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08/08/2020

For the week 8/3-8/7

[Posted 10:00 PM ET, Friday]

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Edition 1,112

Beirut: I have a certain affection for Lebanon, having been there in 2005, purposely going weeks after the horrific car-bombing that killed former prime minister Rafik Hariri (and 21 others), father of Lebanon’s rebirth following the 1975-1990 civil war, and then a return trip in 2010.

Lebanon is a beautiful, exciting, dirty, unnerving, wild place, with a dark history.

It’s also a nation filled with some of the nicest people you’ll ever meet.  Beirut for a long time was known as the Paris of the Middle East.  I used to love my walks along the corniche, up the coast where there were some terrific restaurants with great views of the Mediterranean.

But I could also see the site of the 1983 bombing of the U.S. Marine barracks from my hotel room.  Beauty on one side, darkness on the other.  That’s Lebanon.

Prior to Tuesday, Lebanon and Beirut were basket cases, the economy in shambles, the coronavirus simmering, an incredibly dysfunctional and corrupt government, a collapsing currency, rampant poverty, a nation flooded with refugees from the Syrian war next door, ongoing tensions with Israel…and then a fire started at a warehouse at the main port, one of just two such ports in the country, the other in Tripoli.

The initial fire was captured on video, with what seemed to be small detonations like fireworks.  It then spread to an adjoining warehouse and BAM!  The biggest peacetime explosion in modern history, anywhere, a massive mushroom cloud spewing into the air, a huge shockwave enveloping the city.

A seeming tragic accident, one built of immense negligence, that killed over 150, with scores still missing, 5,000 injured, many of the hospitals heavily damaged, and at least 300,000 now homeless.

In a flash, it is not an overstatement to say a nation was destroyed.

In a year already destined to be remembered in the history books for centuries to come, we get a tragedy of immense proportion that has the potential to change the region in ways we don’t yet understand.

The Lebanese, Beirutis, in these early days are showing immense resilience and courage, but they are running on adrenaline and soon they will crash with exhaustion, immense anger, fear, deep sadness and depression.

Lebanon will need aid on a scope that is inconceivable, with many of its normally reliable neighbors facing big problems in their own right, including the pandemic and a crash in oil prices.

Just one little fact.  Damage to the grain silo at the site left the country with less than a month’s grain reserves, though authorities said there will be no food crisis.  That said, the massive store of grain at the port is unusable.

What is incredible, tragic and infuriating is that officials admitted this disaster was foreseeable and had been the subject of repeated warnings.  An emerging paper trail linked the blast to a mammoth stash of ammonium nitrate, 2,750 tons of a chemical used in bombs and fertilizer, that was once described as a “floating bomb” and housed at the port since 2014.  It seems back then, a Russian-owned vessel carrying the load was impounded at Beirut’s port, after making an emergency stop in the city and being denied permission to leave by customs authorities because it was deemed unseaworthy.

As recently as six months ago, customs officials at the port inspecting the consignment warned that if it was not moved it would “blow up all of Beirut.”

With a population already seething amid an ongoing financial crisis that had sunk half the country into poverty, the explosion fueled new anger at Lebanon’s political class.

Back in 2010, I met with Michael Young, Lebanon’s preeminent authority on the country and author of the best book on modern Lebanon, “The Ghosts of Martyrs Square: An Eyewitness Account of Lebanon’s Life Struggle.”  I explain our meeting in a post I put up this week on my “Hot Spots” link and I was hesitant to write him right after the disaster because I knew he was swamped (assuming he was OK).  I was actually hoping he was in Paris, where I know he spends a considerable amount of time.  But I wrote anyway, seeing as we’ve stayed in touch over the years, and received an immediate reply.

“Brian, thanks so much for your kind note. My wife and I are fine.  Our apartment less so, as is the case for most Beirutis.  A very sad situation that only highlights the vile leadership we have and their criminal incompetence…”

The government ordered some port officials to be placed under house arrest, with 24 now in custody, but what good does that do?  The country doesn’t need an investigation, it needs massive assistance…NOW.  The locals know that all the government will do is look for scapegoats to defer responsibility.  And we know that with the banks in crisis, a collapsing currency and one of the world’s biggest debt burdens, Lebanon has few resources to deal with the disaster.

French President Emmanuel Macron, the first foreign leader to travel to Beirut, promised aid but reassured angry citizens that no blank checks will be given to Lebanon’s leaders unless they enact reforms and end rife corruption.

Speaking at a news conference at the end of his dramatic visit, Macron called for an international inquiry into the devastating explosion, while saying he proposed to Lebanese authorities a roadmap of urgent reforms to unlock billions of dollars in funds from the international community, and that he would return to Lebanon in September to follow up.  “If reforms are not carried out, Lebanon will continue to sink,” Macron said.  “What is also needed here is political change. This explosion should be the start of a new era.”

Macron said France promised “transparent governance” so the aid goes to the people, NGOs and relief groups and not to the ruling elite which has been accused of corruption and mismanagement. He also told reporters that an audit was needed on the Lebanese central bank, among other urgent changes, and that the World Bank and United Nations would play a role in any Lebanese reforms.

During his visit Macron met with all Lebanese political factions, including Hezbollah, which dominates Lebanese politics.

Emmanuel Macron showed what leadership can be in his brave trip less than 48 hours after the explosion.  But the people want the government to fall, now.  And what you are seeing in the first days is that the same government that has failed to tackle a runaway budget, mounting debt and endemic corruption, is incapable of mounting a rescue and recovery effort.

I reread the inscription Michael Young wrote in my copy of his book when we met in 2010:

“To Brian Trumbore.  In memory of an afternoon in Beirut, after the period of the martyrs…but can we be sure?”

---

Meanwhile, Defense Secretary Mark Esper on Wednesday afternoon said that “most believe” the massive explosion was “an accident,” contradicting an incredibly careless and reckless claim by President Trump that “generals” told him that the blast was an “attack.”

Tuesday, just hours after the blast, Trump told reporters at the White House: “I met with some of our great generals and they just seem to feel that it was [an attack].  This was not some kind of a manufacturing explosion type of event – they would know better than I would. They seem to think it was an attack, it was a bomb of some kind, yes.”

A total lie.  IF he met with generals, they did not tell him this.  All you needed to know is that there were no special troop movements in the entire region like there would have been had this been an actual attack.  For its part, Israel immediately denied it had anything to do with the explosion.

Today, Lebanese President Michel Aoun, desperately trying to deflect attention from his government’s total lack of an emergency response, floated the idea of the “possibility of external interference through a rocket or bomb or other act.”

But it was Aoun who said immediately after on Tuesday that the explosive material was stored unsafely for years at the port.  He did say today the investigation would also look into negligence, but he doesn’t want an international inquiry.  Gee, I wonder why?

Sayyed Hassan Nasrallah, the leader of Hezbollah, in denying that his group had arms stored at the port, called for a fair investigation, adding, “Even if a plane struck, or if it was an intentional act, if it turns out this nitrate had been at the port for years in this way, it means part of the case is absolutely negligence and corruption.”

---

Covid-19 death tolls (as of tonight)….

World…723,184
USA…164,094
Brazil…99,702
Mexico…50,517
UK…46,511
India…42,578
Italy…35,190
France…30,324
Spain…28,503
Peru…20,649

Source: worldometers.info

U.S. daily death tolls…Sun. 467; Mon. 568; Tues. 1,362; Wed. 1,319; Thur. 1,203; Fri. 1,290.

President Trump has issued a number of tweets such as the following:

Big China Virus breakouts all over the World, including nations which were thought to have done a great job. The Fake News doesn’t report this.  USA will be stronger than ever before, and soon!”

“With the exception of New York & a few other locations, we’ve done MUCH better than most other Countries in dealing with the China Virus.  Many of these countries are now having a major second wave. The Fake News is working overtime to make the USA (& me) look as bad as possible!”

Oh, go pound sand, Mr. President.  Let’s take Wednesday, which isn’t influenced by the discrepancies you all are well aware of by now when it comes to lags in reporting over the weekend, which is why I coined “Catchup Tuesday” long ago.

Aug. 5, if you combine the populations of Germany, France, Italy, Spain and the UK you come up with 324.8 million.  Conveniently, the European Union recently released its population data for 2019.  The U.S. is at 330 million.

So let’s add in Belgium, 11.5 million; the country having been hit hard by Covid in March and April.

For Wednesday, these six European nations with a population of 336.3 million had a combined total of 7,281 new cases and exactly 100 deaths.

In the United States, we had 55,148 new cases and 1,319 deaths.

Yes, some European nations are a bit worried about spikes in their numbers, but compared with the U.S.?

The president expects Americans to be idiots, but I won’t let you be counted among them.

Covid Bytes

--Dozens of pharmaceutical players are racing to find a vaccine for the coronavirus, while there is hope on the horizon for a cure, as Eli Lilly announced on Monday that its trial of an antibody drug had progressed to phase 3, as the drug giant attempts to see if it can prevent or treat Covid-19 in nursing homes in the U.S.

Antibodies are proteins the body makes in response to invasion of a foreign substance such as a virus. They can be obtained from the blood of recovered patients or created in the laboratory from genetic sequences, which many companies are working on.

China apparently has been using the plasma of recovered patients to treat others but the process is limited by supply.  It seems plasma from four survivors is needed to treat one patient.

But Lilly’s drug candidate is made in the lab.  The process “neutralizes” the virus but is not a vaccine.

--People with symptomless Covid-19 can carry as much as of the virus as those with symptoms, a South Korean study has suggested.  South Korea was able to identify and isolate asymptomatic cases through mass testing as early as the start of March.

There is mounting evidence these cases represent a considerable proportion of coronavirus infections, but the researchers weren’t able to say how much these people actually passed the virus on.

Results of 1,886 tests suggest people with no symptoms at the time of the test, including those who never go on to develop symptoms, have the same amount of viral material in their nose and throat as people with symptoms.

--Africa’s confirmed cases of Covid-19 have surpassed 1 million as the disease has begun to spread rapidly through a continent whose relative isolation has so far spared it the worst of the pandemic, though all are in agreement, Africa obviously has far more than 1 million cases as testing is limited.  As of Thursday, 21,983 have died, according to a Reuters tally, with South Africa recording more than half the cases and 9,600 of the deaths (though that number is being underreported).

A nurse at a hospital in South Africa’s biggest township of Soweto, told Reuters that “patients were sometimes left lying next to a corpse for hours because there weren’t enough staff to remove it.  More than a third of staff caught the virus on duty.”

The World Health Organization’s top emergencies expert, Michael Ryan, warned recently that South Africa’s experiences are a precursor for what is likely to happen across the continent.

But then you realize that as bad as South Africa’s experience has been, their health services are about the most advanced on the continent!

And testing is a huge issue, with long delays in getting results back…if you can get a test in the first place.

--Australia’s second-biggest city of Melbourne began a six-week lockdown on Thursday with the closure of most shops and businesses raising new fears of food shortages, as authorities battle a second wave of infections.

Shops were boarded and streets were deserted in the city of about 5 million, after the capital of Victoria state reported 471 new Covid-19 cases and eight deaths in the prior 24 hours.

Australia has been taking the coronavirus very seriously since Day One and has now recorded about 20,000 cases, overall, and 266 fatalities, far fewer than other developed nations.

But the concern is the Victorian outbreak will spill into other states such as Queensland where the virus has been all but eliminated.

--Stay-at-home orders are now in place in Manila and four surrounding provinces on the island of Luzon in the Philippines after doctors warned a surge in new coronavirus cases could push the healthcare system to collapse. The country only just emerged from one of the strictest lockdowns in June.

But hospitals have been struggling to cope with a five-fold rise in confirmed infections.

--Doctors in Turkey are claiming hospitals there are filling up with more cases than are reflected in the official nationwide count.  “Patients are being made to wait on gurneys for hours or are being sent home. Even those who have pneumonia are sent home because they cannot find a place,” one doctor told Reuters.

--A BBC Persian service investigation has found that the number of deaths from coronavirus in Iran is nearly triple what Iran’s government claims.

The government’s own records appear to show almost 42,000 people died with Covid-19 symptoms up to July 20, versus the 14,405 reported by the health ministry (now 18,132).

--The situation with Ohio Governor Mike DeWine is emblematic of the testing disaster in the U.S.  DeWine had taken a so-called antigen test in preparation for greeting President Trump on the tarmac in Cleveland, Ohio, Thursday, and he was unable to see Trump because the test came back positive.

But then the governor said later in the day he took a second test – using the PCR or nucleic acid method – and came back negative, as did tests for his wife and staff members.

DeWine’s office said in a statement that PCR tests are “known to be extremely sensitive, as well as specific, for the virus.”  His office said the PCR test was run twice, returning negative results both times.

The antigen tests used as part of White House protocols are sometimes referred to as rapid-result tests, but from day one there have been issues, like false positives, and the reverse.  The country has to get this right if we are to truly reopen once we get cases down to a manageable level, because accurate testing is part of the program.

--New York Gov. Andrew Cuomo said his state’s schools can reopen, citing success in battling the coronavirus, but it is complicated.  All 750 school districts still need to submit their plans and they need to address the fears of parents and teachers that their schools will be safe.

The goal is to clear the way for schools to offer at least some days of in-person schooling, alongside remote learning. Students will be required to wear masks throughout the school day.

Each district must also be below the infection threshold that is established.  “If there’s a spike in the infection rate, if there’s a matter of concern in the infection rate, then we can revisit,” said Cuomo today.

New York City has 1 million public school students so you can imagine the confusion and fears.  Schools open in five weeks in Gotham.

In my hometown of Summit, N.J., local officials have proposed that all students can come back to school five days a week, though they will only be in class four hours a day.  The students will receive some remote instruction in the afternoons at home for the remainder of the school day.  No lunch will be served at schools to eliminate the problem of socially distancing in crowded cafeterias.

Good luck to all, but you can see in just these two examples that nothing has been said about what the parents will do.  They still have to be home for the little ones, at least part of the day, or have access to day care, assuming they have a job.  It’s still a nightmare, but it’s a start.

---

In terms of the election and the economy, I address the jobs report and other minutiae below, but the bottom line is, as economist Joshua Shapiro of MFR Securities told Barron’s the other day, “Anybody who claims to have a firm handle on the economy’s path is either delusional or lying.”

Here’s what I know.  If as the medical experts believe the current rate of infection has potentially plateaued, in the short run, but at an entirely unacceptable level (say, 45,000-55,000 new cases a day), we sure as heck are not going to “lock down really hard” as Minneapolis Federal Reserve President Neel Kashkari told CBS’ “Face the Nation” last Sunday; Kashkari saying we need to do so for four to six weeks to bring the virus under control, thus allowing for a truly robust recovery.

“If we don’t do that and we just have this raging virus spreading throughout the country with flare-ups and local lockdowns for the next year or two, which is entirely possible, we’re going to see many, many more business bankruptcies.  That’s going to be a much slower recovery for all of us.”

Kashkari says Congress is positioned to spend big on coronavirus relief efforts because the nation’s budget gap can be financed without relying on foreign borrowing.

“Those of us who are fortunate enough to still have our jobs, we’re saving a lot more money because we’re not going to restaurants or movie theaters or vacations,” Kashkari said.  “That actually means that we have a lot more resources as a country to support those who have been laid off,” he said.

Yeah, but we’re not going to lock down ahead of the election, period.

So what of the House Democrats and Senate Republicans and a new relief package?  Richmond Fed President Thomas Barkin said on Monday:

“Four months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus put a plate over it so we could navigate.  Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate.  If Congress takes support away too abruptly…the unemployed, their landlords, the places they shop will then feel the full brunt.”  [Barkin making his remarks on a webcast to the Northern Virginia Chamber of Commerce.]

But as of tonight, Congressional Democrats, Senate Republicans and the White House are at an impasse.  Democrats offered to reduce a proposed coronavirus aid package by $1 trillion if Republicans would add a trillion to their counteroffer, an idea President Trump’s negotiators rejected before fresh talks even started.

And at a brief news conference tonight in Bedminster, N.J., as I get ready to post, Trump is saying he may sign some executive orders in a few days but offered zero specifics.

The event in Bedminster was an informal small rally/gathering at Trump’s club and he allowed reporters to ask a few questions, using the opportunity to call them fake news as he abruptly cut it off.

Next week I am going to go through some basic statistics that every voter should know as the campaign, such as it is, begins to accelerate.  We should also get Joe Biden’s Veep pick in the coming days…Kamala Harris or Susan Rice, say the experts.  I wouldn’t discount Val Demings’ chances.

What we do know as this week winds down; we have a godawful choice between the two at the top of their tickets.

Trump World

--The top U.S. counterintelligence official on Friday warned that, Russia, China and Iran will all try to interfere in the 2020 presidential election, with Russia already trying to undercut Joe Biden.

In an unusual public statement, William Evanina, director of the National Counterintelligence and Security Center, said those countries were using online disinformation and other means to try to influence voters, stir up disorder and undermine voters’ confidence in the democratic process.

Foreign adversaries also may try to interfere in election systems by trying to sabotage the voting process, stealing election data, or calling into question the validity of election results.  But Evanina insisted “It would be difficult for our adversaries to interfere with or manipulate voting results at scale.”

Evanina warned Russia is already going after Biden, specifically a pro-Russia Ukrainian, Andriy Derkach, who has been “spreading claims about corruption – including through publicized leaked phone calls” to undermine Biden’s campaign and the Democratic Party.

Evanina said “Kremlin-linked actors” also are trying to “boost President Trump’s candidacy via social media and Russian television.”

He added his agency assessed that China would prefer that Trump not win re-election, because Beijing regards him as too unpredictable, witness recent actions.

Evanina said Iran is mostly focused on online tactics such as spreading disinformation to discredit U.S. institutions and President Trump and to stir up voters’ discontent.

--Joe Biden apologized late Thursday for comments he made earlier in the day that suggested that the African-American community was not diverse.

“In no way did I mean to suggest that the African-American community is a monolith – not by identity, not on issues, not at all,” Biden said in a series of tweets.

In an interview with Black and Latino journalists published early Thursday, Biden said that “unlike the African-American community, with notable exceptions, the Latino community is an incredibly diverse community with incredibly diverse attitudes about different things.”

“Throughout my career I’ve witnessed the diversity of thought, background, and sentiment within the African American community. It’s this diversity that makes our workplaces, communities, and country a better place,” Biden said in his apology tweets.

He also commented that he “will always listen, I will never stop fighting for the African American community and I will never stop fighting for a more equitable future.”

Well, Donald Trump had his opening. Biden didn’t deserve the Black vote.

Trump had also said Thursday that Joe Biden is “against God” in ramping up his attacks.  The remarks, during a trip to Ohio, a crucial state in November, came as he tries to make up ground there.

“He’s against God. He’s against guns,” said Trump. 

Biden has spoken frequently about his faith and how it helped him cope with family tragedies.

--Axios reporter Jonathan Swan had a brilliant and highly revealing interview with President Trump, Trump displaying unbelievable naivete when Swan repeatedly confronted him with the facts.  All agree, it was simply the best interview of Trump yet (Chris Wallace’s recent one a close second).

Swan had done his homework and, unlike other interviewers of Trump, didn’t let the president get away with just making false statements.

Among the topics…on defending the Tulsa rally, Swan repeatedly pressed Trump on the wisdom of holding it, with the president talking up how many people were there, while making a point of bringing up something “nobody talks about”: it set a Saturday ratings record for Fox News, something the president repeatedly emphasized to defend holding the rally despite public health concerns.

