Week in Review

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Week in Review

03/02/2019

For the week 2/25-3/1

[Posted 11:30 PM ET, Friday]

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Edition 1,038

Well this was an interesting week. Not a particularly good one, unless you are Bryce Harper, but even he would have been better off taking a 10-year, $300 million offer last fall to stay in Washington, where he was comfortable, rather than the 13-year, $330 million deal he signed with the Phillies, where he will be crucified when he has one of his ‘off’ seasons, which can be incredibly mediocre and numerable.  But I digress...as a Mets fan.

No, it was about President Trump’s summit with Kim Jong Un in Hanoi, and his former personal attorney Michael Cohen’s congressional testimony in D.C.

I cover both in great detail below, but for now, some in the country just need to take a deep breath, as in its March 1st, 2019, not September or October 2020.  Little, if anything, from this past week moves the needle.  Certainly when it comes to 2020, basically zero.

But so much is going to change between now and then.  And when it comes to how Americans vote for president in less than 21 months, regardless of everything that transpired this week, and in the coming months, it’s going to be about the economy in the summer and fall of 2020, geopolitics, specifically Russia, China, Iran and North Korea and whether American lives are being lost or are in peril, the Southern District of New York and whatever they come up with on Donald Trump, and who the Democrats select to run against the president.

There will be no impeachment.  But it does seem we’re headed towards a day when Trump is indicted once he’s out of office.  I couldn’t give a damn about that now.  I mean I hope it’s televised in 2021, or 2025...it would be fun, especially for those of us who normally have CNBC on most of the day...but it has nothing to do with today.

That’s my opinion...and so we move on....

Trump World...Hanoi...Cohen....

North Korea: President Trump suffered a major embarrassment in Hanoi, as he was trying to engineer a win and a distraction from the other news of the day in Washington, the Michael Cohen hearings.  Trump had said before the summit, repeatedly, that he was in “no rush” to get a deal, which may have undercut his strategy.

At a news conference after the talks were suddenly cut short, a “joint agreement signing ceremony” and lunch abruptly canceled, Trump said: “It was all about the sanctions.  Basically, they wanted the sanctions lifted in their entirety, and we couldn’t do that.”

“Sometimes you have to walk, and this was just one of those times,” Trump adding “it was a friendly walk,” as the parties left before what was no doubt going to be a scrumptious repast.  [I’m guessing Kim and his entourage made sure to get doggy-bags.  I have no shame in saying I would have too.]

Trump said he would be happy as long as North Korea conducted no further nuclear or missile tests.

Secretary of State Mike Pompeo revealed that the U.S. had wanted the North Koreans to “do more” to show it was sincere in giving up its nuclear weapons program and that Kim had refused.

Pompeo said Friday from the Philippines that North Korea had asked for full sanctions lifting during the summit, and “They were pretty expansive with respect to what they are prepared to do at Yongbyon, but there was still not complete clarity with respect to full scope of what it is they were prepared to offer,” the secretary told a news conference.

He said the United States was “anxious to get back to the table to continue that conversation.”

Pompeo added North Korea had “basically asked for full sanctions relief.”

But North Korean Foreign Minster Ri Yong Ho later said Pyongyang had sought only a partial lifting of sanctions.

Ri said that a realistic proposal had been made for engineers of both countries to dismantle all of its main nuclear site at Yongbyon.

“This is the biggest denuclearization step we can take based on the current level of trust between the two countries,” Ri said.

North Korean Vice Foreign Minister Choe Son Hui told the same briefing she had the impression that Kim “might lose his willingness to pursue a deal” after the U.S. side rejected a partial lifting of sanctions in return for destruction of Yongbyon, “something we had never offered before.”

U.S. officials say the North Koreans did not define exactly what they meant by the Yongbyon complex, nor could the two sides agree on what denuclearization means.    The U.S. says they were being offered an end to testing, and partial destruction of facilities, but that leaves Kim with his existing arsenal.

True, Trump didn’t impulsively offer further major concessions to Kim, after freezing U.S.-South Korea military exercises at the Singapore summit – without warning his own military leaders, let alone South Korea.

But Trump also showed his deal-making skills are no match for a problem as difficult as North Korea.  Plus twice now he has given Kim the international validation he craves, appearing side-by-side as an equal to the world’s most powerful leader.  Kim goes home, again, as a winner to his own people, giving nothing in return to the United States, no pathway whatsoever to denuclearization.

President Trump also continued to spew praise on the chubby despot who likes to blow people away with an anti-tank gun:

“He has a certain vision and it’s not exactly our vision, but it’s a lot closer than it was a year ago and I think eventually we’ll get there,” Trump said.

For its part, South Korean President Moon Jae-in said his country would work with the United States and North Korea to ensure they reach agreement on denuclearization.

Moon also said South Korea would consult the United States on ways to resume joint projects with the North, including tourism development at Mount Kumgang and the Kaesong industrial complex, both in North Korea. 

And then there was the case of ex-U.S. hostage Otto Warmbier, who was returned home from prison in North Korea in a coma from which he died a few days later.

Trump, incredibly, when asked if he had brought up the situation with Kim, said, “He felt badly about it.  He felt very badly.  He tells me that he didn’t know about it and I will take him at his word.”*

The universal word from Americans on hearing this is “reprehensible,” that our president, the same man who essentially said the same thing of Saudi Crown Prince Mohammed bin Salman and Russia President Vladimir Putin, when it came to the death of journalist Jamal Khashoggi and 2016 election interference, respectively, continues to kowtow to authoritarian figures.

No longer should Americans accept this, nor should we believe that Trump has masterful negotiating skills.

*Friday, the family of Otto Warmbier issued a statement rebuking President Trump: “We have been respectful during this summit process.  Now we must speak out.  Kim and his evil regime are responsible for the death of our son Otto.  Kim and his evil regime are responsible for unimaginable cruelty and inhumanity.  No excuses or lavish praise can change that.  Thank you.”

White House adviser Kellyanne Conway was then sent out to say that she had just spoken to the president about the issue.  “The president agrees with the Warmbier family and holds North Korea responsible for Otto Warmbier’s death.  The president was talking about, that Chairman Kim did not know what happened to Otto at the time when it happened.”

Friday afternoon, seeing the backlash grow, Trump tweeted:

“I never like being misinterpreted, but especially when it comes to Otto Warmbier and his great family.  Remember, I got Otto out along with three others.  The previous Administration did nothing, and he was taken on their watch. Of course I hold North Korea responsible....

“....for Otto’s mistreatment and death.  Most important, Otto Warmbier will not have died in vain. Otto and his family have become a tremendous symbol of strong passion and strength, which will last for many years into the future. I love Otto and think of him often!”

Notice whose name is still absent from blame.

So, back to the summit, after all the hype, where were the months of pre-summit lower level talks to set the stage for Hanoi that everyone agrees is normal practice?  Was President Trump really prepared?  It doesn’t seem so.

Analysts estimate North Korea may have a nuclear arsenal of 20 to 60 weapons, which if fitted to its intercontinental ballistic missiles, could threaten the U.S. mainland.

The collapse of the summit leaves Kim in possession of the arsenal, as well as his sizable conventional forces that could obliterate Seoul in minutes.

But Kim does face pressures at home, with zero sanctions relief, and he needs to convince his people he didn’t make a mistake in sitting down with the enemy.

Thus far, North Korean statements have stopped short of criticizing Trump.  How long this continues is to me the big interim question. 

And in dealing with Trump, Fareed Zakaria observes from his Washington Post perch:

“Trump has pulled out of the Iran nuclear deal, the Paris climate accord and the Trans-Pacific Partnership, and he has questioned the continuing value of NATO. He has repeatedly shown that he regards every decision made by his immediate predecessor to be at least wrong, and often treasonous.

“If you were a North Korean negotiator, you would surely be wondering whether any deal made by the Trump administration would be honored or properly implemented by its successors. And you would be right to wonder. The United States’ bitter polarization at home exacts a price in the nation’s credibility and consistency abroad.”

Josh Rogin / Washington Post

“Trump administration officials constantly say the foreign policy establishment’s decades-long failure with North Korea meant there was no choice but to give Trump’s fresh, personal, top-down method a fair trial. Today the verdict is in. Trump’s approach has failed, and Pyongyang is happily reaping the rewards.

“Make no mistake, the collapse of this week’s U.S.-North Korea summit in Hanoi is a win for Kim Jong Un.  Trump and his officials are already spinning this as a draw, stating that North Korea has promised to continue its testing moratorium, claiming unspecified progress was made inside the talks and promising the negotiations will continue.

“But by securing an extension of the process while giving up nothing on denuclearization, Kim can continue improving his country’s nuclear and missile capabilities, benefit from an ever-eroding sanctions regime and enjoy his elevated status as a newly respected member of the international community.

“The real question is: Did Kim plan it this way?  Did he lure Trump to Hanoi only to set demands he knew the United States could never agree to, while holding Trump’s hand so he would acquiesce?  There’s plenty of evidence that’s exactly what happened.

“We know much of this because Trump laid it out in his news conference before heading home.  He said Kim had offered to dismantle the Yongbyon facility but only in exchange for total sanctions relief.

“ ‘They were willing to denuke a large portion of the areas that we wanted, but we couldn’t give up all of the sanctions for that,’ Trump said.  ‘...We had to walk away from that.’

“Trump is correct; that would be a terrible deal. Yongbyon represents a small and antiquated portion of Kim’s nuclear infrastructure. But Trump can’t claim that he was surprised by that bad offer.  CNN reported that Trump’s top officials told him for days this was Kim’s position and Kim would not budge.

“Special envoy Stephen Biegun had been negotiating with his North Korean counterparts for weeks, but he couldn’t get the North Koreans to do more, like hand over a declaration of what they have. The notion that Trump, charismatic dealmaker that he is, could bridge that gap in a couple of meetings was never plausible.

