Week in Review

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Week in Review

06/16/2012

For the week 6/11-6/15

Greece, Spain and Italy…oh my

June 28-29…EU summit

Last weekend, after Spain received word it was going to get a 100 billion euro ($125 billion) bailout for its banks, Prime Minister Mariano Rajoy was asked about his travel plans that day.

“I’m leaving for the Euro Cup [Euro 2012] because the [economic] situation has been resolved,” he said.

The worst-case scenario for the region is that Sunday night the realization sinks in that Greece will be leaving the eurozone, the government will be defaulting on its debts, there is a run on banks across Greece (on top of the quiet one that is seeing as much as 800 million euro being pulled out daily), Spain and Italy come Monday, and we have a return of the global credit crisis.

Greece would return to the drachma and those with savings in euro there would see their assets immediately halved, or worse. No one would lend to the Greek government so it will just print money non-stop, inflation will skyrocket, and the government would default on its debts, thus triggering huge losses for the European Central Bank and other lenders around the world.

Borrowing costs in the likes of Spain and Italy would then soar and any firewalls in place become ineffective, because, for one, the vaunted European Stability Mechanism hasn’t even been signed off on by Germany yet.

And to those saying the United States wouldn’t be impacted because their holdings of Euro sovereign debt have been significantly pared back, they aren’t taking into consideration the banks’ holdings of credit default swaps, which are not transparent. We won’t know who owns what until the hummus hits the fan.

In Greece, anti-bailout Syriza’s 37-year-old leader, Alexis Tsipras, rallied voters on Thursday with the statement that it was time to “terrorize the terrorists,” though he continues to say he wants to keep the country in the eurozone, despite his statements that he seeks to rip up the bailout agreement.

“No to the memorandum of bankruptcy…Yes to the euro with a national recovery plan that will rebuild the economy and protect the people from bankruptcy.”

Earlier, upon learning of the Spanish bailout for their banks, Tsipras said:

“The developments in Spain confirm the position we adopted from the start – that the crisis is a pan-European problem, and the way it has been handled so far has been socially catastrophic and completely ineffectual.”

[Antonis Samaras, the pro-bailout conservative leader, said the Spanish bailout terms showed “the benefits of taking the road of responsibility.”]

Tsipras then wrote in an op-ed for the Financial Times:

“I strongly believe we will get a clear democratic mandate from the people of the Hellenic Republic on Sunday. With that mandate we will take immediate action to end Greece’s corrupt and inefficient political and regulatory systems that have ravaged our economy over the past decades. The people of Greece also expect us to take immediate responsibility for averting the country’s evolving humanitarian crisis.”

Economists Nicholas Economides, Yannis Ioannides, Emmanuel Petrakis, Christopher Pissarides and Thanasis Stengos / Wall Street Journal

“(Three) key forces work against Greece remaining in the euro. First, Greek voters have not been well-informed. While they feel their current suffering very acutely, they do not know or understand the full consequences to themselves of leaving the eurozone. Populist politicians minimize these terrible consequences.

“Second, some Greek political parties argue that the consequences of Greece leaving the eurozone would be more severe for the EU than for Greece. They propose a game of ‘chicken’ with German Chancellor Angela Merkel and are threatening to scrap the last government’s agreement with its lenders. If these parties do well on Sunday and those threats become a reality, it is hard to see what would prevent Greece’s almost immediate exit from the eurozone.

“Greeks have also come to identify their European debt agreement with austerity, layoffs and salary and pension cuts, due to the fact that the EU, ECB and International Monetary Fund have put growth-promoting reforms in second place, behind fiscal consolidation, while setting the terms for their support for Greece.

“Assuming that rationality prevails on Sunday, a new Greek government – most likely a coalition government – will recommit to the euro and to Greece’s existing debt agreements by the end of the month. Greece will ask the EU to ease its austerity measures and commit to significant investments in infrastructure. The EU at that point should breathe a sigh of relief and agree to both requests, since it is clear that severe austerity alone will not bring Greece to stability.”

After Spain received the outlines of a bailout for its banks, Prime Minister Mariano Rajoy joyfully said that the move was simply a line of credit that Spain’s most troubled banks would be able to access with no outside control over government macroeconomic policy like that imposed on Greece, Ireland and Portugal when their public finances were bailed out. Rajoy said, ‘see, my policies brought this about.’

“If we hadn’t done this in these past five months, what was put forward yesterday would have been a bailout of the Kingdom of Spain. Because we had been doing our homework for five months, what did happen yesterday, what was agreed, was the opening of a line of credit for our financial system.”

Good grief. What a bunch of crapola. Instead, the disingenuous Rajoy knows his government, not just the banks, needs a bailout. As is a popular term these days, going back to the ECB’s long-term refinancing operations (LTRO I and II) you have a “doom loop” where money is routed to the banks to buy sovereign debt, as the governments become further indebted themselves with rising costs of financing. Spanish banks, for example, now account for more than a third of Spanish sovereign bond ownership. If Spanish sovereign debt required restructuring, imagine what the impact on the banks would be as the contagion then spread to the next country and its banks.

Only now with the latest bailout, Spain is receiving funds, more debt, to bailout the banks, which had previously been buying Spanish debt after the LTRO injections.

No wonder the yield on Spain’s 10-year bond this week traded with a yield of 7.00% (and Italy’s up to 6.35%). As everyone knows by now after this two+ year exercise in futility, when your interest rates hit that level, the increased debt service more than wipes out any gains from austerity programs.

So back to Rajoy and his claim Spain avoided the kind of intrusive inspection of government books that Ireland, Greece and Portugal now have through their bailouts, it became clear within 24 hours of the proposed Spanish bank injection that conditions would indeed be placed on the funds, with the loans (just who is lending what is still to be determined) carrying preferred status to Madrid’s existing debt, meaning, say, Germany would get its money back before sovereign debt holders in the event Spain defaulted. Germany’s finance minister Wolfgang Schauble said, “There will be a troika [the team of inspectors from the EU, ECB and IMF] and it will make sure the program is being implemented.”

So Rajoy looked like a real horse’s, or bull’s, ass. 

And then there is Italy…the other ‘I’ in PIIGS. Fake Prime Minister Mario Monti, the one-time darling of the EU, was furious when Austrian finance minister Maria Fekter said in a television interview:

“Italy has to work its way out of the economic dilemma of very high deficits and debt, but of course it may be that, given the high rates Italy pays to refinance on markets, they too will need support [a bailout].”

