Week in Review

---

Week in Review

01/05/2019

For the week 12/31-1/4

[Posted 11:00 PM ET, Friday]

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

Special thanks to Bob C. for his ongoing support.

Edition 1,030

2018 in Review

Dow Jones -5.6%
S&P 500 -6.2%
S&P MidCap -12.5%
Russell 2000 -12.2%
Nasdaq -3.9%

Toronto -11.6%

FTSE (London) -12.5%
DAX (Frankfurt) -18.3%
CAC 40 (Paris) -11.0%
Stoxx Europe 600 -13%

Nikkei (Tokyo) -12.1%
Shanghai Comp. -24.6%
MSCI Asia Pacific -15%

Yes, an ugly year all around the world.  In most cases, such as in the U.S., the worst since 2008.

So how did your editor do?  Let me put it to you this way.  You can’t find anyone who did better than I did, so don’t even try.

On Dec. 30, 2017, I wrote in this space:

“The Dow Jones and S&P will fall 5 percent (though with two ‘crashettes,’ brief 10 percent drops in 2-3 days), while Nasdaq will decline 12 percent, owing to investors souring on some of the big names that have powered the index the past year in particular, namely Facebook, Google and Amazon.”

Yup, I nailed the Dow and S&P like no one else, and I’m hardly embarrassed the Nasdaq didn’t fall quite as much as I said it would, though in late December it was down 22% from its Aug. 29 high.

Further, it’s not like I just say the market will go down every year and get it right once in ten.  I said in Dec. 2016 that “the Dow and S&P would rise 10%, Nasdaq 7%.”

2017 was a banner year, with the Dow +25%, S&P +19% and Nasdaq +13%, but I called for solid gains and that was what we got.

And you might recall that after my bearish call for 2018, stocks shot out of the cannon to open the year, going on to set all-time highs in Sept. and Oct., but I never flinched.

Bloomberg News said this week that the group of analysts and strategists it tracks, back in January, predicted the S&P 500 would end 2018 “at 2,893, on average, translating to an 8% gain.  Instead, the benchmark index dropped 6% to finish just above 2,500 [Ed. 2506]. The almost 400-point gap is the biggest since the 2008 financial crisis....

“The closest that any of the strategists followed by Bloomberg came to the 2018 close was 140 points.”  That means that particular analyst called for a decline in the S&P of about 1%.

For 2019, “All of the 22 strategists tracked by Bloomberg see higher prices over the next 12 months. At 2,975, the average estimate points to a 19% gain from Monday (12/31), a prediction that’s more optimistic at this time of year than any since at least 1998.”

So what do I say?

Here’s some of what is going into my thinking.  That was one bloody ‘bear’ market we just went through.  Yes, technically the S&P was down 19.8% at its closing level worst, not the 20.0% you would need, to be anal about it, and the Dow Jones was down about 18%, but Nasdaq was down over 22%, a clear bear market.  So it was a bloodbath, especially for some of the tech leaders, the FAANG stocks: Facebook Amazon, Apple, Netflix and Google (Alphabet).

But I think in this regard the worst is over.

2019 earnings are expected to rise, currently at 7% to 8%, down from a general forecast of 10% in September.  Yes, the global economy is clearly decelerating, and the U.S. is not growing at 3.5% to 4.0% anymore.

But does this mean earnings are going to tumble to zero growth...and if that were to happen, are stocks now reasonably priced given the interest rate environment?  Yes.  They are no longer overvalued.

Is the U.S.-China trade issue a big risk?  Yes.  But investors, and the public, will at some point be hoodwinked into believing we’ve reached a decent accord with Beijing later in the year and the markets will celebrate, even though the actual agreement will be a bunch of crap, a total sham, a con job, perpetrated by President Trump.

These other trade deals the president has talked about?  I’ve given you the best analysis of anyone.  There’s nothing great in them.  Slight improvements here and there, but it’s all bulls---.

And in the case of America’s farmers, I’ve told you how they are coming up huge losers, not just because of the China trade war, but also looming lost access due to the signing of the revised Trans-Pacific Partnership (TPP), sans U.S. (now the Comprehensive and Progressive Trans-Pacific Partnership), that will cost America’s farmers even more in lost market access then they had before.

I thought I made the best point of anyone weeks ago.  President Trump is going to try to convince Americans that any deal with China is a great deal when in the case of autos and soybeans, to cite two high-profile examples, we’ll be lucky to get back to the levels we had two years ago!  But we’ll be brainwashed into thinking that’s a win.  Wall Street will treat it as a positive.  It will be all about market sentiment.

Then there’s the Mueller factor.  This is a negative, obviously, assuming there is some very damning evidence about the president and his family, i.e., the Trump Organization.  Impeachment?  Who knows.  Today I would say definitely not.  But we await Mueller’s findings.

Unless the Republican wall in Congress collapses, the president has nothing to worry about.  But he will lose more independents over his behavior, which will grow worse and worse.

What Trump really has to worry about is recession in 2020, which will be a killer, assuming the Democrats find a respectable candidate.

As for the Federal Reserve, it won’t hurt Wall Street.  I’ll say one rate hike, not the two currently penciled in.

By the way, I nailed this too last year, except I incorrectly thought inflation “will become an issue for the Federal Reserve, ditto the European Central Bank, and the Fed will be forced to hike the funds rate more than the three times currently forecast.”  [12/30/17]  Yes, they hiked four times.

So my market prediction for 2019 is...S&P and Dow Jones up 12%, Nasdaq up 13%.

But the market will be cracking heading into 2020, then look out below.

Check out my “Wall Street History” link for all the stats, and historical data, as only I present it.  For brokers and financial planners, it’s extremely useful.  Knowledge is power, friends.

As for geopolitics, I said this about 2018 last 12/30/17:

2018 is going to be awful.  Events will rapidly spiral out of control, and this will expose the Trump temperament far more...for the worse, as he recklessly tweets away and greatly exacerbates the crisis of the moment.

China will make a move on Taiwan. [Beijing will also have cause to crack down further on Hong Kong.]

Russia will indeed stir things up in the Baltics.

Kim Jong Un will keep testing, though we might avoid a direct confrontation, depending on how the Taiwan crisis unfolds, as I see it.

Israel will come under increasing threat due to the Trump administration’s washing its hands of Syria, leaving that country to Iran, Russia having already secured its bases there, with Assad remaining firmly in charge.  Iran and Syria, together with Lebanon’s Hizbullah, will encroach on Israel’s buffer zone in the Golan Heights.  Israel will fight back.  Prime Minister Benjamin Netanyahu will be indicted on multiple counts emanating from the long-running corruption investigation into his actions and that of his wife, further roiling Israel, which Iran, Hizbullah and the Palestinians will attempt to take advantage of.

It will become increasingly clear by the fall that Afghanistan cannot survive, as the pro-West government and U.S./NATO-backed Afghan army crumbles amid a further wave of horrific terror attacks, a la this week’s.  ISIS will perpetrate many of them.

Venezuela will finally collapse, with unknown consequences for the region (Hizbullah long having sleeper cells there).

Trump will initiate more than one major protectionism ploy, and to much failure.

You know.  All in all, pretty, pretty good.  I’m a year off, perhaps, on the China-Taiwan issue.  All you have to do is read down below what President Xi of China said about Taiwan and its future this week in a major speech.

Russia stirred things up further in Ukraine, but not yet the Baltics.  There is more mischief coming in either or both theaters, sooner than later.

I said “we might avoid a direct confrontation” with Kim Jong Un, and we did, thus far, but now I believe 2019 will see him fire off a test missile or two.  The Trump Administration is not going to give Kim what he wants, a total relaxation of sanctions, as well as a formal peace agreement, and he’s going to have to show he’s still boss at some point.  Trump’s response will depend on the direction of the Mueller probe (or conclusion) and any reaction in Congress.

I pretty much nailed Syria, and the impact on Israel, and Prime Minister Netanyahu is about to be indicted.  Israel has been fighting back against Iranian encroachment in Syria.

I nailed Trump and trade.

Where I missed flat out thus far is Venezuela.

But the bottom line is the issues of 2018 remain the issues of 2019.  Nothing has gotten better.  It’s only gotten worse.

A few more 2019 threats next time.

Wall Street

Stocks got off to a volatile start, picking up from 2018’s chaotic finish, with the Dow down 660 points on Thursday (2.8%), but then one of the top four rallies since late 2011 on Friday, with the Dow up 3.3%, the S&P 3.4% and Nasdaq 4.3%.

The surge, 746 points on the Dow, was second to the post-Christmas jump on Dec. 26.  After that, one has to go back to August 2015 and then late 2011 to find bigger one-day percentage gains.

On the economic front, the market was spooked Thursday by Apple’s China-specific revenue warning, as well as China’s poor manufacturing numbers (these two topics covered extensively below) and a big drop in the Institute for Supply Management’s PMI for December, which came in at 54.1 (50 being the dividing line between growth and contraction) when a reading of 57.9 was expected, and vs. November’s 59.3.  The 54.1 represented a two-year low, and while it’s still in expansion mode, just 11 of 18 industries tracked reported growth in December.

But then Friday, the market reversed course on a strong employment report for December, 312,000 new jobs vs. an expectation of 180,000, plus big revisions to October and November that brought the three-month average to 254,000.  2.64 million jobs for all of 2018, the best year since 2015.

The unemployment rate did rise to 3.9%, but average hourly earnings rose a solid 0.4%, bringing the year-over-year gain to 3.2%, the best annual gain since 2008.

[The Atlanta Fed’s GDPNow index for the fourth quarter is currently reflecting 2.6% growth.]

But what also helped further today, immensely, was Federal Reserve Chairman Jay Powell’s remarks at a panel discussion with former Fed chairs Janet Yellen and Ben Bernanke. 

Powell said: “I think the markets are pricing in downside risks, is what they’re doing. They’re well ahead of the data.”  But, he added, “We’re listening carefully to that. We’re listening sensitively to the messages markets are sending.”

