Week in Review

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Week in Review

10/21/2023

For the week 10/16-10/20

[Posted 5:15 PM ET, Friday]

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Edition 1,279

President Joe Biden gave just his second Oval Office address Thursday night, an attempt to convince Americans they should spend $billions more on supporting Israel and Ukraine, specifically $14 billion for the former, $60 billion for the latter, as part of a $105 billion package  that includes money for border security, humanitarian aid and $7 billion for the Indo-Pacific region, particularly Taiwan.

It was immensely frustrating for some of us that it took this long for the president to go before the people in prime time to discuss the importance of the war in Ukraine.  As I’ve noted countless times since the war started, pathetically, nothing formal from Biden until last night.

The content of his speech was generally OK, save for the issue of Iran, but it was poorly delivered, rushed, his speech slurred, and the American people saw a very feeble man at a most critical, and dangerous, time in our nation’s history.

Biden argued that only the U.S. can prevent global chaos.

“American leadership is what holds the world together.  American alliances are what keep us, America, safe,” said Biden.

Biden sought to link Hamas to Vladimir Putin.

“Hamas and Putin represent different threats, but they share this in common: They both want to annihilate a neighboring democracy,” he said.

Biden acknowledged that some Americans are asking, “Why does it matter to America” that the U.S. support the wars?

“I know these conflicts can seem far away,” he said.  “History has taught us that when terrorists don’t pay a price for their terror, when dictators don’t pay a price for their aggression, they cause more chaos and death and more destruction.  They keep going and the cost and the threats to America and the world keeps rising,” he said.

If Putin is not stopped, he could threaten Poland, Estonia, Latvia and Lithuania, all NATO allies, Biden suggested.  “If Putin attacks a NATO ally we will defend every inch of NATO.” If the U.S. doesn’t act, “the risks of conflicts and chaos could spread,” including in the Middle East.

Alluding to the political chaos in Washington, Biden said to Republicans: “You can’t let petty, partisan, angry politics get in the way of our responsibilities as a great nation…I refuse to let that happen,” he said.

Biden made clear Israel was not responsible for the hospital blast, discussed at length down below.  And he warned against antisemitism and Islamophobia.

Republicans accused Biden of coddling Iran after his speech, for failing to enforce oil sanctions and for enriching Tehran with tens of billions of dollars.

In fact, aside from saying Vladimir Putin was getting weapons from Iran, this is all that Biden said about Iran in his address:

“Iran is supporting Russia in Ukraine, and it’s supporting Hamas and other terrorist groups in the region. And we’ll continue to hold them accountable, I might add.”

Hold Iran accountable, the president hasn’t done, in any shape or form.  He has correctly moved more firepower to the region as a deterrent, but Iran has not been held accountable for recent attacks on U.S. forces and interests in just the past few weeks in the region, to name but one example.

Walter Russell Mead wrote the following in the Wall Street Journal Thursday afternoon, prior to Biden’s speech:

“Mr. Biden has yet to grapple with the painful truth that America’s core problem in the Middle East is the march of an unappeasable Iran toward regional power regardless of moral or human cost.

“That is not the only thing Mr. Biden and his team don’t seem to have grasped. The Middle East firestorm is merely one hot spot in a world spinning out of control….

“Emboldened by American failures to respond effectively (as when Mr. Putin invaded Georgia in 2008 and Ukraine in 2014, when President Obama failed to enforce his ‘red line’ in Syria, or when China built and militarized artificial islands in the South China Sea), our adversaries gradually lost their inhibitions and dared to challenge us more directly in more damaging ways.

“Mr. Putin’s 2022 invasion of Ukraine in defiance of direct American warnings was a major step. Iran’s support for Hamas’ strike on Israel is an even bolder attack on the American order. If President Biden’s response to Hamas and its patron Iran fails to restore respect for American power, wisdom and will, our enemies everywhere will draw conclusions and take steps that we and our allies won’t like.

“As Mr. Biden analyzes his options and the support he is prepared to offer Israel, he needs to remember that the world is watching.  Strategic passivity as deterrence erodes is a recipe for escalating crises and, ultimately sometimes quite suddenly, war.”

Meanwhile, as I said would be the case, the U.S. and Israel are losing the information war.  There is no such thing as my dictum ‘wait 24 hours’ on the Arab Street.

On the issue of Prime Minister Benjamin Netanyahu, The Economist interviewed former prime minister and defense minister Ehud Barak.

Regarding Oct. 7, Barak said the atrocities represent “the greatest failure in Israeli history.”  And once the war ends, the great reckoning will take place in Israel.  Questions will be asked as to who was responsible for the failures in intelligence and planning that allowed Hamas to take Israel so completely by surprise and perpetrate such horrific crimes.

“The immediate operational problems are being fixed now,” Barak says.  “But a much deeper assessment will have to take place later.”  When that happens, he is convinced that the blame will fall on Netanyahu.  “It will be clear that, above all, Netanyahu had a flawed strategy of keeping Hamas alive and kicking…so he could use them [Hamas] to weaken the Palestinian Authority so that no one in the world could demand that we hold negotiations [with the Palestinians].”

And on the government’s focus on making constitutional changes to curb the powers of the Supreme Court, Netanyahu, says Barak, ignored repeated warnings from military commanders that the divisions this was causing were also tearing the army apart. [Ed. as I was writing at the time in this space as well.]

Netanyahu is squarely to blame for the crisis, believes Barak.  Israel’s strategy towards the Palestinians has backfired.  “Because the deaths were mainly of civilians and the state has forsaken its most basic commitment to its citizens – to keep them alive – this was the worst type of negligence.”

I have news on the House speaker fiasco and the just-released figures on the fiscal 2023 budget deficit down below.

War in Israel

--A new CNN poll conducted between Oct. 12-13, showed the American public expresses deep sympathy for the Israeli people and broadly sees the Israeli government’s military response to Hamas’ attacks as justified, while two-thirds are at least somewhat worried the fighting between Israel and Hamas could lead to terrorism in the U.S. 

The public is mixed over how much trust it has in President Biden to make the right decisions on the fighting between Israel and Hamas (47% have atleast a moderate amount of trust).

Half of Americans (50%) say that the Israeli government’s military response to the Hamas attacks is fully justified, another 20% say it’s partially justified and just 8% that it is not at all justified, with 21% unsure.  Republicans are far more likely than independents or Democrats to say the response is fully justified (68% of Republicans say so compared with 45% of independents and 38% of Democrats), and older Americans are also much likelier than younger ones to say it is completely justified (81% of those age 65 or older see the response as fully justified, compared with 56% of 50-to-64-year-olds, 44% of 35-to-49-year olds and 27% of 18-to-34-year-olds).

--Jordan has a large proportion of Palestinian refugees in its population, over 2 million.  Saturday, Jordan said any move by Israel to impose a new displacement of Palestinians would push the region to the “abyss” of a wider regional conflict.  Foreign Minister Ayman Safadi also said Israel’s blocking of humanitarian aid to Gaza and forcing its residents to leave their homes as it escalates its military action were a “flagrant” breach of international law.

Safadi said the military campaign against Hamas was killing innocent civilians and would bring despair and destruction in its wake that would not bring security to Israel.

“The war is killing and displacing innocent Palestinians and will leave the region and the world facing the repercussion of an environment of destruction and despair that Israel will create in Gaza,” Safadi said in comments after meeting his Canadian counterpart.  “It won’t achieve security or lead to peace,” Safadi said in the toughest language from Jordan since the conflict broke out.

Safadi said Israel’s push to move the entire population to leave their homes was a “red line” that Arabs would confront.  “This will bring the region into the hell of war…we have to end this madness,” he added.

--Iran warned in a social media post on Saturday that if Israel’s “war crimes and genocide” are not stopped then the situation could spiral out of control with “far-reaching consequences.”

Tehran warned Israel – in a message sent via the UN – that it would have to respond if Israel carries out a ground offensive in the Gaza Strip.

“If the Israeli apartheid’s war crimes & genocide are not halted immediately, the situation could spiral out of control & ricochet with far-reaching consequences – the responsibility of which lies with the UN, the Security Council & the states steering the Council toward a dead end,” Iran’s UN mission posted.

Sunday, Iran said that if Israel does not attack it, its interests or its citizens, then Iran’s armed forces would not engage militarily with Israel.

“Iran’s armed forces will not engage, provided that the Israeli apartheid does not dare to attack Iran, its interests, and nationals.  The resistance front can defend itself,” Iran’s mission to the UN told Reuters.

Iranian Foreign Minister Hossein Amirabdollahian said the U.S. will suffer “significant damages” if the Gaza war spirals into a bigger conflict, Al Jazeera reported on Sunday. “We have conveyed our message to the Zionist regime through its allies that if they do not cease their atrocities in Gaza, Iran cannot simply remain an observer,” Amirabdollahian was reported as saying on state media.  “If the scope of the war expands, significant damages will also be inflicted upon America.”

The foreign minister was also quoted as saying of Israel, “If the Zionist aggressions do not stop, the hands of all parties in the region are on the trigger.”

Amirabdollahian met with Hamas leader Ismail Haniyeh on Saturday in Qatar, where the two “agreed to continue cooperation” to achieve the group’s goals, Hamas said in a statement.

Iranian President Ebrahim Raisi urged France to help “prevent oppression” of Palestinians in a phone call with Emmanual Macron.

--Sunday, Israel-Lebanon border clashes escalated.  Hezbollah fighters attacked Israeli army posts and a northern border village, and Israel retaliated with strikes in Lebanon.

Defense Minister Yoav Gallant told reporters: “We have no interest in a war in the north.  We don’t want to escalate the situation.  If Hezbollah chooses the path of war, it will pay a very heavy price.  Very heavy. But if it restrains itself, we will respect that and keep the situation as it is,” Gallant said.

Hezbollah has said it is ready to fight Israel and that it would not be swayed by calls from Arab states and foreign powers for it to stay on the sidelines.  Sources say Hezbollah has designed its moves so far to be limited in scope, preventing a big spillover into Lebanon while keeping Israeli forces occupied.

--Chinese Foreign Minister Wang Yi warned Israel should stop its “collective punishment” of Gaza’s civilians with actions beyond self-defense, warning it would worsen regional tensions and lead to humanitarian disaster.

Wang, in a call with his Saudi counterpart, said, “China opposes and condemns all actions that harm civilians because they violate basic human conscience and basic norms of international law,” Wang said, according to a readout from the Chinese foreign ministry.

