Week in Review

---

Week in Review

04/19/2014

For the week 4/14-4/18

Edition 784

Washington and Wall Street

Stocks rebounded in the holiday-shortened week after the tumult of the past five, particularly in the high-flying momentum names such as NetFlix, as economic data was largely positive and Federal Reserve Chair Janet Yellen gave a dovish speech. Corporate earnings, on the other hand, were decidedly mixed on both the top and bottom line and, correct me if I’m wrong, but I didn’t hear any CEOs on the manufacturing front actually come out with bullish statements as to future expansion.

But first, March retail sales were indeed better than expected, up a very solid 1.1%, the best since 2012, as, guess what? Weather is improving and we’re all feeling better (though March was still freezing where I live).

Industrial production last month was up a solid 0.7%, but March housing starts came in well below expectations and building permits were short of the mark; both further evidence of a sluggish start to the year on this front. Inventories are rising in once-hot areas like Phoenix and Las Vegas and prices are being cut, not raised. One leading housing expert, Ivy Zelman, who had been exceedingly bullish, has now reduced her outlook significantly for 2014 when it comes to existing-home sales.

As for the Fed, its beige book, the monthly review of economic activity across its 12 regions, did show “modest to moderate” expansion in 8 of the 12 in March, with hiring and consumer spending accelerating, though this was to be expected given the godawful winter.

But Chair Yellen, attempting to reassure market participants that they needn’t worry about any imminent rate hikes, said the Fed is “well aware” that if the economy improves substantially, inflation could shoot above the 2% target, but she added, “At present, I rate the chances of this happening as significantly below the chances of inflation persisting below 2%,” ergo, even if inflation picks up, and it is, sports fans, the Fed will be holding the line at zero, well after mid-2015, Yellen seemed to be saying as she backtracks further from comments made at her first press conference.

“Wage gains continue to proceed at a historically slow pace in this recovery, with few signs of a broad-based acceleration,” said the Chair.

Well I continue to believe the Fed is largely a band of idiots and that the data will force the Fed’s hands sooner than expected.

I know, the 10-year Treasury is at 2.72%, up from 2.62% the week before, yet I’ve said we could see 4.00% this year, which of course seems like an outrageous prediction today.

Just remember I’m not a bear on the health of the economy and I’ve said we would get an inflation shock at some point the balance of 2014 and I’ll just add now it will be the “Ralph Kramden Market,” as in with interest rates, “to the moon, Alice!”

OK, maybe not exactly to the moon but rates will rise substantially higher than today’s peg, and quickly.

I will be right. The only fly in the ointment could be geopolitics, which is why we spend so much time on it.

So after a poor first quarter on the GDP front the data will be pointing to 3%+ growth the balance of the year, even with the CEO caution I talked about last week.

As for the earnings of the past week, I have details below but two things remain in play to a great extent...financial engineering to improve the bottom line, earnings (see IBM as the most egregious offender of this game, for years now), while the top line, revenues, remains putrid (also see IBM, as discussed in a bit).

Yes, revenues are abysmal, virtually across all industries, be it in banking or large multi-nationals and cyclicals. But I believe this will begin to change later in the year.

Finally, two other topics...ObamaCare and the federal budget.

Regarding the former, President Obama strode forth into the press briefing room on Thursday to announce that 8 million people have signed up for health insurance under the Affordable Care Act, above expectations, saying, “This thing is working,” while calling the ACA a success story that Democrats should “forcefully defend and be proud of” as they hit the campaign trail.

Obama said of Republicans and naysayers, “They said no one would sign up. They were wrong about that. They are wrong to try to repeal a law that is working.”

Well not so fast, Sheriff! For starters, 28% of those who enrolled are between 18 and 34, below the target of 38%. The president, true to form, lied on Thursday, saying “35%” were under the age of 35. And the 8 million obscures the numbers of those who had their insurance plans canceled and were forced to re-enroll in a new one, chances are without their old doctor, for starters. [On this we have no actual data as yet.]

But as I’ve been saying, going back to my 1/4/14 review, the president could catch a break in terms of the coverage of the topic, and he has, and will continue to do so, but the real test is coming in September and October, right before the mid-term elections, as we begin to get word on the premium hikes for renewals, as well as a slew of new cancellations...at least that’s my guess.

Lastly, the Congressional Budget Office issued an update from its February deficit report and I have to admit I was a bit surprised by the timing. Last year the update came in May but let me give you some data that I guarantee you won’t find anywhere else...simply because I have material from last year I was using in this space and in my videos that I haven’t erased from the white boards I was employing.

The May 2013 estimate for fiscal 2013 (which ended 9/30/13) was for a deficit of $642 billion and it came in at $680 billion. Granted this was after four straight years of $1 trillion+ deficits so the White House trumpeted the improvement, even though it was the fifth-largest on record.

Last May the CBO also projected that the F2015 deficit would fall to $378 billion before beginning to climb back to $889 billion in F2022 owing to the entitlement mess.

But now the CBO, in its revision off of February’s report, says the F2015 deficit will be $469 billion on its way to $998 billion in F2022.

So why the heck was everyone in Washington, at least on the Democratic side, trumpeting an improved deficit picture?!

Yes, the F2014 deficit is expected to decline to $492 billion, or under 3% of GDP, which is kind of a magic number as these things go, and the deficit may fall to $469 billion next year, but then it’s, err, “to the moon, Alice!” 

[Can I use my Ralph Kramden analogy for both interest rates and the deficit? Probably not. I’m guessing that’s not how you win a Pulitzer.]

Anyway, the CBO, and the White House, are touting the fact the former now says costs related to the Affordable Care Act will be $100 billion less than initially projected over the next decade, or something like that, but the budget picture, at least in F2022, is $100 billion worse for that year alone!

[The CBO cites lower projected ACA subsidies to lower-income individuals than first projected due to lower than forecast premiums.]

Now let’s just throw out the fact that obviously these numbers change drastically from the forecasts, as they have in just one year, owing primarily to the rate of growth in the economy and, sometimes, geopolitics. Entitlement spending (or ‘mandatory spending’...primarily Social Security, Medicare and Medicaid) is pretty easy to forecast while the discretionary side of the budget (everything else, including defense), is budgeted by Congress and is subject not only to geopolitics but also natural disasters such as Hurricane Sandy.

First, my favorite...interest expense. It is now projected to be $227 billion in F2014 (ending 9/30/14), rising to $755 billion by 2022, which is little changed from last May’s forecasted $764 billion.