The Fed has penciled in two more rate hikes for 2019, after four last year, which has sent the markets swooning; analysts and economists concerned the Fed’s actions would kill the expansion.  But Powell told Wall Street today that the Fed would be flexible.

“We’re always prepared to shift,” adding the Fed could shift “significantly” if necessary.

Powell said that if economic conditions weaken, the Fed would reconsider its plans to raise interest rates and wind down its balance sheet.

“We wouldn’t hesitate to make a change” in policy, he added.

The Fed chair also saw the momentum generated in 2018 continuing into 2019, and he commented that the solid increase in wage growth, as exhibited in the jobs report, “does not raise concerns about too-high inflation” – which signaled to the markets that just because the wage figure was strong, it doesn’t mean it will accelerate the Fed’s plans for interest rate hikes.

“With the muted inflation readings that we’ve seen coming in, we will be patient as we watch to see how the economy evolves,” Powell said.  The market loved the word “patience.”

Finally, asked if he would resign if Mr. Trump asked him to, Powell replied “no.”  He went out of his way to reassure Americans the Fed remained an independent body.

Prior to Chairman Powell’s remarks, investors were already increasingly believing the Fed will not raise rates in 2019, though due to a slowing economy.

But the Fed is currently forecasting 2.3% growth, and they were penciling in two more rate hikes with that figure in mind.

Nonetheless, Powell’s words today were just what the market wanted to hear, and stocks soared accordingly.

On the trade front.... A U.S. government delegation travels to Beijing this week for trade talks with Chinese officials, the first face-to-face encounter since Trump and Chinese President Xi Jinping agreed to a temporary truce on Dec. 1.  If the two sides can’t reach a deal by March 1, Trump has pledged to boost tariffs on $200 billion of Chinese goods to 25 percent from 10 percent.

On Saturday, President Trump tweeted that he and Mr. Xi had just talked by phone and made “big progress” in the talks.  “Deal is moving along very well,” Trump said.  “If made, it will be very comprehensive, covering all subjects, areas and points of dispute.”

Total bulls--- and a shameless attempt by Trump to talk up the market Monday, the last day of the year and the major indices deeply in the red.    Chinese media reported that Trump initiated the call.  President Xi, according to Xinhua, told Trump, “China attaches great importance to the development of bilateral relations and appreciates the willingness of the U.S. side to develop cooperative and constructive bilateral relations.”

There is no way China is agreeing to the sweeping changes in industrial policy the United States is seeking, let alone the fact the U.S. won’t receive any assurances in terms of how a deal will be enforced.

And as everyone should know by now, China’s pledges aren’t worth the toilet tissue they are written on.

Editorial / Wall Street Journal

“Investors have been searching for signs of how President Trump’s trade standoff with China is affecting the U.S. economy. Judging by the market reaction to slumping iPhone sales in China, many fear Apple is the canary in the global economy.  This may be an overreaction, but the Apple warning does underscore the interdependence of the U.S. and Chinese economies and their joint stake in a trade deal.

“CEO Tim Cook told investors late Wednesday that Apple is cutting its quarterly revenue forecast for the first time in 15 or so years amid falling iPhone sales in China, its third-largest market after the U.S. and Europe....

“(Cook wrote in part...I cover this more extensively below): ‘While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China.’  Nor did investors, as Apple’s stock fell nearly 10%, leading a broader stock selloff.  The 10-year Treasury yield also fell amid concerns of slowing growth and investor flight to safety.

“Mr. Cook is an engineer by training, though he diagnosed the problem like an economist when he said, ‘We believe the economic environment in China has been further impacted by rising trade tensions with the United States.  As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well.’

“Note that word ‘uncertainty.’ These columns used that word often to describe the impact of Barack Obama’s regulatory war on business. When CEOs don’t know when government might harass them next, they postpone or cancel investment and hiring decisions. That explained much of the capital strike and slow growth in the Obama era.

“Trade uncertainty has a similar secondary economic impact beyond the immediate higher costs of tariffs.  If CEOs aren’t sure of their supply chains, or whether tariffs will raise their costs and limit their markets, they also postpone or reduce capital spending. This explains a large part of the investment slowdown in the last half of 2018....

“U.S. businesses across sundry industries have been complaining about the costs and supply-chain complications of the Trump tariffs. In its third-quarter earnings report, Tesla flogged ‘increased import duties on components sourced from China’ that are used to make its Model S and Model X in Fremont, California.

“As Chinese consumers tighten their belts, iPhones have been losing market share to less expensive domestic rivals like Huawei and Vivo.  Overall Chinese smartphone sales have also been falling, which has knock-on effects on U.S. businesses and workers. China is the second-biggest buyer of U.S. semiconductor exports, and its telecom firms rely on components from U.S. businesses including Qualcomm, Broadcom, Intel and Micron Technology.

“American car makers have also reported falling sales in China.... Weakening growth in China has also put downward pressure on oil prices, which could prompt U.S. shale producers to reduce drilling.

“The point is that President Trump can’t shield U.S. businesses from the collateral damage of his trade brawl with China even if he tried.  The two countries’ economies are entwined for better or worse, which is why there’s a political and economic incentive for both sides to cut a trade deal that protects intellectual property, lowers tariffs, and above all reduces uncertainty.

“The President seems to think his negotiating leverage increases as the Chinese economy suffers, and the temptation in some U.S. quarters is to see a Chinese recession as just deserts for Beijing’s policy of condoning intellectual property theft and other depredations against U.S. business.

“But as Apple’s Mr. Cook made clear in his letter, a Chinese downturn will hurt U.S. businesses and economy as well.  Hear that iPhone warble, Mr. Trump?”

Europe and Asia

Eurozone (EA19) annual inflation for 2018 came in at 1.6%, per data from Eurostat today, a flash reading, down from 1.9% in November.  Ex-food and energy the figure is just 1.1%.

We had the release of the eurozone’s PMIs for December this week, and the final EA19 manufacturing PMI was 51.4, the lowest since Feb. 2016.

The manufacturing number in Germany was 51.5, a 33-month low; France 49.7, 27-month low; Spain 51.1, 28-month low; Italy 49.2; Ireland 54.5; Netherlands 57.2; and Greece 53.8.

Then the service sector, non-manufacturing, figures were released for last month and the final number for the eurozone was 51.2.  [The composite reading, 51.1, was the weakest in four years.]

Germany, 51.8, a 27-mo. low; France 49.0*; Spain, 54.0; Italy, 50.5; Ireland, 56.3.

*The “yellow vests” protests definitely had a negative impact on France’s numbers in December.

In the UK, the manufacturing number was a strong 54.2, but this was because companies are gearing up for border delays come Brexit, so they are stockpiling inputs and finished goods.  The non-manufacturing figure was 51.2.

Chris Williamson, chief economist, IHS/Markit:

“A disappointing December rounds off a year in which a manufacturing boom faded away to near-stagnation.

“The weakness of the recent survey data in fact raises the possibility that the goods producing sector could even act as a drag on the overall economy in the fourth quarter, representing a marked contrast to the growth surge seen this time last year.  The last three months of 2018 saw manufacturers report the worst quarterly performance in terms of production since the second quarter of 2013....

“More encouragingly, some of the recent weakness could prove temporary, being the result of protests in France and the auto sector struggling to adjust to new emissions regulations.  However, the undercurrent of weak demand and growing risk aversion evident across the surveys suggests that any rebound could prove modest at best, with Brexit representing a particularly worrying unknown for the outlook.”

Brexit: The next two weeks are critical.  Lawmakers return Monday with debate  on Prime Minister Theresa May’s Brexit proposal slated to begin Monday and a vote the week of Jan. 14, at last word.  Mrs. May, who clearly doesn’t have the votes, today, promised that passage of the Brexit deal would allow the country to “turn a corner” and let the government focus on solving domestic problems such as housing and a skill shortage.

Should the prime minister lose the vote, there would be massive uncertainty, with the European Union refusing to reopen negotiations.  May’s government would likely fall.

The key sticking point remains the fallback arrangement for the Irish “backstop,” the attempt to prevent a hard border between Northern Ireland and the Republic of Ireland.

Italy: Lawmakers here passed the 2019 budget on Sunday, an amended version that was drafted after a first set of proposals sparked a row with the European Union.

The original budget, drawn up by Italy’s governing coalition of the anti-establishment Five Star Movement and the far-right League, would have resulted in a marked increase in the country’s deficit.

The EU rejected the plan and threatened Italy with punitive measures if it did not rein in spending.

So some amendments were made but the coalition still pledged:

--A new income support scheme known as the “citizens’ wage” that will pay nearly $900 a month to 1.7 million of Italy’s poorest families.

--The retirement age will be cut from the current 67 to 62, for workers who had paid into the pension system for 38 years.

--More than a million self-employed workers earning under about $75,000 a year will see their taxes cut to 15%.

Prime Minister Giuseppe Conte has hailed the budget as “the first step of a broad and ambitious plan of reform” which he said would “turn Italy inside out like a sock” and kick-start economic growth. 

Critics argue the plan contains no investment incentives, and is merely “smoke in the eyes” of voters ahead of key European Parliament elections in May, while the European Commission has said it will monitor the situation closely to ensure the budget agreement is adhered to.

France: In his New Year’s Eve speech to the people, French President Emmanuel Macron sounded a warning to extreme elements among anti-government protesters, promising to keep order “without complacency,” while decrying self-appointed “spokespeople for a hateful mob.”

Warning French citizens to be wary of fake news, he asked them “not to forget that you can build nothing on lies.”

The government, he said, should be allowed to continue its work to carry out reforms.

“In recent years, we’ve engaged in a blatant denial of reality,” he said.  “We can’t work less, earn more, cut taxes and increase spending.”

The Euro...and the future of Europe:

The euro celebrated its 20th anniversary on Jan. 1, pretty remarkable, which the Wall Street Journal adds is a “major accomplishment.”

In an editorial, the Journal opines:

“The creation of the monetary union stands as one of the most consequential events in postwar Europe, along with the creation of the Common Market, the collapse of the Soviet bloc and the reunification of Germany.

