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05/30/2015

For the week 5/25-5/29

[Posted 10:30 PM ET, Friday]

http://www.gofundme.com/s3h2w8

Edition 842

Washington and Wall Street

As expected first-quarter GDP was revised downwards on Friday to -0.7%, annualized, from an initial 0.2% advance, as reported by the Commerce Department.

The pullback was the third time we had negative growth in a quarter since the current recovery began in mid-2009, with declines in output in the first quarters of 2011 and 2014.

The revision was forecast because of new data that showed exports fell more than first thought (the strong dollar continues to hammer multi-nationals) and imports were higher, compounding the issues that came with an awful winter in many key parts of the country.

Despite the windfall from falling gasoline prices in the first quarter, personal consumption rose by only 1.8%, down from 4.4% in Q4.

The revised report also showed personal consumption expenditures, the Fed’s preferred inflation gauge, fell 2%, up 0.8% on core, so not an issue for the Fed.

The last few quarters of annualized growth in GDP thus look like this.

Q1 2014... -2.1%
Q2 2014... 4.6%
Q3 2014... 5.0%
Q4 2014... 2.2%
Q1 2015... -0.7%

And for all of....

2012... 2.3%
2013... 2.2%
2014... 2.4%

Economists expect the second-quarter growth rate to be somewhere between 2% and 3%, though as I’ve noted before the Atlanta Fed’s GDPNow indicator is currently pegging it at just 0.8%.

In other economic news, April durable good came is as expected, -0.5%, with orders for capital equipment up 1% after a revised 1.5% increase in March.

On the housing front, April new home sales were at an annualized rate of 517,000, better than expected, while pending home sales came in at their highest level in almost a decade, up 3.4% to the highest reading since May 2006.

Separately, the S&P/Case-Shiller 20-city index for March was up 5% from March 2014.

Yes, housing continues its recovery, but as an earlier release on existing home sales showed, the average median sales price had risen 8.3% and this isn’t necessarily healthy.

Two other items. The FDIC released data this week that showed commercial and industrial loans rose 8.5% in the first quarter, year over year, and now represent 21% of outstanding loan balances at U.S. banks, the highest in 13 years. This is good.

But Friday, a reading from the Chicago Purchasing Managers Index came in at 46.2 for May vs. expectations of 53. Not good. The Institute for Supply Management, which produces the survey, said: “April’s positive move had suggested that the first quarter slowdown was transitory and had been impacted by the cold snap and port strikes. May’s weakness points to a more fundamental slowdown with the Barometer running only slightly above February’s 5 ½-low of 45.8.”

In other matters....

Late last Friday night, as I noted in this space, the Senate approved the Pacific free-trade accord known as the Trans-Pacific Partnership, but the battle in the House will be far tougher as President Obama faces greater resistance from both Democratic leaders and some Republican conservatives. The House could vote this coming week and unless Obama swings about a dozen more Democrats to his side than have currently lined up in support of the TPP, he’ll fall short.

If the president was able to twist enough arms, the deal could be wrapped up in July. The fast-track legislation calls for Obama to then wait 90 days for people to review the agreement, done largely in secret, before he signs it. There could be a further months-long delay, meaning final, final approval wouldn’t come until late this year, so it could then fall victim to the 2016 presidential race.

Separately, the Federal Reserve published the results of an annual survey (2014 data) of the financial wellbeing of Americans and the percent who believe their income will be higher next year is 29%, up from 21% of those questioned in 2013.

Almost half of those surveyed (47%) say they couldn’t cover an emergency expense of $400 without borrowing or selling something to raise the funds.

But the percent of people who describe themselves as “doing OK” or “living comfortably” is 65%, up from 62%.

In an interview with Yahoo Finance’s Andy Serwer, BlackRock CEO Larry Fink said he has been working on a “long termism” campaign, firing off letters to 700 CEOs and top executives, requesting they focus more on long-term objectives and less on quarterly goals and financial engineering in particular to achieve them.

Fink also said that whereas two or three years ago he said investors should be 100% in equities, today he couldn’t make that recommendation because valuations are much higher. “And more importantly, we have extreme valuations because of the central banks’ behavior.”

Europe and Asia

It remains all about Greece, with a key payment to the IMF due on June 5 (300m euro). Christine Lagarde, head of the International Monetary Fund, acknowledged in a newspaper interview with a German paper that Greece could leave the euro. “It’s a potential,” adding it would be “no stroll” but also that it would definitely not spell the end of the euro.

But the IMF has offered Greece three more weeks to repay* 1.6bn euro ($1.7bn) it owes the fund next month in total, insisting Greece still had to persuade creditors it was serious with reforms needed to unlock the desperately needed 7.2bn euro final installment in bailout money.

*This is allowed under the rules...Since Greece is making multiple payments in one month, it can “bundle” them until the final day of the month.

Greek officials have been arguing for months they were making progress in talks but what became apparent this week was that essentially zero progress has been made between Athens and its three bailout monitors – the IMF, the European Central Bank and the European Commission. It’s also clear there has been a slow-motion run on the banks in Greece, with deposits hitting a 10-year low in April. Capital controls are a real possibility.

Lagarde said in her interview with Frankfurter Allgemeine Zeitung, “It’s very unlikely that we will reach a comprehensive solution in the next few days.”

At a meeting of finance ministers in Dresden from the Group of Seven, an official told the Financial Times: “We are still on most key issues quite far apart. [The idea] that a deal is just around the corner and can come by Sunday is far, far from reality.”

German finance minister Wolfgang Schauble said, “We haven’t got much further in the negotiations.”

German Chancellor Angela Merkel reiterated to Greek Prime Minister Alexis Tsipras there will be no deal without IMF approval.

Earlier Tsipras had talked of “red lines we cannot cross,” including pension reforms and increases in value-added tax. Last weekend, Interior Minister Nikos Voutsis warned the country was running out of funds and that the IMF repayment owed in June “will not be given and is not there to be given.”

For his part, U.S. Treasury Secretary Jack Lew urged Athens and its creditors to strike a deal as soon as possible, saying putting it off any further risked “an accident” that could force Greece out of the eurozone. Lew added: “There is great uncertainty at a time when the world needs greater stability and certainty.”

---

Some GDP figures came out at week’s end.

Italy grew 0.3% in the first quarter for the first time in six quarters, according to a final reading. The Italian government expects the economy to grow 0.7% in 2015, the first expansion in three years. The government of Matteo Renzi is also easing up on austerity.

But while the situation in Italy is improving somewhat, the country’s debt-to-GDP ratio will drop from 132.5 percent this year to a still sky high 123.4 percent in 2018, if all goes according to plan, which we all know is never the case.

Swedish GDP was expected to have risen 0.6% in the first quarter and came in at 0.4% (that’s quarter over quarter).

Switzerland had a reading of -0.2% in Q1, worse than expected.

Earlier in the week, the UK’s Office of National Statistics said GDP rose 0.3% in Q1, unchanged from an initial estimate. The 2014 quarterly rate was 0.6%. The Bank of England is forecasting growth of 2.5% for 2015, which would be a decline from 2014’s 2.8%, the fastest since 2006.

Meanwhile, lending growth to eurozone households and firms was flat in April, according to ECB data released Friday, after a rise of 0.1% in March. Economists expected a 0.2% rise in April.

Euro bond markets continued to settle down after a wicked stretch that had seen rates soar. The German 10-year saw its yield fall back to 0.49%.

But the 10-year paper of Italy and Spain did not rally and both are about 0.50% above their yields when the ECB’s version of QE started on March 9. [Italy 1.84% vs. 1.31%; Spain 1.83% vs. 1.29%.]

On the issue of a “Brexit,” Britain leaving the EU, the head of Germany’s Chamber of Commerce and Industry warned that a UK exit would be “disastrous” for Britain and Germany. 

Volker Treier told the BBC that German business is “astonished” that the UK is planning a referendum over its EU membership.

Prime Minister David Cameron met with Angela Merkel in Berlin on Friday and Treier said the German Chancellor should not offer concessions.

The organization estimates that German companies employ nearly 400,000 people in the UK and Treier said if Britain leaves, a significant number of German companies would contemplate reducing their investment there.

But on Friday, Merkel offered to help Cameron keep Britain in the EU, leaving open the prospect of treaty change and declaring: “Where there’s a will, there’s a way.”

Earlier, Cameron met with Polish Prime Minister Ewa Kopacz, who strongly opposes Cameron’s plan to make it harder for migrant workers to claim benefits, a key ‘concession’ from the EU that he’s seeking.

Mrs. Kopacz told Cameron she would fight any proposal “that could lead to the discrimination of Poles or other EU citizens working legally in Great Britain,” her office said in a statement. [Financial Times]

A law enabling a referendum on the EU to occur by the end of 2017 (per Cameron’s election promise) was introduced into parliament this week, allowing the pro-EU camp to be the ‘Yes” campaign, helping it avoid accusations of negative campaigning.

Cameron has said he would be ready to hold the referendum before 2017 if he completes the renegotiation early, but some in the Eurosceptic camp want him to ask for more and to take his time reaching any settlement.

This process is just getting started.

One issue for today, and also in the future, however, is what to do with all the asylum seekers from North Africa. This week the European Commission called on EU member states to take in 40,000 from Syria and Eritrea who land in Italy and Greece over the next two years. The UK, as I noted last time, said it wouldn’t participate, while France, Spain, Hungary, Slovakia and Estonia expressed concerns.

Under the EC’s plan, Germany would take in 8,763 (21.91%); France 6,752 (16.88%); Spain 4,288 (10.72%).

Countries would receive 6,000 euro for every person relocated on their territory under the latest proposal.

Italy has seen a 277% rise in irregular border crossings, Greece 153%. I feel for the Italian government in particular. What a nightmare. They’ve long had a problem with Roma, and now this.

Lastly, Spain’s ruling Popular Party suffered heavy losses in regional and local elections last Sunday. Even though Spain’s economy has bounced back from recession and is on track to grow by 3% this year, the unemployment rate is still sky high and there is lingering anger over the recent economic crisis. Additionally the PP has suffered a string of corruption scandals.

The Popular Party is still the biggest in nine of the 13 regions where elections were held (four other regions will hold them later), but the party of Prime Minister Mariano Rajoy failed to obtain an absolute majority – meaning it will need to cobble together a coalition with one of its rivals and this will get messy. General elections are held later this year.

Turning to Asia, China’s benchmark Shanghai Composite stock index had soared 53% this year until a 6.5% drop on Thursday. It had been within striking distance of 5000, which would have been the first time since Jan. 2008 it was at that level.

Robert Samuelson / Washington Post

“It’s time to worry about China.

“On any list of calamities threatening the world economy, a China crash ranks at or near the top. Just what would constitute a ‘crash’ is murky. Already, China’s sizzling rate of economic growth has declined from 10 percent annually – the average from the late 1970s until 2011 – to 7 percent, which is still high by historical standards. The question is whether the deceleration continues and growth goes much lower.

“A faltering China could tip the world back into recession. Because China is a huge customer for raw materials (grains, metals, fuels), their prices would remain depressed. China’s surplus capacity of basic industrial goods, such as steel, would be increasingly exported, also depressing prices. This would dampen any recovery in global business investment. Confidence would suffer.

“What about political fallout? ‘The Chinese government has maintained its legitimacy by promising economic progress,’ says economist Eswar Prasad of Cornell University. If the promise seems broken, it’s hard to know how China’s masses would react. Or China’s leaders. Would they become more nationalistic and aggressive to deflect attention from economic disappointment?

“Americans are exposed to all these potential spillovers. Prasad doubts the worst-case scenario will come to pass; plenty of other experts agree. After all, China’s leaders have repeatedly disproved doomsayers. There are many reasons the economy can flourish. The most obvious: Consumption spending was only 37 percent of the economy in 2014, the lowest of any major country (the U.S. figure: 68 percent of GDP). If the Chinese become a bit more spendthrift, their economy could thrive.

“Still, there is the example of Japan. In the 1980s, it was widely regarded as the world’s most dynamic economy, overtaking the United States. Then Japan’s prospects collapsed. New Asian competitors (Taiwan, South Korea) and an appreciating currency destroyed its economic model of export-led growth. Unable to build a new model, Japan has foundered ever since.

“China is now at a similar juncture. There’s broad agreement that its economic model is outmoded. It also emphasized export-led growth and high investment spending (the counterpart of low consumer spending). The 2008-09 financial crisis showed the limits of both.

“Exports fell, as China’s biggest customers – the United States and Europe – went into recession. To bolster its economy, China announced a $586 billion stimulus package, almost 13 percent of GDP, in late 2008. But unlike the U.S. stimulus plan in 2009, which was part of the federal budget, much of China’s extra spending was channeled through state-owned banks and local governments. What ensued was a credit boom that has now left a large overhang of unsold housing, surplus industrial capacity and questionable debt.”

As for Japan, exports rose 8% in April year over year, while imports fell 4.2%.

Retail sales last month rose 0.4% over March and represented just the second increase in six months, but were below expectations. Retail sales are up 5.0% year over year, though this is distorted by last April’s sales tax hike and subsequent downturn. Household spending in April was down 1.3% yoy.

But the unemployment rate last month fell to 3.3%, the lowest since the late 1990s.

What Japan really needs is for corporations to pass on more of their profits in the form of higher wages, which is slowly occurring.

Street Bytes

--Stocks finished up a very dull May with a little increase in volatility the last week. Nasdaq hit a new closing high of 5106 on Wednesday, but otherwise the major averages fell, with the Dow Jones losing 1.2% to 18010, reducing its gain for the year to just 1%, while the S&P 500 fell 0.9% and Nasdaq ended up losing 0.4% to 5070. For the month of May, the S&P gained 1.1%.

This coming week is all about the jobs report on Friday, with few other catalysts in the immediate offing.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.61% 10-yr. 2.12% 30-yr. 2.88%

The yield on the key 10-year fell 9 basis points from 2.21% on the punk news on the economy and the realization there is now virtually zero chance the Fed is raising rates before September.

--Canada’s GDP shrank 0.6% at an annualized rate during the first three months of the year, against forecasts for a small rise of 0.3%, as weaker oil prices had a more severe impact than expected. Canada had reported growth at an annualized pace of 2.4% in the fourth quarter.

But the Bank of Canada is forecasting second-quarter growth of 1.8%, 2.8% for the third.

--Brazil’s economy shrank less than expected in the first quarter, contracting 0.2% over the fourth quarter. A 4.7% growth rate for agriculture was a bright spot. Compared to a year ago, GDP contracted 1.6%.

Confidence in Brazil has been collapsing amid the slide in global commodity prices, a widening budget deficit, high inflation and the mammoth corruption scandal at state-controlled oil company Petrobras.

GDP is expected to contract 1.2% for all of 2015.

--India’s economy grew at an annualized pace of 7.5% in the first three months, better than expectations of 7.3%.

But there has been confusion over what the real number is here, as the statistics department recently changed the way GDP is calculated, essentially rebasing it at a higher level. Beats the heck out of me if the figures are right...I’m just trying to find time to watch the Rangers’ Game 7 Friday night.

--Charter Communications struck a deal to acquire Time Warner Cable for $55 billion to become the second-biggest U.S. cable operator and primary challenger to Comcast. Charter is backed by cable tycoon John Malone and the company will pay $195.70 a share to buy TWC in a cash and stock offer.

Charter is also renegotiating its planned takeover of Bright House Networks, another large U.S. cable operator, with Bright House’s owner controlling as much as 14 percent of the newly formed business.

Charter-TWC will serve nearly 24m customers in 41 states, with Comcast serving more than 27m.

So with regulatory opposition having been a key factor in Comcast’s recent withdrawal of its own $45bn bid for TWC, why should Charter be successful? We’ll see.

