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10/27/2012

For the week 10/22-10/26

[Posted 12:00 AM ET]

Washington and Wall Street

It was a miserable week in the markets with little good news as another torrent of earnings reports for the third quarter revealed that when it comes to large multinationals, revenues are falling short thanks to problems in Europe, and in some cases Asia and Latin America (read Brazil), while business investment has stalled owing to the uncertainty being generated by Washington’s “fiscal cliff,” the combination of automatic spending cuts and tax hikes slated to hit the economy on Dec. 31 unless Congress gets its act together following the election. Many are just assuming the new occupant of the White House, or the current one, will reach an easy compromise with a deeply fractured Congress, that could easily remain so following Nov. 6, or successfully kick the can down the road until, say, June, and everything will be hunky-dory. I wish it were that easy. The markets will clearly see through any sham proposal that doesn’t deal authentically with the deficits and entitlement spending, but maybe a 1,500-point downdraft in the Dow Jones will finally wake our slumbering leaders up.

Here are some facts. Business spending has stalled out, whether it’s a Commerce Department report released Thursday that showed orders for capital goods were unchanged in September (ex- volatile defense and aircraft orders), or Friday’s initial estimate of third quarter GDP, which came in at 2.0% (after the first two quarters of the year were 2.0% and 1.3%) but the increase was largely due to respectable consumer spending. Business investment in the quarter was flat. [The 2.0% figure was also influenced to the upside by a surge in defense spending, which was a quirk that occurs from time to time and is reflective of nothing.]

Corporations are doing the right thing, holding off until executives know what the policies are going to be in 2013 and beyond. It would be insane to launch any huge initiatives, especially on the industrial end and, further, if Congress fails to act responsibly, there is agreement virtually across the board that the economy will slide back into recession. As noted by Lori Montgomery of the Washington Post, a National Association of Manufacturers report “predicts that the economic damage would deepen considerably if Congress fails to avert the cliff, destroying nearly 6 million jobs through 2014 and sending the unemployment rate soaring to near 12 percent.

“Across the nation, companies are bracing for the fallout by laying off workers, letting jobs go vacant and postponing major purchases.”

Couple the uncertainty in the U.S. with a Euro economy that is getting sicker by the day and it’s no wonder that data compiled by Bloomberg showed that “North American companies have announced plans to eliminate 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011.”

Further, Bloomberg’s study revealed, “Among western European companies, (owing to the recession in the EU), there have been 47 job-cut announcements so far this year involving at least 1,000 workers, compared with 32 in the same period of 2011.”

I detail some of the individual corporate carnage down below, but over the past two weeks we’ve heard the same story from the likes of Caterpillar, Whirlpool, 3M, IBM, Ford, Dow Chemical, DuPont, United Technologies, Xerox, Ericsson, and Colgate-Palmolive. All of these companies either reported revenues that were lighter than expected and/or guided lower for the coming quarter based on uncertainty over fiscal policy in Washington as well as a sick European economy where the typical U.S. multi-national generates about 25% of their sales.

In fact only two high-profile companies I saw were enthusiastic; Boeing because of stronger orders for its aircraft (though orders can be canceled) and Proctor & Gamble, but here revenues were light.

Meanwhile, the Federal Reserve held its last Open Market Committee meeting prior to the election and offered up more of the same.

“Growth in employment has been slow….Household spending has advanced a bit more quickly…Strains in global financial markets continue to pose significant downside risks…(And the Fed will maintain its highly accommodative monetary policy) for a considerable time after the economic recovery strengthens,” as in leave interest rates at zero “at least through mid-2015.”

Not only do savers continue to take it up the butt, but now banks are getting killed on their net interest margins, the spread between banks’ deposit and lending rates, due to Fed policy.

Economist Martin Feldstein had some of the following thoughts on the fiscal cliff in an op-ed for the Financial Times.

“The biggest piece of the ‘fiscal cliff’ is the automatic expiration of the tax rate cuts enacted when George W. Bush was president. They were scheduled to end in 2012 in order to limit the official projected revenue loss. Subsequent legislation provided additional tax cuts that will also end this year….

“Going over the fiscal cliff includes cuts in government spending – half in defense and half in non-defense ‘discretionary’ programs (i.e., all programs excluding Social Security and Medicare). This ‘sequester’ will automatically start with $109 billion of spending cuts in 2013….

“The critical issue that prevents (legislation resolving the fiscal cliff) is a conflict over tax rates between President Obama and Republicans in the Senate and House of Representatives….

“If Romney is elected and the Republicans win a majority in the Senate, the conflict over tax rates will not persist after the president’s inauguration in January. Even if President Obama were to block Republican-sponsored legislation to eliminate or postpone the fiscal cliff in the two months after the election when he is still president, the new Republican administration and Congress would rapidly reverse the automatic tax increases once Romney takes office. Doing so retroactively to January 1 would avoid most of the adverse short-run effect of going over the cliff. Postponing final legislation until mid-summer would give time to craft compromise reforms of taxes and entitlements that would have a positive effect on the economy.

“If Romney is elected but fails to carry the Senate, a stalemate could remain….

“If President Obama is reelected, he would regard that as a mandate to raise taxes on high income taxpayers. Since the Republicans will still control the House, he may not be able to enact such a tax bill before the end of the year. Some Democrats advocate that the President allow the current tax law to expire and then propose new legislation in January to cut taxes on everyone with income below $250,000, daring House Republicans to vote against a bill that lowers taxes on 97 percent of taxpayers while raising taxes on no one….

“But avoiding the adverse effects of the fiscal cliff under any of the scenarios would still not deal with America’s long run fiscal problems….Dealing with the fiscal cliff is just the first act of a play with many acts.”

Look, I said early this year that if Congress and whoever is president comes up with a solid compromise, the markets will be off to the races. Everyone is in agreement on this…corporate chieftains, market strategists…capital from around the world will come flooding into the U.S. if investors believe America has a legitimate long-term plan to address the deficit crisis, and it is a crisis, whether you feel it in your bones yet or not.

I just look at the lack of real leaders in the House and Senate, outside of Oklahoma Rep. Sen. Tom Coburn…and have trouble seeing the kind of deal emerging out of Washington that our country needs.

Meanwhile…you have the following…

Europe

The next big date for the professional can kickers in the eurozone and European Union is mid-December and another EU summit where a final agreement on a single supervisory mechanism for a new banking union is to be agreed upon (assuming a meeting on Nov. 22 and 23 is fruitful beforehand). But this is a huge task and the new SSM won’t be in place until mid-2013, at the earliest, plus the move will involve treaty changes, and tense votes in some parliaments it can be assumed, and there is total uncertainty just when the likes of Spain would be able to access the new permanent funding mechanism, or bailout fund, the European Stability Mechanism, for the purpose of recapitalizing banks.

So looking at Spain, where the unemployment rate is officially 25% per a release this week, Prime Minister Mariano Rajoy is being told by everyone on the continent to apply for a bailout but he’s saying, ‘Hey, we may not need one. After all, our funding costs have come down substantially from July 25, when the Spanish 10-year had a record yield of 7.75%, and is now around 5.60%. Gee, this is easy.’

But to beat a dead horse, Mr. Rajoy, your rates are down to where they are because the markets think you’re going to ask for a bailout which then entitles you to a lifetime of bond-buying by the European Central Bank! 

It’s beyond absurd. After regional elections last weekend, one in which Rajoy’s party picked up a seat or two, you now have two regions, Catalonia and the Basque area, calling for independence, this as Moody’s cut the credit rating on five of the seventeen regions further. [Every single one of them is broke, by the way.] 

The Bank of Spain reported that GDP was down 0.4% over Q2 (1.7% annualized), while the largest bank in the country, Banco Santander, which is in about as good a shape as any in this land of make believe, has now written off 14.3 billion euros in Spanish real estate and non-performing loans, while conceding lending in the country has shrunk 4.5% from June and deposits contracted another 2.6% so the bank ‘jog’ continues. One bad news item and it turns into a full bank ‘run.’

Which brings me to the state of manufacturing across the eurozone. The October reading on same, the PMI, fell to 45.3. [50 being the dividing line between growth and contraction.] A combined reading on services and manufacturing plunged to 45.8, far worse than expected and below September’s 46.1. Germany’s October PMI for manufacturing was 45.7 vs. 47.4 the prior month. This is the engine of growth in Europe? No wonder business confidence in Germany fell a sixth straight month in October to its lowest level in three years. As the Ifo survey President Hans-Werner Sinn said, “The clouds over the German economy are darkening.” The Bundesbank warned the economy could go negative in the fourth quarter

Business sentiment in France is also plummeting, for a variety of reasons not the least of which is President Hollande’s confiscatory tax policies with no commensurate giveback on the part of the public sector.

At least Britain’s GDP rose in the third quarter, 1%, after three consecutive negative quarters. Much of the gain, though, appears to be a result of a boost from the Olympics. The next two quarters are the telling ones. Can Britain be the beacon of hope, economically, I always thought it would be?

Finally, in Greece, you continue to see everyone outside the country appearing to suddenly discover the dangers in the far-right Golden Dawn party, the same dangers I’ve been noting in this space all year. But I do have to cite a passage from Anthony Faiola’s Washington Post piece:

“In a nation where memories of World War II-era atrocities remain fresh, polls have shown that most Greeks who support the Golden Dawn are doing so based solely on its anti-immigrant stance and that they largely dismiss the group’s more hard-core attributes. But its extracurricular activities are becoming more violent.

“ ‘They speak of ‘cleaning-up’ operations,’ said Vassiliki Georgiadou, an academic who has studied the movement. ‘They will try, violently if needed, to ‘clean up’ whole neighborhoods, towns, the country.’

“Greek Justice Minister Antonis Roupakiotis said he is concerned about the party’s alleged ties to the police and military. Accusations are rife that police may be working with the Golden Dawn on a new nationwide stop-and-search campaign targeting illegal immigrants. Activists also allege that segments of the police may be colluding with the party in anti-immigrant attacks, which the government estimates number at least two or three a week.”

Heck, I told you last week of the Golden Dawn MP who pulled a party member off a police bus after he had been arrested during a demonstration and the police just let the two walk away.

A New York Times piece the other day quoted a local columnist, Nikos Xydakis: “The neo-Nazis are widening their range of targets. First it was foreigners; now it’s women, homosexuals, artists, leftists, Greeks, anyone who is not deemed to be 100 percent Aryan, super-masculine, a total Greek.”

Finally, just a few notes on Asia. An HSBC flash report on China’s PMI for October came in at 49.1, up from 47.9 in September, a good sign that China’s economy may be bottoming. The last time the HSBC reading (the official government one comes out next week) was above 50 was 12 months ago.

In Japan, the government issued a dismal report on September exports, down 10.3% and down 14.1% to China over last year owing to the impact of the territorial dispute in the East China Sea. And to give you yet another sense of how sick Europe is, Japan’s exports to the region fell 21%. [They were up 0.9% to the U.S.]

Japan also has a looming budget crisis of potentially historic proportions. We’ll know more next week as an extraordinary 33-day session of parliament gathers to address the funding of the nation’s mammoth deficit, which requires legislation that is normally automatic but this time the opposition wants to force out Prime Minister Noda in exchange for any cooperation. Noda would lose, badly, in a general election, which is inevitable, but in this game of chicken, as a deputy director of the Ministry of Finance put it, failure to pass a bill (think deficit ceiling debate in the U.S.) could result in a “very disastrous situation.”

Finally, South Korea’s GDP rose just 1.6% in the third quarter, the slowest pace since 2009.

Street Bytes

--Stocks took it on the chin with the Dow Jones declining 236 points to 13107, 1.8%, with Tuesday’s 243-point drop accounting for all the carnage. The markets thus treaded water the other four days. The S&P 500 lost 1.5% and Nasdaq declined 0.6% to settle back below the 3000 level at 2987.

--U.S. Treasury Yields

6-mo. 0.15% 2-yr. 0.30% 10-yr. 1.75% 30-yr. 2.90%

Treasuries finished little changed on the week but a few times the 10-year got up to 1.85% only to back down again.

--ECB President Mario Draghi warned of deflation, telling lawmakers in Berlin that “in our assessment, the greater risk to price stability is currently falling prices in some euro-area countries.”

--Ireland has won over German Chancellor Angela Merkel and French President Francois Hollande on the issue of banking debt relief. Ireland recapitalized its banks on the backs of its taxpayers and now wants to refinance a portion of the debt through one of the bailout mechanisms being implemented. Ireland has been doing all the right things and its economy will grow this year, plus there are some signs its housing market is finally bottoming.

The cost of the banking crisis to Ireland was imposed on it by the Euro position that bondholders had to be made whole. Ireland now believes it is in a position to finance itself entirely in the bond markets from 2014 on, after it receives the last of its bailout funds in 2013.

In forcing Ireland to use public funds to recapitalize its banks following the Lehman Brothers collapse, all the debt was piled on its balance sheet, which led to the crippling austerity programs that were then imposed on the people.

Back to housing, the Irish property market saw its third month of rising prices in September, up 0.9% following increases in July and August, according to the Central Statistics Office.

However, the revival is due solely to increasing values in Dublin, up 2.4% in September, the biggest rise since August 2006. So if you take Dublin out, house prices throughout the rest of the country were down.

--New-home sales in the U.S. for the month of September came in at an annualized rate of 389,000, the best pace since April 2010.

--U.S. home values jumped 1.3% in the third quarter, the biggest gain since 2006, according to Zillow Inc. Home values rose 5.9% in Phoenix over the second quarter, spurred on by investor demand, while prices climbed 3.9% in Las Vegas. They fell 2.2% in Atlanta.

--Apple missed earnings estimates for the just-completed quarter (fiscal Q4), $8.67 per share vs. the $8.75-$8.85 projected by analysts, but another $8.2 billion in net income. Apple also guided lower for the current quarter to $11.75 on sales of $52 billion vs. analysts’ estimates of $15.50 on revenues of $55 billion.

