Week in Review

---

Week in Review

08/10/2024

For the week 8/5-8/9

[Posted 4:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.  Every little bit helps!

Edition 1,321

We ended last week in the markets in a foul mood.  After Federal Reserve Chair Jerome Powell strongly hinted a rate cut was coming in September, the markets focused more on the seemingly slowing economy, rather than the Fed, and Friday’s poor jobs report added to the sudden doom and gloom, the predominant feeling being the Fed waited too long to begin cutting rates.

Last week the Bank of Japan also surprisingly hiked rates, when everyone else is cutting them, or about to do so, and we went into the weekend with a lot of uncertainty, including an imminent response by Iran and its proxies to the killings of a key Hamas figure in Tehran and a Hezbollah commander in Beirut.

Sunday night, the Japanese stock market tanked, and the U.S. followed Monday morning, bond yields plummeting, Wall Street’s “fear gauge,” the VIX, with its biggest spike since records have been kept, 1990, though things stabilized by day’s end.

The Dow Jones only fell 2.6%, the S&P 500 3.0% and Nasdaq 3.4%, not exactly a ‘crash,’ as many, from the media to Donald Trump, called it.  Early Monday morning talk of a panic, and the Fed needing to call an inter-meeting emergency session to cut rates, now, faded away.

Ed Yardeni, one of the better market veterans on the Street who I’ve literally followed my entire career (and the keeper of the Bull/Bear data that I have kept on spread sheets since 1990) said Monday’s market action reminded him of the 1987 crash, when the economy averted a downturn despite investor fears at the time.

“This is very reminiscent, so far, of 1987,” Yardeni said on Bloomberg Television.  “We had a crash in the stock market – that basically all occurred in one day – and the implication was that we were in, or about to fall into, recession. And that didn’t happen at all. It had really more to do with the internals of the market.”

In my office I have a cover of the New York Post from Oct. 19, 1987, Black Monday, when the Dow Jones fell over 22%, the S&P 500 20%.  Now that was a crash. Not this Monday.

It was a crash in Japan, however, 12.4% on Monday in the Nikkei 225 (their S&P 500), 19% in two days, the worst-ever two-day rout in that market, but then they reversed the damage, the Nikkei up 10% on Tuesday, before stabilizing.  Bank of Japan Deputy Governor Shinichi Uchida, highly influential, said Wednesday the central bank won’t raise interest rates further when financial markets are unstable.

“As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” he said in a speech to business leaders.  The yen weakened against the dollar, bond futures spiked higher and stocks immediately rebounded after his comments, which were the first public remarks by a BOJ board member since the bank raised rates on July 31.

Ed Yardeni, speaking to Yahoo Finance’s Morning Brief, said: “A lot of speculators went and borrowed in Japan at zero interest rates,” explaining that borrowed yen was then converted into dollars and other higher-yielding currencies and instruments (the vaunted ‘yen carry trade’).

“The yen weakened, the dollar strengthened, and they took that money and invested it in assets around the world,” he said. If the BOJ doesn’t further raise rates, this trade will continue in some fashion.

The rest of the week saw a lot of volatility, including a big rally Thursday that resulted in a 2.3% gain for the S&P, its best day since November 2022 (even as Donald Trump was still talking about a “crash” in his afternoon press conference the same day), and it was all fueled by a lower than expected jobless claims figure, which normally doesn’t move the market, but such is the focus on the economy and the employment situation these days.

So, we finished the week with minimal losses, detailed below.  But the uncertainty, and volatility, are for real.

We still have an iffy economy, with key data coming next week, and we still have a tension convention in the Middle East.

And now, a major Ukrainian incursion into Russia, the extent of which has been rather shocking, especially to Vladimir Putin.

---

Jamie Dimon, chairman and CEO of JPMorgan Chase, wrote some of the following in an editorial for the Washington Post last Friday.

“We live in a perilous time.  Deeply divided, our nation now faces both challenging domestic issues and perhaps the most complicated geopolitical situation since World War II. We may be at an inflection point that will determine the fate of the free and democratic world for decades.

“We should not sleepwalk into disaster – we will prevail, but we need an active, comprehensive effort.  This is precisely the time when strong American leadership is needed to unite us and strengthen the indispensable role our country plays for the safety of the world.

“We’ve faced worse: war, economic upheaval, social transformation. In those moments, leaders such as Presidents Lincoln, Truman and Eisenhower guided us forward with common sense and pragmatism. Our best leaders strengthen the bonds that unite us. They address the broader interests of our country and don’t pander to base politics or cater to extremes.

“There are lessons learned from these leaders that our current candidates should embrace.  Unity is a word, but there are specific actions that can accomplish it – actions I hope our next president will adopt.

“First, our problems cannot be fixed without our leaders acknowledging them.

“Unite Americans with regular, honest and open communication. We deserve a president who explains our problems, encourages input from all sides, and shares plans and solutions.”

Mr. Dimon goes on to cover other issues, like “developing policies that reflect our crucial place on the global stage.”

Dimon concludes:

“Finally, work to earn the support of all voters.

“Recognize that voters are all different and have good reasons to think differently.  Do not insult, stereotype, weaponize, scapegoat or gaslight. And do not attack them. Engage them....

“A healthy, unified country is good for everyone.  I believe that our nation is at a critical time in its 248-year history.  Like many of your families, my grandparents were immigrants who did not finish high school. They were drawn to the promise of this nation, which was then, and still is, the beacon of freedom for the world.

“America has all the advantages, and we can win the future with smart policy, courageous leaders and everyone with a seat at the table moving in concert.

“We need to elect a president who is dedicated to the ideals that define and unite us, and who is committed to restoring our faith in America and our indispensable role in the world.

“Such a person could be one of our greatest presidents – and put us on a path that is worthy of the American people.”

Watching former president Donald Trump at a campaign rally over the weekend (I watched the whole immensely boring thing), you certainly didn’t get the impression, post-assassination attempt, he wants to unite anyone.  There he was in Atlanta, Ga., going after Republican Gov. Brian Kemp (“little Brian Kemp...he’s a bad guy...disloyal...and he’s a very average Governor”), and saying of Republican leaders in the state, “They don’t want the vote to be honest.”

“We are not going to let them rig the presidential election in 2024.”

Trump even took a shot at Kemp’s wife.

How criticizing a popular Republican governor helps you win an election in a state you lost four years ago by 12,000 votes I’ll never know.

[Gov. Kemp replied on X: “My focus is on winning this November and saving our country from Kamala Harris and the Democrats – not engaging in petty personal insults, attacking fellow Republicans, or dwelling in the past,” he wrote.  “You should do the same, Mr. President, and leave my family out of it.”]

And regarding Vice President Kamala Harris: “We have to work hard to define her. I don’t want to even define her. I just want to say who she is: She’s a horror show,” Trump said, adding Harris is a “lunatic” with a “low IQ.”  Saturday, he did steer clear of his earlier allegation that Harris only recently identified as Black.

As the Washington Post reported, Trump’s “campaign was hoping to characterize (Harris) as being hard to pin down on policy, but instead Trump at a convention for Black journalists earlier in the week took this idea to the extreme and alleged Harris was hard to pin down on race.”

“Ultimately the core of this election is about economic issues.  Every time you’re not talking about that, you’re missing an opportunity to engage independent voters,” GOP pollster David Winston said.  “Independents always decide who wins elections.”

Editorial / Wall Street Journal

“The ascension of Kamala Harris as the Democratic presidential nominee has Donald Trump fumbling for an effective strategy.  But in the meantime, he’s reopening old feuds with fellow Republicans. That will work about as well for him as it did in 2020....

“(Trump said), ‘If it wasn’t for me, (Brian Kemp) would not be your Governor.  I think everybody knows that.’  Actually, everybody knows that Mr. Kemp won in 2022 with 53.4% of the vote against Democratic media darling Stacey Abrams, while Mr. Trump lost the state by 12,000 votes in 2020.

“Mr. Trump also cost Republicans two Senate seats in special elections in January 2021 when he told partisans that the November elections had been stolen.  Turnout was down in Republican areas of the state.  Why vote if your candidate says your ballot won’t count?

“Mr. Trump’s rants are especially counterproductive because he needs Mr. Kemp’s organization in Georgia.  Mr. Kemp is supporting the former President and is deploying his turnout machine, but Mr. Trump may convince many of those Republicans to vote for someone else or stay home as they did in 2020.

“Mr. Trump won’t win if he’s fighting about the past instead of laying out an agenda for the future.  But he simply can’t help himself.”

So, Tuesday, Harris picked Minnesota Gov. Tim Walz to be her running mate, passing over Pennsylvania Gov. Josh Shapiro, some say because the very talented Shapiro is Jewish and that he could outshine Harris.  It’s no secret Shapiro would like to be president someday.

Born in Nebraska, Walz, 60, served for 24 years in the National Guard (more on this below), taught social studies and coached a high school football team.  He got his start in politics in 2006 by winning a congressional race in a rural, largely conservative district of Minnesota, becoming just the second Democrat elected in the district in over 100 years.

After serving in Congress for six terms, he was elected governor in 2018.

After his election, Walz has worked to enact an ambitious agenda of liberal policies: free college tuition for low-income students, free meals for schoolchildren, legal recreational marijuana and protections for transgender people.  He has also championed climate issues but has faced criticism for his response to the George Floyd protests.

