Week in Review

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Week in Review

10/05/2024

For the week 9/30-10/4

[Posted 4:30 PM ET, Friday]

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Edition 1,328

Hurricane Helene and the aftermath....

Helene is now the second-deadliest hurricane to strike the U.S. mainland in the past 50 years, exceeded only by Hurricane Katrina, which killed 1,392 people.  As I go to post, the death toll is at least 220, nearly half in North Carolina, with hundreds still unaccounted for.

“This storm has brought catastrophic devastation...of historic proportions,” North Carolina Governor Roy Cooper said.  “The challenges are immense.”

Thousands of National Guard soldiers are on the ground in the heaviest impact areas of North and South Carolina, but there are some places in North Carolina, for example, that won’t see running water for months as pipes were totally washed away and the reservoirs are polluted (plus the mud has to settle before you can attempt to do anything with them).

“This crisis will likely be a sustained crisis, because of water system issues,” Gov. Cooper said on Tuesday.

President Biden visited North Carolina yesterday and announced that up to 1,000 active-duty soldiers will join the North Carolina National Guard in delivering supplies, food and water to isolated communities.

It’s very early, but Chuck Watson, a disaster modeler at Enki Research, said his latest estimate is that Helene will cause $25 to $30 billion in physical damage and losses.  That was days ago.  The latest estimate is $34 billion, but bound to be much higher.  The majority of that won’t be covered by insurance.  “The ratio of insured to uninsured has been dropping” among U.S. homeowners, Watson said, “and a lot of that is due to floods not being covered by the private sector.”

Roughly 4% of Americans have flood insurance, according to the Federal Emergency Management Agency (FEMA), with the majority of those policies issued under the government’s National Flood Insurance Program.  The rate in no way matches the risk posed by more frequent extreme rainfall events.

After initially projecting classes would be suspended until Oct. 9, the University of North Carolina Asheville said on Tuesday that classes there would not resume until Oct. 28.  The university’s buildings were not badly damaged, according to a statement from the school, but the campus has been without power, water and internet services.  That’s just one school in the region.  At Appalachian State University in Boone (and Hickory), classes were out until at least Oct. 15, though here too, campus buildings, including residence halls, are largely intact.  It’s all the other issues.

Nearly one million customers from Florida to West Virginia remain without power at week’s end.

Continue to pray for everyone impacted.  It’s so sad and sickening.

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Israel-Hezbollah-Hamas-Iran

--When I posted last Friday, 4:30 PM ET, the fate of Hezbollah leader Hassan Nasrallah was not known.  Israel then said Saturday that it killed him, Hezbollah soon after  confirming his death.  [Nasrallah suffocated to death down in the basement, choking on toxic fumes.]  Israel’s Chief of Staff, Lt. Gen. Herzi Halevi, said Saturday that the elimination of Nasrallah was “not the end of our toolbox,” indicating that more strikes were planned.

--Israel carried out air strikes in central Beirut, Lebanon’s capital, for the first time in nearly two decades, killing Fatah Sherif al-Amin, Hamas’ leader in Lebanon, and three senior members of the Popular Front for the Liberation of Palestine.  Over the weekend Hezbollah confirmed that Israel had killed more of its top officials, including Ali Karaki and Nabil Qaouk.  Karaki died in the same strike that accounted for the death of Hassan Nasrallah.  Najib Mikati, Lebanon’s prime minister, said that Israel’s continuing bombing campaign had displaced around 1m people.  The death toll overall from Israel’s attacks was over 1,000.

The strike on Nasrallah also killed about 20 of his followers, according to Isarel.  The Lebanese government said six were killed and 91 injured in the strikes, which leveled six apartment buildings. 

President Biden stood behind Israel after it killed Nasrallah, calling his death a “measure of justice” and pledging renewed work toward peace in a region straining under the threat of wider war.

“Ultimately, our aim is to de-escalate the ongoing conflicts in Gaza and Lebanon through diplomatic means,” Biden said in a statement on Saturday. 

--Saturday, the Iran-backed Houthis in Yemen attacked Israel with a ballistic missile, which Israel said was intercepted before it could strike Ben Gurion International Airport.

In response, Israeli jets bombed the Houthi port of Hodeida, on Yemen’s western coast, on Sunday.  The targets included “power plants and a seaport, which were used by the Houthis to transfer Iranian weapons to the region, in addition to military supplies and oil,” the Israeli Defense Forces (IDF) said on social media.

--Israeli special forces began to carry out small, targeted raids into southern Lebanon over the weekend, gathering intelligence and probing ahead of a possible broader ground incursion.  The government is under pressure to create a buffer zone to stop Hezbollah attacks that have forced some 60,000 from their homes in the north.

Israel then sent soldiers into southern Lebanon, Monday, escalating the weeks-long campaign to degrade Hezbollah.  Amid calls for restraint from the U.S., UK and Arab states, Israel emphasized its ground operations would be “limited,” suggesting it isn’t planning to go deep into Lebanon or intending to hold territory for long.

The U.S. said it “agreed on the necessity of dismantling attack infrastructure” near the Israeli border.

--Iran fired several waves of ballistic missiles, approximately 200, at Israel on Tuesday evening in a sudden assault that raised the likelihood of a direct all-out war between two of the most powerful militaries in the Middle East.

The attack from Iran was the culmination of a dizzying sequence of events over less than 24 hours that began with Israel launching its ground invasion into Lebanon to pursue Hezbollah.

The barrage forced millions of Israelis to take cover in bomb shelters for more than an hour.  Many of the missiles were intercepted by Israel’s air defense system, while some fell in central and southern Israel, according to the IDF. 

One Palestinian man was killed by falling shrapnel in the occupied West Bank. 

It does seem at least three military and intelligence bases were hit, according to a Washington Post analysis of satellite imagery published Friday.  Jeffrey Lewis of the Middlebury Institute for Strategic Studies said, “Our first count is that 32 missiles struck Nevatim air base,” which hosts Israeli F-35 jets.  “This should be no surprise,” Lewis added, noting, “there is plenty of video showing the missiles raining down on Nevatim.”

So, despite Israel’s denials, more missiles got through then you’d think was the case based on their pronouncements, but damage indeed seems to be limited.

Based on initial reports, Israel “effectively defeated this attack” with the help of the U.S. and other partners, Secretary of State Antony Blinken said, adding that “the entire world should condemn” the Iranian strike.

National security adviser, Jake Sullivan, told reporters that American naval destroyers had joined Israel in shooting down inbound missiles. He said there was “meticulous joint planning in anticipation of the attack.”

Herzi Halevi, the military’s chief of staff, said Israel would respond in a manner and time of its choosing. And Iran, for its part, said it would fire more missiles if Israel counterattacked.

The White House said the United States would help defend Israel and warned that a direct attack against Israel would “carry severe consequences for Iran.”

Iran then declared its attack on Israel to be over, barring further provocations.  It said that its barrage of more than 180 missiles was retaliation for the assassinations of the leaders of Hezbollah and Hamas.  Iran’s foreign minister, Abbas Araghchi, said any third parties that help Israel “will be held responsible.”   Araghchi also said Iran’s action “was concluded unless Israeli regime decides to invite further retaliation.”  In a statement on X, he said: “Israel’s enablers now have a heightened responsibility to rein in the warmongers in Tel Aviv instead of getting involved in their folly.”

Iran last attacked Israel in April, but Israel – with the help of the U.S., Jordan and others – intercepted most of the hundreds of missiles and drones fired at its territory.  With the United States urging restraint, Israel’s response was muted; it fired at an air base near some of Iran’s nuclear facilities, but did not go after the facilities themselves...message sent.

Officials in Israel said it will launch a “significant retaliation” to Tuesday’s attack within days that could target oil production facilities inside Iran and other strategic sites.

Prime Minister Netanyahu told a meeting of his security cabinet that “Iran made a big mistake tonight – and it will pay for it.”

--Israel’s army said, “additional forces” were joining “raids on Hezbollah terror targets and terrorist infrastructure in southern Lebanon that began on Monday.”

The IDF also issued another order stating residents in 24 Lebanese villages should leave their homes to avoid being attacks.

