Week in Review

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Week in Review

09/17/2016

For the week 9/12-9/16

[Posted 11:00 PM ET, Friday]

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Edition 910

Washington and Wall Street               

Last week I opened by discussing what a depressing time it was for America, especially on the geopolitical front where Russia and China are having their way with the United States, as we also face a presidential election with two beyond deeply flawed candidates, neither of whom should be occupying the Oval Office.

So here we are today, just ten days from the first debate between Hillary Clinton and Donald Trump, and the latest polls show the race is suddenly a tossup, owing in no small part to two disastrous developments on the Clinton campaign front...her use of the term “deplorables” to describe ‘half’ of Trump supporters, and her serious health issue brought to the fore on Sunday, after which it was more lies and dissembling from the campaign and the candidate herself.

But while I cover the election in great detail down below, there is no doubt officials in Washington are concerned that foreign governments, more than likely one in particular, are attempting to undermine the U.S. vote through cyberattacks.  

Admiral Mike Rogers, the director of the National Security Agency, said on Tuesday, “We continue to be actively concerned,” under questioning from Sen. John McCain, chairman of the Senate Armed Services Committee.  A defense official added the government has an “aggressive investigation” under way.

CIA Director John Brennan warned Sunday that Russia has “exceptionally capable and sophisticated cyber capabilities” and the U.S. must stay on guard against threats to national security and the electoral system.

Certainly the hacking of emails has begun to have an impact on the margins and with the election setting up to be extremely close, this could be decisive.

What we’re also learning is that the rush for high-tech voting machines that can be hacked and don’t always produce a paper trail needs to be stopped before 2020.

Editorial / Washington Post

“Less than two months ago, President Obama approved a presidential policy directive spelling out how the federal government would respond to ‘significant cyber incidents.’  In the shadowy world of cyberconflict, this is often a difficult problem: how to identify the source of an attack and respond appropriately....

“In recent weeks, according to private security experts and government sources, hackers associated with Russia’s government have carried out high-profile intrusions intended to weaken that public confidence and disrupt the U.S. election campaign.  Mr. Obama should do something about it....

“In responding, Mr. Obama must take advantage of the strength of an open society and call out the perpetrators, telling the American people what is happening. Mr. Obama does not need to release sensitive intelligence to effectively make the point. Second, Mr. Obama should order the preparation of economic sanctions against Russian individuals under an executive order he signed that permits sanctions against people linked to malicious cyber-acts.  He must put Russia on notice that such disruptive ‘active measures,’ as the KGB once called them, will not be tolerated. If Mr. Putin thinks he can get away with generating fog and doubt, the best answer is to drag him and his dirty tricks into the sunshine.”

David Ignatius / Washington Post

“Contemplating Russian nuclear threats during the Cold War, the strategist Herman Kahn calibrated a macabre ladder of escalation, with 44 rungs ranging from ‘Ostensible Crisis’ to ‘Spasm or Insensate War.’

“In the era of cyberwarfare that’s now dawning, the rules of the game haven’t yet been established with such coldblooded precision.  That’s why this period of Russian-American relations is so tricky. The strategic framework that could provide stability hasn’t been set.

“Russian hackers appear to be pushing the limits....

“ ‘A line has been crossed. The hard part is knowing how to respond effectively,’ argues one U.S. official.  Retaliating in kind may not be wise for a country that is far more dependent on its digital infrastructure than is Russia.  But unless some clear signal is sent, there’s a danger that malicious hacking and disclosure of information could become the norm....

“Russian officials deny meddling in U.S. politics, but it’s clear from some of their comments that they think the United States shot first in this duel of political destabilization.

“This payback theme was clear in Russian hackers’ disclosure this week of information stolen from the World Anti-Doping Agency about Olympic gymnast Simone Biles and tennis superstars Serena and Venus Williams.  The Russians have been irate about the exposure of their own doping, which led to disqualification of many Russian Olympic athletes.  And so – retaliation, in the disclosure that Biles and the Williams sisters had been given permission to use otherwise banned substances.

“If you’re a Russian with a sense that your country has been humiliated and unjustly maligned since the end of the Cold War – and that seems to be the essence of Putin’s worldview – then the opportunity to fight back in cyberspace must be attractive, indeed....

“Norms for global behavior emerge through trial and error – after a messy period of pushing and shoving, accompanied by public and private discussion. Starting this bumpy process will be the last big challenge of Barack Obama’s presidency.”

Edward Luce / Financial Times

“There is no textbook on what to do.  The U.S. has a history of meddling in other countries’ politics during the Cold War – and since.  But Russia’s thinly-disguised intrusions into the 2016 election is the first time the U.S. has clearly been the object of such attention.  Moreover, the Russian bear is pushing at an open door.  All Vladimir Putin needs to do to cause trouble is to sow doubt about the integrity of the U.S. electoral process.  Large numbers of Americans already suspect the November result will be rigged. So does Donald Trump, who is the first U.S. presidential nominee to invite a foreign power to leak material that would damage his opponent.  If ever U.S. democracy was vulnerable to skullduggery that time would be now.

“What chance does it have of succeeding?  To some extent it already has.  In a Bloomberg interview last week, Mr. Putin offered a blatant non-denial denial that Russia carried out the recent hacking episodes.  ‘To do that you need to have a finger on the pulse and understand the specifics of domestic political life in the U.S.,’ he said with a knowing smile.  ‘I’m not sure that even our foreign ministry experts are sensitive enough.’  The Russian president might as well have winked at the camera.  Nobody, from the cyber security firms looking into the hacking of U.S. political outfits, to the FBI, which is investigating them, doubts Russian intelligence agencies were behind the breaches....

“ ‘It is not a question of whether Russia leaks more data but when,’ says Dmitri Alperovitch, co-founder of CrowdStrike, one of the largest U.S. cyber security companies... It would be easy – but probably wrong – to assume Mr. Trump is working directly with Mr. Putin to build mistrust in the November outcome.  The prima facie case looks strong.  In his July acceptance speech, Mr. Trump said: ‘Big business, elite media and major donors are lining up behind the campaign of my opponent because they know she will keep our rigged system in place.’ That same week Trump officials purged language from the Republican platform which had urged support for the Ukrainian government against Russia.  It came four years after Mitt Romney, the then Republican nominee, had described Russia as America’s ‘number one geopolitical foe.’

“Nothing better captures Mr. Trump’s hostile takeover of the Republican party than its 180-degree turn on Russia.  Every hacking – most recently last week’s ‘exfiltration’ of electoral rolls in Arizona and Illinois – appears to benefit Mr. Trump.  Anything that could implant doubt about Mrs. Clinton’s likely victory in November is grist to his mill.  Only he seems to question Russia’s role in the leaks.  ‘I think it’s probably unlikely.  Maybe the Democrats are putting that out,’ Mr. Trump last week told Russian television (yes, you read that correctly).  He also told the state-owned broadcaster that Mr. Putin was far more of a leader than President Barack Obama.  As I say, the surface evidence for Trump-Putin connivance looks plain....

“The bar is not that high.  No vote rigging need occur – assuming it was even possible. All Mr. Putin needs to do is contaminate the results in people’s minds.  Mr. Trump and his media backers would do the rest.  Sound improbable?  It should not.  Mr. Putin is a past master at setting cats among democratic pigeons.”

Lastly, as I cover below, ObamaCare is exploding anew as a major political issue, much to the benefit of Republicans.  Healthcare costs, which the administration was crowing were under control, are skyrocketing again.

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As for Wall Street, this coming week is a big one.  The Federal Reserve’s Open Market Committee meets on Tuesday and Wednesday with Chair Janet Yellen and her band of merry pranksters seemingly split on whether to hike interest rates or wait until after the election, at their December confab.  The markets have been totally confused over Fed intentions, and mixed messages emanating from Fed officials who can’t keep their mouths shut.

This week you had some dovish comments from Fed Gov. Lael Brainard, after the hawkish comments the week before from Eric Rosengren that roiled the markets.

Brainard said economic weakness “counsels prudence,” saying the risk that higher rates would damage a fragile U.S. economy exceeded the risk that higher rates would increase inflation.

But if the Fed were really just focusing on recent economic data, as they say they do, it hasn’t been strong, with recent purchasing managers indexes (PMIs) on both manufacturing and the service sector coming in at multi-month lows, while this week we had a putrid retail sales reading for August (-0.3%) and industrial production (-0.4%...lowest since March), that taken together clearly dampen the case for hiking next week.

For months, though, I have been saying the Fed won’t act in September because of the election*, but at the same time they’ll get caught with their pants down when it comes to inflation.  I stand by both of these predictions.

*This week Donald Trump said Chair Yellen was “obviously political” and had created a “false” stock market by keeping rates low, but as I’ve been writing, Trump has been all over the place in his criticism of the Fed, saying a year ago he wanted rates to remain at record lows for years to come.

While producer prices for August came in tame (0.0%, ex-food and energy 0.1%; year over year, 0.0% on headline, 1.0% on core), the consumer price data for last month was hotter (0.2%, 0.3% ex-food and energy; 1.1% yoy, 2.3% on core...the highest since March).