Rather rich coming from China, I think you’d agree.

--Prime Minister Netanyahu’s national security adviser said on Saturday hostilities with Lebanese Hezbollah in parallel with the Gaza war appeared to be restrained and warned the group not to take action that could lead to Lebanon’s “destruction.”

Just days before the Hamas attack that killed 1,300 people, Tzachi Hanegbi, head of Israel’s National Security Council, had said in a media interview that the Islamist group was deterred from attacking Israel.  “That was a mistake,” he said, adding that the wrongful assessment was shared across the Israeli intelligence community. “There is no doubt that the State of Israel did not fulfill its mission.”  He dismissed as “fake news” media reports that Egypt gave Israel forewarning of a possible dangerous development, while confirming a separate report that, ahead of the attack, the chief of Israel’s Shin Bet had received unusual intelligence.

The Shin Bet chief, Ronen Bar, held a meeting about that information at 4 a.m. on the morning of the Hamas assault but it was not deemed to be a concrete warning of what followed 2 ½ hours later, Hanegbi said.

Hanegbi told reporters he was aware of 150 to 200 hostages, including Israeli and foreign nationals.  The IDF later narrowed this to at least 199 held by Hamas. [Later raised to 203.]

Israeli Finance Minister Bezalel Smotrich said on Sunday the government was taking responsibility for the devastating attack that allowed Hamas to enter Israel and kill hundreds.

“We have to admit honestly, painfully and with a bowed head – we, the state leadership and the security establishment, have failed in maintaining the security of our citizens,” Smotrich told a news conference. “We failed to implement the unwritten contract, the first of its kind between a state and its citizens. A contract that was written in blood and is now stained with blood.”

--President Biden warned that an Israeli occupation of Gaza would be a “big mistake” in an interview with CBS’ “60 Minutes.”  Biden said Hamas “must be eliminated entirely,” but there “needs to be a path to a Palestinian state.”

--The White House Monday night said Biden would be making a visit to Israel and the region to “demonstrate his steadfast support for Israel.”  Biden was to meet in Jordan with King Abdullah, Egyptian President Sisi and the leader of the Palestinian Authority Mahmoud Abbas.

--The United States already has its newest aircraft carrier – and the world’s largest (USS Gerald R. Ford) – in the eastern Mediterranean and it will be joined by a second aircraft carrier (USS Dwight D. Eisenhower) in the next few days.  While the White House says there are “no plans or intentions for their use, it means U.S. military assets would be in place to provide air support to protect U.S. national security interests if needed.”

The U.S. also has an array of bases in the Middle East with troops, fighter aircraft and warships.

2,000 Marines headed from Kuwait to the waters off Israel in a support/logistics role.

--Michael Bloomberg in an opinion piece for his company, said “dark days lie ahead” and that a “mounting civilian death toll in Gaza will only serve Hamas’ interests.”

--The Palestinian health ministry said Sunday that at least 2,450 Palestinians have been killed and 9,300 wounded since Israel launched its attack on Gaza.

--Monday, Iranian Foreign Minister Amirabdollahian warned in an interview on state television that Iran’s allied regional militias could attack Israel if it continued its attacks on Gaza.

“Time is running out very fast,” he said.  “If the war crimes against the Palestinians are not immediately stopped, other multiple fronts will open and this is inevitable.”

“The resistance front is capable of waging long-term war with the enemy [Israel]…in the coming hours, we can expect a preemptive action by the resistance front,” Amirabdollahian added.

--Israel bombed areas of southern Gaza on Tuesday where Palestinians sought safety, killing dozens of civilians and at least one senior Hamas figure in attacks it says are targeted at militants.  U.S. officials have been trying to convince Israel to allow delivery of supplies to desperate civilians, aid groups and hospitals after days of failed hopes for an opening in the siege.

As of late Tuesday, there was no aid deal in place.  A top Israeli official said his country was demanding guarantees that Hamas militants would not seize any aid deliveries.  Tzahi Hanegbi, suggested entry of aid also depended on the return of hostages held by Hamas.

--So then early Tuesday afternoon, Eastern time, we learned of an explosion at Al Ahli Arab Hospital in Gaza City that was packed with thousands of civilians sheltering there, Palestinian officials said.

The initial newswires largely just trumpeted the Palestinian/Gaza Health Ministry’s claim of 500 dead, killed as the result of an Israeli airstrike.

The despicable Rep. Rashida Tlaib (D-Mich.) wrote on Twitter: “Israel just bombed the Baptist Hospital killing 500 Palestinians (doctors, children, patients) just like that.” She also blamed President Biden for not coercing Israel into a ceasefire.  [Last I saw, Tlaib has not apologized for her tweet.]

Understanding that the Gaza Health Ministry is part of Hamas, just like every government ‘institution’ in Gaza, I thought to myself, ‘wait 24 hours,’ both on the casualty count and responsibility for the blast.

The Arab Street, however, didn’t wait and even in the early morning hours of Wednesday were launching protests against the likes of the U.S. embassy outside of Beirut, and the Israeli embassy in Amman, Jordan.

The IDF, though, said it was a misfired Palestinian rocket, specifically from Islamic Jihad, and over time, Israel began producing its evidence.

But damage done.

--The U.S. State Department on Tuesday raised its travel alert for Lebanon to “do not travel,” citing the security situation related to rocket, missile, and artillery exchanges between Israel and Hezbollah.

--The number of Americans killed from the Hamas attack on Israel was announced Tuesday at 31.

--President Biden arrived in Israel on Wednesday, a high-stakes gamble made more so after the bombing of the hospital, which occurred hours before he left Washington.

Standing beside Prime Mininster Netanyahu, Biden said of the bombing: “Based on what I’ve seen, it appears as though [the hospital strike] was done by the other team, not you. But there’s a lot of people out there who are not sure,” he said, and added, “We’ve got to overcome a lot of things.”

Biden had planned to meet Arab leaders in Jordan, but just before Air Force One took off from Joint Base Andrews, the summit in Amman was suddenly canceled.

Biden wanted to look like an honest broker dealing with both sides in the Middle East, including Palestinian Authority leader Abbas.

But now he faces the embarrassment of being told by the leaders of Jordan, Egypt and the PA that they have no confidence in his ability to end the violence, which they say is in breach of international law.

American officials then reported they have multiple strands of intelligence – including infrared satellite date – indicating that the deadly blast at the Gaza hospital was caused by an armed Palestinian group.

The intelligence includes satellite and other infrared data showing a launch of a rocket or missile from Palestinian fighter positions within Gaza.  American intelligence agencies have also analyzed open-source video of the launch showing that it did not come from the direction of Israeli military positions, the officials said.  Israeli officials have also provided the United States with intercepts of Hamas officials saying the strike came from forces aligned with Palestinian militant groups.

U.S. intelligence officials also say the death toll from the blast is likely between 100 and 300 people, not the Gaza Health Ministry’s ‘refined’ assertion that 471 were killed.

“We have none of the indicators of an airstrike – none,” said Michael Knight of the Washington Institute for Near East Policy, an expert on military and security issues.

--Egypt’s President Sisi said on Wednesday that Egyptians in their millions would reject the forced displacement of Palestinians into Sinai, adding that any such move would turn the peninsula into a base for attacks against Israel, Sisi said in a joint news conference with German Chancellor Olaf Scholz.

--Iran’s Foreign Minister Amirabdollahian warned in a tweet Wednesday that time is “running out” for Israel following the attack on the hospital.

Potentially ignoring the facts, Amirabdollahian grossly tweeted: “After the terrible crime of the Zionist regime in the bombing and massacre of more than 1,000 innocent women and children in the hospital, the time has come for the global unity of humanity against this fake regime more hated than ISIS and its killing machine. Time is OVER!”

--Israel said Wednesday that it will allow Egypt to deliver limited quantities of humanitarian aid to the Gaza Strip, the first crack in a 10-day siege on the territory.  It was not clear when the aid would start flowing, or how much.

At the Rafah crossing, Gaza’s only connection to Egypt, truckloads of aid have been waiting for days to enter. But the facility has only a limited capacity.  Egypt must still repair the road across the border that was cratered by Israeli airstrikes.

Israel has said it “will not thwart” deliveries of food, water or medicine from Egypt, as long as the aid is limited to civilians in the south of the Gaza Strip and doesn’t go to Hamas.

Biden said on Air Force One on the flight back to Washington: “If, in fact, [the 20 aid trucks] cross the border, the UN is going to be on the other side distributing this material – offloading it and then distributing it, which is going to take a little time to set up, probably.”

But if “Hamas confiscates it or doesn’t let it get through, then it’s going to end,” the president said, “because we’re not going to be sending any humanitarian aid to Hamas if they’re going to be confiscating it.  That’s the commitment that I’ve made.”

Biden added on the Gaza explosion: “Our Defense Department says it’s highly unlikely that it was the Israelis. It would have had a different footprint,” he said, referring to the post-strike debris field.

--Thursday, British Prime Minister Rishi Sunak met with Netanyahu in Jerusalem, and the Israeli prime minister said the Hamas attack was aimed at preventing the expansion of peace in the Middle East, while calling on Sunak to keep supporting Israel’s Gaza counteroffensive.

Sources have said Saudi Arabia has put U.S.-backed plans to normalize ties with Israel on ice.

Netanyahu told Sunak: “This is our darkest hour.  That means that this is a long war, and we’ll need your continuous support.”

Sunak’s spokesperson said the British government was still waiting for a report from the security services before offering its opinion on the blast at the hospital.  At least nine British nationals have been killed and seven are still missing since the attack on Israel, some of whom are assumed to be hostages.

--The Pentagon said Thursday that a U.S. warship shot down three missiles and several drones from Yemen in the northern Red Sea, adding that they were potentially heading toward targets in Israel.

And then we learned that over the past few days, U.S. troops came under attack in Iraq and Syria. On Wednesday, a drone hit U.S. forces in Syria resulting in minor injuries, while another one was brought down. Earlier, U.S. forces thwarted multiple drones targeting troops in Iraq.  Thursday, drones and rockets targeted the Ain al-Asad air base, which hosts U.S. and coalition forces in western Iraq, and multiple blasts were reported inside the base.  A Pentagon spokesman said any response “will come at a time and manner of our choosing.”

--Jordan’s foreign minister said on Thursday the country feared the worst was yet to come in the Israel-Hamas war, with no signs of success in efforts to deescalate tensions.

