For the week 8/25-8/29

[Posted 4:30 PM ET, Friday]

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Edition 1,375

The U.S. Senate returns to work Tuesday after their long recess and I’ll be watching Senate Majority Leader John Thune (R-S.D.) and Republican Sen. Lindsey Graham (S.C.) to see if they meet almost immediately with President Trump over this week’s heinous attack by Russia on Kyiv that killed at least 23 people.

Thune, Graham et al have had a strict Russian sanctions bill, with overwhelming bipartisan support, on the plate for months and it should have passed in July, but President Trump continues with his “2-week” stall games and failed diplomatic efforts, even as he should have known all along that Vladimir Putin will never meet with Ukrainian President Volodymyr Zelensky.

Some of us have known since Day One of the war that Putin will not agree to a ceasefire until he captures all of Ukraine…full stop.

If Senate leaders cannot convince Trump this week to just ‘do it,’ let the Senate and House act and sign the freakin’ thing, let alone allow Ukraine to fire U.S. long distance missiles* deep into Russia, beyond the range limit established by former President Biden and adhered to by Trump, it’s a lost cause.  The war will continue for years and eventually Ukraine would fall, with massive consequences for the future of Europe.

*Thankfully, the ingenious Ukrainians are improving, at light speed, their own weapons capabilities, but they need help now (yesterday).

President Trump has not commented on Truth Social about the Kyiv tragedy.  More important to tout toadies’ books he has never even read a page of.

But there is something else going on next week…the little summit meeting taking place in Beijing between Xi Jinping, Vladimir Putin and now, Kim Jong Un, who are convening as China holds a military parade.

Imagine what the three will be discussing.  Putin will be asking Kim for more troops and labor, and Kim will get even more ballistic missile and nuclear weapons expertise in return.

Xi might divulge his rough timetable on taking Taiwan and how both Russia and North Korea can aid in this effort.

All the while, the U.S. military is not ready for any major conflict in the Pacific that lasts any significant period of time.  As noted before, ‘war games’ have us getting our butt kicked.

—

There’s a headline in the Wall Street Journal today, “Higher Prices Are Coming for Household Staples,” a topic near and dear to my heart as I’ve been a boy crying wolf on the impact of tariffs.  The price hikes are here…and just starting.

I saw that first hand again this week, as I posted in my Monday video, on my latest trip to Dollar Tree, which a while ago essentially became $1.25 Tree.

Well, soon you can call it $1.50 Tree, because many of the products that I go to Dollar Tree specifically for (the only reason why), like dishwashing liquid, toilet bowl brushes, and trash bags, went up to $1.50 from $1.25 (and $1.00 just about two years earlier).  They are largely made overseas (or Canada), and as the stores ran out of pre-tariff inventory, well, you know what happens.  It’s rather simple.

And as the Journal notes, this week you had companies ranging from Hormel Foods to J.M. Smucker and Ace Hardware saying they would raise prices for reasons ranging from higher meat costs to tariffs.  Last week, large retailers like Walmart and Target said some tariff-related price increases are already in place.  More on the way.

And then Best Buy echoed the same the other day.  And last night Caterpillar, which reported earnings weeks ago, suddenly warned investors it now expects tariffs to have an even greater impact on its business, costing it as much as $1.8 billion this year.

“While the company continues to take initial mitigating actions to reduce this impact, trade and tariff negotiations continue to be fluid,” CAT said in a regulatory statement.

What’s killing this key manufacturer is the section 232 tariffs on steel and aluminum, which are nonsensical.

You can only eat the cost of tariffs for so long, if you are a corporation.

In the meantime, Dollar Tree reports earnings next week, and they might be good.  But I no longer need to go there as much as I used to.  They haven’t learned that yet.

Actually, Campbell’s chicken noodle soup is still $1.25 at DLTR, and I should probably stock up at that price in preparation for the next pandemic, for which we now know we won’t have a vaccine.

—

Wall Street and the Economy

Going back to last Friday and his speech at Jackson Hole, Wyoming, Federal Reserve Chair Jerome Powell gave markets the signal they wanted, saying the Fed could cut rates, and that with policy in restrictive territory, the shifting balance of risks “may warrant adjusting our policy stance.”  Beyond that he was pretty vague.

Downside employment risks are rising, and could include “sharply higher layoffs and unemployment,” Powell said. A weak jobs report for August, reported a week from Friday, Sept. 5, would not only further justify a September rate cut but also push the Fed into a deeper easing cycle.  A strong labor report could give Powell more cover to move slowly.

On the data front this week, prior to Friday’s key personal consumption expenditures index (PCE) report today, we had a second look at GDP for the second quarter and it was revised upward to 3.3%, more than expected and better than the first read of 3.0%.

Once again, it was imports that were the key factor.  Reminder, imports subtract from GDP and in the first quarter, thanks to frontloading ahead of the tariffs, imports were at record levels, leading to a decline in GDP of 0.5%.  But in the second quarter, imports cratered vs. Q1 and that helped GDP, as well as a solid figure for consumer spending.

July new home sales came in better than forecasts, a 652,000 annualized pace, while the Case Shiller home price index for June had the 20-city index down 0.3% from the prior month, and up 2.1% year-over-year, which was down from 2.8% in May and continues a trend.

July durable goods fell 2.8%, but were up 1.1% ex-transportation.

So then July PCE was released and all the figures were exactly as expected, up 0.2% on headline, 2.6% year-over-year, while on core (ex-food and energy) the figures were 0.3% and 2.9%; this last number the money ball in terms of the Fed.  2.9% is above the 2.8% figure in June and is hardly the Fed’s target of 2%.  As in 2.9% does not warrant a Fed rate cut…at least on paper.

Separately, personal income for the month rose 0.4%, while consumption was up 0.5%, both also as expected.

Finally, the Chicago PMI for manufacturing in August was a putrid 41.5, 50 the dividing line between growth and contraction.

The Atlanta Fed’s GDPNow barometer for the third quarter spiked to 3.5% from 2.2% days earlier, owing to positive takeaways from the GDP and PCE reports.

Freddie Mac’s 30-year fixed-rate mortgage is 6.56%.

But next week we have the ISM readings on manufacturing and the service sector, and a critical jobs report that the Fed, and the markets, will be picking apart.

Regarding the looming FOMC meeting (Sept. 16-17) and the expectation that the Fed will cut rates, regardless of core PCE, Federal Reserve Governor Christopher Waller again called for lower interest rates, saying he would support a quarter-point reduction in September and anticipates additional cuts over the next three to six months.

“With underlying inflation close to 2%, market-based measures of longer-term inflation expectations firmly anchored, and the chances of an undesirable weakening in the labor market increased, proper risk management means the FOMC should be cutting the policy rate now,” Waller said Thursday in remarks prepared for the Economic Club of Miami.

Waller, who dissented at the last Fed meeting, said he does not currently see the need for an outsized rate cut when the FOMC meets, but if next week’s employment report “points to a substantially weakening economy and inflation remains well contained,” that could change.

—

On the Lisa Cook mess….

Monday night President Trump took the extraordinary step of removing Lisa Cook from the board of governors of the Federal Reserve, seeking to undermine the independence of the nation’s central bank.

Trump justified the firing, which he said was effective immediately, by pointing to allegations that Cook may have falsified records in order to obtain favorable terms on a mortgage.

But Cook, who was confirmed by the Senate to the position on the Fed’s board, has not been charged with any wrongdoing or convicted of a crime.  She said she would refuse to step down and would sue the administration.

The allegations against her came from Bill Pulte, the director of the Federal Housing Finance Agency, who has spent weeks fanning Trump’s ire against the central bank.

Under the Federal Reserve Act, the law that charters the central bank, Trump may dismiss a governor only if he can demonstrate cause, typically defined as professional neglect or malfeasance.

Cook’s attorney, Abbe Lowell, said Tuesday that Trump has no authority to remove her.  “His attempt to fire her, based solely on a referral letter, lacks any factual or legal basis. We will be filing a lawsuit challenging this illegal action.”  Trump said he was ready for a legal fight.

The Fed said it would abide by any court decision in Cook’s legal challenge of her dismissal.  A Fed spokesperson added the central bank has deferred any decision on Cook’s current working status and noted there is no official business before the Fed board this week.

Trump told advisers that he wanted to move quickly to announce a nominee to replace Cook on the board.  He could appoint Stephen Miran, a close economic adviser, to replace her. Earlier this month, the president nominated Miran to fill a different seat on the Fed’s board. But the term for that seat expires in January. Cook’s term is set to expire in 2038. “We might switch him to the other – it’s a longer term,” Trump said.

The other name that’s been floated is former World Bank Group President David Malpass, a close ally of the president who has been critical of Fed policy.  He could fill the other seat if Miran is nominated to replace Cook.

Cook then sued President Trump on Thursday, seeking to block his move to fire her.

The lawsuit, filed in Washington, D.C., federal district court, alleges Trump violated the law by attempting to remove Cook from her post without a valid reason.

Cook’s lawsuit said Trump “concocted” a basis for her firing in violation of the Federal Reserve Act.

“Even if the President had been more careful in obscuring his real justification for targeting Governor Cook, the President’s concocted basis for removal – the unsubstantiated and unproven allegation that Governor Cook ‘potentially’ erred in filling out a mortgage form prior to her Senate confirmation – does not amount to ‘cause’ within the meaning of the FRA and is unsupported by caselaw,” the lawsuit said.

