Week in Review

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Week in Review

01/25/2025

For the week 1/20-1/24

[Posted 4:30 PM ET, Friday]

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Edition 1,344

We’re off and running with Donald Trump’s second term.  In his Inaugural Address on Monday, thankfully held indoors due to the extreme cold in Washington, D.C., Trump heralded a new “Golden Age” while promising “America’s decline is over.”  Trump also spoke of “national unity.”

But in a second presentation in Emancipation Hall shortly thereafter, the president ranted about 2020’s “rigged election.”

Trump wasted no time in announcing steps to implement many of his campaign pledges, including on immigration, energy, the military and federal workforce, looking to reverse the policies of Joe Biden.

“We will immediately restore the integrity, competency and loyalty of America’s government,” Trump said in his address.  “With these actions, we will begin the complete restoration of America, and the revolution of common sense.”

The actions included ordering the attorney general not to take action against TikTok for 75 days; pardoning nearly all people with criminal charges related to storming the Capitol on Jan. 6, 2021; rescinding 78 Biden-era orders – including those related to diversity, immigration and climate – and withdrawing the U.S. again from the Paris Agreement, as well as the World Health Organization.

Many of these actions will be challenged in court, but on the tariff front, Trump did not necessarily act on Day One as he had said he would, though he mentioned Monday night he planned to enact tariffs of as much as 25% on Mexico and Canada by Feb. 1.

Trump said: “I will immediately begin the overhaul of our trade system to protect American workers and families.”

He reiterated his contention that America’s two immediate neighbors are letting undocumented migrants and drugs flood into the country.

Trump said he will establish an External Revenue Service to collect tariffs, adding “it will be massive amounts of money pouring into our Treasury coming from foreign sources.”

“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens,” he said.

Trump later said he was considering a 10% tariff on Chinese goods starting Feb. 1.

On inflation, Trump directed departments and agencies “to deliver emergency price relief,” including the cost and supply of housing, lowering health care expenses and eliminate climate policies that drive up energy prices.

On immigration, Trump signed a series of orders that signal a dramatic change to immigration policy and will usher in new limits to both legal and illegal immigration.

He also declared a national emergency at the southern border.  The White House said in a statement that he will deploy armed forces, including the National Guard, to “engage in border security.”

“I will send troops to the southern border to repel the disastrous invasion of our country,” Trump said.  He also wants to complete the wall on the U.S.-Mexico border, which he started in his first term.

The Pentagon then sent 1,500 troops to the border in the first of what will be several waves of troops that could rise to 10,000 in the coming weeks.  There were nearly 2,500 troops already in the border region.

Trump also wants to end birthright citizenship, a right embedded in the Constitution and bolstered by a Supreme Court ruling that grants citizenship to anyone born in the United States.  And he wants to rename the Gulf of Mexico the Gulf of America.

A federal judge on Thursday temporarily blocked Trump’s EO on birthright citizenship, calling it “blatantly unconstitutional” during the first hearing in a multi-state effort challenging the order.

On Tik Tok, Trump temporarily halted a ban on it in the U.S., granting the company and its Chinese parent ByteDance Ltd. more time to reach a deal for the popular app that would resolve longstanding U.S. national security concerns; a 75-day reprieve for the video-sharing platform.   [More below.]

But the first executive order Trump signed in the Oval Office was the full pardon of about 1,500 people for their role in the siege on the Capitol.  It also commuted the sentences of 14 people.

“We won, but now the work begins, we have to bring them home,” he said earlier in the evening.

The pardons covered convictions that ranged from misdemeanor trespassing to assaulting police with weapons and immediately became a political lightning rod.

Approximately 1,583 people had been federally charged with participating in the attack as part of the largest federal criminal investigation in U.S. history.  More than 1,000 defendants pleaded guilty and more than 200 were convicted at trial.  There were more than 300 cases pending that hadn’t reached a verdict or plea deal.  Trump ordered the Justice Department to dismiss all pending indictments.

The clemency action “ends a grave national injustice that has been perpetrated upon the American people over the last four years and begins a process of national reconciliation,” the proclamation stated.

Trump also signed commutations cutting short the prison sentences of 14 people associated with the Oath Keepers or Proud Boys extremist groups.  [Nine associated with the Oath Keepers, five with the Proud Boys.]  They were the only defendants to not receive full pardons, the group including Oath Keepers leader Stewart Rhodes, while former Proud Boys chairman Henry “Enrique” Tarrio was part of the larger cohort that received a pardon.

Former House Speaker Nancy Pelosi released a statement calling it “an outrageous insult to our justice system and the heroes who suffered physical scars and emotional trauma as they protected the Capitol, the Congress and the Constitution.”

In the days leading up to the Inauguration, Vice President Vance, attorney general nominee Pam Bondi and North Carolina Republican Sen. Thom Tillis had strongly condemned rioters who attacked police, who account for many of those spared the most time behind bars by Trump.

Such a mass pardon amounts to an endorsement of election denialism and the use of violence for political gain.

Editorial / Wall Street Journal...pre-Inauguration

“Donald Trump takes the oath of office on Monday for a second term promising to disrupt the status quo – in Washington and around the world.  Lord knows the status quo needs disrupting, but how he’ll do it and how far he’ll go remains a mystery, albeit for different reasons than eight long years ago.

“In 2017 Mr. Trump had won narrowly, almost by accident, and he inherited a GOP majority in Congress that had a long-developed agenda on taxes, healthcare, judges and much else.  The main policy victories of his first term – tax reform, energy development and judges – were traditional GOP priorities.  He was less successful on his own signature issues of tariffs and immigration control....

“The President-elect (starts) his second term with a personal favorable rating that is close to 50% and new political capital.  Susie Wiles, his chief of staff, seems to have imposed order on the transition and the new White House staff.  Mr. Trump’s first six months in 2017, by contrast, were a daily riot of media leaks and make-it-up-as-you-go orders.

“All of this means Mr. Trump has political running room, though it’s not unlimited.  His victory was solid but no landslide.  Half the country still dislikes him.  And the GOP majority in the House is so narrow that a couple of willful Members can kill anything.  Mr. Trump could quickly find himself in trouble if he exceeds his mandate from voters.

“Take immigration and border security.  Mr. Trump has a mandate to stop the flood of illegal migrants, and that will be an immediate priority.  He will have support for deporting criminals and gangs like Tren de Aragua.

“But he also promised mass deportation.  If this means midnight raids on busboys, or separating mothers from children, the politics could turn fast. His best option is controlling the border and using his political capital on the subject to cut a deal with Congress on legal and illegal immigration.

“Or take the tax bill that must pass to avoid a $4 trillion tax increase in 2026.  Merely extending the 2017 tax provisions will be a heavy lift.  But Mr. Trump campaigned on trillions of dollars more in tax breaks – no tax on tips, Social Security benefits or overtime.

“The danger is that the tax bill becomes a vehicle for income redistribution rather than economic growth.  Inflation more than anything else elected Mr. Trump, and he will fail as President if his policies don’t lift real wages for his new working-class coalition.  He needs to support the Federal Reserve’s efforts to keep reducing inflation and promote growth with supply-side tax and regulatory policies.

“Which brings us to tariffs, which he calls the ‘most beautiful word’ except perhaps ‘faith’ and ‘love.’  A tariff is a tax and a tax is anti-growth....

“The biggest risk in our view is Mr. Trump’s desire to court adversaries in search of diplomatic deals for their own sake.  He won’t settle the Ukraine war in a day as he promised, but an ugly deal that favors Russia could be his version of President Biden’s flight from Afghanistan....

“Most important will be his courtship of Chinese dictator Xi Jinping.  Former Trump security adviser John Bolton writes in his memoir that Mr. Trump said in his first term that a U.S. defense of Taiwan was implausible, and Mr. Xi can read.  China could react to Mr. Trump’s tariffs with a blockade of Taiwan, or perhaps by taking nearby islands now controlled by Taiwan. How would Mr. Trump respond to avoid the risk of war?  Would he cede Taiwan to Mr. Xi?

“Mr. Trump’s victory was most important as a repudiation of the woke left, and it creates a rare opening for Republicans to build a new majority. But Americans don’t want disruption for its own sake. They will support it if it means broader prosperity that they can share.  They also don’t want Mr. Trump to indulge in the politics of retribution by siccing the FBI and Justice Department on opponents.

“If Mr. Trump focuses on settling scores rather than raising incomes, Democrats will sweep the 2026 midterms and progressives will return to power with a vengeance in 2028.  A second presidential chance would be a terrible thing to waste.”

George Will / Washington Post...post-Inaugural Address

“Although few presidential inaugural addresses are remembered, six etched in the nation’s memory felicitous phrases, perfect for the moments: ‘Every difference of opinion is not a difference of principle’ (Jefferson, 1801); ‘the mystic chords of memory...the better angels of our nature (Lincoln, 1861); all Lincoln’s 701 words in 1865, carved in his memorial’s marble; ‘the only thing we have to fear is fear itself’ (Roosevelt, 1933); ‘the torch has been passed to a new generation of Americans’ (Kennedy, 1961); ‘In this present crisis, government is not the solution to our problem; government is our problem’ (Reagan, 1981, often quoted without the first four words).