--Defense Secretary Lloyd Austin appeared to have given his blessing to Israel’s ground raids into southern Lebanon.  After a call Monday with his Israeli counterpart, Austin wrote on social media that he “agreed on the necessity of dismantling attack infrastructure along the border to ensure that Hezbollah cannot conduct October 7-style attacks on Israel’s northern communities.”  He also “reiterated the serious consequences for Iran in the event Iran chooses to launch a direct military attack against Israel,” according to his statement.

Israel’s warplanes bombed Beirut overnight Wednesday, after eight of its soldiers were killed in southern Lebanon in battles against Hezbollah.

At least nine died in the Israeli strike on a medical facility belonging to the Islamic Health Organization in the center of the Beirut, the victims mostly Hezbollah-affiliated civilian first responders. 

Heavy air raids were heard in the Beqaa valley in eastern Lebanon, a Hezbollah stronghold.  According to the IDF, as of Thursday, over the past ten days, Israel had hit over 3,600 Hezbollah-linked targets.

The Lebanese Red Cross said an Israeli strike killed four of its paramedics and two Lebanese army soldiers as they were evacuating wounded people from southern Lebanon. The convoy, accompanied by Lebanese troops, was targeted Thursday despite coordinating its movements with UN peacekeepers.

The IDF ordered the evacuation of villages and towns in southern Lebanon that are north of a United Nations-declared buffer zone established after the 2006 war.  The warnings issued Thursday signaled a possible broadening of Israel’s incursion into southern Lebanon, which until now has been confined to areas close to the border.

A drone attack also took place on a weapons-storage facility in Syria, near Russia’s biggest airbase there, the Syrian Human Rights Observatory reported.

Earlier in the week, Israeli jets allegedly struck several locations in southern Syria, including the al-Thaala Airbase, and early warning radar site, and other army and airbases.

Friday, Supreme Leader Ayatollah Ali Khamenei appeared in public and told a huge throng that Iran and its regional allies will not back down from Israel, after an Israeli attack on Beirut that is thought to have targeted the heir apparent to the assassinated leader of Tehran-backed Hezbollah.

“The resistance in the region will not back down even with the killing of its leaders,” Khamenei said in a rare appearance leading to Friday prayers in Tehran, mentioning Nasrallah in his speech and calling its attack on Israel legal and legitimate.

He did not mention Hezbollah official Hashem Safieddine, rumored to be Nasrallah’s successor.  Axios reporter Barak Ravid cited three Israeli officials as saying that Safieddine had been targeted in an underground bunker in Beirut overnight.

The air strikes on Beirut last night were described as more powerful than the massive strike that took out Nasrallah.  One of the reported 11 consecutive strikes on Dahiyeh, the southern Beirut suburb regarded as a Hezbollah stronghold, reportedly hit close to Beirut’s airport.

Another strike hit near Lebanon’s Masnaa border crossing with Syria, cutting off a road used by hundreds of thousands of people to flee Israeli bombardments in recent days.

Meanwhile, in the occupied West Bank city of Tulkarm an Israeli air strike killed at least 18 people in a café.  The IDF claimed it had killed a local Hamas leader in the attack, which leveled the entire building, along with several other Hamas members.

--There are now an estimated 43,000 American troops and at least a dozen U.S. ships in or near the Middle East after officials added troops and equipment over the past few days, according to reporting from the Pentagon, though officials there don’t like to talk exact numbers.

Friday, the U.S. and British militaries launched a largescale attack at more than a dozen Houthi targets in Yemen – obliterating the Iranian-backed rebels’ weapons systems, bases and other equipment.

Seven missiles struck the airport in the major port city of Hodeida and the Katheib area, which is home to a rebel-controlled military base, the Houthi-run news network reported.

--Israeli airstrikes killed at least 40 people in Gaza on Tuesday, local medics said, and fighting ramped up, as the IDF targeted command centers used by Hamas. A separate strike on a school and institute housing displaced people in Gaza killed nine.

--At least seven were killed and 17 others injured when suspected terrorists opened fire near Tel Aviv on Tuesday.  The deadly ordeal unfolded when two gunmen jumped off a train in the central Israeli city of Jaffa and started firing just after 7 p.m. local time, according to authorities.  The two shooters were “neutralized” by police.

--Editorial / Wall Street Journal

“Iran unleashed its second direct military assault against Israel on Tuesday, this time with 181 ballistic missiles. All Israeli civilians were ordered into bomb shelters, and most missiles were intercepted.  But this is an act of war against a sovereign state and American ally, and it warrants a response targeting Iran’s military and nuclear assets.

“This is Iran’s second missile barrage since April, and no country can let this become a new normal.  Israel reported a few civilians injured and one Palestinian may have been killed near Jericho in the attack.  A terrorist shooting, possibly coordinated, killed six Israelis [Ed. seven]. The work by the U.S. and Israel to shoot down most of the missiles was spectacular, but it shouldn’t have to be, and next time it may not be.

“After April’s attack, the Biden Administration pressured Israel for a token response and President Biden said Israel should ‘take the win’ since there was no great harm to Israel.  Israel’s restraint has now yielded this escalation, and it is under no obligation to restrain its retaliation this time.

“Prime Minister Benjamin Netanyahu hinted at a stronger response in a statement to Israelis: ‘Iran made a big mistake tonight – and it will pay for it.  The regime in Iran doesn’t understand our determination to defend ourselves and retaliate against our enemies.’  He cited the Hamas and Hezbollah leaders who have been killed since Oct. 7, adding ‘and there are probably those in Tehran who don’t understand this.  They will understand.’

“But does Mr. Biden understand? Iran’s act of war is an opening to do considerable damage to the regime’s missile program, drone plants and nuclear sites. This is a test for a President who has been unwilling even to enforce oil sanctions against Iran. It is also a chance to restore at least a measure of U.S. deterrence that has vanished during his Presidency.

“Before the attack, Defense Secretary Lloyd Austin warned Iran of ‘severe consequences.’  National security adviser Jake Sullivan reiterated the pledge after the missile barrage.  Having issued such a warning, Mr. Biden has an obligation to follow through or further erode U.S. credibility.

“If there were ever cause to target Iran’s nuclear facilities, this is it.  [Ed. President Biden said Wednesday he hoped Israel would not target the nuclear program.  Thursday, he agreed oil facilities were fair game.]  Iran has shown that it might well use a bomb if it’s acquired, and Tehran would certainly use it as deterrent cover for conventional and terrorist attacks on Israel, Sunni Arab states and perhaps the U.S.  Iran is closer than ever to a nuclear weapon and won’t stop itself.  The question for American and Israeli leaders is: If not now, when?”

Lastly, I forgot to mention that I’ve been in contact with my friend in Beirut, Michael Young, just asking how he was doing, days prior to the killing of Nasrallah, and he said he was hanging in there.

Then the other morning, at 4:30 a.m. when I turned on the international news, there he was as a guest analyst, and it was the first time I had seen him since I was last in Beirut in 2010.  So, I had to write again, telling him what a pleasant it was to see him, “I know that guy.”

He got a kick out of it and he wrote, “Yes, a real s---show, and one the U.S. has done nothing to stop... Let’s see what lies ahead, but it can’t be great.”

Living in Beirut has been particularly hard for its citizens following the ammonium nitrate explosion in August 2020 at a port that killed 218 people and left 300,000 homeless.  The government is broke, worthless, and Hezbollah blocked the investigation into the cause, the site reportedly where it held many of its weapons.

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Russia-Ukraine

--Nine people were killed in two Russian drone strikes on a hospital in Ukraine’s northeastern city of Sumy, officials said.  The building was hit on Saturday morning and was struck again when rescuers were evacuating people.

At least 12 people were injured in the attack that destroyed several floors of the hospital and triggered a fire.

Sumy is just 19 miles from the Russian border and has seen almost daily Russian attacks in recent weeks.

--Moscow shot down more than 100 Ukrainian drones Sunday, sparking multiple fires during one of Ukraine’s largest barrages aimed at Russia since the war began.