“The euro’s durability is all the more remarkable given the demands it places on its members in return for a promise that remains only partly fulfilled – a fact that has bedeviled the currency’s first two decades and could still tear it apart....

“At its best the euro has always been about free trade.  When we heralded the agreements creating the currency in 1998, we noted first and foremost that a successful monetary union ‘would promote free and efficient commerce everywhere’ – and not only within Europe. Robert Mundell, the Nobel-winning economist widely recognized as the father of the euro, wrote in these pages that, ‘The benefits will derive from transparency of pricing, stability of expectations and lower transaction costs.’

“Those goals have largely been met... For all the debate over Mario Draghi’s post-panic interventions in particular, the European Central Bank has delivered more responsible monetary policy than many Europeans could count on from their pre-euro central banks....

“(And) no one has built a political consensus to leave, even amid the rise of populist and nationalist forces.  Some 85% of Irish, 64% of Portuguese, 62% of Spanish and 60% of Greeks said in the November issue of the European Commission’s Eurobarometer poll that the euro is good for their countries.

“This is astonishing support in countries that have suffered so much to keep the currency, and it is mirrored by strong support in countries whose beleaguered taxpayers undergird the union.  Seventy percent of Germans think the euro is good for Germany, and 69% of Dutch say the same for the Netherlands.  Support for the currency is particularly strong among young Europeans.

“Yet the politics of the euro remain complex. Many of the euro’s founders hoped that sharing a common currency would encourage Europeans to think of themselves as sharing a common European polity.  Economic integration would demand an ever closer political union, and both would enhance Europe’s global power and prestige....

“But (any) optimism underestimated how reform-averse Europe can be.... Since the eurozone crisis that kicked off in Athens in late 2009, neither Brussels nor most national capitals have pursued the policy reforms they need to restore pre-crisis prosperity.

“The result is a eurozone whose economy grows too slowly during global booms and seems less resilient to every new global slowdown....

“(And) uneven distribution of the costs of reform exacerbates political tensions between members.  Germans who accepted less welfare and modest wage increases as the cost of longer-term competitiveness chafe as Greeks try to use German subsidies to avoid those costs themselves.  Italians who see Mr. Macron get a pass for violating eurozone fiscal rules with pro-growth tax cuts refuse to accept they don’t warrant similar forbearance for a new welfare binge....

“The lesson of the euro’s first 20 years is that only economic reform to boost growth and productivity in lagging members can allow the euro to live up to its full potential.”

Turning to Asia....

China: The National Bureau of Statistics released its PMIs for manufacturing and the service sector in December.  The former came in at 49.4, the lowest since Feb. 2016 and the first contraction since July 2016.  The service sector, though, was a solid 53.8, the consumer now 50% of the Chinese economy (vs. 66% in the U.S.), so it’s not all bad.

The private Caixin manufacturing figure for last month was 49.7, with non-manufacturing at 52.2.

The bottom line is external demand has been subdued due to trade tensions, with domestic demand weakening considerably.  It was also ironic that today, Friday, both the New York Times and Wall Street Journal had stories on how consumer confidence in China is waning rapidly.

2019 GDP growth in China, according to the World Bank, will be 6.2%, which seems strong but it would be the worst rate of growth in 30 years.

So China is expected to enact more stimulus measures this year, such as in cuts to both taxes and fees, while today the Chinese central bank said it was cutting the amount of cash that banks have to hold as reserves for the fifth time in a year, freeing up $116 billion for new lending as it tries to reduce the risk of a sharper economic slowdown.

Chinese President Xi said on Monday in his New Year message that China’s pace of reforms will not “stagnate” and its door will open wider and wider, though he warned of challenges ahead.

Xi did not, however, make specific mention of the trade war with the United States.

“As we open our eyes to look at the world, we are faced with huge changes, changes not seen in 100 years,” he added, without elaborating.  “No matter how the international situation changes, China’s confidence and determination to safeguard national sovereignty and security will not change.  China’s sincerity and goodwill for maintaining world peace and promoting common development will not change.”

Elsewhere in Asia, Japan’s manufacturing PMI for December was 52.6, South Korea’s 49.8 (up from 48.6 in November), and 47.7 in Taiwan, the lowest since Sept. 2015.

[Outside of Asia, Brazil’s manufacturing number was a decent 52.6.]

Trump World          

California Rep. Nancy Pelosi was elected as House speaker Thursday – returning her to a position she last held in January 2011.  Then the newly Democratic-controlled House passed a package of bills late yesterday that would reopen the federal government without paying for President Trump’s border wall, even though Trump would veto it and the partial government shutdown was no closer to getting resolved.

But there were some breaks in the Republican Senate wall as Sen. Cory Gardner (Colo.) and Susan Collins (Maine) said it was time to break the impasse even if Democrats won’t give Trump the $5 billion in border funding he is demanding.  [Both are up for reelection in 2020, coincidentally.]

Friday, however, President Trump threatened to keep the government partially closed for “months or even a year” if he does not get money to build a wall, but he also expressed optimism he could reach agreement with congressional Democrats as soon as next week.

Trump and Democratic leaders emerged from a two-hour meeting without a deal to reopen government agencies that have already been shuttered 14 days, with Democrats calling the meeting “contentious,” but the president calling it “productive.”

Negotiations headed up by Vice President Mike Pence are going to held this weekend.

At the same time in comments in the Rose Garden this afternoon, Trump said he could declare a national emergency and assume the unilateral power to build a wall without congressional approval.

--Trump and the Generals

Retired four-star Army Gen. Stanley McChrystal last Sunday on ABC’s “This Week” criticized President Trump for his approach to the presidency, the former top commander of U.S. and international forces in Afghanistan calling Trump dishonest and immoral.

“I don’t think he tells the truth,” McChrystal told ABC’s Martha Raddatz.  When asked if he thought Trump was immoral, McChrystal responded: “I think he is.”

“What I would ask every American to do is again, stand in front of that mirror and say, what are we about?” he continued.  “Am I really willing to throw away or ignore some of  the things that people do that are pretty unacceptable normally just because they accomplish certain other things that we might like. If we want to be governed by someone we wouldn’t do a business deal with because their background is so shady, if we’re willing to do that then that’s in conflict with who I think we are.”

“And so I think it’s necessary in those times to take a stand,” he said.

McChrystal also reacted to James Mattis’ resignation from the Trump administration as Secretary of Defense earlier in December.  Mattis wrote in his resignation letter that Trump had the right to a Defense Secretary whose views “better aligned” with the President’s.

“If we have someone who is as selfless and as committed as Jim Mattis, resigns his position walking away from all the responsibility he feels for every service member in our forces and he does so in a public way like that, we ought to stop and say okay, why did he do it?” McChrystal said.  “We ought to ask what kind of commander in chief he had that Jim Mattis, the good marine, felt he had to walk away.”

President Trump then tweeted:

“General McChrystal got fired like a dog by Obama.  Last assignment a total bust.  Known for big, dumb mouth. Hillary lover!”

Peter Bergen, CNN National Security Analyst

“(When) you step back, the degree to which Trump is battling America’s generals is startling, considering how he began his presidency.  Trump came into office besotted by military brass....

“Now, two years later, Trump is eager to tear down the generals.  After Mattis announced his resignation with a letter distancing himself from Trump’s key foreign policy positions on December 20 and said that he would stay in the job until the end of February to allow for an orderly transition, Trump instead pushed him out at the end of December.

“The differences between Trump and U.S. military leaders are more than simply stylistic, although Trump’s lack of decorum and rudeness are certainly at odds with the military’s honor-based values.

“The military tends to want to sustain overseas military commitments, which they see as vital to securing world order, whether that is to defeat ISIS, or to contain a nuclear-armed North Korea, or to prevent Afghanistan from reverting into control by the Taliban.

“Trump believes he was elected to end foreign entanglements and that alliances like NATO are ‘ripping off’ the United States, while U.S. military leaders are keenly aware that NATO allies have been fighting shoulder-to-shoulder with them since the 9/11 attacks....

“In November, Chris Wallace of Fox News asked Trump about retired Adm. Bill McRaven’s comments that Trump’s attacks on the news media were ‘the greatest threat to democracy in my lifetime.’

“Trump told Wallace that McRaven was a ‘Hillary fan,’ and when Wallace pointed out that McRaven was the architect of the raid that killed Osama bin Laden in Pakistan in 2011, Trump asked, ‘Wouldn’t it have been nice if we got Osama bin Laden a lot sooner than that, wouldn’t it have been nice?’  This was a bizarre comment to make about what is arguably one of the greatest intelligence and special operations victories in American history.

“Trump has now made a sharp break with Kelly, Mattis, McChrystal, McRaven, and McMaster, some of the leading American generals and admirals of our era.

“Why Trump, even given his policy disagreements, would pick a war with the military leaders he once so publicly admired is a puzzle that future historians will surely try to unpack.”

--Trump and Afghanistan

In his Wednesday Cabinet meeting where he took questions from reporters, President Trump said:

“Russia used to be the Soviet Union. Afghanistan made it Russia because they went bankrupt fighting in Afghanistan.  The reason Russia was in Afghanistan was because terrorists were going into Russia. They were right to be there.”

Editorial / Wall Street Journal

“President Trump’s remarks on Afghanistan...were a notable event. They will be criticized heavily, and deservedly so.

“Mr. Trump ridiculed other nations’ commitment of troops to fight alongside America’s in Afghanistan.  He said, ‘They tell me a hundred times, ‘Oh, we sent you soldiers. We sent you soldiers.’’

“This mockery is a slander against every ally that has supported the U.S. effort in Afghanistan with troops who fought and often died. The United Kingdom has had more than 450 killed fighting in Afghanistan.

“As reprehensible was Mr. Trump’s utterly false narrative of the Soviet Union’s involvement there in the 1980s.  He said: ‘The reason Russia was in Afghanistan was because terrorists were going into Russia. They were right to be there.’

