Week in Review

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Week in Review

08/03/2024

For the week 7/29-8/2

[Posted 4:30 PM ET, Friday]

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Edition 1,320

Just another slow news week here at StocksandNews.  Goodness gracious.  Stop the world – I want to get off.

As I go to post tonight, there are major fears Iran will choose the weekend to retaliate against Israel for the killing of Hamas leader Ismail Haniyeh in Tehran (12 hours after Israel took out the No. 3 in Hezbollah in Beirut), only unlike in April, Hezbollah and the Houthis would likely join in.  Needless to say, Israel, and U.S. forces in the region, are on high alert.  [Turkish Airlines just postponed flights to Iran for tonight.]

The situation in Venezuela with President Maduro attempting to steal an election is unsettling and could lead to millions more at the U.S. border unless the U.S. and Latin American democratic leaders convince Maduro to step down.  But Russia, China, Cuba and Iran are watching with glee.

And on Wall Street, the stock market cratered at week’s end on fears the economy is slowing rapidly and that the Federal Reserve has waited too long to begin cutting interest rates.

All of the above covered in great detail below.

But we did have a feel-good moment Thursday (aside from those created by the Olympic athletes in Paris this week), though it came at a price...an uncomfortable one.  The U.S. and its allies get some innocent hostages back from Russia, but we had to return some very bad people to Vladimir Putin, and this pattern can’t continue.

So, let’s start there....

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There were signs of a major prisoner exchange between Russia and Belarus on one side and the United States, Germany, Slovenia and Britain on the other at mid-week, as the likes of Paul Whelan and Vladimir Kara-Murza, both jailed in Russia, disappeared from view on Wednesday, their lawyers said, after at least seven Russian dissidents were unexpectedly moved from their prisons in recent days.  A Russian online media outlet reported that at least six special Russian governmental planes had flown to and from the regions where their prisons were located.

I noted in my WIR of 7/20/24, that regarding the sentencing of Evan Gershkovich on fake espionage charges:

“The conclusion of his swift and secretive trial in the country’s highly politicized legal system perhaps cleared the way for a prisoner swap between Moscow and Washington.”

And then we learned Thursday that in a massive swap involving 24 people, including prisoners from Germany, Poland, Slovenia, Norway and Belarus, three Americans – Gershkovich, Whelan and Radio Free Europe/Radio Liberty journalist Alsu Kurmasheva – along with Kara-Murza, who has a U.S. Green card, were freed.

Among those Russia is receiving in exchange is Vladimir Putin’s key to the whole deal, 58-year-old Russian secret service (FSB) colonel Vadim Krasikov, who was convicted in Germany in 2021 of killing (assassinating) a former Chechen rebel in a Berlin park (2019), on the orders of Moscow’s security services.  Others released include money launderer Maxim Marchenko, semiconductor smuggler Vadim Konoshchenok, and hacker Vladislav Klyushin.

Emma Tucker, Editor in Chief of the Wall Street Journal, in a letter Thursday:

“Today is a joyous day for the safe return of our colleague Evan Gershkovich, who left a Russian aircraft moments ago in Turkey’s capital, Ankara, as part of a prisoner swap with Russia....

“And it is a joyous day for the relatives and friends of the other wrongfully detained Americans and German citizens who returned home and for the Russian political prisoners who were released to the West.

“That it was done in a trade for Russian operatives guilty of serious crimes was predictable as the only solution given President Putin’s cynicism. We are grateful to President Biden and his administration for working with persistence and determination to bring Evan home rather than see him shipped off to a Russian work camp for a crime he didn’t commit.

“We are also grateful to the other governments that helped bring an end to Evan’s nightmare, in particular the German government that played such a critical role.

“We know the U.S. government is keenly aware, as are we, that the only way to prevent a quickening cycle of arresting innocent people as pawns in cynical geopolitical games is to remove the incentive for Russia and other nations that pursue the same detestable practice....

“The bogus case against (Evan) represented many significant things.  A blow against press freedom. A warning to journalists covering the Kremlin. A new tension in America’s relationship with Russia.

“But at the center of it all was Evan, our 32-year-old Moscow correspondent from New Jersey, who likes to cook and supports Arsenal Football Club, and who loved living in and reporting on Russia....

“I want to sign off by once again thanking all those who helped bring him home and rejoice that Evan and his fellow former detainees are reunited with their families.

“We stand with them all.”

Negotiators in backchannel talks at one point explored an exchange involving Russian opposition leader Alexei Navalny but after his death in February ultimately stitched together a 24-person deal that required significant concessions from European allies, including the release of the Russian assassin in a German prison.

President Biden offered a special thanks to German Chancellor Olaf Scholz, who said it had not been an easy decision for both him and the German government to release Krasikov, who carried out the assassination of the Chechen on orders from the Kremlin and did so in broad daylight a few minutes’ walk from parliament and the office of then-Chancellor Angela Merkel.

In the end, Scholz said “it was important for us that we have an obligation to protect German nationals as well as solidarity with the United States.”

And as a Wall Street Journal editorial pointed out: “The Chancellor fought hard to gain the release of others besides the Americans, and he succeeded in winning freedom for a dozen Russian dissidents.”

Some German officials had feared such a deal would embolden Russia to take German citizens hostage in the hope of reciprocal favors.  This is now the situation every country faces.  This past March, Germans were “urgently warned” not to go to Russia, just as Americans have been warned for years.

For his part, Vladimir Putin welcomed his eight returnees at the airport in Moscow, giving them a warm welcome.  Putin hugged his hit man, Krasikov.  Putin then said they would all receive “state awards.  I will see you again, we will talk about your future,” said Vlad.

While President Biden deserves a ton of credit for getting the Americans home, and he was right to focus on the role allies played, we all can’t forget those who remain in Russia, and Iran, and elsewhere, as the Journal further editorialized:

“All of this poses an awful dilemma for U.S. policy makers.  Once a hostage is taken, it is difficult for a President to ignore his or her fate. A better policy would deter the hostage takers by letting them know they will pay a price if they imprison Americans. The current global perception of U.S. weakness has bad consequences for press freedom and Americans abroad.

“After Evan’s arrest, the Biden Administration neither arrested any Russians, nor even expelled any Russian journalists in the U.S.  We’re not sure why.

“Something will have to change, or more Americans will be taken hostage after this prisoner swap.  This will be true for Donald Trump as much as for Kamala Harris next year.  Hostage takers will test any new President. None of this reduces our joy at Evan’s release, but leaders have to think hard about how to prevent the innocent hostages of the future.”

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The man accused of plotting the attacks of Sept. 11 and two of his accomplices have agreed to plead guilty to conspiracy charges in exchange for a life sentence rather than a death-penalty trial at Guantanamo Bay, Cuba, prosecutors said Wednesday.

A senior Pentagon official approved the deal for Kahlid Sheikh Mohammed, Walid bin Attash and Mustafa al-Hawsawi, according to Defense Department officials.  The men have been in U.S. custody since 2003.  But the case had become mired in more than a decade of pretrial proceedings that focused on the question of whether their torture in secret CIA prisons had contaminated the evidence against them.

Word of the deal emerged in a letter from war court prosecutors to family members of victims of the attacks on Sept. 11, 2001.

“In exchange for the removal of the death penalty as a possible punishment, these three accused have agreed to plead guilty to all of the charged offenses, including the murder of the 2,976 people listed in the charge sheet,” said the letter, which was signed by Rear Adm. Aaron C. Rugh, the chief prosecutor for military commissions and three lawyers on his team.

The letter said the men could submit their pleas in open court as early as next week.

Many of the family members are not happy. It truly is hard to believe these men weren’t put to death about 20 years ago.

But some families’ of 9/11 victims who for decades have sought to prove the linkage between the hijackers and the government of Saudi Arabia saw new evidence this week of such a connection, including a video from British intelligence that was not seen by the 9/11 Commission.

I saw a portion of it on CNN and it is truly indicting.  More to come on this case...all these years later.  The potential implications, from U.S.-Saudi relations all the way down to the LIV Golf Tour, are huge.  It is the Biden administration that is finally releasing everything that previously may have been withheld.

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Vice President Kamala Harris (who picked up enough votes from delegates to become Democratic nominee today, in an online process) is announcing her new vice-presidential nominee on Tuesday in Philadelphia, so we’ll probably learn Monday, the press sniffing it out, looking at plane schedules, security details suddenly descending on someone’s home, that kind of thing.  The location obviously suggests Pennsylvania Governor Josh Shapiro, who was a terrific surrogate on the campaign trail with Harris this week.

In 2022, Shapiro defeated Republican Doug Mastriano 56.5% to 41.7% in a state known for tight elections.

The Harris campaign has said she plans to travel to six battleground states with her running mate next week.

Much more on the 2024 campaign below.  But for now....

Peggy Noonan / Wall Street Journal

“This is the year of the sudden, historically disastrous debate, the near-assassination of one of the nominees, the sudden removal of the president from his ticket, the sudden elevation of a vice president her own party had judged a liability, and her suddenly pulling even in a suddenly truncated campaign.”

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Israel-Hamas-Hezbollah-Iran

--At least 12 children – between the ages of 10 and 16 – were killed, another 13 injured, on Saturday when a Hezbollah rocket struck a soccer field in the Israeli-controlled Golan Heights in what was the deadliest attack on the Jewish state since the Oct. 7 Hamas assault.

The shelling targeted the northern Druze* town of Majdal Shams, roiling tensions further between Israel and Hezbollah in Lebanon, as Prime Minister Benjamin Netanyahu rushed home from his trip to the United States, and Israeli leadership immediately gathered to weigh a response.

*The Druze, an Arab minority who practice a form of Islam, make up more than half the 40,000-strong population of the Golan Heights.

Israeli Foreign Minister Israel Katz informed Netanyahu of the specifics as he flew home and declared that “Hezbollah crossed all red lines” and the Jewish state was now “facing an all-out war” with the Lebanese terrorists.

“I have no doubt that we’ll pay a cost,” Katz said, adding Hezbollah will pay a higher toll for its actions. 

When Israel does retaliate, Katz claimed it would have the “full backing” of the United States and Europe.

Hezbollah denied any responsibility for the strike.  In a written statement, the terror group said: “The Islamic Resistance has absolutely nothing to do with the incident, and categorically denies all false allegations in this regard.”  But earlier in the day, Hezbollah had announced several rocket attacks targeting Israeli military positions in other locations.

The Israeli military (IDF) said the rocket launch was carried out from an area located north of the village of Chebaa in southern Lebanon.  Sunday, U.S. Secretary of States Antony Blinken said there was every indication that the rocket had been fired by Hezbollah and that Washington stood by Israel’s right to defend itself.