Trump also said he thinks things are under control. Swan asked how when 1,000 Americans are dying a day, and Trump said, “They are dying, that’s true, it is what it is. But that doesn’t mean we aren’t doing everything we can. It’s under control as much as you can control it. This is a horrible plague that beset us.”

It is what it is?!!

Swan asked about testing and when Trump can commit to every American getting the same kind of same-day testing he gets as president.

Trump continued to tout U.S. testing cases and claimed, “And there are those that say you can test too much.  You do know that.”

A stunned Swan asked: “Who says that?”

“Read the manuals, read the books,” Trump said.

“Manuals? What manuals?” Swan asked.  “What books?”

At one point during the exchange on testing, Swan told the president that deaths are going up. The president immediately brought up a chart to try and correct Swan to insist the U.S. is “lower than the world.”

Swan looked over the chart and said, “Oh, you’re doing death as a proportion of cases.  I’m talking about death as a proportion of population. That’s where the U.S. is really bad.  Much worse than South Korea, Germany, etc.”

The president responded, “You can’t do that.”

Swan replied: “Why can’t I do that?”

“You’re not reporting it correctly, Jonathan,” the president said.

Swan confronted Trump at one point about not accepting the election results, which set the president off on the issue of mail-in voting.

“I honestly don’t understand this topic with you,” Swan said.  “The Republican party has an extremely well-funded vote-by-mail program.”

Holding up a piece of paper, Swan added, “Your campaign puts out emails telling people to vote by mail.  Your daughter-in-law Lara Trump, she did robocalls in California saying it’s safe and secure, mail-in voting. The Republican won! That was an all-mail-in race!”

Trump pointed to “many court cases where we’re trying to end it” and invoked World War I and World War II to say people didn’t do mail-in voting then.

“We’ve had mail-in voting since the Civil War,” Swan said.

At one point, Trump repeated something he’s said often before, that “I’ve done more for the black community than anybody, with the possible exception of Abraham Lincoln.”

“You believe you did more than Lyndon Johnson, who passed the Civil Rights Act?” Swan asked.

“I think I did, yeah,” Trump said.

“How?” Swan asked.  “How possibly did you…”

“I got criminal justice reform done. I got prison reform,” Trump said.

“Lyndon Johnson,” Swan repeated.  “He passed the Civil Rights Act.”

“How has it worked out?  If you take a look at what Lyndon Johnson did,” the president responded.

“You think the Civil Rights Act was a mistake?” Swan asked.

“Frankly, it took a long time,” Trump said.  The president then embarrassed himself with his comments on John Lewis.

--Facebook and Twitter penalized President Trump and his campaign for posts in which he claimed children were “almost immune” to coronavirus.

Facebook deleted the post – a clip from an interview Trump did with Fox News – saying it contained “harmful Covid misinformation.”

Twitter followed by saying it had frozen a Trump campaign account until a tweet of the same clip was removed.

It was the first time Facebook took action to remove content posted by the president based on its coronavirus-misinformation policy, though it has penalized Trump over content on his page.

Speaking by telephone to morning show “Fox and Friends,” Trump argued it was time for all schools nationwide to reopen.

“If you look at children, children are almost – and I would almost say definitely – almost immune from this disease.

“So few, they’ve got stronger, hard to believe, I don’t know how you feel about it, but they’ve got much stronger immune systems than we do somehow for this.

“And they don’t have a problem, they just don’t have a problem.”

Trump reiterated that, overall, “This thing’s going away. It will go away like things go away.”

--Trump bashed Coronavirus Task Force coordinator Dr. Deborah Birx, who told CNN’s Dana Bash: “What we’re seeing today is different from March and April. It is extraordinarily widespread.” She cautioned Americans to understand that the virus could spread even in the rural areas that had seemed fairly immune several months ago.

Trump then claimed in a tweet that Birx “took the bait” after she was criticized by House Speaker Nancy Pelosi and “hit us.”

“So Crazy Nancy Pelosi said horrible things about Dr. Deborah Birx, going after her because she was too positive on the very good job we are doing on combatting the China Virus, including Vaccines & Therapeutics,” Trump tweeted.  “In order to counter Nancy, Deborah took the bait & hit us.  Pathetic!”

“Cases up because of BIG Testing!” he wrote on Monday. “Much of our Country is doing very well.  Open the Schools!”

--There was no effort or conspiracy by Barack Obama to prosecute Michael Flynn, President Trump’s former national security adviser, former Deputy Attorney General Sally Yates testified Wednesday.

“No such thing happened,” Yates told the Senate Judiciary Committee when quizzed about a Jan. 5, 2017, meeting with the former president, vice president and top law enforcement officials at the White House.

During the meeting, the president, the vice president and the national security adviser did not attempt in any way to direct or influence any investigation, Yates said.

The meeting has been a focus of Republicans, including Committee Chairman Sen. Lindsey Graham.

Flynn had been having back-channel discussions with Russian Ambassador Sergey Kislyak, including after the Obama administration booted dozens of Russian agents and leveled sanctions on Russia on Dec. 29, 2016, for its election interference.

Yates said that was the reason for fresh interest in Flynn – not some scheme to use the Logan Act to target Trump and Flynn.

“We had Gen. Flynn engaging in discussions with the Russian ambassador that were essentially neutering the American sanctions,” Yates said.  “And that is a very curious thing to be doing, particularly when the Russians have been acting to benefit President Trump – and then covering it up, he’s lying about it.”

Just prior to her testimony, Trump angrily tweeted: “Sally Yates has zero credibility. She was a part of the greatest political crime of the Century, and ObamaBiden knew EVERYTHING!”

--Trump tweets:

“After yesterday’s statement, Sleepy Joe Biden is no longer worthy of the Black Vote!”

“How can voters be sending in Ballots starting, in some case, one month before the First Presidential Debate.  Move the First Debate up. A debate, to me, is a Public Service.  Joe Biden and I owe it to the American People!”

“Nevada has ZERO infrastructure for Mail-In Voting.  It will be a corrupt disaster if not ended by the Courts. It will take months, or years, to figure out. Florida has built a great infrastructure, over years, with two great Republican Governors. Florida, send in your Ballots!”

“Whether you call it Vote by Mail or Absentee Voting, in Florida the election system is Safe and Secure, Tried and True.  Florida’s Voting system has been cleaned up (we defeated Democrats attempts at change), so in Florida I encourage all to request a Ballot & Vote by Mail! #MAGA”

“People are not happy that players are not standing for our National Anthem!”

“OPEN THE SCHOOLS!!!”

“Wow! Really bad TV Ratings for Morning Joe (@JoeNBC). @foxandfriends doing great, leading all others by far. @CNN not a factor!!!”

“My visits last week to Texas and Florida had massive numbers of cheering people gathered along the roads and highways, thousands and thousands, even bigger (by far) than the crowds of 2016. Saw no Biden supporters, and yet some in the Fake News said it was an equal number. Sad!”

Wall Street and the Economy

While better than expected, today’s employment report for July, an increase in nonfarm payrolls of 1.763 million jobs, does nonetheless show that employment growth has slowed considerably after May and June increases of 2.7 and 4.8 million (June revised down slightly to 4.791m).

The unemployment rate fell to 10.2% from 11.1% the prior month, but it has been biased downward by people misclassifying themselves as being “employed but absent from work.”  At least 31.3 million people were receiving unemployment checks in mid-July.

There had been fears the July report would show job losses, not gains, due to the renewed surge in Covid cases and delayed, if not pulled back, reopenings across major hot spots.

Separately, the unemployment rate for Blacks dropped to 14.6% vs. 9.2% for whites, widening the gap slightly to 5.4 points, which is a talking point on the campaign trail.

Earlier, we had our 20th straight week with a jobless claims figure of 1 million or more, Thursday, 1.186 million, which was down from the prior week but still way too high.  This also means the total number of initial jobless claims filed during the pandemic is more than 55 million.

In other economic news, we had very solid ISM figures for July manufacturing, 54.2 (50 the dividing line between growth and contraction), the best since March 2019, while the non-manufacturing/service sector reading was a robust 58.1, best since Feb. 2019, and representing the broad reopening taking place across the country, though this is threatened by surges in Covid-19.

Separately, June construction spending was disappointing, -0.7%, while June factory orders rose a better than expected 6.2%.

On the important TSA checkpoint travel metric, however, the news remains punk.  We had 27 straight days with levels that were 20% to 28% of 2019’s levels, then two days of 30%, but now four straight of 23% to 28% through Thursday.  Far from the ongoing improvement in travel demand that the airlines were hoping for after things bottomed in April.

While it’s very early in looking at third-quarter GDP, the Atlanta Fed’s GDPNow barometer currently has it at 20.5%.  The first official look comes on Oct. 29, days before the election.

And then we had the TikTok issue.  Last Friday night, I noted that the Wall Street Journal was reporting Microsoft was in talks to acquire the U.S. operations of Chinese-owned video app, TikTok, after President Trump said he was considering banning the app from the U.S. over security concerns.

The story then exploded over the weekend and Monday, with the president telling reporters he had talked to Microsoft CEO Satya Nadella on Sunday and essentially gave the company 45 days to complete the deal, but adding that he thought the U.S. government should take a cut from any sale.

TikTok’s founder warned employees about “rising anti-Chinese sentiment,” and on Tuesday, a number of prominent figures in China lambasted the U.S. as unfairly stifling China’s first global internet hit – while defending Beijing’s own restrictions on American technology giants.

Hu Xijin, editor in chief of the Global Times, a Communist Party-backed mouthpiece, derided Trump’s demand that the Treasury receive a “very substantial” portion of the proceeds as “open robbery.”

“The world is watching and God is watching…how President Trump is turning the once great America into a rogue country,” Hu wrote.

TikTok has 100 million U.S. users and is particularly popular with young people.

Trump said the app will be “out of business” in the U.S. if it doesn’t reach a deal to sell its American operations by next month. The president said he does not mind if Microsoft or another company acquires it, so long as they are “a big company, a secure company, a very American company.”  He told reporters Monday he’s personally involved in brokering a potential deal, giving Microsoft until “around Sept. 15, at which point it is going to be out of business in the United States.  But if somebody, whether it’s Microsoft or somebody else buys it, that’ll be interesting.”

Trump said he felt the U.S. government was entitled to a cut from the sale because of his role in bringing about the transaction.

“The United States should be reimbursed or should be paid a substantial amount of money. Because without the United States, they don’t have anything, at least having to do with the 30 percent (stake Microsoft would acquire).  Maybe a deal is going to be made.  It’s a great asset, but it’s not a great asset in the United States unless they have the approval of the United States.”

“Right now they don’t have any rights unless we give it to them,” Trump said of TikTok.  “It’ll close down on September 15 unless Microsoft or somebody else is able to buy it or work out a deal so the Treasury of the United States gets a lot of money.”

White House trade adviser Peter Navarro then suggested that Microsoft could divest its holdings in China if it were to buy TikTok.

“So the question is, is Microsoft going to be compromised?” Navarro said in an interview with CNN.  “Maybe Microsoft could divest its Chinese holdings?”

This is nuts. Yes, there are real security concerns, that the app pipes data to the Chinese Communist Party, which TikTok denies.  But the way the president is going about it will not fly.

Senate Minority Leader Chuck Schumer (D-N.Y.) said on Twitter: “A U.S. company should buy TikTok so everyone can keep using it and your data is safe. This is about privacy. With TikTok in China, it’s subject to Chinese Communist Party laws that may require handing over data to their government.”

The app’s Beijing-based parent company ByteDance will receive a raw deal for TikTok no matter how much it sells for, because the app is still in an early stage of its growth, at least according to Fred Hu, chairman of Primavera Capital Group and one of China’s biggest investors.

“ByteDance is an innocent victim of the mad politics, and mad geopolitics. It is a sad outcome for ByteDance, for entrepreneurial capitalism, and for the future of global commerce.”

Editorial / Washington Post

“President Trump’s preferred strategy to defeat the Chinese government seems to be to emulate the Chinese government. At least, the White House response to the problems posed by popular smartphone app TikTok seems modeled on Xi Jinping’s brand of nationalist industrial policy.

“The TikTok saga has moved over the past few days at the whiplash speed of a video going viral on the platform – from news that a national security review had determined Beijing-based parent ByteDance should divest TikTok, to news that Mr. Trump wanted to ban TikTok, to news that, after all, he supported a bid by Microsoft to buy it.  That outcome would be better than several of the alternatives.  Local laws in China almost ensure that the regime could get its hands on U.S. citizens’ data held by TikTok should it so desire, and this data is hardly limited to memes and dance compilations.  Yet prohibiting the app’s use here, to the extent the gambit succeeded at all, would have stifled expression.  Having an experienced U.S. firm control the popular platform is preferable to shutting it down or accepting the current security risks.

“How this promising outcome occurred, however, presents plenty of concerns on its own.  A blog post from Microsoft published Sunday gives away the game: four mentions of the president, including the company’s appreciation for his ‘personal involvement,’ plus a commitment not only to conduct a data protection review but also to provide ‘proper economic benefits to the United States.’  Mr. Trump’s initial determination to doom the deal shows he was less interested in national security than in national grandstanding.  He changed his mind when Microsoft chief executive Satya Nadella called him up directly to negotiate – and as he magnanimously delivered the public go-ahead on Monday, he declared bizarrely that ‘a very substantial portion of that price is going to have to come into the Treasury of the United States.’

“Microsoft, which has six weeks to haggle with ByteDance over the deal, says this likely is just a reference to the same jobs and taxes that the company already has promised as ‘proper economic benefits.’ The president has in essence conducted a shakedown, threatening a shutdown and then providing his blessing to a private business deal once it pleased him. This is an affront to free enterprise generally. It’s also an affront to the American enterprise of preserving an open outlook toward the world – and encouraging other nations to welcome U.S. investors.  Microsoft appears to have pledged to allow only domestic investors to hold a minority stake in TikTok should it take ownership – another way the president is, as he ostensibly takes aim at a closed society, closing off his own.”

Bob Davis, Alex Leary and Kate Davidson / Wall Street Journal

“The president often presents himself as a master negotiator on everything from international trade accords to dealings with North Korean leader Kim Jong Un.

“With TikTok, he likened his payment idea to ‘key money’ – or an extra fee paid to secure a hard-to-get property.  ‘It’s a little bit like the landlord-tenant,’ the GOP president said at the White House on Monday.  ‘Without a lease, the tenant has nothing.’

“ ‘It’s a great asset,’ Mr. Trump said of TikTok.  ‘But it’s not a great asset in the United States unless they have the approval of the United States.’

“Later in the day, he was asked to clarify his remarks.  ‘It would come from the sale,’ Mr. Trump said.  ‘Whatever the number is, it would come from the sale. Which nobody else would be thinking about but me. But that’s the way I think. And I think it’s very fair.’

“Washington’s move, in the eyes of Beijing, strong-arms one of China’s most valuable global tech companies into selling a lucrative overseas unit. Chinese officials say it is further proof that the U.S. views any Chinese tech company with international success as a challenge to its technology primacy, regardless of the product or how it runs its business.

“Mr. Trump’s comments also amplify how deeply he involves himself in trade and investment decisions, which economic historians also say is a big departure from the past….

“The president also often made broad assertions of presidential power, which may be popular with his political base, only to back off later.

“ ‘Trump often tries to prove how strong he is by taking novel and extreme positions,’ said Alex Conant, a Republican strategist in Washington.  ‘A lot of people in Washington may roll their eyes at Trump’s off-the-wall proposals, but we shouldn’t underestimate their simplistic appeal to many voters.’”

But the comments make life difficult for the likes of Microsoft.  And the situation changed further when Thursday night, President Trump said he was issuing executive orders banning any U.S. transactions with ByteDance as well as Tencent, owner of the WeChat app, starting in 45 days.

The TikTok app may be used for disinformation campaigns that benefit the Chinese Communist Party, and the United States “must take aggressive action against the owners of TikTok to protect our national security,” Trump said in one order.

In the other, Trump said WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

So who the hell knows with this further escalation by Trump in his confrontation with Beijing as the U.S. seeks to curb China’s power in global technology.  Trump is making his challenge of China a central theme of his campaign.  As I go to post it’s unclear how China will retaliate, but they will…they have to.

For now, a Chinese Foreign Ministry spokesman said the U.S. was putting “selfish interests above market principles and international rules” and engaging in “political manipulation and oppression.”

“The relevant businesses follow market principles and international rules in conducting business operations in the U.S. They comply with U.S. laws and regulations, but the U.S. is using national security as an excuse and using state power to oppress non-American businesses.  That is just hegemonic practice.”

Europe and Asia

PMI week for the eurozone (EA19) and as I said would be the case last time, we see continued improvement on the continent.  The final composite output index reading for the EA19 in July was 54.9 vs. 48.5 in June, reflecting the fastest rate of growth since June 2018.  The manufacturing PMI was 51.8 vs. 47.4 the prior month; non-mfg./services came in at 54.7 vs. 48.3 in June.

Germany 51.0 mfg. July vs.  45.2 June; 55.6 non-mfg. July
France 52.4 mfg. July vs. 52.3; 57.3 non-mfg. July
Italy 51.9 mfg. July vs. 47.5; 51.6 non-mfg. July
Spain 53.5 mfg. July vs. 49.0; 51.9 non-mfg. July
Greece 48.6 mfg. July vs. 49.4 June
Netherlands 47.9 mfg. July vs. 45.2

UK 53.3 mfg. July; 56.5 non-mfg. July vs. 47.1 in June.

[Courtesy of IHS Markit]

Chris Williamson, chief economist / IHS Markit

“Eurozone service sector business activity rebounded in July to grow at a rate not exceeded for over two years. France and Germany enjoyed especially strong gains though renewed growth was also recorded in Spain and Italy as Covid-19 containment measures continued to be relaxed.

“Combined with a surge in manufacturing production, the renewed expansion of the service sector bodes well for the economy to rebound in the third quarter after the unprecedented slump seen in the second quarter.

“Whether the recovery can be sustained will be determined first and foremost by virus case numbers, and the recent signs of a resurgence pose a particular risk to many parts of the service sector, such as travel, tourism and hospitality. However, even without a significant increase in infections, social distancing measures will need to be in place until an effective treatment or vaccine is available, dampening the ability of many firms to operate at anything like pre-pandemic capacity, and representing a major constraint on longer-run economic recovery prospects.”

Separately, June retail sales were up 5.7% in the euro area compared with May, according to Eurostat, the statistical arm of the EU.  In June 2020 compared with a year ago, the figure was up 1.3%.

Brexit: Britain’s top minister overseeing Brexit talks said on Friday that progress had been made with the European Union so he believed the two sides would clinch a free trade agreement.  “All the evidence is that we are making progress with the European Union,” Michael Gove told reporters this morning.  “I believe that there will be a successful negotiated outcome.”

Well, you all know the clock is ticking…rapidly. It’s August.

Turning to Asia…we received further PMIs for China.  Last week I reported that the government’s official manufacturing reading for July was 51.0, 54.2 on non-manufacturing (via the National Bureau of Statistics).  This week the private sector Caixin readings, representing small- and medium-sized businesses, was 52.8 on manufacturing vs. 51.2 in June, with services at 54.1 vs. 58.4 the prior month, a big dip but still solid growth, though export demand components remained weak.

