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Week in Review

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01/26/2019

For the week 1/21-1/25

[Posted 11:30 PM ET, Friday]

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Edition 1,033

Trump World

Yup, just another week where I can pull out my adage “wait 24 hours.”  For 20 years I have been touting it, noting how in your personal life it is as applicable as in the world of Washington or geopolitics.

I mean it.  On the personal side, trust me, if you get ticked off at someone for something they said, or for ignoring something you asked for, “wait 24 hours.”  Invariably, 95% of the time the issue resolves itself without you having been a jerk.

And when it comes to talking about Donald Trump, or Venezuela this week, often it’s important to just wait a day or two.

Of course in this game of mine, I’ve long told you the nightmare for me is a breaking story on a Friday.  But today, there is no such need to wait.  It’s all pretty straight forward.

This afternoon, watching our leader address the nation from the White House Rose Garden, I felt as if I was watching an emperor with no clothes.  The Wizard of Oz, exposed as a charlatan by Toto.  It was kind of pathetic.

President Trump caved on the battle over funding for the Wall and agreed to reopen the federal government after 800,000 federal workers, and an estimated 1.2 million contractors, were needlessly forced to go without pay for 35 days.  There is no doubt, at least in my mind, that the news this morning that LaGuardia Airport in New York, a major hub, was forced to severely restrict flights into and out of the airport in a move related to a shortage of air-traffic controllers, that then rippled throughout the already fragile air transportation system, played a deciding role in the president’s move.

LaGuardia was the dreaded “tipping point.”  And it was a signal to President Trump, and congressional Republicans, that the ‘real’ crisis was at hand.

So the government reopens for three weeks, federal workers receiving their back pay (contractors don’t), and in the interim, Trump not having received a dollar for his wall, the pressure is now on Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi to get their newly-elected radical left to fall behind leadership as it works out a viable compromise.  This won’t be easy for the two, especially Pelosi, as she has to deal with the likes of AOC, Ms. Ocasio-Cortez.

At the same time, should a probable House-Senate conference committee of representative not reach an agreement on border security funding by Feb. 15, President Trump will be under immense pressure from Rush Limbaugh, Ann Coulter, Sean Hannity and others to declare a national emergency and proceed with the wall with other funding, while facing a court fight on the constitutionality of it all.

Trump tweeted early in the evening, after watching the initial hours of devastating news coverage:

“I wish people would read or listen to my words on the Border Wall. This was in no way a concession.  It was taking care of millions of people who were getting hurt badly by the Shutdown with the understanding that in 21 days, if no deal is done, it’s off to the races!”

Ah, Wizard?  Weeks ago, Sen. Lindsey Graham gave you this exact same deal that would have prevented a ton of pain, though waiting no doubt cost you a critical one or two percent in some swing states in 2020.

But I digress....

Rival proposals to end the partial government shutdown had failed in the Senate on Thursday, prolonging the impasse, but the actions helped open the door for Trump and congressional leaders to try to find a way to end the shutdown and thus we reached Friday’s temporary solution.  Hundreds of thousands of federal employees missed a second paycheck today.

There is also no doubt that some of the statements made from the White House and by Cabinet members yesterday helped lead to the end of the debacle.

President Trump said Thursday that community businesses including grocery stores and banks will likely “work along” with federal employees impacted by the partial shutdown, Trump making the comments after Commerce Secretary Wilbur Ross, in an unbelievably inept performance on CNBC Thursday morning, said impacted workers should take out a loan rather than use food banks to cope with the loss of income during the shutdown.

Trump then said:

“Perhaps he should have said it differently.  Local people know who they are, (where) they go for groceries and everything else. ...They will work along.  I know banks are working along. ...And that’s what happens in times like this. They know the people; they’ve been dealing with them for years. And they work along. The grocery store – And I think that’s probably what Wilbur Ross meant.”

What planet are these ‘leaders’ living on?

According to a Fox News Poll early in the week, 43 percent now favor a border wall, up from 39 percent in September, while the percentage who oppose, 51, is unchanged.

The poll also found 51 percent believed the president is responsible for the shutdown, while 34 percent blamed congressional Democrats, 3 percent blamed congressional Republicans, and 9 percent blamed all of the above.

But 75 percent considered the shutdown an emergency or major problem, far more than the 59 percent who feel the same about the situation at the border.  74 percent of Republicans described the shutdown as an emergency or major problem.

A CBS News Poll, though, found 71 percent saying the border wall was not worth the government shutdown, 28 percent saying it was.

66 percent agree to a budget without wall funding, while 31 percent refuse a budget without funding for a wall.

47 percent said Speaker Pelosi had handled negotiations during the shutdown better, compared to 35 percent who said Trump had.

--Daniel Henninger / Wall Street Journal...written prior to today’s actions...

“So long as he is president, Donald Trump will have two things going for him.

“The first is the loony left, which diminished the Martin Luther King holiday with dips in the fever swamps.

“Bernie Sanders bellowed: ‘We now have a president of the United States who is a racist.’ Rep. Hakeem Jeffries, the House Democratic Caucus Chairman, called Mr. Trump ‘the grand wizard of 1600 Pennsylvania Avenue.’  A Hollywood actress said MAGA hats are ‘the new white hood.’  This self-indulgent political narcissism is why average voters can’t warm to progressivism.

“The other thing Mr. Trump has going for him is that no one expects much of him.  Given a choice, he’ll take the low road.  Imagine how electrifying it would be if he ended the government shutdown by unexpectedly taking the high road.  It could still happen.

“During one of his presidential campaign rallies, Mr. Trump riffed about building a wall at the border, and the crowd roared approval. With a preternatural sense of pay dirt, Mr. Trump has stuck with the wall ever since.  His early travel ban was a ‘wall’ issue.

“Democrats instantly translated the wall into anti-immigrant sentiment and nativism, and not without reason.  Mr. Trump hasn’t made much effort to mitigate this charge.

“Until Saturday.  Included in the deal the president offered Democrats to end the government shutdown was a three-year extension of the Dreamers’ legal status, but more intriguing, a commitment to hold weekly meetings at the White House on immigration.

“House Speaker Nancy Pelosi dismissed this offer as a ‘non-starter’ before Mr. Trump delivered his talk.

“Amid this increasingly bitter standoff, something remarkable also happened Saturday: Mr. Trump held a naturalization ceremony for new American citizens in the Oval Office.  You’d have to possess Chuck Schumer’s unshakable impassivity not to have been moved by this ritual passage into American citizenship.

“Democrats have made a strategic decision to typecast Mr. Trump and anyone who supports him as hostile to immigration and therefore racist, in the expectation that some voters will recoil.  Left unanswered, it might work.

“Is some percentage of the Trump base irreconcilably nativist?  No doubt some are. But what happened during that Oval Office naturalization ceremony gets us closer to the real immigration issue.

“The difficulty and anguish over immigration for Americans across the political spectrum isn’t about keeping people out of the country but what happens to them after they arrive.  The issue is assimilation.  The issue is the idea of being an American.

“That is hardly a new thought. But it is also hard to overstate the intensity of the political challenge the progressive left is making today against widely held assumptions about Americans’ common heritage....

“New immigrants to the U.S. have become bystanders and casualties in a larger argument about the nation’s identity, to which the border wall is a long footnote.

“Here’s one of the possible questions on the naturalization civics test: ‘What do we show loyalty to when we say the Pledge of Allegiance?’ Answer: ‘the United States and the flag.’

“Put that question to Kamala Harris, Julian Castro, Beto O’Rourke or Elizabeth Warren and what you’ll get is endless qualifying ‘buts’ and guilt-tripping bows.  The party’s left would simply delete the Pledge question.

“Against this pressure, Donald Trump may be the one person able to make a national argument for a more traditional, less fractured, more optimistic idea of America’s appropriate identity.  That’s what most of his base and most of the country really want – the renewal of the melting pot as an aspirational goal; a reassertion of who we are, not a death struggle over deportations, bans and family separations. That’s the real meaning of the MAGA hats, which its wearers would explain if anyone bothered to ask.

“Mr. Trump saw what this idea looked like at that naturalization ceremony.  He moved to higher ground with Saturday’s three-year DACA extension. With Mrs. Pelosi stuck on ‘no,’ Mr. Trump could take the immigration issue away from the Democrats forever by proposing permanent legal status for the Dreamers, plus a promise to attend their naturalization ceremonies after he retires from office.

“The State of the Union is always a good venue for taking the high road.  Even from the steps of the U.S. Capitol.”

Trumpets

--Federal agents arrested Roger Stone, a longtime adviser to Donald Trump, this morning on charges that he had lied to investigators examining Russian interference in the 2016 election.

Special counsel Robert Mueller revealed the charges, including counts of obstruction and witness tampering, after FBI agents stormed Stone’s Florida home, perhaps unnecessarily, before sunrise.

Stone appeared in federal court today, proclaiming his innocence and vowing to fight the charges, saying outside the courthouse that he had been “falsely accused.”  But he also has to appear in D.C. district court on Tuesday.

The charges offer the first view from prosecutors of efforts by members of the Trump campaign to learn about WikiLeaks’ plans to release hacked documents that they believed would be damaging to challenger Hillary Clinton.  Prosecutors have said the hacks were carried out by a Russian intelligence service, adding one unnamed senior campaign official was “directed” to communicate with Stone about future releases of the stolen records.

Much more on this next time.

--The Senate Intelligence Committee on Thursday subpoenaed President Trump’s former lawyer Michael Cohen to appear before the panel, a day after Cohen postponed testimony before a House committee citing attacks by the president on his family.  [I told you two weeks ago this was a distinct possibility.]

Cohen, who was sentenced to three years in prison last month, is scheduled to begin serving his sentence on March 6.

--President Trump caved to Speaker Pelosi’s request to postpone the State of the Union Address scheduled for Jan. 29, though now we’ll see what the new date is with the shutdown over.  To me, next week is too soon, but Trump should go for Feb. 5.

--President Trump’s personal attorney, Rudolph Giuliani, attempted Monday to clean up comments he made over the weekend asserting that discussion about a potential Trump Tower in Moscow stretched as late as November 2016.

Monday, Giuliani said his comments were purely hypothetical and not based on any conversations with the president.  His statement Sunday, made on NBC’s “Meet the Press,” that Trump associates had continued negotiations about the real estate project deep into the 2016 campaign had again raised scrutiny in then-candidate Trump’s posture toward Moscow, including his call in July of that year for Russia to hack into Democratic candidate Hillary Clinton’s emails.

“My recent statements about discussions during the 2016 campaign between Michael Cohen and then-candidate Donald Trump about a potential Trump Moscow ‘project’ were hypothetical and not based on conversations I had with the President,” Giuliani said Monday.  “My comments did not represent the actual timing or circumstances of any such discussions.”

Giuliani had made a total fool of himself Sunday, rambling on how conversations throughout 2016 on the Moscow Tower project “could be up to as far as October, November.  Our answers cover until the election. So anytime during that period, they could’ve talked about it.”

In his plea deal, Cohen had admitted to lying to Congress when he said the Moscow project discussions ended in January 2016, when the negotiations continued through June of that year – a period during which Trump was campaigning vigorously and on his way to securing the GOP nomination.

--Press Secretary Sarah Huckabeee Sanders said the longstanding practice of holding White House press briefings could end up in the dustbin of journalism history.

“We’ll see what happens,” she told “Fox & Friends” on Wednesday when asked about their future after President Trump tweeted that he told her “not to bother” with them anymore.

“Look, we are in the business of getting information to the American people,” Sanders said.  “Not making stars out of people that want to become contributors on CNN, and that’s a lot of times what we see taking place in the briefing room.”

Sanders hasn’t given a briefing from the White House press room since Dec. 18, but I would agree that with a president who addresses reporters constantly, listening to her lies is hardly necessary.

--Trump tweets....

“ ‘BUILD A WALL AND CRIME WILL FALL!’ This is the new theme, for two years until the Wall is finished (under construction now), of the Republican Party.  Use it and pray!”

“To all of the great people who are working so hard for your Country and not getting paid I say, THANK YOU – YOU ARE GREAT PATRIOTS! We must now work together, after decades of abuse, to finally fix the Humanitarian, Criminal & Drug Crisis at our Border. WE WILL WIN BIG!”

“Greatest Witch Hunt in the History of our Country!  NO COLLUSION!  Border Coyotes, Drug Dealers and Human Traffickers are treated better.  Who alerted CNN to be there?”

“Never seen...Republicans so united on an issue as they are on the Humanitarian Crisis & Security on our Southern Border. If we create a Wall or Barrier which prevents Criminals and  Drugs from flowing into our Country, Crime will go down by record numbers!”

“Marist/NPR/PBS Poll shows President Trump’s approval rating among Latinos going to 50%, an increase in one year of 19%. Thank you, working hard!”

[Trump’s approval among blacks in this poll is still just 11%.]

“The reason Sarah Sanders does not go to the ‘podium’ much anymore is that the press covers her so rudely & inaccurately, in particular certain members of the press.  I told her not to bother, the word gets out anyway! Most will never cover us fairly & hence, the term, Fake News!”

“Looking like Nick Sandman & Covington Catholic students were treated unfairly with early judgements proving out  to be false – smeared by media.  Not good, but making big comeback!  ‘New footage shows that media was wrong about teen’s encounter with Native American.’ @TuckerCarlson”

“Many people are saying that the Mainstream Media will have a very hard time restoring credibility because of the way they have treated me over the past 3 years (including the election lead-up), as highlighted by the disgraceful Buzzfeed story & the even more disgraceful coverage!”

I don’t disagree with the above.

Wall Street and China Trade War

This was the week of the World Economic Forum in Davos, Switzerland, and whereas last year’s tone was among the most upbeat in years, helped along by synchronous global growth, rising markets and plentiful cash from ultra-loose monetary policy, the tone darkened this year, after 2018’s miserable equity performance across the globe, slowing growth, most notably in Europe and China, and tightening by the U.S. Federal Reserve.

The tone in Davos was set at the beginning when the International Monetary Fund released its 2019 global growth outlook and reduced its GDP forecast from 3.7% in October (3.9% in July) to 3.5%, though this is higher than 2016’s 3.2%.

The IMF cited the slowing in Europe, risk of a messy Brexit, slowdown in China and global trade tensions.

Growth in the eurozone is now estimated at 1.6% for 2019* (down from 1.8%), Britain 1.5%, China 6.2%, Japan 1.1% (which was actually up from an earlier forecasted 0.9%), and 2.5% in the U.S.

*Germany 1.3%, France 1.5%, Italy 0.6%, Spain 2.2%.  [Canada 1.9%, India 7.5%]

As for China and the ongoing trade war with the U.S., as I’ll detail below, fourth-quarter GDP came in at 6.4%, the lowest since 2009, with further pain expected, but commodity producers, among the first to feel the pain if China stops spending on infrastructure projects and the like, are reporting plenty of demand for copper, with physical inventories at record lows, and for high-quality steel ingredients.  Unilever, a consumer products giant, maintains the country is one of its most reliable sources of growth.  So there is some optimism that, once an agreement with the U.S. is reached, things will improve.

Chinese Vice President Wang Qishan appeared in Davos, saying his country would deliver “modest prosperity” by 2020.  Beijing will continue to cut taxes and the amount of money banks must hold in reserve, to encourage lending, but China hasn’t really cranked up the stimulus, as it can, and we are told it is still committed to deleveraging from mammoth debt levels.

Wang did acknowledge there were risks facing Beijing as well as other major economies, including “unilateralism, protectionism and populism.”

But he insisted China’s growth rate in 2018 was still “a pretty significant number, not low at all,” emphasizing it was the “quality and efficiency” of growth that was more important.

“There will be a lot of uncertainties in 2019, but one certainty is that China’s growth will continue and be sustainable,” Wang told the Davos audience.

Wang also issued a veiled rebuttal of U.S. attacks on China’s tech companies.

“It is imperative to respect national sovereignty and refrain from seeking technological hegemony,” Wang said.  He condemned “conducting, shielding or protecting technology-enabled activities that undermine other countries’ national security.”

Wang didn’t specify what activities he was referring to, but clearly he was alluding to escalating pressure on Huawei Technologies Co.

So on the trade war front, a Chinese delegation is to arrive in Washington on Monday to prepare for the high-level talks Tuesday and Wednesday between Vice Premier Liu He and cohorts, and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, with just five weeks remaining before the March 1deadline for the U.S. to escalate tariffs from the current 10 percent to 25 percent on $200 billion of Chinese goods.

The two sides are not close to agreement on a wide range of disputes, especially when it comes to China’s handling of intellectual property and forced technology transfers from foreign companies looking to do business in the country, let alone the imbalance in goods flows between the two nations.  Treasury Secretary Mnuchin has said there has been some progress on the important issue of currency and the yuan’s exchange rate, and on Thursday said he thought the two sides were “making a lot of progress” in trade talks.

President Trump said in response to a question on the state of negotiations, “I like where we are right now.... We’ll see what happens. But we’re doing very well in our negotiations with China.”

But this week U.S. Commerce Secretary Wilbur Ross said the United States and China are “miles and miles” from resolving trade issues, though there is a fair chance the two get a deal.

“There is a very large group coming,” Ross said in his ill-fated interview with CNBC.  “There’s been a lot of anticipatory work done but we’re miles and miles from getting a resolution and frankly that shouldn’t be too surprising.”

“Trade is very complicated, there’s lots and lots of issues – not just how many soybeans and how much LNG (liquefied natural gas),” Ross added.

More important, Ross said, were the structural reforms that Washington believes are needed in the Chinese economy, as well as enforcement mechanisms for failure to adhere to whatever is agreed to.

Ross said the two sides were unlikely to resolve all their disputes in next week’s talks, but added, “I think there’s a fair chance we get a deal.”

White House economic adviser Larry Kudlow told Fox News, “I think the Liu He talks will be determinative,” but Kudlow also told Reuters that Trump is “not going to back down” on U.S. demands for structural changes to Chinese IP and technology practices.

[In a joint report to the U.S. Trade Representative, the U.S. Chamber of Commerce and the American Chamber of Commerce in China say Beijing’s ambitious plan to become a global technology leader is being widely implemented, casting doubt on efforts by Chinese officials to play down its significance.]

But it’s interesting how new cross-currents have developed, with a senior Alibaba Group Holding Ltd. executive, Joe Tsai, executive vice-chairman, saying rising anti-China sentiment in the United States is impacting relations.

Now I personally can’t stand Mr. Tsai, a total tool of the Xi regime (born on Taiwan), but he is right.  I believe one of the big themes of the next two years will be rising anti-China sentiment in this country.  It’s going to get ugly.  [And very uncomfortable for some who can’t tell the difference between a Korean and the Chinese, in everyday life, let alone the difference between someone from China and those from Taiwan.  I’m serious about this.]

Tsai termed the U.S. government’s treatment of Chinese smartphone and network-gear maker Huawei “extremely unfair” and “very politically motivated.”

Tsai, speaking at a Reuters’ forum today in Hong Kong, said U.S. regulators had made it very difficult for Alibaba to make investments in the country, adding that the company would look at other parts of the world for investment.  [Separately, Tsai was optimistic about China’s consumer sector, saying it was fundamentally very strong.]

Lastly, in Davos, billionaire philanthropist George Soros used his annual speech to launch a scathing attack on China and President Xi.

Soros warned that artificial intelligence and machine learning could be used to entrench totalitarian control in the country.  He said this scenario presented an “unprecedented danger.”

But Soros said the Chinese people were his “main source of hope.”

“China is not the only authoritarian regime in the world but it is the wealthiest, strongest and technologically most advanced,” he said, noting concerns too about Vladimir Putin’s Russia.

“This makes Xi Jinping the most dangerous opponent of open societies,” he said.

Soros, a prominent donor to the Democratic Party, also criticized the Trump administration’s stance towards China.

“Instead of waging a trade war with practically the whole world, the U.S. should focus on China.”  Can’t say I disagree with this.

Soros urged Washington to crack down on Chinese technology companies such as Huawei and ZTE (more on them below), which he said present an “unacceptable security risk for the rest of the world.”

More broadly, Soros cautioned that repressive regimes could utilize technology to control their citizens, in what he called “a mortal threat to open societies.”

