Week in Review

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Week in Review

09/02/2023

For the week 8/28-9/1

[Posted 5:00 PM ET, Friday]

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Edition 1,272

In a widely circulated Associated Press-NORC Center for Public Affairs Research poll, fully 77% said President Biden is too old to be effective for four more years.  Not only do 89% of Republicans say that, so do 69% of Democrats. That view is held across age groups, not just by young people, though older Democrats specifically are more supportive of his 2024 bid.

In contrast, about half of U.S. adults say Trump is too old for the office, and here the familiar partisan divide emerges.

The main point of the survey is that Democrats, Republicans and independents want to sweep a broad broom through the halls of power, imposing age limits on the presidency, Congress and the Supreme Court.  In all about two-thirds of U.S. adults back an age ceiling on candidates for president and Congress and a mandatory retirement age for justices.  [Between 66% and 68% for all three, specifically.]

I have said since the beginning of the year Joe Biden wouldn’t make it through the year, this year, not 2024.  There is a slow drumbeat of Democrats who are increasingly concerned about the mental capacity of the man, today and months from now.  The investigations swirling around him involving his pathetic, sleazy son are the tipping point, perhaps.

Joe Biden says, “Watch me.” We all have been!  With each passing day, at least when he’s making a public appearance, you see the decline.  [On a related matter, I get into Mitch McConnell below.]

I liked what Daniel Henninger observed from his perch at the Wall Street Journal.

Henninger wrote of former Wyoming GOP Sen. Alan Simpson’s adage that Republicans were “the stupid party” and Democrats were “the evil party.”  And he worked in Bill Clinton’s reply to Bob Dole after the 1996 election, Dole complaining about unfair Clinton attack ads: “You gotta do what you gotta do.”

Henninger:

“Once Democrats conclude the Republican Party has arrived at a point of no return on a Trump candidacy, it will be time for another Clyburn moment.

“Ahead of the February 2020 Democratic primary in South Carolina, Rep. Jim Clyburn, reflecting the Democratic establishment consensus, pulled the plug on then-front-runner Sen. Bernie Sanders as unelectable in a general election, and endorsed Joe Biden. It was a fraud on voters that Mr. Biden was a ‘moderate,’ but Democrats do what they gotta do.

“To win in 2024, they will pull the plug on Joe Biden.

“Democratic Rep. Dean Phillips of Minnesota is already laying the groundwork, saying recently that ‘Democrats are telling me that they want, not a coronation, but they want a competition.’ As widely reported, some 50% of Democrats don’t want Mr. Biden to run….

“The party that wins next year could set the country’s direction for a generation.  Democrats won’t let Mr. Biden’s weaknesses put their agenda at risk.

“I don’t know which village elders would go in to tell Mr. Biden he has to withdraw.  But the message to Mr. Biden would be that he has a choice:  Be remembered by his party as the most progressive president since FDR, or as an unpopular incumbent who lost to Donald Trump or was forced to resign for reasons of incapacity.

“Unlike the Clyburn endorsement, there won’t be a coronation.  Democrats can’t explicitly throw over Kamala Harris, but they can open their primaries to an array of Democratic governors who would evade responsibility for Mr. Biden’s economic policies: California’s Gavin Newsom, Michigan’s Gretchen Whitmer, North Carolina’s Roy Cooper, Colorado’s Jared Polis, Pennsylvania’s Josh Shapiro, New Jersey’s Phil Murphy or Illinois’s J.B. Pritzker.

“Democrats don’t have to win big.  They just have to win, and most of these governors, with the party and its donor base behind them, could pull across a winning margin of independents desiring a minimally acceptable alternative to voting for the Trump result.  Then they would likely win again in 2028.

“Of course, the opposite is true: Virtually any of the other Republican candidates would surely defeat a Joe Biden unpopular for personal and policy reasons.  What is not a mystery is whether the stupid party or the evil party will figure this out first.”

Meanwhile, Congress returns on Tuesday and of immediate concern is funding the government beyond September 30.  Congressional leadership and the White House will be happy with a short-term funding measure (CR), perhaps through year end, but House Speaker Kevin McCarthy faces another potential fight from the Freedom Caucus. 

At the same time, a strike from the United Auto Workers looms, Sept. 14, unless negotiations with the Detroit 3 (GM, Ford and Stellantis) are extended.  Ninety-seven percent of UAW membership authorized a strike and one seems inevitable.

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According to unnamed U.S. officials, there has been a dramatic rise in Ukraine’s number of dead.  The BBC’s Quentin Sommerville has been on the front line in the east, where the grim task of counting the dead has become a daily reality.

“The unknown soldiers lie piled high in a small brick mortuary, not very far from the front line in Donetsk, where 26-year-old Margo says she speaks to the dead.

“ ‘It may sound weird…but I’m the one who wants to apologize for their deaths.  I want to thank them somehow.  It’s as if they can hear, but they can’t respond.' ”

It’s Margo’s job to record the particulars of the fallen.

Ukraine gives no official toll of its war dead, but as I noted last week, the New York Times put the number at 70,000 dead and as many as 120,000 injured, per U.S. officials.  The UN has recorded 9,177 civilian deaths to date, but this figure is months old.

This Week in Ukraine…

--Sunday, Russian investigators said that genetic tests had confirmed that Yevgeny Prigozhin was among the 10 people killed in a plane crash last Wednesday.  Russia’s aviation agency had previously published the names of all 10 on board the private jet, including Prigozhin and Dmitry Utkin, his right-hand man who helped found the Wagner Group.

President Vladimir Putin did not attend the private funeral for Prigozhin held Tuesday in St. Petersburg.  [Utkin’s funeral was Thursday outside Moscow.]

Wednesday, the Kremlin said that investigators were considering the possibility that the plane carrying Prigozhin was downed on purpose, the first explicit acknowledgement that he may have been assassinated.

“It is obvious that different versions are being considered, including the version – you know what we are talking about, let’s say a deliberate atrocity,” Kremlin spokesman Dmitry Peskov told reporters.

--On Monday, Ukraine said its troops had liberated the southeastern settlement of Robotyne and were trying to push further south in their counteroffensive.  The Ukrainian military said last week that its forces had raised the national flag in the strategic settlement, but were still carrying out mopping-up operations.  Ukraine believes it has broken through the most difficult line of Russian defenses in the south and that they will now start advancing more quickly, a commander who led troops into Robotyne told Reuters.

“Robotyne has been liberated,” Deputy Defense Minister Hanna Maliar was quoted as saying by the military.  The settlement is six miles south of the frontline town of Orikhiv in the Zaporizhzhia region on an important road towards Tokmak, a Russian-occupied road and rail hub.  Tokmak’s capture would be big, as Ukrainian troops seek to press southwards towards the Sea of Azov in a drive that is intended to split Russian forces.

Ukrainian forces are also fighting Russian troops in eastern Ukraine, and progress has been slower than had been widely expected in the counteroffensive because they have encountered vast Russian minefields and trenches.  Maliar described the battlefield situation in the east as “very hot” in the past week.  Russia was gathering new forces there and regrouping, and Moscow was aiming to deploy its best troops there.

President Zelensky wrote on social media Monday: “Ukraine has shown that the liberation of our land during combat operations is no accident.  Everything is deserved.  It is the heroism of our people and the defense support from our partners. It is the courage of Ukrainians and the solidarity of the world working for such a desirable common result.”

According to Joint Chiefs Chairman Army Gen. Mark Milley, Ukrainian troops have “attacked through the first main defensive belt,” Milley told Jordanian television in an interview that aired over the weekend.  “This is a defense in-depth that the Russians had many months to prepare.  It’s got minefields.  It’s got dragon’s teeth.  It’s got tank ditches.  It’s a very, very complex set of defensive preparations that the Ukrainians are fighting through.”

Regarding Ukraine’s wider counteroffensive, “I think it’s frankly too early to say whether it succeeded or failed,” said Milley.  But: “It clearly has had partial success,” he said.  “The speed at which the offensive is being undertaken is slower than the planners had thought. But that is not necessarily uncommon in the conduct of war.  It’s the difference between war on paper, and real war.  And when real people die and tanks and infantry fighting vehicles get blown up, and you’re running into real dragon’s teeth and real mines, things tend to slow down…But it’s not over yet.”

Zelensky dismissed suggestions that his country’s troops were spread too thinly and repeated his belief that Kyiv would regain all Ukrainian territory that has been seized by Moscow. 

“We have passed the main roads that were mined. We are coming to those lines where we can go (forward). I’m sure we’ll go faster from there,” said a commander in Robotyne who goes by the callsign “Skala.”

Thursday, Ukraine told critics of the pace of its three-month-old counteroffensive to “shut up,” the sharpest signal yet of Kyiv’s frustration at leaks from Western officials that say its forces are advancing too slowly.