Russia’s Ministry of Defense estimated that 125 drones were struck across seven regions overnight, with 17 intercepted as they flew over the Voronezh region. The resulting wreckage crashed into an apartment block and a private home, causing fires to break out, a regional governor said.

Another 18 drones were shot down in the Rostov region. No casualties were reported.

The Ukrainian attack came as the Kremlin launched its own assault on Ukraine’s southern city of Zaporizhzhia, where Kyiv had warned that Russia would be launching a new offensive.  The city was hit with Russian glide bombs in 10 separate attacks overnight, damaging a high-rise building and several residential homes that were occupied at the time, scores injured.

Ukrainian President Volodymyr Zelensky slammed the attack, noting that the Russian bombs also damaged Zaporizhzhia’s transportation hub.

“This week alone, the Russian army has used nearly 900 aerial bombs, over 300 “Shahed” drones, and more than 40 missiles,” Zelensky wrote on X.

“This Russian terror knows no pause, and it can only be stopped by the unity of the world – unity in supporting Ukraine and unity in putting pressure on Russia for the war,” he added.

--Six people were killed* in a local market area in the southern Ukrainian city of Kherson, Tuesday.  According to regional authorities the Russian shelling occurred at 9:00 a.m., just as people across Ukraine had stopped to remember their war dead.

*Some initial reports had seven killed, but doctors resuscitated one man.

“Defenders Day” is held annually in honor of the armed forces.

Kherson was occupied by Russian troops shortly after Moscow launched its full-scale invasion in February 2022 and was liberated by Ukraine in November.  It still lies extremely close to the frontline with fierce fighting on the other side of the Dnipro River.

--Russian troops are now in almost complete control of the eastern city of Vuhledar, which Ukrainian forces have been defending since the beginning of the invasion.

For more than two years Russia has been trying to take this city in order to advance further north and reach regional transportation hubs such as Kurakhove and Pokrovsk.  Additionally, by taking Vuhledar, Russia can advance on two nearby cities occupying higher ground, Chasiv Yar and Toretsk.

The BBC reported: “Over the past few days Ukrainian soldiers had to find their own way out of Vuhledar by foot as it was impossible to evacuate them otherwise, a machine-gunner who wished to remain anonymous said.

“Many were wounded and killed by Russian drones and artillery as they tried to leave, another soldier said.  Many more are still missing.

Moscow’s enormous advantage in weapons and troops – some soldiers have estimated the ratio of forces as seven to one – enabled them to break through Ukrainian defense lines along the flanks and approach Vuhledar.

--Wednesday night, Russia launched a major drone attack on 15 Ukrainian regions, causing widespread damage to power lines, leaving thousands without electricity.  Ukraine’s air force said it shot down 78 of 105 Russian drones during the assault.

--NATO has a new chief in former Dutch Prime Minister Mark Rutte. He took the helm Tuesday after the departure of Norway’s Jens Stoltenberg, who at 10 years was the alliance’s second-longest serving secretary-general in its seven-and-a-half decade history.

Rutte listed three goals for NATO at the outset of his new tenure:

“We must spend more.  There is no cost-free alternative if we are to rise to the challenges ahead and keep our one billion people safe,” he said.

The alliance must “Step up our support for Ukraine...because there can be no lasting security in Europe without a strong, independent Ukraine.”

And he intends to “strengthen our partnerships” with countries outside the 32-member alliance.

“Rutte has an impressive track record as a consensus-builder and decisive leader,” President Joe Biden said in a statement. He also shared his “deep gratitude to Jens Stoltenberg, who led the Alliance through the most consequential decade for Euro-Atlantic security since World War II.”

Stoltenberg’s parting thoughts: “We have undergone the biggest transformation of NATO in a generation,” rising from “zero to eight NATO battlegroups, with tens of thousands of combat-ready NATO soldiers on our eastern flank,” he said Tuesday in Brussels.  “We have gone from thousands to half a million troops on high readiness, and from three to twenty-three allies spending at least two percent of GDP on defense,” he said.

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Wall Street and the Economy

Federal Reserve Chairman Jerome Powell in a speech Monday said he still sees a soft landing ahead for the U.S. economy, aided by the central bank shifting interest rates lower.  That process started with a September rate cut and will include further “recalibration” as incoming economic data dictates.

“With an appropriate recalibration of our policy stance, strength in the labor market can be maintained in an environment of moderate economic growth and inflation moving sustainably down to our objective,” Powell said.

“Overall, the economy is in solid shape; we intend to use our tools to keep it there,” Powell said.  The Fed chair said that if the economy continues on its current course, he expects to see two more quarter-point interest-rate cuts this year.  Markets have been betting on a more aggressive cutting cycle.

So, regarding incoming data, we had an important jobs report for September this morning and it was much stronger than expected, 254,000 vs. Econoday’s consensus of 132,500.  The prior month’s figure was also revised upward from 142,000 to 159,000. The unemployment rate ticked down to 4.1% and average hourly earnings were higher than expected, 0.4% and 4.0% from a year ago.

It was a terrific report, especially for the Biden/Harris administration and the vice president’s campaign.  Treasury yields also soared, however, because the strength in the numbers potentially limits the Fed’s rate cuts going forward.  Chair Powell and Co. after all had cut a whopping 50 basis points because they were concerned about the health of the labor market.

In other economic news, we had the September ISM readings on manufacturing, 47.2, and services, 54.9 (50 the dividing line between growth and contraction), and the service sector figure spooked the bond market, which then tanked further on the next day’s employment picture.

The Chicago PMI for September was a still putrid 46.6.

August construction spending fell 0.1%, and factory orders in the month fell 0.2%.

The Atlanta Fed’s GDPNow barometer for third-quarter growth is down to 2.5%.

Freddie Mac’s 30-year fixed-rate mortgage is 6.12% and headed higher with the big move in the 10-year Treasury.

Next week, CPI and PPI figures for September.

Europe and Asia

We had the final PMI readings for September in the eurozone, courtesy of S&P Global and Hamburg Commercial Bank; the manufacturing PMI at a miserable 45.0, down from 45.8 in August.

The composite reading was 49.6, a 7-mo. low and vs. 51.0 in August, with the services figure 51.4, also a 7-mo. low.

Germany: 40.6 mfg. (12-month low), 50.6 services
France: 44.6 mfg., 49.6 services...down from 55.0 in Aug. [Think Olympics]
Italy: 48.3 mfg., 50.5 services
Spain: 53.0 mfg., 57.0 services, 13th straight month over 50
Ireland: 49.4 mfg., 55.7 services
Netherlands: 48.2 mfg.
Greece: 50.3 mfg.

UK: 51.5 mfg., 52.4 services

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

“It is a real shame that Spain is only the fourth-largest economy in the eurozone. While handling the global manufacturing downturn surprisingly well, Spain just does not have enough weight to lift the rest of the eurozone with it. The worsening industrial slump in Germany, for example, is too big for Spain’s momentum in September to make much of a difference....

“(Meanwhile), the situation in the service sector in the eurozone will continue to deteriorate. This is indicated by the decline in new business....

“On the plus side, operating costs in the services sector saw their slowest rise since early 2021, and inflation in selling prices is also easing off. Given the overall economic weakness, this is a good case for the ECB to cut interest rates in October.  And indeed, only recently ECB president Christine Lagarde did hint at a rate cut this month.”

--Eurostat reported out the flash estimate for inflation in September, 1.8%, down from 2.2% in August and the first time below the European Central Bank’s target of 2% since June 2021.  Ex-food and energy, the figure was 2.7%, down a tick from August’s 2.8%.

But ECB policy makers can claim victory and should, as noted above, cut at their next meeting.

Headline inflation....

Germany 1.8%
France 1.5%
Italy 0.8%
Spain 1.7%
Netherlands 3.3%
Ireland 0.2%

Separately, August industrial producer prices rose 0.6% in the euro area compared with July, down 2.3% year-over-year.

The eurozone unemployment rate in August was 6.4%, down from 6.6% a year ago.

Germany 3.5%, France 7.5%, Italy 6.2% Spain 11.3%, Netherlands 3.7%, Ireland 4.3%.