Donald Trump had a meltdown on Truth Social as Harris was introducing Walz at a campaign rally in Philadelphia, a rather fiery rally.

“What are the chances that Crooked Joe Biden, the WORST president in the history of the US, whose presidency was unconstitutionally STOLEN from him by Kamala, Barack HUSSEIN Obama, Crazy Nancy Pelosi, Shifty Adam Schiff, Cryin’ Chuck Schumer and others on the lunatic left, CRASHES the Democrat National Convention and tries to take back the nomination, beginning with challenging me to another DEBATE.  He feels that he made a historically tragic mistake by handing over the US presidency, a COUP, to the people in the world he most hates. And he wants it back NOW!!!”

Michael Steele, former Republican National Chairman, tweeted: “Umm, GOP, is Donald Trump ok?”

Trump warned Wednesday that Harris and Walz will take the United States straight into communism if they win.

“There’s never been a ticket like this,” Trump said, during an appearance on “Fox & Friends.”

Elon Musk trashed Harris too, calling her “quite literally a communist” in a post on X.

Ingrid Jacques / USA TODAY

“I hate to admit it, but I’m kind of impressed.

“The effort between Democrats and the media to create a political star out of Kamala Harris has gone shockingly well.

“After President Joe Biden finally threw in the towel last month on his presidential bid, the refurbishing campaign began in earnest.

“In a couple of weeks, Harris has gone from a generally disliked, ineffective flop of a vice president to a progressive champion who has miraculously united and excited her Democratic Party just ahead of its national convention in Chicago.

“The momentum of her campaign increased Tuesday when she announced her running mate, Minnesota Gov. Tim ‘one person’s socialism is another person’s neighborliness’ Walz.

“(Yes Walz really said that last week on the ‘White Dudes for Harris’ fundraiser call.)

“Harris’ choice of Walz indicates she’s confident enough to go with a far-left progressive from a state that’s not really in play.

“She’s also managed to steal the spotlight from former President Donald Trump, who just weeks ago survived an assassination attempt that’s become old news rather quickly....

“Ari Fleischer, former press secretary for President George W. Bush, thinks the mainstream media’s distaste for Trump will push them to keep painting Harris in a positive light.

“ ‘I’ve been around the MSM for a long time and I’ve never seen them so passive,’ he recently observed on X.  ‘If you thought they were in the tank for Pres. Obama, it’s nothing compared now to their desire to defeat Trump and help Harris. They should be roasting Harris for hiding and refusing to do interviews.  Instead, they’re in on it.  If it helps her win, it’s more than fine with the MSM.’

“It wasn’t that long ago that Biden finally came out of hiding and showed himself to the world at the debate with Trump in June. That didn’t go so well for him, but it was revealing to say the least.

“Harris was able to avoid the primaries and the vetting that comes with that process. She owes it to the American people to let us see for ourselves who she really is.

“And the media should do their job and make sure she does.”

Editorial / Washington Post

“Vice President Harris has made her most important decision of the campaign thus far.  She has chosen Minnesota Gov. Tim Walz to be her running mate.  The selection means there will be a heavy burden on Ms. Harris to convince the middle of the country that her campaign is broadly appealing in both style and substance.

“Mr. Walz is a former teacher who comes off as an upper-Midwestern everyman on television. He is also the most liberal of the six finalists Ms. Harris considered to be her running mate.  Ms. Harris’s Tuesday move to elevate Mr. Walz to the No. 2 spot on the Democratic ticket could be a play to widen her party’s polished coastal image – or an attempt to placate her party’s left wing. Most likely, it was both....

“Mr. Walz’s first gubernatorial term was defined by the dual 2020 traumas of covid-19 and the murder of George Floyd in Minneapolis. His aggressive pandemic response frustrated small-business owners, and he took heat for failing to deploy the National Guard until three days after Floyd’s death triggered rioting. His administration blamed the city for withholding information needed to deploy troops more quickly. When it comes to recovery, violent crime has fallen sharply in Minnesota since its 2021 spike and remains well below the national average.

“Here is where caution is warranted for a national campaign – and for broader fiscal awareness.  In his second term, after Democrats flipped the Minnesota Senate, Mr. Walz governed with the zeal of a convert. He can boast some significant accomplishments.  But the nation is in a tight fiscal place. Mr. Walz increased the state budget by 40 percent and spent most of a $17.5 billion state surplus. He signed off on a new child tax credit, free school breakfast and lunch for K-12 students and billions of dollars on affordable housing and infrastructure. He signed a law to mandate utilities go carbon-free by 2040.  On social issues, he signed bills that codified abortion rights, restored voting rights for felons, legalized recreational marijuana and allowed undocumented immigrants to get driver’s licenses.

“Mr. Walz touted endorsements from the National Rifle Association during his congressional races but embraced gun control as he ran statewide.  Last week, Mr. Walz celebrated a new state law that increases penalties for straw purchases of weapons made on behalf of ineligible buyers.  Last year, he expanded background checks and signed a red-flag law that makes it easier for law enforcement to remove weapons from people who pose a threat to themselves or others.  For all that, he takes pride in his pheasant-hunting prowess.  He has also been an outspoken booster of U.S. support for Ukraine and has welcomed Ukrainian refugees to Minnesota....

“Certainly, Ms. Harris’s selection of Mr. Walz did not prove that she would resist pressure from the party’s left in the White House, a message she could have sent with a different pick. Tactically, the choice also gives her opponents a clearly defined target: a ticket that leans toward out-of-touch liberalism. For this reason, Ms. Harris needs to invest in building the broad coalition required to win a national election. With Mr. Walz on the ticket, she should feel freer to reach to the center, rather than keeping a wary eye trained on her left.”

Editorial / Wall Street Journal

“Donald Trump did Democrats a favor by choosing a running mate who reinforced his base rather than reaching out to swing voters.  Kamala Harris has now returned the favor in selecting Minnesota Gov. Tim Walz, the progressive favorite, as her pick for Vice President.

“The choice that scared Republicans was popular Gov. Josh Shapiro of Pennsylvania, a swing state crucial to an Electoral College victory. But Mr. Shapiro, who is Jewish, was the target of an extraordinary and nasty campaign against him by the Democratic left.  He was too pro-Israel and had upset unions by showing rhetorical support for school vouchers.

“Ms. Harris appears to have wilted under this pressure, perhaps fearing protests at the Democratic convention in Chicago this month. She went with Mr. Walz instead, and there goes Mr. Trump’s hope of flipping the decisive swing state of Minnesota.  That’s a joke, since the Land of 10,000 Liberals has voted Democratic in every presidential election since 1976.

“Mr. Walz’s progressive bona fides will please Sen. Bernie Sanders and the teachers’ unions.  But his governing record will be fodder for Mr. Trump. And picking him is a bad omen about the ability, or even willingness, of Ms. Harris to defy her party’s left....

“Despite her four years as Vice President, Ms. Harris is largely unknown to most voters.  Democrats want to keep it that way, hoping she can dodge media interviews and ride a gauzy theme about ‘the future’ in a campaign sprint of a mere 100 days.

“But her choice of a running mate is her first presidential-level decision, and it confirms the views she expressed in 2019 when she ran for the White House as a left-wing Democrat.  Choosing Mr. Walz suggests that the real Kamala Harris is the one who wants Medicare for All and to eliminate cash bail.  Voters who don’t like Mr. Trump might decide he’s still better than signing up for that.”

As for the controversy over Gov. Walz’s military record, I thought the Wall Street Journal summed it up well:

“There are plenty of reasons to criticize Democratic vice-presidential candidate Tim Walz, and we’ve told you about several. But the charges leveled so far about his military service look like ‘thin gruel,’ as our friends at the New York Sun put it.

“J.D. Vance has accused Mr. Walz of ‘stolen valor’ despite his 24 years in the National Guard because the Minnesota Governor didn’t deploy to Iraq with his unit.

“Before his political career, Mr. Walz rose to the highest enlisted rank of Command Sergeant Major. He retired in May 2005, shortly before the unit was notified in July 2025 that it would be deployed to Iraq.  Fox News reports that the Pentagon says Mr. Walz put in his retirement request several months earlier, though it’s fair to ask if he was aware of the possible Iraq deployment.

“His retirement timing wasn’t ideal, leaving his leadership position when his unit was headed into a war zone.  But if he had been deemed essential to the operation, the Guard could have declined to approve it.  People retire from service for a variety of reasons.  Mr. Walz had served since he was 17 years old and had decided to run for Congress....

“Mr Vance has alleged that Mr. Walz misrepresented his service by referring to weapons he carried ‘in war.’  That may have been a deceptive boast, though a minor one.  Iraq war veteran and former Michigan Rep. Peter Meijer posted on X that Mr. Walz ‘played fast & loose with his military bio to stay above water as his congressional district drifted right.’  But that doesn’t amount to stolen valor, and a simple concession by Mr. Walz on that point would put the matter to rest....

“By the way, some have demeaned Mr. Vance’s service in Iraq because he served as a Marine correspondent.  But his service was also honorable, and more than a few correspondents have been killed in American wars.

“The U.S. military is a volunteer force and only about 1% of the population serves in uniform.  Mr. Walz and Mr. Vance both served their country.  There are other and better reasons to oppose Mr. Walz’s candidacy.”

More on the presidential campaign below....