On the economic front in the U.S., well, we’ve been largely flying blind. With the partial government shutdown, many of the releases on the economy have been delayed, such as retail sales last week and some housing data and the December figure on durable goods this week.  As of this writing it’s not known exactly when it will all now come out with the government reopened, at least for a spell, but hopefully it’s on some kind of schedule as it’s potentially market-moving, December being the month the economy supposedly began slowing down.

But we did have a release of existing-home sales for December on Tuesday, only because this came not from the government but rather the National Association of Realtors.

The figure was putrid, 4.99 million, far less than expected, down 6.4% from November, and down 10.3% from year ago levels.

The median existing-home price was $253,600, up 2.9% from December 2017, which while the 82nd straight month of year-over-year gains, is a clear deceleration in price gains.

But there are signs housing activity is better in January, and home builders are reporting a better tone in the market, largely because mortgage rates have come down, the 30-year fixed rate at 4.45% this week, vs. close to 5.00% in November.

Europe and Asia          

We had some important PMI data this week, a flash reading on the euro area (EA19) for January, with the composite at 50.7 vs. 51.1 in December (50 the dividing line between growth and contraction), a 66-month low. The manufacturing PMI was 50.5 vs. 51.4, services 50.8 vs. 51.2.

The flash readings also break down Germany and France.

Germany’s mfg. PMI was 49.9 vs. 51.5, contraction, albeit a slight one, but a 50-month low, while the non-manufacturing figure was better at 53.1 vs. last month’s 51.8.

France’s manufacturing figure rebounded from 49.7 to 51.2, but services, reflecting the yellow vest protests, fell to 47.5 vs. 49.0, a 59-month low.

Chris Williamson, chief economist, IHS Markit:

“The Eurozone economy slipped closer to stall speed in January, with companies reporting the first drop in demand for over four years. The disappointing survey data indicate that GDP is rising at a quarterly rate of just 0.1%.

“Both the manufacturing and service sectors are close to stagnation, highlighting the broad-based nature of the current slowdown.  Ongoing auto sector weakness, Brexit worries, trade wars and the protests in France were again widely cited as factors dampening growth, but the survey responses indicate that a deeper malaise has set in at the start of the year.  Companies are concerned about a wider economic slowdown gathering momentum, with rising political and economic uncertainty increasingly affecting risk appetite and demand.

“The ‘yellow vest’ protests led to the steepest downturn in the French economy since November 2014, consistent with GDP falling in the first quarter if these levels continue in coming months. But German businesses are also reporting their toughest spell for four years, led by the manufacturing sector slipping into decline for the first time since 2014, in turn reflecting the largest drop in exports for six years.

“The survey’s output and price gauges have both now fallen into territory more associated with ECB loosening rather than tightening policy, raising pressure on the central bank to acknowledge that downside risks to the outlook now predominate.”

Speaking of the European Central Bank, President Mario Draghi acknowledged the “risks surrounding the euro area growth outlook have moved to the downside.”

The ECB opened the door on Thursday to new stimulus measures to prop up the region’s stumbling economy, with Draghi blaming the deterioration that has occurred in just the last few months to “the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”

So the ECB is not only telegraphing there will be no interest rate hike in 2019, but Draghi said, “We have lots of instruments and we stand ready to adjust them or use them according to the contingency that is produced,” listing options such as forward guidance on interest rates, bond purchases and long-term loans to commercial banks.

Draghi did add that the ECB considered the likelihood of recession to be low.

*The euro bond market took Draghi’s dovish comments and ran with it, the yield on the German 10-year falling to 0.19%!  France’s 10-year is just 0.59%, Italy’s 2.65%. 

Related to the above, Eurostat released the latest debt to GDP data for the EA19, third quarter 2018, which was 86.1% vs. 88.2% a year earlier, so some good news but this is looking backwards and the data is from a stronger eurozone economy than we currently have.

Germany 61.2%, France 99.5%, Italy 133.0%, Spain 98.3%, Portugal 125.0%, Greece 182.2%, Netherlands 52.9%, Sweden 38.3%, and 86.3% in non-euro UK.

Brexit: Queen Elizabeth II weighed in today on Brexit, without using the name, urging people to find “common ground” and to respect “different points of view.”

Parliament is due to vote on the latest deal from Prime Minister Theresa May next week, Plan B, with the UK leaving the EU on March 29 with no deal unless the parties can agree on a way forward.

But Plan B looks like Plan A.  The prime minister told lawmakers she could not rule out the possibility of leaving the EU without any agreement, while she did not believe there was a majority in Parliament for a second referendum that could reverse the whole process of withdrawal.

And May has rejected the option of pivoting toward a model of Brexit that keeps closer ties to the European Union.

Instead, despite the plan being defeated in Parliament last week by 230 votes, the prime minister appears to be just doubling down on her gamble that MPs will vote for her unpopular plan for fear of the alternative – a no-deal, hard Brexit.*

*A no-deal Brexit would mean the UK cuts all ties with the EU overnight.  While the UK would not have to obey EU rules, it would need to follow World Trade Organization terms on trade.  Many businesses would see new taxes on imports, exports and services, which would increase operating costs.  Prices of many goods in the UK would rise.

And the UK would also lose the trade agreements it had with other countries as a member of the EU, all of which would need to be renegotiated alongside the new agreement with the EU itself.

And you can imagine the delays manufacturers in the UK would face in the supply chain, which is why some have been stockpiling goods ahead of such a possibility.

According to the Bank of England, a hard Brexit would cause a severe shock to economic growth in the UK which could fall to just 1.5 percent this year, which is also the IMF’s forecast, but the picture would darken from there.

“A disorderly no-deal Brexit would have a material negative immediate impact on public finances that would in fact persist over a number of years,” Mark Cassidy, director of economics and statistics at the BoE said today.

The European Union’s stance on the necessity for a Border in a no deal Brexit dramatically hardened this week, a devastating blow to Mrs. May’s government, with the EU leaning on Dublin for concessions ahead of a final showdown with the UK.

The EU’s chief Brexit negotiator, Michel Barnier, on Monday described the withdrawal treaty as the “best possible” deal, and called for the focus to be on negotiating a “more ambitious” future relationship rather than making changes to the backstop.

But now Brussels, which has indicated there will be no obligation on Ireland to erect a hard Border in a disorderly Brexit, instead says a hard Border is inevitable with a hard Brexit.

So this left the UK scrambling to come up with a coherent response.  The Government has been claiming it is “preparing for all eventualities” but at the same time “absolutely” denied planning for Border checks.

Asked what would happen on March 29 if the UK leaves without a deal, Irish Prime Minister (Taoiseach) Leo Varadkar said his country will face a “real dilemma.”

Varadkar insisted the backstop is still alive, but a hard Border would mean “We would have to negotiate an agreement on customs and regulations that would mean full alignment so there would be no hard Border,” he said.

“We already have that agreement and that is the backstop.  Nobody who is opposed to the backstop can credibly state he or she is also against a hard Border unless he or she can come up with something else that aligns customs and regulations and allows a Border to be avoided.  Nobody else has done that yet.”

For months, Ireland and the EU have refused to engage in ‘what if’ questions on the Border.

As for a delay in the March 29 date, we’ll see what happens next week.  Everyone agrees anything to prevent a hard, disorderly Brexit that would harm everyone in both Britain and the EU must be done.

***I watched an HBO original movie, “Brexit,” the other night and it was outstanding! 

France: According to the Institut des Politiques Publiques, a think-tank, President Emmanuel Macron’s tax policies, including the emergency measures passed in December to appease anti-government protesters, clearly benefit the wealthy.

The richest 1 percent will see their disposable income rise 2.3 percent as a result of the changes taking effect this year.

But the gains are largely because of changes in tax on capital income.  Reforms since the start of 2018 have had a bigger effect than the new changes for the very wealthiest. Disposable income rose 7.9 percent for around 150,000 households and by an average of 17.5 percent for the top 30,000 because of last year’s reforms.

So the figures only further reinforce the perception that Macron favors the rich, which will fuel calls for him to restore or replace the wealth tax, which he scrapped shortly after taking office.  Macron has made it clear, though, as the “national debate” intended to reduce tensions takes place, that reinstating the wealth tax is off limits – a major platform of the protesters.

The IPP think-tank did say the tax changes rushed through at year end to appease the protesters would have a positive impact on a large part of the population, at the expense of wealthier pensioners; 1.7 percent for the ‘middle class,’ less for those with lower than average incomes.

The freeze on fuel taxes, combined with more generous fuel subsidies, will benefit the poor most.  [Financial Times]

On a different matter, President Macron and German Chancellor Merkel signed a new treaty updating their 1963 post-war reconciliation accord, aiming to reinvigorate the European Union’s main axis as Eurosceptic nationalism tests the EU’s cohesion.

It is attempt by the two to give fresh leadership to the troubled EU project, the document signed in Aachen, Germany, a historic symbol of European concord, the 16-page Aachen Treaty negotiated over the past year to update the 1963 Elysee Treaty.

“We are doing this because we live in special times and because in these times we need resolute, distinct, clear, forward-looking answers,” said Merkel, noting that Aachen had been home to Charlemagne, whom she dubbed “the father of Europe.”

Macron added: “At a time when Europe is threatened by nationalism, which is growing from within, when Europe is shaken by the pains of Brexit and worried by global changes that go far beyond the national level, Germany and France must assume their responsibility and show the way forward.”

The treaty has few real details, but it commits the two nations to closer foreign and defense policy ties, though does little for the cause of eurozone economic reform.

The Aachen Treaty also stipulates it will be a priority of German-French diplomacy for Germany to be accepted as a permanent member of the UN Security Council (joining the U.S., UK, France, Russia and China).

Greece: Follow-up to some earlier missives of mine...the Greek Parliament ratified a U.S.-backed deal with Macedonia that aims to help stabilize the Balkan region, but which is roiling Greece and polarizing its political scene, by just three votes in the 300-seat parliament.

The agreement, which renames the Balkan country as North Macedonia, paves the way for its membership into NATO.

But 70% of Greeks opposed the deal, according to several polls, with many believing the name Macedonia belongs only to Greece’s northern region of the same name, which goes back to the time of Alexander the Great.

But nearly 140 countries have recognized Macedonia under its chosen name.

Credit to Greece’s politicians for recognizing this was something that needed a compromise, but the people are a different matter, and it doesn’t help that this issue comes after the Greek financial crisis, and the EU’s ‘bullying’ on austerity.

Needless to say, Prime Minister Alexis Tsipras, the socialist who has shocked me with his pragmatism over the last few tumultuous years, is under the gun again, having lost his coalition over the Macedonia issue.  His term is up in the fall, but as I’ve written, there is immense pressure for an early election.  I’m pulling for him.  [First Socialist I ever have, come to think of it.]

Turning to Asia...as noted above, China’s National Bureau of Statistics revealed that fourth-quarter GDP was just 6.4%, and 6.6% for all of 2018, the latter the slowest in 28 years, 1990, the former the worst three-month period since 2009.

For the month of December, industrial production rose 5.7% year-over-year, while retail sales rose 8.2% yoy, both of which were above November’s pace, which is encouraging.  For 2018, fixed-asset investment (infrastructure, like rails and airports), rose 5.9% which is not good.

Most experts believe the government’s recent stimulus moves will have an impact in the second half of this year.

Meanwhile, the Bank of Japan warned of growing risks to the Japanese economy from protectionism and faltering demand.  The BOJ on Wednesday downgraded its forecast for core consumer inflation to just 0.9 percent in the coming fiscal year from 1.4 percent projected last October, reflecting slumping oil prices.  Tokyo, a leading indicator of nationwide price trends, saw its core inflation, ex-food and energy, rise 0.7 percent in January.

Despite the rising risks the BOJ does still expect the Japanese economy to grow, though it contracted in the third quarter last year (Q4 yet to be released).  The central bank also said this week it is keeping its key policy rate at minus 0.1%.

Japan reported on Wednesday that December exports shrank at the quickest pace in two years, down 3.8 percent, twice as bad as forecast, with exports to China falling 7 percent, while they were down 11.6 percent to South Korea. Shipments to the U.S. rose 1.6 percent.

Separately, a flash reading on Japan’s January manufacturing sector came in flat, 50.0, vs. 52.6 in December, a bad sign.

Street Bytes

--Stocks were unchanged, dead in the water as the week settled out, though Monday had a mini-downdraft of over 1%, stocks then largely making it back up over the balance of the week as the focus was more on any movement in the U.S.-China trade war than corporate earnings, which remained largely positive, the big tech heavyweights yet to report (Amazon, Apple, Facebook and Google, among others).

So for the week the Dow, in eking out a 0.1% gain, 31 points to 24737, did keeps its winning streak alive at five, Nasdaq doing the same with its own 0.1% advance, but the S&P 500 fell 0.2%.

Next week, with the shutdown largely off to the side, albeit just momentarily, the focus will be on any movement when China’s trade negotiators show up in Washington, far more on the earnings front, and perhaps Venezuela and any impact on the price of crude.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr. 2.61%  10-yr. 2.76%  30-yr. 3.07%

The Federal Reserve holds its first Open Market Committee meeting of the year on Tuesday and Wednesday, and while it is not making another move on interest rates, and isn’t likely to before June, at the earliest, the Fed is expected to say something significant about its balance sheet, as in it may announce it will stop paring down the portfolio, or announced a reduced schedule, which could cut down on uncertainty in the Treasury market.

--The price of oil fell just a bit to $53.55 on West Texas Intermediate as U.S. supplies continued to surge, outweighing the impact of the turmoil in Venezuela (discussed further below).

There is no doubt production in key producer Venezuela will continue to fall, amid the internal chaos, but global oil markets are still very well supplied, thanks to another spike in U.S. output.

The spike in U.S. production, though, comes as capital spending by U.S. oil exploration and production companies has fallen sharply following the decline in crude prices that began last October.

According to Dealogic, companies in the sector have not held a single bond sale since the start of November, while share sales have slowed.  The data suggests a record-breaking boom in U.S. oil output is weaker this year.

The government’s Energy Information Administration has forecast that between December 2018 and December 2019, U.S. crude production will rise by about 500,000 barrels a day, which would be a sharp slowdown from growth of 1.8m b/d over the previous 12 months.

The  reliance on debt to finance the boom has been rather pronounced, some $300 billion from bond issuance over the past 10 years, according to Ed Crook of the Financial Times.  But as Dealogic reports, that has ground to a halt.

Speaking at the World Economic Forum in Davos this week, Occidental Petroleum CEO Vicki Hollub said U.S. shale oil companies were being forced to react to an investor push for more spending discipline.  “Not as much money is going to be pouring into the Permian basin,” she said.

The number of rigs drilling oil wells in the U.S. had dropped 8 percent since November, according to S&P Global Platts Analytics, that is until today, when the weekly report out of energy services firm Baker Hughes showed that the number of operating oil rigs in the U.S. jumped by 10 this week, after having slumped by 21 the week before, to 862.

--United Technologies issued an optimistic outlook for 2019 as the maker of jet engines and airplane parts, saw a year ahead of sales and earnings growth, with both in line with Wall Street’s forecasts.

CEO Gregory Hayes said the company will benefit from “really solid trends in aerospace across the board,” thanks largely to production increases at jet makers Boeing and Airbus.

Last year, United Technologies split into three companies, spinning off Otis elevators and Carrier climate-control systems into separate groups.  UTX will be comprised of Pratt & Whitney jet engines and the Rockwell Collins (airplane parts) business it acquired in November for $23bn.

--Procter & Gamble Co. raised its sales forecast for the year on Wednesday after it topped expectations for the fourth quarter, the outlook boosted by price hikes and strong demand for premium fabric and skin care products.

P&G specifically singled out products such as Gain and Downy, as well as SK-11 skincare products, which helped the company become the No. 1 personal care goods company.

Consumer goods companies have faced a string of challenges in the past year, including soaring commodities costs, a shortage of truck drivers, competition from supermarket brands and direct-to-consumer start-ups.

So P&G has been seeking to counter this through cutting costs and revamping its marketing strategy.  In other areas, its raising prices and launching higher-end products. 

For 2019 the company is looking for organic (ex-acquisitions and impact of currency fluctuations) sales growth of 2 to 4 percent.

--Johnson & Johnson said it expects sales growth to slow in 2019, citing pricing pressures and generic-drug competition for its pharmaceutical division.  J&J had 2018 sales of $81.6 billion, up 6.7%, but only expects revenues this year of $80.4 billion to $81.2 billion.

Additionally, the company is facing major legal liability over the safety of its talc-containing powders such as Johnson’s Baby Powder.  At least 11,700 lawsuits against J&J claim use of its talc powder caused cancer.

J&J claims its products are safe, and it has won some of the suits that went to trial, but juries have awarded large sums to plaintiffs, including the $4.7 billion judgment in July to 22 women and their families.  J&J is appealing the verdicts.

--IBM beat analysts’ fourth-quarter earnings estimates and forecast full-year profit above expectations on Tuesday, as the company benefits from its focus on newer businesses such as cloud, software and services, sending its shares up about 7 percent.

Big Blue has been shifting toward the faster-growing segments to lower dependence on its traditional hardware products and reverse years of revenue declines.

CFO James Kavanaugh said: “We had our strongest signings quarter to finish out the year in a long period of time, where we signed roughly $16 billion worth of signings – that’s up 21 percent.  We had 16 deals greater than a $100 million, which talks to value of our hybrid cloud, multi-cloud value proposition,” he said.  [Reuters]

The company has been structuring its cloud strategy around helping companies put together their multiple cloud platforms, while not competing head-to-head with “hyperscale” cloud providers such as Amazon Web Services, Microsoft Azure and Alphabet’s Google.

So instead, IBM has recently signed multiple cloud services contracts with the likes of British telecom Vodafone and French bank BNP Paribas.

Cloud business, part of what IBM calls “strategic imperatives,” grew 5% to $11.5 billion in the quarter, $39.8 billion for 2018, up 9%.

But overall revenue fell 3.5% in the quarter as its yearslong struggle to recapture growth continues, thus the necessity for the cloud business to take charge in driving future profits.

In October, IBM agreed to buy Red Hat Inc. for $34 billion.

--Ford Motor Co. posted a net loss of $116 million in the fourth quarter due to extraordinary costs and weaker sales in China and Europe. But adjusted earnings before interest and taxes of $1.5bn were driven by North America, with revenue up slightly to $41.8 billion.

Ford said operations outside of North America generated a loss of $828 million, driven by China and Europe.  Trade issues with China and the European Union have also made materials used in auto production more expensive.

Ford has embarked on an $11 billion restructuring of its overseas businesses that is expected to last several years, while separately it overhauls its lineup of vehicles in most major markets.

But investors have expressed frustration with CEO Jim Hackett for providing few specifics about the above ventures.

--Shares in Tesla were marked down again on Wednesday after the company cut production hours amid softening demand for the Model S and Model X vehicles, at the same time CEO Elon Musk is trying to convince investors his company can achieve solid – and sustainable – profit margins.

The news on a cut in production hours comes after last week’s news of a 7 percent headcount reduction.

Bottom line is the outlook is growing more uncertain, especially given global weakness.  But Musk is being given praise in some quarters for taking action as he tries to hit his profit targets.

--Carlos Ghosn resigned as chairman and chief executive of Renault, according to France’s finance minister.

Renault had stood by Ghosn since his arrest in Japan two months ago, but the company had also begun making plans to replace its longtime leader as Ghosn’s legal troubles threatened the automakers alliance with Japanese companies Nissan and Mitsubishi Motors.

Renault, with more than 47,000 workers, is one of France’s biggest employers, with the French government the largest shareholder. The pressure had been ramped up to cut ties with Ghosn in order to save the alliance.

Jean-Dominique Senard, the CEO at French tire maker Michelin, was then named chairman of the board on Thursday, with Renault’s chief operating officer, Thierry Bollore, moving up to CEO.

With slowing demand for cars in China, Europe and the United States, it is essential that the partnership between Renault and Nissan (and Mitsubishi) stay healthy for the sake of all three automakers.  But they have to put their differences aside soon.

Speaking of alliances, it was last week that Ford and Volkswagen announced a joint venture to speed the development of electric and self-driving cars.

