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Week in Review

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02/22/2020

For the week 2/17-2/21

[Posted 9:30 PM ET, Friday]

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Edition 1,088

It's impossible to know if what we hear from China is even close to the truth.  Just today, officials in Hubei province revised the number of new cases it reported on Wednesday to 775, from 349 previously.  Earlier in the day, authorities said they would add back some cases to their tally of the disease, after they, again, adjusted their methodology to count only cases that were detected with genetic tests, rather than with CT scans.  The 349 had been the lowest number reported since Jan. 25.

Tonight, Beijing reported 389 new cases across the mainland, bringing the total to over 76,200, with 109 new deaths in Hubei, 90 of which were in Wuhan.  The total death toll in China as of today is up to 2,345.  The government also reported 234 infections among prisoners outside Hubei, with another 271 reported in prisons in Hubei itself.  Total cases in Beijing also disturbingly neared 400 with four deaths.

But the virus has been spreading worldwide, with some very concerning developments in South Korea, where officials today designated two cities as “special care zones,” while its military confined troops to their bases in a desperate effort to contain the spread of Covid-19.

There are now over 340 reported cases in South Korea (142 today), the majority in Daegu, the country’s fourth-largest city with a population of 2.5 million.  Malls, restaurants and streets are largely empty.

Most of the patients in Daegu, over 110, were traced to an infected 61-year-old woman known as “Patient 31” who attended a church, a scenario health authorities described as a “super-spreading event.”  As of this post, there are actually 400...400...members of the church who are showing symptoms of the disease, though tests were ongoing.

Many of the first patients have recovered, but South Korea also reported its first death.

As for the military, several members tested positive, thus the decision to ban all soldiers from taking leave.  But just imagine, what if North Korea wanted to take advantage of the situation.

In Japan, Tokyo was canceling or postponing major indoor events planned for the next three weeks as part of its efforts to halt the spread of the coronavirus; this as the Olympic Games are now just six months away.

Iran confirmed 13 new cases on Friday, two of whom have died, bringing the number of deaths in the country to at least four, with the majority of the cases in the holy city of Qom, south of Tehran.  Iranians were going to the polls today for a parliamentary election.  That can’t be good.  In Qom, those waiting in line to cast their ballots were wearing masks, according to reports.

Italy suddenly reported 17 new cases today in the northern part of the country, none of whom traveled to China.  Italy also reported its first death.

And then we have the situation where 14 coronavirus-stricken Americans from the Diamond Princess cruise liner were flown back with about 300 virus-free people against the advice of the CDC, which lost the battle to the State Department.  Test results had found that the 14 were infected prior to boarding the planes on Monday.  The 14 figure then increased to 18 by this afternoon.  The number of cases in the U.S. is now up to at least 34, overall.

The handling of the whole Diamond Princess crisis has met with harsh criticism from all quarters, the number infected over 600, two passengers dying.   Authorities are now getting passengers off the cruise ship and into quarantine facilities in Yokohama, while many of the crew stays onboard, a seeming death sentence.

The World Health Organization warned on Friday that the window of opportunity to contain wider international spread of the epidemic is closing, and countries must act fast if they are to control it.  The WHO’s director-general, Tedros Adhanom Ghebreyesus said, “If we do well, we can avert any serious crisis, but if we squander the opportunity then we will have a serious problem on our hands.”

As for the economic impact, the International Monetary Fund said it is premature to give precise projections, but IMF Managing Director Kristalina Georgieva said Thursday, “We are still hoping that the impact will be a V-shaped curve” with a sharp decline in China and sharp rebound after the containment of the virus, she said.  “But we are not excluding that it might turn out to be a different scenario like a U curve where the impact is somewhat longer.”

In China, many small- and medium-sized companies face survival issues unless their businesses can restart soon.  In a recent survey by Tsinghua and Peking Universities, just 34% of nearly 1,000 firms said they could survive for a month on current cashflow.

---

The New York Times reported Thursday evening that “Intelligence officials warned House lawmakers last week that Russia was interfering in the 2020 campaign to try to get President Trump re-elected, five people familiar with the matter said, in a disclosure that angered Mr. Trump, who complained that Democrats would use it against him.

“The day after the Feb. 13 briefing to lawmakers, Mr. Trump berated Joseph Maguire, the outgoing acting director of national intelligence, for allowing it to take place, people familiar with the exchange said.  Mr. Trump cited the presence in the briefing of Representative Adam Schiff, the California Democrat who led the impeachment proceedings against him, as a particular irritant.

“During the briefing to the House Intelligence Committee, Mr. Trump’s allies challenged the conclusions, arguing that Mr. Trump has been tough on Russia and strengthened European security.  Some intelligence officials viewed the briefing as a tactical error, saying that had the official who delivered the conclusion spoken less pointedly or left it out, they would have avoided angering the Republicans.

“That intelligence official, Shelby Pierson, is an aide to Mr. Maguire who has a reputation of delivering intelligence in somewhat blunt terms.  The president announced on Wednesday that he was replacing Mr. Maguire with Richard Grenell, the ambassador to Germany and long an aggressively vocal Trump supporter.”

Maguire formally resigned today.

Earlier, the Washington Post had reported that Maguire and Trump had gotten into a heated exchange, though the details of what led up to it hadn’t been made clear until the Times report.

Back to Grenell, his appointment was widely panned, as aside from being nothing more than a Trump loyalist, he has zero relevant experience.

President Trump was reportedly considering Rep. Doug Collins (Ga.), another fierce loyalist, to be permanent DNI chief, but tonight it’s reported Collins turned this down to run for the Senate.

Lastly, I’m invoking my “24-hour rule” when it comes to the other late-breaking news today, that U.S. officials told Democratic presidential contender Bernie Sanders that Russia is trying to help his campaign, the Washington Post reported on Friday.

Sanders, in a statement responding to the report, said, “I don’t care, frankly, who Putin wants to be president.  My message to Putin is clear: stay out of American elections, and as president I will make sure that you do.”

But a lot of us are wondering why Sanders and his campaign said nothing about this earlier, because he had been briefed on the topic a month ago. This is the same Sanders who now doesn’t want to release further information on his health status, post-heart attack, despite promising same months ago.  And it’s the same Sanders campaign that wouldn’t disavow the lies of a leading campaign staffer, who went on CNN twice on Wednesday, spreading falsehoods about Mike Bloomberg’s health.  When confronted with her lies, the staffer tweeted both times that she had misspoke, but didn’t apologize!  

So major questions when it comes to the credibility of the Sanders camp.

Meanwhile, the man who would be king, Donald Trump, said of the reports that Russia was meddling into the 2020 elections that it was just “another disinformation campaign.”

As I said in my yearend review, this year is going to be hell.

Trump World

--U.S. District Judge Amy Berman Jackson sentenced longtime Trump friend and political adviser Roger Stone to three years and four months in prison for impeding a congressional investigation of Russian interference in the 2016 presidential election.

Jackson’s ruling came after weeks of infighting over the politically charged case that threw the Justice Department into crisis.  Trump decried that his ally wasn’t being treated fairly.

Before imposing the sentence, Jackson took aim at Trump, saying Stone “was not prosecuted for standing up for the president; he was prosecuted for covering up for the president.”  She also appeared to call out Attorney General William Barr, saying intervention to reduce career prosecutors’ sentencing recommendation was “unprecedented.”  Jackson said, however, that the politics of the case had not influenced her final decision, which was indeed considerably less than the 7 to 9 years initially recommended by the prosecutors.

Jackson said, “The truth still exists; the truth still matters.  Roger Stone’s insistence that it doesn’t, his belligerence, his pride in his own lies are a threat to our most fundamental institutions, to the foundations of our democracy.  If it goes unpunished it will not be a victory for one party or another; everyone loses.”

President Trump weighed in by tweet, comparing Stone to former FBI director James Comey, former FBI deputy director Andrew McCabe and former secretary of state Hillary Clinton, all of whom Trump claims “lied to the FBI!  FAIRNESS?”

Trump then hinted he could pardon Stone, while speaking at an event in Las Vegas, blasting the “dirty cops” of the law enforcement establishment.

“We will watch the process and watch it very closely,” Trump said.  “And at some point, I will make a determination.  But Roger Stone and everybody has to be treated fairly and this has not been a fair process.”

--President Trump attempts to continue to rewrite history when it comes to the Russia investigation, arguing the probe into Russian election interference was based on false pretenses, despite a recent report from the Justice Department’s inspector general stating the opposite even as it criticized the FBI’s surveillance of a former Trump campaign aide.  And Trump is claiming, without evidence, that Robert Mueller lied to Congress – which happens to be one of the charges Roger Stone was convicted of.

Yet despite all the president’s comments about the Russia investigation, we have yet to hear him warn Russia not to interfere in the next election, or even acknowledge that U.S. intelligence agencies believe Russian President Putin is seeking to do so.

--Donald Ayer, former U.S. Deputy Attorney General under George H.W. Bush / The Atlantic

“When Donald Trump chose Bill Barr to serve as attorney general in December 2018, even some moderates and liberals greeted the choice with optimism.  One exuberant Democrat described him as ‘an excellent choice,’ who could be counted on to ‘stand up for the department’s institutional prerogatives and...push back on any improper attempt to inject politics into its work.’

“At the end of his first year of service, Barr’s conduct has shown that such expectations were misplaced.  Beginning in March with his public whitewashing of Robert Mueller’s report, which included powerful evidence of repeated obstruction of justice by the president, Barr has appeared to function more as the president’s personal advocate than as an attorney general serving the people and government of the United States.  Among the most widely reported and disturbing events have been Barr’s statements that a judicially authorized FBI investigation amounted to ‘spying’ on the Trump campaign, and his public rejection in December of the inspector general’s considered conclusion that the Russia probe was properly initiated and overseen in an unbiased manner.  Also quite unsettling was Trump’s explicit mention of Barr and Rudy Giuliani in the same breath in his July 25 phone call with Volodymyr Zelensky, as individuals the Ukrainian president should speak with regarding the phony investigation that Ukraine was expected to publicly announce.

“Still more troubling has been Barr’s intrusion, apparently for political reasons, into the area of Justice Department action that most demands scrupulous integrity and strict separation from politics and other bias – invocation of the criminal sanction.  When Barr initiated a second, largely redundant investigation of the FBI Russia probe in May, denominated it criminal, and made clear that he is personally involved in carrying it out, many eyebrows were raised.

“But worst of all have been the events of the past week. The evenhanded conduct of the prosecutions of Roger Stone and Michael Flynn by experienced Department of Justice attorneys have been disrupted at the 11th hour by the attorney general’s efforts to soften the consequences for the president’s associates.  More generally, it appears that Barr has recently identified a group of lawyers whom he trusts and put them in place to oversee and second-guess the work of the department’s career attorneys on a broader range of cases.  And there is no comfort from any of this in Barr’s recent protests about the president’s tweeting.  He in no way suggested he was changing course, only that it is hard to appear independent when the president is publicly calling for him to follow the path he is on....

“The fundamental problem is that (Barr) does not believe in the central tenet of our system of government – that no person is above the law.  In chilling terms, Barr’s own words make clear his long-held belief in the need for a virtually autocratic executive who is not constrained by countervailing powers within our government under the constitutional system of checks and balances.

“Indeed, given our national faith and trust in the rule of law no one can subvert, it is not too strong to say that Bill Barr is un-American.  And now, from his perch as attorney general, he is in the midst of a root-and-branch attack on the core principles that have guided our justice system, and especially our Department of Justice, since the 1970s....

“Barr’s agenda was confirmed by his November speech to the Federalist Society on ‘the Constitution’s approach to executive power.’  He argues that ‘over the past several decades, we have seen a steady encroachment on presidential authority by other branches of government,’ and that those ‘encroachments’ must end.  He purports to justify his position by offering a selective version of American history, discussing the Founders’ intentions with regard to presidential power, characterizing the role the presidency has supposedly played over time, and arguing that, in recent decades, the Founders’ vision has been undermined by actions of Congress and the courts.

“Perhaps even more disturbing than Barr’s manifesto for radical change – for the creation of a president with nearly autocratic powers – is the revisionist account of American history on which it is based, and his dogmatic insistence on it in the face of ample evidence to the contrary....

“According to Barr, the Founders actually were not much concerned about an out-of-control president, as this ‘civics-class version’ suggests.  He reasons that history shows a rise in the relative power of Parliament against the King during the mid-18th century, and that by the time of our own Revolution, the evil perceived by the patriots was more ‘an overweening Parliament’ than ‘monarchical tyranny.’  Further, chaotic governance during the Revolution and under the Articles of Confederation pointed out the need for a single executive officer, and after some debate, such a president was included in the Constitution.  Of course, none of this negates the specific provisions that the Founders adopted to curb presidential overreach, or suggests that it was not a matter of great concern.  Nor does it remotely suggest that the later development of institutions such as judicial review and congressional oversight was out of step with what the Founders had in mind.

“Barr’s next piece of history – his account of how things have allegedly proceeded during the intervening 230 years – is the real stunner.  He would have us believe that this vision of an all-powerful president that he wants to restore has in fact been a reality for most of our history.  Indeed, he says, ‘more than any other branch, the [American presidency] has fulfilled the expectations of the Framers.’  At least, that is, until recently....

“But perhaps the most outrageous and alarming ideas that Barr advances come in his attacks on the judiciary, which occupy fully a third of his speech.  In his mind, it seems, the courts are the principal culprit in constraining the extraordinarily broad powers that the president is constitutionally entitled to exercise.  His discussion ignores a pillar of our legal system since almost the very beginning – Chief Justice John Marshall’s magisterial pronouncement in the early days of our republic that ‘it is emphatically the province and duty of the judicial department to say what the law is.’

“Barr complains that the judiciary ‘has appointed itself the ultimate arbiter of separation-of-powers disputes between Congress and the executive,’ saying that the Framers did not envision that it would play such a role.  Barr yearns for a day when the president can bully everyone else in government, and leave them no ability to seek relief in court....

“Barr’s Federalist Society speech suggests that he is ready to say nearly anything in pursuit of his lifelong goal of a presidency with unchecked powers.  As Napoleon is reputed to have said, the man who will say anything will do anything.  That Barr has also repeatedly used his authority as attorney general to tailor the position of the United States, in court and in legal opinions, to empower such an unworthy incumbent as Donald Trump to do whatever he wants suggests that this is correct.

“The benefit of the doubt that many were ready to extend to Barr a year ago – as among the best of a bad lot of nominees who had previously served in high office without disgrace – has now run out.  He has told us in great detail who he is, what he believes, and where he would like to take us.  For whatever twisted reasons, he believes that the president should be above the law, and he has as his foil in pursuit of that goal a president who, uniquely in our history, actually aspires to that status.  And Barr has acted repeatedly on those beliefs in ways that are more damaging at every turn.  Presently he is moving forward with active misuse of the criminal sanction, as one more tool of the president’s personal interests.

“Bill Barr’s America is not a place that anyone, including Trump voters, should want to go.  It is a banana republic where all are subject to the whims of a dictatorial president and his henchmen.  To prevent that, we need a public uprising demanding that Bill Barr resign immediately, or failing that, be impeached.”

--President Trump granted pardons or commuted the sentences of the likes of financier Michael Milken, former Illinois governor Rod Blagojevich, former NYPD Commissioner Bernard Kerik, and former owner of the San Francisco 49ers, Eddie DeBartolo Jr.

Each case is different, all moves by the president made to benefit him, of course, and Fox.

“It’s a clemency process for the well-connected, and that’s it,” said Rachel Barkow, a professor and clemency expert at the New York University School of Law. “Trump is wielding the power the way you would expect the leader of a banana republic who wants to reward his friends and cronies.”

Trump, on Tuesday, having granted clemency to his political allies, totally circumventing the normal Justice Department process, declared himself “the chief law enforcement officer” in the nation.

“I’m allowed to be totally involved,” he told reporters.  “I’m actually, I guess, the chief law enforcement officer of the country.  But I’ve chosen not to be involved.”

In the meantime, we’ll see what Trump does with the Roger Stone sentence.  More than 2,000 former Justice Department employees signed a public letter this week objecting to Trump’s public intervention in Stone’s case, and urging Bill Barr to resign.

--Victoria Coates, one of President Trump’s longest-serving national security aides, is leaving the White House, soon to become a senior adviser at the Energy Department, the White House said on Thursday. Coates has been at the Trump White House since he took office and has been a key player in the administration’s deliberations on Iran and the Middle East. But Coates has battled rumors that she was the source of an “Anonymous” opinion article expressing opposition to Trump’s agenda that ran in the New York Times.

--Trump tweets:

“The Crooked DNC is working overtime to take the Democrat Nomination away from Bernie, AGAIN! Watch what happens to the Super Delegates in Round Two.  A Rigged Convention!”

“These were Mueller prosecutors, and the whole Mueller investigation was illegally set up based on a phony and now fully discredited Fake Dossier, lying and forging documents to the FISA Court, and many other things.  Everything having to do with this fraudulent investigation is...

“...badly tainted and, in my opinion, should be thrown out.  Even Mueller’s statement to Congress that he did not see me to become the FBI Director (again), has been proven false.  The whole deal was a total SCAM.  If I wasn’t President, I’d be suing everyone all over the place...

“...BUT MAYBE I STILL WILL. WITCH HUNT!”

“ ‘They say Roger Stone lied to Congress.’ @CNN Oh, I see, but so did Comey (and he also leaked classified information, for which almost everyone, other than Crooked Hillary Clinton, goes to jail for a long time), and so did Andy McCabe, who also lied to the FBI! FAIRNESS?”

“What Mini Mike is doing is nothing less than a large scale illegal campaign contribution.  He is ‘spreading’ money all over the place, only to have recipients of his cash payments, many former opponents, happily joining or supporting his campaign.  Isn’t that called a payoff?....

“....Mini is illegally buying the Democrat Nomination.  They are taking it away from Bernie again.  Mini Mike, Major Party Nominations are not for sale!  Good luck in the debate tomorrow night and remember, no standing on boxes!”

“ ‘I don’t think there’s any chance whatsoever of Senator Sanders defeating President Trump.’  Mini Mike Bloomberg.  Mini, there’s even less chance, especially after watching your debate performance last night, of you winning the Democratic nomination...But I hope you do!”

“Did you hear the latest con job?  President Obama is now trying to take credit for the Economic Boom taking place under the Trump Administration.  He had the WEAKEST recovery since the Great Depression, despite Zero Fed Rates & MASSIVE quantitative easing.  NOW, best jobs numbers....

“....ever.  Had to rebuild military, which was totally depleted.  Fed Rate UP, taxes and regulations WAY DOWN.  If Dems won in 2016, the USA would be in big economic (Depression?) & military trouble right now.  THE BEST IS YET TO COME.  KEEP AMERICA GREAT!”

“ ‘Ralph Waldo Emerson seemed to foresee the lesson of the Senate Impeachment Trial of President Trump.  ‘When you strike at the King,’ Emerson famously said, ‘you must kill him.’  Mr. Trump’s foes struck at him but did not take him down.  A triumphant Mr. Trump emerges from the....

“....biggest test of his presidency emboldened, ready to claim exoneration, and take his case of grievance, persecution and resentment to the campaign trail.’ Peter Baker @nytimes  The Greatest Witch Hunt in American History!”

--Lastly, Thursday, a totally out of control President Trump lashed out after a segment on Fox News’ “Your World with Neil Cavuto,” in which RealClearPolitics associate editor A.B. Stoddard, a veteran political journalist and commentator, compared Mike Bloomberg’s debate performance to “cringe-worthy” moments Trump has had on the debate stage.