“Right to be there? We cannot recall a more absurd misstatement of history by an American President. The Soviet Union invaded Afghanistan with three divisions in December 1979 to prop up a fellow communist government.

“The invasion was condemned throughout the non-communist world.  The Soviets justified the invasion as an extension of the Brezhnev Doctrine, asserting their right to prevent countries from leaving the communist sphere. They stayed until 1989.

“The Soviet invasion of Afghanistan was a defining event in the Cold War, making clear to all serious people the reality of the communist Kremlin’s threat.  Mr. Trump’s cracked history can’t alter that reality.”

--Editorial / The Economist

“Donald Trump’s nerve-jangling presidential term began its second half with a federal government shut down, seesawing markets and the ejection of reassuring cabinet members like Generals John Kelly and James Mattis.  As Mr. Trump’s opponents called this a disaster, his supporters lambasted their criticism as hysterical – wasn’t everybody saying a year ago that it was sinister to have so many generals in the cabinet?

“A calm assessment of the Trump era requires those who admire America to unplug themselves from the news cycle for a minute.  As the next phase of the president’s four-year term begins, three questions need answering. How bad is it really?  How bad could it get? And how should Americans, and foreign governments, prepare for the Trump Show’s second season?

“Mr. Trump is so polarizing that his critics brush off anything that might count as an achievement. Shortly before Christmas he signed a useful, bipartisan criminal-justice reform into law. Some of the regulatory changes to schools and companies have been helpful.  In foreign affairs the attempt to change the terms of America’s economic relations with China is welcome, too.  But any orthodox Republican president enjoying the backing of both houses of Congress might have achieved as much – or more.

“What marks out Mr. Trump’s first two years is his irrepressible instinct to act as a wrecker.  His destructive tactics were supposed to topple a self-serving Washington elite, but the president’s bullying, lying and sleaze have filled the swamp faster than it has drained.  Where he has been at his most Trumpish – on immigration, North Korea, NATO – the knocking down has yet to lead to much renewal.  Mr. Trump came to office with a mandate to rewrite America’s immigration rules and make them merit-based, as in Canada.  Yet because he and his staff are ham-fisted with Congress, that chance is now gone.  Kim Jong Un still has his weapons program and, having conceded nothing, now demands a reward from America.  Europeans may pay more into their defense budgets at the president’s urging.  But America has spent half a century and billions of dollars building its relations with Europe.  In just two years Mr. Trump has taken a sledgehammer to them.

“The next two years could be worse.  For a start, Mr. Trump’s luck may be about to turn.  In the first half of his term he has been fortunate.  He was not faced by any shock of the sort his two predecessors had to deal with: 9/11, Afghanistan, Iraq, the financial crisis, Syria.  Electoral triumph, a roaring economy and surging financial markets gave him an air of invulnerability.

“Even without a shock, the weather has changed.  Although the economy is still fairly strong, the sugar-high from the tax cut is fading and growth is slowing in China and Europe.  Markets, which Mr. Trump heralds as a proxy for economic success, are volatile.  Republicans were trounced in the House in the mid-terms. The new Democratic majority will investigate the president’s conduct, and at some point Robert Mueller, the special counsel, will complete his report on links between Russia and the Trump campaign.

“Over the past two years, Mr. Trump has shown that he reacts to any adversity by lashing out without regard to the consequences.  Neither the magnitude nor target of his response need bear on the provocation.  In the past few weeks he has announced troop withdrawals from Syria and Afghanistan.  Seemingly, this was partly because he was being criticized by pundits for failing to build a southern border-wall.  The Afghanistan withdrawal was later walked back and the Syrian one blurred, with the result that nobody can say what America’s policy is (though the harm will remain).  Now that his cabinet has lost its steadying generals, expect even more such destructive ambiguity.

“Moreover, when Mr. Trump acts, he does not recognize boundaries, legal or ethical.  He has already been implicated in two felonies and several of his former advisers are in or heading for prison.  As his troubles mount, he will become less bound by institutional machinery. If Mr. Mueller indicts a member of Mr. Trump’s family, the president may instruct his attorney-general to end the whole thing and then make egregious use of his pardon powers.  House Democrats might unearth documents suggesting that the Trump Organization was used to launder Russian money.  What then?

“Confusion, chaos and norm-breaking are how Mr. Trump operates.  If the federal government really were a business, the turnover of senior jobs in the White House would have investors dumping the stock....

“How should Congress and the world prepare for what is coming?  Foreign allies should engage and hedge; work with Mr. Trump when they can, but have a plan B in case he lets them down.  Democrats in control of the House have a fine line to tread....

“Many Republicans in the Senate find themselves in a now familiar dilemma.  Speaking out and risk losing their seats in a primary; stay silent and risk losing their party and their consciences....

“After two chaotic years, it is clear that the Trump Show is something to be endured. Perhaps the luck will hold and America and the world will muddle through.  But luck is a slender hope on which to build prosperity and peace.”

--The term of the grand jury being used by U.S. Special Counsel Robert Mueller in his investigation into possible collusion between Russia and President Trump’s 2016 election campaign has been extended another six months.

--Trump tweets....

“The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly.  In the meantime we are doing well in various Trade Negotiations currently going on.  At some point this had to be done!”

“The Shutdown is only because of the 2020 Presidential Election. The Democrats know they can’t win based on all of the achievement of ‘Trump,’ so they are going all out on the desperately needed Wall and Border Security – and Presidential Harassment. For them, strictly politics!”

“Any deaths of children or others at the Border are strictly the fault of the Democrats and their pathetic immigration policies that allow people to make the long trek thinking they can enter our country illegally. They can’t. If we had a Wall, they wouldn’t even try! The two....

“....children in question were very sick before they were given over to Border Patrol. The father of the young girl said it was not their fault, he hadn’t given her water in days. Border Patrol needs the Wall and it will all end. They are working so hard & getting so little credit!”

“How do you impeach a president who has won perhaps the greatest election of all time, done nothing wrong (no Collusion with Russia, it was the Dems that Colluded), had the most successful first two years of any president, and is the most popular Republican in party history 93%?”

“As I have stated many times, if the Democrats take over the House or Senate, there will be disruption to the Financial Markets. We won the Senate, they won the House. Things will settle down. They only want to impeach me because they know they can’t win in 2020, too much success!”

“I am the only person in America who could say that, ‘I’m bringing our great troops back home, with victory,’ and get BAD press.  It is Fake News and Pundits who have FAILED for years that are doing the complaining. If I stayed in Endless Wars forever, they would still be unhappy!”

“HAPPY NEW YEAR TO EVERYONE, INCLUDING THE HATERS AND THE FAKE NEWS MEDIA! 2019 WILL BE A FANTASTIC YEAR FOR THOSE NOT SUFFERING FROM TRUMP DERANGEMENT SYNDROME. JUST CALM DOWN AND ENJOY THE RIDE. GREAT THINGS ARE HAPPENING FOR OUR COUNTRY!”

Street Bytes

--The week on Wall Street was broken up by the Christmas holiday and I’ve already described the action above.

But now earnings will begin coming fast and furious and we’re all waiting to see what kind of commentary accompanies the reports, especially regarding the trade war with China.

--U.S. Treasury Yields

12/31/18

6-mo.  2.55%  2-yr.  2.49%  10-yr.  2.68%  30-yr.  3.01%

12/31/17

6-mo.  1.53%  2-yr. 1.88%  10-yr.  2.41%  30-yr.  2.74%

1/4/19

6-mo.  2.50%  2-yr. 2.49%  10-yr.  2.67%  30-yr.  2.98%

The yield on the 10-year hit 2.55% intraday on Thursday, before Chairman Powell’s sanguine remarks Friday caused a stampede back out of bonds and into equities.

That said, the yield on the 10-year is at its lowest level in a year, after just hitting a weekly closing high of 3.21% on Nov. 2.  No one forecast that.

--Crude oil rose sharply on Wednesday, with West Texas Intermediate trading at $47, and then finished the week at $48.31, which flew in the face of China’s manufacturing numbers and the still cloudy picture for demand globally.

However, crude rallied in part on indications the major oil producers, including Saudi Arabia, are reducing output as promised per last month’s OPEC meeting.

The American Petroleum Institute, an industry group, said its data showed a 4.5-million barrel decrease in supplies.  Then today, the Energy Information Administration reported inventories were “virtually unchanged,” though the stockpiles are still about 8% above the five-year average for this time of year.

Gasoline inventories are 5% above the five-year average, President Trump this week, multiple times, taking sole credit for the decline in prices  at the pump.

Earlier, the Wall Street Journal reported on how some frackers will be scaling back drilling plans amid weak prices, representing a quick reversal for an industry that is the reason why the United States has become the biggest producer of crude in the world.

For example, Diamondback Energy Inc. said in December it was dropping three of its 24 rigs, with the possibility of going down to 18 this year.

“If commodity prices continue to decline, we will further reduce activity to match our budget to expected annual operating cash flow,” Diamondback CEO Travis Stice said in a statement last month.

Many shale operators are facing pressure from investors to show financial discipline after the boom.

--Apple rocked the market in announcing it expected revenue of about $84 billion in the fourth quarter, ending Dec. 29, down from a previous estimate of $89 billion to $93 billion, a huge miss and the company’s first earnings warning in 15 years.

Specifically, Apple pointed to weakness in China for its iPhones, China having become Apple’s third-largest market.  iPhone sales growth had already been slowing as the global smartphone market has become saturated, investors worried that the trend was about to worsen when Apple said it would stop reporting how many iPhones it had sold with each quarterly report.

The announcement, made in a letter from Cook to investors, came weeks after signals from inside and outside Apple (the supply chain) that the company was struggling to sell the latest overpriced iPhones released in September.  Two-thirds of Apple’s profit revenue comes from iPhones, which then allows the company to generate cash from attached products like Apple Watch, AirPods, and Apple Music.

Cook wrote: “While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China.”  Cook said the region, which includes Hong Kong and Taiwan, accounted for most of the revenue shortfall, but Cook also admitted iPhone upgrades weren’t as strong as the company anticipated in some developed markets, Cook said.

