Week in Review

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Week in Review

05/04/2024

For the week 4/29-5/3

[Posted 4:30 PM ET, Friday]

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Don’t be shy! Cuz I’m shy...one of the other definitions of said word.

Edition 1,307

Over 2,200 people (students, professors, pseudo terrorists) have been arrested on America’s campuses this week when pro-Palestinian, anti-Israel protests crossed way over the line in some cases.

The Wall Street Journal noted a letter from the University of Chicago President Paul Alivisatos, who wrote that free expression is a “core animating value,” and the school will act to protect “even expression of viewpoints that some find deeply offensive.”  But a line is drawn against expression that “blocks the learning or expression of others” or “disrupts the functioning or safety of the University.”

And it’s just that simple.  There is no First Amendment right to block access, destroy property, or intimidate.

It’s also about the professors on campus.  As I quoted New England Patriots owner Robert Kraft speaking about his alma mater, Columbia, last week, “Their job is not to teach students what to think, their job is to teach students how to think.”

What we’ve seen as well is the emergence (or reemergence) of “outside professional agitators,” as New York Mayor Eric Adams called them.  After the NYPD successfully and professionally cleared out a major academic building on the Columbia campus that had been illegally occupied, the NYPD announced about 30 percent of those arrested had nothing to do with the school.  At another location in New York, City College of New York, 60 percent of the 170 protesters arrested there were unaffiliated with CUNY, as it’s called.

The campus protests have been a godsend to the Republican Party, after the House GOP’s impeachment inquiry into President Biden fell flat and the Republican conference’s divisions were ripped open with the passage (with support from Democrats) of the Ukraine, Israel and Taiwan foreign aid bills.

But Democrats have been feuding internally over the Israel-Hamas war and how campus administrators have handled the protests.

The president had said little the past week and then finally Thursday defended the right to protest but insisted that “order must prevail.”

“Dissent is essential for democracy,” he said at the White House. “But dissent must never lead to disorder.”

He also said the protests have not caused him to reconsider his approach to the war.  Biden has criticized Israel’s conduct but continues to supply it with weapons.

Editorial / Wall Street Journal

“(In) this election year, the student protesters are trying to change American Middle East policy. They may not know much about the region, its history, or even that Hamas’ charter calls for annihilating Jews. But they are swept up in the anti-colonialist, anti-Western, anti-American themes that now dominate so much university instruction. They are the intellectual children of Frantz Fanon.  [Ed. a radical anti-colonialist, Marxist political philosopher.]

“They are also changing the political debate inside the Democratic Party.  President Biden has shifted from the strong pro-Israel stand he took immediately after the Oct. 7 massacre.  He now opposes the destruction of Hamas in its Rafah redoubt in Gaza.  And he is publicly critical of Israel’s coalition wartime government. This accommodation will encourage the protesters to continue even once college exams are over and students return home.  As in 1968, the Chicago convention will be a target.

“All of this bodes ill for the country’s political future, not least if Mr. Trump wins in November. The protests are likely to be widespread and perhaps violent if the election is close.  Democrats and the press keep warning about a repeat of the Jan. 6 Capitol riot, which was a disgrace and for which hundreds have been rightly punished. But the political left is more organized for mass protests and more likely to take to the streets.

“Today’s campus eruptions may be aimed at U.S. policy in the Middle East, but they are a symptom of a larger trend toward street protest and law-breaking to achieve political goals.  Political and other leaders have a duty to call this out and enforce public order, whether the violators are on the left or right.”

Daniel Henninger / Wall Street Journal

“So it really is 1968 all over again or, more relevant, 2020 and the George Floyd protests. The Floyd protests spread almost instantaneously to hundreds of U.S. cities, just as the so-called Gaza solidarity encampments sprouted on many campuses. It isn’t spontaneous. This is modern protest as produced by the cookie cutter of social media.

“At 1 a.m. Tuesday, a group called Columbia University Apartheid Divest posted on Instagram a call for an ‘urgent mobilization’ at Hamilton Hall.  Earlier, the group said: ‘We will not move until Columbia meets our demands or we are moved by force.’  This was effectively a mini-Hamas strategy – give the authorities no choice but to come after you. It’s the most basic flip-the-script tactic: The perpetrators of mayhem transform themselves into camera-ready victims of ‘state violence.’

“Anarchy like this is an opportunity for the U.S.’s enemies, and one hopes the FBI and Department of Homeland Security have this Palestine-justice activity on its radar. Why wait for another domestic act of terror to happen?

“The encampments’ defenders will say that is an overreaction, that despite the violence at Columbia and UCLA, their protests are only about conditions in Gaza.  The fact remains that Gaza is inseparable from Hamas and Iran, two entities in a network dedicated to attacking the U.S.  Add to that the revived terrorism units of Islamic State.  All of a sudden, we have pro-Palestinian encampments spread across a country with a porous, overwhelmed southern border.  Not to worry? ...

“Then there’s Joe Biden.  Because his re-election team assumes an equivalence between younger Democratic voters and the Gaza encampment occupants, the American president has himself become a hostage to the hardest of the U.S. hard left. He won’t cross them, and they know it.

“When Mr. Biden gets to Chicago in August for the Democratic convention, uber-left Mayor Brandon Johnson won’t have the cops’ back the way New York’s Eric Adams did this week.  On current course, the Biden candidacy could die this summer in Chicago.”

More on the campus protests below.

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George F. Will / Washington Post

“Future historians, if there are any, will be dumbfounded. Today, uncountable dollars and unquantifiable hysteria are devoted to the distant threat of climate change milder than some changes Earth has experienced... Meanwhile, negligible public anxiety accompanies the intensifying danger of global incineration from nuclear war.

“High anxiety is unsustainable, but in a presidential election year it can temporarily concentrate minds.  Reading ‘Nuclear War: A Scenario’ by reporter and historian Annie Jacobsen will take you much longer than the 30 or so minutes – 1,800 seconds – that would elapse between the launch of a single nuclear-armed intercontinental ballistic missile in North Korea and its detonation on the Pentagon.  Thereafter, in Jacobsen’s scenario, cascading and irreversible events extinguish civilization in two hours.

“A few tenths of a second after the launch, a bus-size U.S. satellite 22,300 miles above Earth detects the missile’s plume.  Six seconds later, computers in the command center beneath the Pentagon are predicting its destination: the Pentagon.  Twenty-four seconds later, at the military’s Cheyenne Mountain Complex in Colorado, computers generate this message: ‘NUCLEAR LAUNCH ALERT.’

“Jacobsen’s most chilling point: ‘The speed at which nuclear war will unfold, and then escalate, all but guarantees that it will end’ in civilizational collapse.  One of her sources, former defense secretary William Perry, says: ‘Many presidents come to the office uninformed about their role in a nuclear war.  Some seem not to want to know.’  They should know that the ‘launch on warning’ policy could force them to go to nuclear war in the minutes required to brew a cup of coffee.

“The traditional goal in battle, Jacobsen writes, ‘is to meet attacking sword with defensive shield.’ The total number of U.S. interceptor missiles: 44.  Attacked, would the United States ‘retaliate to decapitate’ the attacking regime?  A problem: U.S. Minuteman III ICBMs do not have enough range to hit North Korea without overflying Russia.  In Jacobsen’s scenario, Russia reacts violently.

“Everything – everything – depends on deterrence holding, forever....

“Jacobsen says that in 1983, President Ronald Reagan ordered a simulated war game to explore the probable dynamics of a nuclear attack and counterattack: ‘Over the course of two weeks, in every simulated scenario – and despite whatever particularly triggering event started the war game – nuclear war always ended the same way.’  A minimum of half a billion dead after the first salvos.  ‘There is,’ Jacobsen insists, ‘no such thing as de-escalation.’....

“Jacobsen vividly imagines the horrors of unconstrained nuclear onslaughts: metal-melting heat, beyond-hurricane-level winds, radiation poisoning, the end of agriculture, social disintegration because of electric Armageddon (the electric grid vanishes, and with it the nation’s communications and financial infrastructure) and ecological collapse: swarms of disease-bearing mosquitoes, the birds that preyed on them being dead, feast on sewage, garbage and the dead.

“Jacobsen cannot be faulted for not proposing ‘solutions’ to the dilemma of living with what physics hath wrought.  Her point is that for a while now, and from now on, humanity’s survival depends on statesmanship and luck – as much the latter as the former. Remember that on Nov. 5.

“The second use of nuclear weapons occurred three days after the first.  There has not been a third use for almost 28,800 days. Talk of ‘banning the bomb’ is pointless.  These weapons are here forever. Or so we must hope: They will exist until they are used.  But as long as they are not used, the words of Gen. C. Robert Kehler, former head of the U.S. Strategic Command, will be true every hour of every day: ‘The world could end in the next couple of hours.’”

Now who wants a beer?

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Addressing a group of Asian American and Pacific Islander donors Wednesday, President Biden issued another head-scratching statement.  Biden grouped ally Japan (and India) with China and Russia in a list of countries he called “xenophobic.”

Last month Biden linked China’s economic woes to its unwillingness to accept immigration.  As reported by Bloomberg, this time he added Russia...and Japan.

