Week in Review

---

Week in Review

07/01/2023

For the week 6/26-6/30

[Posted 5:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.

Edition 1,263

What a week on the geopolitical front, starting last Friday and then Saturday’s march up the M-4 in Russia by Yevgeny Prigozhin’s Wagner group, only to turn around.  I detail it all as only I do when it comes to the bigger events of the past 24+ years here at StocksandNews, but as I go to post early this evening, we still haven’t seen Prigozhin, but can only assume he’s in Belarus.

Ukrainian President Volodymyr Zelensky ordered top military commanders today to strengthen Ukraine’s northern military sector following Prigozhin’s presumed arrival there.  He said Ukrainian intelligence and security forces had reported on the situation in Belarus at a meeting of top military and political leaders.

“The decision…is for Commander-in-Chief (General Valeriy) Zaluzhnyi and ‘North’ commander (General Serhiy) Naev to implement a set of measures to strengthen this direction,” Zelensky said on Telegram.  He did not mention Prigozhin in the brief post.  But there are legitimate concerns, fear of the unknown.  There are growing reports a base for Wagner forces could be set up at a vacant military facility 50 miles from Minsk.

General Naev said: “Right now, there is no direct threat of offensive actions from Belarus and Russia in the zone,” but he said moves to strengthen Ukraine’s defense capabilities in the north were needed in the event of a growing threat.

The ongoing prime fear, broadly speaking, is that if Vladimir Putin is toppled, some of Russia’s nuclear weapons could fall into the hands of terrorists or rogue states or groups; a worst-case scenario for the West (and Israel).

But for now, we know that Russian tactical nuclear weapons have been brought into Belarus, before Prigozhin’s mutiny.  And now Prigozhin appears to be there.

The rest of the story follows….

---

Going back to last Friday*, I was posting as literally events began to spiral out of control in Russia.  Yevgeny claimed Russian military forces had fired on Wagner positions in Ukraine. Prigozhin vowed “justice” against Russian defense officials for their mishandling of the war.  [In hindsight, only one dead body was shown, not the slaughter Prigozhin claimed at the time.]

*Earlier Friday, as I noted in my last WIR, Prigozhin appeared to cross a new line in his feud with the Defense Ministry, saying that the Kremlin’s rationale for invading Ukraine was based on lies concocted by the army’s top brass.

Prigozhin, commonly referred to as “Putin’s Chef,” for his catering duties and ownership of a number of restaurants that Putin frequented, going back to their days together in St. Petersburg, had been sparring publicly for months with the Russian defense ministry, as I have detailed extensively in these pages.  Prigozhin’s prime target was Defense Minister Sergei Shoigu.

Prigozhin enjoyed rightwing support among Russian military bloggers for his blunt talk and visible social media presence on the battlefield, while the leaders of the Russian military were ensconced in the Kremlin.

On Saturday, Wagner mercenaries crossed into Russia from Ukraine, without incident, and then marched, a reported 5,000 of them, into the Russian Southern Military District headquarters in the city of Rostov-on-Don.

Vladimir Putin released a video message on Saturday, referencing Russia’s 1917 revolution and calling Wagner’s move a “criminal adventure,” a “serious crime,” and “an armed rebellion.”  Putin pledged to punish the mutineers.

No one in Russia’s military stopped the Wagner convoys as they rolled through Rostov-on-don and northward to within a reported 125-150 miles of Moscow, seeming to catch the Kremlin unprepared.  Russia’s FSB intelligence agency then “launched a criminal case over [Prigozhin’s] calls for an armed uprising,” and demanded a stop to what it called “unlawful actions.”  And Wagner troops certainly didn’t act like they were bluffing as they rolled up the M-4 highway.

Three thousand elite Chechen troops were pulled from Ukraine and deployed to Rostov to resist Wagner, but were withdrawing Sunday morning, TASS news agency reported.

What was startling is that Wagner forces shot down a reported six Russian helicopters and a plane that had been sent to stop the advance.  CNN reported Monday that it was two helicopters and an aircraft, with 12 dead.  Call it 3-6, with at least 12 dead, which is shocking.

[Michael Kofman, the director of Russia studies at the Center for Naval Analysis, put the casualty count at 13 Russian pilots, plus an unknown number of Wagner combatants.]

But a mere hours after Putin’s stern warning, the leader of Belarus, Alexander Lukashenko, announced a surprise truce to ease tensions, an alleged deal that allowed Prigozhin and some of his men to exile in Belarus, while facing no criminal prosecution in Russia.

“Some of them, if they wish to do so, can later ink contracts with the Defense Ministry,” Kremlin spokesman Dmitry Peskov told state-backed TASS.  In allowing Prigozhin and his forces to go free, Peskov said Putin’s “highest goal” was “to avoid bloodshed and internal confrontation with unpredictable results.”

What happened to the forceful Putin?  The answer, nothing, until Monday, when he was seen in a video from perhaps before the mutiny.

We also saw video Monday allegedly of Defense Minister Shoigu, seated in a plane as another official points out a window, viewers supposed to believe it was business as usual and that Shoigu was examining the front lines in Ukraine.  There was no audio.  It could have been from a year ago, for all we know.

Prigozhin then released an audiotape, Monday, defending his actions in a defiant statement. He again taunted the Russian military but said he hadn’t been seeking to stage a coup against Putin, and that he was only protesting the new law that he said would have effectively halted Wagner’s operations in Ukraine*, as well as to register a protest over what he said was the government’s ineffectual conduct of the war.

*An order for all volunteer units, including Wagner, to sign by July 1, placing themselves under the control of Russia’s Defense Ministry.  Fewer than 2% of Wagner’s men have signed up, Prigozhin added.  “The aim of the march was to avoid the destruction of Wagner,” he said.

Prigozhin repeated his claim that Wagner was the most effective fighting force in Russia “and even the world,” and that it put to shame the units that Moscow had sent into Ukraine.

He also stressed that Wagner had not spilt a drop of blood on the ground during its northward march, but regretted that his fighters had had to kill Russian servicemen who attacked their convoy from helicopters.

Prigozhin said, without elaborating, that the Belarusian leadership proposed solutions that would allow Wagner to operate “in a legal jurisdiction,” but it was unclear what that meant.

And then late Monday night, Moscow time, Putin once again blasted organizers of the rebellion as traitors who played into the hands of Ukraine’s government and its allies.  Putin did not blame the West this time.

[President Biden on Monday said the United States and its allies were not involved in the uprising.]

In a nationally televised speech, Putin sought to project stability and control, criticizing the uprising’s “organizers,” without naming Prigozhin.  He also praised Russian unity in the face of the crisis, as well as rank-and-file Wagner fighters for not letting the situation descend into “major bloodshed.”

Putin, in the five-minute speech, said the uprising failed because “the entire Russian society united and rallied everyone.”

“They wanted Russians to fight each other,” Putin said.  “They rubbed their hands, dreaming of taking revenge for their failures at the front and during the so-called counteroffensive.  But they miscalculated,” he said, thanking the Russian military.

Putin said in the speech that Prigozhin’s fighters could either come under Russia’s Defense Ministry’s command, leave service or go to Belarus.

The Kremlin then showed Putin meeting with top security, law enforcement and military officials, including Defense Minister Shoigu.

Putin thanked his team for their work over the weekend, implying support for the embattled Shoigu.

Tuesday morning, the Federal Security Service said they had closed a criminal investigation into the armed rebellion led by Prigozhin, with no charges against him or any of the other participants. 

Prigozhin escaping prosecution poses a stark contrast to how the Kremlin has been treating those staging anti-government protests.

Many opposition figures in Russia have received lengthy prison terms and are serving time in penal colonies under notoriously harsh conditions.

Prigozhin’s group shoots down military helicopters and kills 13 Russian soldiers and airmen, and he is allowed to go free.

Belarusian state news agency BELTA then quoted President Alexander Lukashenko as saying Prigozhin was now in Belarus, though he still hasn’t been seen publicly. 

Then Lukashenko said in a candid conversation Tuesday with his generals, that as he tried to convince Prigozhin to call off his rebellion, Prigozhin was “half-crazed,” pouring out obscenities for half an hour – and unaware, perhaps, that his life was at risk.

The swearing in their phone conversation Saturday “was 10 times more than normal,” Lukashenko said.  He claimed to have stopped Vladimir Putin from making a “harsh decision” – a suggestion that Putin planned to kill Prigozhin.

Prigozhin told Lukashenko he wanted to speak to Putin, and demanded that frequent targets of his ire – Defense Minister Shoigu and Gen. Valery Gerasimov, the chief of the General Staff – be handed over to him.  Lukashenko told him that wasn’t about to happen.

As the Washington Post reported, Lukashenko, while normally full of himself, may have actually played a more important role Saturday that initially thought.

As the Belarusian dictator put it, “The most dangerous thing, as I understood it, was not what the situation was, but how it could develop and its consequences.

“I suggested that Putin take his time,” he said, but the Russian president responded: “Listen, Sasha (Putin’s name for Lukashenko), there’s no point.  He doesn’t even pick up the phone.  He doesn’t want to talk to anyone.”

Lukashenko says he succeed in persuading Putin to hold off.

“A bad peace is better than any war,” he said he told Putin.  “Do not rush. I will try to contact him.”

When Prigozhin during his call said he was going to march all the way to Moscow, Lukashenko told him: “I say, ‘Halfway there you’ll just be crushed like a bug.’”

But it took a while for Lukashenko to persuade Prigozhin to turn around, according to his account of how it all went down.

The conflict, Lukashenko said, was caused by unhealthy competition between Wagner and the military.  “An interpersonal conflict between famous people escalated into this fight.”  [Robyn Dixon and Mary Ilyushina / Washington Post]

Again, this is one side of the story, from a bullshit artist, but history will sort it out. 

Separately, Lukashenko’s defense minister, Viktor Khrennikov, told his leader he would not mind having a unit like Wagener in the Belarusian army.  Lukashenko reportedly instructed Khrennikov to negotiate with Prigozhin on the matter.

[One Russian news outlet Verstka reported that a Wagner base for 8,000 soldiers was being constructed in Belarus, southeast of Minsk.]

