Week in Review

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Week in Review

08/19/2023

For the week 8/14-8/18

[Posted 5:00 PM ET, Friday]

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Edition 1,270

A Georgia grand jury indicted former president Donald Trump and several allies, such as Rudy Giuliani and former White House Chief of Staff Mark Meadows, on Monday on conspiracy charges of trying to steal Georgia’s electoral votes from President Joe Biden after the 2020 election.

The indictment, bringing 41 charges against 19 defendants, accuses Trump and confederates of a coordinated plan to have state officials spike Biden’s victory and award the state to Trump.  The thing is, Fulton County District Attorney Fani Willis launched her investigation of Trump in February 2021, and it wasn’t until two years later that a special grand jury recommended unspecified charges this past February.  So we’ve been waiting since then for the details.

Much of the indictment focused on a behind-the-scenes pressure campaign on state election workers and the overt harassment that resulted from Trump’s naming of Ruby Freeman, a poll worker he falsely accused of fraud, as well as her daughter, Shaye Moss.

Willis said Trump had opportunities to legally challenge the election’s results, but chose instead to pursue a criminal scheme that was counter to Georgia’s process she called “essential to the functioning of our Democracy.”

Trump and the others named in the 98-page indictment have until noon next Friday, Aug. 25, to voluntarily surrender.

Willis set a March trial date but most experts do not expect this one to go to trial until after the 2024 election.

Trump said on Tuesday that he would release a detailed report next Monday on what he called “election fraud” in the state of Georgia in 2020.

“So, the Witch Hunt continues! 19 people indicted tonight, including the former President of the United States, me, by an out of control and very corrupt District Attorney who campaigned and raised money on, ‘I will get Trump,’” the former president wrote.

A post from Trump later Monday morning said he would present his own “report” next week that would lead to “complete EXONERATION.”

“A Large, Complex, Detailed but irrefutable REPORT on the Presidential Election Fraud which took place in Georgia is almost complete & will be presented by me…on Monday of next week in Bedminster, New Jersey,” the post said.  “Based on the results of this CONCLUSIVE Report, all charges should be dropped against me & others. …They never went after those that Rigged the Election.  They only went after those that fought to find the RIGGERS!”

Just a bit racist.

Well then Trump canceled the news conference Thursday evening, he said, on advice from his lawyers.

In a Truth Social post, Trump said his lawyers had urged him to not release the report and that he was calling off the Monday event. 

“My lawyers would prefer putting this, I believe, Irrefutable & Overwhelming evidence of Election Fraud & Irregularities in formal Legal Filings as we fight to dismiss this disgraceful indictment by the publicity and campaign finance seeking D.A., who sadly presides over a record breaking Murder & Violent Crime area, Atlanta,” Trump wrote, concluding:

“Therefore, the News Conference is no longer necessary!”

Donald Trump’s performance this week was beyond pathetic.

The Georgia case is No. 4, after the New York hush money case, the classified documents case, and the Jan. 6 election interference indictment, this last one slated, for now, to go first, potentially as early as Jan. 2nd in Washington.  Of course, Trump and his legal team want to delay all four trials to after the election.

I have long thought since day one that the Georgia case was the obvious one.

“All I want to do is this.  I just want to find 11,780 votes, which is one more than we have,” Trump said in his shakedown phone call with Georgia Sec. of State Brad Raffensperger, after attempting to call Raffensperger 18 times before reaching him on Jan. 2, 2021.

Trump also insisted that “the ballots are corrupt” and someone was “shredding” them.  He told Raffensperger “it is more illegal for you than it is for them because you know what they did and you’re not reporting it.”

Raffensperger told House investigators he considered Trump’s comments a threat. But he said officials found no widespread election fraud.  He had recertified the results Dec. 7, 2020, and the state Supreme Court rejected one election challenge Dec. 12, although others loomed.

“Well, Mr. President, the challenge that you have is the data you have is wrong,” Raffensperger said of a false allegation that unregistered voters cast ballots.

Editorial / Wall Street Journal

“There’s no defending Mr. Trump’s awful conduct after the 2020 election, and it would be a mistake for Republicans to try.  But most Republicans look at these indictments, and the pass for Hillary Clinton and Hunter Biden, and see partisan prosecutions and double standards.  Four indictments later, prosecuting Mr. Trump, instead of leaving the judgment to voters and history, still seems like a bad idea for the country.”

Andrew C. McCarthy, former federal prosecutor / New York Post

“What should most concern Trump is that the Georgia case could be the most enduring of all the criminal indictments.

“If Trump or another Republican were to win the 2024 election, the new president could issue a pardon or otherwise have his Justice Department drop (Jack) Smith’s federal indictments against Trump.

“Indeed, that is why Smith is pushing so hard to get the federal courts in Washington and Florida to accelerate the schedule and get the cases to trial in the next few months – before Election Day 2024.

“Presidents, however, have no authority to pardon state crimes.

“It remains to be seen whether Willis can convince a jury of Atlantans to convict Trump.  But even a newly elected President Trump could not make the Georgia prosecution go away.

“If he were convicted, it would stick.”

I have much more on the former president down below.

But for now one more…Trump would appear to be skipping the first Republican primary debate in Milwaukee next Wednesday, and instead will do an interview with Tucker Carlson.

Both Fox News, who is still paying Carlson, and the Republican National Committee, are furious.

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Hawaii…the Maui Tragedy

As I go to post, the official death toll stands at 111, with over 1,000 unaccounted for ten days after the inferno swept Lahaina.

Brianna Sacks / Washington Post

“Four days before fast-moving brush fires engulfed parts of Maui, weather forecasters warned authorities that powerful wind gusts would trigger dangerous fire conditions across much of the island and Hawaii.

“The state’s electric utility responded with some preemptive steps but did not use what is widely regarded as the most aggressive but effective safety measure: shutting down the power.

“Hawaiian Electric, the utility that oversees Maui Electric and provides service to 95 percent of the state’s residents, did not deploy what’s known as a ‘public power shutoff plan,’ which involves intentionally cutting off electricity to areas where big wind events could spark fires.  A number of states including California have increasingly adopted this safety strategy after what were then the nation’s most destructive and deadliest fires, in 2017 and 2018.

“Hawaiian Electric was aware that a power shut-off was an effective strategy, documents show, but had not adopted it as part of its fire mitigation plans, according to the company and two former power and energy officials interviewed by the Washington Post.  Nor, in the face of predicted dangerous winds, did it act on its own, utility officials said, fearing uncertain consequences.”

The investigation into the causes of the Maui blazes could take weeks or months to produce official findings, Hawaii Attorney General Anne Lopez (D) announcing a “comprehensive review” of the decisions and policies surrounding the fires.

Hawaiian Electric is rejecting suggestions that it could have done more to protect public safety.  But documents show the utility recognized that a power shut-off plan could be effective, especially after it reviewed what happened with California’s 2018 Camp Fire, which killed 85 people.

[Hawaiian Electric’s share price, $38-$39 before the fires, finished the week at $14.]

The death toll makes the Maui fires the deadliest since 1918, when 453 people were killed in Minnesota and Wisconsin by the Cloquet & Moose Lake Fires.

With roughly 2,200 structures destroyed in West Maui across the 2,170 acres burned by the blaze, the initial estimate for damages was $6 billion, but it will likely be much higher.

What we do know is that as the Honolulu Star-Advertiser reported, “There were no sirens, no one with bullhorns, no one to tell anyone what to do.”

It was as if local emergency management wasn’t on the job, and in fact that was partly the case. Two key figures were on vacation back on the mainland.  The head of emergency management in Maui County then resigned Thursday after an embarrassing and contentious press conference.

The facts are beginning to emerge and the final report on the tragedy will be brutal.

In the meantime, you have the issue of tourism.

“Our community needs time to heal, grieve, and restore,” Hawaiian actor Jason Momoa said on Instagram, urging tourists to cancel their trips.