“You know, one of the reasons our economy is growing is because of you and many others. Why? Because we welcome immigrants,” the president told the donors.  “The reason – think about it – why is China stalling so bad economically?  Why is Japan having trouble? Why is Russia, why is anyone?  Because they’re xenophobic, they don’t want immigrants.”

Forget whether Japan needs immigration (it does...its population is shrinking), how can you put them in the same category as two enemies?

The U.S. and Japan just announced a “significant upgrade” to their defense ties, and Japanese Prime Minister Fumio Kishia was welcomed to Washington for a summit and state dinner three weeks ago.

How would you feel if you were in Japan and you read this?  Plus, Japan recognizes their big issue and is gradually opening the door to immigration, but Biden’s statement is flat out idiotic.  And not the kind of ‘diplomacy’ needed today.  It’s the comment of a senile old man...an octogenarian incredibly seeking four more years.  I need another beer.

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Russia-Ukraine

--Thursday, Director of National Intelligence Avril Haines told the Senate Armed Services Committee that Russia has intensified strikes on Ukraine’s infrastructure to hamper Kyiv’s ability to move arms and troops, slow defense production and force it to consider negotiations.

“Putin’s increasingly aggressive tactics against Ukraine, such as strikes on Ukraine’s electricity infrastructure, are intended to impress Ukraine that continuing to fight will only increase the damage to Ukraine and offer no plausible path to victory,” she said.  “These aggressive tactics are likely to continue and the war is unlikely to end anytime soon.”

--The Russian Defense Ministry said last Saturday that its forces had carried out 35 strikes in the last week against Ukrainian energy facilities, defense factories, railway infrastructure, air defenses, and ammunition stocks.  It said in a statement that the strikes were “in response to attempts by the Kyiv regime to damage Russian energy and industrial facilities.”

The Russians said they have been using sea- and air-launched long-range precision weapons, including Kinzhal hypersonic missiles and drones. It said it had also targeted and hit Ukrainian troop formations as well as what it described as foreign mercenaries.

Russia then Saturday night launched 34 missiles against Ukraine, again targeting the energy infrastructure, and Kyiv claims it shot down 21 (which isn’t 34).  One private energy operator DTEK said four of its power plants had been damaged and there were “casualties,” without going into detail.

At the same time, Russia claimed it shot down 66 Ukrainian drones over the country’s southern Krasnodar region.  The governor of the region said Ukraine was targeting an oil refinery and infrastructure facilities but that there were no casualties or serious damage.

--Fighting in eastern Ukraine has worsened and Kyiv’s troops have fallen back to new positions in at least three places along the front, Ukraine’s top general said on Sunday.  Oleksandr Syrskyi said on Telegram that his troops had taken up new positions west of two villages, both north of Avdiivka, and further north near the town of Maryinka.

“In general, the enemy achieved certain tactical successes in these areas, but could not gain operational advantages,” he said.  Syrskyi added that freshly rested Ukrainian brigades were being rotated in those areas to replace units that had suffered losses.

According to the Washington-based Institute for the Study of War’s Sunday memo: “Russian forces have long aimed to seize four major cities that form a fortress belt in Donetsk Oblast (Slovyansk, Kramatorsk, Druzhkivka, and Kostyantynivka).”  Invading and occupying that belt would go a long way toward Russia’s goal of annexing the entire Donetsk region.  But until then, Russia wants to seize the Donetsk city of Chasiv Yar, about 50 miles north of Avdiivka.

“Chasiv Yar is operationally significant because it would provide Russian forces with a staging ground to launch offensive operations against Druzhkivka and Kostyantynivka,” ISW explained.  [Defense One]

Ukrainian forces in Chasiv Yar have complained this week that they aren’t receiving ammunition and that the U.S. aid needs to get to them quicker.

I told you weeks ago Chasiv Yar would become the new Avdiivka and Bakhmut in terms familiarity to those following from outside the region.  Russian forces are trying to capture it at all costs, as it lies on high ground, and is seen as a gateway to the remaining important cities controlled by Ukraine in the Donbas.

ISW continued: In the days to come, “Russian forces will likely continue to make tactical gains in the Avdiivka direction, and Ukrainian commanders may decide to conduct additional withdrawals if Russian forces threaten other Ukrainian tactical positions in the area.”

NATO chief Jens Stoltenberg visited Kyiv Monday, where “The situation is difficult, but it is not too late for Ukraine to prevail,” he wrote on social media.

President Volodymyr Zelensky said: “The Russian army is now trying to take advantage of the situation while we are waiting for deliveries from our partners, and first of all, from the United States.”  Rapid delivery literally means frontline stabilization.

Military experts have said Russia is preparing to launch a new large-scale offensive in late May or early June, and that it will press ahead with attacks in the coming weeks.

--A Russian missile attack on an educational institution in a popular seafront park in the Ukrainian Black Sea port of Odesa on Monday killed at least five people and injured 32, local officials said.

Regional governor Oleh Kiper, writing on Telegram, said that in addition to those killed in the attack, one man died after suffering a stroke attributed to the strike.

“Monsters. Beasts. Savages. Scum.  I don’t know what else to say,” Odesa Mayor Hennadii Trukhanov said in a video posted on Telegram. “People are going for a walk by the sea and they are shooting and killing.”

--Russia attacked the Kharkiv region in northeastern Ukraine with guided bombs on Wednesday, killing at least two people and wounding two others, the regional governor said.

Defense Minister Sergei Shoigu said the volume, quality and speed of arms production needed to be increased.  “To maintain the required pace of the offensive...it is necessary to increase the volume and quality of weapons and military equipment supplied to troops, primarily weapons,” Shoigu said in footage released by the defense ministry.

Russia now controls 18% of Ukraine and has been gaining ground since the failure of Kyiv’s 2023 counter-offensive to make any serious inroads against Russian troops dug in behind deep minefields.

--United Nations sanctions monitors told a Security Council committee in a report on Monday, that “debris recovered from a missile that landed in Kharkiv, Ukraine, on 2 January 2024 derives from a DPRK Hwasong-11 series missile” and is in violation of the arms embargo on North Korea.

Formally known as the Democratic People’s Republic of Korea, North Korea has been under UN sanctions for its ballistic missile and nuclear programs since 2006.

The U.S. and others have accused North Korea of transferring weapons to Russia for use against Ukraine.  Pyongyang and Moscow deny this, but the facts speak differently.

--The Financial Times reported that Russia is jamming the heck out of GPS around the Baltic Sea, citing the foreign ministers of Estonia, Latvia, and Lithuania.  The jamming is so disruptive that two Finnish airliners en route to the Estonian city of Tartu were forced to turn around last week.  The jamming is also affecting boats in the region.

--The Pentagon’s space-policy leader noted with concern Moscow’s recent veto of a UN resolution against putting nuclear weapons in space.

The detonation of a Russian nuclear space weapon could render low-Earth orbit unusable for a year, according to John Plumb, assistant defense secretary for space policy.

Plumb told a House hearing on Wednesday, “Several analysts do believe that detonation in space at the right magnitude in the right location could render low-Earth orbit, for example, unusable for some period of time.”

When asked how long the weapon would leave low-Earth orbit unusable and if it could be year, Plumb said, “I believe it could be.”

Plumb didn’t state in written testimony what orbit such a Russian weapon would be in, but in low orbit it “could pose a threat to all satellites, operated by countries and companies around the globe, as well as to the vital communications, scientific, meteorological, agricultural, commercial, and national security services we all depend upon.”

Plumb did add he didn’t believe the threat is “imminent.” [Defense One]

White House National Security Advisor Jake Sullivan recently said that “the United States assesses that Russia is developing a new satellite carrying a nuclear device.”

--Finally, Russian military personnel entered an airbase in Niger that is hosting about 1,000 U.S. troops, a move that follows a decision by Niger’s junta to expel U.S. forces.

As I’ve noted in the past, until a coup last year, Niger had been a key partner for Washington’s fight against insurgents who have killed thousands and displaced millions.

The Russians were not mingling with the Americans, at last report, but were using a separate hangar at Airbase 1010, which is next to the international airport in Niamey, Niger’s capital.

This isn’t good.

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Israel-Hamas

--Israeli airstrikes on the southern Gaza city of Rafah killed at least 22 people, including six women and five children, according to Palestinian health officials, most of this happening Monday.

--Prime Minister Netanyahu pledged Tuesday to launch an incursion into Rafah.  The comments came as Secretary of State Blinken arrived in Israel to advance the truce talks – which appear to be one of the most serious rounds of negotiations between Israel and Hamas since the war began.   The deal is meant to free hostages, bring some relief to the population and avert an Israeli offensive into Rafah.

Addressing a group of bereaved families and an organization representing families of hostages, Netanyahu said Israel would enter Rafah to destroy Hamas’ battalions there regardless of whether a truce-for-hostages deal was struck or not.

“The idea that we will stop the war before achieving all of its goals is out of the question,” Netanyahu said, according to a statement from his office. “We will enter Rafah and we will eliminate Hamas’ battalions there – with or without a deal, to achieve the total victory.”