The IDF then identified the specific type of Iranian-built rocket used, which the foreign ministry said “Hezbollah is the only terror organization which has those in its arsenal.”  Specifically, an Iranian-made Falaq-1 missile, and earlier Saturday Hezbollah had announced firing a Falaq-1, saying it had been aimed at an Israeli military headquarters.

Israel, earlier Saturday, had killed four militants in a strike on Kfarkila in southern Lebanon, apparently not all members of Hezbollah.  Hezbollah then launched Katyusha rockets into Israeli in retaliation.

Netanyahu then said in a phone call with the leader of the Druze community in Israel, according to a statement from his office, “Hezbollah will pay a heavy price, the kind it has thus far not paid.”

Sunday, thousands of mourners attended funeral ceremonies for the 12 children and teenagers killed.  Hezbollah continued to deny any responsibility for the attack, but was preemptively clearing out some key sites in the eastern Bekaa Valley in the event of an Israeli strike.

The IDF said after the Majdal Shams attack that Hezbollah had killed a total of 23 Israeli civilians and 17 soldiers since October.

Tuesday, rocket fire from Lebanon killed what would be the 24th Israeli civilian. The IDF said Hezbollah had fired 15 rockets on Tuesday. Israel claimed it hit ten Hezbollah targets Monday night, killing one fighter.

Israel has killed 350 Hezbollah fighters in Lebanon and more than 100 civilians, according to security and medical sources compiled by Reuters.

--Lebanon was on high alert after Prime Minister Netanyahu promised a “harsh” response to the rocket attack, saying, “the state of Israel will not and cannot let this pass.”

Secretary of State Antony Blinken spoke with Israeli president Yitzhak Herzog on Monday, emphasizing the “importance of preventing escalation” and discussing efforts to reach a diplomatic solution to months of conflict.

White House spokesperson John Kirby told reporters that Israel had every right to respond to the Golan strike but that nobody wanted a broader war.

Lebanon’s deputy parliament speaker Elias Bou Saab, who said he had been in contact with U.S. mediator Amos Hochstein since Saturday’s Golan attack, said Israel could avert the threat of major escalation by sparing the capital, Beirut, and its environs.

“If they avoid civilians and they avoid Beirut and its suburbs, then their attack could be well calculated,” he said.

Israeli aircraft then carried out attacks against Hezbollah, the IDF said on Sunday.

“Overnight, the IAF struck a series of Hezbollah terror targets both deep inside Lebanese territory and in southern Lebanon, including weapons caches and terrorist infrastructure (in seven areas, including Beqaa),” the IDF said.

Iran warned Israel on Sunday against what it called any “new adventure” in Lebanon, in a statement issued by the foreign ministry.

An Israeli drone strike killed two people on a motorcycle and wounded three more in southern Lebanon on Monday.  The United States warned Americans in Lebanon to “develop a crisis plan of action and leave before a crisis begins.”

Some airlines were cancelling flights to Beirut.

Tuesday at dusk in Beirut, Israel then struck, targeting the Hezbollah commander, Muhsin Shukr, aka Fuad Shukr, who it said was responsible for the Golan Heights strike.  A loud blast was heard, and a plume of smoke could be seen rising from above the southern suburbs – a stronghold of the militants.

“The IDF carried out a targeted strike in Beirut, on the commander responsible for the murder of the children in Majdal Shams and the killing of numerous additional Israeli civilians,” the Israeli Defense Forces said in a statement.

Israeli Defense Minister Gallant said the strike showed that whoever “has the blood of many Israelis on his hands, we have shown that the blood of our people has a price, and that there is no place out of reach for our forces to this end.”

Initially, a senior Lebanese security source said the commander’s fate remained unclear, but Israel insisted Shukr was taken out, and a senior security source from another country in the region told Reuters Shukr had died of wounds sustained in the strike.

Shukr was the most important aide to Hezbollah Secretary-General Hassan Nasrallah, his adviser for wartime operations and in charge of Saturday’s attack.  The Israeli strike on Beirut also killed three civilians.

Israeli media reported that depending on the Hezbollah reaction, the military considered the Beirut strike as concluding the response to the Golan Heights attack.

A member of the Lebanese parliament from Hezbollah said his group would be ready to fight a war with Israel, following the strike.  Ali Ammar spoke to local broadcasters amid the ruins.  “This enemy demands war and we are up for it, God willing, we are up for it,” Ammar said.

--But then came Wednesday...and 12 hours later, Israel assassinated Hamas’ top political leader, Ismail Haniyeh, who was killed in a predawn airstrike in the Iranian capital of Tehran.

At least we initially were told from reports that it was a precision airstrike.  But then the New York Times and others reported that Haniyeh was assassinated by an explosive device covertly smuggled into the Tehran guesthouse where he was staying, the Times citing seven Middle Eastern officials, including two Iranians and an American official.

The bomb had been hidden approximately two months ago in the guesthouse, according to five of the Middle Eastern officials.  The guesthouse is run and protected by the Islamic Revolutionary Guards Corps and is part of a large compound, in an upscale neighborhood of northern Tehran.  The bomb was detonated remotely. It’s incredible to think of the amazing pressure on the individual who planted the device, and those who could be inside the Revolutionary Guards Corps, spying for Israel.  Talk about a movie.

Iran’s Supreme Leader Ayatollah Ali Khamenei vowed revenge on Israel.

“We consider this revenge as our duty,” Khamenei said in a statement on his official website, saying Haniyeh was “a dear guest in our home.”

The shock assassination risks escalating the conflict even as the U.S. and other nations were already scrambling to prevent an all-out regional war following the Hezbollah attack on the Golan Saturday.

Iranian President Pezeshkian vowed his country would “defend its territory” and make the attackers “regret their cowardly action.”

The two bitter rivals had an unprecedented exchange of strikes on each other’s soil in April after Israel hit Iran’s embassy in Damascus.

Needless to say, taking out Haniyeh puts in jeopardy negotiations for a cease-fire and hostage release deal, Haniyeh being Hamas’ chief negotiator.

In Israel, Haniyeh’s death was seen as a major coup by Prime Minister Netanyahu and his coalition, which vowed to eliminate Hamas leaders after the Oct. 7 attack.

The prime minister of Qatar, which has acted as a mediator in ceasefire negotiations, suggested on Wednesday that the killing of Haniyeh could jeopardize talks.

“Political assassinations and continued targeting of civilians in Gaza while talks continue leads us to ask, can mediation succeed when one party assassinates the negotiator on the other side?” Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani wrote on X.  “Peace needs serious partners & a global stance against the disregard for human life.”

Editorial / Wall Street Journal

“Iran swore in a new President to chants of ‘Death to America’ and ‘Death to Israel’ on Tuesday.  But within hours death arrived for Iran’s proxy allies, in strikes that show Israel’s enemies aren’t safe anywhere.  The media is fretting about a broader war, but that war is already here and it’s as likely the strikes have a deterrent effect on Tehran, even as it responds.

“Israel killed Fuad Shukr, Hezbollah’s top military commander, in a precision air strike on south Beirut on Tuesday. Some hours later Ismail Haniyeh, Hamas’ top political leader, was killed by an attack on his floor of a residence in Tehran, of all places....

“Shukr was wanted by the U.S. and Israel. The State Department had a $5 million bounty on his head for his ‘key role’ in ‘planning and launching the 1983 attack on the U.S. Marine Corps barracks in Beirut’ that killed 241 U.S. service members.  He has been leading the development of Hezbollah’s missile arsenal and had helped command Hezbollah’s forces in Syria, aiding the Assad regime in slaughtering its own people.  The 12 Druze children killed on a soccer field Saturday in Israel’s Golan Heights will be Shukr’s last victims.

“Haniyeh’s terror career was nearly as long; it was always someone else’s turn to put on the suicide vest....

“The assassinations send a powerful message.  Even with Hezbollah on highest alert, Israel knew the precise location of a top leader.  Remarkably, Israel was able to locate and kill Haniyeh in Iran’s capital, where he had attended the inauguration of Iran’s new president.  Israel has shown it has the intel and military capability to strike at the center of Tehran, which funds and guides the proxies waging war on the Jewish state.

“The press is fretting that the strikes will further delay negotiations over a Gaza cease-fire, and perhaps they will.  But the evidence has shown that Hamas gives ground when it is most under military pressure.  Israel recently killed Hamas military chief Mohammed Deif*.  The Hamas politicians remaining in Qatar now know their lives are also on the line if they continue to resist Israel’s reasonable terms....

“Iran is pledging revenge, as it always does. But the strikes demonstrate that a larger conflict would not be one-sided and Iran itself could be targeted. That includes the leadership in Tehran....

“The U.S. can help Israel prevent a larger war by putting pressure on Hezbollah and Iran. Expediting weapons to Israel, including deep-penetrating bombs that would put Iran’s nuclear facilities at risk, would send a message, as would enforcing oil sanctions again.

“Sending U.S. warships to the eastern Mediterranean, as after Oct. 7, would also make Iran think twice about Hezbollah’s next move.  Defense Secretary Lloyd Austin’s statement that U.S. forces are ready to help defend Israel from missile attacks was strong and overdue....

“Israel has a right to defend itself, but more than that it has the right and ample cause to defeat the terrorists who won’t let it live in peace.”

*Israel’s military on Thursday said it had determined that it killed Mohammed Deif in a July airstrike.

Hezbollah leader Hassan Nasrallah vowed on Thursday to respond to the killing of Fuad Shukr.

Nasrallah said unnamed countries had asked his group to retaliate in an “acceptable” way – or not at all.  But he said it would be “impossible” for the group not to respond.  “There is no discussion on this point.  The only things lying between us and you are the days, the nights and the battlefield,” Nasrallah added in a threat to Israel.

President Biden, in a call with Netanyahu, Thursday, told the prime minister to agree to a cease-fire with Hamas, while Biden pledged to support Israel against renewed threats from Iran and Hezbollah.

“We have the basis for a cease-fire,” Biden told reporters. “He should move on it and they should move on it now.”  The president added the assassination of Haniyeh had not helped.

--Jerusalem and Ankara traded barbs on Sunday, with Turkish President Erdogan seeming to threaten military action against Israel as tensions heated up between the Jewish state and Hezbollah.

Israel in turn warned that his fate could become akin to that of former Iraqi president Saddam Hussein, who was executed by hanging.

“Erdogan is following in the footsteps of Saddam Hussein by threatening to attack Israel. He should remember what happened there and how it ended,” Israel’s Foreign Minister Israel Katz wrote in a post on X, in which he linked a photograph of the two men.

Katz spoke up after Erdogan suggested that Turkey might enter Israel as it had done in the past in Libya and Nagorno-Karabakh, though he did not spell out what sort of intervention he was suggesting.

