Week in Review

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Week in Review

06/01/2024

For the week of 5/27-5/31

[Posted 4:30 PM ET, Friday]

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Edition 1,311

Donald Trump was convicted Thursday of falsifying records to cover up a sex scandal that threatened to derail his 2016 presidential campaign.  He is the first American president to be declared a felon.

After two days of deliberation, a jury of 12 New Yorkers found the former president guilty of all 34 felony charges.  The decision threatens to reverberate throughout the rest of the campaign.

Trump said after in the hallway, “this was a rigged, disgraceful trial.  The real verdict is going to be November 5th, by the people...I’m a very innocent man...I’m fighting for our country, I am fighting for our constitution...Our whole country is being rigged right now. This was done by the Biden administration, in order to wound or hurt an opponent, a political opponent, and I think it is just a disgrace, and we will keep fighting, we will fight to the end and we will win.”

Sentencing is slated for July 11...days before the Republican Convention.

Republican lawmakers reacted with immediate fury, with House Speaker Mike Johnson saying it was a “shameful day in American history” and the charges were “purely political.”  Ohio Sen. J.D. Vance said the verdict was a “disgrace to the judicial system.”  And Louisiana Rep. Steve Scalise, the No. 2 House Republican, said that the decision was “a defeat for Americans who believe in the critical legal tenet that justice is blind.”

A lone Republican voice, former Maryland Gov. Larry Hogan, said ahead of the verdict that the public should “respect the verdict and the legal process.”

“At this dangerously divided moment in our history, all leaders – regardless of party – must not pour fuel on the fire with more toxic partisanship,” posted Hogan, who is running for the Senate in Maryland.  “We must affirm what has made this nation great: the rule of law.”

Hogan was then excoriated by the Trump campaign and by MAGA Republicans through the usual outlets.

Trump raised over $35 million in the hours after the verdict, easily a record.  But some Trump supporters also flooded pro-Trump websites with calls for riots, revolution and violent retribution.

“Someone in NY with nothing to lose needs to take care of Merchan,” wrote one commentator on Patriots.Win, according to a review by Reuters.  “Hopefully he gets met with illegals with a machete.”

On Gateway Pundit, one poster suggested shooting liberals after the verdict. “Time to start capping some leftys,” said the post.  “This cannot be fixed by voting.”

This morning, Trump then was supposed to hold a press conference at Trump Tower, at least that was how it was advertised, only we saw the former president go off on an incoherent, disjointed airing of grievances, where he called Biden “fascist,” the country “fascist,” and spoke like a bumbling old fool.  And then he walked off without taking any questions.

What is one of my two guiding principles?  Wait 24 hours.  The polls taken before the verdict on whether it would impact their vote to me are useless.  But it’s going to be interesting what the polls say in about two weeks.

Trump’s legal team will have 30 days from the verdict to file notice of appeal and six months to file the full appeal.  Any appeals process would likely extend beyond Nov. 5, and it is plausible an appeals court would agree to stay Trump’s sentence until after the appeal is adjudicated.

As in this whole issue will die down a bit, in my opinion.  The fever will in some respects break.  But the judgment in New York further erodes confidence in our institutions, especially the judicial system.  I feel for the jurors, some of whom will no doubt be harassed.  All they did was do their job...nobly so.  Trump’s lawyers, on the other hand, did a poor one.

Importantly, assuming it still comes off as scheduled, the debate between Trump and Biden on CNN is in less than four weeks, June 27, and Biden’s performance will be critical for Democrats and their leadership in Washington.

I still believe you cannot discount the possibility that the Democratic National Convention in August will yield a different ticket.  No Democrat is going to want to be dragged down in their own race this fall.  If the debate goes off reasonably well for Biden, then such murmuring behind closed doors will die off.

Biden, in his first public remarks on the jury verdict, said this afternoon that it proved “no one is above the law” and called it “reckless” and “dangerous” for people to question the validity of the verdict and the U.S. criminal justice system.

Editorial / Wall Street Journal

“We don’t doubt the sincerity of the Manhattan jurors, but many voters will digest all of this and conclude that, while Mr. Trump may be a cad, this conviction isn’t disqualifying for a second term in the White House.  Judge Juan Merchan tolerated Mr. Bragg’s legal creativity in ways that an appeals court might not.  What if Mr. Trump loses the election and then is vindicated on appeal?  If Democrats think that too many Republicans today complain about stolen elections, imagine how many more might next year.

“The conviction sets a precedent of using legal cases, no matter how sketchy, to try to knock out political opponents, including former Presidents.  Mr. Trump has already vowed to return the favor. If Democrats felt like cheering Thursday when the guilty verdict was read, they should think again.  Mr. Bragg might have opened a new destabilizing era of American politics, and no one can say how it will end.”

Lastly, way back in 2000 and 2002, I went to Oklahoma to see the Jones (not their real name) who live in the Panhandle.  I met them through the Oklahoma Dept. of Agriculture and a local church in their area.  I was looking for someone to help who in turn could help me gain a better understanding of the farmer existence in a sometimes harsh area, which was the scene of some of the famous Dust Bowl photos.

Imagine this stranger from New Jersey appearing at this family’s door (they did know I was coming) and when we sat around the kitchen table in their very modest home, I plopped down a check.

When I went back two years later, their luck had changed...they were in a better place, Robert had more land for his farming, and then afterwards, Joan and I stayed in touch very frequently, especially through long letters at the holidays and occasional phone calls.

But we hadn’t communicated since about 2015, even though they were always on my mind, especially when I heard of tornadoes and drought in their area.

Last night I finally called them but got their answering machine.  I wanted to make sure they were OK after this spring’s awful storms, but I didn’t even know if the number was still theirs.

This morning, they called me back and it was terrific.  I learned their life has only gotten better.  They still farm, only one of their six kids helps out occasionally, the youngest is now 26, and Robert switched from dairy cows to cattle (they grow wheat and other crops as well) because it was easier.  As he reminded me, for a dairy farmer it’s up at 4:00 a.m. and back at 4:00 p.m., every day, 365.  [They had no bird flu issues, by the way.]

But the second thing they asked me was, “What did you think of the Trump trial verdict?”  Uh oh, I mused.  I wanted to stay out of politics.

When I told them I didn’t think this case should have been brought in the first place, Robert said he was really hoping for a different candidate this time.  I said I was hoping for different candidates on both sides...and wanted Nikki Haley.  As in, I needn’t have worried about the discussion.

But it told me, yesterday was a single moment in time with months to go, when it comes to the political choices of the small percentage that may remain undecided.  The Jones and I agreed we must do a better job of staying in touch...and thus far, no tornadoes through their community.  And I thank God for that.  They are the best of America...all the people out that way are.

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In keeping with the theme of today’s dangerous world, even though the masses are largely oblivious to same....

Sen. Roger Wicker (R, Miss.), ranking member of the U.S. Senate Armed Services Committee, in an op-ed for the New York Times:

“ ‘To be prepared for war,’ George Washington said, ‘is one of the most effectual means of preserving peace.’  President Ronald Reagan agreed with his forebear’s words, and peace through strength became a theme of his administration.  In the past four decades, the American arsenal helped secure that peace, but political neglect has led to its atrophy as other nations’ war machines have kicked into high gear.  Most Americans do not realize the specter of great power conflict has risen again.

“It is far past time to rebuild America’s military.  We can avoid war by preparing for it.

“When America’s senior military leaders testify before my colleagues and me on the U.S. Senate Armed Services Committee behind closed doors, they have said that we face some of the most dangerous global threat environments since World War II.  Then, they darken that already unsettling picture by explaining that our armed forces are at risk of being underequipped and outgunned.  We struggle to build and maintain ships, our fighter jet fleet is dangerously small* and our military infrastructure is outdated.  Meanwhile, America’s adversaries are growing their militaries and getting more aggressive.

*Speaking of fighter jets, we lost an F-35B test fighter jet, a developmental aircraft, in a crash in New Mexico this week, the pilot surviving, but it turns out there are very few such test jets for this new prototype.

“In China, the country’s leader Xi Jinping, has orchestrated a historic military modernization intended to exploit the U.S. military’s weaknesses.  He has overtaken the U.S. Navy in fleet size, built one of the world’s largest missile stockpiles and made big advances in space.  President Vladimir Putin of Russia has thrown Europe into war and mobilized his society for long-term conflict.  Iran and its proxy groups have escalated their shadow war against Israel and increased attacks on U.S. ships and soldiers. And North Korea has disregarded efforts toward arms control negotiations and moved toward wartime readiness.

“Worse yet, these governments are materially helping one another, cooperating in new ways to prevent an American-led 21st century.”