August represented the tenth consecutive month the core CPI was at the Fed’s target of 2% or higher, though this isn’t the Fed’s preferred indicator, which is the PCE (personal consumption expenditures index) that is running at a 1.6% pace.  This is what I’m referring to when I say they’ll get caught with their pants down, sooner than later, and the bond market will throw a tantrum that convulses markets around the world; the same markets that now have major doubts with monetary policy and the failure of historically low rates to stimulate global economic activity.

So it’s an interesting time.  Volatility in equities returned as well.  After 43 consecutive days where the S&P 500 didn’t move up or down 1%, the longest such period since spring 2014, last Friday, Sept. 9, that changed with the big 2% downdraft, and then we had 1% moves up and down on Monday, Tuesday and Thursday this week.

But there was some good news that came out of the Census Bureau on Tuesday.  After seven years of stagnant and declining earnings, the median household income in America rose 5.2% in 2015 from a year earlier, after adjusting for inflation; the largest annual gain since the yearly survey of incomes began in 1967, though median household incomes remain 1.6% shy of the 2007 level, before the start of the Great Recession, and 2.4% below the all-time high reached in 1999.

Several years of solid employment growth have finally borne some fruit.  So a bit of good news for Democrats on the campaign trail, as well as our nation’s families.

The official poverty rate for 2015 also declined to 13.5% from 14.8% in 2014, the Census report said. It was 11.3% in 2000 by comparison.  [Wall Street Journal]

Europe and Asia

European leaders, sans Britain, met in Bratislava, Slovakia, on Friday as they try to come up with responses to Brexit and the June 23 decision by the Brits to leave the EU.

Some leaders are looking to deepen integration, while others, especially those in the East such as Poland, Hungary, Slovakia and the Czech Republic, are looking to return more power to the capitals.  Germany is the chief arbiter.

On Thursday night, German Chancellor Angela Merkel said, “Europe is not at all in a good state. That pains me, and I’m making every effort to allow us to rekindle that for which the community once stood.”

German Foreign Minister Frank-Walter Steinmeier said the EU lacked the buy-in to undertake major new integration steps after Britain’s vote to leave the bloc, and he warned against efforts to unwind the existing structure.  Instead, he wants EU members to focus on those areas that were of greatest concern – migration, high youth unemployment and security.

Italian Prime Minister Matteo Renzi said on Thursday he was tired of Brussels’ challenges to Italy’s fiscal policies: “At Bratislava and other summits, I carry the voice of a country that is fed up of receiving lists of things to do.”

On the issue of Brexit, British Prime Minister Theresa May is under increasing pressure to reveal when she intends to trigger Article 50, which would set the time clock for negotiating an exit within two years.  She continues to say Britain won’t invoke the clause until early next year.

On the economic front and the Eurozone, July industrial production fell 1.1% over June, down 0.5% year over year, in a response to Brexit, while exports to the rest of the world shrank by 10% in July compared to the same month a year ago.  [Germany’s exports for the month were earlier reported to be down the same 10%.]

Car sales in the EU for July and August rose 3% over the same period in 2015 (when they were up 10%), according to the European Car Manufacturers Association.

Inflation in Germany for the month of August was 0.3% on an annualized basis, according to government statistics, with the core rate 1.2%.

Italy’s CPI was down 0.1% in August, not good.

In the U.K., August inflation rose 0.6%, annualized.  Retail sales fell 0.2% in August over July, when they rose 1.9%.  Year over year, retail sales for August were up a strong 6.2%, but businesses say it’s still too early to judge what the impact of Brexit will be.

The Bank of England held the line on interest rates this week, but said a further cut this year was still on the table, depending on how post-Brexit data evolves.

Ireland’s GDP in the second quarter increased 0.6% over the first, with growth running at an annual rate of 4.1%, though this was the second-lowest figure since 2013.

On the European corporate bond front, both the ECB and BOE’s quantitative easing (QE) programs are buying up corporates, which has led to a splurge of issuance by companies taking advantage of turbocharged lower rates. The Bank of England said it would start buying corporates later this month and do so for an “initial period” of 18 months. The ECB has been doing it for some time now.

[The BOE said it will only buy bonds of those U.K. companies generating significant revenues in the country, and they must be rated investment grade by at least one ratings agency.]

In other European news....

--French National Front leader Marine Le Pen is ending her silence with what is being billed as a major political speech this weekend in her southern heartlands.  For months she has allowed the news to do the talking, such as the Brexit vote and the Islamist-inspired truck rampage in Nice on July 14.

Le Pen will be kicking off her bid for the French presidency, and despite her inactivity, her approval rating, according to an Ifop poll, has risen to 33% today from 28%, while that of potential presidential rival Nicolas Sarkozy has fallen to 35% from 38%. Sarkozy has been chasing National Front voters.

The first round of the presidential vote is in April, with the run-off on May 7.  As of today, Le Pen would still be in the final two, but then lose badly to whoever she is up against.

As harsh as it is to say, we all know it’s about how many times, and at what level, France is hit on the terror front between now and April as to how much further Le Pen can rise.  If there is relative calm, there is little reason for her status to improve, especially as the French economy, while far from robust, has stabilized some.  [A Trump victory could help her a little, Le Pen touting his outsider campaign.]

--Residents have clashed with asylum-seekers in a town in eastern Germany, Bautzen, that has become a flashpoint for anti-refugee sentiment.  In February, locals there cheered when a building due to house migrants was set on fire.  Bautzen is 38 miles east of Dresden, where the anti-Islamist Pegida movement began.

Separately, German police arrested three Syrian men on Tuesday on suspicion of being sent on a mission by ISIS; the arrests reigniting concerns about the terror threat posed by those arriving in Europe as refugees.

Prosecutors said the three entered Germany in 2015 and were either going to carry out a pre-planned mission or were awaiting further instructions.

--The U.K. finally gave the go ahead on a new $24 billion nuclear power station, Hinkley Point in Somerset, that is being financed by the French and the Chinese.

However, the government said it would “impose a new legal framework for future foreign investment in Britain’s critical infrastructure.”

Critics have warned of escalating costs and the implications of nuclear power plants being built in the U.K. by foreign governments.

The Chinese agreed to take a stake in Hinkley if the government approved a Chinese-led and designed project, which has raised questions over national security.

I think Britain did the right thing as there was an agreement in principle with Chinese President Xi Jinping during a state visit he made to the U.K. in October 2015.  It’s not good form to go back on this.  But in the future, I’d say ‘no way.’

--Hundreds of thousands of pro-independence Catalans took over the streets of Barcelona and four other cities last Sunday to urge their political leaders to push ahead with plans to break away from the rest of Spain.

Madrid has been without an elected government since last December, and a third vote in one year is slated for December.

The demonstrations, while large, were however smaller than in 2012...an estimated 540,000 compared with 1.5 million back then.

Ironically, my friend Dr. W. and his wife had just returned from Barcelona and I had asked them to pick up some intelligence for me.

The Good Doctor noted that while he consumed too much....oops, wrong paragraph....

It seems that everyone he and Connie met were pro-Catalan and want to leave Spain, but retain their affiliation with the EU.  At least in that region, they also don’t have an issue with large numbers of refugees...yet.

But Dr. W. added that while they want their independence, they also love a full governmental safety net to provide for them if they are disabled, can’t get into college, can’t get the job they want, and provide for a comfortable retirement.

As my friend observed, “How the heck are you going to pay for all of this?”

--Talk about embarrassing, a re-vote in the Austrian presidential election, which was to be Oct. 2, is being pushed back to Dec. 4 over “defective glue.”

The government was forced to acknowledge that the glue used on the envelopes for the absentee ballots wouldn’t stick; this after the initial vote in May was thrown out in court over the disposition of some 740,000 absentee ballots that were counted on election day instead of a day later.

Far-right populist Norbert Hofer had lost the first vote to Alexander Van der Bellen by a 50.3% to 49.7% margin, before he filed a successful complaint to the Constitutional Court about procedural irregularities.

Austria has been without a president since July 8, though this is a largely ceremonial post.  The significance would be in that a Hofer victory would be the first by a far-right politician for a national leadership post since WW II.

In Japan, the PPI waa down 0.3% in Aug. over July, -3.6% year over year, but machine orders rose 4.9% in July over June; up 5.2% yoy, the fastest since January for this key barometer.

Street Bytes

--In the end, despite the volatility, the Dow finished up just 0.2% to 18123, while the S&P 500 rose 0.5%.  But Nasdaq soared 2.3%, within 18 points of its all-time high at 5244, due largely to Apple’s big move, nearly 12%.

--U.S. Treasury Yields

6-mo. 0.48%  2-yr. 0.76%  10-yr. 1.69%  30-yr. 2.45%

--Shares in Apple surged all week to levels not seen in 10 months amid evidence sales of the new iPhone 7 won’t be as slow as first feared.  Initial shipments of the jet-black version, for example, have sold out online worldwide.

