Week in Review

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Week in Review

05/11/2024

For the week 5/6-5/10

[Posted 4:30 PM ET, Friday]

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Edition 1,308

I watched President Joe Biden’s interview with CNN’s Erin Burnett Wednesday night, and he was flat out embarrassing.  It was another reminder to Democrats; you have a chance to act at what is already going to be a chaotic Democratic Convention in Chicago in August.  Prepare the ground now.

Biden lied about the economy and inflation, claiming, for example, that inflation was 9% when he took over when it was 1.4% (Jan. 2021).  Inflation rocketed higher, to 9.1% in June 2022, only after he began to spend like a drunken sailor, and now he wonders why he’s doing so poorly in the polls, though of course he says the polls are wrong.

Throughout the interview, with apologies to Rodgers and Hart, Biden was bewitched, bothered and bewildered, as well as befuddled.  And I’m not even talking about his statements on Israel and holding back military support, which I cover extensively below.

I wrote during the 2020 campaign that Biden’s history was that he had a remarkably high opinion of his intellect, particularly on foreign policy, and yet as we all know every major decision he has made on that front in the past 20+ years has been wrong.

I don’t know why Republican candidates for the House and Senate don’t make more of his catastrophic withdrawal from Afghanistan, for example, which in all honesty was made easier for Biden because of the groundwork Donald Trump had laid.

Yes, GOP candidates talk of what a disaster the withdrawal was and bring up Abbey Gate and the deaths in the terror attack of 13 U.S. service members (as well as 170 Afghan civilians...a figure used by the Pentagon two years later), but I never hear them talk about what happened leading up to the withdrawal, and how thanks to a relatively small U.S. force, as well as the military support of key allies, Kabul was a safe haven, especially for Afghan women.  I was pounding the table on the topic back then.

Afghan women for the first time in generations had a real opportunity for a better life. They went to school, picked up degrees from universities, and had their hopes and dreams.

This minimal force would have continued to hold Kabul and also would have continued to have a real view of the terror networks in the countryside, with selective attacks carried out on same, not the “over the horizon” B.S. we were fed after the withdrawal.

Within hours, the Taliban came in and Afghan women’s dreams were once again crushed.  That’s what GOP candidates should talk about, the plight of the women (which would resonate), not just the suicide bombing.

Yet to this day, Joe Biden is proud of his Afghan withdrawal.  And now this man with the shrinking brain is proud of his moves in the Israel-Hamas War (largely for some votes in Dearborn, Michigan, as well as those of young people who chances are won’t even go to the polls), just as he was proud of his moves to slow-walk weapons systems for Ukraine, putting our allies in danger of full defeat.*  Nope, can’t poke the Russian Bear, the timid president thought.

On the other hand, there is Donald Trump.

He’s put us on notice again.  If he loses the election, he reserves the right to encourage his followers to fight.

When Time magazine asked Trump whether the election would end in political violence if he losses, Trump replied: “If we don’t win, you know, it depends. It always depends on the fairness of an election.”

Trump later told the Milwaukee Journal Sentinel: “If everything’s honest, I’ll gladly accept the results. If it’s not, you have to fight for the right of the country.”

In 2016, he won, but he claimed that Hillary Clinton and the Democrats rigged the vote count to deny him a popular-vote landslide.

In 2020, he lost to Joe Biden by 7 million votes, working for months to overturn the election, and then we got Jan. 6.

Last weekend on the Sunday talk shows, it was beyond pathetic that you had a Sen. Tim Scott (R-S.C.), who I used to respect, be pressed at least six times by NBC News’ Kristen Welker on whether he would accept this November’s results.  He repeatedly declined to do so, only saying he was looking forward to Trump being president again.

When Welker reminded him that a “hallmark of our democracy is that both candidates agree to a peaceful transfer of power,” Scott said at one point, “This is why so many Americans believe that NBC is an extension of the Democrat party at the end of the day.”  Oh brother.

North Dakota Gov. Doug Burgum, like Scott hoping to be Trump’s running mate/lap dog, also dodged a question about Trump’s comments on political violence.

All the while our nation is being flooded with disinformation and propaganda from the likes of Russia, China and Iran, let alone America’s own conspiracy theorist-wackos, and you throw in a little dose or two of artificial intelligence, deep fakes, voiceovers, and it’s no wonder so many of us gravitate towards sports these days and in this current moment, the NBA and Stanley Cup Playoffs, the editor typed with a smile.  Go Knicks and Rangers, I can’t help but add.

*In a highly worrisome development in the Ukraine war, Friday morning Russia launched a surprise attack, an armored ground attack on the Kharkiv border region in the northeast, opening up a new front.  More below....

Israel and Hamas

--On Monday, the Israeli military (IDF) ordered tens of thousands of civilians to begin evacuating nearby eastern parts of Rafah city, ahead of what it called a “limited” operation to eliminate Hamas fighters and dismantle infrastructure.

The Israeli military said it had established “operational control” over the Gaza side of the Rafah crossing in the southern Gaza Strip overnight Monday into Tuesday.

On Monday night, the IDF said it was carrying out “targeted strikes” in eastern Rafah.  It said 20 Hamas militants were killed in the operation and it discovered three tunnel shafts.  An Israeli army official said the vast majority of people located in the evacuation zone have left.

The head of a hospital in Rafah said that 27 bodies and 150 wounded people had been brought to his facility since the start of the incursion.

--The UN and European officials said that Israel’s designated safe zone for Rafah is neither safe nor equipped to receive them.  In a statement the head of the Norwegian Refugee Council said the area was “already overstretched and devoid of vital services.”

Israel ordered some 100,000 people to move to an Israeli-declared humanitarian zone called Musawi.

--Hamas said Monday it accepted an Egyptian-Qatari cease-fire proposal, but Israel said the deal did not meet its core demands, pushing ahead with an assault on Rafah.  Israel did say it would continue negotiations.

But Hamas changed the language in the cease-fire deal it accepted Monday to count the bodies of dead hostages in a proposed swap for Palestinian prisoners, according to a report.

The deal signed by Hamas also included an end to the war – something the Israeli side said it would not accept.

But it was the language around the 33 Israeli hostages who were set to be released in exchange for a cease-fire that was notable.  Israeli officials blasted the proposal as significantly different from what Israel had initially said it would agree to.

Hamas has repeatedly warned that it does not have enough hostages who meet Israel’s demands, which called for the release of hostages who are women, elderly or those suffering from illnesses and medical conditions.

I wrote weeks ago that Israeli and American officials, while not saying so publicly, believe that as few as 25 of the 100 believed to be still held captive could be alive.

Israeli Prime Minister Netanyahu then said on Tuesday the latest truce proposal from Hamas falls far short of Israel’s essential demands, adding military pressure remains necessary to return hostages held in Gaza.

--The Israeli military said Wednesday that it has reopened the Kerem Shalom crossing from Israel into Gaza, a key terminal for humanitarian aid that was closed over the weekend after the Hamas rocket attack that killed four Israeli soldiers nearby.  The soldiers were killed after Hamas fired roughly 10 rockets from the area of the Rafah border crossing into an area near the Kerem Shalom crossing.

An Israeli tank brigade seized the nearby Rafah crossing between Gaza and Egypt early Tuesday, and it remained closed, but that limited incursion does not appear to be the start of the full-scale invasion that Israel has repeatedly promised.

--The U.S., Egypt and Qatar ramped up efforts to close the gaps in a possible agreement for at least a temporary cease-fire and the release of some of the Israeli hostages still held by Hamas.

--Biden administration officials admitted they paused a shipment of bombs for Israel over concerns it was going ahead with a major ground operation in Rafah.  The shipment consisted of 1,800 2,000lb bombs and 1,700 500lb bombs, the official told news sources.

Israel has not “fully addressed” U.S. concerns over humanitarian needs of civilians in Rafah, the official said.  Israel made no immediate comment.

Overnight, Wednesday, there were further Israeli air strikes in the Gaza Strip, hours after Israel took control of the Rafah crossing.

And then later Wednesday, President Biden, in the aforementioned interview with CNN, publicly warned Israel for the first time that the U.S. would stop supplying it weapons if Israeli forces launch a major invasion of Rafah.

“I’m not supplying the weapons that have been used historically to deal with Rafah, to deal with the cities, that deal with that problem,” Biden said.

Defense Secretary Lloyd Austin said the decision was taken out of concern for Rafah.

“Civilians have been killed in Gaza as a consequence of those bombs and other ways in which they go after population centers,” he said when asked about 2,000lb bombs sent to Israel.

Biden said the U.S. would continue to provide defensive weapons to Israel.  “We’re going to continue to make sure Israel is secure in terms of Iron Dome and their ability to respond to attacks that came out of the Middle East recently,” he said.  “But...we’re not going to supply the weapons and artillery shells.”