“There were many bombs,” Stoddard said.  “I think (Bloomberg’s) uncoachable.  I think that Donald Trump had disastrous debate performances, many answers were so cringe-worthy you just couldn’t believe he was still standing on the stage, and he’s president so I don’t think debates kill off normal candidates who do not have a billionaire juggernaut machine,” Stoddard added.

Trump promptly took to Twitter to attack the commentator, as well as host Cavuto, while taking a swipe at former Speaker Paul Ryan, who is now on the board of Fox News.

“Could somebody at @foxnews please explain to Trump hater A.B. Stoddard (zero talent!) and @TeamCavuto, that I won every one of my debates, from beginning to end. Check the polls taken immediately after the debates. The debates got me elected.  Must be Fox Board Member Paul Ryan!” Trump tweeted.

Cavuto later responded on air to Trump’s tweet.

“He heard A.B. Stoddard and tweeted out this, that she’s a Trump hater and that ‘I won every’ debate the last go around.  You can read that as well as I.  But, just to point out, he did not.  When you look at polls that came out from Fox, NBC, CNN, Politico, YouGov and a host of others, the initial read was that he had failed to do well in those debates.   He ultimately won, but he didn’t poll well in those debates.”

Thursday, at his rally in Colorado Springs, Trump couldn’t let it go, blasting Cavuto and Stoddard all over again for over 15 minutes.

Wall Street

President Trump on Tuesday blasted proposals that could restrict U.S. companies’ ability to supply jet engines and other components to China’s aviation industry and said he had instructed his administration to prevent such moves.

So once again, the president’s intervention showed his desire to prioritize economic benefits over potential competitive pitfalls and national security concerns. And it contrasts with the administration’s treatment of China’s telecom giant, Huawei, as detailed further below, on those very concerns.

Regarding aviation, there were reports over the weekend that the government was considering whether to block General Electric from continuing to supply engines for a new Chinese passenger jet, while the administration is eyeing limits on other components for Chinese commercial aircraft such as flight control systems made by Honeywell.

Central to the possible crackdown on the sale of U.S. parts to China’s aircraft industry is whether shipments could fuel the rise of a serious competitor to U.S.-based Boeing Co. or boost China’s military capabilities.

But Trump tweeted:

“The United States cannot, & will not, become such a difficult place to deal with in terms of foreign countries buying our product, including for the always used National Security excuse, that our companies will be forced to leave in order to remain competitive. We want to sell...

“...product and goods to China and other countries.  That’s what trade is all about.  We don’t want to make it impossible to do business with us. That will only mean that orders will go to someplace else.  As an example, I want China to buy our jet engines, the best in the World....

“....I have seen some of the regulations being circulated, including those being contemplated by Congress, and they are ridiculous.  I want to make it EASY to do business with the United States, not difficult.  Everyone in my Administration is being so instructed, with no excuses....

“....THE UNITED STATES IS OPEN FOR BUSINESS!”

Then today, no doubt concerned that because of the coronavirus outbreak, China would fall short of some of its targets for phase one of the trade deal, and the impact that could have on America’s farmers, a key voting bloc in some swing states, Trump tweeted:

“IF OUR FORMALLY TARGETED FARMERS NEED ADDITIONAL AID UNTIL SUCH TIME AS THE TRADE DEALS WITH CHINA, MEXICO, CANADA AND OTHERS FULLY KICK IN, THAT AID WILL BE PROVIDED BY THE FEDERAL GOVERNMENT, PAID FOR OUT OF THE MASSIVE TARIFF MONEY COMING INTO THE USA!”

It’s being paid for by the American taxpayer, just as past farm subsidies have.

On the data front, producer prices in January came in far hotter than expected, 0.5% on both headline and core (ex-food and energy), with the former up 2.1% year-on-year, 1.7% on the latter.

January housing starts were better than expected at 1.567 million annualized, while January existing-home sales were more or less in line at a 5.46 million pace, with the median sales price at $266,300, up 6.8% from a year ago.

Separately, since day one of this column I have used the ISM PMI readings on manufacturing and the service sector as one of my primary benchmarks for gauging U.S. economic activity, while I rely on the IHS Markit data for Europe and Asia, as I do below.

But IHS Markit does release PMIs for the U.S., which were never used heavily by the Street; that is until recently and today Markit’s flash U.S. composite reading for February of 49.6 showed contraction for the first time since October 2013, with the services figure at 49.4, falling for the first time in four years.  These figures seemed to move the market somewhat today.

Meanwhile, the Atlanta Fed’s GDPNow barometer for the first quarter rose a bit to 2.6% this week.

Eurozone and Asia

We had the release of the flash February PMI data from IHS Markit today and the composite reading for the eurozone (EA19) came in at 51.6 (50 being the dividing line between growth and contraction), 49.1 for manufacturing, which is actually a 12-month high, 52.8 services.

Germany’s flash figures were 51.6 on comp, 47.8 manufacturing (13-mo. high), and 53.3 services.

France’s flash February numbers were 51.9 comp, 49.7 manufacturing, 52.6 services.

The UK had a flash composite of 53.3, ditto services, with manufacturing at 51.9.

Chris Williamson / IHS Markit:

“The eurozone economy managed to pick up some momentum again in February despite many companies having been disrupted in various ways by the coronavirus, which caused supply problems and showed signs of hitting travel and tourism numbers in particular. The flash PMI has climbed to a six-month high, consistent with GDP growing at a quarterly rate approaching 0.2%.

“The expansion is being led by welcome resilience in the service sector but manufacturing is also showing encouraging signs of pulling out of a downturn that has plagued producers for over a year, with new orders falling at the slowest rate since late-2018.

“However, the outlook remains highly uncertain, notably in respect to the potential for further disruptions to supply chains, travel, tourism and demand arising from the coronavirus outbreak. In particular, the widespread delivery delays seen in February bode ill for production in March unless new deliveries can be secured.

“While the February survey data are welcome news in a month in which media headlines have been dominated by fears of economic growth being hit by the Covid-19 outbreak, the full immediate impact may not yet be apparent.”

Regarding this last bit, the Bundesbank said in a regular economic report on Monday that German economic growth will remain weak in the first quarter, weighed down by weak exports and the coronavirus outbreak.  Europe’s largest economy grew by just 0.6% for all of 2019, as its vast manufacturing sector fell into recession.

Separately, Eurostat released final January inflation data, up 1.4% in the euro area, unchanged from a year ago.

Germany 1.6%, France 1.7%, Italy 0.4%, Spain 1.1%, Netherlands 1.7%.

Brexit: So we are now in the transition period, Britain playing by the old rules when it comes to trading with the European Union for all of 2020, but by year end, there needs to be a comprehensive trade agreement with the bloc, or an extension of talks which British Prime Minister Boris Johnson has vowed he would not request.

Meaning as these things go, there is little actual time for negotiating a highly-complex deal, with talks beginning in earnest in March.

So the two sides are staking out their positions, with the EU hardening its stance, demanding fair competition guarantees that would “stand the test of time,” according to a negotiating mandate being passed around the EU’s 27 member states. The stance doubles down on an earlier version on demands that Britain adopt a level-playing field with the bloc on areas from state aid to labor and social standards.

But Boris Johnson has said the UK would never be bound by the bloc’s rules and that this was the whole point of its desire to exit the EU.

Johnson’s Brexit adviser, David Frost, said in Brussels, “To think that we might accept EU supervision on a so-called level playing field simply fails to see the point of what we are doing.  That isn’t a simple negotiating position which might move under pressure, it is the point of the whole project.”

By the end of the year, the two sides need to reach agreement on issues ranging from trade to security to fishing and environmental cooperation. The European Commission negotiates for the EU side, the 27 member states, and by month’s end, the EC will be given its marching orders.

But already, the EC is talking about “the return or restitution of unlawfully removed cultural objects to their countries of origins,” according to a draft document, a jibe at Britain, where the ancient Greek Elgin Marbles are on display at London’s British Museum.  This is how the negotiations could devolve...endless, relatively petty, issues will keep popping up as each member state has different requests.

Boris Johnson wants the same trade deal with the EU as Canada, but the EU’s chief negotiator, Michel Barnier, said that while the EU was ready to offer “an ambitious partnership” with the UK, its “particular proximity” meant it would be different.

First off, the EU’s trade deal with Canada* took seven years to negotiate.

*To oversimplify things, the trade agreement with Canada eliminated most, but not all, tariffs, and set quotas on products that can be exported without extra charges, though it’s more complicated than this.

But as Barnier told reporters this week at the European Parliament, while the EU wants an ambitious partnership, that means:

“A trade agreement that includes in particular fishing and includes a level playing field, with a country that has a very particular proximity – a unique territorial and economic closeness – which is why it can’t be compared to Canada or South Korea or Japan.”

A level playing field, to the EU, would mean that the two would become economic competitors, as well as partners, and level playing field rules are about how fair that competition is going to be.

“Level playing field” isn’t an unusual term in trade deals, but the EU believes it must be strict because the UK is a major economy right on its doorstep – therefore a bigger potential competitor than, say, Canada. 

So that means the EU will want a common set of rules on things like workers’ rights and environmental regulations that businesses have to follow, but, again, Britain is leaving the EU so it could set its own rules on such topics.

Britain’s David Frost says, don’t worry, the UK will have high standards, they just won’t be your standards.

But this means that Britain could gain a competitive advantage, especially on something like adhering to environmental regulations. 

So you can see just what this is going to be all about in the negotiations.  French Foreign Minister Jean-Yves Le Drian predicted the two sides would “rip each other apart” as they strove for advantage in the talks.  Le Driani added: “But that is part of negotiations, everyone will defend their own interests.”

Meanwhile, Britain’s departure from the EU has left the bloc with a 75 billion euro ($81 billion) hole when it comes to the 2021-27 budget, the EU using 7-year budget cycles.  Talks have been contentious in Brussels.

The joint budget is the most tangible expression of the European Union’s priorities, but the 27-member bloc wants to spend more on climate, migration, digitalization and security, while richer net contributors to the budget refuse to pay more, and beneficiaries want to retain the support they receive for farming and development.  Britain was the second-biggest net contributor to the budget after Germany.

The starting point for discussions on the size of the budget is 1.074% of the bloc’s gross national income (GNI).  While this is only a fraction of member states’ national budgets, it is still seen as far too much by some and far too little by others.

“It would be unacceptable to have a Europe that compensates for the departure of the British by reducing its own means,” French President Emmanuel Macron said.

Dutch Prime Minister Mark Rutte, whose country is one of four net contributors that want to limit the overall size of the budget to 1.0% of GNI, said he could not sign up to a budget that allocates one-third for “cohesion funds” to develop poorer regions and another third on support for farmers, especially when farming is but 1% of Euro GDP.

The summit on the budget broke up this afternoon without any resolution.

Turning to Asia...China’s manufacturing base is facing a multitude of unprecedented challenges, as coronavirus containment efforts hamper factories’ efforts to reopen.  And those that do open are facing trucking, shipping and freight services issues as these industries struggle to find workers.  The supply chain impact is massive both in China and across the globe.

For example, 92 percent of the 100 Australian and global businesses surveyed by the Australian Chamber of Commerce last week said the outbreak would have a negative impact on their revenue in the first quarter of this year, with more than half saying it could dent their top-line by more than 20 percent.

Meanwhile, because of the Lunar New Year holiday, China always reports January and February economic data together, to smooth out impacts of the holiday, good and bad. So we’ll get a slew of information in another week or so.  But now we have to throw in the coronavirus, so who the hell knows what the National Bureau of Statistics will be revealing.  Export and import data, as well as figures on industrial production and retail sales should be enlightening, to the extent China wants to be truthful.

We had one small clue of the impact of the outbreak from the China Passenger Car Association, which today said China car sales plunged 92 percent during the first two weeks of February.

We did have a slew of data on Japan’s economy this week, as it’s clear the impact of the October sales tax increase from 8% to 10% has done more of a number on the economy than the government had to have expected.

Fourth-quarter GDP, for example, fell at an annualized rate of 6.3%! the worst in five years.  Consumer spending fell 2.9% and capital expenditures declined 3.7%.

Exports in January fell for a 14th consecutive month, down 2.6% year-over-year, vs. a 6.3% decline in December.  Exports to China were down 6.4% yoy, and down 7.7% to the U.S., largely because auto exports fell 18.8%, due to softening demand for passenger vehicles.

Separately, core machine orders declined 12.5% in January, month-on-month, and now coronavirus will hit demand in February’s figures amid the ripple effects.

Japan also reported its flash PMI readings for February, with composite at 47.0, manufacturing 47.6 and services 46.7.  The services and comp figures were the worst since April 2014.

Lastly, core consumer prices in January rose 0.8%, ex-fresh food and energy.

In South Korea, the Customs Service reported that for the first 20 days of February, exports to China slumped 3.7%, signaling potentially worse to come over the next few months amid the coronavirus outbreak.  South Koea is the first major exporting economy to release data since the start of the epidemic.

But exports to the United States and Vietnam soared 24.2% and 19.8% each, as South Korean goods fast become substitutes for those made in China.  A breakdown of the trade data showed overseas sales of memory chips and car components jumped 15.4% and 40.6% respectively.

Street Bytes

--Stocks fell, after a nice two-week rally, on renewed coronavirus fears and soft economic data, with the Dow Jones losing 1.4% in the holiday-shortened week to 28992.  The S&P 500 and Nasdaq declined 1.3% and 1.6%, respectively, after both hit all-time highs on Wednesday, before the Thursday-Friday swoon.

--U.S. Treasury Yields

6-mo. 1.52%  2-yr. 1.35%  10-yr. 1.47%  30-yr. 1.91%

Bond yields plummeted in response to the above fears, including that the Covid-19 outbreak could hit far more than just China’s economy.

--We learned late today that Wells Fargo & Co. will pay $3 billion to settle investigations by the Justice Department and the Securities and Exchange Commission into its long-running fake-account issues, as new CEO Charles Scharf tries to put all of Wells’ many problems behind it, so the bank can finally move forward into the future.

But while the deal resolves civil and criminal investigations, to avoid criminal charges, the bank will need to satisfy the government’s requirements, including continuing cooperation with further government investigations over the next three years.

And Wells remains under sanction by the Federal Reserve, which has taken steps to cap the bank’s growth.  Scharf no doubt hopes that by settling with DOJ and the SEC, it might allow the bank to focus on persuading the Fed to lift the cap, though in a quick reading of the settlement, it wouldn’t appear this is anytime imminent.

As part of the settlement, Wells Fargo admitted that it “unlawfully misused customers’ sensitive personal information” and harmed some customers’ credit ratings, collecting millions of dollars of fees and interest in the process.

--Apple Inc. said on Monday that it will not meet its revenue guidance for the March quarter due to the coronavirus outbreak affecting both production and demand in China.  Despite the fact its production facilities in China have re-opened, they are ramping up slower than expected.

Apple had forecast $63 billion to $67 billion in revenue for the first quarter, ahead of estimates of $62.4 billion.  But Apple said that supply for its iPhones will be “temporarily constrained” as manufacturing facilities in China are still not operating at full capacity.  Stores disruptions have also affected sales in China, the world’s biggest market for smartphones.

--A State Department official, Robert Strayer, said EU countries have no reason to use 5G mobile technology from Huawei because Sweden’s Ericsson, Finland’s Nokia and South Korea’s Samsung are on par with the Chinese telecom giant.  Strayer said it was “necessary to demystify” the notion that Huawei is more advanced in 5G.

Washington wants its allies to ban Huawei, arguing the use of its ‘kit’ creates the potential for espionage by China, a stance that has sparked tensions with allies such as Britain granting Huawei a limited role in building out their 5G network.

Strayer, who is assistant secretary for cyber, international communications and information policy at State, said, “There is no way to fully mitigate any type of risk except the use of trusted vendors from democratic countries.  The good news is Ericsson, Nokia and Samsung all provide 5G technology that is on par with the one Huawei is providing today.”

Strayer told reporters on a visit to Lisbon that the open architecture employed by Ericsson and Nokia will enable American companies like Dell, Cisco, Juniper and VMWare to provide compatible equipment.

The European Union has said it would allow members to decide what part Huawei can play in building out their networks.

Separately, the Pentagon dropped its opposition to efforts within the Trump administration to make it harder for U.S. chip makers and other companies to supply Huawei from their overseas facilities, as the U.S. steps up its campaign to persuade allies not to use its gear.

Defense Department officials had voiced concerns that cutting off sales to Huawei would deprive U.S. chip makers of vital revenue needed to fund advanced research. The Pentagon itself spends heavily on research to stay on the cutting edge of weaponry and defensive capabilities.

Meanwhile, is 5G overhyped?  Yes...it is...at least thus far.  South Korea is the first to deploy 5G services on a wide basis, launching in April 2019, and consumers are complaining it doesn’t live up to the hype.  Many of the services aren’t much faster than existing 4G networks.  And the fastest are available only in certain dense urban areas due to their signal limitations.

Apple is introducing its first 5G phones this fall, which it is assumed will spur the adoption of the technology, but aside from the fact these iPhones are bound to be very expensive, it’s up to the carriers to build out their 5G networks enough to attract consumers to invest in the phones.

--Walmart posted earnings that fell short of expectations for the fourth quarter of fiscal 2019, with revenue climbing to $141.7 billion from $138.8 billion, driven by its eCommerce and Sam’s Club businesses in the U.S., and strong performance in Mexico, China and India.

But the company forecast slowing online growth for the year that suggested it was losing sales to Amazon.com.  Walmart has been spending heavily to grow its online business and build up the digital capabilities of its stores, through services that help shoppers buy groceries online for pickup in store parking lots.

WMT expects online sales to grow about 30% this year, down from last year’s growth of 37%.  For the holiday quarter, online sales rose 35%, its slowest in nearly two years.

Sales at Walmart’s U.S. stores open at least a year rose 1.9%, excluding fuel, well below analysts’ forecasts of 2.4%.

The company guided lower on earnings for the full year as well, and this doesn’t include any potential financial impact from the coronavirus outbreak.  But the shares barely budged on the news.

--Boeing faced a new potential safety issue for its crisis-hit 737 MAX jetliner as debris has been found in the fuel tanks of several new planes which were in storage, awaiting delivery to airlines.  The head of Boeing’s 737 program told employees that the discovery was “absolutely unacceptable.”  But Boeing did not see the issue further delaying the jet’s return to service.

[Foreign Object Debris is a technical term referring to any debris or article that isn’t part of a plane which would potentially cause damage.]

--GE CEO Larry Culp told an investor conference that the manufacturing giant would burn about $2 billion in cash flow in the first quarter owing to the extended grounding and production halt of the 737 MAX.  The cash flow pressure will likely result in first-quarter earnings lower than last year, Culp said, adding the coronavirus outbreak is “certainly a bit of a wild card for us, like everybody.”  GE has been prioritizing delivery of health-care equipment to hardest hit areas and has donated patient monitors and other equipment.

--Business jet deliveries across the globe hit a decade high in 2019, the General Aviation Manufacturers Association said on Wednesday, helped by strong market demand for new models. Deliveries rose 15% from 703 to 809 jets, the highest level  since 2009, GAMA said in its 2019 year-end aircraft billing report.

Business jet deliveries are being aided by the ramp-up of new models by manufacturers like Bombardier Inc. and General Dynamics Corp unit Gulfstream Aerospace that offer longer ranges.

GAMA said North America accounted for 67.1% of business jet deliveries.