“Donald Trump does not deal in felicities.  His second inaugural will be remembered for being worse than 59 others including his first (about ‘stealing,’ ‘ravages’ and ‘carnage’). It was memorable for its staggering inappropriateness.

“Inaugurations should be solemn yet celebratory components of America’s civic liturgy.  Instead, we heard on Monday that because of ‘corrupt’ and ‘horrible’ ‘betrayals’ by others, ‘the pillars of our society’ are ‘in complete disrepair.’  The challenges will be ‘annihilated,’ not because God blesses America, but because God chose him.

“The (mercifully) final clergyman at the inauguration defined divinity down by declaring Trump’s election a ‘miracle.’  The 2024 election was, Trump allowed, the ‘most consequential’ in U.S. history.  Eclipsing 1800 (the world’s first peaceful transfer of power by voters from one party to another), and 1860 (the elevation of a nation-saver).

“Previewing things to come, 30 minutes into his term he announced two more presidency-aggrandizing ‘emergencies (the 44th and 45th existing concurrently). The 45th, his energy ‘emergency,’ arrived when Monday’s average price of a gallon of gasoline ($3.12) was less than it was 70 years ago ($3.41, which is 29 cents in 1955, adjusted for inflation)....

“Those who today recoil against an exuberant urban vulgarian should accept that popular sovereignty is not the sovereignty of good taste.  Stephen Kotkin has some advice for the recoilers.

“The day after the election last fall, Kotkin, of Stanford’s Hoover Institution, conversing with Justin Vogt of Foreign Affairs, expressed impatience with those who say of Trump, ‘That’s not who we are.’  Kotkin asked, ‘Who’s the ‘we’?’  Trump, he said, is not ‘an alien who landed from some other planet.’:

“ ‘This is somebody the American people voted for who reflects something deep and abiding about American culture. Think of all the worlds that he has inhabited and that lifted him up.  Pro wrestling.  Reality TV. Casinos and gambling, which are no longer just in Las Vegas or Atlantic City, but everywhere, embedded in daily life. Celebrity culture. Social media.  All of that looks to me like America.  And yes, so does fraud, and brazen lying, and the P.T. Barnum, carnival barker stuff. But there is an audience, and not a small one, for where Trump came from and who he is.’”

But the news cycle Tuesday (and into Wednesday) was dominated with talk on the pardons, Trump calling the conspirators’ sentences “ridiculous and excessive,” saying he pardoned “people that were treated unbelievably poorly.”

Trump added: “They’ve served years in jail,” Trump said Tuesday, adding falsely, “and murderers don’t even go to jail in this country.”

Extremism researchers raised concerns over the message the freedom for the likes of Rhodes and Tarrio sends to armed militia-style groups or others with violent anti-government views.  Will others now be energized to take up more action?

“Those groups of course are going to see the return of battle-hardened leaders, who in addition to having a kind of real-life legitimacy due to having actually fought the government, will also have a strong sense of victimhood and martyrdom, which will further radicalize and fuel recruitment platforms,” said Jacob Ware, a Council on Foreign Relations research fellow.  “This move is going to make combating terrorism far more difficult, not just over the next four years as groups feel like they have an ally in the White House, but beyond that as well.”

Ware called the pardons “a pretty catastrophic moment for domestic counterterrorism.”

“In the past when individuals were acquitted of this crime, recognized as among the most serious in a democracy, it incontrovertibly breathed new life into far-right violent extremism in the United States,” said Bruce Hoffman, a veteran counterterrorism and homeland security fellow at the Council on Foreign Relations.

In 1988, a jury in Fort Smith, Arkansas, acquitted 14 white supremacists of seditious conspiracy, revitalizing an anti-government militia movement that spurred the Alfred P. Murrah Federal Building bombing in Oklahoma City five years later, Hoffman said.

“I don’t think it’s a very ambiguous message that’s being sent, and the historical parallel worries me,” he noted. [Washington Post]

Two-thirds of Americans opposed pardons for people convicted of crimes in the riot, according to a Washington Post-University of Maryland poll conducted in early December, although strong majorities of Republicans (60 percent) and Trump voters (69 percent) approved of them.

The largest police organization that backed Donald Trump in the last three elections, the Fraternal Order of Police, condemned the decision to pardon the J6 rioters.

“Crimes against law enforcement are not just attacks on individuals or public safety – they are attacks on society and undermine the rule of law,” the FOP and the International Association of Chiefs of Police said in a joint statement on Tuesday.

“Allowing those convicted of these crimes to be released early diminishes accountability and devalues the sacrifices made by courageous law enforcement officers and their families.”

Editorial / Wall Street Journal

“Republicans are busy denouncing President Biden’s pre-emptive pardons for his family and political allies, and deservedly so. But then it’s a shame you don’t hear many, if any, ruing President Trump’s proclamation to pardon unconditionally nearly all of the people who rioted at the U.S. Capitol on Jan. 6, 2021.  This includes those convicted of bludgeoning, chemical spraying and electroshocking police to try to keep Mr. Trump in power. Now he’s springing them from prison.

“This is a rotten message from a President about political violence done on his behalf, and it’s a bait and switch.  Asked about Jan. 6 pardons in late November, Mr. Trump projected caution.  ‘I’m going to do case-by-case, and if they were nonviolent, I think they’ve been greatly punished,’ he said.  ‘We’re going to look at each individual case.’

“Taking cues from the boss, last week Vice President JD Vance drew a clear line: ‘If you committed violence on that day, obviously you shouldn’t be pardoned.’

“So much for that.  The President’s clemency proclamation commutes prison sentences to time served for 14 named people, including prominent leaders of the Proud Boys and Oath Keepers, who were organized and ready for violence.  Then Mr. Trump tries to wipe Jan. 6 clean, with ‘a full, complete and unconditional pardon to all other individuals.’  The conceit is that there are hundreds of polite Trump supporters who ended up in the wrong place that day and have since rotted in jail.

“Out of roughly 1,600 cases filed by the Fed, more than a third included accusations of ‘assaulting, resisting, or impeding law enforcement.’....

“ ‘There is nothing patriotic about what is occurring on Capitol Hill,’ one GOP official tweeted [on Jan. 6, hours after the chaos.]  ‘This is 3rd world style anti-American anarchy.’  That was Marco Rubio, now Mr. Trump’s Secretary of State.  He was right.  What happened that day is a stain on Mr. Trump’s legacy.  By setting free the cop beaters, the President adds another.”

Oath Keepers founder Stewart Rhodes then visited Capitol Hill on Wednesday after his 18-year prison sentence was commuted.

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--A new fire broke out Wednesday in southern California, the Hughes fire, near Castaic Lake, a reservoir about 40 miles northwest of downtown Los Angeles, and spread rapidly, forcing the evacuation of tens of thousands in the general Santa Clarita area.  But after spreading to more than 10,000 acres in just hours, Cal Fire seemed to have a handle on it in terms of setting up key fire breaks.  Unlike the Palisades fire, ample resources were in the area and deployed quickly.

Rain (snow in the mountains) is finally expected in the region this weekend.

The death toll in all the fires officially stands at 28, but it will be higher.

Meanwhile, we are all thinking of the rebuilding process and the monumental task ahead, involving labor, materials and government, as well as the ongoing insurance crisis.

On the labor issue and President Trump’s deportation threats, a story from the Los Angeles Times this week, citing data from the National Assn. of Home Builders, notes that “an estimated 41% of construction workers in California are immigrants.”

The “number is far higher in residential construction, experts said, because much of it is nonunionized and not as heavily regulated as large capital projects.”

Trump officials have said deportations will focus on criminals and those posing a threat to public safety, but for now employers are still right to fear the administration will cast a wider net.

Regarding building materials, Canada is the biggest foreign supplier of lumber for the U.S. market and Southern California builders use wood that mostly comes from Canada and the Pacific Northwest, the Times reports.

If Trump moves forward on his tariff threat, import levies on Canadian lumber overall could top 50%, creating yet another hurdle for an industry that is already facing a supply crunch.

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Russia-Ukraine

--Russian President Vladimir Putin has declared Moscow’s readiness for talks but emphasized that any peace deal should respect the “realities on the ground,” a not-so subtle way of saying it must take into account Russia’s land gains.

He emphasized in June that Ukraine must also renounce its NATO bid and fully withdraw its forces from Donetsk, Luhansk, Zaporizhzhia and Kherson – the regions Russia annexed in September 2022 – demands that Ukraine and the West have rejected.  Moscow also wants the West to lift its sanctions that have limited Moscow’s access to global markets and dealt a heavy blow to Russia’s economy.

Ukrainian President Volodymyr Zelensky’s initial “peace formula” demanded Russia’s full withdrawal from all occupied territories, but he later softened his position as Moscow continued to make gains on the battle front, and he is no longer making that retreat a condition for talks.  Zelensky has faced reluctance from some allies to offer Kyiv quick membership in NATO, but he insists on strong security guarantees from the U.S. and other Western partners as the key element of any prospective peace deal.

Zelensky has emphasized the need for a comprehensive agreement, not a temporary halt to hostilities that would only allow Russia time to replenish its arsenal.  He has pushed for deployment of Western troops to Ukraine as peacekeepers.

