Stocks and News
Home | Week in Review Process | Terms of Use | About UsContact Us
   Articles Go Fund Me All-Species List Hot Spots Go Fund Me
Week in Review   |  Bar Chat    |  Hot Spots    |   Dr. Bortrum    |   Wall St. History
Week-in-Review
  Search Our Archives: 
 

 

Week in Review

http://www.gofundme.com/s3h2w8

AddThis Feed Button

   

11/09/2019

For the week 11/4-11/8

[Posted 10:00 PM ET, Friday]

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

Edition 1,073

I watch all of President Trump’s rallies.  For me it’s like homework.  So on Wednesday, at the Monroe, Louisiana, gathering, at one point Trump boasted: “I withdrew from the one-sided Iran nuclear deal.”

I was incredulous.  He said this on the very day Tehran took its most important step in breaching the 2015 accord by beginning to inject uranium gas into centrifuges at its Fordow nuclear complex, in total defiance of the deal’s restrictions. I discuss the move in full detail below, but as I keep repeating, since day one my chief concern with this presidency was on the foreign policy front. 

So go ahead.  Name one foreign policy success under this administration. 

Iran...failure

Syria...failure

Israel...the promised once in a lifetime peace deal?  I think not.  Is Israel threatened now more than ever, at least in the last 45 years?  Yes.

Russia...failure

China....failure

North Korea...failure

Venezuela...failure

Trade policy...which is part of foreign policy, failure

What happens when you have a failed foreign policy, aside from putting America and our allies at risk?  You have plunging confidence in the business community, which is needed for investment and growth.

Our alliances are shattered.

I’ll give the president credit for eliminating Islamic State’s caliphate, but then in one fell swoop he sent a message to the world that America can’t be trusted, and potentially let ISIS in the Syrian sphere off the hook, as it proliferates elsewhere (see below).

The president refuses to say anything bad about Russia, and today talked of going to Vladimir Putin’s May Day celebration next spring; he refuses to criticize China on its human rights or Hong Kong policies, nor on its ongoing expansion in the South China Sea.  And he still calls Kim Jong Un a “friend.”

This can’t continue.  It’s not as if this is a ‘failed foreign policy’ that occurs from time to time in the course of our history, ala George W. Bush and Iraq.  This is about a single man being responsible for all the above.  Not a president working with advisers (the exception being the China trade policy), but a president going rogue.  That’s why I’ve been cryptically referring to the generals.

But we also have the following, which is obviously heating up.

Trump World...the Impeachment Inquiry

President Trump said on Friday he was not concerned about the impeachment inquiry as House Democrats prepared to kick off public hearings next week, dismissing witnesses’ testimony transcripts released by Congress so far.  Speaking to reporters at the White House, Trump accused Democrats of looking for people who hated him and that for the most part he had not heard of the witnesses, which is laughable.

House investigators released various transcripts of their closed-door interviews with diplomats and other officials regarding the July 25 phone call between President Trump and Ukrainian President Volodymyr Zelensky, and the aftermath, and we saw the transcript of the testimony given by U.S. Ambassador to the European Union (and major Trump 2016 donor) Gordon Sondland.  There was a three-page amendment to his original testimony that Sondland filed.

In the addendum, Sondland said he remembered – after testifying that he didn’t know why security aid to Ukraine was being held up – a conversation with a top aide to Zelensky on September 1 “where I said resumption of U.S. aid would likely not occur until Ukraine provided the public anti-corruption statement that we had been discussing for many weeks.”

So it’s virtually impossible to believe the Ukrainians didn’t know about the holdup of nearly $400 million in security aid being due to Trump’s stated urging that Zelensky open investigations into the Bidens, as well as the debunked conspiracy theory that the hacked Democratic National Committee server might be in Ukraine.

But with Sondland’s testimony it was clear there was a stated quid pro quo, though Sondland didn’t directly implicate Trump.

Bill Taylor, the top U.S. diplomat in Ukraine, told impeachment investigators that Trump made the quid pro quo demand on a Sept. 7 phone call with Sondland, according to a transcript of Taylor’s Oct. 22 deposition.

“President Trump did insist that President Zelensky go to a microphone and say he is opening investigations of Biden and 2016 election interference and that President Zelensky should do this himself,” Taylor testified.

The day after Trump’s call with Sondland, Taylor said he spoke with the EU ambassador. Sondland said Trump maintained he wasn’t asking for quid pro quo, according to Taylor.  However, the demands laid about by Trump amounted to an unmistakable quid pro quo.

Three days after Taylor spoke with Sondland, the Trump administration released the nearly $400 million in security assistance that had been held up since mid-July.  It remains unclear exactly why Trump decided to release the aid even though Zelensky had apparently not satisfied his quid pro quo demands.

A top U.S. diplomat, George Kent, told congressional investigators that Trump’s personal attorney, Rudy Giuliani, conducted a “campaign full of lies” against the U.S. ambassador to Ukraine, Marie Yovanovich, before she was recalled from her post, according to a transcript of his testimony released Thursday.  Yovanovich was pulled from her post in May.

Kent said Giuliani conducted a smear campaign against her.  “His assertions and allegations against former Ambassador Yovanovitch were without basis, untrue, period,” Kent testified.  “Mr. Giuliani, at that point, had been carrying on a campaign for several months full of lies and incorrect information about Ambassador Yovanovitch, so this was a continuation of his campaign of lies,” Kent said.

In her own testimony, per the released transcript, Yovanovitch said that she remained worried that she would be a target of retaliation by Trump, who referred to her in his July 25 phone call with Ukraine’s president as “bad news” and someone who was “going to go through some things.”

“I was very concerned” upon reading Trump’s words when the rough transcript of the call was released, Yovanovitch testified.  “I still am.” Asked whether she felt threatened, she replied, “Yes.”

Today, we received the transcript of Alexander Vindman’s testimony and he said he heard Ambassador Sondland explicitly press Ukrainian officials to investigate Joe Biden and his son.  Sondland made it clear in a July 10 meeting at the White House that the investigations of the Bidens and gas company Burisma would have to be opened for President Zelensky to get an Oval Office meeting with Trump.

“He was calling for something, calling for an investigation that didn’t exist into the Bidens and Burisma,” Vindman said.  “My visceral reaction to what was being called for suggested that it was explicit. There was no ambiguity.”

Vindman’s account of the July 10 meeting at the White House was corroborated by Fiona Hill, the former senior director for European and Russian affairs on Trump’s National Security Council.  Hill testified she heard Sondland bring up Burisma at the meeting, according to a separate transcript of her testimony released Friday.

Vindman also testified that Sondland told the July 10 gathering he coordinated the request with acting White House Chief of Staff Mick Mulvaney.  And so now Mulvaney is seen as the potential ringleader.

Also today, we learned that John Bolton, Trump’s former national security adviser, knows about “many relevant meetings and conversations” connected to the Ukraine pressure campaign that House investigators have not yet been informed about, his lawyer told lawmakers.

The lawyer, Charles J. Cooper, said Bolton would be willing to talk but only if a court rules that he should ignore White House objections.  Cooper did not elaborate on what meetings or conversations he was referring to.

Cooper also represents Bolton’s former deputy, Charles Kupperman, who is seeking a court ruling as well on whether he can testify.

Meanwhile, President Trump denied asking the Justice Department to clear him of wrongdoing over the phone call with Zelensky.  The Washington Post reported Attorney General William Barr declined Trump’s request to hold a press conference absolving the president of breaking any laws.

David Graham / The Atlantic

“Newly released testimony in the House impeachment inquiry shows in new detail how the Trump administration’s demands for a quid pro quo from the Ukrainian government operated.

“Ambassador Gordon Sondland, in an addendum to his original testimony released alongside his deposition transcript today, acknowledges telling a Ukrainian official that the country wouldn’t receive U.S. military aid without a statement about public corruption from President Volodymyr Zelensky. And other testimony and communications show that the statement had to specifically mention President Donald Trump’s personal political obsessions.

“ ‘I now recall speaking with Mr. [Andrey] Yermak [personal aide to Zelensky], where I said that resumption of U.S. aid would likely not occur until Ukraine provided the public anti-corruption statement that we had been discussing for many weeks,’ Sondland said in his update, referring to an aide to the Ukrainian president.  ‘Soon thereafter, I came to understand that, in fact, the public statement would need to come directly from President Zelensky himself.’

“While Republicans initially defended Trump by insisting he had never tried to extract a quid pro quo from Ukraine, that defense has become untenable as a mountain of evidence, as well as an ill-advised outburst of honesty from the White House chief of staff, shows it has no basis.

“Now Trump’s defenders have adopted a new talking point: It was a quid pro quo, but not a corrupt quid pro quo.  According to this claim, Trump may have demanded that Ukraine combat corruption in exchange for releasing the aid, but he was simply trying to fight corruption overseas, a core principle of American foreign policy.  That move might have skirted the law by holding up congressionally appropriated funds, but the move was fitting and well intentioned.  The testimony released today cuts straight through that excuse, suggesting that not only did Trump hold up the aid in exchange for a statement (the quid pro quo), but he did so to further his own political prospects (the corrupt quid pro quo).

“Among the documents released today is a set of text messages between American and Ukrainian officials, discussing a statement that Ukrainian officials understood was essential to getting the administration to agree to a White House meeting.  On the evening of August 12,  Yermak sent a draft statement to Kurt Volker, then a special envoy to Ukraine.

“ ‘Special attention should be paid to the problem of interference in the political processes of the United States, especially with the alleged involvement of some Ukrainian politicians,’ Yermak’s draft stated.  ‘I want to declare that this is unacceptable.  We intend to initiate and complete a transparent and unbiased investigation of all available facts and episodes, which in turn will prevent a recurrence of this problem in the future.’

“But that wasn’t enough for the Americans. Rudy Giuliani, Volker and Sondland both testified, insisted that any Ukrainian statement mention two specific things. The next afternoon, on a new chain adding Sondland, Volker sent Yermak an edited draft. ‘Following is text with insert at the end for the 2 key items. We will work on official request,’ he said. The updated draft read:

“ ‘Special attention should be paid to the problem of interference in the political processes of the United States, especially with the alleged involvement of some Ukrainian politicians.  I want to declare that this is unacceptable. We intend to initiate and complete a transparent and unbiased investigation of all available facts and episodes, including those involving Burisma and the 2016 U.S. elections, which in turn will prevent a recurrence of this problem in the future.’

“The ‘2 key items’ are indeed important, because they connect directly back to Trump’s July 25 call with Zelensky and the president’s obsessions.  On that call, he brought up a baseless conspiracy theory holding that Ukraine was behind hacking in the 2016 U.S. election.  In their testimony, both Volker and Sondland separately recounted an angry outburst from the president in an Oval Office meeting, in which he attacked Ukraine for its supposed opposition to his candidacy in 2016.  ‘They tried to take me down,’ the ambassadors each recalled him saying.

“On the call, Trump also appeared to bring up Burisma, a Ukrainian natural-gas company on whose board Hunter Biden, son of former Vice President Joe Biden, served. The name Burisma does not appear in the partial transcript released by the White House, but it’s clear from context that Trump referred to a particular company, and in testimony last week, Lieutenant Colonel Alexander Vindman, a National Security Council official who was on the call, reportedly testified that Trump referred to Burisma.

“When Trump brought these ideas up on the July 25 call, it set off alarm bells at the White House. Vindman himself raised concerns with his superiors.  Multiple people brought their objections to an official, who then filed a whistle-blower complaint. There was reportedly widespread feeling that the request for the investigation was inappropriate. A White House lawyer had the partial transcript moved to a very secure server.

“Yet even as the White House scrambled to cover up the call, Trump-administration officials in the field, like Volker and Sondland, continued to understand that the Burisma and hacking mentions were essential to the president. The Ukrainians tried to satisfy the Trump administration with a general anti-corruption statement, and Volker – whether approving of Trump’s desires or not – made clear that was not enough.

“Though the White House issued a statement distancing the president from the quid pro quo that Sondland acknowledged, Sondland and Volker both testified that Giuliani, the president’s personal attorney, insisted that the statement include Burisma and the 2016 election. The edited statement doesn’t make much sense – even in Trump’s conspiracy theories about Hunter Biden, there’s been no allegation that this role on the Burisma board was tied to Ukrainian interference in U.S. elections.

“Moreover, the statement is steeped in Orwellian irony. Trump wanted Ukraine to pursue these investigation in order to further his chances at reelection in 2020.  The Ukrainian government was having its arm twisted into giving a statement swearing to stop interference in U.S. elections – even as the statement was itself coerced interference in U.S. elections.  (Sondland testified that a demand to investigate Hunter Biden would be improper.)

“The demolition of the binary between the good and the corrupt quid pro quo poses the latest political challenge to Trump and his defenders. The president has argued that everything he did was totally appropriate. Republicans in Congress having been slouching toward a compromise position, arguing that what Trump did was bad, but not impeachable. The testimony released today makes that argument even less appetizing than it already was – though it may still taste better than the alternatives.”

The aforementioned public hearings begin next Wednesday, with Bill Taylor, George Kent and Marie Yovanovitch to be called the first week.

President Trump said today, “We shouldn’t be having public hearings...it’s a hoax!”

Democrats must prove that the impeachment inquiry is worth it.  They have to move the needle.  In this instance, the ratings will be an important gauge of public sentiment.

---

--President Trump admitted to misusing nonprofit funds and was ordered to personally pay $2 million to an array of charities as part of a settlement to a lawsuit accusing his now-defunct foundation of illegally helping his 2016 campaign for the White House. The settlement, announced Thursday, resolved a lawsuit filed by the New York  attorney general’s office against Trump, three of his children and the Donald J. Trump Foundation.

The attorney general accused the foundation of violating laws that regulate charities, calling it “little more than an empty shell.”

When the suit was filed in 2018, Trump tweeted: “I won’t settle this case!”

Trump tweeted Thursday, “I am the only person I know, perhaps the only person in history, who can give major money to charity ($19M), charge no expense, and be attacked by the political hacks in New York State.  No wonder why we are all leaving!”

--President Trump’s son, Don Jr., tweeted the name of a CIA analyst who is the alleged anonymous whistleblower, breaking strict conventions for protecting officials who reveal wrongdoing in government.

Standing beside Trump at a political rally in Kentucky Monday, Republican Senator Rand Paul (Ky.) threatened to expose the person and demanded they testify in Congress.

“We also now know the name of the whistleblower... I say tonight to the media, do your job and print his name.”

--Last weekend President Trump signed off on a plan to cap the number of refugees taken in by the United States at 18,000 in fiscal year 2020.  That’s the lowest amount of possible refugees accepted by America since the program’s creation in 1980.

The administration agreed to let in as many as 30,000 refugees this year.  In the final year of the Obama administration, the refugee ceiling was 85,000.

Secretary of State Mike Pompeo said in a statement that refugee resettlement “is only one aspect of U.S. humanitarian-based immigration efforts.”

I guess an example of this is abandoning the Kurds in Syria, displacing over 300,000 in one fell swoop.

--Speaking of the increasingly disgraceful Pompeo....

David Ignatius / Washington Post

“Since the investigation began into President Trump’s machinations in Ukraine, one of the most disturbing questions has been: Where is Mike Pompeo, the secretary of state, who’s supposed to shield his diplomats from political interference?

“And now we have the answer: Pompeo, in recent months, has essentially been in hiding, protecting himself while his subordinates took the hit – evidently hoping to preserve his influence with Trump.  Sometimes his deflections and denials have been outright misleading.

“Pompeo has badly tarnished his reputation in accommodating Trump. He joins the long list of those damaged by their service to this president.  If you’re someone like me, who thought Pompeo was one of the smarter and more effective people in the administration, it’s a sad moment.

“This harsh judgment is nearly inescapable after reading the transcripts released Monday of testimony from two key State Department officials: Marie Yovanovitch, a 33-year Foreign Service veteran Trump fired in May as ambassador to Ukraine; and Michael McKinley, a 37-year veteran, who resigned in October as Pompeo’s senior adviser because ‘the disparagement of a career diplomat [Yovanovitch] doing her job was unacceptable to me.’....

“Pompeo told ABC News last month that ‘not once’ did McKinley ‘say a single thing about his concerns’ about Yovanovitch’s treatment.  By McKinley’s sworn testimony this statement was false.

“What is character?  It’s difficult to define, but as NPR’s Scott Simon recently noted, a good, short summary is the U.S. Military Academy motto: ‘A cadet will not lie, cheat, steal, or tolerate those who do.’

“We should be careful not to judge others’ character, especially in the hotbox of today’s Washington. But it’s deeply troubling to see a powerful person such as Pompeo who is silent in the face of lies and who takes no action to protect his subordinates from wrongdoing.”

--How bad has public discourse gotten in America?  Republican Sen. John Kennedy (La.) said of House Speaker Nancy Pelosi at Trump’s rally Wednesday, “It must suck to be dumb.”

I liked Kennedy before this remark.

--Trump tweets:

“The Amazon Washington Post and three lowlife reporters, Matt Zapotosky, Josh Dawsey, and Carol Leonnig, wrote another Fake News story, without any sources (pure fiction), about Bill Barr & myself. We both deny this story, which they knew before they wrote it.  A garbage newspaper!”

“It was just explained to me for next weeks Fake Hearing (trial) in the House, as they interview Never Trumpers and others, I get NO LAWYER & NO DUE PROCESS.  It is a Pelosi, Schiff, Scam against the Republican Party and me. This Witch Hunt should not be allowed to proceed!”

“Stock Market up big today. A New Record.  Enjoy!”

“Our big Kentucky Rally on Monday night had a massive impact on all of the races. The increase in Governors race was at least 15 points, and maybe 20!  Will be in Louisiana for @EddieRispone on Wednesday night. Big rally!” 

[Ah, Mr. President?  You lost the governor’s race.]

Wall Street and Trade

Earnings season has wound down, with a few notable exceptions, such as the retail sector yet to come, and as you saw the market continued to rally, new records hit on all three major indexes, as noted further below.  A supposed phase one trade deal with China was a major catalyst, but this is now a bit dubious.

On the economic data front, it was a light week, with September factory orders down 0.6%, while the October ISM reading on the service sector came in at a better-than-expected 54.7 (50 the dividing line between growth and contraction), though this was off September’s 3-year low of 52.6.

As you’ve also noticed the Xmas shopping season has started in earnest, already, because with Thanksgiving falling on the latest possible date, Nov. 28, the season is six days shorter than usual.  There is no reason at this stage why the National Retail Federation’s outlook of a 3.8% to 4.2% gain from a year ago wouldn’t come to fruition, this basically being the average of the last five years, and my own forecast of 3.5% will probably be off but I have to stick to it.

Finally, the Atlanta Fed’s GDPNow barometer of fourth-quarter growth is at just 1.0%, but it’s still early in the cycle, especially in terms of the data releases.  Next week we will get an important one on October retail sales that might be telling.

So turning to the trade dispute between the United States and China, there was a flurry of news stories on Thursday that a phase one deal had basically been finalized and the market rallied, even though the talk of some tariffs being rolled back as part of the agreement was disputed by many inside the White House.  The idea of a tariff rollback was not part of the original October handshake deal between President Trump and Chinese Vice Premier Liu He.

Chinese officials said earlier on Thursday that tariff reductions had been agreed to, and then a U.S. official confirmed that was the case early Thursday afternoon.

But there was a divide within the administration over whether rolling back tariffs will give away leverage in the negotiations.

Former White House adviser Steve Bannon said the Chinese Communist Party is trying to “re-trade” the agreement, adding that rolling back earlier tariffs goes against the grain of the original October agreement.  “There’s nothing that Trump hates more” than someone backtracking on a deal, he said.  [Reuters]

China’s Ministry of Commerce spokesman Gao Feng had said on Thursday, “In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement.”

Well I’d like to thank President Trump for then setting the record straight, at least for today (and this column) when he told reporters this morning outside the White House that he has not agreed to roll back tariffs on China but that Beijing would like him to do so.  So there you have it.