Prime Minister Netanyahu responded defiantly to Biden’s statement: “If we need to stand alone, we will stand alone.”  Netanyahu said Israel would “fight with our fingernails” if need be.

Benny Gantz, member of the war cabinet and Netanyahu’s chief rival, emphasized the strategic and values-based partnership between the U.S. and Israel.

Gantz stressed that Israel has both a security and moral obligation to combat threats posed by groups like Hamas, emphasizing the necessity of returning hostages and ensuring the safety of Israeli citizens.

“Israel has a security and moral obligation to continue fighting to return our hostages and remove the threat of Hamas from the south of the country, and the U.S. has a moral and strategic obligation to provide Israel with the tools required for this mission.”

--Friday, Israeli troops gathered on the outskirts of Rafah, effectively encircling it, as cease-fire talks between Israel and Hamas in Cairo stalled. 

The UN and other aid groups say no aid whatsoever is getting into Gaza at week’s end.

--Last weekend, Israel ordered the closure of Al Jazeera in the country, a move the Qatar-based news network called a “criminal act.”

Prime Minister Netanyahu said in a post on X: “The government headed by me unanimously decided: the incitement channel Al Jazeera will be closed in Israel.”

Israeli cable providers ceased carrying the Al Jazeera networks within hours of Sunday’s announcement.

Al Jazeera said in a statement: “Israel’s suppression of the free press to cover up its crimes by killing and arresting journalists did not deter us from performing our duty.  More than 140 Palestinian journalists have been martyred for the sake of the truth since the beginning of the war on Gaza.”

Several of the network’s journalists working in Gaza have been injured or killed since Oct. 7.

Israel did not want Al Jazeera’s broad network covering any large-scale invasion of Rafah.

--Editorial / Wall Street Journal

“The battle for Rafah has begun in Gaza, and it’s an essential part of Israel’s war of self-defense against Hamas. The terrorist group’s leaders have dragged out negotiations for a cease-fire for months, with no intention of freeing hostages while President Biden shielded their stronghold from attack. Now the masterminds of Oct. 7 are learning that Mr. Biden can’t protect them.

“ ‘No amount of pressure, no decision by any international forum, will stop Israel from defending itself,’ Prime Minister Benjamin Netanyahu said Sunday.  ‘If Israel is forced to stand alone, Israel will stand alone.  But we know we are not alone, because countless decent people around the world support our cause.’....

“The invasion of Rafah was made necessary on Oct. 7 when Hamas slaughtered 1,200 Israelis. At that moment it became impossible for Israel to allow Hamas to control territory, remain in power and plan the next massacre, as the terrorists pledge.

“Mr. Biden’s decision to set himself against any move on Rafah is hard to understand.  Since there was no other way Israel could achieve its objectives, it put the President on the side of Israeli defeat and Hamas victory.

“He now has a chance to reset and support Israel so it can finish its Hamas campaign as quickly as possible.  As a senior Israeli official points out, ‘This Administration never supports anything we do until we do it.’  In October the White House privately opposed any ground invasion of Gaza. It came around when Israel did what it had to do – as it’s doing now.

“Rafah hosts Hamas’ leaders, four terrorist battalions, hostages and a border crossing with Egypt, from which it controls incoming aid and smuggles in military supplies. It is the crucial city for the terrorist group’s future.  Only when Rafah is in danger of falling will Hamas be ready to hand over its remaining hostages.

“After Israel announced the civilian evacuation on Monday, Hamas finally moved fast to submit a counteroffer. Interesting what real pressure can accomplish. Recall that after Israel blitzed Gaza City in November, Hamas released 105 hostages for a breather.

“Despite media reports, by Monday night Hamas hadn’t ‘accepted’ a genuine cease-fire-for-hostages deal.  It made its own offer that Israel ends the war, which means accepting defeat.  In reply, Israel’s war cabinet, which includes Mr. Netanyahu’s main political rival, unanimously decided to move forward in Rafah while sending negotiators ‘to exhaust the possibility of reaching an agreement.’

“If Mr. Biden wants a cease-fire that matters, he will support Israel and let Hamas remember what it’s like to negotiate with its back against the wall.”

--In remarks honoring the 6 million Jews killed in the Holocaust, Tuesday, President Biden warned that the threat of antisemitism is growing.

“Never again simply translated for me means: Never forget. Never forgetting means we must keep telling the story, we must keep teaching the truth. The truth is we’re at risk of people not knowing the truth.”

“This hatred (of Jews) continues to lie deep in the hearts of too many people in the world and requires our continued vigilance and outspokenness,” Biden said. “Now here we are, not 75 years later, but just seven and a half months later, and people are already forgetting...that Hamas unleashed this terror.  I have not forgotten, nor have you.  And we will not forget.”

The president said his commitment to Israel was ironclad, but then he withheld weapons Israel says it needs to destroy Hamas in Rafah.

Brett Stephens / New York Times

“Israeli doubts about America’s reliability as an ally won’t lead to Israeli pliancy. Instead, it will strengthen its determination to become far more independent of Washington’s influence in ways we may not like.  State-of-the-art Israeli cybertech for Beijing?  Closer Israeli ties with Moscow?  Americans who accuse Israel of freeloading off U.S. power will like it even less when it becomes a foreign-policy freelancer – something Biden ought to have learned when he tried to turn Saudi Arabia into a global pariah only to learn, to his own humiliation, the kingdom had other strategic options.

“Worse: Rather than weaken Netanyahu and his political partners on the Israeli far-right, it will strengthen them.  They will make the case that only they have the fortitude to stand up to a liberal president who folds to pressure from Israel-hating campus protesters.”

Editorial / Wall Street Journal, Part II

“Call it what it is: a U.S. arms embargo against Israel. That’s the astonishing story this week as the Biden Administration confirms it is blocking the delivery of weapons to its main ally in the Middle East....

“The message from the White House, in other words, is that Israel shouldn’t have large bombs or small bombs, dumb bombs or smart bombs, and let it do without tanks and artillery too.  Now isn’t a good time to send the weapons, you see, because Israel would use them....

“This is the terrorists’ reward for using civilians as human shields....

“It hasn’t been four weeks since Iran attacked Israel directly, in the largest drone attack in history, plus 150 or so ballistic and cruise missiles.  Hezbollah fires dozens of rockets each day, depopulating the north of Israel for seven months and counting.  The terrorist group and its Iranian controllers would decide at any time to precipitate an even larger war. Would it then be OK for Israel to have the bombs?

“Israel needs to be ready now, and its enemies need to know the U.S. stands behind it.  That’s why Congress approved military aid to Israel in April, 79-18 in the Senate and 366-58 in the House.  The overwhelming votes, including a majority of both parties, marked an important defeat for the anti-Israel left.

“Failing in its efforts to disarm Israel, the left lost.  Now Mr. Biden is endorsing its policy.”

Pathetic.  And regarding the Journal’s last note on the votes, beyond outrageous.  Democrats, dump Joe Biden.  Soon.

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This Week in Ukraine....

--Saturday, Russia’s Defense Ministry claimed that its forces overnight shot down four U.S.-provided long-range ATACMS missiles over the Crimean Peninsula.  The ministry didn’t provide further details.

Ukraine has recently begun using the missiles, provided secretly by the U.S., to hit Russian-held areas, including Crimea.  The ATACMS can strike up to 190 miles away.

--Sunday, Ukrainians in the embattled east flocked to church to mark their third wartime Easter as Russian troops inched closer to threatening some of the region’s key cities.  Fighting continues to worsen, particularly around the town of Chasiv Yar, while Kyiv’s troops await crucial aid.

President Volodymyr Zelensky, in an Easter message from Kyiv, called on Ukrainians to unite in prayer for each other and soldiers on the front line, saying God has a “Ukrainian flag on his shoulder.”

A Ukrainian chaplain on the eastern front told a Reuters reporter: “When things are difficult, people indeed turn to God and genuine prayer.  (They) pay more attention to the spiritual element,” he said.  “We see that.”

--Russia said on Monday it would hold a military exercise that will include practice for the use of tactical nuclear weapons after what the defense ministry said were provocative threats from Western officials.

The ministry said the exercise was ordered by Vladimir Putin and would test the readiness of non-strategic nuclear forces to perform combat missions.

Since the war began, Russia has repeatedly warned of rising nuclear risks – warnings which the United States says it has to take seriously though U.S. officials say they have seen no change in Russia’s nuclear posture.

Putin has faced calls inside Russia from some hardliners to change Russia’s nuclear doctrine, which sets out the conditions under which Russia would use a nuclear weapon, though Putin said last year he saw no need to change the doctrine.