--Airline flight delays rose in 2019, with 79 percent of flights arriving on time, slightly less than 2018, according to the Transportation Department.  An “on time” flight is defined as one that arrives no more than 15 minutes after its scheduled arrival.

As usual, Hawaiian Airlines was the most punctual, with nearly 87.7 percent of flights arriving on time (not a lot of snowstorms and severe weather issues to deal with, you understand), followed by Delta at 83.5 percent.

Frontier was the worst, 73.1 percent, with JetBlue next at 73.5 percent, followed by United with 75.2 percent.

Meanwhile, there were 302 tarmac delays longer than three hours on domestic flights last year, vs. 202 in 2018.

[To cut United some slack, with a major hub in Newark, it’s kind of hopeless.  The airport just sucks, with thunderstorms hundreds of miles away often affecting its flight patterns and delays.]

2.9 million bags were lost, damaged, delayed or stolen out of the more than half a billion bags the major airlines processed last year.

And eleven animals died in transit, vs. more than 400,000 animals transported on airlines.

--Then you have the cruise industry.  The situation with the Diamond Princess in Yokohama, Japan, with over 600 infected from the coronavirus, and now two deaths, is needless to say doing a number on the industry.

All of the cruise lines are cancelling Asian voyages, though this still makes up a fraction of the market for global cruising – the Caribbean and Mediterranean, for example, attracting far more passengers. 

But Asia has been an increasing focus for cruise operators.  According to the Cruise Lines International Association, 28.5 million people took a cruise on one of its members lines in 2018, and approximately 2.5 million of them were from China.

Industry leader Carnival Corp. recently announced it expected to take a hit higher than initially expected as a result of trip cancellations in China and other parts of Asia.  Carnival is suspending all operations in the region through the end of April, at least, with the financial blow amounting to $385 million to $445 million.

Royal Caribbean Cruises, the world’s second-largest cruise operator, said in its update on Feb. 13 that it has had to cancel 18 trips in Southeast Asia and modify several other itineraries, with the changes costing $136 million thus far.  Canceling remaining trips in Asia through the end of April would cost another $115 million.

But the sector is trying to gauge the long-term impact for all cruises, and it’s impossible to determine as the situation is rapidly evolving.

Thursday, for example, Norwegian Cruise Line Holdings announced it was canceling Asia voyages across its three brands through the third quarter.

--General Motors’ decision to pull out of Australia, New Zealand and Thailand as part of a strategy to exit markets that don’t produce adequate returns on investments raised the ire of officials in those three countries concerned over job losses.

GM said it planned to wind down sales, engineering and design operations for its historic Holden brand in Australia and New Zealand in 2021, and it plans to sell its factory in Thailand to China’s Great Wall Motors and withdraw the Chevrolet brand from Thailand by the end of this year.

About 500 workers would lose their jobs in Australia, with GM having 830 employees in Australia and New Zealand, overall, and 1,500 in Thailand.

GM has been struggling in Asia, with its international operations, including China, losing $200 million last year, including $100 million in the fourth quarter.

CEO Mary Barra said the company is making similar moves in Japan, Russia and Europe, where “we don’t have significant scale,” she said.

GM said it will honor all warranties in the markets and continue to provide service and parts.

GM has a long history with the Holden brand in Australia, where cars were designed and sold to the U.S. and other markets, such as the 2008 and 2009 Pontiac G8 muscle car, which was designed and built in Australia.

--Tesla Inc.’s electric cars jumped eight spots to No. 11 in Consumer Reports’ latest auto brand rankings based on road tests, reliability data, owner satisfaction surveys and safety performance.  CR ranked Tesla higher than any U.S. brand and made the Model 3 sedan a top pick for the first time.

Porsche is the number one brand, knocking Subaru out of first place, though two of the Japanese brand’s models were top picks: the Forester SUV and Legacy sedan.

Hyundai Motor Co.’s Genesis luxury brand finished second, unchanged from a year ago.  The Korean brand has been on a roll in several influential surveys, leading J.D. Power’s Initial Quality Study each of the last two years.

Ford Motor’s Lincoln line was the second-best American car brand, placing 13th.  But Ford was 23rd, GM’s Chevrolet and GMC brands 25th and 26th.

Cadillac was 29th, and the Fiat brand again finished last among 33 brands.

--The pace at which people are abandoning traditional pay-TV packages accelerated further last year, as prices continued to rise and consumers gravitated to more affordable streaming options.

Large cable and satellite companies lost about 5.5 million traditional pay-TV customers last year, a decline of about 8%, according to public filings and the Wall Street Journal.

AT&T, led by its DirecTV unit, ended with 3.4 million fewer satellite and fiber-optic TV connections in the U.S.  Dish Network lost more than 500,000 satellite subscribers.

TV package rates have been increasing due to rising yearly programming expenses, which mainly come from sports channels.  I know as an above-average sports viewer, I require them all; ACC, Big Ten, CBS, NBC, FOX, MLB, NFL, YES, and SNY, among other sports networks, let alone ESPN.  That adds up.  [College hoops fans on a typical Saturday are probably catching snippets of games on seven different cable networks, plus FOX and CBS.  That’s kind of staggering to think about.]

--With the above in mind, shares in ViacomCBS cratered 17% on Thursday after the newly merged owner of TV networks like CBS, Showtime, MTV and Nickelodeon reported weaker-than-expected results and failed to wow Wall Street with its plans for launching a video-streaming service.

ViacomCBS CEO Bob Bakish said the company is launching the new service to compete with Netflix, Disney and Amazon.  It would expand on CBS All Access to include shows from Viacom networks, while ViacomCBS rebrands Showtime’s sister network, Showtime Showcase, as an African-American focused service called “SHO*BET.”

In its first earnings report since the merger closed in December, the company posted a fourth-quarter net loss of $273 million.  Revenue fell 3% to $6.87 billion, weighed down by an 11 percent dip in content-licensing revenue.

--Morgan Stanley announced Thursday it was buying discount brokerage E*Trade Financial Corp. in an all-stock deal worth about $13 billion, the biggest deal by a Wall Street bank since the financial crisis.  The move helps Morgan Stanley boost its wealth management unit, which CEO James Gorman has been trying to grow to help it ride out weak periods for trading and investment banking.

E*Trade has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of client assets.

--Asset manager Franklin Resources said on Tuesday it would buy mutual fund company Legg Mason in an all-cash deal valued at $4.5 billion, to create an investing giant with about $1.5 trillion in assets under management.  Franklin’s offer of $50 per share represented a premium of 23% to Legg Mason’s Friday close (the market closed on Monday).  The two expect to realize cost savings of about $200 million annually.

--Europe’s biggest bank, London-based HSBC, reported its net profit fell 53% in 2019 to $6 billion, and the company announced Tuesday it plans a sweeping revamp of its U.S. and European business, including shedding $100 billion in assets to improve its profitability.

So as part of the revamp, HSBC plans to cut 35,000 jobs over the next three years as it struggles to revive a business that has come to depend on China increasingly for growth.

The bank said the coronavirus had caused a “significant disruption” for its staff, suppliers and customers, especially in the Chinese mainland and in Hong Kong.  HSBC said months’ long protests in Hong Kong also weighed on the local economy and caused disruptions to the bank’s business.

--Shares in Deere & Co. rallied strongly Friday on the heels of better than expected earnings in the three months to the beginning of February, reporting a 4% rise in net income when analysts had forecast a decline.  While sales fell 4%, this was less than forecast.

CEO John May said the fiscal first-quarter performance “reflected early signs of stabilization in the U.S. farm sector,” in the wake of the ‘phase one’ trade deal with China.  “Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports.”

--Shares in Domino’s Pizza hit an all-time high Thursday after the company reported fourth-quarter earnings of $129.3 million, which on an adjusted per-share basis handily beat the Street’s expectations.

The pizza chain posted revenue of $1.15 billion in the period, also surpassing forecasts.

Domino’s also said same-store sales at its U.S. restaurants rose 3.4% in the fourth quarter, beating estimates for the first time in over a year, analysts having projected 2.3%.  So a big booster shot for investors as it’s a strong figure and the first sequential quarter-over-quarter rise in U.S. comp sales in almost two years, i.e., headwinds from the competitors may be subsiding.  [Rival Pizza Hut, owned by Yum Brands, recently reported disappointing results.]

Domino’s international same-store sales, up 1.7%, did fall short of analysts forecasts of 2.1%.

--L Brands is selling its majority stake in lingerie brand Victoria’s Secret to a private equity firm, Sycamore Partners, for $1.1 billion; Sycamore gaining a 55% interest in Victoria’s Secret lingerie, Beauty and Pink brands.

When the transaction closes, CEO Leslie Wexner will step down to assume the title chairman emeritus.

--Amazon CEO Jeff Bezos said he will commit $10 billion to fund scientists, activists, nonprofits and other groups fighting to protect the environment and counter the effects of climate change.

“Climate change is the biggest threat to our planet,” Bezos said in an Instagram post.  “I want to work alongside others both to amplify known ways and to explore new ways of fighting the devastating impact of climate change on this planet we all share.”

Bezos Earth Fund will begin issuing grants this summer as part of the initiative.

“It’s going to take collective action from big companies, small companies, nation states, global organizations, and individuals,” Bezos said.

So quickly put your groups together, boys and girls, and apply for a grant!

Meanwhile, if you want the real story on Amazon and its strategy to take over the world, PBS’ “Frontline” has an outstanding documentary on the company that is now available on the PBS site.  Seriously, it’s much watch television. 

--And finally we note the passing of Hair Club for Men founder Sy Sperling, famous for the television commercials in which he proclaimed “I’m not only the Hair Club president but I’m also a client.”  He was 78.

Sperling was a balding New York City swimming pool salesman who was growing frustrated with toupees, so he developed a weaving technique he learned from his hair stylist, perfecting a system where a nylon mesh cap was glued to the scalp.  The client’s remaining hair would grow through it and then hair purchased from women that matched the color was woven into the mesh.

Sperling’s commercials were spoofed on the “Tonight Show” and “Saturday Night Live,” but the ad spots generated 10,000 calls a month.

By 1991, Hair Club for Men had 40 franchises and revenue of $100 million annually.

Foreign Affairs

Syria / Turkey / Russia: Clashes pitting Turkish forces and their Syrian rebel allies against pro-regime forces left 27 fighters dead Thursday, including two Turkish soldiers in the northwestern Syrian province of Idlib, as reported by the Syrian Observatory for Human Rights.

Syrian government and allied forces continue with their devastating offensive, with Russian backing, to flush out the last rebel enclave in the country, with nearly one million people having been displaced, forced to flee their homes and shelters since December, according to the UN.

Turkish President Erdogan is crying for Russia and Syria to honor a ceasefire, while threatening a massive offensive to push Syrian forces back out of Idlib as Turkey cannot deal with any more refugees than the 3.6 million it is already caring for. Those now on the move are sleeping outside by roads and in olive groves, burning trash to stay warm.  Some children have died from the cold.

Russia said a confrontation between Turkish and Syrian forces would be a “worst-case scenario” and Russia would keep working to prevent the situation from worsening, but of course Russia is only making things worse; Syrian troops supported by Russian warplanes and special forces.

Erdogan has said Turkey was determined to make Idlib a secure zone, while several rounds of talks with Moscow have failed to reach an agreement.

Today the UN warned fighting in Idlib could “end in a bloodbath” and it called for a ceasefire, while Moscow denied reports of a mass flight of civilians from the Russian-led Syrian offensive.

Iran: Iranians went to the polls today to vote for a new parliament, with turnout viewed as a key measure of support for Iran’s leadership, the economy weighed down by sanctions and the country isolated diplomatically.

Turnout wasn’t expected to be strong given that the 7,000 potential candidates who were disqualified by election officials were mostly moderates and reformers.

Supreme Leader Ayatollah Ali Khamenei framed the election as a religious duty.

“Anyone who cares about Iran’s national interests should participate in the election,” Khamenei said as he cast his ballot.

Earlier, Khamenei said: “Enemies want to see what the results of the U.S. maximum pressure are.

On the eve of the vote, the Trump administration imposed sanctions on two senior officials of the Guardian Council, including its chief, and three members of its elections supervisory committee.  The U.S. said it was targeting those responsible for silencing the voice of the Iranian people by rejecting the 7,000 candidates.

Meanwhile, Iran now has a potential coronavirus crisis on its hands.

Israel: Yesterday, Prime Minister Benjamin Netanyahu announced plans to build thousands of new housing units in contested East Jerusalem, which critics say dooms any prospect of a deal with the Palestinians.

While it will be years before any of the 6,200 units are built, the announcement came just 11 days before a national election and was widely seen as an effort by Netanyahu to solidify support among his right-wing base.

East Jerusalem was captured by Israel from Jordan in the 1967 war and has long been demanded by Palestinians as the capital of a future state.  Israel annexed the area as part of its capital, a move endorsed by President Trump as part of his peace plan, but panned by most countries.

Construction in the proposed area would choke off the last open area connecting East Jerusalem with the Palestinian city of Bethlehem and the southern West Bank.

Separately, it was announced that Netanyahu’s corruption trial will begin March 17, two weeks after the election, the attorney general not wanting proceedings to influence the vote.

Once again neither Netanyahu nor his rival Benny Gantz have a clear path to a parliamentary majority, after two elections in 2019 failed to yield a conclusive result.

Afghanistan: The United States and the Taliban will begin a seven-day “reduction in violence” on Saturday, “an important step on a long road to peace,” Secretary of State Mike Pompeo said today.  If successful, the two sides will then sign the first phase of a deal aimed at ending nearly two decades of conflict next Sat., Feb. 29.

The Afghan government was not part of the negotiations, as it deals with another dispute over the country’s presidential elections.  Incumbent Ashraf Ghani was declared the winner the other day, but his main rival rejected the result and vowed to form his own government, raising the threat of new turmoil amid hopes for the U.S. peace deal with the Taliban.  Polls were held on Sept. 28 to select a president for the fourth time since U.S.-led forces overthrew the Taliban government in 2001.

According to the Independent Election Commission, Ghani won 50.64%, with his main rival, Abdullah Abdullah at 39.52%.  Abdullah and his allies said he won the election and would form the government.

Libya: The internationally recognized leader of Libya dashed hopes of quickly reviving UN ceasefire negotiations after his side withdrew, saying talk of them resuming had been overtaken by events as the eastern force, the Libyan National Army of Khalifa Haftar, continues to shell the capital.  Haftar also ruled out a truce.

Nearly nine years after rebel fighters backed by NATO air strikes overthrew dictator Muammar Gaddafi, Libya still has no central authority, with the streets controlled by armed factions, with rival governments based in Tripoli and the east.

China: Under fire for its response to the coronavirus crisis, the Chinese government is pushing a new account of events that presents President Xi Jinping as taking early action to fight the outbreak.

But in doing so, the government is acknowledging Xi knew a lot more early on before the public became aware of the scope of the epidemic, and while authorities in the city of Wuhan were playing down the dangers.

In an internal speech published last Saturday, Xi said he had “issued directives about the efforts to prevent and control” the coronavirus on Jan. 7, during a meeting of the Politburo Standing Committee.  But as one expert, Jude Blanchette, told the New York Times, “It seems like (Xi) is trying to indicate that ‘we weren’t asleep at the wheel, but it comes off like ‘we knew this was a problem, but we weren’t sounding the alarm.’”

Xi didn’t utter his first public remarks about the epidemic until Jan. 20, but even on the day before the Lunar New Year holiday began in late January, in a speech at the Great Hall of the People in Beijing, talking of his success in guiding China through a difficult year, Xi made no mention of the virus that was already spreading fear throughout the country.  As he spoke, Wuhan, a city of 11 million, was going into a lockdown.

China’s annual parliamentary meeting, that was scheduled for early March, has been postponed, with a key meeting of the standing committee of the National People’s Congress apparently meeting this weekend to discuss the crisis.

The annual meeting is where China lays out its economic forecast for the year.  But one third of the national legislators are also local government officials who are currently working to stop Covid-19 from spreading.

Separately, the head of a leading hospital in Wuhan, the epicenter of the outbreak, died of the disease on Tuesday.

Editorial / Washington Post

“The early phase of the coronavirus outbreak in China remains an important and still poorly understood lacuna.  Prompt, early action could have saved lives and averted enormous disruption.  Instead, the Chinese people were exposed to danger in the first weeks of the epidemic when their officials failed to sound the alarm, even though they knew something was afoot.

“Not all the details of decision-making in the secretive Chinese system have yet come to light.  But a key disclosure was made Feb. 15 in the Communist Party bimonthly journal, Qiushi, which reprinted the text of a speech that President Xi Jinping gave Feb. 3, according to the newsletter Sinocism.  In the speech, Mr. Xi declared, ‘I issued demands during a Politburo Standing Committee meeting on January 7 for work to contain the outbreak.’  Thus, he knew of the outbreak by that day, and quite possibly days beforehand.

“This is important because at that moment, the information was largely withheld from the public.  As we noted earlier, according to a detailed insider account published by the China Media Project, on Dec. 30 the Wuhan Health Commission ‘issued an order to hospitals, clinics and other healthcare units strictly prohibiting the release of any information about treatment of this new disease.’  The account says that while Chinese officials informed the World Health Organization of a new coronavirus outbreak, ‘they did not inform their own people, but instead maintained strict secrecy.’

“Likewise, eight Chinese doctors expressed concern in Wuhan in December and were reprimanded for spreading rumors.  One of them, Li Wenliang, who died recently of the coronavirus, was warned by the police after sharing concerns about seven new cases in an online group chat on Dec. 30.  Without knowing of the alarming developments about the virus, in those first weeks of January a ‘Spring Festival’ was being planned for 40,000 people in a residential community in Wuhan.  Also, annual provincial and city political meetings were held in Wuhan from Jan. 12 to 17.   In that period, a city health commission issued public statements that no new cases were detected.  And a delegation of Chinese officials was in Washington, to sign a ‘phase one’ trade deal with President Trump on Jan. 15.

“Mr. Xi issued instructions for dealing with the outbreak Jan. 20, nearly two weeks after he spoke about it to the Politburo.  Why only then?  What did he know, and when did he know it?  Did he hope to avoid upsetting the Washington trade event?  And why reveal his Jan. 7 intervention now?  To make himself look like the wise captain of the ship, so that lower-level officials can be punished?

“China has an immense challenge coping with the outbreak.  Its success or failure will affect the whole world.  It has now mounted an enormous containment effort.  But these early weeks of the epidemic reveal the hazards of an authoritarian system that hides the truth from its own people.”

On a different item, on Wednesday, China said it had revoked the press credentials of three Wall Street Journal reporters over a headline for an opinion column deemed by the government to be racist and slanderous.

The move follows a complaint over the headline, which referred to the current virus outbreak in China and called the country the “Real Sick Man of Asia.”

In a statement Wednesday, Foreign Ministry spokesman Geng Shuang said the Feb. 3 op-ed by Bard College Professor Walter Russell Mead “smears the efforts of the Chinese government and people on fighting (the virus) epidemic.”

“The editors used such a racially discriminatory title, triggering indignation and condemnation among the Chinese people and the international community,” he said.

President Xi has repeatedly stated that China will make no concessions when it comes to national territory, sovereignty or dignity.  Donald Trump calls Xi “a great friend.”

Editorial / Wall Street Journal

“President Xi Jinping says China deserves to be treated as a great power, but on Wednesday his country expelled three Wall Street Journal reporters over a headline.  Yes, a headline.  Or at least that was the official justification.  The truth is that Beijing’s rulers are punishing our reporters so they can change the subject from the Chinese public’s anger about the government’s management of the coronavirus scourge.