Earlier in the week, it appeared that any phase one agreement wouldn’t be signed until December, anyway, especially after the cancellation of the APEC conference in Chile where the two sides were to meet, Presidents’ Xi and Trump putting their signatures on some parchment.

But we do know that any trade agreement will contain details on a large Chinese Ag buy, that Trump would be able to trumpet when he spoke to farmers on the campaign trail.  Much of this was to be focused on soybeans, and we have been led to believe that China was already making large buys in beans, according to Dept. of Agriculture figures.

But this week China’s General Administration of Customs showed that the world’s largest soy buyer imported 6.18 million tons of soybeans in October, down 24.6 percent from 8.20 million tons in September.  Huh.  The U.S. was to be a large part of this action.

One last one...the U.S. trade deficit continued to widen in the first nine months of 2019, per data from the Commerce Department, the deficit for both goods and services growing to $481.3 billion in the first three quarters, up 5.4 percent from the same period last year.  Total American exports fell by $7 billion from the prior year, while imports grew by $17.8 billion.

Why I thought the trade gap was supposed to narrow under your leadership, Mr. President?

Don’t worry.  Most of us knew this was a stupid argument in the first place, the trade deficit being a poor metric for measuring American well-being and/or the health of the economy.

If the United States is growing faster than the rest of the world, as is greatly the case today, that boosts purchases of foreign products and weighs on sales abroad.

Europe and Asia

It was PMI week for the eurozone (EA19), data courtesy of IHS Markit.

The euro area composite reading for October was 50.6 vs. 50.1 in September, with manufacturing at 45.9 vs. 45.7 the prior month, and services at 52.2 vs. 51.6.

Germany 42.1 (manufacturing) / 51.6 (services)
France 50.7 / 51.6
Spain 46.8 (78-mo. low) / 52.7
Italy 47.7 / 52.2
Ireland 50.7 / 50.6 (87-mo. low)
Netherlands 50.3 mfg. (76-mo. low)
Greece 53.5 mfg.

Separately, Eurostat reported that EA19 retail trade (sales) rose 0.1% in Sept. over August, 3.1% year-over-year.

Chris Williamson / IHS Markit

“The euro area remained close to stagnation in October, with falling order books suggesting that risks are currently tilted towards contraction in the fourth quarter. While the October PMI is consistent with quarterly GDP rising by 0.1%, the forward-looking data points to a possible decline in economic output in the fourth quarter.

“Worryingly, what little growth was seen in October was supported by firms eating into previously-placed work, meaning demand needs to revive to boost new business inflows and prevent more firms coming under further pressure to cut activity and jobs.

“As for the immediate outlook, much depends on geopolitical issues such as U.S. tariff developments and Brexit, though we will also be watching Christine Lagarde’s first policy meeting on 12th December to assess the appetite for further stimulus from the ECB. Time is needed for recent policy changes to take effect, though if the data flow continues to disappoint more action is in the cards for early next year.”

But Germany is obviously a huge key for the overall health of the eurozone and we did see some good news in September (admittedly the third quarter, not the current one), as manufacturing orders rose 1.3% after a long downswing in activity, while German exports rose 4.6 percent in September, according to the Federal Statistics Office, higher than expected.  So Germany may have avoided a technical recession.

Exports to other EU countries increased 5.6 percent, with particularly strong growth in the Netherlands and Belgium. Exports to the U.S. increased 6.9 percent, while shipments to China fell 3.3 percent.

Germany has an export-driven economy so the above is important, but we need follow-through.

Brexit / UK Election:  For the next few weeks the focus is on the U.K. general election Dec. 12 and Prime Minister Boris Johnson, who is leading in the polls by anywhere from 7 to 17 points, in the end needs to gain more than 40 percent, and then cobble together a coalition, first and foremost.  [For example, an ORB poll for the Sunday Telegraph puts support for Johnson’s Conservatives at 36%, Labour 28%, the Liberal Democrats 14% and Nigel Farage’s Brexit Party at 12%.]

But second, Johnson needs a coalition that will approve his Brexit legislation!  Which is why I’m not going to say much on Brexit itself until after the vote.

For now, Labour leader Jeremy Corbyn has suffered some defections as two former Labour MPs urged voters to back Johnson instead.  Ian Austin said Corbyn was “not fit to lead,” and was joined by John Woodcock as they launched a campaign labeling Corbyn a “disgrace to his party.”

The “Jewish Chronicle” newspaper published a front page piece urging voters not to support Labour because of Corbyn’s handling of anti-semitism within the party.

For his part, the Labour Party said it will spend 400 billion pounds ($514 billion) over 10 years to achieve “an irreversible shift in the balance of power and wealth” to working people if it wins power in next month’s election, according to John McDonnell, the party’s would-be finance minister, who said the plan would include major investments in schools, homes and hospitals.

Boris Johnson’s finance minister, Sajid Javid, called Labour’s plan “fantasy economics.” The Conservatives usually campaign on a reputation for economic competence and casting Labour as spendthrift socialists.

As for Nigel Farage, who is not personally running for Commons but instead focusing on leading the Brexit Party, many Tories are furious, saying Farage is putting Brexit at risk with his plans to run candidates in more than 600 constituencies, arguing they’ll siphon off votes from the Conservatives, leaving Brexit in danger. Leader of the Commons Jacob Rees-Mogg warned Farage was in danger of snatching “defeat from the jaws of victory” if he persisted with his plan.

Farage argues his number one target is Labour Leave voters who had been “completely betrayed” by their party.  Farage says in the 2015 general election, Ukip (the former Brexit party) took more votes from Labour than it did from Conservatives.

So this is the campaign.  Now we wait for the vote and the postmortem. 

Meanwhile, the EU’s chief Brexit negotiator Michel Barnier predicted “difficult and demanding” negotiations with Britain on a future trading relationship, saying the bloc would not accept any “unfair competitive advantage” for London.  Britain is scheduled to leave the EU on Jan. 31 as things stand today.

Spain: Folks are going back to the voting booth Sunday and it’s expected that the result of the general election will be as inconclusive as the one in April, the polls pointing to another stalemate, with no party or bloc of parties having a majority.  The issue of Catalonia and the separatist movement there is a key, with acting Prime Minister Pedro Sanchez, a Socialist, being accused by the leader of the conservative People’s Party (PP) of being too soft on the separatists. “You don’t believe in the Spanish nation,” said Pablo Casado, the leader of the PP.

There are 350 seats in parliament and Sanchez’ Socialists are forecast to gain 120, down 3 from April.

France: The government on Wednesday unveiled a range of measures, many of them hardening migration policies, as President Macron seeks to push the issue up the agenda.

Interior Minister Christophe Castaner said informal migrant camps in northeastern Paris would be cleared out by the end of the year, while 16,000 more housing units would be made available for recognized asylum seekers.

Meanwhile, Macron made waves this week in an interview with The Economist where he claimed that a lack of U.S. leadership is causing the “brain death” of the NATO military alliance, insisting that the European Union must step up and start acting as a strategic world power.

Macron’s public criticism of the state of the world’s biggest military alliance was rejected by German Chancellor Angela Merkel and NATO Secretary-General Jens Stoltenberg, setting the stage for a possible showdown in London next month when President Trump joins his counterparts.

“What we are currently experiencing is the brain death of NATO,” Macron says, adding the United States under Trump appears to be “turning its back on us,” notably by pulling troops out of northeast Syria without notice.

Editorial / The Economist

“Today’s Europe owes its existence to the United States. America fought two world wars on European soil; American diplomacy was midwife to what became the European Union; American arms protected Western Europe from Soviet invasion; and American statesmen oversaw German unification.  Now, in a dramatic plea to all Europeans, France’s president, Emmanuel Macron, has warned that America is cutting Europe loose. The old continent is ‘on the edge of a precipice,’ he warns.  Unless it wakes up, ‘we will no longer be in control of our destiny.’....

“Europe, (Macron says), has yet to grasp the immensity of the challenge ahead.  It still treats the world as if commerce and trade alone were able to ensure peace. But America, the guarantor of world trade, is becoming protectionist. Authoritarian powers are on the rise – including Russia and Turkey on Europe’s borders. While America and China spend vast sums on artificial intelligence, which they see as an essential component of their hard power, the EU devolves too much say to industry.  Mr. Macron warns that slow-moving, head-in-the-clouds Europe must open its eyes and prepare itself for a tougher, less forgiving world.

“It is an astonishingly bleak picture for a centrist European politician and an avowed internationalist.  But it is also unusually thought-through and, as far as Mr. Macron is concerned, a spur to action.  It is hard to overstate the scale of the change he is asking from his fellow Europeans....

“Plenty of times in the past, pious calls for Europe to make its weight felt in the world have turned out to be empty. This time, Mr. Macron argues, must be different.  He is asking his fellow leaders to imagine how Europe will thrive in a dangerous world without a cast-iron American alliance.  How should they deal with Russia, with the conflict and religious fundamentalism roiling the Middle East and north Africa, and with the authoritarian challenge of China?  He deserves an  answer.”

Turning to Asia...in China the Caixin composite PMI came in at 52.0 in October vs. 51.9 in September, with the service sector reading at 51.1, a 15-month low, so kind of a mixed picture.

China reported today that exports in October fell 0.9% from a year earlier, customs data showed, pointing to a worsening outlook for the country’s manufacturers as the trade war drags on, though the decline was less than forecast, and better than the 3.2% decline in September.

Exports to the U.S. dropped 11.3% for the ten months, January to October, while exports rose to the European Union 5.1%.

Imports dropped 6.4% from a year earlier for the sixth consecutive month, though this was also better than expected.

In Japan, the October services PMI was down to 49.7 from 52.8 in September, owing to the typhoon and the sales tax hike.  As you would expect, a separate reading on household spending in September showed a rise of 9.5% year-over-year, the fastest pace on record because of the same sales tax hike Oct. 1.  It will be interesting to see this number for October later. The decline in the services number gives us a clue.

But, a Reuters Corporate Survey of Japanese companies this week said more than two-thirds are feeling less pain from the tax increase last month than from the previous increase five years ago, which precipitated a recession. Still, the overwhelming majority of Japanese companies remain cautious about boosting spending, with many planning to keep wages and hiring flat or even reduce them.

Street Bytes

--As noted above, all three major indices hit new highs this week, including today, as the Dow Jones rose 1.2% to 27681, while the S&P 500 was up 0.9% to 3093, and Nasdaq 1.1% to 8475.

The S&P is on a five-week winning streak, Nasdaq six weeks in a row.  Investors are confident the slowdown in the economy we’ve been experiencing is over, so the safe haven trade (gold and Treasuries, for example) is off.

--U.S. Treasury Yields

6-mo. 1.57%  2-yr. 1.68%  10-yr. 1.94%  30-yr. 2.42%

Speaking of the safe haven trade being off, bonds sold off, with the yield on the 10-year at its highest weekly close since July.  The 10-year, as you know, helps determine mortgage rates, so any further rise could begin to impact housing again.

--A late development today...both American Airlines and Southwest announced they were extending their cancellations of Boeing 737 MAX flights through March 4 and 6, respectively.

Southwest, the world’s largest 737 MAX operator which has bet its entire growth strategy on Boeing’s newest single-aisle aircraft, is cancelling about 175 daily flights as it operates a slimmer fleet. Southwest had 34 MAX jets at the time of the March 13 grounding and was expecting delivery of another 41 jets this year.

For good reason, Southwest expects compensation for damages due to the MAX groundings from Boeing.

--The Saudi government recruited two Twitter employees to get its critics’ personal account information, U.S. prosecutors said Wednesday.

The complaint unsealed in U.S. District Court in San Francisco detailed a coordinated effort by Saudi officials to recruit employees at the social media firm to look up the private data of thousands of Twitter accounts.

The accounts included those of a journalist with more than 1 million followers and other prominent government critics.

It also alleged that the employees – whose jobs did not require access to Twitter users’ private information – were rewarded with a designer watch and tens of thousands of dollars funneled into secret bank accounts.  They were charged with acting as agents of Saudi Arabia without registering with the U.S. government.

--California’s attorney general on Wednesday said he was investigating Facebook’s privacy practices and accused the company of failing to cooperate with his inquiry, in yet another fight over how the social network treats its user information.

AG Xavier Becerra’s suit says that over an 18-month period, Facebook had resisted or ignored dozens of questions and requests for documents, including email correspondence between executives like Mark Zuckerberg and Sheryl Sandberg, the company’s top two leaders. 

Facebook argues it has cooperated with the investigation.

Meanwhile, the Massachusetts attorney general is pressing Facebook to release more information, including the names of the tens of thousands of apps flagged during Facebook’s internal investigation into data sharing practices, as well as the names of the developers who built those apps.

--McDonald’s Corp. fired its CEO, Steve Easterbrook, because of his relationship with an employee, after a board investigation.  The board found that Easterbrook, 52, “demonstrated poor judgment involving a recent consensual relationship with an employee.” McDonald’s said it has a longstanding policy barring employees from relationships with direct or indirect reports. 

In an email to staffers Sunday, Easterbrook apologized and acknowledged the dalliance was a mistake.

“Given the values of the company, I agree with the board that it is time for me to move on,” he wrote.

The British-born Easterbrook started with the company in 1993 as a manager based in London.  He previously served as chief branding officer, and then headed up the U.K. and northern Europe, before becoming CEO in 2015.  During his time as CEO, shares of the company nearly doubled in value.

Easterbrook is also resigning from Walmart Inc.’s board, effective immediately, Walmart said Monday.

McDonald’s stock fell nearly 3% Monday to $188.66, though rallied back by week’s end to $193.85; nonetheless still well shy of the 52-week high of $221.93.

In a filing on Monday, the company said it would pay Easterbrook six months in severance from his base pay, but he is eligible for significant stock rewards.  His total compensation last year, including stock and a bonus was $15.9 million.

Then days later, McDonald’s announced its top human-resources executive had left the company, without providing any details of the reason behind his departure.   The company said David Fairhurst’s exit wasn’t related to the firing of Easterbrook.

Fairhurst had worked with Easterbrook for McDonald’s in the U.K. and was promoted to the top human-resources job soon after Easterbrook became CEO in 2015.

The new CEO, Chris Kempczinski, 51, has worked closely on efforts in recent years to try to boost traffic at U.S. restaurants through spending on new technology and menu items with fresher ingredients.

Sales have risen as have prices as a result, but traffic has remained flat in the U.S. and franchisees have been pulling back at the costs of renovating restaurants and changing operations.

--Under Armour shares tanked when investors learned Sunday night that the company was assisting federal authorities who are investigating its accounting practices and related activities dating back to 2017.

Then on Monday, the company reported revenue declines for the fifth straight quarter in North America – its biggest market – and cut its forecast for the year, predicting revenues for the entire company would grow only 2 percent this year. The shares plummeted nearly 20% Monday.

The thing is, many are ticked off some of the bad news wasn’t known earlier.  Just last month, the company announced that Kevin Plank, who started the company more than 20 years ago, was stepping away from his CEO role on Jan. 1, and he and his successor, Patrik (sic) Frisk, did the media rounds, speaking in glowing terms about the future, yet they obviously knew about the investigation.

Under Armour had built its brand by creating high-tech performance apparel for athletes, but it has struggled mightily in the last two years as rivals Nike and Adidas moved into the co-called athleisure wear market themselves and Under Armour’s once-robust profits turned to losses.

The company has been in the midst of a significant restructuring, cutting jobs and slashing inventory levels as it tries to reestablish itself as a premium-priced brand.

As for the accounting investigation, Under Armour had posted 20 percent or greater year-over-year revenue growth for 26 straight quarters until late 2016. 

Then on Jan. 31, 2017, the company’s stock plunged 23 percent in one day after it said it would miss revenue-growth expectations and that its CFO was departing after 13 months “for personal reasons.”  The probe is examining whether UA shifted sales from quarter to quarter to appear healthier, according to the Wall Street Journal, which broke the story.  That, sports fans, would be fraud.

So David Bergman, who took over as acting finance chief in February 2017, said on the conference call with analysts this week that Under Armour had been “fully cooperating” with the investigations for two and a half years.  But this was never disclosed...until now.  Bergman said, “We firmly believe that our accounting practices and disclosures were appropriate.”

--Saudi Arabia’s giant state-owned oil producer, Saudi Aramco, announced plans on Sunday to go public in what could be the largest initial stock offering ever.

The company, the kingdom’s crown jewel and said to be the world’s most profitable enterprise, said it planned to sell an unspecified percentage of its shares on the Saudi stock exchange, with trading expected to begin next month.

Estimates have the Saudi government valuing the company at around $1.5 trillion, which would make Aramco the most valuable public company in the world, surpassing the current leader, Apple (which closed the week with a market cap of $1.176 trillion, an all-time high).

Originally, Prince Mohammed bin Salman (MBS) said Aramco would have a value of $2 trillion, and that the offering would see its shares trade on a premier international stock exchange like New York, London, or Hong Kong, but these appear to be off the table for now, as the IPO process proceeded in fits and starts over the past three years.  The killing of journalist Jamal Khashoggi by Saudi agents last year didn’t help.

Much of the proceeds from the offering are slated to go into the Public Investment Fund, a sovereign wealth fund that is evolving into MBS’s main vehicle for shifting the Saudi economy from its reliance on oil.

--Shares in Uber Technologies Inc. hit an all-time low Wednesday as the “lockup” period following its May initial public offering ended, delivering a further blow to a company whose shares are down 40% from its IPO price.  Uber priced its shares in May at $45.

Wedbush Securities estimates that 763 million shares became eligible for trading on Wednesday, with 500 million to 520 million underwater, as Uber held various financing rounds since 2015 at a share price significantly higher than Wednesday’s close of nearly $27.

Meanwhile, the company reported earnings earlier in the week and while Uber beat estimates for quarterly revenue and loss, and improved its annual loss forecast and pledged to turn a profit by 2021, the stock fell after the company also reported lackluster gains in bookings and monthly active users, the two metrics most closely followed by the Street.

CEO Dara Khosrowshahi said on a conference call with reporters that the company will spend less aggressively and turn an adjusted profit in 2021, which echoed a commitment from its smaller rival, Lyft Inc., which said it would be profitable by the fourth quarter of 2021, a year earlier than previously expected, but in both cases this requires financial engineering and I’ve never understood how companies got away with it.

Khosrowshahi has sliced roughly 1,200 position from sales and marketing, engineering and product.

--Walt Disney Co.’s hit movies, led by “The Lion King” and “Toy Story 4,” once again helped drive strong quarterly profits, but the focus is on the launch of Disney+, the company’s streaming rival to Netflix Inc.

Disney CEO Bob Iger said on a conference call with analysts Thursday, “We’re making a huge statement about the future of media and entertainment.”

Disney’s theatrical-movie division posted a 52% rise in revenue and 79% jump in operating income in the three months ended Sept. 28.

Disney’s profit slumped by more than half to $1.05 billion, owing to a sharp rise in costs stemming in part from the Disney+ production costs.  But its shares rose sharply as earnings beat expectations.

It’s clear, though, where Iger is spending the bulk of his time. Disney’s film and television divisions are producing hundreds of hours of programming not only for the streaming service but also a 19-month-old ESPN streaming service and Hulu, a third service that Disney now controls after its $71.3 billion acquisition of the 21st Century Fox entertainment assets.

The emphasis on streaming is for good reason, as it was back in 2015 that Iger first acknowledged subscriber losses at ESPN, the company’s most profitable division. The long-term outlook at the cable sports network wasn’t good and Disney shares at the time took a hit.

But now Disney is determined to be in every home in America with a trio of streaming services designed to appeal to more than its core family demographic.

Hulu will become the service where Disney sends its more mature shows and movies, including product from Fox’s FX network.