Erdogan, who has been a fierce critic of Israel’s military campaign in Gaza, started discussing that war during a speech praising his country’s defense industry.

“We must be very strong so that Israel can’t do these ridiculous things to Palestine. Just like we entered Karabakh, just like we entered Libya, we might do similar to them,” Erdogan told a meeting of his ruling AK Party.

“There is no reason why we cannot do this... We must be strong so that we can take these steps,” Erdogan added in the televised address.

--Meanwhile, in central and southern Gaza, a wave of Israeli air strikes killed at least 50 people and injured an estimated 200, with one strike hitting a school where thousands were seeking shelter, killing 30 of the 50 combined death toll, according to Palestinian health ministry officials, who are controlled by Hamas.

Israel then reported its troops battled Palestinian fighters around Khan Younis in southern Gaza on Sunday, as the IDF continued a week-long operation meant to clear Hamas fighters.

The fierce fighting underscores the heavy resistance Israeli forces are still facing almost ten months into the conflict.

As of early in the week, the IDF has lost around 330 soldiers in combat in Gaza.

--Monday, Israeli protesters stormed an army base near Beersheba, a city in the south of the country, in support of soldiers who are accused of severely abusing a Palestinian prisoner.  The protesters were joined by far-right MPs from Israel’s governing coalition.  Herzi Halevi, the head of Israel’s armed forces, said the protests were “extremely serious and against the law,” and that the actions were “bordering on anarchy.”  Prime Minister Netanyahu and Defense Minister Yoav Gallant also denounced the protests.

The IDF then issued an indictment on Tuesday against a reservist soldier accused of severe abuse of Palestinian prisoners, in a separate case.  The indictment alleges that the soldier beat, handcuffed and blindfolded detainees with a club or with his weapon as they were being transported, and videoed his actions, the military said in a statement.

But the protests underscored the tension in the Netanyahu government between hardline nationalist-religious parties and Defense Minister Gallant and the army command.

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Russia-Ukraine

--Russian shelling killed at least five civilians on Saturday in separate regions of Ukraine, officials said. In the Kherson region, in Ukraine’s south, three people were killed.  Kherson region was occupied in the first days of Russia’s Feb. 2022 invasion, but Ukrainian troops recaptured large swathes of it later in the year.

In the northeastern Sumy region, a border area frequently under Russian attack, a 14-year-old boy was killed and 12 others wounded in a rocket attack.  And the fifth victim was in the Kharkiv region.

Ukrainian shelling and drone attacks killed one person in southern Russia’s Belgorod region.

--Three tanks at an oil storage depot in Russia’s Kursk region caught fire as a result of a Ukraine-launched drone attack, the regional government said on Sunday.  Kyiv said it struck the Polevaya oil depot in the region, resulting in “powerful explosions” and a fire.

--Russian President Vladimir Putin on Sunday warned the United States that if Washington deployed long-range missiles in Germany from 2026 then Russia would station similar missiles in striking distance of the West.

The U.S. will start deploying long-range fire capabilities in Germany in 2026 in an effort to demonstrate its commitment to NATO and European defense, the U.S. and Germany said earlier in the month.

“The flight time to targets on our territory of such missiles, which in the future may be equipped with nuclear warheads, will be about 10 minutes,” Putin told sailors in St. Petersburg.

--Russia’s defense ministry said on Tuesday that its forces had taken control of the settlement of Pivdenne in the Donetsk region, as Moscow’s slow but grinding push through the industrial Donbas area continued.

Pivdenne adjoins Toretsk, a Ukrainian stronghold and coal mining town towards which Russia began pushing in June.  Pivdenne had a pre-war population of 1,400, and Toretsk’s around 30,000.

Russia’s push for Toretsk is one of the most active combat zones in the Donetsk region, with Moscow’s forces also moving toward Pokrovsk, a key Ukrainian transport hub located around 43 miles west of Toretsk.

Moscow said on Sunday that its forces had taken two villages on the approaches to Pokrovsk.

Monday, Russia claimed it took control of another village in the Donetsk region, Vovche.

Fighting for Pokrovsk is the fiercest anywhere in the war-scarred east, Ukraine’s General Staff said in a regular battlefield update.  Monday, they said Ukraine had fought off 52 Russian assaults in 24 hours.

--Wednesday, Ukraine said it has repelled “one of the most massive” attacks launched by Russia since the start of the war.

Air defense systems shot down 89 Iranian-made explosive drones and another missile overnight.  The capital Kyiv was the main target, with buildings in the area damaged by falling debris but no casualties.

President Zelensky later said on Telegram: “Ukrainians can fully protect their skies from Russian strikes when they have sufficient supplies.”

He added: “The same level of defense is needed against Russian missiles and the occupier’s combat aircraft.”

The president repeated his calls for allies to speed up deliveries of their air defense systems Ukraine relies on, particularly U.S.-made Patriots.

--Ukraine began taking delivery of a small number of F-16 fighter jets.  Belgium, Denmark, the Netherlands and Norway have pledged 65 F-16s to Ukraine, but as I’ve written before, the country needs closer to 200 in order to “achieve the air support needed for the war on the ground,” according to a recent analysis from the Washington-based Center for Strategic and International Studies. [Defense One]

Imagine the effort now being launched by Russia, its spies and agents, to find where these aircraft are being hidden.

--French President Emmanuel Macron warned his new Iranian counterpart Massoud Pezeshkian in a phone call on Monday against Iran’s continuing support for Russia’s war in Ukraine, the Elysee palace said in a statement.  Macron also told Pezeshkian his nation had a role to play to avoid escalation in Lebanon-Israel tensions by halting support for destabilizing players.

--Vladimir Putin doubled upfront payments for volunteers to fight in Ukraine on Wednesday, a move aimed at facilitating military recruitment but likely to create imbalances in the overheated economy.   All Russians who sign a contract with the army will now receive an upfront payment of 400,000 rubles ($4,651).

--President Zelensky signed a law allowing the government to suspend foreign debt payments until Oct. 1, paving the way for a moratorium to be called that would formally mark a sovereign default.

Earlier this month, Ukraine announced a preliminary deal with a committee of its main bondholders to restructure its near $20 billion worth of international debt.  Bondholders still must approve the deal, which they are expected to do, though it could take weeks.  The proposal would allow Kyiv to save $11.4 billion in payments over the next three years.

--Tuareg rebels seeking autonomy in the West African country of Mali killed dozens of Russian mercenaries last week in what appeared to be one of the deadliest attacks on Russian personnel on the continent since Moscow first sent Wagner Group guns-for-hire there in 2017.

It wasn’t clear how many were killed in the attack, which took place near Mali’s northern border with Algeria and targeted both Russian and Malian troops.

Rusich Group, a neo-Nazi Russian paramilitary unit associated with Wagner, said on Telegram more than 80 men were killed in the operation.

But Rybar, another channel associated with Russia’s military and mercenaries, said “the number of losses hardly exceeds a couple of dozen.”

A Tuareg commander in Mali said 54 Wagner fighters had been killed along with seven Malian soldiers, while the Tuareg side lost seven fighters. [Defense One]

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Wall Street and the Economy

All eyes were on the Federal Reserve and its Open Market Committee Wednesday.  Would Chair Jerome Powell and his band of merry pranksters send out a signal that a rate cut is coming in September?

The Fed released its statement, holding its benchmark lending rate steady for an eighth consecutive time, and said inflation remained “somewhat elevated” despite having eased over the last year.  The Fed had started tightening monetary policy in March 2022, with their last hike coming in July 2023.

“In recent months, there has been some further progress toward the committee’s 2% inflation objective,” the FOMC said.

“The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” the FOMC said, reiterating past remarks, including on June 12.  “The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate.”

U.S. economic activity has continued to expand at a “solid” rate, the committee said.  Job growth has moderated, while the unemployment rate has moved up but continues to be low.

The above was OK, but the markets wanted to hear a specific mention of “September,” and in the press conference following the release of the statement, Chair Powell said rates could be cut as soon as September if the economy follows its expected path.  Powell noted that price pressures were now easing broadly in the economy – what he called “quality” disinflation – and that if coming data evolves as anticipated, support for cutting rates will grow.

“If we were to see inflation moving down...more or less in line with expectations, growth remains reasonably strong, and the labor market remains consistent with current conditions, then I think a rate cut could be on the table at the September meeting,” he said.

“The job is not done on inflation but nonetheless we can afford to begin to dial back the restriction in our policy rate,” Powell added.

Bingo.  Granted, Republican lawmakers warned in a hearing the other week with Powell that a cut in September could be seen as a politicized move, but it’s just the way the calendar works.  The Chair said, in responding to a reporter’s question, that the central bank’s only consideration was the state and direction of the economy and the progress of inflation back to its 2% annual target, not the political calendar or any party’s fortunes.

“This is how we think about it. This is what we do,” Powell said.  He noted that a “soft landing” was in view, with the data that is “not signaling a weak economy.  It is also not signaling an overheating economy.”

The next FOMC meeting is Sept. 17-18.  In the interim, we will have two jobs reports, including Friday’s, two CPI releases and a PCE print, but barring any shockingly negative surprises, a September rate cut seems a surety. 

On the economic data front, the Fed was then no doubt carefully examining Friday’s jobs report for July and it was awful, vs. expectations.  Just 114,000 jobs created, when consensus was at 175,000, the worst figure since December 2020.  June was revised downward from 206,000 to 179,000.

The July unemployment rate rose to 4.3% vs. 4.1% prior, and the highest number since Oct. 2021.

Average hourly earnings rose just 0.2%, 3.6% year-over-year, down from June’s 0.3%, and 3.8% (revised down from 3.9%).

U6, the underemployment rate, surged to 7.8% from 7.4%, its highest since Oct. 2021.

All of this weighed by the Fed argues for not just a 25-basis point cut in the funds rate in September, but many are now talking of a 50-bp cut. 

Plus, the other data below adds further evidence of a big slowdown in economic activity.  Stocks swooned...Treasury yields plunged further.

The ISM manufacturing sector reading for July was just 46.8 (50 the dividing line between growth and contraction), worse than forecast.

The July Chicago PMI came in at 45.3, a little better than expected, but below June’s 47.4.

The May Case-Shiller home price index rose 0.3% over April for the 20-city index seasonally adjusted, and 6.8% year-over-year.

The June construction index fell 0.3%.  June factory orders fell 3.3%.  [These last two normally don’t move the market, but they did this week.]

The Atlanta Fed’s GDPNow barometer for the third quarter is at 2.5%, but it’s very early for a Q3 reading.

Freddie Mac’s 30-year fixed-rate mortgage is 6.73%, down from 7.22% on May 2nd and headed lower still.