Broadly, the doctrine says such a weapon would be used in response to an attack using nuclear or other weapons of mass destruction, or the use of conventional weapons against Russia “when the very existence of the state is put under threat.”

Russia has repeatedly said that remarks by French President Emmanuel Macron about a possible French intervention in Ukraine are extremely dangerous.

Putin warned the West in March a direct conflict between Russia and the U.S.-led NATO would mean the planet was one step away from World War Three.

Separately, this afternoon the New York Times reported it has identified one site in Belarus where it is likely tactical nuclear weapon warheads are being stored, next to the town of Asipovichy, 120 miles north of the Ukrainian border.  [Russia defines tactical arms as those with a range of 300 kilometers, or 186 miles.]  The site is near a military base where Belarus has Iskander missiles capable of launching nuclear or conventional warheads.

Experts say the developments in Belarus, which Putin has long telegraphed, are designed to unnerve NATO and doesn’t necessarily give Russia a significant new military advantage, but as Jeffrey Lewis, an arms control expert at the Middlebury Institute of International Studies at Monterey in California, told the Times, “We are reviving Cold War practices, hence we are reviving Cold War risks.”

--Russia warned Britain on Monday that if British weapons were used by Ukraine to strike Russian territory, then Moscow could hit back at British military installations and equipment both inside Ukraine and elsewhere.

British Ambassador Nigel Casey was called to the foreign ministry for a formal protest after Foreign Secretary David Cameron said last week that Ukraine had the right to use British weapons to strike against Russia.  But Britain denied Casey had been summoned, saying that he had met Russian officials “for a diplomatic meeting” in which he “reiterated the UK’s support for Ukraine in the face of unprovoked Russian aggression.”

Russia’s foreign ministry said the Cameron remarks recognized that Britain was now de facto a part of the conflict and contradicted an earlier assurance that long-range weapons given to Ukraine would not be used against Russia.

The ministry said it considered Cameron’s remarks a serious escalation.

Cameron in Kyiv last week said Ukraine had a right to use the weapons provided by Britain to strike targets inside Russia, and that it was up to Kyiv whether or not to do so.

--Russia claimed a Ukrainian drone attack on the Belgorod region killed six on two buses taking people to work.

A Russian missile and drone attack early Monday disrupted power supplies in Ukraine’s northern Sumy and Kharkiv regions, the national power grid operator Ukrenergo said on Facebook.

Ukraine says it intercepted 12 out of 13 Shahed drones in the Sumy region that were launched from the north at night. There was no report on Kharkiv.

--Russian missiles and drones struck nearly a dozen Ukrainian critical infrastructure facilities in a major airstrike early on Wednesday, causing serious damage at three Soviet-era thermal power plants, Kyiv officials said.

The air force said it shot down 39 of the 55 missiles and 20 out of 21 attack drones used in the attack, which piles more pressure on Ukraine’s beleaguered energy system.

At least the missiles targeting Kyiv were brought down before hitting their targets.

--Thursday, a Ukraine-launched drone attack sparked a fire and damaged several oil tanks at a refinery in Russia’s Krasnodar region, Russian officials in the region said.

The target lies more than 700 miles from Ukraine’s border.

--Today, as alluded to above, and as reported by Reuters: “Russian forces launched an armored ground attack near Ukraine’s second city of Kharkiv in the northeast of the country and made small inroads, opening a new front.”

“At approximately 5 a.m. [Friday], there was an attempt by the enemy to break through our defensive line under the cover of armored vehicles,” Defense Ministry officials said in a statement.

President Zelensky “has said Russia could be preparing a big offensive push this spring or summer.  Kyiv’s forces were prepared to meet Friday’s assault, but Moscow could send more troops to the area, he told reporters in Kyiv,” writes Reuters.

Zelensky: “As of now, these attacks have been repulsed; battles of varying intensity continue.”

--Ukraine’s state security service said it caught two agents, two Ukrainian colonels, for Russia plotting the assassination of President Zelensky and other top officials as “a gift” for Vladimir Putin as he was sworn in for a new term in the Kremlin on Tuesday.*  The two men were colonels in Ukraine’s state guard service recruited by Russia’s Federal Security Service (FSB) who leaked classified information to Moscow, the Security Service of Ukraine (SBU) said on Telegram.

The agents were tasked with finding someone close to the presidential guard who would take Zelensky hostage and later kill him, the SBU statement said, without saying at what stage the alleged plot had been foiled.

But another report I saw made it seem as if once the coordinates of Zelensky’s location were given, a rocket and drone attack was planned.

Last month a man was arrested in Poland accused of working with Russian intelligence to prepare a possible attempt to assassinate Zelensky.

Last fall, Zelensky said at least five Russian plots to assassinate him had been foiled.

According to this latest plot, Zelensky’s top intelligence chief, Kyryll Budanov, was another target.

*Regarding Putin’s inauguration, Fiona Hill, a former White House national security advisor, said, “Putin thinks of himself now as Vladimir the Great, as a Russian tsar.

“If we took ourselves back to his first two presidential terms [Ed. going back to May 2000], I think we’d have a fairly favorable assessment of Putin. He stabilized the country politically and made it solvent again. The Russian economy and system were performing better than at any other previous time in its history.

“The war in Ukraine, going back to the annexation of Crimea 10 years ago, has dramatically changed that trajectory.  He’s turned himself into an imperialist instead of a pragmatist.”

--The Financial Times reported that Moscow is plotting sabotage in Europe, according to three intelligence agencies talking to the paper.

“Russia has already begun to more actively prepare covert bombings, arson attacks and damage to infrastructure on European soil, directly and via proxies, with little apparent concern about causing civilian fatalities, intelligence officials believe. While the Kremlin’s agents have a long history of such operations – and launched attacks sporadically in Europe in recent years – evidence is mounting of a more aggressive and concerted effort.”  [Defense One]

--An American soldier was being held in Vladivostok and Russian officials on Tuesday said Staff Sgt. Gordon Black, who has served in the Army since 2008, would remain in jail for at least two more months while authorities review the theft charges against him.

Black traveled to Vladivostok from his South Korean base to the Russian city, supposedly to visit a girlfriend who his parents say may have set him up.

Russia, at least for now, said this isn’t politically motivated.

--There is a growing frustration with the ballooning number of Ukrainian soldiers reported missing and the inability to identify the dead as the government struggles to work through the backlog and figure out who they are so their families can receive the bodies.  

As one mother told a New York Times reporter, “I want to have his grave, where I can come and cry all this out properly.”

Frustration among civilians is mounting, with the occasional protest, relatives demanding more accountability for soldiers gone missing, while it is battering morale on the front lines.

But the same situation is happening in Russia.  Mothers and wives of servicemen whose fates are unknown have emerged as the most vocal critics of the Russian war effort, presenting a rare public challenge to Vlad the Impaler. 

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Wall Street and the Economy

There was zero of significance on the economic data front this week and the Treasury auctions went OK, which is good enough for now.

But next week we will get April inflation data as well as a closely watched retail sales number.

For now, Minneapolis Federal Reserve President Neel Kashkari (a non-voting member this year) said in an essay on Tuesday that price pressures are “settling” to a level above the Fed’s 2% target.  Housing in particular is “proving more resilient to...tight policy than it generally has in the past,” depriving the Fed of what is typically a key channel for the impact of high interest rates to be felt.

“The question we now face is whether the disinflationary process is in fact still underway, merely taking longer than expected, or if inflation is instead settling to around a 3% level, suggesting that the (Federal Open Market Committee) has more work to do to achieve our dual mandate goals,” Kashkari wrote.

Prior to the last Fed meeting he said that disappointing inflation data and ongoing growth might mean the Fed does not cut interest rates at all this year, but that further increases in the benchmark policy rate were “not a likely scenario.”

At his press conference following last week’s meeting, Fed Chair Jerome Powell said that in a situation where the job market remains strong, but inflation is “moving sideways,” the Fed would likely just hold off on rate cuts and wait since policymakers still believe the current benchmark interest rate is adequate to achieve the Fed’s inflation goal.

But Kashkari wrote: “With inflation in the most recent quarter moving sideways, it raises questions about how restrictive policy really is. The uncertainty about where neutral is today creates a challenge for policymakers.”

New York Federal Reserve Bank President John Williams last Friday (his comments not released until after I posted) said he believes the central bank’s 2% target for inflation is “critical” to its efforts to achieve price stability.

“Theory and experience have also shown the importance of transparency and clear communication, including setting an explicit, numerical longer-run inflation target, and of taking appropriate actions to support the achievement of that goal,” Williams said in remarks prepared for delivery to Stanford University’s Hoover Institution.  But he didn’t offer any updated views on whether or when the Fed should begin cutting interest rates. Williams is a permanent voting member on the FOMC.  A great position...influence, but don’t have the hassle of being Chairman.