--SeaWorld Entertainment Inc. announced it was naming its fourth new CEO in the last five years; hotel and vacation ownership industry executive Sergio Rivera.  Rivera had been a top executive at Starwood Hotels & Resorts.  SeaWorld’s shares jumped nearly 11% on the news, despite the company reporting disappointing third quarter results, which included a big chunk of SeaWorld’s crucial summer season.

The company said visitation dropped 2.6%, with 221,000 fewer visitors coming to its 12 parks during the July-through-September quarter than in the same quarter last year. Also down was overall revenue, which dropped 2% to $473.7 million.  Profit rose 2.1% to $98 million.

SeaWorld blamed the drop in attendance on bad weather, plus a calendar shift that resulted in one fewer peak summer weekend day than a year earlier.

--Xerox Holdings Corp. is looking at taking over personal-computer and printer maker HP Inc., which is an out of nowhere move uniting two fading stars in the tech sector.  HP is what remains after Hewlett-Packard Co. split off Hewlett Packard Enterprise Co., which sells servers, data-storage gear and related services to corporate clients, in 2015.

Xerox is selling stakes in joint ventures with Fujifilm Holdings Corp., as part of a dismissal of a lawsuit filed against Xerox by the Japanese tech company.  Discussions on the HP acquisition were at the board level, according to the Wall Street Journal’s Cara Lombardo.

Xerox primarily makes large printers and copy machines these days, while HP is focused on smaller printers and printing supplies, as well as being one of the largest PC makers in the world.

Well, a few days later we learned Xerox had indeed made an offer for HP that HP is likely to reject, last I saw.

--Juul Labs, the nation’s largest seller of e-cigarettes, said on Thursday that it would stop selling mint-flavored pods, which have become especially popular among teenagers.

The move precedes an anticipated ban by the Food and Drug Administration on flavored e-cigs that would include mint as well as menthol.  Intense lobbying by the vaping and tobacco industries against a menthol ban had heightened speculation that menthol would be exempt from any prohibition against flavors.

Juul said it would continue to sell menthol pods and its two tobacco products, until otherwise advised.

The company’s decision also followed the release earlier this week of two major surveys showing another year-over-year spike in teenage vaping of e-cigarettes, and the rising popularity of mint-flavored nicotine pods as other youth-friendly flavors were pulled from retail shelves.

The surveys showed about 27 percent of high school students reported they had vaped e-cigarettes recently, while hospitals and doctors have been startled in recent months by an alarming outbreak of lung injuries largely related to vaping products containing THC, the high-inducing ingredient in marijuana.

A study released Tuesday by the National Institute on Drug Abuse found that teenagers surveyed in 2019 preferred mint and mango Juul flavors.

--It’s hard keeping up with the Sears store closure announcements, with the owner of the struggling retailer saying Thursday it will shut 96 more Sears or Kmart locations by February.

Following the closures, there will be just 182 Sears or Kmart stores in operation, down from 425 as of February.  Just five years ago, the company had nearly 2,000 locations.

The latest closures are in addition to roughly 100 stores reported last month that were in the process of closing by year-end and are on top of 26 stores that closed this fall.

--The key Southern California housing market showed signs of life in September, according to data from CoreLogic, with the six-county region’s median price hitting $533,000, a 2.5% rise from September 2018.  The number of new and resale houses and condos that sold climbed 10.4%.

Affordability was a major cause of a sustained slowdown across the southland, but now real estate agents say falling mortgage rates have more and more people in the market.

But the September 2018 sales figure was the lowest for that month in at least seven years so we were coming off a low base.

In Orange County, the median fell 2.3% to $723,000, while sales climbed 13.1%.  In Los Angeles County, the median rose 3.9% to $618,000, while sales climbed 7.3%.

--Canada’s economy lost a net 1,800 jobs in October, Statistics Canada said on Friday. The jobless rate held at 5.5%.

--Berkshire Hathaway Inc.’s cash position hit a record in the third quarter, $128 billion as of Sept. 30, the company said Saturday, up from $122 billion at the end of the second quarter.

89-year-old Warren Buffett has complained in recent years he can’t find any large companies at attractive acquisition targets, that would then be able to move the needle for Berkshire.

In his 2018 letter to shareholders, Buffett wrote: “Prices are sky-high for businesses possessing decent long-term prospects.”

--The number of CEOs who have left their positions jumped 14% month-on-month in October, including six who left after allegations of professional misconduct, putting the year-to-date figure at a record high, according to outplacement firm Challenger, Gray & Christmas.

The figure rose to 172 in October compared with 151 exits announced in September and 149 in the same month of 2018, the company said Wednesday.

In the 10 months, 1,332 CEOs have left their jobs, up 13% from the same January-to-October period of 2018, the highest since Challenger began tracking the data in 2002.

“After a decade of expansion, companies that started years ago are finding themselves in a phase where new leadership is needed,” Challenger said.  “Other companies are adapting to changing technologies or finding new leadership based on current economic conditions and forecasts for the coming year.”

Foreign Affairs

Iran: As alluded to above, Iran injected uranium gas into centrifuges at its underground Fordow (aka Fordo) nuclear complex early Thursday, taking its most significant step away from its 2015 nuclear deal with world powers. Fordow thus moves from a research plant to an active nuclear site.

Tehran also acknowledged blocking an official from the International Atomic Energy Agency from visiting its nuclear site at Natanz last week, the first known case of a United Nations inspector being blocked amid heightened tensions over its atomic program.

These latest steps put additional pressure on Europe to offer Iran a way to sell its crude oil abroad despite the U.S. sanctions imposed on the country since President Donald Trump unilaterally withdrew America from the nuclear deal over a year ago.

The centrifuges ultimately will begin enriching uranium up to 4.5%, which is just beyond the limits of the nuclear deal, but nowhere near weapons-grade levels of 90%.

Fordow’s 1,044 centrifuges previously spun without uranium gas for enrichment under the deal, which saw Iran limit its uranium enrichment in exchange for the lifting of economic sanctions.  The deal had called for Fordow to become “a nuclear, physics and technology center.”

Secretary of State Mike Pompeo said on Thursday that Iran’s “nuclear escalations” raise concerns that should move all countries to increase pressure on Tehran.

“Iran’s expansion of proliferation-sensitive activities raises concerns that Iran is positioning itself to have the option of a rapid nuclear breakout,” Pompeo said in a statement.

“It is now time for all nations to reject this regime’s nuclear extortion and take serious steps to increase pressure.  Iran’s continued and numerous nuclear provocations demand such action.”

Even Moscow described Iran’s actions this week as “extremely alarming,” while blaming the U.S. decision to pull out of the pact.

Speaking from Beijing, French President Emmanuel Macron called Iran’s latest move “grave,” saying it explicitly signaled Iran’s intent for the first time to leave the deal.

A central aim of the original agreement was to extend the time the Islamic Republic would need to assemble a nuclear weapon, if it chose to do so (“breakout”), to a year from about 2-3 months.

Editorial / Wall Street Journal

“President Hassan Rouhani has announced that Iran will violate restrictions on the Fordow underground nuclear facility starting Wednesday.  President Trump’s detractors will say this proves that leaving the 2015 nuclear deal was a mistake [Ed. it was!], but this is one more sign of the defects in the deal that Europe should be helping the U.S. to address.

“In a speech Tuesday the Iranian leader said the regime would begin injecting gas into the 1,044 centrifuges at Fordow, an open violation of the Joint Comprehensive Plan of Action. This follows news on Monday that Iran is running new and advanced centrifuges, which shortens its path to a nuclear weapon.  The regime already has been openly violating the deal for months by enriching uranium at higher concentrations and storing more of it.

“ ‘When they uphold their commitments we will cut off the gas,’ said Mr. Rouhani.  ‘So it is possible to reverse this step.’ The Iranian strategy has been to escalate its violations of the deal step by step, hoping to intimidate Mr. Trump and divide the U.S. from Europe.

“The strategy worked for a time, but then Iran attacked Saudi oil fields. German, French and British leaders responded in a statement that Iran should ‘accept negotiation on a long-term framework for its nuclear programme as well as on issues related to regional security, including its missiles programme and other means of delivery.’

“It was a fine statement – and no small feat that Europe called for a new deal – but now Angela Merkel, Emmanuel Macron and Boris Johnson have to do more than talk.... Nothing would focus minds in Tehran more than Berlin, Paris, London and Washington coming together to reimpose the so-called snap-back sanctions that were supposed to be the response to Iranian nuclear escalation.

“The U.S. wants a revised deal to limit Iranian ballistic missile development, allow unlimited inspections of suspect nuclear sites, and remove the sunset clauses that allow restrictions on Iran to expire. Recall that Barack Obama initially wanted the Fordow facility closed in the deal but was unable to get the Iranians to agree to anything beyond the limited restrictions they are now reversing.  President Trump’s pressure campaign is meant to bring the regime back to the negotiating table with more leverage than Mr. Obama had.

“One risk is that the mercurial Mr. Trump loses patience with his own strategy and tries to cut a deal favorable to Tehran ahead of his re-election campaign. That’s why you can expect more Iranian threats to break out of the deal and perhaps more attacks on U.S. allies in the Middle East. The best response is for Europe and the U.S. to reforge a common front toward Iran that shows it will have to return to the negotiating table to have any hope of sanctions being eased.”

President Trump won’t be part of that.  In fact the president hasn’t tweeted a thing on the matter all week, curiously.  His policy has failed.

Syria: Turkish President Erdogan said on Thursday the United States was not fulfilling its pledge to remove a Kurdish militia from a Syrian border region and he will raise the issue when he meets President Donald Trump next week.

Erdogan is set to discuss implementation of the agreement with Trump in Washington on Nov. 13 after confirming that the visit would go ahead following a phone call between the leaders overnight.

“While we hold these talks, those who promised us that the YPG...would withdraw from here within 120 hours have not achieved this,” he told a news conference, referring to the deadline set in last month’s agreement.

After the deal with Washington, Turkey reached an agreement with Russia under which the YPG was to withdraw to a depth of 30km (19 miles) along the entirety of the northeastern Syrian border with Turkey.

But Erdogan said this deal had also not been fulfilled, with YPG fighters still in the border strip, adding that he would be talking to Putin about this.

Later Friday, Erdogan was quoted as saying Turkey will not leave Syria until other countries pull out, while the cross-border offensive against the Kurds continues until every one of them has left the region.

“We will not let up until every last terrorist leaves the region,” Erdogan said.  “We will not leave here until the other countries get out,” according to broadcaster NTV.

Erdogan said clashes in Syria were continuing, with many killed on both sides, as he put it.  We aren’t receiving as many reports of this simply because the press has largely left the area for other stories.

But the Syrian Observatory for Human Rights did report that a car bomb killed 13 last Saturday in a market of a Syrian border town that Turkish-backed forces seized last month, prompting Ankara to blame the YPG. There was no statement from the Kurds.

And a Russian airstrike on a village south of the Idlib region in northwestern Syria killed six civilians, according to the Observatory.

Iraq: Anti-government protests continued across Iraq this week, with security forces killing four protesters in central Baghdad on Thursday. In southern Iraq, protesters blocked the entrance to the port of Umm Qasr, a key point for oil export, as the Iraqi government has failed to find a way out of the biggest and most complicated challenge to its rule in years.

More than 260 people have been killed in the unrest since it first broke out on Oct. 1 over a lack of jobs and an infrastructure wrecked by decades of conflict, sanctions and corruption.  Protesters, mostly unemployed youth, blame a political elite that has ruled Iraq since the toppling of dictator Saddam Hussein in a 2003 U.S.-led invasion, and demand a complete overhaul of the political system.

The government has been enacting internet outages to try to stem the unrest, but they have hit the private sector as well.

Today, Iraq’s top Shiite scholar said that it was up to the security forces to make sure protests do not descend into further violence, and urged the government to respond to demonstrators’ demands as soon as possible.

“The biggest responsibility is on the security forces,” a representative of Grand Ayatollah Ali al-Sistani said in a sermon after Friday prayer in Karbala.

Sistani also warned against exploitation of unrest in Iraq by “internal and external” forces which seek to cause instability in the country.

Mali: Last week I reported on a series of ISIS attacks in Mozambique that killed at least seven Russian mercenaries, showing Islamic State’s vast reach.

Then this week ISIS claimed responsibility for an attack in northeastern Mali that killed at least 53 soldiers at an army post.  [Mali is about 2,500 miles away from Mozambique.]

Mali’s neighbor to the south, Burkina Faso, was then the scene of an Islamist attack on a mining convoy that killed at least 37 and wounded 60.

Five buses carrying staff of Canadian firm Semafo were ambushed on Wednesday, with a military escort vehicle reportedly struck by an explosive device before gunmen opened fire.  It was the third deadliest attack on Semafo staff in 15 months.

The West African nation has been wracked by an Islamist insurgency that has killed hundreds in recent years, the violence spilling over from Mali.

China / Hong Kong: A student at a Hong Kong university who fell during protests last weekend died early Friday morning from his injuries, marking the first student death during the anti-government demonstrations that have roiled the city, promising further unrest this weekend.  It already started Friday as students at the university ransacked the school and stormed the president’s residence.

I support the students, and demonstrations, 100 percent, but the increasing violence of the last 4-6 weeks is hugely counterproductive, in my humble opinion.  The Hong Kong economy is tanking, for one, which benefits no one.

The vast majority of the hundreds of thousands that throng various parts of the city regularly are peaceful, and this is what the world needs to see...not petrol bombs in the metro system, and vandalizing banks and stores.  Last weekend’s protests in a shopping mall turned bloody, with a councilor having part of his ear bitten off.

Meanwhile, the Chinese Communist Party said it would “perfect” the system for choosing the leader of Hong Kong, while denouncing what critics see as Chinese meddling in the former British colony.

The party said in a statement it would support its “special administrative region” of Hong Kong, which was handed back to China in 1997, and not tolerate any “separatist behavior” either there or in neighboring Macau, which returned to Chinese rule in 1999.

At the same time, Hong Kong leader Carrie Lam held a meeting with President Xi Jinping in Shanghai.

“He expressed care and concern about Hong Kong, especially given the social disturbances that we have seen in the last five months and he expressed support for the various action taken by Hong Kong Special Administrative Region government,” she told reporters.

Referring to the foundation of the 1997 deal under which Hong Kong reverted to Chinese rule, Lam said: “...In strict accordance with the principle of ‘one country, two systems’ (we will continue) upholding the rule of law and trying to put an end to the violence.”

Xi said he had a high degree of confidence in Lam and fully recognizes the work by her and her team, the Xinhua News Agency reported.

But China’s Vice Premier Han Zheng said on Wednesday, the day after Lam’s meeting with Xi, that Beijing supports more aggressive measures to tackle the unrest in Hong Kong.

North Korea: Sue Mi Terry / Wall Street Journal...Ms. Terry a former CIA analyst on Korea who worked on Korea policy at the National Security Council in the Bush and Obama administrations.

“For Halloween, Kim Jong Un gave Donald Trump a trick, not a treat: North Korea fired two short-range missiles toward the Sea of Japan.  It was North Korea’s 13th weapons test this year – and the first since the Trump administration’s latest attempt to restart negotiations with North Korea quietly failed a few weeks ago....The North Korean delegates stalked out, and Pyongyang subsequently said they wouldn’t resume the ‘sickening’ negotiations with the U.S.

“This might seem surprising since Mr. Trump has held three meetings with the North Korean dictator and has repeatedly expressed confidence that North Korea is eager to denuclearize.  After his first summit with Mr. Kim, in Singapore in June 2018, Mr. Trump tweeted, ‘There is no longer a Nuclear Threat from North Korea.’

“In reality, North Korea poses a bigger threat than ever.  It has continued expanding its nuclear and missile programs, and it has been testing short-range missiles that place U.S. troops in South Korea and Japan – along with those countries’ civilian populations – in far greater peril. How did Mr. Trump’s high-profile diplomacy with North Korea go so wrong?

“The president committed a cardinal error of deal-making: He misjudged the person across the table from him.  He thought that Mr. Kim had come to the negotiating table primarily because of the U.S. sanctions policy of ‘maximum pressure’ and his own rhetoric warning of nuclear ‘fire and fury.’  Mr. Trump assumed that Mr. Kim was negotiating from a position of weakness that left him ready to make major concessions.

“In Mr. Kim’s mind, however, he was meeting with the U.S. from a position of strength. His nuclear and missile technology had reached the point where he could probably hit the American mainland with a nuclear-tipped intercontinental ballistic missile. He no longer needed to stage provocative tests of his technology and thought he was now in a position to gain international acceptance for North Korea as a nuclear-weapons power.  He never had any intention of denuclearizing.

“In part because he pays little attention to his intelligence briefings, Mr. Trump didn’t understand his adversary’s agenda or mind-set.  He thought he could entice Mr. Kim with the prospect of economic development: In Singapore, the president even offered a slick presentation to show the glorious future that could lie ahead for North Korea (complete with seaside condos) if only it denuclearized....

“Mr. Trump has emboldened Mr. Kim into thinking that he can achieve a significant lifting of U.S. sanctions in return for a small, symbolic step, such as announcing the shutdown of his Yongbyon nuclear facility – an important facility but only one of many in the North. Mr. Kim has shown no willingness to provide a complete inventory of his nuclear program or to allow international inspectors into his country – both prerequisites to verifying any agreement.

“Mr. Trump’s almost certain impeachment in the House will only raise Mr. Km’s confidence: He understands how politically imperative it will be for Mr. Trump to achieve a foreign policy ‘win’ to distract from his deepening political woes....

“The North Koreans’ plan is to stall: show up, talk, break off talks; show up, talk, break off talks; and keep repeating as long as necessary to wait out Mr. Trump.  And while they play this game, they are improving and expanding their nuclear and missile programs.

“Mr. Trump’s incoherent approach to North Korea has left the U.S. with few good options.  Unless he is prepared to make major concessions, the North will resume major provocations in the new year.  Mr. Trump claims to be a master deal maker, but he certainly hasn’t shown it in his relationship with Kim Jong Un.”

Today, at a conference in Moscow, North Korea’s head of the foreign ministry’s North American department, Jo Chol Su, said the window of opportunity for progress in dialogue with the United States was getting smaller, adding that Pyongyang expects reciprocal steps from Washington by the end of the year.

“We’ve given the United States quite a lot of time and we’re waiting for an answer by the end of this year, of some kind of result. ...But I must say that the window of opportunity closes every day.”

Jo also said that sanctions imposed on North Korea were “an unacceptable insult” and must be lifted.

Mexico: The massacre of the six children and three women, all members of an American fundamentalist Mormon community living in Mexico was beyond sickening; victims of a drug war in the border state of Sonora.

But the story is complicated, given the family’s past experiences in the area and other encounters with the drug cartels.  Coming closely on the heels of two other prominent episodes of violence, the ambush further horrified a nation reeling from a record-high number of murders.  President Andres Manuel Lopez Obrador is struggling to fashion a coherent response.

Editorial / Wall Street Journal

“The slaughter Monday of three Mormon women and six children, all Americans citizens who were longtime residents of Mexico, brings home a cruel reality of America’s neighbor to the south.  Drug gangs control huge swathes of the country, and the government in Mexico City is too often overwhelmed by the criminal firepower and money....

“ ‘The hard truth is that Mexico is dangerously close to being a failed state,’ Nebraska Sen. Ben Sasse said Tuesday and, despite the country’s economic advances in recent decades, he’s not far off about the security failures. Especially along drug trafficking routes, cartels essentially are the state....

“Americans should also acknowledge the role their drug habit plays in fueling this wanton violence. (A) Council on Foreign Relations report says that Americans spent almost $150 billion in 2016 on cocaine, heroin, meth and marijuana, and synthetic opioids like fentanyl are compounding the problem.  Most of this comes across the Mexican border, and the money from the drug sales allows the cartels to bribe law enforcement in both countries.

“We are a long way from Nancy Reagan’s campaign of ‘just say no’ against drugs.  Now our elite and entertainment culture sends a message that drug use is a victim-less habit, even glamorous. There’s more social stigma in the U.S. against cigarettes than against cocaine or marijuana.  Young people get the message, and rising drug demand feeds the cartels.