Authorities and businesses, though, have welcomed the trickle of travelers, saying it will lessen the blow to the island’s economy, which relies heavily on tourism. The industry is Maui’s “economic engine,” generating 80% of its wealth, according to the island’s economic development board.

Hawaii Governor Josh Green recalled at a weekend press conference how the Covid-19 pandemic similarly forced the state to weigh the risks of allowing tourists in during a public health crisis against the harm Hawaii’s economy would suffer from barring them.

“All of our people will need to survive, and we can’t afford to have no jobs or no future for our children,” Green said.  “When you restrict any travel to a region, you really devastate its own local residents in many ways more than anyone else.”

In 2022, 2.9 million tourists visited Maui, with visitors spending $5.69 billion on the island that year.

The Hawaii Tourism Authority now is asking visitors to avoid all non-essential travel to West Maui, the part of the island affected by the fires, so resources can be used to help locals recover.

***And now we have the issue of Hurricane Hillary off the Mexican coast and heading north to Southern California.  While it will weaken, it seems increasingly clear that San Diego, Los Angeles, Las Vegas will get hit with torrential rains (I’d be worried about Las Vegas as much as anywhere) and most likely tropical storm force winds. 

No tropical storm has made landfall in Southern California since Sept. 25, 1939, according to the National Weather Service.

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President Joe Biden called for union auto workers and Detroit’s Big Three automakers (Ford, GM and Stellantis) to come together on a new agreement before their contracts expire Sept. 14.

“I’m asking all sides to work together to forge a fair agreement,” Biden said in a statement as talks continue.

“The UAW helped create the American middle class and as we move forward in this transition to new technologies, the UAW deserves a contract that sustains the middle class,” Biden said.

The union represents 150,000 U.S. hourly workers at the Big Three and UAW President Shawn Fain, who briefed the president on the contract talks last month and met with members of Congress as the union pushes for higher wages and benefits, has more or less said a strike is inevitable.  Fain has also criticized some of the administration’s electric vehicle policies, with the union so far not endorsing Biden’s re-election bid.

The UAW is seeking to include workers at battery plants in its contracts.

This is going to be a real s---show.  The strike might cost more than $5 billion in economic losses after 10 days, Anderson Economic Group said Thursday.

Meanwhile, Biden celebrated the anniversary of the Inflation Reduction Act on Wednesday, saying it was spurring job growth and addressing climate threats as he sought a political boost from his signature legislative achievement.

The package promised to create a wave of demand for made-in-America electric vehicles by offering lucrative tax credits.

But as David E. Rovella of Bloomberg noted:

“(A) year later, the IRA has yet to trigger any such inundation. Though arguably early days for any transition spurred by the law, U.S. car buyers and automakers are nevertheless struggling with qualifications that have limited eligibility for many current electrified models.  And the bar for full credits will soon get higher, as the U.S. sets new rules aimed at curbing foreign battery sourcing and manufacturing.

“Automakers, who already are seeing a build-up of EV inventories, may have to change supply chains further or risk losing some or all of their qualifications to make electronic models more affordable.”

One more…the administration on Thursday announced new tariffs on can-making metal imported from China, Germany and Canada, a move that food companies say could lead to higher prices for some canned foods.

The Commerce Department said an investigation found that steelmakers from the three countries sold their tinplate products in the U.S. at unfairly low prices, justifying new import duties.

Chinese products would be subject to the highest tariffs of the three countries – a levy of 122.52% of their import value.  The rate largely reflets Chinese companies’ refusal to cooperate with the investigation to prove their independence from the Chinese Communist Party.

So, in all seriousness, if you see a good sale on soup in the coming weeks, buy a lot.

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China’s issues and lack of transparency

I get into China’s economic malaise in terms of the data down below, but this week’s announcement the government would no longer publish a youth unemployment rate is big.  It just seems that President Xi Jinping is getting closer and closer to playing the nationalism card in one form or another.  That wouldn’t be good.

Editorial / Wall Street Journal

“U.S. stocks took a header on Tuesday after fresh economic data showed a continued softening in China’s economy. Another reason for investor unease if the Chinese government’s suspension of youth unemployment data, which comes amid a Communist Party campaign to limit transparency.

“China’s collapsing real-estate bubble is raising investor worries about financial contagion as Country Garden*, one of its largest developers, edges toward default….

“But unknown risks are usually more worrisome than those that are known.  In recent months Beijing has been tightening the clamp on economic information shared with the public.  A newly amended counterespionage law criminalizes sharing sensitive economic information.

“For ‘sensitive,’ read negative.  Not surprisingly, Chinese economic analysts have become tight-lipped….

“That’s also how to read Beijing’s decision to stop publishing the youth unemployment rate while it does what the government calls ‘further optimization’ and research on the statistic.  China’s official youth unemployment rate has doubled since 2019 to 21.3%, amid President Xi Jinping’s zero-Covid policy and regulatory crackdown on its tech industry and others that threaten the Communist Party’s political control.

“China’s major tech companies have shed more than $1 trillion in market value and laid off hundreds of thousands of workers over the past years.  For years the government boosted favored industries like real estate and electric vehicles, but these are now deflating.  Several hundred EV startups have gone bust in the past few years….

“One Peking University economist estimated that youth unemployment would have hit 46.5% this spring if the millions of workers who have stopped looking for work had been counted.

“The government is telling college graduates to settle for lower-paying, blue-collar jobs.  ‘The more ambitious you are, the more down to earth you need to be,’ the Communist Party’s People’s Daily said last month.  The censorship of unemployment data is aimed at preserving social stability amid a growing class of educated, disillusioned and restless young people who could become a source of political unrest.

“But the price of this lack of transparency is less confidence in Chinese financial markets.  Especially in times of economic weakness, a lack of transparency can feed financial panics.  The government is trying to attract more foreign investment, but it’s giving investors another reason to run away.”

*Property giant China Evergrande filed for bankruptcy protection in the U.S. Thursday, as the real estate crisis deepens.  Evergrande, with debts estimated to total more than $300 billion, was the world’s most heavily indebted property developer.  It first defaulted on its debts in 2021, which sent shockwaves through global financial markets.

Evergrande filed Chapter 15 protection in a New York court.  Chapter 15 protects the U.S. assets of a foreign company while it works on restructuring its debts.  The group’s real estate unit has more than 1,300 projects in more than 280 Chinese cities.

Evergrande revealed last month it lost a combined $80 billion over the last two years.

Country Garden warned it could see a loss of up to $7.6 billion for the first six months of the year.

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This Week in Ukraine….

--As first reported by the New York Times today, Friday, the total number of Ukrainian and Russian troops killed or wounded since the war in Ukraine began 18 months ago is nearing 500,000, U.S. officials said.

The officials cautioned that casualty figures remained difficult to estimate because Moscow is believed to routinely undercount its war dead and injured, and Kyiv does not disclose official figures.  But they said the slaughter intensified this year in eastern Ukraine and has continued at a steady clip as a nearly three-month-old counteroffensive drags on.

Russia’s military casualties, the officials said, are approaching 300,000. The number includes as many as 120,000 deaths and 170,000 to 180,000 injured troops.  Officials put Ukraine’s estimated losses at close to 70,000 killed and 100,000 to 120,000 wounded.

The Times also reports: “Ukraine has around 500,000 troops, including active-duty, reserve and paramilitary troops.  By contrast, Russia has almost triple that number, with 1,330,000 active-duty, reserve and paramilitary troops – most of the latter from the Wagner Group.”

What is emerging is that the first two weeks of the counteroffensive were a disaster for Ukraine, as it lost as much as 20 percent of its weaponry, including some of the formidable Western fighting machines that the Ukrainians were counting on to beat back the Russians.

“More significantly, thousands of troops were killed or wounded, officials said,” as reported by the Times.

If the figure of 70,000 Ukrainian dead is accurate, just think about it.  That’s already more than the U.S. lost in Vietnam (about 58,000), and in 18 months.

