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05/28/2016

For the week 5/23-5/27

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs.  Your support is greatly appreciated.  Click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.  Special thanks to G.R., Jim D., and E.M. this week.

Edition 894

Washington and Wall Street

What will the Federal Reserve do come its June 14-15 meeting?  That has been the paramount issue for the markets, which are now convinced the Fed will move, if not then, then July following the big referendum in the U.K. on Brexit.  I have said recently that I didn’t feel the Fed could act until the vote was taken across the pond, because it does indeed have the ability to convulse markets, at least in the short-term.  However, as I note below the odds of a vote to leave the European Union seem to be going down with each poll.  That said, I still wouldn’t put it past Russia to create an incident (we might not know they were involved until well after) because chaos in the EU redounds to their benefit, but that’s just my opinion.

As for the past week, the economic data for the U.S. continued to be largely positive.  A reading on April new home sales soared to 619,000 annualized, far better than expected and up 16.6% over March. April durable goods (big-ticket items), expected to be up 0.2%, surged 3.4%, though with this one it’s always about the components and ex- volatile transportation the reading was a still solid 0.4%, though non-defense capital orders (business investment) were down 0.8%.   But all in all good.

Then on Friday we had the second reading on first-quarter GDP and it was revised upward from 0.5% annualized to 0.8%.  Consumption was up 1.9%, unrevised, while the decline in business investment was down an annualized 2.6%, which was better than the first look pegging it at -3.5%.

When you couple the 0.8% pace with a projected 2.9% ann. clip for the second quarter (as currently estimated by the Atlanta Fed and its GDPNow indicator), whaddya know, combined, right on that 2% pace we’ve been stuck on...forever.

But for the Fed, the current trend is favorable and various inflation indicators are at the 2% level that is their benchmark.  IF next Friday’s employment report thus comes in strong, say at least 150,000+, and there is some wage growth, look for the Fed to make a hawkish statement on June 15, strongly hinting at an imminent move, if one isn’t forthcoming that day.

Friday, the markets were waiting for Fed Chair Janet Yellen’s comments at Harvard for any further hints.  In a Q&A, Yellen did not say whether Fed policymakers are leaning toward hiking the funds rate in June or July, but she said the economy is picking up.

“If (the economic gains) continue and if the labor market continues to improve, and I expect that will occur... I think it’s important for the Fed to gradually and cautiously increase our overnight interest rate and probably in coming months such a move will be appropriate,” she said in a forum at the university.

Fed Governor Jerome Powell said on Thursday that the economy remains on “solid footing” and that he views ongoing job growth and evidence of rising wages as being more important than recent weakness in consumer spending and business investment.  “There are good reasons to think that underlying growth is stronger than these recent readings suggest.  Labor market data generally provide a better real-time signal of the underlying pace of economic activity.”

Put Yellen and Powell together and I’ll stick with July for a hike, assuming there are no surprises in Friday’s jobs report.

Europe and Asia

First, a little economic data.  Markit released its flash estimates on manufacturing and services in the eurozone for May, with the manufacturing PMI coming in at 51.5 vs. 51.7 in April (50 being the dividing line between growth and contraction).  The services reading was 53.1.

Germany had a flash manufacturing reading of 52.4, 55.2 on services (both above April), while France’s readings were 51.8 services, 48.3 on manufacturing (also better than the prior month).

Chris Williamson, chief economist at Markit:

“The robust pace of economic growth seen in the first quarter will prove temporary. The survey therefore paints a picture of a region stuck in a low-growth phase, managing to eke out frustratingly modest output and employment gains despite various ECB stimulus ‘bazookas,’ a competitive exchange rate and households benefiting from falling prices.”

Germany reported its GDP was 0.7% in the first quarter over the fourth, in line with a prior estimate, while a reading on business sentiment was strong.  But the pace of GDP was expected to soften in Q2.

France is dealing with major labor strife, with all eight oil refineries at one point this week impacted by protests, petrol running perilously low in many cities, while air traffic controllers and others staged job actions.  Labor leaders vowed to disrupt the Euro 2016 football (soccer) championships in the country that begin June 10.  As I noted last week, Euro 2016 was already a huge security concern inside France’s intelligence community, with expected throngs milling about stadiums and bars, and labor protests would only make it even more of a security nightmare for authorities.  Rather easy for terrorists to hide amidst the crowds.

The French government of President Francois Hollande enacted the much-needed reforms to make it easier for companies to hire and fire employees and on Friday, Hollande vowed not to back down amid the threats by trade unions.

“Continue and step up the actions,” eight unions said in a joint call after the day of action.

If you’re a tourist in France these days, this is a nightmare.  Thus far, though, the protests have been largely peaceful with minimal violence.  If I’m talking about this topic in two weeks, however, that won’t be a good sign.

In the U.K., regarding Brexit, a poll from The Telegraph was most encouraging for those wishing to ‘remain’ in the European Union.  55% want to do so, only 42% want to ‘leave,’ the biggest gap yet in a major survey ahead of the June 23 referendum.  It seems more and more pensioners are turning to the pro-EU camp, afraid that a catastrophic recession would be the result of a ‘leave’ vote and that this would lead to pension cuts.  [Not a realistic fear, frankly, but understandable given some of the rhetoric.]

One item that is impacting the referendum in a big way, though, is immigration.  The Office for National Statistics reported this week that net migration of EU citizens to the U.K. rose to 184,000, up 10,000 from a year earlier.  New arrivals from Bulgaria and Romania rose 32% to 58,000, the agency said. The number of non-EU migrants has declined over the past five years, but the number of EU migrants has doubled in that period.

Turning to the other big story on the week, the ongoing Greek debt crisis, Sunday, the Greek parliament passed new budget cuts and tax hikes two days before eurozone finance ministers met to decide on whether Greece had done enough to free up further bailout funds.

Parliament passed the widely unpopular bill by a 153-145 margin.  Pierre Moscovici, European commissioner for economic affairs, praised the Greek government for making a “courageous” effort over the last few months to qualify for its latest round of bailout cash.

So late Tuesday/early Wednesday morning, Greece won additional pledges of debt relief, but nothing substantial until 2018 at the earliest, and only then if it continued to carry out its painful reforms.

More importantly in the immediate term, eurozone finance ministers gave the green light for further disbursements of aid, 10.3 billion euros, or about $11.5 billion, to be distributed in several stages (7.5bn euro by the second half of June so Greece can make coming debt payments and clear initial arrears).

Greece’s government bonds advanced, pushing the yield on the 10-year below 7%, briefly, for the first time since November.  [It closed at 7.07% on the week.]

Earlier, regarding debt relief, German finance minister Wolfgang Schauble stood firm over his insistence that Greece not be given any outright haircuts on its debt. Schauble said debt relief “was not a pressing problem” for Greece.  “Decisions need to be taken in due time,” Schauble not wanting to make any concessions that could require the approval of the German parliament before the country holds an election in October 2017.

Germany has also consistently said there can be no financial assistance for Greece without the IMF tagging along.

But while there is immediate relief there will be no Greek crisis, at least on the debt and the bailout this summer (there could yet be one on the migrant front), once again the major longer-term issue, the level of Greece’s debt, 180% of GDP and still growing, has been kicked down the road until seemingly mid-2018, which coincides not just with Germany’s 2017 vote but also the end of Greece’s third bailout program.

As for the IMF, it is not guaranteeing it will be part of the current program, though it said it would make a new debt-sustainability analysis later in the year and assess then the moves made by Greece and the eurozone finance ministers this week.

As for the Greek people, they will continue to suffer, with further tax hikes and pension cuts.  One wonders if they will willingly go along until 2018.  The leftist government of Alexis Tsipras has been pushing through measures totally antithetical to the platform it was initially elected on.  Tsipras is barely holding on to a governing coalition.

Another big event in euroland last week was Sunday’s runoff for the Austrian presidency, with former Green Party leader, now independent, Alexander Van der Bellen holding off far-right Freedom Party candidate Norbert Hofer 50.3% to 49.7%, thus preventing Hofer from becoming the EU’s first far-right head of state.  The margin was just 31,000 votes of 4.64 million cast.

Since Van der Bellen used to lead Austria’s Greens, he is being hailed as the world’s first elected Green head of state.

For his part, Hofer and his party made tremendous strides, it just wasn’t enough.  What was so disconcerting is that he adopted a number of symbols used during the 1930s and the time of the rise of the Nazis.

But for those who think that the rise of the far-right in Europe has thus been checked and that this is the peak, all you have to do is look at the vote of virtually every far-right party on the continent and with just one or two exceptions the parties are picking up percentage points with every election.  They may not be winning big positions, such as in France where Marine Le Pen’s National Front failed to capture any provincial governments in the last go-around of regional elections there, but she gained votes over the prior election and as of today she’d be in a run-off for the presidency next spring.

National elections are being held in Germany, France and the Netherlands next year, all with growing far-right parties.  After these votes take place we’ll be able to better ascertain just how far these movements can go, but a lot of it will depend on both the level of future terrorism in Europe as well as the migrant situation.

One more election item.  A poll in Spain forecasts that the June 26 vote there is unlikely to break the stalemate that has stopped politicians from forming a government since December.  The conservative Popular Party could see its vote rise to nearly 30% from 21% in December, while the Socialists dip to 20% from 22%.  But newcomer Podemos could be the new No. 2, over the Socialists, and Podemos has long said it would not enter a coalition with the Popular Party.  Ergo, back to square one.

Thus far the political chaos has not hurt the recovery in Spain’s economy to any great extent.

Regarding the migrant crisis...a fishing boat carrying some 590 migrants from Libya capsized in the Mediterranean on Wednesday.  But less than 30 died (including those listed as missing last I saw) as an Italian navy patrol vessel was able to pull virtually of them from the water after a distress call was sent out from the ship, 18 miles off the Libyan coast.

The same day, an Italian coast guard vessel dropped off 1,053 migrants in Palermo, Sicily, including 260 unaccompanied minors after rescuing them from 13 vessels.  That’s 1,500+ in one day!  All headed for Italy.  The figure the first four months was something like 26,000 for the country.

In Greece, authorities began to break down and evacuate the country’s largest informal refugee camp of Idomeni on the Macedonian border, which had become home to 8,400 refugees and migrants heading to northern Europe, before Macedonia cracked down and stopped the flow.

Idomeni was a cesspool and Greek authorities are attempting to find permanent homes for the migrants, or at least remove them to more formal camps.

Lastly, Turkish President Erdogan continues to threaten to tear up the refugee accord with the EU, saying the EU wasn’t keeping its word on financial aid and shouldn’t constantly impose criteria on Turkey in return for pledged visa-free travel for Turkish citizens.  Otherwise, he said, Turkey won’t continue accepting refugees back from Greece. 

For German Chancellor Angela Merkel, who brokered the deal between Turkey and the EU amid rising discontent in Germany over the hordes of migrants swarming into the country, it would be a huge blow if Erdogan rips the agreement up, and would add to the far-right Alternative for Germany party’s support.  [If I were Erdogan, I’d play major hardball.]

On the Asian front, just a few notes on Japan.  The flash manufacturing PMI for May was just 47.6, owing to the earthquakes weighing on heavy goods producers in particular.  Consumer prices ex-food and energy rose 0.9% annualized in April vs. 1.1% in March, but the Bank of Japan’s preferred core, stripping out just fresh food prices, was -0.3% year-on-year, vs. -0.1% in March.  Not good.

Lots of data coming from both China and Japan shortly after month end.

Street Bytes

--Stocks had their best week since March, with the Dow Jones +2.1%, the S&P 500 +2.3% and Nasdaq +3.4%.  The S&P, at 2099, is just 31 points shy of its all-time high.  Obviously, the market isn’t concerned about a looming rate hike and the Fed deserves some credit for this; telegraphing the move appropriately.

But if you work on the Street, you have to be concerned with trading volume.  Granted, it was a Friday before a holiday weekend, but today was the second slowest day of the year, while the week as a whole I believe was close to the slowest.

We need a surprise to stir everyone out of their torpor.  “There’s a meteor approaching!!!  Sell!!!”  [We’ll deal with how it wasn’t detected until six hours before later.]

--U.S. Treasury Yields

6-mo. 0.47%  2-yr. 0.91%  10-yr. 1.85%  30-yr. 2.65%

Further proof the market has discounted a rate hike, Treasuries were essentially unchanged on the week.

--The price of crude, as measured by West Texas Intermediate, hit $50 this week for the first time this year, the highest price since last October, before closing at $49.33.  Global supply disruptions, especially in Nigeria and Canada, and positive U.S. government figures on the inventory front have led to the recent leg of the rally off the January $26 lows.

Regarding Nigeria, it’s about militant activity and a decline in production of 40% from its recent peak, while the wildfires in Canada have generally knocked out 1m barrels a day of output in the oil sands.  [Recent production in Iraq has also been less than expected due to maintenance, bad weather and power outages, according to Iraq’s OPEC governor.]

But is the market overly optimistic that the rebalance in supply is permanent?  [Permanent as these things go.]  U.S. crude inventories fell by 4.2mbd to 5.1mbd last week, depending on the survey you follow, both surpassing expectations, which is significant if this continues, but these figures are volatile and we are still essentially at record levels.

That said, yes, we are driving more than ever.  Demand is also growing in India, China and Russia, which according to the International Energy Agency together are using about 1mbd more today than at the same time a year ago.

Of course if oil stayed around $50 awhile, that will spur some producers to increase supplies, which would cap prices, at least in theory.

--I’m shocked...shocked, I tell ya!  The Securities and Exchange Commission is probing Chinese e-commerce giant Alibaba’s accounting!  Specifically the “reporting of operating data from Singles Day” – BABA’s one-day sales extravaganza that supposedly generated more than $14 billion in revenue on Nov. 11.

The company said in a public filing this week: “Earlier this year, the SEC informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws.”

The SEC declined to comment but the shares declined 7% on Wednesday when the news came out.  [By week’s end, though, the stock had rebounded.]

The SEC is also probing accounting related to other parts of the company as well as “practices applicable to related party transactions in general.”

Alibaba deserves the benefit of the doubt, innocent until proven guilty and all that (stuff), but I told you since day one when the company went public in 2014 not to touch it.  And I have told you how founder Jack Ma will eventually use his acquisition of Hong Kong’s South China Morning Post to promote Beijing’s agenda, but I digress.

Investor Jim Chanos has shorted BABA shares and recently told a hedge fund conference that Alibaba’s accounting was “some of the most questionable I’ve ever seen.”

--In a move that bores the hell out of me, Hewlett Packard Enterprise Co. is spinning off most of its technology services operations and merging them with those of Computer Sciences Corp., an $8.5 billion transaction.

Granted, this isn’t boring if you’re one of the 100,000 employees of the tech services operation, or two-thirds of HP’s overall workforce.

This is a follow-on to the breakup last fall of Hewlett-Packard Co.  HP Enterprises faces increasing competition from cloud-computing vendors such as Amazon and Microsoft.  As the Wall Street Journal best sums up: “Customers must decide whether to opt for cloud services, maintain conventional data centers, or build their own private cloud-like facilities – a business especially targeted by HP Enterprise.”

Meanwhile, HP Inc., the other company, posted a steeper-than-expected sales drop in its most recent quarter, with a 16% decline in consumer sales, as well as a 16% decline in printer revenue.

Overall, revenue fell 11%, below estimates.

--According to a report out of the Centers for Disease Control and Prevention and Harvard, pregnant women infected with the Zika virus during their first trimester face as high as a 13 percent chance that their fetus will develop a severe brain defect, microcephaly.

To put this in perspective, the prevalence of a relatively common congenital condition, such as Down syndrome, is less than 1 percent.  By contrast, as the study in the New England Journal of Medicine found, the estimated risk for microcephaly with Zika infections ranged from 1 percent to 13 percent.  [Bloomberg News]

That’s sickening, and obviously a reason for young people, of both sexes (because the male can pass it to his female partner, apparently), to stay away from the Rio Olympics, for starters.  Puerto Rico would be another. 

Zika keeps spreading...now reportedly on the African archipelago of Cape Verde.   And you’ve heard it’s literally just a matter of days before the mosquitoes who carry it hit the southern U.S.  [The massive amounts of rain the past month or so from Texas to Florida hardly help.]

World Health Organization leader Margaret Chan said this week that the experts had “dropped the ball” in the 1970s with regards to getting a handle on disease-carrying insects and that today:

“With no vaccines and no reliable and widely available diagnostic tests, to protect women of childbearing age, all we can offer is advice.