Lastly, European Union members voted on Friday to impose punitive tariffs on Chinese-made electric vehicles in a hotly anticipated move that is expected to draw a reaction from Beijing.

Tariffs will be imposed by October 31, after a closed-door vote of the bloc’s 27 member states.  This came after an anti-subsidy investigation that found Chinese-made EVs were distorting the European market.

This marks a victory for European Commission chief Ursula von der Leyen who, backed by France, had pushed for a crackdown on what she has described as a “flood” of cut-price, subsidized EVs from China into the EU market.

Austria: The far-right Freedom Party has opened the door to a new era, its leader Herbert Kicki told supporters, as they celebrated an unprecedented election victory.

Kicki’s party received 28.8% in elections last week, two more points ahead of the conservative People’s Party at 26.3%, but far short of a majority.

The Freedom Party (FPO) has been in coalition before, but the People’s Party has refused to take part in a government led by Kicki.

Kicki’s main rival, incumbent Chancellor Karl Nehammer of the People’s Party (OVP), has said it’s “Impossible to form a government with someone who adores conspiracy theories.”

A whopping 78% of Austria’s 6.3 million voters took part in an election dominated by the twin issues of migration and asylum, as well as a flagging economy and the war in Ukraine.

Kicki’s party is set to secure 56 seats in the 183-seat parliament, with the conservatives on 52 and the Social Democrats (center-left) on 41.

The Freedom Party’s fiery leader has vowed to build “Fortress Austria” and has aligned himself closely with Viktor Orban in neighboring Hungary, Orban a bad guy.

Experts say the only way Kicki can form a coalition with the OVP is to find a solution with the latter’s refusal to have Kicki as chancellor, but Kicki wants power.

Turning to Asia...China’s National Bureau of Statistics released the PMI readings for September, with manufacturing at 49.8 vs. 49.1 prior, and non-manufacturing 50.0 vs. 50.3.

The private Caixin manufacturing PMI for the month was 49.3 vs. 50.4 in August, while services came in at 50.3, down from 51.6 prior, not a good sign.

But on Monday, the Shanghai Composite index (their equivalent to our S&P 500) surged 8.5%, its biggest daily jump since 2008.  The 17% gain in the final month of the quarter was its biggest monthly climb since China’s notorious 2015 stock market bubble.

All about the recently injected stimulus, which Sunday included a plan to allow home buyers to refinance their mortgages*, but we’ll see if it can change the moribund numbers up above on the economy, let alone the prolonged issues in the critical property sector.

*In the U.S., when interest rates fall, home buyers on fixed-rate mortgages are able to take out new loans at the lower rates to pay down their existing mortgages/reduce monthly payments.  But until now, their Chinese counterparts haven’t been able to do that, nor have they been able to negotiate with their banks to lower their borrowing rates.

Japan’s September PMI readings came in at 49.7 for manufacturing, 53.1 services.

August industrial production was down 4.9% year-over-year.  Retail sales in the month were up 2.8% Y/Y.

More importantly than the above, Japan got a new leader on Tuesday. Ishiba Shigeru, 67, was sworn in as prime minister after winning the ruling Liberal Democratic Party’s leadership race.  Ishiba’s four previous bids for the party leadership, stretching back to 2008, failed.

Among the public he has consistently ranked as the country’s most popular politician.  He’s from a rural part of western Japan, and he has positioned himself as a champion of Japan’s forgotten regions.  Ishiba has a keen interest in defense and security as well, having served as defense minister, but his call for a collective security framework in Asia, drawing parallels to the sense of urgency in Europe caused by Russia’s invasion of Ukraine, isn’t necessarily viewed well in Washington, let alone Beijing.

You see, Ishiba is looking for a more “balanced” or “equal” partnership with the U.S.  What exactly does that mean?

But, with the LDP needing an image upgrade following a recent financial scandal, Ishiba plans to call a snap general election on Oct. 27.

South Korea’s September manufacturing PMI was 48.3 vs. 51.9 in August.

Taiwan’s was 50.8.

Street Bytes

--The major averages eked out gains on the week, including record highs in the Dow Jones and S&P 500 on Monday, and then the Dow again, today.  Overall, the Dow rose 0.1% to 42352, the S&P gained 0.2%, and Nasdaq 0.1%.  Earnings season kicks off next week.  

--U.S. Treasury Yields

6-mo. 4.45%  2-yr. 3.92%  10-yr. 3.97%  30-yr. 4.26%

Treasury yields soared on the longer end with the strong economic data (jobs and the ISM services reading), and the realization, at least for this week, the Fed doesn’t need to move much more.

The yield on the 2-year surged from 3.56% to 3.92%, while the 10-year went from 3.75% last Friday to 3.97%.

BlackRock Inc. CEO Larry Fink said early in the week that the market is pricing too many interest-rate cuts from the Federal Reserve given the U.S. economy continues to grow.

In an interview with Bloomberg, Fink, at a conference in Berlin said: “The amount of easing that’s in the forward curve is crazy. I do believe there’s room for easing more, but not as much as the forward curve would indicate.”

And the market then corrected, as appropriate.

--Speaking of which, dockworkers walked out of every major port on the U.S. East and Gulf coasts Tuesday, marking the beginning of a strike that threatened to ripple through the economy and cause political turmoil just weeks before the presidential election.  The last time East and Gulf coast dockworkers went on strike was in 1977.

The affected ports have the combined capacity to handle as much as half of all U.S. trade volumes, and the strike halted container cargo and auto shipments. 

The potential economic loss from the shutdown was estimated to be between $3.8 billion to $4.5 billion a day, according to JPMorgan Chase & Co.

A backup resulting from a week-long strike would take a month to clear, according to Oxford Economics.

The International Longshoremen’s Association was seeking higher wages and a rollback of the language on automation in a six-year contract that expired at midnight Tuesday.

The ocean carriers and terminal operators represented by the U.S. Maritime Alliance, also known as USMX, had accused the ILA of refusing to negotiate since the union called off talks back in June.

President Joe Biden, who prides himself on being pro-union, has said the dispute is a matter for collective bargaining and he wouldn’t invoke his authority under national security laws to order dockworkers back to the ports while negotiations continue.

“It would be unconscionable to allow a contract dispute to inflict such a shock to our economy,” Suzanne Clark, CEO of the U.S. Chamber of Commerce, wrote in a letter to Biden on Monday.  “Taft-Hartley would provide time for both parties in negotiation to reach a deal on a new labor contract,” Clark continued, referring to the 1947 congressional act that allows a president to intervene in labor disputes that involved national security.

ILA leader Harold Daggett, a real piece of work who the Wall Street Journal said was paid $900,000 a year, warned the White House not to intervene, and said if forced back to the ports, dockworkers would handle fewer containers than usual, slowing operations.  They work slowly to begin with, mused the editor

While the union hasn’t endorsed a presidential candidate, according to Daggett, former President Trump “promised to support the ILA in its opposition to automated terminals” during a Mar-a-Lago meeting last fall, which is absurd.  Sorry, guys, you will be replaced in time.  You have to be.

As to the holiday shopping impact, as I wrote months ago, most retailers saw this coming going back to last year and sped up shipments in the spring and summer.

So, what were the dockworkers asking for in terms of a wage hike?  Try 77% over six years, while port employers raised their offer from 40% to 50%.

And then Thursday, just three days into the walkout, the union reached a deal to suspend the strike until Jan. 15 to provide time to negotiate a new contract.

The ILA then resumed work immediately on Friday as the ILA and the U.S. Maritime Alliance reached agreement on a 62% wage hike over six years.  Any wage increase would have to be approved by union members as part of the ratification of a final contract.

There are still many issues to be hammered out, including ‘automation,’ but this is a big win for the Biden administration to get this off the front pages prior to the election.

--Saudi Arabia’s oil minister said prices could drop to as low as $50 per barrel if so-called cheaters within OPEC+ don’t stick to agreed-upon production limits, according to reports.

The remarks were interpreted by other producers as a veiled threat from the kingdom that it is willing to launch a price war to keep its market share if other countries don’t abide by the group’s agreements, they said.

