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02/28/2015

For the week 2/23-2/27

[Posted 11:00 PM ET, Friday]

Edition 829

Note: A lot happened late Friday and I can’t begin to do it all justice. But in a few instances I try.

Washington and Wall Street

There really hasn’t been the need for a lot of in-depth commentary on the U.S. economy and markets these days. The former is growing, albeit back in a 2% mode, while the latter, as represented by equities, keeps hitting new highs, with Nasdaq approaching one of its own after 15 years, owing to respectable corporate earnings, the continuing zero interest rate environment, and a relatively calm period in global financial markets, including the avoidance, at least for a few more weeks if not months, of any renewal of the eurozone crisis after an interim settlement over the Greek bailout.

As I’ve noted ad nauseam, while the news from the Middle East is unbelievably depressing these days, and threatens to get worse, thus far it’s not the kind of story that will move the markets in any big way.....yet. Ditto Ukraine, another truly sickening tragedy.

But both of these situations can worsen further at the blink of an eye and it’s why investors should always be asking, ‘What can possibly go wrong to upset my portfolio?’ 

For now, on Friday we had the first revision to fourth quarter GDP and it was revised downwards from an initial reading of 2.6% to 2.2%, though consumption was up a strong 4.2%. So the last four quarters now look like this.

2014

Q1 -2.1%
Q2 4.6%
Q3 5.0%
Q4 2.2%

While the harsh winter some of us have experienced could impact the economic data for the current quarter, the awful weather has not been nearly as widespread as it was last year. No -2.1% performances are in the offing. 

We did have some news on the housing front this week and it was so-so. Existing home sales for January came in less than expected, an annualized pace of 4.82 million, while new home sales were slightly better than forecast, 481,000, though this was also flat from December and well below the 30-year average of 700,000 (ann.). The S&P/Case-Shiller home price index for December was up 4.6% year on year, up 4.5% for the 20-city index, though to a level that is still down 17% from the mid-2006 peak.

Durable goods for January, up 2.8%, were better than expected, including for a core reading, stripping out the volatile components. A Chicago purchasing managers reading for February, however, came in at a disastrous 45.8, like over 12 points worse than expected, but there were some anomalies in the data. [We’ll see this coming week what the national ISM manufacturing index reveals.]

And the consumer price index for January came in down 0.7% (owing to falling gas prices), up 0.2% ex-food and energy; though year on year the former is up 0.7%, the latter up 1.6%, so not anything the Federal Reserve has to worry about.

Speaking of the Fed, Chair Janet Yellen gave her semi-annual testimony to Congress on the performance of the economy and the rate outlook.

“The employment situation in the United States has been improving on many dimensions,” and if the economy keeps improving, the central bank “will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.”

So, yes, sports fans, rates will finally be going up. But with regards to recent Fed language that it will be “patient” before deciding when to raise rates, Yellen said: “It is important to emphasize that a modification of the forward guidance should not be read as indicating that the [Fed] will necessarily increase the target rate in a couple of meetings.”

Yellen noted that once the language was modified, that only puts the topic of rate increases on the table and doesn’t necessarily mean it’s imminent.

“The modification should be understood as reflecting the [Fed’s] judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting.”

Yellen said one determinant will be inflation and the central bank’s 2% objective and it’s not likely the Fed will raise rates unless we are at or closer to this target.

“Provided that labor market conditions continue to improve and further improvement is expected, the [Fed] anticipates it will be appropriate to raise the target range of the federal funds rate when, on the basis of incoming data, [it] is reasonably confident that inflation will move back over the medium term toward our 2% objective,” she said. [Wall Street Journal]

Yellen also highlighted that the Fed will continue to monitor developments overseas before acting; items such as China’s growth rate, as well as the situation in Europe and the pace of its recovery. Oil prices could be a big stimulant should they remain at current low levels.

The next Fed meeting is March 17-18 and if the data before then remains solid, such as next Friday’s employment report, the Fed may very well remove the word “patient” and begin to prep the markets further as to a June hike, or a meeting or two after.

Just a word on oil. The price fell back below $50 on West Texas Intermediate (light) crude, $49.76, as inventories remain at 80-year highs, while U.S. production, 9.29 million barrels per day, continues at its highest level since 1972, according to the Energy Information Agency, though production has leveled off and could finally dip a bit. That said it’s going to be a long time for the inventory picture to improve, at least for the bulls in the sector.

Lastly, there is an event in Washington this week that is rather important, even if it is unlikely to move the markets, that being Israeli Prime Minister Benjamin Netanyahu’s address to a joint session of Congress, Tuesday, on the topic of the dangers of Iran’s nuclear program and a possible deal on same.

While Republicans will be most welcoming, it’s a tension convention down at 1600 Pennsylvania Avenue as the White House condemned Netanyahu’s appearance, with National Security Adviser Susan Rice describing it as “destructive” and damaging to the bipartisan support Israel has enjoyed in the U.S.

Must see television, as otherwise the Obama administration continues to be in a seeming state of denial regarding the terror threat that is sweeping large parts of the Middle East.

As Peggy Noonan noted in the Wall Street Journal the other day, all the White House needs to do to understand the threat from ISIS, for one, is read Graeme Wood’s essay in the March edition of The Atlantic, “What ISIS Really Wants.”

“Great essays tell big truths. A deeply reported piece in next month’s Atlantic magazine does precisely that, and in a way devastating to the Obama administration’s thinking on ISIS,” writes Noonan.

“Mr. Wood’s piece is bracing because it is fearless – he is apparently not afraid of being called a bigot or an Islamophobe. It is important because it gives people, especially political leaders, information they need to understand a phenomenon that may urgently shape U.S. foreign policy for the next 10 years.

“In sorry contrast, of course, are the Obama administration’s willful delusions and dodges. They reached their height this week [Ed. the week prior] when State Department spokesman Marie Harf talked on MSNBC of the ‘root causes’ that drive jihadists, such as ‘lack of opportunity for jobs.’ She later went on CNN to explain: ‘Where there’s a lack of governance, you’ve had young men attracted to this terrorist cause where there aren’t other opportunities...So how do you get at those root causes?’ She admitted her view ‘might be too nuanced of an argument for some.’

“Yes, it might.

“It isn’t about getting a job. They have a job: waging jihad.”

I finally got around to reading Mr. Wood’s piece myself and, yes, it is highly recommended. Here is just a snippet.

“In September, Sheikh Abu Muhammad al-Adnani, the Islamic State’s chief spokesman, called on Muslims in Western countries such as France and Canada to find an infidel and ‘smash his head with a rock,’ poison him, run him over with a car, or ‘destroy his crops.’ To Western ears, the biblical-sounding punishments – the stoning and crop destruction – juxtaposed strangely with his more modern-sounding call to vehicular homicide. (As if to show that he could terrorize by imagery alone, Adnani also refereed to Secretary of State John Kerry as an ‘uncircumcised geezer.’)

“But Adnani was not merely talking trash. His speech was laced with theological and legal discussion, and his exhortation to attack crops directly echoed orders from Muhammad to leave well water and crops alone – unless the armies of Islam were in a defensive position, in which case Muslims in the lands of kuffar, or infidels, should be unmerciful, and poison away.

“The reality is that the Islamic State is Islamic. Very Islamic. Yes, it has attracted psychopaths and adventure seekers, drawn largely from the disaffected populations of the Middle East and Europe. But the religion preached by its most ardent followers derives from coherent and even learned interpretations of Islam.

“Virtually every major decision and law promulgated by the Islamic State adheres to what it calls, in its press and pronouncements, and on its billboards, license plates, stationery, and coins, ‘the Prophetic methodology,’ which means following the prophecy and example of Muhammad, in punctilious detail. Muslims can reject the Islamic State; nearly all do. But pretending that it isn’t actually a religious, millenarian group, with theology that must be understood to be combatted, has already led the United States to underestimate it and back foolish schemes to counter it. We’ll need to get acquainted with the Islamic State’s intellectual genealogy if we are to react in a way that will not strengthen it, but instead help it self-immolate in its own excessive zeal.”

In a new Pew Research Center survey, the American public has grown more supportive of the U.S. fight against ISIS, as about twice as many approve (63%) as disapprove (30%) of the military campaign against IS in Iraq and Syria. Last October, 57% approved and 33% disapproved.

47% favor, 49% oppose sending U.S. ground troops to fight IS; in October, 39% favored the idea and 55% opposed it.

74% of Republicans say the best way to defeat global terrorism is with “overwhelming force,” up from 57% a year ago. But Democrats’ attitudes are virtually unchanged. Only 30% favor the use of overwhelming force to defeat terrorism; 29% said this last March. [Source: people-press.org]

Kyle Smith / New York Post

“If the Obama foreign policy is defined by diffidence and caution and guilt about the history of the U.S. and the West, that isn’t the American attitude. By an 18-point margin, Americans said in an Economist/YouGov poll that it was ‘inappropriate’ for Obama to invoke the Crusades in discussing ISIS. A majority (52 percent) agreed that Islam is more violent than other religions, shunning Obama’s oft-stated view that ‘no religion is responsible for violence.’ Support for military action against ISIS is at 78 percent in a CNN/ORC poll, and even support for ground troops is up to 47 percent.”

Editorial / Wall Street Journal

“One mystery in the immediate aftermath of 9/11 was why al-Qaeda didn’t follow with smaller attacks on public American places to sow more widespread fear. One oft-mentioned potential target was the Mall of America, the vast indoor shopping mall in suburban Minneapolis. Some speculated at the time that Osama bin Laden preferred showier attacks on large targets, but the real answer is that al-Qaeda would have happily staged such attacks if the furious U.S. response after 9/11 hadn’t prevented them....

“Susan Rice, the White House National Security Adviser, recently said that Islamist terrorism doesn’t represent an ‘existential’ threat. If she means the end of America in a nuclear blast, she may be right for now. But innocent families targeted on their routine shopping trips can be forgiven if they consider it a threat to the American way of life.”

Europe and Asia

So the big news was eurozone finance ministers approved a four-month extension, to the end of June, of Greece’s bailout agreement, so there won’t be any immediate bank runs or capital controls, but there remain some real immediate issues, such as Greece has just weeks to alleviate a cash crunch and months of sticky negotiations lie ahead. Greece still needs to do the right thing to unlock 7.2 billion in bailout payments by June.

For example, the eurozone said Greece must proceed with privitizations, yet the government immediately balked on doing so with its dominant electric utility even though bids had come in.

Creditors are not convinced the Greek government will stick to agreed-upon measures (which include combating tax evasion and tackling corruption), while many in Prime Minister Alexis Tsipras’ government at week’s end are fuming that Tsipras and his finance minister, Yanis Varoufakis, reversed course from their election platform in now accepting most of the terms of the bailout, though details are still to be worked out.

The very issues that brought down the previous government of Antonis Samaras, pension cuts, a VAT increase, and strict labor proposals, now must be largely accepted by Tsipras.

Again, for starters, Greece has just weeks to come up with 1.5 billion euro due the IMF, plus another 700 million by end of March.

As the week wore on, following are some of the things that were said throughout euroland as part of the debate, many of the 19 eurozone members needing to hold parliamentary votes by the end of the week to accept the extension for Athens.

Kurt Lauk, president of German Chancellor Angela Merkel’s Christian Democratic Union Economic Council, wrote: “A simple extension of the aid program without effective terms would mean that we are throwing further good money after bad.”

German Finance Minister Wolfgang Schaeuble stressed there would be no payment of new funds to Greece until the conditions of the deal had been met.

Greece’s Varoufakis rejected claims last Friday’s deal (Feb. 20) constituted a climb down from the government’s anti-austerity promises. “Our pre-electoral program was about four years. This deal is about four months.”

Late Monday, the Greek government laid out a list of reforms for approval and IMF managing director Christine Lagarde, in a letter to Jeroen Dijsselbloem, chairman of the eurozone finance ministers, said: “In quite a few areas...including perhaps the most important ones, the letter (listing the reforms) is not conveying clear assurances that the government intends to undertake the reforms envisaged in the [program] memorandum.”

Varoufakis promised eurozone authorities the reform measures would be finalized by April.

Varoufakis also said later in the week that he’s counting on the European Central Bank to help the country avert default when it runs out of money next month. The ECB owes Greece almost 2 billion euros ($2.3 billion) from the return of profits from its program of buying euro-region bonds to support the market, but ECB President Mario Draghi said, “The profits are ready to be distributed if Greece obliges with the program. It’s a commitment by the member states, not the ECB.” [Not to be distributed until the end of the program.]

Varoufakis replied: “I find it very hard to imagine that Europe and the IMF will allow us to trip over what is a relatively small cash problem.”

So Friday rolled around and German Finance Minister Schaeuble urged his lawmakers to back the four-month extension of Greece’s bailout.

“Greece needs much longer than other program countries to win back trust from financial markets,” he told parliament. “We Germans have to do everything to keep Europe together.”

German MPs then overwhelmingly voted to approve the extension, 542 for the proposals, 32 voting against and 13 abstentions. But the debate prior to the vote was fierce and many MPs warned that while they were voting yes this time, it would be the last time they do so if Greece didn’t wise up.

As for Prime Minister Tsipras, he faced a rebellion in his own party as several hundred hardline leftists protested violently Thursday night against the new agreement.

If Greece can’t make it through June, it then faces 6.7bn euro in debt payments in July and August, so it has to have a new rescue plan (bailout) in place by then. 

But the bottom line is nothing good happens unless Greeks start paying their taxes, which they have long had an aversion to. 

Gideon Rachman / Financial Times

“Watching the Greek crisis unfold, I found myself torn between two equal and opposite thoughts. First, the euro cannot survive. Second, everything must be done to save the euro.

“The agreement reached between Greece and its eurozone creditors is therefore a good thing because it has put off the immediate threat of a political and economic crisis. But experience suggests that a debt deal with Greece may be only marginally more durable than a ceasefire in Ukraine....

“Ever since a single European currency was first mooted, I have believed that it would eventually collapse. That belief is based on three simple propositions. First, a currency union cannot ultimately survive unless it is backed by a political union. Second, there will be no political union in Europe because there is no common political identity to underpin it. And so, third – the euro will collapse.

“Plenty of people have attempted to convince me, over the years, that each of these three propositions is simple-minded and wrong. But events keep driving me back to the idea that the euro lacks the political and economic underpinning that it needs to survive....

“Europe can ill-afford the political disarray that would be caused by the collapse of the euro. In fact, there has rarely been a period when it is more urgent for Europeans to work together. The war in Ukraine means that European countries once again face a genuine security threat from Russia.

“It is true that it is NATO’s job to provide the direct, security response. But the EU is critical to organizing and maintaining a united European response to Russian aggression, through sanctions. That is why Moscow is so intent on disrupting EU unity.

“The challenge of Russia is not the only problem that makes EU solidarity particularly important at the moment. There are going to be many more refugees heading towards Europe from north Africa and the Middle East in the near future and the EU badly needs to organize a collective response.

“Above all, at a time when political extremists of the right and left are gaining ground in Europe, the EU serves as an important enforcer of basic, liberal values. At times, the political correctness of Brussels can be grating and smug. But it is infinitely preferable to the political incorrectness of racists and nationalists, such as the National Front in France or the Sweden Democrats.”

Eurobits...

--Final inflation data for the eurozone was released for January, down 0.6% annualized, ergo, deflation continues, even if it is largely energy related. The figure is the worst since July 2009. Prices were down 2.8% in Greece, down 0.5% in both Germany and Italy, down 0.4% in France, and down 1.5% in Spain. [Friday, Spain released its CPI for February, down 1.2% annualized.]

--Germany’s Federal Statistics Office reported GDP rose 0.7% in the fourth quarter, confirming an earlier estimate, while real wages rose 1.6% in 2014, the best pace since at least 2008 (the year they began tracking this metric formally). Germany’s benchmark DAX stock index hit one new high after another.

--Britain’s (London’s) FTSE stock index also hit a record high, exceeding a level from way back in 1999. There’s a big election coming up here and I have some comments below.

--According to the Central Statistics Office, Ireland’s unemployment rate fell below 10% in the fourth quarter for the first time since the economy collapsed in 2008. In the final months of that year the rate was 7.7%, before surging above 10% in early 2009 and peaking at 15.1% in 2011. The sectors contributing to the better tone recently are construction, finance and real estate.

But housing prices fell in January, 1.4% from the prior month, the biggest decline in three years, though there is no real cause for concern. [Irish Independent]

--Lastly, this coming week marks the beginning of the ECB’s version of quantitative easing, QE. But as Christopher Whittall of the Wall Street Journal noted in an important story:

“The European Central Bank has pledged to buy hundreds of billions of euros of government bonds to help revive the eurozone economy. Now it will have to find them.

“Analysts and investors are skeptical about its chances, though, given that many investors will be unwilling or unable to sell top-rated government bonds, particularly those belonging to Germany.”

The ECB’s program involves buying $68 billion of debt securities each month until September 2016, and the government bonds it buys depends on each country’s share of the EU’s population and GDP.

The thing is German government debt, or bunds, will account for a quarter of the purchases.

“But the German treasury,” Christopher Whittall writes, “says it expects to issue this year 147bn euro of eligible bonds – those with maturities of two to 30 years – while 132bn euro of bonds will mature, meaning net new bund issuance of just 15bn for the whole year.”

The bottom line is the ECB’s plans mean it has to “buy 26 times more than the amount the German government bond market is predicted to grow over the same period.”

More on this next time, I’m sure, but for now, here are some of the eurozone’s 10-year yields as of Friday’s close.

Germany 0.33% [hit 0.29% this week, needless to say a record low]
France 0.60%
Spain 1.25%
Italy 1.33%
Portugal 1.80%...all of these record lows as well
Greece 9.15%

Three others for frame of reference...

Britain 1.79%
Japan 0.32%
U.S. 1.99%

---

A few notes on Asia. Next week we’ll have a slew of month-end numbers on China but for now, HSBC’s flash reading of manufacturing for February came in at 50.1 vs. 49.7 in January, so that was a positive. And after a week-long Lunar New Year break, that ended on Tuesday, the Shanghai Composite equity index registered solid gains.

Japan’s Nikkei index closed at a nearly 15-year high this week, even though retail sales fell 1.3% month on month in January, with real household consumption spending falling 0.3%, the 10th straight monthly decline and down 5.1% from a year ago.

Core inflation, stripping out the impact of last April’s sales tax was just 0.2% year on year, the slowest since May 2013 and hardly near the government’s 2% target.

Industrial production did, however, rise 4% on the month, better than expected, though output remains 2.6% lower than a year ago.

