Week in Review

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Week in Review

11/22/2014

For the week 11/17-11/21

Edition 815

Washington and Wall Street

Before I get to the immigration debate, a few notes on the economy. The housing figures were solid for the month of October with housing starts coming in at an annualized pace of 1.08 million, better than expected, led by single-family home starts rising 4.2%, while existing home sales for the month also came in above expectations, 5.26 million, the highest level since September 2013. The median home price was up 5.5% year over year. 

October industrial production fell 0.1% when a rise of 0.2% was expected but this isn’t a big deal.

On the inflation front, October producer prices were up a hotter than forecast 0.2%, up 0.4% ex-food and energy. For the 12 months the PPI is up 1.5%, 1.8% on the core.

Consumer prices for October were unchanged, up 0.2% ex-food and energy. Year over year the two figures were 1.7% and 1.8% on core. So inflation remains a non-issue.

On the earnings front, I jot down a few companies to follow before the week starts and all five of them this time – Staples, Home Depot, Lowe’s, Target and Best Buy – came in better than expected.

As for stocks, they rose to new highs, again, with a solid rally at week’s end propelled by renewed talk from the European Central Bank that it would do all it could to get the freakin’ continent’s economy moving, while China surprised investors in cutting interest rates in a new stimulus effort. Much more on these two moves, plus Japan, in a bit.

Obama’s Executive Action on Immigration

Before President Obama’s move, a USA TODAY poll found that 46% of those surveyed said the president should wait for the new Republican-controlled Congress to act, while 42% thought he should take action now.

So on Thursday in a speech from the White House, Obama lifted the immediate threat of deportation for between 4 and 5 million undocumented immigrants (depending on the source and how you calculate it), bringing to the forefront an issue that immediately ignited the opposition.

“Are we a nation that accepts the cruelty of ripping children from their parents’ arms? Are we a nation that educates the world’s best and brightest in our universities, only to send them home to create businesses in countries that compete against us?”

The president also said: “The actions I’m taking are not only lawful, they’re the kinds of actions taken by every single Republican president and every Democratic president for the past half century. To those members of Congress who question my authority to make our immigration system work better, or question the wisdom of me acting where Congress has failed, I have one answer: Pass a bill.”

Obama insisted his actions did not amount to amnesty: “Amnesty is the immigration system we have today – millions of people who live here without paying their taxes or playing by the rules, while politicians use the issue to scare people and whip up votes at election time.”

First a few facts in terms of what Obama’s executive actions do. It will defer for three years deportation for people who came to the U.S. as children and for parents of children who are citizens or legal permanent residents. It doesn’t give them an easy path to citizenship.

The Department of Homeland Security is to streamline the visa process for foreign workers and their employers, focusing on highly-skilled workers. Graduates of U.S. universities in science and technology will have expanded options for staying.

Obama promised to deport undocumented immigrants who have been convicted of felonies, or gang members (though there was a story in New Jersey this week that county authorities are releasing undocumented immigrants from county jails for various reasons).

So 33% to 50% of those undocumented immigrants now in the U.S., estimated at 11.4 million, can move out of the shadows, seek better jobs, and will be more likely to pay income and Social Security taxes.

I am going to limit my own opinions on the issue except to state the obvious. While his intentions may be right, and I can’t dispute some of the policies, I totally disagree with his end-run of Congress and his Constitutional overreach, while the politics of it all stink. If he was so troubled by the plight of the millions of undocumented folks, and he thought he had the legal authority to do this (even though he had said 20 times before he did not), he could have done so months ago.

But we all know it was about the midterm elections, as was his decision three days after the vote to send an extra 1,500 “advisers” to Iraq, an announcement he could have made beforehand but didn’t, a blatant deception.

Obama wanted to pick a fight and he has one. But congressional Republicans are divided over how to respond and how far they should go to stop him without severely damaging their efforts to win back enough of the Hispanic vote in 2016.

House Speaker John Boehner said in a statement after the speech that Obama’s “ ‘my way or the highway’ approach makes it harder to build the trust with the American people that is necessary to get things done.” Boehner added: “The president has said before that ‘he’s not king’ and he’s ‘not an emperor,’ but he’s sure acting like one.”

For his part, incoming Senate Majority Leader Mitch McConnell has said on more than one occasion: “Let me make it clear: There will be no government shutdowns and no default on the national debt” in response to Obama’s executive action but he has a restive caucus.

Sen. Jeff Sessions (R-Ala.), the incoming chairman of the Budget Committee, wants Boehner and McConnell to allow only a short-term budget bill to keep government agencies open until early next year and the new Congress; the thinking being they’ll be able to force Obama to accept a budget bill that would prevent him from implementing his executive order on immigration. Sessions wants a shutdown to be on the table.

But even West Virginia Dem. Senator Joe Manchin told White House aides on Thursday that he disagreed with Mr. Obama. “To put it through now is the wrong thing to do. I told them I wasn’t comfortable.”

One option favored by the Republican leadership and championed by House Appropriations Committee Chairman Harold Rogers (R-Ky.), is to fund the government until the end of the fiscal year and then rescind parts of immigration-related funding.

But many conservative lawmakers want hard-line actions. Sen. John McCain countered, “It only takes a couple” of comments for an unflattering narrative to build about the Republican response. “That’s the trouble with having some of these new, young punks around here. They ought to listen to us old geezers.” 

Opinion...from all sides...

David Brooks / New York Times...writing before the exact timing of Obama’s executive order was known.

“This move would...make it much less likely that we’ll have immigration reform anytime soon. White House officials are often misinformed on what Republicans are privately discussing, so they don’t understand that many in the Republican Party are trying to find a way to get immigration reform out of the way. This executive order would destroy their efforts.

“The move would further destabilize the legitimacy of government. Redefining the legal status of five million or six million human beings is a big deal. This is the sort of change we have a legislative process for. To do something this seismic with the stroke of one man’s pen is dangerous.

“Instead of a nation of laws, we could slowly devolve into a nation of diktats, with each president relying on and revoking different measures on the basis of unilateral power – creating unstable swings from one presidency to the next. If President Obama enacts this order on the transparently flimsy basis of ‘prosecutorial discretion,’ he’s inviting future presidents to use similarly flimsy criteria. Talk about defining constitutional deviancy down.

“I’m not sure why the Obama administration has been behaving so strangely since the midterms. Maybe various people in the White House are angry in defeat and want to show that they can be as obstructionist as anyone. Maybe, in moments of stress, they are only really sensitive to criticism from the left flank. Maybe it’s Gruberism: the belief that everybody else is slightly dumber and less well-motivated than oneself and, therefore, politics is more about manipulation than conversation.

“Whatever it is, it’s been a long journey from the Iowa caucuses in early 2008 to the pre-emptive obstruction of today. I wonder if, post-presidency, Mr. Obama will look back and regret that he got sucked into the very emotional maelstrom he set out to destroy.”

“President Obama’s decision to legalize millions of undocumented immigrants by his own decree is a sorry day for America’s republic. We say that even though we agree with the cause of immigration reform. But process matters to self-government – sometimes it is the only barrier to tyranny – and Mr. Obama’s policy by executive order is tearing at the fabric of national consent....

“The President’s rationale is ‘prosecutorial discretion,’ but he is stretching that legal concept beyond normal understanding. The executive branch does have discretion about whom to prosecute. But this typically extends to individual cases, or to setting priorities due to limited resources such as prosecuting cocaine but not marijuana use.

“Mr. Obama claims he is using his discretion to focus on such high deportation priorities as criminals, but he is going much further and is issuing an order exempting from deportation entire classes of people – as many as five million....

“The Reagan and Bush precedents cited by the Obama lawyers are different in kind and degree. They involved far fewer people and they were intended to fulfill the policy set by Congress – not, as Mr. Obama intends, to defy Congress. That is why their actions were done with little controversy.

“Mr. Obama is issuing his order amid furious political opposition and after his own multiple previous declarations that he lacks legal authority. ‘If we start broadening that [his 2012 order for undocumented children], then essentially I’ll be ignoring the law in a way that I think would be very difficult to defend legally,’ Mr. Obama said on Telemundo in September 2013. Until now.

“While we favor generous immigration, Mr. Obama’s order also fails as policy because it won’t reduce the economic incentive that drives illegal immigration. The only way to reduce the flow of illegal migrants is to offer enough legal ways to work in the U.S. and then return home.

“His unilateral order will encourage more migrants to come in hope of a future amnesty, without matching the ebb and flow of migration to America’s changing labor market demands. His order also offers no prospect of future citizenship, creating a laboring class with less of a stake in American institutions – and less incentive to assimilate....

“The polls show the American people are uneasy about Mr. Obama’s unilateral law-making, and liberals should be too. Mr. Obama is setting a precedent that Republican Presidents could also use to overcome a Democratic majority....

“Mr. Obama’s rule-by-regulation has already been rebuked more than once by the Supreme Court. His ‘I, Barack’ immigration decree is another abuse that will roil American politics and erode public confidence in the basic precepts of self-government.”

“(The) idea that Mr. Obama is imperious is absurd. His actions are limited in scope and reversible in fact. Likewise, there is hyperbole in Mr. Obama’s defense. His more starry-eyed supporters liken his actions to Abraham Lincoln’s Emancipation Proclamation that put an end to slavery without reference to Congress. If only there were a parallel. In all likelihood, Mr. Obama’s move will put an end to hopes of immigration reform on his watch....