Apple, in December, also had been cutting the price of its iPhone XR to the tune of $300 less than its official sticker price, based on a deal requiring a trade in of an iPhone 7 Plus, a handset from two years ago.

Cook also blamed the release of new iPhone models earlier than the flagship iPhone X last year, which created difficult year-over-year comparisons.  [The iPhone X launched in Nov. 2017.]

Cook added that when it came to China: “As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.”

The warning came after the market close on Wednesday, and overnight in Asia, aside from a hit to  Apple shares (-10%), various Apple suppliers then fell sharply in response.  Many of the same suppliers had been cutting their own revenue estimates during the past few months, suggesting the story was going off the rails.

[On the back of Apple’s warning, U.S. luxury goods makers such as Tiffany saw their shares decline in sympathy, given the concerns over global demand.]

--Delta Air Lines Inc. said fare revenue didn’t climb as much as expected during the holiday travel season, fanning concerns other major carriers will struggle to maintain profits.  Delta shares fell 9%, its biggest percentage drop since June 4, 2012, after the carrier said it raised fares at a slower pace in December.

With lower oil prices, customers expect cheaper flights, while the long gap between Thanksgiving and Christmas this year failed to boost demand from customers who often book at the last minute and pay higher fares.

--Tesla reported a record quarter on Wednesday, but deliveries of the crucial Model 3 sedan were less than analysts’ expectations, though up 13 percent than in the third quarter.  The growth rate was also well off that of Q3, when Tesla more than doubled production amid a rush of initial orders for the car which is key to the company’s future.

And Tesla announced that while overall sales hit 90,000 for the first time, the electric-vehicle maker was cutting prices on all models by $2,000 per car.

CEO Elon Musk said, “We’ve gone from production hell to delivery logistics hell.” For the first six months of 2018, Tesla was ironing out kinks on the assembly line, and then as I noted the other day, Tesla found it hard to deliver orders by yearend to qualify for the $7,500 federal tax credit on EV vehicles.  [The credit now falls to $3,750, and $1,875 by July 1...ending on Jan. 1, 2020, due to the fact Tesla’s cumulative sales reached 200,000 electric vehicles.]

Also in the fourth quarter, Tesla reported deliveries of its other two cars –the Model S luxury sedan and the Model X sport-utility vehicle – were flat in the quarter, which isn’t good.

Overall, Tesla delivered 90,700 cars in Q4, up 9 percent over Q3. For the full year, Tesla sold 245,240 cars, an increase of about 100,000 from 2017.

--Meanwhile, auto makers finished 2018 with mixed U.S. sales results, though the industry’s final sales for 2018 were 17.2 million vehicles, which is in line with the total from 2017, and the fourth straight year of at least 17 million vehicles sold...super resiliency given the boom-and-bust historic nature of the business.

Analysts, who foresaw a decline last year and missed, expect 2019 sales of 16.8 million.

For December, Ford Motor Co.’s sales dropped 8.8% to 219,632 vehicles, while Fiat Chrysler sold 196,520, a 14% increase, and Nissan posted a 7.6% increase to 148,720.  Toyota’s were flat at 220,910.

General Motors has moved to just quarterly reporting and GM said its fourth-quarter sales were 785,229 vehicles, down 2.7% from a year ago.

Ford announced it is following GM by switching to quarterly sales.

--Bristol-Myers Squibb Co. agreed to buy rival Celgene Corp. in a deal valued at about $74 billion, combining two leading sellers of cancer drugs, with investors now wondering if this signals a return to dealmaking in the pharmaceutical industry.

The merged company will have nine products with more than $1 billion each in annual sales – most notably Celgene’s multiple myeloma drug Revlimid and Bristol’s lung-cancer treatment Opdivo.

The companies said their combined pipeline includes six expected near-term product launches representing more than $15 billion in revenue potential.

When the cash-and-stock deal is done, Bristol-Myers shareholders would own about 69% of the combined company, while Celgene shareholders would own 31%.

Some investors were not pleased with the deal, taking Bristol shares down more than 13%, citing such factors as Revlimid, facing generic competition in 2022.  Revlimid contributed $8.2 billion of Celgene’s $13 billion in sales in 2017, with the company struggling to find new products.

Bristol-Myers’ CEO Giovanni Caforio said he wanted to make the deal because of the new sales potential from drugs in Celgene’s pipeline.

This would be the second-biggest pharmaceutical and biotech deal, including a potential later payment to Celgene shareholders if certain targets are hit, behind Pfizer’s 2000 acquisition of Warner-Lambert Co. for $110.4 billion, excluding debt.

So, as you know Celgene is headquartered directly across the street from where I live and no doubt Summit, N.J. officials are skittish, as well as Celgene employees; Bristol-Myers, which is headquartered in New York City, having large facilities in the Garden State as well.  Bristol did say it expected to trim about $2.5 billion in costs by 2022.

This deal came out of left field for everyone in the area.

--Wells Fargo & Co. settled with 50 states and D.C. late last Friday for $575 million on state-level claims over sales practices, just the latest in the fallout from a series of scandals that first erupted two years ago.

So what is the total carnage to date?  According to the Los Angeles Times, its penalties in 2018 were $1 billion to federal regulators for consumer mistreatment and $480 million for an investor class-action lawsuit.  In August, the bank also settled with the U.S. over crisis-era mortgages, for $2.09 billion.

And then the Federal Reserve imposed an unprecedented growth ban on WFC.

--In 2017, Toys “R” Us sold about $2 billion worth of toys the final two months of the year, including $1.4bn in December.

In 2018, without the mammoth chain, U.S. toy sales reportedly fell at a high-single digit percentage in the fourth quarter, according to UBS data.  So this doesn’t bode well for the earnings of the likes of Hasbro Inc. and Mattel Inc.  But UBS did say in a research report that Mattel’s Barbie sales were “surprisingly robust.”

Then today, shares in Mattel rocketed 13% on no apparent news, other than that the stock had been beaten down 43% the past 12 months (Hasbro’s shares climbed 4%).  Investors may have been given hope of renewed demand for toys and games with the strong consumer spending data, but in the case of Mattel, its sales fell 8% in the third quarter, despite stronger North American results and higher Barbie sales. 

--According to Hedge Fund Research data, the average hedge fund was down 6.7% in 2018, with losses accelerating at yearend as the S&P 500 was plunging 9.2% in December.  The S&P was down 6.2% for the year.

--Verizon and Disney came to an agreement on programming fees on Sunday, averting a blackout that could have deprived moi, and millions of others, access to the national championship game between Clemson and Alabama on Monday, among other viewing options; Disney Media Networks including ESPN.

The central issue was Disney’s rollout of the ACC Network, which has this ACC fan excited, and I’m assuming I will receive it on my system now.

--We note the passing of Herb Kelleher, the Texas lawyer who built Southwest Airlines Co. into the biggest discount carrier and set the standard for budget air travel for more than three decades.  Kelleher died Thursday at 87.

Back in 1966, Kelleher, a chain-smoking sipper of Wild Turkey, together with Texas businessman Rollin King, used a cocktail napkin to sketch a plan for flights in a triangle of Houston, Dallas and San Antonio.  Their formula of short, frequent, no-frills trips spawned dozens of imitators, made Southwest the largest U.S. carrier by domestic traffic and led to an annual profit streak dating to 1973.

--Fox News was the most-watched cable network for a third consecutive year, with a record high average of 2.5 million viewers in prime-time, up 2% from 2017.  Only the four major broadcast networks had larger audiences.

MSNBC had its best year ever, finishing second overall with 1.9 million viewers, an 11% increase from 2017.  CNN ranked 11th overall, with 990,000 viewers, down 7% from a year ago, but its highest audience ever in a midterm election year.

Sean Hannity had the top-rated cable program for a second straight year.

What’s kind of interesting is that if you put Fox’s audience of 2.5m against the other two, which is how it basically sorts out ideologically, you come up with 46% Fox (Trump), 54% MSNBC/CNN (the opposition), which mirrors Trump’s approval numbers.

So this is what I’m going to look at, this ratio, after the first-quarter ratings come out, to see if there’s any kind of discernible trend.

--On Broadway, “Hamilton” continues to set sales records in its fourth year, topping its own mark for the highest-grossing week in Broadway history, earning $4 million for the seven-day period ending this past Sunday, as reported by the Broadway League.

Actually, Broadway’s 39 shows grossed $57.8 million for the seven-day stretch, a record as well.

But with “Hamilton,” talk about a juggernaut financially.  The show made it to Broadway with a $12.5 million investment and to date, it has grossed $463 million.

--I can’t believe “Aquaman,” distributed by AT&T’s Warner Bros., continues to lead in the box office; up to $188.8 million domestically after this past weekend, and $560 million overseas.  The trailers looked hideous.  “Mary Poppins” (Disney) has seen its take pick up to $98.9 million.

--Good lord...the New York Times’ Palko Karasz reported a six-pack of beer in Qatar sets one back $26 due to an alcohol tax that went into effect on Jan. 1.  Ergo, a 24-pack would cost $104.

But this story is just beginning, because as the Times notes, Qatar is hosting the World Cup in 2022.  I don’t need to state the obvious, but an expected 1.5 million international visitors will be descending on the country, 1.499 million expecting to be able to get a beer (or ten) at a reasonable price.

Foreign Affairs

Syria: As part of his strange cabinet meeting on Wednesday, President Trump said that as far as he’s concerned, Iran “can do what they want” in Syria.

“Iran is pulling people out of Syria, but they can frankly do whatever they want there,” Trump said.

But Trump refused to directly answer a question from reporters about the timeline of the U.S. withdrawal from Syria, saying only that it will happen “over a period of time.”

“I don’t know, somebody said four months but I didn’t say that either,” Trump added.  It has been reported that Israeli Prime Minister Netanyahu has asked Trump to prolong the withdrawal process.

