Week in Review

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Week in Review

08/20/2016

For the week 8/15-8/19

[Posted 11:00 PM ET, Friday]

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Edition 906

Washington and Wall Street

Well I hope President Obama enjoyed his vacation.  Early on he played the 300th round of golf of his presidency, according to CBS News’ Mark Knoller, the keeper of such data.

I mean 300 is strong.  Ranks right up there with Usain Bolt and Michael Phelps, don’t you think?  Considering how slow Obama is said to play, that’s like 1,500 hours, minimum, just on the course itself.

Golf has been great for our president. It gives him the opportunity to clear his head, and he’s been great at building bonds with the opposition for the betterment of the country.

I mean just look at some of the decisions he’s made thanks to golf, let alone all that he’s accomplished these past nearly eight years.....

Just look......ahhhh.....

Ahhhh......

Well, hopefully he’s brought his handicap way down. 

So Obama comes back to the White House with Russia about to invade Ukraine, Iran violating more UN Security Council resolutions, North Korea continuing to make strides on a giant bottle rocket that could make for some spectacular fireworks on our west coast, or Guam, next Fourth of July, and, of course, Syria.

Instead of me taking issue with the president on this last item, this week I’ll let the following speak for me.

Editorial / Washington Post

“ ‘Devastating and overwhelming.’  Those are the conditions in the ancient and once-great metropolis of Aleppo, according to the head of delegation for the International Committee of the Red Cross, Marianne Gasser, who was in the Syrian city recently.

“ ‘We hear that dozens of civilians are being killed every day and scores more injured from shells, mortars and rockets,’ Ms. Gasser said. ‘The bombing is constant. The violence is threatening hundreds of thousands of people’s lives, homes and livelihoods.’

“War crimes appear to be near-constant also. The air forces of Syrian President Bashar al-Assad and his chief backer, Russian President Vladimir Putin, target apartment buildings, bakeries and – this is their specialty – hospitals and clinics. The United Nations is investigating credible reports that Mr. Assad again has used chemical weapons, in this case chlorine gas.  Water has been cut off from hundreds of thousands of people.

“The last surviving physicians in the rebel-held half of Aleppo a few days ago begged President Obama to help.  [Ed. See my opening from last week’s review.]....

“Why would these brave, forlorn doctors look to Mr. Obama for rescue?  Perhaps one of them, through the terrible din of war, remembers hearing the president promise to stand by the Syrian people as they were being ‘subjected to unspeakable violence, simply for demanding their universal rights.’

“Mr. Obama made his pledge during an address at the U.S. Holocaust Memorial Museum in April 2012. He boasted that he had decreed, in a first for any U.S. president, that preventing mass atrocities ‘is a core national security interest and a core moral responsibility of the United States of America.’  That did not mean that the United States would ‘intervene militarily every time there’s an injustice in the world,’ he cautioned. But when it came to Syria, Mr. Obama was clear.

“ ‘The Syrian people have not given up, which is why we cannot give up,’ Mr. Obama said.  ‘And so with allies and partners, we will keep increasing the pressure, with a diplomatic effort to further isolate Assad and his regime, so that those who stick with Assad know that they are making a losing bet.’

“Alas, that was many atrocities ago.  According to the Red Cross, more than 12 million Syrians – half the prewar population – have been forced from their homes, with millions more under siege.  Hundreds of thousands have been killed.  Well over 1 million have been wounded.  Iran and Russia continue to place their bets on the Assad regime. And Mr. Obama no longer pledges to stand with the Syrian people, though he remains clear-eyed about what they are facing.

“ ‘The regime and its allies,’ Mr. Obama observed at a Pentagon news conference this month, are engaged in ‘vicious attacks on defenseless civilians, medieval sieges against cities like Aleppo, and blocking food from reaching families that are starving.’

“But the administration’s response has not changed: a combination of halfhearted support for the rebels, who increasingly gravitate by necessity to more extremist groups; requests to the Russians to behave better; and finger wagging.

“ ‘It is deplorable,’ the president said during his visit to the Pentagon.  Small comfort to the people of Aleppo.”

Turning to Wall Street....stocks finally took a breather, like a real slight one.  Befitting the incredibly boring action in the markets, the Dow Jones lost 0.1% and the S&P 500 0.01%, while Nasdaq rose an eighth straight week with a 0.1% gain.

There were a few items on the economic front, with July data on consumer prices showing the CPI was unchanged, 0.1% ex-food and energy, while for the 12 months the CPI is up 0.8%, 2.2% on core.

Housing starts in July came in at a robust 1.21 million pace, up 2.1%, while June’s number was up 5.6%, but permits last month were unchanged, reflecting a probable slowdown ahead.

July industrial production was a robust 0.7%.

The Federal Reserve’s minutes from its last meeting in July showed policy-makers remained divided over when the next rate hike should be, with some Fed members feeling “economic conditions would soon warrant taking another step,” while others believed more data was necessary.

I continue to say no way in September (even as some Fed board members this week said they’d like to see it then) and they won’t move until December.  [Fed Bank of New York President William Dudley said the presidential election won’t factor into the Fed’s decision to raise interest rates in September, which is a bunch of malarkey.]

But let’s face it...this discussion got boring years ago and I apologize for wasting your time.  I’ve sure wasted my own.

Fed Chair Janet Yellen does, however, give a key speech next Friday, Aug. 26, in Jackson Hole, Wyoming, at an annual conference of central bankers, but I’ll keep the recap of that one brief. 

Incidentally, when it comes to projected GDP growth for the third quarter, the Atlanta Fed’s GDPNow indicator pegs it at 3.6% (it was 3.8% two weeks ago).  But we won’t see the first look at Q3 until after the Fed’s Sept. meeting, yet another reason why they won’t act, says your editor, pounding the keys into submission.

Then you have the ongoing bond bubble, or what Prof. Robert Shiller of Yale calls the “new normal bubble.” “Paradoxically when people are most pessimistic about their own future, stock prices are at their highest,” he said.  Worried households save more, pressuring the economy and leading to lower interest rates, which boosts share prices.  It doesn’t matter that earnings have been falling for the past 18 months; suddenly Wall Street’s analysts are ratcheting up their profit forecasts.

Others think a flip to fiscal from monetary policy, such as what was supposed to happen in Japan, see below, could also help drive asset prices in coming months...new stimulus.

But Paul Singer, head of a $28bn hedge fund, Elliott Management, warns that the global bond market is “broken,” and he predicted that the end of the current environment is “likely to be surprising, sudden, intense and large.”

With more than $13 trillion of bonds trading with negative yields, Singer warned his investors in a shareholder letter that we were witnessing the “biggest bond bubble in world history,” and cautioned investors to shy away from sub-zero yielding debt.  “Hold such instruments at your own risk; danger of serious injury or death to your capital!” he wrote, according to CNBC and the Financial Times.

The 10-year bond yields of Japan, Germany and Switzerland are all in negative territory.

Janus Capital’s Bill Gross, in an op-ed for the FT, said of the bond bubble:

“(Are) near-zero interest rates and a global store of about $13tn worth of negative-yielding bonds actually good for the real economy?  Recent data suggests they may not be.  Productivity growth, perhaps the best indicator of an economy’s vitality, is abysmal in most developed countries. It has been declining in the past half-decade or so, not coincidentally tracking the advent of QE (quantitative easing) and zero lower bound interest rates.

“In the U.S. the year-on-year trend for productivity has turned negative.  Most central bankers dismiss this fact as a short-term aberration.  But the Japanese economy provides an example of what interest rates at or near zero can do to a large, developed economy.  The answer is not much: not much real growth; not much inflation – and, together, not enough nominal GDP growth to repay historic debt should yields on sovereign debt ever return to normal.”

ObamaCare

This has been a simmering topic over the past year in particular as it was clear large premium hikes were in the offing, while many of the big players in the exchanges have opted to cut way back or get out entirely.

But when your name is Aetna – one of the largest health insurers in the country – and you announce you are significantly scaling back your presence on the ObamaCare marketplaces next year because of growing losses, it tends to get  even more media exposure.

Aetna announced it would go from participating in 15 states this year to just four in 2017.

“As a strong supporter of public exchanges as a means to meet the needs of the uninsured, we regret having to make this decision,” Aetna CEO Mark Bertolini said in a statement, citing a loss of $200 million in the second quarter.  “Providing affordable, high-quality health care options to consumers is not possible without a balanced risk pool,” he added.

The administration argued the move was no big deal.

“Aetna’s decision to alter its Marketplace participation does not change the fundamental fact that the Health Insurance Marketplace will continue to bring quality coverage to millions of Americans next year and every year after that,” said the administration’s ObamaCare marketplace CEO, Kevin Counihan.

The mix of ObamaCare enrollees has been smaller and sicker than expected, and premiums are expected to rise sharply, which would help insurers address some of the losses.

Some believe Aetna’s move also has to do with the administration suing to block the company’s proposed merger with Humana, with Sen. Elizabeth Warren (D-Mass.) saying Aetna was using its posture on ObamaCare as a “bargaining chip” for its merger talks.