Revenue in the completed quarter rose 27% to $36 billion as in recent months it has seemingly been rolling out one new product or upgrade after another, including on its iPod and Mac lines. Such introductions initially squeeze margins.

For the period, Apple sold 26.9 million iPhones, more than projected, and 14 million iPads, less than forecast.

As for the “new iPad,” the company said before the earnings release it had sold 100 million to date. Apple also sold 4.9 million Macs and 5.3 million iPods.

Earlier, Apple introduced the iPad Mini tablet, which has a 7.9 inch screen diagonally compared with 9.7 inches for the larger iPad. Apple is pricing the Mini at $329, with some analysts hoping for $299 instead. Amazon’s Kindle Fired HD and Google’s Nexus 7 basic models are at $199 and $249, respectively. The Mini also comes just 7 ½ months after the company rolled out “the new iPad.”

With all the new products, Apple expects them to make up more than three-quarters of sales in the October-December time period.

Oh, and Apple is now sitting on $121.2 billion in cash.

Apple shares hit an intraday, all-time high of $705 on Sept. 21. They finished a tumultuous week at $608.

--Microsoft formally unveiled Windows 8; a consumer platform more than a business one, it certainly seems. It’s way too early to see how readily it will be accepted, though initially businesses say there is no compelling reason to ‘upgrade’ from Windows 7 or Windows XP. Windows 8 is different, touch-optimized, a la new products from Apple and Google. The company is really hoping that corporate customers move from the decade-old Windows XP, whereas they know there are few reasons to move from Windows 7 to 8. Having just adopted Windows 7 myself after adding a new PC, I’d be content to use this the rest of my life. I don’t want to have to learn anything new. I hate change! [Typed the editor with a grin.]

As for the Surface tablet, which Microsoft also rolled out, I like what I see because of the keyboard and Windows Office software. Apple CEO Tim Cook, though, called Surface a “fairly compromised, confusing product.”

--Amazon revealed sales rose 27% to $13.8 billion, less than expected, while reporting a loss of $274 million, the first since 2003, as the company announced it is opening 19 fulfillment centers worldwide to offer speedier delivery, which contributed to a big increase in operating expenses.

Amazon is valued at 290 times earnings. No matter. The stock finished up $15 on Friday on the earnings news to $238. I will never, ever understand how the Street and investors are coming up with their valuations for the company, whereas on the other hand, Apple, you could easily say, is undervalued.

--Swiss banking giant UBS is in the midst of a program announced last year whereby it is cutting 3,500 jobs. But the Financial Times reported on Friday that UBS is going to unveil a new plan to eliminate a further 10,000 positions over the coming years…one-sixth of the bank’s total workforce.

--Ericsson, the world’s largest maker of mobile network equipment, saw sales decline 2% in the third quarter owing to cautious spending by telecom operators due to the financial turmoil in Europe in particular. Sales in Western and Central Europe fell 21%, but rose 16% in North America.

--Ford Motor Co. announced it will shut three European plants; two in Britain and one in Belgium that will result in 5,700 layoffs. Ford said its loss in Europe will now exceed $1.5 billion in 2012. Earlier it said it would be $1 billion.

--Caterpillar Inc., the world’s largest maker of construction and mining equipment, lowered its sales growth forecast for 2013 to up or down 5% when an increase of 5% was initially projected. Sales in the third quarter were up 4.6%, less than forecast as well with CEO Doug Oberhelman citing Europe and deceleration in key emerging markets such as China and Brazil.

--Dow Chemical Co. announced it was shutting 20 facilities and eliminating 2,400 jobs in Europe, the U.S. and Japan. CEO Andrew Liveris said: “The new reality is that we are operating in a slow-growth and volatile world.”

--United Technology CEO Louis Chenevert: “There is a lot of uncertainty at this point in time. Europe continues to be a real challenge and, if you look at America, while the recovery has begun, it is going to be a slow recovery.”

UTX cut its sales forecast for the year.

--Xerox reported a 12% decline in third-quarter profits and cut its outlook further. Revenues fell 3% over the same period last year. CEO Ursula Burns offered: “We began the year knowing we would face certain challenges, especially as the European economies came under significant pressure…However, we did not predict the incremental strains on the business from more worldwide, widespread economic uncertainty, especially in the U.S….During the third quarter we experienced a much more constrained spending environment in the U.S….due to budget constraints, less funding is available for major government projects.”

So…notice a pattern with some of the above?

--Facebook investors took heart over the third-quarter earnings report as the company generated $1.26 billion in revenue, better than expected, and earned a penny more than analysts’ forecast, 12 cents vs. 11. Importantly, Facebook announced it had earned 14% of its advertising revenue from its mobile business, $150 million.

CEO Mark Zuckerberg said, “I want to dispel this myth that Facebook can’t make money on mobile. This may have been true six months ago, because we hadn’t started trying yet.”

Revenue growth, at 32% for the quarter, was the same as Q2.

The shares finished the week at $22, up from the previous Friday’s close of $19, though the stock hit $24.25 after the earnings release. But a note of caution; almost 1 billion shares will be eligible for sale in the next few weeks as more employee lock ups expire.

--Zynga shares rallied a bit after the game-maker reported third-quarter revenue that was considerably better than expected, though the actual number was only 3% higher than 2011. In an example of how a company like this is only as good as its next product, a new Zynga game, the Ville, in which players create their dream homes, had 7.3 million daily users at the end of July but only 1.7 million today.

--In CEO Marissa Mayer’s first full quarter on the job, Yahoo’s revenues for the third quarter rose 2%. While the results may have seemed underwhelming, Mayer appears to be providing the company with some needed vision.

--The Energy Department forecasts that U.S. production of crude and other liquid hydrocarbons will average 11.4 million barrels per day next year, or just below the 11.6 million barrels produced by Saudi Arabia. This year production is rising 7% to 10.9 million.

--Oil giant BP agreed to sell its 50% stake in TNK-BP to Russia’s Rosneft, which gives Rosneft about half of Russia’s energy sector and makes it the world’s largest publicly-traded oil group. BP retains a 12.84% stake and will continue to explore the country’s vast energy resources, including in the Arctic, while Rosneft gets BP’s expertise in exploring in such conditions.

Initially, Russian President Vladimir Putin said Rosneft made a good deal at a fair price: “This is a good, large deal that is necessary, not only for the Russian energy sector but also the entire economy.” [BBC News]

Rosneft’s CEO is Igor Sechin, the man I’ve said could one day topple Putin, so it was interesting how just a few days after expressing his pleasure at the transaction, Putin suddenly reversed course, saying he had “mixed feelings” about it all.

--A recent survey by the Federal Reserve Bank of Chicago showed a 15% increase in farmland prices since last year across a region covering states such as Iowa and Illinois, while a survey released by the Federal Reserve Bank of Kansas City showed a 26% increase in farmland prices in Great Plains states since last year.

As reported by the New York Times’ Ron Nixon and John Eligon, the drought hasn’t hurt. An Iowa State University survey revealed that prices there have risen 32% since 2010.

So is it yet another bubble? In farmers’ favor is the fact they hold far much less debt than in previous frothy periods and low interest rates help.

--The Times of London interviewed Oracle President Mark Hurd who said the world is “drowning in data” and computing companies are running out of space to store it. As reported by Nic Fildes, “(The) amount of data being produced by the nine billion devices connected to the Internet has grown eightfold over the past seven years…

“(Oracle) predicts that the situation will get worse as the number of devices feeding information back to businesses – be it a smartphone or a sensor on an oil rig – will boom to 50 billion by 2020. This will drive a twentyfold increase in the amount of information being beamed back to servers.”

Enter cloud computing. May I recommend Workday.

--Nissan is recalling 13,900 new and near-new Altima sedans because some bolts may not be tight enough. This isn’t good, sports fans. If the nuts loosen and fall off, the vehicle could veer out of control.

--Shares in Monster Beverage Corp. plunged following reports that the deaths of five people in the past year may have been connected to caffeine toxicity and the consumption of Monster’s energy drinks. Senator Dick Durbin is asking the FDA to consider caffeine limits on energy drinks after emergency room visits involving such products jumped 10-fold from 2005 through 2009. Shares in Monster went on a rollercoaster ride, from $53.50 to $40 after the news hit, back up to $46.

--The U.S. Department of Justice sued Bank of America for more than $1 billion on Wednesday, alleging BofA committed civil fraud by selling defective home loans through its originator, Countrywide, which Bank of America acquired in 2008. Countrywide employed a process called the “Hustle” to deal with loans that avoided being scrutinized in terms of their quality. The toxic crapola was then packaged and pawned off on Fannie Mae and Freddie Mac.

--Rajat Gupta will have lots of free time to play Zynga games as he serves two years in prison, having been sentenced this week following his conviction on passing confidential information about Goldman Sachs’ 2008 earnings and a $5 billion infusion of cash from Warren Buffett that he learned of while serving on Goldman’s board; Gupta passing said info on to his friend, Raj Rajaratnam, hedge-fund king. Rajaratnam is serving an 11-year sentence for insider trading.

--David Lerner is a ubiquitous figure in the New York area (and I guess in Florida) for his radio and television ads touting his brokerage firm, David Lerner Associates. “Take a tip from Poppy,” he finishes each spot.

But he was just banned from the securities industry for a year after regulators said he regularly duped elderly investors by over-hyping real-estate investment trusts. In one seminar on Long Island last year, he described earlier REITs as “something where no one has ever lost money,” which the Financial Industry Regulatory Authority said was patently false. [Kaja Whitehouse / New York Post]

--Barnes & Noble, the country’s largest bookseller, reported a serious attack from data thieves who planted bugs in a single card reader in 63 stores around the country, thus capturing customers’ PIN numbers. This did not affect customers who handed their cards to the cashier for them to swipe. To check on which stores were impacted, go to BarnesandNoble.com, then Investor Relations, then Newsroom, and then look for a 10/24 press release. Granted, B&N has 7,000 stores but it’s better to be safe.

--Comcast’s NBCUniversal broke even on the Olympics when a loss of $200 million had been initially projected.

--A reminder on what I wrote in this space March 17 of this year regarding former Goldman Sachs investment banker Greg Smith, who was on “60 Minutes” last week as part of a book launch.

“Guess what we’ve learned by waiting [24 hours]? There is no story! Period….

“Look, I can’t stand Goldman. I have no friends there, nor am I looking for any….

“But while I printed out all the stories pertaining to Smith’s [New York Times] editorial in the 24 hours after the Times ran it, I am now depositing the pile in the trash. There’s nothing newsworthy there, including all the comments that Jamie Dimon and other Wall Street leaders stupidly put out. If they had waited 24 hours, too, they would have seen the light as I did.”

--From Bloomberg Businessweek, are you frustrated by the amount some hotels, especially high end ones, charge for Wi-Fi service? Some charge $15 per night extra, which is absurd. Of course it should be free.

Know what it costs the hotel? Between $2.50 and $3.50 per room, per month. 12 cents per day. 

--A record-setting 10.8 million passengers flew into and out of New York-area airports in the month of August, the latest available data shows, breaking the record from August 2007. JFK saw its most passengers ever for one month, nearly 5 million.

--TIME magazine had a story on the financial impact of the James Bond flicks. I bet you could win some coin on this one. What two pictures in the series lead in worldwide box office in 2012 dollars? And it’s not even close.

1965’s “Thunderball” is No. 1 and 1964’s “Goldfinger” is No. 2.

These also were two of the better reviewed Bond films. Daniel Craig’s first two films as Bond were in the middle of the pack. “Skyfall,” just hitting theaters, is getting solid reviews.

Foreign Affairs

Syria: The four-day truce for the Eid Islamic holiday lasted about 30 minutes. On Tuesday, a reported 100 were killed across the country, including an attack on a bakery in Aleppo, where at least 20 died. “One gruesome video showed a young girl, in a turquoise shirt, whose head had been blown off.” [Los Angeles Times]

But don’t worry. President Obama told us during the foreign policy debate his administration has been spearheading the international effort to oust Bashar Assad.

And hot off the presses from the Global Security Newswire, “The regime of Bashar Assad is attempting to gain access to large amounts of the precursor materials needed to manufacture sarin, a particularly lethal chemical weapon, Wired magazine reported, citing anonymous U.S. officials.”

Lebanon: Clashes following the funeral of senior intelligence official, Wissam al-Hassan, exploded across Beirut last weekend, while at least nine were killed in the northern city of Tripoli in ongoing sectarian strife there. After about 24 hours, the Lebanese military was able to restore some order on the streets of the former.

The government of Prime Minister Najib Mikati has been urged to step down, with former Prime Minister Fouad Siniora demanding Mikati’s immediate resignation. Former Prime Minister Saad Hariri said: “The martyrdom of Hassan will not pass easily. Our demand is to bring down the government not for the sake of power but for the sake of security…We want to bring down the government in a democratic and peaceful manner.” [Daily Star]

Editorial / Washington Post

“During a visit to Washington in late August, Gen. Wissam al-Hassan, the intelligence chief of Lebanon’s internal security forces, offered a grim assessment of the civil war raging in neighboring Syria and its likely impact on the region. Dictator Bashar al-Assad, he told us, still had a chance to outlast the rebellion against him, though ‘it will take a couple of years and more than 100,000 killed.’ For the Assad regime, he added, ‘one of the solutions of the Syrian conflict is to move it outside Syria. He survives by making it a regional conflict.’

“A little more than seven weeks later, Mr. Hassan was dead…In short, Mr. Assad is attempting to implement the very strategy that Mr. Hassan spoke of.”

The number of Syrian refugees in Lebanon is now over 100,000; another incredibly destabilizing element for the country. [Turkey and Jordan have even more refugees.]

