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02/18/2017

For the week 2/13-2/17

[Posted 11:00 PM ET, Friday]

IMPORTANT: Due to a maintenance issue I’ve been putting off for some time, StocksandNews will be going offline around noon ET on Monday for 24-48 hours.  Because of the tech transition we are undergoing, we can’t even put up a “maintenance” banner.  Ergo, I’ll be dark.  But fear not. Things should be back to normal by mid-Wednesday, hopefully sooner.

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Edition 932

What a first four weeks for America under our new president.  Never has there been more of a reason to exercise my adage “wait 24 hours,” or as Charles Krauthammer said the other day, you have to judge Donald Trump “day by day.”

I want to emphasize that the following is no different than any other column of mine.  There is a ton of red meat for both sides.  If you want to get viewpoints that are solely right or left, you know where you can turn. It’s probably not here.

But if you want a real history of our times, you know to keep it where it is.

You also know I have real problems with our president, just as I did Bush 43 and Obama.  But all Americans should be scared to death over the leaks coming out of the bureaucracy...unelected, anonymous bureaucrats who can destroy a reputation; not just that of our politicians, but of you and me as well. 

And that honeymoon with Russia?  As of tonight, it’s already over.  The face the Kremlin is looking at is that of Secretary of Defense James Mattis, not of Donald Trump.  They can toy with the latter, but they won’t be able to do so with the former.

I would also just say that when it comes to the growing list of investigations, be careful not to slough them off.  Yes, again, wait 24 hours.

One figure who is going to be an increasingly important one is Republican Sen. Rand Paul.

Another is fellow Republican Sen. John McCain, who in a speech at the Munich Security Conference today, blasted President Trump, without mentioning him by name once, because he didn’t have to.

McCain suggested the world is uniquely imperiled this year – and proceeded to question whether it will even survive.

“In recent years, this question would invite accusations of hyperbole and alarmism; not this year,” McCain said.  “If ever there were a time to treat this question with a deadly seriousness, it is now.”

Among McCain’s points:

“[The founders of the Munich conference] would be alarmed by an increasing turn away from universal values and toward old ties of blood and race and sectarianism.”

“They would be alarmed by the hardening resentment we see towards immigrants and refugees and minority groups – especially Muslims.”

“They would be alarmed by the growing inability – and even unwillingness – to separate truth from lies.”

“They would be alarmed that more and more of our fellow citizens seem to be flirting with authoritarianism and romanticizing it as our moral equivalent.”

McCain continued: “But what would alarm them most, I think, is a sense that many of our peoples, including in my own country, are giving up on the West, that they see it as a bad deal that we may be better off without, and that while Western nations still have the power to maintain our world order, it’s unclear whether we have the will.”

Then: “I know there is profound concern across Europe and the world that America is laying down the mantle of global leadership.  I can only speak for myself, but I do not believe that that is the message you will hear from all of the American leaders who cared enough to travel here to Munich this weekend.  That’s not the message you heard today from Secretary of Defense Jim Mattis.  That is not the message you will hear from Vice President Mike Pence. That’s not the message you will hear from Secretary of Homeland Security John Kelly.  And that is certainly not the message you will hear tomorrow from our bipartisan congressional delegation.

“I refuse to accept that our values are morally equivalent to those of our adversaries,” McCain concluded.  “I am a proud, unapologetic believer in the West, and I believe we must always, always stand up for it.  For if we do not, who will?”

On to Michael Flynn and Russia...The Trump Presidency, Week  Four....

White House National Security Adviser Michael Flynn resigned late Monday night amid a controversy over whether he lied about his contacts with Russian Ambassador Sergey Kislyak, even though as of 4 p.m. Monday, Trump counselor Kellyanne Conway said in a television interview that Flynn “does enjoy the full confidence of the president.”

An hour later, White House press secretary Sean Spicer said the president was “speaking to Vice President Pence relative to the conversation the vice president had with General Flynn and also speaking to various other people on what he considers the single most important subject there is, our national security.”

In his letter of resignation, Flynn said he had “inadvertently briefed the Vice President Elect and others with incomplete information regarding my phone calls with the Russian ambassador. I have sincerely apologized to the president and the vice president.”

The Washington Post reported Monday that the Justice Department had warned the White House last month that Flynn had so mischaracterized his communications with the Russian ambassador that he could be vulnerable to blackmail by Moscow.

Vice President Pence first learned that Flynn had misled him about the nature of his contact with a Russian official on Feb. 9, two weeks after other White House officials were briefed on the matter, a spokesman for Pence, Marc Lotter, said on Tuesday.

White House counsel Don McGahn told Trump in a briefing late last month that Flynn had discussed sanctions with Russian Ambassador Sergey Kislyak.

In a January television interview, Pence said that Flynn had told him the issue of sanctions did not come up in his conversations with the Russian ambassador.

So President Trump had been aware for “weeks” that Flynn had misled Pence and other officials, but did not act until Monday night, forcing Flynn to resign.

Sally Q. Yates, the acting attorney general at the time, informed McGahn on Jan. 26, and then White House press secretary Sean Spicer said McGahn briefed a group of senior aides about Flynn the same day, as well as the president. [Again, Pence didn’t learn until Feb. 9.]

Trump, aboard Air Force One last Friday, gave the impression he wasn’t familiar with the Washington Post story that Flynn had not told the truth about the calls.

“I don’t know about that. I haven’t seen it. What report is that? I haven’t seen that.  I’ll look into that,” Trump told reporters on the plane.

Sean Spicer tried to convince us all on Tuesday that Trump was just referring to a question about the Post report and not the overall issue of Flynn’s contact with the Russian ambassador.

Spicer went on to say that the White House Counsel’s Office conducted a review and determined “there was not a legal issue but rather a trust issue.  The president was very concerned that General Flynn had misled the vice president and others.  The president must have complete and unwavering trust of the person in that position.” 

We also learned that the FBI interviewed Flynn about his communications with Kislyak in the first days of the new administration, according to various officials, as first reported by the New York Times.

If Flynn denied the true nature of his discussions to the FBI agents interviewing him, that is a felony, seeing as it seems highly likely the FBI has a transcript of the phone calls between Flynn and Kislyak.

Spicer said the president had not authorized Mr. Flynn to discuss sanctions with his Russian contact.

One of the issues is whether Flynn violated the Logan Act, which prohibits private citizens from negotiating with foreign governments in relation to disputes with the U.S.

WikiLeaks took to Twitter on Tuesday, blaming Flynn’s resignation on “a destabilization campaign by U.S. spies, Democrats, press.”

President Trump on Tuesday said the “real story” of Flynn’s departure was “illegal leaks,” rather than reports Flynn misled senior White House officials about his conversations with Russia.

Trump tweeted: “The real story here is why are there so many illegal leaks coming out of Washington? Will these leaks be happening as I deal with N. Korea etc?”

Russia rushed to defend Flynn, Konstantin Kosachev of the upper house writing in a Facebook post: “To force the resignation of the national security adviser for contacts with the Russian ambassador (normal diplomatic practice) is not even paranoia, but something immeasurably worse. Either Trump has failed to gain his desired independence and is being cornered consistently (and not without success), or Russophobia has infected even the new administration, from top to bottom.”

Earlier, Kremlin spokesman Dmitri Peskov confirmed that Flynn had “some conversations and communications,” but that reports claiming they discussed sanctions before Trump’s inauguration were “incorrect.”

The New York Times reported that phone records and intercepted calls show that Trump campaign officials and advisers had been repeatedly conversing with senior Russian intelligence officials and other government individuals for months.  What was discussed is not clear, but one of the individuals said to be calling the Russians was former Trump campaign chairman, Paul Manafort, who had worked as a political consultant in Russia and Ukraine.

Manafort, in a telephone interview with the Times on Tuesday, insisted he was in no way involved with the Russians.

“I have never knowingly spoken to Russian intelligence officers, and I have never been involved with anything to do with the Russian government or the Putin administration or any other issues under investigation today...It’s not like these people wear badges that say, ‘I’m a Russian intelligence officer.’”

Several congressional Republicans are calling for expanded probes of the administration’s relations with Russia and of the Kremlin’s alleged interference in the election.

“I think there needs to be fulsome investigation on all angles relative to nefarious activities that were taking place with Russia, beginning in March but even going back before that time,” said Sen. Bob Corker, Republican chairman of the Foreign Affairs Committee.  Senators John McCain and Lindsey Graham are among others wanting to learn more about Flynn’s discussions.

Others are questioning security at Mar-a-Lago after President Trump and Japanese Prime Minister Abe seemingly learned of the North Korean ballistic missile test while at the dinner table Saturday night, in a crowded room with other diners, rather than get up and take the issue into a secured room.

On this, I think it’s much ado about nothing.  The missile test was public knowledge and this wasn’t the kind of situation where an immediate response was required.

Now if they learned that the test was in conjunction with disturbing troop movements near the border with South Korea, that’s a different story.

Wednesday, during a news conference with Israel’s Prime Minister Benjamin Netanyahu, Trump criticized the intelligence community and the media for the reports that led to Flynn’s resignation.

“I think he’s been treated very, very unfairly by the media – as I call it, the ‘fake media,’ in many cases – and I think it’s really a sad thing that he was treated so badly,” Trump said.  “I think in addition to that, from intelligence, papers are being leaked, things are being leaked.”

Trump added: “People are trying to cover up for a terrible loss that the Democrats had under Hillary Clinton. I think it’s very, very unfair what’s happened to General Flynn, the way he was treated, and the documents and papers that were illegally – I stress that – illegally leaked.  Very, very unfair.”

But the day before, White House spokesman Spicer emphasized that Trump asked Flynn to resign because he could no longer be trusted.

“The evolving and eroding level of trust as a result of this situation and a series of other questionable instances is what led the president to ask for General Flynn’s resignation.”

Trump’s ire over the leaks to journalists contrasted with his praise of WikiLeaks and its disclosure of leaked internal emails from the Clinton campaign.

Senate Republicans, led by Majority Leader Mitch McConnell, said it was “highly likely” that the events leading up to Flynn’s resignation would be part of a broader probe into alleged Russian meddling in the election.

Trump tweeted Wednesday: “This Russian connection non-sense is merely an attempt to cover-up the many mistakes made in Hillary Clinton’s losing campaign.”

In another tweet: “The real scandal here is that classified information is illegally given out by ‘intelligence’ like candy. Very un-American!”

Thursday, the Wall Street Journal’s Shane Harris and Carol E. Lee reported: “U.S. intelligence officials have withheld sensitive intelligence from President Donald Trump because they are concerned it could be leaked or compromised, according to current and former officials familiar with the matter.

“The officials’ decision to keep information from Mr. Trump underscores the deep mistrust that has developed between the intelligence community and the president over his team’s contacts with the Russian government, as well as the enmity he has shown toward U.S. spy agencies.  On Wednesday, Mr. Trump accused the agencies of leaking information to undermine him.

“In some of these cases of withheld information, officials have decided not to show Mr. Trump the sources and methods that the intelligence agencies use to collect information, the current and former officials said.  Those sources and methods could include, for instance, the means that an agency uses to spy on a foreign government.”

Both the White House and a spokesman for the Office of Director of National Intelligence denied that the Journal’s account is accurate.

But Rep. Adam Schiff (D., Calif.), the ranking member of the House Intelligence Committee, said he has heard concerns from officials about sharing especially sensitive information with Mr. Trump.

“What the intelligence community considers their most sacred obligation is to protect the very best intelligence and to protect the people that are producing it.... I’m sure there are people in the community who feel they don’t know where he’s coming from on Russia,” Schiff said.

Thursday morning, President Trump decided he’d had enough.  He’d hold his own news conference and set the record straight, as only he can.

“My message is being filtered,” the Wall Street Journal reports him telling senior administration officials inside the Oval Office hours before what would prove to be a one-of-a-kind, historic event.  “I want to speak directly to the American people about the progress we’ve been making.”

So he delivered an opening statement highlighting his successes, including executive actions scaling back government regulations and the nomination of a Supreme Court justice.  But as every single news outlet said after, he then devolved into an airing of grievances about his media coverage.

“I turn on the TV, open the newspapers and I see stories of chaos,” Trump said.  “Yet it is the exact opposite. This administration is running like a fine-tuned machine, despite the fact that I can’t get my cabinet approved.”

The news conference came as the number of investigations and inquiries on Capitol Hill is growing on the issue of contacts between the president’s associates and Russian officials, while Trump said he asked the Justice Department to investigate the leaks to the news media. “Those are criminal leaks,” he said, during the presser.

Trump insisted none of his aides had contact with Russian officials during his campaign.

“No.  Nobody that I know of.  Nobody,” he said.

Trump also insisted: “I own nothing in Russia. I have no loans in Russia. I don’t have any deals in Russia,” he said.

[Rep. Devin Nunes (R., Calif.), chairman of the House Intelligence Committee, said Thursday that U.S. intelligence officials have yet to provide evidence of any contact between Russian officials and Trump’s campaign staff, or members of the transition team, beyond Michael Flynn, so Nunes is loath to launch his own investigation, which he said would be like a witch hunt, when there is “no information, no nothing from anyone,” as the Journal reported.]

Trump also asserted: “I inherited a mess.  It’s a mess. At home and abroad, a mess.   Low pay, low wages, mass instability overseas, no matter where you look.”

Michael D. Shear, Maggie Haberman and Glenn Thrush / New York Times

“President Trump, smarting from a series of crises, moved his surrogates aside on Thursday and assigned the rescue of his month-old presidency to the only spokesman he’s ever really trusted – himself.

“For days, a frustrated and simmering president fumed inside the West Wing residence about what aides said he saw as his staff’s inadequate defense and the ineffectiveness of his own tweets. Over the objections of some top advisers who wanted to steer him away from confrontation, Mr. Trump demanded to face the media, determined to reject the narrative that his administration is sinking into chaos, scandal and incompetence.”

Richard Wolf / USA TODAY

“To hear President Trump tell it, he ‘inherited a mess’ and has replaced it with ‘a fine-tuned machine.’

“That’s not what it looked or sounded like inside the East Room of the White House on Thursday during a rambling, defensive and at times angry performance by the leader of the free world.

“In one of the wildest presidential press conferences on record, Trump lashed out at the media, Hillary Clinton, the intelligence community, judges and Democrats – among many others.

“It was a spectacle for the ages – one that his most loyal supporters probably loved, but which political insiders have seldom, if ever, witnessed.  Taking questions from a hostile press corps, Trump interrupted and belittled them repeatedly, then responded in blunt terms avoided by his predecessors.

“His purpose: to compare what he inherited four weeks ago with what he has delivered, mostly in a series of adjectives.  What he inherited was ‘terrible,’ ‘broken,’ ‘catastrophic,’ ‘horrendous’ and ‘a disaster,’ with jobs ‘pouring’ out of the country, illegal drugs that are ‘cheaper than candy bars,’ a ‘depleted’ military and ‘mass instability’ overseas. He used the word ‘mess’ six times.

“What he said he has delivered: ‘really good work,’ ‘incredible progress,’ ‘decisive action,’ plants and factories moving back to the U.S. ‘big league,’ a ‘tremendous surge of optimism’ in the business world, ‘enormously productive talks’ with foreign leaders, and U.S. citizens who are ‘very happy’ as a result.

“ ‘There has never been a presidency that’s done so much in such a short period of time,’ Trump said.  His Cabinet, he said, is ‘one of the great Cabinets ever assembled in American history.’....

“When reporters raised questions about his administration’s relationships with religious and racial minorities, such as Jews and African Americans, Trump heaped praise on himself.  ‘I am the least anti-Semitic person that you’ve ever seen in your entire life’ he told a Jewish reporter, as well as ‘the least racist person.’....

“Near the end of the spectacle, Trump was asked about the nation’s political divisions, and once again he addressed it in personal terms.  ‘We had a totally divided country for eight years and long before that,’ he said.

“ ‘I didn’t come along and divide this country.’”

Among other statements made by President Trump at the news conference:

“The leaks are absolutely real...the news is fake.”

“The press has become so dishonest, that if we don’t talk about it we are doing a tremendous disservice to the American people, a tremendous disservice, we have to talk about it.... The press is out of control...the level of dishonesty is out of control.”

“The tone is such hatred... I’m really not a bad person by the way.”

“I have to say, ‘Fox & Friends’ in the morning, they’re very honorable people... They have the most honest morning show.”

“The whole Russia thing is a ruse.”

“It’s all fake news... Russia is fake news put out by the media.”

Editorial / Wall Street Journal

“President Trump held a nearly 80-minute press conference on Thursday defending his Administration, assailing the media and along the way making some good news.  Political reporters are bewildered by his unconventional style, but the spectacle was Mr. Trump at his Trumpiest.

“ ‘We have made incredible progress.  I don’t think there’s ever been a President elected who in this short period of time has done what we’ve done,’ as the President characterized his ‘fine-tuned machine’ and ‘one of the great cabinets ever assembled in American history.’  He said he was ‘making this presentation directly to the American people, with the media present, which is an honor to have you’ – before he went on to call the media ‘dishonest,’ ‘false, horrible, fake’ and filled with ‘such hatred’ for him.

“One reporter went as far as to accuse Mr. Trump of ‘undermining confidence in our news media,’ and, duh, his goal was to use an East Roomful of journalists as his foil.  They seemed to recoil aesthetically from how he communicates – with his exaggerations, unrehearsed digressions and streams-of-consciousness, or unconsciousness as the case may be.

“But Mr. Trump’s larger message is reasonably clear and coherent.  He exposed himself to press scrutiny and answered multiple pointed questions on Russia and other controversies.  President Obama tended to filibuster at his press events, and he’d have reached perhaps the third question by the 60-minute mark.

“Mr. Trump categorically denied any personal or campaign involvement with the Russians, which means he’s laid down a marker if his position is later contradicted by the evidence. He also had a point when he explained that ‘the real problem’ with the Michael Flynn imbroglio is the ‘classified information that was given illegally.’

“On immigration, Mr. Trump said that the Administration is withdrawing the travel ban executive order, whose rollout was far from ‘perfect’ as he claimed.  But he says he’ll issue a new version [Ed. it’s looking like Tuesday], presumably with better legal arguments, more security analysis and competent logistical preparation.

“Mr. Trump also expressed sympathy for the ‘dreamers’ who immigrated to the U.S. illegally as children with their parents.  Some of his hardline advisers favor deportation, but the President seemed to demure, noting the involvement of ‘some absolutely incredible kids, I would say mostly. They were brought here in such a way – it’s a very, very tough subject’ and ‘I love these kids, I love kids, I have kids and grandkids.’

“Mr. Trump was also right to argue that ‘I think we’re setting a record or close to a record’ in the time the Senate is taking to confirm his cabinet. This time that’s not an exaggeration.  He added: ‘I’m going forever and I still have a lot of people that we’re waiting for. And that’s all they’re doing, is delaying. And you look at [Senate Minority Leader Chuck] Schumer and the mess that he’s got over there and they have nothing going.  The only thing they can do is delay.’

“Oh, and by the way, Mr. Trump announced a new nominee for Labor Secretary, which was the nominal reason for scheduling the impromptu Q&A.  [Ed. Alexander Acosta, dean of Florida International University College of Law and the first Hispanic in the Trump cabinet if approved.]  If we were Mr. Trump we’d call it the greatest afternoon’s work in all of human history, but then it wasn’t the worst either.”

Fox News anchor Shepard Smith caught heat from Fox viewers with this statement after Thursday’s presser.

“It’s crazy what we’re watching every day.  It’s absolutely crazy.  He keeps repeating ridiculous, throwaway lines that are not true at all and sort of avoiding this issue of Russia as if we’re some kind of fools for asking the question.  Really?  Your opposition was hacked and the Russians were responsible for it and your people were on the phone with Russia on the same day it was happening and we’re fools for asking the questions?  No sir....

“We have a right to know,” Smith added.  “You call us fake news and put us down like children for asking questions on behalf of the American people.”

Michael Goodwin / New York Post

“Trump’s detractors immediately panned the show as madness, but they missed the method behind it and proved they still don’t understand his appeal.  Facing his first crisis in the Oval Office, he was unbowed in demonstrating his bare-knuckled intention to fight back.

“He did it his way. Certainly no other president, and few politicians at any level in any time, would dare put on a show like that.

“In front of cameras, and using the assembled press corps as props, he conducted a televised revival meeting to remind his supporters that he is still the man they elected....

“Sure, sentences didn’t always end on the same topic they started with, and his claim to have won the election by the largest electoral college margin since Ronald Reagan wasn’t close to true.

“Fair points, but so what?  Fact-checkers didn’t elect him, nor did voters who were happy with the status quo.

“Trump, first, last and always, matches the mood of the discontented.  Like them, he is a bull looking for a china shop. That’s his ace in the hole and he played it almost to perfection....

“While Republican honchos in Congress say they’re getting ready to move on tax cuts and replacing ObamaCare, nothing will happen without presidential leadership. That means Trump’s fate is in his own hands and he must keep himself and his White House team focused on delivering an economic revival.

“If he does that, the lynch mob will be left holding an empty rope.”

Late Thursday, the Washington Post reported that “Michael Flynn denied to FBI agents in an interview last month that he had discussed U.S. sanctions against Russia with that country’s ambassador to the United States before President Trump took office, contradicting the contents of intercepted communications collected by intelligence agencies, current and former U.S. officials said.”  As I said before, lying to the FBI is a felony, but it’s not clear whether prosecutors would attempt to bring such a case because Flynn could parse the definition of the word “sanctions.”

Opinion on the Flynn / Russia situation....

Leonid Bershidsky / Bloomberg

“The resignation of U.S. national security adviser Michael Flynn shows how toxic any connection with Russia has become in Washington. It would be tempting to say the alleged help in getting Donald Trump elected has backfired for Russian President Vladimir Putin, but that is not the case: So far, he’s been getting exactly what he wants from the U.S.

“Flynn was forced to resign ostensibly because he had inaccurately described the content of his phone calls with Russian Ambassador Sergey Kislyak, which took place before Trump’s inauguration.  He was a liability to the administration in any case, because he seemed unable to get along with the Central Intelligence Agency.  But it will stick in the public mind that Flynn went because he was too close to the Russians.  ‘Russian for the Exit,’ trumpeted the front page of the New York Daily News.

“Trump may be erratic, but it should be clear to him – and to less mercurial people in his administration such as Secretary of State Rex Tillerson – that any sign of engagement with Russia will be magnified by the media and used against the White House.  It’s unlikely that he will now reach out for talks with Russia on any all-embracing deal that would include, for example, expanded cooperation in the Middle East in exchange for U.S. inaction on Ukraine.

“Ivan Krastev and Stephen Holmes wrote in Foreign Policy that the political revolution unfolding in the U.S. has thrown the Kremlin off balance:

“Putin has become a hostage to Trump’s survival and success.  This has seriously restricted Russia’s geopolitical options.  The Kremlin is perfectly aware that Democrats want to use Russia to discredit and possibly impeach Trump while Republican elites want to use Russia to deflate and discipline Trump.  The Russian government fears not only Trump’s downfall, of course, but also the possibility that he could opportunistically switch to a tough anti-Moscow line in order to make peace with hawkish Republican leaders in Congress.

“That’s wishful thinking.  Putin is too experienced, and too steeped in KGB-bred anti-Americanism, ever to expect a friendly U.S. administration.

“It’s predictable that some Russian commentators would decry Flynn’s firing.  ‘Either Trump has not obtained the independence he sought,’ Konstantin Kosachev, head of the foreign affairs committee of the Russian parliament’s upper chamber, wrote on Facebook, ‘or Russophobia has afflicted the new administration, too, top to bottom.’  But Putin himself and Foreign Minister Sergei Lavrov – the two people who matter – have always shown restraint when talking about Trump and his administration....

“Putin is not looking to offer any gifts to Trump in exchange for any immediate gain.  He’s playing a long-term game, in which both Trump and the anti-Russian interests in Washington are now actively aiding him.

“As far as Putin is concerned, the biggest problem with the U.S. is its willingness to interfere in situations far away from its borders – in the Middle East, in Europe, in the former Soviet Union.  Trump, regardless of what he thinks about Russia, is an isolationist: ‘America first’ is his slogan.  Neither he nor his voters appear willing to back direct military interference in any country where Russian interest is strong.  Putin is testing sincerity by encouraging the flare-up of fighting in eastern Ukraine but making no decisive moves there.  The U.S. appears to be relatively unconcerned, except for routine condemnation in the U.N. Security Council. If this pattern holds, Putin – whose understanding of Russian national interests is transparent and predictable – will proceed unilaterally to safeguard those interests as he sees them....

“Putin wants to be an equal partner to the West, not a perennial ‘Mr. No.’  On the other hand, compromising with the U.S. would weaken his domestic position by undermining the villain image Putin’s propaganda machine has painstakingly created for the United States.  It’s great for Putin that there’s such presence on Trump not to seek a rapprochement.  It’s just the kind of drama Russian state television wants.

“For Putin’s Russia, a Trump-led U.S. is an adversary with diminished moral standing and no appetite for meddling in far-off regions.  Putin is enjoying all the benefits he could expect from the Trump administration without having to pay for them.  Even if Trump were inclined to sit down for meaningful talks with Putin about how they could address global issues, America’s aversion to Russia would prevent that.  So, for the first time since he came to power, Putin appears free to play his geopolitical game.”

Eli Lake / Bloomberg

“If we are to believe the Trump White House, National Security Adviser Michael Flynn just resigned because he lied about his conversations with Russia’s ambassador to the vice president.  As White House senior counselor Kellyanne Conway told NBC’s ‘Today Show’ on Tuesday: ‘Misleading the vice president really was the key here.’