The terms of the deal done to end the mutiny appeared to show that Wagner Group was being disbanded.  Russia’s Defense Ministry said preparations were under way for Wagner heavy weapons and hardware to be handed over.

One of Putin’s allies, Viktor Zolotov, director of Russia’s National Guard, said that mutineers from the Wagner Group were able to advance so fast towards Moscow because forces loyal to the state had focused on bolstering the defenses of the capital.

Prigozhin had bragged his fighters marched to within 200 kilometers of Moscow in an example of how the Ukraine war should have been fought by the Russian army.

“It is very simple: we concentrated all our strength in Moscow,’ said Zolotov, who served as head of the presidential bodyguard from 2000 to 2013 and was sometimes seen carrying an automatic weapon to protect Putin on dangerous trips.

Zolotov, 69, said he had been in constant contact with Putin on Friday and Saturday.  The guards, he said, will in future be equipped with heavy weaponry and tanks after having to prepare to defend Russia’s capital against the Wagner fighters.

As a bodyguard, Zolotov stook beside Boris Yeltsin on a tank as he led resistance to the 1991 coup attempt by hardliners against Soviet President Mikhail Gorbachev.

We began to hear of online messages from Wagner Group forces and their relatives who raged against Prigozhin’s decision to halt his dramatic march on Moscow and withdraw from the captured city of Rostov.  The BBC verified one post: “The bald waste of space destroyed Wagner PMC with his own hands. And screwed everyone he could,” one online poster claiming to be a Wagner fighter wrote on a Telegram channel with 200,000 followers.

“It’s been another senseless revolt,” said another.

One relative posted on Telegram, “This is pure betrayal.”

As Prigozhin arrived in Belarus in his private jet from St. Petersburg, on Tuesday, Putin was detailing more than $3 billion he said Russia had paid for Wagner’s troops and for food supplied by Prigozhin’s catering company for the Russian army fighting in Ukraine.

“I hope that no one stole anything, or, let’s say, stole just a little, in the course of this work,” Putin told a group of soldiers at the Kremlin. “We will of course look into all this.”

Wednesday, Putin went on a rare public walkabout in southern Dagestan, shaking hands and posing for selfies in an apparent attempt to counter the damage to his image.

Putin said he had the support of Russians during the mutiny.

The Kremlin declined on Thursday to give any details about the fate of Russian General Sergei Surovikin, whose status and location have not been made public since the mutiny.  Nicknamed “General Armageddon” by the Russian press for his aggressive tactics in Syria, Surovikin – who is deputy commander of Russian forces in Ukraine – has been absent from view since Saturday, when he appeared in a video appealing to Prigozhin to call off his mutiny.  Surovikin looked exhausted in the video and it was unclear if he was speaking under duress.  There have since been unconfirmed reports that he is being questioned by the security services.

The story is Surovikin may have had prior knowledge of Prigozhin’s plan.

Comments….

--Saturday, former Russian president Dmitry Medvedev said Russia would not allow a mutiny by Prigozhin to turn into a coup or a global crisis.  Answering questions from journalists, Medvedev said the whole world would be on the brink of catastrophe if Russian nuclear weapons fell into the hands of “bandits.”

--Russian Foreign Minister Sergei Lavrov said that Wagner will continue to operate in Mali and the Central African Republic, along with official Russian contacts, adding: “Several hundred servicemen are working in the CAR as instructors; this work of course, will be continued,” as Lavrov attempted to beat back questions about Wagner’s future there.  With the war in Ukraine undermining Russia’s ties and trade with the West, the Kremlin has also been underlining its commitment to Africa.

--“Often there are plots without a coup; this seemed like a coup without a plot,” wrote Yale Historian Tim Snyder on Sunday. Noting Wagner’s brief takeover of Rostov-on Don, “The [residents’ apparent] apathy indicates that most Russians at this point just take for granted that they will be ruled by the gangster with the most guns, and will just go on with their daily lives regardless of who that gangster happens to be.”

Snyder noted some lingering questions: “If Wagner was so horrible, why did everyone just let it go forward?”  “If the Russian ministry of defense is so effective, why did it do so little?  “If Putin is in charge, why did he run away, and leave even the negotiating to Lukashenko of Belarus?”

And: “If Lukashenko is the hero of the story, what does that say about Putin?”

--Mark Voyager, a director in global management at the American University in Poland and senior fellow at the Center for European Analysis, told Defense One’s Patrick Tucker: “The fact remains that (Wagner’s forces) are still the best trained, the most motivated, the most cruel, the most brutal but still the most capable…forces that the Russian command currently has at their disposal… The Russian military cannot conjure up new forces in the foreseeable future capable of doing, you know, even a portion of what Wagner was doing.”

Patrick Tucker: “The hybrid nature of the Wagner Group has also made it more valuable to Putin, who won’t be able to replace the mercenary group’s global reach with formal Russian military groups, said military analyst and Russia-watcher Rob Lee.  ‘They are somewhat private in nature, but they’re also public…and they depend on the Russian government for operations in Africa,’ and elsewhere.  But, said Lee, ‘There’s no way Putin wants to give up that kind of influence.’”

But now everyone has been weakened, especially Vladimir Putin and the Russian Ministry of Defense.

And how many powerful folks, and corporate entities, will now want to build their own private armies?  [A common theme for fans of the show “24,” which was spot on in so many areas.]

--Andriy Yermak, President Zelensky’s closest adviser, said at a briefing in Kyiv that when it comes to consequences for Vladimir Putin and the conduct of the war, “I think the countdown has started.”

“What Ukraine has seen since 2014 has become evident for the entire world,” Yermak said.  “This [Russia] is a terrorist country whose leader is an inadequate person who has lost connection with reality. The world must conclude that it’s impossible to have any kind of serious relationship with that country.”

---

This Week in Ukraine….

--Saturday, Russian forces fired more than 20 missiles at Kyiv in a predawn assault, killing at least three, killed in an apartment building fire caused by falling debris.

Kyiv found itself under attack for the eighth time this month amid the anxiety over the confrontation between Putin and Prigozhin.

--Monday, Russian Foreign Minister Sergei Lavrov said Ukrainian allegations that Russia plans to stage an attack involving a release of radiation at the Zaporizhzhia nuclear plant in southern Ukraine were “nonsense,” TASS reported.

--Tuesday, Ukraine said it had made fresh territorial gains in its counteroffensive as Kyiv looks to take advantage of the disarray gripping Russia.

“The orcs are running, and we’re going forward,” said a soldier of Ukraine’s 31st Mechanized Brigade in a video posted against the backdrop of a ruined house in Rivnopil.

The battle for the village in western Donetsk region has been ongoing for several days, with Russia apparently reinforcing its positions there.  Russia didn’t confirm its loss of the settlement which would be the first village taken by Ukraine since June 18 amid the slow grinding push against heavily fortified Russian lines.

Ukraine’s Defense Ministry also said Ukraine had moved forward a mile and a half in certain areas on the flanks of Bakhmut.  Ukraine has been pushing for weeks to establish control over high ground overlooking the city from where it can pound Russian forces defending it and put pressure on them to withdraw.

“We keep moving,” Deputy Defense Minister Hanna Maliar posted on Telegram.

UK Defense Secretary Ben Wallace told the British Parliament on Monday that Ukraine had already captured approximately 300 square kilometers of territory as part of its summer campaign, more land than Russia seized during its largely unsuccessful winter offensive.

--Tuesday, a Russian missile attack that hit a crowded pizza restaurant in an eastern Ukrainian city killed at least 12, including three children, authorities said, as rescue workers continued to search through the rubble.

The evening attack on Kramatorsk wounded another 60 people, in the latest bombardment, a tactic Russia has heavily used in the 16-month-old war.  It’s sickening.

Two of the children were sisters, twins, both age 14, a representative of Kramatorsk’s city council said.  “Russian missiles stopped the beating of the hearts of two angels,” read a Telegram post.

The attack, using what officials said were S-300 missiles, also damaged 18 multi-story buildings, 65 houses, five schools, two kindergartens, a shopping center, an administrative building and a recreational building, the regional governor, Pavlo Kyrylenko, said.  The S-300 is a surface-to-air missile that cannot hit ground targets accurately, but Russia’s forces have repurposed it for loosely targeted strikes on cities.

Kramatorsk is a front-line city in Donetsk region, that houses the Ukrainian army’s regional headquarters.  The pizza restaurant was frequented by journalists, aid workers and soldiers, as well as locals.  Donetsk is one of four provinces that Russia claimed to annex last September but does not fully control.

Ukraine’s SBU intelligence agency arrested a local man it accused of helping the Russians carry out the attack.

The SBU said he was an employee of a gas transportation company who helped coordinate the strike and allegedly sent video footage of the café to the Russian military.

“Anyone who helps Russian terrorists destroy lives deserves the maximum punishment,” President Zelensky said in his nightly video message on Wednesday.

The prosecutor’s office said in a statement that the suspect had been informed that he was suspected of committing treason, an offense that carries a possible life sentence.

People were urged to leave Kramatorsk for safer areas, the regional governor said.

Russia’s defense ministry claimed on Thursday that it had killed two Ukrainian generals and up to 50 Ukrainian military officers in the missile strike.  Asked about the attack, Russia said it attacked only military targets, not civilian ones.

--Thursday, Ukrainian commander-in-chief Gen. Zaluzhnyi told the chairman of the U.S. joint chiefs of staff Mark Milley that his forces had “succeeded in seizing the strategic initiative.”

“Ukraine’s defense forces are proceeding with their offensive action and we have made advances. The enemy is offering strong resistance, while sustaining considerable losses,” Gen. Zaluzhnyi wrote on Telegram.

Deputy Defense Minister Hanna Maliar, speaking on national television, said: “Every day, there is an advance. Yes, the advances are slow, but they are sure.”

--Friday, speaking to the National Press Club in Washington, Gen. Mark Milley said the Ukrainian counteroffensive is “going slower than people had predicted,” but is making steady progress.

“(That) doesn’t surprise me.  It is advancing steadily, deliberately, working its way through very difficult minefields, et cetera.”

--Ukraine must be ready to export grain almost exclusively via its Danube River ports because Russia is effectively blocking Black Sea shipments, the Ukrainian Sea Ports Authority said on Tuesday.