As I noted last week, stories in the New York Times and Washington Post, among other outlets, quoted U.S. and other Western officials as suggesting the offensive was falling short of expectations, some faulting Ukraine’s strategy.

Ukrainian commanders insist they are moving slowly on purpose, degrading Russia’s defenses and logistics to reduce losses when they finally attack at full strength.

“Criticizing the slow pace of the counteroffensive equals spitting into the face of the Ukrainian soldier who sacrifices his life every day, moving forward and liberating one kilometer of Ukrainian soil after another,” Ukraine’s Foreign Minister Dmitro Kuleba told reporters on Thursday.  “I would recommend all critics to shut up, come to Ukraine and try to liberate one square centimeter by themselves,” he said at a meeting of EU foreign ministers in Spain.

NATO Secretary-General Jens Stoltenberg told CNN that Ukrainian commanders deserved the benefit of the doubt.  “Ukrainians have exceeded expectations again and again,” he said.  “We need to trust them.  We advise, we help, we support. But…it is the Ukrainians that have to make those decisions.”

--Three people were killed in an overnight Russian missile strike in central Ukraine, and two died in shelling later on Monday in the east and south.  The three people were killed at an industrial plant in central Poltava region.  Five were wounded and another unaccounted for.  The workers were on a night shift at a vegetable oil factory, presidential chief of staff Andriy Yermak said.

--Poland and the Baltic states will close their borders with Belarus entirely if a “critical incident” involving Wagner mercenaries takes place, Polish Interior Minister Mariusz Kaminski said on Monday.  EU members Latvia, Lithuania, and Poland, which share a border with Belarus, have been increasingly concerned about border security since hundreds of Russian battle-hardened Wagner forces arrived in Belarus at the invitation of President Alexander Lukashenko.

Poland has also seen an increase in the number of mainly Middle Eastern and African migrants trying to cross the border in recent months and has accused Belarus of facilitating them.

“We demand from the authorities in Minsk that the Wagner Group immediately leave the territory of Belarus and that illegal migrants immediately leave the border area and are sent back to their home countries,” Kaminski told a press conference.  “If there is a critical incident, regardless of whether it is at the Polish or Lithuanian border, we will retaliate immediately.  All border crossings that have opened so far will be closed,” he said.

--Russian officials Wednesday accused Ukraine of launching what appeared to be the biggest nighttime drone attack on Russian soil since the war began 18 months ago.  The Kremlin’s forces also hit Kyiv during the night with what Ukrainian officials called a “massive, combined attack” that killed two people.

Drones struck an airport in western Russia’s Pskov region near the border with Estonia and Latvia, damaging four Il-76 transport aircraft that can carry heavy machinery, Russian state news agency TASS reported.

The airport strike started a massive fire, the regional governor reported.  Unconfirmed reports said up to 20 drones may have targeted the airport.

More drones were shot down over the Oryol, Bryansk, Ryazan and Kaluga regions, as well as the region surrounding Moscow, according to the Defense Ministry.  But Pskov was the only region reporting substantial damage.

Ukraine has increasingly targeted Russia’s military assets behind the front lines in the country’s east and south.

At the same time, Russia used drones and missiles in its biggest bombardment of Kyiv in months, with two people killed, according to officials there.  Serhiy Popko, the head of the Kyiv military administration, called the attack the biggest on the capital since the spring.

--Russia’s military, writing on the Telegram app, said early on Wednesday that one of its aircraft had destroyed four rapid Ukrainian vessels carrying up to 50 paratroops in an operation on the Black Sea.  The report couldn’t be confirmed.  Nothing from the Ukrainian military that I saw either way.

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--Hundreds of Ukrainians attended a church ceremony on Tuesday to pay their last respects to a celebrated fighter pilot with the callsign Juice, who was killed in an air disaster during training over the weekend.

The death of Andriy Pilshchykov, 30, a poster boy for Ukraine’s air force who lobbied Western governments for supplies of F-16 fighter jets, was a big blow for Ukraine’s military.

“Unfortunately, the number of deaths is already so high, but every death is painful,” said Natalia Menesheva, a dentist who attended the ceremony in Kyiv’s main Greek Catholic cathedral.  “These are irreparable losses, the best of the nation are dying.  Young, talented, handsome.  It’s very painful.”

Pilshchykov and two other pilots were killed on Friday when two L-39 combat training aircraft collided. The air force spokesperson described him as a “mega-talent.”

I saw this line in a report and it is truly heartbreaking.  “His girlfriend, ashen-faced, looked down and sobbed” as the casket was brought inside the cathedral by six soldiers in uniform.

President Zelensky had called Pilshchykov “one of those who greatly helped our state.”

--Michael Kimmage / Wall Street Journal

“(Putin’s) 2022 invasion of Ukraine was not intended to win over the West.  To the contrary, it was a premeditated assault not just on the territory of Ukraine but on Western power as such.  Putin wanted the war to help Russia align with the non-West, expose the hollowness of Western power, and demonstrate that Russia is destined to be an important arbiter of international order.  This is a top-line effort for Russia.  Had the war gone well, Putin would have tried to split Europe from the U.S.  He has not given up on this agenda and will wage a long war, either to grind down Western backing for Ukraine or to ensure that the Ukraine invited into Western institutions like NATO and the European Union is a failed state.  Putin’s dream in Ukraine is to prove the reality of American decline.

“For Putin, American decline equals Russian ascendance. Since the start of the war last year, Putin has gone out of his way to play the statesman.  He has sent Foreign Minister Sergei Lavrov on long tours of Africa, Asia, the Middle East and Latin America.  A month ago, Putin hosted a Russia-Africa summit in St. Petersburg, building on the popularity of post-Soviet Russia in Africa, in part due to its economic ties with many African countries.  Putin attacked Western criticism of Russia as hypocritical, blaming NATO expansion for the war in Ukraine.

“Another dimension of this outreach to Africa is Putin’s cultural conservatism: Fond of claiming that the West is decadent, he presents Russia as a virtuous alternative….

“At the start of his presidency, Putin presented himself to the world as Russia’s canny modernizer.  Even then, however, violence was omnipresent under the surface, manifesting itself in the Second Chechen War of 1999-2009, the serial assassinations of journalists, the 2014 annexation of Crimea and incursion into the Donbas, and the unrestrained bombing of Syrian cities after 2015.  With the war in Ukraine has come a marked increase in the Kremlin’s bloodthirstiness and ruthlessness.  Knowing less and less caution, Putin causes more and more wanton death and destruction.  Putin, who is 70, has not mellowed with age.  He has become radicalized….

“What Russia gains in short-term leverage through violence and extortion, it loses in its reputation for reliability and decency, which are no less fundamental foreign-policy assets than the possession of military power.

“ ‘Kremlin intrigues are comparable to a bulldog fight under a rug,’ Winston Churchill once observed: ‘An outsider only hears the growling.’  Churchill’s adage applied especially well in Stalin’s time, when the Kremlin was internally contentious and externally opaque….

“After besting Mikahil Gorbachev in an epic fight, Boris Yeltsin had the benefit of being democratically elected in 1991 and again in 1996.  But in 2000 Yeltsin appointed Putin as president, cloaking political change in secrecy once again.  Putin continued the tradition by cycling Dmitry Medvedev into the presidency in 2008 and out of it in 2012.  From 2012 to 2022, political stasis ensued.  Russia seemed to be a country with no politics at all. There wasn’t even audible growling.

“The first person to pull the rug out from under this political quietude was Yevgeny Prigozhin.  He did not wait around the halls of power for opportunity to come his way.  Of his own volition, he took his ragtag army to within a few hundred miles of Moscow.  When he failed to go further, Putin did not have him jailed or sent into exile.  Prigozhin remained conspicuously in public view until he died in public view. The ugliness of the fight for power is no longer hidden.  Nor, to borrow from another Churchill quote about Russia, is there much of an enigma or a riddle or a mystery to Putinism. It is only and self-evidently a dogfight. This may be a workable recipe for Putin’s survival within Russia.  It is not the foundation for any kind of enduring global leadership.”

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Wall Street and the Economy

With the Street now awaiting the Fed’s next decision on interest rates, Sept. 19-20, two key figures came in this week that will be closely examined by Chair Jerome Powell and Co.

Concealed in the July report on personal income, up 0.2%, and consumption, up a hefty and better-than-expected 0.8% (owing in no small part to Barbenheimer, Taylor Swift and Amazon Prime Day falling in the month), we had the critical personal consumption expenditures index, the Fed’s preferred inflation barometer.

While the headline figure was up 0.2% and 3.3% year-over-year, the key core PCE was up 4.2%, up a tick from the prior month, as expected, but up 4%+.  That isn’t the Fed’s target 2%, boys and girls.