But then we received actual export numbers for July and they rose an unexpectedly strong 7.2% over a year ago, with sales to the U.S. jumping 12.5% despite the plunge in U.S. economic activity and the lingering trade war, per the Chinese Customs Administration.

Global exports accelerated from June’s 3% gain.

“There is an overall improvement in exports in July from June, not just medical supplies* which had previously been the main contributor,” said Iris Pang of ING in a report. She pointed to gains in shipments of electronics, autos and clothing.

*See demand for surgical gloves and masks, among other items.

Imports weakened by 1.4% in dollar terms due to falling commodity prices but the total volume increased.

In Japan, July’s manufacturing PMI came in at 45.2 vs. 40.1 in June, while services were 45.4 vs. 45.0.  Just more of the same here. The country is having trouble reopening, and foreign demand for its goods remains soft.

South Korea’s manufacturing PMI came in at 46.9 in July vs. 43.4 in June, so still not good.

Taiwan’s manufacturing number improved to 50.6 vs. 46.2.

Street Bytes

--After mixed action in the major indexes the last two weeks, the big three powered higher, while small- and mid-cap stocks soared. 

Technology still rules and before a minor selloff today, Nasdaq hit four consecutive record highs, Thursday’s close of 11108 the new highwater mark, Nasdaq up 2.5% on the week and a whopping 22.7% for the year.

The Dow Jones gained 3.8% to 27433, while the S&P 500, up 2.5%, now sits just about one percent from its all-time high.

--U.S. Treasury Yields

6-mo. 0.11%  2-yr. 0.13%  10-yr. 0.56%  30-yr. 1.23%

The yield on a 30-year fixed mortgage is 2.82% this week, if you can find one.

The U.S. dollar continues to flash a warning sign to U.S. policy makers. After hitting an all-time high in March, the greenback has lost about 10% of its value, with declines accelerating in recent weeks as infections spread across the nation. 

Early on in the pandemic, investors sought safety in U.S. assets like Treasuries while the virus stormed through Europe, but while Europe has largely stabilized and reopened, with decent prospects for future growth, ditto China, the ineffectual U.S. response has spurred concern about lasting damage to the economy here that could keep growth low for years.

Surging budget deficits don’t help sentiment either. Fitch Ratings last Friday revised its credit rating outlook for the U.S. to negative from stable, though it maintained its triple-A rating.

But…the falling dollar is helping boost the U.S. stock market since a weaker dollar helps multinational companies (think S&P 500), which see their products become more competitive abroad, among other things.

--Oil finished the week at $41.60, the sixth straight week it has closed at $40 or $41.  According to data from Baker Hughes, drillers cut exploration in U.S. oil fields to a 15-year low with the number of active rigs falling by four this week to 176, the lowest since 2005.  Energy companies have been parking rigs on an almost uninterrupted level for four and a half months since the pandemic hit and prices crashed amid plunging demand.

One of the lies that President Trump loves to tell at every campaign stop that absolutely drives me up the wall is that he has “saved millions of jobs in the energy sector.”  In just one category, support activities for oil and gas operations, as broken down by the U.S. Bureau of Labor Statistics, employment at support firms fell by 54,000 jobs in just three months between February and May, and the picture has only gotten worse since.  Employment has shrunk by 86,000 (30% of the sector) compared with a peak in October 2018. 

And in recent weeks you’ve had items such as oilfield services giant Schlumberger laying off 22,000.

It’s been ugly and it isn’t going to get better anytime soon.

--BP PLC cut its dividend for the first time in a decade and outlined plans to pivot away from oil and gas and invest more in low carbon energy – marking one of the most dramatic energy-transition plans among its peers at a time of deep crisis for the industry.

The British energy giant, which reported a loss of $17.7 billion for the three months ended June 30, due to extraordinary charges, vs. a profit of $1.8 billion for the year-earlier period, said it was increasing its low carbon investments to $5 billion a year by 2030, from around $500 million, at the same time as it sees its oil and gas production fall by 40% from 2019 levels.

The loss was one of the worst ever taken by an oil company, while BP warned of more pain to come as the pandemic continues to sap global demand for fossil fuels.

BP’s dividend cut was its first since 2010, after the Deepwater Horizon oil spill disaster in the Gulf of Mexico.

--Fuel maker Marathon Petroleum Corp. said it has agreed to sell its gas stations to the owners of the 7-Eleven convenience store chain for $21 billion in the largest U.S. energy-related deal of the year.

The all-cash agreement comes less than a year after Marathon agreed to spin off its convenience-store chain, known as Speedway, under pressure from activist investors including Elliott Management Corp.

Ryuichi Isaka, president of Seven & 1 Holding Co., the Tokyo-based parent of 7-Eleven, said he saw convenience stores in the U.S. as the biggest growth driver for the company, whose department stores and supermarkets in Japan are struggling.

With the acquisition of 3,900 convenience stores from Speedway, that brings 7-Eleven’s retail footprint in the U.S. and Canada to around 14,000 locations.  Under the agreement, Marathon will supply 7-Eleven with about 7.7 billion gallons of fuel per year for 15 years.

Elliott has repeatedly called on Ohio-based Marathon to split into three businesses – a gas-station chain, a pipeline business and a fuel-making operation – saying the integrated model left the company undervalued.

--Gold hit an all-time high of $2069 on Thursday as the pandemic clouded the economic outlook and bolstered bullion’s safe-haven allure, though it fell back a bit today to finish the week at $2046. 

Gold started the year at $1523 and I said “sell” in my May 15 review at $1754.  Well, I blew it.  I’m not going to be cute.  I have to hold it now until year end and I expect to have significantly cut my losses by then.

--Toyota Motor Corp. eked out its smallest quarterly profit in nine years as the pandemic halved its sales and nearly wiped out its bottom line, down 98% to a profit of $131.73 million for the three months ended June.

“The pace of recovery in a number of regions has been faster than we had initially forecast,” a Toyota spokesman said on Thursday.  “But the virus situation continues to place many uncertainties on the business outlook…and we see a possibility that our forecast could change.”

Toyota expects to take the most serious hit in North America, its biggest market, accounting for about a quarter of its global sales, and where it sees an annual sales drop of 14%.

A 62% tumble in the region during the first quarter led to a 50% slump in consolidated global sales to 1.16 million units.

China has been a bright spot for Toyota, with demand in the world’s biggest car market recovering faster than elsewhere as the economy there has reopened.

--Ford Motor promoted Chief Operating Officer Jim Farley to the CEO position, as the man currently occupying the spot, Jim Hackett, said he was retiring effective Oct. 1.  This was a popular decision in the analyst community; Ford’s shares continuing to slide under Hackett’s three-year tenure.

--Lufthansa does not expect air travel demand to return to pre-coronavirus crisis levels until at least 2024, with the collapse in air travel due to Covid-19 leading to the airline carrying 96% fewer passengers in the second quarter than a year ago, leading to an 80% decline in second-quarter revenue to $2.25 billion.

While there is some improvement in Europe, long-haul flights to the U.S. remain largely grounded due to rising infections.

Last month Lufthansa said it would cut 20% of its leadership positions and 1,000 administrative jobs as it seeks to repay a 9 billion euro state bailout and navigate deepening losses.

The airline plans to increase short- and medium-haul capacity to 55% of prior-year capacity in the fourth quarter and 50% on long-haul routes.

--Virgin Atlantic, the airline founded by British businessman Richard Branson, filed for protection in U.S. Bankruptcy Court as it tries to survive.

The filing in New York is part of a court process in the United Kingdom to carry out a restructuring plan that the airline announced last month. 

The airline is primarily a long-haul operator, including flights between the U.S. and UK.  It stopped flying in April and only resumed flights in July.  It closed a base at London’s Gatwick Airport and cut about 3,500 jobs.

Branson has appealed to the British government for financial help and was turned down.

Delta Air Lines owns 49% of Virgin Atlantic.

--Ryanair reported a 70% yearly decline in traffic in July as Covid-related airspace closures continued to impact traffic.

The Irish low-cost airline had 4.4 million passengers in July vs. 14.8 million in July 2019.

--LATAM Airlines is poised to fire at least 2,700 workers in Brazil, including pilots.  The layoffs are the latest in efforts to downsize Latin America’s largest airline.  Before the coronavirus crisis, the airline had 43,000 workers worldwide, most in Brazil and Chile.  LATAM filed for U.S. bankruptcy protection in May, as it seeks to restructure $18 billion in debt.

--For British Airways employees today is “Black Friday,” when thousands of long-serving cabin crew are expected to find out whether or not they will be laid off.  Many of those who remain will suffer steep pay cuts, and significant changes to their terms and conditions.

Other workers such as engineers, ground crew and office staff are also expected to hear whether they have a future at the airline over the coming days.

Flight attendants who remain face a 50% cut in pay. One told the BBC: “I’m a single mother. I can’t afford to have half of my pay taken away from me.”  She’s been with the company for 15 years.

In April, BA’s parent company, International Airlines Group (IAG) announced plans for a major restructuring of the airline’s business, which could result in 12,000 being laid off.

--Walt Disney’s diversified entertainment and media portfolio took a hit in the second quarter, as the pandemic impacted practically every business that Disney operates in around the globe.

Management estimated that Covid-19 took a nearly $3 billion bite out of Disney’s operating income in the period, as big gains in its streaming segment couldn’t make up for losses elsewhere.

For Disney’s fiscal third quarter (April-June), the company reported a loss of $2.61 per share, which compared with earnings of 79 cents in the year-earlier quarter.  But Disney’s shares rose after the news in large part because adjusted earnings showed a small profit when a loss was expected by the Street.

Sales came in at $11.8 billion, short of Wall Street’s $12.4 billion consensus estimate and down 42% from $20.3 billion in the same period in 2019. The sharpest revenue decline came at Disney’s Parks, Experiences and Products segment, which includes its theme parks, cruises and toys and apparel businesses, down 85% to $1.1 billion.

[Shanghai Disneyland welcomed back guests starting May 1 with pandemic restrictions, while theme parks in Paris and Tokyo have also begun phased reopenings.  Hong Kong Disneyland reopened in June, then closed again due to a spike in Covid cases.]

Studio Entertainment, which includes Disney’s movie business, saw a 55% drop in revenue, to $1.7 billion, while Disney’s largest segment, Media Networks, saw a 2% fall in revenue to $6.6 billion.

The Disney+ streaming service added millions more viewers last quarter, to end the period at 60.5 million subscribers worldwide, which CEO Bob Chapek noted exceeded Disney’s internal projections for every major market in which it was launched.  Like Netflix, Disney+ has seen a surge of subscribers during the coronavirus outbreak and lockdown orders.

Disney plans to lean more heavily on its streaming unit in coming quarters.  Disney+ subscribers will be able to stream a live-action remake of “Mulan” in the U.S. starting Sept. 4.  It will cost $29.99.  Disney had pushed back the film’s theatrical release multiple times this year.

--AMC Entertainment, the nation’s largest movie theater chain, said it lost half a billion dollars in the second quarter, making it the company’s worst quarter since it was founded in 1920.

The chain, which was forced to close cinemas across the nation as the coronavirus swept the nation in March, said it swung to a loss in the three months ended June 30 as revenue plunged 98.8 percent.

“It should be no surprise to anyone that with our operations shut the world over, and almost no revenues coming in the door, this was the most challenging quarter in the 100-year history of AMC,” said CEO Adam Aron.

AMC posted a net loss of $561.2 million, compared with year-ago income of $1.51 billion.

--The issue has been simmering for months, but under a plan recommended Thursday by the Trump administration, Chinese companies with shares traded on U.S. stock exchanges would be forced to give up their listings unless they comply with U.S. audit requirements.

The proposal addresses U.S. regulators’ inability to inspect the financial audits of Chinese companies that sell shares in U.S. markets and follows bipartisan legislation that passed the Senate in May, which would give Chinese companies that don’t comply three years to delist in the U.S. and find a new exchange.

Chinese firms that are already listed on the New York Stock Exchange and Nasdaq would have to comply by 2022 – or give up those listings.

The Senate bill, which was passed unanimously, addresses investor-protection concerns that have lingered for years but which gained political traction as tensions have grown between the U.S. and China.  Companies like Alibaba and Baidu have together raised tens of billions of dollars by tapping into U.S. capital markets.

But some Chinese accounting frauds such as Luckin Coffee Inc., an upstart rival to Starbucks, have exposed the gap in U.S. audit oversight.  Luckin fabricated more than $300 million in sales, only 11 months after its IPO on Nasdaq and has since been delisted.

There are ways Chinese companies like Alibaba can comply, such as getting a second audit from an accounting firm whose records can be inspected by the accounting oversight board.

I suspect the two sides will eventually reach an agreement, but as a friend who owns shares in Baidu told me a while ago, where were the U.S. folks in cases like Enron and Worldcom?

Needless to say, you know my own story with regards to a certain Chinese investment.

--Canada’s economy added 418,500 jobs in July, mostly part-time, and the unemployment rate fell to 10.9% as the economy continued to reopen, according to Statistics Canada.

--CVS Health Corp. released results for the latest quarter, with same-store sales falling 4.5% and the number of prescriptions filled in the quarter down 1.1%.

At the same time, CVS, which owns insurance giant Aetna, joined other insurers realizing savings from skipped elective procedures and reduced visits to clinics and emergency rooms.

CVS did say customers are returning to more normal health-care routines now and that it expects more people will use their insurance for health care in the second half of the year.

Sales in the health-care-benefits segment, which includes Aetna, rose 6.1% to $18.47 billion.

The segment that fulfills medication prescriptions and sells general products rose 1% to $21.66 billion.

The company posted second-quarter profit of $2.98 billion, compared with $1.94 billion in the same period last year.  It also guided higher on earnings for the full year.

Meanwhile, CVS has opened more than 1,800 drive-through Covid test sites at its stores, 40% of those being tested not CVS customers, providing the company the chance to reach new people.  [Though its being criticized for being slow in getting results back.]

CVS plans to administer 18 million flu shots this season, more than previous years, and is in negotiations with the Trump administration about plans for administering any Covid vaccine when it becomes available.

--Uber Technologies Inc. generated more revenue from delivering food than transporting people for the first time last quarter, but it failed to offset a steep and prolonged decline in ridership brought on by the coronavirus pandemic.

Sales fell 29% in the second quarter to $2.24 billion, ending a decade of unchecked growth.

Delivery revenue, which was growing even before the pandemic, surged 103% during the quarter and is now central to Uber’s strategy.  Along with a $2.65 billion deal to acquire Postmates Inc. and expand its food delivery operations, Uber has begun delivering other items including groceries, prescriptions and packages.

But the same pandemic health restrictions that prompted customers to hunker down and order out froze travel in many of Uber’s most important markets.  Mobility, Uber’s new category for rides and scooters, plunged 67% to $790 million in revenue.

--More than 580 U.S. farmers have filed for bankruptcy protection in the 12-month period ending June 30, according to federal data; 8% more than a year earlier and despite a record $33 billion in payments to farmers this year, according to the University of Missouri’s Food and Agricultural Policy Research Institute.

--Ralph Lauren Corp. said on Tuesday its quarterly revenue plunged by nearly $1 billion, as it struggled with coronavirus-led store closures and a slowdown in demand for luxury goods across the world.

The company’s revenue slumped 77% in North America, with analysts saying demand for high-end handbags, apparel and accessories is not expected to rebound quickly as the global economy struggles.

Ralph Lauren’s net revenue fell 66% to $487.5 million, badly missing analysts’ average estimate of $615 million, according to Refinitiv.

Sales at European luxury goods giants LVMH, Kering and Hermes fell between 38% and 44%, much slower than those posted by the company.

Ralph Lauren also reported a mere 3% rise in North American online sales, a far cry from triple-digit sales increases recorded by a number of U.S. retailers.

--The Securities and Exchange Commission is investigating the circumstances around Eastman Kodak Co.’s announcement of a $765 million government loan to make drugs at its U.S. factories.  No surprise to you readers, as I called this out that week.

A massive spike in the share price produced a potential windfall for company executives who owned stock-option grants, some of which were granted on July 27, the day before the loan was officially announced.

The SEC’s move doesn’t mean an investigation will produce any allegations of wrongdoing by the company or individuals, but control of the disclosure was shoddy, as I described recently, with media outlets being informed before the public.

On Monday, Sen. Elizabeth Warren (D-Mass.) asked the SEC to probe whether any illicit activity occurred before the loan announcement.

Kodak shares closed at $2.62 on July 27, the day it issued the new options, and then hit $60 two days later.  They finished this week at $15.  While there were some big potential winners, there were also big losers with swings like these.

--Beyond Meat said revenue hit a record in the second quarter amid increased volume in the U.S. retail channel but it still reported a loss as the company continued to invest in marketing and international expansion to push adoption of its vegetarian food.

Net revenue increased to $113.3 million during the three months that ended June 27 from $67.3 million a year ago, easily beating analysts’ forecasts.

Shares fell over 8% on the earnings, loss per share basically in line, but recovered some later in the week.

“Given the uncertainty regarding the ultimate duration, magnitude, and effects of the Covid-19 pandemic, management remains unable to predict the continuing impact on its business with reasonable certainty” the company said.  “As such, the 2020 outlook, previously provided on Feb. 27, remains suspended.”

--Booking Holdings Inc. said it plans to cut up to a quarter of Booking.com’s global workforce, or roughly more than 4,000 people, and restructure the company as the pandemic continues to batter travel demand.

The online travel agency, which also operates Kayak, OpenTable, Priceline and Agoda, said it needs to work with officials in each country before sending out layoff notices by the end of the year.

Other travel-related sites are moving to cut costs to stay afloat. Tripadvisor Inc. laid off 900, or about a quarter of its workforce.

--The parent company of the Men’s Wearhouse and Jos. A. Bank menswear brands entered bankruptcy hoping to turn around the nearly half-century-old business in the midst of the pandemic by slashing at least $630 million in debt while pivoting to casual wear from business clothing.

Retailer Tailored Brands Inc. filed for Chapter 11 Sunday after revenue declined by about 5.6% over the past two fiscal years ending in February, despite a dominant position in the menswear market. The company couldn’t recover from the mandated shutdowns of its stores.

In court papers, Tailored Brands Chief Restructuring Office Holly Etlin said the business “depends heavily on consumer discretionary spending, and, as such, sales are particularly sensitive to economic conditions and consumer confidence, which have been significantly affected by Covid-19.”

The company had reported a net sales decline of 60% for the quarter ended May 2 vs. a year ago.  Tailored Brands was forecasting revenue of $1.4 billion for 2020, compared with $2.9 billion in 2019.

The company admitted it has made some mistakes, including a limited range of style offerings and pricing that missed out on revenue opportunities.

So now the company wants to speed up plans to mix its products as sales of tailored clothing decrease.

As many as 500 of the company’s 1,400 retail stores in the U.S. and Canada could close, resulting in 2,500 job losses out of 18,000 current employees.

I drove by the Summit Jos. A. Bank store and it looked like it was closed.  I purchased a lot of my early business attire there. 

As for Men’s Wearhouse, which I never stepped into, it was founded in 1973 by George Zimmer, who became known for his catchy slogan in TV and radio commercials: “You’re going to like the way you look.  I guarantee it.”

Zimmer did a good job growing the business, but in 2013, the company abruptly fired him and in response he penned a letter expressing his concerns that the company was headed in the wrong direction.