There alone is your difference between a deficit of $492 billion in F2014 and $998 billion in F2022, if you want to look at it that way.

My point for over a year now is that if you think you have trouble funding your pet project today, just wait until 2022...and beyond...when you’re spending $500 billion more on freakin’ interest, an item that does nothing for the economy, let alone us schmucks (so labeled because we put up with this stuff instead of overturning the government).

Now let’s look at the aforementioned ‘mandatory’ and ‘discretionary’ spending levels.

Thanks to Republicans and negotiated spending caps, discretionary spending in F2014 will come in around $1.18 trillion and rise to $1.327 trillion in F2022...not much of an increase.

But mandatory spending (entitlements), owing to the lack of action on the part of the White House and Congress, will rise from $2.116tr in F2014 to $3.402tr in F2022, a massive increase, and of course it explodes ever upward from there.

All of the above, friends, is what you need to know in a nutshell when it comes to the deficit and the issues we face. I wish it was taught in all of our nation’s schools. I can guarantee if Ross Perot were still active he’d be putting up these same numbers on his flip pads. 

Republican Congressman Paul Ryan is one who fully understands the calamity we are headed to. Again, the budget and funding debates of today are nothing compared to what we will be having in the not too distant future.

But his well-thought out budget plan that he claims offers $5.1 trillion in cuts over ten years by slowing the growth in federal spending (repeat...slowing the rate of growth), passed by only a 219-205 margin in the House, with nary a Democrat and many Republicans voting against because, in the case of the latter in particular, some of the cuts are too risky to discuss before their constituents hit the voting booth in November. Profiles in Courage they are not. [Paul Ryan, on the other hand, is a Profile in Courage.]

A final thought on an item that can really shoot the budget to pieces, potentially, that being defense spending. It is expected to come in at about $606 billion in F2014, while rising to just $706 billion in F2022.

Now I’m one who believes like Sen. John McCain we can cut even more from defense through the single issue of weapons procurement and paying outrageous, bloated (corrupted) sums for weapons systems that don’t fit today’s, or future, military scenarios. But put that aside for another day.

Just looking at the gross numbers, and what we know about Vladimir Putin today that maybe some in Washington are just waking up to, let alone the rapid rate of growth in China’s defense spending and its very public pronouncements on territory it claims in the East and South China Seas, for one, let alone the issue of Iran that we keep putting off, and do you really think defense spending will be only $700 billion in F2022?

Here’s another thing you won’t find anywhere else. If said level for defense proves to be the case come eight years hence, $700 billion, that is a spectacular sign for Planet Earth and is bullish as hell, especially for stocks and corporate earnings. That means no major military conflicts between the United States and our main rivals. At least that’s how I see it this Good Friday.

Europe and Asia

Eurozone inflation for March came in at an annualized rate of just 0.5%, further fueling fears of deflation. The annualized rate was negative 1.5% in Greece, -0.2% in Spain and -0.4% in Portugal, for example, while in Germany it was +0.9%, +0.7% in France and just +0.3% in Italy.

A year ago the annualized inflation rate in the euro-18 was 1.7%, so the trend isn’t good.

European Central Bank President Mario Draghi has been the one saying deflation was not an issue but now the ECB is expected to act, if not at its May meeting, definitely in June by enacting quantitative easing, though not in the manner the U.S. Federal Reserve has. The ECB could cut rates, possibly into negative territory, as well as institute a bond-buying program of some sort, or asset purchases.

Separately, the ECB’s stress tests for euro-area banks is on the way and the banks are said to be hoarding cash to boost their capital ratios while raising loan reserves. The stress tests are to be completed by October and now no one expects any of the top 20 banks to fail. Perhaps none of the full 128 being tested overall.

One other broad measure...eurozone industrial production for February was up 0.2%.

Meanwhile, producer (or factory gate) prices in Germany fell 0.3% in March and are down 0.9% year over year.

But London home prices hit a record in April, up 3.6% in one month and up 16% for the year. Consumer price inflation in the U.K., however, was up just 1.6% in March on an annualized basis, while unemployment fell below the Bank of England’s target 7.0% at 6.9% for the three months ending February, meaning the BoE could begin tightening monetary policy if it so chose. At least the mandate would allow this.

Yes, the recovery in the U.K., as your editor thought would be the case long ago, has been solid. Even wage growth was 1.7% in February, meaning the squeeze on living expenses (such as for heating and transportation) could be easing.

The Wall Street Journal reported that in Spain, the banks held $139 billion in foreclosed homes on their books so 100% financing (at rates as low as 1.5%) is being offered to try and move some of the properties; part of shoring up the balance sheets before the EU/ECB review. Upkeep, for one, is costly for the banks. 

Separately, the yield on the Spanish 10-year bond is below 3.10%, the level Italian 10-year paper is at. I continue to say this is nuts, though understandable given the ECB’s vow to do whatever it takes to keep the eurozone together, as well as due to the search for any kind of yield around the world.

Government debt, though, remains a potentially huge negative issue, such as the 176% of GDP level in Greece, the 125% in Ireland, 130% in Portugal and 133% in Italy. [With Spain and France moving in the wrong direction as well.]

But if the euro economy begins to grow at 2%+, then the debt item can be put away for some time. However, if there was a financial shock, such as further rambunctious behavior by “Vlad the Impaler” in Moscow, let’s just say you’d take a bath on the Spanish and Italian paper for starters, let alone Greek bonds.

German Finance Minister Wolfgang Schaeuble warned, “It has to be clear that the successes we’ve had (in the eurozone) must not lead us astray. We’re on the right track but it has to be continued. In every human society, complacency is one of the great dangers.” Bundesbank President Jens Weidmann said “doubts about the implementation of promised reforms [Ed. see Italy, for one] could lead to a re-evaluation that could materialize in higher risk premia.”

Turning to China, GDP for the first quarter came in at 7.4%, the weakest in six quarters, according to the statistics bureau. GDP was 7.7% for both 2012 and 2013.

But the growth rate was actually just 1.4% from the previous three months, or 5.7% on an annualized basis if you prefer to view it that way, so the government is telling you how severe the deceleration is, which is what you should follow rather than worry whether the country is cooking the books to reflect any number it wants you to see.

Other data was far from strong, such as March industrial production, up 8.8% year over year, or retail sales for the month, up 12.2%. Great by our standards but far from robust given the kinds of growth rates China requires to find work for all its citizens. Fixed asset investment (roads and bridges) was up a less than expected 17.6%.

The value of property sales fell 5.2% in the quarter vs. a year earlier, while new credit fell a whopping 19%.