Key members of the cartel, OPEC+, agreed on Wednesday to ease production curbs in December.  Those plans, which were previously agreed upon, were confirmed in an online meeting.

For now, crude is well above $70 ($74) on Middle East concerns and potential supply disruptions.  Thursday, oil rose $3 on the possibility Israel could hit Iran’s energy facilities, which President Biden indicated the U.S. would support (vs. going after the nuclear facilities).

A wider war could choke oil exports from the Gulf that pass through the Strait of Hormuz, which borders Iran.

But geopolitical concerns have existed for months without any real impact on prices.

Separately, Reuters reported that senior executives at Greek shipping companies have been receiving threatening emails from the Houthis, warning their ships risk being attacked.

A message reviewed by Reuters at one company said the Greek-managed ship had violated a Houthi-imposed transit ban by docking at an Israeli port and would be “directly targeted by the Yemeni Armed Forces in any area they deem appropriate.”

The Houthis have carried out nearly 100 attacks on ships crossing the Red Sea since November, acting in solidarity with Palestinians in Israel’s year-long war in Gaza. They have sunk two vessels, seized another and killed at least four workers.

--High new-vehicle prices and borrowing costs are keeping some shoppers on the sidelines, pointing to what is expected to be another lackluster sales year for automakers.

Industrywide third-quarter U.S. vehicle sales fell 1.9% compared with a year earlier, according to Wards Intelligence.  [Another report I saw had total U.S. vehicle sales for the quarter totaled 504,039, up 0.7% from 500,504 in the same period a year ago.]

For the July-to-September quarter, General Motors, the nation’s largest carmaker by volume, said sales fell 2% compared with a year earlier, with the company’s mass-market Chevrolet brand accounting for most of the decline.

Toyota Motor’s U.S. sales fell 5.6% in the quarter, with popular nameplates such as the Rav4, Camry and Corolla posting declines last month.

Ford Motor’s sales rose 1% for Q3.

Analysts say the industry’s sales tally was dented by Hurricane Helene, which hit the Southeast on the final weekend of September, typically a busy selling period.

--Stellantis stock fell by double digits Monday after the Jeep maker cuts its 2024 financial guidance, citing deteriorating industry dynamics and Chinese competition. 

U.S. sales were down a whopping 20% for the quarter from a year ago, with CEO Carlos Tavares calling the state of the auto industry worldwide “brutal.”

“At the beginning of Q3, we introduced an aggressive incentive program across our U.S. brand portfolio that with significant competitive updates made in August and September resulted in the reduction of dealer inventory by over 50,000 units through the end of the quarter, down 11.6%,” said Matt Thompson, head of U.S. retail sales, Stellantis North America.

The sluggish third-quarter results put automakers on pace to finish the year with U.S. vehicle sales of around 15.7 million – a slight increase from last year, when supply-chain snags were still crimping vehicle output, but still well off historic highs.

Carmakers posted five consecutive years of at least 17 million vehicle sales through 2019.

The average new vehicle in the U.S. sold for $44,467 in September, down nearly 3% from last year, as automakers and dealers offer more discounts, according to industry tracker J.D. Power.

But that figure is up from $34,600 at the end of 2019, reflecting years of sharp inflation during the pandemic, when a shortage of computer chips and other car parts crimped vehicle production.

--Tesla on Wednesday reported third-quarter vehicle deliveries below estimates (though up from the prior quarter) as incentives and low-cost financing failed to lift demand for its aging models in a highly competitive market.  The shares fell 3.5%.

Rising competition in the U.S., a lack of European subsidiaries and slowing consumer spending in China weighed on Tesla’s quarterly deliveries.

In July, BMW led the European battery electric market for the first time, beating Tesla.

The price cuts and incentives have also squeezed the company’s profit margins.

The EV maker handed over 462,890 vehicles in the three months to Sept. 30, up 6.4% from the preceding quarter.

But Wall Street on averaged had expected the company to deliver 463,897 vehicles, according to Bloomberg.

The Model 3 and Model Y represented the bulk of Tesla’s overall total, with those two vehicles combining for 439,975 deliveries.

The company has to deliver 516,344 more vehicles in the fourth quarter to meet last year’s delivery figure of 1.81 million units.

Back to GM, their third-quarter EV sales soared 60% year-over-year, but they were up just 12% for Ford.

GM got a boost from demand for its new Equinox EV, which sold nearly 10,000 units in its first full quarter on the market.

--Boeing and its machinists union haven’t made any progress in recent talks to end the labor strike.

Boeing has offered a base wage increase of about 30% over the life of a four-year contract and some enhancements to retirement benefits. The union, however, wants to shift back to a defined-pension plan from 401(k) accounts.  There is no way Boeing is making this change.  So, to break the deadlock, Boeing is going to have to offer better 401(K) matching or more pay.

One more...Sept. 30 was the last day Boeing committed to funding health-care benefits, including for family members.  They will be reinstated when the workers come back.

--Spirit Airlines has been in discussions with bondholders over the terms of a potential bankruptcy filing in the wake of its failed merger with JetBlue Airways, according to reports, which is exactly what I said would be the case at the time.

The budget carrier has also been exploring restructuring its balance sheet through an out-of-court transaction, though recent talks have been more focused on reaching an agreement with bondholders and other creditors to support a chapter 11 filing.  Nothing seems imminent.

Spirit has been struggling with losses and declining revenue as it aims to address coming maturities within its $3.3 billion debt load, including more than $1.1 billion of secured bonds that are due in less than a year.

--TSA checkpoint numbers vs. 2023

10/3...98 percent
10/2...97
10/1...100
9/30...103
9/29...102
9/28...98
9/27...99
9/26...97

--Nike beat fiscal first-quarter earnings estimates, but the stock fell 6.8% as the company then issued poor guidance, while postponing its previously announced investor day, scheduled for November.

The company reported earnings of 70 cents a share, ahead of estimates calling for 52 cents, with net income at $1.1 billion for the quarter, down 28% from a year ago. Revenue fell 10% to $11.6 billion. Sales in North America, Nike’s largest market, fell 11% year-over-year.

Nike’s chief financial officer, Matthew Friend, took a measured tone, warning investors more than once that a “comeback at this scale takes time.”

While pulling official guidance, Friend gave investors a broad business update, saying the company revenue expectations had moderated since the start of the year.  At the time, Nike predicted sales would be down by a percentage in the mid-single digits.

“While there are some early wins, we have yet to turn the corner,” he added.

Bottom line, Nike continues to lose market share to competitors.

Nike is in the midst of transitioning chief executives.  In September, the company said current CEO John Donahoe would be retiring, to be replaced by company veteran Elliott Hill.

--Humana Inc. shares fell 11% on Wednesday (after being down 24% earlier in the day) as the insurer disclosed a drop in crucial Medicare quality ratings that threatens to drastically reduce revenue.

About a quarter of members in plans that Humana manages for the U.S. Medicare program for the elderly were in four-star rated plans, down from 94%, Humana said Wednesday. The company said it believed there may be potential errors in calculations by the Centers for Medicare and Medicaid Services and that it had appealed some of the results.

The result is catastrophic for the Medicare-focused insurer if it stands.  Humana has already seen profits squeezed by medical costs and tighter reimbursements from the government.  Insurers get more money in future years for top-rated plans, so cuts to the ratings, known as stars, can sink revenue.

Humana could see an earnings hit of $9 a share in 2026 if ratings on its main Medicare contract fell below the level that earns bonuses, according to a Wall Street analyst.

--OpenAI has completed a deal to raise $6.6 billion in new funding, giving the artificial intelligence company a $157 billion valuation and bolstering its efforts to build the world’s leading generative AI technology.

The funding round was led by Thrive Capital, the venture capital firm headed up by Josh Kushner, which put in $1.3 billion.  Microsoft, OpenAI’s largest backer, put in about $750 million, on top of the $13 billion it had already invested in the startup.  Other investors included Fidelity Management and Nvidia Corp.

--Amazon plans to hire 250,000 transportation and warehouse workers this holiday shopping season, the same number as last year as e-commerce spending is expected to outpace overall holiday sales in the final quarter of 2024, the company said on Thursday.