--Health insurer Humana Inc. is working with Goldman Sachs on a possible sale of the company after receiving indications of takeover interest, as first reported by the Wall Street Journal.

Shares in Humana, already up 42% over the past year as it is seen being a major winner in ObamaCare, administering the private version of the federal Medicare program, soared another 20% on Friday to close at an all-time high.

--Singapore-based Avago Technologies, a maker of semiconductors for smartphones, has struck a $37bn deal to acquire Broadcom in the latest and largest transaction in a wave of consolidation among chipmakers. Broadcom makes mobile chips used by companies including Apple and Samsung.

Avago, which is listed in the U.S. but domiciled in Singapore, has been very acquisitive, taking advantage of Singapore’s much lower corporate tax rate of about 10 percent, vs. the 35 percent corporate rate set for most U.S. companies.

--Norway has overtaken Russia as western Europe’s top gas supplier, a good sign the European Union’s drive to reduce its dependence on Russian energy is bearing fruit. Exports to EU members in eastern Europe are not included in the data, but with Norway exporting 29.2 billion cubic meters to western Europe in the first quarter, vs. Gazprom’s 20.29 bcm, it was the first time Norwegian exports have convincingly overtaken Russia’s since a brief period in 2012. [Reuters]

For all of 2014, Russia remained the main EU supplier, though Russia’s market share fell to 42%, while Norway’s share of EU imports rose from 34% to 38%.

--From Ed Crooks / Financial Times: “Oil reserves that Royal Dutch Shell hopes to find in the Arctic are unlikely to be brought into production before the 2030s due to the difficulty in securing environmental approvals, executives leading the exploration said.

“Only a discovery of large reserves in the Chukchi Sea off the northwest coast of Alaska would justify the investment in infrastructure that would be needed to start production, (said CEO Marvin Odum).”

The area is very promising, but several companies have been delaying or cancelling Arctic exploration plans to save money after the plunge in oil prices since last summer.

The Obama administration approved Shell’s plans for the region, but Shell is saying if the U.S. wants full-scale development of its Arctic oil, the government will have to streamline regulatory and legal constraints that hold up exploration.

--Shares in Hanergy Thin Film Power Group, a Hong Kong listed company, collapsed about ten days ago but details of the outfit controlled by Li Hejun, who had become China’s richest man, are still sketchy. HTF had become the world’s largest solar company, with a value that had skyrocketed to more than five times its nearest competitor, First Solar of the U.S., but was it nothing more than another case of massive fraud? It sure seems likely.

Li Hejun had taken a $200m loan pledging millions of shares in HTF as collateral just two days before its share price crashed, filings unearthed by the Financial Times revealed. There were also complicated financial arrangements between HTF (Hanergy Thin Film) and the parent, Hanergy Group.

Wednesday, May 20, shares in Hanergy plummeted 47% in 25 minutes before trading was halted. Other associated stocks then fell like amounts. Li Hejun owns close to 75% of Hanergy’s shares.

There is no word on when trading in the stock will resume.

--Shares in Tiffany soared as the company reported earnings and revenues that were far better than the Street expected, even though overall revenues fell 5% year over year. The company also reported guidance for the second quarter and second half that were better than analysts’ forecasts. Tiffany said it believed “we can return to a healthier rate of double-digit EPS growth over the long-term.” Comp-store sales in the U.S. rose 1%, while they were up 2% in the Asia-Pacific region. But they declined 24% in Japan.

--Workday, a leader in enterprise cloud applications for finance and human resources, reported better than expected earnings and revenues for the quarter ending April 30, with revenue up 57% to $251 million, but the shares were whacked to the tune of 15% when the company conceded on a conference call that its biggest competitor, Oracle, was hitting Workday with serious pricing pressure.

Executives from these two companies don’t like each other and the animosity goes way back, so it seems that executive chairman Larry Ellison is willing to lose money on some of the deals it is going against Workday on just to win the business.

I have never liked Larry Ellison and with a good friend at WDAY, let’s just say I hope Workday weathers this storm and comes out far better for it.

But to be fair, some of the stocks in this space have been priced for perfection and it’s often necessary to take one or two steps back before resuming the advance.

--JPMorgan Chase CEO Jamie Dimon blasted shareholders for being “lazy” and “irresponsible” in letting proxy advisers recommend how they vote at annual meetings. It just so happens the focus this year at the bank’s meeting was on his $20 million pay package; and the issue came to a head a week after the bank agreed to pay $892 million of its shareholders’ funds to regulators for abuses in the foreign exchange market – just one in a series of big fines paid under Dimon’s watch.

JPMorgan also announced it is cutting more than 5,000 jobs, with layoffs already having commenced, as the industry moves toward Internet and mobile banking. Dimon said the average JPMorgan Chase branch would lose one employee over the next two years, mostly through attrition; though the layoffs extends into the bank’s other major business units, such as corporate and investment banking.

--In a disconcerting incident, a Singapore Airlines Airbus A330-300 temporarily lost power in both Rolls-Royce engines in mid-flight last Saturday when the plane hit bad weather en route to Shanghai from Singapore with 194 passengers and crew on board.

“Both engines experienced a temporary loss of power and the pilots followed operational procedures to restore normal operation of the engines,” said the airline.

One engine did apparently return to normal operations almost immediately. The plane landed safely in Shanghai and no “anomalies” were found.

--McDonald’s said it planned to stop reporting monthly same-store sales results and will do so just quarterly. The company has been struggling to turn its business around after 11 straight months of declining global comp-store sales.

--According to BrandZ’s Top 100 Most Valuable Brands study, Apple has regained the top slot from Google, and it’s more about the iPhone 6 than Apple Watch. All four of this year’s top brands – Apple, Google, Microsoft and IBM – are tech names.

5. Visa 6. AT&T 7. Verizon 8. Coca-Cola 9. McDonald’s 10. Marlboro 11. Tencent (Chinese Internet co.) 12. Facebook

--SpaceX, the space launch provider controlled by Elon Musk, was certified by the U.S. Air Force in its campaign to win business launching U.S. spy satellites. 

So now SpaceX, with its Falcon 9 rocket, can compete with United Launch Alliance, which currently holds a monopoly, when launches go up for bid as early as next month. ULA says its launches cost an average of $164m each, while SpaceX has said the true figure is around $400m. SpaceX is offering its rocket to commercial users for as little as $60m per launch.

ULA, however, has a 96% success rate. [Financial Times]

--California’s jobless rate fell to 6.3% in April, the lowest level since 2008. The jobless rate in the U.S. is 5.4%. California has been on a helluva roll...38 straight months of outstripping the national rate in employment growth.

--New Jersey home prices are up 4.2% from year ago levels, according to April data released by New Jersey Realtors. Our market here never crashed like others did around the country following the bursting of the bubble, but it’s also gone up less in the recovery. I sold my home in early 2010 at a great profit, though the timing was poor, but I would have received about the same price today.

--Property prices in Ireland have risen about 16% in the past year, according to the Central Statistics Office. Residential prices in Dublin were up 20% year over year in April.

--In his first public appearance in nearly seven years, former Lehman Brother CEO Dick Fuld said little about the Lehman collapse, though he acknowledged making crucial misjudgments as the investment bank sank into a bankruptcy that helped send global markets and the economy into freefall.

“I missed the violence of the markets,” said Fuld. “You don’t have the time to hear all the things I would have done differently.”  Audience members said they did have time, but Fuld declined to explore the matter further. What an a-hole. Instead he rambled on about the global scene.

--Broadway’s revenue and attendance figures both hit record highs for the third season in a row. The Broadway League said Tuesday that box offices reported a record total gross of $1.36 billion – up from $1.27 billion from the previous season. Attendance was up 7.3% to 13.1 million. [Crain’s New York Business]

--Hollywood saw its worst Memorial Day box office since 2001, which is compounded by the fact average ticket prices have risen 44% over that time, according to the National Association of Theater Owners.

The weak performance of “Tomorrowland” was a key. Disney spent $180 million on this science-fiction film and it took in only $41.7 million over the four-day holiday weekend. The flick stars George Clooney.

--With the dollar about 25% stronger against the euro than this time last year, record numbers of Americans will be heading to Europe, as well as record levels of Asians. As the Wall Street Journal reported, “Chinese outnumber British visitors to the Louvre and Italians at Versailles.”

What a nightmare this is going to be. And remember, guys, keep your wallet in your front pocket, don’t wear expensive watches, and, girls, keep the pocket book zipped, clutch it with your life, and don’t wear diamonds.

Better yet, find a room with a view and just stay in it, drinking adult beverages and listening to local music.

Also, in all seriousness, whatever you do, don’t go to the Louvre!!! Trust me on this. It won’t be enjoyable in the least. The Journal basically says the same of the National Gallery in London.

Foreign Affairs

Iraq/Syria/ISIS:

--For the second consecutive Friday, ISIS took responsibility for a suicide bombing at a Shiite mosque in Saudi Arabia, killing at least four.

--ISIS killed at least 20 men at the ancient theatre inside the Unesco World Heritage site of Palmyra, central Syria, according to the Syrian Observatory for Human Rights. Residents were rounded up and forced to watch the men being shot.

The group says about 240 – mostly soldiers – have been killed by IS since it overran Palmyra last week. Another 600 are being held prisoner, so they could suffer a similar fate. [A separate report has ISIS killing at least 400 already. At least 300 soldiers were killed in the days of fighting before the city was captured, according to the Observatory.]

About a third of Palmyra’s 200,000 residents were able to flee before ISIS arrived. There are reports the rest are being prohibited from leaving.

It’s not known yet what they will do to the 2,000-year-old Roman-era ruins, but ISIS has been destroying ancient sites elsewhere.

And while some may not care about this in the grand scheme of things, a rare species of bird, the northern bald ibis, may become extinct in Syria because of the capture of Palmyra, where the last breeding pairs have previously been protected.

--ISIS captured two phosphate mines outside of Palmyra, a major blow to the Syrian regime, putting an end to one of its “last” chief sources of income.

While ISIS is unlikely to be able to make use of the raw phosphate in the mine, it is depriving the regime of a major revenue stream. Coupled with the suspension of oil exports, how is the Assad clan surviving? [Aid from Iran and Russia, for starters.]

--Iraqi forces launched a counteroffensive against ISIS in Ramadi but were said to just be probing the defenses. Iraqi Prime Minister Haider al-Abadi has enlisted Shiite paramilitary forces in what some are calling the biggest gamble of his nine months in power since it’s bound to fan sectarian trouble.

--Last weekend, John McCain, (R., Ariz.), chairman of the Senate Armed Service Committee, appearing on CBS’ “Face the Nation,” called for U.S. special forces in Iraq, in addition to forward air controllers to help direct bombing missions from the air. Right now, he said, the U.S. has “no strategy” for halting ISIS.

Michele Flournoy, who served as undersecretary of defense under Obama from 2009 to 2012, and was in the running for the top job, said on CNN, Iraq is near a tipping point in which it could disintegrate.

“ISIS is a threat not only to Iraq and Syria,” Flournoy said. “It is a threat to us.” [Jon Hilsenrath and Janet Hook / Wall Street Journal]

--A coordinated bomb attack hit two of Baghdad’s most upscale hotels Thursday night, killing at least 15, according to the Associated Press. [However, Iraqi officials said the number dead was just three. That said, the explosions were massive.]

Two cars rigged with explosives blew up within minutes of each other around midnight. Islamic State is suspected, which if so would be one of its most high-profile attacks in the capital. Heretofore, ISIS has been targeting Shiite neighborhoods of the city.

--The U.S. Army chief of staff, Gen. Raymond Odierno, said the U.S. military should continue training and advising Iraqi Security Forces to fight Islamic State militants, but American combat troops should not be deployed.

Instead, Odierno is suggesting there be more Army trainers deployed to Iraq and even to accompany Iraqi forces onto the battlefield. “Embedded advisors, with increased risk to our soldiers, probably would make this more effective,” he said.

Odierno, though, is concerned the injection of American forces onto the battlefield could further inflame sectarian or ISIS violence.

Odierno’s comments followed Defense Secretary Ashton Carter’s assessment that the Iraqi military “showed no will to fight” when ISIS took Ramadi. [Marcus Weisgerber / Defense One]

Richard Spencer / Daily Telegraph

What have we learnt from ISIS’ recent successes?

“1. ISIL is not on the run. Following its loss of Kobane in Syria to the Kurds and of Tikrit in Iraq in April, the United States seemed to think ISIL would implode. It hasn’t.

“2. ISIL is phenomenally well-run as a desert strike force. An air strike has reportedly decapitated its leader, Abu Bakr al-Baghdadi, and its first deputy leader, while the Iraqis claim – unconvincingly – that its new acting leader has also been killed. A score or more other senior leaders have been killed.

“But its middle-ranking cadres, many former officers in the army of Saddam Hussein, are skilled military tacticians who were able to out-think both the Assad regime army and, more worryingly, the U.S. –trained Iraqi security forces.

“3. President Bashar al-Assad’s army is losing. For years it was vaunted as ‘the strongest army in the Middle East’ and some of his defenders in both East and West said Assad was ‘the only hope’ for Syria. It is now clear that his demoralized army is on the run – from ISIL in the east, from Jabhat al-Nusra and other rebel groups in the northwest. It is on the defensive in the south and near Damascus.

“It has held on so far only where Hizbullah and other Iranian-backed militias are fighting....

“5. Current U.S. strategy may have held up ISIL but will not defeat it....

“7. Everything every government everywhere has done in both wars has deepened sectarian divides. The Assad regime has retrenched to its Alawite core, marginalizing Sunni members of the inner circle and government. It has been supported by Shia Iran – which has deployed its militias to mainly Shia areas.

“Saudi Arabia, Qatar and Turkey have given priority in their backing to Sunni Islamist rebel groups. In Iraq, the government stopped paying loyal Sunni tribal militias because they were not part of the army but has now called on Shia militias to fight.

“The United States refused to give military support to the Free Syrian Army when it contained large secular elements – while Islamist fund-raisers and backers channeled arms to Sunni Islamist extremist groups....

“10. Only hard choices remain, and Mr. Obama is not going to take them.

“In most of Iraq and Syria, the only forces that can defeat ISIL are either backed by Iran, or are Sunni Islamists. It need not have been this way, but it is. Mr. Obama is vicariously backing both – by acting as air cover to Shia militias in Iraq, and allowing American allies like Saudi Arabia and Qatar to support Islamists in Syria.

“But by not acknowledging this policy, he is giving up American influence on the eventual outcome – whatever that is.”

Iran: U.S. Secretary of State John Kerry and his Iranian counterpart Foreign Minister Mohammad Javad Zarif are meeting in Switzerland this weekend as part of the push to seal a final deal over Tehran’s nuclear program, but one of Iran’s negotiators, Abbas Araghchi, quoted by state news agency IRNA, said the two sides were not bound by the June 30 schedule. He added: “We are not at the point where we can say that negotiations will be completed quickly – they will continue until the deadline and could continue beyond that.”

French Foreign Minister Laurent Fabius warned this week that France would oppose a final deal that did not allow inspections of military sites.

Iran’s deputy oil minister was quoted as saying that 20 pages of the text had been written “but there are still disagreements and 30 percent of the work remains to be done.”

Iran’s Supreme Leader Ayatollah Ali Khamenei praised the work of his nuclear negotiators, this after they came under harsh criticism from members of the Iranian parliament. Critics accuse negotiators of accepting demands for international inspections of the military sites, a position Khamenei has totally ruled out. [Daily Star]

John Podhoretz / New York Post

“Deep into the seventh year of his tenure, Barack Obama is thinking about his post-presidential legacy. We know this because he’s telling us so.

