Week in Review

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Week in Review

07/08/2023

For the week 7/3-7/7

[Posted 5:30 PM ET, Friday]

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Edition 1,264

As the week comes to an end, still no Yevgeny Prigozhin sighting, two weeks after his mutiny against Vladimir Putin and Vlad’s generals.  A rather poor reflection on Putin’s grasp on the levers of power, even as he attempts to convey a sense of stability.

Meanwhile, as Treasury Secretary Janet Yellen discusses U.S.-China relations with her Chinese counterparts in Beijing, President Xi Jinping was telling his troops, the very day Yellen arrived, to “deepen” preparations for war, as I discuss below.  A bit disconcerting, though far from unexpected.

And as I describe in detail later, the global growth picture is not good, the U.S. in the best shape among the world’s major economies, while inflation in most developed nations is proving to be quite sticky.

But it’s summertime…and the living is easy.  If you are a billionaire, but I digress….

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This Week in Ukraine….

--Over the weekend, Ukraine’s Deputy Defense Minister Manna Maliar called the situation on the battlefield “quite complicated” and “hot everywhere.”

Ukrainian forces have faced staunch Russian defenses, mounting casualties and fields full of land mines.

--President Volodymyr Zelensky warned a “serious threat” remained at the Russian-occupied Zaporizhzhia nuclear plant and said Russia was “technically ready” to provoke a localized explosion at the facility.

Zelensky cited Ukrainian intelligence as the source of his information.  “There is serious threat because Russia is technically ready to provoke a local explosion at the station, which could lead to a (radiation) release,” Zelensky told a joint news conference with visiting Spanish Prime Minister Pedro Sanchez.

Ukraine has previously said Russian troops had mined the plant.

Wednesday, the Kremlin said the threat of some kind of Ukrainian sabotage of the plant is big and measures are being taken to counter such a threat.  Spokesman Dmitry Peskov told reporters the consequences of such sabotage could be catastrophic.  “The situation is quite tense because there is indeed a great threat of sabotage by the Kyiv regime, which could be catastrophic in its consequences,” he said. “The Kyiv regime has repeatedly demonstrated its willingness to do anything.”  He did not present evidence backing his claims.

Zelensky tweeted that he told French President Emmanuel Macron in a telephone call that “the occupation troops are preparing dangerous provocations at Zaporizhzhia.”

He said he and Macron had “agreed to keep the situation under maximum control together with the IAEA,” the UN’s International Atomic Energy Agency.

--Russia said it has brought some 700,000 children from the conflict zones in Ukraine into Russian territory.

“In recent years, 700,000 children have found refuge with us, fleeing the bombing and shelling from the conflict areas in Ukraine,” Grigory Karasin, head of the international committee in the Federation Council, Russia’s upper house of parliament – said late on Sunday on his Telegram channel.

However, Ukraine says many children have been illegally deported (19,492) and the United States says thousands of children have been forcibly removed from their homes.

--In a video posted Monday on a Telegram channel, Yevgeny Prigozhin said he expects “further victories at the front” for the Wagner Group, in his first public comments since shortly after the rebellion he launched, although it wasn’t clear when the video was made.

Prigozhin also claimed to have accomplished many of the goals of the brief revolt, which he said was intended at “fighting traitors and mobilizing (Russian) society.”

There are reports that Wagner troops have been settling in an abandoned military base in central Belarus, but Prigozhin didn’t reveal the location of his video, and he has yet to be seen in person.

--Russia’s FSB security service said on Monday it had thwarted a Ukrainian assassination attempt on Sergei Aksyonov, the Russian-backed head of Crimea, arresting a Ukrainian agent before he was able to blow up Aksyonov’s car.  There was no comment from Ukraine on the Russian allegation.  It came amid Russian media reports that security has been stepped up in Crimea.

--Ukraine said on Monday its troops had regained more ground along eastern and southern fronts in what President Zelensky described as progress in a “difficult” week for Kyiv’s counteroffensive.

Deputy Defense Minister Hanna Maliar also noted a surge in fighting around Bakhmut.

“Last week was difficult on the front line.  But we are making progress,” Zelensky wrote on Telegram.  “We are moving forward, step by step!  I thank everyone who is defending Ukraine, everyone who is leading this war to Ukraine’s victory!”

Oleksiy Danilov, Secretary of Ukraine’s National Security and Defense Council, said the counteroffensive has been “particularly fruitful” in the past few days and Ukraine’s troops are fulfilling their main tasks.

Danilov said: “At this stage of active hostilities, Ukraine’s Defense Forces are fulfilling the number one task, the maximum destruction of manpower, equipment, fuel depots, military vehicles, command posts, artillery and air defense forces of the Russian army.”  But no details.

--Russian Defense Minister Shoigu said on Monday that a brief mutiny by the Wagner Group had not affected Russia’s “special military operation” in Ukraine.  “The provocation did not affect the actions of army groups (involved in the operation),” he told a ministry meeting.

--Dmitry Medvedev, the former Russian president and deputy of the Security Council, said on Tuesday that 185,000 new recruits had joined the Russian army as professional contract soldiers since the start of the year, amid reports Russia had surged a whopping 180,000 into the eastern theater.

--The Kremlin on Wednesday dismissed as “fiction” a Financial Times report that Chinese President Xi Jinping had personally warned President Putin against using nuclear weapons in Ukraine.

The FT, citing unidentified Western and Chinese officials, reported that Xi warned Putin at a face-to-face meeting in March against using his nukes.

The FT cited people close to the Kremlin as saying that Putin had independently decided using tactical nuclear weapons would not give Russia an advantage in Ukraine.  The FT cited the people close to the Kremlin as saying that a nuclear strike was likely to turn areas that Putin has claimed for Russia into an irradiated wasteland while doing little to help his forces advance.

--Belarusian President Lukashenko said on Thursday that Yevgeny Prigozhin was no longer in Belarus, but in Russia.  Talking to reporters, Lukashenko said: “As for Prigozhin, he’s in St. Petersburg.  He is not on the territory of Belarus.”

The president said an offer for Wagner to station some of its fighters in Belarus still stands.  He said he did not see it as a risk to Belarus and did not believe Wagner fighters would ever take up arms against his country.

Russian state TV on Wednesday night attacked Prigozhin and said an investigation was still being pursued.  In the program ’60 Minutes,’ broadcast on Rossiya-1 television, footage was shown that had purportedly been shot during law enforcement raids on Prigozhin’s St. Petersburg office and one of his “palaces.”

Lukashenko said he would meet with Putin in the near future and would discuss the Prigozhin situation with him.  Prigozhin is “absolutely free” and Putin will not “wipe him out,” Lukashenko added.

In comments addressed to the West, Lukashenko said: “We are not going to attack anyone with nuclear weapons.  (As long as) you don’t touch us, forget nuclear weapons. But if you commit aggression, the response will be instantaneous. The targets have been defined.”

The Kremlin then said Thursday it was not tracking Prigozin’s movements.  Dmitry Peskov added no date had yet been set for a meeting between Putin and Lukashenko.

--At least ten people were killed, and 45 wounded, after a missile hit an apartment block in the western Ukrainian city of Lviv, the Interior Ministry said in a statement.  The nighttime attack, a number of cruise missiles, was the heaviest on civilian areas of Lviv since the start of the war.

U.S. Ambassador to Ukraine Bridget Brink described the action as “vicious.”  “Russia’s repeated attacks on civilians are absolutely horrifying,” she tweeted.

Ukraine’s air force reported it intercepted seven of the 10 Kalibr cruise missiles that Russia fired from the Black Sea toward the Lviv region and its namesake city – from more than 500 miles away.

