Week in Review

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Week in Review

03/24/2018

For the week 3/19-3/23

[Posted 11:30 PM ET, Friday]

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Edition 989

I need to digress briefly from my normal opening because as I go to post in about an hour, I learned of the condition of a real hero in France today...45-year-old gendarme officer Arnaud Beltrame.

I was not going to say much about the terror incident in France, where a gunman, a 25-year-old supporter of ISIS, went on a rampage, killing three in three different locations in the southern part of the country, before he was shot dead by French police after taking hostages in a supermarket, but as I was following the story during the day, I saw that a French policeman, during the siege at the supermarket in the small town of Trebes, voluntarily substituted himself for a hostage who was being used as a human shield.

Wow, I thought, as I was working on this column.  I then saw the siege ended, the terrorist, Redouane Lakdim, killed, but didn’t know of the condition of Beltrame.

So I just saw he is “fighting for his life.”  While full details are unavailable, if you give a damn about the world, this is beyond touching.  This amazing hero, after substituting himself for the hostage, left his mobile phone on a table with an open line so police could monitor the situation.

“When police heard gunshots, a tactical team stormed the supermarket. The gunman was killed but Arnaud Beltrame was seriously injured,” and now we know more than that.  [BBC News]

Interior Minister Geraud Collomb hailed Beltrame’s “heroism and courage.”

President Macron said he had “saved lives and honored his colleagues and his country.”

We all need to honor Lt-Col. Beltrame.  And pray for him. Vive la France!

Trump World

And then there’s this...Trump World.

I have long admired Richard Haass, a diplomat, foreign policy strategist, who has served in various administrations over the years and who is currently president of the Council on Foreign Relations.  I view him as a voice of reason.  Today he tweeted the following that I can’t help but agree with:

“(Donald Trump) is now set for war on 3 fronts: political vs. Bob Mueller, economic vs. China/others on trade, and actual vs. Iran and/or North Korea. This is the most perilous moment in modern American history-and it has been largely brought about by ourselves, not by events.”

I’d add that some of us are concerned about Vladimir Putin, aka Vlad the Impaler, ginning up a crisis in the Baltics because he sees Donald Trump’s weakness.  And as I’ve been telling you (see more below), China is preparing to take Taiwan and the U.S. will do nothing in response.

Wall Street is beginning to sniff out more than just the potential for a trade war.  I told you, on the other hand, since day one of the Trump administration that my main concern was on the foreign policy front.  I know more in my pinkie than he ever will in this regard, but that wouldn’t matter if he listened to good advice.  In his first year, he largely scaled back his impulses, which was good.  But we’ve seen in just the last few weeks, the president is feeling his oats.  And his new group of advisers will only egg him on; much to the detriment of the rest of us...of this I’m certain.

But focusing on the last few Trumpian days....

The president replaced Lt. Gen. H.R. McMaster as national security adviser with hardliner John Bolton, who once rejected North Korea as “human scum” and is vehemently opposed to the Iran nuclear deal.

Trump announced his move in a tweet, of course, bringing in the Fox News commentator and former U.S. ambassador to the United Nations.  Bolton has advocated the use of military force against both Pyongyang and Tehran and has previously rejected negotiating with North Korea.

U.S. allies in South Korea and Europe, in particular, are worried, fearing that Bolton, and fellow hardliner Mike Pompeo, the newly announced secretary of State, will scuttle talks on both Iran and North Korea, or at least the former.  Pompeo has talked of regime change in Pyongyang and ripping up the Iran accord.

Bolton has described Trump’s plan to meet North Korean leader Kim Jong Un as “diplomatic shock and awe” and said it would be an opportunity to deliver a threat of military action.  I’ll weigh in more on Bolton next time. I have mixed feelings.

And also this week, Congress passed a  mammoth $1.3 trillion spending bill, the Senate acting early Friday morning, approving it 65-32, narrowly avoiding a partial government shutdown, with the House having voted to approve it earlier, 256-167, after limited debate and no amendments.

At first, President Trump signaled his support, but then, having watched Fox News and the criticism of the legislation, Thursday night, I’m guessing, he changed his tune.

Trump tweet Friday morning: “I am considering a VETO of the Omnibus Spending Bill based on the fact that the 800,000 plus DACA recipients have been totally abandoned by the Democrats (not even mentioned in Bill) and the BORDER WALL, which is desperately needed for our National Defense, is not fully funded.”

This came after Trump had said this week he was going to sign the bill!  WTF, some of us thought.

So was he going to really veto it and shut the government down tonight at midnight?  The House had already gone home for its two-week recess.  Surely, that would preclude the president from taking such a drastic action as a veto would have sent everyone back to square one in the process.

Then Trump, totally jerking us all around, tweeted: “News conference at the White House concerning the Omnibus Spending Bill, 1:00 PM.”

Initially, there was the thinking he would announce a veto.  Then, right before, the reports were he was signing it.  But was he really holding a press conference? The first formal one in 13 months?

Nope.  Our president came out and called the legislation “ridiculous,” but said he was signing it because of the defense spending provisions.  It was a total cave to the establishment.  I’m anxious to see the reaction from the 35% that represents Trump’s immovable base.  He didn’t get anywhere near the support he was seeking on the border wall....basically he has enough for some meshing to protect plants from deer and other varmints, and, well....read on.....

The spending package would increase domestic funding by $63 billion over last year’s levels, or about 12%, and it would boost military spending by $80 billion, about 15%.  Overall, the agreement allocates $1.3 trillion to fund domestic and military programs through Sept. 30, the end of this fiscal year.

Republicans touted the hike in defense spending. House Speaker Paul Ryan (R-Wis.) said, “What this bill is ultimately about is finally giving our military the tools and the resources it needs to do the job.”

Democrats touted increases in some of their favored domestic programs, including new money to fight the opioid crisis, and to boost infrastructure spending across the country.  The bill also includes funding for a tunnel between New York and New Jersey – a project Trump opposes.

Senate Minority Leader Chuck Schumer (D-NY) said the domestic funding gains were particularly notable given they do not control Congress or the White House.

Republican Sen. Rand Paul (Ky.) threatened to hold up the bill, saying he opposed the measure because of the increases in spending and the quick turnaround for such a massive piece of legislation.

“This could have been written by President Obama and liberal Democrats,” Paul said on Fox News Thursday night.

The immigration funding was one of the more contentious issues for both parties. The bill would bolster border security by $1.6 billion, but that’s just a fraction of the $25 billion the president had sought, and only about $640 million is actually for the wall itself.

The bill also failed to address the fate of the so-called Dreamers, undocumented immigrants who came to the U.S. as children.

The spending package has been labeled “grotesque,” in the words of Republican Sen. Bob Corker (Tenn.) and the Freedom Caucus, and of course no one has read the 2,232-page bill, so for days we’ll be learning about various loopholes and goodies for favored constituencies.

But after faking everyone out, Trump ended up signing it Friday afternoon because he didn’t want to shut down the government, and he desperately wanted to get to Mar-a-Lago for some golf.  That part I can guarantee you.

Trumpets....

--Trump’s lead lawyer John Dowd resigned amid the chaos inside Trump’s legal team.  Friday, there were reports Joe diGenova, who had been brought on the other week, may have a different role than he was initially told he would have...more of a spokesman rather than a lead attorney.

Earlier, the president was once again criticizing the special counsel probe, though this time he called out Mueller by name. Dowd, last weekend, had also called for the Justice Department to step in to stop the Mueller investigation.

Trump:

“ ‘Special Council is told to find crimes, whether a crime exists or not. I was opposed to the selection of Mueller to be Special Council.  I am still opposed to it. I think President Trump was right when he said there never should have been a Special Council appointed because...

“...there was no probable cause for believing that there was any crime, collusion or otherwise, or obstruction of justice!’ So stated by Harvard Law Professor Alan Dershowitz.” 

*Yes, Trump was misspelling counsel. But he got great grades at Wharton, sports fans!

“Why does the Mueller team have 13 hardened Democrats, some big Crooked Hillary supporters, and Zero Republicans? Another Dem recently added...does anyone think this is fair? And yet, there is NO COLLUSION!”

“The Mueller probe should never have been started in that there was no collusion and there was no crime. It was based on fraudulent activities and a Fake Dossier paid for by Crooked Hillary and the DNC, and improperly used in FISA COURT for surveillance of my campaign. WITCH HUNT!”

“As the House Intelligence Committee has concluded, there was no collusion between Russia and the Trump Campaign. As many are now finding out, however, there was tremendous leaking, lying and corruption at the highest levels of the FBI, Justice & State.”

--Former CIA director John Brennan said Wednesday that he thought Russia may have some kind of compromising information on President Trump, setting off speculation about whether the former spy chief was basing that assertion on inside information.

“The Russians, I think, have had long experience with Mr. Trump, and may have things that they could expose,” Brennan said on MSNBC’s “Morning Joe.”

Last weekend, Brennan, in response to Trump’s praise for the firing of the former deputy director of the FBI, Andrew McCabe, tweeted: “When the full extent of your venality, moral turpitude, and political corruption becomes known, you will take your rightful place as a disgraced demagogue in the dustbin of history.”

When Brennan stepped down as CIA director in January, having received the dossier, he said it was “unsubstantiated” and his criticism of Trump was muted.