Jordan: The government announced last weekend that it had broken up a plot by 11 locals with “clear ties to al-Qaeda” who sought to launch suicide attacks on shopping centers and diplomatic missions in Amman. Then on Monday, a Jordanian soldier was killed in clashes with eight armed militants illegally attempting to cross the border with Syria. Salafists have infiltrated Jordan in large numbers. One of their leaders, a cleric named al-Tahawi, announced that 250 Jordanian jihadists had joined the fight against Bashar Assad. [Jerusalem Post]

Ian Bremmer / Financial Times

“Al Qaeda chief Ayman al Zawahiri has publicly signaled that a presence in Syria is a jihadist priority. Extremists need not take power in Syria to pose a threat. They need merely find room to operate if and when the country becomes ungovernable.”

Iran: From the New York Times’ David E. Sanger and William J. Broad:

“Intelligence officials from several countries say Iran in recent weeks has virtually completed an underground nuclear enrichment plant, racing ahead despite international pressure and heavy economic sanctions in what experts say may be an effort to give it leverage in any negotiations with the United States and its allies.

“The installation of the last of nearly 3,000 centrifuges at a site called Fordo, deep under a mountain inside a military base near the holy city of Qum, puts Iran closer to being able to build a nuclear weapon, or come up to the edge, if its leaders ultimately decide to proceed.”

There is little doubt that immediately after the election, Iran is back on the radar in a big way after a lull the past few weeks. Earlier, the New York Times reported the U.S. and Iran have agreed to one-on-one talks on the nuclear program, which the White House and Iran denied. Israel’s ambassador to the U.S., Michael Oren, said: “We do not think Iran should be rewarded with direct talks, rather that sanctions and all other possible pressures on Iran must be increased.”

Separately, President Ahmadinejad is clashing with the influential Larijani brothers – there are five of them – one of whom heads up the judiciary, and the one who is perhaps most familiar, Ali Larijani, who is head of parliament and a contender to succeed Ahmadinejad as president next year. As I’ve written, you also have the Rafsanjani family beating on Ahmadinejad.

Israel: Tensions ratcheted up quickly between Israel and militants in the Gaza Strip, after 80 rockets and mortar shells were fired into southern Israel. Israel retaliated with air strikes. Much of the action is not from Hamas, but rather from even more radical groups Hamas has trouble controlling.

Meanwhile, Sudan accused Israel of launching an attack on a munitions factory, killing two. A spokesman for the Sudanese government in Khartoum said four planes bombed it. Israel was mum, but Israel has claimed in the past Palestinian militants were getting many of their weapons from Sudan. [Not to insult anyone’s intelligence, but Sudan borders Egypt so the weapons just zip right up to Gaza.]

Libya: In his most extensive comments to date on the 9/11 Benghazi attack, Defense Secretary Leon Panetta said U.S. forces were on heightened alert that day but that the attack happened too quickly for the U.S. to respond with any force because military leaders were receiving inadequate information.

“(The) basic principle is that you don’t deploy forces into harm’s way without knowing what’s going on,” Panetta told Pentagon reporters.

House Speaker John Boehner, in a letter to President Obama, questioned whether the White House considered military options during the attack or immediately after.

Emails obtained by Reuters show that officials at the White House and State Department were advised two hours after the assault on the U.S. consulate began, and that an Islamic militant group, Ansar al-Sharia, had claimed responsibility.

Of course this flies in the face of White House claims that the attacks were likely the result of a spontaneous protest against an anti-Muslim film.

While the emails don’t prove President Obama personally knew those first hours of the situation, those in a position to tell him did.

Editorial / New York Post

“And that means the White House claim that there was no information pointing to a well-planned terrorist raid was no misunderstanding, but an unadorned lie….

“The president’s credibility lies in shreds – and his administration has been exposed for its incompetence….

“Perhaps the attack that killed Ambassador Chris Stevens and three others was unavoidable. And yes, initial intelligence reports are often wrong.

“But for two weeks, the public statements by Obama and his subordinates did not reflect any of the supposed confusion. Indeed, the administration was definite: This was the work of a flash mob.”

Afghanistan: A suicide bomber opted not to celebrate Eid and instead blew himself up outside a mosque in the northern part of the country, killing at least 40. It was the deadliest single attack in recent months.

Elsewhere, two British and two U.S. soldiers were killed in apparent insider attacks.

And U.S. Gen. John Allen, the top commander of international forces in Afghanistan, said al-Qaeda was re-emerging. Its numbers are small, but Allen conceded al-Qaeda doesn’t need a large presence to be influential. I thought Obama told us al-Qaeda was a spent force.

China: In what could be a highly significant event, the New York Times’ David Barboza authored an extensive report on departing Premier Wen Jiabao and how his extended family is sitting on assets worth at least $2.7 billion, wealth achieved during his time in leadership.

“In many cases, the names of the relatives have been hidden behind layers of partnerships and investment vehicles involving friends, work colleagues and business partners. Untangling their financial holdings provides an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in China’s fast-growing economy.”

Of course such a report is deeply embarrassing to the Chinese regime, particularly as it undergoes its once a decade leadership change next month, and thus the government immediately blocked access to the English-language and Chinese-language Web sites of the Times.

Earlier this year, Bloomberg published a story detailing the financial holdings of the incoming president, Xi Jinping. Such disclosures one day could lead to mass unrest. In the case of Wen, he always sought to be portrayed as the leader with the common touch, unlike President Hu Jintao who is a rather cold sort. It was Wen who always rushed to the scene of China’s latest disaster.

Meanwhile, Bo Xilai has been expelled from the legislature, which takes away his immunity and subjects him to criminal court on charges of corruption and aiding the cover-up of his wife’s role in the murder of British businessman Neil Heywood. Bo still has lots of support, adding to the turmoil at the upcoming Communist Party Congress. Bo was previously expelled from the 25-member Politburo and the CP.

The South China Morning Post reports that “A crucial document setting the Communist Party’s direction for the next five years (would highlight) several guiding tenets of party doctrines by President Hu Jintao, Jiang Zemin and Deng Xiaoping,” but wouldn’t have any “Mao Zedong thought.”

Mao thought being associated with class struggle, commune living and continuous revolution. But it was also Bo Xilai who had a campaign to revive “red” songs and culture. This triggered fear among reform-minded leaders so with Bo gone, they’ll attempt to extinguish any thought of him.

On a different topic, Mitt Romney’s views on China…

Editorial / Wall Street Journal

“Mitt Romney professes to believe in free trade, except with China, where he reverts to mercantilism. During Monday’s debate, the former manager of multinational investments doubled down on his pledge to label China a ‘currency manipulator’ on day one of his Presidency. Like the dog that catches the bus, the puzzle is what he would do on day two….

“Some business leaders believe that a President-elect Romney would back down or negotiate a solution with Beijing before inauguration. They may be over-optimistic. Mr. Romney is pushing the anti-China rhetoric over the objections of many advisers, and he seems sincerely to believe that getting tough will yield concessions from Beijing.

“Our own view is that Mr. Romney is underestimating Beijing. Even if Chinese leaders agree with his assessment of their economic interests, for domestic political reasons they can’t afford to be pushed around by a hectoring U.S. President….

“Twenty years ago, China was a relatively small economy and its role in global affairs was limited. Today any new Administration faces the conundrum of how to get a free-riding Beijing to help resolve, or at least not exacerbate, a host of problems. Torpedoing the relationship because of an ill-advised campaign promise could have multiple unforeseen consequences….

“Mr. Romney wants to unleash the U.S. economy’s animal spirits with less government intervention. But by linking America’s troubles to trade deficits with China, and proposing a heavy-handed government solution, he’d unleash protectionist genies that could haunt his Presidency.”

Russia: Meeting with reporters, Putin was none too pleased at those questioning his treatment of the two members of Pussy Riot still imprisoned, who were disturbingly sent to labor camps in the Urals this week and away from family in Moscow.

“If you in your countries like to destroy the morals of your societies, you can do that, but it doesn’t have anything to do with Russia, because we highly cherish what we have.” [Financial Times]

In another disturbing development, a left-wing opposition activist, Leonid Razvozzhayev, vanished in Ukraine after applying for political asylum. Razvozzhayev was then found in Lefortovo, the former notorious KGB prison. Razvozzhayev has told visitors he was kidnapped in Kiev, apparently by Russian secret police and tortured into making his confession.

Ilya Ponomaryov, a left-wing Duma member, told the Times of London, “In the last few days, we have seen open terror against the opposition. First Konstantin Lebedev was arrested. Then Sergei Udaltsov found himself barred from leaving the country. But this business with my assistant Leonid Razvozzhayev goes beyond all bounds of the reasonable and imaginable.”

Ukraine: Speaking of this place, big parliamentary election here on Sunday, a referendum on the presidency of Viktor Yanukovich. Yanukovich and his cronies have full control, it would seem, but WBC heavyweight boxing champion Vitali Klitschko is the leader of a new party, Udar, that seeks to shake things up in a big way. Kind of exciting. Klitschko says all the right things and wrote in an op-ed for the Financial Times that he seeks “to build a national party committed to European democratic values, basic economic freedoms and an anti-corruption platform.”

We wish him and Udar luck.

Italy: Early in the week, former Prime Minister Silvio Berlusconi said he wouldn’t run for prime minister in elections next year. He’s 76, after all. Instead, he said he would focus on reinvigorating his party, People of Liberty.

But on Friday he was sentenced to four years in prison for tax fraud. Ciao, Silvio.

[Actually, it’s unlikely he’ll serve a day.]

Britain: What a horrific story is unfolding in Britain, as the late Jimmy Savile, a fixture for 50 years at the BBC, is now being described by the Scotland Yard officer heading an investigation as “undoubtedly” one of the most prolific sex offenders in recent British history. Others may have been involved and the BBC not only has a lot of explaining to do, but some high-ranking figures at the station had to be involved in an extensive cover-up. Evidently prominent doctors also may have been at the heart of a network of child abusers connected to Savile. 300 victims have come forward claiming criminal behavior ranging from “inappropriate touching” to rape.

The BBC reported that Savile was investigated but never prosecuted for sexual abuse at least half a dozen times during his television career.

Japan: This is disturbing. Fish caught off the coast of northern Japan, near the Fukushima power plant, scene of the radiation leak following the earthquake and tsunami, are still as contaminated today as a year ago, according to a study. Said a senior scientist at Woods Hole Oceanographic Institution in Massachusetts, “This means that even if these sources were to be shut off completely, the sediments would remain contaminated for decades to come.” [Bloomberg]

Random Musings

--As of Thursday, CNN had Barack Obama leading in states with 237 electoral votes, while Mitt Romney leads in those that give him 206 votes…270 needed for election.

--An AP-GfK poll had Romney leading Obama, nationwide, 47-45. But among women, Romney is now tied, 47-47, after trailing by 16 points a month ago. On the issue of who women favor in terms of ability to handle the economy, it’s 49-45 Romney after he trailed that one by 16 as well.

--The latest Gallup Poll has Mitt Romney leading Barack Obama 50-47.

--2008 exit polls showed President Obama lost white voters by 12 percentage points, but now, according to the latest Washington Post/ABC News national tracking poll, Obama trails by 23 points, 60-37. Overall, Romney leads in this survey 50-47, Obama’s lowest tally since the party convention.

In 2008, Obama won non-whites with 80%, including 95% of black voters. According to the Post/ABC poll, he is still garnering 80%. 91% of Romney’s support comes from white voters.

--From a different ABC News/Washington Post survey, among females it’s Obama 56-42 (obviously different from the above AP-GfK findings). Among men it’s Romney 54-42.

Among blacks it’s Obama 94-2. Among whites, Romney has a 56-41 edge.

--According to new Wall Street Journal/NBC News/Marist Poll surveys, President Obama leads in Nevada among likely voters, 50-47, while in Colorado it’s tied at 48.

--A WBUR poll of Massachusetts voters has Obama leading Romney 56-36, which hurts the chances of Republican Senate incumbent Scott Brown in his reelection bid against Democratic challenger Elizabeth Warren, with WBUR having Warren up six points.

--A Quinnipiac poll of Connecticut voters has Republican Senate candidate Linda McMahon trialing Democratic Rep. Chris Murphy by six points, another key race if Republicans hope to take the Senate.

--As reported by USA TODAY and the Cincinnati Enquirer’s Barry Horstman, “A new Ohio program intended to make voting easier has the potential to keep the presidential election in doubt until late November if the national outcome hinges on the state’s 18 electoral votes.

“Under Secretary of State Jon Husted’s initiative to send absentee ballot applications to nearly 7 million registered voters across Ohio, more than 800,000 people so far have asked for but not yet completed an absentee ballot for the Nov. 6 election.

“Anyone who does not return an absentee ballot, deciding instead to vote at the polls, will be required to cast a provisional ballot. That’s so officials may verify that they did not vote absentee and also show up at the polls.”

What a freakin’ nightmare! The law says provisional ballots can’t be counted until at least Nov. 17. As Ed Foley, an Ohio State University professor and election law expert said, “We could easily see a situation in which the nation has to wait for Ohio because of provisionals.”

I’m moving to Yap.   

--The House of Representatives is currently 240 Republican, 190 Democrat, 5 vacancies, so Dems need a minimum 25-seat gain,

 but as noted in a USA TODAY piece by Susan Davis, The Cook Political Report projects a zero- to 10-seat range for Democratic gains. The Rothenberg Political Report projects a four- to 10-seat gain, and the University of Virginia’s Larry Sabato projects a seven-seat Democratic gain.

--Colin Powell endorsed Obama, as he did in 2008. I like Powell. There was a time when I would have voted for him for president. But it’s time for him to stop saying he’s a Republican.

--Editorial / Washington Post

“Much of the 2012 presidential campaign has dwelt on the past, but the key questions are who could better lead the country during the next four years – and, most urgently, who is likelier to put the government on a more sound financial footing.

“That second question will come rushing at the winner as soon as the votes are tallied. Absent any action, a series of tax hikes and spending cuts will take effect Jan. 1 that might well knock the country back into recession. This will be a moment of peril but also of opportunity. How the president-elect navigates it will go a long way toward determining the success of his presidency and the health of the nation.

“President Barack Obama is better positioned to be that navigator than is his Republican challenger.”