Job protection at independent federal agencies has been weakened by recent Supreme Court rulings and has never been tested in the context of the Fed.  However, the Supreme Court suggested in May that Fed employees have more protections than those at other agencies.

The attempt to fire Cook, combined with Gov. Adriana Kugler’s resignation earlier this month and the expiration of Chair Powell’s term next May, gives Trump the opportunity to fill three seats on the seven-member board.  Together with governors Michelle Bowman and Christopher Waller, both Trump appointees who dissented in favor of rate cuts in July, they would form a five-member majority on the seven-person board.

But governors also have the authority to approve or veto the reappointment of all 12 regional Fed presidents who are next up for renewal in February 2026.

Regional bank presidents hold five of the 12 votes on the Federal Open Market Committee, which sets interest rates.

“If [Bowman and Waller] allied with whoever fills the two new vacancies, they could remove all 12 presidents, thereby dramatically reshaping the FOMC,” wrote JPMorgan’s Michael Feroli in a recent note.

BUT…each of the 12 Federal Reserve banks has its own board of directors, which must approve the choice but cannot propose its own candidates.  [A search committee is formed to winnow down a list and then the regional bank board selects the president.]

So, it’s not so simple.  And Fed governors can push back against candidates they view as out of step with policy priorities, which would inject uncertainty into a process that has long been routine.

AND…there was a legal opinion by the Justice Department’s Office of Legal Counsel in 2019 that said Fed governors are able to remove a bank president “at will,” but this has yet to be tested in court.

What it boils down to is perception of political pressure and how the markets will respond.

Thus far, Wall Street has reacted with a shrug, largely because in the short term, the interest of the three main players – the Fed, the president, and the market – are all very much aligned.  Trump is demanding lower rates, which is what the bulk of investors want, and Fed Chair Powell signaled at Jackson Hole that he and his colleagues were ready to cut as soon as the next Open Market Committee meeting.

But if the president is successful in reshaping the board, that only adds to inflation risks, and higher inflation would lead to higher interest rates, exactly the opposite of what the White House is looking for.

Or as the Wall Street Journal editorialized:

“If he wants to change the Fed, Mr. Trump has ample opportunity through appointments to the board, including a successor for Mr. Powell as chair next year. That doesn’t seem to be enough for Mr. Trump, who in his afflatus thinks he can run monetary policy. Has he considered what a politically malleable Fed might do when the progressive left takes charge under another President?

“Of course he hasn’t. Mr. Trump is all about short-term tactics and personal political advantage. Institutional integrity bores him.  But if he succeeds in taking over the Fed, he and Republicans will own the results and whatever inflation returns.”

[Ed. I had to look up “afflatus,” which means a divine creative impulse or inspiration.]

Today, Friday, a federal judge signaled that she will move quickly to rule on whether the president acted unlawfully in moving to fire Cook.

But Judge Jia Cobb in Washington, D.C., court didn’t issue any decisions from the bench during a two-hour hearing, asking lawyers for Cook and the administration to set a schedule for the case.

To be continued….

—

Lastly, on the trade front, South Korea’s new president, Lee Jae Myung, came to the White House Monday looking for a better trade deal than the 15% tariff on South Koreans goods President Trump slapped on the nation, and Lee did not get any improvement on the deal.

But the biggest story was Trump formally imposing a crushing 50% tariff on Indian goods to punish the country for buying Russian oil, upending a decades-long push by Washington to forge closer ties with New Delhi as a counterweight to China.

The new tariffs, which took effect at 12:01 a.m. in Washington on Wednesday, doubled the existing 25% duty on Indian exports.  The levies will hit more than 55% of goods shipped to the U.S. – India’s biggest market – and hurt labor-intensive industries like textiles and jewelry the most.  Key exports like electronics and pharmaceuticals are exempt, sparing Apple’s massive new factory investments in India for now.

New Delhi has defended its ties with Russia and has called the U.S.’s actions “unfair, unjustified and unreasonable.”

The tariffs have stunned Indian officials and follow months of trade talks between New Delhi and Washington.  India was among the first countries to open trade talks with the administration, but its own high tariffs and protectionist policies in sectors such as agriculture and dairy have frustrated U.S. negotiators.

Indian Prime Minister Narendra Modi is in China this weekend for his first visit in seven years – a trip that puts him in the company of President Xi Jinping and Russian President Vladimir Putin as India’s ties with Washington crater.

“Indian trust in the U.S. is shattered,” South Asia analyst Michael Kugelman said. “I’m not sure whether U.S. officials fully realize how much trust they have squandered in such a short time.”

Europe and Asia

Nothing of import on the data front from the eurozone this week, but markets in France were roiled as the country’s minority government looked increasingly likely to be ousted next month.

The three main opposition parties said they would not back a confidence vote which Prime Minister Francois Bayrou announced for September 8 over his plans for sweeping budget cuts.

The previous government under Prime Minister Michel Barnier also fell to a no-confidence vote in December, underscoring persistent political instability in the eurozone’s second-largest economy.

“The country needs the stricter budget measures in order to contain debt, and that is creating a lot of political problems in France.  It’s a déjà vu for the French politics,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“In the medium to long run, we think that the French political schisms will eventually ease, but they will not necessarily bring the necessary budget outlook and predictability to go back into France with full confidence.” [Reuters]

A majority of French people want new parliamentary and presidential elections, opinion polls showed on Wednesday, with Prime Minister Bayrou’s government looking likely to collapse.

Two thirds of the people surveyed in two of the three polls also wanted President Emmanuel Macron to resign, and the far-right National Rally (RN) got the most backing to lead the next government in one poll, although not a majority.

So there is deepening dissatisfaction with politics in France, which has had only minority cabinets and fragmented parliaments since Macron’s re-election in 2022.

Bayrou’s surprise announcement on Monday that he will seek a confidence vote has backfired.

Macron said he does not want a snap election and has ruled out resigning.

Turning to Asia…nothing of note from China, with August PMI data coming out over the weekend.

Japan reported on retail sales for July, up just 0.3% year-over-year, way worse than expected, while July industrial production fell 0.9% Y/Y.

Street Bytes

–The Dow Jones and S&P 500 hit new all-time highs on Thursday (45636 and 6501, respectively).  But owing to a sloppy Friday with renewed AI-related tech fears, the three major averages ended the week fractionally down…the Dow off 0.2%, the S&P 0.1% and Nasdaq 0.2%.

It’s been a helluva run…a pause can be expected, and September is historically choppy, if not crappy.  [I’m gunning for a Pulitzer.]

—U.S. Treasury Yields

6-mo. 3.98%  2-yr. 3.61%  10-yr. 4.22%  30-yr. 4.91%

Bonds didn’t move much this week, helped by the PCE release being a non-event.  Next week’s jobs reports, however, could lead to some volatility in Treasuries.

That said the 2-year is back down to recent lows, and that’s because of the belief a September rate cut is in the cards, while the 30-year yield is rising, reflecting long-term inflation concerns.

And that’s essentially the conundrum we find ourselves in.  The Fed is going to cut, even though core PCE is nowhere near 2%…and the impact of tariffs is just beginning, sports fans.

—Oil futures rose Monday as traders weighed geopolitical risks and monetary policy signals. Prices were supported by fears of Russian supply disruptions after fresh Ukrainian drone strikes on energy infrastructure, including a blaze at the Ust-Luga export terminal and a fire at the Novoshaktinsk refinery.  Uncertainty over stalled peace talks, alongside Trump’s threat of new sanctions on Russia and higher tariffs on Indian imports, added to supply concerns.

Meanwhile, if the Fed cuts rates in September, that could boost demand.

But overall, weaker global economic growth could cap consumption, and OPEC+’s plan to restore some output has revived oversupply worries.

At the end of the week, we were basically unchanged at around $64 on West Texas Intermediate.

—Nvidia shares fell just a bit as the world’s most valuable public company continued to capitalize on strong demand for AI computing, but the company’s lackluster outlook stoked jitters about future demand.

Sales in the fiscal second quarter hit $46.7 billion, up 56% and roughly in line with analyst estimates of $46.1bn. Revenue from the important data-center segment, which includes sales of the company’s most powerful chips, used to train and refine artificial-intelligence models, also rose 56% to $41.1 billion, but came in slightly lower than the $41.3 billion that the Street expected.

The company said that about half of its data-center revenue came from large cloud service providers during the quarter

Quarterly net income was $26.4 billion, 59% higher than a year ago.  The company predicted revenue of $54 billion for the third quarter, slightly higher than consensus of $53.14 billion.

After several blockbuster quarters, the revenue projection was seen as underwhelming and stoked worries that growth in demand for AI chips might be hitting a plateau.

Surging demand from the fast-growing AI industry is largely responsible for Nvidia’s strong results.  As software companies like OpenAI, Microsoft, Amazon.com, Alphabet and Meta Platforms continue to train ever more powerful AI models, they continue to buy large quantities of Nvidia’s chips.  The sales growth has offset hiccups in China.