“ ‘China is the Real Sick Man of Asia’ was the headline over Walter Russell Mead’s Feb. 3 column in the Journal.  Mr. Mead, a fellow at the Hudson Institute, writes a weekly column on foreign affairs for us.  He did not write the headline.  Anyone who reads the piece can see it describes the problems in Chinese governance exposed by the response to the coronavirus outbreak.  Beijing has since sacked Wuhan province officials, proving Mr. Mead’s point.

“As for that headline, we have heard from thoughtful people that to Chinese ears the ‘sick man’ reference echoes in insensitive fashion the West’s exploitation of China in the mid-19th century during the opium wars.  Others say it refers to Japan’s 20th-century invasion of China.  We take the point, and we were happy to run letters to the editor criticizing the headline.

“Most Americans, however, understand the phrase in the context of the dying Ottoman Empire as ‘the sick man of Europe.’  That was our historical analogy.  These days the ‘sick man’ phrase is used to describe many countries, most notably the Philippines as the sick man of Asia.  The Financial Times, the Economist and the Guardian all referred to Britain as ‘the sick man of Europe’ in the throes of Brexit.

“The Global Times, a publication that expresses Chinese government views, republished a Reuters article in 2016 whose lead sentence referred to Egypt as the ‘sick man of the Middle East.’  In 2011 Foreign Affairs used the headline ‘The Sick Man of Asia: China’s Health Crisis’ over an article by Yanzhong Huang, a professor who grew up in China and graduated from Fudan University.

“In any event, Mr. Mead’s column and headline were never published in China.  That’s because the Journal is banned there.  Our website has been shut down since 2014.  Our reporters can cover China for the rest of the world but not for Chinese readers.

“That didn’t stop the Chinese government from starting a public campaign against the headline.  A Foreign Ministry spokesman denounced the column, and several Chinese propaganda organs spread the same theme.  ‘Racism worse enemy than epidemic,’ read a headline in Xinhua lumping Mr. Mead’s article with one from Der Spiegel.

“Our email inbox was soon flooded with complaints about the headline, all containing remarkably similar language and demanding an apology.  A campaign was orchestrated to get Mr. Mead barred from Twitter.  If you think this was spontaneous outrage, you don’t understand how China’s government works to influence public opinion at home and abroad.  Beijing knows how to exploit America’s identity politics to charge ‘racism’ in service of its censorship.

“And now China has escalated to ban our three reporters, who had nothing to do with the headline or Mr. Mead’s column.  As our readers know, and as we have explained to Chinese officials for years, our news and opinion departments are run independently and have separate reporting lines to the publisher.

“The Chinese understand this but choose to ignore it when it suits their propaganda purposes.  In August they refused to renew the press credentials of a Journal reporter who wrote about the business interests of Mr. Xi’s cousin in Australia.  This week the excuse for expulsion is an opinion headline.  Soon enough it might be a news story about China’s internment camps for Uighurs in Xinjiang or an editorial about Hong Kong.

“What Chinese officials don’t understand is that a free press would have helped them better cope with the virus fallout.  Democracies are resilient because a free media sends signals and information that allows an outlet for grievances and alert leaders to problems before they become crises.

“The Chinese also don’t seem to understand that their bullying reduces the shrinking number of allies they still have in the U.S.  These columns have supported China’s overall trading relationship with the U.S. even as we criticize some of its trading practices.  In the days before Mr. Mead’s column, we ran an editorial (‘Wuhan Wilbur Ross’) criticizing the U.S. Commerce Secretary for saying the coronavirus would be an economic benefit for the U.S.  Mr. Ross’s point of view will find more American support the more China steals American secrets and banishes reporters.

“China’s expulsions are so extreme that they surely have more to do with its domestic politics than American opinion.  Perhaps they are also in part a response to the State Department’s decision Tuesday to identify the U.S. operations of state-run Chinese media as foreign missions, which subjects them to the same restrictions as embassies.

“The coronavirus is a seismic political event that undermines Mr. Xi’s promise to his citizens about a rising China and the competence of the Communist Party.  The government’s default defense is to play the nationalist card and blame foreigners for its home-grown troubles.  That’s why it censors public complaints on Chinese social media, gins up a furor over a headline – and banishes the best reporters in the world from covering China.”

With all the above in mind, a senior Trump administration official warned on Thursday that the United States must prepare for a possible military conflict with China by developing new weapons and strengthening ties with allies.

“The stakes of the challenge of conflict with China, in other words, are formidable,” said Chad Sbragia, deputy assistant secretary of defense for China.  “This is a long-term process.  We have to be agile, smart.”

The People’s Liberation Army is an increasingly formidable adversary that is marrying long-standing ambition with unprecedented new resources, Sbragia told the U.S.-China Economic and Security Review Commission.

But the idea of strengthening ties with allies took a big hit recently when Manila announced it would end the Philippines-U.S. Visiting Forces Agreement.

Germany: A gunman opened fire on two shisha (hookah) bars in the western German city of Hanau, killing nine and injuring several others, before killing himself.

In both places targeted on Wednesday night the victims were reported to have been predominantly Kurdish.

Federal prosecutors are treating the attack as terrorism, the gunman a far-right extremist.  Germany has long talked about a rise in far-right attacks and it needs to be addressed in the harshest terms.

Russia / Ukraine: A huge cyberattack which knocked out more than 2,000 websites in the country of Georgia last year was carried out by Russia, according to Georgia, the U.S. and UK.

The UK government says that the GRU (Russian military intelligence) was behind the “attempt to undermine Georgia’s sovereignty.”

Foreign Secretary Dominic Raab described it as “totally unacceptable.”

Russia’s Foreign Ministry denied any involvement, the RIA news agency said.

Meanwhile, fighting flared up again in eastern Ukraine, a Ukrainian soldier killed, four others injured on Tuesday, as fighting erupted between Ukrainian and Russian-backed separatists, each blaming the other for the flare-up.

At a Paris summit in December, the two sides tried to implement a peace deal.

Ukrainian President Volodymyr Zelensky said: “This is not just a cynical provocation...it is an attempt to disrupt the peace process in the Donbass.”

On a different topic, at last weekend’s annual Munich Security Conference, German President Frank-Walter Steinmeier deplored the three big powers’ approach to global affairs and, without naming Donald Trump, took issue with his vow to “make America great again.”  “ ‘Great again’ - even at the expense of neighbors and partners,” quipped Steinmeier, a former foreign minister whose comments on foreign policy carry authority.

“Russia...has made military force and the violent shifting of borders on the European continent the means of politics once again...

“China...accepts international law only selectively when it does not run counter to its own interests,” Steinmeier said.  “And our closest ally, the United States of America, under the present administration itself, rejects the idea of an international community.” The upshot is “more mistrust, more armament, less security...all the way to a new nuclear arms race.”

The next day, Secretary of State Mike Pompeo defended the United States’ global role despite misgivings in Europe, vowing that Western values would prevail over Russian and Chinese desires for “empire.”

“I’m happy to report that the death of the transatlantic alliance is grossly exaggerated.  The West is winning, and we’re winning together,” he said.

But French President Emmanuel Macron told the conference he was not surprised by Steinmeier’s speech and had liked it.

“We cannot be the United States’ junior partner,” Macron said, adding that while he supported NATO, Europe needed to be able to tackle threats in its neighborhood and at times act independently of Washington.

Macron said the West’s policy of defiance toward Russia in recent years had failed and, as nobody wanted to confront Moscow directly, the only option was to have a closer dialogue to resolve differences.

“I heard the defiance of all our partners, I’m not mad, but I know that being defiant and weak...is not a policy, it’s a completely inefficient system,” Macron said.

“There is a second choice, which is to be demanding and restart a strategic dialogue because today we talk less and less, conflicts multiply and we aren’t able to resolve them,” he added.

U.S. Defense Secretary Mark Esper warned that Beijing is moving further outside the international order and that allies using Chinese technology (i.e., Huawei) risk undermining NATO.

Under the leadership of Xi Jinping, China “is heading even faster and further in the wrong direction – more internal repression, more predatory economic practices, more heavy-handedness, and, most concerning for me, a more aggressive military posture,” Esper told the conference.

Chinese Foreign Minister Wang Yi, also at the security conference, dismissed U.S. criticism of his country as “lies”, specifically criticizing Pompeo’s description of China’s desire for “empire.”

“All these accusations against China are lies, not based on facts,” said Wang.  “But if we replace the subject of the lie from China to America, maybe those lies become facts.”

Wang added: “China’s drive toward modernization is an inevitable trend of history and will not be held back by any force.”

India: President Trump is traveling to India for a two-day photo op with Prime Minister Narendra Modi, Modi promising millions will be showing up to line the streets for their motorcade.

But the two sides are at loggerheads over trade and other issues, including India’s recent purchase of a Russian missile shield system.

Random Musings

--Presidential tracking polls....

Gallup:  49% approve of Trump’s job performance, 48% disapprove (lowest since the inauguration when it was 47%); 93% of Republicans approve, 43% of independents (new high...Feb. 3-16).
Rasmussen:  49% approve, 49% disapprove (Feb. 21).

In a new Washington Post/ABC News poll, Trump’s approval rating stood at 43%, 53% disapproving.  [52% approve of his handling of the economy, 40% disapprove.  Last month 56% approved.]

A new Wall Street Journal/NBC News poll has Trump’s job approval at 47%, with 50% disapproving.  Approval among independents hit a record 51%.  Hugely significant.  [53% approve of how Trump is handling the economy in this survey.]

--In the Washington Post/ABC News national poll, Bernie Sanders had 32% of Democrats and Democratic-leaning registered voters, an increase of nine points since January.

Joe Biden, who was at 32% in January, fell to 16%.  Mike Bloomberg had 14%, Elizabeth Warren 12%, Pete Buttigieg 8% (despite his strong showings in Iowa and New Hampshire), and Amy Klobuchar 7%.

By a 58 to 38 margin, Democrats say they would rather nominate a candidate who can defeat President Trump than one who agrees with them on major issues.

The WSJ/NBC survey had Sanders at 27% nationally among primary voters, with Biden at 15%, followed by 14% for Warren and Bloomberg, Buttigieg 13% and Klobuchar 7%.

And then in a national poll from NPR/PBS NewsHour/Marist released Tuesday, Sanders had 31%, but Bloomberg polled 19%, which was the clinching poll that got him into Wednesday’s debate.  Biden was at 15%, Warren 12%, Klobuchar 9% and Buttigieg 8%.

--In a Monmouth University poll of key Super Tuesday state Virginia, among voters there who are likely to participate in the Democratic primary, 22% select Bloomberg, 22% Sanders and 18% Biden.  Buttigieg is at 11%, Klobuchar 9%, Warren 5%.

Virginia does not have party registration and any voter may participate in the primary.  [Among those who identify themselves as Democrats, it’s Sanders 22%, Biden 21% and Bloomberg 20%.]

--In a Monmouth poll of likely California Super Tuesday primary voters, Sanders is at 24%, followed by 17% for Biden and 13% for Bloomberg.  Warren receives 10%, Buttigieg 9% and Klobuchar just 4%, with Tom Steyer at 5%.

--A new Quinnipiac University swing state poll of Wisconsin, Pennsylvania and Michigan broke down head-to-head potential matchups, which at this stage I think are meaningless, but for the record, it also broke down Trump’s approval rating in the three states, which is more meaningful in terms of looking at trends going forward.

Trump scores his highest approval rating among voters in Wisconsin, 51-46 percent.  But in both Michigan and Pennsylvania, his job approval is underwater; 54-42 disapproval in Michigan, 52-44 in Pennsylvania.

The president gets high marks for his handling of the economy, though, in all three.

Wisconsin voters approve 59-38, Pennsylvania voters 57-41, and Michigan voters 52-44.

--And then we had Wednesday’s highly-anticipated Democratic debate in Las Vegas, a terrifically entertaining show that smashed a ratings record, drawing a combined 19.7 million between NBC and MSNBC; the most watched in the history of Democratic presidential primary debates.

There is no doubt that the addition of newcomer Michael Bloomberg generated increased interest, but then as Bloomberg said the day after, “The real winner last night was Donald Trump.”  Trump tweeted, “Mini Mike Bloomberg.  I agree!”

Bloomberg was pathetic.  He didn’t defend his solid record as mayor.  He didn’t have ready defenses for the obvious...the questions on stop-and-frisk, and allegations of sexual harassment at Bloomberg LP.  When Bernie Sanders said at one point that Bloomberg should have shared the wealth with his workers, astonishingly, Bloomberg didn’t fight back and say he sure has.  There is no one starving at the company he built.  His employees work hard, and are paid well, with I’m sure very good benefits (including healthcare).

The former mayor also didn’t work in that he has extensive foreign policy experience through his 12 years as one of America’s most powerful public officials.

And he didn’t touch on his plans for income inequality, which is what has garnered him the support thus far of at least four members of the Congressional Black Caucus and countless other public officials.

Nor did he say more than a line or two on his philanthropic activities, nor on what should have been a topic in Vegas, his efforts on gun control.  About the only thing he elucidated on was a few lines on his climate agenda.

The guy just wasn’t prepared in the least, which is inexcusable. 

John Podhoretz / New York Post

“Forget Lincoln and Douglas.  Forget Nixon and Kennedy.  Hell, forget the Athenians and the Melians back during the Peloponnesian War.  Last night’s Democratic primary slagfest (sic) in Nevada was the greatest debate in all of human history.

“Oh, was it glorious – the sheer raging hostility spraying across the stage as every campaign besides the Bernie Sanders and Michael Bloomberg bids face the desperate possibility each might fade into the woodwork against the Bernie surge and the Bloomberg billions.

“It’s not that the gloves were off.  No, my friends, everybody was wearing steel-tipped boots and going right for the crotch. Those weren’t snowflakes.  They were nunchucks.

“Some priceless highlights:

“Pete Buttigieg wagging his finger at Amy Klobuchar after she said she’d made an error by forgetting the name of the president of Mexico in an interview.

“Klobuchar wheeling on Buttigieg and demanding to know if he was trying to say she was dumb.  ‘Are you mocking me here, Pete?’

“Joe Biden saying he’s the only one on stage who has met all kinds of Mexican presidents – whose names he clearly couldn’t remember.

“Bloomberg saying he was too rich to release his returns because he can’t do Turbo Tax like all of you losers.

“Sanders fuming that Bloomberg would dare mention he has a summer house.

“And then there was Elizabeth Warren, desperately trying to get back in the game and spraying fire at everyone else on stage like Machine Gun Kelly.  She spared no one, and by the end she had yelled herself hoarse and seemed like she needed an oxygen tank.

“Warren’s signature moment came at the very beginning, when she went right for the jugular.

“ ‘I’d like to talk about who we’re running against – a billionaire who calls women fat broads and horse-faced lesbians,’ Warren said.  ‘No, I’m not talking about Donald Trump.  I’m talking about Mayor Bloomberg.’

“So how was Bloomberg?  At the midpoint, it seemed like he had just spent the past three months lighting half a billion dollars on fire, given just how disastrously he had performed.

“Everybody took a turn beating him up, and his responses were painfully clueless – especially when he said that his company struck non-disclosure agreements with ex-employees at his company to protect them.

“He apologized unconvincingly for stop-and-frisk and when he was asked a second time to explain himself, he got huffy and basically said, hey, he’d already apologized!

“In that first hour, Bloomberg wasn’t just a Not Ready for Prime Time Debater.  He was Mr. Monopoly stripped naked on the Community Chest card.

“He staged a bit of a comeback in the second half when he got an opening to face off against Bernie Sanders and offer the stark rationale for his own campaign.

“After listening to Sanders offer a passionate defense of his democratic socialism, Bloomberg said, ‘I can’t think of a better way to elect Donald Trump than for people to listen to this conversation.’

“The thing is, even if the entire night had been the epic disaster the first hour suggested it would be, Bloomberg isn’t going anywhere – and he is likely only to increase his insane level of spending to do what he can to erase memories of his performance.”

And we had the battle between Buttigieg and Klobuchar.  As John Podhoretz wrote: “Her loathing for him...was so palpable it’s lucky she didn’t have a stapler or something on her podium she might have launched at his head.

“Klobuchar wouldn’t do that, of course, because she’s actually disciplined and controlled and rose to the occasion with a second great performance – that may not do anything for her.”

So we await Nevada’s results, and the 10-day mad dash to Super Tuesday, the candidates seeking final momentum in South Carolina days before, with another debate there next week.

Bloomberg will be back on stage, and I’m guessing the ratings will again be strong as we watch to see if he can stage a comeback. 

On the nondisclosure agreement issue, late today, Bloomberg offered to release three women from their NDAs related to comments he allegedly made, but Elizabeth Warren said tonight, “That’s just not good enough.”  Warren demands Bloomberg do a blanket release “so that all women who have been muzzled by non-disclosure agreements can step up and tell their side of the story in terms of what Michael Bloomberg has done.”

To be continued in South Carolina....

--Prince Harry and Meghan Markle will not get to use the world “royal” as part of their brand.  The two had hoped to leverage “Sussex Royal” into not just a new website but a “global trademark for a range of items and activities, including clothing, stationery, books and teaching materials” and a new charitable organization with the name.

But it seems the Queen has had enough and she has stepped in to prevent the use of “royal.”  Good for her.  I must say, I am sick of these two.  So here’s my prediction.  Harry will be crawling back to the Royal Family in two years, after he separates from Meghan. 

--The Boy Scouts of America filed for Chapter 11 bankruptcy protection in an effort to keep operating while thousands of claims of sexual abuse by former members against the national youth group are litigated.

Roger Mosby, the Boy Scouts’ president and chief executive officer, said in a statement Tuesday:

“The BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in Scouting.  We are outraged that there have been times when individuals took advantage of our programs to harm innocent children.

“While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process – with the proposed Trust structure – will provide equitable compensation to all victims while maintaining the BSA’s important mission.”

I was a Boy Scout a few years and enjoyed my experience, even if I didn’t get above Second Class.

--Finally, two good news stories.

First, the stunning recovery of race driver Ryan Newman from his horrific crash in Monday’s rain-delayed Daytona 500, as he walked out of a local hospital with his two daughters, just two days later.  Watching it Monday night, I, like everyone else who saw it thought there was no way Newman had survived.  To then see him walking, no visible scars, was a true miracle.

And then we had the news from the sub-Antarctic island of South Georgia, owned by Britain, where scientists have discovered a collection of blue whales, 55, after a 23-day survey – a total that is unprecedented in the decades since commercial whaling ended.

South Georgia was the epicenter for hunting in the early 20th century.

Specialist Dr. Trevor Branch of the University of Washington, Seattle, told the BBC: “To think that in a period of 40 or 50 years, I only had records for two sightings of blue whales around South Georgia.  Since 2007, there have been maybe a couple more isolated sightings.  So to go from basically nothing to 55 in one year is astonishing.”

We quaff a beer to both developments.

---

Gold $1646...7-year high!
Oil $53.33

Returns for the week 2/17-2/21

Dow Jones –1.4%  [28992]
S&P 500  -1.3%  [3337]
S&P MidCap  -0.6%
Russell 2000  -1.5%
Nasdaq -1.6%  [9576]

Returns for the period 1/1/20-2/21/20

Dow Jones  +1.6%
S&P 500  +3.3%
S&P MidCap  +1.0%
Russell 2000  +0.6%
Nasdaq  +6.7%

Bulls 52.9
Bears 19.2...same split as last week owing to holiday.

Have a great week.