Moscow has threatened not to extend the deal beyond July 18 unless a series of demands are met, including the removal of obstacles to Russian grain and fertilizer exports.  It says that promises of help with those exports have not materialized. 

“With Russia effectively blocking the operation of the grain corridor, we need to be ready to receive almost the entire export volume of the new harvest through the Danube ports,” Dmytro Barinov, the Ukrainian Sea Ports Authority’s deputy head, said on Facebook. 

Friday, Russian Foreign Minister Lavrov said he saw no reason to extend the grain deal.  “The attitude of the West towards this deal is outrageous,” Lavrov told reporters.  He said one of the last straws for Russia was an attack on an ammonia pipeline, an attack he blamed on Ukraine which has in turn accused Russia of damaging it.  [I noted this attack weeks ago.]

--In a surprising development, according to the latest Reuters/Ipsos survey American support for arming Ukraine soared this week.  Some 65% favored sending weapons to Ukraine, which is a nearly 20-point increase from just one month ago when 46% approved. That includes 81% of Democrats, 56% for Republicans, and 57% support among independents.

This is similar to the 59% support for arming Ukraine that pollsters with the Reagan Institute discovered in results published this week.  In that survey, too, Democrats were far more willing to send weapons to Ukraine than Republicans, with 75% in favor of sending weapons versus 50% of Republicans.

As Defense One points out, context matters.  When asked if the aid sent to Ukraine had been “worth the cost,” 50 percent of Reagan Institute respondents said yes.  But when they were told that (1) the aid given was just three percent of the U.S. military’s budget, (2) that Ukraine remained in control of much of its territory, and (3) that the war had severely degraded Russian combat capabilities, the number of respondents who approved of the aid jumped to 64 percent.

Opinion….

Editorial / The Economist

“In the spring of 2022, at the moment when it became clear that Russia’s invasion had begun to falter, the generals planning Ukraine’s campaign grasped that their resistance on the battlefield could turn Russian commanders against each other.  Infighting and disunity, they calculated, would be a crucial step in bringing home to Russia and its people that the war was unwinnable – and that the country was paying an intolerable price to satisfy the vanity of their president, Vladimir Putin. It was one route to victory.

“Little can they have imagined that their wishes would be so spectacularly fulfilled.  On the evening of June 23rd Yevgeny Prigozhin mutinied, along with his irregular troops in the Wagner mercenary group.  Over the next 24 hours, they captured Rostov-on-Don, Russia’s ninth-largest city, and embarked on a lightning-fast 1,000km charge towards Moscow, before striking a deal and turning around with about 200km (120 miles) to go.  Having criticized the botched invasion, Mr. Prigozhin was calling for the defense minister and the chief of the general staff to be sacked.

“It is still unclear [Ed. written Sunday p.m.] whether either man has gone, or is about to.  But Mr. Prigozhin, who has apparently gone into exile in Belarus (for the time being, at least), has inflicted severe damage on Mr. Putin and his war.  Wagner’s troops are supposedly going back to the bases they left on June 23rd.  By contrast, Russia and its weakened president find themselves stuck in dangerous new territory.  Tactically, the war will be harder to fight.  Strategically, it will be harder to win.  And Mr. Putin’s leadership has been gravely undermined.

“In terms of tactics, the Wagner mutiny has divided and distracted the Russian army.  In the trenches its men will know that, while they are being ordered to give up their lives for a war that Mr. Prigozhin has branded as corrupt, their commanders are squabbling among themselves over power and influence.  In the barracks officers will be splitting their attention between the war and their own futures. They know that, if there is a power struggle, they need to end up on the right side.

“For Ukraine, by contrast, the mutiny is an opportunity.  Its counter-offensive, now three weeks old, has fallen behind schedule.  Although most Ukrainian forces still remain in reserve, progress has been hard.  There could be no better moment to break through Russian lines.  It is surely no accident that the Ukrainians appear to be trying to retake Bakhmut, purchased with the blood of thousands of Wagner troops and which ordinary Russians perceive as their side’s only gain over the past year.  If Ukraine wins back the town, it will underline Mr. Prigozhin’s message to ordinary Russians that Mr. Putin and his generals are failing.

“Secondly, the mutiny has undermined Russia’s strategy. Ever since his initial assault failed, Mr. Putin’s theory of victory has been that the West would come to believe that backing Ukraine is a waste of money and effort.  However, Mr. Prigozhin has shown that time may not be on Mr. Putin’s side after all.

“Russia cannot just keep doing the same thing over and over again.  Now that Wagner has shown how thin Russia’s defense are, Mr. Putin needs to reinvigorate his command and replenish his troops.  And yet, if he embarks on a fresh mobilization, he risks stirring up popular discontent.  When Mr. Putin stands in front of a camera and insists that his ‘special military operation’ is proceeding according to plan, he wants to send the message that he will never, ever back down.  After Mr. Prigozhin’s escapade, he risks coming across as deluded….

“If he is ever to re-establish his authority, he may resort to desperate violence and repression.  For the sake of Russia and the world, the hope must be that any such possibility has already slipped beyond his reach.”

Walter Russell Mead / Wall Street Journal

“There are three things to bear in mind as we try to make sense of the dramatic developments in Russia. The first is that politics in nondemocratic societies, especially in Russia, can look very different from what we know in the West.  Scheming politicians in Western societies organize parliamentary revolts or make their arguments in the press.  When parliaments lack power, and the press isn’t free, political infighting moves to other venues.  Usually, politics in these societies takes place behind closed doors.  When the infighting bursts into the open, it can look dramatic, but drama isn’t always catastrophe.

“Second, the public was, for the most part, uninvolved. There were scattered signs of public support for Wagner, but there was no surge of public unrest.  No throngs of demonstrators filled the streets of Moscow; no huge crowds gathered at barricades to welcome or block Mr. Prigozhin’s advance.  Even at a moment of perceived regime weakness, ordinary Russians stayed home.  The Russian public may be skeptical of its leaders and unhappy with the war, but for now politics remains the preserve of the elite.  All this, from Mr. Putin’s standpoint, is good news.  Dictatorships rely on public acquiescence and passivity much more than on enthusiastic support, and judging from the weekend’s events, Mr. Putin’s hold on the Russian street looks reasonably secure.

“Finally, we should remember that Messrs. Prigozhin and Shoigu both have real successes under their belts.  Wagner matters to Mr. Putin. Wagner won, at great cost, the only real Russian victory in recent months when its troops forced the Ukrainians out of Bakhmut.  Wagner mercenaries, taking advantage of the unaccountable strategic paralysis that seems to have gripped Washington and the West in the face of the group’s growth, have made great strides across the Middle East and Africa*, bringing wealth and prestige to the Kremlin.  That network is a significant asset, and unless Mr. Putin is certain that it will function as well under new leadership, Mr. Prigozhin may still be too valuable to discard.

“But Mr. Shoigu is also useful.  After a string of reversals, the Russian army seems to have stepped up its game. Deep minefields, well-planned trenches and fortifications, as well as Russian countermeasures against Himars and other Western weapons, have so far blunted Ukraine’s counteroffensive.  Additionally, Mr. Putin believes Mr. Shoigu’s Central Asian ethnic and regional background makes him a safe choice to lead the Defense Ministry.  Without the dense networks within the armed services that Russian-background generals have, Mr. Shoigu would have a hard time launching a coup.

“The West very much wants Mr. Putin to fail, and if the weekend’s events signal the decline of Putinocracy, your Global View columnist will gladly participate in the celebrations.  But if Russia’s defenses hold in Ukraine, Wagner continues to prosper globally and the Russian public stays passive, Mr. Putin may be in less trouble than many of us hope.”

*A decade-long United Nations peacekeeper mission in Mali is set to end on June 30, diplomats said on Tuesday, ahead of a Security Council vote on a draft resolution that will give the 13,000-strong operation six months to withdraw.  The operation has been hobbled by government restrictions since Mali teamed up with the Wagner Group in 2021.  The UN mission is credited with playing a vital role in protecting civilians against an Islamist insurgency that has killed thousands.  The security situation is expected to worsen with the UN departure.

Editorial / Wall Street Journal

“After his initial failure to take Kyiv, Mr. Putin’s bet has been that he can out-wait Western support for Ukraine in a grinding battle of attrition. He still has the advantage in manpower, and the ability to throw green recruits into the meat-grinder.   But the battle of attrition works both ways, even if the West can’t easily judge its impact inside Russia.

“The moment would seem ripe for Ukraine to accelerate its summer offensive and retake more of its territory from the invaders.  If the U.S. had provided more advanced weapons sooner, Ukraine would be better positioned to do so.  President Biden conferred on Saturday with leaders of the G-7 and reiterated steadfast support for Ukraine.

“This is the right message, but F-16 jets and other assets are still weeks or more from deployment. Congress would be undermining Ukraine at the worst moment if it refuses more military aid later this summer.

“The failed coup also offers portents of trouble for the stability of Russia as the war grinds on.  Mr. Putin’s goal in Ukraine has been to revive the Greater Russian empire, but instead he has pushed the Ukrainian people closer to the West.  Kyiv may end the war as a near-member of NATO, as no less than Henry Kissinger now advises.  And who knows if Mr. Putin can hold Russia itself together with its disparate ethnic groups and frustration at the casualties and sacrifice of war.

“The goal of Western policy isn’t to break up what has always been an artificial empire. But the U.S. can’t control what happens, and there should be no effort to keep the Russian Federation together. The best result from this costly, tragic war would be a stronger Western alliance free of the post-Cold War illusions that Russia and China pose no threat and the welfare state can replace the will and money required for national defense.”

Mikhail Khodorkovsky, former Russian political prisoner and CEO of Russian oil company Yukos / The Economist

“What the coup attempt made clear…is that Mr. Putin is a lame duck whose days are numbered.  It has dealt a potentially fatal blow to the legitimacy of his regime, in the eyes of both the Russian elites and society at large. He has been exposed as a weak leader, unable to control his inner circle and security forces and retreating into isolation when under threat.  Far from being the master manipulator of divisions among those beneath him, he risks being toppled by forces he unleashed but can no longer control.