--Kyiv has said the counteroffensive is progressing slower than it wanted because of vast Russian minefields and prepared Russian defensive lines.

--Ukrainian forces targeted the Crimean Bridge and a number of other unspecified targets on the Crimean peninsula on Saturday in a flurry of rocket and drone attacks, but Russia’s defense ministry said there were no casualties or damage.

Separately, Russia said it destroyed 20 Ukrainian drones launched onto the Crimean Peninsula earlier on Saturday.

Russia again claimed it would retaliate, which has meant going after residential areas.

--Russian shelling ripped into homes in the Kherson region of southern Ukraine on Sunday morning, an assault that killed at least seven people, including a family of four, in an area that had already been under relentless heavy bombardment.

President Zelensky condemned how Russian forces had “brutally attacked” the region, saying in his overnight address that there had been 17 reports of shelling by early Sunday evening.

The region has been under nonstop shelling since November, when Russian forces retreated from the regional capital, the city of Kherson, across the Dnipro River.  From their new positions on the river’s eastern bank, Moscow’s troops have launched regular and deadly attacks on the city they once occupied and the towns around it.

--Russian air defenses shot down at least four Ukrainian drones over western regions of Russia on Sunday, the defense ministry said.  Drone air strikes deep inside Russia have increased since a drone was destroyed over the Kremlin in early May and a Moscow business district was targeted twice in three days earlier this month.

--A Russian warship on Sunday fired warning shots at a cargo ship in the southwestern Black Sea as it made its way northwards, the first time Russia has fired on merchant shipping beyond Ukraine since exiting the UN-brokered grain deal last month.

“To forcibly stop the vessel, warning fire was opened from automatic weapons,” the Russian defense ministry said.  The Russian military boarded the vessel, as video of the incident later showed, and then “After the inspection group completed its work on board, the Sukru Okan continued on its way to the (Ukrainian) port of Izmail,” the defense ministry said.

Firing on merchant vessels ratchets up already acute concerns among shipowners, insurers and commodity traders about the potential dangers of getting ensnared in the Black Sea

--Russian air strikes hit two western regions of Ukraine bordering NATO member Poland on Tuesday, killing three people in a factory and wounding more than a dozen, Ukrainian officials said.  Local media said the attacks were the largest air assault on the Lviv region since the invasion.  The fatalities were in the northwestern region of Volyn.  An industrial enterprise in the regional capital Lutsk was struck in the attack.

Swedish industrial bearings maker SKF said its factory in Lutsk was hit, killing three employees.

Both Volyn and Lviv border Poland and are hundreds of miles from the front line.  Lviv city had been spared much of Russia’s air attacks until July, when seven people were killed by a missile that slammed into a residential building near the historic center.  The city has generally been seen as a safe haven from the conflict, with some government offices moving there and international NGOs using it as a base.  It has also been a transit point for Ukrainian refugees en route to Poland and beyond.

“The daily terror of the Russians has a single goal: to break us, our spirit for fighting,” Andriy Yermak, the head of Ukraine’s presidential administration, wrote on Telegram.  “This will not happen.”

--Russia’s military chief Sergei Shoigu said Tuesday that “Ukraine’s military resources are almost exhausted,” while speaking at a conference in Moscow, which was attended by China’s military chief.  Shoigu also said “the Russian army has debunked many myths about the superiority of Western military standards” in its Ukraine invasion, which he still describes not as a war or an invasion, but as a “special military operation.”  Shoigu presented no evidence backing his claims.

--Ukrainian forces recaptured the village of Urozhaine from Russian troops in the southeast, Kyiv’s deputy defense minister said on Wednesday.

“Urozhaine liberated,” Hanna Maliar said on Telegram.  “Our defenders are entrenched on the outskirts.”

The village in Donetsk region is part of a cluster of small rural settlements that Ukraine has declared liberated since early June and the start of the counteroffensive.

The village’s recapture is an important step in Ukraine’s drive towards the Sea of Azov that aims to cut Russian occupying forces in half.  But the Sea of Azov is 55 miles from Urozhaine, which is the first village Ukraine says it has retaken since July 27 when it announced the recapture of neighboring Staromaiorski.

Next up would be the village of Staromlynivka, several kilometers south, which military analysts say serves as a Russian stronghold in the area.

But U.S. intelligence officials don’t think Ukraine can reach one of its counteroffensive goals this summer, which is to reach the southeastern city of Melitopol.  “(That), should it prove correct, would mean Kyiv won’t fulfill its principal objective of severing Russia’s land bridge to Crimea in this year’s push,” the Washington Post reported Thursday.

Meanwhile, Ukraine’s Deputy Defense Minister Maliar warned the situation on the northeastern front was deteriorating, and one of Ukraine’s top generals, Oleksandr Syrskyi, said the battle was growing more difficult in Kupiansk, a town with a pre-war population of around 27,000, seized by Russia in the early days of the invasion before Ukrainian troops recaptured it in September.

“The enemy is trying to break through the defenses of our troops every day, in different directions, with assault squads consisting mainly of convicts, with the aim of blockading and then capturing Kupiansk,” he said.

Losing Kupiansk a second time would be a major blow to Kyiv’s battlefield momentum at a time when its summer counteroffensive has so far failed to deliver significant territorial gains.

Regional authorities announced a mandatory evacuation of civilians from near the Kupiansk front earlier in the month.

--Belarusian President Alexander Lukashenko said in an interview on Thursday that direct contacts between Ukraine and Belarus are non-existent after President Zelensky put a halt to them, the last call occurring months ago.

--Russian officials accused Ukraine of launching a drone attack on a building in Moscow early Friday morning, causing an explosion that was heard across the city’s business district.

Mayor Sergei Sobyanin said air defenses had shot down the drone with its debris falling on the city’s Expo Center.

It marks the latest in a series of such attacks on the capital.

There were no reports of casualties.

--A Ukrainian air force spokesperson Yuriy Ihnat told Ukrainian television late on Wednesday that they will not be able to operate U.S.-built F-16 fighter jets this coming autumn and winter.

President Biden endorsed training programs for Ukrainian pilots on F-16s in May but no timing for the supply of war planes had been given thus far.

“We had big hopes for this plane, that it will become part of air defense, able to protect us from Russia’s missiles and drone terrorism,” Ihnat said.

Thursday, the U.S. then approved sending F-16s to Ukraine from Denmark and the Netherlands, just as soon as pilot training is completed.  Training was to commence in Denmark this month.  But Denmark’s acting defense minister had said last month the country hoped to see “results” from the training in early 2024, which lines up with the comments from Ukraine the day before.

--The BBC had a report on former Ukrainian captives who said they were subjected to torture, including frequent beatings and electric shocks, while in custody at a detention facility in southwestern Russia, in what would be serious violations of international humanitarian law.

In interviews with the BBC, a dozen ex-detainees released in prisoner exchanges alleged physical and psychological abuse by Russia officers and guards at the Pre-Trial Detention Facility Number Two, in the city of Taganrog.

Among the allegations:

Men and women at the Taganrog site are repeatedly beaten, including in the kidneys and chest, and given electric shocks in daily inspections and interrogations.

Captives are constantly left under-nourished, and those who are injured are not given appropriate medical assistance, with reports of detainees dying at the facility.

The Russian government has not allowed any outside bodies, including the United Nations and the International Committee of the Red Cross, to visit the facility which before the war was used exclusively to hold Russian prisoners.

--A massive explosion at a gas station in Russia’s southern republic of Dagestan killed 30 people and injured scores more, Russian officials said Tuesday.

Russia’s Emergency Ministry reported Tuesday that a total of 105 people were injured, and 30 of them died.

A fire started at a car repair shop and spread to a nearby gas station, prompting the blast.

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Wall Street and the Economy

Most Federal Reserve officials last month still regarded high inflation as an ongoing threat that could require further interest rate increases, according to the minutes from their July 25-26 meeting released Wednesday.

