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Week in Review

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01/07/2017

For the week 1/2-1/6

[Posted 11:00 p.m. ET, Friday]

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Edition 926

Washington, Russia and Cyber-Warfare

Before I start, just a random comment that is related to what follows.  Yours truly may be the only person in the world who has both accused Vladimir Putin of bombing his own people (in 1999, writing this months before the late-William Safire famously did), and has also been directly threatened by Julian Assange’s chief counsel, as I wrote a few months ago.

So let’s just say two things: I’d like to think I kind of know what I’m talking about, or, second, if you don’t think I do, you should at least know where I’m coming from.

---

The top intelligence official for the U.S., Director of National Intelligence James R. Clapper Jr., testified to Congress on Thursday that Russia’s meddling in the 2016 presidential campaign went well beyond hacking to include disinformation and the dissemination of ‘fake news’ – an effort, Clapper maintains, continues.

“Whatever crack, fissure, they could find in our tapestry...they would exploit it,” Clapper said, in testimony before the Senate Armed Services Committee on foreign cybersecurity threats, including Russian hacking and interference in the election.

Republican Sen. Tom Cotton (Ark.) and others cast doubt on the idea that Russia would want to help President-elect Trump.

“Donald Trump has proposed to increase our defense budget, to accelerate nuclear modernization, to accelerate ballistic missile defenses, and to expand and accelerate oil and gas production, which would obviously harm Russia’s economy. Hillary Clinton opposed or at least was not as enthusiastic about all those measures.”

But senators John McCain (R-Ariz.) and Lindsey Graham (R-S.C.), were adamant more needed to be done to punish and deter Russia.

Trump has repeatedly voiced skepticism about the intel community’s conclusion there was heavy Russian interference to help him win the White House.

Separately, former CIA director James Woolsey Jr., a member of Trump’s transition team, resigned Thursday over Trump’s vision for intelligence agencies, with Woolsey admitting he had been excluded in recent weeks from discussions on intelligence matters with Trump and retired Lt. Gen. Michael T. Flynn, the incoming White House national security adviser.

Woolsey was particularly taken aback by reports Trump is considering revamping the country’s intelligence framework, according to the Washington Post.

Then Friday, a declassified U.S. intelligence report was released with the conclusion Vladimir Putin ordered an “influence campaign” aimed at interfering with the election.

“Russia’s goals were to undermine public faith in the U.S. democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency,” it states.  “We further assess Putin and the Russian government developed a clear preference for President-elect Trump.”

President Obama and Trump were briefed on the full report earlier.

But Trump wasn’t convinced.  After four intelligence chiefs tried to persuade him earlier on Friday at Trump Tower that Russian intelligence agencies had attempted to tip the election in his favor, Trump announced that the hacking had had “absolutely no effect.”

In a statement, Trump didn’t acknowledge that Russia was any different from any other country or group attempting to penetrate U.S. computer networks, or that it was responsible for hacking into the Democratic National Committee and leaking emails, as U.S. intel officials claim.

“While Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organizations including the Democratic National Committee, there was absolutely no effect on the outcome of the election including the fact that there was no tampering whatsoever with voting machines,” Trump said following his classified briefing.

Trump did say the meeting was “constructive” and that he has “tremendous respect for the work and service done by the men and women of this community to our great nation.”  He also said he would order a team to create a plan to “aggressively combat and stop” cyberattacks within the first three months of taking office.

Trump added, “There were attempts to hack the Republican National Committee, but the RNC had strong hacking defenses and the hackers were unsuccessful.”

Senior intelligence officials have said publicly that there is no way to judge the impact of the hacks on the final vote tally.

Ralph Peters / New York Post

“Thursday’s Senate Armed Services Committee hearing on cyber-warfare threats – particularly those from Russia – was a welcome moment for grown-ups.  Frank, honest and bipartisan, the consensus from our legislators and our intelligence-community leadership was that we face multiple grave and growing dangers, but the most immediate and only existential threat comes from Vladimir Putin’s Russia.

“And yes, the Russians did attack our elections with cyber-weapons and information warfare.  All our intelligence agencies agree.  Which is rare.

“Republican or Democrat, the senators praised the patriotism and accomplishments of those who serve in our intelligence agencies.  That was welcome, too, given the political fashion of the moment to denigrate our intelligence professionals while turning backflips to excuse Putin’s strategic subversion and condone the actions of an America-hating alleged rapist, Julian Assange.

“What have we come to when even a former governor, interviewed on cable news, brushes off Putin’s assault on our country with the suggestion that ‘everybody does it.’ Well, no.  Not everybody pulls out all the stops to shatter the integrity of a U.S. presidential election.

“Putin’s multi-pronged attack targeted all Americans by striking the fundamental tool of our democracy, our free elections.  Right or left, we all should be equally outraged – if we give a damn about our country.

“Instead, we’ve heard no end of political henchmen insist we should listen to Assange (whom they previously loathed) and be quiet about Putin (whom they previously condemned) because of ‘all the intelligence failures’ in the past.

“Yet, when pressed, such critics always cite the same, sole ‘intelligence failure,’ the weapons-of-mass-destruction call prior to the invasion of Iraq.  They neglect to mention that the intelligence community was divided on that conclusion, but neoconservatives in the Bush administration pushed the WMD argument to the fore.  That was a political failure.”

But since 9/11, “a genuine intelligence failure,” the Office of the Director of National Intelligence was created to address the lack of information-sharing between rival intelligence agencies “and there has been remarkable progress in intelligence-sharing,” notes Peters.

“Since 9/11, there hasn’t been another strategic terror attack on our homeland, despite the determination of our enemies.

“Only superb intelligence work allowed us to break al Qaeda’s back and, now, to turn the tide against ISIS (elements within the intelligence community tried to warn the president about ISIS, but he didn’t want to hear it).  It wasn’t Obama who ‘got’ bin Laden, it was great intelligence plus the Navy SEALs....

“The next time a political hack derides our intelligence personnel and defends Julian Assange or Vladimir Putin, ask him or her exactly what he or she has done to protect this country – while intelligence professionals were laying their lives on the line.”

Trump and Governing thru Twitter....various opinions....

Gerald F. Seib / Wall Street Journal

“Is it method or madness?

“That is the question perplexing the world as President-elect Donald Trump continues his unorthodox campaign-season communications habits.  He tweets, apparently randomly.  He wades into subjects that he could easily avoid.  He picks fights.  Monday night, he tweeted of North Korean hopes of developing a nuclear weapon that could reach the U.S.: ‘It won’t happen!’

“It is a risky approach.  By weighing in on all sorts of matters large and small, Mr. Trump already may be in danger of devaluing the most valuable asset any president has, which is the bully pulpit.  Will any individual message from the new president have the impact he wants if it is lost in the static of running commentary?

“It’s also hard to argue that a presidential communication can have the depth, texture and subtlety often required when it comes in 140 characters.

“Yet it also would be a mistake to dismiss Mr. Trump’s transition-season intervention as random musings.  That was a mistake his opponents made consistently through a long presidential campaign.

“In fact, there seem to be specific objectives behind many of Mr. Trump’s seemingly scattershot missives and comments.  Often, say those who know him, he is posturing or positioning in pursuit of broader goals. He doesn’t mind roiling the waters in the process – and, as a consequence, some of what he says isn’t to be taken literally.

“Former House Speaker Newt Gingrich, who speaks regularly with Mr. Trump and is developing a lecture series and book examining Trumpism, suggests the President-elect is in this regard similar to Franklin Roosevelt, who sometimes seemed to cultivate chaos in preparing the ground for his initiatives.  Mr. Gingrich also predicts the style won’t change: ‘My advice is to relax.  It’s going to be this way for eight years.’

“So what might Mr. Trump be trying to accomplish?  There are three likely goals:

He is positioning himself for a negotiation or a deal....

“The best example may be the way Mr. Trump has approached China, a country with which he figures to have plenty of tough negotiations on trade and military maneuvering in the South China Sea.  His opening bid came when he decided to accept a call from the president of Taiwan, a step that was sure to rile the government in Beijing.  He then followed with a series of tweets saying that the Chinese don’t ask for permission to take steps that irritate the U.S., implying they shouldn’t expect the new president to worry too much about keeping them happy either. ‘That was the surest signal to the Chinese that things are going to be different,’ says Mr. Gingrich....

He is seeking to control the agenda.  Early-morning tweets have a way of establishing what everyone else will be compelled to talk about that day.  They also have had a way of upstaging the man who still happens to be the president, Barack Obama, annoying the White House and potentially creating confusion abroad about who really is in charge....

“He is creating rabbits for others to chase.  For two weeks Mr. Trump nursed along the idea that he might pick former Republican presidential nominee Mitt Romney as his secretary of state.  Ultimately, he didn’t – but he sparked a string of news stories suggesting he was reaching out to embrace former enemies, and distracting from less beneficial topics such as potential conflicts of interest in his nascent administration.

“Certainly there is danger in leaving the world unsure which messages to take literally, and in trying to handle subjects as sensitive as nuclear-weapons strategy on the fly. But it’s also likely Mr. Trump knows exactly what he is doing.”

David Brooks / New York Times

“Normal leaders come up with policy proposals in a certain conventional way. They gather their advisers around them and they debate alternatives – with briefing papers, intelligence briefings and implementation strategies.

“Donald Trump doesn’t do that. He’s tweeted out policy gestures in recent weeks, say about the future of America’s nuclear arsenal. But these gestures aren’t attached to anything.  They emerged from no analytic process and point to no implemental effects. Trump’s statements seem to spring spontaneously from his middle-of-night feelings. They are astoundingly ambiguous and defy interpretation.

“Normal leaders serve an office.  They understand that the president isn’t a lone monarch.  He is the temporary occupant of a powerful public post.  He’s the top piece of a big system, and his ability to create change depends on his ability to leverage and mobilize the system.  His statements are carefully parsed around the world because presidential shifts in verbal emphasis are not personal shifts; they are national shifts that signal changes in a superpower’s actual behavior.

“Donald Trump doesn’t think in that way, either. He is anti-system. As my ‘PBS NewsHour’ colleague Mark Shields points out, he has no experience being accountable to anybody, to a board of directors or an owner.  As president-elect, he has not begun attaching himself to the system of governance he’ll soon oversee.

“If anything, Trump is detaching himself.  In a very public way, he’s detached himself from the intelligence community that normally serves as the president’s eyes and ears.  He’s talked about not really moving to the White House, the nerve center of the executive branch. He’s sided with a foreign leader, Vladimir Putin, against his own governmental structures.

“Finally, normal leaders promulgate policies. They measure their days by how they propose and champion actions and legislation.

“Trump doesn’t think in this way, either.  He is a creature of the parts of TV and media where display is an end in itself.  He is not really interested in power; his entire life has been about winning attention and status to build the Trump image for low-class prestige. The posture is the product.

“When Trump issues a statement, it may look superficially like a policy statement, but it’s usually just a symbolic assault in some dominance-submission male rivalry game.  It’s trash-talking against a rival, Barack Obama, or a media critic like CNN.  Trump may be bashing Obama on Russia or the Mideast, but it’s not because he has implementable policies in those realms.  The primary thing is bashing enemies....

“The crucial question of the Trump administration could be: Who will  fill the void left by a leader who is all façade?

“It could be the senior staff.  Trump will spew out a stream of ambiguous tweets, then the hypermacho tough guys Trump has selected will battle viciously with one another to determine which way the administration will really go.

“It could be congressional Republicans....

“It could be the permanent bureaucracy, which has an impressive passive-aggressive ability to let the politicians have their press conference fun and then ignore everything that’s ‘decided.’

“I’ll be curious to see if Trump’s public rhetoric becomes operationalized in any way. For example, I bet his bromance with Putin will end badly. The two men are both such blustery, insecure, aggressive public posturers, sooner or later they will get in a schoolyard fight.

“It will be interesting to see if that brawl is just an escalating but ultimately harmless volley of verbiage, or whether it affects the substance of government policy and leads to nuclear war.”

Editorial / Washington Post

“President-elect Donald Trump’s frequent invocation of his ‘strength’ as a national leader has a superficial appeal, but his approval of a certain brutal, authoritarian government is a disturbing sign of what he thinks it means in practice.

“Americans have never gone in much for the sort of ideological enthusiasms that led much of Europe and Asia into disaster in the 20th century.  We can hope that our national skepticism about such all-encompassing systems of government will serve us in coming years as it has in the past, when outlandish schemes and dreams of power have been thwarted or tempered by the good sense, and the ideals, written into our founding documents.

“But as we have learned over and over again, keeping a democracy in good order requires constant attention and a lot of tedious maintenance. What the founders presented us was a Republic – ‘if you can keep it,’ in the famous words attributed to Benjamin Franklin.  Essential to keeping it is a well-informed and reasonably educated electorate, respect and regard for one another, and, above all, faith in our government to treat us fairly and deal with us truthfully. All of these things are threatened or undermined as we enter the new year. It is up to us as a people – not to any self-styled savior – to defend and strengthen our faith in our common humanity.”

Robert J. Samuelson / Washington Post

“One insistent question that will shape 2017 is whether we’re witnessing the gradual decay of the post-World War II international order, dominated by the economic and military power of the United States.

“After the Soviet Union’s collapse in 1991, it became fashionable to talk of the United States as the only true superpower.  Pax Americana would promote peace and prosperity. Globalization and trade would bind countries together.  The U.S. economic and political model, mixing markets and government oversight, would be emulated. Higher living standards would bolster democratic ideas and institutions.