“In an interview this week [Ed. week of 5/18] with The Atlantic about the potential deal with Iran regarding its nuclear program, the president sought to use the fact of his relative youth and his consciousness about how history might judge him to his advantage: ‘Look, 20 years from now, I’m still going to be around, God willing. If Iran has a nuclear weapon, it’s my name on this. I think it’s fair to say that in addition to our profound national-security interests, I have a personal interest in locking this down.’

“In one sense, this is what we want presidents to worry about. We want them to be restrained by the cautionary examples provided by history and by the fact that history will judge them.

“But what if the desire to tip the scales of history’s judgment in his favor leads a president to take dangerous risks?

“In fact, we know that is what Obama has done with the Iran deal because his aides have told us so.

“His deputy national security adviser, Ben Rhodes, put it this way last year to a roomful of liberal activists when talking about the initial November 2013 agreement to begin talking about Iran’s nuclear program: ‘Bottom line is, this is the best opportunity we’ve had to resolve the Iranian issue diplomatically...This is probably the biggest thing President Obama will do in his second term on foreign policy. This is health care for us, just to put it in context.’

“But this ‘opportunity’ didn’t just emerge organically – which is actually where ‘opportunities’ are supposed to come from. It did not result from changing conditions that opened a new possibility of finding common ground.

“Iran’s behavior didn’t change, and its pursuit of nuclear weapons didn’t change. Obama manufactured what Rhodes called an opportunity by pursuing a deal with Iran and dangling all kinds of carrots in front of the mullahs.

“And why? Because he wants a foreign-policy legacy to match the size and scope of his key legacy in domestic policy.

“And who can blame him? After the failure of the Arab Spring, the collapse of Libya, the failure to act on his self-imposed ‘red line’ in Syria, Russia’s seizure of Crimea from Ukraine and the terrifying rise and forward march of ISIS, the only unmitigated positive on his foreign-policy spreadsheet remains the killing of Osama bin Laden.

“Look, the guy will need something impressive to fill the exhibition space at his brand-new presidential library in Chicago.

“Obama’s asking us to trust him because, he says, you can’t think he would want to look like the man who allowed Iran to go nuclear at some point in the future.

“So what explains the president’s own unprompted comments in an NPR interview in April that, under the terms already announced, Iran would have the right to go nuclear by 2028 – when he will, God willing, be a mere 67 years of age?

“ ‘A more relevant fear,’ he said, ‘would be that in years 13, 14, 15, they have advanced centrifuges that enrich uranium fairly rapidly, and at that point, the breakout times would have shrunk almost down to zero.’

“Obama offered an answer. ‘The option of a future president to take action if in fact they try to obtain a nuclear weapon is undiminished,’ he said.

“So it will be up to his successors to bail him out in the eyes of history and make it appear as though his legacy wasn’t the nuclear destabilization of the Middle East!”

--The Jerusalem Post, via Reuters, reported, “An exiled Iranian opposition group said on Thursday a delegation of North Korean experts in nuclear warheads and ballistic missiles visited a military site near Tehran in April amid talks between world powers and Iran over its nuclear program.

“The dissident National Council of Resistance of Iran (NCRI) exposed Iran’s uranium enrichment plant at Natanz and a heavy water facility at Arak in 2002. But analysts say it has a mixed track record and a clear political agenda....

“The UN Panel of Experts that monitors compliance with sanctions on North Korea has reported in the past that Pyongyang and Tehran were regularly exchanging ballistic missile technology in violation of UN sanctions....

“Several Western officials said they were not aware of a North Korean delegation travelling to Iran recently.”

Yemen: Nearly 100 people were killed in Saudi-led airstrikes on Yemen’s capital and other sites on Wednesday; the largest single-day death toll of the two-month old offensive.

The Saudi-led campaign has yet to drive the Iranian-backed Houthi rebels from Sana or from strongholds in the strategic southern city of Aden.

Israel: Prime Minister Netanyahu appointed Dore Gold, a former Israeli ambassador to the United Nations and a hardliner on Iran and the Palestinian issue, to run the Foreign Ministry.

Gold said in an interview he didn’t oppose the establishment of a Palestinian state, but he sees most of the Palestinians’ conditions as impossible to balance with Israel’s security.

Separately, Amnesty International said in a report released Wednesday that Hamas tortured and killed Palestinians during the war against Israel in the Gaza Strip last year...executing at least 23, the human rights group said.

Russia / Ukraine: Legal and military experts told The Moscow Times that amendments introduced Thursday that classify as state secrets any losses sustained during peacetime special operations are further confirmation of Russia’s direct involvement in the Ukraine conflict.

The amendments, signed by President Putin, make “information disclosing the loss of personnel...during special operations in peacetime” a classified state secret.

Putin’s spokesman, Dmitry Peskov, had no comment when asked about the move, as Putin repeatedly denies Russian troops are in eastern Ukraine.

Lawyers said Thursday that “Military servicemen who are killed, injured or go missing can be considered military losses, meaning their relatives will be forced to keep information about their deaths a secret,” as reported by the paper.

A leading lawyer told the Times, “If a citizen, for instance a journalist, obtains information that is considered a state secret, they face prison.”

Leading Russian opposition leader Boris Nemtsov was working on a report about alleged Russian troops in Ukraine at the time of his assassination in Moscow in February.

Bloomberg’s Josh Rogin reported this week: “Russia is so desperate to hide its military involvement in Ukraine that it has brought in mobile crematoriums to destroy the bodies of its war dead, say U.S. lawmakers who traveled to the war-torn country this spring.”

Separately, Reuters reported Russia’s army is massing troops and hundreds of pieces of weaponry including mobile rocket launchers, tanks and artillery at a makeshift base near the border with Ukraine.

Many of the soldiers spotted have removed insignias from their uniforms.

Military hardware has been seen on trains entering the Matveev Kurgan (Rostov region, southern Russia) railway station every day. This Tuesday, a Reuters reporter saw 16 T-72 tanks on one train.

[Russia’s military is also staging a large exercise involving around 250 aircraft and 12,000 service personnel to check combat readiness.]

Editorial / Wall Street Journal

“So much for February’s Ukraine cease-fire. Russian proxies on Saturday shelled Avdiyivka, a town in eastern Ukraine held by the Kiev government, killing a Ukrainian service member and a civilian in an attack that also shut down a coke-manufacturing plant. On Sunday pro-Kremlin forces fired on Ukrainian positions near the port of Mariupol, killing a Ukrainian soldier and wounding two....

“Prospects for (the Minsk II deal between Vladimir Putin and Ukraine’s President Petro Poroshenko, brokered by Francois Hollande and Angela Merkel) were never good given that its predecessor, Minsk I, collapsed soon after it was signed in 2014. February’s pact also deferred to the end of 2015 the all-important question of securing Ukraine’s border. Sure enough, as a senior Western diplomat told us Thursday: ‘The familiar pattern is recurring. Russia makes high-level assurances that it wants peace, and meanwhile stokes the violence on the ground with fighters and arms.’

“That stoking is happening on a grand scale. Kiev now documents between 50 and 80 Russian cease-fire violations per day, according to Alexey Makukhin, an adviser to Ukraine’s Defense Minister, ranging from minor provocations to heavy shelling....

“Russian special-forces operatives also are infiltrating Ukrainian territory. Kiev forces detained two such operatives on May 16 near Shchastya, Mr. Makukhin told us, as they attempted to conduct reconnaissance on the local power station in preparation for its eventual capture. The plan was foiled....

“(According to a new report from the Atlantic Council), Russia continues to amass troops on its border with Ukraine and ‘Russian training camps stationed along the Ukrainian border are the staging ground for Russian military equipment transported into Ukraine, soon to join the separatist arsenal, and for Russian soldiers mobilized across Russia to cross into Ukraine.’...

“A serious Western response to Russian violations would include arms sales to Kiev so Ukraine could raise the cost of Russian incursions. Then again, serious Western leaders would have taken Mr. Putin’s measure before the Minsk deals started becoming as numerous, and as bad, as ‘Fast & Furious’ sequels.”

Editorial / Wall Street Journal

“China, Russia and Iran are taking advantage of American retreat to assert political and (perhaps eventually) military dominance over their corners of the globe. They share a goal of reducing U.S. influence, bending neighbors to their political will, and ultimately using that regional base of power to diminish the global sway of Western democracies, especially the U.S. In addition to the rise of Islamic State, this will be the biggest strategic challenge for the next President....

“For 20 years and through administrations of both parties, the U.S. managed to contain the emergence of such regional threats. But that containment has broken down in Europe, the Middle East and East Asia during President Obama’s second term....

“Some readers may concede much of this and say, so what? These powers are merely seeking to dominate their natural spheres of influence, and the U.S. should adjust and accommodate to what is inevitable. Meanwhile, the Obama Administration’s expectation has been that ‘the international community’ will replace receding American power with a new cooperative order working through the United Nations.  That hasn’t happened, and it won’t.

“Instead we can already see the rising costs and dangers in a world where authoritarians grow in power. These emerging regional hegemons reject democratic values and the post-World War II liberal world order. They view the U.N. and other institutions as a means to check U.S. power not adhere to global norms....

“This is the dangerous new-old world that Mr. Obama is leaving his successor. The next President will need an urgent strategy to contain and counter the rising threats.”

--Meanwhile, I cover the FIFA mess below but for this space, Vladimir Putin accused the United States of meddling in the affairs of soccer’s governing body as part of an attempt to take the 2018 World Cup away from his country.

--Capital flight from Russia is forecast to hit $110 billion this year, the Economic Development Ministry said Thursday. The ministry’s base forecast anticipates that U.S. and EU sanctions over Moscow’s actions in Ukraine will remain in place through the end of 2018.

“This means that Russian companies’ access to world capital markets will remain limited and there will be quite a high level of capital outflow from the private sector due to debt repayments,” the report said.

Capital flight from Russia soared to an all-time high of $151.5 billion last year, nearly triple the outflow seen in 2013, according to Central Bank data. [Moscow Times]

--Finally, Chechen leader Ramzan Kadyrov announced last weekend he had become the honorary leader of a new regional branch of the Night Wolves, a group of fiercely nationalistic bikers. Vladimir Putin is honorary leader of them in Russia. These are not good people.

China: Defense Secretary Ash Carter reasserted Washington’s territorial rights in international waters.

“There should be no mistake: the United States will fly, sail and operate wherever international law allows, as we do all around the world,” Carter said at a ceremony in Pearl Harbor.

This was a day after China laid out a strategy to prevent foreign powers from “meddling” in the South China Sea.

Sec. Carter said the U.S. wants “an immediate and lasting halt” to land reclamation by China and other claimants.

“With its actions in the South China Sea, China is out of step with both international norms that underscore the Asia-Pacific’s security architecture,” he said.

In reply, a spokesman for the Chinese Embassy in the U.S., Zhu Haiquan, said: “China’s determination to safeguard its own sovereignty and territorial integrity is rock-hard and unquestionable. The activities that China carries out are well within the scope of its sovereignty and are beyond reproach.”

Editorial / Washington Post

“The United States last week stepped up its efforts to call attention to China’s massive and provocative expansion of infrastructure in a disputed portion of the South China Sea. The navy invited CNN aboard a surveillance flight and released video the next day of what one U.S. official called an attempt ‘to make sovereign land out of sand castles’ in the Spratly Islands. The flight by a P-8A Poseidon aircraft drew eight warnings from the Chinese navy and an angry denunciation by the Chinese Foreign Ministry, which called it ‘very irresponsible and also very dangerous.’ But the U.S. action was legal and appropriate.

“China is attempting to steal a march on its neighbors by rapidly constructing airstrips, ports and other infrastructure on reclaimed land in one of the most sensitive maritime areas in Asia – one with multiple overlapping sovereignty claims. While it probably cannot be stopped, the project should be fully exposed – and China’s attempts to restrict air and sea traffic near its installations decisively rejected.”

I urge you to read my current “Hot Spots” column, where I cite a Chinese government mouthpiece, the Global Times, and an editorial that says in part, “war is inevitable” with the United States unless it stops insisting that Beijing halts building islands in disputed waters. Instead, the editorial reads, China will finish its construction work, calling it the country’s most important bottom line.

“If the United States’ bottom line is that China has to halt its activities, then a U.S.-China war is inevitable in the South China Sea.”

Lastly, another week, another scandal. The U.S. Department of Justice charged 15 Chinese nationals with developing a scheme to have imposters take university entrance exams. Prosecutors allege the suspects also used fake passports to trick test monitors into allowing people other than legitimate test takers to sit for the exams, such as the SAT.

Most of the improprieties occurred in western Pennsylvania, where a U.S. Attorney for the Western District of Pa. said the beneficiaries “fraudulently obtained admissions to American institutions of higher education.” Many of the defendants live in Boston and Blacksburg, Va.

Ireland: The final vote margin on legalizing gay marriage in a referendum to change the country’s constitution was 62-38 in favor of allowing same-sex couples to marry; the first country to enshrine marriage equality in the constitution.

Cuba: The Obama administration removed Cuba from a list of state sponsors of terrorism, a big step in normalizing ties between Washington and Havana. Only three remain on the list – Iran, Sudan and Syria.

Random Musings

--In what is truly the biggest sports scandal of all time, United States and Swiss authorities, working together in virtually unprecedented cooperation (though it’s been growing between the two the past few years), launched a sweeping effort to clean up the world’s governing body for the sport of football, soccer to us Americans, FIFA.

Officials from the Justice Department, FBI and IRS jointly announced the indictment of nine officials from FIFA, as well as five sports executives, in what the 47-count indictment claims was an effort to extract $150 million in bribes that were actively solicited by FIFA officials for vote-rigging to send events to certain countries, such as Russia and Qatar for the 2018 and 2022 World Cups, while also steering business to various companies.

Officials on Wednesday emphasized this is just the beginning, though we have known for decades of the shady world in which FIFA operates. As described by the Washington Post’s Sally Jenkins: “Among the subjects of ongoing scrutiny, the law enforcement officials said, are banking institutions through which bribes flowed and sponsors who may have participated in alleged kickback schemes. The indictments contain 75 references to ‘co-conspirators.’”

“The beautiful game was hijacked,” FBI director James Comey said. “The defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world. Undisclosed and illegal payments, kickbacks and bribes became a way of doing business at FIFA.”

Attorney General Loretta Lynch said: “The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States...

“They corrupted the business of worldwide soccer to serve their interests and enrich themselves. They did this over and over, year after year, tournament after tournament.”

Sally Jenkins:

“In colorful detail, the indictments described officials at the very top of the game engaging in more than two decades of relentless corruption, including an alleged $10 million bribe to award the 2010 World Cup to South Africa with that government’s cooperation and a FIFA official passing out envelopes stuffed with $40,000 in cash to buy votes in the 2011 FIFA presidential election. It also outlined bribes for lucrative media and marketing rights for World Cup qualifiers and other events. According to Lynch, one FIFA official alone received $10 million in bribes.”

Meanwhile, Switzerland’s office of the attorney general announced its own separate criminal investigations into suspicions of money laundering, among other things, as well as “unjust enrichment” concerning the controversial awarding of the World Cup to Russia and Qatar. The Swiss seized electronic data from FIFA’s headquarters in Zurich.

As I noted primarily in another column I do for the site, it was a year ago that the Times of London broke the story on Russia and how it obtained its 2018 Cup slot, and it seemed just a matter of time before this whole thing broke wide open.

All one needed to know was how idiotic the awarding of the 2022 World Cup to Qatar was, over the U.S., when during the months of July and August, when the World Cup is traditionally held, the average daytime temperature there is 50C, or 122 Fahrenheit.

As for FIFA president “Sepp” Blatter, he wasn’t touched, yet, and on Friday faced election to a fifth term with little opposition.

The Swiss-born Blatter has been the head of FIFA since 1998, meaning he has control over the World Cup, which in 2014 generated revenues of $4 billion.