Ayman Safadi said the war would have “catastrophic repercussions” and urged “protecting the region from the danger of its expansion.”

“All the indications are that the worst is coming… The catastrophe will have painful consequences in coming periods,” Safadi said.  In Amman, Safadi said the kingdom would confront “with all its means” a mass displacement of Palestinians that results in major changes to the region. “We won’t accept such a solution. This is a red line and would be a declaration of war,” he added.

--As of now, Friday afternoon Eastern time, no aid has flowed through the Rafah border crossing from Egypt into Gaza.  Egypt said it is not responsible for the delay.

--Hamas released two U.S. hostages from Gaza this afternoon – a mother and her daughter – “for humanitarian reasons” in response to Qatari mediation efforts, its spokesman Abu Ubaida said.  Hamas said it took about 200 hostages Oct. 7, adding 50 more are held by other armed groups in the enclave.  It said more than 20 hostages have been killed by Israeli air strikes.

--Lastly, in case you were wondering how many Hamas fighters there are, according to the Economist, “Israel puts Hamas’ military force at about 30,000 fighters.”  [At least 1,500 of which are now dead from this conflict.]

Opinion….

Thomas L. Friedman / New York Times

“(What) makes this war different for me from any war before is Israel’s internal politics.  In the past nine months, a group of Israeli far-right and ultra-Orthodox politicians led by Netanyahu tried to kidnap Israeli democracy in plain sight. The religious-nationalist-settler right, led by the prime minister, tried to take over Israel’s judiciary and other key institutions by eliminating the power of Israel’s Supreme Court to exercise judicial review. That attempt opened multiple fractures across Israeli society.  Israel was recklessly being taken by its leadership to the brink of a civil war for an ideological flight of fancy. These fractures were seen by Iran, Hamas and Hezbollah and may have stirred their boldness.

“If you want to get just a little feel for those fractures – and the volcanic anger at Netanyahu for the way he divided the country before this war – watch the video that went viral in Israel two days ago when Idit Silman, a minister in Netanyahu’s ruling Likud party, was tossed out of the Assaf Harofeh Hospital in Tzrifin when she went to visit some wounded.

“ ‘You’ve ruined this country.  Get out of here,’ an Israeli doctor yelled at her.  ‘How are you not ashamed to wage another war?’ another person told her.  ‘Now it’s our turn,’ the doctor can be heard screaming in a video published on X, and reported by The Forward.  ‘We are in charge. We will govern here – right, left, a nation united – without you.  You’ve ruined everything!’

“Israel has suffered a staggering blow and is now forced into a morally impossible war to outcrazy Hamas and deter Iran and Hezbollah at the same time. I weep for the terrible deaths that now await so many good Israelis and Palestinians. And I also worry deeply about the Israeli war plan.  It is one thing to deter Hezbollah and deter Hamas.  It is quite another to replace Hamas and leave behind something more stable and decent. But what to do?

“Finally, though, just as I stand today with Israel’s new unity government in its fight against Hamas to save Israel’s body, I will stand after this war with Israel’s democracy defenders against those who tried to abduct Israel’s soul.”

Editorial / Wall Street Journal

“An unfortunate reality of the Biden Presidency has been the failure of deterrence since the chaotic retreat from Afghanistan. White House warnings didn’t deter Vladimir Putin from invading Ukraine, and they haven’t stopped Iran’s proxies from attacking U.S. forces or facilities some 83 times.  Now we’ll see if U.S. warnings deter Iran from unleashing Hezbollah and other proxies from opening a second or third front against Israel….

“The U.S. has backed up (the latest warnings to Iran) by dispatching a carrier strike force to the eastern Mediterranean and aircraft to the Persian Gulf region. The Pentagon says another carrier group is on the way.

“These are formidable military assets, but deterrence depends on whether adversaries believe a U.S. President is willing to use them.  When warnings are issued but not followed up after adversaries attack anyway, U.S. credibility and deterrence erode.  Recall Barack Obama’s infamous ‘red line’ against the use of chemical weapons in Syria.

“Iran’s Supreme Leader Ayatollah Khamenei has reason to doubt President Biden after the U.S. responded militarily to only four of those 83 attacks by Iran’s proxies.  Will he believe Mr. Biden now?

“If U.S. deterrence fails again, Mr. Biden will have little choice other than to respond with military force if he wants to retain any credibility.  Hamas terrorists killed at least 29 Americans in their bloody assault, and an unknown number of U.S. citizens are captives in Gaza. A President’s first obligation is to protect American citizens, and if those captives die in Hamas hands he should also hold Iran responsible.

“The Ayatollahs in Tehran need to understand that more than their terrorist proxies are at risk.  They need to know that their nuclear sites and oil fields are also on the target list.  If they think Mr. Biden fears a larger war, they are more likely to escalate this one, and many more people, including Americans, will die.”

Republican Presidential Candidate Nikki Haley, on CNN’s State of the Union, Sunday, in discussing Hamas using human shields and the Arab World:

“Hamas is going to do everything they can to not have them leave, because, guess what, they want them all to die.  One, they want to use them as human shields, but, two, they want to blame Israel and show images of dead children and say, look at what Israel did.

“But don’t ever forget what Hamas did.  Don’t ever forget those girls running for their life. Don’t ever forget those babies that were killed in cribs.  Don’t ever forget the people that they were dragging through the streets. And what were they saying?  They were saying, ‘Death to Israel, death to America.’

“That’s who we’re dealing with.  But I dealt with this at the United Nations.  You’re going to hear all of those Arab countries vilify Israel for what’s about to happen.  You’re going to hear all of them say, how dare you not do more for the Palestinian people?

“And you know what?  We should care about the Palestinian citizens, especially the innocent ones, because they didn’t ask for this. But where are the Arab countries?  Where are they? Where is Qatar?  Where is Lebanon?  Where is Jordan?  Where is Egypt? Do you know we give Egypt over a billion dollars a year?  Why aren’t they opening the gates? Why aren’t they taking the Palestinians?

“You know why?  Because they know they can’t vet them, and they don’t want Hamas in their neighborhood. So why would Israel want them in their neighborhood?  So let’s be honest with what’s going on. The Arab countries aren’t doing anything to help the Palestinians because they don’t trust who is right, who is good, who is evil, and they don’t want it in their country.

“So they’re going to come and blame America. They’re going to come and blame Israel. And don’t fall for it, because they have the ability to fix all of this if they wanted to. They have the ability to go in and tell Hamas right now to stop what they’re doing.  They have the ability to tell Hamas to let those people out.  But you know what? Qatar is going to continue to work with Hamas and their leadership.  Iran is going to continue to fund all of this and not say anything.  And who’s silent? Every one of those Arab countries are going to be silent.  But expect for the finger to point to Israel, and the finger is going to point from Israel – to America.”

---

This Week in Ukraine….

--President Putin, in an interview on state TV, said Moscow’s forces have recently improved their positions across the front lines in Ukraine’s east and northeast, including Zaporizhzhia, Avdiivka, and Kupyansk.  Putin said Kremlin troops are employing a tactic he called “active defense,” and are aware that Ukraine is preparing fresh attacks. Kyiv’s months-long counteroffensive aimed at pushing back Russian forces has “failed completely,” Putin added.

Oleksandr Syrskyi, commander of Ukraine’s ground forces, said Saturday that Kremlin forces have intensified their operations in the area but that Kyiv’s troops were prepared and are defending.  Ukraine repelled 15 attacks around Avdiivka and other towns in the Donetsk region.

Analysts at the Institute for the Study of War said Russian military bloggers are deeply divided on the prospects of Russian successes near Avdiivka, the prospect of an “organized offensive operation,” and on current Ukrainian capabilities.

Kyiv officials then claimed Monday that an attempt by Russian forces to storm Avdiivka appeared to be running out of steam, as the war entered its 600th day.

--Russian attacks on Ukraine Sunday killed six people in the Kherson area after more than 100 shells bombarded the region over the weekend.

Two guided bombs later hit key infrastructure in Kherson city, sparking a partial blackout and disruption to the area’s water supply, the head of the city’s military administration said.

A 14-year-old boy was killed in a mine field.

--Ukraine’s forces struck two air bases in Russian-held territory on Tuesday with American-supplied long-range missiles that were one of the last major weapons systems that Kyiv had sought from the United States, according to two American officials and a Ukrainian parliamentarian who posted about the attack on social media.

They were the first strikes with a weapon known as ATACMS – for advanced, long-range Army Tactical Missile Systems – that President Biden was long reluctant to provide for fear it could escalate the conflict with Russia.  But Biden told President Zelensky during a visit to the White House in September that he had agreed to provide the missiles, albeit a version limited in range.

The version of the ATACMS sent to the Ukrainians, in small numbers, is equipped with cluster munitions.

“ATACMS is already with us,” a Ukrainian lawmaker, Oleksiy Goncharenko, wrote on X.  He said that an airfield in the Russian-controlled city of Berdiansk “was hit by them.”

“Thanks to our partners!” he wrote.  Another base in Luhansk, in the east, was hit – widely reported by Russian military bloggers, but not acknowledged by Russian authorities – destroying nine helicopters, an ammunition depot and military equipment, along with damaging runways, according to Ukraine’s special operations forces.  The claims couldn’t be independently verified.

Ukraine said the powerful weapons would alter the course of the war, with officials saying they will push Russia to move its key air assets far back from the front lines.

Russia said on Wednesday that Washington’s decision to send ATACMS to Ukraine was a grave mistake that will have serious consequences, Russia’s ambassador to the U.S. said on Wednesday.

“The consequences of this step, which was deliberately hidden from the public, will be of the most serious nature,” Ambassador Anatoly Antonov said on Telegram.

Antonov said: “Washington is consistently pursuing a policy of completely curtailing bilateral relations.  The United States continues to push for a direct conflict between NATO and Russia.”

--Two people were killed and at least four wounded after an apartment building was destroyed in a Russian air attack on the city of Zaporizhzhia, officials in the Zaporizhzhia region said on Wednesday.  Eight apartment buildings were damaged.

The death toll then rose to at least 10 civilians killed in Russian attacks overnight Tuesday and Wednesday, with the number of dead in the Zaporizhzhia apartment building rising to five.

--Thursday, Russian forces carried out another series of air strikes on targets in eastern, southern and northern Ukraine.  Ukraine’s air force said Russia used 17 different weapons, including ballistic and cruise missiles and attack drones that struck industrial, infrastructure, civilian and military objects.  Casualties were not announced, Ukraine saying it shot down three drones and one cruise missile, which presumably means the others got through.