Egypt has cautioned an offensive into Rafah could have “catastrophic consequences” on the humanitarian situation in Gaza, as well as on regional peace and security.

As for the discussions on a ceasefire, Israeli negotiators reduced the number of hostages they want Hamas to release during the first phase of a truce in exchange for releasing Palestinians held in Israeli jails and to a second phase of a truce that includes a “period of sustained calm”.

Secretary of State Blinken, who was in Saudi Arabia on Monday with Arab diplomats, said the onus was now on Hamas.

“Hamas has before it a proposal that is extraordinarily generous on the part of Israel,” Blinken said.  “And at the moment, the only thing standing between the people of Gaza and a cease-fire is Hamas.”

Meanwhile, Blinken was working on a deal to normalize relations between Israel and the Saudis, playing off the Abraham Accords, but Israel refuses to consider one of the Saudis’ main conditions: the creation of a Palestinian state.

--Israeli officials are becoming increasingly concerned that the International Criminal Court, the permanent court of last resort to prosecute individuals responsible for the world’s most heinous atrocities, could issue arrest warrants for the country’s leaders more than six months into the war.

The ICC becomes involved when nations are unable or unwilling to prosecute crimes on their territory.  Israel argues that it has a functioning court system, and disputes over a nation’s ability or willingness to prosecute have fueled past disputes between the court and individual countries.

Dozens of countries do not recognize the court’s jurisdiction over war crimes, genocide and other crimes, including the United States, Russia and China.  And, without a police force, the ICC relies on member states to arrest suspects, which has severely hindered prosecutions.

Israel often levies accusations of bias at the UN and international bodies.

--The Pentagon said Monday that the effort to build out a floating platform for bringing aid into the Gaza Strip will cost at least $320 million.  The “rough estimate” involves the transportation of the equipment and pier sections from the U.S. to the Gaza coast, as well as the construction and aid delivery operations.

U.S. and Israeli officials have said they hope to have the floating pier in place, the causeway attached to the shore and operations underway by early May.

Under the plan by the U.S. military, aid will be loaded onto commercial ships in Cyprus to sail to the floating platform now under construction off Gaza.  The pallets will be loaded onto trucks, which will be loaded onto smaller ships that will travel to a metal, floating two-lane causeway. The 1,800-foot causeway will be attached to the shore by the Israeli Defense Forces.

--The United Nations estimates that if the war stopped today, it would take until 2040 to rebuild all the homes that have been destroyed in nearly seven months of Israel’s bombardment and ground offensives, per a study released Thursday.

--Israel’s foreign minister said on Thursday that Turkish President Erdogan was breaking agreements by blocking ports for Israeli imports and exports.

“This is how a dictator behaves, disregarding the interest of the Turkish people and businessmen, and ignoring international trade agreements,” Foreign Minister Israel Katz posted on X.

Bloomberg first reported on Thursday that Turkey had stopped all exports and imports to and from Israel. It’s all about Gaza.

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Wall Street and the Economy

The Federal Reserve’s Open Market Committee opted on Wednesday to keep its benchmark funds rate unchanged at a two-decade high of roughly 5.3%.  The Fed emphasized that inflation has remained stubbornly high in recent months and said it doesn’t plan to cut interest rates until it has “greater confidence” that price increases are slowing sustainably to its 2% target.

“Inflation has eased over the past year but remains elevated.  In recent months, there has been a lack of further progress toward the Committee’s 2% inflation objective,” the FOMC said in its statement.

“The Committee does not expect it will be appropriate to reduce the target range [Ed. federal funds rate currently at 5.25%-5.50%] until it has gained greater confidence that inflation is moving sustainably toward 2%.”

Higher-for-longer continues.

The hotter-than-expected reports on prices and economic growth, including consumer spending, have undercut the Fed’s belief that inflation was easing, going back to year end, and the combination of high interest rates and persistent inflation is doing President Joe Biden no good in his re-election bid.  At least Biden can tout an unemployment rate that has remained below 4% for more than two years, the longest such streak since the 1960s.

The markets have gone from expecting six rate cuts, to three, to maybe one in 2024.

In his press conference, Chair Jerome Powell repeated: “In recent months, inflation has shown a lack of further progress toward our 2% objective.”

But the market was worried Powell and the FOMC would issue a hint that perhaps a rate hike is in the cards if inflation doesn’t behave like the Fed is expecting it to, and Powell said, “My expectation is that over the course of this year, we will see inflation move back down.”

And then he said: “I think it’s unlikely that the next policy rate move will be a hike.”  He also disputed the use these days of the term “stagflation,” which means weak growth, high unemployment and elevated inflation which the U.S. suffered through in the 1970s.

“I was around for stagflation,” Powell said, “and it was 10% unemployment, it was high-single-digit inflation.  And very slow growth.  Right now, we have 3% growth which is pretty solid growth, I would say, by any measure. And we have inflation running under 3%. ...I don’t see the ‘stag’ or the ‘flation,’ actually.”

Powell also reiterated Wednesday that political considerations around the looming presidential election will not affect the central bank’s interest rate decisions.  When it comes to the election, “we’re at peace with it, we know that we’ll do what we think is the right thing,” Powell said.  He added there is no evidence from Fed meeting transcripts that officials have allowed politics to affect their policy choices.

Editorial / Wall Street Journal

“Mr. Powell’s dovish bet on oil prices will be welcome in the White House and Treasury.  Bond yields fell on the Fed news.  President Biden needs lower rates for consumer confidence, and Treasury Secretary Janet Yellen needs them to finance the massive federal debt.  Let’s hope the Fed’s inflation confidence isn’t as transitory as it was in 2021.”

In economic news, the week started with a putrid Chicago PMI report for April that spooked the market, 37.9, far less than the 45.0 expected (and of course deep in contraction territory, 50 the dividing line between growth and the opposite of).  The ISM manufacturing figure for April was also in contraction territory, 49.2.  The ISM services reading came in at 49.4, far less than consensus at 52.

March construction spending was -0.2%, March factory orders +1.6%.

The February Case-Shiller home price index was a stronger than expected 0.6% month-over-month, and 7.3% year-over-year.

So, this all led up to today’s jobs report for April and it was exactly what the Fed ordered, lower than expectations of 243,000 at 175,000, while the average hourly wage component was less than forecast, 0.2%, and 3.9% year-over-year vs. 4.1% a month earlier.

As in, while March’s revised jobs figure of 315,000 helped spook the markets and Fed policymakers at the time, 175,000 is perfect.  Solid but not explosive, ditto the wage numbers, which came after earlier in the week we had an employment cost index report for the first quarter that was far greater than forecast, 1.2%, with stock and bond markets cratering as a result.

What many analysts now seem to agree on is that the hotter-than-expected ECI reading reflected in part raises and minimum-wage increases going into effect in January, as well as new union contracts.

So maybe, at least for this key component, the picture isn’t as bad as it looked and going forward the Fed will get the ammunition it needs to warrant a rate cut.

But to beat a dead horse, it’s still all about the data and each individual CPI, PCE (personal consumption expenditures index), retail sales and jobs report.  The Fed needs a resumption of 2023’s favorable trend that worrisomely leveled off in the first quarter of 2024.

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The Atlanta Fed’s very early GDPNow barometer for second-quarter growth is at 3.3%.

Freddie Mac’s 30-year fixed-rate mortgage is 7.22%.  It was 7.79% on Oct. 26, then fell to 6.60% Jan. 18, before climbing back up.

Lastly, the Organization for Economic Cooperation and Development (OECD) updated its global outlook Thursday.

The global economy will grow 3.1% this year, same as last, and 3.2% in 2025, but this is up from a February forecast for 2.9% this year and 3% next.

A faster than expected fall in inflation set the stage for major central banks to begin rate cuts in the second half, just don’t tell the Fed.

However, the OECD warned, the speed of recoveries diverged widely, noting lingering sluggishness in Europe and Japan was being offset by the United States, whose growth forecast was hiked to 2.6% this year from a prior estimate of 2.1%.  [2025 was revised to 1.8% from 1.7%.]

Europe and Asia

A flash estimate of April inflation in the euro area came in at 2.4%, according to Eurostat.  Ex-food and energy, the core rate is 2.8%, down from 3.1% in March and 3.3% in February.  So this is good.

Germany 2.4%, France 2.4%, Italy 1.0%, Spain, 3.4%, Netherlands 2.6%, and Ireland 1.6%.

The European Central Bank will cut rates in June. It’s just looking for a final data point on wages later in the month to confirm their thinking.

We had the eurozone manufacturing PMIs for the month of April this week, courtesy of S&P Global and Hamburg Commercial Bank.  Overall, 45.7, a 4-month low.

Germany 42.5, France 45.3, Italy 47.3, Spain 52.2 (22-mo. high), Netherlands 51.3 (20-mo. high), Ireland 47.6.  [UK 49.1...down from 50.3 in March]

Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank:

“What is going to rescue the Eurozone economy?  While this is a difficult question, one thing is clear: It’s not the manufacturing sector.  Instead, this sector is prolonging its drawn out recession into April.  Output shrank at a similar pace as in the months before and companies have reduced their purchases at an accelerated rate.  Compounding the issue, there is no sign of a turnaround in the inventory cycle, but instead we saw a sustained trend of depleting stockpiles of both purchased and final goods in April.”