Brennan was responding to Trump’s congratulatory phone call with Vladimir Putin and his refusal to criticize him.

Trump tweeted later in response to the criticism he was receiving, including from some Republican leaders:

“I called President Putin of Russia to congratulate him on his election victory (in past, Obama called him also). The Fake News Media is crazed because they wanted me to excoriate him. They are wrong! Getting along  with Russia (and others) is a good thing, not a bad thing....

“...They can help solve problems with North Korea, Syria, Ukraine, ISIS, Iran and even the coming Arms Race. Bush tried to get along, but didn’t have the ‘smarts.’ Obama and Clinton tried, but didn’t have the energy or chemistry (remember RESET). PEACE THROUGH STRENGH!”

Republican leaders urged the president to shut up and let Mueller do his job. Senator Lindsey Graham (R-S.C.) said if Trump were to dismiss Mueller it would mark “the beginning of the end of his presidency.”

--This Sunday... “60 Minutes” ...Stormy Daniels!  #BreastWorks.  Trump attorney Michael Cohen told Vanity Fair this week that the $130,000 payment to keep her quiet about any relationship with Trump had nothing to do with the 2016 campaign. Cohen also denied he has threatened Daniels.  Sunday, we get her side.

I watched the Karen McDougal interview with Anderson Cooper on Thursday (while also catching the Loyola-Nevada game) and like a lot of people, I thought, what was McDougal thinking when she agreed to do the interview?  She is highly credible, but in terms of her lawsuit against AMI, it didn’t help her. The White House, of course, called it an old story and fake news.  Trump had unprotected sex, according to both Stormy and Karen. I only include this tidbit because I’m trying to juice ratings for StocksandNews.

Wall Street

The Dow Jones plunged 724 points, 2.9%, on Thursday, and then another 424 points today, adding up to the worst week in two years as the president introduced his wide-ranging tariffs on imports from China, fears of a trade war growing.  U.S. businesses warned the tariffs would raise costs for American consumers.

All are in agreement.  China’s intellectual property theft must stop...it should have been stopped years ago...but as I’ve been addressing the past few weeks (and for years, when it comes to the likes of Apple), major U.S. exporters, including Boeing and Caterpillar, which fell 5.2% and 5.7%, respectively, on Thursday, will be hit hard over fears of Chinese retaliation.

China was the third-largest market for U.S. exports last year, with aircraft and aircraft parts the largest category.

Jay Timmons, president of the National Association of Manufacturers, welcomed Trump’s focus on intellectual property theft, but added that tariffs were “likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” let alone provoke retaliation.

The National Retail Federation said the tariffs would “punish ordinary Americans for China’s violations.”  NRF president Matthew Shay said middle- and working-class Americans were “just starting to see the benefits of tax reform in the form of bigger paychecks and higher wages,” and a trade war would “erase those gains and result in higher prices for a wide range of consumer products and basic household goods.”

I totally concur.

Beijing then announced its first retaliation hours after Trump outlined his tariffs on $60 billion of Chinese imports, when, after issuing a temporary exemption for the European Union and other nations, including Canada, Mexico, Australia and South Korea, it became clear the focus of the president’s action was on China.

China’s response, however, was modest and measured, at least thus far, with planned tariffs on imports of U.S. pork, recycled aluminum, steel pipes, fruit and wine, according to the Commerce Ministry.

China will also pursue legal action against the U.S. at the World Trade Organization in response to the planned tariffs on steel and aluminum. With the U.S. saying it was aiming tariffs at intellectual-property abuses, specifics as yet unannounced, China’s relatively small move in response could just be the first stage, and, indeed, the Commerce Ministry said later today that a comprehensive plan to counter the looming U.S. action under Section 301 of the U.S. trade law, has been prepared. It is expected the proposed product list on the intellectual property front includes items in aerospace, information and communication technology and machinery. There would also be tighter restrictions on acquisitions and technology transfers A list is forthcoming in days, but it will target key strategic sectors identified by Beijing in its “Made in China 2025” plan.  Unless an agreement can be reached between the U.S. and China, tariffs could begin to be implemented on April 1.

A statement from the Chinese embassy in Washington read: “We urge the U.S. to cease and desist” from the plan to punish China.  “If a trade war were initiated by the U.S., China would fight to the end to defend its own legitimate interests with all necessary measures.”

The U.S. took in more than $500 billion in Chinese imports last year, so the move to affect imports of $60 billion, which some believe is more like $50 billion, would be 10% of the total.

The White House gave the European Union, Argentina, Australia, Brazil, Canada, Mexico and South Korea until May 1 to negotiate levies on steel and aluminum.

While I’m glad the president exempted the above, what I don’t get is the initial enthusiasm on the part of U.S. steel and aluminum producers, as exhibited at the White House the day the president made his surprise announcement on the tariffs.  I mean, ‘What was that all about?’  The shares in these companies have been sliding ever since and it will be interesting to see if the companies actually go through with some of their announced expansion plans if demand falls, including for supplying the likes of Boeing.

Note to Brad K., long-time friend, loyal supporter, and a steel pool manufacturer, I need to go through the terrific data you just sent me.  I’ll present it next time.

Editorial / Wall Street Journal

“President Trump announced his long-awaited trade assault on China Thursday, and this time at least he is closer to the right target. But his decision seems unconnected to any larger trade strategy, and his main remedy of tariffs will harm American consumers and businesses as much as they will the People’s Republic.

“No one should be surprised by the $60 billion in border taxes on China, given that Mr. Trump campaigned on worse.  He is also responding to the genuine problem of Chinese mercantilism. China’s government steals the intellectual property of U.S. companies or forces them to turn it over, and Beijing uses regulation to discriminate against foreign firms.

“This might have been tolerable when China was a smaller economy trying to reform, and the U.S. made a reasonable bet in 2001 when it let China enter the World Trade Organization. The gamble was that China would continue to reform, adapt to global trade norms, and eventually become a genuine market economy.

“That hope showed early promise but has become forlorn as President Xi Jinping has pushed ‘national champions’ like Huawei and Tencent. Facebook still can’t operate in China, and Tesla is punished with a 25% tariff on imported electric cars. The U.S. tariff on cars from China is 2.5%. China’s predatory behavior has eroded political support in the West for the very free-trade rules that have lifted hundreds of millions of Chinese out of poverty.

“In typical Trumpian fashion, however, the President combines a useful focus on these practices with nonsense trade economics.  He said Thursday that he’s asked China to ‘reduce the trade deficit’ with the U.S. ‘immediately by $100 billion,’ as if that would be a political or economic victory.

“The reality is that the $375 billion annual U.S. trade deficit with China has many causes, and it is the reverse of America’s capital surplus. Faster growth under Mr. Trump’s policies will attract more global capital, which under national trade accounting means a larger trade deficit. Someone in America is buying that $100 billion in goods, and those Americans would suffer if they suddenly couldn’t.

“Apple’s iPhones are assembled in China, for example, but China’s contribution is mainly labor.  Most of the value, including the phone’s design from California, is imported from elsewhere then re-exported by China to the U.S. Yet the trade figures count most of the value of the iPhone as part of the U.S.-China deficit.

“Is Mr. Trump going to impose a tariff on iPhones?....

“The collateral damage in a tariff war with China is likely to include the economies of states that supplied Mr. Trump with his Electoral College victory: Iowa, Indiana, Wisconsin, Michigan and Texas.  Other victims are likely to be companies that Mr. Trump touts as the winners from his tax and regulatory reform. Boeing fell more than 5% Thursday amid investor worries about the trade fallout. China can always buy Airbus planes.

“Which brings us to Mr. Trump’s overall trade strategy, which is hard to discern. If bad Chinese practices are his main target, then he’ll need allies in Europe and Asia to present a united front. Yet the President began his protectionist barrage this year by announcing a global tariff on steel and aluminum imports. Mr. Trump then exempted Canada and Mexico, and Thursday he added the European Union, Australia, Argentina, Brazil and South Korea to the exemption list. But then why alienate these trading partners in the first place?

“The economic worry is that Mr. Trump has no real strategy other than to show he’s ‘tough’ on trade. Liu He, China’s main economic policy maker, visited Washington recently to negotiate on trade but found no one willing or able to make decisions....

“A rising and aggressive China poses considerable risks to world order, but persuading its leaders to conform to trading norms requires more than scattershot tariffs. It demands patient, sophisticated American leadership to rally other nations to join the effort.”

Meanwhile, the Federal Reserve, as expected, raised interest rates another quarter of a percentage point on Wednesday, while signaling it is on track to raise rates twice more in 2018.

So the Fed is raising its benchmark interest rate to a range of 1.5 percent to 1.75 percent, marking the sixth increase since the financial crisis.

In its comments, the Open Market Committee said the economy continues to strengthen and that it expects to pursue a return to more normal interest rate levels.

But the Fed said it now expects to raise rates three times in 2019, an increase from two that it had forecast in December.  [Whether one of these is actually in 2018 remains to be seen, but you can be sure there will not be a fourth rate hike in 2018 if the current market volatility continues.]

Jerome Powell, the new Fed chairman, held his first press conference and I thought he was terrific.  I’m quickly becoming a big fan of the man.

