Week in Review

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Week in Review

07/13/2024

For the week 7/8-7/12

[Posted 4:30 PM ET, Friday]

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Edition 1,317

Biden Interview Fallout...and the Presser....

Prior to last Friday’s interview with ABC’s George Stephanopoulos, a coalition of 168 business leaders, including billionaire Christy Walton, penned a letter asking President Biden to drop his reelection bid to make room for “the next generation.”  Brazilian President Luis Inacio Lula da Silva, a liberal, said, “His debate performance and age are worrying his allies abroad.”

In the interview, Biden said his debate performance offered “no indication of any serious condition – I was exhausted. I didn’t listen to my instincts in terms of preparing, I had a bad night.”  He was defiant, dismissing concerns about his health and doubts about his reelection bid, saying only “the Lord Almighty” could convince him he should step aside.

“Look, if the Lord Almighty said get out of the race, then I get out of the race. But He’s not coming down. It’s hypothetical, George.”

Stephanopoulos repeatedly pressed Biden about his health and, more subtly, whether he is in denial about his ability to win the election. Biden, defensive, answered by reciting the record of his first term.  Which isn’t the point!  You could be totally incapacitated in six months.  And you are running for another four years!  

Biden said his debate performance was “nobody’s fault but mine,” but suggested that Donald Trump’s aggressive falsehoods threw him off balance. “I just had a bad night,” he said.

The president avoided Stephanopoulos’ question as to whether he would submit himself to an independent medical exam and release the results.  And, when asked how he would feel if he stood for election in November and then watched as Donald Trump won the election and returned to the White House, Biden responded, “I’ll feel that as long as I gave it my all and did the goodest job as I know I can do, that this is what this is about.”

Oh brother.  A godawful response, with a new word thrown in. Giving it his all is not what the election is about.  It’s about defeating Donald Trump and maintaining leadership in the Senate and regaining control of the House.  Not giving it the old college try.

Stephanopoulos asked Biden about his dismal approval ratings.

“I don’t believe that’s my approval rating.  That’s not what our polls show,” Biden said.

Stephanopoulos was stunned.  “Really?”

But in the beginning of the interview, Biden was asked if he had watched the debate, which was eight days earlier.

“I don’t think I did – no,” the president said.

At a brief speech at a campaign event in Wisconsin, Friday, before the interview, Biden told the crowd, “I’m staying in this race.  I’m not letting one 90-minute debate wipe out three and a half years of work.”

Before boarding Air Force One in Wisconsin, Biden approached the assembled reporters and said: “You’ve been wrong about everything so far, you were wrong about 2020, you were wrong about 2022. We were going to get wiped out – remember the red wave?  You were wrong about 2023.”  Biden said that all of the Democratic governors he met a week ago Wednesday had urged him to stay in the race. Asked about a succession plan, he said: “By the way, we do have succession plans. But what do I need a succession plan for now?”

A private call Sunday of some 15 top House committee members exposed the deepening divide as at least four more Democrats – Rep. Jerrold Nadler of New York, Rep. Jim Himes of Connecticut (the leading Democrat on the Intelligence Committee), Rep. Adam Smith of Washington state (highest ranking Democrat on the House Armed Services Committee) and Rep. Mark Takano of California – privately, and then publicly, said Biden should step aside.  The number of congressmen publicly calling for Biden to exit the race had reached nine. [Nadler then reversed course Monday.]

Others spoke in support of the president, including Rep. Richard Neal of Massachusetts, the top Democrat on the powerful Ways and Means Committee.

Neal said afterward that the bottom line is Biden beat Trump in 2020 and “he’ll do it again in November.”

Monday morning, Biden called into “Morning Joe” on MSNBC, with the president saying he didn’t care about any of the “big names” urging him to drop out of the race.  “If any of these guys don’t think I should run, run against me,” he said.  “Go ahead, announce for president. Challenge me at the convention.”

But in the call the president also had some totally incoherent moments...sentences that were total gibberish.  CNN anchor Jake Tapper quoted from the interview on his afternoon show.

Biden: “The fact of the matter is how can you assure you’re going to be out on, you know, on your way to go, you know, work tomorrow age, age wasn’t, you know, the idea that I’m too old.”

Tapper: “Keep in mind that soundbite is supposed to be reassuring to those Democratic supporters...many Democratic officials with whom I have spoken are worried that President Biden and his family and his inner circle appear to be in complete denial not just about whatever might be wrong with him but the state of his candidacy right now.”

Also Monday, Biden, in a letter to congressional Democrats, stood firm against calls for him to drop his candidacy and called for an “end” to the intraparty drama that has torn apart Democrats since his dismal debate performance.

Biden’s efforts to shore up a deeply anxious Democratic Party came as lawmakers returning to Washington confronted a choice: decide whether to work to revive his campaign or edge out the party leader.  It’s make-or-break time for his reelection and their own political futures.

Biden wrote in the two-page letter that “the question of how to move forward has been well-aired for over a week now. And it’s time for it to end.”  He stressed that the party has “one job,” which is to defeat Donald Trump.

“We have 42 days to the Democratic Convention and 119 days to the general election,” Biden said in the letter, distributed by the reelection campaign.  “Any weakening of resolve or lack of clarity about the task ahead only helps Trump and hurts us.  It’s time to come together, move forward as a unified party, and defeat Donald Trump.”

Despite Biden’s defiance, Democratic lawmakers are joining calls for the president to step aside.  At the same time, the president’s most staunch supporters are redoubling the fight for Biden’s presidency, insisting three’s no one better to beat Trump.

House Democratic leader Hakeem Jeffries then convened lawmakers for private meetings Tuesday morning, especially those whose bids for reelection are most vulnerable.

Even senior lawmakers supporting Biden, though, said he needed to do more to assuage concerns among voters about his capabilities.

Former Democratic House Speaker Nancy Pelosi, when asked Monday whether Democrats should stick with Biden, said, “People should be prayerful, thoughtful. And the decision is the president’s.  It’s not the caucus’s.”

Sen. Mark Warner of Virgina was intending to gather senators Monday to discuss Biden privately, but then the conversations ended up taking place in Tuesday’s regular caucus luncheon with all Democratic senators.

Monday night, Democratic Senator Patty Murray (WA), chair of the powerful Senate Appropriations Committee, said in a statement, “We need to see a much more forceful and energetic candidate on the campaign trail in the very near future,” adding that Biden “must seriously consider the best way to preserve his incredible legacy.”

Democratic Senator Michael Bennett (CO) said Tuesday he wants Democrats to unite on a campaign strategy by week’s end – whether Biden remains on the ticket or not.

“Donald Trump is on track, I think, to win this election, and maybe win it by a landslide,” Bennett said in an appearance on CNN.  He also argued that Trump and Republicans would “take with it the Senate and the House” majorities come the fall.

Tuesday, George Stephanopoulos admitted he does not believe Biden can serve out a second term.  He was recorded by TMZ answering a question from a passer-by about Biden’s political future in midtown Manhattan.

“Do you think Biden should step down?” the anonymous interrogator asked the “Good Morning America” co-host and “This Week” moderator.  “You’ve talked to him more than anybody else has lately.”

“I don’t think he can serve four more years,” Stephanopoulos responded.  [ABC News execs were not happy with their star, and he apologized.]

And then there was Rep. Mikie Sherrill of New Jersey. 

I’ve told you in the past how I’m in one congressional district, with Rep. Tom Kean Jr., a Republican whom I support, but literally less than 200 yards away from where I live is the start of a different district, served by Democrat Sherrill, who I also like.  She’s a classic moderate, former Navy helicopter pilot and federal prosecutor. 

Sherrill has been a vocal supporter of Biden.  But Tuesday she put out a statement that read in part:

“I know President Biden cares deeply about the future of our country.  That’s why I am asking that he declare that he won’t run for reelection.”

Wednesday, former Speaker Pelosi declined to say definitively whether she wanted Biden to run, but she asked her colleagues on Capitol Hill with concerns about Biden to refrain from airing them while he hosts NATO leaders.

“I’ve said to everyone: let’s just hold off. Whatever you’re thinking, either tell somebody privately, but you don’t have to put that out on the table until we see how we go this week,” she said.  Pelosi declined to say definitively that she wanted Biden to run.

“I want him to do whatever he decides to do,” she said.  “We’re all encouraging him to make that decision because time is running short.”

New York Rep. Richie Torres – a member of the Congressional Black Caucus, which has been strongly supportive of Biden – put the potential down-ballot effects of a Biden candidacy bluntly.

“If we are going on a political suicide mission, then we should at least be honest about it,” he told CNN.

Rep. Pat Ryan of New York, one of the most vulnerable Democratic incumbents, said Biden should drop out “for the good of the country.”