Brian Trumbore



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Week in Review

02/22/2020

For the week 2/17-2/21

[Posted 9:30 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.

Edition 1,088

It's impossible to know if what we hear from China is even close to the truth.  Just today, officials in Hubei province revised the number of new cases it reported on Wednesday to 775, from 349 previously.  Earlier in the day, authorities said they would add back some cases to their tally of the disease, after they, again, adjusted their methodology to count only cases that were detected with genetic tests, rather than with CT scans.  The 349 had been the lowest number reported since Jan. 25.

Tonight, Beijing reported 389 new cases across the mainland, bringing the total to over 76,200, with 109 new deaths in Hubei, 90 of which were in Wuhan.  The total death toll in China as of today is up to 2,345.  The government also reported 234 infections among prisoners outside Hubei, with another 271 reported in prisons in Hubei itself.  Total cases in Beijing also disturbingly neared 400 with four deaths.

But the virus has been spreading worldwide, with some very concerning developments in South Korea, where officials today designated two cities as “special care zones,” while its military confined troops to their bases in a desperate effort to contain the spread of Covid-19.

There are now over 340 reported cases in South Korea (142 today), the majority in Daegu, the country’s fourth-largest city with a population of 2.5 million.  Malls, restaurants and streets are largely empty.

Most of the patients in Daegu, over 110, were traced to an infected 61-year-old woman known as “Patient 31” who attended a church, a scenario health authorities described as a “super-spreading event.”  As of this post, there are actually 400...400...members of the church who are showing symptoms of the disease, though tests were ongoing.

Many of the first patients have recovered, but South Korea also reported its first death.

As for the military, several members tested positive, thus the decision to ban all soldiers from taking leave.  But just imagine, what if North Korea wanted to take advantage of the situation.

In Japan, Tokyo was canceling or postponing major indoor events planned for the next three weeks as part of its efforts to halt the spread of the coronavirus; this as the Olympic Games are now just six months away.

Iran confirmed 13 new cases on Friday, two of whom have died, bringing the number of deaths in the country to at least four, with the majority of the cases in the holy city of Qom, south of Tehran.  Iranians were going to the polls today for a parliamentary election.  That can’t be good.  In Qom, those waiting in line to cast their ballots were wearing masks, according to reports.

Italy suddenly reported 17 new cases today in the northern part of the country, none of whom traveled to China.  Italy also reported its first death.

And then we have the situation where 14 coronavirus-stricken Americans from the Diamond Princess cruise liner were flown back with about 300 virus-free people against the advice of the CDC, which lost the battle to the State Department.  Test results had found that the 14 were infected prior to boarding the planes on Monday.  The 14 figure then increased to 18 by this afternoon.  The number of cases in the U.S. is now up to at least 34, overall.

The handling of the whole Diamond Princess crisis has met with harsh criticism from all quarters, the number infected over 600, two passengers dying.   Authorities are now getting passengers off the cruise ship and into quarantine facilities in Yokohama, while many of the crew stays onboard, a seeming death sentence.

The World Health Organization warned on Friday that the window of opportunity to contain wider international spread of the epidemic is closing, and countries must act fast if they are to control it.  The WHO’s director-general, Tedros Adhanom Ghebreyesus said, “If we do well, we can avert any serious crisis, but if we squander the opportunity then we will have a serious problem on our hands.”

As for the economic impact, the International Monetary Fund said it is premature to give precise projections, but IMF Managing Director Kristalina Georgieva said Thursday, “We are still hoping that the impact will be a V-shaped curve” with a sharp decline in China and sharp rebound after the containment of the virus, she said.  “But we are not excluding that it might turn out to be a different scenario like a U curve where the impact is somewhat longer.”

In China, many small- and medium-sized companies face survival issues unless their businesses can restart soon.  In a recent survey by Tsinghua and Peking Universities, just 34% of nearly 1,000 firms said they could survive for a month on current cashflow.

---

The New York Times reported Thursday evening that “Intelligence officials warned House lawmakers last week that Russia was interfering in the 2020 campaign to try to get President Trump re-elected, five people familiar with the matter said, in a disclosure that angered Mr. Trump, who complained that Democrats would use it against him.

“The day after the Feb. 13 briefing to lawmakers, Mr. Trump berated Joseph Maguire, the outgoing acting director of national intelligence, for allowing it to take place, people familiar with the exchange said.  Mr. Trump cited the presence in the briefing of Representative Adam Schiff, the California Democrat who led the impeachment proceedings against him, as a particular irritant.

“During the briefing to the House Intelligence Committee, Mr. Trump’s allies challenged the conclusions, arguing that Mr. Trump has been tough on Russia and strengthened European security.  Some intelligence officials viewed the briefing as a tactical error, saying that had the official who delivered the conclusion spoken less pointedly or left it out, they would have avoided angering the Republicans.

“That intelligence official, Shelby Pierson, is an aide to Mr. Maguire who has a reputation of delivering intelligence in somewhat blunt terms.  The president announced on Wednesday that he was replacing Mr. Maguire with Richard Grenell, the ambassador to Germany and long an aggressively vocal Trump supporter.”

Maguire formally resigned today.

Earlier, the Washington Post had reported that Maguire and Trump had gotten into a heated exchange, though the details of what led up to it hadn’t been made clear until the Times report.

Back to Grenell, his appointment was widely panned, as aside from being nothing more than a Trump loyalist, he has zero relevant experience.

President Trump was reportedly considering Rep. Doug Collins (Ga.), another fierce loyalist, to be permanent DNI chief, but tonight it’s reported Collins turned this down to run for the Senate.

Lastly, I’m invoking my “24-hour rule” when it comes to the other late-breaking news today, that U.S. officials told Democratic presidential contender Bernie Sanders that Russia is trying to help his campaign, the Washington Post reported on Friday.

Sanders, in a statement responding to the report, said, “I don’t care, frankly, who Putin wants to be president.  My message to Putin is clear: stay out of American elections, and as president I will make sure that you do.”

But a lot of us are wondering why Sanders and his campaign said nothing about this earlier, because he had been briefed on the topic a month ago. This is the same Sanders who now doesn’t want to release further information on his health status, post-heart attack, despite promising same months ago.  And it’s the same Sanders campaign that wouldn’t disavow the lies of a leading campaign staffer, who went on CNN twice on Wednesday, spreading falsehoods about Mike Bloomberg’s health.  When confronted with her lies, the staffer tweeted both times that she had misspoke, but didn’t apologize!  

So major questions when it comes to the credibility of the Sanders camp.

Meanwhile, the man who would be king, Donald Trump, said of the reports that Russia was meddling into the 2020 elections that it was just “another disinformation campaign.”

As I said in my yearend review, this year is going to be hell.

Trump World

--U.S. District Judge Amy Berman Jackson sentenced longtime Trump friend and political adviser Roger Stone to three years and four months in prison for impeding a congressional investigation of Russian interference in the 2016 presidential election.

Jackson’s ruling came after weeks of infighting over the politically charged case that threw the Justice Department into crisis.  Trump decried that his ally wasn’t being treated fairly.

Before imposing the sentence, Jackson took aim at Trump, saying Stone “was not prosecuted for standing up for the president; he was prosecuted for covering up for the president.”  She also appeared to call out Attorney General William Barr, saying intervention to reduce career prosecutors’ sentencing recommendation was “unprecedented.”  Jackson said, however, that the politics of the case had not influenced her final decision, which was indeed considerably less than the 7 to 9 years initially recommended by the prosecutors.

Jackson said, “The truth still exists; the truth still matters.  Roger Stone’s insistence that it doesn’t, his belligerence, his pride in his own lies are a threat to our most fundamental institutions, to the foundations of our democracy.  If it goes unpunished it will not be a victory for one party or another; everyone loses.”

President Trump weighed in by tweet, comparing Stone to former FBI director James Comey, former FBI deputy director Andrew McCabe and former secretary of state Hillary Clinton, all of whom Trump claims “lied to the FBI!  FAIRNESS?”

Trump then hinted he could pardon Stone, while speaking at an event in Las Vegas, blasting the “dirty cops” of the law enforcement establishment.

“We will watch the process and watch it very closely,” Trump said.  “And at some point, I will make a determination.  But Roger Stone and everybody has to be treated fairly and this has not been a fair process.”

--President Trump attempts to continue to rewrite history when it comes to the Russia investigation, arguing the probe into Russian election interference was based on false pretenses, despite a recent report from the Justice Department’s inspector general stating the opposite even as it criticized the FBI’s surveillance of a former Trump campaign aide.  And Trump is claiming, without evidence, that Robert Mueller lied to Congress – which happens to be one of the charges Roger Stone was convicted of.

Yet despite all the president’s comments about the Russia investigation, we have yet to hear him warn Russia not to interfere in the next election, or even acknowledge that U.S. intelligence agencies believe Russian President Putin is seeking to do so.

--Donald Ayer, former U.S. Deputy Attorney General under George H.W. Bush / The Atlantic

“When Donald Trump chose Bill Barr to serve as attorney general in December 2018, even some moderates and liberals greeted the choice with optimism.  One exuberant Democrat described him as ‘an excellent choice,’ who could be counted on to ‘stand up for the department’s institutional prerogatives and...push back on any improper attempt to inject politics into its work.’

“At the end of his first year of service, Barr’s conduct has shown that such expectations were misplaced.  Beginning in March with his public whitewashing of Robert Mueller’s report, which included powerful evidence of repeated obstruction of justice by the president, Barr has appeared to function more as the president’s personal advocate than as an attorney general serving the people and government of the United States.  Among the most widely reported and disturbing events have been Barr’s statements that a judicially authorized FBI investigation amounted to ‘spying’ on the Trump campaign, and his public rejection in December of the inspector general’s considered conclusion that the Russia probe was properly initiated and overseen in an unbiased manner.  Also quite unsettling was Trump’s explicit mention of Barr and Rudy Giuliani in the same breath in his July 25 phone call with Volodymyr Zelensky, as individuals the Ukrainian president should speak with regarding the phony investigation that Ukraine was expected to publicly announce.

“Still more troubling has been Barr’s intrusion, apparently for political reasons, into the area of Justice Department action that most demands scrupulous integrity and strict separation from politics and other bias – invocation of the criminal sanction.  When Barr initiated a second, largely redundant investigation of the FBI Russia probe in May, denominated it criminal, and made clear that he is personally involved in carrying it out, many eyebrows were raised.

“But worst of all have been the events of the past week. The evenhanded conduct of the prosecutions of Roger Stone and Michael Flynn by experienced Department of Justice attorneys have been disrupted at the 11th hour by the attorney general’s efforts to soften the consequences for the president’s associates.  More generally, it appears that Barr has recently identified a group of lawyers whom he trusts and put them in place to oversee and second-guess the work of the department’s career attorneys on a broader range of cases.  And there is no comfort from any of this in Barr’s recent protests about the president’s tweeting.  He in no way suggested he was changing course, only that it is hard to appear independent when the president is publicly calling for him to follow the path he is on....

“The fundamental problem is that (Barr) does not believe in the central tenet of our system of government – that no person is above the law.  In chilling terms, Barr’s own words make clear his long-held belief in the need for a virtually autocratic executive who is not constrained by countervailing powers within our government under the constitutional system of checks and balances.

“Indeed, given our national faith and trust in the rule of law no one can subvert, it is not too strong to say that Bill Barr is un-American.  And now, from his perch as attorney general, he is in the midst of a root-and-branch attack on the core principles that have guided our justice system, and especially our Department of Justice, since the 1970s....

“Barr’s agenda was confirmed by his November speech to the Federalist Society on ‘the Constitution’s approach to executive power.’  He argues that ‘over the past several decades, we have seen a steady encroachment on presidential authority by other branches of government,’ and that those ‘encroachments’ must end.  He purports to justify his position by offering a selective version of American history, discussing the Founders’ intentions with regard to presidential power, characterizing the role the presidency has supposedly played over time, and arguing that, in recent decades, the Founders’ vision has been undermined by actions of Congress and the courts.

“Perhaps even more disturbing than Barr’s manifesto for radical change – for the creation of a president with nearly autocratic powers – is the revisionist account of American history on which it is based, and his dogmatic insistence on it in the face of ample evidence to the contrary....

“According to Barr, the Founders actually were not much concerned about an out-of-control president, as this ‘civics-class version’ suggests.  He reasons that history shows a rise in the relative power of Parliament against the King during the mid-18th century, and that by the time of our own Revolution, the evil perceived by the patriots was more ‘an overweening Parliament’ than ‘monarchical tyranny.’  Further, chaotic governance during the Revolution and under the Articles of Confederation pointed out the need for a single executive officer, and after some debate, such a president was included in the Constitution.  Of course, none of this negates the specific provisions that the Founders adopted to curb presidential overreach, or suggests that it was not a matter of great concern.  Nor does it remotely suggest that the later development of institutions such as judicial review and congressional oversight was out of step with what the Founders had in mind.

“Barr’s next piece of history – his account of how things have allegedly proceeded during the intervening 230 years – is the real stunner.  He would have us believe that this vision of an all-powerful president that he wants to restore has in fact been a reality for most of our history.  Indeed, he says, ‘more than any other branch, the [American presidency] has fulfilled the expectations of the Framers.’  At least, that is, until recently....

“But perhaps the most outrageous and alarming ideas that Barr advances come in his attacks on the judiciary, which occupy fully a third of his speech.  In his mind, it seems, the courts are the principal culprit in constraining the extraordinarily broad powers that the president is constitutionally entitled to exercise.  His discussion ignores a pillar of our legal system since almost the very beginning – Chief Justice John Marshall’s magisterial pronouncement in the early days of our republic that ‘it is emphatically the province and duty of the judicial department to say what the law is.’

“Barr complains that the judiciary ‘has appointed itself the ultimate arbiter of separation-of-powers disputes between Congress and the executive,’ saying that the Framers did not envision that it would play such a role.  Barr yearns for a day when the president can bully everyone else in government, and leave them no ability to seek relief in court....

“Barr’s Federalist Society speech suggests that he is ready to say nearly anything in pursuit of his lifelong goal of a presidency with unchecked powers.  As Napoleon is reputed to have said, the man who will say anything will do anything.  That Barr has also repeatedly used his authority as attorney general to tailor the position of the United States, in court and in legal opinions, to empower such an unworthy incumbent as Donald Trump to do whatever he wants suggests that this is correct.

“The benefit of the doubt that many were ready to extend to Barr a year ago – as among the best of a bad lot of nominees who had previously served in high office without disgrace – has now run out.  He has told us in great detail who he is, what he believes, and where he would like to take us.  For whatever twisted reasons, he believes that the president should be above the law, and he has as his foil in pursuit of that goal a president who, uniquely in our history, actually aspires to that status.  And Barr has acted repeatedly on those beliefs in ways that are more damaging at every turn.  Presently he is moving forward with active misuse of the criminal sanction, as one more tool of the president’s personal interests.

“Bill Barr’s America is not a place that anyone, including Trump voters, should want to go.  It is a banana republic where all are subject to the whims of a dictatorial president and his henchmen.  To prevent that, we need a public uprising demanding that Bill Barr resign immediately, or failing that, be impeached.”

--President Trump granted pardons or commuted the sentences of the likes of financier Michael Milken, former Illinois governor Rod Blagojevich, former NYPD Commissioner Bernard Kerik, and former owner of the San Francisco 49ers, Eddie DeBartolo Jr.

Each case is different, all moves by the president made to benefit him, of course, and Fox.

“It’s a clemency process for the well-connected, and that’s it,” said Rachel Barkow, a professor and clemency expert at the New York University School of Law. “Trump is wielding the power the way you would expect the leader of a banana republic who wants to reward his friends and cronies.”

Trump, on Tuesday, having granted clemency to his political allies, totally circumventing the normal Justice Department process, declared himself “the chief law enforcement officer” in the nation.

“I’m allowed to be totally involved,” he told reporters.  “I’m actually, I guess, the chief law enforcement officer of the country.  But I’ve chosen not to be involved.”

In the meantime, we’ll see what Trump does with the Roger Stone sentence.  More than 2,000 former Justice Department employees signed a public letter this week objecting to Trump’s public intervention in Stone’s case, and urging Bill Barr to resign.

--Victoria Coates, one of President Trump’s longest-serving national security aides, is leaving the White House, soon to become a senior adviser at the Energy Department, the White House said on Thursday. Coates has been at the Trump White House since he took office and has been a key player in the administration’s deliberations on Iran and the Middle East. But Coates has battled rumors that she was the source of an “Anonymous” opinion article expressing opposition to Trump’s agenda that ran in the New York Times.

--Trump tweets:

“The Crooked DNC is working overtime to take the Democrat Nomination away from Bernie, AGAIN! Watch what happens to the Super Delegates in Round Two.  A Rigged Convention!”

“These were Mueller prosecutors, and the whole Mueller investigation was illegally set up based on a phony and now fully discredited Fake Dossier, lying and forging documents to the FISA Court, and many other things.  Everything having to do with this fraudulent investigation is...

“...badly tainted and, in my opinion, should be thrown out.  Even Mueller’s statement to Congress that he did not see me to become the FBI Director (again), has been proven false.  The whole deal was a total SCAM.  If I wasn’t President, I’d be suing everyone all over the place...

“...BUT MAYBE I STILL WILL. WITCH HUNT!”

“ ‘They say Roger Stone lied to Congress.’ @CNN Oh, I see, but so did Comey (and he also leaked classified information, for which almost everyone, other than Crooked Hillary Clinton, goes to jail for a long time), and so did Andy McCabe, who also lied to the FBI! FAIRNESS?”

“What Mini Mike is doing is nothing less than a large scale illegal campaign contribution.  He is ‘spreading’ money all over the place, only to have recipients of his cash payments, many former opponents, happily joining or supporting his campaign.  Isn’t that called a payoff?....

“....Mini is illegally buying the Democrat Nomination.  They are taking it away from Bernie again.  Mini Mike, Major Party Nominations are not for sale!  Good luck in the debate tomorrow night and remember, no standing on boxes!”

“ ‘I don’t think there’s any chance whatsoever of Senator Sanders defeating President Trump.’  Mini Mike Bloomberg.  Mini, there’s even less chance, especially after watching your debate performance last night, of you winning the Democratic nomination...But I hope you do!”

“Did you hear the latest con job?  President Obama is now trying to take credit for the Economic Boom taking place under the Trump Administration.  He had the WEAKEST recovery since the Great Depression, despite Zero Fed Rates & MASSIVE quantitative easing.  NOW, best jobs numbers....

“....ever.  Had to rebuild military, which was totally depleted.  Fed Rate UP, taxes and regulations WAY DOWN.  If Dems won in 2016, the USA would be in big economic (Depression?) & military trouble right now.  THE BEST IS YET TO COME.  KEEP AMERICA GREAT!”

“ ‘Ralph Waldo Emerson seemed to foresee the lesson of the Senate Impeachment Trial of President Trump.  ‘When you strike at the King,’ Emerson famously said, ‘you must kill him.’  Mr. Trump’s foes struck at him but did not take him down.  A triumphant Mr. Trump emerges from the....

“....biggest test of his presidency emboldened, ready to claim exoneration, and take his case of grievance, persecution and resentment to the campaign trail.’ Peter Baker @nytimes  The Greatest Witch Hunt in American History!”

--Lastly, Thursday, a totally out of control President Trump lashed out after a segment on Fox News’ “Your World with Neil Cavuto,” in which RealClearPolitics associate editor A.B. Stoddard, a veteran political journalist and commentator, compared Mike Bloomberg’s debate performance to “cringe-worthy” moments Trump has had on the debate stage.