“Contradicting Trump, North Korea’s foreign minister said Kim had asked for only partial sanctions relief for shutting down Yongbyon.  But even that would have been a bad deal, at least according to Moon Chung-in, a top adviser to South Korean President Moon Jae-in.  Speaking in Washington this week, he said, ‘It’s a good deal for North Korea and a bad deal for the United States.’

“No one is pushing harder for a U.S.-North Korea deal than the South Korean government.  If it knew the United States could not accept the deal Kim was putting forward, of course Kim knew that as well.  He’s evil but not stupid.

“Most likely, Kim’s offer was a poison pill, meant to signal just enough flexibility to get Trump to Hanoi but to ensure that the negotiations would fail.  Trump walked directly into the trap and doesn’t even seem to realize it.

“On top of all that, Trump committed two huge, unforced errors.  He refused to say the negotiation’s goal was to fully denuclearize North Korea.  ‘I don’t want to put myself in that position, from the standpoint of negotiation,’ he said. That contradicts everything his officials keep saying and actually weakens his own negotiating position.

“Trump also let Kim off the hook for the treatment of Otto Warmbier....

“Secretary of State Mike Pompeo claimed repeatedly that progress was made in Hanoi but gave zero information on what he was talking about....

“Trump may see a personal political benefit to dragging out his love affair with Kim and dragging the world along with them on this Sisyphean effort.  But the stink of this summit’s failure and the danger of the North Korean threat are only increasing over time.  No deal is better than a bad deal – but Trump getting played by Kim again and again is even worse.”

David Ignatius / Washington Post

“With the abrupt breakdown of the Hanoi summit, the diplomatic negotiations between the United States and North Korea got a reset, and that’s a good thing. If dialogue resumes, it will be on a firmer, more realistic basis....

“Cautioned by Secretary of State Mike Pompeo to avoid concessions on sanctions before he had hard evidence that North Korea was truly moving toward full denuclearization, Trump decided that ‘sometimes you have to walk.’

“After the summit collapsed Thursday without an agreement, some commentators blamed Trump for lack of preparation. This president doesn’t prepare very well for anything but, in this case, the criticism is somewhat misplaced.  It was the North Koreans who blocked adequate groundwork, by resisting U.S. efforts to plan for a productive meeting....

“Kim may have been encouraged to delay working-level negotiations by Trump’s gushy praise and the president’s emphasis on his personal chemistry with the young dictator. But the failure of the Hanoi summit will hopefully cure each side of any illusions about sweet-talking the other.

“The failure in Hanoi now puts both parties in closer touch with reality.  Pompeo and Biegun – determined to avoid the failure of past U.S. efforts to stop the North Korean nuclear program – have been adamant that UN sanctions shouldn’t be lifted unless North Korea takes steps to make its denuclearization pledges more believable.  Pyongyang’s proposal in Hanoi to dismantle its Yongbyon nuclear complex failed that test, because other secret facilities would remain.  North Korea now knows it will have to make a better offer....

“Walking away from engagement with North Korea would be a mistake. But hitting the pause button now makes some sense.”

Editorial / Wall Street Journal

“President Trump’s critics are carping that his top-down negotiating model undermined his nuclear summit with Kim Jong Un because the details hadn’t been settled on at lower levels of diplomacy. We give Mr. Trump more credit for walking away from a deal that would not have required North Korea to give up its nuclear weapons.

“Despite the long history of the North’s military threats, only recently has it developed and tested both nuclear bombs and the missiles to deliver them across the Pacific. The Hwasong-15 missiles, successfully tested in late 2017, is theoretically able to reach deep into the U.S. mainland. For the current U.S. Presidency, which happens to be Donald Trump’s, that is the hard reality. Something has to be done about this threat, and Mr. Trump has thrown away diplomatic convention to address it.

“One can quibble about Mr. Trump’s negotiating style – the over-the-top buttering up of the North Korean dictator, pushing the process to a summit before the principals on either side had arrived at a mutually agreed framework. But in the event, President Trump was willing to walk away without the deal Mr. Kim was offering. It was the right decision....

“(The) summit produced useful information about North Korea’s real intentions. The question is what to do next.  Mr. Trump said ‘we’ll get there’ and that talks will continue at lower levels.  Perhaps the continuing ‘maximum pressure’ campaign that includes sanctions will cause Mr. Kim to reconsider his lost opportunity to enter the 21st century.

“Meantime, the U.S. needs to prepare if Mr. Kim refuses.  One concern is that Mr. Trump in his post-summit news conference seemed to take off the table military exercises with South Korea.  Mr. Trump went on at length about how expensive these military preparedness drills are, ‘we don’t get reimbursed,’ and so on.

“Nuclear proliferation – whether from North Korea, Iran and others in the Middle East or indeed volatile Pakistan – remains the greatest threat the world and the U.S. faces.  Having the means to resist it is worth at least $100 million spent on the Korean Peninsula.”

Lastly, I’m a bit surprised that at week’s end no one was mentioning what North Korea’s state media said last Sunday, prior to the summit.

“If the upcoming DPRK-U.S. negotiations end without results as wished by the opponent forces (in the U.S.), the U.S. people will never be cleared of the security threats that threw them into panic and then responsibility will be placed on those due.”

This morning, Trump tweeted:

“Great to be back from Vietnam, an amazing place.  We had very substantive negotiations with Kim Jong Un – we know what they want and they know what we must have. Relationship very good, let’s see what happens!”

Michael Cohen hearing: As I allude to in my opening, Cohen hinted at another investigation involving Trump and he said it involved Trump’s breaking the law.

“Is there any other wrongdoing or illegal act that you are aware of regarding Donald Trump that we haven’t yet discussed today?” asked Rep. Raja Krishnamoorthi (D-Ill.).

Cohen responded: “Yes, and again, those are part of the investigation that’s currently being looked at by the Southern District of New York.”

On many occasions, Cohen actually defended the president, such as when he was asked about an alleged tape of Trump in an elevator in which he hit Melania.  Cohen said he had tried to establish whether it existed and found that it didn’t.  He said, too, that whatever he thought of Trump, that kind of behavior wasn’t in his repertoire.  “Mr. Trump would never,” Cohen said.

There were also two confusing exchanges that contradict the public record when it comes to Cohen.  He said on several occasions in his testimony he did not seek a job in the White House, but multiple reports indicated he did just that, though failing to land one.

And there is still the confusion over whether or not Cohen has ever been in Prague, Cohen denying under oath he had not, but various reports have him being there, including once telling the Wall Street Journal he was in Prague in 2001.

Gerald R. Seib / Wall Street Journal

“Speaking under oath, (Cohen) declared of the president of the United States, in a line that figures to be the lasting memory of his testimony: ‘He is a racist, he is a con man and he is a cheat.’

“As that suggests, Mr. Cohens’ description of the president’s character was withering.  More substantively, he said the president both directed hush-money payments to two women claiming affairs with him, and continued to personally pay back Mr. Cohen for the payment to one of the women, adult-movie actress Stephanie Clifford, while in the White House.  Mr. Cohen produced a check from the president to prove his contention. That would mean Mr. Trump not only lied about the payments publicly but may have been complicit in a campaign-finance violation by hiding expenditures made to benefit his presidential campaign.

“And second, Mr. Cohen said the president knew of the pending release of emails stolen from his Democratic opponent, Hillary Clinton, and her camp.  That suggests he might have been complicit in the dissemination of stolen goods.

“Significantly, though, Mr. Cohen also said he had no knowledge of collusion between Mr. Trump and Russia, which is the core matter being investigated by special counsel Robert Mueller.

“There was another, more political signal as well.  One after another, Republicans on the House Oversight Committee chose not to question the president’s actions but to attack Mr. Cohen.  They effectively swung behind Mr. Trump. And that suggested that, while Mr. Trump sustained a series of blows from a onetime loyalist, his support among House Republicans, at least, remains solid.”

At his post-summit news conference, President Trump said Cohen “lied a lot” during Congressional testimony, though Cohen had told the truth when he said there had been “no collusion” with Russia.

Editorial / Wall Street Journal

“Are you not entertained? That disdainful line from ‘Gladiator’ came to mind watching Democrats and Republicans maul each other Wednesday over Michael Cohen’s long denunciation of Donald J. Trump.  The day proved again that Mr. Trump has associated with some dreadful characters, and has no great character himself, but Democrats will need more than the testimony of a former fixer to impeach him....

“Mr. Trump could be in trouble if he lied to Mr. Mueller about what he knew about WikiLeaks, but we won’t know that until the special counsel reports.

“The same goes for evidence of Russia-Trump collusion, as Mr. Cohen said he had none.  Instead he offered ‘my suspicions’ based on overhearing a conversation between Mr. Trump and his son, Don Jr., that suggested Mr. Trump knew in advance about the 2016 Trump Tower meeting with a Russian lawyer.  Don Jr. said an unspecified meeting had been ‘set,’ and his father said ‘OK, good.’  The main political risk here would also be if Mr. Trump lied to Mr. Mueller about what he knew....

“More factually substantial was Mr. Cohen’s account of his hush-money payments to two women during 2016, including one in October.  The fixer said that Mr. Trump’s order to pay came soon after the Access Hollywood tape ‘wildfire’ and reflected Mr. Trump’s concern that news of the alleged affairs would hurt him with women voters.  Part of Mr. Cohen’s December conviction related to his role in what prosecutors said was this campaign-finance crime....

“The day was above all a reminder that Americans elected a President in 2016 who had spent decades in the sleazier corners of New York business and tabloid life. He surrounded himself with political rogues like Mr. Stone, legal hustlers like Mr. Cohen, and even brought in a Beltway bandit from central casting, Paul Manafort, as his campaign chairman for a time.

“Republicans knew all this when they nominated Mr. Trump, and now he and the GOP will pay a political price as Democrats marinate in that blue past in hearing after hearing.  Character does matter, especially in Presidents.