“That sounds about as credible as when the president told CIA employees that the media had invented the story about his enmity toward the spy agency, not even two weeks after he had taken to Twitter to compare the CIA to Nazis.  It’s about as credible as President Donald Trump’s insistence that it didn’t rain during his inauguration. Or that millions of people had voted illegally in the election he just won.

“The point here is that for a White House that has such a casual and opportunistic relationship with the truth, it’s strange that Flynn’s ‘lie’ to Pence would get him fired.  It doesn’t add up.

“It’s not even clear that Flynn lied. He says in his resignation letter that he did not deliberately leave out elements of his conversations with Ambassador Sergey Kislyak when he recounted them to Vice President Mike Pence.  The New York Times and Washington Post reported that the transcript of the phone call reviewed over the weekend by the White House could be read different ways.  One White House official with knowledge of the conversations told me that the Russian ambassador raised the sanctions to Flynn and that Flynn responded that the Trump team would be taking office in a few weeks and would review Russia policy and sanctions. That’s neither illegal nor improper.

“What’s more, the Washington Post reported Monday night that last month Sally Yates, then the acting attorney general, had informed the White House that Flynn discussed sanctions with Kislyak and that he could be susceptible to blackmail because he misled Pence about it.  If it was the lie to Pence that sunk Flynn, why was he not fired at the end of January?

“A better explanation here is that Flynn was just thrown under the bus. His tenure as national security adviser, the briefest in U.S. history, was rocky from the start.  When Flynn was attacked in the media for his ties to Russia, he was not allowed by the White House to defend himself.  Over the weekend, he was instructed not to speak to the press when he was in the fight for his political life.  His staff was not even allowed to review the transcripts of his call to the Russian ambassador....

“In the past it was considered scandalous for senior U.S. officials to even request the identities of U.S. officials incidentally monitored by the government (normally they are redacted from intelligence reports).  John Bolton’s nomination to be U.S. ambassador to the United Nations was derailed in 2006 after the NSA confirmed he had made 10 such requests when he was Undersecretary of State for Arms Control in George W. Bush’s first term. The fact that the intercepts of Flynn’s conversations with Kislyak appear to have been widely distributed inside the government is a red flag.

“Representative Devin Nunes, the Republican chairman of the House Permanent Select Committee on Intelligence, told me Monday that he saw the leaks about Flynn’s conversations with Kislyak as part of a pattern.  ‘There does appear to be a well-orchestrated effort to attack Flynn and others in the administration,’ he said.  ‘From the leaking of phone calls between the president and foreign leaders to what appears to be high-level FISA Court information, to the leaking of American citizens being denied security clearances, it looks like a pattern.’

“Nunes said he was going to bring this up with the FBI, and ask the agency to investigate the leaks and find out whether Flynn himself is a target of a law enforcement investigation.  The Washington Post reported last month that Flynn was not the target of an FBI probe.

“The background here is important. Three people once affiliated with Trump’s presidential campaign – Carter Page, Paul Manafort and Roger Stone – are being investigated by the FBI and the intelligence community for their contacts with the Russian government. This is part of a wider inquiry into Russia’s role in hacking and distributing emails of leading Democrats before the election....

“But that’s all these allegations are at this point: unanswered questions.  It’s possible that Flynn has more ties to Russia that he had kept from the public and his colleagues.  It’s also possible that a group of national security bureaucrats and former Obama officials are selectively leaking highly sensitive law enforcement information to undermine the elected government.

“Flynn was a fat target for the national security state.  He has cultivated a reputation as a reformer and a fierce critic of the intelligence community leaders he once served with when he was the director of the Defense Intelligence Agency under President Barack Obama.  Flynn was working to reform the intelligence-industrial complex, something that threatened the bureaucratic prerogatives of his rivals....

“In the end, it was Trump’s decision to cut Flynn loose.  In doing this he caved in to his political and bureaucratic opposition.  Nunes told me Monday night that this will not end well. ‘First it’s Flynn, next it will be Kellyanne Conway, then it will be Steve Bannon, then it will be Reince Priebus,’ he said.  Put another way, Flynn is only the appetizer.  Trump is the entrée.”

Editorial / Wall Street Journal

“(Readers) should understand how rare it is for electronic intercepts of a private U.S. citizen – which Mr. Flynn was at the time – to be leaked to the press. The conversations of American citizens are supposed to be protected, lest private reputations be ruined without accountability.  So it’s unsettling to read that so many in the government claim to have read the transcripts of Mr. Flynn’s conversations with the Russian ambassador, and then spoke about them to the press.

“If these leaks are retribution against Mr. Flynn by an intelligence community aggrieved by Mr. Trump’s negative comments during the campaign, then the White House has a bigger problem than a national-security job opening. It faces a bureaucratic insurrection that can do great damage with other leaks that may or may not include accurate information.

“This should worry civil libertarians who claim to be worried about the surveillance state. Yet the same voices who call Edward Snowden a hero don’t seem concerned about the leaks of these transcripts about Mr. Flynn.  They fret about Mr. Trump’s speculative authoritarian menace but don’t want to ask if authoritarian tactics were used against Mr. Flynn.”

John Podhoretz / New York Post

“The chaos and infighting and unforced errors at 1600 Penn that have left everyone dizzied may be viewed as rookie mistakes to be overcome by on-the-job training....

“But what happened with (Michael) Flynn also represents a frightening portent.

“Leftists have become fond of saying that Trump shouldn’t be ‘normalized.’  That concern should now go both ways. Every American should be equally concerned at the potential ‘normalization’ of the tactics used by unnamed government officials to do Flynn in.

“To be sure, Flynn’s ouster after three weeks is proof positive he should never have been given the national-security-adviser job in the first place.  Flynn’s deceits about his conversations with a Russian official cannot be viewed in isolation from the overly close relationship with the Russian government he forged following his firing by the Obama administration in 2013.

“Still, unelected bureaucrats with access to career-destroying materials clearly made the decision that what Flynn did or who Flynn was merited their intervention – and took their concerns to the press.

“In one sense, the larger system of American checks and balances worked: The Trump White House couldn’t ignore the Flynn problems because they went public.  On the other hand, the officials who made the problems public did so using raw information that was in their possession for reasons we don’t yet know and may not have any right whatsoever to know....

“If this was intelligence, the revelation of the Flynn meeting just revealed something to the Russians we shouldn’t want revealed – which is that we were listening in on them and doing so effectively.

“And if it was an FBI investigation, then the iron principle of law enforcement – that evidence gathered in the course of an investigation must be kept secret to protect the rights of the American being investigated – was just put through a shredder.

“Keeping our intelligence-gathering assets hidden from those upon whom we are spying is a key element of our national security.

“And as for playing fast and loose with confidential information on American citizens: No joke, people – if they can do it to Mike Flynn, they can do it to you.

“This is the ultimate Pandora’s box.  It makes a public mockery of the presumption of innocence that is the hallmark of our legal system.  Such a thing is only acceptable, even morally, if you believe that the Trump White House represents such an unprecedented threat to everything that a higher law must govern your actions....

“If those who fear Trump embrace antinomianism* because they think he’s going to destroy our democracy, they should stop and consider whether their zeal to stop him might be blinding them to a different threat from the federal government that will erode our rights as citizens.”

*OK, folks...I don’t recall ever seeing this word before, so had to look it up.  “antinomian”: one who denies the validity of moral laws.

David Ignatius / Washington Post

“President Trump confronts complicated problems as the investigation widens into Russia’s attack on our political system. But his responsibilities are simple: A month ago, he swore an oath that he would ‘faithfully execute’ his office and ‘preserve, protect and defend the Constitution of the United States.’

“That’s apparently easier said than done. In a rambling news conference Thursday and his blizzard of tweets, Trump has dismissed inquiries into his campaign’s contacts with Russia and denounced leakers as ‘low-life’ and ‘un-American.’  These statements seem more likely to confound ongoing investigations than faithfully execute his role as chief executive.

“Michael Flynn’s forced resignation as national security adviser this week, after he concealed details of his contacts with a Russian diplomat, has been blurred by Trump’s contradictory comments.  So it’s worth going back to basics: Why was the United States expelling Russian spies at the time Flynn made his late-December call to Russian Ambassador Sergey Kislyak? Why would Flynn have hidden for weeks that he talked with Kislyak about those anti-Russian sanctions, or have denied it to the FBI, as The Post reported late Thursday?  What would Trump have known about these issues?....

“Given the magnitude of Russia’s cyberattack on the United States, it remains puzzling that Flynn and Trump were so cavalier about the U.S. government’s attempt to hold Moscow accountable. That’s one reason investigators keep asking what contacts the Trump team had with Russia before the election. Trump said Thursday there hadn’t been any.  Yet Russian Deputy Foreign Minister Sergei Ryabkov said Nov. 10: ‘Obviously, we know most of the people from [Trump’s] entourage.’

“The FBI and the Senate Intelligence Committee are investigating the scope of Russia’s pro-Trump activities.  Inevitably, there will be leaks, but that issue is a red herring.  For all Trump’s talk about ‘fake news,’ the country needs answers.”

Charles Krauthammer / Washington Post

“It’s a Watergate-era cliché that the coverup is always worse than the crime.  In the Mike Flynn affair, we have the first recorded instance of a coverup in the absence of a crime.

“Being covered up were the Dec. 29 phone calls between Flynn and the Russian ambassador to Washington.  The presumed violation was Flynn negotiating with a foreign adversary while the Obama administration was still in office and, even worse, discussing with Sergey Kislyak the sanctions then being imposed on Russia (for meddling in the 2016 elections).

“What’s wrong with that?  It is risible to invoke the Logan Act, passed during the John Adams administration, under which not a single American has been prosecuted in the intervening 218 years. It prohibits private citizens from negotiating with foreign powers.  Flynn was hardly a private citizen.  As Donald Trump’s publicly designated incoming national security adviser, it was perfectly reasonable for him to be talking to foreign actors in preparation for assuming office within a month.

“Worst case: He was telling Kislyak that the Trump administration might lift sanctions and therefore, comrade, no need for a spiral of retaliations.  How different is this from Barack Obama telling Russian President Dmitry Medvedev, on an inadvertently open mic, during his 2012 reelection campaign, ‘This is my last election.  After my election, I have more flexibility.’

“Flynn would have been giving the Russians useful information that might well have contributed to Russia’s decision not to retaliate. I’m no Russophile.  But again: What’s wrong with that?  Turns out, the Trump administration has not lifted those sanctions.  It’s all a tempest in an empty teapot.”

Daniel Henninger / Wall Street Journal

“A president’s blood is in the water and another White House staff can only look out the windows as the sharks arrive from miles off.

“Dan Rather, who normally toils at explaining away his George W. Bush National Guard story for CBS years ago, swam toward the Trump White House Tuesday to posit that ‘Watergate is the biggest political scandal of my lifetime, until maybe now.’....

“We are far from Watergate levels of threat to the Trump presidency.  The Democrats are in the congressional minority, and however much they intone the I-word, there will be no Sam Ervin committee.

“Impeachment, though, is not the goal of Donald Trump’s opponents. They want to cut off his power – his hold on much of the American public.  To do that, they need to make him look like a loser.

“On Monday, the president lost Mike Flynn. On Wednesday, he lost Andy Puzder, his labor nominee. Both fell in large part because of an understaffed and dangerously diffused White House management structure.  The Trump opposition – Democrats, unions, Never Trumpers – now know that if they can turn three Republican senators against him, he won’t matter.

“They may succeed unless Team Trump can reverse the tides starting to erode the foundations of the president’s political support.

“Let’s talk about the swamp.

“If we have learned anything about the Trump presidency, it is that Mr. Trump and his chief political strategist, Steve Bannon, despise the Washington swamp, which includes the city’s lobbyists, all of its bureaucrats, every member of the media, the entire congressional delegation and their staffs.

“At the moment, that would cover most of the forces arrayed against them, and a good question is whether they’ll drain the swamp before the swamp swallows them....

“What happened to Richard Nixon an eon ago looks familiar: Donald Trump’s presidency is getting bitten to death by an invisible, lethal ant hill of anonymous leakers....

“As always, it works.  You could have spent all Wednesday reading grimly exhilarating stories based on almost no names, such as the Washington Post piece about the White House triumvirate of Mr. Trump, Mr. Bannon and Reince Priebus keeping Mike Pence out of the loop after they’d been told Jan. 26 by the Justice Department of Mr. Flynn’s conversations with the Russian ambassador.  Mr. Pence had gone on Sunday morning television earlier to defend Mr. Flynn.

“Whether the Pence wedge between him and the inner circle (as of this week) is true hardly matters.  Life in the capital wouldn’t be much fun without believing such things. 

“Washington’s most powerful force is...the whisper.

“Trumpians can launch a million outraged emails and tweets against all this incoming, but the blunt reality is, So what?  If you aren’t winning in Washington, you are losing.  Nobody has changed the rules of that game yet.

“For the first two weeks, Team Trump was winning.  The executive orders unwinding the Obama regulatory apparatus had Democrats gagging in astonishment. Having abandoned any arguments based on policy, the Democrats sank to the level of senior members like Sen. Elizabeth Warren exchanging views on TV with comedians.  Comedians are now the Democratic Party’s brain trust.

“Then the White House overplayed its strong hand with the rushed-out immigration order.  The political fires lit by that then consumed a vulnerable Mike Flynn and are now roaring toward the Oval Office.  Unfair?  Criminal?  Maybe, and maybe the historians will sort it all out someday as solace.

“Forgotten now is that Nixon didn’t resign because of anything proven by the anonymous torrent, but only after he saw he’d lost the support of his own party in Congress.  We’re not there, yet.

“Mr. Trump is in the White House because voters wanted two things, in this order: 1) change; 2) Donald Trump.

“That’s the basics.  Get it straight, or 1974 could return.”

Wall Street

Federal Reserve Chair Janet Yellen, in her semi-annual testimony to Congress to provide an update on the economy and fiscal policy, told the Senate Banking Committee on Tuesday that interest rate increases are likely because the central bank forecasts gradual rising inflation and tightening labor markets.

But fiscal policy is uncertain given the lack of clarity on any Republican plans on tax cuts and potential infrastructure spending and the like.

“At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” she said in her prepared remarks.

“Waiting too long to remove accommodation would be unwise, potentially requiring the [Federal Open Market Committee] to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.”

The Fed, as you know, has forecast three quarter-point rate increases for 2017, while your editor has said they’ve already been caught with their pants down because inflation, save for the one metric they happen to favor (the PCE) is solidly over the Fed’s 2% target.

Witness the inflation data that was released this week for January. The producer price index was up a far greater than expected 0.6%, ex-food and energy 0.4%, which means year-over-year, the PPI was 1.6%, 1.2% on core.  But the 0.6% increase for the month was the highest since Sept. 2012.

The consumer price index also rose 0.6% last month, 0.3% on core, and is up 2.5% yoy, 2.3% ex-food and energy, the fastest pace for the latter since May 2012.

Meanwhile, wages have been growing at a 2.5% pace, yes, not the 3%+ you’d see in a standard recovery, but handily above 2%.

And the thing is, the Fed is only calling for about 2% growth this year so what if it comes in at 3%, or even better?  They’ll be forced to hike rates at a faster pace than they want to and, as Yellen herself admits, that would be disruptive.

Eric Rosengren, head of the Boston Federal Reserve, said in a speech in New York on Wednesday that the potential for an “overshoot” in U.S. economic growth may justify a “more rapid” tightening in monetary policy than the central bank had forecast.

As for my projection they will hike rates in March, I’ll stand by it, though the odds are against me.

Separately, Chair Yellen put up a robust defense of Dodd-Frank and the ban on banks’ proprietary trading, the Volcker Rule, which has been a lightning rod for Republican opposition to the reform package put together after the financial crisis.

Texas Congressman Jeb Hensarling, who heads up the House Financial Services Committee, cited a Fed staff paper that argued the Volcker Rule had a “deleterious” impact on liquidity in the corporate bond market by forcing banks to cut their trading inventories.

Yellen countered the paper did not represent the views of the board as a whole.

“It is difficult to come to a conclusion because by most metrics, liquidity in corporate bond markets still remains very healthy,” she said.

Earlier, Yellen said she opposed the idea that Dodd-Frank had damaged the supply of credit to small businesses, citing a National Federation of Independent Businesses survey showing just 4 percent of respondents were unable to get the loans they need.

Just a few other economic notes from the week:

January retail sales were up a solid 0.4%, 0.8% ex-autos, while industrial production for the month declined 0.3%.  January housing starts came in at a 1.246 million pace, a little better than expected.

As for the stock market, it continued to hit new highs, data below, as the Street remains optimistic the president will get his agenda through Congress, including tax reform, a repeal of ObamaCare, reduced regulation (which he is already achieving) and an infrastructure program.

But he is going up against a solid opposition bloc of 48 Democrats in the Senate, with little margin for error, and deficit hawks in his own party that point to 9,800 in this country turning age 65 every day.  [Plus there is growing Republican opposition to the border adjustment tax. More on this next time.]

A lot is going to depend, though, on individual proposals and how many of the 10 Democratic senators up for re-election in 2018 in states in which Trump won will cross over, such as what West Virginia Democrat Joe Manchin has been doing with many of the Trump cabinet nominees.

Europe and Asia

Eurostat released GDP data for the eurozone and for the EA19, it was up 0.4% in the fourth quarter over the third, 1.7% year-on-year, and 1.6% for 2016.

Germany was 0.4% (1.8% yoy), France 0.4% (1.1%), Spain 0.7% (3.0%), Italy 0.2% (1.1%...0.9% for 2016), and the U.K. at 0.6% (2.2%).

The European Commission, which updates its projections three times every year, sees growth this year of 1.7%, and 1.8% in 2018, with the EC still voicing concerns over global uncertainties driven by President Trump’s opaque stance on key policy issues, citing potential disruptions to trade.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said: “Mr. Trump has been president only for a short time, things are moving very fast, and there have been quite dramatic developments. We do need to be cautious and we also have to ensure a spirit of cooperation.”

Eurozone industrial production declined 1.6% in December over November, up 2.0% yoy.

Inflation was 1.8% for the EA19 in January on an annualized basis, but the ECB continues to maintain this is largely because of a spike in energy prices over the past 12 months and there has been no real wage growth.  Ergo, it’s bond-buying plans will remain in place for the balance of 2017.

But Germany’s producer price index for January hit 4.0%, the highest since 2011, with overall CPI at 1.9% ann. last month, a 3-year high.

Spain’s inflation rate was 2.9% in January, the highest there since Dec. 2012.

In the U.K., unemployment for the fourth quarter was 4.8%, an 11-year low, with wages up 2.6% in Q4.

However, retail sales were lousy in Britain, down 0.2% in January month-on-month, ex-fuel, after a revised fall of 2.1% in December.  Inflation is squeezing purchasing power and I still insist confidence will erode as Brexit negotiations officially get underway.

Eurobits....

The Greece debt crisis has re-emerged as a potential major market issue this summer, as the International Monetary Fund continues to wobble on whether it will participate in Greece’s current bailout, its third, with the sticking points remaining the same.  The IMF wants Greece to enact further austerity measures because it doesn’t believe it can achieve required budget surpluses otherwise long term, while Germany and its ilk are opposed to granting the debt relief that the IMF says is required before it will pony up its share of the bailout funding.

Germany also insists the current program can only continue if the IMF joins in, though the other day, a German lawmaker close to Angela Merkel, Manfred Weber, said: “If the IMF insists on a debt cut, then one should let it go. Europe can stand on its own feet now.”

But this is a lone voice thus far.  German Finance Minister Wolfgang Schaeuble said last week that Greece would have to leave the eurozone if it failed to meet its bailout commitments.

The problem is there is no solution, today, and there won’t be until after the big vote in the Netherlands, March 13, after which politics will inevitably get in the way of any resolution, with Greece owing 7bn euro in debt service in July.  Eurozone governments will do all they can to avoid domestically unpopular concessions to Greece from here on.

Meanwhile, Greece’s GDP fell 0.4% in the fourth quarter, after a jump of 0.9% in Q3; finishing 2016 with growth of 0.3%.  The European Commission projects Greece will grow 2.7% this year, but with renewed uncertainty over the bailout, it seems to me this is a pipedream.

On the Brexit front, British Prime Minister Theresa May is expected to trigger the U.K.’s withdrawal from the European Union in early March, ahead of her self-imposed March 31 deadline.  May wants to get it done as close as possible to the EU summit taking place on March 9 and 10, but she can’t act until Parliament passes a bill giving her the permission to do so.

The upper house is due to debate the draft law next week and could amend it, which would cause a delay, with the House of Lords scheduled for a final vote on March 7.  But any amendments to the wording of the bill made by the Lords would mean the draft law goes back to the lower House of Commons, which would have to accept or reject the changes.

In France, the financial prosecutor vowed to push on with its investigation into the fake jobs scandal surrounding presidential candidate Francois Fillon and his wife, though it is highly unlikely any decision to indict would be made before the first round of voting April 23.  But it does mean the legal cloud hanging over Fillon will sit there like a threatening thunderstorm.

Fillon is also under intense pressure from within his conservative camp, with rebel conservative lawmaker Georges Fenech saying voters were deserting the party in droves. 

It’s true that Fillon went from a prohibitive favorite to number three in the race behind National Front (FN) leader Marine Le Pen and centrist Emmanuel Macron.

An opinion poll published Wednesday by Ifop-Fiducial showed Fillon’s popularity has dropped sharply from 45% a month ago to 26%, while Macron’s popularity is at 52% and Le Pen is viewed favorably by 31%.  [This is different from ‘who you’d vote for.’]

But you know how I’ve written over the years that I wish everyone with an interest in European affairs could take the train from Charles de Gaulle Airport into the heart of Paris, where you get to see the suburbs, and the seething neighborhoods, teeming with immigrants from North Africa and the Middle East?

It was one such suburb, Saint Denis (ISIS’ backyard), where the Paris attackers were from, and the past few weeks there has been major unrest in these same mostly northern areas, the banlieues. 

Marine Le Pen is taking advantage of it, saying last Sunday, “All this is the result of complacency in French society, which is the fault of politicians who have governed us for years.”

Le Pen also said, “Security forces have been the target of gangs of scum that nothing seems to be able to stop anymore, and certainly not the courts in an overall context of decadence.”

Le Pen started an online petition campaign to support the police and supporters used social media to condemn the protesters.

“Look at this scum!” Le Pen’s closest adviser Florian Philippot wrote on Twitter Sunday.  “If they’re foreigners, immediate deportation – or prison for life.”

Three officers were charged with battery and a fourth with rape over an attack on a 22-year-old man identified as Theo after a spot check on Feb. 2, the incident that has precipitated the violence.

“Support for Theo is an excuse to attack the cops,” Marion Marechal Le Pen, Marine’s niece and a National Front lawmaker said.  “It’s a pretext to throw opprobrium on an entire profession.”  [Financial Times, BBC News, Bloomberg]

Meanwhile, with Fillon’s support dwindling, Moscow, which had favored either Fillon or Le Pen because of their pro-Russia policies, now appears to be doing what it can to help Le Pen.  There is no doubt the dirty tricksters are out to get Macron, who does have an interesting personal history; marrying his high school teacher, 24 years his senior, though his rivals throw out stories he’s gay.  As Leonid Bershidsky wrote the other day in Bloomberg, “Last year, (Nicolas) Sarkozy described (Macron) as ‘a little male, a little female, the fashion of the moment – androgynous.”  The social media campaign against Macron has been vicious.

So let’s see.  Fillon is corrupt.  Le Pen has her own serious financial issues involving her use of funds as a member of the European Parliament, let alone lack of campaign funds, and Macron has to constantly deflect rumors and innuendo that will increasingly be promulgated by the Kremlin.

And you thought our election was dirty?!

The campaign for Germany’s September election is heating up, with center-left candidate Martin Schulz continuing to poll well.  A new one from broadcaster ZDF has Schulz, the former president of the European parliament, gaining 49% of the popular vote against 38% for Chancellor Merkel in a one-off vote for the chancellorship if the two went head to head. Schulz, who was appointed the SPD hopeful in January, continues to surge as he revitalizes Germany’s Social Democrats, who are currently in a coalition with Merkel’s center-right Christian Democrats.

Schulz is seen as a fresh face, especially when compared with Merkel, who has been chancellor for 12 years.

Turning to Asia, Japan registered its fourth straight quarter of growth for the first time since 2012-13, with Q4 GDP up 0.2%, after a 0.3% increase in Q4.  But the year-over-year, and overall, growth for 2016 is just 1.0%.  That said, it’s growth.

The ongoing concern is private consumption, which was flat in the fourth quarter over the third.  But at least exports grew a strong 11% at an annualized pace the last three months of 2016.

Street Bytes

--The three major averages all closed at record highs Friday, with the Dow Jones notching its seventh consecutive record close, up 1.7% to 20624.  The Dow is now up 4.4% on the year.

The S&P 500 added 1.5% to 2351, up 5.0% for the first seven weeks of 2016, while Nasdaq gained 1.8% to 5838 and it’s up 8.5% already ytd.

It’s still about the hope for tax cuts, regulatory rollbacks and increased spending, along with generally solid corporate earnings reports and a better tone not just here but across Europe and Asia.

Friday, takeover talk from the likes of Kraft Heinz and its bid for Unilever doesn’t hurt.

But valuations by any definition are stretched, ditto most sentiment readings, such as my Bull / Bear readings down below.

--U.S. Treasury Yields

6-mo. 0.66%  2-yr. 1.19%  10-yr. 2.41%  30-yr. 3.02%

Another week with Treasuries virtually unchanged.  It’s now eight straight weeks with the yield on the 10-year finishing at between 2.40% and 2.48%

China increased its holdings of U.S. Treasuries in December for the first time since last May, adding $9.1bn of U.S. sovereign debt to its reserves in the final month of 2016, according to the Treasury and Federal Reserve.

