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12/14/2019

For the week 12/9-12/13

[Posted 10:00 PM ET, Friday]

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Edition 1,078

Well that was an action-packed week.  Our president is on the verge of being impeached by the full House, we had the long-awaited release of the Justice Department’s IG report, the U.S. and China hit the pause button on their trade war, while Democrats and the White House reached agreement on the U.S.-Mexico-Canada trade accord.  Britain’s Boris Johnson had a resounding victory in the U.K.’s election that will lead to an exit from the European Union.  Sports agent Scott Boras had three clients sign for a collective $800 million+ in just three days.  Rudy Giuliani is back from Ukraine.  And some of us are wondering what Kim Jong Un is going to give the United States and Donald Trump for Christmas.  It’s this last item we should all be most concerned with.

But on impeachment, I was watching some of the coverage, specifically between about 7:00 p.m. and 9:00 p.m. Eastern on Thursday, prior to their ½-hour recess, and was thinking, gosh, I really can’t stand some of these Republicans.  And I’m Republican. 

And I found myself musing, gee, Democratic Rep. Hakeem Jeffries is talented, as in down the road, he’s someone who could rile up the minority base in a general election.  And for the first time ever, I was also kind of thinking, gee, Democratic Rep. Sheila Jackson Lee isn’t as bad as I’ve thought she was all these years. 

It’s just that I have trouble respecting a process where it has been total obstruction on the part of the White House, with not a single document turned over, and everyone in lockstep among the elephants parroting the Ukraine hoax, putting it on an equal footing with Russia’s extreme election interference, when all we have are some Ukrainian leaders writing op-eds against then-candidate Donald Trump because the future president thought there was nothing wrong with Vladimir Putin annexing Crimea because, as Trump said, President Obama let him do it!

Even Florida Republican Senator Marco Rubio said you can not in any shape or form equate an op-ed with what Russia was doing.

But I’m also the guy who said this whole deal over the July 25 phone call should have resulted in censure. 

This is going to get uglier and uglier.  And we know our president will want to be right in the middle of it all, straight through to November.

I’m kind of ready for spring training myself.  And I also really miss Ronald Reagan.

Trump World

The House Judiciary Committee approved two articles of impeachment against President Donald Trump after a full day of debate from both sides on amendments that left members in a recess after 11:00 p.m. Thursday, with the vote Friday morning.

For 14 hours yesterday, members debated over the abuse of power and obstruction of Congress articles, which allege the president used the power of his office to pressure Ukraine to open an investigation into former Vice President Joe Biden that would benefit his 2020 campaign, and that he blocked Congress from pursuing its impeachment investigation.

The votes were 23-17, strictly along party lines, with Democratic Rep. Ted Lieu out and unable to vote, so it would have been 24-17, just for the record.  Lieu experienced chest pains and had a heart procedure on Tuesday.

The full House is expected to vote to impeach Trump next week, though Senate Majority Leader Mitch McConnell has said there is “no chance” his chamber will vote to remove Trump from office, proceedings in the Senate sometime in January.

Opinion...both sides....

Editorial / Wall Street Journal

“So that’s it?  That’s all there is?  After all the talk of obstruction of justice, collusion with Russia, bribery, extortion, profiting from the Presidency, and more.  House Democrats have reduced their articles of impeachment against President Trump to two:  abuse of power and obstruction of Congress.  Honey, we shrunk the impeachment.

“Democrats on the Judiciary Committee will vote as early as Thursday on the text of the two articles they unveiled Tuesday, and then they will rush it to the floor next week.  It’s enough to suspect that Democrats understand they are offering the weakest case for impeachment since Andrew Johnson, that the public isn’t convinced, and so they simply want to get it over with.

“At least Johnson was impeached for violating a specific statute, the Tenure of Office Act, by firing Edwin Stanton as Secretary of War.  There was wide agreement that Richard Nixon and Bill Clinton violated criminal statutes.  In this case Democrats don’t even try to allege a criminal act.

“Whatever happened to bribery and extortion?  Democrats spent weeks talking them up as the crimes of Mr. Trump’s Ukraine interventions. They had turned to those words after focus groups with voters found them more compelling than ‘quid pro quo.’  Yet suddenly they’re gone.  Have Democrats  concluded that Mr. Trump’s actions aren’t illegal under statutes that have specific meaning?

“Democrats have retreated instead to charge ‘abuse of power,’ a phrase general enough for anything Congress wants to stuff into it.  They don’t even pretend any more to prove a quid pro quo.  Instead they assert that Mr. Trump, in his phone call with Ukraine’s president, ‘solicited the interference of a foreign government’ in the 2020 election ‘in pursuit of personal political benefit.’  They also assert that this ‘compromised the national security of the United States and undermined the integrity of the United States democratic process.’

“Their problem is that Mr. Trump didn’t withhold military aid to Ukraine, and even if he had he would have merely been returning to Barack Obama’s policy of denying lethal aid.  How would that have jeopardized national security?  Every President also solicits actions from foreign leaders that he hopes will help him politically at home.

“We don’t condone Mr. Trump’s mention of Joe Biden in his call to Ukraine’s President, which was far from perfect and reflects his often bad judgment.   But ‘abuse of power’ on this evidence is a new and low standard for impeachment that will come back to haunt future Presidents of all parties....

“The second Democratic article is weaker in that it amounts to impeaching Mr. Trump because he is resisting their subpoenas.  ‘Without lawful cause or excuse, President Trump directed Executive Branch agencies, offices and officials not to comply with those subpoenas,’ the article charges....

“This ignores that the Constitution stipulates co-equal branches that each have the right to defend their powers.  If Democrats are right in their claim, then every President essentially works for Congress.  We should skip elections and let Congress choose the President.

“Democrats also claim the emergency of time, and as usual Rep. Adam Schiff puts this case in the least credible way.  ‘The argument ‘why don’t you just wait?’ amounts to this: Why don’t you just let [Mr. Trump] cheat in one more election?  Why not let him cheat just one more time?,’ Mr. Schiff told the press as the articles were unveiled.

“But Mr. Trump didn’t cheat to win in 2016, as Robert Mueller’s Russia collusion investigation demonstrated after two years of looking.  As for 2020, the Constitution includes no clause for pre-emptive impeachment to prevent acts that a President might commit....

“In their wisdom, the American people seem to have figured all this out. Despite one-sided lobbying by the impeachment press, the polls show that a majority opposes removing Mr. Trump from office.   This may be the real explanation behind the Democratic move to shrink impeachment.  Democrats now want a fast and furious vote to satisfy their most anti-Trump partisans, dump the mess on the Senate, and campaign on something else.

“They shouldn’t get off that easy.  By defining impeachment down, they are turning what should be a rare and extraordinary constitutional remedy into a routine tool of partisan warfare. They are harming constitutional norms, as the liberals like to say.

“Americans will decide in 11 months whether Mr. Trump deserves to remain in office.  But they should also keep the impeachment vote very much in mind when they decide whether Democrats deserve to keep the House.”

Editorial / Washington Post

“The House Judiciary Committee’s debate about articles of impeachment Wednesday and Thursday underlined the yawning gap between Democrats and Republicans over President Trump’s behavior – and also between Republicans and the truth.

“Democrats arguing for the president’s impeachment repeatedly cited evidence that Mr. Trump conditioned military aid to Ukraine and a White House meeting with its president on an announcement by Ukraine that it would investigate former vice president Joe Biden and a conspiracy theory about the 2016 U.S. election.  Most Republicans responded with the diversions they have offered since the impeachment process began: spurious complaints about the process, coupled with claims that Democrats were interested only in reversing the results of the 2016 election.

“Remarkably, not one GOP member of the Judiciary Committee was ready to acknowledge that there was anything wrong with Mr. Trump’s demand that a foreign government pursue false charges against one of his most likely Democratic opponents in the 2020 election.   They could have followed the example of the several Republican legislators who have said Mr. Trump’s actions were improper but not impeachable.  Instead, they offered a display of blind fealty, portraying Mr. Trump as a victim of Democratic persecution while ignoring or misrepresenting the evidence against him.

Some served up gross distortions and falsehoods.  Reps. Jim Jordan (R-Ohio) and Matt Gaetz (R-Fla.), among Mr. Trump’s most ardent supporters, repeated what they described as four key points, all of which are starkly at odds with sworn testimony and documents.   They said there was no quid pro quo mentioned in a July 25 phone call between Mr. Trump and Ukrainian President Volodymyr Zelensky; but the documented contacts between U.S. and Ukrainian officials before the call make clear that when Mr. Zelensky promised to conduct the investigations Mr. Trump wanted, and Mr. Trump answered by offering him a White House visit, they were confirming a precooked deal.

“The Republicans said the Ukrainians never felt pressured by Mr. Trump, relying on a polite comment Mr. Zelensky made while sitting next to Mr. Trump and disregarding the testimony of U.S. diplomats in Kyiv, who described the Ukrainian president and his aides as ‘desperate.’  Republicans said the Ukrainians did not know that Mr. Trump had withheld military aid, even though a Pentagon official testified the Ukrainians first asked about the hold the same day the two presidents spoke.   Finally, Mr. Jordan and Mr. Gaetz pointed to the fact that Ukrainians received military aid without announcing the investigations.  But Mr. Trump released the aid two days after the announcement of a congressional investigation of his extortion attempt – and Mr. Zelensky still has not been invited to the White House.

“Mr. Gaetz and several colleagues sunk still lower, alleging that Mr. Biden and his son Hunter were guilty of corruption and that Mr. Trump was justified in demanding an investigation of them and of a Russia-propagated allegation that Ukraine and not Russia hacked the servers of the Democratic National Committee in 2016.  Both charges were debunked by multiple U.S. officials and, in the case of Ukraine’s alleged interference, the U.S. intelligence community. Yet, Republicans follow Mr. Trump in brazenly restating them.

“The airing of such disinformation may advance Mr. Trump’s underlying aim with Ukraine, which was to smear an opponent and cloud the record of Russian interference.  But it does nothing to refute the charges against the president.”

--In a dozen October and November polls on impeachment in battleground states like Arizona, Florida, Michigan, Pennsylvania, Nevada, New Hampshire, North Carolina and Wisconsin, an average of 44% of those surveyed supported impeachment, with 51% opposed, according to the Washington Post.

In averages of national polls, 47% of respondents said they support impeachment, while 43% said they oppose it.

After strongly opposing impeachment in the summer, national polls since the start of the House’ public hearings have independent voters divided on the subject, with 42% in support and 44% opposed.

Between the lines: Trump’s approval rating has also remained steady in national polling, as I’ve spelled out below since the beginning on a weekly basis.

In a national Quinnipiac University poll released Tuesday, 51% think President Trump should not be impeached and removed from office, while 45% say he should be impeached and removed.  In a Nov. 26 poll, 48% said he should be not be impeached, while 45% said he should.

--The long-awaited Justice Department inspector general’s report examining the FBI’s investigation of President Trump’s 2016 campaign rebutted Republicans’ accusations that top FBI officials were driven by political bias to illegally spy on Trump advisers, but also found broad and “serious performance failures” requiring major changes.

“The 434-page report issued Monday by Inspector General Michael Horowitz concluded the FBI had an “authorized purpose” when it initiated its investigation, known as Crossfire Hurricane, into the Trump campaign.  Horowitz implicitly rejected GOP assertions that the case was launched out of political animus, or that the FBI broke its own rules on using informants.

But FBI officials repeatedly played down exculpatory evidence they found, while emphasizing damaging information they heard about Trump associates.  The FBI said it would implement dozens of recommendations for corrective measures in response to the report and that disciplinary action remains a possibility.

So both conservatives and liberals claimed victory, with Republicans asserting it exposed serious wrongdoing while Democrats said it validated the whole Russia investigation.  President Trump called the report’s findings “far worse than anything I would have imagined.”

“This was an overthrow of government,” he said.  “This was an attempted overthrow and a lot of people were in on it and they got caught, they got caught red-handed.”

So then Attorney General William Barr said he disagreed with one of the IG’s key conclusions, saying the FBI launched an investigation of a presidential campaign “on the thinnest of suspicions that, in my view, were insufficient to justify the steps taken.  It is also clear that, from its inception, the evidence produced by the investigation was consistently exculpatory.” 

Barr added in an interview with NBC News: “I think our nation was turned on its head for three years based on a completely bogus narrative that was largely fanned and hyped by an irresponsible press.”

Barr said he saw “gross abuses” in the process of obtaining the surveillance warrant and “inexplicable behavior that is intolerable.”

And: “The attorney general’s primary responsibility is to protect against the abuse of the law enforcement and intelligence apparatus, and make sure it doesn’t play an improper role in our political life.  That’s my responsibility, and I’m going to carry it out.”

John Durham, the Connecticut U.S. Attorney Barr handpicked to conduct an investigation similar to that of Horowitz’, said: “Our investigation has included developing information from other persons and entities, both in the U.S. and outside of the U.S...Based on the evidence collected to date, and while our investigation is ongoing, last month we advised the Inspector General that we do not agree with some of the report’s conclusions as to predication and how the FBI case was opened.”

Durham’s investigation is ongoing.

Horowitz was particularly critical of the FBI and applications it made to the Foreign Intelligence Surveillance Court to monitor former Trump campaign adviser Carter Page, asserting those applications contained “significant inaccuracies and omissions” and that agents “failed to meet the basic obligation” to ensure the applications were “scrupulously accurate.”

The IG found that “so many basic and fundamental errors were made by three separate, hand-picked teams on one of the most sensitive FBI investigations that was briefed to the highest levels within the FBI,” that he concluded there was a failure of “not only the operational team, but also of the managers and supervisors, including senior officials, in the chain of command.”

FBI Director Christopher Wray said the bureau accepts the findings and plans to make a host of changes, including to how they gather and submit information for surveillance applications.

But Wray told ABC News it was “important that the inspector general found that in this particular instance the investigation was opened with appropriate predication and authorization.”

President Trump tweeted in response:

“I don’t know what report current Director of the FBI Christopher Wray was reading, but it sure wasn’t the one given to me.  With that kind of attitude, he will never be able to fix the FBI, which is badly broken despite having some of the greatest men & women working there!”

--The Supreme Court agreed today to consider President Trump’s pleas to keep his tax and financial records secret, paving the way for an historic legal case that may impact next November’s election.  The Supremes will begin hearing arguments in late March, with a final ruling in June.

The case comprises three lower court challenges on subpoenas issued by the Manhattan district attorney’s office and three House committees seeking years of Trump’s tax returns and bank records as part of investigations into allegations of possible fraud and other wrongdoing.

Trump has sued to block banks and his private accounting firm from complying with the subpoenas, and, so far, all lower courts have ruled against him and ordered him to turn over the records.

Should the Supreme Court rule against him, the president will have to release the records, after becoming the first president in modern memory to refuse to release his tax returns for public scrutiny upon taking office.

Michael Cohen, Trump’s imprisoned former personal attorney, testified under oath before Congress earlier this year that the president’s tax returns would corroborate allegations that he committed fraud.

--Rudy Giuliani was spotted entering the White House this morning, having returned from Ukraine where he has been waging his own investigation into the Bidens.  Giuliani tweeted several times.

“The American people have already made up their mind on this #ImpeachmentScam.  This is a SMOKESCREEN for the Obama-Biden administration’s corruption.  It will soon be proven.”

--Trump tweets....

How do you get impeached when you have done NOTHING wrong (a perfect call), have created the best economy in the history of our Country, rebuilt our Military, fixed the V.A. (Choice!), cut Taxes & Regs, protected your 2nd A, created Jobs, Jobs, Jobs, and soooo much more? Crazy!”

Dems Veronica Escobar and Jackson Lee purposely misquoted my call.  I said I want you to do us (our Country!) a favor, not me a favor.  They know that but decided to LIE in order to make a fraudulent point!  Very sad.”

“I also have constantly asked, ‘Why aren’t Germany, France and other European countries helping Ukraine more?  They are the biggest beneficiaries.  Why is it always the good ol’ United States?’  The Radical Left, Do Nothing Democrats, never mention this at their phony hearing!”

Ed. The EU has contributed over $16 billion in grants and loans to Ukraine since 2014.

“The Do Nothing Democrats have become the Party of lies and deception!  The Republicans are the Party of the American Dream!”

“Poll numbers have gone through the roof in favor of No Impeachment, especially with Swing States and Independents in Swing States.   People have figured out that the Democrats have no case, it is a total Hoax.  Even Pelosi admitted yesterday that she began this scam 2 ½ years ago!”

“The Republicans House members were fantastic yesterday.  It always helps to have a much better case, in fact the Dems have no case at all, but the unity & sheer brilliance of these Republican warriors, all of them, was a beautiful sight to see.  Dems had no answers and wanted out!”

“Congratulations to @foxandfriends on being named, BY FAR, the Number One Rated cable news show.  CNN and MSNBC have totally tanked, their ratings are terrible.  They have zero credibility!”

“Don’t get why @FoxNews puts losers on like @RepSwalwell (who got ZERO as presidential candidate before quitting), Pramila Jayapal, David Cicilline and others who are Radical Left Haters?”

“The Dems wouldn’t let @FoxNews get near their bad ratings debates, yet Fox panders.  Pathetic!”

--Finally, President Trump said he wants a nationwide review of water efficiency standards because of issues with “sinks and showers and other elements of bathrooms” across the country.

People are flushing toilets 10 times, 15 times as opposed to once.  They end up using more water,” Trump said, continuing that the Environmental Protection Agency is “looking at” the issues at “his suggestion.”

“We have a situation where we’re looking very strongly at sinks and showers and other elements of bathrooms, where you turn the faucet on in areas where there’s tremendous amounts of water, where it rushes out to sea because you could never handle it.  And you don’t get any water.  You turn on the faucet and you don’t get any water,” Trump said during the White House round-table on small business and red tape reduction.

Wall Street and the China Trade War

Before we get to the trade issue, the S&P 500 and Nasdaq hit new highs, the market finishing up on the week after another slow start (a recent pattern) as the trade picture cleared up a bit, and Boris Johnson registered a big victory in the UK, offering clarity across the pond on the future direction of that key nation.

Inflation data for November remained tame, with the consumer price index up 0.3%, 2.1% over the last 12 months, up 0.2% ex-food and energy, 2.3% year-on-year.  Producer prices for the month were unchanged, -0.2% on core, with the year-over-year figures 1.1% and 1.3%, respectively.

November retail sales were disappointing, up only 0.2%, worse than expected.

The Atlanta Fed’s GDPNow barometer for the fourth quarter is at 2.0%.

The Federal Reserve’s Open Market Committee held its last meeting of the year and, as expected, held the line on interest rates (after cutting rates in July, September and October), signaling they are likely to remain unchanged indefinitely, with moderate economic growth and low unemployment expected to continue through next year’s presidential election.

The decision left the benchmark lending rate in its current target range between 1.50% and 1.75%. 