“As for raw military power, no country could challenge the United States. The 1990-1991 Gulf War seemed to prove this.  Of course, there were fearsome nuclear weapons. But they seemed safely stalemated.  Few countries had them, and the largest arsenals, the American and Russian, seemed neutered by a shared understanding everyone would lose in a nuclear exchange.  The stage was set for what one prominent commentator called ‘the end of history.’

“It wasn’t.  Obviously, this reassuring vision no longer describes the real world, if it ever did. On all fronts, the actual future confounds the imagined future....

“Public opinion, rather than strengthening democratic ideals, has veered toward economic populism and nationalism.  Hello Brexit and Donald Trump.

“The notion of a sole surviving superpower has also fared poorly.  Power is the ability to get (or take) what you want.  By this standard, China and Russia rank as important powers.  Indeed, the very term ‘superpower’ may be misleading or obsolete. The United States cannot get everything it wants simply by dispatching troops to hot spots.

“Finally, the nuclear consensus is fraying.  North Korea has atomic weapons; Iran may someday get them. The more countries that have nuclear arms, the more likely that someone will make a catastrophic miscalculation.

“After World War II, the United States stumbled upon a global strategy.  It would protect its allies militarily while hoping that peace would promote prosperous, stable and democratic societies.  Communism’s psychological and political appeal would be rejected.  Despite many setbacks, the strategy generally succeeded.  Europe and Japan rebuilt; the Soviet Union failed; communism was discredited....

“What we did not anticipate was the reaction of other countries and the complexity of history.

“The international order is now in a state of flux for many reasons. Starting with China and Russia, many countries resent the United States’ leadership role. Many Americans have also tired of it.  New technologies (notably, e-commerce, cyberwarfare) are further redistributing power and influence.

“What’s curious is that American leaders have sometimes contributed to the decline of U.S. power. Barack Obama’s disdain of military force is so deeply felt and visible that the use of the United States’ fighting capabilities was often discounted by allies and adversaries alike....

“Trump has his own ideas about weakening the international order.  His chosen field is trade. He threatens to slap stiff tariffs on U.S. imports from China and Mexico. If these ignite a trade war, the adverse side effects may well backfire on U.S. workers and firms.  The last time mass protectionism was tried as economic stimulus was the 1930s; the experiment did not end well.

“There is a larger issue here.  In his latest book, ‘World Order,’ Henry Kissinger argues that the world is at its greatest peril when the international order is moving from one system to another.  ‘Restraints disappear, and the field is open to the most expansive claims and the most implacable actors,’ he writes.  ‘Chaos follows until a new system of order is established.’  It’s a sobering warning.”

Obama’s Legacy

This coming Wednesday, the long-awaited farewell address from Barack Obama will take place in Chicago.

Jon Gabriel / New York Post

“Flip on your TV and the news is grim. Wall Street soars while small towns shutter Main Street stores.  Our government’s computer systems are regularly hacked, the IRS is targeting citizens instead of just (over)taxing them, and the VA is killing the veterans they’re supposed to heal. Racial tensions are through the roof, with another city going up in flames every few months.  Our leaders blame the heavy hand of police instead of mobs hurling Molotovs.

“Syria, Iraq and Libya are in ruins as ISIS inspires terror around the globe. The Russian bear is on the prowl, and China continues to expand its military influence in Asia and beyond. As our enemies slap each other on the back, our allies weep at our incompetence.

“The American people had gotten so angry at the record of our so-called elites that they elected outsider Donald Trump to ‘drain the swamp’ and ‘burn it down.’

“But close your lying eyes and take a step back.  Obama’s eight years in office have actually been fantastic.  Don’t believe it? Just ask the president himself.

“On Thursday, the White House released a self-congratulatory list of all of Obama’s amazing accomplishments in his two terms in office. Apparently, in 2008, America was a smoldering hellscape ravaged by bloodthirsty neocons, greedy banksters, and intolerance lurking behind every Bush.  But then the clouds parted, a rainbow framed the warming sun, and the smartest, kindest, boldest leader ever strode into our imperial capital on a white gender-indeterminate unicorn.

“In less than a decade, he fixed the economy, delivered health care, united Americans, granted peace to the world, and healed the planet itself.  My name is Obamandias, President of Presidents; Look on my Works, ye Mighty, and despair!....

“Over nearly 2,000 words and more than a dozen graphs, Obama presents a Potemkin America that stands astride the globe, citizens dance arm in arm, and paychecks fall from the sky. But this is a standard tactic of the progressive left – insisting that politicians can fix all ills and how horrible things were before their guiding hand.”

Wall Street

Friday’s nonfarm payroll report for December, with the economy adding 156,000 jobs, below the Street’s expectations of about 175,000, was offset by November being revised higher to 204,000 from 178,000.  The unemployment rate ticked up to 4.7% from 4.6%,* matching forecasts, with the economy generating 2.2m jobs for all of 2016, down from 2015’s 2.7m.  [There have been 75 straight months of job gains, the longest streak since 1939.]

A broader gauge of unemployment and underemployment, U6, was 9.2% last month, the lowest since April 2008, but still elevated from the 8.4% level before the recession began in late 2007.

*The unemployment rate when Barack Obama took office was 7.8% and would peak at 10% in October of his first year.

December’s report, though, contained one nugget that was highly important.  Wages climbed 0.4% from the previous month, and are now up 2.9% from December 2015, the swiftest year-on-year growth since 2009.

I have been saying for nearly a year that the Federal Reserve would get caught with its pants down due to rising wages, i.e., they would be proven to be behind the curve (not that they already aren’t), and it now seems a virtual certainty the Fed will next raise interest rates at their March 14-15 meeting, assuming the Trump administration has been successful in enacting some of its growth agenda by then.  [The Fed meets Jan. 31-Feb. 1, but this will be too soon to glean anything of value following Trump’s inauguration.]

Minutes from the Fed’s meeting on Dec. 13-14, released this week, showed almost all officials saying the risks of growth surpassing their forecasts had grown because of the possibility of more “expansionary” fiscal policy under the president-elect and the Republican-controlled Congress.

But, policymakers also stressed it was too soon to jump to conclusions.

In other economic news this week, the December ISM reading on manufacturing came in at 54.7 (50 being the dividing line between growth and contraction), the best in two years and sharply higher than November’s 53.2. The new orders component was 60.2, a two-year high as well.  The ISM services figure was 57.2, matching November’s year high.

November construction spending rose 0.9%, 4.1% year over year, very strong, while factory orders for the month were down 2.4%, actually in line.

So all in all, more solid data, with the Atlanta Fed’s normally reliable GDPNow indicator forecasting fourth-quarter growth of 2.9%.

On the holiday shopping front, Mastercard’s SpendingPulse said sales for November and December rose 4%, with various online surveys showing gains of 11% to 19%.

But it’s now about the first 100 days, beginning January 20, and whether Trump and the Republicans can act quickly on the agenda, including ObamaCare, tax reform and an infrastructure spending bill, while there are going to be some intense confirmation hearings and a Supreme Court selection to deal with.

Investor sentiment, as spelled out in my weekly bull/bear readings down at the bottom, is exceedingly bullish, which is normally a contrarian indicator; the Federal Reserve is going to be hiking interest rates more than twice this year (I say four times); Trump’s policy initiatives won’t be rubber-stamped with just a 52-48 Senate majority; plus Congress is reluctant to widen deficits, which could mean a reduction in some of the more ambitious spending plans that the Trump team has on its plate.  Stocks are also far from cheap on valuation, and with so much uncertainty, it is difficult to figure out where earnings will go this year (FactSet has S&P 500 eps rising 12% in 2017), especially if the dollar rallies anew (after stalling out in recent days), which would adversely impact the earnings of multinationals.

The positives are also the same as some of the negatives. The Street has been betting that Trump’s pro-growth agenda will get through, aided in no small part by the 8-10 Democratic senators facing stiff re-election battles in 2018,  many from states that Trump won.  It is felt that many of these will vote for major Republican economic initiatives to better set themselves up for the next big election on the calendar here in the U.S.

Europe and Asia

A slew of data after the holidays, with Markit reporting the eurozone’s final composite PMI for December was 54.4, vs. 53.9 in November.

The manufacturing figure was 54.9 vs. 53.7, the best since April 2011, while the service sector edged down from 53.8 to a still solid 53.7.

Individually...

Germany had a manufacturing PMI of 55.6, a 35-mo. high, with services at 54.3.

France was 53.5 on the manufacturing end, a 62-mo. high, with services at 52.9.

Spain’s figures were 55.3 (mfg.) and 55.0 (services).

Italy’s splits were 53.2 / 52.3.

Greece’s manufacturing PMI was 49.3, up from November’s 48.3.

The Netherlands, with a manufacturing PMI of 57.3, and Austria, 56.3, both hit 68-mo. highs.

In the U.K., the manufacturing reading for last month was 56.1, best since summer 2014, with services at 56.2 (this being 80% of U.K. GDP)

The 18% depreciation in the pound against the $ has aided exports in a big way, but Brexit and trade relationships continue to impede investment and will throughout 2017.   The situation with the currency also has a downside of importing inflation, which erodes purchasing power and reduces consumption.  At least that is how it is all supposed to work in theory.

Speaking of inflation, a flash reading on prices in the eurozone for December, as put out by Eurostat, had inflation on an annualized basis at 1.1%, up from the 0.6% pace of November.  This is a good sign, and is welcome news at the European Central Bank, but if inflation keeps ticking higher towards the ECB’s 2% target, that will mean less bond-buying and the likes of Italy and Spain could take a header on higher bond yields.  [The yield on the Italian 10-year rose from 1.81% to 1.96% over the course of the week.] 

Germany’s inflation rate for December was 1.7% (ann.), though it was still just 0.8% in France.

The eurozone’s core inflation for last month was 0.9% vs. 0.8% in November.

Chris Williamson, chief economist / Markit:

“The final PMI data signal an even stronger end to 2016 than the preliminary flash numbers, though whether this provides a much-needed springboard for  the euro area’s recovery to gain further momentum in 2017 remains very uncertain. Much depends on political events over the course of the next year.

“The survey data are signaling a 0.4% expansion of GDP in the fourth quarter, with growth accelerating in December....

“Manufacturers and, to a lesser extent, service sector companies are benefiting from the weaker euro, which is both boosting goods exports and encouraging demand for services exports such as tourism and travel to the eurozone. Rising employment, and of course the ECB’s stimulus, are also playing roles in driving the expansion.

“The concern is that domestic demand is likely to remain subdued over the course of 2017 as political uncertainty dominates, resulting in another year of disappointing growth across the region as a whole.  For the moment, however, companies are brushing off political worries, with optimism among service sector companies – who will arguably be the most affected by any political turmoil – reviving to one of the highest levels seen for over five years.”

Separately, Williamson said, “our expectation is that eurozone economic growth will slow slightly in 2017, down from 1.7% in 2016 to 1.4%.”

Eurobits....

--Chancellor Angela Merkel’s approval ratings remain high, even post-Berlin Christmas market attack, but top federal and regional security officials in Germany are facing even more heat after it was disclosed that they met seven times to discuss the potential danger posed by Anis Amri in the year before he drove the truck into the market, a highly embarrassing revelation.  Despite extensive surveillance, police and prosecutors didn’t believe they had enough evidence that would stand up in court to bring him in.

In her New Year’s Eve speech to the nation, Merkel predicted a contentious political climate in a year that’ll include Donald Trump’s inauguration and elections in France and the Netherlands. She also pledged to step up security measures in the wake of Berlin, adding:

“As we pursue our lives and our work, we tell the terrorists: They are murderers full of hatred, but it’s not they who determine how we live and want to live.  We are free, humane, open.  Together, we are stronger.  Our state is stronger.”

A TNS Emnid poll published Tuesday suggested that 56% of Germans still trust Merkel to master the political challenges facing the country.

--In the latest poll of French voters ahead of next spring’s presidential vote, conservative candidate Francois Fillon was seen taking 28% in the first round, with National Front leader Marine Le Pen in second at between 22% and 24% under different scenarios tested by the Elabe polling institute for business daily Les Echos.  Independent former economy minister Emmanuel Macron polled at between 16% and 24%, depending on who the Socialists selected in primaries this month.

Separately, Le Pen is having difficulty raising funds to finance her campaign.

--On the Brexit front, British Prime Minister Theresa May said opportunities for the U.K. are “greater than ever” and called for the country to unite in 2017 as she prepares to trigger Article 50 and begin two years of talks to withdraw Britain from the EU by end of March.

“The referendum laid bare some further divisions in our country – between those who are prospering, and those who are not; those who can easily buy their own home, send their children to a great school, find a secure job, and those who cannot; in short, those for whom our country works well, and those for whom it does not.  This is the year we need to pull down these barriers that hold people back, securing a better deal at home for ordinary, working people.”

But May’s ambassador to the EU unexpectedly resigned this week, just months before the start of formal Brexit negotiations.

Sir Ivan Rogers told staff he would be stepping down from his post early, leaving officials in shock over the loss of one of Britain’s most experienced negotiators.  He didn’t explain the reason for the move.

On a separate topic in the U.K., security minister Ben Wallace said there were reports ISIS was using chemical weapons in Syria and Iraq and that Europol was warning of the chemical threat and the potential realization of “everybody’s worst fear.”

Not that this is new, with Wallace saying ISIS has “no moral barrier to using whatever means possible,” but he told the Sunday Times, “The casualty figures which could be involved would be everybody’s worst fear.”