--Shares in Stanley Black & Decker cratered more than 13 percent after the company warned of continued headwinds from tariffs and the housing market.

The purveyor of drills and lawnmowers reported fourth-quarter earnings and revenue that beat the Street’s expectations, reflecting the rollout of some new Craftsman products, but the company said it “overcame multiple external headwinds” during the year and expects a similar environment in 2019.”  CEO James Loree cited an economic growth backdrop that “also looks to be slowing.”

At times like these with the slowing housing market, SBD is a good barometer for the likes of Home Depot and Lowe’s, the two largest U.S. home-improvement retailers, whose shares also fell on the Stanley Black & Decker news.

--Southwest Airlines says it has lost $10 million to $15 million so far from the partial government shutdown but overall travel demand remains strong, boosting the carrier’s outlook for first-quarter revenue.

Southwest made the announcement in releasing fourth-quarter results that showed a lower profit vs. a year ago, but results that were better than the Street expected and the airline predicted revenue for each seat flown one mile, a key metric, would rise by 4 to 5 percent if there is no further damage from the shutdown.

For Q4, revenue rose 8.5 percent to $5.7 billion.

But in terms of the shutdown, the other airlines all said on Thursday that the impact of more air-traffic controllers and TSA screeners missing work could cause major disruptions.  [And this indeed was the case today at LaGuardia and elsewhere.]

JetBlue CEO Robin Hayes said: “We are closing to a tipping point. The longer this goes on, the longer it will take for air travel infrastructure to rebound.”

The National Air Traffic Controllers Association, the Air Line Pilots Association, and the Association of Flight Attendants-CWA said in a statement Wednesday: “We cannot even calculate the level of risk currently at play, nor predict the point at which the entire system will break.  It is unprecedented.”

--Intel Corp. reported a 9% gain in revenue but cautioned that it expects slowing demand for data-center chips to continue well into 2019, a major challenge as the company’s search for a new CEO drags on.  It’s been almost eight months since the abrupt resignation in June of former CEO Brian Krzanich.

Intel had benefited in 2018 from a surge in demand for personal computers, and the ongoing growth of cloud computing, but revenue from Intel’s data-center group, a critical area, came in shy of the company’s own expectations.  Intel also suffered from slowing sales in China.

The company now expects total revenue growth of about 1% in the year ahead to $71.5 billion, a much more conservative pace than the nearly 13% growth in 2018.  Analysts polled by FactSet had expected to generate $75.07 billion in revenue.

Intel’s shares fell 6% in response.

--Shares in PG&E Corp. surged after California fire investigators said the utility didn’t cause the deadliest in a series of 2017 state wildfires, the Tubbs Fire, which killed 22 people and destroyed nearly 37,000 acres mainly in Napa and Sonoma counties.

Investigators said the fire was caused by a private electrical system near a residential structure, not PG&E.

In response to the news Thursday, the company’s shares soared 75% to $13.95 (before tumbling back 15% to $11.60 today), PG&E having previously announced it was planning to seek bankruptcy protection in response to potential wildfire-related liability costs, which it estimated at $30 billion.  But with Thursday’s court decision, that figure could now be about $8 billion lower, according to financial research firm, CreditSights.

State officials are still investigating whether the utility had anything to do with the deadliest wildfire in state history, last November’s Camp Fire, which killed 86.  PG&E has disclosed it had a high-voltage line malfunction in the region just 15 minutes before the start of the blaze was reported.

--Starbucks Corp. boosted sales at U.S. cafes around the end of the year, beating Wall Street’s forecasts for a second consecutive quarter.

The coffee giant reported same-store sales growth of 4% in the U.S. market during its fiscal first quarter, with traffic flat, which was an improvement from a decline in visits during the July-September period.

Starbucks  has been focused on its other major market, China, entering 10 new cities and expanding its stores there to 3,700, with same-store sales rising 1%.

Globally, comp sales increased 4%, beating analyst expectations.

Earnings also beat the Street at $760.6 million, while the company raised its guidance for the full year, with revenue growth of 5% to 7% for 2019.

--In China, Microsoft confirmed its search engine Bing wasinaccessible on Wednesday, the latest foreign website to be blocked by censors.

But Thursday Microsoft said Bing was restored.  [This may have been more a technical issue than Chinese mischief.]

Chinese authorities do operate a firewall that blocks many U.S. tech platforms, including Facebook and Twitter.

And regulators recently closed hundreds of websites and thousands of mobile apps and calling out tech titan Tencent Holdings Ltd.’s news app for spreading “vulgar” information.

As reported by Shan Li of the Wall Street Journal, “In the past three weeks, the Cyberspace Administration of China has wiped nearly 71 million items of ‘harmful’ information off the web, closed 733 websites and shut down 9,382 mobile apps, the agency said Wednesday.”

Last month the internet watchdog announced it had shut down 110,000 social media accounts for spreading what it said was harmful information. 

By the way, much of this has to do with defaming China’s leaders.

Separately, a former Canadian spy chief said Canada should ban China’s Huawei Technologies from supplying equipment to Canadian 5G networks because the security risk is too great.

Last week, China threatened repercussions if Ottawa blocked Huawei, a warning the government dismissed. This comes amid the tit-for-tat between Canada and China that started with the arrest of Huawei’s CFO Meng Wanzhou at the behest of the United States, after which China detained two Canadians, while retrying a third on a drug smuggling charge and sentencing him to death.

Today, Vodafone announced it has decided to “pause” the installation of new Huawei equipment in its core networks across the world due to the political uncertainty surrounding the supplier.

The ‘core’ is about the ‘kit’ on towers.  Vodafone’s CEO said a “blanket ban” on Huawei’s radio equipment, which is separate, would lead to “a significant delay” in the launch of 5G networks and Vodafone will continue to buy that.

--Verizon Communications Inc. is cutting 7% of its media staff, part of a bid to overhaul a struggling operation that includes former online icons AOL and Yahoo. The cuts would represent about 800 jobs at the division.

In the same vein, BuzzFeed Inc. is eliminating 15% of its workforce (about 250 jobs), the latest pullback for digital-media sites dealing with a challenging advertising market.

Previously, Gannett Inc. announced it was laying off journalists from its collection of newspapers.

--According to an estimate from Air Charter Service, despite global warming being one of the main themes at the World Economic Forum in Davos, some 1,500 private jets were expected this week, up from 1,300 last year.  Andy Christie, private jets director at ACS, said in a statement: “We have had bookings from as far as our operations in Hong Kong, India and the U.S.  No other event has the same global appeal.”

Of course air travel has a heavy carbon footprint, generating greenhouse gas emissions.

--Walmart is looking to add more truck drivers in the upcoming year as an industry-wide shortage continues to loom, and these are good-paying jobs, sports fans.

The company hired more than 1,400 truck drivers in 2018, and the new pay scale has drivers earning an average of $87,500 per year.

According to the American Trucking Association, the median salary for a driver on a national, irregular route is over $53,000.

To be hired at Walmart, drivers will need to have 30 months of experience over the past three years and a good safety record.

--Speaking of Davos, Bono told the World Economic Forum that “unlocking” private sector funds can help achieve amazing things in developing countries.

“Capitalism is not immoral, it’s amoral,” Bono said.

“It has taken more people out of poverty than any other ‘ism’ but it is a wild beast and if not tamed it can chew up a lot of people along the way.”

He said that in some countries people who had their lives chewed up are pushing politics towards populism.

--Passengers on a United Airlines flight to Hong Kong had to deal with one of the worst travel nightmares in recent memory, as 250 ended up stuck on the aircraft for about 12 hours last weekend at an airport in Newfoundland, Canada, due to a medical emergency after taking off from Newark.

A confluence of factors, some beyond the airline’s control, led to the disaster after the 777 was diverted Saturday night, but then after the passenger was removed, Flight 179 couldn’t take off because one of the plane’s doors became stuck, frozen by the bitter subzero cold, and wouldn’t shut properly.

But passengers couldn’t get off in a foreign country without clearing customs, and because it was around 9:30 p.m. local time Saturday, there were no customs officials available.

United had to scramble to get a rescue plane and crew, but this was amid the big storm in the Midwest and Northeast over the weekend, further complicating things.

At least the plane had heat, but there was no food available but snacks.

Finally, after about 11 hours, Canadian border authorities arrived and some of the passengers could leave the plane and get some fresh air, albeit it was below zero, while Tim Hortons provided coffee and sandwiches.  The plane didn’t leave until around 3:30 p.m., 16 hours after landing, and that was to return to Newark.

United offered passengers full refunds and vouchers for meals and hotels, plus travel vouchers in the amount of $500 or 25,000 airline miles.

Having been on that flight before, I can’t imagine how pissed passengers would have been because of how it impacted all their plans, but there was one obvious question, ‘Why couldn’t the plane have been diverted back to Newark?  Or Boston? 

No word on the health of the sick passenger, though some on the flight said the crew worked hard to save a life.

--Billionaire Ken Griffin, CEO of Chicago-based Citadel, a giant hedge fund, paid $238 million for an under-construction New York penthouse on Central Park South, a high-profile building where rock star Sting is among those buying in.  The price is the highest ever paid for a U.S. home

According to Crain’s New York Business, Griffin has previously purchased homes valued at $762 million.  Plus, Griffin is buying the New York home as unfinished space.  He has a similarly priced property, including after he built it out, in Palm Beach, Fla.  So once Griffin builds out the Central Park South property, the value of his holdings will easily surpass $1 billion.

--Finally, amid some of the chaos, we do have an upcoming event worth mentioning.

McDonald’s is hosting a nationwide bacon bash and free bacon giveaway from 4 to 5 p.m. on Tuesday at participating locations nationwide to celebrate the pork’s arrival on three menu classics.

So January 29, you can get free bacon with any purchase, be it a Filet-O-Fish or apple pie.

Foreign Affairs         

Venezuela: Opposition leader Juan Guaido declared himself interim president on Wednesday, immediately winning the backing of Washington and many Latin American nations and prompting socialist leader President Nicolas Maduro, who has led the oil-rich nation since 2013 and is an ally of Russia and China, to sever diplomatic relations with Washington, giving U.S. diplomats there 72 hours to leave the country. Secretary of State Mike Pompeo said the U.S. had no plans to withdraw personnel (though non-essential personnel were sent home Thursday).

President Trump tweeted: “The citizens of Venezuela have suffered for too long at the hands of the illegitimate Maduro regime. Today, I have officially recognized the President of the Venezuelan National Assembly, Juan Guaido, as the Interim President of Venezuela.”

Britain was among the other nations to back Guaido, a spokesman for Prime Minister May saying: “The 2018 presidential election in Venezuela was neither free nor fair, so the regime’s basis for power is deeply flawed. We fully support the democratically elected National Assembly with Juan Guaido as its president.

“In relation to the U.S., we think it is totally unacceptable for Venezuela to cut off diplomatic ties.  The solution to this crisis lies in working to find a peaceful and diplomatic solution, not in expulsions.”

Russian lawmakers slammed what they called the United States’ interference in Venezuela’s affairs.  The head of the Federation Council’s Committee on Foreign Affairs, Senator Konstantin Kosachev, was quoted as saying, “All of current U.S. policy toward Venezuela, including Trump’s latest statements, are a direct and unceremonious interference in its internal affairs.”

Guaido told tens of thousands of Venezuelans in Caracas on Wednesday: “Today, on Jan. 23, in my status as National Assembly president before all powerful God, and my colleagues, I swear to formally assume the duties of national executive to achieve the end of usurpation, [form] a transitional government and [hold] free elections.

“I am not afraid, [rather] I fear for the people who are [living in] bad times,” Guaido proclaimed.

President Trump said in a statement: “The people of Venezuela have courageously spoken out against Maduro and his regime and demanded freedom and the rule of law.  I will continue to use the full weight of United States economic and diplomatic power to press for the restoration of Venezuelan democracy.”

Florida Republican Sen. Marco Rubio has clearly played a major role in convincing Trump to ratchet up pressure on Maduro, reminding him of the importance of the Cuban-American vote in presidential swing state Florida.

“The president’s instincts have always been to do the strongest possible action (against Venezuela) that doesn’t undermine the cohesion of this multilateral approach.”

Maduro said Wednesday: “Anyone can declare himself president, but it’s the Venezuelan people who elect him, not the gringo government,” Maduro branding Guaido a “puppet” of U.S. “imperialism.”

Last month, Maduro said Venezuela and “brother country” Russia had signed a $6 billion investment deal in Venezuela’s oil and gold sectors.

Turkish President Erdogan offered support for Maduro, a spokesman for Erdogan tweeting “Turkey will maintain its principled stance against all coup attempts.”

Guaido then said at week’s end he would consider an amnesty for Maduro if he cedes power.  Guaido said he was reaching out to all sectors including the military to end the crisis.

But so far, Maduro retains the crucial support of the army.  Thursday, the nation’s generals declared their loyalty to Maduro in a news conference and said the opposition’s effort to replace him amounted to an attempted coup.

Russia warned Thursday that any military action on the part of the United States would trigger a catastrophic scenario, Interfax news agency citing the deputy foreign minister, Sergei Ryabkov.

The U.S., at week’s end, and more than a dozen Latin American countries, Canada and the UK have backed Guaido, but aside from Russia, China and Turkey, Mexico, and its new leftist president, is among those offering support for Maduro, or at least ‘recognition.’

Secretary of State Pompeo has requested a UN Security Council meeting for tomorrow, Saturday.  At a meeting of the Organization of American States (OAS) on Thursday, the secretary described Maduro’s government as “morally bankrupt” and “undemocratic to the core.”

Guaido is in hiding, supposedly in Caracas, and there are fears for his safety.

Roger Noriega, former U.S. assistant secretary of state for the Western Hemisphere under President George W. Bush, told Reuters, “The real issue that keeps me up at night is what do we do if Maduro manages to hold on? What do we do if there is a bloody crackdown?”

And there is a late story tonight, first from Reuters, that private military contractors from Russia, the so-called “Wagner group,” have been flown into Venezuela to beef up security for Maduro, the Kremlin having vowed to stand by him.  The estimate is up to 400, though some have told Reuters it’s smaller.

I would just add that the Wagner group’s members – mostly former service personnel – fought in support of Russian forces in Syria and Ukraine, and in Syria, the U.S. blew them away!  Killed an estimated 200 last summer.  [U-S-A!  sorry....]

Seriously, the Wagner group is out of a “24” plot line...also think Blackwater, which as you’ll recall had problems in Iraq as a U.S. contractor.

North Korea: South Korean Foreign Minister Kang Kyung-wha said at the World Economic Forum in Davos that North Korea must make concrete pledges toward curbing its nuclear weapons program, such as dismantling its main nuclear complex and allowing international inspections to confirm the process, when Kim Jong Un and President Donald Trump meet next month.

Kang said: “The (North Korean) leader has promised to his people many times that ‘I’m going to take this country towards economic development.’  He has to deliver that, and he’s not going to get the kind of significant assistance unless he takes concrete steps toward denuclearization and somehow eases the sanctions regime.  Given the strong political will on the part of the top leaders of the two sides... I think we will see concrete results.”

President Trump tweeted Thursday: “The Fake News Media loves saying ‘so little happened at my first summit with Kim Jong Un.’ Wrong!  After 40 years of doing nothing with North Korea but being taken to the cleaners, & with a major war ready to start, in a short 15 months, relationships built, hostages & remains....

“....back home where they belong, no more Rockets or M’s being fired over Japan or anywhere else and, most importantly, no Nuclear Testing. This is more than has ever been accomplished with North Korea, and the Fake News knows it.  I expect another good meeting soon, much potential!”

Kim Jong Un, as reported by state media on Thursday, ordered working-level preparations for his meeting with Trump, and that he “will believe” in Trump’s “positive way of thinking.”

Kim also expressed “large satisfaction” at receiving a “great” letter from Trump and a briefing about the results of the negotiations from the North Korean delegation that visited Washington last week but did not elaborate.

The site of a late February summit still has yet to be announced, but most believe it will be Vietnam.

Kim pledged at the first summit to work towards “complete denuclearization of the Korean peninsula,” but implementation of the vague commitments has gone nowhere, as the Pentagon and various intelligence authorities and think tanks expose an expanding nuclear and weapons program, not a reduction.

Researchers disclosed another secret ballistic missile base in North Korea this week, one of an estimated 20 that the communist state has not declared.

The base, called Sino-ri, was revealed in a report released Monday by the Center for  Strategic and International Studies (CSIS), a Washington, D.C.-based think tank.

According to CSIS, the location, 132 miles from the DMZ, provides “an operational-level nuclear or conventional first strike capability against targets located both throughout the Korean Peninsula and in most of Japan.”

CSIS reported on the existence of 13 of the 20 undeclared missile bases in November.  Sino-ri is one of the oldest in existence and was used for the first deployments of Pyongyang’s Scud missiles and its Nodong medium-range ballistic missile.

One more.  A study conducted by the Middlebury Institute of International Studies in the U.S. has concluded that North Korea is rapidly developing its biological weapons program, with intelligence assessments identifying a sharp increase in internet searches originating in North Korea for “advanced gene and germ research.”

Pyongyang is accessing the work of foreign researchers to develop its existing biotechnology skills and construct the equipment to produce more biological weapons, as first reported by the New York Times.

So while the Trump administration is pushing North Korea on its nuclear weapons and related ballistic missile programs, it is making no demands that Pyongyang come clean on its suspected stockpiles of thousands of tons of biological agents.

Among the most lethal agents in the North’s biological arsenal is likely to be small pox, which kills one-third of the people who contract the disease.

As reported by the Daily Telegraph, “a number of North Korean defectors, including former members of the military, have claimed during questioning that the North tests biological and chemical weapons on citizens who have been sentenced to death.”

China: Editorial / The Economist

“Taiwan ‘must and will’ be reunited with the mainland, declared Xi Jinping, China’s president, on January 2nd. Chinese leaders have been saying such things since the retreating Nationalists separated the island from the rest of the country after losing the civil war to the Communists in 1949. But Mr. Xi has done more than just talk: he has sent bombers and warships to circle the island, held live-fire drills in the narrow Taiwan Strait and, Taiwanese generals say, instructed the People’s Liberation Army (PLA) to be capable of seizing Taiwan by force by next year.  Back in 1996, the most recent cross-strait crisis, China’s military spending was barely twice Taiwan’s. Now it is 15 times greater. That has left Taiwanese leaders rushing to rethink their defenses....

“Although America does not have diplomatic relations with Taiwan, it maintains close ties. Some 3,500-4,000 Pentagon officials travel to Taiwan every year, an average of more than ten per day.  Arms sales have totaled more than $15bn since 2010.  The relationship is deepening in some respects. Arms transfers were previously bundled into big packages that reliably aroused Chinese anger; they are now growing more routine.

“The administration of Donald Trump is stacked with senior officials who know Taiwan well and sympathize with its plight.  Mr. Trump delighted Taiwan’s leaders by holding a taboo-busting phone call with (President Tsai Ing-wen) when he was president-elect.  Last year he also signed the Taiwan Travel Act, which encourages senior American officials to visit the island and vice versa.  If arms sales help bolster America’s commitment to Taiwan, so much the better.

“Though Mr. Xi clearly feels obliged to continue to hound Taiwan about reunification, he has thus far avoided laying down a firm timeline. The relatively slow growth of China’s amphibious fleet casts doubt on the idea that the PLA is working flat out to be ready to invade. Nor has it been conducting big amphibious exercises. There is still time for Taiwan to sharpen its quills.”

On a totally different topic, Chinese authorities are holding scientist He Jiankui wholly responsible for creating the world’s first gene-edited babies.

He had announced their birth in November, after which the authorities announced an investigation into the mater.

A team of investigators then told the official Xinhua news agency on Monday that a preliminary probe had concluded that He had “organized a project team that included foreign staff, which intentionally avoided surveillance and used technology of uncertain safety and effectiveness to perform human embryo gene-editing activity with the purpose of reproduction, which is officially banned in the country.”

Between March 2017 and November 2018, He forged ethical review papers and recruited eight couples to participate in his experiment, resulting in two pregnancies.

One of the mothers gave birth to twins nicknamed “Lulu” and “Nana” the investigators said.  Another woman is still carrying a gene-edited fetus.