Monti was correct in calling Fekter’s comments “completely inappropriate,” but she’s right. Ms. Fekter just needs to learn to keep her mouth shut during these incredibly sensitive times.

The thing about Monti is he burst on the scene in the aftermath of the Berlusconi debacle and acted as if it would be a piece of cake to enact all manner of needed reforms for Italy’s economy, but he failed to understand that dealing with Italy’s politicians is impossible and so his successes have been limited and an overhaul of the labor market, as well as cuts in government spending, are meeting a brick wall in parliament as everyone takes care of their constituencies. Monti’s approval rating has plummeted from 71% when he took office last fall to 34%.

Italy has 2 trillion euro in debt and sells 35 billion each month, while at least Spain only has to refinance 82.5 billion euro of debt the rest of 2012, having gotten through 58% of its funding for the year.

The need is clear for true European integration, especially in the euro area, as the president of the European Commission, Jose Manuel Barroso, stated this week. Barroso’s proposal would put a supervisor in place who would have the power to wind down banks and impose losses on bondholders without the approval of national authorities.

Barroso also wants to accelerate action on a deposit guarantee program, which as I wrote last week is the first step needed to tackle the crisis…but because this is the European Union and not the United States of America, it can’t be implemented overnight, plain and simple, but Europe doesn’t have years to enact it.

As for German Chancellor Angela Merkel, she is already warning there won’t be a “master plan” or major breakthrough at the June 28-29 EU summit. She’s having a tough enough time just getting the two-thirds in the German parliament needed to approve the EU Fiscal Treaty agreed to last year, as various members of her coalition back an idea for a “European Redemption Pact,” a “sinking fund” that would pay down excess sovereign debt in the eurozone. [On all the sovereign debt over 60% of GDP…paid off over 20 years.]

Merkel, as she heads to the G20 with the Greek election outcome being known by the time the meeting is gaveled open, said this week that world leaders should not “overestimate” Germany’s ability to resolve the eurozone debt crisis.

“I say to (the G20) Germany is strong, Germany is an engine of economic growth and a stability anchor in Europe…but Germany’s powers are not unlimited.”

Merkel has long argued there are no “miracle solutions,” that what is required is closer political and fiscal union, which she admits is a “Herculean task.”

For his part, French President Francois Hollande said of the Greek situation that it is up to Greek voters to decide whether they wanted to stay in the euro or not, “But I have to warn them, because I am a friend of Greece, that if the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the eurozone which will prefer to finish with the presence of Greece in the eurozone.” [See Germany, Netherlands and Austria.]

Bank of England Governor Mervyn King said his institution was prepared for the worst and set to activate an emergency liquidity tool as the crisis caused a loss of confidence that was leading to a self-reinforcing weaker growth outlook.

“The black cloud has dampened animal spirits so that businesses and households are battening down the hatches to prepare for the storms ahead.”

Wall Street and Washington

As they dueled in separate speeches in battleground Ohio this week, Mitt Romney said: “He’s going to be a person of eloquence as he describes his plans for making the economy better, but don’t forget, he’s been president for 3 ½ years and talk is cheap.”

President Obama countered: “In this election, you have two very different visions to choose from. This isn’t some abstract debate. This isn’t another trivial Washington argument. This is a make-or-break moment for our middle class.”

So what of the economy? May retail sales came in down 0.2% and May industrial production was down 0.1%. The weekly jobless claims figure rose unexpectedly to 386,000, also not good.

And the Treasury Department released its latest figures on the budget deficit and for the first eight months of the fiscal year, through May, the deficit totaled $844.5 billion, compared with a $927.4 billion shortfall for the year earlier period.

But before you dance a jig, understand the Congressional Budget Office is projecting a $1.2 trillion deficit for the fiscal year ending Sept. 30, down only slightly from $1.3 trillion in the prior year, and the fourth consecutive year over $1 trillion.

The government is going to hit its $16.39 trillion borrowing limit sometime before year end, though I maintain it could become a serious issue by September as the forecast for the limit being hit is fine-tuned more.

The Federal Reserve is now expected to offer up language at this week’s Open Market Committee conducive to further quantitative easing, or “QE,” as Goldman Sachs became the latest to lower their second quarter growth forecast for the U.S., in their case to 1.8%, which is hardly the level needed for massive job creation.

The Fed’s case for further stimulative measures was bolstered some by the tame inflation news for May, with producer prices falling 1.0%, up 0.2% ex-food and energy, and consumer prices losing 0.3%, also up just 0.2% on core.

“The more numbers you add to ‘QE,’ the weaker the thrust. But their historical playbook says lower interest rates are the way to restimulate economies, and if that doesn’t work, you buy Treasuries and push rates even lower.

“It is necessary medicine. You can’t cure a debt crisis with more debt, but you can buy time and kick the can down the road. The only way to cure a debt crisis is to grow out of it, which we don’t seem to be doing, or haircut investors [force investors to incur losses] through defaults or negative real interest rates, which is happening. Policymakers are doing the best they can. This is a long-term workout and double-digit returns are a thing of the past. The entire developed world is overindebted.

Q: How long will it be before the economy can stand on its own?

“A decade. We are in quicksand and the Fed is on dry land extending a hand. We have backed ourselves into this for the past 30 years by making ridiculous bets on dot-coms and subprime mortgages and the like. We should have stopped, and the Fed should have stopped us by keeping interest rates higher over the past 10 years. Now we will be on life support for at least a decade. It doesn’t matter which party is in power. Romney might advocate tax cuts to rejuvenate the private sector and Obama wants to soak the rich. But neither will cure our debt crisis.”

As for the topic of the fiscal cliff; the year end expiring tax-and-spending changes scheduled to go into effect unless Congress acts, JPMorgan Chase CEO Jamie Dimon told the Senate Banking Committee that Congress must act before the election (though of course they won’t).

“Markets and businesses may start taking actions before that that create a slowdown in the economy….

“It’s better to do something now, so that we don’t create additional uncertainty among businesses and consumers. We have to get our fiscal act in order. I mean, it’s either going to be done to us or we’re going to do it ourselves.”

Dimon urged approval of a package similar to Simpson-Bowles, previously issued by the president’s fiscal commission, which Obama then totally ignored, thus ensuring he goes down in history as one of our worst presidents on this single act alone.