“We’re trying to take that middle ground,” striking a balance between raising rates too slowly or too quickly, he said. As opposed to some of his predecessors, Powell seems transparent and easily understandable.

The Fed also raised its median estimates for economic growth this year to 2.7 percent, up from 2.5 percent in December. And they raised their estimate for growth in 2019 to 2.4 percent, up from 2.1 percent. They also now expect the unemployment rate to fall to 3.8 percent this year, and 3.6 percent in 2019.

But with its projected rate increases the next two years, the fed funds rate will be in a range between 3.25% and 3.5%, and we sit today with the yield on the 10-year Treasury at 2.81%. Ergo, as Sgt. Estherhaus of “Hill Street Blues” fame would have said over the looming disparity, “Let’s be careful out there.”

There was some economic news on the week. February existing home sales came in a little better than expected, up 1.1% year-on-year, with the median price, $241,000, up 5.9%, while new home sales were basically in line.

Durable goods for February were above expectations, up 3.1%, and up 1.2% ex-transportation, but this is always a highly-volatile number.

The Atlanta Fed’s GDPNow barometer for the first quarter remained at just 1.8%, consensus around 2.5%.

Europe and Asia

A little economic news for the eurozone (EA19). The flash purchasing managers’ indices (PMIs) for March were released and they reveal a somewhat troubling pattern in that figures are going down, though still in growth mode, 50 being the dividing line between growth and contraction.

The composite readings for the EA19 came in at 55.3 vs. 57.1 in March, a 14-month low, as compiled by IHS Markit.  The services figure was 55.0 vs. 56.2, and 56.6 vs. 58.6 for manufacturing.

The flash readings also look at Germany and France individually.

Germany’s manufacturing PMI was 58.4 vs. 60.6, an 8-month low; services 54.2 vs. 55.3 the prior month.

France’s flash reading on manufacturing for March was 53.6 vs. 55.9, a 12-month low; 56.8 vs. 57.4 on services, a 7-month low.

Chris Williamson, Chief Economist at IHS Markit.

“While the first quarter average PMI reading remains relatively robust, indicative of GDP rising by 0.7-0.8%, the loss of momentum since the buoyant start to the year has been quite dramatic.

“At least some of the showing may be ascribed to bad weather in some northern regions and, perhaps more importantly, ‘growing pains’ resulting from the strength of the recent growth spurt.  Supply chain delays and raw material shortages were often reported to have stymied production in manufacturing (delays in German supply chains are currently more widespread than at any time in the survey’s 22-year history), and both manufacturing and services sectors also saw activity being curtailed by growing incidences of skill shortages. Backlogs of work continue to rise as a result of these growth constraints.

“However, other factors are clearly at play. The fact that export order book growth has more than halved since the end of last year suggests the stronger euro is taking an increasing toll on export performance. Survey responses also highlighted how political uncertainty appears to have intensified, dampening demand.

“The data therefore suggest that eurozone growth peaked around the turn of the year and the region is settling into a slower, but still robust pace of expansion.”

Brexit: British Prime Minister Theresa May welcomed the approval by European Union leaders on Friday of a transition period to help business adapt post-Brexit, telling the bloc to ride the “new dynamic” in upcoming trade talks.

Trade discussions will now begin next month, with the 27 other EU leaders at the summit in Brussels confirming a political, if not legal, commitment to let Britain effectively stay in the bloc – without a vote – until the end of 2020, or 21 months after formal Brexit next March. 

But the text notes that while various interim accords were struck this week, including on the transition, the EU also issued a warning that “nothing is agreed until everything is agreed” – a threat to May and her cabinet to avoid “backsliding” on a deal to let Northern Ireland remain regulated by Brussels if no better solution is found to prevent a “hard border” that might disrupt the peace.

But Mrs. May can go home having secured a deal that so far “gives certainty to people and businesses.  It gives them the clarity to plan for their future.”  Kind of, sort of.

“I believe there is a new dynamic now in the negotiations,” she told reporters. “We will now be sitting down and determining those workable solutions for Northern Ireland but also for our future security partnership and economic partnership.”

The deal was said to be in place for a while, but it wasn’t really struck until after the 28 leaders waited for clarity from Washington on new U.S. tariffs on steel and aluminum imports.  May stayed on to back a collective EU demand for President Trump to grant the EU a permanent exemption from the new tariffs, which is important for British steelworkers.

New talks on the Irish border are to begin next week.

The Brexit schedule is for the 27 EU leaders to endorse a framework for future trade in time for the October summit and then all 27 need to go through their respective ratification processes before Brexit on March 29, 2019. There is still a long ways to go as each EU member, and the U.K., seek to protect key industries specific to them.

On a different issue, the Bank of England set the stage for a second interest rate hike at its next meeting in May, saying that growth was picking up and inflation was likely to remain above its 2 percent target for too long, but the BoE noted concerns over moves the U.S. was making on the trade front.

France: Tens of thousands of nurses, teachers and other public sector workers joined forces to march against President Emmanuel Macron’s labor reforms, causing widespread travel disruption and bringing brief clashes with police in some cities.

It was the first time public sector workers, ranging from air-traffic controllers to civil servants, had joined with rail workers and pensioners to protest over the economic reforms Macron has sought to introduce since he took office last May.

Separately in France, former French President Nicolas Sarkozy says allegations he received campaign funding from late Libyan dictator Muammar Gaddafi are making his life “hell.”

“I am accused without any physical evidence.”

He has been placed under formal investigation for illicit election campaign financing in 2007, misappropriation of Libyan public funds and passive corruption.

The claims have been out there since 2011. Sarkozy, 63, said: “I have never sought to evade my obligations in my dealings with my friends, colleagues and all the people mentioned in these proceedings. I have never sought to influence their statements or judgments.”

Spain: 25 Catalan leaders will be tried for rebellion, embezzlement or disobeying the state, Spain’s Supreme Court ruled on Friday, in a sharp escalation of legal action against separatists in the northeastern region.  One of the leaders, Marta Rovira, faces 25 years in prison if convicted.  But she has joined six others in exile.

The ruling thus raises the stakes in Madrid’s bid to contain the movement in Catalonia, where a banned referendum backed independence last year. Former Catalan president Carles Puigdemont, already in exile in Brussels, will be tried for rebellion.

Eurobits....

--In 2017, 650,000 first time asylum seekers applied for international protection in the Member States of the European Union, just over half the number recorded in 2016, when 1,206,500 first-time asylum applicants were registered, and is comparable to the level recorded in 2014, before the peaks of 2015 and 2016.

Syrian (102,400 first-time applicants), Iraq (47,500) and Afghan (43,600) continued to be the main citizenships of people seeking international protection in the EU Member States, accounting for 30% of the total applicants.

Germany took in 31% of the first-time applicants, 198,300, followed by Italy (126,600), France (91,100) and Greece (57,000).

The figure in Germany is down from 722,265 in 2016, while Italy is up 5,000 over the year before, France up about 14,500.

Migration in the U.K. was 33,310 in 2017 vs. 39,240 in 2016.

In Asia, just a few tidbits on Japan. It’s flash reading on manufacturing for March was 53.2 vs. 54.1 in February.  Separately, Japan’s exports rose for a 15th straight month in February but slowed sharply from the prior month as shipments stalled because of the Lunar New Year holidays.

The Ministry of Finance reported exports grew 1.8%, following a revised 12.3% rise in January. Exports to China fell 9.7% year-on-year, while shipments to the U.S. rose 4.3% in the year to February, driven by hybrid cars. Auto shipments to the U.S. jumped 12.3%.

In China, new home price growth slowed in February from the previous month as the government continues to attempt to curb speculative demand, though overall growth remained firm.

Average new home prices in China’s 70 major cities rose 0.2% in February from the previous month, while the average rose 5.2% year-over-year, as reported by the National Bureau of Statistics.

Street Bytes

--The Dow Jones and S&P 500 had their worst week in two years, Jan. 2016, with the Dow losing 5.7% and the S&P 6.0%, while Nasdaq plunged 6.5%.

The Dow is now back in correction territory, down 11.6% from its high set earlier in the year, while the S&P is teetering in correction mode, down 9.9% from its high (10% being the formal definition of a correction).  Nasdaq is down 7.8% off its high.

But I loved this stat from Elena Popina of Bloomberg News.  “Consider this as a worrying sign of investor fragility: the S&P 500 has closed lower than the midpoint of its daily range for 10 straight days, the longest stretch since at least 1982. That suggests traders are finding reasons to dump shares in the afternoon rather than buy dips.”

--U.S. Treasury Yields

6-mo. 1.90%  2-yr.  2.25%  10-yr. 2.81%  30-yr. 3.06%

The yield on the 10-year hit 2.94% on the Fed’s message, but then fell the rest of the week on the market volatility.       

--Facebook Inc. had a stormy week and it all started with a series of media reports, including on British television (Channel 4).  British privacy regulators are seeking a warrant to search the offices of the political consultancy Cambridge Analytica following the story, which detailed (including in subsequent reports) how Cambridge perhaps improperly gained access to data on 50 million Facebook users.

London-based Cambridge said it strongly denied the media claims, and that it deleted all Facebook data it obtained from a third-party application in 2014 (but apparently didn’t) after learning the information did not adhere to data protection rules.