It’s real simple, and it’s been simple on the rate front all year.  You just have to listen to what Powell has said, and I’ve gotten a kick out of everyone who just ignores it.  ‘Oh, surely, they’ll see the light and have to soon cut rates.’

As Dr. Rumack (Leslie Nielsen) might have replied, ‘Inflation is still 4%.  And don’t call me Shirley.’

Yes, the Fed could pause.  But it’s higher for longer.  Full stop.

The other big report for the Fed was today’s August jobs report, and while the figure, 187,000, was stronger than expected, the prior two months were revised down 110,000, and the unemployment rate rose to 3.8%.  [U6, the underemployment rate, also rose from 6.7% to 7.1%.]

Plus, the Fed had to like the average hourly earnings data…up 0.2%, 4.3% year-over-year, both a tick less than forecast. 

So a Fed-friendly report, and stocks rallied.

Separately, we had a second look at second-quarter GDP and it was revised downward a rather unusual 0.3% to 2.1% from the first look of 2.4%.  This follows Q1’s 2.0%.  2022 came in at 2.1%.  Ergo, we’re growing at about, err, 2%. 

We also had important manufacturing data for the month of August.  The Chicago PMI came in at 48.7, much higher than expected but still the 12th consecutive month under 50, the dividing line between growth and contraction.

And then today the national ISM reading was 47.6, the 10th consecutive month under 50.

The Atlanta Fed’s GDPNow barometer for the third quarter is at 5.6% after all of this week’s data.

Lastly, the S&P CoreLogic Case-Shiller National Home Price Index for June was up 0.9% on the 20-city index over the prior month, but down 1.2% year-over-year, basically in line with expectations.

The weakest market was San Francisco, where prices fell 9.7% on an annual basis.  No surprise there.

Freddie Mac’s 30-year fixed-rate mortgage is at 7.18%, down slightly from last week’s 7.23%.

As for the troubled U.S. commercial real estate market, advisory and services company Newmark Group estimates about $1.2 trillion of debt is “potentially troubled.”

Offices are the biggest near-term problem, accounting for more than half of the $626 billion of at-risk debt that’s set to mature by the end of 2025, the brokerage estimates.  Office values have tumbled 31% from a peak in March 2022, when the Federal Reserve started raising interest rates, according to property analytics firm Green Street.

Overleveraged owners are often more motivated to stop payments than sink money into buildings with diminished prospects for returns: Blackstone, Brookfield Corp. and Goldman Sachs Group among the investors that have defaulted or relinquished offices to lenders this year.

David Bitner, global head of research at Newmark, said in an interview with Bloomberg, “They’re going to have every incentive to hand back the keys to lenders.”

As for Commerce Secretary Gina Raimondo’s trip to China this week, she told Chinese officials that the U.S. was not seeking to sever economic ties with China.  But she raised a lot of concerns that were prompting American businesses to describe China as “uninvestable” because it’s “too risky.”

American companies are worried about long-running issues like intellectual property theft, as well as newer developments like raids on businesses, a counterespionage law and exorbitant fines that come without explanations.  After raising the concerns with Premier Li Qiang, China’s second-highest official, Raimondo said she “didn’t receive any commitments.”

And that’s the bottom line with China.  Raimondo asked for Beijing’s cooperation on broader threats like climate change, fentanyl and artificial intelligence.  Chinese officials in turn asked the U.S. to reduce export controls on advanced technology and retract a recent executive order that bans new investments in certain advanced technologies, Raimondo said.  The commerce secretary said she had refused those requests, saying the U.S. doesn’t negotiate on matters of national security.

Premier Li told Raimondo that economic relations between China and the U.S. were “mutually beneficial,” according to the official Xinhua news agency.  But he also warned that “politicizing economic and trade issues and overstretching the concept of security” would “seriously affect bilateral relations and mutual trust.”

Europe and Asia

S&P Global released the manufacturing PMIs for the eurozone for August, just 43.5, but up from July’s 38-month low of 42.7.  Still, another sharp worsening in the health of the manufacturing economy.

Germany 39.1, France 46.0, Italy 45.4, Spain 46.5, Netherlands 45.9, Ireland 50.8, Greece 52.9.

UK: 43.0, its lowest level since May 2020.

We had a flash reading on euro area inflation for August from Eurostat, and it’s stable at 5.3% compared to July.

The core rate, ex-food and energy, did fall, encouragingly, from 6.6% to an estimated 6.2%.  But that’s obviously still high.

Last weekend, from Jackson Hole, Wyoming, European Central Bank president Christine Lagarde said the ECB will set borrowing costs as high as needed and leave them there for as long as it takes to bring inflation back to its goal.

Describing an “era of uncertainty,” Lagarde said it’s important that central banks provide an anchor for the economy and ensure price stability in line with their respective mandates.

“In the current environment, this means – for the ECB – setting interest rates at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to our 2 percent medium-term target,” Lagarde said.

Lastly, Eurostat reported the July unemployment rate for the EA20 was 6.4%, stable compared with June and down from 6.7% in July 2022.

Germany 2.9%, France 7.4%, Italy 7.6%, Spain 11.6%, Netherlands 3.6%, Ireland 4.1%.

Turning to Asia…China reported its official PMIs for August from the National Bureau of Statistics and manufacturing contracted for a fifth straight month, but at a slower pace than expected, 49.7.  The non-manufacturing figure was just 51.0, down from 51.5 prior.

The private Caixin manufacturing PMI for August came in at a better-than-expected 51.0 vs. 49.2 prior.  The services reading is released Monday.

Meanwhile, China attempted to prop up their stock market by lowering the stamp duty on stock trades for the first time since 2008, marking a major attempt to restore confidence in the world’s second-largest equity market.  But the Shanghai Composite rose just 1% Monday following the news, though a respectable 2.3% on the week.

And property developer Evergrande Group on Sunday reported a January-June net loss of 33 billion yuan ($4.53 billion) versus a $9.1 billion loss in the same period a year ago.  Evergrande is at the center of a crisis in China’s property sector that since late 2021 has seen a string of debt defaults.

Evergrande shares then plunged by nearly 90% after they began trading in Hong Kong, following a 17-month ban, upon its default in 2021.

Japan’s August manufacturing PMI was unchanged at 49.6.

Separately, July retail sales were up 6.8% year-over-year, while industrial production in the month fell 2.5% Y/Y.

South Korea’s manufacturing PMI for August was 48.9.  Taiwan’s came in at a putrid 44.1.  Business conditions here have worsened in each of the past 15 months.

Street Bytes

--The S&P 500 fell 1.8% in August, the worst month since February.  But this week, the S&P rose 2.5%, the Dow Jones 1.4% to 34837, and Nasdaq 3.2%, largely on the feeling that the Fed not only will pause later this month, but it is finished raising rates given the tame economic/inflation data.  I don’t necessarily agree that the Fed is truly ‘finished,’ and I would urge everyone to watch energy, oil prices spiking anew this week.

Little economic news next week as the market awaits the consumer price report on Sept. 13, before the Fed’s confab the following week.

--U.S. Treasury Yields

6-mo. 5.48%  2-yr. 4.87%  10-yr. 4.17%  30-yr. 4.29%

The yield on the 2-year fell 20 basis points (the 10-year just six) on the above-noted sentiment that the Fed is finished hiking.  But the intraday volatility remains historic.

--AAA’s nationwide average price of regular gas at the pump as we enter the holiday weekend is $3.81, up three cents over the past month, but unchanged from a year ago ($3.82).

But the price of diesel, now $4.45, is up 38 cents over the past month.  Reminder, this feeds into goods and food inflation, in particular.

--The government named 10 drugs that will be subject to the first ever price negotiations by Medicare, taking aim at some of the most widely used and costliest medicines in America.  This would be the strongest effort to tackle high drug costs – but drugmakers will try to persuade courts to scuttle the powers that Medicare was granted last year, as part of bipartisan legislation.

Medicare spent $50.5 billion on the ten drugs on the list last year, JPMorgan Chase estimates.  Among them Eliquis, Entresto, Jardiance, Stelara and Xarelto.

Lower prices would take effect in 2026, with Medicare estimating it would save $25 billion a year by 2031.  The savings would go mostly to Medicare because it pays the bulk of the cost of the drugs.

The reductions might not directly affect the price patients pay at the pharmacy counter, though some seniors taking pricey cancer drugs might wind up paying less out of their own pockets.

But, again, the drugmakers and trade groups will be filing lawsuits challenging the constitutionality of Medicare’s new negotiating power, saying negotiations will curb research into certain drugs while not stopping health plans from limiting access.