“Avoid mosquito bites.  Delay pregnancy. Do not travel to areas with ongoing transmission,” Dr. Chan said.  [BBC News]

Amir Attaran, a professor of law and medicine at the University of Ottawa, has argued that by August, when the Olympic Games are held in Rio, the Zika epidemic will be worse than currently predicted.

“It cannot possibly help to send a half-million travelers into Rio from places that would not normally have strong travel connections with Rio and therefore set up new dissemination channels,” Attaran said in an interview.  Just today, doctors worldwide have launched a new campaign urging the Games be postponed.

--Separately, Brazil’s Labor Ministry reported the nation’s factories, farms and services companies shed a net 62,844 jobs in April, the 13th consecutive month of job losses there amid the worst recession in decades.

--And on the medical front another issue bubbled up this week.  The first case of an infection that resists the antibiotic of last resort – colistin – was detected in the U.S., a 48-year-old woman from Pennsylvania who recovered as the infection was vulnerable to other antibiotics.

However, colistin is hugely symbolic in that it is used when other drugs fail and officials warned the world was now reaching “the end of the road” for antibiotics.

Colistin resistance was first discovered in China at the end of 2015 and intensive testing quickly discovered bugs that can resist it in Europe and Asia.

Now the U.S. has identified the first case in a patient, who had a urinary-tract infection.

It is not clear where the infection came from as the patient had not traveled recently and colistin isn’t as widely used in the U.S.  [I hadn’t heard of it, frankly.  I feel like an idiot.]

The concern is that colistin resistance will now hook-up with other forms of antibiotic resistance to create infections that can’t be treated.

Thomas Frieden, the director of the Centers for Disease Control and Prevention, said: “The more we look at drug resistance, the more concerned we are.

“The medicine cabinet is empty for some patients.”  [BBC News]

--After initially rejecting a $62bn cash offer from German conglomerate Bayer, Monsanto said it was open to further discussions over its proposed tie-up.  But the market is highly skeptical the deal would ever be approved on antitrust concerns, let alone the funding of the deal.

--Tiffany & Co. reported miserable earnings and revenues, with first-quarter sales (for the quarter ended April 30) falling 7.4%.

Tiffany is suffering from a strengthening dollar that is cutting into sales by travelers.  Foreign tourists account for more than 25% of Tiffany’s U.S. sales and 40% of revenue at its flagship Fifth Avenue store in New York.  Sales also fell sharply in Hong Kong, while terrorist attacks in Europe crimped sales there.

Sales fell 9% in the Americas, 12% in Asia-Pacific, and 14% in Europe. 

In an attempt to boost revenue, the company is going to be focusing on high-end watches.

After falling about 16% this year, the shares staggered to the end of the week, basically unchanged.

--On the other end of the spectrum, Dollar Tree Inc., where I proudly shop (for certain items like dishwashing liquid, shaving crème, soap, paper products, Campbell’s Soup, pretzel rods, Arizona Iced Tea...it’s foolish not to shop there...), boosted its outlook for the year as earnings and sales for the recent quarter handily beat expectations. Sales soared 9.5%, with same-store sales up a solid 2.3%, compared with department store chains that are struggling mightily.

The shares jumped 7% in response.

--Best Buy Co. warned its financial performance would be weaker in the current quarter as it announced the exit of the CFO, who had been instrumental in the company’s turnaround.  Sharon McCollam’s departure came as a surprise.

The company reported same-store sales fell 0.1%, which was actually a little better than expected, with performance driven by strong sales of wearable electronics like Fitbits and a 14% increase in appliance sales.  But sales of computers, mobile phones and accessories fell 3.5%.

I haven’t had a need for a new television, but Best Buy reported prices for newer high-resolution models are down 30% from a year ago.

Best Buy shares fell 8%.

--The impact of the terror attacks on air travel that began last Oct. 31 with the bombing of the Russian jetliner over Egypt, then Paris and Brussels, has been “a bit more pronounced” than usual, according to the CEO of British Airways’ parent International Consolidated Airlines Group SA.  U.K.-based tour operator Thomas Cook Group said summer bookings were down 5% from last year.

But global tourism is expected to grow 3.5% in 2016, according to the World Travel & Tourism Council.  Bookings by Americans to Europe, for example, are up 9.3% this year from last, according to Allianz Global Assistance, a travel-insurance provider.

At the same time, bookings to Paris are flat, whereas those to London and Rome are up 7% and 15%, respectively.

Americans’ bookings to Brussels for the summer, however, are down 30.4%, and to Istanbul 43.7%, according to Allianz.  Istanbul has seen a wave of terrorist bombings the past year.  [Friday, Turkey’s government reported visitor numbers fell by 28% in April vs. year ago levels, the worst fall since records began.  Tourism accounts for 12% of GDP.]

This week Ryanair, in announcing an 18% jump in passenger traffic for its recent quarter, said there was an immediate slowdown in sales since the EgyptAir flight went down.

The discount airline did, however, report a spectacular load factor of 93%.  Aside from demand, that’s obviously terrific management in controlling capacity.

--Boeing and VietJet of Vietnam finalized an $11.3 billion order for the Vietnamese airline to buy 100 of the U.S. aircraft manufacturer’s single-aisle 737 MAX 200 jets. The deal was signed in conjunction with President Obama’s visit to the country this week.

--The head of security for the TSA was removed from his position after the agency was criticized for long lines at airport checkpoints.  Incredibly, the guy received more than $90,000 in bonuses and awards over a 13-month period in 2013-14, according to a congressional committee.  There did seem to be some improvement at major airports such as Chicago’s O’Hare, ground zero, this past week.

By the way, you may want to have a sit-down with your dog.  There have been cries from all corners to hire more sniffer dogs at the TSA to speed up lines.

“Ralph (we called our dog Ralph, after baseball Hall of Famer Ralph Kiner), it’s time you pulled your share of the load.  I’m taking you tomorrow to apply to be a sniffer dog.”

“Ruff!”

“I’m glad you’re taking it well.  You’ll see some cute girls!”

“Ruff ruff!”

--A Florida judge denied Gawker, the gossip website, a motion for a new trial as former wrestler Hulk Hogan pulled off another courtroom win, the court letting stand a jury’s $140 million award in Hogan’s sex-video case.

“I’m going to deny the motion for a new trial and find no reason to apply any remitter [reduction in judgement] to this case,” Judge Pamela Campbell said.

Gawker must now challenge the judgement in an appellate court.  In the meantime, the parties return to court on June 10, as Judge Campbell has to decide on whether Gawker must put any of the judgement into an escrow account, pending their appeal, and whether to issue a permanent injunction barring Gawker from ever again posting the video.

But this is just part of the story.  Billionaire Silicon Valley entrepreneur Peter Thiel, founder of PayPal and an early investor in Facebook, who was outed as being gay by Gawker, secretly financed the lawsuit against the media company to try to put it out of business.

A 2007 article published by Gawker’s Valleywag blog was headlined, “Peter Thiel is totally gay, people.”  A series of articles followed from the a-holes at Gawker, “(ruining) people’s lives for no reason,” according to Thiel.  So he funded a team of lawyers to find and “help” victims of the company’s coverage.

Thiel, in his first interview on Wednesday since his identity became public, said: “It’s less about revenge and more about specific deterrence.  I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.”

Now this gets complicated.  I sympathize with Thiel and Hulk, but I’m generally not a fan of Thiel overall.  And there are free speech principles at work, but no right to just destroy people without cause, especially when invading one’s privacy.

I just hate the concept of Gawker, frankly.  I call people out when it’s warranted, and comment on others when it becomes general news, but I want the likes of Gawker to fail.  They produce garbage.  And don’t get me started on Gawker founder Nick Denton and some of the hypocrisy angles involved in the Hogan (Terry Bollea) case.

For his part, Denton said in an open letter to Thiel on Thursday, that Gawker was targeted because it brought harsh scrutiny to Silicon Valley figures unaccustomed to it.  He acknowledged his publications “overstepped the line,” but wrote “this vindictive decade-long campaign is quite out of proportion to the hurt you claim.”  [That logic is pathetic.]

Denton warned: “The world is already uncomfortable with the unaccountable power of the billionaire class, the accumulation of wealth in Silicon Valley, and technology’s influence over the media.”

--Disneyland saw a 9% rise in attendance during the park’s 60th anniversary, but SeaWorld San Diego continued to struggle amid the animal rights protests, attendance falling 7% there in 2015, as reported by the L.A. Times’ Hugo Martin.

Disneyland, by the way, brought in 18.3 million visitors last year, second among theme parks to Disney World in Florida, which had 20.5 million, up 6% from 2014.

--Chinese billionaire Wang Jianlin took a shot at Disney as his Dalian Wanda Group prepares to open a theme park in a direct challenge to Disney’s Shanghai resort.

Wang is said to be China’s richest man with a fortune estimated at $28.7bn, according to Forbes.  “One tiger is no match for a pack of wolves,” he said in an interview on China Central Television last weekend.  Shanghai has one Disney, while Wanda, across the nation, will open 15 to 20.  “While Disney is preparing work visas for its foreign princesses, Wanda is keen to stress its domestic credentials. Disneyland is fully built on American culture.  We place importance on local culture.”

Disney said Wang’s comments “were not worthy of a response.”  I would like to but I’m in enough trouble with the country as it is.

--Security researchers have tied a recent spate of digital breaches into Asian banks to North Korea, in what appears to be the first case of a nation using hack attacks for financial gain, according to security firm Symantec, which released a report on the matter this week that included evidence of North Korean complicity in attacks on a bank in the Philippines last October and a Vietnamese bank in December, as well as the central bank of Bangladesh in February that resulted in the theft of more than $81 million.

The thieves gained access to Swift, a Brussels-based banking consortium that runs what was thought to be the world’s most secure payment messaging system. Swift’s system is used by 11,000 banks and companies to move money from one country to another, making it a tempting target.

--Snapchat is now estimated to have a value of $18-$20 billion, the figure implied by a new funding round, according to TechCrunch.  The company raised $1.8bn, giving it about $2.6bn, according to a regulatory filing on Thursday.  Snapchat didn’t formally say the latest funding raised its valuation. The last round, in May 2015, pegged it at $15bn.

With over 100 million daily users, Snapchat is the go-to site for the youth.  They like that the messages disappear after a set time, making it hard for their parents and any authority figures to monitor the use.  Plus the company serves over 10 billion videos daily.

But is it a fad or will the likes of Facebook grab its users?

--Under Armour signed a record apparel deal with UCLA, 15-years, $280 million, exceeding to recent Nike deals with Ohio State (15 yrs., $252 million) and Univ. of Texas (15 yrs., $250 million).  UA was looking to add a major West Coast program to its stable that includes Notre Dame, Auburn and Wisconsin.

--From the Wall Street Journal:

“A major U.S. government study on rats has found a link between cellphones and cancer, an explosive finding in the long-running debate about whether mobile phones cause health effects.

“The multiyear, peer-reviewed study, by the National Toxicology Program, found ‘low incidences’ of two types of radio frequencies that are commonly emitted by cellphones.  The tumors were gliomas, which are in the glial cells of the brain, and schwannomas of the heart.”

The National Institutes of Health, which helped oversee the study, said, “It is important to note that previous human, observational data collected in earlier, large-scale population-based studies have found limited evidence of an increased risk for developing cancer from cellphone use.”

I use my cellphone less than anyone in the world so on this count I’m clear.

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: A wave of bombings claimed by ISIS in the heartland of Syrian President Bashar Assad’s government killed at least 154, according to the Syrian Observatory for Human Rights, a huge blow to Assad.  More than 300 were wounded in the Monday attacks in the Mediterranean coastal cities of Jableh and Tartus.  Most of the dead were civilians.

In Tartus, one car bomb exploded and as people began to flock to the site, two suicide bombers detonated explosive belts.  Then in Jableh, fifteen minutes later, there were a total of four blasts – one car bomb and three suicide attackers targeting a bus station, a hospital and a power station.  Incredible sophistication and coordination.

The two cities, which are majority Alawite – the offshoot of Shiite Islam followed by Assad – had been relatively insulated from the five-year civil war and the unprecedented attacks on the Assad strongholds throw Latakia province into a state of chaos.  The people no longer feel Assad can protect them.

This is also the home of the Russian naval and air bases.  After the attacks, Vladimir Putin vowed to continue his support of Assad.

And this just in...Turkey is furious that U.S. Special Forces in Syria have been filmed (as seen on nightly newscasts in the States tonight) wearing insignias of Kurdish militia.

Turkish Foreign Minister Mevlut Cavusoglu called the U.S. “two-faced” and said the practice was “unacceptable.”

It is!  U.S. Col. Steve Warren in Baghdad said the wearing of the patches was unauthorized, and admitted there were political sensitivities in this case. 

The patches were that of the YPG, which Turkey accuses of being linked to the banned PKK Kurdish militant group that Turkey, along with the EU and U.S., regards as a terrorist organization.

The Pentagon at first claimed the soldiers were wearing the patches to blend in.

One of the many reasons why this is important is because freakin’ President Obama keeps telling the American people our soldiers in Iraq and Syria aren’t in combat when everyone with half a brain, including the families of those who have died there recently, in combat, know otherwise.

Regarding Iraq....

Erika Solomon and Geoff Dyer / Financial Times

“Looking at a map of northern Iraq, it can easily appear as if the ISIS forces holding the city of Mosul are vulnerable. To the west, militia are ready to advance. To the north, south and east, army and paramilitary troops are as close as 20km away.

“Yet even as these troops seem within touching distance, they are a long way from retaking Mosul.  What the maps do not show are the bitter rivalries, political ambitions and regional power struggles behind the forces gathered around Iraq’s second-largest city, hindering what will be one of the most important campaigns in the war against the jihadis.

“ ‘If you think there is some grand plan for this – well, there is no plan,’ says one Iraqi security official.

“In the two years since ISIS shocked the world by seizing Mosul and large swaths of Syria and Iraq, the U.S.-led coalition battling the group has made progress.  ISIS has lost 46 percent of its Iraqi territory and 16 percent of its holdings in Syria, according to the Pentagon, faster than U.S. officials had thought likely.  Recent momentum has lulled many regional players into a sense of confidence, almost as if the war was over.

“ ‘Everyone has forgotten about ISIS,’ says one U.N. official in Iraq.  ‘They are busy positioning themselves for the war after ISIS instead.’....

“The risk of prolonged war has serious implications for the region and beyond. It leaves millions across Syria and Iraq homeless and displaced at a time when world powers are keen to stem the flow of refugees towards Europe.  It also complicates the peace process for Syria.”

The Iraqi military and militia forces announced they would liberate Fallujah from ISIS, but reports from remaining residents say they are being used as human shields as ISIS is well-entrenched.

Actually a late report I just read from Fallujah speaks of unthinkable conditions in the city, with 50,000 civilians trapped.  They have been told through leaflet drops to put white sheets on their roofs so they aren’t bombed.  [Of course the ISIL fighters will do the same.]

A spokeswoman for the UN High Commission for Refugees told the BBC, “We have dramatic reports of the increase of the number of executions of men and older boys, refusing to fight on behalf of ISIL.

“Other reports say a number of people attempting to depart have been executed, or whipped.  One man’s leg was amputated,” said Melissa Fleming.

People are also starving to death.

Michael Gerson / Washington Post

“Want a good measure of how degraded the presidential foreign policy debate has become?  Over the past four years, the United States has largely been a bystander in the largest strategic and humanitarian disaster of our time: the collapse of sovereignty in Syria, which has produced 5 million refugees, caused more than 300,000 deaths [Ed. it’s now 400,000+] and empowered some of the most vicious, totalitarian nut jobs in the world.

“But what is the critique from both Donald Trump and Bernie Sanders? That the United States is overcommitted, especially in the Middle East.  Trump in particular has argued that the United States is a pathetic debtor country that must get its own house in order before engaging in nation-building.  ‘We cannot go around to every country that we’re not exactly happy with,’ Trump said recently, ‘and say we’re going to recreate [them].’

“This has hardly been President Obama’s temptation.  His motivation being...what?  A determination to be the anti-Bush?  Serial indecision? The pivot to Asia? For whatever reason, Obama has consistently filed action in Syria under the category of ‘stupid stuff,’ often overruling the more forward-leaning views of his senior foreign policy advisers (including Hillary Clinton when she was his secretary of state).  Tamara Cofman Wittes of the Brookings Institution recently testified before the Senate Foreign Relations Committee that ‘incremental steps over the last four years to try and shape both the battlefield and the context for diplomacy’ have been ‘too little and too late to alter the conflict’s fundamental dynamics.’