Facebook was already facing calls on Saturday for regulation from Congress after reports in the New York Times and London’s Observer over the weekend.

CEO Mark Zuckerberg broke his silence on Wednesday over Cambridge Analytica’s access to user data on the social network, outlining concrete steps the company is taking to make sure such a leak doesn’t happen again. 

In a series of media interviews, and an interminable blog post, Zuckerberg said Facebook would inform every one of its two-billion-plus users that they may have had their personal data compromised.

Writing on his Facebook profile page, Zuckerberg said in part: “I’ve been working to understand exactly what happened and how to make sure this doesn’t happen again. I promise you we’ll work through this and build a better service over the long term.”

Zuckerberg said in an interview with CNN that the scandal was a “major breach of trust” between Facebook and the people that use it. He added he is “really sorry that this happened” and that his company has a “basic responsibility to protect people’s data.”

But lawmakers, and users, were largely unimpressed, and in the case of the former, there are calls for him to testify before Congress.

“Mea culpas are no substitute for questions and answers under oath,” said Democratic Sen. Richard Blumenthal, a member of the Judiciary Committee.  “Congress has failed to hold Facebook accountable, and legislate protections on privacy, which are manifestly necessary.”

Facebook’s biggest problem, though, could be the European Parliament, the continent having far stricter privacy rules than in the U.S. The president of the Euro Parliament, Antonio Tajani, said in a Twitter post that many questions remain unanswered.  “I look forward to him giving further explanations before the elected representatives of over 500 million European citizens.”

Germany’s justice minister said she will ask Facebook officials to provide an explanation in person.

At least on Wednesday, Zuckerberg stopped short of committing to testify before Congress, saying he was “open” to it but didn’t know if he was the right person to do so, which was laughable.

Zuckerberg said his solutions would focus on outside developers that have accessed Facebook user details through login tools, but he’s  living in a dream world, not acknowledging the ongoing problems, and inexplicably saying Facebook was looking into how this all happened in the first place.

As it was inexplicable that Zuckerberg, and Chief Operating Officer Sheryl Sandberg, didn’t come out right away when the stories broke.

Sue Desmond-Hellmann, the lead director of Facebook’s board, said in a statement: “Mark and Sheryl know how serious this situation is and are working with the rest of Facebook leadership to build stronger user protections.  They have built the company and our business and are instrumental to its future.”

The Federal Trade Commission is probing whether the social network violated a consent decree it agreed to in 2011.

As an editorial in the Financial Times put it, there are also four pressing questions for Facebook. Why did it take so little action when the data leak was discovered back in 2015? Who is accountable for the leak? Why does Facebook accept political advertisements at all?  “Given the amount of information Facebook has about its users, there is clearly potential for manipulation of the electorate on a massive scale,” the FT opined.

Thursday, Zuckerberg said in another interview that his company’s investigation into outsiders’ handling of its users’ information will help identify and deter bad actors but won’t be able to uncover where all the data ended up and how it is being deployed, which is just remarkable.

Zuckerberg said Facebook will dispatch auditors to analyze the servers of developers who scooped up the data, and interrogate them about their business practices.

Editorial / Washington Post

“Before rushing to judgment on the latest surge of disclosures about Facebook data and how it was used by Cambridge Analytica, everyone should take a deep breath. The very essence of Facebook and social media is to share information, to entertain and enlighten users, and to sustain a business model that has transformed marketing, advertising and news. Those who enter the ecosystem of social networking should not suddenly be shocked that information is being shared. What they should want is transparency and a robust digital world that does not become a hidden surveillance state.

“A key question is: Who owns personal information?

“Facebook allowed an outside researcher in 2013 to develop an app on the platform that paid users a small sum to answer questions and download the app, which then harvested private information from their profiles and their friends.  Facebook permitted such data mining at the time. It is doubtful many users knew what was happening or read the fine print. The researcher, Aleksandr Kogan of Cambridge University, then provided the data – on some 50 million people – to Cambridge Analytica, a private firm founded by Stephen K. Bannon, the conservative political operative; and Robert Mercer, the wealthy financier; and another firm.

“This transfer of data to a third party broke Facebook’s internal policies.  In 2015, Facebook found out, removed the app and demanded the data be destroyed. Apparently, it was not, and may have been exploited to help Donald Trump’s 2016 campaign, including tests of anti-establishment messages such as ‘deep state’ and ‘drain the swamp.’  The transfer may also have violated Facebook assurances about user privacy to the Federal Trade Commission in a 2011 settlement....

“It is plausible that some were moved to vote for Mr. Trump by postings or ads based on the data Mr. Kogan gave Cambridge Analytica. That is a story that needs to be thoroughly aired, while bearing in mind that Democrats Barack Obama and Hillary Clinton also harnessed big data in their campaigns.

“All of this should be pursued in the spirit of perfecting rules of the road to keep social networks free and open. In the end, they should remain what they are, great sharing machines.”

John Podhoretz / New York Post

“You’ve likely spent a thousand hours or more on Facebook over the past decade. Did you think that the energy-sucking servers holding your photos and hosting the groups dedicated to your high-school class and your neighborhood ran on good wishes?

“Did you think the company that has allowed you to consume news and opinion at no cost whatsoever to you was doing so out of the goodness of its collective heart?

“Did you think...it was free?

“Did you really not know that your agreement with Facebook was that Mark Zuckerberg would provide you with hours a day of enjoyment in exchange for your personal information?

“There isn’t an adult in this country who shouldn’t know better than to screech in anguish at the supposed horrifying discovery that his or her ‘personal data’ have been gathered by social-media networks and others to earn the dough necessary to run these networks and make massive profits besides.

“Guess how long we’ve lived in a world in which media have been provided to us without charge because networks earned their keep selling the fact of our presence to advertisers?  The first radio station to broadcast over the airwaves transmitted news about the 1920 presidential elections in Pittsburgh. That was 97 years ago, people....

“The science-fiction writer Robert A. Heinlein said it best: ‘There ain’t no such thing as a free lunch.’  Everything has a cost.  If you forgot that, or refused to see it in your relationship with Facebook, or believe any of these things, sorry, you are a fool.   So the politicians and pundits who are working to soak your outrage for their own ideological purposes are gulling you. But of course you knew.

“You just didn’t care...until you cared.  Until, that is, you decided this was a convenient way of explaining away the victory of Donald Trump in the 2016 election.

“You’re so invested in the idea that Trump stole the election you are willing to believe anything other than that your candidate lost because she made a lousy argument and ran a lousy campaign and didn’t know how to run a race that would put her over the top in the Electoral College – which is how you prevail in a presidential election and has been for 220-plus years.

“The rage and anger against Faceook over the past week provide just the latest examples of the self-infantilization and flight from responsibility on the part of the American people and the refusal of Trump haters and American liberals to accept the results of 2016.

“Honestly, it’s time to stop being fools and start owning up to our role in all this.”

Paul Bergevin / Wall Street Journal

“ ‘If men were angels,’ wrote (James) Madison in Federalist 51, ‘no government would be necessary.’ The father of the Constitution knew better. A government of men required a delicate set of checks and balances, and limits on executive authority. Minority rights needed protection. Even the concept of rule by the people was tempered to mean not direct plebiscite but representative democracy. With these limits in place, the Constitution has acted as a restraint on humanity’s darker impulses for nearly 230 years.

“Facebook’s design is the opposite. It proceeds from the same utopian assumptions that the pioneers of the internet largely espoused. Not only should information be free, but sharing it is by nature a good thing. This design philosophy has produced many unintended consequences. Bad actors have learned to manipulate the platform and sow uncertainty and chaos.

“Last month Robert Mueller obtained indictments against 13 Russians who are charged with brazenly posing online as legitimate interest groups when their real purpose was to promote confusion and disrupt the 2016 presidential elections. Think about Facebook from the perspective of these alleged trolls.  If you wanted to create the perfect instrument to undermine confidence in the Western canon – democratic government, the rule of law, respect for empirical evidence – you would design something like Facebook.  Vladimir Putin’s misinformation campaigns recall the line attributed to his namesake, Vladimir Lenin: ‘The capitalists will sell us the rope with which we will hang them.’....

“Facebook insists it is not a media company. Maybe so.  But unless it takes on the responsibilities of an editor and publisher by verifying the identities of users, filtering content that runs on its platform, and addressing the incentives to post specious or inflammatory ‘facts,’ Facebook should expect to be policed externally.

“Again, Madison’s words are rooted in the realities of human nature: ‘In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.’ As presently constituted, Facebook is out of control and cannot last.”

Editorial / The Economist

“Tech has the experience of acting collectively to solve problems. Standards on hardware and software, and the naming of internet domains, are agreed on jointly. Facebook’s rivals may be wary but, if the industry does not come up with a joint solution, a government clampdown will become inevitable.

“Facebook seems to think it only needs to tweak its approach. In fact it, and other firms that hoover up consumer data, should assume that their entire business model is at risk. As users become better informed, the alchemy of taking their data without paying and manipulating them for profit may die. Firms may need to compensate people for their data or let them pay to use platforms ad-free. Profits won’t come as easily, but the alternative is stark. If Facebook ends up as a regulated utility with its returns on capital capped, its earnings may drop by 80%.  How would you like that, Mr. Zuckerberg?”