At the same time, the officials saw “a number of tentative signs that inflation pressures could be abating.”  It was a mixed view that echoed Chair Jerome Powell’s noncommittal stance about future rate hikes at a news conference after the meeting.

According to the minutes, the Fed’s policymakers also felt that despite signs of progress on inflation, it remained well above their 2% target.  They “would need to see more data…to be confident that inflation pressures were abating” and on track to return to their target.

At the meeting, the Fed decided to raise its benchmark funds rate for the 11th time in 17 months in its ongoing drive to curb inflation.  But in a statement after the meeting, provided little guidance about when or whether it might raise rates again.

A “couple” of participants advocated leaving rates unchanged in July.

But Minneapolis Federal Reserve Bank President Neel Kashkari (a voting member on the FOMC this year), said Tuesday that he is uncertain whether enough has been done to bring down the pace of price growth.

“The question in my mind is ‘have we done enough to actually get inflation all the way back down to our 2% mark, or do we have to do more?’” Kashkari said at a conference.  He added that the cumulative federal funds rate increase to this point has had some success in slowing the economy and inflation, but he warned that inflation was “still too high” and that he was not ready to say that the FOMC was done raising rates.

There needs to be “convincing evidence” that inflation is coming down toward the 2% goal to avoid the mistakes of the 1970s, he said.

“I think we are a long way away from cutting rates,” saying that the Fed “needs to be “confident” that inflation is on its way back down to 2%.  The time for rate cuts could come next year or the year after, Kashkari noted, but that will be based on the incoming data.

The significance of his hawkish comments is that Kashkari is known to be a dove on monetary policy.

The data since the July meeting has pointed to a soft landing, no recession, and this week’s July retail sales figure, up a stronger than expected 0.7% (ex-autos 1.0%), as well as solid figures on July housing starts, up 3.9%, and industrial production, 1.0%, provided even more evidence of a solid economy.

[On the other hand, the leading economic indicators for July were down a 16th consecutive month, -0.4%.  So, it continues to forecast recession.]

The Atlanta Fed’s GDPNow barometer for third-quarter growth has shot up to 5.8%!

But on the housing front, Freddie Mac’s 30-year fixed-rate mortgage hit 7.09% this week, the highest since April 2002, as the yield on the 10-year Treasury continues to rise.

This coming week, though, it’s all about Jackson Hole and the annual international gathering of central bankers where Fed Chair Powell’s comments will be picked over with a fine-tooth comb.

Lastly, we’ve seen some volatility in the global currency markets as Russia’s central bank hiked interest rates 350 basis points to 12% in an emergency meeting amid speculation over what other steps Russia may take to prop up its struggling currency.  The ruble did strengthen some after the move, but was 94 to the dollar, and 103 against the euro, last I checked.

The economy has been battered by shrinking export revenues and isolated from international financial markets, while spending on the war in Ukraine has been rising, as are prices, but not precipitously so as yet.

Europe and Asia

We had another key inflation report for the eurozone, this one for July, 5.3%, down from 5.5% in June.  A year earlier, the rate was 8.9%.  But ex-food and energy, the core rate is still 6.6%, down from 6.8%.

Headline July inflation:

Germany 6.5%, France 5.1%, Italy 6.3%, Spain 2.1%, Netherlands 5.3%, Ireland 4.6%.

Separately, June industrial production in the EA20 rose 0.5% month-over-month, but was down 1.2% from a year ago.

Britain: The July inflation rate fell to 6.8% from 7.9% the previous month, the lowest rate of price increases since February last year.

But core inflation, stripping out food and energy, was still rising at an annual rate of 6.9%.  The price of services was up 7.4% from 7.2% in June.  Much more work to do for the Bank of England.

Turning to Asia…China reported important data for July and as alluded to above, it was lackluster, at best.  Industrial production was up 3.7% year-over-year vs. 4.4% in June; retail sales rose 2.5% Y/Y vs. 3.1% prior; and fixed asset investment (rails, airports, highways) increased 3.4% year-to-date.

Property investment in July fell a 17th consecutive month.  The turmoil in China’s property sector is worsening by the day.  Overall investment in real estate development in the first seven months of the year fell 8.5% year-on-year, according to the National Bureau of Statistics (which supplied the other data as well, I hasten to add).

New home sales declined 19% year on year in July, the same as a month earlier, according to Jefferies.  Distressed developers like Country Garden Holdings and China Vanke were hit harder, reporting 60% and 35% year-over-year slumps in sales last month.

The July unemployment rate was 5.3% vs. 5.2% in June.

China’s central bank unexpectedly cut some key rates but the data continues to point to a sluggish recovery.

Japan issued a preliminary reading on second-quarter GDP, up a much better than expected 1.5% quarter-over-quarter vs. 0.9% for the first quarter, a 6.0% annualized pace.

The inflation rate for July was 3.3%, unchanged from June.  But ex-food and energy, the core rate ticked up to 4.3% from 4.2%.

July exports dropped by 0.3% Y/Y, marking the first decline since Feb. 2021, though better than consensus of a 0.8% fall, underscoring weak foreign demand from key markets.  Shipments of electrical machinery and semiconductors was down, but exports of transport equipment jumped 22.7%, led by motor vehicles (28.2%).  Exports to the U.S. bucked the trend, up 13.5%, while sales to China fell 13.4%.  [South Korea -15.2% Y/Y, Taiwan -22.9%.]

Imports fell 13.5% Y/Y.

Street Bytes

--Stocks finished down again, the Dow Jones off 2.2% to 34500, the S&P 500 losing 2.1% and Nasdaq falling 2.6%.  The S&P’s 3-week losing streak is its longest since February.  It’s largely about the ongoing strength in the economy and the feeling that the Fed will be higher for longer.  [One of the chief reasons bitcoin also plunged from $29,400 to $26,200 in one week as I go to post.]

As noted above, next week it’s about Jackson Hole and a biggie, Nvidia’s earnings on Wednesday.

--U.S. Treasury Yields

6-mo. 5.48%  2-yr. 4.94% 10-yr. 4.25%  30-yr. 4.37%

The 10-year significantly hit 4.258% as a closing high Wednesday, exceeding last year’s closing high, and then closed Thursday at 4.307%, highest 10-year yields since June 2008.  It was significant, technically, that today’s closing high was still 4.25%.  But will it hold?

--Home Depot topped profit and sales expectations in its most recent quarter, but sales continued to decline as inflation and soaring interest rates play a larger role in the spending choices made by consumers.

Second quarter revenue was $42.92 billion, edging out the Street’s expectations for $42.25 billion.  But that’s down 2% from the $43.87 billion that the nation’s largest home improvement retailer reported during the same stretch last year, and sales have fallen 3.1% through the first half of the year compared with 2022.

HD on Tuesday stuck to previous guidance for the year, seeing sales decline between 2% and 5%, after lowering its forecast in the last quarter.  It’s the first time the chain forecast declining annual sales since 2009 and the global financial crisis.

Customer transactions dropped 1.8% at Home Depot in the second quarter, but improved from a 4.8% fall in the first.  Comparable sales fell 2%, the company said.

There are signs that consumers, after spending big on homes during the pandemic, are slowing down.

“Where there was strength in categories associated with smaller projects, we did see continued pressure in certain big-ticket, discretionary categories,” said CEO Ted Decker.  “We remain very positive on the medium-to-long term outlook for home improvement and our ability to grow share in a large and fragmented market.”

Home Depot reported profits were $4.66 billion, or $4.65 per share, which was 19 cents better than expected.

Shares rose marginally in response on Tuesday.

--Wednesday, Target lowered its full-year sales and profit expectations and forecast a dour third quarter, in another sign that Americans, squeezed by inflation, are keeping a tight grip on their spending.  The retailer, which largely sells non-essential items like electronics and home décor, has taken a hit from a shift in the spending pattern of consumers, who prefer services and experiences over such products while focusing more on groceries.