“What have been those dynamics? The regime of Bashar al-Assad, once teetering on the brink of destruction, has been saved by Iranian and Russian military interventions.  Early on, jihadist groups in Syria became the most serious, well-equipped opposition to the regime, forcing rivals off the field and raising a long-term terrorist threat.  Assad has committed mass atrocities with impunity, so long as he doesn’t use chemical weapons again (though his victims end up just as dead by other methods).  To avoid responsibility for this nightmare, the Obama administration has tried to narrow the definition of U.S. interests.  What really matters is removing Assad’s chemical weapons. Or the Iranian nuclear agreement.  Or killing terrorists with drones and special operations. Anything else is, according to Obama, ‘someone else’s civil war.’

“If Obama loses sleep over the situation, he gives no public indication.  On the contrary, he often congratulates himself on the coolness and realism of his judgment on Syria (declaring himself ‘very proud’ of his decision not to enforce the chemical weapons ‘red line’). But this is the kind of thing – like the Rwandan genocide for Bill Clinton – that Obama will be left to explain for the duration of his post-presidency. During the Obama years, perpetrators have been given a clear message: Mass atrocities work, at least if you have faithful sponsors and halfhearted enemies.”

Fred Hiatt / Washington Post

“Surveying the wreckage of the Middle East and the fraying of Europe, President Obama understandably would like us to believe that no other policy could have worked better.

“The United States has tried them all, his administration argues: massive invasion, in Iraq; surgical intervention, in Libya; studied aloofness, in Syria.  Three approaches, same result: chaos and destruction.

“So why bother?  Why get sucked into a ‘transformation that will play out for a generation,’ as Obama described it in his State of the Union address this year, ‘rooted in conflicts that date back millennia’?  Even setting aside the offensiveness of such a sweeping dismissal of Arab potential, the formulation is wrong on two counts, one prescriptive and one analytical.

“It offers no plausible path for Obama’s successor – who, as Obama’s own fitful, reluctant re-escalation shows, will not be able to ignore the region.  Instead, it invites the kind of demagogic promises we have heard during the campaign, to ‘carpet bomb’ Islamic militants until we find out whether ‘sand can glow in the dark,’ as Sen. Ted Cruz threatened, or, in Donald Trump’s words, to ‘quickly, quickly’ ‘knock the hell out of’ the Islamic State and then ‘come back here and rebuild our country.’

“More fundamentally, the administration’s fatalism ignores a fourth policy option that Obama, from the beginning, was determined not to try: patient, open-ended engagement using all U.S. tools – diplomatic as well as military – with a positive outcome, not a fixed deadline, as the goal....

“Obama came into office determined to avoid this approach.  In Afghanistan, he set a timetable for troop withdrawal, untethered to conditions.  In Libya, he bombed the Gaddafi regime out of power but did not stay to help a new government get on its feet.  In Iraq, he overrode his civilian and military advisers and declined to keep in the country the 15,000 or 20,000 troops that might have helped preserve the stability the U.S. surge had helped achieve....

“I understand why Obama and so many other Americans reject persistent engagement, often derisively called ‘nation-building.’  It is difficult, and the United States often does it badly and sometimes doesn’t succeed; Americans can’t impose democracy; we often end up doing work that we wish the locals or their neighbors would do....

“But against all that wisdom stands one stubborn fact, again proved by Obama’s re-escalation: The United States does not have a choice. The unraveling doesn’t stay put, but spreads to Syria and Paris and Brussels and the skies over the Mediterranean and, eventually, the United States.”

Finally, speaking on the sidelines of the G7 summit in Japan, President Obama was asked by a reporter about Donald Trump and the attitude of foreign leaders.

“They are not sure how seriously to take some of his pronouncements, but they’re rattled by him – and for good reason, because a lot of the proposals that he’s made display either ignorance of world affairs or a cavalier attitude,” the president said.

“[He only has] an interest in getting tweets and headlines instead of actually thinking through what it is that is required to keep America safe and secure and prosperous and what’s required to keep the world on an even keel.”

Obama actually said that...implying he has kept the world on an even keel.  He will say something like this, with a straight face, when he gives his farewell address next January.

I want to scream.

Yemen: A suicide car bombing claimed by ISIS killed at least 45 army recruits in the Yemeni city of Aden, the port city that serves as the temporary capital of Yemen’s Saudi-backed administration while it seeks to seize back the capital Sanaa from the Iranian-backed Houthi group.

Iran: Defense Minister Hossein Dehqan (also spelled Dehghan) told reporters on Tuesday that the Iraq and Syrian conflicts are part of a long, deep-seated plot hatched by Israel and the United States, according to reports by Iran’s Press TV.

“What is today happening in Syria and Iraq is a deep-seated U.S.-Zionist conspiracy that has triggered war in Muslim territories,” said Dehqan.

“Zionists are supporting terrorists and equipping them.”  [The Jerusalem Post]

Israel: Prime Minister Benjamin Netanyahu expanded his conservative coalition this week, formally appointing Avigdor Lieberman to the position of defense minister, moving the government further right and thus dimming any thoughts of real negotiations with the Palestinians.

By bringing in Lieberman’s Yisrael Beiteinu party, Netanyahu increases his coalition from 61 to 67 seats in the 120-seat parliament, the Knesset. 

Thomas L. Friedman / New York Times

“(Israel) under Netanyahu has gone from bad to worse.  He just forced out Defense minister Moshe Yaalon.  Yaalon, a former army chief of staff, is a very decent man – a soldier’s soldier, determined to preserve the Israeli Army as a people’s army that aspires to the highest standards of integrity in the middle of a very dangerous neighborhood.

“Netanyahu plans to replace Yaalon with the far-right Avigdor Lieberman, who boasts he could not care less what American Jews think about how Israel is behaving and a man whom, Haaretz reported, was only recently dismissed by Bibi’s team as ‘a petty prattler,’ unfit to be even a military analyst, and whose closest brush with a real battle was dodging a ‘tennis ball.’

“Lieberman, when he has not been under investigation for corruption, has mused about blowing up Egypt’s Aswan Dam, denounced Israelis who want Israel to get out of the West Bank as traitors and praised an Israeli soldier, Sgt. Elor Azaria, who fatally shot a wounded Palestinian assailant in the head as he was lying on the ground awaiting medical attention.

“Describing Netanyahu’s dumping of Yaalon for Lieberman, Yediot Aharonot columnist Nahum Barnea wrote, ‘Instead of presenting to the world a more moderate government ahead of the diplomatic battles to come in the fall, Netanyahu is presenting the most radical government to ever exist in Israeli history.’

“Yaalon himself warned, ‘Extremist and dangerous forces have taken over Israel and the Likud movement and are destabilizing our home and threatening to harm its inhabitants.’ Former Labor Defense Minister Ehud Barak said, ‘What happened is a hostile takeover of the Israeli government by dangerous elements.’....

“For those of us who care about Israel’s future, this is a dark hour.”

Egypt: Human remains retrieved from the site where EgyptAir flight 804 went down suggest that an explosion may have brought down the aircraft, Egyptian forensic officials told news agencies on Tuesday.  The impact zone apparently has been identified, but no word on how long it will take to bring up the fuselage, let alone the black boxes.

As for why if it was a bomb that brought down the plane there has been no claim of responsibility, al-Qaeda would have reason not to stake a claim. It took a year after the 7/7 attacks in London before the group stepped forward, and in this case al-Qaeda may not want to return to the center of the radar, as  terrorism expert Daveed Gartenstein-Ross put it. 

If it was AQAP (Al-Qaeda in the Arabian Peninsula) there really would be zero reason to claim responsibility as it would have proved its new methods worked, whether the bomb was planted in one of the stops the plane made that day, or it was incorporated into a laptop brought on board.

Afghanistan: Taliban leader Akhtar Mohammad Mansour was killed in a drone strike on Saturday, in a remote area in western Pakistan’s Baluchistan province.  The operation involved several unmanned American aircraft, and it struck a vehicle in which Mansour was traveling.

The Afghan Taliban acknowledged the death and then announced a new leader to replace Mansour, Mawlawi Haibatullah Akhundzada (you really don’t know if I’ve spelled this properly, do you?)  He is said to be a religious scholar and former head of the Taliban courts, which means he has a twisted definition of religion, sports fans.

Pakistan said Tuesday the American drone strike on Mansour was “against international law.”  Relations between Washington and Islamabad are not good these days.  Pakistan Interior Minister Chaudhry Nisar Ali Khan warned that the strike would have “serious implications” for the country’s relations with the U.S.  In his first comments since the takeout, Khan said that if every country targeted perceived threats abroad, “there will be the law of the jungle in the world,” adding the U.S. action was “completely against the U.N. Charter and international law.”  

Regarding peace talks with the Taliban, Khan said: “You can’t expect that you drone their leader and say ‘come to the negotiation table.”  [Saeed Shah and Qasim Nauman / Wall Street Journal]

In Afghanistan, by the way, the Taliban has killed 5,500 Afghan soldiers in the past year and it has little incentive to stop fighting and cut a deal.

In an op-ed for the Wall Street Journal, Michael O’Hanlon of the Brookings Institution and former commander David Petraeus urged a major step up in the bombing campaign in Afghanistan.  For example, the two point out that in the first three months of this year, U.S. and allied planes dropped 7,000 bombs in Iraq and Syria, but only 300 in Afghanistan.

China: Beijing warned the Group of Seven (G7) countries against engaging in talks that might worsen tensions in the South China Sea.

On the issue of China/Taiwan relations, with the election of Taiwan’s new president, Tsai Ing-wen, Beijing has launched personal attacks against her, with a member of the Association of Relations across the Taiwan Straits, Wang Weixing, saying in a paper published under the official Xinhua news agency:

“From the human point of view, as a single woman politician, [Tsai] does not have the emotional burden of love, of ‘family,’ of children, [so her] political style and executive strategy tends to be emotional, personal and extreme,” wrote Wang, who is also a senior military officer.

Wang charged Tsai’s family was well connected to the Japanese invaders during the Second World War, and he went after Tsai’s father, who was married more than once.

Wang then said Tsai would seek “hidden independence” and provoke Beijing to destroy peace in the Strait, he wrote.  [South China Morning Post]

Beautiful.  But you see, friends, what I’ve been writing for months now.  The shock in the region could very easily be a lightning attack on Taipei from the mainland, before there is any large-scale mischief in the South China Sea.  You can see how Beijing is beginning to lay out the predicate, using such propaganda. 

Or as the Wall Street Journal opined on Monday:

“If Beijing’s leaders think they can pressure Taiwanese into loving them, there will be trouble ahead.  Now would be a good time for the U.S., including the presumptive presidential candidates, to reaffirm Washington’s commitment to its democratic Chinese partners in Taipei.”

Sorry, the Taiwanese are about to get royally screwed.

Separately, China wasn’t happy President Obama announced the end of a longstanding arms embargo on Vietnam.  One of China’s official mouthpieces, the Global Times, called Obama’s claim that the Vietnam move was not aimed at China “a very poor lie,” adding that it would exacerbate the “strategic antagonism between Washington and Beijing.”

And then there is the situation between Beijing and Hong Kong.  This will come to a head next year in a spasm of violence that will shake the world.

The other day the National People’s Congress chairman Zhang Dejiang dismissed calls for self-determination and independence from various activists in Hong Kong as “unfeasible” and not acceptable “to the vast majority of Hongkongers.”

A Beijing-based legal expert told the South China Morning Post that advocacy for Hong Kong independence is “not a problem” for Beijing.

“Because it does not have the strength,” the lawyer said, in quoting a Chinese official.  “Even if it has the strength, it will be easy for Beijing because the central government has the laws, guns and cannons to handle it.”

Japan: President Obama at Hiroshima today. 

“We remember all the innocents killed across the arc of that terrible war,” he said.  “We have a shared responsibility to look directly into the eye of history and ask what we must do differently to curb such suffering again.”

How about a damn no-fly zone in Syria in August of 2012, Mr. President?!  But the November 2012 election was too important.  We didn’t want the American electorate talking about U.S. forces in Syria then, did we?  “GM is alive! Bin Laden is dead!” was the preferred mantra.

Instead, over 380,000 have died since then in Syria, Mr. President.  And in walking away from ally Turkey, who was crying for our help to establish sanctuaries on the Syrian-Turkish border, millions of migrants then began to flood Europe, while relations with Turkey have worsened and President Erdogan has become more autocratic.

Separately, at the start of his visit to Japan, President Obama was pressed by Japanese Prime Minister Shinzo Abe on the death of a Japanese woman in which an American citizen was allegedly involved.  Japanese police arrested an American working on the U.S. military base in Okinawa last week in connection with the murder of the 20-year-old.  The American is a former Marine.  Obama said the U.S. was “appalled” by the death as well.

Abe made such a big point of this purely for political reasons.  Of course it was a heinous crime, from the little I know, but I thought Abe was trying to embarrass Obama. 

Ukraine: Russia said it was ready to support the return of Ukraine’s troubled eastern regions to Kiev government control, according to President Putin’s spokesman, Dmitry Peskov, the RIA Novosti news agency reported on Thursday.

But understand that while this may be an invitation for dialogue, others see a bluff.  Peskov said Moscow fully supported Ukrainian President Petro Poroshenko’s pledge to re-establish control over the war-torn regions.  Such support was, however, conditional on changes being “dictated by humanitarian concerns.”

A day earlier, the head of the so-called Donetsk People’s Republic, Alexander Zakharchenko, declared that the separatist statelet would only agree to Kiev control once “Ukraine becomes a state again.”  For this to happen, “there would need to be a change in government.”

Peskov’s comments also come during a time of an uptick in fighting, with Kiev reporting “record” losses for over a year. 

This is amazing, since it is getting zero press these days, but seven Ukrainian soldiers were killed in fighting on May 23 alone.  [Moscow Times]

Separately, Poroshenko announced this week that the war in eastern Ukraine had killed more than 10,000 Ukrainians and injured more than 20,000.  Staggering figures.

Venezuela: A recent poll of Venezuelans in the Miami Herald showed 86 percent said they bought “less” or “much less” food than they used to, while only 54 percent said they ate three times a day.  But that poll was taken weeks ago.  The situation worsens by the day.  It is leading to mob violence.  As reported by the Associated Press, the other day a man was burned alive outside a Caracas supermarket for allegedly stealing the equivalent of $5.

Pray for opposition leader Henrique Capriles, who is leading a movement to remove President Nicolas Maduro, the village idiot, as I correctly labeled him when he first took office three years ago. This guy has the brain of a toad.  I’m shocked his own lackeys haven’t dumped him from a helicopter into the ocean.

Capriles has a simple mantra.  Food first, then a recall referendum.

Random Musings

Primary Results

Republican

Washington: Trump 76%, Cruz 10%, Kasich 10%

Delegates (1237 needed): Trump 1239 ...ding ding ding!

Democrat

Washington: Clinton 54%, Sanders 46%

Delegates (2383 needed): Clinton 2310, Sanders 1542

Next up: California, New Jersey et al, June 7.

In a Public Policy Institute of California poll, Clinton’s lead over Sanders in the state is down to two points.

--So it’s officially over on the Republican side and the national polls continue to show that Donald Trump has made up the gap already on Hillary Clinton.

An NBC News/Wall Street Journal poll has Clinton leading Trump 46-43, within the margin of error.  Clinton had an 11-point lead in this survey in April.  [Sanders leads Trump 54-39 in a hypothetical matchup.]

Republican support for Trump jumped to 86% from 72% in mid-April, while the share of GOP voters who said they would support Clinton fell to 6% from 13%.

But the two likely nominees are still viewed the most negatively in the modern history of presidential politics, with 58% viewing Trump negatively and 54% feeling the same way about Hillary.  But for Trump, this is an improvement from April when the figure was 65%.

Among the other takeaways, 47% say they would consider an independent or third-party candidate in the fall, up from 40% in the spring of 2012.

In the May poll, Trump leads among men by 9 percentage points, compared with Mitt Romney’s 7-point advantage among men in 2012.  Clinton, though, leads among women by 13 points, compared with Obama’s 11-point edge in 2012.  She maintains 48- and 79-point leads with Hispanics and African-American voters, respectively.

Overall, Trump tops Clinton among white voters by 16 points, compared with Romney’s 20-point margin among white voters in 2012.

So the above is the NBC/WSJ poll.

In the Washington Post/ABC News survey, Trump was favored over Clinton 46-44, so another dead heat.  Again, an 11-point swing toward Trump, in this case since March.