Zimmer, 71, when notified of the bankruptcy filing, said in an interview, “It’s a crying shame. I spent 40 years creating a really neat company, and it only took seven years to destroy it.”

In 2014, Men’s Wearhouse acquired Jos. A. Bank.  But the merger mired Tailored Brands in debt.  And it made no sense…two fundamentally different business models, a problem compounded by relaxation of office dress codes.

--Lord & Taylor, the floundering department store company whose roots go back to 1826, also filed for Chapter 11 protection on Sunday.  The chain had just been acquired last year by clothing rental start-up Le Tote in a $100 million deal.  Now both are in bankruptcy court.

--Like all tourism-related businesses in New York City, the Metropolitan Museum of Art has been suffering greatly and this week it announced it was reducing its staff by 353; the reduction coming through a combination of voluntary retirements, furloughs and the elimination of some positions. 

The Met closed in mid-March and has announced plans to reopen Aug. 29, but that’s dependent on New York City, which hasn’t allowed museums to welcome visitors again.

A Met spokesman said the museum is projecting a loss of $150 million in revenue because of the coronavirus, the institution having an annual budget of $320 million.

A study by the American Alliance of Museums found that 44% of the 760 institutions surveyed said they had reduced staff thus far.

--Another pool update (swimming pool, not ‘pooled testing’).  Manufacturer B.K. passed along a note from a fellow manufacturer/friend in the business down in Florida.

“It is equally insane with demand down here…I am fielding 10-15 inquiries per day.”  Those calling are now getting the reply: “We are Sold Out into May 2021.  Not bidding any new work at this time.”

B.K. points out that “this means if he had capacity he’d have a 5- to 6-fold increase in pool sales.”

My friend adds, “This wave is not even close to breaking.”

And B.K. sent another update wherein he describes a problem on closing pools for the winter.  “That requires antifreeze and other chemicals.  Contact had just heard from rep his antifreeze order was not accepted.  In this case the company provides items like antifreeze and windshield wash to the RV and car industry, with the pool folks at the bottom of the order.  Plus companies that provide these materials are having trouble finding enough workers who reliably show up.”

Draw your own conclusions.  I sure as hell did not anticipate such consequences, good and bad, from the Covid economy that are now in play.

Foreign Affairs

China: China’s Defense Minister Wei Fenghe and his U.S. counterpart Mark Esper warned each other in a phone call about escalating risks over Taiwan and the South China Sea, in the highest-level talks between the two sides in months.

Esper “expressed concerns about [the Chinese military’s] destabilizing activity in the vicinity of Taiwan and the South China Sea, and called on [China] to honor international obligations” as well as share more of its data on Covid-19, a Pentagon spokesman told reporters in Washington on Thursday.

China’s state news agency Xinhua confirmed Taiwan and the South China Sea were on the agenda and that Wei warned Esper against “dangerous moves” that would escalate bilateral tensions.

Meanwhile, the U.S. consulate in Hong Kong broke its silence on Friday to warn of the chilling effect of the “draconian” national security law imposed by Beijing on the city. The consulate also hit back at allegations that diplomats and staff had been colluding with the city’s opposition camp.

What makes this a rare move is that such comments normally emanate from a nation’s State Department.

Three days earlier, Chinese state tabloid Global Times said on Twitter that the U.S. consulate head had reportedly met with two opposition leaders, one of whom had been banned from running in the city’s Legislative Council elections, which have been postponed by a year.

Thursday, two dozen democracy advocates in Hong Kong were charged with taking part in an annual vigil honoring the victims of the 1989 Tiananmen Square protests, yet another sign of the aggressive clampdown on dissent in the territory.

Separately, Health and Human Services Secretary Alex Azar is leading a delegation to Taiwan in the highest-level visit by a U.S. cabinet official since Washington cut ties with Taipei more than 40 years ago. Azar was scheduled to arrive in Taiwan “in the coming days” to discuss the global response to the Covid-19 crisis and supplies of medical equipment and technology, according to a statement on Wednesday from the American Institute in Taiwan, the de facto U.S. embassy in Taipei.

Lastly, China said it will take retaliatory measures if all Chinese journalists based in the United States are forced to leave the country, including targeting U.S. journalists in Hong Kong, Global Times Editor-in-Chief Hu Xijin said on Tuesday.

Israel: Prime Minister Benjamin Netanyahu struck back on Sunday at demonstrations calling for his resignation over his mishandling of the coronavirus, accusing protesters of trampling democracy and the Israeli media of encouraging them.

Netanyahu, who was sworn in for a fifth term in May after an election, has often complained of press bias against him, and some of the charges he faces in a corruption trial relate to alleged attempts to seek favorable coverage from media barons in return for state favors.  He has denied wrongdoing in the three graft cases against him.

Netanyahu’s main coalition partner, Defense Minister Benny Gantz, defended the demonstrations.  “The right to protest is the lifeblood of democracy,” he said at a cabinet meeting.

Afghanistan: The Islamic State group said it was behind a high-profile attack on a central prison in the eastern Afghan city of Jalalabad that saw hundreds of prisoners try to flee, most of whom, it seems, were recaptured.  But at least 29 people were killed in the chaos when car bombs were detonated at the prison’s entrance by gunmen.

The prison held 1,700 inmates – most of them Taliban and Isis fighters.  The attack happened on the third and final day of a temporary ceasefire between the Afghan government and the Taliban, with hundreds of Taliban prisoners released in an effort to get peace talks moving between the two sides.

Russia: Belarusian President Alexander Lukashenko accused Moscow on Tuesday of lying about the arrest of a group of Russian security contractors in Minsk, and said unnamed forces were plotting a revolution that would fail.  In a fiery address to the nation as early voting began in an election in which he is seeking to extend his 26-year rule, Lukashenko said he would protect Belarus from opponents he portrayed as wreckers controlled by “puppet masters” abroad.  He faces his toughest challenge for years in Sunday’s election because of public anger over his handling of the Covid-19 pandemic, the economy and human rights.

There have been mass protests, rare in Belarus, with some of Lukashenko’s opponents arrested on what they call trumped-up charges, while Minsk has said the suspects (which I wrote of last week) were preparing “terrorist acts.”

Russian President Vladimir Putin is sitting back, enjoying the chaos.  At some point Belarus is his.

Random Musings

--Presidential tracking polls….

Gallup: 41% approve of President Trump’s job performance, 56% disapprove; 91% of Republicans approve, 34% of independents (July 1-23).
Rasmussen: 48% approve, 51% disapprove of Trump’s performance (Aug. 7).

--According to a Gallup survey, only 13% of U.S. adults are satisfied with the state of the nation, down seven percentage points in the past month and 32 points since reaching a 15-year high in February.  This is the lowest since November 2011.  The survey was conducted July 1-23.

Satisfaction now sits just six points above the all-time low in October 2008 immediately following sharp drops in the U.S. stock market during the global financial crisis.

Republicans’ satisfaction today (20%) is about half what it was a month ago (39%) and down 60 points since February, after the Senate acquitted President Trump in his impeachment trial.  The prior low for Republicans during the Trump administration had been 38% in October 2017.

But the same Republicans still overwhelmingly approve of the job Trump is doing in the Gallup poll as I note above, 91%, so it’s tough to tell just what the 20% reading means for the elephants and the election.

--President Trump’s campaign took in more than $165 million in July in combined fundraising with the Republican National Committee, while Joe Biden’s campaign team raised about $140 million.  Biden raised $10 million more than Trump in June, $141 million to $131 million.

Trump’s campaign has raised $1.1 billion since January 2019, but it ended July with more than $300 million in the bank, while Biden’s team has $294 million.

--Biden said he will be accepting his party’s nomination in a national address from his home state of Delaware rather than in Milwaukee as planned, party officials said on Wednesday, both political parties drastically downsizing their traditional made-for-television affairs featuring raucous speeches and fist-waving throngs.

Meanwhile, President Trump told Fox News that he would like to accept the Republican Party’s nomination at the White House, because it “would be by far the least expensive from the country’s standpoint.”

House Speaker Nancy Pelosi said Trump would once again “degrade the White House” by using it for a political event.

Republican Sen. Ron Johnson said Trump “probably shouldn’t do it.”  Ditto Republican Sen. John Thune.

--In his above-referenced Axios interview, President Trump aired his personal grievances in dismissing the legacy of the late Rep. John Lewis after snubbing the civil rights icon and defending his decision not to pay his respects following Lewis’ recent death.

Lewis, who played an instrumental role in the Voting Rights Act of 1965, was remembered at an emotional service in Atlanta last week by three of the nation’s four living past presidents.

Asked about the legacy of Lewis, Trump said: “I really don’t know…I don’t know John Lewis. He chose not to come to my inauguration…I never met John Lewis, actually, I don’t believe.”

--We note the passing of John Hume, one of the key architects of the Northern Ireland peace process and co-recipient of the 1998 Nobel Peace Prize with David Trimble.

All you need to know of the man, who died at the age of 83, is that in a 2010 public poll by Irish national broadcaster RTE, Hume was selected the “greatest person in Ireland’s history.”

Sadly, in normal circumstances, Mr. Hume’s funeral would be expected to be one of the largest seen on the island for generations but due to coronavirus it is a more restricted farewell.

Former British prime minister Tony Blair described Hume as a “political Titan and visionary who refused to believe the future had to be the same as the past.”

The current leader of Hume’s Social Democratic and Labour Party (SDLP), Colum Eastwood, said:

“The life of John Hume will forever be a blessing upon this island since Ireland is now blessed by the peace he gifted to us all.  It is the greatest legacy a political leader can bestow upon his country….

“After some 800 years which inflicted so much hurt and harm on all our peoples, it is John Hume who must now be remembered as the great healer of that history. For all of these reasons and more, John Hume truly was Ireland’s greatest.”

Hume is the only person to have received the Nobel Peace Prize, the Gandhi Peace Prize, and the Martin Luther King Award.

But as Colum Eastwood said, “the greatest reward for John was not personal recognition – it was instead found in the end to the violence and death which had taken ownership of our streets for far too long.”

Amen.

--A Wall Street Journal analysis of crime statistics among the nation’s 50 largest cities found that reported homicides were up 24% so far this year, to 3,612.  Shootings and gun violence also rose, though many other violent crimes such as robbery fell.

The murder rate is still low, however, compared with previous decades.  But as the Journal’s Jon Hilsenrath writes: “Researchers, police and some residents fear the homicide spike, if not tamed, could threaten an urban renaissance spurred in part by more than two decades of declining crime.”

In all, 36 of the 50 cities studied saw homicide rise at double-digit rates.

Gang violence has risen significantly and it hasn’t helped that young adults were let out of school in March and many after school activities have stopped.

--I have to just shake my head when I hear of the annual Sturgis Motorcycle Rally still being held this year.  As one who has been to the Black Hills of South Dakota numerous times (but always off-season), I’ve heard many a story from locals on the scene, with hundreds of thousands of bikers descending on a small area, with many accidents on the roads.

But it is quite an economic jolt for the area, particularly Sturgis itself.  Hotels all around are sold out, campgrounds filled…a massive party. 

This year, though, we have a pandemic!  Few will wear masks.  Lord help the region.  City officials in the town of 7,000 are attempting to limit attendance, such as canceling city-hosted events.

Rod Woodruff, the operator of a nearby campground, expects record attendance because “it’s the biggest event that’s going on in the United States that didn’t get canceled.  A lot of people think it’s going to be bigger than ever.”

According to the South Dakota Department of Tourism, attendees in the past have spent about $800 million at the rally.

But despite this cash infusion, according to a city-conducted survey, 60 percent of the Sturgis residents this year opposed holding the event in August.  We’ll see what kind of inevitable rise in Covid-19 cases we get in 2-4 weeks.

--The amount of sea ice in the Arctic melted away to a record low for the month of July, according to the National Snow and Ice Data Center.  The level impacts Arctic communities and wildlife and it helps regulate the planet’s temperature by influencing the circulation of the atmosphere and ocean.

Mark Serreze, director of the center, told Yale Climate Connections that early July brought “just the pattern you’d like to see if you’d like to get rid of ice.”

The average sea ice area for July 2020 was 2.81 million square miles, the lowest extent on record for the month, with records going back to 1979.  This was some 846,000 square miles below the July average and 120,000 square miles below the previous record low mark for July set in 2019. 

The most dramatic melting has been off the coast of central Russia, with soaring temperatures in Siberia, as I’ve been writing this summer.  [Doyle Rice / USA TODAY]

--President Trump signed a new law called the Great American Outdoors Act, which puts as much as $9.5 billion toward a National Park System backlog in deferred maintenance, which has grown to $12 billion since the 1990s. Funding starts in the 2021 fiscal year (Oct. 1).

Expect remodeled buildings, badly needed new water systems and other improvements.  Expanded parking, revamped campgrounds and employee housing are also likely projects.

This is terrific, the bill long having the support of congressional Democrats, joined this year by the president and two Western-state Senate Republicans, Cory Gardner of Colorado, who wrote the bill with Democratic Sen. Joe Manchin (W.Va.) – and Sen. Steve Daines (R-Mont.)  Both Gardner and Daines are campaigning on its success.  The measure passed the Senate 73 to 25.

Democratic Rep. Raul Grijalva of Arizona, chairman of the House committee that oversees the Interior Department, called the new legislation “one of Congress’ most significant investments in environmental conservation in a generation.”

But how can I not mention Trump’s hilarious pronunciation of Yosemite during the bill-signing ceremony… “Yo-semites.” Twice.

--Very cool that two NASA astronauts, Doug Hurley and Bob Behnken, returned to Earth on Sunday in a dramatic, retro-style splashdown, their capsule parachuting into the Gulf of Mexico to close out an unprecedented test flight by Elon Musk’s SpaceX company.

It was the first splashdown by U.S. astronauts in 45 years, with the first commercially built and operated spacecraft to carry people to and from orbit.

Hurley and Behnken rode the SpaceX Dragon capsule back to Earth after departing the International Space Station and two months after blasting off from Florida.

--On Thursday, Bill Gates said that as bad as the pandemic is, it’s dwarfed by the damage that climate change could inflict.

“Climate change will make entire ecosystems die off,” Gates told Bloomberg News.  “It’ll make parts of the world impossible to live in. The actual economic and death toll from climate change will be much, much, much greater than what we have with this pandemic.”

Gates was sounding an alarm that will be amplified in his upcoming book, “How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need,” due out from Knopf in February 2021.

The pandemic is “an acute problem but with a clear solution,” Gates said.  “Whereas with climate change, the scale of the changes required takes decades of invention and decades of scaling up.”

--Hurricane/Tropical Storm Isaias did a number on New Jersey, New York and Connecticut in terms of power outages and all three states are furious with the utilities for not seemingly being prepared.  The damage in my town was very similar to “Sandy” 8 years ago.  I was fortunate, but three days later, large percentages of homes and businesses in the area are still out, with folks being told maybe by early next week. Which isn’t good enough.

--George F. Will / Washington Post

“Seventy-five years ago Sunday, three days after the first use of a nuclear weapon, the second occurred. There has not been a third in the subsequent 27,394 days.  One of humanity’s remarkable achievements is this absence of something.

“President Harry S. Truman, who ordered the bombings of Hiroshima and Nagasaki, did not learn about the existence of the Manhattan Project that developed the weapons until he became president upon the death of Franklin D. Roosevelt on April 12, 1945.  The developers did not know until July 16, in the New Mexico desert, whether the weapon’s physics would work.  Truman used the bombs to avoid invading Japan. His decision, following the bitter-end Japanese fanaticism on Iwo Jima and Okinawa, was a moral and successful wager on economizing violence.

“In the decision’s immediate aftermath, however, little was known of the scale and nature of the violence, and for a while the U.S. government wanted to prevent knowledge.  When reports said the Hiroshima bomb was equivalent to more than 20,000 tons of TNT, a young reporter stationed in Europe, named Walter Cronkite, assumed this was a typo, which he changed to 20 tons.  ‘It was just the same as getting a bigger gun than the other fellow had to win a war,’ said Truman, adding, ‘Nothing else but an artillery weapon.’

“Except this one melted eyes in their sockets. Radiation sickness – the bomb’s lethality long after detonation: uncontrollable vomiting, diarrhea, bleeding gums, wounds that would not heal, disappearing white blood cells, fevers reaching 106 degrees – had been denied, then minimized. Army Lt. Gen. Leslie Groves, head of the Manhattan Project, first dismissed Japanese reports of lethal radioactive effects as ‘pure propaganda,’ then told a Senate committee that radiation poisoning ‘is a very pleasant way to die.’  In May 1946, however, John Hersey arrived in Hiroshima.

“One of his earlier New Yorker stories had concerned the sinking of a PT boat commanded by a young sailor named John F. Kennedy. Two years later, another story began:

“ ‘At exactly fifteen minutes past eight in the morning, on August 6, 1945, Japanese time, at the moment when the atomic bomb flashed above Hiroshima, Miss Toshiko Sasaki, a clerk in the personnel department of the East Asia Tin Works, had just sat down at her place in the plant office and was turning her head to speak to the girl at the next desk.’

“What followed was, Lesley M.M. Blume says, ‘one of the most important works of journalism ever created,’ 30,000 words that filled the entire August 31 issue of the New Yorker and became the book ‘Hiroshima,’ which has not since been out of print.  Blume’s new book about the making of Hersey’s essay, ‘Fallout: The Hiroshima Cover-up and the Reporter Who Revealed It to the World,’ argues that by defeating Gen. Douglas MacArthur’s censorship regime in Japan, Hersey compelled Washington to surmount its reticence, born of queasiness, about the bombings.  Even Groves registered few, if any, objections to the essay.

“After the war had killed perhaps 60 million combatants and civilians, and after the Holocaust’s industrialized murder, people experienced what Blume calls ‘atrocity exhaustion.’  Nevertheless, Hersey’s unsparing journalism, Blume argues, made impossible any further discussion of the bomb as a conventional weapon, and his understated, matter-of-fact presentation of horrific facts facilitated the implementation of deterrence, which has been successful. So far….

“The human capacity for…lunacy suggests that people are too optimistic when they say that the vast majority of human beings who will ever live have not yet lived.  If true, this will require an endless supply of the skill, leavened by luck, that has gotten humanity through its most recent 27,394 days.”

---

Pray for the men and women of our armed forces…and all the fallen, including the nine killed in a training accident off San Clemente Island in Southern California.

God bless America.

---

Gold $2046
Oil $41.60

Returns for the week 8/3-8/7

Dow Jones  +3.8%  [27433]
S&P 500  +2.5%  [3351]
S&P MidCap  +4.0%
Russell 2000  +6.0%
Nasdaq  +2.5%  [11010]

Returns for the period 1/1/20-8/7/20

Dow Jones  -3.9%
S&P 500  +3.7%
S&P MidCap  -6.0%
Russell 2000  -6.0%
Nasdaq  +22.7%

Bulls 56.7
Bears
17.3…57.3/17.5 week before…

Hang in there…Mask up.  Wash your hands.

Say a prayer for Lebanon.

Brian Trumbore

*Welcome back to America, Steve G.  Steve, who I’ve known for over 50 years, had an interesting experience crossing the U.S.-Mexican border the other day after spending years in Central and South America.  Interesting in that it took him “two minutes” to go through the checkpoint at Laredo, Texas, no questions on Covid, no nothing, just “Are you an American citizen?”  “Si.” 