Putin has also rejected a temporary truce, pointing to Russian gains in its current offensive and that any break would allow Ukraine to get reinforcements and supplies.

“The Russians are seeing that Trump is going to push for some kind of resolution or some kind of settlement, and they want to grab as much as they can,” said Kurt Volker, who served as special representative for Ukraine in Trump’s first term.

So that was the background heading into this week and Donald Trump’s inauguration.

--Tuesday, Donald Trump told a news conference he would be talking to Putin “very soon” and it “sounds likely” that he would apply more sanctions if the Russian leader did not come to the table.

But in his Truth Social post on Wednesday, he went further: “I’m going to do Russia, whose Economy is failing, and President Putin, a very big FAVOR,” he wrote.

“Settle now, and STOP this ridiculous WAR!  IT’S ONLY GOING TO GET WORSE.  If we don’t make a ‘deal’, and soon, I have no other choice but to put high levels of Taxes, Tariffs, and Sanctions on anything being sold by Russia to the United States, and various other participating countries.”

Continuing, he said: “Let’s get this war, which never would have started if I were President, over with!  We can do it the easy way, or the hard way – and the easy way is always better.  It’s time to ‘MAKE A DEAL.’  NO MORE LIVES SHOULD BE LOST!!!”

Russia’s deputy UN ambassador Dmitry Polyansky earlier told Reuters that the Kremlin would need to know what Trump wants in a deal to stop the war before the country moves forward.

Meanwhile, at the World Economic Forum, President Zelensky told the audience that at least 200,000 peacekeepers would be needed under any agreement.

And he told Bloomberg that any peacekeeping force for his country would have to include U.S. troops to pose a realistic deterrent to Russia.

“It can’t be without the United States... Even if some European friends think it can be, no it will not,” he said, adding that no one else would risk such a move without the U.S.

While Ukraine’s leaders might appreciate this tougher-talking Trump – they have always said Putin only understands strength – the initial reaction to Kyiv to Trump’s comments suggest that it is actions, not words, that people are waiting for.

Trump has also not specified where more economic penalties might be aimed, seeing as Russian imports to the U.S. have plummeted since 2022 and there are all sorts of heavy restrictions already in place.

Currently, the main Russian exports to the U.S. are phosphate-based fertilizers and platinum.

In an interview with Fox News host Sean Hannity, Trump had tough words for both Presidents Zelensky and Putin, Trump saying Zelensky “shouldn’t have allowed this war to happen.”

“Zelensky was fighting a much bigger entity, much bigger, much more powerful,” Trump said. “He shouldn’t have done that, because we could’ve made a deal...and Zelensky decided that I want to fight.”

Trump reiterated he would “put massive tariffs on Russia and massive taxes and also big sanctions.  And I don’t want to do that, you know I love the Russian people, they’re great people...but we’ve got to get this war ended.”

--Regarding action in the field, last Saturday, three people were killed in a Russian air strike on Kyiv.  A ballistic missile landed just before the authorities sounded the alarm, shortly after a previous air raid alert had ended.

Worrisomely, the projectile landed before the warning sirens because ballistic missiles travel so quickly that the sirens can’t react in time, said Andriy Kulchytskyy, the head of the Military Research Laboratory of the Kyiv Institute of Scientific Expertise, in an interview with the BBC after the attack.

A day earlier, Russian missiles struck the city of Kryvyi Rih, in central Ukraine, killing four people.

“Each such terrorist attack is another reminder of who we are dealing with,” President Zelensky said after the strike on his hometown. “Russia will not stop on its own. It can only be stopped by joint pressure, the pressure of everyone in the world who values life.”

Ukraine fired back on Saturday, striking Russian oil depots in the Tula region, south of Moscow, and in the Kaluga region, about 100 miles southwest of Moscow.

Overnight Thursday, Russian air defenses repelled a massive Ukrainian drone attack, intercepting and destroying 121 drones targeting 13 regions, including Moscow, Russia’s Defense Ministry said on Friday, making no mention of damages or casualties.

The ministry said six drones had been destroyed over the Moscow region and one over the capital itself.

But twenty drones targeted the Ryazan region, southeast of Moscow, the ministry said, and channels on the Telegram app posted unverified videos of what bloggers there described as large blazes in the city.  They said an oil storage depot and a power station had been hit, which was then confirmed by a Ukrainian official.

Meanwhile, Ukraine’s air force said on Friday it had also fought off a Russian drone attack and had shot down 25 of 58 drones launched the same night.

Ukraine’s interior ministry said drone debris had killed two men and a woman in the Kyiv region.

--The New York Times had an extensive piece on the North Korean soldiers fighting in Russia’s Kursk region.

“Unlike their Russian counterparts, they advance with almost no armored vehicles in support.

“When they attack, they do not pause to regroup or retreat, as the Russians often do when they start taking heavy losses, Ukrainian soldiers and American officials say.  Instead, they move under heavy fire across fields strewed with mines and will send in a wave of 40 or more troops.

“If they seize a position, they do not try to secure it. They leave that to Russian reinforcements, while they drop back and prepare for another assault...

“When combating a drone, the North Koreans send out one soldier as a lure so others can shoot it down. If they are gravely wounded, they have been instructed to detonate a grenade to avoid being captured alive, holding it under the neck with one hand on the pin as Ukrainian soldiers approach.”

Gen. Oleksandr Syrsky, Ukraine’s top military commander, said this week that North Korean losses continued to climb, estimating that almost half those sent had been either injured or killed, but he warned that they were “highly motivated, well-trained” and “brave.”

--Remember the storm in the Black Sea Dec. 15 that damaged two aging Russian oil tankers carrying 9,200 metrics tons of heavy fuel oil?

Nearly 150 volunteers and workers involved in cleaning up oil along the coast have sought medical assistance over the past month, health officials in the southern Krasnodar region said the other day.

The health minister said three were hospitalized and 142 treated as outpatients, without specifying the nature of their conditions.

Then we learned a 17-year-old university student died after reportedly helping clean up a beach in the resort town of Anapa.  Pro-Kremlin media suggested he succumbed to toxic fumes.

There are 8,500 volunteers and emergency personnel involved in cleaning up the spill, to give you an idea of the extent of the damage to the coastline.  Even President Putin conceded it was Russia’s most severe environmental disaster in recent years.

--According to a poll in December by the Kyiv International Institute of Sociology, President Zelensky’s approval rating is down to 52% from 90% at the start of the war.  No election can be held while the nation is at war and under martial law, but opposition is rising.  Should there be a ceasefire, an election could be held.

--David Shimer / Wall Street Journal

“Maintaining military aid for Ukraine while simultaneously applying economic pressure on Russia would increase the likelihood of a durable peace.  The Trump administration has made clear that its objective is to end the fighting.  But to secure a just and lasting resolution, Ukraine requires leverage for talks.  Cutting off aid would rob Ukraine of leverage, shift battlefield dynamics in Russia’s favor and undermine Ukraine’s negotiating position at a critical moment.”

Shimer, former member of the National Security Council staff, most recently as the director for Eastern Europe and Ukraine, adds that “helping Ukraine succeed remains fundamentally in America’s national-security interest.  Russia is seeking to legitimize territorial conquest by force.  If Russian aggression isn’t halted in Ukraine, then Moscow could become emboldened to threaten the eastern-flank members of the North Atlantic Treaty Organization, and aggressors around the world would become more likely to imitate Russia’s behavior.  It is no coincidence that Iran, China and North Korea have all been deepening their support for Russia. These countries recognize that a Russian victory in Ukraine would advance their own aims and aspirations.

“Supporting Ukraine also benefits America’s defense industrial base, economy and technological competitiveness.  By investing in Ukraine’s military, we’re simultaneously investing in our own.  The U.S. has two key methods for deploying security assistance.  The first, executed under presidential drawdown authority, involves buying new equipment for Pentagon stockpiles and then providing older equipment to Ukraine.  The second, known as the Ukraine Security Assistance Initiative, procures contracts with U.S. defense manufacturers for Ukraine, a process that promotes investment in innovative defense technologies.  Together, these two methods create American jobs and strengthen the U.S. military, all without putting American lives in harm’s way.

“Congress should make it a priority to appropriate additional security assistance funding for Ukraine.  Only the U.S. has the capacity to provide Ukraine with the equipment it needs to prevail....

“As this war persists, it can be tempting for nonparticipating countries to lose interest.  Curtailing security assistance to Ukraine now, however, would be a historic mistake that would play to Russia’s advantage....

“Ukraine can enter a future negotiation with strength and reach an acceptable outcome to this war, but only if the U.S. continues to support the Ukrainian military and apply economic pressure on Russia.  Now is the time to finish the job.”

Speaking of America’s industrial base...from Michael Bloomberg and Gen. (Ret.) David Berger in an op-ed in the Washington Post:

“The political debate over America’s manufacturing decline has raged for decades, but it has generally overlooked one critical point: the threat deindustrialization poses to our national security.

“The two of us grew up in the shadow of World War II, when U.S. industrial might was the envy of the world and a foundation of our military strength.  In the decades that followed, however, the forces of globalization that shuttered American factories and mills have also eroded our ability to manufacture modern weaponry – and hence our military might.