Clinton’s net negative rating among registered voters is minus-16, while Trump’s is minus-17.

44 percent say they want a third-party option.  The WP/ABC poll tested a hypothetical three-way race and it was Clinton 37%, Trump 35% and Romney 22%.  [But this is stupid in that Romney’s supposed 22% would quickly melt away.  Just being realistic, as one who once voted for John Anderson and Ross Perot.]

Among white voters in this survey, though, Trump takes 57%, while Clinton gets 33%, a 24-pont margin bigger than the above-mentioned Romney edge.

Among nonwhites, Clinton is at 69% with Trump at 21%.  Four years ago, Romney got 19% of the nonwhite vote.

--A new Military Times poll of 950 active-duty troops and reservists has Trump leading Clinton 54-25.  21% said they would not vote.

Interestingly, 52% want Ret. Maj. Gen. Jim Mattis, apparently beloved by the troops, to run as a third party candidate.  Heck, General.  Do it!

--A CBS News Battleground survey had the following for two key states:

Ohio: Clinton 43, Trump 39
Florida: Clinton 43, Trump 42

But all the above was before the latest on....

--Hillary’s e-mail scandal....

Wednesday we learned of a State Department investigation by the inspector general that concluded Hillary Clinton’s use of a private email server and months of missing records from her time at State were violations of policy and practices.

The report totally contradicts what Ms. Clinton has been telling us since this story first broke, that her exclusive use of a private email server while running the State Department was permitted.

The report, though, makes no recommendation that Clinton be investigated but she is already under investigation by the FBI, which still has yet to interview her.

The inspector general (IG) report also faults several previous Secretaries of State for lapses, but the others agreed to questioning by the IG, Steve Linick, while Clinton and three key aides did not.

Clinton spokesman Brian Fallon said in a statement that the report shows problems with the State Department’s electronic record-keeping systems “were longstanding” and emphasizes that her use of a private email server “was known to officials within the department during her tenure.”  That’s a flat-out lie.

Editorial / New York Post

“A devastating report by the State Department’s inspector general Wednesday shows just why Americans are right to distrust Hillary Clinton.

“The 78-page document (by an Obama appointee, no less) concludes that Clinton’s server and e-mail practices as secretary of state violated department policy – and she and her team lied about it repeatedly.

“It says she and her inner circle defiantly stonewalled the investigation, despite Hillary’s repeated assurances that she’d ‘talk to anybody, anytime.’  It also says:

“ – Clinton never sought an OK from State’s legal staff to use a private server, as required, and as her aides claimed. If she had, permission would’ve been denied.  Instead, her IT aides were warned ‘never to speak of the Secretary’s personal email system’ – and neither her server nor her Blackberry ‘met [even] minimum security requirements.’

“ – Despite her repeated denials, there were at least two attempts to hack into her system.  Neither was ever reported to State’s security personnel, as required.

“ – Clinton claimed she used a private system strictly for convenience. But when urged to also use an official e-mail address, she refused, citing the risk that personal e-mails might become publicly accessible.

“Tellingly, Clinton and top aides Huma Abedin, Jake Sullivan and Cheryl Mills refused to be interviewed by the IG.

“Here’s the bottom line: Virtually everything Clinton has said about her e-mails has been a lie.  And no longer can supporters laugh off E-mailgate so easily.

“Hillary’s culpability and her flouting of the law now seem clear.  But that leaves one more shoe to drop: Will Attorney General Loretta Lynch indict the Democrats’ presumptive presidential nominee? If she doesn’t, she’ll need a good excuse why.”

Editorial / Washington Post

“Hillary Clinton’s use of a private email server while secretary of state from 2009 to 2013 has been justifiably criticized as an error of judgment.  What the new report from the State Department inspector general makes clear is that it also was not a casual oversight.

“Mrs. Clinton had plenty of warnings to use official government communications methods, so as to make sure that her records were properly preserved and to minimize cybersecurity risks.  She ignored them....

“During her tenure, State Department employees were told that they were expected to use approved, secure methods to transmit information that was sensitive but unclassified, or SBU.  If they needed to transmit SBU information outside the department’s network, they were told to ask information specialists for help.  The report said there is no evidence that Mrs. Clinton ever asked, ‘despite the fact that emails exchanged on her personal account regularly contained information that was marked as SBU.’  On June 28, 2011, a cable was sent to all diplomatic and consular posts over her signature warning that personal email accounts could be compromised and officials should ‘avoid conducting official Department business from your personal e-mail accounts.’  At the time, Ms. Clinton was doing exactly that.

“On March 11, 2011, an assistant secretary sent a memorandum on cybersecurity threats directly to Ms. Clinton, noting a ‘dramatic increase’ in attempts to compromise personal email accounts of senior department officials, possibly for spying or blackmail. That didn’t stop Ms. Clinton either.  There were also numerous notifications that some emails (but not all) are considered federal records under the law and that she should print and file those in her office and, before leaving office, surrender all emails dealing with department business. She did so only about two years later, in December 2014.

“Starting in 2009, there was a new, electronic system, known as SMART, to properly archive department emails without having to print and file them, but Ms. Clinton opted not to use it, out of concern that there was ‘overly broad access to sensitive materials.’  According to the report, after a staff member ‘raised concerns’ with another official about Ms. Clinton’s personal email server, the staff was instructed ‘never to speak of the Secretary’s personal email system again.’

“The department’s email technology was archaic. Other staffers also used personal email, as did Secretary Colin Powell (2001-2005), without preserving the records. But there is no excuse for the way Ms. Clinton breezed through all the warnings and notifications.  While not illegal behavior, it was disturbingly unmindful of the rules.  In the middle of the presidential campaign, we urge the FBI to finish its own investigation soon, so all information about this troubling episode will be before the voters.”

Editorial / Wall Street Journal

“Hillary Clinton has said for more than a year that her use of a private email server as Secretary of State violated no federal rules and posed no security risk.  Only the gullible believed that, and now everyone has proof of her deceptions in a scathing report from State Department Inspector General Steve Linick....

“The IG concludes that the presumptive Democratic presidential nominee broke federal record-keeping rules, never received permission for her off-grid server, ignored security concerns raised by other officials, and employed a staff that flouted the rules with the same disdain she did.

“ ‘Secretary Clinton should have preserved any Federal records she created and received on her personal accounts by printing and filing those records with the related files in the Office of the Secretary,’ says the report.  ‘At a minimum, Secretary Clinton should have surrendered all emails dealing with Department business before leaving government service and, because she did not do so, she did not comply with the Department’s policies that were implemented in accordance with the Federal Records Act.’

“State still has never received emails from her private account for the first six weeks after she became Secretary, and the IG notes that it found (by other means) business-related emails that Mrs. Clinton did not include among the emails she has turned over.

“The report says she has also stonewalled requests to obtain her server.  And ‘through her counsel, Secretary Clinton declined [the IG’s] request for an interview.’  Former Secretaries Madeleine Albright, Colin Powell, Condoleezza Rice and current Secretary John Kerry all sat for interviews....

“As for Mrs. Clinton’s claim that her private account was secure, the report cites several instances of techies shutting down her server due to hacking concerns.  ‘Notification is required when a user suspects compromise of, among other things, a personally owned device containing personally identifiable information,’ says the report.  But the IG says it found ‘no evidence’ that Mrs. Clinton or her staff filed such reports....

“All of this should bear on the FBI’s email probe and whether Mrs. Clinton understood the security risks she was running.  On the IG’s extensive evidence, she clearly did – and then she lied about it.  Voters should understand that this is precisely the kind of governance Mrs. Clinton would return to the White House.”

The Clinton people will say that Colin Powell did the same things their boss did, but this is another lie.  Powell’s use of personal emails was limited and he was not using an unsecured server in his home.

--Hillary has another problem.  Virginia Dem. Gov. Terry McAuliffe is under investigation for a relationship between a Chinese agricultural company, Dandong Port Group, and $120,000 in contributions that a New Jersey construction firm controlled by Dandong’s CEO, Wang Wenliang, made to McAuliffe’s 2013 campaign and inaugural committee.

CNN first reported on Monday that the FBI and the Justice Department were involved in a review, which includes McAuliffe’s role as a board member of the Clinton Foundation, to which another company linked to Mr. Wang pledged a $2 million contribution in 2013, as reported by the New York Times.

McAuliffe, speaking to reporters on Tuesday, said he was shocked by reports of an inquiry.  He added he played no role in soliciting Wang’s pledge to the Clinton Foundation, and that the contribution from Wang’s company to his campaign was legitimate.

Here’s the bottom line.  Both Wang and McAuliffe are dirty.  Period.  I’ll never forget how over 20 years ago, a good friend from PIMCO who worked in Washington for us told me all about McAuliffe.  His relationship with the Clintons all this time is also out there for the public record.

As for Wang, he is a classic Chinese businessman.  He is also a delegate to China’s National People’s Congress.  He has built his empire by securing construction contracts around the world, including the Chinese Embassy in Washington.  Wang’s contacts with governors across the U.S. are extensive. He’s a Chinese agent.  

--Bernie Sanders said this week that the Democratic National Convention in Philadelphia and his push to make the party more inclusive could get “messy,” asserting in an interview with the Associated Press: “Democracy is not always nice and quiet and gentle.”

No doubt it is indeed going to be messy, and Bernie’s continuing attacks on Hillary are frustrating the hell out of Democratic Party leaders.

But as conservative columnist John Podhoretz of the New York Post wrote in an op-ed this week:

“(Let’s) not give him the credit for the seriousness of his purpose here. I think he’s not quitting because this campaign is the most thrilling, the most exhilarating, the most exciting thing that has ever happened to him.

“He’s a gadfly politician from a tiny state, and has been an outlier both in the House and in the Senate for 25 years.  If he had a rally in Vermont for his mayoral or House or Senate campaigns, three guys with long beards, two women in peasant dresses and one Holstein cow showed up.

“Now he speaks before crowds of 5,000, 10,000 and more.  He’s received nearly 10 million votes.  Larry David, one of the richest men in show business, is playing him weekly on ‘SNL.’  He’s raised – and spent – an astounding $207 million.* Many people view him as the Madame DeFarge of his tale of two countries – the one leading the masses against the millionaires and billionaires.

“Bernie won’t stop until they drag his bid for the nomination from his old, wrinkled fingers. It would be like denying him oxygen now.  I mean, how do you keep them down on the collective farm after they’ve seen Paree?

“Enjoy your panic, Democrats.  You’ve earned it.”

* Sanders had less than $6 million left at the start of May, while Hillary had $30 million.  Sanders had outspent Hillary $207 million to $182 million.

--Interesting that Trump met Sen. Bob Corker (R-TN) in Trump Tower.  I’m a big fan of his.

--I almost threw up when I heard Obama BFF Valerie Jarrett say on “60 Minutes” that one of her boss’s major accomplishments was “ending two wars.” 

--New Jersey Gov. Chris Christie’s approval rating hit yet another low in my state.  An FDU poll found that 49 percent “dislike everything about Gov. Christie.”  Only 26 percent approve of the job he is doing.

And now he is managing Trump’s transition team, continuing to ignore the state’s many issues.  He really should step down, as the Star-Ledger editorialized this week.

--New York City Mayor Bill de Blasio’s poll numbers continue to plummet.  According to a new Quinnipiac University poll, by a margin of 55 to 21 percent, voters agreed that de Blasio “does favors for developers who make political contributions to campaigns in which he is involved.”  His overall approval rating is at its lowest point ever – just 41 percent, with 52 percent disapproving of the job he’s done.  [In January, the Quinnipiac poll had de Blasio with a 50% approval rating.]

De Blasio’s trustworthy rating has also dropped from 60% in January to 43% today.

Among black voters, the mayor’s approval rating is 58%, down from 77% in January.  [Rather stunning.]

Gov. Andrew Cuomo, by the way, has a 56% approval rating in New York City.

--Last time I wrote of 64 people dying from being struck by lightning in Bangladesh within a few days.  By comparison, I saw in a piece by NJ.com, looking at deaths by lightning in my state, that thus far there have been five lightning deaths in all of the U.S. in 2016 – two in Florida, two in Louisiana and one in Mississippi.  [The story was about the 13 who lost their lives in lightning strikes in New Jersey from 2006 to 2012.  We haven’t had one since, which is very rare.  As you would expect, most occur between June and August in these parts.]

--A judge ordered Bill Cosby to stand trial in a sexual assault case.  This one is about Cosby’s alleged assault on a former Temple University women’s basketball official.  No doubt it will be covered wall-to-wall on the cable networks.  But look for zero from moi.

--From Ben Kesling / Wall Street Journal: “The Department of Veterans Affairs has mistakenly declared thousands of veterans to be deceased and canceled their benefits over the past five years, a new snafu to emerge at the embattled department.

“The VA has made the error more than 4,000 times over a half-decade because of employee mistakes or erroneous cross-checking of data by the department’s computers, among other reasons, according to correspondence between the VA and the office of U.S. Rep. David Jolly (R-FL) reviewed by the Wall Street Journal.  The VA changed its procedures to address the issue, but it isn’t yet clear whether the new system is effective.”

--Back on Jan. 28, Donald Trump held a nationally televised fundraiser for veterans’ causes in Des Moines and he said after he had raised $6 million, including $1 million from his own pocket.

As recently as last week, though, the campaign insisted he had given the money when he had not, as the Washington Post reported; the paper and others pressing the campaign for details.

By Monday afternoon, the Post had found not a single veterans group that had received Trump’s money.

Later Monday evening, Trump called the home of James K. Kallstrom, a former FBI official who is chairman of the Marine Corps-Law Enforcement Foundation.  The charity aids families of fallen Marines and federal law enforcement officers.

Trump told Kallstrom he is giving the entire $1 million to the group.  That’s a good choice, but it obviously shouldn’t have taken Trump that long.  The others who gave big donations that evening did make their gifts weeks before.

The Marine Corps-Law Enforcement Foundation had, however, already received $230,000 in past donations from the Donald J. Trump Foundation.

--Uwe E. Reinhardt / Wall Street Journal

“If you have not ever done so, I urge you to program into your next trip abroad a visit to an American military cemetery. There are quite a few in Europe, and some in Asia. You can find a list online.

“These cemeteries are settings of an awesome serenity and beauty, immaculately kept by the American Battle Monuments Commission. As Americans, we must thank the architects who designed these settings and the workers who over the decades and to this day have kept them in their immaculate condition....

“You can walk along the gravel paths of these cemeteries, and among the thousands of markers – crosses and Stars of David – beneath which the warriors rest.  Pick a marker at random and adopt the soldier whose name is chiseled into that marker.  Make him your father, or brother, or cousin, or a friend.  Imagine him alive, and how you might have hugged him as he shipped out to the distant front.

“However brutal his death may have been, you will draw solace from knowing that he rests here, in this serene setting, alongside his buddies who shared his fate.  You may even imagine that somehow, don’t ask how, the fallen soldier may know that you are visiting him, to pay your respects.

“You may not be able to suppress some tears; I never can....

“You will come away with renewed and strengthened respect for those of your fellow Americans willing to wear the nation’s military uniform and to bear the ultimate sacrifice one can make for one’s country.  If you are a student, you will look with fresh eyes at the few among your classmates in the ROTC, learning, along with their regular studies, how to become officers in America’s armed forces.

“And you will reflect deeply on our nation’s role in the world.  Whatever our flaws as a people have been in the past and still are today, you will realize, standing there among the thousands of gravestones, that in the sweep of history, ours is a grand nation of which you can and should be proud.”

I loved this piece because over 20 years ago, I took my own pilgrimage to Normandy and the American Cemetery there.  Inside one of the chapels is an inscription that I have used in this space many times before.

Think not only upon their passing
Remember the glory of their spirit

On a table in my living room I have a small bottle with sand from both Omaha and Utah beaches that I scooped up the day I was there.

---

Pray for the men and women of our armed forces...and all the fallen, especially on Memorial Day.

God bless America.

---

Gold $1212...down $39 this week
Oil $49.33

Returns for the week 5/23-5/27

Dow Jones  +2.1%  [17873]
S&P 500  +2.3%  [2099]
S&P MidCap  +2.9%
Russell 2000  +3.4%
Nasdaq  +3.4%  [4933]

Returns for the period 1/1/16-5/27/16

Dow Jones  +2.6%
S&P 500  +2.7%
S&P MidCap  +6.7%
Russell 2000  +1.3%
Nasdaq  -1.5%

Bulls  35.4
Bears  24.0  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore

 



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Week in Review

05/28/2016

For the week 5/23-5/27

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs.  Your support is greatly appreciated.  Click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.  Special thanks to G.R., Jim D., and E.M. this week.