The next Fed meeting is June 11-12.

The Atlanta Fed’s GDPNow barometer for second-quarter growth is up to 4.2%.

Freddie Mac’s 30-year fixed-rate mortgage fell to 7.09%, down from 7.22% the week prior.

Europe and Asia

We had the service sector PMIs for the eurozone this week, courtesy of S&P Global and HCOB, and business activity expanded at its fastest pace in almost a year, 53.3 (50 the dividing line between growth and contraction) as a resurgence in the bloc’s dominant services industry more than offset a downturn in manufacturing.

Germany 53.2, France 51.3, Italy 54.3, Spain 56.2, Ireland 53.3. [UK 55.0]

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

“This looks pretty nice. Service providers have now expanded their activity for the third consecutive month, putting an end to the lack of dynamism observed in the second half of last year.  Encouragingly, employment has increased at a faster rate, aligning with the uptick in new business and the growth of the order book, which has seen its strongest expansion in eleven months. These trends suggest a growing optimism among service providers, a sentiment further bolstered by business expectations, which are currently at much higher levels compared to the average of the past two years.”

The good doctor also noted that Spain is “capitalizing disproportionately on tourism.”

Be forewarned if you are traveling there this summer.  I have seen many reports that the locals are getting rather furious with the hordes, particularly in Barcelona.

March retail sales in the euro area were up by 0.7% compared with February, and also up 0.7% from March 2023.

Industrial producer prices in March for the EA20 decreased by 0.4% over the month prior, and decreased by 7.8% year-over-year.  [These last two items courtesy of Eurostat.]

Britain: The Bank of England elected to hold interest rates steady at 5.25% at its latest policy meeting, Thursday.

But in his remarks after the vote, Governor Andrew Bailey gave the clearest indication yet that a rate cut is coming soon, saying one is likely “over the coming quarters” and we could see “possibly more” easing “than currently priced into market rates.”

And then today, Friday, the Office for National Statistics said GDP increased 0.6% in the first quarter, after shrinking in the prior two quarters at the end of last year, constituting a recession, though a shallow one.

Separately, London Mayor Sadiq Khan was re-elected in an election over the weekend, helping to cement the Labour Party’s commanding lead over the governing Conservatives in local elections ahead of Britain’s national vote later this year.  Khan’s victory was his third in a row.

Germany: The country has been dealing with a rise in political violence that given Germany’s history is more than a bit disturbing.  German Interior Minister Nancy Faeser on Saturday vowed to fight a surge in violence against politicians after a German member of the European Parliament had to be taken to hospital after being attacked while campaigning for re-election.

Matthias Ecke, 41, a member of Faeser’s Social Democrats (SPD), was hit and kicked by a group of four people while putting up posters in Dresden, capital of the eastern state of Saxony, police said.

Shortly before, what appeared to be the same group attacked a campaigner for the Greens, who was also putting up posters.

“The constitutional state must and will respond to this with tough action, and further protective measures for the democratic forces in our country,” Faeser said in a statement.

The BfV domestic intelligence agency says far-right extremism is the biggest threat to German democracy.  A surge in support for the far-right Alternative for Germany (AfD) over the past year has taken it to second place in nationwide polls.  The AfD is particularly strong in Saxony and elsewhere in the east (think East Germany).

A few days later, Franziska Giffey, a well know figure in the SPD was hit on the head and neck with a bag “filled with hard contents,” police said, briefly requiring hospitalization.  Giffey was in a local library.

Turning to Asia....

--Chinese President Xi Jinping was in Europe for the first time in five years this week, and at the start French President Emmanuel Macron and EU Commission chief Ursula von der Leyen urged China to ensure more balanced trade, at a time of growing business tensions that include the European Union investigating Chinese industries such as electric vehicle exports, while Beijing probes mostly French-made brandy imports.

Von der Leyen was blunt, saying the relationship was hurt by unequal market access and Chinese state subsidies.  After the meeting she told reporters that the EU “cannot absorb massive over-production of Chinese industrial goods flooding its market... Europe will not waver from making tough decisions needed to protect its market.”

U.S. Treasury Secretary Janet Yellen has warned China that Washington would not accept new industries being “decimated” by Chinese imports.

Xi said he viewed relations with Europe as a priority of China’s foreign policy and that both should stay committed to the partnership.

But the EU’s 27 members – in particular France and Germany – are not unified in their attitude towards China. While Macron advocates a tougher line on the electric vehicle probe, Berlin wants to proceed with more caution, according to reports, and German Chancellor Olaf Scholz did not join Macron and Von der Leyen in Paris.

On the Ukraine front, President Macron said he told Xi, “Without security for Ukraine there can be no security for Europe.”  Ursula von der Leyen said she requested China “use all its influence on Russia to end its war of aggression against Ukraine.” She also singled out China’s “delivery of dual-use goods to Russia that find their way to the battlefield.”

“Given the existential nature of the threats stemming from this war for both Ukraine and Europe, this does affect EU-China relations,” von der Leyen told Xi.

Bux Xi tried to reject the negative associations with Russia, saying for example, “we oppose the crisis being used to cast responsibility on a third country, sully its image and incite a new cold war,” according to an account from the New York Times. China, he said, was “not at the origin of this crisis, nor a party to it, nor a participant.”

Starting a new cold war, however, is exactly what Xi is attempting to do, witness his trip to Hungary and Serbia, which is designed to help divide an increasingly fractious EU. 

Meanwhile, China’s commerce ministry on Wednesday condemned a U.S. decision to revoke licenses that had let companies ship chips to sanctioned Chinese telecoms equipment maker Huawei Technologies, calling the move a “typical practice of economic coercion.”

“The U.S. has generalized the concept of national security, politicized economic and trade issues, abused export control measures... China is firmly opposed to this,” a ministry spokesperson said in a statement.  China will take all necessary measures to safeguard the rights and interests of Chinese firms, the statement added.

And now according to reports, President Biden is set to announce new China tariffs as soon as next week targeting strategic sectors, including electric vehicles, batteries and solar equipment, according to Bloomberg.

On the data front this week...China’s private Caixin reading on the service sector in April came in at 52.5.

China’s April exports rose 1.5% from a year earlier, compared to a 7.5% decline in March.

China’s exports to the U.S. dropped by 2.8%, while its shipments to the European Union fell by 3.6%.  But they rose 4% to Taiwan and 8.1% to the Association of Southeast Asian Nations (ASEAN).

Imports were up 8.4% year-over-year, vs. a 1.9% fall the month prior.

Japan’s service sector reading for April was a solid 54.3 vs. 54.1 prior.

March household spending, a big metric here (like our retail sales), was down 1.2% year-over-year.

Street Bytes

--Stocks had another strong week, driven by absolutely nothing that stands out in the mind of yours truly (Seinfeldesque).  The Dow Jones rose 2.2% to 39512; the S&P 500 1.9%, to within 32 points of its all-time closing high of 5254; and Nasdaq up 1.1%.

Euro stocks hit new highs, with the Stoxx Europe 600 (their equivalent of our S&P 500) up 3% on the week.  Here, it’s about a seemingly firming economy and imminent rate cuts.

--U.S. Treasury Yields

6-mo. 5.38%  2-yr. 4.87%  10-yr. 4.50%  30-yr. 4.65%

Befitting a week lacking any market-moving economic data, yields were basically unchanged on the week, though the 2-year yield rose from last week’s 4.80%. 

But next week’s inflation data will be market moving.  Just which way is to be determined.

--Shipping giant Maersk said Monday that disruption to Red Sea container shipping is rising, forecasting this will cut the industry’s capacity between Asia and Europe by up to 20% in the second quarter.

Maersk and other shipping companies have diverted vessels around Africa’s Cape of Good Hope since December to avoid attacks by Iran-aligned Houthi militants in the Red Sea, with the longer voyage times pushing freight rates higher.

“The risk zone has expanded, and attacks are reaching further offshore,” Denmark’s Maersk said. “This has forced our vessels to lengthen their journey further, resulting in additional time and costs to get your cargo to its destination for the time being,” it added in an updated advisory to customers.

Maersk’s fuel costs on the affected routes between Asia and Europe are now 40% higher per journey, a spokesperson said.

The company, long viewed as a barometer of world trade, forecast recently that disruptions would last at least until the end of 2024.

--Australia announced it will ramp up its extraction and use of gas until “2050 and beyond,” despite global calls to phase out fossil fuels.

Prime Minister Anthony Albanese’s government says the move is needed to shore up domestic energy supply while supporting a transition to net zero.