[Separately, new-home price increases continue to ease across the country amid tighter credit, also according to the National Bureau of Statistics.]

But perhaps the best indicator of them all and one that is harder to fudge, power consumption, was up 7.2% in March, which is very solid.

Premier Li Keqiang did not offer any new stimulus programs, but the government is continuing with a tax relief plan for small business.

In Japan, consumer confidence fell in March to the lowest level since August 2011, plus this is prior to the sales-tax hike from 5% to 8% on April 1. Wage increases aren’t matching price hikes. Department store sales were up 25% in March, the biggest gain since at least 1991, ahead of the VAT increase.

But a survey conducted by Reuters and made public on Friday shows that perhaps the tax hike isn’t going to be as damaging as first thought. Two-thirds of companies responding to the survey said April sales were holding steady or improving compared with the same month in 2013. Granted, it’s early, but nonetheless encouraging for Prime Minister Shinzo Abe and his plans to pull Japan out of decades-long deflation.

One other key item from the survey, as reported by the Financial Times, “just over half of respondents said they had raised prices to reflect the additional tax. But nearly four in 10 manufacturers and one-third of non-manufacturers said they had left their prices unchanged – in effect, absorbing the tax increase themselves and accepting lower profits.”

You know I’m not buying the preceding survey results as it relates to sales for the first two weeks of April. But then I’m in a lousy mood.

Street Bytes

--The Dow Jones gained 2.4% to 16408 though is still down an even 1.0% on the year. The S&P 500 added 2.7% and is back in positive territory for 2014, up 0.9%, but Nasdaq, despite a 2.4% rebound, remains off 1.9%.

--U.S. Treasury Yields

6-mo. 0.05% 2-yr. 0.40% 10-yr. 2.72% 30-yr. 3.52%

Consumer prices for March rose a hotter than expected 0.2%, also up 0.2% when you strip out food and energy. For the 12 months the CPI rose 1.5%, 1.7% on core. While this isn’t exactly the Fed’s benchmark when looking at its 2% inflation target, it can’t be ignored. [The Fed prefers the ‘PCE,” personal consumption expenditures index.]

--Russian holdings of U.S. Treasuries fell a fourth straight month in February to their lowest level since 2011 amid tensions in Ukraine. It’s thought part of the reason is Russia needed the assets to defend the ruble, which has fallen sharply this year.

Overall, Treasuries held by foreign central banks dropped a record $104 billion to $2.86 trillion in the week ended March 12, according to the Fed data.

China remains the largest foreign holder at $1.27 trillion, down $2.7 billion (insignificant), while Japan’s rose to $1.21 trillion.

--This is beyond pathetic. On Friday, the Obama administration announced it was delaying a decision on the Keystone XL pipeline project, possibly until after the November elections. The State Department, which has had jurisdiction in the matter, though the final decision is President Obama’s, said the delay was necessary because of a Nebraska state court decision earlier this year that invalidated the pipeline’s route.

Environmentalists praised the move, but some energy-state Democrats up for re-election are livid. Louisiana Democratic Sen. Mary Landrieu said, “This decision is irresponsible, unnecessary and unacceptable.”

The Keystone review is now in its sixth year. Landrieu is among 11 Democrats who asked Obama to approve the project by May 31.

I’ll have more on this next week, but if I’m Canada, and Prime Minister Stephen Harper, I’d do something to tick off the White House. Shut down the borders for 12 hours, something like that. This is as much about our relationship with our great neighbor as it is energy security, in my mind.

Just a disgraceful act on the part of Obama and yet another example of weak presidential leadership.

--Goldman Sachs and Morgan Stanley both reported better-than-expected net income for the first quarter as the two took advantage of surging mergers and acquisitions business, with M&A overall hitting its highest volume for the quarter since Q1 2007, according to research firm Dealogic.

Morgan Stanley has been pulling back sharply in the trading arena with revenue from fixed-income, commodities and currencies representing just 19% of the company’s overall revenue, vs. 37% two years earlier, though the gross figure was up 9% from a year earlier.

Goldman’s trading revenue in the same areas fell 13%. Earlier, JPMorgan Chase & Co.’s trading revenue declined 21%, while those of Citigroup and Bank of America declined 18% and 15%, respectively.

Morgan Stanley’s investment-banking revenue rose 20% and Goldman’s was up 13%.

--Bank of America shocked investors with the news it was setting aside a further $6 billion for potential legal costs related to financial-crisis litigation, this after spending more than $50 billion thus far. It was thought the bleeding was largely over. The CFO added on a conference call that the bank’s legal costs remain “very hard to predict.”

BofA continues to suffer for the actions of Countrywide Financial Corp., the subprime mortgage lender that the bank bought when Ken Lewis was CEO. His successor, Brian Moynihan, seems to have done a solid job in righting the ship but the bank keeps paying for the sins of the past.

Overall, revenue fell at BofA by 3% in the quarter, as mortgage lending and bond trading fell. Mortgage origination fell a whopping 63% vs. a year ago, though Citigroup’s declined 71%, JPMorgan Chase’s 68% and Wells Fargo’s 67%.

Meanwhile, Bank of America’s Merrill Lynch unit reported record revenue in the first quarter, despite a continued decline in head count. The firm had 13,725 brokers vs. 14,474 a year ago. Merrill has been focusing on its new fee-based platform that is designed to integrate financial planning and banking products more easily into the sales process.

--Citigroup reported better than expected results for the quarter, though its core business still saw an 8% drop in net profits and a 3% decline in revenues for the same reason as the others, mortgage lending and bond trading.

--Credit Suisse reported profits fell 34% in the first quarter as revenue declined 8%.

--Google’s earnings report was viewed as a disappointment when the company said operating expenses were 35% of revenue, compared with 31% in the first quarter of 2013. Acquisition costs have been surging, plus the company is recording large construction costs as, like Amazon, it builds out its cloud computing operation for potential customers.

That said revenue rose 19% in the quarter to $15.4 billion with net income of $3.45 billion.

--IBM disappointed yet again as revenue came in at $22.5 billion, compared with $23.4 billion in the year-earlier quarter, below Wall Street’s expectations and the eighth straight quarter with weaker revenue from a year earlier. IBM’s net income also fell 21% to $2.4 billion. CEO Virginia Rometty continues to argue the company is transforming parts of the business, reiterating “We will begin to see the benefits from these actions.”

Hardware sales fell 23%, which is not a surprise as a new mainframe computer isn’t going to be available until next year so customers are holding off.

