Week in Review

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Week in Review

09/07/2024

For the week 9/2-9/6

[Posted 4:30 PM ET, Friday]

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Edition 1,325

It’s all about next Tuesday’s debate.  Ratings should be huge.  This very well could be the election for both Donald Trump and Kamala Harris.  I’m looking forward to it.

But I can’t help but mention my opening of just three weeks ago, 8/17/24:

“I was telling a friend this week that I was receiving a lot of disinformation across the transom like I did for the 2016 campaign, which was largely absent in 2020, and it’s discouraging.  And then I was reading a piece in Defense One by Patrick Tucker on how social media firms are lowering their defenses, after agreeing in 2017 to fight back and develop tools to monitor the flow better, which was why in 2020 it seemed to improve some.”

So this week, the Department of Justice announced that six right-wing influencers were likely witting dupes for Russian propaganda, helping them funnel $9.7 million “to create and distribute content to U.S. audiences with hidden Russian government messaging,” according to Attorney General Merrick Garland Wednesday after unsealing a series of federal charges.

“Over at least the past year, RT and its employees...deployed nearly $100 million to covertly finance and direct a Tennessee-based online content creation company,” the Justice Department announced. That company is reportedly Tenet Media, according to various media outlets.  The company then “published English-language videos on multiple social media channels, including TikTok, Instagram, X and YouTube,” including “nearly 2,000 videos that have garnered more than 16 million views on YouTube alone,” according to the charges.

The alleged dupes include well-known conservative influencers Tim Pool and Benny Johnson, as well as BlazeTV host and Turning Point USA contributor Lauren Chen and her husband Liam Donovan.

Two of their Russian contacts, Kostiantyn Kalashnikov and Elena Afanasyeva of RT, were charged Wednesday with conspiracy to violate the Foreign Agents Registration Act and conspiracy to commit money laundering going back to at least October 2023.

The $9.7 million Tenet Media accepted from RT, while knowing their contacts were from Russia, “represents nearly 90%” of the money deposited in Tenet’s bank accounts “from all sources combined,” according to the Justice Department.

U.S. authorities also seized 32 internet domains “that the Russian government and Russian government-sponsored actors have used to engage in a covert campaign to interfere in and influence the outcome of our country’s elections,” Attorney General Garland announced.  Those sites “were filled with Russian government propaganda that had been created by the Kremlin to reduce international support for Ukraine, bolster pro-Russian policies and interests, and influence voters in the United States and other countries,” Garland said.

The Russian operation mimicked actual news websites to confuse Americans, “cybersquatting,” and included for example “registering washingtonpost.pm to mimic washingtonpost.com” in order “to publish Russian government messaging falsely presented as content from legitimate news media organizations,” the Justice Department explained. [Defense One]

One of the influencers was paid $400,000 a month.

In the presidential race, it’s clear Russia supports Donald Trump as the candidate perceived least supportive of Ukraine, intelligence officials say.

But a secondary, longstanding goal of Russian disinformation, ditto that emanating from China and Iran, is to increase political polarization and distrust as a way of eroding American confidence in democracy and our institutions.

Today, Donald Trump said this was all just more of the same... “Russia, Russia, Russia...” and you can choose to agree with him.

You cannot disagree with the opinion, though, that the likes of Russia, China and Iran are doing all they can to divide the American people and have succeeded in doing so to a large degree.

But then this afternoon, Trump picked up a significant victory when Judge Juan Merchan postponed sentencing in the hush-money case until after the election, Nov. 26.

Justice Merchan cited the “unique time frame this matter currently finds itself in” as he rescheduled sentencing, originally set for Sept. 18.

“This is not a decision this court makes lightly but it is the decision which in this court’s view, best advances the interests of justice.”

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Israel-Hamas....

--The Israel Defense Forces (IDF) located and recovered the bodies of six hostages taken captive by Hamas on Oct. 7 and held in Gaza for almost a year.  The six bodies were located on Saturday in an underground tunnel in the Rafah area of southern Gaza.  The IDF said they are Carmel Gat, Eden Yerushalmi, Israeli-American Hersh Goldberg-Polin, Alexander Lobanov, Almog Sarusi and Master Sgt. Ori Danino.

The IDF added the initial assessment was that they were murdered by their captors shortly before the IDF reached the tunnel, IDF spokesperson Rear Admiral Daniel Hagari said in a statement Sunday.

The six were reportedly scheduled to be released in the first phase of a cease-fire proposal discussed in July, fueling fury and frustration in Israel.  The nation’s largest trade union, the Histadrut, further pressured the government by calling a general strike for Monday.  It aimed to shut down or disrupt major sectors of the economy, including banking, health care and the country’s main airport. 

The Hostages Families Forum said that the six captives were “murdered in the last few days, after surviving almost 11 months of abuse, torture and starvation in Hamas captivity.”

“The delay in signing the deal has led to their deaths and those of many other hostages,” it said.

It is not clear how many hostages remain alive in Gaza.

Critics have accused Prime Minister Benjamin Netanyahu of putting his personal interests over those of the hostages as the war’s end will likely lead to an investigation into his government’s failures in the Oct. 7 attacks, the government’s collapse and early elections.

The prime minister said he was committed to securing a deal that releases the remaining captives and protects the country’s security. But he said: “Whoever murders hostages – does not want a deal.”

President Biden said in a statement late Saturday that he was devastated and outraged, recalling that the U.S.-Israeli citizen had “lost his arm helping friends and strangers during Hamas’ savage massacre. He had just turned 23.”

Biden said that Hamas leaders will pay for these crimes and promised to keep “working around the clock for a deal to secure the release of the remaining hostages.”

--Hamas seemed to confirm the six hostages were deliberately executed – and that any remaining hostages will also be murdered if IDF rescue missions get too close.

“We say to everyone clearly that after the Nuseirat incident, new instructions were issued to the Mujahideen assigned to guard the prisoners regarding dealing with them if the occupation army approached their place of detention,” Hamas spokesperson Abu Ubaida said in a Monday statement.

Ubaida, who speaks for Hamas’ military branch known as the Al-Qassam Brigades, appeared to be referring to the June operation in which five Israeli hostages were rescued from Gaza’s Nuseirat refugee camp.

--Prime Minister Netanyahu on Monday pushed back against the new wave of pressure, brushing aside pleas from allies and the chants of Israeli protesters demanding an immediate cease-fire to facilitate the return of hostages, doubling down on his refusal to agree to a truce that would involve Israel’s withdrawal from Gaza.

In his first news conference since the recovery of the six hostages’ bodies over the weekend – and after a day of labor strikes and protests across the country – Netanyahu defended his plans to maintain an Israeli presence on the Philadelphi corridor, the narrow band along Gaza’s border with Egypt where Israel contends Hamas smuggles weapons into Gaza.  Egypt and Hamas deny this.

Netanyahu called the corridor vital to ensuring Hamas cannot rearm via tunnels.  “This is the oxygen of Hamas,” he said.

And he added: “No one is more committed to freeing the hostages than me. But no one will preach to me.”

“What message would it send Hamas,” to cede under pressure following the deaths of more hostages, Netanyahu asked rhetorically.  “Slay hostages and you’ll get concessions?”

Asked how he would define the end of the war, he said, “When Hamas no longer rules Gaza.”

While the protests are huge in numbers, many still support Netanyahu’s drive to continue the campaign in Gaza, with the prime minister saying the assault will force militants to give in to Israeli demands, potentially facilitate rescue operations and ultimately annihilate the group.