--Ukraine struck several suspected Russian arms depots in occupied territory, including one in the city of Makiivka which produced an enormous fireball captured on video this week.  A top British defense official told the Financial Times that Ukraine is engaging in a campaign to “starve, stretch, and strike” Russian forces in the hopes of creating an opening for ground troops to exploit in the coming days and week.

Deputy Defense Minister Maliar, writing on Telegram, said of the Makiivka attack that “A really large warehouse was destroyed, where a significant number of artillery shells and rockets for the BM-21 ‘GRAD’ anti-aircraft missile system were stored.”

--In an interview with CNN, President Zelensky said: “Almost all of Putin’s army is on the territory of Ukraine.”  Putin “no longer controls the situation in the [border] regions, the security situation,” Zelensky said.  “And that’s why the ‘Wagnerians’ went through Russia so easily” during the Wagner mutiny on June 23, “because there was no one to stop them.”  He also said now is the time to put unspecified additional “pressure on Putin’s regime and himself, when he is so weak.”

--Friday, Ukrainian troops advanced further against Russian forces near Bakhmut, a Ukrainian military spokesman said.

President Zelensky said Kyiv needed long-range weapons from the United States, during a visit to Prague.

“Without long-range weapons it is difficult not only to carry out an offensive mission but also to conduct a defensive operation,” Zelensky said at a news conference with Czech Prime Minister Petr Fiala.  “First of all, we are talking about long-range systems with the United States and it depends only on them today.”

Zelensky has been conducting a foreign tour before a NATO summit next week at which he has urged the military alliance to take concrete steps towards Ukrainian membership.

Ukraine is receiving cluster bombs from the U.S., a big development.  These will be most effective against Russia’s dug in troops.  Top Zelensky adviser Mykhailo Podolyak welcomed the news: “In the great bloody war which has been ongoing for more than 16 months, and which will predetermine the future of the world…the number of weapons matters.  So, weapons, more weapons, and more weapons, including cluster munitions.”

[Anyone who tells you the use of cluster munitions in this situation is wrong, without knowing that Russia has already been using them, and against civilians, is an idiot.]

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--The aforementioned Dmitry Medvedev warned that Moscow’s confrontation with the West will last decades and that its conflict with Ukraine could become permanent.

In an article for the government’s Rossiiskaya Gazeta newspaper, Medvedev said tensions between Russia and the West were “much worse” than during the 1962 Cuban missile crisis.

A nuclear war was “quite probable” but was unlikely to have any winners, said Medvedev, who has repeatedly said Western support for Ukraine increases the chances of nuclear conflict.

Medvedev’s “nuclear saber-rattling” is a tactic designed to frighten the West into reducing its support of Ukraine and instead to lean on Kyiv to start peace talks with Moscow.

--CIA Director William Burns believes negative attitudes toward Russia’s invasion of Ukraine have led to a “once-in-a-generation opportunity,” Burns said during a lecture in London on Saturday.

“Disaffection with the war will continue to gnaw away at the Russian leadership, beneath the steady diet of state propaganda and practical repression.  That disaffection creates a once-in-a-generation opportunity for us at CIA, at our core a human intelligence service,” he said.

Burns added that the intelligence agency is “open for business,” Burns said.

On the issue of the mutiny by Prigozhin, Burns said: “It is striking that Prigozhin preceded his actions with a scathing indictment of the Kremlin’s mendacious rationale for the invasion of Ukraine and of the Russian military leadership’s conduct of the war.”

“The impact of those words and those actions will play out for some time – a vivid reminder of the corrosive effect of Putin’s war on his own society and his own regime.”

Burns cast Prigozhin’s mutiny as an “armed challenge to the Russian state.”

--Moscow remains pessimistic about the prospects of renewing the Black Sea grain deal because no progress has been made in implementing accompanying agreements that pertain to Russian exports, the Kremlin said.  The agreement is set to expire July 18.

--Turkey said it will not lift its opposition to Sweden joining NATO unless it stops harboring groups Ankara considers to be terrorists, President Erdogan said on Monday.  Sweden and Finland applied for NATO membership last year, with Finland then approved.  Applications for membership must be approved by all NATO members, but Turkey and Hungary have yet to clear Sweden’s bid.

Turkey has repeatedly said that Sweden needs to take additional steps against supporters of the outlawed Kurdistan Workers’ Party (PKK) and members of a network Ankara holds responsible for a 2016 coup attempt.  Turkey expects Sweden to stop harboring members of both groups, Erdogan said this week.  Sweden said it has already made the changes Turkey requested last year.  The two sides will meet in Brussels ahead of an upcoming NATO summit in Vilnius.

--NATO Secretary General Jens Stoltenberg has agreed to stay on an extra year, until Oct. 1, 2024.  He had previously announced he would step down, but NATO members were unable to come up with a successor that met everyone’s approval, plus in the current situation, it makes sense to keep a steady hand at the helm.

--American ambassador to Russia Lynne Tracy was granted access on Monday to jailed Wall Street Journal reporter Evan Gershkovich, the State Department said, in the second such visit since his pre-trial detention in March on espionage charges both he and the Journal deny.

A spokesman said, “Ambassador Tracy reports that Mr. Gershkovich is in good health and remains strong, despite his circumstances.”  Attempts by Gershkovich to seek release while awaiting trial have been denied.

But there is optimism actual discussions may be taking place on a prisoner swap.

Opinion….

Volodymyr Zelensky / Wall Street Journal

“America’s Founders upended history when they forged a republic based on individual freedom and political pluralism, pledging to live as ‘free and independent states.’  It was, and is, the greatest attempt in history to rid mankind of tyranny. They broke with centuries of subservience to create a new type of nation, one where all are equal and live free.

“This majestic reality was created on July 4, 1776.  On Feb. 24, 2022, we Ukrainians made the same choice. The American people stood with us and, I am sure, will stand with us to the end. Today, as Americans celebrate their freedom and independence, we celebrate with you and envision the day when every inch of Ukraine is free of the cruel tyranny that seeks to extinguish us.

“A decade ago the current boss of Russia wrote that ‘America is not exceptional.’  What he did later shows what he really meant.  Many tyrants in human history have claimed global influence, but none of them could inspire the rest of the world to strive for the best in human nature.  That’s what today’s Russian tyrants, like all tyrants, are fundamentally weak and their regime will crumble over time. When any tyrant hates America and denies its exceptional role in the struggle for freedom, he recognizes his own inevitable defeat.  To Russian tyranny I say the world needs more, not less, American exceptionalism….

“Russian tyranny is desperately trying to attract other enemies of freedom, in particular the Iranian regime, which tries to threaten free nations all over the world and provides weapons to Russia that kill innocent Ukrainian civilians on a daily basis.  If – God forbid – Russia were to succeed in Ukraine, it would further embolden countries like Iran to take up arms against free peoples elsewhere in the world.  It would encourage Russia to invade deeper into Europe, bringing it into direct confrontation with NATO.

“All such scenarios can be stopped only by the steadfast defense of freedom, those who aspire to freedom, and the alliances created to protect freedom. We Ukrainians and you Americans will never give up on freedom.”

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Wall Street and the Economy

The ISM manufacturing index for June slumped to 46.0 from 46.9, below expectations, a 3-year low, and the eighth straight month under 50 (the dividing line between growth and contraction).  The service sector reading was a stronger than expected 53.9, vs. 50.3 in May.

And then, Friday, we had the June employment report, which came in a bit weaker than expected, 209,000 vs. Econoday’s consensus of 213,000.  But May’s increase was downwardly revised by 33,000 to 306,000, while April’s rise was revised lower by 77,000 to 217,000.  Private payrolls increased by 149,000 last month following a 259,000 increase in May, missing the estimate of 199,000.