---

Israel-Hamas-Hezbollah-Iran

--U.S. intelligence assessed that there would be two waves of attacks by Hezbollah and Iran, but who would strike first and what the attacks will entail remained unclear.  President Biden and Vice President Harris were briefed Monday by their national security team and told it is still unclear when Iran and Hezbollah will launch their attack and precisely what it might include.

European governments, such as France and Italy, last Sunday urged their citizens in Lebanon to leave the country due to the risk of military escalation in the region.

--Hamas on Tuesday named Yahya Sinwar, its top official in Gaza, and the man who masterminded the Oct. 7 attacks, its new leader, signaling the power of the militant group’s hardline wing after his predecessor was killed in Iran.

The selection is a sign Hamas is prepared to keep fighting after 10 months of destruction in Gaza, and it will provoke Israel, which has put him at the top of its kill list.

So much for any chance at a ceasefire (though the U.S., Qatar and Egypt keep urging the two sides to stay at the table), with Iran vowing to revenge Haniyeh’s killing and Hezbollah threatening to retaliate over Israel’s killing of one of its top commanders in Beirut last week.

Also Tuesday, Hezbollah leader Sayyed Hassan Nasrallah said his group would wait for the right moment to respond to the killing of its military commander by Israel but did not hint at its form or timing.

“Whatever the consequences, the resistance will not let these Israeli attacks pass by,” he said in a televised address to mark one week since the assassination of Fuad Shukr in Beirut.  “Our response, God willing, will be strong, effective and impactful,” he said.

Just before the speech began, watched by supporters of Hezbollah in Beirut’s southern suburbs, Israeli warplanes swooped low over the Lebanese capital, setting off a series of sonic booms that rattled windows across the city and sent people ducking for cover.  Nasrallah began by saying these were “small-minded” attempts by Israel to provoke people.  [Observers say they were the loudest sonic booms heard in the city for years.]

Earlier Tuesday, Hezbollah launched attack drones at two Israeli military sites in northern Israel and attacked an Israeli military vehicle in another location.  Israel said seven were injured, one critically; the injuries caused by an interceptor that “missed the target and hit the ground, injuring several civilians,” the IDF said.

Four Hezbollah soldiers were killed in a strike on a home in Lebanon.

Meanwhile, the Lebanese government is working to ensure any response to the Israeli killing does not trigger total war in the region.

Wednesday, Washington Post columnist David Ignatius, citing White House officials, said Iran may be reconsidering its vow of a harsh reprisal on Israel for the assassination of Haniyeh.

Hezbollah is still a “wild card,” however, Ignatius added.  He said the administration is sending strong messages to Prime Minister Netanyahu not to stand in the way of ceasefire negotiations and messages, via regional partners, to Tehran urging restraint.

Additionally, the U.S. show of strength, in sending more warships to the region in preparation of an Iranian-led attack on Israel has had an impact on the regime in Tehran.

Late Wednesday, Egypt instructed all of its airlines to avoid Iranian air space for a three-hour period in the early morning on Thursday.  Last Sunday, Jordanian authorities asked all airlines landing at its airports to carry 45 minutes’ worth of extra fuel.

Today, an Iranian Revolutionary Guards deputy commander was quoted as saying by local news agencies that Iran is set to carry out an order by Supreme Leader Ayatollah Khamenei to “harshly punish” Israel.

--Going back to last Saturday, an Israeli airstrike on a school sheltering displaced persons in Gaza City killed at least 15, hours after two strikes in the occupied West Bank killed nine militants including a local Hamas commander, Hamas said. 

Sunday, a separate Israeli airstrike hit two schools in Gaza City, killing at least 25 people, with the Israeli military (IDF) saying it struck a Hamas military compound embedded in the schools.

Israel also said it was dismantling a 3-meter-high tunnel (nearly 10 feet) in the Philadelphi corridor on the border with Egypt discovered last week by troops searching for underground Hamas infrastructure in the area.

A stabbing attack carried out by a Palestinian killed two elderly people in a Tel Aviv suburb Sunday.  Police said the Palestinian militant was “neutralized.”

Wednesday, Israel said it had killed 45 Palestinian fighters in Gaza since Monday, with civilians also killed in the airstrikes and fighting on the ground.

--Monday, Israel returned the bodies of more than 80 Palestinians killed in its offensive in the Gaza Strip, as Israeli airstrikes killed at least 18 more people on Monday, according to the Palestinian Ministry of Health.

--At least five U.S. personnel were injured in an attack against a military base in Iraq on Monday, U.S. officials said.  Two Katyusha rockets were fired at al Asad airbase in western Iraq, with the rockets falling inside the base.  One can assume the attack was linked to threats by Iran to retaliate over the killing of Ismail Haniyeh in Tehran.

---

Russia-Ukraine

--Kyiv said it sank a Russian sub: The Rostov-on-Don was purportedly hit in the port of Sevastopol last Friday. “The boat sank on the spot,” the General Staff of Ukraine’s Armed Forces said in a Saturday statement that provided no further evidence.  The sub was apparently anchored at a port in the occupied Crimean Peninsula.

If true, it would be another blow to Russia’s navy, which Ukraine claims has already lost a third of its Black Sea Fleet.  The Rostov-on-Don was reportedly one of four submarines in the fleet capable of launching Kalibr cruise missiles.

Kyiv also said the attack destroyed four S-400 air defense systems protecting the peninsula.

The same sub had suffered heavy damage in a strike last September and Ukraine’s military said Russia subsequently repaired the vessel.

Meanwhile, Kyiv said Ukrainian drones targeted a major airfield and oil depots in Russia.  The attack targeted the Morozovsk airfield, where guided bombs which have recently wrecked havoc on Ukrainian cites are stored.

Online footage said to be from the base showed powerful explosions and huge fires, and local authorities declared a state of emergency around the air base.

Oil storage facilities were also targeted in the Rostov, Kursk and Belgorod regions.

The attacks come after Russia launched more than 600 guided air bombs towards Ukraine in a week, according to President Volodymyr Zelensky.

Again, the president reiterated it was crucial Ukraine stopped Russian aircraft from launching the munitions and said that attacking airfields in Russia to do so was “quite fair.”

--On Tuesday, Russia claimed to have captured 420 square kilometers (162 square miles) of Ukrainian territory since June 14, the Interfax news agency said, citing Sergei Shoigu, the secretary of Russia’s security council (and former long-time defense minister).

One of the areas targeted by Russia is the strategic eastern logistics hub of Pokrovsk that I’ve written a lot on recently and last weekend, Ukraine said the pressure is being felt, as waves of guided bombs and infantry lead to some of Moscow’s largest territorial gains since the spring.

The push is fueling a surge in civilians fleeing.  Russian forces are using warplanes and artillery fire to support waves of infantry assaults near Pokrovsk, a spokesman for Ukraine’s National Guard, Ruslan Muzychuk, said in televised remarks.

“These assaults are not always supported by armored vehicles, often it is infantry assaults,” he said, flagging the bombing by Russian warplanes as a particular problem.

“It’s a significant threat...because Pokrovsk and Toretsk fronts are taking a large share of the daily aviation strikes carried out on the positions of Ukrainian defenders.”

--Wednesday, Russian forces thwarted an advance of Ukrainian forces deep into the border area between the two countries, the Russian defense ministry.  Russia continued strikes on Ukrainian forces in the southern Russian region of Kursk overnight and the operation is ongoing, the ministry said.

Moscow said that up to 300 Ukrainian fighters, backed by tanks, had taken part in the reported attacks on Tuesday against Russian border units in Kursk.

But then Moscow changed the number of Ukrainian troops involved to 1,000, 11 tanks, and more than 20 armored combat vehicles.

Wednesday evening, Ukrainian MP Oleksiy Honcharenko said the Ukrainian army had established control over the Sudzha gas hub, a major gas facility involved in the transit of natural gas from Russia to the EU via Ukraine, which has continued despite the war.  It is the only point of entry for Russian gas into the EU.

Kursk acting governor Alexei Smirnov said five people were killed including two members of an ambulance crew, and at least 20 wounded in the fighting.  Ukraine made no official comment.

The attack continued on Thursday, with Russia’s defense ministry saying Ukraine had lost 82 armored vehicles and eight tanks, but in terms of the former category, the numbers don’t add up.  The Ukrainian military continued to remain silent.  The White House said it had not been told of the attack beforehand.

A major nuclear power station lies about 35 miles from Sudzha.

By Friday, it was estimated Kyiv’s forces had moved more than six miles into Russia, Russian military bloggers were reporting.  President Putin confirmed the attack, calling it a “major provocation.”  An advisor to President Zelensky then confirmed it, saying they had seized about 100 square kilometers.

What is Kyiv’s objective? Previous cross-border attacks by Ukraine accomplished little except to embarrass Russian leaders, and this new incursion is drawing upon Ukrainian forces stretched thin in the country’s east, where Russia has been making gains.

David Axe of Forbes notes: “It’s possible the Ukrainian general staff in Kyiv believes a Ukrainian northern offensive might compel the Kremlin to shift troops away from eastern Ukraine, thereby slowing Russian advances on that front.”  But it just might not be a diversion.  “Instead, it may be exactly what it appears to be: a serious effort to capture and hold Russian soil.”

Whatever the true intentions, it’s a high-stakes gamble.