“How much will it matter politically?  Little in Wednesday’s hearing spoke well of Mr. Trump, but little of it will surprise Americans or by itself rise to an impeachable offense.  But the impeachment machinery is now up and running.  Democrats may find it’s not easy to stop, though they’ll need witnesses who are more credible than Michael Cohen.”

Trumpets....

--Tennessee GOP Sen. Lamar Alexander told President Trump on Thursday that he should reconsider his decision to declare a national emergency at the southern border or face a possible Republican rebellion.

Alexander, who is retiring, refused to say whether he would join three other Republicans – Susan Collins (Maine), Thom Tillis (N.C.) and Lisa Murkowski (Alaska) – in voting against the declaration.

With the Senate split 53-47, a fourth Republican would be needed to defeat the measure, with Trump having promised to veto any bill that would overturn his declaration in response to what he calls a “crisis” at the Mexican border, and there is no way the House and Senate can amass the two-thirds needed to override a veto.

Alexander’s point is that the president has other ways to raise the $5.7 billion he wants for the border wall.

Earlier this week the House approved a one-sentence measure to block the declaration, 245-182, with thirteen Republicans voting with the Democrats.

Senate Majority Leader Mitch McConnell told reporters on Tuesday that he expects the Senate will vote on the resolution before the next Senate recess, which will take place the week of March 18.

--From the New York Times:

“President Trump ordered his chief of staff to grant his son-in-law and senior adviser, Jared Kushner, a top-secret security clearance last year, overruling concerns flagged by intelligence officials and the White House’s top lawyer, four people briefed on the matter said.

“Mr. Trump’s decision in May so troubled senior administration officials that at least  one, the White House chief of staff at the time, John F. Kelly, wrote a contemporaneous internal memo about how he had been ‘ordered’ to give Mr. Kushner the top-secret clearance.

“The White House counsel at the time, Donald F. McGahn II, also wrote an internal memo outlining the concerns that had been raised about Mr. Kushner – including by the CIA – and how Mr. McGahn had recommended that he not be given a top-secret clearance.

“The disclosure of the memos contradicts statements made by the president, who told The New York Times in January in an Oval Office interview that he had no role in his son-in-law receiving his clearance.

“Mr. Kushner’s lawyer, Abbe D. Lowell, also said that at the time the clearance was granted last year that his client went through a standard process.  Ivanka Trump, the president’s eldest daughter and Mr. Kushner’s wife, said the same thing three weeks ago.

“Asked on Thursday about the memos contradicting the president’s account, Sarah Huckabee Sanders, the White House press secretary, said, ‘We don’t comment on security clearances.’”

President Trump can override the opinion of others to grant a clearance, but it’s the web of lies in this instance, and clearly, many in the intel community were concerned about Mr. Kushner and his family’s real estate businesses ties to foreign governments and investors.

--Trump tweets: The president went on a tirade when he returned from Hanoi.

 “Wow, just revealed that Michael Cohen wrote a ‘love letter to Trump’ manuscript for a new book that he was pushing. Written and submitted long after Charlottesville and Helsinki, his phony reasons for going rogue. Book is exact opposite of his fake testimony, which now is a lie!”

“Congress must demand the transcript of Michael Cohen’s new book, given to publishers a short time ago.  Your heads will spin when you see the lies, misrepresentations and contradictions against his Thursday testimony.  Like a different person!  He is totally discredited!”

“Oh I see!  Now that the 2 year Russian Collusion case has fallen apart, there was no Collusion, except bye (sic) Crooked Hillary and the Democrats, they say, ‘gee, I have an idea, let’s look at Trump’s finances and every deal he has ever done.  Let’s follow discredited Michael Cohen....

“....and the fraudulent and dishonest statements he made on Wednesday.  No way, it’s time to stop this corrupt and illegally brought Witch Hunt.  Time to start looking at the other side where real crimes were committed.  Republicans have been abused long enough.  Must end now!”

“Michael Cohen’s book manuscript shows that he committed perjury on a scale not seen before.  He must have forgotten about his book when he testified.  What does Hillary Clinton’s lawyer, Lanny Davis, say about this one. Is he being paid by Crooked Hillary.  Using her lawyer?”

“China Trade Deal (and more) in advanced stages.  Relationship between our two Countries is very strong. I have therefore agreed to delay U.S. tariff hikes.  Let’s see what happens?”

“If a deal is made with China, our great American Farmers will be treated better than they have ever been treated before!”

“So funny to watch people who have failed for years, they got NOTHING, telling me how to negotiate with North Korea. But thanks anyway!”

And you got what, Mr. President?

“HOLD THE DATE! We will be having one of the biggest gatherings in the history of Washington, D.C., on July 4th.  It will be called ‘A Salute To America’ and will be held at the Lincoln Memorial. Major fireworks display, entertainment and an address by your favorite President, me!”

This tweet really pissed me off.  We already have three major, national celebrations on the Fourth...the Boston Pops, the Macy’s Fireworks, and a Capitol Fourth...the long-running show that is indeed ‘A Salute to America’ in D.C.

I can’t believe no one said anything after this tweet, but if the president is serious, and he clearly didn’t hold any discussions with National Park officials on this, how the hell do you secure two massive crowds in Washington.  Or does Trump think PBS is just going to step aside for him?

I want an explanation.  Now!

--One day before Michael Cohen appeared before the House Oversight Committee, Rep. Matt Gaetz (R-Fla.), a conservative firebrand and White House ally, tweeted:

“Hey @MichaelCohen212 – Do your wife & father-in-law know about your girlfriends?  Maybe tonight would be a good time for that chat.  I wonder if she’ll remain faithful when you’re in prison. She’s about to learn a lot...”

Gaetz quickly deleted the tweet.  What an a-hole, many of his fellow Republicans saying as much. 

Wall Street and Trade Talks

The Dow Jones fell five points this week, 0.02%, to end its winning streak at nine, but Nasdaq’s continued, now ten, longest since 2012, even as the market largely stalled, waiting for further positive signs on the trade front, while digesting all the week’s news on the economy, which was plentiful.

The Dow and S&P are nonetheless off to their best starts to a year in about three decades.

So in the big catchup, post-shutdown, we started with the S&P CoreLogic housing data for December, up 4.2% year-on-year for the 20-city index, the lowest increase since Nov. 2014.  Las Vegas had the biggest rise, up 11.4% yoy, Phoenix 8%, with Chicago at the bottom, 2.9%.

December housing starts then came in well below expectations, down 11.2% over November.

Wednesday, December factory orders rose a less-than-expected 0.1%.

Thursday, we had a big reading in the Chicago Purchasing Managers’ report for February, a whopping 64.5, 50 being the dividing line between growth and contraction.

Friday, the February ISM manufacturing figure was a little shy of forecasts, 54.2, but still OK.

And we had important data on personal income for December, 1.0%, consumption down 0.5% (not good), with core PCE at 1.9%.

We also had January personal income, down 0.1%, well below expectations; the number for consumption delayed.

But the biggie came Thursday, when we finally received a report on fourth-quarter GDP from the Bureau of Economic Analysis, delayed a month by the shutdown, the number being 2.6%, down from the prior two quarters but better than most forecast.  [The Atlanta Fed’s GDPNow barometer, by the way, had moved up to 1.8% after all the data released Tues. and Wed., prior to the GDP report...still a miss, though the BEA will issue one revision later, March 28, vs. the customary two if the reporting had been as originally scheduled.]

So we have....

Q4 2018...2.6%
Q3 2018...3.4%
Q2 2018...4.2%
Q1 2018...2.2%

Officially, for the year the figure is 2.9%, but it rose 3.1% in the fourth quarter from a year earlier.  Hey, it’s 3% and no one can fault President Trump for touting the number.

2018...2.9%
2017...2.2%
2016...1.6%

Most economists, including the Fed, are calling for growth of around 2.5% in 2019, which is just fine (though the deficit will continue to grow at that level).

The personal consumption expenditures index, PCE, the Federal Reserve’s preferred inflation barometer, grew at a tame 1.5% pace in the quarter, 1.7% ex-food and energy.

Meanwhile, Federal Reserve Chairman Jerome Powell affirmed the central bank’s decision last month to stop raising interest rates while officials assess the impact on the economy of slower global growth and financial-market turbulence.

Powell told the Senate Banking Committee on Tuesday, “With our policy rate in the range of neutral, with muted inflation pressures and with some of the downside risks we’ve talked about, this is a good time to be patient and watch and wait and see how the situation evolves.”

Powell added, “When I say we’re going to be patient, what that really means is...we’re going to allow...the data to come in.”

Thursday night in New York, Chairman Powell reiterated the U.S. economy “is in a good place”, while adding signs of upward pressure on inflation “appear muted.”

Against this backdrop, the Fed’s rate-setting committee “will be patient as we determine what future adjustments” to interest rates are necessary, Powell said.  “This common-sense risk-management approach has served the Committee well in the past.”

On to Trade....

With the March 1 deadline for an increase on tariffs on $200 billion in Chinese imports approaching, President Trump tweeted last Sunday he would delay increasing the level from the current 10% to 25%.

“I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.  As a result of these very productive talks, I will be delaying the U.S. increase in tariffs now scheduled for March 1.

“Assuming both sides make additional progress, we will be planning a Summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement.  A very good weekend for U.S. & China!”

Robert Lighthizer, the president’s top trade adviser, cautioned Congress that hurdles remained in reaching a significant trade pact with Beijing.

President Trump had said: “If all works well, we’re going to have some very big news over the next week or two.”

But Lighthizer told members of the House Ways and Means Committee that he and his negotiators are maintaining a tough line with the Chinese, repeatedly using the word “if” when talking about the potential for reaching a deal.  If an agreement can be reached, he said, it would include concrete commitments to make structural reforms, like curtailing state subsidies, ending the forced transfer of intellectual property and opening up markets to foreign competitors.