And then in an opinion piece in the New York Times, actor and Democratic Party activist and donor, George Clooney, who had just hosted a huge fundraiser for the president last month with Barack Obama in attendance, withdrew his support

“It’s devastating to say it, but the Joe Biden I was with three weeks ago at the fund-raiser was not the Joe ‘big F-ing deal’ Biden of 2010.  He wasn’t even the Joe Biden of 2020.  He was the same man we all witnessed at the debate,” Clooney wrote.  “We are not going to win in November with this president. On top of that, we won’t win the House, and we’re going to lose the Senate.”

Then...Vermont Democrat Sen. Peter Welch became the first sitting senator to directly call for replacing Biden.

“For the good of the country, I’m calling on President Biden to withdraw from the race,” Welch wrote in an op-ed for the Washington Post in which he warned about the dangers of another Trump administration.

“We cannot unsee President Biden’s disastrous debate performance. We cannot ignore or dismiss the valid questions raised since last night,” Welch said. 

Separately, the White House was forced to explain why the visitor logs showed a doctor specializing in Parkinson’s disease was in the White House eight time from last August through March.

“Has the president been treated for Parkinson’s?  No.  Is he being treated for Parkinson’s?  No, he’s not.  Is he taking medication for Parkinson’s?  No,” White House press secretary Karine Jean-Pierre told a briefing.

--Editorial / New York Times

“The president, elected in 2020 as an antidote to Mr. Trump’s malfeasance and mendacity, is now trying to defy reality. For more than a year, voters have made it unquestionably clear in surveys and interviews that they harbor significant doubts about Mr. Biden’s physical and mental fitness for office. Mr. Biden has disregarded the concerns of those voters – his fellow citizens – and put the country at significant risk by continuing to insist that he is the best Democrat to defeat Mr. Trump.

“Since his feeble debate performance, multiple polls have shown that both Mr. Biden’s approval rating and his chance of beating Mr. Trump have markedly dropped from their already shaky levels.  In response, he has adopted a favorite theme of the floundering politician, insisting that the polls are wrong in showing that his presidency is historically unpopular.  Even if the polls were off by historic amounts, they would still be overwhelming skepticism about his fitness. The latest Times/Siena poll showed that 74 percent of voters think that Mr. Biden is too old to serve, an increase of five percentage points since the debate and not a figure that can be attributed to some kind of error or bias.

“He has denied that age is diminishing his abilities, not even bringing up the subject in a lengthy letter to congressional Democrats issued on Monday.  In that letter, he insisted that he is the candidate best equipped to defeat Mr. Trump in November – thereby dismissing the potential candidacy of Vice President Kamala Harris or any other younger, more vigorous Democrat, and in effect asking the American people to trust him instead of their own lying eyes.

“It’s not enough to blame the press, the donors, the pundits or the other elite groups for trying to push him out, as he did in the letter.  In fact, to use his own words, ‘the voters – and the voters alone – decide the nominee of the Democratic Party.’  But Democratic leaders shouldn’t rely solely on the judgment of the few voters who turned out in this year’s coronation primaries.  They should listen instead to the much larger group of voters who have been telling every pollster in America their concerns for a long time. Mr. Biden has to pay attention to the will of the broader electorate that will determine the outcome in November....

“President Biden clearly understands the stakes. But he seems to have lost track of his own role in this national drama.  As the situation has become more dire, he has come to regard himself as indispensable.  He does not seem to understand that he is now the problem – and that the best hope for Democrats to retain the White House is for him to step aside.”

Brett Stephens / New York Times

“It’s a familiar theme: the tragic hero who gains power to vanquish some evil and in doing so commits, or becomes, the evil he intended to vanquish. The Huey Long-like character of Willie Stark in Robert Penn Warren’s ‘All the King’s Men’ comes to mind, as does the figure of Brutus in Shakespeare’s ‘Julius Caesar.’

“And so, increasingly, does President Biden. The man elected to banish his self-deluded, deceptive, disrespected and destructive predecessor increasingly embodies those vices himself.

“So much is becoming clear in recent reporting about the president’s mental state. ‘Saying hello to one Democratic megadonor and family friend at the White House recently, the president stared blankly and nodded his head,’ Olivia Nuzzzi reported last week for New York magazine.  ‘The first lady intervened to whisper in her husband’s ear, telling him to say ‘hello’ to the donor by name and to thank them for their recent generosity.  The president repeated the words his wife had fed him.’

“There’s plenty more like this, including in The Wall Street Journal and The Times.  ‘Asked if one could imagine putting Mr. Biden into the same room with President Vladimir V. Putin of Russia today, a former U.S. official’ – who had helped prepare Biden for a recent trip to Europe – ‘went silent for a while, then said, ‘I just don’t know,’’ The Times reported.  ‘A former senior European official answered the same question by saying flatly, ‘No.’’

“We have gone from Howard Baker’s famous question about Richard Nixon – ‘What did the president know and when did he know it?’ – to something much more pathetic; What does the president know and does he even remember it?

“All this would be more sympathy-inducing if the president and his advisers weren’t engaged in what, to all outward appearances, looks to be an aggressive cover-up about the speed and extent of his decline... The president himself declared ‘my memory is fine’ in an angry rebuttal in February to the report of Robert Hur, the special counsel, which described him as a ‘well-meaning elderly man with a poor memory.’

“But the clearer it becomes that Hur was right, the more offensive the denials feel....

“This is worse than reckless... If the president’s secretaries, confidantes and family members think they are helping him or the country by assuming an ever-increasing share of his decision-making, they aren’t. They are usurping his authority, deceiving the nation and enticing our enemies into mischief or miscalculation.

“They are also feeding the rampant cynicism that in turn feeds MAGA nation. The embarrassment of Biden’s debate performance last month isn’t simply that it confirmed everything that Fox News gleefully alleged and MSNBC pompously denied about the president’s mental state.  It’s that it perfectly fit the narrative of a deep state that protects its own, that calls its critics liars while lying all the time, that can barely hold it together but maintains a very high opinion of itself....

“Now the president is compounding the damage with his insistence that he’ll be the Democratic nominee. The sheer narcissism that goes with putting personal ambition before the interests of your party or country is supposed to be Donald Trump’s thing.  At least the former president really does have the support of his party and, to judge by polls, a plurality of voters. Biden’s own ambitions seem to rest on data that, increasingly, are visible only to him.”

So we move on to Thursday and the critical press conference on the heels of the NATO summit.  Prior to the presser, President Biden introduced Volodymyr Zelensky as “President Putin,” but Biden immediately caught his mistake.

Hours later, in answering the first reporter’s question at the press conference, he referred to Vice President Harris as “Vice President Trump” and did not correct it.

Overall, for 50 minutes, answering questions from about ten reporters, Biden’s performance wasn’t catastrophic like the debate two weeks prior, but that’s quite a low bar.  I was not in the least impressed because I get the big picture, and it remains stunning to me how so many leaders in the Democratic Party miss it.

A typical statement the last few weeks has been something like, “Biden needs to reassure people in a convincing way.”

OK, convincing for the next month?  Six months?  How about 4+ years?

Rep. Bennie Thompson (D-Miss.): “All hands on deck.”  Then what?  What about 2025?  2026?

Sen. Chris Coons (D-Del.), the chief surrogate for Biden, uttered the all-too-familiar line these days, “Joe Biden gets knocked down, but he gets back up!”

Oh geezuz.  A real-life Rock ‘Em, Sock ‘Em Robot (for you old folks out there, and the child’s toy... “You knocked his block off?!”  “Yes, but you can put it back on.”)

As David Remnick, whose op-ed calling on Biden to step down I quoted last week, said the other day when talking of Democrats who have their head in the sand, “It’s a state of denialism.”

For the record, last night, Biden promised to stay in the race and “complete the job.”  He acknowledged concerns about his fitness but said he just had to “pace myself a little more.”

He often finished his answers with... “but anyway....”, never completing his thought.

To one reporter questioning his age, Biden said, “the only thing age does is create a little wisdom,” which is nothing but a bunch of bull. 

At times the president was totally incoherent, such as in talk of limiting “corporate rents to 5%” (?) and it was telling that immediately after, three more Democrats called on him to drop out...bringing the total to 17, one of them Rep. Jim Himes, who is one of the party’s best on foreign policy...as in he understands the stakes as well as anyone.  [He’d be a strong Veep candidate someday.]

Friday morning, at least one other congresswoman, Rep. Brittany Pettersen of Colorado, asked Biden to “pass the torch.”

I have my opinion.  For another, this was the opening of a Washington Post column.

“President Biden, in a pivotal news conference designed to save his candidacy, showed moments of fluency and command of detail as he parried questions from journalists, but also stumbled over words, conflated names and at times gave meandering answers.”

It was significant that House Minority Leader Hakeem Jeffries, who I respect, and like, met with Biden privately Thursday night, following the press conference, and did not offer the president his endorsement.  In a statement, Jeffries wrote in part:

“In my conversation with President Biden, I directly expressed the full breadth of insight, heartfelt perspectives and conclusions about the path forward that the Caucus has shared in our recent time together.”

Also Friday morning, some major Democratic donors told the largest pro-Biden super PAC, Future Forward, that roughly $90 million in pledged donations is now on hold if the president remains atop the ticket, according to multiple reports.