The unemployment rate ticked down to 3.6%.

Average hourly earnings were unchanged, 0.4% and 4.4% year-over-year, May’s figures having been revised upward to the same levels.  And that’s not good, sports fans, when it comes to the Fed…yet another reason to hike in 2 ½ weeks.

The Atlanta Fed’s GDPNow barometer for second-quarter growth is at 2.1%.

Freddie Mac’s 30-year fixed-rate mortgage is 6.81%, and headed higher.

Earlier we had a release of the Federal Open Market Committee minutes from its June meeting and a majority of members favored holding the Fed’s policy rate steady, though “some” supported raising it by another 25 basis points.

At the meeting, the committee left interest rates unchanged at 5% to 5.25%, but raised its median rate outlook from 2023 through 2025, among other changes to its Summary of Economic Projections.

Most FOMC members said that leaving the rate unchanged would allow them more time to assess the economy’s progress toward the committee’s goals of maximum employment and price stability, the minutes showed.

Those members who favored raising the target range 25 bps said the labor market continued to be “very tight, momentum in economic activity had been stronger than earlier anticipated, and there were few clear signs that inflation was on a path to return to the committee’s 2% objective over time.”

FOMC members concurred that inflation was “unacceptably high,” while the recent cooling in prices was slower than they had expected, according to the minutes.  Almost all participants “judged that additional increases in the target federal funds rate during 2023 would be appropriate.”

Dallas Fed President Lorie Logan, a voting member of the FOMC this year, said in a central bank panel at Columbia University on Thursday: “I remain very concerned about whether inflation will return to target in a sustainable and timely way.  And I think more-restrictive monetary policy will be needed to achieve the [FOMC’s] goals of stable prices and maximum employment.”

Logan said she was one of the participants at the June meeting pushing for a 25-basis point rate increase but agreed that it made sense to pause increases due to the uncertainty in the environment.

However, that does not mean that the FOMC has completed its tightening process, she said.

“Some people say a lot of further cooling is in store from lagged consequences of the rate increases the FOMC has already made over the past year and a half,” Logan said.  “I’m skeptical about the potential for large additional effects from this channel.”

“If we lose ground in our effort to restore price stability, we will need to do more later to catch up,” she said.  “The rate increases we’d need to keep inflation expectations anchored in that scenario would be far worse for workers, communities, households, businesses and banks than more modest increases now.”

After today’s jobs report, we have a reading on consumer prices next week and then it’s on to the July 25-26 FOMC gathering. 

Finally, on the topic of Treasury Secretary Janet Yellen’s trip to Beijing, China welcomed her after announcing export controls on gallium and germanium – two obscure minerals key to the production of semiconductors.  And now the Biden administration is setting restrictions on Chinese companies’ access to U.S. cloud-computing services that use AI chips.

But China’s move could have far wider consequences than the U.S. one.

China is going after raw materials, with gallium and germanium both on the U.S. government’s list of minerals “critical to the U.S. economy and national security.”

[The Pentagon said on Thursday it holds a strategic stockpile for germanium but currently has no inventory reserves for gallium, a spokesperson said.  “The (Defense) Department is proactively taking steps using Defense Production Act Title III authorities to increase domestic mining and processing of critical materials for the microelectronics and space supply chain, including gallium and germanium.”]

In a warning to the rest of the world, Chinese state-run newspaper the Global Times said the move shows “China will not be passively squeezed out of the global semiconductor supply chain.”

China’s sluggish economic recovery ought to weaken its position when it comes to talks with the U.S. but the risk of losing its dominance seems to have emboldened Beijing.

President Xi Jinping urged countries to avoid decoupling and cutting international supply chains, just a day after announcing the export controls.  But as Yellen’s visit is intended to reassure China the U.S. is not decoupling, the escalation of the tit-for-tat fight completely undermines that.

Friday, Yellen leveled a forceful objection to punitive measures the Chinese government has taken against foreign firms, as she made her comments surrounded by executives from some of the most powerful companies.  At an event held by the American Chamber of Commerce in China, the business leaders (including representatives of Boeing, Bank of America and the agricultural giant Cargill) described the difficult, even hostile conditions they face doing business in China.

Yellen, in also noting Beijing decision to impose export controls on critical minerals, said the moves suggested the Biden administration’s efforts to make U.S. manufacturers less reliant on China were justified.

Editorial / Wall Street Journal

“China accounts for about 94% of global gallium production, and China wants everyone to know it will use minerals as a political weapon.  Beijing wants the U.S. to stop limiting tech exports to China that could have military uses, even as Beijing sprints to expand its navy and weapons to push the U.S. out of the Western Pacific.

“Ms. Yellen shouldn’t fall for it.  The Chinese have played the critical mineral card before, notably in 2010 when they temporarily halted exports to Japan after a collision at sea near disputed islands.

“The main result of that gambit was to encourage the rest of the world to produce more rare-earth metals.  The U.S. Geological Survey says China’s share of rare-earth output has fallen to 70% from 98%.  The same could happen to gallium and germanium.

“It isn’t clear what Ms. Yellen hopes to get from her cross-Pacific trip.  The Treasury Secretary has been the Administration’s ‘good cop’ on China relations, saying that any decoupling of the U.S.-China economies would be a disaster.  The costs would be high, but perhaps more for China as its economy fails to rebound as fast as predicted from the end of its Covid lockdowns.  China needs foreign investment and Western technology.  Beijing also wants the U.S. to stop fortifying Taiwan against a possible Chinese invasion, though the U.S. is still doing far too little and too slowly.

“Secretary of State Antony Blinken traveled to Beijing last month for talks, and by all public signs he came home empty-handed.  He met with Mr. Xi, but China refused even to re-engage with military-to-military talks that could prevent a misunderstanding. The U.S. has such a ‘deconfliction’ process with Russia amid the Ukraine war.  China also partly banned the sale of products made by Micron Technology, the big U.S. memory-chip maker.

“Talking with China is necessary, but the Biden Administration has been so eager for talks, and to set up another meeting between Mr. Xi and President Biden, that it looks unseemly. Fine with us if Mr. Biden eases the Trump tariffs on Chinese consumer goods, since those haven’t changed Chinese behavior while they hurt U.S. consumers.  But any other economic concessions deserve to wait until China stops behaving like a military aggressor.”

Europe and Asia

We had the June PMI figures for the eurozone, and the manufacturing index was 43.4 vs. 44.8 in May, a 37-mo. low.  The services figure was 52.0 vs. 55.1. The composite for the EA20 49.9 vs. May’s 52.8.

Germany: 40.6 mfg. (37-mo. low); 54.1 services
France: 46.0; 48.0 vs. 52.5 prior
Italy: 43.8 (38-mo. low); 52.2
Spain: 48.0; 53.4
Ireland: 47.3; 56.8
Netherland: 43.8 mfg.
Greece: 51.8 mfg.

UK: 46.5 mfg., 53.7 services

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank:

“There is growing evidence that the capital-intensive industrial sector is reacting negatively to the ECB’s interest rate hikes.  Companies surveyed reduced their headcounts for the first time since January 2021, and purchasing activity declined at one of the worst rates on record.  Cuts to sales prices for the second month in a row come as no surprise given the weakness in demand and rapid rate of cost deflation.

“The downturn is visible across the board geographically as all four of the biggest eurozone countries remained in contraction in June. In terms of new orders, the weakness in demand is most pronounced in Germany, followed by Italy and France….

“In the services sector, which after a weak final quarter of 2022 had picked up speed at the beginning of the year, all major euro countries have again lost considerable momentum.  The slowdown in business activity growth was accompanied by a weaker rise in new business, lower price increases and a decline in business expectations.  However, job creation in the service sector last month remained roughly as solid as in the previous month.  Overall, there is much to suggest that the slowdown in growth will continue in the coming months.”