“Drug enforcement against the supply of drugs amid such demand is a losing battle, but that doesn’t mean the cartels can be allowed to destabilize a government next door or control territory like a drug caliphate. The most basic duty of government is to protect its citizens from lawlessness, which means not allowing the massacre of women and children on a highway on their way to the airport....

“(If) Mexico can’t control its territory, the U.S. will have to do more to protect Americans in both countries from the cartels. The Drug Enforcement Administration should be able to find out the identities and locations of those who ordered or carried out Monday’s murders, and ensuring their demise would be a signal that U.S. justice has a long reach.  A U.S. military operation can’t be ruled out.”

India: Toxic air was choking New Delhi this week, the poisonous smog up to 10 times worse than the upper limits of what’s considered healthy.  Schools were closed, cars forced off the road, and planes prohibited from landing at the airport.  It was the worst crisis in more than three years there.

Random Musings

--Presidential tracking polls....

Gallup: 41% approval of President Trump’s job performance, 57% disapproval; 89% of Republicans approve, 34% of independents (Oct. 14-31).  To me the percentage of independents needs to be about 38% for Trump.  It was 39% in this survey back in April.
Rasmussen: 49% approve, 50% disapprove (an improvement of six points the last two weeks).

A Washington Post/ABC News poll has President Trump with a 39% job approval among registered voters nationally, 58% disapprove.  As opposed to the battleground states poll that follows, Joe Biden leads Trump 56% to 39%, Elizabeth Warren 55-40, and Bernie Sanders leads by 55-41.  But you can throw these head-to-head national figures out.

More important, in this poll only 31% say Trump is honest and trustworthy, tying the lowest result of his presidency.

A Monmouth University poll this week gave Trump a 43% approval rating, 51% disapprove.  [44% said Trump “should be impeached and compelled to leave the Presidency,” while 51% responded “no”.]

A national Fox News poll of registered voters had Biden defeating Trump 51-39, including 33-23 among independents, but 20% of them preferred “other” to him or Trump and 16% said they didn’t know who they would pick.  Elizabeth Warren beat Trump by a narrower 46-41 margin.

--In a New York Times and Siena College survey of six battleground states that Trump won by close margins in 2016 (Michigan, Pennsylvania, Wisconsin, Florida, Arizona and North Carolina), the president trails Joe Biden by an average of just two points among registered voters, which is within the margin of error.

Trump leads Elizabeth Warren by two points, the same margin as his win over Hillary Clinton in these states three years ago.

The poll showed Bernie Sanders deadlocked with the president among registered voters.

So, yes, I, like the others, tout the national polls (for me as much for the record as anything else), but the focus really is on the these six, particularly the three you can specifically point to as giving Trump the electoral college majority in 2016...Michigan, Pennsylvania and Michigan.

But in terms of the Democratic nomination, it’s about Iowa, New Hampshire, Nevada and South Carolina, after which there should be no more than five candidates left in the race.

So in Iowa, a new Quinnipiac University poll released Wednesday had Elizabeth Warren receiving 20% support among likely Democratic caucusgoers, with Pete Buttigieg getting 19%, Bernie Sanders 17%, and Joe Biden back at 15%.

Then you have Amy Klobuchar 5%, Kamala Harris 4%, and Tom Steyer, Tulsi Gabbard and Andrew Yang at 3% each.

--A Wall Street Journal/NBC News national poll of Democratic primary voters showed Biden with 27%, Warren 23%, Sanders 19% and Buttigieg 6%.

--Steven Rattner / New York Times

Senator Elizabeth Warren has unveiled her vision for how to pay for ‘Medicare for all’ – a daunting mountain of new taxes and fees.

“Thanks for providing us, Ms. Warren, with yet more evidence that a Warren presidency is a terrifying prospect, one brought closer by your surge in the polls.

“Left to her own devices, she would extend the reach and weight of the federal government far further into the economy than anything even President Franklin Roosevelt imagined, effectively abandoning the limited-government model that has mostly served us well.

“Ms. Warren may call herself a capitalist, but her panoply of minutely detailed plans suggests otherwise. She would turn America’s uniquely successful public-private relationship into a dirigiste, European-style system.  If you want to live in France (economically), Elizabeth Warren should be your candidate.

“As a lifelong Democrat, I freely acknowledge that substantial reforms are much needed, both to achieve a more equitable distribution of income and wealth and to make good on Donald Trump’s failed pledge to raise the economy’s growth rate.

“But the Warren way would be, quite simply, the wrong way.

“To date, public attention has understandably focused on Ms. Warren’s support for Medicare for all as well as her long list of other new social programs like the Green New Deal, free college tuition, universal child care, student debt forgiveness and on and on....

“Less discussed is her intention to impose vast new regulatory burdens and to revamp the way business functions, which could have an even more negative effect on our economy.  Many of America’s global champions, like banks and tech giants, would be dismembered.  Private equity, which plays a useful role in driving business efficiency, would be effectively eliminated. Shale fracking would be banned, which would send oil and natural gas prices soaring and cost millions of Americans their jobs. And on and on.

“Most significantly, the system of state chartering of corporations would, for businesses with more than $1 billion in revenues, become a federal function.  Companies could lose their charters if they failed to adhere to an often vague set of principles, including considering in their decision-making the interests of employees, customers and their communities.

“That would give a President Warren enormous power to punish companies (including putting them out of business) for not adhering to her subjective vision of corporate responsibility....

“ ‘I have a plan for that’ has become Ms. Warren’s signature campaign rallying cry. That may be, but too many of them would damage the very economy she is trying to help.”

Editorial / Wall Street Journal

“Now we know why Elizabeth Warren took so long to release the financing details of her Medicare-for-All plan. The 20 pages of explanation she released Friday reveal that she is counting on ideas for cost-savings and new revenue that are a fiscal and health-care fantasy.

“You certainly can’t criticize the new Iowa Democratic caucus front-runner for lack of ambition. Despite criticism from fellow Democrats, she is sticking to her plan for a government takeover of American health care, including the elimination of private insurance that 170 million or so Americans now have.  She continues to claim that this will cost ‘not one penny in middle-class tax increases.’  She walks on water too.

“Start with the overall fiscal math, which by itself is staggering. She concedes that her plan will cost only ‘slightly’ less than the $52 trillion that the U.S. is expected to spend on health care in the next 10 years. She deducts from that what the feds now spend on Medicare and Medicaid, plus $6 trillion that the states contribute to Medicaid, the state-federal children’s health program and government worker benefits.

“That leaves $30 trillion to finance, but Senator Warren waves her wand and says the bill will really be $20.5 trillion.  She makes the rest vanish by positing magical savings from things like ‘comprehensive payment reform.’  One of her ideas is the hardy perennial known as ‘bundled payments,’ which have failed to reduce costs as promised by Obama Care.

“She says hospitals would be reimbursed at an average of 110% of current Medicare rates, which is supposed to address the criticism that Medicare currently under-compensates patient care. But hospitals now rely on private insurance payments to stay in business, and 110% of what Medicare now pays will hardly be enough to compensate for the loss of that private money.

“Amusingly, she also proposes savings from ‘restoring health care competition.’ Because everyone will have good insurance, she says, ‘providers will have to compete on better care and reduced wait times in order to attract more patients.’  But if government is controlling all prices and reimbursements, what incentive is there to compete at all?”

The Journal piece goes on and on. 

“She’d also raise the corporate tax rate back to 35% from 21% and extend it to income earned worldwide with no deferrals for foreign taxes.  She claims this would generate $1.75 trillion over 10 years, which is fanciful since it would be an immediate incentive for companies to relocate overseas.

“She also doubles down on her plans to soak the rich, assuming there are any left after her other tax proposals....

“Ms. Warren has already proposed a 2% wealth tax on assets of more than $50 million, which is supposed to pay for her education, child-care and college-debt forgiveness plans.  She now wants to add a 6% annual tax on Americans with more than $1 billion in assets that she says would raise $3 trillion.  Most economists, including Democrat Larry Summers, believe a wealth tax would raise far less due to tax avoidance, which is why so many European countries have repealed their wealth taxes.

“But, no worries, Ms. Warren would hire a new army of tax collectors to close what she calls the 15% ‘tax gap’ between what people owe and what they pay. The Senator says this will be worth $2.3 trillion in additional revenue. This is another old Congressional standby that never yields what is predicted.

“Oh, and she’d save $800 billion by cutting defense spending for Overseas Contingency Operations.  Senator Warren calls this a ‘slush fund,’ but it’s really the account to finance current overseas operations as well as readiness. This would return us to the Obama years of slashing defense even as global threats from regional powers and new technology are increasing. This is a hyper-fantasy....

“Ms. Warren is trying to sell an illusion and make it sound like political courage. Donald Trump’s boast that Mexico would pay for the wall was more believable.”

--Meanwhile, Michael Bloomberg has decided to give it another go after all, or so it seems today, just months after the three-term New York City mayor took his name out of consideration.  Bloomberg supporters told the New York press that he’ll be making a decision quickly.

Bloomberg believes “Biden is weak and Sanders and Warren can’t win,” a source told the New York Daily News.

An insider told the paper, “Trump will get re-elected if Elizabeth Warren is the nominee. That’s not something any Democrat would want.  [Therefore] Mike was encouraged to take another look and reassess the race.”

Certainly Bloomberg has the resources to run a national campaign and he could make a splash, but as I said the other day, he’s just not electable, as much as I’d personally like to see him on the ballot in November 2020.

--Former attorney general Jeff Sessions announced he is running for his old Senate seat in Alabama, setting the stage for a potentially contentious Republican primary with President Trump at the center.

Sessions was forced out in dramatic fashion by the president in November 2018, but he enters the race with deep institutional ties in the state and elsewhere; holding his Senate seat for two decades before becoming Trump’s AG.

So will Trump support Sessions or weigh in against him in favor of other Republicans.  Already, Sessions is kissing up to him.  Slobbering, really.

--Democrats in Virginia gained majority control of the statehouse for the first time in over two decades on Tuesday, flipping both chambers – state Senate and House of Delegates – which had been held by a slim Republican majority going into Election Day.

What about the big picture?

Editorial / Wall Street Journal

“Democrats watched to their dismay as the political reaction to Barack Obama’s polarizing governance cost them the House, most governorships and state legislatures, and finally the Senate and the White House. Republicans are now experiencing the reverse effect under President Trump, as they learned again Tuesday amid more Democratic victories in off-year elections.

“Democrats flipped the state House of Delegates and Senate in Virginia, which means they will control the entire state government for the first time in 25 years. They also appear to have won the governorship in Kentucky...and they came closer than they should have to winning the governorship in conservative Mississippi (losing by 5.6% compared to 34% in 2015).

[Trump won Mississippi by 18 points in 2016, and Kentucky by 30 points.]

“Worse than the defeats for Republicans in the voting trend, which continued the suburban losses of 2017 and 2018 that cost them control of the U.S. House.  In Virginia they could in the past overcome their deficits near Washington, D.C., with gains downstate.  But now their losses extend to the suburbs around Richmond and the state’s southeast.

“Kentucky Governor Matt Bevin was crushed in the Louisville (99,000 votes) and Lexington (36,000) metro areas.  Mr. Bevin lost the Lexington area by only 10,000 in 2015 and around Louisville by 38,000. But turnout statewide this year was up about 50% from 2015, as Democrats showed again that they are highly motivated in the Trump era.

“This turnout trend has now continued for three Novembers, and Republicans who try to explain it away are fooling themselves.  The GOP under Mr. Trump is losing more college-educated suburban voters, especially women, than it is gaining rural voters or working-class former Democrats....

“Mr. Trump won in 2016 on an inside straight in the Electoral College, and he has never had a job approval rating above 50% despite a good economy.  His divisive rhetoric on immigration and so much more may thrill his base but it alienates others.  His approval rating with white college-educated women in particular is dreadful – 34% in the latest WSJ-NBC poll.

“The fair judgment a year from Election Day in 2020 is that Mr. Trump is highly vulnerable in his bid for a second term.  He could benefit if the economy rebounds from its recent 2% rate of growth, and perhaps Democrats bent on impeachment will overreach. But Mr. Trump may need Democrats to nominate an opponent whose agenda is far enough to the left to scare suburban voters who are tired of the daily melodrama of the Trump Presidency.

“Senate Republicans know this, and they know their majority is also at risk. They can’t win merely by turning out the Trump base. The GOP needs a strategy and agenda to regain support in the suburbs or they will lose the House, the White House and the Senate in 2020.”

--Here in New Jersey the Democrats went into the election holding 54 of the 80 seats in the Assembly – their largest advantage since 1978 – and were aiming to add more, bolstered by ever-growing voter registration numbers and a backlash against President Trump, best exemplified in the 2018 House elections, where the two districts I personally straddle went Democrat for the first time in my memory.

But the Republicans actually picked up a few seats because the Democratic governor, Phil Murphy, is despised himself.  The only guy I personally cared about, Republican Assembly Minority Leader Jon Bramnick, who I’ve met many times and tell him how much I want him to be my governor, faced a tough fight against both Democrats and some independent conservatives who entered the race specifically to siphon off Bramnick votes.  The reason? Bramnick is not a Trump supporter, and the independents’ were.

So Bramnick won in a close race.  Thank god.  But you see how complicated it is when it comes to the president.

--It’s always big news when there is a change at the top of the NYPD and Police Commissioner James O’Neill is stepping down after three years leading the department, O’Neill taking a job in the private sector (Visa). Various reports have O’Neill leaving after months of frustration stemming from blurred lines between City Hall and Police Headquarters.

O’Neill has seen crime rates continue to fall under his watch*, but he faced increasing criticism from within the ranks, especially after he fired Officer Daniel Pantaleo, who was accused of using an inappropriate and unauthorized chokehold in the death of Eric Garner.

*Though this week we learned there were 29 murders in October, an increase over the 18 recorded during the same month in 2018.  Murders are now up 3% for the year.

Ed Mullins, the President of the city’s Sergeants Benevolent Association, called O’Neill’s resignation “long overdue.”

“I believe he will go down as the worst Police Commissioner in NYPD history,” Mullins said, adding in a radio interview that morale is at an all-time low.

Chief of Detectives Dermot Shea, a 28-year NYPD veteran, will take over as commissioner.

--I was reading a piece by Bojan Pancevski of the Wall Street Journal on Saturday’s 30th anniversary of the fall of the Berlin Wall and an unveiling of a statue of Ronald Reagan by Sec. of State Pompeo the day before.

But the statue is being placed on the U.S. Embassy’s terrace overlooking the spot where the speech took place, not in a public setting, as the Ronald Reagan Presidential Foundation, which commissioned the artwork, wanted, as well as former and current U.S. diplomats.

It’s all about a split among Berlin politicians, some of whom are from the far left that fiercely opposed Reagan’s “unapologetic devotion to capitalism and his deployment on German soil of nuclear-capable missiles. His visits to Berlin were accompanies by violent riots from far-left protesters.

“While West Germany was a close ally of the U.S. then, relations have frayed since President Trump, a frequent and blistering critic of German Chancellor Angela Merkel, came to power.”  [Bojan Pancevski]

I went to Berlin and Cologne in December 2007, to see the Christmas markets, first and foremost, after which I told you what a huge target they were for terrorism (which, sadly, we’ve seen more than once in the years after I first wrote this), but I also toured Berlin extensively and got a touristy photo of myself at the Wall.

The thing is I know I wrote at the time from there that so little of the Wall remained, which was sad, and a mistake for future generations.

But, it was also totally understandable.  At the time the Wall came down, the people, as you saw live on television, couldn’t wait to tear it down and for good reason.  It’s just that it’s important for one’s history to preserve the past.  It’s why some of us have long supported preserving as much of our major Civil War battlefields as possible.

Yet as we’ve seen in the ongoing debate over monuments to Civil War generals and leaders, it’s contentious.  It’s the same thing now in Berlin.

A statue of Ronald Reagan isn’t as important as remembering what he was fighting for.  Preserving more of the Wall would have made this an easier task for future generations to understand.

--I noted last time how pathetic it was for President Trump to post a tricked-up photo of the hero dog, Conan, from the operation to take out Baghdadi, especially given he hates dogs, so I can’t help but note Kathleen Parker’s thoughts from her Washington Post op-ed perch.

“When you’re on your last leg, when your colleagues have turned tail, when the House of Representatives passes the rules under which you will almost certainly be impeached – you have to be creative.

“Thus, it came to pass that Donald Trump, the first president in 120 years to not have a dog, created a national hero in the canine Conan, who cornered Islamic State leader Abu Bakr al-Baghdadi, whereupon the terrorist kingpin committed suicide.

“Conan is, no doubt, a hero.  Indeed, this particular pooch is coming to the White House soon for a hero’s welcome because that’s how barking mad this president has become.  Not that I would deny Conan his due – perhaps a lifetime supply of his favorite treats? But an invitation to the White House?

“Don’t get me wrong. I love dogs. Full stop.  Anyone who knows me wants to come back as my dog.  I do, too. But this isn’t really about the dog. As always, it’s about Trump.

“Question: What do we know about Trump?  He craves attention.  What will he do to get attention?  Anything.  When things start going south for Trump, what does he routinely do?  Create a distraction.  Even roll out the red carpet for a dog?  Yes!

“...Another question: What do Americans love more than baseball?  Someone surely whispered in his ear: Dogs, sir. Americans love dogs.  If Trump wants to be loved, he must love dogs, too.....

“If this were really about Conan, I’d be setting the DVR, but we know otherwise.  The honoring of Conan is the desperate measure of a man who has seen the end of his own tunnel – and there’s no pretty light.  Nearly lost in all the canine clutter is the real American hero whose face was displaced by Conan’s – Vietnam War medic James McCloughan.  He wasn’t offended by the edited photo, he said, but he’s not the sort to whine.  Rather, he’s the sort to rush headlong into enemy fire to save wounded U.S. soldiers.

“That’s what a Medal of Honor represents.  Exceptional bravery, risk to oneself in the service of others and, in an important distinction, the conscious decision to sacrifice oneself if necessary to save another. For Trump to circulate a faked photo of himself seemingly bestowing the MOH on a dog trivializes the honor, even if some recipients don’t mind.

“Dog people may find some comic relief in reflecting on what dogs know.  They can quickly assess when someone is not a good human.  They also know instinctively who isn’t a dog person.  One feels like danger, the other smells like fear.  Given which, Trump may want to keep a respectful distance from Conan when he arrives – and hope that our fearless fellow on four legs has already had his dinner.”

--The Senate voted unanimously to send a bill to President Trump that would make certain types of animal cruelty a federal felony.  The Preventing Animal Cruelty and Torture Act, a bipartisan proposal, makes it a federal crime to crush, burn, drown, suffocate, impale or sexually exploit animals. The bill expands on a 2010 law that made it a crime to create and sell videos of animal fighting.

Republican Sen. Pat Toomey (Penn.), a co-sponsor of the bill, said, “Evidence shows that the deranged individuals who harm animals often move on to committing acts of violence against people.  It is appropriate that the federal government have strong animal cruelty laws and penalties.”

Sen. Richard Blumenthal (D-Conn.), another co-sponsor, said, “There is no place in a civilized society for maiming and torturing animals – period.”

President Trump is expected to sign the bill.

---

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

God bless America.

---

Gold $1459...huge drop of $57 on the week
Oil $57.45

Returns for the week 11/4-11/8

Dow Jones  +1.2%  [27681*]
S&P 500  +0.9%  [3093*]
S&P MidCap  +0.8%
Russell 2000  +0.6%
Nasdaq  +1.1%  [8475*]

*Record highs

Returns for the period 1/1/19-11/8/19

Dow Jones  +18.7%
S&P 500  +23.4%
S&P MidCap  +20.2%
Russell 2000  +18.6%
Nasdaq  +27.7%

Bulls 57.1
Bears 18.1

Have a great week.