Sen. Wicker’s bottom line?  This week he published a plan including a detailed series of proposals, with the U.S. spending an additional $55 billion on the military in fiscal 2025 and growing spending from a projected 2.9 percent of GDP this year to 5 percent over the next five to seven years.

Wicker:

“Our ability to deter our adversaries can be regained because we have done it before. At the 50th anniversary of Pearl Harbor, in the twilight of the Soviet Union, George H.W. Bush reflected on the lessons of Pearl Harbor.  Though the conflict was long gone, it taught him an enduring lesson: ‘When it comes to national defense,’ he said, ‘finishing second means finishing last.’

“Regaining American strength will be expensive.  But fighting a war – and worse, losing one – is far more costly. We need to begin a national conversation today on how we achieve a peaceful, prosperous and American-led 21st century. The first step is a generational investment in the U.S. military.”

Bret Stephens, similarly opined in his weekly missive for the New York Times titled “Do We Still Understand How Wars Are Won?”

In part...on how we know how America fought wars that are existential...

“During the siege of Vicksburg in 1863, hunger ‘yielded to starvation as dogs, cats, and even rats vanished from the city,’ Ron Chernow noted in his biography of Ulysses Grant. The Union did not send food convoys to relieve the suffering of innocent Southerners.

“In World War II, Allied bombers killed an estimated 10,000 civilians in the Netherlands, 60,000 in France, 60,000 in Italy and hundreds of thousands of Germans.  All this was part of a declared Anglo-American policy to undermine ‘the morale of the German people to the point where their capacity for armed resistance is fatally weakened.’  We pursued an identical policy against Japan, where bombardment killed, according to some estimates, nearly one million civilians.

“Grant is on the $50 bill.  Franklin Roosevelt’s portrait hangs in the Oval Office. The bravery of the American bomber crews is celebrated in shows like Apple TV+’s ‘Masters of the Air.’  Nations, especially democracies, often have second thoughts about the means they use to win existential wars.  But they also tend to canonize leaders who, faced with the awful choice of evils that every war presents, nonetheless chose morally compromised victories over morally pure defeats.

“Today, Israel and Ukraine are engaged in the same kind of wars.  We know that not because they say so but because their enemies do. Vladimir Putin believes that the Ukrainian state is a fiction.  Hamas, Hezbollah and their patrons in Iran openly call for Israel to be wiped off the map.  In response, both countries want to fight aggressively, with the view that they can achieve security only by destroying their enemies’ capability and will to wage war.

“This often ends in tragedy, as it did on Sunday when an Israeli airstrike targeting Hamas leaders reportedly led to the deaths of at least 45 civilians in Rafah. This has always been the story of warfare.  Terms like ‘precision weapons’ can foster the notion that it’s possible for modern militaries to hit only intended targets.  But that’s a fantasy....

“It’s equally a fantasy to imagine that you can supply an ally like Ukraine with just enough weaponry of just the right kind to repel Russia’s attack but not so much as to provoke Russia into escalation.  Wars are not porridge; there’s almost never a Goldilocks approach to getting it just right.  Either you’re on the way to victory or on the way to defeat.

“Right now, the Biden administration is trying to restrain Israel and aid Ukraine while operating under both illusions. It is asking them to fight their wars in roughly the same way that the United States has fought its own wars in recent decades – with limited means, a limited stomach for what it takes to win and an eye on the possibility of a negotiated settlement....

“President Biden gave a moving Memorial Day speech at Arlington National Cemetery on Monday, honoring generations of soldiers who fought and fell ‘in battle between autocracy and democracy.’  But the tragedy of America’s recent battle history is that thousands of those soldiers died in wars we lacked the will to win.  They died for nothing, because Biden and other presidents belatedly decided we had better priorities.

“That’s a luxury that safe and powerful countries like the United States can afford.  Not so for Ukrainians and Israelis. The least we can do for them is understand that they have no voice to fight except in the way we once did – back when we knew what it takes to win.”

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A Harris-Guardian poll shows 49 percent of Americans think stocks have fallen in 2024, when in reality, the S&P 500 is up 10.6%, and about ten days from a record high.  Americans are so misinformed that almost half also believe unemployment is at 50-year highs when it is under 4 percent and near 50-year lows. 

More than half (56%) think the U.S. is in recession.

Republican supporters are especially likely (67%) to think this, but so do many Democrats (49%).

Ordinarily, when stocks do well, the incumbent in the White House tends to win. So, these poll numbers are yet another worrisome development for the Biden campaign.

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This Week in Ukraine

--Remember the attack in Kharkiv a week ago Thursday that killed seven at a printing press (house, as it is called there)?  It turns out this was the biggest printer in Ukraine, accounting for 40% of the country’s printing capacity and produced almost half of its educational textbooks.

The 70-year-old founder, Sergii Polituchyi, told Reuters, “This has wiped out my entire past life.  It has rendered all those years of mine and my team’s hard work meaningless.  It is not only printing and book production that are under threat...but the entire (publishing) industry.”

This is so sickening.

So last Saturday, it got worse.  A Russian strike on a crowded hardware store in Kharkiv killed 16 people and wounded dozens more.

The Kharkiv regional governor said there were no military facilities anywhere near both the printing house and the hardware store. 

Two guided bombs hit DIY hypermarket in a residential part of the city, causing a massive fire that took 16 hours to fully extinguish.  There were about 120 people in the store when it was hit, according to the mayor.

President Volodymyr Zelensky renewed his urgent call for more air defenses to keep the country’s cities safe, and for F-16 fighter aircraft “to strengthen our defenses against terrorist attacks on our cities and pressure from the Russian army on the front line.”

“This strike on Kharkiv is another manifestation of Russian madness.  Only madmen like Putin are capable of killing and terrorizing people in this way.”

A separate evening missile strike hit a residential building in the center of the city, wounding at least 25.

Just over the border, in Russia’s Belgorod region, the regional governor said four residents died in Ukrainian attacks on Saturday.

--Sunday, President Zelensky said that Moscow’s forces were massing for a new ground offensive on the northeast of his country.

“Russia is the only source of aggression and constantly tries to expand the war,” Zelensky said in a speech delivered in English inside the ruins of the above-noted printing house in Kharkiv.

“Russia is preparing for offensive actions,” around 60 miles northwest of Kharkiv, he said, adding that Moscow was gathering “another group of troops near our border,” offering no further details.

Moscow surprised Ukraine on May 10 when its troops poured across the northeastern border, forcing Kyiv to rush in reinforcements while Russia seized a number of villages close to the frontier.

One target for an assault could be the Sumy region northwest of Kharkiv.  Russia was forced to withdraw from the main city, also called Sumy, when it attempted to take it as part of the Feb. 2022 invasion.

Even a limited increase in Russian military activity near the border could stretch Ukrainian forces further along a wider front.

--Ukraine launched a missile attack on the Russian-held northeastern city of Luhansk on Monday, triggering a fire, the regional Russia-installed governor said, providing no information on casualties, though Tass news agency said there had been some.

Russia annexed the Luhansk region several months after the February 2022 invasion – along with three other regions – though it does not fully control any of them.

--Russian air defense units downed a drone outside Moscow on Monday, the Moscow Region Governor said.

--President Zelensky said on Tuesday that if President Biden misses a peace summit organized by Kyiv in Switzerland in June, it would be like a standing ovation for Vladimir Putin.

Ukraine hopes to host as many countries as possible in an attempt to unite opinion on how to halt the war and pile pressure on Russia, which has seized a fifth of Ukraine’s territory.

Washington has signaled support but has not said whether Biden will attend.

“I know that the U.S. supports the summit, but we don’t know at what level,” Zelensky said in Brussels on Monday.  Russia has said it sees no point in the conference.

--President Putin warned the West on Tuesday that NATO members in Europe were playing with fire by proposing to let Ukraine use Western weapons to strike deep inside Russia, which he said could trigger a global conflict.  More than two years into the deadliest land war in Europe since World War II, Putin has increasingly spoken of the risk of a much broader global conflict as the West grapples with what to do about the advance of Russian troops in Ukraine.

NATO Secretary General Jens Stoltenberg told The Economist that alliance members should let Ukraine strike deep into Russia with Western weapons, a view supported by some NATO members but not the Biden administration.

“Constant escalation can lead to serious consequences,” Putin told reporters in Tashkent. “If these serious consequences occur in Europe, how will the United States behave, bearing in mind our parity in the field of strategic weapons?... It’s hard to say – do they want a global conflict?”

French President Emmanuel Macron then said Ukrainian forces are allowed to use powerful cruise missiles supplied by France to strike inside Russia on the condition the weapons are only used to take out military sites that have fired on Ukraine.  But Macron appeared to stop short of acceding to President Zelensky’s broader push for permission to use Western arms to attack Russian troop positions and air bases inside Russia.