You know, it’s an easy conservative position to say research will be cut, and I’m conservative, but, c’mon.  One of the most irritating commercials of all time is for Jardiance, where I’m supposed to celebrate an immensely obese woman on the drug.  It is played in my area 68,000 times a week.  Just stop running the commercial.  If the drug (for diabetes) is effective, let the patient’s doctor recommend it. 

--Earnings season is essentially over, but Dow component Salesforce reported late Wednesday that it had stronger-than-expected fiscal second-quarter results, driven by double-digit subscription and support revenue growth, while the software maker raised its full-year financial outlook.  The shares surged 6% on the open Thursday.

Adjusted per-share earnings rose to $2.12 during the three months ended July 31 from $1.19 a year earlier.  Consensus was at $1.88.  Revenue gained 11% to $8.6 billion, above the Street’s $8.53 billion view.

Subscription and support revenue gained 12% to $8.01 billion, while professional services and other added 3% to $597 million.

Salesforce expects fiscal 2024 adjust EPS of $8.04 to $8.06, up from a prior outlook of $7.41 to $7.43.  The company anticipates reporting revenue between $34.7 billion and $34.8bn, vs. $34.5 billion to $34.7bn previously expected. The consensus is for $7.45 on sales of $34.65 billion. 

CEO Marc Benioff has improved margins by laying off 10% of the workforce and restructured its sales team in a bid toward maximizing profits, through improved margins, and the Street likes that.

Salesforce is also promoting its plans to integrate AI into its products.  But then everyone is.

--UBS Group AG posted the biggest-ever quarterly profit for a bank in the second quarter as a result of its emergency takeover of Credit Suisse and confirmed that it would fully integrate the local business of its former rival by next year.

The $29 billion gain is a result of the accounting difference between the $3.8 billion price UBS paid for Credit Suisse and the value of the acquired lender’s balance sheet.  Underlying profit for the first combined UBS-Credit Suisse quarter came in at $1.1 billion.

UBS CEO Sergio Ermotti has been scrambling to implement one of the biggest mergers ever in global finance. The deal was hastily assembled in March as Credit Suisse hurtled toward bankruptcy.  Ermotti confirmed that 3,000 positions will go in Switzerland alone as a result of the merger.

But the integration task is likely to involve thousands more job cuts globally, yet UBS now commands more than $5 trillion in client assets.  UBS shares jumped 7% at the open in Zurich on Thursday.

“The combination will reinforce our status as a premier global franchise, and one that our home market Switzerland can be proud of,” Ermotti said in the earnings release on Thursday.  “We re humbled by this task, and the responsibility entrusted to us.”

--FedEx said Tuesday its express, ground, and freight units will increase their shipping rates starting Jan. 1.

FedEx Express will raise rates by an average of 5.9% for shipments within the U.S., in addition to U.S. exports and imports, the company said.  Other shipping rates for FedEx Ground and FedEx Home Delivery will increase at the same rate.

Well, that’s inflationary.

--Monday, Britain’s national Air Traffic Service suffered a “technical issue” which forced the UK to restrict the flow of aircraft, passengers stuck in planes on the tarmac and airlines and airports warning of delays and cancellations.

Many passengers reported they were stuck on planes on the tarmac waiting to take off, or being held in airport buildings, in Spain, Portugal, Greece and elsewhere on what was a busy travel day due to Monday’s public holiday in much of Britain and Ireland (a bank holiday I’m all too familiar with). In Budapest, one pilot came on to tell his passengers that they faced an 8-12 hour delay.

Hundreds of flights across the continent were cancelled, hundreds of delays.

--TSA checkpoint numbers vs. 2019

8/31…123 percent of 2019 levels
8/30…106
8/29…92
8/28…103
8/27…134…lower number than normal in 2019
8/26…106
8/25…94
8/24…97

--Facebook’s parent company, Meta, says it took down two massive online influence campaigns from China and Russia.  The company announced the two moves Tuesday, and called the Chinese operation “the largest known cross-platform covert influence operation in the world.”  It includes more than 7,700 Facebook accounts, more than 950 Pages, 15 different Facebook Groups, and 15 Instagram accounts.  And at least some of those seem to have been run by “individuals associated with Chinese law enforcement.”

The content involved “positive commentary about China and its province Xinjiang and criticisms of the United States, Western foreign policies, and critics of the Chinese government including journalists and researchers.”

Researchers said they noticed “a clear shift pattern, with bursts of activity in the mid-morning and early afternoon, Beijing time, with breaks for lunch and supper, and then a final burst of activity in the evening.”  Content also involved fake stories about Taiwan’s leadership “surrendering” and how the U.S. was “hiding the truth about the origin of the [corona]virus from the outside world.”

The Russians, meanwhile, tried to steer opinion about their Ukraine invasion using fake news reports “mimicking websites of mainstream news outlets and government entities,” Meta said.  The spoofed government sources claimed “Western support for Ukraine would lead to higher taxes, greater insecurity, or lower standards of living.”

“This is the largest and the most aggressively-persistent Russian-origin operation we’ve taken down since 2017,” Meta said.  It used fake articles pretending to originate at the Washington Post, Fox News, and NATO.

--Canada’s economy unexpectedly contracted in the second quarter, declining at an annualized rate of 0.2%, when the Bank of Canada had forecast 1.5% annualized growth.  The economists at the BoC should be forced to drink American beer this weekend, rather than their homegrown quality lager.

--Best Buy on Tuesday cut the top end of its annual revenue forecast after beating quarterly sales and profit estimates as bigger discounts encouraged bargain-hunting Americans to shop for appliances and laptops at its stores.  The shares of the top U.S. electronics retailer climbed about 4% after CEO Corie Barry signaled improving television sales trends.  The company also projected a slightly better-than-expected back-to-school season.

Still, Best Buy joined Target and Macy’s in flagging customers reining in discretionary spending and shifting to essentials amid sticky inflation or spending on services and experiences.

Second-quarter revenue fell 7.2% to $9.58 billion but beat estimates of $9.52bn, while adjusted profit of $1.22 per share also topped analysts’ estimates of $1.06.  Comparable store sales fell 6.2%, while the company sees 2024 comp sales dropping between 4.5% and 6%.

Best Buy now expects annual revenue between $43.8 billion and $44.5bn, compared to $43.8bn to $45.2bn previously.  Adjusted earnings per share should be between $6.00 to $6.40, vs. an earlier forecast of $5.70 to $6.50.

--HP Inc. posted mixed financial results, showing the effects of both weak demand for printers and softer-than-expected prices for personal computers.  And with fundamentals improving more slowly than the company had hoped, management trimmed its outlook for the October 2023 fiscal year.  The shares fell about 5%.

For its fiscal third quarter ended July 31, HP reported revenue of $13.2 billion, down 9.9% from the year-ago quarter, and slightly below consensus.  Adjusted profit was 86 cents a share, matching estimates.

The company’s PC business gained market share, with improving operating margins, said CEO Enrique Lores.

But Lores added “PC prices are not improving as quickly as we expected.”  He noted that while overall demand is stronger than expected, in particular for consumer PCs, continued high levels of industry-wide inventory are pressuring pricing.

At the same time, he said, a slowdown in corporate hiring, among other factors, has reduced enterprise PC demand.

HP’s Personal Systems Group, the company’s PC business, had quarterly revenue of $8.9 billion, down 11% from a year earlier and slightly above the Street consensus at $8.7 billion. 

As for printers, Lores said demand was particularly soft for consumer models, while commercial printers were down modestly.  Demand was soft in China, “which did not recover in Q3 as we had expected,” he said.

Printing group revenue was $4.3 billion, down 7% from a year ago.

--But Dell Technologies Inc. shares surged 22% today to a record high, after the company raised its full-year financial guidance with boosts from artificial intelligence and stabilizing demand for computer hardware after a months-long slump.

Dell reported second quarter revenue and EPS above analyst estimates.  Servers and networking revenue rose 11% from the first quarter to $4.27 billion, driven by higher demand for AI-optimized servers, Dell said.  [But sales in the segment fell 18% year-over-year.]

Overall, Dell reported sales of $22.93 billion vs. expectations of $20.86bn, with earnings of $1.74 crushing forecasts for $1.14.

But while earnings rose 4% vs. a year ago, sales fell 13% Y/Y.  Yup, it’s all about how you tell the story. 

The company raised its EPS guidance to $6.10-$6.50 from $5.25-$5.75.

--3M said it was nearing a settlement that would resolve hundreds of thousands of claims by veterans that earplugs made by the company and a subsidiary failed to protect them from hearing loss.

Under the terms being discussed, 3M would pay about $5.5 billion, though negotiations are continuing and the final amount could be even higher.