On the issue of housing, there has been cause for optimism that the bottom is firmly in place, nationwide, even as lenders initiated far more foreclosure proceedings in May over April as the banking industry frees itself from the robo-signing scandal of 2011. Short sales (the bank accepting less than the mortgage balance) are growing, but all of this is good in cleaning up the inventory, one way or another.

Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate, said, “My sense is that there is a broad perception among the potential home buyers that we are close to the low point in the interest-rate cycle and the home-price cycle, and housing affordability is about as good as it is going to get.”

According to economist Mark Zandi, interest payment reductions through refinancings are likely to be $12 billion this year, and this is good, too.

Finally, the Federal Reserve, in its Survey of Consumer Finances, revealed that the median U.S. household net worth declined to $77,300 in 2010, the lowest since 1992, from $126,400 in 2007, or a decline of nearly 39%. Of course this was due largely to the bursting of the housing bubble, and while there has been some improvement since 2010 in the form of higher equity prices, it’s a depressing story when looking at the retirement prospects for a large portion of Americans.

Street Bytes

--Stock rose a second consecutive week on hopes for more QE, as well as a favorable outcome in the Greek election, with the Dow Jones adding 1.7% to 12767, while the S&P 500 tacked on 1.3% and Nasdaq gained 0.5%.

--U.S. Treasury Yields

6-mo. 0.14% 2-yr. 0.27% 10-yr. 1.58% 30-yr. 2.68%

The year-over-year inflation picture for producer prices through May is up just 0.7%, up 2.7% on core, while it’s up 1.7% for consumer prices, up 2.3% core.

--Credit Suisse and Deutsche Bank were among those lowering their growth forecasts for 2012 in China to 7.7% and 7.9%, respectively, with Credit Suisse warning deflation is looming. Most are calling for second quarter GDP of 7-7.5% after an 8.1% pace in the first quarter.

There was a slew of economic news last weekend, some of which I got in before posting last time but I’ll repeat it in putting it all together.

Consumer prices were up only 3% in May, the lowest in two years, while producer prices rose just 1.4%. Food prices increased 6.4% from a year earlier, which is actually good news. Not too long ago food inflation was in the double-digits.

Exports surprised to the upside, up 15.3% in May from a year earlier, the best pace since October, while imports increased 12.7%, also good. Industrial production, up 9.6% for the month, was not quite as strong as expected. Retail sales rose 13.8%, the least in six years.

Cao Wenlian, deputy secretary general of a leading government think tank, said recently-announced “fine-tuning” policies are enough to ensure growth in an economy that is already bottoming out this quarter.

“The second quarter will be the hardest period and data will turn better in the third and fourth quarter with full-year growth no less than 8%.”

The Chinese government has a plan to build 70 airports in the next few years, as well as to expand 100 existing ones.

Passenger-car sales in China rose more than estimated in May, the third straight month they beat expectations, with Toyota and Honda leading the surge as factories recovered from last year’s tsunami and floods in Thailand. GM had previously reported vehicle sales in China rose 21 percent in May, while Ford’s increased 23 percent.

--Industrial production for the month of April in India was only up 0.1%, far less than the 1.7% estimate. Not good.

--Both Italy’s and Spain’s GDP is projected to decline 1.7% in 2012.

--Factory output in both the U.K. and France declined 0.7% in April from March.

--A Deutsche Bank report on the Irish housing sector claims it will take 43 years to fill all the empty homes in the country. The bank estimates there are 289,000 vacant houses, including 60,000 holiday abodes. Staggering. So much for any recovery in prices with a situation like this. Ireland’s vacancy rate of 15% is five time that of the U.K.’s.

“Barring a sudden and sizeable recovery in Irish net migration, or a politically controversial policy of demolishing large volumes of excess housing stock, housing oversupply will remain a feature for many years, possibly decades, to come,” says Deutsche. [Nick Webb / Irish Independent]

--The U.S. has attracted net inflows of foreign direct investment for 12 consecutive quarters, according to the Commerce Department; FDI including long-term bets such as corporate acquisitions and real estate. The single biggest source is acquisitions of U.S. firms by European companies. Nothing in the wind these days will change that pattern, only increase the level.

--Much better news on the housing front in California for the month of May as sales rose 9.3% from April and 17.6% from May 2011, while the state’s median home price hit $270,000, up 8.4% from year ago levels. Home sales here have posted year-over-year gains for 10 consecutive months, with foreclosures making up a smaller share of the market, though “distressed” sales are still 46% of the market.

In the key Southern California market (six counties), sales soared 21% compared with 2011, while the median price rose 5.4%. But, regarding this last metric, the median is still 41.6% off the high in July 2007.

--The Port of Los Angeles and Long Beach, first and second in the U.S., respectively, saw import cargo decline 2.4% in May compared with May 2011, while exports were flat.

--Rajat Gupta, the former Goldman Sachs director, was convicted on four counts of passing confidential information while serving on Goldman’s board to his buddy and hedge fund manager Raj Rajaratnam. He will remain free on bail until his sentencing in the fall as Gupta faces a sentence of at least ten years. He is the highest-ranking corporate figure to go down in an insider-trading sweep that has ensnared about 60 individuals thus far.

The prosecutors deserve a premium lager for their great work on this one.

--It was absurd how glowing some of the business channel and print coverage of JPMorgan Chase CEO Jamie Dimon’s appearance before the Senate Banking Committee was. For starters, the vast majority of the American public (like 99%) didn’t see Mr. Dimon’s testimony on his firm’s $2 billion+ trading loss, nor do they care that he got the better of the senators. Tougher regulations are coming regardless and the industry will pay a heavy price for JPMorgan’s admission for years to come. I totally agree with the following take.

“It’s been about a month since JPMorgan Chase, the nation’s largest commercial bank, announced a $2 billion loss in a dubious series of trades that were supposed to hedge against risks. The embarrassment for the bank and its chief executive, Jamie Dimon, was acute: Mr. Dimon had not only previously dismissed concerns about the bank’s activities as ‘a tempest in a teapot,’ but he had also opposed efforts to regulate such trades more tightly, arguing that restrictions would do more harm than good….

“We tend to believe both Mr. Dimon’s contrition and his promises of an internal cleanup….But we doubt the inquiries will alter the basic picture: This was the sort of accident that can happen when even the most cautious banks entrust extremely complicated transactions to employees who, for all their talent, are only human – with all the defects, greed included, that flesh is heir to….