13 of 17 Fed policymakers foresee no change in interest rates until at least 2021.  The other four saw only one rate hike next year.  Notably, no one suggested lower rates would be appropriate next year, a sign the Fed feels it has engineered a “soft landing” after a year in which recession risks rose.

GDP is expected to stay at its current 2% pace for both next year and 2021, with unemployment remaining at the 3.5% level.  Nothing wrong with that, though far short of the 3%+ annual growth President Trump promised to produce.

Fed Chairman Jerome Powell said, “We expect moderate growth to continue.  We reduced [interest rates] by three quarters of a percentage point.  This shift has helped support the economy and has kept the outlook on track.”

Powell added, “If developments emerge that cause a material reassessment of our outlook, we would respond accordingly.”

No doubt President Trump next year will be screaming for Powell and Co. to lower rates further.

Lastly, the Treasury Department released the figure for the November budget deficit, -$208.8 bn, meaning for the first two months of fiscal 2020, the deficit is -$343 billion, 12% wider than last year.  Federal spending is up 7% thus far, receipts up 3%.  We are headed towards a deficit for the year of over $1 trillion, where it is projected to remain for years to come.

So turning to the trade war, we have a truce as the United States and China agreed to a gradual reduction in tariffs as part of a “phase one” trade deal designed to ease tensions.

Officials in Beijing Friday night local time said at a press conference that the agreement was designed to boost confidence in global markets and would pave the way for more U.S. services and products to enter China.  But details at first were limited.

President Trump tweeted at the same time the Chinese were speaking:

“We have agreed to a very large Phase One Deal with China.  They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more.  The 25% Tariffs will remain as is, with 7 ½% put on much of the remainder....

“....The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal.  We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election.  This is an amazing deal for all. Thank you!”

Washington will initially cut tariffs on $120bn of Chinese goods, introduced on September 1, from 15 percent to 7.5 percent.  Trump said that 25 percent tariffs on $250bn of Chinese goods introduced over the course of the nearly two-year old trade dispute would remain in place for now.

But the 15 percent tariffs on a further $160bn of Chinese goods slated for Sunday, Dec. 15, will not be implemented.

This afternoon we did then receive some details from U.S. Trade Representative Robert Lighthizer, who told reporters that as part of the agreement, Beijing committed to buy an additional $32 billion in agricultural products over two years, or roughly $16 billion a year more than the 2017 baseline of $24 billion.  He said China would aim for another $5 billion in farm purchases each year on top of that, President Trump having promised $40 billion to $50 billion in expanded Chinese agriculture purchases when he first announced the phase one agreement on Oct. 11.

But remember.  $40-$50 billion is double the baseline figure and China has been buying increasing amounts from the likes of Brazil and Argentina as a result of the dispute with the U.S., so it’s not like they are doing to just shut down those pipelines to placate Trump.

In all, Lighthizer said China agreed to buy $200 billion worth of additional U.S. goods and services over the next two years as part of the agreement.  As well as the ag purchases, the other buys would be in manufacturing, energy and services.

Lighthizer said Beijing committed to ending pressure for U.S. companies who do business in China to transfer their technology, as well as improved protections, but he conceded far more work needed to be done and no one realistically expects a sweeping phase two deal in 2020.

Nothing has been signed as yet and that would appear to be weeks off, but Chinese officials signaled that further phased reductions of existing levies were also expected.  Liao Min, vice-minister of finance, said that the U.S. removing tariffs on Chinese goods remains Beijing’s “core” concern.

But it’s all about optics and November 2020.  What will we be saying in the summer and fall about the trade agreement?   Was it worth the pain?  Thousands of farmers were ruined and will never return.

And remember.  China is not about to change their economic model.  Earlier, a Chinese foreign ministry spokeswoman said “negotiations should be based on the principles of equality and mutual respect.”  China will demand it. 

The trade agreement reached this week is also in contrast to a story first reported by the Financial Times that Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years, in a potential blow to the likes of HP, Dell and Microsoft.

The directive, which comes from the Chinese Communist Party’s Central Office, is the first publicly known instruction with specific targets given to Chinese buyers to switch to domestic technology vendors, and is essentially a mirror image of efforts by the Trump administration to curb the use of Chinese technology in the U.S. and its allies.  [See Huawei]

Analysts told the FT that there are an estimated 20m to 30m pieces of hardware that will need to be swapped out as a result of the Chinese directive, with large-scale replacement beginning next year.

One more on trade.  The Democrats compromised with the White House on the new U.S.-Mexico-Canada Agreement, with House Speaker Nancy Pelosi backing the agreement after securing amendments that toughened enforcement of labor and environmental standards.

USMCA is expected to reach a House vote next week and clear the Senate early next year.  Once approved by the legislatures in each country, it will supplant the 1994 North American Free Trade Agreement, which President Trump has called “our country’s worst trade deal.”

The deal’s benefits are largely at the margin.  It would increase the proportion of parts in vehicles that must originate in North America for the cars and trucks to receive duty-free treatment.  USMCA should also benefit dairy farmers on both sides of the U.S.-Canada border.

Europe and Asia

Just one economic tidbit for the eurozone, EA19.  October industrial prediction was down 0.5% over September, down 2.2% year-on-year.

And in the UK, rolling three-month GDP through October was just 0.7% annualized, courtesy of the Office for National Statistics, the lowest such pace since June 2012.

Which brings us to the big story....

Brexit / The UK Election: Prime Minister Boris Johnson won a resounding election victory Thursday that will allow him to end three years of political stalemate and take Britain out of the European Union by Jan. 31.

Johnson’s Conservatives (Tories) won 365 seats (326 a simple majority), with Labour at just 203.  It’s the biggest majority for the Conservatives since Margaret Thatcher’s 1987 election victory.

Labour, on the other hand, suffered its worst defeat since 1935, Labour leader Jeremy Corbyn toast, as his left-wing manifesto, calling for large increases in government spending and the nationalization of key industries, flamed out.  Jo Swinson, the leader of the Liberal Democrats, who picked up just 11 seats, quit as party leader after losing her seat to the SNP (Scottish National Party).

Brexit represents the country’s biggest political and economic gamble since World War II, cutting the world’s fifth-largest economy free from the vast trading bloc and threatening the integrity of the United Kingdom.

Johnson was vindicated after anti-Brexit opponents sought to sabotage his first months in office, campaigning on a vow to “Get Brexit Done.”

“We will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes,” he told supporters at a rally in London.

“Leaving the European Union as one United Kingdom, taking back control of our laws, borders, money, our trade, immigration system, delivering on the democratic mandate of the people,” he said, reprising the refrains of his successful Brexit referendum campaign of 2016.

But now Johnson must strike new international trade deals, preserve London’s position as a top global financial capital and preserve the United Kingdom.

This last goal looks more challenging, with Scotland voting overwhelmingly for a nationalist party that wants an independence referendum, and Irish nationalists performing strongly in Northern Ireland.

Scotland’s first minister, Nicola Sturgeon, said, “Boris Johnson may have a mandate to take England out of the European Union.  He emphatically does not have a mandate to take Scotland out of the European Union.”

Sturgeon’s Scottish National Party won 48 of Scotland’s 59 seats in the national parliament.

In Northern Ireland, there was another significant shift in the balance of power, with for the first time the region electing more lawmakers who favor unification with Ireland than those who support continued membership of the U.K.  The number of nationalists elected to Parliament rose to nine from six, while the number of unionists fell to eight from 10.  The Democratic Unionist Party, which backs Brexit and had supported the Conservatives in Parliament, lost two seats.

The bombastic Johnson struck a note of humility in his victory speech.

“Your hand may have quivered over the ballot paper before you put your cross in the Conservative box, and you may hope to return to Labour next time round, and if that is the case, I am humbled that you have put your trust in me,” he said.

President Trump tweeted:

“Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT.  This deal has the potential to be far bigger and more lucrative than any deal that could be make with the E.U.  Celebrate Boris!”

German Chancellor Angela Merkel’s party member, Norbert Roettgen, said “the British people have decided and we have to accept their choice. With Johnson’s victory Brexit has become inevitable.”

But now there is just 11 months to negotiate a trade deal with the EU after a Jan. 31 exit, and all agree this is an enormously ambitious target.  It’s possible the ‘transition period’ could be extended later, but the EU will only do that if there is real progress being made.

Nigel Farage, Brexit Party leader, said “I think we’re going to head into three years of pretty agonizing negotiations.”

Sweeping trade agreements take time.  More than eleven months.  A no-deal Brexit thus remains very much on the table.

Editorial / Wall Street Journal

“This vindicates Mr. Johnson’s gamble on throwing the Brexit question back to the voters by seeking a mandate for his revised deal with Brussels.  Plenty of anti-Brexit politicians and commentators have argued since the 2016 referendum that the voters had been misinformed about Brexit, or hadn’t fully thought through the issue, or don’t want the specific type of Brexit Mr. Johnson proposes, or have changed their minds.  Mr. Johnson took voters at their word that they wanted Brexit then and still want it now, and he was willing to buck the London intelligentsia in the bargain.

“The large Tory gains also offer hope of restoring some semblance of sanity to British politics.  The anti-Brexit resistance should now admit they have lost the argument.  Instead of endlessly and tediously relitigating the 2016 referendum, the focus can shift to Britain’s future outside the EU.

“On that score, too, this vote seems decisive.  Beyond Brexit, voters faced an economic-policy choice between Mr. Johnson’s generally pro-business pitch and the aggressive socialism of Labour leader Jeremy Corbyn....

“Voters rejected Mr. Corbyn’s promise – or threat – to nationalize large segments of the U.K. economy such as railways, broadband and the post office.  They figured out that he’d be able to pay for that and an expansion of social-welfare benefits only by taxing the middle class and lower earners more heavily, no matter what he said about ‘taxing the rich.’

“They also refused to be led by a radical leftist who has winked and nodded at rampant anti-Semitism within the Labour Party.  Labour now can jettison Mr. Corbyn and his radical cronies and offer voters a more plausible centrist alternative.

“Labour’s thumping by Britain’s middle class is also a warning to American Democrats who think left-wing populism is the way to defeat Donald Trump’s right-wing populism.  Corbynism left the middle of British politics to be filled by Mr. Johnson’s Tories.  A Democratic Party that veers to the Bernie Sanders or Elizabeth Warren left could let Mr. Trump win again by frightening suburban voters who dislike the President personally but don’t want socialism....

“We should also thank British voters for their show of democratic vigor.  Western democracies haven’t been functioning well of late, Westminster included.  Mr. Johnson’s leadership, and his show of respect for Brexit voters, is proving that democracies can be moved to make a decisive choice.  Mr. Johnson will have to reward that faith as he governs in a post-Brexit era, but his apparent victory offers a broader lesson for democratic leaders in this populist era.”

Finally, just a note on the polls.  A YouGov poll of the Conservatives’ actual margin of victory in Parliament had dropped from 68 seats two weeks earlier to just 28 as of Tuesday.  Pollsters should have stuck with their original projection, which was almost spot on.

Otherwise, the polls were accurate, forecasting a sizable Conservative victory.

Turning to Asia....we had a slew of economic data from China.  November exports were down 1.1% year-over-year, worse than expected, a fourth consecutive down month, as reported by the General Administration of Customs.  So no expected jolt from the Christmas rush to buy consumer electronics goods.

Imports were up just 0.3%.

Exports to the United States were down 12.5% year-over-year in the first eleven months of the year, with imports from the U.S. down 23.3% for the same period.

Exports to the EU rose 4.5% the first eleven months of 2019.

Separately, China’s car sales fell 5.4% in November year-over-year, the 17th consecutive monthly decline.

Sales the first eleven months of the year are down 10.5%. 

On the inflation front, consumer prices rose at a 4.5% annualized clip in November, the highest since Jan. 2012, owing largely to the ongoing African swine fever that has decimated the pork industry, critical to the country, with prices up 110% vs. a year ago.

Producer (factory-gate) prices, on the other hand, were down 1.4% in November year-on-year.

In Japan, the figure for third-quarter GDP was revised sharply upwards from an annualized pace of 0.2% to 1.8%, according to the Cabinet Office, thanks to a jump in capital spending from non-manufacturers, but exports and factory output posted their largest declines in years in October, start of Q4.  Recall the sales tax hike was also Oct. 1st.

Street Bytes

As alluded to above, stocks finished up on the week, with the Dow Jones nearing an all-time high, up 0.4% to 28135, while the S&P and Nasdaq each closed at record levels today, up 0.7% and 0.9%, respectively.  The market has been in a see-saw pattern for a month now and we’ll see if we get a real Santa Claus rally these next few weeks with issues like China trade and Brexit off the table for the time being.

Meanwhile, despite the S&P’s best run in six years, investors have pulled $135.5 billion from U.S. stock-focused mutual funds and exchange-traded funds thus far in 2019, the biggest withdrawals on record, according to data provider Refinitiv Lipper, which has tracked the data going back to 1992.

Stock funds have bled money over seven consecutive quarters, dating to the second quarter of 2018, which is when trade tensions between the U.S. and China ratcheted higher.

This is all positive, as it shows investors aren’t chasing the market and thus there could be plenty of room to run further even after a decadelong rally.

--U.S. Treasury Yields

6-mo. 1.55%  2-yr. 1.60%  10-yr. 1.82%  30-yr. 2.25%

--OPEC said Wednesday that oil supply from countries outside the cartel will remain robust in 2020, while the U.S. Energy Information Administration reported a rise in crude inventories last week defied analysts’ expectations of a drawdown.

As for output from non-OPEC countries, OPEC said in its latest report, “For 2019, the U.S., Brazil and Canada remain to be the key drivers for growth, and this will continue in 2020 with the addition of Norway,” adding that “2020 non-OPEC supply forecast remains subject to some uncertainties, including the degree of spending discipline by U.S. independent oil companies.”

Separately, as Clifford Krauss notes in the New York Times, a natural gas boom has “given way to a bust.  A glut of cheap natural gas is wreaking havoc on the energy industry, and companies are shutting down drilling rigs, filing for bankruptcy protection and slashing the value of shale fields they had acquired in recent years.

“Chevron, the country’s second-largest oil and gas giant after Exxon, said on Tuesday that it would write down $10 billion to $11 billion in assets, mostly shale gas holdings in Appalachia and a planned liquefied natural gas export facility in Canada.  The move was an energy company’s clearest acknowledgement yet that the industry has been far too optimistic about the prospects for natural gas.”

An example of the declining fortunes is the Marcellus field centered in central and western Pennsylvania, that was once viewed as the most promising in North America.  With gas prices slashed nearly in half from a year ago, the number of drilling rigs operating in Pennsylvania has dropped to 24, from 47, over the last 12 months.

--Meanwhile, Saudi Arabia’s oil company Aramco began trading for the first time on Wednesday, gaining 10% in the first moments on the market and pushing its worth to $1.88 trillion, making it the most valuable listed company in the world.

The state-owned oil giant started trading on the Saudi Tadawul stock exchange after a mammoth $25.6 billion initial public offering that set the record as the biggest ever in history.

Aramco now has a valuation greater than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.

--The Federal Aviation Administration said Wednesday it has an ongoing investigation into reported production problems involving the Boeing 737 after a former employee reported extensive issues.  Under questioning from lawmakers at a U.S. House hearing, FAA Administrator Steve Dickson confirmed the agency is reviewing issues.  “We are looking into those problems and we will continue to do so,” Dickson said.

And then Thursday, Dickson said the FAA would not be clearing the 737 MAX to fly this month as Boeing has been saying would be the case.  The nation’s top aviation regulator sharply admonished Boeing CEO Dennis Muilenburg and Executive Vice President for Commercial Airplanes Stan Deal with a litany of grievances.

“The administrator recommended to Mr. Muilenburg that Boeing’s focus should be on the quality and timeliness of data submittals for FAA review,” the agency said in an email to lawmakers after the meeting.  “He made clear that FAA’s certification requirements must be 100% complete before return to service.”

The meeting was called by the FAA to address what it said was Boeing’s unrealistic timetable for returning the 737 MAX to service – a sign of growing rancor between the two sides that came as skepticism grew that the plane would be able to resume flights soon.  American Airlines said it’s further delaying a return of the planes to its schedule and Southwest Airlines is considering a similar move.

Southwest said it struck a deal with Boeing to compensate the airline for some of the damage from the nine-month grounding of the 737 MAX, the carrier saying Thursday it would share $125 million of the proceeds with its employees.  Southwest didn’t disclose the full terms of the compensation, saying it is continuing to negotiate with Boeing.  Southwest had 34 MAX jets in its fleet and was due to receive dozens more over the course of the year.

Southwest CEO Gary Kelly said the grounding has resulted in an $830 million reduction in operating income.  The airline has currently scheduled MAX flights to resume in March, but American said it is striking the aircraft from its schedules until April 7.  Southwest is likely to follow.

Separately, regulators decided to allow the 737 MAX jet to keep flying after its first fatal crash last fall even after their own analysis indicated it could become one of the most accident-prone airliners in decades without design changes.

The November 2018 internal FAA analysis, released during the House committee hearing Wednesday, reveals that without agency intervention, the MAX could have averaged one fatal crash about every two or three years.  That amounts to a substantially greater safety risk than either Boeing or the agency indicated publicly at the time.

The assessment, which came a month after a Lion Air crash in Indonesia, raises serious questions about the FAA’s decision-making.

The second fatal MAX crash then came in March, in Ethiopia, which led to the global grounding of the fleet.

Lastly, Boeing Co. said it delivered 24 jets in November, a modest improvement from a month earlier that still leaves the plane maker likely to hand over fewer than half as many aircraft in 2019 as last year.  The company said Tuesday it has delivered 345 commercial jets and military variants of its jetliners so far this year, vs. 806 planes delivered in 2018.

--Huawei Technologies Inc. secured a commitment to build part of Germany’s 5G infrastructure, strengthening its position in Europe’s largest economy despite calls from lawmakers to bar the company.

Telefonica SA, one of three major mobile operators in Germany, said Wednesday it planned to use equipment from Huawei and Finland-based Nokia Corp. to build its 5G network in the country – subject to Huawei equipment being certified for use.

A spokesman for the company said: “Telefonica Germany has clearly taken care not to pre-empt the ongoing political process of defining these security guidelines and at the same time not to delay the start of the 5G rollout.”

Both Nokia and Huawei are supplying equipment for 5G antenna technology.

Germans are split over whether to allow Huawei to supply components for mobile networks or to ban it, as the U.S. has demanded.  The government recently decided against explicitly barring Huawei, while critics are concerned it could be a vehicle for espionage by China.

But lawmakers in Germany’s ruling coalition are threatening to amend the nation’s telecommunications security laws in a way that would exclude the Chinese vendor.

The debate is influencing other mobile operators such as Deutsche Telekom, which says it is waiting to see what the resolution is in terms of the telecom security legislation before it signs any new equipment deals.