Jensen Huang, Nvidia’s CEO, said he anticipates that the largest AI companies will spend $3 trillion to $4 trillion over the next five years, based on their current level of capital expenditures, and suggested that Nvidia could capture as much as 70% of that revenue.

“We’re really an AI infrastructure company,” Huang said.  “We need to squeeze as much out of that factory as possible.”

Sales of the company’s new Blackwell line of graphics processing units – its most powerful chips yet – increased by 17% compared with the previous quarter, a sign that “demand is extraordinary,” Huang said.  The company named Disney, Hitachi, Hyundai Motor and SAP as among its first customers for one of its Blackwell-edition servers.

Nvidia’s stock has nearly doubled since early April, when it closed at a 12-month low of less than $95 a share. That month, as the U.S.-China trade war intensified, the Trump administration banned the company from selling its H20 chips – which were designed to comply with U.S. export restrictions – to Chinese customers.

The president then changed his mind in August and allowed H20 sales to resume after Huang visited the White House and pledged to give the federal government a 15% cut of AI-chip revenue earned in China.  Rival Advanced Micro Devices reached the same agreement for its MI308 chip, which had also been banned.

Nvidia halted production of the H20 after the Chinese government urged customers not to buy it.  President Trump said in a meeting at the White House earlier this month that his administration would potentially approve a Blackwell chip for sale in China if its capabilities were reduced 30% to 50%.

Nvidia is urging the government to approve such a chip.  Blackwell is “the new standard for AI inference,” CFO Collette Kress said.  “We are at the beginning of an industrial revolution that will change every industry.”

The company said it didn’t sell any new H20 chips in the July quarter, and it is assuming no revenue for the H20 in the third quarter either, Kress said Wednesday, because of ongoing geopolitical issues.  The lower-than-expected data-center revenue was partly the result of a $4 billion reduction in H20 sales in the quarter.

Jensen Huang said: “This year is a record-breaking year. I expect next year to be a record-breaking year” as well.

But the shares fell Friday after China’s biggest cloud-computing company, Alibaba, announced it had developed a new chip that is more versatile than its older chips; all part of Beijing’s efforts to build up their own arsenal of homegrown technology and fill the Nvidia void.

Adam Clark of Barron’s had an interesting point about Nvidia, and how it “might not be immune to price increases.  The chip maker is benefiting from a huge expansion of data centers housing its hardware but their power demands are driving up electricity prices, threatening to raise rates for consumers.  A political backlash is one of the biggest threats to the AI boom.”

—Intel said on Monday that the 10% stake by the U.S. government in the chipmaker could pose risks to its business, from potentially harming international sales to limiting its ability to secure future government grants.

The company laid out the new “risk factors” in a securities filing after the government decided to convert government grants into an equity stake in Intel, the latest extraordinary intervention in corporate America by President Trump.

Intel shares will be bought with the $5.7 billion in unpaid grants from the Biden-era CHIPS Act and $3.2 billion awarded to Intel for the Secure Enclave program, a special military project, also given under former President Biden.

Intel’s non-U.S. business may also be impacted by the U.S. government being a significant stockholder as this could subject the company to additional regulations or restrictions such as foreign subsidy laws in other countries, the filing said.

Sales outside the U.S. accounted for 76% of its revenue for the fiscal year ended December 28, 2024, while revenue from China contributed 29% to total revenue.

Monday morning, after watching news coverage criticizing the government’s stake in Intel, Trump posted on Truth Social:

“I PAID ZERO FOR INTEL, IT IS WORTH APPROXIMATELY 11 BILLION DOLLARS.  All goes to the USA. Why are ‘stupid’ people unhappy with that? I will make deals like that for our Country all day long.  I will also help those companies that make such lucrative deals with the United States.  I love seeing their stock price go up, making the USA RICHER, AND RICHER.  More jobs for America!!!  Who would not want to make deals like that?”

—Korean Air announced a $50 billion deal to buy more than 100 Boeing aircraft and several spare engines and obtain engine maintenance for 20 years.

The deal was formalized at a signing ceremony Monday in Washington as South Korean President Lee Jae Myung met with President Trump.

The deal includes $36.2 billion for 103 next-generation Boeing aircraft, with the balance for spare engines and maintenance service contracts through GE Aerospace and CFM International.

—TSA checkpoint numbers vs. 2024

8/28…128 percent of 2024 levels
8/27…113
8/26…79
8/25…93
8/24…128
8/23…82
8/22…100
8/21…118

–The TSA said it expects to screen nearly 17.4 million people at U.S. airport security checkpoints between this Thursday, Aug. 28, and Wednesday, Sept. 3.  That includes a projected 2.91 million people this Friday, marking the holiday’s biggest expected airport travel day.  So we’ll see next week if the numbers match up.

This year’s estimate beats the 17.03 million people TSA screened over the same period last Labor Day weekend, which was its busiest-ever for the holiday, according to revised TSA figures.  TSA screened 2,913,547 passengers the Friday before Labor Day 2024.

–The Federal Aviation Administration said as of the week of Aug. 18, it had seen more than five million flights since Memorial Day weekend, “making it the busiest summer in 15 years.”

–As alluded to above, last week Walmart CEO Doug McMillon said the impact of tariffs has been “gradual enough that any behavioral adjustments by the customer have been somewhat muted.”  But he warned that the company has seen costs increase each week as it replenishes its inventories at post-tariff price levels – a trend that McMillon expects to continue into the third and fourth quarters.

—Editorial / Wall Street Journal

“House Ways and Means Chairman Jason Smith issued a press release last week based on his op-ed in the Washington Examiner headlined ‘Trump’s trade agenda will fuel an economic boom.’  The Missouri Republican hails from the Farm Belt so we wonder if he has spoken with workers at Deere & Co.

“The farm equipment maker is an American manufacturer that Republicans says tariffs will help.  Maybe not.  The Moline, Illinois, company is laying off 238 workers at three factories in Moline, East Moline, and Waterloo, Iowa, in the coming weeks.

“This month the company reported a 26% drop in net income and 9% decline in sales, owing to lower commodity prices and higher tariffs.  ‘Tariff costs in the quarter were approximately $200 million, which brings us to roughly $300 million in tariff expense year to date,’ said director of investor relations Josh Beal.

“Deere expects the pretax damage from tariffs to reach $600 million in the current fiscal year, up from a previous forecast of $500 million. The hits are coming from President Trump’s tariffs on India, the European Union and his 50% border tax on steel and aluminum. The costs hit Deere’s earnings and ultimately employment. What was that again about the new GOP and the working class?

“This tariff damage isn’t surprising since many U.S. manufacturers rely to some extent on imports of components and raw materials.  Caterpillar Inc., another great U.S. manufacturer, has said tariff-related costs could reach $1.5 billion in 2025, including as much as $500 million in the third quarter.  Tariffs raise costs, and their uncertain implementation has customers of the equipment makers more cautious in their investments.

“Tariff cheerleaders point to promised new investments in the U.S. as a sign of a future boom.  ‘This is what happens when the world’s largest market demands that its trading partners stop taking advantage of American workers and farmers and start providing fair and reciprocal access to their markets,’ Mr. Smith writes.

“But U.S. trade policy is now far from reciprocal as Mr. Trump imposes tariffs even on countries (50% on Brazil) with which the U.S. has a trade surplus.  The cheerleaders also ignore the damage across the economy in higher costs from new border taxes and fewer sales from retaliatory trade measures.

“One reason the Farm Belt is struggling is lower exports to China despite the recent tariff truce.  The U.S. exported $5.5 billion in farm goods to China in the first half of this year, roughly half as much as in the same period a year earlier. The overall U.S. agricultural trade deficit hit a record in the first half of this year, rising to $28.6 billion.  Farm exports used to be an American strength.

“Perhaps the Golden Age of tariffs is out there on the horizon where only someone as far-seeing as Mr. Smith can detect it. But as the midterm elections approach, he’d better hope that the incentive boost from the tax and budget bill he helped write offsets the economic harm to workers like those at the Deere factories in Waterloo and Moline.”

—SpaceX pulled off a successful test launch of its Starship rocket Tuesday night, managing a more complete mission after multiple setbacks earlier this year.

The Starship spacecraft flew through space after launching from the company’s South Texas complex Tuesday around 7:30 p.m. ET. The vehicle successfully deployed a batch of dummy Starlink satellites and re-entered Earth’s atmosphere, facing intense heat and forces, before splashing down in the Indian Ocean.

The mission marked the 10th launch of Starship since SpaceX began testing the 403-foot-tall rocket in 2023.

SpaceX founder Elon Musk has much riding on the rocket, envisioned to one day carry satellites, scientific devices and, eventually, astronauts, to first the moon, then Mars.

Separately, Musk targeted Apple and OpenAI in an antitrust lawsuit alleging that the iPhone maker and the ChatGPT maker are teaming up to thwart competition in artificial intelligence.

Two weeks ago, Musk accused Apple of unfairly favoring OpenAI and ChatGPT in the iPhone’s app store rankings for top AI apps.

The 61-page complaint casts OpenAI as a threat to humanity bent on putting profits before public safety as it tries to build on its phenomenal growth since the late 2022 release of ChatGPT.

Apple’s own AI shortcomings may be helping drive more usage of ChatGPT on the iPhone, providing OpenAI with invaluable data that’s unavailable to Grok and other would-be competitors because it’s currently an exclusive partnership.