Thursday, General Valery Zaluzhnyi, Ukraine’s commander-in-chief, said Ukrainian troops were facing a new Russian onslaught in the largely destroyed eastern city of Avdiivka, the latest Bakhmut, while making some progress on their counteroffensive in the southern theater.

“The enemy is not relenting in attempts to break through our defenses and surround (Avdiivka),” Zaluzhnyi wrote on Telegram.  “The enemy is actively bringing in assault units and large amounts of armored equipment and using aircraft and artillery.”

Officials say 1,600 residents remain from a pre-war population of 32,000 in the city.

--Jack Watling, senior research fellow for land warfare at the UK’s Royal United Services Institute, told Defense One today that five months of offensive operations have not breached Russia’s defense in Zaporizhzhia.

Why not? “The heavy attrition of experienced junior officers and trained field-grade staff has limited the scale at which offensive action can be synchronized.  Combined with terrain that contains fighting and the canalizing effect of dense minefields, Ukrainian forces have been restricted to company-scale operations.  When they have expanded the scale of operations, Ukrainian forces have found that they lose synchronization with their supporting arms.”

What now? “The Ukrainians now face a difficult set of competing imperatives: to maintain pressure on the Russians while reconstituting their units for future offensive operations.”  And now winter is fast approaching.

---

--Russia’s legislature voted unanimously to revoke its ratification of a significant international nuclear-test-ban treaty, a move than threatens to intensify global insecurity amid the war in Ukraine and now the crisis in the Middle East.

Tuesday’s decision by the lower house of Russian parliament to revoke ratification of the Comprehensive Nuclear Test Ban Treaty was the first of three required readings of a bill on halting Russia’s endorsement.  A final vote was scheduled in the parliament’s upper house by week’s end, after which President Putin must sign off on the legislation.  Parties loyal to Putin control the legislature.

The step to rescind ratification of the pact follows comments earlier this month by Putin, who suggested that Moscow would revoke ratification because the U.S. had signed but not ratified it.

Vyacheslav Volodin, speaker of the State Duma, said that withdrawal of the ratification was needed to ensure the security of Russia and maintain an equal strategic standing with the U.S.

“Washington must finally understand that hegemony on their part does not lead to anything good,” Volodin wrote Tuesday on his Telegram channel. “The Russian Federation will do everything to protect its citizens and ensure that global strategic parity is maintained.”

The treaty concluded in 1996 bans nuclear-test explosions of any size.  It allows a range of activities to ensure the safety and reliability of nuclear weapons, including experiments involving fissile material, as long as they don’t produce a nuclear explosive yield.

--Russian prosecutors were asking a court on Friday to place Russian-American journalist Alsu Kurmasheva in pre-trial detention, the court said, after her arrest on suspicion of breaking a law on “foreign agents.”

Kurmasheva is a Prague-based journalist for Radio Free Europe/Radio Liberty, which is funded by the United States.  Russia designates it as a “foreign agent,” meaning it gets foreign funding for activity deemed to be political.  She is accused of failing to register as such when she entered Russia on May 20 for a family emergency.  She was detained as she waited for her return flight on June 2.

A State Department spokesman said, “This appears to be another case of the Russian government harassing U.S. citizens.

Failure to register as a foreign agent is an offense that carries a sentence of up to five years in prison.

---

Wall Street and the Economy

Philadelphia Fed President Patrick Harker said Monday he believes that a “resolute, but patient stance” policy could help the Federal Open Market Committee to achieve the soft landing it is trying to achieve.

“I believe such a resolute, but patient, stance of monetary policy will allow us to achieve the soft landing that we all wish for our economy,” Harker, a voting member on the FOMC this year, said at a mortgage bankers conference.  “And with that landing, we’ll be able to see our economy take off again, but this time on a clear and stable path forward.”

Harker said that bankers had told him that when it comes to the current state of housing, with mortgage rates soaring, “There are no first-time home buyers.”

Harker said that while he believes there is not a need for further rate increases, he agrees with the assessment of other FOMC officials that rates will need to stay higher for longer and added that if there was a rebound in inflation, “I know I would not hesitate to support further rate increases as our objective to return inflation to target is, simply, not negotiable.”

Wednesday, Fed Governor Christopher Waller, a permanent voting member, said he wants to “wait, watch and see” if the U.S. economy continues its run of strength or weakens in the face of the Fed’s rate hikes to date.

“Should the real side of the economy soften, we will have more room to wait on any further rate hikes and let the recent run-up on longer-term rates do some of our work,” Waller said in prepared remarks for a seminar in London.  “But if the real economy continues showing underlying strength and inflation appears to stabilize or reaccelerate, more policy tightening is likely needed despite the recent run-up in longer-term rates.”

So then Thursday, Chair Jerome Powell gave a widely anticipated speech to the Economic Club of New York, taking questions after, and Powell said inflation remains too high and that bringing it down to the Fed’s target level of 2%, which he remained adamant on, would likely require a slower-growing economy and job market.

Powell noted that inflation has cooled significantly from a year ago.  But he cautioned that it’s not yet clear whether inflation is on a steady path back to 2%.

“A few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said.  “We cannot yet know how long these lower readings will persist or where inflation will settle over coming quarters.”

Last month, Fed officials indicated that they would impose one more rate hike before the end of the year, and economists and Wall Street traders expect the central bank to stand pat at the Oct. 31-Nov. 1 meeting.  What will happen after is unclear.  But Powell made clear Thursday that if growth remains as healthy as it has been since the summer, additional rate hikes could be needed.

“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing,” Powell said, “could put further progress on inflation at risk and could warrant further tightening of monetary policy.”

Yes, it remains all about the data, and on that front, the bond market was rocked Tuesday with the release of the September retail sales figure, up a whopping 0.7% (ex-autos 0.6%) when 0.3% was expected.  September industrial production was also far better than forecast, up 0.3%.

Meanwhile, September housing starts were less than expected, a 1.358 million annualized pace.  Existing home sales for the month were 3.96 million, the lowest rate in 13 years, according to the National Association of Realtors, down 2.0% over August, and down 15.4% from a year ago.  The median home price was $394,300, up 2.8% year-over-year.

Lastly, September leading economic indicators fell again, 0.7%, this long forecasting a looming recession and it’s been wrong.

The Atlanta Fed’s GDPNow barometer for third-quarter growth is still 5.4%, while a survey of 74 economists from Bloomberg pegs Q3 at 3.5%, which would be the fastest in nearly two years.

Freddie Mac’s 30-year fixed-rate mortgage rose a sixth straight week to 7.63%, again, highest since 2000.

Consumers are catching a break on gas prices, now $3.55 for regular nationwide, down 32 cents in the past month.  But this is probably the bottom.

Next Friday the Fed will get a look at its most important inflation benchmark, the personal consumption expenditures index, PCE.

Europe and Asia

Eurostat reported out the September inflation data for the eurozone Wednesday, 4.3%, down from 5.2% in August, and 9.9% a year earlier.  The core rate, ex-food and energy, was 5.5%, down from 6.2% in August, and 6.0% a year ago.

Headline Sept. inflation:

Germany 4.3% (down from 6.4% in Aug.), France 5.7%, Italy 5.6%, Spain 3.3% (up from 2.4%), Netherlands -0.3% (huh), Ireland 5.0%.

UK inflation failed to slow as forecast in September as rising oil prices offset downward pressure from food costs. The CPI rose 6.7% from a year earlier, the same pace as August, the Office for National Statistics said.

The 6.7% firms up the case for the Bank of England to stand pat on interest rates for the foreseeable future.

[Prime Minister Sunak suffered another big political defeat, as his Conservative Party on Friday lost two of its safest parliamentary seats in an ominous setback.  Sunak must call a general election that will decide his fate within the next 15 months.  Get used to the name Keir Starmer, Labor Party leader, the likely next PM.]

Turning to Asia…China had a slew of key data for September, as reported by the National Bureau of Statistics, headed up by the reading on GDP for the third quarter, 4.9% annualized vs. 6.3% the prior quarter, but better than consensus for 4.4%.

September retail sales rose 5.5% year-over-year, significantly above expectations; industrial production was up 4.5% Y/Y, unchanged from August; and fixed asset investment up 3.1% year-to-date vs. a year ago and 3.2% prior.

September unemployment fell to 5.0% from 5.2% in August.

All in all, generally an improvement but it was largely due to significant government support, and the jury is still out on whether this is the beginning of a real economic recovery.

And then there is China’s ongoing real estate disaster.  Property giant Country Garden missed a final deadline to pay interest on a dollar bond (foreign investors), capping a major fall from grace for a company once considered among the safest developers in the country.

The failure to make a $15.4 million interest payment on the outstanding bond, could lead to a wave of cross-default on its other international debt.  Country Garden had around $15.2 billion of international bonds and loans outstanding at the end of June, according to its public disclosures.

Japan’s September exports grew for the first time in three months, up 4.3% year-over-year, but the worsening conflict in the Middle East and slowdown in China in general cloud the outlook for the world’s third-largest economy.  Exports were driven by car shipments, which account for 18% of overall exports, offsetting declines in exports of chip-related products.  China-bound food exports, including fishery produce, tumbled 58% due to its ban on Japanese food imports on worries about water released from the Fukushima nuclear power plant. Imports dropped 16.3% Y/Y.

September core inflation, ex-food and energy, was up 4.2% year-over-year vs. 4.3% prior.

Street Bytes

--Stocks finished down bigly this week…the Dow Jones losing 1.6% to 33127, the S&P 500 2.4% and Nasdaq off 3.2%.

I like how Lauren Goodwin, economist and portfolio strategist at New York Life Investments, put the current market situation the other day.  “No one market narrative tends to last for more than a couple of days at a time.”

--U.S. Treasury Yields

6-mo. 5.53%  2-yr. 5.07%  10-yr. 4.91%  30-yr. 5.07%

Another crazy week in the bond pits. The 10-year Treasury briefly touched 5%, after jumping from last Friday’s 4.62% close to 4.82% on Tuesday’s retail sales number.  Then it was up from there, a staggering move to 5.00% before closing the week at 4.91%, up 29 basis points, while the 2-year rose just 2 bps.  I’ll get into the spread between the 2- and 10-year next week, after I do some work on it to give you some historical perspective.