Europe and Asia

All kinds of economic data out of the eurozone.

The flash July inflation reading for the EA20 was released by Eurostat, with the rate for the euro area expected to be 2.6% in the month, up from 2.5% in June, and unchanged from February. Ex-food and energy the figure is 2.8%, also unchanged from June.

Flash headline inflation rates:

Germany 2.6%, France 2.6%, Italy 1.7%, Spain 2.9%, Netherlands 3.5%.

This does not make the European Central Bank’s job easier.  Instead, the ECB will be warier about cutting interest rates further as inflation is proving sticky and still well above the bank’s 2% target.

We had manufacturing PMIs for the month of July (courtesy of S&P Global / Hamburg Commercial Bank), the figure 45.8 for the euro area, unchanged from June, not good.

Germany 43.2
France 44.0
Italy 47.4
Spain 51.0
Netherlands 49.2
Ireland 50.1

The UK was strong, 52.1, a 2-year high.

Dr. Cyrus de la Rubia, HCOB:

“The widely held belief that the eurozone’s recovery would pick up speed in the second half of the year is taking a hit, thanks to the latest HCOB PMI index for the manufacturing sector.  Earlier this year, it looked like the sector might gradually climb out of the production slump it had been in for months, but the doubts that surfaced in June have been intensified by an accelerated decline in production in July.  Given this weak data, we’ll probably need to lower our GDP forecast for the year from 0.8%.”

Speaking of GDP, Eurostat released flash estimates for the second quarter of the year, 0.3% in the euro area vs. the previous quarter. Compared with Q2 2023 GDP increased by 0.6%.

Year-over-year GDP:

Germany -0.1%, France 1.1%, Italy 0.9%, Spain 2.9%.

Lastly, euro area unemployment for the month of June came in at 6.5%, up from 6.4% in May, stable compared with June 2023, per Eurostat.

Germany 3.4%, France 7.4%, Italy 7.0%, Spain 11.5%, Netherlands 3.6%, Ireland 4.2%.

Britain: The Bank of England cut interest rates from a 16-year high on Thursday, but it was a 5-4 decision, led by Governor Andrew Bailey to reduce rates a quarter-point to 5%.  It was the first cut since March 2020, giving Britain’s new government a boost as it seeks to speed up the pace of economic growth.  But Bailey said the BoE would move cautiously going forward.

“We need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much,” he said in a statement.

France: Traffic on France’s high-speed rail network was reportedly back to normal by Monday following last week’s sabotage of the signal stations and cables that caused chaos on Friday, the opening day of the Olympics.

While there was no claim of responsibility, suspicions fell on leftist militants or environmental activists.  Gerard Darmanin, France’s interior minister, said “several people” had been identified in connection with the “traditional type” of actions “of the ultra-left.”

Turning to Asia...China’s National Bureau of Statistics reported that the July manufacturing PMI was 49.4 vs. 49.5 prior, the third month under the key 50 level.  The services PMI was 50.2 vs. 50.5 in July.  The private Caixin July manufacturing PMI was 49.8 vs. 51.8 prior.  This was the first time the Caixin reading was below 50 in nine months.

All about slow domestic demand.

Japan: The Bank of Japan raised interest rates to levels unseen in 15 years and unveiled a detailed plan to slow its massive bond buying, taking another step towards phasing out a decade of huge stimulus.

At the two-day meeting ending on Wednesday, the BOJ’s board decided to raise the overnight call rate target to 0.25% from 0-0.1% in a 7-2 vote.  The short-term policy rate is now the highest since 2008.  And BOJ Governor Kazuo Ueda did not rule out another hike this year.  So this contrasts sharply with the Federal Reserve and the Bank of England.

The Japanese 10-year bond didn’t react much as it’s been moving up in yield all year, but the Nikkei stock index fell 2.5% in response to the central bank’s move and accompanying comments.

However, the Nikkei then tumbled 5.8% on Friday as investors panicked over signs of weakness in the U.S. economy.  Intel’s decline didn’t help.  And now strength in the yen could deflate what has been a boom in tourism.

The 2-day plunge in stocks here was the worst since 2011 and the tsunami.  The yield on the 10-year then fell from 1.03% Thursday to 0.93% today.

Meanwhile, the July manufacturing PMI was just 49.1 vs. 50.0 prior.

June industrial production fell a whopping 7.3% year-over-year, the steepest decline since Sept. 2020.  But June retail sales rose 3.7% Y/Y.  The June unemployment rate was 2.5%.

South Korea’s July manufacturing PMI was 51.4.

Taiwan’s came in at a solid 52.9. GDP in Taiwan grew at a preliminary 5.1% pace in the second quarter, which was actually slower than the 6.5% expansion in Q1.  Yes, AI is playing a big role.  Taiwan is a key hub in the global technology supply chain for companies such as Apple and Nvidia, and its home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co.

Street Bytes

--The market rose strongly on Wednesday following Chair Powell’s dovish comments, but then Thursday and Friday, the economic news was so poor, a bit of panic set in and psychology turned on a dime.  The poor earnings guidance from Amazon, and Intel’s overall dour story didn’t help.

In the end, the Dow Jones and S&P 500 both fell 2.1% for the week, the Dow at 39737, while Nasdaq lost 3.3% and is now down 9% the last three weeks.

--U.S. Treasury Yields

6-mo. 4.84%  2-yr. 3.88%  10-yr. 3.80%  30-yr. 4.45%

Staggering declines in yield this week, with the 2-year yield falling from last Friday’s 4.38% to 3.88%, its lowest level since May 2023.

The 10-year plunged from 4.19% to 3.80%, the lowest weekly close since July 21, 2023.

Overseas bond yields plunged as well, with the German 10-year’s falling from 2.40% to 2.17% in one week.

Investors are now looking to Chair Powell’s annual speech in Jackson Hole, Wyoming, end of the month (Aug. 22-24), for some clues as to what the Fed might do beyond September.

--The price of crude oil was whipsawed all week, rising on renewed Middle East tensions, and then falling on global demand concerns, the latter winning out, with West Texas Intermediate closing at $73.90, its lowest weekly close since February. 

Exxon Mobil, though, recorded one of its largest second-quarter profits in a decade on surging quarterly production from oil and gas fields in Guyana and the Permian basin in the U.S., as well as from its $60 billion acquisition of Pioneer Natural Resources, which closed in May.

The Texas oil and gas giant earned $9.24 billion, or $2.14 per share, for the three months ended June 30, topping last year’s profit of 47.88 billion, or $1.94 per share.  The results topped Street expectations, the EPS consensus at $2.04.

“We achieved record quarterly production from our low-cost-of-supply Permian and Guyana assets, with the highest oil production since the Exxon and Mobil merger,” Chairman and CEO Darren Woods said in a statement Friday.

The Pioneer deal contributed $500 million to earnings in the first two months after closing, Exxon said. 

Revenue totaled $93.06 billion, topping Street expectations for $90.38bn.

Exxon’s net production reached 4.4 million oil-equivalent barrels per day during the second quarter, an increase of 15% compared with the first three months of the year.

Rival Chevron Corp. reported net income for Q2 of $4.43 billion; adjusted earnings of $2.53 per share, a big miss from the Street’s estimate of $2.88.

Revenue of $51.18 billion in the period did exceed consensus of $50.78bn and was compared with $48.90 billion a year earlier.

Chevron said its second-quarter profit was hurt by weak refining margins, sending its shares down about 3% in Friday’s sloppy market, while Exxon’s were largely unchanged.

Chevron had warned in June that maintenance work at some of its oil and gas production and refining facilities would have an impact on its results.

The company’s $53 billion takeover of Hess has been delayed to at least May next year.

Both Exxon and Chevron have locked horns over the lucrative concession in Guyana. The legal dispute is proving costly.  Chevron purchased Hess to acquire a share of Guyana’s riches.  On Wednesday, Chevron said an arbitration panel that will evaluate a challenge to the deal from Exxon likely will not have a decision until the second half of next year.  Exxon says it had a right of first refusal on the Hess concession.

Lastly, Chevron said it would move its corporate headquarters to Texas from California. Chevron already has about 7,000 employees in the Houston area and approximately 2,000 in San Ramon, Calif.

--Microsoft late Tuesday reported stronger-than-expected fiscal fourth-quarter results, though intelligent cloud revenue missed Street estimates.

Per-share earnings increased to $2.95 during the three months ended June 30 from $2.69 a year earlier, beating consensus of $2.93. Revenue rose 15% to $64.73 billion, exceeding analyst estimates for $64.44bn.

The intelligent cloud segment’s sales jumped 19% annually to $28.52 billion, driven by a 29% surge in cloud-computing platform Azure and other cloud services, but this was below estimates for 30.6%.  The overall division revenue fell short of the Street’s outlook for $28.72 billion, and this dragged the shares down in the aftermarket Tuesday, but they cut the losses in trading Wednesday.

Microsoft shares have climbed nearly a quarter in the past 12 months on optimism that the company is the frontrunner in the AI race thanks to its investments in ChatGPT maker OpenAI.  But they have lost 10% since a record high on July 5 amid a broader market sell-off driven largely by megacap stocks.

Capital spending soared in the quarter to $19 billion, with the company saying it will spend as needed to expand its global network of data centers and overcome the capacity constraints that were hampering its efforts to meet AI demand.  CEO Satya Nadella has pushed the company to go all-in on the technology, weaving AI into almost every product from search engine Bing to productivity software such as Word.  Large parts of those efforts have been fueled by technology from OpenAI, in which Microsoft has invested about $13 billion, including the 365 Copilot assistant for enterprises that costs $30 a month and became widely available last year.

--Facebook and Instagram parent company Meta Platforms Inc. reported stronger-than-expected results for the second quarter on Wednesday, sending shares sharply higher, up 5%.

The Menlo Park, California-based company earned $13.47 billion, or $5.16 per share for the second quarter. That’s up 73% from $7.8bn, or $2.98 per share, in the same period a year earlier.

Revenue rose 22% to $39.07 billion from $32 billion. Ad revenue increased to $38.33 billion from $31.5bn.

Analysts were expecting earnings of $4.72 per share on revenue of $38.26 billion.

“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said CEO Mark Zuckerberg in a statement.

The number of daily active users for Meta’s family of apps, Facebook, Instagram, WhatsApp and Messenger, was 3.27 billion for June, an increase of 7% from a year earlier.  The company no longer breaks out numbers for Facebook as it had in the past.

Meta now expects its 2024 capital expenditures to be between $37 billion and $40 billion, lifting the bottom end of the prior outlook from $35 billion.  All about investing in their artificial intelligence research and product development efforts.