--Home Depot Inc. tempered its sales targets for next year, saying the long U.S. economic expansion is expected to cool and the home-improvement chain will need more time for some investments to pay off in sales gains.  CEO Craig Menear said that while the company “will continue to gain outsized share in our market,” the company’s 2020 forecast reflects slower growth in the broad economy.

For fiscal 2020, HD said it expects comparable (same-store) sales to rise by 3.5% to 4%, vs. a prior company projection of 4.5% to 6%.

Separately, CEO Menear said the opioid crisis is a major cause for a recent rise in retail theft.

“This is happening everywhere in retail,” Menear said on a call with analysts.  “We think there are ties to the opioid crisis, but we’re not positive about that.”

Social media, responding to the claim, was skeptical.

--Oracle Corp. said it won’t replace its late co-CEO, Mark Hurd, leaving Safra Catz as the sole top executive leading the software giant after years of operating with a two-chief structure.

The company also reported earnings for the fiscal second quarter that were a little above forecasts, but sales were slightly below estimates.

Oracle has been playing catch-up to the likes of Amazon.com, Microsoft and Alphabet’s Google on cloud computing, the company attempting to introduce new features to its cloud, including greater automation.

--George J. Lauer, the inventor of the bar code, died.  He was 94.

The Universal Product code made its official debut in 1974 when a scanner registered 67 cents for a 10-pack of Wrigley’s Juicy Fruit at a Marsh supermarket in Troy, Ohio.

“It was cheap and it was needed,” Lauer told the New York Times in 2009.  “And it is reliable.”

The concept that replaced price tags and revolutionized commerce had evolved over several decades, the result of fluky coincidences and the expertise of several collaborators.

The first, N. Joseph Woodland, an alumnus of the Manhattan Project, was earning a master’s degree when a supermarket executive visiting the campus urged experts at the engineering school to develop a practical means of digitally storing product data.  Woodland and a classmate, Bernard Silver, devised a circular symbol in which the information could be encoded, but commercial scanners and microprocessors that could interpret the code were not yet widely available.

In 1951, Lauer joined IBM, where he was asked to design a code for food labels modeled on the Woodland-Silver bull’s-eye and compatible with a new generation of optical scanners.  But he found that the circular symbol was too blurry when reproduced on high-speed printing presses and instead developed a rectangular design.

Eventually, a supermarket executive who headed the Uniform Grocery Product Code Council, which was organized to choose a universal symbol, favored Lauer’s design, though it wasn’t until 1973 that the committee from the Product Code Council voted for the bar code that has appeared on billions of items since.

Lauer went on to work for IBM at North Carolina’s Research Triangle Park until 1987, receiving 26 patents, including for a hand-held scanner that reads bar codes.

--Interesting piece in Crain’s New York Business by Matthew Flamm on the new TWA Hotel at JFK Airport.  Back in May, when it opened its doors, its developer predicted the property could one day be running at 200% occupancy.

“My objective is to sell every room every day twice a day,” Tyler Morse, chief executive of MCR, an independent hotel owner-operator, told The Wall Street Journal.

That is, the 512-room hotel – combining the historic architecture of the Trans World Airlines terminal with a location steps from Jet Blue’s departure gates – would be booking airline travelers for both overnight and daytime stays.

But the hotel has dramatically underperformed, as in the property’s occupancy rate has seldom risen above 30% since it opened.  “At the same time, talent from all levels of the organization has been walking out the door.”

Tyler Morse’s big mistake was his decision to rely on word-of-mouth about the stylishly decorated architectural wonder to sell rooms.  Breaking with industry practice, MCR is not working with online travel agencies such as Expedia nor using hotel-inventory reservations systems such as Sabre.  Instead, Morse chose to have travelers book their stays through the hotel’s own website.

--This was a bad product idea.  Walmart pulled from its Canadian website a Christmas sweater depicting Santa and what appears to be lines of cocaine.  The “Let It Snow” sweater was being offered by a third-party seller and was not available on Walmart’s U.S. website.  The company said in a statement: “These sweaters...do not represent Walmart’s values... We apologize for any unintended offense this may have caused.”

--Donald B. Marron, who headed PaineWebber Group for two decades, died last weekend.  He was 85.

Marron was a classic Wall Street story, working on the Street in his late teens after dropping out of college and founding a macroeconomic research firm Data Resources Inc. in the late 1960s with Harvard economist Otto Eckstein.  McGraw-Hill Inc. acquired Data Resources for $103 million in 1979.  In 1980, Marron was named CEO of what became PaineWebber, where he remained until 2000, when UBS AG acquired the securities firm for $12 billion.  Marron then went on to found Lightyear Capital, a private-equity firm.

But Marron’s tenure at PaineWebber was marred early on by the acquisition of Blyth Eastman Dillon & Co.  A surge in stock-trading volume caught PaineWebber unable to keep up with the paperwork required to complete trades and meet regulatory requirements.  Recovering from the back-office mess consumed most of the 1980s, he later told the Wall Street Journal.

Marron was also known for his massive contemporary-art collection that included works by Matisse and Picasso.  He was president of the Museum of Modern Art for five years in the late ‘80s.

--Lastly, we note the passing of a true giant, Paul A. Volcker, who died Sunday at age 92.  As Federal Reserve chairman in the early 1980s, he launched a battle against inflation, driving it down from 12 percent to around 6 percent, using a monetary straitjacket that caused the short-term interest rate to rise to 20 percent.  The economy endured two recessions, and unemployment hit double digits, but Volcker won the battle.

Volcker took over the Fed at a time in the summer of 1979 when 84 percent of Americans thought the country was on the wrong track, according to a Gallup poll.  President Jimmy Carter spoke of “a crisis of confidence...a crisis that strikes at the very heart and soul and spirit of our national will.”

Annualized inflation peaked at 14.7% in the 12 months that ended in both March 1980 and April 1980, and at the same time, economic growth stagnated, creating a disastrous combination labeled stagflation.

Volcker believed that getting inflation under control was a precondition to prosperity.  “We were on a track where inflation was feeding on itself, and the longer it went on the harder it would be to deal with,” he recalled in an interview with the Wall Street Journal in October 2018.  “You can’t imagine the United States running a 20%, a 25% inflation rate.  That’s what people were scared of.”

Volcker constricted the nation’s money supply, sending interest rates soaring, with the rate on a conventional 30-year mortgage hitting 18.45% in 1980.

Farmers were furious, ditto construction workers, begging him to lower interest rates to boost housing starts.

Volcker recalled his task of corralling inflation proved “A lot tougher than I would’ve imagined.”

It wasn’t until the summer of 1982 that he felt confident that he had broken the back of inflation.  The inflation rate dropped to around 3% by the end of his first four-year term as Fed chairman.

Current Fed Chairman Jerome Powell said of Volcker: “He believed there was no higher calling than public service.  His life exemplified the highest ideals – integrity, courage, and a commitment to do what was best for all Americans.  His contributions to the nation left a lasting legacy.”

Foreign Affairs

Iran: The government acknowledged it faced a “very big” cyberattack, following a report in the New York Times this week that information from 15 million Iranian bank accounts was stolen and published online after widespread street protests were crushed in November.

Iran’s telecommunications minister said the attack had been state sponsored, but offered no evidence to back up the claim.

Editorial / Washington Post

“The Trump administration has been citing a massive wave of protests in Iran as evidence that its ‘maximum pressure’ strategy against the Islamic republic is working.  In one sense, that’s probably true. Sanctions against Iranian oil exports helped force the regime to raise gasoline prices by 50 percent or more on Nov. 15, which in turn triggered, by the government’s own account, demonstrations by up to 200,000 people in 29 of the country’s 31 provinces, including attacks on 50 military bases. That could be the biggest popular rebellion since the overthrow of the Shah 40 years ago.

“The regime responded with brutal and uncompromising repression. ...According to Amnesty International, at least 208 people were killed in less than a week, and the real figure could be far higher. The Trump administration claims it could be more than 1,000.

“The carnage was likely the result of the regime’s conviction that it needed to prove it was not vulnerable to collapse.  ‘Iranian officials have noted...that the speed with which they were able to quiet the streets, regardless of the cost, should demonstrate to Washington that they are in full control,’ said a report this week by the International Crisis Group.  It remains to be seen whether the unrest really has been quelled...

“But if President Trump’s objectives are, as he says, to force Iran to renegotiate the nuclear deal he scrapped and prevent further aggression against its neighbors, ‘maximum pressure’ is not working.   The Crisis Group reports says it’s possible that, despite its rhetoric, the regime has been so shaken by the protests that it will look for a way to settle with the United States.  If so, an avenue is open: Earlier this year, French President Emmanuel Macron appeared close to persuading Mr. Trump, if not Iranian Supreme Leader Ayatollah Ali Khamenei, to consider an accord under which Iran would resume observance of the nuclear deal’s terms and agree to renegotiate some of them in exchange for sanctions relief.

“It’s at least as likely, though, that Tehran will seek to regain leverage with more external aggression, like the devastating attack it launched in September against Saudi oil facilities....

“Hard-liners in the administration, such as Secretary of State Mike Pompeo, clearly hope that the protests are a sign that U.S. pressure will trigger revolution and regime change in Tehran.

“Though that might be a desirable outcome, history as well as the events of the past month suggest it remains unlikely.   The administration would be wiser to use this moment of Iranian weakness to offer a path of de-escalation.”

Iraq: The nation’s top Shiite cleric Grand Ayatollah Ali al-Sistani on Friday condemned recent killings and kidnappings of protesters, urging the state to assert control over the widespread use of weapons.  He also called on the armed forces to remain professional, loyal to the state and free from foreign influence, a representative of Sistani said during a sermon on Friday in the holy city of Kerbala.

More than 440 people have been killed since Oct. 1, according to a Reuters tally.

Israel: Israel is heading for an unprecedented third election within a year – prolonging a political stalemate that has paralyzed the government and undermined faith in the democratic process.

For weeks, Benjamin Netanyahu and his chief challenger, Benny Gantz, insisted they want to avoid another costly election campaign that is expected to produce the same results.   But neither has been willing to compromise on their core demands for a power-sharing agreement.  Netanyahu’s recent indictment on corruption charges has added a murky layer to the saga.

Following September’s elections, both men failed during their officially mandated time to form a governing coalition on their own.  Then, in a final three-week window, they could not join forces to avoid another vote.

So it now appears new elections will be held in early March and there is zero guarantee that another vote will break the loop of elections and instability that has rocked the country for the past year.  The frustration among the citizenry is mounting.  Legislation isn’t being passed, let alone budgets.

The only solution today is for Gantz’s centrist Blue and White party to form a unity government with Netanyahu’s Likud.  Together, they control a solid majority in the 120 seat Knesset.  But Gantz’s party refuses to sit with Netanyahu.

Gantz has said he would make a deal with a different leader of Likud, but Netanyahu has fended off an insurrection inside his party, specifically Gideon Saar.

Avigdor Lieberman, a former Netanyahu ally, remains the kingmaker, refusing to endorse either Netanyahu or Gantz while failing to coax them into a unity government.

Separately, the High Court of Justice ruled on Thursday that Prime Minister Benjamin Netanyahu can remain premier for the time-being, rejecting one of the petitions seeking his resignation.

Syria et al: Defense Secretary Mark Esper said that Russia’s presence in Syria has grown since U.S. troops withdrew from the latter’s northeastern border region, Esper told the House Armed Services Committee, but he said he’s more worried about Moscow’s burgeoning influence elsewhere.

“I’m concerned about Russia in other parts of the Middle East,” Esper said, naming Egypt, Saudi Arabia, and ‘other places.’

This week Russian forces entered Raqqa, the former de facto capital of the Islamic State caliphate, in one of the starkest examples yet of how Moscow has filled the vacuum created by President Trump’s decision to pull U.S. forces from northern Syria.

Esper added he is more worried that Turkey is moving closer to Moscow and away from NATO than he is about expanding Russian influence within Syria.

Both Esper and Joint Chiefs Chairman Gen. Mark Milley said that they believed the situation on the ground in Northeastern Syria has ‘stabilized,’ although Milley cautioned that ‘it’s a little early to tell.’   Turkish-backed proxy forces that carried out the incursion remain ‘the wildcard,’ Esper said.

The New York Times reported that commanders on the ground in Syria now view attacks from armed groups backed by Turkey, Russia, Iran and the Syrian government as a greater threat than ISIS.

Afghanistan: The Washington Post obtained a trove of government documents that reveals that senior U.S. officials failed to tell the truth about the war in Afghanistan throughout the 18-year campaign, making rosy pronouncements they knew to be false and hiding unmistakable evidence the war had become unwinnable.

The documents, which are being compared to the Pentagon Papers, were generated by a federal project examining the root failures of the longest armed conflict in U.S. history. 

The U.S. government tried to shield the identities of the vast majority of those interviewed for the project and conceal nearly all of their remarks.  The Post won release of the documents under the Freedom of Information Act after a three-year legal battle.

In the interviews, more than 400 insiders offered unrestrained criticism of what went wrong in Afghanistan and how the United States became mired in nearly two decades of warfare.

Since 2001, more than 775,000 U.S. troops have deployed to Afghanistan, many repeatedly.  Of those, 2,300 died there and 20,589 were wounded in action, according to Defense Department figures.

The government has not carried out a comprehensive accounting of how much it has spent on the war in Afghanistan, but a solid estimate is between $934 billion and $978 billion, according to experts who talked to the Post.

“What did we get for this $1 trillion effort?  Was it worth $1 trillion?”  Jeffrey Eggers, a retired Navy SEAL and White House staffer for Bush and Obama, told government interviewers. He added, “After the killing of Osama bin Laden, I said that Osama was probably laughing in his watery grave considering how much we have spent on Afghanistan.”

Andrew J. Bacevich / Defense One

“No evidence exists to suggest that the United States and its allies are today winning this war.  Indeed, the available evidence points in the opposite direction: The Taliban are growing in strength day by day. The on-again, off-again peace negotiations undertaken by the Trump administration amount to little more than a transparent effort to get out of Afghanistan, as the president has repeatedly promised to do, while creating a ‘decent interval’ between the U.S. troop withdrawal and the eventual collapse of the Afghan regime in Kabul.

“Critics of U.S. policy in Afghanistan have long made the case that U.S. efforts there are doomed to fail.  Senior civilian and military officials have offered a different assessment, regularly issuing optimistic progress reports.  At the end of the tunnel, light gleams.

“Thanks to a trove of government documents made available today courtesy of The Washington Post, we now know that many of those officials were lying. The lies began during the George W. Bush administration and continued through the administration of Barack Obama.  The liars included both senior civilian officials and military officers directly responsible for the war’s conduct.

“In September 2013, General Mark A. Milley, then a U.S. Army three-star, today the chairman of the Joint Chiefs of Staff, offered this assessment of Afghan security forces: ‘This army and this police force have been very, very effective in combat against the insurgents every single day.’  Either Milley was dissembling or he was deluded and therefore grotesquely incompetent.  Take your pick.  U.S. efforts to create effective Afghan forces have come nowhere close to demonstrating effectiveness.

“Indeed, the documents show that from the war’s earliest days, senior U.S. officials such as Secretary of Defense Donald Rumsfeld knew that events in Afghanistan were spinning out of control.  ‘I have no visibility into who the bad guys are,’ Rumsfeld complained September 2003.  Of course, by then for official Washington the Iraq War had eclipsed Afghanistan as a matter of priority interest.  There, too, knowing who the bad guys are proved to be a problem.

“Perhaps the most damning assessment in the documents that the Post provides comes from retired Army Lieutenant General Doug Lute, who served on the National Security Council during both the Bush and Obama administrations.  Lute was commonly referred to as the White House ‘czar’ for Afghanistan.   Yet in a 2015 conversation with interviewers, he confessed, ‘We didn’t have the foggiest notion of what we were undertaking.’

“In a dismal echo of Vietnam, the documents describe commanders in Afghanistan devising multicolored charts to measure their progress toward mission accomplishment, manipulating numbers as needed to show that things were headed in the right direction.  ‘Every data point was altered to present the best picture possible,’ one Army colonel acknowledged.

“New commanders arriving in country discovered that their predecessors had left things in a total mess, only to report at the end of their tour that impressive progress had been made – with their replacements then finding quite the opposite.  And so it went, year after year, as the U.S. military learned to deceive itself.  In so doing, it also deceived Congress and a gullible public.

“Meanwhile, Congress offered negligible oversight, finding perpetuating the war more convenient than ending it.  And members of the press demonstrated little of the outrage regularly heaped upon Trump for his varying offenses.

“If those offenses meet the standard of high crimes and misdemeanors, then how are we to classify what has occurred in Afghanistan since U.S. forces first arrived in 2001?  And who will demand accountability?  After finishing with Trump, Congress has long-overdue work to do.”

China / Hong Kong: For the first time since August, police allowed a rally by the Civil Human Rights Front, a pro-democracy group in Hong Kong, in the largest anti-government rally in months.  Organizers said an estimated 800,000 took part while police put the number at 183,000.

At the end of the march, the government said it was looking forward to finding “a way out for Hong Kong’s deep problems through dialogue.”

Monday marked six months since a mass rally on June 9 that triggered the political crisis that has gripped the semi-autonomous Chinese territory.

Meanwhile, the critical presidential and legislative election in Taiwan is just a month away, Jan. 11, and President Tsai Ing-wen and her party have taken advantage of the violence in Hong Kong to gain an upper hand over the opposition KMT and their presidential candidate, Han Kuo-yu.

The slogan “Today, Hong Kong; tomorrow, Taiwan” has spread on the island.

North Korea: The U.S. is ready “to simultaneously take concrete steps” toward a deal aimed at getting North Korea to give up its nuclear and missile programs, but the Security Council must be prepared to respond to any provocations, the U.S. envoy to the UN said on Wednesday.  The 15-member Security Council met at the request of the United States as concerns grow internationally that North Korea could resume nuclear or long-range missile testing – suspended since 2017 – because denuclearization talks between Pyongyang and Washington have stalled.

Kim Jong Un has given Donald Trump until the end of the year to show flexibility.  North Korea’s UN ambassador, Kim Song, declared last weekend that denuclearization was off the table.  Trump then warned that Kim risked losing “everything” if he resumes hostility and that North Korea must denuclearize.

“Kim Jong-un is too smart and has far too much to lose, everything actually, if he acts in a hostile way.  He signed a strong Denuclearization Agreement with me in Singapore.  He does not want to void his special relationship with the President of the United States or interfere with the U.S. Presidential Election in November.” Trump tweeted on Sunday.

“North Korea, under the leadership of Kim Jong-un, has tremendous economic potential, but it must denuclearize as promised.  NATO, China, Russia, Japan, and the entire world is unified on this issue!”