President Zelensky then said in his Thursday evening address that Moscow must “feel” the consequences for its invasion of Ukraine.

“Russia brought the war to our land and should feel what it has done,” Zelensky said.  “Ukrainians know how to achieve their goals. And we did not choose to achieve our goals in the war,” he added.

Russia’s defense ministry said Thursday that its troops were “continuing to destroy” armed Ukrainian units with air strikes, rockets and artillery fire.  The ministry said Russian reserves had been rushed to the region.  It claimed to have killed and wounded up to 300 Ukrainian troops.

Video on Friday verified by multiple outlets showed a convoy of about 15 burnt-out Russian military trucks spaced out along a highway in the Kursk region, some containing dead bodies.  Ukraine said the trucks had been hit by a U.S.-supplied HIMARS rocket system.  Russian bloggers blamed a HIMARS strike, and as Reuters reported, “one said whoever had given the order for military vehicles to move in exposed columns was an ‘asshole’ who should be shot.”

The video was shot by a local man who passed it on to a Ukrainian channel.  The man was then subsequently arrested on suspicion of spying.  Russia’s defense ministry released its own video showing a drone destroying a Ukrainian tank and howitzer near Sudzha.

Friday, Ukraine said it hit a military airfield deep inside Russia, destroying warehouses with guided bombs.

In a statement, the military reported a huge blaze and multiple detonations at the Lipetsk airfield, more than 200 miles from Ukraine’s border, after the overnight strike.

Lipetsk’s regional authorities said a state of emergency was now in place in the area, confirming the detonations at an “energy infrastructure facility.”  Residents of four nearby villages were being evacuated.

Russia then hit a supermarket in the Ukrainian town of Kostiantynivka in the frontline Donetsk region on Friday, killing at least 14 and injuring 35 others, Ukrainian officials said.

President Zelensky wrote on X: “Russian terrorists hit an ordinary supermarket and a post office. There are people under the rubble.”

--Also Friday, Ukraine reported its special forces conducted an amphibious raid on the Russian-occupied Kinburn Spit in the Black Sea’s northwest, destroying six Russian armored vehicles and about three dozen personnel, according to the Ukrainian military intelligence agency.

Russia had captured the southern Mykolaiv region’s Kinburn Spit, which juts out into the Black Sea, at the start of the invasion, Feb. 2022.

Moscow said Kyiv lost 16 “saboteurs” in the operation.

--Ukraine has put additional funding toward its domestic missile program, President Zelensky said on Tuesday, as it tries to narrow a gap in capabilities with Rusia, which has an array of long-range weapons.

Ukraine, which has prioritized the production of long-range strike drones since Russia’s February 2022 invasion, has tried to build up its domestic output of arms like the Neptune, a Ukrainian anti-ship missile that can also attack land targets.

In July, Zelensky said Kyiv was working to reduce its dependence on missiles, including for air defense, that are supplied by Ukraine’s allies.

--Ukraine’s air defense shot down two Iskander-M or KN-23 ballistic missiles, two cruise Kh-59 cruise missiles and 15 attack drones that Russia launched overnight Tuesday.   The bulk of these were fired at Kyiv and the surrounding region.

The governor of the southern region of Mykolaiv said that the air force destroyed 13 Shahed drones over his region.

--A Russian missile attack on Kharkiv killed at least one person and injured 12 on Tuesday, President Zelensky said on Telegram, with some buried in the rubble.

--Ukrainian pilots have started flying F-16s for operations within the nation, President Zelensky said on Sunday confirming the long-awaited arrival of the fighter jets more than 29 months since Russia’s invasion.

Zelensky, talking to reporters on an unidentified airfield (for security reasons), said Ukraine still did not have enough trained pilots to use the F-16s or enough of the jets themselves.

--Going back to the prisoner swap, Steven Rosenberg, the BBC’s Russia editor, had the following:

“What message does the prisoner swap send?

“The message the Kremlin wants to send to its agents and spies is: if we send you on missions abroad, and things go wrong, we’ll find a way of getting you home.  There’s another message the pro-Kremlin press is putting out right now: good riddance to those Russia has freed from its prisons and who’ve been flown abroad.”

---

Wall Street and the Economy

As Wall Street Journal Fed watcher, Nick Timiros, put it over the weekend, “The script is being flipped for the U.S. economy.”

From a focus on inflation to the economy and recession fears.  Measured by the Fed’s preferred inflation barometer, the PCE, inflation has indeed come down to 2.5% (2.6% on core, ex-food and energy).  But now the unemployment rate has risen from 3.7% at the beginning of the year to 4.3%.

Chicago Fed Bank President Austan Goolsbee, in an interview on CNBC, before the market open on Monday morning, but as the futures were tanking and interest rates tumbling, said Fed policymakers need to carefully monitor changes in the economy to avoid being too restrictive with interest rates but right now signs do not point to a recession despite last Friday’s weaker-than-expected jobs data.

“You only want to be that restrictive if you think there’s fear of overheating,” Goolsbee said.  “These data, to me, do not look like overheating...as you see jobs numbers come in weaker than expected but not looking yet like recession, I do think you want to be forward-looking at where the economy is headed for making the decisions.”

Goolsbee also cautioned against taking too much signal from a global market sell-off, amid fears the central bank has waited too long to begin cutting interest rates.

“The law doesn’t say anything about the stock market; it’s about the employment (picture) and it’s about price stability,” Goolsbee said, citing the Fed’s dual goals set by Congress, noting financial markets are prone to volatility.

But, “If the market moves give us an indication over a long arc that we’re looking at a deceleration of growth, then we should react to that,” Goolsbee said.

About an hour after Goolsbee spoke, the July ISM services reading was released, 51.4 (50 the dividing line between growth and contraction), a bit above consensus, and vs. 48.8 prior, and that helped stabilize the market.  Certainly 51.4 doesn’t denote imminent recession.

The Atlanta Fed’s (early) GDPNow barometer for third quarter activity is at 2.9%, also hardly recessionary.

Freddie Mac’s 30-year fixed-rate mortgage plunged to its lowest level in over a year, 6.47%, down from 6.73% a week ago and 7.22% May 2nd.

Editorial / Wall Street Journal

“(Fed Chair Jerome Powell) isn’t to blame for the economic slowdown. The Fed has had to tighten money to combat the inflation outbreak caused by overspending and too-easy money. And doing so isn’t an exact science.

“So far at least, Mr. Powell has managed to reduce inflation without the recession that Keynesians told us was necessary.  Interest rates aren’t high by historical standards in any event, and looking at asset prices and other markers it’s hard to argue that financial conditions are unduly tight.  A rate cut may be appropriate in September, but the lack of one this week isn’t causing the current distress.

“Blame instead the politicians. The U.S. economy never settled into a virtuous growth cycle after the pandemic because Washington kept creating headwinds.  That includes a host of new regulations on productive parts of the economy and huge, misallocated subsidies for green energy and other political favorites.

“Heading into November’s election, Democrats led by Kamala Harris promise more of the same regulation and subsidies, plus huge tax increases. Donald Trump wants to cut taxes and regulation. But he also vows a 10% across-the-board tariff reminiscent of the Smoot-Hawley tariffs that contributed to the Great Depression, plus a mass deportation of migrant workers who have been a source of growth.

“Mr. Powell and the Fed have made mistakes, but they’ve managed the way down from 9.1% inflation [Ed. CPI, not PCE] reasonably well.  They don’t deserve to be scapegoats for a recession, if one is coming. What we’d like to hear from one of the candidates isn’t blame but an agenda for faster growth and stable prices.”

Next week is a big one...CPI/PPI data and a key report on retail sales.

Europe and Asia

We had the July services PMIs for the eurozone this week, courtesy of S&P Global and Hamburg Commercial Bank, following last week’s manufacturing PMIs...51.9 vs. 52.8 in June, a 4-month low.  The eurozone composite for July (mfg. and services) was 50.2, a 5-mo. low.

Services PMIs....

Germany 52.5; France 50.1; Italy 51.7 (vs. 53.7 prior); Spain 53.9 (vs. 56.8 prior).

UK 52.5.

Dr. Cyrus de la Rubia, Chief Economist, HCOB:

“The eurozone’s economy is growing at a snail’s pace in July. Sector-wise, services is not picking up speed like it did earlier in the year, while the industrial slump has continued unabated.  Because of this, the HCOB Composite Output PMI is just hovering above the expansion line. So, while the second half of the year started off pretty weak, the PMIs and the official numbers for economic growth in the second quarter were surprisingly good. Given this situation, our 0.7% growth forecast for the year is still conservative.

“You cannot miss the slowdown in the service sector. The PMI has dropped for three months straight to 51.9, companies have been more hesitant about hiring, and new business is barely ticking up. The extraordinary effects from the European Football Championships in Germany, the Olympics in France, and Taylor Swift’s concert tour in Europe are winding down too. So, the service sector probably won’t give us much of a boost in the second half of the year.”

June producer prices for the EA 20 were 0.5% over May, down 3.2% year-over-year.

June retail trade was down 0.3% both month-over-month and Y/Y.

Britain: The anti-immigration fueled rioting taking place across the country is deeply disturbing. In Rotherham criminals attempted to set a hotel housing asylum-seekers’ ablaze.  In Middlesbrough, far-right mobs fought running battles with local Asians, who were apparently trying to protect their property.  In many towns counter-protesters showed up in force.  Prime Minister Keir Starmer called it “far-right thuggery” and vowed to crack down.  Starmer was the UK’s former chief prosecutor.