According to a flash estimate of eurozone GDP in the first quarter, courtesy of Eurostat, Q1 was up 0.3% compared with the previous quarter, and 0.4% vs. a year ago.

Year-over-year GDP....

Germany -0.2%, France 1.1%, Italy 0.6%, Spain 2.4%.

And Eurostat reported that the March unemployment rate in the euro area was 6.5%, same as February and essentially unchanged from the 6.6% rate of a year ago.

Germany 3.2%, France 7.3%, Italy 7.2%, Spain 11.7%, Netherlands 3.6%.

Spain: Prime Minister Pedro Sanchez said on Monday that after a period of reflection about his future he had decided to continue as the country’s leader.  Sanchez, in power since 2018, had shocked the nation last week when he announced in a public letter on X he was taking time out from his duties to reflect on whether it was worth carrying on as PM. 

It followed news that a court had opened an investigation into allegations of influence peddling and corruption by his wife, Begona Gomez.  A separate court is considering an appeal by Madrid’s prosecuting authority to dismiss the case for lack of evidence.  Sanchez insisted his wife was innocent and accused opposition leaders of collaborating with those circulating claims against his wife.

Britain: The governing Conservative Party suffered heavy losses in local elections, piling further pressure on Prime Minister Rishi Sunak ahead of a general election in which the main opposition Labour Party is likely to return to power after 14 years.

But in areas where there is a substantial Muslim population, Labour’s gains were pared over the party’s stance on the war in Gaza.  Leader Keir Starmar has been a staunch supporter of Israel.

Turning to Asia...China’s National Bureau of Statistics released PMI data for April, and manufacturing was 50.4 vs. 50.8 prior, and non-manufacturing was 51.2 vs. 52.2.

The private Caixin reading on manufacturing in the month was 51.4 vs. 51.0.

The above-noted OECD update has China’s growth coming in at 4.9% in 2024 and 4.5% in 2025, up from 4.7% and 4.2% respectively in February.

Japan’s April PMI on manufacturing was 49.6 vs. 48.2 prior.

Separately, for the month of March, industrial production was down 6.7% year-over-year vs. 3.9% prior.  March retail sales were 1.2% Y/Y vs. 4.7% prior.  Not great.  The March unemployment rate was 2.6%.

South Korea’s April mfg. PMI came in at 49.4.  Taiwan’s at 50.2 was the best in two years.

Taiwan’s economy expanded at the fastest pace in almost three years as global demand for AI-related technologies fueled a boom in exports. GDP grew 6.5% year-on-year in the first quarter, the fastest pace since the second quarter of 2021, and stronger than the 6% increase economists had forecast in a Bloomberg survey.

But the first quarter is likely to be as good as it gets as the year-over-year comparisons in the coming quarters will be coming off a higher base than we saw with Q1 2023.

Street Bytes

--Stocks fell hard on Tuesday as a result of an inflation scare and fears over what Fed Chair Powell would say Wednesday afternoon, but then it was up, up, up the rest of the week, all three major averages finishing in positive territory after today’s booming rally.  It also helped that the two key earnings reports for the week, Amazon and Apple, offered no negative surprises.

On the week, the Dow Jones rose 1.1% to 38675, the S&P 500 0.6% and Nasdaq 1.4%.

There is literally nothing next week on the earnings or economic data front that can move the markets in any big way.  But the following week, we are back to crucial CPI/PPI and retail sales updates.

--U.S. Treasury Yields

6-mo. 5.37%  2-yr. 4.80%  10-yr. 4.50%  30-yr. 4.66%

After Tuesday’s ECI report shocked the markets, the yield on the 2-year, which had hit 5.04% intraday Tuesday, finished the week all the way back down to 4.80%, while the 10-year closed at 4.50%, down from last Friday’s 4.67%.

--Crude oil had a lousy week, down about $5 to $78, an 8-week low amid speculation that the U.S. government may move to replenish its strategic petroleum reserves as it aims to buy back oil at $79 a barrel or less, which would be bullish.  But...U.S. inventories are rising and there were hopes for a ceasefire agreement between Israel and Hamas.  And the Energy Information Administration said this week that U.S. crude oil production rose to 13.15 million barrels per day in February from 12.58 bpd in the previous month, marking the sharpest monthly increase in nearly 3 ½ years.

--Apple shares were up 6% at the open Friday after Thursday’s after-the-close release of earnings showing a smaller than expected decline in revenue for the quarter, CEO Tim Cook saying he expects a return to sales growth in the current quarter as it invests in AI features to be unveiled in the coming months.  Cook offered zero details, only to say the company has spent more than $100 billion on research in the past five years.

“We continue to feel very bullish about our opportunity in Generative AI, and we’re making significant investments.  We’re looking forward to sharing some very exciting things with our customers” at events later in the year, Cook said.

Fiscal second-quarter revenue fell 4% to $90.8 billion, beating consensus of $90.0 billion.  For the current quarter, Apple expects “low-single digits” growth in overall revenue.

For Q1, iPhone sales fell 10.5% to $45.96 billion, compared with expectations of $46bn.  It was the biggest drop in iPhone sales since late 2020.  In Grater China, the decline was not as steep as analysts expected, with sales of $16.37 billion for the quarter ending March 30, down 8.1% but above analyst expectations of $15.59bn.

Quarterly earnings per share were $1.53, above consensus of $1.50.  Profit was down 2.2% to $23.6 billion.

Sales in Apple’s services segment, which also represents Apple Music and TV offerings, rose to $23.87 billion, above estimates.  Mac sales grew to $7.5 billion when a decline was expected.  Sales in the iPad segment fell to $5.56 billion, below consensus. And the company’s wearables segments, which represents Apple Watches and AirPods headphones saw its sales fall to $7.91 billion.

None of this is great, but clearly bad news was built into the forecasts, and investors loved that Apple increased the dividend 4% and authorized an additional program to buy back $110 billion of its stock.

--Amazon posted better-than-expected first quarter financial results, driven by strong growth in the company’s AWS (Amazon Web Services) cloud computing business and impressive advertising demand.

The shares rose 3% at the start on Wednesday following Tuesday’s after-the-close announcement.

Last week both Microsoft and Alphabet posted better-than-expected growth in their cloud computing businesses, each beating Wall Street’s estimates by several percentage points.  And for Amazon, AWS revenue was $25 billion, up 17%, about two points better than Street estimates, and the best growth in four quarters. [Microsoft’s cloud revenues rose 31%, Alphabet’s 28% for Q1.]

For the March quarter, Amazon’s overall sales came in at $143.3 billion, up 13% from a year ago, and ahead of consensus. Operating income was $15.3 billion, ahead of the company’s forecast of $8 billion to $12 billion.  Earnings per share of 98 cents were above the Street’s consensus of 84 cents.

Advertising revenue of $11.8 billion was up 24% and a tick above the Street.  Asked on a call with reporters about progress on selling ads on Amazon Prime Video, the company said it was “off to a good start,” but didn’t provide specifics.

Like Alphabet and Microsoft, Amazon is ratcheting up capital spending amid growing demand for cloud-based AI workloads. The company said it expects spending to “meaningfully increase” in 2024 from the $48.4 billion that the company spent in 2023.  The company said it spent nearly $14 billion in cap ex in the quarter, comparable to Microsoft at $14 billion and Alphabet at $12 billion.

The company guided lower than the Street’s consensus for the June quarter in terms of sales but roughly in line on operating income.

Amazon CEO Andy Jassy said: “The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS’s AI capabilities is reaccelerating AWS’s growth rate (now at a $100 billion annual revenue run rate.)”

Amazon is racing to keep abreast of rivals in offering generative artificial-intelligence software.

The company ended the quarter with 1.52 million employees, about 4,000 fewer than at year-end 2023, but higher than a year earlier by 56,000.  This was despite AMZN cutting at least 27,000 jobs last year and continuing to trim positions across a number of units.

--Advanced Micro Devices stock fell 6% at the open on Wednesday after the company reported first-quarter results that slightly beat guidance and Street estimates.

For the quarter, AMD posted revenue of $5.5 billion, up 2% from a year ago, just above the midpoint of the company’s guidance range of $5.4 billion, and a little ahead of consensus of $5.48bn.  Adjusted profits of 62 cents a share matched the Street.

AMD CEO Lisa Su noted in a statement that the company saw strong growth in its data center business with revenue up 80% from a year ago, and client revenue up 85%. The strength in data center reflects robust demand for the company’s MI300 chips for AI data centers.  The company continued to see weaker demand in its gaming division, which was down 48% from a year ago, and embedded chips, down 46%.

Su said AMD has expanded MI300 deployments with Microsoft, Meta and Oracle, “to power generative AI training and inference for both internal workloads and a broad set of public offerings.”

Su said AMD now sees data center GPU revenue in 2024 exceeding $4 billion, above the company’s previous guidance of $3.5 billion. Some investors had been expecting a much higher revised estimate, and the stock’s after-hours loss expanded after Su made the comment.