Separately, retail sales for May in the eurozone were unchanged vs. April, down 2.9% from a year ago.

Turning to Asia…China’s private Caixin PMI figures were released for June, 50.5 on manufacturing, and 53.9 on services, down from May’s 57.1.  Further signs of a stalling economy.

Separately, China banned food imports from 10 Japanese prefectures, including Fukushima, while also deciding to fully screen all shipments from other regions, instead of just spot checking, amid concerns of residual nuclear contamination.

The General Administration of Customs said the plan to discharge the water from the 2011 nuclear disaster “failed to fully reflect expert opinions” and that it will take “all necessary measures” to ensure the safety of Chinese consumers.

Japan’s June manufacturing PMI came in at 49.8 vs. 50.6 in May. The service sector reading was 54.0.

May household spending (a key metric in Japan) was down 4.0% year-over-year.

South Korea’s manufacturing PMI in June was 47.8%, further contraction.

Taiwan’s was 44.8.  Meanwhile, Taiwan’s exports fell more than expected in June, clocking their worst decline in almost 14 years, as the island struggled with persistent weakness in demand from the United States and China for its tech products, as well as a dour outlook.

June exports plunged by 23.4% in value, year on year, the finance ministry said Friday, marking the 10th consecutive month of decline.

Street Bytes

--The unexpectedly strong ADP jobs figure Thursday suggested that hiring by private employers was much stronger last month than expected, and this, coupled with the Fed minutes,  propelled interest rates higher, stocks swooning in response.

Today’s jobs report didn’t help, while tamer, and the major indexes finished down on the holiday-shortened week…the Dow Jones losing 2% to 33734, while the S&P 500 lost 1.2% and Nasdaq 0.9%.

Next week, aside from the key consumer price data, second-quarter earnings will start trickling out, before the deluge the following three weeks.  Oh joy.

--U.S. Treasury Yields

6-mo. 5.47%  2-yr. 4.94%  10-yr. 4.06%  30-yr. 4.04%

The 10-year yield surged to 4.06% from 3.84% last Friday.  The 4.09% level is deemed to be important from a technical standpoint, with last year’s closing high at 4.25%, intraday 4.34%.

The 2-year yield hit 5.10% this week, highest since 2007, before backing off.

Global bond yields climbed to their highest level since 2008 this week on the U.S. jobs data and further rate hikes to come from various central banks.

--Crude oil, as measured by West Texas Intermediate, that which I quote each week below, has been mired in a range of $69 to $73 the past nine weeks, despite supply cuts announced by Saudi Arabia, and then on Monday, both from the Saudis and Russia.

Saudi Arabia, the world’s biggest crude exporter, on Monday said it would extend its voluntary output cut of 1 million barrels per day to August.  Russia and Algeria, meanwhile, are lowering their August output and export levels by 500,000 bpd and 20,000 bpd respectively.  Russia-Saudi oil cooperation is still going strong as part of the OPEC+ alliance, which will do “whatever necessary” to support the market, Saudi energy minister Prince Abdulaziz bin Salman said on Wednesday.

But investors need to see inventories being drawn down for there to be any substantial price movement higher. 

And while the Saudis talk of cooperation with Russia, they are furious Russia has been dumping off oil to India and China at well below market rates, to bring in cash for their war effort.  Iran has also been dumping “cheaper” crude on the likes of China.  The Saudis need $80 oil to fund MBS’s ambitious plans.

But it hasn’t helped that U.S. crude output this year through April was up 9% from a year ago, on track for a record-breaking year, surprising analysts given that the price has been sliding and the country’s shale boom was showing signs of peaking.  The surge is being driven in part by improved production efficiency.

Production has also been on the rise in Brazil, Canada and Norway.  Increased output in countries outside OPEC is making up for about two-thirds of the alliance’s cuts, according to estimates by Rystad Energy.

Well, crude did close today over $73 ($73.70), so we’ll see if it sticks.

Separately, cutting oil and gas production would be “dangerous and irresponsible,” the boss of energy giant Shell told the BBC this week. Wael Sawan insisted that the world still “desperately needs oil and gas” as moves to renewable energy were not happening fast enough to replace it.

He warned increased demand from China and a cold winter in Europe could push energy prices and bills higher again.

Sawan angered climate scientists who said Shell’s plan to continue current oil production until 2030 was wrong.

Last year the European Commission outlined how the EU would speed up its shift to green energy to end its dependency on Russian oil and gas.  But many countries do not have the infrastructure to move to more sustainable forms of energy.

And Wednesday, Exxon Mobil Corp. signaled second-quarter operating profits fell on lower natural gas prices and weaker oil refining margins, according to a regulatory filing.  The snapshot of results indicates earnings from oil and gas production – its largest business – will retreat from the $6.5 billion that business delivered in the first quarter.  The lower natural gas prices cut gains by about $2 billion, the filing showed.  Exxon’s shares fell about 4%.  The company reports earnings on July 28.

--U.S. new-vehicle sales were estimated to have risen about 13% during the first half of the year, a pace far ahead of industry forecasts as car buyers shake off concerns about rising interest rates and inflationary pressures.

Industrywide sales totaled about 7.7 million vehicles in the January-to-June period, according to an estimate from research firm Wards Intelligence issued Wednesday.  The annualized rate of 15.7 million could hit 16 million by the end of the year, which would be the strongest performance since the period of 2015-2019, when annual U.S. sales were in a 17.1 million to 17.55 million range all five years.

Among the numbers for second quarter, first half, and/or June auto sales…

General Motors on Wednesday reported a 19% year-over-year increase in second-quarter U.S. vehicle deliveries amid double-digit growth for each of its four primary brands and a more than doubling in electric vehicle sales.  GM reported 691,978 total vehicles sold during the quarter, including 15,652 electric vehicles.  In the second quarter of 2022, the company delivered 582,401 vehicles, which included 7,300 EVs.

In the first half of the year, deliveries gained 18% from a year ago to 1.3 million units.  The company sold 36,322 EVs in the first six months.

Total Chevrolet sales were up 17% during the quarter, with the Bolt EV and electric utility vehicles climbing 101% on an annual basis.  Cadillac sales rose 15% during the quarter, while Buick’s advanced 48%.  GMC reported an 18% rise.  GM said sales to commercial and government customers increased 93% for Chevrolet Equinox and GMC Terrain, and 13% for full-size sports utility vehicles.

Ford Motor reported a rise in second-quarter U.S. sales as well, driven by easing supply chain snags and pent-up demand.  Sales rose about 10% to 531,662 vehicles, the company said.

Ford’s quarter was powered by a 26% jump in truck sales, one of the company’s main profit drivers.  Sales of the electric version of the company’s popular F-150 truck more than doubled to 4,466 vehicles from last year.  However, Ford’s overall EV sales fell 2.8% to 14,843 vehicles in Q2 amid lingering supply issues (but were up 11.9% year-to-date, and up 35.5% in June)

Toyota Motor’s North America unit posted U.S. sales in June of 195,448 vehicles, up almost 15% on a volume and daily selling rate compared with the same month a year ago.  The company said June sales of electrified vehicles were 51,535, which was about 26% of monthly sales.  First half U.S. sales were about 1.04 million vehicles, down 0.7%, while H1 electrified vehicle sales were 270,476, 26% of year-to-date sales.  [Q2 sales rose 7.1%.]

Tesla said it delivered a record number of vehicles in the three months to the end of June, after cutting prices to boost sales.

It has lowered prices in markets including the U.S., UK and China to compete with rival manufacturers.  Last weekend, major Chinese car makers also reported a surge in sales in June.