--In its earnings report, General Electric talked about a “generally positive” business environment, while continuing with its plan to dispose of non-core industrial businesses. The company said it was looking for organic growth of 4-7% in industrial revenues for the year, but in the first quarter, overall revenues were down 2%.

--China’s Twitter, Weibo, had its initial public offering on Nasdaq Thursday and after being priced at $17 and opening below that, climbed 19% to finish its first day of trading at $20.24, giving the company a market value of more than $4 billion. Weibo means microblog in Chinese. The company had sales of $188 million last year but losses of $38 million.

All eyes now are on Chinese e-commerce giant Alibaba, which is expected to go public in the summer, with a filing coming perhaps as soon as this week. Alibaba owns about a third of Weibo following the latter’s IPO.

There are now 620 million people using the Internet in China these days, though this is still less than 46% of the country’s population vs. 85% in the U.S.

--Yahoo reported lackluster earnings as revenue and profit growth were flat, but the story was about its 25% stake in Alibaba, which we learned was pegged at about $42 billion – more than Yahoo’s own market capitalization, as revenue at Alibaba surged 66% to $3.06 billion in the fourth quarter (there’s a lag) vs. a year earlier, while net income doubled to $1.36 billion.

Separately, Yahoo’s recently fired chief operating officer, Henrique de Castro, left the company with total cash and prizes of $58 million even though he lasted just 15 months on the job. Yes, this is a wee bit outrageous.

--Intel reported quarterly revenue was down 1% from last year and off 8% from the previous quarter. The company expects full-year revenue to be flat.  Intel is struggling to advance its mobile and Net devices strategies, as well as Big Data-cloud platforms.

Chips for PCs continue to be the majority of Intel’s business though here the results were actually decent as it sold 1% more PC processors despite the declining PC market, ergo, it gained market share.

--Southern California’s median home price hit $400,000 in March for the first time in six years, up 4.5% over February, but the number of homes sold fell 14.3% to the second-lowest total for a March in nearly two decades, according to DataQuick. It’s the rich vs. the poor. Sales of homes costing $800,000 or more rose 12%, while those of homes costing less than $500,000 fell at twice that rate, as reported by Tim Logan and Andrew Khouri of the Los Angeles Times.

--Coca-Cola said its sales volume of carbonated drinks fell by 1% in the first quarter, the first decline worldwide in 15 years. In the U.K. the decline was 10%. Overall, sales rose 2% with noncarbonated drinks such as Powerade picking up the slack.

Rival PepsiCo reported its global drink volume was flat, while snack sales rose 2%.

--China’s government crackdown on ostentatious consumption (“gifting”) by party officials continues to hit the likes of drink-makers Diageo (Johnnie Walker scotch) and Remy Cointreau (cognac) particularly hard, with sales down as much as 40% there.

--Canada reported 900 individual social insurance numbers had been stolen through its tax agency’s Web site as a result of the Heartbleed bug. One kid was arrested for hacking into it.

The actual fix for the bug could cause major disruptions to the Internet over the coming weeks. As reported by the Washington Post’s Brian Fung, “What initially seemed like an inconvenient matter of changing passwords for protection now appears much more serious. New revelations suggest that skilled hackers can use the bug to create fake Web sites that mimic legitimate ones to trick consumers into handing over valuable personal information.

“The sheer scale of the work required to fix this aspect of the bug – which makes it possible to steal ‘security certificates’ that verify that a Web site is authentic – could overwhelm the systems designed to keep the Internet trustworthy.”

--Speaking of the Web, from L. Gordon Crovitz / Wall Street Journal:

“Less than a month after announcing its plan to abandon U.S. protection of the open Internet in 2015, the White House has stepped back from the abyss. Following objections by Bill Clinton, a warning letter from 35 Republican senators, and critical congressional hearings, the administration now says the change won’t happen for years, if ever.

“ ‘We can extend the contract for up to four years,’ Assistant Commerce Secretary Lawrence Strickling told Congress last week, referring to the agreement under which the U.S. retains ultimate control over the Internet Corporation for Assigned Names and Numbers, known as Icann. If the administration makes good on that reassurance, it would punt the decision to 2019 and the next president.”

--U.S. newspaper industry revenue fell a further 2.6% in 2013. Print advertising dropped 8.6%, while circulation revenue rose 3.7%.

Digital revenue rose only 1.5% and is less than 10% of the industry’s overall revenue. [Crain’s New York Business]

--Mexican food chain Chipotle (still haven’t been to one myself...which doesn’t make me a bad person...) said it was raising prices for the first time in three years, with the company confident it won’t hurt traffic. Higher costs for beef, avocados and cheese have been pressuring profit margins at not only Chipotle but other chains.

Of course a big reason why Chipotle says it can get away with the price hikes is the fact same-store sales growth hit 13.4% in the first quarter, which is staggering for an established food chain. By comparison, McDonald’s kills for 3%.

--Sonic Corp. plans to add 1,000 new 1950s-style drive-in restaurants in the next decade to bring its total to 3,500. I didn’t realize Sonic is the No. 4 burger chain in U.S. sales after McDonald’s, Wendy’s and Burger King. I could never work for Sonic because I can’t roller-skate. I can’t ice-skate either. 

--Uh oh...we’re eating less fish. The average U.S. consumer ate 14.4 pounds of seafood in 2012, the last year for which data is available, down from a record high 16.6 pounds in 2004. This is far less than the average 82 pounds of chicken, 57 pounds of beef and 46 pounds of pork, as reported by the Wall Street Journal’s Ben DiPietro.

Now contrast our seafood intake with that of Japan, 120 pounds a year, and Spain, 96 pounds.

Fish producers aren’t doing a good job marketing their product in the U.S. I mean Charlie the Tuna was the last real spokesman the industry had and he was canned long ago. [Rumor has it packed in oil.]

Foreign Affairs

Ukraine: Last weekend, Russia’s provocation grew worse as, simultaneously, pro-Russian activists, dressed in military attire, seized police buildings in several eastern cities and set up roadblocks. The government in Kiev said it would prepare a military response.

Also over the weekend, a Russian fighter jet made repeated low-altitude, close-range passes near a U.S. destroyer, the USS Donald Cook, in the Black Sea. A Pentagon spokesman called it “provocative and unprofessional.” The incident lasted 90 minutes.

In the rebel-held town of Slaviansk, six armored personal carriers were taken from the Ukrainian army, another humiliation for Kiev.