But critics argue the move is a rejection of science, pointing to the International Energy Agency call for “huge declines in the use of coal, oil and gas” to reach climate targets.

Australia – one of the world’s largest exporters of liquefied natural gas – has also said the policy is based on “its commitment to being a reliable trading partner.”

Currently gas accounts for 27% of the country’s existing energy needs.  But the bulk of what is produced domestically is exported to countries such as China, Japan, and South Korea.

Gas is responsible for roughly a quarter of Australia’s total emissions, according to government data.

Australia is of course Ground Zero for climate change.

--Spirit Airlines on Monday forecast a loss in the second quarter as its earnings continue to reel from the grounding of a number of its aircraft as well as bloated industry capacity in key markets.  Its shares fell 11%.

The ultra-low-cost carrier has been losing money despite booming travel demand, raising questions about its ability to manage debt that is due to mature in 2025 and 2026.  The company has said it has had “constructive” discussions with its bond holders and is aiming to have a resolution this summer.

Spirit is among the carriers hardest hit by a snag with RTX’s Pratt & Whitney Geared Turbofan engines, which is expected to ground around 40 of its aircraft this year. The situation is expected to worsen in 2025.  It is not only hurting its growth plans, but also leaving the airline overstaffed and driving up operating costs.

Spirit has announced plans to furlough up to 260 pilots in September and to roll out more measures to cut its costs by $100 million this year.  The airline is also discounting heavily to fill planes due to overcapacity in some markets.  It has exited a few cities in a bid to better align its capacity with supply and demand to protect its pricing power.  Yet it expects its total revenue per seat mile to be down 8% to 9.5% in the second quarter from a year ago.

--The Federal Aviation Administration said on Monday it has opened a new investigation into the Boeing 787 Dreamliner after the planemaker told the regulator last month it may not have completed required inspections. The FAA said it is investigating whether Boeing completed the inspections to confirm adequate bonding and grounding where the wings join the fuselage on certain 787 Dreamliner airplanes “and whether company employees may have falsified aircraft records.”

As in this is yet another serious matter for Boeing.

--Boeing called off its first astronaut launch because of a valve problem on the rocket Monday night.  The two NASA test pilots had just strapped into Boeing’s Starliner capsule for a flight to the International Space Station when the countdown was halted, just two hours before the planned liftoff.

United Launch Alliance CEO Tory Bruno said an oxygen pressure-relief valve on the upper stage of the company’s Atlas rocket started fluttering open and close, creating a loud buzz.

Bruno said similar valve trouble had occurred in years past on a few other Atlas rockets launching satellites. It was quickly resolved by turning the troublesome valves off and back on.  But the company has stricter flight rules for astronaut flights, prohibiting valve recycling when a crew is on board.

It was back in 2014 that NASA, through its Commercial Crew Program, awarded a $4.2 billion contract to Boeing to build and operate a spacecraft to service the space station, while rival SpaceX received $2.6 billion to do the same.

Since 2020, SpaceX completed its crewed test flight and has ferried eight operations crews to the base – while Boeing has managed only two unmanned flights, including one that docked remotely in May of last year.

--TSA checkpoint numbers vs. 2023

5/9...107 percent of 2023 levels
5/8...108
5/7...107
5/6...107
5/5...104
5/4...106
5/3...107
5/2...105

--Walt Disney shares plunged 10% on Tuesday even after the company actually reported that its streaming entertainment unit posted its first profit, two quarters ahead of schedule, and the media conglomerate raised its annual earnings per share outlook as it said turnaround efforts were yielding results.

For January through March, the direct-to-consumer entertainment division – which includes the Disney+ and Hulu streaming services – reported operating income of $47 million, compared with a loss of $587 million a year earlier.  But the combined streaming business with ESPN+ lost $18 million.  The division lost $659 million in the prior year.

Disney now expects adjusted earnings per share to rise by 25% this fiscal year, the company said, up from the 20% it previously forecast.  It attributed the change to strong results at theme parks and improvements in the streaming business. Disney had promised Wall Street that the streaming operation would become profitable by September.

The division had been losing money since Disney+ debuted in 2019 in the company’s rush to compete with Netflix.

“Our strong performance this past quarter demonstrates we have turned the corner and entered a new era for our company,” CEO Bob Iger said in a statement.  “The steps we are taking today lend themselves to solidifying Disney’s place as the preeminent creator of global content,” he added.

Iger, who came out of retirement to revamp Disney in November 2022, instituted cost cuts that are expected to reach at least $7.5 billion by the end of September.  He also unveiled a 10-year, $60 billion investment in theme parks and announced plans for a stand-alone ESPN streaming app, among other efforts.

The combined steaming unit should generate a fiscal fourth-quarter profit and become a “meaningful future growth driver for the company, with further improvements in profitability for fiscal 2025,” Disney said in its earning statement.

During the second quarter, the company posted adjusted earnings of $1.21, ahead of consensus of $1.10.  Quarterly revenue rose to $22.1 billion, in line with analysts’ forecasts.  The company’s experiences division, which includes the Disney theme parks around the world, reported operating income of $2.3 billion, a 12% increase from a year earlier.

At Disney’s entertainment segment, the home of the traditional TV business, streaming and film, operating income rose 72% from a year earlier to $781 million.  The sports unit that includes ESPN saw operating income decline by 2% to $778 million, which it attributed to the timing of college football playoff games.

However, revenue from the traditional television business declined 8% to $2.77 billion and operating profit fell 22% from a year ago.  That decline reflected lower ad revenue and the impact of Disney’s new TV distribution deal with Charter Communications, as the second-largest cable TV and broadband company dropped eight of Disney’s cable networks.

And guidance for its streaming division left investors disappointed.  CFO Hugh Johnston said on the earnings call, “the path to long-term profitability (in streaming) is not a linear one.  On that note, we are forecasting a loss for entertainment direct-to-consumer in the (fiscal) third quarter... We also do not expect to see core subscriber growth at Disney+ in the third quarter...”

A very confusing report, which confused the market.

--Toyota Motor forecast a 20% decline in profits in its current financial year on Wednesday, citing looming investment in both its suppliers and strategy after it delivered blockbuster fourth-quarter earnings.

Despite the leaner forecast, results from the world’s top-selling automaker smashed market expectations.  Operating profit surged 78% in the January-March quarter.  For the full year, Toyota saw a profit of $34.5 billion (5.35 trillion yen, the first time for a Japanese company to top 5 trillion yen, according to local media).

Toyota has been boosted by a weaker yen, and also cooling demand for electric vehicles in some markets, such as the United States, where more customers are embracing gas-electric hybrids, Toyota’s strength.

The Japanese automaker was long criticized for pursuing its “multi-pathway” strategy championing hybrids and plug-in hybrids as well as EVs, a stance that looks prescient given consumer concerns about EV driving range and the availability of charging stations.

--Arm Holdings’ U.S.-listed shares fell 8% at the open on Thursday after the British semiconductor manufacturer saw chip shipments drop 10% year-on-year during its fiscal fourth quarter.

The chipmaker expects revenue to be in the range of $3.8 billion to $4.1 billion for fiscal 2025, while consensus is at $3.97 billion. In the previous fiscal year, revenue jumped 21% to $3.23 billion.

Licensing revenue is forecast to continue to be “lumpy from period to period” for the year due to the “timing of revenue recognition,” CFO Jason Child said during an earnings call.

Arm said chips reported as shipped declined to 7 billion for the March quarter from 7.8 billion the year before.  Adjusted EPS jumped to $0.36 from $0.02, topping analysts’ $0.31 estimate.  Revenue surged 47% to $928 million, surpassing the Street’s view of $881.3 million.

--Microsoft unveiled a $3.3 billion artificial-intelligence investment focused on a new data center in southeastern Wisconsin, an announcement that drew a visit from President Biden to the critical battleground state.  The plan includes a training program for AI jobs in manufacturing, creating 2,300 union construction jobs, and eventually hiring 2,000 data-center workers.

Microsoft President Brad Smith said the company chose Wisconsin because it had the land for the data center, the energy to power it, and skilled laborers to build it.  The state last year passed a bill to exempt data-center builders from sales taxes for servers and other equipment-related sales costs.

The location of the new facility in Racine County, Wis., is where former President Trump in 2018 broke ground on a site where iPhone maker Foxconn planned a factory.

But Foxconn’s $10 billion site didn’t materialize, and the company scaled back its plans and is looking to create 1,454 jobs by 2025, down from the 13,000 pledged in 2017.  Microsoft bought the land intended for the Foxconn site last year for $50 million.