But Apple did not make enough of the iPhone 7 Plus models to meet demand, with inadequate supplies of components for the camera feature being the cause of the backup in manufacturing.  Plus the jet-black versions have a more complicated manufacturing process, so we’re told.

Apple won’t disclose initial weekend sales numbers for the new models, breaking with tradition, but according to RBC Capital Markets, the company will sell 44 million iPhones in the three months through September, down from 48 million sold in the same period a year earlier, but sales in the final three months are forecast to reach 79 million units, up from 75 million a year earlier, RBC forecast.  [Bloomberg]

Preorders from Sprint Corp. and T-Mobile have been better-than-expected and at record levels, as reported by executives at the two.  But it’s not clear how much of the activity is being driven by promotional activities, like offering the phone for free when you trade in your iPhone 6 and 6s models and commit to two-year contracts, as the companies, including Verizon and AT&T, scramble for market share.  A UBS analyst estimates the carriers are losing about $300 per iPhone under the trade-in promos.  [New York Post]

[Meanwhile, Samsung’s Galaxy Note 7 woes can’t hurt.]

A week earlier, Apple shares had tanked after the new phone was unveiled, with analysts and investors complaining it didn’t look any different from the iPhone 6 and 6s models.

The two models start at $649 and $769, respectively.

--Speaking of Samsung, it formally recalled 1 million Galaxy Note 7 smartphones sold in the U.S., replacing or refunding them, with the company’s reputation severely damaged.

Samsung said on Thursday it had received 92 reports of batteries overheating in the United States, including 26 reports of burns and 55 cases of property damage.

Then the U.S. Consumer Product Safety Commission announced a product recall.

Samsung is the world’s largest manufacturer of smartphones and the recall is unprecedented.  The company said replacement devices would be available at most retail locations in the U.S. no later than Sept. 21.

--Crude Oil was once again all over the place, overreacting to every little inventory number.  No one thinks long term trading this product.  “Omigod,” inventories fell by 559,000 barrels to 510.8m in the week to September 9, according to the U.S. Energy Information Administration when inventories were due to rise by 4m!

Yeah, inventories dropped a huge 14.5m barrels the previous week, the biggest fall since 1999, but when all was said and done the price was down.  You see, traders decided the drop in inventory was fleeting; much of it owed to the hurricane from weeks earlier that shut down some Gulf production as a precaution.

Plus early in the week, the International Energy Agency said demand growth would slump, with supplies robust well into late 2017, a fourth consecutive year of oversupply, according to the IEA.  Demand has been faltering in China and India, while OPEC continues to churn out record output.

--Shares in Deutsche Bank fell sharply, nearly 10%, on reports the U.S. Department of Justice was seeking a penalty of as much as $14 billion to settle allegations of miss-selling mortgage securities.  In a statement, DB said:

“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited.  The negotiations are only just beginning.”

DB has built up a reserve of about $6bn to deal with its legal woes, but it’s not clear how much of this is intended for the U.S. probe.

--Wells Fargo is far from out of the woods as the bank still faces lawsuits from customers who say they were harmed by the bank’s practices, as well as from former employees who claim they were fired or forced to quit when they wouldn’t comply with the edicts of their superiors to meet sales quotas or “open unneeded ‘ghost’ accounts for customers, to order credit cards without customers’ permission and to forge clients signatures on paperwork in order to meet their sales quotas,” as alleged in one suit.  [Los Angeles Times]

Wells has paid $185 million thus far, and reached a separate class-action settlement brought on behalf of customers, details of which weren’t disclosed.  But this was separate from other customer and employee suits.

CEO John Stumpf is to appear before the Senate Banking Committee on Tuesday, telling the Wall Street Journal the other day, “There was no incentive to do bad things,” calling the conduct that led to the settlement with federal and local authorities “not acceptable.”

--Tuesday’s above-mentioned Census data brought good economic news nationwide, but it was bad for New Jersey as the household median income in my state remained stagnant while it was increasing in 2015 across the nation by 5.2%.

The percent change here was just 0.3%, the lowest of any state.

--Within the past few weeks, two more companies have pulled out of New Jersey’s health exchange marketplace created under ObamaCare (Health Republic Insurance of New Jersey and Oscar), forcing 60,000 policy holders to find another provider.

Back in May, Oxford Health Plans, owned by UnitedHealthcare Co., announced it was pulling out of the state.

--Business software giant Oracle reported top-line revenue growth of just 2%, while net income increased 5% to $1.8 billion.  But you know I can’t stand Oracle because of the options policy for the man at the top, and so I got a kick out of this Reuters story.

“The headline of the earnings press release read: Q1 FY17 GAAP SaaS and PaaS revenues were up 77 percent, and up 79 percent in constant currency.”

GAAP refers to generally accepted accounting principles, while SaaS and PaaS refers to software as a service and platform as a service, “a category accounting for 9 percent of Oracle’s total revenue in the quarter to August.”

Again, total revenue grew 2%.  But the company did say cloud revenue increased 59% from a year ago to $969m in the three months ended in August, or about 11% of overall sales.  Oracle got off to a very late start in this category.

--Intel Corp. announced third-quarter revenue is expected to be above the company’s previous outlook; now about $15.6 billion, plus or minus $300 million, as compared to the previous range of $14.9bn, plus or minus $500 million. The increase is primarily driven by the replenishment of the PC supply chain inventory, with the company seeing some signs of improving PC demand overall.

Intel will report on Oct. 18.

--Tesla Chief Executive Elon Musk said his company had come up with a “dramatic improvement” to the automaker’s Autopilot technology – to help the car see better and avoid collisions.

This follows several Autopilot-related crashes, including a fatal one in Florida in May, where a Model S driving on Autopilot failed to distinguish between a big rig (which was white) and the bright sky behind it.

The changes will be in the form of a software upgrade that won’t require owners to bring their cars into a shop.

The most significant upgrade, Musk said on a call Sunday, is shifting Autopilot to rely on the car’s radar to create “a picture of the world.”

I’m thinking the car will see a picture of an increasingly scary geopolitical situation and automatically drive off a bridge.

--Meanwhile, General Motors announced that its new all-electric Chevy Bolt has a driving range of 238 miles, better than the 215 miles of Tesla’s Model 3 sedan.  Both will go for about $30,000 after tax incentives, but the Bolt will be available before the year is out and the new Model 3 won’t enter production until the middle of next year, assuming Tesla actually meets a production target, which never happens.

--Walt Disney Co. announced it had laid off about 250 people in its consumer products and interactive media unit.  Disney has been revamping its gaming strategy in the face of slowing sales.

Separately, NBCUniversal disclosed it was eliminating 200 jobs at its DreamWorks Animation unit, less than a month after completing its takeover of it.  Universal might outsource more work from DreamWorks Animation to a Paris-based studio, Illumination Mac Guff, which benefits from French subsidies.  [L.A. Times]

--California Democratic Gov. Jerry Brown signed legislation that entitles farmworkers in the state to the same overtime pay as most other hourly workers.  The United Farm Workers union has been arguing exempting farmworkers from labor laws is racist and unfair.

The new law will be phased in beginning in 2019.

Currently, agricultural employers must pay time-and-a-half to farmworkers after 10 hours in a day or 60 hours in a week.

--Golfsmith International, the world’s largest golf retailer, filed for bankruptcy protection on Wednesday after failing to find a buyer.

At least 20 of 109 stores will be shuttered with Oct. 31 as a closing date.  One of those is a Fifth Ave., Manhattan location. The story was first broken by the New York Post on Monday.

Yes, the slump in golf’s popularity is doing a number on all those affiliated with the sport, with some 20% who used to regularly play walking away since 2000.

Aside from the expense, especially at the country club level, it’s as much about time as anything else.  An easy solution is an emphasis on 9-hole play. 

Golfsmith said it would try to sell its remaining stores in bankruptcy.

--Christ-mas-time...is heeere....

Yup, time for retailers and shippers to begin ramping up and announcing by how much they expect to increase their workforces for the holiday crush.

UPS said it plans to bring in roughly 95,000 workers to help deliver Santa’s toys and 10-year-old fruit cakes (WMDs).  Toys R Us said it is now accepting applications to fill thousands of part-time positions at its stores and distribution facilities.  Target announced it plans to hire 70,000 holiday workers.

But with the unemployment rate at 4.9%, it will be interesting to see how easily companies can fill the slots.

UPS emphasizes part-time work can lead to full-time employment.  Current CEO David Abney started at the company loading trucks part time when he was a college student.

--We note the passing of a New York-area institution, Eddie Antar, founder of the Crazy Eddie electronics store chain, who died at the age of 68.

Antar, from Brooklyn, created the chain only to see it collapse when an underlying fraud was exposed.  He was extradited from Israel in 1993 and pleaded guilty to a single charge of racketeering.

At its peak, Crazy Eddie had 43 stores in the New York metropolitan area, fueled in part by the spread of the VCR.

But it became famous for a memorable series of commercials starring a radio disc jockey named Jerry Carroll, who performed more than 7,500 radio and television spots that ran for nearly 14 years, starting in 1975.  Dan Aykroyd used to lampoon them on “SNL.”