“For the general population, the ease with which Mr. Prigozhin’s mercenaries took over Rostov-on-Don, a city in southern Russia that serves as a key logistical staging-post for Russian forces in Ukraine, put paid to the idea that Mr. Putin enjoys overwhelming public support.  Russian elites, meanwhile, can no longer look to him as a guarantor of their status, stability and prosperity.

“The president can no longer control his troops, and the population no longer believes the myths he peddles about his unnecessary, criminal war.  Mr. Prigozhin understood Mr. Putin’s weakness, the parlous state of his war machine and the decimated morale of his troops.  He wouldn’t have mutinied if he didn’t think he had a serious chance of success.

“We glimpsed how the regime’s inevitable fall is likely to come about and the forces that will seek to take over – so called ‘national patriots’ led by another thug.  The democratic anti-war opposition and our natural allies in the West need to prepare for the regime’s collapse and cannot meekly allow the bandit currently in charge of Russia’s nuclear arsenal to be replaced by another.

“The West should bet big on Russia’s democratic opposition and grant it agency, so that when the regime implodes we are capable of seizing the moment. Western powers should recognize our opposition institutions, such as the Russian Action Committee, as legitimate representatives of Russian society, enabling us to better compete with the militarized ‘national patriots’ in the Prigozhin mold.

“Simultaneously, there must be no let-up in the West’s support for Ukraine.  It must continue to arm the Ukrainians to spur them on to victory.  Mr. Putin’s forces are in disarray and Ukraine must be fully backed to press home the advantage….

“If the West wishes ever to see a Russia capable of being a responsible actor in the world, it needs to give its backing to the democratic anti-war opposition.  The Russian opposition, meanwhile, needs to prepare for what comes next and the cold, hard reality that the next Russian revolution will not be of the velvet variety.  The regime and the forces that will topple it will be armed.  We may abhor Mr. Prigozhin, but we cannot ignore that he has demonstrated the potential for successful sabotage against Mr. Putin’s noxious regime.

“Regime change is coming. Exactly when is impossible to say. But one thing is certain: we must be ready for it.”

Editorial / Washington Post…on Prigozhin going free, while thousands languish in prison for speaking out against the system…

“(Thousands) of Russians who object to the war and oppose Mr. Putin have not had the benefit of such lenience. They protested – on social media, on the streets – only to be charged with crimes and imprisoned.  Today, there are 527 suspects and people convicted in antiwar criminal cases in Russia, according to the group OVD-Info, which tracks the cases and supports those accused. Since the invasion was launched, 19,735 people have been detained for speaking out against the war….

“Hundreds of Russians have been hauled off to police stations for minor acts of dissent….

“A 13-year-old was sent to an orphanage after drawing an antiwar sketch at school that led to the conviction of her father, Aleksei Moskalyov, on charges of discrediting Russia’s armed forces.  A street artist from Yekaterinburg, Yegor Ladyakin, was sentenced to six months for writing anti-Putin slogans on the wall of a kiosk. He was found guilty of vandalism motivated by political hatred.  When he asked for a lawyer, the security forces hit him in the jaw, he said.

“These Russians were not allowed to just drive away like Mr. Prigozhin.

“Russia has not been governed by the rule of law under Mr. Putin, but it has reached new depths of lawlessness and arbitrary enforcement during the war.  In the current system, Mr. Putin’s foes are punished and, on his whim, warlords get off.  It should be the other way around: Mr. Putin should be prosecuted for war crimes, and the thousands of innocent people penalized for antiwar views should be set free.”

---

Wall Street and the Economy

In Sintra, Portugal, the world’s key central bankers gathered for a forum – Fed Chair Jerome Powell, European Central Bank head Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Japan Governor Kazuo Ueda.

The persistence of inflation was a major theme for Powell, Lagarde and Bailey, who all pointed to the strength of underlying prices so far, and how they are adapting to that.  Both Powell and Lagarde indicated more tightening is needed and Bailey said strong inflation drove the BOE’s decision to hike by 50 basis points earlier this month.

All three said their institutions are moving on a meeting-by-meeting basis, taking data into account as they determine what policy is appropriate…tight labor markets and still strong consumption the prime issues.  Lagarde made it clear that another hike in the ECB’s benchmark rate is coming this month, though gave no hints about September.  At the same time, she signaled that the ECB will keep rates higher for longer.

Lagarde zeroed in on buoyant wage growth in Europe, where pay is often negotiated between trade unions and employers in deals that often last several years.

Chair Powell reiterated more rate rises are likely and did not rule out a boost in the cost of borrowing at a policy meeting July 25-26.  He said taking a pause three weeks ago was a move to take stock of how the rate hike campaign is affecting the economy.  Powell said future policy actions will be driven by how the economy is performing, noting “the only thing we decided was not to raise rates at the June meeting.”

Powell said, “I wouldn’t take, you know, moving at consecutive meetings off the table at all,” adding “the committee clearly believes that there’s more work to do, that there are more rate hikes that are likely to be appropriate” at some point over the course of the year.

“Although policy is restrictive, it may not be restrictive enough and it has not been restrictive for long enough,” which leaves open the door for more increases, Powell said.

Powell noted the economy has been resilient in the face of the Fed action and the job market is strong.

“It’s a constructive thing, that we’ve been able to raise rates 500 basis points with the expectation of going further, and we still have a very strong job market, but nonetheless one that is in fact cooling in just the way we would have hoped,” Powell said.

The chair admitted “there’s a significant probability that there will be a downturn…but it’s not to me the most likely case.”

Powell added, “I don’t see us getting back to 2% (on the inflation rate) this year or next year,” and when it does happen, it’s likely to be in 2025, he said.

And so, on the economic data front this week, most of it buttressed the Fed’s case for further rate hikes, beginning with a final look at first-quarter GDP, up a revised 2.0% rather than an expected 1.4%, and 1.3% prior.  The consumption component was also revised up to a solid 4.2%.

Durable goods for May rose a higher than expected 1.7% when a decline was forecast, and ex-transportation, 0.4%, was better than forecast. 

May new home sales were far better than estimates, a 763,000 annualized pace.

Even the Case-Shiller home price index for April beat expectations, up 0.9% month-over-month, and down 1.7% year-over-year.

The only fly in the ointment was another weak Chicago PMI on manufacturing in that key region, 41.5 in June (50 the dividing line between growth and contraction).

But on the inflation front, while the GDP data helped make the Fed’s case, so did the May reading for the personal consumption expenditures index, with the Fed’s preferred benchmark, core PCE, up 4.6%...a tick down from 4.7% prior, but still well above the central bank’s 2% target.

[Personal income rose 0.4%, consumption 0.1%.]

The Fed’s Open Market Committee will have one more employment report and another reading on consumer prices before gathering July 25-26, but it already basically has more than enough evidence to hike rates anew.

The Atlanta Fed’s GDP Now barometer for second-quarter growth is up to 2.2%.

Freddie Mac’s 30-year fixed-rate mortgage is at 6.71%.

---

Separately, President Biden on Wednesday acknowledged that his biggest adversary is not Donald Trump, but rather ‘time.’

In a speech embracing Bidenomics, a shift in the relationship between government and the economy, underpinned by several pieces of legislation that will add trillions of dollars of new spending over the next decade, the president walked through the many benefits voters might see, but conceded, “All those major legislations we passed, people go, ‘That’s great.’  But it takes time to get it out in the field, and it takes time for them to see it,” Biden said.  “I’m not here to declare victory on the economy, I’m here to say we have a plan that’s turning things around incredibly quickly.”

Biden has been hammering home the idea of an economic revival led by the middle class, while his Republican challengers have sought to link his administration’s economic performance to higher prices for food and household items, high gas prices, and increased government spending.

The new federal cash has contributed to the spike in inflation, and pushed the labor market to a place that Fed Chair Powell has called “tight to an unhealthy level.”

Voters are focused on inflation, not the strong labor market.

And as the Wall Street Journal opined, on the issue of real hourly earnings (inflation adjusted):

“In 1982-84 dollars, which takes account of inflation, average hourly earnings were $11.39 when Mr. Biden took office but started to decline immediately and didn’t stop falling until inflation peaked in June 2022. They have bounced up a little but were still back only to $11.03 in May.  That’s a 3.16% decline in real earnings for the average worker across the 29 months of the Biden Presidency.

“These are official Labor Department statistics.  Mr. Biden can’t deny them, so he had someone fudge the point by writing in his Chicago remarks that, ‘Look, pay for low-wage workers has grown at the fastest pace in over two decades.’  We’d like to see how his economists cherry-picked the data to justify that one.

“All of which reminds us of the old Marx Brothers joke: Who are you going to believe, me or your own eyes?  Regarding Bidenomics, Americans should believe their own eyes.”

Europe and Asia

We had key inflation data for the eurozone today, a flash estimate for June, 5.5% on headline for the EA20 vs. 6.1% in May, as reported by Eurostat.

But ex-food and energy the core figure is still 6.8%, down from March’s 7.5%, and May’s 6.9%, but still 6.8%, which ain’t good, sports fans.

Headline inflation….

Germany 6.8%
France 5.3%
Italy 6.7%
Spain 1.6%...yes, 1.6%
Netherlands 6.4%
Ireland 4.8%

May unemployment in the euro area was 6.5%, stable compared with April.

Germany 2.9%
France 7.0%
Italy 7.6%
Spain 12.7%
Netherlands 3.5%
Ireland 3.8%

Britain:  In a weekly YouGov poll for the Times newspaper, the Labour Party has extended its lead over the ruling Conservatives.  Tory support has fallen to 22%, its lowest level in four months, compared to 47% for Labour, a 25-point lead.  The Liberal Democrats are at 11%, while the Greens garner 8%.

With a general election less than 18 months away, only 15% of people said the government is handling the economy well, while 75% said it’s doing a bad job handling the country’s finances.

The cost-of-living crisis is killing Prime Minister Rishi Sunak’s Conservatives.

Turning to Asia…China continued to report crappy PMI numbers, this time for June, with the National Bureau of Statistics revealing the manufacturing figure was 49.0, contraction and the third straight down month, while the service sector came in at 53.2, which is down from May’s 54.5.

The Chinese economy has simply stalled out after a little burst following reopening.

Japan reported May retail sales were at a strong 5.7% pace year-over-year, while industrial production in the month was 4.7% Y/Y.