In an initial statement, Blatter said: “As unfortunate as these events are, it should be clear that we welcome the actions and investigations by the U.S. and Swiss authorities and believe that it will help to reinforce measures that FIFA has already taken to root out any wrongdoing in football.”

The U.S. indictments, though, speak of a pattern of corruption going back 24 years.

But while some of those who were indicted protested they were innocent, U.S. law enforcement announced that four individuals and two corporate defendants already have pleaded guilty to charges as part of the investigation, including former FIFA official Chuck Blazer of the U.S., who wore a wire in cooperating with the FBI. For years this man was the most powerful in American soccer and a longtime member of the FIFA executive committee.

Back to Blatter, on Thursday he said he condemned the “action of individuals” for bringing “shame and humiliation” on football.

But he added, although many held him “ultimately responsible” for the football community, he could “not monitor everyone all of the time.”

You can’t make this stuff up. In China, this guy would be put to death. 

Blatter did admit the “next few months will not be easy – I am sure bad news will follow” but that with Friday’s vote, “we have the opportunity to begin on what will be a long and difficult road to rebuilding trust.”

And so it was that Blatter was reelected to a fifth term after the first round of voting had him beating Jordan’s Prince Ali bin al-Hussein 133-73, 140 needed for victory so Ali opted to withdraw rather than go to a second ballot, which requires only a simple majority.

As for those calling for the 2018 and 2022 bids to be rescinded, it just isn’t going to happen, even as the stories of brutal, and deadly, working conditions for those building Qatar’s facilities grow.

--Nike wasn’t mentioned by name when Attorney General Loretta Lynch released the indictments against FIFA, but they show that some of the offenses include “agreements regarding sponsorship of the Brazilian national soccer team by a major U.S. sportswear company.”

Nike and Brazil agreed to a 10-year, $160-million deal to sponsor the national team back in 1996. It was then renegotiated in 2008 and lasts through 2018. Nike has said it is cooperating.

--The Clinton Foundation accepted as much as $100,000 from FIFA, with Bill Clinton hobnobbing with Sepp Blatter at the World Cup in Johannesburg in 2010.

Clinton was serving as honorary chairman of the effort to bring the event to the U.S. in 2018 or 2022. Britain’s Telegraph once reported that when the United States lost in 2010, “Clinton was so enraged that he threw an object across a hotel room and shattered a wall mirror.” [New York Post]

--IRS investigators believe the hackers who stole the personal tax information on more than 100,000 taxpayers from an IRS website are part of a criminal operation based in Russia, as first reported by the Associated Press. IRS Commissioner John Koskinen told reporters the information was stolen as part of an elaborate scheme to claim fraudulent tax refunds. Koskinen declined to say where the crime originated, but officials briefed on the matter said it was clear who the culprits were.

This isn’t the first time the IRS was targeted. In 2012, the IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai.

--Early last Saturday morning, the Senate failed to resolve a standoff over the NSA’s system of collecting and storing U.S. telephone records, so they are supposed to recommence work on it Sunday, hours before a June 1 expiration date. The opposition to the NSA’s data collection program has been led by Republican Sen. Rand Paul, while his fellow Kentuckyan, Sen. Majority Leader Mitch McConnell, has been trying to get it extended.

For its part, the NSA announced it would mothball its mammoth archive of phone records, but it will not destroy the database if it loses its legal authority to collect the material.

--A new Gallup poll found that Barack Obama’s popularity rating is up to 53%, his highest rating since September 2013, when 58% viewed him favorably.

I am mildly surprised by this. But then, really not. The vast majority just don’t have a clue on the importance of foreign policy. Some might say it’s important, but they couldn’t begin to tell you about the threat posed by China in the South China Sea, for example. They might watch the nightly news now and then, and understand ISIS is a threat, but it’s a glancing interest. Another big terrorist attack or an assassination will focus the mind.

But then the 53% ‘favorable’ grade for Obama is a bit deceptive. 90% of Democrats in the Gallup survey view him favorably while only 13% of Republicans say the same.

Worrisomely for Republicans and 2016, 52% of independents view Obama favorably, up 6 percentage points since April and 17 points since last fall. That’s a potential killer for the elephants should it continue. [‘Elephant’ is No. 2 on the All-Species List, behind ‘Dog.’ But ‘Man,’ including all Republicans, is anywhere between No. 298 and 323...see allspecieslist.com.]

But, wait...there’s more. Those grades above, again, are for popularity. Obama’s ‘job approval’ rating is still just 43% while 51% disapprove of the job he’s doing in office. [Actually, the latest Gallup job approval rating I see for Obama is 46%, 49% disapproval...all the above was from a CNN.com story from Wednesday.]

--Rick Santorum became one of the latest Republicans to announce his bid for the 2016 nomination; Santorum having been runner-up four years ago. The former Pennsylvania senator did go on to win 11 states, including the Iowa caucuses.

But this time, many of his senior aides and supporters have moved on to other candidates. As one figure told the New York Times, “I worked for Santorum last time. The guy wins more states than anyone but Romney and he’s polling at 1 percent.”

Former New York Gov. George Pataki also announced this week that he was formally a candidate.

--So in the Republican race, a new Quinnipiac University national poll is rather fascinating. Or maybe not surprising. Five GOP hopefuls all tie for first with ten percent.

Ben Carson (who had only 3% in the last Quinnipiac survey), Scott Walker, Marco Rubio, Jeb Bush and Mike Huckabee.

Then it’s Rand Paul with 7%, Ted Cruz 6%, Donald Trump 5%, Chris Christie 4%, and John Kasich and Carly Fiorina at 2%.

But what’s interesting is some of the matchup numbers with Hillary Clinton.

Clinton would beat Rand Paul by only 46-42 and 45-41 over Marco Rubio.

Then you have 46-37 over Christie, 47-37 over Bush, 46-38 over Walker, 48-37 over Cruz...that sort of thing.

What’s also interesting, though, is that in this Quinnipiac survey by a 53-39 margin, American voters think Hillary is not honest and trustworthy, yet by 60-37, the people say she has strong leadership qualities. That, my friends, is very screwed up.

--Ex-House speaker Dennis Hastert was charged with lying to the FBI and structuring cash withdrawals to avoid bank reporting requirements, federal authorities said on Thursday.

Hastert, who served as speaker from 1999 until 2007, was working as a lobbyist in Washington, before suddenly resigning this week. He was providing money to an unknown person in order to “compensate for and conceal his prior misconduct” against that person, who we haven’t learned the identity of, though the story emerging is the case is about sexual misconduct with a student when Hastert was a high school coach and teacher.

When questioned about the cash withdrawals from his account, Hastert, according to the indictment, told agents, “I kept the cash. That’s why I’m doing it,” as he attempted to convince the FBI he felt the banking system wasn’t secure.

--So if you take out a legal pad and draw a line down the middle, with the title ‘overrated’ on the left side and ‘underrated’ on the other, when it comes to the United States, you’d put the story of the Defense Department inadvertently sending live anthrax samples to labs in eleven states as well as a military base in South Korea (and, just announced, Australia seven years ago) on the left side of the ledger. How can this happen?

Col. Steve Warren, the chief Pentagon spokesman, said there was “no known risk to the general public” or any confirmed cases of anthrax infection in workers who were potentially exposed to the samples, but four are being monitored in the U.S., and 22 personnel at the base in South Korea have been given medical treatment.

--Jerry Markon / Washington Post

“Monica Camacho-Perez came to the United States from Mexico as a child, crossing into Arizona with her mother in the same spot where her father made the trip before them. ‘Nobody stopped us,’ Camacho-Perez, now 20, said of her 2002 journey.

“Three years ago, her uncle tried to cross the border and join the family in Baltimore, where they remain illegal immigrants. He was stopped three times by the U.S. Border Patrol and jailed for 50 days.

“ ‘He doesn’t want to try anymore,’ said Camacho-Perez. ‘Now, it’s really hard.’

“As the Department of Homeland Security continues to pour money into border security, evidence is emerging that illegal immigration flows have fallen to their lowest level in at least two decades. The nation’s population of illegal immigrants, which more than tripled, to 12.2 million, between 1990 and 2007, has dropped by about 1 million, according to demographers at the Pew Research Center....

“Homeland security officials in the Obama and George W. Bush administrations – who have more than doubled the Border Patrol’s size and spent billions on drones, sensors and other technology at the border – say enhanced security is driving new tends....

“What’s increasingly clear is that the shifting fortunes of the U.S. economy account for less of the ebb and flow of illegal immigration. Even as the economy bounces back from recession, illegal immigration flows, especially from Mexico, have kept declining, according to researchers and government data. Since the 1990s, the opposite was true: The better the economy, the more people tried to come.

“ ‘Every month or quarter that the economy continues to improve and unauthorized immigration doesn’t pick up supports the theory that border security is a bigger factor, and it’s less about the economy and we have moved into a new era,’ said Marc Rosenblum, deputy director of the U.S. immigration program at the Migration Policy Institute.”

--Nebraska became the first conservative state in more than 40 years to abolish the death penalty, thus defying Republican Gov. Pete Ricketts, who is a staunch supporter of capital punishment. The bill that was approved, veto-proof, replaces the death penalty with life imprisonment.

--Baltimore has had at least 38 homicides in May – the city’s deadliest month since 1999, thus bringing the total for the year to 111.

--The drought is over in Oklahoma and Texas after five grueling years, but at a staggering cost. The probable cause of all the rain is a building El Nino, which could eventually provide drought relief to California by winter, but then you’ll see awful flooding and mudslides there, too.

With a week left in May, Oklahoma City had already notched its wettest month ever. Dallas-Ft. Worth is about to do the same. [OKC has over 30 inches year-to-date vs. 4.29 inches for all of 2014.]

Back to the Golden State, I read a piece the other day on how more and more Californians are replacing their real grass with artificial turf. But while today’s fake grass can look authentic, many communities ban it because what prevents one homeowner from putting in some awful looking turf? And you can imagine the homeowner association fights.

--Nobel Prize winner John Nash, 86, and his wife, Alicia, 82, were killed in a car crash on the New Jersey Turnpike last weekend, as they took a taxi back home from the airport. The taxi driver lost control as he tried to pass another auto in the center lane, with the cab crashing into a guard rail.

Nash and his wife were not wearing their seat belts, sitting in the back, and were ejected, dying immediately. It’s that fact, not wearing seatbelts, that probably saves the driver from serious charges.

Steve Chawkins / Los Angeles Times

“While Nash was famous among mathematicians for sophisticated solutions to a variety of problems involving algebraic geometry and partial differential equations, he was more widely known for his work in economics.

“His 1994 Nobel Prize in economics was for his contributions to game theory, a discipline that has become fundamental to the study of the field and a crucial aid in high-stakes contests such as arms talks, trade negotiations, and elections.

“It was a concept he laid out in his doctoral thesis when he was just 21.

“His paper was only 27 pages... But the implications of what came to be called ‘the Nash equilibrium’ were huge.

“Game theory had emerged in the 1940s as the creation of mathematician John von Neumann and economist Oskar Morgenstern. The two delved into ‘zero-sum’ games – the kind with a winner who takes all and a loser who gets nothing.

“With mathematical elegance, Nash analyzed more complex rivalries and found ways to compute a sweet spot – the Nash equilibrium – where each party gets the best deal possible under the circumstances. Unions and management would apply it in complicated contract decisions; nuclear superpowers would use it in raising the specter of ‘mutually assured destruction’ to keep a tenuous peace.

“ ‘Nash’s insight into the dynamics of human rivalry – this theory of rational conflict and cooperation – was to become one of the most influential ideals of the twentieth century,’ his biographer Sylvia Nasar wrote in her 1999 book ‘A Beautiful Mind.’”

Nash had issues...serious ones...but the Nobel Prize seemed to change him He and his wife Alicia were returning to their Princeton home from a trip to Oslo, where he was presented the 2015 Abel Prize from the Norwegian Academy of Arts and Sciences for some of his mathematical breakthroughs.

--Indian American kids had won the Scripps National Spelling Bee seven years in a row* and all but four of the last 15 years, as pointed by out by the Washington Post’s Joe Heim. Page Kimble, the bee’s longtime director (and one-time champ in 1981), has been reluctant to talk about the streak but agreed to this year.

“How hard a child works is a very individual factor. But what might be happening [with Indian American contestants] is that there might be perseverance for the National Spelling Bee goal over a longer period of time.”

As Joe Heim writes: “Indeed, of the Indian American champions over the past 15 years, only one, Pratyush Buddiga, won on a first trip to the national bee in 2002. The others won after multiple trips, including last year’s co-champ, Sriram, who made it to the national bee five times before winning, and Kavya Shivashankar in 2009 and Sameer Mishra in 2008, who both won on their fourth trips.”

Goodness gracious.

But the reason why this is even a topic of discussion is because of the barrage of racist comments on Facebook and Twitter after last year’s contest when Sriram, then 14, and his co-winner Ansun, then 13, took the crown.

“The kids in the spelling bee should only be AMERICAN”

“No American sounding names who won the spelling B. #sad #fail”

Unbelievable. You know that ledger I’m keeping above? Put this one also on the left side.

But there is an obvious comment. Most young people at some point are giving sports a try, even if just through elementary school, but as the 2002 winner, Buddiga, told the Post, “When the other kids are playing football or basketball, the Indians are doing spelling.”

*So make it eight years in a row and all but four of the last 16. Thursday, Gokul Venkatachalam, 14, of Chesterfield, Missouri, and Vanya Shivashankar, 13, of Olathe, Kansas were declared co-winners.

---

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

God bless America.
---

Gold closed at $1189
Oil $60.30...up an unprecedented 11 weeks in a row

Returns for the week 5/25-5/29

Dow Jones -1.2% [18010]
S&P 500 -0.9% [2107]
S&P MidCap -1.1%
Russell 2000 -0.4%
Nasdaq -0.4% [5070]

Returns for the period 1/1/15-5/29/15

Dow Jones +1.0%
S&P 500 +2.4%
S&P MidCap +5.0%
Russell 2000  +3.5%
Nasdaq +7.0%

Bulls 48.5
Bears 14.9 [Source: Investors Intelligence]

Brian Trumbore

NOTE: Before I say a brief word on my GoFundMe campaign that I launched this week, the link for which is prominently displayed on the home page and will be affixed elsewhere on the site shortly, I just want to thank those of you who contributed thus far in either this endeavor or my recent first fundraising campaign in over 16 years.

Claude B., Dr. W., Dr. T., Jim D. (twice!), Bill C., Josh P., Denise D., Brad K., Ted T., Kelly L., Kirk N., Uncle C., Phil S., John G., Jeff B., Jack C., Pete M., Jimbo, Harry T., Rich H., Ken P., Steve G., Steve D., Cindy K. and Roj P.

You all have been terrific. [And if you don’t want your name listed in this fashion, let me know and I’ll take it out.]

This all started when my 15-year arrangement with BuyandHold.com ended earlier this year as they were folded into another operation, and it forced me to do some soul-searching.

For those of you who don’t know much about ‘crowdfunding,’ which is what GoFundMe, Kickstarter, and others of their ilk are, it is rapidly filling the role filled by angel investors and some venture capitalists/private-equity types in allowing those such as myself to in effect receive ‘series A’ type funding by going to the masses.

This is a very simplistic view of what I’m shooting for. All funds raised, aside from paying normal expenses, will be pumped into marketing and tech support. Some of you have noticed that after extensive travel last year, I have cut back, though I do hope to hit Iowa later in the summer for the State Fair and some politics.

StocksandNews is 24/7 even more so than before, when it was 23/7.

Where I need your assistance in the next few months is in helping me spread the word. I will just say that with regards to GoFundMe, hitting $500 is very important as it opens up far more doors, the way their system works. Think more radar screens.

Have a great week.
 