Pyongyang continues to hint darkly about a “Christmas gift” to the U.S., which most suspect means a long-range missile launch or a nuclear bomb test.

North Korean diplomat Ri Thae-song said, “It is entirely up to the U.S. what Christmas gift it will select to get.”

A senior North Korean official, former nuclear negotiator Kim Yong Chol, said in a statement that his country wouldn’t cave in to U.S. pressure because it has nothing to lose and accused the Trump administration of attempting to buy time ahead of the end-of-year deadline. 

Separately, President Trump and South Korean President Moon Jae-in held a phone call to discuss ways to maintain diplomacy with Pyongyang.

The two leaders agreed that the situation has become “severe” and that “dialogue momentum should be maintained to achieve prompt results from denuclearization negotiations,” South Korea’s presidential Blue House said in a statement.

Editorial / Army Times

“What are the 26,000 U.S. troops stationed in South Korea doing these days?

“Evidently, they are not doing major joint military exercises with their South Korean allies.

“U.S. Defense Secretary Mark Esper announced Nov. 17 that the two countries have indefinitely postponed a joint military exercise, a move intended to be an ‘act of goodwill’ toward North Korea, Esper said...

“Yes, to be sure, peace on the Korean Peninsula would be a great achievement.

“But it’s not clear at all how canceling large-scale exercises – and the diminished military readiness that results – is going to achieve that goal of ‘peace.’

“Here’s what’s at stake: The North Korean regime has nuclear weapons and ballistic missiles that could likely deliver them to any major city in the United States.  The North Koreans have repeatedly rejected efforts by the U.S. and its allies to denuclearize the peninsula.  North Korea continues to test missiles to ensure they are ready to strike the United States if they so choose.

“Meanwhile, despite three years of diplomatic talks and grip-and-grin photographs of U.S. and North Korean leaders, there has been no real progress toward any agreement to reduce this nuclear threat.

“The result is that U.S. forces in Korea – and their families – are more vulnerable than ever.  North Korea appears emboldened, and their military technology is improving.  At the same time, the U.S. troops’ ability to respond in the event of a crisis is atrophying.

“The risk to troops is intensified by the Army’s effort to move thousands of U.S. soldiers out of Seoul to Camp Humphreys, about 40 miles south of the South Korean capital.

“Experts who track North Korean propaganda say the regime refers to Camp Humphreys as a ‘fat target’ that is within range of their weapons systems....

“(This) no-exercises approach runs counter to the age-old logic of ‘peace through strength.’  Historically, conducting planned and predictable military exercises has been a way to show off military power and display readiness which, in turn, advances U.S. diplomatic goals....

“The current posture is the worst of all options – limiting the U.S. ability to maintain readiness and respond to a crisis, but at the same time leaving thousands of service members on the ground as possible targets.”

Russia / Ukraine: Secretary of State Mike Pompeo and his Russian counterpart, Foreign Minister Sergei Lavrov, held tense talks in Washington Tuesday, clashing over the fate of an American detained in Russia and over U.S. conclusions of Kremlin meddling in the 2016 U.S. election.

At a news conference, Pompeo and Lavrov both called for an improvement in U.S.-Russia relations, while stipulating that the two governments disagree on an array of issues. 

Pompeo said the U.S. has provided ample evidence of Russian interference in the 2016 election.  Mr. Lavrov said there is “no proof.”

The White House said that during a meeting with President Trump, the president “warned against any Russian attempts to interfere in United States elections” and urged Russia to resolve its conflict with Ukraine.

In a press conference with reporters following his White House visit, Mr. Lavrov appeared to contradict the president, saying he didn’t discuss elections with Mr. Trump.  Later in his remarks, Lavrov said he raised the issue of elections himself, to complain about Mr. Pompeo’s earlier comments.  He wouldn’t say whether President Trump responded to his complaint.

Meanwhile, earlier, leaders of Russia and Ukraine agreed on measures to de-escalate the conflict in Eastern Ukraine but fell short of a breakthrough in talks aimed at lowering tensions in a region that has become a flashpoint between Moscow and the West.

In their first face-to-face meeting, Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin said they agreed to implement a cease-fire and an exchange of prisoners by the end of the year.  They also agreed on limited troop withdrawal in certain areas, and a plan to remove mines from the conflict zone.

“We unblocked dialogue with Russia, a positive step....Unfortunately we couldn’t settle all issues today,” Zelensky said at a joint press conference with French President Emmanuel Macron and German Chancellor Angela Merkel, who mediated the talks.

“The process is going in the right direction,” Putin said, while acknowledging differences remain.

Monday’s agreement basically reaffirmed a peace deal reached four years ago in Minsk, Belarus.  That accord stipulates the return of the border with Russia to Ukrainian control, the holding of elections in separatist-held regions and the granting of more autonomy to areas of Eastern Ukraine held by separatists.

Monday, the leaders didn’t agree on some of the thorniest issues in the conflict, such as returning the Ukrainian side of the border to Kiev’s control.  Russia and Ukraine also disagree on the sequencing of many steps of the Minsk agreement.

Lastly, Russia was banned from competing in the 2020 Summer Olympics in Tokyo and the 2022 Winter Olympics in Beijing by the World Anti-Doping Agency (WADA), after Moscow was banned from the 2018 Winter Games in PyeongChang.  Russian officials were caught this year manipulating data from their Moscow anti-doping laboratory and misleading WADA investigators, prompting a new chapter in a years-long doping scheme that continues to roil the international sports community.

India: There have been violent protests in India’s northeast over a new federal law that would make it easier for non-Muslim minorities from some neighboring countries to seek Indian citizenship.  Prime Minister Narendra Modi’s Hindu nationalist government has said the Citizenship Amendment bill, approved by parliament on Wednesday, was meant to protect minorities from Bangladesh, Pakistan and Afghanistan.

But protesters in the state of Assam, which shares a border with Bangladesh, say the measure would open the region to a flood of foreign migrants.  Others said the bigger problem with the new law was that it undermined India’s secular constitution by not offering protection to Muslims.

Random Musings

--Presidential tracking polls.....

Gallup: Still no update from Nov. 1-14 numbers; 43% approve of President Trump’s job performance, 54% disapprove, 90% of Republicans, 38% independents.
Rasmussen: 49% approve of Trump’s performance, 49% disapprove (Dec. 13)

In a Monmouth University national poll, 43% of registered voters feel that President Trump should be reelected, while 54% say it is time to have someone new in the Oval Office; numbers that haven’t really budged in the past month (42%-55% in the last one).

In a new Quinnipiac University national poll of registered votes, 41% approve of the way President Trump is handling his job, 55% disapprove, which like other national surveys hasn’t changed much all year.  92% of Republicans approve of Trump’s job performance, and 35% of independents.  34% of women approve, 57% disapprove.  [Men are 50-46.]  40% of those with a college degree approve of Trump’s performance, while 59% of those without a degree approve.

--In the Monmouth University national survey, among Democrats and Democratic-leaning voters, Joe Biden receives 26%, Bernie Sanders 21%, and Elizabeth Warren 17%.  [In late September, it was 28% Warren, 25% Biden, and 15% Sanders.]  Pete Buttigieg is at 8%, with Michael Bloomberg entering the race at 5%.  Amy Klobuchar receives 4%.

In the new Quinnipiac University national poll, Joe Biden is at 29%, Bernie Sanders 17%, Elizabeth Warren 15% and Pete Buttigieg at 9%.  Michael Bloomberg also gets 5% in this one.  [Andrew Yang 4%, Amy Klobuchar 3%.]

--In a national Harvard-Harris poll of registered Democrats, Joe Biden polls at 29%, Sanders 16%, Warren 13%, Buttigieg 8% and Bloomberg 7%.

If Hillary Clinton and former Secretary of State John Kerry were added to the mix, it would be Clinton 21%, Biden 20%, Sanders 12%.  [Kerry 5%]

--In two big Super Tuesday (March 3) states, California and Texas, Joe Biden leads in both, according to a new CNN/SSRS poll.

In California, Biden polls at 21% among Democratic likely primary voters, with Bernie Sanders at 20% and Elizabeth Warren 17%.  Pete Buttigieg is at 9%, followed by Andrew Yang (6%) and Michael Bloomberg (5%).

In Texas, Biden tops Sanders by 20 points, 35% to 15%, with Warren almost even with Sanders at 13%.  Buttigieg follows at 9% and Bloomberg at 5%.

[Regarding President Trump, 86% of likely Republican primary voters in Texas say they back the president.  In California it’s 85%.  Overall, just 32% of Californians approve of the way Trump is handling his job, while 61% disapprove.  In Texas, significantly, 42% approve and 50% disapprove.  38% of independents approve, 34% of women, which suggests a warning sign for his general election prospects in this reliably GOP state.  Trump took Texas 52.2% to 43.2% in 2016.]

--Joe Biden denied he has ever discussed with his campaign whether he would only serve one term if elected.  “I don’t have plans on one term.  I’m not even there yet,” Biden said.

Why not?  I think it’s a selling point, assuming you get the nomination and then at the convention select a running mate who is already capable of becoming president...Amy Klobuchar.  Cough cough....Sen. Klobuchar having been mentioned by moi last week as a good running mate for an equally elderly Michael Bloomberg.

Separately, Biden still refuses to ‘get it’ when it comes to son Hunter.  When pressed in an interview with Axios, while he said that if he’s elected president his family will have to stay out of foreign business, when questioned by Mike Allen further about Hunter’s involvement with Burisma, and whether “everything that happened...was kosher?”, Biden shot back, “You know, there’s not one single bit of evidence, not one little tiny bit, to suggest anything done was wrong.  You know that.”

That’s not the answer, Uncle Joe.  But then on this issue he hasn’t ‘gotten it’ from day one.

By the way, the most underrated president in our history, James K. Polk (1845-49), made a one-term pledge.

--Under pressure from Democratic rival Elizabeth Warren, Pete Buttigieg on Tuesday released the names of clients he worked for at the management consulting firm, McKinsey & Co., a decade ago.

Buttigieg, the mayor of South Bend, Ind., worked for the Best Buy electronics chain, the U.S. Postal Service, the Pentagon, Blue Cross Blue Shield of Michigan, as well as a coalition of power companies and environmental groups when they were clients of the firm.

“Now, voters can see for themselves that my work amounted to mostly research and analysis,” he said.  “They can also see that I value transparency and keeping my word.  Neither of these qualities are something we see coming out of Washington, especially from this White House.”

Buttigieg said he had “little decision-making authority” at McKinsey, where he worked from 2007 to 2010.  His work mostly involved cost-cutting analyses, or, in the case of his last study at McKinsey, which was for the U.S. Postal Service, to identify potential new sources of revenue.

Buttigieg says he had to wait for months to release his McKinsey client list because he could not get permission from McKinsey to break his confidentiality agreement.

--When Donald Trump was elected in 2016, there were 241 Republicans in the House. With the retirement of Florida Rep. Ted Yoho on Tuesday, 104 of them have either retired, been defeated or are not running again in 2020, according to stats provided by the Cook Political Report.

So about half (43%) of the Republicans who were in the House when Trump became president are either already gone or in the process of going.  Some of this attrition is due to candidates running for other offices, those who retire or just leave.  This often happens as well when a party goes from the House majority to the House minority.

But these are ugly numbers, and a concern in a state like Texas which has seen numerous Republican House members leave or announce their resignations.

--An Office of Congressional Ethics report on California Republican Rep. Duncan Hunter’s campaign spending, held up for three years by the criminal prosecution of the congressman, has been released now that he has pleaded guilty to misspending the funds.

The 50-page report examined items such as $9,200 spent on an Italian vacation, $7,000 spent on trips to Hawaii, and a trip to a cousin’s wedding in Idaho, where over $2,200 in lodging and other expenses was paid for by the campaign committee.

But the report also catalogued five $125 charges covering air travel for a pet rabbit.

--The United States has grounded hundreds of Saudi military aviation students (303) at three Florida Naval Air Stations: Pensacola, Whiting Field and Mayport, in the wake of last Friday’s deadly shooting in Florida.  All flying will be paused, though classroom studies will continue.

The move comes after Defense Secretary Mark Esper ordered a review following the shooting of three sailors at the naval base in Pensacola, by a Saudi Air Force lieutenant.

Investigators continue to work on the assumption that it was an act of terrorism.

Editorial / Washington Post

“President Trump’s reaction to the murderous rampage in Pensacola, Fla., on Friday by an officer of the Royal Air Force of Saudi Arabia was insensitive and grossly insufficient. Three American servicemen lost their lives and eight were wounded by a Saudi wielding a 9mm Glock 45 pistol....(and) What does the president say?  He finds it ‘shocking’ and conveys the condolences of ‘very, very devastated’ King Salman of Saudi Arabia and his son, Crown Prince Mohammed bin Salman, and adds that the kingdom will ‘help out the families very greatly.’

“Not a word from Mr. Trump about the threat of terrorism, or a shred of curiosity about motives and whether the Saudi officer was radicalized and by whom, or a thought about what Saudi Arabia could do to help investigate the shooter, or perhaps a lament that a pilot, a guest of the United States, would carry out such a horrific assault on his hosts, or even a worry about where the 21-year-old officer got the weapon....

“Mr. Trump has an inexplicable blind spot for Saudi Arabia.  He has no trouble insulting in the vilest way people from other Muslim countries.... But when a Saudi carries out an attack on a U.S. military base, Mr. Trump becomes a spokesman and apologist for the king....

“The king’s promises of cooperation might be more credible if he would direct his intelligence service, and the crown prince to whom it reports, to pay more attention to cases of radicalization and less to what seem to be the prince’s top priorities: silencing peaceful dissent, torturing women who campaigned for the right to drive, surveilling the relatives of the murdered Khashoggi.  Mr. Trump might ask the king to make public who really ordered that murder and to free the writers and activists the regime has thrown into prison.  That is, if Mr. Trump could see beyond his blind spot.”

--What a terrifying day it was for Jersey City, New Jersey, on Tuesday, a shootout killing six, including a police officer with five children, two suspects, and three innocents inside the Jewish JC Kosher Supermarket.  Jersey City Mayor Steven Fulop said it appeared the supermarket was targeted, and we learned later one of the suspects had been posting anti-Semitic diatribes on social media, both apparently adherents of the Black Hebrew Israelites, a fringe religious movement not associated with mainstream Judaism that’s been labeled a hate group by experts who track extremists in America.  The duo is also suspected of killing an Uber driver in Bayonne the day before.

I lived in Jersey City from 1982-85, when I was first working on Wall Street.  It’s a popular, often far-less-expensive place to live than Manhattan, or even neighboring Hoboken. 

But it’s a very complex city because of massive gentrification in spots.  Those watching around the country Tuesday probably just have one image of the place, but understand it is a generally safe large city.

--The death toll from this week’s volcano eruption on an island off the coast of New Zealand rose to 16, with six of the eight remaining bodies removed in a dangerous mission yesterday. Among the dead were passengers from a Royal Caribbean cruise line vessel (Ovation of the Seas).  Many of the injured are being treated for severe burns and medical officials are importing skin.

The amount of skin needed equates to about 60 donors.  In New Zealand, only five to 10 people donate skin each year.  The poor patients are in incredible pain and fighting for their lives.

As for whether tour groups should have been allowed on the island, weeks after the threat level had been raised because of “heightened volcanic unrest,” the victims and their families deserve answers.

--According to a study undertaken by conservation group IUCN, climate change and nutrient pollution are driving the oxygen from our oceans, and threatening many species of fish. 

Nutrient run-off has been known for decades, but climate change, according to the researchers, is making the lack of oxygen worse and now, around 700 ocean sites are suffering from low oxygen, compared with 45 in the 1960s.

Researchers say the depletion is threatening species including tuna, marlin and sharks.

According to the scientists, as more carbon dioxide is released enhancing the greenhouse effect, much of the heat is absorbed by the oceans.  In turn, this warmer water can hold less oxygen.  This normally wouldn’t be that big a deal, overall, but in some tropical locations the loss can range up to 40%.

“We have known about de-oxygenation but we haven’t known the linkages to climate change and this is really worrying,” said Minna Epps from IUCN.

The bigger fish like tuna have greater energy needs.  According to the authors, the big fish are starting to move to the shallow surface layers of the seas where there is more of the gas dissolved.   However, this makes the species more vulnerable to over-fishing.

--Climate activist Greta Thunberg was named ‘TIME’ Person of the Year, the 16-year-old the  youngest to be so honored. 

So President Trump’s team edited his face on to the body of Thunberg, tweeting, “When it comes to keeping his promises, there’s only one Person of the Year.”

Trump himself tweeted: “So ridiculous.  Greta must work on her Anger Management problem, then go to a good old fashioned movie with a friend!  Chill Greta, Chill!”

Thunberg wasted little time in offering a rejoinder, updating her Twitter profile to read: “A teenager working on her anger management problem.  Currently chilling and watching a good old fashioned movie with a friend.”

In explaining its choice of Ms. Thunberg as Person of the Year, ‘TIME’ editor in chief Edward Felsenthal said “she became the biggest voice on the biggest issue facing the planet this year, coming from essentially nowhere to lead a worldwide movement.”

--Finland has a new prime minister, Sanna Marin, the world’s youngest at the age of 34.  She is heading a women-led coalition government.  The center-left coalition consists of five parties, all headed by women.  You go, Girls!!!

--We note the passing of Pete Frates, a former Boston College baseball player whose participation in the social media phenomenon known as the Ice Bucket Challenge helped raise more than $100 million toward fighting amyotrophic lateral sclerosis, commonly known as A.L.S. or Lou Gehrig’s disease.  Frates died on Monday at his home in Beverly, Mass.  He was 34.

Frates learned he had A.L.S. in 2012 and, while he didn’t create the Ice Bucket Challenge, a Facebook post in July 2014 showing him doing his version of the challenge prompted a surge in participation that summer, to where it became a viral sensation.

--A painting discovered on the wall of an Indonesian cave has been found to be 44,000 years old.  As reported by the BBC, “The art appears to show a buffalo being hunted by part-human, part-animal creatures holding spears and possibly rope.  Some researchers think the scene could be the world’s oldest-recorded story.”

In other news, free agent pitcher Gerrit Cole signed with the Yankees for nine years, $324 million.

And now you’re caught up.

---

Gold $1480
Oil $59.79

Returns for the week 12/9-12/13

Dow Jones  +0.4%  [28135]
S&P 500  +0.7%  [3168]
S&P MidCap  +0.1%
Russell 2000  +0.3%
Nasdaq  +0.9%  [8734]

Returns for the period 1/1/19-12/13/19

Dow Jones  +20.6%
S&P 500  +26.4%
S&P MidCap  +21.8%
Russell 2000  +21.5%
Nasdaq  +31.6%

Bulls 53.3
Bears 17.2

Have a good week.