--Peggy Noonan / Wall Street Journal

“[Regarding Bob Woodward’s book ‘The Price of Politics,’ published last month.] The portrait it contains of Mr. Obama – of a president who is at once over his head, out of his depth and wholly unaware of the fact – hasn’t received the attention it deserves. Throughout the book, which is a journalistic history of the president’s key economic negotiations with Capitol Hill, Mr. Obama is portrayed as having the appearance and presentation of an academic or intellectual while being strangely clueless in his reading of political situations and dynamics. He is bad at negotiating – in fact doesn’t know how. His confidence is consistently greater than his acumen, his arrogance greater than his grasp.

“He misread his Republican opponents from day one. If he had been large-spirited and conciliatory he would have effectively undercut them, and kept them from uniting. (If he’d been large-spirited with Mr. Romney, he would have undercut him, too.) Instead he was toughly partisan, he shut them out, and positions hardened. In time Republicans came to think he doesn’t really listen, doesn’t really hear. So did some Democrats. Business leaders and mighty CEOs felt patronized: After inviting them to meet with him, the president read from a teleprompter and included the press. They felt like ‘window dressing.’ One spoke of Obama’s surface polish and essential remoteness. In negotiation he did not cajole, seduce, muscle or win sympathy. He instructed. He claimed deep understanding of his adversaries and their motives but was often incorrect. He told staffers that John Boehner, one of 11 children of a small-town bar owner, was a ‘country club Republican.’ He was often patronizing, which in the old and accomplished is irritating but in the young and inexperienced is infuriating. ‘Boehner said he hated going down to the White House to listen to what amounted to presidential lectures,’ Mr. Woodward writes.

“Mr. Obama’s was a White House that had – and showed – no respect for trying to negotiate with other Republicans. Through it all he was confident – ‘Eric, don’t call my bluff’ – because he believed, as did his staff, that his talents would save the day.

“They saved nothing. Washington became immobilized.

“Mr. Woodward’s portrait of the president is not precisely new – it has been drawn in other ways in other accounts, and has been a staple of D.C. gossip for three years now – but it is vivid and believable. And there’s probably a direct line between that portrait and the Obama seen in the first debate. Maybe that’s what made it so indelible, and such an arc-changer.

“People saw for the first time an Obama they may have heard about on radio or in a newspaper but had never seen.

“They didn’t see some odd version of the president. They saw the president.

“And they didn’t like what they saw, and that would linger.”

--Editorial / New York Post

“Four frustratingly long years ago, a war-weary and economically battered America took a flier on a savior.

“It didn’t work out.

“Now, in 12 days, the nation will return to the polls – to reject, or to ratify, the results of the great Barack Obama experiment.

“That is, to reject or to ratify the notion that hoping for change is a sound footing for productive national policy.

“But, by the evidence, it is not. It cannot create jobs. It cannot reduce deficits. It cannot restore foreign confidence in America – or Americans’ confidence in their own great nation.

“America needs more than hope. It needs leadership. That is why The Post today endorses the candidacy of Mitt Romney for president of the United States….

“Obama says he inherited the mess, but he’s done nothing to fix it. Borrow, spend, regulate and redistribute is not a prescription for sustainable growth, yet that has been the totality of his program.

“He says things will get better – soon. But there’s no evidence for that.
“Obamanomics has produced:

“A sky-high national debt, now at a stupefying $16 trillion and growing.

“Intractable unemployment and a workforce hemorrhaging discouraged workers.

“No perceptible economic growth.

“Historic expansion in welfare programs – especially food stamps….

“Four years ago, Obama vowed ‘to restore America’s standing in the world.’ But he has sown rancor and confusion instead.

“Our friends don’t know if they’re still our friends; our enemies wonder whether we have the courage to stand up to them.

“The result has been a cataclysmic breakdown of U.S. leadership in the Middle East.”

--Editorial / USA TODAY

“Between his governorship of Massachusetts (2003-07) and his successful run for the Republican presidential nomination this year, Romney shifted sharply to the right on an array of issues, including abortion, gun control, climate change, immigration and health care. Had he done otherwise, his chances of winning over skeptical conservatives who control the party were zero.

“More recently, in the closing weeks of the campaign, Romney has veered back toward the center. He has begun emphasizing that his tax cuts wouldn’t produce a windfall for the wealthy. He has tempered his harsh criticism of the auto bailout. And, most strikingly, in Monday’s debate he toned down his bellicose foreign-policy rhetoric, frequently invoking the word ‘peace’ and embracing several of Barack Obama’s policies. On Afghanistan, for instance, he said that he would support a fixed timetable for withdrawing U.S. troops, an idea he previously derided.

“To some degree, this is par for the course in American politics, where candidates tack to their party’s ideological edge to get the nomination, then shift toward the center in a bid for independent votes. Nor is the nation well-served by politicians who never change their minds, even in the face of new facts.

“But Romney has moved back and forth more abruptly, and on more issues, than most candidates, leaving voters to sort conviction from opportunism. Would President Romney govern as moderate Mitt from Massachusetts? Or the self-described ‘severely conservative’ Mitt from the Republican primaries?

“Odd as it might seem, the answer is: probably both.”

--Re: the third and last presidential debate…

Editorial / Wall Street Journal

“If Mr. Obama wanted to make the Republican look ‘wrong and reckless,’ as he said, he surely failed. The former Massachusetts Governor was so intent on appearing to be cool and steady that he avoided offering any major policy differences on Syria, Iran or Afghanistan. Most remarkably, he even refused to challenge the Administration’s handling of the deadly assault on Americans in Benghazi.”

I couldn’t believe Romney didn’t bring up the issue of Malala, the Pakistani girl who is recovering from the Taliban’s assassination attempt. It was a layup in terms of the female vote. [Can’t believe Obama didn’t bring it up, either.]

America must be the moral beacon for the world…period.

I also thought Monday’s foreign policy debate was incredibly stupid. The American people learned absolutely nothing. I wrote last time:

“I frankly think Monday is going to be a mess…for both gentlemen…verging on embarrassment for America.”

To the educated it was indeed an embarrassment.

Nonetheless, for the record, in two flash polls CNN/ORC had Obama winning the debate 48-40, while CBS News had it 53-23 Obama. 

But I have to note the thoughts of Mortimer Zuckerman, editor of U.S. News Weekly, among other things.

“Mitt Romney took a low-key approach during this week’s debate on foreign policy. It baffled that he didn’t continue to press on the hot button issue of the murder of our ambassador in Libya. The ambassador had asked for extra security and didn’t get it, so he and three other Americans died in a well-planned terrorist assault, not by the random violence of a mob supposedly offended by a stupid video

“:President Obama was judged to have won the debate. But grave consequences for the long term have been seeded by the administration’s Middle East policies, especially our relationships with Egypt and Iraq.”

The United States abandoned a long-time ally in President Mubarak in despicable fashion, employing former ambassador to Egypt, Frank Wisner, to work out a deal with Mubarak whereby he would agree not to run for office in September so as to facilitate a transition to a new regime, but then after Wisner successfully accomplished his mission, Obama publicly called on Mubarak to resign, and to resign “now.”

Zuckerman:

“Wisner left Egypt in dismay. His own president had cut the ground out from under him, and we lost a settlement that would have been far more constructive for American interests than what was to transpire.

“The ambassador was not alone in his bewilderment. The Arab world shared it. In an encounter I had with a leading Saudi in Europe at the time, he expressed his shock: ‘Mubarak was your longest and most loyal ally in the Middle East. He worked with you on every counterterrorism measure over the last 30 years; he kept the Suez Canal open; he supported the Israeli-Palestinian peace process and the Camp David peace agreement arranged by his predecessor, Anwar Sadat; and he continued to support efforts to bring about an Israeli-Palestinian compromise, and to that end he even helped blockade Hamas in Gaza. Yet in the first week that Mubarak was in trouble, you backstab him.’ What all the regional leaders in the Middle East now believe, he says, is that ‘the minute I get into trouble the same will happen to me.’

“That word – backstab – has haunted me ever since. The Saudi was saying we’d breached the code of international relations long adhered to in maintaining peace in the volatile Middle East. That code is simple: You support your friends, especially long-term allies such as Mubarak, and you don’t abandon them when they are in trouble, and especially through the public words of a press secretary. The code seems to have been completely beyond the understanding of the Obama administration, and there will be consequences. The Saudi official closed his comments as follows: ‘Do you think we are ever going to rely on the United States again?’”

As for Iraq, Zuckerman concludes:

“The negative results of our sacrifices for Iraq follow the administration’s failure to negotiate a long-term military relationship. Iranian influence is growing within Iraq and threatening American interests even more, and al Qaeda has now established a foothold in Iraq. In fact, if Iraq is bound to Tehran, it is now almost impossible to restrain Iran.

“In effect, we have not only lost the support of Egypt and Iraq, but we have also lost credibility throughout the Middle East, dramatically diminishing our position as the great Western power in the region. This strategic decline has received too little attention in America and has been wholly absent from the presidential debate.”

I repeat…what an embarrassment.

--From a Washington Post story:…regarding the attempt on the part of Republicans to take the Senate:

“ ‘A terrible thing might happen if Republicans gain the majority: We might have a budget even! We might even have to debate a budget,’ said Sen. John McCain, voicing a common GOP complaint that Democratic leaders in the Senate have not passed a budget in three years.”

--Of course Republicans don’t have an easy go of it in terms of regaining the Senate, especially with Richard Mourdock, the Indiana Republican candidate, saying the following during a debate on Tuesday, when asked whether he believed abortion should be allowed in cases of rape or incest.

“I struggled with it myself for a long time, but I came to realize that life is that gift from God. And, I think, even when life begins in that horrible situation of rape, that it is something God intended to happen.”

Mourdock, in his apology later, then stupidly said others were trying to “twist” his comments. 

Earth to my fellow Republicans who are looking to replace establishment Republicans with the likes of Mourdock and Akin….and in 2010, O’Donnell and Angle. Wise up.

--From Newsweek, Neera Tanden, former Obama aide, explaining why the president didn’t call Bill Clinton.

“It’s stunning that he’s in politics, because he really doesn’t like people.”

Sound familiar? It should. I’ve been writing this for years.

--In a case that has shook up a lot of scientists, an Italian regional court sentenced six Italian scientists and an ex-government official to six years in prison over the 2009 deadly earthquake in L’Aquila, which devastated the city and killed 309 people. Prosecutors said the defendants gave a falsely reassuring statement before the quake, while the defense maintained there was no way to predict major quakes. [BBC News]

--From Marilyn Marchione / AP:

“Aspirin, one of the world’s oldest and cheapest drugs, has shown remarkable promise in treating colon cancer in people with mutations in a gene that’s thought to play a role in the disease.

“Among patients with mutations, those who regularly took aspirin lived longer than those who didn’t, a major study found. Five years after their cancers were diagnosed, 97% of the aspirin users were still alive versus 74% of those not taking the drug.

“Aspirin seemed to make no difference in patients who did not have the mutations.”

The study didn’t start out attempting to prove aspirin helped; “people were taking it on their own for various reasons.”

“Still, the results suggest that this simple medicine might be the cheapest gene-targeting therapy ever found for cancer.”

--Can’t help but note the performance of San Francisco’s Pablo Sandoval in the first game of the World Series, three home runs, thus joining Babe Ruth, Reggie Jackson and Albert Pujols as the only players to hit three in a Series game.

--We note the passing of former U.S. Senator and 1972 Democratic presidential candidate George McGovern. He was 90. During World War II, McGovern flew 35 missions over Europe as a B-24 bomber pilot, receiving a Distinguished Flying Cross and several Air Medals.

Just a month ago, McGovern discussed his 1972 defeat with the Washington Post: “I wanted to win for our party, our young soldiers and the men and women of goodwill disaffected by Watergate and turned off by the power of big money in politics.”

But “at the wise old age of 90, I can say that losing the presidency was one chapter in a long, complex and richly happy life in which I learned that you can’t always control all the outcomes.”

McGovern did a ton in his lifetime to help alleviate world hunger, going back to 1961 when he was named first director of the United States’ Food for Peace Plan.

--A few of you noticed that I started my Nightly Review videos this week, Mondays thru Thursdays for now because I have to spend all day Friday writing this piece. It was a stressful time for my tech assistant, Roj, and I. We had issues with the first two but figured out the problem and the last two were posted in full, while I was able to go back and correct the initial ones. [So for those who saw only the first few minutes of Monday’s and Tuesday’s, full versions are now available.]

There are different reasons for launching this project for which I have zero time that I won’t get into. I expect the second month to be better than the first, and the third month better than the second. On some occasions I’m going to have to ‘mail it in,’ which I never like to do, and that will be because of a lack of time for preparation due to other responsibilities.

I also have some technical issues to iron out, such as the sound quality, which I am well aware of but probably won’t get around to for a month or so. 

I’m also not officially launching this venture with press releases and such until around year end. Traffic is the last thing I care about today. It’s trying to come up with a quality product, first and foremost. The traffic will follow later.

--And finally, with the big storm seemingly headed for my home area, we could easily lose power for a week or so, as was the case with last Halloween’s freak snowstorm.   It might be forced time off. I’ll be scrambling over the weekend to post a lot of new columns before the lights go out.

---

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

God bless America.
---

Gold closed at $1711
Oil, $86.24

Returns for the week 10/22-10/26

Dow Jones -1.8% [13107]
S&P 500 -1.5% [1411]
S&P MidCap -1.3%
Russell 2000 -0.9%
Nasdaq -0.6% [2987]

Returns for the period 1/1/12-10/26/12

Dow Jones +7.3%
S&P 500 +12.3%
S&P MidCap +10.9%
Russell 2000 +9.8%
Nasdaq +14.7%

Bulls 41.5
Bears 27.7 [Source: Investors Intelligence]

Next week is Halloween. Remember, kids will throw eggs at your house if you don’t drop a StocksandNews iPad app in their bag.

Have a great week. I appreciate your support.