--Apple Inc. returned to revenue growth in the second quarter, which ended June 29, with a 5% increase to $85.8 billion, beating the Street’s forecast of $84.5 billion.  Fiscal Q3 earnings came in at $1.40 per share, up from $1.26 a year earlier, with consensus at $1.34.  Net income was $21.45 billion.

Sales of iPhones fell 0.9% to $39.3 billion, a smaller decline than what analysts had forecast, as demand picked up ahead of the launch of artificial intelligence features.

Apple predicted that its new AI features will spur iPhone upgrades in coming months, helping the company reemerge from a sales slowdown that has hit its China business especially hard.  Sales there fell 6.5% to $14.7 billion, missing Wall Street’s projection of $15.3 billion.  Apple has taken to discounting its iPhones in China to compete with the much cheaper alternative smartphones offered by local competitors such as Huawei.

CEO Tim Cook, speaking on a conference call Thursday to discuss the results, said that upcoming Apple AI features will provide a fresh reason for customers to buy new phones.

“It will be a very key time for a compelling upgrade cycle,” he told analysts on the call.

Sales in Apple’s services segment, which includes the App Store and represents Apple Music and TV products, rose 14.1% to $24.21 billion. Mac sales grew 2.5% to $7.01 billion.  The company’s iPad segment increased by 23.7% to $7.16bn, and the wearables segment, which represents sales of Apple Watches and AirPods headphones, saw sales fall 2.3% to $8.10 billion.

--Amazon.com shares fell 8% at the open on Friday (and that’s about where they finished) as the company forecast current-quarter sales below estimates.  The stock drop came despite Q2 profit and cloud computing sales that beat consensus.

Sales increased 10% year-over-year to $147.98 billion but fell short of expectations of   $148.76bn.  Per-share earnings jumped to $1.26 for the quarter through June 30 from $0.65 a year earlier, topping the Street’s estimate of $1.03.  Consolidated operating income increased to $14.67 billion in the quarter from $7.68bn a year earlier.

But Amazon forecast current-quarter revenue largely below Wall Street estimates on Thursday, signaling tepid demand for its cloud computing services as businesses keep a tight lid on costs against an uncertain economic backdrop.

Amazon’s CFO Brian Olsavsky said in a call with reporters that consumers were being more cautious with their spending. “They are looking for deals,” he said, noting that lower priced products were selling briskly.

At the same time, sticky inflation and high borrowing costs are prompting companies to reconsider lavish investments into AI technology, holding back cloud providers from matching Wall Street’s lofty expectations.

Amazon’s cloud business, Amazon Web Services (AWS), reported a 19% increase in revenue to $26.3 billion for the second quarter, surpassing market estimates of $25.95bn.  But the company expects revenue in Q3 of $154.0 billion to $158.5 billion for the third quarter, compared with consensus of $158.24bn.

--Advanced Micro Devices forecast third-quarter revenue above market estimates on Tuesday, banking on demand for its artificial intelligence chips staying strong. Shares rose 8% at the open on Wednesday but then slid for a gain of 4%.

AMD benefits from large cloud operators buying the company’s AI and other chips.  Some view the company as an alternative to Nvidia.  Both Meta Platforms and Microsoft are customers of AMD’s MI300 line of AI chips.  CEO Lisa Su said the company was boosting its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion during a conference call late Tuesday.

Overall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter compared with analysts’ average estimate of $6.61 billion.  On an adjusted basis, the company forecast a gross margin of about 53.5% for Q3, in line with current consensus.

In the second quarter, AMD’s data center revenue, its biggest segment, jumped 115% (yes, more than doubled) to $2.8 billion, just topping estimates.  Total revenue in the quarter rose 9% to $5.8 billion, beating the Street’s $5.72 billion.

AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. New computer AI features are reviving consumer demand.

Adjusted earnings of 69 cents per share topped analyst estimates of 68 cents.

--Meanwhile, Intel shocked the market after the close on Thursday, reporting net income for Q2 of $0.02 per share, down from $0.13 a year earlier and analysts’ estimates at $0.10.

Revenue for the quarter ended June 29 was $12.83 billion, down from $12.95 billion a year ago, with consensus at $12.98bn.

The company then guided down for Q3, projecting a loss of $0.03 on revenue of $12.5 billion to $13.5 billion, as the chipmaker grapples with a pullback in spending on traditional data center chips and increased competition in the personal computer market.

Analysts were expecting $0.31 on revenue of $14.39 billion.

These are massive current and projected misses and the shares plunged 26%, its worst day since 1974!  Intel also said it would suspend its dividend starting in Q4.

And...it said it would cut more than 15% of its workforce, some 17,500 employees, with a majority of the job cuts completed by the end of the year.

“I need less people at headquarters, more people in the field, supporting customers,” CEO Pat Gelsinger said in an interview.  The company also set out plans to cut operating expenses and reduce capital expenditures of more than $10 billion in 2025.

Much of investors’ focus has centered around the heavy investments and huge costs incurred by Intel as it builds out its manufacturing capacity in a bid to compete with Taiwan Semiconductor.

--Boeing named a new CEO on Wednesday as the aircraft manufacturer’s loss in the second quarter grew more than expected.

The company appointed aerospace industry veteran Robert ‘Kelly’ Ortberg as CEO, effective Aug. 8.  He will succeed Dave Calhoun, who earlier this year announced his plan to step down at the end of 2024.  Ortberg has previously served as CEO of Rockwell Collins, as well as the chair of the Aerospace Industries Association board.

Separately, the plane maker said its core loss grew to $2.90 a share for the June quarter from $0.82 the year before, compared with consensus for a per-share loss of $2.01. Revenue dropped 15% year over year to $16.87 billion, trailing the Street’s view for $17.35 billion.

Revenue in the commercial airplane segment tumbled 32% year over year to $6 billion, mainly due to lower plane deliveries, which fell to 92 from 136 last year.  The company “gradually” increased production of its 737 program during the quarter and still aims to increase output to 38 planes per month by the end of the year.  It plans to return the 787 program to five planes a month by 2024-end.

--Spirit Airlines shares fell after the company announced it is furloughing hundreds of pilots as the industry’s fight for passengers weighs on its bottom line.

Spirit said it was furloughing about 240 pilots and downgrading about 100 captains in a bid to cut costs.  The airline is also suspending the recruitment of pilots and flight attendants to reduce training expenses.

CEO Ted Christie said competition among airlines has hit a fever pitch after they increased capacity to meet higher demand.  But those efforts outstripped demand and it resulted in a glut of empty airline seats, and carriers ramped up discounts to fill them.  Despite the busy summer-travel season, a number of airlines, including Delta and American, have posted weaker profits.

For Spirit, its losses ballooned in the second quarter to $192.9 million, compared with a loss of $2.3 million a year ago.

--Delta Air Lines’ CEO Ed Bastian said the carrier took a $500 million hit from the CrowdStrike outage that severely impacted Delta’s operation.

Delta notified CrowdStrike and Microsoft that it was preparing to sue the two.  Bastian told CNBC the airline has no choice.

“Between not just the loss of revenue, but the tens of millions of dollars per day in compensation and hotels. We did everything we could to take care of our customers over that time,” he said.

--TSA checkpoint numbers vs. 2023

8/1...107 percent of 2023 levels
7/31...108
7/30...103
7/29...104
7/28...104
7/27...105
7/26...103
7/25...107

--Tesla announced it was recalling 1.85 million vehicles in the U.S. due to risk of software failure to detect an unlatched hood, the company said.  An unlatched hood could fully open and obstruct the driver’s view, the National Highway Traffic Safety Administration said.

This would kind of suck if you were driving 65 mph on the highway, sandwiched between two tractor trailers and another tractor trailer on your left...in a driving rain. 

The recall affects 2021-2024 Model 3, Model S, Model X, and 2020-2024 Model Y vehicles.

Tesla shares fell about 4% on the news.

--Ford still reports sales on a monthly basis and it sold 173,223 vehicles in July, down from 173,639 in July 2023.

The automaker sold 8,242 electric vehicles and 16,825 hybrids, up 31% and 47%, respectively.

But EVs are still less than 5% of the total.

--On Monday, McDonald’s earnings and sales fell short, but the stock was up 3%, as the fast-food giant said it is waging an all-out value meals war, but it is confident of victory despite the earnings miss.  Investors were upbeat that the chain’s five-dollar value meal can bring better results in the second half, and the shares rallied further the remainder of the week.

For the three months ended in June, McDonald’s reported adjusted earnings of $2.97 a share, with the Street at $3.07.  Revenue came in at $6.49 billion, consensus at $6.62 billion, up 1% from Q2 2023.

Same-restaurant sales in the U.S. and international operated markets slipped 0.7% and 1.1% from a year ago*, respectively.  In the same quarter last year, the company posted a 10% and 12% year-over-year growth in these markets.

*Global sales (U.S. and international) fell 1%, the first decline in sales worldwide in 13 quarters.

But management on the earnings call was optimistic – especially about the $5 combo meal that was launched on June 25.  The deal is supposed to bring back customers, notably those from lower-income households, who are dining out less because of menu prices pushed higher by inflation.

--Starbucks maintained its full-year outlook even after the coffee chain’s fiscal third-quarter results declined with sales missing Wall Street’s expectations.

The company continues to anticipate per-share adjusted earnings growth in a range of flat to a low single-digit percentage in fiscal 2024, it said late Tuesday.  The shares rallied 4% in response.

Global revenue is still expected to rise by a low-single digit, while global comparable store sales are projected to be flat to down by low-single digits.

For the quarter ended June 30, adjusted EPS declined 7% to $0.93, in line with consensus. Revenue slipped to $9.11 billion from $9.17 billion last year, trailing the Street’s view for $9.25bn.  Global comparable store sales dropped 3%, in line.

But CFO Rachel Ruggeri said, “We’re seeing progress against our three-part action plans.”

U.S. same-store sales fell 2%, but pricing and multi-beverage orders drove the average ticket up 4%. China same-store sales tumbled 14% (following an 11% drop in the prior quarter), as the company continued to face “more cautious consumer spending and intensified competition,” CEO Laxman Narasimhan said on an earnings call.

I don’t think I’ve been to a Starbucks in ten years.

--Sprits maker Diageo expects demand to remain soft after consumers in North and Latin America pulled back spending on alcohol in its last fiscal year, weighing on sales.

The U.K. company, which counts Johnnie Walker, Guinness and Smirnoff among its brands, booked net sales of $20.27 billion for the year ended June 30, down 1.4% year-on-year.

Diageo said organic net sales (ex-mergers and acquisitions) fell 2.5% in North America.  Alcohol sales had surged during the pandemic, in case you needed reminding.