--The Israeli government is considering taking legal action against Twitter Inc. for ignoring repeated requests to remove online content that was inciting or supportive of terrorism, Justice Minister Ayelet Shaked warned on Tuesday. The shares fell 10 percent in response.

“Terrorist organizations such as Hamas and Hezbollah have moved to Twitter instead of Facebook. Through Twitter, the terrorist organizations promote terror and incite to violence, including public activity that they carry out without fear.”

The government has tried to pass legislation that would give Israel the tools to remove content it deems is “liable to lead to murder and terror.” Social media stoked a wave of stabbings in Israel in late 2014.

--A self-driving car from Uber Technologies Inc.  hit and killed a woman in Arizona on Sunday evening, what is likely the first pedestrian fatality involving a driverless vehicle.  Uber quickly halted its tests of self-driving cars in San Francisco, Pittsburgh, Toronto and the greater Phoenix area as the crash is investigated.  [The New York Times is reporting tonight the tests have not been going well to begin with, including issues going through construction areas and approaching tractor trailers.]

The woman was crossing the road in Tempe, Arizona, when the vehicle, operating in autonomous mode, struck her, according to the Tempe Police Department.

Experts have long worried about the effect deadly crashes such as this one could have on the industry, and autonomous vehicles is key to Uber’s business plan.  But such accidents are inevitable, and the victim was not in a pedestrian crosswalk.  Plus it also needs to be said that the Uber employee who was acting as a safety operator was looking down at the time of the accident, as video revealed, though the way the safety operator works, it’s probable he had no time anyway to take control.

--The National Highway Traffic Safety Administration says it’s investigating problems that affect an estimated 425,000 cars made by Hyundai and Kia, where airbags have failed to inflate in crashes, resulting in the deaths of four people. The agency is also examining whether this problem could occur in other automakers’ vehicles.  For now, the probe impacts models from 2011 to 2013 (Hyundai Sonata, Kia Forte)

There are electrical circuit shorts in airbag control computers made by parts supplier ZF-TRW; so the issue is, do other companies use the same computer.

--Best Buy Co. plans to stop selling phones in the U.S. made by Chinese wireless-equipment giant Huawei, a big blow for them. Best Buy has been one of several U.S. retailers, including Amazon, that offer the brand.

Huawei is the world’s third-largest smartphone vendor by units shipped, but its share of the U.S. market has been tiny since a 2012 congressional report advised carriers against doing business with Huawei over security concerns.  Huawei has long denied the threat, but U.S. intelligence leaders have also recently recommended against Americans using their phones or those of Chinese rival ZTE Corp.  Of course they are right.  You cannot believe Huawei’s statements that it is employee-owned and that no government has ever asked it to spy on or sabotage another country.

--According to a Journal analysis of regulatory data, “The three largest U.S. banks by assets have added more than $2.4 trillion in domestic deposits over the past 10 years, a 180% increase,” an amount that exceeds what the top eight banks had in such deposits combined in 2007, pre-financial crisis.

It helped that the three – JPMorgan Chase, Bank of America, and Wells Fargo – did large deals during the crisis as their heft continues as consumers opt for the big banks over smaller ones.

Last year, about 45% of new checking accounts were opened at the three national banks, even though they accounted for 24% of US. branches, according to research by consulting firm Novantas.

--Paul Ziobro / Wall Street Journal: “Some retailers gambled on slower shipping options during the holidays, depriving FedEx Corp. of high-priced express shipments until the crunch time before Christmas.

“The move paid off for shippers, as FedEx’s ground network delivered more than 54 million packages a day earlier than expected. But FedEx’s express business, which had spent big on aircraft and staffing anticipating higher volumes, posted a steep drop in operating income in the latest attester. The unit incurred $170 million in extra costs during the December-to-February quarter, including for added costs during the peak shipping period.”

FedEx made considerable investments last year after some issues with several large shippers during the 2016 holiday season, while at the same time, improvements to the ground network gave shippers more confidence to use it during last year’s holiday season.

Revenue did increase 10% to $16.5 billion for the quarter.  Income fell 24% to $424 million in the express business, while surging to $634 million for the ground unit.

--Oracle reported 6% total revenue growth, year-over-year, for the third consecutive quarter, its most rapid growth on a consistent basis in seven years.

But Oracle’s total cloud revenue came in a bit under Wall Street’s forecasts, while its outlook for its current quarter (fiscal fourth) was less than projected. The shares fell sharply in response.

The company has been making significant progress in transitioning its business to the cloud, however, with the unit now responsible for 15% of total revenue for the 12 months ending Feb. 28, compared to just 7% two years prior.

But, a change that Oracle made to attract more of its traditional software licensing clients to cloud, allowing them to bring the licenses to the cloud services rather than having to renegotiate new contracts, has the perverse effect of fattening licensing revenue at the expense of cloud revenue.  Ergo, the percentages are deceiving.

On this last topic, co-CEO Mark Hurd added: “Less than 15% of our on-premise applications customers have begun to migrate their applications to the cloud.  As the other 85% of our applications customers start to move their applications to the Cloud, we have a huge opportunity in front of us. We expect to more than double the size of our SaaS (software-as-a-service) business very quickly.”

--Nike reported fourth-quarter earnings and sales Thursday that topped Wall Street’s expectations, while confirming a major deal with a rival retailer Nike has avoided working with in the past: Amazon.

In a call with analysts and investors, Nike said a new pilot program with Amazon, where the retailer will directly sell a limited product assortment on its e-commerce platform, including athletic footwear, apparel and accessories.

Nike reported double-digit sales growth in Western Europe, Greater China and emerging markets.

The company has been using expensive sponsorship deals to increase its market share in sports like soccer, where Nike outfitted 10 World Cup teams, and in basketball, where it spent large sums to keep NBA star Kevin Durant.

--Saudi Arabia is scaling back its public offering for oil giant Aramco, with a small listing next year on the Saudi stock exchange, while taking more time to decide if an international venue (such as New York or Hong Kong) is worth it.

The Saudis have concerns about legal risks in a listing overseas, while the need for a bigger listing has been negated by rising oil prices.

The Saudis now realize that a listing in New York, for one, would require far more disclosure than they are prepared to reveal, while the rise in the price of crude to $65 has bolstered the Saudi treasury.

--Meanwhile, in terms of the price of crude, while U.S. shale producers continue to drill at an increasing pace as energy companies boost spending, which is bearish, the odds that the U.S. will pull out of the Iran nuclear agreement in May is running high, and that’s bullish.

It is now estimated that U.S. production, currently 10.38 million barrels per day, is expected to overtake Russia (approx.. 11 million) by year end.

Crude, as measured by West Texas Intermediate, rallied to over $65 for the first time in seven weeks.

--The founder of Toys R Us, Charles Lazarus, died Thursday, hours before his beloved toy chain was to begin going-out-of-business sales. 

Lazarus, 94, opened his first toy store in 1957 in a Washington, D.C., suburb, and by the 1980s had built his company into a powerful supermarket-of-toys format, the largest force in toy retailing.

In 1965, Lazarus introduced Geoffrey the Giraffe as the growing chain’s mascot, and the jingle, “I Don’t Want to Grow Up, I’m a Toys R Us Kid,” was an anthem for a generation of children.

Lazarus stepped down as CEO in 1994 and chairman in 1998.

In 1987, according to Forbes, he was the highest-paid U.S. executive, earning $60 million.

--Byron Allen, the comedian-turned-media entrepreneur, has acquired the Weather Channel cable network as he seeks to build his TV and film business.  Allen purchased Weather Group, the parent company of the Weather Channel, for $300 million.  Allen, whose Entertainment Studios plans on investing $billions over the next five years to acquire media assets, does not plan to make any major changes to the channel.

TWC was previously owned by the Blackstone Group and Bain Capital with Comcast Corp.’s NBCUniversal.  The group bought the network for $3.5 billion in 2008.

The deal does not include digital and mobile outlets such as Weather.com, which IBM purchased from NBCUniversal for about $2.5 billion in 2015 in a play to bolster its “big data” clout.

Personally, I’m still pissed my Verizon network dropped the Weather Channel for AccuWeather.

--United Airlines announced it was suspending the transport of animals in the cargo compartments of planes, pending an internal review following a number of mistakes.  United won’t accept any more reservations for pets until the review is completed, likely around May 1.

According to the Transportation Department, United carried the most animals in cargo of any airline last year, with 138,178 out of 506,994 among 17 carriers.  But United had 18 of the 24 animal deaths, last year.

--Southern California home prices jumped 10.3% in February compared with a year earlier, though sales remained flat in the six-county region as the state grapples with a shortage of homes for sale.

The median price was $506,750 last month, according to data firm CoreLogic.  December’s all-time high was $509,500.

The median price in Orange County tied a record of $710,000 and was 10.1% higher than a year ago.  The price in San Diego County rose 8.7% to $535,000.

The flipside of these sky-high prices is California has the nation’s highest poverty rate after accounting for the cost of living.

--Meredith Corp., which recently bought Time Inc. and its stable of magazines for $1.8 billion, has completed a review and now plans to sell the flagship TIME publication, as well as Sports Illustrated, Fortune and Money.