Second-quarter total revenue fell 4.9% to $24.77 billion, marking its first decline in about six years and missing market expectations of $25.16 billion.

“We are seeing food and beverage and household essentials absorbing a larger portion of the U.S. consumer wallet,” Target CEO Brian Cornell said.  “Guests are out at concerts, they are gong to movies…they are enjoying those experiential moments and are shopping very carefully for discretionary goods.”

The big-box retailer expects annual comparable sales to decline in the mid-single digit range compared to its prior forecast of low-single digit decline to a low-single digit increase.  It expects 2023 adjusted profit per share between $7 to $8, compared with the prior range of $7.75 to $8.75.  And Target expects third-quarter comp sales to fall mid-single digit and adjusted profit of $1.20 to $1.60 per share.  Consensus for Q3 is looking for a sales decline of 2% and profit of $1.82 per share.

Company executives said the backlash against “adjustments” to its Pride merchandise also hit its sales and that it would carefully look at its partnerships while celebrating heritage moments.

Still, Target recorded second-quarter adjusted profit of $1.80 per share, handily beating estimates of $1.37, as it held back on steep discounts.

--So then Thursday we had Walmart’s earnings for the second quarter and the world’s largest retailer beat estimates.

Sales at Walmart’s U.S. stores open at least a year rose 6.4%, excluding fuel, in the three months ended July 31, beating forecasts of a 4.4% increase.  Total revenue was $161.63 billion in the period, topping consensus of $159.82 billion.

“Food is a strength, but we’re also encouraged by our results in general merchandise versus our expectations when we started the quarter,” CEO Doug McMillon said in a statement.  Walmart is also benefiting from lower supply-chain costs and fewer discounts that were previously put in place to cut down excess inventory.

“We’re in good shape with inventory, and we like our position for the back half of the year,” McMillon said.

Walmart said gross margin rate in the second quarter rose 50 basis points, compared to an 18 basis point decline in the first quarter.

Walmart raised its full-year forecasts to an earnings range of $6.36 to $6.46 per share, compared to the prior forecast of $6.10 to $6.20.  The company also forecast net sales to increase about 4% to 4.5%, compared to a 3.5%% rise expected previously.  In contrast, Target cut its full-year forecasts.

Walmart’s operating income rose 6.7% to $7.32 billion in the quarter, while it reported adjusted earnings of $1.84.

U.S. e-commerce sales jumped 24%, compared with a 12% increase in the year-ago quarter and a 27% increase in the first quarter.

--Southwest Airlines Co. said on Tuesday it had reached a tentative agreement with the union that represents about 17,120 transport workers who handle ramp, operations, provisioning and cargo.  The workers will now earn $36.72 per hour, higher than the hourly wages at United Airlines, Delta and American, based on the tentative agreement uploaded on Transport Workers Union Local 555’s website.  [Which I actually just went through.  It’s kind of interesting, if you’re lounging at the beach, drinking an adult beverage, hoping a sea gull doesn’t bomb you, and looking for something different to read.]

--TSA checkpoint numbers vs. 2019

8/17…102 percent of 2019 levels
8/16…100
8/15…101
8/14…98
8/13…103
8/12…107
8/11…101
8/10…102

--Norway’s wealth fund, the world’s largest single stock market investor, posted a profit of $143 billion in the first half of the year, driven by strong equity markets and a weak crown currency, the fund said on Tuesday.

“The fund’s equity investments had a strong first half after a weak 2022.  Equity investments returned 13.7% for the period,” the fund said in a report.  Technology companies delivered the period’s strongest return of 38.6% after a poor year in 2022, it added.  “The sector benefited from strong demand for new artificial intelligence solutions from the biggest internet and software companies and their semiconductor suppliers,” the fund said.

Why bring this up…it being Norway?  Because it’s a $1.4 trillion fund, investing the state’s revenues from oil and gas production, and it owns on average 1.5% of all listed stocks worldwide.

CEO Nicolai Tangen told Reuters the strong return came as a surprise for such a large fund given “a pretty worrisome backdrop,” with high inflation and geopolitical tensions.

This has led the fund to reduce its overweight investment position in major tech companies.

Asked whether he was concerned about a possible crash in tech stocks, Tangen said: “We are always conscious and worried about the biggest exposures of the fund.  Now they are in the tech sector.”

Tech represented 11.9% of the fund’s total value at the end of 2022.

Looking ahead, Tangen said the fund expects it will be difficult to reduce inflation worldwide, not least due to a new phenomenon – inflation fueled by climate change.

Global warming is lowering food harvests, and thus increasing food prices, and reducing productivity since some workers are unable to work in the middle of the day in some countries.

“The new thing here is the link between climate (change) and inflation and therefore between climate and financial markets,” Tangen said.

--Tesla cut prices twice in three days in China this week, further fueling concerns the carmaker is reigniting a price war.

The company reduced the price of Model S sedans and Model X sport utility vehicles in inventory by as much as 70,000 yuan ($9,600) to $103,400 (base).

Two days earlier Tesla marked down versions of the Model Y SUV by about $2,000.

--Shares in Cisco Systems moved higher after the networking giant showed signs of improvement in its product orders.

The company’s outlook for fiscal 2024 came in below Wall Street estimates, but results for the fiscal fourth quarter topped the company’s forecast for both revenue and profits.

For the fiscal fourth quarter ended July 29, Cisco posted revenue of $15.2 billion, up 16% from a year ago, ahead of consensus of $15.1 billion and at the high end of the company’s forecast for growth of 14% to 16%.  On an adjusted basis, the company earned $1.14 a share, ahead of the company’s forecast of $1.05 to $1.07 a share.

The company’s largest unit, “secure, agile networks,” had revenue of $8.1 billion, up 33%. 

For the full year, Cisco’s revenue was $57 billion, up 11%.

For the fiscal first quarter, Cisco forecast revenue of $14.5 billion to $14.7 billion, which at the midpoint would be up 7% from a year ago and in line with consensus.

But for the full year, the company is projecting revenue of $57 billion to $58.2 billion, which would be an increase of just 1% from a year ago and below the Street’s current forecast.

CEO Chuck Robbins said that while the service provider market was weak, the company saw improving order trends for enterprise customers (large companies) and commercial customers (smaller companies), with the public sector “steady.”  Orders were down 14% on a year-over-year basis.

--Deere & Co. shares fell 2% even as it breezed past Wall Street estimates for third-quarter profit on Friday and raised its annual net income outlook on strong demand for large tractors, combines and precision agriculture equipment.  The world’s largest farm equipment maker now expects 2023 net income between $9.75 billion and $10 billion, compared with previous guidance of $9.25bn to $9.50bn, after posting a 60% rise in quarterly profit.

Deere, a barometer for the global economy, has maintained resilient operating profit margins despite volatility in markets worldwide, with demand from farmers looking for new equipment and parts to repair aging machinery bolstering the company’s sales.

Executives have reiterated that order books are still robust heading into next year.  Robust demand for its construction equipment has also propped up margins as the U.S. upgrades roads, railways and other transportation infrastructure under the administration’s $1 trillion package approved by the Senate in 2021.  Construction and forestry equipment sales increased 14% from the prior year.

Net income rose to $2.98 billion for the quarter ended July 31.  Earnings per share came in at $10.20, outpacing consensus of $8.20.  Worldwide net sales and revenue rose 12% to $15.80.

--Shares of major health insurers took a bath Thursday after Blue Shield of California announced plans to cut its reliance on CVS Health as its sole pharmacy benefit manager and work with others including Amazon.com.  UnitedHealth and Cigna also struggled as a result.

CVS said in an 8-K filing, however, that it expects the decision by Blue Shield will not impact its full-year 2023 adjusted EPS, nor its long-term outlook.

--According to new Nielsen data and the Wall Street Journal, streaming’s share of U.S. viewing time grew to a new high in July, while television viewing fell below 50% for the first time.