Edition 894

Washington and Wall Street

What will the Federal Reserve do come its June 14-15 meeting?  That has been the paramount issue for the markets, which are now convinced the Fed will move, if not then, then July following the big referendum in the U.K. on Brexit.  I have said recently that I didn’t feel the Fed could act until the vote was taken across the pond, because it does indeed have the ability to convulse markets, at least in the short-term.  However, as I note below the odds of a vote to leave the European Union seem to be going down with each poll.  That said, I still wouldn’t put it past Russia to create an incident (we might not know they were involved until well after) because chaos in the EU redounds to their benefit, but that’s just my opinion.

As for the past week, the economic data for the U.S. continued to be largely positive.  A reading on April new home sales soared to 619,000 annualized, far better than expected and up 16.6% over March. April durable goods (big-ticket items), expected to be up 0.2%, surged 3.4%, though with this one it’s always about the components and ex- volatile transportation the reading was a still solid 0.4%, though non-defense capital orders (business investment) were down 0.8%.   But all in all good.

Then on Friday we had the second reading on first-quarter GDP and it was revised upward from 0.5% annualized to 0.8%.  Consumption was up 1.9%, unrevised, while the decline in business investment was down an annualized 2.6%, which was better than the first look pegging it at -3.5%.

When you couple the 0.8% pace with a projected 2.9% ann. clip for the second quarter (as currently estimated by the Atlanta Fed and its GDPNow indicator), whaddya know, combined, right on that 2% pace we’ve been stuck on...forever.

But for the Fed, the current trend is favorable and various inflation indicators are at the 2% level that is their benchmark.  IF next Friday’s employment report thus comes in strong, say at least 150,000+, and there is some wage growth, look for the Fed to make a hawkish statement on June 15, strongly hinting at an imminent move, if one isn’t forthcoming that day.

Friday, the markets were waiting for Fed Chair Janet Yellen’s comments at Harvard for any further hints.  In a Q&A, Yellen did not say whether Fed policymakers are leaning toward hiking the funds rate in June or July, but she said the economy is picking up.

“If (the economic gains) continue and if the labor market continues to improve, and I expect that will occur... I think it’s important for the Fed to gradually and cautiously increase our overnight interest rate and probably in coming months such a move will be appropriate,” she said in a forum at the university.

Fed Governor Jerome Powell said on Thursday that the economy remains on “solid footing” and that he views ongoing job growth and evidence of rising wages as being more important than recent weakness in consumer spending and business investment.  “There are good reasons to think that underlying growth is stronger than these recent readings suggest.  Labor market data generally provide a better real-time signal of the underlying pace of economic activity.”

Put Yellen and Powell together and I’ll stick with July for a hike, assuming there are no surprises in Friday’s jobs report.

Europe and Asia

First, a little economic data.  Markit released its flash estimates on manufacturing and services in the eurozone for May, with the manufacturing PMI coming in at 51.5 vs. 51.7 in April (50 being the dividing line between growth and contraction).  The services reading was 53.1.

Germany had a flash manufacturing reading of 52.4, 55.2 on services (both above April), while France’s readings were 51.8 services, 48.3 on manufacturing (also better than the prior month).

Chris Williamson, chief economist at Markit:

“The robust pace of economic growth seen in the first quarter will prove temporary. The survey therefore paints a picture of a region stuck in a low-growth phase, managing to eke out frustratingly modest output and employment gains despite various ECB stimulus ‘bazookas,’ a competitive exchange rate and households benefiting from falling prices.”

Germany reported its GDP was 0.7% in the first quarter over the fourth, in line with a prior estimate, while a reading on business sentiment was strong.  But the pace of GDP was expected to soften in Q2.

France is dealing with major labor strife, with all eight oil refineries at one point this week impacted by protests, petrol running perilously low in many cities, while air traffic controllers and others staged job actions.  Labor leaders vowed to disrupt the Euro 2016 football (soccer) championships in the country that begin June 10.  As I noted last week, Euro 2016 was already a huge security concern inside France’s intelligence community, with expected throngs milling about stadiums and bars, and labor protests would only make it even more of a security nightmare for authorities.  Rather easy for terrorists to hide amidst the crowds.

The French government of President Francois Hollande enacted the much-needed reforms to make it easier for companies to hire and fire employees and on Friday, Hollande vowed not to back down amid the threats by trade unions.

“Continue and step up the actions,” eight unions said in a joint call after the day of action.

If you’re a tourist in France these days, this is a nightmare.  Thus far, though, the protests have been largely peaceful with minimal violence.  If I’m talking about this topic in two weeks, however, that won’t be a good sign.

In the U.K., regarding Brexit, a poll from The Telegraph was most encouraging for those wishing to ‘remain’ in the European Union.  55% want to do so, only 42% want to ‘leave,’ the biggest gap yet in a major survey ahead of the June 23 referendum.  It seems more and more pensioners are turning to the pro-EU camp, afraid that a catastrophic recession would be the result of a ‘leave’ vote and that this would lead to pension cuts.  [Not a realistic fear, frankly, but understandable given some of the rhetoric.]

One item that is impacting the referendum in a big way, though, is immigration.  The Office for National Statistics reported this week that net migration of EU citizens to the U.K. rose to 184,000, up 10,000 from a year earlier.  New arrivals from Bulgaria and Romania rose 32% to 58,000, the agency said. The number of non-EU migrants has declined over the past five years, but the number of EU migrants has doubled in that period.

Turning to the other big story on the week, the ongoing Greek debt crisis, Sunday, the Greek parliament passed new budget cuts and tax hikes two days before eurozone finance ministers met to decide on whether Greece had done enough to free up further bailout funds.

Parliament passed the widely unpopular bill by a 153-145 margin.  Pierre Moscovici, European commissioner for economic affairs, praised the Greek government for making a “courageous” effort over the last few months to qualify for its latest round of bailout cash.

So late Tuesday/early Wednesday morning, Greece won additional pledges of debt relief, but nothing substantial until 2018 at the earliest, and only then if it continued to carry out its painful reforms.

More importantly in the immediate term, eurozone finance ministers gave the green light for further disbursements of aid, 10.3 billion euros, or about $11.5 billion, to be distributed in several stages (7.5bn euro by the second half of June so Greece can make coming debt payments and clear initial arrears).

Greece’s government bonds advanced, pushing the yield on the 10-year below 7%, briefly, for the first time since November.  [It closed at 7.07% on the week.]

Earlier, regarding debt relief, German finance minister Wolfgang Schauble stood firm over his insistence that Greece not be given any outright haircuts on its debt. Schauble said debt relief “was not a pressing problem” for Greece.  “Decisions need to be taken in due time,” Schauble not wanting to make any concessions that could require the approval of the German parliament before the country holds an election in October 2017.

Germany has also consistently said there can be no financial assistance for Greece without the IMF tagging along.

But while there is immediate relief there will be no Greek crisis, at least on the debt and the bailout this summer (there could yet be one on the migrant front), once again the major longer-term issue, the level of Greece’s debt, 180% of GDP and still growing, has been kicked down the road until seemingly mid-2018, which coincides not just with Germany’s 2017 vote but also the end of Greece’s third bailout program.

As for the IMF, it is not guaranteeing it will be part of the current program, though it said it would make a new debt-sustainability analysis later in the year and assess then the moves made by Greece and the eurozone finance ministers this week.

As for the Greek people, they will continue to suffer, with further tax hikes and pension cuts.  One wonders if they will willingly go along until 2018.  The leftist government of Alexis Tsipras has been pushing through measures totally antithetical to the platform it was initially elected on.  Tsipras is barely holding on to a governing coalition.

Another big event in euroland last week was Sunday’s runoff for the Austrian presidency, with former Green Party leader, now independent, Alexander Van der Bellen holding off far-right Freedom Party candidate Norbert Hofer 50.3% to 49.7%, thus preventing Hofer from becoming the EU’s first far-right head of state.  The margin was just 31,000 votes of 4.64 million cast.

Since Van der Bellen used to lead Austria’s Greens, he is being hailed as the world’s first elected Green head of state.

For his part, Hofer and his party made tremendous strides, it just wasn’t enough.  What was so disconcerting is that he adopted a number of symbols used during the 1930s and the time of the rise of the Nazis.

But for those who think that the rise of the far-right in Europe has thus been checked and that this is the peak, all you have to do is look at the vote of virtually every far-right party on the continent and with just one or two exceptions the parties are picking up percentage points with every election.  They may not be winning big positions, such as in France where Marine Le Pen’s National Front failed to capture any provincial governments in the last go-around of regional elections there, but she gained votes over the prior election and as of today she’d be in a run-off for the presidency next spring.

National elections are being held in Germany, France and the Netherlands next year, all with growing far-right parties.  After these votes take place we’ll be able to better ascertain just how far these movements can go, but a lot of it will depend on both the level of future terrorism in Europe as well as the migrant situation.

One more election item.  A poll in Spain forecasts that the June 26 vote there is unlikely to break the stalemate that has stopped politicians from forming a government since December.  The conservative Popular Party could see its vote rise to nearly 30% from 21% in December, while the Socialists dip to 20% from 22%.  But newcomer Podemos could be the new No. 2, over the Socialists, and Podemos has long said it would not enter a coalition with the Popular Party.  Ergo, back to square one.

Thus far the political chaos has not hurt the recovery in Spain’s economy to any great extent.

Regarding the migrant crisis...a fishing boat carrying some 590 migrants from Libya capsized in the Mediterranean on Wednesday.  But less than 30 died (including those listed as missing last I saw) as an Italian navy patrol vessel was able to pull virtually of them from the water after a distress call was sent out from the ship, 18 miles off the Libyan coast.

The same day, an Italian coast guard vessel dropped off 1,053 migrants in Palermo, Sicily, including 260 unaccompanied minors after rescuing them from 13 vessels.  That’s 1,500+ in one day!  All headed for Italy.  The figure the first four months was something like 26,000 for the country.

In Greece, authorities began to break down and evacuate the country’s largest informal refugee camp of Idomeni on the Macedonian border, which had become home to 8,400 refugees and migrants heading to northern Europe, before Macedonia cracked down and stopped the flow.

Idomeni was a cesspool and Greek authorities are attempting to find permanent homes for the migrants, or at least remove them to more formal camps.

Lastly, Turkish President Erdogan continues to threaten to tear up the refugee accord with the EU, saying the EU wasn’t keeping its word on financial aid and shouldn’t constantly impose criteria on Turkey in return for pledged visa-free travel for Turkish citizens.  Otherwise, he said, Turkey won’t continue accepting refugees back from Greece. 

For German Chancellor Angela Merkel, who brokered the deal between Turkey and the EU amid rising discontent in Germany over the hordes of migrants swarming into the country, it would be a huge blow if Erdogan rips the agreement up, and would add to the far-right Alternative for Germany party’s support.  [If I were Erdogan, I’d play major hardball.]

On the Asian front, just a few notes on Japan.  The flash manufacturing PMI for May was just 47.6, owing to the earthquakes weighing on heavy goods producers in particular.  Consumer prices ex-food and energy rose 0.9% annualized in April vs. 1.1% in March, but the Bank of Japan’s preferred core, stripping out just fresh food prices, was -0.3% year-on-year, vs. -0.1% in March.  Not good.

Lots of data coming from both China and Japan shortly after month end.

Street Bytes

--Stocks had their best week since March, with the Dow Jones +2.1%, the S&P 500 +2.3% and Nasdaq +3.4%.  The S&P, at 2099, is just 31 points shy of its all-time high.  Obviously, the market isn’t concerned about a looming rate hike and the Fed deserves some credit for this; telegraphing the move appropriately.

But if you work on the Street, you have to be concerned with trading volume.  Granted, it was a Friday before a holiday weekend, but today was the second slowest day of the year, while the week as a whole I believe was close to the slowest.

We need a surprise to stir everyone out of their torpor.  “There’s a meteor approaching!!!  Sell!!!”  [We’ll deal with how it wasn’t detected until six hours before later.]

--U.S. Treasury Yields

6-mo. 0.47%  2-yr. 0.91%  10-yr. 1.85%  30-yr. 2.65%

Further proof the market has discounted a rate hike, Treasuries were essentially unchanged on the week.

--The price of crude, as measured by West Texas Intermediate, hit $50 this week for the first time this year, the highest price since last October, before closing at $49.33.  Global supply disruptions, especially in Nigeria and Canada, and positive U.S. government figures on the inventory front have led to the recent leg of the rally off the January $26 lows.

Regarding Nigeria, it’s about militant activity and a decline in production of 40% from its recent peak, while the wildfires in Canada have generally knocked out 1m barrels a day of output in the oil sands.  [Recent production in Iraq has also been less than expected due to maintenance, bad weather and power outages, according to Iraq’s OPEC governor.]

But is the market overly optimistic that the rebalance in supply is permanent?  [Permanent as these things go.]  U.S. crude inventories fell by 4.2mbd to 5.1mbd last week, depending on the survey you follow, both surpassing expectations, which is significant if this continues, but these figures are volatile and we are still essentially at record levels.

That said, yes, we are driving more than ever.  Demand is also growing in India, China and Russia, which according to the International Energy Agency together are using about 1mbd more today than at the same time a year ago.

Of course if oil stayed around $50 awhile, that will spur some producers to increase supplies, which would cap prices, at least in theory.

--I’m shocked...shocked, I tell ya!  The Securities and Exchange Commission is probing Chinese e-commerce giant Alibaba’s accounting!  Specifically the “reporting of operating data from Singles Day” – BABA’s one-day sales extravaganza that supposedly generated more than $14 billion in revenue on Nov. 11.

The company said in a public filing this week: “Earlier this year, the SEC informed us that it was initiating an investigation into whether there have been any violations of the federal securities laws.”

The SEC declined to comment but the shares declined 7% on Wednesday when the news came out.  [By week’s end, though, the stock had rebounded.]

The SEC is also probing accounting related to other parts of the company as well as “practices applicable to related party transactions in general.”

Alibaba deserves the benefit of the doubt, innocent until proven guilty and all that (stuff), but I told you since day one when the company went public in 2014 not to touch it.  And I have told you how founder Jack Ma will eventually use his acquisition of Hong Kong’s South China Morning Post to promote Beijing’s agenda, but I digress.

Investor Jim Chanos has shorted BABA shares and recently told a hedge fund conference that Alibaba’s accounting was “some of the most questionable I’ve ever seen.”

--In a move that bores the hell out of me, Hewlett Packard Enterprise Co. is spinning off most of its technology services operations and merging them with those of Computer Sciences Corp., an $8.5 billion transaction.

Granted, this isn’t boring if you’re one of the 100,000 employees of the tech services operation, or two-thirds of HP’s overall workforce.

This is a follow-on to the breakup last fall of Hewlett-Packard Co.  HP Enterprises faces increasing competition from cloud-computing vendors such as Amazon and Microsoft.  As the Wall Street Journal best sums up: “Customers must decide whether to opt for cloud services, maintain conventional data centers, or build their own private cloud-like facilities – a business especially targeted by HP Enterprise.”

Meanwhile, HP Inc., the other company, posted a steeper-than-expected sales drop in its most recent quarter, with a 16% decline in consumer sales, as well as a 16% decline in printer revenue.

Overall, revenue fell 11%, below estimates.

--According to a report out of the Centers for Disease Control and Prevention and Harvard, pregnant women infected with the Zika virus during their first trimester face as high as a 13 percent chance that their fetus will develop a severe brain defect, microcephaly.

To put this in perspective, the prevalence of a relatively common congenital condition, such as Down syndrome, is less than 1 percent.  By contrast, as the study in the New England Journal of Medicine found, the estimated risk for microcephaly with Zika infections ranged from 1 percent to 13 percent.  [Bloomberg News]

That’s sickening, and obviously a reason for young people, of both sexes (because the male can pass it to his female partner, apparently), to stay away from the Rio Olympics, for starters.  Puerto Rico would be another. 

Zika keeps spreading...now reportedly on the African archipelago of Cape Verde.   And you’ve heard it’s literally just a matter of days before the mosquitoes who carry it hit the southern U.S.  [The massive amounts of rain the past month or so from Texas to Florida hardly help.]

World Health Organization leader Margaret Chan said this week that the experts had “dropped the ball” in the 1970s with regards to getting a handle on disease-carrying insects and that today:

“With no vaccines and no reliable and widely available diagnostic tests, to protect women of childbearing age, all we can offer is advice.