“Yes, the losses this time were manageable and confined to the bank’s shareholders. What about the next time, though? If federally insured banks must reduce risk through other means, including assembling less risky credits on their balance sheets in the first place, so be it.”

--Tom Braithwaite of the Financial Times had a story that a doomsday scenario for JPMorgan Chase had been presented to policy makers and bankers at a presentation given at Harvard Law School in March before disclosure of the bank’s trading losses in early May.

“In the doomsday scenario set out by (Gregory Baer, deputy general counsel), a $50 billion loss would trigger ‘a run on the bank’ – with $375 billion of funding, including bank deposits, draining away.

“The government would then step in and mark down the bank’s assets, leading to an additional $150 billion loss. Shareholders would be wiped out but senior creditors would be transferred to a new bridge company that allows ‘critical activities [to] continue to operate smoothly.’”

So we return again to Jamie Dimon, who conceded in his Senate appearance that his traders didn’t understand the risks they were taking.

I also just have to add I got a kick out of the questions directed at Dimon on the Volcker Rule by the senators and whether or not it would have applied in the case of JPM when not only does the rule not go into effect until July, but the actual draft of same isn’t complete and there isn’t one person in the whole freakin’ world who can tell you exactly what will be in it in the end. So on this I shared Dimon’s exasperation when the topic came up. 

--According to the Centers for Medicare and Medicaid Services, national health-care spending growth was 3.8% in 2009, the smallest increase on record, and was followed by a 3.9% increase in 2010. The report’s authors then project rises averaging 4% annually for 2011, 2012 and 2013.

But… “Spending would jump 7.4% in 2014 when the health-care law is scheduled to be fully implemented…as millions of Americans gain coverage through subsidized insurance plans purchased through government-run exchanges or through Medicaid.” Afterwards spending growth would average 6.2% from 2015-2021. [Louise Radnofsky / Wall Street Journal] 

--Shares in Finnish mobile-phone giant Nokia have plummeted 50% this year, diving another 20% or so just this week as the company announced yet further job cuts, this time 10,000 positions, and other restructuring moves as sales of its new Lumia smartphone flounder and prices plummet, including for rival Android phones. Investors did like that senior management at the basic phone division was being replaced, though Nokia can’t say when its core business will be profitable again.

Nokia’s jobs cuts will mostly be in Finland, as well as some R&D facilities in Germany and Canada. 

--Microsoft is going to shock the tech world, so it seems, by announcing plans to sell its own tablet running the new Windows 8 operating system in time for the holiday season, assuming Santa Claus doesn’t cancel it due to the ongoing Euro debt crisis. Yes, direct competition for Apple, which controls 62.5% of the tablet market these days. This could be interesting. Looks like the unveiling is Monday.

--U.S. airlines had their best on-time arrival rate for the first four months of the year since 1995, and they mishandled fewer bags! Good weather (recall summer in February and March), along with fewer planes in the air led to the better performance.

--Interesting piece in Bloomberg on how prices for Boeing 747-400s, the most popular wide-body plane, are falling rapidly as carriers replace it with more fuel efficient aircraft such as the Boeing 777s and the Airbus A380s. Ten-year-old 747-400s are worth a record low $36 million, about 10 percent less than last year. 48 of the 404 such planes have been placed in storage.

Long, long ago, like 30 years ago, I was involved in a leasing deal where we structured a private placement around a KLM 747. Oh, those were the days…3:1 tax write-offs, he wrote mischievously. 

--According to research firm comScore Inc., the number of unique U.S. visitors to Facebook’s site increased only 5% in April vs. a year ago, the lowest user growth rate since comScore began tracking the data in 2008. The amount of time people spend on the site is also decelerating.

--Allen Stanford was sentenced to 110 years in prison for leading his $7 billion fraud scheme. He was also ordered to forfeit $5.9 billion. As a prosecutor said, “he’s treated his victims like road kill.”

--“A Government Accountability Office report found that just under a third of those 55 to 64 who lost their jobs from 2007 through 2009 had found full-time work by January 2010, compared with 41 percent of people 25 to 54. The median duration of unemployment for those 55 and older was 34.1 weeks in May, according to the Labor Department, in contrast to 22 weeks for all jobless people over 16.” [Motoko Rich / New York Times]

--Conservative talk show host Glenn Beck signed a five-year, $100 million contract to continue with his morning radio program.   Beck ranks third behind Rush Limbaugh and Sean Hannity.

--Atlantic City suffered another awful month in May with casino gambling revenue falling 9.5 percent. 

--The Nobel Foundation said the money for its awards would be cut by a fifth to $1.2 million as costs had exceeded returns from interest and investments on the capital over the past decade. So if you win this year, you’ll receive the reduced prize money plus the celebration won’t be as good owing to cost-cutting. Hell, why bother?

Foreign Affairs

Iran: There were conflicting statements from Iran this week, per usual, as talks between Tehran and the P5+1 (the United States, Britain, France, Russia, China and Germany) take place on Monday in Moscow.

Iran’s foreign minister, Ali Akbar Salehi, said at a news conference with Russian Foreign Minister Sergei Lavrov, “This is a complex issue and we need to be patient but we’re on the right track.”

But then Saeed Jalili, Iran’s chief nuclear negotiator, told Iranian lawmakers that Iran wouldn’t compromise on its right to enrich uranium. Jalili told the group that Iran was prepared to pull out of the talks except he had received assurances from Catherine Ashton, the European Union’s Foreign Secretary, that Iran’s concerns were on the table.

One fly in the ointment is the story that Iran could be working on a nuclear-powered submarine that could be used in building their case for the need for producing weapons-grade nuclear material, enriched to 90 percent, though the report says such construction is beyond Iran’s capability. Iranian Rear Adm. Abbas Zamini earlier told the country’s Fars News Agency that his nation is in “the initial phases of manufacturing atomic submarines.”

Karim Sadjadpour of the Carnegie Endowment for International Peace offered, “One of the few if only civilian pretexts for weapons-grade uranium are nuclear submarines, so it was fairly predictable that Iran would announce its desire to build them.” The issue is whether or not Iran presses their case on the topic.