Brian Trumbore



AddThis Feed Button

-11/09/2019-      
Web Epoch NJ Web Design  |  (c) Copyright 2016 StocksandNews.com, LLC.

Week in Review

11/09/2019

For the week 11/4-11/8

[Posted 10:00 PM ET, Friday]

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

Edition 1,073

I watch all of President Trump’s rallies.  For me it’s like homework.  So on Wednesday, at the Monroe, Louisiana, gathering, at one point Trump boasted: “I withdrew from the one-sided Iran nuclear deal.”

I was incredulous.  He said this on the very day Tehran took its most important step in breaching the 2015 accord by beginning to inject uranium gas into centrifuges at its Fordow nuclear complex, in total defiance of the deal’s restrictions. I discuss the move in full detail below, but as I keep repeating, since day one my chief concern with this presidency was on the foreign policy front. 

So go ahead.  Name one foreign policy success under this administration. 

Iran...failure

Syria...failure

Israel...the promised once in a lifetime peace deal?  I think not.  Is Israel threatened now more than ever, at least in the last 45 years?  Yes.

Russia...failure

China....failure

North Korea...failure

Venezuela...failure

Trade policy...which is part of foreign policy, failure

What happens when you have a failed foreign policy, aside from putting America and our allies at risk?  You have plunging confidence in the business community, which is needed for investment and growth.

Our alliances are shattered.

I’ll give the president credit for eliminating Islamic State’s caliphate, but then in one fell swoop he sent a message to the world that America can’t be trusted, and potentially let ISIS in the Syrian sphere off the hook, as it proliferates elsewhere (see below).

The president refuses to say anything bad about Russia, and today talked of going to Vladimir Putin’s May Day celebration next spring; he refuses to criticize China on its human rights or Hong Kong policies, nor on its ongoing expansion in the South China Sea.  And he still calls Kim Jong Un a “friend.”

This can’t continue.  It’s not as if this is a ‘failed foreign policy’ that occurs from time to time in the course of our history, ala George W. Bush and Iraq.  This is about a single man being responsible for all the above.  Not a president working with advisers (the exception being the China trade policy), but a president going rogue.  That’s why I’ve been cryptically referring to the generals.

But we also have the following, which is obviously heating up.

Trump World...the Impeachment Inquiry

President Trump said on Friday he was not concerned about the impeachment inquiry as House Democrats prepared to kick off public hearings next week, dismissing witnesses’ testimony transcripts released by Congress so far.  Speaking to reporters at the White House, Trump accused Democrats of looking for people who hated him and that for the most part he had not heard of the witnesses, which is laughable.

House investigators released various transcripts of their closed-door interviews with diplomats and other officials regarding the July 25 phone call between President Trump and Ukrainian President Volodymyr Zelensky, and the aftermath, and we saw the transcript of the testimony given by U.S. Ambassador to the European Union (and major Trump 2016 donor) Gordon Sondland.  There was a three-page amendment to his original testimony that Sondland filed.

In the addendum, Sondland said he remembered – after testifying that he didn’t know why security aid to Ukraine was being held up – a conversation with a top aide to Zelensky on September 1 “where I said resumption of U.S. aid would likely not occur until Ukraine provided the public anti-corruption statement that we had been discussing for many weeks.”

So it’s virtually impossible to believe the Ukrainians didn’t know about the holdup of nearly $400 million in security aid being due to Trump’s stated urging that Zelensky open investigations into the Bidens, as well as the debunked conspiracy theory that the hacked Democratic National Committee server might be in Ukraine.

But with Sondland’s testimony it was clear there was a stated quid pro quo, though Sondland didn’t directly implicate Trump.

Bill Taylor, the top U.S. diplomat in Ukraine, told impeachment investigators that Trump made the quid pro quo demand on a Sept. 7 phone call with Sondland, according to a transcript of Taylor’s Oct. 22 deposition.

“President Trump did insist that President Zelensky go to a microphone and say he is opening investigations of Biden and 2016 election interference and that President Zelensky should do this himself,” Taylor testified.

The day after Trump’s call with Sondland, Taylor said he spoke with the EU ambassador. Sondland said Trump maintained he wasn’t asking for quid pro quo, according to Taylor.  However, the demands laid about by Trump amounted to an unmistakable quid pro quo.

Three days after Taylor spoke with Sondland, the Trump administration released the nearly $400 million in security assistance that had been held up since mid-July.  It remains unclear exactly why Trump decided to release the aid even though Zelensky had apparently not satisfied his quid pro quo demands.

A top U.S. diplomat, George Kent, told congressional investigators that Trump’s personal attorney, Rudy Giuliani, conducted a “campaign full of lies” against the U.S. ambassador to Ukraine, Marie Yovanovich, before she was recalled from her post, according to a transcript of his testimony released Thursday.  Yovanovich was pulled from her post in May.

Kent said Giuliani conducted a smear campaign against her.  “His assertions and allegations against former Ambassador Yovanovitch were without basis, untrue, period,” Kent testified.  “Mr. Giuliani, at that point, had been carrying on a campaign for several months full of lies and incorrect information about Ambassador Yovanovitch, so this was a continuation of his campaign of lies,” Kent said.

In her own testimony, per the released transcript, Yovanovitch said that she remained worried that she would be a target of retaliation by Trump, who referred to her in his July 25 phone call with Ukraine’s president as “bad news” and someone who was “going to go through some things.”

“I was very concerned” upon reading Trump’s words when the rough transcript of the call was released, Yovanovitch testified.  “I still am.” Asked whether she felt threatened, she replied, “Yes.”

Today, we received the transcript of Alexander Vindman’s testimony and he said he heard Ambassador Sondland explicitly press Ukrainian officials to investigate Joe Biden and his son.  Sondland made it clear in a July 10 meeting at the White House that the investigations of the Bidens and gas company Burisma would have to be opened for President Zelensky to get an Oval Office meeting with Trump.

“He was calling for something, calling for an investigation that didn’t exist into the Bidens and Burisma,” Vindman said.  “My visceral reaction to what was being called for suggested that it was explicit. There was no ambiguity.”

Vindman’s account of the July 10 meeting at the White House was corroborated by Fiona Hill, the former senior director for European and Russian affairs on Trump’s National Security Council.  Hill testified she heard Sondland bring up Burisma at the meeting, according to a separate transcript of her testimony released Friday.

Vindman also testified that Sondland told the July 10 gathering he coordinated the request with acting White House Chief of Staff Mick Mulvaney.  And so now Mulvaney is seen as the potential ringleader.

Also today, we learned that John Bolton, Trump’s former national security adviser, knows about “many relevant meetings and conversations” connected to the Ukraine pressure campaign that House investigators have not yet been informed about, his lawyer told lawmakers.

The lawyer, Charles J. Cooper, said Bolton would be willing to talk but only if a court rules that he should ignore White House objections.  Cooper did not elaborate on what meetings or conversations he was referring to.

Cooper also represents Bolton’s former deputy, Charles Kupperman, who is seeking a court ruling as well on whether he can testify.

Meanwhile, President Trump denied asking the Justice Department to clear him of wrongdoing over the phone call with Zelensky.  The Washington Post reported Attorney General William Barr declined Trump’s request to hold a press conference absolving the president of breaking any laws.

David Graham / The Atlantic

“Newly released testimony in the House impeachment inquiry shows in new detail how the Trump administration’s demands for a quid pro quo from the Ukrainian government operated.

“Ambassador Gordon Sondland, in an addendum to his original testimony released alongside his deposition transcript today, acknowledges telling a Ukrainian official that the country wouldn’t receive U.S. military aid without a statement about public corruption from President Volodymyr Zelensky. And other testimony and communications show that the statement had to specifically mention President Donald Trump’s personal political obsessions.

“ ‘I now recall speaking with Mr. [Andrey] Yermak [personal aide to Zelensky], where I said that resumption of U.S. aid would likely not occur until Ukraine provided the public anti-corruption statement that we had been discussing for many weeks,’ Sondland said in his update, referring to an aide to the Ukrainian president.  ‘Soon thereafter, I came to understand that, in fact, the public statement would need to come directly from President Zelensky himself.’

“While Republicans initially defended Trump by insisting he had never tried to extract a quid pro quo from Ukraine, that defense has become untenable as a mountain of evidence, as well as an ill-advised outburst of honesty from the White House chief of staff, shows it has no basis.

“Now Trump’s defenders have adopted a new talking point: It was a quid pro quo, but not a corrupt quid pro quo.  According to this claim, Trump may have demanded that Ukraine combat corruption in exchange for releasing the aid, but he was simply trying to fight corruption overseas, a core principle of American foreign policy.  That move might have skirted the law by holding up congressionally appropriated funds, but the move was fitting and well intentioned.  The testimony released today cuts straight through that excuse, suggesting that not only did Trump hold up the aid in exchange for a statement (the quid pro quo), but he did so to further his own political prospects (the corrupt quid pro quo).

“Among the documents released today is a set of text messages between American and Ukrainian officials, discussing a statement that Ukrainian officials understood was essential to getting the administration to agree to a White House meeting.  On the evening of August 12,  Yermak sent a draft statement to Kurt Volker, then a special envoy to Ukraine.

“ ‘Special attention should be paid to the problem of interference in the political processes of the United States, especially with the alleged involvement of some Ukrainian politicians,’ Yermak’s draft stated.  ‘I want to declare that this is unacceptable.  We intend to initiate and complete a transparent and unbiased investigation of all available facts and episodes, which in turn will prevent a recurrence of this problem in the future.’

“But that wasn’t enough for the Americans. Rudy Giuliani, Volker and Sondland both testified, insisted that any Ukrainian statement mention two specific things. The next afternoon, on a new chain adding Sondland, Volker sent Yermak an edited draft. ‘Following is text with insert at the end for the 2 key items. We will work on official request,’ he said. The updated draft read:

“ ‘Special attention should be paid to the problem of interference in the political processes of the United States, especially with the alleged involvement of some Ukrainian politicians.  I want to declare that this is unacceptable. We intend to initiate and complete a transparent and unbiased investigation of all available facts and episodes, including those involving Burisma and the 2016 U.S. elections, which in turn will prevent a recurrence of this problem in the future.’

“The ‘2 key items’ are indeed important, because they connect directly back to Trump’s July 25 call with Zelensky and the president’s obsessions.  On that call, he brought up a baseless conspiracy theory holding that Ukraine was behind hacking in the 2016 U.S. election.  In their testimony, both Volker and Sondland separately recounted an angry outburst from the president in an Oval Office meeting, in which he attacked Ukraine for its supposed opposition to his candidacy in 2016.  ‘They tried to take me down,’ the ambassadors each recalled him saying.

“On the call, Trump also appeared to bring up Burisma, a Ukrainian natural-gas company on whose board Hunter Biden, son of former Vice President Joe Biden, served. The name Burisma does not appear in the partial transcript released by the White House, but it’s clear from context that Trump referred to a particular company, and in testimony last week, Lieutenant Colonel Alexander Vindman, a National Security Council official who was on the call, reportedly testified that Trump referred to Burisma.

“When Trump brought these ideas up on the July 25 call, it set off alarm bells at the White House. Vindman himself raised concerns with his superiors.  Multiple people brought their objections to an official, who then filed a whistle-blower complaint. There was reportedly widespread feeling that the request for the investigation was inappropriate. A White House lawyer had the partial transcript moved to a very secure server.

“Yet even as the White House scrambled to cover up the call, Trump-administration officials in the field, like Volker and Sondland, continued to understand that the Burisma and hacking mentions were essential to the president. The Ukrainians tried to satisfy the Trump administration with a general anti-corruption statement, and Volker – whether approving of Trump’s desires or not – made clear that was not enough.

“Though the White House issued a statement distancing the president from the quid pro quo that Sondland acknowledged, Sondland and Volker both testified that Giuliani, the president’s personal attorney, insisted that the statement include Burisma and the 2016 election. The edited statement doesn’t make much sense – even in Trump’s conspiracy theories about Hunter Biden, there’s been no allegation that this role on the Burisma board was tied to Ukrainian interference in U.S. elections.

“Moreover, the statement is steeped in Orwellian irony. Trump wanted Ukraine to pursue these investigation in order to further his chances at reelection in 2020.  The Ukrainian government was having its arm twisted into giving a statement swearing to stop interference in U.S. elections – even as the statement was itself coerced interference in U.S. elections.  (Sondland testified that a demand to investigate Hunter Biden would be improper.)

“The demolition of the binary between the good and the corrupt quid pro quo poses the latest political challenge to Trump and his defenders. The president has argued that everything he did was totally appropriate. Republicans in Congress having been slouching toward a compromise position, arguing that what Trump did was bad, but not impeachable. The testimony released today makes that argument even less appetizing than it already was – though it may still taste better than the alternatives.”

The aforementioned public hearings begin next Wednesday, with Bill Taylor, George Kent and Marie Yovanovitch to be called the first week.

President Trump said today, “We shouldn’t be having public hearings...it’s a hoax!”

Democrats must prove that the impeachment inquiry is worth it.  They have to move the needle.  In this instance, the ratings will be an important gauge of public sentiment.

---

--President Trump admitted to misusing nonprofit funds and was ordered to personally pay $2 million to an array of charities as part of a settlement to a lawsuit accusing his now-defunct foundation of illegally helping his 2016 campaign for the White House. The settlement, announced Thursday, resolved a lawsuit filed by the New York  attorney general’s office against Trump, three of his children and the Donald J. Trump Foundation.

The attorney general accused the foundation of violating laws that regulate charities, calling it “little more than an empty shell.”

When the suit was filed in 2018, Trump tweeted: “I won’t settle this case!”

Trump tweeted Thursday, “I am the only person I know, perhaps the only person in history, who can give major money to charity ($19M), charge no expense, and be attacked by the political hacks in New York State.  No wonder why we are all leaving!”

--President Trump’s son, Don Jr., tweeted the name of a CIA analyst who is the alleged anonymous whistleblower, breaking strict conventions for protecting officials who reveal wrongdoing in government.

Standing beside Trump at a political rally in Kentucky Monday, Republican Senator Rand Paul (Ky.) threatened to expose the person and demanded they testify in Congress.

“We also now know the name of the whistleblower... I say tonight to the media, do your job and print his name.”

--Last weekend President Trump signed off on a plan to cap the number of refugees taken in by the United States at 18,000 in fiscal year 2020.  That’s the lowest amount of possible refugees accepted by America since the program’s creation in 1980.

The administration agreed to let in as many as 30,000 refugees this year.  In the final year of the Obama administration, the refugee ceiling was 85,000.

Secretary of State Mike Pompeo said in a statement that refugee resettlement “is only one aspect of U.S. humanitarian-based immigration efforts.”

I guess an example of this is abandoning the Kurds in Syria, displacing over 300,000 in one fell swoop.

--Speaking of the increasingly disgraceful Pompeo....

David Ignatius / Washington Post

“Since the investigation began into President Trump’s machinations in Ukraine, one of the most disturbing questions has been: Where is Mike Pompeo, the secretary of state, who’s supposed to shield his diplomats from political interference?

“And now we have the answer: Pompeo, in recent months, has essentially been in hiding, protecting himself while his subordinates took the hit – evidently hoping to preserve his influence with Trump.  Sometimes his deflections and denials have been outright misleading.

“Pompeo has badly tarnished his reputation in accommodating Trump. He joins the long list of those damaged by their service to this president.  If you’re someone like me, who thought Pompeo was one of the smarter and more effective people in the administration, it’s a sad moment.

“This harsh judgment is nearly inescapable after reading the transcripts released Monday of testimony from two key State Department officials: Marie Yovanovitch, a 33-year Foreign Service veteran Trump fired in May as ambassador to Ukraine; and Michael McKinley, a 37-year veteran, who resigned in October as Pompeo’s senior adviser because ‘the disparagement of a career diplomat [Yovanovitch] doing her job was unacceptable to me.’....

“Pompeo told ABC News last month that ‘not once’ did McKinley ‘say a single thing about his concerns’ about Yovanovitch’s treatment.  By McKinley’s sworn testimony this statement was false.

“What is character?  It’s difficult to define, but as NPR’s Scott Simon recently noted, a good, short summary is the U.S. Military Academy motto: ‘A cadet will not lie, cheat, steal, or tolerate those who do.’

“We should be careful not to judge others’ character, especially in the hotbox of today’s Washington. But it’s deeply troubling to see a powerful person such as Pompeo who is silent in the face of lies and who takes no action to protect his subordinates from wrongdoing.”

--How bad has public discourse gotten in America?  Republican Sen. John Kennedy (La.) said of House Speaker Nancy Pelosi at Trump’s rally Wednesday, “It must suck to be dumb.”

I liked Kennedy before this remark.

--Trump tweets:

“The Amazon Washington Post and three lowlife reporters, Matt Zapotosky, Josh Dawsey, and Carol Leonnig, wrote another Fake News story, without any sources (pure fiction), about Bill Barr & myself. We both deny this story, which they knew before they wrote it.  A garbage newspaper!”

“It was just explained to me for next weeks Fake Hearing (trial) in the House, as they interview Never Trumpers and others, I get NO LAWYER & NO DUE PROCESS.  It is a Pelosi, Schiff, Scam against the Republican Party and me. This Witch Hunt should not be allowed to proceed!”

“Stock Market up big today. A New Record.  Enjoy!”

“Our big Kentucky Rally on Monday night had a massive impact on all of the races. The increase in Governors race was at least 15 points, and maybe 20!  Will be in Louisiana for @EddieRispone on Wednesday night. Big rally!” 

[Ah, Mr. President?  You lost the governor’s race.]

Wall Street and Trade

Earnings season has wound down, with a few notable exceptions, such as the retail sector yet to come, and as you saw the market continued to rally, new records hit on all three major indexes, as noted further below.  A supposed phase one trade deal with China was a major catalyst, but this is now a bit dubious.

On the economic data front, it was a light week, with September factory orders down 0.6%, while the October ISM reading on the service sector came in at a better-than-expected 54.7 (50 the dividing line between growth and contraction), though this was off September’s 3-year low of 52.6.

As you’ve also noticed the Xmas shopping season has started in earnest, already, because with Thanksgiving falling on the latest possible date, Nov. 28, the season is six days shorter than usual.  There is no reason at this stage why the National Retail Federation’s outlook of a 3.8% to 4.2% gain from a year ago wouldn’t come to fruition, this basically being the average of the last five years, and my own forecast of 3.5% will probably be off but I have to stick to it.

Finally, the Atlanta Fed’s GDPNow barometer of fourth-quarter growth is at just 1.0%, but it’s still early in the cycle, especially in terms of the data releases.  Next week we will get an important one on October retail sales that might be telling.

So turning to the trade dispute between the United States and China, there was a flurry of news stories on Thursday that a phase one deal had basically been finalized and the market rallied, even though the talk of some tariffs being rolled back as part of the agreement was disputed by many inside the White House.  The idea of a tariff rollback was not part of the original October handshake deal between President Trump and Chinese Vice Premier Liu He.

Chinese officials said earlier on Thursday that tariff reductions had been agreed to, and then a U.S. official confirmed that was the case early Thursday afternoon.

But there was a divide within the administration over whether rolling back tariffs will give away leverage in the negotiations.

Former White House adviser Steve Bannon said the Chinese Communist Party is trying to “re-trade” the agreement, adding that rolling back earlier tariffs goes against the grain of the original October agreement.  “There’s nothing that Trump hates more” than someone backtracking on a deal, he said.  [Reuters]

China’s Ministry of Commerce spokesman Gao Feng had said on Thursday, “In the past two weeks, top negotiators had serious, constructive discussions and agreed to remove the additional tariffs in phases as progress is made on the agreement.”

Well I’d like to thank President Trump for then setting the record straight, at least for today (and this column) when he told reporters this morning outside the White House that he has not agreed to roll back tariffs on China but that Beijing would like him to do so.  So there you have it.