Antar took the chain public in 1984 at $8 a share and within two years, the stock price hit $79.

But after dissident stockholders staged a takeover of the company in 1987, they said they had discovered $45 million in merchandise was missing.  At the same time, federal prosecutors were investigating Antar for defrauding shareholders through stock manipulation.

Authorities eventually accused him and two brothers of taking from the till and inflating the value of the company.  Even before the company went public, Antar would fly to Israel with cash strapped to his body as part of the scheme.

So he fled for good in 1990 and was found and arrested two years later and eventually extradited. Eddie Antar served seven years in federal prison.  One brother testified against Eddie. The other pleaded guilty and also served time.  [Niraj Chokshisept / New York Times]

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: The Syrian ceasefire brokered by U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov commenced Monday and thus far there has been little major violence, but the aid trucks were stuck on the border with Turkey and not getting into the likes of Aleppo.

[In the hours prior to the truce, at least 91 people were killed in air strikes on rebel-held areas of the country, according to doctors and monitoring groups.  Today, Friday, there were reports of fierce fighting and clashes between government forces and rebels on the eastern edge of Damascus.]

Moscow accused the rebels of violating the truce 60 times (as of Thursday), but some of these ‘rebel’ forces are the ones the U.S. is supporting...others could be Islamist linked.

The truce was first extended for 48 hours under an agreement between Moscow and Washington, and on Thursday, 20 trucks loaded with aid for eastern Aleppo finally crossed into a buffer zone between Turkey and Syria, according to the UN’s head of the humanitarian taskforce, Jan Egeland.  But they weren’t getting through as yet, with conflicting stories on whether the key Castello Road route into the city was being demilitarized, which is part of the agreement.

The Syrian Observatory for Human Rights, the British-based activist group that has been critical in getting the facts out during the war, said government forces were still on the road.

It’s up to Russia to exert pressure on Syrian President Bashar Assad to get his army to cooperate.  Without aid for Aleppo, where at least 250,000 remain under siege, the agreement simply isn’t credible.

The truce is to be extended every 48 hours, and then this coming Monday, the U.S. and Russia would weigh the success or failure of it and decide if the two sides could cooperate on going after ISIS and Jabhat Fatah al Sham (previously known as Al-Nusra Front).  Government warplanes would then be barred from areas where either Jabhat Fatah al Sham or opposition forces are present.

Oh, it’s complicated, and of course both Russia and Syria have bombed forces the U.S. supposedly supports.  Plus now Turkey has been going after Kurds loyal to America.

President Assad continues to assert he is committed to recovering all of Syria, though his army is in tatters.

Meanwhile, France isn’t real happy it hasn’t been apprised of the details of the deal between the U.S. and Russia, as it should be; France concerned that mainstream rebels will end up being targeted, not Islamists, which will clearly be the result. 

Look, friends.  I’ve told you since 2012 it was over!  Syria is finished.

Benny Avni / New York Post

“Another one of Secretary of State John Kerry’s ‘Hail Mary’ diplomatic deals is well on its way to collapsing, this time in Syria.

“A seven-day cease-fire was supposed to start Monday across Syria, under an agreement signed last week by Kerry and his Russian counterpart, Sergei Lavrov.  Multiparty talks to end the war were to follow....

“The United Nations was to start delivering humanitarian aid to civilians in long-besieged towns, like Aleppo. And ‘We made everything ready,’ UN Secretary-General Ban Ki-moon told reporters Wednesday. But aid convoys hadn’t yet moved because, as one UN source told me, ‘We’re still waiting for necessary approval from all sides.’

“Neither the Russian-backed Syrian government (which is imposing the Aleppo siege) nor its opponents will guarantee aid workers’ safety while they deliver food, medicine and shelter to besieged women, children and the elderly.  Those Syrians are yet to benefit from last week’s amicable Kerry-Lavrov handshake....

“(While) the first stage is off to an iffy start, the deal will get even wobblier next week.  That’s when America and Russia are scheduled to start sharing intelligence on the fight against ISIS & Co.  It’s a crucial part of the Kerry-Lavrov deal – and one the Pentagon strongly opposes.

“The New York Times reports that Defense Secretary Ash Carter is unenthusiastic about handing the Kremlin details about the anti-regime rebels America supports.  After all, Syrian President Bashar al-Assad and his Russian patrons have never been that interested in fighting ISIS. Assad, in fact, is complicit in its growth.

“Instead, the Russians and Assad’s other allies (mainly Iran and Hizbullah) are most interested in squashing any legitimate alternative to the Damascus butcher, including the groups America has tried to cultivate since the war began...

“As long as Assad remains in power, drawing the ire of the country’s Sunni majority, the fighting will go on.  As Obama and Kerry used to say (before they capitulated to Moscow), Assad long ago lost legitimacy as Syria’s ruler....

“Since 2011, when the Syrian civil war erupted, Obama has essentially acted as if it’s not our problem. In came Russian President Vladimir Putin, who’s turning Syria into a Russian Mediterranean outpost....

“In fact, we do have an interest in today’s most consequential Mideast contest.  So the next president will have to walk away from Kerry’s futile deal-making, and listen to the hawks advocating a more muscular approach in Syria. There’s plenty of space between a large ground-force invasion and outsourcing the Syrian war to Putin.

“This week, Obama chided Donald Trump, suggesting he’d do Putin’s bidding around the globe.  Too bad John Kerry, in Syria at least, is already doing exactly that.”

Editorial / Washington Post

“(Vladimir Putin’s) regime at least has a motive (to see the ceasefire succeed): If  it does, it will have realized Mr. Putin’s aspiration of imposing his will on the United States.

“When Russia launched its direct military intervention in Syria a year ago, President Obama predicted its only result would be a quagmire.  Instead, the agreement struck by Secretary of State John F. Kerry on Friday with his Russian counterpart offers Mr. Putin everything he sought.  The Assad regime, which was tottering a year ago, will be entrenched and its opposition dealt a powerful blow. The United States will meanwhile grant Mr. Putin’s long-standing demand that it join with Russia in targeting groups deemed to be terrorists.  If serious political negotiations on Syria’s future ever take place – an unlikely prospect, at least in the Obama administration’s remaining months – the Assad regime and its Russian and Iranian backers will hold a commanding position.”

In Iraq, government and Western officials are sounding notes of cautious optimism over plans to recapture the ISIS capital of Mosul. What has changed from all the dire forecasts of just four months ago is that the Iraqi military has gotten stronger and ISIS weaker.

You still have the issue of distrust between Mosul’s Sunni population and Iraq’s Shia-dominated security forces, so there is no certainty the battle will go well, but it is expected to begin by year end.

Some believe talk of optimism as to the outcome is unfounded, given that ISIS has had two years to prepare, with a Kurdish official telling the Financial Times talk of success is “delusional.”

But an Iraqi army spokesman is confident locals would rise to support the Iraqi army.

There are some reports that ISIS has built miles of underground tunnels all around Mosul, complete with bathrooms and enough food to last years.

As to collateral damage, the Iraqi government has seen estimates that it will cost $1.5 billion a year in humanitarian requirements if the army blasts the hell out of the city as Mosul’s 1 million residents are then forced to live outside in camps.  But Iraqi forces estimate they ‘only’ destroyed about 20 percent of Fallujah in retaking that city earlier this year.  Ramadi, on the other hand, was half destroyed.

Meanwhile, the Kurds in Iraq  have expanded the area under their control by an estimated 50% in their push against ISIS.  Their commander, Gen. Wasta Rasul, told the BBC that after the Mosul offensive, the Kurds will press ahead with a referendum on independence in their areas.  “Iraq can’t stay as one unit,” he says.  “There should be three federations – Sunni, Shia and Kurds.  For me there is no unified Iraq.”

Iran/Saudi Arabia: Tensions over Saudi Arabia’s handling of the hajj are close to boiling over as a senior Saudi official, the Mecca province governor, urged Iran to end what he called wrong attitudes towards Arabs, warning Tehran also not to use force against the kingdom.

It’s about Shiite Muslim Iran and Sunni Saudi Arabia and the exclusion of Iranian pilgrims this year following last year’s crush that killed as many as 2,300, according to some estimates.

Prince Khaled al-Faisal said, “If (Iran) is preparing an army to invade us, we are not easily taken by someone who would make war on us.”

No top Iranian leader has called for war on the kingdom, but criticism of Riyadh from Tehran has been intense following the execution of dissident Saudi Shiite cleric Nimr al-Nimr and the attack by Iranians against the Saudi embassy in Tehran following Nimr’s death.  Iran’s Revolutionary Guards at the time promised “harsh revenge.”  [Jerusalem Post]

Meanwhile, Iran has stepped up its harassment of U.S. Navy ships in the Persian Gulf, with the Navy counting at least 31 interactions with Iranian naval forces deemed “unsafe,” “unprofessional,” or both, according to a defense official.

Army Gen. Joseph Votel, the top U.S. commander in the region, issued a rare warning to Iranian forces: “Ultimately if they continue to test us we’re going to respond and we’re going to protect ourselves and our partners.”