Meredith also plans to eliminate about 1,000 jobs over the next 10 months as part of the integration of other Time publications into a lineup including Better Homes & Gardens and Family Circle.  200 other employees have already been given notice.

Apparently Newsweek and U.S. News & World Report were each sold for $10 million or less, and one analyst, Craig Huber, said it wasn’t likely any of the above titles would fetch more than that, which is kind of staggering to think about for us old-timers.

Meredith is keeping People, which is the most profitable of the Time Inc. titles it acquired.

--New York City’s unemployment rate fell to 4.2% in February, an all-time low based on records going back to 1976.  Gotham’s population reached a record high of over 8.6 million and has climbed 5.5 percent since 2010, according to a Department of City Planning analysis of new Census Bureau population estimates.  [8,622,698, to be exact.]

The statewide jobless rate dipped to 4.6%, its lowest level since 2007, prior to the Great Recession.

--Mercer, one of the world’s largest human resources consulting firms, released its ranking of the best cities in the world to reside.  Vienna is number one, followed by Zurich, Auckland, Munich and Vancouver.

The least livable cities are Khartoum, Port au Prince, Sana’a (Yemen), Bangui (Central African Republic), and No. 1...Baghdad.

--Not sure where New York City is on Mercer’s list (it wasn’t top ten), but the Big Apple welcomed a record 62.8 million visitors in 2017, according to NYC & Company, the city’s official tourism-marketing organization.  So fears of a potential “Trump slump” in tourism were misguided.

The increase over 2016 was 2.3 million, or 3.8%; with 49.7 million domestic (up 3.9%) and 13.1 million (up 3.4%) international travelers.

Gotham is bucking the U.S. overall international trend when it comes to international tourism, which saw the number of visitors to the U.S. for January through September 2017 declining 3.8% to roughly 55 million, according to the U.S. Department of Commerce.

--We note the passing of Peter B. Peterson, who it seems has been a fixture in my lifetime, having been secretary of commerce in the Nixon administration, though he was fired by the president for being too chummy with Democrats, after which Lehman Brothers hired him as a vice chairman in 1973.  He became CEO quickly thereafter amid a bond-trading scandal and then the billionaire was a co-founder of private-equity firm Blackstone Group, along with a Lehman colleague, Stephen A. Schwarzman.

Peterson was also chairman of the Council on Foreign Relations for 22 years and was well known in public policy circles, particularly with his missives against debt and the U.S. budget deficit.

He became a billionaire when Blackstone went public in June 2007.

--I’ll have Wayne Huizenga’s story next time, Huizenga just passing at the age of 80.

Foreign Affairs

Russia: In an election rife with ballot stuffing and such, President Vladimir Putin handily won another six-year term in office with a reported 76.7% of the vote.  Turnout was said to be a strong 70%.

Moscow Times: “Lyudmila Sklyarevskaya, a Russian hospital administrator, voted on Sunday in an election that gave Vladimir Putin another term as Russian president.

“Then she went to another polling station and voted again, according to Reuters reporters who witnessed her movements.”

She was among 17 people who were photographed apparently casting ballots at more than one polling station in a town in southern Russia.

At another polling station in Simferopol, Crimea, “reporters saw 797 voters at that station, while the official figures state that 1,325 people voted on the day and in person.”

So on Tuesday, President Trump called Putin to congratulate him, but did not raise the nature of the vote, Russia’s meddling in our elections, Moscow’s cyberattacks on our electrical grid, or the Kremlin’s role in a nerve agent attack on a former Russian spy and his daughter living in Britain.

Trump ignored his national security advisers, who counseled him to raise Russia’s recent behavior.

Trump told reporters in the Oval Office, where he had just welcomed Crown Prince Mohammed bin Salman of Saudi Arabia, “We had a very good call. We will probably be meeting in the not-too-distant future.”

This last bit shocked his advisers, who weren’t prepared for his statement of a coming summit.

Trump’s friendly banter came despite the administration’s tougher stance toward Russia with increased sanctions and for its “malicious cyberattacks,” as well as after he joined Britain, France and Germany in denouncing the Russian government for violating international law for the attack on the spy, Sergei V. Skripal, and his daughter Yulia.

But Trump refuses to criticize Putin directly, believing his leader-to-leader rapport is the only way to improve relations.

And then the report emerged in the Washington Post that Trump not only completely disregarded instructions from aides to condemn the recent poisoning in the U.K. but it was written in his briefing book in all caps, “DO NOT CONGRATULATE” Putin. Instead, Trump told reporters he had offered his well wishes.

Trump was livid with the leak.  White House Chief of Staff John Kelly said he also was “frustrated and deeply disappointed.”

Sen. John McCain (R-AZ) rebuked President Trump for making a formal call to congratulate Putin on his re-election.

“An American president does not lead the Free World by congratulating dictators on winning sham elections,” McCain wrote in a statement.

“And by doing so with Vladimir Putin, President Trump insulted every Russian citizen who was denied the right to vote in a free and fair election to determine their country’s future, including the countless Russian patriots who have risked so much to protest and resist Putin’s regime.”

Editorial / Washington Post

“Vladimir Putin was reported to have won 76.7 percent of the vote in Russia’s presidential election, more than anyone in the post-Soviet era. But the show of popular support his regime orchestrated for itself was less impressive than it looked. Turnout, at 67.5 percent, was below the 70 percent goal the Kremlin set for itself, even though authorities raised the total with ballot-box stuffing so blatant that videos of it were readily available.  Young people did not turn out: According to the New York Times, an exit poll by a state-backed agency showed only about 9 percent participation by voters aged 18 to 25.

“In all, it seemed more than understandable that Mr. Putin, who is often described as wildly popular, did not take the risk of allowing his most prominent opponent, Alexei Navalny, to run against him.  Mr. Navalny, who called for a boycott, ended up stealing some of Mr. Putin’s show anyway: His live online debate with the officially sanctioned opposition candidate, Ksenia Sobchak, generated far more buzz than Mr. Putin’s lackluster victory rally.

“Mr. Putin based his campaign almost entirely on hostility toward the West.  He boasted of new nuclear weapons and displayed an animation of them streaking toward Florida. With the results in on Monday, he abruptly shifted gears, saying he was not interested in an arms race and would focus on raising living standards at home.  Yet the reality is that a Russian ruler who has been in power longer than anyone since Joseph Stalin will find it difficult to climb out of the holes he has dug for his regime in both domestic and foreign affairs....

“Only forceful Western action will deter Mr. Putin.  Ukrainian forces should be supplied with more weapons, and cyberattacks should be answered. Above all, Mr. Putin and the clique of oligarchs around him should be prevented from stashing their money in Western financial and real estate markets. Mr. Putin should know that further adventures abroad will put his newly renewed regime at risk.”

Ralph Peters / New York Post

“It wasn’t supposed to happen this way.  After the Soviet Union’s collapse in 1991, democracy was supposed to be irresistible. While some of us were more skeptical than others, even cynics allowed that freedom seemed to have the upper hand.

“Instead, barely a quarter-century along, democracy and political freedoms are newly embattled, as one society after another defaults to reborn tyranny, striding behind religious extremism, xenophobic nationalism – or both.

“On Sunday, Vladimir Putin was reelected as Russia’s president with almost 77 percent of the vote.  With his relentlessly propagandized image at home, Putin would have won a free election, but that wouldn’t have been enough: He feels the need of an unassailable mandate, of recognition as his country’s savior. So serious opposition candidates were excluded (and one murdered), while ballot-box stuffing was shameless. Czars are just that way.

“Days earlier, China’s President Xi Jinping engineered his lifetime tenure (he didn’t bother with the charade of a nationwide vote). Xi’s the most-powerful leader China has had since Mao in his heyday, and Mao cost China tens of millions of lives.

“In NATO-member Turkey, President Recep Tayyip Erdogan, a would-be sultan, has dismantled the constitution; jailed tens of thousands of opposition members; staged massive show trials; destroyed freedom of the press; attacked minorities; empowered religious fanatics; and, now, invaded Syria not to defeat the remnants of ISIS, but to crush our Kurdish allies.

“In Egypt, where democracy came and went in a blink, President Abdel Fattah al-Sissi rules ruthlessly, while Syria’s Bashar al-Assad has survived every prediction of his fall.  In Iran, Ayatollah Ali Khamenei, unelected, remains the undisputed ruler.

“Even Kim Jong Un, a tin-pot despot, has gained international recognition at a level his predecessors never achieved.

“In NATO and European Union members Hungary and the Czech Republic, strongmen dominate the political scene. Romania and Slovakia struggle to maintain democratic forms, and even Poland has seen its constitution undermined. Corruption, tyranny’s handmaiden, is everywhere.

“In Italy and France, pro-Putin, neo-fascist parties are political forces to be reckoned with, while Moscow also backs far-right parties in Germany and Austria....

“Tyrants may oppress you. They may lead you into disastrous wars. But they don’t demand that you take personal responsibility, that great burden of democracy. And every tyrant worth his salt provides scapegoats for his people’s failures: It’s never your fault, it’s them. It’s a message demagogues promote even here.

“Tyrants offer certainty. All you have to do is let them run things. It’s a deal too many humans gladly embrace.