“What about the politics? Here Mr. Obama may have more to gain from his gambit. Those puzzling over Mr. Obama’s uncharacteristic fit of impatience should cast their mind back to 2010 when Republicans took control of the House of Representatives. Mr. Obama bent over backwards to meet his opponents halfway on fiscal reform, which was the central issue of the moment. In return Republicans took the U.S. to the brink of sovereign default. The same applies to Mr. Obama’s efforts to fashion a bipartisan bill on immigration reform. He has taken draconian steps to strengthen the border first in order to meet the Republican precondition for offering illegal immigrants a pathway to citizenship. Again, it bought him nothing. Mr. Obama’s actions should be seen in that context – once bitten, twice shy. Now he is playing solely for the politics.”

“The president has made his decision, and we hope it works out for the best, offering welcome relief to immigrant families. But still, as Obama himself has noted, executive action will not bring final resolution to the problem. Fewer than half of those living in the country illegally will be helped by his actions, and those only temporarily. Related issues such as border security and what to do about illegal immigration in the future have not been fully addressed. And by acting unilaterally, the president has further antagonized Republicans, likely cementing their intransigence. (‘Sticking your finger in the eye of a recently elected Republican Congress’ is how Republican Sen. Lamar Alexander of Tennessee described Obama’s move. House Speaker John A. Boehner of Ohio warned that the president was ‘playing with fire.’)

“We understand the deep frustration felt by immigrants and their advocates, and we understand why Obama moved now. But this is an issue that must ultimately be solved legislatively, with all sides giving a little and getting a little. Comprehensive immigration reform hashed out through the political process remains the best and only long-term solution. A new Congress – a Republican-led Congress – will take office in January, and plenty of compromise by both the president and lawmakers will be necessary if progress is to be made on this terribly important issue.”

“The president always has had authority to calibrate and prioritize the enforcement of immigration (and other) laws, but this wholesale reinterpretation amounts to overreaching.

“Mr. Obama, a former constitutional law professor, has said as much, explicitly and many times. ‘Now, I know some people want me to bypass Congress and change the laws on my own,’ he said in 2011. ‘That’s not how our democracy functions. That’s not how our Constitution is written.’....

“On Thursday evening, they organized watch parties to see Mr. Obama’s speech on the matter. On Friday, he is scheduled to travel to Nevada to celebrate in a purple state. The move has the feel of a political campaign, not a soberly considered act of governance....

“Mr. Obama was right to argue Thursday that otherwise law-abiding undocumented immigrants deserve a route out of the shadows. But unilateral action is not the right way to achieve that.

“Republicans, obstinate and inert for so long on immigration, cannot dodge responsibility. Even after the Senate passed sweeping immigration reform last year with bipartisan support, House Speaker John A. Boehner refused to allow a vote on the bill in the lower chamber, where it would have been likely to pass. Republicans now berate the president for thwarting the popular will; yet the GOP thumbed its nose at democracy by refusing to submit the question to an up-or-down vote.

“Now the White House seems almost eager to goad the opposition into a collective temper tantrum – and may succeed....

“(But) if Republicans want revenge...they have a ready way to take it. It’s called legislation.”

Finally, on a totally unrelated issue, but of potentially far greater importance, the director of the National Security Agency, Michael Rogers, testifying before a House Intelligence Committee hearing on cybersecurity, said he expects a major cyberattack against the U.S. in the next decade. “It’s only a matter of the ‘when,’ not the ‘if,’ that we are going to see something dramatic,” he said.

Adm. Rogers also heads the U.S. Cyber Command, a military division, and he highlighted several threats that will become significant problems in the coming year. At the top of his list are nation-states, including China and “one or two others,” that are infiltrating the networks of industrial-control systems, the electronic brains behind the electrical grid, nuclear power plants, air traffic control and subway systems.

“There shouldn’t be any doubt in our minds that there are nation-states and groups out there that have the capability to do that,” Adm. Rogers said. “We’re watching multiple nations invest in that capability.”

We’ve heard this many times before, and I’ve written of it ad nauseam, but to hear a man of the status of Adm. Rogers discuss the topic in such blunt terms should have us all sleeping with one eye open.

China, by the way, denied the charges. [Insert your own comment here.]

Europe and Asia

The week started with British Prime Minister David Cameron warning of the risk of another global recession at the G20 summit in Brisbane, through an opinion piece in The Guardian, with Cameron saying a combination of economic problems in the eurozone, a slowdown in emerging countries and geopolitical risks around the globe had created a “dangerous backdrop of uncertainty and instability.”

“In our interconnected world, wider problems in the global economy pose a real risk to our recovery at home.”

And then we had some flash PMI data for the euro-18 for the month of November, courtesy of the good folks at Markit, and the news wasn’t good. The flash composite was 51.4 vs. 52.1 in October, with the manufacturing PMI at 50.4 (vs. 50.6) and services at 51.3 (vs. 52.3).

The flash readings only look at Germany and France on a country basis and in the former, the services PMI was 52.1 (54.4 in October), while manufacturing was 50.0 vs. 51.4. Not good. [But an investor confidence figure in Germany rose for the first time in 11 months.]

In France, the services PMI was 48.8 vs. last month’s 48.3, while manufacturing was down to 47.4 from 48.5.

Commenting on the data, Chris Williamson, Chief Economist at Markit said:

“France remains a key concern, with business activity falling for a seventh successive month and demand for goods and services deteriorating at a faster rate. Growth in Germany has meanwhile slowed to the weakest since the summer of last year, with demand stagnating. The rest of the region as a whole continues to outperform the two ‘core’ countries, though even here the rate of expansion has cooled.

“Policymakers will no doubt be disappointed that recent announcements and stimulus measures are showing no signs of reviving growth. The deteriorating trend in the surveys will add to pressure for the ECB to do more to boost the economy without waiting to gauge the effectiveness of previously-announced initiatives.”

Well, lo and behold, ECB President Mario Draghi once again said the central bank will do all it can to revive the economy.

“We will do what we must to raise inflation and inflation expectations as fast as possible, as our price-stability mandate requires,” he said in Frankfurt on Friday. Some inflation expectations “have been declining to levels that I would deem excessively low,” he said.

The ECB then announced it purchased more asset-backed securities and Euro stocks soared, bond yields fell, on speculation the central bank is closer to buying sovereign debt in a full-scale, U.S. style, quantitative easing program.

For the week, the yield on the German 10-year fell just one basis point to 0.77%, but the 10-year yield in Spain dropped from 2.12% to 2.01%; in Italy from 2.34% to 2.21%; and in Portugal from 3.16% to 2.98%.

Draghi made clear (recognizing thus far he has been much talk and little action for over two years) that “There is a combination of policies that will work to bring growth and inflation back on a sound path. If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases.”

But Bundesbank President Jens Weidmann, speaking two hours after Draghi, said: “More than just favorable refinancing conditions will be needed to stimulate credit growth.” It’s still largely about “structural reforms which bolster competitiveness and boost economies’ growth potential. A prosperous economy needs healthy banks, but the opposite is just as true: healthy banks need a prosperous economy.” [Bloomberg]

The ECB next meets Dec. 4, at which time it is expected to lower its macroeconomic forecasts for the region. 

There was some good news that I have to squeeze in. EU new car registrations (new car sales) rose 6.5% in October, the strongest monthly increase since March, with all major markets up except France, down 3.8% year over year. Spain was up 18.1%, the U.K. up 9.5%. Renault, BMW and Volkswagen all posted solid gains. [Sales in the EU are up 10.1% in the ten months to October.]

And retail sales in the U.K. rose a solid 0.8% in October, far better than expected.

Turning to Asia...in China, the week started with more bad news on the housing front, with new-home prices dropping in October in 67 of 70 major cities vs. a year earlier. Housing sales are down 10% in the first 10 months of the year, which is doing a number on steel, cement and furniture manufacturers.

And a preliminary reading on China manufacturing by HSBC for November was at 50.0, the dividing line between growth and contraction vs. October’s 50.4.

But then on Friday, Friday night China time, the People’s Bank cut its one-year lending rate to 5.6% from 6.0%, the first cut in the benchmark interest rate since July 2012, which sent global shares, oil and metals prices higher on the hope it will provide fresh stimulus.

But the rate cut is also a further acknowledgement all is not well in China.

Then there is Japan, where on Monday the government released a flash estimate on third-quarter growth and it fell 1.6% when an increase of 2.2% had been expected. [GDP was down a whopping 7.3% in Q2.] The final reading on Q3 is Dec. 8 and it could be revised upwards a bit but the number was all Prime Minister Shinzo Abe needed to delay the final hike in the sales tax, from 8% to 10%, slated for next October to the following year, or even 2017. Abe then called an early election, two years ahead of schedule, dissolving parliament.

Abe’s Liberal Democrats have a majority in the lower house (the important chamber), but he sees an opportunity to consolidate power with the opposition party in disarray and he wants support to push ahead with “Abenomics”; kick-starting the economy through stimulus (government spending) and economic reforms, while the Bank of Japan does it thing with monetary policy.

Abe said, “I need to hear the voice of the people. I will step down if we fail to keep our majority because that would mean our Abenomics is rejected.”

But Abe has another reason for calling an early election. His popularity is now below 50% for the first time since his election in 2012, and while that is high by Japan standards, the trend isn’t good and a year from now he could face a much tougher battle if the economy isn’t improving substantially.

Should he win as expected, though, he locks in another four years in power. And once he secures a new mandate, he can go ahead with what will be some unpopular measures while knowing he has time for a further decline in his ratings, before the hoped for bounceback.

One thing Abe wants to do that isn’t popular is restart Japan’s nuclear power generation plants, which accounted for 30% of Japan’s power before they were shut down following Fukushima. The shutdown is damaging the economy because of expensive energy imports.

As for the delay in the sales tax, which was implemented by his predecessor to instill global confidence in Japan’s commitment to fiscal discipline in the face of a debt to GDP ratio of 245%, Abe called it a “grave, grave” decision, but said it would be justified if Japan finally completed an exit from the deflation it has been experiencing for the better part of 15 years.