Wallace also warned of the threat from “the enemy within” as terror groups, Russia and cyber attackers were trying to plant “traitors” in the Government, the military and leading businesses.

--Lastly, fifty Moroccan and five Spanish border guards were injured when 1,100 African migrants attempted to storm a border fence in Spain’s North African enclave of Ceuta.  One guard lost an eye, officials said.

Hundreds of sub-Saharan African migrants living illegally in Morocco try to enter Ceuta and Melilla, Spain’s other North African enclave, each year in hopes of getting to Europe.  The enclaves are Europe’s only land borders in Africa.

Turning to Asia, China’s PMI data was released.  The official figures for December, as compiled by the National Bureau of Statistics, had the manufacturing number at 51.4 vs. November’s 51.7, with services at 54.5. Caixin’s private-data figure on manufacturing was 51.9, up from November’s 50.9 and the best out of Caixin since Jan. 2013, while services was 53.4, up from 53.1.

It would seem from the above that the government’s target for 2016, 6.7% growth, will be hit, with a government-run think tank saying on Tuesday that China could slow to 6.5% this year.

Chinese companies invested a record $45.6bn in the U.S. in 2016, but few expect this to continue with Trump in office, based on his previous China bashing.

Regarding the huge capital flows that are a growing concern for the government, the State Information Center said China “should appropriately control capital outflows...keep tight control over state-owned firms’ overseas investments in property, antiquities, sports teams” and other non-core or non-technological transactions.

The reference to sports teams is primarily soccer/football teams in England, such as the Premier League, where a number of franchises are owned at least partially by Chinese interests.

In Japan, the manufacturing PMI was a solid 52.4 vs. 51.3 in November, with services at 52.3 vs. 51.8.

But inflation-adjusted wages for November were down 0.2% year over year, not good, and frustrating for the government of Prime Minister Shinzo Abe.

Elsewhere in the region, South Korea’s manufacturing PMI for last month was 49.4; Taiwan’s was 56.2; and India’s fell sharply from 52.3 to 49.6. 

Street Bytes

--Stocks began 2017 on an up note, with the Dow Jones gaining 1%, though once again falling shy of the 20000 mark, closing at 19963.  The S&P 500, though, finished Friday at a new high of 2276, up 1.7%, while Nasdaq is also at its all-time mark, 5521, having advanced 2.6% in the holiday-shortened week.

--U.S. Treasury Yields

6-mo. 0.61%  2-yr. 1.21%  10-yr. 2.42%  30-yr. 3.01%

Largely unchanged on the week, though the yield on the 10-year was down to 2.34% before Friday’s wage gain component in the jobs report reminded traders that more hikes are on the way.

--President-elect Donald Trump and senior GOP lawmakers vowed to move quickly on a repeal and replacement of ObamaCare, but Republicans haven’t detailed how they plan to replace the law’s coverage program, which they concede will develop over the next several years. 

Some of the Republican ideas: The return of high-risk pools, an end to mandated benefit requirements, tax credits, changes to Medicaid, reliance on health savings accounts, and selling insurance across state lines.

Republicans will also need eight Democrats to enact many parts of any new plan, and there’s no guarantee all 52 Republicans will vote for every aspect themselves.

A poll suggests 52% of Americans are not confident that Trump can deliver on his healthcare promise, while 48% say they are.  [Los Angeles Times]

--U.S. light-vehicle sales hit a second consecutive annual high, with December’s sales pace, one of the strongest monthly performances in the industry’s history, fueled by discounts, according to research firm J.D. Power.

For December, GM’s sales rose 10%, Ford’s just 0.1%, Fiat Chrysler’s 10%, Toyota’s 2.1%, Honda’s 6.4% and Nissan’s 9.7%.

Auto makers sold 1.69 million vehicles last month, 3.1% more than 12 months ago despite one fewer sales day.  The seasonally adjusted sales pace of 18.43 million was the highest since July 2005.  For 2016, a total of 17.55 million vehicles were sold vs. 17.47 million in 2015’s then-record setting year, according to Autodata Corp. 

Roughly 60% of this year’s sales were classified as light trucks.  In 2015, that figure was 56%; the category including pickups, SUVs and crossover wagons.

The bad news is that in pushing to beat 2015’s record pace, the incentives were piled on to lure customers into the showrooms.  Analysts reported they were about 25 percent higher in the fourth quarter of 2016 than in the same period a year earlier, with overall sales flat.

For all of 2016, GM’s sales fell 1.3 percent, to 3.04 million vehicles.  Ford reported sales of 2.61 million in the U.S., essentially flat with ’15.

The third American automaker, Fiat Chrysler, sold 2.24 million last year, a decline of less than 1 percent from the previous year. 

In 2017, the National Automobile Dealers Assn. projects U.S. sales to drop to 17.1 million vehicles as interest rates and vehicle prices rise.  [Wall Street Journal, New York Times, USA TODAY, AP]

--On the Trump front, Ford Motor announced it was scrapping plans to build a $1.6bn plant in Mexico, after coming under criticism by the President-elect for shifting small-car production south of the border.

So instead, the next generation of the Ford Focus compact car will be built at an existing facility in Hermosillo, Mexico, while Ford canceled plans to build a plant in San Luis Potosi, CEO Mark Fields announced.  Ford will now build two products at a factory in Wayne, Michigan, where it assembles the Focus today, protecting about 3,500 jobs. 

Fields told reporters on Tuesday, “One of the factors we’re looking at is the more positive U.S. business environment that we foresee under President-elect Trump and the pro-growth policies that he’s been outlining. This is a vote of confidence around that.” 

--Tesla opened its Gigafactory outside Reno, Nevada.  By 2018, the battery cell manufacturing facility will double the world’s production capacity for lithium-ion batteries and employ 6,500 full-time workers by 2020, according to Tesla’s lastest forecast.  The Gigafactory is one-third complete and is a joint partnership with Panasonic.

But the company fell short of its target to deliver 80,000 cars in 2016, reporting just 76,230 completed in time.

Production at the Gigafactory is critical to Tesla’s goal of producing 500,000 Model 3 sedans by 2018; batteries being the limiting factor for electric cars.

Of course Tesla has seldom hit its production targets, missing its quarterly forecast three times last year, which doesn’t bode well for reaching the goal of 500,000, let alone 1 million in 2020.  Given the sky-high valuation accorded the stock, as Charley Grant of the Wall Street Journal noted: “Tesla certainly can talk the talk, but it looks less and less like it can walk the walk.”

--Separately, Faraday Future unveiled a self-driving electric car this week that it says can accelerate from zero to 60mph in 2.39 seconds, faster than Tesla’s Model S.  But Faraday Future has faced major financial difficulties

And as the car was being shown off at the CES tech show in Las Vegas, the vehicle failed when it came to a self-parking demonstration, the car remaining stationary.

--Mercedes retook the luxury-car crown from BMW for the first time in over a decade, thanks to peppy new models like the GLA compact SUV, while the S-Class was re-established as the benchmark luxury sedan.

BMW AG’s push into electric cars has fallen flat, while the revamped 5-Series sedan still has a conservative design.

Mercedes deliveries jumped 12 percent in the 11 months through November, more than double the pace of growth for BMW’s namesake brand.  Mercedes sold 1.9 million vehicles in the period, about 69,000 ahead of BMW, guaranteeing the crown for the full year.  [Bloomberg]

--Struggling Sears announced it will sell its Craftsman brand to Stanley Black & Decker for more than $900 million, as Sears tries to generate cash after a lengthy string of money-losing years. Due to the payment stream on the deal, including Sears receiving a percentage of new sales of Craftsman products for 15 years, Sears estimates the deal’s value could top $1 billion.

Sears also said on Thursday that it is trying to raise another $1 billion by selling off real estate.  Wednesday, chairman and CEO Eddie Lampert lent Sears up to $500 million to fund operations while it negotiates its asset sales.

Back in May, Sears announced it was trying to wring as much cash as possible out of better known brands, such as Craftsman, Kenmore and DieHard.

But with Craftsman products now becoming available in more outlets, there is less incentive to walk into a Sears store, though sales of the tools will generate money for the company.

Also Wednesday, Sears said it would close 150 unprofitable stores, including 108 Kmarts.  During November and December, sales at Sears and Kmart stores open at least a year declined at least 12% from year ago levels.

--Meanwhile, Macy’s and Kohl’s both reported a drop in same-stores sales during the holiday season of 2.1% each, after Macy’s, for one, had expected stronger sales.  It is now planning on closing 68 stores by spring.

Macy’s says the store closings and other moves will eliminate more than 10,000 jobs, with the 68 closures being part of a previously announced 100 closings; the timetable has been accelerated it would seem.  While some employees may be offered positions at nearby stores, Macy’s estimates more than 3,900 will be affected.  Other restructurings will result in 6,200 job losses.

The retailer plans to invest some of its savings, estimated at $550 million annually, in its growing digital business.

Kohl’s said strong sales on Black Friday and during the week before Christmas were offset by softness in early November and December.

Shares in both Macy’s and Kohl’s fell more than 10% on the dire news, which pressured other retailers. Friday, J.C. Penney Co. reported its holiday sales also declined vs. expectations of growth.

--One more regarding the retail sector...Neiman Marcus said today it has pulled its planned initial public offering, having filed for an IPO in August 2015, two years after it was acquired by private-equity firm Ares Management and Canada Pension Plan Investment Board in a $6bn buyout.

The float has repeatedly been pushed back, with Neiman blaming adverse market conditions, which is certainly the case today.

--Apple Inc. said its App Store generated record revenue of more than $20 billion for developers in 2016, roughly maintaining its growth rate even as iPhone sales volumes declined.  Apple takes 30% of App Store sales so the $20bn implies Apple collected about $8.5bn. 

Based on figures supplied by the company last year, growth at the App Store is implied to be around 40%.  With slowing iPhone sales, the growth is coming from a mix of surging app sales in China, new games and rising subscription billings.

On a related issue, Apple CEO Tim Cook and other executives took home lower pay packets in 2016 because of missed revenue and profit targets. Based on a regulatory filing, Apple’s net sales in 2016 were $215.6bn with operating income of $60bn in 2016, below the company’s stated targets.

The filing said: “These two financial measures are used to evaluate executive performance under our annual cash incentive program.”

Cook received $8.7m in total compensation, down from his $10.3m pay in 2015.  He did, however, have over $136m of stock options that vested during 2016, so you know, I’m not shedding any tears for the lad taking a pay cut on his non-stock comp.

--Canada’s jobs report in December was solid, with the economy adding 53,700 jobs, when a loss of 2,500 was expected according to a Bloomberg poll of economists.  In the fourth quarter, employment increased by 108,000, the largest increase since the second quarter of 2010.

--Brazil’s manufacturing PMI was 45.2 in December vs. 46.2 in November as this economy continues to struggle mightily.

--Jon Corzine, former head of MF Global, will pay a $5 million penalty to resolve a lawsuit from the U.S. Commodity Futures Trading Commission over his role in the alleged unlawful use of nearly $1bn in customer funds, with the brokerage firm collapsing in 2011.  Corzine will also be banned from registering with the CFTC or acting as a principal, agent, officer, director or employee of a futures commission operator.

Corzine, through a statement, said in part: “I have accepted responsibility for (MF Global’s) failure, and I deeply regret the impact it had on customers, employees, shareholders and others.  I remain gratified that several years ago all customer money was recovered and returned to MF Global customers.”

--Bitcoin suffered another big day of losses on Friday, falling as low as $873, after hitting $1,000 for the first time since 2013.  Sceptics point to the volatility (including a 50 percent surge in November) as evidence of the currency’s lack of viability.  Earlier Friday, the People’s Bank of China issued a notice on “risks associated with bitcoin.”  The PBOC reminded investors that bitcoin “does not have real meaning as a currency.”

--California’s drought could largely be over after this winter.  Back-to-back storms early this week dropped more than 2 feet of snow in the Sierras, and over the coming days, an “atmospheric river” (“Pineapple Express”) is due to hit the state, with up to 12 inches of rain expected in some areas, and up to 6 feet of snow in the highest elevations. 

The downsides are all the mudslides and avalanches that will ensue and travel will be chaotic.

[The drought is already essentially over in northern California after all the precip of the past few weeks, but the southern half was still suffering...that is until this massive amount of water that will fill the reservoirs now, for starters.]

--Broadways shows set a weekly record by posting a combined $49.7 million in ticket sales for the period ended Jan. 1, according to the Broadway League, a trade group.  “Jersey Boys,” which is ending an 11-year run this month, grossed an all-time high of $1,778,189 for the holiday week.

The $49.7 million figure was 15.4% higher than the previous record-setting week’s total set during the final week of 2015.

--The New York Post’s Chris Perez reported that the Better Business Bureau “has revoked the accreditation of the MyPillow, a popular ‘As Seen On TV’ product, and downgraded its rating to an ‘F’ after receiving a slew of complains about false advertising.

“The consumer watchdog group reported this week that the Minnesota-based company had been taking advantage of customers with their ongoing ‘buy one, get one free’ discount.

“Instead of offering shoppers a pair of standard, Queen-sized MyPillow’s for $49.98 – which is the listed price for just one at checkout – the company is currently offering two of the pillows for $89.97.

“ ‘Continuous BOGO offers, which can then be constructed at an item’s regular, everyday price, violate not only BBB’s code of Advertising – which all BBB Accredited Businesses agree to abide by – but also other state and national organizations’ rules,’ Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota, told NBC affiliate KARE.”

What a bunch of scumbags!  Yeah, you, CEO Mike Lindell.