Governor Ueda, at the above-mentioned forum in Portugal, said underlying inflation in Japan is still below 2% (it isn’t…), but the BOJ is ready to shift policy if necessary, Japan in a unique situation…a massive Ponzi scheme when it comes to government debt, but it is what it is.

Street Bytes

--Stocks resumed their winning ways to close out the quarter, and first half of the year with a bang, the Dow Jones up 2.0% to 34407, the S&P 500 2.4%, and Nasdaq 2.2%.  Apple became the first company in the universe (assuming there are no markets on Mars) to have a market cap of $3 trillion at $3.05 trillion, up 48% on the year.

I have the year-to-date returns down below, but Nasdaq’s 31.7% surge the first six months is,  needless to say, remarkable. 

--U.S. Treasury Yields

6-mo. 5.41%   2-yr. 4.90%  10-yr. 3.84%  30-yr. 3.86%

Yields surged higher on Chair Powell’s hawkish comments in Portugal, as well as the strong economic data, the 10-year at its highest weekly close since March.

--The Federal Reserve said the biggest U.S. banks remain healthy, a vote of confidence for the financial system after a series of midsize bank failures earlier in the year.

All 23 firms that participated in the latest stress tests performed well, the Fed said, meaning they would stay above minimum capital levels and keep lending to businesses and households in a severe recession.

The annual exercise is aimed at shoring up confidence in the banking system. If banks do poorly, they could face automatic restrictions on shareholder distributions and discretionary bonus payments.  None of the banks face those limits after this round of tests.

The Fed also said the largest banks performed well in a new addition to the test that looked at how lenders would weather a rise in interest rates.

“We should remain humble about how risks can arise and continue our work to ensure that banks are resilient to a range of economic scenarios, market shocks, and other stresses,” Michael Barr, the Fed’s vice chair for supervision, said in a statement.

Shares in Wells Fargo, Goldman Sachs, JPMorgan and Bank of America all rose more than 2% in response Thursday.

--President Biden announced more than $42 billion in new federal funding to expand high-speed internet access nationwide, commencing the largest-ever campaign to help an estimated 8.5 million families and small businesses finally take advantage of modern-day connectivity.

The president likened the new infrastructure project to the government’s work to electrify the nation’s darkened heartland in the late 1930s, when nearly 90 percent of farms had no electric power in the face of high costs and prohibitive terrain.

Roughly 7 percent of the United States still does not have broadband service that meets the government’s minimum standards, according to new federal estimates.

But it’s one thing to say you are bringing broadband to 8.5 million families and small businesses, it’s another thing to get it done.

For decades, government has been trying to accomplish this task, spending billions annually to deploy internet service nationwide, but the lagging federal campaign took on new energy and importance during the pandemic, which proved how the internet is essential for daily life.

For a state like West Virginia, which has long struggled from a combination of chronic underinvestment and rocky terrain that can make building out broadband difficult, Sen Shelley Moore Capito (R-W.Va.) summed it up:

“We’re a state that’s trying to recruit remote workers to live in West Virginia. But if they can’t connect, they can’t work here, and that’s been an issue for us.”

--The state of Texas has pushed its power grid to the max once again this week with a heat dome that settled over the area putting unprecedented strain on the state’s electricity system.  Dallas is typical of the misery…100 degrees air temps for days, 110+ heat index, and what’s worrying climatologists the most, average nighttime lows of over 75 degrees.

But Texas’ grid has survived thus far and as the Washington Post pointed out, a savior has been “giant batteries… Mack truck-size systems, which can quickly spew stored electrons onto the grid when power plants sputter.”  The batteries are also ideal for harnessing wind and solar energy.”

So, this is a big test case for the system and the debate between fossil fuels and the clean energy folks.

But speaking of wind power, last Friday I missed that shares in Siemens Energy fell 36% after the company withdrew its fiscal 2023 profit guidance.  It seems that components in wind turbines made by its subsidiary Siemens Gamesa are wearing out faster than expected.  So not just a blow for shareholders, but for all investors and policy makers betting on the rapid rollout of renewable power.

As reported by the Wall Street Journal, the problem appears to involve critical parts like bearings and blades.  The average lifespan of a wind turbine can be up to 20 years, but wear and tear has been spotted in both newly installed and older turbines.

The creaky components, which affect 15% to 30% of the installed onshore fleet, will be expensive to fix.  Like over $1 billion, thus wiping out more than a third of Siemens expected profit the company was expecting to make doing maintenance on wind turbines it has already installed.

The big worry for investors in this space is that the same faults could crop up in other wind-turbine manufacturers (like Vestas) due to shared supply chains.

--What a disaster for many airline travelers this week proved to be, with both weather and air traffic control issues causing 2,200 cancellations both Monday and Tuesday, according to FlightAware, in addition to 1,400 canceled Sunday. [The situation improved some through today.]

Summer travel is in full swing, and the timing of this week’s mess couldn’t have been worse ahead of the holiday weekend.  I feel for those whose holiday plans were delayed a day or two. 

The weather being an issue was understandable.  But the lack of air traffic controllers was a topic I brought up in this space months ago when looking ahead to summer.

--TSA checkpoint numbers vs. 2019

6/29…132 percent of 2019 levels…this particular day an anomaly
6/28…99
6/27…101
6/26…109
6/25…105
6/24…104
6/23…102
6/22…100

--Nvidia, Wall Street’s darling this year, slumped a little on Wednesday as investors took into account new U.S. rules on exporting artificial intelligence chips to China, setting it and other semiconductor makers up for a multibillion-dollar hit.

The downside is that Nvidia and its peers are vulnerable to American concerns about powerful AI in Chinese control.  But the upside is that Nvidia has high demand for its chips.

The Wall Street Journal first reported the Biden administration is considering more restrictions on selling AI chips to customers in China that could go into effect as soon as early July.

The new limits, part of final rules expanding measures announced in October, would stop shipments to China from Nvidia, Advanced Micro Devices, and others without first obtaining a license.

Nvidia’s CFO said on Wednesday that the company was aware of the possibility of more restrictions, but because of strong demand, it doesn’t expect any “immediate material impact” to its results if the controls are adopted.

Nvidia shares then recovered and are up a stupendous 190% on the year.

--Ford Motor Co. said on Tuesday it will begin layoffs this week (at least 1,000 in North America, according to the Wall Street Journal), impacting mostly engineering jobs in the U.S. and Canada, as part of the automaker’s move to exit unprofitable locations and cut headcount.  The development comes after the company said in May it expects to take up restructuring charges between $1.5 billion and $2 billion in 2023.  The number of job cuts is unspecified.

In February, Ford also detailed plans to eliminate 3,800 product development and administration jobs in Europe in the next three years.  CEO Jim Farley said at the time that Ford needed 25% more engineers to produce its product than rivals and that is costing the company billions in profit.

Ford has about 28,000 salaried employees in North America.

--Lordstown Motors, the electric-truck startup once cheered by investors during the SPAC boom and lauded by former President Trump as a savior for a closed General Motors factory in Ohio, has filed for bankruptcy, the company said Tuesday.

Lordstown’s filing came after talks with its investment partner, Taiwan-based contract-manufacturing giant Foxconn Technology, for it to purchase $170 million in shares of the electric-truck maker fell through, Lordstown said.

Lordstown sold its northeast Ohio factory, a former GM plant, to Foxconn in November 2021, after the startup ran into production issues. As part of the deal, Foxconn and Lordstown agreed to cooperate on a series of new vehicles, which were to be produced at the plant.

Aside from filing for Chapter 11, Lordstown sued Foxconn for fraud and breach of contract, alleging that the contract manufacturer’s actions “had the intended effect of destroying the business of an American start-up.”

--Micron Technology posted better-than-expected results for its May quarter, sending the shares higher by about 2%.

The semiconductor company reported an adjusted loss of $1.43 a share for its fiscal third quarter, compared with the consensus call for a loss of $1.61.  Revenue came in at $3.75 billion – down 57% year-over-year, which was slightly above analysts’ expectations for $3.65 billion.

For the current quarter, Micron offered a range of revenue forecasts with a midpoint of $3.9 billion, in line with estimates.

The company is a leader in the semiconductor market for dynamic random-access memory, which is used in desktop computers and servers, and for flash memory, which is found in smartphones and solid-state hard drives.

“We believe that the memory industry has passed its trough in revenue, and we expect margins to improve as industry supply-demand balance is gradually restored,” Micron CEO Sanjay Mehrotra said in the press release.

Earlier this month, Micron warned a low-double-digit percentage of the company’s revenue was at risk of being impacted by the Cyberspace Administration of China’s ban on some of its products.

--Dow component Walgreens Boots Alliance saw its shares tumble 9% to an 11-year low after the company warned that lower spending by inflation-spooked consumers and a hit from a larger-than-expected drop in Covid product sales would likely persist into next year.  Shares of rival CVS Health and Rite Aid fell between 2% and 5% in response.

WBA also said its newly launched healthcare business, through which it operates doctors’ offices, missed Walgreens’ target for sales growth.  That unit is key to the company’s strategy to expand beyond its traditional business.

“Similar to other retailers, we’ve been impacted by the rapid softening of the macro environment and a more cautious and value-driven consumer,” CEO Rosalind Brewer told investors.  “There are some factors impacting us today that are likely to extend into next year, namely the macroeconomic-driven consumer pressure and Covid headwinds.”

Sales of cough and cold medicines were also hit by a weak season of respiratory diseases, with the volume of prescriptions seeing industry-wide pressure, Brewer said.

In the third quarter of the fiscal year, Walgreens reported a 0.2% fall in same-store sales at its retail division, compared with estimates of a 2.1% rise.  It now expects fiscal 2023 adjusted earnings per share of $4.00 to $4.05, from $4.50 to $4.65 previously.

--Nike on Thursday beat Wall Street estimates for quarterly revenue as the world’s largest sportswear maker benefited from a recovery in China but margins remained under pressure due to higher costs and markdowns. The company reported a 16% jump in Greater China sales following the reversal of the rigid zero-Covid policy.  Sales in the region had declined in the first three quarters of its fiscal 2023.