But unemployment ticked up to 3.6% from 3.4%, the highest rate since September.

So once again there are calls for the Bank of Japan to stimulate demand and for Prime Minister Shinzo Abe to speed up structural reforms.

Street Bytes

--What a month of February. After the Dow Jones and S&P 500 fell 3.7% and 3.1%, respectively, in January, stocks, not just here but around the world, soared this month, with the Dow up 5.6%, its best month since Jan. 2013, the S&P up 5.5%, best since Oct. 2011, and Nasdaq soaring 7.1%, its best since 2012. 

Nasdaq is not only on the verge of 5000 at 4963, but it is likely to register its ninth straight quarter of gains...unprecedented. It helps when a stock like Apple gains 9.6% this month as it just did. 

So Nasdaq is at its highest levels since its peak close of 5048 on March 10, 2000, and oh how that was a different environment back then. I called the crash in the Star-Ledger newspaper that spring, as a matter of fact. You had idiot strategists saying things like price/earnings ratios of 100 or more didn’t matter. [One of whose initials are E.K.]

Interesting tidbit on that era from University of Florida professor Jay Ritter, via Barron’s. Last year, just 53 technology companies went public, compared with 371 in 1999 and 261 in 2000.

As for the strength of the global markets in February, the Euro Stoxx 600 (an index like the S&P) was up 6.9% and is now already up 15% for the year.

But thus far in 2015, at least in the U.S., the economic news has been mixed and estimated earnings for the S&P have been coming down. I’m not calling for any crashes this time, but I reserve the right to do so at any moment. Hint...if I did it would be geopolitics related for sure and U.S. multinationals would be the biggest sufferers. We also may be looking to the Far East for the troubles, not necessarily Eastern Europe or the Middle East.

--U.S. Treasury Yields

6-mo. 0.07% 2-yr. 0.62% 10-yr. 1.99% 30-yr. 2.59%

The long end of the curve liked what Chair Yellen had to say.

--The Federal Communications Commission ruled in a 3-2 party-line vote to approve tough net neutrality regulations that, for starters, prohibit Internet service providers from discriminating against content flowing through their pipes or wireless networks by charging websites for faster delivery of data or videos to consumers.

FCC Chairman Tom Wheeler said: “The Internet is the most powerful and pervasive platform on the planet. It’s simply too important to be left without rules and without a referee on the field. The Internet is simply too important to allow broadband providers to be the ones making the rules.”

In opposition, Ajit Pai, one of two Republicans on the FCC, said the new regulatory proposal abandoned 20 years of bipartisan consensus “to let the Internet grow free from utility-style regulation.”

“It seizes unilateral authority to regulate Internet conduct, to direct where Internet service providers make their investments and to determine what service plans will be available to the American public,” he said. [Jim Puzzanghera / Los Angeles Times]

So it’s the likes of AT&T, Verizon and Comcast vs. Facebook, Netflix and Google. There is clearly less of an incentive on the part of the broadband providers to invest, while broadband speeds are likely to be slower, and at probably higher prices (as in new taxes since the service providers will be treated like utilities).

Then again, this whole deal is no doubt headed to court. An AT&T senior executive in charge of legislative affairs said in a statement, “We once again face the uncertainty of litigation, and the very real potential of having to start over – again – in the future.”

The authority for the new rules reclassifying ISPs as public utilities comes from Title II of the Communications Act of 1934, though it also needs to be added we are all awaiting the FCC’s final memorandum on same, with the guidelines then becoming effective 60 days after publication.

--Consumer Reports issued its annual ranking of autos sold in America and while Tesla’s Model S remains the best car you can buy (assuming you can afford it), little Subaru owned CR’s No. 1 rating in three of the 11 categories. Go Subaru Go Subaru Go!

Subaru won in the “Compact car” category (Subaru Impreza, fourth consecutive year); “Midsize sedan” (Subaru Legacy, bumping your editor’s Honda Accord, which won the previous two years) and “Small SUV” (Subaru Forester).

Others of note...the Buick Regal took top “Sports sedan,” beating out the BMW 328i. The Chevy Impala won in a new category, “Large car.”   And the Toyota Prius captured the best “Green car” category for a fifth consecutive year. Also the Audi A6 won the “Luxury car” honors for a third consecutive year. [USA TODAY]

Overall, Buick has stepped up its game, while Mercedes got trashed.

--Honda Motor dumped its CEO after a huge number of safety recalls, including for faulty airbags. The replacement for Takanobu Ito is Takahiro Hachigo (quiz next week), an obscure managing officer based in China; unusual because the move flies in the face of traditional Japanese promotions

--JPMorgan Chase, during an investor and analyst meeting, said it plans to close 300 retail branches during the next two years as more customers migrate to online banking. [I refuse to do so myself.]

JPM is also going to shed $100 billion in large deposits by the end of the year so it can meet new capital requirement rules penalizing large, uninsured deposits, while charging large institutional customers for some of same.

But CEO Jamie Dimon is resisting calls to break the bank up, saying instead it will “aggressively pursue” cost reductions of $2.8 billion in the investment bank business.

--Morgan Stanley said it agreed to pay $2.6 billion to settle with the federal government over its role in the mortgage debacle and financial crisis. JPMorgan, Citigroup and Bank of America have previously shelled out tens of $billions to settle state and federal charges.

--Friday afternoon we learned of the passing of former AIG chief executive Robert Benmosche, who died at the age of 70 after a truly heroic battle with lung cancer. Time doesn’t allow me to do his story justice at this moment, but it was Benmosche who led the insurer to repay a $182.3 billion taxpayer bailout at a time when he was dealing with his health issues.

Benmosche had come out of retirement in August 2009 to take over AIG, reeling from its massive losses on failed housing-market bets, and then turned it around.

Robert Benmosche was one of the great leaders of the past decade, if not century. May he rest in peace.

--IBM unveiled a plan at an investor conference whereby Big Blue’s new tech markets – business analytics, cloud computing, mobile services and security – are to comprise 40% of IBM’s overall business, or $40 billion, in the next 4 years, up from 27% by the end of this year.

CEO Virginia Rometty said the sales decline witnessed by the company has been largely engineered as it restructures its hardware business and sells off less profitable units. Hardware now makes up less than 10% of the company.

IBM said it would spend $4 billion in the new areas of focus, excluding acquisitions. The shares fell on the news.

--Shares in Hewlett-Packard got whacked to the tune of 10% as the PC manufacturer slashed its full-year earnings guidance by more than a third, owing to currency swings and restructuring costs. By the end of the year, the company will have shed about 55,000 workers since 2012.

Nonetheless, CEO Meg Whitman said the company’s turnaround remained “on track,” while admitting the currency issues were “significantly greater than we anticipated in November.”

In its fiscal first quarter, revenues fell 5% from a year earlier.

--Macy’s Inc. gave a cautious outlook for 2015, including sales growth of just 1% for the full year. As part of a restructuring to control costs, up to 2,000 employees nationwide could be impacted.

For the quarter ending Jan. 31, revenue edged up 1.8%, while earnings fell short of expectations (revenues were basically in line). Macy’s shares fell over $2.00 on the news.

--Home Depot Inc. blew out their quarter and shares surged about 4%, as same-store sales growth for the quarter ended Feb. 1 rose 7.9%, with U.S. stores up 8.9%, super. For 2015, Home Depot said it expected sales growth of 3.5% to 4.7%, very solid, though negatively impacted by foreign exchange rates.

Rival Lowe’s reported same-store sales growth of 7.3% for its fourth quarter, better than expected, with earnings beating as well.

--As reported by Tracey Lien of the Los Angeles Times, women are eschewing the tech industry in large numbers, even as industry group Code.org estimates computing jobs will more than double by 2020, to 1.4 million. Last summer the likes of Google, Facebook and Apple released figures showing men outnumbered women 4 to 1 or more in their tech sectors.

“A Harvard Business Review study from 2008 found that as many as 50% of women working in science, engineering and technology will, over time, leave because of hostile work environments.”

The Harvard study cited among other issues a “hostile” male culture, a sense of isolation and lack of a clear career path. 

Google’s engineering workforce is only 17% female, Apple’s is 20%.

--Speaking of Apple, it announced it is building two new data centers in Europe – Galway, Ireland and Jutland peninsula in Denmark – at a cost of about $1.9 billion. Hundreds of local jobs will be created.

Building the new facilities is actually one way for a company like Apple to spend the cash hoards it holds outside the U.S.

--But here is some not so good news for Apple and its ilk. According to tech consultancy Canalys – tablet sales fell 12% over the final three months of 2014 compared with the same period the previous year.

Apple sold 15% fewer iPads over 2014 vs. 2013.

Gartner is forecasting worldwide tablet sales of 259 million in 2016, which means PCs will still be more popular.

--Offshore oil drillers are warning that the number of rigs “stacked” or idled is about to hit a two-decade high.

Norway’s SeaDrill said, “The offshore drilling market is entering the second year of a downturn, which is shaping up to be more challenging than the first and worse than had previously been expected by the industry.”

As reported by the Financial Times’ Christopher Adams and Ed Crooks: “Rates for advanced, deepwater rigs have tumbled from a peak of about $650,000 a day two years ago to $350,000-$400,000 now, with contractors slashing prices in the face of dwindling exploration, some to near breakeven levels.”

Spain’s Repsol this week became the latest to announce it was slashing capital spending, in their case by 35% in 2015.

--As expected, President Obama vetoed a bill to approve construction of the Keystone XL oil pipeline. The White House said the president continues to wait on all of the environmental and regulatory reviews to be completed. But it’s also a signal to the new Republican-controlled Congress that he is not rolling over when it comes to their agenda.

Wyoming Republican Sen. John Barrasso said, “This is bipartisan legislation being vetoed by a partisan president.”

The debate on the pipeline goes all the way back to 2008, when TransCanada Corp. first applied for a permit to construct the 1,179-mile pipeline delivering heavy petroleum from Alberta’s oil sands to ports and refineries on the Gulf Coast. To be continued...as in Republicans will attach it to a bill later in the year that the president will have to sign. At least that is the plan for today.

--In the U.K., the offshore oil and gas industry has just gone through its worst annual performance in four decades, spending about $7 billion more than it earned during 2014, according to BBC News.

Plus, while it was expected 25 wells would be drilled, only 14 were.

--Officials at United Airlines sent their pilots a warning recently under the heading “significant safety concerns,” prompted by four separate “safety events and near misses” in prior weeks. As noted by the Wall Street Journal, “one incident required pilots to execute an emergency pull-up maneuver to avoid crashing into the ground.”

The memo dated Jan. 9 that just came to light, “focused on the dangers of lax discipline and poor cockpit communication and coordination.”

The last fatal accident for United occurred in 1991 and for Continental in 1987; the two having merged in 2010. [Not including the events of 9/11.]

United is hiring 700 pilots this year, a large number to integrate into a workforce that already has 12,000 pilots.

As the Journal story by Andy Pasztor and Susan Carey notes:

“Stressing the importance of conducting detailed pre-departure briefings and strictly complying with rules to keep planes from landing too fast or too far down runways, the bulletin mentioned the fatal crash of a United Parcel Service Inc. cargo jet that smashed into a hill while lining up to land in Birmingham, Ala., in 2013.

“ ‘The approach and landing appeared normal to the pilots until right before impact,’ according to the bulletin. ‘Let’s not for a moment think that could not happen at United.’”

--Meanwhile, federal officials have agreed to allow Southwest Airlines to keep flying 128 planes – one-fifth of its fleet – that Southwest had grounded on Tuesday after discovering it missed an inspection of a backup rudder system, as long as the planes were all checked within the next five days. Southwest, upon recognizing the omission, immediately notified federal safety regulators and took the planes out of service. [David Koenig / AP]

--The Indian government said the country’s economic expansion will accelerate to an 8.5% pace in the coming year, which would be a four-year high, which is higher than an earlier Finance Ministry forecast of 7.4% for the fiscal year, which begins in April.

Ergo, India should be outpacing China for the first time since the 1990s.

--This is startling but gambling revenues in Macau were down 55% during the weeklong Lunar New Year holiday compared with a year earlier. For all of February, the territory is tracking towards a decline of 50%. What’s kind of bizarre is actual tourist arrivals rose 7% for the holiday vs. last year, according to Barclays.

It’s all about China’s anticorruption campaign. The high-roller junkets of yore are quickly becoming a thing of the past. And the six major casino operators in Macau are all slated to open new palaces in the next few years. Good luck.

--Danish company Lego reported a 13% increase in revenue and a 15% jump in net profit in 2014, both records for the world’s most profitable toymaker. A decade ago the company was near death but last year produced 60bn bricks. 

As reported by the Financial Times’ Richard Milne, “Lego estimates that on average every person on earth owns 102 of its bricks.” The company’s biggest sales growth is coming in the U.S., U.K., France, Russia and China.

--Another iconic brand, Campbell’s Soup, isn’t fairing as well with sales for the quarter ending Feb. 1 down 2% over the prior year, while earnings fell 11%.

--According to Euromonitor, Budweiser’s U.S. market share fell to 8.7% in 2013, down from 14.3% in 2005, as younger drinkers prefer craft beers and bourbon.

--Workday, a leader in enterprise cloud applications for finance and human resources saw Q4 total revenue rise 59% year over year; up 68% to $787.9 million for fiscal 2015. 

But free cash flow for the year was negative with an operating loss of $215.7 million. That said, on the growth front WDAY continues to kick butt.

--According to a report from the Department of Commerce, travel abroad by Americans grew 10% in 2014 compared with the previous year to a record 68.3 million travelers. The previous record was 2007, prior to the recession.

About 34% of U.S. travelers going abroad went to Mexico, 19% to Canada and 18% to Europe. [Hugo Martin / Los Angeles Times]

--Hotel occupancy in Ireland is back up to 2007 levels, with the number of visitors from North America in 2014 jumping 15%.

--Doctors Without Borders (Medecins Sans Frontieres) reports that the average death rate from Ebola at the centers it is overseeing has dropped to 52% from 62% and there is no ready reason for it, except for the fact patients are arriving with less virus in their blood, which increases a patient’s chances of survival. [Donald G. McNeil Jr. / New York Times]

--Anton Troianovski of the Wall Street Journal had a fascinating story last weekend on salmon farming in the Faeroe Islands. It has to do with the sanctions leveled against Russia by the West over Ukraine, which means U.S. and European farmers are banned from selling fruit to Russia, to cite but one example.

But the Faeroe Islands, which lie between Iceland and Scotland, aren’t part of the European Union and so aren’t subject to the sanctions. And so when Russia retaliated against the countries that sanctioned it, the Faeroe Islands had an opportunity, a virtual monopoly on supplying Russia with fresh salmon, the Islands’ biggest export. In fact salmon-loving Russia is receiving just about all its fresh salmon (that which is imported) from the Faeroes, which has a population of 50,000....$79 million worth from September to December, up 627%, according to the Journal.

You know how I feel about Vlad the Impaler and the dirtballs around him, but I have to hand it to the Faeroe Islands. Said their prime minister, Kaj Leo Holm Johannesen, “People need to have food. Russia needs to have food.” 

The Faeroe Islands have been under Danish rule for almost six centuries, but negotiated a home-rule agreement with Denmark after World War II that grants them trade independence, while Denmark handles items such as foreign policy.

--Seaworld continues to suffer from the 2013 CNN documentary “Blackfish” over its treatment of captive killer whales. Revenue for the fourth quarter fell 3% from the same period in 2013. Plus Seaworld has been without a CEO for three months. 

The chairman has been filling in as interim CEO. Flipper would be a good choice, frankly. A bridge between the killer whales and management. 

“Flip, this container needs to be about three times larger and we want fresh mackerel.” “OK, Shamu. I’ll talk to management.”

A few minutes later at the executive council meeting, “He...heheheheheheheh....hehehehhe....”

--In week two without Brian Williams, NBC’s Nightly News telecast averaged 10.1 million viewers, maintaining a 400,000-viewer advantage over ABC’s World News. NBC executives have warned “interim” host Lester Holt that he won’t be able to take a day off until Thanksgiving 2017, to which Holt, ever the good company soldier, said “No problem.”

--We note the passing of longtime former Coca-Cola Co. president and chief operating officer, Donald R. Keough, 88. For many of us, this is a familiar name, as described by the Los Angeles Times’ Elaine Woo.

“Keough rose to the No. 2 job at the beverage giant in 1981 and with Coca-Cola Chairman Roberto Goizueta helped steer it through a prosperous era when its global revenues more than doubled to $14 billion despite one of the worst marketing stumbles in business history.

“Known as a skillful communicator, Keough played a major role in promoting and then retreating from a controversial 1985 decision to market ‘New Coke,’ a sweeter reformulation of the original drink that was conceived to beat back Pepsi, which had been cutting into Coke’s sales.

“But Coke loyalists instantly and massively revolted: They poured the new product down sewers, mocked the ‘Coke Is It’ ad with the line ‘Coke Was It,’ and overwhelmed the company’s switchboard with irate messages. After only three months, the company admitted its mistake and brought back the original version, which it called Coke Classic.

“Despite the gaffe – and Pepsi’s efforts to exploit it – Coca-Cola never lost its preeminence in the soft-drink industry. Much of the credit for Coca-Cola’s recovery went to Keough for his eloquent mea culpa at a news conference in July 1985.

“ ‘We love any retreat which has us rushing toward our best customers with the product they love most,’ said the executive, who called Coke’s appeal ‘a lovely American enigma.’”

Foreign Affairs

Iraq / Syria / ISIS: We learned this week officially that “Jihadi John,” the masked man with a British accent who has been beheading Western hostages is Mohammed Emwazi, a Briton from West London who graduated from college with a degree in computer programming. The Washington Post reported he traveled to Syria around 2012.

The Wall Street Journal noted that about one quarter of the 20,000 foreign fighters who have traveled to Syria and Iraq hail from Europe, North America and Australia, according to intelligence officials.

We also learned that Islamic State abducted a reported 200+ Assyrian Christians from villages in northeastern Syria, according to the Syrian Observatory for Human Rights, which has been an accurate source in the past of such moves, as well as casualty figures. [Assyrian leaders have said 287 were taken captive, including 30 children and several dozen women.]

The Syrian Observatory also claims U.S.-led air strikes have killed more than 1,600 people, mainly jihadis, since they began five months ago.

Meanwhile, in northern Iraq, sledgehammers were taken to ancient statues inside the Mosul Museum in what NBC’s Richard Engel called an act of “cultural genocide...taking a hammer to history,” as the museum highlighted finds from the Assyrian empire. ISIS claims it was destroying false idols.