“The challenge we face is twofold: Our traditional defense industrial base, built on fossilized systems and entrenched processes, is ill-equipped to respond to modern threats.  At the same time, we are increasingly reliant on other countries for the kinds of parts needed to build high-tech weaponry, including unmanned autonomous systems.

“The solution is not a simple matter of building more factories.  The technology needed to make today’s advanced military supplies relies on computer chips more than blast furnaces and on research labs more than assembly lines. To retain our military edge, the United States needs to overhaul our approach to both defense production and acquisition by placing greater emphasis on innovation and stronger partnerships with the private sector....

“During WWII, President Franklin D. Roosevelt called the private sector ‘the arsenal of democracy.’  This is still true, but our military’s capacity to integrate that arsenal into its operations needs modernizing and fortifying.

“As our geopolitical competitors continue to build up their capabilities, the United States risks falling behind.  By recognizing that the strength of American industry and technology are not only economic imperatives but also national security necessities, we can help protect our country – and the freedoms that have inspired the world – for generations to come.”

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Wall Street and the Economy

President Trump told attendees at Davos that he’ll demand interest rates drop “immediately” and that he’ll ask Saudi Arabia and OPEC to cut the price of oil.

“If the price came down, the Russia-Ukraine war would end immediately,” Trump said during his virtual performance at the World Economic Forum.

On interest rates, Trump said when rates drop in the U.S., “they’ll drop all around the world.  They should follow us.”

Trump promised tariffs on imports made outside of the country.

“My message to every business in the world is very simple: Come make your product in America and we will give you among the lowest taxes of any nation on Earth... But if you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff.”

Expressing frustration at tariffs the European Union places on American farm products and cars, Trump said the bloc treats the U.S. unfairly. “They put tariffs on things that we want to do.”

On the economic data front, it was a light week, with December existing-home sales coming in better than expected, up 2.2% from November at a 4.24 million annualized pace.  Sales grew 9.3% from a year ago, the largest year-over-year gain since June 2021.  The median existing-home sales price was $404,400, up 6.0% from Dec. 2023, as reported by the National Association of Realtors.

But next week, we have the first Federal Reserve Open Market Committee meeting of the year, a critical one in terms of attempting to forecast future rate cuts for 2025, if any, and the timing of same.  For his part, Fed Chair Jerome Powell, in his press conference after, will do his best to deflect the inevitable questions concerning President Trump’s demands that interest rates come down.

Friday, we will also have the latest personal consumption expenditures data, the Fed’s preferred inflation barometer.

And we’ll have our first look at fourth-quarter GDP, with the Atlanta Fed’s GDPNow barometer at 3.0%.

Freddie Mac’s 30-year fixed-rate mortgage fell back below 7.00% this week to 6.96%.

Europe and Asia

We had flash PMI readings for January in the eurozone today, courtesy of S&P Global and Hamburg Commercial Bank, the composite at 50.2, a 5-month high (50 the dividing line between growth and contraction).  Manufacturing was 46.8, an 8-month high, with services at 51.4.

Germany: manufacturing 45.2 (8-mo. high), services 52.5 (6-mo. high).
France: mfg. 45.0 (7-mo. high), services 48.9.

UK: mfg. 49.3, services 51.2.

Dr. Cyrus de la Rubia, Chief Economist at HCB:

“The kick-off to the new year is mildly encouraging.  The private sector is back in cautious growth mode after two months of shrinking.  The drag from the manufacturing sector has eased a bit, while the services sector continues to grow moderately.  Germany played a major role in improving the eurozone economy, with the composite index jumping back into expansionary territory.  In contrast, France’s economy remained in contraction....

“Ahead of the ECB meeting next week, news on the price front is not encouraging.  Cost inflation has increased in the services sector, which ECB President Christine Lagarde is said to monitor closely... Worryingly, input prices in manufacturing have increased, ending four months of stable or decreasing costs... However, given the weak state of the economy, the ECB will likely stick to its gradual pace of cutting interest rates, for the time being.”

Germany: Ahead of next month’s election, an Insa survey for Bild am Sonntag newspaper has support for Germany’s conservative opposition falling below 30% for the first time since April.

Friedrich Merz’s center-right CDU/CSU alliance was at 29%, but with a wide lead over the far-right Alternative for Germany (AfD), down a point to 21%.  Backing for Chancellor Olaf Scholz’s Social Democrats and the Greens was unchanged at 16% and 13%, respectively.

With the Feb. 23 vote fast approaching, Merz remains on course to become Germany’s next chancellor but will need at least one coalition partner to secure a majority in parliament, which is likely to be the Social Democrats, though he may need a third party like the Greens as well.

Turning to Asia...nothing from China on the data front, as they approach the Lunar New Year holiday.

But in his interview with Fox News’ Sean Hannity, President Trump said he’d prefer not to have to impose tariffs on China, even as he continues to threaten sweeping action otherwise.

“We have one very big power over China, and that’s tariffs, and they don’t want them,” Trump said.  “And I’d rather not have to use it.  But it’s a tremendous power over China.”

Japan’s central bank increased the cost of borrowing to its highest level in 17 years after consumer price rises accelerated in December.

The move by the Bank of Japan to raise its short-term policy rate to “around 0.5 percent” came hours after the latest economic data showed prices rose last month at the fastest pace in 16 months, the December CPI up 3.6% vs. 2.9% prior.  Ex-food and energy the figure was 2.4%, unchanged, but Japan defines “core” as ex-fresh food, though including energy, and that was 3.0% vs. 2.7% the month before.

With the threat of tariffs on Japan’s exports, which could hit the economy hard, the BOJ wanted to raise rates now so as to give it some room to cut rates in the future if it needs to boost economic activity.

Separately, December exports rose 2.8% year-over-year, while November industrial production fell 2.2% over October, down 2.7% Y/Y.

A flash January PMI reading on manufacturing was 48.8, but the service sector figure of 52.7 was solid.

Street Bytes

--Trump euphoria continues in the markets, with a little hiccup today.  But we’ll see what the president does on the tariff front, if anything, next week (perhaps starting this weekend).  Earnings season has generally been positive thus far.

The Dow Jones rose 2.1% to 44424, while the S&P 500 added 1.7%, including a record closing high of 6118 on Thursday, and Nasdaq gained 1.6%.

Some major earnings reports this coming week (the coming two, in actuality), with the likes of Microsoft, Tesla, Apple and Meta.

--U.S. Treasury Yields

6-mo. 4.28%  2-yr. 4.27%  10-yr. 4.62%  30-yr. 4.85%

Treasuries were essentially unchanged on the week, with the lack of inflation data.  But, over time, as BlackRock’s Larry Fink said in Davos, “The bond market is going to tell us where we’re headed.”  Indeed.

--Netflix shares soared 10% after the streaming giant reported it had added 18.9 million subscribers in its holiday quarter, blowing past Wall Street’s forecasts, with live sporting events and the return of its popular South Korean series “Squid Game” attracting a record number of new customers, the company reported after the close on Tuesday.

Netflix said it continues to invest in programming that its members value, and it will increase prices for the service for most plans in the U.S., Canada, Portugal and Argentina.  In the U.S., the basic service with ads would increase by $1 a month to $7.99, a 14% price increase, up from $6.99, while the premium package will cost $24.99, an increase of 9% ($2).  The company last raised prices in the U.S. in October 2023.

Netflix said its fourth-quarter programming slate surpassed its internal expectations, with the Jake Paul vs. Mike Tyson boxing match becoming the most-streamed sporting event and the two National Football League games on Christmas Day delivering two of the most-streamed competitions in league history.

The company has the lowest rate of cancellations among the subscription streaming services, with a churn rate of 1.8% in December, according to researcher Antenna.

This quarter also marks the last time Netflix reports subscriber additions, as the company emphasizes other performance metrics including revenue and profit – a change analysts attribute to slowing subscriber growth.

The company reported per-share earnings of $4.27, beating the Street’s forecast of $4.20, with net profit rising to $1.87 billion in the fourth quarter, up from $938 million a year earlier, and annual operating income exceeding $10 billion for the first time in the company’s history.

Revenue rose 16% over the same time a year ago, to $10.25 billion, compared with Wall Street’s estimates of $10.1 billion for the quarter.

“We enter 2025 with strong momentum,” Netflix said in its note to investors, saying it added a record 41 million subscribers in 2024 and re-accelerated growth.  It ended the quarter with 301.6 million subscribers.

The company revised its guidance, projecting revenue of $43.5 billion to $44.5 billion in 2025, an increase of a half-billion dollars over the prior forecast.  The updated guidance reflects improved business fundamentals, the company said.

--China’s leading aircraft manufacturer hopes to deliver twice the number of its C919 passenger jets this year as it scales up production to meet demand.

The Commercial Aircraft Corporation of China (Comac) has delivered 15 C919s since commercial operations started in May 2023, with the latest being delivered to China Eastern on New Year’s Eve.

Comac anticipates it will dispatch 30 units of the C919 this year with a production capacity scale of up to 50 units, the company said last weekend.

The state-owned company is facing an extensive backlog, with domestic and international carriers ordering more than a thousand planes, according to Chinese media reports.

Major domestic carriers such as China Eastern, China Southern and Air China each want to have more than a hundred of the planes by 2031.

The C919 received certification from the Civil Aviation Administration in 2022 and gained global attention with its aim of challenging the two market-leading narrowbody planes, the Boeing 737 and Airbus A320.