I am trying to be fair in my coverage of the president.  I’ve been doing this column for over 25 years, the same consistent format, the same treatment of every president I’ve covered.  Bush to Obama to Trump to Biden.  All four have come under scathing criticism in these pages.

In the end, this November it’s going to come down to turnout.  As it stands today, this is a truly awful choice.  I’ll cast a vote, but it won’t be for either one.  The question is, how many Americans will just totally sit it out, and what impact will that have on congressional races as well?

But for now, we await the next Biden disaster.

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Russia-Ukraine....

--Russia launched a number of attacks on Monday, killing at least 43 people, injuring 190, and severely damaging a children’s hospital in Kyiv.  At least 19 of the people killed were in the capital in a rare daytime aerial assault, during rush hour, the biggest bombardment of Kyiv in several months.

Dozens of others were killed and injured across Dnipro, Kryvyi Rih, Sloviansk, and Kramatorsk, President Zelensky said on social media.  “Ukraine is currently initiating an emergency meeting of the UN Security Council due to the Russian strike on civilian infrastructure, including the children’s hospital,” Zelensky said during a trip to Warsaw. The president vowed retaliation.

Zelensky also said: “The entire world must use all its determination to finally put an end to the Russian strikes.  Killing is what Putin brings.  Only together can we bring real peace and security.”

A UN rights mission said on Tuesday there was a “high likelihood” the children’s hospital took a direct hit from a Russian missile, as the Kremlin continued to deny involvement.

Even Indian Prime Minister Narendra Modi, in Moscow for a controversial visit with Vladimir Putin, who he called “my friend,” said his “heart bleeds” when children are killed in war, conflict or a terrorist attack, an implicit rebuke to Putin.

[Zelensky blasted Modi’s trip, calling it a “huge disappointment and a devastating blow to peace efforts.”]

The daylight attacks included Kinzhal hypersonic missiles, one of the most advanced Russian weapons, the Ukrainian air force said.  The Kinzhal flies at 10 times the speed of sound, making it hard to intercept.

After Zelensky vowed retaliation, Russia’s Defense Ministry said it had subsequently shot down 38 drones. An oil refinery was apparently struck.

--Prior to the attack on Kyiv and the other cities, a Russian attack on a power facility in Ukraine left 100,000 people without power in the northwestern region of Sumy.

--Back to the Modi visit to Moscow, Putin’s war effort has been funded in significant part by India’s purchases of Russian oil products, which have increased 20-fold since 2021.  For Modi, Russia remains a crucial source of weaponry and energy and space technology, as India seeks to become a great power.

--A Ukrainian drone attack triggered a large warehouse explosion in a Russian village on the border with Ukraine Sunday.  “The enemy stored surface-to-surface and surface-to-air missiles, shells for tanks and artillery, and boxes of cartridges for firearms,” a Ukrainian official said.  Russia claims its air defense systems shot down all the drones, and debris sparked explosions in the warehouse.

--Tuesday, heavy fighting continued in the eastern Donetsk region, with Russia claiming its forces captured the village of Yasnobrodivka.

--After visiting Kyiv and Moscow for talks last week, Hungarian Prime Minister Viktor Orban met Chinese President Xi Jinping on Monday, describing his unexpected trip to Beijing as the third-leg of a “peace mission.”  This was outrageous.

President Zelensky said on Monday Orban could not mediate between Russia and Ukraine, a task he said could only be undertaken by world powers such as China, the U.S. or EU.  Zelensky said at a press conference in Poland that Orban’s negotiations with Putin, which provoked a rebuke within the European Union, had not been coordinated with Kyiv.

“Even if (Putin) meets with a particular state, this does not mean he wants to end the war,” he said.

--In his speech welcoming NATO leaders in Washington, D.C., Tuesday, President Biden pledged to provide Ukraine with five new strategic air defense systems to counter Russia’s relentless attacks.

The president declared the military alliance “more powerful than ever” as it faced a “pivotal moment” in the war between Russia and Ukraine.

Biden said the U.S. would partner with Germany, Italy, the Netherlands and Romania to donate Patriot missile batteries and other systems to aid Ukraine, amid growing civilian casualties in the conflict.

For his part, President Zelensky, in attendance, urged U.S. political leaders not to wait for the outcome of the November election to move forcefully to aid his country.

“Everyone is waiting for November.  Americans are waiting for November, in Europe, Middle East, in the Pacific, the whole world is looking towards November and, truly speaking, Putin awaits November too,” Zelensky said.

“It is time to step out of the shadows, to make strong decisions...to act and not to wait for November or any other month.”

--Secretary of State Antony Blinken said a first batch of F-16s were already being transferred to Ukraine from Denmark and the Netherlands and would be flying over Ukrainian skies this summer.

NATO countries have committed 65 F-16s to Ukraine, and the greatest impact will likely come using those aircraft in large numbers, according to an analysis from the Center for Strategic and International Studies in Washington.  For example, “Ukraine needs close to 12 fighter squadrons to achieve the air support needed for the war on the ground, with four squadrons primarily responsible for each core mission set: (1) suppression of enemy air defenses, (2) air interdiction, and (3) defensive counter air. This aim would require 216 F-16s, with 18 aircraft in each squadron.” That is, of course, considerably more than have been pledged so far.

Big picture: “The United States must decide what type of Ukrainian armed force it wants to support,” the three CSIS analysts write.  “Is it a Ukraine that can defend, deter, or defeat Russia?  Regardless of wanted outcomes, Ukraine needs more aircraft, and it needs them now.” [Defense One]

Plans to deliver F-16 fighter jets to Ukraine show that the United States is leading a “war gang” fighting Russia, the state-run TASS news agency quoted Russian Foreign Ministry spokeswoman Maria Zakharova as saying on Wednesday.

--Russia launched 20 drones and five missiles at Ukraine on Wednesday, killing two people in the Black Sea region of Odesa, damaging port infrastructure and hitting another energy facility in the northwest, officials said.

--Ukraine has strengthened its frontline defenses, making significant Russian gains less likely.

“Ukrainian forces are stretched thin and face difficult months of fighting ahead, but a major Russian breakthrough is now unlikely,” said Michael Kofman, a senior fellow in the Russia and Eurasia program at the Carnegie Endowment for International Peace.  [Defense One]

--So at the NATO meeting, leaders issued the alliance’s strongest language calling out China’s military support for Russia amid signs that Beijing is developing an attack drone for the conflict with Ukraine.

In a declaration issued Wednesday night, NATO described China as a “decisive enabler” of Russia’s war against Ukraine.

The communique detailed China’s supply of dual-use materials such as weapons components, equipment and raw materials that are used in Russia’s defense sector.

The declaration said China poses “systemic challenges to Euro-Atlantic security,” including through cyber activities and disinformation as well as its development of counter-space capabilities.

“We urge all countries not to provide any kind of assistance to Russia’s aggression.  We condemn all those who are facilitating and thereby prolonging Russia’s war in Ukraine,” the alliance said.

A spokesman for the Chinese mission to the European Union said NATO’s statement is full of “belligerent rhetoric” and the China-related content has provocations and lies.

European capitals were alarmed by reports this month that Chinese and Russian companies were developing an attack drone similar to an Iranian model deployed in Ukraine, Bloomberg reported earlier.

The push from NATO shows a growing consensus between the United States and its partners that Beijing represents not just a threat in Asia, but also to European security through its support for Russia.

But Hungary does not want, and will not support, NATO becoming an “ant-China” bloc, Foreign Minister Peter Szijjarto told Hungary’s state television.  He added that Ukraine’s admission to the alliance would weaken unity within the group.  Of course, Prime Minister Viktor Orban was just in China, promoting business ties.

And Thursday, Orban met with Donald Trump in Florida to discuss “ways to make peace.”  Oh brother.

NATO members pledged their support for an “irreversible path” to future membership for Ukraine, as well as more aid.

While there is no formal timeline for Kyiv to join the alliance, the 32 members said they had “unwavering” support for Ukraine’s war effort.  [Make that 31.]

Secretary-General Jens Stoltenberg said: “Support to Ukraine is not charity – it is in our own security interest.”

Zelensky continued to press the U.S. to greenlight missile strikes on Russian bases.  At a Wednesday speech, the Ukrainian president highlighted Russia’s strikes on population centers with guided bombs.

To prevent the attacks, Zelensky reiterated his country’s need to use U.S.-provided long-range weapons to target airfields hundreds of miles inside Russia.  “We can protect our cities from Russian guided bombs if American leadership takes a step forward and allows us to destroy Russian military aircraft on their bases,” he said.

--A Russian court on Tuesday ordered the arrest of the self-exiled widow of the opposition leader Aleksei Navalny, accusing her of “participating in an extremist community.”

The court order against Yulia Navalnaya, who left Russia in 2021, comes five months after her husband’s death under murky circumstances in a Russian penal colony.