“We can see every point where Russian troops are concentrated. We know all areas from which Russian missiles are launched and combat aircraft take off,” Zelensky said earlier in the week.  Targeting these areas with Western weapons, he said, “is entirely a political decision. The decision that must be made.”

German Chancellor Olaf Scholz, standing next to Macron at a press conference, appeared to endorse Macron’s position.

“Ukraine has all options under international law to do what it’s doing,” Scholz said.  “It was attacked and it should be allowed to defend itself.”

But Germany has been afraid to give Ukraine its longest-range missile over concerns it would be used to target the Kerch bridge, which links the occupied Ukrainian peninsula of Crimea to the Russian mainland and is a vital supply route for Russian troops in southern Ukraine.

However, Berlin has sent Ukraine long-range, high-precision artillery munition that could reach deep inside Russia.

The West needs to give Ukraine the permission to hit troops massed on the border and air bases...period.

But this should have been granted long ago.

National Security Council spokesman John Kirby told a briefing on Tuesday that Washington was aware of Zelensky’s comments on the matter.  “I would tell you that there’s no change to our policy at this point. We don’t encourage or enable the use of U.S.-supplied weapons to strike Russia.”

“We do not want this to escalate in any form,” press secretary Karine Jean-Pierre told reporters at a White House briefing.

But Putin is blowing up Ukrainian shopping centers and printing houses.  Russia long ago escalated!

NATO Sec. Gen. Stoltenberg then said: “The time has come to consider whether it will be right to lift some of the restrictions which have been imposed because we see now that especially in the Kharkiv region, the front line and the borderline is more or less the same.”

The White House needs to listen to Danish Prime Minister Mette Frederiksen.  “It is Ukraine that is being attacked by Russia,” in allowing what Denmark has donated to Ukraine to be used on Russian targets.

Lithuanian Foreign Minister Gabrielius Landsbergis said on Monday: “The way to react to Russia’s aggression in Ukraine, and also in our countries, is to support Ukraine, is to allow Ukraine to use the weapons that they already have, the way that they need to use them.  That is how you manage escalation...this is how you stop Russia.”

Sec. of State Antony Blinken then suggested Wednesday that perhaps the administration could be open to tolerating strikes inside Russia using American-made weapons, saying the United States would “adapt and adjust” its stance based on changing conditions on the battlefield.

When asked by a reporter whether his words “adapt and adjust” meant the U.S. could support attacks by Ukraine with American-made weapons inside Russia, Blinken said, “Adapt and adjust means exactly that” – signaling flexibility.

The administration then decided to allow Ukraine to strike inside Russia with U.S.-made weapons with the aim of blunting Russia’s attacks in the Kharkiv area, senior officials said Thursday.

The permission from Biden is intended solely for Ukraine to strike military sites in Russia.

Friday, NATO Sec. Gen. Stoltenberg dismissed warnings by Vladimir Putin that allowing Kyiv to use Western weapons for strikes inside Russian territory might lead to an escalation.

“This is nothing new.  It has...been the case for a long time that every time NATO allies are providing support to Ukraine, President Putin is trying to threaten us to not do that,” he told reporters in Prague.  “And an escalation?  Well, Russia has escalated by invading another country.”

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Israel and Hamas

--Hamas launched missiles at Tel Aviv on Sunday, prompting sirens to sound in the Israeli city for the first time in four months as the militant group sought to show military strength despite Israel’s Gaza offensive.

The Israeli military (IDF) said eight projectiles were identified crossing from the area of Rafah, the southern tip of the Gaza Strip. Israel said a number of the projectiles were intercepted and there were no reports of casualties.

--An Israeli airstrike triggered a fire that killed 45 people in a tent camp in Rafah, officials said on Monday, prompting an outcry from global leaders who urged the implementation of a World Court order to halt Israel’s assault.  More than half of the dead were women and children, and the elderly, health officials said, and 250 wounded.

The strike Sunday night set tents and rickety metal shelters ablaze.  Israel’s military said it was investigating reports that the strike it carried out against commanders of Hamas had caused the fire.

Prime Minister Benjamin Netanyahu said on Monday the strike had not been intended to cause civilian casualties.  “In Rafah, we already evacuated about 1 million non-combatant residents and despite our utmost effort not to harm non-combatants, something unfortunately went tragically wrong,” he said in a speech in parliament that was interrupted by shouting from opposition lawmakers. 

The bombing came just days after the International Court of Justice called on Israel’s military to stop its offensive in the area.

Israel claimed the target of the strike was a Hamas compound, adding that “precise munitions” were used to eliminate a Hamas commander and another senior Hamas official at the site.

French President Macron said he was “outraged” over Israel’s latest attack.  “These operations must stop. There are no safe areas in Rafah for Palestinian civilians,” he said on X.

Both he and German Chancellor Olaf Scholz later called for an immediate ceasefire in Rafah.

The U.S. urged Israel to take more care to protect civilians but stopped short of calling for a halt to the Rafah incursion.

“Israel has a right to go after Hamas, and we understand this strike killed two senior Hamas terrorist who are responsible for attacks against Israeli civilians,” National Security Council spokesperson John Kirby said.  “But as we’ve been clear, Israel must take every precaution possible to protect civilians.”

Tuesday, Israeli Rear Adm. Daniel Hagari said, “This is a devastating incident which we did not expect.” Hagari said the Israeli munitions alone could not have caused the ensuing conflagration.

John Kirby told reporters Tuesday: “As a result of this strike on Sunday, I have no policy changes to speak to.”

The U.S. would be monitoring the investigation into the incident and expected Israel to learn lessons from the airstrike, Kirby said, but he added the bombing was short of the large-scale military operation that the U.S. has warned Israel would carry consequences.

“We don’t support, we won’t support, a major ground operation in Rafah, and we’ve again been very consistent on that,” Kirby said.  ‘And the president said that, should that occur, then it might make him have to make different decisions in terms of support. We haven’t seen that happen.”

--At least eight people were killed on Sunday by Israeli strikes in villages across southern Lebanon, Lebanese security sources said.  Hezbollah said four of its fighters were killed from the strikes, and that it responded by launching dozens of Katyusha rockets towards Israeli army reserve units along Israel’s northern border.

Hezbollah has repeatedly said that it will cease fire when the Israeli offensive in Gaza stops, but that it is also ready to fight on if Israel continues to attack Lebanon.

--Israel stepped up the intensity of bombardments of eastern and central areas of Rafah on Monday, killing at least eight, local officials said.

--Israeli tanks and six brigades of troops poured into Rafah, Tuesday, ignoring the pleas of protesters and select leaders and organizations around the world.

--The IDF denied striking a tent camp west of Rafah on Tuesday that killed at least 21 people.  Israel then said the cluster of tents wasn’t in a designated safe zone.

Israeli tanks advanced to the heart of Rafah for the first time after a night of heavy bombardment, while Spain, Ireland and Norway officially recognized a Palestinian state, a move that further deepened Israel’s international isolation.

--The temporary pier constructed by the U.S. military to transport aid into Gaza broke apart in heavy seas on Sunday in a major blow to the American-led effort to create a maritime corridor for humanitarian supplies.

Officials said the parking area will have to be reconnected to the causeway before the pier can be used again.

The setback came one day after heavy seas forced two small U.S. Army vessels to beach in Israel, according to U.S. Central Command, while another two vessels broke free of their moorings and were anchored near the pier.

The pier was only in operation for one week.  Aid is now piling up in Cyprus waiting for the corridor to reopen.

Aid trucks, some 200, were utilizing the Kerem Shalom crossing, which before the war was the main commercial crossing station between Israel, Egypt and Gaza.  The Rafah crossing has been shut for three weeks, since Israel took control of the Palestinian side of the crossing as it stepped up its offensive. Egypt has been increasingly alarmed at the prospect of large numbers of Palestinians entering its territory from Gaza and has refused to open its side of the Rafah crossing.

--Three IDF soldiers were killed in combat in the Gaza Strip on Wednesday. Israeli media reported the soldiers were scanning tunnels in Rafah, when an explosive device detonated causing a building with soldiers in it to collapse. Three others were critically injured.

Three more were killed in separate incidents, including two in the West Bank in a terror attack, on Thursday.

--Wednesday, Israel predicted its war in Gaza would continue all year, after Washington said the Rafah assault did not cross any red lines.  Hamas has demanded an end to the war as part of any deal that would see the exchange of hostages it holds for Palestinian prisoners.

Israeli National Security Adviser Tzachi Hanegbi said, “The fighting in Rafah is not a pointless war,” reiterating that the aim was to end Hamas rule in Gaza and stop it and its allies from attacking Israel.