Brian Trumbore

 



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Week in Review

12/14/2019

For the week 12/9-12/13

[Posted 10:00 PM ET, Friday]

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

Edition 1,078

Well that was an action-packed week.  Our president is on the verge of being impeached by the full House, we had the long-awaited release of the Justice Department’s IG report, the U.S. and China hit the pause button on their trade war, while Democrats and the White House reached agreement on the U.S.-Mexico-Canada trade accord.  Britain’s Boris Johnson had a resounding victory in the U.K.’s election that will lead to an exit from the European Union.  Sports agent Scott Boras had three clients sign for a collective $800 million+ in just three days.  Rudy Giuliani is back from Ukraine.  And some of us are wondering what Kim Jong Un is going to give the United States and Donald Trump for Christmas.  It’s this last item we should all be most concerned with.

But on impeachment, I was watching some of the coverage, specifically between about 7:00 p.m. and 9:00 p.m. Eastern on Thursday, prior to their ½-hour recess, and was thinking, gosh, I really can’t stand some of these Republicans.  And I’m Republican. 

And I found myself musing, gee, Democratic Rep. Hakeem Jeffries is talented, as in down the road, he’s someone who could rile up the minority base in a general election.  And for the first time ever, I was also kind of thinking, gee, Democratic Rep. Sheila Jackson Lee isn’t as bad as I’ve thought she was all these years. 

It’s just that I have trouble respecting a process where it has been total obstruction on the part of the White House, with not a single document turned over, and everyone in lockstep among the elephants parroting the Ukraine hoax, putting it on an equal footing with Russia’s extreme election interference, when all we have are some Ukrainian leaders writing op-eds against then-candidate Donald Trump because the future president thought there was nothing wrong with Vladimir Putin annexing Crimea because, as Trump said, President Obama let him do it!

Even Florida Republican Senator Marco Rubio said you can not in any shape or form equate an op-ed with what Russia was doing.

But I’m also the guy who said this whole deal over the July 25 phone call should have resulted in censure. 

This is going to get uglier and uglier.  And we know our president will want to be right in the middle of it all, straight through to November.

I’m kind of ready for spring training myself.  And I also really miss Ronald Reagan.

Trump World

The House Judiciary Committee approved two articles of impeachment against President Donald Trump after a full day of debate from both sides on amendments that left members in a recess after 11:00 p.m. Thursday, with the vote Friday morning.

For 14 hours yesterday, members debated over the abuse of power and obstruction of Congress articles, which allege the president used the power of his office to pressure Ukraine to open an investigation into former Vice President Joe Biden that would benefit his 2020 campaign, and that he blocked Congress from pursuing its impeachment investigation.

The votes were 23-17, strictly along party lines, with Democratic Rep. Ted Lieu out and unable to vote, so it would have been 24-17, just for the record.  Lieu experienced chest pains and had a heart procedure on Tuesday.

The full House is expected to vote to impeach Trump next week, though Senate Majority Leader Mitch McConnell has said there is “no chance” his chamber will vote to remove Trump from office, proceedings in the Senate sometime in January.

Opinion...both sides....

Editorial / Wall Street Journal

“So that’s it?  That’s all there is?  After all the talk of obstruction of justice, collusion with Russia, bribery, extortion, profiting from the Presidency, and more.  House Democrats have reduced their articles of impeachment against President Trump to two:  abuse of power and obstruction of Congress.  Honey, we shrunk the impeachment.

“Democrats on the Judiciary Committee will vote as early as Thursday on the text of the two articles they unveiled Tuesday, and then they will rush it to the floor next week.  It’s enough to suspect that Democrats understand they are offering the weakest case for impeachment since Andrew Johnson, that the public isn’t convinced, and so they simply want to get it over with.

“At least Johnson was impeached for violating a specific statute, the Tenure of Office Act, by firing Edwin Stanton as Secretary of War.  There was wide agreement that Richard Nixon and Bill Clinton violated criminal statutes.  In this case Democrats don’t even try to allege a criminal act.

“Whatever happened to bribery and extortion?  Democrats spent weeks talking them up as the crimes of Mr. Trump’s Ukraine interventions. They had turned to those words after focus groups with voters found them more compelling than ‘quid pro quo.’  Yet suddenly they’re gone.  Have Democrats  concluded that Mr. Trump’s actions aren’t illegal under statutes that have specific meaning?

“Democrats have retreated instead to charge ‘abuse of power,’ a phrase general enough for anything Congress wants to stuff into it.  They don’t even pretend any more to prove a quid pro quo.  Instead they assert that Mr. Trump, in his phone call with Ukraine’s president, ‘solicited the interference of a foreign government’ in the 2020 election ‘in pursuit of personal political benefit.’  They also assert that this ‘compromised the national security of the United States and undermined the integrity of the United States democratic process.’

“Their problem is that Mr. Trump didn’t withhold military aid to Ukraine, and even if he had he would have merely been returning to Barack Obama’s policy of denying lethal aid.  How would that have jeopardized national security?  Every President also solicits actions from foreign leaders that he hopes will help him politically at home.

“We don’t condone Mr. Trump’s mention of Joe Biden in his call to Ukraine’s President, which was far from perfect and reflects his often bad judgment.   But ‘abuse of power’ on this evidence is a new and low standard for impeachment that will come back to haunt future Presidents of all parties....

“The second Democratic article is weaker in that it amounts to impeaching Mr. Trump because he is resisting their subpoenas.  ‘Without lawful cause or excuse, President Trump directed Executive Branch agencies, offices and officials not to comply with those subpoenas,’ the article charges....

“This ignores that the Constitution stipulates co-equal branches that each have the right to defend their powers.  If Democrats are right in their claim, then every President essentially works for Congress.  We should skip elections and let Congress choose the President.

“Democrats also claim the emergency of time, and as usual Rep. Adam Schiff puts this case in the least credible way.  ‘The argument ‘why don’t you just wait?’ amounts to this: Why don’t you just let [Mr. Trump] cheat in one more election?  Why not let him cheat just one more time?,’ Mr. Schiff told the press as the articles were unveiled.

“But Mr. Trump didn’t cheat to win in 2016, as Robert Mueller’s Russia collusion investigation demonstrated after two years of looking.  As for 2020, the Constitution includes no clause for pre-emptive impeachment to prevent acts that a President might commit....

“In their wisdom, the American people seem to have figured all this out. Despite one-sided lobbying by the impeachment press, the polls show that a majority opposes removing Mr. Trump from office.   This may be the real explanation behind the Democratic move to shrink impeachment.  Democrats now want a fast and furious vote to satisfy their most anti-Trump partisans, dump the mess on the Senate, and campaign on something else.

“They shouldn’t get off that easy.  By defining impeachment down, they are turning what should be a rare and extraordinary constitutional remedy into a routine tool of partisan warfare. They are harming constitutional norms, as the liberals like to say.

“Americans will decide in 11 months whether Mr. Trump deserves to remain in office.  But they should also keep the impeachment vote very much in mind when they decide whether Democrats deserve to keep the House.”

Editorial / Washington Post

“The House Judiciary Committee’s debate about articles of impeachment Wednesday and Thursday underlined the yawning gap between Democrats and Republicans over President Trump’s behavior – and also between Republicans and the truth.

“Democrats arguing for the president’s impeachment repeatedly cited evidence that Mr. Trump conditioned military aid to Ukraine and a White House meeting with its president on an announcement by Ukraine that it would investigate former vice president Joe Biden and a conspiracy theory about the 2016 U.S. election.  Most Republicans responded with the diversions they have offered since the impeachment process began: spurious complaints about the process, coupled with claims that Democrats were interested only in reversing the results of the 2016 election.

“Remarkably, not one GOP member of the Judiciary Committee was ready to acknowledge that there was anything wrong with Mr. Trump’s demand that a foreign government pursue false charges against one of his most likely Democratic opponents in the 2020 election.   They could have followed the example of the several Republican legislators who have said Mr. Trump’s actions were improper but not impeachable.  Instead, they offered a display of blind fealty, portraying Mr. Trump as a victim of Democratic persecution while ignoring or misrepresenting the evidence against him.

Some served up gross distortions and falsehoods.  Reps. Jim Jordan (R-Ohio) and Matt Gaetz (R-Fla.), among Mr. Trump’s most ardent supporters, repeated what they described as four key points, all of which are starkly at odds with sworn testimony and documents.   They said there was no quid pro quo mentioned in a July 25 phone call between Mr. Trump and Ukrainian President Volodymyr Zelensky; but the documented contacts between U.S. and Ukrainian officials before the call make clear that when Mr. Zelensky promised to conduct the investigations Mr. Trump wanted, and Mr. Trump answered by offering him a White House visit, they were confirming a precooked deal.

“The Republicans said the Ukrainians never felt pressured by Mr. Trump, relying on a polite comment Mr. Zelensky made while sitting next to Mr. Trump and disregarding the testimony of U.S. diplomats in Kyiv, who described the Ukrainian president and his aides as ‘desperate.’  Republicans said the Ukrainians did not know that Mr. Trump had withheld military aid, even though a Pentagon official testified the Ukrainians first asked about the hold the same day the two presidents spoke.   Finally, Mr. Jordan and Mr. Gaetz pointed to the fact that Ukrainians received military aid without announcing the investigations.  But Mr. Trump released the aid two days after the announcement of a congressional investigation of his extortion attempt – and Mr. Zelensky still has not been invited to the White House.

“Mr. Gaetz and several colleagues sunk still lower, alleging that Mr. Biden and his son Hunter were guilty of corruption and that Mr. Trump was justified in demanding an investigation of them and of a Russia-propagated allegation that Ukraine and not Russia hacked the servers of the Democratic National Committee in 2016.  Both charges were debunked by multiple U.S. officials and, in the case of Ukraine’s alleged interference, the U.S. intelligence community. Yet, Republicans follow Mr. Trump in brazenly restating them.

“The airing of such disinformation may advance Mr. Trump’s underlying aim with Ukraine, which was to smear an opponent and cloud the record of Russian interference.  But it does nothing to refute the charges against the president.”

--In a dozen October and November polls on impeachment in battleground states like Arizona, Florida, Michigan, Pennsylvania, Nevada, New Hampshire, North Carolina and Wisconsin, an average of 44% of those surveyed supported impeachment, with 51% opposed, according to the Washington Post.

In averages of national polls, 47% of respondents said they support impeachment, while 43% said they oppose it.

After strongly opposing impeachment in the summer, national polls since the start of the House’ public hearings have independent voters divided on the subject, with 42% in support and 44% opposed.

Between the lines: Trump’s approval rating has also remained steady in national polling, as I’ve spelled out below since the beginning on a weekly basis.

In a national Quinnipiac University poll released Tuesday, 51% think President Trump should not be impeached and removed from office, while 45% say he should be impeached and removed.  In a Nov. 26 poll, 48% said he should be not be impeached, while 45% said he should.

--The long-awaited Justice Department inspector general’s report examining the FBI’s investigation of President Trump’s 2016 campaign rebutted Republicans’ accusations that top FBI officials were driven by political bias to illegally spy on Trump advisers, but also found broad and “serious performance failures” requiring major changes.

“The 434-page report issued Monday by Inspector General Michael Horowitz concluded the FBI had an “authorized purpose” when it initiated its investigation, known as Crossfire Hurricane, into the Trump campaign.  Horowitz implicitly rejected GOP assertions that the case was launched out of political animus, or that the FBI broke its own rules on using informants.

But FBI officials repeatedly played down exculpatory evidence they found, while emphasizing damaging information they heard about Trump associates.  The FBI said it would implement dozens of recommendations for corrective measures in response to the report and that disciplinary action remains a possibility.

So both conservatives and liberals claimed victory, with Republicans asserting it exposed serious wrongdoing while Democrats said it validated the whole Russia investigation.  President Trump called the report’s findings “far worse than anything I would have imagined.”

“This was an overthrow of government,” he said.  “This was an attempted overthrow and a lot of people were in on it and they got caught, they got caught red-handed.”

So then Attorney General William Barr said he disagreed with one of the IG’s key conclusions, saying the FBI launched an investigation of a presidential campaign “on the thinnest of suspicions that, in my view, were insufficient to justify the steps taken.  It is also clear that, from its inception, the evidence produced by the investigation was consistently exculpatory.” 

Barr added in an interview with NBC News: “I think our nation was turned on its head for three years based on a completely bogus narrative that was largely fanned and hyped by an irresponsible press.”

Barr said he saw “gross abuses” in the process of obtaining the surveillance warrant and “inexplicable behavior that is intolerable.”

And: “The attorney general’s primary responsibility is to protect against the abuse of the law enforcement and intelligence apparatus, and make sure it doesn’t play an improper role in our political life.  That’s my responsibility, and I’m going to carry it out.”

John Durham, the Connecticut U.S. Attorney Barr handpicked to conduct an investigation similar to that of Horowitz’, said: “Our investigation has included developing information from other persons and entities, both in the U.S. and outside of the U.S...Based on the evidence collected to date, and while our investigation is ongoing, last month we advised the Inspector General that we do not agree with some of the report’s conclusions as to predication and how the FBI case was opened.”

Durham’s investigation is ongoing.

Horowitz was particularly critical of the FBI and applications it made to the Foreign Intelligence Surveillance Court to monitor former Trump campaign adviser Carter Page, asserting those applications contained “significant inaccuracies and omissions” and that agents “failed to meet the basic obligation” to ensure the applications were “scrupulously accurate.”

The IG found that “so many basic and fundamental errors were made by three separate, hand-picked teams on one of the most sensitive FBI investigations that was briefed to the highest levels within the FBI,” that he concluded there was a failure of “not only the operational team, but also of the managers and supervisors, including senior officials, in the chain of command.”

FBI Director Christopher Wray said the bureau accepts the findings and plans to make a host of changes, including to how they gather and submit information for surveillance applications.

But Wray told ABC News it was “important that the inspector general found that in this particular instance the investigation was opened with appropriate predication and authorization.”

President Trump tweeted in response:

“I don’t know what report current Director of the FBI Christopher Wray was reading, but it sure wasn’t the one given to me.  With that kind of attitude, he will never be able to fix the FBI, which is badly broken despite having some of the greatest men & women working there!”

--The Supreme Court agreed today to consider President Trump’s pleas to keep his tax and financial records secret, paving the way for an historic legal case that may impact next November’s election.  The Supremes will begin hearing arguments in late March, with a final ruling in June.

The case comprises three lower court challenges on subpoenas issued by the Manhattan district attorney’s office and three House committees seeking years of Trump’s tax returns and bank records as part of investigations into allegations of possible fraud and other wrongdoing.

Trump has sued to block banks and his private accounting firm from complying with the subpoenas, and, so far, all lower courts have ruled against him and ordered him to turn over the records.

Should the Supreme Court rule against him, the president will have to release the records, after becoming the first president in modern memory to refuse to release his tax returns for public scrutiny upon taking office.

Michael Cohen, Trump’s imprisoned former personal attorney, testified under oath before Congress earlier this year that the president’s tax returns would corroborate allegations that he committed fraud.

--Rudy Giuliani was spotted entering the White House this morning, having returned from Ukraine where he has been waging his own investigation into the Bidens.  Giuliani tweeted several times.

“The American people have already made up their mind on this #ImpeachmentScam.  This is a SMOKESCREEN for the Obama-Biden administration’s corruption.  It will soon be proven.”

--Trump tweets....

How do you get impeached when you have done NOTHING wrong (a perfect call), have created the best economy in the history of our Country, rebuilt our Military, fixed the V.A. (Choice!), cut Taxes & Regs, protected your 2nd A, created Jobs, Jobs, Jobs, and soooo much more? Crazy!”

Dems Veronica Escobar and Jackson Lee purposely misquoted my call.  I said I want you to do us (our Country!) a favor, not me a favor.  They know that but decided to LIE in order to make a fraudulent point!  Very sad.”

“I also have constantly asked, ‘Why aren’t Germany, France and other European countries helping Ukraine more?  They are the biggest beneficiaries.  Why is it always the good ol’ United States?’  The Radical Left, Do Nothing Democrats, never mention this at their phony hearing!”

Ed. The EU has contributed over $16 billion in grants and loans to Ukraine since 2014.

“The Do Nothing Democrats have become the Party of lies and deception!  The Republicans are the Party of the American Dream!”

“Poll numbers have gone through the roof in favor of No Impeachment, especially with Swing States and Independents in Swing States.   People have figured out that the Democrats have no case, it is a total Hoax.  Even Pelosi admitted yesterday that she began this scam 2 ½ years ago!”

“The Republicans House members were fantastic yesterday.  It always helps to have a much better case, in fact the Dems have no case at all, but the unity & sheer brilliance of these Republican warriors, all of them, was a beautiful sight to see.  Dems had no answers and wanted out!”

“Congratulations to @foxandfriends on being named, BY FAR, the Number One Rated cable news show.  CNN and MSNBC have totally tanked, their ratings are terrible.  They have zero credibility!”

“Don’t get why @FoxNews puts losers on like @RepSwalwell (who got ZERO as presidential candidate before quitting), Pramila Jayapal, David Cicilline and others who are Radical Left Haters?”

“The Dems wouldn’t let @FoxNews get near their bad ratings debates, yet Fox panders.  Pathetic!”

--Finally, President Trump said he wants a nationwide review of water efficiency standards because of issues with “sinks and showers and other elements of bathrooms” across the country.

People are flushing toilets 10 times, 15 times as opposed to once.  They end up using more water,” Trump said, continuing that the Environmental Protection Agency is “looking at” the issues at “his suggestion.”

“We have a situation where we’re looking very strongly at sinks and showers and other elements of bathrooms, where you turn the faucet on in areas where there’s tremendous amounts of water, where it rushes out to sea because you could never handle it.  And you don’t get any water.  You turn on the faucet and you don’t get any water,” Trump said during the White House round-table on small business and red tape reduction.

Wall Street and the China Trade War

Before we get to the trade issue, the S&P 500 and Nasdaq hit new highs, the market finishing up on the week after another slow start (a recent pattern) as the trade picture cleared up a bit, and Boris Johnson registered a big victory in the UK, offering clarity across the pond on the future direction of that key nation.

Inflation data for November remained tame, with the consumer price index up 0.3%, 2.1% over the last 12 months, up 0.2% ex-food and energy, 2.3% year-on-year.  Producer prices for the month were unchanged, -0.2% on core, with the year-over-year figures 1.1% and 1.3%, respectively.

November retail sales were disappointing, up only 0.2%, worse than expected.

The Atlanta Fed’s GDPNow barometer for the fourth quarter is at 2.0%.

The Federal Reserve’s Open Market Committee held its last meeting of the year and, as expected, held the line on interest rates (after cutting rates in July, September and October), signaling they are likely to remain unchanged indefinitely, with moderate economic growth and low unemployment expected to continue through next year’s presidential election.

The decision left the benchmark lending rate in its current target range between 1.50% and 1.75%. 