Overseas, the Italian 10-year hit an 11-year high of 5.05% before closing the week at 4.92%.  Mangia!  [With some good red wine.]

***But this just in…the Treasury Department reported that the budget deficit for fiscal 2023, ending Sept. 30, hit $1.695 trillion, a 23% jump from F2022. 

Revenue fell shy by $457 billion from a year ago and expenses decreased by just $137 billion.  Outlays for the year totaled $6.134 trillion.

The budget shortfall adds to the staggering U.S. debt total, which stood at $33.6 trillion earlier this week.

A whopping $659 billion went for net interest on the accumulated debt, up from $475 billion in fiscal 2022.  That’s a big reason why interest rates remain so high, sports fans. Lots of supply hitting the market…like gobs and gobs of paper.

--Oil passed $90 today, Friday, before settling at $89.02 on West Texas Intermediate, owing to the tensions in the Middle East.

Just a reminder on the import of the Strait of Hormuz.  It is the world’s most important oil artery, with about a fifth of the volume of the world’s total oil consumption passing through the Strait on a daily basis.

OPEC members Saudi Arabia, Iran, the UAE, Kuwait and Iraq export most of their crude through the Strait. Qatar, the world’s biggest liquefied natural gas exporter, sends almost all of its LNG through there. 

--Bank of America posted a 10% rise in third quarter profits Tuesday, helped by higher interest rates that allowed the bank to charge more for loans at the same time that it kept expenses under control.

However, CEO Brian Moynihan warned that Americans continue to slow their spending after burning through pandemic savings, and now face higher costs due to inflation.

BAC earned a profit of $7.8 billion, or $0.90 cents per share, which was 13 cents better than the Street expected. It also tops last year’s $7.1 billion profit, or 81 cents per share, in the same period.

Revenue was $25.17 billion, up from $24.50 billion last year, and ahead of expectations of $25.07bn.

With much of the savings gone from the pandemic, consumers are turning more heavily to credit cards to manage their expenses. BofA saw credit card balances rise to $98 billion in the quarter, compared with $85 billion a year ago.

Investment banking and trading at BofA did well in the quarter. The bank saw revenues from stock trading rise 10% to $1.7 billion in the quarter.

--Goldman Sachs saw its third-quarter earnings fall 33% with the investment bank seeing muted market conditions that allowed fewer deals and market making opportunities for the firm.

The bank also saw a notable rise in expenses in the quarter, as the bank had to write down its investment in lending platform GreenSky as well as its real estate investments.

Goldman had earnings of $2.06 billion, or $5.47 a share, down from a profit of $3.07bn, or $8.25 a share, in the same period a year ago.

Revenue was $11.82 billion vs. $11.98bn a year earlier.

“We’re confident that the work we’re doing now provides us a much stronger platform for 2024,” said David Solomon, chairman and CEO, in a statement.

Goldman has struggled in the past year as fewer businesses have sought to do deals amid higher inflation and geopolitical uncertainty, and market conditions have been tougher this year compared to last.

The bank saw a 1% rise in investment banking revenues from last year, and its trading business of bonds, currencies and commodities was down 6% in the period.  Equities trading was up 8%.

--Morgan Stanley’s profit fell about 9% in the third quarter dragged down by lethargic dealmaking that sent the lender’s shares down 6% in trading Wednesday.  Profit for the three months ended Sept. 30 was $2.4 billion, or $1.38 per diluted share, compared with $2.6 billion, or $1.47 per share a year earlier.

Morgan Stanely’s total revenue from investment banking fell 27% to $938 million in the quarter.

“While the market environment remained mixed this quarter, the firm delivered solid results,” CEO James Gorman said in a statement. “Our equity and fixed income businesses navigated markets well, and both wealth and investment management produced higher revenues.”

Global mergers and acquisitions activity showed few signs of improvement in the third quarter after almost two years in the doldrums.  Rising interest rates, antitrust scrutiny and an increase in uncertain economic and geopolitical outlook have diminished companies’ appetites to strike deals.  Industrywide global investment banking fees fell almost 17% in the third quarter vs. a year ago, to $15.2 billion, according to data from Dealogic.

MS also set aside $134 million in provisions for credit losses, surging from $35 million in the same quarter last year.

--Shares in United Airlines fell over 9% Tuesday after the company said its fourth-quarter results would be hurt by higher fuel costs and the continued suspension of its flights to Tel Aviv because of the Israel-Hamas War.

United reported “strong and steady domestic demand” and a record-setting international performance for the third quarter, surpassing analysts’ expectations, but the focus was on the future.

UAL said it expects fourth-quarter earnings of about $1.80 a share if service to Tel Aviv remains suspended through October, and about $1.50 a share if Tel Aviv flights are suspended for the rest of the year.  Wall Street was expecting $2.09 a share.

In addition, United is projecting average fuel costs per gallon of $3.28 in the fourth quarter, up 11% from $2.95 in the third quarter.

The Israel angle is important as United has more flights there than other U.S. airlines, with service from Washington, D.C., Newark, and San Francisco.

Last week, Delta Air Lines trimmed its 2023 outlook.

Chicago-based UAL reported third-quarter revenue of $14.5 billion, slightly above forecasts, and above last year’s $12.9 billion. Net income of $1.1 billion, or $3.42 a share, beat the $942 million, or $2.86 a share, in last year’s third quarter.

Adjusted earnings of $3.65 beat the Street’s consensus of $3.38.

--American Airlines reported a loss of $545 million for the third quarter in contrast with the huge profits posted by United and Delta.

American said its results were dragged down by $983 million in charges related to a new labor contract with its pilots, but United and Delta reached similar deals with their pilots and still earned $1.1 billion each in the quarter.

Labor costs at American jumped 17%, an increase of nearly $600 million, which was roughly offset by lower fuel prices than a year ago.

American’s revenue was roughly flat with last summer, compared with 12% and 11% increases at United and Delta.

There are already concerns over rising costs for airlines as fuel prices surge at the same time that travel has begun to slow.  Fuel prices are still lower than they were last year, but the loss at American could add to anxiety over burdensome costs across the industry.

American reported adjusted earnings of 38 cents per share, above expectations, while revenue of $13.48 billion was slightly below forecasts.

“I see demand, especially as we approach the holidays, very strong,” CEO Robert Isom said in an interview with CNBC. “Overall, I feel really good about where demand is, not just now.  People want to connect. People want to travel.”

But AAL cut its forecast for the year.

I would suggest that all airlines are about to get a big hit to their future bookings over events threatening to spiral out of control in the Middle East, with terrorism spreading here at some point.

And they are all now stuck with these huge new labor agreements.  Just an opinion.

--TSA checkpoint numbers vs. 2019

10/19…106 percent of 2019 levels
10/18…104
10/17…104
10/16…104
10/15…107
10/14…109
10/13…101
10/12…104

--General Motors revealed a new offer to the United Auto Workers, including a 20% wage increase over the contract’s duration with a 10% increase in the first year.  At the end of the agreement, almost all UAW employees at GM will have a base wage of $39.24 per hour.

Ford Chairman Bill Ford urged the UAW to reach an agreement because the ongoing strike would have a “major” impact on the U.S. economy and could “devastate” local communities if it continues.

Ford offered employees a “record” contract that would make them the “best paid” manufacturing workers in the world, he added.

***Late today, the UAW reported progress as it received fresh contract offer from two of the big three, but President Shawn Fain said, “there is more to be won.”

--Ford Motor is recalling more than 238,000 Explorer sport utility vehicles, because the rear axle horizontal mounting bolt may fracture and cause the driveshaft to disconnect.  The recall covers Explorers from model years 2020-2022.

A disconnected driveshaft can result in a loss of drive power or a vehicle rollaway if the parking brake is not applied, increasing the risk of a crash.

--Tesla reported third-quarter earnings after the close on Wednesday, falling short of Wall Street’s estimates as its margin more than halved year-over-year amid higher costs and reduced vehicle prices.

The EV manufacturer’s revenue increased 9% from a year ago to $23.35 billion, but trailed consensus of $24.14bn. Adjusted earnings of $0.66 per share were down from $1.05 a year earlier and below the Street’s view of $0.73.

Operating margin shrank to 7.6% as operating income was impacted by factors including costs of ramping up production and “idle cost related to factory upgrades,” Tesla said.  [Gross margin dropped to 17.9% in the quarter, compared with 25.1% a year earlier. ]

Earlier this month, Tesla reported third-quarter deliveries of 435,059 that advanced 27% year-on-year but missed estimates.

The company said it plans to grow production “as quickly as possible,” in line with its long-term 50% compound annual growth rate target.  The company said its Cybertruck deliveries remain on course for later this year.

Tesla shares had fallen $12 to $242, prior to the earnings announcement, and they traded up a few $s initially after, but then CEO Elon Musk got on a conference call at 5:30 p.m., and he was a downer…and the shares plummeted.

Musk said he was concerned about the impact of high interest rates on car buyers, adding the company was hesitating on its plans for a factory in Mexico as it gauges the economic outlook.  Musk said he wanted to get a better sense of where the economy was headed before going “full tilt” on the Mexico factory.

“If interest rates remain high…it’s that much harder for people to buy the car. They simply can’t afford it,” Musk said, fearing rising rates would make cars unaffordable.  In Tesla’s case, despite steep price cuts I’ve outlined in past WIRs.

When pressed for details by analysts on the factory in Mexico, Musk said: “I am scarred by 2009 when General Motors and Chrysler went bankrupt. I don’t want to be going at top speed into uncertainty.”

Musk also said there would be “enormous challenges” in reaching volume production for Tesla’s long delayed Cybertruck pickup and making it cash flow positive.  The company has said it had the capacity to make more than 125,000 Cybertrucks annually, with Musk adding there was the potential to lift that to 250,000 in 2025, but no one expects anywhere near these figures for a while. Pricing for the vehicle is expected to be announced on Nov. 30.

Tesla stock finished the week at $212, down from $263 on Oct. 11.

--Netflix shares soared over $40 Wednesday* after the market closed as the company reported it was raising subscription prices for some of its streaming plans in the U.S., Britain and France as it shattered new customer expectations. The company picked up nearly 9 million new customers around the globe, surpassing the 6 million consensus forecast of Wall Street analysts.

Netflix credited the gains to the crackdown on password-sharing and a steady flow of new programming such as global hit “One Piece.”