--The IDF took control of the “Philadelphi Corridor,” its term for a buffer zone along Gaza’s border with Egypt. The capture means Israel is now in effective control of Gaza’s entire land border.

Israel continued its offensive, advancing into central Rafah at week’s end. 

--This afternoon, President Biden, declaring that Hamas was no longer capable of carrying out a major terrorist attack on Israel, said the time had come for a permanent cease-fire in Gaza, endorsing a new three-phase plan, starting with a six-week cease-fire that the president said Israel had offered to win the release of hostages and ultimately end the fighting.

“This is truly a decisive moment,” Biden said.  “Hamas says it wants a cease-fire.  This deal is an opportunity to prove whether they really mean it.”

But it appeared Biden was talking more directly to the Israeli people than the Israeli government. 

This evening (local time) a statement was then released through Netanyahu’s office.

“The Israeli government is united in the desire to return our hostages as soon as possible and is working to achieve this goal.  Therefore, the prime minister has authorized the negotiating team to present an outline for achieving this goal, while insisting that the war will not end until all of its goals are achieved, including the return of all our hostages and the destruction of Hamas’ military and governmental capabilities.”

--Prime Minister Netanyahu is regaining his popularity after struggling politically for more than a year, out-polling rival Benny Gantz for the first time since Oct. 7.

A Channel 12 survey conducted on Wednesday of 500 voters representing a cross-section of Israeli society asked, “Who is better suited to serve as prime minister?”  It found 36% chose Netanyahu and 30% Gantz.  Last month, Gantz was ahead 35% to 29%.

Netanyahu was also ahead of opposition leader Yair Lapid by 37% to 30% and edged above former Prime Minister Naftali Bennett 34%-32%.

No election is due until 2026 and there’s little evidence that Netanyahu’s party members of coalition partners are ready to desert him.

For his part, Gantz’s party submitted a bill to dissolve parliament, in a move analysts said is unlikely to lead to a vote soon but opens the door for a battle over elections as early as this summer.

Gantz would need at least 61 of the 120 lawmakers to vote to dissolve the parliament and there are no indications he has such a majority yet.

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Wall Street and the Economy

Tuesday, Federal Reserve Bank of Minneapolis President Neel Kashkari said in an interview with CNBC that policymakers should take their time in monitoring whether inflation is slowing enough to warrant interest-rate cuts.

The economy has remained “remarkable resilient” and the labor market continues to be strong – especially in services.  While nothing should be ruled out in terms of future policy, the Fed would be well-advised to wait and see, he added.

Kashkari also said:

“Most people thought we’d be in a recession toward the end of last year, and that didn’t happen.  Instead we had very strong growth.  U.S. consumers have remained remarkably resilient, the housing market has remained resilient. So I’m not seeing the need to hurry and do rate cuts. I think we should take our time and get it right.”

“At the beginning of this year,” inflation “has moved sideways and that has raised questions in my mind: is the disinflationary process continuing or are we landing to more of a 3% inflation level. I think it’s still too early to know and we need to wait and see to get more confidence.”

“I don’t think we should rule anything out at this point.  We are all committed to getting inflation all the way back to our 2% target.”

Thursday, Fed Bank of New York President John Williams said the current setting of monetary policy is in the right place to help inflation get back to 2%, in remarks that gave no hints of when he thinks the central bank might be able to cut the cost of short-term borrowing.

“The behavior of the economy over the past year provides ample evidence that monetary policy is restrictive in a way that helps us achieve our goals,” Williams said in a speech before the Economic Club of New York.  “I see the current stance of monetary policy as being well positioned to continue the progress we’ve made toward achieving our objectives.”

Williams added Fed policy makers “will continue to keep an eye on the totality of the data, so that we make policy decisions that ensure that we get inflation sustainably back to 2 percent while maintaining a strong labor market.”

In his remarks, Williams said inflation remains too high and its performance over the start of the year has been disappointing, but he expects to see price pressures ease further over the second half of the year amid a better balancing of the economy, and the bond market liked this, Treasuries rallying.  Williams sees inflation easing to around 2.5% this year from the 2.7% year-over-year rise seen in March’s personal consumption expenditures (PCE) price index.  Inflation will be closer to 2% in 2025.

As the market then waited for Friday’s PCE, Tuesday the Conference Board released consumer confidence figures that showed an American consumer more confident in May, above expectations, but the reading also revealed how the wealthiest Americans are powering the economy’s surprising growth and making it hard for the Fed to enact the rate cuts it wants.

“In terms of income, those making over $100K expressed the largest rise in confidence,” Dana Peterson, chief economist at the Conference Board, said in a release.  “On a six-month moving average basis, confidence continued to be highest among the youngest (under 35) and wealthiest (making over $100K) consumers.”

Thursday, first-quarter GDP was revised down from an initial 1.5% estimate to 1.3%.  I thought it would be revised upward.

Friday, we had an awful Chicago PMI for May, 35.4 when 40.5 was expected (50 the dividing line between growth and contraction).  It was the lowest reading for this metric since May 2020, i.e., the pandemic.

And as for the PCE, everything was exactly as expected, up 0.3% for April, 0.2% ex-food and energy, and the money numbers, year-over-year, 2.7% headline, 2.8% core.

The markets breathed a sigh of relief, but the Fed still isn’t moving until September at the earliest.

Separately, personal income rose 0.3% in the month, consumption was up 0.2%, the latter down a tick from forecasts.

The Atlanta Fed’s GDPNow barometer for second-quarter growth is down to 2.7% from last week’s 3.5%.

Freddie Mac’s 30-year fixed-rate mortgage is back over 7.00%...7.03%.

Next week, ISM figures and the May jobs report.

Europe and Asia

We had an important flash estimate on May inflation Friday for the eurozone, ahead of next week’s European Central Bank meeting where it is expected the ECB will be cutting its key rate.

And the inflation rate was 2.6%, again, flash estimate, up from 2.4% in April, and ex-food and energy, 2.9% vs. 2.8% prior.  So not exactly great. But the 2.9% on core is still against 6.9% a year ago.

Headline inflation....

Germany 2.8%, France 2.7%, Italy 0.8%, Spain 3.8%, Netherlands 2.7%, Ireland 1.9%.

The April unemployment rate for the euro area was 6.4%, down from 6.5% in March and in April 2023.

Germany 3.2%, France 7.3%, Italy 6.9%, Spain 11.7%, Netherlands 3.7%, Ireland 4.4%

Meanwhile, EU parliamentary voting is taking place between June 6 and 9 and there are major concerns over the flood of disinformation and propaganda flowing through social media.  Generative AI has only made things worse...made it easier to get it out (while slashing the cost of doing so).

In Asia...China reported out its May PMIs, courtesy of the National Bureau of Statistics, and the reading on manufacturing was a surprise, 49.5, vs. 50.4 prior and a 50.5 consensus estimate.  The non-manufacturing figure was 51.1.

The International Monetary Fund hiked its estimate for China’s economy this year to 5% growth, up from 4.6% a few weeks ago to reflect a strong expansion at the start of 2024 and additional support from the government. [But this was before the disappointing manufacturing PMI release.]

The IMF also raised its GDP forecast for next year to 4.5% from 4.1%, according to a release put out Wednesday.  Beijing is targeting 5% this year, with the first quarter better-than-expected at 5.3%.

The IMF, while noting the housing slump, said consumption is recovering some.

Speaking of housing, Shanghai lowered the minimum down payment for first home purchases to 20%, the local government said in a statement on Monday, down from 30%.  The minimum down payment for second home purchases was also lowered to 30% for suburban areas, an attempt to lend support for the troubled housing market.

Japan, like with the rest of the world, receives its PMI figures for May next week.  April industrial production was -1.0% year-over-year, while retail sales in the month rose 2.4% Y/Y.

The April unemployment rate was 2.6%. 

Street Bytes

--One new record this week, Nasdaq on Monday, and a late-day rally today cut the losses for the other two.  The Dow Jones ended the week at 38686, down 1.0%, the S&P 500 lost 0.5%, and Nasdaq still fell 1.1% overall.

Earnings have been decidedly mixed, including in the retail sector, as noted below.

--The switch to T+1 for settling trades began Tuesday, halving the time it takes to complete every transaction (from two business days to one), is ultimately intended to reduce risk in the financial system, yet there are worries about potential growing pains, including that international investors may struggle to source dollars on time, global funds will move at different speeds to their assets, and everyone will have less time to fix errors.

Firms across the spectrum have been preparing for months and have staffed up and adjusted shifts, while overhauling workflows, and most seem confident they’re ready.