Sales rose 5% in Nike’s largest market of North America, but that was the slowest in four quarters as demand from U.S. wholesalers wanes due to still-high inflation.  Retailers have started to cut back on orders and become more prudent in placing newer orders due to a drop in discretionary spending among shoppers.  The company’s move to offer more discounts to get rid of excess apparel and footwear inventory drew more customers to its stores.  But this hurt margins, which fell to 43.6%.

The company’s fourth-quarter revenue rose to $12.83 billion from $12.23 billion a year earlier. Analysts had expected $12.59bn.  But adjusted earnings of $0.66 per share fell short of estimates of $0.68.

--General Mills shares fell about 5% Wednesday after the company forecast full-year profit largely below analysts’ estimates as price hikes to counter inflation dent demand for its ready-to-eat cereals and meal kits.  GIS also missed net sales estimates for the fourth quarter ended May and reported a dip in volumes across its segments.

Packaged-food peers, including Kellogg, Kraft Heinz and Conagra Brands, have been pushing up product prices for more than a year to offset inflation in labor, raw materials and transportation costs.  While price increases fueled top-line growth for the companies, volumes have taken a hit in recent quarters, signaling increasing resistance from inflation-weary customers against further price hikes.

“We’ll see some (more hikes in) pricing this year because we still see inflation in the marketplace,” General Mills CEO Jeffrey Harmening said.  The company’s May quarter net sales rose 3% to $5.03 billion from a year earlier, below consensus of $5.18 billion.

GIS forecast fiscal 2024 organic net sales to rise 3% to 4%, compared with 10% growth in 2023, as it expects inflation to temper slightly next year.

--Shares in Carnival Corp. cratered over 10% Monday (though they had been up 75% this year prior), as the cruise operator forecast third-quarter adjusted profit marginally below estimates as CCL battles higher labor and fuel costs, while spending more on marketing.

Carnival has increased marketing spend since Josh Weinstein took over as CEO in August last year, as it seeks to gain an edge over its competitors including Norwegian Cruise Line Holdings.  Cruise liners have seen labor costs rise as they have had to add staff to manage higher occupancy levels at a time when a strong labor market has driven up wages.  This along with a slower-than-expected drop in inflation with respect to port expenses, freight, and crew travel has pushed the company to raise its cost forecast, CEO David Bernstein said.

Carnival, however, lowered its annual loss forecast banking on higher ticket prices and U.S. customers including the younger population shelling out money on novel services such as cruise travel even as they cut spending on non-essential goods.  It now expects adjusted annual loss per share between 8 cents and 20 cents, compared with an earlier forecast of loss per share of 28 cents to 44 cents.

The company beat second-quarter revenue estimates at $4.91 billion, up from $2.40 billion a year earlier.  Analysts were at $4.77 billion.

Well, the shares then rallied the rest of the week on a series of upgrades.

--KPMG is laying off 5% of its U.S. employees after feeling the pinch of “economic headwinds, coupled with historically low attrition,” a spokesperson for the Big Four accounting giant said on Monday.  The firm had over 39,000 employees in the U.S. at the end of its last fiscal year on Sept. 30.

KPMG cut about 2% of its U.S. workforce in February, the first of the world’s four biggest accountancy firms to slash jobs in the country.

--Robinhood Markets is cutting about 7% of its full-time staff, the online brokerage’s third round of layoffs in just over a year as the company adjusts to a slowdown in customer trading activity.  Around 150 employees are being laid off in the current round.

Robinhood cut more than 1,000 jobs in two rounds of layoffs last year.  As of the end of 2022, it had about 2,300 full-time employees, according to its annual report.

--Amazon.com’s cloud computing division will invest $7.8 billion through 2030 in Ohio to expand its data center operations, the company announced Monday.  The e-commerce giant has invested $6.3 billion in the state since 2015, with the latest increase in spending to meet a rise in demand for cloud services from corporate and government bodies.  Amazon said the new investment will create hundreds of jobs and support thousands at local businesses through construction, operations and maintenance on-site at Amazon Web Service facilities.

The company had said in January it plans to invest another $35 billion by 2040 to expand data centers in Virginia.  And $13 billion in India by the end of this decade.

--Federal prosecutors arrested three investors on Thursday on insider trading charges related to a deal to take former president Trump’s media business public.

According to the indictment, the three individuals together made more than $22 million in illegal profits in October 2021 by purchasing shares in Digital World Acquisition Corporation after secretly learning about the blank-check firm’s plan to buy Truth Social owner Trump Media & Technology Group.

The value of the securities they purchased went up sharply once the Trump deal was announced, prosecutors say. The defendants and individuals they tipped off then sold their securities for a significant profit, according to prosecutors.

The three men charged in the indictment are Michael Shvartsman, Gerald Shvartsman and Bruce Garelick, who served as a director on Digital World’s board of directors.  All three surrendered to authorities.

There is no allegation that Donald Trump had any involvement at all in the alleged insider trading.

However, the new charges add to the controversy surrounding the Trump deal, which has drawn scrutiny from regulators and prosecutors.

Nearly two years after being announced, the merger has yet to be completed and last month the Nasdaq stock exchange threatened to delist Digital World because it hadn’t filed its quarterly report.

--I can’t keep up on all the new weight-loss drugs hitting the scene and not even going to try, at least for now. 

But I saw Martha Stewart on CNBC after she was selected to be a Sports Illustrated swimsuit cover girl at age 81, and when asked how she got in such superb shape, it basically came down to two things…exercise and staying off alcohol.  And a smart diet.

--Bud Light is offering a rebate of up to $14 on purchases of a 15-pack of Budweiser, Bud Light, Budweiser Select or Budweiser Select 55.  So in places where a 15-pack sells for less than $15, the beer could be practically free.

Bud Light’s parent company Anheuser-Busch offered the same promotion over Memorial Day weekend.

The rebate applies to purchases of up to $15 that are made between June 15 and July 8 and will be offered via a prepaid digital card.  Customers can redeem rebates on the Bud Light website.  Rules vary by state.

--Fox News announced Monday it is replacing Tucker Carlson in the 8 p.m. ET slot with Jesse Watters, starting July 17.  Watters’ opinion program “Jesse Watters Primetime” originally launched last year as a 7 p.m. show.

In May, the month after Carlson departed Fox news, the network’s average total primetime viewers declined by 32% from the previous month, according to AdWeek, citing Nielsen data.  Yet Fox remains the highest-rated cable news network in total viewers and in the key 25-54 demographic.

Laura Ingraham is moving to the 7 p.m. slot, while Greg Gutfeld will move up an hour to 10 p.m.  Sean Hannity remains at 9 p.m.

--Ryan Seacrest will succeed Pat Sajak on “Wheel of Fortune” in 2024.  It was a quick decision, just two weeks after Sajak announced he was stepping down after more than four decades on the job.

Executives at Sony Pictures Television, which produces the show, clearly hoped to avoid the succession fiasco that nearly overwhelmed their other hit game show, “Jeopardy!”

Vanna White is under contract for another year.

--Last week I mentioned the upcoming movie “Oppenheimer,” and then I read an interview with director Christopher Nolan in Wired Magazine and the question is asked: How are early viewers reacting?

“Some people leave the movie absolutely devastated.  They can’t speak.  I mean, there’s an element of fear that’s there in the history and there in the underpinnings.”

I know I will be one of those leaving the theater devastated.  And imagine how this is coming out during a time of immense tension with Russia and who will control their nukes down the road.

--The Wall Street Journal analyzed Taylor Swift’s Eras Tour, talking to high-ranking concert executives, in an attempt to calculate how much revenue Swift’s shows are generating in ticket sales versus how much money she’s actually taking home in profit.

The record for concert tours via gross concert-ticket revenue figures that artists provide is Elton John’s ongoing “Farewell Yellow Brick Road Tour,” which has run from 2018 to 2023.  The tour thus far has raked in over $887 million.

Back in December, Billboard estimated that Swift’s 52-date U.S. leg would gross about $590 million; the average ticket price being $215.

But with 106 shows worldwide, she could cross the record-breaking $1 billion line, though tickets are generally more expensive in the U.S. than overseas.

Assuming the tour grossed $1 billion, what does the artist make?  Superstars like Swift get paid for the whole tour, not per show.

You have the expense of running the concert, including renting out stadiums, along with production, labor and transportation costs.  Swift’s Eras Tour is one of the more technically ambitious in recent history.

Then the promoter typically gets a 10% cut, according to Billboard.  But Swift can secure something more advantageous.

Some executives told the Journal they expect Swift is taking home 40% to 60% of the estimated $10 million average per-show gross.

The hosting stadium would receive $2 million to $3 million from the estimated $10 million.  From there, Swift pays her staging costs and the promoter’s cut, which together could remove 50% of the remaining $7 million to $8 million.  That gives her about $3.5 million to $4 million in profit per night.

Multiply that by roughly 100 shows, takes you to $350 million to $400 million in profit for the entire 2023-24 tour.

But, what about merchandise sales?  Concert executives told the Journal the Eras Tour is likely grossing another $2 million-plus a night through merchandise.  After paying a merchandise company, of the $2 million-plus in average per-night merch revenue, Swift could be left with around 70%.  Call it $1.4 million in merchandise profit per night.  So for 100 shows, $140 million on top of the $300 million to $500 million from tickets.

Ergo, Swift is looking at possibly over $500 million in profit across tickets and merchandise from the Eras Tour between the U.S. and overseas.

But then add in her Capital One alliance, like her commercials, and album and CD sales.  And she’s experiencing a spike in streaming.  In the week ending June 15, Swift had six different albums in the top 25 of the Billboard 200 Chart.

Bottom line, as Ronald Reagan would have said, when it comes to Taylor Swift’s financial goldmine, ‘Not bad…not bad at all.’

--Richard Ravitch, who rescued New York City’s subways and helped rescue Gotham from the brink of bankruptcy, died.  He was 89.  As Sam Roberts put it in the New York Times:

“Mr. Ravitch never won elective office.  But he left an outsize mark on government at every level as one of the backstage wise men recruited to stave off the financial collapse of New York’s Urban Development Corporation in 1975 and, a few months later, of New York City’s own overdrawn municipal accounts.

“By rallying public support for inventive means of raising revenue, he was also instrumental in rejuvenating the city’s mass transit system in the 1980s as the chairman of the Metropolitan Transportation Authority.”