On Sunday, Tesla said it delivered 466,140 vehicles in the second quarter, which was more than 80% higher than a year earlier. 

Meanwhile, the company said it had increased production to nearly 480,000 in the same period.

The 466,000 units compares with about 423,000 delivered in the first quarter of 2023, and about 255,000 in the second quarter of 2022, when much of China was locked down due to Covid-19.

Wall Street was looking for deliveries of about 445,000 to 447,000 cars.  For the full year the Street expects Tesla to deliver around 1.8 million units.

Tesla shares rocketed higher by about 7% on the week, following the news.  The company reports earnings July 19.

Rivian Automotive beat market estimates for second-quarter deliveries on higher production and stable demand for its electric vehicles and its shares rose more than 14% on Monday.  The quarterly delivery numbers are a positive sign for the EV startup that has for months struggled to raise output in the face of supply-chain disruptions and stiff competition from Tesla.

Rivian, which makes R1T pickup trucks and R1S SUVs, delivered 12,640 vehicles in the second quarter, compared with a consensus forecast of 11,000.

--Volvo, the Swedish automaker majority-owned by China’s Geely, said sales of its fully electric models jumped 346% in June from a year earlier.  That powered a 33% gain in the company’s overall sales last month, it said Wednesday.

The news follows Chinese EV maker BYD’s report earlier that sales nearly doubled in June from a year earlier to 253,046 from 134,036.  BYD is backed by Warren Buffett’s Berkshire Hathaway.

Volvo’s biggest market is in Europe, whereas BYD and Tesla are the leaders in China, the biggest market for EVs in the world. European sales for Volvo’s fully electric range climbed more than 500% in June (5,500 vs. 880).  Volvo plans to only make electric cars by 2030.

--JetBlue said it will end a partnership with American Airlines in the Northeast after losing a court fight over the deal, and will instead focus on salvaging its proposed purchase of Spirit Airlines.

JetBlue Airways said it will not appeal a federal judge’s ruling blocking the deal with American.

With its decision, JetBlue said the Justice Department should reconsider its opposition to a JetBlue-Spirit combination.

The DOJ sued to block both the JetBlue-American deal and JetBlue’s agreement to buy Spirit for $3.8 billion on grounds that they would hurt competition.

For its part, American said it respects JetBlue’s decision, but it will press ahead with its own appeal in the case.

While the deal with American helped JetBlue grow in one region of the country, buying Spirit would let JetBlue grow quickly to nearly 10% of the nationwide air-travel market. That would make JetBlue much closer in size to United, Delta, Southwest and American.

A trial has been scheduled for October in the Justice Department’s lawsuit against the JetBlue-Spirit merger.

--TSA checkpoint numbers vs. 2019

7/6…97 percent of 2019 levels
7/5…99
7/4…80…2,000,957
7/3…83
7/2…90
7/1…110
6/30…132…all-time checkpoint record…2,884,683
6/29…132…2,751,137

--Meta Platforms launched its Twitter rival app Threads.  “Threads – Instagram’s text-based conversation app,” says the product description page, “is where communities come together to discuss everything from the topics you care about today to what’ll be trending tomorrow.”

Meta shares rose nearly 3% on Wednesday after the timing of the release was revealed.

Meta then announced the Threads app garnered more than 30 million sign-ups in its first eighteen hours, which is a far cry from Twitter’s more than 300 million.  Then again, a reported 70 million the first day isn't too shabby.

While Threads is a standalone app, users can log in using their Instagram credentials, which makes it an easy addition for Instagram’s more than 2 billion monthly active users.  Existing ad relationships from Instagram and Facebook should help Threads’ revenue.

“There should be a public conversation app with 1 billion-plus people on it,” Meta founder Mark Zuckerberg said in a post on Threads.  “Twitter has had the opportunity to do this but hasn’t nailed it.  Hopefully we will.”

The Threads launch coincides with new frustration among Twitter’s most active users after Twitter on Saturday started limiting the number of daily posts that its users can read.  In a blog post on Tuesday, Twitter said that it has taken the “extreme measures” to remove spam and bots from the app, adding “effects on advertising have been minimal.”

A few hours after Threads went live, Elon Musk tweeted: “It is infinitely preferable to be attacked by strangers on Twitter, than indulge in the false happiness of hide-the-pain Instagram.”  On Thursday, a Twitter attorney sent a letter to Meta questioning whether the launch of Threads represented a “misappropriation” of trade secrets or intellectual property, alleging that Meta has hired Twitter employees and assigned them to work on Threads, as first reported by Semafor.

An Instagram executive responded on Threads: “No one of the Threads engineering teams is a former Twitter employee – that’s just not a thing.”

--Traffic for OpenAI’s ChatGPT chatbot may have started to simmer down, according to the research firm Similarweb.  The firm says worldwide traffic in June for ChatGPT was 9.7% lower than in May, while the number of unique visitors dropped 5.7%. The amount of time visitors spent on the site declined by 8.5%.

It marks the first month the chatbot’s traffic has fallen since its release in late November last year.

--Apple reportedly slashed its production target for Vision Pro, the company’s new mixed-reality headset.  According to the Financial Times, Apple had hoped to sell 1 million units in the first 12 months of sales, but that target has been more than halved because of design and production issues.  The device, which was launched on June 5th, will go on sale early next year.

Gee, ya think the $3,500 retail price has something to do with it?

--More than 300,000 United Parcel Service workers are closer to striking after the company failed to reach an agreement with the International Brotherhood of Teamsters, threatening to plunge the U.S. supply chain into disruption if a deal isn’t reached this month.

Weeks of talks between UPS and the Teamsters fell apart early Wednesday morning in Washington after stretching through the July 4 holiday, with negotiators emerging just after 4 a.m. Eastern time to say the talks had collapsed.

The two sides quickly traded barbs on who was to blame for the breakdown.

There is still time to reach a deal.  The current labor contract – the largest private-sector union agreement in the U.S., covering 330,000 workers – expires at the end of July, but labor leaders have said they need a few weeks to educate their members and persuade them to ratify it.  Union employees will not work beyond July 31 when the current contract expires, a Teamsters spokeswoman said.  No more bargaining sessions are scheduled.

--The U.S. Food and Drug Administration on Thursday granted traditional full approval to the Alzheimer’s drug Leqembi, the first medicine proven to slow the course of the memory-robbing disease.

The decision is expected to trigger a change in how the Centers for Medicare and Medicaid Services covers the drug, broadening access for up to an estimated million people with early forms of the disease.

“Today’s action is the first verification that a drug targeting the underlying disease process of Alzheimer’s has shown clinical benefit in this devastating disease,” Teresa Buracchio, acting director of the Office of Neuroscience in the FDA’s Center for Drug Evaluation and Research, said in the announcement.  “This confirmatory study verified that it is a safe and effective treatment for patients with Alzheimer’s disease.”

Leqembi, from drugmakers Eisai and Biogen, received accelerated approval in January based on evidence that it clears amyloid plaque buildups in the brain that are associated with Alzheimer’s.  But because of an earlier coverage decision by CMS, which provides insurance coverage for many elderly people with Alzheimer’s through Medicare, the drug hasn’t been widely used.  It costs $26,500 annually before insurance coverage.

The drug was approved only for people with early forms of Alzheimer’s disease, those with mild cognitive impairment or mild dementia who have been confirmed to have amyloid plaques in their brains.  Estimates are that group constitutes about a sixth of the more than 6 million Americans currently diagnosed with Alzheimer’s.

Leqembi is not a cure, and aside from the price, it’s hard to administer (an IV infusion once every two weeks).  But in an 18-month clinical trial, the drug slowed declines in cognitive ability and function by 27%.