Comac aims to further challenge Boeing and Airbus by developing two long-range widebody jets, the C929 and C939.

It says the C929 will have 280 seats and a range of 12,000km (7,500 miles) “effectively meeting the global demand for international and regional air passenger transport.”

--Boeing reported after Thursday’s close that its fourth-quarter earnings, which formally come out next Tuesday, will not be good.  Q4 sales will be $15.2 billion, with the Street looking for $16.6 billion.  The per-share loss will be $5.46 vs. consensus for a loss of $1.55.

But the quarter included a labor strike that lasted about seven weeks, which hit production, and the strike’s resolution meant large cash payouts to workers.

In the quarter, Boeing also recognized charges for large employee layoffs and wrote down assets related to underperforming programs.

CEO Kelly Ortberg emphasized in a news release that production is back “and our team remains focused on the hard work ahead to build a new future for Boeing.”

The stock didn’t fall that much after the news hit.

--United Airlines on Tuesday forecast a stronger-than-expected profit in the current quarter, after its earnings topped Wall Street’s expectations in the fourth quarter on robust travel demand and improved pricing power.  The shares rose 5% in response.

United expects an adjusted profit in the range of 75 cents a share to $1.25 in the quarter through March, with analysts at 54 cents currently.  For the full year 2025, UAL forecast an adjusted profit of $11.50 to $13.50, compared with the Street’s $12.85.

December quarter adjusted earnings came in at $3.26 a share, compared with analysts’ expectations of $3.00.  Revenue of $14.7 billion beat the $14.4bn projected.

For full year 2024, United reported adjusted earnings of $10.61 per share, at the higher end of its previous 2024 guidance of $9 to $11 a share.

Delta Air Lines had set the tone for earnings season earlier this month with the carrier signaling strong demand continuing in 2025, particularly for premium travel and improving corporate sales, both of which are good news for United, which has a strong exposure to both.

At the same time, those airlines that don’t have as much exposure to corporate and international are not going to perform as well...at least on paper.

--American Airlines shares fell sharply Thursday after the company forecast 2025 profit below Wall Street expectations, hurt by an uptick in jet fuel prices and efforts to fix a sales-strategy misstep that drove away corporate travelers.

The aggressive approach, implemented in 2023, focused on renegotiating contracts with corporate travel agencies and clients while cutting back on perks and discounts.  The plan backfired, denting revenue, hurting the airline’s image and giving rivals an edge.

The carrier spent much of 2024 rebuilding its sales strategy and mending relationships with corporate travelers, regaining some of the lost customers.

The company expects 2025 adjusted earnings per share in the range of $1.70 to $2.70, compared with analysts’ average estimates of $2.42.

But AAL forecast an adjusted loss per share in the range of 20 cents to 40 cents for the first quarter, with consensus at a loss of just 4 cents.

Jet fuel prices have climbed sharply in the past month, tracking a rise in global crude benchmarks driven by broader sanctions targeting Russian oil revenue, alongside growing optimism about stronger demand from China.

The Texas-based carrier reported a profit of $590 million, or 84 cents per share, for the quarter ended Dec. 31, compared with $19 million, or 3 cents per share, a year earlier.

The airline’s total operating revenue rose 4.6% to about $13.7 billion.

--TSA checkpoint numbers vs. 2024

1/23...134 percent of 2024 levels
1/22...83
1/21...78
1/20...141
1/19...101
1/18...92
1/17...136
1/16...127

2,350 cancellations on Tuesday, and 1,850 on Wednesday in the South due to the severe storm.

--As noted above, the issue of TikTok is to be resolved in the next 75 days, but last weekend we had some drama as the video platform suspended its services for U.S.-based users while Apple Inc. and Google removed the platform from their mobile app stores to avoid penalties under a new law that took effect Sunday.  TikTok’s legal challenges failed to head off the measure, which was passed last year to address national security concerns.

President Trump had said Saturday he would “most likely” give TikTok a 90-day reprieve from the law, providing Chinese-owned company ByteDance Ltd. more time to find a buyer.

But now it’s 75 days.  And Sunday the app gradually came back up for relieved users.

Editorial / Wall Street Journal

“President Trump took the oath of office Monday promising to faithfully execute the duties of his office, which include implementing the laws passed by Congress. Yet in one of his first acts as President, Mr. Trump effectively suspended a law requiring TikTok to divest from its Chinese owner ByteDance by Jan. 19.

“Mr. Trump issued an executive order on Monday promising not to enforce the law’s penalties against tech companies that host the TikTok app for 75 days. He said he needs this time to consult with advisers ‘on the national security concerns posed by TikTok, and to pursue a resolution’ that saves the platform.

“Congress spent years studying the security concerns and resolved them with the Protecting Americans from Foreign Adversary Controlled Applications Act, which passed with large majorities last spring.  The law lets the President grant a one-time 90-day reprieve from a ban if TikTok demonstrates ‘a path to executing a qualified divestiture,’ ‘evidence of significant progress,’ and ‘relevant legal agreements to enable’ its execution.

“None of these conditions have been met.  Mike Waltz, Mr. Trump’s national security adviser, on Sunday on CBS’ ‘Face the Nation’ cited interest in buying from Kevin O’Leary. But there is no formal offer and no interest in such a deal from ByteDance.

“While challenging the law in court, TikTok rebuffed potential suitors.  Beijing effectively blocked a deal by imposing export controls on the algorithms, which it treats as state secrets. After losing at the Supreme Court on Friday, TikTok and Beijing have shown a seeming openness to a deal.  And Mr. Trump floated a ‘joint venture’ in which the U.S. would have a 50% stake.  It isn’t clear if he meant the U.S. government or private investors would own the American 50%.  But it’s illegal either way.

“The law precludes ‘the establishment or maintenance of any operational relationship’ between TikTok’s U.S. operations ‘and any formerly affiliated entities’ like ByteDance ‘that are controlled by a foreign adversary, including any cooperation with respect to the operation of a content recommendation algorithm or an agreement with respect to data sharing’ (our emphasis).

“In other words, TikTok must sever all ties with ByteDance and China.  Mr. Trump can’t suspend laws like an English King before the 1689 Bill of Rights....

“Congress is a co-equal branch of government, not a subsidiary of the President.  Members passed the law after finding that TikTok was collecting user data that would let Beijing spy on Americans.

“Yet now he’s canoodling with CEO Shou Zi Chew, who was spotted at the inauguration next to Tulsi Gabbard, the President’s nominee for director of national intelligence, of all people. Talk about a horrible signal.  Mr. Trump is relaying that he puts pleasing China’s Xi Jinping above a law passed by Congress....

“Arkansas Sen. Tom Cotton warned Sunday that ‘any company that hosts, distributes, services, or otherwise facilitates communist-controlled TikTok could face hundreds of billions of dollars of ruinous liability under the law.’  He’s right.  State Attorneys General could sue tech companies for putting their citizens’ data at risk.  Shareholders could sue the companies for risking ruinous penalties if they fail to comply with the law.

“Mr. Trump directed his AG to ‘defend the Executive’s exclusive authority to enforce the Act.’  But the Justice Department can’t stop others from suing.  Mr. Trump’s TikTok order shows a Biden-like disdain for limits on his power that doesn’t bode well for the next four years.”

When asked by reporters Monday about a potential sale of TikTok, and specifically if he would be in favor of Elon Musk buying it, Trump said, “I would be, yeah.”

--President Trump announced a joint venture between OpenAI, SoftBank and Oracle to create at least $100 billion in computing infrastructure to power artificial intelligence. 

The venture, called Stargate, adds to tech companies’ significant investments in U.S. data centers, huge buildings full of servers that provide computing power.  Stargate could eventually invest as much as $500 billion over four years. The three companies plan to contribute funds to the venture, which will be open to other investors and start with 10 data centers already under construction in Texas.

The president declared the venture “a resounding declaration of confidence in America’s potential” under his new administration.

Trump has promised to accelerate the production of American-made A.I. to compete against China for global leadership in the technology, and on Monday he rolled back an executive order from former President Biden that imposed standards on safety and other requirements for government use of A.I.

Trump has said he would make “emergency declarations” to allow Stargate to generate its own electricity, without providing details.

I get a kick out of all the development in Texas for these immensely energy-needy investments with a Texas grid already sketchy during times of severe cold and heat.

For his part, Elon Musk questioned the value of Stargate.

“They don’t actually have the money,” Musk wrote on X. “SoftBank has well under $10B secured. I have that on good authority.”

OpenAI CEO Sam Altman, with whom Musk has clashed, responded that Musk was “wrong, as you surely know.”

Musk was an early OpenAI investor and board member who sued the company last year alleging it had betrayed its founding aims as a nonprofit research lab benefiting the public good rather than pursuing profits.

--Saudi Arabia’s crown prince said Thursday the kingdom wants to invest $600 billion in the United States over the next four years, comments that came after President Trump earlier put a price tag on returning to the kingdom as his first foreign trip.

The comments from Crown Prince Mohammed bin Salman, reported early Thursday by the state-run Saudi Press Agency, came in a phone call with Trump.

“The crown prince affirmed the kingdom’s intention to broaden its investments and trade with the United States over the next four years, in the amount of $600 billion, and potentially beyond that,” the report said.