Investors are focused on long-term potential AI riches as the chip maker takes on Nvidia.

On the more traditional chip side, Su said AMD expects the PC market to return to growth this year, driven by an enterprise refresh cycle and the emergence of AI PCs.

For the June quarter, AMD sees revenue of $5.7 billion, give or take $300 million, right in line with Street estimates.

--The Wall Street Journal reported that Brazilian regional jet maker Embraer was considering adding a new larger plane to its product lineup.

In an email to Barron’s, Embraer said it focused on its “young and very successful portfolio of products developed in recent years, and we are really focused on selling those products and making Embraer bigger and stronger.  We don’t have any plan for a sizable cycle of capex at this time.”

Embraer’s largest current aircraft, the ERJ 195, can seat about 120 passengers, vs. a 737 MAX 8 that can seat about 210.

As one analyst told Barron’s Al Root, development costs can run up to $25 billion on a new plane and you need “deep-pocketed partners that insulate them for failure.”

The Journal mentions Saudi Arabia’s Public Investment Fund as a potential investment partner for Embraer.

But as Al Root points out what the story really highlights is that “Boeing needs a new plane. It hasn’t designed an all-new single-aisle aircraft in years, opting instead to update its existing 737 platform again and again.”

--TSA checkpoint numbers vs. 2023

5/2...105 percent of 2023 levels
5/1...108
4/30...107
4/29...103
4/28...105
4/27...106
4/26...107
4/25...106

--Tesla shares surged 15% Monday as the company reached an agreement with Chinese search engine Baidu to allow it to deploy its automated driving system in China, according to various media reports.

The deal clears a regulatory hurdle that will allow Tesla to roll out its driver assistance system, called Full Self Driving, in China.

In China, intelligent driving systems require a mapping license, and foreign firms must partner with one of a dozen domestic companies that have secured one.  Baidu will provide Tesla with its lane-level navigation system, reports have it.  Tesla will be allowed to use its software to collect data about vehicles’ surroundings.

The deal followed CEO Elon Musk’s visit with China’s Premier Li Qiang over the weekend in a surprise visit to Beijing.

Chinese regulators had since 2021 required Tesla to store all data collected by its Chinese fleet in Shanghai, leaving the company unable to transfer any back to the U.S.  Musk is looking to obtain approval to transfer data collected in the country abroad to train algorithms for its autonomous driving technologies, the person said.

Tesla is reportedly the only foreign-funded automaker to meet China’s data compliance requirements, a big deal.  Premier Li on Sunday praised Tesla’s development in China as a successful example of U.S.-China economic and trade cooperation.

Heretofore, Tesla cars have been banned from entering Chinese military complexes over security concerns relating to cameras installed on its vehicles. And its cars have been turned away from sites holding important political events.

But Tesla’s market share in the EV market in China has been sliding.  For now, investors think this will help.

And then on Tuesday, the stock fell back again on Musk’s abrupt decision to lay off employees who ran Tesla’s EV charging business, which blindsided automakers gearing up to equip new EVs for customers to use the Tesla Supercharger network.

For now, General Motors, Ford and other automakers which struck deals last year to give customers access to the network said they are not changing their plans.

Tesla’s decision to open its network to rival EV manufacturers was hailed by President Biden and opened the door for Tesla to get federal subsidies to expand the reach of its North American Charging Standard system.

But Musk’s decision to dismiss the head of the business, Rebecca Tinucci, and most or all of the staff* that operated and maintained the system, left officials at automakers and Tesla suppliers uncertain about the future.

*The group has nearly 500 employees.

Musk subsequently said on X that the carmaker still plans to expand the Supercharger network, “just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations.”

Lastly, Tesla sold fewer vehicles in California for the second straight quarter, suggesting its popularity in the state may have peaked, according to a report from the California New Car Dealers Assn.

While the EV maker still makes some of the top-selling models in California, overall Tesla registrations declined by 7.8% in the first quarter compared with a year earlier, the trade group said Monday.  Tesla registrations slid 9.8% during the final quarter of last year.

Tesla’s share of California’s EV market has dropped 6.4 percentage points to 55.4%, as new battery-powered models from Mercedes and BMW, gain ground in the state.

--Back to China, BYD and a host of other Chinese electric-vehicle makers posted higher sales and deliveries in April.

Warren Buffett-backed BYD, the world’s largest maker of EVs, said Wednesday that its total sales jumped 49% from a year earlier to 313,245 vehicles for the month. That was 3.6% higher than March sales.

Price cuts deepened in April, while Beijing has been seeking to spur new demand.  The government is offering consumers who replace cars with electric or hybrid vehicles up to the equivalent of nearly $1,400.

--Samsung Electronics, the world’s largest memory chip and TV maker and often seen as a bellwether for the tech sector, reported its net profit more than quadrupled for the first quarter. The demand for hardware to power artificial-intelligence technology is causing a boom in its memory-chip business.

Samsung posted a net profit of $4.91 billion for the quarter, with revenue up 13%.

Samsung said demand for high-bandwidth memory chips is expected to remain strong through the second half of 2024. Such chips are necessary components for the latest AI processors from the likes of Nvidia.

The company said demand for smartphones was firm, helped by the launch of the AI-enabled Galaxy S24 during the quarter. Samsung overtook Apple as the largest smartphone maker in the world by shipments in the first quarter, according to market research firm IDC.

--Huawei Technologies’ net profit rose more than sixfold in the first quarter, helped by a jump in the Chinese telecom equipment maker’s smartphone sales in China.

Net profit rose to $2.71 billion, with revenue up 37%.

Huawei reports a handful of unaudited financial figures throughout the year.  But there was no accompanying press release for the latest figures on Tuesday.

Market data from IDC last week showed that Huawei’s smartphone shipments in China more than doubled in the first quarter from a year earlier, putting it alongside rival Honor as the top smartphone sellers in China.

--Eli Lilly shares surged nearly 5% on rapidly climbing sales of the new obesity drug Zepbound and its counterpart for diabetes, Mounjaro.  The drugmaker also hiked its forecast for 2024 well beyond analyst expectations after sales of Mounjaro more than tripled in the year’s quarter. [To $1.81 billion from $568 million in last year’s quarter.]

Lilly said it was still dealing with supply issues, with strong demand for both drugs outpacing its production hikes.  But the company expects its most significant increases to occur in the back half of the year.

Lilly recorded $517 million in sales from Zepbound, which received approval from U.S. regulators last fall.

Total revenue jumped 26% to $8.77 billion, though this was actually a little less than expected.  Research and development costs jumped 27%.

Net income jumped 67% to $2.24 billion, with adjusted earnings per share at $2.58, vs. the Street’s $2.47.

The stock had already climbed 26% this year prior to the earnings release.

--CVS Health shares cratered 16% after the company missed first-quarter expectations and chopped its 2024 outlook more than a dollar below Street forecasts.

The company said it was still struggling with rising costs from care use in its Medicare Advantage business.  Company leaders told analysts they were dealing with rising use from outpatient care and in supplemental benefits.

CEO Karen Lynch said CVS’ visibility into trends during the quarter was impaired by the cyberattack on Change Healthcare, which is operated by rival UnitedHealth Group.  Change provides technology used to submit and process insurance claims for several insurers.

CVS had already scaled back 2024 expectations earlier this year as it worked to understand why costs keep rising from Medicare Advantage, the privately run version of Medicare, the government’s program which is for people age 65 and older.

The company now expects adjusted earnings for 2024 to be at least $7, down from its previous forecast of at least $8.30.  Street consensus was at $8.27.  This is a big reduction and raises questions about the company’s path to reaching its previously stated goal of double-digit growth in earnings next year.

In the first quarter, net income plunged 48% to $1.11 billion.  Adjusted earnings were $1.31 on total revenue of $88.4 billion.  The Street was at $1.69 and $89.33bn, respectively.

--McDonald’s said higher U.S. sales in the first quarter helped it overcome weakness in the Middle East and other markets where consumers have been boycotting the brand.

The burger giant said same-store sales rose 1.9% worldwide, up 2.5% in the U.S. as the company raised prices and saw higher demand for delivery.

But sales fell 0.2% in MCD’s international franchised markets.

Customers across the Middle East and in Muslim-majority markets like Indonesia and Malaysia have been boycotting McDonald’s for months over its perceived support for Israel.  It all started in October, after a local Israeli franchisee announced it was providing free meals for Israeli troops involved in the war in Gaza.  McDonald’s, in trying to limit the damage, announced in early April it was buying its Israeli franchisee and taking over the country’s 225 restaurants.

Revenue rose 5% to $6.17 billion in the January-March period.  Net income was up 7% to $1.93 billion.  Adjusted earnings of $2.70 per share fell two cents shy of consensus.

McDonald’s also plans to nearly double its restaurants in China to more than 10,000 by the end of 2028, after recently spending $1.8 billion to buy back a bigger slice of its business in the country.

McDonald’s has a big challenger is Chinese rival Tastien, which caters to local appetites with inexpensive burgers made of Peking duck, spicy tofu or fish-flavored pork, in addition to beef.