--Israel’s security cabinet voted last Friday on a resolution to keep Israeli troops in the Philadelphi corridor.  Israel’s presence in the corridor has been a major sticking point in negotiations with Hamas in recent weeks and Israeli Defense Minister Yoav Gallant objected to the decision, warning that it would delay a ceasefire deal, which would include the return of hostages.

--The work stoppages on Monday reflected the national outpouring of grief, anger and protest over the weekend.  Advocates for the hostages criticized Netanyahu, arguing a cease-fire agreement could have saved the lives of the six found dead on Saturday.  Hundreds of thousands hit the streets Sunday night.

--Britain announced it would suspend the export of some weapons to Israel, Foreign Secretary David Lammy saying the decision was based on a legal review that concluded there was a “clear risk” the weapons could be used in a way that would breach international law. Lamey emphasized this wasn’t an arms embargo.

President Joe Biden showed his impatience on Monday, speaking to reporters at the White House. Asked if Netanyahu was doing enough, Biden responded, “No.”

He insisted that negotiators remain “very close” to a deal, adding, “Hope springs eternal.”

--Bottom lines remain the same.  Hamas has offered to release all remaining hostages in return for an end to the war, the complete withdrawal of Israeli forces and the release of a large number of Palestinian prisoners, while Netanyahu has pledged “total victory” over Hamas and blames it for the failure of the negotiations.  On Monday, he said he is ready to carry out the first phase of the cease-fire – a plan that would include the release of some hostages, a partial pullout of Israeli troops and the release of some prisoners held by Israel. But he rejected a full withdrawal from Gaza, saying he saw no other party that could control Gaza’s borders.

--Netanyahu, Wednesday, addressing the foreign media, insisted that Israeli forces will not leave the Philadelphi Corridor.  He said he is “open” to considering alternatives to the presence of Israeli troops along the Gaza-Egypt border, as part of any future permanent ceasefire deal – but that he did not see it happening.

Netanyahu argued that Israeli troops must remain in this buffer zone to prevent weapons and possibly Israeli hostages being smuggled across the border.

Netanyahu also doubled-down on his insistence that Israel needed to keep troops there for its security, describing it as a “red line.”

“People said: this will kill the deal,” he continued.  “And I say: such a deal will kill us.”

Making more concessions after Hamas killed six hostages last week would be “illogical,” “immoral” and “insane,” he insisted.

--U.S. Federal prosecutors charged Yahya Sinwar, the leader of Hamas, and five senior members of the group with planning and carrying out years of terrorist attacks in Israel, including the Oct. 7 massacre, according to a sweeping complaint unsealed on Tuesday.

The criminal complaint, originally filed in New York in February, implicated two other senior members of Hamas not previously thought to be directly involved in the attacks.  It also listed the number of Americans believed to have died at 43.

Israel killed two of the officials named, Muhammad Deif and Marwan Issa during the fighting in Gaza and assassinated Haniyeh in Iran.

The Justice Department said the charges were kept under seal after they were filed in February in the hopes of arresting Haniyeh and perhaps additional defendants, and to keep them from going into hiding.  But after Haniyeh’s killing, the department decided there was no longer sufficient reason to keep the charges secret.

--Editorial / Wall Street Journal

“Mr. Biden said Sunday that ‘Hamas leaders will pay for these crimes.’  But his next sentence pushed for a cease-fire to end the war.  Ms. Harris says, ‘Hamas cannot control Gaza,’ an important line that has been missing from her speeches, but that also seems at odds with her insistence on an ‘immediate case-fire.’

“In executing hostages, Hamas must have figured it would increase pressure on Mr. Netanyahu.  Many Israelis demand he make more concessions toward a deal because Hamas has rejected the past several, including the U.S. proposals, which Mr. Netanyahu accepted.  Israel’s largest trade union held a brief strike on Monday to demand a deal.  Others call that giving in to terrorism; the right-of-center group of hostage families is now demanding the end of negotiations and more military pressure on Hamas.

“The choices are heavy, and Israel’s leaders don’t need U.S. pressure driven by an American election calendar. Americans know right from wrong. When Mr. Polin and Ms. Goldberg spoke at the Democratic convention, the crowd chanted ‘bring them home.’ That was also the chant at the Republican convention during the speech by the parents of Amer Neutra, a 22-year-old U.S. hostage still in Gaza.

“Israel is offering unprecedented strategic concessions and risking its soldiers’ lives to free hostages. U.S. pressure should be on Hamas, which took the hostages and murders them.”

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Russia-Ukraine....

--Another awful week started out with a Russian strike on Kharkiv, Ukraine’s second-largest city, last weekend, injuring at least 47 people.  Among the buildings damaged were a supermarket and a sports complex in areas residents go to every day, the regional head said, many of the wounded being children.

Russia said it shot down 158 Ukrainian drones in 15 regions across the country, including two over Moscow.  It claimed the UAVs had struck a power plant and an oil refinery.

Five people were killed and 46 wounded on Saturday in Ukrainian shelling of Belgorod, according to the regional governor.

--Monday, Russia then carried out its third large-scale bombardment of Ukraine in a week, with explosions ringing out in the early morning in Kyiv and several other cities on the first day of the school year.

Schools in Ukraine must provide bomb shelters for students or operate only online.  Many schools in Kyiv are open, and children attend even on days when missiles have targeted the city.

Serhit Popko, the military administrator in Kyiv, said in a post on social media that Russia had fired about 10 ballistic missiles and more than 10 cruise missiles.  The attack stood out for the large number of ballistic missiles fired at Kyiv, Popko wrote, but most of the missiles were intercepted and casualties were minimal.

Before the attack on Monday, President Volodymyr Zelensky said that Russia had fired more than 160 missiles of various types, 780 guided aerial bombs and 400 attack drones at Ukrainian targets over the preceding week.  It is the guided aerial bombs that have been a big issue in terms of casualties, as they are fired from Russia, via fighter aircraft, which is why Ukraine keeps asking for permission to fire Western-supplied long-range missiles deep into Russia to go after the airfields.

--Tuesday, two ballistic missiles blasted a military academy and nearby hospital in Poltava, located in central Ukraine, about 200 miles southeast of Kyiv, killing a staggering 51 people and injuring more than 200, in what was one of the deadliest Russian strikes of the war.

The missiles tore into the heart of the Poltava Military Institute of Communication’s main building, causing several stories to collapse.  The strike hit as cadets were lined up for an event.  It wasn’t the first time this happened while Ukrainian troops congregated to observe military protocol or receive awards.  Last fall, a Russian missile struck a medal ceremony for artillery troops in the Zaporizhzhia region, killing 19 soldiers in an episode that stirred criticism of the military and civilian leadership.

The missiles also hit shortly after an air-raid alert sounded, when many people were on their way to a bomb shelter, Ukraine’s Defense Ministry said, describing the strike as “barbaric.”

Poltava is on the main highway and rail route between Kyiv and Kharkiv, which is close to the Russian border.

President Zelensky issued a fresh appeal for aid. He has said he needs at least seven Patriot missile-defense batteries.  Four are currently deployed.

“Ukraine needs air defense systems and missiles now, not sitting in storage,” Zelensky wrote on Telegram.  “Long-range strikes that can protect us from Russian terror are needed now, not later. Every day of delay, unfortunately, means more lost lives,” he said.