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Week in Review

05/30/2015

For the week 5/25-5/29

[Posted 10:30 PM ET, Friday]

http://www.gofundme.com/s3h2w8

Edition 842

Washington and Wall Street

As expected first-quarter GDP was revised downwards on Friday to -0.7%, annualized, from an initial 0.2% advance, as reported by the Commerce Department.

The pullback was the third time we had negative growth in a quarter since the current recovery began in mid-2009, with declines in output in the first quarters of 2011 and 2014.

The revision was forecast because of new data that showed exports fell more than first thought (the strong dollar continues to hammer multi-nationals) and imports were higher, compounding the issues that came with an awful winter in many key parts of the country.

Despite the windfall from falling gasoline prices in the first quarter, personal consumption rose by only 1.8%, down from 4.4% in Q4.

The revised report also showed personal consumption expenditures, the Fed’s preferred inflation gauge, fell 2%, up 0.8% on core, so not an issue for the Fed.

The last few quarters of annualized growth in GDP thus look like this.

Q1 2014... -2.1%
Q2 2014... 4.6%
Q3 2014... 5.0%
Q4 2014... 2.2%
Q1 2015... -0.7%

And for all of....

2012... 2.3%
2013... 2.2%
2014... 2.4%

Economists expect the second-quarter growth rate to be somewhere between 2% and 3%, though as I’ve noted before the Atlanta Fed’s GDPNow indicator is currently pegging it at just 0.8%.

In other economic news, April durable good came is as expected, -0.5%, with orders for capital equipment up 1% after a revised 1.5% increase in March.

On the housing front, April new home sales were at an annualized rate of 517,000, better than expected, while pending home sales came in at their highest level in almost a decade, up 3.4% to the highest reading since May 2006.

Separately, the S&P/Case-Shiller 20-city index for March was up 5% from March 2014.

Yes, housing continues its recovery, but as an earlier release on existing home sales showed, the average median sales price had risen 8.3% and this isn’t necessarily healthy.

Two other items. The FDIC released data this week that showed commercial and industrial loans rose 8.5% in the first quarter, year over year, and now represent 21% of outstanding loan balances at U.S. banks, the highest in 13 years. This is good.

But Friday, a reading from the Chicago Purchasing Managers Index came in at 46.2 for May vs. expectations of 53. Not good. The Institute for Supply Management, which produces the survey, said: “April’s positive move had suggested that the first quarter slowdown was transitory and had been impacted by the cold snap and port strikes. May’s weakness points to a more fundamental slowdown with the Barometer running only slightly above February’s 5 ½-low of 45.8.”

In other matters....

Late last Friday night, as I noted in this space, the Senate approved the Pacific free-trade accord known as the Trans-Pacific Partnership, but the battle in the House will be far tougher as President Obama faces greater resistance from both Democratic leaders and some Republican conservatives. The House could vote this coming week and unless Obama swings about a dozen more Democrats to his side than have currently lined up in support of the TPP, he’ll fall short.

If the president was able to twist enough arms, the deal could be wrapped up in July. The fast-track legislation calls for Obama to then wait 90 days for people to review the agreement, done largely in secret, before he signs it. There could be a further months-long delay, meaning final, final approval wouldn’t come until late this year, so it could then fall victim to the 2016 presidential race.

Separately, the Federal Reserve published the results of an annual survey (2014 data) of the financial wellbeing of Americans and the percent who believe their income will be higher next year is 29%, up from 21% of those questioned in 2013.

Almost half of those surveyed (47%) say they couldn’t cover an emergency expense of $400 without borrowing or selling something to raise the funds.

But the percent of people who describe themselves as “doing OK” or “living comfortably” is 65%, up from 62%.

In an interview with Yahoo Finance’s Andy Serwer, BlackRock CEO Larry Fink said he has been working on a “long termism” campaign, firing off letters to 700 CEOs and top executives, requesting they focus more on long-term objectives and less on quarterly goals and financial engineering in particular to achieve them.

Fink also said that whereas two or three years ago he said investors should be 100% in equities, today he couldn’t make that recommendation because valuations are much higher. “And more importantly, we have extreme valuations because of the central banks’ behavior.”

Europe and Asia

It remains all about Greece, with a key payment to the IMF due on June 5 (300m euro). Christine Lagarde, head of the International Monetary Fund, acknowledged in a newspaper interview with a German paper that Greece could leave the euro. “It’s a potential,” adding it would be “no stroll” but also that it would definitely not spell the end of the euro.

But the IMF has offered Greece three more weeks to repay* 1.6bn euro ($1.7bn) it owes the fund next month in total, insisting Greece still had to persuade creditors it was serious with reforms needed to unlock the desperately needed 7.2bn euro final installment in bailout money.

*This is allowed under the rules...Since Greece is making multiple payments in one month, it can “bundle” them until the final day of the month.

Greek officials have been arguing for months they were making progress in talks but what became apparent this week was that essentially zero progress has been made between Athens and its three bailout monitors – the IMF, the European Central Bank and the European Commission. It’s also clear there has been a slow-motion run on the banks in Greece, with deposits hitting a 10-year low in April. Capital controls are a real possibility.

Lagarde said in her interview with Frankfurter Allgemeine Zeitung, “It’s very unlikely that we will reach a comprehensive solution in the next few days.”

At a meeting of finance ministers in Dresden from the Group of Seven, an official told the Financial Times: “We are still on most key issues quite far apart. [The idea] that a deal is just around the corner and can come by Sunday is far, far from reality.”

German finance minister Wolfgang Schauble said, “We haven’t got much further in the negotiations.”

German Chancellor Angela Merkel reiterated to Greek Prime Minister Alexis Tsipras there will be no deal without IMF approval.

Earlier Tsipras had talked of “red lines we cannot cross,” including pension reforms and increases in value-added tax. Last weekend, Interior Minister Nikos Voutsis warned the country was running out of funds and that the IMF repayment owed in June “will not be given and is not there to be given.”

For his part, U.S. Treasury Secretary Jack Lew urged Athens and its creditors to strike a deal as soon as possible, saying putting it off any further risked “an accident” that could force Greece out of the eurozone. Lew added: “There is great uncertainty at a time when the world needs greater stability and certainty.”

---

Some GDP figures came out at week’s end.

Italy grew 0.3% in the first quarter for the first time in six quarters, according to a final reading. The Italian government expects the economy to grow 0.7% in 2015, the first expansion in three years. The government of Matteo Renzi is also easing up on austerity.

But while the situation in Italy is improving somewhat, the country’s debt-to-GDP ratio will drop from 132.5 percent this year to a still sky high 123.4 percent in 2018, if all goes according to plan, which we all know is never the case.

Swedish GDP was expected to have risen 0.6% in the first quarter and came in at 0.4% (that’s quarter over quarter).

Switzerland had a reading of -0.2% in Q1, worse than expected.

Earlier in the week, the UK’s Office of National Statistics said GDP rose 0.3% in Q1, unchanged from an initial estimate. The 2014 quarterly rate was 0.6%. The Bank of England is forecasting growth of 2.5% for 2015, which would be a decline from 2014’s 2.8%, the fastest since 2006.

Meanwhile, lending growth to eurozone households and firms was flat in April, according to ECB data released Friday, after a rise of 0.1% in March. Economists expected a 0.2% rise in April.

Euro bond markets continued to settle down after a wicked stretch that had seen rates soar. The German 10-year saw its yield fall back to 0.49%.

But the 10-year paper of Italy and Spain did not rally and both are about 0.50% above their yields when the ECB’s version of QE started on March 9. [Italy 1.84% vs. 1.31%; Spain 1.83% vs. 1.29%.]

On the issue of a “Brexit,” Britain leaving the EU, the head of Germany’s Chamber of Commerce and Industry warned that a UK exit would be “disastrous” for Britain and Germany. 

Volker Treier told the BBC that German business is “astonished” that the UK is planning a referendum over its EU membership.

Prime Minister David Cameron met with Angela Merkel in Berlin on Friday and Treier said the German Chancellor should not offer concessions.

The organization estimates that German companies employ nearly 400,000 people in the UK and Treier said if Britain leaves, a significant number of German companies would contemplate reducing their investment there.

But on Friday, Merkel offered to help Cameron keep Britain in the EU, leaving open the prospect of treaty change and declaring: “Where there’s a will, there’s a way.”

Earlier, Cameron met with Polish Prime Minister Ewa Kopacz, who strongly opposes Cameron’s plan to make it harder for migrant workers to claim benefits, a key ‘concession’ from the EU that he’s seeking.

Mrs. Kopacz told Cameron she would fight any proposal “that could lead to the discrimination of Poles or other EU citizens working legally in Great Britain,” her office said in a statement. [Financial Times]

A law enabling a referendum on the EU to occur by the end of 2017 (per Cameron’s election promise) was introduced into parliament this week, allowing the pro-EU camp to be the ‘Yes” campaign, helping it avoid accusations of negative campaigning.

Cameron has said he would be ready to hold the referendum before 2017 if he completes the renegotiation early, but some in the Eurosceptic camp want him to ask for more and to take his time reaching any settlement.

This process is just getting started.

One issue for today, and also in the future, however, is what to do with all the asylum seekers from North Africa. This week the European Commission called on EU member states to take in 40,000 from Syria and Eritrea who land in Italy and Greece over the next two years. The UK, as I noted last time, said it wouldn’t participate, while France, Spain, Hungary, Slovakia and Estonia expressed concerns.

Under the EC’s plan, Germany would take in 8,763 (21.91%); France 6,752 (16.88%); Spain 4,288 (10.72%).

Countries would receive 6,000 euro for every person relocated on their territory under the latest proposal.

Italy has seen a 277% rise in irregular border crossings, Greece 153%. I feel for the Italian government in particular. What a nightmare. They’ve long had a problem with Roma, and now this.

Lastly, Spain’s ruling Popular Party suffered heavy losses in regional and local elections last Sunday. Even though Spain’s economy has bounced back from recession and is on track to grow by 3% this year, the unemployment rate is still sky high and there is lingering anger over the recent economic crisis. Additionally the PP has suffered a string of corruption scandals.

The Popular Party is still the biggest in nine of the 13 regions where elections were held (four other regions will hold them later), but the party of Prime Minister Mariano Rajoy failed to obtain an absolute majority – meaning it will need to cobble together a coalition with one of its rivals and this will get messy. General elections are held later this year.

Turning to Asia, China’s benchmark Shanghai Composite stock index had soared 53% this year until a 6.5% drop on Thursday. It had been within striking distance of 5000, which would have been the first time since Jan. 2008 it was at that level.

Robert Samuelson / Washington Post

“It’s time to worry about China.

“On any list of calamities threatening the world economy, a China crash ranks at or near the top. Just what would constitute a ‘crash’ is murky. Already, China’s sizzling rate of economic growth has declined from 10 percent annually – the average from the late 1970s until 2011 – to 7 percent, which is still high by historical standards. The question is whether the deceleration continues and growth goes much lower.

“A faltering China could tip the world back into recession. Because China is a huge customer for raw materials (grains, metals, fuels), their prices would remain depressed. China’s surplus capacity of basic industrial goods, such as steel, would be increasingly exported, also depressing prices. This would dampen any recovery in global business investment. Confidence would suffer.

“What about political fallout? ‘The Chinese government has maintained its legitimacy by promising economic progress,’ says economist Eswar Prasad of Cornell University. If the promise seems broken, it’s hard to know how China’s masses would react. Or China’s leaders. Would they become more nationalistic and aggressive to deflect attention from economic disappointment?

“Americans are exposed to all these potential spillovers. Prasad doubts the worst-case scenario will come to pass; plenty of other experts agree. After all, China’s leaders have repeatedly disproved doomsayers. There are many reasons the economy can flourish. The most obvious: Consumption spending was only 37 percent of the economy in 2014, the lowest of any major country (the U.S. figure: 68 percent of GDP). If the Chinese become a bit more spendthrift, their economy could thrive.

“Still, there is the example of Japan. In the 1980s, it was widely regarded as the world’s most dynamic economy, overtaking the United States. Then Japan’s prospects collapsed. New Asian competitors (Taiwan, South Korea) and an appreciating currency destroyed its economic model of export-led growth. Unable to build a new model, Japan has foundered ever since.

“China is now at a similar juncture. There’s broad agreement that its economic model is outmoded. It also emphasized export-led growth and high investment spending (the counterpart of low consumer spending). The 2008-09 financial crisis showed the limits of both.

“Exports fell, as China’s biggest customers – the United States and Europe – went into recession. To bolster its economy, China announced a $586 billion stimulus package, almost 13 percent of GDP, in late 2008. But unlike the U.S. stimulus plan in 2009, which was part of the federal budget, much of China’s extra spending was channeled through state-owned banks and local governments. What ensued was a credit boom that has now left a large overhang of unsold housing, surplus industrial capacity and questionable debt.”

As for Japan, exports rose 8% in April year over year, while imports fell 4.2%.

Retail sales last month rose 0.4% over March and represented just the second increase in six months, but were below expectations. Retail sales are up 5.0% year over year, though this is distorted by last April’s sales tax hike and subsequent downturn. Household spending in April was down 1.3% yoy.

But the unemployment rate last month fell to 3.3%, the lowest since the late 1990s.

What Japan really needs is for corporations to pass on more of their profits in the form of higher wages, which is slowly occurring.

Street Bytes

--Stocks finished up a very dull May with a little increase in volatility the last week. Nasdaq hit a new closing high of 5106 on Wednesday, but otherwise the major averages fell, with the Dow Jones losing 1.2% to 18010, reducing its gain for the year to just 1%, while the S&P 500 fell 0.9% and Nasdaq ended up losing 0.4% to 5070. For the month of May, the S&P gained 1.1%.

This coming week is all about the jobs report on Friday, with few other catalysts in the immediate offing.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.61% 10-yr. 2.12% 30-yr. 2.88%

The yield on the key 10-year fell 9 basis points from 2.21% on the punk news on the economy and the realization there is now virtually zero chance the Fed is raising rates before September.

--Canada’s GDP shrank 0.6% at an annualized rate during the first three months of the year, against forecasts for a small rise of 0.3%, as weaker oil prices had a more severe impact than expected. Canada had reported growth at an annualized pace of 2.4% in the fourth quarter.

But the Bank of Canada is forecasting second-quarter growth of 1.8%, 2.8% for the third.

--Brazil’s economy shrank less than expected in the first quarter, contracting 0.2% over the fourth quarter. A 4.7% growth rate for agriculture was a bright spot. Compared to a year ago, GDP contracted 1.6%.

Confidence in Brazil has been collapsing amid the slide in global commodity prices, a widening budget deficit, high inflation and the mammoth corruption scandal at state-controlled oil company Petrobras.

GDP is expected to contract 1.2% for all of 2015.

--India’s economy grew at an annualized pace of 7.5% in the first three months, better than expectations of 7.3%.

But there has been confusion over what the real number is here, as the statistics department recently changed the way GDP is calculated, essentially rebasing it at a higher level. Beats the heck out of me if the figures are right...I’m just trying to find time to watch the Rangers’ Game 7 Friday night.

--Charter Communications struck a deal to acquire Time Warner Cable for $55 billion to become the second-biggest U.S. cable operator and primary challenger to Comcast. Charter is backed by cable tycoon John Malone and the company will pay $195.70 a share to buy TWC in a cash and stock offer.

Charter is also renegotiating its planned takeover of Bright House Networks, another large U.S. cable operator, with Bright House’s owner controlling as much as 14 percent of the newly formed business.

Charter-TWC will serve nearly 24m customers in 41 states, with Comcast serving more than 27m.

So with regulatory opposition having been a key factor in Comcast’s recent withdrawal of its own $45bn bid for TWC, why should Charter be successful? We’ll see.