--Warren Buffett took the stage at Berkshire Hathaway’s annual meeting on Saturday, paying tribute to his longtime business partner Charlie Munger.  It was the 60th shareholder meeting for Buffett, 93, since he took over Berkshire in 1965.  He has largely stopped appearing publicly to discuss the company.  He told investors in November that he felt good but knew he was “playing in extra innings.”

“I have been in the position of having people I trust around me,” Buffett said on stage, who then referenced Munger.  “Charlie’s architectural thoughts led to the Berkshire Hathaway of today,” said Buffett on a video shown ahead of the meeting.  His design, he said, “lives beyond his lifetime and will live far beyond mine.”

Ahead of the meeting, Berkshire reported first-quarter earnings that showed that its cash pile grew to a record $189 billion at the end of the first quarter and Buffett said it’s fair to assume it will head to $200 billion this quarter.  “I don’t think anybody sitting at this table has any idea of how to use it effectively, and therefore we don’t use it,” he said at the meeting Saturday.

Not a great sign for the market overall, that a rather learned investor wouldn’t see any attractive opportunities, admitting he was happy building up that cash pile further, earning 5%.  Nothing wrong with that.

But one of the big takeaways was Buffett cutting his stake in Apple 13%, while also reiterating his long-term commitment to the company in front of CEO Tim Cook who was in attendance.  Buffett said “unless something dramatic happens,” it will have Apple as its largest investment.

Buffett added that Berkshire remains committed to the U.S.  “We will be American oriented,” he said. “If we do something really big it’s extremely likely it will be in the United States?”

Berkshire posted a record operating profit exceeding $11 billion, as its insurance operations benefited from improved underwriting and higher income from investments as interest rates rose.

--Customers of the failed cryptocurrency exchange FTX are poised to recover all of the money they lost when the firm collapsed in 2022 and receive interest on top of it, the company’s bankruptcy lawyers said on Tuesday.

The landmark announcement refers to the $8 billion in customer assets that disappeared when FTX imploded virtually overnight, setting off a crisis in the crypto industry.

Hundreds of thousands of ordinary investors used the exchange to buy and sell cryptocurrencies, and now they will receive cash payments equivalent to 118 percent of the assets they had stored on FTX, the lawyers said.

But there is a big caveat.  The amount owed customers is based on the value of their holdings when FTX went under in November 2022.  At the time, Bitcoin was about $20,000.  And today it’s worth more than $60,000.

FTX founder and CEO Sam Bankman-Fried was later convicted of a sweeping fraud and sentenced to 25 years in prison in March.

Credit goes to John J. Ray III, a veteran of corporate turnarounds who oversaw the recovery effort, tracking down the missing assets.

--Shares of meatpacking giant Tyson Foods plunged more than 9% on Monday – the stock’s worst day since August – after the company said persistent inflation weakened consumer appetites for beef, pork and chicken purchases, biting into profits in the second quarter.

At grocery stores, shoppers are prioritizing essential kitchen staples over discretionary categories thanks to persistent inflation that’s kept interest rates at their highest level in more than two decades, said Melanie Bouldin, who heads Tyson’s prepared foods business.

“The consumer is under pressure, especially the lower-income households,” Boulden said on an earnings call.

The company is likely to deliver less profits in the second half of the current fiscal year than in the first.  Boulden said a 20% cumulative inflation over the past three years has contributed to create a “more cautious, price-sensitive consumer” in retail.

The gloomier outlook eclipsed Tyson’s better-than-forecast fiscal second-quarter results.  Adjusted net income in the three months ended March 30 was 62 cents a share, reversing a loss of 4 cents a year earlier.

The earnings rebound was mostly driven by the chicken business, Tyson citing measures to streamline its operations, including the shutdown of six poultry facilities last year, which played a key role in restoring profitability.  But the beef unit posted a loss of $34 million as higher cattle costs more than offset improved volumes and prices.

--Members of the United Auto Workers on Saturday ratified a new labor contract with Daimler Truck that includes at least a 25% general wage increase over the four-year deal.  The vote was 94.5% in favor  of the new contract, which covers more than 7,300 hourly UAW workers after a tentative agreement was reached in late April, averting a strike.

The contract covers hourly workers at six facilities in southern states where unionization has traditionally been low, including four factories in North Carolina and parts warehouses in Georgia and Tennessee.  In less than two weeks, workers at a Mercedes assembly plant in Alabama will decide on whether to join the UAW.

UAW President Shawn Fain said the pay hike matched what workers at the Detroit Three received in talks last fall.

--TikTok and its Chinese parent company ByteDance are suing the U.S. over a law that would ban the video-sharing app unless it’s sold to another company, arguing that it violates the First Amendment.

This was widely expected and sets up a long legal fight over TikTok’s future in the U.S.

“Congress has taken the unprecedented step of expressly singling out and banning TikTok: a vibrant online forum for protested speech and expression used by 170 million Americans to create, share, and view videos over the internet,” ByteDance said in its suit.  “For the first time in history, Congress has enacted a law that subjects a single, named speech platform to a permanent, nationwide ban, and bars every American from participating in a unique online community with more than 1 billion people worldwide.”

The law requires ByteDance to sell the platform within nine months. If a sale is already in progress, the company will get another three months to complete the deal.  ByteDance has said it “doesn’t have any plan to sell TikTok.”  But even if it wanted to divest, the company would have to get a blessing from Beijing, which has signaled its opposition.

--I was reading a report on Manhattan office real estate by Aaron Elstein of Crain’s New York Business and the views of Steven Roth, who has more than 50 years of experience in the sector and as head of Vornado Realty Trust is Manhattan’s second-largest commercial landlord.

In his annual letter to shareholders last week, Roth described 245 million of New York’s 422 million square feet of office space as “old, tired, obsolete, and well past their sell-by date.”

--With the Chinese economy facing massive challenges, tourism was held out as a savior.

Last week’s five-day public holiday to mark Labour Day saw 295 million trips made within China, according to figures from the Ministry of Culture and Tourism.  This was 28% higher than pre-pandemic figures recorded in 2019.

However, international tourism continues to lag, with foreigners currently entering China at barely 30% of 2019 levels.

--Gold has been on a roll in no small part due to Chinese buying, specifically consumers have flocked to gold as their confidence in traditional investments like real estate or stocks has faltered.  At the same time the nation’s central bank has steadily added to its gold reserves, while whittling away at its holdings of U.S. debt.

--We note the passing of Herbert Hunt, 95.  It was in 1980 that Herbert and his brother Bunker (Nelson Bunker Hunt) tried to corner the silver market when what had been an incredibly lucrative trade turned on them, they went bankrupt, and they were the subject of federal investigations and banned from trading commodities, as well as being the inspiration for Eddie Murphy’s movie “Trading Places.”

Herbert and Bunker were two of H.L. Hunt’s sons, he being a Texas oilman who turned poker winnings into one of the world’s largest fortunes.  The third son, Lamar, helped create the American Football League, founded the Kansas City Chiefs and coined the name Super Bowl. [There was a fourth brother, Hassie.  And years later the brothers and their two sisters found out their father had two other families and many other children!]

After college, Herbert went into the oil-and-gas business, and then in the early 1970s, the brothers began buying silver.  All was good when reports came out that the Hunts and their partners controlled up to two-thirds of a year’s supply of silver as the price rose from $11 an ounce to $50 between September 1979 and January 1980, but when the price tanked back to about $11 on March 27, “Silver Thursday,” the brothers were left facing their creditors, brokerage houses and federal regulators. [Wall Street Journal]

I have a terrific piece on the Hunt Brothers and the Silver Crisis in my Wall Street History archives.  [One of the columns was part of a ‘server transition’ for my site that led to some gremlins in the column, such as missing apostrophes, so I apologize for that.]

Herbert Hunt rebuilt his fortune in oil, gas and real estate and at the time of death, Forbes estimated his net worth to be north of $5 billion.

Foreign Affairs, Part II

China: China said on Tuesday its military took steps to warn and alert an Australian aircraft after Australia blamed a Chinese fighter jet for endangering one of its military helicopters during an “unsafe” confrontation over the Yellow Sea.

Australian Defense Minister Richard Marles said the Chinese air force J-10 jet dropped flares above and ahead of an Australian MH60R Seahawk helicopter on a routine flight on Saturday.  The helicopter was part of an operation to enforce sanctions against North Korea.  Prime Minister Anthony Albanese said it was “unacceptable” for Australian defense personnel to be put at risk in international airspace.

China’s foreign ministry said the Australian aircraft deliberately flew near China’s airspace “in a provocative move” that endangered maritime air security.

Give me a freakin’ break.

--China’s launch last weekend of a mission to collect samples from the moon’s far side has been hailed for its potential for a scientific breakthrough.

But in the U.S., lawmakers and NASA are closely watching the expedition with trepidation: as a milestone in a rival’s campaign to build a base on the moon’s most strategic location.