One thing is certain. No one in government expected last April’s sales tax rise from 5% to 8% to do the number on economic activity that it did. It was supposed to be transitory, not depression-like. Japan is now in a technical recession – its fourth since the financial crisis – in the six months to September.

The government is going to institute a $26 billion stimulus program focusing on childcare and other measures to help the middle class directly and boost consumer spending and business investment.

But so far, all of Abe’s moves have done nothing but boost stock prices, with corporations failing to pass on some of their surging profits to workers in the form of higher wages. Sound a bit familiar?

Lastly, the Japanese people are wondering why there has to be a new election. The LDP in a new poll is at 39% support, with the next most popular option all the way down at 9.7%. [There are multiple parties in Japan.]

A Kyodo News agency survey released Friday found that 63% of the people did not understand Abe’s reasons for the snap vote. A survey by the Asahi Shimbun newspaper found only 39% support for Abe.

One final, hopeful note for the government. October exports rose 9.6% year over year in October, the most in 8 months, to the highest level since October 2008.

Street Bytes

--Stocks rose a fifth straight week, the longest winning streak of the year, as the S&P 500 and Dow closed at new highs. The Dow rose 1.0% to 17810, while the S&P added 1.2% to 2063 and is now up 11.6% for 2014. Nasdaq rose 0.5% to 4712, just 336 points from its all-time closing high of March 10, 2000...5048.

As noted up top, it was largely about the continuing role of the central banks and additional stimulus measures, real or perceived.

But, boy, are stocks now stretched. Then again, it’s the most...won-der-ful time...of the year! And I’m on record as saying this will be a solid holiday season for retailers.

--U.S. Treasury Yields

6-mo. 0.06% 2-yr. 0.50% 10-yr. 2.31% 30-yr. 3.02%

Another dull week in the Treasury pits. Even the Federal Reserve’s minutes from its last meeting were a real yawner.

How much has volatility dried up since mid-October’s craziness? I didn’t realize until CNBC’s Rick Santelli said it on Friday that the 10-year has closed between 2.30% and 2.38% for 19 straight days.

--On the Ebola front, funny how quickly sentiment changes. Martin Salia died at the Nebraska Medical Center, just 10 days after he had an initial test for Ebola in Sierra Leone, where he was a doctor, that came back negative; to give you yet another sense of just how virulent the virus can be. By the time he got to Nebraska, it was too late.

But it was just a minor news item, even as the World Health Organization said Wednesday that the death toll was up to 5,420 across eight countries, out of a total 15,145 cases of infection. The figure was up from 5,177 just five days earlier and doesn’t include scores that are going unreported. The WHO believes the toll is “far higher.”

As I noted the other week, though, the spread of Ebola in the capital of Liberia has slowed, a good sign, but there are new pockets popping up elsewhere and it only takes one to begin the cycle all over again.

The WHO said that a total of 568 healthcare workers were known to have contracted the virus, 329 of whom died.

Lastly, I started bringing up Ebola as a major concern long before the White House did, but from an economic perspective. Tourism is suffering mightily in sub-Saharan Africa, for example, with the industry worth about $170 billion, or almost 10% of the region’s GDP. The Nov. 15 issue of The Economist observed:

“Now many safari lodges are closer to extinction than the animals that surround them. Redundant (laid off) workers might eventually turn to poaching. [Ed. an immensely depressing thought.]

“Fear of Ebola is growing among Africans, too. Morocco said it would not host the African Cup of Nations, the premier football event on the continent, due to start on January 7th. Morocco had sought a year-long postponement, citing the danger of the virus spreading at large gatherings. Miffed, the Confederation of African Football barred Morocco, which has not had a single Ebola case, from the tournament. The three worst-affected countries – Liberia, Sierra Leone and Guinea – have not, or not yet qualified. Organizers are scrambling to find an alternative host. African football may be the next victim of Ebola.”

--Meanwhile, there have been bird flu outbreaks in Germany, the Netherlands and Britain that the World Animal Health Organization said could be linked through migrating birds, though the H5N8 strain being detected has never been detected in humans. It is, however, the first time this strain was discovered outside Asia. 

H5N1 is the strain that can be transmitted to humans and has resulted in the deaths of hundreds over the years. Two died in two days in Egypt this week. While this is isolated, H5N1 does have a high mortality rate, with the WHO saying 393 of 668 confirmed human cases in the past ten years proved fatal.

--The Senate wasn’t able to muster the 60 votes it needed to approve the Keystone XL pipeline, falling one vote short, 59-41, though it will try again with the new Senate in January to force President Obama’s hands, but they may still fall short of the 67 needed to overcome his probable veto.

This week’s vote was spurred on by Louisiana Democrat Mary Landrieu, who spent days trying to arouse support as she faces a Dec. 6 runoff in which she is trailing. Should she lose to Republican Representative Bill Cassidy, Republicans will have a 54-46 edge.

--I said the other day that those who say lower oil prices won’t impact drilling in the U.S. are perhaps being a bit too cocky and while oil rallied slightly for the first time in eight weeks, should it tumble anew there will be trouble.

As reported in the Wall Street Journal this week, for example, the number of drilling rigs in North Dakota dropped in September from 195 to 186, the latest available data, which is down from a high of 218 in May 2012, though oil output hit a state record of 1.18 million barrels in September.

If the price stabilizes in the $80-$85 range on West Texas Intermediate, the sector is fine. But a renewed decline due to slower economic growth, both here and abroad, will do a number on the likes of North Dakota, which at some point will be yet another classic example of boom and bust.

On a related note, Deutsche Bank warned that if oil fell to $60, there could be a 30% default rate among borrowers in the energy sector, who loaded up on debt to fund their operations and acquire new acreage in states like North Dakota.

--Halliburton Co., the second-biggest oilfield services provider, agreed to buy No. 3 Baker Hughes Inc. for $34.6 billion, though the merger will draw intense review from antitrust authorities. Halliburton CEO Dave Lesar said, “We have the best antitrust counsel available on this. We are absolutely confident that we’re gonna get this thing done.” 

Halliburton has already agreed to sell businesses that account for as much as $7.5 billion of revenue, if necessary. [Bloomberg]

--Speaking of mergers, with the above and a $66 billion acquisition of the Botox-maker Allergan by Actavis, about $1.5 trillion in deals targeting American companies have been announced this year, the most since 2000.

--Hundreds of police raided the offices of Brazilian energy giant Petrobras last weekend as part of a political case, this as Petrobras delayed the release of its financial results, warning the investigation may force it to “adjust” its accounts. Shares in the company have plunged 30% this year amid ongoing stories of wrongdoing, including money laundering and massive illegal kickbacks. President Dilma Rousseff’s ruling coalition has been accused of accepting 3% of all Petrobras contracts. Rousseff ran Petrobras before becoming president in 2010.

--According to a Senate report, Goldman Sachs, JPMorgan and Morgan Stanley “exposed themselves to catastrophic financial risks, environmental disasters and potential market manipulation by investing in oil, metals and power plant businesses,” as reported by the Financial Times.

“ ‘Imagine if BP had been a bank,’ said Senator John McCain... ‘The liability from the oil spill would have led to its failure, leading to another taxpayer bailout.’

“A 2012 Federal Reserve of New York commodities team review found that the three banks and a fourth unnamed financial group had shortfalls of up to $15bn to cover ‘extreme loss scenarios,’ the report said. The Fed is considering restricting banks’ physical commodity activities.

“In addition to potential environmental disasters, the subcommittee said the banks’ ownership of investments in physical commodity businesses gave them inside knowledge that allowed them to benefit financially through market manipulation or unfair trading advantages.”  [Gina Chon / FT]

--Target Corp. showed signs of stability, with revenues up 2.8% in its recent quarter, better than expected, with same-store sales in the U.S. advancing 1.2%. The number of shopper transactions in the U.S. edged down 0.4%, marking eight straight periods of declines, but this was the narrowest drop in more than a year.

Target had been hit hard by its botched expansion into Canada, but same-store sales in Canada rose 1.6% in the third quarter, though it still lost another $211 million in the Great White North.

--And as noted above, Home Depot Inc. reported solid results, even as it faces more costs related to a massive data breach earlier this year, but results showed customers weren’t scared off. Revenues were up 5.4%, with same-store sales up a solid 5.2%.

--Home-improvement competitor Lowe’s same-store sales rose 5.1%, with overall revenues up 5.6%, exceeding expectations. The company sees encouraging signs in the housing sector and pegs consumer confidence at prerecession highs. CEO Robert A. Niblock said customers are looking to invest in their homes more now than at any point since 2006.

It’s kind of interesting that Lowe’s said lower fuel prices were helping sales, while Home Depot execs said “the company doesn’t think it will get a sales boost from lower gasoline prices as there’s little correlation in the way there is at other food retailers,” according to HD’s finance chief, who added customers typically shop at Home Depot four times a year.

--Best Buy Co. was another retailer that beat expectations with its fiscal third-quarter earnings release, including same-store sales growth, up 2.2%, the chain’s biggest quarterly gain since 2010. The number of visitors to its stores, however, continued to decline.

--Federal auto safety regulators called on automakers to conduct a nationwide recall of vehicles containing airbags manufactured by Japan’s Takata. Heretofore, the recall was limited to two states and two territories associated with high humidity that is said to help create the highest dangers.

On Thursday, Takata executives appeared before a Senate committee and the company admitted it knew one of its air bags had exploded as early as May 2005 but didn’t investigate it further or warn automakers until two years later. “We didn’t believe it required further investigation at the time,” said the company’s senior vice president of global quality assurance.

--Alibaba was able to handily sell $8 billion in bonds, with the order book oversubscribed by more than six times. The Chinese ecommerce giant’s five-year paper went off at 2.5% and the 10-year at 3.6%. The bonds are expected to carry an A+ investment grade rating by S&P and Fitch...A1 from Moody’s.