Britain’s courts are suffering from their biggest backlog in history, but in the case of these thugs, those arrested have faced lightning-quick convictions and sentences.

“We were able to demonstrate the criminal justice system working speedily,” Starmer said Thursday, crediting the courts for an easing in the disorder and violence on Wednesday night.  The prime minister, meeting with senior police officials Thursday, vowed to keep using “the full force of the law” against ringleaders of the violence.  It’s a huge moment for Starmer, just weeks into his term.

But Starmer has to deal with Elon Musk. On Tuesday, Musk sharply criticized the PM and his government for the handling of the unrest by suggesting UK police were cracking down harder on white people than minorities.  Musk then reposted comments claiming that “gangs of armed Muslim men are rampaging through cities up and down the country” and other disinformation.  Musk has also posted that civil war in the UK is “inevitable.”

Turning to Asia...China’s private Caixin services reading for July was a better than expected 52.1 vs. 51.2 prior.  But business optimism in the country remains low.

July exports then came in well below forecasts, up 7.0% year-on-year, moderating from 8.6% in June and the analysts’ estimate of a 9.7% jump.  It’s the softest growth in outbound shipments since April.  But it was a positive number.

Exports to the U.S. rose 8.1% and 8.0% to the EU.

Imports came in better than forecast, up 7.2% Y/Y, up 3.5%.

And we had inflation readings for July, with consumer prices rising 0.5% year-over-year, vs. 0.2% prior, according to the National Bureau of Statistics.  This is actually good news.  Producer prices were -0.8% Y/Y, unchanged vs. June.

Japan’s services reading for July measured 53.7 vs. 49.4 prior, but a bit below consensus.

June household spending came in -1.4% year-over-year.

Street Bytes

--When all was said and done on this stormy week, for both the entire East Coast with Debby and the financial markets, the major indexes were just down a fraction.  The Dow Jones fell 0.6% to 39497, the S&P 500 losing only two points, and Nasdaq down 0.2%.  Like whoopty-damn-do.

Next week, earnings from the Big Box retailers, Home Depot and Walmart, which should give us a good sense of the state of the consumer.

--U.S. Treasury Yields

6-mo. 4.98%  2-yr. 4.05%  10-yr. 3.94%  30-yr. 4.23%

What swings in the bond market on Monday alone.  Reminder, the 2-year Treasury closed last Friday at 3.88% and the 10-year at 3.80% [After the previous Friday, July 26, the 2-yr. was at 4.38%, and the 10-yr. 4.19%]

Monday morning, at 6:00 a.m., the 2-year yield had fallen to 3.78%, the 10-yr. 3.75%, after Tokyo’s bloodbath.  By around 8:00 a.m., both were at 3.62%!  Think of the moves from just ten days earlier.

Yet the market took heart from the above-noted ISM services reading, stocks stabilized some, and Treasuries rallied, with the 2-year closing at 3.90%, the 10-yr. 3.78%.

Japan’s 10-year, 1.03% Friday July 26, and 0.93% Aug. 2, hit 0.79% Monday. [It closed today at 0.83%.]

The rest of the week, bond yields headed higher as imminent recession fears waned.  The yield on the 10-year is at 3.94%, up 14 basis points from last Friday’s close.  The 2-year rose 17 bps.  What a wild ride. 

--Caterpillar Inc. reported second-quarter net income of $2.68 billion, with adjusted earnings of $5.99 per share, handily surpassing Wall Street expectations of $5.53.

The construction equipment company posted revenue of $16.69 billion in the period, which fell a bit shy of consensus at $16.76bn, and down from $17.32 billion last year. The shares rose over 3%, earnings coming out before the market opening Tuesday.

Machinery, energy and transportation revenue fell 4% year-over-year to $15.84 billion.  Within the segment, construction and resource industries declined 7% and 10%, respectively, mainly due to lower sales volumes, partially offset by price increases.  Energy and transportation climbed 2% to $7.34 billion, aided by price gains.

Revenue in North America ticked 1% higher, while sales in Europe, Africa and the Middle East fell 15%.  Order backlog fell by $2.2 billion year-over-year, but increased by $700 million from the preceding quarter.

For the ongoing quarter and full year, Caterpillar expects sales to come in “slightly lower” year over year, according to an investor presentation.

--Warren Buffett appears to have soured on stocks, letting cash at Berkshire Hathaway soar to nearly $277 billion and selling a large chunk of its stake in Apple, even as the conglomerate posted a record quarterly operating profit.

Berkshire sold about 390 million Apple shares in the second quarter, on top of 115 million shares from January to March, as Apple’s stock price rose 23%.  It still owned about 400 million shares worth $84.2 billion as of June 30.

The cash stake grew to $276.9 billion from $189bn three months earlier largely because Berkshire sold a net $75.5 billion of stocks.  It was the seventh straight quarter Berkshire sold more stocks than it bought.

Berkshire has also been significantly paring its Bank of America Corp. stake, its biggest bank bet.

Second-quarter profit from Berkshire’s dozens of businesses rose 15% to $11.6 billion, from $10.04bn a year earlier.  Nearly half of that profit came from underwriting and investments in Berkshire’s insurance businesses.  Net income fell 15% to $30.34 billion from $35.91 billion a year earlier, but still hefty, as rising stock prices in both periods boosted the value of Berkshire’s investment portfolio, including Apple.

Berkshire often lets cash build up when it can’t find whole businesses or individual stocks to buy at fair prices.

--Google acted illegally to maintain a monopoly in online search, a federal judge ruled on Monday, a landmark decision that strikes at the power of tech giants in the modern internet era and that may fundamentally alter the way they do business.

Judge Amit P. Mehta of U.S. District Court for the District of Columbia said in a 277-page ruling that Google had abused a monopoly over the search business.  The Department of Justice and states had sued Google, accusing it of illegally cementing its dominance, in part, by paying other companies, like Apple and Samsung, billions of dollars a year to have Google automatically handle search queries on their smartphones and browsers.

“Google is a monopolist, and it has acted as one to maintain its monopoly,” Judge Mehta said in his ruling.

The ruling is the most significant victory to date for American regulators who are trying to rein in the power of tech giants in the internet era.  It is likely to influence other government antitrust lawsuits against Google, Apple, Amazon and Meta, the owner of Facebook, Instagram and WhatsApp.

The Justice Department and states sued in 2020 over Google’s dominance in online search.

The company spends billions of dollars annually to be the automatic search engine on browsers like Apple’s Safari and Mozilla’s Firefox.  Google paid Apple about $18 billion for being the default in 2021.

As to what happens next, the decision does not change anything immediately.  The court has yet to determine the next steps, and this could take months, including on whether Google should be broken up or should the focus be on curbing anti-competitive practices.  For now, business as usual.  Any real change could easily take years.

--Last week, Delta said it was forced to sue CrowdStrike (and Microsoft) to recover some of its massive losses, $500 million, according to CEO Ed Bastian, from the tech outage caused by the cybersecurity company.

Sunday evening, CrowdStrike, in a letter responding to Delta, said Delta’s threats of a lawsuit have contributed to a “misleading narrative” that CrowdStrike was responsible for the airline’s tech decisions and response to the outage.

“Should Delta pursue this path, Delta will have to explain to the public, its shareholders, and ultimately a jury why CrowdStrike took responsibility for its actions – swiftly, transparently, and constructively – while Delta did not,” wrote Michael Carlinksy, an attorney at law firm Quinn Emanuel Urquhart & Sullivan.

CrowdStrike said its liability is contractually capped at an amount in the “single-digit millions.”  The company also said Delta was at fault for using outdated Microsoft product, i.e., not upgrading as needed.

Delta then fired back on Thursday in a new letter, blasting what it called CrowdStrike’s “blame the victim” defense for the disruption.

“There is no basis – none – to suggest that Delta was in any way responsible for the faulty software that crashed systems around the world,” David Boies, the high-profile litigator Delta hired, wrote in response to comments from CrowdStrike.

--TSA checkpoint numbers vs. 2023

8/8...106 percent of 2023 levels
8/7...106
8/6...101
8/5...104
8/4...102
8/3...106
8/2...104
8/1...107

--Walt Disney Co. on Wednesday reported fiscal third-quarter earnings of $2.62 billion.  Adjusted net income came in at $1.39 per share, beating consensus of $1.20.  Revenue was $23.16 billion, also topping the Street’ $22.91bn forecast.

The results were buoyed by the success of animated Pixar film “Inside Out 2,” which helped overcome a profit decline at theme parks.

April-June operating income nearly tripled at its Entertainment unit, with the combined streaming businesses of Disney+, Hulu and ESPN+ posting a profit for the first time.  However, the Experiences segment that includes parks and consumer products – and makes up just over half of profit – recorded an operating income drop of 3%.

Disney said “moderation” of demand at its U.S. parks could continue through the next few quarters.  Operating income for the unit is likely to fall by “mid-single digits” in the July-September quarter compared with the same period a year prior, Disney said.

CEO Bob Iger touted success in the entertainment division, where Disney’s combined streaming businesses turned a profit a quarter ahead of its projections.  “We are confident in our ability to continue driving earnings growth through our collection of unique and powerful assets,” Iger said in a statement. 