The readout didn’t elaborate on where those investments and trade could be placed.  President Trump in his presentation to the World Economic Forum then said he hoped MBS would kick it up to $1 trillion.

Saudi sovereign wealth funds have taken large stakes in American businesses, while at the same time the United States has increasingly pulled away from relying on Saudi oil exports, which was the bedrock of the relationship for decades.

--Texas Instruments’ shares fell 7% today after the chipmaker gave a disappointing earnings forecast for the current period, hurt by still-sluggish demand and higher manufacturing costs.

Profit will be 94 cents to $1.16 a share in the first quarter, the company said in a statement after the close on Thursday.  The midpoint of that range, $1.05 a share, was well below the $1.17 that analysts projected on average.

Much of the electronics industry remains mired in a slump – contributing to nine straight quarters of sales declines at the company.  Manufacturing expenses also have affected profit.

TI gets the biggest portion of its sales from manufacturers of industrial equipment and vehicles, making its projections a bellwether for much of the global economy.

CEO Haviv Ilan said Thursday that industrial demand remains slow.  “Industrial automation and energy infrastructure still haven’t found the bottom,” he said on a call with analysts.

In the automotive segment, growth in China wasn’t as strong as it has been, meaning it can’t offset the expected weakness in other parts of the world.

--Johnson & Johnson, fresh off a $14.6 billion deal to buy neurological drugmaker Intra-Cellular, reported fourth-quarter sales and profit above Wall Street estimates on Wednesday, driven by strong sales of its cancer treatments.

J&J said it expects 2025 sales of between $90.9 billion and $91.7 billion and earnings between $10.74 and $10.95 per share on an adjusted basis.  Analysts were expecting sales of $90.98 billion and a profit of $10.56 per share for 2025.

The company’s fourth-quarter sales stood at $22.52 billion, up 5.3% from a year ago and above analysts’ expectations of $22.42bn.

On an adjusted basis, eps came in at $2.04, nearly 11% lower than the prior year but above consensus of $2.01.

Quarterly sales of J&J’s cancer drugs rose 19% worldwide, driven by more than $3 billion for multiple myeloma treatment Darzalex, which was up 20.9% from a year ago.

Sales of J&J’s blockbuster psoriasis treatment Stelara fell 14.7% to $2.35 billion in Q4, above expectations.

Close copies of Stelara launched in Europe, Canada and a few other markets last year, and several ‘biosimilars’ are expected to launch in the U.S. this year.

For the full year, Stelara brought in revenue of $10.36 billion, making up more than 18% of J&J’s total drug sales of $56.96 billion for 2024.

Darzalex brought in annual sales of $11.67 billion, making it J&J’s biggest-selling drug.

But the shares fell because there are headwinds for both Stelara and Darzalex.

--Procter & Gamble beat fiscal second-quarter results estimates on Wednesday, driven by growing demand for its household items such as Pantene shampoos and Tide detergents as product innovations across price tiers helped lure more U.S. customers.

P&G has doubled down on investments on innovation, and launched affordable products such as Olay Melts and Tide Evo to draw in lower-income shoppers, following a drop in customer demand due to repeated price hikes.

The company has also tried to revamp its marketing and line-up of influencers on fast-growing Chinese shopping app Douyin, which helped its Pantene shampoo lead growth in hair care on the platform, executives previously said.

P&G reported a 2% rise in overall organic volumes (ex-sales and acquisitions) in the quarter, while the average prices across their product categories remained flat.

The company has been able to gain market share in the U.S., which accounts for nearly half of P&G’s total sales.

Net sales in the quarter rose to $21.88 billion from $21.44 billion a year earlier, better than consensus.  Adjusted EPS of $1.88 beat estimates as well and the shares rose 2%.

--China has reported the discovery of an extremely large rare earth deposit in the southwestern province of Yunnan as it seeks to strengthen its control over global supply chains for critical minerals.

The recently discovered deposit primarily contains medium and heavy rare earths, which are crucial inputs in the manufacturing of hi-tech products including electric vehicles, wind turbines and cutting-edge defense systems...this last one crucial for both China and the United States, among others.

According to China’s Ministry of Natural Resources’ China Geological Survey, the site has potential resources of 1.15 million tons.

“The discovery is highly significant for strengthening China’s advantage in rare earth resources, improving the rare earth industry chain, and further consolidating China’s strategic dominance in medium and heavy rare earth resources,” the ministry said on its WeChat account.

China is already the world’s top producer of rare earth elements, with 44 million tons of deposits, according to the U.S. Geological Survey.  Beijing has been applying more restrictions to the supply and export of rare earths, which the Ministry of State Security has identified as being “directly related to national security.”  [South China Morning Post]

--President Trump and Melania Trump introduced meme coins over the weekend.  The president announced the arrival of his $TRUMP meme coin, which traded as high as $73 on Monday, according to CoinDesk.  About 80% of the coin’s supply is owned by an affiliate of the Trump Organization, Fight Fight Fight and CIC Digital, which has drawn criticism from within and outside the crypto industry, according to various reports.

The Trump coin sold for around $3 initially and then hit about $76 last weekend.  Last I saw it was trading at $33.50.

Separately, Melania launched a rival token in a social media post Sunday: $MELANIA, the value of which also soared, and then collapsed by week’s end.

Editorial / Wall Street Journal

“Donald Trump doesn’t always separate his personal interests from his public obligations, and a howling example is his sudden new status as a crypto billionaire. The President is inviting trouble with what looks like remarkably poor judgement....

“Federal law doesn’t define all types of securities, nor specify how cryptocurrencies are to be regulated.  The Supreme Court set out a multifactor test for determining a security in its Howey (1946) precedent.  But Biden SEC Chair Gary Gensler dunned crypto developers that didn’t meet the Howey definition for failing to register with the agency and make investor disclosures.

“Mr. Trump has created a regulatory nightmare for Paul Atkins, his highly qualified nominee to run the SEC.  Mr. Atkins was crypto-friendly long before his nomination, but now any regulatory move he takes that the industry supports will be attacked as helping Mr. Trump’s business.  The Trump tokens might hurt the crypto industry by making it all look like a get-rich-quick scheme.

“Mr. Trump’s $TRUMP website includes the disclaimer that the tokens are ‘intended to function as a support for, and engagement with the ideals and beliefs embodied by the symbol ‘$TRUMP’’ and ‘are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.’  That disclaimer won’t stop lawsuits.

“If the token’s price drops, buyers who lose money could argue that Mr. Trump failed to make required securities disclosures about the risks.  Democratic state Attorneys General could seek restitution for investors.  If Mr. Trump hypes the token at a press conference, they might even charge him after he leaves office with market manipulation since he isn’t immune from prosecution for unofficial acts.

“No careful President would get anywhere near this kind of political risk, and we can’t recall any President who has.  Where are Mr. Trump’s lawyers?  In his first term, Mr. Trump was often deterred from some of his worst impulses by legal advisers who saw their job as serving the Presidency as much as this President.  The crypto caper is a worrisome sign that Mr. Trump’s current advisers don’t understand the difference any better than he does, or that they are too cowed to speak up.”

--As you have noticed, the price of eggs continues to skyrocket, owing mainly to bird flu concerns.  The average cost of a dozen eggs is $4.15 nationally, according to data from the Bureau of Labor Statistics, but in the New York metro area, eggs are an average of $6.72 a dozen, and $8.97 in California.

NJ Advance Media did an informal study of major grocery chains in my state and came up with $6.99 at Stop & Shop, $7.48 at ShopRite, figures that jive with my own personal observations.

Five bird flu outbreaks across five different states have resulted in the loss of 5.6 million chickens in the final weeks of 2024 and the start of 2025.

Since October 2024, more than 17 million egg-laying chickens have been lost, according to Expana, a price-reporting data firm.  Bakeries are having a real problem, as you can imagine.

And in Georgia, two bird flu cases have been found at commercial poultry farms.  It’s unclear how that might affect the price of chicken meat, if at all.

Also on the inflation front, my auto insurance went up 15% this year.  Outrageous.  [Nationally, the BLS data shows it rising 11.3% in 2024, which was actually an improvement.]

--“Mufasa: The Lion King,” a photorealistic “Lion King” prequel, had a soft opening at Christmas, collecting just $35 million in its first weekend in theaters, or 30 percent less than Disney expected.

But “Mufasa,” which cost $200 million to make, has since become a sleeper success, taking in about $211 million domestically, while when you include overseas tickets sales, the total grows to around $600 million as of last weekend.  It will end its theater run at $675-$700 million, by most estimates.

--LVMH (Louis Vuitton Moet Hennessy), the luxury goods empire, is suffering a big PR hit as the Paris Olympics’ biggest corporate sponsor designed the Olympic medals, which are falling apart.  Literally crumbling and tarnishing 100 days after.

--U.S. whiskey sales fell 1.2% in 2023, the first decline since 2002.  But sales lost another 4% in 2024’s first nine months. [Barron’s]

Foreign Affairs, Part II

Israel-Gaza: The ceasefire in Gaza began last Sunday after Hamas provided the names of three female Israeli hostages it then handed over, ending an hours-long delay that led to more deadly airstrikes.  Israel then released 90 Palestinian prisoners, all women or minors, later that day.