The Chinese have fiercely resisted giving in on these areas.

Lighthizer told Congress: “I honestly believe that good people tried for 20 years the multilateral approach, the talk approach and the ‘let’s all go along get along’ approach, they just demonstrably failed....

“Is this perfect?  I’m not going to say it’s perfect, but at least it’s leading to results where everything else didn’t.”

Lighthizer added that Trump is patient: “His instructions to me are: You have to get a great agreement. If we have no agreement, we’ll just wait until we can get a great agreement.”

As to whether China would actually adhere to any deal, Lighthizer admitted this would be “a challenge that goes on for a long, long time.”

“We can compete with anyone in the world, but we must have rules, enforced rules, that make sure market outcomes and not state capitalism and technology theft determine winners,” Lighthizer told the Ways and Means committee.

On the now postponed deadline to raise tariffs to 25%, there is no time frame for reaching a deal with Beijing.

For their part, China’s state-run media had commentaries Monday playing up the progress but also warned the remaining differences would be the most difficult to settle.

“The outcome has sent positive messages to the world that China and the United States are able to properly solve trade disputes, laying the foundation for the two sides to reach a final agreement,” People’s Daily said.

“From extending the seventh round of trade talks by two days, to the U.S. postponement of raising tariffs against Chinese imports, the [outcome] suggests both sides’ sincerity, emphasis and sense of urgency to reach a deal as soon as possible,” a Xinhua commentary read.

“But they also underscore more time is needed for both sides to overcome differences in the critical stage of the negotiations.”

Editorial / Wall Street Journal

“The U.S. and China appear to be making progress toward a new trade deal, and doing so is essential to repair the damage that tariffs are inflicting on both economies.  But one emerging risk is that President Trump will undermine U.S. law as part of the trade negotiations.

“That risk was clear on Friday when reporters asked Mr. Trump about potentially dropping U.S. criminal charges against Huawei, the Chinese telecom giant, as part of the trade deal.  ‘We’re going to be discussing all of that during the course of the next couple of weeks. And we’ll be talking to the U.S. Attorneys. We’ll be talking to the Attorney General,’ Mr. Trump said. ‘But we’ll be making that decision.  Right now it’s not something that we’re discussing.’

“Hold on there, sir.  U.S. Attorneys aren’t trade negotiators. They’re prosecutors who enforce American law, and last month they unsealed an indictment charging Huawei’s chief financial officer Meng Wanzhou with violating U.S. sanctions against Iran.  A separate indictment says Huawei employees stole technology from T-Mobile, the U.S. telecom firm.  Suggesting that the U.S. could toss those indictments as part of a trade deal bolsters critics who say the indictments are political. Huawei and Ms. Meng deny wrongdoing.

“If the charges are merely intended to pressure China on trade, then the Justice Department should drop them and apologize. But if the evidence is clear that Ms. Meng and Huawei violated U.S. law, and Mr. Trump lets them skate to increase soybean exports to China, Mr. Trump will undermine U.S. sanctions and confidence in American justice.

“He’d also be doing a disservice to Canada, which has detained Ms. Meng at U.S. request pending extradition for trial in the U.S.  China has responded by arresting two Canadians in China on obviously political charges. Why should Canada, or any other U.S. ally, endure this diplomatic risk if it concludes that such U.S. indictments are political and will be dropped on presidential whim?

“Mr. Trump has already undermined U.S. sanctions policy by letting ZTE, another Chinese telecom firm, off easy....

“President Trump’s comments on Huawei appear to reflect his view that all global politics is transactional, like a real-estate deal.  He seems to think he and Mr. Xi can agree on terms and it will be done. That’s true for Mr. Xi, who runs an authoritarian system where the law is what he dictates.  That isn’t true for the U.S., where no one is above the law.

“Mr. Trump should be careful what he promises Mr. Xi on Huawei because he might not be able to deliver. He may find that new Attorney General Bill Barr doesn’t want to undermine his prosecutors by dropping charges, and that Congress could limit the President’s flexibility on sanctions.  Mr. Trump should keep the Huawei prosecutions out of any China trade deal.”

Understand the U.S. is still squeezing Europe to prohibit Huawei products in the buildout of their 5G networks, and we contemplate doing this?   

Lastly, tonight Trump just tweeted:

“I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions....

“....and I did not increase their second traunch of Tariffs to 25% on March 1st.  This is very important for our great farmers – and me!”

Europe and Asia

Lots of data for the eurozone (EA19) at month’s end.  The final manufacturing PMI for February was 49.3 vs. January’s 50.5, courtesy of IHS Markit.

Germany 47.6 (74-mo. low), France 51.5, Italy 47.7 (69-mo. low), Spain 49.9 (63-mo. low), Netherlands 52.7 (32-mo. low), Greece 54.2 (9-mo. high).  Also, UK 52.0.

Chris Williamson, chief economist, IHS Markit:

“Euro area manufacturing is in its deepest downturn for almost six years, with forward-looking indicators suggesting risks are tilted further to the downside as we move into spring.

“Most worrying is the downward trend in new orders.  Orders are falling at a faster rate than output to a degree not seen for seven years, meaning production is likely to be pared back further in coming months unless demand revives....

“Spare capacity is consequently developing, which means companies are likely to take a more cautious approach to hiring and investment....

“The weakening demand environment has meanwhile been accompanied by a marked easing of inflationary pressures to the lowest since late-2016....

“In addition to widespread trade war worries, often linked to U.S. tariffs, and concerns regarding the outlook for the global economy, companies report that heightened political uncertainty, including Brexit, is hitting demand and driving increased risk aversion.”

Speaking of inflation, a flash estimate on same for February, via Eurostat, came in at 1.5%, annualized, up from 1.4% in January, and just 1.2% ex-food and energy, the same as a year ago.

Also, euro area unemployment in January came in at 7.8%, stable compared with December and down from 8.6% in January 2018.  This remains the lowest rate recorded in the EA19 since October 2008.

Germany 3.2%, France 8.8%, Italy 10.5%, Spain 14.1%, Netherlands 3.6%, Ireland 5.3%, Greece 18.5% (Nov.)

Brexit: British Prime Minister Theresa May promised MPs a vote on delaying the UK’s departure from the EU or ruling out a no-deal Brexit, if they reject her deal next month, Mrs. May making the statement to MPs on Tuesday, amid the threat of a revolt by Remain-supporting ministers.

Yes, Mrs. May is once again “kicking the can down the road,” “running out the clock,” which she has been doing for months now.

The prime minster said she will put her withdrawal agreement – including any changes she has agreed to with the EU – to a meaningful vote by March 12.

If that fails, MPs will be offered two separate votes:

One, the following day, on whether MPs support a no-deal Brexit – so the UK would “only leave without a deal on March 29 if there is explicit consent in the House for that outcome,” or....

If that fails, then MPs will get a vote by March 14 on requesting an extension to the two-year Article 50 negotiating process to delay EU withdrawal beyond March 29.

“Let me be clear, I do not want to see Article 50 extended,” May told MPs.  “Our absolute focus should be on working to get a deal and leaving on 29 March.”

But here’s the big problem. Extending Article 50 would require the unanimous backing of the other 27 EU member states and, Mrs. May said, she hasn’t had any conversations about it with them.

So March 12-14 are now the critical dates in the process.  Some of the most important in the history of Britain.

And the prime minister must get terms in Brussels that she can sell to the Commons in the interim.

But the EU’s chief Brexit negotiator Michel Barnier said, we don’t need more time, we need decisions.  And regarding the critical Irish backstop, Barnier said Wednesday, “I am doing all I can,” but the backstop “cannot be renegotiated.”

Labour Party leader Jeremy Corbyn said he will back another EU referendum after his alternative Brexit plan was again defeated in the Commons.  But he also said he would continue to push for “other available options” including a general election.

Labour’s Brexit proposals – which would see the UK join an EU customs union – were defeated 323-240.

Corbyn said: “We will back a public vote in order to prevent a damaging Tory Brexit or a disastrous no deal outcome.

“We will also continue to push for the other available options to prevent those outcomes, including a close economic relationship based on our credible alternative plan or a general election.”

French President Emmanuel Macron weighed in on Wednesday, saying the EU would only agree to extend the Brexit deadline beyond March 29 if Britain justified a delay with a clear objective and new choices.

Reminder, the original 2016 referendum to leave the EU passed 52% to 48%.

France: In an interesting development, the French public has begun to turn against the yellow-vest movement, according to a new poll, a sign of relief for President Macron.  Odoxa, an independent French polling agency, published a survey in which 55% of the 1,004 polled said they wanted the protests to stop.  Last month the figure was 49%.

Monday’s poll also showed Macron’s approval rating rose to 32% this month, compared with 27% in December, when the large-scale protests were at their peak, the movement having begun in November.

While Macron is sticking to the substance of his economic overhauls, he has softened his tone, appearing at town-hall gatherings across the country.

Last weekend, Macron received a warm welcome at France’s annual agricultural trade show in Paris, where just a year ago he was jeered.  As reported by the Wall Street Journal, the president spent “14 straight hours shaking hands and chatting with farmers.”

“I’m fully aware of the daily struggles, of the tragedies that have been taking place in some of our regions for far too many years,” he told the gathering on Saturday.

Understand the images were shown across French television and had to have played very well, at one point Macron holding “a sobbing farmer in his arms for a few seconds after telling him his pension was too low and that his office would sort it out for him.”

Turning to Asia...

The official manufacturing PMI in China came in at 49.2 in February, the weakest level since Feb. 2016, the third month in a row of contraction, while the non-manufacturing (services) reading fell to 54.3 from 54.7 the prior month, but still well above the 50-mark.

The private Caixin reading on manufacturing for February rose to 49.9 from 48.3 in January. Factories continued to cut costs by shedding staff for the 64th straight month. 