While this attack was occurring, President Putin was in Mongolia, making his first state visit to a member of the International Criminal Court since it issued a warrant for his arrest last year.  Mongolia, highly dependent on Russia for energy, gave Putin the red-carpet treatment.  He’s supposed to be arrested!

--Russian attacks overnight Tuesday killed at least seven in the western city of Lviv, near the Polish border, so they initiated air raid warnings for the border area.  Three children were among the dead with 35 others injured, many in critical condition, according to Lviv’s mayor.

Again, President Zelensky reacted to the attacks by urging Ukraine’s allies to give Kyiv “more range” to use Western weapons to strike deeper into Russian territory.

In his Tuesday evening national address, Zelensky said: “Autumn will be extremely important for Ukraine.  And our state institutions must be set up in such a way that Ukraine will achieve all the results we need, for all of us,” he said.

--Wednesday, Ukrainian Foreign Minister Dmytro Kuleba submitted his resignation ahead of a cabinet reshuffle that saw five others resign.  Kuleba was Ukraine’s most recognizable face on the international stage, next to Zelensky.  The president hinted last week a government shakeup was coming after 30 months of war.

These changes were “months in the making,” and as such “not a big surprise,” said Chris Miller of the Financial Times. “Some who’ve resigned will be reappointed to new posts and/or with new portfolios,” he said, and noted, “There are 5 acting ministers, so (the changes are) partly aimed at making (Zelensky’s) cabinet whole.”

Zelensky on Wednesday evening then released a slate of nine candidates for top cabinet positions, which need approval from parliament (expected).  Kuleba would be replaced by Andrii Sybiha, the first deputy foreign minister, for example.

Zelensky said he was acting to bring a “new energy” to state institutions.

--While Russia has been bombing the hell out of Ukraine, Russian forces are advancing faster in eastern Ukraine than they have done for a long time, taking several square kilometers per day, President Putin said on Monday as Moscow’s forces tried to smash through a Ukrainian defensive line.

President Zelensky acknowledged the difficulties in the east, particularly near the strategic city of Pokrovsk, but said Russia’s military had made no further advances in the past two days.

While Ukraine’s incursion into Russia’s southern Kursk region that began on Aug. 6 continues, Russia has been making gains in eastern Ukraine.  “We have not had such a place in the offensive in Donbas (region) for a long time,” Putin told children at a school in Kyrzyl, in a remote region, Tuva, about 2,800 miles east of Moscow.  I’m sure the schoolchildren were thrilled to hear this. 

For good reason, there has been criticism of the Ukrainian strategy of its major incursion into Kursk, which is taking valuable resources away from the eastern front and a true breakthrough could threaten some major cities.

Ukraine lost Avdiivka, 36 miles east of Pokrovsk, after months of bloody fighting in February, and Russia has been grinding forward ever since.

In an interview Tuesday, Zelensky told NBC News’ Richard Engel that Ukraine will “hold” onto the territory it has seized inside Russia with its cross-border incursion into the Kursk region, and it will attempt to hold that land as part of a “victory plan” to end the war.

“For now, we need it,” he said of the estimated 770km of land (about 300 square miles) Ukrainian forces occupy in Kursk.  “We don’t need their land. We don’t want to bring our Ukrainian way of life there,” he said.  But he said it could be useful in future negotiations.

Friday, The Economist reported there were signs that the incursion is forcing the Russians to redeploy forces from the eastern front, including some troops earmarked for the Pokrovsk offensive.

Ukrainian analysts expect Russian troops to reach Pokrovsk by mid-September, but claim they will struggle to capture it.

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Wall Street and the Economy

The Federal Reserve got the news it wanted out of today’s August jobs report, less than expected for a second consecutive month, 142,000 vs. 160,000 that was the Street’s consensus, with July’s figure revised down to 89,000 from 114,000 first reported.   The unemployment rate dropped from 4.3% to 4.2%, while average hourly earnings grew at a faster pace than expected: 0.4% on a monthly basis, and 3.8% year-over-year.

So, Chair Jerome Powell gets the report both he and the other members of the Open Market Committee sought...a still cooling job market, but one that is not falling apart.

New York Federal Reserve President John Williams said today the central bank should start cutting rates this month, but didn’t build the case for a half-point cut.

When asked during a Q&A whether the Fed should act with more urgency, Williams signaled little alarm.  “I feel like we’re well positioned” to maintain both a healthy labor market and inflation that returns to the Fed’s 2% goal,” he said.

It thus seems the Fed will lower its benchmark funds rate 25 basis points, not more, when it gathers Sept. 17-18.

Next week’s CPI data for August will likely be tame and of little consequence when it comes to the Fed’s decision.  The jobs report, on the other hand, was important.

As for the other economic data for the week, the ISM manufacturing reading for August was 47.2, another month under the key 50 mark, the dividing line between growth and contraction.  The August non-manufacturing/service sector reading was 51.5, essentially unchanged from July.

Two others of less import...July construction spending was off 0.3%, and factory orders rose 5.0% in the month.

Lastly, last week I talked about home insurance premiums increasing 30+ percent in California, and this week we had a story on how auto insurance premiums nationwide are expected to rise by nearly 22%, according to an analysis by insurance advice website Insurify, some of it citing the Bureau of Labor Statistics Consumer Price Index.  Vehicle maintenance and repair costs have increased by nearly 38 percent over the past five years.  And increasingly severe and frequent weather events are also driving up auto insurance premiums.  Hail-related auto claims now represent nearly 12 percent of all comprehensive claims, up from 9 percent in 2020.

And vehicle theft rates, traffic congestion and an increase in car accidents also contribute to higher rates.

Point being, home and auto insurance premiums are a huge part of every family’s budget, and those costs have been soaring.

The Atlanta Fed’s GDPNow barometer for third-quarter growth is at 2.1%.

Freddie Mac’s 30-year fixed-rate mortgage was unchanged at 6.35%.

Europe and Asia

We had a release of the August PMIs for the eurozone (courtesy of S&P Global and Hamburg Commercial Bank), with the manufacturing figure at 45.8, unchanged from July, further solid deterioration, being sub-50 on an ongoing basis since July 2022.  The services PMI was 52.9, a 3-month high.  The composite index was 51.0 vs. July’s 50.2.

Manufacturing PMIs:

Germany 42.4 (5-month low), France 43.9 (7-mo. low), Italy 49.4 (5-mo. high), Spain 50.5 (7-mo. low), Netherlands 47.7 (8-mo. low), Greece 52.9 (8-mo. low), Ireland 50.4 (6-mo. high).

UK: 52.5, up from 52.1, 26-mo. high.

Services:

Germany 51.2, France 55.0 (up from 50.1 in July, the strongest expansion here since May 2022), Italy 51.4, Spain 54.6, Ireland 53.8.

UK: 53.7.

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

“Things are going downhill, and fast. The manufacturing sector has been stuck in a rut, with business conditions worsening at the same solid pace for three straight months, pushing the recession to a grueling 26 months and counting.  New orders, both domestic and international, are slowing down even more, dashing any short-term hopes for a rebound. Added insult to injury, input prices have been creeping up again since June.  There is a silver lining insofar as companies managed to pass some of these higher costs onto their customers in August.”

On the service sector...

“The Olympic Games in Paris brought plenty of victories, and the French service sector was certainly among the winners.  The latter helped drive accelerated growth in the eurozone’s service sector for August.  But the big question is whether this boost is sustainable.  The positive vibes from the Games and the ongoing Paralympics might carry through into September in part, but we expect the slowdown in growth, which started in May, to likely resume in the coming months.”