The milestone is the latest sign of the rapid erosion of the cable-TV bundle, which has lost about a quarter of its subscribers over the past decade, as more Americans cut the cord in favor of Netflix, Hulu and the rest.

Cable television accounted for 29.6% of total viewing time in July, while broadcast attracted 20%, Nielsen said.  Streaming captured 38.7% of viewing time and “Other” – DVD playback and gaming – accounted for the remaining 11.6%.

YouTube, by the way, was the most-watched streaming platform in the U.S. last month, with 9.2% of overall viewing time, while Netflix was next at 8.5%.  The show Americans spent the most time watching was “Suits,” a made for cable TV program that made its debut more than a decade ago and which features Meaghan Markle.  It just became available on Netflix in June.  [It is also available on Peacock.]

Foreign Affairs

Japan/South Korea: In a significant event, U.S., Japanese and South Korean leaders held a summit at Camp David and in a statement released a series of “deliverables” tied to military, diplomatic, education and technology commitments, as well as an agreement to operate a “state-of-the-art” hotline and pledge to closely confer in a crisis.

The agreement, rolled out by President Biden, Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk-yeol, stops short of a formal alliance or the sort of collective defense commitment seen in NATO’s binding Article 5 (attack on one an attack on all).

But it does reflect an understanding that “something that poses a threat to any one of us, fundamentally poses a threat to all of us,” a U.S. official said, echoing NATO language.

National Security spokesperson John Kirby said in an interview that the summit was “not about containing China” despite charges to that effect from Beijing.  “It’s about dealing with a wide set of threats and challenges and quite frankly opportunities in that part of the world.”  He added later that nobody was talking about forming an “Asian NATO.”

But the joint statement did use rather strong language to condemn China’s “dangerous and aggressive actions” in the South China Sea.

So China is not pleased….

….Nor is North Korea:  It is expected that Pyongyang may launch an intercontinental ballistic missile or take other military action to protest the summit, as well as upcoming joint U.S.-South Korean military drills.

The U.S., South Korea and Japan also expect that Russia and North Korea will speed up their defense cooperation, after Russia’s Defense Minister Shoigu visited Kim Jong Un last month.  South Korea spotted signs of military supplies being shipped out of Pyongyang on a Russian plane on Aug. 8.  Washington has criticized North Korea for providing weapons to Russia for the war in Ukraine.

Separately, North Korea concluded that Travis King wants refuge there or in another country because of “inhuman maltreatment and racial discrimination within the U.S. Army,” state media said on Wednesday, Pyongyang’s first public acknowledgement of King crossing from South Korea on July 17.

A private in the U.S. Army, King dashed into the North while on a civilian tour of the Joint Security Area on the border. U.S. officials have said they believe King crossed the border intentionally, and have declined so far to classify him as a prisoner of war.  And that’s what North Korean investigators have also concluded, state news agency KCNA said.

King is now a propaganda pawn of the Korean regime.

Iran: According to a series of European intelligence reports, Iran is close to possibly testing a nuclear weapons device and has sought to obtain illicit technology for its atomic weapons program.

The Middle East Media Research Institute first published translations of the intelligence documents on its website.  The Jerusalem Post then reported on the intelligence findings from the Netherlands, Sweden and Germany.

The most unsettling revelation comes from the Netherlands General and Intelligence Security Service (AVID).

The AVID determined the Iranian regime’s fast-moving development of weapons-grade uranium “brings the option of a possible Iranian first nuclear test closer.”  Iran is “deploying increasingly more sophisticated uranium enrichment centrifuges,” thus enlarging its enrichment capacity.

Meanwhile, Saudi Crown Prince Mohammed bin Salman met Iran’s foreign minister in Jeddah on Friday in the highest level talks since the countries reconciled after years of bitter rivalry that destabilized the region.

Niger: The West African bloc ECOWAS stands ready to intervene militarily in Niger should diplomatic efforts to reverse a coup there fail, a senior official told army chiefs meeting in Ghana on Thursday to discuss the details of a standby force.

ECOWAS Commissioner for Political Affairs, Peace and Security Abdel-Fatau Musah accused the junta that deposed President Mohamed Bazoum on July 26 of “playing cat-and-mouse” with the bloc by refusing to meet with envoys and seeking justifications for the takeover.

“The military and the civilian forces of West Africa are ready to answer to the call of duty,” he told assembled chiefs of defense staff from member states.  He listed past ECOWAS deployments in Gambia, Liberia and elsewhere as examples of readiness.

“If push comes to shove we are going into Niger with our own contingents and equipment and our own resources to make sure we restore constitutional order.  If other democratic partners want to support us they are welcome,” he said.

Musah strongly criticized the junta’s announcement that it had sought to put Bazoum, who is being detained, on trial for treason.  The United Nations, European Union and ECOWAS have all expressed concerns over the conditions of his detention.

“The irony of it is that somebody who is in a hostage situation himself…is being charged with treason.  When did he commit high treason is everybody’s guess,” Musah said.

As I go to post tonight, ECOWAS has set an undisclosed “D-Day” for military intervention if diplomacy fails.

Random Musings

--Presidential approval ratings….

Gallup: 40% approve of President Biden’s job performance, 55% disapprove; 38% of independents approve (July 3-27).

Rasmussen: 46% approve, 53% disapprove (Aug. 18).

--A new Quinnipiac University national poll of registered voters gives President Biden a 39% approval rating, 55% disapproval, similar to July’s survey.

The same survey had Biden leading Trump 47-46 among all registered voters.  Last month, Biden had his biggest edge over Trump 49-44 percent.

Separately, Americans were asked about Biden’s handling of the economy:  36% approve, 58% disapprove.

--In an Emerson College survey of New Hampshire Republican primary voters, Donald Trump has 49%, but Chris Christie is in second with 9%, one more than Ron DeSantis. Tim Scott receives 6%.

Christie has earmarked New Hampshire and needs no worse than third to keep his anti-Trump message alive.

Mike Pence is at 2% and really should pack it in.

--Donald Trump’s popularity is sagging, according to a grim AP-NORC poll released Wednesday.  Just 35% of Americans have a favorable view of Trump compared to 62% who view him unfavorably.  The survey, conducted from last Friday to Monday, also found that 53% of all voters say they definitely wouldn’t vote for Trump in 2024.

Some 53% of those surveyed approve of the Department of Justice indicting Trump for his alleged scheme to stay in power illegally, compared to just 30% who disapprove.  The poll was taken before the Georgia indictment.

But the partisan divide is stark.  Some 86% of Democrats back the indictments compared to just 16% of Republicans.

The above-mentioned Quinnipiac survey had Americans by a 54-42 margin believing Trump should be prosecuted (Democrats 95-5, independents 57-37) for attempting to overturn the election (this poll conducted Aug. 10-14).

Nearly two-thirds of Americans (64%) think the federal criminal charges are either very serious (52%) or somewhat serious (12%), while roughly one-third (32%) think they are either not too serious or not serious at all.

An overwhelming majority of American (83%) are either very worried (44%) or somewhat worried (39%) about the system of democracy being able to function in the United States, while 15% are either not so worried or not worried at all.

In the race for the GOP presidential nomination, Trump remains far ahead with 57% support among Republican and Republican leaning voters.  Governor DeSantis receives 18%, his lowest level of support in Quinnipiac University’s polls of the 2024 GOP primary race this year.  In February 2023, DeSantis was 6 points behind Trump and now he is 39 points back.

Vivek Ramaswamy receives 5%, Mike Pence 4% and Nikki Haley, Tim Scott and Chris Christie all receive 3% each.

--In Quinnipiac’s poll of Democrats and Democratic leaning voters, President Biden receives 72%, Robert F. Kennedy Jr. 13% and Marianne Williamson 9%.

--Trump raged late Sunday night/Monday morning against the impending indictment against him in Georgia, arguing that he did not tamper with the state’s elections in 2020.