Navalnaya has repeatedly accused Vladimir Putin of murdering her husband and has vowed to continue his opposition work.  She has become an outspoken critic of Russia’s war in Ukraine, using episodes like Russia’s attack on the children’s hospital to blame Putin and the Kremlin for the bloodshed.

--Russia designated the English-language Moscow Times, an outlet focusing on covering Russia, an “undesirable organization,” effectively banning its operations and exposing anyone collaborating with it to potential criminal charges.

“A decision has been taken to declare the activities of the Moscow Times, a foreign nongovernmental organization, an undesirable on the territory of the Russian Federation,” Russia’s prosecutor general’s office said in a statement Monday.

I’ve long read the Moscow Times, and used to give it a little money, which makes me an “undesirable” under Russia’s definition.

The MT moved its offices to Amsterdam in 2022 after Russia passed a package of laws restricting coverage of the invasion of Ukraine.

--Finland’s parliament passed a law on Friday granting border guards the power to block asylum seekers crossing from Russia, after more than 1,300 people arrived in the country, forcing Helsinki to close its border.

Finland has accused Russia of weaponizing migration by encouraging scores of migrants from countries such as Syria and Somalia to cross the border, an assertion the Kremlin denies.  Helsinki believes Russia is making the move in retaliation for Finland joining NATO.

--The U.S. and Germany foiled a Kremlin plot to assassinate a top European arms maker’s CEO, CNN first reported.  Moscow’s target was Rheinmetall CEO Armin Papperger, who has led the German manufacturing charge in support of Ukraine.

“The plot was one of a series of Russian plots to assassinate defense industry executives across Europe who were supporting Ukraine’s war effort,” the sources said, according to CNN’s Katie Bo Lillis.

“Targeting people like Papperger is something very different – killing ‘enemies’ rather than ‘traitors’ in Putin’s parlance, and non-Russians, at that,” said renowned Putin scholar Mark Galeotti of the London-based Royal United Services Institute. [Defense One]

--Finally, last Saturday, Ukrainian service members gathered in Kyiv to pay last respects to a British combat medic who set up a charity delivering essential supplies to front-line fighters.

Peter Fouche died at the front line a week ago Thursday as his unit clashed with Russian troops, according to a statement by Project Konstantin, a volunteer group that since 2022 has ferried drones, vehicles, uniforms and food to Ukrainian soldiers in the east. Its efforts have helped to evacuate some 220 Ukrainian soldiers from combat zones.

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Israel-Hamas....

--The Israeli Defense Forces (IDF) initiated a reinvasion of Gaza City on Monday for the first time since January, including accompanying tanks and air strikes.  It’s the fifth reinvasion of Gaza by the IDF since it achieved operational control over northern Gaza and central Gaza in January-February.

At least 17 people were killed in separate Israeli strikes in Gaza on Sunday.  Tanks deepened their raids in central and northern areas of Rafah.

Earlier on Monday, the military said IDF ground troops killed over 30 terrorists in the Rafah area in the past day, while overnight, the Israel Air Force carried out strikes in the center of the Gaza Strip.  The IDF later said that more than 150 fighters were taken out of action in the last week.

Locals told Reuters “Gaza City is being wiped out.”

Hamas chief Ismail Haniyeh said Monday that Israel’s military actions in Gaza could push mediated ceasefire talks back to square one.  In a call with mediators, Haniyeh said he held Prime Minister Benjamin Netanyahu and Israel fully responsible for the potential collapse of negotiations, Hamas said.

Netanyahu said Sunday that any ceasefire deal must allow Israel to resume fighting until its objectives are met.

“The plan that has been agreed to by Israel and which has been welcomed by President Biden will allow Israel to return hostages without infringing on the other objectives of the war,” Netanyahu said.   The deal must also prohibit weapons smuggling to Hamas via the Gaza-Egypt border and should not allow for thousands of armed militants to return to northern Gaza.

Protesters took to the streets across Israel again on Sunday to pressure the government to reach an accord to bring back hostages still being held in Gaza.

CIA Director William Burns traveled to Qatar for negotiations that were to resume Wednesday.

--At least 29 Palestinians have been killed and dozens wounded in an Israeli air strike on a camp for displaced people outside a school in southern Gaza, hospital officials said Tuesday. The strike hit next to the al-Awda school in a town east of the city of Khan Younis.

The Israeli military said it had used “precise munition” to target a “terrorist from Hamas’ military wing” who, it said, had taken part in the October 7 attack.

It said it was “looking into the reports that civilians were harmed” adjacent to the school, which houses displaced people from the eastern villages of Khan Younis.

The incident came a week after the IDF ordered civilians to evacuate the area, prompting tens of thousands to flee.

--Two Israelis were killed when Hezbollah fired dozens of rockets at the Golan Heights on Tuesday, Israeli police said, as the Lebanese group retaliated after a former bodyguard of its leader was killed in an Israeli strike.  One rocket hit a car in the Golan that instantly killed a man and woman, police said.

Israel then hit Hezbollah infrastructure targets in southern Lebanon.  Earlier, an Israeli airstrike hit a vehicle in Syrian territory on the Damascus-Beirut highway, killing one of Hezbollah leader Sayyed Hassan Nasrallah’s former bodyguards, who security sources said was recently involved in transporting weapons for the Iranian-backed group.

Nasrallah said Hamas was conducting Gaza ceasefire talks with Israel on behalf of the entire “Axis of Resistance*” and, if a deal was reached, Hezbollah would stop its operations with no need for separate talks.

At the same time, Nasrallah warned that Hezbollah was ready for and did not fear a war and pointed to the ever-larger salvos of rockets and drones the group has fired at Israel as evidence.

*Axis of Resistance includes Yemen’s Houthis and Shiite armed groups in Iraq.

---

Wall Street and the Economy

Federal Reserve Chairman Jerome Powell gave his semi-annual testimony to the Senate and House banking committees.  Tuesday, he told the Senate that the U.S. is “no longer an overheated economy” with a job market that has cooled from its pandemic-era extremes and in many ways is back where it was before the health crisis, Powell said, suggesting the case for interest rate cuts is becoming stronger.

“We are well aware that we now face two-sided risks,” and can no longer focus solely on inflation, Powell said.  “The labor market appears to be fully back in balance.”

Powell told lawmakers that he did not want “to be sending any signals about the timing of any future actions” on interest rates, a stance consistent with the chair’s recent efforts to focus attention more on the evolution of economic data – and the possible choices the Fed might make in response – and less on firm guidance about what might happen on what timetable.

The Chair also said he needs “more good data” to strengthen the case that inflation is moving toward the Fed’s 2% target.  Recent readings may point to “modest further progress” on prices, he said, but apparently Powell wants more.

“Elevated inflation is not the only risk we face,” he said.  “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

Wednesday, Powell, in his House testimony, said he was not yet ready to declare inflation had been beaten, but felt the U.S. remained on a path back to stable prices and continued low unemployment.

On whether he thought the Fed is confident as to inflation heading back to the 2% target, Powell said: “I do have some confidence of that,” but as to whether the bar had been cleared, he replied, “I am not ready to say that yet.”

Otherwise, his comments were the same as Tuesday’s, showing both increased faith in a continued decline in inflation and a growing sensitivity about the risk of keeping monetary policy too tight for too long and slowing the economy more than necessary.

So then the consumer price data for June was released Thursday morning and it was more of what the Fed ordered.  Prices declined for the first time since Jan. 2021, -0.1% when a gain of 0.1% was expected; 0.1% ex-food and energy.  For the 12 months, headline CPI was up 3.0%, also below expectations, ditto core, 3.3% when 3.5% was forecast.

There is no reason for the Fed at its next Open Market Committee meeting, July 30-31, not to now telegraph the first rate cut for September (9/17-18).  True, 3% isn’t 2%, but it’s hard to refute the progress.

Producer prices for June came out today and as opposed to CPI, the numbers were all above consensus, and in the case of year-over-year, well above.

The PPI rose 0.2%, ex-food and energy 0.4%; 2.6% year-over-year on headline, 3.0% on core.

But PPI doesn’t have the impact on the bond market CPI does and yields were little changed today after cratering on the tame CPI data Thursday.

Meanwhile, on Thursday, the Treasury Department revealed the June federal budget deficit was $66 billion – a figure that would have been more than twice as large if not for calendar-related quirks in the timing of payments.

The deficit for the first nine months of the fiscal year was $1.26 trillion.  The Congressional Budget Office projects the fiscal 2024 shortfall will be $1.9 trillion, topping the 2023 deficit of $1.7 trillion.

The interest on public debt in June hit $140 billion and totaled $868 billion in the first nine months – 33% higher than in the same period last year.

The Atlanta Fed’s GDPNow barometer for second-quarter growth rose to 2.0%.

Freddie Mac’s 30-year fixed-rate mortgage is at 6.89%.

Aside from earnings season kicking into gear next week, the only item of significance on the economic calendar is the June report on retail sales.

Europe and Asia

There was no major economic data for the eurozone this week, after last week’s deluge.