As for Musk’s Tesla, months after he predicted a “major rebound” in Tesla sales, they plunged 40% in July in the 27 European Union countries compared with a year earlier even as sales overall of electric vehicles soared, according to the European Automobile Manufacturers’ Association.  Meanwhile, sales of Chinese rival BYD continued to climb fast, grabbing 1.1% market share of all car sales in the month versus Tesla’s 0.7%.

Overall, Tesla sold 6,600 cars in July in the EU versus 11,465 a year ago, even as battery electric vehicles sales overall soared 39%.

For the first seven months of the year, Tesla sales have fallen 44% across the pond.

—Eli Lilly shares surged Tuesday after the pharma giant posted fresh data on its experimental weight-loss pill.

Lilly said the latest trial showed the medication resulted in up to 10.5% weight-loss in overweight or obese patients with Type 2 diabetes in a late-stage trial as it continues to battle it out with rival Novo Nordisk for market share in the lucrative GLP-1 space.

Following the results, “we are moving with urgency toward global regulatory submissions to potentially meet the needs of patients who are waiting,” said Kenneth Custer, president of Cardiometabolic Health in a statement Tuesday. “If approved, we are ready to offer a convenient, once-daily pill that can be scaled globally.”

The data readout for the pill orforglipron comes less than three weeks after the drugmaker released results of a similar trial in patients with obesity or overweight without diabetes which didn’t meet investors’ expectations and sent shares falling 14% on the day.  That study showed a mean body weight reduction of 12.4% over 72 weeks for patients on the highest dose, compared with patients on the placebo, who lost 0.9%.

Even if the latest results showed less pronounced weigh reduction than in the previous trial, it isn’t much of a concern for investors because obese and overweight people with diabetes often find it more challenging to lose weight.

Results will also ramp up the battle for market dominance with Novo, which in May submitted in pill form to the Food and Drug Administration.  A decision is expected on the medication in the fourth quarter.

Lilly said the safety profile of orforglipron was consistent with injectable GLP-1 medicines such as its Mounjaro and Zepbound drugs.  While the pill has shown less weight-loss than the jabs, it is expected that an oral version will be favored by consumers as well as easier to scale and expand worldwide – partly because the pill doesn’t have to be shipped cold as injectable versions do.

—HP Inc. gave a profit outlook for the current quarter that may beat expectations.  In the fiscal third-quarter ended July 31, HP reported sales climbed 3.1% to $13.9 billion.  Adjusted profit was 75 cents a share, the Street at $13.7 billion and 74 cents, respectively.

Sales of PCs rose 6% in the quarter and the company expects “mid-single digit” growth to continue in the current period, with adjusted earnings of 87 to 97 cents a share.

Business customers are upgrading to machines with Microsoft’s Windows 11 and new AI PCs, which now make up more than 25% of HP’s product mix, a milestone reached a quarter ahead of the company’s target.  Consumer PC sales were also better than expected last quarter.

“We feel confident about the fact that PCs will continue to grow,” CEO Enrique Lores said.  “AI PCs and Windows 11 are going to continue to drive demand.”

To cope with the impact of tariffs, HP has adjusted to build almost all of its products sold in North America outside China and also increased some prices, Lores said.  Still the industry is being buffeted by economic uncertainty and higher costs tied to President Trump’s trade policies.

—Dell Technologies shares fell hard Friday after the company reported adjusted second quarter earnings after the bell Thursday that came in at $2.32 a share, ahead of the $2.31 analysts’ expected.  Revenue rose 19% to $29.78 billion, above consensus.

But the view for the third quarter was worrying to investors. Dell anticipates adjusted EPS to be $2.45 at the midpoint, below analysts’ forecast of $2.51.

For the full year, the Round Rock, Texas, tech company expects revenue to be between $105 billion and $109 billion, up from a prior range of $101 billion to $105 billion.

Dell anticipates profit from its infrastructure and client solutions groups will grow, specifically within its AI server business.  The company has logged growth in both AI and traditional server shipments, and raised its server shipment guidance for the year.

—Kohl’s stock fell in late-day trading Tuesday in response to a report that the company may be struggling to make vendor payments.

Kohl’s is asking some vendors for more time to settle invoices, Bloomberg reported Tuesday.

But then Wednesday the company reported second-quarter adjusted earnings per share of 56 cents that handily beat estimates of 29 cents.  And while comparable sales fell 4.2%, that was smaller than estimates of a 5% decline.

And the company guided higher for the year with earnings of 50 cents to 80 cents, compared with its earlier wide range of 10 cents to 60 cents.

“We were able to expand our gross margins, reduce our inventory, and lower our expenses, leading to solid second-quarter earnings,” said interim-CEO Michael Bender.

As part of its restructuring, the company earlier had announced it was closing an e-fulfillment center in Ohio and downsizing its in-store jewelry business, as well as trimming inventory of its own brands.

The stock rose 20% at the open Wednesday.

—Cracker Barrel’s beloved “old timer” is coming back. The homestyle restaurant chain scrapped its new logo Tuesday following pressure from President Trump and an outcry on social media.

“Our new logo is going away and our ‘Old Timer’ will remain,” the company said.  The “old Timer” is founder Dan Evins’ Uncle Herschel, a man in overalls leaning on a barrel who had appeared on the logo since 1977.

The about-turn came just hours after Trump weighed in on the disastrous rebrand.  “Cracker Barrel should go back to the old logo, admit a mistake based on customer response (the ultimate Poll), and manage the company better than ever before,” the president wrote on Truth Social.

Cracker Barrel unveiled the new logo, which it said was “rooted ever more closely to the iconic barrel shape and word mark that started it all,” on Aug. 19. The removal of Uncle Herschel sparked a loud backlash from conservatives including Donald Trump Jr. with threats to boycott the chain because of what some termed a “woke” move.

The move then sparked a sharp selloff in Cracker Barrel stock.

President Trump posted after the decision to go back to the old branding: “All of your fans very much appreciate it. Good luck into the future.”

The shares rallied.

—Best Buy’s fiscal second quarter topped Wall Street’s expectations on nearly all fronts, with the electronics retailer notching its strongest same-store sales growth in years.

But the stock fell 6%, before rallying back a little, as investors were disappointed that the company did not raise guidance for the full year.

For the quarter ended Aug. 2, Best Buy reported adjusted earnings of $1.28 a share on $9.44 billion in revenue. The Street was at $1.21 on $9.23bn.

Same-store sales grew 1.6% from a year ago in the quarter, topping consensus estimates for a 0.5% decline and marking the company’s highest growth in three years, said CEO Corie Barry.

The company expects same-store sales to grow at a similar pace in the third quarter, compared with analysts’ expectations for sales growth to be flat.

But the company continues to expect revenue to range between $41.1 billion to $41.9 billion for the full year, with adjusted earnings per share projected to range from $6.15 to $6.30, and it’s the failure to raise the numbers that caused the shares to fall, the company also citing tariff uncertainty.

—Dick’s Sporting Goods shares, like Best Buy’s, also fell even after the sporting-goods retailer reported better-than-expected quarterly earnings ahead of its merger with Foot Locker.

Adjusted earnings for the fiscal second quarter came in at $4.38 a share with analysts’ at $4.30.  Comparable-store sales jumped 5% from the prior year, well ahead of the Street at 3.4% growth.

The company raised its fiscal-year guidance for same-store sales growth to between 2% and 3.5%, up from a range of 1% to 3% previously.  Fiscal-year per-share earnings are now expected to total between $13.90 and $14.50, up from a prior forecast of $13.80 to $14.40.

But the beat and raise didn’t give the stock a boost ahead of the Foot Locker merger, which is expected to close on Sept. 8.

Foot Locker’s second-quarter earnings, reported Wednesday, missed estimates, but there were some positive signals in North America.

–The ending today of the de minimis rule that for years has allowed packages worth $800 or less to enter the country tariff-free is killing a ton of small businesses around the world and it’s so unfortunate.

—The Trump administration is planning to cancel the approval of yet another offshore wind farm.  On the heels of its move to block a major project off the coast of Rhode Island, court filings indicate the Interior Department plans to block another off the coast of Maryland.

“We’re not allowing any windmills to go up,” President Trump said at Tuesday’s Cabinet meeting.  “They’re ruining our country. They’re ugly, they don’t work, they kill your birds.”

Last Friday, the White House declared a stop to the massive wind farm off Rhode Island that is 80 percent complete. Shares of Orsted, the project’s developer, plunged 16 percent on Monday and thousands of jobs are at risk.  The move has drawn warnings of broad impacts from regional grid operators and power companies.

Meanwhile, residential electricity rates have risen about 30% since 2021 – and 5.5% in the past year alone, twice as fast as overall inflation in the same span.  The Energy Information Administration projects that residential rates will rise by roughly 6% in 2026.

President Trump campaigned on cutting electricity prices in half – an impractical goal – and he’s blaming rising prices on renewable energy like wind turbines and solar panels.

But states that depend on large amounts of renewables – such as Texas and Iowa – have relatively low electricity prices. And some states with low amounts of renewable resources, such as Connecticut, have very high electricity rates.

—Paramount is looking to cut between 2,0000 to 3,000 jobs by early November, after the completion of its merger with production studio Skydance, Variety reported on Friday.