Separately, a report from the Institute of International Law and Human Rights (IILHR), says Iraqi minorities face a “threat to their existence” as IS tries to eradicate them from large parts of the country. The IILHR says the acts being perpetrated by ISIS are tantamount to war crimes and, in some cases, genocide.

The IILHR focuses on the aftermath from the fall of Mosul to IS in June 2014, after which Christian, Shabak, Turkmen and Yazidi populations were targeted, with Christians told to leave or face execution. At least 160 Shabak were killed, according to the report.

Elsewhere, IS is using Yazidi as human shields, if they weren’t already abducted or killed. [BBC News]

And a note on Turkey. Hundreds of Turkish troops entered northern Syria to evacuate a historic Ottoman tomb and the soldiers guarding it. The remains of Suleyman Shah are to be moved elsewhere in Syria. Turkey considers the shrine to be sovereign territory, in accordance with a treaty signed in 1921, and the troops destroyed the tomb’s complex to prevent it from falling under IS control.

Suleyman Shah, who lived from around 1178 to 1236, was grandfather of the founder of the Ottoman Empire, Osman I.

In August 2012, President Erdogan – then prime minister – had warned an act against the tomb would be considered “an attack on our territory, as well as an attack on NATO land.”

Israel / Iran: Following two days of talks between Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif in Geneva, outlines of a deal over Iran’s nuclear program began to leak out, with the plan to constrain Iran for ten years, during which time it is supposed to be closely monitored, but then after Tehran could build up its capabilities again, a “sunset” clause.

Sen. Bob Corker (R-Tenn.) said a 10-year time frame wasn’t long enough.

“If you’re going to do all of this and then just end up with a 10-year agreement, you just really haven’t accomplished near what people had hoped,” Corker chairing the Senate Foreign Relations Committee.

Israeli Intelligence Minister Yuval Steinitz, who I quoted extensively last week, said Iran would be “extremely close” to a “dangerous breakout program,” and “for a 10-year delay you are sacrificing the future of Israel and the U.S., and the future of the world.” [Wall Street Journal]

Charles Krauthammer / Washington Post

“A sunset clause?

“The news from the nuclear talks with Iran was already troubling. Iran was being granted the ‘right to enrich.’ It would be allowed to retain and spin thousands of centrifuges. It could continue construction of the Arak plutonium reactor. Yet so thoroughly was Iran stonewalling International Atomic Energy Agency inspectors that just last Thursday the IAEA reported its concern ‘about the possible existence in Iran of undisclosed...development of a nuclear payload for a missile.’

“Bad enough. Then it got worse: News leaked Monday of the elements of a ‘sunset clause.’ President Obama had accepted the Iranian demand that any restrictions on its program be time-limited. After which, the mullahs can crank up their nuclear program at will and produce as much enriched uranium as they want.

“Sanctions lifted. Restrictions gone. Nuclear development legitimized. Iran would reenter the international community, as Obama suggested in an interview in December, as ‘a very successful regional power.’ A few years – probably around 10 – of good behavior and Iran would be home free.

“The agreement thus would provide a predictable path to an Iranian bomb. Indeed, a flourishing path, with trade resumed, oil pumping and foreign investment pouring into a restored economy.

“Meanwhile, Iran’s intercontinental ballistic missile program is subject to no restrictions at all. It’s not even part of these negotiations.

“Why is Iran building them? You don’t build ICBMs in order to deliver sticks of dynamite. Their only purpose is to carry nuclear warheads. Nor does Iran need an ICBM to hit Riyadh or Tel Aviv. Intercontinental missiles are for reaching, well, other continents. North America, for example.

“Such an agreement also means the end of proliferation....(Regional) hyperproliferation becomes inevitable as Egypt, Turkey, Saudi Arabia and others seek shelter in going nuclear themselves.

“Wasn’t Obama’s great international cause a nuclear-free world?....

“Consider where we began: six U.N. Security Council resolutions demanding an end to Iranian enrichment. Consider what we are now offering: an interim arrangement ending with a sunset clause that allows the mullahs a robust, industrial-strength, internationally sanctioned nuclear program.

“Such a deal makes the Cuba normalization look good and the Ukrainian cease-fires positively brilliant. We are on the cusp of an epic capitulation. History will not be kind.”

As for Israeli Prime Minister Netanyahu’s speech to Congress on Tuesday....

Editorial / Wall Street Journal

“(Leave) it to the political wizards of the Obama administration to turn it into the global diplomatic event of the year.

“From the moment House Speaker John Boehner invited Mr. Netanyahu, the Obama administration has made its displeasure plain, first accusing the Israeli government of breaching diplomatic protocol and leaning on Congressional Democrats to boycott. Then this week the administration unleashed a withering personal and political attack that is unprecedented against a close ally. National Security Adviser Susan Rice even said the speech is ‘destructive of the fabric of the relationship’ between Washington and Jerusalem.

“That’s some claim against one speech, and it’s worth asking why the administration has gone to such extraordinary lengths to squelch it. Mr. Netanyahu is expected to make the case against President Obama’s looming nuclear deal with Iran, and perhaps the administration knows how vulnerable it is to such a critique.”

After Susan Rice’s above comment, Netanyahu said the U.S. and others were “accepting that Iran will gradually, within a few years, develop capabilities to produce material for many nuclear weapons.

“I respect the White House and the president of the United States but on such a fateful matter, that can determine whether or not we survive, I must do everything to prevent such a great danger for Israel.”

Secretary of State John Kerry, in congressional testimony, said: “The policy is: Iran will not get a nuclear weapon.” Then he added in an apparent dig at Netanyahu: “Anyone running around right now, jumping to say ‘we don’t like the deal,’ or this or that, doesn’t know what the deal is. There is no deal yet.”

As for the March 17 Israeli election, Netanyahu’s Likud is neck-and-neck with the ZU, led by Yitzhak Herzog and Tzipi Livni.

But as Benny Avni said in an editorial for the New York Post, “Netanyahu’s opposition is every bit as leery of the rumored Iranian nuclear deal as Bibi is.”

Egypt: President Abdel-Fattah Al Sisi said in a televised address to the Egyptian people on Sunday that there was the need for a joint Arab military force to combat IS.

“The need for a unified Arab force is growing and becoming more pressing every day,” said Sisi.

Such a plan, including Saudi Arabia, the UAE and Kuwait was discussed for a time last fall, but it died out, though now it’s being resurrected to include, potentially, Jordan, France, Italy and Algeria.

Yemen: Former President Abed Rabbo Mansour Hadi has vowed to reclaim power after fleeing to the southern city of Aden over the weekend, slipping out of the capital, Sanaa, where he was being held by rebels under house arrest since last month. Supposedly his escape went undetected for hours as he had the help of presidential guards. [Another story had the rebels allowing him to leave under international and local pressure.]

Hadi, a Sunni Muslim, had been an ally of the U.S., especially in its efforts to take out al-Qaeda in the Arabian Peninsula (AQAP). Washington still considers him the legitimate leader despite the Houthi takeover.

Russia / Ukraine: I had written up what follows on Ukraine before I learned Friday afternoon of the assassination of Russian opposition leader Boris Nemtsov. For starters, when I saw the first pictures I thought, I’ve been on that bridge more than once...it’s how you get from the Kremlin area to the great Tretyakov gallery of Russian art, one of my favorites in the world. Walking alone on it, though, was kind of spooky, especially when you’re an American. For Boris Nemtsov it proved deadly.

I’ve referenced Mr. Nemtsov countless times in my columns, including last spring when he was one of the few in Russia with the guts to criticize Putin’s annexation of Crimea.

It was also just last week I noted that fellow opposition leader Alexei Navalny had been placed in jail for promoting an anti-Putin demonstration that was to take place this Sunday, March 1. Nemtsov on Friday was also promoting it hours before he was gunned down in a drive-by hit.

So now the anti-Putin protest has been canceled and a memorial march will be held in its stead. Oh how I wish I was there.

Putin is now overseeing the investigation, which of course is laughable. He probably had Nemtsov killed just like he has had countless others taken out over the years, going back to the 1999 apartment bombings. He’s a murderer. Anyone with half a brain knows this.

Just ask the family of human-rights activist Anna Politkovskaya, or the friends of Alexander Litvinenko...and all the innocents in those apartment buildings who perished in bomb attacks blamed on Chechen rebels as a pretext for Putin executing his war there.

But there’s also a chance in this instance he did not directly order the hit. And were that to be the case it would be an example of the dark “third force” I’ve written of for years now that will one day take out Putin himself. 

More next week...continuing with the rest of the news...

As of Friday, there were signs the cease-fire in Ukraine was beginning to take hold as Kiev said it would start pulling back heavy weapons from the front lines, though late reports had 3 Ukrainian servicemen being killed Thursday night after two days of no deaths.

But there seems little doubt that eventually Russia (and the separatists) will move on the port city of Mariupol to create the land bridge to Crimea. The separatists claim they have pulled back close to 100% of their artillery but of course they can return to the front lines at a moment’s notice.

Meanwhile, Ukraine’s gas company Naftogaz said on Friday it paid $15 million for another month of Russian gas, but Moscow said that was enough for only an additional day of deliveries. Per an October agreement between the two nations, Kiev was to pay in advance for gas shipments. Earlier in the week, Putin warned Russia would cut off supplies unless it received further pre-payments.

NATO Commander Gen. Philip Breedlove told Congress that even if the U.S. armed Ukraine’s army, they wouldn’t be able to stop Russians from expanding further into Eastern Ukraine.

“More than 1,000 pieces of Russian military equipment have been transferred into Ukraine, including tanks, armored personnel carriers, heavy artillery pieces and other military vehicles and equipment. These are not the actions of a good faith negotiating partner,” said Breedlove.

Sen. John McCain said Wednesday on the Senate floor that the U.S. was obligated to arm Ukraine, regardless. “To me, it’s the most unbelievable view that somehow we don’t want to provoke Vladimir Putin, who has taken Crimea – they’ve written that off. Shot down an airplane, at least with Russian equipment. Moved and dislocated Eastern Ukraine. Caused an economic crisis. And we don’t want to provoke Vladimir Putin?”

Breedlove said: “I think first and foremost, Mr. Putin has not accomplished his objectives in Ukraine, so next is probably more action.” [Ben Watson / Defense One]

On a different issue, Russian propaganda, the Financial Times’ Andrei Ostalski had the following:

“Most Russians support President Vladimir Putin and his policies in Ukraine. Most share his anti-Western views. At home, Mr. Putin’s actions have given him an extraordinary propaganda victory. Many younger people are persuaded by television that the West is weak, decadent and more likely to capitulate than risk a direct confrontation. The older generation seems more cautious.

“But it is a widely sold T-shirt design that best captures the public mood. It is emblazoned with the words: ‘Don’t make our Iskanders laugh’ – and it carries a picture of the strategic nuclear missiles to which the caption refers. This, to many Russians, is the appropriate response to western sanctions: respect us, or we nuke you.

“Some of the country’s pundits claim a nuclear war may be winnable. ‘Russia can turn the U.S. into radioactive dust,’ Dmitry Kiselyov said last year on primetime television. Mr, Kiselyov is neither a marginal eccentric nor an ordinary political commentator. He enjoys close links with the Kremlin and is, in effect, Russia’s propagandist-in-chief.”

Lovely. I said months ago there will be a nuclear scare this year, a threat from the Kremlin. Last weekend, thousands of Russians gathered in Red Square to mark the anniversary of Ukraine’s pro-Russian president being forced to flee, vowing it would never be repeated in Russia. The assortment of ultranationalists, war veterans, bikers and other pro-Kremlin groups bore banners that said “Die, America!” or “U$A, Stop the War!”

According to a poll conducted this month by the independent Levada Center, 81% of Russians feel negatively about the United States – the highest figure since the early 1990s – and 71% feel negatively about the European Union.

The number of Russians who dubbed relations between Russia and the U.S. as that of “enemies” leapt from 4% in January 2014 to 42%. [Irish Independent]

At the same time as the Red Square protest, in Kharkiv, Ukraine, where demonstrators marked the deaths of more than 100 protesters in last year’s revolution, pro-Russian separatists threw an explosive device from a car towards the marchers, killing two.

Mikheil Saakashvili (former president of Georgia) / Washington Post

“One thing is clear: The post-Cold War order in Europe has been irreversibly undermined. New solutions need to be found to avoid further chaos. But the West should accept that Putin is not just after pieces of the former Soviet empire. He clearly regards his hybrid war a payback for Russia’s defeat in the Cold War. Ukraine is Putin’s frontline in a standoff with the West. It is his West Berlin – the taking of which was a matter of principle for Stalin and the successful protection of which ultimately reversed the spread of communism in Europe. The dismantlement of Ukraine is how Putin seeks to erode the values of the transatlantic alliance, and the future of Europe is no less at risk than it was decades ago in Germany.

“The West must also accept that Ukraine is today’s West Berlin: the frontline in the defense of Western values against Russian revanchism.”

In a “soft” interview with Russian television, President Putin said war with Ukraine was “unlikely.” When asked whether Russia had invaded Ukraine, he shrugged off evidence he had deployed troops to help the rebels. Instead he said Kiev was claiming that to hide its humiliation at being defeated by former miners and tractor drivers.

Regarding Crimea, Putin said Ukraine should spend more time focusing on saving its collapsing economy instead of vowing to take back the land. [BBC News]

China: State-run media gave wall-to-wall coverage on Wednesday of President Xi Jinping’s newly declared “four comprehensives” political theory as he consolidates power and advances his own brand of Communist thought.

As reported by the South China Morning Post and Agence France-Presse, in a 2,000-word editorial in the People’s Daily, the slogan refers to “four orders made by Xi since he took power two years ago, namely, to comprehensively build a moderately prosperous society, to deepen reform, to govern the country strictly according to the law and to enforce strict discipline with the governing Communist Party.”

The People’s Daily commentary, the first of five to be published, said the “four comprehensives” would lead the way for national renewal, though most analysts say these are simply catchphrases with little impact. I would say it’s all a bunch of bull. Albeit scary B.S.

On a totally different matter, China announced it was banning the import of ivory products for one year amid worldwide criticism it was helping to threaten the existence of African elephants. Britain’s Prince William, a strong critic of the ivory trade, is touring China this coming week.

Last year, according to a report by Save the Elephants and the Aspinall Foundation, the number of ivory goods on sale in Beijing and Shanghai had risen 60% compared with 2002. Last December, the two reported that more than 100,000 wild elephants were killed from 2010 to 2012, with their slaughter largely fuelled by the “out of control” illegal ivory trade in China.   [South China Morning Post]

North Korea: The start of the annual joint U.S.-South Korean military exercises is March 2, eight weeks of drills. So it’s time for Pyongyang to step up its rhetoric.

“The DPRK (Democratic People’s Republic of Korea) will wage a merciless sacred war against the U.S. now that the latter has chosen confrontation,” the country’s official news agency aid.

“Nuclear weapons are not a monopoly of the U.S.,” quoting from an article running in the Workers’ Party newspaper. “The U.S. is seriously mistaken if it thinks its mainland is safe.”

Regarding their neighbor, the Orcs recently described inter-Korean relations as “inching close to a catastrophe.”

Bangladesh: A U.S.-Bangladeshi blogger was hacked to death in the capital Dhaka after his writings on religion upset Islamist hardliners.

Avijit Roy was an atheist advocating secularism and he was attacked walking back from a book fair with his wife, who was also injured. No one was arrested but a local Islamist group praised the killing. At least two of the attackers used meat cleavers.

Britain: Ahead of May’s super important general election, the monthly Survation (sic) poll for the Daily Mirror has the Conservatives at 28%, with Labour at 34%, UKIP 19%, and the Liberal Democrats 10%. 

The daily YouGov poll for the Sun has the Conservatives (Tories) at 35%, Labour 33%, UKIP 14% and the Lib. Dems 6%.

Many of us are curious to see how Nigel Farage’s anti-immigrant, anti-EU UKIP party does. With neither the Conservatives nor Labour poised to come anywhere close to a majority, Farage becomes a power broker post-election, though he has said he does not want to be in a formal coalition with the Tories, but would support certain legislation, such as on the budget.

I mean this is looking like a freakin’ mess. Much more in coming weeks as, remember, Prime Minister David Cameron has promised a referendum on remaining in the European Union should he remain in power. 

France: Susan Dominus had a lengthy, fair and balanced, piece on the National Front in last weekend’s New York Times Magazine...worth checking out for political junkies. As for the drones mysteriously circling many of Paris’ high-profile sites, it’s more than a bit disturbing. A team from Al-Jazeera was arrested for allegedly flying an illegal one, but apparently they weren’t involved in the buzzing of tourist targets and the U.S. embassy, as well as nuclear power plants around the country.

Argentina: A judge dismissed the criminal allegations against President Cristina Fernandez de Kirchner that had been brought by Alberto Nisman, the prosecutor who accused her of conspiring to shield Iran from responsibility in the 1994 bombing of a Buenos Aires Jewish community center that left 85 dead.

Nisman died mysteriously last month as he was preparing to bring the charges against Kirchner. But the judge, Daniel Rafecas, decided there was not sufficient evidence to open an investigation.

Venezuela: Editorial / Wall Street Journal

“When Venezuelan intelligence agents carted off Caracas Mayor Antonio Ledezma to jail last week, they fired shots into the air to terrorize a gathering crowd. It was nothing unusual for the Venezuelan police state, which has studied under Cuba’s dictatorship. But it did underscore the magnitude of the economic and political crisis now gripping a country with one of the largest oil reserves in the world.

“Mr. Ledezma is accused of plotting to overthrow Venezuelan President Nicolas Maduro with U.S. help. The government has provided no evidence....

“A government that has run out of money will find it more difficult than it has in the past to contain popular unrest. Mr. Ledezma has appealed to Venezuelans from prison to ‘continue the struggle in the streets,’ and the increasing economic desperation raises the odds of a bloody confrontation. It’s past time for the U.S. and its allies to start calling tyranny by its name in Venezuela.”

Inflation is running at 68%. Ledezma was seized from his office by police dressed in camouflage and armed with assault rifles. Maduro’s poll numbers are cratering. I said when he took over for Hugo Chavez the guy was an idiot. He is proving to be just that.

Random Musings

--Senate leaders reached a deal on a ‘clean’ funding bill for the Department of Homeland Security to avoid a shutdown, with Senate Majority Mitch McConnell (R-Ky.) anxious to avert any political risk such a temporary move might entail. The goal is to act separately on President Obama’s executive actions to shield several million unauthorized immigrants from deportation; DHS having oversight of immigration and the border patrol, among other duties.