Separately, Eurostat reported industrial producer prices fell in July by 0.8% compared with June.  Year-over-year they decreased by 2.1% in the euro area.

July retail sales rose 0.1% over June in the EA20.  Versus July 2023, they decreased 0.1%.

France: Michel Barnier, the EU’s former chief Brexit negotiator, was named France’s new prime minister, the French president’s office said, ending two months of stalemate following inconclusive parliamentary elections.

In a statement on Thursday, the Elysee Palace said: “The President of the Republic has appointed Michel Barnier as Prime Minister. He has to form a united government to serve the country and the French people.”

Barnier, 73, a staunch Europhile, is a member of the Republicans party which represents the traditional right.  He is best known on the international stage for his role in mediating the United Kingdom’s exit from the European Union.

But the prospects for Barnier forming a stable government are unclear, though at least the National Rally (RN), France’s far-right party previously suggested it could be open to working with Barnier and would not immediately veto him.  The left-wing alliance that won more seats at the general election than any other bloc, however, is enraged that the post has gone to the center-right.  Street demonstrations are planned for Saturday.

Germany: The far right won the most votes in German state elections for the first time since the Nazis.  For some in Germany, the rise of Alternative for Germany (AfD) is a literal nightmare.  But others, particularly in the east, say the AfD is a chance for change.

The temperature has been rising in German politics and last Sunday’s vote in Thuringia and Saxony represented the boiling point.

Chancellor Olaf Scholz’s Democratic Party, along with his Green and Liberal coalition partners, did badly.  The prior week’s knife attack, in which a Syrian asylum seeker and suspected Islamist is accused of killing three people, has fueled fierce criticism of how successive governments have handled migration.

In the eastern state of Thuringia, the AfD won 32.8% of the vote, nine points ahead of the conservative CDU, and far in front of Germany’s three governing parties; the far-right vote win in a state parliament was the first since World War II, although it has little hope of forming a government in Thuringia as no one wants to work with it.  But, the AfD would have enough seats to block legislation.

In Saxony, the AfD trailed the CDU, 31.8% to 30.7%, again far ahead of Chancellor Scholz’s coalition.

With federal elections only a year away, the AfD is second in national opinion polls.

But there was another party that did well, the Sahra Wagenknecht Alliance (BSW), an insurgent party of the far-left, led by, you guessed it, Sahra Wagenknecht, who offered voters the chance to vote for an anti-immigration, anti-Ukraine-war party without AfD’s far-right tinge and many seized it.  BSW won 15.5% of the vote in Thuringia and 11.5% in Saxony, impressive for a party formed barely nine months ago.

Taken together, as the Wall Street Journal editorialized:

“The bigger problem is what the joint rise of AfD and BSW says about the collapse of Germany’s governing parties.  The insurgents won nearly 49% of the vote in Thuringia and more than 42% in Saxony.  The parties that run the country – the Social Democrats (SPD), Greens and Free Democrats – won a combined 13.6% in Saxony and 10.6% in Thuringia.

“This confirms what national opinion polls have said for a year or more: Voters are fed up with Chancellor Olaf Scholz (SPD) and a coalition that can’t manage immigration and clings to climate targets despite the tangible and growing economic harm.

“That leaves the center-right Christian Democrats (the CDU) and Bavaria’s CSU as the only mainstream alternative to the insurgents. Don’t blame German voters for losing patience with their dysfunctional governing parties. Blame those mainstream politicians for being slow and navel-gazing as voter frustrations mount.”

Turning to Asia...China reported out its PMIs for August...the National Bureau of Statistics had manufacturing at 49.1 vs. 49.4 prior, not good, below 50.  The non-manufacturing services figure was 50.3 vs. 50.2...also not particularly good.

But Caixin’s private manufacturing PMI was 50.4 vs. 49.8 prior, and services 51.6 vs. 52.1.

Reminder, the National Bureau of Statistics is reporting the data on large, state-owned enterprises, while Caixin is a measure of small- and medium-sized businesses.

Japan’s August manufacturing PMI was 49.8 vs. 49.1 prior, with the services figure unchanged at 53.7.  July household spending was up just 0.1% year-over-year, far less than forecast.

South Korea’s manufacturing PMI for August was 51.9 vs. 51.4 in July.

Taiwan’s was 51.5 vs. 52.9.

Street Bytes

--It was an ugly, holiday-shortened week for equities, starting off with a miserable day Tuesday, the S&P falling 2.1% and Nasdaq 3.3% as concerns over economic growth and the performance of semiconductor giant Nvidia spread among investors both here and abroad.  Nvidia’s shares fell 9.5%, the company losing $278.9 billion in valuation, exceeding Meta Platform’s $232bn from Feb. 3, 2022, the largest one-day valuation loss for any U.S. company on record.

Nvidia CEO Jensen Huang’s wealth tumbled the most ever as part of Tuesday’s rout, down $10 billion to $94.9 billion, the biggest single day drop for him since the Bloomberg Billionaires Index began tracking his wealth in 2016.

Bloomberg reported the Justice Department had sent subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws, though on Wednesday, the company denied it had received a subpoena.

Antitrust officials are concerned that Nvidia is making it harder to switch to other suppliers and penalizes buyers that don’t exclusively use its AI chips, according to Bloomberg’s reporting.

It didn’t get any better as the week went on and then Friday’s jobs report left investors with more questions than answers and concerns over AI demand continued to pummel the tech sector.

Overall, the Dow Jones lost 2.9% to 40345, while the S&P 500 fell 4.2% and Nasdaq 5.8%.  For the Dow and S&P, their worst week in 18 months.  For Nasdaq, go back to 2022.

--U.S. Treasury Yields

6-mo. 4.72%  2-yr. 3.67%  10-yr. 3.72%  30-yr. 4.03%

Anxiety about the economy sent Treasury yields to their lowest levels in over a year, with the 10-year at its lowest weekly close since June 2023.

And lo and behold, the yield curve between the 2- and 10-year has disinverted (or if you prefer, normalized) for the first time since 2022, when the Fed started its aggressive rate-hiking regime.  The yield on the 2-year plunged 25 basis points this week, while the 10-year fell 19.

--Crude prices fell again, reaching the lowest level since December 2023. The latest decline was due to growing pessimism about future demand, due to concerns about increasing supply and a potential deal between Libya’s rival governments to resume oil production.  Additionally, OPEC plans to boost production in the fourth quarter.  Data from China continues to indicate weak economic growth, and the ISM manufacturing PMI showed U.S. factory activity contracting for the fifth consecutive month.

--The Iran-backed Houthis in Yemen attacked another crude oil tanker in the Red Sea/Gulf of Aden with ballistic missiles and a drone on Monday, striking the Panama-flagged and -owned Blue Lagoon 1 sometime in the morning, the attack taking place about 70 nautical miles west of Yemen.  But British maritime authorities said there were no casualties, and the vessel was proceeding to its next port of call.

About five hours later, a drone hit a ship south of where the earlier attack occurred.  U.S. officials claimed it was the Saudi-flagged, -owned, and -operated Amjad tanker, but the vessel was apparently undamaged. Saudi officials said it wasn’t targeted.

But CENTCOM reported Monday that the tanker Sounion “is still on fire and threatens the possibility of a major environmental disaster.” The Houthis attacked and disabled while the tanker was sailing through the Red Sea on Aug. 21.  A salvage operation has been underway, and the European Union is providing security for the tugboats needed to haul the Sounion to port.