And then there is the issue of the rapidly approaching July 1 deadline for a European Union ban on Iranian oil. The U.S. exempted Japan and 10 EU nations from sanctions in March, granting then renewable 180-day exemptions, and on Monday it exempted six other countries – India, South Korea, Turkey, South Africa, Malaysia and Sri Lanka – plus Taiwan.

Virtually all of the above, though, have been slashing their imports from Iran and the exemptions are supposed to be granted just to allow each nation a little more time to find replacements for the bulk of the Iranian crude they once received.

But China, along with Singapore, remain subject to the sanctions which would see their financial institutions involved in settling oil trades with Iran cut off from the U.S. financial system. A Chinese foreign ministry spokesman said, “China is opposed to one country imposing unilateral sanctions on another country in accordance with domestic law, let alone imposing sanctions on a third country.” [South China Morning Post]

Nations have until June 28 to demonstrate they qualify for an exemption. In India, for example, officials there said imports of Iranian oil had been reduced from 16.4 percent of the country’s oil imports in 2008-09 to 10.3 percent in 2011-12.

Lastly, AFP quoted U.S. analysts as saying on Sunday that the Flame malware virus had received an instruction to self-destruct, while the London Telegraph reported there was “very strong evidence” of a link between Flame and the Stuxnet worm that damaged Iranian uranium enrichment operations.

Egypt: Thomas Friedman, in one of his New York Times op-eds, when asked by a young Egyptian woman who should she vote for in her country’s presidential election?

“My heart went out to her. As Egyptian democracy activists say: It’s like having to choose between two diseases. How sad that 18 months after a democratic revolution, Egyptians have been left with a choice between a candidate anchored in 1952, when Egypt’s military seized power, and a candidate anchored in 622, when the Prophet Muhammad gave birth to Islam.”

The nation’s Supreme Constitutional Court dissolved the Islamist-dominated parliament while upholding the right of deposed Hosni Mubarak’s ally, Ahmed Shafik, to remain on the ballot.

This is a huge and unexpected blow for the Muslim Brotherhood and throws the country into turmoil as the country goes to the polls to elect a new president on Saturday and Sunday.

The Supreme Court, as well as the current interim military rulers, are almost all Mubarak holdovers and seem hellbent on maintaining their authority, when it was thought, at least by yours truly, that the military would fight to maintain authority in key areas, such as foreign policy, after the election when a new constitution was drafted. The battle was to be over how much power the president would then actually have and the division of power between the office and the army.

The ruling military council, after all, had promised to turn over control to a civilian government by July, but should Shafik defeat the Brotherhood candidate, Mohamed Morsi, clearly the military would be running the show totally. As a Brotherhood member of parliament put it, Thursday’s action equaled a “complete coup d’etat.”

But as I go to post, no one seems to know what happens next following the vote. A constitution must still be drafted. Legislative power for now will reside in the hands of the ruling Supreme Council of Armed Forces (Scaf)

For their part, it wasn’t certain the Brotherhood would win before the Court’s move, anyway, as many in the country are still upset the Brotherhood broke their promise not to field a presidential candidate in the first place.

Shafik has the support not only of the military, but also the old guard business establishment, and he’s been going after the Christian vote, Christians representing 10 percent of the population.

So it’s not clear how and when a new parliament will be elected, nor just who is going to write the constitution and when; a 100-member constitution writing body having just been selected earlier in the week.

The Court found that one-third of the 498 seats in the assembly, which was voted on back in November and January, should have been reserved for independents. The Brotherhood, coupled with the hard-line Salafists, held a majority.

So is the Revolution over? As Hosni Mubarak lies on his deathbed, are this week’s maneuvers simply a return to the past? We’ll learn some answers the next few days.

Syria: What a disaster. U.S. Secretary of State Hillary Clinton, who hubby Bill and many in America believe would have been a better president than Barack Obama (which isn’t saying much) totally screwed up in her job as chief diplomat when she went off on Russia this week, saying they were delivering attack helicopters to Syrian President Bashar al-Assad’s regime. Both Russia and Syria denied the accusation.

Now, U.S. officials are conceding Moscow was right. Those helicopter gunships you see the Syrian Army using on its own people are actually old ones that were being returned from Russia after routine maintenance.

Clinton’s ‘outrage’ that the U.S. was “concerned about the latest information we have that there are attack helicopters on the way from Russia to Syria, which will escalate the conflict quite dramatically” was totally without evidence and incredibly reckless.

No one is defending the Assad regime, except Russia these days, but you can’t go off half-cocked on such a serious accusation, especially as the United States has itself armed some rather dubious regimes and the U.S. needs Russia’s help in supplying our troops in Afghanistan.

Meanwhile, Assad’s goons perpetrate one massacre after another and the opposition Free Syrian Army abandoned the U.N.-backed ceasefire and struck at three districts in Damascus. It also appointed a new leader, Abdelbasset Sayda, who proclaimed the regime was “on its last legs.”

What is despicable from the standpoint of the Obama administration’s handling of the civil war is that it has refused to take the simple step of working with Turkey and Jordan for the creation of safe zones, which should have been created last year.

Finally, Israel is rightfully concerned that Hizbullah is getting its hands on Syria’s non-conventional weapons, as well as Scud missiles (one with a range of 435 miles) that Syria would have been holding for the militants. Israeli Defense Minister Ehud Barak said, “The moment the regime there falls, we’ll be following these things,” adding, “The Assad family is slaughtering its people, with the support of the Iranians and Hizbullah and the world is silent.”

Iraq: Prime Minister Nouri al-Maliki appears to have beaten back a move to force a vote of no confidence as part of a growing challenge from Sunni and Kurdish parties, though Maliki has one key Kurdish leader on his side, President Jalal Talabani, whose office was responsible for affirming whether a petition for a no-confidence vote had enough signatures. 164 signatures in the 325-member parliament were required and opponents said they submitted 176, but Talabani said the letter contained only 160 valid ones. Talabani added, before heading out of the country for medical treatment, incidentally, that 13 lawmakers informed him they were withdrawing or suspending their signatures, without an explanation being given between the 176 and 173 figures.

A few days after this development, there was a wave of car bombs against Shiite pilgrims, with at least 72 killed, the worst such violence in months. At week’s end al-Qaeda claimed responsibility. Donald Rumsfeld’s dead-enders no doubt.

Afghanistan: A Taliban suicide bomber disguised as a woman wearing a burqa killed four French soldiers when he blew himself up in a market. French President Hollande reiterated France’s combat troops will be out by year end, well before the 2014 goal for the majority of NATO forces. As of last Sunday, 189 international service members have been killed in Afghanistan this year.