Iger is working to rebuild Disney after billions of dollars in losses from streaming efforts, the decline of traditional television and a rough patch for its storied film studio.  “Inside Out 2” has notched $1.6 billion in global ticket sales and “Deadpool & Wolverine,” which debuted in the current quarter, has brought in more than $850 million.  This comes after years of misfires on the big screen.

The shares initially rose 3% in premarket trading, but then fell off over concerns with the theme-parks division, and the economic signals the underperformance is sending.

--Warner Bros. Discovery shares plunged again after the company reported second quarter revenue of $9.7 billion, down 6% from a year ago, and a loss of $9.99 billion, or $4.07 a share, with consensus at a loss of 27 cents a share.  Adjusted earnings were $1.80 billion, down 16% from a year ago.

The parent of streaming platform Max, CNN and movie studio Warner Bros. recorded a $9.1 billion impairment charge related to the networks segment.  It largely reflects continued softness in the U.S. linear advertising market, which refers to ads shown during scheduled television programming, and uncertainty related to affiliate and sports rights renewals, including the NBA.

Revenue from its networks business, which includes CNN, Discovery, and TNT, fell 8%, to $5.3 billion as advertising revenue slipped 9%.  The company said its domestic network television saw audience declines of about 13%.  But it did highlight that the 2024 presidential debate on CNN was that channel’s highest rated linear program ever.

Warner’s Hollywood studio saw revenue drop 5% from one year ago, to $2.4 billion.

Streaming revenue also fell, down 6% to $2.6 billion.  Subscribers rose 3.6 million from the first quarter to 103.3 million, and advertising revenue just about doubled, driven by higher domestic engagement on its Max platform and subscriber growth in its ad-lite tier.

David Zaslav, WBD’s CEO, said the priority is the streaming business, which is now available in 65 countries.  “We are extremely pleased with the growing momentum we are seeing,” he said, referring to the subscriber ads during the quarter.

--Paramount Global, home of channels such as Comedy Central, MTV and Nickelodeon, on Thursday wrote down the value of its cable-TV networks by nearly $6 billion, while announcing it was cutting about 2,000 jobs, or 15% of its U.S. workforce, as part of an effort to realize $500 million in cost savings.

Paramount’s television unit saw a 17% decline in revenue in the second quarter.  [Yikes]

But the shares rose a bit as the company’s streaming unit, Paramount+, posted its first quarterly profit in three years, with revenue up 46%, aided by year-on-year subscriber growth and higher prices.

--CVS Health reported Q2 adjusted earnings of $1.83 per share on Wednesday, down from $2.21 a year earlier, with the Street at $1.73.  Revenue for the quarter ended June 30 was $91.23 billion compared with $88.92 billion a year earlier.  Analysts were at $91.43bn.

The company trimmed its 2024 guidance for a third time to $6.40 to $6.65 per share from at least $7.00, as the health care giant continues to struggle with its health insurance business.

The leader of that segment left the company and CEO Karen Lynch is taking over.  The adjusted operating income from that segment plunged 39% in the quarter to $938 million, helping to drag down the company’s overall profit.  CVS Health has been struggling with rising claims in its Medicare Advantage business and a drop in quality ratings for those plans, which affects government funding for them.

CVS Health said it also dealt with higher costs from people covered by the state and federally funded Medicaid program.

Overall, the company’s profit dropped more than 7% to $1.77 billion in the quarter.

The shares only fell about 2% on the news as they’ve been beaten down pretty severely over the past year.

--Novo Nordisk shares fell the most in two years, 7%, as sales of its blockbuster weight-loss treatment Wegovy disappointed investors, a rare setback for a drugmaker that’s had the booming market mostly to itself until recently.

Revenue from the drug was hit by higher-than-expected price concessions to U.S. managers of pharmacy benefits, CFO Karsten Knudsen said in a conference call with journalists.  He called it a one-off factor, but the size of the shortfall raised concerns among investors about growing pricing pressure as competition from Eli Lilly heats up.

Second-quarter sales of Wegovy were $1.7 billion vs. $2 billion expected.

The Denmark company is vying with Lilly for supremacy in the pharmaceutical industry’s fastest-growing new business, obesity drugs.  The market is expected to reach $130 billion by the end of the decade.

As Novo wins access to more insurers in the U.S., it’s being forced into discounting via a complex system of rebates paid to pharmacy benefit managers.  It’s a phenomenon the company foresaw, but the rebates Novo is paying are higher than the company expected last year, Knudsen said in a call with reporters.

--Speaking of Eli Lilly, on Thursday its shares soared 8% after it raised its annual profit forecast and boosted its revenue expectations by $3 billion, as it benefited from ramped up manufacturing capacity for its highly popular weight-loss and diabetes drugs.

The former, Zepbound, crossed $1 billion for the first time in the quarter.  Analysts believe Novo Nordisk and Lilly will split the U.S. market roughly 50-50 by the end of 2024, as Lilly increases its manufacturing capacity and closes the gap with Novo.  Investor interest in these therapies has propelled Lilly’s market value to more than $750 billion, with the stock up over 40% this year.

Sales of diabetes treatment Mounjaro hit $3.09 billion in the quarter, while Zepbound’s were $1.24bn.  Analysts had predicted $2.49bn and $930 million, respectively.  They expect the drugs to have combined sales of $15 billion this year.

Lilly now expects adjusted profit of $16.10 to $16.60 per share for 2024, compared with its prior forecast of $13.50 to $14.

In other words, this company is kickin’ butt.

--Tyson Foods Inc. reported fiscal third-quarter net income of $191 million, with adjusted EPS of 87 cents, topping consensus of 67 cents, and up from 15 cents a year earlier.  Revenue came in at $13.35 billion for the period, up from $13.14 bn and also exceeding estimates.

Beef revenue increased to $5.24 billion from $4.96 billion in the prior-year quarter, aided by an average price gain of 1.4% and volume growth of 4.4%. Pork sales rose to $1.46 billion from $1.32 billion, boosted by a 13% jump in prices and a 1.2% increase in volume.

And chicken sales slipped to $4.08 billion from $4.21 billion amid a 3.7% decrease in average price.  Prepared foods edged higher to $2.43 billion from $2.38 billion.

For fiscal 2024, the company said it expects revenue to be relatively flat compared with fiscal 2023, with analysts at $53.17 billion.  The guidance takes into account the U.S. Department of Agriculture’s indication that domestic production of beef, pork, chicken and turkey should “increase slightly” versus 2023 levels, according to the company.

Tyson guided a bit higher on full year adjusted operating income, a range of $1.6 billion to $1.8 billion, compared with its previous forecast range of $1.4bn to $1.8bn.

--Yum Brands Inc. reported second-quarter net income of $367 million, with adjusted earnings of $1.35 per share, topping the Street’s $1.32.  The parent company of KFC, Taco Bell and Pizza Hut, posted revenue of $1.76 billion in the period, missing Street forecasts of $1.8 billion.

The shares rose 4% Tuesday even as the company reported a bigger-than-expected fall in sales driven by lower-income consumers paring back spending on dining out.  Like its peers in the fast-food industry, Yum has been investing in loyalty programs and refreshing its menus in an attempt to appeal to budget-conscious consumers, but stiff competition for value meals and promotions has dogged its KFC business this year.

Company executives on a post-earnings call also said that the impact from boycotts related to the Middle East conflict have surfaced in several other markets beyond Malaysia, Indonesia and the Middle East.

But...fresh menu items at Taco Bell saw strong demand, driving a 5% rise in comparable sales in the division (what a great chain...I’m still pissed I don’t have one nearby...but I digress).

Overall, Yum’s quarterly same-store sales declined just 1%, from 3% in the preceding quarter.

--Uber Technologies Inc. reported second-quarter net income of $1.01 billion, 47 cents per share, beating analysts who were at 31 cents.  Revenue in the period was $10.7 billion, also beating the Street, and up from last year’s $9.23 billion.

The ride sharing and food-delivery company continues to see steady demand.  With more people returning to offices and stepping out of their homes, ride-sharing demand has gotten a boost.

The issue has been, though, would the increasing demand stick amidst a slowing economy, and clues like families not going out to dinner as much.

But CEO Dara Khosrowshahi said, “Mobility had a standout second quarter...growth was consistent across use cases and geographic strength was led by LatAm and APAC, in particular Brazil, Australia and India.”

Revenue from the company’s ride-sharing segment, its largest, rose 25% to $6.13 billion, above expectations of $5.94 billion.  Uber’s delivery business reported revenue of $3.29 billion, compared with estimates of $3.32 billion.

“While there have been some concerns about consumer spend on restaurants and delivery, we are not seeing any impact today,” Khosrowshahi said, adding that a greater push on groceries through expanded partnerships with Instacart and Costco Wholesale was boosting deliveries.

But Uber’s forecast for the third quarter was the midpoint of analysts’ estimates. That said the shares rose over 10% on the news.

--New York Times Company reported adjusted operating profit for the second quarter of April through June, rose to $104.7 million from $92.2 million a year before.  Overall revenue increased 5.8 percent, to $625.1 million, compared with the same period in 2023.

The Times now has more than 10.8 million total subscribers, of which 10.2 million are digital-only subscribers.  It added 300,000 new digital subscribers in Q2.