--Health insurer Humana Inc. is working with Goldman Sachs on a possible sale of the company after receiving indications of takeover interest, as first reported by the Wall Street Journal.

Shares in Humana, already up 42% over the past year as it is seen being a major winner in ObamaCare, administering the private version of the federal Medicare program, soared another 20% on Friday to close at an all-time high.

--Singapore-based Avago Technologies, a maker of semiconductors for smartphones, has struck a $37bn deal to acquire Broadcom in the latest and largest transaction in a wave of consolidation among chipmakers. Broadcom makes mobile chips used by companies including Apple and Samsung.

Avago, which is listed in the U.S. but domiciled in Singapore, has been very acquisitive, taking advantage of Singapore’s much lower corporate tax rate of about 10 percent, vs. the 35 percent corporate rate set for most U.S. companies.

--Norway has overtaken Russia as western Europe’s top gas supplier, a good sign the European Union’s drive to reduce its dependence on Russian energy is bearing fruit. Exports to EU members in eastern Europe are not included in the data, but with Norway exporting 29.2 billion cubic meters to western Europe in the first quarter, vs. Gazprom’s 20.29 bcm, it was the first time Norwegian exports have convincingly overtaken Russia’s since a brief period in 2012. [Reuters]

For all of 2014, Russia remained the main EU supplier, though Russia’s market share fell to 42%, while Norway’s share of EU imports rose from 34% to 38%.

--From Ed Crooks / Financial Times: “Oil reserves that Royal Dutch Shell hopes to find in the Arctic are unlikely to be brought into production before the 2030s due to the difficulty in securing environmental approvals, executives leading the exploration said.

“Only a discovery of large reserves in the Chukchi Sea off the northwest coast of Alaska would justify the investment in infrastructure that would be needed to start production, (said CEO Marvin Odum).”

The area is very promising, but several companies have been delaying or cancelling Arctic exploration plans to save money after the plunge in oil prices since last summer.

The Obama administration approved Shell’s plans for the region, but Shell is saying if the U.S. wants full-scale development of its Arctic oil, the government will have to streamline regulatory and legal constraints that hold up exploration.

--Shares in Hanergy Thin Film Power Group, a Hong Kong listed company, collapsed about ten days ago but details of the outfit controlled by Li Hejun, who had become China’s richest man, are still sketchy. HTF had become the world’s largest solar company, with a value that had skyrocketed to more than five times its nearest competitor, First Solar of the U.S., but was it nothing more than another case of massive fraud? It sure seems likely.

Li Hejun had taken a $200m loan pledging millions of shares in HTF as collateral just two days before its share price crashed, filings unearthed by the Financial Times revealed. There were also complicated financial arrangements between HTF (Hanergy Thin Film) and the parent, Hanergy Group.

Wednesday, May 20, shares in Hanergy plummeted 47% in 25 minutes before trading was halted. Other associated stocks then fell like amounts. Li Hejun owns close to 75% of Hanergy’s shares.

There is no word on when trading in the stock will resume.

--Shares in Tiffany soared as the company reported earnings and revenues that were far better than the Street expected, even though overall revenues fell 5% year over year. The company also reported guidance for the second quarter and second half that were better than analysts’ forecasts. Tiffany said it believed “we can return to a healthier rate of double-digit EPS growth over the long-term.” Comp-store sales in the U.S. rose 1%, while they were up 2% in the Asia-Pacific region. But they declined 24% in Japan.

--Workday, a leader in enterprise cloud applications for finance and human resources, reported better than expected earnings and revenues for the quarter ending April 30, with revenue up 57% to $251 million, but the shares were whacked to the tune of 15% when the company conceded on a conference call that its biggest competitor, Oracle, was hitting Workday with serious pricing pressure.

Executives from these two companies don’t like each other and the animosity goes way back, so it seems that executive chairman Larry Ellison is willing to lose money on some of the deals it is going against Workday on just to win the business.

I have never liked Larry Ellison and with a good friend at WDAY, let’s just say I hope Workday weathers this storm and comes out far better for it.

But to be fair, some of the stocks in this space have been priced for perfection and it’s often necessary to take one or two steps back before resuming the advance.

--JPMorgan Chase CEO Jamie Dimon blasted shareholders for being “lazy” and “irresponsible” in letting proxy advisers recommend how they vote at annual meetings. It just so happens the focus this year at the bank’s meeting was on his $20 million pay package; and the issue came to a head a week after the bank agreed to pay $892 million of its shareholders’ funds to regulators for abuses in the foreign exchange market – just one in a series of big fines paid under Dimon’s watch.

JPMorgan also announced it is cutting more than 5,000 jobs, with layoffs already having commenced, as the industry moves toward Internet and mobile banking. Dimon said the average JPMorgan Chase branch would lose one employee over the next two years, mostly through attrition; though the layoffs extends into the bank’s other major business units, such as corporate and investment banking.

--In a disconcerting incident, a Singapore Airlines Airbus A330-300 temporarily lost power in both Rolls-Royce engines in mid-flight last Saturday when the plane hit bad weather en route to Shanghai from Singapore with 194 passengers and crew on board.

“Both engines experienced a temporary loss of power and the pilots followed operational procedures to restore normal operation of the engines,” said the airline.

One engine did apparently return to normal operations almost immediately. The plane landed safely in Shanghai and no “anomalies” were found.

--McDonald’s said it planned to stop reporting monthly same-store sales results and will do so just quarterly. The company has been struggling to turn its business around after 11 straight months of declining global comp-store sales.

--According to BrandZ’s Top 100 Most Valuable Brands study, Apple has regained the top slot from Google, and it’s more about the iPhone 6 than Apple Watch. All four of this year’s top brands – Apple, Google, Microsoft and IBM – are tech names.

5. Visa 6. AT&T 7. Verizon 8. Coca-Cola 9. McDonald’s 10. Marlboro 11. Tencent (Chinese Internet co.) 12. Facebook

--SpaceX, the space launch provider controlled by Elon Musk, was certified by the U.S. Air Force in its campaign to win business launching U.S. spy satellites. 

So now SpaceX, with its Falcon 9 rocket, can compete with United Launch Alliance, which currently holds a monopoly, when launches go up for bid as early as next month. ULA says its launches cost an average of $164m each, while SpaceX has said the true figure is around $400m. SpaceX is offering its rocket to commercial users for as little as $60m per launch.

ULA, however, has a 96% success rate. [Financial Times]

--California’s jobless rate fell to 6.3% in April, the lowest level since 2008. The jobless rate in the U.S. is 5.4%. California has been on a helluva roll...38 straight months of outstripping the national rate in employment growth.

--New Jersey home prices are up 4.2% from year ago levels, according to April data released by New Jersey Realtors. Our market here never crashed like others did around the country following the bursting of the bubble, but it’s also gone up less in the recovery. I sold my home in early 2010 at a great profit, though the timing was poor, but I would have received about the same price today.

--Property prices in Ireland have risen about 16% in the past year, according to the Central Statistics Office. Residential prices in Dublin were up 20% year over year in April.

--In his first public appearance in nearly seven years, former Lehman Brother CEO Dick Fuld said little about the Lehman collapse, though he acknowledged making crucial misjudgments as the investment bank sank into a bankruptcy that helped send global markets and the economy into freefall.

“I missed the violence of the markets,” said Fuld. “You don’t have the time to hear all the things I would have done differently.”  Audience members said they did have time, but Fuld declined to explore the matter further. What an a-hole. Instead he rambled on about the global scene.

--Broadway’s revenue and attendance figures both hit record highs for the third season in a row. The Broadway League said Tuesday that box offices reported a record total gross of $1.36 billion – up from $1.27 billion from the previous season. Attendance was up 7.3% to 13.1 million. [Crain’s New York Business]

--Hollywood saw its worst Memorial Day box office since 2001, which is compounded by the fact average ticket prices have risen 44% over that time, according to the National Association of Theater Owners.

The weak performance of “Tomorrowland” was a key. Disney spent $180 million on this science-fiction film and it took in only $41.7 million over the four-day holiday weekend. The flick stars George Clooney.

--With the dollar about 25% stronger against the euro than this time last year, record numbers of Americans will be heading to Europe, as well as record levels of Asians. As the Wall Street Journal reported, “Chinese outnumber British visitors to the Louvre and Italians at Versailles.”

What a nightmare this is going to be. And remember, guys, keep your wallet in your front pocket, don’t wear expensive watches, and, girls, keep the pocket book zipped, clutch it with your life, and don’t wear diamonds.

Better yet, find a room with a view and just stay in it, drinking adult beverages and listening to local music.

Also, in all seriousness, whatever you do, don’t go to the Louvre!!! Trust me on this. It won’t be enjoyable in the least. The Journal basically says the same of the National Gallery in London.

Foreign Affairs

Iraq/Syria/ISIS:

--For the second consecutive Friday, ISIS took responsibility for a suicide bombing at a Shiite mosque in Saudi Arabia, killing at least four.

--ISIS killed at least 20 men at the ancient theatre inside the Unesco World Heritage site of Palmyra, central Syria, according to the Syrian Observatory for Human Rights. Residents were rounded up and forced to watch the men being shot.

The group says about 240 – mostly soldiers – have been killed by IS since it overran Palmyra last week. Another 600 are being held prisoner, so they could suffer a similar fate. [A separate report has ISIS killing at least 400 already. At least 300 soldiers were killed in the days of fighting before the city was captured, according to the Observatory.]

About a third of Palmyra’s 200,000 residents were able to flee before ISIS arrived. There are reports the rest are being prohibited from leaving.

It’s not known yet what they will do to the 2,000-year-old Roman-era ruins, but ISIS has been destroying ancient sites elsewhere.

And while some may not care about this in the grand scheme of things, a rare species of bird, the northern bald ibis, may become extinct in Syria because of the capture of Palmyra, where the last breeding pairs have previously been protected.

--ISIS captured two phosphate mines outside of Palmyra, a major blow to the Syrian regime, putting an end to one of its “last” chief sources of income.

While ISIS is unlikely to be able to make use of the raw phosphate in the mine, it is depriving the regime of a major revenue stream. Coupled with the suspension of oil exports, how is the Assad clan surviving? [Aid from Iran and Russia, for starters.]

--Iraqi forces launched a counteroffensive against ISIS in Ramadi but were said to just be probing the defenses. Iraqi Prime Minister Haider al-Abadi has enlisted Shiite paramilitary forces in what some are calling the biggest gamble of his nine months in power since it’s bound to fan sectarian trouble.

--Last weekend, John McCain, (R., Ariz.), chairman of the Senate Armed Service Committee, appearing on CBS’ “Face the Nation,” called for U.S. special forces in Iraq, in addition to forward air controllers to help direct bombing missions from the air. Right now, he said, the U.S. has “no strategy” for halting ISIS.

Michele Flournoy, who served as undersecretary of defense under Obama from 2009 to 2012, and was in the running for the top job, said on CNN, Iraq is near a tipping point in which it could disintegrate.

“ISIS is a threat not only to Iraq and Syria,” Flournoy said. “It is a threat to us.” [Jon Hilsenrath and Janet Hook / Wall Street Journal]

--A coordinated bomb attack hit two of Baghdad’s most upscale hotels Thursday night, killing at least 15, according to the Associated Press. [However, Iraqi officials said the number dead was just three. That said, the explosions were massive.]

Two cars rigged with explosives blew up within minutes of each other around midnight. Islamic State is suspected, which if so would be one of its most high-profile attacks in the capital. Heretofore, ISIS has been targeting Shiite neighborhoods of the city.

--The U.S. Army chief of staff, Gen. Raymond Odierno, said the U.S. military should continue training and advising Iraqi Security Forces to fight Islamic State militants, but American combat troops should not be deployed.

Instead, Odierno is suggesting there be more Army trainers deployed to Iraq and even to accompany Iraqi forces onto the battlefield. “Embedded advisors, with increased risk to our soldiers, probably would make this more effective,” he said.

Odierno, though, is concerned the injection of American forces onto the battlefield could further inflame sectarian or ISIS violence.

Odierno’s comments followed Defense Secretary Ashton Carter’s assessment that the Iraqi military “showed no will to fight” when ISIS took Ramadi. [Marcus Weisgerber / Defense One]

Richard Spencer / Daily Telegraph

What have we learnt from ISIS’ recent successes?

“1. ISIL is not on the run. Following its loss of Kobane in Syria to the Kurds and of Tikrit in Iraq in April, the United States seemed to think ISIL would implode. It hasn’t.

“2. ISIL is phenomenally well-run as a desert strike force. An air strike has reportedly decapitated its leader, Abu Bakr al-Baghdadi, and its first deputy leader, while the Iraqis claim – unconvincingly – that its new acting leader has also been killed. A score or more other senior leaders have been killed.

“But its middle-ranking cadres, many former officers in the army of Saddam Hussein, are skilled military tacticians who were able to out-think both the Assad regime army and, more worryingly, the U.S. –trained Iraqi security forces.

“3. President Bashar al-Assad’s army is losing. For years it was vaunted as ‘the strongest army in the Middle East’ and some of his defenders in both East and West said Assad was ‘the only hope’ for Syria. It is now clear that his demoralized army is on the run – from ISIL in the east, from Jabhat al-Nusra and other rebel groups in the northwest. It is on the defensive in the south and near Damascus.

“It has held on so far only where Hizbullah and other Iranian-backed militias are fighting....

“5. Current U.S. strategy may have held up ISIL but will not defeat it....

“7. Everything every government everywhere has done in both wars has deepened sectarian divides. The Assad regime has retrenched to its Alawite core, marginalizing Sunni members of the inner circle and government. It has been supported by Shia Iran – which has deployed its militias to mainly Shia areas.

“Saudi Arabia, Qatar and Turkey have given priority in their backing to Sunni Islamist rebel groups. In Iraq, the government stopped paying loyal Sunni tribal militias because they were not part of the army but has now called on Shia militias to fight.

“The United States refused to give military support to the Free Syrian Army when it contained large secular elements – while Islamist fund-raisers and backers channeled arms to Sunni Islamist extremist groups....

“10. Only hard choices remain, and Mr. Obama is not going to take them.

“In most of Iraq and Syria, the only forces that can defeat ISIL are either backed by Iran, or are Sunni Islamists. It need not have been this way, but it is. Mr. Obama is vicariously backing both – by acting as air cover to Shia militias in Iraq, and allowing American allies like Saudi Arabia and Qatar to support Islamists in Syria.

“But by not acknowledging this policy, he is giving up American influence on the eventual outcome – whatever that is.”

Iran: U.S. Secretary of State John Kerry and his Iranian counterpart Foreign Minister Mohammad Javad Zarif are meeting in Switzerland this weekend as part of the push to seal a final deal over Tehran’s nuclear program, but one of Iran’s negotiators, Abbas Araghchi, quoted by state news agency IRNA, said the two sides were not bound by the June 30 schedule. He added: “We are not at the point where we can say that negotiations will be completed quickly – they will continue until the deadline and could continue beyond that.”

French Foreign Minister Laurent Fabius warned this week that France would oppose a final deal that did not allow inspections of military sites.

Iran’s deputy oil minister was quoted as saying that 20 pages of the text had been written “but there are still disagreements and 30 percent of the work remains to be done.”

Iran’s Supreme Leader Ayatollah Ali Khamenei praised the work of his nuclear negotiators, this after they came under harsh criticism from members of the Iranian parliament. Critics accuse negotiators of accepting demands for international inspections of the military sites, a position Khamenei has totally ruled out. [Daily Star]

John Podhoretz / New York Post

“Deep into the seventh year of his tenure, Barack Obama is thinking about his post-presidential legacy. We know this because he’s telling us so.