The European Union did release population figures, showing that the bloc’s population has returned to growth after the pandemic – but thanks only to migration.  The EU’s average fertility rate is about 1.46 per woman, well below the “replacement rate” of 2.1.  Spain (1.16), Italy (1.24) and Poland (1.29) would face a population collapse without immigration. Spain, on one hand, saw its population grow by 525,100 last year thanks to new arrivals; Poland, on the other, shrank by 132,800.

France: Despite polls predicting a majority for the National Rally (RN), which had led the first round of voting, a left-wing alliance called New Popular Front (NFP) won the most seats in Sunday’s second round, while the coalition of parties supporting President Emmanual Macron came in second.

The Left won 182 seats
Emmanuel Macron’s centrist alliance 168
Marine Le Pen’s National Rally and allies 143 (up 54 from last election)
Les Republicans (Conservatives) 46
Other 38

Turnout was strong, 67 percent (highest since 1997), vs. only 46 percent in the second round of the last legislative elections, 2022.

RN did take the highest percentage vote at 32.05%.  But the people, for the umpteenth time, said they do not want the far right in power.  A win in the European elections, yes.  A win in the first-round of this parliamentary election, yes.  But in the end, “non, merci”.

Their shared strategy of withdrawing candidates to leave a single option for anti-far right voters relegated RN to third place.  But the ultimate outcome, which France has not seen before, is a hung parliament, as none of the three blocs were close to a majority, needing 289 seats.

Many of France’s allies breathed a sigh of relief after National Rally failed to win.  But with the leftist New Popular Front alliance, hastily assembled before the election, unexpectedly coming first but far from an absolute majority, the election heralded a period of volatility and possible gridlock.

“It’s not going to be simple, no, it’s not going to be easy, and no, it’s not going to be comfortable,” said Green party leader Marine Tondelier. “It’s going to take a bit of time.”

The left said Monday it wanted to run the government but conceded that talks would be tough and take time.  It could form a minority government – which would be at the mercy of a no confidence vote from rivals unless they reach deals – and the cobbling together of an unwieldy coalition of parties with almost no common ground.

“We’ll need some time,” NFP lawmaker Pouria Amirshahi told reporters as newly elected lawmakers arrived in parliament to pick up their badges and settle in.  Any option will be complex and the NFP has no single leader.

“The President of the Republic must call on us to run the government, to respect the outcome of the election,” Manuel Bompard of the hard left France Unbowed said before a meeting with the Socialists, Greens and Communist to decide on what strategy the NFP would take.

RN leader Jordan Bardella, who called the cooperation between anti-RN forces a “disgraceful alliance” that he said would paralyze France, acknowledged that the party had made mistakes, including on the choice of some of its candidates, but assured supporters that Sunday’s ballot had sown the seeds for future victory for the far right.

Bardella’s boss, Marine Le Pen, placed the blame for the political impasse squarely on Macron.

“Today, we find ourselves in a quagmire since no one is able to know from what rank the prime minister will come, or what policy will be pursued for the country,” Le Pen told reporters.  She condemned the pre-election deals that kept National Rally from power.

Meanwhile, Prime Minister Gabriel Attal, a centrist and ally of Macron, tendered his resignation but Macron asked him to stay on for now “in order to ensure the country’s stability,” the president’s office said.

A fragmented parliament will make it hard for anyone to push through a domestic agenda and is likely to weaken France’s role in the European Union, and further afield.

“The most immediate risk is a financial crisis and France’s economic decline,” said the current finance minister, Bruno Le Maire.

There was no consensus on the left on questions such as whether the bloc should seek support from other forces such as Macron’s centrists.

France Unbowed’s firebrand leader Jean-Luc Melenchon has ruled out any deal with centrists, and his party won the most seats in Parliament, 75, among those in the coalition.

But the left-wing bloc, whose main proposals include reversing Macron’s pension reform and capping prices of key goods, will need some kind of agreement with lawmakers from outside the bloc if they are to govern.

Some prominent centrists said they would work on a pact but would not work with France Unbowed, which many French centrists see as extreme as the RN.

Macron, whose term ends in 2027, looks unlikely to be able to drive policy again, though he had already pushed through much of his agenda including increasing the pension age, a move that caused street protests, and a divisive immigration bill.

Le Pen, who will likely be RN’s candidate for the 2027 presidential election, said Sunday’s ballot, in which the RN did indeed make major gains, had sown the seeds for the future.

“Our victory has been merely delayed,” she said.

[For the record, in the 2017 presidential election, Macron defeated Le Pen 66-34.  In 2022, Macron beat her again, but 58-41.  So, RN is right to say they are making progress.  But it’s a big leap to victory.]

In the here and now, it is going to take intense negotiations to eventually form a viable government.  Macron could appoint a prime minister from outside his party and share power, but he has labeled the far-left and far-right parties too “extreme,” and other political groups have shown little appetite for working with him.

Breaking his silence Wednesday on the vote, Macron called on mainstream parties to join forces to form a solid majority in the National Assembly.

UK: The new government has hit the ground running, taking a big step to boost public and private investment to modernize the economy on Tuesday, placing a National Wealth Fund atop the existing state-owned British Business Bank and UK Infrastructure Bank.

Prime Minister Keir Starmer and his finance minister Rachel Reeves hope to attract investment in new and growing industries as part of their push to speed up Britain’s economy and meet the challenge of net zero.

Starmer has rejected Labour’s long-held image as a “tax and spend” party and has pledged to channel more private investment to fix problems in Britain’s economy.  Labour plans to allocate an additional 7.3 billion pounds ($9.35 billion) of public money via the existing UK Infrastructure Bank so investments can be launched immediately. The government hopes to attract three times as much from private capital to invest in areas such as ports, hydrogen, automotives and steel.

Starmer then was at the NATO summit as leader of the UK on the world stage for the first time.

Turning to Asia...China reported on June inflation, up 0.2% year-over-year, while producer prices in the month fell 0.8% Y/Y.

June exports rose 8.6% year-over-year, imports fell 2.3%.  Exports grew to the U.S. by 6.6%, and by 4.1% to the EU. [Source: General Administration of Customs]

China’s third plenum, a seminal event typically held every five years and originally expected late last year, kicks off on Monday. Various reforms top the agenda, including an overhaul of the fiscal system to redirect income from Beijing to cash-strapped regional governments.

And we have a slew of important economic data coming up, including second-quarter GDP Sunday evening.

Japan’s producer price index for June came in at +2.9% year-over-year.

May industrial production rose 1.1% Y/Y.

Street Bytes

--Stocks surged again, with even the Dow Jones getting into the action, hopes for a rate cut in September helping fuel the latest rally.

But the Dow, which was in record territory Friday afternoon, fell off at the close to fall just 3 points shy at an even 40000, up 1.6% on the week.  The S&P 500, up 0.9%, and Nasdaq, +0.3%, hit new highs on Wednesday.

Among the big earnings reports for next week are Goldman Sachs, Netflix and Taiwan Semiconductor.

--U.S. Treasury Yields

6-mo. 5.19%  2-yr. 4.45%  10-yr. 4.18%  30-yr. 4.39%

The bond market liked the good CPI news, with the yield on the 2- and 10-year at their lowest levels since March.

--Apple stock continued to hit new all-time highs, the market cap $3.573 trillion at the close on Wednesday, shares $233, with the company announcing ambitious plans to increase iPhone sales, counting on AI services to fuel demand after a bumpy 2023.

Apple will ship at least 90 million iPhone 16 devices in the second half, targeting about 10% growth in shipments compared with the model’s predecessors.

--We had the first big-bank earnings reports today and the shares in all three, JPMorgan Chase, Wells Fargo and Citi, fell, though they’ve been on a roll.

JPM’s profit rose in the second quarter, buoyed by rising investment banking fees and an $8 billion accounting gain from a share exchange deal with Visa.  Investment banks have benefited from a resurgence in capital-raising activity both in debt and equities markets.

“While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks,” CEO Jamie Dimon said, adding that the risks are still there, including a changing geopolitical situation, which remains the most dangerous since World War II.

“There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Dimon said in a statement.

The largest U.S. bank’s profit was $18.15 billion, or $6.12 per share, for the three months ended June 30, compared with $14.47 billion, or $4.75 per share, a year earlier.  But without the gain from its share exchange deal with Visa, profit fell.  And the bank set aside $3.1 billion to cover potentially bad loans, up sharply from a year earlier, as JPM acknowledged that delinquencies were climbing among some Americans, though executives said on an earnings call that the U.S. consumer overall is doing just fine.

Wells Fargo’s second-quarter profit declined, and it missed estimates for interest income as the lender shelled out more to hold on to customers’ deposits amid intense competition, the shares down more than 6%.  Profit came in at $4.91 billion in the quarter, or $1.33 per share, beating the Street’s target of $1.25.

Lenders are now facing the fallout of higher-for-longer interest rates as more borrowers balk at taking out new loans at high costs.  Banks are also having to pay more to retain customers who are hunting for greater yields for their money.