Brian Trumbore



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Week in Review

10/27/2012

For the week 10/22-10/26

[Posted 12:00 AM ET]

Washington and Wall Street

It was a miserable week in the markets with little good news as another torrent of earnings reports for the third quarter revealed that when it comes to large multinationals, revenues are falling short thanks to problems in Europe, and in some cases Asia and Latin America (read Brazil), while business investment has stalled owing to the uncertainty being generated by Washington’s “fiscal cliff,” the combination of automatic spending cuts and tax hikes slated to hit the economy on Dec. 31 unless Congress gets its act together following the election. Many are just assuming the new occupant of the White House, or the current one, will reach an easy compromise with a deeply fractured Congress, that could easily remain so following Nov. 6, or successfully kick the can down the road until, say, June, and everything will be hunky-dory. I wish it were that easy. The markets will clearly see through any sham proposal that doesn’t deal authentically with the deficits and entitlement spending, but maybe a 1,500-point downdraft in the Dow Jones will finally wake our slumbering leaders up.

Here are some facts. Business spending has stalled out, whether it’s a Commerce Department report released Thursday that showed orders for capital goods were unchanged in September (ex- volatile defense and aircraft orders), or Friday’s initial estimate of third quarter GDP, which came in at 2.0% (after the first two quarters of the year were 2.0% and 1.3%) but the increase was largely due to respectable consumer spending. Business investment in the quarter was flat. [The 2.0% figure was also influenced to the upside by a surge in defense spending, which was a quirk that occurs from time to time and is reflective of nothing.]

Corporations are doing the right thing, holding off until executives know what the policies are going to be in 2013 and beyond. It would be insane to launch any huge initiatives, especially on the industrial end and, further, if Congress fails to act responsibly, there is agreement virtually across the board that the economy will slide back into recession. As noted by Lori Montgomery of the Washington Post, a National Association of Manufacturers report “predicts that the economic damage would deepen considerably if Congress fails to avert the cliff, destroying nearly 6 million jobs through 2014 and sending the unemployment rate soaring to near 12 percent.

“Across the nation, companies are bracing for the fallout by laying off workers, letting jobs go vacant and postponing major purchases.”

Couple the uncertainty in the U.S. with a Euro economy that is getting sicker by the day and it’s no wonder that data compiled by Bloomberg showed that “North American companies have announced plans to eliminate 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011.”

Further, Bloomberg’s study revealed, “Among western European companies, (owing to the recession in the EU), there have been 47 job-cut announcements so far this year involving at least 1,000 workers, compared with 32 in the same period of 2011.”

I detail some of the individual corporate carnage down below, but over the past two weeks we’ve heard the same story from the likes of Caterpillar, Whirlpool, 3M, IBM, Ford, Dow Chemical, DuPont, United Technologies, Xerox, Ericsson, and Colgate-Palmolive. All of these companies either reported revenues that were lighter than expected and/or guided lower for the coming quarter based on uncertainty over fiscal policy in Washington as well as a sick European economy where the typical U.S. multi-national generates about 25% of their sales.

In fact only two high-profile companies I saw were enthusiastic; Boeing because of stronger orders for its aircraft (though orders can be canceled) and Proctor & Gamble, but here revenues were light.

Meanwhile, the Federal Reserve held its last Open Market Committee meeting prior to the election and offered up more of the same.

“Growth in employment has been slow….Household spending has advanced a bit more quickly…Strains in global financial markets continue to pose significant downside risks…(And the Fed will maintain its highly accommodative monetary policy) for a considerable time after the economic recovery strengthens,” as in leave interest rates at zero “at least through mid-2015.”

Not only do savers continue to take it up the butt, but now banks are getting killed on their net interest margins, the spread between banks’ deposit and lending rates, due to Fed policy.

Economist Martin Feldstein had some of the following thoughts on the fiscal cliff in an op-ed for the Financial Times.

“The biggest piece of the ‘fiscal cliff’ is the automatic expiration of the tax rate cuts enacted when George W. Bush was president. They were scheduled to end in 2012 in order to limit the official projected revenue loss. Subsequent legislation provided additional tax cuts that will also end this year….

“Going over the fiscal cliff includes cuts in government spending – half in defense and half in non-defense ‘discretionary’ programs (i.e., all programs excluding Social Security and Medicare). This ‘sequester’ will automatically start with $109 billion of spending cuts in 2013….

“The critical issue that prevents (legislation resolving the fiscal cliff) is a conflict over tax rates between President Obama and Republicans in the Senate and House of Representatives….

“If Romney is elected and the Republicans win a majority in the Senate, the conflict over tax rates will not persist after the president’s inauguration in January. Even if President Obama were to block Republican-sponsored legislation to eliminate or postpone the fiscal cliff in the two months after the election when he is still president, the new Republican administration and Congress would rapidly reverse the automatic tax increases once Romney takes office. Doing so retroactively to January 1 would avoid most of the adverse short-run effect of going over the cliff. Postponing final legislation until mid-summer would give time to craft compromise reforms of taxes and entitlements that would have a positive effect on the economy.

“If Romney is elected but fails to carry the Senate, a stalemate could remain….

“If President Obama is reelected, he would regard that as a mandate to raise taxes on high income taxpayers. Since the Republicans will still control the House, he may not be able to enact such a tax bill before the end of the year. Some Democrats advocate that the President allow the current tax law to expire and then propose new legislation in January to cut taxes on everyone with income below $250,000, daring House Republicans to vote against a bill that lowers taxes on 97 percent of taxpayers while raising taxes on no one….

“But avoiding the adverse effects of the fiscal cliff under any of the scenarios would still not deal with America’s long run fiscal problems….Dealing with the fiscal cliff is just the first act of a play with many acts.”

Look, I said early this year that if Congress and whoever is president comes up with a solid compromise, the markets will be off to the races. Everyone is in agreement on this…corporate chieftains, market strategists…capital from around the world will come flooding into the U.S. if investors believe America has a legitimate long-term plan to address the deficit crisis, and it is a crisis, whether you feel it in your bones yet or not.

I just look at the lack of real leaders in the House and Senate, outside of Oklahoma Rep. Sen. Tom Coburn…and have trouble seeing the kind of deal emerging out of Washington that our country needs.

Meanwhile…you have the following…

Europe

The next big date for the professional can kickers in the eurozone and European Union is mid-December and another EU summit where a final agreement on a single supervisory mechanism for a new banking union is to be agreed upon (assuming a meeting on Nov. 22 and 23 is fruitful beforehand). But this is a huge task and the new SSM won’t be in place until mid-2013, at the earliest, plus the move will involve treaty changes, and tense votes in some parliaments it can be assumed, and there is total uncertainty just when the likes of Spain would be able to access the new permanent funding mechanism, or bailout fund, the European Stability Mechanism, for the purpose of recapitalizing banks.

So looking at Spain, where the unemployment rate is officially 25% per a release this week, Prime Minister Mariano Rajoy is being told by everyone on the continent to apply for a bailout but he’s saying, ‘Hey, we may not need one. After all, our funding costs have come down substantially from July 25, when the Spanish 10-year had a record yield of 7.75%, and is now around 5.60%. Gee, this is easy.’

But to beat a dead horse, Mr. Rajoy, your rates are down to where they are because the markets think you’re going to ask for a bailout which then entitles you to a lifetime of bond-buying by the European Central Bank! 

It’s beyond absurd. After regional elections last weekend, one in which Rajoy’s party picked up a seat or two, you now have two regions, Catalonia and the Basque area, calling for independence, this as Moody’s cut the credit rating on five of the seventeen regions further. [Every single one of them is broke, by the way.] 

The Bank of Spain reported that GDP was down 0.4% over Q2 (1.7% annualized), while the largest bank in the country, Banco Santander, which is in about as good a shape as any in this land of make believe, has now written off 14.3 billion euros in Spanish real estate and non-performing loans, while conceding lending in the country has shrunk 4.5% from June and deposits contracted another 2.6% so the bank ‘jog’ continues. One bad news item and it turns into a full bank ‘run.’

Which brings me to the state of manufacturing across the eurozone. The October reading on same, the PMI, fell to 45.3. [50 being the dividing line between growth and contraction.] A combined reading on services and manufacturing plunged to 45.8, far worse than expected and below September’s 46.1. Germany’s October PMI for manufacturing was 45.7 vs. 47.4 the prior month. This is the engine of growth in Europe? No wonder business confidence in Germany fell a sixth straight month in October to its lowest level in three years. As the Ifo survey President Hans-Werner Sinn said, “The clouds over the German economy are darkening.” The Bundesbank warned the economy could go negative in the fourth quarter

Business sentiment in France is also plummeting, for a variety of reasons not the least of which is President Hollande’s confiscatory tax policies with no commensurate giveback on the part of the public sector.

At least Britain’s GDP rose in the third quarter, 1%, after three consecutive negative quarters. Much of the gain, though, appears to be a result of a boost from the Olympics. The next two quarters are the telling ones. Can Britain be the beacon of hope, economically, I always thought it would be?

Finally, in Greece, you continue to see everyone outside the country appearing to suddenly discover the dangers in the far-right Golden Dawn party, the same dangers I’ve been noting in this space all year. But I do have to cite a passage from Anthony Faiola’s Washington Post piece:

“In a nation where memories of World War II-era atrocities remain fresh, polls have shown that most Greeks who support the Golden Dawn are doing so based solely on its anti-immigrant stance and that they largely dismiss the group’s more hard-core attributes. But its extracurricular activities are becoming more violent.

“ ‘They speak of ‘cleaning-up’ operations,’ said Vassiliki Georgiadou, an academic who has studied the movement. ‘They will try, violently if needed, to ‘clean up’ whole neighborhoods, towns, the country.’

“Greek Justice Minister Antonis Roupakiotis said he is concerned about the party’s alleged ties to the police and military. Accusations are rife that police may be working with the Golden Dawn on a new nationwide stop-and-search campaign targeting illegal immigrants. Activists also allege that segments of the police may be colluding with the party in anti-immigrant attacks, which the government estimates number at least two or three a week.”

Heck, I told you last week of the Golden Dawn MP who pulled a party member off a police bus after he had been arrested during a demonstration and the police just let the two walk away.

A New York Times piece the other day quoted a local columnist, Nikos Xydakis: “The neo-Nazis are widening their range of targets. First it was foreigners; now it’s women, homosexuals, artists, leftists, Greeks, anyone who is not deemed to be 100 percent Aryan, super-masculine, a total Greek.”

Finally, just a few notes on Asia. An HSBC flash report on China’s PMI for October came in at 49.1, up from 47.9 in September, a good sign that China’s economy may be bottoming. The last time the HSBC reading (the official government one comes out next week) was above 50 was 12 months ago.

In Japan, the government issued a dismal report on September exports, down 10.3% and down 14.1% to China over last year owing to the impact of the territorial dispute in the East China Sea. And to give you yet another sense of how sick Europe is, Japan’s exports to the region fell 21%. [They were up 0.9% to the U.S.]

Japan also has a looming budget crisis of potentially historic proportions. We’ll know more next week as an extraordinary 33-day session of parliament gathers to address the funding of the nation’s mammoth deficit, which requires legislation that is normally automatic but this time the opposition wants to force out Prime Minister Noda in exchange for any cooperation. Noda would lose, badly, in a general election, which is inevitable, but in this game of chicken, as a deputy director of the Ministry of Finance put it, failure to pass a bill (think deficit ceiling debate in the U.S.) could result in a “very disastrous situation.”

Finally, South Korea’s GDP rose just 1.6% in the third quarter, the slowest pace since 2009.

Street Bytes

--Stocks took it on the chin with the Dow Jones declining 236 points to 13107, 1.8%, with Tuesday’s 243-point drop accounting for all the carnage. The markets thus treaded water the other four days. The S&P 500 lost 1.5% and Nasdaq declined 0.6% to settle back below the 3000 level at 2987.

--U.S. Treasury Yields

6-mo. 0.15% 2-yr. 0.30% 10-yr. 1.75% 30-yr. 2.90%

Treasuries finished little changed on the week but a few times the 10-year got up to 1.85% only to back down again.

--ECB President Mario Draghi warned of deflation, telling lawmakers in Berlin that “in our assessment, the greater risk to price stability is currently falling prices in some euro-area countries.”

--Ireland has won over German Chancellor Angela Merkel and French President Francois Hollande on the issue of banking debt relief. Ireland recapitalized its banks on the backs of its taxpayers and now wants to refinance a portion of the debt through one of the bailout mechanisms being implemented. Ireland has been doing all the right things and its economy will grow this year, plus there are some signs its housing market is finally bottoming.

The cost of the banking crisis to Ireland was imposed on it by the Euro position that bondholders had to be made whole. Ireland now believes it is in a position to finance itself entirely in the bond markets from 2014 on, after it receives the last of its bailout funds in 2013.

In forcing Ireland to use public funds to recapitalize its banks following the Lehman Brothers collapse, all the debt was piled on its balance sheet, which led to the crippling austerity programs that were then imposed on the people.

Back to housing, the Irish property market saw its third month of rising prices in September, up 0.9% following increases in July and August, according to the Central Statistics Office.

However, the revival is due solely to increasing values in Dublin, up 2.4% in September, the biggest rise since August 2006. So if you take Dublin out, house prices throughout the rest of the country were down.

--New-home sales in the U.S. for the month of September came in at an annualized rate of 389,000, the best pace since April 2010.

--U.S. home values jumped 1.3% in the third quarter, the biggest gain since 2006, according to Zillow Inc. Home values rose 5.9% in Phoenix over the second quarter, spurred on by investor demand, while prices climbed 3.9% in Las Vegas. They fell 2.2% in Atlanta.

--Apple missed earnings estimates for the just-completed quarter (fiscal Q4), $8.67 per share vs. the $8.75-$8.85 projected by analysts, but another $8.2 billion in net income. Apple also guided lower for the current quarter to $11.75 on sales of $52 billion vs. analysts’ estimates of $15.50 on revenues of $55 billion.

Revenue in the completed quarter rose 27% to $36 billion as in recent months it has seemingly been rolling out one new product or upgrade after another, including on its iPod and Mac lines. Such introductions initially squeeze margins.

For the period, Apple sold 26.9 million iPhones, more than projected, and 14 million iPads, less than forecast.

As for the “new iPad,” the company said before the earnings release it had sold 100 million to date. Apple also sold 4.9 million Macs and 5.3 million iPods.

Earlier, Apple introduced the iPad Mini tablet, which has a 7.9 inch screen diagonally compared with 9.7 inches for the larger iPad. Apple is pricing the Mini at $329, with some analysts hoping for $299 instead. Amazon’s Kindle Fired HD and Google’s Nexus 7 basic models are at $199 and $249, respectively. The Mini also comes just 7 ½ months after the company rolled out “the new iPad.”

With all the new products, Apple expects them to make up more than three-quarters of sales in the October-December time period.

Oh, and Apple is now sitting on $121.2 billion in cash.

Apple shares hit an intraday, all-time high of $705 on Sept. 21. They finished a tumultuous week at $608.

--Microsoft formally unveiled Windows 8; a consumer platform more than a business one, it certainly seems. It’s way too early to see how readily it will be accepted, though initially businesses say there is no compelling reason to ‘upgrade’ from Windows 7 or Windows XP. Windows 8 is different, touch-optimized, a la new products from Apple and Google. The company is really hoping that corporate customers move from the decade-old Windows XP, whereas they know there are few reasons to move from Windows 7 to 8. Having just adopted Windows 7 myself after adding a new PC, I’d be content to use this the rest of my life. I don’t want to have to learn anything new. I hate change! [Typed the editor with a grin.]

As for the Surface tablet, which Microsoft also rolled out, I like what I see because of the keyboard and Windows Office software. Apple CEO Tim Cook, though, called Surface a “fairly compromised, confusing product.”

--Amazon revealed sales rose 27% to $13.8 billion, less than expected, while reporting a loss of $274 million, the first since 2003, as the company announced it is opening 19 fulfillment centers worldwide to offer speedier delivery, which contributed to a big increase in operating expenses.

Amazon is valued at 290 times earnings. No matter. The stock finished up $15 on Friday on the earnings news to $238. I will never, ever understand how the Street and investors are coming up with their valuations for the company, whereas on the other hand, Apple, you could easily say, is undervalued.

--Swiss banking giant UBS is in the midst of a program announced last year whereby it is cutting 3,500 jobs. But the Financial Times reported on Friday that UBS is going to unveil a new plan to eliminate a further 10,000 positions over the coming years…one-sixth of the bank’s total workforce.

--Ericsson, the world’s largest maker of mobile network equipment, saw sales decline 2% in the third quarter owing to cautious spending by telecom operators due to the financial turmoil in Europe in particular. Sales in Western and Central Europe fell 21%, but rose 16% in North America.

--Ford Motor Co. announced it will shut three European plants; two in Britain and one in Belgium that will result in 5,700 layoffs. Ford said its loss in Europe will now exceed $1.5 billion in 2012. Earlier it said it would be $1 billion.

--Caterpillar Inc., the world’s largest maker of construction and mining equipment, lowered its sales growth forecast for 2013 to up or down 5% when an increase of 5% was initially projected. Sales in the third quarter were up 4.6%, less than forecast as well with CEO Doug Oberhelman citing Europe and deceleration in key emerging markets such as China and Brazil.

--Dow Chemical Co. announced it was shutting 20 facilities and eliminating 2,400 jobs in Europe, the U.S. and Japan. CEO Andrew Liveris said: “The new reality is that we are operating in a slow-growth and volatile world.”

--United Technology CEO Louis Chenevert: “There is a lot of uncertainty at this point in time. Europe continues to be a real challenge and, if you look at America, while the recovery has begun, it is going to be a slow recovery.”

UTX cut its sales forecast for the year.

--Xerox reported a 12% decline in third-quarter profits and cut its outlook further. Revenues fell 3% over the same period last year. CEO Ursula Burns offered: “We began the year knowing we would face certain challenges, especially as the European economies came under significant pressure…However, we did not predict the incremental strains on the business from more worldwide, widespread economic uncertainty, especially in the U.S….During the third quarter we experienced a much more constrained spending environment in the U.S….due to budget constraints, less funding is available for major government projects.”

So…notice a pattern with some of the above?

--Facebook investors took heart over the third-quarter earnings report as the company generated $1.26 billion in revenue, better than expected, and earned a penny more than analysts’ forecast, 12 cents vs. 11. Importantly, Facebook announced it had earned 14% of its advertising revenue from its mobile business, $150 million.

CEO Mark Zuckerberg said, “I want to dispel this myth that Facebook can’t make money on mobile. This may have been true six months ago, because we hadn’t started trying yet.”

Revenue growth, at 32% for the quarter, was the same as Q2.

The shares finished the week at $22, up from the previous Friday’s close of $19, though the stock hit $24.25 after the earnings release. But a note of caution; almost 1 billion shares will be eligible for sale in the next few weeks as more employee lock ups expire.

--Zynga shares rallied a bit after the game-maker reported third-quarter revenue that was considerably better than expected, though the actual number was only 3% higher than 2011. In an example of how a company like this is only as good as its next product, a new Zynga game, the Ville, in which players create their dream homes, had 7.3 million daily users at the end of July but only 1.7 million today.

--In CEO Marissa Mayer’s first full quarter on the job, Yahoo’s revenues for the third quarter rose 2%. While the results may have seemed underwhelming, Mayer appears to be providing the company with some needed vision.

--The Energy Department forecasts that U.S. production of crude and other liquid hydrocarbons will average 11.4 million barrels per day next year, or just below the 11.6 million barrels produced by Saudi Arabia. This year production is rising 7% to 10.9 million.

--Oil giant BP agreed to sell its 50% stake in TNK-BP to Russia’s Rosneft, which gives Rosneft about half of Russia’s energy sector and makes it the world’s largest publicly-traded oil group. BP retains a 12.84% stake and will continue to explore the country’s vast energy resources, including in the Arctic, while Rosneft gets BP’s expertise in exploring in such conditions.

Initially, Russian President Vladimir Putin said Rosneft made a good deal at a fair price: “This is a good, large deal that is necessary, not only for the Russian energy sector but also the entire economy.” [BBC News]

Rosneft’s CEO is Igor Sechin, the man I’ve said could one day topple Putin, so it was interesting how just a few days after expressing his pleasure at the transaction, Putin suddenly reversed course, saying he had “mixed feelings” about it all.

--A recent survey by the Federal Reserve Bank of Chicago showed a 15% increase in farmland prices since last year across a region covering states such as Iowa and Illinois, while a survey released by the Federal Reserve Bank of Kansas City showed a 26% increase in farmland prices in Great Plains states since last year.

As reported by the New York Times’ Ron Nixon and John Eligon, the drought hasn’t hurt. An Iowa State University survey revealed that prices there have risen 32% since 2010.

So is it yet another bubble? In farmers’ favor is the fact they hold far much less debt than in previous frothy periods and low interest rates help.

--The Times of London interviewed Oracle President Mark Hurd who said the world is “drowning in data” and computing companies are running out of space to store it. As reported by Nic Fildes, “(The) amount of data being produced by the nine billion devices connected to the Internet has grown eightfold over the past seven years…

“(Oracle) predicts that the situation will get worse as the number of devices feeding information back to businesses – be it a smartphone or a sensor on an oil rig – will boom to 50 billion by 2020. This will drive a twentyfold increase in the amount of information being beamed back to servers.”

Enter cloud computing. May I recommend Workday.

--Nissan is recalling 13,900 new and near-new Altima sedans because some bolts may not be tight enough. This isn’t good, sports fans. If the nuts loosen and fall off, the vehicle could veer out of control.

--Shares in Monster Beverage Corp. plunged following reports that the deaths of five people in the past year may have been connected to caffeine toxicity and the consumption of Monster’s energy drinks. Senator Dick Durbin is asking the FDA to consider caffeine limits on energy drinks after emergency room visits involving such products jumped 10-fold from 2005 through 2009. Shares in Monster went on a rollercoaster ride, from $53.50 to $40 after the news hit, back up to $46.

--The U.S. Department of Justice sued Bank of America for more than $1 billion on Wednesday, alleging BofA committed civil fraud by selling defective home loans through its originator, Countrywide, which Bank of America acquired in 2008. Countrywide employed a process called the “Hustle” to deal with loans that avoided being scrutinized in terms of their quality. The toxic crapola was then packaged and pawned off on Fannie Mae and Freddie Mac.

--Rajat Gupta will have lots of free time to play Zynga games as he serves two years in prison, having been sentenced this week following his conviction on passing confidential information about Goldman Sachs’ 2008 earnings and a $5 billion infusion of cash from Warren Buffett that he learned of while serving on Goldman’s board; Gupta passing said info on to his friend, Raj Rajaratnam, hedge-fund king. Rajaratnam is serving an 11-year sentence for insider trading.

--David Lerner is a ubiquitous figure in the New York area (and I guess in Florida) for his radio and television ads touting his brokerage firm, David Lerner Associates. “Take a tip from Poppy,” he finishes each spot.

But he was just banned from the securities industry for a year after regulators said he regularly duped elderly investors by over-hyping real-estate investment trusts. In one seminar on Long Island last year, he described earlier REITs as “something where no one has ever lost money,” which the Financial Industry Regulatory Authority said was patently false. [Kaja Whitehouse / New York Post]

--Barnes & Noble, the country’s largest bookseller, reported a serious attack from data thieves who planted bugs in a single card reader in 63 stores around the country, thus capturing customers’ PIN numbers. This did not affect customers who handed their cards to the cashier for them to swipe. To check on which stores were impacted, go to BarnesandNoble.com, then Investor Relations, then Newsroom, and then look for a 10/24 press release. Granted, B&N has 7,000 stores but it’s better to be safe.

--Comcast’s NBCUniversal broke even on the Olympics when a loss of $200 million had been initially projected.

--A reminder on what I wrote in this space March 17 of this year regarding former Goldman Sachs investment banker Greg Smith, who was on “60 Minutes” last week as part of a book launch.

“Guess what we’ve learned by waiting [24 hours]? There is no story! Period….

“Look, I can’t stand Goldman. I have no friends there, nor am I looking for any….

“But while I printed out all the stories pertaining to Smith’s [New York Times] editorial in the 24 hours after the Times ran it, I am now depositing the pile in the trash. There’s nothing newsworthy there, including all the comments that Jamie Dimon and other Wall Street leaders stupidly put out. If they had waited 24 hours, too, they would have seen the light as I did.”

--From Bloomberg Businessweek, are you frustrated by the amount some hotels, especially high end ones, charge for Wi-Fi service? Some charge $15 per night extra, which is absurd. Of course it should be free.

Know what it costs the hotel? Between $2.50 and $3.50 per room, per month. 12 cents per day. 

--A record-setting 10.8 million passengers flew into and out of New York-area airports in the month of August, the latest available data shows, breaking the record from August 2007. JFK saw its most passengers ever for one month, nearly 5 million.

--TIME magazine had a story on the financial impact of the James Bond flicks. I bet you could win some coin on this one. What two pictures in the series lead in worldwide box office in 2012 dollars? And it’s not even close.

1965’s “Thunderball” is No. 1 and 1964’s “Goldfinger” is No. 2.

These also were two of the better reviewed Bond films. Daniel Craig’s first two films as Bond were in the middle of the pack. “Skyfall,” just hitting theaters, is getting solid reviews.

Foreign Affairs

Syria: The four-day truce for the Eid Islamic holiday lasted about 30 minutes. On Tuesday, a reported 100 were killed across the country, including an attack on a bakery in Aleppo, where at least 20 died. “One gruesome video showed a young girl, in a turquoise shirt, whose head had been blown off.” [Los Angeles Times]

But don’t worry. President Obama told us during the foreign policy debate his administration has been spearheading the international effort to oust Bashar Assad.

And hot off the presses from the Global Security Newswire, “The regime of Bashar Assad is attempting to gain access to large amounts of the precursor materials needed to manufacture sarin, a particularly lethal chemical weapon, Wired magazine reported, citing anonymous U.S. officials.”

Lebanon: Clashes following the funeral of senior intelligence official, Wissam al-Hassan, exploded across Beirut last weekend, while at least nine were killed in the northern city of Tripoli in ongoing sectarian strife there. After about 24 hours, the Lebanese military was able to restore some order on the streets of the former.

The government of Prime Minister Najib Mikati has been urged to step down, with former Prime Minister Fouad Siniora demanding Mikati’s immediate resignation. Former Prime Minister Saad Hariri said: “The martyrdom of Hassan will not pass easily. Our demand is to bring down the government not for the sake of power but for the sake of security…We want to bring down the government in a democratic and peaceful manner.” [Daily Star]

Editorial / Washington Post

“During a visit to Washington in late August, Gen. Wissam al-Hassan, the intelligence chief of Lebanon’s internal security forces, offered a grim assessment of the civil war raging in neighboring Syria and its likely impact on the region. Dictator Bashar al-Assad, he told us, still had a chance to outlast the rebellion against him, though ‘it will take a couple of years and more than 100,000 killed.’ For the Assad regime, he added, ‘one of the solutions of the Syrian conflict is to move it outside Syria. He survives by making it a regional conflict.’

“A little more than seven weeks later, Mr. Hassan was dead…In short, Mr. Assad is attempting to implement the very strategy that Mr. Hassan spoke of.”

The number of Syrian refugees in Lebanon is now over 100,000; another incredibly destabilizing element for the country. [Turkey and Jordan have even more refugees.]