“In an interview this week [Ed. week of 5/18] with The Atlantic about the potential deal with Iran regarding its nuclear program, the president sought to use the fact of his relative youth and his consciousness about how history might judge him to his advantage: ‘Look, 20 years from now, I’m still going to be around, God willing. If Iran has a nuclear weapon, it’s my name on this. I think it’s fair to say that in addition to our profound national-security interests, I have a personal interest in locking this down.’

“In one sense, this is what we want presidents to worry about. We want them to be restrained by the cautionary examples provided by history and by the fact that history will judge them.

“But what if the desire to tip the scales of history’s judgment in his favor leads a president to take dangerous risks?

“In fact, we know that is what Obama has done with the Iran deal because his aides have told us so.

“His deputy national security adviser, Ben Rhodes, put it this way last year to a roomful of liberal activists when talking about the initial November 2013 agreement to begin talking about Iran’s nuclear program: ‘Bottom line is, this is the best opportunity we’ve had to resolve the Iranian issue diplomatically...This is probably the biggest thing President Obama will do in his second term on foreign policy. This is health care for us, just to put it in context.’

“But this ‘opportunity’ didn’t just emerge organically – which is actually where ‘opportunities’ are supposed to come from. It did not result from changing conditions that opened a new possibility of finding common ground.

“Iran’s behavior didn’t change, and its pursuit of nuclear weapons didn’t change. Obama manufactured what Rhodes called an opportunity by pursuing a deal with Iran and dangling all kinds of carrots in front of the mullahs.

“And why? Because he wants a foreign-policy legacy to match the size and scope of his key legacy in domestic policy.

“And who can blame him? After the failure of the Arab Spring, the collapse of Libya, the failure to act on his self-imposed ‘red line’ in Syria, Russia’s seizure of Crimea from Ukraine and the terrifying rise and forward march of ISIS, the only unmitigated positive on his foreign-policy spreadsheet remains the killing of Osama bin Laden.

“Look, the guy will need something impressive to fill the exhibition space at his brand-new presidential library in Chicago.

“Obama’s asking us to trust him because, he says, you can’t think he would want to look like the man who allowed Iran to go nuclear at some point in the future.

“So what explains the president’s own unprompted comments in an NPR interview in April that, under the terms already announced, Iran would have the right to go nuclear by 2028 – when he will, God willing, be a mere 67 years of age?

“ ‘A more relevant fear,’ he said, ‘would be that in years 13, 14, 15, they have advanced centrifuges that enrich uranium fairly rapidly, and at that point, the breakout times would have shrunk almost down to zero.’

“Obama offered an answer. ‘The option of a future president to take action if in fact they try to obtain a nuclear weapon is undiminished,’ he said.

“So it will be up to his successors to bail him out in the eyes of history and make it appear as though his legacy wasn’t the nuclear destabilization of the Middle East!”

--The Jerusalem Post, via Reuters, reported, “An exiled Iranian opposition group said on Thursday a delegation of North Korean experts in nuclear warheads and ballistic missiles visited a military site near Tehran in April amid talks between world powers and Iran over its nuclear program.

“The dissident National Council of Resistance of Iran (NCRI) exposed Iran’s uranium enrichment plant at Natanz and a heavy water facility at Arak in 2002. But analysts say it has a mixed track record and a clear political agenda....

“The UN Panel of Experts that monitors compliance with sanctions on North Korea has reported in the past that Pyongyang and Tehran were regularly exchanging ballistic missile technology in violation of UN sanctions....

“Several Western officials said they were not aware of a North Korean delegation travelling to Iran recently.”

Yemen: Nearly 100 people were killed in Saudi-led airstrikes on Yemen’s capital and other sites on Wednesday; the largest single-day death toll of the two-month old offensive.

The Saudi-led campaign has yet to drive the Iranian-backed Houthi rebels from Sana or from strongholds in the strategic southern city of Aden.

Israel: Prime Minister Netanyahu appointed Dore Gold, a former Israeli ambassador to the United Nations and a hardliner on Iran and the Palestinian issue, to run the Foreign Ministry.

Gold said in an interview he didn’t oppose the establishment of a Palestinian state, but he sees most of the Palestinians’ conditions as impossible to balance with Israel’s security.

Separately, Amnesty International said in a report released Wednesday that Hamas tortured and killed Palestinians during the war against Israel in the Gaza Strip last year...executing at least 23, the human rights group said.

Russia / Ukraine: Legal and military experts told The Moscow Times that amendments introduced Thursday that classify as state secrets any losses sustained during peacetime special operations are further confirmation of Russia’s direct involvement in the Ukraine conflict.

The amendments, signed by President Putin, make “information disclosing the loss of personnel...during special operations in peacetime” a classified state secret.

Putin’s spokesman, Dmitry Peskov, had no comment when asked about the move, as Putin repeatedly denies Russian troops are in eastern Ukraine.

Lawyers said Thursday that “Military servicemen who are killed, injured or go missing can be considered military losses, meaning their relatives will be forced to keep information about their deaths a secret,” as reported by the paper.

A leading lawyer told the Times, “If a citizen, for instance a journalist, obtains information that is considered a state secret, they face prison.”

Leading Russian opposition leader Boris Nemtsov was working on a report about alleged Russian troops in Ukraine at the time of his assassination in Moscow in February.

Bloomberg’s Josh Rogin reported this week: “Russia is so desperate to hide its military involvement in Ukraine that it has brought in mobile crematoriums to destroy the bodies of its war dead, say U.S. lawmakers who traveled to the war-torn country this spring.”

Separately, Reuters reported Russia’s army is massing troops and hundreds of pieces of weaponry including mobile rocket launchers, tanks and artillery at a makeshift base near the border with Ukraine.

Many of the soldiers spotted have removed insignias from their uniforms.

Military hardware has been seen on trains entering the Matveev Kurgan (Rostov region, southern Russia) railway station every day. This Tuesday, a Reuters reporter saw 16 T-72 tanks on one train.

[Russia’s military is also staging a large exercise involving around 250 aircraft and 12,000 service personnel to check combat readiness.]

Editorial / Wall Street Journal

“So much for February’s Ukraine cease-fire. Russian proxies on Saturday shelled Avdiyivka, a town in eastern Ukraine held by the Kiev government, killing a Ukrainian service member and a civilian in an attack that also shut down a coke-manufacturing plant. On Sunday pro-Kremlin forces fired on Ukrainian positions near the port of Mariupol, killing a Ukrainian soldier and wounding two....

“Prospects for (the Minsk II deal between Vladimir Putin and Ukraine’s President Petro Poroshenko, brokered by Francois Hollande and Angela Merkel) were never good given that its predecessor, Minsk I, collapsed soon after it was signed in 2014. February’s pact also deferred to the end of 2015 the all-important question of securing Ukraine’s border. Sure enough, as a senior Western diplomat told us Thursday: ‘The familiar pattern is recurring. Russia makes high-level assurances that it wants peace, and meanwhile stokes the violence on the ground with fighters and arms.’

“That stoking is happening on a grand scale. Kiev now documents between 50 and 80 Russian cease-fire violations per day, according to Alexey Makukhin, an adviser to Ukraine’s Defense Minister, ranging from minor provocations to heavy shelling....

“Russian special-forces operatives also are infiltrating Ukrainian territory. Kiev forces detained two such operatives on May 16 near Shchastya, Mr. Makukhin told us, as they attempted to conduct reconnaissance on the local power station in preparation for its eventual capture. The plan was foiled....

“(According to a new report from the Atlantic Council), Russia continues to amass troops on its border with Ukraine and ‘Russian training camps stationed along the Ukrainian border are the staging ground for Russian military equipment transported into Ukraine, soon to join the separatist arsenal, and for Russian soldiers mobilized across Russia to cross into Ukraine.’...

“A serious Western response to Russian violations would include arms sales to Kiev so Ukraine could raise the cost of Russian incursions. Then again, serious Western leaders would have taken Mr. Putin’s measure before the Minsk deals started becoming as numerous, and as bad, as ‘Fast & Furious’ sequels.”

Editorial / Wall Street Journal

“China, Russia and Iran are taking advantage of American retreat to assert political and (perhaps eventually) military dominance over their corners of the globe. They share a goal of reducing U.S. influence, bending neighbors to their political will, and ultimately using that regional base of power to diminish the global sway of Western democracies, especially the U.S. In addition to the rise of Islamic State, this will be the biggest strategic challenge for the next President....

“For 20 years and through administrations of both parties, the U.S. managed to contain the emergence of such regional threats. But that containment has broken down in Europe, the Middle East and East Asia during President Obama’s second term....

“Some readers may concede much of this and say, so what? These powers are merely seeking to dominate their natural spheres of influence, and the U.S. should adjust and accommodate to what is inevitable. Meanwhile, the Obama Administration’s expectation has been that ‘the international community’ will replace receding American power with a new cooperative order working through the United Nations.  That hasn’t happened, and it won’t.

“Instead we can already see the rising costs and dangers in a world where authoritarians grow in power. These emerging regional hegemons reject democratic values and the post-World War II liberal world order. They view the U.N. and other institutions as a means to check U.S. power not adhere to global norms....

“This is the dangerous new-old world that Mr. Obama is leaving his successor. The next President will need an urgent strategy to contain and counter the rising threats.”

--Meanwhile, I cover the FIFA mess below but for this space, Vladimir Putin accused the United States of meddling in the affairs of soccer’s governing body as part of an attempt to take the 2018 World Cup away from his country.

--Capital flight from Russia is forecast to hit $110 billion this year, the Economic Development Ministry said Thursday. The ministry’s base forecast anticipates that U.S. and EU sanctions over Moscow’s actions in Ukraine will remain in place through the end of 2018.

“This means that Russian companies’ access to world capital markets will remain limited and there will be quite a high level of capital outflow from the private sector due to debt repayments,” the report said.

Capital flight from Russia soared to an all-time high of $151.5 billion last year, nearly triple the outflow seen in 2013, according to Central Bank data. [Moscow Times]

--Finally, Chechen leader Ramzan Kadyrov announced last weekend he had become the honorary leader of a new regional branch of the Night Wolves, a group of fiercely nationalistic bikers. Vladimir Putin is honorary leader of them in Russia. These are not good people.

China: Defense Secretary Ash Carter reasserted Washington’s territorial rights in international waters.

“There should be no mistake: the United States will fly, sail and operate wherever international law allows, as we do all around the world,” Carter said at a ceremony in Pearl Harbor.

This was a day after China laid out a strategy to prevent foreign powers from “meddling” in the South China Sea.

Sec. Carter said the U.S. wants “an immediate and lasting halt” to land reclamation by China and other claimants.

“With its actions in the South China Sea, China is out of step with both international norms that underscore the Asia-Pacific’s security architecture,” he said.

In reply, a spokesman for the Chinese Embassy in the U.S., Zhu Haiquan, said: “China’s determination to safeguard its own sovereignty and territorial integrity is rock-hard and unquestionable. The activities that China carries out are well within the scope of its sovereignty and are beyond reproach.”

Editorial / Washington Post

“The United States last week stepped up its efforts to call attention to China’s massive and provocative expansion of infrastructure in a disputed portion of the South China Sea. The navy invited CNN aboard a surveillance flight and released video the next day of what one U.S. official called an attempt ‘to make sovereign land out of sand castles’ in the Spratly Islands. The flight by a P-8A Poseidon aircraft drew eight warnings from the Chinese navy and an angry denunciation by the Chinese Foreign Ministry, which called it ‘very irresponsible and also very dangerous.’ But the U.S. action was legal and appropriate.

“China is attempting to steal a march on its neighbors by rapidly constructing airstrips, ports and other infrastructure on reclaimed land in one of the most sensitive maritime areas in Asia – one with multiple overlapping sovereignty claims. While it probably cannot be stopped, the project should be fully exposed – and China’s attempts to restrict air and sea traffic near its installations decisively rejected.”

I urge you to read my current “Hot Spots” column, where I cite a Chinese government mouthpiece, the Global Times, and an editorial that says in part, “war is inevitable” with the United States unless it stops insisting that Beijing halts building islands in disputed waters. Instead, the editorial reads, China will finish its construction work, calling it the country’s most important bottom line.

“If the United States’ bottom line is that China has to halt its activities, then a U.S.-China war is inevitable in the South China Sea.”

Lastly, another week, another scandal. The U.S. Department of Justice charged 15 Chinese nationals with developing a scheme to have imposters take university entrance exams. Prosecutors allege the suspects also used fake passports to trick test monitors into allowing people other than legitimate test takers to sit for the exams, such as the SAT.

Most of the improprieties occurred in western Pennsylvania, where a U.S. Attorney for the Western District of Pa. said the beneficiaries “fraudulently obtained admissions to American institutions of higher education.” Many of the defendants live in Boston and Blacksburg, Va.

Ireland: The final vote margin on legalizing gay marriage in a referendum to change the country’s constitution was 62-38 in favor of allowing same-sex couples to marry; the first country to enshrine marriage equality in the constitution.

Cuba: The Obama administration removed Cuba from a list of state sponsors of terrorism, a big step in normalizing ties between Washington and Havana. Only three remain on the list – Iran, Sudan and Syria.

Random Musings

--In what is truly the biggest sports scandal of all time, United States and Swiss authorities, working together in virtually unprecedented cooperation (though it’s been growing between the two the past few years), launched a sweeping effort to clean up the world’s governing body for the sport of football, soccer to us Americans, FIFA.

Officials from the Justice Department, FBI and IRS jointly announced the indictment of nine officials from FIFA, as well as five sports executives, in what the 47-count indictment claims was an effort to extract $150 million in bribes that were actively solicited by FIFA officials for vote-rigging to send events to certain countries, such as Russia and Qatar for the 2018 and 2022 World Cups, while also steering business to various companies.

Officials on Wednesday emphasized this is just the beginning, though we have known for decades of the shady world in which FIFA operates. As described by the Washington Post’s Sally Jenkins: “Among the subjects of ongoing scrutiny, the law enforcement officials said, are banking institutions through which bribes flowed and sponsors who may have participated in alleged kickback schemes. The indictments contain 75 references to ‘co-conspirators.’”

“The beautiful game was hijacked,” FBI director James Comey said. “The defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world. Undisclosed and illegal payments, kickbacks and bribes became a way of doing business at FIFA.”

Attorney General Loretta Lynch said: “The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States...

“They corrupted the business of worldwide soccer to serve their interests and enrich themselves. They did this over and over, year after year, tournament after tournament.”

Sally Jenkins:

“In colorful detail, the indictments described officials at the very top of the game engaging in more than two decades of relentless corruption, including an alleged $10 million bribe to award the 2010 World Cup to South Africa with that government’s cooperation and a FIFA official passing out envelopes stuffed with $40,000 in cash to buy votes in the 2011 FIFA presidential election. It also outlined bribes for lucrative media and marketing rights for World Cup qualifiers and other events. According to Lynch, one FIFA official alone received $10 million in bribes.”

Meanwhile, Switzerland’s office of the attorney general announced its own separate criminal investigations into suspicions of money laundering, among other things, as well as “unjust enrichment” concerning the controversial awarding of the World Cup to Russia and Qatar. The Swiss seized electronic data from FIFA’s headquarters in Zurich.

As I noted primarily in another column I do for the site, it was a year ago that the Times of London broke the story on Russia and how it obtained its 2018 Cup slot, and it seemed just a matter of time before this whole thing broke wide open.

All one needed to know was how idiotic the awarding of the 2022 World Cup to Qatar was, over the U.S., when during the months of July and August, when the World Cup is traditionally held, the average daytime temperature there is 50C, or 122 Fahrenheit.

As for FIFA president “Sepp” Blatter, he wasn’t touched, yet, and on Friday faced election to a fifth term with little opposition.

The Swiss-born Blatter has been the head of FIFA since 1998, meaning he has control over the World Cup, which in 2014 generated revenues of $4 billion.