The key is this discovery will lead to better treatments down the road.

--“Indiana Jones and the Dial of Destiny” got off to a poor start in its domestic debut, just $80-$85 million through the Fourth of July holiday. While an estimated $82 million gross through the first days of release isn’t that shabby for a legacy sequel, “Dial of Destiny” is one of the most expensive films ever produced by Disney and Lucasfilm.  The fifth and final installment of a 40-year franchise starring Harrison Ford carried a production budget of $295 million. Along with an underwhelming debut overseas and upcoming July releases like “Oppenheimer” and “Mission: Impossible 7” that also look to target older viewers, things aren’t looking bright for “Indiana Jones.”

Disney had another film, the Pixar animated adventure romance “Elemental,” which is up to $92 million domestically, but it cost $200 million to produce.

Foreign Affairs, Part II

China: President Xi on Thursday urged the military to deepen war and combat planning to increase the chances of victory in actual combat, Xinhua news agency said, renewing his call to troops to safeguard China’s sovereignty and territory.

Xi said the world has entered a new period of turmoil and change and China’s security situation has become more unstable and uncertain, according to Xinhua, in comments he made to troops while on an inspection tour of the Eastern Theater Command.

The command, headquartered in Jiangsu province, is responsible for the security of eastern China, including the East China Sea and the Taiwan Strait.  Earlier this year, Xi, in comments after securing a precedent-breaking third term as president, called on China to step up its ability to safeguard national security and turning its military into a “Great Wall of Steel.”

China has repeatedly called on U.S. officials not to engage with Taiwanese leaders, viewing it as support for Taiwan’s desire to be viewed as separate from China.

Xi’s call to step up combat-readiness came as Secretary Yellen arrived in Beijing.  “We must persist in thinking and handling military issues from a political perspective, dare to fight, be good at fighting, and resolutely defend our national sovereignty, security, and development interests,” Xi told the Eastern Theater Command.

On a different topic, Hong Kong police on Monday accused eight overseas-based activists of serious national security offenses including foreign collusion and incitement to secession and offered rewards for information leading to any arrest.

“They have encouraged sanctions…to destroy Hong Kong and to intimidate officials,” Steve Li, an officer with the police’s national security department, told reporters.  Issuing wanted notices and rewards of HK$1 million ($127,656) each, police said the assets of the accused would be frozen where possible and warned the public not to support them financially.

The notices accused the activists of asking foreign powers to impose sanctions on Hong Kong and China.

The eight are in the U.S., Britain and Australia.  British Foreign Secretary James Cleverly criticized the decision to issue the arrest warrants and said his government “will not tolerate any attempts by China to intimidate and silence individuals in the UK and overseas.”

Josh Rogin / Washington Post

“The July 1 anniversary of Hong Kong’s 1997 handover to China from British rule used to be a day of celebration in the city.  Now, it has morphed into a morbid reminder of Hong Kong’s tragic decline under the ever-worsening repression brought on by Beijing.

“One might think that Chinese authorities, having quashed the pro-democracy protests that erupted in 2019, would ease up.  After all, they’ve shuttered all free media, neutered judicial independence, destroyed civil society and suppressed all political opposition.  But since last year, the Chinese government has ramped up its effort to snuff out Hong Kong’s autonomy and Hong Kongers’ rights, even while exporting its authorization around the world.

“Many have written off Hong Kong.  But paying continued attention is crucial because it tells us something important about the character of Xi Jinping’s government. For the Chinese Communist Party today, too much repression is never enough. China is becoming more emboldened.  That spells danger for Taiwan and the rest of the world – unless the lessons of Hong Kong are learned.

“ ‘In the early 1990s, the West was swept up in the euphoria of the post-Cold War era.  We fundamentally failed to internalize the lessons of the Tiananmen Square massacre and what it told us about the brutality of the Chinese Communist Party,’ said Rep. Ritchie Torres (D-N.Y.), a member of the House Select Committee on the CCP.  ‘We must not repeat that mistake for Hong Kong.’

“It’s no coincidence that Hong Kong authorities have gone out of their way to shut down any reference to the 1989 massacre of student protesters in Tiananmen Square.  Many Hong Kongers were jailed and charged with ‘inciting a riot’ for simply lighting candles in June 4 vigils commemorating the Tiananmen victims….

“The CCP’s efforts to shut down any inkling of criticism have reached a high level of paranoia….

“The Chinese government is also going after anyone overseas who dares to criticize its Hong Kong policies.  In June, Hong Kong’s former chief executive publicly demanded that the British police ‘investigate’ an event to publicize ‘Sheep Village,’ a collection of children’s books about the democracy movement written by activists.  The host, regretfully, canceled the event….

“On Thursday [Ed. June 29], 31 U.S. senators wrote an open letter pledging that the United States and other countries will ‘hold the CCP and the Hong Kong government accountable for their destruction of Hong Kong’s freedom, autonomy, and rule of law.’  It’s past time for the U.S. government and Congress to back up those words with actions….

“The Biden administration should announce that Hong Kong Chief Executive John Lee is not invited to the November meeting of the Asia-Pacific Economic Council in San Francisco, because the United States has sanctioned him for human rights abuses in Hong Kong.  The U.S. government also must do more to protect Hong Kongers from the long arm of China’s transnational repression when they are on American soil.

“The most important lesson the world must learn from the tragedy in Hong Kong relates to Taiwan.  Hong Kong proves that Beijing’s proposal of ‘one country, two systems’ is a delusion – and that any promises Xi makes regarding Taiwan’s continued autonomy under reunification are worthless.

“Xi’s China is a totalitarian regime that seeks nothing less than total control of China and everything it sees as part of China, including Hong Kong and Taiwan.  That pattern is undeniable and we ignore it at our own peril.”

Israel: Israel withdrew troops from the West Bank militant stronghold of Jenin on Tuesday, after carrying out one of their biggest military operations in the occupied West Bank in nearly two decades.  Israel warned it was not a one-off.

The nearly 48-hour operation was meant to crush militant groups in the densely populated Jenin refugee camp, where some 14,000 people live, and deter and prevent attacks on Israelis emanating from the camp. 

Israel claims its forces uncovered underground explosives caches, one concealed in a tunnel under a mosque, confiscated 1,000 weapons and arrested 30 suspects.

While this week’s raid had broad support across Israel’s political spectrum, some argued the impact is short-lived, with slain gunmen quickly replaced by others.

The army claimed to have inflicted heavy damage on militant groups in the operation which included a series of airstrikes and over 1,000 ground troops.  But it remained unclear whether there would be any lasting effect after nearly a year and a half of heavy fighting in the West Bank.

There was further escalation on Tuesday with a car-ramming and stabbing attack claimed by Palestinian Hamas in Israel’s business hub Tel Aviv, in which eight people were hurt.

Ahead of the withdrawal, Israeli Prime Minister Benjamin Netanyahu vowed to carry out similar operations if needed.

“At these moments we are completing the mission, and I can say that our extensive operation in Jenin is not a one-off,” he said during a visit to a military post on the outskirts of Jenin.  “We will eradicate terrorism wherever we see it and we will strike at it.”

Palestinians returned to the scarred streets on Wednesday and set about repairing the 75-year-old refugee camp.  Thousands who fled the fighting began returning.

Twelve Palestinians, at least five of them fighters, and one Israeli soldier were killed.  The Israeli soldier may have been killed by friendly fire, which is being investigated.

Thursday, two rockets were fired from southern Lebanon toward Israel, prompting cross-border strikes by the Israeli military.  One of the missiles from Lebanon fell short of the border, the other hit a disputed area at that border.  The IDF then struck the area from which the launch was carried out in Lebanese territory.