McDonald’s opened 1,000 new restaurants in China last year and now has over 5,500 there, making it the second-largest market for the company.

The shares finished essentially unchanged on Tuesday following all the news.

--Restaurant Brands International beat the Street’s expectations for quarterly results on Tuesday and the shares rose 3%.  RBI (symbol QSR) cited a revival in demand at its Burger King outlets as well as continued strength at the Tim Hortons chain; the latter continuing to benefit from robust demand for its coffee (it has great doughnuts too, mused the editor, who wishes he had one nearby).  Tim Hortons saw same-store growth of 4.6%.

Separately, the company said it would invest an additional $300 million towards modernizing Burger King outlets in the U.S.  Same-store sales at BK outlets in the U.S. rose 3.9%.  So better same-store sales than at McDonald’s.

--Yum Brands reported a fall in quarterly global same-store sales on Wednesday, hurt by choppy demand for its KFC and Pizza Hut brands from inflation-weary consumers in the U.S. as well as in overseas markets.

Consumers in the U.S. are increasingly looking for value-oriented meals in the face of sticky inflation, pushing fast food chains to double down on promotions and offers and on revamping their stores.

Total revenue at Yum fell nearly 3% to $1.60 billion in the first quarter ended March 31, missing analysts’ estimates of $1.71 billion.  Per share earnings of $1.15 in the quarter fell short of estimates of $1.20.

The company’s worldwide same-store sales fell 3%, while analysts were expecting it to be flat.

Global same-store sales at the KFC restaurants fell 2%, while that of Pizza Hut dropped 7%. Taco Bell posted an increase of 1%, which was below estimates for a 2.8% rise.  The shares fell 4% on the news.

--Wendy’s, which has the best fast-food burger, period (mused the editor who nonetheless just used an expiring Burger King coupon...two junior whoppers and two medium fries for $5.99), saw its shares rise about 3% after it reported adjusted first-quarter earnings of $0.23, up from $0.21 a year earlier and above consensus at same.

Revenue for the quarter ended March 31 was $534.8 million, up from $528.8 million a year earlier, though the Street was at $540.8 million.

Global same-store restaurant sales were up 0.9%, with the U.S. +0.6% and International +3.2%.

For 2024, the home of Dave’s Single, which is really a quality product, kept guidance on the earnings front at $0.98 to $1.02 per share, in line with expectations.

--Domino’s Pizza on Monday reported better-than-expected fiscal first-quarter earnings and the shares surged over 5% as the chain benefited from higher delivery and pickup orders in the U.S.

EPS came in at $3.58 per share for the quarter ended March 24, up from $2.93 the year before, topping consensus of $3.40.  Total revenue rose 5.9% to $1.08 billion, largely in line.

U.S. same-store sales advanced 5.6%, while international operations, ex- the impact of foreign exchange, edged up 0.9%.

Domino’s signed an agreement with Uber in July 2023 to allow U.S. customers to place orders on the ride-sharing company’s Uber Eats and Postmates apps.  The company added 20 stores in the U.S. and 144 internationally in the quarter.

--Starbucks shares plunged 16% at the open on Wednesday after the company reported fiscal Q2 adjusted earnings and sales that missed the market’s expectations.  Adjusted EPS of $0.68 per share ($772.4 million) was down from $0.74 a year earlier and consensus of $0.80.

Net revenue for the quarter ended March 31 was $8.56 billion, down from $8.72bn a year earlier.  Analysts were expecting $9.16 billion. 

Comparable-store sales during the quarter were down 4% worldwide, when forecasts called for 1% growth.  U.S. sales declined 3%, due to a fall in transactions, even as average spending per customer rose 4%.

In China, Starbucks’ second largest market, comp-store sales declined 11%.

And the company lowered its earnings and sales forecast for the rest of 2024, with global revenue growth in the low single digits from the previous range of 7% to 10%.  Earnings per share are also expected to stay flat for 2024, down from the previous forecast of 15% to 20% growth.

Yup, this is ugly.

“In a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities, or the opportunities ahead,” said CEO Laxman Narasimhan.  “We have a clear plan to execute and the entire organization is mobilized around it.”

But we heard similar things in January after the company missed fiscal first quarter expectations.

A simple fact is Starbucks is very expensive (I sure as hell never go there).

--We had a report on food inflation in my state of New Jersey today from TraceOne, a software solutions company, that revealed grocery prices are up 25 percent over March 2020, in line with all the national data you’ve seen, and this is why it’s such a killer issue for Joe Biden.  Yes, prices in some categories have stabilized, or may even be coming down this year, like in the cost of eggs, but we all know everything is up 25 percent, or more, since 2020 and that is our benchmark.  And it’s a lot!  Whose wages have gone up 25% in that time except perhaps fast-food workers.

I keep going back to my personal single-best barometer that you all can relate to...Stouffer’s French Bread Pizza, which was consistently $3.50 at the three national grocery chains I shop at in my area in early 2020 (and often on sale two for $5.00, at which point I loaded up the freezer), and immediately shot up to $4.69-$4.99 and has stayed there, or 34 percent+ higher.  And if you get a sale, which is very rare, it’s two for $7.00, or 40 percent higher.

Pssst...Mark R. ...I see ShopRite has Stouffer’s on sale for two for $7.00 this week. [Mark and I load up the truck when ShopRite puts Black Bear hot dogs on sale...they are the very best, trust me.  Denise D. also vouches for them.  Only sold at ShopRite.]

This New Jersey report said beef roasts are up 40 percent since March 2020, and chicken 29 percent.

The economy, and in this political cycle, inflation, will inevitably end up being the number issue for most Americans when they go to the voting booth (or drop their ballots in the mail, as we do here at StocksandNews ever since PTAs stopped doing bake sales on Election Day!  But Hillary Clinton stopped that, he typed mischievously.)

--Paramount Global’s months-long internal struggles came into full view Monday as CEO Bob Bakish was ousted and pressure mounted for the company’s directors to accept – or reject – a takeover bid by David Ellison’s Skydance Media.  Three of the company’s top executives will run the firm for now, the CEOs of Paramount Pictures, CBS, and Showtime/MTV Entertainment Studios.

But then Sony Pictures and private-equity firm Apollo Global Management submitted an all-cash $26 billion offer.

Paramount has been going through a tumultuous time as its traditional TV and movie studio businesses decline amid the head winds for the media industry in general.

--Former Binance CEO Changpeng Zhao was sentenced to Tuesday to four months in prison for allowing rampant money laundering on the world’s largest cryptocurrency exchange.

Zhao pleaded guilty in November to one count of failing to take required anti-money-laundering measures and stepped down as Binance agreed to pay $4.3 billion to settle related allegations.  U.S. officials said Zhao deliberately looked the other way as people conducted transactions that supported child sex abuse, the illegal drug trade and terrorism.

“I failed here,” Zhao said before U.S. District Judge Richard A. Jones issued the sentence.  “I deeply regret my failure, and I am sorry.”

--Comcast’s NBCUniversal is preparing to pay an average of $2.5 billion a year to air a package of National Basketball Association games, as Warner Bros. Discovery makes last-ditch efforts to keep those rights.

Warner’s TNT is one of the league’s oldest television partners and has paid an average fee of $1.2 billion under its current deal.  But Warner was unable to reach a new pact with the NBA before an exclusive negotiating window expired last week, thus NBC’s bid.

NBC is bidding on both playoff and regular season games and is discussing carrying two prime-time games a week, something Warner can’t offer because it doesn’t own a broadcast network.  NBC would also stream on Peacock.

Disney, parent of ESPN and ABC, is the other major TV partner and is expected to pay an average per-year fee of about $2.6 billion to renew its deal, up from a current $1.5 billion.

--Trump Media & Technology Group stock has been rising despite signs activity at the Truth Social media platform might be falling.  In March, Truth Social had 21% fewer monthly active users than it did for the same month last year, according to analytics firm Similarweb.

It isn’t clear yet whether Donald Trump’s posts on Truth Social during his criminal trial in New York have boosted the number of active users.

“In just a few years Truth Social has amassed millions of users and our user base is rapidly expanding every day, though it’s unsurprising to see the politicized media cherry pick some unreliable estimate to downplay our success,” the company said.

[Trump Media’s auditor since 2022, BF Borgers CPA PC, was charged by the Securities and Exchange Commission today for failing to comply with Public Company Accounting Oversight Board standards in its audits and reviews that were incorporated in more than 1,500 SEC filings from January 2021 through June 2023, the agency said.  The firm failed to obtain an engagement quality review and didn’t adequately supervise and review work of engagement teams as required, the SEC said.]

--The Justice Department plans to forward a recommendation for easing restrictions on marijuana to the White House in what could amount to a major change in federal policy, according to multiple reports.

The move, if approved, would kick off a lengthy rule-making process and does not end the criminalization of the drug, but it would be a significant shift in how the government views the safety and use of marijuana for medical purposes.

It could also lead to the softening of other laws and regulations that account for the use or possession of cannabis, including sentencing guidelines, banking and access to public housing.

Shares of cannabis companies surged on the news Tuesday, but then fell back on the realization that a lengthy rule-making process means just that.