The earplug litigation has become the largest mass tort in U.S. history, with more than 300,000 claims.  Veterans allege that 3M and Aearo Technologies, a company 3M acquired in 2008, produced faulty earplugs that failed to protect their hearing from noise damage when issued to them by the U.S. military.  3M is contesting the cases, and has said the earplugs work correctly when used with proper training.

3M shares rallied on news of the ‘potential’ settlement because the amount being discussed is substantially less than the $10 billion to $15 billion that some analysts have predicted the case would cost.

3M’s ability to absorb a huge earplug settlement has been diminished by a tentative settlement back in June over so-called forever chemicals in municipal drinking water.  That agreement between 3M and municipal water providers, which still needs court approval, could cost 3M as much as $12.5 billion over five years.

--Broadcom forecast fourth-quarter revenue slightly below Wall Street estimates on Thursday, on worries bleak enterprise spending and stiff competition in the networking chip space will outweigh benefits from a boom in artificial intelligence-led demand.  Shares of the San Jose, California-based company fell over 5%.

Soft enterprise demand, coupled with slower-than-expected recovery in consumer electronics markets such as smartphones, has also taken a toll on Broadcom’s semiconductor business.

The entire software industry is feeling the pain of slashed IT budgets across enterprises, both in the U.S. and Europe.

The chip company expects current-quarter revenue to be about $9.27 billion, basically the consensus call today.  Revenue in the third quarter was $8.88 billion.  Adjusted earnings of $10.54 per share in the quarter ended July 30, were above estimates of $10.42.

--Lululemon Athletica lifted its annual profit and revenue forecasts for a second time after beating quarterly estimates on Thursday, betting on steady demand for its activewear from affluent shoppers in North America and China.

Lululemon – which in the last quarter said that there was no change in customer behavior – has seen people stick to their pandemic habits of shopping for comfortable clothing such as Dance Studio pants, running shorts as well as accessories like backpacks and duffle. LULU has also been launching products such as “road-to-trail” running shoes and introducing new colors in its sports apparel in a bid to attract more customers to shop at its stores.  Revenue in North America surged 11% in the second quarter, slowing down from the 17% increase it saw in the first quarter.

The company now expects full-year 2023 revenue between $9.51 billion and $9.57 billion, compared with its prior estimate of $9.44bn to $9.51bn.  Lululemon now also expects annual profit between $12.02 and $12.17 per share, after earlier forecasting earnings of $11.74 to $11.94.  The premium apparel retailer’s revenue rose to $2.21 billion in the second quarter, up from $1.87bn a year earlier, while analysts on average had expected $2.17bn.

The shares rose 6% in response.

--Bitcoin rose to two-week highs on Tuesday after a U.S. court ruled that the SEC should not have rejected digital asset manager Grayscale’s application for a spot bitcoin exchange traded fund.

The SEC’s denial of Grayscale’s proposal was arbitrary and capricious because the regulator failed to explain the different treatment between bitcoin futures ETFs and spot bitcoin ETFs, said a panel of judges in the District of Columbia Court of Appeals in Washington.

The SEC has 45 days to appeal.  It had rejected Grayscale’s application for a spot bitcoin ETF, arguing the proposal did not meet anti-fraud and investor protection standards.

Coinbase shares soared 15% on the court ruling, though how much Coinbase would actually benefit from a spot-based bitcoin ETF is debatable.

And then the rest of the week, bitcoin plunged back to prior levels below $26,000.

--Amazon CEO Andy Jassy made it clear the company employees need to start working from the office.  As per a report by Insider, Jassy told employees working from home that ‘it is not going to work out for them’ if they don’t start working from the office. 

Amazon is looking for at least three days a week in the office.

--Hawaiian Electric’s shares jumped 40% on Monday after the utility said it was not responsible for the wildfires in Maui earlier last month, saying its power lines had been shut for hours prior to the deadliest blaze that devastated the island.

Maui County sued Hawaiian Electric last week, accusing the utility of negligently failing to shut off power and causing the devastating fires that destroyed the coastal town of Lahaina and killed 115 people, with an unknown number missing at this point.  [The FBI is to issue an update later today.]

Well, you’ve seen the videos of trees falling on power lines that then ignited the brush.

Hawaiian Electric, though, says its power lines were responsible for the earlier of two fires in Lahaina, but said the town was gutted by a different fire which started later in the afternoon and could not be contained by the county’s fire department.

This will be one interesting trial if it comes to that.  Obviously, there’s a way of proving if and when the utility shut off the power.

The shares of Hawaiian Electric rallied on the company’s claims, but were still down more than 60% since the wildfires started on Aug. 8.

--Farmers Insurance, one of the nation’s largest property and casualty insurers, is laying off 2,400 workers, representing 11% of its total workforce.

The Los Angeles-based company cited a need to reduce operational costs and focus on “long-term sustainable profitability” in an announcement Monday to explain the job cuts.

This has been a chaotic year for the California insurance market, with Farmers previously announcing it was not planning on accelerating its growth in the state, and would keep writing new policies at the same pace as before, which doesn’t seem like much of a big deal, but it was another shot across the bow for homeowners, builders and state regulators.

State Farm, the top insurer in the state, had announced in May that it was hitting pause on writing new home insurance policies in the state, citing rising construction costs and growing wildfire risks.  Allstate, sixth largest in the state, hit pause last year.  So Farmers, the second-largest home and auto insurer in California, is saying it won’t fill the void.

--Campbell Soup forecast annual profit largely above Wall Street estimates on Thursday, banking on higher prices to help offset softer demand for its soups and packaged meals as inflation-weary consumers switch to cheaper options.

Large packaged food companies have passed on higher input costs to customers through multiple rounds of price increases over the past several months, a move that has helped bolster their revenues despite a decline in sales volumes.  Campbell’s snack brands, such as Cape Cod potato chips and Goldfish crackers, have also continued to attract customers despite getting costlier, offsetting weaker sales at its meals and beverages division that makes soups and sauces.

Organic sales at Campbell’s snacks segment rose 9% in the fourth quarter ended July 30 from a year earlier, while its meals and beverages division posted a modest 1% increase.  Volumes across both businesses fell 5% in the quarter.

Campbell’s gross profit margin grew to 31.7% from 28.7%, helped by easing costs of commodities such as wheat and corn.

The company expects full-year adjusted earnings per share between $3.09 and $3.15, higher than analysts’ average estimate of $3.10.  Net sales at Campbell rose to $2.07 billion in the fourth quarter from $1.99bn a year earlier.

--Bloomberg had a piece over the weekend on the damage left by a SpaceX blast last spring.

“In April, U.S. wildlife officials visited the site of a SpaceX rocket that exploded shortly after takeoff and took in the damage: Concrete chunks had left craters a foot deep and were strewn across tidal flats, almost four acres of state park were burned, and seven bobwhite quail eggs and a collection of blue land crabs had been incinerated.

“The officials, biologists working with the Fish and Wildlife Service, privately expressed disbelief at the extent of the scene, records obtained by Bloomberg News show.  ‘The explosion was so extensive it sent concrete chunks flying into the surf,’ said one email from Chris Perez of the FWS to colleagues.  The environmental damage was due to the tremendous amount of force required to get the world’s largest rocket off the ground….

“(Officials) puzzled over why SpaceX had opted not to use flame-suppression technology long considered the gold standard in the launch industry.  Not doing so appeared to be a costly error, allowing what Elon Musk called a ‘rock tornado’ of power, heat and gas to blow a hole into the ground under Starship, the SpaceX rocket, during the April 20 incident – a problem the company is still trying to solve.

“SpaceX’s ‘pad site was totally destroyed and will likely force them to re-design the whole thing,’ Perez wrote to Joan Marsan, an attorney with the U.S. Department of Interior.  ‘Probably won’t see another launch for awhile.’”

Concrete chunks were thrown as far as 2,680 feet from the launchpad.  Think about that.  About half a mile.

--There was a huge water main break in New York’s Times Square early this week, gushing nearly 2 million gallons of water into the city’s busiest subway station, which brought multiple lines to a crawl.  It took the city’s Department of Environmental Protection 90 minutes to shut off the water.

But the reason why I mention it is Crain’s New York later reported that it was a 127-year-old water main, though according to Debra Laefer, an associate professor at NYU’s Tandon School of Engineering, “Typically the life expectancy for one of these pipes would be 50 years, and at the rate that we and other communities are replacing them, there’s a mismatch so that they will never catch up unless they start putting in new pipes more quickly,” Laefer told Crain’s.  “While, yes, some pipes can last 127 years, we shouldn’t be counting on that; we really need to invest in them more.”

Nearly 40% of New York City’s water mains were installed prior to 1941, despite the average design life of these pipes being estimated between 50 and 70 years, according to a 2022 infrastructure report card from the American Society of Civil Engineers.

New York has roughly 6,800 miles of similar decaying water mains.