Jordan: The government announced last weekend that it had broken up a plot by 11 locals with “clear ties to al-Qaeda” who sought to launch suicide attacks on shopping centers and diplomatic missions in Amman. Then on Monday, a Jordanian soldier was killed in clashes with eight armed militants illegally attempting to cross the border with Syria. Salafists have infiltrated Jordan in large numbers. One of their leaders, a cleric named al-Tahawi, announced that 250 Jordanian jihadists had joined the fight against Bashar Assad. [Jerusalem Post]

Ian Bremmer / Financial Times

“Al Qaeda chief Ayman al Zawahiri has publicly signaled that a presence in Syria is a jihadist priority. Extremists need not take power in Syria to pose a threat. They need merely find room to operate if and when the country becomes ungovernable.”

Iran: From the New York Times’ David E. Sanger and William J. Broad:

“Intelligence officials from several countries say Iran in recent weeks has virtually completed an underground nuclear enrichment plant, racing ahead despite international pressure and heavy economic sanctions in what experts say may be an effort to give it leverage in any negotiations with the United States and its allies.

“The installation of the last of nearly 3,000 centrifuges at a site called Fordo, deep under a mountain inside a military base near the holy city of Qum, puts Iran closer to being able to build a nuclear weapon, or come up to the edge, if its leaders ultimately decide to proceed.”

There is little doubt that immediately after the election, Iran is back on the radar in a big way after a lull the past few weeks. Earlier, the New York Times reported the U.S. and Iran have agreed to one-on-one talks on the nuclear program, which the White House and Iran denied. Israel’s ambassador to the U.S., Michael Oren, said: “We do not think Iran should be rewarded with direct talks, rather that sanctions and all other possible pressures on Iran must be increased.”

Separately, President Ahmadinejad is clashing with the influential Larijani brothers – there are five of them – one of whom heads up the judiciary, and the one who is perhaps most familiar, Ali Larijani, who is head of parliament and a contender to succeed Ahmadinejad as president next year. As I’ve written, you also have the Rafsanjani family beating on Ahmadinejad.

Israel: Tensions ratcheted up quickly between Israel and militants in the Gaza Strip, after 80 rockets and mortar shells were fired into southern Israel. Israel retaliated with air strikes. Much of the action is not from Hamas, but rather from even more radical groups Hamas has trouble controlling.

Meanwhile, Sudan accused Israel of launching an attack on a munitions factory, killing two. A spokesman for the Sudanese government in Khartoum said four planes bombed it. Israel was mum, but Israel has claimed in the past Palestinian militants were getting many of their weapons from Sudan. [Not to insult anyone’s intelligence, but Sudan borders Egypt so the weapons just zip right up to Gaza.]

Libya: In his most extensive comments to date on the 9/11 Benghazi attack, Defense Secretary Leon Panetta said U.S. forces were on heightened alert that day but that the attack happened too quickly for the U.S. to respond with any force because military leaders were receiving inadequate information.

“(The) basic principle is that you don’t deploy forces into harm’s way without knowing what’s going on,” Panetta told Pentagon reporters.

House Speaker John Boehner, in a letter to President Obama, questioned whether the White House considered military options during the attack or immediately after.

Emails obtained by Reuters show that officials at the White House and State Department were advised two hours after the assault on the U.S. consulate began, and that an Islamic militant group, Ansar al-Sharia, had claimed responsibility.

Of course this flies in the face of White House claims that the attacks were likely the result of a spontaneous protest against an anti-Muslim film.

While the emails don’t prove President Obama personally knew those first hours of the situation, those in a position to tell him did.

Editorial / New York Post

“And that means the White House claim that there was no information pointing to a well-planned terrorist raid was no misunderstanding, but an unadorned lie….

“The president’s credibility lies in shreds – and his administration has been exposed for its incompetence….

“Perhaps the attack that killed Ambassador Chris Stevens and three others was unavoidable. And yes, initial intelligence reports are often wrong.

“But for two weeks, the public statements by Obama and his subordinates did not reflect any of the supposed confusion. Indeed, the administration was definite: This was the work of a flash mob.”

Afghanistan: A suicide bomber opted not to celebrate Eid and instead blew himself up outside a mosque in the northern part of the country, killing at least 40. It was the deadliest single attack in recent months.

Elsewhere, two British and two U.S. soldiers were killed in apparent insider attacks.

And U.S. Gen. John Allen, the top commander of international forces in Afghanistan, said al-Qaeda was re-emerging. Its numbers are small, but Allen conceded al-Qaeda doesn’t need a large presence to be influential. I thought Obama told us al-Qaeda was a spent force.

China: In what could be a highly significant event, the New York Times’ David Barboza authored an extensive report on departing Premier Wen Jiabao and how his extended family is sitting on assets worth at least $2.7 billion, wealth achieved during his time in leadership.

“In many cases, the names of the relatives have been hidden behind layers of partnerships and investment vehicles involving friends, work colleagues and business partners. Untangling their financial holdings provides an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in China’s fast-growing economy.”

Of course such a report is deeply embarrassing to the Chinese regime, particularly as it undergoes its once a decade leadership change next month, and thus the government immediately blocked access to the English-language and Chinese-language Web sites of the Times.

Earlier this year, Bloomberg published a story detailing the financial holdings of the incoming president, Xi Jinping. Such disclosures one day could lead to mass unrest. In the case of Wen, he always sought to be portrayed as the leader with the common touch, unlike President Hu Jintao who is a rather cold sort. It was Wen who always rushed to the scene of China’s latest disaster.

Meanwhile, Bo Xilai has been expelled from the legislature, which takes away his immunity and subjects him to criminal court on charges of corruption and aiding the cover-up of his wife’s role in the murder of British businessman Neil Heywood. Bo still has lots of support, adding to the turmoil at the upcoming Communist Party Congress. Bo was previously expelled from the 25-member Politburo and the CP.

The South China Morning Post reports that “A crucial document setting the Communist Party’s direction for the next five years (would highlight) several guiding tenets of party doctrines by President Hu Jintao, Jiang Zemin and Deng Xiaoping,” but wouldn’t have any “Mao Zedong thought.”

Mao thought being associated with class struggle, commune living and continuous revolution. But it was also Bo Xilai who had a campaign to revive “red” songs and culture. This triggered fear among reform-minded leaders so with Bo gone, they’ll attempt to extinguish any thought of him.

On a different topic, Mitt Romney’s views on China…

Editorial / Wall Street Journal

“Mitt Romney professes to believe in free trade, except with China, where he reverts to mercantilism. During Monday’s debate, the former manager of multinational investments doubled down on his pledge to label China a ‘currency manipulator’ on day one of his Presidency. Like the dog that catches the bus, the puzzle is what he would do on day two….

“Some business leaders believe that a President-elect Romney would back down or negotiate a solution with Beijing before inauguration. They may be over-optimistic. Mr. Romney is pushing the anti-China rhetoric over the objections of many advisers, and he seems sincerely to believe that getting tough will yield concessions from Beijing.

“Our own view is that Mr. Romney is underestimating Beijing. Even if Chinese leaders agree with his assessment of their economic interests, for domestic political reasons they can’t afford to be pushed around by a hectoring U.S. President….

“Twenty years ago, China was a relatively small economy and its role in global affairs was limited. Today any new Administration faces the conundrum of how to get a free-riding Beijing to help resolve, or at least not exacerbate, a host of problems. Torpedoing the relationship because of an ill-advised campaign promise could have multiple unforeseen consequences….

“Mr. Romney wants to unleash the U.S. economy’s animal spirits with less government intervention. But by linking America’s troubles to trade deficits with China, and proposing a heavy-handed government solution, he’d unleash protectionist genies that could haunt his Presidency.”

Russia: Meeting with reporters, Putin was none too pleased at those questioning his treatment of the two members of Pussy Riot still imprisoned, who were disturbingly sent to labor camps in the Urals this week and away from family in Moscow.

“If you in your countries like to destroy the morals of your societies, you can do that, but it doesn’t have anything to do with Russia, because we highly cherish what we have.” [Financial Times]

In another disturbing development, a left-wing opposition activist, Leonid Razvozzhayev, vanished in Ukraine after applying for political asylum. Razvozzhayev was then found in Lefortovo, the former notorious KGB prison. Razvozzhayev has told visitors he was kidnapped in Kiev, apparently by Russian secret police and tortured into making his confession.

Ilya Ponomaryov, a left-wing Duma member, told the Times of London, “In the last few days, we have seen open terror against the opposition. First Konstantin Lebedev was arrested. Then Sergei Udaltsov found himself barred from leaving the country. But this business with my assistant Leonid Razvozzhayev goes beyond all bounds of the reasonable and imaginable.”

Ukraine: Speaking of this place, big parliamentary election here on Sunday, a referendum on the presidency of Viktor Yanukovich. Yanukovich and his cronies have full control, it would seem, but WBC heavyweight boxing champion Vitali Klitschko is the leader of a new party, Udar, that seeks to shake things up in a big way. Kind of exciting. Klitschko says all the right things and wrote in an op-ed for the Financial Times that he seeks “to build a national party committed to European democratic values, basic economic freedoms and an anti-corruption platform.”

We wish him and Udar luck.

Italy: Early in the week, former Prime Minister Silvio Berlusconi said he wouldn’t run for prime minister in elections next year. He’s 76, after all. Instead, he said he would focus on reinvigorating his party, People of Liberty.

But on Friday he was sentenced to four years in prison for tax fraud. Ciao, Silvio.

[Actually, it’s unlikely he’ll serve a day.]

Britain: What a horrific story is unfolding in Britain, as the late Jimmy Savile, a fixture for 50 years at the BBC, is now being described by the Scotland Yard officer heading an investigation as “undoubtedly” one of the most prolific sex offenders in recent British history. Others may have been involved and the BBC not only has a lot of explaining to do, but some high-ranking figures at the station had to be involved in an extensive cover-up. Evidently prominent doctors also may have been at the heart of a network of child abusers connected to Savile. 300 victims have come forward claiming criminal behavior ranging from “inappropriate touching” to rape.

The BBC reported that Savile was investigated but never prosecuted for sexual abuse at least half a dozen times during his television career.

Japan: This is disturbing. Fish caught off the coast of northern Japan, near the Fukushima power plant, scene of the radiation leak following the earthquake and tsunami, are still as contaminated today as a year ago, according to a study. Said a senior scientist at Woods Hole Oceanographic Institution in Massachusetts, “This means that even if these sources were to be shut off completely, the sediments would remain contaminated for decades to come.” [Bloomberg]

Random Musings

--As of Thursday, CNN had Barack Obama leading in states with 237 electoral votes, while Mitt Romney leads in those that give him 206 votes…270 needed for election.

--An AP-GfK poll had Romney leading Obama, nationwide, 47-45. But among women, Romney is now tied, 47-47, after trailing by 16 points a month ago. On the issue of who women favor in terms of ability to handle the economy, it’s 49-45 Romney after he trailed that one by 16 as well.

--The latest Gallup Poll has Mitt Romney leading Barack Obama 50-47.

--2008 exit polls showed President Obama lost white voters by 12 percentage points, but now, according to the latest Washington Post/ABC News national tracking poll, Obama trails by 23 points, 60-37. Overall, Romney leads in this survey 50-47, Obama’s lowest tally since the party convention.

In 2008, Obama won non-whites with 80%, including 95% of black voters. According to the Post/ABC poll, he is still garnering 80%. 91% of Romney’s support comes from white voters.

--From a different ABC News/Washington Post survey, among females it’s Obama 56-42 (obviously different from the above AP-GfK findings). Among men it’s Romney 54-42.

Among blacks it’s Obama 94-2. Among whites, Romney has a 56-41 edge.

--According to new Wall Street Journal/NBC News/Marist Poll surveys, President Obama leads in Nevada among likely voters, 50-47, while in Colorado it’s tied at 48.

--A WBUR poll of Massachusetts voters has Obama leading Romney 56-36, which hurts the chances of Republican Senate incumbent Scott Brown in his reelection bid against Democratic challenger Elizabeth Warren, with WBUR having Warren up six points.

--A Quinnipiac poll of Connecticut voters has Republican Senate candidate Linda McMahon trialing Democratic Rep. Chris Murphy by six points, another key race if Republicans hope to take the Senate.

--As reported by USA TODAY and the Cincinnati Enquirer’s Barry Horstman, “A new Ohio program intended to make voting easier has the potential to keep the presidential election in doubt until late November if the national outcome hinges on the state’s 18 electoral votes.

“Under Secretary of State Jon Husted’s initiative to send absentee ballot applications to nearly 7 million registered voters across Ohio, more than 800,000 people so far have asked for but not yet completed an absentee ballot for the Nov. 6 election.

“Anyone who does not return an absentee ballot, deciding instead to vote at the polls, will be required to cast a provisional ballot. That’s so officials may verify that they did not vote absentee and also show up at the polls.”

What a freakin’ nightmare! The law says provisional ballots can’t be counted until at least Nov. 17. As Ed Foley, an Ohio State University professor and election law expert said, “We could easily see a situation in which the nation has to wait for Ohio because of provisionals.”

I’m moving to Yap.   

--The House of Representatives is currently 240 Republican, 190 Democrat, 5 vacancies, so Dems need a minimum 25-seat gain,

 but as noted in a USA TODAY piece by Susan Davis, The Cook Political Report projects a zero- to 10-seat range for Democratic gains. The Rothenberg Political Report projects a four- to 10-seat gain, and the University of Virginia’s Larry Sabato projects a seven-seat Democratic gain.

--Colin Powell endorsed Obama, as he did in 2008. I like Powell. There was a time when I would have voted for him for president. But it’s time for him to stop saying he’s a Republican.

--Editorial / Washington Post

“Much of the 2012 presidential campaign has dwelt on the past, but the key questions are who could better lead the country during the next four years – and, most urgently, who is likelier to put the government on a more sound financial footing.

“That second question will come rushing at the winner as soon as the votes are tallied. Absent any action, a series of tax hikes and spending cuts will take effect Jan. 1 that might well knock the country back into recession. This will be a moment of peril but also of opportunity. How the president-elect navigates it will go a long way toward determining the success of his presidency and the health of the nation.

“President Barack Obama is better positioned to be that navigator than is his Republican challenger.”