Tuesday, Ukrainian forces launched an operation to retake facilities seized by the pro-Russian militants. A military airfield was recaptured, but otherwise in about ten cities and towns, pro-Russian forces showed little sign of pulling back.

Vladimir Putin’s spokesman strongly denied there were any Russian troops in Ukraine, despite Western governments’ accusations that Moscow supported the armed men who seized government facilities.

Anders Fogh Rasmussen, NATO’s secretary-general, said, “it is very clear that Russia’s hand is deeply engaged in this.”

British Foreign Secretary William Hague accused Moscow of “deliberately” stirring confrontation. “Russia must choose whether it is open to diplomacy and de-escalation, and if it decides otherwise, we must be ready for a different state of relations with Russia in the next 10 years than in the last 20.”

A U.N. inquiry found no evidence of widespread attacks on Russians in Ukraine as Moscow has continually argued.

Russian Prime Minister Medvedev warned of “civil war.”

Polish Defense Minister Tomasz Siemoniak said, “It is important the U.S. feels that if it resigns from its global role, then the world, and thus the U.S. itself, will be less secure. This is what we think in Poland.”

As to the Russian propaganda campaign, Lilia Shevtsova, an expert on Russian politics at the Carnegie Moscow Center, told the New York Times’ David M. Herszenhorn: “It’s all lies. The Russian leadership doesn’t care about how it’s being perceived in the outside world, in the world of communication, in the world where we have plurality of information and where information can be confirmed and checked. This is a radical change in attitude toward the West.... Now, there are no rules. You can invent anything.”

In a recent poll conducted in Germany, only 45% of Germans said they should stick firmly with the Western alliance, while 49% said it should occupy a ‘middle position’ between Russia and the West; the latter a clear indication of how many Germans believe it is more important to protect their economic well-being. Germany and Russia exchange some $100 billion in goods each year.

[At the same time, more than half the revenue of the 50 firms making up Russia’s benchmark stock index comes from outside Russia. For example, as reported by Bloomberg, energy giant OAO Lukoil gets more than 81% of its revenue from foreign sources.]

On Wednesday, three separatists were reportedly killed by Ukrainian security forces after hundreds of pro-Russians attacked a military base and refused to back off, leaving Ukrainian forces no other option but to open fire.

At talks in Geneva on Thursday between Russia, the U.S., EU and Ukraine, it was agreed that illegal military groups must leave official government buildings in eastern Ukraine.

In a statement the four said: “The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens. All sides must refrain from any violence, intimidation or provocative actions.”

The agreement called for all illegal armed groups in Ukraine to be disarmed and seized buildings to be returned to their legitimate owners. An amnesty was to be granted to protesters. The Organization for Security and Cooperation in Europe is to help oversee the measures, while a new constitutional process was to create “a broad national dialogue.”

Kerry said the government in Kiev was prepared to conduct elections across the east of their country to provide citizens with a level of autonomy far greater than that granted to any Russian region by Moscow.

Russian Foreign Minister Lavrov said, “We have no desire at all to deploy our troops in Ukraine, a friendly state, a territory where a brotherly people lives; this is against the basic interests of the Russian Federation.”

Right. Afterwards pro-Russian separatists in Donetsk said they would not leave the government building they were occupying, with a spokesman telling the BBC that the Kiev government was “illegal” and so they would not vacate the premises until the government stepped down.

For his part, President Obama, while welcoming the Geneva deal, warned that the U.S. and its allies were prepared to impose significant new sanctions on Russia if the situation worsened.

“My hope is that we actually do see follow-through over the next several days, but I don’t think, given past performance, that we can count on that,” he said.

Meanwhile, the coverage in Russia was all about President Putin’s four-hour televised annual call-in show rather than the Geneva talks.

Among the tidbits, Putin commented on U.S. sanctions and how they were counterproductive.

“Everything in the world is very interdependent. So when one tries to punish someone, like a naughty child, have them kneel on peas so it hurt – in the end they will saw off the branch they’re sitting on, and at some point, they will of course understand this.”

On the east and south of Ukraine, Putin said: “Let me remind everyone, this is New Russia, using the terminology of Czarist Russia. These are the territories that were passed to Ukraine in the 1920s by the Soviet government. God knows why they did that.”

On American unilateralism: “What happens is that the U.S. is able to act as it does in Yugoslavia, Libya and Afghanistan, while Russia is forbidden from defending its interests.”

Putin also said claims Russian agents were acting in the region were “rubbish.”

Plus he took a call from Edward Snowden, but the Journal sums up that exchange below.

The latest poll released by the independent Levada Center on Wednesday found that 71% of Russians trust Putin.

“On Russia and Ukraine we are experiencing things incrementally and coming to terms with the fact that we have entered a new era. Vladimir Putin has ended the post-Cold War settlement and is redrawing borders. It is childish and obtuse to see his moves and understand them as anything but what they are, the beginning of a time that will sorely try the United States. We have to get busy figuring out how to deal with it, both day to day and in the long term.”

“John Kerry has a nice phrase. The west will respond to Russia’s 19th-century behavior with 21st-century tools. The U.S. secretary of state is missing something. Leaving aside whether Europeans can summon the political will to impose serious economic costs on Moscow for its march into Ukraine, there is another dimension to the conflict. Vladimir Putin has been winning the propaganda war.

“The Russian president, a child of the KGB, has dusted down the disinformation playbooks of the cold war. He has added an expensive 21st-century gloss, harnessing 24-hour news, digital networks and social media to the Kremlin’s cause....

“Given the state’s iron grip on the domestic media it is unsurprising that Mr. Putin commands strong support at home. The stifling of internal dissent has seen him tap a powerful emotion – nationalism rooted in grievance. He is far from alone in seeing the collapse of the Soviet Union as a catastrophe and the U.S. as the author of Russia’s subsequent ills. The foreigners are to blame.

“More striking is the impact that the sharp, well-funded propaganda strategy has had on opinion beyond Russia.   Much public sentiment, particularly in Europe, runs from indifference to a sense that Mr. Putin may have a point. If he turns Ukraine into a failed state, what is in it for others to interfere? Doesn’t democratic Europe have troubles enough of its own?

“The Kremlin starts with the credo that if you repeat a lie often enough, and with sufficient conviction, some will imagine it a truth....

“Such blatant dissembling is not available to democratic states with a free media.”

“The (Geneva) deal promises to arrest what had looked like an accelerating slide into anarchy or even civil war in eastern Ukraine. [Ed. But...] As Secretary of State John F. Kerry pointed out, so far it exists merely as ‘words on paper,’ and it remains to be seen whether Russia will fully unwind the quasi-covert offensive it launched 10 days ago....