Earlier in the week, it appeared that any phase one agreement wouldn’t be signed until December, anyway, especially after the cancellation of the APEC conference in Chile where the two sides were to meet, Presidents’ Xi and Trump putting their signatures on some parchment.

But we do know that any trade agreement will contain details on a large Chinese Ag buy, that Trump would be able to trumpet when he spoke to farmers on the campaign trail.  Much of this was to be focused on soybeans, and we have been led to believe that China was already making large buys in beans, according to Dept. of Agriculture figures.

But this week China’s General Administration of Customs showed that the world’s largest soy buyer imported 6.18 million tons of soybeans in October, down 24.6 percent from 8.20 million tons in September.  Huh.  The U.S. was to be a large part of this action.

One last one...the U.S. trade deficit continued to widen in the first nine months of 2019, per data from the Commerce Department, the deficit for both goods and services growing to $481.3 billion in the first three quarters, up 5.4 percent from the same period last year.  Total American exports fell by $7 billion from the prior year, while imports grew by $17.8 billion.

Why I thought the trade gap was supposed to narrow under your leadership, Mr. President?

Don’t worry.  Most of us knew this was a stupid argument in the first place, the trade deficit being a poor metric for measuring American well-being and/or the health of the economy.

If the United States is growing faster than the rest of the world, as is greatly the case today, that boosts purchases of foreign products and weighs on sales abroad.

Europe and Asia

It was PMI week for the eurozone (EA19), data courtesy of IHS Markit.

The euro area composite reading for October was 50.6 vs. 50.1 in September, with manufacturing at 45.9 vs. 45.7 the prior month, and services at 52.2 vs. 51.6.

Germany 42.1 (manufacturing) / 51.6 (services)
France 50.7 / 51.6
Spain 46.8 (78-mo. low) / 52.7
Italy 47.7 / 52.2
Ireland 50.7 / 50.6 (87-mo. low)
Netherlands 50.3 mfg. (76-mo. low)
Greece 53.5 mfg.

Separately, Eurostat reported that EA19 retail trade (sales) rose 0.1% in Sept. over August, 3.1% year-over-year.

Chris Williamson / IHS Markit

“The euro area remained close to stagnation in October, with falling order books suggesting that risks are currently tilted towards contraction in the fourth quarter. While the October PMI is consistent with quarterly GDP rising by 0.1%, the forward-looking data points to a possible decline in economic output in the fourth quarter.

“Worryingly, what little growth was seen in October was supported by firms eating into previously-placed work, meaning demand needs to revive to boost new business inflows and prevent more firms coming under further pressure to cut activity and jobs.

“As for the immediate outlook, much depends on geopolitical issues such as U.S. tariff developments and Brexit, though we will also be watching Christine Lagarde’s first policy meeting on 12th December to assess the appetite for further stimulus from the ECB. Time is needed for recent policy changes to take effect, though if the data flow continues to disappoint more action is in the cards for early next year.”

But Germany is obviously a huge key for the overall health of the eurozone and we did see some good news in September (admittedly the third quarter, not the current one), as manufacturing orders rose 1.3% after a long downswing in activity, while German exports rose 4.6 percent in September, according to the Federal Statistics Office, higher than expected.  So Germany may have avoided a technical recession.

Exports to other EU countries increased 5.6 percent, with particularly strong growth in the Netherlands and Belgium. Exports to the U.S. increased 6.9 percent, while shipments to China fell 3.3 percent.

Germany has an export-driven economy so the above is important, but we need follow-through.

Brexit / UK Election:  For the next few weeks the focus is on the U.K. general election Dec. 12 and Prime Minister Boris Johnson, who is leading in the polls by anywhere from 7 to 17 points, in the end needs to gain more than 40 percent, and then cobble together a coalition, first and foremost.  [For example, an ORB poll for the Sunday Telegraph puts support for Johnson’s Conservatives at 36%, Labour 28%, the Liberal Democrats 14% and Nigel Farage’s Brexit Party at 12%.]

But second, Johnson needs a coalition that will approve his Brexit legislation!  Which is why I’m not going to say much on Brexit itself until after the vote.

For now, Labour leader Jeremy Corbyn has suffered some defections as two former Labour MPs urged voters to back Johnson instead.  Ian Austin said Corbyn was “not fit to lead,” and was joined by John Woodcock as they launched a campaign labeling Corbyn a “disgrace to his party.”

The “Jewish Chronicle” newspaper published a front page piece urging voters not to support Labour because of Corbyn’s handling of anti-semitism within the party.

For his part, the Labour Party said it will spend 400 billion pounds ($514 billion) over 10 years to achieve “an irreversible shift in the balance of power and wealth” to working people if it wins power in next month’s election, according to John McDonnell, the party’s would-be finance minister, who said the plan would include major investments in schools, homes and hospitals.

Boris Johnson’s finance minister, Sajid Javid, called Labour’s plan “fantasy economics.” The Conservatives usually campaign on a reputation for economic competence and casting Labour as spendthrift socialists.

As for Nigel Farage, who is not personally running for Commons but instead focusing on leading the Brexit Party, many Tories are furious, saying Farage is putting Brexit at risk with his plans to run candidates in more than 600 constituencies, arguing they’ll siphon off votes from the Conservatives, leaving Brexit in danger. Leader of the Commons Jacob Rees-Mogg warned Farage was in danger of snatching “defeat from the jaws of victory” if he persisted with his plan.

Farage argues his number one target is Labour Leave voters who had been “completely betrayed” by their party.  Farage says in the 2015 general election, Ukip (the former Brexit party) took more votes from Labour than it did from Conservatives.

So this is the campaign.  Now we wait for the vote and the postmortem. 

Meanwhile, the EU’s chief Brexit negotiator Michel Barnier predicted “difficult and demanding” negotiations with Britain on a future trading relationship, saying the bloc would not accept any “unfair competitive advantage” for London.  Britain is scheduled to leave the EU on Jan. 31 as things stand today.

Spain: Folks are going back to the voting booth Sunday and it’s expected that the result of the general election will be as inconclusive as the one in April, the polls pointing to another stalemate, with no party or bloc of parties having a majority.  The issue of Catalonia and the separatist movement there is a key, with acting Prime Minister Pedro Sanchez, a Socialist, being accused by the leader of the conservative People’s Party (PP) of being too soft on the separatists. “You don’t believe in the Spanish nation,” said Pablo Casado, the leader of the PP.

There are 350 seats in parliament and Sanchez’ Socialists are forecast to gain 120, down 3 from April.

France: The government on Wednesday unveiled a range of measures, many of them hardening migration policies, as President Macron seeks to push the issue up the agenda.

Interior Minister Christophe Castaner said informal migrant camps in northeastern Paris would be cleared out by the end of the year, while 16,000 more housing units would be made available for recognized asylum seekers.

Meanwhile, Macron made waves this week in an interview with The Economist where he claimed that a lack of U.S. leadership is causing the “brain death” of the NATO military alliance, insisting that the European Union must step up and start acting as a strategic world power.

Macron’s public criticism of the state of the world’s biggest military alliance was rejected by German Chancellor Angela Merkel and NATO Secretary-General Jens Stoltenberg, setting the stage for a possible showdown in London next month when President Trump joins his counterparts.

“What we are currently experiencing is the brain death of NATO,” Macron says, adding the United States under Trump appears to be “turning its back on us,” notably by pulling troops out of northeast Syria without notice.

Editorial / The Economist

“Today’s Europe owes its existence to the United States. America fought two world wars on European soil; American diplomacy was midwife to what became the European Union; American arms protected Western Europe from Soviet invasion; and American statesmen oversaw German unification.  Now, in a dramatic plea to all Europeans, France’s president, Emmanuel Macron, has warned that America is cutting Europe loose. The old continent is ‘on the edge of a precipice,’ he warns.  Unless it wakes up, ‘we will no longer be in control of our destiny.’....

“Europe, (Macron says), has yet to grasp the immensity of the challenge ahead.  It still treats the world as if commerce and trade alone were able to ensure peace. But America, the guarantor of world trade, is becoming protectionist. Authoritarian powers are on the rise – including Russia and Turkey on Europe’s borders. While America and China spend vast sums on artificial intelligence, which they see as an essential component of their hard power, the EU devolves too much say to industry.  Mr. Macron warns that slow-moving, head-in-the-clouds Europe must open its eyes and prepare itself for a tougher, less forgiving world.

“It is an astonishingly bleak picture for a centrist European politician and an avowed internationalist.  But it is also unusually thought-through and, as far as Mr. Macron is concerned, a spur to action.  It is hard to overstate the scale of the change he is asking from his fellow Europeans....

“Plenty of times in the past, pious calls for Europe to make its weight felt in the world have turned out to be empty. This time, Mr. Macron argues, must be different.  He is asking his fellow leaders to imagine how Europe will thrive in a dangerous world without a cast-iron American alliance.  How should they deal with Russia, with the conflict and religious fundamentalism roiling the Middle East and north Africa, and with the authoritarian challenge of China?  He deserves an  answer.”

Turning to Asia...in China the Caixin composite PMI came in at 52.0 in October vs. 51.9 in September, with the service sector reading at 51.1, a 15-month low, so kind of a mixed picture.

China reported today that exports in October fell 0.9% from a year earlier, customs data showed, pointing to a worsening outlook for the country’s manufacturers as the trade war drags on, though the decline was less than forecast, and better than the 3.2% decline in September.

Exports to the U.S. dropped 11.3% for the ten months, January to October, while exports rose to the European Union 5.1%.

Imports dropped 6.4% from a year earlier for the sixth consecutive month, though this was also better than expected.

In Japan, the October services PMI was down to 49.7 from 52.8 in September, owing to the typhoon and the sales tax hike.  As you would expect, a separate reading on household spending in September showed a rise of 9.5% year-over-year, the fastest pace on record because of the same sales tax hike Oct. 1.  It will be interesting to see this number for October later. The decline in the services number gives us a clue.

But, a Reuters Corporate Survey of Japanese companies this week said more than two-thirds are feeling less pain from the tax increase last month than from the previous increase five years ago, which precipitated a recession. Still, the overwhelming majority of Japanese companies remain cautious about boosting spending, with many planning to keep wages and hiring flat or even reduce them.

Street Bytes

--As noted above, all three major indices hit new highs this week, including today, as the Dow Jones rose 1.2% to 27681, while the S&P 500 was up 0.9% to 3093, and Nasdaq 1.1% to 8475.

The S&P is on a five-week winning streak, Nasdaq six weeks in a row.  Investors are confident the slowdown in the economy we’ve been experiencing is over, so the safe haven trade (gold and Treasuries, for example) is off.

--U.S. Treasury Yields

6-mo. 1.57%  2-yr. 1.68%  10-yr. 1.94%  30-yr. 2.42%

Speaking of the safe haven trade being off, bonds sold off, with the yield on the 10-year at its highest weekly close since July.  The 10-year, as you know, helps determine mortgage rates, so any further rise could begin to impact housing again.

--A late development today...both American Airlines and Southwest announced they were extending their cancellations of Boeing 737 MAX flights through March 4 and 6, respectively.

Southwest, the world’s largest 737 MAX operator which has bet its entire growth strategy on Boeing’s newest single-aisle aircraft, is cancelling about 175 daily flights as it operates a slimmer fleet. Southwest had 34 MAX jets at the time of the March 13 grounding and was expecting delivery of another 41 jets this year.

For good reason, Southwest expects compensation for damages due to the MAX groundings from Boeing.

--The Saudi government recruited two Twitter employees to get its critics’ personal account information, U.S. prosecutors said Wednesday.

The complaint unsealed in U.S. District Court in San Francisco detailed a coordinated effort by Saudi officials to recruit employees at the social media firm to look up the private data of thousands of Twitter accounts.

The accounts included those of a journalist with more than 1 million followers and other prominent government critics.

It also alleged that the employees – whose jobs did not require access to Twitter users’ private information – were rewarded with a designer watch and tens of thousands of dollars funneled into secret bank accounts.  They were charged with acting as agents of Saudi Arabia without registering with the U.S. government.

--California’s attorney general on Wednesday said he was investigating Facebook’s privacy practices and accused the company of failing to cooperate with his inquiry, in yet another fight over how the social network treats its user information.

AG Xavier Becerra’s suit says that over an 18-month period, Facebook had resisted or ignored dozens of questions and requests for documents, including email correspondence between executives like Mark Zuckerberg and Sheryl Sandberg, the company’s top two leaders. 

Facebook argues it has cooperated with the investigation.

Meanwhile, the Massachusetts attorney general is pressing Facebook to release more information, including the names of the tens of thousands of apps flagged during Facebook’s internal investigation into data sharing practices, as well as the names of the developers who built those apps.

--McDonald’s Corp. fired its CEO, Steve Easterbrook, because of his relationship with an employee, after a board investigation.  The board found that Easterbrook, 52, “demonstrated poor judgment involving a recent consensual relationship with an employee.” McDonald’s said it has a longstanding policy barring employees from relationships with direct or indirect reports. 

In an email to staffers Sunday, Easterbrook apologized and acknowledged the dalliance was a mistake.

“Given the values of the company, I agree with the board that it is time for me to move on,” he wrote.

The British-born Easterbrook started with the company in 1993 as a manager based in London.  He previously served as chief branding officer, and then headed up the U.K. and northern Europe, before becoming CEO in 2015.  During his time as CEO, shares of the company nearly doubled in value.

Easterbrook is also resigning from Walmart Inc.’s board, effective immediately, Walmart said Monday.

McDonald’s stock fell nearly 3% Monday to $188.66, though rallied back by week’s end to $193.85; nonetheless still well shy of the 52-week high of $221.93.

In a filing on Monday, the company said it would pay Easterbrook six months in severance from his base pay, but he is eligible for significant stock rewards.  His total compensation last year, including stock and a bonus was $15.9 million.

Then days later, McDonald’s announced its top human-resources executive had left the company, without providing any details of the reason behind his departure.   The company said David Fairhurst’s exit wasn’t related to the firing of Easterbrook.

Fairhurst had worked with Easterbrook for McDonald’s in the U.K. and was promoted to the top human-resources job soon after Easterbrook became CEO in 2015.

The new CEO, Chris Kempczinski, 51, has worked closely on efforts in recent years to try to boost traffic at U.S. restaurants through spending on new technology and menu items with fresher ingredients.

Sales have risen as have prices as a result, but traffic has remained flat in the U.S. and franchisees have been pulling back at the costs of renovating restaurants and changing operations.

--Under Armour shares tanked when investors learned Sunday night that the company was assisting federal authorities who are investigating its accounting practices and related activities dating back to 2017.

Then on Monday, the company reported revenue declines for the fifth straight quarter in North America – its biggest market – and cut its forecast for the year, predicting revenues for the entire company would grow only 2 percent this year. The shares plummeted nearly 20% Monday.

The thing is, many are ticked off some of the bad news wasn’t known earlier.  Just last month, the company announced that Kevin Plank, who started the company more than 20 years ago, was stepping away from his CEO role on Jan. 1, and he and his successor, Patrik (sic) Frisk, did the media rounds, speaking in glowing terms about the future, yet they obviously knew about the investigation.

Under Armour had built its brand by creating high-tech performance apparel for athletes, but it has struggled mightily in the last two years as rivals Nike and Adidas moved into the co-called athleisure wear market themselves and Under Armour’s once-robust profits turned to losses.

The company has been in the midst of a significant restructuring, cutting jobs and slashing inventory levels as it tries to reestablish itself as a premium-priced brand.

As for the accounting investigation, Under Armour had posted 20 percent or greater year-over-year revenue growth for 26 straight quarters until late 2016. 

Then on Jan. 31, 2017, the company’s stock plunged 23 percent in one day after it said it would miss revenue-growth expectations and that its CFO was departing after 13 months “for personal reasons.”  The probe is examining whether UA shifted sales from quarter to quarter to appear healthier, according to the Wall Street Journal, which broke the story.  That, sports fans, would be fraud.

So David Bergman, who took over as acting finance chief in February 2017, said on the conference call with analysts this week that Under Armour had been “fully cooperating” with the investigations for two and a half years.  But this was never disclosed...until now.  Bergman said, “We firmly believe that our accounting practices and disclosures were appropriate.”

--Saudi Arabia’s giant state-owned oil producer, Saudi Aramco, announced plans on Sunday to go public in what could be the largest initial stock offering ever.

The company, the kingdom’s crown jewel and said to be the world’s most profitable enterprise, said it planned to sell an unspecified percentage of its shares on the Saudi stock exchange, with trading expected to begin next month.

Estimates have the Saudi government valuing the company at around $1.5 trillion, which would make Aramco the most valuable public company in the world, surpassing the current leader, Apple (which closed the week with a market cap of $1.176 trillion, an all-time high).

Originally, Prince Mohammed bin Salman (MBS) said Aramco would have a value of $2 trillion, and that the offering would see its shares trade on a premier international stock exchange like New York, London, or Hong Kong, but these appear to be off the table for now, as the IPO process proceeded in fits and starts over the past three years.  The killing of journalist Jamal Khashoggi by Saudi agents last year didn’t help.

Much of the proceeds from the offering are slated to go into the Public Investment Fund, a sovereign wealth fund that is evolving into MBS’s main vehicle for shifting the Saudi economy from its reliance on oil.

--Shares in Uber Technologies Inc. hit an all-time low Wednesday as the “lockup” period following its May initial public offering ended, delivering a further blow to a company whose shares are down 40% from its IPO price.  Uber priced its shares in May at $45.

Wedbush Securities estimates that 763 million shares became eligible for trading on Wednesday, with 500 million to 520 million underwater, as Uber held various financing rounds since 2015 at a share price significantly higher than Wednesday’s close of nearly $27.

Meanwhile, the company reported earnings earlier in the week and while Uber beat estimates for quarterly revenue and loss, and improved its annual loss forecast and pledged to turn a profit by 2021, the stock fell after the company also reported lackluster gains in bookings and monthly active users, the two metrics most closely followed by the Street.

CEO Dara Khosrowshahi said on a conference call with reporters that the company will spend less aggressively and turn an adjusted profit in 2021, which echoed a commitment from its smaller rival, Lyft Inc., which said it would be profitable by the fourth quarter of 2021, a year earlier than previously expected, but in both cases this requires financial engineering and I’ve never understood how companies got away with it.

Khosrowshahi has sliced roughly 1,200 position from sales and marketing, engineering and product.

--Walt Disney Co.’s hit movies, led by “The Lion King” and “Toy Story 4,” once again helped drive strong quarterly profits, but the focus is on the launch of Disney+, the company’s streaming rival to Netflix Inc.

Disney CEO Bob Iger said on a conference call with analysts Thursday, “We’re making a huge statement about the future of media and entertainment.”

Disney’s theatrical-movie division posted a 52% rise in revenue and 79% jump in operating income in the three months ended Sept. 28.

Disney’s profit slumped by more than half to $1.05 billion, owing to a sharp rise in costs stemming in part from the Disney+ production costs.  But its shares rose sharply as earnings beat expectations.

It’s clear, though, where Iger is spending the bulk of his time. Disney’s film and television divisions are producing hundreds of hours of programming not only for the streaming service but also a 19-month-old ESPN streaming service and Hulu, a third service that Disney now controls after its $71.3 billion acquisition of the 21st Century Fox entertainment assets.

The emphasis on streaming is for good reason, as it was back in 2015 that Iger first acknowledged subscriber losses at ESPN, the company’s most profitable division. The long-term outlook at the cable sports network wasn’t good and Disney shares at the time took a hit.

But now Disney is determined to be in every home in America with a trio of streaming services designed to appeal to more than its core family demographic.

Hulu will become the service where Disney sends its more mature shows and movies, including product from Fox’s FX network.

--SeaWorld Entertainment Inc. announced it was naming its fourth new CEO in the last five years; hotel and vacation ownership industry executive Sergio Rivera.  Rivera had been a top executive at Starwood Hotels & Resorts.  SeaWorld’s shares jumped nearly 11% on the news, despite the company reporting disappointing third quarter results, which included a big chunk of SeaWorld’s crucial summer season.