The lunar territory that both the U.S. and China covet is the south pole. It contains resources that could sustain a crewed base, so supplies wouldn’t have to be brought from Earth. It has ice, which can be turned into water and oxygen for humans, and into hydrogen for rocket fuel. Some south-pole regions enjoy round-the-clock sunlight, a potential source of solar power.

“My concern is if China got there first and suddenly said, ‘OK, this is our territory.  You stay out,’” NASA Administrator Bill Nelson told a congressional hearing last month.  Nelson said China’s aggressive territorial claims in the South China Sea offer a clue as to how Beijing would handle a potential lunar dispute.

A crater near the south pole is the destination of the 53-day mission, aiming to do something no country has done before: collect samples from the moon’s far side and bring them to Earth.

The success of this mission will determine whether China can hit its goal of putting astronauts on the moon by the end of this decade.  Sample-return missions follow the “exact same steps that any human mission to the moon will go through,” said James Head III, a Brown University professor who worked on NASA’s Apollo program and has worked with Chinese scientists on studying the mission’s landing zone.  “There’s a lot of practicing going on here.”  [Wall Street Journal]

--Here was some good news.  Taiwan’s major pilgrimages for Mazu – the goddess of the sea – attracted record numbers of participants.  It seems many were young people who want to keep old traditions alive.  Good for them!

Chris Buckley, a reporter for the New York Times, observed from Taipei: “They’re proud of their culture. They’re proud of being Taiwanese.  And so what you find is this pilgrimage that might start as a sort of social event or cultural tourism can actually take on a deeper meaning for a good number of the people.”

India: As India continues with its interminable election, seven rounds which began April 19 and ends June 1, Prime Minister Narendra Modi has increased his anti-Muslim rhetoric in an effort to attract Hindu voters.

At recent gatherings across the country, Modi has claimed that an opposition victory would result in it “seizing” wealth and land from India’s majority Hindu community and surrendering it to the country’s 200-odd million minority Muslim population.

Hindus comprise 80 percent of India’s population of about 1.4 billion, while Muslims form round 15 percent.

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 10)...same split as last week.

--A new ABC News/Ipsos national survey of 2,200 adults has Donald Trump at 46%, Joe Biden 44%.  Among registered voters, it’s Biden 46%, Trump 45%. Among likely voters, it’s Biden 49%, Trump 45%.  Ergo, basically a tie all around.

If it is a five-way contest, Trump receives 42%, Biden 40%, and Robert F. Kennedy Jr. 12% (2% for Cornel West and 1% for Jill Stein).  [But that assumes RFK, West and Stein are on the ballot in all states, an open question, though Stein should be.]  Among registered voters in the five-way race, it’s 42%-42%, Biden-Trump.

Kennedy gets 12% even though 77% of his supporters say they know “just some” or “hardly anything” about his positions on the issues. But his supporters are more apt to be GOP-leaning independents (54%) than Democrats and Democratic leaners (42%).  And in a two-way race, they favor Trump over Biden by 13 points.  Which may explain why Trump has been attacking Kennedy recently as a stalking horse in various social media posts.

The real question, ABC News is asking, is why Biden is competitive at all, given his job approval is just 35%, with 57% disapproving.  Forty-three percent say they’ve gotten worse off financially under his presidency.  An overwhelming 81% say he’s too old for another term.  [Fifty-five percent say the same about Trump.]

And Trump has huge leads in the three most0cited issues in importance – the economy (Trump up 14 points); inflation (also 14 points); and crime and safety, 8 points.

Further, Biden’s support among Hispanics and Blacks is cratering.

But, among independents, the two are essentially even, 42 to 40 percent.

--A Quinnipiac University poll of registered voters in Wisconsin released this week has President Biden with a 50-44 lead over Donald Trump in a head-to-head.

In a five-man race, Biden receives 40%, Trump 39%, Robert F. Kennedy Jr. 12%, Jill Stein 4% and Cornel West 1%.

--The House overwhelmingly voted to kill a move by Republican hard-liners aimed at removing Speaker Mike Johnson (R-La.), saving the leader of an unruly House six months after GOP lawmakers ousted his predecessor, Kevin McCarthy.

Only 11 Republicans opposed the move to “table” a measure by Rep. Marjorie Taylor Greene, while 196 Republicans embraced keeping Johnson in the speaker’s job.  The overall vote was 359-43, with seven Democratic lawmakers voting present.

All 11 Republicans who supported Greene’s push to consider ousting Johnson were members of the House Freedom Caucus.

--Stormy Daniels took the stand in Donald Trump’s hush-money trial and described in detail her encounter with Trump, including having sex after he invited her to dinner in his Lake Tahoe hotel suite following a golf tournament in 2006.  That night, she said, Mr. Trump dangled an appearance on “The Apprentice” in front of her and told her not to worry about the fact that he was married.

Daniels received $130,000 from Trump’s personal lawyer, Michael Cohen, just before the 2016 election to bury her account of the encounter and that’s why we’re here; Cohen (who has yet to testify) still the key, not necessarily Daniels.

But Trump’s defense team attempted to shred Stormy’s story and her credibility.  During the second day of cross-examination, Susan Necheles, Trump’s lawyer, suggested that Daniels, because of her career in porn, had a lot of experience with “phony stories about sex.”

Daniels shot back, “The sex in the films is very real, just like what happened to me in that room.”

Editorial / Wall Street Journal

“After three weeks of witnesses, Manhattan District Attorney Alvin Bragg still hasn’t come close to making his case.  Prosecutors need to prove, beyond a reasonable doubt, that Mr. Trump falsified business records, and that he did so with intent to commit or cover up a second crime. Did Mr. Trump conceive that the Stormy payoff was an illegal campaign donation, or that the repayment to (Michael) Cohen was tax fraud.”

It’s all about the looming Cohen testimony, apparently Monday, and he has more than a few issues to deal with, namely he is highly unlikable, and a convicted liar.

The focus on this trial, though, is largely because it is the only one that will get to court before election day.

As the Journal points out:

“The Jan. 6 case brought by special counsel Jack Smith against Mr. Trump is hung up at the Supreme Court over presidential immunity.  On Tuesday federal judge Aileen Cannon indefinitely postponed Mr. Trump’s trial for keeping classified files amid disputes over prosecutorial conduct. District Attorney Fani Willis has messed up the Georgia case to a fare-thee-well.”

--After weeks of student protests, Columbia University announced Monday that it would be canceling its main commencement ceremony, and holding smaller ceremonies for each of its 19 colleges, mostly as its athletics complex some 100 blocks north.

The university’s main campus has been in a state of near lockdown since a week ago Tuesday, when hundreds of NYPD swarmed Hamilton Hall to remove some 46 pro-Palestinian protesters who had occupied the building and arrested more than 100 protesting in and around the campus.

Nemat Shafik, Columbia’s president, had previously cited her desire to host the graduation on campus as one of the key reasons that she called in the police on April 30 to remove both the occupiers from Hamilton Hall and the large tent encampment that had taken over a central lawn for two weeks.

--I was reading an extensive piece in the Washington Post on college protests and I liked this quote from Robert Cohen, a history professor at New York University who has spent decades studying student activism.

“There has been an erosion of democratic values and a rising political tribalism that I think is extremely dangerous,” he said.  “The way politics is functioning now is so unhealthy that almost anything can happen.  Even the Taylor Swift romance gets spun as some conspiracy – and that’s a really bad place.”

Cohen added that a tendency to demonize those one disagrees with is one of the more frightening features of this moment.

--In a Bloomberg interview last weekend, former Harvard University President (and U.S. Treasury Secretary) Larry Summers renewed his criticism of college protests stemming from Israel’s war against Hamas, saying the chaotic scenes were encouraging U.S. adversaries; a terrible signal to countries such as Russia, China, Iran and North Korea at the “most dangerous geopolitical moment” in decades, Summers said.

“It seems to me that anybody sitting in one of those countries has to be taking great encouragement from the spectacle that is being made by our young future elites on so many of our leading college campuses, and even more by the craven responses that are typifying university leaderships,” Summers said.

Summers has been outspoken in chiding schools for failing to stamp out antisemitic behavior on campus, and he renewed that line of criticism in his interview with Bloomberg’s David Westin.

“I predicted that given the craven weakness they showed in the wake of Oct. 7 that come the spring, which is always protest time on college campuses, there would be a massive and ugly disruption,” Summers said. “And that’s what it’s been.”

--But then there is former Nebraska Senator Ben Sasse, a favorite of mine, now the president at the University of Florida.