--And it was a bit ironic that last week I mentioned John Goodenough, the Nobel Prize-winning creator of the lithium-ion battery, in a bit on lithium battery fires.  He died two days after I posted, last Sunday.  Age 100.

In 2019, at age 97 and still active in research at the University of Texas, Dr. Goodenough became the oldest Nobel Prize winner in history.  RIP.

Foreign Affairs, Part II

China: Guess what…nothing of major consequence to report from here this time. 

North Korea: In a lengthy state-media report published on Monday, Pyongyang castigated Washington – though not President Biden by name – for making “desperate efforts to ignite a nuclear war.”  North Korea said any military conflict would result in the most catastrophic consequences and spur a “thermonuclear war unprecedented in the world.”

Pyongyang also expressed its firm support for Vladimir Putin.

Both North and South Korea marked the start of the Korean War last weekend, June 25, 1950.

Israel: The country said its Mossad intelligence service carried out an operation in Iran to capture the suspected leader of an Iranian plot to attack Israeli businesspeople in Cyprus and thwart the attack.

“In a unique operation on Iranian soil, the Mossad captured the head of the cell, who, during an investigation, gave a detailed confession that led to the exposure and dismantlement of the terrorist cell behind the Cyprus attack,” the Mossad said in a statement.  Iranian officials did not comment.  Mossad didn’t say when the capture took place, where the suspect is now nor when the Cyprus attack would have happened.

Prime Minister Benjamin Netanyahu said on Sunday an attack had been foiled but didn’t say when.

France: More than 800 people were arrested and at least 200 police officers injured as the government struggled to restore order on a third night of unrest following the deadly police shooting of a 17-year-old.

Armored police vehicles rammed through the charred remains of cars that had been flipped and set ablaze in the northwestern Paris suburb of Nanterre, where a police officer shot the teen identified only by his first name, Nahel, during a traffic stop.

In several Paris neighborhoods, groups of people hurled firecrackers at security forces.  Some shops were looted along Rivoli street, near the Louvre museum, and at the Forum des Halles, the largest shopping mall in central Paris.

President Emmanual Macron was forced to leave an EU summit in Brussels to return to Paris and hold an emergency security meeting Friday.

Some 40,000 police officers were deployed to quell the protests.  The officer accused of pulling the trigger Tuesday was handed a preliminary charge of voluntary homicide.

My advice to travelers to Paris in particular, keep your guard up…and keep your wallet in your front pocket. And I have to add, I’ve always really liked the Paris police.

Brazil: Former President Jair Bolsonaro’s political career evaporated on Friday as a majority of federal electoral court justices voted to bar him from public office until 2030 for his conduct during last year’s fraught election.

Bolsonaro is accused of creating a nationwide movement to overturn the election result that culminated in the Jan. 8 invasion of government buildings in Brasilia by thousands of his supporters (shades of Jan. 6, 2021).

The lead justice in the case voted to make Bolsonaro ineligible for eight years, saying he had “used (a) meeting (of foreign ambassadors) to spread doubts and incite conspiracy theories.”

Bolsonaro said he may have his wife run in 2026 in his stead. 

Afghanistan: I’ll comment on the State Department’s internal report on the Afghan withdrawal next week.

Random Musings

--Presidential approval ratings….

Gallup: New numbers…43% approve of Biden’s job performance, 54% disapprove; 41% of independents approve…highest since Aug. 2021 (June 1-22).  The prior split was 39-57, 33.

Rasmussen: 44% approve, 54% disapprove (June 30).

A new NBC News survey has Biden’s job approval rating among all registered voters at 43%, 53% disapprove – essentially unchanged from April.

A combined 44% of registered voters say they’d “definitely” or “probably” consider voting for a third-party or independent candidate for president – if the other candidates include Biden and Trump.  That’s actually lower than the 46% who said they’d consider a third-party candidate in 2016.

On the Republican side, among GOP primary voters, Trump is the first choice of 51%, while Ron DeSantis is at 22%.  The split in April was 46-31.

Seven percent select Mike Pence and Chris Christie is at 5%.  [Nikki Haley 4%, Tim Scott* and Vivek Ramaswamy at 3%.]

*I said Scott would be third on July 4th…guess I was wrong.

But while Trump has a big lead in the primary race, about half of Republican voters said they prefer a new leader to Trump, the survey found.

And 61% of voters disapprove of the Supreme Court’s ruling last year overturning federal abortion rights, while only 36% approve.

Another NBC poll found a stunning 74% saying the U.S. is on the wrong track, with just 20% of respondents believing America is moving in the right direction.

The last time voters were that bitter about the nation’s course – in 1992 and 2008 – the party in control of the White House changed hands.

But Biden leads Trump 49% to 45% in a hypothetical matchup, while Biden and DeSantis are in a dead heat – 47% to 47%.

--Speaker Kevin McCarthy on Tuesday had to clean up a little mess he created.  In the morning, during an interview with CNBC, McCarthy wondered whether it would be good for the party to have Donald Trump as its presidential nominee given his legal troubles.

“Can he win the election?  Yeah, he can win that election,” McCarthy said.  “The question is, is he the strongest to win the election; I don’t know that answer.”

The comment immediately irked Trump’s staff and allies, setting off an urgent effort by McCarthy to walk it back.  He contacted right-wing news outlet Breitbart News to offer an exclusive interview in which he said the former president was “stronger today than he was in 2016” and blamed the media for “attempting to drive a wedge between President Trump and House Republicans.”

Pathetic.

--An audio recording in which Donald Trump appears to acknowledge keeping a classified document after leaving the White House was obtained by the media, at first CNN, and then others.

In the recording, the former president is heard rifling through papers and saying: “This is highly confidential.”

The two-minute recording allegedly came from a July 2021 meeting at Trump’s Bedminster, N.J., golf club, with several people working on the memoir of his former chief of staff Mark Meadows present.

Trump is heard saying “these are the papers” and referred to a document as “highly confidential.”

“This was done by the military and given to me,” he says.  “See as president I could have declassified it.  Now I can’t, you know, but this is still a secret.”

It appears to be the same audio recording cited by federal prosecutors in their indictment of Trump.

But it’s not clear from the indictment if the documents referenced in the recording were ever recovered by investigators.

After the recording was revealed, Trump denied it was a classified document in his possession and said it was all “bravado.”

Last Saturday, speaking at the Road to Majority conference in Washington, D.C., hosted by the right-wing evangelical Faith and Freedom Coalition, Trump said he considered each of the two indictments he has received thus far to be a “great badge of courage.”

“Joe Biden has weaponized law enforcement to interfere in our elections,’ Trump said.  “I’m being indicted for you.”

In his speech, Trump attempted to argue that the Presidential Records Act of 1978 made his retention of classified documents legal, even though he has actually been charged under the Espionage Act.

“Whatever document a president decides to take with him, he has the absolute right to take them,” Trump falsely claimed.

“They lie, they cheat, and they steal,” Trump said of Democrats. “This is how they’ve fallen in an attempt to win the 2024 election, and we’re not going to let that happen.”  He then repeated his claim that the 2020 presidential election had been rigged against him.

Speaking to the same group the night before, Chris Christie attacked Trump’s character and accused him of having “let us down.”

“He’s unwilling to take responsibility for any of the mistakes that were made, any of the faults that he has, and any of the things that he’s done,” Christie said, prompting some boos from the crowd.

Trump then mocked Christie on Saturday, falsely saying he was “booed off the stage,” even though he was in fact allowed to finish his remarks.  Trump’s insult was met with loud applause.

J. Michael Luttig / New York Times…Luttig the former U.S. Court of Appeals judge appointed by George H.W. Bush:

“The stewards of the Republican Party have become so inured to their putative leader, they have managed to convince themselves that an indicted and perhaps convicted Donald Trump is their party’s best hope for the future. But rushing to model their campaign on Mr. Trump’s breathtakingly inane template is as absurd as it is ill fated.  They will be defending the indefensible.

“On cue, the Republicans kicked their self-defeating political apparatus into high gear this month.  Almost as soon as the indictment in the documents case was unsealed, Mr. Trump jump-started his up-to-then languishing campaign, predictably declaring himself an ‘innocent man’ victimized in ‘the greatest witch hunt of all time’ by his ‘totally corrupt’ political nemesis, the Biden administration.  On Thursday, he added that it was all part of a plot, hatched at the Justice Department and the FBI to ‘rig’ the 2024 election against him.

“From his distant second place, Gov. Ron DeSantis of Florida denounced the Biden administration’s ‘weaponization of federal law enforcement’ against Mr. Trump and the Republicans.  Mike Pence dutifully pronounced the indictment political. And both Gov. DeSantis and Mr. Pence pledged – in a new Republican litmus test – that on their first day in office they would fire the director of the FBI, Trump appointee Christopher Wray, obviously for his turpitude in investigating Mr. Trump. It fell to Kevin McCarthy, the House speaker, to articulate the treacherous overarching Republican strategy: ‘I, and every American who believes in the rule of law, stand with President Trump against this grave injustice. House Republicans will hold this brazen weaponization of power accountable.’

“There’s no stopping Republicans now, until they have succeeded in completely politicizing the rule of law in service to their partisan political ends.

“If the indictment of Mr. Trump on Espionage Act charges – not to mention his now almost certain indictment for conspiring to obstruct Congress from certifying Mr. Biden as the president on Jan. 6 – fails to shake the Republican Party from its moribund political senses, then it is beyond saving itself.  Nor ought it be saved….

“When Republicans faced an 11th-hour reckoning with another of their presidents over far less serious offenses 50 years ago, the elder statesmen of the party marched into the Oval Office and told Richard Nixon the truth.  He had lost his Republican support and he would be impeached if he did not resign. The beleaguered Nixon resigned the next day and left the White House the day following.

“Such is what it means to put country over party. History tends to look favorably upon a party that writes its own history, as Winston Churchill might have said.

“Republicans have waited in vain for political absolution.  It’s finally time for them to put the country before their party and pull back from the brink – for the good of the party, as well as the nation.”

--In a momentous week for the Supreme Court, one of the biggest rulings of the last few decades came Thursday, when the Court ruled that the race-conscious admissions programs at Harvard and the University of North Carolina were unlawful, curtailing affirmative action at colleges and universities around the nation, a policy that has long been a pillar of higher education.