--Yahoo Inc. pulled off a coup in reaching a five-year deal with Mozilla Corp. to become the default search engine on the Firefox browser, thus supplanting the nonprofit’s long-time relationship with Google Inc. Firefox could help send millions of new users to Yahoo, which then increases its core ad business.

--Speaking of Google, the European Parliament “is poised to call for a break-up of (the company), in one of the most brazen assaults so far on the technology group’s power,” as reported by the Financial Times late Friday.

“The gambit increases the political pressure on the European Commission, the EU’s executive arm, to take a tougher line on Google, either in its antitrust investigation into the company or through the introduction of laws to curb its reach.”

--Bill Gross got quite a vote of confidence from George Soros, with Soros handing Gross $500 million of his estimated $24 billion fortune to manage; more than Gross raised for his new Global Unconstrained Bond fund in the whole of October.

In a tweet, Gross said: “An honor to be chosen & an honor to be earned as well.”

Boy, if I had my old national sales manager hat on, I’d have a lot of fun with this endorsement, as Janus wholesalers are no doubt having. 

“It was a truly spectacular own goal scored by one of the most senior executives of one of the tech world’s hottest companies in the presence of two famous journalists in a semi-private club owned by the Vanity Fair editor, Graydon Carter.

“At the dinner on Friday night the executive, Emil Michael, a senior vice president at Uber, the car hire tech that has risen from start-up to $17 billion international giant in four years, declared to the table that the company should spend a million dollars hiring private investigators to dig up dirt on journalists to silence them.

“The group, gathered at the Waverley Inn in Manhattan’s West Village, included the actor, Ed Norton, and the Huffington Post publisher, Ariana Huffington, as well as the journalists Michael Wolff and Buzzfeed’s Ben Smith. Michael’s own boss was there too, the Uber chief executive and founder, Travis Kalanick....

“Michael, Buzzfeed reported, was particularly frustrated by one female journalist, Sarah Lacy, who runs the popular Silicon Valley website PandoDaily. She has criticized Uber for having an allegedly sexist culture and for putting female passengers at risk by not vetting its drivers thoroughly enough....

“At the dinner Michael was outraged and, according to Buzzfeed, said that Uber’s dirt diggers could be used to ‘prove a particular and very specific claim about her personal life.’”

Needless to say, Michael was forced to apologize, but it was too late. Everyone in the media came down hard on Uber, well-deserved. As a Bloomberg headline read: “Uber May Need Adult Supervision as Controversy Builds.”

Uber has another problem. Accusations its employees have tracked riders’ whereabouts without their permission –and for seemingly no good reason, as reported by the New York Post’s Kaja Whitehouse.

--McDonald’s flagship Moscow restaurant reopened after the Kremlin, through a sham sanitation inspection, shut it down over worsening tensions between Moscow and Washington and the Ukraine crisis. The restaurant had been closed three months.

At least 12 McDonald’s restaurants in Russia were closed by the sanitation authorities, and four remain shut. 

McDonald’s has nonetheless gone ahead and opened 45 new restaurants in Russia this year and plans on another 25 before year end.

--The Cystic Fibrosis Foundation said Wednesday that the sale of royalty rights for drugs developed with its financial support will result in receipts of $3.3 billion. The foundation committed $150 million to fund Vertex Pharmaceuticals Inc.’s cystic-fibrosis drug Kalydeco. Foundation Chief Executive Robert Beall said the nonprofit will use the $3.3 billion to support further research.

--According to a study by the National Employment Law Project, many factory jobs today pay far less than what workers in basically identical positions earned in the past. 

As reported by the New York Times’ Nelson D. Schwartz and Patricia Cohen:

“Perhaps even more significant, while the typical production job in the manufacturing sector paid more than the private sector average in the 1980s, 1990s and early 2000s, that relationship flipped in 2007, and line work in factories now pays less than the typical private sector job. That gap has been widening – in 2013, production jobs paid an average of $19.29 an hour, compared with $20.13 for all private sector positions.

“Pressured by temporary hiring practices and a sharp decrease in salaries in the auto parts sector, real wages for manufacturing workers fell by 4.4 percent from 2003 to 2013, NELP researchers found, nearly three times the decline for workers as a whole”

--The supply of turkeys is the lowest in nearly three decades but while wholesale prices are at an all-time high, prices at the stores are pretty much the same.

--The problems for Atlantic City continue. A buyer for the $2 billion white elephant Revel Casino Hotel has backed out after Toronto-based Brookfield Asset Management said it couldn’t reach an agreement with bondholders.

Separately, Trump Taj Mahal is still slated to close on Dec. 12. Billionaire Carl Icahn is interested in saving the property, but only if he can secure state and local tax breaks and concessions from the main union.

--Newark Airport’s Terminal C is to be renovated to the tune of $120 million by OTG Management, with the project featuring 55 new restaurants, including some high-end joints, 10,000 electrical plugs and USB ports, and the installation of 6,000 iPads.

I just want greatly expanded restrooms and I didn’t see anything about this in the news release.

--As reported by Nicholas Wells of Crain’s New York Business, the unemployment rate in New York City enjoyed the largest three-month drop – 1.4 points – since the figure was first determined in 1976, down to 6.4% in October. The unemployment rate was 8.4% in October 2013.

Jobs in leisure and hospitality are spurring the growth. The unemployment rate in New York state is 6.0%, so NYS and NYC are enjoying their lowest unemployment rates since October 2008.

--According to research by McKinsey, almost a third of the world’s population is overweight or obese, resulting in an economic cost rivaling smoking or war. Half the population is expected to be overweight in 15 years’ time. McKinsey puts the annual global cost of obesity at $2 trillion – or 2.8% of the world’s economic output. 

The estimated cost is related to loss of economic productivity, increased healthcare and investment required to mitigate the impact of obesity, as reported by the Financial Times. 

--NBC and Netflix have shelved projects associated with comedian Bill Cosby as the number of women who have come forward with sexual assault allegations hit 13 by week’s end. That spells the end of the 77-year-old comic’s network career and it will be interesting to see how much longer he can do standup concerts, with venues beginning to cancel future dates. I noted in another column I do that I took my father to see Cos about five years ago at a local theater, but if given the opportunity today, I wouldn’t go.

His handling of the situation the past week has also been disastrous.

--A mere ten weeks after being hired to take the reins as SVP of “Today,” Jamie Horowitz, former ESPN programmer, was fired by NBC News President Deborah Turness for creating a climate of “instability and insecurity” among the “Today” team. Supposedly, Matt Lauer was urged by cohorts on the program to go to Turness and demand Horowitz be canned, according to the New York Post. So NBC is eating a reported $3 million contract.

This is just one of a stream of stories for years now on the turmoil behind “Today,” which is my personal morning staple (just the first 20 minutes).

--We note the passing of market strategist Vince Farrell, 68. Aside from his many appearances on CNBC, Mr. Farrell was a regular on Louis Rukeyser’s “Wall Street Week.” Farrell was a highly likable man who consistently gave good advice. RIP.

Foreign Affairs

Iran: While there is nothing more important on the foreign policy front this weekend than the topic of Iran’s nuclear program and the Nov. 24 deadline for an agreement, as I go to post Friday evening, there is little to say until we learn over the next 72 hours that an agreement has been  reached, both sides have walked away, or the talks have been extended further.

The head of the UN’s International Atomic Energy Agency (IAEA) said on Thursday that Iran continued to fail to provide explanations for suspected atomic bomb research, as the IAEA has demanded, which I have long maintained is all you need to know if you didn’t already understand Iran’s true intentions. Everything else is secondary.

There should not be an agreement of any kind unless Iran allows intrusive inspections into all reported and disputed facilities, including of the research variety...period. End of story.

IAEA director general Yukiya Amano made clear his agency remains torqued off.

“Iran has not provided any explanations that enable the agency to clarify the outstanding practical measures,” referring to two steps that Iran had agreed to carry out by late August; that being to provide information on allegations of explosives tests and other activity that could be used to develop nuclear bombs.

“With the self-imposed deadline of Monday fast approaching, the negotiations are taking place on three levels. The first part is a hectic attempt to reach a final deal that would put sharp restraints on Iran’s nuclear activities in return for sanctions relief.

“More likely is that the diplomats will announce another extension to the talks, which will probably give them until around February before the new Republican-controlled U.S. Congress starts to have a say in the matter.

“But beneath the surface there is a third level to the negotiations, the subtle start of a blame game between the U.S. and Iran to define who would be responsible should the diplomatic enterprise fail....

“The first part of Iran’s approach will be to blame the breakdown on American intransigence. The election of a Republican-controlled Congress eager to introduce new sanctions gives the Iranians a convenient rhetorical scapegoat: they will argue the Beltway hardliners made it impossible for the Obama administration to negotiate in good faith. If Tehran can define the U.S. as the obstacle, it will lobby Russia, China and maybe some of the Europeans to start lifting sanctions....

“Even with a floundering economy and a falling oil price, Iran might think it would have two advantages in a new stand-off with the U.S.

“First, the rise of (ISIS) has made the U.S. threat of military action against Iran less credible. At a time when the U.S. and Iran are tacit partners in the anti-ISIS campaign in Iraq, it would be even more complicated to think about bombing Iran’s nuclear facilities.

“Iran might also hope that the Ukraine crisis could provide another opening. So far, Moscow has kept its dispute with the west over Ukraine very much apart from its Iran diplomacy. But if a broader conflict breaks out in the coming months in eastern Ukraine, Russia might be tempted to make concessions to Iran as a way of undermining the U.S.”