--Unilever rejected a $143bn takeover approach from Kraft Heinz, the food conglomerate backed by Brazil’s 3G and Warren Buffett, so the two will now battle it out. 

The Anglo-Dutch company behind brands such as Dove soap and Ben & Jerry’s ice cream said that the $50 per share cash and stock offer, an 18% premium to its closing price on Thursday, “fundamentally undervalues Unilever.”  The company added, “Unilever does not see the basis for any further discussions.”

Kraft Heinz said it had made “a comprehensive proposal to Unilever about combining the two groups to create a leading consumer goods company with a mission of long-term growth and sustainable living.”

If the deal went forward, it would be the second largest in history, after the $183bn takeover of Germany’s Mannesmann by Vodafone of the U.K. in 2000.

Under U.K. takeover rules, Kraft Heinz has until the close of business on March 17 to make a firm bid or walk away for six months from Unilever.  [Financial Times]

--Apple Inc. shares hit a new all-time high during the week, and on Friday, closing today at $135.65, amid growing optimism the company will issue a dramatically improved iPhone model.

Apple’s market value is about $710bn, well ahead of No. 2, Google parent Alphabet Inc., but below Apple’s value in February 2015 due to a share-buyback program.

--U.S. crude stockpiles rose a sixth straight week, while OPEC’s oil output cuts have exceeded expectations.

The rise in the U.S. is due to ramped up drilling as prices have stabilized above $50 a barrel.

Speaking of OPEC, the cartel this week said it has achieved 92% compliance of its 1.2m barrel per day targeted production cut; 1.1m b/d in January, per its monthly report issued on Monday.  The Friday before, as I wrote last time, the International Energy Agency showed the cuts by OPEC in month one of the six months deal have been “one of the deepest in the history of OPEC output cut initiatives.”

--Aetna Inc. CEO Mark Bertolini escalated his fight against ObamaCare, saying, “It is in a death spiral,” while predicting more insurers will drop out of the market for 2018, following Humana Inc.’s decision to quit ObamaCare entirely for next year.

Aetna is also mulling whether to further reduce its presence in the markets set up by the Affordable Care Act, having already cut its footprint to four states for this year, from 15, after losing about $450 million on sales of ACA plans last year.

Bertolini said back in October that rising rates would push healthy people away from ObamaCare, leaving insurers with sicker customers, and forcing premiums even higher.  With fewer and fewer healthy customers enrolling, you have the conditions for an insurance death spiral.

But wait...there’s more!  Aetna’s $34 billion bid for Humana officially came to an end when a federal judge ruled “the tie-up violated antitrust regulations and would likely lead to higher prices for consumers.”

As reported by the New York Post: “The judge also excoriated Bertolini for misleading the country when he said last year that Aetna would exit several state-run health exchanges because the company was losing money in the businesses.

“Aetna was booking a profit in some of the states, it was discovered via testimony during the trial – but Aetna moved to exit the exchanges simply to pressure the Justice Department to okay the Humana deal.

“The move blew up in Bertolini’s face.”

Aetna and Humana called off the deal on Tuesday, with Aetna owing Humana a $1 billion termination fee.

So you see, boys and girls, you need to read everything...or just read me...because many Republicans are pointing to Bertolini’s comment on ObamaCare as being in a “death spiral,” which I do believe is the case, but this guy is also a liar, according to the courts.

--Samsung’s de facto leader Lee Jae-yong has been arrested for bribery, embezzlement and perjury in connection with the corruption scandal that is poised to topple President Park Geun-hye.

Mr. Lee, the 48-year-old vice-chairman of Samsung Electronics, is the highest-profile business figure engulfed in the scandal.

The arrest comes as Samsung Electronics, the crown jewel, is scrambling to revive the fortunes of its mobile business after the problems with the Galaxy Note 7 smartphone last year.

Lee, who has been leading Samsung Group, which has about 60 business units, since his father and chairman Lee Kun-hee was hospitalized with a heart attack in 2014, is accused of bribing President Park and her shadowy adviser, Choi Soon-sil, to the tune of about $36 million to help smooth his succession and to consolidate control over the group units.

The special prosecutor also accused Lee of hiding assets overseas and concealing profits made from illicit business activities.  Lee has conceded he made political donations but not for the purpose of getting favors in return.

Understand that Samsung accounts for about 20 percent of the nation’s economy.

--There are conflicting reports on the valuation of the coming Snapchat IPO, the company setting a lower than projected price range of $14 to $16 per share that puts the valuation in a range from $19.5bn to $22.2bn, or lower, with the company initially talking of $25bn.

And Snap (the parent of Snapchat) is offering shares with no votes, reserving the power for all major decisions to co-founders Evan Spiegel and Bobby Murphy.  Even if these two stand down from their roles as CEO and chief technology officer, they control any acquisitions the company makes, for example.

Needless to say, many large investors think this is absurd, while Spiegel and Murphy become billionaires as the company lists.

Snap is presenting itself as a camera company pushing to sell video ads and sponsored filters, but it has slower user growth, increasing losses (as it staffs up) and stiffer competition from the likes of Facebook-owned Instagram.

--Yahoo has agreed to a price cut on the original $4.8bn sale of its core business to Verizon, down to a reported $4.5bn, after the company revealed it had suffered a series of data breaches.

--Cisco Systems Inc. exceeded expectations for its fiscal second quarter with net profit of $2.35 billion.

The seller of routers, switches, software and services posted revenue of $11.58 billion, also surpassing forecasts.

--Lenovo, the world’s largest PC maker, missed earnings expectations for its fiscal third quarter by a wide margin as revenues decreased 6% to $12.2bn.  Revenue at the company’s PC business rose 2%, but mobile fell 23% and data center revenue declined 20%.

PC shipments increased 2% year-on-year in the quarter, with commercial orders up 5%.

The company said the issues it faced last quarter could continue in the current one.

--PepsiCo’s revenues rose 5% in the fourth quarter, to $19.5bn, matching Wall Street expectations.  Earnings after adjustments also beat the Street.

PepsiCo has been reformulating products and developing new ones to meet the demand for healthier snacks.

--Marriott International handily beat expectations on fourth-quarter earnings, with revenue of $5.46 billion also exceeding the Street’s forecast.

--CBS reported lower than expected sales in the fourth quarter as weaker NFL ratings weighed on advertising revenue, which fell 2% to $3.52bn from $3.59bn, with ad sales (despite political advertising) down 3%, which was offset by growth in retransmission fees and streaming sales.

--Shares in AIG tumbled 9% after the insurer’s $3 billion quarterly loss raised fresh questions about the company’s recovery efforts and hedge fund Paulson & Co. revealed it had sold about half its stake – even as it has a seat on the board (a rare move for an activist investor).

This was AIG’s fourth loss in six quarters as it struggles to transform itself from top to bottom.

--I was reading a piece in the Financial Times’ Lex column and it’s pretty startling that Goldman Sachs shares bought a decade ago have earned a compound annual return of less than 2%.  And that includes a 38% jump following the presidential election.  Revenues are down a third from 10 years ago.

--Credit Suisse Group AG posted a fourth-quarter loss of $2.34 billion after taking a charge to settle a U.S. investigation into the role of its mortgage securities business in the 2008 financial crisis.  The bank pledged to cut between 5,500 and 6,500 jobs this year.

--Toshiba chairman Shigenori Shiga resigned after the Japanese conglomerate said it was set to report a net loss of $3.4bn in the year to March 2017.  The company is going to take a $6.3bn writedown at its U.S. nuclear business which has been under question the past year.  Some analysts rightfully believe the company’s future is at risk because of the bet placed in 2015 when its U.S. subsidiary, Westinghouse Electric, bought the nuclear construction and services business from Chicago Bridge & Iron in 2015.

The problem is the assets Westinghouse took on are worth far less than initially thought and there are questions about what Westinghouse (Chicago Bridge & Iron) might owe.  It is thought in April, or earlier, that Toshiba could be getting out of the global nuclear business altogether, apart from its operations in Japan.  [This would have a big impact on existing plants in the U.K., for one.]

--Restaurant Brands International, the company behind Burger King and the Tim Hortons chains, said same-store sales at the former grew 2.8% during the fourth quarter, though a slowdown from the 3.9% gain in the prior year period.  Tim Hortons’ sales grew just 0.2%.

I love my Dunkin’ Donuts downstairs, but if I ever hit Powerball, I’m changing it to Tim Hortons.

--Wendy’s warned full-year sales growth at its restaurants could fall short of expectations, as more Americans prefer to eat at home encouraged by a drop in grocery prices.  The company now expects same-restaurant sales growth of 2-3 percent vs. a previous guidance of 3 percent.  [They were up 0.8 percent for the just completed quarter.]  Profits are being dented by higher minimum wages.

--Campbell Soup Co. reported second-quarter earnings of $101 million, topping the Street, though revenue of $21.7bn missed, down 1%.

--Last week I talked about the spirits industry.  This week we learned that U.S. exports of wine – the bulk of it from California – set a record in 2016, despite a strong dollar, among other negatives, with the volume in foreign trade revenue at $1.62 billion last year vs. 2015’s previous record of $1.49 billion.  90% of the wine exported came from California.

Canada was the top single nation buying U.S. wine, shelling out $431 million, followed by the U.K. with $337 million; China and Hong Kong, $181 million; and Japan, $87 million.  [Germany is in there, but didn’t see an exact figure.]

--Hasbro announced Thursday that it is removing the thimble game piece from Monopoly after it didn’t garner enough votes in a contest that will determine the eight tokens in an updated version of the board game.  News of this move was overshadowed by Trump’s press conference, no doubt.

A replacement for thimble has yet to be named, with a new version of the game going on sale in August.  Among the possibilities are penguin, rubber duck and TV.

--Josh Elliott was fired from CBS News on Monday after he stepped down from CBS’ digital channel for a larger role at the network, but did so in a way that shocked his own bosses.

Elliott served as CBSN’s lead daytime anchor for a year and suddenly told his viewers last Friday it was his “last day.”  “It has been by any measure a great stay here at CBSN,” he said.

But this shocked the hell out of CBS News execs, who had no idea he was planning to leave the online station, even though the plan was for Elliott to do various work for the television network.  At the time, as I was reading stories over the weekend, it was described by network sources as “a mess of epic proportions. Nobody at the top at CBS News knew that Josh was going to do that.”

Monday morning, Elliott was called to a meeting with CBS News heads including President David Rhodes and fired. He was escorted out by security, according to the New York Post.

It seems Elliott’s executive producer didn’t inform higher ups.

Elliott now has the distinction of having blown up his career at all three main networks.  He abruptly quit ABC for NBC, and then left NBC under a cloud two years later for CBS.

Well here at StocksandNews, higher ups are totally in sync with moi, your faithful editor.

--Finally, on one of my favorite topics, fish fraud.  Filipa A. Oioannou of the San Francisco Chronicle had a piece on Wednesday concerning an upscale restaurant in Santa Clara County, Odeum in Morgan Hill, “helmed and owned by a chef with a Michelin star – (that) was serving tilapia in place of the petrale sole listed on the menu for a period of more than a year, an investigation by the Santa Clara County district attorney’s office alleged.”

According to a civil judgement announced this week, the restaurant must pay $120,000 - $30,000 in restitution and $90,000 in civil penalties – and offer a $30 gift card to any customer who ordered sole at Odeum between October 2014 and March 2016 and files a claims form by May 31.

As we’ve discussed in the past, everyone should know that when they order a fancy fish, odds are pretty good it’s tilapia.

It was last September that conservation group Oceana estimated 1 in 5 seafood samples worldwide is mislabeled, and I’d bet it is really more than this. Asian catfish and farmed salmon are other fish often presented as wild-caught, higher-value fish, Oceana found.  And that’s the other fraud...wild caught vs. farmed.

Foreign Affairs

Israel: Prime Minister Benjamin Netanyahu received a warm welcome from President Trump in his first visit to the White House with the new administration.  In a joint press conference on Wednesday, Trump said the United States would no longer insist on a Palestinian state as part of a peace accord between Israel and the Palestinians, backing away from a decades-long policy that has underpinned America’s role in Middle East peace negotiations.

“I’m looking at two states and one state,” Trump said.  “I like the one that both parties like.  I can live with either one.”

Needless to say the Palestinians, who are unlikely to accept anything short of a sovereign state, were upset, while at the same time, a single Israeli state encompassing the Palestinians would either become undemocratic or no longer Jewish, given the exploding growth of the Arab population.

Netanyahu embraced Trump’s words, saying he preferred to deal with “substance” rather than “labels” in negotiating with the Palestinians.

Netanyahu said the two-state solution meant different things to different people, and, first and foremost, the Palestinians continue to refuse to recognize the legitimacy of the Jewish state.

Trump did request Netanyahu hold off on further settlement building in the West Bank.

Netanyahu and Trump no doubt also talked about the status of the Iran nuclear deal (though the departure of Michael Flynn hurt in this regard), which if it isn’t scrapped outright, Netanyahu just wants to be assured it will be enforced rigorously.

One thing is for sure, the relationship between Netanyahu and Trump will be much stronger than the Israeli prime minister’s relationship with President Obama.

Benny Avni / New York Post

“Call it the ‘whatever’ approach to peacemaking.

“At a White House press conference Wednesday designed to display renewed warmth in the U.S.-Israel relationship, President Trump was asked about his approach to Mideast peace.  For two decades, the two-state solution has been the preferred approach to dissolving Arab-Israeli enmity.  Would Trump stick to it?

“ ‘I’m looking at two states and one state, and I like the one that both parties like. I can live with either one,’ Trump said.

“At first glance, a glib, shallow answer. But the self-styled artist of deals has long championed noncommitment and unpredictability as a bargaining tactic.  Why stake out a firm position when a nonchalant ‘whatever’ would do?

“Especially if in doing so, Trump is able to thaw the icy treatment his guest, Israeli Prime Minister Benjamin Netanyahu, got from President Barack Obama and, earlier, Bill Clinton.

“The irony: Now that Bibi finally found a friend in the White House, his 11-year hold on power at home suddenly looks shaky. Under investigation for corruption, Netanyahu has become increasingly reliant on his right-wing coalition partners, who push him to add new settlements and renounce his commitment to establishing a Palestinian state....

“While Bibi was routinely called upon to take political risks for the sake of peace, no similar demand was made to Palestinian Authority President Mahmoud Abbas, whose political weakness made officials nervous about pushing him too far. He couldn’t possibly make bold moves like recognizing Israel as a Jewish state or giving up on the demand to flood it with more than 5 million Arab descendants of refugees.

“While not shutting the door on the two-state solution, Netanyahu sidestepped it.

“ ‘Rather than labels, I want to look at substance,’ he said, adding a question about the proposed Palestinian state: ‘Will it be Costa Rica, or will it be Iran?’

“Trump didn’t force Netanyahu to swear allegiance to the ‘solution.’  Instead, he hinted, ‘We are going to make a deal that might be even a bigger and better deal than people in this room understand.’

“Rather than leaving it at that, Netanyahu spelled out the new strategy – a regional approach that involves, he said, ‘our newfound Arab partners in the pursuit of a broader peace, and peace with the Palestinians.’

“Trump insisted that this so-called outside-in strategy – making peace between Israel and existing Arab states before creating a new Arab state – ‘hasn’t been discussed before.’  But in 1991, Bush 41 gathered leaders of Arab states in Madrid, Spain, for a conference that tried just that.

“It didn’t succeed then. Can it now?

“Leaders from the Maghreb to Arabia – including most prominently Saudi Arabia and the Gulfies, Egypt, Morocco and Jordan – have tightened cooperation with Israel recently.  They’ve realized that Israel threatens them much less than ISIS or Iran....

“For the time being, Trump managed to set new peace goals. For a short news cycle, he got a reprieve from the political turmoil around him, while helping out an old friend.

“So, yes, peace remains as elusive as it was when the words ‘two-state solution’ were abused so often that they became an empty slogan.  Will Trump and Bibi manage to break the ennui?

“Well, whatever.”

Back to Netanyahu’s legal problems, the Jerusalem Post reported that police are preparing to indict the prime minister in four to six weeks.

Defense Minister Avigdor Lieberman said last weekend that Netanyahu should not resign if this occurs.

Iraq/Syria/ISIS/Russia/Turkey: ISIS killed at least 59 in a car bomb attack in Baghdad, the deadliest attack of the year and the same day as a huge attack in Pakistan (see below).

The Iraqi military claims to have killed 13 ISIS commanders last Saturday in an airstrike on a house in Anbar, where reportedly Islamic State leader Abu Bakr al-Baghdadi was holding a meeting, but he wasn’t on a list of victims.

Iraq claims Baghdadi was seen moving from Raqqa, Syria to Iraq in a convoy a week earlier, to discuss with commanders “the collapse happening in Mosul and to choose a successor for him.”  [Daily Telegraph]

Who the heck knows where the truth lies.

As for Syria and the prospect of safe zones, which I have said for months since Trump first proposed them is absurd, that it is too late, I was reading the current issue of Army Times and a piece by Andrew deGrandpre (sic) and it starts out thusly:

“The Pentagon has more questions than answers about President Donald Trump’s plan to establish ‘safe zones’ inside Syria and surrounding countries for potentially millions of refugees uprooted by the endless bloodshed there, an initiative that could require the deployment of tens of thousands of U.S. military personnel.

“The draft executive order, a document published online Jan. 25 after it was obtained by numerous media outlets, appears to have caught military leaders by surprise....

“The challenges in Syria are far more complex than those presented by ISIS. The country’s six-year-old civil war is in the midst of a tenuous cease fire. And the presence of more U.S. troops, whether to wage war or protect refugees, heightens the risk of a confrontation with entities loyal to Syrian President Bashar al-Assad and the unpredictable Russian military forces supporting them.

“That concern, perhaps above all, is feeding the Pentagon’s skepticism.  What specific territory would U.S. troops be asked to secure? From whom would they be protecting the refugees?  How does Trump even define protection?  Should American commanders tasked with securing these safe zones be prepared to intercept or shoot down any Russian or Syrian aircraft that breach these safe zones?”

Separately, Human Rights Watch said in a report published on Monday that Syrian government forces used chemical weapons in opposition-controlled parts of Aleppo during battles to retake the city late last year.  Government helicopters dropped chlorine bombs in residential areas on at least eight occasions between November 17 and December 13, 2016, the report says.

Lastly, a referendum bill was approved for April 16 in Turkey that would grant President Recep Tayyip Erdogan further sweeping powers in concentrating authority in his office.

Since last July’s failed coup, authorities have purged more than 140,000 civil servants and military personnel accused of supporting the coup plotters.

Pakistan: An Islamic State suicide bomber struck inside a famed shrine in southern Pakistan on Thursday, killing at least 75 people in the deadliest attack in the country in more than two years.  At least 20 women and nine children were among the dead. ISIL claimed responsibility in a statement, saying it had targeted a “Shiite gathering.”    ISIL, Sunnis, view Shiites as apostates and Sufi shrines like the one hit as a form of idolatry.

So ISIS killed at least 134 people within hours in Iraq and here.

Afghanistan: There seems little doubt the Taliban is receiving support from Moscow and the other day, according to the pro-Kremlin newspaper Komsomolskaya Pravda, a former Taliban commander, Mohammad Akbar Agha, said in an interview that the Taliban has been chasing closer ties with Russia for the past three years and wanted to build political ties with Moscow to fight the region’s “U.S. threat.”  The militant group has been inviting Russians to meet them at their “office” in the U.A.E. for the past three years, he added.

In return for their support, the Kremlin could expect Taliban fighters to secure “Russia’s borders,” along the lines of the  former Soviet Union, Akbar Agha claimed. The warlord added, “The hatred and hostility left from the Soviet invasion has run its course. We are ready to shake hands with Russia in order to rid ourselves of the scourge of America.”

Technically, the Kremlin still brands the Taliban as a terrorist organization, alongside ISIS.

Akbar Agha was sentenced to 16 years in prison for kidnapping U.N. personnel in 2004, and then pardoned by President Karzai in 2009, after which he became one of the region’s most infamous warlords.

Russia: Defense Secretary James Mattis said after talks at NATO headquarters in Brussels that he did not see the conditions for military collaboration with Russia, in a blow to Moscow’s hopes for repairing ties with the U.S. following Trump’s election.

“We are not in a position right now to collaborate on a military level.  But our political leaders will engage and try to find common ground.”

Asked by reporters if Russia had interfered in the presidential elections, Mattis said: “Right now, I would just say there’s very little doubt that they have either interfered or they have attempted to interfere in a number of elections in the democracies.”

President Putin did say on Thursday that it was in the interests of both Russia and the United States to restore communications between their respective intelligence agencies.  “It’s in everyone’s interest to resume dialogue between the intelligence agencies of the United States and other members of NATO,” Putin said, addressing Russia’s Federal Security Service (FSB).  “It’s absolutely clear that in the area of counter-terrorism all relevant governments and international groups should work together.”  [Reuters]

Earlier, Secretary Mattis said NATO is a “fundamental bedrock” for Washington, and that the U.S. had a “shared level of commitment” to the alliance.

Mattis reiterated Trump’s call for member states to step up their contribution to the alliance, with only five NATO allies, including the U.S., currently meeting spending targets.  [2% of GDP...Britain, Poland, Estonia and Greece are the others.]

Separately, Putin reportedly told the same FSB gathering Thursday that Ukraine’s government was plotting a series of terrorist attacks across Russia, as, according to Putin, Ukraine pushes a military agenda in order to tear the 2015 Minsk peace agreement apart, according to the Interfax news agency.

Also, Secretary of State Rex Tillerson sat down with his Russian counterpart, Foreign Minister Sergei Lavrov, on Thursday for the first time, but journalists were escorted out of the room by U.S. officials as soon as Tillerson said hello.

According to Bloomberg, Lavrov was taken aback by the move, asking Tillerson, “Why did you shush them out?” Afterwards, both sides described the meeting as “productive.”

But this followed the White House’s statement earlier in the week that President Trump expects Moscow to return Crimea to Ukraine, and now Russian officials are scrambling to adjust their expectations.

White House press secretary Sean Spicer shattered the Kremlin’s American dream on Tuesday:

“President Trump has made it very clear that he expects the Russian government to de-escalate violence in the Ukraine and return Crimea.” 

Trump then tweeted on Wednesday: “Crimea was TAKEN by Russia during the Obama Administration. Was Obama too soft on Russia?”

Authorities in Moscow were angered, and it didn’t help that the night before, Michael Flynn, a Russian sympathizer, was forced to resign for withholding information about his phone conversations with the Russian ambassador.

Maria Zakharova, Russian foreign ministry spokeswoman: “We do not return our territories.  Crimea is the territory of the Russian Federation. That’s it.”

Viktor Ozerov, Head of Security Committee in the Federation Council: “Crimea is and will remain Russian. Demanding to return it simply cannot be fulfilled.  It’s as if Russia demanded for Alaska to be returned.”

Leonid Slutsky, Duma deputy: “Russia has no intention to discuss the issue of returning Crimea to Ukraine with the U.S. or anyone else for that matter....Any attempts to reignite the subject of Crimea’s ‘return’ will be treated as infringement of Russia’s territorial integrity.”  [Moscow Times]

The Kremlin has ordered state media to cut way back on the fawning coverage of Trump with the realization his administration may not be as friendly as once thought.

Lastly, Russia’s Sunday news shows took a decidedly militaristic tone last week, as reported by Alexey Kovalev of the Moscow Times.  “Dmitry Kiselyov’s propaganda flagship Vesti Nedeli (Weekly News) began with a feature on Russia’s latest radar stations.  Be wowed, Kiselyov told his audience.  This radar kit is next generation, rapid response, and can track up to 500 targets as far as Cape Horn, he said....

“Meanwhile, the conflict in Ukraine drags on with lethal consequences.  Kiselyov blamed Ukraine and its president, Petro Poroshenko, ‘who still expects a pat on the head from America for carrying on with the killing.’”

Like I said in the opening...the honeymoon is over.

North Korea / China: 45-year-old Kim Jong Nam, the son of former North Korean leader, Kim Jong Il, was assassinated in an airport in Kuala Lumpur, Malaysia, as he waited for a flight back to his home in Macau.  Malaysian police have said as many as six people may have been involved in the attack, but two women, assumed to be North Korean agents, attacked him and Kim was poisoned, with a needle, spray or toxic cloth to the face.  Thus far, two women and one man, traveling on Vietnamese and Indonesian passports have bene detained.

As The Economist opined:

“The 45-year-old Mr. Kim had once been Kim Jong Il’s favorite son....

“But in the end it was Kim Jong Il’s third son, Kim Jong Un, born to his second wife and educated, like his half-brother, in Switzerland, who succeeded their father in 2011.  Kim Jong Nam was not visible at his father’s funeral.  He was known in recent years to have been living in exile in Macau, a semi-autonomous enclave within China.

“Since the 30-something Kim Jong Un came to power, he has consolidated power by executing about 140 senior officials, most notably his uncle and security chief, Jang Song Thaek.  Yet exile had typically been the fate of members of the Kim family who had fallen out of favor....

“Jong Nam was thought to have been under the protection of the Chinese security services.  China’s government, which had had good relations with Jang, is bound to be irked by the murder of yet another protégé.  Kim Kwang Jin, a defector who once worked in North Korea’s ‘royal court’ economy, says that even if rumors that China had hoped to install Jong Nam if Jong Un fell from power are far-fetched, China would nonetheless have seen Jong Nam as useful leverage.

“North Korea frequently irks China, however, without changing its apparent conclusion that a violent nuclear dictatorship makes a better neighbor than a unified Korea packed with American troops.  The timing, hard on the heels of a North Korean missile test, is probably coincidental.  North Korea had been trying to kill Jong Nam for some time, according to South Korea’s spooks... And given how little clout he seems to have had in North Korea, there is no hint that his murder is a sign of turmoil within the regime.”