WFC’s net interest income (NII) – or the difference between what it earns on loans and pays out for deposits – fell 9% to $11.92 billion in the second quarter, when the Street was looking for $12.12 billion.  NII could fall another 7% to 9% this year, the company said on Friday.

Wells has been beefing up its investment banking division and that paid off, revenue surging 38% to $430 million in Q2.

Citigroup reported second-quarter profit of $3.22 billion, $1.52 per share, boosted by a 60% jump in investment banking revenue and gains in its services division.    

The results come two days after U.S. regulators fined Citi $136 million for making “insufficient progress” in fixing data management problems identified in 2020.

CEO Jane Fraser is carrying out a sweeping overhaul in an effort to improve the bank’s performance, cut costs and simplify its sprawling businesses.  As part of the turnaround, Citi aims to shrink its workforce by 20,000 over the next two years.

--Yemen’s Houthis said on Tuesday they targeted the Maersk Sentosa ship in the Arabian sea with several ballistic and wing missiles.  Earlier in the day, Maersk said one of its vessels had reported being targeted but the shipping giant said no injuries to the crew or damage to the ship or cargo was reported.

Maersk has been avoiding the Red Sea, leading to longer shipping routes and higher costs and it wasn’t clear where the ship was coming from or going.

--Boeing confirmed that it reached an agreement with the Justice Department. It will plead guilty to criminal conspiracy charges tied to the 2018 and 2019 crashes of its 737 MAX jet. The move has some implications for its overall aerospace and defense business as a government contractor.

The government typically bars or suspends firms with records from participating in bids but can grant waivers.  Boeing is also the sole alternative for many of the Defense Department’s projects.

Boeing will pay a $244 million fine and spend more on compliance and training. Boeing will also be subject to an independent compliance monitor for three years. Aviation regulators have intensified their oversight on the plane maker since the blowout of a door plug during an Alaska Air flight in January.

Separately, the company said it delivered 44 commercial aircraft in June, the highest monthly total since Boeing curbed work in its factories in the wake of the above-noted near-catastrophe in early January involving a 737 MAX jetliner.

Thirty-seven of the 44 planes were MAX models.

Rival Airbus delivered 67 jets in the month, including 53 of its narrowbody A320neo models that compete directly with the MAX.

But Boeing has notified some 737 MAX customers in recent weeks that aircraft due for delivery in 2025 and 2026 face additional delays.

--Aer Lingus will accept Labour Court proposals boosting pilots’ pay by 17.75 percent in a bid to end a dispute that prompted the airline to cancel almost 550 flights.

The total pay increases would be up to July 2026, backdated to January 2023, along with increases to pilots’ overnight allowances.

--A United Airlines jet, a Boeing 757-200, lost a landing-gear wheel on Monday when it took off from Los Angeles but landed safely in Denver, its planned destination, with no injuries, the airline said. The wheel was recovered in L.A.  United is lucky the wheel didn’t kill anyone on the ground.  The aircraft was nearly 30 years old.

Wednesday, an American Airlines plane suffered a tire blowout as it was preparing to take off from Tampa International Airport, causing a small fire.  All those on board were safe and booked on other flights to the destination, Phoenix.

--Delta Air Lines shares opened down 9% Thursday, before recovering some, after the company reported second-quarter adjusted earnings that fell short of expectations, $2.36 vs. consensus of $2.38, and down from last year’s $2.68.

Operating revenue for the quarter ended June 30 was $16.66 billion, which did beat forecasts.

But for the current quarter, Delta said it expects $1.70 to $2 in adjusted EPS and 2% to 4% revenue growth, while the Street was at $2.06.  The airline cited discounting pressure in the low end of the market, while also reporting a hit to transatlantic bookings as travelers are avoiding Paris due to the Olympic Games.

Airlines are enjoying a summer travel boom, but it’s failed to lift earnings at most of the U.S. carriers as excess industry capacity has undermined pricing power.  The average round-trip ticket price for a U.S. domestic flight was $543 in May, down 1% month-on-month and 3% lower from a year earlier, according to data from Airlines Reporting Corporation.  American and Southwest have cut their revenue for the second quarter, citing discounting pressure.

So, you might be thinking, I thought there was a shortage of planes due to production and engine issues, which was expected to drive up airfares.  But instead, the airlines rushed to capitalize on travel demand and that has caused overcapacity.

[United and American Airlines earnings are next week.]

--Germany’s Lufthansa slashed its 2024 earnings guidance for a second time this year and issued a profit warning on Friday for its second quarter as one of Europe’s top airlines struggles with low yields and operations problems.  Same story. High labor and operating costs, as well as pressure on tickets prices.

--TSA checkpoint numbers vs. 2023

7/11...104 percent of 2023 levels
7/10...107
7/9...108
7/8...104
7/7...114...3,013,413...finally break the 3M mark
7/6...108
7/5...95
7/4...87

--Tesla shares rose 11 straight days through Wednesday, a stunning 45% advance since June 24, before falling 8% on Thursday on word the company is delaying the launch of the Robotaxi to October from August, Bloomberg News first reported, citing people familiar with the decision. [Tesla didn’t refute the story.]

To combat a slowdown in EV sales, which generate more than 80% of Tesla’s quarterly revenue, the company has shifted focus over the past few months to its artificial-intelligence efforts such as its Robotaxi and Optimus humanoid robot.

Tesla’s once-commanding share of the electric vehicle market slipped below 50 percent in the second quarter of the year, according to estimates published Tuesday by Cox Automotive.

Tesla accounted for 49.7 percent of EV sales from April through June, down from 59.3 percent a year earlier as Elon Musk’s company lost ground to General Motors, Ford, Hyundai and Kia.  It was the first time Tesla’s market share fell below 50 percent in a quarter.

Overall, U.S. electric vehicle sales climbed 11.3 percent from a year earlier, suggesting that demand for the technology remains healthy even if sales are no longer growing at more than 40 percent a year as they were in 2023.  Americans bought or leased more than 330,000 electric cars and light trucks during the quarter, accounting for 8 percent of all new cars sold or leased in the three-month period.  A year earlier, EVs accounted for 7.2 percent of the market, Cox said.

One more on Tesla owner Elon Musk.  His SpaceX’s workhorse Falcon 9 rocket was grounded by the Federal Aviation Administration on Friday after one broke apart in space and doomed its payload of Starlink satellites, the first failure in more than seven years of a rocket relied upon by the global space industry.

Roughly an hour after Falcon 9 lifted off from the Vandenberg Space Force Base in California on Thursday night, the rocket’s second stage failed to reignite and deployed its 20 Starlink satellites on a shallow orbital path where they will soon reenter and burn up in Earth’s atmosphere.  We hope.

The rocket had a streak of more than 300 straight missions.  But the investigation and fix, needing agency approval, could take several weeks or months.

--AT&T reported a major security breach, a download of customer data from 109 million U.S. accounts.

“We understand that at least one person has been apprehended,” said the company.

The compromised data includes records of calls and texts of nearly all of its cellular customers, customers of mobile virtual network operators using its wireless network, as well as its landline customers who interacted with those cellular numbers between May 1, 2022, and Oct. 31, 2022.

According to AT&T, the downloaded records identify telephone numbers but do not contain the content of calls or texts or personal information such as Social Security numbers, customer names and dates of birth.

As Church Lady would have said, “Well, isn’t that special...”

--A jury in federal court in Manhattan on Wednesday found the investor Bill Hwang guilty on charges arising from the collapse of Archegos Capital Management, which led to roughly $10 billion in losses for a handful of big Wall Street banks.

The 12-person jury deliberated for nearly two days after a two-month trial that featured two key witnesses who were former employees of Archegos, which Hwang had set up in 2013 as a giant family office that traded like a hedge fund but with little regulatory oversight.

Hwang, 60, was charged with 11 counts of securities fraud, wire fraud, conspiracy, racketeering and market manipulation.  The jury found him guilty on 10 of the charges. 

The jury also convicted Patrick Halligan, the former chief financial officer, on all three counts against him.

The sudden collapse in 2021 of Archegos – which managed $36 billion in Hwang’s family money – wiped out most of his personal fortune in addition to causing the steep losses for the banks that had facilitated his firm’s trading. Credit Suisse, since taken over by UBS, lost $5.5 billion.  UBS itself lost about $860 million from lending to Archegos. The fire sale of at least $20bn-worth of equities also left Nomura with multi-billion losses.

Hwang faces 20 years in prison.

Damian Williams, the U.S. attorney for the Southern District of New York, afterwards said in a statement that both men had “lied about Archegos’ positions in these companies and just about every other materially important metric investment banks would use in determining the firm’s creditworthiness.”

--Intuit is eliminating 1,800 jobs and will close facilities in Boise, Idaho and Edmonton, Alberta, Canada in a reallocation of resources supporting artificial intelligence initiatives and other high-growth sectors, the software firm said Wednesday in an SEC filing.