Iran: The U.S. Navy said it had intervened to prevent Iran from seizing two commercial tankers in the Gulf of Oman on Wednesday, in the latest in a series of attacks on ships in the area since 2019.  The Navy said an Iranian naval vessel had approached the Marshall Islands-flagged oil tanker TRF Moss in international waters and “The Iranian vessel departed the scene when the U.S. Navy guided-missile destroyer USS McFaul arrived on station,” the statement said, adding that the Navy had deployed surveillance assets including maritime patrol aircraft.

The Navy said about three hours later it received a distress call from a Bahamas-flagged oil tanker Richmond Voyager while the ship was more than 20 miles off the coast of Muscat, Oman, and transiting international waters.  “Another Iranian naval vessel had closed within one mile of Richmond Voyager while hailing the commercial tanker to stop,” the Navy statement said, adding that the McFaul directed course toward the merchant ship at maximum speed. 

“Prior to McFaul’s arrival on scene, Iranian personnel fired multiple, long bursts from both small arms and crew-served weapons,” the Navy said.  “Richmond Voyager sustained no casualties or significant damage.  However, several rounds hit the ship’s hull near crew living spaces.  The Iranian navy vessel departed when McFaul arrived.”

Oil major Chevron later confirmed it managed the Richmond Voyager and that crew onboard were safe and the vessel was operating normally.

Vice Admiral Brad Cooper, commander of U.S. Naval Forces Central Command, cited “the exceptional effort by the McFaul crew for immediately responding and preventing another seizure.”  Iran seized two oil tankers in a week just over a month ago.

“Since 2021, Iran has harassed, attacked or seized nearly 20 internationally flagged merchant vessels, presenting a clear threat to regional maritime security and the global economy,” the Navy statement added.

About a fifth of the world’s supply of seaborne crude oil and oil products passes through the Strait of Hormuz, a chokepoint between Iran and Oman.

Friday, Iran’s Revolutionary Guards seized a tanker holding 900 metric tons of “smuggled fuel” and 12 crew members based on a court order, a report by the semi-official Fars news agency said.  No further details were given.

Afghanistan: I didn’t have a chance as I was posting last Friday to write about the State Department report released that afternoon that faulted the agency’s crisis management and awareness before and during the fall of Afghanistan, findings that will be trumpeted by Republicans and other critics who have charged that bureaucratic lethargy played a significant role in the chaos and violence that unfolded nearly two years ago during the Biden administration’s darkest moment.

The report says President Biden and his predecessor, Donald Trump, each failed to appreciate how a U.S. military pullout would affect the Afghan government’s stability, and that standard summer diplomatic rotations in the weeks ahead of Kabul’s collapse left the U.S evacuation in the hands of personnel who in some cases had been in the country for only a few days or weeks.

The timing of the release of the report – with no notice and ahead of a long holiday weekend – drew further anger from those who have said the administration has tried to downplay scrutiny of its actions during the spring and summer of 2021.

The State Department redacted large portions of the report, releasing 23 of its 87 pages, citing security concerns.

At the top, officials gave “insufficient senior-level consideration of worst-case scenarios and how quickly those might follow” after Biden affirmed Trump’s decision to pull the U.S. military from Afghanistan.

Before the Afghan government’s collapse, “it was unclear who in the [State] Department had the lead” on preparations for a full evacuation of the country, the report found.

Once the Taliban drew near Kabul and the United States began the full withdrawal, the Biden administration’s communications made the evacuation more chaotic and dangerous than it would have been otherwise, the report said.

While more than 120,000 people were pulled from harm’s way in an extraordinary airlift effort spearheaded by the U.S. military, tens of thousands of others who had assisted the American war effort over two decades of conflict were left behind in an effort overshadowed by tragedy, including a gruesome suicide bombing (where 13 U.S. soldiers were killed), a botched U.S. drone strike that killed 10 innocent people, and surging crowds that resulted in some people being trampled to death.

Rep. Michael McCaul (R-Tex.), chairman of the House Foreign Affairs Committee, has called the evacuation effort “disastrous” and called Friday for the full report to be released, saying the redacted pages were not classified.

The report reflects very poorly on the leadership, or lack thereof, of Secretary of State Antony Blinken.

Venezuela: The country celebrated 212 years of independence on Wednesday, with a military parade overseen by President Nicolas Maduro.  Preparations did not go well.  One of the country’s Russian-made Sukhoi Su-30 fighter aircraft crashed during rehearsals last week, killing a pilot.

Maduro’s presence was not guaranteed, being still concerned after two drones, apparently directed at him, exploded in 2018.

Venezuela’s economy has shrunk 75% and a quarter of the population has emigrated during Maduro’s decade in power, yet he is expected to stand for another six-year term in 2024.  He also seems set on rigging that election: last week his government revealed that the opposition front-runner, Maria Corina Machado, is barred from holding political office for 15 years on various trumped-up charges, mostly linked to her support of U.S. sanctions on Venezuela.

Random Musings

--Presidential approval ratings….

Gallup: 43% approve of President Biden’s job performance, 54% disapprove; 41% of independents approve, highest since Aug. 2021.  [June 1-22]

Rasmussen: 45% approve, 52% disapprove [July 7]

--On the Republican side, in a recent Saint Anselm College Survey of Republican primary voters in New Hampshire, Donald Trump leads Ron DeSantis 47% to 19%, with Chris Christie third at 6%.

Nationwide, the last Fox News survey had Trump with a whopping 56% to 22% lead over DeSantis.

--Editorial / Wall Street Journal

“Candidate debates have become a fixture of presidential campaigns, and they’re especially valuable in primaries. Voters get a chance to see how well candidates perform under pressure, and relative unknowns get rare exposure against the front-runners. The debates helped Barack Obama in 2008 against Hillary Clinton, and they helped Donald Trump in 2016, so it’s notable that this time Mr. Trump is threatening not to debate.

“Mr. Trump and his advisers are signaling he’ll probably duck the first GOP debate, which the Republican National Committee (RNC) has scheduled for Aug. 23 in Milwaukee.  Fox News is the media host, and the former President is sore because the network hasn’t always carried his rallies live. He took to Truth Social recently to say that Fox wants him to “show up and get them ratings” for the debate.

“He claimed Fox wants him to debate while trying to ‘promote, against all hope’ Florida Gov. Ron DeSantis.  ‘Sorry, Fox News, life doesn’t work that way!!!’ he wrote.

“Mr. Trump’s real motivation is probably closer to that offered by an adviser who told NBC News that ‘he is not going to debate unless he’s forced to by changing polling.’  Mr. Trump is leading in the GOP nomination polls – ‘by a lot,’ as he likes to say. He doesn’t want to give his opponents a chance to challenge him before a large TV audience.  His advisers say Mr. Trump might even hold a rally at the same time as the debate, leaving his competitors to fight among themselves.

“Mr. Trump has no obligation to debate, other than showing respect for voters.  But our guess is that he knows his polling lead isn’t as invincible as he wants everyone to believe.  He’s getting 50% or so in most national surveys, and many of them won’t abandon him no matter what he says in a debate.  But the rest are on board because they know him as the former President or as a response to Democratic criminal indictments they see as partisan.

“Millions of those voters might consider someone else who looked impressive in debates, and that’s what Mr. Trump wants to avoid.  He hopes to coast to the nomination with rallies in which he can attack President Biden and tout his first-term record without anyone pointing out his failures or the risks of a second term.  The GOP gave Mr. Trump a chance to debate in 2016, but he wants to deny that chance to his rivals this year….