Paramount Global and Skydance Media completed their $8.4 billion merger – announced more than a year ago – earlier this month and the combined entity was renamed Paramount Skydance Corp.

The layoffs will affect staff across divisions and the numbers could vary, the Variety report said.

As of December 2024, Paramount had nearly 18,600 full- and part-time employees, and 3,500 project-based staff.

—Kroger is laying off nearly 1,000 corporate workers, Bloomberg reported, citing a memo sent to staff by interim CEO Ron Sargent.

Foreign Affairs

Russia/Ukraine:

—Vice President Vance said on “Meet the Press” on Sunday that he still believes the administration can broker peace between Russia and Ukraine, despite the lack of progress.

Vance said he believes “the Russians have made significant concessions to President Trump for the first time in three and a half years of this conflict.”

“They’ve actually been willing to be flexible on some of their core demands,” Vance added. “They’ve talked about what would be necessary to end the war.  Of course, they haven’t been completely there yet, or the war would be over.  But we’re engaging in this diplomatic process in good faith.”

Speaking on the same program, though, Foreign Minister Sergei Lavrov poured cold water on Vance’s optimism.  Lavrov lowered expectations that Trump will usher in a swift end to the war in Ukraine.

He said there was no meeting planned between Putin and Zelensky and that key issues – including security guarantees for Ukraine and territorial disputes – remain unresolved.  Lavrov told NBC that Ukraine “has the right to exist” but added a caveat to that right related to Ukraine’s willingness to cede territory.

“Irrespective of when this meeting might take place, and that must be very well prepared, the issue of who is going to sign the deal on Ukrainian side is a very serious issue,” Lavrov claimed.

“We recognize him as the de-facto head of the regime, and in this capacity we are ready to meet with him. But when it comes to signing legal documents – we would need very clear understanding by everybody that the person who is signing is legitimate.”

Vice President Vance said in his interview that the Russians agreed in Anchorage that Zelensky is the rightful leader of Ukraine.

“They’ve recognized that they’re not going to be able to install a puppet regime in Kyiv, and importantly, they’ve acknowledged that there is going to be some security guarantee to the territorial integrity of Ukraine,” Vance said of the concessions Russia agreed to in Anchorage.

—Monday, speaking to reporters, President Trump said on the topic of security guarantees: “We haven’t even discussed the specifics.”  The president was asked, “You rule out boots on the ground in Ukraine, but how would air support as part of a security guarantee be any different?”  He replied, “Well, you don’t know what security guarantee is because we haven’t even discussed the specifics of it, and we’ll see.  Number one, Europe is going to give them significant security guarantees and they should because they’re right there, but we’ll be involved.  From the standpoint of backup, we’re going to help them. And I think we get a deal and I think we will, but if we get a deal, you’re not going to – I don’t believe you’re going to have much of a problem.”

Oh brother.  I thought the big takeaway from Anchorage was Russia’s concessions on security guarantees?

—Ukraine launched attacks against Russian energy facilities last weekend as President Trump has moved closer to Vladimir Putni’s position than that of his European allies.  Russia said Novatek PJSC’s fuel terminal at the Baltic port of Ust-Luga caught fire early Sunday after wreckage from downed drones hit the facility.  Ust-Luga is on the Gulf of Finland, not far from Russia’s border with Estonia, and the debris ignited a huge blaze at the terminal.

Russian crude oil shipments to Hungary and Slovakia through the Druzhba pipeline were halted again last Friday, just two days after flows resumed following attacks by Ukrainian drones.

Gas stations have run dry in some regions of Russia after Ukrainian drones struck refineries and other oil infrastructure.

—Russian troops captured two villages in the Dnipropetrovsk region, the first settlements they have taken in the south-central Ukrainian area in 3 ½ years of war, according to the battlefield map maintained by DeepState, a Ukrainian group with ties to the military.

The villages, near the intersection of the neighboring regions of Donetsk and Zaporizhzhia, are not militarily significant, but their occupation is a sign of the pressure that Russian troops are trying to exert on Ukrainian forces along that stretch of the front line.  And their capture means yet another morale hit for Ukrainian troops already struggling with being outnumbered and out-droned.

The two settlements were tiny, with populations of only about 100 or less.

While Russia does not intend to try to seize all of the Dnipropetrovsk region, holding territory there could be useful if peace negotiations between Russia and Ukraine move forward.

Ukraine acknowledged that Russia’s military had crossed into the industrial region and is trying to establish a foothold, but Ukraine said the advance had been stopped.

—More than 100,000 Ukrainian homes were left without power after further Russian drone attacks on energy infrastructure, Zelensky posted on Telegram Wednesday.  The Poltava, Sumy and Chernihiv regions were affected.  A school in the Kharkiv region and a high-rise building in Kherson were also hit, he said.

“New steps are needed to put pressure on Russia to stop the strikes and truly guarantee security. We are working with partners for such pressure,” Zelensky added.

And then overnight Wednesday, Russia launched a massive attack on Kyiv, killing at least 23, including four children, and wounding at least 50 more.

Russia fired nearly 600 drones, two Kinzhal and nine Iskander-M missiles and 20 Kha-101 cruise missiles in strikes across the country. It said 563 drones and 26 of the missiles were shot down.  It was the second largest assault this year, according to Bloomberg calculations based on Ukrainian Air Force data.

President Zelensky said the attacks showed that Russia had no intention of negotiating an end to the war, despite the recent intervention of Donald Trump.

“These Russian missiles and attack drones today are a clear response to everyone in the world who, for weeks and months, has been calling for a ceasefire and for real diplomacy,” he said on social media.  “Russia chooses ballistics instead of the negotiating table.”

Officials reported impacts at more than 20 locations, including the destruction of part of a five-story building in the east of Kyiv.

Zelensky said there should be an international response and called for further sanctions against Russia, including from China.  “We expect a reaction from China to what is going on. China has repeatedly called for not expanding the war and for a ceasefire,” he added.

But hours earlier, Beijing announced Putin would be attending a military parade with President Xi Jinping next week.

Finland President Alexander Stubb wrote on social media Thursday after Russia’s latest deadly attack: “Russia has no intentions of ending this war.” And “Russia has not changed its main strategic aim of destroying the independence, sovereignty and territorial integrity of Ukraine,” he stressed, and added, “Finland will continue to support Ukraine with all necessary diplomatic, financial and military efforts.  For as long as it takes.”

That’s Finland. Which shares a very lengthy border with Putin’s Russia.

Ukraine did hit two more Russian oil refineries on Thursday.

—President Trump, talking to reporters Monday, said he believed Putin’s dislike of President Zelensky is holding up a meeting between the pair.

“He doesn’t like him,” Trump said. ‘I have people I don’t like, I don’t like to meet with them.”

And Trump repeated: “Every conversation I have with (Putin) is a good conversation. And then, unfortunately, a bomb is loaded up into Kyiv or someplace, and then I get very angry about it.”

Tuesday, Trump warned of “an economic war” if he can’t secure an end to the fighting, saying he had “very serious” consequences in mind.  “It’s going to be bad for Russia, and I don’t want that,” he said.

He is so full of it.  The Senate must act and force Trump’s hand.

Editorial / Wall Street Journal

“A durable peace in Ukraine could be one of President Trump’s most consequential achievements, but getting there is all the tougher when his Administration undermines his position.  He was right late last week in venting that President Biden ‘would not let Ukraine FIGHT BACK, only DEFEND.’  Yet is his own Administration doing much differently?

“Mr. Biden’s anxieties about escalation and reluctance to offer weapons contributed to the locked battlefield.   Mr. Trump’s criticism clearly suggested the U.S. might now take the gloves off and let Ukraine use more American long-range missiles to hit more targets deep in Russia. Such a warning could put pressure on Mr. Putin to sit down at the negotiating table, if the Russian thinks it’s credible.

“But the Journal reported [last] Friday that Mr. Trump’s Pentagon is preventing Ukraine from using the U.S. Army Tactical Missile System for precisely such long-range strikes.  Ukraine’s defenders, as under Mr. Biden, are losing the battle in the U.S. bureaucracy.  The Defense Department veto appears to be the latest masterwork of Elbridge Colby, the Pentagon strategy chief. Mr. Colby was also reportedly behind a pause in U.S. weapons shipments this summer that took Mr. Trump by surprise.

“Mr. Colby recently stepped on the President’s pledge that the U.S. would assist with security guarantees for Ukraine.  Mr. Colby’s message to a group of European allies: Forget it. Who’s on first here regarding U.S. Ukraine policy?  Is Mr. Trump running this show, or is it Vice President JD Vance’s man at the Pentagon?

“The Russians, meantime, are underscoring their intransigence.  Foreign Minister Sergei Lavrov took to American television over the weekend to decline a direct meeting between Mr. Putin and Ukraine’s Volodymyr Zelensky.  He issued his usual demands and once more implied Mr. Zelensky isn’t Ukraine’s legitimate leader.

“The ballyhooed Alaska summit seems to have come to nothing, except let Mr. Putin stave off further sanctions pressure.  Mr. Trump now says he needs another two weeks to figure out what to do.  He puts the onus on both sides. ‘I’ll see whose fault it is,’ he said.  ‘We’re going to see whether or not they have a meeting.’….