13 of 17 Fed policymakers foresee no change in interest rates until at least 2021.  The other four saw only one rate hike next year.  Notably, no one suggested lower rates would be appropriate next year, a sign the Fed feels it has engineered a “soft landing” after a year in which recession risks rose.

GDP is expected to stay at its current 2% pace for both next year and 2021, with unemployment remaining at the 3.5% level.  Nothing wrong with that, though far short of the 3%+ annual growth President Trump promised to produce.

Fed Chairman Jerome Powell said, “We expect moderate growth to continue.  We reduced [interest rates] by three quarters of a percentage point.  This shift has helped support the economy and has kept the outlook on track.”

Powell added, “If developments emerge that cause a material reassessment of our outlook, we would respond accordingly.”

No doubt President Trump next year will be screaming for Powell and Co. to lower rates further.

Lastly, the Treasury Department released the figure for the November budget deficit, -$208.8 bn, meaning for the first two months of fiscal 2020, the deficit is -$343 billion, 12% wider than last year.  Federal spending is up 7% thus far, receipts up 3%.  We are headed towards a deficit for the year of over $1 trillion, where it is projected to remain for years to come.

So turning to the trade war, we have a truce as the United States and China agreed to a gradual reduction in tariffs as part of a “phase one” trade deal designed to ease tensions.

Officials in Beijing Friday night local time said at a press conference that the agreement was designed to boost confidence in global markets and would pave the way for more U.S. services and products to enter China.  But details at first were limited.

President Trump tweeted at the same time the Chinese were speaking:

“We have agreed to a very large Phase One Deal with China.  They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more.  The 25% Tariffs will remain as is, with 7 ½% put on much of the remainder....

“....The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal.  We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election.  This is an amazing deal for all. Thank you!”

Washington will initially cut tariffs on $120bn of Chinese goods, introduced on September 1, from 15 percent to 7.5 percent.  Trump said that 25 percent tariffs on $250bn of Chinese goods introduced over the course of the nearly two-year old trade dispute would remain in place for now.

But the 15 percent tariffs on a further $160bn of Chinese goods slated for Sunday, Dec. 15, will not be implemented.

This afternoon we did then receive some details from U.S. Trade Representative Robert Lighthizer, who told reporters that as part of the agreement, Beijing committed to buy an additional $32 billion in agricultural products over two years, or roughly $16 billion a year more than the 2017 baseline of $24 billion.  He said China would aim for another $5 billion in farm purchases each year on top of that, President Trump having promised $40 billion to $50 billion in expanded Chinese agriculture purchases when he first announced the phase one agreement on Oct. 11.

But remember.  $40-$50 billion is double the baseline figure and China has been buying increasing amounts from the likes of Brazil and Argentina as a result of the dispute with the U.S., so it’s not like they are doing to just shut down those pipelines to placate Trump.

In all, Lighthizer said China agreed to buy $200 billion worth of additional U.S. goods and services over the next two years as part of the agreement.  As well as the ag purchases, the other buys would be in manufacturing, energy and services.

Lighthizer said Beijing committed to ending pressure for U.S. companies who do business in China to transfer their technology, as well as improved protections, but he conceded far more work needed to be done and no one realistically expects a sweeping phase two deal in 2020.

Nothing has been signed as yet and that would appear to be weeks off, but Chinese officials signaled that further phased reductions of existing levies were also expected.  Liao Min, vice-minister of finance, said that the U.S. removing tariffs on Chinese goods remains Beijing’s “core” concern.

But it’s all about optics and November 2020.  What will we be saying in the summer and fall about the trade agreement?   Was it worth the pain?  Thousands of farmers were ruined and will never return.

And remember.  China is not about to change their economic model.  Earlier, a Chinese foreign ministry spokeswoman said “negotiations should be based on the principles of equality and mutual respect.”  China will demand it. 

The trade agreement reached this week is also in contrast to a story first reported by the Financial Times that Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years, in a potential blow to the likes of HP, Dell and Microsoft.

The directive, which comes from the Chinese Communist Party’s Central Office, is the first publicly known instruction with specific targets given to Chinese buyers to switch to domestic technology vendors, and is essentially a mirror image of efforts by the Trump administration to curb the use of Chinese technology in the U.S. and its allies.  [See Huawei]

Analysts told the FT that there are an estimated 20m to 30m pieces of hardware that will need to be swapped out as a result of the Chinese directive, with large-scale replacement beginning next year.

One more on trade.  The Democrats compromised with the White House on the new U.S.-Mexico-Canada Agreement, with House Speaker Nancy Pelosi backing the agreement after securing amendments that toughened enforcement of labor and environmental standards.

USMCA is expected to reach a House vote next week and clear the Senate early next year.  Once approved by the legislatures in each country, it will supplant the 1994 North American Free Trade Agreement, which President Trump has called “our country’s worst trade deal.”

The deal’s benefits are largely at the margin.  It would increase the proportion of parts in vehicles that must originate in North America for the cars and trucks to receive duty-free treatment.  USMCA should also benefit dairy farmers on both sides of the U.S.-Canada border.

Europe and Asia

Just one economic tidbit for the eurozone, EA19.  October industrial prediction was down 0.5% over September, down 2.2% year-on-year.

And in the UK, rolling three-month GDP through October was just 0.7% annualized, courtesy of the Office for National Statistics, the lowest such pace since June 2012.

Which brings us to the big story....

Brexit / The UK Election: Prime Minister Boris Johnson won a resounding election victory Thursday that will allow him to end three years of political stalemate and take Britain out of the European Union by Jan. 31.

Johnson’s Conservatives (Tories) won 365 seats (326 a simple majority), with Labour at just 203.  It’s the biggest majority for the Conservatives since Margaret Thatcher’s 1987 election victory.

Labour, on the other hand, suffered its worst defeat since 1935, Labour leader Jeremy Corbyn toast, as his left-wing manifesto, calling for large increases in government spending and the nationalization of key industries, flamed out.  Jo Swinson, the leader of the Liberal Democrats, who picked up just 11 seats, quit as party leader after losing her seat to the SNP (Scottish National Party).

Brexit represents the country’s biggest political and economic gamble since World War II, cutting the world’s fifth-largest economy free from the vast trading bloc and threatening the integrity of the United Kingdom.

Johnson was vindicated after anti-Brexit opponents sought to sabotage his first months in office, campaigning on a vow to “Get Brexit Done.”

“We will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes,” he told supporters at a rally in London.

“Leaving the European Union as one United Kingdom, taking back control of our laws, borders, money, our trade, immigration system, delivering on the democratic mandate of the people,” he said, reprising the refrains of his successful Brexit referendum campaign of 2016.

But now Johnson must strike new international trade deals, preserve London’s position as a top global financial capital and preserve the United Kingdom.

This last goal looks more challenging, with Scotland voting overwhelmingly for a nationalist party that wants an independence referendum, and Irish nationalists performing strongly in Northern Ireland.

Scotland’s first minister, Nicola Sturgeon, said, “Boris Johnson may have a mandate to take England out of the European Union.  He emphatically does not have a mandate to take Scotland out of the European Union.”

Sturgeon’s Scottish National Party won 48 of Scotland’s 59 seats in the national parliament.

In Northern Ireland, there was another significant shift in the balance of power, with for the first time the region electing more lawmakers who favor unification with Ireland than those who support continued membership of the U.K.  The number of nationalists elected to Parliament rose to nine from six, while the number of unionists fell to eight from 10.  The Democratic Unionist Party, which backs Brexit and had supported the Conservatives in Parliament, lost two seats.

The bombastic Johnson struck a note of humility in his victory speech.

“Your hand may have quivered over the ballot paper before you put your cross in the Conservative box, and you may hope to return to Labour next time round, and if that is the case, I am humbled that you have put your trust in me,” he said.

President Trump tweeted:

“Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT.  This deal has the potential to be far bigger and more lucrative than any deal that could be make with the E.U.  Celebrate Boris!”

German Chancellor Angela Merkel’s party member, Norbert Roettgen, said “the British people have decided and we have to accept their choice. With Johnson’s victory Brexit has become inevitable.”

But now there is just 11 months to negotiate a trade deal with the EU after a Jan. 31 exit, and all agree this is an enormously ambitious target.  It’s possible the ‘transition period’ could be extended later, but the EU will only do that if there is real progress being made.

Nigel Farage, Brexit Party leader, said “I think we’re going to head into three years of pretty agonizing negotiations.”

Sweeping trade agreements take time.  More than eleven months.  A no-deal Brexit thus remains very much on the table.

Editorial / Wall Street Journal

“This vindicates Mr. Johnson’s gamble on throwing the Brexit question back to the voters by seeking a mandate for his revised deal with Brussels.  Plenty of anti-Brexit politicians and commentators have argued since the 2016 referendum that the voters had been misinformed about Brexit, or hadn’t fully thought through the issue, or don’t want the specific type of Brexit Mr. Johnson proposes, or have changed their minds.  Mr. Johnson took voters at their word that they wanted Brexit then and still want it now, and he was willing to buck the London intelligentsia in the bargain.

“The large Tory gains also offer hope of restoring some semblance of sanity to British politics.  The anti-Brexit resistance should now admit they have lost the argument.  Instead of endlessly and tediously relitigating the 2016 referendum, the focus can shift to Britain’s future outside the EU.

“On that score, too, this vote seems decisive.  Beyond Brexit, voters faced an economic-policy choice between Mr. Johnson’s generally pro-business pitch and the aggressive socialism of Labour leader Jeremy Corbyn....

“Voters rejected Mr. Corbyn’s promise – or threat – to nationalize large segments of the U.K. economy such as railways, broadband and the post office.  They figured out that he’d be able to pay for that and an expansion of social-welfare benefits only by taxing the middle class and lower earners more heavily, no matter what he said about ‘taxing the rich.’

“They also refused to be led by a radical leftist who has winked and nodded at rampant anti-Semitism within the Labour Party.  Labour now can jettison Mr. Corbyn and his radical cronies and offer voters a more plausible centrist alternative.

“Labour’s thumping by Britain’s middle class is also a warning to American Democrats who think left-wing populism is the way to defeat Donald Trump’s right-wing populism.  Corbynism left the middle of British politics to be filled by Mr. Johnson’s Tories.  A Democratic Party that veers to the Bernie Sanders or Elizabeth Warren left could let Mr. Trump win again by frightening suburban voters who dislike the President personally but don’t want socialism....

“We should also thank British voters for their show of democratic vigor.  Western democracies haven’t been functioning well of late, Westminster included.  Mr. Johnson’s leadership, and his show of respect for Brexit voters, is proving that democracies can be moved to make a decisive choice.  Mr. Johnson will have to reward that faith as he governs in a post-Brexit era, but his apparent victory offers a broader lesson for democratic leaders in this populist era.”

Finally, just a note on the polls.  A YouGov poll of the Conservatives’ actual margin of victory in Parliament had dropped from 68 seats two weeks earlier to just 28 as of Tuesday.  Pollsters should have stuck with their original projection, which was almost spot on.

Otherwise, the polls were accurate, forecasting a sizable Conservative victory.

Turning to Asia....we had a slew of economic data from China.  November exports were down 1.1% year-over-year, worse than expected, a fourth consecutive down month, as reported by the General Administration of Customs.  So no expected jolt from the Christmas rush to buy consumer electronics goods.

Imports were up just 0.3%.

Exports to the United States were down 12.5% year-over-year in the first eleven months of the year, with imports from the U.S. down 23.3% for the same period.

Exports to the EU rose 4.5% the first eleven months of 2019.

Separately, China’s car sales fell 5.4% in November year-over-year, the 17th consecutive monthly decline.

Sales the first eleven months of the year are down 10.5%. 

On the inflation front, consumer prices rose at a 4.5% annualized clip in November, the highest since Jan. 2012, owing largely to the ongoing African swine fever that has decimated the pork industry, critical to the country, with prices up 110% vs. a year ago.

Producer (factory-gate) prices, on the other hand, were down 1.4% in November year-on-year.

In Japan, the figure for third-quarter GDP was revised sharply upwards from an annualized pace of 0.2% to 1.8%, according to the Cabinet Office, thanks to a jump in capital spending from non-manufacturers, but exports and factory output posted their largest declines in years in October, start of Q4.  Recall the sales tax hike was also Oct. 1st.

Street Bytes

As alluded to above, stocks finished up on the week, with the Dow Jones nearing an all-time high, up 0.4% to 28135, while the S&P and Nasdaq each closed at record levels today, up 0.7% and 0.9%, respectively.  The market has been in a see-saw pattern for a month now and we’ll see if we get a real Santa Claus rally these next few weeks with issues like China trade and Brexit off the table for the time being.

Meanwhile, despite the S&P’s best run in six years, investors have pulled $135.5 billion from U.S. stock-focused mutual funds and exchange-traded funds thus far in 2019, the biggest withdrawals on record, according to data provider Refinitiv Lipper, which has tracked the data going back to 1992.

Stock funds have bled money over seven consecutive quarters, dating to the second quarter of 2018, which is when trade tensions between the U.S. and China ratcheted higher.

This is all positive, as it shows investors aren’t chasing the market and thus there could be plenty of room to run further even after a decadelong rally.

--U.S. Treasury Yields

6-mo. 1.55%  2-yr. 1.60%  10-yr. 1.82%  30-yr. 2.25%

--OPEC said Wednesday that oil supply from countries outside the cartel will remain robust in 2020, while the U.S. Energy Information Administration reported a rise in crude inventories last week defied analysts’ expectations of a drawdown.

As for output from non-OPEC countries, OPEC said in its latest report, “For 2019, the U.S., Brazil and Canada remain to be the key drivers for growth, and this will continue in 2020 with the addition of Norway,” adding that “2020 non-OPEC supply forecast remains subject to some uncertainties, including the degree of spending discipline by U.S. independent oil companies.”

Separately, as Clifford Krauss notes in the New York Times, a natural gas boom has “given way to a bust.  A glut of cheap natural gas is wreaking havoc on the energy industry, and companies are shutting down drilling rigs, filing for bankruptcy protection and slashing the value of shale fields they had acquired in recent years.

“Chevron, the country’s second-largest oil and gas giant after Exxon, said on Tuesday that it would write down $10 billion to $11 billion in assets, mostly shale gas holdings in Appalachia and a planned liquefied natural gas export facility in Canada.  The move was an energy company’s clearest acknowledgement yet that the industry has been far too optimistic about the prospects for natural gas.”

An example of the declining fortunes is the Marcellus field centered in central and western Pennsylvania, that was once viewed as the most promising in North America.  With gas prices slashed nearly in half from a year ago, the number of drilling rigs operating in Pennsylvania has dropped to 24, from 47, over the last 12 months.

--Meanwhile, Saudi Arabia’s oil company Aramco began trading for the first time on Wednesday, gaining 10% in the first moments on the market and pushing its worth to $1.88 trillion, making it the most valuable listed company in the world.

The state-owned oil giant started trading on the Saudi Tadawul stock exchange after a mammoth $25.6 billion initial public offering that set the record as the biggest ever in history.

Aramco now has a valuation greater than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.

--The Federal Aviation Administration said Wednesday it has an ongoing investigation into reported production problems involving the Boeing 737 after a former employee reported extensive issues.  Under questioning from lawmakers at a U.S. House hearing, FAA Administrator Steve Dickson confirmed the agency is reviewing issues.  “We are looking into those problems and we will continue to do so,” Dickson said.

And then Thursday, Dickson said the FAA would not be clearing the 737 MAX to fly this month as Boeing has been saying would be the case.  The nation’s top aviation regulator sharply admonished Boeing CEO Dennis Muilenburg and Executive Vice President for Commercial Airplanes Stan Deal with a litany of grievances.

“The administrator recommended to Mr. Muilenburg that Boeing’s focus should be on the quality and timeliness of data submittals for FAA review,” the agency said in an email to lawmakers after the meeting.  “He made clear that FAA’s certification requirements must be 100% complete before return to service.”

The meeting was called by the FAA to address what it said was Boeing’s unrealistic timetable for returning the 737 MAX to service – a sign of growing rancor between the two sides that came as skepticism grew that the plane would be able to resume flights soon.  American Airlines said it’s further delaying a return of the planes to its schedule and Southwest Airlines is considering a similar move.

Southwest said it struck a deal with Boeing to compensate the airline for some of the damage from the nine-month grounding of the 737 MAX, the carrier saying Thursday it would share $125 million of the proceeds with its employees.  Southwest didn’t disclose the full terms of the compensation, saying it is continuing to negotiate with Boeing.  Southwest had 34 MAX jets in its fleet and was due to receive dozens more over the course of the year.

Southwest CEO Gary Kelly said the grounding has resulted in an $830 million reduction in operating income.  The airline has currently scheduled MAX flights to resume in March, but American said it is striking the aircraft from its schedules until April 7.  Southwest is likely to follow.

Separately, regulators decided to allow the 737 MAX jet to keep flying after its first fatal crash last fall even after their own analysis indicated it could become one of the most accident-prone airliners in decades without design changes.

The November 2018 internal FAA analysis, released during the House committee hearing Wednesday, reveals that without agency intervention, the MAX could have averaged one fatal crash about every two or three years.  That amounts to a substantially greater safety risk than either Boeing or the agency indicated publicly at the time.

The assessment, which came a month after a Lion Air crash in Indonesia, raises serious questions about the FAA’s decision-making.

The second fatal MAX crash then came in March, in Ethiopia, which led to the global grounding of the fleet.

Lastly, Boeing Co. said it delivered 24 jets in November, a modest improvement from a month earlier that still leaves the plane maker likely to hand over fewer than half as many aircraft in 2019 as last year.  The company said Tuesday it has delivered 345 commercial jets and military variants of its jetliners so far this year, vs. 806 planes delivered in 2018.

--Huawei Technologies Inc. secured a commitment to build part of Germany’s 5G infrastructure, strengthening its position in Europe’s largest economy despite calls from lawmakers to bar the company.

Telefonica SA, one of three major mobile operators in Germany, said Wednesday it planned to use equipment from Huawei and Finland-based Nokia Corp. to build its 5G network in the country – subject to Huawei equipment being certified for use.

A spokesman for the company said: “Telefonica Germany has clearly taken care not to pre-empt the ongoing political process of defining these security guidelines and at the same time not to delay the start of the 5G rollout.”

Both Nokia and Huawei are supplying equipment for 5G antenna technology.

Germans are split over whether to allow Huawei to supply components for mobile networks or to ban it, as the U.S. has demanded.  The government recently decided against explicitly barring Huawei, while critics are concerned it could be a vehicle for espionage by China.

But lawmakers in Germany’s ruling coalition are threatening to amend the nation’s telecommunications security laws in a way that would exclude the Chinese vendor.

The debate is influencing other mobile operators such as Deutsche Telekom, which says it is waiting to see what the resolution is in terms of the telecom security legislation before it signs any new equipment deals.