But the other day, the EU said towing is unsafe.

Point being, for months the Houthis have created a mess in Red Sea tanker traffic that impacts the supply chain and prices, and nothing the U.S. and its allies have done in terms of missile strikes on targets in Yemen has deterred the militants.

--Vice President Kamala Harris joined President Biden in declaring that United States Steel Corp. should remain domestically owned and operated, the latest headwind to the proposed sale of the company to Japan-based Nippon Steel Corp.

“U.S. Steel is an historic American company, and it is vital for our nation to maintain strong American steel companies,” Harris said during a Labor Day event with unions in Pittsburgh, home to both U.S. Steel and the United Steelworkers union, which has opposed the sale.

U.S. Steel Corp. CEO David Burnett said Nippon Steel’s promise to invest is “evidence of its unwavering commitment to U.S. Steel and all of our stakeholders,” not only to complete the transaction but also to protect and grow the company, he said in a statement Monday.  “U.S. Steel will be a much stronger company as a result of the transaction and these investments.”

Without capital from a larger steel company, U.S. Steel faces plant closures and a future that doesn’t include a headquarters in Pittsburgh.

The shares fell 17% on Wednesday.

Editorial / Wall Street

“A sign of the rotten political times is that President Biden, Kamala Harris, Donald Trump and JD Vance all agree on the dumbest economic idea of the presidential campaign so far: opposing Nippon Steel’s $14.1 billion acquisition of U.S. Steel.

“We’ll admit that the competition for the dumbest economic policy is fierce these days – with price controls on food, a 10% across-the-board tariff, and national rent control on the table.  But opposition to the Nippon deal deserves careful consideration for this distinct dishonor given the deal’s manifest benefits and nonexistent harm.

“Ms. Harris is apparently undaunted by economic illiteracy, telling a Monday rally in Pittsburgh that ‘U.S. Steel should remain American-owned and American-operated.’

“A politician with the U.S. national interest in mind would celebrate the Nippon Steel deal, which would boost U.S. manufacturing.  The Japanese firm has promised to spend $2.7 billion refurbishing the Pittsburgh steel maker’s aging plants. It has also agreed to honor U.S. Steel’s collective-bargaining agreements with the United Steelworkers.

“The union has nonetheless lobbied the Administration to block the deal because it prefers a takeover by Cleveland-Cliffs, a union shop like U.S. Steel.  The union wants to create a domestic cartel shielded from competition by the Trump-Biden 25% steel tariffs....

“Cleveland-Cliffs lost the bidding auction to Nippon Steel, but CEO Lourenco Goncalves hasn’t given up.  He has continued to lobby the Administration to nix the Nippon deal on dubious national-security grounds.  ‘Japan is not a friend’ of the U.S., he claims.

“But then why is Washington deepening its defense cooperation with Tokyo?  ‘As our Alliance cooperation reaches new heights, we are expanding our engagement to reflect the global nature of our partnership,’ said a U.S.-Japan joint leaders’ statement in April.  ‘Our purpose as partners is to uphold and bolster the free and open international order based on the rule of law that has allowed so many nations to develop and prosper.’

“Political opposition from leaders of both major parties does the opposite of this boast.  It sends the signal that foreign investment isn’t welcome in the U.S. and buying voters matters more than the rule of law.

“After Mr. Trump pledged to block the deal in January, the Biden team ordered the Committee on Foreign Investment in the United States and Justice Department to investigate on security and antitrust grounds, though the deal doesn’t pose concerns regarding either.  If anything, the deal would make the U.S. steel industry more globally competitive, which would enhance American security....

“Employment at U.S. iron and steel mills is down roughly 7% compared to January 2020 as U.S. steel makers remain economically uncompetitive even with tariffs and no doubt in part because of them. A market protected from competition has less incentive to innovate.

“Nippon Steel’s investment would help revitalize U.S. steel manufacturing. But these days America appears to be led by a confederacy of economic dunces.”

--Hong Kong’s Cathay Pacific canceled more than 90 flights after identifying 15 aircraft from the 48-strong Airbus A350 fleet had engine fuel lines requiring replacement, specifically deformed or degraded fuel lines.  The engine component failure is the first such episode for that model of aircraft worldwide.

--Ryanair, Europe’s largest airline by passenger numbers, said Tuesday that passenger volume grew 8% last month over a year ago to 20.5 million.  The Irish low-cost carrier said the result was a new record after it operated more than 111,800 flights in the month.  The company’s August load factor remained flat at 96%.

--JetBlue shares rose 7% on Thursday after the airline bumped up its capacity and revenue guidance for the third quarter, crediting its raised views to favorable fuel prices and a lift in July bookings after technology outages caused cancellations for other carriers.

JetBlue said it expects its revenue to now land between 2.5% lower and 1% higher than a year earlier, compared with a previous forecast of a drop of between 1.5% to 5.5%.

--TSA checkpoint numbers vs. 2023

9/5...100 percent of 2023 levels
9/4...100
9/3...101
9/2...104
9/1...107
8/31...103
8/30...106
8/29...105

These numbers are going to be very interesting the next two months.

--The Bank of Canada cut its main interest rate for a third straight time, down a quarter point to 4.25%, and said it is worried about the economy being too weak and the risk that inflation slows too quickly.

The latest inflation data, covering July, indicated that inflation decelerated to 2.5% or a 40-month low.

--Dick’s Sporting Goods shares fell 5% Wednesday even though the retailer boosted its financial outlook for the fiscal year.

The company cited its latest quarter’s strong results as it raised both its same-store sales and earnings forecasts.  But the outlook was short of Wall Street’s projections.

Dick’s now expects comp-store sales growth between 2.5% and 3.5%, up from its earlier estimate of 2% to 3%.

The sporting goods outlet also raised its EPS forecast to a range of $13.55 to $13.90, compared with $13.35 to $13.75 prior.  However, the midpoint of the range, $13.73 a share, comes in short of the $13.84 consensus.

For its fiscal second quarter ended Aug. 3, Dick’s reported earnings of $4.37 a share, beating consensus of $3.86.  Net sales of $3.47 billion also beat the Street’s call for $3.44bn.  Comp-store sales rose a solid 4.5% in the quarter.

--Dollar Tree shares cratered a whopping 24% after the company cut annual forecasts on Wednesday, as it struggled to lure in price-sensitive shoppers for its more profitable higher-margin goods amid sticky inflation.

Peer Dollar General also cut its annual forecasts after its quarterly sales came in below expectations last week, signaling strained spending from lower-income customers as well as value-seeking behavior from middle and higher-income households.

Dollar stores have struggled to attract shoppers as bigger rivals such as Walmart and Target, along with PDD Holdings’ ecommerce platform Temu compete for customers.

Dollar Tree expects annual sales between $30.6 billion and $30.9 billion, compared with its prior forecast range of $31 billion to $32 billion.

The company sees annual adjusted earnings per share in the range of $5.20 to $5.60, compared with its prior forecast of $6.50 to $7 per share.

--Red Lobster is poised to exit from Chapter 11 bankruptcy protection, as a U.S. bankruptcy judge on Thursday approved the seafood chain’s reorganization plan and sale to a lender group led by asset manager Fortress.

Red Lobster said it expects to operate about 544 locations across the U.S. and Canada upon emerging from bankruptcy, down from the 578 disclosed in the original filing in May.