“At this point, Mr. Trump can certainly tell his voters that he tried mightily to talk Mr. Putin into peace. The effort failed. The next strategy, one that has worked for Mr. Trump in other parts of the world, is called maximum pressure. The way Mr. Trump can end the war is by getting Mr. Putin to conclude that the costs are too high for him to continue.”

John Bolton / Washington Examiner op-ed

“President Donald Trump’s Ukraine policy is no more coherent today than it was last Friday when his administration executed search warrants against my home and office. Collapsing in confusion, haste, and the absence of any discernible meeting of the minds among Ukraine, Russia, several European countries, and America, Trump’s negotiations may be in their last throes, along with his Nobel Peace Prize campaign….

“After the Putin-Trump meeting, Trump executed a stunning about-face. He said that, despite his pre-summit threats that sanctions would be imposed on Russia if Putin did not agree to a ceasefire, there would be no new U.S. sanctions or tariffs.  Moreover, Trump announced he no longer favored a near-term ceasefire but wanted instead to proceed directly to a final agreement.  Moscow and other capitals could hardly miss these U-turns.

“Trump’s subsequent Aug. 18 meetings in Washington with Ukrainian President Volodymyr Zelensky and several European leaders also occurred with dizzying speed. Emerging from that meeting, interrupted by a 40-minute Trump phone call to Putin, came the idea of a soon-to-follow bilateral meeting between Putin and Zelensky, perhaps joined at its conclusion by Trump, or with a follow-up trilateral meeting, presumably at which the three leaders would wrap up a final deal.  None of this was realistic, and no meeting appears likely anytime soon.

“A corollary mistake was the very high level of generality at which the major substantive issues were discussed.  National leaders often converse together in broad terms, but almost always after their subordinates have plowed through the same ground in much greater detail prior thereto.  Inevitably, this more-traditional ‘bottoms-up’ process takes longer than the pace Trump wanted.  Speaking in broad generalities may seem to enhance chances of reaching agreement, but they may instead merely paper over vast differences, possibly serious enough to derail discussions entirely. We are not necessarily at that point, but today, there is no clear path ahead.”

Israel/Gaza: Twenty people were reported killed in Gaza on Monday, among them medical workers and journalists, when two Israeli strikes hit a hospital in what Prime Minister Benjamin Netanyahu later described as a “tragic mishap.”

The five journalists killed had worked for media outlets including Reuters, The Associated Press and Al Jazeera, according to their employers.

The Israeli military said it had carried out a strike in the area of Nasser Hospital, without saying what the target was.  In a statement, the military said that it regretted “any harm to uninvolved individuals.”

Later in the day, the office of the prime minister issued a rare statement of contrition about the strike.

“Israel deeply regrets the tragic mishap that occurred today at the Nasser Hospital in Gaza,” he said. “Israel values the work of journalists, medical staff, and all civilians. The military authorities are conducting a thorough investigation.  Our war is with Hamas terrorists. Our just goals are defeating Hamas and bringing our hostages home.”

The Israeli government has barred international journalists from entering Gaza to freely report throughout the war.  That has left much of the world relying on Palestinian journalists – reporting amid bombardment and hunger – to understand the situation in Gaza.

—Israeli planes and tanks pounded the eastern and northern outskirts of Gaza City, as Israeli leaders vowed to press on with a planned offensive on the city.  The actual assault on Gaza City is not expected to begin for a few weeks, leaving room for mediators from Egypt and Qatar to try to resume ceasefire talks between the sides.

Protests against the war continue in Israel, ten of thousands in a demonstration Tuesday, calling on Netanyahu to agree to a plan to end the war and call off plans to attack Gaza City.

China: North Korea’s Kim Jong Un will attend a military parade in Beijing next week alongside Russia’s Vladimir Putin, China has said, in what will be a landmark visit.

This is Kim’s first multilateral international meeting, making the event a diplomatic win for China’s Xi who has been pushing for a new Beijing-led world order.

China’s “Victory Day” parade will mark the 80th anniversary of Japan’s surrender in World War II and the end of the conflict.

Putin and Kim will be among 26 other heads of state who are expected to attend the parade. It’s the first time a North Korean leader has attended a Chinese military parade since 1959.

China is likely to display its latest weaponry, including hundreds of aircraft, tanks and anti-drone systems.

Earlier in the week, President Trump said he plans to meet with Kim, following a request from South Korea’s president to help bring about peace on the peninsula.

South Korean President Lee Jae Myung argued in an Oval Office meeting Monday that Trump is “the only person who can make progress on this issue.”

Iran: Australia accused Tehran of directing arson attacks on a Jewish business and a synagogue in Australia last year and said it was severing diplomatic ties with the country and expelling its diplomats.

“These were extraordinary and dangerous acts of aggression orchestrated by a foreign nation on Australian soil,” Prime Minister Anthony Albanese said at a news conference in Canberra, the capital, where he was flanked by Australia’s top intelligence official, its foreign minister and its home affairs minister.

“They were attempts to undermine social cohesion and sow discord in our community,” he said.

A spate of violent attacks on Jewish businesses and institutions, which began late last year, has unnerved many people in Australia, which has the highest concentration of Holocaust survivors outside of Israel.

Mike Burgess, Australia’s head of intelligence, said a monthslong investigation had uncovered links between the two attacks and Iran’s Islamic Revolutionary Guards Corps, which Australia said it would designate as a terrorist organization.

Agents of the Revolutionary Guards used “a complex web of proxies to hide its involvement” in the attacks, Mr. Burgess said at the news conference.

Separately, Iran hasn’t yet agreed to give the United Nations atomic agency access to the country’s main enrichment sites, the agency’s chief said Wednesday, though a team of international inspectors recently returned following June’s Israeli and U.S. strikes.

The Pentagon says the attacks delayed Iran’s program by up to two years, but experts are still trying to pinpoint the status of Iran’s stockpile of enriched uranium and Tehran’s potential to rebuild its nuclear capability.

Rafael Grossi, director general of the International Atomic Energy Agency, told reporters in Washington that it was essential that inspectors visit those sites and that the agency was currently involved in talks with Iranian officials on how to do so.

“I would say our work has started,” said Grossi.  “We are not yet where I would like us to be.  I will not hide this.  But at the same time, as a diplomat, I am always working.”

Grossi said that the agency doesn’t believe there has been any major shipment of nuclear material from the sites since they were attacked by the U.S. and Israel, based on satellite photos and other information.

“We do not see or believe that there has been any major movement of material,” he said.

And then Thursday, the UK, France and Germany moved to reimpose all the international sanctions on Iran that had been lifted under the 2015 nuclear deal, a decision that European governments hope will compel Tehran to resume nuclear negotiations with the Trump administration.

The European countries said they had triggered the so-called sanctions snapback because of Iran’s broad breaches of the terms of the 2015 deal.  The U.S. left the agreement in 2018, but the three European countries, Iran, Russia and China remained part of it.

The decision on Thursday triggers a 30-day period after which Iran would once again face an array of international United Nations-backed economic, banking, weapons and trade sanctions that pummeled its economy before the 2015 deal was struck.  Renewed sanctions would effectively deal a final death blow to the 2015 deal.

Iran’s deputy foreign minister and nuclear negotiator, Kazem Gharibabdi, said that the triggering of the sanctions snapback would halt Iran’s discussions with the IAEA about international inspections of the country’s nuclear sites.

“The international community faces serious ongoing concerns regarding the lack of credible assurances that Iran’s nuclear program is peaceful,” the European countries said in a letter triggering the snapback process, adding that there had been “significant non-performance of its commitments” by Iran under the deal.

Random Musings

—Presidential approval ratings….

Gallup: New numbers…40% approve of President Trump’s job performance, while 56% disapprove.  35% of independents approve (Aug. 1-20).  The prior split was 37-59, 29 independents.

Rasmussen: 48% approve, 51% disapprove (Aug. 29).

A new Quinnipiac University poll released Wednesday found that Trump’s approval rating slid 3 percentage points since the last survey was conducted in July, now 37%, while 55% disapprove of his job performance.  Independents disapprove by a 58-31 margin.

—A poll by the UC Berkeley Institute of Governmental Studies, conducted for the Los Angeles Times, asked registered voters about the Governor Gavin Newsom-backed redistricting push favoring California Democrats.

When voters were asked whether they agree with California’s redistricting maneuver, 46% said it was a good idea, and 36% said it was a bad idea.

Slightly more, 48%, said they would vote in favor of the temporary gerrymandering efforts if it appeared on the statewide special election ballot in November.  Nearly a third said they would vote no, and 20% said they were undecided.

But director of the IGS Poll, Mark DiCamillo, said: “With ballot measures, you’d like to be comfortably above 50% because you got to get people to vote yes and when people are undecided or don’t know enough about initiatives, they tend to vote no, just because it’s the safer vote.”  [Ed. this is a great point.  I myself tend to vote ‘no’ on ballot initiatives I know nothing about.]

Among voters who regularly cast ballots in statewide elections, overall support for redistricting jumped to 55%, compared with 34% opposed.

[Last week I alluded to a poll that showed Californians did not approve of the gerrymandering initiative.]