The Athletic, which the company acquired for $550 million in 2022, continues to lose money, but the losses shrank to $2.4 million in the quarter, from $7.8 million during the same period last year.  Revenue at the website grew to $40.5 million, up 33.4 percent from a year earlier.  The Athletic now has 5.3 million digital-only subscribers, which includes those who have a stand-alone subscription to the site and those who have access to it through a Times subscription bundle, up from 3.6 million the same time last year.

Foreign Affairs, Part II

Bangladesh: Last weekend nearly 100 were killed, including 13 police officers, and hundreds injured in renewed clashes in Bangladesh, as tens of thousands of protesters called for Prime Minister Sheikh Hasina to resign.  The government declared an indefinite nationwide curfew starting at 6 p.m. local on Sunday, the first time it has taken such a step during the current protests that began last month.  And then it announced a three-day national holiday from Monday.

Hasina then resigned on Monday and fled the country.  Army chief General Waker-Us-Zaman said in a televised address that an interim government would be formed, Hasina reportedly heading to somewhere in India.  Thousands poured into the streets to celebrate, and they stormed Hasina’s official residence, carrying away televisions, chairs and tables from what was one of the most protected buildings in the country. 

Over 150 were killed overall in the protests against a controversial government-job quota scheme.

Tuesday, the parliament was dissolved, the president’s office said, and the president, Mohammed Shahabuddin, appointed Muhammad Yunus, a pioneer in microfinance who is a Nobel laureate, to oversee the interim government, accommodating demands by protesters and offering a reprieve for the country.

Yunus, who was in Paris undergoing medical treatment, then headed home, urging an end to the violence, while the president needed to fill out the rest of the government and pave the way for elections.

Venezuela: A Washington Post review of more than 23,000 precinct-level tally sheets collected by the opposition from the recent election (July 28) showed that the challenger, Edmundo Gonzalez, likely received more than twice as many votes as President Nicolas Maduro.

Venezuela’s national electoral council, controlled by Maduro, declared him the winner with nearly 52% of the vote to Gonzalez’s 43%.  But the council, almost two weeks later, has yet to make precinct-level results to support the claim available to be audited, as required by Venezuelan law.

The Post analysis had Gonzalez receiving 6,901,845 votes to Maduro’s 3,131,103... ‘all others votes’ 251,820.  Gonzalez at 67%, Maduro 30%.  [An Associated Press analysis came up with a similar result.]

Maduro on Thursday took tensions with Elon Musk and X to new heights, banning the platform for 10 days.  In a resolution, Maduro accused Musk of inciting hate, civil war, and death.

“X get out of Venezuela for 10 days!” he said in a nationally televised speech on state TV.

Musk has compared Maduro to a donkey (pretty clever), while Maduro has blamed Musk for being a driving force behind the protests and dissent following the election.

The foreign ministers of Mexico, Colombia and Brazil reiterated their calls for Venezuela’s electoral authority to publish the vote tallies in a joint statement.

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, 55% disapprove (Aug. 9).

--A new CBS/YouGuv poll released Sunday had Kamala Harris with a one-point edge nationally over Donald Trump – when Joe Biden was down 5 points when he left the race – and Harris and Trump are tied across the collective battleground states.

Michigan: 48-48 among likely voters
Pennsylvania: 50-50
Wisconsin: 50-49 Trump
Arizona: 49-49
Georgia: 50-47 Trump
Nevada: 50-48 Harris
North Carolina: 50-47 Trump

Rather remarkable.

A new NPR/PBS News/Marist national poll has Vice President Harris leading Trump 51% to 48%. When third-party candidates are included, Harris leads 48%-45%.

Significantly, Harris is up 9 points with independents (53-44) after being down 14 points with them when she launched her campaign just two weeks ago.

Harris leads by 13 points with women (55-42) but is losing men by nine points (54-45).

Trump is more trusted on the economy, but only by 3 points (51-48), compared to 9 points over Biden (54-45) in June.

A new Ipsos national poll published Thursday had Harris widening her lead over Trump to 42% to 37%.  Just 4% of those surveyed backed Robert F. Kennedy Jr., down from 10% in July.

In a separate poll, Ipsos found Harris leading Trump 42-40 in the seven battleground states, results not broken down for individual states.

--Going back to Trump’s campaign strategy, his aides are correctly criticizing Kamala Harris for taking opposing stances over the years, such as fracking, and the campaign’s new ad buy is aimed at battleground states and linking Harris with problems at the southern border.

The Harris campaign in a statement, prior to the Georgia rally, said that the vice president “believes real leadership means bringing all sides together to build consensus. It is that approach that made it possible for the Biden-Harris administration to achieve bipartisan breakthroughs on everything from infrastructure to gun-violence prevention.  As president, she will take that same pragmatic approach, focusing on common-sense solutions for the sake of progress.”

Among Trump’s greatest hits Saturday in Atlanta was his congratulations to Russian President Putin for making “another great deal” in the prisoner swap involving Evan Gershkovich, Paul Whelan and others.

“They released some of the greatest killers anywhere in the world,” Trump said.  “It’s nice to say we got them back but that set a bad precedent.”

--The two campaigns have been disagreeing over terms of a debate.  Trump said on social media he agreed to a Sept. 4 debate on Fox News, suggesting it in lieu of the Sept. 10 matchup he previously agreed to do with ABC News when Biden was in the race. The Harris campaign said it would stick with the date with ABC.

“It’s interesting how ‘any time, any place’ becomes ‘one specific time, one specific safe space,’” Harris wrote on X.  “I’ll be there on Sept. 10, like he agreed to.  I hope to see him there.”

Trump said Saturday on Truth Social that he will see her on Sept. 4, “or, I won’t see her at all.”

But then Trump said on Thursday at his impromptu press conference that he would agree to three debates...and as of today, the two campaigns have agreed to at least one, Sept. 10, on ABC.

During the news conference, Trump again questioned Harris’ intelligence, pushed back repeatedly on the idea that Harris is generating as much enthusiasm as he is, if not more, and compared the crowd size at one of his events to that drawn by Martin Luther King Jr. for his “I Have a Dream” speech in Washington, D.C., in 1963.  So, so pathetic.

[An estimated 250,000 were at MLK Jr.’s speech...53,000 at Trump’s Jan. 6 affair.]

--George Will / Washington Post

“The white noise of American politics is the gurgling river of rhetoric from two presidential candidates who seem determined to say nothing germane about the nation’s domestic misgovernance and deteriorating security.  The candidates are wagering that there are no serious consequences of prolonged unseriousness.

“Last Monday, the national debt ‘unexpectedly’ surged past $35 trillion.  Neither candidate seemed to notice....

“Unfortunately, the candidates will pass the time until Election Day pelting each other with insincerities.  Vice President Harris vows to end the border crisis that became one because of actions and inactions of the Biden-Harris administration.  She promises to improve the cost of living that soared during the inflation that reached a 40-year high under that administration.  And she promises to rescue women from Trump’s supposed abortion extremism.  (Never mind that the overturning of Roe, which she operatically deplores, put abortion policy beyond the federal government’s reach.)

“Trump is promising whatever pops into his skull during one of those bouts of rhetorical diarrhea that enchant his audiences.  For example, during his acceptance speech, which was of Castroite length, he assured the Milwaukee convention that the Green Bay Packers will have a swell season.

“Perhaps.  But expect that the national debt will soon ‘unexpectedly’ pass $36 trillion.  Seriously.”

--U.S. District Judge Tanya Chutkan scheduled a pretrial meeting on Aug. 16 in the criminal case accusing Donald Trump of illegally trying to overturn his 2020 election defeat, a court document showed on Saturday.

Chutkan’s order came a day after she regained jurisdiction in the case which had been on pause for nearly eight months to allow for Trump to get his presidential immunity claim adjudicated.  She is expected to decide in the coming weeks which aspects of the indictment obtained by Special Counsel Jack Smith must be tossed out after the Supreme Court ruled that former presidents are entitled to broad immunity for official actions taken while in office.

In her document Saturday, Chutkan said Trump will not be required to appear in court for the status conference on Aug. 16.

--Robert F. Kennedy Jr.’s poll numbers have not been improving with the elevation of Kamala Harris at the top of the Democratic ticket, and they surely won’t be helped by yet another weird story emerging over the weekend, where he said in a video with comedian Roseanne Barr that he dumped a dead bear in New York City’s Central Park a decade ago and staged it to look like a bike had hit it.

Kennedy suggested in the video, which he posted on X Sunday, that he is trying to get ahead of a not-yet-published story from the New Yorker.

“Looking forward to seeing how you spin this one, @NewYorker...” Kennedy posted.

RFK Jr. said in the video he was driving to the Hudson Valley in New York state when a woman in a van in front of him hit a young bear and killed it.  He put the bear’s body into the back of his car because he was going to skin the bear and store its meat at his house, he said.

But after a late dinner in New York City, he had to go straight to the airport and did not want to leave the bear in his vehicle.

“I had an old bike in my car that somebody asked me to get rid of. I said, ‘Let’s go put the bear in Central Park and we’ll make it look like he got hit by a bike,’” he said and then laughed, saying it would be ‘amusing’ for whoever found it.”

I’ve been asking the single pertinent question since RFK Jr. announced he was running for president.  ‘You’re thinking of voting for him why?’

--Democratic congresswoman and “Squad” member Cori Bush lost her primary race in Missouri this week, falling to Wesley Bell, a St. Louis prosecutor.