North Korea: South Korea announced it had a plan to annihilate Pyongyang if North Korea shows any signs of mounting a nuclear attack, according to South Korea’s Yonhap news agency. A military source said every part of the North Korean capital “will be completely destroyed by ballistic missiles and high-explosives shells.”

Yonhap has close ties to the Seoul government, and this was in response to the North’s fifth, and largest, nuclear test.  Separately, South Korean officials believe Pyongyang could be ready to conduct a sixth test at any time.

William J. Broad / New York Times

“Military experts say that by 2020, Pyongyang will most likely have the skills to make a reliable intercontinental ballistic missile topped by a nuclear warhead. They also expect that by then North Korea may have accumulated enough nuclear material to build up to 100 warheads....

“The Pentagon warned Congress in a report earlier this year that one of Pyongyang’s latest missiles, if perfected, ‘would be capable of reaching much of the continental United States.’”

Max Fisher / New York Times

“(Political scientists investigating Pyongyang’s behavior), time and again, emerged with the same answer: North Korea’s behavior, far from crazy, is all too rational.

“Its belligerence, they conclude, appears calculated to maintain a weak, isolated government that would otherwise succumb to the forces of history.  Its provocations introduce tremendous danger, but stave off what Pyongyang sees as the even greater threats of invasion or collapse.

“Denny Roy, a political scientist, wrote in a still-cited 1994 journal article that the country’s ‘reputation as a ‘crazy state’’ and for ‘reckless violence’ had ‘worked to North Korea’s advantage,’ keeping more powerful enemies at bay. But this image, he concluded, was ‘largely a product of misunderstanding and propaganda.’

“In some ways, this is more dangerous than irrationality.  While the country does not want war, its calculus leads it to cultivate a permanent risk of one – and prepare to stave off defeat, should war happen, potentially with nuclear weapons. That is a subtler danger, but a grave one.”

Ret. Navy admiral Mike Mullen and former U.S. Sen. Sam Nunn / Washington Post

“North Korea’s accelerating nuclear and missile programs, including its recent nuclear test, pose a grave and expanding threat to security, stability and peace in Asia and the rest of the world.  This threat affects close U.S. allies – South Korea and Japan – and U.S. personnel and facilities in the region.  In the coming months and years, it will create increasing danger for the United States.  It is likely that the next president will face a North Korea that has gained the capability to strike the United States with nuclear weapons.

“The Obama administration has succeeded in strengthening U.S. alliances in Asia and deterring a war, but, like its predecessors, has failed to change Pyongyang’s assessment that defiance is preferable to conciliation.  It is clear that the next president will have to sharpen Pyongyang’s choice: offer greater benefits for cooperation and promise greater costs for continued defiance....

“If Pyongyang refuses to negotiate, the United States and its allies should judiciously apply new military measures to deny North Korea the benefit of its actions and to strengthen deterrence against military attacks.  This can include the United States, South Korea and Japan jointly signaling that future North Korean aggression would be met with an active and proportionate self-defense response, including inside North Korea.

“We also recommend that the United States and its allies jointly build the capacity to intercept all missiles originating from North Korea with a range-payload capability greater than existing Scud missiles (approximately 1,000 kilometers) – whether they are declared to be ballistic missile tests or civil space launch vehicles....

“North Korea presents one of the most dangerous international security challenges facing the world.  In April, Chinese President Xi Jinping told a group of foreign diplomats that his country ‘will never allow war or chaos on the peninsula,’ a statement that seemed to apply to all parties.  The United States and China have a shared and vital national interest in preventing this from occurring. The time to act on that interest is now.”

Editorial / Washington Post

“President Obama reiterated Friday that ‘the United States does not, and never will, accept North Korea as a nuclear state.’ But Mr. Obama has failed to take the North Korean buildup seriously enough.  For years, his administration pursued a policy of ‘strategic patience,’ which mostly consisted of ignoring North Korea while mildly cajoling China to put more pressure on the regime. In February, Mr. Obama signed into law a bill pushed by congressional Republicans that gave him broad new powers to sanction North Korea and cut off its economic lifelines. The next month, the United Nations Security Council unanimously passed a resolution imposing new sanctions on the regime, including limits on its trade.

“However, China has not aggressively implemented the U.N. sanctions – and Mr. Obama has not used the powers Congress gave him. As The Post’s Anna Fifield recently reported, customs data shows that China’s trade with North Korea in June was almost 10 percent higher than the previous year, in spite of the sanctions.  Though the White House has issued executive orders sanctioning Mr. Kim and other senior leaders, congressional leaders point out that it has yet to penalize any Chinese companies or banks for continuing to do business with the regime.”

China: Authorities on Tuesday revealed details of an unprecedented election fraud (vote-buying) at the core of the Liaoning provincial legislature that rendered it inoperable and forced the dismissal of 45 national lawmakers.  It was inoperable because more than half of its standing committee members were disqualified over the fraud, thus it couldn’t form a quorum.  [South China Morning Post]

Separately, since Taiwan’s new president, Tsai Ing-wen, took office in May, tourism to Taiwan from the mainland has been falling rapidly as she has refused to recognize the “1992 consensus,” which states that there is only “one China,” with each side having its own interpretation of what that means.

Beijing is not happy and it can easily control China’s tourism bureaus.  The two sides are seen to be in a cold war.  Tourism was down 15% in July over a year earlier and August’s figures were said to be worse.

You know my feeling.  This is the sleeper geopolitical issue the remainder of 2016.

Russia: Parliamentary elections are being held on Sunday.  Don’t look for any surprises.  Last week, the Levada Center, an independent polling group in Russia whose results I have frequently quoted, was branded a foreign agent for publishing a poll showing declining support for the pro-Putin United Russia party. This label, which equates Levada with espionage, is crippling to the Center’s activities. 

Philippines: According to a former death squad member (hit man) who testified before a Senate inquiry on extra-judicial killings, President Rodrigo Duterte once shot dead a justice department agent with an Uzi submachine gun while serving as mayor of Davao.

Edgar Matobato also alleged Duterte ordered him and others to kill about 1,000 criminals or political rivals over a 25-year period.

Duterte’s office denied the allegations.

More importantly, the United States doesn’t know how to respond to Duterte’s moves, as he blasts the U.S. in favor of stronger relations with China.

But a senior U.S. official involved in the region told the Wall Street Journal that Duterte was alienating himself from the country’s political elites and the military, who both want strong relations with Washington to counter Beijing.

The other day, Duterte demanded the removal of U.S. troops from the southern island of Mindanao, which could do serious damage to the alliance.

Looks to me like we could be talkin’ ‘coup time’ in 2017...just my personal conclusion.

Brazil: Former president Luiz Inacio Lula da Silva has been charged with corruption; federal prosecutors accusing him of being the “commander-in-chief” of the kickback scheme at oil giant Petrobras.  Lula was accused of holding power through a “bribocracy.”

From what I know of the case, the details of which have been out there awhile and include a penthouse apartment prosecutors allege was secretly acquired and renovated at great cost for Lula’s family, by one of the construction groups at the center of the Petrobras scandal, this seems kind of weak.

The main goal is to weaken Lula’s chances for a comeback in 2018 and his Workers’ party (PT) from making gains in upcoming municipal elections.

Separately, one of Brazil’s best-loved television actors, Domingos Montagner, drowned in a river where the crew was shooting scenes for the country’s most popular soap opera.

Montagner, who played the leading role in a soap called Velho Chico, which is named after the Sao Francisco river, died in it after going for a swim with an actress after the day’s filming was over.  She said he was dragged away by the river’s strong currents, and when Camila Pitanga cried for help, some of the locals failed to act initially because they believed the drowning was a scene in the soap opera.

Montagner’s body was found underwater hours later.

Random Musings

--Polls....

A Washington Post/ABC News national poll has Hillary Clinton holding a 46-41 lead over Donald Trump, followed by Libertarian candidate Gary Johnson at 9% and the Green Party’s Jill Stein at 2% among likely voters.

More than 6 in 10 voters say both Trump and Clinton are not honest and trustworthy.  Only 46% of Trump supporters say they are “very enthusiastic” about his candidacy, but that number drops to 33% for Clinton’s supporters.

Trump’s 50-36 lead among white likely voters is smaller than Mitt Romney’s 20-point edge in the 2012 exit poll.

Clinton’s 75-13 lead among nonwhite voters is similar to Barack Obama’s four years ago.

A New York Times/CBS News national poll has Clinton leading Trump 46-44 among likely voters.  In a four-way race the two are tied at 42 percent, with Gary Johnson at 8 and Jill Stein at 4 percent.

In this one, 26% of voters ages 18 to 29 say they plan to vote for Johnson, and another 10% back Stein.

51% of Trump supporters say they are very enthusiastic about voting, to just 43% of Clinton supporters.

[This survey is significant because many of those polled would have been aware of Clinton’s health issues and her comment about “deplorables,” covered below.]