Meanwhile, other major insurers like UnitedHealth Group Inc. and Humana have been scaling back their exchange participation in 2017.

Editorial / Wall Street Journal

“Democrats claimed for years that ObamaCare is working splendidly, though anybody acquainted with reality could see the entitlement is dysfunctional.  Now as the law breaks down in an election year, they’ve decided to blame private insurers for their own failures.

“Their target this week is Aetna, which has announced it is withdrawing two-thirds of its ObamaCare coverage, pulling out of 536 of 778 counties where it does business.  The third-largest U.S. insurer has lost about $430 million on the exchanges since 2014, and this carnage is typical.  More than 40 other companies are also fleeing ObamaCare.

“The mass exodus will leave consumers consigned to the exchanges with surging premiums and fewer options, but don’t mention these victims to Democrats.  They’re trying to change the subject by claiming Aetna is retaliating because the Justice Department is trying to block Aetna’s $37 billion acquisition of Humana.

“The 2010 ObamaCare law makes it nearly impossible for non-mega insurers to operate, and a tide of regulations has encouraged consolidation. Aetna says the Humana tie-up will create economies of scale that could sustain the money-losing exchange policies....

“ObamaCare’s troubles aren’t the result of any business decision. The entire industry is caught in the law’s structural undertow.  Despite subsidies, overall enrollment is flat, there’s too much monthly churn, and the exchanges aren’t attracting enough healthy people to make the economics work....

“Democrats figure they have insurers over a barrel because a Hillary Clinton Presidency is coming.  She’s running on higher subsidies for beneficiaries, a taxpayer bailout for the industry, and a ‘public option’ akin to Medicare for the middle class.  In health care the solution to a problem caused by government is always more government, which will create new problems and beget more government.

“Republicans have no obligation to participate.  They had no hand in creating this mess and they’ve been mocked by Democrats and the media for years for warning about ObamaCare’s flaws and trying to repeal and replace the law. Assuming the GOP holds at least the House, they should insist that any ‘fixes’ – which are fast becoming inevitable – create a rational health-care market.  Democrats deserve to be held accountable for the collapse of their ideas.”

Europe and Asia

Early this week, Italy warned that any decision by the UK to delay Brexit negotiations until late 2017 would risk extending political uncertainty in Europe and undermine efforts to relaunch integration between member states.

But recent media reports had the UK wanting to wait until after French and German elections next year, with Germany’s not slated until September or October 2017, after which Article 50 would be invoked, triggering the two-year negotiations timetable that then leads to a formal exit from the EU.

UK Prime Minister Theresa May had told her Italian counterpart, Matteo Renzi, that Britain would launch talks early next year.  Tensions in European capitals have been rising over the inaction.

But then a report late Friday has the British prime minister and her Cabinet indeed leaning toward the first part of ’17, not the end of the year.  May has wanted to wait to allow her new government time to form a team and positions for what will be tough negotiations.

In the UK, the unemployment rate for the three months ending June was 4.9%, the lowest in 11 years, according to the Office for National Statistics, but this was pre-Brexit and the Bank of England sees it rising to 5.5% by year end.  Far from catastrophic but a noticeable difference.

July retail sales in Britain, however, surged 1.4% over June, up 5.9% year over year, but all of the confidence indexes have been plunging, ditto figures on manufacturing, so there is little thought that the consumer will continue to spend robustly.  Certainly foreign multinationals are already looking to pull back in the UK.

Eurobits....

Inflation in the eurozone was 0.2% in July, annualized, as published by Eurostat.  The figure was 0.1% in June, -0.2% back in April, but 0.2% is still a long way from the preferred 2% level.

The inflation rate in Germany and France was 0.4%, ann., while it was -0.2% in Italy and -0.7% in Spain.  [Inflation in non-euro UK is currently running at 0.6%.]

The unemployment rate in France fell to 9.9% in the second quarter, the first time below 10% since 2012, and a minor positive for President Hollande.  [If it continued to fall into next spring and the elections, it would turn into a potentially major positive.]

On the migration issue....

Friday, Germany moved towards a controversial partial ban on the burka when interior ministers from Chancellor Angela Merkel’s ruling CDU/CSU bloc backed proposals for restrictions on wearing the full-face Islamic veil.

The partial ban is the most controversial element of a wide-ranging package announced by federal Interior Minister Thomas de Maiziere and his counterparts in eight of 16 regions where the CDU/CSU runs the interior ministry.  [Think states and their attorneys general.]

“We reject the full veil,” said de Maiziere.  “Showing your face is basic for people living together in our society.”

The move was in response to the recent series of attacks in Germany, two of which were carried off by Islamist-inspired terrorists; one a man wielding an axe and the other a suicide bomber.

But this week Chancellor Merkel said refugees had not brought terrorism to Germany, adding that Islam belonged in the country as long as it was practiced in a way that respected the constitution. 

“The phenomenon of Islamist terrorism, of IS (Islamic State), is not a phenomenon that came to us with the refugees,” she said at a campaign event ahead of regional elections.

But she conceded many Germans had traveled to Syria for training with militants and Interior Minister de Maiziere put the figure at 800.

52% of Germans think Merkel’s migrant policy has been bad.

On a related issue in Germany, the Turkish minority, I discuss that in depth below.

In Asia, no big economic news out of China, but in Japan, preliminary data on second-quarter GDP has it rising at a highly disappointing 0.2% pace, annualized, with the quarter over quarter figure unchanged.  The first quarter GDP was revised up to 2.0%.  The yen’s recent rise has done a number on growth, hurting exporters.

Speaking of which, exports were down 5.9% in Q2, with corporations also cutting spending, while consumer spending rose 0.6%.

July exports were down 14%, year over year, after being down 7.4% in June.  Imports were down 24.7% (down 18.8% in June); the largest drops for these two metrics since October 2009.

And then a key poll on manufacturing, the Reuters Tankan survey, which tracks the Bank of Japan’s quarterly index, registered its lowest level since 2013, when the central bank embarked on aggressive monetary easing, further highlighting the weakness in the economy between sliding exports and weak consumer spending.

Prime Minister Shinzo Abe recently released the outlines of his latest stimulus program but little of the fiscal spending is of immediate impact and there has still been zero structural reform.  Even tourist spending per capita is down 9.9%, according to the tourism bureau.

Separately, Taiwan raised its annual GDP forecast to 1.2% for 2016, up from 1.1% as estimated in May.  Q2 GDP was up 0.7%, annualized, ending three quarters of negative growth (two is a recession).

Street Bytes

--U.S. Treasury Yields

6-mo. 0.44%  2-yr. 0.75%  10-yr. 1.58%  30-yr. 2.29%

Yields rose some on the increased feeling the Fed will hike before yearend.

Foreign holdings of U.S. Treasury securities rose in June, 1.1% to $6.28 trillion after declining 0.5% in May and 0.8% in April, according to the Treasury Department.

Japan, the second-biggest foreign owner of Treasury securities, increased its holdings 1.3% to $1.15 trillion, while China, the top foreign owner of Treasury debt, trimmed its holdings 0.3% to $1.24 trillion.

Foreigners own about 45% of the publicly traded debt, $14 trillion, with most of this, $4 trillion, belonging to foreign governments, primarily central banks.

--Wal-Mart reported a higher-than-expected quarterly profit on Thursday, with both sales and revenue exceeding expectations.  Same-store sales rose 1.6%, the eighth consecutive quarter of gains, and its shares rose in response.  The company said that its initiative to increase entry level wages to $10 an hour has led to cleaner stores, faster checkouts and improved customer service.

Wal-Mart issued guidance for the rest of the year that also beat the Street.

--Wal-Mart rival Target Corp., on the other hand, cut its full year profit forecast and reported a drop in quarterly sales on weakness in its electronics and grocery divisions, citing “a difficult retail environment.”  Sales were down 7.2% to $16.2 billion, while same-store sales fell 1.1%.  The company also lowered its expectations for comparable sales in the second half of the year, with same-store sales projected to be essentially unchanged.

Target also said it is on track to “exceed” its two-year plan to cut costs $2 billion by year end.  At the same time, Target is focusing on remaking itself as a one-stop retailer, including for groceries and exclusive apparel and home goods.

--Home Depot’s earnings beat the Street, with same-store sales up a solid 4.7%, as overall revenue climbed 6.6% to $26.47 billion.  For the year, it expects comp sales to increase 6.3%.

The company also said its number of transactions over $900 rose 8.1% in the quarter ending July 31, as homeowners take on more-ambitious projects that require more tools and parts.

--HD rival Lowe’s second-quarter profit and revenue missed Wall Street’s expectations, though net income increased 3.6%, with revenue up 5.3%.  Same-store sales rose 1.9%.  Lowe’s cut its full-year forecast on eps and comp sales growth to 2% and the shares got whacked about 7%.

Lowe’s has more than held its own with Home Depot over the past few years, but it doesn’t receive the same amount of business from professional renovators and builders as HD does and that seems to make a big difference.  Lowe’s is stronger in the garden business.