Foreign Affairs

China:  Beijing’s top spy agency vowed on Monday to fight “Taiwan independence” and expand public support for peaceful reunification.

Minister of State Security Chen Yixin said in a Monday article in the Study Times, a newspaper published by the Central Party School, that mainland China’s top intelligence agency would “resolutely fight any form of Taiwan independence moves, counter interference from foreign forces, and punish Taiwanese spies who act as the vanguard of ‘Taiwan independence’ in accordance with the law.”

“(We must) try our utmost to promote reunification, strengthen the power of patriotic and pro-unification forces, and broaden the public opinion base for peaceful reunification,” it said.

The article also called on Beijing’s secret security agencies to “help advance the reunification of China.”

Chen’s article was published just weeks before the inauguration of Taiwanese president-elect William Lai Ching-te, and is the second time this year Beijing’s top anti-spy body has issued a public warning to the island’s separatist forces.

Lai is slated to take office on May 20. Taiwan is expecting extensive Chinese military drills around the same time. 

And along those lines, Friday, Taiwan’s defense ministry said it had detected a renewed incursion by Chinese military aircraft across the Taiwan Strait, as China reported its navy had carried out combat drills with landing craft.  Fourteen Chinese military aircraft crossed Taiwan’s median line, getting as close as 40 miles to the northern Taiwanese port city of Keelung, home to a major navy base.  China has said it doesn’t recognize the line’s existence.

Meanwhile, Beijing has been cracking down on what it says are Taiwanese citizens who have been deemed to have threatened national security.

Last year a publisher Li Yanhe was said to be under investigation for allegedly “endangering national security” after Taiwanese media reported that he had disappeared after traveling to Shanghai to visit his family last March.  The publishing house founded by Li is known for books critical of Beijing’s human rights record.

As in if you’re a Taiwanese citizen, and a professional, I wouldn’t be traveling to China!

The aforementioned Avril Haines, director of national intelligence, commented in her Senate testimony this week that when it comes to China, she said President Xi Jinping and his top leaders expect some future instability in relations with Washington.  But, she continued, they will seek to project stability in those ties as their top priority is grappling with China’s troubled economy.

Rather than pursue policies to stimulate consumer spending or encourage investment, however, they appear to be “doubling down” on a long-term strategy driven by manufacturing and technological innovation, she said. That approach “will almost certainly deepen public and investment pessimism over the near term.”

Separately, China’s coast guard confronted Japanese lawmakers in waters claimed by both countries in the East China Sea, China’s embassy in Tokyo and Japanese media said on Sunday, the latest in a series of maritime disputes involving China and its neighbors.

Chinese vessels took unspecified law enforcement measures, the embassy said in a statement, adding that it had lodged protests for what it called “infringement and provocation” by Japan near tiny uninhabited islands that Beijing calls the Diaoyu and Tokyo calls the Senkaku.

The Japanese group, including former Defense Minister Tomomi Inada, was on an inspection mission organized by a city in Okinawa prefecture.

This comes on top of China’s escalating run-ins with the Philippine navy in disputed areas of the South China Sea.

Georgia: Georgian security forces used water cannon, tear gas and stun grenades against protesters outside parliament late on Tuesday, sharply escalating a crackdown against lawmakers debating a “foreign agents” bill which is viewed by the opposition and Western nations as authoritarian and Russian-inspired.

Levan Khabeishvili, the leader of Georgia’s largest opposition party, the United National Movement, posted a picture on X with his face bloodied and sporting a black eye.  A party official told Reuters Khabeishvili was beaten by police after disappearing in central Tbilisi. 

Thousands of protesters shouted “Slaves” and “Russians” at police.

Georgian President Salome Zourabichvili, an avowed foe of the government whose powers are mostly ceremonial, said in a post on X the crackdown had been “totally unwarranted, unprovoked and out of proportion,” and that the protests had been peaceful.

The bill has heightened divisions in the deeply polarized southern Caucasus country, setting the ruling Georgian Dream party against a protest movement backed by opposition groups, civil society, celebrities and the figurehead president.

Parliament, which is controlled by Georgian Dream and its allies, is set to approve the bill, which would require organizations receiving more than 20% of their funding from abroad to register as “foreign agents.”

Critics have called this “the Russian law,” comparing it to Moscow’s “foreign agent” legislation, which has been used to crack down on dissent there.

Russia of course is disliked by many Georgians for its support of the breakaway regions of Abkhazia and South Ossetia.  Georgia lost a brief war with Russia in 2008.

The United States, the European Union and Britain have criticized the bill.

Georgia’s president asked protesters in a video posted on social media to show restraint. The real task, she said, was to oust the government in an October election.  So this could be a sleeper geopolitical issue this fall.

Random Musings

--Presidential approval ratings...

Gallup: 38% approve of President Biden’s job performance, 58% disapprove; 33% of independents approve (Apr. 1-22).

Rasmussen: 40% approve, 59% disapprove (May 3).

In a new CNN national poll of registered voters getting a lot of buzz, Donald Trump leads Joe Biden 49% to 43% in a head-to-head matchup.  In January it was 49-45 Trump.

In a five-man race with Robert F, Kennedy Jr., Jill Stein and Cornel West, Trump receives 42%, Biden just 33%, and RFK Jr. 16%. [West 4%, Stein 3%.]

Biden receives a job approval rating of 40%, 60% disapproving.

Looking back, 55% of all Americans now say they see Trump’s presidency as a success, while 44% see it as a failure.  In a January 2021 poll taken just before Trump left office and days after the January 6 attack on the Capitol, 55% considered his time as president a failure.

Assessing Biden’s time in office so far, 61% say his presidency thus far has been a failure, while 39% say it’s been a success.  In January 2022, 57% called the first year of his administration a failure, with 41% calling it a success.

On Biden’s handling of the Israel-Hamas war, 28% approve of Biden’s handling of it, 71% disapprove, including an 81% disapproval mark among those younger than 35 and majority disapproval among Democrats (53%).

Biden’s approval ratings for the economy (34%) and inflation (29%) remain starkly negative.  Also, 65% of voters call the economy extremely important to their vote for president, compared with 40% who felt that way in early 2020 and 46% who said the same at roughly this point in 2016.  Those voters who say the economy is deeply important break heavily for Trump in a matchup against Biden, 62% to 30%.

For Democratic-aligned voters, protecting democracy (67%), abortion (54%), the economy (52%), gun policy (51%) and health care (49%) all rank as key for about half or more, while on the GOP-aligned side, it’s the economy (79%), immigration (71%), crime (65%) and then democracy (54%).

In a Biden vs. Trump matchup, the poll finds Biden faring worse than in previous CNN polls among the youngest voters, trailing Trump by a 51% to 40% margin among voters younger than 35.

A separate CNN poll suggests that in the Manhattan hush-money trial, just 28% say a conviction would disqualify Trump from the presidency – double-digits less than those who say that of Trump’s three other (more serious) indictments.  And just 33% say he did something illegal.  Another 33% say his conduct was unethical but not illegal.

Americans say 56% to 44% that they’re not confident the jury will reach a fair verdict.

--Bret Stephens / New York Times

“In 1992, as President George H.W. Bush was campaigning for re-election during a recession, he made the mistake of apparently reading a little too fully from a cue card. ‘Message: I care,’ he said to an audience in Exeter, N.H.  The gaffe became a subject of endless mockery and, as the political writer Mark Leibovich later observed, served as a kind of epitaph for a doomed campaign.

“On Wednesday, it was déjà vu all over again.  Speaking to a union conference at the Washington Hilton, President Biden rattled off a list of his ambitions for a second term.  ‘Folks, imagine what we could do next,’ he said, trying to rouse his audience.  ‘Four more years – pause.’

“The president seemed to quickly realize his mistake, at least to judge by the self-knowing grin that came over his face a few seconds later. An initial White House transcript of his remarks omitted the ‘pause,’ claiming the word was inaudible. But as video of the remarks went viral, someone seems to have thought better of that elision and restored the word to the current transcript.

“If the Biden team is wise, they’ll get the president to repeat the line a few times in the form of a wisecrack, much as they cleverly turned the anti-Biden ‘Let’s go, Brandon,’ taunt into a cool ‘Dark Brandon’ meme....

“But the larger problem for the Biden campaign is that perceptions about the president’s physical and mental fitness are hardly baseless.  Axios reports that White House aides now surround the president as he walks across the South Lawn to his presidential helicopter – all for the purpose of disguising his shuffling walk.  The New York Times has issued a statement calling it ‘troubling’ that the president ‘has so actively and effectively avoided questions from independent journalists during his term.’ One can reasonably speculate as to why the president and his staff would want to avoid such questions.

“There was a time in American life when the White House and the press colluded to hide the infirmities or indiscretions of the sitting president: Woodrow Wilson’s stroke, Franklin Roosevelt’s wheelchair, John F. Kennedy’s chronic back pain (and philandering).  It’s past time for this White House to accept that that time is over.”

--South Dakota Republican Gov. Kristi Noem blew her shot at becoming Donald Trump’s running mate after revealing in a forthcoming book that she shot and killed her puppy.  One ally of Trump told the New York Post that his team was “bewildered” to hear of Noem’s account in her book “No Going Back: The Truth on What’s Wrong with Politics and How We Move America Forward.”