Two other national polls...the L.A. Times/USC Dornsife tracking poll has Trump up 47-41, while the latest Reuters/Ipsos online survey puts it at 40-39 Clinton.

And Thursday, a Fox News national survey has Trump ahead 46-45...41-40 in a 4-way race.

A CBS News Battleground Tracker poll released Sunday morning had Clinton leading Trump by 2 points, 44-42, in Florida.  Last month, she led Trump by 5 points.

The same survey has Clinton leading in Ohio, 46-39.

In a Bloomberg Politics poll of Ohio, Trump leads Clinton 48-43 among likely voters in a two-way contest, and 44-39 with Johnson and Stein included.

A CNN/ORC poll has Donald Trump, not Clinton, leading in Florida, 47-44 (Johnson 6%), while the survey has Trump with a 46-41 lead in Ohio (Johnson 8%).  Trump leads among independents over Clinton by 10 points in Florida and 8 points in Ohio.

A new NBC News/Wall Street Journal/Marist poll has Clinton up by one point in Nevada, 45-44, and New Hampshire, 42-41.  Clinton is also up one point among likely voters in Arizona, 42-41.  Ergo, all deadlocked according to this survey.

[Obama won New Hampshire and Nevada by more than 5 points in 2012, while Romney won Arizona by 9.]

A Monmouth University poll of Iowa voters has Trump extending his lead here to 45-37 (Johnson 8%).

A new poll for Univision News has Clinton “far ahead among Latino voters in Arizona, Colorado, Florida and Nevada, with her biggest lead at 50 percentage points in Arizona and smallest in Florida, where she’s ahead by 24 points....

“Clinton’s advantages over Trump among Latino voters are similar to President Obama’s advantage over Republican Mitt Romney in 2012 in Nevada, Florida and Arizona, while her 45-point lead in Colorado is smaller than Obama’s 52-point edge there four years ago.”  [Washington Post]

Gary Johnson earned support from 5 or 6 percent of voters in each state.

--Sarah Ferris / The Hill:

“Eight of the states that will determine the Senate majority in November are likely to see significant reductions in the number of insurers participating in ObamaCare marketplaces.

“The likely departures of insurers in Illinois, Wisconsin, Florida, Pennsylvania, Ohio, North Carolina, Arizona and Missouri are pushing the healthcare law toward the center of some of the most competitive Senate races in the country.

“GOP strategists say ObamaCare’s troubles this year are morphing into a perfect storm for their candidates, providing a boost in a year when the party is defending 24 Senate seats.”

--Hillary Clinton’s campaign released a letter from her doctor, Lisa Bardack, that described her treatment for “mild” bacterial pneumonia and painted an overall picture of good health as they try to put to rest concerns about her medical condition after she stumbled around like an actor in a bad drunk driving commercial on Sunday.

So we learned Hillary was going through a regimen involving an antibiotic to rid her of the pneumonia, though the illness caused Clinton to miss three days of campaigning before she resumed her schedule on Thursday.

For the record, after she abruptly left the 9/11 ceremonies at Ground Zero on Sunday morning, and she was caught on video buckling in front of her van, it was 90 minutes before the campaign said anything on her condition or whereabouts.  It was many hours after that that aides revealed she had been diagnosed with pneumonia two days earlier.

Clinton herself revealed the kind of dehydration and dizziness that caused her collapse on Sunday has occurred “a few times” over her life, these comments to CNN coming after Bill Clinton told CBS television that his wife had experienced similar episodes on “more than one occasion.”

Clinton turns 69 in October, which would make her the second-oldest president to enter the White House (after Ronald Reagan, who was also 69).  Donald Trump would be the oldest, having turned 70 in June.

[Trump discussed his own health during a taping of “The Dr. Oz Show” on Wednesday that aired Thursday.  Trump shared some of the results of his most recent physical examination.  Dr. Oz declared Trump was in seemingly good health.]

--Democratic strategist David Axelrod, who helped Barack Obama win the White House, tweeted after Clinton’s collapse and the handling by her campaign of the episode:

“Antibiotics can take care of pneumonia. What’s the cure for an unhealthy penchant for privacy that repeatedly creates unnecessary problems?”

One Clinton ally called the string of events leading up to her abrupt departure at Ground Zero as a “self-inflicted f---ing nightmare.” [Amie Parnes / The Hill]

--The New York Post reported that regarding Hillary Clinton’s incident she was headed to an emergency room, “but detoured to daughter Chelsea Clinton’s apartment to keep details of her medical treatment under wraps.

“Secret Service protocol called for the Democratic presidential nominee to be rushed to a state-designated Level I Trauma Center in the wake of her Sunday-morning health crisis, sources said....

“But a campaign operative decided to change course to avoid having Clinton seen by doctors, nurses and other medical workers who could leak details to reporters, according to a source.

“In addition, Clinton’s van was supposed to be escorted by an NYPD detail, but the Secret Service whisked her away from Ground Zero before cops could accompany her, another source said....

“NYPD Deputy Commissioner John Miller said Clinton’s ‘early departure was transmitted in real time by the Secret Service to the NYPD... There was no lack of communication, nor diminution of security,” he added.

Rich Lowry / New York Post

“With the Clintons, mistrust always pays.

“A couple of weeks ago, Hillary Clinton was yukking it up with Jimmy Kimmel over the absurdity of rumors that she was hiding something about her health.  Look, she can open a pickle jar!

“That feels so long ago now that her campaign has admitted that she was indeed hiding something about her health – a pneumonia diagnosis late last week....

“Clinton has now been caught being dishonest about an area where public skepticism is most justified.  Politicians lying about or concealing health problems is a common feature of every political system the world over, democratic or totalitarian, East or West.  Hillary would do well to adopt an uncharacteristic policy of complete transparency about her health records and perform the rest of the way without a disruption more serious than a stray sneeze.

“Even if she does, the handling of her pneumonia is a preview of how a second Clinton White House would operate.  If she’s elected president, inevitably, some outlandish allegation will arise.  The Clintons and their defenders will dismiss it as a hateful fantasy, before – when all other options are exhausted – admitting it’s actually true.

“This is the Clinton pattern over a couple of decades of stoking, and validating, their critics’ distrust.”

--Michael Goodwin / New York Post

“It is said that history turns on small hinges, and now maybe the presidential race does, too. For hinges don’t get much smaller than the 20-second video of Hillary Clinton collapsing and being lifted into her security vehicle.

“Without it, Americans would still be clueless about Clinton’s serious health issues. Because of it, she was forced to admit she has pneumonia.

“Because they were scooped by the video, an army of journalists is now under pressure to report facts instead of covering them up.  Most important, voters got fresh proof that Clinton’s first instinct is to lie, and then lie again.

“Those are just some of the immediate aftershocks of that little video.   If my hunch is correct, the fallout is just beginning and eventually will result in voters learning the whole truth of Clinton’s condition.

“Start with the fact that she humiliated the so-called best and brightest news organizations.  Despite her unshakable reputation for being dishonest and untrustworthy, Clinton nonetheless managed to snooker most mainstream outlets into believing that her coughing fits were just allergies.

“Those organizations were so gullible that they created a protective circle around her.  Doing a modern imitation of the correspondents of the past who refused to photograph FDR in a wheelchair or refused to reveal JFK’s and LBJ’s White House trysts, the press corps swallowed Clinton’s claim that her health was fine....

“NBC News got the full treatment when it dared to break ranks.

“Alone among the big networks and major papers, it did a four-paragraph, 91-word story on Clinton’s uncontrolled coughing fit during her Labor Day speech.  In a flash, campaign operatives and their media handmaidens declared war on the reporter, Andrew Rafferty, lest others also get the crazy notion that their job is to report facts.

“Rafferty was mocked and swamped with insults, including from some MSNBC commentators who turned on their sister network.  They were like jackals, tearing away at a colleague’s reputation out of partisan allegiance.

“The Washington Post, CNN and others added their voices to the Clinton chorus, demonizing any who mentioned her coughing fits as cranks, nut jobs and conspiracy theorists. No news here, they thundered.

“In fact, the deniers were suckers.  They were buying into the Clinton scam that the world is out to get her. They are her useful idiots....

“But remember the little video – it is a hinge of hope. It shows the power of simple facts and the value of the democratization of media.

“In this case, it lifted the veil of dishonesty and informed the electorate.  In doing so, it reminded millions of Americans why they don’t trust the mainstream media any more than they trust the Clintons.

“Smart people, deplorables and all.”

Editorial / Wall Street Journal

“Mr. Trump has certainly made appalling comments, but Republicans and media conservatives have criticized him for it.  They denounced his praise of Vladimir Putin.  They assailed his attacks on Judge Gonzalo Curiel and his insensitivity to the Khan family.  Some have said they can’t support the GOP nominee.

“But where are the Democrats raising doubts about Mrs. Clinton’s behavior?  Mrs. Clinton reneged on her confirmation promise to the Senate not to mix her State Department duties with the Clinton Foundation by doing favors for donors.  She maintained a private email server to hide her official emails and lied about it to the public.  Yet no prominent Democrat we know has denounced this deception, and former House Speaker Nancy Pelosi says there’s ‘too much ado’ about it.