--SpaceX moved to evacuate employees from Brazil and warned others against traveling to the country, a sign of how Elon Musk’s ongoing battle against Brazil’s highest court over his social media company X is spilling out to affect some of his other businesses.

For months, Musk has been battling with Brazilian Supreme Court Justice Alexandre de Moraes, who ordered X to remove a number of accounts that the court said are spreading hate speech and misinformation on the platform. In August, X closed operations in Brazil, citing the need to protect the safety of its staff.

--Donald Trump’s social media company had fallen 74% from its March high on Wednesday, $16.98 vs. a closing high of $66 after Trump Media’s merger with a publicly traded shell company.

Trump is the single largest shareholder of Trump Media, the parent company of Truth Social, owning 115 million shares – a roughly 60% stake.

--Hotel workers walked off the job on early Sunday during the busy Labor Day weekend at Hilton, Hyatt, Marriott and Omni properties in six cities - Boston; Greenwich, Conn; San Francisco; San Jose, Calif; Seattle and in Hawaii.

But the impact appears to have been minimal, though the Unite Here labor union has vowed further action as they push for higher wages and to address pandemic-era staffing and service cuts that have left some employees feeling overwhelmed.

--The Turkish Tourism Board advertises heavily in the New York area, with direct flights on Turkish Airlines to the country.  I’ve been twice and found it a fascinating place and love Istanbul and felt safe (though I kept my guard up). 

But the attack Monday on two Marines in the Turkish coastal city of Izmir, a tourist destination, during a routine port visit by the USS Wasp, certainly doesn’t help the Turkish government and its tourist industry.

The assailants were allegedly Turkish nationalists, who reportedly accused the Marines of having “the blood of Turkish soldiers and thousands of Palestinians” on their hands, according to video footage taken during the encounter.

One of the Marines, you saw, had a bag placed over his head as a crowd yelled “Yankee, go home!” before his fellow service members helped free him from the attackers.  The Marines suffered no real injuries.  Turkish officials said 15 suspects were arrested.

In late July, Turkish President Erdogan vaguely threatened to invade Israel to assist Palestinians, as he has expressed his adoration of Hamas in past statements.

--Oh baby...General Mills’ Cinnamon Toast Crunch cereal is going to be incorporated into Hormel’s Black Label bacon...as in, a cinnamon-flavored bacon.

The company said “Cinnadust” seasoning is hand-rubbed onto slabs of Hormel’s thick-cut bacon and held overnight to guarantee the most cinnamon-y flavor possible.

This is going to be a limited-edition product.  I envision riots over the availability in the grocery stores.  This sounds absolutely amazing.

Foreign Affairs, Part II

China: Beijing and Manila accused each other of once again ramming coast guard vessels in a disputed area of the South China Sea.

The Philippines has claimed a Chinese ship “directly and intentionally rammed” into its vessel, while Beijing has accused the Philippines of “deliberately” crashing into a Chinese chip.

Last Saturday’s collision near the Sabina Shoal is the latest in a long-running – and escalating – row between the two countries over various islands and zones in the South China Sea.

Within the past two weeks, there were at least three other incidents in the same area involving ships between the two countries. 

Both nations claim the Sabina Shaol (known by China as Xianbin Jiao and as Escoda Shoal by the Philippines), located some 75 nautical miles from the Philippines west coast and 630 from China.  China freakin’ claims everything in the South China Sea...it’s beyond absurd, and long ruled illegal.

You keep waiting to wake up one morning to find out that there has been bloodshed in one of these disputes and then all hell could break loose depending on the severity of the incident.

The U.S. ambassador to the Philippines, Marykay L. Carlson, criticized what she called China’s dangerous actions in the region.

“The U.S. condemns the multiple dangerous violations of international law by the (People’s Republic of China), including today’s intentional ramming of the BRP Teresa Magbanua while it was conducting lawful operations within the (Philippines) EEZ*,” she wrote on X.  “We stand with the Philippines in upholding international law.”

*Exclusive economic zone.

--Last week I wrote on the issue of reckless China and its failure to notify the international community about space debris it is creating. The head of the U.S. Space Command this week called on Beijing to get their act together and step up notification of Chinese satellite launches leaving behind loads of debris in orbit in the past two years.

“I hope next time there’s a rocket like that that leaves a lot of debris, it’s not our sensors that are the first to detect that, but we’re getting communications that help us to understand that, just like we communicate with others,” the Space Command chief, General Stephen Whiting, said.

North Korea: Kim Jong Un ordered up to 30 officials to be executed over their alleged failure to prevent massive flooding and landslides in the summer that resulted in the death of some 4,000 people, according to South Korean media.

An official under Kim’s regime said between 20 to 30 leaders in North Korea had been charged with corruption and dereliction of duty, with the state sentencing them to capital punishment, TV Chosun reported.

“It has been determined that 20 to 30 cadres in the flood-stricken area were executed at the same time late last month,” the official told the outlet.

The catastrophic flooding that hit the Chagang Province in July resulted in thousands of deaths, and also displaced more than 15,000 people, with the North Korean Central News Agency previously reporting that Kim ordered authorities to “strictly punish” the officials involved.

A former North Korean diplomat Lee Il-gyu told TV Chosun that it was clear officials in the province were “so anxious that they don’t know when their necks will fall off.”

Kim was seen last month surveying the damage.  He slammed South Korea for reports on the death toll at the time.

Iraq: American and Iraqi troops launched a joint military operation in western Iraq that killed 15 members of Islamic State.  America’s army said that the militants were armed with weapons, grenades and suicide belts.  Seven American soldiers were injured, as reported by U.S. Central Command.   All were said to be in stable condition.

The operation was carried out a week ago Thursday, but details just emerged late Friday. There was no indication any civilians were injured.

An initial statement by Iraqi security forces said, “Airstrikes targeted the hideouts, followed by an airborne operation.”

“Among the dead were key ISIS leaders,” Iraqi officials said.  Curiously, they didn’t mention U.S. involvement in their initial announcement of the operation, or maybe not curiously, as politicians continue to debate the future of American troops in the country.

Reminder, there are approximately 2,500 U.S. troops in Iraq and 900 in Syria.

Venezuela: The U.S. seized a plane belonging to President Nicolas Maduro, claiming it was bought illegally for $13 million and smuggled out of the country.

According to the Department of Justice, the Falcon 900EX aircraft was seized in the Dominican Republic and transferred to Florida.

There was no immediate comment from Maduro. The U.S. said the plane was seized for suspected violations of U.S. export controls and sanctions laws.

A spokesperson for the White House national security council said the action represented “an important step to ensure that Maduro continues to feel the consequences from his misgovernance of Venezuela.”

Meanwhile, a Venezuelan judge on Monday issued an arrest warrant for the former presidential candidate Edmundo Gonzalez as part of a criminal investigation into the results of the disputed presidential election.

The warrant accuses Gonzalez, a former diplomat, of various crimes including conspiracy, falsifying documents and usurpation of powers.  All lies, of course.

Electoral authorities declared Maduro the victor of the July 28 election, hours after polls closed, and then have never shown any details since, yet the evidence from actual tally sheets of more then 80% of the vote, shows Gonzalez winning by a 2-to-1 margin.

The U.S. has recognized Gonzalez as the rightful winner, while the European Union, and some Latin American countries like Brazil, refuse to recognize Maduro as the leader, citing the fact no evidence has been produced to confirm his ‘victory.’

Random Musings

--Presidential approval ratings....

Gallup:  43% approve of President Biden’s job performance, 53% disapprove; 37% of independents approve (Aug. 1-20).