The company said visitation dropped 2.6%, with 221,000 fewer visitors coming to its 12 parks during the July-through-September quarter than in the same quarter last year. Also down was overall revenue, which dropped 2% to $473.7 million.  Profit rose 2.1% to $98 million.

SeaWorld blamed the drop in attendance on bad weather, plus a calendar shift that resulted in one fewer peak summer weekend day than a year earlier.

--Xerox Holdings Corp. is looking at taking over personal-computer and printer maker HP Inc., which is an out of nowhere move uniting two fading stars in the tech sector.  HP is what remains after Hewlett-Packard Co. split off Hewlett Packard Enterprise Co., which sells servers, data-storage gear and related services to corporate clients, in 2015.

Xerox is selling stakes in joint ventures with Fujifilm Holdings Corp., as part of a dismissal of a lawsuit filed against Xerox by the Japanese tech company.  Discussions on the HP acquisition were at the board level, according to the Wall Street Journal’s Cara Lombardo.

Xerox primarily makes large printers and copy machines these days, while HP is focused on smaller printers and printing supplies, as well as being one of the largest PC makers in the world.

Well, a few days later we learned Xerox had indeed made an offer for HP that HP is likely to reject, last I saw.

--Juul Labs, the nation’s largest seller of e-cigarettes, said on Thursday that it would stop selling mint-flavored pods, which have become especially popular among teenagers.

The move precedes an anticipated ban by the Food and Drug Administration on flavored e-cigs that would include mint as well as menthol.  Intense lobbying by the vaping and tobacco industries against a menthol ban had heightened speculation that menthol would be exempt from any prohibition against flavors.

Juul said it would continue to sell menthol pods and its two tobacco products, until otherwise advised.

The company’s decision also followed the release earlier this week of two major surveys showing another year-over-year spike in teenage vaping of e-cigarettes, and the rising popularity of mint-flavored nicotine pods as other youth-friendly flavors were pulled from retail shelves.

The surveys showed about 27 percent of high school students reported they had vaped e-cigarettes recently, while hospitals and doctors have been startled in recent months by an alarming outbreak of lung injuries largely related to vaping products containing THC, the high-inducing ingredient in marijuana.

A study released Tuesday by the National Institute on Drug Abuse found that teenagers surveyed in 2019 preferred mint and mango Juul flavors.

--It’s hard keeping up with the Sears store closure announcements, with the owner of the struggling retailer saying Thursday it will shut 96 more Sears or Kmart locations by February.

Following the closures, there will be just 182 Sears or Kmart stores in operation, down from 425 as of February.  Just five years ago, the company had nearly 2,000 locations.

The latest closures are in addition to roughly 100 stores reported last month that were in the process of closing by year-end and are on top of 26 stores that closed this fall.

--The key Southern California housing market showed signs of life in September, according to data from CoreLogic, with the six-county region’s median price hitting $533,000, a 2.5% rise from September 2018.  The number of new and resale houses and condos that sold climbed 10.4%.

Affordability was a major cause of a sustained slowdown across the southland, but now real estate agents say falling mortgage rates have more and more people in the market.

But the September 2018 sales figure was the lowest for that month in at least seven years so we were coming off a low base.

In Orange County, the median fell 2.3% to $723,000, while sales climbed 13.1%.  In Los Angeles County, the median rose 3.9% to $618,000, while sales climbed 7.3%.

--Canada’s economy lost a net 1,800 jobs in October, Statistics Canada said on Friday. The jobless rate held at 5.5%.

--Berkshire Hathaway Inc.’s cash position hit a record in the third quarter, $128 billion as of Sept. 30, the company said Saturday, up from $122 billion at the end of the second quarter.

89-year-old Warren Buffett has complained in recent years he can’t find any large companies at attractive acquisition targets, that would then be able to move the needle for Berkshire.

In his 2018 letter to shareholders, Buffett wrote: “Prices are sky-high for businesses possessing decent long-term prospects.”

--The number of CEOs who have left their positions jumped 14% month-on-month in October, including six who left after allegations of professional misconduct, putting the year-to-date figure at a record high, according to outplacement firm Challenger, Gray & Christmas.

The figure rose to 172 in October compared with 151 exits announced in September and 149 in the same month of 2018, the company said Wednesday.

In the 10 months, 1,332 CEOs have left their jobs, up 13% from the same January-to-October period of 2018, the highest since Challenger began tracking the data in 2002.

“After a decade of expansion, companies that started years ago are finding themselves in a phase where new leadership is needed,” Challenger said.  “Other companies are adapting to changing technologies or finding new leadership based on current economic conditions and forecasts for the coming year.”

Foreign Affairs

Iran: As alluded to above, Iran injected uranium gas into centrifuges at its underground Fordow (aka Fordo) nuclear complex early Thursday, taking its most significant step away from its 2015 nuclear deal with world powers. Fordow thus moves from a research plant to an active nuclear site.

Tehran also acknowledged blocking an official from the International Atomic Energy Agency from visiting its nuclear site at Natanz last week, the first known case of a United Nations inspector being blocked amid heightened tensions over its atomic program.

These latest steps put additional pressure on Europe to offer Iran a way to sell its crude oil abroad despite the U.S. sanctions imposed on the country since President Donald Trump unilaterally withdrew America from the nuclear deal over a year ago.

The centrifuges ultimately will begin enriching uranium up to 4.5%, which is just beyond the limits of the nuclear deal, but nowhere near weapons-grade levels of 90%.

Fordow’s 1,044 centrifuges previously spun without uranium gas for enrichment under the deal, which saw Iran limit its uranium enrichment in exchange for the lifting of economic sanctions.  The deal had called for Fordow to become “a nuclear, physics and technology center.”

Secretary of State Mike Pompeo said on Thursday that Iran’s “nuclear escalations” raise concerns that should move all countries to increase pressure on Tehran.

“Iran’s expansion of proliferation-sensitive activities raises concerns that Iran is positioning itself to have the option of a rapid nuclear breakout,” Pompeo said in a statement.

“It is now time for all nations to reject this regime’s nuclear extortion and take serious steps to increase pressure.  Iran’s continued and numerous nuclear provocations demand such action.”

Even Moscow described Iran’s actions this week as “extremely alarming,” while blaming the U.S. decision to pull out of the pact.

Speaking from Beijing, French President Emmanuel Macron called Iran’s latest move “grave,” saying it explicitly signaled Iran’s intent for the first time to leave the deal.

A central aim of the original agreement was to extend the time the Islamic Republic would need to assemble a nuclear weapon, if it chose to do so (“breakout”), to a year from about 2-3 months.

Editorial / Wall Street Journal

“President Hassan Rouhani has announced that Iran will violate restrictions on the Fordow underground nuclear facility starting Wednesday.  President Trump’s detractors will say this proves that leaving the 2015 nuclear deal was a mistake [Ed. it was!], but this is one more sign of the defects in the deal that Europe should be helping the U.S. to address.

“In a speech Tuesday the Iranian leader said the regime would begin injecting gas into the 1,044 centrifuges at Fordow, an open violation of the Joint Comprehensive Plan of Action. This follows news on Monday that Iran is running new and advanced centrifuges, which shortens its path to a nuclear weapon.  The regime already has been openly violating the deal for months by enriching uranium at higher concentrations and storing more of it.

“ ‘When they uphold their commitments we will cut off the gas,’ said Mr. Rouhani.  ‘So it is possible to reverse this step.’ The Iranian strategy has been to escalate its violations of the deal step by step, hoping to intimidate Mr. Trump and divide the U.S. from Europe.

“The strategy worked for a time, but then Iran attacked Saudi oil fields. German, French and British leaders responded in a statement that Iran should ‘accept negotiation on a long-term framework for its nuclear programme as well as on issues related to regional security, including its missiles programme and other means of delivery.’

“It was a fine statement – and no small feat that Europe called for a new deal – but now Angela Merkel, Emmanuel Macron and Boris Johnson have to do more than talk.... Nothing would focus minds in Tehran more than Berlin, Paris, London and Washington coming together to reimpose the so-called snap-back sanctions that were supposed to be the response to Iranian nuclear escalation.

“The U.S. wants a revised deal to limit Iranian ballistic missile development, allow unlimited inspections of suspect nuclear sites, and remove the sunset clauses that allow restrictions on Iran to expire. Recall that Barack Obama initially wanted the Fordow facility closed in the deal but was unable to get the Iranians to agree to anything beyond the limited restrictions they are now reversing.  President Trump’s pressure campaign is meant to bring the regime back to the negotiating table with more leverage than Mr. Obama had.

“One risk is that the mercurial Mr. Trump loses patience with his own strategy and tries to cut a deal favorable to Tehran ahead of his re-election campaign. That’s why you can expect more Iranian threats to break out of the deal and perhaps more attacks on U.S. allies in the Middle East. The best response is for Europe and the U.S. to reforge a common front toward Iran that shows it will have to return to the negotiating table to have any hope of sanctions being eased.”

President Trump won’t be part of that.  In fact the president hasn’t tweeted a thing on the matter all week, curiously.  His policy has failed.

Syria: Turkish President Erdogan said on Thursday the United States was not fulfilling its pledge to remove a Kurdish militia from a Syrian border region and he will raise the issue when he meets President Donald Trump next week.

Erdogan is set to discuss implementation of the agreement with Trump in Washington on Nov. 13 after confirming that the visit would go ahead following a phone call between the leaders overnight.

“While we hold these talks, those who promised us that the YPG...would withdraw from here within 120 hours have not achieved this,” he told a news conference, referring to the deadline set in last month’s agreement.

After the deal with Washington, Turkey reached an agreement with Russia under which the YPG was to withdraw to a depth of 30km (19 miles) along the entirety of the northeastern Syrian border with Turkey.

But Erdogan said this deal had also not been fulfilled, with YPG fighters still in the border strip, adding that he would be talking to Putin about this.

Later Friday, Erdogan was quoted as saying Turkey will not leave Syria until other countries pull out, while the cross-border offensive against the Kurds continues until every one of them has left the region.

“We will not let up until every last terrorist leaves the region,” Erdogan said.  “We will not leave here until the other countries get out,” according to broadcaster NTV.

Erdogan said clashes in Syria were continuing, with many killed on both sides, as he put it.  We aren’t receiving as many reports of this simply because the press has largely left the area for other stories.

But the Syrian Observatory for Human Rights did report that a car bomb killed 13 last Saturday in a market of a Syrian border town that Turkish-backed forces seized last month, prompting Ankara to blame the YPG. There was no statement from the Kurds.

And a Russian airstrike on a village south of the Idlib region in northwestern Syria killed six civilians, according to the Observatory.

Iraq: Anti-government protests continued across Iraq this week, with security forces killing four protesters in central Baghdad on Thursday. In southern Iraq, protesters blocked the entrance to the port of Umm Qasr, a key point for oil export, as the Iraqi government has failed to find a way out of the biggest and most complicated challenge to its rule in years.

More than 260 people have been killed in the unrest since it first broke out on Oct. 1 over a lack of jobs and an infrastructure wrecked by decades of conflict, sanctions and corruption.  Protesters, mostly unemployed youth, blame a political elite that has ruled Iraq since the toppling of dictator Saddam Hussein in a 2003 U.S.-led invasion, and demand a complete overhaul of the political system.

The government has been enacting internet outages to try to stem the unrest, but they have hit the private sector as well.

Today, Iraq’s top Shiite scholar said that it was up to the security forces to make sure protests do not descend into further violence, and urged the government to respond to demonstrators’ demands as soon as possible.

“The biggest responsibility is on the security forces,” a representative of Grand Ayatollah Ali al-Sistani said in a sermon after Friday prayer in Karbala.

Sistani also warned against exploitation of unrest in Iraq by “internal and external” forces which seek to cause instability in the country.

Mali: Last week I reported on a series of ISIS attacks in Mozambique that killed at least seven Russian mercenaries, showing Islamic State’s vast reach.

Then this week ISIS claimed responsibility for an attack in northeastern Mali that killed at least 53 soldiers at an army post.  [Mali is about 2,500 miles away from Mozambique.]

Mali’s neighbor to the south, Burkina Faso, was then the scene of an Islamist attack on a mining convoy that killed at least 37 and wounded 60.

Five buses carrying staff of Canadian firm Semafo were ambushed on Wednesday, with a military escort vehicle reportedly struck by an explosive device before gunmen opened fire.  It was the third deadliest attack on Semafo staff in 15 months.

The West African nation has been wracked by an Islamist insurgency that has killed hundreds in recent years, the violence spilling over from Mali.

China / Hong Kong: A student at a Hong Kong university who fell during protests last weekend died early Friday morning from his injuries, marking the first student death during the anti-government demonstrations that have roiled the city, promising further unrest this weekend.  It already started Friday as students at the university ransacked the school and stormed the president’s residence.

I support the students, and demonstrations, 100 percent, but the increasing violence of the last 4-6 weeks is hugely counterproductive, in my humble opinion.  The Hong Kong economy is tanking, for one, which benefits no one.

The vast majority of the hundreds of thousands that throng various parts of the city regularly are peaceful, and this is what the world needs to see...not petrol bombs in the metro system, and vandalizing banks and stores.  Last weekend’s protests in a shopping mall turned bloody, with a councilor having part of his ear bitten off.

Meanwhile, the Chinese Communist Party said it would “perfect” the system for choosing the leader of Hong Kong, while denouncing what critics see as Chinese meddling in the former British colony.

The party said in a statement it would support its “special administrative region” of Hong Kong, which was handed back to China in 1997, and not tolerate any “separatist behavior” either there or in neighboring Macau, which returned to Chinese rule in 1999.

At the same time, Hong Kong leader Carrie Lam held a meeting with President Xi Jinping in Shanghai.

“He expressed care and concern about Hong Kong, especially given the social disturbances that we have seen in the last five months and he expressed support for the various action taken by Hong Kong Special Administrative Region government,” she told reporters.

Referring to the foundation of the 1997 deal under which Hong Kong reverted to Chinese rule, Lam said: “...In strict accordance with the principle of ‘one country, two systems’ (we will continue) upholding the rule of law and trying to put an end to the violence.”

Xi said he had a high degree of confidence in Lam and fully recognizes the work by her and her team, the Xinhua News Agency reported.

But China’s Vice Premier Han Zheng said on Wednesday, the day after Lam’s meeting with Xi, that Beijing supports more aggressive measures to tackle the unrest in Hong Kong.

North Korea: Sue Mi Terry / Wall Street Journal...Ms. Terry a former CIA analyst on Korea who worked on Korea policy at the National Security Council in the Bush and Obama administrations.

“For Halloween, Kim Jong Un gave Donald Trump a trick, not a treat: North Korea fired two short-range missiles toward the Sea of Japan.  It was North Korea’s 13th weapons test this year – and the first since the Trump administration’s latest attempt to restart negotiations with North Korea quietly failed a few weeks ago....The North Korean delegates stalked out, and Pyongyang subsequently said they wouldn’t resume the ‘sickening’ negotiations with the U.S.

“This might seem surprising since Mr. Trump has held three meetings with the North Korean dictator and has repeatedly expressed confidence that North Korea is eager to denuclearize.  After his first summit with Mr. Kim, in Singapore in June 2018, Mr. Trump tweeted, ‘There is no longer a Nuclear Threat from North Korea.’

“In reality, North Korea poses a bigger threat than ever.  It has continued expanding its nuclear and missile programs, and it has been testing short-range missiles that place U.S. troops in South Korea and Japan – along with those countries’ civilian populations – in far greater peril. How did Mr. Trump’s high-profile diplomacy with North Korea go so wrong?

“The president committed a cardinal error of deal-making: He misjudged the person across the table from him.  He thought that Mr. Kim had come to the negotiating table primarily because of the U.S. sanctions policy of ‘maximum pressure’ and his own rhetoric warning of nuclear ‘fire and fury.’  Mr. Trump assumed that Mr. Kim was negotiating from a position of weakness that left him ready to make major concessions.

“In Mr. Kim’s mind, however, he was meeting with the U.S. from a position of strength. His nuclear and missile technology had reached the point where he could probably hit the American mainland with a nuclear-tipped intercontinental ballistic missile. He no longer needed to stage provocative tests of his technology and thought he was now in a position to gain international acceptance for North Korea as a nuclear-weapons power.  He never had any intention of denuclearizing.

“In part because he pays little attention to his intelligence briefings, Mr. Trump didn’t understand his adversary’s agenda or mind-set.  He thought he could entice Mr. Kim with the prospect of economic development: In Singapore, the president even offered a slick presentation to show the glorious future that could lie ahead for North Korea (complete with seaside condos) if only it denuclearized....

“Mr. Trump has emboldened Mr. Kim into thinking that he can achieve a significant lifting of U.S. sanctions in return for a small, symbolic step, such as announcing the shutdown of his Yongbyon nuclear facility – an important facility but only one of many in the North. Mr. Kim has shown no willingness to provide a complete inventory of his nuclear program or to allow international inspectors into his country – both prerequisites to verifying any agreement.

“Mr. Trump’s almost certain impeachment in the House will only raise Mr. Km’s confidence: He understands how politically imperative it will be for Mr. Trump to achieve a foreign policy ‘win’ to distract from his deepening political woes....

“The North Koreans’ plan is to stall: show up, talk, break off talks; show up, talk, break off talks; and keep repeating as long as necessary to wait out Mr. Trump.  And while they play this game, they are improving and expanding their nuclear and missile programs.

“Mr. Trump’s incoherent approach to North Korea has left the U.S. with few good options.  Unless he is prepared to make major concessions, the North will resume major provocations in the new year.  Mr. Trump claims to be a master deal maker, but he certainly hasn’t shown it in his relationship with Kim Jong Un.”

Today, at a conference in Moscow, North Korea’s head of the foreign ministry’s North American department, Jo Chol Su, said the window of opportunity for progress in dialogue with the United States was getting smaller, adding that Pyongyang expects reciprocal steps from Washington by the end of the year.

“We’ve given the United States quite a lot of time and we’re waiting for an answer by the end of this year, of some kind of result. ...But I must say that the window of opportunity closes every day.”

Jo also said that sanctions imposed on North Korea were “an unacceptable insult” and must be lifted.

Mexico: The massacre of the six children and three women, all members of an American fundamentalist Mormon community living in Mexico was beyond sickening; victims of a drug war in the border state of Sonora.

But the story is complicated, given the family’s past experiences in the area and other encounters with the drug cartels.  Coming closely on the heels of two other prominent episodes of violence, the ambush further horrified a nation reeling from a record-high number of murders.  President Andres Manuel Lopez Obrador is struggling to fashion a coherent response.

Editorial / Wall Street Journal

“The slaughter Monday of three Mormon women and six children, all Americans citizens who were longtime residents of Mexico, brings home a cruel reality of America’s neighbor to the south.  Drug gangs control huge swathes of the country, and the government in Mexico City is too often overwhelmed by the criminal firepower and money....

“ ‘The hard truth is that Mexico is dangerously close to being a failed state,’ Nebraska Sen. Ben Sasse said Tuesday and, despite the country’s economic advances in recent decades, he’s not far off about the security failures. Especially along drug trafficking routes, cartels essentially are the state....

“Americans should also acknowledge the role their drug habit plays in fueling this wanton violence. (A) Council on Foreign Relations report says that Americans spent almost $150 billion in 2016 on cocaine, heroin, meth and marijuana, and synthetic opioids like fentanyl are compounding the problem.  Most of this comes across the Mexican border, and the money from the drug sales allows the cartels to bribe law enforcement in both countries.

“We are a long way from Nancy Reagan’s campaign of ‘just say no’ against drugs.  Now our elite and entertainment culture sends a message that drug use is a victim-less habit, even glamorous. There’s more social stigma in the U.S. against cigarettes than against cocaine or marijuana.  Young people get the message, and rising drug demand feeds the cartels.