“The great liberal media watchdogs aren’t challenging Mrs. Clinton either. They’re beating up NBC’s Matt Lauer because he spent too much time asking Mrs. Clinton about the emails during last week’s military forum. This is best understood as a collective warning to the moderators of the coming debates not to jeopardize their standing in polite progressive company by doing the same.

“As Mrs. Clinton’s support has eroded in the polls, Democrats are figuring out that they may have nominated the only candidate who could lose to Donald Trump. But then they didn’t give themselves many good choices.  Their Congressional leaders are old, and their bench in the states is thin after their election wipeouts of 2010 and 2014.  Mrs. Clinton’s bid to be the first woman President fit the party’s priority for identity politics, and the Clinton machine would do what it takes to win.

“Mrs. Clinton is still leading, and Mr. Trump is always a driverless-car accident waiting to happen.  But it’s also obvious that a majority of Americans do not want to vote for an extension of the Clinton dynasty. They aren’t ‘deplorables.’ They’ve seen Mrs. Clinton in public life for 25 years and they know what they’ll be getting if she wins.”

--Emails released by hackers behind a WikiLeaks-type website believed to have ties to Russian intelligence show former Secretary of State Colin Powell criticizing Trump, Bill and Hillary Clinton and others, with Powell saying they were authentic and that the hackers had a lot more.

The remarks were made by Powell to private friends and colleagues.  While he served under President George W. Bush and endorsed Barack Obama, twice, he has largely avoided controversy since he’s retired.

Powell slammed Trump as a “national disgrace” and an “international pariah” in a June email to a former aide, saying Trump was “in the process of destroying himself.”

Previously, Powell had avoided criticizing Trump in any fashion.

Powell also ripped Trump for the “racist” birther movement in an August email.  “When Trump couldn’t keep that up he said he also wanted to see if the certificate noted that he was a Muslim,” Powell wrote.

“There is nothing he can say that will sway black voters so he might as well say it to white folks,” Powell wrote in another email last month.  “He is at 1% black voters and will drop.  He takes us for idiots.”

As for Hillary Clinton, Powell wrote: “Everything HRC touches she kind of screws up with hubris.”

Regarding the emails and Clinton’s private server, Powell said, “I have been warning her staff for a year not to try to use me.”

In another email, Powell wrote a confidant, “HRC could have killed this two years ago by merely telling everyone honestly what she had done and not tie me into it.”  [Jesse Byrnes / The Hill]

--Daniel Henninger / Wall Street Journal

“Hillary Clinton’s comment that half of Donald Trump’s supporters are ‘racist, sexist, homophobic, xenophobic, Islamophobic’ – a heck of a lot of phobia for anyone to lug around all day – puts back in play what will be seen as one of the 2016 campaign’s defining forces: the revolt of the politically incorrect.

“They may not live at the level of Victor Hugo’s ‘Les Miserables,’ but it was only a matter of time before les deplorables – our own writhing mass of unheard Americans – rebelled against the intellectual elites’ ancien regime  of political correctness.

“It remains to be seen what effect Hillary’s five phobias will have on the race, which tightened even before these remarks and Pneumonia-gate.  The two events produced one of Mrs. Clinton’s worst weeks in opposite ways.

“As with the irrepressible email server, Mrs. Clinton’s handling of her infirmity – ‘I feel great,’ the pneumonia-infected candidate said while hugging a little girl – deepened the hole of distrust she lives in.  At the same time, her dismissal, at Barbra Streisand’s LGBT fundraiser, of uncounted millions of Americans as deplorables had the ring of genuine belief.

“Perhaps sensing that public knowledge of what she really thinks could be a political liability, Mrs. Clinton went on to describe ‘people who feel that the government has let them down, the economy has let them down, nobody cares about them...and they’re just desperate for change.’....

“Mrs. Clinton is right that they feel the system has let them down.  There is a legitimate argument over exactly when the rising digital economy started transferring income away from blue-collar workers and toward the ‘creative class’ of Google and Facebook employees, no few of whom are smug progressives who think the landmass seen from business class between San Francisco and New York is pocked with deplorable, phobic Americans.  Naturally, they’ll vote for the status quo, which is Hillary.

“But in the eight years available to Barack Obama to do something about what rankles the lower-middle class – white, black or brown – the non-employed and underemployed grew.  A lot of them will vote for Donald Trump because they want a radical mid-course correction.  Which Mrs. Clinton isn’t and never will be....

“(Clinton’s) supporters say it’s Donald Trump’s rhetoric that is ‘divisive.’  Just so.  But it’s rich to hear them claim that their words and politics are ‘inclusive.’ So is the town dump.  They have chopped American society into so many offendable identities that only a Yale freshman can name them all.

“If the Democrats lose behind Hillary Clinton, it will be in part because America’s les deplorables decided enough of this is enough.”

On Saturday, Clinton said she regretted denigrating “half” of Trump’s supporters, but stood by her characterization.

“Last night I was ‘grossly generalistic,’ and that’s never a good idea.  I regret saying ‘half’ – that was wrong,” Clinton said in a statement.

“But let’s be clear, what’s really ‘deplorable’ is that Donald Trump hired a major advocate for the so-called ‘alt-right’ movement to run his campaign [Ed. referring to Steve Bannon, formerly the chairman of Breitbart News] and that David Duke and other white supremacists see him as a champion of their values.”

--Thomas L. Friedman / New York Times

“When it comes to rebutting Donald Trump’s idiotic observation that Vladimir Putin is a strong leader – ‘far more than our president has been a leader’ – it is hard to top the assessment of Russian-born Garry Kasparov, the former world chess champion, which The Times’ Andrew Higgins quoted in his story from Moscow: ‘Vladimir Putin is a strong leader in the same way that arsenic is a strong drink.  Praising a brutal K.G.B. dictator, especially as preferable to a democratically elected U.S. president, whether you like Obama or hate him, is despicable and dangerous.’

“Indeed, Kasparov’s point cuts to the core of what is so scary about a Trump presidency: Trump is what The Economist has called ‘the leading exponent of ‘post-truth’ politics – a reliance on assertions that ‘feel true’ but have no basis in fact,’ and, sadly, ‘his brazenness is not punished, but taken as evidence of his willingness to stand up to elite power.’ When politics becomes ‘like pro-wrestling,’ society pays a huge cost, The Economist added, because any complex explanation of any problem is dismissed as experts just trying ‘to bamboozle everyone else.’

“So Trump just skips from blaming Mexican immigrants for high murder rates, to President Obama for inventing ISIS, to China for creating the concept of global warming, to thousands of Muslims in New Jersey for celebrating 9/11, to Obama for really having been born in Kenya, to an I.R.S. audit for preventing him from showing us his tax returns – which would probably show that he paid no taxes.

“Every word of it is a lie that most in his own party won’t call out. Can you imagine the damage Trump could do to the fabric of our democracy if he had the White House pulpit from which to preach his post-truth politics – how it would filter down into public discourse at large and infect every policy debate?”

--The former State Department employee who set up Hillary Clinton’s email server, Bryan Pagliano, did not appear before the House Oversight Committee on Tuesday despite a subpoena to testify on the deletion of some of Clinton’s emails.  Instead, Pagliano exercised his Fifth Amendment right not to testify against himself.

But this set off a firestorm at the committee hearing, with Republicans suggesting he could be subject to contempt of Congress, while Democrats argued the committee is unfairly expecting Pagliano to open himself up to criminal liability, whereupon Rep. Trey Gowdy (R-S.C.) fired back, insisting Pagliano already had immunity from prosecution.

--Editorial / Washington Post

“The Trump campaign believes this editorial is not journalism. It is ‘badgering.’ That is how campaign manager Kellyanne Conway described on Tuesday some simple questions The Post and others have asked Mr. Trump and his circle over the past several months about his supposed philanthropic activities.  If anyone has an authenticity problem, it is Mr. Trump.  The facts on the table suggest he is not a great philanthropist – he is a scam artist.

“Mr. Trump has cultivated the persona of a generous man, repeatedly claiming on television he would donate to charity ‘out of my wallet’ and accepting honors from groups he appeared to support.  In fact, an exhaustive investigation by Post reporter David A. Fahrenthold shows that Mr. Trump retooled his foundation about a decade ago to act as an intermediary for other people’s charitable giving, a racket from which Mr. Trump gained in reputation and from which he may even have occasionally profited.

“Mr. Trump does not appear to have given his own money to the Trump Foundation since 2008, and by then Trump funds had become a tiny slice of the organization’s revenue.  Since then, the available records suggest, a charitable group that bears the billionaire’s name has been funded by others. That has not stopped Mr. Trump from claiming credit for doling out other people’s cash.  He happily accepted an award from the Palm Beach Police Foundation in 2010 – then he cut the group off once the real source of the money, a New Jersey charity, stopped contributing to the Trump Foundation.  Donations he promised on ‘The Celebrity Apprentice’ would come out of his ‘own wallet’ instead came from his foundation or a television production company....