Rasmussen: 43% approve, 55% disapprove (Sept. 6)

--Former President Trump raised $130 million last month, a haul built almost entirely by small-dollar donations, his campaign announced Wednesday.  The August fundraising total leaves Trump with $295 million in cash on hand.

But the Harris campaign raised $361 million in August, both sums including money raised by allied party committees.

Harris’ aides report $404 million on hand vs. Trump’s $295m.

--Kamala Harris proposed a 28% capital-gains tax for anyone earning $1 million or more, though this is a bit deceiving as she also favors a five-point surcharge on investment income.   Currently, the highest rate for long-term capital gains is 20% for single people earning around $500,000 or more and couples earning around $600,000.   The proposal on cap gains is down from the 44.6% rate that President Biden has embraced (39.6% plus the surcharge), marking her efforts to chart an economic vision separate from the sitting president, slightly.

She added that she supports a billionaire minimum tax and “corporations paying their fair share.”

Harris, at an event Wednesday in Portsmouth, New Hampshire, said that with regards to small businesses, “We will expand the tax deduction for start-ups to $50,000.  It’s essentially a tax cut for starting a small business,” she said. The current expense deduction for start-up costs in the first year is $5,000.

The proposal would likely cost $1 to $4 billion a year or $20 billion over a decade, according to Marc Goldwein of the Committee for a Responsible Federal Budget, like a pretty modest proposal, but it allows Harris to make her pitch for an “opportunity economy” concrete.

But I have to admit, I don’t like spending a lot of time on ‘proposals’ because they are just that, ‘proposals,’ totally dependent on the makeup of the new Congress.  But the small business proposal could possibly get done as part of a larger bipartisan tax deal in 2025.

Ditto some of the parts of Donald Trump’s economic plan, as spelled out Thursday at the Economic Club of New York.

Trump pledged to cut the corporate tax rate, slash regulations and audit the federal government, embracing an idea proposed by backer Elon Musk.

He also reiterated plans to embrace cryptocurrency, increase tariffs on imports from 10% to 20%, and to extend his tax cuts for wealthy individuals.

“I am promising low taxes, low regulations, low energy costs, low interest rates, secure borders, low, low, low crime,” Trump said.

The centerpiece of his plan to reduce the corporate tax rate to 15% is for companies that make their products in the U.S.  That would be a large reduction from the current 21% rate – a key policy win from Trump’s own 2017 tax law.

“We want to make our goods in America and most of them we can,” Trump said.  “If you outsource, offshore or replace American workers, you are not eligible for any of these benefits.”

Harris has called for an increase in the corporate rate to 28%.

Of course, some of Trump’s proposals would do a number on the deficit.

As for running a federal efficiency commission, Elon Musk said on X that “I look forward to serving America if the opportunity arises.  No pay, no title, no recognition is needed.”

Musk already runs Tesla, social media site X, SpaceX, the artificial intelligence company xAI, the tunnel-making Boring Company, and the brain-implant maker Neuralink.  There would be just a few conflicts of interest.

--Speaking at a Fox News town hall in Harrisburg, Pa., Wednesday night, Donald Trump insisted that ABC News, which will host next week’s debate in Philadelphia, was “dishonest,” even though he agreed months ago to allow the network to host the debate.  Trump also insisted, without evidence, that Harris was “going to get the questions in advance.”

--Trump’s position on the Florida amendment that sought to expand abortion access is confusing, to say the least.  He said last weekend he would vote against it, after drawing anger from conservative allies when he appeared to endorse the initiative.

The referendum in Trump’s home state would broaden abortion rights, currently limited in the state to the first six weeks of a pregnancy.

“You need more time than six weeks.  I’ve disagreed with that right from the early primaries, when I heard about it.  I disagreed with it,” Trump said in an interview with Fox News ahead of a rally in Johnstown, Pa.

“At the same time the Democrats are radical because the nine months is just a ridiculous situation,” he added.  “All of that stuff is unacceptable, so I’ll be voting no for that reason.”

Twenty-four hours earlier, Trump had told NBC News: “I think the six-week is too short; it has to be more time.”  And when pressed how he would vote on the amendment, he said: “I am going to be voting that we need more than six weeks.”

The comments were then sharply criticized by Christian conservatives and other anti-abortion advocates.

The proposed change would allow abortions “before viability,” which is usually around 24 weeks of pregnancy, and to protect the mother’s health as determined by her health-care provider.

Vice President Harris, in a statement from her campaign, said: “Donald Trump just made his position on abortion very clear: He will vote to uphold an abortion ban so extreme it applies before many women even know if they are pregnant.”

--Donald Trump has now conceded he lost the 2020 election “by a whisker” three times in recent weeks.  In a podcast with Lex Fridman, at a 30 Moms for Liberty summit, and during a press event at the Southern border.

Some prominent far-right figures have now vowed they will lead a campaign to keep him from being elected in 2024, including white nationalist Nick Fuentes, who blasted Trump Wednesday for admitting that he lost the election.

“So, why did we do Stop the Steal?  Why did anyone go to Jan. 6?  Why did any one go to jail? ...It would have been good to know that before 1,600 people got charged,” Fuentes said on his podcast.

--Former congresswoman Liz Cheney (Wyo.) broke from the Republican party on Wednesday by saying she plans to vote for Democratic nominee Harris in November.

Cheney, speaking at a Duke University event, cited “the danger that Donald Trump poses” in her decision to endorse the vice president.

“As a conservative, as someone who believes in and cares about the Constitution, I have thought deeply about this – and because of the danger that Donald Trump poses, not only am I not voting for Donald Trump, but I will be voting for Kamala Harris,” Cheney said.  According to a video posted to X, her comments prompted applause in the crowd.

--Jim McCain, son of the late Sen. John McCain, said Tuesday that he is also backing Kamala Harris.

McCain, one of the more private members of his political family, publicly rolled out an endorsement that could pack some importance because of his father’s standing in the state he represented on Capitol Hill for decades.

Regarding the incident at Arlington National Cemetery with the Trump campaign and some family members of the 13 American soldiers who died during the withdrawal from Afghanistan, McCain told the Arizona Republic it was an affront to everyone buried at the cemetery.

“The part that drives me the most insane is that those men and women at that cemetery don’t get an opinion.  They have passed away. They don’t get a political opinion,” he said.  “There’s three generations of McCains buried there.  There would be four, but my father’s buried at Annapolis.

“It’s a very sacred place, not only to myself but to every veteran. ...The point of Arlington is to honor and remember the brothers and sisters who have given their lives in service to their country – the ultimate sacrifice. Whether or not (Trump) was invited, it is a place of memorialization and there are rules against having a campaign stop.”

McCain is a former independent who last month re-registered as a Democrat he said, after getting back home from nine months in the Middle East as part of the Arizona National Guard.

The Trump campaign last weekend posted some videos from family members of those killed during the 2021 evacuation of Afghanistan, accusing President Biden and Kamala Harris of killing their children by placing them in harm’s way.

It is astounding to me that neither Biden nor Harris ever contacted the families directly.

But the Trump campaign was specifically told not to film at Section 60 for campaign purposes and they did.

--Congress will settle on a $833 billion defense spending topline for fiscal 2025, according to Rep. Rob Wittman, R-Va., vice chairman of the House Armed Services Committee.  But in typical fashion it won’t be on time – so lawmakers are readying a budget extension.