--The world’s largest brewer, Budweiser brewer Anheuser-Busch InBev, on Thursday reported second-quarter underlying earnings that came in ahead of analysts’ forecasts thanks to higher profitability, but revenue growth missed expectations mostly due to weakness in China and Argentina, and the continuing fallout from a boycott of its Bud Light brand in the U.S.

Sales volumes dropped 0.8% on an organic basis from the same period last year, the company’s fifth consecutive quarter of organic volume decline.

Volumes in China fell 10% due to weaker demand and adverse weather during the period, the maker of Stella Artois, Michelob Ultra and Busch Light said.  The company reported a 3.2% fall in North America.

Net profit rose to $1.47 billion from $339 million, as the company booked lower finance costs thanks to reduced losses on derivative contracts.

--CBS announced Norah O’Donnell is leaving the anchor chair at last-place “CBS Evening News” after the presidential election. 

O’Donnell re-upped her contract with CBS News in 2022, despite speculation that the anchor – whose salary was rumored to be substantially slashed from $8 million – would be replaced.  She will become a senior correspondent.

The “CBS Evening News” has long been an also-ran in the ratings race with ABC’s “World News Tonight” and NBC’s “Nightly News,” typically finishing third in viewers and crucial demographics.  So far this season, “Evening News” is averaging 4.7 million viewers, compared with 7.8 million for “World News Tonight” and 6.4 million for “Nightly News,” according to Nielsen data.

CBS then announced Thursday that it is massively revamping the “Evening News,” including moving it from its headquarters in Washington, D.C., to New York, where it will be co-anchored by CBS News veteran John Dickerson and WCBS-TV anchorman Maurice DuBois.

“Face the Nation” host Margaret Brennan will lead political and foreign affairs coverage out of D.C., and Lonnie Quinn will become the chief weathercaster in a new format that will be supervised by “60 Minutes” executive producer Bill Owens.

--Walt Disney’s “Deadpool & Wolverine” hauled in $205 million in domestic box office sales, the biggest film debut of the year and the eighth-biggest premiere ever (and biggest for an ‘R-rated’ flick).  It’s also a reprieve for Marvel after a string of disappointments and a move by Disney CEO Bob Iger to cut back on its production levels.  Hollywood has been reeling from the lingering effects of last year’s strikes, which forced production and film release delays.  Industry domestic box office for the weekend was $277.5 million, but the year’s total of $4.69 billion is still 17% lower than last year, Comscore said. That said, this was one of the top 10 domestic grossing weekends of all time.

“Deadpool” added $233 million in overseas ticket sales.

The weekend’s second-biggest draw was Universal Pictures’ “Twisters,” which sold $35.3 million domestically and has reached a total of $221.3 million in ticket sales since opening July 19.

--Lasty, NBC is kicking butt with its coverage of the Olympics, announcing Wednesday that it broke its record for advertising sales, over $1.25 billion, without being more specific, that being the previous record set in Tokyo in 2021.  The network also said the total number of advertisers was more than double the Tokyo and 2016 Rio Games combined.

NBC paid $7.75 billion for the rights to broadcast the Summer and Winter Games through 2032, including the 2028 Olympics that will be held in Los Angeles.

Saturday’s coverage swelled to 41.5 million viewers, thanks to the first day of competition for Simone Biles and the U.S. women’s gymnastics team.  It garnered 31.3 million viewers on Monday.

I know I’ve loved watching all the swimming finals, live, in the afternoons.

Foreign Affairs, Part II

China / Japan / South Korea: The United States announced a plan to revamp its command in Japan to a new three-star billet, moving from a leader that mostly supervised forces to one that can plan large operations with the Japanese military.

Defense Secretary Lloyd Austin and Secretary of State Antony Blinken traveled to Tokyo for meetings with their Japanese counterparts Sunday, where they announced sweeping new commitments.

And for the first time in 15 years, a South Korean minister of defense was in Tokyo and set to meet with Japanese and U.S. defense officials.  Together they produced a Trilateral Security Cooperation Framework that will include “senior-level policy consultations, information sharing, trilateral exercises, and defense exchange cooperation, to contribute to peace and stability on the Korean Peninsula, in the Indo-Pacific region, and beyond.”

A joint statement by Austin and his Japanese and South Korean counterparts also expressed “grave concern” over increasing Russian-North Korean cooperation, and vague opposition to “unilateral attempts to change the status quo,” which is a reference to China and Taiwan.

But Japan’s Self Defense Forces still face more limitations than most militaries due to the country’s pacifist constitution.  And cooperation with Korea, given the history between the two, isn’t always guaranteed, especially as it depends on who the leaders are at any moment in time.

None of the above would be necessary were it not for China.  Beijing reacted: “China is strongly dissatisfied with the exaggeration of China’s threat and the malicious speculation of regional tensions,” Foreign Ministry spokesman Lin Jian said Monday, according to Reuters.  China “has always maintained its nuclear capabilities at the minimum level required for national security and does not pose a threat to any country,” he said.  “We strongly urge the United States and Japan to immediately stop interfering with China’s internal affairs and stop creating imaginary enemies.”

North Korea: There have been reports of massive flooding in northwestern North Korea, with 5,000 being rescued by airlift and other evacuation work, though the official Korean Central News Agency did not mention any death tolls or how much damage the flooding caused, but the video that has emerged is catastrophic looking.

KCNA credited Kim Jong Un with overseeing the rescue operation on Sunday, aiming to portray him as an able leader handling a disaster and caring about the public’s well-being.

Speaking of Kim, there were other reports talking about his health, Kim having regained weight and long having been rumored to have high blood pressure and diabetes, with South Korea’s spy agency telling lawmakers Monday that officials in Pyongyang were looking for new medicines abroad to treat his issues.

Kim, still just 40, is known for heavy drinking and smoking, and his family has a history of heart issues.

He is only 5 feet, 8 inches, but said to be over 300 pounds, though he had lost a lot of weight in 2021.  Recent state media shows he has put it back on.

So with such talk come rumors about who is being groomed to succeed Kim, and South Korea’s National Intelligence Service, the nation’s main spy agency, maintains Kim is grooming his preteen daughter, reportedly named Kim Ju Ae, who is about 10 years old.   But she hasn’t officially been designated as her father’s successor.

Kim Ju Ae has accompanied her father on high-profile public events starting in late 2022. State media has called her Kim Jong Un’s “most beloved” or “respected” child and churned out footage and photos proving her rising political standing and closeness with her father.

Meanwhile, North Korea vowed to “totally destroy” its enemies in case of war when Kim Jong Un gives an order, state media reported on Sunday.  Senior military officials made the comments “out of surging hatred” towards the U.S. and South Korea at a meeting on Saturday attended by Kim to celebrate the 71st Korean War armistice anniversary, according to KCNA.

Venezuela: Nicolas Maduro was declared the winner of the presidential election last weekend by the government-controlled electoral authority in a result that appeared to dash opposition hopes of ending 25 years of socialist rule and looked certain to be bitterly contested.

Mary Anastasia O’Grady / Wall Street Journal...prior to the vote count....

“Venezuelans went to the polls on Sunday to vote in the sixth presidential election since Hugo Chavez won the office in December 1998. In the past 25 years, the country has gone from a democracy, admittedly imperfect, to a military dictatorship. Nevertheless, the events of the day show the nation hasn’t given up hope that it might peacefully restore its freedom via the ballot box....

“Mr. Maduro agreed to the election because he craves legitimacy and thought he could control the outcome.  There are no longer independent news outlets, so the dictatorship’s narrative is the only one on television.  A daily dose of Maduro propaganda may have been all a public worker needed to convince himself that his job and food rations depend on the regime.

“Yet even Mr. Maduro didn’t believe this was enough. All during the campaign he used uniformed and paramilitary agents to impede opposition rallies and arbitrarily punish supporters. An estimated half of the 7.7 million Venezuelans who have emigrated are registered to vote in the country. But the regime made it difficult for them to vote from abroad, and reportedly fewer than 70,000 were able to do so.

“Electronic voting machines produce a paper confirmation of the vote deposited in a box as the voter exits.  Those ballots are to be counted by observers from both sides. But there are plenty of ways for the regime to cheat, which might send the nation into the streets.”

The electoral council then said that with about 80 percent of the votes counted, Maduro had secured more than five million compared with rival Edmundo Gonzalez’s 4.4 million, or 51.2% to 44.2%.  Maria Corina Machado, the main opposition leader, was banned from running.  Edmundo Gonzalez, an ally, stood in her place.  Maduro had previously warned of a “bloodbath” if he lost.

The opposition immediately alleged voting fraud and vowed to challenge the result.

Machado said on Monday that the country’s opposition has 73.2% of the voting tallies from the election, allowing it to prove election results it says give it a victory.

Separately, an opposition adviser, one of six living in the Argentine embassy since warrants were issued for their arrests, said on social media that security forces were trying to enter the building.

Protesters than gathered in towns and cities across Venezuela on Monday. The election council declared Maduro would be president from 2025 to 2031, adding he had won “the majority of valid votes.”

But governments in Washington and elsewhere cast doubt on the results and called for a full tabulation of votes.  Independent exit polls pointed to a landslide win for the opposition.

“Our triumph is historic,” Edmundo Gonzalez told reporters late Monday.  “We’ve won in places where the democratic forces had never won in the last 25 years.”  The opposition said the tabulation sheets show that Gonzalez received 6.3 million votes, not the 4.4 million electoral officials said he had garnered, compared with 2.8 million for Maduro.

The protests then turned deadly.  At least 11 people – including one soldier – have died, and about 750 more were arrested.  Leaders on both sides called on their followers to take to the streets.

President Biden and Brazilian President Luiz Inacio Lula da Silva on Tuesday called on the Maduro government to release detailed voting data.

The U.S.-based Carter Center, invited by Venezuela’s National Electoral Council (CNE) to monitor the vote, deployed 17 experts and observers and in a statement released on Wednesday, said that it could not “verify or corroborate the results of the election declared by CNE.”

U.S. Assistant Secretary of State for Western Hemisphere Affairs Brian Nichols on Wednesday urged President Maduro and foreign governments to acknowledge Edmundo Gonzalez as the winner.

Speaking at a meeting of the Organization of American States, Nichols said that the reason Venezuela’s CNE had not yet provided detailed results of the vote was either because it did not want to show Gonzalez’s victory or because it needed time to falsify the results.

Maduro on Wednesday said he asked the country’s Supreme Court to conduct an audit of the election, while telling reporters that the ruling party is also ready to show the totality of the electoral tally sheets.  Of course, he totally controls the Supreme Court. 