Online holiday shoppers are expected to spend a record $240.8 billion, up 4.9% from last year.  Broader holiday spending is expected to rise a modest 3.2%, according to a Mastercard forecast.

Target announced it is tacking on 100,000 workers for the season.  I haven’t seen Walmart’s plans, but they have previously announced they have been hiring associates throughout the year and will offer additional hours to current associates.

--DirecTV announced it is buying rival Dish Network, ending multiple decades of on-and-off talks about the satellite services merging.

The companies have struggled to retain subscribers in the streaming era. As platforms like Netflix, Hulu, and Amazon’s Prime Video have gained traction, peeling off millions of subscribers away from pay TV with lower price tags and on-demand content, DirecTV and Dish have found it increasingly difficult to justify rising subscription costs, worsening already dramatic cord-cutting.

If they combine, the new service would have about 20 million subscribers with DirecTV accounting for over 11 million of that number.  Yet this figure pales compared to DirecTV’s 20.3 million peak TV subscriber base in 2015 when AT&T bought a majority stake in the company.

AT&T sold half of the company to private equity firm TPG in 2021, and on Monday sold the remaining half to TPG.

--Carnival stock fell slightly after the company reported earnings that beat expectations, but its fourth-quarter outlook was not so good, below expectations.

The cruise operator reported a profit of $1.27 per share in its third quarter, beating forecasts for $1.17, on record sales of $7.9 billion, also ahead of consensus of $7.819 billion.  Carnival said that cumulative advanced bookings for 2025 broke 2024’s record, with prices above the prior year’s levels too.

--McDonald’s is rolling out the Chicken Big Mac in the U.S. that proved to be wildly successful in the UK.  It sold out there within 10 days. 

Beginning Oct. 10, the highly anticipated sandwich will be sold for a limited time at U.S. locations.  The Chicken Big Mac is similar to its beefy sibling, replacing the two burgers with two tempura chicken patties.  You get the same Big Mac sauce, pickles, shredded lettuce and a slice of American cheese.

McDonald’s has sought to add more chicken to its menu, which is generally cheaper than beef.  CEO Chris Kempczinski recently said chicken is now on par with beef sales at its restaurants.

--Forbes released its annual ranking of America’s super-rich this week, The Forbes 400, whose fortunes are worth $5.4 trillion, up nearly $1 trillion from last year, a record.  The minimum net worth to make the elite club is $3.3 billion.

Elon Musk tops the list for a third year with an estimated net worth of $244 billion, down from $251 billion in 2023.

Amazon founder Jeff Bezos is again No. 2 with a net worth of $197 billion, ahead of Facebook founder Mark Zuckerberg at $181 billion.  Oracle founder Larry Ellison is fourth, $175 billion; and Warren Buffett is fifth at $150bn.

Bloomberg’s Billionaires Index is more ‘real-time’ than the Forbes ranking and on Thursday, Mark Zuckerberg became the world’s second-richest person, surpassing Bezos at $206.2 billion, $1.1 billion ahead of Bezos and almost $50 billion behind Musk.

--From Barron’s: “96%...the decline in the number of U.S. dairy farms from 1970 (more than 648,000) to 2022 (24,470).”

This is kind of funny, because I talked to my friends in the Oklahoma Panhandle (Gate, OK) a few months ago, and they always had dairy cows the two times I went out to see them back in the early 2000s, and I was asking them if they still did and they said no.  They have a large family, but the only child mildly interested in the business wasn’t willing to get up at 4:30 every morning, nor was Eugene as he gets older, so they switched to cattle...much lower maintenance...to go with their other crops. 

Foreign Affairs, Part II

China: President Xi Jinping used his annual National Day address on Monday to call for an all-out effort to counter mounting uncertainty and to send a strong warning to “separatists” on Taiwan.

“Be prepared for the future and resolutely overcome all uncertainties,” Xi said at an official event in Beijing to mark the 75th anniversary of the founding of the People’s Republic on Tuesday.

He also said Taiwan was “China’s sacred territory” and “the people on both sides of the [Taiwan] Strait are connected by blood.”

“We must...promote the spiritual harmony of compatriots on both sides of the strait, and resolutely oppose Taiwan independence separatist activities,” Xi said.

Meanwhile, the U.S. quietly announced almost $600 million in more military aid to Taiwan, according to a short notice from the White House Sunday.  The president said he’s authorized “the drawdown of up to $567 million in defense articles and services of the Department of Defense, and military education and training” for Taiwan – but there are no more details than that.

But as Reuters noted separately, “Taipei has complained of delayed U.S. arms deliveries, including for upgraded F-14 fighter jets.”

Seth Jones of the Washington-based Center for Strategic and International Studies argued this week in Foreign Affairs that “China Is Ready for War.”  However, he explained, thanks to America’s “crumbling” defense industrial base, the U.S. appears to be nowhere nearly as prepared for a conflict with China.

“Despite the country’s current economic challenges, its defense spending is soaring and its defense industry is on a wartime footing,” Jones writes. “China has already caught up to the United States in its ability to produce weapons at mass and scale,” and it has “become the world’s largest shipbuilder by far, with a capacity roughly 230 times as large as that of the United States.”

Lastly, China on Friday successfully launched its first reusable satellite* in a mission that aims to make progress in seed science, microgravity research and international cooperation in space, according to state media.

*As opposed to allowing it to burn up during reentry.

The Shijian-19 was successfully delivered into orbit by a Long March 2D (CZ-2D) rocket from the northwestern Jiuquan Satellite Launch Center, state broadcaster CCTV said.

The Shijian-19 carries payloads from five countries, including Thailand and Pakistan, as part of China’s efforts to promote international cooperation in space.

Iraq: The U.S. announced an agreement with the Iraqi government last Friday to wrap up the military mission in Iraq of an American-led coalition fighting the Islamic State group by next year, with U.S. troops departing some bases that they have long occupied during a two-decade-long military presence in the country.

But the Biden administration refused to provide details on how many of the approximately 2,500 U.S. troops still serving in Iraq will remain there or acknowledge it will mark a full withdrawal from the country.

For years, Iraqi officials have periodically called for a withdrawal of coalition forces, and formal talks to wind down the U.S. presence in the country have been going on for months.

The agreement will apparently bring about a two-phase transition in the troops assigned to Iraq that began this month.  In the first phase, which runs through September 2025, the coalition mission against ISIS will end and forces will leave some longstanding bases.

In the second phase, the U.S. will continue to operate in some fashion from Iraq through 2026 to support counter-ISIS operations in Syria, according to U.S. officials on a call with reporters.

Ultimately, the U.S. military mission would transition to a bilateral security relationship, the U.S. officials said, but they did not indicate what that might mean for the number of American troops who remain in Iraq in the future.

“We have taken an important step in resolving the issue of the international coalition to fight ISIS,” Iraqi Prime Minister Mohammed al-Sudani said in a speech this month. He noted “the government’s belief in the capabilities of our security forces that defeated the remnants of ISIS.”

The U.S. said troops will stay in Syria.

Mexico: Claudia Sheinbaum was sworn in as Mexico’s first female president this week. She promised continuity with Andres Manual Lopez Obrador, founder of the Morena party and her predecessor as president (term limited), and to bolster women’s rights, green energy and railways.  Mr. Lopez Obrador is accused of lurching towards authoritarianism after imposing a slew of constitutional changes.  Sheinbaum also inherits a huge budget deficit and slow economic growth.

And she has to deal with the powerful drug gangs and other criminal groups that make Mexico so hard to govern.

With AMLO in the background, the Morena party having appointed his son, Andres Lopez Beltran, to a senior position, Sheinbaum is likely to be hamstrung by Lopez Obrador’s loyalists on issues such as her pledge to push a transition to clean energy (at the expense of Pemex, the state-owned oil company that gets a ton of government help).

Random Musings

--Presidential approval ratings....

Gallup: 39% approve of President Biden’s job performance, 58% disapprove; 31% of independents approve (Sept. 3-15).