“Drug enforcement against the supply of drugs amid such demand is a losing battle, but that doesn’t mean the cartels can be allowed to destabilize a government next door or control territory like a drug caliphate. The most basic duty of government is to protect its citizens from lawlessness, which means not allowing the massacre of women and children on a highway on their way to the airport....

“(If) Mexico can’t control its territory, the U.S. will have to do more to protect Americans in both countries from the cartels. The Drug Enforcement Administration should be able to find out the identities and locations of those who ordered or carried out Monday’s murders, and ensuring their demise would be a signal that U.S. justice has a long reach.  A U.S. military operation can’t be ruled out.”

India: Toxic air was choking New Delhi this week, the poisonous smog up to 10 times worse than the upper limits of what’s considered healthy.  Schools were closed, cars forced off the road, and planes prohibited from landing at the airport.  It was the worst crisis in more than three years there.

Random Musings

--Presidential tracking polls....

Gallup: 41% approval of President Trump’s job performance, 57% disapproval; 89% of Republicans approve, 34% of independents (Oct. 14-31).  To me the percentage of independents needs to be about 38% for Trump.  It was 39% in this survey back in April.
Rasmussen: 49% approve, 50% disapprove (an improvement of six points the last two weeks).

A Washington Post/ABC News poll has President Trump with a 39% job approval among registered voters nationally, 58% disapprove.  As opposed to the battleground states poll that follows, Joe Biden leads Trump 56% to 39%, Elizabeth Warren 55-40, and Bernie Sanders leads by 55-41.  But you can throw these head-to-head national figures out.

More important, in this poll only 31% say Trump is honest and trustworthy, tying the lowest result of his presidency.

A Monmouth University poll this week gave Trump a 43% approval rating, 51% disapprove.  [44% said Trump “should be impeached and compelled to leave the Presidency,” while 51% responded “no”.]

A national Fox News poll of registered voters had Biden defeating Trump 51-39, including 33-23 among independents, but 20% of them preferred “other” to him or Trump and 16% said they didn’t know who they would pick.  Elizabeth Warren beat Trump by a narrower 46-41 margin.

--In a New York Times and Siena College survey of six battleground states that Trump won by close margins in 2016 (Michigan, Pennsylvania, Wisconsin, Florida, Arizona and North Carolina), the president trails Joe Biden by an average of just two points among registered voters, which is within the margin of error.

Trump leads Elizabeth Warren by two points, the same margin as his win over Hillary Clinton in these states three years ago.

The poll showed Bernie Sanders deadlocked with the president among registered voters.

So, yes, I, like the others, tout the national polls (for me as much for the record as anything else), but the focus really is on the these six, particularly the three you can specifically point to as giving Trump the electoral college majority in 2016...Michigan, Pennsylvania and Michigan.

But in terms of the Democratic nomination, it’s about Iowa, New Hampshire, Nevada and South Carolina, after which there should be no more than five candidates left in the race.

So in Iowa, a new Quinnipiac University poll released Wednesday had Elizabeth Warren receiving 20% support among likely Democratic caucusgoers, with Pete Buttigieg getting 19%, Bernie Sanders 17%, and Joe Biden back at 15%.

Then you have Amy Klobuchar 5%, Kamala Harris 4%, and Tom Steyer, Tulsi Gabbard and Andrew Yang at 3% each.

--A Wall Street Journal/NBC News national poll of Democratic primary voters showed Biden with 27%, Warren 23%, Sanders 19% and Buttigieg 6%.

--Steven Rattner / New York Times

Senator Elizabeth Warren has unveiled her vision for how to pay for ‘Medicare for all’ – a daunting mountain of new taxes and fees.

“Thanks for providing us, Ms. Warren, with yet more evidence that a Warren presidency is a terrifying prospect, one brought closer by your surge in the polls.

“Left to her own devices, she would extend the reach and weight of the federal government far further into the economy than anything even President Franklin Roosevelt imagined, effectively abandoning the limited-government model that has mostly served us well.

“Ms. Warren may call herself a capitalist, but her panoply of minutely detailed plans suggests otherwise. She would turn America’s uniquely successful public-private relationship into a dirigiste, European-style system.  If you want to live in France (economically), Elizabeth Warren should be your candidate.

“As a lifelong Democrat, I freely acknowledge that substantial reforms are much needed, both to achieve a more equitable distribution of income and wealth and to make good on Donald Trump’s failed pledge to raise the economy’s growth rate.

“But the Warren way would be, quite simply, the wrong way.

“To date, public attention has understandably focused on Ms. Warren’s support for Medicare for all as well as her long list of other new social programs like the Green New Deal, free college tuition, universal child care, student debt forgiveness and on and on....

“Less discussed is her intention to impose vast new regulatory burdens and to revamp the way business functions, which could have an even more negative effect on our economy.  Many of America’s global champions, like banks and tech giants, would be dismembered.  Private equity, which plays a useful role in driving business efficiency, would be effectively eliminated. Shale fracking would be banned, which would send oil and natural gas prices soaring and cost millions of Americans their jobs. And on and on.

“Most significantly, the system of state chartering of corporations would, for businesses with more than $1 billion in revenues, become a federal function.  Companies could lose their charters if they failed to adhere to an often vague set of principles, including considering in their decision-making the interests of employees, customers and their communities.

“That would give a President Warren enormous power to punish companies (including putting them out of business) for not adhering to her subjective vision of corporate responsibility....

“ ‘I have a plan for that’ has become Ms. Warren’s signature campaign rallying cry. That may be, but too many of them would damage the very economy she is trying to help.”

Editorial / Wall Street Journal

“Now we know why Elizabeth Warren took so long to release the financing details of her Medicare-for-All plan. The 20 pages of explanation she released Friday reveal that she is counting on ideas for cost-savings and new revenue that are a fiscal and health-care fantasy.

“You certainly can’t criticize the new Iowa Democratic caucus front-runner for lack of ambition. Despite criticism from fellow Democrats, she is sticking to her plan for a government takeover of American health care, including the elimination of private insurance that 170 million or so Americans now have.  She continues to claim that this will cost ‘not one penny in middle-class tax increases.’  She walks on water too.

“Start with the overall fiscal math, which by itself is staggering. She concedes that her plan will cost only ‘slightly’ less than the $52 trillion that the U.S. is expected to spend on health care in the next 10 years. She deducts from that what the feds now spend on Medicare and Medicaid, plus $6 trillion that the states contribute to Medicaid, the state-federal children’s health program and government worker benefits.

“That leaves $30 trillion to finance, but Senator Warren waves her wand and says the bill will really be $20.5 trillion.  She makes the rest vanish by positing magical savings from things like ‘comprehensive payment reform.’  One of her ideas is the hardy perennial known as ‘bundled payments,’ which have failed to reduce costs as promised by Obama Care.

“She says hospitals would be reimbursed at an average of 110% of current Medicare rates, which is supposed to address the criticism that Medicare currently under-compensates patient care. But hospitals now rely on private insurance payments to stay in business, and 110% of what Medicare now pays will hardly be enough to compensate for the loss of that private money.

“Amusingly, she also proposes savings from ‘restoring health care competition.’ Because everyone will have good insurance, she says, ‘providers will have to compete on better care and reduced wait times in order to attract more patients.’  But if government is controlling all prices and reimbursements, what incentive is there to compete at all?”

The Journal piece goes on and on. 

“She’d also raise the corporate tax rate back to 35% from 21% and extend it to income earned worldwide with no deferrals for foreign taxes.  She claims this would generate $1.75 trillion over 10 years, which is fanciful since it would be an immediate incentive for companies to relocate overseas.

“She also doubles down on her plans to soak the rich, assuming there are any left after her other tax proposals....

“Ms. Warren has already proposed a 2% wealth tax on assets of more than $50 million, which is supposed to pay for her education, child-care and college-debt forgiveness plans.  She now wants to add a 6% annual tax on Americans with more than $1 billion in assets that she says would raise $3 trillion.  Most economists, including Democrat Larry Summers, believe a wealth tax would raise far less due to tax avoidance, which is why so many European countries have repealed their wealth taxes.

“But, no worries, Ms. Warren would hire a new army of tax collectors to close what she calls the 15% ‘tax gap’ between what people owe and what they pay. The Senator says this will be worth $2.3 trillion in additional revenue. This is another old Congressional standby that never yields what is predicted.

“Oh, and she’d save $800 billion by cutting defense spending for Overseas Contingency Operations.  Senator Warren calls this a ‘slush fund,’ but it’s really the account to finance current overseas operations as well as readiness. This would return us to the Obama years of slashing defense even as global threats from regional powers and new technology are increasing. This is a hyper-fantasy....

“Ms. Warren is trying to sell an illusion and make it sound like political courage. Donald Trump’s boast that Mexico would pay for the wall was more believable.”

--Meanwhile, Michael Bloomberg has decided to give it another go after all, or so it seems today, just months after the three-term New York City mayor took his name out of consideration.  Bloomberg supporters told the New York press that he’ll be making a decision quickly.

Bloomberg believes “Biden is weak and Sanders and Warren can’t win,” a source told the New York Daily News.

An insider told the paper, “Trump will get re-elected if Elizabeth Warren is the nominee. That’s not something any Democrat would want.  [Therefore] Mike was encouraged to take another look and reassess the race.”

Certainly Bloomberg has the resources to run a national campaign and he could make a splash, but as I said the other day, he’s just not electable, as much as I’d personally like to see him on the ballot in November 2020.

--Former attorney general Jeff Sessions announced he is running for his old Senate seat in Alabama, setting the stage for a potentially contentious Republican primary with President Trump at the center.

Sessions was forced out in dramatic fashion by the president in November 2018, but he enters the race with deep institutional ties in the state and elsewhere; holding his Senate seat for two decades before becoming Trump’s AG.

So will Trump support Sessions or weigh in against him in favor of other Republicans.  Already, Sessions is kissing up to him.  Slobbering, really.

--Democrats in Virginia gained majority control of the statehouse for the first time in over two decades on Tuesday, flipping both chambers – state Senate and House of Delegates – which had been held by a slim Republican majority going into Election Day.

What about the big picture?

Editorial / Wall Street Journal

“Democrats watched to their dismay as the political reaction to Barack Obama’s polarizing governance cost them the House, most governorships and state legislatures, and finally the Senate and the White House. Republicans are now experiencing the reverse effect under President Trump, as they learned again Tuesday amid more Democratic victories in off-year elections.

“Democrats flipped the state House of Delegates and Senate in Virginia, which means they will control the entire state government for the first time in 25 years. They also appear to have won the governorship in Kentucky...and they came closer than they should have to winning the governorship in conservative Mississippi (losing by 5.6% compared to 34% in 2015).

[Trump won Mississippi by 18 points in 2016, and Kentucky by 30 points.]

“Worse than the defeats for Republicans in the voting trend, which continued the suburban losses of 2017 and 2018 that cost them control of the U.S. House.  In Virginia they could in the past overcome their deficits near Washington, D.C., with gains downstate.  But now their losses extend to the suburbs around Richmond and the state’s southeast.

“Kentucky Governor Matt Bevin was crushed in the Louisville (99,000 votes) and Lexington (36,000) metro areas.  Mr. Bevin lost the Lexington area by only 10,000 in 2015 and around Louisville by 38,000. But turnout statewide this year was up about 50% from 2015, as Democrats showed again that they are highly motivated in the Trump era.

“This turnout trend has now continued for three Novembers, and Republicans who try to explain it away are fooling themselves.  The GOP under Mr. Trump is losing more college-educated suburban voters, especially women, than it is gaining rural voters or working-class former Democrats....

“Mr. Trump won in 2016 on an inside straight in the Electoral College, and he has never had a job approval rating above 50% despite a good economy.  His divisive rhetoric on immigration and so much more may thrill his base but it alienates others.  His approval rating with white college-educated women in particular is dreadful – 34% in the latest WSJ-NBC poll.

“The fair judgment a year from Election Day in 2020 is that Mr. Trump is highly vulnerable in his bid for a second term.  He could benefit if the economy rebounds from its recent 2% rate of growth, and perhaps Democrats bent on impeachment will overreach. But Mr. Trump may need Democrats to nominate an opponent whose agenda is far enough to the left to scare suburban voters who are tired of the daily melodrama of the Trump Presidency.

“Senate Republicans know this, and they know their majority is also at risk. They can’t win merely by turning out the Trump base. The GOP needs a strategy and agenda to regain support in the suburbs or they will lose the House, the White House and the Senate in 2020.”

--Here in New Jersey the Democrats went into the election holding 54 of the 80 seats in the Assembly – their largest advantage since 1978 – and were aiming to add more, bolstered by ever-growing voter registration numbers and a backlash against President Trump, best exemplified in the 2018 House elections, where the two districts I personally straddle went Democrat for the first time in my memory.

But the Republicans actually picked up a few seats because the Democratic governor, Phil Murphy, is despised himself.  The only guy I personally cared about, Republican Assembly Minority Leader Jon Bramnick, who I’ve met many times and tell him how much I want him to be my governor, faced a tough fight against both Democrats and some independent conservatives who entered the race specifically to siphon off Bramnick votes.  The reason? Bramnick is not a Trump supporter, and the independents’ were.

So Bramnick won in a close race.  Thank god.  But you see how complicated it is when it comes to the president.

--It’s always big news when there is a change at the top of the NYPD and Police Commissioner James O’Neill is stepping down after three years leading the department, O’Neill taking a job in the private sector (Visa). Various reports have O’Neill leaving after months of frustration stemming from blurred lines between City Hall and Police Headquarters.

O’Neill has seen crime rates continue to fall under his watch*, but he faced increasing criticism from within the ranks, especially after he fired Officer Daniel Pantaleo, who was accused of using an inappropriate and unauthorized chokehold in the death of Eric Garner.

*Though this week we learned there were 29 murders in October, an increase over the 18 recorded during the same month in 2018.  Murders are now up 3% for the year.

Ed Mullins, the President of the city’s Sergeants Benevolent Association, called O’Neill’s resignation “long overdue.”

“I believe he will go down as the worst Police Commissioner in NYPD history,” Mullins said, adding in a radio interview that morale is at an all-time low.

Chief of Detectives Dermot Shea, a 28-year NYPD veteran, will take over as commissioner.

--I was reading a piece by Bojan Pancevski of the Wall Street Journal on Saturday’s 30th anniversary of the fall of the Berlin Wall and an unveiling of a statue of Ronald Reagan by Sec. of State Pompeo the day before.

But the statue is being placed on the U.S. Embassy’s terrace overlooking the spot where the speech took place, not in a public setting, as the Ronald Reagan Presidential Foundation, which commissioned the artwork, wanted, as well as former and current U.S. diplomats.

It’s all about a split among Berlin politicians, some of whom are from the far left that fiercely opposed Reagan’s “unapologetic devotion to capitalism and his deployment on German soil of nuclear-capable missiles. His visits to Berlin were accompanies by violent riots from far-left protesters.

“While West Germany was a close ally of the U.S. then, relations have frayed since President Trump, a frequent and blistering critic of German Chancellor Angela Merkel, came to power.”  [Bojan Pancevski]

I went to Berlin and Cologne in December 2007, to see the Christmas markets, first and foremost, after which I told you what a huge target they were for terrorism (which, sadly, we’ve seen more than once in the years after I first wrote this), but I also toured Berlin extensively and got a touristy photo of myself at the Wall.

The thing is I know I wrote at the time from there that so little of the Wall remained, which was sad, and a mistake for future generations.

But, it was also totally understandable.  At the time the Wall came down, the people, as you saw live on television, couldn’t wait to tear it down and for good reason.  It’s just that it’s important for one’s history to preserve the past.  It’s why some of us have long supported preserving as much of our major Civil War battlefields as possible.

Yet as we’ve seen in the ongoing debate over monuments to Civil War generals and leaders, it’s contentious.  It’s the same thing now in Berlin.

A statue of Ronald Reagan isn’t as important as remembering what he was fighting for.  Preserving more of the Wall would have made this an easier task for future generations to understand.

--I noted last time how pathetic it was for President Trump to post a tricked-up photo of the hero dog, Conan, from the operation to take out Baghdadi, especially given he hates dogs, so I can’t help but note Kathleen Parker’s thoughts from her Washington Post op-ed perch.

“When you’re on your last leg, when your colleagues have turned tail, when the House of Representatives passes the rules under which you will almost certainly be impeached – you have to be creative.

“Thus, it came to pass that Donald Trump, the first president in 120 years to not have a dog, created a national hero in the canine Conan, who cornered Islamic State leader Abu Bakr al-Baghdadi, whereupon the terrorist kingpin committed suicide.

“Conan is, no doubt, a hero.  Indeed, this particular pooch is coming to the White House soon for a hero’s welcome because that’s how barking mad this president has become.  Not that I would deny Conan his due – perhaps a lifetime supply of his favorite treats? But an invitation to the White House?

“Don’t get me wrong. I love dogs. Full stop.  Anyone who knows me wants to come back as my dog.  I do, too. But this isn’t really about the dog. As always, it’s about Trump.

“Question: What do we know about Trump?  He craves attention.  What will he do to get attention?  Anything.  When things start going south for Trump, what does he routinely do?  Create a distraction.  Even roll out the red carpet for a dog?  Yes!

“...Another question: What do Americans love more than baseball?  Someone surely whispered in his ear: Dogs, sir. Americans love dogs.  If Trump wants to be loved, he must love dogs, too.....

“If this were really about Conan, I’d be setting the DVR, but we know otherwise.  The honoring of Conan is the desperate measure of a man who has seen the end of his own tunnel – and there’s no pretty light.  Nearly lost in all the canine clutter is the real American hero whose face was displaced by Conan’s – Vietnam War medic James McCloughan.  He wasn’t offended by the edited photo, he said, but he’s not the sort to whine.  Rather, he’s the sort to rush headlong into enemy fire to save wounded U.S. soldiers.

“That’s what a Medal of Honor represents.  Exceptional bravery, risk to oneself in the service of others and, in an important distinction, the conscious decision to sacrifice oneself if necessary to save another. For Trump to circulate a faked photo of himself seemingly bestowing the MOH on a dog trivializes the honor, even if some recipients don’t mind.

“Dog people may find some comic relief in reflecting on what dogs know.  They can quickly assess when someone is not a good human.  They also know instinctively who isn’t a dog person.  One feels like danger, the other smells like fear.  Given which, Trump may want to keep a respectful distance from Conan when he arrives – and hope that our fearless fellow on four legs has already had his dinner.”

--The Senate voted unanimously to send a bill to President Trump that would make certain types of animal cruelty a federal felony.  The Preventing Animal Cruelty and Torture Act, a bipartisan proposal, makes it a federal crime to crush, burn, drown, suffocate, impale or sexually exploit animals. The bill expands on a 2010 law that made it a crime to create and sell videos of animal fighting.

Republican Sen. Pat Toomey (Penn.), a co-sponsor of the bill, said, “Evidence shows that the deranged individuals who harm animals often move on to committing acts of violence against people.  It is appropriate that the federal government have strong animal cruelty laws and penalties.”

Sen. Richard Blumenthal (D-Conn.), another co-sponsor, said, “There is no place in a civilized society for maiming and torturing animals – period.”

President Trump is expected to sign the bill.

---

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

God bless America.

---

Gold $1459...huge drop of $57 on the week
Oil $57.45

Returns for the week 11/4-11/8

Dow Jones  +1.2%  [27681*]
S&P 500  +0.9%  [3093*]
S&P MidCap  +0.8%
Russell 2000  +0.6%
Nasdaq  +1.1%  [8475*]

*Record highs

Returns for the period 1/1/19-11/8/19

Dow Jones  +18.7%
S&P 500  +23.4%
S&P MidCap  +20.2%
Russell 2000  +18.6%
Nasdaq  +27.7%

Bulls 57.1
Bears 18.1

Have a great week.

Brian Trumbore