Editorial / Washington Post

“Now is the golden hour of democratic change, the moment after the votes have been cast but before a theft of the outcome has solidified. It must not be squandered amid Mr. Maduro’s lies and distractions. The United States and every nation that values electoral competition, rule of law and democratic transfer of power has an obligation to recognize the opposition are the true winners and to demand that Mr. Maduro submit to the will of the people.  No temporizing, no maybes, no false negotiations.  Protestations of ‘serious concern’ are not enough....

“Anyone familiar with recent Venezuela history cannot credit this spuriously precise ‘tabulation.’  Far more believable are exit polls showing that 65 percent of the people voted for the opposition, in keeping with previous opinion polls showing Venezuelans are sick of the Maduro regime’s corruption, repression and economic incompetence and want change.  And that does not include the millions who have voted with their feet and left the country. The throngs who waited in long lines to cast their ballots obviously did not do so to uphold the status quo....

“The stakes are enormous for what was once a prosperous anchor of all Latin America.  Already, more than 7.7 million Venezuelans have fled since 2014, one of the largest displacement crises in the world.  If Mr. Maduro persists in clinging to power, another million or more may soon depart, creating a wave of desperate new arrivals at the borders of its South American neighbors and, eventually, the United States.  Moreover, the United States made two attempts in recent years – once under President Donald Trump and once under President Biden – to advance democracy against Mr. Maduro’s dictatorship.  Now the opposition has united and, at U.S. urging, tried to make the most of the limited and manipulated democratic opening Mr. Maduro – pressured by U.S. sanctions – permitted. If they fail, it will resonate around the world, and could set back Venezuela for many years.

“And that will be especially true if the United States fails to support them. There are those in the United States who hint that it would be better to acquiesce to a Maduro power grab so as to assure U.S. access to Venezuela’s oil. This would be a betrayal of principle but also a misreading of this country’s true economic interest – since it is now the world’s leading oil producer and can afford to do without crude from Caracas....

“Diplomacy, in the form of a negotiated ‘off-ramp,’ including amnesty on corruption and drug charges for Mr. Maduro, might help avoid bloodshed – assuming Mr. Maduro could be interested in a deal.  Or that his patrons in Iran, Russia and Cuba would countenance one.

“Unfortunately, it’s more likely he will cling to power as dictators in the aforementioned countries, and Nicaragua’s Daniel Ortega – also a Maduro ally – have done.  The United States and other democracies have invested heavily in a peaceful democratic transition for Venezuela.  In that sense, this election is being stolen from them, too.”

Thursday, Secretary of State Antony Blinken said the U.S. recognized Edmundo Gonzalez as the rightful winner of the election, rejecting Maduro’s claim of victory.

“Given the overwhelming evidence, it is clear to the United States and, most importantly, to the Venezuelan people that Edmundo Gonzalez Urrutia won the most votes in Venezuela’s July 28 presidential election,” Blinken said in a statement.  The announcement from Washington did not go beyond congratulating him for a “successful campaign,” the closest the U.S. has come to recognizing Gonzalez as the new leader.

The opposition now says it has the paper tallies of about 90% of the votes showing that Gonzalez received more than double the support of the incumbent president, in line with independent polling conducted before the contest.

The statement from Blinken stopped short of threatening new sanctions but he hinted at possible “punitive action.”

Random Musings

--Presidential approval ratings....

Gallup: 36% approve of President Biden’s job performance, 58% disapprove; 31% of independents approve (July 1-21).

Rasmussen: 44% approve, 54% disapprove (Aug. 2)

--A new Wall Street Journal national poll found 49% of registered voters said they supported Donald Trump and 47% backed Kamala Harris in a two-person matchup.

On a ballot test that included Robert F. Kennedy Jr. and other independent and third-party candidates, Harris received 45% and Trump 44%. Joe Biden trailed in the multicandidate contest by six points in the last poll. [RFK Jr. receives just 4%, with 5% undecided.]

Harris is supported by 63% of nonwhite voters in the two-way race, up from the 51% Biden had in the last WSJ poll.  While this is an improvement, her support is still below the 73% of nonwhite voters who, according to exit polls, backed Biden in 2020.

According to the pollsters conducting the survey for the Journal, “Only 37% of Biden voters were enthusiastic about him in early July [post-debate] and now 81% of Harris voters are enthusiastic about her,” said Democratic pollster Mike Bocian, who conducted the survey with Republican pollster David Lee.  “This is an astounding change.”

A new Fox News poll in battleground states found Trump and Harris statistically tied in Michigan, Pennsylvania and Wisconsin.  Harris led by 6 points in Minnesota.

When third-party candidates were included in the poll, Trump gained the lead in Michigan by 2 points (45%-43%); Harris pulled ahead in Pennsylvania by 2 points (45%-43%); the candidates tied in Wisconsin at 46% apiece; and Harris continued to lead in Minnesota by 6 points (47%-41%).

According to the latest Bloomberg News/Morning Consult poll, Kamala Harris wiped out Donald Trump’s lead across seven battleground states.

Harris was backed by 48% of voters to 47% for Trump in the states that will likely decide the election.  Joe Biden had a 2-point deficit in the same survey before he dropped out.

Arizona...Harris +2
Georgia...Tied
Michigan...Harris +11!
Nevada...Harris +2
North Carolina...Trump +2
Pennsylvania...Trump +4
Wisconsin...Harris +2

--In a speech in Minnesota on Saturday, Trump jettisoned his appeal for national unity and called Harris “evil,” “unhinged” and “sick.”  Trump also labeled Harris “low IQ” and “radical.”

Last Friday night at the Turning Point USA Believers’ Summit in West Palm Beach, Fla., Trump honed his attacks on Harris, calling her “the most incompetent, unpopular and far-left vice president in American history,” blaming her for high numbers of migrant apprehensions at the southern border and calling her a “bum.”

“She was a bum three weeks ago,” Trump said.  “She was a bum, a failed vice president.”

[My brother and I are getting a kick out of this last line.  Our legendary Uncle Bill, Mr. All-Knowing about western Pennsylvania sports, used to love to say, “Brian, that (quarterback, outfielder) is a Bum!”]

Interestingly, Trump urged attendees at the event to vote – “Vote early.  Vote absentee.  Vote on Election Day.”

As in he’s finally on board when it comes to absentee voting, which he himself has always employed.  That is until there is an unfavorable result, at which point, of course, he’ll blame absentee balloting.

Democrats, and their presumptive presidential nominee Kamala Harris, have settled on a theme; Donald Trump is “just plain weird.” Or “old and quite weird.”

The New York Times’ Thomas Friedman commented: “I cannot think of a sillier, more playground, more foolish and more counterproductive political taunt for Democrats to seize on than calling Trump and his supporters ‘weird.’”

Trump addressed a cryptocurrency conference in Nashville before heading to St. Cloud, Minn., vowing to make the U.S. the “crypto capital of the world,” a far cry from his stance in 2021, when he called bitcoin a “scam.”

While the Nashville and St. Cloud appearances were indoor events, Trump vowed on social media to hold outdoor rallies again, despite the Secret Service’s recommendations that he should avoid them, Trump saying he would return to Butler, Pa.

Trump hosted a fundraiser prior to his remarks at the crypto conference, with tickets ranging from $60,000 to over $800,000 per person.

Kamala Harris’s campaign raised more than $200 million in the first week*, with 2/3s of the haul coming from first-time donors, according to Harris campaign officials.

The campaign also said they have recruited 170,000 new volunteers.

*The Harris campaign then announced it raised $300 million in August vs. the Trump campaign’s $139 million.

--Transportation Secretary Pete Buttigieg is a smart guy, and for good reason is on the Veep short list.  Last weekend on “Fox News Sunday” with Shannon Bream, she asked Buttigieg if President Biden was aware of how badly he had been doing in polling against Trump.

Buttigieg: “I’m aware of how he was doing.  We’re all aware of how he’s doing.  Our country has watched our president lead, and yes, we’ve also seen the fact that he’s 10 years older than he was 10 years ago. But unlike Republicans, who in Trump’s personality cult will take a look at Donald Trump and say he’s perfectly fine, even though he seemed unable to tell the difference between Nikki Haley and Nancy Pelosi, even though he’s rambling about electrocuting sharks and Hannibal Lecter, even though he is clearly older and stranger than he was when America first got to know him.

“They say he’s strong as an ox, leaps tall buildings in a single bound. We don’t have that kind of warped reality on our side.

“On the contrary, the president confronted that reality in what must have been one of the most difficult decision for an American president to make ever. And he did something that I don’t think Donald Trump could even conceive of doing, which is putting his own interests aside for the country.”

--Editorial / Wall Street Journal

“Donald Trump’s choice of 39-year-old J.D. Vance as his running mate was supposed to present the GOP ticket as modern and looking to the future. Instead the campaign has found itself playing defense against Mr. Vance’s censorious views about women who don’t have children.

“As it always does, the press has been digging up the VP choice’s comments over the years for political scrutiny, and the Ohio Senator turns out to be a target-rich environment.  As a Senate candidate in 2021 he told Tucker Carlson, then a Fox News host, that the U.S. is being run by ‘a bunch of childless cat ladies who are miserable at their own lives and the choices that they’ve made, and so they want to make the rest of the country miserable, too.’

“That sounds like he was referring to Vice President Kamala Harris, who has two stepchildren but none of her own.  The comment is the sort of smart-aleck crack that gets laughs in certain right-wing male precincts. But it doesn’t play well with the millions of female voters, many of them Republican, who will decide the presidential race....

“Mr. Vance went on ‘The Megyn Kelly Show’ [last] Friday to repair the damage, calling the cat-lady line a ‘sarcastic comment’ that didn’t mean to denigrate single or childless women.  But he wasn’t at all apologetic.

“ ‘I know the media wants to attack me and wants me to back down on this, Megyn, but the simple point that I made is that having children, becoming a father, becoming a mother, I really do think it changes your perspective in a pretty profound way,’ Mr. Vance said.

“He’s right about that, but then why didn’t he say it in 2021?  One possibility is that at some level Mr. Vance really doesn’t respect people who make different life choices.  Politicians often reveal their true beliefs when talking to supporters, as Hillary Clinton did when she sneered at the ‘basket of deplorables’ who supported Mr. Trump in 2016....

“An old political saw is that the best VP choice is one who gets applause upon announcement and then is never heard from again. You can tell that doesn’t apply to Mr. Vance since Mr. Trump is being asked if he still believes he made the right choice.  He says he does, but the Trump campaign can’t be happy about having to defend Mr. Vance instead of focusing on Kamala Harris’ many extreme views.”

Recall, the Journal supported Trump selecting Doug Burgum as Veep, as did I.

--Tuesday, at a star-studded rally in Atlanta, Ga., Harris denounced Trump as a “predator” in her address.