--The judge overseeing Donald Trump’s criminal case in Manhattan held him in contempt on Tuesday, fining him $9,000 for repeatedly violating a gag order and warning that he could go to jail if he continued to attack witnesses and jurors.

“The court will not tolerate continued willful violations of its lawful orders,” Judge Juan Merchan said as Trump’s trial convened for a third week.  He added that while he was “keenly aware of, and protective of, defendant’s First Amendment rights,” he would jail Trump “if necessary and appropriate under the circumstances.”

Trump was ordered to remove nine specific posts on Truth Social by Tuesday afternoon.

The former president says the gag order is “unconstitutional,” which is laughable. 

His defense team Thursday suggested that rather than orchestrating a hush money scheme, Trump was the target of a shakedown attempt by unscrupulous entertainment figures who saw his 2016 presidential campaign as an opportunity for a quick payday.

The jury also heard a secretly recorded phone conversation between Stormy Daniels’ lawyer Keith Davidson and Trump’s then-lawyer, Michael Cohen, in which Cohen claimed Trump told him, “I hate the fact that we did it,” in reference to the hush money paid to Daniels.

And today, the jury heard from former top aide to Trump, Hope Hicks, whose testimony could help Trump’s lawyers make their case that he paid off big-busted Stormy to keep his wife, Melania, not voters, from hearing Stormy’s allegations, and learning about his relationship with Karen McDougal.

--GOP Rep. Marjorie Taylor Greene announced Wednesday she will trigger a motion to vacate against House Speaker Mike Johnson next week to force members to put their position on the record – a move that comes after Democrats have said they will vote to kill the effort and ensure Johnson doesn’t lose his job.

“I think every member of Congress needs to take that vote and let the chips fall where they may and so next week, I am going to be calling this motion to vacate.  Absolutely calling it,” she said at a news conference.

In a statement after Greene’s announcement, Johnson said: “This motion is wrong for the Republican Conference, wrong for the institution, and wrong for the country.”

This is going nowhere fast.

--Democratic Rep. Henry Cuellar (Texas) and his wife were charged with participating in a yearslong $600,000 bribery scheme involving Azerbaijan and a Mexican bank, according to a federal indictment unsealed in Houston on Friday.

--George F. Will / Washington Post

“Do not emulate the Chicago politician who said he would not ‘cast asparagus’ at opponents.  Do cast aspersions at ‘elite’ (just a synonym for ‘expensive’) institutions of what I still called, despite an ocean of contrary evidence, higher (than what?) education.

“Parents paying $89,000 for a child’s year at Columbia University might be nonplussed about the university’s explanation of its recourse to remote learning: ‘Safety is our highest priority.’  Clearly education is not.

“Otherwise, the university, instead of flinching from firm measures to make the campus conducive to learning, would have expelled all students participating in the antisemitic encampment that panicked Columbia into prioritizing ‘safety.’  Imagine how stern the institutional responses would be, nationwide, if the antisemitic and anti-American disruptors of education were violating really important norms by, say, using inappropriate pronouns.

“Given academia’s nearly monochrome culture, most universities have many infantile adults. These are faculty members who have glided from kindergarten through postdoctoral fellowships (these often support surplus PhDs, who are being manufactured faster than the academic job market can absorb them).  To such professors, the 99.9 percent of the world adjacent to campuses is as foreign as Mongolia.

“Still, suppose you want to hire a recent college graduate for your business.  Suppose one of your applicants attended Harvard while it was becoming an incubator of antisemitic agitations. And suppose the other applicant attended a large public university. The public-university graduate is at least marginally less apt to be enthusiastic about Hamas, which aspires to complete the Holocaust....

“The leakage of prestige from politicized universities is overdue and wholesome.  Those schools that once were preeminent and now are punchlines might soon have a bruising rendezvous with real politics, which, unlike the sandbox radicalism of campus playgrounds, can be serious.”

Or as the Wall Street Journal editorialized:

“If the schools want to know where the politics of this is headed, they might read a letter Monday to the Columbia trustees from 21 Democrats in Congress. The letter urged the school ‘to act decisively, disband the encampment, and ensure the safety and security of all of its students.’  These Democrats can see that the campus protests, as they spread, may hurt their political cause in an election year as the protesters target President Biden’s policies. Students can’t be left to run U.S. campuses.”

The White House on Tuesday denounced the overnight takeover of a Columbia University academic building (named after Founding Father Alexander Hamilton) by anti-Israel protesters – calling it “not peaceful” and saying President Biden “condemns” the use of the word “intifada,” which a two-story banner at the site now reads.

“President Biden has stood against repugnant, Antisemitic smears and violent rhetoric his entire life,” White House deputy press secretary Andrew Bates said in a statement.  “He condemns the use of the term ‘intifada,’ as he has the other tragic and dangerous hate speech displayed in recent days.

“President Biden respects the right to free expression, but protests must be peaceful and lawful. Forcibly taking over buildings is not peaceful – it is wrong.  And hate speech and hate symbols have no place in America,” Bates said.

White House National Security Council spokesman John Kirby added of Columbia, “A small percentage of students shouldn’t be able to [disrupt] the academic experience...for the rest of the student body – students paying to go to school and want an education and be able to do that without destruction.

“They ought to be able to do it, feel safe. And they certainly deserve to be able to graduate and participate in a graduation ceremony... [What Columbia protesters are doing] does not comport with the idea of peaceful protest.”

House Republicans have launched an investigation into federal funding for universities amid the campus protests.

--NYU professor Scott Galloway said that college campuses were increasingly becoming reminiscent of Nazi Germany – and attributed the reason partly to young people not having enough sex.

Galloway has put forward this theory for the past year, actually, in forums such as on “Real Time” with Bill Maher and Michael Smerconish’s CNN show, as well as his books.

“I think part of the problem is young people aren’t having enough sex so they go on the hunt for fake threats and the most popular threat through history is [antisemitism].”

--It was an awful day in Charlotte, NC, Monday, as four law enforcement officers were shot and killed, four others wounded, while serving a warrant.  One suspected attacker was found dead in the front yard of a barricaded home after a standoff that lasted three hours, police said.  Two armed suspects were involved. 

It was one of the deadliest assaults on U.S. law enforcement in decades, and worst since the 2016 ambush of police officers in Dallas, Texas, that claimed five lives.

The officers were part of a U.S. Marshals Service-led task force who were attempting to serve a warrant against a felon wanted for illegally possessing a firearm when gunfire erupted on the suburban street.  The officers returned fire at an assailant in the front yard, then more shots were fired at them from inside the home, Charlotte-Mecklenburg police said.  An AR-15 rifle was found inside the property.

“Today we lost some heroes who were out simply trying to keep our community safe,” Police Chief Johnny Jennings said in a news conference.

The U.S. Marshals Service confirmed that one of its officers had been killed in the raid.  Two of those killed were members of the state’s Department of Adult Corrections, and the fourth was a Charlotte-Mecklenburg police officer.

--A majority of Americans believe that China uses TikTok to shape U.S. public opinion, according to a Reuters/Ipsos poll. Some 58% of respondents agreed with a statement that the Chinese government uses TikTok, which is owned by ByteDance, to “influence American public opinion.”

--Last week I wrote of the awful flooding in China’s Pearl River Basin, and then Saturday, a tornado swept through the economic hub of Guangzhou (population 19 million), killing five and damaging scores of factory buildings (at least 140 buildings, as reported).

It got worse...a section of a highway collapsed early Wednesday in Guangdong province, leaving at least 48 people dead.

At least 18 cars fell down a slope after a long section of the highway collapsed in an area that has seen heavy rain in recent days.  The accident occurred at 2 a.m., but there was heavy travel on the road due to a holiday.

--The Philippines halted in-person classes at public schools while Thai power demand rose to a record, as a heat wave gripping southern Asia continued to take its toll.

The temperature in metropolitan Manila soared to 38.8C (101.8F) on Saturday, according to the nation’s weather forecaster, beating a previous all-time high recorded in May 1915, ABS-CBN News reported.[Another story I read said the record was 101.3F from May 1987]

But you know this region is humid, and the heat index on Monday in Manila was expected to reach as high as 46C, or 114.8F!

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

Pray for Ukraine and the innocent in Gaza.

God bless America.

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Gold $2308
Oil $78.03

Bitcoin: $62,000 [4:00 PM ET, Fri.]

Regular Gas: $3.66; Diesel: $3.99 [$3.58 / $4.10 yr. ago]

Returns for the week 4/29-5/3

Dow Jones  +1.1%  [38675]
S&P 500  +0.6%  [5127]
S&P MidCap  +1.2%
Russell 2000   +1.7%
Nasdaq  +1.4%  [16156]

Returns for the period 1/1/24-5/3/24

Dow Jones  +2.6%
S&P 500  +7.5%
S&P MidCap  +5.3%
Russell 2000  +0.4%
Nasdaq  +7.6%

Bulls 47.0
Bears 19.7

Hang in there.

Brian Trumbore

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