As for the U.S., if talks fail it needs to “make sure that its negotiating partners have a common view about why no deal was reached and how to get Tehran back to the negotiating table. If the U.S. can keep the negotiating group together, then it can start to apply more pressure on Iran through additional sanctions.”

But the new Congress could impose new sanctions of its own. And, as Geoff Dyer concludes:

“On a day when the administration and Congress are starting to do battle over immigration, their ability to work together on Iran remains the wild card.”

Of course the likes of Israel, Saudi Arabia and the United Arab Emirates are wary of any further extension in the talks, that it’s just dragging things out while Iran fine-tunes their nuclear program. And they are correct.

Sen. Mark Warner, a top Democrat, said on Thursday: “Diplomacy is the best means for resolving all international disputes. But diplomacy cannot be used as a cover for the continuation of the research, development and manufacture of secret weapons of mass destruction.” [Wall Street Journal]

Israeli Prime Minister Benjamin Netanyahu, appearing last Sunday on “Face the Nation,” urged the P5+1 not to make a deal with Iran.

“Look at what ISIS is doing now with assault rifles and pickup trucks. Just imagine what Iran would do if it had nuclear weapons. I think it’s important to continue the sanctions. The alternative to a bad deal is not war. The alternative to a bad deal are more sanctions, tougher sanctions, that will make Iran dismantle its capacity to make nuclear bombs.”

Netanyahu added: “I want to be clear what has to be achieved. It’s not merely preventing Iran from having nuclear weapons today, it’s to prevent them from having nuclear weapons tomorrow.

“That means that Iran should not be left with the residual capacity to enrich uranium that you need to have an atomic bomb, nor to have the long-range ballistic missiles – the ICBMs – to launch them.” [Jerusalem Post]

Iraq / Syria / ISIS: ISIS was responsible for a car bomb that killed five in normally peaceful Irbil, the capital of the semiautonomous region of Kurdistan, while Kurdish forces (the peshmerga) were said to have launched an offensive targeting ISIS controlled areas that the militants had taken this past summer.

“The beheading of another American by the Islamic State brought an appropriately harsh condemnation from President Obama, who called it ‘an act of pure evil.’ Such words about the murder of Abdul-Rahman Kassig, also known as Peter Kassig, ought to reinforce the urgency of destroying the terrorist entity before it can further embed itself in Syria and Iraq and commit other atrocities – such as genocide against non-Muslim communities or a direct attack on the United States.

“That’s why it was discouraging to hear Mr. Obama simultaneously rule out steps to patch the glaring gaps in his strategy. At a news conference in Australia on Sunday, the president appeared to reject the deployment of U.S. Special Operations forces to the front lines – a move his senior military commanders have publicly said may be necessary – except in extreme circumstances. Mr. Obama cited the Islamic State’s acquisition of a nuclear weapon as an example of what would move him to act.

“For the Joint Chiefs of Staff chairman, Gen. Martin Dempsey, and other U.S. commanders, the threshold is considerably lower. Gen. Dempsey said last week that he could recommend the deployment of the forces in any effort to retake the Iraqi city of Mosul or secure the border with Syria. That’s because the U.S. troops could play a crucial role in directing airstrikes against enemy forces as well as in advising Iraqi and allied units on tactics....

“It’s not just the generals who are chafing. U.S. allies in the region, including Turkey and Qatar, are increasingly uncomfortable with Mr. Obama’s strategy of training moderate Syrian rebels in the hope that they will fight the Islamic State but doing nothing to weaken the regime of Bashar al-Assad. Both allies and the rebels point out that the Damascus government appears to be benefiting from the U.S. bombing in Syria and has stepped up attacks on the Western-backed forces.”

“Asked if he was ‘actively discussing ways to remove’ Mr. Assad, Mr. Obama’s response was a blunt ‘no.’ While ‘we are looking for a political solution eventually within Syria,’ he said, ‘we’re not even close to being at that state yet.’ That message will be greeted with cheers by the Assad clique and its supporters in Iran; it will encourage the regime to believe it can continue its ‘barrel bomb’ and chlorine gas attacks with impunity. It will also probably ensure that the rift between the United States and its allies against the Islamic State continues to widen.”

Max Boot of the Council on Foreign Relations echoed something I was pounding the table on over two years ago in an op-ed for the Washington Post:

“Impose a no-fly zone over part of all of Syria. Even though U.S. aircraft are overflying Syria, they are not stopping dictator Bashar al-Assad’s forces from bombing rebel-held areas. This has led to a widespread suspicion among Sunnis that the United States is willing to keep Assad in power – a suspicion fueled by news that Obama sent a letter to Assad’s backers in Tehran proposing cooperation. Sunnis are not going to fight the Islamic State if the alternative is Iranian domination. A no-fly zone over part or all of Syria would save lives while rallying Sunnis to the anti-Islamic State cause, allowing the Free Syrian Army to expand, and possibly paving the way for greater Turkish involvement.”

There was some positive news, or at least sentiments, expressed by Gen. Dempsey while on a trip to Iraq to buck up the Iraqi army. Dempsey said the battle against ISIS was likely to take years but that momentum is turning against them.

At the same time, though, the Wall Street Journal reported that in Syria, IS militants are seizing the foreign aid destined for the neediest Syrians to redistribute. Relief agencies also report their workers are being kidnapped by ISIS.

In one instance, militants “ferried away 30 generators worth at least $300,000 donated by the German government’s largest development agency.”

Separately, according to the Syrian Observatory for Human Rights, ISIS has killed 1,432 Syrians off the battlefield since the end of June when it declared a caliphate. The majority – 882 – were civilians, including two children and five women.

Israel: There are legitimate fears of a full-blown religious war between Jews and Muslims following another week of unspeakable violence in which a pair of Palestinians wielding meat cleavers and a gun killed five Israelis, including four rabbis and a police officer, in a Jerusalem synagogue, before being killed themselves.

“All of us are scared that there will be a religious war, that extremists from both sides will start fighting each other,” said Oded Wiener, an Israeli Jew from the Council of Religious Institutions of the Holy Land. [William Booth and Ruth Eglash / Washington Post]

For weeks now Jerusalem has been the center of violence, beginning with the clashes over the Temple Mount, (Noble Sanctuary for Muslims).

During the two intifadas, or uprisings, the attacks against Israelis were driven by militant factions and leaders but now it’s seemingly lone-wolf zealots. The rhetoric between the two sides has been ugly. And both seem to be pointing at al-Aqsa as the source, where Jews want the right to pray.

Israeli Economy Minister Naftali Bennett called on the government to launch a military operation to “go to the source” of terror in the holy city.

Over the past month, five Israelis and a foreign visitor to Jerusalem have been run over deliberately or stabbed by Palestinians and about a dozen Palestinians have died, including the men accused of carrying out the attacks.

“To understand why peace in Palestine is years if not decades away, consider the Palestinian celebrations after Tuesday’s murder in a Jerusalem synagogue of five Israelis, including three with joint U.S. citizenship....

“The Popular Front for the Liberation of Palestine claimed responsibility, while Hamas praised the murders as a ‘response to continued Israeli crimes.’ The main obstacle to peace isn’t Jewish settlements in the multi-religious city of Jerusalem. The barrier is the culture of hatred against Jews that is nurtured by Palestinian leaders.

“Palestinian Prime Minister Mahmoud Abbas condemned the killings, but not without calling for Israel to halt what he called ‘invasions’ of the holy Al Aqsa Mosque in Jerusalem. Mr. Abbas has previously said the Temple Mount was being ‘contaminated’ by Jews, despite assurances by Prime Minister Benjamin Netanyahu that the Dome of the Rock and Al Aqsa Mosque are for Muslim worship only. The Memri news service reports that the Oct. 29 issue of the Palestinian daily Al-Hayat Al-Jadida was full of false accusations that Israel is damaging Jerusalem’s holy sites.

“Secretary of State John Kerry blamed Tuesday’s attack on general ‘incitement,’ but Mr. Abbas was one of the inciters....

“The best way to prevent another intifada is to reassure Israel that the U.S. supports its self-defense, while warning Palestinians that they will never have a homeland as long as they cultivate a society that celebrates murdering the innocent in the name of religion.”

Russia: Thursday, President Vladimir Putin gave another hardline speech, this time in chairing a meeting of the Security Council at the Kremlin, calling on law enforcement agencies, religious leaders, institutions of civil society and Russia’s education system to join together to prevent the rise of extremism.

“In the modern world extremism is often used as a geopolitical instrument to rearrange spheres of influence. We see the tragic consequences of the wave of so-called ‘color revolutions,’ the turmoil in the countries that have undergone the irresponsible experiments of covert and sometimes blatant interference in their lives,” Putin said, according to a transcript.

“We take this as a lesson and a warning, and we must do everything necessary to ensure this never happens in Russia,” he added.

Putin also said the country’s anti-extremism measures had “nothing to do” with fighting the opposition.

“We have a free, democratic country, and its citizens have the right to have and express their opinion, and have the right to be opposed to the government,” he said.

Right. He then called for tackling “uncontrolled migration,” which he said “breeds crime, interethnic tensions and extremism.” [The Moscow Times]

Putin’s spokesman, Dmitry Peskov, said in an interview with the BBC:

“We would like to hear that NATO will stop drawing closer to Russia’s borders, that NATO will stop its attempts to disrupt the balance of power. Unfortunately, we have not heard these assurances, and that forces us to worry, since NATO is gradually moving closer to our borders.”

The Russian Foreign Ministry this week also blasted the Obama administration for its failure to stamp out the use of torture and inhumane methods in American prisons and detention facilities. The statement read in part:

“We recommend that our U.S. colleagues, who ambitiously pretend to be an international leader in fighting torture, should start by bringing human rights in their own country to elementary order.”