 



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Week in Review

08/08/2020

For the week 8/3-8/7

[Posted 10:00 PM ET, Friday]

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

Edition 1,112

Beirut: I have a certain affection for Lebanon, having been there in 2005, purposely going weeks after the horrific car-bombing that killed former prime minister Rafik Hariri (and 21 others), father of Lebanon’s rebirth following the 1975-1990 civil war, and then a return trip in 2010.

Lebanon is a beautiful, exciting, dirty, unnerving, wild place, with a dark history.

It’s also a nation filled with some of the nicest people you’ll ever meet.  Beirut for a long time was known as the Paris of the Middle East.  I used to love my walks along the corniche, up the coast where there were some terrific restaurants with great views of the Mediterranean.

But I could also see the site of the 1983 bombing of the U.S. Marine barracks from my hotel room.  Beauty on one side, darkness on the other.  That’s Lebanon.

Prior to Tuesday, Lebanon and Beirut were basket cases, the economy in shambles, the coronavirus simmering, an incredibly dysfunctional and corrupt government, a collapsing currency, rampant poverty, a nation flooded with refugees from the Syrian war next door, ongoing tensions with Israel…and then a fire started at a warehouse at the main port, one of just two such ports in the country, the other in Tripoli.

The initial fire was captured on video, with what seemed to be small detonations like fireworks.  It then spread to an adjoining warehouse and BAM!  The biggest peacetime explosion in modern history, anywhere, a massive mushroom cloud spewing into the air, a huge shockwave enveloping the city.

A seeming tragic accident, one built of immense negligence, that killed over 150, with scores still missing, 5,000 injured, many of the hospitals heavily damaged, and at least 300,000 now homeless.

In a flash, it is not an overstatement to say a nation was destroyed.

In a year already destined to be remembered in the history books for centuries to come, we get a tragedy of immense proportion that has the potential to change the region in ways we don’t yet understand.

The Lebanese, Beirutis, in these early days are showing immense resilience and courage, but they are running on adrenaline and soon they will crash with exhaustion, immense anger, fear, deep sadness and depression.

Lebanon will need aid on a scope that is inconceivable, with many of its normally reliable neighbors facing big problems in their own right, including the pandemic and a crash in oil prices.

Just one little fact.  Damage to the grain silo at the site left the country with less than a month’s grain reserves, though authorities said there will be no food crisis.  That said, the massive store of grain at the port is unusable.

What is incredible, tragic and infuriating is that officials admitted this disaster was foreseeable and had been the subject of repeated warnings.  An emerging paper trail linked the blast to a mammoth stash of ammonium nitrate, 2,750 tons of a chemical used in bombs and fertilizer, that was once described as a “floating bomb” and housed at the port since 2014.  It seems back then, a Russian-owned vessel carrying the load was impounded at Beirut’s port, after making an emergency stop in the city and being denied permission to leave by customs authorities because it was deemed unseaworthy.

As recently as six months ago, customs officials at the port inspecting the consignment warned that if it was not moved it would “blow up all of Beirut.”

With a population already seething amid an ongoing financial crisis that had sunk half the country into poverty, the explosion fueled new anger at Lebanon’s political class.

Back in 2010, I met with Michael Young, Lebanon’s preeminent authority on the country and author of the best book on modern Lebanon, “The Ghosts of Martyrs Square: An Eyewitness Account of Lebanon’s Life Struggle.”  I explain our meeting in a post I put up this week on my “Hot Spots” link and I was hesitant to write him right after the disaster because I knew he was swamped (assuming he was OK).  I was actually hoping he was in Paris, where I know he spends a considerable amount of time.  But I wrote anyway, seeing as we’ve stayed in touch over the years, and received an immediate reply.

“Brian, thanks so much for your kind note. My wife and I are fine.  Our apartment less so, as is the case for most Beirutis.  A very sad situation that only highlights the vile leadership we have and their criminal incompetence…”

The government ordered some port officials to be placed under house arrest, with 24 now in custody, but what good does that do?  The country doesn’t need an investigation, it needs massive assistance…NOW.  The locals know that all the government will do is look for scapegoats to defer responsibility.  And we know that with the banks in crisis, a collapsing currency and one of the world’s biggest debt burdens, Lebanon has few resources to deal with the disaster.

French President Emmanuel Macron, the first foreign leader to travel to Beirut, promised aid but reassured angry citizens that no blank checks will be given to Lebanon’s leaders unless they enact reforms and end rife corruption.

Speaking at a news conference at the end of his dramatic visit, Macron called for an international inquiry into the devastating explosion, while saying he proposed to Lebanese authorities a roadmap of urgent reforms to unlock billions of dollars in funds from the international community, and that he would return to Lebanon in September to follow up.  “If reforms are not carried out, Lebanon will continue to sink,” Macron said.  “What is also needed here is political change. This explosion should be the start of a new era.”

Macron said France promised “transparent governance” so the aid goes to the people, NGOs and relief groups and not to the ruling elite which has been accused of corruption and mismanagement. He also told reporters that an audit was needed on the Lebanese central bank, among other urgent changes, and that the World Bank and United Nations would play a role in any Lebanese reforms.

During his visit Macron met with all Lebanese political factions, including Hezbollah, which dominates Lebanese politics.

Emmanuel Macron showed what leadership can be in his brave trip less than 48 hours after the explosion.  But the people want the government to fall, now.  And what you are seeing in the first days is that the same government that has failed to tackle a runaway budget, mounting debt and endemic corruption, is incapable of mounting a rescue and recovery effort.

I reread the inscription Michael Young wrote in my copy of his book when we met in 2010:

“To Brian Trumbore.  In memory of an afternoon in Beirut, after the period of the martyrs…but can we be sure?”

---

Meanwhile, Defense Secretary Mark Esper on Wednesday afternoon said that “most believe” the massive explosion was “an accident,” contradicting an incredibly careless and reckless claim by President Trump that “generals” told him that the blast was an “attack.”

Tuesday, just hours after the blast, Trump told reporters at the White House: “I met with some of our great generals and they just seem to feel that it was [an attack].  This was not some kind of a manufacturing explosion type of event – they would know better than I would. They seem to think it was an attack, it was a bomb of some kind, yes.”

A total lie.  IF he met with generals, they did not tell him this.  All you needed to know is that there were no special troop movements in the entire region like there would have been had this been an actual attack.  For its part, Israel immediately denied it had anything to do with the explosion.

Today, Lebanese President Michel Aoun, desperately trying to deflect attention from his government’s total lack of an emergency response, floated the idea of the “possibility of external interference through a rocket or bomb or other act.”

But it was Aoun who said immediately after on Tuesday that the explosive material was stored unsafely for years at the port.  He did say today the investigation would also look into negligence, but he doesn’t want an international inquiry.  Gee, I wonder why?

Sayyed Hassan Nasrallah, the leader of Hezbollah, in denying that his group had arms stored at the port, called for a fair investigation, adding, “Even if a plane struck, or if it was an intentional act, if it turns out this nitrate had been at the port for years in this way, it means part of the case is absolutely negligence and corruption.”

---

Covid-19 death tolls (as of tonight)….

World…723,184
USA…164,094
Brazil…99,702
Mexico…50,517
UK…46,511
India…42,578
Italy…35,190
France…30,324
Spain…28,503
Peru…20,649

Source: worldometers.info

U.S. daily death tolls…Sun. 467; Mon. 568; Tues. 1,362; Wed. 1,319; Thur. 1,203; Fri. 1,290.

President Trump has issued a number of tweets such as the following:

Big China Virus breakouts all over the World, including nations which were thought to have done a great job. The Fake News doesn’t report this.  USA will be stronger than ever before, and soon!”

“With the exception of New York & a few other locations, we’ve done MUCH better than most other Countries in dealing with the China Virus.  Many of these countries are now having a major second wave. The Fake News is working overtime to make the USA (& me) look as bad as possible!”

Oh, go pound sand, Mr. President.  Let’s take Wednesday, which isn’t influenced by the discrepancies you all are well aware of by now when it comes to lags in reporting over the weekend, which is why I coined “Catchup Tuesday” long ago.

Aug. 5, if you combine the populations of Germany, France, Italy, Spain and the UK you come up with 324.8 million.  Conveniently, the European Union recently released its population data for 2019.  The U.S. is at 330 million.

So let’s add in Belgium, 11.5 million; the country having been hit hard by Covid in March and April.

For Wednesday, these six European nations with a population of 336.3 million had a combined total of 7,281 new cases and exactly 100 deaths.

In the United States, we had 55,148 new cases and 1,319 deaths.

Yes, some European nations are a bit worried about spikes in their numbers, but compared with the U.S.?

The president expects Americans to be idiots, but I won’t let you be counted among them.

Covid Bytes

--Dozens of pharmaceutical players are racing to find a vaccine for the coronavirus, while there is hope on the horizon for a cure, as Eli Lilly announced on Monday that its trial of an antibody drug had progressed to phase 3, as the drug giant attempts to see if it can prevent or treat Covid-19 in nursing homes in the U.S.

Antibodies are proteins the body makes in response to invasion of a foreign substance such as a virus. They can be obtained from the blood of recovered patients or created in the laboratory from genetic sequences, which many companies are working on.

China apparently has been using the plasma of recovered patients to treat others but the process is limited by supply.  It seems plasma from four survivors is needed to treat one patient.

But Lilly’s drug candidate is made in the lab.  The process “neutralizes” the virus but is not a vaccine.

--People with symptomless Covid-19 can carry as much as of the virus as those with symptoms, a South Korean study has suggested.  South Korea was able to identify and isolate asymptomatic cases through mass testing as early as the start of March.

There is mounting evidence these cases represent a considerable proportion of coronavirus infections, but the researchers weren’t able to say how much these people actually passed the virus on.

Results of 1,886 tests suggest people with no symptoms at the time of the test, including those who never go on to develop symptoms, have the same amount of viral material in their nose and throat as people with symptoms.

--Africa’s confirmed cases of Covid-19 have surpassed 1 million as the disease has begun to spread rapidly through a continent whose relative isolation has so far spared it the worst of the pandemic, though all are in agreement, Africa obviously has far more than 1 million cases as testing is limited.  As of Thursday, 21,983 have died, according to a Reuters tally, with South Africa recording more than half the cases and 9,600 of the deaths (though that number is being underreported).

A nurse at a hospital in South Africa’s biggest township of Soweto, told Reuters that “patients were sometimes left lying next to a corpse for hours because there weren’t enough staff to remove it.  More than a third of staff caught the virus on duty.”

The World Health Organization’s top emergencies expert, Michael Ryan, warned recently that South Africa’s experiences are a precursor for what is likely to happen across the continent.

But then you realize that as bad as South Africa’s experience has been, their health services are about the most advanced on the continent!

And testing is a huge issue, with long delays in getting results back…if you can get a test in the first place.

--Australia’s second-biggest city of Melbourne began a six-week lockdown on Thursday with the closure of most shops and businesses raising new fears of food shortages, as authorities battle a second wave of infections.

Shops were boarded and streets were deserted in the city of about 5 million, after the capital of Victoria state reported 471 new Covid-19 cases and eight deaths in the prior 24 hours.

Australia has been taking the coronavirus very seriously since Day One and has now recorded about 20,000 cases, overall, and 266 fatalities, far fewer than other developed nations.

But the concern is the Victorian outbreak will spill into other states such as Queensland where the virus has been all but eliminated.

--Stay-at-home orders are now in place in Manila and four surrounding provinces on the island of Luzon in the Philippines after doctors warned a surge in new coronavirus cases could push the healthcare system to collapse. The country only just emerged from one of the strictest lockdowns in June.

But hospitals have been struggling to cope with a five-fold rise in confirmed infections.

--Doctors in Turkey are claiming hospitals there are filling up with more cases than are reflected in the official nationwide count.  “Patients are being made to wait on gurneys for hours or are being sent home. Even those who have pneumonia are sent home because they cannot find a place,” one doctor told Reuters.

--A BBC Persian service investigation has found that the number of deaths from coronavirus in Iran is nearly triple what Iran’s government claims.

The government’s own records appear to show almost 42,000 people died with Covid-19 symptoms up to July 20, versus the 14,405 reported by the health ministry (now 18,132).

--The situation with Ohio Governor Mike DeWine is emblematic of the testing disaster in the U.S.  DeWine had taken a so-called antigen test in preparation for greeting President Trump on the tarmac in Cleveland, Ohio, Thursday, and he was unable to see Trump because the test came back positive.

But then the governor said later in the day he took a second test – using the PCR or nucleic acid method – and came back negative, as did tests for his wife and staff members.

DeWine’s office said in a statement that PCR tests are “known to be extremely sensitive, as well as specific, for the virus.”  His office said the PCR test was run twice, returning negative results both times.

The antigen tests used as part of White House protocols are sometimes referred to as rapid-result tests, but from day one there have been issues, like false positives, and the reverse.  The country has to get this right if we are to truly reopen once we get cases down to a manageable level, because accurate testing is part of the program.

--New York Gov. Andrew Cuomo said his state’s schools can reopen, citing success in battling the coronavirus, but it is complicated.  All 750 school districts still need to submit their plans and they need to address the fears of parents and teachers that their schools will be safe.

The goal is to clear the way for schools to offer at least some days of in-person schooling, alongside remote learning. Students will be required to wear masks throughout the school day.

Each district must also be below the infection threshold that is established.  “If there’s a spike in the infection rate, if there’s a matter of concern in the infection rate, then we can revisit,” said Cuomo today.

New York City has 1 million public school students so you can imagine the confusion and fears.  Schools open in five weeks in Gotham.

In my hometown of Summit, N.J., local officials have proposed that all students can come back to school five days a week, though they will only be in class four hours a day.  The students will receive some remote instruction in the afternoons at home for the remainder of the school day.  No lunch will be served at schools to eliminate the problem of socially distancing in crowded cafeterias.

Good luck to all, but you can see in just these two examples that nothing has been said about what the parents will do.  They still have to be home for the little ones, at least part of the day, or have access to day care, assuming they have a job.  It’s still a nightmare, but it’s a start.

---

In terms of the election and the economy, I address the jobs report and other minutiae below, but the bottom line is, as economist Joshua Shapiro of MFR Securities told Barron’s the other day, “Anybody who claims to have a firm handle on the economy’s path is either delusional or lying.”

Here’s what I know.  If as the medical experts believe the current rate of infection has potentially plateaued, in the short run, but at an entirely unacceptable level (say, 45,000-55,000 new cases a day), we sure as heck are not going to “lock down really hard” as Minneapolis Federal Reserve President Neel Kashkari told CBS’ “Face the Nation” last Sunday; Kashkari saying we need to do so for four to six weeks to bring the virus under control, thus allowing for a truly robust recovery.

“If we don’t do that and we just have this raging virus spreading throughout the country with flare-ups and local lockdowns for the next year or two, which is entirely possible, we’re going to see many, many more business bankruptcies.  That’s going to be a much slower recovery for all of us.”

Kashkari says Congress is positioned to spend big on coronavirus relief efforts because the nation’s budget gap can be financed without relying on foreign borrowing.

“Those of us who are fortunate enough to still have our jobs, we’re saving a lot more money because we’re not going to restaurants or movie theaters or vacations,” Kashkari said.  “That actually means that we have a lot more resources as a country to support those who have been laid off,” he said.

Yeah, but we’re not going to lock down ahead of the election, period.

So what of the House Democrats and Senate Republicans and a new relief package?  Richmond Fed President Thomas Barkin said on Monday:

“Four months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus put a plate over it so we could navigate.  Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate.  If Congress takes support away too abruptly…the unemployed, their landlords, the places they shop will then feel the full brunt.”  [Barkin making his remarks on a webcast to the Northern Virginia Chamber of Commerce.]

But as of tonight, Congressional Democrats, Senate Republicans and the White House are at an impasse.  Democrats offered to reduce a proposed coronavirus aid package by $1 trillion if Republicans would add a trillion to their counteroffer, an idea President Trump’s negotiators rejected before fresh talks even started.

And at a brief news conference tonight in Bedminster, N.J., as I get ready to post, Trump is saying he may sign some executive orders in a few days but offered zero specifics.

The event in Bedminster was an informal small rally/gathering at Trump’s club and he allowed reporters to ask a few questions, using the opportunity to call them fake news as he abruptly cut it off.

Next week I am going to go through some basic statistics that every voter should know as the campaign, such as it is, begins to accelerate.  We should also get Joe Biden’s Veep pick in the coming days…Kamala Harris or Susan Rice, say the experts.  I wouldn’t discount Val Demings’ chances.

What we do know as this week winds down; we have a godawful choice between the two at the top of their tickets.

Trump World

--The top U.S. counterintelligence official on Friday warned that, Russia, China and Iran will all try to interfere in the 2020 presidential election, with Russia already trying to undercut Joe Biden.

In an unusual public statement, William Evanina, director of the National Counterintelligence and Security Center, said those countries were using online disinformation and other means to try to influence voters, stir up disorder and undermine voters’ confidence in the democratic process.

Foreign adversaries also may try to interfere in election systems by trying to sabotage the voting process, stealing election data, or calling into question the validity of election results.  But Evanina insisted “It would be difficult for our adversaries to interfere with or manipulate voting results at scale.”

Evanina warned Russia is already going after Biden, specifically a pro-Russia Ukrainian, Andriy Derkach, who has been “spreading claims about corruption – including through publicized leaked phone calls” to undermine Biden’s campaign and the Democratic Party.

Evanina said “Kremlin-linked actors” also are trying to “boost President Trump’s candidacy via social media and Russian television.”

He added his agency assessed that China would prefer that Trump not win re-election, because Beijing regards him as too unpredictable, witness recent actions.

Evanina said Iran is mostly focused on online tactics such as spreading disinformation to discredit U.S. institutions and President Trump and to stir up voters’ discontent.

--Joe Biden apologized late Thursday for comments he made earlier in the day that suggested that the African-American community was not diverse.

“In no way did I mean to suggest that the African-American community is a monolith – not by identity, not on issues, not at all,” Biden said in a series of tweets.

In an interview with Black and Latino journalists published early Thursday, Biden said that “unlike the African-American community, with notable exceptions, the Latino community is an incredibly diverse community with incredibly diverse attitudes about different things.”

“Throughout my career I’ve witnessed the diversity of thought, background, and sentiment within the African American community. It’s this diversity that makes our workplaces, communities, and country a better place,” Biden said in his apology tweets.

He also commented that he “will always listen, I will never stop fighting for the African American community and I will never stop fighting for a more equitable future.”

Well, Donald Trump had his opening. Biden didn’t deserve the Black vote.

Trump had also said Thursday that Joe Biden is “against God” in ramping up his attacks.  The remarks, during a trip to Ohio, a crucial state in November, came as he tries to make up ground there.

“He’s against God. He’s against guns,” said Trump. 

Biden has spoken frequently about his faith and how it helped him cope with family tragedies.

--Axios reporter Jonathan Swan had a brilliant and highly revealing interview with President Trump, Trump displaying unbelievable naivete when Swan repeatedly confronted him with the facts.  All agree, it was simply the best interview of Trump yet (Chris Wallace’s recent one a close second).

Swan had done his homework and, unlike other interviewers of Trump, didn’t let the president get away with just making false statements.

Among the topics…on defending the Tulsa rally, Swan repeatedly pressed Trump on the wisdom of holding it, with the president talking up how many people were there, while making a point of bringing up something “nobody talks about”: it set a Saturday ratings record for Fox News, something the president repeatedly emphasized to defend holding the rally despite public health concerns.