The Guangdong government is keeping the twins under observation, while He and his staff would be punished according to the law, penalties for which I’m not sure.

An expert in the field, Shao Feng, from the Chinese Academy of Sciences, told the Beijing Youth Daily last weekend in an interview, that he is concerned about potential health risks the children will face as well as the incident’s effect on the human race.

“Once the gate of gene-editing is wide open, the human race will be finished,” he said.  “The technology is strong but the terrifying fact is that anyone slightly trained in a lab can perform it.”

He has not been seen in public since he announced the births at the Second International Summit on Human Genome Editing in Hong Kong in November, stoking obvious rumors he is being detained under house arrest, or worse.  He’s employer, Shenzhen-based Southern University of Science and Technology, denies talk of detention.  [South China Morning Post]

Lastly, China reported that new births declined by 2 million last year, pushing the country’s population growth rate to its lowest level since 1962, the time of the disastrous famine.

The government has estimated that China’s population will peak in 2029 at around 1.44 billion.

Syria / Iran / Israel: Twenty-one people were killed in extensive Israeli strikes on Syria overnight Sunday, according to the watchdog group, the Syrian Observatory for Human Rights, with at least 12 of the victims members of Iran’s Revolutionary Guards. Six killed were Syrian soldiers and the rest were “foreigners” (militiamen).

The Israeli military admitted it struck Syrian and Iranian targets, including sites of the Guards’ Quds Force, in response to a surface-to-surface missile fired toward northern Israel a day earlier.  Israel said the targets included munition storage facilities, an intelligence site and a military training camp, as well as a number of Syrian air defense batteries.

Israeli Prime Minister Benjamin Netanyahu said in a speech: “We are operating both against Iran and against the Syrian forces that are abetting the Iranian aggression. We will strike at anyone who tried to harm us. Whoever threatens to eliminate us, bears full responsibility.”

Syria claims its air defenses destroyed more than 30 cruise missiles ground bombs during the Israeli strikes.

Russia has warned Israel to stop striking Syria.

In Tehran, air force chief Brigadier General Aziz Nasirzadeh said Iran was “fully ready and impatient to confront the Zionist regime and eliminate it from the earth,” according to a website supervised by state television.

Syrian President Assad has said Iranian forces are welcome to stay in Syria after years of military victories that have brought most of the country back under his control, though two large enclaves are still held by other forces.

Separately, Turkey said it has the capacity to create a “safe zone” in Syria on its own but will not exclude the United States, Russia or others if they want to cooperate, as announced by Turkish Foreign Minister Mevlut Cavusoglu, which I find ironic personally because I have long said that President Obama’s 2012 refusal to work with Turkey on a no-fly zone then in Syria will prove to have been one of the worst decisions in the history of this century, because of the multiple consequences of the move.  [500,000 killed since, 9 million displaced, the rise of ISIS, and the immigration crisis in Europe.]

A safe zone today is far too late, but the topic was discussed in a call between Turkish President Erdogan and President Trump after the latter announced he was withdrawing all 2,000 U.S. troops from Syria.

Cavusoglu said this week that nothing was certain about the planned safe zone, but that Ankara and Washington’s views were in line.

Afghanistan: There were conflicting reports on the lethality of a Taliban attack on Afghan security forces on Monday, with the death toll ranging from 45 to 126 in various stories, a senior defense ministry official telling Reuters the toll was 126.  A provincial official also said the toll was over 100, the Taliban claiming responsibility for the attack on a military compound in central Maidan Wardak province.

Yet hours after word of the attack, the Taliban was meeting U.S. special envoy Zalmay Khalilzad in Qatar, days after threatening to pull out of Afghan peace talks.

“Talks between Taliban leaders and U.S. officials have started today in Qatar,” a Taliban spokesman said.  According to Reuters, a source close to the talks said members of the Taliban’s political office met with Khalilzad, adding: “They will hopefully finalize a timeline and mechanism of the withdrawal of foreign troops from Afghanistan.”

If you’re thinking, ‘WTF?’ you’re not alone. Putting the two stories together, you can only say  ‘this is nuts.’

I saw a story later in the week where the Taliban is offering ‘assurances’ that it will not let outside extremist groups develop bases in Afghanistan, referring to the likes of ISIS and al-Qaeda. 

Congo: The constitutional court confirmed Felix Tshisekedi’s presidential election win on Sunday, dismissing a challenge from another opposition leader who had accused him and the ruling party of manipulating the result.

Second-place Martin Fayulu had rejected the provisional tally for Democratic Republic of Congo’s election released last week, saying it was the product of a secret deal between Tshisekedi and outgoing President Joseph Kabila to cheat him out of a clear win of more than 60 percent.  Kabila and Tshisekedi deny this.

The constitutional court is seen as beholden to Kabila, who has been in power since his father was assassinated in 2001.

Random Musings

--Presidential tracking polls....

Gallup: 37% approval, 59% disapproval, 88% Republicans, 31% Independents (Jan. 15).
Rasmussen:  45% approval, 54% disapproval.

In the above-noted Fox News poll, President Trump receives a 43% overall approval rating, down three points from 46% in December (43% the lowest since February 2018).  54% disapprove of Trump’s job performance. 

The approval rating for Trump among ‘men’ at 45% is at or near a record low, while approval among Republican women has fallen to 83% from 93%.

41% rate the economy positively (excellent or good), but this is down from 47% last month – and the lowest mark since August 2017.  49% approve of Trump’s handling of the economy vs. 46% who disapprove.  Only 38% approve of his handling of foreign policy, 53% disapprove.

In the above-mentioned CBS News survey, Trump’s approval rating was just 36%, 59% disapproving of the job he is doing.

--California Democratic Sen. Kamala Harris became the latest to declare her candidacy for president on Monday, joining fellow senators Elizabeth Warren of Massachusetts and Kirsten Gillibrand of New York.  Representative Tulsi Gabbard, a Hawaii Democrat, has also said she is running, and more women will no doubt enter the race in the coming weeks.

Compared to the others in the above list, I see Sen. Harris as a survivor beyond Iowa and New Hampshire.

--In another classic example of “wait 24 hours,” this week we had the following.

Editorial / Wall Street Journal

“Of the most culturally deplorable boxes one can check in progressive America in 2019, the boys of Covington Catholic High School have most of them: white, male, Christian, attendees at the annual March for Life in Washington, and wearers of MAGA hats.  What’s not to dislike?  So when four minutes of video footage emerged online this weekend showing the students appearing to harass a Native American Vietnam veteran named Nathan Phillips, America’s media and cultural elite leapt to judgment.

“A short video clip of student Nick Sandman supposedly ‘smirking’ as Mr. Phillips banged his drum in the student’s face went viral, and instantly the boys of Covington Catholic in Kentucky were branded racists....

“Meanwhile, mainstream news outlets published misleading accounts of what happened based on incomplete information.  And pundits on the right and left rushed to demonstrate their own virtue by trashing high school students as somehow symptomatic of America’s cultural rot in the Age of Trump.

“Only it turns out there was a much longer video, nearly two hours, showing that almost everything first reported about the confrontation was false, or at least much more complicated.  The boys had been taunted by a group of Black Hebrew Israelites, who shouted racist and homophobic slurs. Far from the boys confronting Mr. Phillips, he confronted them as they were waiting near the Lincoln Memorial for their bus.

“It also turns out that Mr. Phillips is not the Vietnam veteran he was reported to be in most stories.  On Tuesday the Washington Post offered a correction, noting that while Mr. Phillips served in the Marines from 1972 to 1976, he was ‘never deployed to Vietnam.’

“Some of the students did respond to Mr. Phillips by doing the Tomahawk Chop, and it would have been better had they all walked away.  But on the whole these teenagers were calm amid the provocations and far less incendiary than the adults who taunted them and the progressive high priests who denounced them....

“Many of these early critics have now apologized or walked back their initial condemnation.  But these social injustices perpetrated on social media are not so easily redressed. Covington Catholic was closed Tuesday for security reasons.

“Most of those who so eagerly maligned these boys will face no lasting consequences, while the boys themselves will always have to wonder, when they are turned down for a job or a school, whether someone had Googled their name and found only half this story.  This is an ugly moment in America, all right, but there are few things uglier than a righteous leftist mob.”

John Podhoretz / New York Post

“Can social media be saved?  We had better hope so.

“Over the past week, we have seen a virtual lynch mob hunt a group of high schoolers almost exclusively on the basis of truncated viral footage – and there has actually been an ongoing argument about whether what has happened to them is fair.

“The fact that there is even a discussion about this is a mark of how social media is corrupting our rational judgment.

“What happened to the boys from Covington Catholic High School wasn’t, isn’t and wound never be fair. They were sentenced to national contumely on the basis of a single minute of smartphone video taken in the midst of a two-hour series of verbal confrontations during the March for Life in Washington.

“Their pro-Trump hats and a freeze-framed ‘smirk’ were all the supporting evidence necessary to make the case that they were guilty of a monstrous – offense against the Native American in the footage who was playing the drum.

“Elementary fairness requires that people know the facts of a case before they pass judgment, and any minimal understanding of how things work in America today should ensure that people know there is no way to get the facts of the case in the five seconds it takes someone to read a tweet.

“We are supposed to be sophisticated about media and its uses in 2019. And we are supposed to know how easily we can be misled, either by design or unconscious biases.  This should be true particularly of the ‘opinion leaders’ who elevated the story to mainstream interest.

“Opinion leaders are supposed to know about the risks of selective editing.  They should know that a freeze-framed ‘smirk’ is an entirely evanescent expression, one of 24 frames in a second of conventional motion-picture stock – and that when you read meaning into it, you are revealing more about your own obsessions than you are interpreting a real-world phenomenon....

“We’re supposed to know about all this, but either we don’t or we just don’t care. The seduction of immediacy is just too great. So is the fear of remaining quiet in the face of something egregious.

“That is why many conservatives who might have been expected to line up in defense of pro-life Catholics went the other way and joined those in condemnation as soon as they could – not only because their outrage was real but also because they didn’t want to be seen as ignoring what appeared to be an outrageous moment of social misbehavior with the potential of tarring all pro-life Catholics.

“And, just to pile irony upon irony, after these conservatives apologized soulfully for their rush to judgment, others condemned them for having rushed to the side of the ‘libs.’

“Mobs have formed since humans made societies. But there is something entirely new about a social media mob, and that is the fact that joining it happens at no cost whatsoever.  You don’t have to get out of your house and go somewhere, pitchfork in hand.

“You don’t have to put yourself at personal physical risk in your confrontation with someone else....

“You can enjoy the tiny dopamine rush that comes not only from venting anger but from the performative aspect of that anger as it is expressed on social media – safe in the knowledge that you are far from any consequence the public expression of your anger might provoke....

“I love Twitter. But I also loved cigarettes.  And the second-hand smoke social media produce is making our public life diseased. It also does damage to its users; it makes most of us meaner and uglier and more hostile, and is therefore clearly a bad thing spiritually.

“I have no idea how Americans will find the restraint we need to limit the social media damage other than a revolution in manners that will encompass the whole society and not just the computer-networked part.  But we have to.  We have to.”

David Brooks / New York Times

“Within living memory, political polarization had at least something to do with issues, but in the age of social media it’s almost entirely about social type.  It’s about finding and spreading the viral soap operas that are supposed to reveal the dark hearts of those who are in the opposite social type from your own.

“It’s about finding images that confirm your negative stereotypes about people you don’t know. It’s about reducing a complex human life into one viral moment and then banishing him to oblivion.

“You don’t have to read social theory on this phenomenon; just look at the fracas surrounding the Covington Catholic High School boys.

“For those of you vacationing on Mars this past weekend, a video went viral showing a group of boys, many of them in MAGA hats, surrounding an older Native American man who was banging a drum....

“Many news organizations ran one (of Nathan Phillips’ two initial accounts).  Before you judge the reporters too harshly, it’s important to remember that these days the social media tail wags the mainstream media dog.  If you want your story to be well placed and if you want to be professional rewarded, you have to generate page views – you have to incite social media. The way to do that is to reinforce the prejudices of your readers.

“In this one episode, you had a gentle, 64-year-old Native American man being swarmed by white (boo!), male (boo!), preppy (double boo!) Trump supporters (infinite boo!).  If you are trying to rub the pleasure centers of a liberal audience, this is truly a story too good to check.

“Saturday was a day of liberal vindication. See! This is what those people do! This is who they really are....

“The institutions in charge of serving the boys did what institutions always do in the face of a social media mob. They cratered. The school and archdiocese apologized. The mayor of Covington denounced them.

“On Sunday several longer videos emerged showing that most of what Phillips had told the media was inaccurate.  The incident actually started when members of the hate cult – the Black Hebrew Israelites – started hurling racist and homophobic slurs at the boys.

“The Covington boys eventually asked their chaperone if they could do their school cheers.  As they were doing that Phillips walked into the middle of their circle and banged his drum in the face of one of the boys.  Everybody was suddenly confused.  Students shouted, ‘What is going on?’  Then there was confusion and discomfort, smirking and verbal jousting.

“Everybody involved in the incident was operating in an emotional and moral context that has been set by the viciousness of the Black Hebrew Israelites.  Of the major players, the boys’ behavior is probably the least egregious.

“So Sunday was a day of conservative vindication. See? This is what those liberals do! They rush to judgment, dehumanize and seek to expunge us from national life.  The main boy wrote a public letter that was consistent with the visual evidence and that was actually quite humane.

“In this case the facts happened to support the right-wing tribe. But that’s not the point. The crucial thing is that the nation’s culture is now enmeshed in a new technology that we don’t yet know how to control....

“The Covington case was such a blatant rush to judgment – it was powered by such crude prejudice and social stereotyping – I’m hoping it will be an important pivot point.  I’m hoping that at least a few people start thinking about norms of how decent people should behave on these platforms.

“It’s hard to believe that people are going to continue forever on platforms where they are so cruel to one another.  It’s hard to believe that people are going to be content, year after year, to distort their own personalities in service to a platform, making themselves humorless, semi-blind, joyless and grim.”

--Fred Barnes / Wall Street Journal

“What keeps Democrats in the mood for resistance after two years?  Mr. Trump has become a fixation.  No one arouses their opposition the way he does. Democrats are like those Trump-loathing columnists who can’t write about anyone but the president. They’re obsessed with Mr. Trump.

“The president fuels their mania daily. So does the media.  It seemed excessive when Fox News began running his speeches live during the 2016 campaign. But the ratings were great and other networks began showing much more of him, including the speeches.  Mr. Trump had seized center stage and never relinquished it.  Democrats continue to fume.

“Mr. Trump does things to keep the media, and thus Democrats, on his case.  He fights back.  He counterpunches harder than he’s been hit.  Speaker Nancy Pelosi should have known she couldn’t get away with postponing his State of the Union  address.  Yet his counterpunch caught her by surprise....

“Mr. Trump stirs controversy on purpose and for the same reason he fights back and ridicules those he dislikes: He wants attention.  At an early campaign event, he claimed John McCain wasn’t a hero in Vietnam because he was imprisoned in Hanoi after his plane was shot down. The remark got enormous press play.

“Democrats are as appalled by Mr. Trump as ever and remain committed to the resistance. And now they believe they have him in their clutches. They won the House in the midterm elections and intend to drop subpoenas like confetti.  They are eager to force Trump officials to testify on Capitol Hill.

“In Washington in 2019, hearings are likely to dominate the news.  They will cover much of the Trump territory that special counsel Robert Mueller has investigated, plus a whole lot more.  But Mr. Mueller does his work in private and House hearings are usually public.  This means Democrats are likely to be in attack mode....

“With party leaders focused on Mr. Trump, young progressives like Rep. Alexandria Ocasio-Cortez have taken on the task of making the party more left-wing.  She ‘has had the uncommon ability for a first-year member of Congress to push the debate inside the Democratic party to the left,’ the New York Times reported last week.

“Ms. Ocasio-Cortez’s talk of a 70% marginal tax rate on the highest incomes, a ‘Green New Deal’ to replace fossil fuels within 10 years, and abolition of the Immigration and Customs Enforcement agency has attracted media attention and favorable comments from Democratic presidential candidates.  Yet these are radical ideas unlikely to help the party win in 2020.

“Older Democrats haven’t stopped Ms. Ocasio-Cortez and her progressives allies from becoming a significant force in shaping their party’s future. They’ve been too busy resisting Mr. Trump.”

--The number of Americans without health insurance jumped to its highest level in four years, according to a Gallup report released Wednesday. 

The percentage of adults without health insurance climbed to 13.7% in the fourth quarter of 2018, from 12.4% a year earlier and 10.9% in 2016, Gallup’s data based on self-reported responses from tens of thousands of adults.

Per the report, about seven million more Americans lacked health insurance in the fourth quarter compared with the 2016 period, with women, low-income people and younger adults seeing the greatest rise in the uninsured rate, the poll found.

So this pits Democrats who say the White House is sabotaging the Affordable Care Act against Republicans who blame high premiums under the law for people out of coverage.

Related to the above, in a new survey from the nonpartisan Kaiser Family Foundation on the popularity of Medicare for all, support soars when people hear it would guarantee health insurance as a right.

But it becomes a political loser if people think it would lead to treatment delays.

Even a majority of Republicans surveyed support opening up Medicare and Medicaid – designed for the elderly and the poor – to some who wouldn’t otherwise qualify.

And 56 percent, as surveyed by Kaiser, back the idea of all Americans getting insurance from a single government plan.  But support shoots up to 71 percent when respondents were told Medicare for all could “guarantee health insurance as a right for all Americans.”  But then levels of support flipped when asked their views if the proposal would “lead to delays in people getting some medical tests and treatments.”

--Alejandro Bermudez / Wall Street Journal

“Father John Jenkins, president of the University of Notre Dame, announced Sunday that the school would cover a dozen murals depicting the life of Christopher Columbus.  ‘The murals’ depiction of Columbus as beneficent explorer and friend of the native peoples hides from view the darker side of the story,’ he asserted in a letter. While this decision may give the university a brief respite from its critics, it will never be enough. Columbus may be the momentary object of hatred, but the real target is the Catholic faith itself....

“In his letter, Father Jenkins mentioned Martin Luther King Jr.   Apparently he was unaware of the irony: Tearing down Columbus monuments has been the work of hateful fringe groups in this country for decades. The Ku Klux Klan pioneered the practice, and antifa has taken up the mantle in recent years. This is the company Notre Dame chooses to keep.

“As Catholic universities across the U.S. have become more secular, many hoped that they would at least remain safe for Catholic ideas. But this incident raises a troubling question: If murals that portray Columbus bringing the faith to this hemisphere are not welcome at a Catholic university, what part of Catholic identity is?”

I watched Father Jenkins on Martha MacCallum’s Fox News program on Thursday and was kind of miffed, as a Catholic myself.  Jenkins not only had a wormy response to the issue of covering up the murals, but at one point he said, “As a Catholic we’re interested in the full truth.”

Not the best statement to make in this time of self-inflicted Church turmoil, fueled by outright lies on the part of Church officials.

--Finally, we note the passing of humorist Russell Baker, 93, who together with syndicated columnist Art Buchwald (who died in 2007) provided generations of Americans with the lighter side of the news of the day, or our foibles.

The two were part of a simpler time in many respects.  We all actually read real newspapers, and the likes of Baker and Buchwald appeared in hundreds of them.

Baker’s best-selling autobiography, “Growing Up,” was compared by some as one of the more enduring recollections of American boyhood (in his case backwoods Virginia), Baker winning a Pulitzer Prize for it (one of two he received).

Baker also served as the host of “Masterpiece Theater” on PBS from 1993 to 2004, having succeeded Alistair Cooke.

---

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

God bless America.

---

Gold $1308
Oil $53.55

Returns for the week 1/21-1/25

Dow Jones  +0.1%  [24737]
S&P 500  -0.2%  [2664]
S&P MidCap  +0.1%
Russell 2000  +0.02%
Nasdaq  +0.1%  [7164]

Returns for the period 1/1/19-1/25/19

Dow Jones  +6.0%
S&P 500  +6.3%
S&P MidCap  +9.4%
Russell 2000  +10.0%
Nasdaq  +8.0%

Bulls 45.4
Bears
21.3

Have a great week.