Yup, the propaganda machine was in full swing this week. Meanwhile, the carnage in Ukraine continues. 

“Russia’s military assault on Ukraine threatens the survival of an independent state and peace in Europe. Often overlooked is what the invasion – and that’s what it is even if President Obama and the Europeans are afraid to utter the ‘I word’ – has meant for Ukrainians in lands taken by Vladimir Putin’s forces.

“In a report Thursday, the United Nations provided a bracing look behind the new Putin curtain. Life for people there is brutish and dangerous. The ‘cease fire’ signed in early September in eastern Ukraine is a farce: In that time, 957 people have died, or about 13 every day, says the U.N.

“Altogether, since well-armed men in camouflage came out of nowhere in April and claimed to rule the regions of Donetsk and Luhansk on Russia’s behalf, 4,317 people have been killed and 9,921 wounded. All these lives are on the docket, if not conscience, of Russian President Vladimir Putin. His spies, soldiers and media disinformers conjured a conflict in eastern Ukraine from nothing.

“ ‘New Russia,’ per Moscow’s preferred phrase, is in the hands of Russian soldiers, mercenaries and local gangsters. The U.N. reports that their rule is bringing about ‘the total breakdown of law and order.’ This is Mad Max territory of summary executions, kidnappings and torture. Monitors found evidence of three mass graves....

“Almost a million have fled the Putin zones, leaving behind mainly those who can’t, such as the elderly and poor. The recent Russian military buildup along the Ukrainian border and in Donetsk and Luhansk suggests more of the same in lands further west.”

As The Economist editorializes as well, the West must support Ukraine’s economy. “In particular America could be more generous; it has so far delivered a measly $1 billion.”

Ukraine’s debt must be restructured to give it a fighting chance. So much time has already been wasted.

Gideon Rachman / Financial Times, looking back on an old protest camp in the 1980s outside a British nuclear-weapons base.

“Thirty years on and the nuclear peace is still holding. But I am becoming a little less secure in my belief that nukes will never be used.

“There are three reasons for my anxiety. First, the spread of nuclear weapons to unstable countries such as Pakistan and North Korea. Second, the growing body of evidence about how close the world has come, at various times, to nuclear conflict. My third reason for worry is more immediate: a significant increase in threatening nuclear talk from Russia.

“Both in private and in public, the Russians are now making increasingly explicit references to their country’s nuclear arsenal. A couple of weeks ago, I witnessed a prominent Russian warn an audience, at a private seminar in Washington, that ‘President Putin has put the nuclear gun on the table.’ The Russian president has indeed told an audience at home that outsiders should not ‘mess with us,’ because ‘Russia is one of the leading nuclear powers.’

“Last week, Pravda – the Soviet mouthpiece during the cold war – ran an article headlined, ‘Russia Prepares Nuclear Surprise for NATO.’ It crowed that Russia has parity with the U.S. in strategic nuclear weapons and boasted: ‘As for tactical nuclear weapons, the superiority of modern-day Russia over NATO is even stronger. The Americans are well aware of this. They were convinced before that Russia would never rise again. Now it is too late.’....

“Mr. Putin seems to adhere to what Richard Nixon called the ‘madman theory’ of leadership. The former U.S. president explained: ‘If the adversary feels that you are unpredictable, even rash, he will be deterred from pressing you too far. The odds that he will fold increase greatly.’ President Putin may be right in calculating that, by putting the nuclear gun on the table, he can always out-madman Barack Obama, the coolly rational U.S. president.

“Nonetheless, even assuming that the Russian nuclear talk is a bluff, it is still dangerous – since to make the bluff intimidating, the Russians have to raise tensions and take risks. Last week, General Philip Breedlove, commander of NATO forces in Europe, said that Russia had ‘moved forces that are capable of being nuclear’ into Crimea. As fighting in Ukraine continues, the danger of Russia and NATO misreading each other’s intentions increases.”

Lastly, watch Georgia. Russia and the breakaway region of Abkhazia are forming a joint military force. As German Chancellor Angela Merkel said this week on the issue of Putin and Ukraine.

“This is not just about Ukraine. This is about Moldova, this is about Georgia, and if this continues then one will have to ask about Serbia and one will have to ask about the countries of the Western Balkans.”

China: So, on cue, as world leaders departed Beijing following the APEC summit, the pollution returned...the killer smog. All week there were hazardous levels of the stuff.

So city planners are hoping to “create six passages to channel wind through four major areas (of the city),” as reported by the Beijing News and the South China Morning Post. Yup, wind tunnels.

The State Council announced this week it was committed to capping annual coal consumption at 4.2 billion tons in seven years, which is up from 3.61 billion last year. Better get those wind tunnels goin’, sports fans!

[This also speaks to the sham climate change agreement between the U.S. and China.]

On the military front, Russia and China strengthened their alliance and vowed to hold joint naval exercises to counter U.S. influence in the Asia-Pacific during a meeting between defense chiefs in Beijing.

But Monday, in an address to the Australian parliament, President Xi Jinping said China would never use force to achieve Beijing’s goals, including in maritime disputes.

“A review of history shows that countries that attempted to pursue development with force invariably failed. This is what history teaches us. China is dedicated to upholding peace. Peace is precious and needs to be protected.”

But he added: “We must always be on high alert against the factors that may deprive us of peace.” [Agence France-Presse]

But in trying to read Xi’s true intentions, The Economist had this telling note.

“Last month, at a meeting tightening Communist Party control of the arts, Mr. Xi endorsed a young Chinese blogger known for his anti-American bile. The state media’s shrill, cold-war warnings of a hostile West plotting to undo China appear to contradict Mr. Xi’s call for a ‘new type of great power relationship.’ And for all that Mr. Xi says China and America should become an ‘anchor of world stability and propeller of world peace,’ sharp differences emerged in his press conference with Mr. Obama at the conclusion of the APEC summit. The Chinese leader admonished a foreign press which has reported on how some of the country’s leaders and their families have enriched themselves. And he warned America not to meddle in Hong Kong, whose student demonstrations in favor of democracy he condemned as ‘illegal,’ his strongest criticism of them to date. At times magnanimous, at times vituperative: China may continue to show both faces to the world for as long as it may not feel as confident about its strengths as it would wish to appear.”

On the economic front, China signed a $12 billion contract to build over 1.400 kilometers of rail along the coast of Nigeria, China’s single biggest overseas contract, according to Xinhua news agency.

North Korea: Pyongyang threatened to conduct a nuclear test in response to a United Nations move towards a probe into its human rights violations. The foreign ministry office accused the United States of orchestrating a recent U.N. resolution calling for the investigation.

Britain: Prime Minister Cameron suffered a key defeat as UKIP (the United Kingdom Independence Party) won its second seat in parliament in a by-election. UKIP takes votes from Cameron’s Tories and there have been increasing defections to it, including the winning candidate this week, who has the interesting name of Mark Reckless.

UKIP is anti-EU, anti-immigration, which is where many conservatives are lining up these days, yet Cameron is holding a general election in six months to prove he’s a keeper. Now there is clearly trouble.

A YouGov poll this week shows Labor, the major party of opposition, would get 34% to the Conservative’s (Tories) 32%. UKIP polls at 15%, while the junior partners in the current coalition government, the Liberal Democrats, would get 7%.

UKIP’s leader is the colorful Nigel Farage, known to be quite a beer drinker. In an interview with USA TODAY, Farage said on Wednesday, “This party is united by a feeling that the established political classes are out of touch, and inherently dishonest with British voters.”

France: No secret I’m fascinated by this nation’s politics, witness my two trips in recent years to see firsthand far right Marine Le Pen’s annual May Day addresses. This week Nicolas Sarkozy said a law passed last year giving same-sex couples marriage and adoption rights should be “completely rewritten” as he tries to regain the party leadership of the center-right Union for a Popular Movement (UMP) against centrist Alain Juppe; Sarkozy the former president, Juppe a former prime minister and currently mayor of Bordeaux. 

The election isn’t until 2017, but Sarkozy first has to gain the leadership of the UMP, and that vote is Nov. 29, which Juppe is not contesting and Sarkozy will win.   But it’s in 2016 the two would square off for the party’s nomination for presidential candidate.

Sarkozy’s popularity has been dropping, from 65% among UMP sympathizers in September to 52% today, according to an Ifop poll, while Juppe’s numbers have improved from 25% to 33% over the same period.

But UMP sympathizers support gay marriage to the tune of 58%, up from 33% in January, so Sarkozy is walking a tightrope. [Financial Times]

Sarkozy is nonetheless changing his stripes, recognizing that if he’s the presidential candidate, it’s about his battle with Le Pen to get in a runoff...but now I’m getting way ahead of myself. There will be major riots in Paris and elsewhere long before then that could change the entire dynamics of the country. All over what it is to be French and immigration, let alone an economy that simply isn’t competitive in a global marketplace.

Mexico: The case of the 43 missing Mexican students has led to violent mass demonstrations in the country, including in Mexico City, as families of students demand answers from the government; not accepting the official explanation the students were murdered by a drug gang. Forensic tests are being carried out on bodies found in mass graves in Guerrero State, with the mayor of Iguala having been arrested and facing accusations that he ordered police to confront the students on the day of their disappearance, Sept. 26.

But as I noted last time, more than 100,000 have been killed and 27,000 have disappeared in Mexico in the last decade. There is no rule of law. Corruption and political violence have long been endemic.

That said, the case of the 43 has galvanized the country unlike any other.

“(President Enrique Pena Nieto’s) people rightly say that the rule of law cannot be imposed in Mexico overnight. But that is no excuse for inaction today. Iguala is not the only town where criminals run the police: in such places, the federal government should take temporary control of the police and administration. Mr. Pena should lead an effort to clean up state police forces and local courts. A bill to make the attorney-general’s office independent and to create an anti-corruption agency should be fast-tracked. Federalism in Mexico needs change, too: states and municipalities raise almost no funds of their own and are not held to account for their spending. It is an indictment of all three main political parties that the elements in Mr. Pena’s reform pact to make politicians accountable have yet to be approved.