But the real issue was whether House Speaker John Boehner (R-Ohio) would bring the Senate’s bill to the floor, which would anger more conservative members of his caucus.

At risk are Latino voters, who voted by almost 3-1 for Obama over Mitt Romney in 2012. Republicans have to narrow this margin to win the White House in ’16, plus Obama took Florida in both of his elections, Latinos making up 1-in-5 of the state’s voters.

So what happened late Friday? Oh, time doesn’t permit me to go thru the details now, but I will next time. Bottom line, DHS is being funded for another week while Boehner tries to get the 50 or so Republicans out for his head to understand the vast majority of the American people are tired of their garbage.

--Michael Goodwin / New York Post

“He can’t bring himself to call Islamic terrorists what they are, but President Obama finally said something with which we can all agree. Speaking of his remaining time in office, he said: ‘Two years is a long time.’

“He can say that again – and did, attaching a scary promise about his plans for the twilight of his tenure.

“ ‘Two years is also the time in which we’re going to be setting the stage for the next presidential election and the next 10 years of American policy,’ he told wealthy donors in San Francisco. ‘So I intend to run through the tape and work really hard, and squeeze every last little bit of change.’

“There you have it. Instead of cleaning up the messes he’s created, Obama is hell-bent on making more of them.

“The word that comes to mind is ‘rogue.’ As in, the president is going rogue. Like an elephant on a rampage, he’s breaking free of all constraints.

“That makes the next two years extremely dangerous. Not just for Americans, but also for people around the world who count on us for their security and well-being.

“It is party time for the bad guys. Imagine you are the head of Islamic State or al Qaeda. Or you are Vladimir Putin, the head of China or the ayatollah of Iran.

“You know Obama has spent six years shrinking America’s footprint and abandoning allies, leaving behind the vacuums you are filling. It’s already a bonanza, and his vow to double down over the next two years means you will never get a better opportunity to make more hay.

“The whole world knows that, no matter who the next president is, he or she almost certainly will be determined to reassert some level of global leadership.

“Until then, the Putins, the mullahs and the terrorists will match Obama’s sprint to the finish with their own.”

--Rudy Giuliani / Wall Street Journal [defending his remarks about President Obama not loving America.]

“I didn’t intend to question President Obama’s motives or the content of his heart. My intended focus really was the effect his words and his actions have on the morale of the country, and how that effect may damage his performance....

“Irrespective of what a president may think or feel, his inability or disinclination to emphasize what is right with America can hamstring our success as a nation. This is particularly true when a president is seen, as President Obama is, as criticizing his country more than other presidents have done, regardless of their political affiliation. Furthermore, this president sometimes seems to have a difficult time in expressing adequate support for important allies, particularly Israel, Ukraine and Jordan. We can all agree that the Islamic State militants and other radical Islamists – including the regime in Iran, the largest state sponsor of terrorism in the world – threaten our safety and security. Any reluctance to hold up America and its ideals in contrast to the nation’s enemies weakens our message. Any reluctance to define accurately the beliefs of our enemies helps them camouflage themselves and confuses our military and intelligence efforts.

“Presidents John Kennedy, Ronald Reagan and Bill Clinton all possessed the ability to walk a fine line by placing any constructive criticisms regarding the ways the country might improve in the context of their unbending belief in American exceptionalism. Those presidents acknowledged America’s flaws, but always led with a fundamental belief in the country’s greatness and the example we set for the world. When President Reagan called America a shining city upon a hill, it burnished our image, rallied our allies and helped ultimately to defeat the Soviet empire....

“But I can only be disheartened when I hear (President Obama) claim, as he did last August, that our response to 9/11 betrayed the ideals of this country. When he interjected that ‘we tortured some folks,’ he undermined those who managed successfully to protect us from further attack.”

A YouGov poll, in conjunction with the Huffington Post, found 69% of Republican respondents do not believe Obama loves America.

The National Review’s John Fund wrote Wednesday:

“I thought Giuliani’s comments inappropriate, but the White House should be concerned to the extent their own signaling and policies have led to such a result. It is indeed hard to imagine similar results for any modern president.”

A January Washington Post/ABC News poll had the same 69% of Republicans “strongly” disapproving of Obama’s performance. [Scott Clement / Washington Post]

--GOP presidential contenders gathered for the annual Conservative Political Action Conference and Wisconsin Gov. Scott Walker had the first gaffe in talking about President Obama, saying a commander in chief should “do everything in their power to ensure that the threat from radical Islamic terrorists does not wash up on American soil.”

“If I can take on 100,000 protesters,” Walker added, referring to his battles with the unions in his state, “I can do the same across the world.”

A Walker spokeswoman issued a statement late Thursday saying the governor “was in no way comparing any American citizen to [the Islamic State.] What the governor was saying was when faced with adversity he chooses strength and leadership.” [Washington Post]

Sen. Rand Paul hopes to win the conference’s concluding straw poll for a third straight year.

--Peggy Noonan / Wall Street Journal

“What the Republican Party needs in a presidential candidate is not a centrist who can make the sale to conservatives in the primaries; it is a conservative who can win over centrists in the general election. That means the Republican nominee should be a man or woman who can redefine conservative thinking for current circumstances and produce policies that centrists and independents will find worthy of consideration.

“Jeb Bush is said by some and treated by many as the front-runner, the one to beat. I don’t see it. In fact I think he’s making a poor impression.....

“Mr. Bush is spending much of his time in The Rooms – offices and conference rooms – with millionaires and billionaires. Money in politics is very important, and Mr. Bush makes a great impression on the denizens of The Rooms. He speaks their language. They like his experience, the fluency with which he speaks of domestic policy. Here his family name helps him; they know he is politically vetted, a successful former governor, is respectful of the imperatives of business, and is bottom-line sane....

“Mr. Bush’s operation is also, according to the New York Times, muscling party strategists and policy specialists to advise only him and no one else. Again a message is sent: Be with us now or we’ll remember later. It sounds tough and Clintonian. Actually it looks less like a sales pitch than a hostile takeover.

“There’s something tentative and joyless in Mr. Bush’s public presentations....

“What is most missing so far is a fierce sense of engagement, a passionate desire to lead America out of the morass, a fiery – or Churchillian – certainty that he is the man for the moment....

“I am not sure Mr. Bush likes the base. If he doesn’t, it would explain some of his discomfort....

“A certain resistance to the idea of Mr. Bush is bubbling up among some journalists and intellectuals....

“Jim Geraghty of National Review writes of ‘considerable evidence that there’s a lot of Jeb-skepticism out there among conservatives.’ Jay Cost of the Weekly Standard says Mr. Bush may be ‘cornering the market’ on professional Republicans but asks: ‘What is the case for a Bush restoration, beyond the fact that it would make the professional GOP comfortable once again? Why should average Republican primary voters – the insurance salesmen and truck drivers, not pollsters and policy advisors – choose Jeb over Scott Walker, Chris Christie, Ted Cruz, or the dozen other potential nominees?’....

“The road is long. Maybe Jeb Bush will succeed. But no one should bow to his inevitability. He doesn’t have a better chance with Republican voters than some other possible candidates, and may have less.”

--New Jersey Republican Gov. Chris Christie introduced a $33.8 billion state budget proposal on Wednesday, warning of dire consequences unless action is taken on the state’s pension obligations.

Christie has touted his ability to cross party lines on critical issues before and he announced he reached an accord with the state’s largest teachers union, NJEA, on resolving the pension and health benefit systems, but the NJEA said a deal has not been struck, rather it’s just a roadmap.

“NJEA is deeply disappointed that Gov. Chris Christie overstated the nature of the understanding we reached with the commission,” the NJEA president said in a statement. “We have not agreed to any changes to pension or health benefits.”

But what’s this? A new Monmouth University poll revealed that 63% of New Jerseyans call the Garden State a good (48%) or excellent (15%) place to live, while another 25% rate it “only fair,” and 11% rate it a “poor” place. So it’s a slight tick up from the 61% who responded excellent or good back in September. [Jeff Goldman / NJ Advance Media]

Monmouth has been conducting this poll since 1980 and the peak level of satisfaction was in February 1987, 84%. 

--Donald Trump said he is “more serious” than ever about running for the White House, revealing in an interview with the Washington Post that he has hired staffers in key primary states and delayed signing on for another season of “Celebrity Apprentice” because of his projected schedule. Trump told the Post’s Robert Costa:

“Everybody feels I’m doing this just to have fun or because it’s good for the brand. Well, it’s not fun. I’m not doing this for enjoyment. I’m doing this because the country is in serious trouble.”

Trump met with Reince Priebus, the chairman of the Republican National Committee, this week. Last Sunday, Trump gave a speech at the Citadel and met with South Carolina Republican Sen. Tim Scott.

But most just continue to roll their eyes when they hear Trump and the White House in the same sentence.

--Chicago Mayor Rahm Emanuel suffered a setback in the city’s mayoral election.    He wasn’t able to garner 50% of the vote and will now face an April runoff against Cook County Commissioner Jesus ‘Chuy’ Garcia; Emanuel receiving about 45% to Garcia’s 34%. Even President Obama’s direct campaigning for his former chief of staff didn’t help enough.

Emanuel has had a most contentious first term, including the first teachers strike in a generation, a soaring murder rate, and a deeply underfunded pension system.

--Eddie Ray Routh was sentenced to life in prison for the killings of “American Sniper” Chris Kyle and Kyle’s friend Chad Littlefield in 2013.

The death penalty was off the table so the jury faced only one possible sentence as Routh and his lawyers argued he was not guilty by reason of insanity and that he belonged in a state mental hospital.

The jury sided with prosecutors who portrayed Routh as a cold-blooded killer who knew his actions were wrong, a part of the legal test of insanity.

--Veterans Affairs Secretary Robert McDonald apologized a number of times Tuesday to veterans groups and members of Congress for falsely claiming he served in the Army Special Forces while speaking to a homeless man, the incident part of a CBS News segment.

When the homeless man told McDonald he had served in Special Ops, McDonald replied: “Special Forces? What years? I was in Special Forces.”

McDonald graduated from West Point and completed Army Ranger training before being assigned to the 82nd Airborne Division until his retirement, but he was never in Special Forces.

Lying about being in the Special Forces is a major no-no, stolen valor.

McDonald said “I have no excuse” and that he was making an attempt to connect with the veteran to make him feel comfortable.

About a week earlier, McDonald had falsely claimed on NBC’s “Meet the Press” that 60 Veterans Affairs employees had been fired in recent months related to the VA’s wait-time scandal, but the true number was eight, which he also apologized for.

--Fox News host Bill O’Reilly defended himself against charges originating in an article for Mother Jones magazine and subsequent interviews with journalists at CBS News that accused him of embellishing his record as a correspondent early in his career; with the first issue being his alleged misrepresentation of his coverage of the Falklands war in 1982.

The main issue is whether O’Reilly reported from active war zones, as he has inferred in some public comments and in his 2001 book, “The No Spin Zone: Confrontations With the Powerful and Famous in America.”

O’Reilly has said he never claimed he reported from the Falkland Islands, “I said I covered the Falklands war, which I did,” in describing his coverage of protests in the aftermath of the war on the streets of Buenos Aires. O’Reilly claims an unknown number of protesters were killed in the rioting, while others strongly dispute that anyone was shot or killed by police the main evening in question that CBS News released some footage of.

Rem Rieder / USA TODAY

“The estimable Jon Stewart gave voice to the ‘who really cares about this?’ take on The Daily Show Tuesday night. Basically, Stewart’s view is that spinning is pretty much what O’Reilly does for a living in his alleged ‘No-Spin Zone.’ As for Fox, Stewart said, ‘No one is watching them for the actual truth.’

“Much as I respect Stewart, though, I’m not with him on this one, for a couple of reasons.

“First of all, the truth is the truth. It matters. And there’s no real argument on the question of whether O’Reilly was in the actual Falklands ‘war zone.’ Everyone, including O’Reilly, agrees he wasn’t, his repeated claims that he was there to the contrary. No American correspondents got to those remote islands, only British journos brought there by the British armed forces....

“O’Reilly says he meant that he covered the war in general – from Buenos Aires, 1,200 miles away, like everybody else. There, he was caught up covering violent protests. Many have come forward to dispute just how violent the protests were. But it doesn’t really matter. A war zone is a war zone, and a riot scene isn’t. End of story....

“But there’s another reason why the kerfuffle deserves scrutiny, and that’s O’Reilly’s scorched-earth response to the allegations. From the jump, O’Reilly’s approach has been to try to shift the focus to his accusers, in a decidedly ugly way. The whole thing, he maintains, is simply a partisan effort to damage him and damage Fox....

“O’Reilly said on The O’Reilly Factor Monday night, ‘I want to stop this now,’ as if, unlike everybody else, unlike all of his targets, he were somehow above scrutiny.

“He’s not.”

O’Reilly has also faced charges he misrepresented his record as a war correspondent in El Salvador during the civil war there.

A Fox spokesperson said in a statement: “This is nothing more than an orchestrated campaign by far left advocates Mother Jones and Media Matters.”

O’Reilly’s ratings haven’t suffered a lick. Actually his audience on Monday was his largest in the 25-to-54 age group since November 2012.

--I couldn’t help but note this story from the Irish Independent. A couple in Dublin was hosting a ‘sweet 16’ birthday party for their daughter and a few of her friends, but an invite to the party was posted on Facebook and it went viral. 250 teenagers showed up, “A knife was put up to the throat of (the husband) as he tried to prevent a gang of youths from ripping a television off his wall. A bottle was also smashed over (the husband’s) head.”

As if this wasn’t enough, the couple’s 11-year-old son, who has special needs, “was repeatedly thrown against the sitting room wall as the chaos unfolded.”

Knives were used to rip the furniture, pictures ripped off the walls. A total nightmare.

But the payoff is, “Gardai cleared the large crowd from the home, but no arrests have been made in relation to the incident.”

--February has been brutally cold in the New York area, let alone the snow issues they’ve faced in Boston and its surrounding environs.

How cold has it been here? The average temperature for the month is 11 degrees below normal and New York will have had its coldest February in 81 years, 1934. That month in ‘34 was perhaps the worst month in NYC weather history, so if you take that one out, this February is the coldest since 1885.

--From Rachel Feltman / Washington Post:

“Astronomers have spotted an object of almost impossible brightness about 12.8 billion light years away – the most luminous object ever seen in such ancient space.

“It’s from just 900 million years after the big bang, and the old quasar – a shining object produced by a massive black hole – is 420 trillion times more luminous than our sun....

“The newly found black hole contains the equivalent of about 12 billion suns, more than twice the mass of previously found black holes of similar age, said researcher Bram Venemans with the Max Planck Institute for Astronomy in Germany.”

My brain hurts.

--We note the passing of Rev. Theodore Hesburgh, who served as president of Notre Dame from 1952 to 1987, a titanic figure in the fields of civil rights and Catholic higher education who held 150 honorary degrees and the Medal of Freedom, the nation’s highest civilian honor.

Notre Dame President the Rev. John Jenkins in a statement said: “With his leadership, charisma and vision, he turned a relatively small Catholic college known for football into one of the nation’s great institutions for higher learning. He was a steadfast champion for human rights, the cause of peace and care for the poor.”

Hesburgh marched with Martin Luther King Jr., worked on immigration reform, and fought for the world-wide elimination of nuclear weapons.

Hesburgh was 97.

--And Leonard Nimoy. RIP. Live long and prosper.

--Finally, while Presidents’ Day was two weeks ago, last weekend in the Star-Ledger, columnist Mark Di Ionno* had some interesting thoughts on the treatment of the holiday.

*Mark and I went to the same high school here in New Jersey and we share some of the same frustrations.

“Take out a dollar and look at George Washington. Dignified. A brilliant military strategist, a much-underrated political genius. No single person more formed America’s identity and forged its ideals. Read his farewell address; it’s about how to avoid the decay of both.

“Yet this time of year, we turn him and Abraham Lincoln, the preserver of what Washington started, into cartoon characters. We get talking bucks and pennies shilling for cars, furniture and mattresses. We get salesmen in white wigs and top hats, bastardizing their legendary expressions.

“ ‘I cannot tell a lie...shop at so-and-so for the best deals...’

“Last year, a carmaker had them doing a little blue-eyed soul.

“This year, a furniture chain turned Mount Rushmore into a barbershop quartet.

“It gets worse every year and I’d say there ought to be a law against it, but I know both great presidents would disagree.

“ ‘If freedom of speech is taken away, then dumb and silent we may be led, like sheep to the slaughter.’ –Washington

“ ‘Don’t interfere with anything in the Constitution. That must be maintained, for it is the only safeguard of our liberties.’ –Lincoln.

“So we’re stuck with it, this commercial debasement of our two greatest leaders, just as we’re stuck with Memorial Day being de-solemnized. Call it irreverent. Tasteless. Plain stupid. Pick your adjective. They all apply when red, white and blue is seen through the green lens of money. Washington understood greed.

“ ‘Few men have virtue to withstand the highest bidder,’ he said.

“He also said, ‘Guard against the impostures of pretended patriotism.’

“That is from his farewell address. Of course, he was talking about potential despots who would skirt Constitutional law for their own political power, not mattress salesman. Still...

“Is nothing sacred?

“No, nothing is sacred...

“(Robert W. Snyder, an associate professor of American Studies and journalism at Rutgers University-Newark), sees the commercial silliness as a lost opportunity for reflection and education.

“ ‘Those holidays, think about what Washington and Lincoln really meant, were a chance for us to take stock of who we were, who we are, and who we might become,’ he said.”

Regarding this last bit, who we might become, one need only look at the “buzz” over the dress photo at week’s end.

---

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

God bless America.
---

Gold closed at $1213
Oil $49.76

Returns for the week 2/23-2/27

Dow Jones -0.04% [18132]
S&P 500 -0.3% [2104]
S&P MidCap -0.7%
Russell 2000 +0.1%
Nasdaq +0.1% [4963]

Returns for the period 1/1/15-2/27/15

Dow Jones +1.7%
S&P 500 +2.2%
S&P MidCap +3.7%
Russell 2000 +2.4%
Nasdaq +4.8%

Bulls 59.5
Bears 14.1 [Source: Investors Intelligence...huge spread between bulls/bears hasn’t meant anything yet. Reminder for newbies...this is a contrarian indicator.]

Have a great week. I appreciate your support.