--Meanwhile, hotel occupancy in Gotham swelled by over 10% in July compared to the same time in 2022, reflecting a year-to-date improvement in occupancy of 13%, higher than the national average gain of 9%, according to real estate research firm CoStar.

Hotel occupancy reached 86% in July in NYC, while the nationwide average remained at 69%.

--Warner Bros. Discovery named Mark Thompson as CEO of CNN on Wednesday, tasking the former New York Times and BBC chief with reviving a news network beset by sagging ratings and falling profits.  Thompson succeeds Chris Licht, who stepped down in June after a rocky one year at the helm.

Thompson was highly successful in his 8-year tenure at the New York Times, helping transform it into a beacon for newspapers in the internet age by focusing on digital subscriptions.  The Times’ share price grew nearly five-fold in the period.  [I double-checked this factoid.  It’s true.  I’m shocked.]

--Uh oh…Subway’s foot traffic plunged 21.6% over the past four years, according to data from Placer.ai shared with the New York Post.

The private equity firm, Roark Capital, that just purchased the sandwich chain for $9.6 billion,  has its work cut out for it in reviving the troubled brand.

Rival Jersey Mike’s, on the other hand, has seen an increase of 39.1% over the same period from May 2019 to May 2023, the data showed.

Our late Dr. Bortrum chose Subway over Jersey Mike’s.

--“Taylor Swift: The Eras Tour” will show at movie theaters in the U.S., Canada and Mexico starting Oct. 13.  AMC Theaters said it is acting as a theatrical distributor in North America and securing showings with other companies.  AMC, along with Cinemark and Regal Cinemas, plan to screen the film.

AMC said it strengthened its website and ticketing capacity in anticipation of a surge in demand for tickets for the concert film.

Movie tickets are selling for $19.89 for adults and $13.13 for children and older adults.

AMC said every U.S. theater location will have at least four showtimes a day for the concert film on Thursdays, Fridays, Saturdays and Sundays.

It’s not clear for how long the film will run.

--Finally, we note the passing of stock picker and market forecaster Laszlo Birinyi, 79.  Birinyi developed a theory about the flow of money that made him one of the nation’s foremost stock pickers in the 1990s.  He was a frequent guest on “Wall Street Week with Louis Rukeyser.”

Foreign Affairs

China/Taiwan:  Terry Gou, the billionaire founder of iPhone assembler Foxconn Technology Group, said he plans to run for Taiwan’s presidency, complicating a closely watched contest that could reshape the island’s testy relations with Beijing and affect U.S. policy toward China.

Gou cast himself as an independent who can unite Taiwan’s disparate opposition forces and unseat the ruling Democratic Progressive Party, which has tightened ties with Washington, at the presidential election due in January.

Analysts say his emergence (if it comes to pass) could sap support for the Beijing-friendly Nationalist Party, or Kuomintang, of which he was a member.

“The people’s interests are my biggest interests,” said Gou.  “I don’t have partisan baggage.”

But in an echo of the Kuomintang’s platform, Gou accused the ruling DPP of irresponsibly stirring up tensions with Beijing and steering Taiwan toward the danger of war.  “We must take down the DPP,” the 72-year-old said.  “We want peace, not war. We want unity, not tearing apart.”

Well this is stupid.  Gou, and the Kuomintang, would just let China slide in and poof…gone is an independent Taiwan.

Vice President William Lai is the front runner in opinion polls with 40 percent, in a field including Gou.

Meanwhile, the White House approved an arms sale to Taiwan under terms typically designed for sovereign countries. While the package is modest – only $80 million of what Congress had set aside as a potential $2 billion – the implications of using the so-called Foreign Military Financing program to provide it infuriated China, the Associated Press reported Thursday.

A Chinese military spokesman said, “As always, the People’s Liberation Army will take all necessary measures to resolutely retaliate,” according to the South China Morning Post.

House Foreign Affairs Committee Chairman Rep. Michael McCaul (Tex.) said in a statement: “These weapons will not only help Taiwan and protect other democracies in the region, but also strengthen the U.S. deterrence posture and ensure our national security from an increasingly aggressive (Chinese Communist Party).”

As I’ve noted in the past, Taiwan has purchased $19 billion in military items from the U.S., but most of it remains undelivered due to supply chain issues and U.S. support for Ukraine.

And in a move to further poke the bear, the British parliament on Wednesday declared Taiwan an “independent country” because, as they described it, the self-governing island “possesses all the qualifications for statehood.”

Love it.

Separately, Chinese President Xi Jinping is likely to skip a G20 summit in India next week.  Premier Li Qiang is expected to represent Beijing at the Sept. 9-10 meeting in New Delhi.  The summit in India had been viewed as a venue for a possible meeting between Xi and President Biden, who has confirmed his attendance.  Xi last met Biden on the sidelines of the G20 in Bali, Indonesia last November.  Vladimir Putin previously said he will not be traveling to New Delhi and will send Foreign Minister Lavrov instead.

Tensions between China and India have risen again over a border dispute between the two nuclear-armed neighbors.

Meanwhile, China’s state-owned nuclear power corporation says it has passed a milestone in its quest to create an “artificial sun” powered by nuclear fusion.

China National Nuclear Corporation said on Saturday that the newest version of its tokamak machine, known as HL-2A, had generated a plasma current of more than 1 million amperes, or 1 mega-amp, in high-confinement mode for the first time.

“This is an important milestone for the country’s development of nuclear fusion…as confined nuclear fusion is one of the three building blocks of the country’s nuclear energy development strategy,” it said.

Scientists hope that the process – which generates energy in much the same way as the sun generates heat and light – can provide safe, clean and near-limitless energy.

North Korea: Pyongyang said it conducted a simulated “scorched-earth” nuclear strike on targets across South Korea, state media reported on Thursday, in reaction to allied exercises that it said amounted to plans for a preemptive nuclear attack by the United States.  The missile unit fired two ballistic missiles and correctly carried out its “nuclear strike mission,” the General Staff of the North’s Korean People’s Army said in a statement carried by KCNA.

“The KPA staged a tactical nuclear strike drill simulating scorched-earth strikes at major command centers and operational airfields of the ‘ROK’ military gangsters on Wednesday night,” it said, using the initials of South Korea’s official name, the Republic of Korea.

South Korea’s military said this was nothing.  Just another two short-range ballistic missiles into the sea, hours after the U.S. deployed B-1B bombers for allied air drills.

Russia said on Thursday it intended to develop ties with North Korea, while not confirming a statement by the White House that President Putin had exchanged letters with Kim Jong Un.  The White House said on Wednesday it was concerned that arms negotiations between Russia and North Korea were advancing actively, and said Putin and Kim had written to each other pledging to increase their cooperation.

Gabon: African leaders were working out on Thursday how to respond to officers in Gabon who ousted President Ali Bongo and installed their own head of state, the latest in a wave of coups in West and Central Africa that regional powers have failed to reverse.

The takeover ends the Bongo family dynasty’s almost six decades in power and creates a new conundrum for regional powers who have struggled to find an effective response to eight coups in the area since 2020.

ECOWAS, the Central Africa political bloc, condemned the coup and planned an “imminent” meeting of heads of state to determine how to respond.  But ECOWAS has been totally ineffective in Niger, which suffered a coup about a month ago.

Nigerian President Bola Tinubu, the current chair of ECOWAS, said he was working closely with other African leaders to contain what he called a “contagion of autocracy” spreading across Africa.

Good luck.

[Reuters reported this afternoon that a military plane took a Russian delegation to Burkina Faso on Thursday, and then landed in Central African Republic Friday, according to flight tracking data and a Reuters reporter.  The Wagner Group has been operating in CAR since 2018, helping the government fight rebels and extending Russian influence in the mineral-rich nation.  Burkina Faso, and Mali, have shunned old alliances with former colonial power France.  Russia no doubt wants to reassure some leaders, post-Prigozhin, while exerting control over Wagner troops on the ground in Africa.]

Israel/Libya: Protests broke out in Tripoli, the capital of Libya, after Israel’s foreign minister announced that he had held an informal meeting with his Libyan counterpart.  Libya is a staunch supporter of Palestine and refuses to recognize Israel.  The Speaker’s Office in Libya’s parliament accused the foreign minister of “grand treason.”  The prime minister then suspended her.

Ecuador: Prisoners here took 57 prison guards hostage, hours after four car-bombs exploded in the capital, Quito (thankfully no reported injuries).  Both incidents are believed to be muscle-flexing by organized-crime gangs.  The unrest came a day after authorities carried out an extensive search for weapons in one of the country’s biggest jails.  Over 400 inmates have died in Ecuadorian prisons since 2021.

[If you are planning a bucket list trip to the Galapagos Islands, reminder, most excursions go through Quito.]