“Meanwhile, freedom means insecurity, and democracy signals chaos to unprepared societies. As we’ve seen for almost three decades now, the sudden imposition of democratic forms on traditional societies is like handing a child a grenade....

“We need to stop whining and be grateful for the freedoms we enjoy, our countless privileges as Americans and our remarkably effective government. In perilous times such as these, when domestic demagogues cherry-pick the Constitution and even a president displays impatience with our laws, we must put the Constitution above party and personal biases, above all else.

“That document is our sole guarantee that tyranny won’t come here, and that’s why our military takes an oath to the Constitution, not to an individual.”

Lastly...

British Foreign Minister Boris Johnson said on Wednesday that Vladimir Putin will bolster Russia’s image through hosting the World Cup in a similar way to how Hitler used the Olympics when it was held in Nazi Germany. Russia is hosting this huge event in June and July and it’s going to be a security nightmare, with all manner of terrorist groups no doubt wanting to send a message.

China: In his speech at the end of the country’s annual parliament session, President Xi Jinping warned on Tuesday that no Chinese land will be separated from China and the country is able, confident and has the will to thwart any separatists attempts, a pointed message to places like Taiwan and Hong Kong.

Xi said “achieving total unity” was the “collective hope of all Chinese people” and any attempts to divide it were “doomed to fail.”

“Every inch of the territory of our great nation cannot be separated from China.”  Any attempts at separatism would “face the punishment of history,” Xi said.

On Hong Kong, Xi called on its people to strengthen their sense of belonging to the nation and patriotic feeling.

Overall, Xi stressed the paramount role of the Communist Party in governing China, urging its 1.3 billion people to rally behind it.

Xi also laid out his grand vision for China, saying history had proven that “only socialism can save China.”  And Chinese people, he said, “have the spirit of fighting the bloody battle against our enemies to the bitter end.”

Xi also named a trusted ally, former top graft-buster Wang Qishan, to be vice president.  Wang has experience dealing with the United States and will no doubt be the main point person between Beijing and Washington.

The rubber-stamp National People’s Congress voted 2,970-to-0 to give Xi a second five-year term Saturday, days after repealing a constitutional provision that would’ve barred him from a third.

[A total of 2,969 people voted to elect Wang Qishan vice-president, with one voting against, a brave soul indeed who is now serving hard labor.]

For his part, Premier Li Keqiang, who is supposed to be in charge of the economy, used his once-a year news conference to say China was committed to global cooperation on trade.  Li said China would further open up its economy and “ensure that both domestic and foreign firms” were “able to compete on fair terms in China’s large market.” But this is total B.S.  They say it every year.

Taiwan’s Defense Ministry said it sent ships and planes to monitor a Chinese aircraft carrier that entered the Taiwan Straits this week, as cross-strait tensions continue to ramp up following U.S. passage of a law allowing formal exchanges between Washington and Taipei, which drew protests in Beijing.

North Korea: State media said it was “self-confidence” and not sanctions that drove it to seek talks with South Korea and the U.S.

The commentary in KCNA comes after President Trump accepted an invitation to meet Kim Jong Un, though details of any meeting are still not clear.

And it’s curious that Kim still has not made any kind of announcement, and the KCNA editorial didn’t make any direct reference to a possible summit, though it said its “peace-loving proposal” was a “sign of change” in Pyongyang’s relationship with the U.S.

We’ll see what the reaction is when U.S.-South Korean military exercises resume April 1.

South Korean President Moon Jae-in is due to meet Kim before then, in the next week.  [It’s just been reported, March 29.]

North Korea’s Foreign Minister Ri Yong Ho has been in Sweden and Finland for talks, with Sweden no doubt playing a prominent role in representing U.S. interests in Pyongyang.

Syria: Turkey’s initial invasion of northern Syria bogged down the first two months, but now its army is on the move, having taken the Afrin region and seeking more territory in its battle against the Kurdish population. But it could get embroiled in a guerrilla war in Syria, as Russia and the United States, who control the airspace, tolerate Turkey’s moves.

Turkish forces and their Syrian rebel allies took the city of Afrin on Sunday, declaring full control after an eight-week campaign to drive out Kurdish YPG forces.  Turkish President Erdogan exulted in the triumph.  “Most of the terrorists have already fled with tails between their legs....In the center of Afrin, symbols of trust and stability are waving instead of rags of terrorists.”

But then videos on social media emerged of the conquering soldiers looting the city. And the Kurds said, “Our forces all over Afrin will become a constant nightmare for them.”

Afrin itself remains volatile, with a bobby trap planted in the city killing seven civilians and four Free Syrian Army soldiers, the latter Turkey’s proxy.

And then you have the issue of more than 150,000 people fleeing the area in recent days, according to the Syrian Observatory, with 280 civilians killed, a figure denied by Ankara.

The deepening engagement places Turkey in the middle of the fight between the government of President Assad, who is backed by Russia, and the rebel groups out to remove him from power.

David Ignatius / Washington Post

“The seizure of the Syrian Kurdish enclave of Afrin on Sunday by Turkish forces is a rerun of one of modern history’s saddest recurring themes: The Kurds struggle for survival while their friends among the great powers stand aside and watch.

“The Kurds’ plight is especially painful for U.S. military commanders, because the Kurdish-led Syrian Democratic Forces have been America’s key ally in defeating the Islamic State in Syria.  U.S. commanders fear that the decisive gains won against the jihadists since 2014 may be slipping away as the SDF leaves the Islamic State front in eastern Syria to combat the Turkish assault on Afrin in the northwest.

“Seeing the photographs of pro-Turkish Islamist militiamen strutting about the center of Afrin on Sunday, it seemed eerily possible that jihadist allies of the Islamic State were back in control in northern Syria, thanks to our ‘NATO ally’ Turkey.

“The Kurdish defeat in Afrin was probably inevitable.  The United States made clear months ago that Afrin was in the Russian-controlled zone and America wouldn’t intervene there.  Russian forces, who had six outposts in the enclave and had promoted themselves as Afrin’s protectors, withdrew their troops two months ago and gave Turkey a green light for its assault. If the Kurds were betrayed in Afrin, it was by the Russians.

“The U.S.-Turkish confrontation now moves about 60 miles east to the town of Manbij, which is controlled by the SDF and its U.S. military advisers. Turkey is demanding that the Americans and the Kurds withdraw to east of the Euphrates River. That would be a policy mistake, in addition to an amoral abandonment of a faithful ally.  The Turks don’t have disciplined forces that could maintain security in Manbij. Acceding to Turkish demands would spread chaos and make the ruinous situation in Syria even worse....

“The problem is that if the United States did what Turkey wants, the result would be bloody chaos in Manbij that might cascade south and east, unraveling the stability that was bought at such cost.  A reasonable goal would be a gradual withdrawal by the United States and SDF from Manbij, as the Afrin conflict ends and there’s a de-escalation in northern Syria.  A sudden retreat would risk disaster, not least for Turkey, whose appetite in northern Syria vastly exceeds its ability to swallow and digest.”

Separately, airstrikes in Syria killed more than 100 last weekend as civilians fled eastern Ghouta. The weeks-long violence left more than 1,300 civilians dead, 5,000 wounded and forced thousands to flee to government-controlled areas. 

And today, Russian air strikes killed 37 civilians in this shrinking rebel enclave. The Observatory said the Russians used “incendiary weapons,” killing “the civilians in a basement from burning or suffocation.”

The White Helmets, a civil defense organization, said most of the dead today were women and children.

Iran: Prior to the appointment of John Bolton, Republican Sen. Bob Corker (Tenn.), chairman of the Senate Foreign Relations Committee, said last Sunday on CBS’ “Face the Nation” that he expected President Trump to pull out of the Iran nuclear agreement in May.

Asked if he thought Trump would pull out on May 12, the deadline for the president to issue a new waiver to suspend Iran sanctions as part of the deal, Corker responded, “I do.  I do.”

Britain, France and Germany have proposed fresh EU sanctions on Iran over its ballistic missiles and its role in Syria’s war, according to a confidential document, in a bid to persuade Washington to preserve the 2015 nuclear deal with Tehran.  The EU strategy is to levy new sanctions to show Trump that there are other ways to counter Iranian power abroad.

Separately, today, the Department of Justice and Treasury Department charged nine Iranian and an Iranian company with attempting to hack into hundreds of U.S. and international universities, dozens of companies and parts of the U.S. government on behalf of the Tehran government.  The cyberattack pilfered academic data and intellectual property from 144 U.S. universities and 176 universities in 21 foreign countries.

Deputy Attorney General Rod Rosenstein said at a press conference that the nine defendants “are now fugitives of justice,” and face extradition in more than 100 countries if they travel outside of Iran. The action is the fourth time in the past few months that the administration has blamed a foreign government for major cyberattacks.

The campaign targeted the email accounts of more than 100,000 professors worldwide and compromised about 8,000 of them.

Afghanistan: The head of U.S. forces, Gen. John Nicholson, said he’d seen “destabilizing activity by the Russians,” who he said were smuggling weapons across the Tajik border to the Taliban, but could not say in what quantity. Russia has denied these allegations in the past, but the new claims come at a sensitive time, with Britain and Russia locked in their dispute over the attack on a former Russian spy and his daughter on UK soil using a deadly nerve agent.