Ergo, the budget won’t be passed before the start of the new fiscal year – Oct. 1 – so Congress will temporarily fund the Defense Department at 2024 levels for an as-yet-undetermined time.  But since it’s an election year, look for lawmakers to punt the final decision on 2025 spending until a new Congress has taken office in January.

Yup, time to hear constant talk of a new CR....continuing resolution.  [Defense One]

--Hunter Biden pleaded guilty on Thursday to nine federal tax charges in Los Angeles, after telling his legal team that he refused to subject his family to another round of anguish and humiliation after his trial in Delaware two months ago on gun charges.

Hunter’s move was unexpected, but defense lawyers concluded they could not prevail in the trial.

He remains free on bond until his sentencing hearing in mid-December, at which point Papa Joe will pardon him, even though the White House denies the president would do so.  But the election will be over, and few will care.

--Linda Sun, who worked for both New York governors Kathy Hochul and Andrew Cuomo, was indicted, along with her husband, and accused of using her position to benefit the Chinese government.

Prosecutors on Tuesday described a yearslong series of payoffs to Sun, in exchange for actions that benefited the People’s Republic of China and its Communist Party. The 65-page indictment described travel benefits, event tickets and the promotion of a close friend’s freight business with a headquarters in Queens.

Prosecutors say that Sun blocked Taiwanese officials from having access to the governor’s office, eliminated references to Taiwan from state communications and quashed meetings between Taiwanese officials and state leaders, including Gov. Hochul, who succeeded Cuomo and who promoted Sun to deputy chief of staff.

Sun also ensured that state officials did not publicly address the persecution of Uyghurs, the primarily Muslim ethnic group that has been persecuted in a region of China.

The Hochul administration “terminated her employment in March 2023 after discovering evidence of misconduct.” [New York Times]

Well, yours truly is certainly not surprised, having shared some personal experiences involving China...and certain people in my building here in Summit, N.J.

--Barron Trump is attending NYU’s Stern School of Business, Donald Trump said in an interview Wednesday.  NYU declined to comment.

Barron is departing from the Trump family tradition of going to the University of Pennsylvania.  The former president and three other Trump children – Ivanka, Tiffany and Don Jr. – went to the Ivy League school.  Eric Trump, the only other outlier, attended Georgetown.

--A 14-year-old student opened fire at a Geogia high school and killed four people on Wednesday, wounding nine, all of whom were expected to survive.

Two 14-year-old students at Apalachee High School in Winder, Ga., about an hour’s drive from Atlanta were killed, plus two teachers.

The suspect, Colt Gray, had been on the FBI’s radar since last year – when he was investigated by local authorities in connection to online school shooting threats, the bureau revealed.

At the time, the Jackson County Sheriffs’ Office identified Gray, then 13, as a possible suspect and interviewed him and his father.

The father was then arrested Thursday, having told police he gave his son the AR-15 style rifle used as a Christmas gift last year, which is nuts.

Georgia officials charged Colin Gray, 54, with two counts of second-degree murder, and four counts of involuntary manslaughter and eight counts of cruelty to children.  Colt Gray was charged with four felony counts of murder.

The father “knowingly allowed him to possess the weapon.  His charges are directly connected to the actions of his son,” Chris Hosey, director of the Georgia Bureau of Investigation.

The charges are the most severe ever filed against the parent of an alleged school shooter, and they come just months after a mother and father in Michigan became the first parents of a school shooter ever convicted of involuntary manslaughter, a less severe crime than second-degree murder.  Investigators found that, in November 2021, James and Jennifer Crumbley had bought their 15-year-old son a gun, didn’t lock it up, and ignored blatant warning signs before he opened fire at Oxford High in Michigan, killing four students.  In separate trials, each was found guilty and sentenced to 10 to 15 years in prison, the maximum allowed.

The message is finally being sent to the parents.  Hopefully it gets through to those who most need to hear it.

--There are three separate investigations swirling around the administration of New York City Mayor Eric Adams; an investigation into his campaign operation, another into the police commissioner, and the third looking at the activities of members of the Banks family, who have (or had) high-ranking positions in the city and police force.

--Two New Jersey residents have died after contracting West Nile virus, health officials said as they urged people to take precautions to protect themselves from the mosquito—borne illness.  Six other cases were reported in my state.

--This is highly disturbing...an AP analysis of Food and Drug Administration data shows that agency staffers have not returned to roughly 2,000 pharmaceutical manufacturing firms to conduct surveillance inspections since before the pandemic, raising the risks of contamination and other issues in drugs used by millions of Americans.

The firms that are overdue for safety and quality inspections represent about 42% of the 4,700 plants that are currently registered to produce drugs for the U.S. and previously underwent FDA review before May 2019, the AP found.

Under FDA’s own guidelines, factories that haven’t been inspected in five or more years are considered a significant risk and are supposed to be prioritized for “mandatory” inspections.  Most of the plants are in the U.S., but more than 340 are in India and China, countries that together make up the largest source of drug ingredients used in low-cost U.S. prescriptions.

Recall that the recent case of severe eye issues from contaminated eye drops largely came from a factory in India.

The pandemic totally upended the inspection regime, and regulators are scrambling to get back on track.

--Super typhoon Yagi killed at least 16 people in the Philippines before slamming popular tourist island Hainan, China, and neighboring Guangdong with wind gusts of up to 150 mph and localized 20-inch rainfalls.  A “super typhoon” is the equivalent of a Category 5 hurricane.

Yagi was slated to hit Vietnam later today.

--Summer 2024 was the Earth’s warmest on record, according to the Copernicus Climate Change Service, the European Union’s climate service.

It was also the warmest across Europe at 1.54C above the 1991-2020 long term average, exceeding the previous record from 2022.

While the UK had its coolest summer since 2015, much of Europe experienced a hotter than average summer.

Austria had its warmest summer on record, Spain had its warmest August on record, and Switzerland second warmest.

--Phoenix, Arizona hit 100 degrees for a 100th straight day Tuesday and is headed for at least 110 straight.  The record had been 76 days in a row set back in 1993. 

The temperature hit 102 F in Phoenix on May 27 and has made it to triple digits every day since.

Phoenix also set a new record with 55 days at 110 this week, breaking the record of 54 set last year.

And everyone is moving there, why?  [I love the area...as a tourist...when it’s not 110.]

Well, at least tee times around 2:00 p.m. would be readily available, one would think.

--Starliner, sans crew, is scheduled to return tonight (shortly after midnight Eastern Time).  Staff at Boeing are lighting candles all goes smoothly.  Undocking from the International Space Station is slated for about 6:00 p.m.

---

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

Pray for Ukraine.

God bless America.

---

Gold $2524
Oil $67.70 (settlement)...lowest weekly close since March 2023, worst week since Oct. 2023.

Bitcoin: $53,561 [4:00 PM ET, Friday...another awful week]

Regular Gas: $3.29; Diesel: $3.67 [$3.80 - $4.45 yr. ago]

Returns for the week 9/2-9/6

Dow Jones  -2.9%  [40345]
S&P 500  -4.2%  [5408]
S&P MidCap  -4.9%
Russell 2000  -5.7%
Nasdaq  -5.8%  [16690]

Returns for the period 1/1/24-9/6/24

Dow Jones  +7.0%
S&P 500  +13.4%
S&P MidCap  +5.7%
Russell 2000  +3.2%
Nasdaq  +11.2%

Bulls 52.0
Bears 21.6

Hang in there.

Brian Trumbore

 

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