But administration officials have been saying that Trump has agreed to a gradual, not sudden, withdrawal, following pressure from military officials and the likes of Sen. Lindsey Graham (R-S.C.).  But officials said Trump had given the military four months to withdraw.

“We want to  protect the Kurds but I don’t want to be in Syria forever. It’s sand and its death,” Trump added.

Trump then said his administration was not interested in facing the challenge posed by Syria: “We don’t want Syria.  Obama gave up Syria years ago when he didn’t violate the red line.  I did when I shot 59 missiles but that was a long time later. And when President Obama decided not to violate his statement that never cross the red line and then they did and he didn’t do anything about it.”

David Ignatius / Washington Post

“Asked to describe U.S. policy toward Syria after President Trump’s sudden decision on Dec. 19 to withdraw U.S. troops from that country, several key officials use the same two words: ‘total chaos.’

“There’s another phrase that comes to mind in assessing Trump’s move: snatching defeat from the jaws of victory. U.S.-backed forces were on the verge of eliminating the Islamic State in northeastern Syria when Trump made his surprise announcement, which went against the recommendations of all his senior diplomatic and military advisers.

“Trump did it anyway, for reasons that remain mysterious to some of his subordinates. The trigger was a Dec. 14 phone call from President Recep Tayyip Erdogan of Turkey.  Trump had been briefed to warn the Turkish leader not to invade Syria, as he had been threatening to do. But Trump instead told Erdogan: ‘You know what?  It’s yours. I’m leaving.’

“Trump’s idea was to let Turkish forces take over the U.S.-backed campaign against the Islamic State in northeastern Syria. But senior military officials say the Turkish alternative doesn’t add up, quite literally, in terms of numbers.

“The Turks want to replace a Kurdish-led force of about 60,000 fighters, known as the Syrian Democratic Forces. They have also claimed to U.S. officials that they have 50,000 Syrian opposition forces under their control, but that is wildly overstated. The Turkish-backed opposition is closer to 5,000, U.S. officials say, and many have extremist connections.

“The Turks have been trying to sell the notion that they can combat the Islamic State for more than two years.  U.S. military commanders who investigated Ankara’s proposals starting in 2016 began describing the force that would supposedly clear Raqqa and other extremist strongholds as a ‘ghost brigade.’

“The posturing continues: Last week, Turkish-backed Syrians moved heavy weapons across the border toward Manbij to signal their readiness. But Turkish military resources are so threadbare that they’ve asked the United States to provide overhead surveillance, logistical support and air cover for any operation to finish off the Islamic State in the Middle Euphrates River valley, officials say. The United States has, so far, refused such requests.

“The most dangerous consequence of Trump’s Turkish solution is that it could reignite the Islamic State. The problem begins with about 780 foreign fighters who are now being held by the SDF in a half-dozen prisons in northeastern Syria.  The SDF commander, Gen. Mazloum Abdi, told me bluntly in an interview last month that he wouldn’t be able to hold the prisoners if Turkish forces invaded the areas under his control.

“These Islamic extremist prisoners are considered the worst of the worst, and their release could mean mayhem....

“Trump’s apparent assumption, initially, that Turkey would take the prisoners could be almost as dangerous as letting them go free.  The Turks have allowed extremist fighters to crisscross their border since the Syrian civil war began in 2011, U.S. officials say....

“Amid all this policy turmoil, the Kurds just keep fighting the Islamic State.  A U.S. official told me Thursday that the SDF had suffered 80 casualties – including 25 dead – in heavy fighting by its 5,000 fighters over the previous 72 hours.  It had also pushed to within 15 miles of the Iraqi border.  A brief ray of hope for the Kurds is that Trump has agreed to carry out the withdrawal of U.S. Special Operations forces from Syria over the next four months, and Turkey has pledged that it won’t attack until the SDF’s American advisers leave.

“The Kurdish fighters ‘do what they promise to do,’ said one U.S. official who has worked closely with them.  The same, alas, cannot be said of the Trump administration.”

Secretary of State Mike Pompeo has been attempting to reassure Prime Minister Netanyahu that the U.S. would continue to cooperate with Israel over Syria and in countering Iran in the Middle East, despite Trump’s withdrawal plans.

Trump tweets:

“If anybody but Donald Trump did what I did in Syria, which was an ISIS loaded mess when I became President, they would be a national hero.  ISIS  is mostly gone, we’re slowly sending our troops back home to be with their families, while at the same time fighting ISIS remnants....

“....I campaigned on getting out of Syria and other places.  Now when I start getting out the Fake News Media, or some failed Generals who were unable to do the job before I arrived, like to complain about me & my tactics, which are working.  Just doing what I said I was going to do!”

Iran: The United States warned Iran against pursuing planned space launches and asked it to cease all ballistic missile activity, Secretary of State Pompeo said on Thursday.  “The United States will not stand by and watch the Iranian regime’s destructive policies place international stability and security at risk,” Pompeo said in a statement.  “We advise the regime to reconsider these provocative launches and cease all activities related to ballistic missiles in order to avoid deeper economic and diplomatic isolation.”

Perhaps in response to the above, the Iranian navy will send warships into the Atlantic starting in March, a top commander said today, as the Islamic Republic looks to increase the operating range of its naval forces to the backyard of the U.S.  The presence of U.S. aircraft carriers in the Gulf has long been a security concern for Iran so its navy has sought to counter that by showing the flag near American waters.

Iran had earlier announced it was sending two to three vessels on a mission to Venezuela soon.

Separately, the chief of Israeli military intelligence said on Monday that Iran could use its growing clout in Iraq to turn it into a springboard for attacks against Israel.  Reuters has previously reported that Iran has transferred short-range ballistic missiles to Shiite allies in Iraq, though Baghdad has denied the findings.  But Israel had said it could attack such sites in Iraq.

2019 is going to be very complicated.

Saudi Arabia: The kingdom announced Thursday it will seek the death penalty against five suspects in the slaying of Washington Post columnist Jamal Khashoggi, a killing that has seen members of Crown Prince Mohammad bin Salman’s entourage implicated in the writer’s assassination.

Prosecutors announced that 11 suspects had attended their first court hearing with lawyers, but the statement did not name those in court.  No mention of seven other suspects initially arrested was made.

Saudi officials then didn’t respond to requests for comment.

The prosecutors statement read: “The Public Prosecutor demanded imposing proper punishments against the defendants and is seeking capital punishment for five of the defendants for their direct involvement in the murder.”

Turkey has demanded Saudi Arabia extradite those 18 suspects to be tried there for Khashoggi’s killing.

Israel: In a poll from Smith Research for the Jerusalem Post, more than half of Israeli voters say Prime Minister Benjamin Netanyahu must resign if, as expected, he is indicted next month.

51% said he should have to resign, 34% say he would not have to, and 15% expressed no opinion.

Attorney-General Avichai Mandelblit has indicated he will complete the various investigations into the prime minister well in advance of the April 9 election.

Asked who is most fit to be prime minister, 39% said Netanyahu, 14% said former IDF chief of staff Benny Gantz, and 9% went for Yesh Atid leader Yair Lapid.

Afghanistan: The nation’s presidential election has been delayed three months to July 29 to give authorities more time to organize the ballot.  Afghanistan had a chaotic parliamentary election in October, for which complete results have still not been announced, while the last presidential election in 2014 was tainted by accusations of massive cheating on both sides.  This year, President Ashraf Ghani is expected to seek a second five-year term.  Current government Chief Executive Abdullah Abdullah will run against Ghani, among others.

It had been hoped the Taliban would enter full peace negotiations, but they have said there was no reason to do so if the government was going to change in April.

North Korea: Six months after the Singapore summit between President Trump and North Korea’s Kim Jong Un, there has been zero progress on denuclearization.  In a televised New Year’s Day address, Kim said he was ready to meet again with Trump “anytime” but delivered a warning not to test North Korea’s patience over sanctions, threatening that it may have to find a “new way” to defend its interests.

If the U.S. “persists in imposing sanctions and pressure against our Republic, we may be compelled to find a new way for defending the sovereignty of the country and the supreme interests of the state,” Kim said.

Thursday, Pyongyang sent a warning to the U.S. to avoid “meddling” in its affairs with South Korea and criticized Washington’s “unreasonable attitude” and “hostile” policies.

An editorial in the country’s state-run Rodong Sinmun newspaper blamed the U.S. for stagnation in the relationship between North and South Korea, claiming that “the United States does not want to see the improvement and development of the inter-Korean relations.”

While relations between Pyongyang and Washington are at an impasse, Seoul has continued to push for engagement with the North.  But some projects, such as one to connect the rail systems of North and South, cannot move forward until U.S.-led sanctions on North Korea are lifted.  The North has also been eager to reopen a jointly run factory park in its border town of Kaesong and to resume South Korean tours to the resort area of Mount Kumgang.

“We will never tolerate the intervention and interference of the U.S. that tries to check the Korean nation’s reconciliation, unity and reunification while trying to subordinate the north-south relations to its own tastes and interests,” said the editorial.

“This is our warning in New Year,” the article continued.

What was interesting is that the harsh words came a day after President Trump said he had received a “great letter” from Kim Jong Un and that the two would like to meet a second time.

Speaking to reporters at the Wednesday Cabinet meeting at the White House, Trump said that he and Kim have made “tremendous progress” and have “really established a good relationship.”  Trump also claimed credit for maintaining peace on the Korean peninsula, saying that if it weren’t for the efforts of his administration, “you’d be having a nice, big, fat war in Asia.”

But Trump added he wasn’t “in any rush” to hold the second meeting.

Separately, according to South Korean lawmakers, a North Korean diplomat in Rome has gone into hiding along with his wife, which would represent an extreme embarrassment to Pyongyang.

But there are conflicting reports on whether the interim ambassador to Italy is trying to flee to another country, or whether he and his wife are in protective custody by Italian authorities.

The danger in a defection of this kind is that Kim Jong Un’s foreign policy could be exposed.

China...and Taiwan: Taiwan President Tsai Ing-wen said in her New Year’s Day address that the island’s people want to preserve their own political system. 