--Peggy Noonan / Wall Street Journal

“[Regarding Bob Woodward’s book ‘The Price of Politics,’ published last month.] The portrait it contains of Mr. Obama – of a president who is at once over his head, out of his depth and wholly unaware of the fact – hasn’t received the attention it deserves. Throughout the book, which is a journalistic history of the president’s key economic negotiations with Capitol Hill, Mr. Obama is portrayed as having the appearance and presentation of an academic or intellectual while being strangely clueless in his reading of political situations and dynamics. He is bad at negotiating – in fact doesn’t know how. His confidence is consistently greater than his acumen, his arrogance greater than his grasp.

“He misread his Republican opponents from day one. If he had been large-spirited and conciliatory he would have effectively undercut them, and kept them from uniting. (If he’d been large-spirited with Mr. Romney, he would have undercut him, too.) Instead he was toughly partisan, he shut them out, and positions hardened. In time Republicans came to think he doesn’t really listen, doesn’t really hear. So did some Democrats. Business leaders and mighty CEOs felt patronized: After inviting them to meet with him, the president read from a teleprompter and included the press. They felt like ‘window dressing.’ One spoke of Obama’s surface polish and essential remoteness. In negotiation he did not cajole, seduce, muscle or win sympathy. He instructed. He claimed deep understanding of his adversaries and their motives but was often incorrect. He told staffers that John Boehner, one of 11 children of a small-town bar owner, was a ‘country club Republican.’ He was often patronizing, which in the old and accomplished is irritating but in the young and inexperienced is infuriating. ‘Boehner said he hated going down to the White House to listen to what amounted to presidential lectures,’ Mr. Woodward writes.

“Mr. Obama’s was a White House that had – and showed – no respect for trying to negotiate with other Republicans. Through it all he was confident – ‘Eric, don’t call my bluff’ – because he believed, as did his staff, that his talents would save the day.

“They saved nothing. Washington became immobilized.

“Mr. Woodward’s portrait of the president is not precisely new – it has been drawn in other ways in other accounts, and has been a staple of D.C. gossip for three years now – but it is vivid and believable. And there’s probably a direct line between that portrait and the Obama seen in the first debate. Maybe that’s what made it so indelible, and such an arc-changer.

“People saw for the first time an Obama they may have heard about on radio or in a newspaper but had never seen.

“They didn’t see some odd version of the president. They saw the president.

“And they didn’t like what they saw, and that would linger.”

--Editorial / New York Post

“Four frustratingly long years ago, a war-weary and economically battered America took a flier on a savior.

“It didn’t work out.

“Now, in 12 days, the nation will return to the polls – to reject, or to ratify, the results of the great Barack Obama experiment.

“That is, to reject or to ratify the notion that hoping for change is a sound footing for productive national policy.

“But, by the evidence, it is not. It cannot create jobs. It cannot reduce deficits. It cannot restore foreign confidence in America – or Americans’ confidence in their own great nation.

“America needs more than hope. It needs leadership. That is why The Post today endorses the candidacy of Mitt Romney for president of the United States….

“Obama says he inherited the mess, but he’s done nothing to fix it. Borrow, spend, regulate and redistribute is not a prescription for sustainable growth, yet that has been the totality of his program.

“He says things will get better – soon. But there’s no evidence for that.
“Obamanomics has produced:

“A sky-high national debt, now at a stupefying $16 trillion and growing.

“Intractable unemployment and a workforce hemorrhaging discouraged workers.

“No perceptible economic growth.

“Historic expansion in welfare programs – especially food stamps….

“Four years ago, Obama vowed ‘to restore America’s standing in the world.’ But he has sown rancor and confusion instead.

“Our friends don’t know if they’re still our friends; our enemies wonder whether we have the courage to stand up to them.

“The result has been a cataclysmic breakdown of U.S. leadership in the Middle East.”

--Editorial / USA TODAY

“Between his governorship of Massachusetts (2003-07) and his successful run for the Republican presidential nomination this year, Romney shifted sharply to the right on an array of issues, including abortion, gun control, climate change, immigration and health care. Had he done otherwise, his chances of winning over skeptical conservatives who control the party were zero.

“More recently, in the closing weeks of the campaign, Romney has veered back toward the center. He has begun emphasizing that his tax cuts wouldn’t produce a windfall for the wealthy. He has tempered his harsh criticism of the auto bailout. And, most strikingly, in Monday’s debate he toned down his bellicose foreign-policy rhetoric, frequently invoking the word ‘peace’ and embracing several of Barack Obama’s policies. On Afghanistan, for instance, he said that he would support a fixed timetable for withdrawing U.S. troops, an idea he previously derided.

“To some degree, this is par for the course in American politics, where candidates tack to their party’s ideological edge to get the nomination, then shift toward the center in a bid for independent votes. Nor is the nation well-served by politicians who never change their minds, even in the face of new facts.

“But Romney has moved back and forth more abruptly, and on more issues, than most candidates, leaving voters to sort conviction from opportunism. Would President Romney govern as moderate Mitt from Massachusetts? Or the self-described ‘severely conservative’ Mitt from the Republican primaries?

“Odd as it might seem, the answer is: probably both.”

--Re: the third and last presidential debate…

Editorial / Wall Street Journal

“If Mr. Obama wanted to make the Republican look ‘wrong and reckless,’ as he said, he surely failed. The former Massachusetts Governor was so intent on appearing to be cool and steady that he avoided offering any major policy differences on Syria, Iran or Afghanistan. Most remarkably, he even refused to challenge the Administration’s handling of the deadly assault on Americans in Benghazi.”

I couldn’t believe Romney didn’t bring up the issue of Malala, the Pakistani girl who is recovering from the Taliban’s assassination attempt. It was a layup in terms of the female vote. [Can’t believe Obama didn’t bring it up, either.]

America must be the moral beacon for the world…period.

I also thought Monday’s foreign policy debate was incredibly stupid. The American people learned absolutely nothing. I wrote last time:

“I frankly think Monday is going to be a mess…for both gentlemen…verging on embarrassment for America.”

To the educated it was indeed an embarrassment.

Nonetheless, for the record, in two flash polls CNN/ORC had Obama winning the debate 48-40, while CBS News had it 53-23 Obama. 

But I have to note the thoughts of Mortimer Zuckerman, editor of U.S. News Weekly, among other things.

“Mitt Romney took a low-key approach during this week’s debate on foreign policy. It baffled that he didn’t continue to press on the hot button issue of the murder of our ambassador in Libya. The ambassador had asked for extra security and didn’t get it, so he and three other Americans died in a well-planned terrorist assault, not by the random violence of a mob supposedly offended by a stupid video

“:President Obama was judged to have won the debate. But grave consequences for the long term have been seeded by the administration’s Middle East policies, especially our relationships with Egypt and Iraq.”

The United States abandoned a long-time ally in President Mubarak in despicable fashion, employing former ambassador to Egypt, Frank Wisner, to work out a deal with Mubarak whereby he would agree not to run for office in September so as to facilitate a transition to a new regime, but then after Wisner successfully accomplished his mission, Obama publicly called on Mubarak to resign, and to resign “now.”

Zuckerman:

“Wisner left Egypt in dismay. His own president had cut the ground out from under him, and we lost a settlement that would have been far more constructive for American interests than what was to transpire.

“The ambassador was not alone in his bewilderment. The Arab world shared it. In an encounter I had with a leading Saudi in Europe at the time, he expressed his shock: ‘Mubarak was your longest and most loyal ally in the Middle East. He worked with you on every counterterrorism measure over the last 30 years; he kept the Suez Canal open; he supported the Israeli-Palestinian peace process and the Camp David peace agreement arranged by his predecessor, Anwar Sadat; and he continued to support efforts to bring about an Israeli-Palestinian compromise, and to that end he even helped blockade Hamas in Gaza. Yet in the first week that Mubarak was in trouble, you backstab him.’ What all the regional leaders in the Middle East now believe, he says, is that ‘the minute I get into trouble the same will happen to me.’

“That word – backstab – has haunted me ever since. The Saudi was saying we’d breached the code of international relations long adhered to in maintaining peace in the volatile Middle East. That code is simple: You support your friends, especially long-term allies such as Mubarak, and you don’t abandon them when they are in trouble, and especially through the public words of a press secretary. The code seems to have been completely beyond the understanding of the Obama administration, and there will be consequences. The Saudi official closed his comments as follows: ‘Do you think we are ever going to rely on the United States again?’”

As for Iraq, Zuckerman concludes:

“The negative results of our sacrifices for Iraq follow the administration’s failure to negotiate a long-term military relationship. Iranian influence is growing within Iraq and threatening American interests even more, and al Qaeda has now established a foothold in Iraq. In fact, if Iraq is bound to Tehran, it is now almost impossible to restrain Iran.

“In effect, we have not only lost the support of Egypt and Iraq, but we have also lost credibility throughout the Middle East, dramatically diminishing our position as the great Western power in the region. This strategic decline has received too little attention in America and has been wholly absent from the presidential debate.”

I repeat…what an embarrassment.

--From a Washington Post story:…regarding the attempt on the part of Republicans to take the Senate:

“ ‘A terrible thing might happen if Republicans gain the majority: We might have a budget even! We might even have to debate a budget,’ said Sen. John McCain, voicing a common GOP complaint that Democratic leaders in the Senate have not passed a budget in three years.”

--Of course Republicans don’t have an easy go of it in terms of regaining the Senate, especially with Richard Mourdock, the Indiana Republican candidate, saying the following during a debate on Tuesday, when asked whether he believed abortion should be allowed in cases of rape or incest.

“I struggled with it myself for a long time, but I came to realize that life is that gift from God. And, I think, even when life begins in that horrible situation of rape, that it is something God intended to happen.”

Mourdock, in his apology later, then stupidly said others were trying to “twist” his comments. 

Earth to my fellow Republicans who are looking to replace establishment Republicans with the likes of Mourdock and Akin….and in 2010, O’Donnell and Angle. Wise up.

--From Newsweek, Neera Tanden, former Obama aide, explaining why the president didn’t call Bill Clinton.

“It’s stunning that he’s in politics, because he really doesn’t like people.”

Sound familiar? It should. I’ve been writing this for years.

--In a case that has shook up a lot of scientists, an Italian regional court sentenced six Italian scientists and an ex-government official to six years in prison over the 2009 deadly earthquake in L’Aquila, which devastated the city and killed 309 people. Prosecutors said the defendants gave a falsely reassuring statement before the quake, while the defense maintained there was no way to predict major quakes. [BBC News]

--From Marilyn Marchione / AP:

“Aspirin, one of the world’s oldest and cheapest drugs, has shown remarkable promise in treating colon cancer in people with mutations in a gene that’s thought to play a role in the disease.

“Among patients with mutations, those who regularly took aspirin lived longer than those who didn’t, a major study found. Five years after their cancers were diagnosed, 97% of the aspirin users were still alive versus 74% of those not taking the drug.

“Aspirin seemed to make no difference in patients who did not have the mutations.”

The study didn’t start out attempting to prove aspirin helped; “people were taking it on their own for various reasons.”

“Still, the results suggest that this simple medicine might be the cheapest gene-targeting therapy ever found for cancer.”

--Can’t help but note the performance of San Francisco’s Pablo Sandoval in the first game of the World Series, three home runs, thus joining Babe Ruth, Reggie Jackson and Albert Pujols as the only players to hit three in a Series game.

--We note the passing of former U.S. Senator and 1972 Democratic presidential candidate George McGovern. He was 90. During World War II, McGovern flew 35 missions over Europe as a B-24 bomber pilot, receiving a Distinguished Flying Cross and several Air Medals.

Just a month ago, McGovern discussed his 1972 defeat with the Washington Post: “I wanted to win for our party, our young soldiers and the men and women of goodwill disaffected by Watergate and turned off by the power of big money in politics.”

But “at the wise old age of 90, I can say that losing the presidency was one chapter in a long, complex and richly happy life in which I learned that you can’t always control all the outcomes.”

McGovern did a ton in his lifetime to help alleviate world hunger, going back to 1961 when he was named first director of the United States’ Food for Peace Plan.

--A few of you noticed that I started my Nightly Review videos this week, Mondays thru Thursdays for now because I have to spend all day Friday writing this piece. It was a stressful time for my tech assistant, Roj, and I. We had issues with the first two but figured out the problem and the last two were posted in full, while I was able to go back and correct the initial ones. [So for those who saw only the first few minutes of Monday’s and Tuesday’s, full versions are now available.]

There are different reasons for launching this project for which I have zero time that I won’t get into. I expect the second month to be better than the first, and the third month better than the second. On some occasions I’m going to have to ‘mail it in,’ which I never like to do, and that will be because of a lack of time for preparation due to other responsibilities.

I also have some technical issues to iron out, such as the sound quality, which I am well aware of but probably won’t get around to for a month or so. 

I’m also not officially launching this venture with press releases and such until around year end. Traffic is the last thing I care about today. It’s trying to come up with a quality product, first and foremost. The traffic will follow later.

--And finally, with the big storm seemingly headed for my home area, we could easily lose power for a week or so, as was the case with last Halloween’s freak snowstorm.   It might be forced time off. I’ll be scrambling over the weekend to post a lot of new columns before the lights go out.

---

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

God bless America.
---

Gold closed at $1711
Oil, $86.24

Returns for the week 10/22-10/26

Dow Jones -1.8% [13107]
S&P 500 -1.5% [1411]
S&P MidCap -1.3%
Russell 2000 -0.9%
Nasdaq -0.6% [2987]

Returns for the period 1/1/12-10/26/12

Dow Jones +7.3%
S&P 500 +12.3%
S&P MidCap +10.9%
Russell 2000 +9.8%
Nasdaq +14.7%

Bulls 41.5
Bears 27.7 [Source: Investors Intelligence]

Next week is Halloween. Remember, kids will throw eggs at your house if you don’t drop a StocksandNews iPad app in their bag.

Have a great week. I appreciate your support.

Brian Trumbore