In an Op-Ed for the Wall Street Journal, Sasse opined on the current campus situation:

“Higher education has for years faced a slow-burning crisis of public trust.  Mob rule at some of America’s most prestigious universities in recent weeks has thrown gasoline on the fire.  Pro-Hamas agitators have fought police, barricaded themselves in university buildings, shut down classes, forced commencement cancellations, and physically impeded Jewish students from attending lectures.

“Parents are rightly furious at the asinine entitlements of these activists and the embarrassing timidity of many college administrators.  One parent put it bluntly:

“ ‘Why the hell should anybody spend their money to send their kid to college?’  Employers watching this fiasco are asking the same question.

“At the University of Florida, we tell parents and future employers: We’re not perfect, but the adults are still in charge.  Our response to a threat to build encampments is driven by three basic truths.

“First, universities must distinguish between speech and action. Speech is central to education. We’re in the business of discovering knowledge and then passing it, both newly learned and time-tested, to the next generation.  To do that, we need to foster an environment of free thought in which ideas can be picked apart and put back together, again and again. The heckler gets no veto. The best arguments deserve the best counterarguments.

“To cherish the First Amendment rights of speech and assembly, we draw a hard line at unlawful action.  Speech isn’t violence. Silence isn’t violence. Violence is violence... Throwing fists, storming buildings, vandalizing property, spitting on cops and hijacking a university aren’t speech.

“Second, universities must say what they mean and then do what they say.  Empty threats make everything worse.  Any parent who has endured a 2-year-old’s tantrum gets this.  You can’t say, ‘Don’t make me come up there’ if you aren’t willing to walk up the stairs and enforce the rules... In the same way, universities make things worse with halfhearted appeals to abide by existing policies and then immediately negotiating with 20-year-old toddlers....

“At the University of Florida, we have repeatedly, patiently explained two things to protesters: We will always defend your rights to free speech and free assembly – but if you cross the line on clearly prohibited activities, you will be thrown off campus and suspended.  In Gainesville, that means a three-year prohibition from campus. That’s serious.  We said it. We meant it.  We enforced it... We’re a university, not a daycare. We don’t coddle emotions, we wrestle with ideas.

“Third, universities need to recommit themselves to real education. Rather than engage a wide range of ideas with curiosity and intellectual humility, many academic disciplines have capitulated to a dogmatic view of identity politics....

“Universities have an obligation to combat this ignorance with ignorance with rigorous teaching.  Life-changing education explores alternatives, teaches the messiness of history, and questions every truth claim. Knowledge depends on healthy self-doubt and a humble willingness to question self-certainties....

“The insurrectionists who storm administration buildings, the antisemites who punch Jews, and the entitled activists who seek attention aren’t persuading anyone.  Nor are they appealing to anyone’s better angels. Their tactics are naked threats to the mission of higher education....

“Martin Luther King Jr., America’s greatest philosopher, countered the nation’s original sin of racism by sharpening the best arguments across millennia. To win hearts, he offered hope that love could overcome injustice.

“King’s approach couldn’t be more different from the abhorrent violence and destruction on display across the country’s campuses.  He showed us a way protest can persuade rather than intimidate.  We ought to model that for our students.  We do that by recommitting to the fundamentals of free speech, consequences and genuine education. Americans get this. We want to believe in the power of education as a way to elevate human dignity.  It’s time for universities to do their jobs again.”

--In 2010, Robert F. Kennedy Jr. was experiencing memory loss and mental fogginess so severe that a friend grew concerned he might have a brain tumor.  Kennedy said he consulted several of the country’s top neurologists, many of whom had treated uncle Senator Ted Kennedy before his death the previous year of brain cancer.

Several doctors noticed a dark spot on RFK Jr.’s brain scans and concluded he had a tumor, he said in a 2012 deposition reviewed by the New York Times.  Kennedy then had a procedure at Duke University Medical Center by the same surgeon who had operated on his uncle.

But when packing for a trip, according to the story that emerged Wednesday, RFK Jr. received a call from a doctor at New York-Presbyterian Hospital who had a different opinion: Kennedy, he believed, had a dead parasite in his head, “caused by a worm that got into my brain and ate a portion of it and then died,” Kennedy said in the deposition.

So, a lot of people were laughing at this, but, hell, while I have never been an RFK Jr. fan, I can see this happening.  Anyone that swims a lot in lakes and rivers/ponds with any kind of stagnant water (or has traveled to Southeast Asia like RFK Jr. has) should know you can get an amoeba into your system.  There have been a ton of stories here in New Jersey on the risks in swimming in some of our lakes, for example.  [Specifically, the danger is from ‘naegleria fowleri,’ often fatal.]

--My neighbors in my building, who I’ve known for nearly 30 years, just returned from their ninth or tenth trip to Paris, spending two weeks there (normally they travel all over the country, but this time stayed put), and they told me the other day, their observation is that Paris is in no way prepared for the Olympics, including security.  The locals are also fuming over all the road closures, which in Michael and Angela’s case resulted in outrageously expensive cab rides because of all the detours.

As in, if you’re going, be prepared.  It might not be a Monet...it could be Picasso’s Guernica.

[I truly pray the Games go off without a major hitch...I want to see the world’s best battle it out for Gold, especially on the track.]

--The Boy Scouts of America is changing its name for the first time in its 114-year history and will become Scouting America, as the organization emerges from bankruptcy following a flood of sexual abuse claims and seeks to focus on inclusion.

The organization began allowing gay youth in 2013 and ended a blanket ban on gay adult leaders in 2015. In 2017, it made the historic announcement that girls would be accepted as Cub Scouts as of 2018 and into the flagship Boy Scout program- renamed Scouts BSA – in 2019.

--The death toll from heavy rains that have caused massive flooding in Brazil’s southern state of Rio Grande do Sul has risen to at least 107, with more than 165,000 displaced.  At least 136 people are still missing as of Thursday’s report from Governor Eduardo Leite, as the initial estimates on the cost to rebuild climb towards $4 billion.

“The effect of the floods and the extent of the tragedy are devastating,” he said on social media.

--As of late this week, the number of people killed by flooding and other impacts of the heavy rains battering Kenya had risen to 238, the government reported, with 235,000 displaced and living in camps.  The flooding and landslides are forecast to worsen this month.

Homes, roads, bridges and other infrastructure have been destroyed across east Africa’s largest economy.

--And you saw the awful flooding in the Houston, Texas, area, last week following nearly two feet of rain over a five-day period, as well as this week’s ongoing tornado fury, that largely decimated some small towns that are quickly forgotten but shouldn’t be.

--A rare late season storm dumped nearly 2 feet of snow on some regions of Northern California last weekend, breaking at least one daily snowfall record.

The storm dropped 31 inches of snow on Lower Lassen peak, 26 inches at Palisades Summit and 22 inches at Soda Springs Ski Resort, according to the National Weather Service’s Sacramento office.

The UC Berkely Central Sierra Snow Laboratory at Donner Summit recorded 26.4 inches in a 24-hour period on May 5, making it the “snowiest day of the season at the lab,” according to a social media post.  The last record was 23.8 inches on March 3.

California receives about 70% of its annual precipitation during the months of December, January and February.  Precip then drops off around April and beyond.

Palisades Tahoe in Olympic Valley saw its season total increase to 423 inches.

--The world just experienced its hottest April on record, extending an 11-month streak in which every month set a temperature record, the European Union’s Copernicus Climate Change Service said on Wednesday.

Each month since June 2023 has ranked as the planet’s hottest on record, compared with the corresponding month in previous years, the agency said in its monthly bulletin.

--Let’s hope this weekend’s geomagnetic storm behaves.  Certainly turn your computers off when not in use, and/or have good surge protectors.  But one of these days, of course, we’re screwed by this phenomenon.  Deep in my archives I have a column by Newt Gingrich, who was one of the first to warn about the potentially massive impacts.

--Finally, I was thinking this afternoon about who I really miss and who I’d like to hear from in these troubling times, both domestically and globally, and it’s Tim Russert, Christopher Hitchens, and Charles Krauthammer.

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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 $2369...good week, up about $60
Oil $78.38

Bitcoin: $60,700 [4:00 PM ET, Fri.]

Regular Gas: $3.63; Diesel: $3.95 [$3.53 / $4.04 yr. ago]

Returns for the week 5/6-5/10

Dow Jones  +2.2%  [39512]
S&P 500  +1.9%  [5222]
S&P MidCap  +2.2%
Russell 2000  +1.2%
Nasdaq  +1.1%  [16340]

Returns for the period 1/1/24-5/10/24

Dow Jones  +4.8%
S&P 500  +9.5%
S&P MidCap  +7.6%
Russell 2000  +1.6%
Nasdaq  +1.1% 

Bulls 50.0
Bears 18.7

Hang in there.

Happy Mother’s Day!

Brian Trumbore

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