“Perhaps Mr. Trump confused the Trump Foundation with his own bank account because he occasionally treated it like one.  Melania Trump used $20,000 of foundation funds to buy a six-foot painting of Mr. Trump at a charity art auction.  Mr. Trump bid $12,000 in foundation money to win a football helmet signed by quarterback Tim Tebow.  These examples appear to violate IRS rules against charity officials engaging in ‘self-dealing.’”

David H. Fahrenthold:

“A spokeswoman for Donald Trump’s presidential campaign, seeking to rebut criticism of the GOP’s nominee’s history of charitable giving, said that Trump has given away ‘tens of millions of dollars’ over his life.

“But spokeswoman Hope Hicks offered no details about that number, beyond saying that it included donations from the Donald J. Trump Foundation – a charity that, despite its name, has been filled almost entirely with other people’s money in recent years.

“Hicks also provided no information about how much – if any – of the donations she was describing had come from Trump’s own pocket.”

--In an interview with the Washington Post, Trump said he remains unwilling to say that President Obama was born in the United States, telling the paper, “I’ll answer that question at the right time. I just don’t want to answer it yet.”

Earlier, his campaign manager, Kellyanne Conway, said Trump now believes Obama was born in this country.

It’s clear he’s afraid to lose a segment of his base.

But then on Friday, Trump said the following:

“Hillary Clinton in her campaign of 2008 started the birther controversy. I finished it.  President Barack Obama was born in the United States, period.  Now we all want to get back to making America strong and great again.”

And then Trump walked off.

What an amazing jerk!  And sorry if this offends some of you, but I thought Hillary Clinton’s immediate response was outstanding.

[I’m not voting for either.]

--Thursday, Trump offered an expanded economic blueprint and outlined an overhaul of his tax plan on Thursday, which calls for lowering the corporate tax rate to 15% from 35%, while collapsing seven individual tax brackets into three, though earlier in the week he had a separate proposal to help families defray child-care costs that adds complexity to the tax code.

Trump seeks to ramp up energy production and to slash environmental and consumer-protection regulations that could boost jobs and growth, defraying the revenue lost from his tax cuts.  So he says.

--Libertarian presidential candidate Gary Johnson said he would be on the ballot in all 50 states plus the District of Columbia, the first time in two decades a third-party ticket has done so.  [1996 was the year of Reform Party candidate Ross Perot, as well as Libertarian Harry Browne who got on all 50.]

Jill Stein of the Green Party is expected to be on the ballot of 44 states and D.C.              

But we learned on Friday that the Commission on Presidential Debates announced that only Clinton and Trump and their running mates will participate in the upcoming debates.

I told you long ago this would be the case.  It sucks.  And it wasn’t about Gary Johnson’s Aleppo flub; there was just no way he was getting to 15% in the five polls the commission was using.

Johnson could still conceivably get in the Oct. 9 or Oct. 19 debates, if his poll position improved, but that just isn’t happening.

In the commission’s sample of polls, Johnson averaged 8.4% and Stein 3.2%.

A Morning Consult poll earlier this month showed that 52% of voters wanted Johnson on the debate stage.

I wanted Bill Weld on the V.P. stage.  He would have kicked ass.

--The Obama administration is raising the number of refugees admitted to the U.S. to 110,000 in the fiscal year starting Oct. 1, from 85,000 this fiscal year, according to a report to Congress obtained by the Wall Street Journal.

This is an almost 60% increase over the 70,000 admitted in 2015.

The number of Syrian arrivals has accelerated in recent months, and the U.S. has exceeded its goal of admitting 10,000 in fiscal 2016.

--This was NYPD commissioner Bill Bratton’s final week at the helm and at a breakfast meeting with a friendly audience, he said in his 46-year policing career, he most regretted the break-up with then-Mayor Rudy Giuliani that cost him the same job two decades ago.

It was unfortunate “to end up at odds with the person who appointed me,” Bratton said, referring to Giuliani.  “I’d like to think I have learned from those [mistakes].”  While Bratton didn’t go into details, the worst move on his part was appearing by himself on the cover of TIME magazine in 1996 as the face of the city’s turnaround, apparently without the mayor’s knowledge or approval.

Monday, Bratton took responsibility for the breakup without a word of criticism for Giuliani.

He was not as nice to advocates who oppose his treasured policing strategy called broken windows; going after those who commit minor offenses.  He also said the use of stop, question and frisk is essential to keeping order.  “They’re crazy, they’re out of their minds, because that is the basic mission of police,” he said of opponents.  [Erik Engquist / New York Times]

Jimmy O’Neill replaced Bratton on Friday afternoon, although his ceremonial entrance is Monday.

--New York State Assemblyman Bill Nojay committed suicide, supposedly because he was facing a fraud trial in Cambodia and reportedly under FBI scrutiny.

But not to worry, he won his primary election a few days later! And due to a quirk in state election law, local GOP leaders get to pick someone to take on the Democrat in November, and it won’t necessarily be Nojay’s challenger, who was critical of county leaders ahead of the vote.

Nationally, since 1962, four people who died close to Election Day have been elected to the House of Representatives.

--By Sept. 8, nearly 3,000 people had been shot in Chicago in 2016, an average of one shooting victim every two hours.  516 had been murdered (including 92 in August...the worst month for homicides in the Windy City since July 1993).

As a story in the Wall Street Journal points out, it was back in October 2015 that Mayor Rahm Emanuel told U.S. Attorney General Loretta Lynch during a crime meeting in Washington, D.C., that the Chicago police had gone “fetal,” and were less likely to interdict criminal behavior.  As Heather MacDonald reports, “That pull-back worsened in 2016, with pedestrian stops dropping 82% from January through July 20, 2016, compared with the same period in 2015, according to the Chicago police department.”  The police are just driving by.  “Criminals are back in control and black lives are being lost at a rate not seen for two decades.”

And talk about depressing, as the Journal reports: “Three gangs – the Vice Lords, Black Disciples and Four Corner Hustlers – reached a pact in August to assassinate Chicago officers, according to a police department alert.  The National Gang Intelligence Center has also picked up on plans to shoot officers.”

--Denise Grady / New York Times

“A new study offers important information to men who are facing difficult decisions about how to treat early prostate cancer, or whether to treat it at all.  Researchers followed patients for 10 years and found no difference in death rates between men who were picked at random to have surgery or radiation, or to have ‘active monitoring’ of the cancer, with treatment only if it progressed.

“Death rates from the cancer were low: only about 1 percent of patients at 10 years.

“But the disease was more likely to progress and spread in the men who opted for monitoring rather than for early treatment, and by the end of 10 years, about half the patients in the study who had started out being monitored would up having surgery or radiation.”

The study was published Wednesday in The New England Journal of Medicine and is the first to include detailed information from patients about the side effects of treatment.

“ ‘I can counsel patients better now,’ Dr. Freddie C. Hamdy, a leader of the study from the University of Oxford, in England, said in an interview.  ‘I can tell them very precisely, ‘Look, your risk of dying from cancer is very, very small.  If you receive treatment you will get some benefit.  It will reduce the disease from growing outside your prostate, but these are exactly the side effects you might expect.’’”

--An NBC News investigation found that K-9 teams at some of the nation’s busiest airports have failed tests designed to check how accurately they can sniff out bombs. The Transportation Security Administration said some failures are normal when you set high standards.

But multiple failures at the likes of Washington Dulles Airport and LAX raise concerns over the training and preparation of some K-9 teams and their ability to protect against threats.

Well, seeing as ‘Dog’ is No. 1 on my Exclusive All-Species List, my ears perked up on hearing the story and what it comes down to is that the human partners aren’t practicing enough with their canines, and the dogs thus lose interest.  [‘Man’ being No. 329 on the ASL.]

As aviation security expert Jeff Price told NBC’s investigator, Scott Friedman, “Without constant practice, K-9 handlers may not recognize the dog’s cues.”   [Ed. Dogs being superior.]

“You need to convince that dog that there’s a reason to work,” he said.  “Train, train, train – and train as you’re going to work.”

There is a big success story...Hartsfield-Jackson Atlanta International Airport, the busiest in the nation, where records show K-9 teams passed 97% of their readiness tests, including all Atlanta Police Department K-9 teams.

Atlanta police officer John Wowk told Friedman, “We train every single day.”

Woof.

[Hopefully, next week at this time I’m talking about the launch of my new official All-Species List link.]

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

God bless America.

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Gold $1313
Oil $43.19

Returns for the week 9/12-9/16

Dow Jones  +0.2%  [18123]
S&P 500  +0.5%  [2139]
S&P MidCap  -0.5%
Russell 2000  +0.5%
Nasdaq  +2.3%  [5244]

Returns for the period 1/1/16-9/16/16

Dow Jones  +4.0%
S&P 500  +4.7%
S&P MidCap  +8.8%
Russell 2000  +7.8%
Nasdaq  +4.7%

Bulls  49.0
Bears  22.6  [Source: Investors Intelligence]

And remember, as Billy Currington sang, “God is great, beer is good...and people are crazy.”

Brian Trumbore

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