--As a regular customer of Staples Inc., I’m always curious to see how they’re doing and the company reported a loss amidst its failed plan to merge with Office Depot Inc. and continuing falling sales, comp sales down 5% in the quarter, worse than expected.  It is looking to close 50 North American stores this year.

The stock is down about 40% over the past 12 months.  Staples had to pay smaller rival Office Depot a $250 million breakup fee. 

But I go to my Staples generally twice a week and I’ve seen more traffic than normal the past few months (not just back-to-school shoppers), so I’ll say the company’s performance has bottomed. 

--Dick’s Sporting Goods Inc. reported same-store sales rose 2.8% in the second quarter, solid, as the chain benefits from the demise of competitors like the Sports Authority Inc., whose closeout sales didn’t impact Dick’s as much as feared.

--Network equipment maker Cisco said it will cut up to 5,500 jobs – 7% of its global workforce – as it restructures, again, because of a “challenging macro environment.”  It essentially did the same thing two years ago, when it announced layoffs numbering 6,000, which was on top of 4,000 the year before.

But, as noted in the Wall Street Journal, total employee head count has shrunk by less than 2% over this time.  The problem is Cisco’s larger businesses don’t generate much growth, though they pay the bills, while smaller, more promising segments find their footing.

Separately, at the macro level, as part of their fiscal fourth quarter earnings report, Cisco noted that sales in the UK had been hit by the country’s decision to leave the European Union.

CEO Chuck Robbins said the Brexit vote had a “real impact” on the business and called for clarity on how the process of leaving the EU will work.  “Even clarity about a timeline could be helpful,” he said.

But as you saw above, no real clarity yet.

Earlier this year, another mature technology company, Intel, announced cuts of 12,000 jobs in April.

--China’s Lenovo Group, the world’s biggest PC maker, said net profit climbed 64% for the second quarter, though a large portion of this was from the sale of a Beijing office property.

The company that had acquired Motorola’s handset business in 2014 to reduce exposure to the shrinking PC market saw global smartphone shipments plunge 31% from a year ago.

PC shipments fell 2% year-on-year, compared with a 4% decline in the broader industry.

Overall company revenue dropped 6%, but this was better than expected.

--Australia has a major issue with China concerning the Aussie government’s decision to squelch a deal that would have seen 50.4 percent of Sydney’s electricity poles and wires leased to global infrastructure giants headquartered in either China or Hong Kong, citing “national security.” 

The two companies, State Grid and Cheung Kong Infrastructure, have been told they can’t be trusted, but they already control a lot of Australia’s electricity, gas and transport infrastructure.  As previously reported in the Sydney Morning Herald, “If they’re a national security threat, we’re already screwed.” 

It’s a totally political situation, under the guise that someone controlling the New South Wales region’s electricity grid can shut down much of Australia’s internet, for example, but you can see how China would be pissed, especially as it’s one of Australia’s top trade partners.

--Gregory Zuckerman and Laurence Fletcher of the Wall Street Journal had a piece on the hedge fund industry, with both hedge funds and actively managed mutual funds continuing to underperform the market.

“Funds in the $2.9 trillion hedge-fund sector have now experienced three consecutive quarters of withdrawals for the first time since 2009, according to researcher HFR.”

Tuesday, one of the giants in the industry, Tudor Investment Corp., reduced its workforce by about 15%, or 60 employees, amid poor performance and withdrawals.

“The money-management business is increasingly becoming bifurcated – with institutional investors choosing low-cost exchange-traded and index funds, then adding hedge funds that focus on quant trading, such as Renaissance Technologies and Two Sigma Investments LLC.” [WSJ]

--BHP Billiton Ltd. reported its worst-ever loss, $6.9 billion for the year through June from a year-earlier profit of $1.9 billion, as it continues to write-down businesses amid the slump in commodity prices.

The Melbourne, Australia-based miner also cut its dividend 77%.  Prices have rebounded this year, but year over year are still down.

--The U.S. Agriculture Department predicted domestic farmers will harvest a record 15.2 billion bushels of corn and 4.1 billion bushels of soybeans this fall, which would smash earlier records (14.2bn and 3.9bn, respectively).  But this will extend the multiyear slump in agricultural commodity prices, putting further pressure on farmer incomes, as I touched on last week.

Corn prices fell to a 7-year low on the report’s release, which was Friday, Aug. 12.

The USDA estimates U.S. farm incomes will fall to $54.8 billion in 2016, the lowest level since 2002.  Yikes.

--Very much related to the above, Deere & Co. reported its 10th straight quarterly drop in revenues and profits as farmers continue to rein in spending, although the decline in earnings wasn’t as bad as the Street expected so the shares soared 13%, which is nuts.  [All computer-driven, sports fans...absurd.]

Sales for the three months to July 31 fell 11% to $6.7bn and net income dropped 4%.

Samuel R. Allen, chairman and CEO, said:

“John Deere’s performance in the third quarter reflected the continuing impact of the global farm recession as well as difficult conditions in construction equipment markets.”

But the company appears to be keeping a tight lid on costs.

Deere did say its equipment sales are expected to decline 10% in fiscal 2016 from the year ago period, and 8% in the current quarter (its fiscal fourth quarter).

--Health officials said a cluster of Zika cases in Miami Beach was most likely transmitted by local mosquitoes and they have designated a busy tourist area as a zone of Zika transmission, which will do a number on local businesses on up to the airlines. 

In an advisory, the CDC said pregnant women should not travel to the designated area of Miami Beach, and that they should consider avoiding all of Miami-Dade County.

As of Wednesday, there were 35 locally-transmitted Zika cases in Florida, 25 of which were in the Wynwood zone in Miami.

Last year was the busiest year ever for tourism in the Miami area, with 15.5 million visitors, up 6.4% over 2014, according to the Greater Miami Convention and Visitors Bureau, with spending at an estimated $24.4 billion.

This story is now on the verge of blowing wide open.

--A study by the Wall Street Journal confirmed what we all know...Tesla Motors Inc. CEO Elon Musk isn’t good when it comes to keeping his promises.

“In the past five years...Tesla has fallen short of more than 20 projections made by Mr. Musk, ranging from car-production output to financial targets,” according to a Journal analysis.  “The company missed 10 of his stated goals by an average of nearly a year.”

Normally, companies that fail to hit their goals are punished by investors, but Tesla’s share price is rarely hit hard for more than a day or two when a projection misses badly. The shares are up 760% in the past five years.

--Philippe Dauman is out as Viacom chairman and CEO after losing a three-month battle for control with majority shareholders Sumner and Shari Redstone. Dauman agreed to step down from both posts immediately, though with a reported $72 million in parting gifts, including unidentified merchandise behind the curtain where Carol Merrill is standing. 

[Dauman took in a staggering $491 million over his ten years at the helm before you add in the severance.  $491 million for a really crappy job as Viacom has sucked during his tenure.]

Chief Operating Officer Tom Dooley will take over as CEO, at least on an interim basis, as the board expands to 16 people.

Viacom is the owner of MTV, Comedy Central, Nickelodeon and several other cable networks.

--Gawker.com will cease publishing next week, as its parent company has been acquired by Univision for a reported $135 million.  Univision will integrate the sites Deadspin, Lifehacker and others into its Fusion Media Group.  But it won’t operate Gawker.com going forward.

--Interesting piece in the New York Times by Jennifer Smith on the Metropolitan Opera, which balanced its budget a second year in a row, a rare accomplishment, despite record low paid attendance last season.  Lots of ongoing cost cuts, for one, as “paying customers occupied just 72% of all seats.”

Over 30 years ago, my parents had a season-subscription to the Met and my brother and I would go to one performance a year and I remember never seeing an empty seat, but that was long ago.

You just have to wonder how the Met, and other large opera companies of its ilk, will survive the next three decades.  I certainly can’t see millennials getting into it.

--NBC’s ratings for the Olympics have not been good.  The latest had the prime-time audience down 17% compared to London 2012.  The crucial 18-49 age group is off 25%, according to Bloomberg Intelligence.  This is the first drop in Summer Olympics ratings since 2000 and seeing as NBCUniversal has committed to the Games through 2032, has to be cause for some concern.  [Plus the next Olympics in Tokyo isn’t likely to have major draws Michael Phelps and Usain Bolt.]

But NBC can take heart its streaming audience is up 24%, and the network is still reaching more 18-49-year-olds on broadcast television during the Olympics than its three broadcast rivals combined.

--Food Alert!  Salmon prices could be collapsing due to oversupply, as reported by Reuters.  This is potentially awesome news for moi, and vous, but bad for shareholders in fish-farming companies, particularly in Norway.

--Finally, as reported in TIME magazine, “According to state-by-state data compiled by the Cremation Association of North America and the National Funeral Directors Association, cremation is the new custom, accounting for almost 49% of all dispositions last year, vs. 45% for burials – ‘a seismic shift,’ says Barbara Kemmis, CANA’s executive director.”

Needless to say this is doing a number on the funeral home industry, with the number falling 10% since 2005.