“There were many bombs,” Stoddard said.  “I think (Bloomberg’s) uncoachable.  I think that Donald Trump had disastrous debate performances, many answers were so cringe-worthy you just couldn’t believe he was still standing on the stage, and he’s president so I don’t think debates kill off normal candidates who do not have a billionaire juggernaut machine,” Stoddard added.

Trump promptly took to Twitter to attack the commentator, as well as host Cavuto, while taking a swipe at former Speaker Paul Ryan, who is now on the board of Fox News.

“Could somebody at @foxnews please explain to Trump hater A.B. Stoddard (zero talent!) and @TeamCavuto, that I won every one of my debates, from beginning to end. Check the polls taken immediately after the debates. The debates got me elected.  Must be Fox Board Member Paul Ryan!” Trump tweeted.

Cavuto later responded on air to Trump’s tweet.

“He heard A.B. Stoddard and tweeted out this, that she’s a Trump hater and that ‘I won every’ debate the last go around.  You can read that as well as I.  But, just to point out, he did not.  When you look at polls that came out from Fox, NBC, CNN, Politico, YouGov and a host of others, the initial read was that he had failed to do well in those debates.   He ultimately won, but he didn’t poll well in those debates.”

Thursday, at his rally in Colorado Springs, Trump couldn’t let it go, blasting Cavuto and Stoddard all over again for over 15 minutes.

Wall Street

President Trump on Tuesday blasted proposals that could restrict U.S. companies’ ability to supply jet engines and other components to China’s aviation industry and said he had instructed his administration to prevent such moves.

So once again, the president’s intervention showed his desire to prioritize economic benefits over potential competitive pitfalls and national security concerns. And it contrasts with the administration’s treatment of China’s telecom giant, Huawei, as detailed further below, on those very concerns.

Regarding aviation, there were reports over the weekend that the government was considering whether to block General Electric from continuing to supply engines for a new Chinese passenger jet, while the administration is eyeing limits on other components for Chinese commercial aircraft such as flight control systems made by Honeywell.

Central to the possible crackdown on the sale of U.S. parts to China’s aircraft industry is whether shipments could fuel the rise of a serious competitor to U.S.-based Boeing Co. or boost China’s military capabilities.

But Trump tweeted:

“The United States cannot, & will not, become such a difficult place to deal with in terms of foreign countries buying our product, including for the always used National Security excuse, that our companies will be forced to leave in order to remain competitive. We want to sell...

“...product and goods to China and other countries.  That’s what trade is all about.  We don’t want to make it impossible to do business with us. That will only mean that orders will go to someplace else.  As an example, I want China to buy our jet engines, the best in the World....

“....I have seen some of the regulations being circulated, including those being contemplated by Congress, and they are ridiculous.  I want to make it EASY to do business with the United States, not difficult.  Everyone in my Administration is being so instructed, with no excuses....

“....THE UNITED STATES IS OPEN FOR BUSINESS!”

Then today, no doubt concerned that because of the coronavirus outbreak, China would fall short of some of its targets for phase one of the trade deal, and the impact that could have on America’s farmers, a key voting bloc in some swing states, Trump tweeted:

“IF OUR FORMALLY TARGETED FARMERS NEED ADDITIONAL AID UNTIL SUCH TIME AS THE TRADE DEALS WITH CHINA, MEXICO, CANADA AND OTHERS FULLY KICK IN, THAT AID WILL BE PROVIDED BY THE FEDERAL GOVERNMENT, PAID FOR OUT OF THE MASSIVE TARIFF MONEY COMING INTO THE USA!”

It’s being paid for by the American taxpayer, just as past farm subsidies have.

On the data front, producer prices in January came in far hotter than expected, 0.5% on both headline and core (ex-food and energy), with the former up 2.1% year-on-year, 1.7% on the latter.

January housing starts were better than expected at 1.567 million annualized, while January existing-home sales were more or less in line at a 5.46 million pace, with the median sales price at $266,300, up 6.8% from a year ago.

Separately, since day one of this column I have used the ISM PMI readings on manufacturing and the service sector as one of my primary benchmarks for gauging U.S. economic activity, while I rely on the IHS Markit data for Europe and Asia, as I do below.

But IHS Markit does release PMIs for the U.S., which were never used heavily by the Street; that is until recently and today Markit’s flash U.S. composite reading for February of 49.6 showed contraction for the first time since October 2013, with the services figure at 49.4, falling for the first time in four years.  These figures seemed to move the market somewhat today.

Meanwhile, the Atlanta Fed’s GDPNow barometer for the first quarter rose a bit to 2.6% this week.

Eurozone and Asia

We had the release of the flash February PMI data from IHS Markit today and the composite reading for the eurozone (EA19) came in at 51.6 (50 being the dividing line between growth and contraction), 49.1 for manufacturing, which is actually a 12-month high, 52.8 services.

Germany’s flash figures were 51.6 on comp, 47.8 manufacturing (13-mo. high), and 53.3 services.

France’s flash February numbers were 51.9 comp, 49.7 manufacturing, 52.6 services.

The UK had a flash composite of 53.3, ditto services, with manufacturing at 51.9.

Chris Williamson / IHS Markit:

“The eurozone economy managed to pick up some momentum again in February despite many companies having been disrupted in various ways by the coronavirus, which caused supply problems and showed signs of hitting travel and tourism numbers in particular. The flash PMI has climbed to a six-month high, consistent with GDP growing at a quarterly rate approaching 0.2%.

“The expansion is being led by welcome resilience in the service sector but manufacturing is also showing encouraging signs of pulling out of a downturn that has plagued producers for over a year, with new orders falling at the slowest rate since late-2018.

“However, the outlook remains highly uncertain, notably in respect to the potential for further disruptions to supply chains, travel, tourism and demand arising from the coronavirus outbreak. In particular, the widespread delivery delays seen in February bode ill for production in March unless new deliveries can be secured.

“While the February survey data are welcome news in a month in which media headlines have been dominated by fears of economic growth being hit by the Covid-19 outbreak, the full immediate impact may not yet be apparent.”

Regarding this last bit, the Bundesbank said in a regular economic report on Monday that German economic growth will remain weak in the first quarter, weighed down by weak exports and the coronavirus outbreak.  Europe’s largest economy grew by just 0.6% for all of 2019, as its vast manufacturing sector fell into recession.

Separately, Eurostat released final January inflation data, up 1.4% in the euro area, unchanged from a year ago.

Germany 1.6%, France 1.7%, Italy 0.4%, Spain 1.1%, Netherlands 1.7%.

Brexit: So we are now in the transition period, Britain playing by the old rules when it comes to trading with the European Union for all of 2020, but by year end, there needs to be a comprehensive trade agreement with the bloc, or an extension of talks which British Prime Minister Boris Johnson has vowed he would not request.

Meaning as these things go, there is little actual time for negotiating a highly-complex deal, with talks beginning in earnest in March.

So the two sides are staking out their positions, with the EU hardening its stance, demanding fair competition guarantees that would “stand the test of time,” according to a negotiating mandate being passed around the EU’s 27 member states. The stance doubles down on an earlier version on demands that Britain adopt a level-playing field with the bloc on areas from state aid to labor and social standards.

But Boris Johnson has said the UK would never be bound by the bloc’s rules and that this was the whole point of its desire to exit the EU.

Johnson’s Brexit adviser, David Frost, said in Brussels, “To think that we might accept EU supervision on a so-called level playing field simply fails to see the point of what we are doing.  That isn’t a simple negotiating position which might move under pressure, it is the point of the whole project.”

By the end of the year, the two sides need to reach agreement on issues ranging from trade to security to fishing and environmental cooperation. The European Commission negotiates for the EU side, the 27 member states, and by month’s end, the EC will be given its marching orders.

But already, the EC is talking about “the return or restitution of unlawfully removed cultural objects to their countries of origins,” according to a draft document, a jibe at Britain, where the ancient Greek Elgin Marbles are on display at London’s British Museum.  This is how the negotiations could devolve...endless, relatively petty, issues will keep popping up as each member state has different requests.

Boris Johnson wants the same trade deal with the EU as Canada, but the EU’s chief negotiator, Michel Barnier, said that while the EU was ready to offer “an ambitious partnership” with the UK, its “particular proximity” meant it would be different.

First off, the EU’s trade deal with Canada* took seven years to negotiate.

*To oversimplify things, the trade agreement with Canada eliminated most, but not all, tariffs, and set quotas on products that can be exported without extra charges, though it’s more complicated than this.

But as Barnier told reporters this week at the European Parliament, while the EU wants an ambitious partnership, that means:

“A trade agreement that includes in particular fishing and includes a level playing field, with a country that has a very particular proximity – a unique territorial and economic closeness – which is why it can’t be compared to Canada or South Korea or Japan.”

A level playing field, to the EU, would mean that the two would become economic competitors, as well as partners, and level playing field rules are about how fair that competition is going to be.

“Level playing field” isn’t an unusual term in trade deals, but the EU believes it must be strict because the UK is a major economy right on its doorstep – therefore a bigger potential competitor than, say, Canada. 

So that means the EU will want a common set of rules on things like workers’ rights and environmental regulations that businesses have to follow, but, again, Britain is leaving the EU so it could set its own rules on such topics.

Britain’s David Frost says, don’t worry, the UK will have high standards, they just won’t be your standards.

But this means that Britain could gain a competitive advantage, especially on something like adhering to environmental regulations. 

So you can see just what this is going to be all about in the negotiations.  French Foreign Minister Jean-Yves Le Drian predicted the two sides would “rip each other apart” as they strove for advantage in the talks.  Le Driani added: “But that is part of negotiations, everyone will defend their own interests.”

Meanwhile, Britain’s departure from the EU has left the bloc with a 75 billion euro ($81 billion) hole when it comes to the 2021-27 budget, the EU using 7-year budget cycles.  Talks have been contentious in Brussels.

The joint budget is the most tangible expression of the European Union’s priorities, but the 27-member bloc wants to spend more on climate, migration, digitalization and security, while richer net contributors to the budget refuse to pay more, and beneficiaries want to retain the support they receive for farming and development.  Britain was the second-biggest net contributor to the budget after Germany.

The starting point for discussions on the size of the budget is 1.074% of the bloc’s gross national income (GNI).  While this is only a fraction of member states’ national budgets, it is still seen as far too much by some and far too little by others.

“It would be unacceptable to have a Europe that compensates for the departure of the British by reducing its own means,” French President Emmanuel Macron said.

Dutch Prime Minister Mark Rutte, whose country is one of four net contributors that want to limit the overall size of the budget to 1.0% of GNI, said he could not sign up to a budget that allocates one-third for “cohesion funds” to develop poorer regions and another third on support for farmers, especially when farming is but 1% of Euro GDP.

The summit on the budget broke up this afternoon without any resolution.

Turning to Asia...China’s manufacturing base is facing a multitude of unprecedented challenges, as coronavirus containment efforts hamper factories’ efforts to reopen.  And those that do open are facing trucking, shipping and freight services issues as these industries struggle to find workers.  The supply chain impact is massive both in China and across the globe.

For example, 92 percent of the 100 Australian and global businesses surveyed by the Australian Chamber of Commerce last week said the outbreak would have a negative impact on their revenue in the first quarter of this year, with more than half saying it could dent their top-line by more than 20 percent.

Meanwhile, because of the Lunar New Year holiday, China always reports January and February economic data together, to smooth out impacts of the holiday, good and bad. So we’ll get a slew of information in another week or so.  But now we have to throw in the coronavirus, so who the hell knows what the National Bureau of Statistics will be revealing.  Export and import data, as well as figures on industrial production and retail sales should be enlightening, to the extent China wants to be truthful.

We had one small clue of the impact of the outbreak from the China Passenger Car Association, which today said China car sales plunged 92 percent during the first two weeks of February.

We did have a slew of data on Japan’s economy this week, as it’s clear the impact of the October sales tax increase from 8% to 10% has done more of a number on the economy than the government had to have expected.

Fourth-quarter GDP, for example, fell at an annualized rate of 6.3%! the worst in five years.  Consumer spending fell 2.9% and capital expenditures declined 3.7%.

Exports in January fell for a 14th consecutive month, down 2.6% year-over-year, vs. a 6.3% decline in December.  Exports to China were down 6.4% yoy, and down 7.7% to the U.S., largely because auto exports fell 18.8%, due to softening demand for passenger vehicles.

Separately, core machine orders declined 12.5% in January, month-on-month, and now coronavirus will hit demand in February’s figures amid the ripple effects.

Japan also reported its flash PMI readings for February, with composite at 47.0, manufacturing 47.6 and services 46.7.  The services and comp figures were the worst since April 2014.

Lastly, core consumer prices in January rose 0.8%, ex-fresh food and energy.

In South Korea, the Customs Service reported that for the first 20 days of February, exports to China slumped 3.7%, signaling potentially worse to come over the next few months amid the coronavirus outbreak.  South Koea is the first major exporting economy to release data since the start of the epidemic.

But exports to the United States and Vietnam soared 24.2% and 19.8% each, as South Korean goods fast become substitutes for those made in China.  A breakdown of the trade data showed overseas sales of memory chips and car components jumped 15.4% and 40.6% respectively.

Street Bytes

--Stocks fell, after a nice two-week rally, on renewed coronavirus fears and soft economic data, with the Dow Jones losing 1.4% in the holiday-shortened week to 28992.  The S&P 500 and Nasdaq declined 1.3% and 1.6%, respectively, after both hit all-time highs on Wednesday, before the Thursday-Friday swoon.

--U.S. Treasury Yields

6-mo. 1.52%  2-yr. 1.35%  10-yr. 1.47%  30-yr. 1.91%

Bond yields plummeted in response to the above fears, including that the Covid-19 outbreak could hit far more than just China’s economy.

--We learned late today that Wells Fargo & Co. will pay $3 billion to settle investigations by the Justice Department and the Securities and Exchange Commission into its long-running fake-account issues, as new CEO Charles Scharf tries to put all of Wells’ many problems behind it, so the bank can finally move forward into the future.

But while the deal resolves civil and criminal investigations, to avoid criminal charges, the bank will need to satisfy the government’s requirements, including continuing cooperation with further government investigations over the next three years.

And Wells remains under sanction by the Federal Reserve, which has taken steps to cap the bank’s growth.  Scharf no doubt hopes that by settling with DOJ and the SEC, it might allow the bank to focus on persuading the Fed to lift the cap, though in a quick reading of the settlement, it wouldn’t appear this is anytime imminent.

As part of the settlement, Wells Fargo admitted that it “unlawfully misused customers’ sensitive personal information” and harmed some customers’ credit ratings, collecting millions of dollars of fees and interest in the process.

--Apple Inc. said on Monday that it will not meet its revenue guidance for the March quarter due to the coronavirus outbreak affecting both production and demand in China.  Despite the fact its production facilities in China have re-opened, they are ramping up slower than expected.

Apple had forecast $63 billion to $67 billion in revenue for the first quarter, ahead of estimates of $62.4 billion.  But Apple said that supply for its iPhones will be “temporarily constrained” as manufacturing facilities in China are still not operating at full capacity.  Stores disruptions have also affected sales in China, the world’s biggest market for smartphones.

--A State Department official, Robert Strayer, said EU countries have no reason to use 5G mobile technology from Huawei because Sweden’s Ericsson, Finland’s Nokia and South Korea’s Samsung are on par with the Chinese telecom giant.  Strayer said it was “necessary to demystify” the notion that Huawei is more advanced in 5G.

Washington wants its allies to ban Huawei, arguing the use of its ‘kit’ creates the potential for espionage by China, a stance that has sparked tensions with allies such as Britain granting Huawei a limited role in building out their 5G network.

Strayer, who is assistant secretary for cyber, international communications and information policy at State, said, “There is no way to fully mitigate any type of risk except the use of trusted vendors from democratic countries.  The good news is Ericsson, Nokia and Samsung all provide 5G technology that is on par with the one Huawei is providing today.”

Strayer told reporters on a visit to Lisbon that the open architecture employed by Ericsson and Nokia will enable American companies like Dell, Cisco, Juniper and VMWare to provide compatible equipment.

The European Union has said it would allow members to decide what part Huawei can play in building out their networks.

Separately, the Pentagon dropped its opposition to efforts within the Trump administration to make it harder for U.S. chip makers and other companies to supply Huawei from their overseas facilities, as the U.S. steps up its campaign to persuade allies not to use its gear.

Defense Department officials had voiced concerns that cutting off sales to Huawei would deprive U.S. chip makers of vital revenue needed to fund advanced research. The Pentagon itself spends heavily on research to stay on the cutting edge of weaponry and defensive capabilities.

Meanwhile, is 5G overhyped?  Yes...it is...at least thus far.  South Korea is the first to deploy 5G services on a wide basis, launching in April 2019, and consumers are complaining it doesn’t live up to the hype.  Many of the services aren’t much faster than existing 4G networks.  And the fastest are available only in certain dense urban areas due to their signal limitations.

Apple is introducing its first 5G phones this fall, which it is assumed will spur the adoption of the technology, but aside from the fact these iPhones are bound to be very expensive, it’s up to the carriers to build out their 5G networks enough to attract consumers to invest in the phones.

--Walmart posted earnings that fell short of expectations for the fourth quarter of fiscal 2019, with revenue climbing to $141.7 billion from $138.8 billion, driven by its eCommerce and Sam’s Club businesses in the U.S., and strong performance in Mexico, China and India.

But the company forecast slowing online growth for the year that suggested it was losing sales to Amazon.com.  Walmart has been spending heavily to grow its online business and build up the digital capabilities of its stores, through services that help shoppers buy groceries online for pickup in store parking lots.

WMT expects online sales to grow about 30% this year, down from last year’s growth of 37%.  For the holiday quarter, online sales rose 35%, its slowest in nearly two years.

Sales at Walmart’s U.S. stores open at least a year rose 1.9%, excluding fuel, well below analysts’ forecasts of 2.4%.

The company guided lower on earnings for the full year as well, and this doesn’t include any potential financial impact from the coronavirus outbreak.  But the shares barely budged on the news.

--Boeing faced a new potential safety issue for its crisis-hit 737 MAX jetliner as debris has been found in the fuel tanks of several new planes which were in storage, awaiting delivery to airlines.  The head of Boeing’s 737 program told employees that the discovery was “absolutely unacceptable.”  But Boeing did not see the issue further delaying the jet’s return to service.

[Foreign Object Debris is a technical term referring to any debris or article that isn’t part of a plane which would potentially cause damage.]

--GE CEO Larry Culp told an investor conference that the manufacturing giant would burn about $2 billion in cash flow in the first quarter owing to the extended grounding and production halt of the 737 MAX.  The cash flow pressure will likely result in first-quarter earnings lower than last year, Culp said, adding the coronavirus outbreak is “certainly a bit of a wild card for us, like everybody.”  GE has been prioritizing delivery of health-care equipment to hardest hit areas and has donated patient monitors and other equipment.

--Business jet deliveries across the globe hit a decade high in 2019, the General Aviation Manufacturers Association said on Wednesday, helped by strong market demand for new models. Deliveries rose 15% from 703 to 809 jets, the highest level  since 2009, GAMA said in its 2019 year-end aircraft billing report.

Business jet deliveries are being aided by the ramp-up of new models by manufacturers like Bombardier Inc. and General Dynamics Corp unit Gulfstream Aerospace that offer longer ranges.

GAMA said North America accounted for 67.1% of business jet deliveries.