The company raised the U.S. price of the premium ad-free plan by $3 per month to $22.99.  The one-stream basic plan rose by $2 per month.  The streaming video pioneer has been searching for ways to increase revenue as it nears market saturation in the United States and faces competition from Walt Disney, Warner Bros Discovery and others.

The company posted revenue of $8.54 billion, in line with forecasts.  EPS came in at $3.73, ahead of the Street’s expectation of $3.49.  Netflix projected fourth quarter revenue of $8.69 billion, slightly below the $8.77bn forecast of analysts.

Regarding the labor issues in Hollywood, the strikes prompted Netflix to revise its projections on content spending to around $13 billion in 2023, assuming the studios reach a settlement with striking actors “in the near future.”  That was down from the $17 billion it expected to spend.

*The stock ended up $55 to $401.75 on Thursday, up 16%, and closed the week at $401.

--Nvidia shares tumbled about 8% Tuesday and Wednesday, as the U.S. government imposed additional licensing requirements for exports of Nvidia’s integrated circuits exceeding certain performance thresholds to certain countries, including China, according to a regulatory filing.

The company said Tuesday it doesn’t expect the new export restrictions on certain products to have a “near-term meaningful impact” on its financial results, but the shares fell 4% Wednesday, after a 4% drop Tuesday.

--China said on Friday it will require export permits for some graphite products to protect national security, China the world’s top graphite producer and exporter.  It also refines more than 90% of the world’s graphite into the material that is used in virtually all EV battery anodes, which is the negatively charged portion of a battery.

“What China is saying to the West with this decision is that we are not going to help you make electric cars, you have to find your own way to do that,” Northern Graphite CEO Hugues Jacquemin told Reuters.

--Taiwanese chipmaker TSMC (Taiwan Semiconductor Manufacturing Co.) posted a 25% fall in third quarter net profit on Thursday, which beat expectations, as it said the semiconductor industry could be poised for recovery.

For the year ahead, the world’s largest contract chipmaker predicted healthy growth and a drop in industry inventory levels.  Demand for personal computers and smartphones, two of TSMC’s business drivers, is expected to lead the recovery, with artificial intelligence growth also increasing demand for its advanced chips and advanced packaging.

“We can expect 2024 to be a healthy growth year for TSMC,” CEO C.C. Wei told an earnings briefing, with the company expecting to “do better than the overall industry” next year.

Wei said, “Right now, do we see the bottom?  Very close.”  But he added it was too soon to say how strong the recovery would be as customers remain cautious because of macro weakness and China’s slow economic recovery.

TSMC had third-quarter net income of $6.67 billion, $1.29 per share, beating estimates of $1.16.  Revenue came in at $17.28 billion.  For the current quarter ending in December, the company expects revenue in the range of $18.8 billion to $19.6 billion.

--Finnish telecom giant Nokia is to axe 9,000 to 14,000 jobs by the end of 2026.  That represents 16% of its global workforce of 86,000, a figure that had been reduced by thousands in previous layoffs.

The company blamed slowing demand for 5G equipment in markets such as North America.

CEO Pekka Lundmark said advances in cloud computing and AI will need “significant investments in networks that have vastly improved capabilities.  However, given the uncertain timing of the market recovery, we are now taking decisive action.”

Nokia was once the biggest handset manufacturer in the world, but it failed to anticipate the popularity of internet-enabled touchscreen phones such as Apple’s iPhone and Samsung’s Galaxy and was knocked from its perch by rivals.

After selling its handset business to Microsoft, which the software giant later wrote off, Nokia concentrated on telecom equipment.

But 5G equipment makers have been struggling as operators in the U.S. and EU cut spending.

--Pfizer shares bounced around after the drug company said sales of its Covid-19 vaccine and its coronavirus treatment are less than expected and cut revenue expectations for the year by $9 billion.

Falling sales of both clipped sales in the second quarter, but Pfizer had said in August that it expected a rebound in the second half of 2023.

The company said global usage of Paxlovid is trending slightly above last year, but that it’s still below forecasts.  The fall vaccination period has just begun and the drugmaker said that it’s too soon to get a handle on vaccination rates for the year.

Pfizer now foresees 2023 revenue in a range of $58 billion to $61 billion, down from its prior forecast for $67 billion to $70 billion. It now projects full-year adjusted earnings between $1.45 and $1.65 per share. 

That is far short of expectations for full-year revenue of $63.61 billion and earnings of $2.77 per share that the Street was expecting, and far short of the company’s previous projections of EPS between $3.25 and $3.45.

Pfizer then announced that after buying back its unused Paxlovid doses from the government, it will price the Covid drug at nearly $1,400 when commercial sales begin later this year, more than double what the U.S. government has paid.

Pfizer told pharmacies and clinics it will dispense Paxlovid as a five-day course of the antiviral at a cost of $1,390.

Health plans will probably pay much less than the list price for the pills, and most patients will have a small or no out-of-pocket cost because Pfizer is expected to offer price discounts and help patients with their out-of-pocket charges.

Pfizer shares are floundering near their 52-week lows.

--Rite Aid, one of the largest pharmacy chains in the U.S., filed for bankruptcy on Sunday, weighed down by billions of dollars in debt, declining sales and more than a thousand federal, state and local lawsuits claiming it filled thousands of illegal prescriptions for painkillers.

The company appointed a new CEO, Jeffrey Stein, who heads an advisory firm that focuses on fixing troubled companies.

Rite Aid is one of many drugstore chains dealing with lawsuits stemming from the deadly abuse of opioids in the United States.  In March, the Justice Department filed a complaint against Rite Aid and its various subsidiaries asserting that the company filled prescriptions for excessive quantities of opioids “that had obvious, and often multiple, red flags indicating misuse.”

Rite Aid has more than 45,000 employees and has struggled to compete against larger rivals CVS and Walgreens Boots Alliance, as well as Amazon.

--The cost of employer health insurance rose this year at the fastest clip since 2011, according to an annual survey from KFF (formerly the Kaiser Family Foundation), a healthcare research nonprofit.  The 7% jump in the cost of a family plan brought the average tab to nearly $24,000 – more than the price for some small cars.

Workers’ average payment of $6,575 for those plans was nearly $500 more than last year.

Employers and workers may see similar boosts in 2024, according to benefits consultants.

--The Wall Street Journal reported that CVS is pulling some of the most common decongestants from its shelves and will no longer sell them, after advisers to U.S. health regulators recently determined that an ingredient, phenylephrine, doesn’t work.

I noted at the time I beg to differ, as it’s in Alka-Seltzer Plus Cold medicine (tablets), which I never considered a decongestant, but rather took it when I began to get a scratchy throat, and it never failed me.

So, knowing this day was coming, I’ve been building a stockpile of the stuff.

--Procter & Gamble reported first quarter fiscal year 2024 net sales of $21.9 billion, an increase of six percent versus the prior year, and beating estimates of $21.58bn. Organic sales, which excludes the impact of foreign exchange and acquisitions and divestitures, increased seven percent. Adjusted net earnings per share were $1.83, an increase of 17% over the prior year.

P&G has consistently raised prices of its products over the past several months. While that has led to weaker sales as some cost-conscious shoppers turn to cheaper alternatives, the benefits from higher prices have helped bolster profit.

Overall prices jumped 7% in the first quarter, while total sales dropped 1%, consistent with the levels seen in the first quarter.

The company now expects sales growth to be in the range of 2%-4% for fiscal 2024, compared to its prior estimate of a 3%-4% rise.

--Swiss multinational food and drink company Nestle posted lower-than-expected nine-month sales growth on Thursday as higher product prices made shoppers balk, but it said it expects volumes to turn positive again by the end of the year.

The packaged goods industry has for over two years hit shoppers with higher prices, citing higher input costs that started with the pandemic and were exacerbated by Russia’s invasion of Ukraine.

Nestle’s raised prices 8.4%, but sales volumes fell 0.6%.  Organic sales rose 7.8% for the nine months ended September.

Nestle also reported the firm had “not seen any impact from (weight loss drugs) on our sales,” referring to the potential threat posed to the packaged food industry by Novo Nordisk’s blockbuster weight-loss drug Wegovy.  Nestle shares had fallen earlier this month after Walmart said it saw a slight pullback in food consumption with people taking appetite-suppressing drugs like Wegovy.

--Bitcoin and other cryptocurrencies surged Monday on the rising possibility that the Securities and Exchange Commission soon will approve the first spot Bitcoin exchange-traded fund.

The price of Bitcoin spiked to more than $30,000 on Monday, before fading to about $28,100, but still up 3.5% above its level 24 hours earlier.  [It finished the week, 4:00 p.m. ET, at $29,950.]

The jump in price, however, came after a crypto trade publication tweeted that the SEC had approved an application by BlackRock to launch a spot Bitcoin ETF.  But then BlackRock said its application was still under review, and the publication deleted its tweet and apologized.

--LinkedIn, the professional social networking platform owned by Microsoft, said on Monday that it would cut about 668 jobs, or roughly 3% of its work force.  This is the second round of layoffs this year. In May, LinkedIn laid off 716 employees worldwide and said it was reducing its business in China, citing declining demand in an uncertain job market.

LinkedIn, which has 19,500 employees across 36 offices globally, did not detail the reasons for the job cuts on Monday.

--Another prestigious New York law firm, Davis Polk & Wardwell, has revoked job offers to three students at Harvard and Columbia universities after the students signed controversial letters supporting Palestine in the wake of Hamas’ deadly slaughter in Israel.

The firm alerted staffers on Tuesday that it had rescinded the offers because the prospective employees held leadership positions within the student organizations that issued last week’s statement blaming Israel for the attacks.

--Taylor Swift’s concert film grossed an estimated $126 million to $130 million in global ticket sales its opening weekend, according to AMC Theatres Distribution, putting it on par with some of the year’s biggest theatrical debuts.

Domestically, Swift’s “The Eras Tour” took in an estimated $95 million to $97 million, out-grossing several high-profile studio disappointments this year, such as “Indiana Jones and the Dial of Destiny,” and “The Flash.”

It took in an estimated $31 million to $33 million across 94 international territories in over 4,500 theaters.

Roughly 70% of domestic box office receipts last weekend came from Swift’s film, according to ComScore. 

The production costs for Swift’s movie are estimated at around $15 million.  Think about that.  A big-budget film such as Indiana Jones would run in the $300 million range.

But wait…there’s more!  Swift earns 57% of ticket revenue as part of her deal with AMC, meaning she walked away from the weekend with around $55 million, not including her cut from international sales.  With tickets costing $19.89 (in homage to her birth year) for adults and $13.13 (her favorite number) for children ages 2 to 12 and people 60 and older, the film is still a boon for theaters.