In an initial statement, Blatter said: “As unfortunate as these events are, it should be clear that we welcome the actions and investigations by the U.S. and Swiss authorities and believe that it will help to reinforce measures that FIFA has already taken to root out any wrongdoing in football.”

The U.S. indictments, though, speak of a pattern of corruption going back 24 years.

But while some of those who were indicted protested they were innocent, U.S. law enforcement announced that four individuals and two corporate defendants already have pleaded guilty to charges as part of the investigation, including former FIFA official Chuck Blazer of the U.S., who wore a wire in cooperating with the FBI. For years this man was the most powerful in American soccer and a longtime member of the FIFA executive committee.

Back to Blatter, on Thursday he said he condemned the “action of individuals” for bringing “shame and humiliation” on football.

But he added, although many held him “ultimately responsible” for the football community, he could “not monitor everyone all of the time.”

You can’t make this stuff up. In China, this guy would be put to death. 

Blatter did admit the “next few months will not be easy – I am sure bad news will follow” but that with Friday’s vote, “we have the opportunity to begin on what will be a long and difficult road to rebuilding trust.”

And so it was that Blatter was reelected to a fifth term after the first round of voting had him beating Jordan’s Prince Ali bin al-Hussein 133-73, 140 needed for victory so Ali opted to withdraw rather than go to a second ballot, which requires only a simple majority.

As for those calling for the 2018 and 2022 bids to be rescinded, it just isn’t going to happen, even as the stories of brutal, and deadly, working conditions for those building Qatar’s facilities grow.

--Nike wasn’t mentioned by name when Attorney General Loretta Lynch released the indictments against FIFA, but they show that some of the offenses include “agreements regarding sponsorship of the Brazilian national soccer team by a major U.S. sportswear company.”

Nike and Brazil agreed to a 10-year, $160-million deal to sponsor the national team back in 1996. It was then renegotiated in 2008 and lasts through 2018. Nike has said it is cooperating.

--The Clinton Foundation accepted as much as $100,000 from FIFA, with Bill Clinton hobnobbing with Sepp Blatter at the World Cup in Johannesburg in 2010.

Clinton was serving as honorary chairman of the effort to bring the event to the U.S. in 2018 or 2022. Britain’s Telegraph once reported that when the United States lost in 2010, “Clinton was so enraged that he threw an object across a hotel room and shattered a wall mirror.” [New York Post]

--IRS investigators believe the hackers who stole the personal tax information on more than 100,000 taxpayers from an IRS website are part of a criminal operation based in Russia, as first reported by the Associated Press. IRS Commissioner John Koskinen told reporters the information was stolen as part of an elaborate scheme to claim fraudulent tax refunds. Koskinen declined to say where the crime originated, but officials briefed on the matter said it was clear who the culprits were.

This isn’t the first time the IRS was targeted. In 2012, the IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai.

--Early last Saturday morning, the Senate failed to resolve a standoff over the NSA’s system of collecting and storing U.S. telephone records, so they are supposed to recommence work on it Sunday, hours before a June 1 expiration date. The opposition to the NSA’s data collection program has been led by Republican Sen. Rand Paul, while his fellow Kentuckyan, Sen. Majority Leader Mitch McConnell, has been trying to get it extended.

For its part, the NSA announced it would mothball its mammoth archive of phone records, but it will not destroy the database if it loses its legal authority to collect the material.

--A new Gallup poll found that Barack Obama’s popularity rating is up to 53%, his highest rating since September 2013, when 58% viewed him favorably.

I am mildly surprised by this. But then, really not. The vast majority just don’t have a clue on the importance of foreign policy. Some might say it’s important, but they couldn’t begin to tell you about the threat posed by China in the South China Sea, for example. They might watch the nightly news now and then, and understand ISIS is a threat, but it’s a glancing interest. Another big terrorist attack or an assassination will focus the mind.

But then the 53% ‘favorable’ grade for Obama is a bit deceptive. 90% of Democrats in the Gallup survey view him favorably while only 13% of Republicans say the same.

Worrisomely for Republicans and 2016, 52% of independents view Obama favorably, up 6 percentage points since April and 17 points since last fall. That’s a potential killer for the elephants should it continue. [‘Elephant’ is No. 2 on the All-Species List, behind ‘Dog.’ But ‘Man,’ including all Republicans, is anywhere between No. 298 and 323...see allspecieslist.com.]

But, wait...there’s more. Those grades above, again, are for popularity. Obama’s ‘job approval’ rating is still just 43% while 51% disapprove of the job he’s doing in office. [Actually, the latest Gallup job approval rating I see for Obama is 46%, 49% disapproval...all the above was from a CNN.com story from Wednesday.]

--Rick Santorum became one of the latest Republicans to announce his bid for the 2016 nomination; Santorum having been runner-up four years ago. The former Pennsylvania senator did go on to win 11 states, including the Iowa caucuses.

But this time, many of his senior aides and supporters have moved on to other candidates. As one figure told the New York Times, “I worked for Santorum last time. The guy wins more states than anyone but Romney and he’s polling at 1 percent.”

Former New York Gov. George Pataki also announced this week that he was formally a candidate.

--So in the Republican race, a new Quinnipiac University national poll is rather fascinating. Or maybe not surprising. Five GOP hopefuls all tie for first with ten percent.

Ben Carson (who had only 3% in the last Quinnipiac survey), Scott Walker, Marco Rubio, Jeb Bush and Mike Huckabee.

Then it’s Rand Paul with 7%, Ted Cruz 6%, Donald Trump 5%, Chris Christie 4%, and John Kasich and Carly Fiorina at 2%.

But what’s interesting is some of the matchup numbers with Hillary Clinton.

Clinton would beat Rand Paul by only 46-42 and 45-41 over Marco Rubio.

Then you have 46-37 over Christie, 47-37 over Bush, 46-38 over Walker, 48-37 over Cruz...that sort of thing.

What’s also interesting, though, is that in this Quinnipiac survey by a 53-39 margin, American voters think Hillary is not honest and trustworthy, yet by 60-37, the people say she has strong leadership qualities. That, my friends, is very screwed up.

--Ex-House speaker Dennis Hastert was charged with lying to the FBI and structuring cash withdrawals to avoid bank reporting requirements, federal authorities said on Thursday.

Hastert, who served as speaker from 1999 until 2007, was working as a lobbyist in Washington, before suddenly resigning this week. He was providing money to an unknown person in order to “compensate for and conceal his prior misconduct” against that person, who we haven’t learned the identity of, though the story emerging is the case is about sexual misconduct with a student when Hastert was a high school coach and teacher.

When questioned about the cash withdrawals from his account, Hastert, according to the indictment, told agents, “I kept the cash. That’s why I’m doing it,” as he attempted to convince the FBI he felt the banking system wasn’t secure.

--So if you take out a legal pad and draw a line down the middle, with the title ‘overrated’ on the left side and ‘underrated’ on the other, when it comes to the United States, you’d put the story of the Defense Department inadvertently sending live anthrax samples to labs in eleven states as well as a military base in South Korea (and, just announced, Australia seven years ago) on the left side of the ledger. How can this happen?

Col. Steve Warren, the chief Pentagon spokesman, said there was “no known risk to the general public” or any confirmed cases of anthrax infection in workers who were potentially exposed to the samples, but four are being monitored in the U.S., and 22 personnel at the base in South Korea have been given medical treatment.

--Jerry Markon / Washington Post

“Monica Camacho-Perez came to the United States from Mexico as a child, crossing into Arizona with her mother in the same spot where her father made the trip before them. ‘Nobody stopped us,’ Camacho-Perez, now 20, said of her 2002 journey.

“Three years ago, her uncle tried to cross the border and join the family in Baltimore, where they remain illegal immigrants. He was stopped three times by the U.S. Border Patrol and jailed for 50 days.

“ ‘He doesn’t want to try anymore,’ said Camacho-Perez. ‘Now, it’s really hard.’

“As the Department of Homeland Security continues to pour money into border security, evidence is emerging that illegal immigration flows have fallen to their lowest level in at least two decades. The nation’s population of illegal immigrants, which more than tripled, to 12.2 million, between 1990 and 2007, has dropped by about 1 million, according to demographers at the Pew Research Center....

“Homeland security officials in the Obama and George W. Bush administrations – who have more than doubled the Border Patrol’s size and spent billions on drones, sensors and other technology at the border – say enhanced security is driving new tends....

“What’s increasingly clear is that the shifting fortunes of the U.S. economy account for less of the ebb and flow of illegal immigration. Even as the economy bounces back from recession, illegal immigration flows, especially from Mexico, have kept declining, according to researchers and government data. Since the 1990s, the opposite was true: The better the economy, the more people tried to come.

“ ‘Every month or quarter that the economy continues to improve and unauthorized immigration doesn’t pick up supports the theory that border security is a bigger factor, and it’s less about the economy and we have moved into a new era,’ said Marc Rosenblum, deputy director of the U.S. immigration program at the Migration Policy Institute.”

--Nebraska became the first conservative state in more than 40 years to abolish the death penalty, thus defying Republican Gov. Pete Ricketts, who is a staunch supporter of capital punishment. The bill that was approved, veto-proof, replaces the death penalty with life imprisonment.

--Baltimore has had at least 38 homicides in May – the city’s deadliest month since 1999, thus bringing the total for the year to 111.

--The drought is over in Oklahoma and Texas after five grueling years, but at a staggering cost. The probable cause of all the rain is a building El Nino, which could eventually provide drought relief to California by winter, but then you’ll see awful flooding and mudslides there, too.

With a week left in May, Oklahoma City had already notched its wettest month ever. Dallas-Ft. Worth is about to do the same. [OKC has over 30 inches year-to-date vs. 4.29 inches for all of 2014.]

Back to the Golden State, I read a piece the other day on how more and more Californians are replacing their real grass with artificial turf. But while today’s fake grass can look authentic, many communities ban it because what prevents one homeowner from putting in some awful looking turf? And you can imagine the homeowner association fights.

--Nobel Prize winner John Nash, 86, and his wife, Alicia, 82, were killed in a car crash on the New Jersey Turnpike last weekend, as they took a taxi back home from the airport. The taxi driver lost control as he tried to pass another auto in the center lane, with the cab crashing into a guard rail.

Nash and his wife were not wearing their seat belts, sitting in the back, and were ejected, dying immediately. It’s that fact, not wearing seatbelts, that probably saves the driver from serious charges.

Steve Chawkins / Los Angeles Times

“While Nash was famous among mathematicians for sophisticated solutions to a variety of problems involving algebraic geometry and partial differential equations, he was more widely known for his work in economics.

“His 1994 Nobel Prize in economics was for his contributions to game theory, a discipline that has become fundamental to the study of the field and a crucial aid in high-stakes contests such as arms talks, trade negotiations, and elections.

“It was a concept he laid out in his doctoral thesis when he was just 21.

“His paper was only 27 pages... But the implications of what came to be called ‘the Nash equilibrium’ were huge.

“Game theory had emerged in the 1940s as the creation of mathematician John von Neumann and economist Oskar Morgenstern. The two delved into ‘zero-sum’ games – the kind with a winner who takes all and a loser who gets nothing.

“With mathematical elegance, Nash analyzed more complex rivalries and found ways to compute a sweet spot – the Nash equilibrium – where each party gets the best deal possible under the circumstances. Unions and management would apply it in complicated contract decisions; nuclear superpowers would use it in raising the specter of ‘mutually assured destruction’ to keep a tenuous peace.

“ ‘Nash’s insight into the dynamics of human rivalry – this theory of rational conflict and cooperation – was to become one of the most influential ideals of the twentieth century,’ his biographer Sylvia Nasar wrote in her 1999 book ‘A Beautiful Mind.’”

Nash had issues...serious ones...but the Nobel Prize seemed to change him He and his wife Alicia were returning to their Princeton home from a trip to Oslo, where he was presented the 2015 Abel Prize from the Norwegian Academy of Arts and Sciences for some of his mathematical breakthroughs.

--Indian American kids had won the Scripps National Spelling Bee seven years in a row* and all but four of the last 15 years, as pointed by out by the Washington Post’s Joe Heim. Page Kimble, the bee’s longtime director (and one-time champ in 1981), has been reluctant to talk about the streak but agreed to this year.

“How hard a child works is a very individual factor. But what might be happening [with Indian American contestants] is that there might be perseverance for the National Spelling Bee goal over a longer period of time.”

As Joe Heim writes: “Indeed, of the Indian American champions over the past 15 years, only one, Pratyush Buddiga, won on a first trip to the national bee in 2002. The others won after multiple trips, including last year’s co-champ, Sriram, who made it to the national bee five times before winning, and Kavya Shivashankar in 2009 and Sameer Mishra in 2008, who both won on their fourth trips.”

Goodness gracious.

But the reason why this is even a topic of discussion is because of the barrage of racist comments on Facebook and Twitter after last year’s contest when Sriram, then 14, and his co-winner Ansun, then 13, took the crown.

“The kids in the spelling bee should only be AMERICAN”

“No American sounding names who won the spelling B. #sad #fail”

Unbelievable. You know that ledger I’m keeping above? Put this one also on the left side.

But there is an obvious comment. Most young people at some point are giving sports a try, even if just through elementary school, but as the 2002 winner, Buddiga, told the Post, “When the other kids are playing football or basketball, the Indians are doing spelling.”

*So make it eight years in a row and all but four of the last 16. Thursday, Gokul Venkatachalam, 14, of Chesterfield, Missouri, and Vanya Shivashankar, 13, of Olathe, Kansas were declared co-winners.

---

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

God bless America.
---

Gold closed at $1189
Oil $60.30...up an unprecedented 11 weeks in a row

Returns for the week 5/25-5/29

Dow Jones -1.2% [18010]
S&P 500 -0.9% [2107]
S&P MidCap -1.1%
Russell 2000 -0.4%
Nasdaq -0.4% [5070]

Returns for the period 1/1/15-5/29/15

Dow Jones +1.0%
S&P 500 +2.4%
S&P MidCap +5.0%
Russell 2000  +3.5%
Nasdaq +7.0%

Bulls 48.5
Bears 14.9 [Source: Investors Intelligence]

Brian Trumbore

NOTE: Before I say a brief word on my GoFundMe campaign that I launched this week, the link for which is prominently displayed on the home page and will be affixed elsewhere on the site shortly, I just want to thank those of you who contributed thus far in either this endeavor or my recent first fundraising campaign in over 16 years.

Claude B., Dr. W., Dr. T., Jim D. (twice!), Bill C., Josh P., Denise D., Brad K., Ted T., Kelly L., Kirk N., Uncle C., Phil S., John G., Jeff B., Jack C., Pete M., Jimbo, Harry T., Rich H., Ken P., Steve G., Steve D., Cindy K. and Roj P.

You all have been terrific. [And if you don’t want your name listed in this fashion, let me know and I’ll take it out.]

This all started when my 15-year arrangement with BuyandHold.com ended earlier this year as they were folded into another operation, and it forced me to do some soul-searching.

For those of you who don’t know much about ‘crowdfunding,’ which is what GoFundMe, Kickstarter, and others of their ilk are, it is rapidly filling the role filled by angel investors and some venture capitalists/private-equity types in allowing those such as myself to in effect receive ‘series A’ type funding by going to the masses.

This is a very simplistic view of what I’m shooting for. All funds raised, aside from paying normal expenses, will be pumped into marketing and tech support. Some of you have noticed that after extensive travel last year, I have cut back, though I do hope to hit Iowa later in the summer for the State Fair and some politics.

StocksandNews is 24/7 even more so than before, when it was 23/7.

Where I need your assistance in the next few months is in helping me spread the word. I will just say that with regards to GoFundMe, hitting $500 is very important as it opens up far more doors, the way their system works. Think more radar screens.

Have a great week.