--U.S. Treasury Yields

6-mo. 5.37%  2-yr. 4.88%  10-yr. 4.51%  30-yr. 4.65%

Longer end of the curve was up a bit...5 basis points on the 10-year, 8 on the 30-year.  But the 2-year fell 7 bps.  The jobs report next Friday could be somewhat meaningful for Treasuries.

--OPEC+ meets on June 2 (virtually) and is expected to extend voluntary output cuts of 2.2 million barrels per day into the second half of the year.

But the week was about waiting on the PCE and whether the Fed might bring forward interest rate cuts, supporting the outlook for economic growth and thus energy demand.

--Hess Corp. shareholders voted Tuesday to approve a $53 billion merger with Chevron, removing the first of three question marks hanging over the deal.

The news is particularly important for Chevron, which is counting on the Hess deal to bulk up its future production.

It’s all about Guyana, with Hess owning a 30% stake in an offshore project there where Exxon is the operator.  Exxon says it has a right of first refusal to buy Hess’ stake and is challenging Chevron’s acquisition at the International Chamber of Commerce in Paris, so you know the food at the breaks is terrific, including the pastries.  The case there is likely to play out over the coming months.

And there is an FTC inquiry into the acquisition which Chevron is confident will move “towards its conclusion in the coming weeks.”

--ConocoPhillips has agreed to acquire Marathon Oil in an all-stock deal valued at $17.1 billion ($22.5 billion including $5.4 billion of debt) in a bid to catchup with rivals as drillers race to secure new oil and gas wells.  The deal allows ConocoPhillips to expand its presence in several key U.S. shale basins including in Texas and North Dakota.

Houston-based ConocoPhillips in recent months saw competitors Exxon Mobil, Chevron, Occidental Petroleum and Diamondback Energy beef up their oil and gas properties with deals totaling about $150 billion.  Most of these deals were focused on the prolific Permian Basis of West Texas and New Mexico.  Marathon Oil has assets adjacent to ConocoPhillips in the Permian, Texas’ Eagle Ford, and North Dakota’s Bakken.  ConocoPhillips will also benefit from Marathon’s offshore assets in Equatorial Guinea.

--Shell Plc is preparing to cut staff from its offshore wind business as CEO Wael Sawan moves the company away from the capital-intensive renewable energy sector.  The British oil major is set to begin the layoffs within months, mainly in Europe, according to sources.

“We are concentrating on select markets and segments to deliver the most value for our investors and customers,” a Shell spokesperson said.  “Shell is looking how it can continue to compete for offshore wind projects in priority markets while maintaining our focus on performance, discipline and simplification.”

Shell had been spending heavily in offshore wind, aiming to leverage its experience extracting oil and gas at sea to become a leader in the technology.  But soaring costs in the sector and a renewed focus on driving returns for shareholders under Sawan has led the company to back away from wind and green energy.

Offshore wind projects are being cut all over, including in my native New Jersey.  The economics changed drastically post-pandemic. What made sense in, say, 2018, no longer does.

--Shares in American Airlines cratered 14% on Wednesday after the carrier cut its profit forecast for the current quarter, citing weakening pricing power despite expectations for record travel demand in the summer season.

The Fort Worth, Texas-based company now expects second-quarter adjusted earnings in the range of $1.00 to $1.15 per share, compared to previous expectations of $1.15 to $1.45 per share.  The carrier has made a strategic shift away from lucrative corporate travel in a bid to grow its market share in small markets.  However, excess capacity in such markets has been hurting its pricing power.

The forecast cut comes just after the Memorial Day weekend, considered the beginning of the summer travel season – the most profitable season for airlines.

--The Federal Aviation Administration weighed in on Boeing’s quality and manufacturing systems after a meeting to discuss the jet maker’s plans to improve safety this week.  FAA Administrator Mike Whitaker said the agency reviewed Boeing’s road map to set a new safety standard, take corrective actions, and transform its safety culture.

For now, Whitaker said the FAA won’t lift its production cap, which is 38 of Boeing’s 737s a month, that it placed on the company for at least several months.  Boeing has been churning out half that number since the Jan. 5 Alaska Air door plug incident on a 737 MAX 9.

--TSA checkpoint numbers vs. 2023

5/30...107 percent of 2023 levels
5/29...108
5/28...109
5/27...107
5/26...107
5/25...110
5/24...108...2,951,000...last Friday, all-time high...but not the forecast 3M
5/23...108

--Apple’s iPhone may have staged a rebound in China last month with shipments rising 52% amid a flurry of discounts from retail partners, according to the latest figures from the China Academy of Information and Communications Technology and Bloomberg.  The bounce back comes after it registered growth in March following steep declines in the first two months of the year.

Apple and its Chinese resellers have been cutting prices since the start of 2024, and those deals are extending into the sale season that accompanies the June 18th shopping festival in the country.

Apple had been seeing double-digit declines in sales of its latest generation of handsets, losing premium market share to Huawei Technologies Co.

--Elon Musk’s xAI said it raised $6 billion in its latest fundraising round, as the OpenAI rival looks to invest more in research and development amid fierce competition in the burgeoning sector.

The funding round brings the valuation of the year-old startup to $24 billion, making it the second-most valuable AI startup outside OpenAI.

The money will be used to take “xAI’s first products to market, build advanced infrastructure and accelerate research and development of future technologies,” xAI said.

The round is double the initial target set by Musk’s team.  Investors include Silicon Valley firms such as Sequoia Capital and Andreessen Horowitz as well as Fidelity Management & Research and Saudi Prince al-Waleed bin Talal and Kingdom Holding.

--Shares in Salesforce were down 15% Thursday after the company’s latest quarterly results came up light in revenue and bookings.

For the fiscal first quarter ended April 30, the cloud-based software giant and Dow Jones Index component reported revenue of $9.13 billion, up 11% year over year but at the low end of the company’s guidance range of $9.12 billion to $9.17 billion. The consensus on Wall Street was for $9.15bn.

The company provided a July quarter revenue forecast of $9.20 to $9.25 billion, also below the Street’s forecast for $9.35bn.  Adjusted earnings for the April quarter were $2.4 billion, $2.44 a share, vs. analysts’ estimate of $2.37. 

The company’s comments on order backlog were disappointing to the Street, and the concern is that Salesforce’s AI offerings could be losing out to those of rivals.

--HP reported an uptick in corporate PC sales as it delivered its April quarter results that were in line with expectations.

“Enterprises are starting a new cycle,” CEO Enrique Lores told Barron’s Wednesday. “We see that in a funnel of opportunities for the second half that’s much stronger than we saw before.”

HP has introduced many products designed for artificial intelligence this year, including AI workstations for data scientists.  But sales of AI PCs probably won’t ramp up until next year, according to Lores.

The PC and printer company’s revenue in the April quarter was $12.8 billion. While that’s down from the year-earlier quarter’s $12.9 billion, it was better than consensus for $12.6 billion.  Earnings were $800 million, or 82 cents a share adjusted, three cents better than last year’s quarter, and a penny above Street estimates.

Commercial sales of PCs were $6.2 billion.  That was up 3% from the January 2024 quarter, and 6% from the April 2023 quarter. 

Personal sales of PCs were $2.2 billion, down 3% from last year.

The quarter’s $4.4 billion in printing product sales was flat sequentially and down 8% from April 2023.

The shares rose about 5% on the open, Thursday.

--Dell Technologies reported fiscal first-quarter earnings declined more than expected as weakness in the consumer segment weighed on client solutions sales.

The computer-maker’s adjusted earnings fell to $1.27 a share for the quarter ended May 3 from $1.31 a year earlier, trailing consensus of $1.29.  Revenue rose 6% to $22.24 billion, above the Street’s view of $21.65 billion.

But the shares fell 20% Friday as the company talked of its big investments in AI that are expected to dent its quarterly profits in the near future, before the supposed reward comes further down the road.

--T-Mobile agreed to buy much of U.S. Cellular’s customers and spectrum in a roughly $4.4 billion deal that would bring more consolidation to the wireless industry.

T-Mobile would gain more than four million new customers and a trove of valuable spectrum rights to carry more of their data over the air. The deal is expected to close in mid-2025.

U.S. Cellular, which caters to a base of mostly rural customers across several states, said it would hold on to its portfolio of cellphone towers, about 70% of its wireless spectrum licenses and interests in joint ventures with Verizon.

T-Mobile agreed under the proposed deal to extend its leases on 600 U.S. Cellular towers and sign long-term leases on about 2,000 more. 

--Nissan issued a “do not drive” warning for nearly 84,000 vehicles equipped with recalled Takata air bags that can explode in even relatively minor crashes. The models involved are from 2002 to 2006, which have had an open Takata air bag recall since 2020.