“However impressive Mr. Pena’s economic reforms, Mexico will never manage to achieve its considerable potential without an honest, efficient criminal-justice system. Its democracy will lose legitimacy if its politicians continue to tolerate graft. Mr. Pena’s domestic critics say that he is a skin-deep modernizer, steeped in his party’s bad old ways. Now is the time for him to prove them wrong.”

Criminality is scaring investors away, while smaller operations have to pay extortion money to gangs and corrupt public servants.

Separately, Mexico’s first lady, Angelica Rivera, a former soap opera star, has decided to sell her family’s highly controversial mansion, dubbed the ‘White House.’  [To me it looks incredibly ugly...but what do I know.]

“I don’t want this to continue to be a pretext to offend and defame my family,” the actress said.

In a video she talked of her wealth and how she was under no obligation to divulge her real estate purchases.

The controversy, which has rocked the country, concerns the fact the residence is legally owned by a construction firm that won lucrative public works contracts when current president Pena was governor of the State of Mexico before he ascended to the top spot in the land.

But it’s clear Rivera’s statement doesn’t put the scandal to rest. It’s complicated, as is everything in Mexico. 

Random Musings

--According to a report from the Global Terrorism Index 2014, the number of deaths from terrorism increased by 61% between 2012 and 2013, with nearly 10,000 terrorist attacks in 2013, a 44% increase from the previous year. ISIS, al-Qaeda, Boko Haram and the Taliban were behind most of the deaths. The Institute for Economics and Peace says nearly 18,000 people died from terrorist attacks in 2013. The IEP executive chairman told the BBC, “The destabilization in Syria, which has now overflowed into Iraq, is where we feel the upsurge.”

Five countries – Iraq, Afghanistan, Pakistan, Nigeria and Syria – accounted for 80% of the deaths last year.

Al-Qaeda, the Taliban, Boko Haram and ISIS were responsible for 66% of all deaths from terrorist attacks in this period, with all four using “religious ideologies based on extreme interpretations of Wahhabi Islam,” the report added.

The only way to counteract this is for moderate Sunni theologies “to be cultivated by credible forces within Islam,” the report noted.

--On Friday, in retaliation for Obama’s executive order on immigration, House Republicans filed a lawsuit against the administration over unilateral actions on the healthcare law, saying they are abuses of Obama’s executive authority.

--In a Wall Street Journal/NBC News poll, 53% have positive feelings about the midterm elections, while 40% have negative feelings. At the same time, 76% said the results would produce “just some” or “not that much” change, with 21% believing there would be “a great deal” or “quite a lot” of change.

56% believe Congress should take the lead in setting policy, while 33% think President Obama should.

63% of those surveyed want candidates who were elected to office this year to bend enough to broker deals, compared with 30% who want lawmakers to abide by the promises made in their campaigns.

--In the above-mentioned USA TODAY poll, by 60-25, those surveyed say Congress and Obama should approve construction of the Keystone pipeline, while by a 63-28 margin, Americans support a U.S.-China agreement on reducing carbon emissions, which means they have no idea China agreed to nothing.

“There is an odd, magical-thinking element in the psychology of recent White Houses. It is now common for those within them to assume that history will declare their greatness down the road. They proceed as if this is automatic, guaranteed: They will leave someday, history will ponder their accomplishments and announce their genius.

“The assumption of history’s inevitable vindication is sharper in the current White House, due to general conceit – they really do think they possess a higher wisdom and play a deeper game – and the expectation that liberal historians will write the history.

“The illusion becomes a form of license. We don’t have to listen to critics, adversaries, worriers and warn-ers, we just have to force through our higher vision and let history say down the road we got it right.

“They make this assumption because they don’t know much about history – they really are people who saw the movie but didn’t read the book – and because historical vindication is what happened so spectacularly in the case of Ronald Reagan. So it will happen to them, too....

“What (the Obama White House forgets) is that facts largely decide what history thinks – outcomes, what happened, what it means. What they also forget, or perhaps never knew, is that the great ones are always constructive. They don’t divide and tear down. They build, gather in, create, bend, meld, and in so doing move things forward.

“This White House seems driven...by a kind of political nihilism. They agitate, aggravate, fray and separate.”

Ms. Noonan mentions three great domestic issues of just the past few weeks...ObamaCare (and the idiotic Gruber), Keystone XL, and immigration.

On Keystone, “the building of the pipeline would show the world that America is capable of coming back, that we’re not only aware of our good fortune and engineering genius, we are pushing it hard into the future. America’s got her hard-hat on again. America is dynamic. ‘You ain’t seen nothin’ yet.’ Not just this endless talk of limits, restrictions, fears and ‘Oh, we’re all going to melt in the warm global future!’

“Great presidencies have a different one. They expand, move on, reach out.

“The future acknowledgement of greatness only follows actual greatness. History takes the long view but in the end relies on facts.

“ ‘But history will be written by liberals.’ Fair enough, and they will judge the president the more harshly because he failed to do anything that lasts. ObamaCare will be corrected and torn down piece by piece. The immigration order will be changed, slowed or undone by the courts, Congress or through executive actions down the road. Keystone will pass and a veto overridden.

“And the president has failed liberals through unpopularity, which is another word for incompetence.”

--The Senate blocked a plan to overhaul the National Security Agency that had the support of the White House, the leaders of the intelligence and the tech industry. The bill would have placed limits on the NSA’s surveillance activities, including the bulk collection of phone records.

So it will be up to the new Congress to deal with some of the NSA’s surveillance authorities that come up for renewal.

Republicans cited the threat posed by the likes of ISIS in arguing against major changes to the NSA’s surveillance tactics.

Incoming Senate Majority Leader Mitch McConnell said, “This is the worst possible time to be tying our hands behind our backs. The threat from ISIS is real.”

--Diane Black, Republican representative from Tennessee, penned an op-ed in the Wall Street Journal noting that despite the Dept. of Health and Human Services commitment of $800 million to $1.7 billion for the development of HealthCare.gov, including in the future, the website as it turned one-year-old “is still not fully secure.”

“Independent agencies such as the Government Accountability Office and the HHS inspector general have warned of continued security problems.... HealthCare.gov houses vast amounts of sensitive personal enrollment information – from full, legal names, to Social Security numbers, dates of birth and even income information. This wealth of private information on HealthCare.gov has been described by experts as a ‘hacker’s dream.’”

HealthCare.gov was hacked last July, though the government didn’t uncover this until Aug. 25. HHS maintains no sensitive personal information was obtained. But the hackers “managed to implant malicious software on the site that could have been used in future cyberattacks....

--Speaking of ObamaCare...Editorial / Wall Street Journal:

“As a rule, Americans don’t like to be called ‘stupid,’ as Jonathan Gruber is discovering. Whatever his academic contempt for voters, the ObamaCare architect and Massachusetts Institute of Technology economist deserves the Presidential Medal of Freedom for his candor about the corruption of the federal budget process.

“In his now-infamous talk at the University of Pennsylvania last year, Professor Gruber argued that the Affordable Care Act ‘would not have passed’ had Democrats been honest about the income-redistribution policies embedded in its insurance regulations. But the more instructive moment is his admission that ‘this bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies.’....

“In another clip from Mr. Gruber’s seemingly infinite video library, he discusses how he and Democrats wrote the law to game the CBO’s fiscal conventions and achieve goals that would otherwise be ‘politically impossible.’ In still another, he explains that these ruses are ‘a sad statement about budget politics in the U.S., but there you have it.’

“Yes you do. Such admissions aren’t revelations, since the truth has long been obvious to anyone curious enough to look....

“Democrats are now pretending they’ve never heard of Mr. Gruber, though they used to appeal to his authority when he still had some. His commentaries are no less valuable because he is now a political liability for Democrats.”

“Democrats are desperately distancing themselves from ObamaCare architect Jonathan Gruber. He ‘never worked on our staff,’ President Obama said this weekend in Brisbane, Australia, (even though Gruber was paid almost $400,000 by his administration, is the intellectual author of the individual mandate and met in the Oval Office with Obama and the head of the Congressional Budget Office to pore over the bill). ‘I don’t know who he is,’ Nancy Pelosi declared on Capitol Hill (even though she repeatedly cited him by name during the ObamaCare debate).

“The reason Democrats are running from Gruber is the same reason conservatives should be thanking him: Gruber has exposed what liberals really think of the American people....

“It’s one thing for Americans to suspect that their president lies to them. It’s quite another to hear a key Obama adviser boast of it.

“So thank you, Jonathan Gruber. We now know how the Obama left sees the American people. We are like children who don’t understand what is best for us. We need experts such as Jonathan Gruber to make decisions for us. If we are too ‘stupid’ to agree with them, they can use our ignorance to deceive us and enact policies we would never otherwise support. And if we’re too stupid to catch the deception, well, that’s our problem.”

--The Star-Ledger had some voter turnout figures for the midterm elections. Overall turnout was just 36.4%. The worst state was Indiana at 28.0%. Only 21.5% of young people nationwide voted.

But since 1948, turnout among eligible U.S. voters in presidential election years is 60%. In midterms, the average is 40%. [Sources: various]

--Former Democratic Sen. Jim Webb of Virginia has launched an exploratory committee for a potential 2016 presidential run. This would be terrific...a huge longshot, but particularly on foreign policy he’d be great in early debates, if this initial effort can get him to that point. Remember, he was Navy secretary under Ronald Reagan.