--Exxon Mobil Corp. has awarded former CEO Rex Tillerson a $180 million retirement package as the company moves to break ties, with Tillerson being Donald Trump’s nominee for secretary of state.  Currently Tillerson holds more than 600,000 vested shares worth about $54 million and the decision will allow him to sell off all of this if he is confirmed.

Tillerson stepped down as Exxon CEO Jan. 1. Before his nomination, he was set to receive more than $180 million in shares that would have vested over a decade.

--We note the passing of F. Ross Johnson, the former RJR Nabisco CEO depicted as the epitome of corporate greed in the bestselling book and movie, “Barbarians at the Gate.”  He was 85.

In 1986, Johnson became CEO of RJR Nabisco, which made both Oreo cookies and Camel cigarettes.

Then in October 1988, Johnson and a group of investors proposed taking the company private, which started a fierce bidding war, with private equity firm Kohlberg Kravis Roberts eventually winning the bidding, paying nearly $25 billion for RJR Nabisco; the largest private equity deal in history at the time, with Johnson walking away with an estimated $50 million as a golden parachute.

--Megyn Kelly left Fox News this week after 12 years to go to NBC News, where she will host a daytime news and discussion program, anchor an in-depth Sunday night news show and take regular part in the network’s political programming and big-event coverage, which no doubt ticks off the likes of Matt Lauer, Samantha Guthrie, Lester Holt and even Brian Williams, who has done well at MSNBC in his return off the suspended list. 

Fox quickly moved to fill Megyn’s slot, announcing just two days later that Tucker Carlson will slide into 9:00 p.m. Eastern, thus fortifying its politically right-leaning commentary programs in prime time, with Carlson between Bill O’Reilly and Sean Hannity.  O’Reilly’s contract is also up this year, though he’s not going anywhere.

Just weeks ago, Carlson took over Fox News’ 7 p.m. hour, where he has scored high ratings.  Martha MacCallum, co-anchor of Fox’s morning news show, is to succeed Carlson at 7 p.m., though this is being billed as a potentially short-term move, with her program titled “The First 100 Days,” for the first 100 days of Trump’s administration.

Also Thursday, we learned Greta Van Susteren, formerly at Fox, is joining MSNBC for a daily 6 p.m. show.  So kind of ironic that Fox’s two best-known female anchors ended up at NBC. 

The New York Post is reporting that Kelly will be groomed to take over for Savannah Guthrie at “Today”. While this wouldn’t be for a few years, persistent rumors of this move will dominate the gossip columns, even if Guthrie just signed a five-year deal with “Today.”

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: There have been all manner of violations of the ceasefire, with Syrian government warplanes bombing a rebel-held Damascus suburb on Thursday.  The suburb, Wadi Barada, is a main source of water to the Syrian capital, and the water supply to some four million residents has been cut off since Dec. 22, according to the United Nations, citing damage to the infrastructure.  [Noam Raydan / Wall Street Journal]

A spokesman for the rebels told the Journal, “The entire cease-fire is on the brink of collapse because of Wadi Barada.”  At least 40 people, including children, have been killed in the air strikes, according to the Syrian Observatory for Human Rights.

The Syrian regime says that an offshoot of al Qaeda-linked Nusra Front (their former name) is mixed in among other rebel factions in Wadi Barada, which residents and the rebels deny.

Turkey warned that planned Syrian peace talks co-sponsored by Russia, were at risk if the Bashar Assad government didn’t halt violations of the ceasefire.  The peace talks are slated to start Jan. 23 in Kazakhstan’s capital of Astana under the auspices of Russia and Turkey, but a dozen Syrian rebel factions suspended talks on negotiations, accusing Assad of multiple violations of the ceasefire.

In Iraq, government forces launched an offensive against ISIS near the Syrian border Thursday, as it tries to squeeze the extremists.  Baghdad has also ramped up the fight on the ISIS stronghold of Mosul, launching a fresh push in the past week.  We’re told significant progress has been made.

Separately, ISIS claimed responsibility for a series of car bombs in Baghdad last weekend and Monday that killed more than 60, combined, while it also attacked an Iraqi police checkpoint near the southern city of Najaf, killing seven policemen

As for Turkey, a gunman later identified as being affiliated with ISIS killed at least 39 New Year’s Eve partiers at the Reina nightclub in Istanbul, ISIS issuing a statement later taking credit, with the gunman still at large as I go to post.  [At least 25 of the people killed were foreigners.]

It has been one terrorist attack after another in Turkey the past few years, along with a bloody, failed coup attempt, and between the ISIS threat and that of Kurdish militants, you can imagine the hit to Turkey’s key tourism industry.

Editorial / Washington Post

“(There) is reason to worry that Iraq and Turkey, the targets of the weekend attacks, are in danger of effectively losing their war with the terrorists. Both dispatched their armies to capture Islamic State territories last year and recorded significant gains.  But both are at risk of political, economic and social breakdown as a result of terrorist counterattacks and of their own counterproductive measures.

“Iraqi counterterrorism units advancing through Mosul, and the U.S. advisers and airpower backing them, deserve credit for tactics aimed at protecting civilians: The humanitarian cost of the 2 ½-month-old battle has been small compared with the assault on Aleppo by Syrian, Russian and Iranian forces.  But the Iraqi troops have taken heavy casualties and, having aimed for victory by the end of 2016, the government of Prime Minister Haider al-Abadi says it may take months more.

“Mr. Abadi’s government, meanwhile, is not delivering on his frequent promises to promote political reconciliation among Iraq’s sectarian factions.  On the contrary, the parliament in Baghdad recently took measures that further alienated the Shiite-led government from Sunni and Kurdish leaders.  The danger is that even after the recapture of Mosul, the country’s sectarian warfare will continue and perhaps even intensify as the factions compete for control over liberated territories.

“Turkey appears at risk of its own meltdown in spite of – and because of – the authoritarianism of President Recep Tayyip Erdogan.  Mr. Erdogan, who avoided action against the Islamic State for several years, dispatched troops to Syria in 2016, but he appears more intent on preventing the consolidation of a Kurdish-controlled region there than on helping to capture Raqqa.  His brutal crackdown on Kurds and other political opponents inside Turkey has polarized the country, driving a wedge between groups that should be united against the terrorists.”

Israel: Since day one of this column I have said that Israeli Prime Minister Benjamin Netanyahu was the “smartest man on the planet, but hopelessly corrupt” and the latter was the focus this week in Israel as police investigators and prosecutors questioned Netanyahu in two long sessions about two different cases, at least one of which involves suspicions of graft – did he and his family receive gifts and other benefits worth hundreds of thousands of shekels from businesspeople.

Haaretz revealed that Hollywood producer Arnon Milchan is allegedly one of the main figures involved in the case, as police have deposed witnesses abroad as well as in Israel.  One significant witness was Jewish American businessman Ron Lauder, a longtime friend of Netanyahu’s, with Lauder’s associates denying reports that he told police he has given gifts to the prime minister and his family.

There is a second, more serious case whose full details haven’t been released to the public, though they were raised by Attorney General Avichal Mendelblit a few months ago.  On Monday, Netanyahu was questioned for the first time over these allegations, with the prime minister cautioning critics afterwards: “don’t celebrate yet.”

But if Netanyahu is indicted, while technically that doesn’t mean there would be immediate elections (Likud and the cabinet could rally behind a replacement), the chances are there would be.

According to a Dec. 31 public opinion poll released by Channel 10, if Knesset elections were held now, the opposition Yesh Atid party, headed by Yair Lapid, would be the largest in parliament, with 27 of the Knesset’s 120 seats.

Likud, which has 30 seats today, would shrink to 23, and could shrink further without Netanyahu.  Forming a coalition would be more of a mess than it was to get the current one.

Israel faced another major controversy this week as a young Israeli soldier was convicted of manslaughter for killing a wounded Palestinian in a divisive military trial that immediately led to calls from right-wing politicians, and Netanyahu, for a pardon.

It is a rare case of Israel’s military convicting one of its own troops in a killing, the last instance being in 2003.

Sgt. Elor Azaria was arrested in March after video emerged of him shooting a wounded Palestinian man as he lay bleeding in the street in Hebron.  The Palestinian had stabbed an Israeli soldier moments before and had been shot but not killed by other troops. The mobile phone footage showed Azaria calmly cocking his rifle and firing once into the man’s head.  A panel of military judges rejected defense claims that Azaria thought the wounded man might have a suicide vest on and acted to protect his comrades.

Lastly, Israel sees Hizbullah as a major threat, more so than ever, with an unfathomable number of missiles in their warehouses in Lebanon.  There are so many, the Israeli Defense Forces have stopped trying to count them and now focus on the quality.  A lot of the missiles can hit any point on the map, and while Hizbullah has been bloodied in Syria, it’s the steady inflow of weaponry from Iran that comprises the main threat to Israel today.

China: Heavy, deadly smog continues to blanket a third of China’s cities, including Beijing, with the hazardous air forcing hundreds of flight cancellations and the smog lingering into the weekend in some areas.

The concentration of PM2.5 particles – which pose the greatest health risks as they can become lodged in the lungs – was measured at 475 micrograms per cubic meter near Tiananmen Square on Wednesday, according to the municipal air-monitoring website, while the World Health Organization recommends PM2.5 exposure of no more than 25 micrograms over a 24-hour period, so almost 20 times the accepted level.  [South China Morning Post]

Meanwhile, on Taiwan, President Tsai Ing-wen in her New Year’s press conference, said China is becoming a growing threat to the island and predicted a volatile but pivotal 2017.

“The Beijing leadership has, step by step, backed onto an old track to polarize, pressure and even threaten and intimidate Taiwan,” Tsai said.  “We hope that this is not Beijing’s adoption of a policy and want to remind it that such moves have hurt Taiwanese people’s feelings and affected stability across the Taiwan Strait.”

Tsai has irritated China by refusing to take up Beijing’s offer for talks that the Communist Party hopes could lead to unification of the two sides someday. And Tsai irked Beijing with her phone call to Donald Trump.

“In 2017, our society is going to face some turbulence and face some uncertainties,” she warned. “It’s going to test our whole national security team, as well as the whole government’s ability to handle change.”

North Korea: Last Sunday, leader Kim Jong-un said his nuclear-capable country was close to test-launching an intercontinental ballistic missile (ICBM), raising the prospect of putting parts of the United States in range.

In a 30-minute New Year’s address, Kim said North Korea has become a “nuclear and military power in the East” following its two nuclear tests in 2016 and pledged to boost its nuclear weapons capability for national defense.

Kim also urged the United States to scrap its “hostile policy” toward Pyongyang.

Donald Trump tweeted in response: “It won’t happen.”  South Korea’s Foreign Ministry said Trump’s comment, his first mention of the North Korean nuclear issue since the election, could be interpreted as a “clear warning” to the North.  Trump spokeswoman Kellyanne Conway told ABC’s “Good Morning America” that the president-elect was “putting North Korea on notice through this tweet and through other statements that this won’t happen.”

A State Department spokesman, John Kirby, said on Tuesday, “We do continue to believe that (Kim Jong-un) continues to pursue both nuclear and ballistic missile technologies. We do not believe that at this point in time he has the capability to tip one of these with a nuclear warhead.”

I should hope not. I maintain a position I took about six months ago.  That while Kim is out to create some kind of disturbance around Inauguration Day, I believe he could target a U.S. possession (Guam) directly around Fourth of July, especially assuming testing continues over the coming months.

In an editorial, the Wall Street Journal says if Kim “proceeds with the (missile) test, the U.S. should shoot it down....

“Even the defensive use of force carries risks that Kim would retaliate, but the larger risk is letting a man as reckless as Kim gain the means to hold American cities hostage.  Kim evidently believes that once the North has a credible ability to destroy Seattle or Chicago, the U.S. will have no choice other than to accept it as a normal nuclear state.”

Kim Jong-un’s birthday is January 8th. 

South Korea: President Park Geun-hye refused to testify Tuesday in her impeachment trial that will decide her future, prompting prosecutors to question why she has publicly denied the corruption charges leveled against her, but won’t do so before the court.  The court cannot compel her to appear, but can proceed if she refuses to do so twice.

The Constitutional Court must decide within six months of her Dec. 9 impeachment whether Park should permanently step down or should be reinstated to office.  If the court removes her, an election is held within 60 days.

Russia, part ‘dva’: John Podhoretz / New York Post

“In this time of weird reversals, Democrats and liberals who scoffed at Mitt Romney’s 2012 assertion that Russia was our primary adversary have become so convinced of Vladimir Putin’s perfidy they sound like the Cold Warriors of old.

“Meanwhile, our incoming president continues to extend the benefit of the doubt to Russia when it comes to cyber-mischief, even going so far as to get in a public kerfuffle with America’s intelligence agencies and accuse them of rescheduling a briefing on Russia out of rudeness or lack of preparation....

“(Trump) clearly thinks the intelligence community is participating in an effort to delegitimize his victory.  So he expresses a lack of interest in their briefings and continually reminds the world of the CIA’s mistaken assertion that it was a ‘slam dunk’ Saddam Hussein had WMDs....

“The same media outlets that joined in the laughter at Romney’s anti-Russia talk in 2012 are so eager for news that fits the new narrative line they will not only suspend disbelief but won’t even do any serious spade work or fact-checking before publishing nonsense.

“Last week the Washington Post, on high alert, reported breathlessly that Russia had somehow hacked into Vermont’s power grid. In a matter of days, the Post disavowed the story....