Pakistan: Islamabad continues to refuse to end its six-month blockade of NATO troop supplies meant for Afghanistan, while the U.S. presses Pakistan to target the Haqqani network, based in Pakistan, which is responsible for killing American forces across the border. Pakistan seemingly doesn’t target the Haqqanis because it wants their fighting ability to counter growing Indian influence in Afghanistan.

Russia: President Vladimir Putin signed the legislation increasing fines on protesters a staggering 150-fold to $9,000, but tens of thousands were allowed to protest peacefully on Russia Day, Tuesday, with Putin, in his holiday address, apparently attempting to defuse tension.

“It is important to listen and to respect each other, to seek mutual understanding and find compromise, to unite society around a positive and constructive agenda.”

The thing is, the day before, Monday, in an incredibly disturbing move, the police raided the offices and homes of protest organizers, including prominent blogger Alexei Navalny and the leader of the Left Front movement, Sergei Udaltsov. Even relatives’ homes were searched, while Navalny et al were told to appear for questioning early Tuesday, forcing them to miss the rally in Moscow, though Udaltsov defied the order and instead addressed the crowd.

The day of the demonstration, opposition-leaning websites were shut down by denial of service attacks.

So while Putin didn’t crack down on the protesters themselves, the leaders will be harassed into submission; at least that is the hope of the Kremlin.

Separately, Russian fighter jets have been conducting exercises over Armenia amid the escalating border conflict between Armenia and Azerbaijan, two former Soviet republics.

France: President Hollande should gain a parliamentary majority after round two of the elections for the National Assembly on Sunday, as his Socialists and coalition partner the Greens surpass the 289 seats needed for a majority in the 577-seat body. Hollande would thus be able to move on his 60-point program aimed at boosting youth employment, increasing the number of teachers and raising taxes on the rich.

Meanwhile, Marine Le Pen’s National Front party is projected to win about 14 percent of the vote, less than the 18 percent she won personally in the presidential election, but the FN should gain its first seats since the late 1980s.

Ms. Le Pen won 42% in her northern constituency in the first round last Sunday, handily defeating the leader of the Left Front, Jean-Luc Melenchon. Actually, Le Pen beat him like a rented mule.

“Tonight,” said Le Pen, “we confirm our position as the third political force in the country.”

She does, however, still have a fight on her hands in round two.

And Marine’s niece, beautiful 22-year-old Marion Marechal-Le Pen, grand-daughter of FN founder Jean-Marie Le Pen, stunned pundits by coming on top in her constituency. She has a chance to win a seat in parliament on Sunday.

Speaking of good-looking women, the London Times reported on President Hollande’s partner, Valerie Trierweiler, who has provoked the first real crisis of his presidency, save for Greece, Spain et al, by refusing to support Segolene Royal, the Socialist politician with whom Hollande lived for 30 years and who is the mother of his four children. Instead, Trierweiler is backing a dissident candidate in the parliamentary elections against Ms. Royal after Hollande let it be known he wants his former main squeeze to win.

You see, sports fans, Trierweiler is said to be very jealous of Ms. Royal. Heck, Trierweiler’s eleven years younger! What’s her problem? Or perhaps I’m already in enough trouble.

North Korea: In a bit of a surprise, Pyongyang said last weekend it was not planning on conducting a nuclear test, though it complained South Korea was trying to provoke it into conducting one. It was thought the North was ready to hold its third test at any moment as satellite imagery showed heightened activity.

While the White House welcomed the backdown, it said it was not considering resuming food aid.

Mexico: The four presidential candidates squared off in their final debate ahead of the July 1 election and incredibly didn’t “delve deeply into themes such as the drug war and violence,” as reported by Randal C. Archibold of the New York Times. Enrique Pena Nieto seems destined to win. The cartels will steamroller him.

Random Musings

--Rather than working with Congress, President Obama once again went the executive order route in declaring that some youth deportations will immediately stop; those brought to this country before they were age 16, have no criminal record and are in school or have a high school diploma or equivalent.

The blatantly political move designed to shore up his base in the Hispanic community, which he captured 67% to 31% in 2008, offers a degree of relief and hope “to talented, driven, patriotic young people” and makes the nation’s immigration system “more fair, more efficient, and more just,” according to the president in his statement on Friday.

--68% of Americans surveyed in a Gallup poll still feel President George W. Bush deserves a “great deal” or a “moderate amount” of the blame for the nation’s financial troubles. President Obama receives at least some blame from 52%; nearly identical numbers to when Gallup asked the same question last September.

--According to a Public Policy poll of North Carolina voters, Mitt Romney leads Barack Obama 48-46 in this crucial swing state won by Obama in 2008. Of great concern to Democratic strategists is the statistic that support for the president among North Carolina’s black voters has declined from 95% in ’08 to 77% today.

--Obama, by the way, is now up to 160+ fundraisers since he declared his candidacy for re-election on April 4, 2011. [Bloomberg] He had more high-profile celeb-filled affairs in New York City this week.

“Democrats seem to be inching away from (Obama), undermining and diminishing the president with a thousand tiny cuts. Not even his strongest alleged ally, Bill Clinton, can stay on message. Of course, Clinton has never really been Obama’s friend, despite his assertions to the contrary.

“Does Clinton think that Obama has been a good president? Of course not. He thinks that he was a good president and that his wife would have been better than Obama. In 2008, when Clinton infamously dismissed Obama’s imminent primary victory in South Carolina by noting that even Jesse Jackson had won there, he was showing his true colors. Translation: Obama won because he was black, not because he was the best candidate….

“Recently, Clinton has expressed (other) observations that he might have kept to himself. If, that is, he were truly interested in helping Obama get reelected. In one television interview, Clinton praised Romney’s ‘sterling’ business record, the same one Obama has been criticizing. In another, he said the Bush tax cuts may as well be extended since it isn’t likely that a large debt-reduction plan will be considered until after the election. This wasn’t exactly an endorsement of the tax cuts, but it wasn’t precisely on the same page as the president either….

“(The) fact that Obama’s surrogates can’t stick to the script may be the best barometer of his perilous incumbency. In the political jungle, where people tend to be more Darwinian than divine, he is wounded and the pack is beginning to turn. Former Pennsylvania governor Ed Rendell…told CBS’ Charlie Rose that Hillary Clinton would have been a better president.