“Avoid mosquito bites.  Delay pregnancy. Do not travel to areas with ongoing transmission,” Dr. Chan said.  [BBC News]

Amir Attaran, a professor of law and medicine at the University of Ottawa, has argued that by August, when the Olympic Games are held in Rio, the Zika epidemic will be worse than currently predicted.

“It cannot possibly help to send a half-million travelers into Rio from places that would not normally have strong travel connections with Rio and therefore set up new dissemination channels,” Attaran said in an interview.  Just today, doctors worldwide have launched a new campaign urging the Games be postponed.

--Separately, Brazil’s Labor Ministry reported the nation’s factories, farms and services companies shed a net 62,844 jobs in April, the 13th consecutive month of job losses there amid the worst recession in decades.

--And on the medical front another issue bubbled up this week.  The first case of an infection that resists the antibiotic of last resort – colistin – was detected in the U.S., a 48-year-old woman from Pennsylvania who recovered as the infection was vulnerable to other antibiotics.

However, colistin is hugely symbolic in that it is used when other drugs fail and officials warned the world was now reaching “the end of the road” for antibiotics.

Colistin resistance was first discovered in China at the end of 2015 and intensive testing quickly discovered bugs that can resist it in Europe and Asia.

Now the U.S. has identified the first case in a patient, who had a urinary-tract infection.

It is not clear where the infection came from as the patient had not traveled recently and colistin isn’t as widely used in the U.S.  [I hadn’t heard of it, frankly.  I feel like an idiot.]

The concern is that colistin resistance will now hook-up with other forms of antibiotic resistance to create infections that can’t be treated.

Thomas Frieden, the director of the Centers for Disease Control and Prevention, said: “The more we look at drug resistance, the more concerned we are.

“The medicine cabinet is empty for some patients.”  [BBC News]

--After initially rejecting a $62bn cash offer from German conglomerate Bayer, Monsanto said it was open to further discussions over its proposed tie-up.  But the market is highly skeptical the deal would ever be approved on antitrust concerns, let alone the funding of the deal.

--Tiffany & Co. reported miserable earnings and revenues, with first-quarter sales (for the quarter ended April 30) falling 7.4%.

Tiffany is suffering from a strengthening dollar that is cutting into sales by travelers.  Foreign tourists account for more than 25% of Tiffany’s U.S. sales and 40% of revenue at its flagship Fifth Avenue store in New York.  Sales also fell sharply in Hong Kong, while terrorist attacks in Europe crimped sales there.

Sales fell 9% in the Americas, 12% in Asia-Pacific, and 14% in Europe. 

In an attempt to boost revenue, the company is going to be focusing on high-end watches.

After falling about 16% this year, the shares staggered to the end of the week, basically unchanged.

--On the other end of the spectrum, Dollar Tree Inc., where I proudly shop (for certain items like dishwashing liquid, shaving crème, soap, paper products, Campbell’s Soup, pretzel rods, Arizona Iced Tea...it’s foolish not to shop there...), boosted its outlook for the year as earnings and sales for the recent quarter handily beat expectations. Sales soared 9.5%, with same-store sales up a solid 2.3%, compared with department store chains that are struggling mightily.

The shares jumped 7% in response.

--Best Buy Co. warned its financial performance would be weaker in the current quarter as it announced the exit of the CFO, who had been instrumental in the company’s turnaround.  Sharon McCollam’s departure came as a surprise.

The company reported same-store sales fell 0.1%, which was actually a little better than expected, with performance driven by strong sales of wearable electronics like Fitbits and a 14% increase in appliance sales.  But sales of computers, mobile phones and accessories fell 3.5%.

I haven’t had a need for a new television, but Best Buy reported prices for newer high-resolution models are down 30% from a year ago.

Best Buy shares fell 8%.

--The impact of the terror attacks on air travel that began last Oct. 31 with the bombing of the Russian jetliner over Egypt, then Paris and Brussels, has been “a bit more pronounced” than usual, according to the CEO of British Airways’ parent International Consolidated Airlines Group SA.  U.K.-based tour operator Thomas Cook Group said summer bookings were down 5% from last year.

But global tourism is expected to grow 3.5% in 2016, according to the World Travel & Tourism Council.  Bookings by Americans to Europe, for example, are up 9.3% this year from last, according to Allianz Global Assistance, a travel-insurance provider.

At the same time, bookings to Paris are flat, whereas those to London and Rome are up 7% and 15%, respectively.

Americans’ bookings to Brussels for the summer, however, are down 30.4%, and to Istanbul 43.7%, according to Allianz.  Istanbul has seen a wave of terrorist bombings the past year.  [Friday, Turkey’s government reported visitor numbers fell by 28% in April vs. year ago levels, the worst fall since records began.  Tourism accounts for 12% of GDP.]

This week Ryanair, in announcing an 18% jump in passenger traffic for its recent quarter, said there was an immediate slowdown in sales since the EgyptAir flight went down.

The discount airline did, however, report a spectacular load factor of 93%.  Aside from demand, that’s obviously terrific management in controlling capacity.

--Boeing and VietJet of Vietnam finalized an $11.3 billion order for the Vietnamese airline to buy 100 of the U.S. aircraft manufacturer’s single-aisle 737 MAX 200 jets. The deal was signed in conjunction with President Obama’s visit to the country this week.

--The head of security for the TSA was removed from his position after the agency was criticized for long lines at airport checkpoints.  Incredibly, the guy received more than $90,000 in bonuses and awards over a 13-month period in 2013-14, according to a congressional committee.  There did seem to be some improvement at major airports such as Chicago’s O’Hare, ground zero, this past week.

By the way, you may want to have a sit-down with your dog.  There have been cries from all corners to hire more sniffer dogs at the TSA to speed up lines.

“Ralph (we called our dog Ralph, after baseball Hall of Famer Ralph Kiner), it’s time you pulled your share of the load.  I’m taking you tomorrow to apply to be a sniffer dog.”

“Ruff!”

“I’m glad you’re taking it well.  You’ll see some cute girls!”

“Ruff ruff!”

--A Florida judge denied Gawker, the gossip website, a motion for a new trial as former wrestler Hulk Hogan pulled off another courtroom win, the court letting stand a jury’s $140 million award in Hogan’s sex-video case.

“I’m going to deny the motion for a new trial and find no reason to apply any remitter [reduction in judgement] to this case,” Judge Pamela Campbell said.

Gawker must now challenge the judgement in an appellate court.  In the meantime, the parties return to court on June 10, as Judge Campbell has to decide on whether Gawker must put any of the judgement into an escrow account, pending their appeal, and whether to issue a permanent injunction barring Gawker from ever again posting the video.

But this is just part of the story.  Billionaire Silicon Valley entrepreneur Peter Thiel, founder of PayPal and an early investor in Facebook, who was outed as being gay by Gawker, secretly financed the lawsuit against the media company to try to put it out of business.

A 2007 article published by Gawker’s Valleywag blog was headlined, “Peter Thiel is totally gay, people.”  A series of articles followed from the a-holes at Gawker, “(ruining) people’s lives for no reason,” according to Thiel.  So he funded a team of lawyers to find and “help” victims of the company’s coverage.

Thiel, in his first interview on Wednesday since his identity became public, said: “It’s less about revenge and more about specific deterrence.  I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.”

Now this gets complicated.  I sympathize with Thiel and Hulk, but I’m generally not a fan of Thiel overall.  And there are free speech principles at work, but no right to just destroy people without cause, especially when invading one’s privacy.

I just hate the concept of Gawker, frankly.  I call people out when it’s warranted, and comment on others when it becomes general news, but I want the likes of Gawker to fail.  They produce garbage.  And don’t get me started on Gawker founder Nick Denton and some of the hypocrisy angles involved in the Hogan (Terry Bollea) case.

For his part, Denton said in an open letter to Thiel on Thursday, that Gawker was targeted because it brought harsh scrutiny to Silicon Valley figures unaccustomed to it.  He acknowledged his publications “overstepped the line,” but wrote “this vindictive decade-long campaign is quite out of proportion to the hurt you claim.”  [That logic is pathetic.]

Denton warned: “The world is already uncomfortable with the unaccountable power of the billionaire class, the accumulation of wealth in Silicon Valley, and technology’s influence over the media.”

--Disneyland saw a 9% rise in attendance during the park’s 60th anniversary, but SeaWorld San Diego continued to struggle amid the animal rights protests, attendance falling 7% there in 2015, as reported by the L.A. Times’ Hugo Martin.

Disneyland, by the way, brought in 18.3 million visitors last year, second among theme parks to Disney World in Florida, which had 20.5 million, up 6% from 2014.

--Chinese billionaire Wang Jianlin took a shot at Disney as his Dalian Wanda Group prepares to open a theme park in a direct challenge to Disney’s Shanghai resort.

Wang is said to be China’s richest man with a fortune estimated at $28.7bn, according to Forbes.  “One tiger is no match for a pack of wolves,” he said in an interview on China Central Television last weekend.  Shanghai has one Disney, while Wanda, across the nation, will open 15 to 20.  “While Disney is preparing work visas for its foreign princesses, Wanda is keen to stress its domestic credentials. Disneyland is fully built on American culture.  We place importance on local culture.”

Disney said Wang’s comments “were not worthy of a response.”  I would like to but I’m in enough trouble with the country as it is.

--Security researchers have tied a recent spate of digital breaches into Asian banks to North Korea, in what appears to be the first case of a nation using hack attacks for financial gain, according to security firm Symantec, which released a report on the matter this week that included evidence of North Korean complicity in attacks on a bank in the Philippines last October and a Vietnamese bank in December, as well as the central bank of Bangladesh in February that resulted in the theft of more than $81 million.

The thieves gained access to Swift, a Brussels-based banking consortium that runs what was thought to be the world’s most secure payment messaging system. Swift’s system is used by 11,000 banks and companies to move money from one country to another, making it a tempting target.

--Snapchat is now estimated to have a value of $18-$20 billion, the figure implied by a new funding round, according to TechCrunch.  The company raised $1.8bn, giving it about $2.6bn, according to a regulatory filing on Thursday.  Snapchat didn’t formally say the latest funding raised its valuation. The last round, in May 2015, pegged it at $15bn.

With over 100 million daily users, Snapchat is the go-to site for the youth.  They like that the messages disappear after a set time, making it hard for their parents and any authority figures to monitor the use.  Plus the company serves over 10 billion videos daily.

But is it a fad or will the likes of Facebook grab its users?

--Under Armour signed a record apparel deal with UCLA, 15-years, $280 million, exceeding to recent Nike deals with Ohio State (15 yrs., $252 million) and Univ. of Texas (15 yrs., $250 million).  UA was looking to add a major West Coast program to its stable that includes Notre Dame, Auburn and Wisconsin.

--From the Wall Street Journal:

“A major U.S. government study on rats has found a link between cellphones and cancer, an explosive finding in the long-running debate about whether mobile phones cause health effects.

“The multiyear, peer-reviewed study, by the National Toxicology Program, found ‘low incidences’ of two types of radio frequencies that are commonly emitted by cellphones.  The tumors were gliomas, which are in the glial cells of the brain, and schwannomas of the heart.”

The National Institutes of Health, which helped oversee the study, said, “It is important to note that previous human, observational data collected in earlier, large-scale population-based studies have found limited evidence of an increased risk for developing cancer from cellphone use.”

I use my cellphone less than anyone in the world so on this count I’m clear.

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: A wave of bombings claimed by ISIS in the heartland of Syrian President Bashar Assad’s government killed at least 154, according to the Syrian Observatory for Human Rights, a huge blow to Assad.  More than 300 were wounded in the Monday attacks in the Mediterranean coastal cities of Jableh and Tartus.  Most of the dead were civilians.

In Tartus, one car bomb exploded and as people began to flock to the site, two suicide bombers detonated explosive belts.  Then in Jableh, fifteen minutes later, there were a total of four blasts – one car bomb and three suicide attackers targeting a bus station, a hospital and a power station.  Incredible sophistication and coordination.

The two cities, which are majority Alawite – the offshoot of Shiite Islam followed by Assad – had been relatively insulated from the five-year civil war and the unprecedented attacks on the Assad strongholds throw Latakia province into a state of chaos.  The people no longer feel Assad can protect them.

This is also the home of the Russian naval and air bases.  After the attacks, Vladimir Putin vowed to continue his support of Assad.

And this just in...Turkey is furious that U.S. Special Forces in Syria have been filmed (as seen on nightly newscasts in the States tonight) wearing insignias of Kurdish militia.

Turkish Foreign Minister Mevlut Cavusoglu called the U.S. “two-faced” and said the practice was “unacceptable.”

It is!  U.S. Col. Steve Warren in Baghdad said the wearing of the patches was unauthorized, and admitted there were political sensitivities in this case. 

The patches were that of the YPG, which Turkey accuses of being linked to the banned PKK Kurdish militant group that Turkey, along with the EU and U.S., regards as a terrorist organization.

The Pentagon at first claimed the soldiers were wearing the patches to blend in.

One of the many reasons why this is important is because freakin’ President Obama keeps telling the American people our soldiers in Iraq and Syria aren’t in combat when everyone with half a brain, including the families of those who have died there recently, in combat, know otherwise.

Regarding Iraq....

Erika Solomon and Geoff Dyer / Financial Times

“Looking at a map of northern Iraq, it can easily appear as if the ISIS forces holding the city of Mosul are vulnerable. To the west, militia are ready to advance. To the north, south and east, army and paramilitary troops are as close as 20km away.

“Yet even as these troops seem within touching distance, they are a long way from retaking Mosul.  What the maps do not show are the bitter rivalries, political ambitions and regional power struggles behind the forces gathered around Iraq’s second-largest city, hindering what will be one of the most important campaigns in the war against the jihadis.

“ ‘If you think there is some grand plan for this – well, there is no plan,’ says one Iraqi security official.

“In the two years since ISIS shocked the world by seizing Mosul and large swaths of Syria and Iraq, the U.S.-led coalition battling the group has made progress.  ISIS has lost 46 percent of its Iraqi territory and 16 percent of its holdings in Syria, according to the Pentagon, faster than U.S. officials had thought likely.  Recent momentum has lulled many regional players into a sense of confidence, almost as if the war was over.

“ ‘Everyone has forgotten about ISIS,’ says one U.N. official in Iraq.  ‘They are busy positioning themselves for the war after ISIS instead.’....

“The risk of prolonged war has serious implications for the region and beyond. It leaves millions across Syria and Iraq homeless and displaced at a time when world powers are keen to stem the flow of refugees towards Europe.  It also complicates the peace process for Syria.”

The Iraqi military and militia forces announced they would liberate Fallujah from ISIS, but reports from remaining residents say they are being used as human shields as ISIS is well-entrenched.

Actually a late report I just read from Fallujah speaks of unthinkable conditions in the city, with 50,000 civilians trapped.  They have been told through leaflet drops to put white sheets on their roofs so they aren’t bombed.  [Of course the ISIL fighters will do the same.]

A spokeswoman for the UN High Commission for Refugees told the BBC, “We have dramatic reports of the increase of the number of executions of men and older boys, refusing to fight on behalf of ISIL.

“Other reports say a number of people attempting to depart have been executed, or whipped.  One man’s leg was amputated,” said Melissa Fleming.

People are also starving to death.

Michael Gerson / Washington Post

“Want a good measure of how degraded the presidential foreign policy debate has become?  Over the past four years, the United States has largely been a bystander in the largest strategic and humanitarian disaster of our time: the collapse of sovereignty in Syria, which has produced 5 million refugees, caused more than 300,000 deaths [Ed. it’s now 400,000+] and empowered some of the most vicious, totalitarian nut jobs in the world.

“But what is the critique from both Donald Trump and Bernie Sanders? That the United States is overcommitted, especially in the Middle East.  Trump in particular has argued that the United States is a pathetic debtor country that must get its own house in order before engaging in nation-building.  ‘We cannot go around to every country that we’re not exactly happy with,’ Trump said recently, ‘and say we’re going to recreate [them].’

“This has hardly been President Obama’s temptation.  His motivation being...what?  A determination to be the anti-Bush?  Serial indecision? The pivot to Asia? For whatever reason, Obama has consistently filed action in Syria under the category of ‘stupid stuff,’ often overruling the more forward-leaning views of his senior foreign policy advisers (including Hillary Clinton when she was his secretary of state).  Tamara Cofman Wittes of the Brookings Institution recently testified before the Senate Foreign Relations Committee that ‘incremental steps over the last four years to try and shape both the battlefield and the context for diplomacy’ have been ‘too little and too late to alter the conflict’s fundamental dynamics.’