“Now, alongside caskets and grave plots, many funeral directors sell personalized urns and spots in cremation gardens, which tend to cost a fraction as much.”

By 2030, the cremation rate will top 70%, according to the NFDA.  [Josh Sanburn / TIME]

If your ashes are tossed in the ocean, you might be eaten by a salmon, which, err, in turn could end up on the dinner table....

Foreign Affairs

Note: Ukraine courses through some of the following.

Iraq/Syria/ISIS/Russia: It’s been all about Aleppo the past few weeks, as the U.N. had desperately been trying to get Russia and Syria to allow for aid convoys into besieged areas of Syria during the month of August, but none had gotten in so the special envoy for Syria, Staffan de Mistura, suspended a humanitarian task force until next week as a signal to major powers.

“I insist, on behalf of the (U.N.) Secretary General: to have a 48-hour pause in Aleppo, to start with, which would require some heavy lifting not only by the two co-chairs (Russia and the United States) but also those with influence on the ground,” de Mistura told reporters in Geneva.

That was Thursday. Friday, de Mistura said he welcomed Russia’s proposal of a 48-hour pause in fighting to allow aid deliveries, but it was up to Russia to get Bashar al-Assad to agree.

Separately, Russia denied its warplanes bombed Omran Daqneesh’s house, the five-year-old who was photographed caked in dust and blood after being pulled from the rubble of his home in the rebel-held Qaterji district of Aleppo.

Russia’s defense ministry said it never targets civilian areas.  Really, they said that.  I guess it’s true then.  What is known is that on Tuesday, air raids on two rebel-held districts in Aleppo killed 19 civilians, including three children, according to the Syrian Observatory for Human Rights.  12 rebel troops were killed in an attack on a convoy of anti-government fighters.

Last weekend, strikes killed at least 45 civilians in Aleppo and 22 more in Idlib province.  The Observatory said both Syrian and Russian warplanes were responsible for these attacks.

Meanwhile, Syrian government aircraft hit the rebel-held Damascus suburb of Daraya with incendiary bombs for a third straight day on Wednesday, according to local officials, with the weapons packed with a substance resembling napalm. Human Rights Watch contends Russia is using similar weapons.  The group said incendiary weapon have been used at least 18 times in the past nine weeks, mostly in and around Aleppo.  [New York Times]

And on Friday, we learned the Pentagon warned the Syrian government it would be “well-advised” not to strike U.S. and allied military personnel operating in Syria, a day after a close call as Syrian bombers conducted strikes near where U.S. forces were aiding Kurdish fighters in the battle against ISIS.

Benny Avni / New York Post

“As Americans focus on who’ll replace President Obama, Russian strongman Vladimir Putin marches around the globe unabated, rushing to gobble up anything and everything he can before the new president takes office.

“Amassing troops on Ukraine’s border.  Bombing Syria mercilessly.  Allying with Turkey, a NATO member, to bring it into the Moscow-Tehran-Damascus axis.

“On Tuesday, Russia announced it was using an Iranian air base to launch bombing sorties in Syria. That’s quite a coup. The mullahs don’t easily allow foreigners to use their soil for military purposes.  Iranian officials protest that the Russian Air Force merely uses Iran for ‘refueling,’ but that’s not what Moscow says or Washington sees.

“Also, last week Moscow revealed a plan to turn Hmeymim, Syria, an airbase near Latakia, into a ‘full-fledged’ Russian facility, making it a permanent Russian hub in the world’s hottest war zone.  (Unlike the Iranian base, Hmeymim can’t facilitate Tupolev-22M3 or Sukhoi-34 heavy bombers, needed to escalate Putin’s Syria war.)

“Syria’s hottest current battle is over Aleppo, once a financial capital and now a ghost town filled with extremists where Russian and Syrian-government planes pound schools and hospitals.

“And American officials, at best, make speeches about the need to help the United Nations deliver humanitarian aid to Aleppo.

“We won’t do much about Putin’s renewed aggression against Ukraine, either....

“We’re too obsessed with allegations of Kremlin meddling in our election to even notice Putin’s global march, let alone do anything about it.

“Putin’s known as a great poker player who holds the weakest hand.  But we facilitate his activist, daring and immoral style of play by constantly whining about our own hand, and by endlessly waiting to be dealt a pair of aces.

“No wonder Putin now sits in front of a much larger stack of chips than even he dreamed of eight years ago, when he began this expansion in earnest by invading Georgia with barely a peep from Bush-era America.”

Separately, Amnesty International issued a report this week claiming nearly 18,000 have died in government prisons in Syria since the start of the uprising in 2011.

The charity interviewed 65 “torture survivors,” who detailed systematic use of rape and beatings by prison guards.

“Former detainees described so-called welcome parties – ritual beatings using metal bars and electric cables.”  [BBC News]

A U.N. human rights report in February accused the Syrian government of carrying out a state policy of extermination.

In Iraq, Kurdish Peshmerga forces launched a fresh attack on ISIS militants, as part of a campaign to capture the de facto IS capital of Mosul, according to Kurdish officials.

The Iraqi army and the Peshmerga forces are gradually taking up positions around Mosul, 250 miles north of Baghdad, as preparations for a full assault on the city continue.

Iran: On the issue of Russian military aircraft targeting rebel positions in Aleppo and elsewhere in Syria from an air base in western Iran, the U.S. warned that Moscow could be in violation of a U.N. Security Council resolution that bans the use of Iranian air bases.

On a related matter....

Editorial / Wall Street Journal

“The Obama Administration’s handling of the Iran ransom-for-hostages story brings to mind the classic Chico Marx line in the movie ‘Duck Soup’: ‘Who are you going to believe – me or your own eyes?’

“After everyone in the Administration from President Obama on down denied that a $400 million cash payment to Iran had anything to do with the same-day release of four American hostages, the State Department on Thursday said your own eyes had it right the first time.

“While still not using the R-word, State Department spokesman John Kirby said of the two events: ‘We of course wanted to seek maximum leverage in this case as these two things came together at the same time.’

“Credit here goes to Wall Street Journal reporters Jay Solomon and Carol E. Lee, who on Aug. 3 broke the story of the $400 million payment to Iran coincident with the hostage release in January. Despite Mr. Obama himself trying to knock down the Journal’s story by asserting, ‘we do not pay ransom for hostages,’ the reporters this week established the linkage.

“U.S. officials acknowledged to the Journal that they wouldn’t allow a plane from Iran Air, loaded with pallets of cash, to take off from a runway in Geneva until the hostages’ plane in Tehran was ‘wheels up.’  State’s Mr. Kirby was finally obliged to admit this publicly....

“(Mr. Obama) didn’t want to sully what he obviously considers the crowning foreign-policy achievement of his Presidency with an admission that a grubby payoff to Iran’s mullahs is what got it done.

“Coming clearer by the day is the reality that Mr. Obama in fact ransomed his second term’s entire foreign policy to getting the nuclear deal, which along with lifting sanctions was supposed to be the incentive for Iran to help stabilize the Middle East.  Iran had its own ideas about that.

“On Tuesday the Russian foreign ministry ostentatiously announced that four of its Tu-22M3 bombers had flown from an Iranian airfield to hit anti-Assad forces in three Syrian provinces.  The long-range bombers then returned to Russia.

“Russia doesn’t need the Iranian air base to bomb Syria.  Russia and Iran were making a political point about their budding alliance in the Middle East.  They did this, moreover, after persuading Secretary of State John Kerry to persuade Mr. Obama to share with Russia U.S. intelligence on bombing targets in Syria.  Mr. Obama sided with Mr. Kerry despite Pentagon objections.  Oh, and Vladimir Putin is now sending tens of thousands of Russian soldiers to newly built installations near the border with Ukraine.  Perhaps this is the Russian’s way of thanking Mr. Kerry for the intel.

“Mr. Obama, meanwhile, spent August denying that a ransom was a ransom.  Since the January ‘leverage’ moment, Iran has taken three more Americans as hostage and is now demanding the return of $2 billion in funds that U.S. courts have ordered held for the victims of Iranian-sponsored terrorism. The eyes of the world can simply stare.”

Charles Krauthammer / Washington Post

“This week Russian bombers flew out of Iranian air bases to attack rebel positions in Syria.  The State Department pretended not to be surprised. It should be.  It should be alarmed. Iran’s intensely nationalistic revolutionary regime had never permitted foreign forces to operate from its soil.  Until now.

“The reordering of the Middle East is proceeding apace.  Where for 40 years the U.S.-Egypt alliance anchored the region, a Russia-Iran condominium is now dictating events. That’s what you get after eight years of U.S. retrenchment and withdrawal.  That’s what results from the nuclear deal with Iran, the evacuation of Iraq and utter U.S. immobility on Syria....

“When Russia dramatically intervened last year (in Syria), establishing air bases and launching a savage bombing campaign, Obama did nothing.  Indeed, he smugly predicted that Vladimir Putin had entered a quagmire. Some quagmire. Bashar al-Assad’s regime is not only saved.  It encircled Aleppo and has seized the upper hand in the civil war.  Meanwhile, our hapless secretary of state is running around trying to sue for peace, offering to share intelligence and legitimize Russian intervention if only Putin will promise to conquer gently.