--Dick’s Sporting Goods lifted its full-year outlook on Wednesday after the athletic goods retailer reported better-than-expected fiscal first-quarter results, the shares soaring 15% in response.

The company now anticipates per-share earnings to come in between $13.35 and $13.75 for fiscal 2024, up from its prior guidance of $12.85 to $13.25.  Sales are pegged at $13.1 billion to $13.2 billion versus its previous forecast of $13bn to $13.13bn. The consensus on the Street is for EPS of $13.24 and revenue of $13.16 billion.

Dicks’s also expects comparable sales to increase by 2% to 3% for the fiscal year, compared with prior guidance for a 1% to 2% rise.  The Street is at 2.1%.

Dick’s logged adjusted EPS of $3.30 for the three-month period ended May 4, down from $3.40 the year before, but ahead of the market’s view for $2.97.  Sales rose 6.2% to $3.02 billion, topping analysts’ $2.94 billion estimate.

Comp sales advanced 5.3%, beating the 2.5% gain modeled by the Street.

This is a great chain...good to see them doing well.

--Shares in Abercrombie & Fitch soared 24% Wednesday after the apparel chain raised its annual sales growth forecast and beat estimates for first-quarter results, expecting new and trendy apparel and accessories to drive demand at its Hollister and namesake brands.  Comp sales were up 29% at Abercrombie, and 13% at Hollister in the quarter, which is rather remarkable.

“Our brands are delivering high-quality, on-trend assortments for new and retained customers across regions and brands,” CEO Fran Horowitz said. The company is also benefiting from people resuming shopping for discretionary items as inflation rates ease.

Said analyst Rachel Wolff of eMarketer: “Abercrombie’s reinvention as an inclusive lifestyle brand is resonating strongly with Gen Zers and millennials, enabling it to outperform the broader apparel sector and maintain a healthy momentum.”

The company now expects its fiscal 2024 net sales to be up 10%, compared with its prior forecast of a 4% to 6% rise.

Net sales in the quarter were $1.02 billion, with adjusted profit at $2.14 per share, both way above expectations.

[Since I can never remember and assume some of you don’t either...Gen Zers were born 1995-2012; Millennials 1980-94.]

--Kohl’s shares cratered 27% Thursday after the department store swung to a fiscal first-quarter loss of $0.24 per share from a profit of $0.13 a year earlier.  Total revenue for the quarter ended May 4 was $3.38 billion, down from $3.57 billion a year ago, with consensus at $3.36bn.

The retailer cut its 2024 earnings outlook to $1.25 to $1.85 per share from $2.10 to $2.70, a massive reduction and thus the tumbling share price.  Kohl’s expects revenue for the year to fall 2% to 4%, vs. a projection of essentially ‘flat’ previously.

--Best Buy Co. reported fiscal Q1 earnings Thursday of $1.20 per share, up from $1.15 a year earlier, with the Street at $1.07.

Revenue for the quarter ended May 4 was $8.85 billion, down from $9.47 billion a year ago, and analysts at $8.97bn.

The company maintained its fiscal 2025 EPS guidance of $5.75 to $6.20, with consensus at $6.04.  Revenue is projected to be $41.3 billion to $42.6 billion, in line with estimates.

The country’s largest electronics retailer also maintained its annual comparable sales forecast of flat to a decline of up to 3%, though it reported a 6.1% fall in the quarter, the tenth straight quarterly drop in this metric.

But the stock rose 11% on the earnings and positive comments on an improving sales outlook for laptops.

--Dollar Tree (or $1.25 Tree as it’s become in much of the country) is acquiring the leases of 170 99 Cents Only Stores and will reopen these stores with its own products as early as fall 2024, the company announced Wednesday.

Yet another sign of inflation...a 26% increase!

Foreign Affairs, Part II

China/Taiwan: Beijing urged Washington to refrain from interfering in China’s maritime disputes with its neighbors in their latest talks that were made public on Tuesday.

Hong Liang, the Chinese foreign ministry’s director general for boundary and ocean affairs, and Mark Lambert, the State Department’s China coordinator and deputy assistant secretary for China and Taiwan, held a virtual meeting last Friday.

Friday, Defense Secretary Lloyd Austin met face-to-face with his Chinese counterpart Admiral Dong Jun on the sidelines of this year’s Shangri-La Dialogue, their first such meeting in more than 18 months.

Austin urged China to “not use Taiwan’s political transition...as a pretext for coercive measures,” according to a readout from the Pentagon, and stressed “The importance of respect for high seas freedom of navigation guaranteed under international law, especially in the South China Sea.”

A Chinese defense ministry spokesperson told reporters after that the two sides gained a better understanding on Taiwan, adding there were “positive effects.”  But Wu Qian also highlighted “one meeting cannot fix all the problems in a military to military relationship, but having a meeting is better than no meeting at all.”

The two sets of talks coincided with the People’s Liberation Army two days of drills that simulated a blockade of Taiwan, the exercises coming days after the inauguration of the Willliam Lai Ching-te.

Taipei this week said the purpose of the exercise was to “intimidate...not to start a war.”

Separately, police arrested six people under Hong Kong’s new domestic national security legislation for the first time for allegedly publishing seditious materials linked to the 1989 Tiananmen Square crackdown.

One of those arrested, a woman, activist Chow Hang-tung, was alleged to have used a social media platform from April to “take advantage of a coming sensitive date” and was “continuously publishing posts to incite hatred of the central authorities, the city government and the judiciary,” a statement from the National Security Department said.

The security minister did not detail how recent posts published on Facebook constituted the seditious element of the offense.

Then on Thursday, fourteen pro-democracy activists were convicted in Hong Kong’s biggest national security case by a court that said their plan to effect change through an unofficial primary election would have undermined the government’s authority and created a constitutional crisis.

After a 2019 protest movement that filled the city’s streets with demonstrators, authorities have all but silenced dissent in Hong Kong through reduced public choice in elections, crackdowns on media and the Beijing-imposed security law under which the activists were convicted.

Four of the fourteen were former lawmakers who face up to life in prison when sentenced later.

The activists were among 47 democracy advocates who were prosecuted in 2021 for their involvement in the primary.  Thirty-one pleaded guilty before the trial.  They all too face possible life in prison.

Two former district councilors were acquitted but prosecutors said they intend to appeal against the judgements.

I get into the three-way summit between China, South Korea and Japan in Seoul below, but South Korean President Yoon Suk Yeol and Chinese Premier Li Qiang agreed on Sunday to launch a diplomatic and security dialogue and resume talks on a free trade agreement, Yoon’s office said.

There were low expectations and no significant developments but talking face-to-face is better than not doing so.  Yoon asked China to play a greater role as a permanent member of the UN Security Council, especially as North Korea continues to develop nuclear missiles and boost military cooperation with Russia.  Li told Yoon, in a meeting before the tri-lateral talks, that their countries should work to maintain stable supply chains.

China criticized a decision by South Korean and Japanese lawmakers to attend Taiwanese President William Lai’s inauguration.

North Korea: North said its attempt to launch a new military reconnaissance satellite ended in failure on Monday when a newly developed rocket engine exploded in flight. The attempt came just hours after Pyongyang issued a warning that it would try to launch a satellite by June 4, in what would have been its second spy satellite in orbit. 

Instead, the launch became the nuclear-armed North’s latest failure, following two other fiery crashes last year.  It successfully placed its first spy satellite in orbit in November.

These launches are in total violation of relevant UN Security Council resolutions.

The launch came hours after China, South Korea and Japan wrapped up their rare summit.

Somewhat surprisingly, North Korea condemned all three for committing to denuclearize the Korean Peninsula, describing their joint declaration as a “grave political provocation” that violates its sovereignty.

It was surprising in that the statement exposed tensions between Beijing and Pyongyang.

China angered North Korea when it signed on to UN Security Council resolutions sanctioning Pyongyang’s nuclear weapons and missile program from 2006 to 2017, but in recent years Beijing has joined Russia in blocking new sanctions and calling for existing measures to be eased.

Meanwhile, South Korea accused Pyongyang on Wednesday of sending a large number of balloons across their heavily fortified border to drop objects including trash and excrement, calling the act base and dangerous.

The military’s explosives ordnance unit and chemical and biological warfare response team were deployed to inspect and collect the objects, and an alert was issued warning residents to keep away and report any sightings to authorities.

By Wednesday afternoon, more than 260 balloons had been detected, the Joint Chiefs of Staff said.  Yonhap news agency said some of the balloons contained animal feces.

Iran: The Wall Street Journal reported that the Biden administration is pressing European allies to back off plans to rebuke Iran for advances in its nuclear program, even as Tehran expands its stockpile of near-weapons-grade fissile material to a record level, according to diplomats involved in discussions.