--Home Depot Inc. tempered its sales targets for next year, saying the long U.S. economic expansion is expected to cool and the home-improvement chain will need more time for some investments to pay off in sales gains.  CEO Craig Menear said that while the company “will continue to gain outsized share in our market,” the company’s 2020 forecast reflects slower growth in the broad economy.

For fiscal 2020, HD said it expects comparable (same-store) sales to rise by 3.5% to 4%, vs. a prior company projection of 4.5% to 6%.

Separately, CEO Menear said the opioid crisis is a major cause for a recent rise in retail theft.

“This is happening everywhere in retail,” Menear said on a call with analysts.  “We think there are ties to the opioid crisis, but we’re not positive about that.”

Social media, responding to the claim, was skeptical.

--Oracle Corp. said it won’t replace its late co-CEO, Mark Hurd, leaving Safra Catz as the sole top executive leading the software giant after years of operating with a two-chief structure.

The company also reported earnings for the fiscal second quarter that were a little above forecasts, but sales were slightly below estimates.

Oracle has been playing catch-up to the likes of Amazon.com, Microsoft and Alphabet’s Google on cloud computing, the company attempting to introduce new features to its cloud, including greater automation.

--George J. Lauer, the inventor of the bar code, died.  He was 94.

The Universal Product code made its official debut in 1974 when a scanner registered 67 cents for a 10-pack of Wrigley’s Juicy Fruit at a Marsh supermarket in Troy, Ohio.

“It was cheap and it was needed,” Lauer told the New York Times in 2009.  “And it is reliable.”

The concept that replaced price tags and revolutionized commerce had evolved over several decades, the result of fluky coincidences and the expertise of several collaborators.

The first, N. Joseph Woodland, an alumnus of the Manhattan Project, was earning a master’s degree when a supermarket executive visiting the campus urged experts at the engineering school to develop a practical means of digitally storing product data.  Woodland and a classmate, Bernard Silver, devised a circular symbol in which the information could be encoded, but commercial scanners and microprocessors that could interpret the code were not yet widely available.

In 1951, Lauer joined IBM, where he was asked to design a code for food labels modeled on the Woodland-Silver bull’s-eye and compatible with a new generation of optical scanners.  But he found that the circular symbol was too blurry when reproduced on high-speed printing presses and instead developed a rectangular design.

Eventually, a supermarket executive who headed the Uniform Grocery Product Code Council, which was organized to choose a universal symbol, favored Lauer’s design, though it wasn’t until 1973 that the committee from the Product Code Council voted for the bar code that has appeared on billions of items since.

Lauer went on to work for IBM at North Carolina’s Research Triangle Park until 1987, receiving 26 patents, including for a hand-held scanner that reads bar codes.

--Interesting piece in Crain’s New York Business by Matthew Flamm on the new TWA Hotel at JFK Airport.  Back in May, when it opened its doors, its developer predicted the property could one day be running at 200% occupancy.

“My objective is to sell every room every day twice a day,” Tyler Morse, chief executive of MCR, an independent hotel owner-operator, told The Wall Street Journal.

That is, the 512-room hotel – combining the historic architecture of the Trans World Airlines terminal with a location steps from Jet Blue’s departure gates – would be booking airline travelers for both overnight and daytime stays.

But the hotel has dramatically underperformed, as in the property’s occupancy rate has seldom risen above 30% since it opened.  “At the same time, talent from all levels of the organization has been walking out the door.”

Tyler Morse’s big mistake was his decision to rely on word-of-mouth about the stylishly decorated architectural wonder to sell rooms.  Breaking with industry practice, MCR is not working with online travel agencies such as Expedia nor using hotel-inventory reservations systems such as Sabre.  Instead, Morse chose to have travelers book their stays through the hotel’s own website.

--This was a bad product idea.  Walmart pulled from its Canadian website a Christmas sweater depicting Santa and what appears to be lines of cocaine.  The “Let It Snow” sweater was being offered by a third-party seller and was not available on Walmart’s U.S. website.  The company said in a statement: “These sweaters...do not represent Walmart’s values... We apologize for any unintended offense this may have caused.”

--Donald B. Marron, who headed PaineWebber Group for two decades, died last weekend.  He was 85.

Marron was a classic Wall Street story, working on the Street in his late teens after dropping out of college and founding a macroeconomic research firm Data Resources Inc. in the late 1960s with Harvard economist Otto Eckstein.  McGraw-Hill Inc. acquired Data Resources for $103 million in 1979.  In 1980, Marron was named CEO of what became PaineWebber, where he remained until 2000, when UBS AG acquired the securities firm for $12 billion.  Marron then went on to found Lightyear Capital, a private-equity firm.

But Marron’s tenure at PaineWebber was marred early on by the acquisition of Blyth Eastman Dillon & Co.  A surge in stock-trading volume caught PaineWebber unable to keep up with the paperwork required to complete trades and meet regulatory requirements.  Recovering from the back-office mess consumed most of the 1980s, he later told the Wall Street Journal.

Marron was also known for his massive contemporary-art collection that included works by Matisse and Picasso.  He was president of the Museum of Modern Art for five years in the late ‘80s.

--Lastly, we note the passing of a true giant, Paul A. Volcker, who died Sunday at age 92.  As Federal Reserve chairman in the early 1980s, he launched a battle against inflation, driving it down from 12 percent to around 6 percent, using a monetary straitjacket that caused the short-term interest rate to rise to 20 percent.  The economy endured two recessions, and unemployment hit double digits, but Volcker won the battle.

Volcker took over the Fed at a time in the summer of 1979 when 84 percent of Americans thought the country was on the wrong track, according to a Gallup poll.  President Jimmy Carter spoke of “a crisis of confidence...a crisis that strikes at the very heart and soul and spirit of our national will.”

Annualized inflation peaked at 14.7% in the 12 months that ended in both March 1980 and April 1980, and at the same time, economic growth stagnated, creating a disastrous combination labeled stagflation.

Volcker believed that getting inflation under control was a precondition to prosperity.  “We were on a track where inflation was feeding on itself, and the longer it went on the harder it would be to deal with,” he recalled in an interview with the Wall Street Journal in October 2018.  “You can’t imagine the United States running a 20%, a 25% inflation rate.  That’s what people were scared of.”

Volcker constricted the nation’s money supply, sending interest rates soaring, with the rate on a conventional 30-year mortgage hitting 18.45% in 1980.

Farmers were furious, ditto construction workers, begging him to lower interest rates to boost housing starts.

Volcker recalled his task of corralling inflation proved “A lot tougher than I would’ve imagined.”

It wasn’t until the summer of 1982 that he felt confident that he had broken the back of inflation.  The inflation rate dropped to around 3% by the end of his first four-year term as Fed chairman.

Current Fed Chairman Jerome Powell said of Volcker: “He believed there was no higher calling than public service.  His life exemplified the highest ideals – integrity, courage, and a commitment to do what was best for all Americans.  His contributions to the nation left a lasting legacy.”

Foreign Affairs

Iran: The government acknowledged it faced a “very big” cyberattack, following a report in the New York Times this week that information from 15 million Iranian bank accounts was stolen and published online after widespread street protests were crushed in November.

Iran’s telecommunications minister said the attack had been state sponsored, but offered no evidence to back up the claim.

Editorial / Washington Post

“The Trump administration has been citing a massive wave of protests in Iran as evidence that its ‘maximum pressure’ strategy against the Islamic republic is working.  In one sense, that’s probably true. Sanctions against Iranian oil exports helped force the regime to raise gasoline prices by 50 percent or more on Nov. 15, which in turn triggered, by the government’s own account, demonstrations by up to 200,000 people in 29 of the country’s 31 provinces, including attacks on 50 military bases. That could be the biggest popular rebellion since the overthrow of the Shah 40 years ago.

“The regime responded with brutal and uncompromising repression. ...According to Amnesty International, at least 208 people were killed in less than a week, and the real figure could be far higher. The Trump administration claims it could be more than 1,000.

“The carnage was likely the result of the regime’s conviction that it needed to prove it was not vulnerable to collapse.  ‘Iranian officials have noted...that the speed with which they were able to quiet the streets, regardless of the cost, should demonstrate to Washington that they are in full control,’ said a report this week by the International Crisis Group.  It remains to be seen whether the unrest really has been quelled...

“But if President Trump’s objectives are, as he says, to force Iran to renegotiate the nuclear deal he scrapped and prevent further aggression against its neighbors, ‘maximum pressure’ is not working.   The Crisis Group reports says it’s possible that, despite its rhetoric, the regime has been so shaken by the protests that it will look for a way to settle with the United States.  If so, an avenue is open: Earlier this year, French President Emmanuel Macron appeared close to persuading Mr. Trump, if not Iranian Supreme Leader Ayatollah Ali Khamenei, to consider an accord under which Iran would resume observance of the nuclear deal’s terms and agree to renegotiate some of them in exchange for sanctions relief.

“It’s at least as likely, though, that Tehran will seek to regain leverage with more external aggression, like the devastating attack it launched in September against Saudi oil facilities....

“Hard-liners in the administration, such as Secretary of State Mike Pompeo, clearly hope that the protests are a sign that U.S. pressure will trigger revolution and regime change in Tehran.

“Though that might be a desirable outcome, history as well as the events of the past month suggest it remains unlikely.   The administration would be wiser to use this moment of Iranian weakness to offer a path of de-escalation.”

Iraq: The nation’s top Shiite cleric Grand Ayatollah Ali al-Sistani on Friday condemned recent killings and kidnappings of protesters, urging the state to assert control over the widespread use of weapons.  He also called on the armed forces to remain professional, loyal to the state and free from foreign influence, a representative of Sistani said during a sermon on Friday in the holy city of Kerbala.

More than 440 people have been killed since Oct. 1, according to a Reuters tally.

Israel: Israel is heading for an unprecedented third election within a year – prolonging a political stalemate that has paralyzed the government and undermined faith in the democratic process.

For weeks, Benjamin Netanyahu and his chief challenger, Benny Gantz, insisted they want to avoid another costly election campaign that is expected to produce the same results.   But neither has been willing to compromise on their core demands for a power-sharing agreement.  Netanyahu’s recent indictment on corruption charges has added a murky layer to the saga.

Following September’s elections, both men failed during their officially mandated time to form a governing coalition on their own.  Then, in a final three-week window, they could not join forces to avoid another vote.

So it now appears new elections will be held in early March and there is zero guarantee that another vote will break the loop of elections and instability that has rocked the country for the past year.  The frustration among the citizenry is mounting.  Legislation isn’t being passed, let alone budgets.

The only solution today is for Gantz’s centrist Blue and White party to form a unity government with Netanyahu’s Likud.  Together, they control a solid majority in the 120 seat Knesset.  But Gantz’s party refuses to sit with Netanyahu.

Gantz has said he would make a deal with a different leader of Likud, but Netanyahu has fended off an insurrection inside his party, specifically Gideon Saar.

Avigdor Lieberman, a former Netanyahu ally, remains the kingmaker, refusing to endorse either Netanyahu or Gantz while failing to coax them into a unity government.

Separately, the High Court of Justice ruled on Thursday that Prime Minister Benjamin Netanyahu can remain premier for the time-being, rejecting one of the petitions seeking his resignation.

Syria et al: Defense Secretary Mark Esper said that Russia’s presence in Syria has grown since U.S. troops withdrew from the latter’s northeastern border region, Esper told the House Armed Services Committee, but he said he’s more worried about Moscow’s burgeoning influence elsewhere.

“I’m concerned about Russia in other parts of the Middle East,” Esper said, naming Egypt, Saudi Arabia, and ‘other places.’

This week Russian forces entered Raqqa, the former de facto capital of the Islamic State caliphate, in one of the starkest examples yet of how Moscow has filled the vacuum created by President Trump’s decision to pull U.S. forces from northern Syria.

Esper added he is more worried that Turkey is moving closer to Moscow and away from NATO than he is about expanding Russian influence within Syria.

Both Esper and Joint Chiefs Chairman Gen. Mark Milley said that they believed the situation on the ground in Northeastern Syria has ‘stabilized,’ although Milley cautioned that ‘it’s a little early to tell.’   Turkish-backed proxy forces that carried out the incursion remain ‘the wildcard,’ Esper said.

The New York Times reported that commanders on the ground in Syria now view attacks from armed groups backed by Turkey, Russia, Iran and the Syrian government as a greater threat than ISIS.

Afghanistan: The Washington Post obtained a trove of government documents that reveals that senior U.S. officials failed to tell the truth about the war in Afghanistan throughout the 18-year campaign, making rosy pronouncements they knew to be false and hiding unmistakable evidence the war had become unwinnable.

The documents, which are being compared to the Pentagon Papers, were generated by a federal project examining the root failures of the longest armed conflict in U.S. history. 

The U.S. government tried to shield the identities of the vast majority of those interviewed for the project and conceal nearly all of their remarks.  The Post won release of the documents under the Freedom of Information Act after a three-year legal battle.

In the interviews, more than 400 insiders offered unrestrained criticism of what went wrong in Afghanistan and how the United States became mired in nearly two decades of warfare.

Since 2001, more than 775,000 U.S. troops have deployed to Afghanistan, many repeatedly.  Of those, 2,300 died there and 20,589 were wounded in action, according to Defense Department figures.

The government has not carried out a comprehensive accounting of how much it has spent on the war in Afghanistan, but a solid estimate is between $934 billion and $978 billion, according to experts who talked to the Post.

“What did we get for this $1 trillion effort?  Was it worth $1 trillion?”  Jeffrey Eggers, a retired Navy SEAL and White House staffer for Bush and Obama, told government interviewers. He added, “After the killing of Osama bin Laden, I said that Osama was probably laughing in his watery grave considering how much we have spent on Afghanistan.”

Andrew J. Bacevich / Defense One

“No evidence exists to suggest that the United States and its allies are today winning this war.  Indeed, the available evidence points in the opposite direction: The Taliban are growing in strength day by day. The on-again, off-again peace negotiations undertaken by the Trump administration amount to little more than a transparent effort to get out of Afghanistan, as the president has repeatedly promised to do, while creating a ‘decent interval’ between the U.S. troop withdrawal and the eventual collapse of the Afghan regime in Kabul.

“Critics of U.S. policy in Afghanistan have long made the case that U.S. efforts there are doomed to fail.  Senior civilian and military officials have offered a different assessment, regularly issuing optimistic progress reports.  At the end of the tunnel, light gleams.

“Thanks to a trove of government documents made available today courtesy of The Washington Post, we now know that many of those officials were lying. The lies began during the George W. Bush administration and continued through the administration of Barack Obama.  The liars included both senior civilian officials and military officers directly responsible for the war’s conduct.

“In September 2013, General Mark A. Milley, then a U.S. Army three-star, today the chairman of the Joint Chiefs of Staff, offered this assessment of Afghan security forces: ‘This army and this police force have been very, very effective in combat against the insurgents every single day.’  Either Milley was dissembling or he was deluded and therefore grotesquely incompetent.  Take your pick.  U.S. efforts to create effective Afghan forces have come nowhere close to demonstrating effectiveness.

“Indeed, the documents show that from the war’s earliest days, senior U.S. officials such as Secretary of Defense Donald Rumsfeld knew that events in Afghanistan were spinning out of control.  ‘I have no visibility into who the bad guys are,’ Rumsfeld complained September 2003.  Of course, by then for official Washington the Iraq War had eclipsed Afghanistan as a matter of priority interest.  There, too, knowing who the bad guys are proved to be a problem.

“Perhaps the most damning assessment in the documents that the Post provides comes from retired Army Lieutenant General Doug Lute, who served on the National Security Council during both the Bush and Obama administrations.  Lute was commonly referred to as the White House ‘czar’ for Afghanistan.   Yet in a 2015 conversation with interviewers, he confessed, ‘We didn’t have the foggiest notion of what we were undertaking.’

“In a dismal echo of Vietnam, the documents describe commanders in Afghanistan devising multicolored charts to measure their progress toward mission accomplishment, manipulating numbers as needed to show that things were headed in the right direction.  ‘Every data point was altered to present the best picture possible,’ one Army colonel acknowledged.

“New commanders arriving in country discovered that their predecessors had left things in a total mess, only to report at the end of their tour that impressive progress had been made – with their replacements then finding quite the opposite.  And so it went, year after year, as the U.S. military learned to deceive itself.  In so doing, it also deceived Congress and a gullible public.

“Meanwhile, Congress offered negligible oversight, finding perpetuating the war more convenient than ending it.  And members of the press demonstrated little of the outrage regularly heaped upon Trump for his varying offenses.

“If those offenses meet the standard of high crimes and misdemeanors, then how are we to classify what has occurred in Afghanistan since U.S. forces first arrived in 2001?  And who will demand accountability?  After finishing with Trump, Congress has long-overdue work to do.”

China / Hong Kong: For the first time since August, police allowed a rally by the Civil Human Rights Front, a pro-democracy group in Hong Kong, in the largest anti-government rally in months.  Organizers said an estimated 800,000 took part while police put the number at 183,000.

At the end of the march, the government said it was looking forward to finding “a way out for Hong Kong’s deep problems through dialogue.”

Monday marked six months since a mass rally on June 9 that triggered the political crisis that has gripped the semi-autonomous Chinese territory.

Meanwhile, the critical presidential and legislative election in Taiwan is just a month away, Jan. 11, and President Tsai Ing-wen and her party have taken advantage of the violence in Hong Kong to gain an upper hand over the opposition KMT and their presidential candidate, Han Kuo-yu.

The slogan “Today, Hong Kong; tomorrow, Taiwan” has spread on the island.

North Korea: The U.S. is ready “to simultaneously take concrete steps” toward a deal aimed at getting North Korea to give up its nuclear and missile programs, but the Security Council must be prepared to respond to any provocations, the U.S. envoy to the UN said on Wednesday.  The 15-member Security Council met at the request of the United States as concerns grow internationally that North Korea could resume nuclear or long-range missile testing – suspended since 2017 – because denuclearization talks between Pyongyang and Washington have stalled.

Kim Jong Un has given Donald Trump until the end of the year to show flexibility.  North Korea’s UN ambassador, Kim Song, declared last weekend that denuclearization was off the table.  Trump then warned that Kim risked losing “everything” if he resumes hostility and that North Korea must denuclearize.

“Kim Jong-un is too smart and has far too much to lose, everything actually, if he acts in a hostile way.  He signed a strong Denuclearization Agreement with me in Singapore.  He does not want to void his special relationship with the President of the United States or interfere with the U.S. Presidential Election in November.” Trump tweeted on Sunday.

“North Korea, under the leadership of Kim Jong-un, has tremendous economic potential, but it must denuclearize as promised.  NATO, China, Russia, Japan, and the entire world is unified on this issue!”