“What have been those dynamics? The regime of Bashar al-Assad, once teetering on the brink of destruction, has been saved by Iranian and Russian military interventions.  Early on, jihadist groups in Syria became the most serious, well-equipped opposition to the regime, forcing rivals off the field and raising a long-term terrorist threat.  Assad has committed mass atrocities with impunity, so long as he doesn’t use chemical weapons again (though his victims end up just as dead by other methods).  To avoid responsibility for this nightmare, the Obama administration has tried to narrow the definition of U.S. interests.  What really matters is removing Assad’s chemical weapons. Or the Iranian nuclear agreement.  Or killing terrorists with drones and special operations. Anything else is, according to Obama, ‘someone else’s civil war.’

“If Obama loses sleep over the situation, he gives no public indication.  On the contrary, he often congratulates himself on the coolness and realism of his judgment on Syria (declaring himself ‘very proud’ of his decision not to enforce the chemical weapons ‘red line’). But this is the kind of thing – like the Rwandan genocide for Bill Clinton – that Obama will be left to explain for the duration of his post-presidency. During the Obama years, perpetrators have been given a clear message: Mass atrocities work, at least if you have faithful sponsors and halfhearted enemies.”

Fred Hiatt / Washington Post

“Surveying the wreckage of the Middle East and the fraying of Europe, President Obama understandably would like us to believe that no other policy could have worked better.

“The United States has tried them all, his administration argues: massive invasion, in Iraq; surgical intervention, in Libya; studied aloofness, in Syria.  Three approaches, same result: chaos and destruction.

“So why bother?  Why get sucked into a ‘transformation that will play out for a generation,’ as Obama described it in his State of the Union address this year, ‘rooted in conflicts that date back millennia’?  Even setting aside the offensiveness of such a sweeping dismissal of Arab potential, the formulation is wrong on two counts, one prescriptive and one analytical.

“It offers no plausible path for Obama’s successor – who, as Obama’s own fitful, reluctant re-escalation shows, will not be able to ignore the region.  Instead, it invites the kind of demagogic promises we have heard during the campaign, to ‘carpet bomb’ Islamic militants until we find out whether ‘sand can glow in the dark,’ as Sen. Ted Cruz threatened, or, in Donald Trump’s words, to ‘quickly, quickly’ ‘knock the hell out of’ the Islamic State and then ‘come back here and rebuild our country.’

“More fundamentally, the administration’s fatalism ignores a fourth policy option that Obama, from the beginning, was determined not to try: patient, open-ended engagement using all U.S. tools – diplomatic as well as military – with a positive outcome, not a fixed deadline, as the goal....

“Obama came into office determined to avoid this approach.  In Afghanistan, he set a timetable for troop withdrawal, untethered to conditions.  In Libya, he bombed the Gaddafi regime out of power but did not stay to help a new government get on its feet.  In Iraq, he overrode his civilian and military advisers and declined to keep in the country the 15,000 or 20,000 troops that might have helped preserve the stability the U.S. surge had helped achieve....

“I understand why Obama and so many other Americans reject persistent engagement, often derisively called ‘nation-building.’  It is difficult, and the United States often does it badly and sometimes doesn’t succeed; Americans can’t impose democracy; we often end up doing work that we wish the locals or their neighbors would do....

“But against all that wisdom stands one stubborn fact, again proved by Obama’s re-escalation: The United States does not have a choice. The unraveling doesn’t stay put, but spreads to Syria and Paris and Brussels and the skies over the Mediterranean and, eventually, the United States.”

Finally, speaking on the sidelines of the G7 summit in Japan, President Obama was asked by a reporter about Donald Trump and the attitude of foreign leaders.

“They are not sure how seriously to take some of his pronouncements, but they’re rattled by him – and for good reason, because a lot of the proposals that he’s made display either ignorance of world affairs or a cavalier attitude,” the president said.

“[He only has] an interest in getting tweets and headlines instead of actually thinking through what it is that is required to keep America safe and secure and prosperous and what’s required to keep the world on an even keel.”

Obama actually said that...implying he has kept the world on an even keel.  He will say something like this, with a straight face, when he gives his farewell address next January.

I want to scream.

Yemen: A suicide car bombing claimed by ISIS killed at least 45 army recruits in the Yemeni city of Aden, the port city that serves as the temporary capital of Yemen’s Saudi-backed administration while it seeks to seize back the capital Sanaa from the Iranian-backed Houthi group.

Iran: Defense Minister Hossein Dehqan (also spelled Dehghan) told reporters on Tuesday that the Iraq and Syrian conflicts are part of a long, deep-seated plot hatched by Israel and the United States, according to reports by Iran’s Press TV.

“What is today happening in Syria and Iraq is a deep-seated U.S.-Zionist conspiracy that has triggered war in Muslim territories,” said Dehqan.

“Zionists are supporting terrorists and equipping them.”  [The Jerusalem Post]

Israel: Prime Minister Benjamin Netanyahu expanded his conservative coalition this week, formally appointing Avigdor Lieberman to the position of defense minister, moving the government further right and thus dimming any thoughts of real negotiations with the Palestinians.

By bringing in Lieberman’s Yisrael Beiteinu party, Netanyahu increases his coalition from 61 to 67 seats in the 120-seat parliament, the Knesset. 

Thomas L. Friedman / New York Times

“(Israel) under Netanyahu has gone from bad to worse.  He just forced out Defense minister Moshe Yaalon.  Yaalon, a former army chief of staff, is a very decent man – a soldier’s soldier, determined to preserve the Israeli Army as a people’s army that aspires to the highest standards of integrity in the middle of a very dangerous neighborhood.

“Netanyahu plans to replace Yaalon with the far-right Avigdor Lieberman, who boasts he could not care less what American Jews think about how Israel is behaving and a man whom, Haaretz reported, was only recently dismissed by Bibi’s team as ‘a petty prattler,’ unfit to be even a military analyst, and whose closest brush with a real battle was dodging a ‘tennis ball.’

“Lieberman, when he has not been under investigation for corruption, has mused about blowing up Egypt’s Aswan Dam, denounced Israelis who want Israel to get out of the West Bank as traitors and praised an Israeli soldier, Sgt. Elor Azaria, who fatally shot a wounded Palestinian assailant in the head as he was lying on the ground awaiting medical attention.

“Describing Netanyahu’s dumping of Yaalon for Lieberman, Yediot Aharonot columnist Nahum Barnea wrote, ‘Instead of presenting to the world a more moderate government ahead of the diplomatic battles to come in the fall, Netanyahu is presenting the most radical government to ever exist in Israeli history.’

“Yaalon himself warned, ‘Extremist and dangerous forces have taken over Israel and the Likud movement and are destabilizing our home and threatening to harm its inhabitants.’ Former Labor Defense Minister Ehud Barak said, ‘What happened is a hostile takeover of the Israeli government by dangerous elements.’....

“For those of us who care about Israel’s future, this is a dark hour.”

Egypt: Human remains retrieved from the site where EgyptAir flight 804 went down suggest that an explosion may have brought down the aircraft, Egyptian forensic officials told news agencies on Tuesday.  The impact zone apparently has been identified, but no word on how long it will take to bring up the fuselage, let alone the black boxes.

As for why if it was a bomb that brought down the plane there has been no claim of responsibility, al-Qaeda would have reason not to stake a claim. It took a year after the 7/7 attacks in London before the group stepped forward, and in this case al-Qaeda may not want to return to the center of the radar, as  terrorism expert Daveed Gartenstein-Ross put it. 

If it was AQAP (Al-Qaeda in the Arabian Peninsula) there really would be zero reason to claim responsibility as it would have proved its new methods worked, whether the bomb was planted in one of the stops the plane made that day, or it was incorporated into a laptop brought on board.

Afghanistan: Taliban leader Akhtar Mohammad Mansour was killed in a drone strike on Saturday, in a remote area in western Pakistan’s Baluchistan province.  The operation involved several unmanned American aircraft, and it struck a vehicle in which Mansour was traveling.

The Afghan Taliban acknowledged the death and then announced a new leader to replace Mansour, Mawlawi Haibatullah Akhundzada (you really don’t know if I’ve spelled this properly, do you?)  He is said to be a religious scholar and former head of the Taliban courts, which means he has a twisted definition of religion, sports fans.

Pakistan said Tuesday the American drone strike on Mansour was “against international law.”  Relations between Washington and Islamabad are not good these days.  Pakistan Interior Minister Chaudhry Nisar Ali Khan warned that the strike would have “serious implications” for the country’s relations with the U.S.  In his first comments since the takeout, Khan said that if every country targeted perceived threats abroad, “there will be the law of the jungle in the world,” adding the U.S. action was “completely against the U.N. Charter and international law.”  

Regarding peace talks with the Taliban, Khan said: “You can’t expect that you drone their leader and say ‘come to the negotiation table.”  [Saeed Shah and Qasim Nauman / Wall Street Journal]

In Afghanistan, by the way, the Taliban has killed 5,500 Afghan soldiers in the past year and it has little incentive to stop fighting and cut a deal.

In an op-ed for the Wall Street Journal, Michael O’Hanlon of the Brookings Institution and former commander David Petraeus urged a major step up in the bombing campaign in Afghanistan.  For example, the two point out that in the first three months of this year, U.S. and allied planes dropped 7,000 bombs in Iraq and Syria, but only 300 in Afghanistan.

China: Beijing warned the Group of Seven (G7) countries against engaging in talks that might worsen tensions in the South China Sea.

On the issue of China/Taiwan relations, with the election of Taiwan’s new president, Tsai Ing-wen, Beijing has launched personal attacks against her, with a member of the Association of Relations across the Taiwan Straits, Wang Weixing, saying in a paper published under the official Xinhua news agency:

“From the human point of view, as a single woman politician, [Tsai] does not have the emotional burden of love, of ‘family,’ of children, [so her] political style and executive strategy tends to be emotional, personal and extreme,” wrote Wang, who is also a senior military officer.

Wang charged Tsai’s family was well connected to the Japanese invaders during the Second World War, and he went after Tsai’s father, who was married more than once.

Wang then said Tsai would seek “hidden independence” and provoke Beijing to destroy peace in the Strait, he wrote.  [South China Morning Post]

Beautiful.  But you see, friends, what I’ve been writing for months now.  The shock in the region could very easily be a lightning attack on Taipei from the mainland, before there is any large-scale mischief in the South China Sea.  You can see how Beijing is beginning to lay out the predicate, using such propaganda. 

Or as the Wall Street Journal opined on Monday:

“If Beijing’s leaders think they can pressure Taiwanese into loving them, there will be trouble ahead.  Now would be a good time for the U.S., including the presumptive presidential candidates, to reaffirm Washington’s commitment to its democratic Chinese partners in Taipei.”

Sorry, the Taiwanese are about to get royally screwed.

Separately, China wasn’t happy President Obama announced the end of a longstanding arms embargo on Vietnam.  One of China’s official mouthpieces, the Global Times, called Obama’s claim that the Vietnam move was not aimed at China “a very poor lie,” adding that it would exacerbate the “strategic antagonism between Washington and Beijing.”

And then there is the situation between Beijing and Hong Kong.  This will come to a head next year in a spasm of violence that will shake the world.

The other day the National People’s Congress chairman Zhang Dejiang dismissed calls for self-determination and independence from various activists in Hong Kong as “unfeasible” and not acceptable “to the vast majority of Hongkongers.”

A Beijing-based legal expert told the South China Morning Post that advocacy for Hong Kong independence is “not a problem” for Beijing.

“Because it does not have the strength,” the lawyer said, in quoting a Chinese official.  “Even if it has the strength, it will be easy for Beijing because the central government has the laws, guns and cannons to handle it.”

Japan: President Obama at Hiroshima today. 

“We remember all the innocents killed across the arc of that terrible war,” he said.  “We have a shared responsibility to look directly into the eye of history and ask what we must do differently to curb such suffering again.”

How about a damn no-fly zone in Syria in August of 2012, Mr. President?!  But the November 2012 election was too important.  We didn’t want the American electorate talking about U.S. forces in Syria then, did we?  “GM is alive! Bin Laden is dead!” was the preferred mantra.

Instead, over 380,000 have died since then in Syria, Mr. President.  And in walking away from ally Turkey, who was crying for our help to establish sanctuaries on the Syrian-Turkish border, millions of migrants then began to flood Europe, while relations with Turkey have worsened and President Erdogan has become more autocratic.

Separately, at the start of his visit to Japan, President Obama was pressed by Japanese Prime Minister Shinzo Abe on the death of a Japanese woman in which an American citizen was allegedly involved.  Japanese police arrested an American working on the U.S. military base in Okinawa last week in connection with the murder of the 20-year-old.  The American is a former Marine.  Obama said the U.S. was “appalled” by the death as well.

Abe made such a big point of this purely for political reasons.  Of course it was a heinous crime, from the little I know, but I thought Abe was trying to embarrass Obama. 

Ukraine: Russia said it was ready to support the return of Ukraine’s troubled eastern regions to Kiev government control, according to President Putin’s spokesman, Dmitry Peskov, the RIA Novosti news agency reported on Thursday.

But understand that while this may be an invitation for dialogue, others see a bluff.  Peskov said Moscow fully supported Ukrainian President Petro Poroshenko’s pledge to re-establish control over the war-torn regions.  Such support was, however, conditional on changes being “dictated by humanitarian concerns.”

A day earlier, the head of the so-called Donetsk People’s Republic, Alexander Zakharchenko, declared that the separatist statelet would only agree to Kiev control once “Ukraine becomes a state again.”  For this to happen, “there would need to be a change in government.”

Peskov’s comments also come during a time of an uptick in fighting, with Kiev reporting “record” losses for over a year. 

This is amazing, since it is getting zero press these days, but seven Ukrainian soldiers were killed in fighting on May 23 alone.  [Moscow Times]

Separately, Poroshenko announced this week that the war in eastern Ukraine had killed more than 10,000 Ukrainians and injured more than 20,000.  Staggering figures.

Venezuela: A recent poll of Venezuelans in the Miami Herald showed 86 percent said they bought “less” or “much less” food than they used to, while only 54 percent said they ate three times a day.  But that poll was taken weeks ago.  The situation worsens by the day.  It is leading to mob violence.  As reported by the Associated Press, the other day a man was burned alive outside a Caracas supermarket for allegedly stealing the equivalent of $5.

Pray for opposition leader Henrique Capriles, who is leading a movement to remove President Nicolas Maduro, the village idiot, as I correctly labeled him when he first took office three years ago. This guy has the brain of a toad.  I’m shocked his own lackeys haven’t dumped him from a helicopter into the ocean.

Capriles has a simple mantra.  Food first, then a recall referendum.

Random Musings

Primary Results

Republican

Washington: Trump 76%, Cruz 10%, Kasich 10%

Delegates (1237 needed): Trump 1239 ...ding ding ding!

Democrat

Washington: Clinton 54%, Sanders 46%

Delegates (2383 needed): Clinton 2310, Sanders 1542

Next up: California, New Jersey et al, June 7.

In a Public Policy Institute of California poll, Clinton’s lead over Sanders in the state is down to two points.

--So it’s officially over on the Republican side and the national polls continue to show that Donald Trump has made up the gap already on Hillary Clinton.

An NBC News/Wall Street Journal poll has Clinton leading Trump 46-43, within the margin of error.  Clinton had an 11-point lead in this survey in April.  [Sanders leads Trump 54-39 in a hypothetical matchup.]

Republican support for Trump jumped to 86% from 72% in mid-April, while the share of GOP voters who said they would support Clinton fell to 6% from 13%.

But the two likely nominees are still viewed the most negatively in the modern history of presidential politics, with 58% viewing Trump negatively and 54% feeling the same way about Hillary.  But for Trump, this is an improvement from April when the figure was 65%.

Among the other takeaways, 47% say they would consider an independent or third-party candidate in the fall, up from 40% in the spring of 2012.

In the May poll, Trump leads among men by 9 percentage points, compared with Mitt Romney’s 7-point advantage among men in 2012.  Clinton, though, leads among women by 13 points, compared with Obama’s 11-point edge in 2012.  She maintains 48- and 79-point leads with Hispanics and African-American voters, respectively.

Overall, Trump tops Clinton among white voters by 16 points, compared with Romney’s 20-point margin among white voters in 2012.

So the above is the NBC/WSJ poll.

In the Washington Post/ABC News survey, Trump was favored over Clinton 46-44, so another dead heat.  Again, an 11-point swing toward Trump, in this case since March.