—Officials in Denmark are reportedly aware that “at least three people with connections to President Donald Trump have been carrying out covert influence operations in Greenland,” the Associated Press reported Wednesday, relaying reporting from Danish public broadcaster DR.

As noted by the BBC: “DR’s report on Wednesday gave details of a visit by one American to Greenland’s capital Nuuk, saying he was seeking to compile a list of Greenlanders who backed U.S. attempts to take over the island. The aim would be to try to recruit them for a secession movement.”

Danish Foreign Minister Lars Lokke Rasmussen has summoned America’s top diplomat in Denmark, Mark Stroh, the U.S. charge d’affaires in Copenhagen, over the matter.  “Any attempt to interfere in the internal affairs of the Kingdom [of Denmark] will of course be unacceptable,” Rasmussen told Time magazine.

“It is important for us to speak out very clearly against the United States,” Rasmussen told reporters Wednesday. He called the allegations “completely unacceptable,” and added, “If anyone thinks they can influence it by creating a ‘fifth column’* or that type of activity, then it is contrary to the way states cooperate.”

*A ‘fifth column’ being a group of people seeking to undermine a nation from within.

—Trump musings on Truth Social….

Sunday evening: “I just watched Sloppy Chris Christie be interviewed on a ratings challenged ‘News’ Show, ‘This Week With George Slopadopolus,’ on ABC Fake News (By the way, what the ‘hell’ happened to Jonathan Karl’s hair? He looks absolutely terrible!  It’s amazing what bad ratings, on a failed television show that was forced to pay me $16,000,000, can do to one’s appearance!).  Can anyone believe anything that Sloppy Chris says? Do you remember the way he lied about the dangerous and deadly closure of the George Washington Bridge in order to stay out of prison, at the same time sacrificing people who worked for him, including a young mother, who spent years trying to fight off the vicious charges against her. Chris refused to take responsibility for these criminal acts. For the sake of JUSTICE, perhaps we should start looking at that very serious situation again?  NO ONE IS ABOVE THE LAW!  Thank you for your attention to this matter.  President DJT.”

Sunday evening: “Except what is written and broadcast in the Fake News, I now have the highest poll numbers I’ve ever had, some in the 60’s and even 70’s.  Thank you.  MAKE AMERICA GREAT AGAIN!!!”

Sunday evening: “Despite a very high popularity and, according to many, among the greatest 8 months in Presidential History, ABC & NBC FAKE NEWS, two of the worst and most biased networks in history, give me 97% BAD STORIES. IF THAT IS THE CASE, THEY ARE SIMPLY AN ARM OF THE DEMOCRAT PARTY AND SHOULD, ACCORDING TO MANY, HAVE THEIR LICENSES REVOKED BY THE FCC.  I would be totally in favor of that because they are so biased and untruthful, an actual threat to our Democracy!!! MAGA”

Sunday evening: “Why is it that ABC and NBC FAKE NEWS, two of the absolute worst and most biased networks anywhere in the World, aren’t paying Millions of Dollars a year in LICENSE FEES.  They should lose their Licenses for their unfair coverage of Republicans and/or Conservatives, but at a minimum, they should pay up BIG for having the privilege of using the most valuable airwaves anywhere at anytime!!! Cooked ‘journalism’ should not be rewarded, it should be terminated!!!”

Earlier in the day, Trump wrote a long screed on why Roger Clemens must be inducted into the Baseball Hall of Fame… “NOW!”

But regarding Chris Christie, he had been discussing Trump’s connection to recent FBI searches of the Maryland home and Washington office of John Bolton, a national security adviser in the first Trump term.

The 2013 “Bridgegate” closures created days of traffic jams, and the scandal tarnished Christie’s reputation and helped to destroy his 2016 presidential candidacy.  He has long denied any knowledge of the plan.

It didn’t help that as a federal prosecutor, Christie also led the prosecution that resulted in the 2005 conviction of Charles Kushner, the father of President Trump’s son-in-law and former adviser, Jared Kushner.  Trump pardoned Kushner in 2020 and named him ambassador to France earlier this year.

In 2016, two of Christie’s associates were convicted of wire fraud and other federal charges for their roles in the bridge closure, but the Supreme Court unanimously overturned the convictions four years later.  Trump said at the time that the court’s decision was a “complete and total exoneration”’ of Christie, who was not charged in the case, “and all others involved.”

—Editorial / Wall Street Journal

“President Trump promised voters during his campaign for a second term that he had bigger things on his mind than retribution against opponents. But it is increasingly clear that vengeance is a large part, maybe the largest part, of how he will define success in his second term.

“His revenge campaign took an ominous turn Friday as FBI agents raided the home and office of Mr. Trump’s first-term national security adviser John Bolton.  They brought two broad warrants to search the ‘premises.’  Agents showed up unannounced at his Bethesda, Md., home at 7 a.m.  They confiscated his wife Gretchen’s phone because it was visible and not on her person.  Mr. Bolton had already left for his office, which is where FBI agents greeted him….

“It’s hard to see the raid as anything other than vindictive.  Mr. Bolton fell out of Mr. Trump’s favor in the first term and then wrote a book about his experience in the White House while Mr. Trump was still President.  Mr. Trump tried and failed to block publication.  The President then claimed Mr. Bolton had exposed classified information, though the book had gone through an extensive pre-publication scrub at the White House for classified material.

“The book investigation faded away under President Biden, but now it looks as if (FBI director Kash) Patel is reviving it.  Whether Mr. Trump ordered the FBI probe or not doesn’t matter.  Mr. Patel knows what the President thinks about Mr. Bolton, and the President’s minions in Trump II don’t serve as the check on his worst impulses the way grown-ups did in his first term.  The presidential id is now unchained.

“Mr. Trump made clear that he was out for blood against Mr. Bolton when he pulled the former adviser’s protective detail after his re-election.  Mr. Bolton is widely known as a defense hawk, and in 2022 the Justice Department charged an Iranian national it said planned to murder him….

“Mr. Bolton has had to pay for his own personal security, though he had served at the behest of the President. This is the kind of gratuitous viciousness that has increasingly defined Mr. Trump’s return to office.

“It’s unlikely that Mr. Bolton broke any laws on national secrets, and he certainly didn’t share any with us over our long association with him. But perhaps Mr. Trump intends for the process itself to be the punishment even if there is ultimately no criminal charge.  Mr. Bolton has to pay for legal counsel, and his family has to endure the anxiety of being under federal government siege.

“Mr. Bolton has continued to speak candidly about Mr. Trump’s second-term decisions, pro and con, including in these pages this week.  The President may also hope the FBI raid will cause Mr. Bolton to shut up, though knowing him we can’t imagine that working.

“The real offender here is a President who seems to think he can use the powers of his office to run vendettas.  We said this was one of the risks of a second Trump term, and it’s turning out to be worse than we imagined.”

–The following was developing as I went to post last time and just wanted to get it down for the record.

Jeffrey Epstein’s imprisoned associate Ghislaine Maxwell told the Justice Department in an interview last month that she admired President Donald Trump and never observed him receiving massages or acting inappropriately, according to transcripts released last Friday.

“I never witnessed the president in any inappropriate setting in any way. The president was never inappropriate with anybody in the times that I was with him.  He was a gentleman in all respects,” Maxwell told Deputy Attorney General Todd Blanche during two days of interviews in Tallahassee, where she was serving a 20-year sentence for sex trafficking.

Early in the interview, Blanche asked Maxwell about her and Epstein’s relationship with Trump. Maxwell said she was friendly with the president and admired him from the time she met him in the 1990s.

“President Trump was always very cordial and very kind to me,” Maxwell said.  “And I just want to say that I find – I – I admire his extraordinary achievement in becoming the president now. And I like him, and I’ve always liked him.”

The president has denied any knowledge of Epstein’s crimes.

The government previously said that Maxwell lied repeatedly under oath leading up to her 2021 trial, and of course she has a strong interest in telling the government what it wants to hear.

Maxwell also offered no incriminating testimony about Epstein’s links to dozens of other prominent people – including former president Bill Clinton.

At one point during the interview, Blanche asked whether Epstein maintained a “client list” – a roster of famous people he knew.

Maxwell responded: “There is no list. …There is nothing like that.”

She described a copy of Epstein’s so-called black book with several marked names that was introduced as evidence at her trial and previously released by the Justice Department as “papers.”

Days after the interview, Maxwell was transferred to a minimum-security prison camp in Texas.

–Also last Friday afternoon, we learned the Pentagon had fired the head of the Defense Intelligence Agency, weeks after the agency drafted a preliminary report that contradicted President Trump’s contention that Iran’s nuclear sites had been “obliterated” in U.S. military strikes.

Air Force Lt. Gen. Jeffrey Kruse was the latest senior Pentagon official, and the second top military intelligence official, to be removed since Donald Trump’s return to office.

“The firing of yet another senior national security official underscores the Trump administration’s dangerous habit of treating intelligence as a loyalty test rather than a safeguard for our country,” Democratic Senator Mark Warner of Virginia said, Warner also the senior Democrat on the Senate Intelligence Committee.

–The Food and Drug Administration signed off Wednesday on coronavirus vaccines for those considered higher risk, narrowing approval for shots once routinely provided to nearly all Americans.

The agency cleared shots manufactured by Pfizer, Moderna and Novavax.  Companies were working to reformulate their vaccines to better target new strains of the virus.  The move comes as the country is in the midst of a midsummer wave of coronavirus cases.