Trump said in two Truth Social posts that he did not interfere with the election process and repeated his false claims that others who “tampered” with the process to steal the election from him are the ones who should face prosecution.

“No, I didn’t tamper with the election! Those who rigged & stole the election were the ones doing the tampering, & they are the slime that should be prosecuted,” he said in a post.

“Would someone please tell the Fulton County grand jury that I did not tamper with the election,” he said in another post.

It was Trump who made the phone call in January 2021 to Georgia Secretary of State Raffensperger (R) in which he asked Raffensperger to “find” 11,780 votes to flip the state from now-President Biden.

Trump has defended the incident as a “perfect” phone call.  “I made a perfect phone call of protest,” Trump said Monday.

He alleged Fulton County District Attorney Fani Willis has “no interest” in the “massive amounts of evidence” available on those who he claims stole the election from him and only wants to go after him. He added that he would be “happy” to show the information to the grand jury.

Trump also criticized former Georgia Lt. Gov. Geoff Duncan (R), who received a subpoena last week to testify before the grand jury.  Duncan served as lieutenant governor of the state from 2019 to 2023 and has been highly critical of Trump.

Trump said Duncan should not testify, but he was a “disaster” for not looking into the claims of voter fraud and “fought the truth all the way.”

Trump was then indicted late Monday night for the fourth time.

Speaking to Fox News Digital soon after the indictment became public, Trump claimed: “Nineteen people were indicted, and the whole world is laughing at the United States as they see how corrupt and horrible a place it has turned out to be under the leadership of Crooked Joe Biden.”

Trump said of Fulton County District Attorney Fani Willis: “The racist and corrupt district attorney of Fulton County, which has turned out to be a murder capital of the world with among the highest violent crime levels anywhere in our country, just opened a fundraising site in order to benefit off the things she most campaigned on, ‘I will get Donald Trump.’”

He added: “This politically-inspired indictment, which could have been brought close to three years ago, was tailored for placement right smack in the middle of my political campaign, where I am leading all Republicans – by a lot – and beating Joe Biden soundly in almost all polls.”

Rudy Giuliani, one of the 18 others also indicted in the Georgia probe, told CBS the charges are an “affront to American democracy,” claiming they “do permanent, irrevocable harm” to the justice system.  He described the indictment as “just the next chapter in a book of lies” to frame Trump and anyone else “willing to take on the ruling regime.”

Giuliani added: “The real criminals here are the people who have brought this case forward both directly and indirectly.”

Daniel Henninger / Wall Street Journal

“The Democrats’ bet has been that Mr. Trump is the one Republican Joe Biden could beat, with independents deserting the former president as they did in 2020.  That sounded right, but I’m not so sure anymore. The prosecutorial overkill, the overflowing kitchen sink of criminal counts, is starting to back out all other 2024 considerations.

“What great timing: The one thing the U.S. needs – for itself and an amazed, watching world – is a serious presidential election.

“Xi Jinping must be doing somersaults at the spectacle of his adversary draining its political energy over the Trump indictments.  Mr. Xi, an expert in rigged elections, is surely aware that the U.S. system of accountability has analyzed and refuted Mr. Trump’s election claims.  But Mr. Xi must also be concluding that any system that resolves such an aggressive challenge but then insists on disappearing down a rabbit hole of internal division won’t have enough political capital left to resist his plans for China’s expansion.

“Mr. Trump calls the prosecutions ‘election interference,’ by which he means the election in November 2024.  But clearly the prosecutions are wrecking the Republican Party’s traditional process of candidate selection, potentially reducing both parties’ primaries to nonevents.

“The first GOP primary debate is Wednesday. At this juncture, the one reliable piece of the system still standing is the totality of Republican voters, who will have to decide whether to continue this chaos or offer the country a substantive alternative.”

--Hunter Biden’s legal team said late Sunday the Justice Department had decided to “renege on the previously agreed-upon plea agreement,” escalating a dispute that will potentially be a major factor in the 2024 presidential race.

Hunter’s legal team, days after Attorney General Merrick Garland named Delaware U.S. Attorney David Weiss as a special counsel to continue the investigation and prosecution related to Hunter’s tax and business dealings, issued a three-page filing Sunday, saying prosecutors had proposed and “largely dictated” the language in the plea agreement and a separate deal to resolve a gun charge.

That included language that said the U.S. wouldn’t criminally prosecute Biden further over the conduct at issue in either the tax or gun cases, a provision which Biden understood to mean the investigation was over.

At the July hearing, prosecutors instead revealed they continued to investigate Hunter Biden, including in connection with possible foreign-lobbying charges related to his work for foreign clients, which had been at issue in the tax counts.

In the new filing, Hunter’s team said prosecutors had previously conveyed otherwise, saying that “his understanding of the scope of immunity agreed to by the United States is also corroborated by prosecutors’ contemporaneous written and oral communications during the plea negotiations.”

Peter Baker / New York Times

“What had been a painful but relatively contained political scandal that animated mainly partisans on the right could now extend for months just as the president is gearing up for his re-election campaign. This time, the questions about Hunter Biden’s conduct may be harder for the White House to dismiss as politically motivated.  They may even break out of the conservative echo chamber to the general public, which has largely not paid much attention until now….

“The Biden camp was deeply relieved that five years of investigation had added up to nothing more serious.  The president made a point of inviting his son, who has struggled with a crack cocaine addiction, to a high-profile state dinner two days later in what was taken as a spike-the-ball moment declaring victory over the family’s pursuers.  The fact that Mr. Garland was also at the state dinner, hanging out just across an outdoor tent from the man his department was prosecuting, left even some Democrats feeling uncomfortable.

“But any sense of relief was premature.  When Hunter Biden showed up at the Federal District Court in Wilmington, Del., on July 26 to finalize a plea deal, it all unraveled under questioning from a judge in just a few hours….

“The president’s strategists have argued that Republican attacks on Hunter Biden did not work in the 2020 election, or in the 2022 midterm elections when Democrats did better than anticipated.  Nor, they added, has the issue resonated with voters who will be important to the president’s re-election in 2024, meaning independents and disappointed Democrats.

“That is an assumption that in the months to come will be put on trial, in effect, at the same time as the president’s son.”

Rep. James Comer, R-Ky., chairman of the House Oversight and Accountability Committee, said his committee will eventually subpoena members of President Joe Biden’s family as part of an investigation into Biden’s foreign business dealings.

“This is always gonna end with the Bidens coming in front of the committee,” Comer told Fox Business in an interview last Thursday.  “We are going to subpoena the family.”

But Comer cautioned subpoenas for Biden family members are not imminent.

“We want to talk to about three or four more associates first,” he said.  “We’re trying to bring them in just like we did Devon Archer for a transcribed interview. If they don’t come in voluntarily, then they’ll be subpoenaed.”

Editorial / Wall Street Journal…on AG Garland’s announcement that David Weiss was given Special Counsel status:

“This is another example of the way that Mr. Garland, supposedly a man of sound judgment, has belly flopped his department into the 2024 presidential campaign.

“He unleashed special counsel Jack Smith to pursue Donald Trump, and Mr. Smith has obliged with two prosecutions.  He named a special counsel to investigate Joe Biden’s mishandling of secret documents, but no one expects anything beyond a stern rebuke to come out of that.  Now he’s doing the same with the Hunter prosecution to uncertain result.

“Mr. Garland claims he has done all this to remove any political taint from the investigations, but this is having the opposite effect. We are now going to have a presidential election debate adjudicated in effect by special counsels. Don’t expect any of this to calm our partisan furies or restore faith in nonpartisan justice.”

--Virginia Republican Gov. Glenn Youngkin / USA TODAY

“Elections are competitions, and the principles for victory are straightforward – which candidate has the most compelling vision, communicates that vision the best and builds trust to turn promises made into promises kept.

“Yes, like any team sport in a tough game, the team that fields the best players, executes the better strategy and competes the hardest, wins.