Pyongyang continues to hint darkly about a “Christmas gift” to the U.S., which most suspect means a long-range missile launch or a nuclear bomb test.

North Korean diplomat Ri Thae-song said, “It is entirely up to the U.S. what Christmas gift it will select to get.”

A senior North Korean official, former nuclear negotiator Kim Yong Chol, said in a statement that his country wouldn’t cave in to U.S. pressure because it has nothing to lose and accused the Trump administration of attempting to buy time ahead of the end-of-year deadline. 

Separately, President Trump and South Korean President Moon Jae-in held a phone call to discuss ways to maintain diplomacy with Pyongyang.

The two leaders agreed that the situation has become “severe” and that “dialogue momentum should be maintained to achieve prompt results from denuclearization negotiations,” South Korea’s presidential Blue House said in a statement.

Editorial / Army Times

“What are the 26,000 U.S. troops stationed in South Korea doing these days?

“Evidently, they are not doing major joint military exercises with their South Korean allies.

“U.S. Defense Secretary Mark Esper announced Nov. 17 that the two countries have indefinitely postponed a joint military exercise, a move intended to be an ‘act of goodwill’ toward North Korea, Esper said...

“Yes, to be sure, peace on the Korean Peninsula would be a great achievement.

“But it’s not clear at all how canceling large-scale exercises – and the diminished military readiness that results – is going to achieve that goal of ‘peace.’

“Here’s what’s at stake: The North Korean regime has nuclear weapons and ballistic missiles that could likely deliver them to any major city in the United States.  The North Koreans have repeatedly rejected efforts by the U.S. and its allies to denuclearize the peninsula.  North Korea continues to test missiles to ensure they are ready to strike the United States if they so choose.

“Meanwhile, despite three years of diplomatic talks and grip-and-grin photographs of U.S. and North Korean leaders, there has been no real progress toward any agreement to reduce this nuclear threat.

“The result is that U.S. forces in Korea – and their families – are more vulnerable than ever.  North Korea appears emboldened, and their military technology is improving.  At the same time, the U.S. troops’ ability to respond in the event of a crisis is atrophying.

“The risk to troops is intensified by the Army’s effort to move thousands of U.S. soldiers out of Seoul to Camp Humphreys, about 40 miles south of the South Korean capital.

“Experts who track North Korean propaganda say the regime refers to Camp Humphreys as a ‘fat target’ that is within range of their weapons systems....

“(This) no-exercises approach runs counter to the age-old logic of ‘peace through strength.’  Historically, conducting planned and predictable military exercises has been a way to show off military power and display readiness which, in turn, advances U.S. diplomatic goals....

“The current posture is the worst of all options – limiting the U.S. ability to maintain readiness and respond to a crisis, but at the same time leaving thousands of service members on the ground as possible targets.”

Russia / Ukraine: Secretary of State Mike Pompeo and his Russian counterpart, Foreign Minister Sergei Lavrov, held tense talks in Washington Tuesday, clashing over the fate of an American detained in Russia and over U.S. conclusions of Kremlin meddling in the 2016 U.S. election.

At a news conference, Pompeo and Lavrov both called for an improvement in U.S.-Russia relations, while stipulating that the two governments disagree on an array of issues. 

Pompeo said the U.S. has provided ample evidence of Russian interference in the 2016 election.  Mr. Lavrov said there is “no proof.”

The White House said that during a meeting with President Trump, the president “warned against any Russian attempts to interfere in United States elections” and urged Russia to resolve its conflict with Ukraine.

In a press conference with reporters following his White House visit, Mr. Lavrov appeared to contradict the president, saying he didn’t discuss elections with Mr. Trump.  Later in his remarks, Lavrov said he raised the issue of elections himself, to complain about Mr. Pompeo’s earlier comments.  He wouldn’t say whether President Trump responded to his complaint.

Meanwhile, earlier, leaders of Russia and Ukraine agreed on measures to de-escalate the conflict in Eastern Ukraine but fell short of a breakthrough in talks aimed at lowering tensions in a region that has become a flashpoint between Moscow and the West.

In their first face-to-face meeting, Ukrainian President Volodymyr Zelensky and Russian President Vladimir Putin said they agreed to implement a cease-fire and an exchange of prisoners by the end of the year.  They also agreed on limited troop withdrawal in certain areas, and a plan to remove mines from the conflict zone.

“We unblocked dialogue with Russia, a positive step....Unfortunately we couldn’t settle all issues today,” Zelensky said at a joint press conference with French President Emmanuel Macron and German Chancellor Angela Merkel, who mediated the talks.

“The process is going in the right direction,” Putin said, while acknowledging differences remain.

Monday’s agreement basically reaffirmed a peace deal reached four years ago in Minsk, Belarus.  That accord stipulates the return of the border with Russia to Ukrainian control, the holding of elections in separatist-held regions and the granting of more autonomy to areas of Eastern Ukraine held by separatists.

Monday, the leaders didn’t agree on some of the thorniest issues in the conflict, such as returning the Ukrainian side of the border to Kiev’s control.  Russia and Ukraine also disagree on the sequencing of many steps of the Minsk agreement.

Lastly, Russia was banned from competing in the 2020 Summer Olympics in Tokyo and the 2022 Winter Olympics in Beijing by the World Anti-Doping Agency (WADA), after Moscow was banned from the 2018 Winter Games in PyeongChang.  Russian officials were caught this year manipulating data from their Moscow anti-doping laboratory and misleading WADA investigators, prompting a new chapter in a years-long doping scheme that continues to roil the international sports community.

India: There have been violent protests in India’s northeast over a new federal law that would make it easier for non-Muslim minorities from some neighboring countries to seek Indian citizenship.  Prime Minister Narendra Modi’s Hindu nationalist government has said the Citizenship Amendment bill, approved by parliament on Wednesday, was meant to protect minorities from Bangladesh, Pakistan and Afghanistan.

But protesters in the state of Assam, which shares a border with Bangladesh, say the measure would open the region to a flood of foreign migrants.  Others said the bigger problem with the new law was that it undermined India’s secular constitution by not offering protection to Muslims.

Random Musings

--Presidential tracking polls.....

Gallup: Still no update from Nov. 1-14 numbers; 43% approve of President Trump’s job performance, 54% disapprove, 90% of Republicans, 38% independents.
Rasmussen: 49% approve of Trump’s performance, 49% disapprove (Dec. 13)

In a Monmouth University national poll, 43% of registered voters feel that President Trump should be reelected, while 54% say it is time to have someone new in the Oval Office; numbers that haven’t really budged in the past month (42%-55% in the last one).

In a new Quinnipiac University national poll of registered votes, 41% approve of the way President Trump is handling his job, 55% disapprove, which like other national surveys hasn’t changed much all year.  92% of Republicans approve of Trump’s job performance, and 35% of independents.  34% of women approve, 57% disapprove.  [Men are 50-46.]  40% of those with a college degree approve of Trump’s performance, while 59% of those without a degree approve.

--In the Monmouth University national survey, among Democrats and Democratic-leaning voters, Joe Biden receives 26%, Bernie Sanders 21%, and Elizabeth Warren 17%.  [In late September, it was 28% Warren, 25% Biden, and 15% Sanders.]  Pete Buttigieg is at 8%, with Michael Bloomberg entering the race at 5%.  Amy Klobuchar receives 4%.

In the new Quinnipiac University national poll, Joe Biden is at 29%, Bernie Sanders 17%, Elizabeth Warren 15% and Pete Buttigieg at 9%.  Michael Bloomberg also gets 5% in this one.  [Andrew Yang 4%, Amy Klobuchar 3%.]

--In a national Harvard-Harris poll of registered Democrats, Joe Biden polls at 29%, Sanders 16%, Warren 13%, Buttigieg 8% and Bloomberg 7%.

If Hillary Clinton and former Secretary of State John Kerry were added to the mix, it would be Clinton 21%, Biden 20%, Sanders 12%.  [Kerry 5%]

--In two big Super Tuesday (March 3) states, California and Texas, Joe Biden leads in both, according to a new CNN/SSRS poll.

In California, Biden polls at 21% among Democratic likely primary voters, with Bernie Sanders at 20% and Elizabeth Warren 17%.  Pete Buttigieg is at 9%, followed by Andrew Yang (6%) and Michael Bloomberg (5%).

In Texas, Biden tops Sanders by 20 points, 35% to 15%, with Warren almost even with Sanders at 13%.  Buttigieg follows at 9% and Bloomberg at 5%.

[Regarding President Trump, 86% of likely Republican primary voters in Texas say they back the president.  In California it’s 85%.  Overall, just 32% of Californians approve of the way Trump is handling his job, while 61% disapprove.  In Texas, significantly, 42% approve and 50% disapprove.  38% of independents approve, 34% of women, which suggests a warning sign for his general election prospects in this reliably GOP state.  Trump took Texas 52.2% to 43.2% in 2016.]

--Joe Biden denied he has ever discussed with his campaign whether he would only serve one term if elected.  “I don’t have plans on one term.  I’m not even there yet,” Biden said.

Why not?  I think it’s a selling point, assuming you get the nomination and then at the convention select a running mate who is already capable of becoming president...Amy Klobuchar.  Cough cough....Sen. Klobuchar having been mentioned by moi last week as a good running mate for an equally elderly Michael Bloomberg.

Separately, Biden still refuses to ‘get it’ when it comes to son Hunter.  When pressed in an interview with Axios, while he said that if he’s elected president his family will have to stay out of foreign business, when questioned by Mike Allen further about Hunter’s involvement with Burisma, and whether “everything that happened...was kosher?”, Biden shot back, “You know, there’s not one single bit of evidence, not one little tiny bit, to suggest anything done was wrong.  You know that.”

That’s not the answer, Uncle Joe.  But then on this issue he hasn’t ‘gotten it’ from day one.

By the way, the most underrated president in our history, James K. Polk (1845-49), made a one-term pledge.

--Under pressure from Democratic rival Elizabeth Warren, Pete Buttigieg on Tuesday released the names of clients he worked for at the management consulting firm, McKinsey & Co., a decade ago.

Buttigieg, the mayor of South Bend, Ind., worked for the Best Buy electronics chain, the U.S. Postal Service, the Pentagon, Blue Cross Blue Shield of Michigan, as well as a coalition of power companies and environmental groups when they were clients of the firm.

“Now, voters can see for themselves that my work amounted to mostly research and analysis,” he said.  “They can also see that I value transparency and keeping my word.  Neither of these qualities are something we see coming out of Washington, especially from this White House.”

Buttigieg said he had “little decision-making authority” at McKinsey, where he worked from 2007 to 2010.  His work mostly involved cost-cutting analyses, or, in the case of his last study at McKinsey, which was for the U.S. Postal Service, to identify potential new sources of revenue.

Buttigieg says he had to wait for months to release his McKinsey client list because he could not get permission from McKinsey to break his confidentiality agreement.

--When Donald Trump was elected in 2016, there were 241 Republicans in the House. With the retirement of Florida Rep. Ted Yoho on Tuesday, 104 of them have either retired, been defeated or are not running again in 2020, according to stats provided by the Cook Political Report.

So about half (43%) of the Republicans who were in the House when Trump became president are either already gone or in the process of going.  Some of this attrition is due to candidates running for other offices, those who retire or just leave.  This often happens as well when a party goes from the House majority to the House minority.

But these are ugly numbers, and a concern in a state like Texas which has seen numerous Republican House members leave or announce their resignations.

--An Office of Congressional Ethics report on California Republican Rep. Duncan Hunter’s campaign spending, held up for three years by the criminal prosecution of the congressman, has been released now that he has pleaded guilty to misspending the funds.

The 50-page report examined items such as $9,200 spent on an Italian vacation, $7,000 spent on trips to Hawaii, and a trip to a cousin’s wedding in Idaho, where over $2,200 in lodging and other expenses was paid for by the campaign committee.

But the report also catalogued five $125 charges covering air travel for a pet rabbit.

--The United States has grounded hundreds of Saudi military aviation students (303) at three Florida Naval Air Stations: Pensacola, Whiting Field and Mayport, in the wake of last Friday’s deadly shooting in Florida.  All flying will be paused, though classroom studies will continue.

The move comes after Defense Secretary Mark Esper ordered a review following the shooting of three sailors at the naval base in Pensacola, by a Saudi Air Force lieutenant.

Investigators continue to work on the assumption that it was an act of terrorism.

Editorial / Washington Post

“President Trump’s reaction to the murderous rampage in Pensacola, Fla., on Friday by an officer of the Royal Air Force of Saudi Arabia was insensitive and grossly insufficient. Three American servicemen lost their lives and eight were wounded by a Saudi wielding a 9mm Glock 45 pistol....(and) What does the president say?  He finds it ‘shocking’ and conveys the condolences of ‘very, very devastated’ King Salman of Saudi Arabia and his son, Crown Prince Mohammed bin Salman, and adds that the kingdom will ‘help out the families very greatly.’

“Not a word from Mr. Trump about the threat of terrorism, or a shred of curiosity about motives and whether the Saudi officer was radicalized and by whom, or a thought about what Saudi Arabia could do to help investigate the shooter, or perhaps a lament that a pilot, a guest of the United States, would carry out such a horrific assault on his hosts, or even a worry about where the 21-year-old officer got the weapon....

“Mr. Trump has an inexplicable blind spot for Saudi Arabia.  He has no trouble insulting in the vilest way people from other Muslim countries.... But when a Saudi carries out an attack on a U.S. military base, Mr. Trump becomes a spokesman and apologist for the king....

“The king’s promises of cooperation might be more credible if he would direct his intelligence service, and the crown prince to whom it reports, to pay more attention to cases of radicalization and less to what seem to be the prince’s top priorities: silencing peaceful dissent, torturing women who campaigned for the right to drive, surveilling the relatives of the murdered Khashoggi.  Mr. Trump might ask the king to make public who really ordered that murder and to free the writers and activists the regime has thrown into prison.  That is, if Mr. Trump could see beyond his blind spot.”

--What a terrifying day it was for Jersey City, New Jersey, on Tuesday, a shootout killing six, including a police officer with five children, two suspects, and three innocents inside the Jewish JC Kosher Supermarket.  Jersey City Mayor Steven Fulop said it appeared the supermarket was targeted, and we learned later one of the suspects had been posting anti-Semitic diatribes on social media, both apparently adherents of the Black Hebrew Israelites, a fringe religious movement not associated with mainstream Judaism that’s been labeled a hate group by experts who track extremists in America.  The duo is also suspected of killing an Uber driver in Bayonne the day before.

I lived in Jersey City from 1982-85, when I was first working on Wall Street.  It’s a popular, often far-less-expensive place to live than Manhattan, or even neighboring Hoboken. 

But it’s a very complex city because of massive gentrification in spots.  Those watching around the country Tuesday probably just have one image of the place, but understand it is a generally safe large city.

--The death toll from this week’s volcano eruption on an island off the coast of New Zealand rose to 16, with six of the eight remaining bodies removed in a dangerous mission yesterday. Among the dead were passengers from a Royal Caribbean cruise line vessel (Ovation of the Seas).  Many of the injured are being treated for severe burns and medical officials are importing skin.

The amount of skin needed equates to about 60 donors.  In New Zealand, only five to 10 people donate skin each year.  The poor patients are in incredible pain and fighting for their lives.

As for whether tour groups should have been allowed on the island, weeks after the threat level had been raised because of “heightened volcanic unrest,” the victims and their families deserve answers.

--According to a study undertaken by conservation group IUCN, climate change and nutrient pollution are driving the oxygen from our oceans, and threatening many species of fish. 

Nutrient run-off has been known for decades, but climate change, according to the researchers, is making the lack of oxygen worse and now, around 700 ocean sites are suffering from low oxygen, compared with 45 in the 1960s.

Researchers say the depletion is threatening species including tuna, marlin and sharks.

According to the scientists, as more carbon dioxide is released enhancing the greenhouse effect, much of the heat is absorbed by the oceans.  In turn, this warmer water can hold less oxygen.  This normally wouldn’t be that big a deal, overall, but in some tropical locations the loss can range up to 40%.

“We have known about de-oxygenation but we haven’t known the linkages to climate change and this is really worrying,” said Minna Epps from IUCN.

The bigger fish like tuna have greater energy needs.  According to the authors, the big fish are starting to move to the shallow surface layers of the seas where there is more of the gas dissolved.   However, this makes the species more vulnerable to over-fishing.

--Climate activist Greta Thunberg was named ‘TIME’ Person of the Year, the 16-year-old the  youngest to be so honored. 

So President Trump’s team edited his face on to the body of Thunberg, tweeting, “When it comes to keeping his promises, there’s only one Person of the Year.”

Trump himself tweeted: “So ridiculous.  Greta must work on her Anger Management problem, then go to a good old fashioned movie with a friend!  Chill Greta, Chill!”

Thunberg wasted little time in offering a rejoinder, updating her Twitter profile to read: “A teenager working on her anger management problem.  Currently chilling and watching a good old fashioned movie with a friend.”

In explaining its choice of Ms. Thunberg as Person of the Year, ‘TIME’ editor in chief Edward Felsenthal said “she became the biggest voice on the biggest issue facing the planet this year, coming from essentially nowhere to lead a worldwide movement.”

--Finland has a new prime minister, Sanna Marin, the world’s youngest at the age of 34.  She is heading a women-led coalition government.  The center-left coalition consists of five parties, all headed by women.  You go, Girls!!!

--We note the passing of Pete Frates, a former Boston College baseball player whose participation in the social media phenomenon known as the Ice Bucket Challenge helped raise more than $100 million toward fighting amyotrophic lateral sclerosis, commonly known as A.L.S. or Lou Gehrig’s disease.  Frates died on Monday at his home in Beverly, Mass.  He was 34.

Frates learned he had A.L.S. in 2012 and, while he didn’t create the Ice Bucket Challenge, a Facebook post in July 2014 showing him doing his version of the challenge prompted a surge in participation that summer, to where it became a viral sensation.

--A painting discovered on the wall of an Indonesian cave has been found to be 44,000 years old.  As reported by the BBC, “The art appears to show a buffalo being hunted by part-human, part-animal creatures holding spears and possibly rope.  Some researchers think the scene could be the world’s oldest-recorded story.”

In other news, free agent pitcher Gerrit Cole signed with the Yankees for nine years, $324 million.

And now you’re caught up.

---

Gold $1480
Oil $59.79

Returns for the week 12/9-12/13

Dow Jones  +0.4%  [28135]
S&P 500  +0.7%  [3168]
S&P MidCap  +0.1%
Russell 2000  +0.3%
Nasdaq  +0.9%  [8734]

Returns for the period 1/1/19-12/13/19

Dow Jones  +20.6%
S&P 500  +26.4%
S&P MidCap  +21.8%
Russell 2000  +21.5%
Nasdaq  +31.6%

Bulls 53.3
Bears 17.2

Have a good week.

Brian Trumbore