Random Musings

--Presidential approval ratings….

Gallup: New numbers…42% approve of President Biden’s job performance, 53% disapprove; 39% of independents approve (Aug. 1-23).  The prior split was 40-55, 38.

Rasmussen: 40% approve, 58% disapprove (Sept. 1).  Big drop from last week’s 46-53 split.

--Special Counsel Jack Smith had proposed starting the trial for the case charging Donald Trump with trying to overturn his 2020 election defeat on Jan. 2, 2024.  Trump’s lawyers then asked U.S. District Judge Tanya Chutkan, Monday, to delay the trial until April 2026.  Chutkan said neither of those dates was acceptable.

“Mr. Trump will have to make the trial date work, regardless of his schedule,” she said, adding that a defendant’s professional schedule should not have a bearing on when a trial is set.

Trump’s attorneys say they need time to sort through the government’s evidence, but prosecutors say much of that consists of public materials, such as Trump’s statements and congressional records. They said on Monday that they have handed over most of the evidence in the case, which totals about 12.8 million pages.

Chutkan then set a date of March 4, 2024, two months after the date proposed by Smith.

“The public has a right to a prompt and efficient resolution of this matter,” Chutkan said.

March 4 is a day before Super Tuesday.

“I want to note here that setting a trial date does not depend and should not depend on the defendant’s personal or professional obligations,” Chutkan said.

In the Georgia case, District Attorney Fani Willis had asked the court to set the same March 4, 2024 date, but now that will change, and there are issues on breaking up all the defendants.

[Trump pleaded not guilty on Thursday and waived arraignment, slated for next week.]

Trump is already set to be on trial in New York on March 25, 2024, on separate state charges of concealing a hush money payment to Stormy Daniels.

Trump is also due to go to trial in Florida on May 20, 2024, on federal charges also brought by Smith alleging he illegally retained classified records after leaving the White House and tried to obstruct justice.

Editorial / Wall Street Journal

“When Donald Trump won the Republican presidential nomination in 2016, he spent Super Tuesday barnstorming Columbus, Ohio, and Louisville, Ky., holding his signature rallies.  Next year Mr. Trump might be stuck in a defendant’s chair at the federal courthouse in Washington, D.C., and how the public will respond is anybody’s guess.

“Mr. Trump has been indicted four times, but the first case to be resolved might be the one involving his 2020 election subversion….

“It’s all well and good to argue that nobody is above the law… Yet whatever happens in Judge Chutkan’s courtroom, including her decision about when it happens, is bound to affect the 2024 presidential election….

“The March 4 choice means that at least some Republican voters from early and Super Tuesday states will probably see their ballots as a chance to protest what they view as unfair treatment of Mr. Trump.    Voting for him will be their way of giving the establishment the middle finger. Mr. Trump might have the GOP nomination sewn up before a verdict arrives and voters learn whether he’s a convicted felon.  This would certainly delight Democrats….

“But the stubborn fact for Republicans, even those fond of Mr. Trump, is that his legal risks are political risks for the GOP. The next federal case, set for a May 20 trial in Florida, involves allegations that Mr. Trump squirreled away national secrets and then tried to delete Mar-a-Lago security tapes to cover it up.  Most analysts say that’s the strongest indictment.

“It’s incumbent on Mr. Trump’s Republican opponents to make the case directly to GOP voters that they shouldn’t roll the dice.  The way to restore impartial justice is to nominate a candidate who can beat an aging and politically vulnerable President Biden.

“Sending Mr. Trump to a 2024 rematch he is likely to lose among independent voters and many Republicans would accomplish nothing. It would be a strange and self-destructive catharsis for Republicans to try to ‘own the libs’ by making Mr. Biden’s re-election easier.”

--A federal judge determined that Rudy Giuliani forfeits the defamation lawsuit from two Georgia election workers against him, which could lead to significant penalties for the former attorney to Donald Trump.

Frankly, I had never heard of ‘forfeiting a lawsuit,’ but Giuliani lost the case because he struggled to maintain access to his electronic records, partly because of the cost, and couldn’t adequately respond to subpoenas from attorneys for Ruby Freeman and Shaye Moss as the case moved forward.

The mother and daughter are asking for unspecified damages after they say they suffered emotional and reputational harm, as well as having their safety put in danger, after Giuliani singled them out when he made false claims of ballot tampering in Georgia after the 2020 election.

A trial to determine the amount of damages for which Giuliani will be held liable will be set for later this year or early 2024, Judge Beryl Howell of the DC District Court said on Wednesday.

These two women deserve $millions.  This was the most outrageous example of defamation I can think of.  It was beyond cruel.  Disgraceful.  Hell-worthy, when it comes to an end-of-life judgement from the Almighty.

--Donald Trump’s mug shot helped him raise $9.4 million less than a week after he surrendered to authorities in the Georgia election interference case.  With this windfall, the Trump campaign has now raised more than $20 million in August, Fox News Digital reported on Tuesday.

“Since the moment my mugshot was plastered all over the Internet in a vicious attempt to wrongfully turn me into a criminal, our movement has RAISED $9 MILLION from grassroots patriots like YOU,” Trump said in a statement released by the Trump Save America Joint Fundraising Committee on Tuesday.

--Editorial / Wall Street Journal

“House investigators are trying to figure out President Biden’s relationship to his son’s foreign business deals, and now comes a new revelation: emails from private accounts that Joe Biden maintained while Vice President using a pseudonym.

“The Southeastern Legal Foundation on Monday sued the National Archives and Records Administration (NARA) under the Freedom of Information Act, demanding access to some 5,100 email messages in which then-Vice President Biden used a pseudonym for government business. NARA has admitted having Joe Biden’s emails from robinware456@gmail.com, JRBWare@gmail.com, and Robert.L.Peters@pci.gov.

“House Oversight Chairman James Comer wants to see all of the pseudonym emails, as well as unredacted versions of the few that have been made public.  A Comer spokesperson says NARA says it has ‘sent some of the records to the representatives for former President Obama and Joe Biden for their approval to be released.’

“Senators Chuck Grassley and Ron Johnson first demanded access to Joe Biden’s pseudonym emails in mid-2021, after Hunter Biden’s famous laptop showed the veep’s office used private or alias accounts to send government information to Hunter….

“Why use email addresses to skirt searches of government records? Without the public exposure of Hunter’s laptop by the New York Post, nobody would know an extra set of vice presidential communications existed under obscure addresses.

“The clandestine emails fit a pattern that GOP investigators are piecing together of a behind-the-scenes effort by Hunter to sell his father’s power in Washington – in which Joe played along….

“Government employees are discouraged from using private email to conduct government business, and when they do they are required to forward all relevant documents to federal record-keepers.  There’s no reason for the White House to refuse disclosing these official, vice-presidential records – unless it has something it wants to hide.”

--Meanwhile, should Biden make it into 2024 and actually attempt to campaign, the issue of illegal migration will come up again.  “Record numbers of migrant families streamed across the U.S.-Mexico border in August, according to preliminary data obtained by the Washington Post, an influx that has upended Biden administration efforts to discourage parents from entering illegally with children and could once again place immigration in the spotlight during a presidential race.”

The U.S. Border Patrol arrested at least 91,000 migrants who crossed as part of a family group in August, exceeding the prior one-month record of 84,486 set in May 2019, during the Trump administration.

Overall, the data show, border apprehensions have risen more than 30 percent for two consecutive months, after falling sharply in May and June as the Biden administration rolled out new restrictions and entry opportunities.  Border Patrol made more than 177,000 arrests along the Mexico border in August, up from 132,652 in July and 99,539 in June.

--Senate Minority leader Mitch McConnell (R-Ky) froze up for more than 30 seconds on Wednesday during a public appearance before he was escorted away, the second such ‘public’ incident in a little more than a month, and who knows how many private instances this has occurred in front of staff when the cameras weren’t on.  It is awful to watch, but at the same time, McConnell must step down from his leadership duties, while Democratic Sen. Dianne Feinstein should immediately resign.

This is the U.S. Senate.  There are only 100 senators, and they have a huge role in shaping policy and the future direction of the country.  Most importantly is their impact on foreign policy.

The Senate is due to reconvene on Tuesday and it will be interesting to see what happens to these two.  McConnell, for example, has always played a key role in the above-mentioned budget negotiations.

McConnell is leader until the next Congress, which begins in 2025.  But a special conference meeting could be held to talk about the party’s leadership.  It takes just five GOP senators to call for a meeting, and then Sen. John Barrasso, the GOP conference chairman, sets the schedule.

Regardless, the Senate GOP conference is set to meet for its usual weekly meeting next Wednesday, so we might hear something after, and hopefully we hear from McConnell directly, but you have to believe, “three strikes and he’s out.”  At least I hope so.