Britain and France want to censure Iran at the International Atomic Energy Agency’s member-state board in early June, the diplomats said, but the U.S. is pressing them to abstain, saying that is what Washington will do.

U.S. officials have denied they are lobbying against a resolution.

But the White House has long said it is seeking a diplomatic solution on Iran’s nuclear program and it fears Iran could be more volatile as the country moves toward elections to replace the deceased President Ebrahim Raisi on June 28.

European diplomats have warned that failure to take action would undermine the authority of the IAEA, which polices nonproliferation of nuclear weapons.

So, the Journal story was Monday, and then Tuesday, the Associated Press reported that Iran has further increased its stockpile of enriched uranium, according to a confidential report by the IAEA, seen by the AP.

According to the report, Iran now has 313.2 pounds of uranium enriched up to 60% - an increase of 45.4 pounds since the last report by the watchdog in February.  The jump from 60% to weapons-grade levels of 90% is a short one in this game.  Iran has over 13,600 pounds of enriched uranium overall.

According to the IAEA’s definition, around 42 kilograms (92.5 pounds) of uranium enriched to 60% is the amount at which creating one atomic weapon is theoretically possible – if the material is further enriched to 90%.

IAEA chief, Rafael Mariano Grossi, has also acknowledged the agency cannot guarantee that none of Iran’s centrifuges may have been peeled away for clandestine enrichment.

Editorial / Wall Street Journal:

“Tehran’s nuclear progress has become so alarming it worries France and the United Kingdom, which were enthusiastic participants in the Obama negotiations. But the Administration wants to disguise the truth in order not to provoke Iran by challenging the mullahs on their nuclear program.  The White House doesn’t want another new international crisis before the November election.

“But what is it that the U.S. fears? That Iran unbound could arm Hamas and Hezbollah to launch genocidal attacks on Israel, or could launch its first-ever direct missile strike against that American ally?  That Tehran could arm the Houthi fighters in Yemen as they disrupt global shipping through the Red Sea?  Or that the mullahs could send missiles and drones to Russia for use in Ukraine?  Or give Shiite militias the green light to attack U.S. troops in Syria, Iraq and Jordan?

“Iran has already done all of that in the last year, nuclear censure or no. Downplaying Iran’s nuclear progress doesn’t make the problem go away.  President Biden claimed to be better at foreign policy than Donald Trump, who withdrew from the Obama-era nuclear deal with Iran, a pact that faced consistent, bipartisan opposition in Congress. But Mr. Biden’s strategy, if you can call it that, is to let Tehran escalate, escalate and escalate, and then appease, appease and appease.

“The significance of the IAEA’s latest report is that while Mr. Biden stalls until November, Tehran won’t.  Expect the pace of enrichment to continue.  The next Administration, whether led by Mr. Biden or someone else, will inherit an emboldened Iran with more enriched uranium on hand....

“Iran’s regime is richer than it was when Mr. Biden took office and stopped enforcing sanctions; more aggressive than it was as Mr. Biden has failed to respond to its terrorism; and much closer to having a nuclear weapon.  It’s hard to imagine a more complete policy failure.”

I can...Afghanistan.

On a different topic, Yemen’s Iran-backed Houthis launched attacks at six ships in three different seas on Tuesday and Wednesday, including the Marshall Islands-flagged bulk carrier Laax that was damaged after reporting a Houthi missile strike off the coast of Yemen.  Attacks were launched on ships in the Arabian Sea, the Red Sea and the Mediterranean.

The Laax, which was carrying a cargo of grain, was hit by five missiles fired from Yemen, but the vessel was still able to sail to its destination and the crew were safe, the ship reported on Wednesday.

There had been reports the Laax was taking on water, but the ship’s security company, LSS-SAPU, told Reuters, “The vessel has sustained damage, she is not taking water, she is not tilting and there are no wounded onboard.  She is proceeding to her destination with a normal speed.”

The U.S. and Britain then struck 13 Houthi targets in several locations in Yemen on Thursday in response to the surge in attacks.

Georgia: The Georgian parliament on Tuesday overrode a presidential veto of the “foreign agents” bill that has prompted weeks of massive protests by critics who say it restricts media freedom and obstructs Georgia’s chances of joining the European Union.

President Salome Zourabichvili has five days to endorse the bill.  If not, the parliament speaker will sign it into law.

One demonstrator told the Associated Press: “We have realized that our government is ready to throw this country off a cliff.  The feeling, when I talk to my friends and people here, is that in the 21st century, our country is once again going under Soviet occupation.”

I repeat, the holding of the scheduled parliamentary elections in October is not necessarily a fait accompli. 

Mexico: Claudia Sheinbaum, a Jewish woman with a Ph.D. in energy engineering, is expected to become the first female president of Mexico in Sunday’s election, quite a meteoric rise in this largely Catholic country. 

Sheinbaum has a commanding lead in all the polls and has the endorsement of Mexico’s popular nationalist leader, President Andres Manuel Lopez Obrador, who shepherded Sheinbaum’s career over the past two decades, including as former mayor of Mexico City.

On the campaign trail, she has emphasized that her administration will be a continuation of Lopez Obrador’s.

South Africa: Early results in the election here suggest that the ruling African National Congress was on track to lose its parliamentary majority.  After 70% of the polling stations had completed counting, the ANC’s share of the vote stood at 42%, a precipitous drop from the 57.5% it secured in the last national election in 2019.  The party has recently presided over economic stagnation, rampant crime and epic corruption.  Final results are expected Sunday.

Slovakia: Prime Minister Robert Fico was released from the hospital and was able to return home, where he will continue his recovery from the assassination attempt on his life, May 15.

Random Musings

--Presidential approval ratings....

Gallup: New numbers...39% approve of President Biden’s job performance, 56% disapprove; 34% of independents approve (May 1-23).  Prior split, 38-58, 33.

Rasmussen: 44% approve, 55% disapprove (May 31).

--In an NPR/PBS NewsHour/Marist national poll of registered voters, in a head-to-head, Joe Biden leads Donald Trump 50% to 48%.  Trump leads Biden 54-42 among independent voters.

But in a five-way race, Trump edges Biden 44-40, with Robert F. Kennedy Jr. receiving 8%, Jill Stein 3% and Cornel West 2%.  Actually, if I had to guess today how the results will play out in November, I think this looks about right.

Biden’s approval rating in this poll is 41%, 54% disapproving.

--For the record, prior to Thursday’s verdict...Jury deliberations began Wednesday in Donald Trump’s hush-money trial. 

Judge Juan Merchan ripped Trump attorney Todd Blanche during his closing argument for suggesting to jurors that Trump could be sent to prison if convicted, with prosecutors claiming the statement “was a blatant and wholly inappropriate effort to cause sympathy for their client.”

A furious Merchan told Blanche that, as a longtime attorney and former prosecutor, he should have known better than to make the “outrageous” and “highly inappropriate” comment – as jurors are not allowed to take punishment into consideration when deliberating.

“That statement was outrageous,” the judge said. “You know that making a comment like that is highly inappropriate.  It’s hard for me to imagine that that was accidental.”

--A federal judge on Tuesday rejected a request by prosecutors to issue a gag order barring Trump from making inflammatory comments about law enforcement, after his campaign falsely claimed the FBI had been authorized to assassinate him when it searched Mar-a-Lago for classified documents.

Florida-based U.S. District Judge Aileen Cannon rebuffed Special Counsel Jack Smith’s motion to modify the former president’s conditions of release as he awaits trial on charges of mishandling classified material.

Smith argued Trump’s “false and inflammatory” comments about the FBI could subject the agency, as well as trial witnesses, to threats, violence or harassment.  Cannon wrote Smith didn’t meaningfully confer with Trump’s lawyers before making the gag order request.

--Former President Trump appeared before the Libertarian Party convention Saturday night, urging a raucous crowd to ditch their party and endorse his re-election campaign, slamming the third party for only polling at “three percent.”

“Nominate me or at least vote for me,” he asked the crowd of Libertarians and MAGA voters in Washington, D.C.  “We need your help. We need your support.”

But Trump’s remarks were met with a mix of chants to “lock him up,” boos, “we want Trump” and “end the Fed” throughout.

Trump was clearly startled by the boos and he cut his speech off after just 34 minutes.

“Maybe you don’t want to win,” he said to a loud chorus of boos.  “Keep getting your 3 percent every four years.”

Former 2024 candidate Vivek Ramaswamy was booed when he mentioned Trump’s name in his speech at the convention.

Appearing the day before, Robert F. Kennedy Jr. fiercely attacked Trump, accusing him of allowing “the greatest restriction on civil liberties this country has ever known” during the pandemic.