Foreign Affairs, Part II

China: Beijing hosted its Belt and Road Forum this week, with representatives of more than 130 countries, largely from the Global South, in attendance, including several heads of state, the most prominent of whom was Vladimir Putin, referred to by President Xi Jinping as his “dear friend.”

Chinese Foreign Minister Wang Yi told a press conference on Wednesday that China had signed $97.2 billion worth of business contracts with other countries in conjunction with the initiative.

President Xi laid out a vision for a revamped version of his signature “Belt and Road” project promising continued economic support for nations that sign on to China’s remade world order.

Xi presented the plan as an alternative route to riches than that offered by the U.S. and other industrial democracies, which he accused of holding back developing nations with trade sanctions and demands for political reform.

“We do not engage in ideological confrontation, geopolitical games, or form confrontational political cliques,” Xi said from the Great Hall of the People.

Xi’s initiative started ten years ago, a plan to rebuild the ancient Silk Road, and reshape global trade and politics with China planted firmly in the center.

But it’s largely been a mess, with some countries that were hosts to various project, like power plants, ports, roads and railways, now facing mammoth debt loads, or threats to national sovereignty (as is the case in Laos).

Xi talked of an increasingly polarized world, taking aim at American and European efforts to “de-risk” supply chains by reducing dependence on China.

Meanwhile, on a different issue, the Wall Street Journal reported: “China appeared to have repatriated a large number of North Koreans this week, despite international pressure given the harsh punishment the returnees likely face back in the Kim Jong Un regime.

“Fleeing North Korea is punishable by hard labor, imprisonment in re-education camps or even execution.

“Earlier this week [Ed. last week], civic and human-rights groups, citing contacts inside China, claimed roughly 500 to 600 imprisoned North Koreans were forcibly sent back to their home country.”

Separately, on the issue of the blast at the Gaza hospital, Chinese ambassador Zhang Jun delivered China’s statement to the UN Security Council on Wednesday.  Zhang denounced an “indiscriminate use of force” and urged Israel to “effectively fulfill its obligations under the international humanitarian law.”  Yes, it was Israel’s fault, says China.

“Developments over the past few days have amply demonstrated that an immediate and comprehensive ceasefire must be the overriding priority… Without a comprehensive ceasefire, any amount of humanitarian assistance will be a drop in the bucket,” Zhang said in a strongly worded statement to the council.

“If the current fight in Gaza is allowed to drag on, the end result will not be a complete military victory for any side, but rather most likely will be a catastrophe that will engulf the entire region, that will probably completely end the prospect for the two-state solution.”

Lastly, Britain’s MI5 intelligence agency said more than 20,000 people in the UK have now been approached covertly online by Chinese spies.  It comes amid a new warning to tens of thousands of British businesses of the risk of having their innovation stolen.

The heads of the U.S., UK, Australian, Canadian and New Zealand security agencies appeared together at an unprecedented public appearance of the Five Eyes alliance at Stanford University in California, chosen because it lies in the heart of Silicon Valley.

In both public statements and a closed session with entrepreneurs and investors, security chiefs warned that cutting-edge research is being stolen.

“We have seen a sustained campaign on a pretty epic scale,” Ken McCallum of MI5 told the BBC in an interview.

North Korea: Russan Foreign Minister Lavrov arrived in Pyongyang Wednesday.  The two-day visit has the West nervous.  Last week, as I wrote, America accused North Korea of shipping 1,000 containers full of weapons to Russia.  It is alarming the two countries are growing closer.

Lavrov thanked North Korea for supporting the war in Ukraine and pledged Moscow’s “complete support and solidarity” for Kim Jong Un, Russia’s foreign ministry said.

Lavrov was seen setting the stage for a visit by President Putin.

North Korean state media said Lavrov’s visit will mark a “significant occasion” in further consolidating relations between the countries.

Separately, Hamas fighters likely fired North Korean weapons during their Oct. 7 assault on Israel, a militant video and weapons seized by Israel show, despite Pyongyang’s denials that it arms the terrorist group.  The weapons included a rocket-propelled grenade, and shoulder-fired weapons typically used against armored vehicles.

Poland: Poles voted in huge numbers (the highest turnout since the fall of communism in 1989) last weekend and faced a period of political uncertainty Monday after opposition parties appeared to gain a combined majority in national elections.  The ruling conservative party won more votes than any single party and said it would try to keep governing.

The results showed the ruling nationalist conservative Law and Justice party with 35.4% of the votes cast, the opposition Civic Coalition, led by Donald Tusk (a former prime minister), with 30.7%, the centrist third Way coalition with 14.4%, the Left party with 8.6% and the far-right Confederation with 7.2%.

In order for a government to pass laws, it needs at least 231 seats in the 460-seat lower house of parliament, the Sejm, and it appeared the opposition collectively had 248.

But as Andrew Higgins wrote in the New York Times: “The big question now, however, is not only whether the opposition can form a government but, if it does manage to take power, can it actually wield it in a system where public broadcasting, the constitutional court, the judiciary in general, the central bank, the national prosecutor’s office and other branches of state have been packed with Law and Justice loyalists who, in many cases, cannot be easily dislodged?”

Ecuador: Business heir Daniel Noboa, scion of a banana magnate, on Sunday won Ecuador’s presidential election, vowing to rebuild the South American country, which is struggling with a weak economy and rising crime and violence.

Noboa took 52%, compared with 48% for his leftist opponent, Luisa Gonzalez, a protégé of leftist former President Rafael Correa, according to the National Electoral Council.  Gonzalez conceded.

Thirty-five-year-old Noboa, a surprise qualifier for the run-off in the early election, has pledged to improve the economy and create jobs for young people, as well as to house dangerous criminals on prison ships.

“Tomorrow, we start work for this new Ecuador, we start working to rebuild a country seriously battered by violence, by corruption and by hate,” Noboa told supporters.  He has just 17 months to govern, serving a truncated term from December this year until May 2025.  He is able to run again in the regular-scheduled 2025 contest.

Noboa’s family has a monopoly on the banana business in the country.  His father Alvaro had run for president multiple times and failed.

My friend here in the building, Luis from Ecuador, said Noboa will be a disaster, essentially, a little rich kid who has no idea about the issues faced by the common folk, who are poor, with Noboa, for example, pledging to raise gasoline prices to help fund his projects, but the people won’t be receiving any pay boosts.

Recall, with the assassination of one of the candidates in this race, Luis confided in me for the first time how he himself has faced down the drug gangs looking to extort money from him when he goes to Ecuador for his occasional family visits.

Random Musings

--Presidential approval ratings….

Gallup: 41% approve of President Biden’s job performance, 58% disapprove; 39% of independents approve (Sept. 1-23).

Rasmussen: 47% approve, 52% disapprove (Oct. 20).  I was interviewed by Rasmussen this week for the first time and gave them their required time.

--A CNBC poll had President Biden with a record 58% disapproval rating for his job performance, only 37% approving – with only 32% approving of his handling of the economy, and 31% approving of his handling of foreign policy.

The CNBC survey, conducted between Oct. 11 and Oct. 15, had Biden losing in a head-to-head matchup against Donald Trump, 46% to 42%.

A Quinnipiac University poll released Tuesday gave Biden a 38% approval rating, 56% disapproval among registered voters. In this one, 38% approve of the president’s handling of the economy, 37% approve re foreign policy.

--In a Bloomberg News / Morning Consult survey of seven key swing states – Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin – Trump leads Biden in the seven combined, 47% to 43%, with Biden leading only in Nevada, 46-43, while Michigan is tied 44-44.

Arizona 47-43, Trump; Georgia 48-43, Trump; North Carolina 47-43, Trump; Pennsylvania 46-45, Trump; Wisconsin 46-44, Trump.

One bright spot for Biden…he’s leading among suburban women in these seven swing states by 5 points.

A 51% majority of swing-state voters said the national economy was better off during the Trump administration.

The poll was of 5,023 registered voters online, Oct. 5-Oct. 10.

--Ohio Republican congressman Jim Jordan had his first vote, Tuesday, on becoming House speaker and he was defeated 212-200, with 20 voting for ‘others,’ leaving him shy by more than expected of the 217 he needed (there are 433, not 435, current voting members of the House these days).

Wednesday, Jordan had a second vote and he lost one more, 212-199, 21 ‘others.’

There were growing cries in the Republican conference to come up with a short-term fix, namely Rep. Patrick McHenry, who has been temporarily filling the speaker’s chair but has no real power.  The idea would be to give McHenry the powers to be speaker through Nov. 17 or until a permanent speaker is elected so that the business of the House can continue, such as one critical budget and foreign issues.

Jordan then postponed a third vote for Thursday, several Republican lawmakers having said they have been targeted by intimidation tactics, including death threats, from allies of Jordan.  It was clear that the ‘others’ figure would grow if Jordan stupidly held another vote.

So, Thursday, Jordan said he would support a resolution that would give fresh powers to current speaker pro tempore McHenry.  But that met stiff resistance, so Jordan reversed and said he would push for another vote, Friday, even though he was bleeding support and calls were increasing for him to step aside.

The third vote was held and with a few members not in attendance, the vote was 210-194, 25 ‘others,’ including six for McHenry.

The conference then met behind closed doors for a secret ballot on whether Jordan should continue his futile quest.

And Jordan lost it…he’s out.

The Republican conference will meet Monday to come up with a new nominee.  Nothing is getting done on so many critical issues.  A disaster for the GOP.

--Attorney General Jeff Landry, a Republican backed by former president Trump, has won the Louisiana governor’s race, holding off a crowded field of candidates.

The win is a major victory for the GOP as they reclaim the governor’s mansion for the first time in eight years; Landry replacing current Gov. John Bel Edwards, who was unable to seek reelection due to consecutive term limits.

Edwards is the only Democratic governor in the Deep South.

--The New York Post editorialized on the despicable dirtball Vivek Ramaswamy, who I have called out from day one.

“In his bizarre attack on presidential rival Nikki Haley, Vivek Ramaswamy just exposed what’s most ailing the Republican Party right now: craven click-bait-y conspiracy-mongering.

“Interviewed on Haley’s call for Israel to wipe out Hamas, Ramaswamy claimed, ‘She is somebody that, like many politicians, is in a position to get wealthier from war.’