Bush, who is a real piece of work, came to prominence as an organizer in the Black Lives Matter movement and, after taking office in 2021, as one of the “Squad” of Democratic members of the House known for supporting radical progressive causes.

She is the second “Squad” member to go down this political season, the other being the loathsome Jamaal Bowman in New York.

--Follow up...literally 3 ½ hours after I posted last Friday, Defense Secretary Lloyd Austin overruled the overseer of the war court at Guantanamo Bay and revoked a plea agreement reached earlier in the week with the accused mastermind of the Sept. 11, 2001, attacks and two alleged accomplices that would have spared them the death penalty.

The Pentagon announced the decision with the release of a memorandum relieving the senior official at the Defense Department responsible for military commissions of her oversight of the capital case against Khalid Sheikh Mohammed and his alleged accomplices for the attacks that killed nearly 3,000 people in New York City, at the Pentagon and in a Pennsylvania field.

In taking away the authority, Austin assumed direct oversight of the case and canceled the agreement, effectively reinstating it as a death-penalty case.

Because of the stakes involved, the “responsibility for such a decision should rest with me,” Austin said in an order released by the Pentagon Friday night.

--An ISIS-linked plot to attack a Taylor Swift concert in Vienna, Austria was narrowly foiled by police.

Two suspects – a 19-year-old living in his parents’ home near Vienna, along with a 17-year-old, were arrested Wednesday after police raided the home and found various chemicals and substances, along with timers, machetes and knives, according to the Austrian outlet Kronen Zeitung.

The pair were allegedly targeting Swift’s concerts at Vienna’s Ernst Happel Stadium, where she was scheduled to perform Thursday through Saturday to sold-out crowds.  The stadium seats 65,000, but as is always the case, there would have been thousands outside just looking to hear and experience it all.

Austrian Director General for Public Safety Franz Ruf said, “The suspected perpetrator was focused on the Taylor Swift concerts.  Preparatory actions were detected.”

“A concrete threat has been averted,” he said, adding that authorities had not yet declared the concerts entirely safe and were still investigating for other suspects.

The 19-year-old pledged allegiance to ISIS online in July.

Within hours of this initial news, tour organizers canceled the three shows, terror experts and others well aware of the 2015 Paris concert attack that led to 130 deaths, the 2017 Manchester, UK, concert attack that took 22 lives, and this year’s Moscow / Crocus City Hall attack that claimed at least 145 lives.

Thursday, authorities in Vienna outlined a picture of a terrorist assault designed to kill as many people as possible.  Director Ruf said the 19-year-old confessed to the plans shortly after being arrested, giving police a detailed description of his intended acts, which included using explosives and weapons to kill concert attendees.

We then learned the 19-year-old, with North Macedonian roots, was planning a suicide attack on the estimated 20,000 “Swiftie” fans that would have gathered outside, according to the national intelligence head Omar Haijawi-Pirchner.  A 15-year-old, was also detained, but not arrested.

Austrian Chancellor Karl Nehammer also said: “The main perpetrator has confessed that he was supposed to carry out a suicide attack with two accomplices.  The suspects actually had very specific and detailed plans...to leave a bloodbath in their wake.”

The main suspect quit his job on July 25, telling people he had “big plans,” Director Ruf said.  He had changed his appearance and grew a “Taliban beard.”  The 17-year-old had been given a job with a company a few days ago that was providing services at the stadium, according to security officials.

Friday, an 18-year-old Iraqi national was arrested as part of the plot, officially the third suspect.

--Michael Bloomberg’s philanthropic organization is making a $600 million donation to four historically Black medical schools, a gift that will more than double the endowments at three of the four institutions.

Howard University College of Medicine; Meharry Medical College in Nashville, Tenn.; and Morehouse School of Medicine in Atlanta will each receive a gift of $175 million.

Charles R. Drew University of Medicine & Science in Los Angeles will receive $75 million.

Bloomberg Philanthropies hopes to support the education of future doctors at HBCUs and address systemic inequity in healthcare and underinvestment at these institutions.

The organization gave $100 million to the four schools in 2020, which at the time was the largest donation the historically Black colleges and universities had received from a single donor.  The 2020 donation helped reduce the student debt of nearly 1,000 future Black doctors, Bloomberg said.

Mayor Michael Bloomberg...making a difference.  All praise to him.

--I cover the Olympics in my Bar Chat column, but for the purposes of this space, I can’t help but note the opening to the Wall Street Journal’s Daniel Henninger’s latest opinion piece:

“The Paris Olympics have been a pleasure to watch, but what has been particularly satisfying is what one isn’t seeing: Russia.

“After the invasion of Ukraine in 2022, the International Olympic Committee effectively banned Russia from competing in Paris. Before addressing the particulars and longer-term implications, let’s get one thing straight: Russia’s disappearance from the most popular global event should be seen as a humiliating defeat for one person, Vladimir Putin.”

As Henninger adds, the question is what will the IOC do when as seems inevitable, China invades Taiwan, probably before the 2028 Summer Games in Los Angeles?

--Some of China’s biggest cities have been sweltering in the heat, 40 C. (104 F.).  Hangzhou, home to 12.5 million, banned all non-essential lighting in an attempt to conserve energy. The rice-growing regions are under threat.

But I found this bit from Reuters interesting, concerning Shanghai, which has nearly 25 million people.  “Shanghai leads the country in power load density, with the city’s core Lujiazui area consuming twice the power per square kilometer compared to New York’s Manhattan or Tokyo’s Ginza district, according to its grid operator.”  You wouldn’t want to be a resident here and have the power go out.

South Korea and Japan have reported fatalities due to the heat this summer, but China has not, and they clearly have them.

--Hurricane Debby made landfall in Florida’s Big Bend area Monday morning with sustained winds of 80-85 mph.  But all weekend we knew wind and storm surge were not necessarily the major parts of the story...rather, we had endless forecasts of 20-30 inches of rain for an area between roughly Savannah, Ga., and Murtle Beach, N.C. and points inland as the storm slowed to a crawl off the coast.

There were fears Debby could rival Hurricane Harvey, which slammed into Corpus Christi, Texas, in August 2017.  While downgraded into a tropical storm as it moved inland, it lingered over the state, dumping about 50 inches of rain on Houston.  Harvey is rated as one of the wettest storms in U.S. history, caused more than 100 deaths and $125 billion in damage.

Did such forecasts materialize?

By Wednesday, now Tropical Storm Debby continued to bring unrelenting rain as it drifted off the Carolinas, with rainfall totals of 12 to 15 inches+ common in many parts of northern Florida (Lake City, 19.6 inches), Georgia (Oliver, 14 inches) and North and South Carolina (Summerville, 18 inches; Columbia, 15; Charleston 13).

The death toll as of Thursday from Debby was seven.

[I’m posting as my area gets slammed with the remnants.]

--Last week I concluded my column writing about the plight of astronauts Butch Wilmore and Suni Williams, stuck on the International Space Station amid questions concerning the safety of their Boeing Starliner capsule and the ability to return to Earth on it.

Wednesday, NASA officials said the two could return on SpaceX’s Crew Dragon in February 2025 if further testing on Starliner deems it unsafe.

NASA has been discussing potential plans with SpaceX to leave two seats empty on an upcoming Crew Dragon launch for Wilmore and Williams, who you’ll recall first went up June 6 on an eight-day mission.

It’s still all about thruster issues on Starliner and several leaks of helium – used to pressurize the thrusters, with Boeing and NASA attempting to understand the cause and possible fixes.

But tests thus far have done little to quell the concerns.

Using a SpaceX craft to return the astronauts that Boeing planned to bring back on Starliner would be a major blow to the aerospace giant that has been attempting to catch up and compete with SpaceX and its more experienced Crew Dragon.

Early Tuesday morning, NASA, using a SpaceX rocket and a Northrop Grumman capsule, delivered a routine shipment of food and supplies to the station, including extra clothes for Wilmore and Williams.

--Finally, yesterday marked the 50th anniversary of President Richard Nixon announcing his resignation, effective the next day.

“By taking this action, I hope that I will have hastened the start of that process of healing which is so desperately needed in America,” Nixon said in the prime-time address.

What I remember of that day, that evening, was that I was working as a stock boy in a drug store that summer in downtown Summit, and on my walk home that Thursday night, every single television in the homes I passed had the president on.  That had to be among the top ten viewed moments in American television history (percent of population viewing it).  [Wiki has the moon landing first, and then all Super Bowls in the top ten, but this had to be No. 2.]

---

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

Pray for Ukraine.

God bless America.

---

Gold $2467
Oil $77.06

Bitcoin: $60,715 [4:00 PM ET, Friday]

Regular Gas: $3.45; Diesel: $3.77 [$3.82 - $4.21 yr. ago]

Returns for the week 8/5-8/9

Dow Jones  -0.6%  [39497]
S&P 500  -0.04%...2 points [5344]
S&P MidCap  -0.4%
Russell 2000  -1.3%
Nasdaq  -0.2%  [16745]

Returns for the period 1/1/24-8/9/24

Dow Jones  +4.8%
S&P 500  +12.0%
S&P MidCap  +5.5%
Russell 2000  +2.7%
Nasdaq  +11.5%

Bulls 46.9
Bears 18.7... 64.2 / 14.9 two weeks ago

Hang in there.

Brian Trumbore

---