Rasmussen: 45% approve, 54% disapprove (Oct. 4)

--A New York Times/Siena College Poll of battleground, pseudo battleground states, had Kamala Harris leading Donald Trump by 49%-47% in Wisconsin and 48%-47% in Michigan among likely voters, but trailing Trump 50%-44% in Ohio.

Harris leads in Nebraska’s key 2nd District, 52%-43%.

The Times/Siena survey also found Democratic Senate candidates in Michigan, Ohio, and Wisconsin and elsewhere holding leads over their Republican competitors, keeping a narrow path open to maintaining Democratic control of Congress’ upper chamber next year.

Wisconsin...Democrat Tammy Baldwin 50%, Republican Eric Hovde 43%
Pennsylvania...Dem. Bob Casey 49%, Rep. Dave McCormick 40%
Arizona...Dem. Ruben Gallego 49%, Rep. Kari Lake 43%
Ohio...Dem. Sherrod Brown 47%, Rep. Bernie Moreno 43%
Michigan...Dem. Elissa Slotkin 47%, Mike Rogers 42%.

--In a campaign speech on Sunday in Pennsylvania, Donald Trump railed against immigrants in the country illegally, calling some migrants “vicious” over 10 times during his nearly two-hour address in Erie, and described several violent incidents.

Trump knows immigration is a winning campaign issue, but many of us can’t stand the rhetoric he employs.

“They call them of the worst order,” Trump said of immigrants who had committed violent crimes.  “Charged with or convicted with heinous crimes, including child predators, drug dealers, vicious gang members, sadist thugs and people that deal in women.”

Trump multiple times referenced instances of rape, including child rape.  At one point, he suggested he would condone a burst of police violence.

“One rough hour, and I mean real rough.  The word will get out and it will end immediately,” he said.

This is, of course, nuts.

At a speech in Wisconsin, Trump linked Kamala Harris to illegal border crossings, saying she could never be forgiven for “erasing our border.”

“Kamala Harris can never be forgiven for her erasing our border and she must never be allowed to become president of the United States,” Trump aid.  “She’s letting in people who are going to walk into your house, break into your door,” he said.

“I will liberate Wisconsin from the mass migrant invasion,” he said.  “We’re going to liberate the country.”

“If a Republican did what she did, that Republican would be impeached and removed from office...Joe Biden became mentally impaired.  Kamala was born that way,” he said.

For her part, Harris went to the U.S.-Mexico border last Friday, after I posted, and called for further tightening of asylum restrictions as she sought to project a tougher stance on illegal migration and address one of her biggest vulnerabilities in the election.  But incredibly, that was the vice president’s first trip to the border.  Beyond pathetic.

Harris recounted how a sweeping bipartisan package aiming to overhaul the federal immigration system collapsed in Congress earlier this year after Trump urged top Republicans to oppose it.

“Donald Trump tanked it,” she said, so he could campaign on disorder at the border.  “He prefers to run on a problem instead of fixing a problem.”

But the vice president and the president had years to address the issue, and the executive order the administration finally issued earlier this year that led to a drastically reduced flow of illegals, realistically should have been put in place two years earlier, once Biden and Harris realized their original plan instituted on his inauguration was a major failure.

Editorial / Wall Street Journal

“The U.S.-Mexico border on Friday was the latest stop on Kamala Harris’ reinvention tour, and defending her record there will take more than a smile and shifting blame. She criticized Donald Trump and republicans for rejecting a bipartisan Senate deal, as we did at the time.  But as usual she blew past the steps that she and President Biden failed to take for more than three years as illegal migrant border crossings surged to record levels....

“(The Senate plan), which collapsed in February, included a higher standard for asylum claims, and would have halted claims once crossings surpassed a weekly average of 5,000 a day.

“The bill would have helped at the margin, assuming the Administration had enforced it – and doubts about the latter were part of the political rub.  Since the spring, the Administration has required migrants to claim asylum only at ports of entry, and border crossings have fallen sharply. The President had this authority all along but was unwilling to use it for fear of offending his party’s left wing.

“This record of failure has been especially frustrating for anyone who favors generous legal immigration, as we do.  The surge of migrants and its spread of fiscal, housing and law enforcement woes has soured public support....

“Ms. Harris says it’s possible to have both border security and a humane immigration system. That’s true, but that requires an Administration willing to enforce the rules.  President Biden hasn’t.

“Ms. Harris says she will, and we’d like to believe it. But even after the last three years, she refuses to call the Biden policies a failure.  If she won’t admit that now to win over swing voters, why would she risk the left’s wrath once she’s elected?  It takes a great leap of political faith to believe she won’t revert to Biden form.”

--Donald Trump laid the groundwork to try to overturn the 2020 election even before he lost, knowingly pushed false claims of voter fraud and “resorted to crimes” in his failed bid to cling to power, according to a court filing unsealed Wednesday that offers new evidence from the landmark criminal case against the former president.

The filing from special counsel Jack Smith’s team offers the most comprehensive view to date of what prosecutors intend to prove if the case charging Trump with conspiring to overturn the election reaches trial (not likely).  What is ‘new’ are the accounts offered by Trump’s closest aides to paint a portrait of an “increasingly desperate” president who, while losing his grip on the White House, “used deceit to target every stage of the electoral process.”

The filing says that Trump was alone when he tweeted from the dining room next to the Oval Office, where he was watching all the proceedings, alone, on Fox News.  At 2:24 p.m. he tweeted that Pence “didn’t have the courage to do what should have been done to protect our Country and our Constitution.”

“So what?” the filing quotes Trump as telling an aide after being advised that Vice President Pence had been rushed to a secure location after the violent mob stormed the Capitol

“The details don’t matter,” Trump said, when told by an adviser that a lawyer who was mounting his legal challenges wouldn’t be able to prove the false allegations in court, the filing states.

Trump posted repeatedly on Truth Social on Wednesday claiming that the filing was election interference, but it was his own defense team that delayed, and delayed, and delayed, though the legal challenges didn’t stop the cases altogether.

The whole Jan. 6 mess can be summed up in one quote from the filing:

“It doesn’t matter if you won or lost the election,” Trump allegedly told family members and others aboard Marine One.  “You still have to fight like hell.”

The filing says the comment was overheard by the same aide who brought Trump news of Pence being moved to a secure location.

--We had a civil and relatively restrained vice-presidential debate between Republican Sen. JD Vance and Democratic Governor Tim Walz and that in and of itself was refreshing.  The two men spent much more time attacking the other’s running mate than each other during the 90-plus minutes on the CBS News stage in New York, and there was zero conversation concerning JD Vance’s comments on ‘Haitians eating pets’ in Springfield, Ohio, nor did Vance go after Walz’s National Guard service and questions over some of the governor’s claims regarding same.

Personally, I was ticked there wasn’t a single question on Ukraine from the highly unlikable moderators.

It was an otherwise policy-focused debate, Vance doing his ticket good, clearly winning the night, while I thought Walz was fine (save for his “knucklehead” remark).  He struggled at the start, clearly nervous, but he gained his footing.

Vance’s positioning can be summed up in his statement: “Something these guys do is they make a lot of claims about if Donald Trump becomes president, all of these terrible consequences are going to ensue,” he said.  “But in reality, when Donald Trump was president, inflation was low.  Take home pay was higher.”

If Tim Walz landed a knockout punch, it came at the very end with Vance’s refusal to say during an exchange whether he believed Trump had lost the 2020 election.

“Did he lose the 2020 election?” Walz asked Vance.

“Tim, I’m focused on the future,” Vance replied.

“That’s a damning non-answer,” Walz replied.

Walz continued: “I’m pretty shocked by this. He lost the election.  This is not a debate. It’s not anything anywhere other than in Donald Trump’s world.  Because look, when Mike Pence made that decision to certify the election, that’s why Mike Pence isn’t on this stage.  What I’m concerned about is, where is the firewall with Donald Trump.  Where is the firewall? ...”

Editorial / Wall Street Journal

“The political cliché is that vice-presidential debates don’t matter to the ultimate election result. But even if that turns out to be true about Tuesday’s debate between Tim Walz and JD Vance, Americans were at least able to watch a substantive debate that came closer to revealing the election choice than anything their running mates have offered.