The next day, Chinese President Xi Jinping, in a prepared address marking the 40th anniversary of a call to end military confrontation across the Taiwan Strait (Jan. 1, 1979), promised Taiwan a peaceful and prosperous future with the mainland while suggesting that Beijing’s patience would wear thin if its overtures fail.

“Differences in systems aren’t an obstacle to unification, much less an excuse for separatism,” Xi said in his nationally televised remarks before an audience of government and military officials in Beijing’s Great Hall of the People.  He said unification between China and Taiwan is inevitable and that while Beijing prefers peaceful means for achieving that goal, military measures remain an option.

“The political division across the strait...cannot be passed on from generation to generation,” said Xi, apparently signaling his determination to end the separation between the self-ruled island and mainland China.

“The problem of Taiwan existed because the Chinese nation was weak and in chaos, but it will end along with national rejuvenation.”

Xi said Taiwanese independence cannot be tolerated and representatives from both sides should “start in-depth democratic consultations for a cross-strait relationship and the future of the Chinese nation, and reach transitional arrangements for the peaceful development of cross-strait ties.”

“The Chinese dream [of national rejuvenation] is the common dream of compatriots across the strait,” Xi said, using a slogan to promote China’s aspiration to be a strong power by the middle of the century.  “No one and no force can change the fact that Taiwan is part of China, and the historical and legal fact that both sides of the strait belong to one China.”

“The introduction of one country, two systems is originally for taking care of the conditions of Taiwan and protecting the interests and benefits of Taiwan compatriots,” he said.

“The social system and lifestyle of Taiwan compatriots will be fully respected, and their private property, religion and legitimate interests will be fully protected after peaceful unification, and on the condition that national sovereignty, security and development are guaranteed.”

However: “We are willing to create a vast space for peaceful unification, but we will never leave any room for any sort of Taiwan independence separatist activities,” he said.

Xi said China would not abandon the use of force for unification, but stressed that the military would only target external elements and those seeking independence for Taiwan.

“Chinese people will not fight Chinese people,” he said.

Hours after Xi’s speech, President Tsai rejected his offer, saying Taiwanese voters won’t go for the proposal, known as “one country, two systems.”  The framework would place the island under China’s rule with limited autonomy, much like Hong Kong.

“Taiwan will never accept ‘one country, two systems,’” Ms. Tsai said.  “The vast majority of Taiwanese public opinion also firmly opposed ‘one country, two systems.’”

So it’s inevitable tensions will continue to rise throughout the year.  Xi sees unification as a marker for national greatness.

Separately, Canada said Thursday that 13 of its citizens have been detained in China since Huawei Technologies Co. CFO Meng Wanzhou was arrested last month in Vancouver at the request of the United States.

“At least” eight of the 13 had since been released, the Canadian government said in a statement, without disclosing what charges if any have been laid.

Prior to Thursday’s statement, detention of only three Canadian citizens had been publicly disclosed.

Meng was released on $7.4 million bail on Dec. 11 and is living in one of her two Vancouver homes as she fights extradition to the United States.

Lastly, and very significantly, China announced it had successfully landed a robotic spacecraft on the far side of the Moon, the first ever such attempt and landing.

The un-manned Chang’e-4 probe is carrying instruments to analyze the unexplored region’s geology, as well as to conduct biological experiments.

With no direct communication link possible, all pictures and data have to be bounced off a separate satellite before being relayed to Earth.

Previous Moon missions have landed on the Earth-facing side, but this is the first time any craft has landed on the unexplored and rugged far side.  It also marks the first time China had attempted something the other space powers had not done.

China is determined to eventually lead the space race, and the Chang’e-4 mission could be a first step towards an eventual base on the moon, the first of its kind.  Such a project is a further sign China is looking to challenge the United States for supremacy in artificial intelligence, quantum computing and other fields.

China, aside from putting astronauts in a lunar base by the end of the next decade, is likely to be sending probes to Mars, including ones that could return samples of the Martian surface back to Earth.

Russia: Russia’s FSB security service detained former U.S. Marine Paul Whelan on December 28 in Moscow on suspicion of spying, and then on Thursday, Interfax news agency reported Whelan was charged with espionage, though there has been no disclosure regarding the nature of his alleged activities.

It is believed Whelan is being used as a pawn in retaliation for the guilty plea extracted from Russian national Maria Buttina in the U.S. last month, Buttina charged with conspiracy; admitting to work with a top Russian official to infiltrate American conservative activist groups and politicians as an agent for Moscow.  The Kremlin clearly doesn’t want Buttina to talk, so it is believed Whelan will be used as part of a potential swap.

Whelan was in Moscow to attend a wedding when he disappeared, his brother said Tuesday.  Sec. of State Pompeo said the Trump administration has “made clear to the Russians our expectation that we will learn more about the charges and come to understand what it is he’s been accused of.”

Whelan’s family said in a statement posted on Twitter: “We are deeply concerned for his safety and well-being.  His innocence is undoubted and we trust that his rights will be respected.”

But I can provide some insight.  Whelan was staying at a hotel in Moscow I am most familiar with, the Metropol.  He was there with the wedding party for a fellow former Marine.  Whelan never made it to the wedding, and it’s not known just where he was taken, but I know of a labyrinth of hidden stairways, kind of like catacombs, behind an unmarked door.  I was directed to them my first of two stays at the hotel when I wanted access to the in-house casino, advised to do so rather than approach the entrance from the outside.  Let’s just say it was kind of spooky, winding my way down flights of stairs until I found myself at a checkpoint.  I’m picturing Whelan could have been spirited through this maze to avoid any of the public seeing him.

President Trump has yet to comment or tweet about the Whelan arrest.

Separately, President Putin, in a New Year letter to Donald Trump, said on Sunday that Moscow was ready for dialogue on a “wide-ranging agenda.”

“Vladimir Putin stressed that (Russia-United States) relations are the most important factor for providing strategic stability and international security,” a Kremlin statement said.

“He confirmed that Russia is open for dialogue with the USA on the most wide-ranging agenda.”

Brazil: Jair Bolsonaro, a former army captain who has promised radical measures to cut soaring crime and widespread corruption, was sworn in as president on Tuesday, marking Brazil’s starkest shift to the right since its return to democracy three decades ago.

Bolsonaro has pledged to take Brazil in a new direction – such as in allowing citizens to arm themselves for self-defense, and promoting more development in the environmentally sensitive Amazon.  He is an ardent admirer of President Trump.

“I invite all of Congress to join me in the mission to restore and rebuild our homeland, liberating it from corruption, crime, economic irresponsibility and ideological traps,” Bolsonaro said in his inaugural speech.

Congo: The Democratic Republic of Congo finally held a long-delayed presidential election, originally slated for December 2016, and it was roiled by disorder, which is compounding efforts to deal with the latest Ebola crisis, while disrupting a critical mining industry that serves global electronics production.

The government blocked internet connections and instant messaging for at least three days following the vote in an effort to maintain public order, according to officials, but of course it was thwarting any information flow on the outcome.

Official preliminary results are to be released, supposedly, on Sunday and final results Jan. 15.

Ebola-affected areas aren’t holding a vote until March, and dozens of health workers were forced to flee treatment centers after protesters, angered by the delay, started torching facilities.

Congo hasn’t witnessed a peaceful transfer of power since gaining independence from Belgium in the 1960s.  The ruling coalition of President Joseph Kabila, in power since 2001, is expected to continue to rule as the vote tally is manipulated in favor of his hand-picked successor, a former interior minister.  Unsurprisingly, the opposition also claimed victory.

Kabila is supposed to step down in 18 months.

Random Musings:

--Presidential tracking polls...

Gallup: 39% approval of Trump’s job performance, 55% disapproval; 89% Republicans, 39% Independents approve (Dec. 22).*
Rasmussen: 46% approve, 53% disapprove (Jan. 4).

*Gallup is going to monthly reporting, effective Jan. 15.  I will just leave the last figure up for the entire month until the next reporting date.  These figures haven’t been changing much at all for over a year in both Gallup and Rasmussen, but you’re looking for trends.

--Boy, the Democrats didn’t need this the first week they have control in the House; Rookie Rep. Rashida Tlaib’s incendiary comment from Thursday night, captured on camera, explaining at a Move On reception – just hours after being sworn in – that she had told her son “we’re gonna go in and impeach the mother—ker,” referring to President Trump.

Tlaib, now an “Idiot of the Year” candidate for 2019, just handed Republicans a gift.

For his part, President Trump told reporters in the Rose Garden this afternoon, “I think she dishonored herself and I think she dishonored her family.”

Yup, sure did.  Democratic Party leaders were fuming at Tlaib, who was unapologetic after.  Some of her fellow rookie Democratic congresswomen are offering beyond lame excuses for this behavior.

--Incoming Republican Sen. Mitt Romney (Utah) in a Washington Post op-ed:

“The Trump presidency made a deep descent in December.  The departures of Defense Secretary Jim Mattis and White House Chief of Staff John F. Kelly, the appointment of senior persons of lesser experience, the abandonment of allies who fight beside us, and the president’s thoughtless claim that America has long been a ‘sucker’ in world affairs all defined his presidency down.

“It is well known that Donald Trump was not my choice for the Republican presidential nomination. After he became the nominee, I hoped his campaign would refrain from resentment and name-calling.  It did not. When he won the election, I hoped he would rise to the occasion.  His early appointments of Rex Tillerson, Jeff Sessions, Nikki Haley, Gary Cohn, H.R. McMaster, Kelly and Mattis were encouraging.  But, on balance, his conduct over the past two years, particularly his actions this month, is evidence that the president has not risen to the mantle of the office.