Brian Trumbore

 



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Week in Review

01/26/2019

For the week 1/21-1/25

[Posted 11:30 PM ET, Friday]

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

Edition 1,033

Trump World

Yup, just another week where I can pull out my adage “wait 24 hours.”  For 20 years I have been touting it, noting how in your personal life it is as applicable as in the world of Washington or geopolitics.

I mean it.  On the personal side, trust me, if you get ticked off at someone for something they said, or for ignoring something you asked for, “wait 24 hours.”  Invariably, 95% of the time the issue resolves itself without you having been a jerk.

And when it comes to talking about Donald Trump, or Venezuela this week, often it’s important to just wait a day or two.

Of course in this game of mine, I’ve long told you the nightmare for me is a breaking story on a Friday.  But today, there is no such need to wait.  It’s all pretty straight forward.

This afternoon, watching our leader address the nation from the White House Rose Garden, I felt as if I was watching an emperor with no clothes.  The Wizard of Oz, exposed as a charlatan by Toto.  It was kind of pathetic.

President Trump caved on the battle over funding for the Wall and agreed to reopen the federal government after 800,000 federal workers, and an estimated 1.2 million contractors, were needlessly forced to go without pay for 35 days.  There is no doubt, at least in my mind, that the news this morning that LaGuardia Airport in New York, a major hub, was forced to severely restrict flights into and out of the airport in a move related to a shortage of air-traffic controllers, that then rippled throughout the already fragile air transportation system, played a deciding role in the president’s move.

LaGuardia was the dreaded “tipping point.”  And it was a signal to President Trump, and congressional Republicans, that the ‘real’ crisis was at hand.

So the government reopens for three weeks, federal workers receiving their back pay (contractors don’t), and in the interim, Trump not having received a dollar for his wall, the pressure is now on Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi to get their newly-elected radical left to fall behind leadership as it works out a viable compromise.  This won’t be easy for the two, especially Pelosi, as she has to deal with the likes of AOC, Ms. Ocasio-Cortez.

At the same time, should a probable House-Senate conference committee of representative not reach an agreement on border security funding by Feb. 15, President Trump will be under immense pressure from Rush Limbaugh, Ann Coulter, Sean Hannity and others to declare a national emergency and proceed with the wall with other funding, while facing a court fight on the constitutionality of it all.

Trump tweeted early in the evening, after watching the initial hours of devastating news coverage:

“I wish people would read or listen to my words on the Border Wall. This was in no way a concession.  It was taking care of millions of people who were getting hurt badly by the Shutdown with the understanding that in 21 days, if no deal is done, it’s off to the races!”

Ah, Wizard?  Weeks ago, Sen. Lindsey Graham gave you this exact same deal that would have prevented a ton of pain, though waiting no doubt cost you a critical one or two percent in some swing states in 2020.

But I digress....

Rival proposals to end the partial government shutdown had failed in the Senate on Thursday, prolonging the impasse, but the actions helped open the door for Trump and congressional leaders to try to find a way to end the shutdown and thus we reached Friday’s temporary solution.  Hundreds of thousands of federal employees missed a second paycheck today.

There is also no doubt that some of the statements made from the White House and by Cabinet members yesterday helped lead to the end of the debacle.

President Trump said Thursday that community businesses including grocery stores and banks will likely “work along” with federal employees impacted by the partial shutdown, Trump making the comments after Commerce Secretary Wilbur Ross, in an unbelievably inept performance on CNBC Thursday morning, said impacted workers should take out a loan rather than use food banks to cope with the loss of income during the shutdown.

Trump then said:

“Perhaps he should have said it differently.  Local people know who they are, (where) they go for groceries and everything else. ...They will work along.  I know banks are working along. ...And that’s what happens in times like this. They know the people; they’ve been dealing with them for years. And they work along. The grocery store – And I think that’s probably what Wilbur Ross meant.”

What planet are these ‘leaders’ living on?

According to a Fox News Poll early in the week, 43 percent now favor a border wall, up from 39 percent in September, while the percentage who oppose, 51, is unchanged.

The poll also found 51 percent believed the president is responsible for the shutdown, while 34 percent blamed congressional Democrats, 3 percent blamed congressional Republicans, and 9 percent blamed all of the above.

But 75 percent considered the shutdown an emergency or major problem, far more than the 59 percent who feel the same about the situation at the border.  74 percent of Republicans described the shutdown as an emergency or major problem.

A CBS News Poll, though, found 71 percent saying the border wall was not worth the government shutdown, 28 percent saying it was.

66 percent agree to a budget without wall funding, while 31 percent refuse a budget without funding for a wall.

47 percent said Speaker Pelosi had handled negotiations during the shutdown better, compared to 35 percent who said Trump had.

--Daniel Henninger / Wall Street Journal...written prior to today’s actions...

“So long as he is president, Donald Trump will have two things going for him.

“The first is the loony left, which diminished the Martin Luther King holiday with dips in the fever swamps.

“Bernie Sanders bellowed: ‘We now have a president of the United States who is a racist.’ Rep. Hakeem Jeffries, the House Democratic Caucus Chairman, called Mr. Trump ‘the grand wizard of 1600 Pennsylvania Avenue.’  A Hollywood actress said MAGA hats are ‘the new white hood.’  This self-indulgent political narcissism is why average voters can’t warm to progressivism.

“The other thing Mr. Trump has going for him is that no one expects much of him.  Given a choice, he’ll take the low road.  Imagine how electrifying it would be if he ended the government shutdown by unexpectedly taking the high road.  It could still happen.

“During one of his presidential campaign rallies, Mr. Trump riffed about building a wall at the border, and the crowd roared approval. With a preternatural sense of pay dirt, Mr. Trump has stuck with the wall ever since.  His early travel ban was a ‘wall’ issue.

“Democrats instantly translated the wall into anti-immigrant sentiment and nativism, and not without reason.  Mr. Trump hasn’t made much effort to mitigate this charge.

“Until Saturday.  Included in the deal the president offered Democrats to end the government shutdown was a three-year extension of the Dreamers’ legal status, but more intriguing, a commitment to hold weekly meetings at the White House on immigration.

“House Speaker Nancy Pelosi dismissed this offer as a ‘non-starter’ before Mr. Trump delivered his talk.

“Amid this increasingly bitter standoff, something remarkable also happened Saturday: Mr. Trump held a naturalization ceremony for new American citizens in the Oval Office.  You’d have to possess Chuck Schumer’s unshakable impassivity not to have been moved by this ritual passage into American citizenship.

“Democrats have made a strategic decision to typecast Mr. Trump and anyone who supports him as hostile to immigration and therefore racist, in the expectation that some voters will recoil.  Left unanswered, it might work.

“Is some percentage of the Trump base irreconcilably nativist?  No doubt some are. But what happened during that Oval Office naturalization ceremony gets us closer to the real immigration issue.

“The difficulty and anguish over immigration for Americans across the political spectrum isn’t about keeping people out of the country but what happens to them after they arrive.  The issue is assimilation.  The issue is the idea of being an American.

“That is hardly a new thought. But it is also hard to overstate the intensity of the political challenge the progressive left is making today against widely held assumptions about Americans’ common heritage....

“New immigrants to the U.S. have become bystanders and casualties in a larger argument about the nation’s identity, to which the border wall is a long footnote.

“Here’s one of the possible questions on the naturalization civics test: ‘What do we show loyalty to when we say the Pledge of Allegiance?’ Answer: ‘the United States and the flag.’

“Put that question to Kamala Harris, Julian Castro, Beto O’Rourke or Elizabeth Warren and what you’ll get is endless qualifying ‘buts’ and guilt-tripping bows.  The party’s left would simply delete the Pledge question.

“Against this pressure, Donald Trump may be the one person able to make a national argument for a more traditional, less fractured, more optimistic idea of America’s appropriate identity.  That’s what most of his base and most of the country really want – the renewal of the melting pot as an aspirational goal; a reassertion of who we are, not a death struggle over deportations, bans and family separations. That’s the real meaning of the MAGA hats, which its wearers would explain if anyone bothered to ask.

“Mr. Trump saw what this idea looked like at that naturalization ceremony.  He moved to higher ground with Saturday’s three-year DACA extension. With Mrs. Pelosi stuck on ‘no,’ Mr. Trump could take the immigration issue away from the Democrats forever by proposing permanent legal status for the Dreamers, plus a promise to attend their naturalization ceremonies after he retires from office.

“The State of the Union is always a good venue for taking the high road.  Even from the steps of the U.S. Capitol.”

Trumpets

--Federal agents arrested Roger Stone, a longtime adviser to Donald Trump, this morning on charges that he had lied to investigators examining Russian interference in the 2016 election.

Special counsel Robert Mueller revealed the charges, including counts of obstruction and witness tampering, after FBI agents stormed Stone’s Florida home, perhaps unnecessarily, before sunrise.

Stone appeared in federal court today, proclaiming his innocence and vowing to fight the charges, saying outside the courthouse that he had been “falsely accused.”  But he also has to appear in D.C. district court on Tuesday.

The charges offer the first view from prosecutors of efforts by members of the Trump campaign to learn about WikiLeaks’ plans to release hacked documents that they believed would be damaging to challenger Hillary Clinton.  Prosecutors have said the hacks were carried out by a Russian intelligence service, adding one unnamed senior campaign official was “directed” to communicate with Stone about future releases of the stolen records.

Much more on this next time.

--The Senate Intelligence Committee on Thursday subpoenaed President Trump’s former lawyer Michael Cohen to appear before the panel, a day after Cohen postponed testimony before a House committee citing attacks by the president on his family.  [I told you two weeks ago this was a distinct possibility.]

Cohen, who was sentenced to three years in prison last month, is scheduled to begin serving his sentence on March 6.

--President Trump caved to Speaker Pelosi’s request to postpone the State of the Union Address scheduled for Jan. 29, though now we’ll see what the new date is with the shutdown over.  To me, next week is too soon, but Trump should go for Feb. 5.

--President Trump’s personal attorney, Rudolph Giuliani, attempted Monday to clean up comments he made over the weekend asserting that discussion about a potential Trump Tower in Moscow stretched as late as November 2016.

Monday, Giuliani said his comments were purely hypothetical and not based on any conversations with the president.  His statement Sunday, made on NBC’s “Meet the Press,” that Trump associates had continued negotiations about the real estate project deep into the 2016 campaign had again raised scrutiny in then-candidate Trump’s posture toward Moscow, including his call in July of that year for Russia to hack into Democratic candidate Hillary Clinton’s emails.

“My recent statements about discussions during the 2016 campaign between Michael Cohen and then-candidate Donald Trump about a potential Trump Moscow ‘project’ were hypothetical and not based on conversations I had with the President,” Giuliani said Monday.  “My comments did not represent the actual timing or circumstances of any such discussions.”

Giuliani had made a total fool of himself Sunday, rambling on how conversations throughout 2016 on the Moscow Tower project “could be up to as far as October, November.  Our answers cover until the election. So anytime during that period, they could’ve talked about it.”

In his plea deal, Cohen had admitted to lying to Congress when he said the Moscow project discussions ended in January 2016, when the negotiations continued through June of that year – a period during which Trump was campaigning vigorously and on his way to securing the GOP nomination.

--Press Secretary Sarah Huckabeee Sanders said the longstanding practice of holding White House press briefings could end up in the dustbin of journalism history.

“We’ll see what happens,” she told “Fox & Friends” on Wednesday when asked about their future after President Trump tweeted that he told her “not to bother” with them anymore.

“Look, we are in the business of getting information to the American people,” Sanders said.  “Not making stars out of people that want to become contributors on CNN, and that’s a lot of times what we see taking place in the briefing room.”

Sanders hasn’t given a briefing from the White House press room since Dec. 18, but I would agree that with a president who addresses reporters constantly, listening to her lies is hardly necessary.

--Trump tweets....

“ ‘BUILD A WALL AND CRIME WILL FALL!’ This is the new theme, for two years until the Wall is finished (under construction now), of the Republican Party.  Use it and pray!”

“To all of the great people who are working so hard for your Country and not getting paid I say, THANK YOU – YOU ARE GREAT PATRIOTS! We must now work together, after decades of abuse, to finally fix the Humanitarian, Criminal & Drug Crisis at our Border. WE WILL WIN BIG!”

“Greatest Witch Hunt in the History of our Country!  NO COLLUSION!  Border Coyotes, Drug Dealers and Human Traffickers are treated better.  Who alerted CNN to be there?”

“Never seen...Republicans so united on an issue as they are on the Humanitarian Crisis & Security on our Southern Border. If we create a Wall or Barrier which prevents Criminals and  Drugs from flowing into our Country, Crime will go down by record numbers!”

“Marist/NPR/PBS Poll shows President Trump’s approval rating among Latinos going to 50%, an increase in one year of 19%. Thank you, working hard!”

[Trump’s approval among blacks in this poll is still just 11%.]

“The reason Sarah Sanders does not go to the ‘podium’ much anymore is that the press covers her so rudely & inaccurately, in particular certain members of the press.  I told her not to bother, the word gets out anyway! Most will never cover us fairly & hence, the term, Fake News!”

“Looking like Nick Sandman & Covington Catholic students were treated unfairly with early judgements proving out  to be false – smeared by media.  Not good, but making big comeback!  ‘New footage shows that media was wrong about teen’s encounter with Native American.’ @TuckerCarlson”

“Many people are saying that the Mainstream Media will have a very hard time restoring credibility because of the way they have treated me over the past 3 years (including the election lead-up), as highlighted by the disgraceful Buzzfeed story & the even more disgraceful coverage!”

I don’t disagree with the above.

Wall Street and China Trade War

This was the week of the World Economic Forum in Davos, Switzerland, and whereas last year’s tone was among the most upbeat in years, helped along by synchronous global growth, rising markets and plentiful cash from ultra-loose monetary policy, the tone darkened this year, after 2018’s miserable equity performance across the globe, slowing growth, most notably in Europe and China, and tightening by the U.S. Federal Reserve.

The tone in Davos was set at the beginning when the International Monetary Fund released its 2019 global growth outlook and reduced its GDP forecast from 3.7% in October (3.9% in July) to 3.5%, though this is higher than 2016’s 3.2%.

The IMF cited the slowing in Europe, risk of a messy Brexit, slowdown in China and global trade tensions.

Growth in the eurozone is now estimated at 1.6% for 2019* (down from 1.8%), Britain 1.5%, China 6.2%, Japan 1.1% (which was actually up from an earlier forecasted 0.9%), and 2.5% in the U.S.

*Germany 1.3%, France 1.5%, Italy 0.6%, Spain 2.2%.  [Canada 1.9%, India 7.5%]

As for China and the ongoing trade war with the U.S., as I’ll detail below, fourth-quarter GDP came in at 6.4%, the lowest since 2009, with further pain expected, but commodity producers, among the first to feel the pain if China stops spending on infrastructure projects and the like, are reporting plenty of demand for copper, with physical inventories at record lows, and for high-quality steel ingredients.  Unilever, a consumer products giant, maintains the country is one of its most reliable sources of growth.  So there is some optimism that, once an agreement with the U.S. is reached, things will improve.

Chinese Vice President Wang Qishan appeared in Davos, saying his country would deliver “modest prosperity” by 2020.  Beijing will continue to cut taxes and the amount of money banks must hold in reserve, to encourage lending, but China hasn’t really cranked up the stimulus, as it can, and we are told it is still committed to deleveraging from mammoth debt levels.

Wang did acknowledge there were risks facing Beijing as well as other major economies, including “unilateralism, protectionism and populism.”

But he insisted China’s growth rate in 2018 was still “a pretty significant number, not low at all,” emphasizing it was the “quality and efficiency” of growth that was more important.

“There will be a lot of uncertainties in 2019, but one certainty is that China’s growth will continue and be sustainable,” Wang told the Davos audience.

Wang also issued a veiled rebuttal of U.S. attacks on China’s tech companies.

“It is imperative to respect national sovereignty and refrain from seeking technological hegemony,” Wang said.  He condemned “conducting, shielding or protecting technology-enabled activities that undermine other countries’ national security.”

Wang didn’t specify what activities he was referring to, but clearly he was alluding to escalating pressure on Huawei Technologies Co.

So on the trade war front, a Chinese delegation is to arrive in Washington on Monday to prepare for the high-level talks Tuesday and Wednesday between Vice Premier Liu He and cohorts, and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer, with just five weeks remaining before the March 1deadline for the U.S. to escalate tariffs from the current 10 percent to 25 percent on $200 billion of Chinese goods.

The two sides are not close to agreement on a wide range of disputes, especially when it comes to China’s handling of intellectual property and forced technology transfers from foreign companies looking to do business in the country, let alone the imbalance in goods flows between the two nations.  Treasury Secretary Mnuchin has said there has been some progress on the important issue of currency and the yuan’s exchange rate, and on Thursday said he thought the two sides were “making a lot of progress” in trade talks.

President Trump said in response to a question on the state of negotiations, “I like where we are right now.... We’ll see what happens. But we’re doing very well in our negotiations with China.”

But this week U.S. Commerce Secretary Wilbur Ross said the United States and China are “miles and miles” from resolving trade issues, though there is a fair chance the two get a deal.

“There is a very large group coming,” Ross said in his ill-fated interview with CNBC.  “There’s been a lot of anticipatory work done but we’re miles and miles from getting a resolution and frankly that shouldn’t be too surprising.”

“Trade is very complicated, there’s lots and lots of issues – not just how many soybeans and how much LNG (liquefied natural gas),” Ross added.

More important, Ross said, were the structural reforms that Washington believes are needed in the Chinese economy, as well as enforcement mechanisms for failure to adhere to whatever is agreed to.

Ross said the two sides were unlikely to resolve all their disputes in next week’s talks, but added, “I think there’s a fair chance we get a deal.”

White House economic adviser Larry Kudlow told Fox News, “I think the Liu He talks will be determinative,” but Kudlow also told Reuters that Trump is “not going to back down” on U.S. demands for structural changes to Chinese IP and technology practices.

[In a joint report to the U.S. Trade Representative, the U.S. Chamber of Commerce and the American Chamber of Commerce in China say Beijing’s ambitious plan to become a global technology leader is being widely implemented, casting doubt on efforts by Chinese officials to play down its significance.]

But it’s interesting how new cross-currents have developed, with a senior Alibaba Group Holding Ltd. executive, Joe Tsai, executive vice-chairman, saying rising anti-China sentiment in the United States is impacting relations.

Now I personally can’t stand Mr. Tsai, a total tool of the Xi regime (born on Taiwan), but he is right.  I believe one of the big themes of the next two years will be rising anti-China sentiment in this country.  It’s going to get ugly.  [And very uncomfortable for some who can’t tell the difference between a Korean and the Chinese, in everyday life, let alone the difference between someone from China and those from Taiwan.  I’m serious about this.]

Tsai termed the U.S. government’s treatment of Chinese smartphone and network-gear maker Huawei “extremely unfair” and “very politically motivated.”

Tsai, speaking at a Reuters’ forum today in Hong Kong, said U.S. regulators had made it very difficult for Alibaba to make investments in the country, adding that the company would look at other parts of the world for investment.  [Separately, Tsai was optimistic about China’s consumer sector, saying it was fundamentally very strong.]

Lastly, in Davos, billionaire philanthropist George Soros used his annual speech to launch a scathing attack on China and President Xi.

Soros warned that artificial intelligence and machine learning could be used to entrench totalitarian control in the country.  He said this scenario presented an “unprecedented danger.”

But Soros said the Chinese people were his “main source of hope.”

“China is not the only authoritarian regime in the world but it is the wealthiest, strongest and technologically most advanced,” he said, noting concerns too about Vladimir Putin’s Russia.

“This makes Xi Jinping the most dangerous opponent of open societies,” he said.

Soros, a prominent donor to the Democratic Party, also criticized the Trump administration’s stance towards China.

“Instead of waging a trade war with practically the whole world, the U.S. should focus on China.”  Can’t say I disagree with this.

Soros urged Washington to crack down on Chinese technology companies such as Huawei and ZTE (more on them below), which he said present an “unacceptable security risk for the rest of the world.”

More broadly, Soros cautioned that repressive regimes could utilize technology to control their citizens, in what he called “a mortal threat to open societies.”