“The president gave a speech about the economy yesterday to put his stumbling campaign on a strong new footing – and cribbed most of it from speeches he delivered last year.

“OK, presidents repeat themselves, it’s no crime. But then tend to repeat themselves when they’re trying to advance a specific argument, piece of legislation, or cause – and they tend to repeat their strongest and most potent points in an effort to win that argument.

“That’s not what happened yesterday (in Ohio). Instead, Obama dug back into his bag of tricks and brought out a bunch of unsuccessful arguments – ones that failed to generate support when he first advanced them and failed to move the policy needle in his direction.

“A long passage about how Abraham Lincoln was both the first Republican president and the first Big Government president came directly out of his Sept. 9, 2011, speech before a joint session of Congress to push his ‘American Jobs Act.’

“Obama yesterday: ‘As much as we might associate the GI Bill with Franklin Roosevelt’ (odd, since Roosevelt had been dead two years when it was passed), ‘it was a Republican, Lincoln, who launched the Trans-Continental Railroad, the National Academy of Sciences, land-grant colleges.’

“Obama on Sept. 9: Lincoln was ‘a Republican president who mobilized government to build the Transcontinental Railroad, launch the National Academy of Sciences, set up the first land-grant colleges.’

“Here’s the oddity: Using Lincoln to sell Obamanomics was a flop nine months ago, when it was part of a nationally televised address seen by 10 times as many people as watched yesterday’s speech. If it didn’t work then, why would it work now?....

“More striking was the evidence of Obama’s indiscipline – a destructive problem for someone in a tight race. The endlessly repetitive speech was so very, very long that it brought to mind a story about the 1960 premiere of the Otto Preminger movie ‘Exodus,’ about the creation of the state of Israel. As the film crossed the three-hour mark, the comedian Mort Sahl stood up and shouted, ‘Otto, let my people go!’

“If the nation’s undecided voters decide Obama has become a bore on top of everything else, they’re going to do what Otto Preminger would not do for Mort Sahl: They’re going to let him go.”

--In a Pew Research survey of 21 countries, approval of President Obama’s foreign policy has plunged sharply during his term in office; the largest drop being in China, from 57% to 27%. In five Muslim countries surveyed in both 2009 and 2012, the approval rate dropped from 34% to 15%.

In Pakistan, Obama’s approval rating is now the same 7% George W. Bush received. 

--With the Supreme Court expected to issue a decision on the Affordable Care Act shortly, Mitt Romney renewed his pledge to repeal and replace any remaining aspects of Obamacare.

Romney did, however, vow to maintain coverage for people with preexisting conditions; this as UnitedHealth Group, Aetna and Humana said this week they would save some of the law’s provisions, including letting young adults stay on parents’ plans, regardless of how the Supremes rule.

--Lee Smith / The Weekly Standard…on the growing leak scandal out of the White House.

“In an excerpt from his just published book, Confront and Conceal: Obama’s Secret Wars and Surprising Use of American Power, from which the cyber war story was adapted for the Times, (David) Sanger recounts how Pentagon officials ‘fumed’ when White House counterterrorism czar John Brennan apparently gave away ‘operational secrets never shared outside the tribe.’ Defense Secretary Robert Gates confronted the senior administration official he perhaps believed in the best position to enact, or at least forward, his recommendation for a ‘new strategic communications approach.’ And what was that strategic approach? asked White House national security adviser Thomas Donilon. ‘Shut the f--- up,’ said Gates.

“In other words, Defense Secretary Robert Gates thought President Obama’s national security adviser was responsible, directly or indirectly, for the leaks. And if Donilon is responsible, the buck stops with President Obama.

“To paraphrase the president, that his White House would purposely release classified national security information is offensive. And it’s wrong.”

--Funny how quickly the situation with Commerce Secretary John Bryson appears to have died down after he took an indefinite leave of absence to deal with health problems, the official word being Bryson had a seizure while driving Saturday and was involved in three traffic collisions in California. He was cited for felony hit-and-run. Bryson said in his memo his leave would last “during the period of my illness.”

No one was seriously hurt in the collisions and toxicology tests confirmed neither drugs nor alcohol played a role, according to the Commerce Department.

So the accidents occurred on Saturday, the White House wasn’t advised until Sunday, and then there was the flurry of activity on Monday, Bryson leaves, and nothing since. 

Leaving the rest of us schmucks to only think, in the words of Robert Gates had he been asked for a comment, “WTF?”

--New York Democratic Gov. Andrew Cuomo, despite a seeming stumble regarding the gambling industry and campaign donations, has a 70% approval rating according to two surveys by Quinnipiac and Siena. Both also show 65% of Republicans in the state approving of Cuomo’s performance.

--No doubt…the issue of the value of a college education is exploding and not a week goes by these days without a couple opinion pieces on the topic. George Will started his weekend Washington Post column thusly:

“Many parents and the children they sent to college are paying rapidly rising prices for something of declining quality. This is because ‘quality’ is not synonymous with ‘value.’

“Glenn Harlan Reynolds, a University of Tennessee law professor, believes that college has become, for many, merely a ‘status marker,’ signaling membership in the educated caste, and a place to meet spouses of similar status – ‘associative mating.’ Since 1961, the time students spend reading, writing and otherwise studying has fallen from 24 hours a week to about 15 – enough for a degree often desired only as an expensive signifier of rudimentary qualities (e.g., the ability to follow instructions). Employers value this signifier as an alternative to aptitude tests when evaluating potential employees because such tests can provoke lawsuits by having a ‘disparate impact’ on this or that racial or ethnic group.”

--The U.S. Department of Education’s annual look at college affordability show the average tuition at a four-year public university climbed 15 percent between 2008 and 2010; 40 percent and more at universities in states like Georgia, Arizona and California.

Between 2001-02 and 2011-12, in-state tuition and fees at public, four-year colleges increased at an average rate of 5.6 percent each year, according to the College Board.

--The Bureau of Labor Statistics estimates that only 20 percent of U.S. jobs require a bachelor’s degree or more. About another 10 percent require some post-high school instruction, as noted by Robert Samuelson in the Washington Post.

“Successful economies result from many sources, not just an educated workforce, though that’s important. Other crucial influences include flexible markets, management competence, work ethic, government policies and an entrepreneurial culture. Some robust economies have workforces with a much smaller share of college degree-holders than the United States: Germany’s rate is 26 percent. Some other countries with higher rates (Japan: 56 percent) are floundering….