--Airline flight delays rose in 2019, with 79 percent of flights arriving on time, slightly less than 2018, according to the Transportation Department.  An “on time” flight is defined as one that arrives no more than 15 minutes after its scheduled arrival.

As usual, Hawaiian Airlines was the most punctual, with nearly 87.7 percent of flights arriving on time (not a lot of snowstorms and severe weather issues to deal with, you understand), followed by Delta at 83.5 percent.

Frontier was the worst, 73.1 percent, with JetBlue next at 73.5 percent, followed by United with 75.2 percent.

Meanwhile, there were 302 tarmac delays longer than three hours on domestic flights last year, vs. 202 in 2018.

[To cut United some slack, with a major hub in Newark, it’s kind of hopeless.  The airport just sucks, with thunderstorms hundreds of miles away often affecting its flight patterns and delays.]

2.9 million bags were lost, damaged, delayed or stolen out of the more than half a billion bags the major airlines processed last year.

And eleven animals died in transit, vs. more than 400,000 animals transported on airlines.

--Then you have the cruise industry.  The situation with the Diamond Princess in Yokohama, Japan, with over 600 infected from the coronavirus, and now two deaths, is needless to say doing a number on the industry.

All of the cruise lines are cancelling Asian voyages, though this still makes up a fraction of the market for global cruising – the Caribbean and Mediterranean, for example, attracting far more passengers. 

But Asia has been an increasing focus for cruise operators.  According to the Cruise Lines International Association, 28.5 million people took a cruise on one of its members lines in 2018, and approximately 2.5 million of them were from China.

Industry leader Carnival Corp. recently announced it expected to take a hit higher than initially expected as a result of trip cancellations in China and other parts of Asia.  Carnival is suspending all operations in the region through the end of April, at least, with the financial blow amounting to $385 million to $445 million.

Royal Caribbean Cruises, the world’s second-largest cruise operator, said in its update on Feb. 13 that it has had to cancel 18 trips in Southeast Asia and modify several other itineraries, with the changes costing $136 million thus far.  Canceling remaining trips in Asia through the end of April would cost another $115 million.

But the sector is trying to gauge the long-term impact for all cruises, and it’s impossible to determine as the situation is rapidly evolving.

Thursday, for example, Norwegian Cruise Line Holdings announced it was canceling Asia voyages across its three brands through the third quarter.

--General Motors’ decision to pull out of Australia, New Zealand and Thailand as part of a strategy to exit markets that don’t produce adequate returns on investments raised the ire of officials in those three countries concerned over job losses.

GM said it planned to wind down sales, engineering and design operations for its historic Holden brand in Australia and New Zealand in 2021, and it plans to sell its factory in Thailand to China’s Great Wall Motors and withdraw the Chevrolet brand from Thailand by the end of this year.

About 500 workers would lose their jobs in Australia, with GM having 830 employees in Australia and New Zealand, overall, and 1,500 in Thailand.

GM has been struggling in Asia, with its international operations, including China, losing $200 million last year, including $100 million in the fourth quarter.

CEO Mary Barra said the company is making similar moves in Japan, Russia and Europe, where “we don’t have significant scale,” she said.

GM said it will honor all warranties in the markets and continue to provide service and parts.

GM has a long history with the Holden brand in Australia, where cars were designed and sold to the U.S. and other markets, such as the 2008 and 2009 Pontiac G8 muscle car, which was designed and built in Australia.

--Tesla Inc.’s electric cars jumped eight spots to No. 11 in Consumer Reports’ latest auto brand rankings based on road tests, reliability data, owner satisfaction surveys and safety performance.  CR ranked Tesla higher than any U.S. brand and made the Model 3 sedan a top pick for the first time.

Porsche is the number one brand, knocking Subaru out of first place, though two of the Japanese brand’s models were top picks: the Forester SUV and Legacy sedan.

Hyundai Motor Co.’s Genesis luxury brand finished second, unchanged from a year ago.  The Korean brand has been on a roll in several influential surveys, leading J.D. Power’s Initial Quality Study each of the last two years.

Ford Motor’s Lincoln line was the second-best American car brand, placing 13th.  But Ford was 23rd, GM’s Chevrolet and GMC brands 25th and 26th.

Cadillac was 29th, and the Fiat brand again finished last among 33 brands.

--The pace at which people are abandoning traditional pay-TV packages accelerated further last year, as prices continued to rise and consumers gravitated to more affordable streaming options.

Large cable and satellite companies lost about 5.5 million traditional pay-TV customers last year, a decline of about 8%, according to public filings and the Wall Street Journal.

AT&T, led by its DirecTV unit, ended with 3.4 million fewer satellite and fiber-optic TV connections in the U.S.  Dish Network lost more than 500,000 satellite subscribers.

TV package rates have been increasing due to rising yearly programming expenses, which mainly come from sports channels.  I know as an above-average sports viewer, I require them all; ACC, Big Ten, CBS, NBC, FOX, MLB, NFL, YES, and SNY, among other sports networks, let alone ESPN.  That adds up.  [College hoops fans on a typical Saturday are probably catching snippets of games on seven different cable networks, plus FOX and CBS.  That’s kind of staggering to think about.]

--With the above in mind, shares in ViacomCBS cratered 17% on Thursday after the newly merged owner of TV networks like CBS, Showtime, MTV and Nickelodeon reported weaker-than-expected results and failed to wow Wall Street with its plans for launching a video-streaming service.

ViacomCBS CEO Bob Bakish said the company is launching the new service to compete with Netflix, Disney and Amazon.  It would expand on CBS All Access to include shows from Viacom networks, while ViacomCBS rebrands Showtime’s sister network, Showtime Showcase, as an African-American focused service called “SHO*BET.”

In its first earnings report since the merger closed in December, the company posted a fourth-quarter net loss of $273 million.  Revenue fell 3% to $6.87 billion, weighed down by an 11 percent dip in content-licensing revenue.

--Morgan Stanley announced Thursday it was buying discount brokerage E*Trade Financial Corp. in an all-stock deal worth about $13 billion, the biggest deal by a Wall Street bank since the financial crisis.  The move helps Morgan Stanley boost its wealth management unit, which CEO James Gorman has been trying to grow to help it ride out weak periods for trading and investment banking.

E*Trade has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of client assets.

--Asset manager Franklin Resources said on Tuesday it would buy mutual fund company Legg Mason in an all-cash deal valued at $4.5 billion, to create an investing giant with about $1.5 trillion in assets under management.  Franklin’s offer of $50 per share represented a premium of 23% to Legg Mason’s Friday close (the market closed on Monday).  The two expect to realize cost savings of about $200 million annually.

--Europe’s biggest bank, London-based HSBC, reported its net profit fell 53% in 2019 to $6 billion, and the company announced Tuesday it plans a sweeping revamp of its U.S. and European business, including shedding $100 billion in assets to improve its profitability.

So as part of the revamp, HSBC plans to cut 35,000 jobs over the next three years as it struggles to revive a business that has come to depend on China increasingly for growth.

The bank said the coronavirus had caused a “significant disruption” for its staff, suppliers and customers, especially in the Chinese mainland and in Hong Kong.  HSBC said months’ long protests in Hong Kong also weighed on the local economy and caused disruptions to the bank’s business.

--Shares in Deere & Co. rallied strongly Friday on the heels of better than expected earnings in the three months to the beginning of February, reporting a 4% rise in net income when analysts had forecast a decline.  While sales fell 4%, this was less than forecast.

CEO John May said the fiscal first-quarter performance “reflected early signs of stabilization in the U.S. farm sector,” in the wake of the ‘phase one’ trade deal with China.  “Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports.”

--Shares in Domino’s Pizza hit an all-time high Thursday after the company reported fourth-quarter earnings of $129.3 million, which on an adjusted per-share basis handily beat the Street’s expectations.

The pizza chain posted revenue of $1.15 billion in the period, also surpassing forecasts.

Domino’s also said same-store sales at its U.S. restaurants rose 3.4% in the fourth quarter, beating estimates for the first time in over a year, analysts having projected 2.3%.  So a big booster shot for investors as it’s a strong figure and the first sequential quarter-over-quarter rise in U.S. comp sales in almost two years, i.e., headwinds from the competitors may be subsiding.  [Rival Pizza Hut, owned by Yum Brands, recently reported disappointing results.]

Domino’s international same-store sales, up 1.7%, did fall short of analysts forecasts of 2.1%.

--L Brands is selling its majority stake in lingerie brand Victoria’s Secret to a private equity firm, Sycamore Partners, for $1.1 billion; Sycamore gaining a 55% interest in Victoria’s Secret lingerie, Beauty and Pink brands.

When the transaction closes, CEO Leslie Wexner will step down to assume the title chairman emeritus.

--Amazon CEO Jeff Bezos said he will commit $10 billion to fund scientists, activists, nonprofits and other groups fighting to protect the environment and counter the effects of climate change.

“Climate change is the biggest threat to our planet,” Bezos said in an Instagram post.  “I want to work alongside others both to amplify known ways and to explore new ways of fighting the devastating impact of climate change on this planet we all share.”

Bezos Earth Fund will begin issuing grants this summer as part of the initiative.

“It’s going to take collective action from big companies, small companies, nation states, global organizations, and individuals,” Bezos said.

So quickly put your groups together, boys and girls, and apply for a grant!

Meanwhile, if you want the real story on Amazon and its strategy to take over the world, PBS’ “Frontline” has an outstanding documentary on the company that is now available on the PBS site.  Seriously, it’s much watch television. 

--And finally we note the passing of Hair Club for Men founder Sy Sperling, famous for the television commercials in which he proclaimed “I’m not only the Hair Club president but I’m also a client.”  He was 78.

Sperling was a balding New York City swimming pool salesman who was growing frustrated with toupees, so he developed a weaving technique he learned from his hair stylist, perfecting a system where a nylon mesh cap was glued to the scalp.  The client’s remaining hair would grow through it and then hair purchased from women that matched the color was woven into the mesh.

Sperling’s commercials were spoofed on the “Tonight Show” and “Saturday Night Live,” but the ad spots generated 10,000 calls a month.

By 1991, Hair Club for Men had 40 franchises and revenue of $100 million annually.

Foreign Affairs

Syria / Turkey / Russia: Clashes pitting Turkish forces and their Syrian rebel allies against pro-regime forces left 27 fighters dead Thursday, including two Turkish soldiers in the northwestern Syrian province of Idlib, as reported by the Syrian Observatory for Human Rights.

Syrian government and allied forces continue with their devastating offensive, with Russian backing, to flush out the last rebel enclave in the country, with nearly one million people having been displaced, forced to flee their homes and shelters since December, according to the UN.

Turkish President Erdogan is crying for Russia and Syria to honor a ceasefire, while threatening a massive offensive to push Syrian forces back out of Idlib as Turkey cannot deal with any more refugees than the 3.6 million it is already caring for. Those now on the move are sleeping outside by roads and in olive groves, burning trash to stay warm.  Some children have died from the cold.

Russia said a confrontation between Turkish and Syrian forces would be a “worst-case scenario” and Russia would keep working to prevent the situation from worsening, but of course Russia is only making things worse; Syrian troops supported by Russian warplanes and special forces.

Erdogan has said Turkey was determined to make Idlib a secure zone, while several rounds of talks with Moscow have failed to reach an agreement.

Today the UN warned fighting in Idlib could “end in a bloodbath” and it called for a ceasefire, while Moscow denied reports of a mass flight of civilians from the Russian-led Syrian offensive.

Iran: Iranians went to the polls today to vote for a new parliament, with turnout viewed as a key measure of support for Iran’s leadership, the economy weighed down by sanctions and the country isolated diplomatically.

Turnout wasn’t expected to be strong given that the 7,000 potential candidates who were disqualified by election officials were mostly moderates and reformers.

Supreme Leader Ayatollah Ali Khamenei framed the election as a religious duty.

“Anyone who cares about Iran’s national interests should participate in the election,” Khamenei said as he cast his ballot.

Earlier, Khamenei said: “Enemies want to see what the results of the U.S. maximum pressure are.

On the eve of the vote, the Trump administration imposed sanctions on two senior officials of the Guardian Council, including its chief, and three members of its elections supervisory committee.  The U.S. said it was targeting those responsible for silencing the voice of the Iranian people by rejecting the 7,000 candidates.

Meanwhile, Iran now has a potential coronavirus crisis on its hands.

Israel: Yesterday, Prime Minister Benjamin Netanyahu announced plans to build thousands of new housing units in contested East Jerusalem, which critics say dooms any prospect of a deal with the Palestinians.

While it will be years before any of the 6,200 units are built, the announcement came just 11 days before a national election and was widely seen as an effort by Netanyahu to solidify support among his right-wing base.

East Jerusalem was captured by Israel from Jordan in the 1967 war and has long been demanded by Palestinians as the capital of a future state.  Israel annexed the area as part of its capital, a move endorsed by President Trump as part of his peace plan, but panned by most countries.

Construction in the proposed area would choke off the last open area connecting East Jerusalem with the Palestinian city of Bethlehem and the southern West Bank.

Separately, it was announced that Netanyahu’s corruption trial will begin March 17, two weeks after the election, the attorney general not wanting proceedings to influence the vote.

Once again neither Netanyahu nor his rival Benny Gantz have a clear path to a parliamentary majority, after two elections in 2019 failed to yield a conclusive result.

Afghanistan: The United States and the Taliban will begin a seven-day “reduction in violence” on Saturday, “an important step on a long road to peace,” Secretary of State Mike Pompeo said today.  If successful, the two sides will then sign the first phase of a deal aimed at ending nearly two decades of conflict next Sat., Feb. 29.

The Afghan government was not part of the negotiations, as it deals with another dispute over the country’s presidential elections.  Incumbent Ashraf Ghani was declared the winner the other day, but his main rival rejected the result and vowed to form his own government, raising the threat of new turmoil amid hopes for the U.S. peace deal with the Taliban.  Polls were held on Sept. 28 to select a president for the fourth time since U.S.-led forces overthrew the Taliban government in 2001.

According to the Independent Election Commission, Ghani won 50.64%, with his main rival, Abdullah Abdullah at 39.52%.  Abdullah and his allies said he won the election and would form the government.

Libya: The internationally recognized leader of Libya dashed hopes of quickly reviving UN ceasefire negotiations after his side withdrew, saying talk of them resuming had been overtaken by events as the eastern force, the Libyan National Army of Khalifa Haftar, continues to shell the capital.  Haftar also ruled out a truce.

Nearly nine years after rebel fighters backed by NATO air strikes overthrew dictator Muammar Gaddafi, Libya still has no central authority, with the streets controlled by armed factions, with rival governments based in Tripoli and the east.

China: Under fire for its response to the coronavirus crisis, the Chinese government is pushing a new account of events that presents President Xi Jinping as taking early action to fight the outbreak.

But in doing so, the government is acknowledging Xi knew a lot more early on before the public became aware of the scope of the epidemic, and while authorities in the city of Wuhan were playing down the dangers.

In an internal speech published last Saturday, Xi said he had “issued directives about the efforts to prevent and control” the coronavirus on Jan. 7, during a meeting of the Politburo Standing Committee.  But as one expert, Jude Blanchette, told the New York Times, “It seems like (Xi) is trying to indicate that ‘we weren’t asleep at the wheel, but it comes off like ‘we knew this was a problem, but we weren’t sounding the alarm.’”

Xi didn’t utter his first public remarks about the epidemic until Jan. 20, but even on the day before the Lunar New Year holiday began in late January, in a speech at the Great Hall of the People in Beijing, talking of his success in guiding China through a difficult year, Xi made no mention of the virus that was already spreading fear throughout the country.  As he spoke, Wuhan, a city of 11 million, was going into a lockdown.

China’s annual parliamentary meeting, that was scheduled for early March, has been postponed, with a key meeting of the standing committee of the National People’s Congress apparently meeting this weekend to discuss the crisis.

The annual meeting is where China lays out its economic forecast for the year.  But one third of the national legislators are also local government officials who are currently working to stop Covid-19 from spreading.

Separately, the head of a leading hospital in Wuhan, the epicenter of the outbreak, died of the disease on Tuesday.

Editorial / Washington Post

“The early phase of the coronavirus outbreak in China remains an important and still poorly understood lacuna.  Prompt, early action could have saved lives and averted enormous disruption.  Instead, the Chinese people were exposed to danger in the first weeks of the epidemic when their officials failed to sound the alarm, even though they knew something was afoot.

“Not all the details of decision-making in the secretive Chinese system have yet come to light.  But a key disclosure was made Feb. 15 in the Communist Party bimonthly journal, Qiushi, which reprinted the text of a speech that President Xi Jinping gave Feb. 3, according to the newsletter Sinocism.  In the speech, Mr. Xi declared, ‘I issued demands during a Politburo Standing Committee meeting on January 7 for work to contain the outbreak.’  Thus, he knew of the outbreak by that day, and quite possibly days beforehand.

“This is important because at that moment, the information was largely withheld from the public.  As we noted earlier, according to a detailed insider account published by the China Media Project, on Dec. 30 the Wuhan Health Commission ‘issued an order to hospitals, clinics and other healthcare units strictly prohibiting the release of any information about treatment of this new disease.’  The account says that while Chinese officials informed the World Health Organization of a new coronavirus outbreak, ‘they did not inform their own people, but instead maintained strict secrecy.’

“Likewise, eight Chinese doctors expressed concern in Wuhan in December and were reprimanded for spreading rumors.  One of them, Li Wenliang, who died recently of the coronavirus, was warned by the police after sharing concerns about seven new cases in an online group chat on Dec. 30.  Without knowing of the alarming developments about the virus, in those first weeks of January a ‘Spring Festival’ was being planned for 40,000 people in a residential community in Wuhan.  Also, annual provincial and city political meetings were held in Wuhan from Jan. 12 to 17.   In that period, a city health commission issued public statements that no new cases were detected.  And a delegation of Chinese officials was in Washington, to sign a ‘phase one’ trade deal with President Trump on Jan. 15.

“Mr. Xi issued instructions for dealing with the outbreak Jan. 20, nearly two weeks after he spoke about it to the Politburo.  Why only then?  What did he know, and when did he know it?  Did he hope to avoid upsetting the Washington trade event?  And why reveal his Jan. 7 intervention now?  To make himself look like the wise captain of the ship, so that lower-level officials can be punished?

“China has an immense challenge coping with the outbreak.  Its success or failure will affect the whole world.  It has now mounted an enormous containment effort.  But these early weeks of the epidemic reveal the hazards of an authoritarian system that hides the truth from its own people.”

On a different item, on Wednesday, China said it had revoked the press credentials of three Wall Street Journal reporters over a headline for an opinion column deemed by the government to be racist and slanderous.

The move follows a complaint over the headline, which referred to the current virus outbreak in China and called the country the “Real Sick Man of Asia.”

In a statement Wednesday, Foreign Ministry spokesman Geng Shuang said the Feb. 3 op-ed by Bard College Professor Walter Russell Mead “smears the efforts of the Chinese government and people on fighting (the virus) epidemic.”

“The editors used such a racially discriminatory title, triggering indignation and condemnation among the Chinese people and the international community,” he said.

President Xi has repeatedly stated that China will make no concessions when it comes to national territory, sovereignty or dignity.  Donald Trump calls Xi “a great friend.”

Editorial / Wall Street Journal

“President Xi Jinping says China deserves to be treated as a great power, but on Wednesday his country expelled three Wall Street Journal reporters over a headline.  Yes, a headline.  Or at least that was the official justification.  The truth is that Beijing’s rulers are punishing our reporters so they can change the subject from the Chinese public’s anger about the government’s management of the coronavirus scourge.