Brian Trumbore



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Week in Review

02/28/2015

For the week 2/23-2/27

[Posted 11:00 PM ET, Friday]

Edition 829

Note: A lot happened late Friday and I can’t begin to do it all justice. But in a few instances I try.

Washington and Wall Street

There really hasn’t been the need for a lot of in-depth commentary on the U.S. economy and markets these days. The former is growing, albeit back in a 2% mode, while the latter, as represented by equities, keeps hitting new highs, with Nasdaq approaching one of its own after 15 years, owing to respectable corporate earnings, the continuing zero interest rate environment, and a relatively calm period in global financial markets, including the avoidance, at least for a few more weeks if not months, of any renewal of the eurozone crisis after an interim settlement over the Greek bailout.

As I’ve noted ad nauseam, while the news from the Middle East is unbelievably depressing these days, and threatens to get worse, thus far it’s not the kind of story that will move the markets in any big way.....yet. Ditto Ukraine, another truly sickening tragedy.

But both of these situations can worsen further at the blink of an eye and it’s why investors should always be asking, ‘What can possibly go wrong to upset my portfolio?’ 

For now, on Friday we had the first revision to fourth quarter GDP and it was revised downwards from an initial reading of 2.6% to 2.2%, though consumption was up a strong 4.2%. So the last four quarters now look like this.

2014

Q1 -2.1%
Q2 4.6%
Q3 5.0%
Q4 2.2%

While the harsh winter some of us have experienced could impact the economic data for the current quarter, the awful weather has not been nearly as widespread as it was last year. No -2.1% performances are in the offing. 

We did have some news on the housing front this week and it was so-so. Existing home sales for January came in less than expected, an annualized pace of 4.82 million, while new home sales were slightly better than forecast, 481,000, though this was also flat from December and well below the 30-year average of 700,000 (ann.). The S&P/Case-Shiller home price index for December was up 4.6% year on year, up 4.5% for the 20-city index, though to a level that is still down 17% from the mid-2006 peak.

Durable goods for January, up 2.8%, were better than expected, including for a core reading, stripping out the volatile components. A Chicago purchasing managers reading for February, however, came in at a disastrous 45.8, like over 12 points worse than expected, but there were some anomalies in the data. [We’ll see this coming week what the national ISM manufacturing index reveals.]

And the consumer price index for January came in down 0.7% (owing to falling gas prices), up 0.2% ex-food and energy; though year on year the former is up 0.7%, the latter up 1.6%, so not anything the Federal Reserve has to worry about.

Speaking of the Fed, Chair Janet Yellen gave her semi-annual testimony to Congress on the performance of the economy and the rate outlook.

“The employment situation in the United States has been improving on many dimensions,” and if the economy keeps improving, the central bank “will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.”

So, yes, sports fans, rates will finally be going up. But with regards to recent Fed language that it will be “patient” before deciding when to raise rates, Yellen said: “It is important to emphasize that a modification of the forward guidance should not be read as indicating that the [Fed] will necessarily increase the target rate in a couple of meetings.”

Yellen noted that once the language was modified, that only puts the topic of rate increases on the table and doesn’t necessarily mean it’s imminent.

“The modification should be understood as reflecting the [Fed’s] judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting.”

Yellen said one determinant will be inflation and the central bank’s 2% objective and it’s not likely the Fed will raise rates unless we are at or closer to this target.

“Provided that labor market conditions continue to improve and further improvement is expected, the [Fed] anticipates it will be appropriate to raise the target range of the federal funds rate when, on the basis of incoming data, [it] is reasonably confident that inflation will move back over the medium term toward our 2% objective,” she said. [Wall Street Journal]

Yellen also highlighted that the Fed will continue to monitor developments overseas before acting; items such as China’s growth rate, as well as the situation in Europe and the pace of its recovery. Oil prices could be a big stimulant should they remain at current low levels.

The next Fed meeting is March 17-18 and if the data before then remains solid, such as next Friday’s employment report, the Fed may very well remove the word “patient” and begin to prep the markets further as to a June hike, or a meeting or two after.

Just a word on oil. The price fell back below $50 on West Texas Intermediate (light) crude, $49.76, as inventories remain at 80-year highs, while U.S. production, 9.29 million barrels per day, continues at its highest level since 1972, according to the Energy Information Agency, though production has leveled off and could finally dip a bit. That said it’s going to be a long time for the inventory picture to improve, at least for the bulls in the sector.

Lastly, there is an event in Washington this week that is rather important, even if it is unlikely to move the markets, that being Israeli Prime Minister Benjamin Netanyahu’s address to a joint session of Congress, Tuesday, on the topic of the dangers of Iran’s nuclear program and a possible deal on same.

While Republicans will be most welcoming, it’s a tension convention down at 1600 Pennsylvania Avenue as the White House condemned Netanyahu’s appearance, with National Security Adviser Susan Rice describing it as “destructive” and damaging to the bipartisan support Israel has enjoyed in the U.S.

Must see television, as otherwise the Obama administration continues to be in a seeming state of denial regarding the terror threat that is sweeping large parts of the Middle East.

As Peggy Noonan noted in the Wall Street Journal the other day, all the White House needs to do to understand the threat from ISIS, for one, is read Graeme Wood’s essay in the March edition of The Atlantic, “What ISIS Really Wants.”

“Great essays tell big truths. A deeply reported piece in next month’s Atlantic magazine does precisely that, and in a way devastating to the Obama administration’s thinking on ISIS,” writes Noonan.

“Mr. Wood’s piece is bracing because it is fearless – he is apparently not afraid of being called a bigot or an Islamophobe. It is important because it gives people, especially political leaders, information they need to understand a phenomenon that may urgently shape U.S. foreign policy for the next 10 years.

“In sorry contrast, of course, are the Obama administration’s willful delusions and dodges. They reached their height this week [Ed. the week prior] when State Department spokesman Marie Harf talked on MSNBC of the ‘root causes’ that drive jihadists, such as ‘lack of opportunity for jobs.’ She later went on CNN to explain: ‘Where there’s a lack of governance, you’ve had young men attracted to this terrorist cause where there aren’t other opportunities...So how do you get at those root causes?’ She admitted her view ‘might be too nuanced of an argument for some.’

“Yes, it might.

“It isn’t about getting a job. They have a job: waging jihad.”

I finally got around to reading Mr. Wood’s piece myself and, yes, it is highly recommended. Here is just a snippet.

“In September, Sheikh Abu Muhammad al-Adnani, the Islamic State’s chief spokesman, called on Muslims in Western countries such as France and Canada to find an infidel and ‘smash his head with a rock,’ poison him, run him over with a car, or ‘destroy his crops.’ To Western ears, the biblical-sounding punishments – the stoning and crop destruction – juxtaposed strangely with his more modern-sounding call to vehicular homicide. (As if to show that he could terrorize by imagery alone, Adnani also refereed to Secretary of State John Kerry as an ‘uncircumcised geezer.’)

“But Adnani was not merely talking trash. His speech was laced with theological and legal discussion, and his exhortation to attack crops directly echoed orders from Muhammad to leave well water and crops alone – unless the armies of Islam were in a defensive position, in which case Muslims in the lands of kuffar, or infidels, should be unmerciful, and poison away.

“The reality is that the Islamic State is Islamic. Very Islamic. Yes, it has attracted psychopaths and adventure seekers, drawn largely from the disaffected populations of the Middle East and Europe. But the religion preached by its most ardent followers derives from coherent and even learned interpretations of Islam.

“Virtually every major decision and law promulgated by the Islamic State adheres to what it calls, in its press and pronouncements, and on its billboards, license plates, stationery, and coins, ‘the Prophetic methodology,’ which means following the prophecy and example of Muhammad, in punctilious detail. Muslims can reject the Islamic State; nearly all do. But pretending that it isn’t actually a religious, millenarian group, with theology that must be understood to be combatted, has already led the United States to underestimate it and back foolish schemes to counter it. We’ll need to get acquainted with the Islamic State’s intellectual genealogy if we are to react in a way that will not strengthen it, but instead help it self-immolate in its own excessive zeal.”

In a new Pew Research Center survey, the American public has grown more supportive of the U.S. fight against ISIS, as about twice as many approve (63%) as disapprove (30%) of the military campaign against IS in Iraq and Syria. Last October, 57% approved and 33% disapproved.

47% favor, 49% oppose sending U.S. ground troops to fight IS; in October, 39% favored the idea and 55% opposed it.

74% of Republicans say the best way to defeat global terrorism is with “overwhelming force,” up from 57% a year ago. But Democrats’ attitudes are virtually unchanged. Only 30% favor the use of overwhelming force to defeat terrorism; 29% said this last March. [Source: people-press.org]

Kyle Smith / New York Post

“If the Obama foreign policy is defined by diffidence and caution and guilt about the history of the U.S. and the West, that isn’t the American attitude. By an 18-point margin, Americans said in an Economist/YouGov poll that it was ‘inappropriate’ for Obama to invoke the Crusades in discussing ISIS. A majority (52 percent) agreed that Islam is more violent than other religions, shunning Obama’s oft-stated view that ‘no religion is responsible for violence.’ Support for military action against ISIS is at 78 percent in a CNN/ORC poll, and even support for ground troops is up to 47 percent.”

Editorial / Wall Street Journal

“One mystery in the immediate aftermath of 9/11 was why al-Qaeda didn’t follow with smaller attacks on public American places to sow more widespread fear. One oft-mentioned potential target was the Mall of America, the vast indoor shopping mall in suburban Minneapolis. Some speculated at the time that Osama bin Laden preferred showier attacks on large targets, but the real answer is that al-Qaeda would have happily staged such attacks if the furious U.S. response after 9/11 hadn’t prevented them....

“Susan Rice, the White House National Security Adviser, recently said that Islamist terrorism doesn’t represent an ‘existential’ threat. If she means the end of America in a nuclear blast, she may be right for now. But innocent families targeted on their routine shopping trips can be forgiven if they consider it a threat to the American way of life.”

Europe and Asia

So the big news was eurozone finance ministers approved a four-month extension, to the end of June, of Greece’s bailout agreement, so there won’t be any immediate bank runs or capital controls, but there remain some real immediate issues, such as Greece has just weeks to alleviate a cash crunch and months of sticky negotiations lie ahead. Greece still needs to do the right thing to unlock 7.2 billion in bailout payments by June.

For example, the eurozone said Greece must proceed with privitizations, yet the government immediately balked on doing so with its dominant electric utility even though bids had come in.

Creditors are not convinced the Greek government will stick to agreed-upon measures (which include combating tax evasion and tackling corruption), while many in Prime Minister Alexis Tsipras’ government at week’s end are fuming that Tsipras and his finance minister, Yanis Varoufakis, reversed course from their election platform in now accepting most of the terms of the bailout, though details are still to be worked out.

The very issues that brought down the previous government of Antonis Samaras, pension cuts, a VAT increase, and strict labor proposals, now must be largely accepted by Tsipras.

Again, for starters, Greece has just weeks to come up with 1.5 billion euro due the IMF, plus another 700 million by end of March.

As the week wore on, following are some of the things that were said throughout euroland as part of the debate, many of the 19 eurozone members needing to hold parliamentary votes by the end of the week to accept the extension for Athens.

Kurt Lauk, president of German Chancellor Angela Merkel’s Christian Democratic Union Economic Council, wrote: “A simple extension of the aid program without effective terms would mean that we are throwing further good money after bad.”

German Finance Minister Wolfgang Schaeuble stressed there would be no payment of new funds to Greece until the conditions of the deal had been met.

Greece’s Varoufakis rejected claims last Friday’s deal (Feb. 20) constituted a climb down from the government’s anti-austerity promises. “Our pre-electoral program was about four years. This deal is about four months.”

Late Monday, the Greek government laid out a list of reforms for approval and IMF managing director Christine Lagarde, in a letter to Jeroen Dijsselbloem, chairman of the eurozone finance ministers, said: “In quite a few areas...including perhaps the most important ones, the letter (listing the reforms) is not conveying clear assurances that the government intends to undertake the reforms envisaged in the [program] memorandum.”

Varoufakis promised eurozone authorities the reform measures would be finalized by April.

Varoufakis also said later in the week that he’s counting on the European Central Bank to help the country avert default when it runs out of money next month. The ECB owes Greece almost 2 billion euros ($2.3 billion) from the return of profits from its program of buying euro-region bonds to support the market, but ECB President Mario Draghi said, “The profits are ready to be distributed if Greece obliges with the program. It’s a commitment by the member states, not the ECB.” [Not to be distributed until the end of the program.]

Varoufakis replied: “I find it very hard to imagine that Europe and the IMF will allow us to trip over what is a relatively small cash problem.”

So Friday rolled around and German Finance Minister Schaeuble urged his lawmakers to back the four-month extension of Greece’s bailout.

“Greece needs much longer than other program countries to win back trust from financial markets,” he told parliament. “We Germans have to do everything to keep Europe together.”

German MPs then overwhelmingly voted to approve the extension, 542 for the proposals, 32 voting against and 13 abstentions. But the debate prior to the vote was fierce and many MPs warned that while they were voting yes this time, it would be the last time they do so if Greece didn’t wise up.

As for Prime Minister Tsipras, he faced a rebellion in his own party as several hundred hardline leftists protested violently Thursday night against the new agreement.

If Greece can’t make it through June, it then faces 6.7bn euro in debt payments in July and August, so it has to have a new rescue plan (bailout) in place by then. 

But the bottom line is nothing good happens unless Greeks start paying their taxes, which they have long had an aversion to. 

Gideon Rachman / Financial Times

“Watching the Greek crisis unfold, I found myself torn between two equal and opposite thoughts. First, the euro cannot survive. Second, everything must be done to save the euro.

“The agreement reached between Greece and its eurozone creditors is therefore a good thing because it has put off the immediate threat of a political and economic crisis. But experience suggests that a debt deal with Greece may be only marginally more durable than a ceasefire in Ukraine....

“Ever since a single European currency was first mooted, I have believed that it would eventually collapse. That belief is based on three simple propositions. First, a currency union cannot ultimately survive unless it is backed by a political union. Second, there will be no political union in Europe because there is no common political identity to underpin it. And so, third – the euro will collapse.

“Plenty of people have attempted to convince me, over the years, that each of these three propositions is simple-minded and wrong. But events keep driving me back to the idea that the euro lacks the political and economic underpinning that it needs to survive....

“Europe can ill-afford the political disarray that would be caused by the collapse of the euro. In fact, there has rarely been a period when it is more urgent for Europeans to work together. The war in Ukraine means that European countries once again face a genuine security threat from Russia.

“It is true that it is NATO’s job to provide the direct, security response. But the EU is critical to organizing and maintaining a united European response to Russian aggression, through sanctions. That is why Moscow is so intent on disrupting EU unity.

“The challenge of Russia is not the only problem that makes EU solidarity particularly important at the moment. There are going to be many more refugees heading towards Europe from north Africa and the Middle East in the near future and the EU badly needs to organize a collective response.

“Above all, at a time when political extremists of the right and left are gaining ground in Europe, the EU serves as an important enforcer of basic, liberal values. At times, the political correctness of Brussels can be grating and smug. But it is infinitely preferable to the political incorrectness of racists and nationalists, such as the National Front in France or the Sweden Democrats.”

Eurobits...

--Final inflation data for the eurozone was released for January, down 0.6% annualized, ergo, deflation continues, even if it is largely energy related. The figure is the worst since July 2009. Prices were down 2.8% in Greece, down 0.5% in both Germany and Italy, down 0.4% in France, and down 1.5% in Spain. [Friday, Spain released its CPI for February, down 1.2% annualized.]

--Germany’s Federal Statistics Office reported GDP rose 0.7% in the fourth quarter, confirming an earlier estimate, while real wages rose 1.6% in 2014, the best pace since at least 2008 (the year they began tracking this metric formally). Germany’s benchmark DAX stock index hit one new high after another.

--Britain’s (London’s) FTSE stock index also hit a record high, exceeding a level from way back in 1999. There’s a big election coming up here and I have some comments below.

--According to the Central Statistics Office, Ireland’s unemployment rate fell below 10% in the fourth quarter for the first time since the economy collapsed in 2008. In the final months of that year the rate was 7.7%, before surging above 10% in early 2009 and peaking at 15.1% in 2011. The sectors contributing to the better tone recently are construction, finance and real estate.

But housing prices fell in January, 1.4% from the prior month, the biggest decline in three years, though there is no real cause for concern. [Irish Independent]

--Lastly, this coming week marks the beginning of the ECB’s version of quantitative easing, QE. But as Christopher Whittall of the Wall Street Journal noted in an important story:

“The European Central Bank has pledged to buy hundreds of billions of euros of government bonds to help revive the eurozone economy. Now it will have to find them.

“Analysts and investors are skeptical about its chances, though, given that many investors will be unwilling or unable to sell top-rated government bonds, particularly those belonging to Germany.”

The ECB’s program involves buying $68 billion of debt securities each month until September 2016, and the government bonds it buys depends on each country’s share of the EU’s population and GDP.

The thing is German government debt, or bunds, will account for a quarter of the purchases.

“But the German treasury,” Christopher Whittall writes, “says it expects to issue this year 147bn euro of eligible bonds – those with maturities of two to 30 years – while 132bn euro of bonds will mature, meaning net new bund issuance of just 15bn for the whole year.”

The bottom line is the ECB’s plans mean it has to “buy 26 times more than the amount the German government bond market is predicted to grow over the same period.”

More on this next time, I’m sure, but for now, here are some of the eurozone’s 10-year yields as of Friday’s close.

Germany 0.33% [hit 0.29% this week, needless to say a record low]
France 0.60%
Spain 1.25%
Italy 1.33%
Portugal 1.80%...all of these record lows as well
Greece 9.15%

Three others for frame of reference...

Britain 1.79%
Japan 0.32%
U.S. 1.99%

---

A few notes on Asia. Next week we’ll have a slew of month-end numbers on China but for now, HSBC’s flash reading of manufacturing for February came in at 50.1 vs. 49.7 in January, so that was a positive. And after a week-long Lunar New Year break, that ended on Tuesday, the Shanghai Composite equity index registered solid gains.

Japan’s Nikkei index closed at a nearly 15-year high this week, even though retail sales fell 1.3% month on month in January, with real household consumption spending falling 0.3%, the 10th straight monthly decline and down 5.1% from a year ago.

Core inflation, stripping out the impact of last April’s sales tax was just 0.2% year on year, the slowest since May 2013 and hardly near the government’s 2% target.

Industrial production did, however, rise 4% on the month, better than expected, though output remains 2.6% lower than a year ago.