“What matters is the quality of our graduates – at both the high school and college levels – as much as their quantity.”

--Britain’s Supreme Court dismissed WikiLeaks founder Julian Assange’s appeal against extradition to Sweden over alleged sex crimes. He has one more avenue, that being taking his case to the European Court of Human Rights to further delay extradition, though they don’t have to agree to hear it. I’ve been holding off on a story involving Mr. Assange and yours truly; something that happened just a few weeks ago. Let’s just say I’m not a happy camper.

--Australia announced it would create the world’s largest network of marine parks, covering 3.1 million square kilometers, including the Coral Sea. Restrictions will be placed on oil and gas exploration and fishing.

The Coral Sea reserve is significant for a number of reasons. Aside from including the Great Barrier Reef and being home to sharks and tuna, it is the resting place of three U.S. naval vessels sunk in the Battle of the Coral Sea in 1942.

But environmentalists wanted a complete ban on commercial fishing there and some will still be allowed.

--According to the European Commission, unless overfishing is stopped in European waters, cod, hake and mackerel will all but disappear within a decade. Close to 50% of the Atlantic fish stock and more than 80% of the Mediterranean’s has been exhausted.

--The story of British Prime Minister David Cameron leaving his 8-year-old daughter at the pub was more than a bit overblown. But as Carol Midgley noted in the London Times, “Apparently, the Camerons often visit this pub, the Plough at Cadsen, on Sundays for a few snifters [the prime minister drinks beer] before returning to Chequers for lunch. It is said to be something of a ‘ritual.’”

Mr. Cameron then drinks “three or four glasses of wine with lunch” according to a recent biography, before sleeping it off in the afternoon.

Well, as Carol Midgley says, “I think this will chime more with the average person than Tony Blair did when he fretted that he had a drink problem because he had a gin and tonic before dinner and a couple of glasses of wine with his meal. Pah.”

[Ms. Midgley had another point to her story. It seems pubs in London, around Westminster, do not allow children like in the rest of the country, or in Ireland, I’d add, which is too bad.]

--Following Queen Elizabeth II’s Diamond Jubilee festivities, 75% of Brits say they want to keep the monarchy, according to a poll for the Sunday Times of London.

--So, do you have a lot of tattoos? I was reading a story in the current Army Times titled “Rethink the Ink” and new regulations in the armed forces (some of the service branches began changing the rules up to two years ago) that require “excessive” tattoos be removed.

One in five Americans now sports at least one tattoo, up 50 percent in less than a decade, according to Harris Interactive.

But when I see someone with a lot of tats, my first thought always is, ‘You expect to be hired?’

“The New York State Police, for example, say tattoos and ‘other body art shall not be visible while a member is in uniform or other business attire,’ including ‘a short sleeve shirt open at the front of the neck.’ Potential hires must agree to have any visible tattoos removed before their application will be accepted.”

Just a little reminder for those of you thinking of getting one.

--Uh oh…I only get five hours of sleep a night and a new study shows that if you get less than six hours, your risk of stroke goes up four times. Yikes.

--I watched the “41” documentary on HBO and it was a solid, admiring treatment of George H.W. Bush. He had warm words, generally, for Richard Nixon. Nothing but contempt for Ross Perot for costing him the election.

--Peter Robinson, a fellow at Stanford University’s Hoover Institution who wrote speeches in the Reagan White House, in an op-ed for the Wall Street Journal.

“Twenty-five years ago this month on June 12, 1987, Ronald Reagan delivered a speech in Berlin. Standing in front of the Berlin Wall, with the Brandenburg Gate, the historic ceremonial entrance to the city, rising behind him, the president of the United States issued a challenge to the leader of the Soviet Union, Mikhail Gorbachev.

“ ‘General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalization, come here to this gate.

“This may sound odd coming from a Reagan speechwriter, but for much of these past 25 years a question bothered me: Had it really mattered? The speech had been just that, a speech. Mere talk. Had it made any difference?”

Everyone in the American diplomatic corps, the National Security Council and State Department had objected to the ‘tear down this wall’ inclusion.

“The challenge…they insisted, would raise false hopes, place Mr. Gorbachev in a difficult position inside the Politburo, and divert attention from modest but realistic initiatives, such as negotiations to increase air traffic between West Berlin and Western Europe.”

Seven alternative drafts omitted the call to tear down the wall. “The president insisted on delivering the call anyway.”

This spring, Gorbachev told an American audience “we really were not impressed. We knew that Mr. Reagan’s original profession was actor.”

But friends Peter Robinson met both in the old Soviet Union and Germany over the years, including in 1987, told him otherwise. “(Reagan) issued a summons of such power and clarity that many who heard him felt as if they had suddenly regained consciousness. The Berlin Wall address represented a call to awaken.”

“A final note: Although Nancy Reagan, who will turn 91 next month, no longer gives interviews, a friend at the Reagan Library asked her a question on my behalf, then relayed her answer. Had the president ever remarked that it was the people of Berlin, not General Secretary Gorbachev, who had torn down the Berlin Wall? ‘Oh, yes,’ Mrs. Reagan replied. ‘He always felt that it happened because the people made it happen, and he was happy to have helped them in any way possible.’

“Ronald Reagan, that good and valiant man, happy to have helped.”

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

God bless America.

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Gold closed at $1628
Oil, $84.03

Returns for the week 6/11-6/15

Dow Jones +1.7% [12767]
S&P 500 +1.3% [1342]
S&P MidCap -0.6%
Russell 2000 +0.3%
Nasdaq +0.5% [2872]

Returns for the period 1/1/12-6/15/12

Dow Jones +4.5%
S&P 500 +6.8%
S&P MidCap +4.7%
Russell 2000 +4.1%
Nasdaq +10.3%

Bulls 37.2
Bears 26.6   [Source: Investors Intelligence]

Have a great week. I appreciate your support.

Don’t forget StocksandNews has an iPad app…perfect for the beach.

Happy Father’s Day!

NOTE: The next two weeks I’ll be coming to you from the Eugene, Oregon area, where I’ll be attending the U.S. Olympic Track and Field Trials. Due to the fact I’ll be at the track much of the time, including Fridays, this column may be posted as late as noon ET while I’m there.

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