“ ‘China is the Real Sick Man of Asia’ was the headline over Walter Russell Mead’s Feb. 3 column in the Journal.  Mr. Mead, a fellow at the Hudson Institute, writes a weekly column on foreign affairs for us.  He did not write the headline.  Anyone who reads the piece can see it describes the problems in Chinese governance exposed by the response to the coronavirus outbreak.  Beijing has since sacked Wuhan province officials, proving Mr. Mead’s point.

“As for that headline, we have heard from thoughtful people that to Chinese ears the ‘sick man’ reference echoes in insensitive fashion the West’s exploitation of China in the mid-19th century during the opium wars.  Others say it refers to Japan’s 20th-century invasion of China.  We take the point, and we were happy to run letters to the editor criticizing the headline.

“Most Americans, however, understand the phrase in the context of the dying Ottoman Empire as ‘the sick man of Europe.’  That was our historical analogy.  These days the ‘sick man’ phrase is used to describe many countries, most notably the Philippines as the sick man of Asia.  The Financial Times, the Economist and the Guardian all referred to Britain as ‘the sick man of Europe’ in the throes of Brexit.

“The Global Times, a publication that expresses Chinese government views, republished a Reuters article in 2016 whose lead sentence referred to Egypt as the ‘sick man of the Middle East.’  In 2011 Foreign Affairs used the headline ‘The Sick Man of Asia: China’s Health Crisis’ over an article by Yanzhong Huang, a professor who grew up in China and graduated from Fudan University.

“In any event, Mr. Mead’s column and headline were never published in China.  That’s because the Journal is banned there.  Our website has been shut down since 2014.  Our reporters can cover China for the rest of the world but not for Chinese readers.

“That didn’t stop the Chinese government from starting a public campaign against the headline.  A Foreign Ministry spokesman denounced the column, and several Chinese propaganda organs spread the same theme.  ‘Racism worse enemy than epidemic,’ read a headline in Xinhua lumping Mr. Mead’s article with one from Der Spiegel.

“Our email inbox was soon flooded with complaints about the headline, all containing remarkably similar language and demanding an apology.  A campaign was orchestrated to get Mr. Mead barred from Twitter.  If you think this was spontaneous outrage, you don’t understand how China’s government works to influence public opinion at home and abroad.  Beijing knows how to exploit America’s identity politics to charge ‘racism’ in service of its censorship.

“And now China has escalated to ban our three reporters, who had nothing to do with the headline or Mr. Mead’s column.  As our readers know, and as we have explained to Chinese officials for years, our news and opinion departments are run independently and have separate reporting lines to the publisher.

“The Chinese understand this but choose to ignore it when it suits their propaganda purposes.  In August they refused to renew the press credentials of a Journal reporter who wrote about the business interests of Mr. Xi’s cousin in Australia.  This week the excuse for expulsion is an opinion headline.  Soon enough it might be a news story about China’s internment camps for Uighurs in Xinjiang or an editorial about Hong Kong.

“What Chinese officials don’t understand is that a free press would have helped them better cope with the virus fallout.  Democracies are resilient because a free media sends signals and information that allows an outlet for grievances and alert leaders to problems before they become crises.

“The Chinese also don’t seem to understand that their bullying reduces the shrinking number of allies they still have in the U.S.  These columns have supported China’s overall trading relationship with the U.S. even as we criticize some of its trading practices.  In the days before Mr. Mead’s column, we ran an editorial (‘Wuhan Wilbur Ross’) criticizing the U.S. Commerce Secretary for saying the coronavirus would be an economic benefit for the U.S.  Mr. Ross’s point of view will find more American support the more China steals American secrets and banishes reporters.

“China’s expulsions are so extreme that they surely have more to do with its domestic politics than American opinion.  Perhaps they are also in part a response to the State Department’s decision Tuesday to identify the U.S. operations of state-run Chinese media as foreign missions, which subjects them to the same restrictions as embassies.

“The coronavirus is a seismic political event that undermines Mr. Xi’s promise to his citizens about a rising China and the competence of the Communist Party.  The government’s default defense is to play the nationalist card and blame foreigners for its home-grown troubles.  That’s why it censors public complaints on Chinese social media, gins up a furor over a headline – and banishes the best reporters in the world from covering China.”

With all the above in mind, a senior Trump administration official warned on Thursday that the United States must prepare for a possible military conflict with China by developing new weapons and strengthening ties with allies.

“The stakes of the challenge of conflict with China, in other words, are formidable,” said Chad Sbragia, deputy assistant secretary of defense for China.  “This is a long-term process.  We have to be agile, smart.”

The People’s Liberation Army is an increasingly formidable adversary that is marrying long-standing ambition with unprecedented new resources, Sbragia told the U.S.-China Economic and Security Review Commission.

But the idea of strengthening ties with allies took a big hit recently when Manila announced it would end the Philippines-U.S. Visiting Forces Agreement.

Germany: A gunman opened fire on two shisha (hookah) bars in the western German city of Hanau, killing nine and injuring several others, before killing himself.

In both places targeted on Wednesday night the victims were reported to have been predominantly Kurdish.

Federal prosecutors are treating the attack as terrorism, the gunman a far-right extremist.  Germany has long talked about a rise in far-right attacks and it needs to be addressed in the harshest terms.

Russia / Ukraine: A huge cyberattack which knocked out more than 2,000 websites in the country of Georgia last year was carried out by Russia, according to Georgia, the U.S. and UK.

The UK government says that the GRU (Russian military intelligence) was behind the “attempt to undermine Georgia’s sovereignty.”

Foreign Secretary Dominic Raab described it as “totally unacceptable.”

Russia’s Foreign Ministry denied any involvement, the RIA news agency said.

Meanwhile, fighting flared up again in eastern Ukraine, a Ukrainian soldier killed, four others injured on Tuesday, as fighting erupted between Ukrainian and Russian-backed separatists, each blaming the other for the flare-up.

At a Paris summit in December, the two sides tried to implement a peace deal.

Ukrainian President Volodymyr Zelensky said: “This is not just a cynical provocation...it is an attempt to disrupt the peace process in the Donbass.”

On a different topic, at last weekend’s annual Munich Security Conference, German President Frank-Walter Steinmeier deplored the three big powers’ approach to global affairs and, without naming Donald Trump, took issue with his vow to “make America great again.”  “ ‘Great again’ - even at the expense of neighbors and partners,” quipped Steinmeier, a former foreign minister whose comments on foreign policy carry authority.

“Russia...has made military force and the violent shifting of borders on the European continent the means of politics once again...

“China...accepts international law only selectively when it does not run counter to its own interests,” Steinmeier said.  “And our closest ally, the United States of America, under the present administration itself, rejects the idea of an international community.” The upshot is “more mistrust, more armament, less security...all the way to a new nuclear arms race.”

The next day, Secretary of State Mike Pompeo defended the United States’ global role despite misgivings in Europe, vowing that Western values would prevail over Russian and Chinese desires for “empire.”

“I’m happy to report that the death of the transatlantic alliance is grossly exaggerated.  The West is winning, and we’re winning together,” he said.

But French President Emmanuel Macron told the conference he was not surprised by Steinmeier’s speech and had liked it.

“We cannot be the United States’ junior partner,” Macron said, adding that while he supported NATO, Europe needed to be able to tackle threats in its neighborhood and at times act independently of Washington.

Macron said the West’s policy of defiance toward Russia in recent years had failed and, as nobody wanted to confront Moscow directly, the only option was to have a closer dialogue to resolve differences.

“I heard the defiance of all our partners, I’m not mad, but I know that being defiant and weak...is not a policy, it’s a completely inefficient system,” Macron said.

“There is a second choice, which is to be demanding and restart a strategic dialogue because today we talk less and less, conflicts multiply and we aren’t able to resolve them,” he added.

U.S. Defense Secretary Mark Esper warned that Beijing is moving further outside the international order and that allies using Chinese technology (i.e., Huawei) risk undermining NATO.

Under the leadership of Xi Jinping, China “is heading even faster and further in the wrong direction – more internal repression, more predatory economic practices, more heavy-handedness, and, most concerning for me, a more aggressive military posture,” Esper told the conference.

Chinese Foreign Minister Wang Yi, also at the security conference, dismissed U.S. criticism of his country as “lies”, specifically criticizing Pompeo’s description of China’s desire for “empire.”

“All these accusations against China are lies, not based on facts,” said Wang.  “But if we replace the subject of the lie from China to America, maybe those lies become facts.”

Wang added: “China’s drive toward modernization is an inevitable trend of history and will not be held back by any force.”

India: President Trump is traveling to India for a two-day photo op with Prime Minister Narendra Modi, Modi promising millions will be showing up to line the streets for their motorcade.

But the two sides are at loggerheads over trade and other issues, including India’s recent purchase of a Russian missile shield system.

Random Musings

--Presidential tracking polls....

Gallup:  49% approve of Trump’s job performance, 48% disapprove (lowest since the inauguration when it was 47%); 93% of Republicans approve, 43% of independents (new high...Feb. 3-16).
Rasmussen:  49% approve, 49% disapprove (Feb. 21).

In a new Washington Post/ABC News poll, Trump’s approval rating stood at 43%, 53% disapproving.  [52% approve of his handling of the economy, 40% disapprove.  Last month 56% approved.]

A new Wall Street Journal/NBC News poll has Trump’s job approval at 47%, with 50% disapproving.  Approval among independents hit a record 51%.  Hugely significant.  [53% approve of how Trump is handling the economy in this survey.]

--In the Washington Post/ABC News national poll, Bernie Sanders had 32% of Democrats and Democratic-leaning registered voters, an increase of nine points since January.

Joe Biden, who was at 32% in January, fell to 16%.  Mike Bloomberg had 14%, Elizabeth Warren 12%, Pete Buttigieg 8% (despite his strong showings in Iowa and New Hampshire), and Amy Klobuchar 7%.

By a 58 to 38 margin, Democrats say they would rather nominate a candidate who can defeat President Trump than one who agrees with them on major issues.

The WSJ/NBC survey had Sanders at 27% nationally among primary voters, with Biden at 15%, followed by 14% for Warren and Bloomberg, Buttigieg 13% and Klobuchar 7%.

And then in a national poll from NPR/PBS NewsHour/Marist released Tuesday, Sanders had 31%, but Bloomberg polled 19%, which was the clinching poll that got him into Wednesday’s debate.  Biden was at 15%, Warren 12%, Klobuchar 9% and Buttigieg 8%.

--In a Monmouth University poll of key Super Tuesday state Virginia, among voters there who are likely to participate in the Democratic primary, 22% select Bloomberg, 22% Sanders and 18% Biden.  Buttigieg is at 11%, Klobuchar 9%, Warren 5%.

Virginia does not have party registration and any voter may participate in the primary.  [Among those who identify themselves as Democrats, it’s Sanders 22%, Biden 21% and Bloomberg 20%.]

--In a Monmouth poll of likely California Super Tuesday primary voters, Sanders is at 24%, followed by 17% for Biden and 13% for Bloomberg.  Warren receives 10%, Buttigieg 9% and Klobuchar just 4%, with Tom Steyer at 5%.

--A new Quinnipiac University swing state poll of Wisconsin, Pennsylvania and Michigan broke down head-to-head potential matchups, which at this stage I think are meaningless, but for the record, it also broke down Trump’s approval rating in the three states, which is more meaningful in terms of looking at trends going forward.

Trump scores his highest approval rating among voters in Wisconsin, 51-46 percent.  But in both Michigan and Pennsylvania, his job approval is underwater; 54-42 disapproval in Michigan, 52-44 in Pennsylvania.

The president gets high marks for his handling of the economy, though, in all three.

Wisconsin voters approve 59-38, Pennsylvania voters 57-41, and Michigan voters 52-44.

--And then we had Wednesday’s highly-anticipated Democratic debate in Las Vegas, a terrifically entertaining show that smashed a ratings record, drawing a combined 19.7 million between NBC and MSNBC; the most watched in the history of Democratic presidential primary debates.

There is no doubt that the addition of newcomer Michael Bloomberg generated increased interest, but then as Bloomberg said the day after, “The real winner last night was Donald Trump.”  Trump tweeted, “Mini Mike Bloomberg.  I agree!”

Bloomberg was pathetic.  He didn’t defend his solid record as mayor.  He didn’t have ready defenses for the obvious...the questions on stop-and-frisk, and allegations of sexual harassment at Bloomberg LP.  When Bernie Sanders said at one point that Bloomberg should have shared the wealth with his workers, astonishingly, Bloomberg didn’t fight back and say he sure has.  There is no one starving at the company he built.  His employees work hard, and are paid well, with I’m sure very good benefits (including healthcare).

The former mayor also didn’t work in that he has extensive foreign policy experience through his 12 years as one of America’s most powerful public officials.

And he didn’t touch on his plans for income inequality, which is what has garnered him the support thus far of at least four members of the Congressional Black Caucus and countless other public officials.

Nor did he say more than a line or two on his philanthropic activities, nor on what should have been a topic in Vegas, his efforts on gun control.  About the only thing he elucidated on was a few lines on his climate agenda.

The guy just wasn’t prepared in the least, which is inexcusable. 

John Podhoretz / New York Post

“Forget Lincoln and Douglas.  Forget Nixon and Kennedy.  Hell, forget the Athenians and the Melians back during the Peloponnesian War.  Last night’s Democratic primary slagfest (sic) in Nevada was the greatest debate in all of human history.

“Oh, was it glorious – the sheer raging hostility spraying across the stage as every campaign besides the Bernie Sanders and Michael Bloomberg bids face the desperate possibility each might fade into the woodwork against the Bernie surge and the Bloomberg billions.

“It’s not that the gloves were off.  No, my friends, everybody was wearing steel-tipped boots and going right for the crotch. Those weren’t snowflakes.  They were nunchucks.

“Some priceless highlights:

“Pete Buttigieg wagging his finger at Amy Klobuchar after she said she’d made an error by forgetting the name of the president of Mexico in an interview.

“Klobuchar wheeling on Buttigieg and demanding to know if he was trying to say she was dumb.  ‘Are you mocking me here, Pete?’

“Joe Biden saying he’s the only one on stage who has met all kinds of Mexican presidents – whose names he clearly couldn’t remember.

“Bloomberg saying he was too rich to release his returns because he can’t do Turbo Tax like all of you losers.

“Sanders fuming that Bloomberg would dare mention he has a summer house.

“And then there was Elizabeth Warren, desperately trying to get back in the game and spraying fire at everyone else on stage like Machine Gun Kelly.  She spared no one, and by the end she had yelled herself hoarse and seemed like she needed an oxygen tank.

“Warren’s signature moment came at the very beginning, when she went right for the jugular.

“ ‘I’d like to talk about who we’re running against – a billionaire who calls women fat broads and horse-faced lesbians,’ Warren said.  ‘No, I’m not talking about Donald Trump.  I’m talking about Mayor Bloomberg.’

“So how was Bloomberg?  At the midpoint, it seemed like he had just spent the past three months lighting half a billion dollars on fire, given just how disastrously he had performed.

“Everybody took a turn beating him up, and his responses were painfully clueless – especially when he said that his company struck non-disclosure agreements with ex-employees at his company to protect them.

“He apologized unconvincingly for stop-and-frisk and when he was asked a second time to explain himself, he got huffy and basically said, hey, he’d already apologized!

“In that first hour, Bloomberg wasn’t just a Not Ready for Prime Time Debater.  He was Mr. Monopoly stripped naked on the Community Chest card.

“He staged a bit of a comeback in the second half when he got an opening to face off against Bernie Sanders and offer the stark rationale for his own campaign.

“After listening to Sanders offer a passionate defense of his democratic socialism, Bloomberg said, ‘I can’t think of a better way to elect Donald Trump than for people to listen to this conversation.’

“The thing is, even if the entire night had been the epic disaster the first hour suggested it would be, Bloomberg isn’t going anywhere – and he is likely only to increase his insane level of spending to do what he can to erase memories of his performance.”

And we had the battle between Buttigieg and Klobuchar.  As John Podhoretz wrote: “Her loathing for him...was so palpable it’s lucky she didn’t have a stapler or something on her podium she might have launched at his head.

“Klobuchar wouldn’t do that, of course, because she’s actually disciplined and controlled and rose to the occasion with a second great performance – that may not do anything for her.”

So we await Nevada’s results, and the 10-day mad dash to Super Tuesday, the candidates seeking final momentum in South Carolina days before, with another debate there next week.

Bloomberg will be back on stage, and I’m guessing the ratings will again be strong as we watch to see if he can stage a comeback. 

On the nondisclosure agreement issue, late today, Bloomberg offered to release three women from their NDAs related to comments he allegedly made, but Elizabeth Warren said tonight, “That’s just not good enough.”  Warren demands Bloomberg do a blanket release “so that all women who have been muzzled by non-disclosure agreements can step up and tell their side of the story in terms of what Michael Bloomberg has done.”

To be continued in South Carolina....

--Prince Harry and Meghan Markle will not get to use the world “royal” as part of their brand.  The two had hoped to leverage “Sussex Royal” into not just a new website but a “global trademark for a range of items and activities, including clothing, stationery, books and teaching materials” and a new charitable organization with the name.

But it seems the Queen has had enough and she has stepped in to prevent the use of “royal.”  Good for her.  I must say, I am sick of these two.  So here’s my prediction.  Harry will be crawling back to the Royal Family in two years, after he separates from Meghan. 

--The Boy Scouts of America filed for Chapter 11 bankruptcy protection in an effort to keep operating while thousands of claims of sexual abuse by former members against the national youth group are litigated.

Roger Mosby, the Boy Scouts’ president and chief executive officer, said in a statement Tuesday:

“The BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in Scouting.  We are outraged that there have been times when individuals took advantage of our programs to harm innocent children.

“While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process – with the proposed Trust structure – will provide equitable compensation to all victims while maintaining the BSA’s important mission.”

I was a Boy Scout a few years and enjoyed my experience, even if I didn’t get above Second Class.

--Finally, two good news stories.

First, the stunning recovery of race driver Ryan Newman from his horrific crash in Monday’s rain-delayed Daytona 500, as he walked out of a local hospital with his two daughters, just two days later.  Watching it Monday night, I, like everyone else who saw it thought there was no way Newman had survived.  To then see him walking, no visible scars, was a true miracle.

And then we had the news from the sub-Antarctic island of South Georgia, owned by Britain, where scientists have discovered a collection of blue whales, 55, after a 23-day survey – a total that is unprecedented in the decades since commercial whaling ended.

South Georgia was the epicenter for hunting in the early 20th century.

Specialist Dr. Trevor Branch of the University of Washington, Seattle, told the BBC: “To think that in a period of 40 or 50 years, I only had records for two sightings of blue whales around South Georgia.  Since 2007, there have been maybe a couple more isolated sightings.  So to go from basically nothing to 55 in one year is astonishing.”

We quaff a beer to both developments.

---

Gold $1646...7-year high!
Oil $53.33

Returns for the week 2/17-2/21

Dow Jones –1.4%  [28992]
S&P 500  -1.3%  [3337]
S&P MidCap  -0.6%
Russell 2000  -1.5%
Nasdaq -1.6%  [9576]

Returns for the period 1/1/20-2/21/20

Dow Jones  +1.6%
S&P 500  +3.3%
S&P MidCap  +1.0%
Russell 2000  +0.6%
Nasdaq  +6.7%

Bulls 52.9
Bears 19.2...same split as last week owing to holiday.

Have a great week.

Brian Trumbore