Japan’s February PMI for manufacturing was just 48.9, the lowest in 32 months, and down from January’s 50.3.  Additionally, Japan’s factory output fell 3.7% in January over December, the biggest decline in a year as slowing China demand continues to take a toll, while retail sales grew just 0.6% year-on-year in January, well below economists’ estimates, and down from a 1.3% rise in December.

In South Korea, exports fell 11.1% in February, the most in nearly 3 years, while imports declined 12.6%, according to the Korea Customs Service.

Street Bytes

--As noted above stocks finished mixed owing to the Dow’s five-point, 0.02% decline to 26026.  But the S&P gained 0.4% and Nasdaq 0.9%.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr.  2.55%  10-yr. 2.75%  30-yr. 3.12%

The yield on the 10-year rose 10 basis points on the week due to the stronger than expected economic news.

--Crude oil traded near its recent highs after the Energy Information Administration revealed that domestic inventories decreased last week by 8.6 million barrels, the largest week-over-week reduction so far in 2019. Exports of crude have been robust, with the U.S. taking in fewer imports; in this week’s report, down to the lowest rate since February 1996.

So if the total storage level continues to decline, prices will rise, including at the pump.  Crude prices were also helped when Saudi Arabia’s influential energy minister brushed aside pressure from President Trump to tread carefully as OPEC and its allies cut output.

Trump had tweeted: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”

Oil did decline a bit Friday to close the week at $55.75 on West-Texas Intermediate.

--China’s stock market rocked this week on trade-deal optimism, 6.8% (up 20% since the start of the year, note to President Trump), as well as the news index provider MSCI Inc. said it would more than quadruple the contribution of mainland Chinese shares to an influential global benchmark, which makes stocks in Shanghai and Shenzhen more important to global investors.

--Home Depot Inc. executives said wet weather around the country hurt quarterly sales at the world’s largest home improvement chain, and while upbeat about consumer spending, the company tempered its growth expectations for 2019.

Comparable-store sales rose 3.2% for the quarter ended in February, below the Street’s forecasts for 4.5%, while HD said it is expecting comp sales growth in its current fiscal year to come in slightly lower compared with the previous one, 5% vs. 5.2% for fiscal 2018.

Net sales were $26.49 billion, up 11% from a year ago, while the board raised the quarterly dividend by 32% to $1.36 and authorized a new $15 billion share-repurchase program.

--Lowe’s, the second-largest home improvement chain, reported adjusted earnings that beat the Street’s expectations, but sales fell short of forecasts, $15.6 billion, up from $15.5 billion in the fourth quarter of 2017, with same-store sales rising 1.7%; 2.4% in the U.S.

Lowe’s has been undergoing a company-wide overhaul and CEO Marvin Ellison, who took over in July, said the company still has work to do, but that it is pleased with results thus far in the transformation, which has included closing stores and exiting Mexico, as well as replacing executives.

In December, Lowe’s said it will be hiring roughly 2,000 software engineers to improve its digital capabilities.

--Macy’s signaled 2019 would be challenging, predicting flat sales and announcing another round of cost cuts as part of a plan to save $100 million a year.  100 jobs would be eliminated.

Macy’s net sales for the period ended Feb. 2 fell 2.5% to $8.46 billion, in line with forecasts.

Comp sales at stores open at least a year grew 0.4% for the fourth quarter, less than estimates.

CEO Jeff Gennette conceded “Things did slow down a little bit,” in December, though said it was difficult to tell how great the impact of the government shutdown was on sales, Gennette nonetheless feeling “the consumer is healthy.”

Gennette also said that Macy’s was exploring options for its Herald Square flagship that could involve adding complementary uses to the location, though he stressed Macy’s would continue to operate in the space.

Macy’s operates about 680 department stores under the Macy’s and Bloomingdale’s names.

--Gap Inc. announced it was separating its fast-growing budget brand, Old Navy, from the rest of the business, creating two publicly-traded companies, an acknowledgement Gap is struggling and Old Navy outperforming with its lower price-points.  Old Navy now exceeds Gap in sales, making up nearly half of the overall total of $16.6 billion (Gap Inc. also including Banana Republic).

Gap used to rule the malls, back at a time when its commercials featured celebrities wearing its blue jeans.  Now Gap is announcing it will close roughly 230 of the namesake stores.

Shareholders loved the move, taking Gap shares up 16% on the announcement.

--JC Penny’s comparable-store sales fell at a slower pace than expected and the shares surged over 20 percent to $1.50.  A strategy of better serving its core base of middle-aged women rather than chasing after millennials with fickle tastes seems to be paying off.

Penney is worth less than a tenth of its value two years ago after shuttering hundreds of stores (and announcing Thursday another 18 will be closed).

--Shares in Best Buy Co. surged 14 percent Wednesday after it gave an upbeat profit forecast for the year and reported better-than-expected holiday-quarter sales, the company citing the frenzy for battle royale game “Fortnite” for a boost in sales of gaming gear.

Best Buy’s report comes after a largely disappointing holiday season for retailers, which continue to struggle with Amazon and other online sellers.  Instead, Best Buy has focused on customer service that has helped drive both store and online sales.

Domestic comparable sales rose by 3 percent, beating estimates, for the three months ending Feb. 2, with growth across wearables, appliances, smart home and gaming, being partially offset by a decline in sales of mobile phones.

--A U.S. appeals court approved AT&T’s deal to buy media company Time Warner on Tuesday, a defeat for the Trump administration which had argued the $85.4 billion merger would mean higher prices for consumers.  It was AT&T’s second major court victory against the Justice Department, the deal a target of criticism from President Trump, who opposed it because he saw it helping Time Warner’s CNN unit, which he has accused of broadcasting “fake news.”

The appeals court said it would give the Justice Department seven days to seek a rehearing or a review by the full appeals court before issuing the formal legal mandate.

--PG&E Corp. said Thursday it is probable its equipment sparked the deadliest wildfire in California history as it recorded $11.5 billion in charges related to fires over the past two years.  The utility sounded a warning about its future, saying it would not be able to continue as a going concern, as it experiences extreme financial duress in the wake of its bankruptcy filing and $30 billion in potential further liabilities.  PG&E has thus far recorded $14 billion in wildfire-related charges, which exceeds its current market capitalization.

But the company’s fate, seeing as it provides essential services to more than 16 million customers with its gas and electric service, is in the hands of California lawmakers and regulators, though investors remain optimistic, the stock closing the week of $18.

--Shares in Campbell Soup Co. soared 10 percent Wednesday after the company reported sales that were better than expected, though comp sales were flat in the latest quarter, nonetheless beating analysts’ forecasts.

Like Kraft Heinz, which reported miserable results last week, Campbell’s business has eroded over the years as new brands have challenged grocery mainstays by offering fresher, natural ingredients.

Campbell responded by acquiring refrigerated-food brands, a strategy that backfired, so it has now refocused on soup and snacks, like Pepperidge Farm Goldfish crackers, which are doing well.  Campbell’s U.S. soup sales have also shown improvement after suffering double-digit declines the prior year.

--General Electric Co. disclosed that it shed 30,000 workers last year as the conglomerate restructured its operations and sold off some business lines.  The company ended 2018 with 283,000 workers, including 97,000 in the U.S., according to its annual filing Tuesday.  Most of the decline came from the troubled power business.

GE ended 2018 with $110 billion in total debt, down from $134.6bn a year ago, the reduction of the company’s debt load being a key focus of CEO Larry Culp, who has pledged to repay about $30 billion through asset sales, including a deal reached this week to sell GE’s biotech business to Danaher for $21 billion; Danaher being Culp’s old company where he was CEO before taking over at GE in October.

--Warren Buffett’s Berkshire Hathaway is still licking its wounds following Kraft Heinz’s disastrous earnings report from last week. Over the weekend his Berkshire Hathaway holding company issued its quarterly report and reported a $25.4 billion loss due to the unexpected write-down at Kraft Heinz and unrealized investment losses.

For the year, however, Berkshire posted $24.8 billion in operating earnings, a record high, as Buffett noted in his annual letter to shareholders that was released Saturday.

But Buffett offered no hints about who will succeed the 88-year-old as CEO, though it is still expected that either Ajit Jain or Greg Abel, who were both elevated last year to vice chairmen, will oversee many of Berkshire’s day-to-day operations, with one eventually succeeding Buffett.

Berkshire’s earnings are highly volatile because of its large stakes in companies such as Wells Fargo and Apple Inc. and an accounting rule that went into effect last year requires Berkshire to include unrealized gains or losses in its net income.

But Berkshire hasn’t done a major deal in three years, and Buffett, sitting on $112 billion in cash at year end, has said he’s having difficulty identifying large companies to buy, though he said he is still hoping for “an elephant-sized acquisition.”

Buffett said in an interview on CNBC Monday, “We overpaid for Kraft,” a rare admission of failure by him, as he added he was “wrong in a couple of ways on Kraft Heinz.”  Buffett and Brazilian investment fund 3G Capital bought Kraft in 2015 to merge with Heinz in a deal valuing Kraft at $62.6bn.  When the combined company floated on the stock market at the time it was worth $89bn – on Monday it was worth $41.6bn.

Kraft Heinz was also hurt by its failed hostile bid to acquire Unilever for $143bn in 2017, Buffett having opposed the move.

On the issue of changing consumer tastes, Buffett acknowledged:

“We both misjudged the retail versus brand fight as to who would be gaining ground on the other,” he said, referring to retailers that have pushed their own private label brands over established labels owned by the likes of Kraft Heinz.  “With Amazon and Walmart fighting it’s a bit like the elephants fighting. The mice get trampled.”

--Elon Musk announced Thursday that Tesla was delivering on a big promise – a $35,000 Model 3.  But Musk’s previous claim that Tesla’s days of losing money are over is out the window, the CEO telling reporters after the market closed yesterday that the company won’t post a profit in the first quarter.