“Instead of bolstering the case against Russian misconduct, stories like these weaken it by causing any rational consumer of news to view subsequent reports on the subject with skepticism and distrust.”

Josh Rogin / Washington Post

“For many Americans, President Obama’s announcement of sanctions against Russia last week brought home a shocking realization that Russia is using hybrid warfare in an aggressive attempt to disrupt and undermine our democracy.

“But for many Europeans, this is old news.  As Obama was educating the American people about the threat, three senior senators were getting a lesson from leaders of three NATO countries that have been barraged with Russian meddling. Having fought alone for years, Estonia, Latvia and Lithuania are begging the United States to join the battle...

“In the Baltic states, cyberhacking is only one of many tactics that Russia uses for malign influence.  Moscow has corrupted the media space by blasting Russian-language propaganda at the region’s millions of Russian-speaking citizens.  Years before the 2016 U.S. presidential campaign, in 2007, a massive Russian cyberassault on Estonia simultaneously targeted the presidency, Parliament, most government ministries, banks and media organizations.  The tiny Baltic state reacted by becoming an international leader in cyberdefense.

“Across Europe, Russia has supported far-right politicians and political parties, including in Germany and France, which have major elections coming soon.  Pro-Russian leaders with either explicit or indirect Russian government support have taken over the governments of Armenia, Georgia, Hungary and Moldova....

“ ‘Russia is trying to break the backs of democracies all over the world,’ (Republican Sen. Lindsey) Graham told reporters in Latvia, where he promised that more sanctions would get bipartisan support.  ‘You can expect some economic pain. It will be true in America.  But freedom is worth suffering pain.  It is now time for Russia to understand, enough is enough.’”

Who might be the next target for the Kremlin?  German Chancellor Angela Merkel, with the country holding general elections next autumn.  Merkel has been a thorn in Putin’s side, following the Crimea annexation.  As reported by Jochen Bittner in the New York Times:

“After all, last year the same hackers who broke into the Democratic Party’s computers, known online as Fancy Bear or Sofacy Group, attacked the German Parliament’s network; they are also accused of stealing documents from individual members of Parliament.  Every revelation about how Russia interfered in the American elections gives Germany a foretaste of what is already looking to be the nastiest, toughest, most exhausting election campaign in modern German history.”

Holman W. Jenkins, Jr. / Wall Street Journal

“Here’s one more way U.S. intelligence on Russia may not be up to snuff.  Many would like President Obama to repay Russian hacking by releasing secret details of Vladimir Putin’s stolen wealth, estimated at up to $160 billion.  They may be disappointed to learn the data doesn’t exist.

“The idea of weakening Mr. Putin by laying out his secrets is a good one.  We proposed it here three years ago.  But even then, when the U.S. Treasury announced sanctions on Mr. Putin’s ‘personal bank’ after his Crimea grab, it was quoting the 10-year-old allegation of one of Mr. Putin’s domestic opponents.  Treasury revealed nothing you couldn’t find from Google. A second problem may be that Mr. Putin actually owns title to nothing. At least in the latter stages of Russia’s kleptocracy, he merely points to things and people give them to him....

“The extreme murkiness of who owns what, and for how long, under Putin sufferance is illustrated by the financial coup with which he ended 2016.

“To relieve a strained Russian budget and show the country’s appeal to Western investors, his underlings arranged a partial privatization of state-owned oil giant Rosneft.  Yet the Italian bank supposedly financing the purchase admitted it was still mulling whether to participate. The key Western participant, Anglo-Swiss mining giant Glencore, was revealed in the Russian press to be off the hook for most of the cash for its $5 billion stake: ‘Russian banks provided it an exemption from this obligation.’

“So where the money came from and who might end up owning many of the shares is about as clear as mud.

“Still, critics are not wrong to suspect Mr. Putin is sensitive to corruption allegations. Nobody predicted the Arab Spring, the Ukrainian revolution, the fall of Gaddafi, etc.  Mr. Putin cannot be certain when a public eruption might sweep him from his throne....

“(Western governments) have kept silent even on the polonium murder in London of dissident Alexander Litvinenko, an act of international nuclear terrorism. Why?  Because they are unwilling to press hard on the Putin regime, fearing either blowback or his replacement by the devil they don’t know....

“The best and likeliest outcome if Mr. Trump is successful is that Mr. Putin will stop being an international problem in the run-up to his own re-election in 2018 and a year or so thereafter.  Mr. Trump will be freer to concentrate on domestic reform and reacting to whatever emergencies the European Union inevitably throws up in the new year.

“This holiday will be temporary. Mr. Putin, who has no realistic hope for a peaceful retirement, and whose society and economy are rotting out from under him, is almost certain to be a bane for the world and Russia in the coming decade.”

Brazil: The news here just continues to get worse.  56 inmates were killed in a prison riot between drug gangs at a maximum-security prison, which you might be thinking, ‘Well, what’s so bad about that?’ except that 126 violent convicts escaped in the chaos.

You also need to know that the violence was so horrific many of the dead were decapitated or cut into quarters by fellow inmates and thrown over prison walls, as reported by the Los Angeles Times.

But then on Friday, at a separate prison, the powerful drug gang that was targeted in the above attack sought revenge and, as reported by Reuters, members of the First Capital Command (PCC) gang killed 33 inmates, “decapitating and cutting out the hearts of most of them.”

Well, it’s been a lovely week in Brazil.  You can have this place.

[Separately, across the Pacific, nearly 160 inmates escaped from a prison holding suspected Muslim rebels in the Philippines this week, too.]

Finland: My new Finn friend, M.N., who is now in Chicago but maintains extensive contacts, sent me an update the other day on the situation in his country, which I wrote of after the killing of two female reporters and a female politician; that he believes is an immigration issue, native Finns increasingly ticked off at the benefits accorded immigrants while regular Finns struggle.  M.N. said there will be no official update on the crime and the only thing one would find in the press eventually is a little mention of the sentence.  The authorities, he said, are afraid to talk about how the immigrants have been destroying the country.  The police are hiring 50 more officers to be trained to detect “hate talk” in all media, and that what I wrote of would be considered such talk there.  Devices are even inserted in all cars not just to collect a “road tax,” but also so that authorities know where you are at all times. 

M.N. says all politicians profit from the “immigration business,” collecting millions on the legal assistance, translations and social assistance paid by regular Finns through their taxes.  “Most often these businesses are run by their spouses or foundations where they are board members.  I laugh when there are reports on Finland being one of the least corrupted nations in the world.”

Thank you, M.N.  After your description, it seems Finland is ripe for Russian mischief, too, if the corruption is at levels you describe.  It would only take a little hacking to uncover it, no?  Then it’s an easy game of propaganda and blackmail.

Random Musings

--The Wall Street Journal first reported that President-elect Donald Trump wants to pare back the Central Intelligence Agency and other facets of the intelligence apparatus, believing the Office of the Director of National Intelligence has become bloated and politicized, according to the Journal.  On Thursday, Trump was said to have selected former Indiana Sen. Dan Coats to be the director of the Office of National Intelligence Agency, which oversees all 16 agencies that make up the intelligence community.

--Sweden said it would not decide for several weeks whether to drop or proceed with an investigation into allegations of rape against WikiLeaks founder Julian Assange.  Prosecutors interviewed him in November at the Ecuadorian embassy in London, where he has been holed up since 2012 to avoid extradition over allegations that he committed rape in 2010, which Assange denies.

--President-elect Donald Trump blasted Republicans for their move to gut an independent congressional ethics office, saying they should focus instead on domestic policy priorities such as health care and a tax overhaul.

Trump called the Office of Congressional Ethics “unfair,” in his series of tweets, but said focusing on it was misplaced at this time, referencing #DTS, an apparent allusion to his promise to “drain the swamp” in Washington.

So this was a break with Republicans, who overrode their own leadership on Monday in the vote to curtail the power of the ethics office, which was set up in 2008 as a result of scandals that impacted three members.

Part of the issue, and uproar after, was the fact this move was made late Monday, on the eve of the formal beginning of the new legislative session.

So with the ensuing uproar, House Republicans reversed course Tuesday, Trump’s comment certainly helping, while Speaker Paul Ryan and top Republicans warned their colleagues not to pursue the proposal to weaken the independent ethics office.

But there was a legitimate reason to look at the ethics office in the first place.

Editorial / Wall Street Journal

“(The) GOP is right that the investigative body has the power to destroy reputations without due process.

“By the way, Paul Ryan was re-elected Speaker Tuesday with one GOP defection, while Minority Leader Nancy Pelosi lost four Democrats.  But that news was dwarfed as the House considered rules for the new Congress, and Judiciary Chairman Bob Goodlatte offered an amendment to restructure the Office of Congressional Ethics.

“The office is composed of political grandees, often former Members, and it has not prosecutorial power. But it conducts investigations into Members or staffers and makes recommendations to the House Ethics Committee.  The proposal limited what information can be released to the public and barred the committee from having a press secretary. Also banned: Anonymous tips.

“Mr. Ryan and other House leaders opposed the rule as badly timed. But the rank and file adopted the idea Monday night anyway, only to dump it on Tuesday after denunciations from the Democratic-media complex.  The left rounded up callers to deluge Republican switchboards for ‘gutting’ the outfit. Donald Trump couldn’t resist piling on with a pair of tweets: ‘With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it may be, their number one act and priority.’

“The reality is that the office is at best redundant and perhaps worse.  Democrats created the office in 2008 to deflect attention from a crush of corruption scandals, including against at least three Members. The left is pitching the place as an essential institution of self-government, but the Senate manages to function without a similar office.

“As it is, the ethics office is a roving investigator that can publish reports with details that may not be accurate and can damage a reputation with little or no proof of guilt.  Evidence of wrongdoing in travel, campaign finances and other matters can be handled by the House Ethics Committee, and if necessary law-enforcement agencies. Both are politically accountable, unlike the independent office.

“Anonymous complaints are especially insidious, as subjects of an investigation may not know who is accusing them – and the accuser may never have to press his case.  Nixing the communications director is also worthy: A press secretary is nothing but a designated leaker. The office is a great tool for government ‘watchdog’ groups that are progressives posing as transparency enthusiasts, which renders the proceedings even less fair....

“Progressives are elated that their Trump ‘resistance’ project notched a victory and will continue the fact-free outrage campaigns.  If you think the political pressure is intense on ethics rules, wait until the left completes its nationwide talent search for the person most harmed by the GOP’s health-care proposals.  Mr. Trump will also figure he can rout any opposition with a tweet, not that he’s known for restraint.”

--Republicans currently enjoy a 241-194 advantage over Democrats in the House, though the margin will narrow in the coming weeks as the Senate takes up nominations of several House members to the Trump administration, including Mike Pompeo (R-Kan.) to serve as CIA director and Rep. Tom Price (R-Ga.) for health and human services secretary.  Should they be confirmed, their seats would be filled through special elections to be held later this year.  In all, four Republicans fit the bill, while Democrat Rep. Xavier Becerra (Calif.) also expected to depart the House soon to become his state’s attorney general.

--New York Democratic Gov. Andrew Cuomo has been all over the place the past few months, especially in and around Gotham, as there is little doubt he is gearing up for a run for president in 2020 (assuming he can escape the ethics probes that have been circling around him the past few years).  He needs a clean sheet, as they say in Premier League football, where it’s only his associates, and not he himself, who continue to be targeted.  But at some point by 2018, he needs the public to believe he won’t ever be indicted, that the probes are over, and he can thus move on.

In the meantime he was all over the opening of New York’s Second Avenue Subway this week after decades and decades, and $10s of billions in expense, no doubt as an example of an infrastructure program he’ll claim in 2019-20 to have directed.

Also this week he appeared with Sen. Bernie Sanders at a community college in Queens to trumpet a tuition free plan for in-state students whose families earn $125,000 or less.  Some 940,000 New York households with college-age children would qualify for the additional assistance.

New York is one of 10 states considering tuition-free programs at community colleges, and 150 state and local programs of one kind or another already target the same thing, but Cuomo claims his would be the most aggressive and unique because of the high income cap.

--As I imagine virtually every American who can read knows by now, Chicago ended up with 762 homicides in 2016, the most in two decades and more than New York City (335) and Los Angeles (294) combined.

The nation’s third-largest city also saw 1,100 more shooting incidents than in 2015, according to the Chicago Police Department. The spike in homicides from 485 in ’15 was the largest percentage increase in 60 years.

Rich Lowry / New York Post

“The city of Chicago is conducting a long, bloody experiment in what happens to a gang-ridden municipality in the absence of effective policing.

“It is keeping the morgue depressingly busy...

“While everyone on the left pays obeisance to the slogan ‘Black Lives Matter,’ Chicago mayor Rahm Emanuel runs a jurisdiction where black lives have been getting cheaper almost by the day, especially in the poorest areas.

“The lion’s share of Chicago’s spike of violence has occurred in five of the city’s 22 police districts. Eighty percent of the victims were rated by the Police Department as likely to be involved in gun violence, which means that the city is adept at identifying people as potential victims – just not at keeping them from getting shot....

“The equation that accounts for the rising body count is simple: As the Chicago police have become less aggressive, the gangs have become more aggressive and more people have been killed.  Chicago demonstrates that in swatches of inner-city America you can have a chastened, passive police department or a modicum of public order – but not both....

“Fearful of becoming the next ‘viral video,’ harassed and mocked when out doing their job in tough neighborhoods, beleaguered by paperwork, the police have suffered a crisis in morale and clearly pulled back.