Clinton’s net negative rating among registered voters is minus-16, while Trump’s is minus-17.

44 percent say they want a third-party option.  The WP/ABC poll tested a hypothetical three-way race and it was Clinton 37%, Trump 35% and Romney 22%.  [But this is stupid in that Romney’s supposed 22% would quickly melt away.  Just being realistic, as one who once voted for John Anderson and Ross Perot.]

Among white voters in this survey, though, Trump takes 57%, while Clinton gets 33%, a 24-pont margin bigger than the above-mentioned Romney edge.

Among nonwhites, Clinton is at 69% with Trump at 21%.  Four years ago, Romney got 19% of the nonwhite vote.

--A new Military Times poll of 950 active-duty troops and reservists has Trump leading Clinton 54-25.  21% said they would not vote.

Interestingly, 52% want Ret. Maj. Gen. Jim Mattis, apparently beloved by the troops, to run as a third party candidate.  Heck, General.  Do it!

--A CBS News Battleground survey had the following for two key states:

Ohio: Clinton 43, Trump 39
Florida: Clinton 43, Trump 42

But all the above was before the latest on....

--Hillary’s e-mail scandal....

Wednesday we learned of a State Department investigation by the inspector general that concluded Hillary Clinton’s use of a private email server and months of missing records from her time at State were violations of policy and practices.

The report totally contradicts what Ms. Clinton has been telling us since this story first broke, that her exclusive use of a private email server while running the State Department was permitted.

The report, though, makes no recommendation that Clinton be investigated but she is already under investigation by the FBI, which still has yet to interview her.

The inspector general (IG) report also faults several previous Secretaries of State for lapses, but the others agreed to questioning by the IG, Steve Linick, while Clinton and three key aides did not.

Clinton spokesman Brian Fallon said in a statement that the report shows problems with the State Department’s electronic record-keeping systems “were longstanding” and emphasizes that her use of a private email server “was known to officials within the department during her tenure.”  That’s a flat-out lie.

Editorial / New York Post

“A devastating report by the State Department’s inspector general Wednesday shows just why Americans are right to distrust Hillary Clinton.

“The 78-page document (by an Obama appointee, no less) concludes that Clinton’s server and e-mail practices as secretary of state violated department policy – and she and her team lied about it repeatedly.

“It says she and her inner circle defiantly stonewalled the investigation, despite Hillary’s repeated assurances that she’d ‘talk to anybody, anytime.’  It also says:

“ – Clinton never sought an OK from State’s legal staff to use a private server, as required, and as her aides claimed. If she had, permission would’ve been denied.  Instead, her IT aides were warned ‘never to speak of the Secretary’s personal email system’ – and neither her server nor her Blackberry ‘met [even] minimum security requirements.’

“ – Despite her repeated denials, there were at least two attempts to hack into her system.  Neither was ever reported to State’s security personnel, as required.

“ – Clinton claimed she used a private system strictly for convenience. But when urged to also use an official e-mail address, she refused, citing the risk that personal e-mails might become publicly accessible.

“Tellingly, Clinton and top aides Huma Abedin, Jake Sullivan and Cheryl Mills refused to be interviewed by the IG.

“Here’s the bottom line: Virtually everything Clinton has said about her e-mails has been a lie.  And no longer can supporters laugh off E-mailgate so easily.

“Hillary’s culpability and her flouting of the law now seem clear.  But that leaves one more shoe to drop: Will Attorney General Loretta Lynch indict the Democrats’ presumptive presidential nominee? If she doesn’t, she’ll need a good excuse why.”

Editorial / Washington Post

“Hillary Clinton’s use of a private email server while secretary of state from 2009 to 2013 has been justifiably criticized as an error of judgment.  What the new report from the State Department inspector general makes clear is that it also was not a casual oversight.

“Mrs. Clinton had plenty of warnings to use official government communications methods, so as to make sure that her records were properly preserved and to minimize cybersecurity risks.  She ignored them....

“During her tenure, State Department employees were told that they were expected to use approved, secure methods to transmit information that was sensitive but unclassified, or SBU.  If they needed to transmit SBU information outside the department’s network, they were told to ask information specialists for help.  The report said there is no evidence that Mrs. Clinton ever asked, ‘despite the fact that emails exchanged on her personal account regularly contained information that was marked as SBU.’  On June 28, 2011, a cable was sent to all diplomatic and consular posts over her signature warning that personal email accounts could be compromised and officials should ‘avoid conducting official Department business from your personal e-mail accounts.’  At the time, Ms. Clinton was doing exactly that.

“On March 11, 2011, an assistant secretary sent a memorandum on cybersecurity threats directly to Ms. Clinton, noting a ‘dramatic increase’ in attempts to compromise personal email accounts of senior department officials, possibly for spying or blackmail. That didn’t stop Ms. Clinton either.  There were also numerous notifications that some emails (but not all) are considered federal records under the law and that she should print and file those in her office and, before leaving office, surrender all emails dealing with department business. She did so only about two years later, in December 2014.

“Starting in 2009, there was a new, electronic system, known as SMART, to properly archive department emails without having to print and file them, but Ms. Clinton opted not to use it, out of concern that there was ‘overly broad access to sensitive materials.’  According to the report, after a staff member ‘raised concerns’ with another official about Ms. Clinton’s personal email server, the staff was instructed ‘never to speak of the Secretary’s personal email system again.’

“The department’s email technology was archaic. Other staffers also used personal email, as did Secretary Colin Powell (2001-2005), without preserving the records. But there is no excuse for the way Ms. Clinton breezed through all the warnings and notifications.  While not illegal behavior, it was disturbingly unmindful of the rules.  In the middle of the presidential campaign, we urge the FBI to finish its own investigation soon, so all information about this troubling episode will be before the voters.”

Editorial / Wall Street Journal

“Hillary Clinton has said for more than a year that her use of a private email server as Secretary of State violated no federal rules and posed no security risk.  Only the gullible believed that, and now everyone has proof of her deceptions in a scathing report from State Department Inspector General Steve Linick....

“The IG concludes that the presumptive Democratic presidential nominee broke federal record-keeping rules, never received permission for her off-grid server, ignored security concerns raised by other officials, and employed a staff that flouted the rules with the same disdain she did.

“ ‘Secretary Clinton should have preserved any Federal records she created and received on her personal accounts by printing and filing those records with the related files in the Office of the Secretary,’ says the report.  ‘At a minimum, Secretary Clinton should have surrendered all emails dealing with Department business before leaving government service and, because she did not do so, she did not comply with the Department’s policies that were implemented in accordance with the Federal Records Act.’

“State still has never received emails from her private account for the first six weeks after she became Secretary, and the IG notes that it found (by other means) business-related emails that Mrs. Clinton did not include among the emails she has turned over.

“The report says she has also stonewalled requests to obtain her server.  And ‘through her counsel, Secretary Clinton declined [the IG’s] request for an interview.’  Former Secretaries Madeleine Albright, Colin Powell, Condoleezza Rice and current Secretary John Kerry all sat for interviews....

“As for Mrs. Clinton’s claim that her private account was secure, the report cites several instances of techies shutting down her server due to hacking concerns.  ‘Notification is required when a user suspects compromise of, among other things, a personally owned device containing personally identifiable information,’ says the report.  But the IG says it found ‘no evidence’ that Mrs. Clinton or her staff filed such reports....

“All of this should bear on the FBI’s email probe and whether Mrs. Clinton understood the security risks she was running.  On the IG’s extensive evidence, she clearly did – and then she lied about it.  Voters should understand that this is precisely the kind of governance Mrs. Clinton would return to the White House.”

The Clinton people will say that Colin Powell did the same things their boss did, but this is another lie.  Powell’s use of personal emails was limited and he was not using an unsecured server in his home.

--Hillary has another problem.  Virginia Dem. Gov. Terry McAuliffe is under investigation for a relationship between a Chinese agricultural company, Dandong Port Group, and $120,000 in contributions that a New Jersey construction firm controlled by Dandong’s CEO, Wang Wenliang, made to McAuliffe’s 2013 campaign and inaugural committee.

CNN first reported on Monday that the FBI and the Justice Department were involved in a review, which includes McAuliffe’s role as a board member of the Clinton Foundation, to which another company linked to Mr. Wang pledged a $2 million contribution in 2013, as reported by the New York Times.

McAuliffe, speaking to reporters on Tuesday, said he was shocked by reports of an inquiry.  He added he played no role in soliciting Wang’s pledge to the Clinton Foundation, and that the contribution from Wang’s company to his campaign was legitimate.

Here’s the bottom line.  Both Wang and McAuliffe are dirty.  Period.  I’ll never forget how over 20 years ago, a good friend from PIMCO who worked in Washington for us told me all about McAuliffe.  His relationship with the Clintons all this time is also out there for the public record.

As for Wang, he is a classic Chinese businessman.  He is also a delegate to China’s National People’s Congress.  He has built his empire by securing construction contracts around the world, including the Chinese Embassy in Washington.  Wang’s contacts with governors across the U.S. are extensive. He’s a Chinese agent.  

--Bernie Sanders said this week that the Democratic National Convention in Philadelphia and his push to make the party more inclusive could get “messy,” asserting in an interview with the Associated Press: “Democracy is not always nice and quiet and gentle.”

No doubt it is indeed going to be messy, and Bernie’s continuing attacks on Hillary are frustrating the hell out of Democratic Party leaders.

But as conservative columnist John Podhoretz of the New York Post wrote in an op-ed this week:

“(Let’s) not give him the credit for the seriousness of his purpose here. I think he’s not quitting because this campaign is the most thrilling, the most exhilarating, the most exciting thing that has ever happened to him.

“He’s a gadfly politician from a tiny state, and has been an outlier both in the House and in the Senate for 25 years.  If he had a rally in Vermont for his mayoral or House or Senate campaigns, three guys with long beards, two women in peasant dresses and one Holstein cow showed up.

“Now he speaks before crowds of 5,000, 10,000 and more.  He’s received nearly 10 million votes.  Larry David, one of the richest men in show business, is playing him weekly on ‘SNL.’  He’s raised – and spent – an astounding $207 million.* Many people view him as the Madame DeFarge of his tale of two countries – the one leading the masses against the millionaires and billionaires.

“Bernie won’t stop until they drag his bid for the nomination from his old, wrinkled fingers. It would be like denying him oxygen now.  I mean, how do you keep them down on the collective farm after they’ve seen Paree?

“Enjoy your panic, Democrats.  You’ve earned it.”

* Sanders had less than $6 million left at the start of May, while Hillary had $30 million.  Sanders had outspent Hillary $207 million to $182 million.

--Interesting that Trump met Sen. Bob Corker (R-TN) in Trump Tower.  I’m a big fan of his.

--I almost threw up when I heard Obama BFF Valerie Jarrett say on “60 Minutes” that one of her boss’s major accomplishments was “ending two wars.” 

--New Jersey Gov. Chris Christie’s approval rating hit yet another low in my state.  An FDU poll found that 49 percent “dislike everything about Gov. Christie.”  Only 26 percent approve of the job he is doing.

And now he is managing Trump’s transition team, continuing to ignore the state’s many issues.  He really should step down, as the Star-Ledger editorialized this week.

--New York City Mayor Bill de Blasio’s poll numbers continue to plummet.  According to a new Quinnipiac University poll, by a margin of 55 to 21 percent, voters agreed that de Blasio “does favors for developers who make political contributions to campaigns in which he is involved.”  His overall approval rating is at its lowest point ever – just 41 percent, with 52 percent disapproving of the job he’s done.  [In January, the Quinnipiac poll had de Blasio with a 50% approval rating.]

De Blasio’s trustworthy rating has also dropped from 60% in January to 43% today.

Among black voters, the mayor’s approval rating is 58%, down from 77% in January.  [Rather stunning.]

Gov. Andrew Cuomo, by the way, has a 56% approval rating in New York City.

--Last time I wrote of 64 people dying from being struck by lightning in Bangladesh within a few days.  By comparison, I saw in a piece by NJ.com, looking at deaths by lightning in my state, that thus far there have been five lightning deaths in all of the U.S. in 2016 – two in Florida, two in Louisiana and one in Mississippi.  [The story was about the 13 who lost their lives in lightning strikes in New Jersey from 2006 to 2012.  We haven’t had one since, which is very rare.  As you would expect, most occur between June and August in these parts.]

--A judge ordered Bill Cosby to stand trial in a sexual assault case.  This one is about Cosby’s alleged assault on a former Temple University women’s basketball official.  No doubt it will be covered wall-to-wall on the cable networks.  But look for zero from moi.

--From Ben Kesling / Wall Street Journal: “The Department of Veterans Affairs has mistakenly declared thousands of veterans to be deceased and canceled their benefits over the past five years, a new snafu to emerge at the embattled department.

“The VA has made the error more than 4,000 times over a half-decade because of employee mistakes or erroneous cross-checking of data by the department’s computers, among other reasons, according to correspondence between the VA and the office of U.S. Rep. David Jolly (R-FL) reviewed by the Wall Street Journal.  The VA changed its procedures to address the issue, but it isn’t yet clear whether the new system is effective.”

--Back on Jan. 28, Donald Trump held a nationally televised fundraiser for veterans’ causes in Des Moines and he said after he had raised $6 million, including $1 million from his own pocket.

As recently as last week, though, the campaign insisted he had given the money when he had not, as the Washington Post reported; the paper and others pressing the campaign for details.

By Monday afternoon, the Post had found not a single veterans group that had received Trump’s money.

Later Monday evening, Trump called the home of James K. Kallstrom, a former FBI official who is chairman of the Marine Corps-Law Enforcement Foundation.  The charity aids families of fallen Marines and federal law enforcement officers.

Trump told Kallstrom he is giving the entire $1 million to the group.  That’s a good choice, but it obviously shouldn’t have taken Trump that long.  The others who gave big donations that evening did make their gifts weeks before.

The Marine Corps-Law Enforcement Foundation had, however, already received $230,000 in past donations from the Donald J. Trump Foundation.

--Uwe E. Reinhardt / Wall Street Journal

“If you have not ever done so, I urge you to program into your next trip abroad a visit to an American military cemetery. There are quite a few in Europe, and some in Asia. You can find a list online.

“These cemeteries are settings of an awesome serenity and beauty, immaculately kept by the American Battle Monuments Commission. As Americans, we must thank the architects who designed these settings and the workers who over the decades and to this day have kept them in their immaculate condition....

“You can walk along the gravel paths of these cemeteries, and among the thousands of markers – crosses and Stars of David – beneath which the warriors rest.  Pick a marker at random and adopt the soldier whose name is chiseled into that marker.  Make him your father, or brother, or cousin, or a friend.  Imagine him alive, and how you might have hugged him as he shipped out to the distant front.

“However brutal his death may have been, you will draw solace from knowing that he rests here, in this serene setting, alongside his buddies who shared his fate.  You may even imagine that somehow, don’t ask how, the fallen soldier may know that you are visiting him, to pay your respects.

“You may not be able to suppress some tears; I never can....

“You will come away with renewed and strengthened respect for those of your fellow Americans willing to wear the nation’s military uniform and to bear the ultimate sacrifice one can make for one’s country.  If you are a student, you will look with fresh eyes at the few among your classmates in the ROTC, learning, along with their regular studies, how to become officers in America’s armed forces.

“And you will reflect deeply on our nation’s role in the world.  Whatever our flaws as a people have been in the past and still are today, you will realize, standing there among the thousands of gravestones, that in the sweep of history, ours is a grand nation of which you can and should be proud.”

I loved this piece because over 20 years ago, I took my own pilgrimage to Normandy and the American Cemetery there.  Inside one of the chapels is an inscription that I have used in this space many times before.

Think not only upon their passing
Remember the glory of their spirit

On a table in my living room I have a small bottle with sand from both Omaha and Utah beaches that I scooped up the day I was there.

---

Pray for the men and women of our armed forces...and all the fallen, especially on Memorial Day.

God bless America.

---

Gold $1212...down $39 this week
Oil $49.33

Returns for the week 5/23-5/27

Dow Jones  +2.1%  [17873]
S&P 500  +2.3%  [2099]
S&P MidCap  +2.9%
Russell 2000  +3.4%
Nasdaq  +3.4%  [4933]

Returns for the period 1/1/16-5/27/16

Dow Jones  +2.6%
S&P 500  +2.7%
S&P MidCap  +6.7%
Russell 2000  +1.3%
Nasdaq  -1.5%

Bulls  35.4
Bears  24.0  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore