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04/13/2019

For the week 4/8-4/12

[Posted 11:30 PM ET, Friday]

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

*Special thanks to an old friend from my PIMCO days, Andy M.

Edition 1,044

I don’t have any pithy opening this week, because I’m kind of confused.  Just what the heck is President Donald Trump’s immigration policy and strategy?  Literally, as I’m about to post, he has tweeted at about 10:30 PM ET:

“If the Radical Left Democrats all of a sudden don’t want the Illegal Migrants in their Sanctuary Cities (no more open arms), why should others be expected to take them into their communities?  Go home and come into our Country legally and through a system of Merit!”

I don’t want to make this Republicans vs. Democrats, but the fact is this crisis, and, yes, it’s a crisis, is now the responsibility of Donald Trump.  He had a Republican Congress for two years, could have worked out a compromise with the Democrats, and didn’t.  Now it’s the issue for 2020, Congress is divided, and the president is saying one day he’s going to close the border with Mexico, until he is reminded by every business leader in America that that would be a disaster, then he says he’s giving Mexico a year to get its act together, but then he reportedly tells Kevin McAleenan, who was about to become acting secretary of homeland security, to close the border...as in wink wink, I know I said I wasn’t closing it, but don’t let anyone in.

The president today is looking to bring more military down there, which is dangerous in terms of our preparedness for any conflict around the world that the U.S. military is supposed to be in existence for, not border security, and then he does a number on the personnel of both Customs and Homeland Security, all due to the machinations of a creep, Stephen Miller, who, so help me, is the puppet master...as in Stephen Miller, some of us have known since day one, is this heretofore undistinguished, unelected, 33-year-old guy who is wielding immense power and impacting millions of lives.

This is nuts. Stephen Miller?!

And the president’s constant harping on ‘Merit’ in terms of those we allow into the United States should irk every single American, but of course we live in such a polarized nation, a large segment of the population agrees with the president on this single word, and policy, without using their brain.  If you read nothing else from this column, read Marc Thiessen’s piece down below.

Our immigration policy is a shambles...but we need immigration.  I worry that we have millions of adults, who are teaching their children about America, who aren’t passing down the lessons of what makes this country great.

The superintendent in my building, my good friend Luis, is from Ecuador.  He’s an American citizen.  He has a great wife.  The two of them raised an awesome son I’ve literally watched grow up in my nine+ years here, across from Celgene’s global headquarters, with the boy now in his first year of college in South Carolina.  They are living the American dream.

But would Luis and his wife have been able to come to this country on Donald Trump’s definition of ‘merit’?  No.

Some of you may like that.  If that’s your opinion, do your kids a favor.  Let them figure it all out on their own.

Trump World

Homeland Security Secretary Kirstjen Nielsen resigned Sunday, amid President Trump’s growing frustration and bitterness over the number of Central American families crossing the southern border. She led the agency since December 2017 and was this administration’s third Homeland Security secretary.  John Kelly had brought Nielsen to the White House after Trump named him chief of staff.

Nielsen quickly became a trusted aide to Kelly, and the two worked together to impose order on a dysfunctional White House that lacked clear lines of command.

Trump announced in a tweet that U.S. Customs and Border Protection Commissioner Kevin McAleenan would be taking over as acting head of the department.  McAleenan is a longtime border official who is well respected by many members of Congress and within the administration.

Nielsen was viewed as resistant to some of the harshest immigration measures supported by the president and his aides, particularly senior adviser Stephen Miller.

Editorial / Wall Street Journal

“Frustrated with Congress and the courts on border security, President Trump has responded by firing his own immigration-enforcement deputies. This political incoherence won’t produce better results at the border or break the stalemate in Congress over immigration.

“Mr. Trump was good enough to finally show Homeland Security Secretary Kirstjen Nielsen the door on Sunday after taunting her for months on Twitter and via White House leaks to the press. Her forced resignation comes a week after he yanked the nomination of Ron Vitiello to lead Immigration and Customs Enforcement to ‘go in a tougher direction.’  Restrictionists want him to clear house, but what do they hope to accomplish?

“After defenestrating the department’s top brass, Mr. Trump will be left with a dozen or so vacancies including the deputy secretary at Homeland Security, the general counsel and Citizenship and Immigration Services director. The Senate could take months to confirm replacements – assuming the President can find masochists who’ll take the jobs – and the lack of permanent leadership won’t ease the mess at the southern border....

“Some advisers want Mr. Trump to take ‘tougher’ actions that strain the legal limits of his executive authority such as ending birthright citizenship.  Other bad ideas include reviving family separations at the border, though Mr. Trump backed off that on Tuesday....

“Mr. Trump has cause to be exasperated that Congress has ignored him. Yet some of his advisers, especially immigration Svengali Stephen Miller, have also repeatedly scuttled attempts to forge a compromise with Democrats that could provide more legal immigration including work permits for young adults who came to the country as children.

“Last weekend the President channeled Mr. Miller by declaring ‘we can’t handle any more’ immigrants and ‘our country’s full.’  Yet this contradicts Mr. Trump’s avowals that the U.S. needs more foreign workers amid a stretched labor force. The Departments of Labor and Homeland Security acknowledged this reality Monday by making available an additional 30,000 H-2B visas for seasonal workers.

“Mr. Trump needs to offer an immigration policy that gets beyond the political dead end of Mr. Miller’s close-the-border restrictionism.  Democrats have no incentive to cooperate as long as Mr. Trump is raging against his own deputies as they’re the problem.

“The President needs to offer a larger immigration vision that combines border security while welcoming legal immigrants and offering Democrats something they want.  If they still refuse to cooperate, then he can offer that better vision to voters in 2020.  Until he does he’ll be frustrated by his own policy incoherence that sounds tough but accomplishes nothing.”

Late Thursday we had the story from the Washington Post, confirmed by others, that the White House tried multiple times to pressure immigration authorities into releasing migrants on the streets of sanctuary cities as retaliation against Democrats and to target sanctuary cities in liberal strongholds.  It didn’t come to fruition after pushback from U.S. Immigration and Customs Enforcement, the Post reported.  ICE rejected the idea after at first thinking it was a joke, the Post said.

Members of Congress and immigration advocates then blasted the proposal, calling the idea inhumane and calling for those within President Trump’s administration to be held accountable.

House Speaker Nancy Pelosi’s district was specifically targeted, according to the Post, noting that the White House wanted to transport migrants into her congressional district in San Francisco.

Former Secretary of Housing and Urban Development, Julian Castro, a candidate for the Democratic nomination for president, said during a CNN town hall:

“The cruelty of this administration never seems to end,” noting the list of Trump’s immigration policies that have been criticized or challenged in court.  “These folks want us to choose cruelty as a weapon against these people and against political opponents.”

So I saw the reports Thursday and thought this is the kind of story the president would slam as “fake news,” even if true, only early this afternoon, Trump doubled and tripled down, tweeting:

“Due to the fact that Democrats are unwilling to change our very dangerous immigration laws, we are indeed, as reported, giving strong considerations to placing illegal Immigrants in Sanctuary Cities only...

“...The Radical Left always seems to have an Open Borders, Open Arms policy – so this should make them very happy!”

So if you had any doubts what the lead campaign issue for the president was for 2020, they should now be formally dispelled. 

Marc A. Thiessen / Washington Post

“President Trump is 100 percent correct that there is a crisis on our southern border.  And he is absolutely right when he says some migrants are abusing our asylum laws. But he is dead wrong when he declares, in what has become his favorite refrain, that ‘Our country is FULL.’

“Sorry, our country is not full.  Not by a long shot.  The opposite is true. We need more immigrants, lots of them. In fact, no one needs immigrants more than Trump.

“Today, thanks to Trump’s leadership, the U.S. economy is strong.  Unemployment recently reached its lowest level in 49 years.  U.S. manufacturing employment is growing at the fastest pace in nearly a quarter-century.  On Trump’s watch, the unemployment rates for African Americans, Hispanics and Americans without a high school diploma have all reached the lowest points ever recorded.

“The Wall Street Journal recently called this ‘the hottest job market in half a century,’ declaring that ‘Workers are so scarce that, in many parts of the country, low-skill jobs are being handed out to pretty much anyone willing to take them – and high-skilled workers are in even shorter supply.  All sorts of people who have previously had trouble landing a job are now finding work.  Racial minorities, those with less education and people working in the lowest-paying jobs are getting bigger pay raises and, in many cases, experiencing the lowest unemployment rate ever recorded for their groups.’

“In some places, unemployment is so low that employers can’t find workers to fill the jobs.  There are now a record 7.1 million job openings in the United States.  According to the National Federation of Independent Business, 39 percent of small business owners who hired or tried to hire workers reported few or no qualified applicants for the position.  Nearly a quarter of all small-business owners report that finding qualified workers is their ‘single most important business problem.’  And the demand for seasonal workers is so big that, when the application window for H-2B visas opened up on Jan. 1, the Labor Department’s electronic filing system for the visas crashed due to overwhelming demand.  Employers requested three times as many visas as were available....

“If Trump wants to keep this strong economy going, and achieve his stated goal of sustained 3 percent growth throughout his presidency, he needs more workers.

“The trouble is, the United States is not producing enough native-born workers.  According to the Economic Innovation Group, 80 percent of U.S. counties lost prime working-age adults from 2007 through 2017.  And the situation is not improving....The U.S. population is now growing at less than replacement levels.

“The decline is driven in large part by millennials, who are marrying and having children at much lower rates than previous generations.  It’s ironic.  Many millennials want socialism, but they are not producing the future workers and taxpayers needed to pay for it.  The only thing stopping us from overall population decline is the arrival of immigrants, who account for about 48 percent of U.S. population growth....

“We need immigrants to work and pay taxes that fund Social Security and Medicare for our aging population. And we need immigrants to provide the human capital for continued economic growth and prosperity.  If the president wants to keep this economic boom going, he needs more people coming to the United States, not fewer.

“So, yes, our shining city on a hill needs walls – because the world is a dangerous place, and we are a nation of laws. But, as President Ronald Reagan put it in his farewell address, those walls must also have doors.  And the sign above those doors should read ‘Welcome to America’ – not ‘Sorry, we’re full.’”

Back at the border, wait times at the ports of entry have soared as the Trump administration diverts officers to handle the influx of immigrants, leaving trucks backed up for hours, with possible produce shortages and supply-chain interruptions.

Business leaders, and Mexico’s foreign minister, are among those complaining, with the latter calling the move a “very bad idea.”  The shift in enforcement efforts is overwhelming legal checkpoints and impeding the free flow of goods.  Trump has said he would consider closing the border as a punitive measure if Mexico doesn’t take steps to reduce the flow of migrants to the United States within the next year.

Those suffering most are automakers, tech companies and farmers, with $1.7 billion a day in goods crossing the border between the two countries.

By week’s end Trump said he would have to mobilize more of the military, after listening to stories from people attending a Republican fundraiser about migrants crossing the border.

Trumpets...

--Attorney General William Barr said he would form a team to examine the origins of a 2016 counterintelligence investigation that conducted what he termed as ‘spying’ on people affiliated with the Trump campaign, a characterization Democrats said was politically motivated and echoed the president’s longstanding criticism of the Justice Department’s Russia probe.

At a Senate hearing on Wednesday, Barr said the team would look at what lay behind the FBI’s probe of the Trump campaign’s possible ties to Russia, which included surveillance.

“I think spying on a political campaign is a big deal,” Barr said, invoking Vietnam-era intelligence abuses such as the surveillance of antiwar activists as a reason to raise these questions.  “Spying did occur. The question is whether it was adequately predicated.”

Barr’s move immediately provoked questions on Capitol Hill from Democrats who rebuked Barr for his implication that legitimate investigative activities into Russian interference should be considered “spying.”

The inquiry by Barr’s team will mark the third ongoing investigation – including one being conducted by the Justice Department’s inspector general – of the department’s actions in connection with the 2016 counterintelligence probe.

Mr. Barr didn’t elaborate on what he meant by spying.

Meanwhile, he said he would deliver the Mueller report to Congress within a week, and that he would be transparent about redactions in the report.  But he demurred when asked whether he has briefed the White House on it.

--Treasury Secretary Steven Mnuchin told lawmakers on Tuesday that White House lawyers had been in touch with his department about a congressional request for President Trump’s tax returns but said he had not personally spoken to Mr. Trump or those lawyers about how the matter was being handled.

“It is our intent to follow the law,” Mnuchin said during one of the hearings he was subjected to.  “It is being reviewed by the legal departments and we look forward to responding to the letter.”

--President Trump’s expected nomination of former pizza chain executive Herman Cain to the Federal Reserve Board appeared in jeopardy on Thursday after a fourth Republican senator voiced opposition.  Cain will be withdrawing his name from consideration shortly.

--President Trump tweeted Thursday: “Great news! #MAGA,” along with a screenshot from “Lou Dobbs Tonight,” the graphic reading “Trump’s soaring approval,” which was above statistics that read “55% overall” and “58% economy.”  It cited Georgetown Politics as the source.

The latter number was correct. The first Georgetown Institute of Politics and Public Policy “Battleground Poll” for the 2020 presidential election found that 58% of voters approve of his handling of the economy.  But the graphic implied his job approval rating was 55% when the poll actually found that only 43% approved of the job he is doing and 52% disapproved.

41% had a favorable impression of Trump, 55% had an unfavorable one.  [Speaker Nancy Pelosi had a 37% favorable rating and a 53% unfavorable one.]

The Fox Business Network delivered an on-air correction to the error.

--In a wide-ranging interview with Politico, former White House strategist Steve Bannon said American can expect “pure Trump off the chain” if the president is re-elected.  Bannon said a second term would mean “four years of Donald Trump in payback mode.”

Bannon also observed no one in the Democratic field could “take on Trump one-on-one” among the current candidates.

Bannon also didn’t dismiss the idea of Hillary Clinton running again in 2020, saying if Democrats “don’t think that they’ve got somebody that can beat him, the vampire is going to be in the bullpen.  She did get 63 million votes.”

Trump tweets:

“I think what the Democrats are doing with the Border is TREASONOUS.  Their Open Border mindset is putting our Country at risk.  Will not let this happen!”

“Even the Democrats now say that our Southern Border is a Crisis and a National Emergency.  Hopefully, we will not be getting any more BAD (outrageous0 court decisions!”

“President Obama’s top White House lawyer, Gregory B. Craig, was indicted yesterday on very serious charges.  This is a really big story, but the Fake News New York Times didn’t even put it on page one, rather page 16. @washingtonpost not much better, ‘tiny’ page one.  Corrupt News!”

“I have not read the Mueller Report yet, even though I have every right to do so.  Only know the conclusions, and on the big one, No Collusion.  Likewise, recommendations made to our great A.G. who found No Obstruction.  13 Angry Trump hating Dems (later brought to 18) given two...

“...years and $30 million, and they found No Collusion, No Obstruction.  But the Democrats, no matter what we give them, will NEVER be satisfied.  A total waste of time.  As @FrankLuntz has just stated, ‘Enough, America has had enough.  What have you accomplished.  Public is fed up.’”

Wall Street and Trade

The International Monetary Fund held its semiannual meeting in Washington this week and issued a new forecast for global growth, 3.3% in 2019, down from a forecast of 3.7% last October.  The IMF projects 3.6% in 2020.

The United States is expected to grow 2.3% this year, 1.9% in 2020.

The IMF pegs China at 6.3% this year, with Japan at 1.0%.

For the Euro Area, the IMF is looking at 1.3% growth in 2019, with Germany at just 0.8%, France 1.3% and Italy 0.1%.

The IMF warns that the global economy is slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus measures.  In its World Economic Report, the IMF pointed to the U.S.-China trade war and a potentially disorderly British exit from the European Union as key risks and warned that chances of further cuts to the outlook were high.

The Federal Reserve released its minutes from the March Open Market Committee meeting and they show the Fed saw the U.S. economy weathering a global slowdown, policymakers making it clear they saw no recession for the United States in the next few years.

But some committee members said they could change their minds on whether the Fed’s next move should be to raise or lower rates, based on incoming data.

After the central bank’s meeting March 19-20, Chairman Jerome Powell said, “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy,” seemingly ruling out a rate increase anytime soon.

In a survey of economists by the Wall Street Journal, the Fed is now expected to keep rates unchanged at least through the end of 2021.  Last month, the same survey had the Fed raising rates once this year (your editor’s prediction), but Fed officials’ statements and projections since then appear to have changed everyone’s outlook.

While no one expects a rate cut this year, which the administration is calling for, a third of the economists surveyed expect one or more reductions by the end of 2021.

In the Journal survey, economists saw a 26% probability of a recession in the next 12 months, up from 18% in October.

Meanwhile, on the economic data front, the Fed won’t be concerned with the latest inflation news for March.  Producer prices rose a stronger than expected 0.6%, due to rising energy prices, but ex-food and energy the number was in line, 0.3%.  Year-over-year, the PPI is at 2.2%, a little hotter than projected, but 2.4% on core, a little lower.

Consumer prices for March rose 0.4%, but just 0.1% ex-food and energy, with the respective 12-month readings being 1.9% and 2.0%.

February factory orders were down 0.5%, in line.

And then we had the report on the budget deficit for March, -$146.9 billion, as per the Treasury Department. So this leaves the six-month deficit (since October 1) at $691.2 billion, 15.3% larger than the same period in fiscal 2018

Total receipts for the first six months were $1.507 trillion, up 0.7% from the same period in the previous year.  Individual income tax receipts fell 1.7% from a year ago to $723.8 billion, while corporate income tax receipts were down 13.5% to $68.0 billion.  Offsetting the declines were sizable increases in customs duties, up 88.6% to $34.7 billion, excise taxes, and employment/retirement social insurance receipts.

Outlays for the first six months of fiscal 2019 totaled $2.198 trillion, up 4.9% from the comparable period a year ago.  Net interest expense was up 14.8% to $190.3 billion, while defense spending was up 9.2% to $342.0 billion, and social security payments, up 5.6% to $309.5 billion.

The next report, for April, will show a budget surplus, it being tax time, but the overall picture is not good.

As for the Atlanta Fed’s GDPNow barometer for the first quarter, it is all the way up to 2.3%, which happens to be the average for GDP the last 10 years.  There could be a big swing next week with data on retail sales, inventories, housing and international trade.

On the trade front...negotiators for both the United States and China are trying to reach compromise on remaining issues that block an agreement.  Treasury Secretary Mnuchin said Wednesday that the two sides have agreed to set up enforcement offices to monitor compliance with an eventual deal, which has been one major stumbling block; China concerned that checks on its policies by U.S. officials would be an infringement of its sovereignty. 

But the agreement will also allow China to monitor U.S. behavior, a reciprocal concession that analysts said showed determination from both sides to reach a broad deal.

China sweetened an offer to open its cloud-computing sector to foreign companies, in a bid to forge a deal after U.S. negotiators rejected an earlier proposal as inadequate.

In last week’s talks in Washington, Chinese negotiators, led by Vice Premier Liu He, proposed to issue more licenses that businesses need to operate data centers and to lift the 50% equity cap that limits ownership for certain foreign cloud-service providers, according to the Wall Street Journal.

Amazon.com, Microsoft and Apple have invested $millions to provide cloud services in China, but are hampered by regulations.  By allowing them to enlarge their presence, and pick up more market share, it would help meet President Trump’s goal of reducing the U.S. trade deficit with China.

Secretary Mnuchin said the trade deal ran to more than 150 pages and these were currently under discussion.  There was no time frame, he said, but they hoped to wrap things up quickly.

Mnuchin did not say whether the monitoring system would involve U.S. officials being based in China, but it’s assumed the new offices would allow both sides to step up communications.

Last weekend, Chinese state media said the two sides had made “new progress” in the talks, without being specific.

White House economic adviser Larry Kudlow said, “We are making headway in a lot of areas. That includes enforcement, that includes IP theft, that includes forced technology transfers, ownership, cyberspace, commodities and all the rest of it.”

Meanwhile, the Trump administration is proposing tariffs on $11 billion in imports from the European Union in response to harm the U.S. says is being caused by EU subsidies to Boeing rival Airbus SE. 

The U.S. Trade Representative’s office cited the World Trade Organization’s finding that the aid to Airbus has “repeatedly” caused “adverse effects to the United States.”

The administration is beginning a process under Section 301 of the Trade Act of 1974 to “identify products of the EU to which additional duties may be applied until the EU removes those subsidies.”

The threatened tariffs, which we learned would be on new passenger helicopters, various cheeses and wines, and certain motorcycles, among other goods, would be implemented only after the WTO gave the final go-ahead this summer, the administration said, which is interesting because President Trump has previously trashed the WTO.

Robert Lighthizer, the U.S. trade representative, said, “This case has been in litigation for 14 years, and the time has come for action.”  I totally agree with this one.

But Lighthizer just wants to see an end to the EU subsidies in question so that tariffs aren’t necessary.

This action is totally separate from any broad trade discussions between the EU and the U.S., which are at a standstill, EU officials not having reached consensus on a negotiating stance.

Europe and Asia

After the slew of data the week before, the only report of note concerning the Eurozone economy was for February industrial production, down 0.2% over January for the EA19, and down 0.3% year-over-year, reflecting the sad state of manufacturing in the euro area these days.

But we also had a meeting of the European Central Bank, which kept its ultra-easy monetary policy unchanged as expected on Wednesday, giving recent stimulus measures time to work their way into the economy and counter spreading global gloom, or so the ECB says.  President Mario Draghi confirmed that policymakers were considering measures to mitigate the impact on banks of its negative deposit rates as well as the pricing of new cheap two-year loans to banks, but said it was too early to decide.

“We need further information that will come to us between now and June,” Draghi said, which didn’t go over well with the banks, who want more help now.  Draghi added, “Incoming data continue to be weak, especially for the manufacturing sector... The slower growth momentum is expected to extend into the current year,” he added.

But Draghi said the probabilities of recession “remain low,” though risks remained to the downside.  That said, the ECB has previously said it was prepared to keep interest rates at record low levels at least through this year.

Brexit: European Union leaders and British Prime Minister Theresa May agreed to extend the UK’s departure from the bloc until Oct. 31, as today’s April 12 deadline loomed.  Without the extension, Britain faced the prospect of crashing out of the EU with no deal, a scenario that most conceded would lead to a deep recession as tariffs are imposed on UK exports and other restrictions on trade are imposed.

Mrs. May’s path toward actually taking Britain out of the EU, however, remains unclear.  She is blocked by a strong faction in her own Conservative Party that hates her withdrawal deal and hopes to oust her, and talks aimed at winning support from the opposition Labour Party are moving forward slowly, if at all.

May’s own authority has been gravely compromised by the long Brexit ordeal and she has promised to step down once Britain leaves the bloc, if efforts to get rid of her more quickly do not bear fruit.

European Council President Donald Tusk pleaded, “Please, do not waste this time.”  He said the EU was giving Britain six more months “to find the best possible solution” to the Brexit impasse. 

But like with everything else in this nearly 3-year debacle, going back to the June 2016 referendum, the extension was a messy compromise.  May had come to the emergency summit in Brussels seeking to postpone Britain’s departure from the EU until June 30.  Some European leaders favored a longer extension, while French President Emmanuel Macron was wary of anything but a very short delay, pushing for a June Brexit.  Macron strongly opposed the other leaders’ preference for a year-long extension; proponents feeling that over the course of a year, odds would increase that Britain would change its mind and stay in the bloc.

But Macron argued that a long extension risked disrupting the bloc’s more important work and that Britain’s political confusion could prove contagious – that even a hard Brexit was better than a paralyzed European Union.

German Chancellor Angela Merkel stressed the need for Britain to have time to manage an orderly process, which would allow for a good relationship between the two sides after the divorce.

The October 31 date is important in that a new European Commission is formed then and Britain would be outside of it.

So the leaders of the 27 remaining EU member states wrangled for six hours Wednesday night, over a reported dinner of scallops and cod, before settling on the October date, the Halloween Brexit, with the possibility of an earlier withdrawal agreement should the May government and the British parliament finally reach a consensus.

May told reporters that if lawmakers back her Brexit deal (already turned down three times), Britain could still leave by June 30, and possibly as soon as May 22, which would release Britain from having to participate in elections for the European Parliament (May 23-26).

Tusk said that during the extension Britain “will continue its sincere cooperation as a full member state, with all its rights, and as a close friend and trusted ally in the future.”

EU diplomats will now meet end of June to assess the situation. Britain could have left by then if May succeeds in building a coalition for her deal with the Labour opposition, though this is far from a sure thing.

In order to continue as an EU member beyond June 1, May has agreed to organize British elections to the European Parliament on May 23, though it is still unclear if that vote will go ahead and how far it might turn into a virtual second referendum on EU membership that some hope could lead to Britain cancelling Brexit.

For now, the prime minister has urged lawmakers to reflect on Brexit during their Easter recess.

One non-Brexit item...Italy’s populist government conceded it won’t hit its budget-deficit target agreed on with European Union authorities, setting the stage for renewed tensions with Brussels.

The Italian government has been forecasting growth of 1.0% for this year, but now admits it will be closer to 0.2%, or worse.  Markets are sensitive to Italy’s lack of growth because of its humongous debt load, 132% of GDP and headed higher, not down, as the government wanted us to believe.

Separately, Italy’s Deputy Prime Minister Matteo Salvini said he would host a major rally of European nationalist and far-right parties to promote a shared political vision ahead of May’s EU parliamentary elections.

Salvini leads the ruling League party and hopes to put together a bloc of like-minded, anti-immigration parties in the European parliament to challenge the traditionally predominant and mainstream center-left and center-right groups.

But Salvini’s attempts at a broad, Euro-wide front have been limited thus far, with the EU’s conflicting national interests.

For example, AfD (Alternative for Germany), the anti-euro, far-right party, said while it has similar anti-immigrant views as the League, it differs on positions like the need to respect EU fiscal rules.

Turning to Asia...

China’s factory-gate, or producer prices, rose for the first time in nine months in March, lifted by rising prices in global commodities as well as signs that government efforts to stimulate the economy may be putting a floor under domestic demand.

Consumer inflation also quickened to the highest point since October 2018, as pork prices soared due to a growing epidemic of swine fever, the National Bureau of Statistics announced.

The PPI rose 0.4% from a year earlier.  The CPI rose 2.3% vs. a year ago, with pork prices up 5.1% from March 2018. Non-food inflation was 1.8%.

Exports in March grew by 14.2%, a big jump from the 20.7% fall in January and February (the data combined due to the Lunar New Year holiday in February), with imports falling 7.6%, after a 19.9% collapse those two months.

The export news was welcomed, but imports continued to slump, suggesting weak demand.

The new data from the General Administration of Customs means that for the first quarter, China’s exports grew by 0.9%, while imports contracted by 4.4%.

China’s trade surplus with the U.S. was $20.5 billion in March.

China’s gross domestic product for the first quarter will be released on April 17, which should offer real evidence of how the trade war with the U.S. has affected the economy.

In Japan, Prime Minister Shinzo Abe has repeatedly said a planned sales tax hike to 10 percent from the current 8 percent will take place in October, after Tokyo has postponed raising the rate twice.  To blunt the economic impact, the government has earmarked $18 billion in spending.

Authorities say the move is needed to cover growing social welfare costs as the population rapidly ages.  But the hike is likely to knock the economy into contraction in the fourth quarter, according to a Reuters poll of economists.

Abe could delay the hike a third time.

Street Bytes

--The major indices finished mixed on the week, with the Dow Jones down just 12 points to 26412, -0.05%, but the S&P 500 up 0.5% and Nasdaq 0.6%, as all three remain within striking distance of their all-time highs.

But the next three weeks will see a flood of earnings reports and FactSet is forecasting earnings for the S&P 500 in the first quarter will decline 4.2%, though early indications are this is too pessimistic, with profits for all of 2019 rising 3.7%, after 20% growth in 2018.

The market, witness its strong start to the year, has long discounted poor first-quarter guidance and is expecting the balance of 2019 to be better than currently forecast, plus it expects a satisfactory resolution to the U.S.-China trade talks and no serious issues with the Euro economy, or Brexit. 

As Ray Stevens once sang, “Everything is beau-ti-ful...in its own way....” [#1 1970]

--U.S. Treasury Yields

6-mo. 2.44%  2-yr. 2.39%  10-yr. 2.57%  30-yr. 2.98%       

The yield on the 10-year is back to 2.57% from a cycle low of 2.41% just two weeks ago, which is important for the housing market, if the upward trend continues.

--Oil rose again this week, to $63.76.  And not for nothing, but the price of gas at the pump is up bigly in my area, 30 cents in just weeks.  The national average for unleaded regular is now $2.78.

But the big story in the energy sector came today, as Chevron announced it was buying Anadarko Petroleum for $33 billion in cash and stock as the company doubles down on its bet on U.S. shale oil and gas production, where the surge in output has made the United States the world’s largest energy producer.

With the spike in the oil price this year, Chevron and its rival Exxon Mobil Corp. have been increasing investment in the Permian basin in West Texas, the most prolific shale oil field in the country.

Shares of Apache Corp., which also has extensive acreage in the Permian Basin, jumped 7 percent today, while Pioneer Natural Resources Co. rose 6 percent on the Anadarko acquisition.

At the end of 2018, Exxon and Chevron accounted for about one-fifth of Permian output, where producers pump around 4 million barrels per day currently.  The acquisition of Anadarko will give the combined company a 75-mile-wide corridor across the Permian’s Delaware basin, on the Texas-New Mexico border.

--Boeing on Tuesday said first-quarter orders of its 737 model dropped nearly 90% from the previous quarter after the company suspended deliveries and regulators around the world grounded the 737 MAX following the two deadly crashes in Indonesia and Ethiopia.

Boeing said orders for its best-selling plane fell to 32 in the first three months of the year, none in March, down from 248 in the fourth quarter of 2018. [March was the first month without a sale of the aerospace giant’s best-selling aircraft in almost seven years.]

The company said it delivered 89 737s in Q1, down from 173 in the previous period, including just 11 of the 737 MAX jets in March. 

Boeing previously issued guidance in January that it would deliver over 900 jetliners this year, with analysts previously expecting this figure to include more than 550 MAX planes.

Earlier, Boeing had said it would cut its production by 20% as it rolls out a software patch to the system blamed for the crashes.  With the fix needing approval from global regulators, some are now predicting the 737 MAX won’t be returning to commercial flight until at least September.

The production cut and global grounding of the MAX aircraft are prompting airlines to rearrange their operations and schedules ahead of the busy summer travel period.  Southwest, for example, the largest operator of the 737 MAX with 34 in its fleet, was planning on adding 31 this year.  Needless to say this is impacting operations.

And today, it was reported that before last month’s crash in Ethiopia, Boeing said in a legal document that large, upgraded 737s “cannot be used at what are referred to as ‘high/hot’ airports.”

At an elevation of 7,657 feet – or more than a mile high – Addis Ababa’s Bole International Airport falls into that category.  High elevations require longer runways and faster speeds for takeoff.

The Ethiopian airport’s altitude hasn’t been cited as a factor in Flight 302.  The preliminary report on the disaster said the plane’s anti-stall system pushed the nose of the plane down less than two minutes into the flight because of a malfunctioning sensor.

The revelation on high/hot airports was part of a case Boeing brought before the International Trade Commission, with Boeing alleging unfair competition from Bombardier – which beat out Boeing for a large order from Delta Air Lines.

--Staying in the aerospace sector, a Lockheed Martin F-35 stealth fighter jet crashed over the Pacific Ocean close to northern Japan, with the pilot missing.  The plane was less than a year old, with the first squadron of F-35s just becoming operational at the Misawa air base.  The Japanese government plans to buy 87 of the stealth fighters to modernize its air defenses as China’s military power grows.

The crash represented just the second time an F-35 has gone down since the plane began flying almost two decades ago.  Each plane costs about $100 million.

--Uber told some investors that its upcoming initial public offering might value the company at up to $100 billion, which is below the $120 billion valuation that has been floated by investment bankers.

Uber’s main North American competitor, Lyft, debuted last month and its shares plummeted this week to $59.85 below the $72 IPO price.

Another Silicon Valley darling, Pinterest, this week set its pricing expectations for its own IPO below its last private fund-raising round.

The issue is all three of the above are major money losers, at the moment, so what is the real appetite for them with investors?

You just don’t want to break your IPO price as Lyft has, and so early.

So on Thursday, Uber made its IPO papers public, the so-called S-1 filing it had made with the Securities and Exchange Commission in December.

The filing shows that the spectacular growth Uber has enjoyed in its core ride-hailing business has leveled off lately.  The company’s revenue from ride-hailing was $2.31 billion in the fourth quarter, little changed over the prior six months.

Overall revenue last year was $11.27 billion, but the company’s total losses on operations – excluding items like sales of business units – totaled more than $10 billion between 2016 and 2018, and were $3.03 billion last year alone, Uber warning in the filing it may never make a profit due to competition in the ride-hailing space, which continues to expand.  Uber also said it expects operating expenses to “increase significantly in the foreseeable future” and cautioned it “may not achieve profitability.”

Uber had 67% of the U.S. ride-hailing market last year, down from 78% two years earlier, according to Second Measure Inc., which analyzes credit card transactions.

But unlike Lyft Inc., Uber has built big businesses in Europe, India and Latin America, and its ambitions go beyond ride-hailing, such as with Uber Eats, and a trucking business called Uber Freight.  Eats has grown quickly to represent more than 13% of Uber’s total net revenue.  But this too is an increasingly competitive business.

The filing sets up the company to begin trading in early May following a roadshow in late April.

--The country’s largest bank, JPMorgan Chase & Co., saw its shares rise 5% as it reported better than expected earnings and revenue for the first quarter. The company said the U.S. consumer is in good shape, pointing to healthy credit-card spending and auto lending.

“Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong,” said CEO Jamie Dimon in a statement.

JPM reported a profit of$9.18 billion, well above expectations, with revenue rising 4.7 percent to $29.85 billion.

--Shares in Wells Fargo fell a bit, with falling revenue across all segments of the business as it continues to deal with the aftermath of the fake accounts scandal; mortgage originations falling 23% in the quarter from a year ago. 

But the fourth-largest U.S. bank by assets did still record a profit of $5.86 billion, up 14%, though helped by one-time gains.

With the resignation of CEO Tim Sloan last month, Wells said the board has chosen a firm to help with the CEO search.  What was once an aggressive, fast-growing lender, has become a firm with declining revenue and big cost cuts looming.

--Bank of America announced it planned to raise its minimum wage to $20 an hour from $15 over the next two years.  Income inequality has become a major focus among Democrats in Congress and the big banks are trying to deal with the shifting political winds.  Bank CEOs need to be able to explain to the more progressive representatives why they are paid more than 700 times what low-wage workers, including some tellers in their branches, earn each year.

BofA CEO Brian Moynihan was among the bank honchos to appear Wednesday before the House Financial Service Committee, where the issue of executive pay, diversity and other issues came up, but it was basically a non-event.

--Societe Generale, France’s third-largest bank, announced it planned to cut 1,600 jobs, mainly at its corporate and investment banking arm; part of a plan to slash $563 million in costs. The bank employs 18,000 in 30 countries.  The cuts will be in France, London and New York.

--As first reported by Bloomberg, Amazon is listening to customers through Alexa devices, with seven former employees who were part of Amazon’s voice review program coming forward with the startling revelations.

Employees recorded thousands of clips including a woman singing in the shower and a sex assault, it emerged Wednesday.

Full-time workers and contractors reportedly sift through as many as 1,000 recordings per shift – and even share “amusing” clips between themselves.

The former employees told Bloomberg the recordings are linked to the customer’s first name, their device’s serial number and even their personal account number.

Amazon then confirmed the story, with a spokesperson saying that “an extremely small sample of Alexa voice recordings” are analyzed by staff.

Amazon added the process “helps us train our speech recognition and natural language understanding systems, so Alexa can better understand your requests, and ensure the service works well for everyone.”

Apple and Google have admitted previously they have employees who listen to audio commands, but both insist the recordings are completely anonymous and are not paired with customers’ accounts.

--The U.S. wants foreign governments to follow Germany in adopting stricter security standards for their 5G networks, which would effectively rule out the use of Chinese equipment vendors, namely Huawei.

Germany set the tougher standards last month, stopping short of singling out Huawei for special treatment, which was a blow to Washington, having led efforts to get Western governments to ban the Chinese behemoth due to concerns its equipment could be used to support Chinese spying, allegations Huawei has repeatedly denied.

But, Robert Strayer, deputy assistant secretary for cyber policy at the State Department, said the Trump administration approved of the German move.

“We have encouraged countries to adopt risk-based security frameworks. And we think that a rigorous application of those frameworks...will lead inevitably to the banning of Huawei....

“At this point, we’re looking for governments to adopt security standards like we’re seeing in Germany.  We think it was a very positive step forward in the German standards,” Strayer said on a call with reporters the other day.

--Panasonic is freezing plans to expand its role as Tesla’s electric car battery supplier, a move raising new questions about demand for Tesla’s Model 3, and possibly its future.  Japan’s Nikkei Asian Review reported that Panasonic was abandoning plans to expand its manufacturing capacity at the company’s Nevada battery factory by 54% next year.

A Tesla spokesman said the company’s demand for batteries remains strong.  “Contrary to what is implied in [the Nikkei] report, our demand for cells continues to outpace supply.  It remains the fundamental constraint on Tesla vehicle and Powerwall/Powerpack production.”

Powerwalls and Powerpacks are home and utility battery storage products assembled and sold by Tesla.

As I noted the other week, Model 3 deliveries fell 19% in the first quarter, with a 56% drop in sales for the company’s Models S and X.  There are also stories Tesla no longer has a waiting list.

One more.  David Einhorn’s Greenlight Capital hedge fund renewed its criticism of Elon Musk and Tesla today, saying the company again appeared to be on the “brink” of failure, according to a letter sent to clients of the fund.  The letter cited a lack of demand, “desperate” price cuts, layoffs, “closing-and-then-not-closing” stores, closing service centers, slashing capital expenditures, rushed product announcements and “a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities.”  “We believe that right here, right now, the company appears to again be on the brink,” the letter said.

--Disney unveiled how it will compete in the streaming video business now ruled by Netflix.  Disney+, its “family friendly” video streaming service, will start Nov. 12 and cost subscribers $6.99 a month.

The streaming service is being launched into a saturated market dominated by Netflix and Amazon.  Apple is also planning to launch its own streaming service later this year.

CEO Bob Iger said the service will be built around five Disney properties: Disney, Pixar, Marvel, LucasFilm and assets it acquired from Twenty-First Century Fox, like National Geographic.

I was shocked that this news, long anticipated, led to a 12% surge in the share price to a new record for Disney, $130.  Plus CEO Bob Iger confirmed he was stepping down at the end of 2021, which will be in the midst of the rollout.

Then again, Disney+ will have 30 years of “The Simpsons,” and there is something to be said for that.

--Johnson & Johnson won the latest trial over claims its baby powder can cause cancer, as a jury in Long Beach, Calif., rejected a lawsuit brought by a 65-year-old retired teacher who claimed the product was contaminated with asbestos.

The J&J victory came after the company settled three cases alleging its baby powder caused a rare asbestos-related cancer.  The cases, two of which were settled during trial, were in New York, Oklahoma and California.

--Bed Bath & Beyond Inc. reported its first annual loss and sales decline in its nearly three decades as a public company.  The home-goods retailer posted a 2.6% sales decline and swung to a $137.2 million loss in the year ended March 2.  The prior year it reported a profit of $424.9 million.

BBBY is opening a series of so-called lab stores to test assortments and displays and is introducing several private-label home-furnishing brands to improve sales.

The company guided higher on profitability this year, but projected sales would fall from last year’s level.

For the latest quarter, same-store sales fell 1.4%, worse than analysts had expected.

When BBBY went public in 1992, it had 34 stores.  It now has more than 1,500, though the company said it was closing 40 this year; a figure that would grow unless the company can negotiate more favorable lease terms with the landlords, according to the CFO.

--Royal Dutch Shell PLC said Monday it would invest $300 million in the protection and restoration of natural ecosystems over the next three years as part of an effort to reduce its carbon footprint by 2-3%.

Shell is investing in forests, wetlands and other natural ecosystems around the world, and will collaborate with the Dutch state forestry service to plant over 5 million trees in the Netherlands.

The oil giant is also investing in 200 new rapid electric-vehicle charging stations in the Netherlands, powered by renewable energy, to go along with 500 it has already installed elsewhere in Europe.

--Italian carmaker Fiat Chrysler Automobiles NV has agreed to pay electric carmaker Tesla Inc. hundreds of millions of euros so that the vehicles of Tesla are counted in its fleet to avoid fines for violating new European Union emission rules, the Financial Times first reported.

The step will let FCA offset carbon dioxide emissions from its cars against Tesla’s, by bringing down its average figure to a permissible level.  Details on the financial agreement weren’t announced.

--If you are thinking of building a swimming pool in your backyard, I saw a piece in the Los Angeles Times, a study from Redfin, that analyzed 26,000 properties sold in the L.A. metropolitan area last year.  “Homes with a pool sold for an average of $95,393 more than similar homes without them.”

In Orange County, pools added an average of $55,885 to a home’s value, and in Austin, Texas, it was $52,228.

Of course it’s not like this all over, but something to think about...like the value of adding a new kitchen.

--American Media Inc. is looking to sell the National Enquirer as well as other tabloid publications, including the Globe and National Examiner, the company announced Wednesday.

The decision comes on the heels of the Jeff Bezos scandal in which he accused the Enquirer of extorting him with leaked text messages and naked photos that the publication had obtained.

AMI’s chairman, David Pecker, a former accountant who took over the company in 1999, has been a longtime friend of President Trump and has admitted employing catch-and-kill techniques to protect Trump from unfavorable stories.

--According to brand and sales marketing agency Acosta, the average U.S. supermarket carries 306 different yogurt varieties, up 4% since 2015, but overall yogurt sales fell 6% by volume in the year through February, per Nielsen data.  Sales of Greek yogurt, which had kicked off the categories’ tremendous growth, fell 11%.

Not a good sign for packaged-food companies, whose decades-old brands are losing market share to cheaper store-branded alternatives.  Peter McGuinness, Chobani’s chief marketing officer, told the Wall Street Journal that yogurt makers shot themselves in the foot when they undermined their own sales by introducing too many new flavors and styles.

General Mills Chief Executive Jeff Harmening said that food producers made the category too confusing.  “The shelf has become more difficult to shop,” he said.

You know, he’s right.  I look at my own shopping habits.  I used to just have yogurt and some nuts for lunch, basically every day, and now it’s cottage cheese and fruit (and some nuts).  I find the yogurt section at my ACME totally confusing.  A mess, as in there used to be like four or five main brands, with a handful of flavors, and now, just as Peter McGuinness said, the consumer is overwhelmed.

--Despite tepid reviews, a new Broadway jukebox biomusical, “Ain’t Too Proud,” which chronicles the Motown group the Temptations, grossed $1.3 million for the week ended Sunday, its best seven-day showing since opening March 21, after a brief preview run. As reported by the Journal and the Broadway League, the sales represented 93% of the show’s potential gross, if all the seats were sold.

Meanwhile, “The Cher Show,” a biomusical featuring songs by, err, Cher, grossed just 58% of its potential take, $866,000, over the same seven-day period.

Foreign Affairs

Israel: Prime Minister Benjamin Netanyahu secured a record fifth term on Wednesday with Benny Gantz conceding the election after more than 98 percent of the votes gave the right-wing bloc a lead of 9-10 seats.  Should Netanyahu retain the helm, he will become the longest-serving Israeli prime minister in July, overtaking the country’s founding father, David Ben-Gurion, assuming looming criminal charges don’t force his removal.

Netanyahu’s Likud tied with Gantz’s Kahol Lavan party with 35 seats each.  Almost all right-wing parties have said they would recommend to the president that Netanyahu form the next ruling coalition, with Netanyahu’s bloc controlling 65 of the Knesset’s 120 seats.

The close and often vitriolic contest was widely seen as a referendum on Netanyahu’s character and record in the face of corruption allegations.  The prime minister faces possible indictment in three graft cases, though he has denied wrongdoing in all of them and would not have to resign should indictments be handed down.  The issue would be if he lost support during any trial.

“It is a night of colossal victory,” the 69-year-old Netanyahu told supporters at Likud headquarters after Tuesday’s vote.

The prime minister highlighted his close relationship with President Trump, who delighted Israelis and angered Palestinians by recognizing Jerusalem as Israel’s capital in 2017 and moving the American embassy to the holy city last May.

And then two weeks before the election, Trump signed a proclamation with Netanyahu at his side at the White House, recognizing Israeli sovereignty over the occupied Golan Heights, captured from Syria in the 1967 Middle East war.

And then Netanyahu further alarmed Palestinians when days before the vote, he pledged to annex Jewish settlements in the occupied West Bank if re-elected.*  Palestinians have long sought a state there and in the Gaza Strip, with East Jerusalem as its capital.

Netanyahu’s pledge to annex the settlements was a clear attempt to draw more right-wing votes.

*Some 500,000 Israelis live in the West Bank and East Jerusalem, areas that are also home to more than 2.6 million Palestinians.

Commenting on the election, Palestinian chief negotiator Saeb Erekat said: “Israelis have voted to preserve the status quo. They have said no to peace and yes to the occupation.”

The last round of U.S.-brokered peace talks between Israel and the Palestinians broke down in 2014.

President Trump is expected to release his long-awaited Middle East peace plan in the coming months.

As for Gantz, unless he joins Netanyahu in a future broad coalition, he looks destined to lead a center-left parliamentary opposition.

Editorial / Wall Street Journal

“Benjamin Netanyahu’s election Tuesday to what is likely to be a fifth term as Israel’s Prime Minister is a personal triumph, as well as a testament to how much he has moved the Jewish state’s politics to the right in the past 20 years....

“The veteran Prime Minister ran as a statesman indispensable to Israel’s security.  The fruits of his close relationship with President Trump helped make the case: a U.S. Embassy in Jerusalem; American recognition of Israeli sovereignty in the Golan Heights; and Monday’s designation of Iran’s Islamic Revolutionary Guard Corps as a terrorist organization.  He could also point to improved relations with Sunni Arabs in the Gulf states and Egypt.  Israel’s economy under Mr. Netanyahu has prospered as he has tried to remove its socialist shackles.

“Proof of his success is that Mr. Gantz focused not on policy but on Mr. Netanyahu’s long tenure and bumptious personality.  ‘I think Benjamin Netanyahu has done a lot for the country.  He is the son of this country,’ the former top general said earlier this month.  ‘But, as they say, enough is enough.’

“Also striking is the collapse of the Labor Party that ruled Israel for most of its first three decades. The party barely passed the threshold to make it into parliament with about 5% of the vote.  The refusal of the Palestinians to accept landmark peace offers in 2000 and 2008, plus the bloody record of Hamas in Gaza, has created a new consensus in Israel skeptical of the old ‘two-state’ solution....

“Voters knew about (Netanyahu’s) legal troubles and delivered a majority to (him) and his allies anyway.  He may now push legislation granting immunity to a sitting Prime Minister, with some democratic justification.  But changing the rules in response to a personal crisis will provide fodder for his political opponents and tempt competitors to look for an opening to replace him.

“He will also have to manage a peace proposal that Mr. Trump has said he’ll release later this year.  The contours are likely to include some form of land for peace that won’t be welcomed by some of Mr. Netanyahu’s coalition partners. The Prime Minister made a last-minute campaign promise to annex Jewish settlements on the West Bank, which will further complicate negotiations. But as the election results show again, Mr. Netanyahu has a remarkable feel for the Israeli public’s mood.”

Iran: President Trump designated Iran’s Revolutionary Guard Corps a foreign terrorist organization on Monday – a step that will raise tensions in the Middle East.

Secretary of State Mike Pompeo said in a press conference: “We’re doing it because the Iranian regime’s use of terrorism as a tool of statecraft makes it fundamentally different from any other government.”

Pompeo noted that “businesses and banks around the world now have a clear duty to ensure the companies with which they conduct financial transactions are not connected to the IRGC in any material way.”

It is the first time the United States has formally labeled another country’s military a terrorist group.

Iran’s Supreme Leader Ayatollah Ali Khamenei said the United States had made “a vicious move” in designating the Guards corps as a terrorist organization, and Tehran vowed to take action against U.S. forces in the region.

“They wish to plot against our Sepah (the Guard corps)...it is the frontline of confronting enemies of our (1979 Islamic) revolution and has always defended the country... America has failed to block our advances,” Khamenei, who controls the Guards, was quoted as saying by the state media.  “In spite of all the pressure over the past 40 years, Americans have failed to do a damn thing and their vicious move will bear no fruit.”

Iranian President Hassan Rouhani said in a televised speech that the United States “holds a grudge” against the Guards who have “sacrificed their lives to protect our people, our revolution.”

The Guards are comprised of army, navy and air units, 125,000 strong, as well as commanding the Basij, a religious volunteer paramilitary force, and Iran’s missile programs.

Iranian lawmakers wore Guards uniforms to parliament on Tuesday, chanting ‘Death to America” as Iran marked the annual National Day of the Revolutionary Guards.

David Ignatius / Washington Post

“The Trump administration’s ‘maximum pressure campaign’ against Iran assumes that economic sanctions are weakening its Revolutionary Guard Corps – and that more sanctions will make the Revolutionary Guard weaker still.  The problem is that U.S. and European intelligence analysts don’t think this forecast is accurate.  ‘Re-imposition of sanctions in 2018 has played into the hands of the [Revolutionary Guard],’ warns one recent Western intelligence assessment. Rather than turning Iranians against the corrupt Revolutionary Guard leadership, in other words, the U.S. economic squeeze is instead giving Maj. Gen. Qasem Soleimani and his allies greater control over the Iranian economy.

“The Iran sanctions paradox deepened this week with Secretary of State Mike Pompeo’s announcement that the United States will designate the Revolutionary Guard as a foreign terrorist organization. But as Pompeo warned Monday, the Revolutionary Guard’s leaders are masters of ‘nationwide con artistry and corruption...which they perpetrate against the regime’s own people.’

“History has shown that these operatives find illegal ways to escape pressure, and that the economic vise instead tightens for the Iranian people.

“Like so many Trump administration foreign policy gambits, the Iran squeeze looks like a tactical campaign that’s in search of a strategy.  Does the administration want negotiations?  If so, why has it effectively banned the United States from contact with Tehran’s power brokers?  ‘We’ll preclude ourselves from talking to the people who matter,’ warns Karim Sadjadpour, a senior fellow at the Carnegie Endowment for International Peace.

“Does the administration instead seek a change of Iranian policy and less power for the hard-liners?  If so, the United States should be working to deepen fissures within the Iranian elite, rather than pushing different factions toward the Revolutionary Guard. ‘The goal should be to widen political divisions,’ argues Sadjadpour.  ‘When you’re trying to foment political change, you need pressure from below and divisions above.’

“Sanctions have their uses, to be sure. The ban on oil and financial transactions that President Trump re-imposed after withdrawing from the 2015 Iran nuclear deal has hit Iran hard.  Oil exports have been cut in half, from 2.5 million barrels a day in April 2018 to about 1.25 million barrels in February, according to Reuters.  The International Monetary Fund predicted Tuesday that Iran’s economy will shrink 6 percent this year, after a 3.9 percent decline last year.  Inflation is running at 47.5 percent.

“The resulting cash squeeze means there’s less money for Iran to distribute to its proxies in Lebanon, Syria and Yemen....

“The pressure is mounting, but to what end?  As with other Trump administration foreign policies, it’s hard to discern the strategic goal.  Trump has privately told foreign leaders that he wants to pressure Tehran back to the bargaining table and win a better, broader nuclear deal than the one negotiated by his predecessor, Barack Obama. But John Bolton, Trump’s national security adviser, has signaled instead that he wants to create conditions for regime change, rather than just renewed negotiation.

“Imagine the White House confusion if Iran’s Ayatollah Ali Khamenei sent Trump a letter proposing a new round of nuclear and regional negotiations – with Soleimani, the leader of the Revolutionary Guard’s Quds Force, as his chief negotiator.  Trump could claim a win, but such talks would violate the just-imposed terrorist designation.

“The biggest danger of the escalating Iran campaign is that it risks unraveling the hard-won U.S. success in Iraq over the past five years.  About 5,000 U.S. soldiers are in Iraq, training the Iraqi military and checking the power of Iranian-backed Shiite militias. They could become targets if Iran follows through on its tit-for-tat designation this week of U.S. Central Command forces as ‘terrorists.’

“But even if Iran refrains from shooting at U.S. troops, Tehran-backed politicians may pass legislation in the Iraqi parliament that would forbid continued U.S. military training of Iraqi forces.  That would be a real loss.  Iran would pull Iraq deeper into its sphere of influence – offsetting any U.S. gains in Lebanon, Syria or Yemen.

“Sanctions are like catnip for U.S. policymakers. If you want to see how badly they can misfire, recall the U.S.-led campaign of sanctions against the Iraqi regime of Saddam Hussein in the 1990s.  That squeeze had the perverse effect of empowering Saddam’s clique of smugglers with torturers. We’re in danger of repeating that sorry chapter with Iran.”

Libya: Fighting between eastern Libyan forces and Tripoli government troops killed 56 people and forced 6,000 to flee their homes in the capital the last week, according to the United Nations, as France and Italy wrangled over how to respond to the renewed conflict.

The Libyan National Army (LNA) forces of Khalifa Haftar have been blocked in the southern suburbs of Tripoli about six miles from the center.

In Rome, Libya’s former colonial ruler Italy warned France, which has close ties to Haftar and oil assets in eastern Libya, to refrain from supporting any faction after diplomats said Paris blocked an EU statement calling on him to halt his offensive.

Sudan: The military ousted President Omar al-Bashir on Thursday, the defense minister announced, ending a 30-year authoritarian rule in the face of mass street protests that have swept the country.

Defense Minister Awad Mohamed Ahmed Ibn Auf said that al-Bashir had been taken into custody and that the government had been dissolved and there would be a two-year transition period. Mr. al-Bashir, 75, who is wanted by the International Criminal Court on genocide charges in connection with atrocities in Darfur, has ruled Sudan longer than any leader since the country gained independence in 1956.

While there was cause for celebration, those calling for al-Bashir’s ouster won’t be satisfied if he were simply replaced by another general.

Protests began in December over rising food costs but quickly expanded to a broad challenge to Mr. al-Bashir’s hold on power. In recent days, rival factions within the security services have battled each other, raising fears of a complete breakdown in order.

Editorial / Wall Street Journal

“Sudanese dictator Omar al-Bashir’s three decade reign of misery ended Thursday following a military coup. Good riddance, though his arrest alone won’t satisfy the protestors who have filled the country’s streets for months.

“Mr. Bashir came to power in a coup, toppling a democratic government in summer 1989. The former army officer restricted the media and repressed opponents. Despite Sudan’s oil wealth, his people remained impoverished as cronies from his Islamist National Congress Party grew rich.

“Mr. Bashir’s ethnic cleansing against non-Arabs in the Darfur region made him an international villain in the 2000s. Yet he had long been a menace, seemingly linked to every malign force in the Middle East.  He supported Saddam Hussein’s invasion of Kuwait.  A veteran of the 1973 Yom Kippur War, he worked with Iran and stored Hamas rockets.  In the 1990s Sudan gave refuge to Osama bin Laden.

“Mr. Bashir was clever as dictators go, turning potential rivals against each other and using a network of security services.  Yet he also knew when to adapt.  His relationship with Tehran cooled in recent years, and he has cooperated with the U.S. to fight terrorism.

“Yet corrupt regimes are typically unstable.  Economic growth slowed after the secession of oil-rich South Sudan.  Rising food prices sparked December’s demonstrations, which became a general protest against the regime.  Women played a notable role in criticizing the Islamist government.

“As demonstrators became bolder, the dictator’s allies turned on him.  Defense Minister Ahmed Awad Ibn Auf announced Thursday that a military council would rule the country for two years before elections.  The new government quickly freed political prisoners, but few believe the military will cede power....

“Meanwhile, much of North Africa is in tumult.  Algeria’s long-time dictator recently stepped down after similar protests, though the country’s establishment is fighting to cling to power.  The only worse outcome than another dictatorship in Sudan or Algeria would be a civil war like the one in Libya, which is heating up again.  A regional conflagration could send additional waves of migrants toward Europe.

“The U.S. and Europe have an interest in a stable Sudan, as we’ve learned the hard way from other eruptions in Africa.”

Today, with protest crowds in the hundreds of thousands, wanting an immediate changeover to civilian rule, the ruling military council promised a new civilian government, but this hasn’t satisfied the people as yet in Khartoum.

Turkey: President Erdogan has said electoral authorities should annul Istanbul’s local elections due to irregularities, notably over the appointment of ballot box officials.  Initial results indicate the main opposition party narrowly won control of Turkey’s biggest city in the mayoral elections, seemingly ending 25 years of control of a key power center by Erdogan’s AK Party and its Islamist predecessors.

Separately, Erdogan said his country would forge ahead with the purchase of an air-defense system (the S-400) from Russia despite warnings from the U.S. that using the equipment would jeopardize Ankara’s role within NATO.

Afghanistan: A decorated FDNY firefighter was among three American service members killed by a roadside bomb while traveling in a convoy in Afghanistan on Monday.

Christopher Slutman, a U.S. Marine and FDNY firefighter in the Bronx, is the fourth FDNY member to die while serving in Iraq and Afghanistan since U.S. military action started in 2003.

The Taliban claimed responsibility for the attack.

North Korea: In one of the biggest leadership shake-ups in years, North Korea named a new nominal head of state and a new premier, and gave leader Kim Jong Un a new title, state media reported on Friday, moves intended to solidify Kim’s grip on power.

In an expected move, Kim was re-elected as chairman of the State Affairs Commission at a session of North Korea’s rubber-stamp legislature that took place on Thursday, Korean Central News Agency (KCNA) said.

For the first time, however, state media referred to Kim as “supreme representative of all the Korean people.”

It has now been eight years since Kim inherited rule from his father, Kim Jong Il.

Choe Ryong Hae was named President of the Presidium of the Supreme People’s Assembly of North Korea, replacing Kim Yong Nam.

The person holding this position is constitutionally considered to be North Korea’s head of state and usually represents the country at diplomatic events, though the real power remains in Kim Jong Un’s hands.

Kim Yong Nam held the position since it was created for him in 1998.

His replacement, Choe, has in recent years been gaining more influence since he was promoted in October 2017 to the party’s powerful Central Military Commission, according to South Korean intelligence officials.

Choe was one of three officials sanctioned by the United States in December over allegations of rights abuses.

But late tonight, Saturday in Pyongyang, Kim Jong Un has said the breakdown in talks with the United States has raised the risks of returning to past tensions, but he is only interested in meeting President Trump again if the United States comes with the right attitude, state media KCNA said.  Kim said that he will wait “until the end of this year” for the United States to decide.

“What is needed is for the U.S. to stop its current way of calculation, and come to us with a new calculation,” Kim said in a speech to the Supreme People’s Assembly, KCNA said.

“The second DPRK-U.S. summit in Hanoi in February raised strong questions about whether the steps we took under our strategic decision were right, and gave us a sense of caution about whether the U.S. is even really trying to improve the DPRK-U.S. relationship,” Kim said.

In Hanoi, the United States came with “completely unrealizable plans” and was “not really ready to sit with us face-to-face and solve the problem,” said the chubby dictator who likes to blow people away with anti-tank guns.  “By that sort of thinking, the U.S. will not be able to move us one iota even if they sat with us a hundred, thousand times, and will not be able to get what it wants at all,” Kim said.  [Reuters]

Russia: President Vladimir Putin said Russia is entering the final testing phase of its nuclear-armed intercontinental ballistic missile dubbed Satan-2.  Back in 2013, Russia announced plans to develop the ICBM to replace a Cold War standby known in the West as “Satan,” or the RS-20B Voyevoda in Russian.  Putin unveiled Satan-2 with an array of other nuclear-capable weapons at his annual speech to both chambers of parliament in March 2018.

Satan-2, or RS-28 Sarmat, has a reported range of 10,000 kilometers. Moscow says the ICBM can get through the United States’ defense shield and is capable of destroying an area the size of Texas.

The RS-28 is equipped with multiple hypersonic warhead MIRVs to help it evade missile defense systems.

The Russian government says the missile can carry a payload of up to 15 warheads.  The plan is to have the RS-28 enter service by the start of the next decade.

George P. Shultz, William J. Perry and Sam Nunn / Wall Street Journal

“The U.S., its allies and Russia are caught in a dangerous policy paralysis that could lead – most likely by mistake or miscalculation – to a military confrontation and potentially the use of nuclear weapons for the first time in nearly 74 years.  A bold policy shift is needed to support a strategic re-engagement with Russia and walk back from this perilous precipice.  Otherwise, our nations may soon be entrenched in a nuclear standoff more precarious, disorienting and economically costly than the Cold War.  The most difficult task facing the U.S. is also the most important – to refocus on America’s most vital interests even as we respond firmly to Russia’s aggressions.

“The three of us experienced the low points of U.S. relations with the Soviet Union, and the nuclear dangers that arose. The 1962 Cuban missile crisis, the 1973 Arab-Israeli War, the 1979 Soviet invasion of Afghanistan and the 1981-83 confrontation over intermediate-range nuclear missiles were periods of increased tensions, reduced trust and rising nuclear risks.  With Henry Kissinger, we wrote in 2007 that although the world escaped the nuclear knife’s edge of the Cold War through a combination of diligence, professionalism and good luck, reliance on nuclear weapons for deterrence is becoming increasingly hazardous and decreasingly effective as more states gain nukes of their own.  The U.S. and other nuclear states have yet to take decisive steps toward the goal of a world without nuclear weapons, and the dangers continue to mount.

“Deterrence cannot protect the world from a nuclear blunder or nuclear terrorism.  Both become more likely when there is no sustained, meaningful dialogue between Washington and Moscow.  The risks are compounded by the rising possibility that cyberattacks could target nuclear warning and command-and-control systems, as well as the continuing expansion of global terrorist networks. Since the crises broke out in Ukraine and Syria in the past few years, U.S. and Russian forces have again been operating in proximity, increasing the risk that an act of aggression, followed by an accident or miscalculation, will lead to catastrophe.

“A new comprehensive approach is required to decrease the risks of conflict and increase cooperation, transparency, and security....

“The U.S. must first address its own dysfunctional Russia policy, and Congress must lead the way.  House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell should convene a new bipartisan liaison group of legislative leaders and committee chairmen to work with senior administration officials on strengthening the North Atlantic Treaty Organiztion and renewing dialogue with Russia....

“Second, Presidents Trump and Vladimir Putin should announce a joint declaration reaffirming that a nuclear war cannot be won and must never be fought.  This would renew the 1985 Reagan-Gorbachev statement that Americans and Russians received positively as the beginning of an effort to reduce risk and improve mutual security.  A joint statement today would clearly communicate that despite current tensions, leaders of the two countries possessing more than 90% of the world’s nuclear weapons recognize their responsibility to work together to prevent catastrophe....

“Third, the U.S. and Russia must discuss a broad framework for strategic stability – including increasing decision time for leaders – in a period of global destabilization and emerging military technologies.  In a positive step, Presidents Trump and Putin apparently agreed in Helsinki last summer to open a dialogue on strategic stability, focused on nuclear dangers that threaten both nations.  Yet their inability to follow up by empowering their military and civilian professionals to follow through underlines how dangerously dysfunctional relations have become.

“This effort must begin now....

“The U.S. and Russia should work toward a mutual vision for a more stable security architecture in the next five to 10 years, and identify the tools and policy initiatives necessary to get there....

“The U.S. and Russia, joined by other nuclear states, must decisively confront the problems that threaten global security.  It is essential that we re-engage with Russia in areas of common fundamental interest to both nations, including reducing reliance on nuclear weapons, keeping them out of unstable hands, preventing their use and ultimately ending them as a threat to the world.”

Australia: The nation is holding a general election on May 18, Prime Minister Scott Morrison announced.  Yes, a tad bit shorter campaign than what we have in the United States.

The vote will decide whether the conservative government wins a third term or is replaced by a Labor administration led by Bill Shorten.

All 151 seats in the House of Representatives will be contested, and half of the 76 seats in the Senate.

Two of the key issues for voters will be climate change and the economy.  Prime Minister Morrison said on Thursday, “We live in the best country in the world, but to secure your future, the road ahead depends on a strong economy.”

Voting is compulsory in Australia.  95% of people voted in Australia’s last election.  Morrison only became prime minister last August after bitter party infighting ousted his predecessor, Malcolm Turnbull.

Random Musing

--Presidential tracking polls:

Gallup: A new one...45% approval of Trump’s job performance, 51% disapproval (April 12), with 89% of Republicans, 39% of Independents approving.  Back on Mar. 15, the split was 39/57, prior to Attorney General Barr’s summary of the Mueller Report.
Rasmussen: 49% approval, 50% disapproval (April 12).  The approval rating hit 53% on Tuesday.

--In a Morning Consult poll of voters who say they intend to participate in a Democratic primary or caucus next year, Joe Biden was still at the top of the list with 32 percent, ahead of Bernie Sanders at 23 percent.

Sen. Kamala Harris is way back in third at 9 percent, followed by Beto O’Rourke at 8 percent, Sen. Elizabeth Warren, 7 percent, and Mayor Pete Buttigieg at 5 percent.

--As for the first two primary/caucus states....

A new Monmouth University poll of Iowa Democrats has:

Biden 27%
Sanders 16%
Buttigieg 9%
Warren 7%
Harris 7%
O’Rourke 6%

And a new Saint Anselm College survey of New Hampshire registered Democrats has:

Biden 23%
Sanders 16%
Buttigieg 11%
Warren 9%
Harris 7%
O’Rourke 6%

It really is amazing how much traction the 37-year-old mayor, Buttigieg, has gained already.

--Peggy Noonan / Wall Street Journal

“Don’t do it, Joe.

“Don’t run for president. It won’t work, you won’t get the nomination, your loss will cause pain and not only for you.

“And your defeat will be worse than sudden, it will be poignant.

“Right now operatives for the other candidates are trying to scare you out of jumping in.  We all know that what you intended as warmth is now received as a boundary violation.  You addressed this in a video that was crisp and friendly: You never meant to cause discomfort, you intend to change your ways.

“But it’s not going away.  It will linger, and more will come.

“Democratic operatives do not fear you will win the nomination – they think you’re too old, your time has passed, you’re not where the energy of the base is, or the money.  But they do not want you taking up oxygen the next six to 10 months as you sink in the polls.  And they don’t want you swooping in to claim the middle land.  Others already have a stake there, or mean to.”

--In a Siena College poll of voters in her district, Rep. Alexandria Ocasio-Cortez’s favorability rating is 52%, vs. 33% who view her unfavorably, with 61% of Democrats in her deep-blue district saying they would vote for her in 2020, while 41% endorse her call for a Green New Deal, with 21% opposing it.

But 57% of registered voters described Amazon’s decision to retract plans to construct an office complex in nearby Long Island City as “bad for New York,” and 58% supported Gov. Andrew Cuomo’s pleas to persuade Amazon to change its mind.

--We note the passing of former longtime South Carolina senator Ernest Hollings, 97.  “Fritz” served 38 years in the Senate in an era of rising prosperity and often painful accommodation to racial tolerance in his state and across the South.

I liked the guy.  He was a revered populist who took care of the military. Together with fellow senator Strom Thurmond, they were the nation’s longest-serving Senate pair from one state.  Thurmond served 48 years in office, dying in 2003 at 100.

So I asked longtime South Carolina resident Dr. W. for a few words on Hollings.

“Fritz was a classic Southern politician of the 50s through the 90s.  Stubborn and with convictions but able to change them with the prevailing political winds if that’s what it took to get re-elected.  More attuned to the modern media and national perceptions than a lot of other Southern politicians of his era.  And, he was part of that generation of politicians who were willing to reach across the aisle if that’s what it took to create better opportunities for all constituents (not just those who voted for him).”

--Freshman Rep. Ilhan Omar complained of being held to a double standard by her critics, during an appearance on the “Late Show with Stephen Colbert” this week.  Colbert, though, didn’t ask Omar about her recent reference to the 2001 terror attack as “some people did something,” but he did reference the Minnesota Democrat’s controversial statements about Israel – and about the criticism she’s faced from both conservatives and some Democrats.

Omar responded by saying that her critics do not receive the same amount of scrutiny as she does.

“This kind of double standard it really is quite offensive,” she told Colbert.

“It is very much embedded in a lot of our culture these days, where you will have people come after minorities for things that they say, that they might have insinuated,” she added.

I have to bite my tongue when it comes to Rep. Omar.  I really don’t like this woman.  At all.

--Julian Assange, the WikiLeaks founder who released reams of secret documents that embarrassed the U.S. government, was arrested by British police on Thursday at the Ecuadorean Embassy in London, where Assange had lived, after Ecuador withdrew the asylum it had granted him seven years ago.

Ecuadorian President Lenin Moreno derided Assange as a “spoiled brat” who hit embassy guards during his stay at the consulate.  There were stories Assange had spread feces on the walls.

The U.S. Department of Justice confirmed that Assange has been indicted on conspiracy with Chelsea Manning to commit computer intrusion in 2010.

“The indictment alleges that in March 2010, Assange engaged in a conspiracy with Chelsea Manning, a former intelligence analyst in the U.S. Army, to assist Manning cracking a password” on classified Department of Defense computer systems, according to a Justice Department press release.

Manning served about seven years in prison for her disclosure of U.S. military and diplomatic secrets to WikiLeaks in 2010, before being released in May 2017.

Long-time readers may remember I was once threatened by Assange, through his attorney, for something I wrote on the guy, which was just a retelling of the truth.  Trust me, you don’t want one of those kinds of letters.  I had a sleepless night or two.

--Michael Avenatti, the lawyer known for representing Stormy Daniels in lawsuits against President Trump, was indicted by a Southern California grand jury on fraud, tax evasion, embezzlement and other charges.

Prosecutors say he received settlements for clients, but did not inform them and kept and hid the money.  He also evaded taxes on the funds.

Avenatti said he intended to fight all charges.  “For 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice. Along the way, I have made many powerful enemies.  I am entitled to a full presumption of innocence and am confident that justice will be done once all of the facts are known.”

Avenatti is already facing charges in New York of trying to extort millions of dollars from Nike, threatening to reveal improper payments to basketball recruits.

--Greg Craig, who served as former President Barack Obama’s top White House lawyer, was charged on Thursday with lying about work he performed in 2012 for Ukraine in a case that grew out of Special Counsel Robert Mueller’s Russia investigation. Craig, 74, faces up to 10 years in prison for charges of making false statements and violating a lobbying law, the Foreign Agents Registration Act.  He is accused of lying to the Justice Department about his work after he left the White House on a legal review that largely vindicated the prosecution of a political enemy of Viktor Yanukovych, the Russian-aligned president of Ukraine at the time. 

Craig worked on a report that was produced at the behest of Paul Manafort, who is currently serving a 7 ½-year prison sentence for lobbying violations and financial crimes.

--New York City declared a public health emergency following a measles outbreak in the ultra-Orthodox Jewish community in Brooklyn.

Mayor Bill de Blasio said the city would require unvaccinated individuals living in select ZIP codes in Williamsburg, Brooklyn, to receive the measles vaccine as the city escalated its efforts to stem one of the largest measles outbreaks in decades.

New York City has now seen 285 confirmed cases since the outbreak began in the fall, with five admitted to the intensive care unit.  The vast majority of the cases have been concentrated in Hasidic communities in Williamsburg and Borough Park, Brooklyn.

--Thirteen wealthy parents, including actress Felicity Huffman, and one coach will plead guilty to using bribery and other forms of fraud as part of the college admissions scandal, federal prosecutors in Boston said on Monday.

Huffman and the others face potential jail time, though it should be minimal since they admitted guilt early.  The actress said in a statement: “I am in full acceptance of my guilt, and with deep regret and shame over what I have done...and will accept the consequences that stem from those actions....

“My daughter knew absolutely nothing about my actions, and in my misguided and profoundly wrong way, I have betrayed her.”

But actress Lori Loughlin and 15 other parents implicated in the scandal were indicted on additional charges of money laundering and fraud conspiracy, federal prosecutors, a day after Huffman and the others pleaded guilty. 

While the new indictments do not preclude a deal for the holdouts, the added charge of money laundering makes it more likely they face jail time.  Good!

--The first privately funded mission to the Moon crashed on the lunar surface after the apparent failure of its main engine.  I was watching live as the Israeli spacecraft – called Beresheet – attempted a soft touch down, but suffered technical problems on its descent.

I was watching live and it wasn’t easy to follow, the broadcast being in Hebrew, but suddenly, a minute from landing, the graphic went blank and, well, the little guy is probably in a thousand pieces.

Project originator and major backer Morris Kahn said, “We didn’t make it, but we definitely tried.”

Prime Minister Benjamin Netanyahu, watching from the control room near Tel Aviv, said: “If at first you don’t succeed, you try again.”

--Far more successful than Beresheet was SpaceX’s successful launch of its new and improved Falcon Heavy rocket from NASA’s Kennedy Space Center Thursday.

The Falcon Heavy is now the world’s most powerful operation rocket with 27 engines firing at liftoff.  It launched into the sky Thursday evening with a satellite built by Lockheed Martin and operated by Saudi Arabia.

Eight minutes after liftoff, SpaceX landed two of the first-stage boosters back at Cape Canaveral, side by side, and two minutes later, the core booster landed on an ocean platform hundreds of miles offshore, which is way cool.

Oh, and the satellite ended up in the proper orbit.

Congratulations to Elon Musk, who should stick with SpaceX and blow off Tesla.  GM, Ford and Fiat Chrysler will kick his butt, anyway, in the electric car market in the coming years.

--And then we had this...from outer space.

Ray Jayawardhana / Wall Street Journal

“For something no one has ever seen, black holes seem awfully familiar.  Astronomers believe they are numerous.  Science-fiction authors and film directors love using their ability to warp space and time as a plot device.  But humanity is only now getting its first blurry glimpse at a real-life black hole.

“Using a globe-spanning network of radio telescopes*, astronomers this week revealed a black hole’s ‘shadow’ for the first time.  Observational evidence for black holes, with gravity so strong not even light can escape their grip, has piled up in recent decades.  Some are gargantuan monsters lurking at the hearts of galaxies, including our own Milky Way, while others are invisible stellar corpses that tug on their companion stars.

“The evidence had been circumstantial until recently....By now, researchers have ‘heard’ the fleeting shrieks of colliding black holes 10 times.

“That may be enough to convince most people.  But the scientists behind Wednesday’s announcement are a dogged bunch. They set out to pin down a black hole by its most distinctive feature – the virtual boundary called the event horizon, which marks the point of no return. Anything that crosses it, including light, has no escape....

“Now, thanks to a carefully choreographed observation campaign and two years of painstaking analyses, the Event Horizon Telescope team has captured the shadow of a supermassive black hole, billions of times heftier than the sun, at the heart of a giant elliptical galaxy known as M87.    Reality tends to be messier than theory, so it’s no surprise the actual image is blurrier than the striking computer simulations that preceded it.

“Nevertheless, if seeing is believing, we have finally glimpsed the monster’s shadow, having heard its whimpers only recently.  It appears that one of the weirdest constructs of the human mind exists for real.  The transformation of the black hole from a mathematical oddity, emerging from Einstein’s theory of general relativity, to an observable fixture of the cosmos is a testament to humanity’s collective intellectual prowess, relentless curiosity and dogged perseverance.”

*The eight telescopes used are in Hawaii, Arizona, Spain, Mexico, Chile and the South Pole – focused on two black holes, M87 and Sagittarius A, the supermassive black hole at the center of the Milky Way, the spiral galaxy that contains our solar system.

M87’s black hole is more than 50 million light years from Earth.

The telescopes together form a virtual telescope more than 7,000 miles, with the data collected collated by supercomputers at MIT and in Bonn, Germany.

---

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

God bless America.

---

Gold $1293
Oil $63.76

Returns for the week 4/8-4/12

Dow Jones  -0.05%  [26412]
S&P 500  +0.5%  [2907]
S&P MidCap  +0.9%
Russell 2000  +0.1%
Nasdaq  +0.6%  [7984]

Returns for the period 1/1/19-4/12/19

Dow Jones  +13.2%
S&P 500  +16.0%
S&P MidCap  +18.2%
Russell 2000  +17.5%
Nasdaq  +20.3%

Bulls 53.9
Bears 19.2

Have a great week.  Enjoy The Masters!  Though the weather is going to be a factor.  Drat!

Brian Trumbore



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-04/13/2019-      
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Week in Review

04/13/2019

For the week 4/8-4/12

[Posted 11:30 PM ET, Friday]

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

*Special thanks to an old friend from my PIMCO days, Andy M.

Edition 1,044

I don’t have any pithy opening this week, because I’m kind of confused.  Just what the heck is President Donald Trump’s immigration policy and strategy?  Literally, as I’m about to post, he has tweeted at about 10:30 PM ET:

“If the Radical Left Democrats all of a sudden don’t want the Illegal Migrants in their Sanctuary Cities (no more open arms), why should others be expected to take them into their communities?  Go home and come into our Country legally and through a system of Merit!”

I don’t want to make this Republicans vs. Democrats, but the fact is this crisis, and, yes, it’s a crisis, is now the responsibility of Donald Trump.  He had a Republican Congress for two years, could have worked out a compromise with the Democrats, and didn’t.  Now it’s the issue for 2020, Congress is divided, and the president is saying one day he’s going to close the border with Mexico, until he is reminded by every business leader in America that that would be a disaster, then he says he’s giving Mexico a year to get its act together, but then he reportedly tells Kevin McAleenan, who was about to become acting secretary of homeland security, to close the border...as in wink wink, I know I said I wasn’t closing it, but don’t let anyone in.

The president today is looking to bring more military down there, which is dangerous in terms of our preparedness for any conflict around the world that the U.S. military is supposed to be in existence for, not border security, and then he does a number on the personnel of both Customs and Homeland Security, all due to the machinations of a creep, Stephen Miller, who, so help me, is the puppet master...as in Stephen Miller, some of us have known since day one, is this heretofore undistinguished, unelected, 33-year-old guy who is wielding immense power and impacting millions of lives.

This is nuts. Stephen Miller?!

And the president’s constant harping on ‘Merit’ in terms of those we allow into the United States should irk every single American, but of course we live in such a polarized nation, a large segment of the population agrees with the president on this single word, and policy, without using their brain.  If you read nothing else from this column, read Marc Thiessen’s piece down below.

Our immigration policy is a shambles...but we need immigration.  I worry that we have millions of adults, who are teaching their children about America, who aren’t passing down the lessons of what makes this country great.

The superintendent in my building, my good friend Luis, is from Ecuador.  He’s an American citizen.  He has a great wife.  The two of them raised an awesome son I’ve literally watched grow up in my nine+ years here, across from Celgene’s global headquarters, with the boy now in his first year of college in South Carolina.  They are living the American dream.

But would Luis and his wife have been able to come to this country on Donald Trump’s definition of ‘merit’?  No.

Some of you may like that.  If that’s your opinion, do your kids a favor.  Let them figure it all out on their own.

Trump World

Homeland Security Secretary Kirstjen Nielsen resigned Sunday, amid President Trump’s growing frustration and bitterness over the number of Central American families crossing the southern border. She led the agency since December 2017 and was this administration’s third Homeland Security secretary.  John Kelly had brought Nielsen to the White House after Trump named him chief of staff.

Nielsen quickly became a trusted aide to Kelly, and the two worked together to impose order on a dysfunctional White House that lacked clear lines of command.

Trump announced in a tweet that U.S. Customs and Border Protection Commissioner Kevin McAleenan would be taking over as acting head of the department.  McAleenan is a longtime border official who is well respected by many members of Congress and within the administration.

Nielsen was viewed as resistant to some of the harshest immigration measures supported by the president and his aides, particularly senior adviser Stephen Miller.

Editorial / Wall Street Journal

“Frustrated with Congress and the courts on border security, President Trump has responded by firing his own immigration-enforcement deputies. This political incoherence won’t produce better results at the border or break the stalemate in Congress over immigration.

“Mr. Trump was good enough to finally show Homeland Security Secretary Kirstjen Nielsen the door on Sunday after taunting her for months on Twitter and via White House leaks to the press. Her forced resignation comes a week after he yanked the nomination of Ron Vitiello to lead Immigration and Customs Enforcement to ‘go in a tougher direction.’  Restrictionists want him to clear house, but what do they hope to accomplish?

“After defenestrating the department’s top brass, Mr. Trump will be left with a dozen or so vacancies including the deputy secretary at Homeland Security, the general counsel and Citizenship and Immigration Services director. The Senate could take months to confirm replacements – assuming the President can find masochists who’ll take the jobs – and the lack of permanent leadership won’t ease the mess at the southern border....

“Some advisers want Mr. Trump to take ‘tougher’ actions that strain the legal limits of his executive authority such as ending birthright citizenship.  Other bad ideas include reviving family separations at the border, though Mr. Trump backed off that on Tuesday....

“Mr. Trump has cause to be exasperated that Congress has ignored him. Yet some of his advisers, especially immigration Svengali Stephen Miller, have also repeatedly scuttled attempts to forge a compromise with Democrats that could provide more legal immigration including work permits for young adults who came to the country as children.

“Last weekend the President channeled Mr. Miller by declaring ‘we can’t handle any more’ immigrants and ‘our country’s full.’  Yet this contradicts Mr. Trump’s avowals that the U.S. needs more foreign workers amid a stretched labor force. The Departments of Labor and Homeland Security acknowledged this reality Monday by making available an additional 30,000 H-2B visas for seasonal workers.

“Mr. Trump needs to offer an immigration policy that gets beyond the political dead end of Mr. Miller’s close-the-border restrictionism.  Democrats have no incentive to cooperate as long as Mr. Trump is raging against his own deputies as they’re the problem.

“The President needs to offer a larger immigration vision that combines border security while welcoming legal immigrants and offering Democrats something they want.  If they still refuse to cooperate, then he can offer that better vision to voters in 2020.  Until he does he’ll be frustrated by his own policy incoherence that sounds tough but accomplishes nothing.”

Late Thursday we had the story from the Washington Post, confirmed by others, that the White House tried multiple times to pressure immigration authorities into releasing migrants on the streets of sanctuary cities as retaliation against Democrats and to target sanctuary cities in liberal strongholds.  It didn’t come to fruition after pushback from U.S. Immigration and Customs Enforcement, the Post reported.  ICE rejected the idea after at first thinking it was a joke, the Post said.

Members of Congress and immigration advocates then blasted the proposal, calling the idea inhumane and calling for those within President Trump’s administration to be held accountable.

House Speaker Nancy Pelosi’s district was specifically targeted, according to the Post, noting that the White House wanted to transport migrants into her congressional district in San Francisco.

Former Secretary of Housing and Urban Development, Julian Castro, a candidate for the Democratic nomination for president, said during a CNN town hall:

“The cruelty of this administration never seems to end,” noting the list of Trump’s immigration policies that have been criticized or challenged in court.  “These folks want us to choose cruelty as a weapon against these people and against political opponents.”

So I saw the reports Thursday and thought this is the kind of story the president would slam as “fake news,” even if true, only early this afternoon, Trump doubled and tripled down, tweeting:

“Due to the fact that Democrats are unwilling to change our very dangerous immigration laws, we are indeed, as reported, giving strong considerations to placing illegal Immigrants in Sanctuary Cities only...

“...The Radical Left always seems to have an Open Borders, Open Arms policy – so this should make them very happy!”

So if you had any doubts what the lead campaign issue for the president was for 2020, they should now be formally dispelled. 

Marc A. Thiessen / Washington Post

“President Trump is 100 percent correct that there is a crisis on our southern border.  And he is absolutely right when he says some migrants are abusing our asylum laws. But he is dead wrong when he declares, in what has become his favorite refrain, that ‘Our country is FULL.’

“Sorry, our country is not full.  Not by a long shot.  The opposite is true. We need more immigrants, lots of them. In fact, no one needs immigrants more than Trump.

“Today, thanks to Trump’s leadership, the U.S. economy is strong.  Unemployment recently reached its lowest level in 49 years.  U.S. manufacturing employment is growing at the fastest pace in nearly a quarter-century.  On Trump’s watch, the unemployment rates for African Americans, Hispanics and Americans without a high school diploma have all reached the lowest points ever recorded.

“The Wall Street Journal recently called this ‘the hottest job market in half a century,’ declaring that ‘Workers are so scarce that, in many parts of the country, low-skill jobs are being handed out to pretty much anyone willing to take them – and high-skilled workers are in even shorter supply.  All sorts of people who have previously had trouble landing a job are now finding work.  Racial minorities, those with less education and people working in the lowest-paying jobs are getting bigger pay raises and, in many cases, experiencing the lowest unemployment rate ever recorded for their groups.’

“In some places, unemployment is so low that employers can’t find workers to fill the jobs.  There are now a record 7.1 million job openings in the United States.  According to the National Federation of Independent Business, 39 percent of small business owners who hired or tried to hire workers reported few or no qualified applicants for the position.  Nearly a quarter of all small-business owners report that finding qualified workers is their ‘single most important business problem.’  And the demand for seasonal workers is so big that, when the application window for H-2B visas opened up on Jan. 1, the Labor Department’s electronic filing system for the visas crashed due to overwhelming demand.  Employers requested three times as many visas as were available....

“If Trump wants to keep this strong economy going, and achieve his stated goal of sustained 3 percent growth throughout his presidency, he needs more workers.

“The trouble is, the United States is not producing enough native-born workers.  According to the Economic Innovation Group, 80 percent of U.S. counties lost prime working-age adults from 2007 through 2017.  And the situation is not improving....The U.S. population is now growing at less than replacement levels.

“The decline is driven in large part by millennials, who are marrying and having children at much lower rates than previous generations.  It’s ironic.  Many millennials want socialism, but they are not producing the future workers and taxpayers needed to pay for it.  The only thing stopping us from overall population decline is the arrival of immigrants, who account for about 48 percent of U.S. population growth....

“We need immigrants to work and pay taxes that fund Social Security and Medicare for our aging population. And we need immigrants to provide the human capital for continued economic growth and prosperity.  If the president wants to keep this economic boom going, he needs more people coming to the United States, not fewer.

“So, yes, our shining city on a hill needs walls – because the world is a dangerous place, and we are a nation of laws. But, as President Ronald Reagan put it in his farewell address, those walls must also have doors.  And the sign above those doors should read ‘Welcome to America’ – not ‘Sorry, we’re full.’”

Back at the border, wait times at the ports of entry have soared as the Trump administration diverts officers to handle the influx of immigrants, leaving trucks backed up for hours, with possible produce shortages and supply-chain interruptions.

Business leaders, and Mexico’s foreign minister, are among those complaining, with the latter calling the move a “very bad idea.”  The shift in enforcement efforts is overwhelming legal checkpoints and impeding the free flow of goods.  Trump has said he would consider closing the border as a punitive measure if Mexico doesn’t take steps to reduce the flow of migrants to the United States within the next year.

Those suffering most are automakers, tech companies and farmers, with $1.7 billion a day in goods crossing the border between the two countries.

By week’s end Trump said he would have to mobilize more of the military, after listening to stories from people attending a Republican fundraiser about migrants crossing the border.

Trumpets...

--Attorney General William Barr said he would form a team to examine the origins of a 2016 counterintelligence investigation that conducted what he termed as ‘spying’ on people affiliated with the Trump campaign, a characterization Democrats said was politically motivated and echoed the president’s longstanding criticism of the Justice Department’s Russia probe.

At a Senate hearing on Wednesday, Barr said the team would look at what lay behind the FBI’s probe of the Trump campaign’s possible ties to Russia, which included surveillance.

“I think spying on a political campaign is a big deal,” Barr said, invoking Vietnam-era intelligence abuses such as the surveillance of antiwar activists as a reason to raise these questions.  “Spying did occur. The question is whether it was adequately predicated.”

Barr’s move immediately provoked questions on Capitol Hill from Democrats who rebuked Barr for his implication that legitimate investigative activities into Russian interference should be considered “spying.”

The inquiry by Barr’s team will mark the third ongoing investigation – including one being conducted by the Justice Department’s inspector general – of the department’s actions in connection with the 2016 counterintelligence probe.

Mr. Barr didn’t elaborate on what he meant by spying.

Meanwhile, he said he would deliver the Mueller report to Congress within a week, and that he would be transparent about redactions in the report.  But he demurred when asked whether he has briefed the White House on it.

--Treasury Secretary Steven Mnuchin told lawmakers on Tuesday that White House lawyers had been in touch with his department about a congressional request for President Trump’s tax returns but said he had not personally spoken to Mr. Trump or those lawyers about how the matter was being handled.

“It is our intent to follow the law,” Mnuchin said during one of the hearings he was subjected to.  “It is being reviewed by the legal departments and we look forward to responding to the letter.”

--President Trump’s expected nomination of former pizza chain executive Herman Cain to the Federal Reserve Board appeared in jeopardy on Thursday after a fourth Republican senator voiced opposition.  Cain will be withdrawing his name from consideration shortly.

--President Trump tweeted Thursday: “Great news! #MAGA,” along with a screenshot from “Lou Dobbs Tonight,” the graphic reading “Trump’s soaring approval,” which was above statistics that read “55% overall” and “58% economy.”  It cited Georgetown Politics as the source.

The latter number was correct. The first Georgetown Institute of Politics and Public Policy “Battleground Poll” for the 2020 presidential election found that 58% of voters approve of his handling of the economy.  But the graphic implied his job approval rating was 55% when the poll actually found that only 43% approved of the job he is doing and 52% disapproved.

41% had a favorable impression of Trump, 55% had an unfavorable one.  [Speaker Nancy Pelosi had a 37% favorable rating and a 53% unfavorable one.]

The Fox Business Network delivered an on-air correction to the error.

--In a wide-ranging interview with Politico, former White House strategist Steve Bannon said American can expect “pure Trump off the chain” if the president is re-elected.  Bannon said a second term would mean “four years of Donald Trump in payback mode.”

Bannon also observed no one in the Democratic field could “take on Trump one-on-one” among the current candidates.

Bannon also didn’t dismiss the idea of Hillary Clinton running again in 2020, saying if Democrats “don’t think that they’ve got somebody that can beat him, the vampire is going to be in the bullpen.  She did get 63 million votes.”

Trump tweets:

“I think what the Democrats are doing with the Border is TREASONOUS.  Their Open Border mindset is putting our Country at risk.  Will not let this happen!”

“Even the Democrats now say that our Southern Border is a Crisis and a National Emergency.  Hopefully, we will not be getting any more BAD (outrageous0 court decisions!”

“President Obama’s top White House lawyer, Gregory B. Craig, was indicted yesterday on very serious charges.  This is a really big story, but the Fake News New York Times didn’t even put it on page one, rather page 16. @washingtonpost not much better, ‘tiny’ page one.  Corrupt News!”

“I have not read the Mueller Report yet, even though I have every right to do so.  Only know the conclusions, and on the big one, No Collusion.  Likewise, recommendations made to our great A.G. who found No Obstruction.  13 Angry Trump hating Dems (later brought to 18) given two...

“...years and $30 million, and they found No Collusion, No Obstruction.  But the Democrats, no matter what we give them, will NEVER be satisfied.  A total waste of time.  As @FrankLuntz has just stated, ‘Enough, America has had enough.  What have you accomplished.  Public is fed up.’”

Wall Street and Trade

The International Monetary Fund held its semiannual meeting in Washington this week and issued a new forecast for global growth, 3.3% in 2019, down from a forecast of 3.7% last October.  The IMF projects 3.6% in 2020.

The United States is expected to grow 2.3% this year, 1.9% in 2020.

The IMF pegs China at 6.3% this year, with Japan at 1.0%.

For the Euro Area, the IMF is looking at 1.3% growth in 2019, with Germany at just 0.8%, France 1.3% and Italy 0.1%.

The IMF warns that the global economy is slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus measures.  In its World Economic Report, the IMF pointed to the U.S.-China trade war and a potentially disorderly British exit from the European Union as key risks and warned that chances of further cuts to the outlook were high.

The Federal Reserve released its minutes from the March Open Market Committee meeting and they show the Fed saw the U.S. economy weathering a global slowdown, policymakers making it clear they saw no recession for the United States in the next few years.

But some committee members said they could change their minds on whether the Fed’s next move should be to raise or lower rates, based on incoming data.

After the central bank’s meeting March 19-20, Chairman Jerome Powell said, “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy,” seemingly ruling out a rate increase anytime soon.

In a survey of economists by the Wall Street Journal, the Fed is now expected to keep rates unchanged at least through the end of 2021.  Last month, the same survey had the Fed raising rates once this year (your editor’s prediction), but Fed officials’ statements and projections since then appear to have changed everyone’s outlook.

While no one expects a rate cut this year, which the administration is calling for, a third of the economists surveyed expect one or more reductions by the end of 2021.

In the Journal survey, economists saw a 26% probability of a recession in the next 12 months, up from 18% in October.

Meanwhile, on the economic data front, the Fed won’t be concerned with the latest inflation news for March.  Producer prices rose a stronger than expected 0.6%, due to rising energy prices, but ex-food and energy the number was in line, 0.3%.  Year-over-year, the PPI is at 2.2%, a little hotter than projected, but 2.4% on core, a little lower.

Consumer prices for March rose 0.4%, but just 0.1% ex-food and energy, with the respective 12-month readings being 1.9% and 2.0%.

February factory orders were down 0.5%, in line.

And then we had the report on the budget deficit for March, -$146.9 billion, as per the Treasury Department. So this leaves the six-month deficit (since October 1) at $691.2 billion, 15.3% larger than the same period in fiscal 2018

Total receipts for the first six months were $1.507 trillion, up 0.7% from the same period in the previous year.  Individual income tax receipts fell 1.7% from a year ago to $723.8 billion, while corporate income tax receipts were down 13.5% to $68.0 billion.  Offsetting the declines were sizable increases in customs duties, up 88.6% to $34.7 billion, excise taxes, and employment/retirement social insurance receipts.

Outlays for the first six months of fiscal 2019 totaled $2.198 trillion, up 4.9% from the comparable period a year ago.  Net interest expense was up 14.8% to $190.3 billion, while defense spending was up 9.2% to $342.0 billion, and social security payments, up 5.6% to $309.5 billion.

The next report, for April, will show a budget surplus, it being tax time, but the overall picture is not good.

As for the Atlanta Fed’s GDPNow barometer for the first quarter, it is all the way up to 2.3%, which happens to be the average for GDP the last 10 years.  There could be a big swing next week with data on retail sales, inventories, housing and international trade.

On the trade front...negotiators for both the United States and China are trying to reach compromise on remaining issues that block an agreement.  Treasury Secretary Mnuchin said Wednesday that the two sides have agreed to set up enforcement offices to monitor compliance with an eventual deal, which has been one major stumbling block; China concerned that checks on its policies by U.S. officials would be an infringement of its sovereignty. 

But the agreement will also allow China to monitor U.S. behavior, a reciprocal concession that analysts said showed determination from both sides to reach a broad deal.

China sweetened an offer to open its cloud-computing sector to foreign companies, in a bid to forge a deal after U.S. negotiators rejected an earlier proposal as inadequate.

In last week’s talks in Washington, Chinese negotiators, led by Vice Premier Liu He, proposed to issue more licenses that businesses need to operate data centers and to lift the 50% equity cap that limits ownership for certain foreign cloud-service providers, according to the Wall Street Journal.

Amazon.com, Microsoft and Apple have invested $millions to provide cloud services in China, but are hampered by regulations.  By allowing them to enlarge their presence, and pick up more market share, it would help meet President Trump’s goal of reducing the U.S. trade deficit with China.

Secretary Mnuchin said the trade deal ran to more than 150 pages and these were currently under discussion.  There was no time frame, he said, but they hoped to wrap things up quickly.

Mnuchin did not say whether the monitoring system would involve U.S. officials being based in China, but it’s assumed the new offices would allow both sides to step up communications.

Last weekend, Chinese state media said the two sides had made “new progress” in the talks, without being specific.

White House economic adviser Larry Kudlow said, “We are making headway in a lot of areas. That includes enforcement, that includes IP theft, that includes forced technology transfers, ownership, cyberspace, commodities and all the rest of it.”

Meanwhile, the Trump administration is proposing tariffs on $11 billion in imports from the European Union in response to harm the U.S. says is being caused by EU subsidies to Boeing rival Airbus SE. 

The U.S. Trade Representative’s office cited the World Trade Organization’s finding that the aid to Airbus has “repeatedly” caused “adverse effects to the United States.”

The administration is beginning a process under Section 301 of the Trade Act of 1974 to “identify products of the EU to which additional duties may be applied until the EU removes those subsidies.”

The threatened tariffs, which we learned would be on new passenger helicopters, various cheeses and wines, and certain motorcycles, among other goods, would be implemented only after the WTO gave the final go-ahead this summer, the administration said, which is interesting because President Trump has previously trashed the WTO.

Robert Lighthizer, the U.S. trade representative, said, “This case has been in litigation for 14 years, and the time has come for action.”  I totally agree with this one.

But Lighthizer just wants to see an end to the EU subsidies in question so that tariffs aren’t necessary.

This action is totally separate from any broad trade discussions between the EU and the U.S., which are at a standstill, EU officials not having reached consensus on a negotiating stance.

Europe and Asia

After the slew of data the week before, the only report of note concerning the Eurozone economy was for February industrial production, down 0.2% over January for the EA19, and down 0.3% year-over-year, reflecting the sad state of manufacturing in the euro area these days.

But we also had a meeting of the European Central Bank, which kept its ultra-easy monetary policy unchanged as expected on Wednesday, giving recent stimulus measures time to work their way into the economy and counter spreading global gloom, or so the ECB says.  President Mario Draghi confirmed that policymakers were considering measures to mitigate the impact on banks of its negative deposit rates as well as the pricing of new cheap two-year loans to banks, but said it was too early to decide.

“We need further information that will come to us between now and June,” Draghi said, which didn’t go over well with the banks, who want more help now.  Draghi added, “Incoming data continue to be weak, especially for the manufacturing sector... The slower growth momentum is expected to extend into the current year,” he added.

But Draghi said the probabilities of recession “remain low,” though risks remained to the downside.  That said, the ECB has previously said it was prepared to keep interest rates at record low levels at least through this year.

Brexit: European Union leaders and British Prime Minister Theresa May agreed to extend the UK’s departure from the bloc until Oct. 31, as today’s April 12 deadline loomed.  Without the extension, Britain faced the prospect of crashing out of the EU with no deal, a scenario that most conceded would lead to a deep recession as tariffs are imposed on UK exports and other restrictions on trade are imposed.

Mrs. May’s path toward actually taking Britain out of the EU, however, remains unclear.  She is blocked by a strong faction in her own Conservative Party that hates her withdrawal deal and hopes to oust her, and talks aimed at winning support from the opposition Labour Party are moving forward slowly, if at all.

May’s own authority has been gravely compromised by the long Brexit ordeal and she has promised to step down once Britain leaves the bloc, if efforts to get rid of her more quickly do not bear fruit.

European Council President Donald Tusk pleaded, “Please, do not waste this time.”  He said the EU was giving Britain six more months “to find the best possible solution” to the Brexit impasse. 

But like with everything else in this nearly 3-year debacle, going back to the June 2016 referendum, the extension was a messy compromise.  May had come to the emergency summit in Brussels seeking to postpone Britain’s departure from the EU until June 30.  Some European leaders favored a longer extension, while French President Emmanuel Macron was wary of anything but a very short delay, pushing for a June Brexit.  Macron strongly opposed the other leaders’ preference for a year-long extension; proponents feeling that over the course of a year, odds would increase that Britain would change its mind and stay in the bloc.

But Macron argued that a long extension risked disrupting the bloc’s more important work and that Britain’s political confusion could prove contagious – that even a hard Brexit was better than a paralyzed European Union.

German Chancellor Angela Merkel stressed the need for Britain to have time to manage an orderly process, which would allow for a good relationship between the two sides after the divorce.

The October 31 date is important in that a new European Commission is formed then and Britain would be outside of it.

So the leaders of the 27 remaining EU member states wrangled for six hours Wednesday night, over a reported dinner of scallops and cod, before settling on the October date, the Halloween Brexit, with the possibility of an earlier withdrawal agreement should the May government and the British parliament finally reach a consensus.

May told reporters that if lawmakers back her Brexit deal (already turned down three times), Britain could still leave by June 30, and possibly as soon as May 22, which would release Britain from having to participate in elections for the European Parliament (May 23-26).

Tusk said that during the extension Britain “will continue its sincere cooperation as a full member state, with all its rights, and as a close friend and trusted ally in the future.”

EU diplomats will now meet end of June to assess the situation. Britain could have left by then if May succeeds in building a coalition for her deal with the Labour opposition, though this is far from a sure thing.

In order to continue as an EU member beyond June 1, May has agreed to organize British elections to the European Parliament on May 23, though it is still unclear if that vote will go ahead and how far it might turn into a virtual second referendum on EU membership that some hope could lead to Britain cancelling Brexit.

For now, the prime minister has urged lawmakers to reflect on Brexit during their Easter recess.

One non-Brexit item...Italy’s populist government conceded it won’t hit its budget-deficit target agreed on with European Union authorities, setting the stage for renewed tensions with Brussels.

The Italian government has been forecasting growth of 1.0% for this year, but now admits it will be closer to 0.2%, or worse.  Markets are sensitive to Italy’s lack of growth because of its humongous debt load, 132% of GDP and headed higher, not down, as the government wanted us to believe.

Separately, Italy’s Deputy Prime Minister Matteo Salvini said he would host a major rally of European nationalist and far-right parties to promote a shared political vision ahead of May’s EU parliamentary elections.

Salvini leads the ruling League party and hopes to put together a bloc of like-minded, anti-immigration parties in the European parliament to challenge the traditionally predominant and mainstream center-left and center-right groups.

But Salvini’s attempts at a broad, Euro-wide front have been limited thus far, with the EU’s conflicting national interests.

For example, AfD (Alternative for Germany), the anti-euro, far-right party, said while it has similar anti-immigrant views as the League, it differs on positions like the need to respect EU fiscal rules.

Turning to Asia...

China’s factory-gate, or producer prices, rose for the first time in nine months in March, lifted by rising prices in global commodities as well as signs that government efforts to stimulate the economy may be putting a floor under domestic demand.

Consumer inflation also quickened to the highest point since October 2018, as pork prices soared due to a growing epidemic of swine fever, the National Bureau of Statistics announced.

The PPI rose 0.4% from a year earlier.  The CPI rose 2.3% vs. a year ago, with pork prices up 5.1% from March 2018. Non-food inflation was 1.8%.

Exports in March grew by 14.2%, a big jump from the 20.7% fall in January and February (the data combined due to the Lunar New Year holiday in February), with imports falling 7.6%, after a 19.9% collapse those two months.

The export news was welcomed, but imports continued to slump, suggesting weak demand.

The new data from the General Administration of Customs means that for the first quarter, China’s exports grew by 0.9%, while imports contracted by 4.4%.

China’s trade surplus with the U.S. was $20.5 billion in March.

China’s gross domestic product for the first quarter will be released on April 17, which should offer real evidence of how the trade war with the U.S. has affected the economy.

In Japan, Prime Minister Shinzo Abe has repeatedly said a planned sales tax hike to 10 percent from the current 8 percent will take place in October, after Tokyo has postponed raising the rate twice.  To blunt the economic impact, the government has earmarked $18 billion in spending.

Authorities say the move is needed to cover growing social welfare costs as the population rapidly ages.  But the hike is likely to knock the economy into contraction in the fourth quarter, according to a Reuters poll of economists.

Abe could delay the hike a third time.

Street Bytes

--The major indices finished mixed on the week, with the Dow Jones down just 12 points to 26412, -0.05%, but the S&P 500 up 0.5% and Nasdaq 0.6%, as all three remain within striking distance of their all-time highs.

But the next three weeks will see a flood of earnings reports and FactSet is forecasting earnings for the S&P 500 in the first quarter will decline 4.2%, though early indications are this is too pessimistic, with profits for all of 2019 rising 3.7%, after 20% growth in 2018.

The market, witness its strong start to the year, has long discounted poor first-quarter guidance and is expecting the balance of 2019 to be better than currently forecast, plus it expects a satisfactory resolution to the U.S.-China trade talks and no serious issues with the Euro economy, or Brexit. 

As Ray Stevens once sang, “Everything is beau-ti-ful...in its own way....” [#1 1970]

--U.S. Treasury Yields

6-mo. 2.44%  2-yr. 2.39%  10-yr. 2.57%  30-yr. 2.98%       

The yield on the 10-year is back to 2.57% from a cycle low of 2.41% just two weeks ago, which is important for the housing market, if the upward trend continues.

--Oil rose again this week, to $63.76.  And not for nothing, but the price of gas at the pump is up bigly in my area, 30 cents in just weeks.  The national average for unleaded regular is now $2.78.

But the big story in the energy sector came today, as Chevron announced it was buying Anadarko Petroleum for $33 billion in cash and stock as the company doubles down on its bet on U.S. shale oil and gas production, where the surge in output has made the United States the world’s largest energy producer.

With the spike in the oil price this year, Chevron and its rival Exxon Mobil Corp. have been increasing investment in the Permian basin in West Texas, the most prolific shale oil field in the country.

Shares of Apache Corp., which also has extensive acreage in the Permian Basin, jumped 7 percent today, while Pioneer Natural Resources Co. rose 6 percent on the Anadarko acquisition.

At the end of 2018, Exxon and Chevron accounted for about one-fifth of Permian output, where producers pump around 4 million barrels per day currently.  The acquisition of Anadarko will give the combined company a 75-mile-wide corridor across the Permian’s Delaware basin, on the Texas-New Mexico border.

--Boeing on Tuesday said first-quarter orders of its 737 model dropped nearly 90% from the previous quarter after the company suspended deliveries and regulators around the world grounded the 737 MAX following the two deadly crashes in Indonesia and Ethiopia.

Boeing said orders for its best-selling plane fell to 32 in the first three months of the year, none in March, down from 248 in the fourth quarter of 2018. [March was the first month without a sale of the aerospace giant’s best-selling aircraft in almost seven years.]

The company said it delivered 89 737s in Q1, down from 173 in the previous period, including just 11 of the 737 MAX jets in March. 

Boeing previously issued guidance in January that it would deliver over 900 jetliners this year, with analysts previously expecting this figure to include more than 550 MAX planes.

Earlier, Boeing had said it would cut its production by 20% as it rolls out a software patch to the system blamed for the crashes.  With the fix needing approval from global regulators, some are now predicting the 737 MAX won’t be returning to commercial flight until at least September.

The production cut and global grounding of the MAX aircraft are prompting airlines to rearrange their operations and schedules ahead of the busy summer travel period.  Southwest, for example, the largest operator of the 737 MAX with 34 in its fleet, was planning on adding 31 this year.  Needless to say this is impacting operations.

And today, it was reported that before last month’s crash in Ethiopia, Boeing said in a legal document that large, upgraded 737s “cannot be used at what are referred to as ‘high/hot’ airports.”

At an elevation of 7,657 feet – or more than a mile high – Addis Ababa’s Bole International Airport falls into that category.  High elevations require longer runways and faster speeds for takeoff.

The Ethiopian airport’s altitude hasn’t been cited as a factor in Flight 302.  The preliminary report on the disaster said the plane’s anti-stall system pushed the nose of the plane down less than two minutes into the flight because of a malfunctioning sensor.

The revelation on high/hot airports was part of a case Boeing brought before the International Trade Commission, with Boeing alleging unfair competition from Bombardier – which beat out Boeing for a large order from Delta Air Lines.

--Staying in the aerospace sector, a Lockheed Martin F-35 stealth fighter jet crashed over the Pacific Ocean close to northern Japan, with the pilot missing.  The plane was less than a year old, with the first squadron of F-35s just becoming operational at the Misawa air base.  The Japanese government plans to buy 87 of the stealth fighters to modernize its air defenses as China’s military power grows.

The crash represented just the second time an F-35 has gone down since the plane began flying almost two decades ago.  Each plane costs about $100 million.

--Uber told some investors that its upcoming initial public offering might value the company at up to $100 billion, which is below the $120 billion valuation that has been floated by investment bankers.

Uber’s main North American competitor, Lyft, debuted last month and its shares plummeted this week to $59.85 below the $72 IPO price.

Another Silicon Valley darling, Pinterest, this week set its pricing expectations for its own IPO below its last private fund-raising round.

The issue is all three of the above are major money losers, at the moment, so what is the real appetite for them with investors?

You just don’t want to break your IPO price as Lyft has, and so early.

So on Thursday, Uber made its IPO papers public, the so-called S-1 filing it had made with the Securities and Exchange Commission in December.

The filing shows that the spectacular growth Uber has enjoyed in its core ride-hailing business has leveled off lately.  The company’s revenue from ride-hailing was $2.31 billion in the fourth quarter, little changed over the prior six months.

Overall revenue last year was $11.27 billion, but the company’s total losses on operations – excluding items like sales of business units – totaled more than $10 billion between 2016 and 2018, and were $3.03 billion last year alone, Uber warning in the filing it may never make a profit due to competition in the ride-hailing space, which continues to expand.  Uber also said it expects operating expenses to “increase significantly in the foreseeable future” and cautioned it “may not achieve profitability.”

Uber had 67% of the U.S. ride-hailing market last year, down from 78% two years earlier, according to Second Measure Inc., which analyzes credit card transactions.

But unlike Lyft Inc., Uber has built big businesses in Europe, India and Latin America, and its ambitions go beyond ride-hailing, such as with Uber Eats, and a trucking business called Uber Freight.  Eats has grown quickly to represent more than 13% of Uber’s total net revenue.  But this too is an increasingly competitive business.

The filing sets up the company to begin trading in early May following a roadshow in late April.

--The country’s largest bank, JPMorgan Chase & Co., saw its shares rise 5% as it reported better than expected earnings and revenue for the first quarter. The company said the U.S. consumer is in good shape, pointing to healthy credit-card spending and auto lending.

“Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong,” said CEO Jamie Dimon in a statement.

JPM reported a profit of$9.18 billion, well above expectations, with revenue rising 4.7 percent to $29.85 billion.

--Shares in Wells Fargo fell a bit, with falling revenue across all segments of the business as it continues to deal with the aftermath of the fake accounts scandal; mortgage originations falling 23% in the quarter from a year ago. 

But the fourth-largest U.S. bank by assets did still record a profit of $5.86 billion, up 14%, though helped by one-time gains.

With the resignation of CEO Tim Sloan last month, Wells said the board has chosen a firm to help with the CEO search.  What was once an aggressive, fast-growing lender, has become a firm with declining revenue and big cost cuts looming.

--Bank of America announced it planned to raise its minimum wage to $20 an hour from $15 over the next two years.  Income inequality has become a major focus among Democrats in Congress and the big banks are trying to deal with the shifting political winds.  Bank CEOs need to be able to explain to the more progressive representatives why they are paid more than 700 times what low-wage workers, including some tellers in their branches, earn each year.

BofA CEO Brian Moynihan was among the bank honchos to appear Wednesday before the House Financial Service Committee, where the issue of executive pay, diversity and other issues came up, but it was basically a non-event.

--Societe Generale, France’s third-largest bank, announced it planned to cut 1,600 jobs, mainly at its corporate and investment banking arm; part of a plan to slash $563 million in costs. The bank employs 18,000 in 30 countries.  The cuts will be in France, London and New York.

--As first reported by Bloomberg, Amazon is listening to customers through Alexa devices, with seven former employees who were part of Amazon’s voice review program coming forward with the startling revelations.

Employees recorded thousands of clips including a woman singing in the shower and a sex assault, it emerged Wednesday.

Full-time workers and contractors reportedly sift through as many as 1,000 recordings per shift – and even share “amusing” clips between themselves.

The former employees told Bloomberg the recordings are linked to the customer’s first name, their device’s serial number and even their personal account number.

Amazon then confirmed the story, with a spokesperson saying that “an extremely small sample of Alexa voice recordings” are analyzed by staff.

Amazon added the process “helps us train our speech recognition and natural language understanding systems, so Alexa can better understand your requests, and ensure the service works well for everyone.”

Apple and Google have admitted previously they have employees who listen to audio commands, but both insist the recordings are completely anonymous and are not paired with customers’ accounts.

--The U.S. wants foreign governments to follow Germany in adopting stricter security standards for their 5G networks, which would effectively rule out the use of Chinese equipment vendors, namely Huawei.

Germany set the tougher standards last month, stopping short of singling out Huawei for special treatment, which was a blow to Washington, having led efforts to get Western governments to ban the Chinese behemoth due to concerns its equipment could be used to support Chinese spying, allegations Huawei has repeatedly denied.

But, Robert Strayer, deputy assistant secretary for cyber policy at the State Department, said the Trump administration approved of the German move.

“We have encouraged countries to adopt risk-based security frameworks. And we think that a rigorous application of those frameworks...will lead inevitably to the banning of Huawei....

“At this point, we’re looking for governments to adopt security standards like we’re seeing in Germany.  We think it was a very positive step forward in the German standards,” Strayer said on a call with reporters the other day.

--Panasonic is freezing plans to expand its role as Tesla’s electric car battery supplier, a move raising new questions about demand for Tesla’s Model 3, and possibly its future.  Japan’s Nikkei Asian Review reported that Panasonic was abandoning plans to expand its manufacturing capacity at the company’s Nevada battery factory by 54% next year.

A Tesla spokesman said the company’s demand for batteries remains strong.  “Contrary to what is implied in [the Nikkei] report, our demand for cells continues to outpace supply.  It remains the fundamental constraint on Tesla vehicle and Powerwall/Powerpack production.”

Powerwalls and Powerpacks are home and utility battery storage products assembled and sold by Tesla.

As I noted the other week, Model 3 deliveries fell 19% in the first quarter, with a 56% drop in sales for the company’s Models S and X.  There are also stories Tesla no longer has a waiting list.

One more.  David Einhorn’s Greenlight Capital hedge fund renewed its criticism of Elon Musk and Tesla today, saying the company again appeared to be on the “brink” of failure, according to a letter sent to clients of the fund.  The letter cited a lack of demand, “desperate” price cuts, layoffs, “closing-and-then-not-closing” stores, closing service centers, slashing capital expenditures, rushed product announcements and “a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities.”  “We believe that right here, right now, the company appears to again be on the brink,” the letter said.

--Disney unveiled how it will compete in the streaming video business now ruled by Netflix.  Disney+, its “family friendly” video streaming service, will start Nov. 12 and cost subscribers $6.99 a month.

The streaming service is being launched into a saturated market dominated by Netflix and Amazon.  Apple is also planning to launch its own streaming service later this year.