“Documents obtained by ’60 Minutes’ show an 80 percent drop in stops from almost 50,000 in August 2015 to under 9,000 a year later, and arrests dropping from roughly 10,000 to 7,000.

“This reduced police presence on the streets has been a boon only to anti-police ideologues (the ACLU welcomes it) and the city’s myriad gangs.  Chicago police superintendent Eddie Johnson says that the surge in violence has been driven by ‘emboldened offenders who acted without a fear of penalty from the criminal-justice system.’

“There is much about Chicago that can’t be readily fixed, but it is fully within the city’s power to make its criminal offenders feel less emboldened. Chicago simply needs to stop, arrest and jail more dangerous people.

“The only alternative is the continuation of the city’s current experiment in chaos, which is making the city unlivable for the people unfortunate enough to inhabit its most violent precincts.”

[New York City’s total of 335 homicides is bested only by the 333 recorded in 2014.   The city’s peak was a staggering 2,245 in 1989 during the crack epidemic.  Another tally is 2,262 in 1990, but I seem to remember the official high being 2,245.  It’s possible, though, they have gone back and reclassified some homicides.]

Editorial / Wall Street Journal

“President Obama plans a farewell speech next week in Chicago, and perhaps he’ll notice that while he’s been in Washington his hometown has become the nation’s murder capital and largest gang war zone.  Worth reflecting on is the city’s upswell in violence last year that followed political protests against law enforcement and a pullback in policing....

“(The) demonization of cops has contributed to Chicago’s surge of violence, with the principal victims being young minorities, many of them innocent bystanders. Perhaps the President could include an elegy for these black lives in his farewell.”

--Ah yes, my adage “wait 24 hours.”  As I went to post last Friday, I was aware of a story about possible Russian hacking of a Vermont utility computer, but opted not to comment and, as it turns out, we learned a few days later the story was benign.

An employee at Burlington Electric Department was checking his Yahoo email account Friday and triggered an alert indicating his laptop had connected to an IP address associated with the hack on the Democratic National Committee, but officials later said this particular address is found all over the place and not unique to Burlington Electric, suggesting the company wasn’t being targeted. The laptop also wasn’t connected to its grid systems.  But the Washington Post initially did really poor work on the story, reporting incorrectly the country’s electric grid had been penetrated.

--George F. Will / Washington Post

“Any summation of Barack Obama’s impact on domestic policy and politics should begin with this: In 2008, he assured supporters, ‘We are the ones we’ve been waiting for. We are the change that we seek.’

“Soon he will be replaced by someone who says, ‘I alone can fix it.’ So, Americans have paid Obama the compliment of choosing continuity, if only in presidential narcissism.

“The nation has now had, for only the second time, three consecutive two-term presidencies.  (The other was ‘the Virginia dynasty’ of Thomas Jefferson, James Madison and James Monroe.)  The first trio culminated in an ‘era of good feelings.’  (Monroe was reelected unopposed.)  The second not so much.

“Obama, who called health insurance reform the ‘defining struggle of this generation,’ was semi-right, in two senses.  Because ObamaCare demonstrates the perils of trying to micromanage 18 percent of the economy (America’s health-care sector is larger than all but four national economies), it might be the last gasp of New Deal/Great Society-style government hubris.

“On Jan. 16, 2008, Obama told the Reno-Gazette-Journal, ‘I want to make government cool again.’  His paragraph in our national epic did not do that.  On the other hand, Obama might have catalyzed a conviction already forming in the American mind, but in any case he leaves a nation that now believes public policy should enable everyone to have access to insurance.

“Obama has been among the most loquacious of our presidents, but can you call to mind from his Niagara of rhetoric a memorable sentence or even phrase?  If power is the ability to achieve intended effects, his rhetoric has been powerless to produce anything but an empty, inconsequential reputation for speaking well.

“He assured congressional Democrats that they could safely vote for ObamaCare because ‘you’ve got me.’  He would demonstrate his magic when campaigning for it and for them.  Seven years after he said this, it remains unpopular, and they are fewer than they were.  There are 11 fewer senators and 62 fewer representatives from the Democratic Party than on Jan. 20, 2009.

“Three presidents – George Washington, Ulysses Grant and Dwight Eisenhower – were world figures before becoming president and are remembered primarily for what they did before. Eisenhower rebuffed his aides’ requests that he make more use of a new medium for marketing himself: ‘I can think of nothing more boring, for the American public, than to have to sit in their living rooms for a whole half-hour looking at my face on their television screens.’  Eisenhower left office very popular.

“A former colleague of Obama’s on the faculty of the University of Chicago Law School described him as someone who never learned anything from anyone with whom he disagreed.  He also never learned anything from anyone about constitutional etiquette....

“He combined progressivism’s oldest tradition and central tenet – hostility to the separation of powers – with a breezy indifference to the take care clause (the president ‘shall take care that the laws be faithfully executed’) and to the first sentence of the Constitution’s first article (‘All legislative powers herein granted shall be vested in a Congress’)....

“Obama’s adventures in green energy produced the $535 million bankruptcy of Solyndra and 60 percent fewer electric cars on the road in 2015 than he had predicted.  Gulliver on his travels met someone like Obama:

“ ‘He has been eight years upon a project for extracting sunbeams out of cucumbers, which were to be put in phials hermetically sealed, and let out to warm the air in raw inclement summers.  He told me, he did not doubt, that, in eight years more, he should be able to supply the governor’s gardens with sunshine, at a reasonable rate: but he complained that his stock was low, and entreated me to give him something as an encouragement to ingenuity, especially since this had been a very dear season for cucumbers.’

“In 2007, Obama said, ‘Let us transform this nation.’   Judging by the nature of his successor, Obama somewhat succeeded.”

--Johnny Oleksinski / New York Post

“Two Hollywood icons died this week, a mother and daughter, only one day apart.  But Carrie Fisher and Debbie Reynolds’ untimely ends have already been pushed aside by – what else? – tweets.

“Death itself is no longer the most dramatic event there is.

“Last Tuesday, Steve Martin, an actual friend of Fisher’s, took to Twitter to pay tribute to the ‘Star Wars’ icon.

“ ‘When I was a young man,’ he wrote, ‘Carrie Fisher was the most beautiful creature I had ever seen. She turned out to be witty and bright as well.’

“New York magazine flogged Martin, implying he was as piggish as Jabba the Hutt.  How dare he objectify Fisher?  Anonymous tweeters piled on , and within hours Martin deleted his innocent tweet.

“When it was announced on Christmas Day that singer George Michael had died at age 53, actress Sarah Michelle Gellar leapt to Twitter to respond...to the wrong person’s passing.

“ ‘Do you really want to hurt me?’ she tweeted.  ‘I guess you do 2016 - #ripboygeorge I was truly one of your biggest fans.’

“Such is the pressure to hop on Twitter the moment a celebrity dies: You might get your ‘80s British icons mixed up.

“This onslaught of feuds and memes and mini-obits is all part of our crippling addiction to mournography – the near-pornographic levels of grief we exhibit for the loss of total strangers and the race to be the best at it.

“Today, people are glued to every celebrity death, reveling in virtual snuff films while having nonstop paroxysms of surface-level sadness. We’ve convinced ourselves that this fixation is loving – generous even – when it’s actually as selfish as a man-spreader on the subway.

“Grieving on social media is one of the most shameful acts of acceptable narcissism today. See how upset I am?  See how big a fan I was?  See the run-in I had with her in line at Starbucks?  It’s a cockfight at a funeral, a talent show at a wake.  Mourning, once complex and personal, has been reduced to a few hasty clicks and GIFs....

“When (Carrie) Fisher suffered her heart attack on a flight to Los Angeles on Dec. 23, one fellow passenger immediately took to Twitter.

“Discarding common decency like a crumpled receipt, a passenger seated behind Fisher, YouTube star Anna Akana, took to the social-media platform to break the news to her 132,000 followers.

“ ‘Don’t know how else to process this but Carrie Fisher stopped breathing on the flight home.  Hope she’s gonna be OK,’ tweeted Akana, ending her message with a tacky frown emoji....

“Not everyone thought Akana was committing a public service.

“ ‘Have some respect, don’t be tweeting about things like this!’ wrote one user.

“Akana would not be shamed.  ‘We talked it over and ultimately hoped it would help get the news to her family since people report on tweets,’ she wrote.

“How thoughtful.

“Her tweet was, in all likelihood, the way Fisher’s family discovered that their mother, daughter and sister might be brain-dead.  And yet, it was Akana – a promoter of ‘rape prevention leggings’ – who needed to ‘process’ the situation.”

--As reported by the Associated Press: “A Mexican man accused of raping a 13-year-old on a Greyhound bus that traveled through Kansas had been deported 10 times and voluntarily removed from the U.S. another nine times since 2003...

“Three U.S. Republican senators – including Kansas’ Jerry Moran and Pat Roberts – demanded this month that the Department of Homeland Security provide immigration records for 38-year-old Tomas Martinez-Maldonado....

“U.S. Sen. Charles Grassley, from Iowa and chairman of the judiciary committee, co-signed a Dec. 9 letter with Moran and Roberts to Homeland Security Secretary Jeh Johnson, calling it ‘an extremely disturbing case’ and questioning how Martinez-Maldonado was able to re-enter and remain in the country.”

--From Rebecca Everett / NJ.com: “Police are investigating the alleged beating of a 19-year-old New Jersey man whose family claims he was targeted because of his U.S. Army service.

“Lori F. [I’m withholding her name and that of her son] told Fox29 that her son, Austin F., was attacked while walking with her after the Mummers parade (in Philadelphia) on New Year’s Day by a group of young men who made comments to him about his army jacket.

“He is now being treated for a broken jaw and other injuries at Jefferson University Hospital, police confirmed.  His mother told the station that his jaw will have to be wired shut for eight week....

“Austin F., a recent Hammonton (N.J.) High School graduate, was home for the holidays from Fort Benning in Georgia and was preparing to deploy to the Middle East, his mother told Fox29....

“Witnesses told police that a group of 11 or 12 men started making comments to the victim about the army and, after what Gripp called an ‘exchange of words,’ the men started beating the victim in the face and body....

“(Gripp) said he has not heard of any other recent reports of soldiers or veterans being targeted in Philadelphia.”

--After I wrote about 64 U.S. policemen being killed in the line of duty in 2016, sadly, one more was added to the list, a Pennsylvania state trooper, Landon Weaver, who was fatally shot after responding to an abuse violation Friday night (Dec. 30).

--607 people died on New Jersey’s roads last year, 45 more than 2015, and, of course, distracted driving is an increasing problem, “the largest change in behavior over the last 10 years,” as a spokeswoman for the AAA said.

--According to new guidelines from the National Institutes of Health, most babies should start eating peanut-containing foods well before their first birthday, a shift in dietary advice, based on landmark research that found early exposure dramatically lowers a baby’s chances of becoming allergic.

But that’s all I’m saying on the topic, not even playing a fake doctor on the Web.  Ask your pediatrician for guidance.

---

Pray for the men and women of our armed forces...and all the fallen.  And our thoughts and prayers go out to the victims in Ft. Lauderdale...this is a 'wait 24 hours' moment as well.

God bless America.

---

Gold $1172
Oil $53.70

Returns for the week 1/2-1/6

Dow Jones  +1.0%  [19963]
S&P 500  +1.7%  [2276]
S&P MidCap  +1.3%
Russell 2000  +0.8%
Nasdaq  +2.6%  [5521]

Bulls  60.2
Bears  18.4  [Source: Investors Intelligence...now it gets interesting, if you follow this contrarian indicator.  60 is a definite ‘buyer beware’ sign....]

Have a great week.

Dr. Bortrum posted a new column.

Brian Trumbore



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Week in Review

01/07/2017

For the week 1/2-1/6

[Posted 11:00 p.m. ET, Friday]

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

Edition 926

Washington, Russia and Cyber-Warfare

Before I start, just a random comment that is related to what follows.  Yours truly may be the only person in the world who has both accused Vladimir Putin of bombing his own people (in 1999, writing this months before the late-William Safire famously did), and has also been directly threatened by Julian Assange’s chief counsel, as I wrote a few months ago.

So let’s just say two things: I’d like to think I kind of know what I’m talking about, or, second, if you don’t think I do, you should at least know where I’m coming from.

---

The top intelligence official for the U.S., Director of National Intelligence James R. Clapper Jr., testified to Congress on Thursday that Russia’s meddling in the 2016 presidential campaign went well beyond hacking to include disinformation and the dissemination of ‘fake news’ – an effort, Clapper maintains, continues.

“Whatever crack, fissure, they could find in our tapestry...they would exploit it,” Clapper said, in testimony before the Senate Armed Services Committee on foreign cybersecurity threats, including Russian hacking and interference in the election.

Republican Sen. Tom Cotton (Ark.) and others cast doubt on the idea that Russia would want to help President-elect Trump.

“Donald Trump has proposed to increase our defense budget, to accelerate nuclear modernization, to accelerate ballistic missile defenses, and to expand and accelerate oil and gas production, which would obviously harm Russia’s economy. Hillary Clinton opposed or at least was not as enthusiastic about all those measures.”

But senators John McCain (R-Ariz.) and Lindsey Graham (R-S.C.), were adamant more needed to be done to punish and deter Russia.

Trump has repeatedly voiced skepticism about the intel community’s conclusion there was heavy Russian interference to help him win the White House.

Separately, former CIA director James Woolsey Jr., a member of Trump’s transition team, resigned Thursday over Trump’s vision for intelligence agencies, with Woolsey admitting he had been excluded in recent weeks from discussions on intelligence matters with Trump and retired Lt. Gen. Michael T. Flynn, the incoming White House national security adviser.