“Georgia, it is so good to be back, and I’m very clear: the path to the White House runs right through this state,” Harris said.  “The momentum in this race is shifting, and there are signs that Donald Trump is feeling it.”

One of Harris’ best-received lines of the 20-minute speech (not Trump’s usual 1 ½ hours), was in sending a message to Trump: “I do hope you’ll reconsider and meet me on the debate stage, because, as the saying goes, ‘if you’ve got something to say, say it to my face!’”

Roughly 10,000 attended the rally highlighted by a performance by rapper Megan Thee Stallion.

--Trump, on Wednesday, in an appearance before a gathering of the National Association of Black Journalists, attacked Kamala Harris’ racial identity.

“I didn’t know she was Black until a number of years ago when she happened to turn Black, and now she wants to be known as Black. So I don’t know, is she Indian or is she Black?”  He added later that Harris “was Indian all the way” but then “became a Black person.”

On Wednesday night, Harris addressed Trump’s statement during remarks at the annual gathering of the historically Black Sigma Gamma Rho sorority, calling Trump’s words “the same old show – the divisiveness and the respect.”

“The American people deserve a leader who tells the truth,” she said.  “A leader who doesn’t respond with hostility and anger when presented with the facts. We deserve a leader who understands that our differences do not divide us.  They are an essential source of our strength.”

Harris has always identified herself as Black and attended a historically Black university, Howard.

To attempt to defend Trump, somewhat, he at least showed up at the NABJ, the group having invited Harris, who turned it down, though the NABJ said it is looking to get her for a September appearance.  So, Trump went into the lion’s den, and once again stuck his foot in his mouth when he could have just emphasized his record and gains that Black Americans made during his term.

Senate Republican Whip John Thune (S.D.) said Wednesday that Trump should focus on policy issues and not race in the campaign. Former Maryland Gov. Larry Hogan, an anti-Trump Republican now running for the Senate, called the comments “unacceptable and abhorrent.”

--Peggy Noonan / Wall Street Journal...on Kamala’s ‘free ride’....

“On policy she is bold to the point of shameless.  This week she essentially said: You know those policies I stood for that you don’t like?  I changed my mind!  Her campaign began blithely disavowing previous stands, with no explanation. From the New York Times’ Reid Epstein: ‘The Harris campaign announced on Friday that the vice president no longer wanted to ban fracking, a significant shift from where she stood four years ago.’  Campaign officials said she also now supports ‘increased funding for border enforcement; no longer supported a single-payer health insurance program; and echoed Mr. Biden’s call for banning assault weapons but not a requirement to sell them to the federal government.’  It’s remarkable, she’s getting away with it, and it’s no doubt just the beginning. It will make it harder for the Trump campaign with its devastating videos.”

--Texts showed officers spotted Donald Trump’s would-be assassin at 4:26 p.m., nearly 100 minutes before he was almost assassinated on July 13, a local countersniper who was leaving his security detail shift texted his colleagues about a young man sitting on a picnic table: “He knows you guys are up there.”

The message, obtained by the New York Times, revealed that law enforcement was aware of the would-be assassin about half an hour earlier than previously known.

At 5:38 p.m., pictures of the man, Thomas Crooks, were shared in a group chat, and another text went out among the officers: “I did see him with a range finder looking towards stage.  FYI. If you wanna notify SS snipers to look out. I lost sight of him.”

Appearing before a joint hearing of the Senate Homeland Security and Judiciary Committees on Tuesday, Acting Secret Service Director Ronald Rowe told lawmakers that he visited the outdoor rally site in Butler, Pa., and climbed onto the roof of a nearby building from which Crooks fired.

“What I saw made me ashamed,” Rowe testified.  “As a career law enforcement officer, and a 25-year veteran with the Secret Service, I cannot defend why that roof was not better secured.”

--President Biden formally proposed major changes for the Supreme Court: an enforceable code of ethics, term limits for justices and a constitutional amendment that would limit the justices’ recent decision on presidential immunity.

But as I wrote the other week, there is zero chance of the proposal passing a divided Congress with Election Day looming, let alone a constitutional amendment limiting the Supreme Court’s immunity decision, so I’m not wasting any more time on it.  Many are wondering why do this less than 100 days before the election?

That said, the reforms are popular amongst a majority of the electorate, so Vice President Harris can get a few applause lines should she choose to use the material.

--The stabbing attack in Southport, England (just north of Liverpool), the other day that resulted in the deaths of three young girls, ages 6, 7 and 9, with ten others injured, five in critical condition, was beyond sickening.

The girls were holding a Taylor Swift-themed dance event.

A 17-year-old was taken into custody and then charged with murder, and as an adult as he turns 18 next week.

There were days of violent protests following the stabbings, with mobs descending on a mosque.  Supporters of the English Defense League, a far-right group, were inspired by speculation about the boy’s identity, according to Merseyside (Liverpool) police.  Authorities said the violence was fueled by misinformation spread on social media.  Police said, “the person arrested was born in the UK,” but social media said he was a radical Islamist migrant.

The protests spread across the country, including London on Wednesday, protesters throwing flares and smoke cannisters towards Downing Street.  Fifty police officers were hurt in the protests in Southport on Tuesday.

Prime Minister Keir Starmer denounced the “violent thugs” who clashed with police.

Taylor Swift fans have so far raised more than $417,000 (as of Thursday) to help families of the victims and for the hospital where some of the children are being treated.

Swift said she is in shock over the “loss of life and innocence” and at a “complete loss for how to ever convey my sympathies to these families.”

--Portions of China’s central Hunan province saw water levels reach “record levels,” state media reported, with three dike breaches in less than 20 hours on Monday, in the wake of Typhoon Gaemi.

On Sunday morning, 15 people were killed and six others injured after a severe landslide triggered by heavy rain swept away a guest house in the city of Hengyang, according to state media.

The death toll from Gaemi in the Philippines rose to at least 34, and Taiwan reported its death toll hit 10.

--The death toll from massive landslides that hit the southern Indian state of Kerala is at least 187, with nearly 200 people still missing, days later.

Thick torrents of mud and water swept through the region early Tuesday morning, flattening homes and uprooting trees.  Heavy rains continue in the area, hampering rescue operations.

The landslides swept through tea and spice estates, which makes the region a popular tourist destination; Cochin (now Kochi) known as the ‘spice capital of the world.’  I worked there briefly in 1985, when I took a hiatus from Wall Street.  [The company I worked for was involved in spice oleoresins, the essence of the raw material, that you find in frozen foods, for example.]

--In the aftermath of the wildfires that hit Jasper, Alberta, Canada, authorities said 358 of the 1,113 structures in town had been destroyed by the main fire, which was caused by a lightning storm.

However, all critical infrastructure was protected, including the hospital, library and firehall.

--California’s Park fire grew into the fourth largest in state history over the weekend and kept growing.  It’s over 600 square miles.

--According to Brian Brettschneider, a climatologist based in Alaska, Death Valley, Calif., registered an average July temperature of 108.5 degrees, the highest monthly value ever recorded among thousands of weather stations around the globe.

July was also the hottest month on record for dozens of cities in the western U.S., including Sacramento, Las Vegas and Portland, Ore.

Death Valley’s high temperatures ranged from 111 to 129 degrees. It reached at least 125 on nine consecutive days from July 4 to 12. At night, the mercury only dipped below 90 twice and remained in the triple digits three times.  [Dan Stillman / Washington Post]

I have Death Valley, Las Vegas and Phoenix on my weather bug and this past Wednesday, Phoenix reached at least 105 degrees for a 57th consecutive day, breaking its previous record of 56 straight days in 2023.  The city also recorded a low temperature of 80 degrees or warmer Wednesday for the 57th consecutive day, exceeding the record of 51 days in 2023.  [Washington Post]

Both the 105 and 80 marks are forecast to be exceeded for at least the next two weeks...so the above figures should get well into the 70-consecutive days levels.  That’s astounding.  And this is the most popular place in the country to move to.  Eegads.

--NASA astronauts Sunita Williams and Barry “Butch” Wilmore are still up on the International Space Station, with NASA and Boeing yet to determine what went wrong with their spacecraft.

Williams and Wilmore arrived at the space station June 6 for what was supposed to be an eight-day mission, that as of today has now stretched to 58 days.  The delay is because of the fact that during the approach to the ISS, five of the spacecraft’s thrusters shut off suddenly, and the spacecraft also sprang a series of small but persistent helium leaks in its propulsion system. Since then, engineers from Boeing and NASA have been running tests to determine what went wrong and to ensure the spacecraft is safe to fly Wilmore and Williams home.

SpaceX’s Dragon capsule could be used as a backup if necessary, NASA officials said.  The two astronauts have said they still have full faith in their Starliner capsule to get them home.

I saw a description of the ISS that I hadn’t seen before in the Washington Post...that it is as long as a football field, with the living space of a Boeing 747 airplane.  Wilmore and Williams have been asked to pitch in on chores shared with the other seven astronauts on the ISS, including toilet duty. They’ve described weightlessness as a joy.  Veteran NASA astronaut Sandy Magnus once said: “Gravity sucks.  It’s horrible.”

However, despite seeing a sunrise every 90 minutes and entire continents in their field of view, space can get old.  They do get homesick and the ISS can feel cramped. [Christian Davenport / Washington Post]

At week’s end, NASA is putting pressure on Boeing to bring the astronauts’ home!

---

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

Pray for Ukraine.

God bless America.  Welcome home Evan Gershkovich, Paul Whelan, and Alsu Kurmesheva. 

But keep Yulia Navalnaya and her daughter, Dasha, in your thoughts and prayers.

---

Gold $2478...all-time weekly high!
Oil $73.91...lowest weekly close since Feb.

Bitcoin: $62,570 [4:00 PM ET, Friday]

Regular Gas: $3.48; Diesel: $3.80 [$3.80 - $4.10 yr. ago]

Returns for the week 7/29-8/2

Dow Jones  -2.1%  [39737]
S&P 500  -2.1%  [5346]
S&P MidCap  -4.1%
Russell 2000  -6.7%
Nasdaq  -3.3%  [16776]

Returns for the period 1/1/24-8/2/24

Dow Jones  +5.4%
S&P 500  +12.1%
S&P MidCap  +6.0%
Russell 2000  +4.1%
Nasdaq   +11.8%

Bulls 59.4
Bears 15.6

Hang in there. 

Note to CIA Director Bill Burns...pour yourself a cold one.  No one deserves it more than you.  [But the guy has zero rest these days.]

And I have to say, having just watched it, congratulations to America’s Grant Fisher for capturing just the second U.S. medal (bronze) in the men’s 10,000 meters in Paris in 56 years!  Us former, and those who are current, distance runners are thrilled for the guy.

Brian Trumbore

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