Trump also said he thinks things are under control. Swan asked how when 1,000 Americans are dying a day, and Trump said, “They are dying, that’s true, it is what it is. But that doesn’t mean we aren’t doing everything we can. It’s under control as much as you can control it. This is a horrible plague that beset us.”

It is what it is?!!

Swan asked about testing and when Trump can commit to every American getting the same kind of same-day testing he gets as president.

Trump continued to tout U.S. testing cases and claimed, “And there are those that say you can test too much.  You do know that.”

A stunned Swan asked: “Who says that?”

“Read the manuals, read the books,” Trump said.

“Manuals? What manuals?” Swan asked.  “What books?”

At one point during the exchange on testing, Swan told the president that deaths are going up. The president immediately brought up a chart to try and correct Swan to insist the U.S. is “lower than the world.”

Swan looked over the chart and said, “Oh, you’re doing death as a proportion of cases.  I’m talking about death as a proportion of population. That’s where the U.S. is really bad.  Much worse than South Korea, Germany, etc.”

The president responded, “You can’t do that.”

Swan replied: “Why can’t I do that?”

“You’re not reporting it correctly, Jonathan,” the president said.

Swan confronted Trump at one point about not accepting the election results, which set the president off on the issue of mail-in voting.

“I honestly don’t understand this topic with you,” Swan said.  “The Republican party has an extremely well-funded vote-by-mail program.”

Holding up a piece of paper, Swan added, “Your campaign puts out emails telling people to vote by mail.  Your daughter-in-law Lara Trump, she did robocalls in California saying it’s safe and secure, mail-in voting. The Republican won! That was an all-mail-in race!”

Trump pointed to “many court cases where we’re trying to end it” and invoked World War I and World War II to say people didn’t do mail-in voting then.

“We’ve had mail-in voting since the Civil War,” Swan said.

At one point, Trump repeated something he’s said often before, that “I’ve done more for the black community than anybody, with the possible exception of Abraham Lincoln.”

“You believe you did more than Lyndon Johnson, who passed the Civil Rights Act?” Swan asked.

“I think I did, yeah,” Trump said.

“How?” Swan asked.  “How possibly did you…”

“I got criminal justice reform done. I got prison reform,” Trump said.

“Lyndon Johnson,” Swan repeated.  “He passed the Civil Rights Act.”

“How has it worked out?  If you take a look at what Lyndon Johnson did,” the president responded.

“You think the Civil Rights Act was a mistake?” Swan asked.

“Frankly, it took a long time,” Trump said.  The president then embarrassed himself with his comments on John Lewis.

--Facebook and Twitter penalized President Trump and his campaign for posts in which he claimed children were “almost immune” to coronavirus.

Facebook deleted the post – a clip from an interview Trump did with Fox News – saying it contained “harmful Covid misinformation.”

Twitter followed by saying it had frozen a Trump campaign account until a tweet of the same clip was removed.

It was the first time Facebook took action to remove content posted by the president based on its coronavirus-misinformation policy, though it has penalized Trump over content on his page.

Speaking by telephone to morning show “Fox and Friends,” Trump argued it was time for all schools nationwide to reopen.

“If you look at children, children are almost – and I would almost say definitely – almost immune from this disease.

“So few, they’ve got stronger, hard to believe, I don’t know how you feel about it, but they’ve got much stronger immune systems than we do somehow for this.

“And they don’t have a problem, they just don’t have a problem.”

Trump reiterated that, overall, “This thing’s going away. It will go away like things go away.”

--Trump bashed Coronavirus Task Force coordinator Dr. Deborah Birx, who told CNN’s Dana Bash: “What we’re seeing today is different from March and April. It is extraordinarily widespread.” She cautioned Americans to understand that the virus could spread even in the rural areas that had seemed fairly immune several months ago.

Trump then claimed in a tweet that Birx “took the bait” after she was criticized by House Speaker Nancy Pelosi and “hit us.”

“So Crazy Nancy Pelosi said horrible things about Dr. Deborah Birx, going after her because she was too positive on the very good job we are doing on combatting the China Virus, including Vaccines & Therapeutics,” Trump tweeted.  “In order to counter Nancy, Deborah took the bait & hit us.  Pathetic!”

“Cases up because of BIG Testing!” he wrote on Monday. “Much of our Country is doing very well.  Open the Schools!”

--There was no effort or conspiracy by Barack Obama to prosecute Michael Flynn, President Trump’s former national security adviser, former Deputy Attorney General Sally Yates testified Wednesday.

“No such thing happened,” Yates told the Senate Judiciary Committee when quizzed about a Jan. 5, 2017, meeting with the former president, vice president and top law enforcement officials at the White House.

During the meeting, the president, the vice president and the national security adviser did not attempt in any way to direct or influence any investigation, Yates said.

The meeting has been a focus of Republicans, including Committee Chairman Sen. Lindsey Graham.

Flynn had been having back-channel discussions with Russian Ambassador Sergey Kislyak, including after the Obama administration booted dozens of Russian agents and leveled sanctions on Russia on Dec. 29, 2016, for its election interference.

Yates said that was the reason for fresh interest in Flynn – not some scheme to use the Logan Act to target Trump and Flynn.

“We had Gen. Flynn engaging in discussions with the Russian ambassador that were essentially neutering the American sanctions,” Yates said.  “And that is a very curious thing to be doing, particularly when the Russians have been acting to benefit President Trump – and then covering it up, he’s lying about it.”

Just prior to her testimony, Trump angrily tweeted: “Sally Yates has zero credibility. She was a part of the greatest political crime of the Century, and ObamaBiden knew EVERYTHING!”

--Trump tweets:

“After yesterday’s statement, Sleepy Joe Biden is no longer worthy of the Black Vote!”

“How can voters be sending in Ballots starting, in some case, one month before the First Presidential Debate.  Move the First Debate up. A debate, to me, is a Public Service.  Joe Biden and I owe it to the American People!”

“Nevada has ZERO infrastructure for Mail-In Voting.  It will be a corrupt disaster if not ended by the Courts. It will take months, or years, to figure out. Florida has built a great infrastructure, over years, with two great Republican Governors. Florida, send in your Ballots!”

“Whether you call it Vote by Mail or Absentee Voting, in Florida the election system is Safe and Secure, Tried and True.  Florida’s Voting system has been cleaned up (we defeated Democrats attempts at change), so in Florida I encourage all to request a Ballot & Vote by Mail! #MAGA”

“People are not happy that players are not standing for our National Anthem!”

“OPEN THE SCHOOLS!!!”

“Wow! Really bad TV Ratings for Morning Joe (@JoeNBC). @foxandfriends doing great, leading all others by far. @CNN not a factor!!!”

“My visits last week to Texas and Florida had massive numbers of cheering people gathered along the roads and highways, thousands and thousands, even bigger (by far) than the crowds of 2016. Saw no Biden supporters, and yet some in the Fake News said it was an equal number. Sad!”

Wall Street and the Economy

While better than expected, today’s employment report for July, an increase in nonfarm payrolls of 1.763 million jobs, does nonetheless show that employment growth has slowed considerably after May and June increases of 2.7 and 4.8 million (June revised down slightly to 4.791m).

The unemployment rate fell to 10.2% from 11.1% the prior month, but it has been biased downward by people misclassifying themselves as being “employed but absent from work.”  At least 31.3 million people were receiving unemployment checks in mid-July.

There had been fears the July report would show job losses, not gains, due to the renewed surge in Covid cases and delayed, if not pulled back, reopenings across major hot spots.

Separately, the unemployment rate for Blacks dropped to 14.6% vs. 9.2% for whites, widening the gap slightly to 5.4 points, which is a talking point on the campaign trail.

Earlier, we had our 20th straight week with a jobless claims figure of 1 million or more, Thursday, 1.186 million, which was down from the prior week but still way too high.  This also means the total number of initial jobless claims filed during the pandemic is more than 55 million.

In other economic news, we had very solid ISM figures for July manufacturing, 54.2 (50 the dividing line between growth and contraction), the best since March 2019, while the non-manufacturing/service sector reading was a robust 58.1, best since Feb. 2019, and representing the broad reopening taking place across the country, though this is threatened by surges in Covid-19.

Separately, June construction spending was disappointing, -0.7%, while June factory orders rose a better than expected 6.2%.

On the important TSA checkpoint travel metric, however, the news remains punk.  We had 27 straight days with levels that were 20% to 28% of 2019’s levels, then two days of 30%, but now four straight of 23% to 28% through Thursday.  Far from the ongoing improvement in travel demand that the airlines were hoping for after things bottomed in April.

While it’s very early in looking at third-quarter GDP, the Atlanta Fed’s GDPNow barometer currently has it at 20.5%.  The first official look comes on Oct. 29, days before the election.

And then we had the TikTok issue.  Last Friday night, I noted that the Wall Street Journal was reporting Microsoft was in talks to acquire the U.S. operations of Chinese-owned video app, TikTok, after President Trump said he was considering banning the app from the U.S. over security concerns.

The story then exploded over the weekend and Monday, with the president telling reporters he had talked to Microsoft CEO Satya Nadella on Sunday and essentially gave the company 45 days to complete the deal, but adding that he thought the U.S. government should take a cut from any sale.

TikTok’s founder warned employees about “rising anti-Chinese sentiment,” and on Tuesday, a number of prominent figures in China lambasted the U.S. as unfairly stifling China’s first global internet hit – while defending Beijing’s own restrictions on American technology giants.

Hu Xijin, editor in chief of the Global Times, a Communist Party-backed mouthpiece, derided Trump’s demand that the Treasury receive a “very substantial” portion of the proceeds as “open robbery.”

“The world is watching and God is watching…how President Trump is turning the once great America into a rogue country,” Hu wrote.

TikTok has 100 million U.S. users and is particularly popular with young people.

Trump said the app will be “out of business” in the U.S. if it doesn’t reach a deal to sell its American operations by next month. The president said he does not mind if Microsoft or another company acquires it, so long as they are “a big company, a secure company, a very American company.”  He told reporters Monday he’s personally involved in brokering a potential deal, giving Microsoft until “around Sept. 15, at which point it is going to be out of business in the United States.  But if somebody, whether it’s Microsoft or somebody else buys it, that’ll be interesting.”

Trump said he felt the U.S. government was entitled to a cut from the sale because of his role in bringing about the transaction.

“The United States should be reimbursed or should be paid a substantial amount of money. Because without the United States, they don’t have anything, at least having to do with the 30 percent (stake Microsoft would acquire).  Maybe a deal is going to be made.  It’s a great asset, but it’s not a great asset in the United States unless they have the approval of the United States.”

“Right now they don’t have any rights unless we give it to them,” Trump said of TikTok.  “It’ll close down on September 15 unless Microsoft or somebody else is able to buy it or work out a deal so the Treasury of the United States gets a lot of money.”

White House trade adviser Peter Navarro then suggested that Microsoft could divest its holdings in China if it were to buy TikTok.

“So the question is, is Microsoft going to be compromised?” Navarro said in an interview with CNN.  “Maybe Microsoft could divest its Chinese holdings?”

This is nuts. Yes, there are real security concerns, that the app pipes data to the Chinese Communist Party, which TikTok denies.  But the way the president is going about it will not fly.

Senate Minority Leader Chuck Schumer (D-N.Y.) said on Twitter: “A U.S. company should buy TikTok so everyone can keep using it and your data is safe. This is about privacy. With TikTok in China, it’s subject to Chinese Communist Party laws that may require handing over data to their government.”

The app’s Beijing-based parent company ByteDance will receive a raw deal for TikTok no matter how much it sells for, because the app is still in an early stage of its growth, at least according to Fred Hu, chairman of Primavera Capital Group and one of China’s biggest investors.

“ByteDance is an innocent victim of the mad politics, and mad geopolitics. It is a sad outcome for ByteDance, for entrepreneurial capitalism, and for the future of global commerce.”

Editorial / Washington Post

“President Trump’s preferred strategy to defeat the Chinese government seems to be to emulate the Chinese government. At least, the White House response to the problems posed by popular smartphone app TikTok seems modeled on Xi Jinping’s brand of nationalist industrial policy.

“The TikTok saga has moved over the past few days at the whiplash speed of a video going viral on the platform – from news that a national security review had determined Beijing-based parent ByteDance should divest TikTok, to news that Mr. Trump wanted to ban TikTok, to news that, after all, he supported a bid by Microsoft to buy it.  That outcome would be better than several of the alternatives.  Local laws in China almost ensure that the regime could get its hands on U.S. citizens’ data held by TikTok should it so desire, and this data is hardly limited to memes and dance compilations.  Yet prohibiting the app’s use here, to the extent the gambit succeeded at all, would have stifled expression.  Having an experienced U.S. firm control the popular platform is preferable to shutting it down or accepting the current security risks.

“How this promising outcome occurred, however, presents plenty of concerns on its own.  A blog post from Microsoft published Sunday gives away the game: four mentions of the president, including the company’s appreciation for his ‘personal involvement,’ plus a commitment not only to conduct a data protection review but also to provide ‘proper economic benefits to the United States.’  Mr. Trump’s initial determination to doom the deal shows he was less interested in national security than in national grandstanding.  He changed his mind when Microsoft chief executive Satya Nadella called him up directly to negotiate – and as he magnanimously delivered the public go-ahead on Monday, he declared bizarrely that ‘a very substantial portion of that price is going to have to come into the Treasury of the United States.’

“Microsoft, which has six weeks to haggle with ByteDance over the deal, says this likely is just a reference to the same jobs and taxes that the company already has promised as ‘proper economic benefits.’ The president has in essence conducted a shakedown, threatening a shutdown and then providing his blessing to a private business deal once it pleased him. This is an affront to free enterprise generally. It’s also an affront to the American enterprise of preserving an open outlook toward the world – and encouraging other nations to welcome U.S. investors.  Microsoft appears to have pledged to allow only domestic investors to hold a minority stake in TikTok should it take ownership – another way the president is, as he ostensibly takes aim at a closed society, closing off his own.”

Bob Davis, Alex Leary and Kate Davidson / Wall Street Journal

“The president often presents himself as a master negotiator on everything from international trade accords to dealings with North Korean leader Kim Jong Un.

“With TikTok, he likened his payment idea to ‘key money’ – or an extra fee paid to secure a hard-to-get property.  ‘It’s a little bit like the landlord-tenant,’ the GOP president said at the White House on Monday.  ‘Without a lease, the tenant has nothing.’

“ ‘It’s a great asset,’ Mr. Trump said of TikTok.  ‘But it’s not a great asset in the United States unless they have the approval of the United States.’

“Later in the day, he was asked to clarify his remarks.  ‘It would come from the sale,’ Mr. Trump said.  ‘Whatever the number is, it would come from the sale. Which nobody else would be thinking about but me. But that’s the way I think. And I think it’s very fair.’

“Washington’s move, in the eyes of Beijing, strong-arms one of China’s most valuable global tech companies into selling a lucrative overseas unit. Chinese officials say it is further proof that the U.S. views any Chinese tech company with international success as a challenge to its technology primacy, regardless of the product or how it runs its business.

“Mr. Trump’s comments also amplify how deeply he involves himself in trade and investment decisions, which economic historians also say is a big departure from the past….

“The president also often made broad assertions of presidential power, which may be popular with his political base, only to back off later.

“ ‘Trump often tries to prove how strong he is by taking novel and extreme positions,’ said Alex Conant, a Republican strategist in Washington.  ‘A lot of people in Washington may roll their eyes at Trump’s off-the-wall proposals, but we shouldn’t underestimate their simplistic appeal to many voters.’”

But the comments make life difficult for the likes of Microsoft.  And the situation changed further when Thursday night, President Trump said he was issuing executive orders banning any U.S. transactions with ByteDance as well as Tencent, owner of the WeChat app, starting in 45 days.

The TikTok app may be used for disinformation campaigns that benefit the Chinese Communist Party, and the United States “must take aggressive action against the owners of TikTok to protect our national security,” Trump said in one order.

In the other, Trump said WeChat “automatically captures vast swaths of information from its users. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”

So who the hell knows with this further escalation by Trump in his confrontation with Beijing as the U.S. seeks to curb China’s power in global technology.  Trump is making his challenge of China a central theme of his campaign.  As I go to post it’s unclear how China will retaliate, but they will…they have to.

For now, a Chinese Foreign Ministry spokesman said the U.S. was putting “selfish interests above market principles and international rules” and engaging in “political manipulation and oppression.”

“The relevant businesses follow market principles and international rules in conducting business operations in the U.S. They comply with U.S. laws and regulations, but the U.S. is using national security as an excuse and using state power to oppress non-American businesses.  That is just hegemonic practice.”

Europe and Asia

PMI week for the eurozone (EA19) and as I said would be the case last time, we see continued improvement on the continent.  The final composite output index reading for the EA19 in July was 54.9 vs. 48.5 in June, reflecting the fastest rate of growth since June 2018.  The manufacturing PMI was 51.8 vs. 47.4 the prior month; non-mfg./services came in at 54.7 vs. 48.3 in June.

Germany 51.0 mfg. July vs.  45.2 June; 55.6 non-mfg. July
France 52.4 mfg. July vs. 52.3; 57.3 non-mfg. July
Italy 51.9 mfg. July vs. 47.5; 51.6 non-mfg. July
Spain 53.5 mfg. July vs. 49.0; 51.9 non-mfg. July
Greece 48.6 mfg. July vs. 49.4 June
Netherlands 47.9 mfg. July vs. 45.2

UK 53.3 mfg. July; 56.5 non-mfg. July vs. 47.1 in June.

[Courtesy of IHS Markit]

Chris Williamson, chief economist / IHS Markit

“Eurozone service sector business activity rebounded in July to grow at a rate not exceeded for over two years. France and Germany enjoyed especially strong gains though renewed growth was also recorded in Spain and Italy as Covid-19 containment measures continued to be relaxed.

“Combined with a surge in manufacturing production, the renewed expansion of the service sector bodes well for the economy to rebound in the third quarter after the unprecedented slump seen in the second quarter.

“Whether the recovery can be sustained will be determined first and foremost by virus case numbers, and the recent signs of a resurgence pose a particular risk to many parts of the service sector, such as travel, tourism and hospitality. However, even without a significant increase in infections, social distancing measures will need to be in place until an effective treatment or vaccine is available, dampening the ability of many firms to operate at anything like pre-pandemic capacity, and representing a major constraint on longer-run economic recovery prospects.”

Separately, June retail sales were up 5.7% in the euro area compared with May, according to Eurostat, the statistical arm of the EU.  In June 2020 compared with a year ago, the figure was up 1.3%.

Brexit: Britain’s top minister overseeing Brexit talks said on Friday that progress had been made with the European Union so he believed the two sides would clinch a free trade agreement.  “All the evidence is that we are making progress with the European Union,” Michael Gove told reporters this morning.  “I believe that there will be a successful negotiated outcome.”

Well, you all know the clock is ticking…rapidly. It’s August.

Turning to Asia…we received further PMIs for China.  Last week I reported that the government’s official manufacturing reading for July was 51.0, 54.2 on non-manufacturing (via the National Bureau of Statistics).  This week the private sector Caixin readings, representing small- and medium-sized businesses, was 52.8 on manufacturing vs. 51.2 in June, with services at 54.1 vs. 58.4 the prior month, a big dip but still solid growth, though export demand components remained weak.