“Given that there was just a lot happening in Q1, and we’re taking a lot of one-time charges and there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable in Q1,” Musk said.  “But we do think that profitability in Q2 is likely.”

I’d be a seller on his Q2 prediction.

Tesla’s shares had risen ahead of the announcement as Musk teased it, tweeting the company had news to share.  Today, they lost nearly 8% to $295.

Musk also announced he planned to trim costs by closing stores and cutting more jobs, shifting to online-only ordering, which allows the company to lower the price of the Model 3.  Tesla will also be “significantly reducing” its spending on sales and marketing.

I’ll be curious if a ‘store’ in The Mall at Short Hills (next to me) keeps its store as Musk said some will survive as ‘galleries.’

So a big issue now, more so than ever, will be ‘servicing’ of the vehicles.

Tesla also said all Model 3s on backorder today will be delivered by end of June to claim the $3,750 federal tax credit. As of July 1, the credit falls to $1,875 (and goes away entirely end of the year).

Earlier, the Securities and Exchange Commission, in a filing Monday, said Musk should be held in contempt for violating an agreement that settled fraud charges by tweeting material information about his company without prior review.

The potential repercussions are big, as in Musk could be unseated as CEO and banned from serving as an officer of a publicly traded company.

Musk, who hasn’t been shy about expressing his disdain for the SEC, tweeted last week that Tesla would produce 500,000 cars this year, which violated a deal requiring pre-approval for tweets containing material information pertaining to the company or its shareholders, the agency said.

Last August, Musk, Tesla and the SEC struck a deal to settle fraud charges over a series of tweets, including one in which Musk claimed he had “funding secured” for a deal to take Tesla private at $420 a share.  Under the deal he agreed to have the company monitor his public comments before putting them out on Twitter or elsewhere.

One more...Tesla delivered its largest-ever bond payment tonight, likely using up nearly a quarter of its cash.  Recall I noted the conversion price for its $920 million in convertible notes was $359.87 a share and we finished well below that today.  Time to pay up.  This isn’t good for future capital raises for Tesla.

--The key six-county Southern California housing market took another hit in January, with sales plunging 17% from a year earlier, according to real estate data firm S&P CoreLogic.

The median price rose just 2% from January 2018 to $505,000, with the median now $32,000 below its all-time high reached in June, while sales, clocking in at 12,665 last month, haven’t been this low in January since 2008.

--For those of us in the New York, New Jersey area, we have long known that the two, century-old tunnels carrying Amtrak and NJ Transit trains into Penn Station from New Jersey are deteriorating rapidly because of age and damage from Superstorm Sandy and that a nearly $13 billion project to create two new rail tubes under the Hudson River, called the Gateway Project, is critical to the economic future of the region.

Gateway is for the purposes of allowing the original tunnels to be closed and repaired without constricting train traffic.

But as Daniel Geiger of Crain’s New York Business reports, a study by the Regional Plan Association and Arup stated the local and national economies would take a $16 billion hit, with home values in the region dropping by $22 billion if there was an unplanned shutdown of passenger-rail service under the Hudson.

The Trump administration, though, has pulled support for the project, which is actually part of a total $30 billion plan including other infrastructure upgrades, like the replacing of a key bridge in New Jersey.

This is a project that should have started years ago, but it’s getting late early, as Yogi Berra would say. 

--From an op-ed by John Rie and Alan Emery in the Wall Street Journal:

“If Americans want a ‘Green New Deal,’ they should try the nuclear option.

“Nuclear power is clean, carbon-free, 24/7 power, 365 days a year. It’s scalable more quickly than other carbon-free sources and takes up far less space. From 1970-90 Sweden doubled its energy output by deploying nuclear plants while reducing carbon emissions 50%.  Its economy expanded by 50% while fossil-fuel use dropped by 40%....

“The proposed Green New Deal is based on solar, wind and hydro power.  By themselves, those sources aren’t serious solutions to the problem of global energy demand.  Wind and solar power output vary with nature, and both are short-lived power solutions, about three to five times as costly as nuclear over time... The usefulness of hydropower is severely limited by geography.

“Nuclear power, on the other hand, is a stable, profit-generating, 24/7 carbon-free source of energy at low cost to consumers using the existing grid and fully proven technology....

“Is nuclear power generation dangerous?  The only major nuclear accident in the U.S. – Three Mile Island, in 1979 – caused neither death nor increase in cancer areawide. The 2011 ‘disaster’ at the Fukushima plant in Japan also directly caused neither deaths nor disease from exposure to radiation.

“World-wide, there have been fewer than 150 deaths from nuclear plants, mostly from the 1986 Chernobyl accident, in which bad design and a series of operator errors led to a significant release of radiation into the environment.  Thanks to the Soviet government’s attempt to keep it secret, lifesaving efforts such as the provision of iodine pills to local residents never happened.  For comparison, according to a 2012 World Health Organization report, urban outdoor air pollution from the burning of fossil fuels and biomass is estimated to cause three million deaths world-wide each year.”

It’s difficult for younger folks, such as AOC, to understand how no single incident in U.S. history set back economic policy and public health more than the total hysteria created by Three Mile Island.  It killed off nuclear power for multiple generations in this country. 

I also have to add that I’m probably the only one in my audience who has been to the Chernobyl museum in Kiev, years ago, and what was so sad there was how the heroic firemen went into the nuclear inferno wearing little more than what looked like London Fog raincoats, totally oblivious to the dangers they were facing.  Over 20 of them died.

--Concerns about a slowdown in membership growth for Weight Watchers International dealt major shareholder Oprah Winfrey a big blow.  Winfrey owns 8% of the company and she lost $58 million on paper Wednesday as the stock plunged.

The company was rebranded in 2018 as WW with Winfrey’s blessing, aiming to ride a wave of interest in wellness and natural ingredients.  But the pivot away from a focus on weight loss isn’t helping.  Fourth-quarter net income fell 30 percent to $43.8 million.  Subscribers, though, totaled 3.9 million, up 22.4 percent from a year earlier.

CEO Mindy Grossman said in a statement that the company has had “a soft start to 2019 versus last year’s strong performance.”

So to regain momentum, Winfrey has personally agreed to “play a central role in our upcoming TV and digital marketing campaign,” Grossman said.

Winfrey started investing in Weight Watchers in 2015 and her shares remain nearly three times their original value, but the stock is off 82 percent from its 52-week high of $105.73.

--Foot Locker kicked butt with its earnings report today and the shares rallied 6%.  I’ve been a mall walker this winter (well before the mall actually opens) and as I do my circuit of every store in the place, I’ve been impressed with Foot Locker, which always had a cramped space and then took a larger one and has a great look....a Lululemon look.  You want to go inside.  Good for FL.  I never thought they’d survive, and now they’re thriving.  This is a case where the CEO is clearly making a difference.  More on them in the future. 

--Bank of America is downgrading the iconic “Merrill Lynch” name as part of CEO Brian Moynihan’s effort to rebrand the company under a single title.  Only Merrill Lynch Wealth Management, the more traditional brokerage unit, will retain the Merrill Lynch title.

BofA merged with Merrill Lynch at the height of the financial crisis in 2009.

--In a radio interview, former Federal Reserve chairwoman Janet Yellen said she didn’t think President Trump understood economic policy or the mission of the Fed.  Yellen also said in the interview on the American Public Media radio program “Marketplace” that she was worried Trump’s episodes of caustic criticism of the Fed and current Chair Jerome Powell’s rate-rise campaign could hurt the Fed and make it harder for it to do its job effectively.

Asked if she thought Trump understood economic policy in the broadest sense, Yellen replied, “No, I do not.  I doubt that [Trump] would even be able to say that the Fed’s goals are maximum employment and price stability.”  [Michael S. Derby / Wall Street Journal]

--Shares in SeaWorld Entertainment rose 8 percent on Thursday after the company reported revenue that was better than forecast.  Attendance also increased 8 percent to 4.6 million from the same quarter in 2017.

--ABC’s determination to have a faster-paced Oscars telecast paid off as the audience for Sunday’s ceremony grew nearly 12% over 2018’s all-time low.

The Oscars averaged 29.6 million viewers compared to 26.5 million a year ago, according to Nielsen.

After comedian Kevin Hart bailed out over hosting due to a backlash over past gay-related jokes, ABC opted to go without a host, and I sure didn’t notice a difference.  The program clocked in at 3:13 (prior to the last break), shorter than the average of 3:30 from 2010 to 2018.

ABC also saw a 13% gain in the 18-to-49 age group, the demographic most important to advertisers.

The Oscars’ audience was 43.7 million as recently as 2014.

Foreign Affairs

India / Pakistan: For a time this week it looked like India and Pakistan were on the brink of war, after Pakistan said it shot down two Indian military aircraft over its territory Wednesday and launched strikes in Indian-controlled Kashmir, while India claimed it shot down a Pakistani fighter jet.

Tensions ratcheted up further when Pakistan announced the capture of an Indian fighter pilot, Pakistani military officials posting a photo of him.  India demanded his immediate release.

But by week’s end, Pakistan returned the pilot as Prime Minister Imran Khan told his nation he wanted to avoid war and urged, “Let’s settle this with talks.”

Indian Prime Minister Narendra Modi at first issued some bellicose statements, before appearing to walk back some.

The tit-for-tat airstrikes were triggered by the terrorist bombing in Indian-controlled Kashmir on Feb. 14 that killed 44 Indian security personnel, the attack claimed by a Pakistan-based militant group called Jaish-e-Muhammad.

India early in the week then claimed it bombed a militant camp inside Pakistan, with the initial reports I read from Indian media claiming they had killed 300!  Pakistan then said the bombs had fallen on an uninhabited forested area and that there were no casualties.