Thursday, the U.S. Capitol physician said the leader was cleared to continue his schedule.

“I have consulted with Leader McConnell and conferred with his neurology team.  After evaluating yesterday’s incident, I have informed Leader McConnell that he is medically clear to continue with his schedule as planned,” Dr. Brian Monahan, the attending doctor for the Capitol, said in a statement released through McConnell’s office.

“Occasional lightheadedness is not uncommon in concussion recovery and can also be expected as a result of dehydration,” added Monahan.

--Karl Rove / Wall Street Journal

“A particularly low point of last week’s GOP presidential debate came at around the 39-minute mark, when an unusually glib, shallow, overbearing, smooth-talking biotech entrepreneur proclaimed himself ‘the only person on the stage who isn’t bought and paid for.’ That’s when most Americans, and most Republicans, got their first real look at Vivek Ramaswamy.

“The candidate offered no proof for his charge.  He didn’t care that his opponents have more then 123 years of public service among them, serving as vice president, governor, senator, representative, Drug Enforcement Agency administrator, undersecretary of homeland security, U.S. attorney, state legislator, county council member and combat veteran.

“Mr. Ramaswamy’s public service?  None.  That’s ironic given that at 18 he asked the Rev. Al Sharpton, a candidate for the 2004 Democratic presidential nomination, at an MSNBC forum: ‘Of all the Democratic candidates out there, why should I vote for the one with the least political experience?’ Add to the mix that Mr. Ramaswamy was evidently so uninterested in the nation’s direction that he couldn’t be bothered to vote in the 2008, 2012 and 2016 presidential elections….

“Mr. Ramaswamy is quick to disregard the truth when it’s politically expedient.  Discussing the Jan. 6, 2021, Capitol riots with Tucker Carlson at the Iowa Family Leadership Summit in July, the GOP hopeful said, ‘What caused January 6th is pervasive censorship.’  When ‘you tell people they cannot scream,’ he explained, ‘that is when they tear things down.’

“It didn’t matter to Mr. Ramaswamy that President Trump’s stolen-election claims got their day in court and couldn’t be proved. Or that the militia members, Proud Boys and an outright mob Mr. Trump whipped up on the Capitol steps weren’t merely trying to scream. They beat police officers bloody trying to stop a joint session of Congress.  How weird for a person seeking to represent a party that once championed law and order to excuse this sort of behavior….

“It’s easy to dismiss Mr. Ramaswamy as a present-day Professor Harold Hill, the con man in ‘The Music Man’ with a ready smile and rapid patter skinning the citizens of River City.  But Hill wanted only to see band uniforms and musical instruments.  Mr. Ramaswamy wants to control America’s nuclear codes – or perhaps to occupy a comfortable seat in Mr. Trump’s cabinet.

“He is a performance artist who says outrageous things, smears his opponents and appeals to the dark parts of the American psyche.  There’s already a GOP candidate who does all those things, and worse.  Republicans deserve a choice, not an echo.”

I’ve said my piece on Ramaswamy.  He makes my skin crawl. 

I do have to note that Thursday, Joseph Biggs, a onetime lieutenant in the Proud Boys, was sentenced to 17 years in prison after his conviction on charges of seditious conspiracy for plotting with a gang of pro-Trump followers to attack the Capitol and disrupt the peaceful transfer of power.

--Fox News wrongly reported last month that a Gold Star family had to pay $60,000 to ship the remains of a Marine killed in Afghanistan. The story was not true, and the indignation it inspired drew the attention of the U.S. Marine Corps, which asked for a correction.  Instead, Fox’s editors deleted the story, and the network did not apologize to the deceased Marine’s family until Military.com brought attention to the matter with new reporting last Wednesday; a network spokesperson finally apologized on Saturday (of course when no one is paying attention).

--Rising air pollution can cut life expectancy by more than five years per person in South Asia, one of the world’s most polluted regions, according to a report from the University of Chicago’s Energy Policy Institute and its latest Air Quality Life Index.

Rapid industrialization and population growth have contributed to declining air quality in South Asia, where particulate pollution levels are currently more than 50% higher than at the start of the century and now overshadow dangers posed by larger health threats.

People in Bangladesh, the world’s most polluted country, stand to lose 6.8 years of life on average per person, compared to 3.6 months in the United States, according to the study, which uses satellite data to calculate the impact of an increase in airborne fine particles on life expectancy.

India is responsible for about 59% of the world’s increase in pollution since 2013, the report said, as hazardous air threatens to shorten lives further in some of the country’s more polluted regions.  In densely populated New Delhi, the world’s most polluted mega-city, the average life span is down by more than 10 years!

Well, I’ve always had a simple rule about air pollution.  If it looks and smells like s---, it is s---.  I spent a month in India way back in 1985, and despite numerous washings, I was never able to get the smell out of my clothes when I returned.  I had to throw them all out.

G20 leaders must be thrilled to be meeting in New Delhi.  Mask up!

--As one who is a lifetime user of contact lens and is constantly putting drops in my eyes, nothing is scarier than the recent warnings on eye drops (regular eye drops) from the Food and Drug Administration, specifically Dr. Berne’s MSM Drops 5 percent Solution and LightEyez MSM Eye Drops – Eye Repair.

These drops could potentially be contaminated with bacteria, fungus, or both, according to an Aug. 22 consumer warning.  Both companies sell the drops online.

Last I saw, at least five people have died nationwide, as “Using contaminated eye drops could result in minor to serious vision-threatening infection which could possibly progress to a life-threatening infection,” said the FDA.

Health officials also said these products contain an active ingredient that is unapproved, and is “illegally marketed” for sale in the United States.

Some of the drops, including other brands not listed above, are manufactured overseas.  Personally, I’d carefully check the label, as I now do. 

--The weather….

Thankfully, Hurricane Idalia struck in a sparsely populated area of Florida on Wednesday, and fatalities were few as it then moved up through Georgia, South Carolina and eastern North Carolina.  Initial damage estimates are about one-tenth those of Hurricane Ian last year (Ian causing $112 billion in property losses and killing 150). 

But if you lived in Steinhatchee, Perry, Cedar Key, or Horseshoe Beach, such a comparison is meaningless.

If Idalia hadn’t been undergoing an eyewall-replacement cycle as it neared the coast, which reduced the strength slightly, it could have been far worse.

--It hit 110F in Dallas on Saturday, after 110 on Friday, breaking by four degrees the previous record for the date set in 2011, according to the National Weather Service.  And it’s going to basically be 100 the next ten days, when the average is 90/91.  It’s been a brutal summer across Texas.

I’ve been a little surprised the electric grid has held up, but it is diversified.  That said, the Electric Reliability Council of Texas, or ERCOT, has asked the state’s 30 million residents five times this summer to voluntarily reduce power usage because of the high demand created by the intense heat.

This weekend is going to see intense heat in America’s Midwest, with the temp potentially hitting 100 degrees in Minneapolis.

--Australia recorded its warmest winter on record, its weather bureau said on Friday ahead of a widely anticipated decision over whether to declare El Nino conditions, which typically bring hotter, drier weather.

--Hong Kong and the Chinese province of Guangdong canceled hundreds of flights today and evacuated nearly 800,000 as the imminent arrival of Typhoon Saola forced closures of businesses, schools and financial markets.  Packing winds of around 125 mph, the super typhoon made landfall late morning today, Eastern Time.  It might rate among the five strongest to hit Guangdong since 1949, authorities warned.

Actually, if you’ve been to Hong Kong, picture 460 flights being canceled there.  Storm surges of up to 10 feet were expected.  Macau is also under the gun.

Another storm, Haikui, is set to hit Taiwan on Sunday and then move on to Fujian province, sadly, a place I am all too familiar with.

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

This week we note the deaths of three U.S. Marines, killed in an Osprey helicopter crash during a military drill in Australia…Captain Eleanor LeBeau, 29; Corporal Spencer Collart, 21; and Major Tobin Lewis, 37.  Twenty others were injured.

Pray for Ukraine.

God bless America.

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Gold $1966
Oil $85.88

Regular Gas: $3.81; Diesel: $4.45 [$3.82 / $5.08 yr. ago]

Returns for the week 8/28-9/1

Dow Jones  +1.4%  [34837]
S&P 500  +2.5%  [4515]
S&P MidCap  +3.5%
Russell 2000  +3.6%
Nasdaq  +3.2%  [14031]

Returns for the period 1/1/23-9/1/23

Dow Jones  +5.1%
S&P 500  +17.6%
S&P MidCap  +9.8%
Russell 2000  +9.1%
Nasdaq  +34.1%

Bulls 43.1
Bears 20.8

Hang in there.  Happy Labor Day!

Brian Trumbore

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