And reports of Russian meddling in the 2016 election.

“We see a narrative that’s being used that grossly exaggerates the number of ISIS fighters here,” Gen. Nicholson told BBC News.  “This narrative then is used as a justification for the Russians to legitimize the actions of the Taliban and provide some degree of support to them.”

“We’ve had weapons brought to this headquarters and given to us by Afghan leaders who said, this was given by the Russians to the Taliban. We know that the Russians are involved.”

Wednesday, a suicide bomber linked to Islamic State struck on the road to a Shiite shrine in Kabul, killing at least 33 people as Afghans celebrated the Persian New Year.  65 others were wounded in the attack, which was carried out by a bomber on foot.  ISIS claimed responsibility, the group being Sunni Muslim extremists who have repeatedly targeted Shiites.

Random Musings

--Presidential tracking polls....

Gallup: 40% approval for Trump, 56% disapproval [March 18]
Rasmussen: 46% approval, 52% disapproval

--In a new Wall Street Journal/NBC News poll, President Trump’s job approval was up to 43% from 39% in January, while just 21% have a positive image of Democratic Minority Leader Nancy Pelosi, down 4 percentage points from a poll six months ago.  [Paul Ryan is viewed positively by just 24%.]

But, asked what party should control Congress (the generic #s you’ll hear so much about from here until November), 50% of registered voters picked Democrats to 40% Republicans, after some polls have showed the generic gap closing to zero.

This is the figure that gives GOP leaders the heebie-jeebies.  I’ve told you since Nov. 2016 that the figure I’m focused on is Independents, who favor a Democratic Congress by a 48-36 margin, according to the WSJ/NBC survey.

And, interestingly, the National Rifle Association is now viewed positively by 37% of adults and negatively by 40%, the first time since 2000 that the group is viewed more negatively than positively.  In April 2017, it was 45-33, positive.

--A Monmouth University Poll finds a large bipartisan majority who feel that national policy is being manipulated or directed by a “Deep State” of unelected government officials.  Just over half of the public is either very worried (23%) or somewhat worried (30%) about the U.S. government monitoring their activities and invading their privacy.  There are no significant partisan differences – 57% of independents, 51% of Republicans and 50% of Democrats are at least somewhat worried the federal government is monitoring their activities.

--Fox News analyst retired Lt. Col. Ralph Peters resigned, saying the cable channel has gone from being a valuable conservative voice to “assaulting our constitutional order and the rule of law, while fostering corrosive and unjustified paranoia among viewers,” directly targeting the hosts, particularly Tucker Carlson, Laura Ingraham and Sean Hannity – for their non-stop attacks on special counsel Robert Mueller’s investigation into Russian interference with the 2016 presidential election.

“When prime-time hosts – who have never served our country in any capacity – dismiss facts and empirical reality to launch profoundly dishonest assaults on the FBI, the Justice Department, the courts, the intelligence community (in which I served) and, not least, a model public servant and genuine war hero such as Robert Mueller – all the while scaremongering with lurid warnings of ‘deep-state’ machinations – I cannot be part of the same organization, even at a remove,” Peters wrote. “To me, Fox News is now wittingly harming our system of government for profit.”

Earlier, Fox News anchor Shepard Smith said in an interview with TIME magazine that some of the network’s opinion programming “is there strictly to be entertaining,” which led to some blowback from Hannity and Ingraham on social media.  (Hannity called Smith “clueless” about the reporting done on his program).

But Peters had been Fox News’ national security analyst for 10 years, and he often criticized the Obama administration.

Peters’ email notes that the network’s hard news reporters were “talented professionals in a poisoned environment.”

--Kyle Smith / National Review

“Two years ago Donald Trump hijacked the Republican party. Now it’s time to think about what steps might have to be taken to regain control of it.

“The tocsin of doom that sounded this (last) week in Pennsylvania’s 18th Congressional District could hardly have been more clear in its meaning: This November the GOP is headed for a mega-shellacking with a side order of drubbing sauce.  The fault for this lies almost solely with President Trump.  Losing the House looks like a foregone conclusion.  Losing the Senate, while unlikely, no longer appears unthinkable. After the Democrats take the House, they will be implacably opposed to making deals, and would we want those anyway?  Legislatively, President Trump will be finished. Getting appointments through the Senate won’t be easy.

“A reasonably normal Republican president could, at this stage, count on holding the House with ease and expect to pick up three or more Senate seats this fall. Trump can boast that under his watch, ISIS has been all but defeated, domestic or foreign policy crises are absent, the stock market has hit one high after another, unemployment has come down sharply from an already low level, and even crime is falling.  And let’s not forget that thanks to El Presidente there were no commercial aviation fatalities last year.

“So what? say the voters in PA-18, a district Trump won by 20 points, where the Republican candidate Rick Saccone had no major defects (and the Democratic winner Conor Lamb can be expected to vote with Nancy Pelosi on nearly all occasions) and where Trump’s economically illiterate faith in tariffs is popular. Saccone lost the district anyway.  To borrow language from the anthem of Trump’s hometown, if the GOP can’t make it there, it can’t make it anywhere.  It’s’ because of Trump that the (R) next to Saccone’s name was too great a  burden to overcome.

“The behavior of the president shouldn’t be all that salient to, say, the candidacies of Democrats who ran and won in the Virginia House of Delegates. But voters can’t be counted on to be rational.  There’s essentially only one issue on their minds this year: It’s the personality, stupid. The Chernobyl cloud of noxious presidential behavior is poisoning the party from coast to coast. That Trump’s approval rating is hovering in the high 30s and (very) low 40s is gobsmacking enough considering the sunny economic news, but what’s really disturbing is that his supporters are so unenthused. PA-18 Trump voters simply didn’t show up on Tuesday, yet he’s supplying the Democrats with a turnout motivator like no other....

“After the November debacle, it’ll be smoke-filled-room time for the senior lawmakers and other grandees of Abraham Lincoln’s party. Although Trump has made strong judicial appointments and signed a tax reform that is boosting the economy, his personality is interfering with his duties as a president, and the voters are right to notice this and take it seriously....

“Trump has a proven inability to help other Republican candidates get elected, and most will ask him not to try.  The president is a cement jumpsuit that is dragging us all to the bottom.”

--“Sex & the City” actress Cynthia Nixon announced on Monday that she will challenge New York Gov. Andrew Cuomo in a Democratic primary.  Nixon has been involved in New York politics in recent years, calling for more funding of public education and campaigning for Mayor Bill de Blasio.

A Siena College poll released Monday before Nixon’s announcement, long-rumored, showed her trailing Cuomo, 66% to 19%, among New York Democrats in the September primary.  I kind of think she could do pretty well.  Nixon has some name recognition and is already raking large numbers of small donations, more than Cuomo has received.

--A Quinnipiac University Poll of New Jersey voters for the U.S. Senate race has Democratic Sen. Robert Menendez leading probable Republican candidate, former Celgene executive Bob Hugin (who I wrote of the other day) 49-32, despite Menendez’ corruption issues, to show you how ‘blue’ my home state is.

Granted, Hugin isn’t a known figure in New Jersey as yet, with 83% saying they don’t know enough to form an opinion of him. But to show you how clueless my fellow Garden Staters are, 37 percent haven’t heard of Menendez’ issues, and by a 46-39, they approve of the job he is doing, his best score in more than a year.

Meanwhile, I remain on the record as wanting Menendez to win, solely because he has a brilliant mind on the foreign policy front and I value that more today than ever.  Hypocritical in some respect?  Yup.  I plead guilty.

--The other day I wrote of the crime wave in Mexico in terms of its tourist destinations, such as Cancun, and today we learned a family of four from Iowa was found dead inside their rented holiday home on the Yucatan, the popular resort of Tulum.  But both Mexican and U.S. police say there was no sign of traumatic injury and no foul play was suspected. Autopsies are pending.

--A Cirque du Soleil performer died Saturday night after he fell during a performance in Tampa, Fla.  Yann Arnaud, an aerialist, was performing during the company’s show “Volta” when he plummeted to the stage.  He had been with the company for 15 years.

Many children were in the audience.  A witness, Julien Martinez, told WFLA, “It was awful.  You heard all the cries of the audience. There were children there and they were freaking out.”

“It kinds of colors our opinions of what is going on behind the scenes,” Martinez said.  “What is the cost of our entertainment at that point?”

In June 2013, a Cirque du Soleil performer died after a fall during a show at a Las Vegas casino.

Years ago in Vegas, I saw their production of “Love” and it was spectacular.

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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 $1352
Oil $65.74

Returns for the week 3/19-3/23

Dow Jones  -5.7%  [23533]
S&P 500  -6.0%  [2588]
S&P MidCap  -5.0%
Russell 2000  -4.8%
Nasdaq  -6.5%  [6992]

Returns for the period 1/1/18-3/23/18

Dow Jones  -4.8%
S&P 500  -3.2%
S&P MidCap  -3.2%
Russell 2000  -1.7%
Nasdaq  +1.3%

Bulls 55.5
Bears 16.8 [Source: Investors Intelligence]

Have a great week.

Brian Trumbore

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