“Consider what Putin has achieved. Dealt a very weak hand – a rump Russian state, shorn of empire and saddled with a backward economy and a rusting military – he has restored Russia to great-power status. Reduced to irrelevance in the 1990s, it is now a force to be reckoned with.

“In Europe, Putin has unilaterally redrawn the map. His annexation of Crimea will not be reversed. The Europeans are eager to throw off the few sanctions they grudgingly imposed on Russia. And the rape of eastern Ukraine continues.

“Ten thousand have already died and now Putin is threatening even more open warfare....

“And why shouldn’t he? He’s pushing on an open door.  Obama still refuses to send Ukraine even defensive weapons. The administration’s response to these provocations?  Urging ‘both sides’ to exercise restraint.  Both sides, mind you.

“And in a gratuitous flaunting of its newly expanded reach, Russia will be conducting joint naval exercises with China in the South China Sea, in obvious support of Beijing’s territorial claims and illegal military bases.

“Yet the president shows little concern. He is too smart not to understand geopolitics; he simply doesn’t care.  In part because his priorities are domestic.  In part because he thinks we lack clean hands and thus the moral standing to continue to play international arbiter....

“Obama made all this perfectly clear in speeches at the U.N., in Cairo and here at home in his very first year in office. Two terms later, we see the result.  Ukraine dismembered.  Eastern Europe on edge. Syria a charnel house.  Iran subsuming Iraq.  Russia and Iran on the march across the entire northern Middle East.

“At the heart of this disorder is a simple asymmetry.  It is in worldview. The major revisionist powers – China, Russia and Iran – know what they want: power, territory, tribute.  And they’re going after it.  Barack Obama takes Ecclesiastes’ view that these are vanities, nothing but vanities.

“In the kingdom of heaven, no doubt. Here on earth, however – Aleppo to Donetsk, Estonia to the Spratly Islands – it matters greatly.”

Turkey: Two big car bombs in the eastern part of the country killed six and wounded over 200 others, with the government blaming the Kurdish militant group, the PKK.  The week before at least eight were killed in two separate attacks.

Also this week, Turkish riot police raided the offices of 51 businesses and detained dozens of executives the government claims aided exiled cleric Fethullah Gulen*, who has been blamed by President Erdogan for a failed coup.

At a time when the government is trying to reassure markets and rating agencies, the continuing purge undermines efforts to present Turkey as a stable and safe environment.

And then you had the story Turkey was releasing 38,000 prisoners – to make room for thousands of people who have been arrested as a result of the coup attempt.  Prisoners who have served half of their sentence are eligible for parole, according to the decree by the justice minister.

Separately, as the Wall Street Journal reported, the German government is increasingly concerned that Turkey is conducting its internal politics on German soil.

“For years, Germany encouraged Turkey’s state-run religious institution to provide Islamic preachers and teachers for the large Turkish minority here.

“But Turkey’s upheaval since July’s coup attempt has German authorities worried that the guidance on offer isn’t only spiritual – but also aimed at drumming up support for Turkish President Recep Tayyip Erdogan.”  [Marcus Walker and Ruth Bender / WSJ]

There are three million residents of Turkish descent in Germany.  Inner political conflicts will increasingly be carried out in German cities.

But what torqued off the Turks, especially government officials in Ankara this past week, was disclosure of a leaked internal German government assessment that viewed Turkey as a “central platform” for Islamist groups throughout the Middle East.  The Interior Ministry confirmed the report was sent due to a “clerical error.”

The report cites increasing ties between President Erdogan’s ruling Justice and Development Party and other regional Islamist groups, including Egypt’s Muslim Brotherhood, as well as Syrian opposition groups and Palestinian militants Hamas.

“As a result of the gradual Islamization of Ankara’s foreign and domestic policy especially since 2011, Turkey has developed into a central platform of action for Islamist groupings throughout the region,” the Interior Ministry document reads.

All the above further threatens the accord with the EU to halt the influx of asylum seekers fleeing the Middle East into Europe.  Turkey has been threatening to scrap the deal if its citizens aren’t granted visa waivers traveling to the EU.  [Bloomberg News]

*The U.S. Justice Department is sending a team to Turkey in coming days to pursue allegations by the Turkish government of criminal activity by Gulen.  Gulen continues to deny the accusation.

Yemen: In another atrocity in the region, Saudi warplanes bombed a hospital supported by Doctors Without Borders, killing at least 15, including three Yemeni staff members of the group.  Two days earlier, Saudi airstrikes killed at least 19, mostly children, in a residential area and a school in northern Yemen.

Understand, U.S. weapons are being used.

Ukraine: President Petro Poroshenko warned Thursday of a possible invasion by Russia as the situation in eastern Ukraine continues to deteriorate, with Russia rapidly building up its forces on the border.  Three Ukrainian soldiers were killed Thursday in shelling by Russian-backed separatists.  In a televised speech, Poroshenko said, “We don’t rule out a full-scale Russian invasion.”

Ukraine has rejected out of hand Vladimir Putin’s claim that Kiev sent saboteurs to Crimea who killed two Russian servicemen, while Putin has vowed to respond with “very serious” measures, as Vlad the Impaler gins up a crisis as a pretext for his next move.

Ukraine’s army is on high alert and Putin deployed air-defense missiles to Crimea.

North Korea: Pyongyang announced it has resumed plutonium production by reprocessing spent fuel rods and has no plans to stop nuclear tests as long as the U.S. continues to threaten it, according to Japan’s Kyodo news agency.  North Korea’s Atomic Energy Institute also told Kyodo it had been producing highly enriched uranium necessary for nuclear arms and power “as scheduled.”

In June, the U.N. nuclear watchdog, the International Atomic Energy Agency, said the North appeared to have reopened the Yongbyon plant to produce plutonium from spent fuel.

Well, the United States is most upset.  “We call on North Korea to refrain from actions and rhetoric that further raise tensions in the region,” said Katina Adams, a spokeswoman for the State Department.

Yessiree...we are ticked off and, gosh darnit, we won’t let this stand!

Meanwhile, a North Korean diplomat stationed in London has defected with his family.  The fellow had lived in Britain for 10 years and disappeared several weeks ago.  He apparently has defected to South Korea.  I didn’t hear what his favorite Premier League team is.

China: Wondering why it has been fairly quiet here the past few weeks?  It’s mostly because President Xi Jinping and Premier Li Keqiang have been on holiday, though unlike in the West where it’s known where leaders are holidaying, in China the leaders disappear out of view, with no mention of their whereabouts in state media.  [They are at Beidaihe, a summer retreat east of Beijing.]

But as the South China Morning Post notes, often momentous changes take place during this annual break, with high-level meetings a constant.

Xi and Li return to work this Monday.  We may find out if any serious business was conducted, like Li’s departure from government, I’ll muse, though reports say it is more likely Li will give up most of his economic power to Xi.

I’ll also surmise that invasion plans for Taiwan may have been discussed.  I do not in any way mean to say this flippantly.  I strongly believe this could be the massive geopolitical surprise for the remainder of 2016, Xi knowing Obama wouldn’t do anything, and with a new leader in Taipei who is not getting along with Beijing.  [In my scenario, an invasion of Ukraine is no longer a “surprise.”  It seems to be an inevitability.] 

One other note on China...a rather startling one.  According to the agricultural ministry, overfishing in Chinese rivers and seas has seriously depleted stocks and the government is cutting the size of its fishing fleet.

The surprise is the statement there were practically “no fish” in the coastal East China Sea, according to a state radio report last Sunday. 

Agriculture minister Han Changfu told China National Radio that the country’s deep-sea fishing in the world’s oceans must commit to tighter regulations, supervision and self-discipline, “gradually getting rid of the outdated ways of production which are destructive to the environment,” Han said.

The radio report also said “the top four fish species now lay less than one billion eggs a year in Chinese rivers, down from about 30 billion previously.”  [South China Morning Post]

India: Clashes in Indian-administered Kashmir have claimed at least 65 lives over the past 40 days, with another 6,000 injured, overwhelming the main hospital in the area.  [There are apparently a ton of serious eye injuries.]  It all started on July 8 with the killing of a popular field commander of a Pakistan-based separatist group.

Random Musings

--Presidential Polls....

Quinnipiac University polling:

Colorado: Hillary Clinton 49 percent, Donald Trump 39 percent.

Iowa: Clinton 47-44

Virginia: Clinton 50-38

But, if you add Gary Johnson and Jill Stein to the mix, you can see Johnson is beginning to gain a little traction, but whether he can get to the key 15 percent level, nationally, to gain a position on the debate stage come Sept. 26 is another story.