On the economic front in the U.S., well, we’ve been largely flying blind. With the partial government shutdown, many of the releases on the economy have been delayed, such as retail sales last week and some housing data and the December figure on durable goods this week.  As of this writing it’s not known exactly when it will all now come out with the government reopened, at least for a spell, but hopefully it’s on some kind of schedule as it’s potentially market-moving, December being the month the economy supposedly began slowing down.

But we did have a release of existing-home sales for December on Tuesday, only because this came not from the government but rather the National Association of Realtors.

The figure was putrid, 4.99 million, far less than expected, down 6.4% from November, and down 10.3% from year ago levels.

The median existing-home price was $253,600, up 2.9% from December 2017, which while the 82nd straight month of year-over-year gains, is a clear deceleration in price gains.

But there are signs housing activity is better in January, and home builders are reporting a better tone in the market, largely because mortgage rates have come down, the 30-year fixed rate at 4.45% this week, vs. close to 5.00% in November.

Europe and Asia          

We had some important PMI data this week, a flash reading on the euro area (EA19) for January, with the composite at 50.7 vs. 51.1 in December (50 the dividing line between growth and contraction), a 66-month low. The manufacturing PMI was 50.5 vs. 51.4, services 50.8 vs. 51.2.

The flash readings also break down Germany and France.

Germany’s mfg. PMI was 49.9 vs. 51.5, contraction, albeit a slight one, but a 50-month low, while the non-manufacturing figure was better at 53.1 vs. last month’s 51.8.

France’s manufacturing figure rebounded from 49.7 to 51.2, but services, reflecting the yellow vest protests, fell to 47.5 vs. 49.0, a 59-month low.

Chris Williamson, chief economist, IHS Markit:

“The Eurozone economy slipped closer to stall speed in January, with companies reporting the first drop in demand for over four years. The disappointing survey data indicate that GDP is rising at a quarterly rate of just 0.1%.

“Both the manufacturing and service sectors are close to stagnation, highlighting the broad-based nature of the current slowdown.  Ongoing auto sector weakness, Brexit worries, trade wars and the protests in France were again widely cited as factors dampening growth, but the survey responses indicate that a deeper malaise has set in at the start of the year.  Companies are concerned about a wider economic slowdown gathering momentum, with rising political and economic uncertainty increasingly affecting risk appetite and demand.

“The ‘yellow vest’ protests led to the steepest downturn in the French economy since November 2014, consistent with GDP falling in the first quarter if these levels continue in coming months. But German businesses are also reporting their toughest spell for four years, led by the manufacturing sector slipping into decline for the first time since 2014, in turn reflecting the largest drop in exports for six years.

“The survey’s output and price gauges have both now fallen into territory more associated with ECB loosening rather than tightening policy, raising pressure on the central bank to acknowledge that downside risks to the outlook now predominate.”

Speaking of the European Central Bank, President Mario Draghi acknowledged the “risks surrounding the euro area growth outlook have moved to the downside.”

The ECB opened the door on Thursday to new stimulus measures to prop up the region’s stumbling economy, with Draghi blaming the deterioration that has occurred in just the last few months to “the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”

So the ECB is not only telegraphing there will be no interest rate hike in 2019, but Draghi said, “We have lots of instruments and we stand ready to adjust them or use them according to the contingency that is produced,” listing options such as forward guidance on interest rates, bond purchases and long-term loans to commercial banks.

Draghi did add that the ECB considered the likelihood of recession to be low.

*The euro bond market took Draghi’s dovish comments and ran with it, the yield on the German 10-year falling to 0.19%!  France’s 10-year is just 0.59%, Italy’s 2.65%. 

Related to the above, Eurostat released the latest debt to GDP data for the EA19, third quarter 2018, which was 86.1% vs. 88.2% a year earlier, so some good news but this is looking backwards and the data is from a stronger eurozone economy than we currently have.

Germany 61.2%, France 99.5%, Italy 133.0%, Spain 98.3%, Portugal 125.0%, Greece 182.2%, Netherlands 52.9%, Sweden 38.3%, and 86.3% in non-euro UK.

Brexit: Queen Elizabeth II weighed in today on Brexit, without using the name, urging people to find “common ground” and to respect “different points of view.”

Parliament is due to vote on the latest deal from Prime Minister Theresa May next week, Plan B, with the UK leaving the EU on March 29 with no deal unless the parties can agree on a way forward.

But Plan B looks like Plan A.  The prime minister told lawmakers she could not rule out the possibility of leaving the EU without any agreement, while she did not believe there was a majority in Parliament for a second referendum that could reverse the whole process of withdrawal.

And May has rejected the option of pivoting toward a model of Brexit that keeps closer ties to the European Union.

Instead, despite the plan being defeated in Parliament last week by 230 votes, the prime minister appears to be just doubling down on her gamble that MPs will vote for her unpopular plan for fear of the alternative – a no-deal, hard Brexit.*

*A no-deal Brexit would mean the UK cuts all ties with the EU overnight.  While the UK would not have to obey EU rules, it would need to follow World Trade Organization terms on trade.  Many businesses would see new taxes on imports, exports and services, which would increase operating costs.  Prices of many goods in the UK would rise.

And the UK would also lose the trade agreements it had with other countries as a member of the EU, all of which would need to be renegotiated alongside the new agreement with the EU itself.

And you can imagine the delays manufacturers in the UK would face in the supply chain, which is why some have been stockpiling goods ahead of such a possibility.

According to the Bank of England, a hard Brexit would cause a severe shock to economic growth in the UK which could fall to just 1.5 percent this year, which is also the IMF’s forecast, but the picture would darken from there.

“A disorderly no-deal Brexit would have a material negative immediate impact on public finances that would in fact persist over a number of years,” Mark Cassidy, director of economics and statistics at the BoE said today.

The European Union’s stance on the necessity for a Border in a no deal Brexit dramatically hardened this week, a devastating blow to Mrs. May’s government, with the EU leaning on Dublin for concessions ahead of a final showdown with the UK.

The EU’s chief Brexit negotiator, Michel Barnier, on Monday described the withdrawal treaty as the “best possible” deal, and called for the focus to be on negotiating a “more ambitious” future relationship rather than making changes to the backstop.

But now Brussels, which has indicated there will be no obligation on Ireland to erect a hard Border in a disorderly Brexit, instead says a hard Border is inevitable with a hard Brexit.

So this left the UK scrambling to come up with a coherent response.  The Government has been claiming it is “preparing for all eventualities” but at the same time “absolutely” denied planning for Border checks.

Asked what would happen on March 29 if the UK leaves without a deal, Irish Prime Minister (Taoiseach) Leo Varadkar said his country will face a “real dilemma.”

Varadkar insisted the backstop is still alive, but a hard Border would mean “We would have to negotiate an agreement on customs and regulations that would mean full alignment so there would be no hard Border,” he said.

“We already have that agreement and that is the backstop.  Nobody who is opposed to the backstop can credibly state he or she is also against a hard Border unless he or she can come up with something else that aligns customs and regulations and allows a Border to be avoided.  Nobody else has done that yet.”

For months, Ireland and the EU have refused to engage in ‘what if’ questions on the Border.

As for a delay in the March 29 date, we’ll see what happens next week.  Everyone agrees anything to prevent a hard, disorderly Brexit that would harm everyone in both Britain and the EU must be done.

***I watched an HBO original movie, “Brexit,” the other night and it was outstanding! 

France: According to the Institut des Politiques Publiques, a think-tank, President Emmanuel Macron’s tax policies, including the emergency measures passed in December to appease anti-government protesters, clearly benefit the wealthy.

The richest 1 percent will see their disposable income rise 2.3 percent as a result of the changes taking effect this year.

But the gains are largely because of changes in tax on capital income.  Reforms since the start of 2018 have had a bigger effect than the new changes for the very wealthiest. Disposable income rose 7.9 percent for around 150,000 households and by an average of 17.5 percent for the top 30,000 because of last year’s reforms.

So the figures only further reinforce the perception that Macron favors the rich, which will fuel calls for him to restore or replace the wealth tax, which he scrapped shortly after taking office.  Macron has made it clear, though, as the “national debate” intended to reduce tensions takes place, that reinstating the wealth tax is off limits – a major platform of the protesters.

The IPP think-tank did say the tax changes rushed through at year end to appease the protesters would have a positive impact on a large part of the population, at the expense of wealthier pensioners; 1.7 percent for the ‘middle class,’ less for those with lower than average incomes.

The freeze on fuel taxes, combined with more generous fuel subsidies, will benefit the poor most.  [Financial Times]

On a different matter, President Macron and German Chancellor Merkel signed a new treaty updating their 1963 post-war reconciliation accord, aiming to reinvigorate the European Union’s main axis as Eurosceptic nationalism tests the EU’s cohesion.

It is attempt by the two to give fresh leadership to the troubled EU project, the document signed in Aachen, Germany, a historic symbol of European concord, the 16-page Aachen Treaty negotiated over the past year to update the 1963 Elysee Treaty.

“We are doing this because we live in special times and because in these times we need resolute, distinct, clear, forward-looking answers,” said Merkel, noting that Aachen had been home to Charlemagne, whom she dubbed “the father of Europe.”

Macron added: “At a time when Europe is threatened by nationalism, which is growing from within, when Europe is shaken by the pains of Brexit and worried by global changes that go far beyond the national level, Germany and France must assume their responsibility and show the way forward.”

The treaty has few real details, but it commits the two nations to closer foreign and defense policy ties, though does little for the cause of eurozone economic reform.

The Aachen Treaty also stipulates it will be a priority of German-French diplomacy for Germany to be accepted as a permanent member of the UN Security Council (joining the U.S., UK, France, Russia and China).

Greece: Follow-up to some earlier missives of mine...the Greek Parliament ratified a U.S.-backed deal with Macedonia that aims to help stabilize the Balkan region, but which is roiling Greece and polarizing its political scene, by just three votes in the 300-seat parliament.

The agreement, which renames the Balkan country as North Macedonia, paves the way for its membership into NATO.

But 70% of Greeks opposed the deal, according to several polls, with many believing the name Macedonia belongs only to Greece’s northern region of the same name, which goes back to the time of Alexander the Great.

But nearly 140 countries have recognized Macedonia under its chosen name.

Credit to Greece’s politicians for recognizing this was something that needed a compromise, but the people are a different matter, and it doesn’t help that this issue comes after the Greek financial crisis, and the EU’s ‘bullying’ on austerity.

Needless to say, Prime Minister Alexis Tsipras, the socialist who has shocked me with his pragmatism over the last few tumultuous years, is under the gun again, having lost his coalition over the Macedonia issue.  His term is up in the fall, but as I’ve written, there is immense pressure for an early election.  I’m pulling for him.  [First Socialist I ever have, come to think of it.]

Turning to Asia...as noted above, China’s National Bureau of Statistics revealed that fourth-quarter GDP was just 6.4%, and 6.6% for all of 2018, the latter the slowest in 28 years, 1990, the former the worst three-month period since 2009.

For the month of December, industrial production rose 5.7% year-over-year, while retail sales rose 8.2% yoy, both of which were above November’s pace, which is encouraging.  For 2018, fixed-asset investment (infrastructure, like rails and airports), rose 5.9% which is not good.

Most experts believe the government’s recent stimulus moves will have an impact in the second half of this year.

Meanwhile, the Bank of Japan warned of growing risks to the Japanese economy from protectionism and faltering demand.  The BOJ on Wednesday downgraded its forecast for core consumer inflation to just 0.9 percent in the coming fiscal year from 1.4 percent projected last October, reflecting slumping oil prices.  Tokyo, a leading indicator of nationwide price trends, saw its core inflation, ex-food and energy, rise 0.7 percent in January.

Despite the rising risks the BOJ does still expect the Japanese economy to grow, though it contracted in the third quarter last year (Q4 yet to be released).  The central bank also said this week it is keeping its key policy rate at minus 0.1%.

Japan reported on Wednesday that December exports shrank at the quickest pace in two years, down 3.8 percent, twice as bad as forecast, with exports to China falling 7 percent, while they were down 11.6 percent to South Korea. Shipments to the U.S. rose 1.6 percent.

Separately, a flash reading on Japan’s January manufacturing sector came in flat, 50.0, vs. 52.6 in December, a bad sign.

Street Bytes

--Stocks were unchanged, dead in the water as the week settled out, though Monday had a mini-downdraft of over 1%, stocks then largely making it back up over the balance of the week as the focus was more on any movement in the U.S.-China trade war than corporate earnings, which remained largely positive, the big tech heavyweights yet to report (Amazon, Apple, Facebook and Google, among others).

So for the week the Dow, in eking out a 0.1% gain, 31 points to 24737, did keeps its winning streak alive at five, Nasdaq doing the same with its own 0.1% advance, but the S&P 500 fell 0.2%.

Next week, with the shutdown largely off to the side, albeit just momentarily, the focus will be on any movement when China’s trade negotiators show up in Washington, far more on the earnings front, and perhaps Venezuela and any impact on the price of crude.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr. 2.61%  10-yr. 2.76%  30-yr. 3.07%

The Federal Reserve holds its first Open Market Committee meeting of the year on Tuesday and Wednesday, and while it is not making another move on interest rates, and isn’t likely to before June, at the earliest, the Fed is expected to say something significant about its balance sheet, as in it may announce it will stop paring down the portfolio, or announced a reduced schedule, which could cut down on uncertainty in the Treasury market.

--The price of oil fell just a bit to $53.55 on West Texas Intermediate as U.S. supplies continued to surge, outweighing the impact of the turmoil in Venezuela (discussed further below).

There is no doubt production in key producer Venezuela will continue to fall, amid the internal chaos, but global oil markets are still very well supplied, thanks to another spike in U.S. output.

The spike in U.S. production, though, comes as capital spending by U.S. oil exploration and production companies has fallen sharply following the decline in crude prices that began last October.

According to Dealogic, companies in the sector have not held a single bond sale since the start of November, while share sales have slowed.  The data suggests a record-breaking boom in U.S. oil output is weaker this year.

The government’s Energy Information Administration has forecast that between December 2018 and December 2019, U.S. crude production will rise by about 500,000 barrels a day, which would be a sharp slowdown from growth of 1.8m b/d over the previous 12 months.

The  reliance on debt to finance the boom has been rather pronounced, some $300 billion from bond issuance over the past 10 years, according to Ed Crook of the Financial Times.  But as Dealogic reports, that has ground to a halt.

Speaking at the World Economic Forum in Davos this week, Occidental Petroleum CEO Vicki Hollub said U.S. shale oil companies were being forced to react to an investor push for more spending discipline.  “Not as much money is going to be pouring into the Permian basin,” she said.

The number of rigs drilling oil wells in the U.S. had dropped 8 percent since November, according to S&P Global Platts Analytics, that is until today, when the weekly report out of energy services firm Baker Hughes showed that the number of operating oil rigs in the U.S. jumped by 10 this week, after having slumped by 21 the week before, to 862.

--United Technologies issued an optimistic outlook for 2019 as the maker of jet engines and airplane parts, saw a year ahead of sales and earnings growth, with both in line with Wall Street’s forecasts.

CEO Gregory Hayes said the company will benefit from “really solid trends in aerospace across the board,” thanks largely to production increases at jet makers Boeing and Airbus.

Last year, United Technologies split into three companies, spinning off Otis elevators and Carrier climate-control systems into separate groups.  UTX will be comprised of Pratt & Whitney jet engines and the Rockwell Collins (airplane parts) business it acquired in November for $23bn.

--Procter & Gamble Co. raised its sales forecast for the year on Wednesday after it topped expectations for the fourth quarter, the outlook boosted by price hikes and strong demand for premium fabric and skin care products.

P&G specifically singled out products such as Gain and Downy, as well as SK-11 skincare products, which helped the company become the No. 1 personal care goods company.

Consumer goods companies have faced a string of challenges in the past year, including soaring commodities costs, a shortage of truck drivers, competition from supermarket brands and direct-to-consumer start-ups.

So P&G has been seeking to counter this through cutting costs and revamping its marketing strategy.  In other areas, its raising prices and launching higher-end products. 

For 2019 the company is looking for organic (ex-acquisitions and impact of currency fluctuations) sales growth of 2 to 4 percent.

--Johnson & Johnson said it expects sales growth to slow in 2019, citing pricing pressures and generic-drug competition for its pharmaceutical division.  J&J had 2018 sales of $81.6 billion, up 6.7%, but only expects revenues this year of $80.4 billion to $81.2 billion.

Additionally, the company is facing major legal liability over the safety of its talc-containing powders such as Johnson’s Baby Powder.  At least 11,700 lawsuits against J&J claim use of its talc powder caused cancer.

J&J claims its products are safe, and it has won some of the suits that went to trial, but juries have awarded large sums to plaintiffs, including the $4.7 billion judgment in July to 22 women and their families.  J&J is appealing the verdicts.

--IBM beat analysts’ fourth-quarter earnings estimates and forecast full-year profit above expectations on Tuesday, as the company benefits from its focus on newer businesses such as cloud, software and services, sending its shares up about 7 percent.

Big Blue has been shifting toward the faster-growing segments to lower dependence on its traditional hardware products and reverse years of revenue declines.

CFO James Kavanaugh said: “We had our strongest signings quarter to finish out the year in a long period of time, where we signed roughly $16 billion worth of signings – that’s up 21 percent.  We had 16 deals greater than a $100 million, which talks to value of our hybrid cloud, multi-cloud value proposition,” he said.  [Reuters]

The company has been structuring its cloud strategy around helping companies put together their multiple cloud platforms, while not competing head-to-head with “hyperscale” cloud providers such as Amazon Web Services, Microsoft Azure and Alphabet’s Google.

So instead, IBM has recently signed multiple cloud services contracts with the likes of British telecom Vodafone and French bank BNP Paribas.

Cloud business, part of what IBM calls “strategic imperatives,” grew 5% to $11.5 billion in the quarter, $39.8 billion for 2018, up 9%.

But overall revenue fell 3.5% in the quarter as its yearslong struggle to recapture growth continues, thus the necessity for the cloud business to take charge in driving future profits.

In October, IBM agreed to buy Red Hat Inc. for $34 billion.

--Ford Motor Co. posted a net loss of $116 million in the fourth quarter due to extraordinary costs and weaker sales in China and Europe. But adjusted earnings before interest and taxes of $1.5bn were driven by North America, with revenue up slightly to $41.8 billion.

Ford said operations outside of North America generated a loss of $828 million, driven by China and Europe.  Trade issues with China and the European Union have also made materials used in auto production more expensive.

Ford has embarked on an $11 billion restructuring of its overseas businesses that is expected to last several years, while separately it overhauls its lineup of vehicles in most major markets.

But investors have expressed frustration with CEO Jim Hackett for providing few specifics about the above ventures.

--Shares in Tesla were marked down again on Wednesday after the company cut production hours amid softening demand for the Model S and Model X vehicles, at the same time CEO Elon Musk is trying to convince investors his company can achieve solid – and sustainable – profit margins.

The news on a cut in production hours comes after last week’s news of a 7 percent headcount reduction.

Bottom line is the outlook is growing more uncertain, especially given global weakness.  But Musk is being given praise in some quarters for taking action as he tries to hit his profit targets.

--Carlos Ghosn resigned as chairman and chief executive of Renault, according to France’s finance minister.

Renault had stood by Ghosn since his arrest in Japan two months ago, but the company had also begun making plans to replace its longtime leader as Ghosn’s legal troubles threatened the automakers alliance with Japanese companies Nissan and Mitsubishi Motors.

Renault, with more than 47,000 workers, is one of France’s biggest employers, with the French government the largest shareholder. The pressure had been ramped up to cut ties with Ghosn in order to save the alliance.

Jean-Dominique Senard, the CEO at French tire maker Michelin, was then named chairman of the board on Thursday, with Renault’s chief operating officer, Thierry Bollore, moving up to CEO.

With slowing demand for cars in China, Europe and the United States, it is essential that the partnership between Renault and Nissan (and Mitsubishi) stay healthy for the sake of all three automakers.  But they have to put their differences aside soon.

Speaking of alliances, it was last week that Ford and Volkswagen announced a joint venture to speed the development of electric and self-driving cars.