Chase Oliver won the Libertarian nomination on Sunday.  Candidate Jo Jorgensen received 1.2% of the national vote in 2020.

--Addressing the graduating class of the U.S. Military Academy on Saturday at West Point, President Biden reminded them that their oath is to the Constitution, not any political party or president, delivering a rebuke of former President Trump.

Biden, in his 22-minute commencement address, did not mention Trump by name, but he said, “The oath you’ve taken here (was) against all enemies, foreign and domestic,” calling the cadets “guardians of American democracy.”

Biden faced no interruptions at the military academy, with his advisors trying to keep the president in tightly controlled environments and away from large student gatherings and protests on his support of Israel.

--Blackstone Inc. CEO and mega-billionaire Steve Schwarzman, who said in 2022 that he would not back Donald Trump again, calling for a “new generation” of Republican leaders and giving $2 million to a super PAC allied to former New Jersey Gov. Chris Christie, said this week he would raise money for Trump’s campaign.

--Supreme Court Justice Samuel Alito rejected calls to sit out pending cases involving former President Trump, saying that he had nothing to do with his wife raising MAGA-associated flags at the couple’s homes in Virginia and New Jersey.

Alito, in letters to Senate and House Democrats who had called on him to recuse himself from cases involving criminal charges Trump faces over his alleged scheme to retain power, he wrote, “My wife is fond of flying flags.  I am not.”  Martha-Ann Alito “was solely responsible for having flagpoles put up at our residence and our vacation home and has flown a wide variety of flags over the years,” he added.

--Pope Francis apologized Tuesday after he was quoted using a vulgar term about gays to reaffirm the Catholic Church’s ban on gay priests.

Vatican spokesman Matteo Bruni issued a statement acknowledging the media storm that erupted over Francis’ comments, which were delivered behind closed doors to Italian bishops on May 20.

Italian media on Monday had quoted unnamed Italian bishops in reporting that Francis jokingly used the term ‘faggotness’ while speaking in Italian during the encounter. He had used the term in reaffirming the Vatican’s ban on allowing gay men to enter seminaries and be ordained priests.

Bruni said Francis was aware of the reports and recalled that the Argentine pope, who has made outreach to LGBTQ+ Catholics a hallmark of his papacy, has long insisted there was “room for everyone” in the Catholic Church.

“The pope never intended to offend or express himself in homophobic terms, and he extends his apologies to those who were offended by the use of a term that was reported by others,” Bruni said.

Italian is not Francis’ mother tongue language, and he has made linguistic gaffes in the past.

His outreach to LGBTQ+ Catholics has been sincere. Francis is, however, steadfastly against allowing gay men to enter seminaries and be ordained priests.

--Over the weekend, the situation in Papua New Guinea worsened as the death toll in a landslide reached an estimated 2,000+, while officials feared there could be a second landslide, and that 8,000 people needed to be evacuated.

A disease outbreak is a definite possibility as waterways become contaminated from disaster debris and the rotting corpses of those that remain in the rubble, the United Nations said on Tuesday.

The scenes of villagers digging with their bare hands through muddy debris in search of their loved ones are heartbreaking, but the debris is shifting and as a UN official said, “it can gain speed and further wipe out other communities and villages further down the mountain.”

You have to understand there are streams under the debris that had been covered, so the whole debris mass, which is massive, is unstable.

--Speaking of water, authorities in the Brazilian state of Rio Grande do Sul have confirmed 54 cases of the waterborne leptospirosis disease after the region experienced unprecedented floods in the months of April and May.  Four have died of the illness, which is transmitted through water contaminated with infected animals’ urine, like rats.

But more than 800 other cases are being investigated.

More than 165 people were killed in the floods with scores missing.

More than 2.3 million Brazilians were impacted in Rio Grande do Sul (581,000 displaced) in what the government has described as a “climate disaster.”

--India’s national elections have been held in waves, across various parts of the country, beginning April 19 and concluding Saturday, June 1, with results due June 4.

But I wrote last week about the extreme heat those going to the polls are facing and last Saturday, as 111 million voted across eight states, the temperature in the capital of New Delhi hovered around 107F, but the heat index at 2:00 p.m. was 120F, as reported by Reuters, via the weather department, which prompted many voters to question why the election isn’t held in a more favorable time of year.

And then this week, the temperature crossed 50C (122F) in parts of northern and central India.  I had heard it was supposed to cool off.  I just looked at a 10-day forecast for Delhi (as of Thursday) and it was between 107 and 113 each day.  Not exactly a cool down. 

The capital hit 52.9C, or 127.22F yesterday...the country’s highest ever recorded!  At least 24 people died of heatstroke in the east. [Reuters]

Delhi is also running out of water...but that’s a different discussion.

--In a piece by Teddy Amenabar in the Washington Post, he notes:

“Dairy farmers who sell raw milk say demand is on the rise.  But U.S. public health officials have long warned about the risks of drinking raw milk – especially now, as a highly virulent bird flu is infecting dairy cows across the country....

“Richard J. Webby, a virologist at St. Jude Children’s Research Hospital who was not among the researchers in (a New England Journal of Medicine study showing mice given raw milk from dairy cows infected with the bird flu virus quickly developed symptoms and had high levels of the virus in their respiratory tract), said scientists can’t say with ‘any real confidence’ that drinking raw milk contaminated with the flu will infect people. But cows that are ‘heavily infected’ with the bird flu have high amounts of the virus in their milk, Webby said.

“ ‘It doesn’t make any sense to be drinking unpasteurized milk at this stage,’ he said.  ‘Not everyone who drinks virus-laden milk is probably going to get infected with that virus. But, from my perspective, it’s a chance I’m certainly not going to take.’

“Celine Gounder, an infectious-disease specialist and editor-at-large for public health at KFF Health News, said more human exposure to the H5N1 virus increases the likelihood of people getting sick and creates more opportunities for the virus to mutate [emphasis mine] so it’s more easily transmissible among humans.

“ ‘You’re giving yourself more shots on goal and increasing the probability,’ Gounder said.

A third case of bird flu was detected in a Michigan farmworker, who unlike the first two cases, had respiratory symptoms, not conjunctivitis. 

But as I noted last week, the actual number could be far higher.

--Iceland is suffering through the fifth volcanic eruption in the southwest of the country since December, spewing lava toward the seaside town of Grindavik, a town of 4,000 that has largely been evacuated since the first eruption.

Iceland’s biggest tourist draw, the Blue Lagoon geothermal spa, is in the area and was shut down through at least Friday, so a major bummer if this was your week for a vacation to Iceland.  [Personally, I’ve been to this wildly beautiful place twice, but never to the Blue Lagoon!]

Experts say this is potentially the worst of the five eruptions and it came quickly after a large series of earthquakes. Roads have been covered by lava flows.

--The holiday weekend's storms and tornadoes in the Southern Plains and the Ozark Mountains killed at least 23 people, with hundreds injured, across four states (Texas, Oklahoma, Arkansas and Kentucky), destroying hundreds of structures.

Kentucky Gov. Andy Beshear said the devastating storms had hit almost the entire state, including damage to 100 state highways and roads.

April and May have been brutal months, with tornadoes far above normal.

More than a million customers in Texas were without power Tuesday as powerful storms delivered another round of violent weather, with hurricane-force wind gusts across the Dallas area, ditto Houston.  Then more flooding rains yesterday. They can’t catch a break.

--Tomorrow, June 1, marks the official start of the hurricane season.

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*George Will / Washington Post on Memorial Day:

“Rick Atkinson – the nation’s finest military historian, living or dead – has written of the 291,557 American lives lost in World War II combat: ‘Each death is as unique as a snowflake or a fingerprint. The most critical lesson for every American is to understand, viscerally, that this vast host died one by one; to understand in your bones that they died for you.’   Remember this, and also the mostly young military men and women who this day, as every day, are in peril on the sea, and under it, and elsewhere.”

God bless America.

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Gold $2347
Oil $77.10

Bitcoin: $67,700

Regular Gas: $3.55; Diesel: $3.87 [$3.57 / $3.95 yr. ago]

Returns for the week 5/27-5/31

Dow Jones  -1.0%  [38686]
S&P 500  -0.5%  [5277]
S&P MidCap  +0.2%
Russell 2000  +0.02%
Nasdaq  -1.1%  [16735]

Returns for the period 1/1/24-5/31/24

Dow Jones  +2.6%
S&P 500  +10.6%
S&P MidCap  +7.2%
Russell 2000  +2.1%
Nasdaq  +11.5%

Bulls 58.2
Bears 17.9

Hang in there.

Brian Trumbore

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