“In Virginia this fall, where every seat in the General Assembly is on the ballot, the stakes could not be more consequential for the future of our state. Republicans have an opportunity to cement our majority in the House, flip the Senate and take Virginia to the next level…..

“One of the most important plays in Republicans’ game plan in Virginia is not new or groundbreaking – it involves an aggressive absentee and early voting program.  We turned out early voters in our 2021 win, and we’re doubling down in 2023. The rules are the rules.  Let’s compete to win.

“In Virginia, you do not need a reason or an excuse to vote early or by absentee ballot.  Democrats put these rules in place while in control of Virginia’s government and have used these rules to their advantage by vastly outpacing Republicans in early and absentee voting.

“We can either continue complaining, or we can recognize reality, beat the left at their own game and win elections.  I chose to win – to make Virginia the best place to live, work and raise a family – which is why I launched Secure Your Vote Virginia.

“Secure Your Vote Virginia modernizes the way we turn out our voters through absentee and early voting.  The portal…provides step-by-step instructions for requesting an absentee ballot or voting early by mail or in person….

“We cannot afford to go into Election Day down thousands of votes – that will all but guarantee a loss.  Losing is not an option when the future of the state is on the line….

“We must use every tool at our disposal to win.  That’s what we did in Virginia in 2021.  It’s also what many governors, including Georgia Gov. Brian Kemp, did in 2022.  We can beat the far left by turning out our voters and winning elections…

“We have an unprecedented opportunity in 2023 to prove, once again, that Virginia can be a beacon of success, overcoming the deep challenges faced by our country mired in the Biden administration’s failed policies.  Let’s get to work.”

If Gov. Youngkin can flip the state senate, many believe that he could inject himself into the GOP presidential nomination process, even at such a late date.  Of course this all depends on how Republican primary voters still feel about Donald Trump come November.

--Gerald F. Seib had a long essay in the Wall Street Journal on prospects for a third-party candidacy in 2024, and while in some polls, 70 percent of Americans do not want a Trump-Biden rematch, the odds of a third-party ticket, say through No Labels, being successful is virtually zero.

As one who voted for John Anderson in 1980 (6.6%) and Ross Perot in 1992 (19%, no Electoral College votes), I know it’s an almost impossible task.

But Seib did have an interesting point.

“Anderson and Perot both claimed, in their own ways, that they wanted to be radical centrists.  The problem for them was that there actually still was a vibrant center in each political party when they ran.  Today, that center is nearly gone as the Democrats have moved left, while Republicans have moved even farther away from their traditional conservatism and toward the Trump populist right.”

And therein lies the opportunity, sort of.

--New restrictions on access to a drug used in the most common form of abortion would be imposed under a federal appeals court ruling issued Wednesday, but the Supreme Court will have the final say.

The ruling by three judges on the 5th U.S. Circuit Court of Appeals in New Orleans overturned part of a lower court ruling that revoked the Food and Drug Administration’s approval – more than two decades ago – of mifepristone.  But it left intact part of the ruling that would end the availability of the drug by mail and require that the drug be administered in the presence of a physician.

Those restrictions won’t take effect, at least right away, because the Supreme Court previously intervened to keep the drug available during the legal fight.

At issue is a Texas-based federal judge’s April ruling revoking the drug’s approval, which was granted more than 20 years ago by the FDA.

--We had some good news last weekend.

A “floating time bomb” oil tanker left adrift in the Red Sea has successfully been drained of its cargo, the UN said.

The vessel was abandoned off Yemen in 2015 after war broke out with more than one million barrels of oil on board.

It has long been feared the deteriorating FSO Safer could explode or break apart.

German Foreign Minister Annalena Baerbock said the international community had “defused a floating time bomb and prevented a potentially enormous environmental and health disaster.”

The UN led a $120 million fundraising effort to secure the decaying ship and buy another tanker to take the recovered oil.  It took 18 days to complete the transfer in a stretch of water where naval mines were known to be located.

The FSO Safer was constructed in 1976 and was carrying more oil than was spilled in the 1989 Exxon Valdez disaster when it was left at sea.

But the vessel is anchored near a terminal controlled by Yemen’s rebel Houthi movement and the fate of the recovered oil could prove even more complex to resolve, such as how profits from the oil’s sale will be shared among warring groups.

--A few weather-related items.

This week the heat was in the Pacific Northwest and the Gulf region.

Portland, Oregon hit 103 degrees on Tuesday, a new record for the date. Nearby Redmond hit 105, also a record for Aug. 15.  Olympia, Washington set a high for the date at 100, as did Spokane with a recording of 102.  Lewiston, Idaho hit a staggering 110 Tuesday, followed by highs of 109 and 108, Wed. and Thursday.

In the Southwest, Houston and College Station were among the locations posting their hottest week ever observed, with average temperatures of 92.3 and 94.7F, respectively.

New Orleans just finished its hottest seven-day stretch and set record highs on 12 straight days (through Aug. 14).

Monday, New Orleans saw its fifth-straight day reaching at least 100, its longest such streak on record.  [I checked the Weather Channel site and they don’t exactly have 100 five straight, but it would depend on where the temp is taken.]  Tuesday it did hit 100, making it a record six straight.

The thing is the entire Gulf Coast has seen overnight “lows” in the 80s and the region is seeing its hottest August on record.  New Orleans and Baton Rouge have already registered 11 record warm lows this month, through Tuesday, Aug. 15.

Coastal water temps in the Gulf are at least 90 degrees from Texas to Florida.  Water temps averaged over the entire Gulf of Mexico topped 88 degrees this week, according to Michael Lowry, a hurricane expert for Miami television affiliate WPLG.  That’s 2.6 degrees above average and more than a degree above the previous record.

“The Gulf of Mexico this week is the hottest it’s been at any point in any year on record by a wide margin,” Lowry tweeted.  Which is going to scare the hell out of meteorologists when the first potentially big storm either forms in the Gulf or enters it.  And that day will come.

Meanwhile, up in Canada, the military airlifted hundreds of residents away from wildfires in the country’s Northwest Territories this week, where officials declared a state of emergency on Tuesday. The regional capital of Yellowknife, located about 300 miles south of the Arctic Circle, declared a state of emergency on Monday.  By Thursday, an evacuation order was given for all 20,000 residents.

The Territories, with a population of just 46,000, have limited infrastructure and there is only one two-lane road out of Yellowknife to the province of Alberta to the south, a trip of some 540km (335 miles).  It’s chaos.

I’m thinking, what about gas stations along the route?  They’d obviously quickly run out.

If there is no rain, the fire could reach the city by Saturday.

Earlier, more than 6,500 people outside of Yellowknife were told to evacuate part of the territories as more than 230 active wildfires roll through the region.  This is scary stuff for the poor people up there.  There aren’t a lot of places to evacuate to.  I’ve been telling you about Fort Good Hope, basically on the Arctic Circle, and its record 99-degree temperature in July.  That’s what’s helping to fuel the fires; Canada experiencing its worst wildfire season on record, with more than 1,000 active fires still burning across the country, charring more than 32 million acres, basically the size of Greece.

Over 5,800 domestic firefighters and nearly 5,000 international firefighters from 12 countries are battling the blazes, an official said last weekend.

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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 $1918
Oil $81.30…seven-week winning streak broken…

Regular Gas: $3.87; Diesel: $4.34 [$3.93 / $4.99 yr. ago]

Returns for the week 8/14/-8/18

Dow Jones  -2.2%  [34500]
S&P 500  -2.1%  [4369]
S&P MidCap  -3.1%
Russell 2000  -3.4%
Nasdaq   -2.6%  [13290]

Returns for the period 1/1/23-8/18/23

Dow Jones  +4.1%
S&P 500  +13.8%
S&P MidCap  +6.1%
Russell 2000  +5.6%
Nasdaq  +27.0%

Bulls 52.2
Bears 19.4…no new figures this week…vacation time…

Hang in there.

Brian Trumbore

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