--Shares in Stanley Black & Decker cratered more than 13 percent after the company warned of continued headwinds from tariffs and the housing market.

The purveyor of drills and lawnmowers reported fourth-quarter earnings and revenue that beat the Street’s expectations, reflecting the rollout of some new Craftsman products, but the company said it “overcame multiple external headwinds” during the year and expects a similar environment in 2019.”  CEO James Loree cited an economic growth backdrop that “also looks to be slowing.”

At times like these with the slowing housing market, SBD is a good barometer for the likes of Home Depot and Lowe’s, the two largest U.S. home-improvement retailers, whose shares also fell on the Stanley Black & Decker news.

--Southwest Airlines says it has lost $10 million to $15 million so far from the partial government shutdown but overall travel demand remains strong, boosting the carrier’s outlook for first-quarter revenue.

Southwest made the announcement in releasing fourth-quarter results that showed a lower profit vs. a year ago, but results that were better than the Street expected and the airline predicted revenue for each seat flown one mile, a key metric, would rise by 4 to 5 percent if there is no further damage from the shutdown.

For Q4, revenue rose 8.5 percent to $5.7 billion.

But in terms of the shutdown, the other airlines all said on Thursday that the impact of more air-traffic controllers and TSA screeners missing work could cause major disruptions.  [And this indeed was the case today at LaGuardia and elsewhere.]

JetBlue CEO Robin Hayes said: “We are closing to a tipping point. The longer this goes on, the longer it will take for air travel infrastructure to rebound.”

The National Air Traffic Controllers Association, the Air Line Pilots Association, and the Association of Flight Attendants-CWA said in a statement Wednesday: “We cannot even calculate the level of risk currently at play, nor predict the point at which the entire system will break.  It is unprecedented.”

--Intel Corp. reported a 9% gain in revenue but cautioned that it expects slowing demand for data-center chips to continue well into 2019, a major challenge as the company’s search for a new CEO drags on.  It’s been almost eight months since the abrupt resignation in June of former CEO Brian Krzanich.

Intel had benefited in 2018 from a surge in demand for personal computers, and the ongoing growth of cloud computing, but revenue from Intel’s data-center group, a critical area, came in shy of the company’s own expectations.  Intel also suffered from slowing sales in China.

The company now expects total revenue growth of about 1% in the year ahead to $71.5 billion, a much more conservative pace than the nearly 13% growth in 2018.  Analysts polled by FactSet had expected to generate $75.07 billion in revenue.

Intel’s shares fell 6% in response.

--Shares in PG&E Corp. surged after California fire investigators said the utility didn’t cause the deadliest in a series of 2017 state wildfires, the Tubbs Fire, which killed 22 people and destroyed nearly 37,000 acres mainly in Napa and Sonoma counties.

Investigators said the fire was caused by a private electrical system near a residential structure, not PG&E.

In response to the news Thursday, the company’s shares soared 75% to $13.95 (before tumbling back 15% to $11.60 today), PG&E having previously announced it was planning to seek bankruptcy protection in response to potential wildfire-related liability costs, which it estimated at $30 billion.  But with Thursday’s court decision, that figure could now be about $8 billion lower, according to financial research firm, CreditSights.

State officials are still investigating whether the utility had anything to do with the deadliest wildfire in state history, last November’s Camp Fire, which killed 86.  PG&E has disclosed it had a high-voltage line malfunction in the region just 15 minutes before the start of the blaze was reported.

--Starbucks Corp. boosted sales at U.S. cafes around the end of the year, beating Wall Street’s forecasts for a second consecutive quarter.

The coffee giant reported same-store sales growth of 4% in the U.S. market during its fiscal first quarter, with traffic flat, which was an improvement from a decline in visits during the July-September period.

Starbucks  has been focused on its other major market, China, entering 10 new cities and expanding its stores there to 3,700, with same-store sales rising 1%.

Globally, comp sales increased 4%, beating analyst expectations.

Earnings also beat the Street at $760.6 million, while the company raised its guidance for the full year, with revenue growth of 5% to 7% for 2019.

--In China, Microsoft confirmed its search engine Bing wasinaccessible on Wednesday, the latest foreign website to be blocked by censors.

But Thursday Microsoft said Bing was restored.  [This may have been more a technical issue than Chinese mischief.]

Chinese authorities do operate a firewall that blocks many U.S. tech platforms, including Facebook and Twitter.

And regulators recently closed hundreds of websites and thousands of mobile apps and calling out tech titan Tencent Holdings Ltd.’s news app for spreading “vulgar” information.

As reported by Shan Li of the Wall Street Journal, “In the past three weeks, the Cyberspace Administration of China has wiped nearly 71 million items of ‘harmful’ information off the web, closed 733 websites and shut down 9,382 mobile apps, the agency said Wednesday.”

Last month the internet watchdog announced it had shut down 110,000 social media accounts for spreading what it said was harmful information. 

By the way, much of this has to do with defaming China’s leaders.

Separately, a former Canadian spy chief said Canada should ban China’s Huawei Technologies from supplying equipment to Canadian 5G networks because the security risk is too great.

Last week, China threatened repercussions if Ottawa blocked Huawei, a warning the government dismissed. This comes amid the tit-for-tat between Canada and China that started with the arrest of Huawei’s CFO Meng Wanzhou at the behest of the United States, after which China detained two Canadians, while retrying a third on a drug smuggling charge and sentencing him to death.

Today, Vodafone announced it has decided to “pause” the installation of new Huawei equipment in its core networks across the world due to the political uncertainty surrounding the supplier.

The ‘core’ is about the ‘kit’ on towers.  Vodafone’s CEO said a “blanket ban” on Huawei’s radio equipment, which is separate, would lead to “a significant delay” in the launch of 5G networks and Vodafone will continue to buy that.

--Verizon Communications Inc. is cutting 7% of its media staff, part of a bid to overhaul a struggling operation that includes former online icons AOL and Yahoo. The cuts would represent about 800 jobs at the division.

In the same vein, BuzzFeed Inc. is eliminating 15% of its workforce (about 250 jobs), the latest pullback for digital-media sites dealing with a challenging advertising market.

Previously, Gannett Inc. announced it was laying off journalists from its collection of newspapers.

--According to an estimate from Air Charter Service, despite global warming being one of the main themes at the World Economic Forum in Davos, some 1,500 private jets were expected this week, up from 1,300 last year.  Andy Christie, private jets director at ACS, said in a statement: “We have had bookings from as far as our operations in Hong Kong, India and the U.S.  No other event has the same global appeal.”

Of course air travel has a heavy carbon footprint, generating greenhouse gas emissions.

--Walmart is looking to add more truck drivers in the upcoming year as an industry-wide shortage continues to loom, and these are good-paying jobs, sports fans.

The company hired more than 1,400 truck drivers in 2018, and the new pay scale has drivers earning an average of $87,500 per year.

According to the American Trucking Association, the median salary for a driver on a national, irregular route is over $53,000.

To be hired at Walmart, drivers will need to have 30 months of experience over the past three years and a good safety record.

--Speaking of Davos, Bono told the World Economic Forum that “unlocking” private sector funds can help achieve amazing things in developing countries.

“Capitalism is not immoral, it’s amoral,” Bono said.

“It has taken more people out of poverty than any other ‘ism’ but it is a wild beast and if not tamed it can chew up a lot of people along the way.”

He said that in some countries people who had their lives chewed up are pushing politics towards populism.

--Passengers on a United Airlines flight to Hong Kong had to deal with one of the worst travel nightmares in recent memory, as 250 ended up stuck on the aircraft for about 12 hours last weekend at an airport in Newfoundland, Canada, due to a medical emergency after taking off from Newark.

A confluence of factors, some beyond the airline’s control, led to the disaster after the 777 was diverted Saturday night, but then after the passenger was removed, Flight 179 couldn’t take off because one of the plane’s doors became stuck, frozen by the bitter subzero cold, and wouldn’t shut properly.

But passengers couldn’t get off in a foreign country without clearing customs, and because it was around 9:30 p.m. local time Saturday, there were no customs officials available.

United had to scramble to get a rescue plane and crew, but this was amid the big storm in the Midwest and Northeast over the weekend, further complicating things.

At least the plane had heat, but there was no food available but snacks.

Finally, after about 11 hours, Canadian border authorities arrived and some of the passengers could leave the plane and get some fresh air, albeit it was below zero, while Tim Hortons provided coffee and sandwiches.  The plane didn’t leave until around 3:30 p.m., 16 hours after landing, and that was to return to Newark.

United offered passengers full refunds and vouchers for meals and hotels, plus travel vouchers in the amount of $500 or 25,000 airline miles.

Having been on that flight before, I can’t imagine how pissed passengers would have been because of how it impacted all their plans, but there was one obvious question, ‘Why couldn’t the plane have been diverted back to Newark?  Or Boston? 

No word on the health of the sick passenger, though some on the flight said the crew worked hard to save a life.

--Billionaire Ken Griffin, CEO of Chicago-based Citadel, a giant hedge fund, paid $238 million for an under-construction New York penthouse on Central Park South, a high-profile building where rock star Sting is among those buying in.  The price is the highest ever paid for a U.S. home

According to Crain’s New York Business, Griffin has previously purchased homes valued at $762 million.  Plus, Griffin is buying the New York home as unfinished space.  He has a similarly priced property, including after he built it out, in Palm Beach, Fla.  So once Griffin builds out the Central Park South property, the value of his holdings will easily surpass $1 billion.

--Finally, amid some of the chaos, we do have an upcoming event worth mentioning.

McDonald’s is hosting a nationwide bacon bash and free bacon giveaway from 4 to 5 p.m. on Tuesday at participating locations nationwide to celebrate the pork’s arrival on three menu classics.

So January 29, you can get free bacon with any purchase, be it a Filet-O-Fish or apple pie.

Foreign Affairs         

Venezuela: Opposition leader Juan Guaido declared himself interim president on Wednesday, immediately winning the backing of Washington and many Latin American nations and prompting socialist leader President Nicolas Maduro, who has led the oil-rich nation since 2013 and is an ally of Russia and China, to sever diplomatic relations with Washington, giving U.S. diplomats there 72 hours to leave the country. Secretary of State Mike Pompeo said the U.S. had no plans to withdraw personnel (though non-essential personnel were sent home Thursday).

President Trump tweeted: “The citizens of Venezuela have suffered for too long at the hands of the illegitimate Maduro regime. Today, I have officially recognized the President of the Venezuelan National Assembly, Juan Guaido, as the Interim President of Venezuela.”

Britain was among the other nations to back Guaido, a spokesman for Prime Minister May saying: “The 2018 presidential election in Venezuela was neither free nor fair, so the regime’s basis for power is deeply flawed. We fully support the democratically elected National Assembly with Juan Guaido as its president.

“In relation to the U.S., we think it is totally unacceptable for Venezuela to cut off diplomatic ties.  The solution to this crisis lies in working to find a peaceful and diplomatic solution, not in expulsions.”

Russian lawmakers slammed what they called the United States’ interference in Venezuela’s affairs.  The head of the Federation Council’s Committee on Foreign Affairs, Senator Konstantin Kosachev, was quoted as saying, “All of current U.S. policy toward Venezuela, including Trump’s latest statements, are a direct and unceremonious interference in its internal affairs.”

Guaido told tens of thousands of Venezuelans in Caracas on Wednesday: “Today, on Jan. 23, in my status as National Assembly president before all powerful God, and my colleagues, I swear to formally assume the duties of national executive to achieve the end of usurpation, [form] a transitional government and [hold] free elections.

“I am not afraid, [rather] I fear for the people who are [living in] bad times,” Guaido proclaimed.

President Trump said in a statement: “The people of Venezuela have courageously spoken out against Maduro and his regime and demanded freedom and the rule of law.  I will continue to use the full weight of United States economic and diplomatic power to press for the restoration of Venezuelan democracy.”

Florida Republican Sen. Marco Rubio has clearly played a major role in convincing Trump to ratchet up pressure on Maduro, reminding him of the importance of the Cuban-American vote in presidential swing state Florida.

“The president’s instincts have always been to do the strongest possible action (against Venezuela) that doesn’t undermine the cohesion of this multilateral approach.”

Maduro said Wednesday: “Anyone can declare himself president, but it’s the Venezuelan people who elect him, not the gringo government,” Maduro branding Guaido a “puppet” of U.S. “imperialism.”

Last month, Maduro said Venezuela and “brother country” Russia had signed a $6 billion investment deal in Venezuela’s oil and gold sectors.

Turkish President Erdogan offered support for Maduro, a spokesman for Erdogan tweeting “Turkey will maintain its principled stance against all coup attempts.”

Guaido then said at week’s end he would consider an amnesty for Maduro if he cedes power.  Guaido said he was reaching out to all sectors including the military to end the crisis.

But so far, Maduro retains the crucial support of the army.  Thursday, the nation’s generals declared their loyalty to Maduro in a news conference and said the opposition’s effort to replace him amounted to an attempted coup.

Russia warned Thursday that any military action on the part of the United States would trigger a catastrophic scenario, Interfax news agency citing the deputy foreign minister, Sergei Ryabkov.

The U.S., at week’s end, and more than a dozen Latin American countries, Canada and the UK have backed Guaido, but aside from Russia, China and Turkey, Mexico, and its new leftist president, is among those offering support for Maduro, or at least ‘recognition.’

Secretary of State Pompeo has requested a UN Security Council meeting for tomorrow, Saturday.  At a meeting of the Organization of American States (OAS) on Thursday, the secretary described Maduro’s government as “morally bankrupt” and “undemocratic to the core.”

Guaido is in hiding, supposedly in Caracas, and there are fears for his safety.

Roger Noriega, former U.S. assistant secretary of state for the Western Hemisphere under President George W. Bush, told Reuters, “The real issue that keeps me up at night is what do we do if Maduro manages to hold on? What do we do if there is a bloody crackdown?”

And there is a late story tonight, first from Reuters, that private military contractors from Russia, the so-called “Wagner group,” have been flown into Venezuela to beef up security for Maduro, the Kremlin having vowed to stand by him.  The estimate is up to 400, though some have told Reuters it’s smaller.

I would just add that the Wagner group’s members – mostly former service personnel – fought in support of Russian forces in Syria and Ukraine, and in Syria, the U.S. blew them away!  Killed an estimated 200 last summer.  [U-S-A!  sorry....]

Seriously, the Wagner group is out of a “24” plot line...also think Blackwater, which as you’ll recall had problems in Iraq as a U.S. contractor.

North Korea: South Korean Foreign Minister Kang Kyung-wha said at the World Economic Forum in Davos that North Korea must make concrete pledges toward curbing its nuclear weapons program, such as dismantling its main nuclear complex and allowing international inspections to confirm the process, when Kim Jong Un and President Donald Trump meet next month.

Kang said: “The (North Korean) leader has promised to his people many times that ‘I’m going to take this country towards economic development.’  He has to deliver that, and he’s not going to get the kind of significant assistance unless he takes concrete steps toward denuclearization and somehow eases the sanctions regime.  Given the strong political will on the part of the top leaders of the two sides... I think we will see concrete results.”

President Trump tweeted Thursday: “The Fake News Media loves saying ‘so little happened at my first summit with Kim Jong Un.’ Wrong!  After 40 years of doing nothing with North Korea but being taken to the cleaners, & with a major war ready to start, in a short 15 months, relationships built, hostages & remains....

“....back home where they belong, no more Rockets or M’s being fired over Japan or anywhere else and, most importantly, no Nuclear Testing. This is more than has ever been accomplished with North Korea, and the Fake News knows it.  I expect another good meeting soon, much potential!”

Kim Jong Un, as reported by state media on Thursday, ordered working-level preparations for his meeting with Trump, and that he “will believe” in Trump’s “positive way of thinking.”

Kim also expressed “large satisfaction” at receiving a “great” letter from Trump and a briefing about the results of the negotiations from the North Korean delegation that visited Washington last week but did not elaborate.

The site of a late February summit still has yet to be announced, but most believe it will be Vietnam.

Kim pledged at the first summit to work towards “complete denuclearization of the Korean peninsula,” but implementation of the vague commitments has gone nowhere, as the Pentagon and various intelligence authorities and think tanks expose an expanding nuclear and weapons program, not a reduction.

Researchers disclosed another secret ballistic missile base in North Korea this week, one of an estimated 20 that the communist state has not declared.

The base, called Sino-ri, was revealed in a report released Monday by the Center for  Strategic and International Studies (CSIS), a Washington, D.C.-based think tank.

According to CSIS, the location, 132 miles from the DMZ, provides “an operational-level nuclear or conventional first strike capability against targets located both throughout the Korean Peninsula and in most of Japan.”

CSIS reported on the existence of 13 of the 20 undeclared missile bases in November.  Sino-ri is one of the oldest in existence and was used for the first deployments of Pyongyang’s Scud missiles and its Nodong medium-range ballistic missile.

One more.  A study conducted by the Middlebury Institute of International Studies in the U.S. has concluded that North Korea is rapidly developing its biological weapons program, with intelligence assessments identifying a sharp increase in internet searches originating in North Korea for “advanced gene and germ research.”

Pyongyang is accessing the work of foreign researchers to develop its existing biotechnology skills and construct the equipment to produce more biological weapons, as first reported by the New York Times.

So while the Trump administration is pushing North Korea on its nuclear weapons and related ballistic missile programs, it is making no demands that Pyongyang come clean on its suspected stockpiles of thousands of tons of biological agents.

Among the most lethal agents in the North’s biological arsenal is likely to be small pox, which kills one-third of the people who contract the disease.

As reported by the Daily Telegraph, “a number of North Korean defectors, including former members of the military, have claimed during questioning that the North tests biological and chemical weapons on citizens who have been sentenced to death.”

China: Editorial / The Economist

“Taiwan ‘must and will’ be reunited with the mainland, declared Xi Jinping, China’s president, on January 2nd. Chinese leaders have been saying such things since the retreating Nationalists separated the island from the rest of the country after losing the civil war to the Communists in 1949. But Mr. Xi has done more than just talk: he has sent bombers and warships to circle the island, held live-fire drills in the narrow Taiwan Strait and, Taiwanese generals say, instructed the People’s Liberation Army (PLA) to be capable of seizing Taiwan by force by next year.  Back in 1996, the most recent cross-strait crisis, China’s military spending was barely twice Taiwan’s. Now it is 15 times greater. That has left Taiwanese leaders rushing to rethink their defenses....

“Although America does not have diplomatic relations with Taiwan, it maintains close ties. Some 3,500-4,000 Pentagon officials travel to Taiwan every year, an average of more than ten per day.  Arms sales have totaled more than $15bn since 2010.  The relationship is deepening in some respects. Arms transfers were previously bundled into big packages that reliably aroused Chinese anger; they are now growing more routine.

“The administration of Donald Trump is stacked with senior officials who know Taiwan well and sympathize with its plight.  Mr. Trump delighted Taiwan’s leaders by holding a taboo-busting phone call with (President Tsai Ing-wen) when he was president-elect.  Last year he also signed the Taiwan Travel Act, which encourages senior American officials to visit the island and vice versa.  If arms sales help bolster America’s commitment to Taiwan, so much the better.

“Though Mr. Xi clearly feels obliged to continue to hound Taiwan about reunification, he has thus far avoided laying down a firm timeline. The relatively slow growth of China’s amphibious fleet casts doubt on the idea that the PLA is working flat out to be ready to invade. Nor has it been conducting big amphibious exercises. There is still time for Taiwan to sharpen its quills.”

On a totally different topic, Chinese authorities are holding scientist He Jiankui wholly responsible for creating the world’s first gene-edited babies.

He had announced their birth in November, after which the authorities announced an investigation into the mater.

A team of investigators then told the official Xinhua news agency on Monday that a preliminary probe had concluded that He had “organized a project team that included foreign staff, which intentionally avoided surveillance and used technology of uncertain safety and effectiveness to perform human embryo gene-editing activity with the purpose of reproduction, which is officially banned in the country.”

Between March 2017 and November 2018, He forged ethical review papers and recruited eight couples to participate in his experiment, resulting in two pregnancies.

One of the mothers gave birth to twins nicknamed “Lulu” and “Nana” the investigators said.  Another woman is still carrying a gene-edited fetus.