Colorado: Clinton 41, Trump 33, Johnson 16 and Stein 7 percent

Iowa: Clinton 41, Trump 39, Johnson 12, Stein 3

Virginia: Clinton 45, Trump 34, Johnson 11, Stein 5

In a CBS News Battleground Tracker poll:

In Florida, Clinton leads Trump 45-40

New Hampshire: Clinton 45-36

In a USA TODAY/Rock the Vote poll of millennials (under the age of 35), Clinton is favored 56% to 20% for Trump, with a four-way matchup reading 50-18, Johnson 11 and Stein 4; another 17% undecided. Half of millennials identified themselves as leaning towards the Democratic Party, with only 20% identifying with or leaning towards the Republicans.  17% identify as independents.

The survey also found that 72% of supporters of Bernie Sanders who are under 35 plan to vote for Clinton and 11% Trump.

I would say that based on earlier polling I noted last week, many of the above simply won’t bother to vote in the first place.

But looking at the above numbers, Michael Gerson in the Washington Post noted that Ronald Reagan, in his 1984 race against Walter Mondale, took voters 18 to 24 by a 61-39 margin, while Trump is losing 18-34, 56-20... “an astonishing and consequential collapse for the GOP,” Gerson notes. “In the long run, younger voters are older voters.”  Gerson concludes it has something to do with Trump’s “assault on the idea of tolerance, particularly racial and religious tolerance.”  I agree.  It’s how you lose a generation.

A Siena College survey of New York State voters has Clinton with a 30-point lead over Trump, 25 points when Johnson and Stein are included.

But...there were two national polls of note, both conducted before Trump’s big campaign shakeup, and they both give his camp cause for optimism.

A USC Dornsife/Los Angeles Times poll had Clinton with just a 44-43 lead, while a Pew Research Center national survey has Clinton up only 41-37.

--An editorial in the Wall Street Journal posted Sunday evening concerning Trump’s campaign gained a lot of attention.

“Donald Trump lashed out at the media on Sunday after more stories describing dysfunction inside his presidential campaign.  ‘If the disgusting and corrupt media covered me honestly and didn’t put false meaning into the words I say, I would be beating Hillary by 20%,’ Mr. Trump averred on Twitter.

“Mr. Trump is right that most of the media want him to lose, but then that was also true of George W. Bush, George H.W. Bush and Ronald Reagan.  It’s true of every Republican presidential nominee.  The difference is that Mr. Trump has made it so easy for the media and his opponents.

“The latest stories comport with what we also hear from sources close to the Trump campaign.  Mr. Trump’s advisers and his family want the candidate to deliver a consistent message making the case for change.  They’d like him to be disciplined.  They want him to focus on growing the economy and raising incomes and fighting terrorism.

“They think he should make the election a referendum on Hillary Clinton, not on himself.  And they’d like him to spend a little time each day – a half-hour even – studying the issues he’ll need to understand if he becomes President.

“Is that so hard?  Apparently so.  Mr. Trump prefers to watch the cable shows rather than read a briefing paper.  He thinks the same shoot-from-the-lip style that won over a plurality of GOP primary voters can persuade other Republicans and independents who worry if he has the temperament to be Commander in Chief.

“He also thinks the crowds at his campaign rallies are a substitute for the lack of a field organization and digital turnout strategy. And he thinks that Twitter and social media can make up for being outspent $100 million to zero in battleground states.

“By now it should be obvious that none of this is working.  It’s obvious to many of his advisers, who are the sources for the news stories about dysfunction.  They may be covering for themselves, but this is what happens in failing campaigns. The difference is that the recriminations typically start in October, not mid-August....

“Mr. Trump has alienated his party and he isn’t running a competent campaign.  Mrs. Clinton is the second most unpopular presidential nominee in history – after Mr. Trump. But rather than reassure voters and try to repair his image, the New Yorker has spent the last three weeks giving his critics more ammunition.

“Even with more than 80 days left, Mr. Trump’s window for a turnaround is closing. The ‘Trump pivot’ always seemed implausible given his lifelong instincts and habits, but Mr. Trump promised Republicans.  ‘At some point I’ll be so presidential that you people will be so bored, and I’ll come back as a presidential person, and instead of 10,000 people I’ll have about 150 people and they’ll say, boy, he really looks presidential,’ he said in April.

“Those who sold Mr. Trump to GOP voters as the man who could defeat Hillary Clinton now face a moment of truth.  Chris Christie, Newt Gingrich, Rudy Giuliani, Paul Manafort and the talk-radio right told Republicans their man could rise to the occasion.

“If they can’t get Mr. Trump to change his act by Labor Day, the GOP will have no choice but to write off the nominee as hopeless and focus on salvaging the Senate and House and other down-ballot races. As for Mr. Trump, he needs to stop blaming everyone else and decide if he wants to behave like someone who wants to be President – or turn the nomination over to Mike Pence.”

Fred Hiatt, editorial page editor / Washington Post

“If he doesn’t ultimately win the election and shred our Constitution, the most annoying thing about Donald Trump may end up being this: He forced us to devote so much of our lives to a man who is, fundamentally, a bore.

“Don’t get me wrong: I’m as addicted to coverage of his train-wreck, oh-no-he-didn’t campaign as everyone else.  Even if we wanted to avert our eyes, as citizens we would have a duty not to, to learn as much about the man and his potential presidency as we can.  As Trump pinballed last week from ‘rigged election’ to ‘Second Amendment people’ to ‘founder of ISIS,’ I crashed from one bumper to the next along with the rest of America.

“But one reason this feels like such an imposition is that Trump is, in the end, so uninteresting.

“Trump has upended our politics. But he turns out to be the guy you would pray not to sit next to at dinner. He’s the one who never asks you a question, talks endlessly about himself – and has nothing to say.  He doesn’t read, has no original ideas and thinks he knows more than you do because he once heard something on the news.  If you were at a bar and saw him walking in, you’d look the other way, hoping not to catch his eye....

“ ‘Make America Great Again’ is...nothing more than words on a hat.  Trump hasn’t bothered to learn anything more about the Constitution, or the government, or government policy than he knew a year ago.  His campaign still consists of test-marketing insults one rally at a time.  Occasionally he tries to impersonate a devoted churchgoer, or an antiabortion activist, or an NRA believer, but he usually botches the role because he hasn’t prepared.  And he hasn’t prepared because he’s not really interested in what anyone else believes – not Christians, not anti-abortion activists, not gun enthusiasts. He has only one interest.

“His extreme self-regard is one of the qualities that make him unfit to be president, as has been frequently pointed out.  But it also explains why, even as we follow his campaign minute by minute, we feel almost demeaned.  All this time, all this attention, and what will we have learned?

“The true trademark of the insufferable bore is the conviction that he is doing you a great favor by spending time with you.  Trump brings this to his campaign every day – his conviction that he is doing the entire country a great favor, that serving as president would represent an enormous sacrifice.  ‘I could be having a very nice life right now,’ he says.

“And if he loses, that’s okay, too: ‘I’m going to have a very, very nice long vacation,’ he said last week.

“Which is fine.  Just don’t tell us about it when you get back.”

--But Trump overhauled his campaign a second time in two months, bringing in Stephen Bannon of Breitbart News as the campaign CEO, and pollster Kellyanne Conway as campaign manager, with Paul Manafort remaining campaign chairman, though clearly in a diminished role.

Bannon has said his role at Breitbart is “virulently anti-establishment.”

The Washington Post cited Trump campaign aides as saying the candidate felt “boxed in” by people “who barely knew him.”

Manafort then resigned on Friday.

--Editorial / Wall Street Journal

“In any diagnosis of Donald Trump’s campaign troubles, the idea that the candidate has been too constrained wouldn’t be our first guess.  But Mr. Trump is now telling the world that he is shaking up his campaign to unleash undiluted Donald in the last 80 days

“ ‘Everyone talks about, ‘Oh, you’ve got to pivot,’’ Mr. Trump told a Wisconsin TV station on Tuesday.  ‘I don’t want to pivot. I don’t want to change.  You have to be you.  If you start pivoting, you’re not being honest with people.’  He said this hours before he added two new senior advisers, whose job is to help rescue what has been a sinking candidacy.

“One new hire, pollster Kellyanne Conway as campaign manager, is encouraging.  Ms. Conway is one of the best people in politics, a sincere conservative with a talent for finding the language to connect with voters who aren’t policy wonks or political addicts. During the GOP primaries she ran a Super PAC associated with Ted Cruz, but everyone makes mistakes.  She has also advised Mike Pence, the GOP vice presidential candidate, and she has been the Trump campaign’s best TV spokesperson by far in the last several weeks.

“Less encouraging is the arrival of Stephen Bannon of Breitbart News as chief executive for campaign operations.  Breitbart has been called Mr. Trump’s Pravda, but Pravda is more subtle.  The website specializes in attacking – often in nasty personal terms – Republicans who refuse to assail immigration and trade.

“Breitbart led the campaign to defeat House Speaker Paul Ryan in his Wisconsin primary this month.  ‘Paul Ryan Bows Down to Nationalist Populism as His Career Flashes Before His Eyes,’ said one headline.  Mr. Ryan won 84% of the vote.

“Mr. Bannon wants Mr. Trump to run the way he did in the primaries as an unabashed populist and nationalist.  We thought Mr. Trump’s problem is that he hadn’t changed from the primaries, that he hadn’t tried to reach out to skeptical independents and Republicans, that he hadn’t until recently broadened his message beyond trade and immigration.  But maybe Mr. Bannon sees a path to 270 electoral votes that others don’t.”