Woolsey was particularly taken aback by reports Trump is considering revamping the country’s intelligence framework, according to the Washington Post.

Then Friday, a declassified U.S. intelligence report was released with the conclusion Vladimir Putin ordered an “influence campaign” aimed at interfering with the election.

“Russia’s goals were to undermine public faith in the U.S. democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency,” it states.  “We further assess Putin and the Russian government developed a clear preference for President-elect Trump.”

President Obama and Trump were briefed on the full report earlier.

But Trump wasn’t convinced.  After four intelligence chiefs tried to persuade him earlier on Friday at Trump Tower that Russian intelligence agencies had attempted to tip the election in his favor, Trump announced that the hacking had had “absolutely no effect.”

In a statement, Trump didn’t acknowledge that Russia was any different from any other country or group attempting to penetrate U.S. computer networks, or that it was responsible for hacking into the Democratic National Committee and leaking emails, as U.S. intel officials claim.

“While Russia, China, other countries, outside groups and people are consistently trying to break through the cyber infrastructure of our governmental institutions, businesses and organizations including the Democratic National Committee, there was absolutely no effect on the outcome of the election including the fact that there was no tampering whatsoever with voting machines,” Trump said following his classified briefing.

Trump did say the meeting was “constructive” and that he has “tremendous respect for the work and service done by the men and women of this community to our great nation.”  He also said he would order a team to create a plan to “aggressively combat and stop” cyberattacks within the first three months of taking office.

Trump added, “There were attempts to hack the Republican National Committee, but the RNC had strong hacking defenses and the hackers were unsuccessful.”

Senior intelligence officials have said publicly that there is no way to judge the impact of the hacks on the final vote tally.

Ralph Peters / New York Post

“Thursday’s Senate Armed Services Committee hearing on cyber-warfare threats – particularly those from Russia – was a welcome moment for grown-ups.  Frank, honest and bipartisan, the consensus from our legislators and our intelligence-community leadership was that we face multiple grave and growing dangers, but the most immediate and only existential threat comes from Vladimir Putin’s Russia.

“And yes, the Russians did attack our elections with cyber-weapons and information warfare.  All our intelligence agencies agree.  Which is rare.

“Republican or Democrat, the senators praised the patriotism and accomplishments of those who serve in our intelligence agencies.  That was welcome, too, given the political fashion of the moment to denigrate our intelligence professionals while turning backflips to excuse Putin’s strategic subversion and condone the actions of an America-hating alleged rapist, Julian Assange.

“What have we come to when even a former governor, interviewed on cable news, brushes off Putin’s assault on our country with the suggestion that ‘everybody does it.’ Well, no.  Not everybody pulls out all the stops to shatter the integrity of a U.S. presidential election.

“Putin’s multi-pronged attack targeted all Americans by striking the fundamental tool of our democracy, our free elections.  Right or left, we all should be equally outraged – if we give a damn about our country.

“Instead, we’ve heard no end of political henchmen insist we should listen to Assange (whom they previously loathed) and be quiet about Putin (whom they previously condemned) because of ‘all the intelligence failures’ in the past.

“Yet, when pressed, such critics always cite the same, sole ‘intelligence failure,’ the weapons-of-mass-destruction call prior to the invasion of Iraq.  They neglect to mention that the intelligence community was divided on that conclusion, but neoconservatives in the Bush administration pushed the WMD argument to the fore.  That was a political failure.”

But since 9/11, “a genuine intelligence failure,” the Office of the Director of National Intelligence was created to address the lack of information-sharing between rival intelligence agencies “and there has been remarkable progress in intelligence-sharing,” notes Peters.

“Since 9/11, there hasn’t been another strategic terror attack on our homeland, despite the determination of our enemies.

“Only superb intelligence work allowed us to break al Qaeda’s back and, now, to turn the tide against ISIS (elements within the intelligence community tried to warn the president about ISIS, but he didn’t want to hear it).  It wasn’t Obama who ‘got’ bin Laden, it was great intelligence plus the Navy SEALs....

“The next time a political hack derides our intelligence personnel and defends Julian Assange or Vladimir Putin, ask him or her exactly what he or she has done to protect this country – while intelligence professionals were laying their lives on the line.”

Trump and Governing thru Twitter....various opinions....

Gerald F. Seib / Wall Street Journal

“Is it method or madness?

“That is the question perplexing the world as President-elect Donald Trump continues his unorthodox campaign-season communications habits.  He tweets, apparently randomly.  He wades into subjects that he could easily avoid.  He picks fights.  Monday night, he tweeted of North Korean hopes of developing a nuclear weapon that could reach the U.S.: ‘It won’t happen!’

“It is a risky approach.  By weighing in on all sorts of matters large and small, Mr. Trump already may be in danger of devaluing the most valuable asset any president has, which is the bully pulpit.  Will any individual message from the new president have the impact he wants if it is lost in the static of running commentary?

“It’s also hard to argue that a presidential communication can have the depth, texture and subtlety often required when it comes in 140 characters.

“Yet it also would be a mistake to dismiss Mr. Trump’s transition-season intervention as random musings.  That was a mistake his opponents made consistently through a long presidential campaign.

“In fact, there seem to be specific objectives behind many of Mr. Trump’s seemingly scattershot missives and comments.  Often, say those who know him, he is posturing or positioning in pursuit of broader goals. He doesn’t mind roiling the waters in the process – and, as a consequence, some of what he says isn’t to be taken literally.

“Former House Speaker Newt Gingrich, who speaks regularly with Mr. Trump and is developing a lecture series and book examining Trumpism, suggests the President-elect is in this regard similar to Franklin Roosevelt, who sometimes seemed to cultivate chaos in preparing the ground for his initiatives.  Mr. Gingrich also predicts the style won’t change: ‘My advice is to relax.  It’s going to be this way for eight years.’

“So what might Mr. Trump be trying to accomplish?  There are three likely goals:

He is positioning himself for a negotiation or a deal....

“The best example may be the way Mr. Trump has approached China, a country with which he figures to have plenty of tough negotiations on trade and military maneuvering in the South China Sea.  His opening bid came when he decided to accept a call from the president of Taiwan, a step that was sure to rile the government in Beijing.  He then followed with a series of tweets saying that the Chinese don’t ask for permission to take steps that irritate the U.S., implying they shouldn’t expect the new president to worry too much about keeping them happy either. ‘That was the surest signal to the Chinese that things are going to be different,’ says Mr. Gingrich....

He is seeking to control the agenda.  Early-morning tweets have a way of establishing what everyone else will be compelled to talk about that day.  They also have had a way of upstaging the man who still happens to be the president, Barack Obama, annoying the White House and potentially creating confusion abroad about who really is in charge....

“He is creating rabbits for others to chase.  For two weeks Mr. Trump nursed along the idea that he might pick former Republican presidential nominee Mitt Romney as his secretary of state.  Ultimately, he didn’t – but he sparked a string of news stories suggesting he was reaching out to embrace former enemies, and distracting from less beneficial topics such as potential conflicts of interest in his nascent administration.

“Certainly there is danger in leaving the world unsure which messages to take literally, and in trying to handle subjects as sensitive as nuclear-weapons strategy on the fly. But it’s also likely Mr. Trump knows exactly what he is doing.”

David Brooks / New York Times

“Normal leaders come up with policy proposals in a certain conventional way. They gather their advisers around them and they debate alternatives – with briefing papers, intelligence briefings and implementation strategies.

“Donald Trump doesn’t do that. He’s tweeted out policy gestures in recent weeks, say about the future of America’s nuclear arsenal. But these gestures aren’t attached to anything.  They emerged from no analytic process and point to no implemental effects. Trump’s statements seem to spring spontaneously from his middle-of-night feelings. They are astoundingly ambiguous and defy interpretation.

“Normal leaders serve an office.  They understand that the president isn’t a lone monarch.  He is the temporary occupant of a powerful public post.  He’s the top piece of a big system, and his ability to create change depends on his ability to leverage and mobilize the system.  His statements are carefully parsed around the world because presidential shifts in verbal emphasis are not personal shifts; they are national shifts that signal changes in a superpower’s actual behavior.

“Donald Trump doesn’t think in that way, either. He is anti-system. As my ‘PBS NewsHour’ colleague Mark Shields points out, he has no experience being accountable to anybody, to a board of directors or an owner.  As president-elect, he has not begun attaching himself to the system of governance he’ll soon oversee.

“If anything, Trump is detaching himself.  In a very public way, he’s detached himself from the intelligence community that normally serves as the president’s eyes and ears.  He’s talked about not really moving to the White House, the nerve center of the executive branch. He’s sided with a foreign leader, Vladimir Putin, against his own governmental structures.

“Finally, normal leaders promulgate policies. They measure their days by how they propose and champion actions and legislation.

“Trump doesn’t think in this way, either.  He is a creature of the parts of TV and media where display is an end in itself.  He is not really interested in power; his entire life has been about winning attention and status to build the Trump image for low-class prestige. The posture is the product.

“When Trump issues a statement, it may look superficially like a policy statement, but it’s usually just a symbolic assault in some dominance-submission male rivalry game.  It’s trash-talking against a rival, Barack Obama, or a media critic like CNN.  Trump may be bashing Obama on Russia or the Mideast, but it’s not because he has implementable policies in those realms.  The primary thing is bashing enemies....

“The crucial question of the Trump administration could be: Who will  fill the void left by a leader who is all façade?

“It could be the senior staff.  Trump will spew out a stream of ambiguous tweets, then the hypermacho tough guys Trump has selected will battle viciously with one another to determine which way the administration will really go.

“It could be congressional Republicans....

“It could be the permanent bureaucracy, which has an impressive passive-aggressive ability to let the politicians have their press conference fun and then ignore everything that’s ‘decided.’

“I’ll be curious to see if Trump’s public rhetoric becomes operationalized in any way. For example, I bet his bromance with Putin will end badly. The two men are both such blustery, insecure, aggressive public posturers, sooner or later they will get in a schoolyard fight.

“It will be interesting to see if that brawl is just an escalating but ultimately harmless volley of verbiage, or whether it affects the substance of government policy and leads to nuclear war.”

Editorial / Washington Post

“President-elect Donald Trump’s frequent invocation of his ‘strength’ as a national leader has a superficial appeal, but his approval of a certain brutal, authoritarian government is a disturbing sign of what he thinks it means in practice.

“Americans have never gone in much for the sort of ideological enthusiasms that led much of Europe and Asia into disaster in the 20th century.  We can hope that our national skepticism about such all-encompassing systems of government will serve us in coming years as it has in the past, when outlandish schemes and dreams of power have been thwarted or tempered by the good sense, and the ideals, written into our founding documents.

“But as we have learned over and over again, keeping a democracy in good order requires constant attention and a lot of tedious maintenance. What the founders presented us was a Republic – ‘if you can keep it,’ in the famous words attributed to Benjamin Franklin.  Essential to keeping it is a well-informed and reasonably educated electorate, respect and regard for one another, and, above all, faith in our government to treat us fairly and deal with us truthfully. All of these things are threatened or undermined as we enter the new year. It is up to us as a people – not to any self-styled savior – to defend and strengthen our faith in our common humanity.”

Robert J. Samuelson / Washington Post

“One insistent question that will shape 2017 is whether we’re witnessing the gradual decay of the post-World War II international order, dominated by the economic and military power of the United States.

“After the Soviet Union’s collapse in 1991, it became fashionable to talk of the United States as the only true superpower.  Pax Americana would promote peace and prosperity. Globalization and trade would bind countries together.  The U.S. economic and political model, mixing markets and government oversight, would be emulated. Higher living standards would bolster democratic ideas and institutions.

“As for raw military power, no country could challenge the United States. The 1990-1991 Gulf War seemed to prove this.  Of course, there were fearsome nuclear weapons. But they seemed safely stalemated.  Few countries had them, and the largest arsenals, the American and Russian, seemed neutered by a shared understanding everyone would lose in a nuclear exchange.  The stage was set for what one prominent commentator called ‘the end of history.’

“It wasn’t.  Obviously, this reassuring vision no longer describes the real world, if it ever did. On all fronts, the actual future confounds the imagined future....

“Public opinion, rather than strengthening democratic ideals, has veered toward economic populism and nationalism.  Hello Brexit and Donald Trump.

“The notion of a sole surviving superpower has also fared poorly.  Power is the ability to get (or take) what you want.  By this standard, China and Russia rank as important powers.  Indeed, the very term ‘superpower’ may be misleading or obsolete. The United States cannot get everything it wants simply by dispatching troops to hot spots.

“Finally, the nuclear consensus is fraying.  North Korea has atomic weapons; Iran may someday get them. The more countries that have nuclear arms, the more likely that someone will make a catastrophic miscalculation.

“After World War II, the United States stumbled upon a global strategy.  It would protect its allies militarily while hoping that peace would promote prosperous, stable and democratic societies.  Communism’s psychological and political appeal would be rejected.  Despite many setbacks, the strategy generally succeeded.  Europe and Japan rebuilt; the Soviet Union failed; communism was discredited....

“What we did not anticipate was the reaction of other countries and the complexity of history.

“The international order is now in a state of flux for many reasons. Starting with China and Russia, many countries resent the United States’ leadership role. Many Americans have also tired of it.  New technologies (notably, e-commerce, cyberwarfare) are further redistributing power and influence.