CEO Bob Iger said the service will be built around five Disney properties: Disney, Pixar, Marvel, LucasFilm and assets it acquired from Twenty-First Century Fox, like National Geographic.

I was shocked that this news, long anticipated, led to a 12% surge in the share price to a new record for Disney, $130.  Plus CEO Bob Iger confirmed he was stepping down at the end of 2021, which will be in the midst of the rollout.

Then again, Disney+ will have 30 years of “The Simpsons,” and there is something to be said for that.

--Johnson & Johnson won the latest trial over claims its baby powder can cause cancer, as a jury in Long Beach, Calif., rejected a lawsuit brought by a 65-year-old retired teacher who claimed the product was contaminated with asbestos.

The J&J victory came after the company settled three cases alleging its baby powder caused a rare asbestos-related cancer.  The cases, two of which were settled during trial, were in New York, Oklahoma and California.

--Bed Bath & Beyond Inc. reported its first annual loss and sales decline in its nearly three decades as a public company.  The home-goods retailer posted a 2.6% sales decline and swung to a $137.2 million loss in the year ended March 2.  The prior year it reported a profit of $424.9 million.

BBBY is opening a series of so-called lab stores to test assortments and displays and is introducing several private-label home-furnishing brands to improve sales.

The company guided higher on profitability this year, but projected sales would fall from last year’s level.

For the latest quarter, same-store sales fell 1.4%, worse than analysts had expected.

When BBBY went public in 1992, it had 34 stores.  It now has more than 1,500, though the company said it was closing 40 this year; a figure that would grow unless the company can negotiate more favorable lease terms with the landlords, according to the CFO.

--Royal Dutch Shell PLC said Monday it would invest $300 million in the protection and restoration of natural ecosystems over the next three years as part of an effort to reduce its carbon footprint by 2-3%.

Shell is investing in forests, wetlands and other natural ecosystems around the world, and will collaborate with the Dutch state forestry service to plant over 5 million trees in the Netherlands.

The oil giant is also investing in 200 new rapid electric-vehicle charging stations in the Netherlands, powered by renewable energy, to go along with 500 it has already installed elsewhere in Europe.

--Italian carmaker Fiat Chrysler Automobiles NV has agreed to pay electric carmaker Tesla Inc. hundreds of millions of euros so that the vehicles of Tesla are counted in its fleet to avoid fines for violating new European Union emission rules, the Financial Times first reported.

The step will let FCA offset carbon dioxide emissions from its cars against Tesla’s, by bringing down its average figure to a permissible level.  Details on the financial agreement weren’t announced.

--If you are thinking of building a swimming pool in your backyard, I saw a piece in the Los Angeles Times, a study from Redfin, that analyzed 26,000 properties sold in the L.A. metropolitan area last year.  “Homes with a pool sold for an average of $95,393 more than similar homes without them.”

In Orange County, pools added an average of $55,885 to a home’s value, and in Austin, Texas, it was $52,228.

Of course it’s not like this all over, but something to think about...like the value of adding a new kitchen.

--American Media Inc. is looking to sell the National Enquirer as well as other tabloid publications, including the Globe and National Examiner, the company announced Wednesday.

The decision comes on the heels of the Jeff Bezos scandal in which he accused the Enquirer of extorting him with leaked text messages and naked photos that the publication had obtained.

AMI’s chairman, David Pecker, a former accountant who took over the company in 1999, has been a longtime friend of President Trump and has admitted employing catch-and-kill techniques to protect Trump from unfavorable stories.

--According to brand and sales marketing agency Acosta, the average U.S. supermarket carries 306 different yogurt varieties, up 4% since 2015, but overall yogurt sales fell 6% by volume in the year through February, per Nielsen data.  Sales of Greek yogurt, which had kicked off the categories’ tremendous growth, fell 11%.

Not a good sign for packaged-food companies, whose decades-old brands are losing market share to cheaper store-branded alternatives.  Peter McGuinness, Chobani’s chief marketing officer, told the Wall Street Journal that yogurt makers shot themselves in the foot when they undermined their own sales by introducing too many new flavors and styles.

General Mills Chief Executive Jeff Harmening said that food producers made the category too confusing.  “The shelf has become more difficult to shop,” he said.

You know, he’s right.  I look at my own shopping habits.  I used to just have yogurt and some nuts for lunch, basically every day, and now it’s cottage cheese and fruit (and some nuts).  I find the yogurt section at my ACME totally confusing.  A mess, as in there used to be like four or five main brands, with a handful of flavors, and now, just as Peter McGuinness said, the consumer is overwhelmed.

--Despite tepid reviews, a new Broadway jukebox biomusical, “Ain’t Too Proud,” which chronicles the Motown group the Temptations, grossed $1.3 million for the week ended Sunday, its best seven-day showing since opening March 21, after a brief preview run. As reported by the Journal and the Broadway League, the sales represented 93% of the show’s potential gross, if all the seats were sold.

Meanwhile, “The Cher Show,” a biomusical featuring songs by, err, Cher, grossed just 58% of its potential take, $866,000, over the same seven-day period.

Foreign Affairs

Israel: Prime Minister Benjamin Netanyahu secured a record fifth term on Wednesday with Benny Gantz conceding the election after more than 98 percent of the votes gave the right-wing bloc a lead of 9-10 seats.  Should Netanyahu retain the helm, he will become the longest-serving Israeli prime minister in July, overtaking the country’s founding father, David Ben-Gurion, assuming looming criminal charges don’t force his removal.

Netanyahu’s Likud tied with Gantz’s Kahol Lavan party with 35 seats each.  Almost all right-wing parties have said they would recommend to the president that Netanyahu form the next ruling coalition, with Netanyahu’s bloc controlling 65 of the Knesset’s 120 seats.

The close and often vitriolic contest was widely seen as a referendum on Netanyahu’s character and record in the face of corruption allegations.  The prime minister faces possible indictment in three graft cases, though he has denied wrongdoing in all of them and would not have to resign should indictments be handed down.  The issue would be if he lost support during any trial.

“It is a night of colossal victory,” the 69-year-old Netanyahu told supporters at Likud headquarters after Tuesday’s vote.

The prime minister highlighted his close relationship with President Trump, who delighted Israelis and angered Palestinians by recognizing Jerusalem as Israel’s capital in 2017 and moving the American embassy to the holy city last May.

And then two weeks before the election, Trump signed a proclamation with Netanyahu at his side at the White House, recognizing Israeli sovereignty over the occupied Golan Heights, captured from Syria in the 1967 Middle East war.

And then Netanyahu further alarmed Palestinians when days before the vote, he pledged to annex Jewish settlements in the occupied West Bank if re-elected.*  Palestinians have long sought a state there and in the Gaza Strip, with East Jerusalem as its capital.

Netanyahu’s pledge to annex the settlements was a clear attempt to draw more right-wing votes.

*Some 500,000 Israelis live in the West Bank and East Jerusalem, areas that are also home to more than 2.6 million Palestinians.

Commenting on the election, Palestinian chief negotiator Saeb Erekat said: “Israelis have voted to preserve the status quo. They have said no to peace and yes to the occupation.”

The last round of U.S.-brokered peace talks between Israel and the Palestinians broke down in 2014.

President Trump is expected to release his long-awaited Middle East peace plan in the coming months.

As for Gantz, unless he joins Netanyahu in a future broad coalition, he looks destined to lead a center-left parliamentary opposition.

Editorial / Wall Street Journal

“Benjamin Netanyahu’s election Tuesday to what is likely to be a fifth term as Israel’s Prime Minister is a personal triumph, as well as a testament to how much he has moved the Jewish state’s politics to the right in the past 20 years....

“The veteran Prime Minister ran as a statesman indispensable to Israel’s security.  The fruits of his close relationship with President Trump helped make the case: a U.S. Embassy in Jerusalem; American recognition of Israeli sovereignty in the Golan Heights; and Monday’s designation of Iran’s Islamic Revolutionary Guard Corps as a terrorist organization.  He could also point to improved relations with Sunni Arabs in the Gulf states and Egypt.  Israel’s economy under Mr. Netanyahu has prospered as he has tried to remove its socialist shackles.

“Proof of his success is that Mr. Gantz focused not on policy but on Mr. Netanyahu’s long tenure and bumptious personality.  ‘I think Benjamin Netanyahu has done a lot for the country.  He is the son of this country,’ the former top general said earlier this month.  ‘But, as they say, enough is enough.’

“Also striking is the collapse of the Labor Party that ruled Israel for most of its first three decades. The party barely passed the threshold to make it into parliament with about 5% of the vote.  The refusal of the Palestinians to accept landmark peace offers in 2000 and 2008, plus the bloody record of Hamas in Gaza, has created a new consensus in Israel skeptical of the old ‘two-state’ solution....

“Voters knew about (Netanyahu’s) legal troubles and delivered a majority to (him) and his allies anyway.  He may now push legislation granting immunity to a sitting Prime Minister, with some democratic justification.  But changing the rules in response to a personal crisis will provide fodder for his political opponents and tempt competitors to look for an opening to replace him.

“He will also have to manage a peace proposal that Mr. Trump has said he’ll release later this year.  The contours are likely to include some form of land for peace that won’t be welcomed by some of Mr. Netanyahu’s coalition partners. The Prime Minister made a last-minute campaign promise to annex Jewish settlements on the West Bank, which will further complicate negotiations. But as the election results show again, Mr. Netanyahu has a remarkable feel for the Israeli public’s mood.”

Iran: President Trump designated Iran’s Revolutionary Guard Corps a foreign terrorist organization on Monday – a step that will raise tensions in the Middle East.

Secretary of State Mike Pompeo said in a press conference: “We’re doing it because the Iranian regime’s use of terrorism as a tool of statecraft makes it fundamentally different from any other government.”

Pompeo noted that “businesses and banks around the world now have a clear duty to ensure the companies with which they conduct financial transactions are not connected to the IRGC in any material way.”

It is the first time the United States has formally labeled another country’s military a terrorist group.

Iran’s Supreme Leader Ayatollah Ali Khamenei said the United States had made “a vicious move” in designating the Guards corps as a terrorist organization, and Tehran vowed to take action against U.S. forces in the region.

“They wish to plot against our Sepah (the Guard corps)...it is the frontline of confronting enemies of our (1979 Islamic) revolution and has always defended the country... America has failed to block our advances,” Khamenei, who controls the Guards, was quoted as saying by the state media.  “In spite of all the pressure over the past 40 years, Americans have failed to do a damn thing and their vicious move will bear no fruit.”

Iranian President Hassan Rouhani said in a televised speech that the United States “holds a grudge” against the Guards who have “sacrificed their lives to protect our people, our revolution.”

The Guards are comprised of army, navy and air units, 125,000 strong, as well as commanding the Basij, a religious volunteer paramilitary force, and Iran’s missile programs.

Iranian lawmakers wore Guards uniforms to parliament on Tuesday, chanting ‘Death to America” as Iran marked the annual National Day of the Revolutionary Guards.

David Ignatius / Washington Post

“The Trump administration’s ‘maximum pressure campaign’ against Iran assumes that economic sanctions are weakening its Revolutionary Guard Corps – and that more sanctions will make the Revolutionary Guard weaker still.  The problem is that U.S. and European intelligence analysts don’t think this forecast is accurate.  ‘Re-imposition of sanctions in 2018 has played into the hands of the [Revolutionary Guard],’ warns one recent Western intelligence assessment. Rather than turning Iranians against the corrupt Revolutionary Guard leadership, in other words, the U.S. economic squeeze is instead giving Maj. Gen. Qasem Soleimani and his allies greater control over the Iranian economy.

“The Iran sanctions paradox deepened this week with Secretary of State Mike Pompeo’s announcement that the United States will designate the Revolutionary Guard as a foreign terrorist organization. But as Pompeo warned Monday, the Revolutionary Guard’s leaders are masters of ‘nationwide con artistry and corruption...which they perpetrate against the regime’s own people.’

“History has shown that these operatives find illegal ways to escape pressure, and that the economic vise instead tightens for the Iranian people.

“Like so many Trump administration foreign policy gambits, the Iran squeeze looks like a tactical campaign that’s in search of a strategy.  Does the administration want negotiations?  If so, why has it effectively banned the United States from contact with Tehran’s power brokers?  ‘We’ll preclude ourselves from talking to the people who matter,’ warns Karim Sadjadpour, a senior fellow at the Carnegie Endowment for International Peace.

“Does the administration instead seek a change of Iranian policy and less power for the hard-liners?  If so, the United States should be working to deepen fissures within the Iranian elite, rather than pushing different factions toward the Revolutionary Guard. ‘The goal should be to widen political divisions,’ argues Sadjadpour.  ‘When you’re trying to foment political change, you need pressure from below and divisions above.’

“Sanctions have their uses, to be sure. The ban on oil and financial transactions that President Trump re-imposed after withdrawing from the 2015 Iran nuclear deal has hit Iran hard.  Oil exports have been cut in half, from 2.5 million barrels a day in April 2018 to about 1.25 million barrels in February, according to Reuters.  The International Monetary Fund predicted Tuesday that Iran’s economy will shrink 6 percent this year, after a 3.9 percent decline last year.  Inflation is running at 47.5 percent.

“The resulting cash squeeze means there’s less money for Iran to distribute to its proxies in Lebanon, Syria and Yemen....

“The pressure is mounting, but to what end?  As with other Trump administration foreign policies, it’s hard to discern the strategic goal.  Trump has privately told foreign leaders that he wants to pressure Tehran back to the bargaining table and win a better, broader nuclear deal than the one negotiated by his predecessor, Barack Obama. But John Bolton, Trump’s national security adviser, has signaled instead that he wants to create conditions for regime change, rather than just renewed negotiation.

“Imagine the White House confusion if Iran’s Ayatollah Ali Khamenei sent Trump a letter proposing a new round of nuclear and regional negotiations – with Soleimani, the leader of the Revolutionary Guard’s Quds Force, as his chief negotiator.  Trump could claim a win, but such talks would violate the just-imposed terrorist designation.

“The biggest danger of the escalating Iran campaign is that it risks unraveling the hard-won U.S. success in Iraq over the past five years.  About 5,000 U.S. soldiers are in Iraq, training the Iraqi military and checking the power of Iranian-backed Shiite militias. They could become targets if Iran follows through on its tit-for-tat designation this week of U.S. Central Command forces as ‘terrorists.’

“But even if Iran refrains from shooting at U.S. troops, Tehran-backed politicians may pass legislation in the Iraqi parliament that would forbid continued U.S. military training of Iraqi forces.  That would be a real loss.  Iran would pull Iraq deeper into its sphere of influence – offsetting any U.S. gains in Lebanon, Syria or Yemen.

“Sanctions are like catnip for U.S. policymakers. If you want to see how badly they can misfire, recall the U.S.-led campaign of sanctions against the Iraqi regime of Saddam Hussein in the 1990s.  That squeeze had the perverse effect of empowering Saddam’s clique of smugglers with torturers. We’re in danger of repeating that sorry chapter with Iran.”

Libya: Fighting between eastern Libyan forces and Tripoli government troops killed 56 people and forced 6,000 to flee their homes in the capital the last week, according to the United Nations, as France and Italy wrangled over how to respond to the renewed conflict.

The Libyan National Army (LNA) forces of Khalifa Haftar have been blocked in the southern suburbs of Tripoli about six miles from the center.

In Rome, Libya’s former colonial ruler Italy warned France, which has close ties to Haftar and oil assets in eastern Libya, to refrain from supporting any faction after diplomats said Paris blocked an EU statement calling on him to halt his offensive.

Sudan: The military ousted President Omar al-Bashir on Thursday, the defense minister announced, ending a 30-year authoritarian rule in the face of mass street protests that have swept the country.

Defense Minister Awad Mohamed Ahmed Ibn Auf said that al-Bashir had been taken into custody and that the government had been dissolved and there would be a two-year transition period. Mr. al-Bashir, 75, who is wanted by the International Criminal Court on genocide charges in connection with atrocities in Darfur, has ruled Sudan longer than any leader since the country gained independence in 1956.

While there was cause for celebration, those calling for al-Bashir’s ouster won’t be satisfied if he were simply replaced by another general.

Protests began in December over rising food costs but quickly expanded to a broad challenge to Mr. al-Bashir’s hold on power. In recent days, rival factions within the security services have battled each other, raising fears of a complete breakdown in order.

Editorial / Wall Street Journal

“Sudanese dictator Omar al-Bashir’s three decade reign of misery ended Thursday following a military coup. Good riddance, though his arrest alone won’t satisfy the protestors who have filled the country’s streets for months.

“Mr. Bashir came to power in a coup, toppling a democratic government in summer 1989. The former army officer restricted the media and repressed opponents. Despite Sudan’s oil wealth, his people remained impoverished as cronies from his Islamist National Congress Party grew rich.

“Mr. Bashir’s ethnic cleansing against non-Arabs in the Darfur region made him an international villain in the 2000s. Yet he had long been a menace, seemingly linked to every malign force in the Middle East.  He supported Saddam Hussein’s invasion of Kuwait.  A veteran of the 1973 Yom Kippur War, he worked with Iran and stored Hamas rockets.  In the 1990s Sudan gave refuge to Osama bin Laden.

“Mr. Bashir was clever as dictators go, turning potential rivals against each other and using a network of security services.  Yet he also knew when to adapt.  His relationship with Tehran cooled in recent years, and he has cooperated with the U.S. to fight terrorism.

“Yet corrupt regimes are typically unstable.  Economic growth slowed after the secession of oil-rich South Sudan.  Rising food prices sparked December’s demonstrations, which became a general protest against the regime.  Women played a notable role in criticizing the Islamist government.

“As demonstrators became bolder, the dictator’s allies turned on him.  Defense Minister Ahmed Awad Ibn Auf announced Thursday that a military council would rule the country for two years before elections.  The new government quickly freed political prisoners, but few believe the military will cede power....

“Meanwhile, much of North Africa is in tumult.  Algeria’s long-time dictator recently stepped down after similar protests, though the country’s establishment is fighting to cling to power.  The only worse outcome than another dictatorship in Sudan or Algeria would be a civil war like the one in Libya, which is heating up again.  A regional conflagration could send additional waves of migrants toward Europe.

“The U.S. and Europe have an interest in a stable Sudan, as we’ve learned the hard way from other eruptions in Africa.”

Today, with protest crowds in the hundreds of thousands, wanting an immediate changeover to civilian rule, the ruling military council promised a new civilian government, but this hasn’t satisfied the people as yet in Khartoum.

Turkey: President Erdogan has said electoral authorities should annul Istanbul’s local elections due to irregularities, notably over the appointment of ballot box officials.  Initial results indicate the main opposition party narrowly won control of Turkey’s biggest city in the mayoral elections, seemingly ending 25 years of control of a key power center by Erdogan’s AK Party and its Islamist predecessors.

Separately, Erdogan said his country would forge ahead with the purchase of an air-defense system (the S-400) from Russia despite warnings from the U.S. that using the equipment would jeopardize Ankara’s role within NATO.

Afghanistan: A decorated FDNY firefighter was among three American service members killed by a roadside bomb while traveling in a convoy in Afghanistan on Monday.

Christopher Slutman, a U.S. Marine and FDNY firefighter in the Bronx, is the fourth FDNY member to die while serving in Iraq and Afghanistan since U.S. military action started in 2003.

The Taliban claimed responsibility for the attack.

North Korea: In one of the biggest leadership shake-ups in years, North Korea named a new nominal head of state and a new premier, and gave leader Kim Jong Un a new title, state media reported on Friday, moves intended to solidify Kim’s grip on power.

In an expected move, Kim was re-elected as chairman of the State Affairs Commission at a session of North Korea’s rubber-stamp legislature that took place on Thursday, Korean Central News Agency (KCNA) said.

For the first time, however, state media referred to Kim as “supreme representative of all the Korean people.”

It has now been eight years since Kim inherited rule from his father, Kim Jong Il.

Choe Ryong Hae was named President of the Presidium of the Supreme People’s Assembly of North Korea, replacing Kim Yong Nam.

The person holding this position is constitutionally considered to be North Korea’s head of state and usually represents the country at diplomatic events, though the real power remains in Kim Jong Un’s hands.

Kim Yong Nam held the position since it was created for him in 1998.

His replacement, Choe, has in recent years been gaining more influence since he was promoted in October 2017 to the party’s powerful Central Military Commission, according to South Korean intelligence officials.

Choe was one of three officials sanctioned by the United States in December over allegations of rights abuses.

But late tonight, Saturday in Pyongyang, Kim Jong Un has said the breakdown in talks with the United States has raised the risks of returning to past tensions, but he is only interested in meeting President Trump again if the United States comes with the right attitude, state media KCNA said.  Kim said that he will wait “until the end of this year” for the United States to decide.

“What is needed is for the U.S. to stop its current way of calculation, and come to us with a new calculation,” Kim said in a speech to the Supreme People’s Assembly, KCNA said.

“The second DPRK-U.S. summit in Hanoi in February raised strong questions about whether the steps we took under our strategic decision were right, and gave us a sense of caution about whether the U.S. is even really trying to improve the DPRK-U.S. relationship,” Kim said.

In Hanoi, the United States came with “completely unrealizable plans” and was “not really ready to sit with us face-to-face and solve the problem,” said the chubby dictator who likes to blow people away with anti-tank guns.  “By that sort of thinking, the U.S. will not be able to move us one iota even if they sat with us a hundred, thousand times, and will not be able to get what it wants at all,” Kim said.  [Reuters]

Russia: President Vladimir Putin said Russia is entering the final testing phase of its nuclear-armed intercontinental ballistic missile dubbed Satan-2.  Back in 2013, Russia announced plans to develop the ICBM to replace a Cold War standby known in the West as “Satan,” or the RS-20B Voyevoda in Russian.  Putin unveiled Satan-2 with an array of other nuclear-capable weapons at his annual speech to both chambers of parliament in March 2018.

Satan-2, or RS-28 Sarmat, has a reported range of 10,000 kilometers. Moscow says the ICBM can get through the United States’ defense shield and is capable of destroying an area the size of Texas.

The RS-28 is equipped with multiple hypersonic warhead MIRVs to help it evade missile defense systems.

The Russian government says the missile can carry a payload of up to 15 warheads.  The plan is to have the RS-28 enter service by the start of the next decade.

George P. Shultz, William J. Perry and Sam Nunn / Wall Street Journal

“The U.S., its allies and Russia are caught in a dangerous policy paralysis that could lead – most likely by mistake or miscalculation – to a military confrontation and potentially the use of nuclear weapons for the first time in nearly 74 years.  A bold policy shift is needed to support a strategic re-engagement with Russia and walk back from this perilous precipice.  Otherwise, our nations may soon be entrenched in a nuclear standoff more precarious, disorienting and economically costly than the Cold War.  The most difficult task facing the U.S. is also the most important – to refocus on America’s most vital interests even as we respond firmly to Russia’s aggressions.

“The three of us experienced the low points of U.S. relations with the Soviet Union, and the nuclear dangers that arose. The 1962 Cuban missile crisis, the 1973 Arab-Israeli War, the 1979 Soviet invasion of Afghanistan and the 1981-83 confrontation over intermediate-range nuclear missiles were periods of increased tensions, reduced trust and rising nuclear risks.  With Henry Kissinger, we wrote in 2007 that although the world escaped the nuclear knife’s edge of the Cold War through a combination of diligence, professionalism and good luck, reliance on nuclear weapons for deterrence is becoming increasingly hazardous and decreasingly effective as more states gain nukes of their own.  The U.S. and other nuclear states have yet to take decisive steps toward the goal of a world without nuclear weapons, and the dangers continue to mount.

“Deterrence cannot protect the world from a nuclear blunder or nuclear terrorism.  Both become more likely when there is no sustained, meaningful dialogue between Washington and Moscow.  The risks are compounded by the rising possibility that cyberattacks could target nuclear warning and command-and-control systems, as well as the continuing expansion of global terrorist networks. Since the crises broke out in Ukraine and Syria in the past few years, U.S. and Russian forces have again been operating in proximity, increasing the risk that an act of aggression, followed by an accident or miscalculation, will lead to catastrophe.

“A new comprehensive approach is required to decrease the risks of conflict and increase cooperation, transparency, and security....

“The U.S. must first address its own dysfunctional Russia policy, and Congress must lead the way.  House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell should convene a new bipartisan liaison group of legislative leaders and committee chairmen to work with senior administration officials on strengthening the North Atlantic Treaty Organiztion and renewing dialogue with Russia....

“Second, Presidents Trump and Vladimir Putin should announce a joint declaration reaffirming that a nuclear war cannot be won and must never be fought.  This would renew the 1985 Reagan-Gorbachev statement that Americans and Russians received positively as the beginning of an effort to reduce risk and improve mutual security.  A joint statement today would clearly communicate that despite current tensions, leaders of the two countries possessing more than 90% of the world’s nuclear weapons recognize their responsibility to work together to prevent catastrophe....

“Third, the U.S. and Russia must discuss a broad framework for strategic stability – including increasing decision time for leaders – in a period of global destabilization and emerging military technologies.  In a positive step, Presidents Trump and Putin apparently agreed in Helsinki last summer to open a dialogue on strategic stability, focused on nuclear dangers that threaten both nations.  Yet their inability to follow up by empowering their military and civilian professionals to follow through underlines how dangerously dysfunctional relations have become.

“This effort must begin now....

“The U.S. and Russia should work toward a mutual vision for a more stable security architecture in the next five to 10 years, and identify the tools and policy initiatives necessary to get there....

“The U.S. and Russia, joined by other nuclear states, must decisively confront the problems that threaten global security.  It is essential that we re-engage with Russia in areas of common fundamental interest to both nations, including reducing reliance on nuclear weapons, keeping them out of unstable hands, preventing their use and ultimately ending them as a threat to the world.”

Australia: The nation is holding a general election on May 18, Prime Minister Scott Morrison announced.  Yes, a tad bit shorter campaign than what we have in the United States.

The vote will decide whether the conservative government wins a third term or is replaced by a Labor administration led by Bill Shorten.

All 151 seats in the House of Representatives will be contested, and half of the 76 seats in the Senate.

Two of the key issues for voters will be climate change and the economy.  Prime Minister Morrison said on Thursday, “We live in the best country in the world, but to secure your future, the road ahead depends on a strong economy.”

Voting is compulsory in Australia.  95% of people voted in Australia’s last election.  Morrison only became prime minister last August after bitter party infighting ousted his predecessor, Malcolm Turnbull.

Random Musing

--Presidential tracking polls:

Gallup: A new one...45% approval of Trump’s job performance, 51% disapproval (April 12), with 89% of Republicans, 39% of Independents approving.  Back on Mar. 15, the split was 39/57, prior to Attorney General Barr’s summary of the Mueller Report.
Rasmussen: 49% approval, 50% disapproval (April 12).  The approval rating hit 53% on Tuesday.

--In a Morning Consult poll of voters who say they intend to participate in a Democratic primary or caucus next year, Joe Biden was still at the top of the list with 32 percent, ahead of Bernie Sanders at 23 percent.

Sen. Kamala Harris is way back in third at 9 percent, followed by Beto O’Rourke at 8 percent, Sen. Elizabeth Warren, 7 percent, and Mayor Pete Buttigieg at 5 percent.

--As for the first two primary/caucus states....

A new Monmouth University poll of Iowa Democrats has:

Biden 27%
Sanders 16%
Buttigieg 9%
Warren 7%
Harris 7%
O’Rourke 6%

And a new Saint Anselm College survey of New Hampshire registered Democrats has:

Biden 23%
Sanders 16%
Buttigieg 11%
Warren 9%
Harris 7%
O’Rourke 6%

It really is amazing how much traction the 37-year-old mayor, Buttigieg, has gained already.

--Peggy Noonan / Wall Street Journal

“Don’t do it, Joe.

“Don’t run for president. It won’t work, you won’t get the nomination, your loss will cause pain and not only for you.

“And your defeat will be worse than sudden, it will be poignant.

“Right now operatives for the other candidates are trying to scare you out of jumping in.  We all know that what you intended as warmth is now received as a boundary violation.  You addressed this in a video that was crisp and friendly: You never meant to cause discomfort, you intend to change your ways.

“But it’s not going away.  It will linger, and more will come.

“Democratic operatives do not fear you will win the nomination – they think you’re too old, your time has passed, you’re not where the energy of the base is, or the money.  But they do not want you taking up oxygen the next six to 10 months as you sink in the polls.  And they don’t want you swooping in to claim the middle land.  Others already have a stake there, or mean to.”

--In a Siena College poll of voters in her district, Rep. Alexandria Ocasio-Cortez’s favorability rating is 52%, vs. 33% who view her unfavorably, with 61% of Democrats in her deep-blue district saying they would vote for her in 2020, while 41% endorse her call for a Green New Deal, with 21% opposing it.

But 57% of registered voters described Amazon’s decision to retract plans to construct an office complex in nearby Long Island City as “bad for New York,” and 58% supported Gov. Andrew Cuomo’s pleas to persuade Amazon to change its mind.

--We note the passing of former longtime South Carolina senator Ernest Hollings, 97.  “Fritz” served 38 years in the Senate in an era of rising prosperity and often painful accommodation to racial tolerance in his state and across the South.

I liked the guy.  He was a revered populist who took care of the military. Together with fellow senator Strom Thurmond, they were the nation’s longest-serving Senate pair from one state.  Thurmond served 48 years in office, dying in 2003 at 100.

So I asked longtime South Carolina resident Dr. W. for a few words on Hollings.

“Fritz was a classic Southern politician of the 50s through the 90s.  Stubborn and with convictions but able to change them with the prevailing political winds if that’s what it took to get re-elected.  More attuned to the modern media and national perceptions than a lot of other Southern politicians of his era.  And, he was part of that generation of politicians who were willing to reach across the aisle if that’s what it took to create better opportunities for all constituents (not just those who voted for him).”

--Freshman Rep. Ilhan Omar complained of being held to a double standard by her critics, during an appearance on the “Late Show with Stephen Colbert” this week.  Colbert, though, didn’t ask Omar about her recent reference to the 2001 terror attack as “some people did something,” but he did reference the Minnesota Democrat’s controversial statements about Israel – and about the criticism she’s faced from both conservatives and some Democrats.

Omar responded by saying that her critics do not receive the same amount of scrutiny as she does.

“This kind of double standard it really is quite offensive,” she told Colbert.

“It is very much embedded in a lot of our culture these days, where you will have people come after minorities for things that they say, that they might have insinuated,” she added.

I have to bite my tongue when it comes to Rep. Omar.  I really don’t like this woman.  At all.

--Julian Assange, the WikiLeaks founder who released reams of secret documents that embarrassed the U.S. government, was arrested by British police on Thursday at the Ecuadorean Embassy in London, where Assange had lived, after Ecuador withdrew the asylum it had granted him seven years ago.

Ecuadorian President Lenin Moreno derided Assange as a “spoiled brat” who hit embassy guards during his stay at the consulate.  There were stories Assange had spread feces on the walls.

The U.S. Department of Justice confirmed that Assange has been indicted on conspiracy with Chelsea Manning to commit computer intrusion in 2010.

“The indictment alleges that in March 2010, Assange engaged in a conspiracy with Chelsea Manning, a former intelligence analyst in the U.S. Army, to assist Manning cracking a password” on classified Department of Defense computer systems, according to a Justice Department press release.

Manning served about seven years in prison for her disclosure of U.S. military and diplomatic secrets to WikiLeaks in 2010, before being released in May 2017.

Long-time readers may remember I was once threatened by Assange, through his attorney, for something I wrote on the guy, which was just a retelling of the truth.  Trust me, you don’t want one of those kinds of letters.  I had a sleepless night or two.

--Michael Avenatti, the lawyer known for representing Stormy Daniels in lawsuits against President Trump, was indicted by a Southern California grand jury on fraud, tax evasion, embezzlement and other charges.

Prosecutors say he received settlements for clients, but did not inform them and kept and hid the money.  He also evaded taxes on the funds.

Avenatti said he intended to fight all charges.  “For 20 years, I have represented Davids vs. Goliaths and relied on due process and our system of justice. Along the way, I have made many powerful enemies.  I am entitled to a full presumption of innocence and am confident that justice will be done once all of the facts are known.”

Avenatti is already facing charges in New York of trying to extort millions of dollars from Nike, threatening to reveal improper payments to basketball recruits.

--Greg Craig, who served as former President Barack Obama’s top White House lawyer, was charged on Thursday with lying about work he performed in 2012 for Ukraine in a case that grew out of Special Counsel Robert Mueller’s Russia investigation. Craig, 74, faces up to 10 years in prison for charges of making false statements and violating a lobbying law, the Foreign Agents Registration Act.  He is accused of lying to the Justice Department about his work after he left the White House on a legal review that largely vindicated the prosecution of a political enemy of Viktor Yanukovych, the Russian-aligned president of Ukraine at the time. 

Craig worked on a report that was produced at the behest of Paul Manafort, who is currently serving a 7 ½-year prison sentence for lobbying violations and financial crimes.

--New York City declared a public health emergency following a measles outbreak in the ultra-Orthodox Jewish community in Brooklyn.

Mayor Bill de Blasio said the city would require unvaccinated individuals living in select ZIP codes in Williamsburg, Brooklyn, to receive the measles vaccine as the city escalated its efforts to stem one of the largest measles outbreaks in decades.

New York City has now seen 285 confirmed cases since the outbreak began in the fall, with five admitted to the intensive care unit.  The vast majority of the cases have been concentrated in Hasidic communities in Williamsburg and Borough Park, Brooklyn.

--Thirteen wealthy parents, including actress Felicity Huffman, and one coach will plead guilty to using bribery and other forms of fraud as part of the college admissions scandal, federal prosecutors in Boston said on Monday.

Huffman and the others face potential jail time, though it should be minimal since they admitted guilt early.  The actress said in a statement: “I am in full acceptance of my guilt, and with deep regret and shame over what I have done...and will accept the consequences that stem from those actions....

“My daughter knew absolutely nothing about my actions, and in my misguided and profoundly wrong way, I have betrayed her.”

But actress Lori Loughlin and 15 other parents implicated in the scandal were indicted on additional charges of money laundering and fraud conspiracy, federal prosecutors, a day after Huffman and the others pleaded guilty. 

While the new indictments do not preclude a deal for the holdouts, the added charge of money laundering makes it more likely they face jail time.  Good!

--The first privately funded mission to the Moon crashed on the lunar surface after the apparent failure of its main engine.  I was watching live as the Israeli spacecraft – called Beresheet – attempted a soft touch down, but suffered technical problems on its descent.

I was watching live and it wasn’t easy to follow, the broadcast being in Hebrew, but suddenly, a minute from landing, the graphic went blank and, well, the little guy is probably in a thousand pieces.

Project originator and major backer Morris Kahn said, “We didn’t make it, but we definitely tried.”

Prime Minister Benjamin Netanyahu, watching from the control room near Tel Aviv, said: “If at first you don’t succeed, you try again.”

--Far more successful than Beresheet was SpaceX’s successful launch of its new and improved Falcon Heavy rocket from NASA’s Kennedy Space Center Thursday.

The Falcon Heavy is now the world’s most powerful operation rocket with 27 engines firing at liftoff.  It launched into the sky Thursday evening with a satellite built by Lockheed Martin and operated by Saudi Arabia.

Eight minutes after liftoff, SpaceX landed two of the first-stage boosters back at Cape Canaveral, side by side, and two minutes later, the core booster landed on an ocean platform hundreds of miles offshore, which is way cool.

Oh, and the satellite ended up in the proper orbit.

Congratulations to Elon Musk, who should stick with SpaceX and blow off Tesla.  GM, Ford and Fiat Chrysler will kick his butt, anyway, in the electric car market in the coming years.

--And then we had this...from outer space.

Ray Jayawardhana / Wall Street Journal

“For something no one has ever seen, black holes seem awfully familiar.  Astronomers believe they are numerous.  Science-fiction authors and film directors love using their ability to warp space and time as a plot device.  But humanity is only now getting its first blurry glimpse at a real-life black hole.

“Using a globe-spanning network of radio telescopes*, astronomers this week revealed a black hole’s ‘shadow’ for the first time.  Observational evidence for black holes, with gravity so strong not even light can escape their grip, has piled up in recent decades.  Some are gargantuan monsters lurking at the hearts of galaxies, including our own Milky Way, while others are invisible stellar corpses that tug on their companion stars.

“The evidence had been circumstantial until recently....By now, researchers have ‘heard’ the fleeting shrieks of colliding black holes 10 times.

“That may be enough to convince most people.  But the scientists behind Wednesday’s announcement are a dogged bunch. They set out to pin down a black hole by its most distinctive feature – the virtual boundary called the event horizon, which marks the point of no return. Anything that crosses it, including light, has no escape....

“Now, thanks to a carefully choreographed observation campaign and two years of painstaking analyses, the Event Horizon Telescope team has captured the shadow of a supermassive black hole, billions of times heftier than the sun, at the heart of a giant elliptical galaxy known as M87.    Reality tends to be messier than theory, so it’s no surprise the actual image is blurrier than the striking computer simulations that preceded it.

“Nevertheless, if seeing is believing, we have finally glimpsed the monster’s shadow, having heard its whimpers only recently.  It appears that one of the weirdest constructs of the human mind exists for real.  The transformation of the black hole from a mathematical oddity, emerging from Einstein’s theory of general relativity, to an observable fixture of the cosmos is a testament to humanity’s collective intellectual prowess, relentless curiosity and dogged perseverance.”

*The eight telescopes used are in Hawaii, Arizona, Spain, Mexico, Chile and the South Pole – focused on two black holes, M87 and Sagittarius A, the supermassive black hole at the center of the Milky Way, the spiral galaxy that contains our solar system.

M87’s black hole is more than 50 million light years from Earth.

The telescopes together form a virtual telescope more than 7,000 miles, with the data collected collated by supercomputers at MIT and in Bonn, Germany.

---

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

God bless America.

---

Gold $1293
Oil $63.76

Returns for the week 4/8-4/12

Dow Jones  -0.05%  [26412]
S&P 500  +0.5%  [2907]
S&P MidCap  +0.9%
Russell 2000  +0.1%
Nasdaq  +0.6%  [7984]

Returns for the period 1/1/19-4/12/19

Dow Jones  +13.2%
S&P 500  +16.0%
S&P MidCap  +18.2%
Russell 2000  +17.5%
Nasdaq  +20.3%

Bulls 53.9
Bears 19.2

Have a great week.  Enjoy The Masters!  Though the weather is going to be a factor.  Drat!

Brian Trumbore