But then we received actual export numbers for July and they rose an unexpectedly strong 7.2% over a year ago, with sales to the U.S. jumping 12.5% despite the plunge in U.S. economic activity and the lingering trade war, per the Chinese Customs Administration.

Global exports accelerated from June’s 3% gain.

“There is an overall improvement in exports in July from June, not just medical supplies* which had previously been the main contributor,” said Iris Pang of ING in a report. She pointed to gains in shipments of electronics, autos and clothing.

*See demand for surgical gloves and masks, among other items.

Imports weakened by 1.4% in dollar terms due to falling commodity prices but the total volume increased.

In Japan, July’s manufacturing PMI came in at 45.2 vs. 40.1 in June, while services were 45.4 vs. 45.0.  Just more of the same here. The country is having trouble reopening, and foreign demand for its goods remains soft.

South Korea’s manufacturing PMI came in at 46.9 in July vs. 43.4 in June, so still not good.

Taiwan’s manufacturing number improved to 50.6 vs. 46.2.

Street Bytes

--After mixed action in the major indexes the last two weeks, the big three powered higher, while small- and mid-cap stocks soared. 

Technology still rules and before a minor selloff today, Nasdaq hit four consecutive record highs, Thursday’s close of 11108 the new highwater mark, Nasdaq up 2.5% on the week and a whopping 22.7% for the year.

The Dow Jones gained 3.8% to 27433, while the S&P 500, up 2.5%, now sits just about one percent from its all-time high.

--U.S. Treasury Yields

6-mo. 0.11%  2-yr. 0.13%  10-yr. 0.56%  30-yr. 1.23%

The yield on a 30-year fixed mortgage is 2.82% this week, if you can find one.

The U.S. dollar continues to flash a warning sign to U.S. policy makers. After hitting an all-time high in March, the greenback has lost about 10% of its value, with declines accelerating in recent weeks as infections spread across the nation. 

Early on in the pandemic, investors sought safety in U.S. assets like Treasuries while the virus stormed through Europe, but while Europe has largely stabilized and reopened, with decent prospects for future growth, ditto China, the ineffectual U.S. response has spurred concern about lasting damage to the economy here that could keep growth low for years.

Surging budget deficits don’t help sentiment either. Fitch Ratings last Friday revised its credit rating outlook for the U.S. to negative from stable, though it maintained its triple-A rating.

But…the falling dollar is helping boost the U.S. stock market since a weaker dollar helps multinational companies (think S&P 500), which see their products become more competitive abroad, among other things.

--Oil finished the week at $41.60, the sixth straight week it has closed at $40 or $41.  According to data from Baker Hughes, drillers cut exploration in U.S. oil fields to a 15-year low with the number of active rigs falling by four this week to 176, the lowest since 2005.  Energy companies have been parking rigs on an almost uninterrupted level for four and a half months since the pandemic hit and prices crashed amid plunging demand.

One of the lies that President Trump loves to tell at every campaign stop that absolutely drives me up the wall is that he has “saved millions of jobs in the energy sector.”  In just one category, support activities for oil and gas operations, as broken down by the U.S. Bureau of Labor Statistics, employment at support firms fell by 54,000 jobs in just three months between February and May, and the picture has only gotten worse since.  Employment has shrunk by 86,000 (30% of the sector) compared with a peak in October 2018. 

And in recent weeks you’ve had items such as oilfield services giant Schlumberger laying off 22,000.

It’s been ugly and it isn’t going to get better anytime soon.

--BP PLC cut its dividend for the first time in a decade and outlined plans to pivot away from oil and gas and invest more in low carbon energy – marking one of the most dramatic energy-transition plans among its peers at a time of deep crisis for the industry.

The British energy giant, which reported a loss of $17.7 billion for the three months ended June 30, due to extraordinary charges, vs. a profit of $1.8 billion for the year-earlier period, said it was increasing its low carbon investments to $5 billion a year by 2030, from around $500 million, at the same time as it sees its oil and gas production fall by 40% from 2019 levels.

The loss was one of the worst ever taken by an oil company, while BP warned of more pain to come as the pandemic continues to sap global demand for fossil fuels.

BP’s dividend cut was its first since 2010, after the Deepwater Horizon oil spill disaster in the Gulf of Mexico.

--Fuel maker Marathon Petroleum Corp. said it has agreed to sell its gas stations to the owners of the 7-Eleven convenience store chain for $21 billion in the largest U.S. energy-related deal of the year.

The all-cash agreement comes less than a year after Marathon agreed to spin off its convenience-store chain, known as Speedway, under pressure from activist investors including Elliott Management Corp.

Ryuichi Isaka, president of Seven & 1 Holding Co., the Tokyo-based parent of 7-Eleven, said he saw convenience stores in the U.S. as the biggest growth driver for the company, whose department stores and supermarkets in Japan are struggling.

With the acquisition of 3,900 convenience stores from Speedway, that brings 7-Eleven’s retail footprint in the U.S. and Canada to around 14,000 locations.  Under the agreement, Marathon will supply 7-Eleven with about 7.7 billion gallons of fuel per year for 15 years.

Elliott has repeatedly called on Ohio-based Marathon to split into three businesses – a gas-station chain, a pipeline business and a fuel-making operation – saying the integrated model left the company undervalued.

--Gold hit an all-time high of $2069 on Thursday as the pandemic clouded the economic outlook and bolstered bullion’s safe-haven allure, though it fell back a bit today to finish the week at $2046. 

Gold started the year at $1523 and I said “sell” in my May 15 review at $1754.  Well, I blew it.  I’m not going to be cute.  I have to hold it now until year end and I expect to have significantly cut my losses by then.

--Toyota Motor Corp. eked out its smallest quarterly profit in nine years as the pandemic halved its sales and nearly wiped out its bottom line, down 98% to a profit of $131.73 million for the three months ended June.

“The pace of recovery in a number of regions has been faster than we had initially forecast,” a Toyota spokesman said on Thursday.  “But the virus situation continues to place many uncertainties on the business outlook…and we see a possibility that our forecast could change.”

Toyota expects to take the most serious hit in North America, its biggest market, accounting for about a quarter of its global sales, and where it sees an annual sales drop of 14%.

A 62% tumble in the region during the first quarter led to a 50% slump in consolidated global sales to 1.16 million units.

China has been a bright spot for Toyota, with demand in the world’s biggest car market recovering faster than elsewhere as the economy there has reopened.

--Ford Motor promoted Chief Operating Officer Jim Farley to the CEO position, as the man currently occupying the spot, Jim Hackett, said he was retiring effective Oct. 1.  This was a popular decision in the analyst community; Ford’s shares continuing to slide under Hackett’s three-year tenure.

--Lufthansa does not expect air travel demand to return to pre-coronavirus crisis levels until at least 2024, with the collapse in air travel due to Covid-19 leading to the airline carrying 96% fewer passengers in the second quarter than a year ago, leading to an 80% decline in second-quarter revenue to $2.25 billion.

While there is some improvement in Europe, long-haul flights to the U.S. remain largely grounded due to rising infections.

Last month Lufthansa said it would cut 20% of its leadership positions and 1,000 administrative jobs as it seeks to repay a 9 billion euro state bailout and navigate deepening losses.

The airline plans to increase short- and medium-haul capacity to 55% of prior-year capacity in the fourth quarter and 50% on long-haul routes.

--Virgin Atlantic, the airline founded by British businessman Richard Branson, filed for protection in U.S. Bankruptcy Court as it tries to survive.

The filing in New York is part of a court process in the United Kingdom to carry out a restructuring plan that the airline announced last month. 

The airline is primarily a long-haul operator, including flights between the U.S. and UK.  It stopped flying in April and only resumed flights in July.  It closed a base at London’s Gatwick Airport and cut about 3,500 jobs.

Branson has appealed to the British government for financial help and was turned down.

Delta Air Lines owns 49% of Virgin Atlantic.

--Ryanair reported a 70% yearly decline in traffic in July as Covid-related airspace closures continued to impact traffic.

The Irish low-cost airline had 4.4 million passengers in July vs. 14.8 million in July 2019.

--LATAM Airlines is poised to fire at least 2,700 workers in Brazil, including pilots.  The layoffs are the latest in efforts to downsize Latin America’s largest airline.  Before the coronavirus crisis, the airline had 43,000 workers worldwide, most in Brazil and Chile.  LATAM filed for U.S. bankruptcy protection in May, as it seeks to restructure $18 billion in debt.

--For British Airways employees today is “Black Friday,” when thousands of long-serving cabin crew are expected to find out whether or not they will be laid off.  Many of those who remain will suffer steep pay cuts, and significant changes to their terms and conditions.

Other workers such as engineers, ground crew and office staff are also expected to hear whether they have a future at the airline over the coming days.

Flight attendants who remain face a 50% cut in pay. One told the BBC: “I’m a single mother. I can’t afford to have half of my pay taken away from me.”  She’s been with the company for 15 years.

In April, BA’s parent company, International Airlines Group (IAG) announced plans for a major restructuring of the airline’s business, which could result in 12,000 being laid off.

--Walt Disney’s diversified entertainment and media portfolio took a hit in the second quarter, as the pandemic impacted practically every business that Disney operates in around the globe.

Management estimated that Covid-19 took a nearly $3 billion bite out of Disney’s operating income in the period, as big gains in its streaming segment couldn’t make up for losses elsewhere.

For Disney’s fiscal third quarter (April-June), the company reported a loss of $2.61 per share, which compared with earnings of 79 cents in the year-earlier quarter.  But Disney’s shares rose after the news in large part because adjusted earnings showed a small profit when a loss was expected by the Street.

Sales came in at $11.8 billion, short of Wall Street’s $12.4 billion consensus estimate and down 42% from $20.3 billion in the same period in 2019. The sharpest revenue decline came at Disney’s Parks, Experiences and Products segment, which includes its theme parks, cruises and toys and apparel businesses, down 85% to $1.1 billion.

[Shanghai Disneyland welcomed back guests starting May 1 with pandemic restrictions, while theme parks in Paris and Tokyo have also begun phased reopenings.  Hong Kong Disneyland reopened in June, then closed again due to a spike in Covid cases.]

Studio Entertainment, which includes Disney’s movie business, saw a 55% drop in revenue, to $1.7 billion, while Disney’s largest segment, Media Networks, saw a 2% fall in revenue to $6.6 billion.

The Disney+ streaming service added millions more viewers last quarter, to end the period at 60.5 million subscribers worldwide, which CEO Bob Chapek noted exceeded Disney’s internal projections for every major market in which it was launched.  Like Netflix, Disney+ has seen a surge of subscribers during the coronavirus outbreak and lockdown orders.

Disney plans to lean more heavily on its streaming unit in coming quarters.  Disney+ subscribers will be able to stream a live-action remake of “Mulan” in the U.S. starting Sept. 4.  It will cost $29.99.  Disney had pushed back the film’s theatrical release multiple times this year.

--AMC Entertainment, the nation’s largest movie theater chain, said it lost half a billion dollars in the second quarter, making it the company’s worst quarter since it was founded in 1920.

The chain, which was forced to close cinemas across the nation as the coronavirus swept the nation in March, said it swung to a loss in the three months ended June 30 as revenue plunged 98.8 percent.

“It should be no surprise to anyone that with our operations shut the world over, and almost no revenues coming in the door, this was the most challenging quarter in the 100-year history of AMC,” said CEO Adam Aron.

AMC posted a net loss of $561.2 million, compared with year-ago income of $1.51 billion.

--The issue has been simmering for months, but under a plan recommended Thursday by the Trump administration, Chinese companies with shares traded on U.S. stock exchanges would be forced to give up their listings unless they comply with U.S. audit requirements.

The proposal addresses U.S. regulators’ inability to inspect the financial audits of Chinese companies that sell shares in U.S. markets and follows bipartisan legislation that passed the Senate in May, which would give Chinese companies that don’t comply three years to delist in the U.S. and find a new exchange.

Chinese firms that are already listed on the New York Stock Exchange and Nasdaq would have to comply by 2022 – or give up those listings.

The Senate bill, which was passed unanimously, addresses investor-protection concerns that have lingered for years but which gained political traction as tensions have grown between the U.S. and China.  Companies like Alibaba and Baidu have together raised tens of billions of dollars by tapping into U.S. capital markets.

But some Chinese accounting frauds such as Luckin Coffee Inc., an upstart rival to Starbucks, have exposed the gap in U.S. audit oversight.  Luckin fabricated more than $300 million in sales, only 11 months after its IPO on Nasdaq and has since been delisted.

There are ways Chinese companies like Alibaba can comply, such as getting a second audit from an accounting firm whose records can be inspected by the accounting oversight board.

I suspect the two sides will eventually reach an agreement, but as a friend who owns shares in Baidu told me a while ago, where were the U.S. folks in cases like Enron and Worldcom?

Needless to say, you know my own story with regards to a certain Chinese investment.

--Canada’s economy added 418,500 jobs in July, mostly part-time, and the unemployment rate fell to 10.9% as the economy continued to reopen, according to Statistics Canada.

--CVS Health Corp. released results for the latest quarter, with same-store sales falling 4.5% and the number of prescriptions filled in the quarter down 1.1%.

At the same time, CVS, which owns insurance giant Aetna, joined other insurers realizing savings from skipped elective procedures and reduced visits to clinics and emergency rooms.

CVS did say customers are returning to more normal health-care routines now and that it expects more people will use their insurance for health care in the second half of the year.

Sales in the health-care-benefits segment, which includes Aetna, rose 6.1% to $18.47 billion.

The segment that fulfills medication prescriptions and sells general products rose 1% to $21.66 billion.

The company posted second-quarter profit of $2.98 billion, compared with $1.94 billion in the same period last year.  It also guided higher on earnings for the full year.

Meanwhile, CVS has opened more than 1,800 drive-through Covid test sites at its stores, 40% of those being tested not CVS customers, providing the company the chance to reach new people.  [Though its being criticized for being slow in getting results back.]

CVS plans to administer 18 million flu shots this season, more than previous years, and is in negotiations with the Trump administration about plans for administering any Covid vaccine when it becomes available.

--Uber Technologies Inc. generated more revenue from delivering food than transporting people for the first time last quarter, but it failed to offset a steep and prolonged decline in ridership brought on by the coronavirus pandemic.

Sales fell 29% in the second quarter to $2.24 billion, ending a decade of unchecked growth.

Delivery revenue, which was growing even before the pandemic, surged 103% during the quarter and is now central to Uber’s strategy.  Along with a $2.65 billion deal to acquire Postmates Inc. and expand its food delivery operations, Uber has begun delivering other items including groceries, prescriptions and packages.

But the same pandemic health restrictions that prompted customers to hunker down and order out froze travel in many of Uber’s most important markets.  Mobility, Uber’s new category for rides and scooters, plunged 67% to $790 million in revenue.

--More than 580 U.S. farmers have filed for bankruptcy protection in the 12-month period ending June 30, according to federal data; 8% more than a year earlier and despite a record $33 billion in payments to farmers this year, according to the University of Missouri’s Food and Agricultural Policy Research Institute.

--Ralph Lauren Corp. said on Tuesday its quarterly revenue plunged by nearly $1 billion, as it struggled with coronavirus-led store closures and a slowdown in demand for luxury goods across the world.

The company’s revenue slumped 77% in North America, with analysts saying demand for high-end handbags, apparel and accessories is not expected to rebound quickly as the global economy struggles.

Ralph Lauren’s net revenue fell 66% to $487.5 million, badly missing analysts’ average estimate of $615 million, according to Refinitiv.

Sales at European luxury goods giants LVMH, Kering and Hermes fell between 38% and 44%, much slower than those posted by the company.

Ralph Lauren also reported a mere 3% rise in North American online sales, a far cry from triple-digit sales increases recorded by a number of U.S. retailers.

--The Securities and Exchange Commission is investigating the circumstances around Eastman Kodak Co.’s announcement of a $765 million government loan to make drugs at its U.S. factories.  No surprise to you readers, as I called this out that week.

A massive spike in the share price produced a potential windfall for company executives who owned stock-option grants, some of which were granted on July 27, the day before the loan was officially announced.

The SEC’s move doesn’t mean an investigation will produce any allegations of wrongdoing by the company or individuals, but control of the disclosure was shoddy, as I described recently, with media outlets being informed before the public.

On Monday, Sen. Elizabeth Warren (D-Mass.) asked the SEC to probe whether any illicit activity occurred before the loan announcement.

Kodak shares closed at $2.62 on July 27, the day it issued the new options, and then hit $60 two days later.  They finished this week at $15.  While there were some big potential winners, there were also big losers with swings like these.

--Beyond Meat said revenue hit a record in the second quarter amid increased volume in the U.S. retail channel but it still reported a loss as the company continued to invest in marketing and international expansion to push adoption of its vegetarian food.

Net revenue increased to $113.3 million during the three months that ended June 27 from $67.3 million a year ago, easily beating analysts’ forecasts.

Shares fell over 8% on the earnings, loss per share basically in line, but recovered some later in the week.

“Given the uncertainty regarding the ultimate duration, magnitude, and effects of the Covid-19 pandemic, management remains unable to predict the continuing impact on its business with reasonable certainty” the company said.  “As such, the 2020 outlook, previously provided on Feb. 27, remains suspended.”

--Booking Holdings Inc. said it plans to cut up to a quarter of Booking.com’s global workforce, or roughly more than 4,000 people, and restructure the company as the pandemic continues to batter travel demand.

The online travel agency, which also operates Kayak, OpenTable, Priceline and Agoda, said it needs to work with officials in each country before sending out layoff notices by the end of the year.

Other travel-related sites are moving to cut costs to stay afloat. Tripadvisor Inc. laid off 900, or about a quarter of its workforce.

--The parent company of the Men’s Wearhouse and Jos. A. Bank menswear brands entered bankruptcy hoping to turn around the nearly half-century-old business in the midst of the pandemic by slashing at least $630 million in debt while pivoting to casual wear from business clothing.

Retailer Tailored Brands Inc. filed for Chapter 11 Sunday after revenue declined by about 5.6% over the past two fiscal years ending in February, despite a dominant position in the menswear market. The company couldn’t recover from the mandated shutdowns of its stores.

In court papers, Tailored Brands Chief Restructuring Office Holly Etlin said the business “depends heavily on consumer discretionary spending, and, as such, sales are particularly sensitive to economic conditions and consumer confidence, which have been significantly affected by Covid-19.”

The company had reported a net sales decline of 60% for the quarter ended May 2 vs. a year ago.  Tailored Brands was forecasting revenue of $1.4 billion for 2020, compared with $2.9 billion in 2019.

The company admitted it has made some mistakes, including a limited range of style offerings and pricing that missed out on revenue opportunities.

So now the company wants to speed up plans to mix its products as sales of tailored clothing decrease.

As many as 500 of the company’s 1,400 retail stores in the U.S. and Canada could close, resulting in 2,500 job losses out of 18,000 current employees.

I drove by the Summit Jos. A. Bank store and it looked like it was closed.  I purchased a lot of my early business attire there. 

As for Men’s Wearhouse, which I never stepped into, it was founded in 1973 by George Zimmer, who became known for his catchy slogan in TV and radio commercials: “You’re going to like the way you look.  I guarantee it.”

Zimmer did a good job growing the business, but in 2013, the company abruptly fired him and in response he penned a letter expressing his concerns that the company was headed in the wrong direction.