“Mr. Vance in particular helped the ticket and himself. The sarcastic candidate of ‘childless cat ladies’ fame was nowhere in sight. The Ohio Senator was respectful, well prepared, articulate, and relentless in reminding voters about the flaws of what he called ‘the Kamala Harris Administration.’  This is a case Donald Trump was unable to make in his debate, or for that matter anywhere in the weeks since President Biden left the race.

“Mr. Walz was likable and avuncular, though he sometimes seemed frenetic and overstuffed with too many facts and prepared attack lines.  On presence and command, Mr. Vance won the debate going away.

“The Senator was especially effective in sanding down the sharper edges of GOP policies that Democrats and the press portray as cruel.  He addressed abortion policy by conceding that the voters of Ohio had chosen to pass a policy he opposed, but in a democracy that is what you have to accept.  He also conceded that Republicans had to do more to win back the trust of Americans on the issue.

“Mr. Walz offered the restoration of Roe v. Wade in a national law as the only possible answer....

“The press will focus on Mr. Vance’s refusal to say if Mr. Trump lost the 2020 election, and we wish he had.  Holding on to the 2020 Trumpian fiction is a political loser and for many voters a deal-breaker....

“Neither candidate was all that good on the economy, as both men seem to think that tariffs and domestic manufacturing are the key to prosperity.  Mr. Vance suggested that this was crucial to the success of the Trump economy, but his policy history is wrong.  The reason for the burst of growth and rising incomes was the 2017 tax reform and regulation.  The tariffs that began in 2018 detracted from growth, as economic studies have shown.

“As for Mr. Walz, he’s a government man.  When he speaks of ‘investment,’ he always means more spending.  And it’s too bad Mr. Vance didn’t nail the Biden-Harris spending as the main cause of inflation....

“(As for the anchors) it was especially disappointing that they asked only a single question on foreign policy given that the men could become Commander-in-Chief.  Nothing on China, nothing on the Ukraine war, or the decline of America’s military deterrent.

“They did ask about the current war in the Middle East and whether the candidates would support an Israeli attack on Iran’s nuclear program. Mr. Walz ducked and pivoted to cite Mr. Trump’s first-term advisers who say he can’t be trusted as Commander-in-Chief.

“Mr. Vance got the better of the rebuttal by saying that, no matter his tweets and temperament, Mr. Trump understands effective deterrence and showing strength to adversaries.  Mr. Vance said it is Israel’s choice about how to respond to Iran’s missile attack and the U.S. should support Israel if it does. That answer will resonate in Tehran and elsewhere more than Mr. Walz’s equivocation.

“Since we’re not hearing this from either of the presidential candidates, we’re glad Mr. Vance sent that message. Coping with world disorder may be the most important challenge the next President faces.”

--Former first lady Melania Trump signaled her support for abortion access, a topic that has vexed her husband’s presidential campaign, in a video promoting her upcoming memoir.

“Individual freedom is a fundamental principle that I safeguard,” she said in a video posted to social media Thursday.  “Without a doubt, there is no room for compromise when it comes to this essential right that all women possess from birth. Individual freedom: What does ‘my body, my choice’ really mean?”

--In a Marist New York City Poll released today, a staggering 69% of New Yorkers believe Mayor Eric Adams should resign after he was slapped with bombshell federal corruption charges, more such charges forthcoming it seems.

If he decides to stick to his word and fight the charges, 63% believe Gov. Kathy Hochul should tap her rarely used power as governor to force him to step down, the poll shows.

--In my neck of the woods, there have been lots of news stories on local high-school seniors heading to schools down South, rather than stay in the area, which was long the tradition...schools like Lehigh, Lafayette, Muhlenberg, Colgate, Rutgers, Fordham, the New York State University System, Syracuse, and all the excellent little schools in New England, like Amherst, Williams, Middlebury, and the likes of Boston College and UConn...let alone the Ivy League institutions.

But a Wall Street Journal piece over the weekend highlighted the growing trend, dating back two decades, where, for example, at the “University of Tennessee in Knoxville, total freshmen from the Northeast jumped to nearly 600 in a class of about 6,800, up from around 50 in 2002.  At the University of Mississippi, in Oxford, they increased from 11 to more than 200 in a class of about 4,500 in 2022.  At the University of Alabama in Tuscaloosa, 11% of students came from the Northeast in 2022, compared with less than 1% two decades prior.”

Students are searching for fun and school spirit, i.e., big-time sports programs, while parents cite lower tuition and less debt, and warmer weather.  College counselors also say many teens want to escape the political polarization ripping apart campuses in New England and New York.

--Major floods and landslides in Nepal have killed at least 100 people across the Himalayan nation, officials have reported.  Intense rainfall inundated the valley around the capital Kathmandu.

Six of the victims were football players at a training center operated by the All Nepal Football Association.

--The Amazon has had its worst forest fires in two decades, with more than 62,000 square kilometers having been burned already this year – an area bigger than countries like Sri Lanka or Costa Rica.

The world relies on the Amazon to absorb a lot of its carbon. These fires mean it is now emitting record amounts itself.  Most of the fires are illegally started by humans, according to scientists, the Federal Police, and the government: loggers and miners looking to exploit land in the Amazon, or farmers turning it into pasture.

--An unprecedented heat wave has been scorching the western part of the United States at the start of October with record-breaking temperatures and excessive heat alerts expected to last into the weekend.

High temperatures in parts of Arizona, California, and Nevada are expected to be 10 to 25 degrees above normal, forecasters said.

After facing its warmest summer on record this year, Phoenix saw little relief in September, and the records continued into October, with both Phoenix and Yuma reaching 113 degrees on Tuesday – making it the hottest October day in the city’s history.  Prior to this week, Phoenix had never reached temperatures at or above 110 degrees in the month of October.

Tuesday also marked the eighth day in a row of record high, tied, or broken temperatures in Phoenix, according to the Arizona Republic and USA TODAY.  And another record, 108, was set on Wednesday.  [The weekend forecast is for 109 Saturday and Sunday, and the same on Monday.]

--For the record, the 2-day rainfall totals as a result of Hurricane Helene and the earlier weather front prior to the storm’s advance into the region were biblical...29.58 inches in Busick, N.C., 24 inches at Mt. Mitchell, 20 inches in Boone, N.C., a broad swath of South Carolina in the 12-15- inch range.  Atlanta had his highest 48-hour rainfall ever, 11 inches, like 3 inches more than the previous record.  And there were portions of Florida that received 15-20 inches with record storm surge.

--SpaceX launched a rescue mission for the two stuck astronauts at the International Space Station on Saturday, sending up a downsized crew to bring them home but not until next year.

Since NASA rotates space station crews approximately every six months, this newly launched flight with two empty seats for Butch Wilmore and Suni Williams won’t return until late February.  Officials said there wasn’t a way to bring them back earlier on SpaceX without interrupting other scheduled missions.

By the time they return, the pair will have logged more than eight months in space, when they were expected to be gone just a week when they signed up for Boeing’s first astronaut flight that launched in June.

NASA ultimately decided that Boeing’s Starliner was too risky after a cascade of thruster troubles and helium leaks marred its trip to the orbiting complex.

Late February must seem like an eternity for Wilmore and Williams.  You gotta feel for them.

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

Pray for Ukraine.

God bless America.

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Gold $2666...hit a record of $2690 Tuesday
Oil $74.53...up over $6 on the week on Middle East fears

Bitcoin: $62,350 [4:00 PM ET, Friday]

Regular Gas: $3.18; Diesel: $3.56 [$3.78 - $4.55 yr. ago]

Returns for the week 9/30-10/4

Dow Jones  +0.1%  [42352]
S&P 500  +0.2%  [5751]
S&P MidCap  -0.03%
Russell 2000  -0.5%
Nasdaq  +0.1%  [18137]

Returns for the period 1/1/24-10/4/24

Dow Jones  +12.4%
S&P 500  +20.6%
S&P MidCap  +12.1%
Russell 2000  +9.2%
Nasdaq  +20.8%

Bulls 55.7
Bears 21.3

Hang in there.  Go Mets!

Brian Trumbore

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