Russian President Vladimir Putin told Prime Minister Modi in a phone call that he hopes for a quick settlement of the crisis, while both leaders expressed their interests in further strengthening military and technical ties, according to the Kremlin.

Yes, China is on the side of Pakistan, and Russia is trying to ensure it is in India’s orbit, more so than the U.S.

Iran: Foreign Minister Mohammad Javad Zarif returned to work on Wednesday after the country’s president Hassan Rouhani rejected his offer of resignation.

Zarif had announced he was stepping down on Monday, the U.S.-educated architect of the 2015 nuclear deal with world powers announcing on Instagram: “Many thanks for the generosity of the dear and brave people of Iran and its authorities over the past 67 months. I sincerely apologize for the inability to continue serving and for all the shortcomings during my service.  Be happy and worthy,” he wrote.

Zarif gave no specific reasons for his resignation, which rocked the diplomatic world.  Unconfirmed reports said he resigned over Syrian President Bashar al-Assad’s visit to Tehran on Monday, with Zarif not pictured in any of the coverage of the visit.

Zarif had been under attack from anti-Western hardliners in Iran after the United States pulled out of the agreement last May and reimposed sanctions on Iran’s economy and its lifeblood oil industry that had been lifted under the deal.

U.S. Secretary of State Pompeo dismissed Zarif and Rouhani as “front men for a corrupt religious mafia.  Our policy is unchanged – the regime must behave like a normal country and respect its people,” Pompeo tweeted.

Zarif’s resignation was a severe blow to Rouhani, who said on Wednesday: “I will not agree with your resignation.”

“Borrowing the words of the supreme leader [Ayatollah Ali Khamenei], I see you as ‘trustworthy, valiant, brave, pious’ and in the front-line of standing against sweeping U.S. pressure.”

Rouhani and Zarif have led efforts by centrist politicians to keep Iran’s 2015 nuclear deal alive; Zarif the main figure working with Europe, Russia and China to counter President Trump’s withdrawal.

But the drama highlights Iran’s internal power struggle as the nation deals with the crippling sanctions, which have exacerbated divisions between the hardliners and the moderates backing the president and Zarif.

Zarif suggested he would stay on.

Syria: President Trump declared on Thursday that “we just took over 100 percent” of territory controlled by the Islamic State in Syria.

“You kept hearing it was 90 percent, 92 percent, the caliphate in Syria. Now it’s 100 percent, we just took over,” Trump said in remarks to troops in Alaska as he headed home from Hanoi.  “That means the area of the land. We just have 100 percent.  So that’s good.”

As Trump was making his comment, American forces, working with their partners, the Syrian Democratic Forces, were waging a fierce battle to seize the last square mile of ISIS territory on the border with Iraq. 

Israel: As long expected, Israel’s attorney general, Avichai Mandelblit, announced plans on Thursday to indict Prime Minister Benjamin Netanyahu on charges of bribery, fraud and breach of trust, imperiling his political future just 40 days before he is to stand for re-election.

The announcement was the culmination of a two-year investigation into Netanyahu’s dealings with wealthy businessmen, including a Hollywood movie producer, Israeli newspaper publishers and the head of the country’s largest telecom conglomerate.

Netanyahu is now entitled to a hearing, a process that can take weeks, or months, but if the case proceeds, he would be the first sitting prime minister to be indicted.  He does not have to resign should he be so.

The police accused Netanyahu of trading lucrative official favors for gifts worth hundreds of thousands of dollars including cigars, Champagne and jewelry, and for flattering news coverage.

Despite the drip, drip, drip of the coverage of the investigation the past two years, Netanyahu’s popularity has been barely diminished, yet he does face a stiff challenge in the April 9 vote from Lt. Gen. Benny Gantz, the former army chief of staff, Gantz’s arguing the country needs a fresh start after a decade of Netanyahu.

For his part, Netanyahu assailed the news of the week as a “witch hunt,” but as the indictment became increasingly certain, he has grown more divisive, and some of his right-leaning base is beginning to wobble.  A poll by The Times of Israel published on Thursday, ahead of Mandelblit’s announcement, did show that Gantz’s party would gain more seats in Parliament than Netanyahu’s Likud party, but it is assumed that the prime minister will still be able to cobble together a coalition as he has in the past.

Gantz had his own issue this week...an accusation of sexual misconduct from 40 years ago when he was a senior in high school, Gantz denying the allegations saying they are political libel, while hinting it was initiated by the Likud.   

Afghanistan: Under a new Pentagon plan being offered in peace negotiations with the Taliban, all American troops would be withdrawn from Afghanistan over the next three to five years as part of a deal that would lead to a power-sharing government in Kabul.  The rest of the international force would leave at the same time.  As the New York Times reported, the plan is now being discussed with European allies.

“The plan calls for cutting by half, in coming months, the 14,000 American troops currently in Afghanistan. It would task the 8,600 European and Australian troops with training the Afghan military – a focus of the NATO mission for more than a decade – and largely shift American operations to counterterrorism strikes....

“Until the final withdrawal, several thousand American forces would continue strikes against Al Qaeda and the Islamic State, including on partnered raids with Afghan commandos.”  [Thomas Gibbons-Neff and Julian E. Barnes / NY Times]

So far the plan is being met with broad acceptance among our NATO allies.

Separately, a new report from the UN said more civilians were killed last year in Afghanistan than at any time since records have been kept.  There were 3,804 civilian deaths in 2018, including 927 children.

In the past decade since the UN began tracking casualties, more than 32,000 civilians have been killed.

Earlier this year, Afghan President Ashraf Ghani said more than 45,000 members of the country’s security forces had been killed since he became leader in 2014 – a figure far higher than previously thought.

Venezuela: Nicolas Maduro remains in power another week and there is no way the White House expected this when they began applying their pressure on the regime.  Thursday, Russia and China vetoed a U.S. push for the UN Security Council to call for free and fair presidential elections in Venezuela and unhindered aid access.

Russia and the United States remain at loggerheads over the U.S.-led campaign to oust Maduro in favor of Juan Guaido, the opposition leader who has declared himself the interim head of state.

Russia’s UN Ambassador Vassily Nebenzia said ahead of the UN vote, “We are seriously concerned about the fact that today’s meeting may be exploited as a step for preparations for a real, not humanitarian, intervention.”

French UN Ambassador Francois Delatrre, in support of the U.S.-drafted resolution, said it “does not represent a legal basis for a use of force, nor an attempt to undermine the sovereignty of Venezuela.”

Canada: Prime Minister Justin Trudeau is facing a major political crisis as a dispute with his ex-attorney general came to a head this week, with many calling for Trudeau to resign.

The prime minister has been accused of pressuring his former attorney general to cut a deal with a company facing corruption charges – and retaliating when she refused to play ball.

The former AG, Jody Wilson-Raybould, says Trudeau and his staff spent months trying to convince her that taking the company to trial would cost Canadians jobs, and their party votes.  She also says she was subject to “veiled threats,” which she believes were made when she was shuffled out of her department.

In Canada, the AG is also the justice minister, and in January she was moved from the justice department to the department of veterans affairs – which you can see was viewed as a demotion.  She resigned from the position Feb. 12.

The company, SNC-Lavalin, is one of the world’s largest engineering and construction companies and it faces fraud and corruption charges in relation to bribes it is accused of offering Libyan officials between 2001 and 2011, when Muammar Gaddafi was in power.

Trudeau cares about SNC-Lavalin because it is based in Quebec, a swing province essential to his Liberal Party’s hopes in a federal election coming up in October.  The prime minster has denied wrongdoing and says any lobbying by him or his inner circle was done to protect jobs.  Trudeau’s longtime friend and principal secretary has already resigned.

And then today, Trudeau shuffled his cabinet for a second time, moving his agriculture minister to the veterans affairs portfolio to replace Jody Wilson-Raybould.

Random Musings

--Presidential tracking polls....

Gallup: 44% approval of Trump’s job performance, 52% disapproval (Feb. 15); 89% Republicans, 38% Independents.
Rasmussen: 49% approval, 49% disapproval (March 1).

--Former vice president Joe Biden dropped his strongest hint yet he was entering the race for the Democratic nomination for president by quoting Plato during an event at the University of Delaware the other day.

“One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors,” using the quote to take a shot at President Trump.

Biden said after several family conversations, “there’s a consensus I should, they want me to run.”

But he continued to tease Democrats with his indecision.

“I can die a happy man never having lived in the White House. But what I don’t want to do is take people’s time, effort and commitment without there being a clear shot I could be the nominee.  I think I can.  I think that’s where we are,” he said.

“We’re also taking a hard look at whether or not this alleged appeal I have – how deep does it run?  Is it real?”

And that’s really the issue.  In the perfect world, Biden would sit back and just ride in during a brokered convention, but while us political junkies always dream of such a scenario, because it would be delicious (Republican or Democrat), it doesn’t happen.

Ergo, Biden understands he has to put in the work, and this won’t be easy.

--Interesting Gallup poll that gauged President Trump’s job approval in all 50 states.

For example, here in New Jersey, his approval rating is just 35%, 59% disapproval.  We certainly saw this in the two congressional districts I straddle that both turned Democrat in November after being Republican my entire lifetime.  The above Gateway Tunnel project story also doesn’t help New Jerseyans attitude towards the president.

Trump is most popular in West Virginia, with a job approval of 62%, and Wyoming, 61%.  His approval rating was lowest in Hawaii, 26%, and Vermont, 28%.

17 states gave Trump an approval rating of at least 50%, 16 states rated his performance in office below 40%.

But I wanted to look at the three states that won Trump the 2016 election.  This isn’t  apples to apples, but it’s interesting.

Michigan: Trump won it 47.5% to 47.3%....Gallup 42% approval, 54% disapproval.
Pennsylvania: Trump won it 48.2% to 47.5%...Gallup 42% approval, 54% disapproval.
Wisconsin: Trump won it 47.2% to 46.5%...Gallup 42% approval, 53% disapproval.