The vote was 6 to 3, with the court’s liberal members in dissent.

“The Harvard and UNC admissions programs cannot be reconciled with the guarantees of the Equal Protection Clause,” Chief Justice John Roberts wrote for the majority.  “Both programs lack sufficiently focused and measurable objectives warranting the use of race, unavoidably employ race in a negative manner, involve racial stereotyping, and lack meaningful end points.”

But he added that “nothing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration or otherwise.”

The point, he said, was that applicants must be assessed individually.  “In other words,” he wrote, “the student must be treated based on his or her experiences as an individual – not on the basis of race.”

Justice Sonia Sotomayor summarized her dissent from the bench, a rare move that signals profound disagreement.

“The Court cements a superficial rule of colorblindness as a constitutional principle in an endemically segregated society where race has always mattered and continues to matter,” she said in her written dissent.  “The Court subverts the constitutional guarantee of equal protection by further entrenching racial inequality in education, the very foundation of our democratic government and pluralistic society.”

The decision will send schools scrambling to revisit their admissions practices, and complicates diversity efforts elsewhere, such as making it harder for employers to consider race in hiring.

The three justices in dissent stressed that even if the Court did not formally end race-based affirmative action in higher education, its analysis will make it practically impossible for colleges and universities to take race into account.

CNN Chief Legal Analyst Laura Coates sees more confusion in the admissions process.

“I’m still scratching my head, as many admissions officers will be – so ‘I can take into consideration race as part of the student’s experience, but their actual racial group or category cannot be contemplated or taken into account?’” she said.

“While the actual language of the Supreme Court will come across as very intellectualized and esoteric as if in a classroom, in reality, how will this work?  How will you be able to have certain color blindedness, but then at the same time allowed to take into account one’s experiences when race has been a part of that?’ Coates said.

The Court had repeatedly upheld similar admissions programs, most recently in 2016, saying that race could be used as one factor among many in evaluating applicants.  The Court has also upheld affirmative action on the grounds that institutions have a compelling interest to address past discrimination that shut nonwhite students out of higher learning.  Justices have also agreed with arguments that more diverse student bodies promoted cross-racial understanding.

About a quarter of schools said in a 2019 National Association of College Admission Counseling survey that race had a “considerable” or “moderate” influence on admissions, while nearly 60 percent said race had no influence at all.

President Biden on Thursday urged colleges to take into account challenges that applicants face – including racial discrimination – during the admissions process.

The University of North Carolina at Chapel Hill released a statement in response to the Supreme Court’s decision.  “Carolina remains firmly committed to bringing together talented students with different perspectives and life experiences,” the university’s chancellor, Kevin M. Guskiewicz, said. “While not the outcome we hoped for, we will carefully review the Supreme Court’s decision and take any steps necessary to comply.”

Harvard University said it will comply with the Court’s ruling.  “In the weeks and months ahead, drawing on the talent and expertise of our Harvard community, we will determine how to preserve, consistent with the Court’s new precedent, our essential values.”

From here on, more than ever, it’s about the ability of universities to avoid lawsuits.

--Then today the Court issued two more big rulings, both in 6-3 votes.

The Court ruled in favor of a Christian web designer in Colorado who refuses to create websites to celebrate same-sex weddings out of religious objections.  The decision represents a devastating blow to LGBTQ protections, which have in recent years been bolstered by landmark decisions, including one authored three years ago by Justice Gorsuch in which the majority expanded protections for LGBTQ workers, and the 2015 case legalizing same-sex marriage nationwide.

In dissent, Justice Sonia Sotomayor wrote: “Today, the Court, for the first time in its history, grants a business open to the public a constitutional right to refuse to serve members of a protected class.

“Specifically, the Court holds that the First Amendment exempts a website design company from a state law that prohibits the company from denying wedding websites to same-sex couples if the company chooses to sell those websites to the public,” she wrote.

In the other monumental ruling, the Supreme Court ruled that the Biden administration had overstepped its authority with its plan to wipe out more than $400 billion in student debt, dashing the hopes of millions of borrowers and imposing new restrictions on presidential power.

It was a huge setback, though not unexpected, for the president, who had vowed to help borrowers “crawl out from under that mountain of debt.”  More than 45 million people across the country owe $1.6 trillion in federal loans for college, according to government data, and the proposed debt cancellation, announced by Biden last summer, would have been perhaps the most expensive executive action in U.S. history.

Nearly 26 million borrowers have applied to have some of their student loan debt erased.  While the government has approved 16 million applications, no debt has been canceled yet.

All of the above three major decisions will of course have an impact on the 2024 elections.

[I’m neutral on the affirmative action ruling; totally with the Court on the student loan issue because President Biden indeed has no authority to unilaterally spend $430 billion like this (it’s really simple…yes, it’s up to Congress); and on the website ruling, I’m reminded of how the first Black major league ballplayers were often excluded from the same restaurants and hotels their white teammates were welcomed into.  It’s the same principle, though this was a trumped-up case to begin with.]

--The Supreme Court on Tuesday rebuffed a legal theory favored by many conservatives that could hand sweeping power to state legislatures to establish rules for presidential and congressional elections and draft electoral maps giving huge advantages to the party already in control.

The justices, in a 6-3 decision authored by Chief Justice John Roberts, ruled against Republican state legislators in a case arising from a legal fight over their map of North Carolina’s 14 U.S. House of Representatives districts.  The state’s top court last year blocked the map as unlawfully biased against Democratic voters. The legislators had asked the justices to embrace a once-marginal legal theory, called the “independent state legislature” doctrine, that would remove any role of state courts and state constitutions in regulating federal elections.

The theory is based in part on the U.S. Constitution’s statement that the “times, places and manner” of federal elections “shall be prescribed in each state by the legislature thereof.”

“The Elections Clause does not insulate state legislatures from the ordinary exercise of state judicial review,” Roberts wrote of that constitutional provision.

--Earlier, the Supreme Court on Monday allowed Louisiana’s congressional map to be redrawn to add another majority-Black district.  There were no noted dissents.

Louisiana state officials were sued last year for a congressional map – passed by the Republican legislature over Democratic Gov. John Bel Edwards’ veto – that made only one of its six districts majority Black, despite the 2020 census showing that the state’s population is 33% Black.

Earlier in the month, the Supreme Court ruled that Alabama had to re-draw its congressional district maps to include a second majority-owned minority district.

But the court had allowed Louisiana to use its unlawful maps during the 2022 election cycle.

--We learned President Biden is using a continuous positive airway pressure machine, or CPAP, to address a problem with sleep apnea, White House officials admitted Wednesday.

The topic came up because prior to his economic policy speech on Wednesday, reporters saw him with markings on his face.

But the White House provided no other details on what prompted use of the machine and how the sleep apnea may have been treated previously.

While the condition is common, untreated, it can cause forgetfulness, fatigue and sleepiness, and can ultimately lead to cardiovascular disease because of the significant strain it can put on the heart, studies have shown.

To be fair, Biden’s last physical in February noted the president has dealt with “sinus congestion for most of his life,” and that “sinus symptoms have improved after several sinus and nasal passage surgeries.”

Politico in 2008 mentioned Biden’s “reoccurring problem of sleep apnea.”

--Meanwhile, half of Americans believe Hunter Biden received preferential treatment from prosecutors who reached a deal that would allow the dirtball to plead guilty to tax charges but avoid a gun-related conviction, a Reuters/Ipsos poll found.

Americans were divided along partisan lines, with 75% of Republicans seeing preferential treatment compared with just 33% of Democrats.

--Homelessness continues to rise dramatically in southern California, specifically up 9% in Los Angeles County and 10% in the city of Los Angeles last year, according to a report released by the Los Angeles Homeless Services Authority.

Efforts to house people, which include $100s of millions spent on shelter, permanent housing and outreach, have failed to stem the growth of street encampments.

Since the 2015 count, homelessness has increased by 70% in the county and 80% in the city.

--An area the size of Switzerland was cleared from Earth’s most pristine rainforests in 2022, despite promises by world leaders to halt their destruction, new figures compiled by the World Resources Institute and the University of Maryland show.

The equivalent of 11 football fields of primary rainforest were destroyed every minute last year as the planet’s most carbon-dense and biodiverse ecosystems were cleared for cattle ranching, agriculture, and mining, with indigenous forest communities forced from their land by extractive industries in some countries.

The tropics lost a particularly large amount of rainforest in 2022.

The report’s authors warn that humans are destroying one of the most effective tools for mitigating global heating and halting biodiversity loss.

--Ireland just experienced its hottest ever June, breaking an 83-year-old record, with warnings of more frequent and extreme weather events to come.  June was also the warmest on record in the UK.

July is expected to be particularly hot in the UK, Germany, and parts of France. 

--School Resource Officer Scott Peterson was found not guilty of negligence and child neglect in the Parkland, Florida, school shooting that killed 17.  This is why you hire a good lawyer, and Mark Eiglarsh was clearly that in this case.

--The U.S. Coast Guard said it has likely recovered human remains from the wreckage of the Titan submersible and is bringing the evidence back to the United States.

The return of the Titan debris to port in St. John’s, Newfoundland and Labrador on Wednesday is a key piece of the investigation into how the submersible imploded.  Twisted chunks of the 22-foot submersible were unloaded at a Canadian Coast Guard pier.

Pretty remarkable how much they have recovered from such a depth.

---

Pray for the men and women of our armed forces…and all the fallen.

Pray for Ukraine.

Happy Birthday, America!

---

Gold $1926
Oil $70.51

Regular Gas: $3.54; Diesel: $3.86 [$4.85 / $5.77 yr. ago]

Returns for the week 6/26-6/30

Dow Jones  +2.0%  [34407]
S&P 500  +2.4%  [4450]
S&P MidCap  +4.3%
Russell 2000  +3.7%
Nasdaq  +2.2%  [13787]

Returns for the period 1/1/23-6/30/23

Dow Jones  +3.8%
S&P 500  +15.9%
S&P MidCap  +7.9%
Russell 2000  +7.2%
Nasdaq  +31.7%

Bulls 50.0
Bears 18.6

Hang in there.  Have a safe Fourth!

Brian Trumbore

---