Editorial / Wall Street Journal

“Commentary on North Korean intrigue often focuses on its sensational or otherworldly qualities, and this case may prove no different, as news reports claim the hit was carried out by female agents with poisoned needles or spray.  More important, though, is to recognize the growing danger of a regime that is fanatical, fragile – and has nuclear weapons.

“The Trump administration says it has launched a North Korea policy review, and not a moment too soon.  Regardless of how or why Kim Jong Nam was killed, the U.S. and its allies need plans to handle a Pyongyang palace coup as well as a nuclear assault.”

As for the intermediate-range ballistic missile launched by North Korea on Sunday (NK time), according to some analysts it is a “game-changer” because it uses a solid fuel engine that makes the weapon more stable and reduces the time required to fuel a missile before launch.

The Pukguksong-2 is also road-mobile on tractor-erector-launcher units, which means it is difficult to detect and neutralize before it is launched.

Lance Gatling, a defense analyst and president of Tokyo-based Nexial Research Inc., told the Irish Independent, “If they have made a solid-fuel engine that works, then that is a great advance. It’s a game-changer in the sense that  a solid fuel rocket can be kept in ambient temperatures before being launched with a very short preparation time.”

The missile flew 310 miles before splashing down in the Sea of Japan.  That is more than sufficient range to worry Japan, let alone South Korea which has already been worried.

[But remember, at least for now, these missiles are wildly inaccurate.]

Japan: President Trump’s diplomatic efforts with Japanese Prime Minister Shinzo Abe no doubt will bear fruit, and worry China, which is a good thing.  I give Trump high marks on this score.

His brief statement following the North Korean missile test was also totally appropriate and all that was needed.

“The United States of America stands behind Japan, its great ally, 100%.”

Cuba: JetBlue became the latest airline to say it was reducing its service to Cuba, joining American Airlines, which announced it was dropping one of the two daily flights between Miami and the cities of Holguin, Santa Clara and Varadero, citing weak demand.

JetBlue is opting to fly smaller aircraft, though it didn’t formally say the change was because of a decline in demand.

I just get a kick out of this.  Everyone and their mother was rushing to get in this market.  I see zero attraction to going there.

Random Musings

--Retired Vice-Admiral Robert Harward was expected to replace Mike Flynn as national security adviser, but he turned down the offer, ostensibly because he wasn’t going to be allowed to bring in his own team. [See influence of Steve Bannon.]

This is going to be a big problem with just about any of the candidates remaining.

--Oklahoma attorney general Scott Pruitt is the head of the Environmental Protection Agency, having cleared the Senate by a 52-46 vote.  Republican Susan Collins (Maine) voted against; Democrats Joe Manchin (West Va.) and Heidi Heitkamp (N.D.) crossed over.

--The RealClearPolitics average of polls has President Trump with a 44% approval rating, 50% disapproval. 

A Gallup poll had only 38% of Americans approving of the job Trump is doing, while 56% disapprove, as of Friday’s figures.

A Fox News Poll found that when it comes to the temporary travel ban, 46% of voters approve, 52% disapprove.  53% say the indefinite ban on Syrian refugees “went too far.”

Meanwhile, by a 42-33 percent margin, voters think the travel ban makes the United States safer rather than less safe.

[No, I don’t acknowledge the Rasmussen poll and its 55% Trump approval rating because of its methodology, if there even is one.]

--While this shouldn’t be a huge surprise, Californians put President Trump’s approval rating at 34% among likely voters, 55% disapprove, according to a Public Policy Institute of California survey.  Although only 10% of Democrats in California approve, Trump is favored by 72% of Republicans.

85% of Californians favor a way for undocumented immigrants to stay in the U.S. legally if certain requirements are met.

65% of adults believe climate change poses a major threat to the nation, with 20% viewing it as a minor threat and 12% as no threat.

--Andrew Puzder had to withdraw his nomination to be President Trump’s labor secretary as senate Republicans began to abandon him.  The clincher was a videotape of Puzder’s wife appearing incognito on Oprah Winfrey’s television show in 1990, and detailing her claims of abuse during a testy divorce.  Puzder also came under intense fire from Democrats and liberal groups over his management of CKE Restaurants fast-food chain, owner of Hardee’s and Carl’s Jr.

And others focused their fire on his employment of an undocumented immigrant as a housekeeper and his failure to pay taxes for her services.

--White House senior policy adviser Stephen Miller, 31, made the rounds on the Sunday talk shows and particularly with his performance on “This Week” with George Stephanopoulos, he made my skin crawl.

Miller said on CBS’ “Face the Nation” that the judiciary was acting like “a supreme branch of government.”

“One unelected judge in Seattle cannot make laws for the entire country,” Miller told anchor John Dickerson, in addressing the executive order on immigration.  “I mean, this is just crazy, John.  The idea that you’re going to have a judge in Seattle say that a foreign national living in Libya has an effective right to enter the United States is beyond anything we’ve ever seen before.”

But it was his exchange on “This Week” that I found astounding.  It was one false talking point after another, including on alleged voter fraud.  [Glenn Kessler of the Washington Post gave Miller four Pinocchios.]

STEPHANOPOULOS: Let me move on, though, to the question of voter fraud as well. President Trump again this week suggested in a meeting with senators that thousands of illegal voters were bused from Massachusetts to New Hampshire and that’s what caused his defeat in the state of New Hampshire, also the defeat of Senator Kelly Ayotte.

That has provoked a response from a member of the Federal Election Commission, Ellen Weintraub, who says, “I call upon the president to immediately share New Hampshire voter fraud evidence so that his allegations may be investigated promptly.”

Do you have that evidence?

MILLER: I have actually, having worked before on a campaign in New Hampshire, I can tell you that this issue of busing voters into New Hampshire is widely known by anyone who’s worked in New Hampshire politics. It’s very real.  It’s very serious.  This morning, on this show, is not the venue for me to lay out all the evidence.

But I can tell you this, voter fraud is a serious problem in this country.  You have millions of people who are registered in two states or who are dead who are registered to vote.  And you have 14 percent of noncitizens, according to academic research, at a minimum, are registered to vote, which is an astonishing statistic.

This is a totally bogus reading of the 2012 Pew Center study that the Trump campaign, and now administration, continues to fall back on.

STEPHANOPOULOS: You can’t make a – hold on a second. You just claimed again that there was illegal voting in New Hampshire, people bused in from the state of Massachusetts.  Do you have any evidence to back that up?

MILLER: I’m saying anybody – George, go to New Hampshire. Talk to anybody who has worked in politics there for a long time. Everybody is aware of the problem in New Hampshire with respect to –

STEPHANOPOULOS: Do you have any evidence?

MILLER: If this is an issue that interests you, then we can talk about it more in the future.  And we now have – our governance is beginning to get stood up.  But we have a Department of Justice and we have more officials.

An issue of voter fraud is something we’re going to be looking at very seriously and very hard.

But the reality is, is that we know for a fact, you have massive numbers of noncitizens registered to vote in this country.  Nobody disputes that.

And many, many highly qualified people, like Kris Kobach, the Kansas secretary of state, have looked deeply into this issue and have confirmed it to be true and have put together evidence.

And I suggest you invite Kris Kobach onto your show and he can walk you through some of the evidence of voter fraud in greater detail.

The Kansas City Star wrote an editorial titled “Kris Kobach is a big fraud on Kansas voter fraud.”

The exchange between Miller and Stephanopoulos continued.....

STEPHANOPOULOS: Just for the record, you have provided absolutely no evidence. The president’s made a statement.

MILLER: The White House has provided enormous evidence with respect to voter fraud, with respect to people being registered in more than one state, dead people voting, noncitizens being registered to vote. George, it is a fact and you will not deny it, that there are massive numbers of noncitizens in this country who are registered to vote.  That is a scandal.

We should stop the presses. And, as a country, we should be aghast about the fact that you have people who have no right to vote in this country registered to vote, canceling out the franchise of lawful citizens of this country

That’s the story we should be talking about.  And I’m prepared to go on any show, anywhere, anytime, and repeat it and say the president of the United States is correct 100 percent.

STEPHANOPOULUS: Well, you just repeated, though, you just made those declarations. But, for the record, you have provided zero evidence that the president was the victim of massive voter fraud in New Hampshire.  You provided zero evidence that the president’s claim that he would have won the general – the popular vote – if 3 million to 5 million illegal immigrants hadn’t voted, zero evidence for either one of those claims.

--David Rothkopf / Foreign Policy

“Stephen Miller, top White House policy advisor and creepy, unblinking throwback to totalitarian propaganda ministries of old, bragged that Donald Trump has gotten more done in his first three weeks than some presidents do in their entire terms of office.  Seemingly allergic to facts as this champion of unsubstantiated scare stories is – from those about refugees to the myths of voter fraud – he may be on to something.  Trump is already breaking records.

“Disgraced former National Security Advisor Michael Flynn’s 24 days in office is by almost half a year the shortest tenure of any national security advisor in history.  The scandal that brought Flynn down is almost certainly the earliest of real consequence to hit a fledgling presidency.  From Flynn’s apparently illegal communications with the Russian government to Trump’s conducting of what should have been secret business in the middle of a dinner party at his Florida club, no White House has ever shown such contempt for the norms of operational security. Trump’s approval rating is the lowest for a new president in the modern era.  His disregard for the Constitution has not only gotten him in trouble with the court system earlier than any president in recent memory, but it quite likely gives him the record for being the earliest serial violator of his oath of office ever.  No president has even been enshrouded by anything remotely like the web of conflicts of interest that envelops Trump, who has made being above the law a foundational principle of his presidency.  He has done more to shake the confidence and earn the opprobrium of America’s most important allies – from the U.K. to EU and Mexican leaders to Australia – than any president since the United States became a world power.  And as Miller barked out on last Sunday’s morning news shows, this president is just getting started.  Attention must be paid....

“Of course, (we have also seen) the very serious consequences that come from having no policy process: the chaos surrounding the implementation of the president’s travel ban; a federal court putting a hold on that ban; the conflicting stories and framings of the ban from within the administration; and in other areas like the damage done to U.S.-Mexico relations by a presidential tweet (and presidential bad policy judgment) or that done to the U.S.-Australia relationship by a president who didn’t know his brief, anything about diplomacy, or have much of a grip on history or long-term U.S. interests.

“Beyond that, there were daily shocks on the government ethics front from the president’s ongoing refusal to disclose his tax returns as all his modern predecessors had done, his flouting of standards against nepotism, his refusal to divest his corporate interests, and his almost certain repeated violations of both aspects of the emoluments clause of the Constitution prohibiting him to profit from either foreign government payments or any remuneration from the U.S. government other than his salary.  His unorthodox living arrangement with his wife [Ed. Melania is going to become more and more of a story, see below] has created security costs that will surpass each year the level of funding required by, say, the National Endowment for the Arts, which the president allegedly seeks to defund.  His sons travel the world doing business that benefits their dad and enriches their family at large while also racking up big burdens to the U.S. taxpayer in the form of security costs.  [Ed. I didn’t write of it when I first saw the story, but the other week, Eric Trump went to Uruguay on business for a few nights and the Secret Service cost was huge.]....

“This brings us back to the scandal that brought down the hapless and arrogant Flynn.  If the White House thinks that throwing Flynn under the bus will relieve it of further scrutiny of Kremlingate, we had all better hope it is sadly mistaken.

“Flynn was just a small piece of this scandal.  Other members of the president’s inner circle, including possibly the president himself, have had long, worrisome ties with the Russians....

“In any other world, at any other time, a scandal that tied the president of the United States and his closest associates to one of America’s leading adversaries in the wake of action by that adversary that likely had a direct impact on the results of a U.S. election and subsequently resulted in a complete reversal of long-standing U.S. policy toward that adversary, would not just dominate U.S. political debate; it would obliterate discussion of anything else until it was fully resolved.  Not only would it – but it should. There has never been a scandal like it in American history.

“For that reason, we cannot and must not let the fog of Trump get the better of us. Nor can we let it derail necessary debate or the checks demanded by law on the other inchoate yet shocking outrages of the Trump Era (known otherwise as the past few weeks). We can’t let the number, scope, diversity, or complexity of the abuses of public trust currently underway serve as a defense for the perpetrators of those abuses, whether the fog is intentional or not.  We must flag every wrong, challenge every lie, and demand action where the law and our values demand it.  Nothing less than the future of American leadership, security, and credibility demands it.”

David Brooks / New York Times

“(In) capitals around the world, intelligence agencies are drafting memos with advice on how to play Donald Trump.

“The first conclusion is obvious. This administration is more like a medieval monarchy than a modern nation-state.  It’s more ‘The Madness of King George’ than ‘The Missiles of October.’  The key currency is not power, it’s flattery.

“The corollary is that Trump is ripe to be played. Give the boy a lollipop and he won’t notice if you steal his lunch.  The Japanese gave Trump a new jobs announcement he could take to the Midwest, and in return they got presidential attention and coddling that other governments would have died for.

“If you want to roll the Trump administration, you’ve got to get in line. The Israelis got a possible one-state solution. The Chinese got Trump to flip-flop on the ‘One China’ policy. The Europeans got him to do a 180 on undoing the Iran nuclear deal.

“Vladimir Putin was born for a moment such as this.  He is always pushing the envelope.  After gifting Team Trump with a little campaign help, the Russian state media has suddenly turned on Trump and Russian planes are buzzing U.S. ships.  The bear is going to grab what it can.

“We’re about to enter a moment in which U.S. economic and military might is strong but U.S. political might is weak.  Imagine the Roman Empire governed by Monaco.

“That’s scary.  The only saving thought is this: The human imagination is vast, but it is not nearly vast enough to encompass the infinitely multitudinous ways Donald Trump can find to get himself disgraced.”

--Paul Sperry / New York Post

“When former President Barack Obama said he was ‘heartened’ by anti-Trump protests, he was sending a message of approval to his troops. Troops?  Yes, Obama has an army of agitators – numbering more than 30,000 – who will fight his Republican successor at every turn of his historic presidency.  And Obama will command them from a bunker less than two miles from the White House.

“In what’s shaping up to be a highly unusual post-presidency, Obama isn’t just staying behind in Washington.  He’s working behind the scenes to set up what will effectively be a shadow government to not only protect his threatened legacy, but to sabotage the incoming administration and its popular ‘America First’ agenda.

“He’s doing it through a network of leftist nonprofits led by Organizing for Action.  Normally you’d expect an organization set up to support a politician and his agenda to close up shop after that candidate leaves office, but not Obama’s OFA.  Rather, it’s gearing up for battle, with a growing war chest and more than 250 offices across the country.

“Since Donald Trump’s election, this little-known but well-funded protesting arm has beefed up staff and ramped up recruitment of young liberal activists, declaring on its website, ‘We’re not backing down.’  Determined to salvage Obama’s legacy, ‘it’s drawing battle lines on immigration, ObamaCare, race relations and climate change.

“Obama is intimately involved in OFA operations and even tweets from the group’s account.  In fact, he gave marching orders to OFA foot soldiers following Trump’s upset victory.

“ ‘It is fine for everybody to feel stressed, sad, discouraged,’ he said in a conference call from the White House.  ‘But get over it.’  He demanded they ‘move forward to protect what we’ve accomplished.’

“ ‘Now is the time for some organizing,’ he said.  ‘So don’t mope.’

“Far from sulking, OFA activists helped organize anti-Trump marches across U.S. cities, some of which turned into riots.  After Trump issued a temporary ban on immigration from seven terror-prone Muslim nations, the demonstrators jammed airports, chanting: ‘No ban, no wall, sanctuary for all!’

“Run by old Obama aides and campaign workers, federal tax records show ‘nonpartisan’ OFA marshals 32,525 volunteers nationwide.  Registered as a 501(c)(4), it doesn’t have to disclose its donors, but they’ve been generous.  OFA has raised more than $40 million in contributions and grants since evolving from Obama’s campaign organization Obama for America in 2013....

“It will be aided in that effort by the Obama Foundation, run by Obama’s former political director, and the National Democratic Redistricting Committee, launched last month by Obama pal Eric Holder to end what he and Obama call GOP ‘gerrymandering’ of congressional districts.

“Obama will be overseeing it all from a shadow White House located within two miles of Trump.  It features a mansion, which he’s fortifying with construction of a tall brick perimeter, and a nearby taxpayer-funded office with his own chief of staff and press secretary.  Michelle Obama will also open an office there, along with the Obama Foundation.

“Critical to the fight is rebuilding the ravaged Democrat Party.  Obama hopes to install his former civil-rights chief Tom Perez at the helm of the Democratic National Committee.

“Perez is running for the vacant DNC chairmanship, vowing ‘It’s time to organize and fight...We must stand up to protect President Obama’s accomplishments’; while also promising, ‘We’re going to build the strongest grass-roots organizing force this country has ever seen.’

“The 55-year-old Obama is not content to go quietly into the night like other ex-presidents.

“ ‘You’re going to see me early next year,’ he said after the election, ‘and we’re going to be in a position where we can start cooking up all kinds of great stuff.’

“Added the ex-president: ‘Point is, I’m still fired up and ready to go.’”

--During his Wednesday press conference with Prime Minister Netanyahu, an Israeli reporter asked Trump the following:

Q: Mr. President, since your election campaign and even after your victory, we’ve seen a sharp rise in anti-Semitic incidents across the United States.  And I wonder what you say to those among the Jewish community in the States, and in Israel, and maybe around the world who believe and feel that your administration is playing with xenophobia and maybe racist tones.

President Trump: Well, I just want to say that we are very honored by the victory that we had – 306 Electoral College votes.  We were not supposed to crack 220.  You know that, right?  There was no way to 221, but then they said there’s no way to 270.  And there’s tremendous enthusiasm out there.

I will say that we are going to have peace in this country.  We are going to stop crime in this country.  We are going to do everything within our power to stop long-simmering racism and every other thing that’s going on, because a lot of bad things have been taking place over a long period of time.

I think one of the reasons I won the election is we have a very, very divided nation.  Very divided. And, hopefully, I’ll be able to do something about that. And, you know, it was something that was very important to me.

As far as people – Jewish people – so many friends, a daughter who happens to be here right now, a son-in-law, and three beautiful grandchildren.  I think that you’re going to see a lot different United States of America over the next three, four, or eight years.  I think a lot of good things are happening, and you’re going to see a lot of love.  You’re going to see a lot of love. Okay?

[Just shoot me.]

--Back to the aforementioned Melania Trump....

Laura Italiano / New York Post

“Melania Trump is secretly miserable as first lady, a new report claims.

“Private, self-conscious, and smarting from some harsh, even mocking press, Melania is ‘struggling with the realities of her new role and the scrutiny that comes with it,’ US Weekly says in its Feb. 27 cover story, citing family sources.

“ ‘This life wasn’t her dream.  It was Donald’s,’ a Trump family friend, stylist Phillip Bloch, told the magazine.

“ ‘Truthfully, it’s a lot to cope with.’

“Since Inauguration Day, Melania has spent almost all her time hiding inside the ‘gilded cage’ of the family’s lavish $100 million Trump Tower penthouse on Fifth Avenue – where treasured son Barron, 10, has a whole floor to himself.

“And she won’t be pressured into giving up her privacy.

“Recently, the White House team begged her to come to Washington and give her husband a PR boost by presiding over the traditional first lady tours at 1600 Pennsylvania Ave. – and posing for press photos, sources told US.

“ ‘She was told, ‘All you need to do is show up on one day and take photos,’' one family source said.  Melania declined.”

And then there’s the lawsuit against the Daily Mail, which implied she’d once worked as a high-end escort, an implication the newspaper later retracted.

Melania is happiest in Mar-a Lago.

“But while she did entertain Akie Abe in Florida – smilingly posing for the requisite photo op at Morikami Museum and Japanese Gardens in nearby Delray Beach – it was a struggle.

“ ‘Don’t let her smile [in the photographs] fool you,’ the source said.  ‘She hates this.’

“The source added, ‘Melania is unhappy with how her life ended up.

“ ‘She is miserable.’”

Yup, this is another potential problem for The Donald.  What if she left him in two years?

--Mika Brzezinski and Joe Scarborough, hosts of MSNBC’s “Morning Joe,” said they wouldn’t invite White House counselor Kellyanne Conway on their show anymore because she doesn’t provide reliable information.

“We know for a fact she tries to book herself on this show,” Brzezinski said.  “I won’t do it, ‘cuz I don’t believe in fake news or information that is not true.  And that is – every time I’ve ever seen her on television, something’s askew, off or incorrect.”

--I watched “Saturday Night Live” and I agree with a review that said when it comes to the attacks on President Trump, there was a “sense of exhaustion – of ‘How long can we keep this up?’”

Personally, I love Melissa McCarthy’s impersonation of Sean Spicer, but the segment on Kellyanne Conway and Jake Tapper crossed the line.

I told you a few weeks ago what would happen to Ms. Conway, and it is.  She’s flaming out, bigly.

But while she is used to playing in this cesspool, there is such a thing as cruelty and that’s what that skit was.

--Three children died of gunshot wounds in Chicago in a 24-hour period, Tuesday and Wednesday.  From the Chicago Tribune:

“It started on Saturday night when a 12-year-old girl was gravely wounded by a bullet while playing with friends in the West Englewood neighborhood.  Just 30 minutes later and about 4 miles away, another girl, 11, was shot in the head sitting in a car with her family on the South Side. She died Tuesday morning in her mother’s arms in a hospital.

“Hours later, on a sunny, unusually warm Valentine’s Day, the 2-year-old boy was gunned down while riding in the back seat of a car on the city’s West Side – a horrific attack captured on Facebook Live that also left the boy’s 26-year-old uncle dead and the uncle’s girlfriend and her unborn child hospitalized.”

All three then died in hospital.

--This topic really ticks me off.  The AAA Foundation for Traffic Safety found 88% of drivers 19- to 24-years-old acknowledged engaging in risky behavior such as texting while driving, running red lights or speeding during the previous month, according to a report released Wednesday.

Market research firm GfK surveyed 2,511 drivers from Aug. 25 through Sept. 6, and Millennials acknowledged texting or emailing while driving at nearly twice the rate of other drivers (59.3% to 31.4%).

Nearly half of Millennials reported running a red light even if they could have stopped safely, compared with 36% of the rest of drivers.

Nearly 12% of Millennials said it was acceptable to speed 10 mph over the speed limit in a school zone, compared with 5% of other drivers.

This is outrageous, and it should thus be no surprise that the number of traffic deaths rose to 35,092 in 2015, up 7.7% from a year earlier, the largest one-year jump in five decades.

Of course drivers are hypocrites.  40.2% of drivers reported reading a text or email during the previous month, 78.2% called that “completely unacceptable,” the survey said.

Well, I’m no hypocrite.  I do not check my phone while driving, period.  And I’m furious anytime I see someone else do it.

Separately, the National Safety Council estimates that motor-vehicle deaths surged in 2016, up 6% to 40,200 after the big rise in 2015; the sharpest two-year rise in more than a half-century. The NSC data isn’t the same as that which will come from the National Highway Traffic Safety Administration, which has yet to release its figures for last year.

--According to the American Psychological Association’s anxiety meter: “(The) January 2017 poll show a statistically significant increase in stress for the first time since the survey was first conducted in 2007,” the APA said on Wednesday. 

Americans’ stress levels in January were worse than in August, in the middle of the angriest, most personal political campaign in recent memory.  At 57 percent, more than half of respondents said the current political climate was a very or somewhat significant source of stress.

A full two-thirds of respondents to the survey said they are stressed out about the nation’s future, and while that includes 76 percent of Democrats, it reflects the feelings of 59 percent of Republicans as well.

Millennials reported more stress than their parents or grandparents, but they were strong supporters of Hillary Clinton.

The survey was conducted by Harris Poll from Jan. 5 to Jan. 19.

--We note the passing of Lt. Gen. Harold G. Moore, whose heroics in the first major battle between American and North Vietnamese troops was immortalized in the book he co-authored with Joseph L. Galloway, “We Were Soldiers Once...and Young,” Mel Gibson playing Moore in the terrific movie of the same name.

Gibson, who had visited with Moore recently, said: “He was a phenomenal man of great strength and character, courageous and like a father to his troops who got most of his boys out of there after he landed in a hornet’s nest.”

General Moore, a West Point grad, was George Armstrong Custer’s heir as commander of the Seventh Cavalry Regiment during the battle of Ia Drang Valley in November 1965.

The battle was fought in two places, Landing Zone X-Ray and Landing Zone Albany and when it was over, 234 Americans were dead, but also as many as 3,000 North Vietnamese.  The North Vietnamese outnumbered the Americans 12:1 and without Gen. Moore’s bravery, far more of his men would have died.

Moore’s son, David, said his father’s mantra was: “Hate war, love the American soldier.”

Lt. Gen. Harold G. Moore was 94.

---

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

God bless America.

---

Gold $1236
Oil $53.37

Returns for the week 2/13-2/17

Dow Jones  +1.7%  [20624]
S&P 500  +1.5%  [2351]
S&P MidCap  +0.8%
Russell 2000  +0.8%
Nasdaq  +1.8%  [5838]

Returns for the period 1/1/17-2/17/17

Dow Jones  +4.4%
S&P 500  +5.0%
S&P MidCap  +4.5%
Russell 2000  +3.2%
Nasdaq  +8.5%

Bulls  61.8
Bears  17.6  [Source: Investors Intelligence]

Have a great week.

Again, site will be down a bit.  I will be back!

Heck, this week marks 18 years of S&N.  As David Byrne of The Talking Heads sang in “Once in a Lifetime,” My God...what have I done?!