But unemployment ticked up to 3.6% from 3.4%, the highest rate since September.

So once again there are calls for the Bank of Japan to stimulate demand and for Prime Minister Shinzo Abe to speed up structural reforms.

Street Bytes

--What a month of February. After the Dow Jones and S&P 500 fell 3.7% and 3.1%, respectively, in January, stocks, not just here but around the world, soared this month, with the Dow up 5.6%, its best month since Jan. 2013, the S&P up 5.5%, best since Oct. 2011, and Nasdaq soaring 7.1%, its best since 2012. 

Nasdaq is not only on the verge of 5000 at 4963, but it is likely to register its ninth straight quarter of gains...unprecedented. It helps when a stock like Apple gains 9.6% this month as it just did. 

So Nasdaq is at its highest levels since its peak close of 5048 on March 10, 2000, and oh how that was a different environment back then. I called the crash in the Star-Ledger newspaper that spring, as a matter of fact. You had idiot strategists saying things like price/earnings ratios of 100 or more didn’t matter. [One of whose initials are E.K.]

Interesting tidbit on that era from University of Florida professor Jay Ritter, via Barron’s. Last year, just 53 technology companies went public, compared with 371 in 1999 and 261 in 2000.

As for the strength of the global markets in February, the Euro Stoxx 600 (an index like the S&P) was up 6.9% and is now already up 15% for the year.

But thus far in 2015, at least in the U.S., the economic news has been mixed and estimated earnings for the S&P have been coming down. I’m not calling for any crashes this time, but I reserve the right to do so at any moment. Hint...if I did it would be geopolitics related for sure and U.S. multinationals would be the biggest sufferers. We also may be looking to the Far East for the troubles, not necessarily Eastern Europe or the Middle East.

--U.S. Treasury Yields

6-mo. 0.07% 2-yr. 0.62% 10-yr. 1.99% 30-yr. 2.59%

The long end of the curve liked what Chair Yellen had to say.

--The Federal Communications Commission ruled in a 3-2 party-line vote to approve tough net neutrality regulations that, for starters, prohibit Internet service providers from discriminating against content flowing through their pipes or wireless networks by charging websites for faster delivery of data or videos to consumers.

FCC Chairman Tom Wheeler said: “The Internet is the most powerful and pervasive platform on the planet. It’s simply too important to be left without rules and without a referee on the field. The Internet is simply too important to allow broadband providers to be the ones making the rules.”

In opposition, Ajit Pai, one of two Republicans on the FCC, said the new regulatory proposal abandoned 20 years of bipartisan consensus “to let the Internet grow free from utility-style regulation.”

“It seizes unilateral authority to regulate Internet conduct, to direct where Internet service providers make their investments and to determine what service plans will be available to the American public,” he said. [Jim Puzzanghera / Los Angeles Times]

So it’s the likes of AT&T, Verizon and Comcast vs. Facebook, Netflix and Google. There is clearly less of an incentive on the part of the broadband providers to invest, while broadband speeds are likely to be slower, and at probably higher prices (as in new taxes since the service providers will be treated like utilities).

Then again, this whole deal is no doubt headed to court. An AT&T senior executive in charge of legislative affairs said in a statement, “We once again face the uncertainty of litigation, and the very real potential of having to start over – again – in the future.”

The authority for the new rules reclassifying ISPs as public utilities comes from Title II of the Communications Act of 1934, though it also needs to be added we are all awaiting the FCC’s final memorandum on same, with the guidelines then becoming effective 60 days after publication.

--Consumer Reports issued its annual ranking of autos sold in America and while Tesla’s Model S remains the best car you can buy (assuming you can afford it), little Subaru owned CR’s No. 1 rating in three of the 11 categories. Go Subaru Go Subaru Go!

Subaru won in the “Compact car” category (Subaru Impreza, fourth consecutive year); “Midsize sedan” (Subaru Legacy, bumping your editor’s Honda Accord, which won the previous two years) and “Small SUV” (Subaru Forester).

Others of note...the Buick Regal took top “Sports sedan,” beating out the BMW 328i. The Chevy Impala won in a new category, “Large car.”   And the Toyota Prius captured the best “Green car” category for a fifth consecutive year. Also the Audi A6 won the “Luxury car” honors for a third consecutive year. [USA TODAY]

Overall, Buick has stepped up its game, while Mercedes got trashed.

--Honda Motor dumped its CEO after a huge number of safety recalls, including for faulty airbags. The replacement for Takanobu Ito is Takahiro Hachigo (quiz next week), an obscure managing officer based in China; unusual because the move flies in the face of traditional Japanese promotions

--JPMorgan Chase, during an investor and analyst meeting, said it plans to close 300 retail branches during the next two years as more customers migrate to online banking. [I refuse to do so myself.]

JPM is also going to shed $100 billion in large deposits by the end of the year so it can meet new capital requirement rules penalizing large, uninsured deposits, while charging large institutional customers for some of same.

But CEO Jamie Dimon is resisting calls to break the bank up, saying instead it will “aggressively pursue” cost reductions of $2.8 billion in the investment bank business.

--Morgan Stanley said it agreed to pay $2.6 billion to settle with the federal government over its role in the mortgage debacle and financial crisis. JPMorgan, Citigroup and Bank of America have previously shelled out tens of $billions to settle state and federal charges.

--Friday afternoon we learned of the passing of former AIG chief executive Robert Benmosche, who died at the age of 70 after a truly heroic battle with lung cancer. Time doesn’t allow me to do his story justice at this moment, but it was Benmosche who led the insurer to repay a $182.3 billion taxpayer bailout at a time when he was dealing with his health issues.

Benmosche had come out of retirement in August 2009 to take over AIG, reeling from its massive losses on failed housing-market bets, and then turned it around.

Robert Benmosche was one of the great leaders of the past decade, if not century. May he rest in peace.

--IBM unveiled a plan at an investor conference whereby Big Blue’s new tech markets – business analytics, cloud computing, mobile services and security – are to comprise 40% of IBM’s overall business, or $40 billion, in the next 4 years, up from 27% by the end of this year.

CEO Virginia Rometty said the sales decline witnessed by the company has been largely engineered as it restructures its hardware business and sells off less profitable units. Hardware now makes up less than 10% of the company.

IBM said it would spend $4 billion in the new areas of focus, excluding acquisitions. The shares fell on the news.

--Shares in Hewlett-Packard got whacked to the tune of 10% as the PC manufacturer slashed its full-year earnings guidance by more than a third, owing to currency swings and restructuring costs. By the end of the year, the company will have shed about 55,000 workers since 2012.

Nonetheless, CEO Meg Whitman said the company’s turnaround remained “on track,” while admitting the currency issues were “significantly greater than we anticipated in November.”

In its fiscal first quarter, revenues fell 5% from a year earlier.

--Macy’s Inc. gave a cautious outlook for 2015, including sales growth of just 1% for the full year. As part of a restructuring to control costs, up to 2,000 employees nationwide could be impacted.

For the quarter ending Jan. 31, revenue edged up 1.8%, while earnings fell short of expectations (revenues were basically in line). Macy’s shares fell over $2.00 on the news.

--Home Depot Inc. blew out their quarter and shares surged about 4%, as same-store sales growth for the quarter ended Feb. 1 rose 7.9%, with U.S. stores up 8.9%, super. For 2015, Home Depot said it expected sales growth of 3.5% to 4.7%, very solid, though negatively impacted by foreign exchange rates.

Rival Lowe’s reported same-store sales growth of 7.3% for its fourth quarter, better than expected, with earnings beating as well.

--As reported by Tracey Lien of the Los Angeles Times, women are eschewing the tech industry in large numbers, even as industry group Code.org estimates computing jobs will more than double by 2020, to 1.4 million. Last summer the likes of Google, Facebook and Apple released figures showing men outnumbered women 4 to 1 or more in their tech sectors.

“A Harvard Business Review study from 2008 found that as many as 50% of women working in science, engineering and technology will, over time, leave because of hostile work environments.”

The Harvard study cited among other issues a “hostile” male culture, a sense of isolation and lack of a clear career path. 

Google’s engineering workforce is only 17% female, Apple’s is 20%.

--Speaking of Apple, it announced it is building two new data centers in Europe – Galway, Ireland and Jutland peninsula in Denmark – at a cost of about $1.9 billion. Hundreds of local jobs will be created.

Building the new facilities is actually one way for a company like Apple to spend the cash hoards it holds outside the U.S.

--But here is some not so good news for Apple and its ilk. According to tech consultancy Canalys – tablet sales fell 12% over the final three months of 2014 compared with the same period the previous year.

Apple sold 15% fewer iPads over 2014 vs. 2013.

Gartner is forecasting worldwide tablet sales of 259 million in 2016, which means PCs will still be more popular.

--Offshore oil drillers are warning that the number of rigs “stacked” or idled is about to hit a two-decade high.

Norway’s SeaDrill said, “The offshore drilling market is entering the second year of a downturn, which is shaping up to be more challenging than the first and worse than had previously been expected by the industry.”

As reported by the Financial Times’ Christopher Adams and Ed Crooks: “Rates for advanced, deepwater rigs have tumbled from a peak of about $650,000 a day two years ago to $350,000-$400,000 now, with contractors slashing prices in the face of dwindling exploration, some to near breakeven levels.”

Spain’s Repsol this week became the latest to announce it was slashing capital spending, in their case by 35% in 2015.

--As expected, President Obama vetoed a bill to approve construction of the Keystone XL oil pipeline. The White House said the president continues to wait on all of the environmental and regulatory reviews to be completed. But it’s also a signal to the new Republican-controlled Congress that he is not rolling over when it comes to their agenda.

Wyoming Republican Sen. John Barrasso said, “This is bipartisan legislation being vetoed by a partisan president.”

The debate on the pipeline goes all the way back to 2008, when TransCanada Corp. first applied for a permit to construct the 1,179-mile pipeline delivering heavy petroleum from Alberta’s oil sands to ports and refineries on the Gulf Coast. To be continued...as in Republicans will attach it to a bill later in the year that the president will have to sign. At least that is the plan for today.

--In the U.K., the offshore oil and gas industry has just gone through its worst annual performance in four decades, spending about $7 billion more than it earned during 2014, according to BBC News.

Plus, while it was expected 25 wells would be drilled, only 14 were.

--Officials at United Airlines sent their pilots a warning recently under the heading “significant safety concerns,” prompted by four separate “safety events and near misses” in prior weeks. As noted by the Wall Street Journal, “one incident required pilots to execute an emergency pull-up maneuver to avoid crashing into the ground.”

The memo dated Jan. 9 that just came to light, “focused on the dangers of lax discipline and poor cockpit communication and coordination.”

The last fatal accident for United occurred in 1991 and for Continental in 1987; the two having merged in 2010. [Not including the events of 9/11.]

United is hiring 700 pilots this year, a large number to integrate into a workforce that already has 12,000 pilots.

As the Journal story by Andy Pasztor and Susan Carey notes:

“Stressing the importance of conducting detailed pre-departure briefings and strictly complying with rules to keep planes from landing too fast or too far down runways, the bulletin mentioned the fatal crash of a United Parcel Service Inc. cargo jet that smashed into a hill while lining up to land in Birmingham, Ala., in 2013.

“ ‘The approach and landing appeared normal to the pilots until right before impact,’ according to the bulletin. ‘Let’s not for a moment think that could not happen at United.’”

--Meanwhile, federal officials have agreed to allow Southwest Airlines to keep flying 128 planes – one-fifth of its fleet – that Southwest had grounded on Tuesday after discovering it missed an inspection of a backup rudder system, as long as the planes were all checked within the next five days. Southwest, upon recognizing the omission, immediately notified federal safety regulators and took the planes out of service. [David Koenig / AP]

--The Indian government said the country’s economic expansion will accelerate to an 8.5% pace in the coming year, which would be a four-year high, which is higher than an earlier Finance Ministry forecast of 7.4% for the fiscal year, which begins in April.

Ergo, India should be outpacing China for the first time since the 1990s.

--This is startling but gambling revenues in Macau were down 55% during the weeklong Lunar New Year holiday compared with a year earlier. For all of February, the territory is tracking towards a decline of 50%. What’s kind of bizarre is actual tourist arrivals rose 7% for the holiday vs. last year, according to Barclays.

It’s all about China’s anticorruption campaign. The high-roller junkets of yore are quickly becoming a thing of the past. And the six major casino operators in Macau are all slated to open new palaces in the next few years. Good luck.

--Danish company Lego reported a 13% increase in revenue and a 15% jump in net profit in 2014, both records for the world’s most profitable toymaker. A decade ago the company was near death but last year produced 60bn bricks. 

As reported by the Financial Times’ Richard Milne, “Lego estimates that on average every person on earth owns 102 of its bricks.” The company’s biggest sales growth is coming in the U.S., U.K., France, Russia and China.

--Another iconic brand, Campbell’s Soup, isn’t fairing as well with sales for the quarter ending Feb. 1 down 2% over the prior year, while earnings fell 11%.

--According to Euromonitor, Budweiser’s U.S. market share fell to 8.7% in 2013, down from 14.3% in 2005, as younger drinkers prefer craft beers and bourbon.

--Workday, a leader in enterprise cloud applications for finance and human resources saw Q4 total revenue rise 59% year over year; up 68% to $787.9 million for fiscal 2015. 

But free cash flow for the year was negative with an operating loss of $215.7 million. That said, on the growth front WDAY continues to kick butt.

--According to a report from the Department of Commerce, travel abroad by Americans grew 10% in 2014 compared with the previous year to a record 68.3 million travelers. The previous record was 2007, prior to the recession.

About 34% of U.S. travelers going abroad went to Mexico, 19% to Canada and 18% to Europe. [Hugo Martin / Los Angeles Times]

--Hotel occupancy in Ireland is back up to 2007 levels, with the number of visitors from North America in 2014 jumping 15%.

--Doctors Without Borders (Medecins Sans Frontieres) reports that the average death rate from Ebola at the centers it is overseeing has dropped to 52% from 62% and there is no ready reason for it, except for the fact patients are arriving with less virus in their blood, which increases a patient’s chances of survival. [Donald G. McNeil Jr. / New York Times]

--Anton Troianovski of the Wall Street Journal had a fascinating story last weekend on salmon farming in the Faeroe Islands. It has to do with the sanctions leveled against Russia by the West over Ukraine, which means U.S. and European farmers are banned from selling fruit to Russia, to cite but one example.

But the Faeroe Islands, which lie between Iceland and Scotland, aren’t part of the European Union and so aren’t subject to the sanctions. And so when Russia retaliated against the countries that sanctioned it, the Faeroe Islands had an opportunity, a virtual monopoly on supplying Russia with fresh salmon, the Islands’ biggest export. In fact salmon-loving Russia is receiving just about all its fresh salmon (that which is imported) from the Faeroes, which has a population of 50,000....$79 million worth from September to December, up 627%, according to the Journal.

You know how I feel about Vlad the Impaler and the dirtballs around him, but I have to hand it to the Faeroe Islands. Said their prime minister, Kaj Leo Holm Johannesen, “People need to have food. Russia needs to have food.” 

The Faeroe Islands have been under Danish rule for almost six centuries, but negotiated a home-rule agreement with Denmark after World War II that grants them trade independence, while Denmark handles items such as foreign policy.

--Seaworld continues to suffer from the 2013 CNN documentary “Blackfish” over its treatment of captive killer whales. Revenue for the fourth quarter fell 3% from the same period in 2013. Plus Seaworld has been without a CEO for three months. 

The chairman has been filling in as interim CEO. Flipper would be a good choice, frankly. A bridge between the killer whales and management. 

“Flip, this container needs to be about three times larger and we want fresh mackerel.” “OK, Shamu. I’ll talk to management.”

A few minutes later at the executive council meeting, “He...heheheheheheheh....hehehehhe....”

--In week two without Brian Williams, NBC’s Nightly News telecast averaged 10.1 million viewers, maintaining a 400,000-viewer advantage over ABC’s World News. NBC executives have warned “interim” host Lester Holt that he won’t be able to take a day off until Thanksgiving 2017, to which Holt, ever the good company soldier, said “No problem.”

--We note the passing of longtime former Coca-Cola Co. president and chief operating officer, Donald R. Keough, 88. For many of us, this is a familiar name, as described by the Los Angeles Times’ Elaine Woo.

“Keough rose to the No. 2 job at the beverage giant in 1981 and with Coca-Cola Chairman Roberto Goizueta helped steer it through a prosperous era when its global revenues more than doubled to $14 billion despite one of the worst marketing stumbles in business history.

“Known as a skillful communicator, Keough played a major role in promoting and then retreating from a controversial 1985 decision to market ‘New Coke,’ a sweeter reformulation of the original drink that was conceived to beat back Pepsi, which had been cutting into Coke’s sales.

“But Coke loyalists instantly and massively revolted: They poured the new product down sewers, mocked the ‘Coke Is It’ ad with the line ‘Coke Was It,’ and overwhelmed the company’s switchboard with irate messages. After only three months, the company admitted its mistake and brought back the original version, which it called Coke Classic.

“Despite the gaffe – and Pepsi’s efforts to exploit it – Coca-Cola never lost its preeminence in the soft-drink industry. Much of the credit for Coca-Cola’s recovery went to Keough for his eloquent mea culpa at a news conference in July 1985.

“ ‘We love any retreat which has us rushing toward our best customers with the product they love most,’ said the executive, who called Coke’s appeal ‘a lovely American enigma.’”

Foreign Affairs

Iraq / Syria / ISIS: We learned this week officially that “Jihadi John,” the masked man with a British accent who has been beheading Western hostages is Mohammed Emwazi, a Briton from West London who graduated from college with a degree in computer programming. The Washington Post reported he traveled to Syria around 2012.

The Wall Street Journal noted that about one quarter of the 20,000 foreign fighters who have traveled to Syria and Iraq hail from Europe, North America and Australia, according to intelligence officials.

We also learned that Islamic State abducted a reported 200+ Assyrian Christians from villages in northeastern Syria, according to the Syrian Observatory for Human Rights, which has been an accurate source in the past of such moves, as well as casualty figures. [Assyrian leaders have said 287 were taken captive, including 30 children and several dozen women.]

The Syrian Observatory also claims U.S.-led air strikes have killed more than 1,600 people, mainly jihadis, since they began five months ago.

Meanwhile, in northern Iraq, sledgehammers were taken to ancient statues inside the Mosul Museum in what NBC’s Richard Engel called an act of “cultural genocide...taking a hammer to history,” as the museum highlighted finds from the Assyrian empire. ISIS claims it was destroying false idols.