--Manafort’s departure was in large part due to a New York Times story published late on Sunday that suggested he had received more than $12 million in shady payments from a pro-Russia political party in Ukraine, where it’s been always known he had done some consulting work.  Manafort strongly denied he was the recipient of any such largesse.  “The suggestion that I accepted cash payments is unfounded, silly and nonsensical,” read a statement.

From the Wall Street Journal:

“(Manafort’s) last high-profile client was former Ukrainian President Viktor Yanukovych, a tainted candidate whom Mr. Manafort helped transform into a winning one – for a time....

“For Mr. Manafort’s allies, his work with Mr. Yanukovych in Ukraine is evidence of his steady hand and skill under pressure: He revived a candidate who had lost a disputed election in 2004, defeating a political rival, Yulia Tymoshenko, who is known as a fearsome campaigner.

“For his detractors, the harsh nature of Mr. Yanukovych’s rule reveals Mr. Manafort, 67 years old, as a gun-for-hire focused solely on winning – and with no compunction about the nature of his client.

“ ‘Manafort was representing a guy who was up to his eyeballs in corruption and has blood on his hands,’ said David Kramer, senior director for human rights and democracy at the McCain Institute and a former U.S. assistant secretary of state under George W. Bush.” [James Marson and Damian Paletta / WSJ]

--Addressing the recent rioting in Milwaukee in the wake of a police shooting, Trump said at a rally there:

“The riots and destruction that have taken place in Milwaukee is an assault on the right of all citizens to live in security and to live in peace.”

Rich Lowry / New York Post

“In other officer-involved shootings or deaths that have occasioned unrest, there has at least been a colorable case that the police acted wrongfully.

“In Milwaukee, a black officer shot an armed man, 23-year-old Sylville Smith, who by all accounts ran from his car after a traffic stop and defied an order to drop his (stolen) gun.

“The officer wore a body camera and the police chief says the video shows Smith raising his gun before the cop shot him dead.

“Presumably, we’ll see the entire video and know more soon enough, but it’s not hard to believe Smith was capable of recklessly threatening the officer. His long rap sheet is the story, in microcosm, of why inner-cities communities are so miserably unlivable, and need to be policed so intensely.

“According to the Milwaukee Journal-Sentinel, Smith had been ‘arrested or ticketed nine times’ since 2011, including for a shooting, a robbery, carrying a concealed weapon, theft and possession of heroin and cocaine.

“He beat a shooting rap at a jury trial in 2015 when a witness recanted, allegedly after Smith intimidated him....

“Three people were murdered last weekend within blocks of where the officer shot Smith on Saturday afternoon, and five people were killed in total over a nine-hour period Friday night and Saturday morning. The routine carnage is, of course, never the occasion for rioting....

“But the Milwaukee disorder is another stark illustration of how often the agitation over police-involved shootings fades into a noxious nihilism, heedless of the facts or reason.

“Burning down neighborhood business establishments, throwing bricks at cops, trashing police cars and chasing white people – all features of the Milwaukee riots – may feel good, but they’re simply more symptoms of the social breakdown that police are asked to respond to every day.”

Separately, USA TODAY reported that “Twenty people have died of probable heroin overdoses in Milwaukee County in the past two weeks, a toll the county medical examiner’s office called unprecedented.

“The county of almost 1 million residents typically averages one heroin death every three days, the office said Thursday.”

The Drug Enforcement Administration said that heroin deaths have tripled since 2010, with heroin use among young adults ages 18 to 25 more than doubling in that period.

[Fetanyl is another increasing problem, with the synthetic opiate 40-50 times more powerful than street heroin.]

--Earlier in the week, Trump told an audience in Youngstown, Ohio, that he would champion immigration reform that would “screen out any who have hostile attitudes toward our country or its principles.”

Trump called for “extreme vetting” of people looking to immigrate to or visit the United States, including an ideological screening test to weed out those who don’t “share our values and respect our people.”

Trump said immigration would need to be stopped from “some of the most dangerous and volatile regions of the world that have a history of exporting terrorism,” but gave no specifics as to what was to be targeted.  Trump said he would ask the State Department and Department of Homeland Security to identify those places and stop processing visas for people looking to come to the United States from there.

“Those who do not believe in our Constitution, or who support bigotry and hatred, will not be admitted for immigration into the country,” Trump said.  “Only those who we expect to flourish in our country – and to embrace a tolerant American society – should be issued immigrant visas.”

Trump added that Hillary Clinton didn’t have the judgement, temperament or “mental and physical stamina” to fight the Islamic State.

Appearing with Clinton in Scranton, Penn., Vice President Joe Biden said Trump was “totally, thoroughly unqualified” to be president.  “If my [late] son [Beau] were still in Iraq, and I say to all those who are there, the threat to their life has gone up a couple of clicks.”

--Trump said that he was merely being “sarcastic” in accusing President Obama of being the “founder” of ISIS, telling a Pennsylvania audience he was “obviously being sarcastic – but not that sarcastic, to be honest with you.”

--Then Thursday, in his first speech since the big reorganization, Trump said he has “regret” for some of his rhetoric that has caused “personal pain.”

“Sometimes, in the heat of debate and speaking on a multitude of issues, you don’t choose the right words or you say the wrong thing,” he said at a rally in Charlotte.

“I have done that, and I regret it, particularly where it may have caused personal pain,” Trump said, without being specific.  “Too much is at stake for us to be consumed with these issues.  But one thing I can promise you is this: I will always tell the truth.”

Trump, belatedly, has also begun appealing for the black vote.

--One of the truly unlikable people on the planet is Michael Cohen, Donald Trump’s chief counsel.  So as I’ve told you my viewing habits after the market closes are to watch CNN’s Jake Tapper and Wolf Blitzer (for the interviews, mostly), and Wednesday, Brianna Keilar, subbing for Wolf, interviewed Cohen and as became well known on Twitter, I learned later, the following exchange took place.

Keilar: You say it’s not a shake-up [Ed. referring to the day’s campaign staff shake-up, which Cohen said earlier wasn’t a shake-up], but you guys are down –

Cohen: Says who?  Says who?

Keilar: Polls.  Most of them.  All of them?

Cohan: Says who?

Keilar: Polls.  I just told you.  I answered your question.

Cohen: Okay.  Which polls?

Keilar: All of them.

Needless to say, you should have seen the exasperated look on Keilar’s face.  [I am not a fan of hers, either, by the way.]

Why Trump allows Cohen to go on the air as a surrogate I’ll never know.  There is no way he is ever a ‘net-positive’ in terms of gaining supporters.  He is a major net-negative.  The most obnoxious, arrogant a-hole I’ve ever seen, frankly. And that’s a memo....

--Clinton

Nick Wadhams / Bloomberg

“Huma Abedin stepped down from her post as deputy chief of staff at the State Department and Hillary Clinton’s ever-present personal assistant on June 3, 2012.  Only she didn’t really leave.

“Instead, in a reverse twist on a program intended to bring talented outsiders into government, Abedin was immediately rehired as a ‘special government employee.’ She also took paying jobs with the Clinton Foundation and Teneo Holdings, a consulting firm with international clients that was co-founded by a foundation official who also was Bill Clinton’s long-time personal aide.

“Abedin’s multitasking in the final eight months of Hillary Clinton’s time as the top diplomat – and her role as intermediary for some of the same players before that – are drawing renewed scrutiny after a conservative watchdog group’s release last week of a new batch of e-mails to and from Clinton aides.  Abedin has become the personification of an election-year debate over whether the nonprofit foundation will create conflicts of interest if Clinton wins the White House.

“ ‘The Clinton Foundation for Hillary Clinton is kind of a walking conflict-of-interest problem,’ Meredith McGehee, policy director for the nonpartisan Campaign Legal Center, said in an interview.  ‘Clearly this notion that it could continue to operate while she was secretary of state – it was a built-in problem.  If you’re really looking at what should happen if she’s elected, neither her husband nor her daughter, certainly no relative, should have any connection with the foundation.’”

[Thursday, it was announced the Clinton Foundation will stop receiving foreign and corporate donations if Hillary becomes president, while Bill Clinton told staff he would step down from the board if his wife were elected.]

--Another set of internal Democratic Party documents was released by a hacker believed to be tied to the Russian intelligence services, operating under the pseudonym Guccifer 2.0, and personal cellphone numbers and email addresses of nearly 200 lawmakers were suddenly out there for the public, if you’re into looking for stuff like this.

The files weren’t politically embarrassing, but many members of Congress were suddenly inundated with nasty calls and emails, including House Minority Leader Nancy Pelosi.

--Chris Cillizza / Washington Post

“Two important things happened today in the political world of President Obama.