--I saw an item during the week where the head of New York State’s Republican Party said, get this, that New York City Mayor Bill de Blasio would receive the Democratic Party nomination for...president! Really.

Well this is nuts, but de Blasio does appeal to a wing of the party, the activists, who would be more likely to vote in the primaries (as is the case with Republicans on the other side in a state like Iowa).

So in a Quinnipiac University Poll of New York City voters, white voters disapprove of the way Mayor de Blasio is handling his job by a 50% to 34% margin, while black voters approve, 71% to 14%, and Hispanic voters approve, 56% to 27%; signs of an increasing racial divide in Gotham.

Among all racial groups combined, voters approved of his performance, 49% to 36%.

Consider this. The mayor took office last January and at that time just 21% of white voters disapproved of him. That number has risen 30 points. I mean as far as polls of this kind go, that’s huge.

De Blasio campaigned on a “tale of two cities” narrative and he is increasingly viewed by many as the mayor of the black community.

De Blasio, white, is married to Chirlane McCray, who is black and already a highly polarizing figure herself.

So a running story here in the New York area media has been First Lady McCray’s $170,000-a-year chief of staff, Rachel Noerdlinger. Months ago we first learned the First Lady had one and a major reason for some of the decline in de Blasio’s poll numbers can be pinned to this single issue. Many of us are thinking, what the heck does Chirlane McCray have a $170K a year chief of staff for?

Next we learned Rachel Noerdlinger was dating a man who is an ex-con, Hassaun McFarlan, who served time for killing a man when he was a teenager, and has been arrested numerous times since then. There were immediate calls for Noerdlinger to step down, number one because she was obliged to note this relationship on her disclosure forms. She refused to do so. Mayor de Blasio, Chirlane McCray and Rev. Al Sharpton jumped to her defense, Noerdlinger having been a long-time member of Sharpton’s staff before her new position. 

Then this week Noerdlinger took an unpaid leave of absence in the wake of her teenage son Khari’s arrest last Friday.

De Blasio angrily blamed her exit on a “repulsive” smear campaign against a “hardworking public servant” and that she would be welcomed back.

De Blasio went on to say Noerdlinger’s life had been relentlessly and unfairly scrutinized and suggested the attacks were similar to red-baiting in the McCarthy era.

“We saw this in the 1950s, we’ve seen this throughout the history of this country.” The mayor’s parents were questioned over allegations of Communist sympathies during the 50s.

Then Noerdlinger said her 17-year-old son was “subjected to attacks that have nothing to do with the public interest, and everything to do with derailing this administration.”

Khari Noerdlinger was arrested on a charge of criminal trespassing after he was found in Washington Heights (NYC) with friends, drinking and smoking. He was booked because he had no ID. Neighbors in the building where he was caught said they see him and his friends smoking pot there often. In 2011, the kid was busted in a robbery but was classified as a youthful offender and not convicted of a crime. Gee, let’s see, he would have been about 14.

Oh, you had the usual folks come to his defense. “He’s a great young man,” said Michael Skolnick, who is connected to both the family and Russell Simmons. “He’s a good kid.”

But back to the mother. Again, she and the mayor and Chirlane and Rev. Al all express outrage and Noerdlinger has lied about her relationship with a man convicted of murder!

One guy I really like in New York is Patrick Lynch, president of the Patrolmen’s Benevolent Association. “We hope (the administration) can find someone...who will not bring an anti-police bias to the table.” Noerdlinger’s boyfriend, by the way, the killer, has mocked police on Facebook.

As for Rev. Al, who said Noerdlinger was the victim of “media distortion, smears and outright lies,” he was on the front page of the New York Times for an old issue; taxes owed the federal government by both himself and his National Action Network...like $4.6 million. In a bizarre press conference where he defended himself and his organization, Sharpton suddenly blurted out that he wasn’t Khari Noerdlinger’s father. Yet no one had asked!

You can’t make this stuff up...and there is Rev. Al, a man who has made 80 visits to the White House during the Obama years.

“She can blame the media until she turns blue – but Rachel Noerdlinger is responsible for thrusting her own teenage son into the spotlight.

“How did we, the media, learn her son’s name? It wasn’t during some anti-progressive witch hunt. It was when the duplicitous Noerdlinger named him in an application for a residency waiver, spinning a tale about how the teen – so strapping and healthy that he was playing high school football at the time – was hobbled by a pair of car accidents and needed to be near his doctors.

“She was then allowed to live in New Jersey with her felon boyfriend instead of New York City...

“And when it comes to putting children in the cross hairs, the mayor is far from blameless. He prostituted his own family in campaign TV commercials.

“He claimed a nice victory off his son’s Afro. He later had his daughter go public – PUBLIC! – with her battles with depression and substance abuse.

“And now, this pair of shameless ideological twins are blaming us for exploiting their families....

“The hypocrisy is stunning. On Planet de Blasio, one’s kin make for acceptable collateral damage – provided that they’re used to win something that the mayor and a best pal wants....

“De Blasio, at an unrelated news conference, also lashed out at the media and assorted foes for taking down his friend, who made $170,000 a year of taxpayer money working for his unelected wife....

“So I beg of Rachel Noerdlinger: Take care of your son. De Blasio would also be wise to stop blaming others.

“After all, Khari Noerdlinger never asked to be dragged into his mother’s troubles.”

A new Quinnipiac University poll released on Wednesday shows 71% of New York City voters want a mayor’s spouse to play little or no role in shaping policy. 61% also don’t think a mayoral spouse should have a chief of staff. I’m amazed this isn’t 90%, but then as I said during the New York mayoral race, warning what would happen if they elected de Blasio (as I supported the pragmatic Christine Quinn), New York voters can be idiots. [I didn’t say all voters...so don’t accuse me of being a Gruberite.]

For new readers in particular, I live in a New York City suburb, but like many around here we consider ourselves part New Yorkers. I worked in the city for years, I love the city on many levels, and I have never had a problem that the local news is dominated by all things New York. I’ve often told people I like to live where local news has national impact and thus it’s here. Plus, we have the sports unlike any other city in America. [Though goodness gracious, our teams truly blow these days.]

--The prime minister of the Czech Republic, Bohuslav Sobotka, had some thoughts on the late Vaclav Havel in an op-ed for the Wall Street Journal; Havel getting his own bust in the U.S. Capitol this week, Nov. 17, marking the day nearly 25 years earlier when students took to the streets of Prague.

Sobotka noted a passage from Havel’s address before a joint session of Congress on Feb. 21, 1990.

“For many years, Czechoslovakia as someone’s meaningless satellite has refused to face up honestly to its co-responsibility for the world. It has a lot to make up for. If I dwell on this and so many important things here, it is only because I feel, along with my fellow citizens, a sense of culpability for our former reprehensible passivity – and a rather ordinary sense of indebtedness.”

“Having thus demonstrated a commitment to building a more responsible world politics – not through sheer idealism but with practical steps like owning up to one’s responsibility – Havel set out to advance his cause by taking those steps. He was an effective advocate for the Czech Republic in its quest to join NATO and the European Union, which the Czech Republic joined in 1999 and 2004, respectively. He saw both organizations as pillars of international stability. He saw them as means to guarantee the Czech Republic’s return to a community of Western democracies, where it had belonged before the advent of Communist totalitarianism....

“Today’s Europe is more prosperous and united than ever before, in no small measure thanks to people like Havel. Yet the world in many ways remains dangerous and unpredictable. Militant separatism and the spread of violent extremism present daunting challenges. For instance, Russia’s actions to undermine Ukraine’s sovereignty constitute an unprecedented breach of one of the key principles of international law. Such challenges must be met with an international effort.

“One can choose to ignore dangerous trends in the world by believing that someone else will deal with them – but this is shortsighted and never pays off. Today’s interconnected world more than ever puts a special premium on international cooperation. Europe must step outside of its post-Cold War shadow and raise its profile on the world stage in order to become more active in promoting development, preventing conflicts and stimulating prosperity. Borrowing from Vaclav Havel’s principled foreign policy must become our shared responsibility for upholding our values and principles.”

--From Jason Song of the Los Angeles Times: “For the first time in 13 years, USC has lost its title as the leader in recruiting lucrative foreign students, according to a new report. 

“USC enrolled about 10,900 students from outside the country in the last academic year,” which, while an increase from the year before is fewer than NYU’s 11,100 foreign-born students. [I’m embarrassed...I had no idea that, extrapolating, NYU had that many students overall. Just looked it up...40,000.]

“The number of international students in U.S. colleges and universities increased about 8% last year to nearly 886,000,” writes Song. “China sent the largest group, with about 274,000 students, more than double the number of students from India, the second biggest group.”

Chinese students are key for many schools because they tend to pay full tuition.

--The average snowfall in an entire year for the greater Buffalo area is 93.6 inches, or about 8 feet. The typical amount of snow on a Buffalo driveway by the end of the week was in excess of 25 tons, according to meteorologist Ryan Maue and USA TODAY.

On both Tuesday and Wednesday, overnight temperatures in all 50 states fell to freezing or lower (atop Mauna Kea on the Big Island of Hawaii).

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

Gold $1198
Oil $76.51...breaks 7-week losing streak

Returns for the week 11/17-11/21

Dow Jones +1.0% [17810]
S&P 500 +1.2% [2063]
S&P MidCap +1.0%
Russell 2000 -0.1%
Nasdaq +0.5% [4712]

Returns for the period 1/1/14-11/21/14

Dow Jones +7.4%
S&P 500 +11.6%
S&P MidCap +7.6%
Russell 2000 +0.8%
Nasdaq +12.8%

Bulls  56.4
Bears 14.9 [Source: Investors Intelligence...reminder, Tues. Oct. 21... 35.8 / 18.2]

Have a great week. I appreciate your support.

Brian Trumbore

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