Separately, a report from the Institute of International Law and Human Rights (IILHR), says Iraqi minorities face a “threat to their existence” as IS tries to eradicate them from large parts of the country. The IILHR says the acts being perpetrated by ISIS are tantamount to war crimes and, in some cases, genocide.

The IILHR focuses on the aftermath from the fall of Mosul to IS in June 2014, after which Christian, Shabak, Turkmen and Yazidi populations were targeted, with Christians told to leave or face execution. At least 160 Shabak were killed, according to the report.

Elsewhere, IS is using Yazidi as human shields, if they weren’t already abducted or killed. [BBC News]

And a note on Turkey. Hundreds of Turkish troops entered northern Syria to evacuate a historic Ottoman tomb and the soldiers guarding it. The remains of Suleyman Shah are to be moved elsewhere in Syria. Turkey considers the shrine to be sovereign territory, in accordance with a treaty signed in 1921, and the troops destroyed the tomb’s complex to prevent it from falling under IS control.

Suleyman Shah, who lived from around 1178 to 1236, was grandfather of the founder of the Ottoman Empire, Osman I.

In August 2012, President Erdogan – then prime minister – had warned an act against the tomb would be considered “an attack on our territory, as well as an attack on NATO land.”

Israel / Iran: Following two days of talks between Secretary of State John Kerry and Iranian Foreign Minister Mohammad Javad Zarif in Geneva, outlines of a deal over Iran’s nuclear program began to leak out, with the plan to constrain Iran for ten years, during which time it is supposed to be closely monitored, but then after Tehran could build up its capabilities again, a “sunset” clause.

Sen. Bob Corker (R-Tenn.) said a 10-year time frame wasn’t long enough.

“If you’re going to do all of this and then just end up with a 10-year agreement, you just really haven’t accomplished near what people had hoped,” Corker chairing the Senate Foreign Relations Committee.

Israeli Intelligence Minister Yuval Steinitz, who I quoted extensively last week, said Iran would be “extremely close” to a “dangerous breakout program,” and “for a 10-year delay you are sacrificing the future of Israel and the U.S., and the future of the world.” [Wall Street Journal]

Charles Krauthammer / Washington Post

“A sunset clause?

“The news from the nuclear talks with Iran was already troubling. Iran was being granted the ‘right to enrich.’ It would be allowed to retain and spin thousands of centrifuges. It could continue construction of the Arak plutonium reactor. Yet so thoroughly was Iran stonewalling International Atomic Energy Agency inspectors that just last Thursday the IAEA reported its concern ‘about the possible existence in Iran of undisclosed...development of a nuclear payload for a missile.’

“Bad enough. Then it got worse: News leaked Monday of the elements of a ‘sunset clause.’ President Obama had accepted the Iranian demand that any restrictions on its program be time-limited. After which, the mullahs can crank up their nuclear program at will and produce as much enriched uranium as they want.

“Sanctions lifted. Restrictions gone. Nuclear development legitimized. Iran would reenter the international community, as Obama suggested in an interview in December, as ‘a very successful regional power.’ A few years – probably around 10 – of good behavior and Iran would be home free.

“The agreement thus would provide a predictable path to an Iranian bomb. Indeed, a flourishing path, with trade resumed, oil pumping and foreign investment pouring into a restored economy.

“Meanwhile, Iran’s intercontinental ballistic missile program is subject to no restrictions at all. It’s not even part of these negotiations.

“Why is Iran building them? You don’t build ICBMs in order to deliver sticks of dynamite. Their only purpose is to carry nuclear warheads. Nor does Iran need an ICBM to hit Riyadh or Tel Aviv. Intercontinental missiles are for reaching, well, other continents. North America, for example.

“Such an agreement also means the end of proliferation....(Regional) hyperproliferation becomes inevitable as Egypt, Turkey, Saudi Arabia and others seek shelter in going nuclear themselves.

“Wasn’t Obama’s great international cause a nuclear-free world?....

“Consider where we began: six U.N. Security Council resolutions demanding an end to Iranian enrichment. Consider what we are now offering: an interim arrangement ending with a sunset clause that allows the mullahs a robust, industrial-strength, internationally sanctioned nuclear program.

“Such a deal makes the Cuba normalization look good and the Ukrainian cease-fires positively brilliant. We are on the cusp of an epic capitulation. History will not be kind.”

As for Israeli Prime Minister Netanyahu’s speech to Congress on Tuesday....

Editorial / Wall Street Journal

“(Leave) it to the political wizards of the Obama administration to turn it into the global diplomatic event of the year.

“From the moment House Speaker John Boehner invited Mr. Netanyahu, the Obama administration has made its displeasure plain, first accusing the Israeli government of breaching diplomatic protocol and leaning on Congressional Democrats to boycott. Then this week the administration unleashed a withering personal and political attack that is unprecedented against a close ally. National Security Adviser Susan Rice even said the speech is ‘destructive of the fabric of the relationship’ between Washington and Jerusalem.

“That’s some claim against one speech, and it’s worth asking why the administration has gone to such extraordinary lengths to squelch it. Mr. Netanyahu is expected to make the case against President Obama’s looming nuclear deal with Iran, and perhaps the administration knows how vulnerable it is to such a critique.”

After Susan Rice’s above comment, Netanyahu said the U.S. and others were “accepting that Iran will gradually, within a few years, develop capabilities to produce material for many nuclear weapons.

“I respect the White House and the president of the United States but on such a fateful matter, that can determine whether or not we survive, I must do everything to prevent such a great danger for Israel.”

Secretary of State John Kerry, in congressional testimony, said: “The policy is: Iran will not get a nuclear weapon.” Then he added in an apparent dig at Netanyahu: “Anyone running around right now, jumping to say ‘we don’t like the deal,’ or this or that, doesn’t know what the deal is. There is no deal yet.”

As for the March 17 Israeli election, Netanyahu’s Likud is neck-and-neck with the ZU, led by Yitzhak Herzog and Tzipi Livni.

But as Benny Avni said in an editorial for the New York Post, “Netanyahu’s opposition is every bit as leery of the rumored Iranian nuclear deal as Bibi is.”

Egypt: President Abdel-Fattah Al Sisi said in a televised address to the Egyptian people on Sunday that there was the need for a joint Arab military force to combat IS.

“The need for a unified Arab force is growing and becoming more pressing every day,” said Sisi.

Such a plan, including Saudi Arabia, the UAE and Kuwait was discussed for a time last fall, but it died out, though now it’s being resurrected to include, potentially, Jordan, France, Italy and Algeria.

Yemen: Former President Abed Rabbo Mansour Hadi has vowed to reclaim power after fleeing to the southern city of Aden over the weekend, slipping out of the capital, Sanaa, where he was being held by rebels under house arrest since last month. Supposedly his escape went undetected for hours as he had the help of presidential guards. [Another story had the rebels allowing him to leave under international and local pressure.]

Hadi, a Sunni Muslim, had been an ally of the U.S., especially in its efforts to take out al-Qaeda in the Arabian Peninsula (AQAP). Washington still considers him the legitimate leader despite the Houthi takeover.

Russia / Ukraine: I had written up what follows on Ukraine before I learned Friday afternoon of the assassination of Russian opposition leader Boris Nemtsov. For starters, when I saw the first pictures I thought, I’ve been on that bridge more than once...it’s how you get from the Kremlin area to the great Tretyakov gallery of Russian art, one of my favorites in the world. Walking alone on it, though, was kind of spooky, especially when you’re an American. For Boris Nemtsov it proved deadly.

I’ve referenced Mr. Nemtsov countless times in my columns, including last spring when he was one of the few in Russia with the guts to criticize Putin’s annexation of Crimea.

It was also just last week I noted that fellow opposition leader Alexei Navalny had been placed in jail for promoting an anti-Putin demonstration that was to take place this Sunday, March 1. Nemtsov on Friday was also promoting it hours before he was gunned down in a drive-by hit.

So now the anti-Putin protest has been canceled and a memorial march will be held in its stead. Oh how I wish I was there.

Putin is now overseeing the investigation, which of course is laughable. He probably had Nemtsov killed just like he has had countless others taken out over the years, going back to the 1999 apartment bombings. He’s a murderer. Anyone with half a brain knows this.

Just ask the family of human-rights activist Anna Politkovskaya, or the friends of Alexander Litvinenko...and all the innocents in those apartment buildings who perished in bomb attacks blamed on Chechen rebels as a pretext for Putin executing his war there.

But there’s also a chance in this instance he did not directly order the hit. And were that to be the case it would be an example of the dark “third force” I’ve written of for years now that will one day take out Putin himself. 

More next week...continuing with the rest of the news...

As of Friday, there were signs the cease-fire in Ukraine was beginning to take hold as Kiev said it would start pulling back heavy weapons from the front lines, though late reports had 3 Ukrainian servicemen being killed Thursday night after two days of no deaths.

But there seems little doubt that eventually Russia (and the separatists) will move on the port city of Mariupol to create the land bridge to Crimea. The separatists claim they have pulled back close to 100% of their artillery but of course they can return to the front lines at a moment’s notice.

Meanwhile, Ukraine’s gas company Naftogaz said on Friday it paid $15 million for another month of Russian gas, but Moscow said that was enough for only an additional day of deliveries. Per an October agreement between the two nations, Kiev was to pay in advance for gas shipments. Earlier in the week, Putin warned Russia would cut off supplies unless it received further pre-payments.

NATO Commander Gen. Philip Breedlove told Congress that even if the U.S. armed Ukraine’s army, they wouldn’t be able to stop Russians from expanding further into Eastern Ukraine.

“More than 1,000 pieces of Russian military equipment have been transferred into Ukraine, including tanks, armored personnel carriers, heavy artillery pieces and other military vehicles and equipment. These are not the actions of a good faith negotiating partner,” said Breedlove.

Sen. John McCain said Wednesday on the Senate floor that the U.S. was obligated to arm Ukraine, regardless. “To me, it’s the most unbelievable view that somehow we don’t want to provoke Vladimir Putin, who has taken Crimea – they’ve written that off. Shot down an airplane, at least with Russian equipment. Moved and dislocated Eastern Ukraine. Caused an economic crisis. And we don’t want to provoke Vladimir Putin?”

Breedlove said: “I think first and foremost, Mr. Putin has not accomplished his objectives in Ukraine, so next is probably more action.” [Ben Watson / Defense One]

On a different issue, Russian propaganda, the Financial Times’ Andrei Ostalski had the following:

“Most Russians support President Vladimir Putin and his policies in Ukraine. Most share his anti-Western views. At home, Mr. Putin’s actions have given him an extraordinary propaganda victory. Many younger people are persuaded by television that the West is weak, decadent and more likely to capitulate than risk a direct confrontation. The older generation seems more cautious.

“But it is a widely sold T-shirt design that best captures the public mood. It is emblazoned with the words: ‘Don’t make our Iskanders laugh’ – and it carries a picture of the strategic nuclear missiles to which the caption refers. This, to many Russians, is the appropriate response to western sanctions: respect us, or we nuke you.

“Some of the country’s pundits claim a nuclear war may be winnable. ‘Russia can turn the U.S. into radioactive dust,’ Dmitry Kiselyov said last year on primetime television. Mr, Kiselyov is neither a marginal eccentric nor an ordinary political commentator. He enjoys close links with the Kremlin and is, in effect, Russia’s propagandist-in-chief.”

Lovely. I said months ago there will be a nuclear scare this year, a threat from the Kremlin. Last weekend, thousands of Russians gathered in Red Square to mark the anniversary of Ukraine’s pro-Russian president being forced to flee, vowing it would never be repeated in Russia. The assortment of ultranationalists, war veterans, bikers and other pro-Kremlin groups bore banners that said “Die, America!” or “U$A, Stop the War!”

According to a poll conducted this month by the independent Levada Center, 81% of Russians feel negatively about the United States – the highest figure since the early 1990s – and 71% feel negatively about the European Union.

The number of Russians who dubbed relations between Russia and the U.S. as that of “enemies” leapt from 4% in January 2014 to 42%. [Irish Independent]

At the same time as the Red Square protest, in Kharkiv, Ukraine, where demonstrators marked the deaths of more than 100 protesters in last year’s revolution, pro-Russian separatists threw an explosive device from a car towards the marchers, killing two.

Mikheil Saakashvili (former president of Georgia) / Washington Post

“One thing is clear: The post-Cold War order in Europe has been irreversibly undermined. New solutions need to be found to avoid further chaos. But the West should accept that Putin is not just after pieces of the former Soviet empire. He clearly regards his hybrid war a payback for Russia’s defeat in the Cold War. Ukraine is Putin’s frontline in a standoff with the West. It is his West Berlin – the taking of which was a matter of principle for Stalin and the successful protection of which ultimately reversed the spread of communism in Europe. The dismantlement of Ukraine is how Putin seeks to erode the values of the transatlantic alliance, and the future of Europe is no less at risk than it was decades ago in Germany.

“The West must also accept that Ukraine is today’s West Berlin: the frontline in the defense of Western values against Russian revanchism.”

In a “soft” interview with Russian television, President Putin said war with Ukraine was “unlikely.” When asked whether Russia had invaded Ukraine, he shrugged off evidence he had deployed troops to help the rebels. Instead he said Kiev was claiming that to hide its humiliation at being defeated by former miners and tractor drivers.

Regarding Crimea, Putin said Ukraine should spend more time focusing on saving its collapsing economy instead of vowing to take back the land. [BBC News]

China: State-run media gave wall-to-wall coverage on Wednesday of President Xi Jinping’s newly declared “four comprehensives” political theory as he consolidates power and advances his own brand of Communist thought.

As reported by the South China Morning Post and Agence France-Presse, in a 2,000-word editorial in the People’s Daily, the slogan refers to “four orders made by Xi since he took power two years ago, namely, to comprehensively build a moderately prosperous society, to deepen reform, to govern the country strictly according to the law and to enforce strict discipline with the governing Communist Party.”

The People’s Daily commentary, the first of five to be published, said the “four comprehensives” would lead the way for national renewal, though most analysts say these are simply catchphrases with little impact. I would say it’s all a bunch of bull. Albeit scary B.S.

On a totally different matter, China announced it was banning the import of ivory products for one year amid worldwide criticism it was helping to threaten the existence of African elephants. Britain’s Prince William, a strong critic of the ivory trade, is touring China this coming week.

Last year, according to a report by Save the Elephants and the Aspinall Foundation, the number of ivory goods on sale in Beijing and Shanghai had risen 60% compared with 2002. Last December, the two reported that more than 100,000 wild elephants were killed from 2010 to 2012, with their slaughter largely fuelled by the “out of control” illegal ivory trade in China.   [South China Morning Post]

North Korea: The start of the annual joint U.S.-South Korean military exercises is March 2, eight weeks of drills. So it’s time for Pyongyang to step up its rhetoric.

“The DPRK (Democratic People’s Republic of Korea) will wage a merciless sacred war against the U.S. now that the latter has chosen confrontation,” the country’s official news agency aid.

“Nuclear weapons are not a monopoly of the U.S.,” quoting from an article running in the Workers’ Party newspaper. “The U.S. is seriously mistaken if it thinks its mainland is safe.”

Regarding their neighbor, the Orcs recently described inter-Korean relations as “inching close to a catastrophe.”

Bangladesh: A U.S.-Bangladeshi blogger was hacked to death in the capital Dhaka after his writings on religion upset Islamist hardliners.

Avijit Roy was an atheist advocating secularism and he was attacked walking back from a book fair with his wife, who was also injured. No one was arrested but a local Islamist group praised the killing. At least two of the attackers used meat cleavers.

Britain: Ahead of May’s super important general election, the monthly Survation (sic) poll for the Daily Mirror has the Conservatives at 28%, with Labour at 34%, UKIP 19%, and the Liberal Democrats 10%. 

The daily YouGov poll for the Sun has the Conservatives (Tories) at 35%, Labour 33%, UKIP 14% and the Lib. Dems 6%.

Many of us are curious to see how Nigel Farage’s anti-immigrant, anti-EU UKIP party does. With neither the Conservatives nor Labour poised to come anywhere close to a majority, Farage becomes a power broker post-election, though he has said he does not want to be in a formal coalition with the Tories, but would support certain legislation, such as on the budget.

I mean this is looking like a freakin’ mess. Much more in coming weeks as, remember, Prime Minister David Cameron has promised a referendum on remaining in the European Union should he remain in power. 

France: Susan Dominus had a lengthy, fair and balanced, piece on the National Front in last weekend’s New York Times Magazine...worth checking out for political junkies. As for the drones mysteriously circling many of Paris’ high-profile sites, it’s more than a bit disturbing. A team from Al-Jazeera was arrested for allegedly flying an illegal one, but apparently they weren’t involved in the buzzing of tourist targets and the U.S. embassy, as well as nuclear power plants around the country.

Argentina: A judge dismissed the criminal allegations against President Cristina Fernandez de Kirchner that had been brought by Alberto Nisman, the prosecutor who accused her of conspiring to shield Iran from responsibility in the 1994 bombing of a Buenos Aires Jewish community center that left 85 dead.

Nisman died mysteriously last month as he was preparing to bring the charges against Kirchner. But the judge, Daniel Rafecas, decided there was not sufficient evidence to open an investigation.

Venezuela: Editorial / Wall Street Journal

“When Venezuelan intelligence agents carted off Caracas Mayor Antonio Ledezma to jail last week, they fired shots into the air to terrorize a gathering crowd. It was nothing unusual for the Venezuelan police state, which has studied under Cuba’s dictatorship. But it did underscore the magnitude of the economic and political crisis now gripping a country with one of the largest oil reserves in the world.

“Mr. Ledezma is accused of plotting to overthrow Venezuelan President Nicolas Maduro with U.S. help. The government has provided no evidence....

“A government that has run out of money will find it more difficult than it has in the past to contain popular unrest. Mr. Ledezma has appealed to Venezuelans from prison to ‘continue the struggle in the streets,’ and the increasing economic desperation raises the odds of a bloody confrontation. It’s past time for the U.S. and its allies to start calling tyranny by its name in Venezuela.”

Inflation is running at 68%. Ledezma was seized from his office by police dressed in camouflage and armed with assault rifles. Maduro’s poll numbers are cratering. I said when he took over for Hugo Chavez the guy was an idiot. He is proving to be just that.

Random Musings

--Senate leaders reached a deal on a ‘clean’ funding bill for the Department of Homeland Security to avoid a shutdown, with Senate Majority Mitch McConnell (R-Ky.) anxious to avert any political risk such a temporary move might entail. The goal is to act separately on President Obama’s executive actions to shield several million unauthorized immigrants from deportation; DHS having oversight of immigration and the border patrol, among other duties.