“It is not that all of the president’s policies have been misguided. He was right to align U.S. corporate taxes with those of global competitors, to strip out excessive regulations, to crack down on China’s unfair trade practices, to reform criminal justice and to appoint conservative judges. These are policies mainstream Republicans have promoted for years.  But policies and appointments are only a part of a presidency.  To a great degree, a presidency shapes the public character of the nation.  A president should unite us and inspire us to follow ‘our better angels.’  A president should demonstrate the essential qualities of honesty and integrity, and elevate the national discourse with comity and mutual respect.  As a nation, we have been blessed with presidents who have called on the greatness of the American spirit.  With the nation so divided, resentful and angry, presidential leadership in qualities of character is indispensable. And it is in this province where the incumbent’s shortfall has been most glaring.

“The world is also watching. America has long been looked to for leadership.  Our economic and military strength was part of that, of course, but our enduring commitment to principled conduct in foreign relations, and to the rights of all people to freedom and equal justice, was even more esteemed. Trump’s words and actions have caused dismay around the world.  In a 2016 Pew Research Center poll, 84 percent of people in Germany, Britain, France, Canada and Sweden believed the American president would ‘do the right thing in world affairs.’  One year later, that number had fallen to 16 percent. 

“This comes at a very unfortunate time.  Several allies in Europe are experiencing political upheaval.  Several former Soviet satellite states are rethinking their commitment to democracy. Some Asian nations, such as the Philippines, lean increasingly toward China, which advances to rival our economy and our military. The alternative to U.S. world leadership offered by China and Russia is autocratic, corrupt and brutal.

“The world needs American leadership, and it is in America’s interest to provide it.   A world led by authoritarian regimes is a world – and an America – with less prosperity, less freedom, less peace.

“To reassume our leadership in world politics, we must repair failings in our politics at home.  That project begins, of course, with the highest office once again acting to inspire and unite us.  It includes political parties promoting policies that strengthen us rather than promote tribalism by exploiting fear and resentment.  Our leaders must defend our vital institutions despite their inevitable failings: a free press, the rule of law, strong churches, and responsible corporations and unions.

“We must repair our fiscal foundation, setting a course to a balanced budget. We must attract the best talent to America’s service and the best innovators to America’s economy.

“America is strongest when our arms are linked with other nations.  We want a unified and strong Europe, not a disintegrating union.  We want stable relationships with the nations of Asia that strengthen our mutual security and prosperity....

“I do not intend to comment on every (presidential) tweet or fault. But I will speak out against significant statements or actions that are divisive, racist, sexist, anti-immigrant, dishonest or destructive to democratic institutions....

“(Noble) instincts live in the hearts of Americans.  The people of this great land will eschew the politics of anger and fear if they are summoned to the responsibility by leaders in homes, in churches, in schools, in businesses, in government – who raise our sights and respect the dignity of every child of God – the ideal that is the essence of America.”

Editorial / Wall Street Journal

“Does Mitt Romney plan to run against Donald Trump for the GOP presidential nomination in 2020?  That’s a fair speculation after the soon-to-be Senator from Utah blasted the President on Wednesday in an op-ed in the Washington Post, a leading publication of the anti-Trump resistance.

“Mr. Trump ‘has not risen to the mantle of the office,’ the 2012 GOP presidential nominee averred in an assault on the President’s character. He hit all the familiar points about Mr. Trump’s polarizing political style, his dishonesty, his ‘abandonment of allies,’ and dismissal of talented appointees for lesser lights.

“None of those criticisms will surprise readers of these columns, and Mr. Romney hit a particular nerve by noting Mr. Trump’s December ‘descent.’  The departure of Defense Secretary Jim Mattis after Mr. Trump’s abrupt withdrawal from Syria, the President’s flip-flops on a government shutdown, and a torrent of defensive Twitter rants has many Republicans who have so far struck with Mr. Trump wondering if he’s in a downward dive.

“Mr. Romney is setting himself up as an alternative in 2020 if that trend continues.  No one knows what Special Counsel Robert Mueller will produce, and impeachment is possible.  The daily high-wire tension of the Trump Presidency makes for constant theater but is tiring.  Democrats could do worse than nominate a candidate who promises a return to presidential normalcy, and many Republicans may feel the same as the New Hampshire primary approaches next year....

“Yet note that Mr. Romney found almost no fault with Mr. Trump’s agenda in his op-ed indictment. He praised tax reform, deregulation, conservative judges, even trade policy toward China. This is why Mr. Trump retains the support of most Republicans in most polls. Could Mr. Romney defeat Mr. Trump on character alone?

“If Mr. Romney really wants to stand for principle, here’s a suggestion: Join Tennessee Sen. Lamar Alexander in trying to restrain the President’s ability to impose tariffs nearly at will under Section 232 of the Trade Expansion Act.  Mr. Trump has defined ‘national security’ so broadly under the statute that he is holding tariffs over the head of every U.S. trading partner even when he’s signed a new trade deal as he has with Mexico and Canada.  [Ed. discussed here last week in detail...it’s an abomination.]

“This would require Mr. Romney to show character of his own because trade protectionism is popular even in some GOP quarters. But he could also rally Senators who dislike the 232 tariffs but are afraid to speak up. Win or lose, principled opposition on trade would count for more than op-ed declarations.”

The Journal would endorse Romney in a heartbeat.

--Related to the above, retiring Arizona Republican Sen. Jeff Flake published his final guest column as a senator in The Arizona Republic on Saturday, expressing the hope that Republicans can find common ground once again.

But he also wrote that Americans have become too accustomed to the crude and course dialogues exchanged by political leaders – dialogue that wouldn’t even be tolerated if it came from political opponents.

“Such theatrics may excite our political base, but that base becomes smaller with every new slight, with every new insult,” Flake warned.

The Republican Party has become dominated by fear and conspiracy theories that have done nothing but cause further division, he said: “Lately, the party that has long been my political home has become defined by its resentments rather than its ambitions, and dominated by its fears rather than its principles.  We have given ourselves over to conspiracy theories and given in to the impulse to vilify and divide, rather than exalt and unite.”

Flake called the direction “beyond reckless...quite simply, a prescription for political extinction.”

He’s right.  What is so disgraceful is that in the trashing of Flake, it’s forgotten that this was one of the two or three most conservative senators in Congress!  You don’t have to like him for the caricature he became, but at least get his record straight. 

--From the Washington Post:

“Nearly 6 in 10 military veterans voted for Republican candidates in the November midterm elections, and a similar majority had positive views of President Donald Trump’s leadership.  But women, the fastest growing demographic group in the military, are defying that vote trend.

“That’s according to AP VoterCast, a nationwide survey of more than 115,000 midterm voters – including more than 4,000 current and former service members – conducted for The Associated Press by NORC at the University of Chicago.  It found that veterans overall approved of Trump’s job performance, showing high support for the president’s handling of border security and his efforts to make the U.S. safer from terrorism.

“Male veterans were much more likely to approve of Trump than those who haven’t serve, 58 percent to 46 percent.

“But 58 percent of female veterans disapproved of Trump, which is similar to the share for women overall (61 percent).

“Overall, 56 percent of veterans – both current and former service members – said they approve of the job Trump is doing as president, while 43 percent disapproved.  Voters who have not served in the military were more likely to disapprove (58 percent) than approve (42 percent) of the president’s job performance.”

--It is disgraceful how the national parks are being literally trashed in the government shutdown.  I could point to tens of times I have said the best employees in America are our national park rangers, who are paid less than dirt, and now when they return, they’ll get little support in the cleanups...disgusting ones at that.

What is encouraging, however, is some of the local movements you are beginning to hear about where the citizenry is going in and at least cleaning up the trash.

Anyone caught trashing a park should be thrown into a pool of hippos.  Hint: it wouldn’t end well for ‘Man.’

--According to data from the Labor Department, teachers and other public employees, such as community-college faculty, are quitting their jobs at the fastest rate on record.  While the rate, 83 per 10,000 a month, is still well below the rate for American workers overall – 231 voluntary departures per 10,000 workers in 2018 – it is the highest rate for public educators since such records began in 2001.  Poor pay is a big reason for the exodus.  Wages and salaries for public-education workers rose 2.2% in the third quarter vs. a year ago, not adjusting for inflation, which was well below the 3.1% annual increase* in pay for private-sector workers, also according to the Labor Department.

*Now 3.2% after today’s jobs report.

--It’s the time of year for the homicide total in some of America’s major cities.  New York City came in at 289 (preliminary) vs. 292 in 2017, a record low.  It was in 1990 that New York was the murder capital of the U.S. with over 2,000 murders during the crack epidemic (2,262).  Yes, it’s been a monumental success story since.

Compared to New York’s murder rate of about 3 per 100,000, Los Angeles is 6 per 100,000 (about 260 homicides in ’18), Houston’s just over 14, and Chicago’s just under 20.

Police in Chicago reported 561 homicides, down from 770 in 2016, a 19-year high.  Progress, but still way too high.

Baltimore had 308 homicides.  Consider this city has about 610,000 people.  New York has 8.6 million.  You do the math.

--Since I broached the topic the other day, the final traffic death toll in New York City was an even 200 in 2018, the lowest level since they started keeping records in 1910!

But, of that total, 114 were pedestrians, up over 2017.  Just remember that if you’re a tourist in Gotham.  You cannot be too careful in crossing the streets there.  10 bicyclists were killed.  37 victims were in cars, 39 were motorcyclists.

---

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

God bless America.

---

Gold $1286... $1284 on 12/31/18
Oil $48.31... $45.41 on 12/31/18

Returns for 1/1/19-1/4/19

Dow Jones  +0.45%
S&P 500  +1.0%
S&P MidCap  +1.3%
Russell 2000  +2.4%
Nasdaq  +1.6%

Returns for 2018

Dow -5.6%
S&P 500  -6.2%
S&P MidCap -12.5%
Russell 2000 -12.2%
Nasdaq -3.9%

Bulls 29.9
Bears 34.6 [The ratio for the prior week was the same as that of two weeks ago, 39.3 / 21.3.  So big swings after due to the excessive market volatility.  This week’s ratio was certainly bullish, given this is a contrarian indicator.]

Here’s to the New Year...may it be a safe one for all of us.

Dr. Bortrum posted a new column!

Brian Trumbore

 

---