A suspension of hostilities entered into effect at 11:15 a.m. local time, later than the initial 8:30 a.m.

The Qatari and Egyptian-mediated deal backed by Washington stipulates an initial six-week truce during which 33 hostages will be freed by Hamas in return for more than 1,000 Palestinian prisoners held in Israeli jails. 

The Israeli military said at 9:20 a.m. that it was striking in Gaza, and that “artillery and aircrafts struck a number of terror targets in northern and central Gaza.”  The Palestinian Civil Defense, an emergency service, said that at least 19 people had been killed.

Hamas said it had begun deploying thousands of police officers according to a government plan to “maintain security and order.”

In the southern towns of Deir al-Balah and Khan Younis, Hamas officers appeared in uniforms but were unarmed.  But I saw the video showing armed men from Hamas’ military wing, dressed in uniforms, surrounded by cheering revelers.

United Nations trucks carrying humanitarian supplies began entering Gaza just 15 minutes after the ceasefire took effect, according to the UN.  The ceasefire deal calls for 600 trucks to be allowed to bring aid to Gazans daily, although it was not clear how the supplies would be distributed. 

By week’s end, more than 4,000 aid trucks had entered Gaza, though there have been clashes between Hamas and organized gangs of looters who seek to steal much of the aid.

The next step, the nebulous “second phase,” is going to be hard to reach it seems.

Hamas is scheduled to make its next exchange, freeing another four hostages, this weekend.  It released the names of four female Israeli soldiers this afternoon.

Israeli Prime Minister Benjamin Netanyahu said last Saturday that Israel has U.S. guarantees to go back to fighting if negotiations on a second stage of the ceasefire falter and that “Israel is keeping significant assets in our hands in order to return all our hostages, and in order to meet all goals of the war.”’

Israel’s tally of remaining Gaza hostages was lowered to 97 after it said its forces had recovered the body of Oron Shaul, a soldier held by Hamas since 2014.  The vast majority of the hostages are from the Oct. 7, 2023, Hamas attack.

Israel’s military chief of staff, Lieutenant General Herzi Halevi said he will resign in March over the failure to prevent the October 7 attack.

In a letter to Israel’s prime minister and defense minister released by the military, Halevi said: “As a result of my responsibility for the IDF’s failure on October 7, and at a time when the military has recorded exceptional achievements in restoring Israel’s deterrence and strength, I wish to conclude my tenure on March 6, 2025.”

Halevi’s resignation marks the highest-profile departure of an Israeli official linked to the security establishment’s failures on October 7.  Prime Minister Netanyahu has declined to take responsibility for those failures, stating that accountability will come only after the war.

Meanwhile, Israeli security forces on Tuesday embarked on a military operation in Jenin, a Palestinian city in the Israeli-occupied West Bank, as Israel turned its focus to an area seen as a hotbed of militancy just days after the temporary ceasefire took hold in Gaza.

Netanyahu said in a statement that the operation, the latest in a string of West Bank raids over the past year, was aimed at “eradicating terrorism” and would be “extensive and significant.”  The Palestinian Authority’s health ministry reported that eight people had been killed and at least 35 injured during the first hours of the operation.

For Netanyahu the operation in the West Bank could serve as a distraction from Gaza, where the show of force by Hamas, gunmen parading through the streets, signaled that it had survived the 15-month war despite the prime minister’s vows to destroy it.

Hamas has intensified its efforts to arm militants in the West Bank to open another front against Israel, analysts said, making an Israeli offensive there almost inevitable.

Lastly, in Lebanon, the 60-day ceasefire with Hezbollah has largely held but the initial period ends on Jan. 26, Sunday, so we’ll see what happens.

The Israeli military (IDF) accuses Hezbollah of continuing to operate near the border and says its military activity is aimed at dismantling the group’s assets in line with the ceasefire agreement.

But the IDF denies it has been advancing into new territory or engaged in the widespread destruction of homes and businesses along the border.

The agreement had called for both Israel and Hezbollah to withdraw from the border region by Jan. 26 and for the deployment of the Lebanese army and UN peacekeepers to that area.

Today, however, Prime Minister Netanyahu announced Israeli forces will not fully withdraw from southern Lebanon by the deadline.  The IDF’s withdrawal “is conditional on the Lebanese Army deploying in Southern Lebanon and fully and effectively enforcing the agreement, while Hezbollah withdraws beyond the Litani,” Netanyahu said, according to media reports.

Lebanon has “not yet fully enforced” its part of the bargain, the prime minister added, and as a result, a gradual withdrawal process will continue “in full coordination with the United States.”

Syria:  The country’s new government terminated a treaty granting Russia a long-term military presence in the Mediterranean, a deal brokered under ousted leader Bashar al-Assad, Syrian media reported Tuesday.

If true, this is big. The agreement, signed in 2017, extended the Russian Navy’s lease on the port of Tartus for 49 years.  However, its future became uncertain after Assad was overthrown by Islamist rebels last month.

The de facto authorities in Tartus reportedly annulled the agreement and demanded the immediate withdrawal of Russian forces, the Syrian opposition news outlet Shaam reported Monday, citing the regime’s ministry of information.

Moscow has not yet issued a statement regarding the reported termination of the lease, with Kremlin spokesman Dmitry Peskov declining to comment.  The transitional government in Damascus has also not confirmed the report, per the BBC on Thursday.

Last Sunday, the new Syrian government reportedly imposed bans on imports from Russia, Iran and Israel.

China: During their chat a week ago Friday, Presidents Trump and Xi talked about Taiwan, which Trump hasn’t said much about in how he will handle the relationship with Taipei, other than pressing its leaders to spend significantly more on defense.  In their call, Xi reminded Trump to handle the issue of Taiwan “with prudence,” calling it a concern of national sovereignty and territorial integrity, state media reported.

Vladimir Putin then held a video call with President Xi on Tuesday in which Putin proposed further developing their strategic partnership just hours after Donald Trump was sworn in.

China and Russia declared a “no limits” partnership in February 2022 when Putin visited Beijing, days before he sent tens of thousands of troops into Ukraine, and in recent months Putin has also described China as an “ally.”

Putin waved at Xi and addressed him as his “dear friend,” saying he wanted to outline “new plans for the development of the Russian-Chinese comprehensive partnership and strategic cooperation.”

South Korea: Impeached President Yoon Suk Yeol was formally arrested Sunday, days after being apprehended at his presidential compound in Seoul, as he faces possible imprisonment over his ill-fated declaration of martial law last month.

The Corruption Investigation Office for High-Ranking Officials, which is leading a joint investigation with police and the military, can now extend his detention to 20 days.

Yoon then denied Tuesday that he ordered the military to drag lawmakers out of the National Assembly to prevent them from voting to reject his martial law decree last month, as he appeared for the first time before the Constitutional Court that will determine his fate.

After abruptly imposing martial law on Dec. 3, Yoon sent troops and police officers to encircle the National Assembly, but enough lawmakers managed to enter to vote unanimously to reject his decree, forcing Yoon’s Cabinet to lift the measure early the following morning.

Yoon, a conservative, has since argued that his dispatch of troops was not meant to block the assembly but instead was a warning to the main liberal opposition Democratic Party, which has used its legislature majority to obstruct Yoon’s agenda, undermine his budget and impeach some of his top officials.  In his announcement of martial law, Yoon called the assembly “a den of criminals” that was bogging down government affairs and vowed to eliminate “shameless North Korea followers and anti-state forces.”

The commanders of military units sent to the assembly have disagreed with Yoon’s stance.  The commander of a special forces unit, Kwak Jong-keun, told an assembly hearing that Yoon had called him directly and asked that his troops “quickly destroy the door and drag out the lawmakers who are inside.”  Kwak said he didn’t carry out the order.

Random Musings

--Presidential approval ratings....

Gallup: No readings on Donald Trump as yet.

Rasmussen: In a very early poll, 53% approve of Trump’s job performance, while 42% disapprove (Jan. 24).  Rasmussen’s five-day rolling measure will start next week.

--In the last CNN/SSRS poll, Joe Biden’s approval rating was 36%, matching his previous low mark in CNN polling during his term, with even fewer rating his performance positively on immigration (31%), foreign affairs (32%) or the economy (33%).

Biden’s favorability rating, a measure of personal feelings rather than job performance, stands at 33% favorable to 58% unfavorable, just one point off his previous low in CNN polling since he became vice president under Barack Obama in 2009 (he reached that 32% in June 2023).

Former first lady Jill Biden leaves the White House with a largely neutral favorability rating, about the same as it has been since 2022 – 33% view her favorably and 31% unfavorably with 35% unsure how they feel about her.

The Washington Post reported the other day that Jill Biden believed her husband would have been fine with a second term.

“I mean, today, I think he has a full schedule,” Jill said.  “He started early with interviews and briefings, and it just keeps going.”

Oh puh-leeze...so freakin’ lame.    

--President Biden moved on Monday to guard some of President-elect Trump’s most high-profile adversaries against a promised campaign of “retribution” by issuing pre-emptive pardons that would make it harder if not impossible for the next administration to prosecute them.