But the real issue was whether House Speaker John Boehner (R-Ohio) would bring the Senate’s bill to the floor, which would anger more conservative members of his caucus.

At risk are Latino voters, who voted by almost 3-1 for Obama over Mitt Romney in 2012. Republicans have to narrow this margin to win the White House in ’16, plus Obama took Florida in both of his elections, Latinos making up 1-in-5 of the state’s voters.

So what happened late Friday? Oh, time doesn’t permit me to go thru the details now, but I will next time. Bottom line, DHS is being funded for another week while Boehner tries to get the 50 or so Republicans out for his head to understand the vast majority of the American people are tired of their garbage.

--Michael Goodwin / New York Post

“He can’t bring himself to call Islamic terrorists what they are, but President Obama finally said something with which we can all agree. Speaking of his remaining time in office, he said: ‘Two years is a long time.’

“He can say that again – and did, attaching a scary promise about his plans for the twilight of his tenure.

“ ‘Two years is also the time in which we’re going to be setting the stage for the next presidential election and the next 10 years of American policy,’ he told wealthy donors in San Francisco. ‘So I intend to run through the tape and work really hard, and squeeze every last little bit of change.’

“There you have it. Instead of cleaning up the messes he’s created, Obama is hell-bent on making more of them.

“The word that comes to mind is ‘rogue.’ As in, the president is going rogue. Like an elephant on a rampage, he’s breaking free of all constraints.

“That makes the next two years extremely dangerous. Not just for Americans, but also for people around the world who count on us for their security and well-being.

“It is party time for the bad guys. Imagine you are the head of Islamic State or al Qaeda. Or you are Vladimir Putin, the head of China or the ayatollah of Iran.

“You know Obama has spent six years shrinking America’s footprint and abandoning allies, leaving behind the vacuums you are filling. It’s already a bonanza, and his vow to double down over the next two years means you will never get a better opportunity to make more hay.

“The whole world knows that, no matter who the next president is, he or she almost certainly will be determined to reassert some level of global leadership.

“Until then, the Putins, the mullahs and the terrorists will match Obama’s sprint to the finish with their own.”

--Rudy Giuliani / Wall Street Journal [defending his remarks about President Obama not loving America.]

“I didn’t intend to question President Obama’s motives or the content of his heart. My intended focus really was the effect his words and his actions have on the morale of the country, and how that effect may damage his performance....

“Irrespective of what a president may think or feel, his inability or disinclination to emphasize what is right with America can hamstring our success as a nation. This is particularly true when a president is seen, as President Obama is, as criticizing his country more than other presidents have done, regardless of their political affiliation. Furthermore, this president sometimes seems to have a difficult time in expressing adequate support for important allies, particularly Israel, Ukraine and Jordan. We can all agree that the Islamic State militants and other radical Islamists – including the regime in Iran, the largest state sponsor of terrorism in the world – threaten our safety and security. Any reluctance to hold up America and its ideals in contrast to the nation’s enemies weakens our message. Any reluctance to define accurately the beliefs of our enemies helps them camouflage themselves and confuses our military and intelligence efforts.

“Presidents John Kennedy, Ronald Reagan and Bill Clinton all possessed the ability to walk a fine line by placing any constructive criticisms regarding the ways the country might improve in the context of their unbending belief in American exceptionalism. Those presidents acknowledged America’s flaws, but always led with a fundamental belief in the country’s greatness and the example we set for the world. When President Reagan called America a shining city upon a hill, it burnished our image, rallied our allies and helped ultimately to defeat the Soviet empire....

“But I can only be disheartened when I hear (President Obama) claim, as he did last August, that our response to 9/11 betrayed the ideals of this country. When he interjected that ‘we tortured some folks,’ he undermined those who managed successfully to protect us from further attack.”

A YouGov poll, in conjunction with the Huffington Post, found 69% of Republican respondents do not believe Obama loves America.

The National Review’s John Fund wrote Wednesday:

“I thought Giuliani’s comments inappropriate, but the White House should be concerned to the extent their own signaling and policies have led to such a result. It is indeed hard to imagine similar results for any modern president.”

A January Washington Post/ABC News poll had the same 69% of Republicans “strongly” disapproving of Obama’s performance. [Scott Clement / Washington Post]

--GOP presidential contenders gathered for the annual Conservative Political Action Conference and Wisconsin Gov. Scott Walker had the first gaffe in talking about President Obama, saying a commander in chief should “do everything in their power to ensure that the threat from radical Islamic terrorists does not wash up on American soil.”

“If I can take on 100,000 protesters,” Walker added, referring to his battles with the unions in his state, “I can do the same across the world.”

A Walker spokeswoman issued a statement late Thursday saying the governor “was in no way comparing any American citizen to [the Islamic State.] What the governor was saying was when faced with adversity he chooses strength and leadership.” [Washington Post]

Sen. Rand Paul hopes to win the conference’s concluding straw poll for a third straight year.

--Peggy Noonan / Wall Street Journal

“What the Republican Party needs in a presidential candidate is not a centrist who can make the sale to conservatives in the primaries; it is a conservative who can win over centrists in the general election. That means the Republican nominee should be a man or woman who can redefine conservative thinking for current circumstances and produce policies that centrists and independents will find worthy of consideration.

“Jeb Bush is said by some and treated by many as the front-runner, the one to beat. I don’t see it. In fact I think he’s making a poor impression.....

“Mr. Bush is spending much of his time in The Rooms – offices and conference rooms – with millionaires and billionaires. Money in politics is very important, and Mr. Bush makes a great impression on the denizens of The Rooms. He speaks their language. They like his experience, the fluency with which he speaks of domestic policy. Here his family name helps him; they know he is politically vetted, a successful former governor, is respectful of the imperatives of business, and is bottom-line sane....

“Mr. Bush’s operation is also, according to the New York Times, muscling party strategists and policy specialists to advise only him and no one else. Again a message is sent: Be with us now or we’ll remember later. It sounds tough and Clintonian. Actually it looks less like a sales pitch than a hostile takeover.

“There’s something tentative and joyless in Mr. Bush’s public presentations....

“What is most missing so far is a fierce sense of engagement, a passionate desire to lead America out of the morass, a fiery – or Churchillian – certainty that he is the man for the moment....

“I am not sure Mr. Bush likes the base. If he doesn’t, it would explain some of his discomfort....

“A certain resistance to the idea of Mr. Bush is bubbling up among some journalists and intellectuals....

“Jim Geraghty of National Review writes of ‘considerable evidence that there’s a lot of Jeb-skepticism out there among conservatives.’ Jay Cost of the Weekly Standard says Mr. Bush may be ‘cornering the market’ on professional Republicans but asks: ‘What is the case for a Bush restoration, beyond the fact that it would make the professional GOP comfortable once again? Why should average Republican primary voters – the insurance salesmen and truck drivers, not pollsters and policy advisors – choose Jeb over Scott Walker, Chris Christie, Ted Cruz, or the dozen other potential nominees?’....

“The road is long. Maybe Jeb Bush will succeed. But no one should bow to his inevitability. He doesn’t have a better chance with Republican voters than some other possible candidates, and may have less.”

--New Jersey Republican Gov. Chris Christie introduced a $33.8 billion state budget proposal on Wednesday, warning of dire consequences unless action is taken on the state’s pension obligations.

Christie has touted his ability to cross party lines on critical issues before and he announced he reached an accord with the state’s largest teachers union, NJEA, on resolving the pension and health benefit systems, but the NJEA said a deal has not been struck, rather it’s just a roadmap.

“NJEA is deeply disappointed that Gov. Chris Christie overstated the nature of the understanding we reached with the commission,” the NJEA president said in a statement. “We have not agreed to any changes to pension or health benefits.”

But what’s this? A new Monmouth University poll revealed that 63% of New Jerseyans call the Garden State a good (48%) or excellent (15%) place to live, while another 25% rate it “only fair,” and 11% rate it a “poor” place. So it’s a slight tick up from the 61% who responded excellent or good back in September. [Jeff Goldman / NJ Advance Media]

Monmouth has been conducting this poll since 1980 and the peak level of satisfaction was in February 1987, 84%. 

--Donald Trump said he is “more serious” than ever about running for the White House, revealing in an interview with the Washington Post that he has hired staffers in key primary states and delayed signing on for another season of “Celebrity Apprentice” because of his projected schedule. Trump told the Post’s Robert Costa:

“Everybody feels I’m doing this just to have fun or because it’s good for the brand. Well, it’s not fun. I’m not doing this for enjoyment. I’m doing this because the country is in serious trouble.”

Trump met with Reince Priebus, the chairman of the Republican National Committee, this week. Last Sunday, Trump gave a speech at the Citadel and met with South Carolina Republican Sen. Tim Scott.

But most just continue to roll their eyes when they hear Trump and the White House in the same sentence.

--Chicago Mayor Rahm Emanuel suffered a setback in the city’s mayoral election.    He wasn’t able to garner 50% of the vote and will now face an April runoff against Cook County Commissioner Jesus ‘Chuy’ Garcia; Emanuel receiving about 45% to Garcia’s 34%. Even President Obama’s direct campaigning for his former chief of staff didn’t help enough.

Emanuel has had a most contentious first term, including the first teachers strike in a generation, a soaring murder rate, and a deeply underfunded pension system.

--Eddie Ray Routh was sentenced to life in prison for the killings of “American Sniper” Chris Kyle and Kyle’s friend Chad Littlefield in 2013.

The death penalty was off the table so the jury faced only one possible sentence as Routh and his lawyers argued he was not guilty by reason of insanity and that he belonged in a state mental hospital.

The jury sided with prosecutors who portrayed Routh as a cold-blooded killer who knew his actions were wrong, a part of the legal test of insanity.

--Veterans Affairs Secretary Robert McDonald apologized a number of times Tuesday to veterans groups and members of Congress for falsely claiming he served in the Army Special Forces while speaking to a homeless man, the incident part of a CBS News segment.

When the homeless man told McDonald he had served in Special Ops, McDonald replied: “Special Forces? What years? I was in Special Forces.”

McDonald graduated from West Point and completed Army Ranger training before being assigned to the 82nd Airborne Division until his retirement, but he was never in Special Forces.

Lying about being in the Special Forces is a major no-no, stolen valor.

McDonald said “I have no excuse” and that he was making an attempt to connect with the veteran to make him feel comfortable.

About a week earlier, McDonald had falsely claimed on NBC’s “Meet the Press” that 60 Veterans Affairs employees had been fired in recent months related to the VA’s wait-time scandal, but the true number was eight, which he also apologized for.

--Fox News host Bill O’Reilly defended himself against charges originating in an article for Mother Jones magazine and subsequent interviews with journalists at CBS News that accused him of embellishing his record as a correspondent early in his career; with the first issue being his alleged misrepresentation of his coverage of the Falklands war in 1982.

The main issue is whether O’Reilly reported from active war zones, as he has inferred in some public comments and in his 2001 book, “The No Spin Zone: Confrontations With the Powerful and Famous in America.”

O’Reilly has said he never claimed he reported from the Falkland Islands, “I said I covered the Falklands war, which I did,” in describing his coverage of protests in the aftermath of the war on the streets of Buenos Aires. O’Reilly claims an unknown number of protesters were killed in the rioting, while others strongly dispute that anyone was shot or killed by police the main evening in question that CBS News released some footage of.

Rem Rieder / USA TODAY

“The estimable Jon Stewart gave voice to the ‘who really cares about this?’ take on The Daily Show Tuesday night. Basically, Stewart’s view is that spinning is pretty much what O’Reilly does for a living in his alleged ‘No-Spin Zone.’ As for Fox, Stewart said, ‘No one is watching them for the actual truth.’

“Much as I respect Stewart, though, I’m not with him on this one, for a couple of reasons.

“First of all, the truth is the truth. It matters. And there’s no real argument on the question of whether O’Reilly was in the actual Falklands ‘war zone.’ Everyone, including O’Reilly, agrees he wasn’t, his repeated claims that he was there to the contrary. No American correspondents got to those remote islands, only British journos brought there by the British armed forces....

“O’Reilly says he meant that he covered the war in general – from Buenos Aires, 1,200 miles away, like everybody else. There, he was caught up covering violent protests. Many have come forward to dispute just how violent the protests were. But it doesn’t really matter. A war zone is a war zone, and a riot scene isn’t. End of story....

“But there’s another reason why the kerfuffle deserves scrutiny, and that’s O’Reilly’s scorched-earth response to the allegations. From the jump, O’Reilly’s approach has been to try to shift the focus to his accusers, in a decidedly ugly way. The whole thing, he maintains, is simply a partisan effort to damage him and damage Fox....

“O’Reilly said on The O’Reilly Factor Monday night, ‘I want to stop this now,’ as if, unlike everybody else, unlike all of his targets, he were somehow above scrutiny.

“He’s not.”

O’Reilly has also faced charges he misrepresented his record as a war correspondent in El Salvador during the civil war there.

A Fox spokesperson said in a statement: “This is nothing more than an orchestrated campaign by far left advocates Mother Jones and Media Matters.”

O’Reilly’s ratings haven’t suffered a lick. Actually his audience on Monday was his largest in the 25-to-54 age group since November 2012.

--I couldn’t help but note this story from the Irish Independent. A couple in Dublin was hosting a ‘sweet 16’ birthday party for their daughter and a few of her friends, but an invite to the party was posted on Facebook and it went viral. 250 teenagers showed up, “A knife was put up to the throat of (the husband) as he tried to prevent a gang of youths from ripping a television off his wall. A bottle was also smashed over (the husband’s) head.”

As if this wasn’t enough, the couple’s 11-year-old son, who has special needs, “was repeatedly thrown against the sitting room wall as the chaos unfolded.”

Knives were used to rip the furniture, pictures ripped off the walls. A total nightmare.

But the payoff is, “Gardai cleared the large crowd from the home, but no arrests have been made in relation to the incident.”

--February has been brutally cold in the New York area, let alone the snow issues they’ve faced in Boston and its surrounding environs.

How cold has it been here? The average temperature for the month is 11 degrees below normal and New York will have had its coldest February in 81 years, 1934. That month in ‘34 was perhaps the worst month in NYC weather history, so if you take that one out, this February is the coldest since 1885.

--From Rachel Feltman / Washington Post:

“Astronomers have spotted an object of almost impossible brightness about 12.8 billion light years away – the most luminous object ever seen in such ancient space.

“It’s from just 900 million years after the big bang, and the old quasar – a shining object produced by a massive black hole – is 420 trillion times more luminous than our sun....

“The newly found black hole contains the equivalent of about 12 billion suns, more than twice the mass of previously found black holes of similar age, said researcher Bram Venemans with the Max Planck Institute for Astronomy in Germany.”

My brain hurts.

--We note the passing of Rev. Theodore Hesburgh, who served as president of Notre Dame from 1952 to 1987, a titanic figure in the fields of civil rights and Catholic higher education who held 150 honorary degrees and the Medal of Freedom, the nation’s highest civilian honor.

Notre Dame President the Rev. John Jenkins in a statement said: “With his leadership, charisma and vision, he turned a relatively small Catholic college known for football into one of the nation’s great institutions for higher learning. He was a steadfast champion for human rights, the cause of peace and care for the poor.”

Hesburgh marched with Martin Luther King Jr., worked on immigration reform, and fought for the world-wide elimination of nuclear weapons.

Hesburgh was 97.

--And Leonard Nimoy. RIP. Live long and prosper.

--Finally, while Presidents’ Day was two weeks ago, last weekend in the Star-Ledger, columnist Mark Di Ionno* had some interesting thoughts on the treatment of the holiday.

*Mark and I went to the same high school here in New Jersey and we share some of the same frustrations.

“Take out a dollar and look at George Washington. Dignified. A brilliant military strategist, a much-underrated political genius. No single person more formed America’s identity and forged its ideals. Read his farewell address; it’s about how to avoid the decay of both.

“Yet this time of year, we turn him and Abraham Lincoln, the preserver of what Washington started, into cartoon characters. We get talking bucks and pennies shilling for cars, furniture and mattresses. We get salesmen in white wigs and top hats, bastardizing their legendary expressions.

“ ‘I cannot tell a lie...shop at so-and-so for the best deals...’

“Last year, a carmaker had them doing a little blue-eyed soul.

“This year, a furniture chain turned Mount Rushmore into a barbershop quartet.

“It gets worse every year and I’d say there ought to be a law against it, but I know both great presidents would disagree.

“ ‘If freedom of speech is taken away, then dumb and silent we may be led, like sheep to the slaughter.’ –Washington

“ ‘Don’t interfere with anything in the Constitution. That must be maintained, for it is the only safeguard of our liberties.’ –Lincoln.

“So we’re stuck with it, this commercial debasement of our two greatest leaders, just as we’re stuck with Memorial Day being de-solemnized. Call it irreverent. Tasteless. Plain stupid. Pick your adjective. They all apply when red, white and blue is seen through the green lens of money. Washington understood greed.

“ ‘Few men have virtue to withstand the highest bidder,’ he said.

“He also said, ‘Guard against the impostures of pretended patriotism.’

“That is from his farewell address. Of course, he was talking about potential despots who would skirt Constitutional law for their own political power, not mattress salesman. Still...

“Is nothing sacred?

“No, nothing is sacred...

“(Robert W. Snyder, an associate professor of American Studies and journalism at Rutgers University-Newark), sees the commercial silliness as a lost opportunity for reflection and education.

“ ‘Those holidays, think about what Washington and Lincoln really meant, were a chance for us to take stock of who we were, who we are, and who we might become,’ he said.”

Regarding this last bit, who we might become, one need only look at the “buzz” over the dress photo at week’s end.

---

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

God bless America.
---

Gold closed at $1213
Oil $49.76

Returns for the week 2/23-2/27

Dow Jones -0.04% [18132]
S&P 500 -0.3% [2104]
S&P MidCap -0.7%
Russell 2000 +0.1%
Nasdaq +0.1% [4963]

Returns for the period 1/1/15-2/27/15

Dow Jones +1.7%
S&P 500 +2.2%
S&P MidCap +3.7%
Russell 2000 +2.4%
Nasdaq +4.8%

Bulls 59.5
Bears 14.1 [Source: Investors Intelligence...huge spread between bulls/bears hasn’t meant anything yet. Reminder for newbies...this is a contrarian indicator.]

Have a great week. I appreciate your support.

Brian Trumbore