CEO Sasan Goodarzi said the company has maintained “a successful track record of self-disruption and reinvention,” stressing the current layoffs are not intended to merely cut costs.

Intuit expects to hire “a nearly equivalent number of employees” during fiscal 2025, with many of the new and existing employees working in the company’s AI-powered financial assistant platform, Intuit Assist, Goodarzi said.

--Allstate joined State Farm in seeking to raise its California homeowners’ insurance premiums by an average of 34%.  Last month State Farm sought a 30% increase.

--France’s wheat harvest is seen slumping to levels near those last seen in 2020, as excessive rain in Europe’s biggest agricultural producer hurt the crop outlook.  Bad weather has also battered crops in other major exporters like Russia, with the U.S. Department of Agriculture forecasting global stockpiles to hit a nine-year low.

--Paramount Global agreed to merge with Skydance Media in a deal that hands control of the storied Hollywood studio to producer David Ellison (son of Oracle’s Larry Ellison), ending one of the industry’s most dramatic acquisitions.

As part of the complicated deal, Paramount Chair Shari Redstone agreed to sell her family’s National Amusements Inc., which controls about 77% of the voting stock in Paramount, for $2.4 billion.

The accord marked an abrupt turnaround after talks between Redstone and Ellison collapsed last month.

--Speaking of Hollywood, overall domestic box-office sales for the first half of the year, through June 30, totaled $3.61 billion, 19% below 2023. 

But the Fourth of July holiday weekend was a good one, led by animated films “Despicable Me 4” and “Inside Out 2,” the latter becoming Pixar’s top-grossing animated film of all time at $1.242 billion, both domestically and internationally.

Foreign Affairs, Part II

China: President Xi Jinping called on world powers to help Russia and Ukraine resume direct dialogue and negotiations during a meeting Monday with Hungary’s Prime Minister Viktor Orban, according to state broadcaster CCTV.

Orban, as alluded to above, made a surprise visit to China after similar trips to Moscow and Kyiv to discuss prospects for a peaceful settlement in Ukraine.

Orban praised China’s “constructive and important initiatives” for achieving peace and described Beijing as a stabilizing force amid global turbulence, according to CCTV.

“The number of countries that can talk to both warring sides is diminishing,” Orban said. “Hungary is slowly becoming the only country in Europe that can speak to everyone.”

Regarding Taiwan, Isaac Stone Fish, CEO and founder of Strategy Risks, a firm that quantifies corporate exposure to China, had an op-ed in the Wall Street Journal with a possible scenario involving the U.S. election.

“There are not two plausible outcomes for the immediate aftermath of Election Day on Nov. 5, but three: former President Donald Trump wins, President Joe Biden – or his replacement – wins and Trump yields, or Trump claims he won even though Biden won or it’s still too close to call.  This third scenario would be a dream for autocrats the world over.  The struggle over the presidency would give them a wonderfully opportunistic window to exploit a power vacuum.

“Chaos – or, almost equally damaging, the perception of chaos – would enable Russia, North Korea, Turkey, and Saudi Arabia to push for global or domestic changes the U.S. may have opposed. Even democratic U.S. allies such as Israel, the Philippines, and Japan could use this period to implement decisions Washington opposes.  Biden’s mesmerizingly awful debate performance and the uncertainty it sparked may already have elicited some of this planning.  A power struggle would be far worse.”

Isaac Stone Fish then lays out some scenarios for China attacking Taiwan, including an assassination plot like that of which I wrote recently, and then this....

“Innumerable factors shape a U.S. president’s decision to go to war.  Domestic approval, Congressional relations, and economic realities all factor in.  But distraction and fatigue also play a role.  Defending Taiwan from Beijing would be a momentously difficult task for any commander in chief. An aging U.S. president, enmeshed in an unprecedented domestic political crisis, will find it supremely taxing.

“In January, Jen Easterly, the director of the Cybersecurity and Infrastructure Security Agency, painted a picture of ‘massive’ Chinese cyberattacks across America. She warned of a scenario with ‘telecommunications going down so people can’t use their cell phone, people start getting sick from polluted water,’ and trains getting derailed.  Beijing, Easterly said, believes these attacks would ‘crush American will’ to defend Taiwan. She might be right, especially if Beijing is careful to avoid harming Americans at the outset.  Barring American casualties on the scale of Sept. 11 or Pearl Harbor, a U.S. in domestic political crisis may simply stay on the sidelines of China’s invasion.  Or so Xi may gamble.

“A Taiwanese invasion, successful or not, will reshape the world.  At this late date, for business and investors to lack a plan for how they would respond is folly.”

Taiwan said Friday that the People’s Liberation Army sent a record number of warplanes across the median line of the Taiwan Strait, as a PLA aircraft carrier strike group conducts drills in waters southeast of Taiwan.

Taiwan’s defense ministry said 66 PLA planes and drones had been detected in the island’s air defense identification zone in the 24 hours from early on Wednesday.  Fifty-six crossed the median line.

Japan and the Philippines signed a key defense pact Monday that will allow the deployment of Japanese forces for joint military exercises, including live-fire drills, to the Southeast Asian nation that came under brutal Japanese occupation in World War II but is now building an alliance with Tokyo as they face an increasingly assertive China.

The Reciprocal Access Agreement will also allow Filipino forces to enter Japan for joint combat training.  Both countries’ legislatures need to ratify the pact.

Australia accused China of supporting APT40, a cyber- hacking group that is “actively conducting regular reconnaissance against networks of interest in Australia.”  The statement by the Australian Signals Directorate, the national cyber-security agency, was backed by several other countries, including America, Britain and Japan.  They cited a “shared understanding” of the threat posed by the Chinese “state-sponsored cyber group.”

North Korea: Kim Yo Jong, the powerful sister of leader Kim Jong Un, accused South Korean President Yoon Suk Yeol of generating tensions on the Korean peninsula to divert attention from problems at home, state media reported on Monday.

“The Yoon and his group, plunged into the worst ruling crisis, are attempting an ‘emergency escape’ through the platform of ever-escalating tensions,” Kim Yo Jong said, according to KCNA.  She cited an online petition calling for Yoon to be impeached, with more than 1 million signatures.

South Korea has resumed live-fire artillery drill near the western maritime border and, last month, said it would suspend a military agreement signed with North Korea in 2018 aimed at easing tensions, in protest against North Korea’s trash balloon launches toward the South.

Kim said if Pyongyang judges its own sovereignty as violated, its armed forces will immediately react according to the constitution.

I’ve long said Kim Yo Jong is far scarier than her brother.

Iran: Iranians turned out in higher numbers than in previous votes to elect a reformist president who ran on a platform of re-engaging with the West and loosening the country’s strict moral codes for women.

In the presidential run-off last Friday, voters were confronted with a stark choice between a cautious reformer, little-known Masoud Pezeshkian, a 69-year-old surgeon, who won more than 53% of the vote, and hardline rival Saeed Jalil, 58.  Turnout was 49.8%, up from 40% in the initial round of voting.

So Pezeshkian now has to operate in the treacherous theater of Iranian politics to manage a battered economy and an increasingly disaffected population that has erupted in protests repeatedly over the past decade.  He has vowed to work to restore a 2015 pact that lifted international sanctions in exchange for curbs on Iran’s nuclear program, rein in the country’s hated morality police who force women to cover their hair and stand against curbs on the internet.

The president oversees economic policy and appoints a cabinet that includes key decisionmakers in areas from foreign affairs to the critical oil industry.  But decisions can be blocked by parliament and Supreme Leader Ali Khamenei.  The president has virtually no power when it comes to security and military matters, which are in the hands of Khamenei and the hardline Islamic Revolutionary Guard Corps.

You may be surprised, however, that Pezeshkian won the election, but remember, the government approves all candidates, and many reformists were prevented from running in the first place, while it does allow a competitive campaign, to a degree, in hopes of appearing responsive and helping to keep order.

We will soon see just how effective the new president can be on issues such as headscarves.  And the West waits to see what influence Pezeshkian has, if any, on the nuclear program and renewing negotiations, or at least, cooperation with the International Atomic Energy Agency.

Random Musings

--Presidential approval ratings....

Gallup: 38% approve of President Biden’s job performance, 58% disapprove; 33% of independents approve (June 3-23).

Rasmussen: 44% approve, 54% disapprove (July 12).  This continues to be an outlier.

--A new Washington Post/ABC News/Ipsos national poll found that 56% of Democrats say that President Biden should end his candidacy, while 42% say he should continue to seek reelection.  Overall, 2 in 3 adults say the president should step aside, including 7 in 10 independents, the polling taking place from July 5-9.

The survey did find Biden and Donald Trump in a dead heat for the popular vote at 46% each among registered voters, figures nearly identical to April’s.  Eight other post-debate national polls tracked by the Post have Trump leading by 3.5 percentage points on average, up about three points since before the debate.

If the choice was between Kamala Harris and Trump, Harris has a 49% to 47% edge.