Zimmer, 71, when notified of the bankruptcy filing, said in an interview, “It’s a crying shame. I spent 40 years creating a really neat company, and it only took seven years to destroy it.”

In 2014, Men’s Wearhouse acquired Jos. A. Bank.  But the merger mired Tailored Brands in debt.  And it made no sense…two fundamentally different business models, a problem compounded by relaxation of office dress codes.

--Lord & Taylor, the floundering department store company whose roots go back to 1826, also filed for Chapter 11 protection on Sunday.  The chain had just been acquired last year by clothing rental start-up Le Tote in a $100 million deal.  Now both are in bankruptcy court.

--Like all tourism-related businesses in New York City, the Metropolitan Museum of Art has been suffering greatly and this week it announced it was reducing its staff by 353; the reduction coming through a combination of voluntary retirements, furloughs and the elimination of some positions. 

The Met closed in mid-March and has announced plans to reopen Aug. 29, but that’s dependent on New York City, which hasn’t allowed museums to welcome visitors again.

A Met spokesman said the museum is projecting a loss of $150 million in revenue because of the coronavirus, the institution having an annual budget of $320 million.

A study by the American Alliance of Museums found that 44% of the 760 institutions surveyed said they had reduced staff thus far.

--Another pool update (swimming pool, not ‘pooled testing’).  Manufacturer B.K. passed along a note from a fellow manufacturer/friend in the business down in Florida.

“It is equally insane with demand down here…I am fielding 10-15 inquiries per day.”  Those calling are now getting the reply: “We are Sold Out into May 2021.  Not bidding any new work at this time.”

B.K. points out that “this means if he had capacity he’d have a 5- to 6-fold increase in pool sales.”

My friend adds, “This wave is not even close to breaking.”

And B.K. sent another update wherein he describes a problem on closing pools for the winter.  “That requires antifreeze and other chemicals.  Contact had just heard from rep his antifreeze order was not accepted.  In this case the company provides items like antifreeze and windshield wash to the RV and car industry, with the pool folks at the bottom of the order.  Plus companies that provide these materials are having trouble finding enough workers who reliably show up.”

Draw your own conclusions.  I sure as hell did not anticipate such consequences, good and bad, from the Covid economy that are now in play.

Foreign Affairs

China: China’s Defense Minister Wei Fenghe and his U.S. counterpart Mark Esper warned each other in a phone call about escalating risks over Taiwan and the South China Sea, in the highest-level talks between the two sides in months.

Esper “expressed concerns about [the Chinese military’s] destabilizing activity in the vicinity of Taiwan and the South China Sea, and called on [China] to honor international obligations” as well as share more of its data on Covid-19, a Pentagon spokesman told reporters in Washington on Thursday.

China’s state news agency Xinhua confirmed Taiwan and the South China Sea were on the agenda and that Wei warned Esper against “dangerous moves” that would escalate bilateral tensions.

Meanwhile, the U.S. consulate in Hong Kong broke its silence on Friday to warn of the chilling effect of the “draconian” national security law imposed by Beijing on the city. The consulate also hit back at allegations that diplomats and staff had been colluding with the city’s opposition camp.

What makes this a rare move is that such comments normally emanate from a nation’s State Department.

Three days earlier, Chinese state tabloid Global Times said on Twitter that the U.S. consulate head had reportedly met with two opposition leaders, one of whom had been banned from running in the city’s Legislative Council elections, which have been postponed by a year.

Thursday, two dozen democracy advocates in Hong Kong were charged with taking part in an annual vigil honoring the victims of the 1989 Tiananmen Square protests, yet another sign of the aggressive clampdown on dissent in the territory.

Separately, Health and Human Services Secretary Alex Azar is leading a delegation to Taiwan in the highest-level visit by a U.S. cabinet official since Washington cut ties with Taipei more than 40 years ago. Azar was scheduled to arrive in Taiwan “in the coming days” to discuss the global response to the Covid-19 crisis and supplies of medical equipment and technology, according to a statement on Wednesday from the American Institute in Taiwan, the de facto U.S. embassy in Taipei.

Lastly, China said it will take retaliatory measures if all Chinese journalists based in the United States are forced to leave the country, including targeting U.S. journalists in Hong Kong, Global Times Editor-in-Chief Hu Xijin said on Tuesday.

Israel: Prime Minister Benjamin Netanyahu struck back on Sunday at demonstrations calling for his resignation over his mishandling of the coronavirus, accusing protesters of trampling democracy and the Israeli media of encouraging them.

Netanyahu, who was sworn in for a fifth term in May after an election, has often complained of press bias against him, and some of the charges he faces in a corruption trial relate to alleged attempts to seek favorable coverage from media barons in return for state favors.  He has denied wrongdoing in the three graft cases against him.

Netanyahu’s main coalition partner, Defense Minister Benny Gantz, defended the demonstrations.  “The right to protest is the lifeblood of democracy,” he said at a cabinet meeting.

Afghanistan: The Islamic State group said it was behind a high-profile attack on a central prison in the eastern Afghan city of Jalalabad that saw hundreds of prisoners try to flee, most of whom, it seems, were recaptured.  But at least 29 people were killed in the chaos when car bombs were detonated at the prison’s entrance by gunmen.

The prison held 1,700 inmates – most of them Taliban and Isis fighters.  The attack happened on the third and final day of a temporary ceasefire between the Afghan government and the Taliban, with hundreds of Taliban prisoners released in an effort to get peace talks moving between the two sides.

Russia: Belarusian President Alexander Lukashenko accused Moscow on Tuesday of lying about the arrest of a group of Russian security contractors in Minsk, and said unnamed forces were plotting a revolution that would fail.  In a fiery address to the nation as early voting began in an election in which he is seeking to extend his 26-year rule, Lukashenko said he would protect Belarus from opponents he portrayed as wreckers controlled by “puppet masters” abroad.  He faces his toughest challenge for years in Sunday’s election because of public anger over his handling of the Covid-19 pandemic, the economy and human rights.

There have been mass protests, rare in Belarus, with some of Lukashenko’s opponents arrested on what they call trumped-up charges, while Minsk has said the suspects (which I wrote of last week) were preparing “terrorist acts.”

Russian President Vladimir Putin is sitting back, enjoying the chaos.  At some point Belarus is his.

Random Musings

--Presidential tracking polls….

Gallup: 41% approve of President Trump’s job performance, 56% disapprove; 91% of Republicans approve, 34% of independents (July 1-23).
Rasmussen: 48% approve, 51% disapprove of Trump’s performance (Aug. 7).

--According to a Gallup survey, only 13% of U.S. adults are satisfied with the state of the nation, down seven percentage points in the past month and 32 points since reaching a 15-year high in February.  This is the lowest since November 2011.  The survey was conducted July 1-23.

Satisfaction now sits just six points above the all-time low in October 2008 immediately following sharp drops in the U.S. stock market during the global financial crisis.

Republicans’ satisfaction today (20%) is about half what it was a month ago (39%) and down 60 points since February, after the Senate acquitted President Trump in his impeachment trial.  The prior low for Republicans during the Trump administration had been 38% in October 2017.

But the same Republicans still overwhelmingly approve of the job Trump is doing in the Gallup poll as I note above, 91%, so it’s tough to tell just what the 20% reading means for the elephants and the election.

--President Trump’s campaign took in more than $165 million in July in combined fundraising with the Republican National Committee, while Joe Biden’s campaign team raised about $140 million.  Biden raised $10 million more than Trump in June, $141 million to $131 million.

Trump’s campaign has raised $1.1 billion since January 2019, but it ended July with more than $300 million in the bank, while Biden’s team has $294 million.

--Biden said he will be accepting his party’s nomination in a national address from his home state of Delaware rather than in Milwaukee as planned, party officials said on Wednesday, both political parties drastically downsizing their traditional made-for-television affairs featuring raucous speeches and fist-waving throngs.

Meanwhile, President Trump told Fox News that he would like to accept the Republican Party’s nomination at the White House, because it “would be by far the least expensive from the country’s standpoint.”

House Speaker Nancy Pelosi said Trump would once again “degrade the White House” by using it for a political event.

Republican Sen. Ron Johnson said Trump “probably shouldn’t do it.”  Ditto Republican Sen. John Thune.

--In his above-referenced Axios interview, President Trump aired his personal grievances in dismissing the legacy of the late Rep. John Lewis after snubbing the civil rights icon and defending his decision not to pay his respects following Lewis’ recent death.

Lewis, who played an instrumental role in the Voting Rights Act of 1965, was remembered at an emotional service in Atlanta last week by three of the nation’s four living past presidents.

Asked about the legacy of Lewis, Trump said: “I really don’t know…I don’t know John Lewis. He chose not to come to my inauguration…I never met John Lewis, actually, I don’t believe.”

--We note the passing of John Hume, one of the key architects of the Northern Ireland peace process and co-recipient of the 1998 Nobel Peace Prize with David Trimble.

All you need to know of the man, who died at the age of 83, is that in a 2010 public poll by Irish national broadcaster RTE, Hume was selected the “greatest person in Ireland’s history.”

Sadly, in normal circumstances, Mr. Hume’s funeral would be expected to be one of the largest seen on the island for generations but due to coronavirus it is a more restricted farewell.

Former British prime minister Tony Blair described Hume as a “political Titan and visionary who refused to believe the future had to be the same as the past.”

The current leader of Hume’s Social Democratic and Labour Party (SDLP), Colum Eastwood, said:

“The life of John Hume will forever be a blessing upon this island since Ireland is now blessed by the peace he gifted to us all.  It is the greatest legacy a political leader can bestow upon his country….

“After some 800 years which inflicted so much hurt and harm on all our peoples, it is John Hume who must now be remembered as the great healer of that history. For all of these reasons and more, John Hume truly was Ireland’s greatest.”

Hume is the only person to have received the Nobel Peace Prize, the Gandhi Peace Prize, and the Martin Luther King Award.

But as Colum Eastwood said, “the greatest reward for John was not personal recognition – it was instead found in the end to the violence and death which had taken ownership of our streets for far too long.”

Amen.

--A Wall Street Journal analysis of crime statistics among the nation’s 50 largest cities found that reported homicides were up 24% so far this year, to 3,612.  Shootings and gun violence also rose, though many other violent crimes such as robbery fell.

The murder rate is still low, however, compared with previous decades.  But as the Journal’s Jon Hilsenrath writes: “Researchers, police and some residents fear the homicide spike, if not tamed, could threaten an urban renaissance spurred in part by more than two decades of declining crime.”

In all, 36 of the 50 cities studied saw homicide rise at double-digit rates.

Gang violence has risen significantly and it hasn’t helped that young adults were let out of school in March and many after school activities have stopped.

--I have to just shake my head when I hear of the annual Sturgis Motorcycle Rally still being held this year.  As one who has been to the Black Hills of South Dakota numerous times (but always off-season), I’ve heard many a story from locals on the scene, with hundreds of thousands of bikers descending on a small area, with many accidents on the roads.

But it is quite an economic jolt for the area, particularly Sturgis itself.  Hotels all around are sold out, campgrounds filled…a massive party. 

This year, though, we have a pandemic!  Few will wear masks.  Lord help the region.  City officials in the town of 7,000 are attempting to limit attendance, such as canceling city-hosted events.

Rod Woodruff, the operator of a nearby campground, expects record attendance because “it’s the biggest event that’s going on in the United States that didn’t get canceled.  A lot of people think it’s going to be bigger than ever.”

According to the South Dakota Department of Tourism, attendees in the past have spent about $800 million at the rally.

But despite this cash infusion, according to a city-conducted survey, 60 percent of the Sturgis residents this year opposed holding the event in August.  We’ll see what kind of inevitable rise in Covid-19 cases we get in 2-4 weeks.

--The amount of sea ice in the Arctic melted away to a record low for the month of July, according to the National Snow and Ice Data Center.  The level impacts Arctic communities and wildlife and it helps regulate the planet’s temperature by influencing the circulation of the atmosphere and ocean.

Mark Serreze, director of the center, told Yale Climate Connections that early July brought “just the pattern you’d like to see if you’d like to get rid of ice.”

The average sea ice area for July 2020 was 2.81 million square miles, the lowest extent on record for the month, with records going back to 1979.  This was some 846,000 square miles below the July average and 120,000 square miles below the previous record low mark for July set in 2019. 

The most dramatic melting has been off the coast of central Russia, with soaring temperatures in Siberia, as I’ve been writing this summer.  [Doyle Rice / USA TODAY]

--President Trump signed a new law called the Great American Outdoors Act, which puts as much as $9.5 billion toward a National Park System backlog in deferred maintenance, which has grown to $12 billion since the 1990s. Funding starts in the 2021 fiscal year (Oct. 1).

Expect remodeled buildings, badly needed new water systems and other improvements.  Expanded parking, revamped campgrounds and employee housing are also likely projects.

This is terrific, the bill long having the support of congressional Democrats, joined this year by the president and two Western-state Senate Republicans, Cory Gardner of Colorado, who wrote the bill with Democratic Sen. Joe Manchin (W.Va.) – and Sen. Steve Daines (R-Mont.)  Both Gardner and Daines are campaigning on its success.  The measure passed the Senate 73 to 25.

Democratic Rep. Raul Grijalva of Arizona, chairman of the House committee that oversees the Interior Department, called the new legislation “one of Congress’ most significant investments in environmental conservation in a generation.”

But how can I not mention Trump’s hilarious pronunciation of Yosemite during the bill-signing ceremony… “Yo-semites.” Twice.

--Very cool that two NASA astronauts, Doug Hurley and Bob Behnken, returned to Earth on Sunday in a dramatic, retro-style splashdown, their capsule parachuting into the Gulf of Mexico to close out an unprecedented test flight by Elon Musk’s SpaceX company.

It was the first splashdown by U.S. astronauts in 45 years, with the first commercially built and operated spacecraft to carry people to and from orbit.

Hurley and Behnken rode the SpaceX Dragon capsule back to Earth after departing the International Space Station and two months after blasting off from Florida.

--On Thursday, Bill Gates said that as bad as the pandemic is, it’s dwarfed by the damage that climate change could inflict.

“Climate change will make entire ecosystems die off,” Gates told Bloomberg News.  “It’ll make parts of the world impossible to live in. The actual economic and death toll from climate change will be much, much, much greater than what we have with this pandemic.”

Gates was sounding an alarm that will be amplified in his upcoming book, “How to Avoid a Climate Disaster: The Solutions We Have and the Breakthroughs We Need,” due out from Knopf in February 2021.

The pandemic is “an acute problem but with a clear solution,” Gates said.  “Whereas with climate change, the scale of the changes required takes decades of invention and decades of scaling up.”

--Hurricane/Tropical Storm Isaias did a number on New Jersey, New York and Connecticut in terms of power outages and all three states are furious with the utilities for not seemingly being prepared.  The damage in my town was very similar to “Sandy” 8 years ago.  I was fortunate, but three days later, large percentages of homes and businesses in the area are still out, with folks being told maybe by early next week. Which isn’t good enough.

--George F. Will / Washington Post

“Seventy-five years ago Sunday, three days after the first use of a nuclear weapon, the second occurred. There has not been a third in the subsequent 27,394 days.  One of humanity’s remarkable achievements is this absence of something.

“President Harry S. Truman, who ordered the bombings of Hiroshima and Nagasaki, did not learn about the existence of the Manhattan Project that developed the weapons until he became president upon the death of Franklin D. Roosevelt on April 12, 1945.  The developers did not know until July 16, in the New Mexico desert, whether the weapon’s physics would work.  Truman used the bombs to avoid invading Japan. His decision, following the bitter-end Japanese fanaticism on Iwo Jima and Okinawa, was a moral and successful wager on economizing violence.

“In the decision’s immediate aftermath, however, little was known of the scale and nature of the violence, and for a while the U.S. government wanted to prevent knowledge.  When reports said the Hiroshima bomb was equivalent to more than 20,000 tons of TNT, a young reporter stationed in Europe, named Walter Cronkite, assumed this was a typo, which he changed to 20 tons.  ‘It was just the same as getting a bigger gun than the other fellow had to win a war,’ said Truman, adding, ‘Nothing else but an artillery weapon.’

“Except this one melted eyes in their sockets. Radiation sickness – the bomb’s lethality long after detonation: uncontrollable vomiting, diarrhea, bleeding gums, wounds that would not heal, disappearing white blood cells, fevers reaching 106 degrees – had been denied, then minimized. Army Lt. Gen. Leslie Groves, head of the Manhattan Project, first dismissed Japanese reports of lethal radioactive effects as ‘pure propaganda,’ then told a Senate committee that radiation poisoning ‘is a very pleasant way to die.’  In May 1946, however, John Hersey arrived in Hiroshima.

“One of his earlier New Yorker stories had concerned the sinking of a PT boat commanded by a young sailor named John F. Kennedy. Two years later, another story began:

“ ‘At exactly fifteen minutes past eight in the morning, on August 6, 1945, Japanese time, at the moment when the atomic bomb flashed above Hiroshima, Miss Toshiko Sasaki, a clerk in the personnel department of the East Asia Tin Works, had just sat down at her place in the plant office and was turning her head to speak to the girl at the next desk.’

“What followed was, Lesley M.M. Blume says, ‘one of the most important works of journalism ever created,’ 30,000 words that filled the entire August 31 issue of the New Yorker and became the book ‘Hiroshima,’ which has not since been out of print.  Blume’s new book about the making of Hersey’s essay, ‘Fallout: The Hiroshima Cover-up and the Reporter Who Revealed It to the World,’ argues that by defeating Gen. Douglas MacArthur’s censorship regime in Japan, Hersey compelled Washington to surmount its reticence, born of queasiness, about the bombings.  Even Groves registered few, if any, objections to the essay.

“After the war had killed perhaps 60 million combatants and civilians, and after the Holocaust’s industrialized murder, people experienced what Blume calls ‘atrocity exhaustion.’  Nevertheless, Hersey’s unsparing journalism, Blume argues, made impossible any further discussion of the bomb as a conventional weapon, and his understated, matter-of-fact presentation of horrific facts facilitated the implementation of deterrence, which has been successful. So far….

“The human capacity for…lunacy suggests that people are too optimistic when they say that the vast majority of human beings who will ever live have not yet lived.  If true, this will require an endless supply of the skill, leavened by luck, that has gotten humanity through its most recent 27,394 days.”

---

Pray for the men and women of our armed forces…and all the fallen, including the nine killed in a training accident off San Clemente Island in Southern California.

God bless America.

---

Gold $2046
Oil $41.60

Returns for the week 8/3-8/7

Dow Jones  +3.8%  [27433]
S&P 500  +2.5%  [3351]
S&P MidCap  +4.0%
Russell 2000  +6.0%
Nasdaq  +2.5%  [11010]

Returns for the period 1/1/20-8/7/20

Dow Jones  -3.9%
S&P 500  +3.7%
S&P MidCap  -6.0%
Russell 2000  -6.0%
Nasdaq  +22.7%

Bulls 56.7
Bears
17.3…57.3/17.5 week before…

Hang in there…Mask up.  Wash your hands.

Say a prayer for Lebanon.

Brian Trumbore

*Welcome back to America, Steve G.  Steve, who I’ve known for over 50 years, had an interesting experience crossing the U.S.-Mexican border the other day after spending years in Central and South America.  Interesting in that it took him “two minutes” to go through the checkpoint at Laredo, Texas, no questions on Covid, no nothing, just “Are you an American citizen?”  “Si.”