Trump administration officials have previously described those at higher risk as being ages 65 and older or having an underlying condition that increases the risk of severe disease.

But the big news on the health front was that the director of the Centers for Disease Control and Prevention is refusing to leave her post, despite demands from Health Secretary Robert F. Kennedy Jr. that she quit or be fired, according to her lawyers.

The clash between Kennedy and Susan Monarez, who was sworn in as CDC director just one month ago, burst into public view on Wednesday as four other high-ranking CDC official quit en masse, apparently in frustration over vaccine policy and Kennedy’s leadership.

Late Wednesday afternoon, the Dept. of Health and Human Services announced on X that Dr. Monarez was “no longer” director of the CEC.

Hours later, Abbe Lowell and Mark Zaid, high-profile lawyers, disputed the department’s account, saying Dr. Monarez “has neither resigned nor received notification from the White House that she has been fired, and as a person of integrity and devoted to science, she will not resign.”

The statement from Zaid and Lowell also said: “This is not about one official.  It is about the systematic dismantling of public health institutions, the silencing of experts, and the dangerous politicization of science. The attack on Dr. Monarez is a warning to every American: our evidence-based systems are being undermined from within.”

Kennedy and his department, they said, “have set their sights on weaponizing public health for political gain and putting millions of American lives at risk.”

The White House then said late Wednesday Monarez was fired.  Her attorneys said the firing was “legally deficient” because President Trump hadn’t announced it.

Kennedy then appointed a deputy (loyalist) as interim CDC director.

Editorial / Washington Post

“When Sen. Bill Cassidy (R-La.) voted to confirm Robert F. Kennedy Jr. as health and human services secretary, he did so with the expectation that he and other serious people would be able to contain the worst impulses of the anti-vaccine activist. Cassidy, a physician and chair of the Senate health committee, said in a floor speech that he believed they could ‘have a great relationship to make America healthy again,’ focused on the parts of Kennedy’s agenda that many found promising: tackling chronic diseases, promoting healthier food and reforming the nation’s health agencies.

“That illusion – to the extent that it still existed – was fully shattered late Wednesday. Kennedy’s decision to oust Susan Monarez as director of the (CDC) over disagreements on vaccine policy proves that no one will provide an effective check on Kennedy – not Republican senators, not thoughtful leaders at HHS and certainly not President Donald Trump.

“The drama paints an ominous portrait of the state of the country’s crucial health agencies.  Monarez, a longtime government scientist, was confirmed as CDC director just weeks ago.  She was seen as a responsible pick for the job, especially after Trump withdrew his first nominee, Dave Weldon, because Republican senators raised concerns about his history of anti-vaccine statements….

“Kennedy on Thursday defended his moves.  ‘The agency is in trouble, and we need to fix it,’ he said on Fox News.  ‘It may be that some people should not be working there anymore.’

“The episode underscores that Kennedy is operating with essentially no meaningful constraints….

“What comes next could be the dismantling of America’s vaccine infrastructure. During Trump’s Cabinet meeting on Tuesday, Kennedy teased a report on autism expected next month.  Despite reams of evidence to the contrary, he has long sought to link the condition to vaccines.  The HHS secretary told the president that ‘certain interventions’ are ‘clearly almost certainly causing autism.’  Trump responded: ‘There has to be something artificially causing this, meaning a drug or something.’

“The fear is that Kennedy and his allies on the advisory committee will use the report to remove shots for children and pregnant women from the CDC vaccine schedule. This would not only make it harder for families to access the shots, since the schedule determines coverage policies for insurance plans, but also make it easier for people to sue manufacturers in court.    That could enrich Kennedy’s trial lawyer friends. Even if the lawsuits are not successful, however, they would chill pharmaceutical innovation and make future immunizations less likely….

“What can stop him?  Maybe elected Republicans will speak up more: Cassidy, for example, demanded Thursday afternoon that the CDC postpone its next vaccine advisory committee meeting over concerns about Kennedy’s influence on its agenda.  Immense public pressure might also force the White House to restrain Kennedy.

“Until that happens – and we’re not holding our breath – Americans will live with the consequences of senators who decided to let an anti-vaccine crank become one of the most powerful people in government.”

–After threatening to send troops to Chicago on Friday, President Trump took several swipes at Illinois Democratic Gov. J.B. Pritzker on Monday, calling him a “slob” and describing the city of Chicago as a “disaster” and a “killing field.”

“A lot of people are saying maybe we like a dictator,” Trump said.  “I don’t like a dictator.  I’m not a dictator.  I’m a man with great common sense and a smart person. And when I see what’s happening to our cities, and then you send in troops, instead of being praised, they’re saying you’re trying to take over the Republic. These people are sick.”

Meanwhile, it just needs to be said of Chicago Mayor Brandon Johnson that he is truly a moron…and I’m being kind.

–Scores of reports from Washington, D.C., have more than a few National Guard troops sent to the capital for crime control now picking up trash and spreading mulch.

It is kind of funny that as Brad Heath of Reuters noted: “Normally the Park Service does that, but the administration laid off the workers.”

—Friday afternoon, the Trump administration said it is using an untested strategy to rescind $4.9 billion in foreign aid without congressional approval, sparking a backlash on Capitol Hill, with Sen. Susan Collins of Maine, the top Republican on the Appropriations Committee, saying “any effort to rescind appropriated funds without congressional approval is a clear violation of the law.”

Add this to the issues list ahead of a potential government shutdown end of September.

—Kilmar Abrego Garcia was detained by U.S. Immigration and Customs Enforcement Monday after arriving at the agency’s Baltimore field office as part of a required check-in after his release pending trial on human smuggling charges, his attorney said.

The detention came three days after the undocumented immigrant was freed after a federal judge determined he did not pose a flight risk or danger to the community.  Trump officials had insisted Abrego would “never go free” in the United States, and ICE notified him shortly after his release Friday that the agency could deport him to Uganda within days.

Abrego then filed a new lawsuit in U.S. District Court in Maryland “seeking to ensure that he is not removed from the United States pending his immigration proceedings.”

And at a hearing Monday afternoon, U.S. District Judge Paula Kinis ordered that Abrego must remain and stay detained in the United States – temporarily blocking his deportation to Uganda – until she holds an evidentiary hearing.

—President Trump signed an executive order Aug. 25 seeking to penalize people who burn flags.

“If you burn a flag, you get one year in jail,” Trump said.  “You will see flag burning stop immediately.”

The First Amendment protects speech and peaceful protest. The Supreme Court in 1989 ruled in a 5-4 decision that burning a flag itself is a form of political expression and isn’t illegal.

–I can’t help but note this comment from Trump’s deputy chief of staff Stephen Miller, appearing on Sean Hannity’s Fox News show on Monday: “The Democrat Party is not a political party. It is a domestic extremist organization.  It is an entity devoted exclusively to the defense of hardened criminals, gangbangers, and illegal, alien killers and terrorists,” he said, and insisted – using patriotic “purity” rhetoric of autocrats throughout history – the “Democrat Party does not fight for, care about, or represent American citizens.”

–That was a scary looking monster dust storm (haboob) Monday in the Phoenix area, blinding drivers, knocking out power to thousands and grounding flights at Phoenix Sky Harbor International Airport, where it caused some damage to a terminal roof.

More than 15,000 people lost power.

Richard Gilley, a retired university professor who lives in Gilbert, told the AP the dust storm caused fine dust to find its way through “every little crack and space” into his house.

A haboob is a dust storm pushed by the wind produced by a weather front or thunderstorm and typically occurs in flat, arid areas.

–For the U.S. overall, according to Bill Kirk of Weather Trends International in Bethlehem, Pa., the period Aug. 29 to Sept. 1 will be the coolest in 16 years, with below-average national temperatures of 84.8 degrees F. [Barron’s]

–Congrats to Travis Kelce and Taylor Swift.  I’ll be waiting for my invitation, which I’ll then turn down because I have to work.

–Finally, our hearts go out to the families of the victims, and the general Annunciation Catholic School community, for that heinous attack Wednesday during Mass that killed two children, ages 8 and 10, and injured 18 others, two still in serious condition.  It makes you sick to your stomach.

But at the same time, while the interviews with the kids are heartbreaking, you marvel at their courage and it gives you some hope.

—

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

Slava Ukraini.

God bless America.

—

Gold $3514…record high …and Silver, $39.75, highest since 2011.  [Congrats, Trader George]
Oil $63.95

Bitcoin: $108,265 [4:00 PM ET, Friday]…down from a recent high of $124,000, and down $8,000 on the week.

Regular Gas: $3.20; Diesel: $3.70 [$3.36 – $3.71 yr. ago]

Returns for the week 8/25-8/29

Dow Jones  -0.2%  [45544]
S&P 500  -0.1%  [6460]
S&P MidCap  -0.1%
Russell 2000  +0.2%
Nasdaq  -0.2%  [21455]

Returns for the period 1/1/25-8/29/25

Dow Jones  +7.1%
S&P 500  +9.8%
S&P MidCap  +4.3%
Russell 2000  +6.1%
Nasdaq  +11.1%

Bulls 51.0
Bears 17.6

Hang in there.

Brian Trumbore