“And he charged that she and other GP candidates are ‘ignoring the interests of the U.S. right here at home,’ while also focusing on Israel’s suffering while overlooking Azerbaijan’s cruel treatment of ethnic Armenians.

“ ‘A lot of it comes down to money, the corrupting influence of super PACs on the process,’ he elaborated.

“This is a thinly-veiled appeal to antisemitism: His listeners are supposed to hear, Jews are spending their money to win special treatment.

“And there’s no mistaking it.

“Ramaswamy claims his words have been misinterpreted, but that’s become his habit, as Sean Hannity noted in calling out his latest game: ‘What are the financial corrupting influences that Nikki Haley is taking a position on?’ the Fox News host asked.

“And: ‘We’ve got pictures of dead babies decapitated, burned babies’ bodies.’  How is Haley out of line to speak out?

“Fact is, she’s been rising in the polls, passing Ramaswamy, by winning the GOP debates to date with a steady, sane demeanor – slapping down the rest of the pack every time they reach for easy answers or pat appeals, whether on foreign policy or issues like abortion.

“She shows a hard-nosed understanding of the nation as it is – divided but able to reach sensible agreements – and the world as it is: a dangerous place needing America’s involvement and, yes, leadership.

“Ramaswamy is capable of serious thinking; we’ve been happy to print some of it.

“But he’s also far too eager to outrage to win attention, and now has repeatedly suggested Haley is simply for sale.

“It’s not working for you, Vivek: Better to try learning from Nikki instead of smearing her.”

--Garry Kasparov had an interesting idea in his Wall Street Journal op-ed.  Joe Biden should win the war, then step aside for Lloyd Austin.

“The Biden administration has an obligation – and an opportunity – to defeat terror and authoritarianism arrayed on multiple fronts. The U.S. faces one war in several theaters, in Europe and the Mideast.  Rather than divide resources and attention, Washington must respond by doing everything possible to defeat Russia in Ukraine as quickly as possible instead of allowing Mr. Putin to drag out the conflict in hopes of outlasting Western political support for Ukraine.  This doesn’t mean ignoring Israel or the Middle East, but setting them into context as part of the larger fight against terror.

“One strategy is for Washington to seize Russian sovereign assets – such as state-owned bank funds – that are already under U.S. control and redirect them to Ukraine’s war and reconstruction efforts….

“Also required: Step on the gas with military aid.  The U.S. and Germany in particular must stop slow-rolling weapons deliveries out of some delusional sense of fair play or misguided fears of escalation….

“Mr. Biden has another front requiring his attention: the home front.  He trails Donald Trump in many polls, despite the twice-impeached former president’s indictments and increasingly erratic behavior.  Mr. Trump’s return to the White House would be a victory for illiberal populism and a defeat for those who support the rule of law at home and abroad.

“Concerns about Mr. Biden are legitimate. He is the oldest American president in history, his family’s legal issues are under scrutiny, and his vice president is unpopular. In the meantime, no one in the Republican primary field looks poised to take on Mr. Trump.  It’s too dangerous to hope the GOP will suddenly favor a more-reasonable candidate.  American voters will view a Biden-Trump rematch as a new political low, and it will be seen as a symbol of American decline abroad.

“There is, however, another path to restoring American vitality.  Decisively defeating Russia and Iran and their terrorist proxies would give Mr. Biden a boost on the global stage.  Then, rather than proceed with an unpredictable rematch with Mr. Trump, the president could endorse a younger leader up to the challenge: Defense Secretary Lloyd Austin.  Though he’s expressed no interest in such a bid, Mr. Austin is perhaps perfect for the moment, a war hero who, in support of Ukraine, has led the greatest international coalition since the 1991 Gulf War.  In supporting him, Mr. Biden could repeat the Ronald Reagan playbook: Defeat the evil empire, secure peace for American allies, and leave the country in the hands of an experienced veteran.

“Faced with such a formidable candidate as Mr. Austin, Republicans might ditch Mr. Trump or else fracture into conservative and populist wings. It would be ironic if Mr. Biden were indirectly responsible for the rebirth of a genuine conservative party with traditional values and a commitment to national defense. A race between Mr. Austin and, say, Nikki Haley would produce the kind of debate America needs about its role in the world….

“In his ‘A Time for Choosing’ speech in 1964, Reagan said the answers are sometimes simple though not easy.  Mr. Biden has a choice before him that is just that: not easy, but simple. He can go down in history as a placeholder who failed to live up to the challenges of the moment – or as the man who stood tall when faced with evil and put aside personal ambitions for the good of the world.”

--A poll from the University of Virginia’s Center for Politics had some disturbing results.  A large portion on both sides of the political aisle favor getting rid of democracy and imposing violence on their political opponents, among other authoritarian measures.

Thirty-one percent of Donald Trump supporters and 24% of Biden supporters said democracy is “no longer viable” and an alternative system should be tried.  The survey polled 2,008 registered voters between Aug. 25 and Sept. 11.

When asked whether it is acceptable to employ violence to stop political opponents from attaining their goals, 41% of Biden supporters and 38% of Trump supporters said yes.

30% of Trump supporters and 25% of Biden supporters said elections should be suspended in times of crisis.

41% of Trump supporters and 30% of Biden supporters said they favor either conservative or liberal states seceding from the union.

Who the heck are these people?!

--Lawyer Sidney Powell pleaded guilty to reduced charges Thursday over efforts to overturn Donald Trump’s loss in the 2020 election in Georgia, becoming the second defendant in the sprawling case to reach a deal with prosecutors.

Powell, who was charged alongside Trump and 17 others with violating the state’s anti-racketeering law, entered the plea just a day before jury selection was set to start in her trial.  She pleaded guilty to six misdemeanors accusing her of conspiring to intentionally interfere with the performance of election duties.

As part of the deal, she will serve six years of probation, will be fined $6,000 and will have to write an apology letter to Georgia and its residents. She also agreed to testify truthfully against her co-defendants at future trials.

And then today, lawyer Kenneth Chesebro pleaded guilty to a felony in the same case.  Chesebro pleaded guilty to one felony charge of conspiracy to commit filing false documents in a last-minute deal.

The two guilty pleas are major victories for Fulton County District Attorney Fani Willis.  They allow her to avoid a lengthy trial of just two defendants – which would have given those remaining a look at her trial strategy.

--A gunman fatally shot two Swedes in Brussels late Monday, prompting authorities to halt a Sweden-Belgium soccer match nearby and place the capital on its highest terror alert level.  The gunman was then gunned down by police hours later and found to be part of an ISIS-affiliated group.

Threat levels were raised across the region.

--French authorities had to evacuate and close the Louvre museum and the Palace of Versailles last weekend after receiving bomb threats (which were most likely pranks, the government said at week’s end).  French President Macron ordered up 7,000 soldiers to be mobilized for increased security patrols as well after a teacher was stabbed to death, two others gravely injured, in an Islamist attack in the northern part of the country.

The latest security alert comes as France has been hosting the Rugby World Cup and less than a year before Paris welcomes the Olympic Games, which include plans for an unprecedented opening ceremony outside a stadium and a parade down the river Seine.

--Two foreign tourists and their Ugandan guide were killed after assailants attacked their vehicle in a national park in southwestern Uganda, authorities said.

The three were driving through the Queen Elizabeth National Park when they were attacked by suspected members of the Allied Democratic Forces rebel group.

Not what Ugandan tourism officials desire.  Very sad.  Uganda needs the tourism dollars.

--Violent crime across the U.S. decreased last year, according to data in the FBI’s annual crime report released Monday, but property crimes rose substantially, including vehicle thefts, which have been soaring.

While some law enforcement agencies failed to provide data, the FBI said the new data represents 83.3% of all agencies covering 93.5% of the population.

Violent crime dropped 1.7% and that included a 6.1% decrease in murder and non-negligent manslaughter.  Rape decreased 5.4% and aggravated assault dropped 1.1%. Violent crime had also decreased slightly in 2021, a big turnaround from 2020, when the murder rate in the U.S. jumped 29% during the pandemic, which created huge social disruption and upended support systems.

--The backlash on college campuses against professors and administrators who tolerated, or even supported, Hamas’ terror attacks continues, as many alumni at America’s most prestigious institutions of higher learning threaten to stop their contributions, which would have a substantial impact on the bottom line.

A petition to oust a controversial Columbia University professor who praised Hamas, describing the attacks as “awesome,” garnered more than 20,000 signatures.

Tenured politics and history professor Joseph Massad, employed by Columbia since 1999 – gushed about the “astonishing,” “astounding,” “awesome,” and “incredible” nature of the terror attacks against thousands of Israelis.

An Israeli American professor at Columbia, Shai Davidai, slammed his employer in a fiery speech on campus Wednesday night – ripping the university for apparently not publicly denouncing pro-Palestinian student organizations he claimed are “pro-terror.”  Davidai said he would never allow his daughter to attend the school in remarks he posted to YouTube.

Columbia has been described by some as a “liberal hotbed of hate.”  But that’s been a description of the place for decades.  It is the absolute last school in the country I would want to go to.

--NOAA’s Climate Prediction Center said the U.S. winter of 2023-24 (defined as December, January and February) will probably be dominated by the effects of what could be a powerful El Nino.  That means a mild, dry winter is likely on tap for much of the northern tier of the U.S., while the southeastern U.S. should see a wetter-than-average winter.

The greatest odds for warmer-than-average conditions are in Alaska, the Pacific Northwest and northern New England.  No parts of the nation are forecast to be colder than average, according to the forecast.

As for precipitation, wetter-than-average conditions are most likely in northern Alask, portions of the West from California to the south-central Rockies, the Southern Plains, the Gulf Coast, the Southeast and the lower mid-Atlantic, NOAA predicts.

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

Pray for Ukraine…and Israel…

God bless America.

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Gold $1991
Oil $87.68

Regular Gas: $3.55; Diesel: $4.47 [$3.83 / $5.33 yr. ago]

Returns for the week 10/16-10/20

Dow Jones  -1.6%  [33127]
S&P 500  -2.4%  [4224]
S&P MidCap  -2.0%
Russell 2000  -2.3%
Nasdaq  -3.2%  [12983]

Returns for the period 1/1/23-10/20/23

Dow Jones  -0.1%
S&P 500  +10.0%
S&P MidCap  -1.5%
Russell 2000  -4.6%
Nasdaq  +24.1%

Bulls 51.1
Bears 22.2

Hang in there.

Brian Trumbore

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