When third-party candidates are included, Biden receives 42% and Trump 43%, with 9% for Robert F. Kennedy Jr, and 2% each for Cornel West and Jill Stein.

--A new Pew Research Center national survey of 7,000 registered voters found Trump leading Biden in a multiple candidate race, 44% to 40%, with RFK Jr. at a substantial 15%.

In a head-to-head matchup, Trump leads 50-47, an improvement from Trump’s April advantage of 49% to 48%.

Only 24% of voters agreed that Biden was “mentally sharp,” the poll found.  When asked the same of Trump, 58% said the term describes Trump very or fairly well.

--A controversial Bloomberg/Morning Consult tracking poll of battleground states had Donald Trump leading Joe Biden by just 47% to 45%, the smallest gap since the poll began last October.  Biden led Trump in Michigan and Wisconsin.  Biden is also within the poll’s statistical margin of error in Arizona, Georgia, Nevada and North Carolina, and is farthest behind in Pennsylvania.

Arizona +3 Trump
Georgia +1 Trump
Michigan +5 Biden
Nevada +3 Trump
North Carolina +3 Trump
Pennsylvania +7 Trump
Wisconsin +3 Biden

Swing-state voters thought Biden acquitted himself poorly in the debate, with fewer than one in five respondents saying the 81-year-old was the more coherent, mentally fit or dominant participant.

I say ‘controversial,’ because this poll flies in the face of all other major battleground polling data, though we have yet to see some of them post-debate.  And the Bloomberg poll did show nearly three in 10 Democrats saying Biden should drop out of the race.

The poll also showed that among those who watched the debate, 52% said Trump exceeded their expectations, while only 13% said Biden did. [Someone give Elon Musk permission to send these 13% to Mars on an untested spacecraft...tomorrow.]

Only 39% of swing-state voters say Biden should definitely or probably continue his campaign, compared to 50% saying the same of Trump.

But the Bloomberg survey had Biden and Trump tied among swing-state independents at 40% each, when back in May, Biden trailed Trump among independents, 36% to 44%.

--I didn’t have a chance to get into the following that hit late last Friday as I was posting....

Former President Trump blasted a prospective policy agenda put forward by the conservative Heritage Foundation, calling their plans “abysmal” and saying he has “nothing to do with them.”

Project 2025, a collaboration of dozens of right-wing groups organized by Heritage, says it is meant to “get into the business of restoring this country through the combination of the right policies and well-trained people.”

The project’s output includes a “180-day playbook” for the first six months of a new presidential administration – with proposed policies that have caused an uproar among liberals, including restrictions on immigration and abortion as well as shrinking the federal bureaucracy.

The Biden campaign has repeatedly alleged that Trump is running on the playbook’s agenda, and that he would implement it if he gained power.

“I know nothing about Project 2025. I have no idea who is behind it,” Trump posted on Truth Social.

“I disagree with some of the things they’re saying and some of the things they’re saying are absolutely ridiculous and abysmal. Anything they do, I wish them luck, but I have nothing to do with them,” Trump added.

Trump’s comments came days after Heritage Foundation President Kevin Roberts issued a warning about the state of the country.

“We are in the process of the second American Revolution, which will remain bloodless – if the left allows it to be,” Roberts said last week on Real America’s Voice.

Project 2025 then quickly responded to Trump’s remarks in a post on X, saying they do not speak directly for the former president.

“As we’ve been saying for more than two years now, Project 2025 does not speak for any candidate or campaign. We are a coalition of more than 110 conservative groups advocating policy & personnel recommendations for the next conservative president,” the group said in their statement.

Of course Trump knew of Project 2025.

But next week is the Republican National Convention in Milwaukee, where we finally learn who Trump’s running mate is.  I want him to pick Doug Burgum.

--A jury in New York began deliberations late this afternoon in New Jersey Democratic Sen. Bob Menendez’s federal corruption trial.  [I haven’t seen if a verdict was reached as of 4:20 p.m. ET]

--More than 100 people were shot in Chicago, including 19 fatally, during a violent Fourth of July weekend.

--A majority of medical students at Johns Hopkins University are set to receive free tuition after the school received a $1 billion gift from Bloomberg Philanthropies, making Hopkins the latest medical school to go tuition free because of a large donation.

Hopkings estimates nearly two-thirds of its students would qualify for either free tuition starting in the fall, and/or have their living expenses covered, depending on the income level of their families.

Tuition at Johns Hopkins med school is nearly $65,000 a year.

The cost of medical school has kept aspiring doctors out of the field, where they can graduate with hundreds of thousands of dollars in debt.

Billionaire Michael Bloomberg’s organization said Monday that the U.S. has a shortage of medical professionals due to the high costs.

“By reducing the financial barriers to these essential fields, we can free more students to pursue careers they’re passionate about,” Bloomberg said.

--The Olympic Games in Paris are just two weeks away and the swimming competition is going to be highly controversial, due to China having many entrants that three years ago tested positive for steroids, some winning gold in Tokyo, but the World Anti-Doping Agency did nothing about it.

As I’ve written in that other column I do, WADA took the word of authorities in China on how the swimmers ingested a banned heart medication.

But China is furious that the United States and other Western nations have alleged the Chinese clearly were doping and are doping so again ahead of Paris.

This is going to be very interesting.  A Chinese Foreign Ministry spokesperson asserted that the U.S. goal is to “slander outstanding Chinese athletes and affect Chinese athletes’ participation in the Paris Olympics.”

--Hurricane Beryl hit the Texas coast early Monday morning and 24 hours later, much of Houston remained without power, with authorities warning the blackout could last several days as the heat built back up over the region (heat index readings around 105).  The fourth-largest city was a mess...flooded streets (after a foot of rain), downed trees, power lines lying on the ground.  Nine deaths were reported in the metro area (Harris and Montgomery counties), including a Houston Police Department employee who drowned in his car.  At least two of the other victims were as a result of falling trees.

A tenth fatality was recorded in Louisiana, also the victim of a tree falling on her home in Benton.

More than 1,100 flights were canceled at Houston’s main airport on Monday, according to flightaware.com.

By Thursday, an estimated 1.5 million customers in Houston were still without power (which can mean a lot more than 1.5 million ‘people’).  At least 500,000 will be without power over the weekend.  This is pathetic.

The death toll in the Caribbean from Beryl reached 11.

--Last month was the hottest June on record, the European Union’s climate change monitoring service said on Monday, continuing a streak of exceptional temperatures that some scientists said puts 2024 on track to be the world’s hottest recorded year.

Every month since June 2023 – 13 months in a row – has ranked as the planet’s hottest since records began, compared with the corresponding month in previous years, the EU’s Copernicus Climate Change Service said in a monthly bulletin.

In the 12 months ending in June, the world’s average temperature was the highest on record for any such period, at 1.64 degrees Celsius above the pre-industrial average, Copernicus said.

--Among the all-time record highs, for any date, set this past week in the U.S. was 106 in Raleigh, NC, last Friday; Palm Springs, CA, 124 last Friday; Ukiah, north of San Francisco, tied its all-time high of 117 on Saturday; Livermore, east of San Francisco, hit 111, breaking its all-time record of 109.

Las Vegas set a new all-time high for any date on Sunday, 120, when 117 was the previous high, record-keeping going back to 1937.  Vegas has seen more than 10 consecutive days with temperatures above 110, when the average temp is 104.

But of even more significance, Las Vegas residents had to deal with six consecutive days over 115 F (and probably a seventh today), the prior record being four set in July 2005.

Death Valley hit 127 last Friday, 128 Saturday, and 129 on Sunday, a single degree short of the official record for the planet, 130, set there in 2021. The unofficial ‘official’ record is 134.  There are multiple reporting sites in Death Valley, some of which may not have exceeded 127 on the days cited...not that this was good.  A motorcyclist who was visiting Death Valley National Park died from heat exposure on Saturday.  Others were treated for severe heat illness.

There have been as many as 14 heat-related deaths in Oregon the past few weeks. [Though it takes a while for a medical examiner to release the final cause.]

--Finally, NASA announced this week that if all the testing on the Starliner spacecraft reveals no major issues with the thruster, the crew could return as early as the end of July. 

Butch Wilmore and Suni Williams were supposed to return to earth June 13th. 

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

Pray for Ukraine.

God bless America.

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Gold $2417
Oil $82.23

Bitcoin: $57,725 [4:00 PM ET, Friday]

Regular Gas: $3.53; Diesel: $3.87 [$3.54 - $3.84 yr. ago]

Returns for the week 7/8-7/12

Dow Jones  +1.6%  [40000]
S&P 500  +0.9%  [5615]
S&P MidCap  +4.4%
Russell 2000  +6.0%
Nasdaq  +0.3%

Returns for the period 1/1/24-7/12/24

Dow Jones  +6.1%
S&P 500  +17.7%
S&P MidCap  +8.7%
Russell 2000  +6.0%
Nasdaq  +22.6%

Bulls 62.7
Bears 17.9

Hang in there.

Brian Trumbore

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