The Guangdong government is keeping the twins under observation, while He and his staff would be punished according to the law, penalties for which I’m not sure.

An expert in the field, Shao Feng, from the Chinese Academy of Sciences, told the Beijing Youth Daily last weekend in an interview, that he is concerned about potential health risks the children will face as well as the incident’s effect on the human race.

“Once the gate of gene-editing is wide open, the human race will be finished,” he said.  “The technology is strong but the terrifying fact is that anyone slightly trained in a lab can perform it.”

He has not been seen in public since he announced the births at the Second International Summit on Human Genome Editing in Hong Kong in November, stoking obvious rumors he is being detained under house arrest, or worse.  He’s employer, Shenzhen-based Southern University of Science and Technology, denies talk of detention.  [South China Morning Post]

Lastly, China reported that new births declined by 2 million last year, pushing the country’s population growth rate to its lowest level since 1962, the time of the disastrous famine.

The government has estimated that China’s population will peak in 2029 at around 1.44 billion.

Syria / Iran / Israel: Twenty-one people were killed in extensive Israeli strikes on Syria overnight Sunday, according to the watchdog group, the Syrian Observatory for Human Rights, with at least 12 of the victims members of Iran’s Revolutionary Guards. Six killed were Syrian soldiers and the rest were “foreigners” (militiamen).

The Israeli military admitted it struck Syrian and Iranian targets, including sites of the Guards’ Quds Force, in response to a surface-to-surface missile fired toward northern Israel a day earlier.  Israel said the targets included munition storage facilities, an intelligence site and a military training camp, as well as a number of Syrian air defense batteries.

Israeli Prime Minister Benjamin Netanyahu said in a speech: “We are operating both against Iran and against the Syrian forces that are abetting the Iranian aggression. We will strike at anyone who tried to harm us. Whoever threatens to eliminate us, bears full responsibility.”

Syria claims its air defenses destroyed more than 30 cruise missiles ground bombs during the Israeli strikes.

Russia has warned Israel to stop striking Syria.

In Tehran, air force chief Brigadier General Aziz Nasirzadeh said Iran was “fully ready and impatient to confront the Zionist regime and eliminate it from the earth,” according to a website supervised by state television.

Syrian President Assad has said Iranian forces are welcome to stay in Syria after years of military victories that have brought most of the country back under his control, though two large enclaves are still held by other forces.

Separately, Turkey said it has the capacity to create a “safe zone” in Syria on its own but will not exclude the United States, Russia or others if they want to cooperate, as announced by Turkish Foreign Minister Mevlut Cavusoglu, which I find ironic personally because I have long said that President Obama’s 2012 refusal to work with Turkey on a no-fly zone then in Syria will prove to have been one of the worst decisions in the history of this century, because of the multiple consequences of the move.  [500,000 killed since, 9 million displaced, the rise of ISIS, and the immigration crisis in Europe.]

A safe zone today is far too late, but the topic was discussed in a call between Turkish President Erdogan and President Trump after the latter announced he was withdrawing all 2,000 U.S. troops from Syria.

Cavusoglu said this week that nothing was certain about the planned safe zone, but that Ankara and Washington’s views were in line.

Afghanistan: There were conflicting reports on the lethality of a Taliban attack on Afghan security forces on Monday, with the death toll ranging from 45 to 126 in various stories, a senior defense ministry official telling Reuters the toll was 126.  A provincial official also said the toll was over 100, the Taliban claiming responsibility for the attack on a military compound in central Maidan Wardak province.

Yet hours after word of the attack, the Taliban was meeting U.S. special envoy Zalmay Khalilzad in Qatar, days after threatening to pull out of Afghan peace talks.

“Talks between Taliban leaders and U.S. officials have started today in Qatar,” a Taliban spokesman said.  According to Reuters, a source close to the talks said members of the Taliban’s political office met with Khalilzad, adding: “They will hopefully finalize a timeline and mechanism of the withdrawal of foreign troops from Afghanistan.”

If you’re thinking, ‘WTF?’ you’re not alone. Putting the two stories together, you can only say  ‘this is nuts.’

I saw a story later in the week where the Taliban is offering ‘assurances’ that it will not let outside extremist groups develop bases in Afghanistan, referring to the likes of ISIS and al-Qaeda. 

Congo: The constitutional court confirmed Felix Tshisekedi’s presidential election win on Sunday, dismissing a challenge from another opposition leader who had accused him and the ruling party of manipulating the result.

Second-place Martin Fayulu had rejected the provisional tally for Democratic Republic of Congo’s election released last week, saying it was the product of a secret deal between Tshisekedi and outgoing President Joseph Kabila to cheat him out of a clear win of more than 60 percent.  Kabila and Tshisekedi deny this.

The constitutional court is seen as beholden to Kabila, who has been in power since his father was assassinated in 2001.

Random Musings

--Presidential tracking polls....

Gallup: 37% approval, 59% disapproval, 88% Republicans, 31% Independents (Jan. 15).
Rasmussen:  45% approval, 54% disapproval.

In the above-noted Fox News poll, President Trump receives a 43% overall approval rating, down three points from 46% in December (43% the lowest since February 2018).  54% disapprove of Trump’s job performance. 

The approval rating for Trump among ‘men’ at 45% is at or near a record low, while approval among Republican women has fallen to 83% from 93%.

41% rate the economy positively (excellent or good), but this is down from 47% last month – and the lowest mark since August 2017.  49% approve of Trump’s handling of the economy vs. 46% who disapprove.  Only 38% approve of his handling of foreign policy, 53% disapprove.

In the above-mentioned CBS News survey, Trump’s approval rating was just 36%, 59% disapproving of the job he is doing.

--California Democratic Sen. Kamala Harris became the latest to declare her candidacy for president on Monday, joining fellow senators Elizabeth Warren of Massachusetts and Kirsten Gillibrand of New York.  Representative Tulsi Gabbard, a Hawaii Democrat, has also said she is running, and more women will no doubt enter the race in the coming weeks.

Compared to the others in the above list, I see Sen. Harris as a survivor beyond Iowa and New Hampshire.

--In another classic example of “wait 24 hours,” this week we had the following.

Editorial / Wall Street Journal

“Of the most culturally deplorable boxes one can check in progressive America in 2019, the boys of Covington Catholic High School have most of them: white, male, Christian, attendees at the annual March for Life in Washington, and wearers of MAGA hats.  What’s not to dislike?  So when four minutes of video footage emerged online this weekend showing the students appearing to harass a Native American Vietnam veteran named Nathan Phillips, America’s media and cultural elite leapt to judgment.

“A short video clip of student Nick Sandman supposedly ‘smirking’ as Mr. Phillips banged his drum in the student’s face went viral, and instantly the boys of Covington Catholic in Kentucky were branded racists....

“Meanwhile, mainstream news outlets published misleading accounts of what happened based on incomplete information.  And pundits on the right and left rushed to demonstrate their own virtue by trashing high school students as somehow symptomatic of America’s cultural rot in the Age of Trump.

“Only it turns out there was a much longer video, nearly two hours, showing that almost everything first reported about the confrontation was false, or at least much more complicated.  The boys had been taunted by a group of Black Hebrew Israelites, who shouted racist and homophobic slurs. Far from the boys confronting Mr. Phillips, he confronted them as they were waiting near the Lincoln Memorial for their bus.

“It also turns out that Mr. Phillips is not the Vietnam veteran he was reported to be in most stories.  On Tuesday the Washington Post offered a correction, noting that while Mr. Phillips served in the Marines from 1972 to 1976, he was ‘never deployed to Vietnam.’

“Some of the students did respond to Mr. Phillips by doing the Tomahawk Chop, and it would have been better had they all walked away.  But on the whole these teenagers were calm amid the provocations and far less incendiary than the adults who taunted them and the progressive high priests who denounced them....

“Many of these early critics have now apologized or walked back their initial condemnation.  But these social injustices perpetrated on social media are not so easily redressed. Covington Catholic was closed Tuesday for security reasons.

“Most of those who so eagerly maligned these boys will face no lasting consequences, while the boys themselves will always have to wonder, when they are turned down for a job or a school, whether someone had Googled their name and found only half this story.  This is an ugly moment in America, all right, but there are few things uglier than a righteous leftist mob.”

John Podhoretz / New York Post

“Can social media be saved?  We had better hope so.

“Over the past week, we have seen a virtual lynch mob hunt a group of high schoolers almost exclusively on the basis of truncated viral footage – and there has actually been an ongoing argument about whether what has happened to them is fair.

“The fact that there is even a discussion about this is a mark of how social media is corrupting our rational judgment.

“What happened to the boys from Covington Catholic High School wasn’t, isn’t and wound never be fair. They were sentenced to national contumely on the basis of a single minute of smartphone video taken in the midst of a two-hour series of verbal confrontations during the March for Life in Washington.

“Their pro-Trump hats and a freeze-framed ‘smirk’ were all the supporting evidence necessary to make the case that they were guilty of a monstrous – offense against the Native American in the footage who was playing the drum.

“Elementary fairness requires that people know the facts of a case before they pass judgment, and any minimal understanding of how things work in America today should ensure that people know there is no way to get the facts of the case in the five seconds it takes someone to read a tweet.

“We are supposed to be sophisticated about media and its uses in 2019. And we are supposed to know how easily we can be misled, either by design or unconscious biases.  This should be true particularly of the ‘opinion leaders’ who elevated the story to mainstream interest.

“Opinion leaders are supposed to know about the risks of selective editing.  They should know that a freeze-framed ‘smirk’ is an entirely evanescent expression, one of 24 frames in a second of conventional motion-picture stock – and that when you read meaning into it, you are revealing more about your own obsessions than you are interpreting a real-world phenomenon....

“We’re supposed to know about all this, but either we don’t or we just don’t care. The seduction of immediacy is just too great. So is the fear of remaining quiet in the face of something egregious.

“That is why many conservatives who might have been expected to line up in defense of pro-life Catholics went the other way and joined those in condemnation as soon as they could – not only because their outrage was real but also because they didn’t want to be seen as ignoring what appeared to be an outrageous moment of social misbehavior with the potential of tarring all pro-life Catholics.

“And, just to pile irony upon irony, after these conservatives apologized soulfully for their rush to judgment, others condemned them for having rushed to the side of the ‘libs.’

“Mobs have formed since humans made societies. But there is something entirely new about a social media mob, and that is the fact that joining it happens at no cost whatsoever.  You don’t have to get out of your house and go somewhere, pitchfork in hand.

“You don’t have to put yourself at personal physical risk in your confrontation with someone else....

“You can enjoy the tiny dopamine rush that comes not only from venting anger but from the performative aspect of that anger as it is expressed on social media – safe in the knowledge that you are far from any consequence the public expression of your anger might provoke....

“I love Twitter. But I also loved cigarettes.  And the second-hand smoke social media produce is making our public life diseased. It also does damage to its users; it makes most of us meaner and uglier and more hostile, and is therefore clearly a bad thing spiritually.

“I have no idea how Americans will find the restraint we need to limit the social media damage other than a revolution in manners that will encompass the whole society and not just the computer-networked part.  But we have to.  We have to.”

David Brooks / New York Times

“Within living memory, political polarization had at least something to do with issues, but in the age of social media it’s almost entirely about social type.  It’s about finding and spreading the viral soap operas that are supposed to reveal the dark hearts of those who are in the opposite social type from your own.

“It’s about finding images that confirm your negative stereotypes about people you don’t know. It’s about reducing a complex human life into one viral moment and then banishing him to oblivion.

“You don’t have to read social theory on this phenomenon; just look at the fracas surrounding the Covington Catholic High School boys.

“For those of you vacationing on Mars this past weekend, a video went viral showing a group of boys, many of them in MAGA hats, surrounding an older Native American man who was banging a drum....

“Many news organizations ran one (of Nathan Phillips’ two initial accounts).  Before you judge the reporters too harshly, it’s important to remember that these days the social media tail wags the mainstream media dog.  If you want your story to be well placed and if you want to be professional rewarded, you have to generate page views – you have to incite social media. The way to do that is to reinforce the prejudices of your readers.

“In this one episode, you had a gentle, 64-year-old Native American man being swarmed by white (boo!), male (boo!), preppy (double boo!) Trump supporters (infinite boo!).  If you are trying to rub the pleasure centers of a liberal audience, this is truly a story too good to check.

“Saturday was a day of liberal vindication. See! This is what those people do! This is who they really are....

“The institutions in charge of serving the boys did what institutions always do in the face of a social media mob. They cratered. The school and archdiocese apologized. The mayor of Covington denounced them.

“On Sunday several longer videos emerged showing that most of what Phillips had told the media was inaccurate.  The incident actually started when members of the hate cult – the Black Hebrew Israelites – started hurling racist and homophobic slurs at the boys.

“The Covington boys eventually asked their chaperone if they could do their school cheers.  As they were doing that Phillips walked into the middle of their circle and banged his drum in the face of one of the boys.  Everybody was suddenly confused.  Students shouted, ‘What is going on?’  Then there was confusion and discomfort, smirking and verbal jousting.

“Everybody involved in the incident was operating in an emotional and moral context that has been set by the viciousness of the Black Hebrew Israelites.  Of the major players, the boys’ behavior is probably the least egregious.

“So Sunday was a day of conservative vindication. See? This is what those liberals do! They rush to judgment, dehumanize and seek to expunge us from national life.  The main boy wrote a public letter that was consistent with the visual evidence and that was actually quite humane.

“In this case the facts happened to support the right-wing tribe. But that’s not the point. The crucial thing is that the nation’s culture is now enmeshed in a new technology that we don’t yet know how to control....

“The Covington case was such a blatant rush to judgment – it was powered by such crude prejudice and social stereotyping – I’m hoping it will be an important pivot point.  I’m hoping that at least a few people start thinking about norms of how decent people should behave on these platforms.

“It’s hard to believe that people are going to continue forever on platforms where they are so cruel to one another.  It’s hard to believe that people are going to be content, year after year, to distort their own personalities in service to a platform, making themselves humorless, semi-blind, joyless and grim.”

--Fred Barnes / Wall Street Journal

“What keeps Democrats in the mood for resistance after two years?  Mr. Trump has become a fixation.  No one arouses their opposition the way he does. Democrats are like those Trump-loathing columnists who can’t write about anyone but the president. They’re obsessed with Mr. Trump.

“The president fuels their mania daily. So does the media.  It seemed excessive when Fox News began running his speeches live during the 2016 campaign. But the ratings were great and other networks began showing much more of him, including the speeches.  Mr. Trump had seized center stage and never relinquished it.  Democrats continue to fume.

“Mr. Trump does things to keep the media, and thus Democrats, on his case.  He fights back.  He counterpunches harder than he’s been hit.  Speaker Nancy Pelosi should have known she couldn’t get away with postponing his State of the Union  address.  Yet his counterpunch caught her by surprise....

“Mr. Trump stirs controversy on purpose and for the same reason he fights back and ridicules those he dislikes: He wants attention.  At an early campaign event, he claimed John McCain wasn’t a hero in Vietnam because he was imprisoned in Hanoi after his plane was shot down. The remark got enormous press play.

“Democrats are as appalled by Mr. Trump as ever and remain committed to the resistance. And now they believe they have him in their clutches. They won the House in the midterm elections and intend to drop subpoenas like confetti.  They are eager to force Trump officials to testify on Capitol Hill.

“In Washington in 2019, hearings are likely to dominate the news.  They will cover much of the Trump territory that special counsel Robert Mueller has investigated, plus a whole lot more.  But Mr. Mueller does his work in private and House hearings are usually public.  This means Democrats are likely to be in attack mode....

“With party leaders focused on Mr. Trump, young progressives like Rep. Alexandria Ocasio-Cortez have taken on the task of making the party more left-wing.  She ‘has had the uncommon ability for a first-year member of Congress to push the debate inside the Democratic party to the left,’ the New York Times reported last week.

“Ms. Ocasio-Cortez’s talk of a 70% marginal tax rate on the highest incomes, a ‘Green New Deal’ to replace fossil fuels within 10 years, and abolition of the Immigration and Customs Enforcement agency has attracted media attention and favorable comments from Democratic presidential candidates.  Yet these are radical ideas unlikely to help the party win in 2020.

“Older Democrats haven’t stopped Ms. Ocasio-Cortez and her progressives allies from becoming a significant force in shaping their party’s future. They’ve been too busy resisting Mr. Trump.”

--The number of Americans without health insurance jumped to its highest level in four years, according to a Gallup report released Wednesday. 

The percentage of adults without health insurance climbed to 13.7% in the fourth quarter of 2018, from 12.4% a year earlier and 10.9% in 2016, Gallup’s data based on self-reported responses from tens of thousands of adults.

Per the report, about seven million more Americans lacked health insurance in the fourth quarter compared with the 2016 period, with women, low-income people and younger adults seeing the greatest rise in the uninsured rate, the poll found.

So this pits Democrats who say the White House is sabotaging the Affordable Care Act against Republicans who blame high premiums under the law for people out of coverage.

Related to the above, in a new survey from the nonpartisan Kaiser Family Foundation on the popularity of Medicare for all, support soars when people hear it would guarantee health insurance as a right.

But it becomes a political loser if people think it would lead to treatment delays.

Even a majority of Republicans surveyed support opening up Medicare and Medicaid – designed for the elderly and the poor – to some who wouldn’t otherwise qualify.

And 56 percent, as surveyed by Kaiser, back the idea of all Americans getting insurance from a single government plan.  But support shoots up to 71 percent when respondents were told Medicare for all could “guarantee health insurance as a right for all Americans.”  But then levels of support flipped when asked their views if the proposal would “lead to delays in people getting some medical tests and treatments.”

--Alejandro Bermudez / Wall Street Journal

“Father John Jenkins, president of the University of Notre Dame, announced Sunday that the school would cover a dozen murals depicting the life of Christopher Columbus.  ‘The murals’ depiction of Columbus as beneficent explorer and friend of the native peoples hides from view the darker side of the story,’ he asserted in a letter. While this decision may give the university a brief respite from its critics, it will never be enough. Columbus may be the momentary object of hatred, but the real target is the Catholic faith itself....

“In his letter, Father Jenkins mentioned Martin Luther King Jr.   Apparently he was unaware of the irony: Tearing down Columbus monuments has been the work of hateful fringe groups in this country for decades. The Ku Klux Klan pioneered the practice, and antifa has taken up the mantle in recent years. This is the company Notre Dame chooses to keep.

“As Catholic universities across the U.S. have become more secular, many hoped that they would at least remain safe for Catholic ideas. But this incident raises a troubling question: If murals that portray Columbus bringing the faith to this hemisphere are not welcome at a Catholic university, what part of Catholic identity is?”

I watched Father Jenkins on Martha MacCallum’s Fox News program on Thursday and was kind of miffed, as a Catholic myself.  Jenkins not only had a wormy response to the issue of covering up the murals, but at one point he said, “As a Catholic we’re interested in the full truth.”

Not the best statement to make in this time of self-inflicted Church turmoil, fueled by outright lies on the part of Church officials.

--Finally, we note the passing of humorist Russell Baker, 93, who together with syndicated columnist Art Buchwald (who died in 2007) provided generations of Americans with the lighter side of the news of the day, or our foibles.

The two were part of a simpler time in many respects.  We all actually read real newspapers, and the likes of Baker and Buchwald appeared in hundreds of them.

Baker’s best-selling autobiography, “Growing Up,” was compared by some as one of the more enduring recollections of American boyhood (in his case backwoods Virginia), Baker winning a Pulitzer Prize for it (one of two he received).

Baker also served as the host of “Masterpiece Theater” on PBS from 1993 to 2004, having succeeded Alistair Cooke.

---

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

God bless America.

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Gold $1308
Oil $53.55

Returns for the week 1/21-1/25

Dow Jones  +0.1%  [24737]
S&P 500  -0.2%  [2664]
S&P MidCap  +0.1%
Russell 2000  +0.02%
Nasdaq  +0.1%  [7164]

Returns for the period 1/1/19-1/25/19

Dow Jones  +6.0%
S&P 500  +6.3%
S&P MidCap  +9.4%
Russell 2000  +10.0%
Nasdaq  +8.0%

Bulls 45.4
Bears
21.3

Have a great week.

Brian Trumbore