Brian Trumbore

 



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Week in Review

02/18/2017

For the week 2/13-2/17

[Posted 11:00 PM ET, Friday]

IMPORTANT: Due to a maintenance issue I’ve been putting off for some time, StocksandNews will be going offline around noon ET on Monday for 24-48 hours.  Because of the tech transition we are undergoing, we can’t even put up a “maintenance” banner.  Ergo, I’ll be dark.  But fear not. Things should be back to normal by mid-Wednesday, hopefully sooner.

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Edition 932

What a first four weeks for America under our new president.  Never has there been more of a reason to exercise my adage “wait 24 hours,” or as Charles Krauthammer said the other day, you have to judge Donald Trump “day by day.”

I want to emphasize that the following is no different than any other column of mine.  There is a ton of red meat for both sides.  If you want to get viewpoints that are solely right or left, you know where you can turn. It’s probably not here.

But if you want a real history of our times, you know to keep it where it is.

You also know I have real problems with our president, just as I did Bush 43 and Obama.  But all Americans should be scared to death over the leaks coming out of the bureaucracy...unelected, anonymous bureaucrats who can destroy a reputation; not just that of our politicians, but of you and me as well. 

And that honeymoon with Russia?  As of tonight, it’s already over.  The face the Kremlin is looking at is that of Secretary of Defense James Mattis, not of Donald Trump.  They can toy with the latter, but they won’t be able to do so with the former.

I would also just say that when it comes to the growing list of investigations, be careful not to slough them off.  Yes, again, wait 24 hours.

One figure who is going to be an increasingly important one is Republican Sen. Rand Paul.

Another is fellow Republican Sen. John McCain, who in a speech at the Munich Security Conference today, blasted President Trump, without mentioning him by name once, because he didn’t have to.

McCain suggested the world is uniquely imperiled this year – and proceeded to question whether it will even survive.

“In recent years, this question would invite accusations of hyperbole and alarmism; not this year,” McCain said.  “If ever there were a time to treat this question with a deadly seriousness, it is now.”

Among McCain’s points:

“[The founders of the Munich conference] would be alarmed by an increasing turn away from universal values and toward old ties of blood and race and sectarianism.”

“They would be alarmed by the hardening resentment we see towards immigrants and refugees and minority groups – especially Muslims.”

“They would be alarmed by the growing inability – and even unwillingness – to separate truth from lies.”

“They would be alarmed that more and more of our fellow citizens seem to be flirting with authoritarianism and romanticizing it as our moral equivalent.”

McCain continued: “But what would alarm them most, I think, is a sense that many of our peoples, including in my own country, are giving up on the West, that they see it as a bad deal that we may be better off without, and that while Western nations still have the power to maintain our world order, it’s unclear whether we have the will.”

Then: “I know there is profound concern across Europe and the world that America is laying down the mantle of global leadership.  I can only speak for myself, but I do not believe that that is the message you will hear from all of the American leaders who cared enough to travel here to Munich this weekend.  That’s not the message you heard today from Secretary of Defense Jim Mattis.  That is not the message you will hear from Vice President Mike Pence. That’s not the message you will hear from Secretary of Homeland Security John Kelly.  And that is certainly not the message you will hear tomorrow from our bipartisan congressional delegation.

“I refuse to accept that our values are morally equivalent to those of our adversaries,” McCain concluded.  “I am a proud, unapologetic believer in the West, and I believe we must always, always stand up for it.  For if we do not, who will?”

On to Michael Flynn and Russia...The Trump Presidency, Week  Four....

White House National Security Adviser Michael Flynn resigned late Monday night amid a controversy over whether he lied about his contacts with Russian Ambassador Sergey Kislyak, even though as of 4 p.m. Monday, Trump counselor Kellyanne Conway said in a television interview that Flynn “does enjoy the full confidence of the president.”

An hour later, White House press secretary Sean Spicer said the president was “speaking to Vice President Pence relative to the conversation the vice president had with General Flynn and also speaking to various other people on what he considers the single most important subject there is, our national security.”

In his letter of resignation, Flynn said he had “inadvertently briefed the Vice President Elect and others with incomplete information regarding my phone calls with the Russian ambassador. I have sincerely apologized to the president and the vice president.”

The Washington Post reported Monday that the Justice Department had warned the White House last month that Flynn had so mischaracterized his communications with the Russian ambassador that he could be vulnerable to blackmail by Moscow.

Vice President Pence first learned that Flynn had misled him about the nature of his contact with a Russian official on Feb. 9, two weeks after other White House officials were briefed on the matter, a spokesman for Pence, Marc Lotter, said on Tuesday.

White House counsel Don McGahn told Trump in a briefing late last month that Flynn had discussed sanctions with Russian Ambassador Sergey Kislyak.

In a January television interview, Pence said that Flynn had told him the issue of sanctions did not come up in his conversations with the Russian ambassador.

So President Trump had been aware for “weeks” that Flynn had misled Pence and other officials, but did not act until Monday night, forcing Flynn to resign.

Sally Q. Yates, the acting attorney general at the time, informed McGahn on Jan. 26, and then White House press secretary Sean Spicer said McGahn briefed a group of senior aides about Flynn the same day, as well as the president. [Again, Pence didn’t learn until Feb. 9.]

Trump, aboard Air Force One last Friday, gave the impression he wasn’t familiar with the Washington Post story that Flynn had not told the truth about the calls.

“I don’t know about that. I haven’t seen it. What report is that? I haven’t seen that.  I’ll look into that,” Trump told reporters on the plane.

Sean Spicer tried to convince us all on Tuesday that Trump was just referring to a question about the Post report and not the overall issue of Flynn’s contact with the Russian ambassador.

Spicer went on to say that the White House Counsel’s Office conducted a review and determined “there was not a legal issue but rather a trust issue.  The president was very concerned that General Flynn had misled the vice president and others.  The president must have complete and unwavering trust of the person in that position.” 

We also learned that the FBI interviewed Flynn about his communications with Kislyak in the first days of the new administration, according to various officials, as first reported by the New York Times.

If Flynn denied the true nature of his discussions to the FBI agents interviewing him, that is a felony, seeing as it seems highly likely the FBI has a transcript of the phone calls between Flynn and Kislyak.

Spicer said the president had not authorized Mr. Flynn to discuss sanctions with his Russian contact.

One of the issues is whether Flynn violated the Logan Act, which prohibits private citizens from negotiating with foreign governments in relation to disputes with the U.S.

WikiLeaks took to Twitter on Tuesday, blaming Flynn’s resignation on “a destabilization campaign by U.S. spies, Democrats, press.”

President Trump on Tuesday said the “real story” of Flynn’s departure was “illegal leaks,” rather than reports Flynn misled senior White House officials about his conversations with Russia.

Trump tweeted: “The real story here is why are there so many illegal leaks coming out of Washington? Will these leaks be happening as I deal with N. Korea etc?”

Russia rushed to defend Flynn, Konstantin Kosachev of the upper house writing in a Facebook post: “To force the resignation of the national security adviser for contacts with the Russian ambassador (normal diplomatic practice) is not even paranoia, but something immeasurably worse. Either Trump has failed to gain his desired independence and is being cornered consistently (and not without success), or Russophobia has infected even the new administration, from top to bottom.”

Earlier, Kremlin spokesman Dmitri Peskov confirmed that Flynn had “some conversations and communications,” but that reports claiming they discussed sanctions before Trump’s inauguration were “incorrect.”

The New York Times reported that phone records and intercepted calls show that Trump campaign officials and advisers had been repeatedly conversing with senior Russian intelligence officials and other government individuals for months.  What was discussed is not clear, but one of the individuals said to be calling the Russians was former Trump campaign chairman, Paul Manafort, who had worked as a political consultant in Russia and Ukraine.

Manafort, in a telephone interview with the Times on Tuesday, insisted he was in no way involved with the Russians.

“I have never knowingly spoken to Russian intelligence officers, and I have never been involved with anything to do with the Russian government or the Putin administration or any other issues under investigation today...It’s not like these people wear badges that say, ‘I’m a Russian intelligence officer.’”

Several congressional Republicans are calling for expanded probes of the administration’s relations with Russia and of the Kremlin’s alleged interference in the election.

“I think there needs to be fulsome investigation on all angles relative to nefarious activities that were taking place with Russia, beginning in March but even going back before that time,” said Sen. Bob Corker, Republican chairman of the Foreign Affairs Committee.  Senators John McCain and Lindsey Graham are among others wanting to learn more about Flynn’s discussions.

Others are questioning security at Mar-a-Lago after President Trump and Japanese Prime Minister Abe seemingly learned of the North Korean ballistic missile test while at the dinner table Saturday night, in a crowded room with other diners, rather than get up and take the issue into a secured room.

On this, I think it’s much ado about nothing.  The missile test was public knowledge and this wasn’t the kind of situation where an immediate response was required.

Now if they learned that the test was in conjunction with disturbing troop movements near the border with South Korea, that’s a different story.

Wednesday, during a news conference with Israel’s Prime Minister Benjamin Netanyahu, Trump criticized the intelligence community and the media for the reports that led to Flynn’s resignation.

“I think he’s been treated very, very unfairly by the media – as I call it, the ‘fake media,’ in many cases – and I think it’s really a sad thing that he was treated so badly,” Trump said.  “I think in addition to that, from intelligence, papers are being leaked, things are being leaked.”

Trump added: “People are trying to cover up for a terrible loss that the Democrats had under Hillary Clinton. I think it’s very, very unfair what’s happened to General Flynn, the way he was treated, and the documents and papers that were illegally – I stress that – illegally leaked.  Very, very unfair.”

But the day before, White House spokesman Spicer emphasized that Trump asked Flynn to resign because he could no longer be trusted.

“The evolving and eroding level of trust as a result of this situation and a series of other questionable instances is what led the president to ask for General Flynn’s resignation.”

Trump’s ire over the leaks to journalists contrasted with his praise of WikiLeaks and its disclosure of leaked internal emails from the Clinton campaign.

Senate Republicans, led by Majority Leader Mitch McConnell, said it was “highly likely” that the events leading up to Flynn’s resignation would be part of a broader probe into alleged Russian meddling in the election.

Trump tweeted Wednesday: “This Russian connection non-sense is merely an attempt to cover-up the many mistakes made in Hillary Clinton’s losing campaign.”

In another tweet: “The real scandal here is that classified information is illegally given out by ‘intelligence’ like candy. Very un-American!”

Thursday, the Wall Street Journal’s Shane Harris and Carol E. Lee reported: “U.S. intelligence officials have withheld sensitive intelligence from President Donald Trump because they are concerned it could be leaked or compromised, according to current and former officials familiar with the matter.

“The officials’ decision to keep information from Mr. Trump underscores the deep mistrust that has developed between the intelligence community and the president over his team’s contacts with the Russian government, as well as the enmity he has shown toward U.S. spy agencies.  On Wednesday, Mr. Trump accused the agencies of leaking information to undermine him.

“In some of these cases of withheld information, officials have decided not to show Mr. Trump the sources and methods that the intelligence agencies use to collect information, the current and former officials said.  Those sources and methods could include, for instance, the means that an agency uses to spy on a foreign government.”

Both the White House and a spokesman for the Office of Director of National Intelligence denied that the Journal’s account is accurate.

But Rep. Adam Schiff (D., Calif.), the ranking member of the House Intelligence Committee, said he has heard concerns from officials about sharing especially sensitive information with Mr. Trump.

“What the intelligence community considers their most sacred obligation is to protect the very best intelligence and to protect the people that are producing it.... I’m sure there are people in the community who feel they don’t know where he’s coming from on Russia,” Schiff said.

Thursday morning, President Trump decided he’d had enough.  He’d hold his own news conference and set the record straight, as only he can.

“My message is being filtered,” the Wall Street Journal reports him telling senior administration officials inside the Oval Office hours before what would prove to be a one-of-a-kind, historic event.  “I want to speak directly to the American people about the progress we’ve been making.”

So he delivered an opening statement highlighting his successes, including executive actions scaling back government regulations and the nomination of a Supreme Court justice.  But as every single news outlet said after, he then devolved into an airing of grievances about his media coverage.

“I turn on the TV, open the newspapers and I see stories of chaos,” Trump said.  “Yet it is the exact opposite. This administration is running like a fine-tuned machine, despite the fact that I can’t get my cabinet approved.”

The news conference came as the number of investigations and inquiries on Capitol Hill is growing on the issue of contacts between the president’s associates and Russian officials, while Trump said he asked the Justice Department to investigate the leaks to the news media. “Those are criminal leaks,” he said, during the presser.

Trump insisted none of his aides had contact with Russian officials during his campaign.

“No.  Nobody that I know of.  Nobody,” he said.

Trump also insisted: “I own nothing in Russia. I have no loans in Russia. I don’t have any deals in Russia,” he said.

[Rep. Devin Nunes (R., Calif.), chairman of the House Intelligence Committee, said Thursday that U.S. intelligence officials have yet to provide evidence of any contact between Russian officials and Trump’s campaign staff, or members of the transition team, beyond Michael Flynn, so Nunes is loath to launch his own investigation, which he said would be like a witch hunt, when there is “no information, no nothing from anyone,” as the Journal reported.]

Trump also asserted: “I inherited a mess.  It’s a mess. At home and abroad, a mess.   Low pay, low wages, mass instability overseas, no matter where you look.”

Michael D. Shear, Maggie Haberman and Glenn Thrush / New York Times

“President Trump, smarting from a series of crises, moved his surrogates aside on Thursday and assigned the rescue of his month-old presidency to the only spokesman he’s ever really trusted – himself.

“For days, a frustrated and simmering president fumed inside the West Wing residence about what aides said he saw as his staff’s inadequate defense and the ineffectiveness of his own tweets. Over the objections of some top advisers who wanted to steer him away from confrontation, Mr. Trump demanded to face the media, determined to reject the narrative that his administration is sinking into chaos, scandal and incompetence.”

Richard Wolf / USA TODAY

“To hear President Trump tell it, he ‘inherited a mess’ and has replaced it with ‘a fine-tuned machine.’

“That’s not what it looked or sounded like inside the East Room of the White House on Thursday during a rambling, defensive and at times angry performance by the leader of the free world.

“In one of the wildest presidential press conferences on record, Trump lashed out at the media, Hillary Clinton, the intelligence community, judges and Democrats – among many others.

“It was a spectacle for the ages – one that his most loyal supporters probably loved, but which political insiders have seldom, if ever, witnessed.  Taking questions from a hostile press corps, Trump interrupted and belittled them repeatedly, then responded in blunt terms avoided by his predecessors.

“His purpose: to compare what he inherited four weeks ago with what he has delivered, mostly in a series of adjectives.  What he inherited was ‘terrible,’ ‘broken,’ ‘catastrophic,’ ‘horrendous’ and ‘a disaster,’ with jobs ‘pouring’ out of the country, illegal drugs that are ‘cheaper than candy bars,’ a ‘depleted’ military and ‘mass instability’ overseas. He used the word ‘mess’ six times.

“What he said he has delivered: ‘really good work,’ ‘incredible progress,’ ‘decisive action,’ plants and factories moving back to the U.S. ‘big league,’ a ‘tremendous surge of optimism’ in the business world, ‘enormously productive talks’ with foreign leaders, and U.S. citizens who are ‘very happy’ as a result.

“ ‘There has never been a presidency that’s done so much in such a short period of time,’ Trump said.  His Cabinet, he said, is ‘one of the great Cabinets ever assembled in American history.’....

“When reporters raised questions about his administration’s relationships with religious and racial minorities, such as Jews and African Americans, Trump heaped praise on himself.  ‘I am the least anti-Semitic person that you’ve ever seen in your entire life’ he told a Jewish reporter, as well as ‘the least racist person.’....

“Near the end of the spectacle, Trump was asked about the nation’s political divisions, and once again he addressed it in personal terms.  ‘We had a totally divided country for eight years and long before that,’ he said.

“ ‘I didn’t come along and divide this country.’”

Among other statements made by President Trump at the news conference:

“The leaks are absolutely real...the news is fake.”

“The press has become so dishonest, that if we don’t talk about it we are doing a tremendous disservice to the American people, a tremendous disservice, we have to talk about it.... The press is out of control...the level of dishonesty is out of control.”

“The tone is such hatred... I’m really not a bad person by the way.”

“I have to say, ‘Fox & Friends’ in the morning, they’re very honorable people... They have the most honest morning show.”

“The whole Russia thing is a ruse.”

“It’s all fake news... Russia is fake news put out by the media.”

Editorial / Wall Street Journal

“President Trump held a nearly 80-minute press conference on Thursday defending his Administration, assailing the media and along the way making some good news.  Political reporters are bewildered by his unconventional style, but the spectacle was Mr. Trump at his Trumpiest.

“ ‘We have made incredible progress.  I don’t think there’s ever been a President elected who in this short period of time has done what we’ve done,’ as the President characterized his ‘fine-tuned machine’ and ‘one of the great cabinets ever assembled in American history.’  He said he was ‘making this presentation directly to the American people, with the media present, which is an honor to have you’ – before he went on to call the media ‘dishonest,’ ‘false, horrible, fake’ and filled with ‘such hatred’ for him.

“One reporter went as far as to accuse Mr. Trump of ‘undermining confidence in our news media,’ and, duh, his goal was to use an East Roomful of journalists as his foil.  They seemed to recoil aesthetically from how he communicates – with his exaggerations, unrehearsed digressions and streams-of-consciousness, or unconsciousness as the case may be.

“But Mr. Trump’s larger message is reasonably clear and coherent.  He exposed himself to press scrutiny and answered multiple pointed questions on Russia and other controversies.  President Obama tended to filibuster at his press events, and he’d have reached perhaps the third question by the 60-minute mark.

“Mr. Trump categorically denied any personal or campaign involvement with the Russians, which means he’s laid down a marker if his position is later contradicted by the evidence. He also had a point when he explained that ‘the real problem’ with the Michael Flynn imbroglio is the ‘classified information that was given illegally.’

“On immigration, Mr. Trump said that the Administration is withdrawing the travel ban executive order, whose rollout was far from ‘perfect’ as he claimed.  But he says he’ll issue a new version [Ed. it’s looking like Tuesday], presumably with better legal arguments, more security analysis and competent logistical preparation.

“Mr. Trump also expressed sympathy for the ‘dreamers’ who immigrated to the U.S. illegally as children with their parents.  Some of his hardline advisers favor deportation, but the President seemed to demure, noting the involvement of ‘some absolutely incredible kids, I would say mostly. They were brought here in such a way – it’s a very, very tough subject’ and ‘I love these kids, I love kids, I have kids and grandkids.’

“Mr. Trump was also right to argue that ‘I think we’re setting a record or close to a record’ in the time the Senate is taking to confirm his cabinet. This time that’s not an exaggeration.  He added: ‘I’m going forever and I still have a lot of people that we’re waiting for. And that’s all they’re doing, is delaying. And you look at [Senate Minority Leader Chuck] Schumer and the mess that he’s got over there and they have nothing going.  The only thing they can do is delay.’

“Oh, and by the way, Mr. Trump announced a new nominee for Labor Secretary, which was the nominal reason for scheduling the impromptu Q&A.  [Ed. Alexander Acosta, dean of Florida International University College of Law and the first Hispanic in the Trump cabinet if approved.]  If we were Mr. Trump we’d call it the greatest afternoon’s work in all of human history, but then it wasn’t the worst either.”

Fox News anchor Shepard Smith caught heat from Fox viewers with this statement after Thursday’s presser.

“It’s crazy what we’re watching every day.  It’s absolutely crazy.  He keeps repeating ridiculous, throwaway lines that are not true at all and sort of avoiding this issue of Russia as if we’re some kind of fools for asking the question.  Really?  Your opposition was hacked and the Russians were responsible for it and your people were on the phone with Russia on the same day it was happening and we’re fools for asking the questions?  No sir....

“We have a right to know,” Smith added.  “You call us fake news and put us down like children for asking questions on behalf of the American people.”

Michael Goodwin / New York Post

“Trump’s detractors immediately panned the show as madness, but they missed the method behind it and proved they still don’t understand his appeal.  Facing his first crisis in the Oval Office, he was unbowed in demonstrating his bare-knuckled intention to fight back.

“He did it his way. Certainly no other president, and few politicians at any level in any time, would dare put on a show like that.

“In front of cameras, and using the assembled press corps as props, he conducted a televised revival meeting to remind his supporters that he is still the man they elected....

“Sure, sentences didn’t always end on the same topic they started with, and his claim to have won the election by the largest electoral college margin since Ronald Reagan wasn’t close to true.

“Fair points, but so what?  Fact-checkers didn’t elect him, nor did voters who were happy with the status quo.

“Trump, first, last and always, matches the mood of the discontented.  Like them, he is a bull looking for a china shop. That’s his ace in the hole and he played it almost to perfection....

“While Republican honchos in Congress say they’re getting ready to move on tax cuts and replacing ObamaCare, nothing will happen without presidential leadership. That means Trump’s fate is in his own hands and he must keep himself and his White House team focused on delivering an economic revival.

“If he does that, the lynch mob will be left holding an empty rope.”

Late Thursday, the Washington Post reported that “Michael Flynn denied to FBI agents in an interview last month that he had discussed U.S. sanctions against Russia with that country’s ambassador to the United States before President Trump took office, contradicting the contents of intercepted communications collected by intelligence agencies, current and former U.S. officials said.”  As I said before, lying to the FBI is a felony, but it’s not clear whether prosecutors would attempt to bring such a case because Flynn could parse the definition of the word “sanctions.”

Opinion on the Flynn / Russia situation....

Leonid Bershidsky / Bloomberg

“The resignation of U.S. national security adviser Michael Flynn shows how toxic any connection with Russia has become in Washington. It would be tempting to say the alleged help in getting Donald Trump elected has backfired for Russian President Vladimir Putin, but that is not the case: So far, he’s been getting exactly what he wants from the U.S.

“Flynn was forced to resign ostensibly because he had inaccurately described the content of his phone calls with Russian Ambassador Sergey Kislyak, which took place before Trump’s inauguration.  He was a liability to the administration in any case, because he seemed unable to get along with the Central Intelligence Agency.  But it will stick in the public mind that Flynn went because he was too close to the Russians.  ‘Russian for the Exit,’ trumpeted the front page of the New York Daily News.

“Trump may be erratic, but it should be clear to him – and to less mercurial people in his administration such as Secretary of State Rex Tillerson – that any sign of engagement with Russia will be magnified by the media and used against the White House.  It’s unlikely that he will now reach out for talks with Russia on any all-embracing deal that would include, for example, expanded cooperation in the Middle East in exchange for U.S. inaction on Ukraine.

“Ivan Krastev and Stephen Holmes wrote in Foreign Policy that the political revolution unfolding in the U.S. has thrown the Kremlin off balance:

“Putin has become a hostage to Trump’s survival and success.  This has seriously restricted Russia’s geopolitical options.  The Kremlin is perfectly aware that Democrats want to use Russia to discredit and possibly impeach Trump while Republican elites want to use Russia to deflate and discipline Trump.  The Russian government fears not only Trump’s downfall, of course, but also the possibility that he could opportunistically switch to a tough anti-Moscow line in order to make peace with hawkish Republican leaders in Congress.

“That’s wishful thinking.  Putin is too experienced, and too steeped in KGB-bred anti-Americanism, ever to expect a friendly U.S. administration.

“It’s predictable that some Russian commentators would decry Flynn’s firing.  ‘Either Trump has not obtained the independence he sought,’ Konstantin Kosachev, head of the foreign affairs committee of the Russian parliament’s upper chamber, wrote on Facebook, ‘or Russophobia has afflicted the new administration, too, top to bottom.’  But Putin himself and Foreign Minister Sergei Lavrov – the two people who matter – have always shown restraint when talking about Trump and his administration....

“Putin is not looking to offer any gifts to Trump in exchange for any immediate gain.  He’s playing a long-term game, in which both Trump and the anti-Russian interests in Washington are now actively aiding him.

“As far as Putin is concerned, the biggest problem with the U.S. is its willingness to interfere in situations far away from its borders – in the Middle East, in Europe, in the former Soviet Union.  Trump, regardless of what he thinks about Russia, is an isolationist: ‘America first’ is his slogan.  Neither he nor his voters appear willing to back direct military interference in any country where Russian interest is strong.  Putin is testing sincerity by encouraging the flare-up of fighting in eastern Ukraine but making no decisive moves there.  The U.S. appears to be relatively unconcerned, except for routine condemnation in the U.N. Security Council. If this pattern holds, Putin – whose understanding of Russian national interests is transparent and predictable – will proceed unilaterally to safeguard those interests as he sees them....

“Putin wants to be an equal partner to the West, not a perennial ‘Mr. No.’  On the other hand, compromising with the U.S. would weaken his domestic position by undermining the villain image Putin’s propaganda machine has painstakingly created for the United States.  It’s great for Putin that there’s such presence on Trump not to seek a rapprochement.  It’s just the kind of drama Russian state television wants.

“For Putin’s Russia, a Trump-led U.S. is an adversary with diminished moral standing and no appetite for meddling in far-off regions.  Putin is enjoying all the benefits he could expect from the Trump administration without having to pay for them.  Even if Trump were inclined to sit down for meaningful talks with Putin about how they could address global issues, America’s aversion to Russia would prevent that.  So, for the first time since he came to power, Putin appears free to play his geopolitical game.”

Eli Lake / Bloomberg

“If we are to believe the Trump White House, National Security Adviser Michael Flynn just resigned because he lied about his conversations with Russia’s ambassador to the vice president.  As White House senior counselor Kellyanne Conway told NBC’s ‘Today Show’ on Tuesday: ‘Misleading the vice president really was the key here.’