Gallup has Ohio at 48/48, Florida at 43/51, Texas 41/52 (Trump having won the state by 52-43 in 2016).

The bottom line is, Trump has his work cut out for him.

--Richard Cohen / Washington Post

“I don’t quite know what a handbasket is, but the Democratic Party is in one headed toward electoral hell with its talk of socialism and reparations.  Given a Republican incumbent who has never exceeded 50 percent in Gallup’s approval ratings poll, and who won the presidency thanks to a dysfunctional electoral college, the party is nevertheless determined to give Donald Trump a fair shot at reelection by sabotaging itself.  In fact, it’s veering so far to the left it could lose an election in 1950s Bulgaria.

“Democratic socialist ideas appear to be making significant headway in the party. The Democratic party is fine; the socialism part is not.  It suggests a massive government intrusion in the economy that has not worked elsewhere – postwar Britain, or that contemporary mess called Venezuela – and that, in a cultural sense, is un-American.  Time and time again, the American people have shown they want nothing to do with socialism. While socialist movements have, at times, been politically strong in Europe, such has not been the case in the United States. This, in fact, is one of the original meanings of the phrase ‘American exceptionalism.’

“If Americans are not about to embrace socialism, they certainly are not about to support reparations.  This proposal, which seems to have come out of nowhere, has the support of Democratic presidential hopefuls Elizabeth Warren, Kamala D. Harris, Julian Castro and Marianne Williamson.  This supposed redress for slavery – nothing can redress slavery – polls abysmally. Sixty-eight percent of Americans oppose making payments to descendants of slaves, and 72 percent oppose paying reparations to African Americans in general. Among whites, 81 percent oppose payments to descendants of slaves. At the moment, these proposals are reassuringly vague: Who would benefit? Just the descendants of slaves?  All African Americans?  What about the very rich? As you can see, this can get a bit complicated.

“It can also can get dangerously divisive. The poll numbers cited above obscure a vast racial division. African Americans and Hispanics feel differently. Only 35 percent and 47 percent, respectively, oppose reparations. Such a stark racial or ethnic difference does not bode well for a political party trying to woo the votes of whites who supported Trump the last time out. It may prove difficult to persuade a low-paid Walmart worker that he or she owes something to the descendants of long-ago slaves.  I pity the politicians who venture into that argument.

“The problem for the Democrats at the moment is that much attention is being focused on political novelties such as Rep. Alexandria Ocasio-Cortez (D-N.Y.), who espouse both socialism and reparations.  Ocasio-Cortez is ferociously telegenic, infectiously likable and clearly inexhaustible. She is also political poison, the product of a freak election in a New York district where the past has taken root – socialism and a lot of rot about the evils of capitalism.  She cheered Amazon’s decision to forsake New York for friendlier climes, taking at least 25,000 jobs with it.  For a mere first-termer, this is quite an accomplishment. It usually takes much more seniority to do this much damage.

“The Democrats need worthy candidates – some who can occupy the media’s idle hours in Iowa and remind America that the party is not in the least Trotskyite.  Joe Biden would fit the bill. So would John F. Kerry and, of course, so would Michael R. Bloomberg.  Harris, who has the necessary happy countenance of the successful politician, would suffice if, as I suspect, she turns out to be more moderate than she now appears.

“Already, Trump and other Republicans are going to town over socialism, which is about as real a threat to the United States as Mexican sociopaths clambering over the border, bearing drugs and, of course, infectious diseases.  Moderate Democrats are having to answer for the provocative statements and tweets of their more radical colleagues, including the now-retracted anti-Semitic tweets of Rep. Ilhan Omar (D-Minn.).  The GOP, ever-helpful, will ensure that those tweets are not forgotten....

“The president is a divisive, unpopular figure who can be defeated. But imprecations of socialism and endorsements of reparations are anathema to the electorate, socially and racially fragmenting a nation that urgently needs unity.  They are both worn ideas – nostalgia trips for the radicals of old and freighted with failure. They ought to come boxed and nicely wrapped for what they really are – not a gift to the economically anxious or the racially aggrieved, but to Donald Trump.”

--In keeping with the above, liberal Rep. Ocasio-Cortez (N.Y.) threatened to put fellow Democrats voting with Republicans “on a list” for a primary challenge, in a closed-door session Thursday, as Speaker Nancy Pelosi lashed out at about two dozen moderates and pressured them to get on board.  “We are either a team or we’re not, and we have to make that decision,” Pelosi said, according to the Washington Post.  Ocasio-Cortez then upped the ante.

Triggering the blowup were Wednesday’s votes on a bill to expand federal background checks for gun purchases, with twenty-six moderate Democrats joining Republicans in amending the legislation, adding a provision requiring that ICE be notified if an illegal immigrant seeks to purchase a gun.

--According a report from the nonprofit Governors Highway Safety Association, which represents state highway-safety offices, the number of pedestrian deaths in the U.S. reached a nearly 30-year high in 2018, as an estimated 6,227 people died on foot from car crashes, which account for about 16% of motor-vehicle crash deaths, up from 12% a decade ago.

Pedestrian deaths plummeted from 6,482 to 4,109 from 1990 to 2009, federal figures show.  Fatalities then rose 45% from 2009 to 2017. The 2018 figure is an estimate based on half-year totals reported by all states, and previous projections based on midyear figures have closely mirrored final full-year totals.

Clearly, a large share of the deaths are caused by distractions caused by smartphones – both for driver and pedestrian alike.  I just shake my head at the behavior I see in my own town by pedestrians, who blindly start crossing a street while on their phone, never looking up.  We are such idiots.

--Pope Francis ended a landmark Vatican meeting on clerical sexual abuse with an appeal “for an all-out battle against the abuse of minors,” but his speech offered no concrete policy remedies demanded by the faithful.

Anne Barrett Doyle, leader of BishopAccountability.org, said, “Pope Francis’ talk today was a stunning letdown, a catastrophic misreading of the grief and outrage of the faithful. As the world’s Catholics cry out for concrete change, the pope instead provides tepid promises, all of which we’ve heard before.” [Jason Horowitz and Elizabeth Dias / New York Times]

Editorial / Washington Post

“Was the Vatican’s just-completed summit on child sex abuse, convened by Pope Francis amid a crisis of credibility that has crippled the Catholic Church’s moral authority, really intended simply to prepare the way for genuine reforms in the indefinite future?  Victims’ groups had hoped for much more, as had many of the faithful in the United States and elsewhere. They were heartened, briefly, when the pope opened the unprecedented four-day conference by demanding what he called ‘concrete’ measures to deliver something real that would uproot the scourge of clerical sex abuse and hierarchical coverup.

“In the end, those concrete measures were a chimera – widely debated, held up to intense canonical scrutiny, but ultimately put off to some future date. The contrast with the pope’s own words could not have been sharper, or more disappointing.

“Child sex abuse, the pope declared in his various remarks, is akin to human sacrifice, and the ‘wrath of God’ should be visited upon the ‘ravenous wolves’ who commit it.  He called for an ‘all-out battle.’  His rhetoric suggested a no-holds-barred approach; so did his earlier pledges to apply a ‘zero-tolerance’ policy, meaning, at the least, that any priest credibly accused of assaulting a minor would be removed from ministry.

“Yet at the conclusion of four wrenching days in Rome – days when nearly 200 bishops and cardinals heard unstinting testimony and criticism by victims and their advocates – the result was dismayingly vague. What had been held up as a policymaking conference resembled more closely an encounter group, in which awareness was raised, sensitivity enhanced and heartfelt emotions expressed.

“That’s not good enough – not for the world’s 1.2 billion Roman Catholics, nor for the 70 million in the United States.  For the U.S. bishops, the shortcomings in Rome should serve as a gauntlet thrown down. They must act in coming months.”

The pope didn’t.

And the Vatican had to deal with the conviction on five charges of child sex abuse by Cardinal George Pell of Australia, the verdict becoming public Tuesday after a court found him guilty in December.

Complaints against Pell first became public in 2016, with charges handed down in 2017, even as he was rising through the Church hierarchy.

Pell had a command of financial matters and when Pope Francis was elected in 2013, hoping to end Vatican financial scandals, the pope moved Pell to Rome and in 2014 he was appointed to run a new ministry, the Secretariat for the Economy.

But then the inquiry began in Australia, and accounts of child abuse and cover-ups emerged, though in the initial inquiries, Pell wasn’t named.  [Priests underneath him were alleged to have abused children in Pell’s hometown of Ballarat.]

But when the allegations reached Pell in 2017, he took leave from his Vatican finance role to fight the charges.

A day after the December verdict against Pell, he was one of three cardinals removed from Francis’ group of close advisers, no reason given at the time, the Vatican says because of Australia’s suppression order (until this Tuesday).

First Theodore McCarrick, now George Pell.

Thursday, I received a postcard from my hometown church about Ash Wednesday and “penance.”  

--Finally, Australia officially experienced its hottest summer on record, according to the nation’s Bureau of Meteorology, hundreds of individual heat records shattered across the country over the past three months.

While in California, they experienced a record of a different kind.  For the first time since forecasters began recording data – at least 132 years – the mercury did not reach 70 degrees in downtown Los Angeles the entire month of February.

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

God bless America.

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Gold $1294...down $36 on the week
Oil $55.75

Returns for the week 2/25-3/1

Dow Jones  -0.02%  [26026]
S&P 500  +0.4%  [2803]
S&P MidCap -0.4%
Russell 2000  -0.03%
Nasdaq  +0.9%  [7595]

Returns for the period 1/1/19-3/1/19

Dow Jones  +11.6%
S&P 500  +11.8%
S&P MidCap  +15.8%
Russell 2000  +17.9%
Nasdaq  +14.5%

Bulls 52.4
Bears 20.4

Have a great week.

Brian Trumbore

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