“The first was that the Advocate, a Louisiana newspaper chain, published an editorial calling on the president to come to the state to see the horrible flooding first-hand.  It read, in part: We’ve seen this story before in Louisiana, and we don’t deserve a sequel.  In 2005, a fly-over by a vacationing President George W. Bush became a symbol of official neglect for the victims of Hurricane Katrina.  The current president was among those making political hay out of Bush’s aloofness.

“Sometimes, presidential visits can get in the way of emergency response, doing more harm than good.  But we don’t see that as a factor now that flood waters are subsiding, even if at an agonizing pace.  It’s past time for the president to pay a personal visit, showing his solidarity with suffering Americans.

“Tough stuff, right?

“The second thing that happened was (a tweet on same).  Cue outrage.

“The I-can’t-believe-he-is-on-vacation-while-terrible-news-event-happens narrative is neither new nor unique to Obama.  George W. Bush was regularly pilloried by his political opponents for extended vacations at his ranch in Crawford, Texas.  (Bush once took a five-week break during the summer of 2005.)

“And, as has been documented ad nauseam, there’s really no such thing as a vacation for a president of the United States....Work, especially in this digital age, follows you around. Still, it’s worth noting this moment. And that’s because it speaks to Obama’s unique and long-lasting commitment to not playing by a core rule of modern politics: making at least some decisions based on ‘how it looks’ and/or ‘how it will play.’

“Obama has long been a rejectionist on this front.  His stubborn refusal to rebut claims regarding what was in the Affordable Care Act badly hamstrung his party’s attempt to win the fight for public perception on the law.  His unwillingness to say the words ‘radical Islamic terror’ have become a hobbyhorse for conservatives and Republican presidential nominee Donald Trump.  And so on and so forth.

“Obama just doesn’t like to fake it.  If he doesn’t want to do something or thinks it’s stupid to do it – regardless of whether it actually is stupid – he won’t do it....

“That’s why Obama won’t break off his vacation in Martha’s Vineyard – or stop playing golf on said vacation – to travel to Louisiana.  Because he believes he can monitor the situation as well – or better – from where he is.  And that the sole reason to go to Louisiana is for the theatrical piece of politics, a piece that he not only rejects but detests.”

[Today, it was announced Obama is going to Louisiana on Tuesday, the president returning from vacation on Sunday.]

--Pennsylvania Attorney General Kathleen Kane faces up to seven years in prison after being convicted of perjury, including conviction on 9 counts of leaking grand jury information to a reporter in an attempt to embarrass a rival prosecutor.

Kane, a Democrat, was once a rising star in Pennsylvania politics.  After being found guilty she resigned, effective the day of her sentencing.

--The Pentagon said the U.S. has sent 15 Guantanamo Bay detainees to the United Arab Emirates – the largest single transfer during President Obama’s administration.

The transfer of the 12 Yemeni nationals and three Afghans brings the total number of prisoners down to 61 at the facility.

--The U.S. confirmed it is going to cede power of the internet’s naming system, DNS (Domain Naming System), to Icann – the Internet Corporation for Assigned Names and Numbers – a non-profit organization.  The terms of the change were agreed upon in 2014, but it wasn’t until now that the U.S. said it was finally satisfied that Icann was ready to make the change.

While Icann will remain in Los Angeles, this is a move that has been fiercely criticized by some in Congress as opening the door to the likes of China and Russia to meddle with the system that the U.S. technically “protected.”

Several Republican senators, including Ted Cruz, warned in a letter, “The proposal will significantly increase the power of foreign governments over the internet.”

I agree.  This is not good.  While the U.S. government has very rarely intervened in disputes, through an agency in the Dept. of Commerce, no longer will it be able to intervene on matters around naming.

So now, Icann will become an organization with stakeholders that include countries, businesses and groups offering technical expertise.

The likes of Russia and China had put pressure on the UN to call for the DNS to be controlled by a UN arm, but a few years ago, the U.S., along with Canada, the UK and Australia, refused, citing concerns over human rights abuses that may arise, for example, with countries having greater say and control.  They already do, as it is, witness the massive censorship emanating from Beijing and Moscow.  Now, even though it is Icann and not the UN, it will only get worse.

--We note the passing of political pundit John McLaughlin, the former aide to Richard Nixon who became a fixture on television for 34 years as creator, executive producer and host of “The McLaughlin Group,” which began airing in 1982.  While it appeared at different times, and on different networks, I would say I was a regular viewer until about 10 years ago.  Last weekend was the first time he had missed one, writing in a note to viewers, “I am under the weather.” He died days later.

McLaughlin was a pioneer in reinventing the political talk-show format by injecting unabashed partisanship.  He was known for giving nicknames to his regular panelists, which first featured Robert Novak, Pat Buchanan, Morton Kondracke and Jack Germond, and later the likes of Eleanor Clift, Clarence Page and Fred Barnes.  Chris Matthews also got heavy exposure on McLaughlin’s show earlier in his own career.

McLaughlin, a former Jesuit priest, once ran for the United States Senate in Rhode Island as a Republican calling for a rapid end to the Vietnam War; the same year fellow Jesuit Robert Drinan, who was given permission to run for the House as an antiwar Democrat, won.

McLaughlin joined Nixon’s speechwriting team in 1971.  In 1975, he was released from his vows by Pope Paul VI and married his former Senate campaign manager, Anne Dore, who later served as secretary of labor under Ronald Reagan.

John McLaughlin was a piece of work, a true entertainer and, in keeping with his Jesuit roots, an educator.  He earned his place in television history.

--Sally Jenkins / Washington Post

“Ryan Lochte is the dumbest bell that ever rang. The 32-year-old swimmer is so landlocked in juvenility that he pulled an all-nighter with guys young enough to call him uncle.  His story to NBC’s Billy Bush had the quality of a kid exaggerating the size of a fish, and notice how he was the hero of every detail.  That was always the most dubious, implausible part.

“There is a special category of obnoxious American ‘bro’ that Lochte represents, in his T-shirt and jeans and expensive suede footwear, which he showed off on Instagram that night at the party along with the price tag.  ‘We’re 6k deep here,’ he captioned it.  Is there anything worse, in any country, than a bunch of entitled young drunks who break the furniture and pee on a wall? There is no translator needed for that one, no cultural norm that excuses it.  If I’d been working at that Brazilian gas station, I might’ve pulled a gun on them, too....

“Lochte’s done as a public figure, of course. Which is probably the most effective form of justice for someone who apparently so craves attention.  Oblivion is what he deserves.”

Lochte issued an apology on Friday for “not being more careful and candid” about the incident.  I’ll comment on the Rio Games in full next time.  I don’t want to jinx the last 24-48 hours.

--The remake of the movie “Ben-Hur” is out this weekend.  I’m the only kid on my block who has touched the Bible used by Lew Wallace for his research when he wrote, “Ben-Hur: A Tale of the Christ” in 1880.

Really.  10 years ago I went to the Gen. Lew Wallace Study and Museum in Crawfordsville, Indiana, and because I was a regular contributor to the museum then, when I told them of a project I’ve long wanted to work on (but it now seems I’ll never find the time for it), the director brought out the book, I put on special gloves, and in flipping through the pages you saw Wallace’s handwritten notes in the margins.  It was very cool.

I also then went to the Civil War battlefield at Shiloh, the low point in Wallace’s career as a general, and got a private tour.

Alas, I may take my idea to the grave.  I hope the movie gets good reviews and a great audience.  The original will always be in my top five.

--Last month was the hottest July on record for the surface of earth, according to data released by the National Oceanic and Atmospheric Administration, which continues the longest-ever streak of record-breaking months – now 15.  There is a 99% likelihood already that 2016 will go down as the hottest on record, according to NASA’s Gavin Schmidt.

Some of the heat is still attributable to El Nino, which releases heat from the Pacific for months even after the underlying conditions have subsided.  But now this gives way to a cooling La Nina, which NOAA’s Climate Prediction Center gives a 55-60% chance of developing in the fall or winter, though this won’t change the pattern that has seen 15 of the 16 hottest years on record thus far in the 21st century.

--But winter is coming, and as the New York Post observes, “it’s going to be brutal” in this area, at least according to a new forecast from The Farmer’s Almanac.

The almanac’s managing editor, Sandi Duncan, said in a statement, “We’re calling it the return of the old-fashioned winter. The ice-cold winter is back.”

Particular attention is to be paid to mid-February, when the cold will be paired with major snowfalls.

I recommend panicking now and loading up on staples.

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

We send our prayers to those suffering in Louisiana and California.

God bless America.

---

Gold $1345
Oil $48.57

Returns for the week 8/15-8/19

Dow Jones  -0.1%  [18552]
S&P 500  -0.01%  [2183]
S&P MidCap  +0.3%
Russell 2000  +0.6%
Nasdaq  +0.1%  [5238]

Returns for the period 1/1/16-8/19/16

Dow Jones  +6.5%
S&P 500  +6.9%
S&P MidCap  +11.7%
Russell 2000  +8.9%
Nasdaq  +4.6%

Bulls 56.2
Bears  20.0  [Source: Investors Intelligence...for newbies, this is a contrarian indicator and it is now flashing ‘Danger, Will Robinson!’]

Have a great week.

Brian Trumbore

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