“That sounds about as credible as when the president told CIA employees that the media had invented the story about his enmity toward the spy agency, not even two weeks after he had taken to Twitter to compare the CIA to Nazis.  It’s about as credible as President Donald Trump’s insistence that it didn’t rain during his inauguration. Or that millions of people had voted illegally in the election he just won.

“The point here is that for a White House that has such a casual and opportunistic relationship with the truth, it’s strange that Flynn’s ‘lie’ to Pence would get him fired.  It doesn’t add up.

“It’s not even clear that Flynn lied. He says in his resignation letter that he did not deliberately leave out elements of his conversations with Ambassador Sergey Kislyak when he recounted them to Vice President Mike Pence.  The New York Times and Washington Post reported that the transcript of the phone call reviewed over the weekend by the White House could be read different ways.  One White House official with knowledge of the conversations told me that the Russian ambassador raised the sanctions to Flynn and that Flynn responded that the Trump team would be taking office in a few weeks and would review Russia policy and sanctions. That’s neither illegal nor improper.

“What’s more, the Washington Post reported Monday night that last month Sally Yates, then the acting attorney general, had informed the White House that Flynn discussed sanctions with Kislyak and that he could be susceptible to blackmail because he misled Pence about it.  If it was the lie to Pence that sunk Flynn, why was he not fired at the end of January?

“A better explanation here is that Flynn was just thrown under the bus. His tenure as national security adviser, the briefest in U.S. history, was rocky from the start.  When Flynn was attacked in the media for his ties to Russia, he was not allowed by the White House to defend himself.  Over the weekend, he was instructed not to speak to the press when he was in the fight for his political life.  His staff was not even allowed to review the transcripts of his call to the Russian ambassador....

“In the past it was considered scandalous for senior U.S. officials to even request the identities of U.S. officials incidentally monitored by the government (normally they are redacted from intelligence reports).  John Bolton’s nomination to be U.S. ambassador to the United Nations was derailed in 2006 after the NSA confirmed he had made 10 such requests when he was Undersecretary of State for Arms Control in George W. Bush’s first term. The fact that the intercepts of Flynn’s conversations with Kislyak appear to have been widely distributed inside the government is a red flag.

“Representative Devin Nunes, the Republican chairman of the House Permanent Select Committee on Intelligence, told me Monday that he saw the leaks about Flynn’s conversations with Kislyak as part of a pattern.  ‘There does appear to be a well-orchestrated effort to attack Flynn and others in the administration,’ he said.  ‘From the leaking of phone calls between the president and foreign leaders to what appears to be high-level FISA Court information, to the leaking of American citizens being denied security clearances, it looks like a pattern.’

“Nunes said he was going to bring this up with the FBI, and ask the agency to investigate the leaks and find out whether Flynn himself is a target of a law enforcement investigation.  The Washington Post reported last month that Flynn was not the target of an FBI probe.

“The background here is important. Three people once affiliated with Trump’s presidential campaign – Carter Page, Paul Manafort and Roger Stone – are being investigated by the FBI and the intelligence community for their contacts with the Russian government. This is part of a wider inquiry into Russia’s role in hacking and distributing emails of leading Democrats before the election....

“But that’s all these allegations are at this point: unanswered questions.  It’s possible that Flynn has more ties to Russia that he had kept from the public and his colleagues.  It’s also possible that a group of national security bureaucrats and former Obama officials are selectively leaking highly sensitive law enforcement information to undermine the elected government.

“Flynn was a fat target for the national security state.  He has cultivated a reputation as a reformer and a fierce critic of the intelligence community leaders he once served with when he was the director of the Defense Intelligence Agency under President Barack Obama.  Flynn was working to reform the intelligence-industrial complex, something that threatened the bureaucratic prerogatives of his rivals....

“In the end, it was Trump’s decision to cut Flynn loose.  In doing this he caved in to his political and bureaucratic opposition.  Nunes told me Monday night that this will not end well. ‘First it’s Flynn, next it will be Kellyanne Conway, then it will be Steve Bannon, then it will be Reince Priebus,’ he said.  Put another way, Flynn is only the appetizer.  Trump is the entrée.”

Editorial / Wall Street Journal

“(Readers) should understand how rare it is for electronic intercepts of a private U.S. citizen – which Mr. Flynn was at the time – to be leaked to the press. The conversations of American citizens are supposed to be protected, lest private reputations be ruined without accountability.  So it’s unsettling to read that so many in the government claim to have read the transcripts of Mr. Flynn’s conversations with the Russian ambassador, and then spoke about them to the press.

“If these leaks are retribution against Mr. Flynn by an intelligence community aggrieved by Mr. Trump’s negative comments during the campaign, then the White House has a bigger problem than a national-security job opening. It faces a bureaucratic insurrection that can do great damage with other leaks that may or may not include accurate information.

“This should worry civil libertarians who claim to be worried about the surveillance state. Yet the same voices who call Edward Snowden a hero don’t seem concerned about the leaks of these transcripts about Mr. Flynn.  They fret about Mr. Trump’s speculative authoritarian menace but don’t want to ask if authoritarian tactics were used against Mr. Flynn.”

John Podhoretz / New York Post

“The chaos and infighting and unforced errors at 1600 Penn that have left everyone dizzied may be viewed as rookie mistakes to be overcome by on-the-job training....

“But what happened with (Michael) Flynn also represents a frightening portent.

“Leftists have become fond of saying that Trump shouldn’t be ‘normalized.’  That concern should now go both ways. Every American should be equally concerned at the potential ‘normalization’ of the tactics used by unnamed government officials to do Flynn in.

“To be sure, Flynn’s ouster after three weeks is proof positive he should never have been given the national-security-adviser job in the first place.  Flynn’s deceits about his conversations with a Russian official cannot be viewed in isolation from the overly close relationship with the Russian government he forged following his firing by the Obama administration in 2013.

“Still, unelected bureaucrats with access to career-destroying materials clearly made the decision that what Flynn did or who Flynn was merited their intervention – and took their concerns to the press.

“In one sense, the larger system of American checks and balances worked: The Trump White House couldn’t ignore the Flynn problems because they went public.  On the other hand, the officials who made the problems public did so using raw information that was in their possession for reasons we don’t yet know and may not have any right whatsoever to know....

“If this was intelligence, the revelation of the Flynn meeting just revealed something to the Russians we shouldn’t want revealed – which is that we were listening in on them and doing so effectively.

“And if it was an FBI investigation, then the iron principle of law enforcement – that evidence gathered in the course of an investigation must be kept secret to protect the rights of the American being investigated – was just put through a shredder.

“Keeping our intelligence-gathering assets hidden from those upon whom we are spying is a key element of our national security.

“And as for playing fast and loose with confidential information on American citizens: No joke, people – if they can do it to Mike Flynn, they can do it to you.

“This is the ultimate Pandora’s box.  It makes a public mockery of the presumption of innocence that is the hallmark of our legal system.  Such a thing is only acceptable, even morally, if you believe that the Trump White House represents such an unprecedented threat to everything that a higher law must govern your actions....

“If those who fear Trump embrace antinomianism* because they think he’s going to destroy our democracy, they should stop and consider whether their zeal to stop him might be blinding them to a different threat from the federal government that will erode our rights as citizens.”

*OK, folks...I don’t recall ever seeing this word before, so had to look it up.  “antinomian”: one who denies the validity of moral laws.

David Ignatius / Washington Post

“President Trump confronts complicated problems as the investigation widens into Russia’s attack on our political system. But his responsibilities are simple: A month ago, he swore an oath that he would ‘faithfully execute’ his office and ‘preserve, protect and defend the Constitution of the United States.’

“That’s apparently easier said than done. In a rambling news conference Thursday and his blizzard of tweets, Trump has dismissed inquiries into his campaign’s contacts with Russia and denounced leakers as ‘low-life’ and ‘un-American.’  These statements seem more likely to confound ongoing investigations than faithfully execute his role as chief executive.

“Michael Flynn’s forced resignation as national security adviser this week, after he concealed details of his contacts with a Russian diplomat, has been blurred by Trump’s contradictory comments.  So it’s worth going back to basics: Why was the United States expelling Russian spies at the time Flynn made his late-December call to Russian Ambassador Sergey Kislyak? Why would Flynn have hidden for weeks that he talked with Kislyak about those anti-Russian sanctions, or have denied it to the FBI, as The Post reported late Thursday?  What would Trump have known about these issues?....

“Given the magnitude of Russia’s cyberattack on the United States, it remains puzzling that Flynn and Trump were so cavalier about the U.S. government’s attempt to hold Moscow accountable. That’s one reason investigators keep asking what contacts the Trump team had with Russia before the election. Trump said Thursday there hadn’t been any.  Yet Russian Deputy Foreign Minister Sergei Ryabkov said Nov. 10: ‘Obviously, we know most of the people from [Trump’s] entourage.’

“The FBI and the Senate Intelligence Committee are investigating the scope of Russia’s pro-Trump activities.  Inevitably, there will be leaks, but that issue is a red herring.  For all Trump’s talk about ‘fake news,’ the country needs answers.”

Charles Krauthammer / Washington Post

“It’s a Watergate-era cliché that the coverup is always worse than the crime.  In the Mike Flynn affair, we have the first recorded instance of a coverup in the absence of a crime.

“Being covered up were the Dec. 29 phone calls between Flynn and the Russian ambassador to Washington.  The presumed violation was Flynn negotiating with a foreign adversary while the Obama administration was still in office and, even worse, discussing with Sergey Kislyak the sanctions then being imposed on Russia (for meddling in the 2016 elections).

“What’s wrong with that?  It is risible to invoke the Logan Act, passed during the John Adams administration, under which not a single American has been prosecuted in the intervening 218 years. It prohibits private citizens from negotiating with foreign powers.  Flynn was hardly a private citizen.  As Donald Trump’s publicly designated incoming national security adviser, it was perfectly reasonable for him to be talking to foreign actors in preparation for assuming office within a month.

“Worst case: He was telling Kislyak that the Trump administration might lift sanctions and therefore, comrade, no need for a spiral of retaliations.  How different is this from Barack Obama telling Russian President Dmitry Medvedev, on an inadvertently open mic, during his 2012 reelection campaign, ‘This is my last election.  After my election, I have more flexibility.’

“Flynn would have been giving the Russians useful information that might well have contributed to Russia’s decision not to retaliate. I’m no Russophile.  But again: What’s wrong with that?  Turns out, the Trump administration has not lifted those sanctions.  It’s all a tempest in an empty teapot.”

Daniel Henninger / Wall Street Journal

“A president’s blood is in the water and another White House staff can only look out the windows as the sharks arrive from miles off.

“Dan Rather, who normally toils at explaining away his George W. Bush National Guard story for CBS years ago, swam toward the Trump White House Tuesday to posit that ‘Watergate is the biggest political scandal of my lifetime, until maybe now.’....

“We are far from Watergate levels of threat to the Trump presidency.  The Democrats are in the congressional minority, and however much they intone the I-word, there will be no Sam Ervin committee.

“Impeachment, though, is not the goal of Donald Trump’s opponents. They want to cut off his power – his hold on much of the American public.  To do that, they need to make him look like a loser.

“On Monday, the president lost Mike Flynn. On Wednesday, he lost Andy Puzder, his labor nominee. Both fell in large part because of an understaffed and dangerously diffused White House management structure.  The Trump opposition – Democrats, unions, Never Trumpers – now know that if they can turn three Republican senators against him, he won’t matter.

“They may succeed unless Team Trump can reverse the tides starting to erode the foundations of the president’s political support.

“Let’s talk about the swamp.

“If we have learned anything about the Trump presidency, it is that Mr. Trump and his chief political strategist, Steve Bannon, despise the Washington swamp, which includes the city’s lobbyists, all of its bureaucrats, every member of the media, the entire congressional delegation and their staffs.

“At the moment, that would cover most of the forces arrayed against them, and a good question is whether they’ll drain the swamp before the swamp swallows them....

“What happened to Richard Nixon an eon ago looks familiar: Donald Trump’s presidency is getting bitten to death by an invisible, lethal ant hill of anonymous leakers....

“As always, it works.  You could have spent all Wednesday reading grimly exhilarating stories based on almost no names, such as the Washington Post piece about the White House triumvirate of Mr. Trump, Mr. Bannon and Reince Priebus keeping Mike Pence out of the loop after they’d been told Jan. 26 by the Justice Department of Mr. Flynn’s conversations with the Russian ambassador.  Mr. Pence had gone on Sunday morning television earlier to defend Mr. Flynn.

“Whether the Pence wedge between him and the inner circle (as of this week) is true hardly matters.  Life in the capital wouldn’t be much fun without believing such things. 

“Washington’s most powerful force is...the whisper.

“Trumpians can launch a million outraged emails and tweets against all this incoming, but the blunt reality is, So what?  If you aren’t winning in Washington, you are losing.  Nobody has changed the rules of that game yet.

“For the first two weeks, Team Trump was winning.  The executive orders unwinding the Obama regulatory apparatus had Democrats gagging in astonishment. Having abandoned any arguments based on policy, the Democrats sank to the level of senior members like Sen. Elizabeth Warren exchanging views on TV with comedians.  Comedians are now the Democratic Party’s brain trust.

“Then the White House overplayed its strong hand with the rushed-out immigration order.  The political fires lit by that then consumed a vulnerable Mike Flynn and are now roaring toward the Oval Office.  Unfair?  Criminal?  Maybe, and maybe the historians will sort it all out someday as solace.

“Forgotten now is that Nixon didn’t resign because of anything proven by the anonymous torrent, but only after he saw he’d lost the support of his own party in Congress.  We’re not there, yet.

“Mr. Trump is in the White House because voters wanted two things, in this order: 1) change; 2) Donald Trump.

“That’s the basics.  Get it straight, or 1974 could return.”

Wall Street

Federal Reserve Chair Janet Yellen, in her semi-annual testimony to Congress to provide an update on the economy and fiscal policy, told the Senate Banking Committee on Tuesday that interest rate increases are likely because the central bank forecasts gradual rising inflation and tightening labor markets.

But fiscal policy is uncertain given the lack of clarity on any Republican plans on tax cuts and potential infrastructure spending and the like.

“At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” she said in her prepared remarks.

“Waiting too long to remove accommodation would be unwise, potentially requiring the [Federal Open Market Committee] to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.”

The Fed, as you know, has forecast three quarter-point rate increases for 2017, while your editor has said they’ve already been caught with their pants down because inflation, save for the one metric they happen to favor (the PCE) is solidly over the Fed’s 2% target.

Witness the inflation data that was released this week for January. The producer price index was up a far greater than expected 0.6%, ex-food and energy 0.4%, which means year-over-year, the PPI was 1.6%, 1.2% on core.  But the 0.6% increase for the month was the highest since Sept. 2012.

The consumer price index also rose 0.6% last month, 0.3% on core, and is up 2.5% yoy, 2.3% ex-food and energy, the fastest pace for the latter since May 2012.

Meanwhile, wages have been growing at a 2.5% pace, yes, not the 3%+ you’d see in a standard recovery, but handily above 2%.

And the thing is, the Fed is only calling for about 2% growth this year so what if it comes in at 3%, or even better?  They’ll be forced to hike rates at a faster pace than they want to and, as Yellen herself admits, that would be disruptive.

Eric Rosengren, head of the Boston Federal Reserve, said in a speech in New York on Wednesday that the potential for an “overshoot” in U.S. economic growth may justify a “more rapid” tightening in monetary policy than the central bank had forecast.

As for my projection they will hike rates in March, I’ll stand by it, though the odds are against me.

Separately, Chair Yellen put up a robust defense of Dodd-Frank and the ban on banks’ proprietary trading, the Volcker Rule, which has been a lightning rod for Republican opposition to the reform package put together after the financial crisis.

Texas Congressman Jeb Hensarling, who heads up the House Financial Services Committee, cited a Fed staff paper that argued the Volcker Rule had a “deleterious” impact on liquidity in the corporate bond market by forcing banks to cut their trading inventories.

Yellen countered the paper did not represent the views of the board as a whole.

“It is difficult to come to a conclusion because by most metrics, liquidity in corporate bond markets still remains very healthy,” she said.

Earlier, Yellen said she opposed the idea that Dodd-Frank had damaged the supply of credit to small businesses, citing a National Federation of Independent Businesses survey showing just 4 percent of respondents were unable to get the loans they need.

Just a few other economic notes from the week:

January retail sales were up a solid 0.4%, 0.8% ex-autos, while industrial production for the month declined 0.3%.  January housing starts came in at a 1.246 million pace, a little better than expected.

As for the stock market, it continued to hit new highs, data below, as the Street remains optimistic the president will get his agenda through Congress, including tax reform, a repeal of ObamaCare, reduced regulation (which he is already achieving) and an infrastructure program.

But he is going up against a solid opposition bloc of 48 Democrats in the Senate, with little margin for error, and deficit hawks in his own party that point to 9,800 in this country turning age 65 every day.  [Plus there is growing Republican opposition to the border adjustment tax. More on this next time.]

A lot is going to depend, though, on individual proposals and how many of the 10 Democratic senators up for re-election in 2018 in states in which Trump won will cross over, such as what West Virginia Democrat Joe Manchin has been doing with many of the Trump cabinet nominees.

Europe and Asia

Eurostat released GDP data for the eurozone and for the EA19, it was up 0.4% in the fourth quarter over the third, 1.7% year-on-year, and 1.6% for 2016.

Germany was 0.4% (1.8% yoy), France 0.4% (1.1%), Spain 0.7% (3.0%), Italy 0.2% (1.1%...0.9% for 2016), and the U.K. at 0.6% (2.2%).

The European Commission, which updates its projections three times every year, sees growth this year of 1.7%, and 1.8% in 2018, with the EC still voicing concerns over global uncertainties driven by President Trump’s opaque stance on key policy issues, citing potential disruptions to trade.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, said: “Mr. Trump has been president only for a short time, things are moving very fast, and there have been quite dramatic developments. We do need to be cautious and we also have to ensure a spirit of cooperation.”

Eurozone industrial production declined 1.6% in December over November, up 2.0% yoy.

Inflation was 1.8% for the EA19 in January on an annualized basis, but the ECB continues to maintain this is largely because of a spike in energy prices over the past 12 months and there has been no real wage growth.  Ergo, it’s bond-buying plans will remain in place for the balance of 2017.

But Germany’s producer price index for January hit 4.0%, the highest since 2011, with overall CPI at 1.9% ann. last month, a 3-year high.

Spain’s inflation rate was 2.9% in January, the highest there since Dec. 2012.

In the U.K., unemployment for the fourth quarter was 4.8%, an 11-year low, with wages up 2.6% in Q4.

However, retail sales were lousy in Britain, down 0.2% in January month-on-month, ex-fuel, after a revised fall of 2.1% in December.  Inflation is squeezing purchasing power and I still insist confidence will erode as Brexit negotiations officially get underway.

Eurobits....

The Greece debt crisis has re-emerged as a potential major market issue this summer, as the International Monetary Fund continues to wobble on whether it will participate in Greece’s current bailout, its third, with the sticking points remaining the same.  The IMF wants Greece to enact further austerity measures because it doesn’t believe it can achieve required budget surpluses otherwise long term, while Germany and its ilk are opposed to granting the debt relief that the IMF says is required before it will pony up its share of the bailout funding.

Germany also insists the current program can only continue if the IMF joins in, though the other day, a German lawmaker close to Angela Merkel, Manfred Weber, said: “If the IMF insists on a debt cut, then one should let it go. Europe can stand on its own feet now.”

But this is a lone voice thus far.  German Finance Minister Wolfgang Schaeuble said last week that Greece would have to leave the eurozone if it failed to meet its bailout commitments.

The problem is there is no solution, today, and there won’t be until after the big vote in the Netherlands, March 13, after which politics will inevitably get in the way of any resolution, with Greece owing 7bn euro in debt service in July.  Eurozone governments will do all they can to avoid domestically unpopular concessions to Greece from here on.

Meanwhile, Greece’s GDP fell 0.4% in the fourth quarter, after a jump of 0.9% in Q3; finishing 2016 with growth of 0.3%.  The European Commission projects Greece will grow 2.7% this year, but with renewed uncertainty over the bailout, it seems to me this is a pipedream.

On the Brexit front, British Prime Minister Theresa May is expected to trigger the U.K.’s withdrawal from the European Union in early March, ahead of her self-imposed March 31 deadline.  May wants to get it done as close as possible to the EU summit taking place on March 9 and 10, but she can’t act until Parliament passes a bill giving her the permission to do so.

The upper house is due to debate the draft law next week and could amend it, which would cause a delay, with the House of Lords scheduled for a final vote on March 7.  But any amendments to the wording of the bill made by the Lords would mean the draft law goes back to the lower House of Commons, which would have to accept or reject the changes.

In France, the financial prosecutor vowed to push on with its investigation into the fake jobs scandal surrounding presidential candidate Francois Fillon and his wife, though it is highly unlikely any decision to indict would be made before the first round of voting April 23.  But it does mean the legal cloud hanging over Fillon will sit there like a threatening thunderstorm.

Fillon is also under intense pressure from within his conservative camp, with rebel conservative lawmaker Georges Fenech saying voters were deserting the party in droves. 

It’s true that Fillon went from a prohibitive favorite to number three in the race behind National Front (FN) leader Marine Le Pen and centrist Emmanuel Macron.

An opinion poll published Wednesday by Ifop-Fiducial showed Fillon’s popularity has dropped sharply from 45% a month ago to 26%, while Macron’s popularity is at 52% and Le Pen is viewed favorably by 31%.  [This is different from ‘who you’d vote for.’]

But you know how I’ve written over the years that I wish everyone with an interest in European affairs could take the train from Charles de Gaulle Airport into the heart of Paris, where you get to see the suburbs, and the seething neighborhoods, teeming with immigrants from North Africa and the Middle East?

It was one such suburb, Saint Denis (ISIS’ backyard), where the Paris attackers were from, and the past few weeks there has been major unrest in these same mostly northern areas, the banlieues. 

Marine Le Pen is taking advantage of it, saying last Sunday, “All this is the result of complacency in French society, which is the fault of politicians who have governed us for years.”

Le Pen also said, “Security forces have been the target of gangs of scum that nothing seems to be able to stop anymore, and certainly not the courts in an overall context of decadence.”

Le Pen started an online petition campaign to support the police and supporters used social media to condemn the protesters.

“Look at this scum!” Le Pen’s closest adviser Florian Philippot wrote on Twitter Sunday.  “If they’re foreigners, immediate deportation – or prison for life.”

Three officers were charged with battery and a fourth with rape over an attack on a 22-year-old man identified as Theo after a spot check on Feb. 2, the incident that has precipitated the violence.

“Support for Theo is an excuse to attack the cops,” Marion Marechal Le Pen, Marine’s niece and a National Front lawmaker said.  “It’s a pretext to throw opprobrium on an entire profession.”  [Financial Times, BBC News, Bloomberg]

Meanwhile, with Fillon’s support dwindling, Moscow, which had favored either Fillon or Le Pen because of their pro-Russia policies, now appears to be doing what it can to help Le Pen.  There is no doubt the dirty tricksters are out to get Macron, who does have an interesting personal history; marrying his high school teacher, 24 years his senior, though his rivals throw out stories he’s gay.  As Leonid Bershidsky wrote the other day in Bloomberg, “Last year, (Nicolas) Sarkozy described (Macron) as ‘a little male, a little female, the fashion of the moment – androgynous.”  The social media campaign against Macron has been vicious.

So let’s see.  Fillon is corrupt.  Le Pen has her own serious financial issues involving her use of funds as a member of the European Parliament, let alone lack of campaign funds, and Macron has to constantly deflect rumors and innuendo that will increasingly be promulgated by the Kremlin.

And you thought our election was dirty?!

The campaign for Germany’s September election is heating up, with center-left candidate Martin Schulz continuing to poll well.  A new one from broadcaster ZDF has Schulz, the former president of the European parliament, gaining 49% of the popular vote against 38% for Chancellor Merkel in a one-off vote for the chancellorship if the two went head to head. Schulz, who was appointed the SPD hopeful in January, continues to surge as he revitalizes Germany’s Social Democrats, who are currently in a coalition with Merkel’s center-right Christian Democrats.

Schulz is seen as a fresh face, especially when compared with Merkel, who has been chancellor for 12 years.

Turning to Asia, Japan registered its fourth straight quarter of growth for the first time since 2012-13, with Q4 GDP up 0.2%, after a 0.3% increase in Q4.  But the year-over-year, and overall, growth for 2016 is just 1.0%.  That said, it’s growth.

The ongoing concern is private consumption, which was flat in the fourth quarter over the third.  But at least exports grew a strong 11% at an annualized pace the last three months of 2016.

Street Bytes

--The three major averages all closed at record highs Friday, with the Dow Jones notching its seventh consecutive record close, up 1.7% to 20624.  The Dow is now up 4.4% on the year.

The S&P 500 added 1.5% to 2351, up 5.0% for the first seven weeks of 2016, while Nasdaq gained 1.8% to 5838 and it’s up 8.5% already ytd.

It’s still about the hope for tax cuts, regulatory rollbacks and increased spending, along with generally solid corporate earnings reports and a better tone not just here but across Europe and Asia.

Friday, takeover talk from the likes of Kraft Heinz and its bid for Unilever doesn’t hurt.

But valuations by any definition are stretched, ditto most sentiment readings, such as my Bull / Bear readings down below.

--U.S. Treasury Yields

6-mo. 0.66%  2-yr. 1.19%  10-yr. 2.41%  30-yr. 3.02%

Another week with Treasuries virtually unchanged.  It’s now eight straight weeks with the yield on the 10-year finishing at between 2.40% and 2.48%

China increased its holdings of U.S. Treasuries in December for the first time since last May, adding $9.1bn of U.S. sovereign debt to its reserves in the final month of 2016, according to the Treasury and Federal Reserve.