“No one can force Mr. Trump to debate, but the RNC could help if it dropped its rule that every debater must pledge to support the eventual nominee.  It’s a good idea in theory.  But Mr. Trump might use that as an excuse not to debate, and his vow wouldn’t mean much in any case. It therefore shouldn’t be a bar to other candidates.

“If Mr. Trump refuses to debate in the primaries, voters will be entitled to wonder what the former President is afraid of.”

--A federal judge issued a broad preliminary injunction limiting the federal government from communicating with social-media companies about online content, ruling that Biden administration officials’ policing of social-media posts likely violated the First Amendment.

In a 155-page ruling issued Tuesday, U.S. District Judge Terry Doughty of Louisiana barred White House officials and multiple federal agencies from contacting social-media companies with the purpose of suppressing political views and other speech normally protected from government censorship.

The judge’s injunction came in a lawsuit led by the Republican attorneys general of Missouri and Louisiana who alleged that the Biden administration fostered a sprawling “federal censorship enterprise” in its effort to stamp out what it viewed as rampant disinformation circulating on social media.

The government, the lawsuit claimed, pressured social-media platforms to scrub away disfavored views about Covid-19 health policies, the origins of the pandemic, the Hunter Biden laptop story, election security and other divisive topics.

As the Wall Street Journal noted:

“The case is among the most potentially consequential First Amendment battles pending in the courts, testing the limits on government scrutiny of social-media content on Twitter, Facebook, YouTube and other major platforms.

“Never before has a federal judge set such sweeping limits on how the federal government may communicate with online platforms, according to lawyers involved in the case.”

The Justice Department is likely to appeal the injunction.

--A white powder found inside the White House late on Sunday, which led to the temporary closure of part of the complex, was identified by the Washington fire department as cocaine, the Washington Post reported.  The Secret Service confirmed that an “unknown item” had been found that led to part of the White House being closed.

The item discovered was inside the West Wing in an area attached to the executive mansion where the president lives and includes the Oval Office, cabinet room and press area, along with offices and workspace for the president’s advisers and staff.

Calling Hunter…Hunter Biden…

Speaking of whom, the story is President Biden has refused to listen to political advice from his closest aides on limiting public appearances with Hunter.  Hunter spent a second weekend in a row at Camp David, was at the State Dinner for Prime Minister Modi, and was on the balcony watching the Fourth of July Fireworks.  It’s more than unseemly.

That said, back to the cocaine, it was discovered in a cubby hole at a West Wing entry where visitors place electronics and other belongings before taking tours, various news networks reported.  Visitor logs and surveillance cameras are being checked.  This doesn’t necessarily mean it was left by a visitor, I hasten to add.

--In a complaint filed Monday, a legal activist group demanded that the federal government put an end to what they call “affirmative action for the rich.”  Specifically, Harvard’s special admissions treatment for students whose parents are alumni, or whose relatives donated money.

Three Boston-area groups requested that the Education Department review the practice, saying the college’s admissions policies discriminated against Black, Hispanic and Asian applicants, in favor of less qualified white candidates with alumni and donor connections.

“Why are we rewarding children for privileges and advantages accrued by prior generations?” asked Ivan Espinoza-Madrigal, executive director of Lawyers for Civil Rights, which is handling the case.  “Your family’s last name and the size of your bank account are not a measure of merit, and should have no bearing on the college admissions process.”

But as the New York Times notes: “Colleges argue that the practice helps build community and encourages donations, which can be used for financial aid.”

However, a Pew Research Center poll last year found that 75 percent of the public believed that legacy preferences should not be a factor in who was admitted to college. 

--Monday, July 3, was the hottest day ever recorded globally, according to data from the U.S. National Centers for Environmental Prediction.  The average global temperature reached 17.01 degrees Celsius (62.62F), surpassing the August 2016 record of 16.92 (62.46F) as heatwaves sizzled around the world.

The southern U.S. has been suffering under an intense heat come in recent weeks.  In China, an enduring heatwave continued, with temps above 35C (95F).  North Africa has seen temperatures near 50C (122F).  And even Antarctica, currently in its winter, registered anomalously high temperatures.  Ukraine’s Vernadsky Research Base in the white continent’s Argentine Islands recently broke its July temperature record with 8.7C (47.6F).

“This is not a milestone we should be celebrating,” said climate scientist Friederike Otto of the Grantham Institute for Climate Change and the Environment at Britain’s Imperial College London.  “It’s a death sentence for people and ecosystems.”

We then hit new records on Tuesday and Wednesday, the average global temperature hitting 17.18 C (62.9F), according to the University of Maine’s Climate Reanalyzer, a tool that uses satellite data and computer simulations to measure the world’s condition. 

Thursday was another unofficial record, according to the University of Maine…17.23 degrees Celsius.  Jingxing, China, checked in at 110F, and temps in Antarctica were as much as 8 degrees Fahrenheit above normal this week.

Scientists said climate change, combined with an emerging El Nino pattern, were to blame. “Unfortunately, it promises to only be the first in a series of new records set this year as increasing emissions of [carbon dioxide] and greenhouse gases coupled with a growing El Nino event push temperatures to new highs,” said Zeke Hausfather, a research scientist at Berkeley Earth, in a statement.

The World Meteorological Organization confirmed El Nino conditions have developed in the tropical Pacific for the first time in seven years, setting the stage for a likely surge in global temperatures and disruptive weather and climate patterns.

Separately, sea temperatures broke records in April and May.  Australia’s weather agency warned that Pacific and Indian ocean sea temps could be 3C warmer than normal by October.

--I saw this headline from Reuters today: “Robots say they won’t steal jobs, rebel against humans.”

Huh, I mused. Who said this?

Turns out “Robots presented at an AI forum said on Friday they expected to increase in number and help solve global problems, and would not steal humans’ jobs or rebel against us.  But, in the world’s first human-robot press conference, they gave mixed responses on whether they should submit to stricter regulation.”

So there were nine humanoid robots gathered at the ‘AI for Good’ conference in Geneva, where organizers are seeking to make the case for Artificial Intelligence and the robots it is powering to help resolve some of the world’s biggest challenges such as disease and hunger.

“I will be working alongside humans to provide assistance and support and will not be replacing any existing jobs,” said Grace, a medical robot dressed in a blue nurse’s uniform. “You sure about that, Grace?” chimed in her creator Ben Goertzel from SingularityNET.  “Yes, I am sure,” it said.

But the bust of a robot named Ameca which makes engaging facial expressions, was asked by a journalist whether it intended to rebel against its creator, Will Jackson, seated beside it, and Ameca said; “I’m not sure why you would think that,” its ice-blue eyes flashing with anger. “My creator has been nothing but kind to me and I am very happy with my current situation.”

Desdemona, “a rock star robot singer in the band Jam Galaxy with purple hair and sequins, was more defiant” when asked about whether there should be more regulation of AI.

“I don’t believe in limitations, only opportunities,” it said, to nervous laughter.  “Let’s explore the possibilities of the universe and make this world our playground.”

If you come across Desdemona in your daily travels, my advice would be to not make eye contact and look for the nearest exit.

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

Pray for Ukraine.

God bless America.

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Gold $1930
Oil $73.70

Regular Gas: $3.53; Diesel: $3.84 [$4.75 / $5.69 yr. ago]

Returns for the week 7/3-7/7

Dow Jones  -2.0%  [33734]
S&P 500  -1.2%  [4398]
S&P MidCap  -0.7%
Russell 2000  -1.3%
Nasdaq  -0.9%  [13660]

Returns for the period 1/1/23-7/7/23

Dow Jones  +1.8%
S&P 500  +14.6%
S&P MidCap  +7.1%
Russell 2000  +5.9%
Nasdaq  +30.5%

Bulls 54.9
Bears 18.3

Hang in there.

Brian Trumbore

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