Among those receiving pre-emptive pardons were Gen. Mark Milley, the former chairman of the Joint Chiefs of Staff; Dr. Anthony Fauci; and all the members of the bipartisan House committee that investigated the Jan. 6, 2021, attack on the Capitol, including former Rep. Liz Cheney.

“These are exceptional circumstances, and I cannot in good conscience do nothing,” Biden said in a statement.  “Baseless and politically motivated investigations wreak havoc on the lives, safety and financial security of targeted individuals and their families.

“Even when individuals have done nothing wrong – and in fact have done the right thing – and will ultimately be exonerated, the mere fact of being investigated or prosecuted can irreparably damage reputations and finances,” he added.

President Biden then pardoned five members of his family in his last minutes in office, saying in a statement that he did so not because they did anything wrong but because he feared political attacks from President Trump.

“My family has been subjected to unrelenting attacks and threats, motivated solely by a desire to hurt me – the worst kind of partisan politics,” he said in his last statement as president.  ‘Unfortunately, I have no reason to believe these attacks will end.”

Biden’s action pardoned James B. Biden, his brother; Sara Jones Biden, James’ wife; Valerie Biden Owens, Mr. Biden’s sister; John T. Owens, Ms. Owens’ husband; and Francis W. Biden, Mr. Biden’s brother.

As Democratic strategist David Axelrod said after, what Biden did was “tawdry.”  Another stain on his record.  Frankly, total bulls---.  What a disgraceful figure in the end.  He turned the constitutional power of forgiveness into a protective shield against what he maintains would be politically driven vengeance. 

And some of the people he pardoned from the House committee, like former Rep. Adam Kinzinger, didn’t want a pardon.

But it was President Trump who indeed said of Liz Cheney that she “should be prosecuted for their lies and, quite frankly, TREASON!” He said that Vice President Kamala Harris “should be impeached and prosecuted.”  He has suggested that General Milley deserved execution.

Editorial / Wall Street Journal

“President Biden’s parting shot to democratic norms was announced Monday at 11:38 a.m., or 22 minutes before his constitutional term ended at high noon.  Citing ‘unrelenting attacks’ on his family, Mr. Biden issued pre-emptive, unconditional pardons for his siblings and their spouses, blanket immunity for any ‘nonviolent offenses’ they might have committed since 2014....

“This is the inevitable political logic of President Biden’s lawfare campaign.  His Administration became the first in history to unleash the Justice Department on a former President and political rival.  As we and others warned, the precedent would tempt future Presidents to do the same, perhaps as early as Mr. Biden’s immediate successor.

“As a candidate, Mr. Trump has sometimes promised ‘retribution’ against his enemies. In 2016 he said that Hillary Clinton ought to be locked up, though he never followed through once he was in power.  Rather than wait around to find out, Mr. Biden has decided to protect the home team and further abuse the unrestrained pardon power that every President has.

“As he did with Hunter, he gave his family clemency for unspecified acts since Jan. 1, 2014.  This timing is important because a House investigation alleges that Biden family members received money from foreign sources through shadow accounts.  The pardons are an ignominious final act by a President who has never lived up to his self-advertising as a protector of democratic norms....

“As we’ve learned since the election as the White House drops its rule of omerta, one of Mr. Biden’s regrets is that Attorney General Merrick Garland waited too long to prosecute Mr. Trump.

“These pardons will mute any public anger at Mr. Trump for pardoning some 1,500 of the Jan. 6, 2021, rioters as he did on Monday evening.  We’re on record as opposing those pardons in all but exceptional cases of unfair prosecution. But with his multitude of post-election pardons, including politically motivated pre-emptive clemency, Mr. Biden has opened the gate to more abuses.

“He may also have done Mr. Trump an ironic favor, if the new President is wise enough to recognize it.  With fewer political opponents to target, Mr. Trump may be less likely to make the mistake of pursuing revenge.  Mr. Trump can help his own legacy if he lets lawfare die with the Biden Presidency.”

Maureen Dowd / New York Times

“The chip on Biden’s shoulder devoured his judgment about what was good for him, for his party and for the country.  His narcissism trumped his patriotism.”

--The Senate confirmed Marco Rubio as secretary of state Monday, voting unanimously, 99-0, to give President Trump the first member of his new Cabinet on Inauguration Day. 

Thursday, John Ratcliffe was confirmed as CIA director by a 74-25 vote.

And despite two Republican senators saying they would not vote for Pete Hegseth as defense secretary, Lisa Murkowski (Alaska) and Susan Collins (Maine), Hegseth was expected to be confirmed later today.

--Vivek Ramaswamy is leaving the Department of Government Efficiency he had been tabbed to lead alongside Elon Musk, after signaling plans to run for governor of Ohio.  It was clear Vivek was clashing with Elon.

--Back to the pardons issued to the Jan. 6, 2021, rioters, New Jersey Gov. Phil Murphy (D) said “President Trump’s decision to pardon the individual who assaulted (Capitol Police Officer Brian) Sicknick (a New Jersey native) that day – and 1,500 other Jan 6th defendants – is a deep betrayal of justice.”

Former Metropolitan Police Officer Michael Fanone, who lost consciousness and suffered a heart attack after a rioter shocked him with a stun gun, appeared taken aback to learn from an Associated Press reporter that those who assaulted police officers are among the pardon recipients.

“This is what the American people voted for,” he said.  “How do you react to something like that?”

Fanone said he has spent the past four years worried about his safety and the well-being of his family.  Pardoning his assailants only compounds his fears, he said.

“I think they’re cowards,” he said.  “Their strength was in their numbers and the mob mentality. And as individuals, they are who they are.”

Separately, Fanone told CNN, “I have been betrayed by my country.”

--The Trump administration ordered executive branch agencies to close all “diversity, equity, inclusion and accessibility” offices by close of business this Wednesday.

These employees likely won’t return to work: All employees of offices “focusing exclusively on DEIA initiatives and programs” will go on paid administrative leave Wednesday afternoon.  Charles Ezell, the Office of Personnel Management’s acting director, directed agencies to submit plans by Jan. 31 to permanently fire the employees.

--President Trump on Thursday ordered the declassification and release of long-secret files on the assassinations of President John F. Kennedy, his brother Robert F. Kennedy and civil rights leader Martin Luther King Jr.

“Everything will be revealed,” Trump said in the Oval Office as he signed an executive order mandating the disclosure – after decades of speculation and conspiracy theories about each of the slayings.

Officials have 15 days to “present a plan to the President for the full and complete release of records” on the JFK assassination and 45 days to do so for the RFK and MLK cases.

--Four lines from Joe Biden I won’t miss... “All kidding aside,” “That’s not a joke,” “No, I’m serious,” and “That’s not hyperbole...”

--A fire blazed through a 12-story hotel at a ski resort in Turkey on Tuesday, killing a staggering 76, at least, and injuring scores more, authorities said.

The disaster struck during Turkey’s winter holiday, when children are off school and many families go on vacation, including ski resorts.

The cause of the fire was unclear, with the justice minister saying nine prosecutors had been assigned to investigate the blaze and that four people, including the hotel’s owner, had been detained.

The fire broke out before dawn in the Grand Kartal Hotel in Kartalkaya, 180 miles east of Istanbul, and took 12 hours to fully put out.

About 230 guests were believed to be in the hotel at the time, in addition to a number of employees.  Some survivors told the Turkish news media of terrifying escapes, exacerbated by a lack of fire alarms or clear fire escapes.

--What a weather system we had in the South this week, a record-breaking winter storm that brought snow, sleet, freezing rain and even blizzard warnings to parts of Texas and Louisiana.

Houston woke Tuesday to a blanket of snow and its two airports canceled all flights, nearly 1,300, while New Orleans International canceled 250.  A 50-mile stretch of Interstate 10 in and  around New Orleans was shut down.

Houston saw more snow, 3-4 inches metro-wide, than it has received since at least 1960, forecasters said. 

But parts of Louisiana saw 10+ inches of snow, with New Orleans receiving up to 8 inches, according to the National Weather Service, breaking the city’s old record of 2.7 inches set in 1963, and as officials there noted, they don’t have snowplows!

Florida broke its state snowfall record of 4 inches, set in Milton on March 6, 1954, as the NWS’ Mobile office said Pensacola had gotten 5 inches.  Mobile’s airport received 6.2 inches, surpassing its old record of 5 inches set Jan. 24, 1881.

But officials noted that the Valentine’s Day snowstorm that struck parts of the Gulf Coast in 1895 dumped 19 inches on Houston and 15.4 on Galveston.

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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 $2780
Oil $74.72

Bitcoin: $105,435 [4:00 PM ET, Friday]...hit a new high over $109,000 earlier in the week.

Regular Gas: $3.13; Diesel: $3.68 [$3.09 - $3.92 yr. ago]

Returns for the week 1/20-1/24

Dow Jones  +2.1%  [44424]
S&P 500  +1.7%  [6101]
S&P MidCap  +1.1%
Russell 2000  +1.4%
Nasdaq  +1.6%  [19954]

Returns for the period 1/1/25-1/24/25

Dow Jones  +4.4%
S&P 500  +3.7%
S&P MidCap  +5.0%
Russell 2000  +3.5%
Nasdaq  +3.3%

Bulls 45.2
Bears 30.6

Hang in there.

Brian Trumbore

 

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