--Unilever rejected a $143bn takeover approach from Kraft Heinz, the food conglomerate backed by Brazil’s 3G and Warren Buffett, so the two will now battle it out. 

The Anglo-Dutch company behind brands such as Dove soap and Ben & Jerry’s ice cream said that the $50 per share cash and stock offer, an 18% premium to its closing price on Thursday, “fundamentally undervalues Unilever.”  The company added, “Unilever does not see the basis for any further discussions.”

Kraft Heinz said it had made “a comprehensive proposal to Unilever about combining the two groups to create a leading consumer goods company with a mission of long-term growth and sustainable living.”

If the deal went forward, it would be the second largest in history, after the $183bn takeover of Germany’s Mannesmann by Vodafone of the U.K. in 2000.

Under U.K. takeover rules, Kraft Heinz has until the close of business on March 17 to make a firm bid or walk away for six months from Unilever.  [Financial Times]

--Apple Inc. shares hit a new all-time high during the week, and on Friday, closing today at $135.65, amid growing optimism the company will issue a dramatically improved iPhone model.

Apple’s market value is about $710bn, well ahead of No. 2, Google parent Alphabet Inc., but below Apple’s value in February 2015 due to a share-buyback program.

--U.S. crude stockpiles rose a sixth straight week, while OPEC’s oil output cuts have exceeded expectations.

The rise in the U.S. is due to ramped up drilling as prices have stabilized above $50 a barrel.

Speaking of OPEC, the cartel this week said it has achieved 92% compliance of its 1.2m barrel per day targeted production cut; 1.1m b/d in January, per its monthly report issued on Monday.  The Friday before, as I wrote last time, the International Energy Agency showed the cuts by OPEC in month one of the six months deal have been “one of the deepest in the history of OPEC output cut initiatives.”

--Aetna Inc. CEO Mark Bertolini escalated his fight against ObamaCare, saying, “It is in a death spiral,” while predicting more insurers will drop out of the market for 2018, following Humana Inc.’s decision to quit ObamaCare entirely for next year.

Aetna is also mulling whether to further reduce its presence in the markets set up by the Affordable Care Act, having already cut its footprint to four states for this year, from 15, after losing about $450 million on sales of ACA plans last year.

Bertolini said back in October that rising rates would push healthy people away from ObamaCare, leaving insurers with sicker customers, and forcing premiums even higher.  With fewer and fewer healthy customers enrolling, you have the conditions for an insurance death spiral.

But wait...there’s more!  Aetna’s $34 billion bid for Humana officially came to an end when a federal judge ruled “the tie-up violated antitrust regulations and would likely lead to higher prices for consumers.”

As reported by the New York Post: “The judge also excoriated Bertolini for misleading the country when he said last year that Aetna would exit several state-run health exchanges because the company was losing money in the businesses.

“Aetna was booking a profit in some of the states, it was discovered via testimony during the trial – but Aetna moved to exit the exchanges simply to pressure the Justice Department to okay the Humana deal.

“The move blew up in Bertolini’s face.”

Aetna and Humana called off the deal on Tuesday, with Aetna owing Humana a $1 billion termination fee.

So you see, boys and girls, you need to read everything...or just read me...because many Republicans are pointing to Bertolini’s comment on ObamaCare as being in a “death spiral,” which I do believe is the case, but this guy is also a liar, according to the courts.

--Samsung’s de facto leader Lee Jae-yong has been arrested for bribery, embezzlement and perjury in connection with the corruption scandal that is poised to topple President Park Geun-hye.

Mr. Lee, the 48-year-old vice-chairman of Samsung Electronics, is the highest-profile business figure engulfed in the scandal.

The arrest comes as Samsung Electronics, the crown jewel, is scrambling to revive the fortunes of its mobile business after the problems with the Galaxy Note 7 smartphone last year.

Lee, who has been leading Samsung Group, which has about 60 business units, since his father and chairman Lee Kun-hee was hospitalized with a heart attack in 2014, is accused of bribing President Park and her shadowy adviser, Choi Soon-sil, to the tune of about $36 million to help smooth his succession and to consolidate control over the group units.

The special prosecutor also accused Lee of hiding assets overseas and concealing profits made from illicit business activities.  Lee has conceded he made political donations but not for the purpose of getting favors in return.

Understand that Samsung accounts for about 20 percent of the nation’s economy.

--There are conflicting reports on the valuation of the coming Snapchat IPO, the company setting a lower than projected price range of $14 to $16 per share that puts the valuation in a range from $19.5bn to $22.2bn, or lower, with the company initially talking of $25bn.

And Snap (the parent of Snapchat) is offering shares with no votes, reserving the power for all major decisions to co-founders Evan Spiegel and Bobby Murphy.  Even if these two stand down from their roles as CEO and chief technology officer, they control any acquisitions the company makes, for example.

Needless to say, many large investors think this is absurd, while Spiegel and Murphy become billionaires as the company lists.

Snap is presenting itself as a camera company pushing to sell video ads and sponsored filters, but it has slower user growth, increasing losses (as it staffs up) and stiffer competition from the likes of Facebook-owned Instagram.

--Yahoo has agreed to a price cut on the original $4.8bn sale of its core business to Verizon, down to a reported $4.5bn, after the company revealed it had suffered a series of data breaches.

--Cisco Systems Inc. exceeded expectations for its fiscal second quarter with net profit of $2.35 billion.

The seller of routers, switches, software and services posted revenue of $11.58 billion, also surpassing forecasts.

--Lenovo, the world’s largest PC maker, missed earnings expectations for its fiscal third quarter by a wide margin as revenues decreased 6% to $12.2bn.  Revenue at the company’s PC business rose 2%, but mobile fell 23% and data center revenue declined 20%.

PC shipments increased 2% year-on-year in the quarter, with commercial orders up 5%.

The company said the issues it faced last quarter could continue in the current one.

--PepsiCo’s revenues rose 5% in the fourth quarter, to $19.5bn, matching Wall Street expectations.  Earnings after adjustments also beat the Street.

PepsiCo has been reformulating products and developing new ones to meet the demand for healthier snacks.

--Marriott International handily beat expectations on fourth-quarter earnings, with revenue of $5.46 billion also exceeding the Street’s forecast.

--CBS reported lower than expected sales in the fourth quarter as weaker NFL ratings weighed on advertising revenue, which fell 2% to $3.52bn from $3.59bn, with ad sales (despite political advertising) down 3%, which was offset by growth in retransmission fees and streaming sales.

--Shares in AIG tumbled 9% after the insurer’s $3 billion quarterly loss raised fresh questions about the company’s recovery efforts and hedge fund Paulson & Co. revealed it had sold about half its stake – even as it has a seat on the board (a rare move for an activist investor).

This was AIG’s fourth loss in six quarters as it struggles to transform itself from top to bottom.

--I was reading a piece in the Financial Times’ Lex column and it’s pretty startling that Goldman Sachs shares bought a decade ago have earned a compound annual return of less than 2%.  And that includes a 38% jump following the presidential election.  Revenues are down a third from 10 years ago.

--Credit Suisse Group AG posted a fourth-quarter loss of $2.34 billion after taking a charge to settle a U.S. investigation into the role of its mortgage securities business in the 2008 financial crisis.  The bank pledged to cut between 5,500 and 6,500 jobs this year.

--Toshiba chairman Shigenori Shiga resigned after the Japanese conglomerate said it was set to report a net loss of $3.4bn in the year to March 2017.  The company is going to take a $6.3bn writedown at its U.S. nuclear business which has been under question the past year.  Some analysts rightfully believe the company’s future is at risk because of the bet placed in 2015 when its U.S. subsidiary, Westinghouse Electric, bought the nuclear construction and services business from Chicago Bridge & Iron in 2015.

The problem is the assets Westinghouse took on are worth far less than initially thought and there are questions about what Westinghouse (Chicago Bridge & Iron) might owe.  It is thought in April, or earlier, that Toshiba could be getting out of the global nuclear business altogether, apart from its operations in Japan.  [This would have a big impact on existing plants in the U.K., for one.]

--Restaurant Brands International, the company behind Burger King and the Tim Hortons chains, said same-store sales at the former grew 2.8% during the fourth quarter, though a slowdown from the 3.9% gain in the prior year period.  Tim Hortons’ sales grew just 0.2%.

I love my Dunkin’ Donuts downstairs, but if I ever hit Powerball, I’m changing it to Tim Hortons.

--Wendy’s warned full-year sales growth at its restaurants could fall short of expectations, as more Americans prefer to eat at home encouraged by a drop in grocery prices.  The company now expects same-restaurant sales growth of 2-3 percent vs. a previous guidance of 3 percent.  [They were up 0.8 percent for the just completed quarter.]  Profits are being dented by higher minimum wages.

--Campbell Soup Co. reported second-quarter earnings of $101 million, topping the Street, though revenue of $21.7bn missed, down 1%.

--Last week I talked about the spirits industry.  This week we learned that U.S. exports of wine – the bulk of it from California – set a record in 2016, despite a strong dollar, among other negatives, with the volume in foreign trade revenue at $1.62 billion last year vs. 2015’s previous record of $1.49 billion.  90% of the wine exported came from California.

Canada was the top single nation buying U.S. wine, shelling out $431 million, followed by the U.K. with $337 million; China and Hong Kong, $181 million; and Japan, $87 million.  [Germany is in there, but didn’t see an exact figure.]

--Hasbro announced Thursday that it is removing the thimble game piece from Monopoly after it didn’t garner enough votes in a contest that will determine the eight tokens in an updated version of the board game.  News of this move was overshadowed by Trump’s press conference, no doubt.

A replacement for thimble has yet to be named, with a new version of the game going on sale in August.  Among the possibilities are penguin, rubber duck and TV.

--Josh Elliott was fired from CBS News on Monday after he stepped down from CBS’ digital channel for a larger role at the network, but did so in a way that shocked his own bosses.

Elliott served as CBSN’s lead daytime anchor for a year and suddenly told his viewers last Friday it was his “last day.”  “It has been by any measure a great stay here at CBSN,” he said.

But this shocked the hell out of CBS News execs, who had no idea he was planning to leave the online station, even though the plan was for Elliott to do various work for the television network.  At the time, as I was reading stories over the weekend, it was described by network sources as “a mess of epic proportions. Nobody at the top at CBS News knew that Josh was going to do that.”

Monday morning, Elliott was called to a meeting with CBS News heads including President David Rhodes and fired. He was escorted out by security, according to the New York Post.

It seems Elliott’s executive producer didn’t inform higher ups.

Elliott now has the distinction of having blown up his career at all three main networks.  He abruptly quit ABC for NBC, and then left NBC under a cloud two years later for CBS.

Well here at StocksandNews, higher ups are totally in sync with moi, your faithful editor.

--Finally, on one of my favorite topics, fish fraud.  Filipa A. Oioannou of the San Francisco Chronicle had a piece on Wednesday concerning an upscale restaurant in Santa Clara County, Odeum in Morgan Hill, “helmed and owned by a chef with a Michelin star – (that) was serving tilapia in place of the petrale sole listed on the menu for a period of more than a year, an investigation by the Santa Clara County district attorney’s office alleged.”

According to a civil judgement announced this week, the restaurant must pay $120,000 - $30,000 in restitution and $90,000 in civil penalties – and offer a $30 gift card to any customer who ordered sole at Odeum between October 2014 and March 2016 and files a claims form by May 31.

As we’ve discussed in the past, everyone should know that when they order a fancy fish, odds are pretty good it’s tilapia.

It was last September that conservation group Oceana estimated 1 in 5 seafood samples worldwide is mislabeled, and I’d bet it is really more than this. Asian catfish and farmed salmon are other fish often presented as wild-caught, higher-value fish, Oceana found.  And that’s the other fraud...wild caught vs. farmed.

Foreign Affairs

Israel: Prime Minister Benjamin Netanyahu received a warm welcome from President Trump in his first visit to the White House with the new administration.  In a joint press conference on Wednesday, Trump said the United States would no longer insist on a Palestinian state as part of a peace accord between Israel and the Palestinians, backing away from a decades-long policy that has underpinned America’s role in Middle East peace negotiations.

“I’m looking at two states and one state,” Trump said.  “I like the one that both parties like.  I can live with either one.”

Needless to say the Palestinians, who are unlikely to accept anything short of a sovereign state, were upset, while at the same time, a single Israeli state encompassing the Palestinians would either become undemocratic or no longer Jewish, given the exploding growth of the Arab population.

Netanyahu embraced Trump’s words, saying he preferred to deal with “substance” rather than “labels” in negotiating with the Palestinians.

Netanyahu said the two-state solution meant different things to different people, and, first and foremost, the Palestinians continue to refuse to recognize the legitimacy of the Jewish state.

Trump did request Netanyahu hold off on further settlement building in the West Bank.

Netanyahu and Trump no doubt also talked about the status of the Iran nuclear deal (though the departure of Michael Flynn hurt in this regard), which if it isn’t scrapped outright, Netanyahu just wants to be assured it will be enforced rigorously.

One thing is for sure, the relationship between Netanyahu and Trump will be much stronger than the Israeli prime minister’s relationship with President Obama.

Benny Avni / New York Post

“Call it the ‘whatever’ approach to peacemaking.

“At a White House press conference Wednesday designed to display renewed warmth in the U.S.-Israel relationship, President Trump was asked about his approach to Mideast peace.  For two decades, the two-state solution has been the preferred approach to dissolving Arab-Israeli enmity.  Would Trump stick to it?

“ ‘I’m looking at two states and one state, and I like the one that both parties like. I can live with either one,’ Trump said.

“At first glance, a glib, shallow answer. But the self-styled artist of deals has long championed noncommitment and unpredictability as a bargaining tactic.  Why stake out a firm position when a nonchalant ‘whatever’ would do?

“Especially if in doing so, Trump is able to thaw the icy treatment his guest, Israeli Prime Minister Benjamin Netanyahu, got from President Barack Obama and, earlier, Bill Clinton.

“The irony: Now that Bibi finally found a friend in the White House, his 11-year hold on power at home suddenly looks shaky. Under investigation for corruption, Netanyahu has become increasingly reliant on his right-wing coalition partners, who push him to add new settlements and renounce his commitment to establishing a Palestinian state....

“While Bibi was routinely called upon to take political risks for the sake of peace, no similar demand was made to Palestinian Authority President Mahmoud Abbas, whose political weakness made officials nervous about pushing him too far. He couldn’t possibly make bold moves like recognizing Israel as a Jewish state or giving up on the demand to flood it with more than 5 million Arab descendants of refugees.

“While not shutting the door on the two-state solution, Netanyahu sidestepped it.

“ ‘Rather than labels, I want to look at substance,’ he said, adding a question about the proposed Palestinian state: ‘Will it be Costa Rica, or will it be Iran?’

“Trump didn’t force Netanyahu to swear allegiance to the ‘solution.’  Instead, he hinted, ‘We are going to make a deal that might be even a bigger and better deal than people in this room understand.’

“Rather than leaving it at that, Netanyahu spelled out the new strategy – a regional approach that involves, he said, ‘our newfound Arab partners in the pursuit of a broader peace, and peace with the Palestinians.’

“Trump insisted that this so-called outside-in strategy – making peace between Israel and existing Arab states before creating a new Arab state – ‘hasn’t been discussed before.’  But in 1991, Bush 41 gathered leaders of Arab states in Madrid, Spain, for a conference that tried just that.

“It didn’t succeed then. Can it now?

“Leaders from the Maghreb to Arabia – including most prominently Saudi Arabia and the Gulfies, Egypt, Morocco and Jordan – have tightened cooperation with Israel recently.  They’ve realized that Israel threatens them much less than ISIS or Iran....

“For the time being, Trump managed to set new peace goals. For a short news cycle, he got a reprieve from the political turmoil around him, while helping out an old friend.

“So, yes, peace remains as elusive as it was when the words ‘two-state solution’ were abused so often that they became an empty slogan.  Will Trump and Bibi manage to break the ennui?

“Well, whatever.”

Back to Netanyahu’s legal problems, the Jerusalem Post reported that police are preparing to indict the prime minister in four to six weeks.

Defense Minister Avigdor Lieberman said last weekend that Netanyahu should not resign if this occurs.

Iraq/Syria/ISIS/Russia/Turkey: ISIS killed at least 59 in a car bomb attack in Baghdad, the deadliest attack of the year and the same day as a huge attack in Pakistan (see below).

The Iraqi military claims to have killed 13 ISIS commanders last Saturday in an airstrike on a house in Anbar, where reportedly Islamic State leader Abu Bakr al-Baghdadi was holding a meeting, but he wasn’t on a list of victims.

Iraq claims Baghdadi was seen moving from Raqqa, Syria to Iraq in a convoy a week earlier, to discuss with commanders “the collapse happening in Mosul and to choose a successor for him.”  [Daily Telegraph]

Who the heck knows where the truth lies.

As for Syria and the prospect of safe zones, which I have said for months since Trump first proposed them is absurd, that it is too late, I was reading the current issue of Army Times and a piece by Andrew deGrandpre (sic) and it starts out thusly:

“The Pentagon has more questions than answers about President Donald Trump’s plan to establish ‘safe zones’ inside Syria and surrounding countries for potentially millions of refugees uprooted by the endless bloodshed there, an initiative that could require the deployment of tens of thousands of U.S. military personnel.

“The draft executive order, a document published online Jan. 25 after it was obtained by numerous media outlets, appears to have caught military leaders by surprise....

“The challenges in Syria are far more complex than those presented by ISIS. The country’s six-year-old civil war is in the midst of a tenuous cease fire. And the presence of more U.S. troops, whether to wage war or protect refugees, heightens the risk of a confrontation with entities loyal to Syrian President Bashar al-Assad and the unpredictable Russian military forces supporting them.

“That concern, perhaps above all, is feeding the Pentagon’s skepticism.  What specific territory would U.S. troops be asked to secure? From whom would they be protecting the refugees?  How does Trump even define protection?  Should American commanders tasked with securing these safe zones be prepared to intercept or shoot down any Russian or Syrian aircraft that breach these safe zones?”

Separately, Human Rights Watch said in a report published on Monday that Syrian government forces used chemical weapons in opposition-controlled parts of Aleppo during battles to retake the city late last year.  Government helicopters dropped chlorine bombs in residential areas on at least eight occasions between November 17 and December 13, 2016, the report says.

Lastly, a referendum bill was approved for April 16 in Turkey that would grant President Recep Tayyip Erdogan further sweeping powers in concentrating authority in his office.

Since last July’s failed coup, authorities have purged more than 140,000 civil servants and military personnel accused of supporting the coup plotters.

Pakistan: An Islamic State suicide bomber struck inside a famed shrine in southern Pakistan on Thursday, killing at least 75 people in the deadliest attack in the country in more than two years.  At least 20 women and nine children were among the dead. ISIL claimed responsibility in a statement, saying it had targeted a “Shiite gathering.”    ISIL, Sunnis, view Shiites as apostates and Sufi shrines like the one hit as a form of idolatry.

So ISIS killed at least 134 people within hours in Iraq and here.

Afghanistan: There seems little doubt the Taliban is receiving support from Moscow and the other day, according to the pro-Kremlin newspaper Komsomolskaya Pravda, a former Taliban commander, Mohammad Akbar Agha, said in an interview that the Taliban has been chasing closer ties with Russia for the past three years and wanted to build political ties with Moscow to fight the region’s “U.S. threat.”  The militant group has been inviting Russians to meet them at their “office” in the U.A.E. for the past three years, he added.

In return for their support, the Kremlin could expect Taliban fighters to secure “Russia’s borders,” along the lines of the  former Soviet Union, Akbar Agha claimed. The warlord added, “The hatred and hostility left from the Soviet invasion has run its course. We are ready to shake hands with Russia in order to rid ourselves of the scourge of America.”

Technically, the Kremlin still brands the Taliban as a terrorist organization, alongside ISIS.

Akbar Agha was sentenced to 16 years in prison for kidnapping U.N. personnel in 2004, and then pardoned by President Karzai in 2009, after which he became one of the region’s most infamous warlords.

Russia: Defense Secretary James Mattis said after talks at NATO headquarters in Brussels that he did not see the conditions for military collaboration with Russia, in a blow to Moscow’s hopes for repairing ties with the U.S. following Trump’s election.

“We are not in a position right now to collaborate on a military level.  But our political leaders will engage and try to find common ground.”

Asked by reporters if Russia had interfered in the presidential elections, Mattis said: “Right now, I would just say there’s very little doubt that they have either interfered or they have attempted to interfere in a number of elections in the democracies.”

President Putin did say on Thursday that it was in the interests of both Russia and the United States to restore communications between their respective intelligence agencies.  “It’s in everyone’s interest to resume dialogue between the intelligence agencies of the United States and other members of NATO,” Putin said, addressing Russia’s Federal Security Service (FSB).  “It’s absolutely clear that in the area of counter-terrorism all relevant governments and international groups should work together.”  [Reuters]

Earlier, Secretary Mattis said NATO is a “fundamental bedrock” for Washington, and that the U.S. had a “shared level of commitment” to the alliance.

Mattis reiterated Trump’s call for member states to step up their contribution to the alliance, with only five NATO allies, including the U.S., currently meeting spending targets.  [2% of GDP...Britain, Poland, Estonia and Greece are the others.]

Separately, Putin reportedly told the same FSB gathering Thursday that Ukraine’s government was plotting a series of terrorist attacks across Russia, as, according to Putin, Ukraine pushes a military agenda in order to tear the 2015 Minsk peace agreement apart, according to the Interfax news agency.

Also, Secretary of State Rex Tillerson sat down with his Russian counterpart, Foreign Minister Sergei Lavrov, on Thursday for the first time, but journalists were escorted out of the room by U.S. officials as soon as Tillerson said hello.

According to Bloomberg, Lavrov was taken aback by the move, asking Tillerson, “Why did you shush them out?” Afterwards, both sides described the meeting as “productive.”

But this followed the White House’s statement earlier in the week that President Trump expects Moscow to return Crimea to Ukraine, and now Russian officials are scrambling to adjust their expectations.

White House press secretary Sean Spicer shattered the Kremlin’s American dream on Tuesday:

“President Trump has made it very clear that he expects the Russian government to de-escalate violence in the Ukraine and return Crimea.” 

Trump then tweeted on Wednesday: “Crimea was TAKEN by Russia during the Obama Administration. Was Obama too soft on Russia?”

Authorities in Moscow were angered, and it didn’t help that the night before, Michael Flynn, a Russian sympathizer, was forced to resign for withholding information about his phone conversations with the Russian ambassador.

Maria Zakharova, Russian foreign ministry spokeswoman: “We do not return our territories.  Crimea is the territory of the Russian Federation. That’s it.”

Viktor Ozerov, Head of Security Committee in the Federation Council: “Crimea is and will remain Russian. Demanding to return it simply cannot be fulfilled.  It’s as if Russia demanded for Alaska to be returned.”

Leonid Slutsky, Duma deputy: “Russia has no intention to discuss the issue of returning Crimea to Ukraine with the U.S. or anyone else for that matter....Any attempts to reignite the subject of Crimea’s ‘return’ will be treated as infringement of Russia’s territorial integrity.”  [Moscow Times]

The Kremlin has ordered state media to cut way back on the fawning coverage of Trump with the realization his administration may not be as friendly as once thought.

Lastly, Russia’s Sunday news shows took a decidedly militaristic tone last week, as reported by Alexey Kovalev of the Moscow Times.  “Dmitry Kiselyov’s propaganda flagship Vesti Nedeli (Weekly News) began with a feature on Russia’s latest radar stations.  Be wowed, Kiselyov told his audience.  This radar kit is next generation, rapid response, and can track up to 500 targets as far as Cape Horn, he said....

“Meanwhile, the conflict in Ukraine drags on with lethal consequences.  Kiselyov blamed Ukraine and its president, Petro Poroshenko, ‘who still expects a pat on the head from America for carrying on with the killing.’”

Like I said in the opening...the honeymoon is over.

North Korea / China: 45-year-old Kim Jong Nam, the son of former North Korean leader, Kim Jong Il, was assassinated in an airport in Kuala Lumpur, Malaysia, as he waited for a flight back to his home in Macau.  Malaysian police have said as many as six people may have been involved in the attack, but two women, assumed to be North Korean agents, attacked him and Kim was poisoned, with a needle, spray or toxic cloth to the face.  Thus far, two women and one man, traveling on Vietnamese and Indonesian passports have bene detained.

As The Economist opined:

“The 45-year-old Mr. Kim had once been Kim Jong Il’s favorite son....

“But in the end it was Kim Jong Il’s third son, Kim Jong Un, born to his second wife and educated, like his half-brother, in Switzerland, who succeeded their father in 2011.  Kim Jong Nam was not visible at his father’s funeral.  He was known in recent years to have been living in exile in Macau, a semi-autonomous enclave within China.

“Since the 30-something Kim Jong Un came to power, he has consolidated power by executing about 140 senior officials, most notably his uncle and security chief, Jang Song Thaek.  Yet exile had typically been the fate of members of the Kim family who had fallen out of favor....

“Jong Nam was thought to have been under the protection of the Chinese security services.  China’s government, which had had good relations with Jang, is bound to be irked by the murder of yet another protégé.  Kim Kwang Jin, a defector who once worked in North Korea’s ‘royal court’ economy, says that even if rumors that China had hoped to install Jong Nam if Jong Un fell from power are far-fetched, China would nonetheless have seen Jong Nam as useful leverage.

“North Korea frequently irks China, however, without changing its apparent conclusion that a violent nuclear dictatorship makes a better neighbor than a unified Korea packed with American troops.  The timing, hard on the heels of a North Korean missile test, is probably coincidental.  North Korea had been trying to kill Jong Nam for some time, according to South Korea’s spooks... And given how little clout he seems to have had in North Korea, there is no hint that his murder is a sign of turmoil within the regime.”