“ ‘De-escalation’ does not mean that Vladimir Putin has given up his goal of bringing as much of Ukraine as possible under Moscow’s suzerainty – and making the rest ungovernable. His performance in a televised appearance Thursday, in which he reiterated that the Russian parliament had given him authority to invade eastern Ukraine and referred to the region as ‘new Russia,’ made clear that his ambition to upend the post-Cold War order in Europe remains unchecked.

“Moscow is still demanding constitutional changes that would make the eastern regions virtually independent and give them a veto over national policies. Mr. Kerry said that Foreign Minister Sergei Lavrov indicated that the Russian troops still massed on Ukraine’s borders would be drawn down only ‘as the constitutional process unfolds.’ In other words, Moscow reserves the right to use force if it does not get the chopped-up Ukraine it wants.”

“The Edward Snowden Fan Club got a special bonus this week. The man who stole the secret operations of the U.S. National Security Agency and shared them with the world showed up on Moscow television to interrogate Vladimir Putin about citizen privacy.

“Well, OK, he didn’t really interrogate the Russian president. It was more like an appearance on a Russian version of ‘The Colbert Report,’ with Mr. Putin playing the role of a mock civil libertarian....

“Mr. Putin immediately tried to put his new guest at ease by suggesting a shared career path. ‘Mr. Snowden, you are a former agent, a spy,’ the Russian president said. ‘I used to work for an intelligence service. We can talk one professional language.’ And with that, the Vlad and Ed Show was on. Mr. Snowden spoke in English and Mr. Putin in Russian, but it was still one language.

“Edward Snowden: ‘Does Russia intercept, store, or analyze in any way, the communications of millions of individuals? Do you believe that simply increasing the effectiveness of intelligence or law enforcement investigation can justify placing societies rather than subjects under surveillance?’

“Vladimir Putin; ‘We don’t have a mass system of such interception and according to our law, it cannot exist.’ He continued: ‘Our special services, thank God, are strictly controlled by the laws of society and are well-regulated.’

“That settles that, thank God. Still, it would have been nice to be able to bounce the Snowden-Putin privacy dialogues off leading Russian dissident and anti-corruption blogger, Alexei Navalny, who has led pro-democracy demonstrations against Mr. Putin. These days that’s difficult, however, because Mr. Navalny, unlike Mr. Snowden, is under house arrest in Moscow.”

“The dictators who ran the so-called Eastern Bloc countries for the Soviets had names like Ceausescu, Honecker, Jaruzelski, Hoxha and Kadar. It seems as if they would rule behind their Iron Curtain forever because the Red Army to the east had their backs. Then in the 1970s, a determined internal opposition developed. They had names like Havel, Walesa and Wojtyla. Karol Wojtyla became Pope John Paul II, called ‘the Polish pope’ because he fought there against the unfree society designed by Vladimir Putin’s predecessors.

“Now the battle for Ukraine is ending without much more than a yawn in Washington, London, Paris and most ironic of all, the Berlin that the Cold War divided in two. In 1947, President Harry Truman, a Democrat, began a year-long allied airlift to supply Soviet-occupied and isolated Berlin. The Berlin airlift broke the blockade. Nobody running the West would do that now....

“Earlier this month, Poland’s prime minister, Donald Tusk, said, ‘If there is a thing such as NATO’s border that needs diligence it would be Poland’s eastern border.’ He knows that pressure from his neighbor in the east will come after Ukraine. What remains of NATO now is a good question. Mr. Putin gave his answer in Ukraine.

“The post-Cold-War West stands un-led by the American president. Vladimir Putin famously believes the U.S. and Western Europe in 2014 are filled with self-indulgent populations who can barely lift their eyes from an iPhone screen to see a European nation swallowed. Yes, it does look like Cold War 2.0. The videogame.”

“Mr. Putin has taken to arguing that Russian values are fundamentally at odds with Western liberal ones. He now has the tools to intervene on his borders and beyond so as to upend the post-Soviet order. That might be in Transdniestria, a slice of Moldova that has hosted Russian troops since the early 1990s. Or in Kazakhstan, which has a large Russian population in the north. Or even in the Baltic states, two of which have large Russian-speaking minorities and all of which depend on Russian gas. Because the Baltics are members of NATO and the EU, a Russian move against them would be a challenge to the entire West. A miscalculation by either side could be disastrous.

“That is why the West needs to show Mr. Putin that further action will be costly. So far, its rhetoric has marched far ahead of its willingness to act – only adding to the aura of weakness. Not enough is at stake in Ukraine to risk war with a nuclear-armed Russia. And European voters will not put up with gas shortages, so an embargo is not plausible. But the West has other cards to play. One is military. NATO should announce that it will hold exercises in central and eastern Europe, strengthen air and cyber defenses there and immediately send some troops, missiles and aircraft to the Baltics and Poland. NATO members should pledge to increase military spending.”

The other is economic, far harsher sanctions. If action isn’t taken, as The Economist also opines, if the West doesn’t face up to Putin now, “it may find him at its door.”

Iran: President Rohani, on National Army Day, said Iran has no hostile intentions toward anyone in the world, including the United States.

“We are not after war, we are after logic, we are after talks.”

Now it’s true, to the extent you believe the Iranians, that according to the International Atomic Energy Agency, Tehran has blended down half of its 20% enriched uranium to a lower purity, per November’s agreement, but this of course is only of the material they’ve declared and would not take into account any secret operations. Iran has until June to finish carrying out its promises.

As a reward for perceived compliance to date, Iran was to receive $450 million from seized accounts as part of a total of $4.2 billion if it complies fully with the accord.

Actually, earlier in the week, President Rohani told a crowd, “With your support, this government has taken the first steps towards the lifting of the brutal sanctions... We will witness the sanctions shattering in the coming months. Today we already see the sanctions unraveling....

“We will prove to the world through these negotiations that what has been said about Iran is a lie. Iran has never pursued nuclear weapons and never will.” [Jerusalem Post]

But Iran has yet to grant the IAEA inspections at the undeclared Revolutionary Guard sites, such as my favorite, Parchin, that are suspected of housing nuclear weapons-related research. Even though Parchin’s buildings have been destroyed and paved over, the inspectors still haven’t been allowed in.

And then you have Iran’s atomic energy chief, Ali Akbar Salehi, saying Iran had the “right” to enrich uranium at the level needed to yield nuclear weapons material, though he didn’t say Iran would.

Syria: The Bashar Assad regime missed another target date for sending most of its chemicals arms overseas on foreign transport vessels, according to the U.N. The U.N. then granted an extra two weeks, to April 27, saying any failure to hit this date “could have serious impact” on an effort to fully destroy the materials by the end of June. According to the U.N. body monitoring the flow, Assad has handed over 57% of its deadliest chemicals and 82% of its lower-priority warfare substances...but, such as in the case of Iran, this is of the material that was declared; with virtually all in agreement Assad did not declare everything.

Just this week there were credible reports Syria used poison gas in an attack on a village last weekend, specifically toxic chlorine, which can lead to suffocation.

Meanwhile, the government continues to make headway in the fight against the rebels, seizing three towns on the Lebanese border that had been opposition strongholds. But Assad’s forces have had trouble in their own stronghold of Latakia as a stubborn offensive by rebel fighters there has led Assad’s Alawite minority that calls the area home to feel uneasy for the first time in the war.

Israel: Prime Minister Netanyahu has been having problems with a member of his coalition, Naftali Bennett, whose behavior has been called “childish” by Netanyahu associates. Bennett has been saying publicly he would withdraw his party from the coalition if anymore Israeli Arab prisoners were released.

Afghanistan: Early results of the presidential election have Abdullah Abdullah and Ashraf Ghani facing off in a runoff in late May or early June. Abdullah has a preliminary 4-point lead. While there are lots of allegations of ballot stuffing, there appears to have been far less fraud than in the controversial 2009 vote.

Saudi Arabia: The kingdom confirmed a surge in cases of the deadly MERS virus, or Middle East Respiratory Syndrome. The World Health Organization says it has confirmed 228 cases, with 92 being fatal. Not sure if this includes a Malaysian man who died this week in Malaysia after traveling to Saudi Arabia.

China: The government admitted that nearly one-fifth of the nation’s soil, including the prime crop-growing areas, was contaminated with pollution. The worst hit areas are the Pearl River and Yangtze deltas where industrialization has been heaviest. A survey had previously been kept secret.

Of key concern is cadmium, a carcinogenic metal that is absorbed by rice – the nation’s staple.

If joined together in a single land mass, the area of contamination would be twice the size of Spain.

“Early last year, the newspaper Nanfang Daily reported that tens of thousands of tons of cadmium-tainted rice had been sold to noodle makers in southern China since 2009. It said government inspectors declared it fit only for production of non-food goods, such as industrial alcohol. But a trader sold most of the rice to food processors anyway.

Meanwhile, a team of scientists from Texas, California and Washington State has concluded that air pollution from Asia, most of which emanates from China, is leading to more intense cyclones and more warm air in the mid-Pacific moving towards the north pole; such patterns ultimately leading to further erratic weather in the U.S.

North Korea: An expert website 38 North said an image analysis of North Korea’s premier chemical complex, initially intended to produce fertilizers and insecticides going back to the 1970s, shows a massive expansion that could be fueling a chemical weapons program, according to Japanese and South Korean officials.

South Korea: What a sickening tale here with about 270 missing days after a Korean ferry capsized. 28 are known dead. Most are students who were on a field trip; 340 (out of 475 total passengers) children and teachers from one school. Supposedly the ferry, contrary to first reports, sailed within the defined shipping land, and the area where it sank was free of reefs or rocks. But there was a report strong winds may have caused containers and cars stacked on deck to shift.

The Sewol is the country’s second-largest passenger ferry and departed Incheon for the resort island of Jeju, off the South Korean coast. It sank three hours short of its destination. Rescue efforts were hampered by strong currents and murky waters.

The captain escaped and told state television: “I am really sorry and deeply ashamed. I don’t know what to say.”

When asked why he had left the sinking ship, he remained silent. Some relatives of the missing were outraged by survivor testimony that passengers had been told not to move in the crucial period after the ferry stopped and before it listed sharply to the side.

One businessman who was on the ferry said, “The rescue wasn’t done well. We were wearing life jackets. We had time. If people had jumped into the water...they could have been rescued. But we were told not to go out.”

At week’s’ end the captain had been arrested as it became apparent the third officer was at the helm at the time of the accident, which would lend credence to the theory that a sharp turn was made that led to a shift in the cargo that unbalanced the ship. It is also reported the captain waited for 30 minutes before giving an evacuation order, even though a crew member suggested this in the first minutes after the ferry began listing.

In 1993, South Korea suffered one of its worst shipping accidents when a ferry with 362 on board capsized because of tidal waves. 292 died.

Japan: The population continues to decline, now 127.3 million as of Oct. 1, with people age 65 or older making up one fourth of the total, the highest-ever percentage. The working age population fell to less than 80 million for the first time in 32 years.

Such numbers just don’t work, especially when you’re servicing a debt that is well in excess of twice the size of the economy.

Nigeria: Islamist militant group Boko Haram was responsible for a bus station bombing in Abuja, the capital, that killed at least 75 in the largest such attack on the city, and then on Wednesday, the terrorists are believed to have been responsible for the kidnapping of as many as 100 girls from a school with the belief at week’s end that they were taken hostage to become sex slaves.

Boko Haram was also responsible for attacks elsewhere in Nigeria last weekend that killed 217 in Borno State, the same region as the school kidnapping.

Latin America: According to U.N. data, nearly one in three global homicides occur in this region, making it the world’s most violent. Latin America and the Caribbean have 13 of the top 20 homicide rates globally, topped by Honduras and Venezuela.

Honduras’ rate is 90.4 homicides per 100,000. By contrast, Afghanistan’s is 6.5 per 100,000. The U.S. homicide rate is 4.7, well above every other industrialized country. [Wall Street Journal]

Random Musings

“The U.S. National Security Agency knew for at least two years about a flaw in the way that many websites send sensitive information, now dubbed the Heartbleed bug, and regularly used it to gather critical intelligence, two people familiar with the matter said.

“The agency’s reported decision to keep the bug secret in pursuit of national security interests threatens to renew the rancorous debate over the role of the government’s top computer experts. The NSA, after declining to comment on the report, subsequently denied that it was aware of Heartbleed until the vulnerability was made public by a private security report earlier this month.”

--Kentucky Republican Senator (and 2016 presidential contender) Rand Paul, defending his foreign policy in an op-ed for the Washington Post:

“(Foreign policy) is complicated and doesn’t fit neatly within a bumper sticker, headline or tweet.

“Those who reduce it to such do a disservice to their reporting and, potentially, to the security of our nation....

“Nuance has been a bit lacking in our foreign policy of late. Whether through preemptive war or ‘red lines’ that were crossed without consequence, the extremes of foreign policy have had their way, and it has not worked.

“Ronald Reagan was once criticized for not announcing in advance his policy toward particular situations. He was accused of not having a concrete foreign policy. His response was that he simply chose not to announce his policies in advance.

“If he had been bluffing the Soviets with his Strategic Defense Initiative, or using it as leverage in negotiations, it would have been counterproductive to announce that in advance.

“In fact, Reagan often practiced strategic ambiguity. He thought, as many other presidents have, that we should not announce to our enemies what we might do in every conceivable hypothetical situation.

“It is a dumb idea to announce to Iran that you would accept and contain that country if it were to become a nuclear power. But it is equally dumb, dangerous and foolhardy to announce in advance how we would react to any nation that obtains nuclear weapons....

“I believe all options should be on the table to stop Iran from getting nuclear weapons, including the military option. I have voted repeatedly for sanctions against Iran and will continue to do so. But I will also continue to argue that war is a last resort and that, as Reagan wrote, we should be reluctant to go to war but resolved to do so if necessary....

“I have often said that we have, for too long, had a debate between the extremes of foreign policy – and that to be on either end of the extremes can have life-or-death consequences.

“False choices between being everywhere all of the time and nowhere any of the time are fodder for debate on Sunday morning shows or newspaper columns. Real foreign policy is made in the middle; with nuance; in the gray area of diplomacy, engagement and reluctantly, if necessary, military action.”

Sen Paul got in trouble in an interview with ABC’s Jonathan Karl when he said he didn’t think it was a good idea to rule out containment of Iran, thus the reason for his clarifying piece in the Post. He has problems with the Republican base because, as Jennifer Rubin pointed out in the paper:

“No GOP elected leader or 2016 contender would agree with him. In fact, no elected Democrat probably would, either. It has been the position of three presidents that a nuclear-armed Iran is intolerable. It is an existential threat to Israel. It is not simply that it is ‘not a good idea’ for Iran to get the bomb. He is far, far outside the mainstream on this – and far to the left of President Obama.

“Hillary Clinton would eviscerate him on that point and win over a chunk of Republicans. Whatever her faults on foreign policy, at least she understands that we can’t allow Iran to get a bomb and that suggesting we could consider it destroys our negotiating position and military threat.”

--According to a Fox News poll, 61% said President Obama lies at least some of the time on important issues. Only 15% believe the president is completely truthful. Of course you have predictable party splits on this, but 63% of independents believe Obama lies at least some of the time.

--The New York City Police Department disbanded a unit that had been tracking the daily lives of Muslims in an effort to detect terror threats. Mayor Bill de Blasio called the move “a critical step forward in easing tensions between the police and the communities they serve, so that our cops and our citizens can help one another go after the real bad guys.”

--White supremacist Frazier Glenn Cross was arrested in the shooting and killing of a 14-year-old Boy Scout and his grandfather at the Jewish Community Center of Greater Kansas City in Overland Park, Kan., and a woman at a nearby Jewish assisted living center. The boy and grandfather were Methodists. The other victim a Catholic. 

Cross was a former ‘grand dragon’ of the Carolina Knights of the Ku Klux Klan. Put him to death.

--The real dirtballs in the whole Bundy cattle dustup in Nevada aren’t the Bundys or the Bureau of Land Management (depending on which side you’re on), but the BLM’s hired contractors, the cattle rustlers. The West is peopled with them. No different than drug gangs.

--According to New Jersey’s Acting Attorney General, John J. Hoffman, out of some 3 million motor vehicle accidents in the state between 2004 and 2013, nearly half involved driver inattention.

And, as reported by the Star-Ledger’s Amy Ellis Nutt, “during that same period, more than 1,600 people were killed in car crashes where driver inattention was a major contributing factor.”

“The numbers tell the sad truth: we are in the midst of a surge in driver inattention, and crash statistics bear out that we can characterize the last 10 years simply as New Jersey’s Distracted Driving Decade. What is perhaps most troubling about these numbers is that the issue of distracted driving seems to be getting progressively worse.

“Our research indicates that while crashes and fatalities are trending downward as a whole, the number and proportion of distracted crashes are rising.”

Last year driver inattention was cited as a major contributing factor in 53% of accidents.

According to a survey in my state, while 9 out of 10 people presumed it was against the law to text and drive in New Jersey (it is), 3 in 10 admitted to doing it anyway.

Studies also now show that driving with a hands-free device is still bad, “inattention blindness,” to the research community.

“After he was convicted of armed robbery in 2000, Cornealious (sic) Anderson was sentenced to 13 years behind bars and told to await instructions on when and where to report to prison. But those instructions never came.

“So Anderson didn’t report. He spent the next 13 years turning his life around – getting married, raising three kids, learning a trade. He made no effort to conceal his identity or whereabouts. Anderson paid taxes and traffic tickets, renewed his driver’s license and registered his businesses.

“Not until last year did the Missouri Department of Corrections discover the clerical error that kept him free. Now he’s fighting for release, saying authorities missed their chance to incarcerate him.”

Last July, a SWAT team was sent to his house and he was taken to Southeast Correctional Center in Charleston, Mo., to begin serving the sentence. A court appeal filed in February asks for him to be freed.

Anderson had just an arrest for marijuana possession on his record before he and a cousin robbed a manager at a Burger King. Let him go home.

--There’s been another big space discovery, an Earth-size planet that could be as much like us as any discovered to date, what is being called Kepler-186f, after it was located using the Kepler space telescope. It would appear water might exist, which means giant sea serpents no doubt ply the seas there...as your editor lets his imagination get ahead of the facts.

Anyway, Kepler-186f is about 460 light years away, which is kind of a bummer, especially for network honchos looking to augment their Thursday prime-time television schedules, let alone for Jerry Seinfeld and any hopes he has for further royalties.

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

God bless America.

---

Gold closed at $1293
Oil $104.30

Returns for the week 4/14-4/18

Dow Jones +2.4% [16408]
S&P 500 +2.7% [1864]
S&P MidCap +2.5%
Russell 2000 +2.4%
Nasdaq +2.4% [4095]

Returns for the period 1/1/14-4/18/14

Dow Jones -1.0%
S&P 500 +0.9%
S&P MidCap +0.7%
Russell 2000  -2.2%
Nasdaq -1.9%

Bulls 505.
Bears 20.6 [Source: Investors Intelligence]

---