Editorial / Wall Street Journal

“Commentary on North Korean intrigue often focuses on its sensational or otherworldly qualities, and this case may prove no different, as news reports claim the hit was carried out by female agents with poisoned needles or spray.  More important, though, is to recognize the growing danger of a regime that is fanatical, fragile – and has nuclear weapons.

“The Trump administration says it has launched a North Korea policy review, and not a moment too soon.  Regardless of how or why Kim Jong Nam was killed, the U.S. and its allies need plans to handle a Pyongyang palace coup as well as a nuclear assault.”

As for the intermediate-range ballistic missile launched by North Korea on Sunday (NK time), according to some analysts it is a “game-changer” because it uses a solid fuel engine that makes the weapon more stable and reduces the time required to fuel a missile before launch.

The Pukguksong-2 is also road-mobile on tractor-erector-launcher units, which means it is difficult to detect and neutralize before it is launched.

Lance Gatling, a defense analyst and president of Tokyo-based Nexial Research Inc., told the Irish Independent, “If they have made a solid-fuel engine that works, then that is a great advance. It’s a game-changer in the sense that  a solid fuel rocket can be kept in ambient temperatures before being launched with a very short preparation time.”

The missile flew 310 miles before splashing down in the Sea of Japan.  That is more than sufficient range to worry Japan, let alone South Korea which has already been worried.

[But remember, at least for now, these missiles are wildly inaccurate.]

Japan: President Trump’s diplomatic efforts with Japanese Prime Minister Shinzo Abe no doubt will bear fruit, and worry China, which is a good thing.  I give Trump high marks on this score.

His brief statement following the North Korean missile test was also totally appropriate and all that was needed.

“The United States of America stands behind Japan, its great ally, 100%.”

Cuba: JetBlue became the latest airline to say it was reducing its service to Cuba, joining American Airlines, which announced it was dropping one of the two daily flights between Miami and the cities of Holguin, Santa Clara and Varadero, citing weak demand.

JetBlue is opting to fly smaller aircraft, though it didn’t formally say the change was because of a decline in demand.

I just get a kick out of this.  Everyone and their mother was rushing to get in this market.  I see zero attraction to going there.

Random Musings

--Retired Vice-Admiral Robert Harward was expected to replace Mike Flynn as national security adviser, but he turned down the offer, ostensibly because he wasn’t going to be allowed to bring in his own team. [See influence of Steve Bannon.]

This is going to be a big problem with just about any of the candidates remaining.

--Oklahoma attorney general Scott Pruitt is the head of the Environmental Protection Agency, having cleared the Senate by a 52-46 vote.  Republican Susan Collins (Maine) voted against; Democrats Joe Manchin (West Va.) and Heidi Heitkamp (N.D.) crossed over.

--The RealClearPolitics average of polls has President Trump with a 44% approval rating, 50% disapproval. 

A Gallup poll had only 38% of Americans approving of the job Trump is doing, while 56% disapprove, as of Friday’s figures.

A Fox News Poll found that when it comes to the temporary travel ban, 46% of voters approve, 52% disapprove.  53% say the indefinite ban on Syrian refugees “went too far.”

Meanwhile, by a 42-33 percent margin, voters think the travel ban makes the United States safer rather than less safe.

[No, I don’t acknowledge the Rasmussen poll and its 55% Trump approval rating because of its methodology, if there even is one.]

--While this shouldn’t be a huge surprise, Californians put President Trump’s approval rating at 34% among likely voters, 55% disapprove, according to a Public Policy Institute of California survey.  Although only 10% of Democrats in California approve, Trump is favored by 72% of Republicans.

85% of Californians favor a way for undocumented immigrants to stay in the U.S. legally if certain requirements are met.

65% of adults believe climate change poses a major threat to the nation, with 20% viewing it as a minor threat and 12% as no threat.

--Andrew Puzder had to withdraw his nomination to be President Trump’s labor secretary as senate Republicans began to abandon him.  The clincher was a videotape of Puzder’s wife appearing incognito on Oprah Winfrey’s television show in 1990, and detailing her claims of abuse during a testy divorce.  Puzder also came under intense fire from Democrats and liberal groups over his management of CKE Restaurants fast-food chain, owner of Hardee’s and Carl’s Jr.

And others focused their fire on his employment of an undocumented immigrant as a housekeeper and his failure to pay taxes for her services.

--White House senior policy adviser Stephen Miller, 31, made the rounds on the Sunday talk shows and particularly with his performance on “This Week” with George Stephanopoulos, he made my skin crawl.

Miller said on CBS’ “Face the Nation” that the judiciary was acting like “a supreme branch of government.”

“One unelected judge in Seattle cannot make laws for the entire country,” Miller told anchor John Dickerson, in addressing the executive order on immigration.  “I mean, this is just crazy, John.  The idea that you’re going to have a judge in Seattle say that a foreign national living in Libya has an effective right to enter the United States is beyond anything we’ve ever seen before.”

But it was his exchange on “This Week” that I found astounding.  It was one false talking point after another, including on alleged voter fraud.  [Glenn Kessler of the Washington Post gave Miller four Pinocchios.]

STEPHANOPOULOS: Let me move on, though, to the question of voter fraud as well. President Trump again this week suggested in a meeting with senators that thousands of illegal voters were bused from Massachusetts to New Hampshire and that’s what caused his defeat in the state of New Hampshire, also the defeat of Senator Kelly Ayotte.

That has provoked a response from a member of the Federal Election Commission, Ellen Weintraub, who says, “I call upon the president to immediately share New Hampshire voter fraud evidence so that his allegations may be investigated promptly.”

Do you have that evidence?

MILLER: I have actually, having worked before on a campaign in New Hampshire, I can tell you that this issue of busing voters into New Hampshire is widely known by anyone who’s worked in New Hampshire politics. It’s very real.  It’s very serious.  This morning, on this show, is not the venue for me to lay out all the evidence.

But I can tell you this, voter fraud is a serious problem in this country.  You have millions of people who are registered in two states or who are dead who are registered to vote.  And you have 14 percent of noncitizens, according to academic research, at a minimum, are registered to vote, which is an astonishing statistic.

This is a totally bogus reading of the 2012 Pew Center study that the Trump campaign, and now administration, continues to fall back on.

STEPHANOPOULOS: You can’t make a – hold on a second. You just claimed again that there was illegal voting in New Hampshire, people bused in from the state of Massachusetts.  Do you have any evidence to back that up?

MILLER: I’m saying anybody – George, go to New Hampshire. Talk to anybody who has worked in politics there for a long time. Everybody is aware of the problem in New Hampshire with respect to –

STEPHANOPOULOS: Do you have any evidence?

MILLER: If this is an issue that interests you, then we can talk about it more in the future.  And we now have – our governance is beginning to get stood up.  But we have a Department of Justice and we have more officials.

An issue of voter fraud is something we’re going to be looking at very seriously and very hard.

But the reality is, is that we know for a fact, you have massive numbers of noncitizens registered to vote in this country.  Nobody disputes that.

And many, many highly qualified people, like Kris Kobach, the Kansas secretary of state, have looked deeply into this issue and have confirmed it to be true and have put together evidence.

And I suggest you invite Kris Kobach onto your show and he can walk you through some of the evidence of voter fraud in greater detail.

The Kansas City Star wrote an editorial titled “Kris Kobach is a big fraud on Kansas voter fraud.”

The exchange between Miller and Stephanopoulos continued.....

STEPHANOPOULOS: Just for the record, you have provided absolutely no evidence. The president’s made a statement.

MILLER: The White House has provided enormous evidence with respect to voter fraud, with respect to people being registered in more than one state, dead people voting, noncitizens being registered to vote. George, it is a fact and you will not deny it, that there are massive numbers of noncitizens in this country who are registered to vote.  That is a scandal.

We should stop the presses. And, as a country, we should be aghast about the fact that you have people who have no right to vote in this country registered to vote, canceling out the franchise of lawful citizens of this country

That’s the story we should be talking about.  And I’m prepared to go on any show, anywhere, anytime, and repeat it and say the president of the United States is correct 100 percent.

STEPHANOPOULUS: Well, you just repeated, though, you just made those declarations. But, for the record, you have provided zero evidence that the president was the victim of massive voter fraud in New Hampshire.  You provided zero evidence that the president’s claim that he would have won the general – the popular vote – if 3 million to 5 million illegal immigrants hadn’t voted, zero evidence for either one of those claims.

--David Rothkopf / Foreign Policy

“Stephen Miller, top White House policy advisor and creepy, unblinking throwback to totalitarian propaganda ministries of old, bragged that Donald Trump has gotten more done in his first three weeks than some presidents do in their entire terms of office.  Seemingly allergic to facts as this champion of unsubstantiated scare stories is – from those about refugees to the myths of voter fraud – he may be on to something.  Trump is already breaking records.

“Disgraced former National Security Advisor Michael Flynn’s 24 days in office is by almost half a year the shortest tenure of any national security advisor in history.  The scandal that brought Flynn down is almost certainly the earliest of real consequence to hit a fledgling presidency.  From Flynn’s apparently illegal communications with the Russian government to Trump’s conducting of what should have been secret business in the middle of a dinner party at his Florida club, no White House has ever shown such contempt for the norms of operational security. Trump’s approval rating is the lowest for a new president in the modern era.  His disregard for the Constitution has not only gotten him in trouble with the court system earlier than any president in recent memory, but it quite likely gives him the record for being the earliest serial violator of his oath of office ever.  No president has even been enshrouded by anything remotely like the web of conflicts of interest that envelops Trump, who has made being above the law a foundational principle of his presidency.  He has done more to shake the confidence and earn the opprobrium of America’s most important allies – from the U.K. to EU and Mexican leaders to Australia – than any president since the United States became a world power.  And as Miller barked out on last Sunday’s morning news shows, this president is just getting started.  Attention must be paid....

“Of course, (we have also seen) the very serious consequences that come from having no policy process: the chaos surrounding the implementation of the president’s travel ban; a federal court putting a hold on that ban; the conflicting stories and framings of the ban from within the administration; and in other areas like the damage done to U.S.-Mexico relations by a presidential tweet (and presidential bad policy judgment) or that done to the U.S.-Australia relationship by a president who didn’t know his brief, anything about diplomacy, or have much of a grip on history or long-term U.S. interests.

“Beyond that, there were daily shocks on the government ethics front from the president’s ongoing refusal to disclose his tax returns as all his modern predecessors had done, his flouting of standards against nepotism, his refusal to divest his corporate interests, and his almost certain repeated violations of both aspects of the emoluments clause of the Constitution prohibiting him to profit from either foreign government payments or any remuneration from the U.S. government other than his salary.  His unorthodox living arrangement with his wife [Ed. Melania is going to become more and more of a story, see below] has created security costs that will surpass each year the level of funding required by, say, the National Endowment for the Arts, which the president allegedly seeks to defund.  His sons travel the world doing business that benefits their dad and enriches their family at large while also racking up big burdens to the U.S. taxpayer in the form of security costs.  [Ed. I didn’t write of it when I first saw the story, but the other week, Eric Trump went to Uruguay on business for a few nights and the Secret Service cost was huge.]....

“This brings us back to the scandal that brought down the hapless and arrogant Flynn.  If the White House thinks that throwing Flynn under the bus will relieve it of further scrutiny of Kremlingate, we had all better hope it is sadly mistaken.

“Flynn was just a small piece of this scandal.  Other members of the president’s inner circle, including possibly the president himself, have had long, worrisome ties with the Russians....

“In any other world, at any other time, a scandal that tied the president of the United States and his closest associates to one of America’s leading adversaries in the wake of action by that adversary that likely had a direct impact on the results of a U.S. election and subsequently resulted in a complete reversal of long-standing U.S. policy toward that adversary, would not just dominate U.S. political debate; it would obliterate discussion of anything else until it was fully resolved.  Not only would it – but it should. There has never been a scandal like it in American history.

“For that reason, we cannot and must not let the fog of Trump get the better of us. Nor can we let it derail necessary debate or the checks demanded by law on the other inchoate yet shocking outrages of the Trump Era (known otherwise as the past few weeks). We can’t let the number, scope, diversity, or complexity of the abuses of public trust currently underway serve as a defense for the perpetrators of those abuses, whether the fog is intentional or not.  We must flag every wrong, challenge every lie, and demand action where the law and our values demand it.  Nothing less than the future of American leadership, security, and credibility demands it.”

David Brooks / New York Times

“(In) capitals around the world, intelligence agencies are drafting memos with advice on how to play Donald Trump.

“The first conclusion is obvious. This administration is more like a medieval monarchy than a modern nation-state.  It’s more ‘The Madness of King George’ than ‘The Missiles of October.’  The key currency is not power, it’s flattery.

“The corollary is that Trump is ripe to be played. Give the boy a lollipop and he won’t notice if you steal his lunch.  The Japanese gave Trump a new jobs announcement he could take to the Midwest, and in return they got presidential attention and coddling that other governments would have died for.

“If you want to roll the Trump administration, you’ve got to get in line. The Israelis got a possible one-state solution. The Chinese got Trump to flip-flop on the ‘One China’ policy. The Europeans got him to do a 180 on undoing the Iran nuclear deal.

“Vladimir Putin was born for a moment such as this.  He is always pushing the envelope.  After gifting Team Trump with a little campaign help, the Russian state media has suddenly turned on Trump and Russian planes are buzzing U.S. ships.  The bear is going to grab what it can.

“We’re about to enter a moment in which U.S. economic and military might is strong but U.S. political might is weak.  Imagine the Roman Empire governed by Monaco.

“That’s scary.  The only saving thought is this: The human imagination is vast, but it is not nearly vast enough to encompass the infinitely multitudinous ways Donald Trump can find to get himself disgraced.”

--Paul Sperry / New York Post

“When former President Barack Obama said he was ‘heartened’ by anti-Trump protests, he was sending a message of approval to his troops. Troops?  Yes, Obama has an army of agitators – numbering more than 30,000 – who will fight his Republican successor at every turn of his historic presidency.  And Obama will command them from a bunker less than two miles from the White House.

“In what’s shaping up to be a highly unusual post-presidency, Obama isn’t just staying behind in Washington.  He’s working behind the scenes to set up what will effectively be a shadow government to not only protect his threatened legacy, but to sabotage the incoming administration and its popular ‘America First’ agenda.

“He’s doing it through a network of leftist nonprofits led by Organizing for Action.  Normally you’d expect an organization set up to support a politician and his agenda to close up shop after that candidate leaves office, but not Obama’s OFA.  Rather, it’s gearing up for battle, with a growing war chest and more than 250 offices across the country.

“Since Donald Trump’s election, this little-known but well-funded protesting arm has beefed up staff and ramped up recruitment of young liberal activists, declaring on its website, ‘We’re not backing down.’  Determined to salvage Obama’s legacy, ‘it’s drawing battle lines on immigration, ObamaCare, race relations and climate change.

“Obama is intimately involved in OFA operations and even tweets from the group’s account.  In fact, he gave marching orders to OFA foot soldiers following Trump’s upset victory.

“ ‘It is fine for everybody to feel stressed, sad, discouraged,’ he said in a conference call from the White House.  ‘But get over it.’  He demanded they ‘move forward to protect what we’ve accomplished.’

“ ‘Now is the time for some organizing,’ he said.  ‘So don’t mope.’

“Far from sulking, OFA activists helped organize anti-Trump marches across U.S. cities, some of which turned into riots.  After Trump issued a temporary ban on immigration from seven terror-prone Muslim nations, the demonstrators jammed airports, chanting: ‘No ban, no wall, sanctuary for all!’

“Run by old Obama aides and campaign workers, federal tax records show ‘nonpartisan’ OFA marshals 32,525 volunteers nationwide.  Registered as a 501(c)(4), it doesn’t have to disclose its donors, but they’ve been generous.  OFA has raised more than $40 million in contributions and grants since evolving from Obama’s campaign organization Obama for America in 2013....

“It will be aided in that effort by the Obama Foundation, run by Obama’s former political director, and the National Democratic Redistricting Committee, launched last month by Obama pal Eric Holder to end what he and Obama call GOP ‘gerrymandering’ of congressional districts.

“Obama will be overseeing it all from a shadow White House located within two miles of Trump.  It features a mansion, which he’s fortifying with construction of a tall brick perimeter, and a nearby taxpayer-funded office with his own chief of staff and press secretary.  Michelle Obama will also open an office there, along with the Obama Foundation.

“Critical to the fight is rebuilding the ravaged Democrat Party.  Obama hopes to install his former civil-rights chief Tom Perez at the helm of the Democratic National Committee.

“Perez is running for the vacant DNC chairmanship, vowing ‘It’s time to organize and fight...We must stand up to protect President Obama’s accomplishments’; while also promising, ‘We’re going to build the strongest grass-roots organizing force this country has ever seen.’

“The 55-year-old Obama is not content to go quietly into the night like other ex-presidents.

“ ‘You’re going to see me early next year,’ he said after the election, ‘and we’re going to be in a position where we can start cooking up all kinds of great stuff.’

“Added the ex-president: ‘Point is, I’m still fired up and ready to go.’”

--During his Wednesday press conference with Prime Minister Netanyahu, an Israeli reporter asked Trump the following:

Q: Mr. President, since your election campaign and even after your victory, we’ve seen a sharp rise in anti-Semitic incidents across the United States.  And I wonder what you say to those among the Jewish community in the States, and in Israel, and maybe around the world who believe and feel that your administration is playing with xenophobia and maybe racist tones.

President Trump: Well, I just want to say that we are very honored by the victory that we had – 306 Electoral College votes.  We were not supposed to crack 220.  You know that, right?  There was no way to 221, but then they said there’s no way to 270.  And there’s tremendous enthusiasm out there.

I will say that we are going to have peace in this country.  We are going to stop crime in this country.  We are going to do everything within our power to stop long-simmering racism and every other thing that’s going on, because a lot of bad things have been taking place over a long period of time.

I think one of the reasons I won the election is we have a very, very divided nation.  Very divided. And, hopefully, I’ll be able to do something about that. And, you know, it was something that was very important to me.

As far as people – Jewish people – so many friends, a daughter who happens to be here right now, a son-in-law, and three beautiful grandchildren.  I think that you’re going to see a lot different United States of America over the next three, four, or eight years.  I think a lot of good things are happening, and you’re going to see a lot of love.  You’re going to see a lot of love. Okay?

[Just shoot me.]

--Back to the aforementioned Melania Trump....

Laura Italiano / New York Post

“Melania Trump is secretly miserable as first lady, a new report claims.

“Private, self-conscious, and smarting from some harsh, even mocking press, Melania is ‘struggling with the realities of her new role and the scrutiny that comes with it,’ US Weekly says in its Feb. 27 cover story, citing family sources.

“ ‘This life wasn’t her dream.  It was Donald’s,’ a Trump family friend, stylist Phillip Bloch, told the magazine.

“ ‘Truthfully, it’s a lot to cope with.’

“Since Inauguration Day, Melania has spent almost all her time hiding inside the ‘gilded cage’ of the family’s lavish $100 million Trump Tower penthouse on Fifth Avenue – where treasured son Barron, 10, has a whole floor to himself.

“And she won’t be pressured into giving up her privacy.

“Recently, the White House team begged her to come to Washington and give her husband a PR boost by presiding over the traditional first lady tours at 1600 Pennsylvania Ave. – and posing for press photos, sources told US.

“ ‘She was told, ‘All you need to do is show up on one day and take photos,’' one family source said.  Melania declined.”

And then there’s the lawsuit against the Daily Mail, which implied she’d once worked as a high-end escort, an implication the newspaper later retracted.

Melania is happiest in Mar-a Lago.

“But while she did entertain Akie Abe in Florida – smilingly posing for the requisite photo op at Morikami Museum and Japanese Gardens in nearby Delray Beach – it was a struggle.

“ ‘Don’t let her smile [in the photographs] fool you,’ the source said.  ‘She hates this.’

“The source added, ‘Melania is unhappy with how her life ended up.

“ ‘She is miserable.’”

Yup, this is another potential problem for The Donald.  What if she left him in two years?

--Mika Brzezinski and Joe Scarborough, hosts of MSNBC’s “Morning Joe,” said they wouldn’t invite White House counselor Kellyanne Conway on their show anymore because she doesn’t provide reliable information.

“We know for a fact she tries to book herself on this show,” Brzezinski said.  “I won’t do it, ‘cuz I don’t believe in fake news or information that is not true.  And that is – every time I’ve ever seen her on television, something’s askew, off or incorrect.”

--I watched “Saturday Night Live” and I agree with a review that said when it comes to the attacks on President Trump, there was a “sense of exhaustion – of ‘How long can we keep this up?’”

Personally, I love Melissa McCarthy’s impersonation of Sean Spicer, but the segment on Kellyanne Conway and Jake Tapper crossed the line.

I told you a few weeks ago what would happen to Ms. Conway, and it is.  She’s flaming out, bigly.

But while she is used to playing in this cesspool, there is such a thing as cruelty and that’s what that skit was.

--Three children died of gunshot wounds in Chicago in a 24-hour period, Tuesday and Wednesday.  From the Chicago Tribune:

“It started on Saturday night when a 12-year-old girl was gravely wounded by a bullet while playing with friends in the West Englewood neighborhood.  Just 30 minutes later and about 4 miles away, another girl, 11, was shot in the head sitting in a car with her family on the South Side. She died Tuesday morning in her mother’s arms in a hospital.

“Hours later, on a sunny, unusually warm Valentine’s Day, the 2-year-old boy was gunned down while riding in the back seat of a car on the city’s West Side – a horrific attack captured on Facebook Live that also left the boy’s 26-year-old uncle dead and the uncle’s girlfriend and her unborn child hospitalized.”

All three then died in hospital.

--This topic really ticks me off.  The AAA Foundation for Traffic Safety found 88% of drivers 19- to 24-years-old acknowledged engaging in risky behavior such as texting while driving, running red lights or speeding during the previous month, according to a report released Wednesday.

Market research firm GfK surveyed 2,511 drivers from Aug. 25 through Sept. 6, and Millennials acknowledged texting or emailing while driving at nearly twice the rate of other drivers (59.3% to 31.4%).

Nearly half of Millennials reported running a red light even if they could have stopped safely, compared with 36% of the rest of drivers.

Nearly 12% of Millennials said it was acceptable to speed 10 mph over the speed limit in a school zone, compared with 5% of other drivers.

This is outrageous, and it should thus be no surprise that the number of traffic deaths rose to 35,092 in 2015, up 7.7% from a year earlier, the largest one-year jump in five decades.

Of course drivers are hypocrites.  40.2% of drivers reported reading a text or email during the previous month, 78.2% called that “completely unacceptable,” the survey said.

Well, I’m no hypocrite.  I do not check my phone while driving, period.  And I’m furious anytime I see someone else do it.

Separately, the National Safety Council estimates that motor-vehicle deaths surged in 2016, up 6% to 40,200 after the big rise in 2015; the sharpest two-year rise in more than a half-century. The NSC data isn’t the same as that which will come from the National Highway Traffic Safety Administration, which has yet to release its figures for last year.

--According to the American Psychological Association’s anxiety meter: “(The) January 2017 poll show a statistically significant increase in stress for the first time since the survey was first conducted in 2007,” the APA said on Wednesday. 

Americans’ stress levels in January were worse than in August, in the middle of the angriest, most personal political campaign in recent memory.  At 57 percent, more than half of respondents said the current political climate was a very or somewhat significant source of stress.

A full two-thirds of respondents to the survey said they are stressed out about the nation’s future, and while that includes 76 percent of Democrats, it reflects the feelings of 59 percent of Republicans as well.

Millennials reported more stress than their parents or grandparents, but they were strong supporters of Hillary Clinton.

The survey was conducted by Harris Poll from Jan. 5 to Jan. 19.

--We note the passing of Lt. Gen. Harold G. Moore, whose heroics in the first major battle between American and North Vietnamese troops was immortalized in the book he co-authored with Joseph L. Galloway, “We Were Soldiers Once...and Young,” Mel Gibson playing Moore in the terrific movie of the same name.

Gibson, who had visited with Moore recently, said: “He was a phenomenal man of great strength and character, courageous and like a father to his troops who got most of his boys out of there after he landed in a hornet’s nest.”

General Moore, a West Point grad, was George Armstrong Custer’s heir as commander of the Seventh Cavalry Regiment during the battle of Ia Drang Valley in November 1965.

The battle was fought in two places, Landing Zone X-Ray and Landing Zone Albany and when it was over, 234 Americans were dead, but also as many as 3,000 North Vietnamese.  The North Vietnamese outnumbered the Americans 12:1 and without Gen. Moore’s bravery, far more of his men would have died.

Moore’s son, David, said his father’s mantra was: “Hate war, love the American soldier.”

Lt. Gen. Harold G. Moore was 94.

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

God bless America.

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Gold $1236
Oil $53.37

Returns for the week 2/13-2/17

Dow Jones  +1.7%  [20624]
S&P 500  +1.5%  [2351]
S&P MidCap  +0.8%
Russell 2000  +0.8%
Nasdaq  +1.8%  [5838]

Returns for the period 1/1/17-2/17/17

Dow Jones  +4.4%
S&P 500  +5.0%
S&P MidCap  +4.5%
Russell 2000  +3.2%
Nasdaq  +8.5%

Bulls  61.8
Bears  17.6  [Source: Investors Intelligence]

Have a great week.

Again, site will be down a bit.  I will be back!

Heck, this week marks 18 years of S&N.  As David Byrne of The Talking Heads sang in “Once in a Lifetime,” My God...what have I done?!

Brian Trumbore