“What’s curious is that American leaders have sometimes contributed to the decline of U.S. power. Barack Obama’s disdain of military force is so deeply felt and visible that the use of the United States’ fighting capabilities was often discounted by allies and adversaries alike....

“Trump has his own ideas about weakening the international order.  His chosen field is trade. He threatens to slap stiff tariffs on U.S. imports from China and Mexico. If these ignite a trade war, the adverse side effects may well backfire on U.S. workers and firms.  The last time mass protectionism was tried as economic stimulus was the 1930s; the experiment did not end well.

“There is a larger issue here.  In his latest book, ‘World Order,’ Henry Kissinger argues that the world is at its greatest peril when the international order is moving from one system to another.  ‘Restraints disappear, and the field is open to the most expansive claims and the most implacable actors,’ he writes.  ‘Chaos follows until a new system of order is established.’  It’s a sobering warning.”

Obama’s Legacy

This coming Wednesday, the long-awaited farewell address from Barack Obama will take place in Chicago.

Jon Gabriel / New York Post

“Flip on your TV and the news is grim. Wall Street soars while small towns shutter Main Street stores.  Our government’s computer systems are regularly hacked, the IRS is targeting citizens instead of just (over)taxing them, and the VA is killing the veterans they’re supposed to heal. Racial tensions are through the roof, with another city going up in flames every few months.  Our leaders blame the heavy hand of police instead of mobs hurling Molotovs.

“Syria, Iraq and Libya are in ruins as ISIS inspires terror around the globe. The Russian bear is on the prowl, and China continues to expand its military influence in Asia and beyond. As our enemies slap each other on the back, our allies weep at our incompetence.

“The American people had gotten so angry at the record of our so-called elites that they elected outsider Donald Trump to ‘drain the swamp’ and ‘burn it down.’

“But close your lying eyes and take a step back.  Obama’s eight years in office have actually been fantastic.  Don’t believe it? Just ask the president himself.

“On Thursday, the White House released a self-congratulatory list of all of Obama’s amazing accomplishments in his two terms in office. Apparently, in 2008, America was a smoldering hellscape ravaged by bloodthirsty neocons, greedy banksters, and intolerance lurking behind every Bush.  But then the clouds parted, a rainbow framed the warming sun, and the smartest, kindest, boldest leader ever strode into our imperial capital on a white gender-indeterminate unicorn.

“In less than a decade, he fixed the economy, delivered health care, united Americans, granted peace to the world, and healed the planet itself.  My name is Obamandias, President of Presidents; Look on my Works, ye Mighty, and despair!....

“Over nearly 2,000 words and more than a dozen graphs, Obama presents a Potemkin America that stands astride the globe, citizens dance arm in arm, and paychecks fall from the sky. But this is a standard tactic of the progressive left – insisting that politicians can fix all ills and how horrible things were before their guiding hand.”

Wall Street

Friday’s nonfarm payroll report for December, with the economy adding 156,000 jobs, below the Street’s expectations of about 175,000, was offset by November being revised higher to 204,000 from 178,000.  The unemployment rate ticked up to 4.7% from 4.6%,* matching forecasts, with the economy generating 2.2m jobs for all of 2016, down from 2015’s 2.7m.  [There have been 75 straight months of job gains, the longest streak since 1939.]

A broader gauge of unemployment and underemployment, U6, was 9.2% last month, the lowest since April 2008, but still elevated from the 8.4% level before the recession began in late 2007.

*The unemployment rate when Barack Obama took office was 7.8% and would peak at 10% in October of his first year.

December’s report, though, contained one nugget that was highly important.  Wages climbed 0.4% from the previous month, and are now up 2.9% from December 2015, the swiftest year-on-year growth since 2009.

I have been saying for nearly a year that the Federal Reserve would get caught with its pants down due to rising wages, i.e., they would be proven to be behind the curve (not that they already aren’t), and it now seems a virtual certainty the Fed will next raise interest rates at their March 14-15 meeting, assuming the Trump administration has been successful in enacting some of its growth agenda by then.  [The Fed meets Jan. 31-Feb. 1, but this will be too soon to glean anything of value following Trump’s inauguration.]

Minutes from the Fed’s meeting on Dec. 13-14, released this week, showed almost all officials saying the risks of growth surpassing their forecasts had grown because of the possibility of more “expansionary” fiscal policy under the president-elect and the Republican-controlled Congress.

But, policymakers also stressed it was too soon to jump to conclusions.

In other economic news this week, the December ISM reading on manufacturing came in at 54.7 (50 being the dividing line between growth and contraction), the best in two years and sharply higher than November’s 53.2. The new orders component was 60.2, a two-year high as well.  The ISM services figure was 57.2, matching November’s year high.

November construction spending rose 0.9%, 4.1% year over year, very strong, while factory orders for the month were down 2.4%, actually in line.

So all in all, more solid data, with the Atlanta Fed’s normally reliable GDPNow indicator forecasting fourth-quarter growth of 2.9%.

On the holiday shopping front, Mastercard’s SpendingPulse said sales for November and December rose 4%, with various online surveys showing gains of 11% to 19%.

But it’s now about the first 100 days, beginning January 20, and whether Trump and the Republicans can act quickly on the agenda, including ObamaCare, tax reform and an infrastructure spending bill, while there are going to be some intense confirmation hearings and a Supreme Court selection to deal with.

Investor sentiment, as spelled out in my weekly bull/bear readings down at the bottom, is exceedingly bullish, which is normally a contrarian indicator; the Federal Reserve is going to be hiking interest rates more than twice this year (I say four times); Trump’s policy initiatives won’t be rubber-stamped with just a 52-48 Senate majority; plus Congress is reluctant to widen deficits, which could mean a reduction in some of the more ambitious spending plans that the Trump team has on its plate.  Stocks are also far from cheap on valuation, and with so much uncertainty, it is difficult to figure out where earnings will go this year (FactSet has S&P 500 eps rising 12% in 2017), especially if the dollar rallies anew (after stalling out in recent days), which would adversely impact the earnings of multinationals.

The positives are also the same as some of the negatives. The Street has been betting that Trump’s pro-growth agenda will get through, aided in no small part by the 8-10 Democratic senators facing stiff re-election battles in 2018,  many from states that Trump won.  It is felt that many of these will vote for major Republican economic initiatives to better set themselves up for the next big election on the calendar here in the U.S.

Europe and Asia

A slew of data after the holidays, with Markit reporting the eurozone’s final composite PMI for December was 54.4, vs. 53.9 in November.

The manufacturing figure was 54.9 vs. 53.7, the best since April 2011, while the service sector edged down from 53.8 to a still solid 53.7.

Individually...

Germany had a manufacturing PMI of 55.6, a 35-mo. high, with services at 54.3.

France was 53.5 on the manufacturing end, a 62-mo. high, with services at 52.9.

Spain’s figures were 55.3 (mfg.) and 55.0 (services).

Italy’s splits were 53.2 / 52.3.

Greece’s manufacturing PMI was 49.3, up from November’s 48.3.

The Netherlands, with a manufacturing PMI of 57.3, and Austria, 56.3, both hit 68-mo. highs.

In the U.K., the manufacturing reading for last month was 56.1, best since summer 2014, with services at 56.2 (this being 80% of U.K. GDP)

The 18% depreciation in the pound against the $ has aided exports in a big way, but Brexit and trade relationships continue to impede investment and will throughout 2017.   The situation with the currency also has a downside of importing inflation, which erodes purchasing power and reduces consumption.  At least that is how it is all supposed to work in theory.

Speaking of inflation, a flash reading on prices in the eurozone for December, as put out by Eurostat, had inflation on an annualized basis at 1.1%, up from the 0.6% pace of November.  This is a good sign, and is welcome news at the European Central Bank, but if inflation keeps ticking higher towards the ECB’s 2% target, that will mean less bond-buying and the likes of Italy and Spain could take a header on higher bond yields.  [The yield on the Italian 10-year rose from 1.81% to 1.96% over the course of the week.] 

Germany’s inflation rate for December was 1.7% (ann.), though it was still just 0.8% in France.

The eurozone’s core inflation for last month was 0.9% vs. 0.8% in November.

Chris Williamson, chief economist / Markit:

“The final PMI data signal an even stronger end to 2016 than the preliminary flash numbers, though whether this provides a much-needed springboard for  the euro area’s recovery to gain further momentum in 2017 remains very uncertain. Much depends on political events over the course of the next year.

“The survey data are signaling a 0.4% expansion of GDP in the fourth quarter, with growth accelerating in December....

“Manufacturers and, to a lesser extent, service sector companies are benefiting from the weaker euro, which is both boosting goods exports and encouraging demand for services exports such as tourism and travel to the eurozone. Rising employment, and of course the ECB’s stimulus, are also playing roles in driving the expansion.

“The concern is that domestic demand is likely to remain subdued over the course of 2017 as political uncertainty dominates, resulting in another year of disappointing growth across the region as a whole.  For the moment, however, companies are brushing off political worries, with optimism among service sector companies – who will arguably be the most affected by any political turmoil – reviving to one of the highest levels seen for over five years.”

Separately, Williamson said, “our expectation is that eurozone economic growth will slow slightly in 2017, down from 1.7% in 2016 to 1.4%.”

Eurobits....

--Chancellor Angela Merkel’s approval ratings remain high, even post-Berlin Christmas market attack, but top federal and regional security officials in Germany are facing even more heat after it was disclosed that they met seven times to discuss the potential danger posed by Anis Amri in the year before he drove the truck into the market, a highly embarrassing revelation.  Despite extensive surveillance, police and prosecutors didn’t believe they had enough evidence that would stand up in court to bring him in.

In her New Year’s Eve speech to the nation, Merkel predicted a contentious political climate in a year that’ll include Donald Trump’s inauguration and elections in France and the Netherlands. She also pledged to step up security measures in the wake of Berlin, adding:

“As we pursue our lives and our work, we tell the terrorists: They are murderers full of hatred, but it’s not they who determine how we live and want to live.  We are free, humane, open.  Together, we are stronger.  Our state is stronger.”

A TNS Emnid poll published Tuesday suggested that 56% of Germans still trust Merkel to master the political challenges facing the country.

--In the latest poll of French voters ahead of next spring’s presidential vote, conservative candidate Francois Fillon was seen taking 28% in the first round, with National Front leader Marine Le Pen in second at between 22% and 24% under different scenarios tested by the Elabe polling institute for business daily Les Echos.  Independent former economy minister Emmanuel Macron polled at between 16% and 24%, depending on who the Socialists selected in primaries this month.

Separately, Le Pen is having difficulty raising funds to finance her campaign.

--On the Brexit front, British Prime Minister Theresa May said opportunities for the U.K. are “greater than ever” and called for the country to unite in 2017 as she prepares to trigger Article 50 and begin two years of talks to withdraw Britain from the EU by end of March.

“The referendum laid bare some further divisions in our country – between those who are prospering, and those who are not; those who can easily buy their own home, send their children to a great school, find a secure job, and those who cannot; in short, those for whom our country works well, and those for whom it does not.  This is the year we need to pull down these barriers that hold people back, securing a better deal at home for ordinary, working people.”

But May’s ambassador to the EU unexpectedly resigned this week, just months before the start of formal Brexit negotiations.

Sir Ivan Rogers told staff he would be stepping down from his post early, leaving officials in shock over the loss of one of Britain’s most experienced negotiators.  He didn’t explain the reason for the move.

On a separate topic in the U.K., security minister Ben Wallace said there were reports ISIS was using chemical weapons in Syria and Iraq and that Europol was warning of the chemical threat and the potential realization of “everybody’s worst fear.”

Not that this is new, with Wallace saying ISIS has “no moral barrier to using whatever means possible,” but he told the Sunday Times, “The casualty figures which could be involved would be everybody’s worst fear.”

Wallace also warned of the threat from “the enemy within” as terror groups, Russia and cyber attackers were trying to plant “traitors” in the Government, the military and leading businesses.

--Lastly, fifty Moroccan and five Spanish border guards were injured when 1,100 African migrants attempted to storm a border fence in Spain’s North African enclave of Ceuta.  One guard lost an eye, officials said.

Hundreds of sub-Saharan African migrants living illegally in Morocco try to enter Ceuta and Melilla, Spain’s other North African enclave, each year in hopes of getting to Europe.  The enclaves are Europe’s only land borders in Africa.

Turning to Asia, China’s PMI data was released.  The official figures for December, as compiled by the National Bureau of Statistics, had the manufacturing number at 51.4 vs. November’s 51.7, with services at 54.5. Caixin’s private-data figure on manufacturing was 51.9, up from November’s 50.9 and the best out of Caixin since Jan. 2013, while services was 53.4, up from 53.1.

It would seem from the above that the government’s target for 2016, 6.7% growth, will be hit, with a government-run think tank saying on Tuesday that China could slow to 6.5% this year.

Chinese companies invested a record $45.6bn in the U.S. in 2016, but few expect this to continue with Trump in office, based on his previous China bashing.

Regarding the huge capital flows that are a growing concern for the government, the State Information Center said China “should appropriately control capital outflows...keep tight control over state-owned firms’ overseas investments in property, antiquities, sports teams” and other non-core or non-technological transactions.

The reference to sports teams is primarily soccer/football teams in England, such as the Premier League, where a number of franchises are owned at least partially by Chinese interests.

In Japan, the manufacturing PMI was a solid 52.4 vs. 51.3 in November, with services at 52.3 vs. 51.8.

But inflation-adjusted wages for November were down 0.2% year over year, not good, and frustrating for the government of Prime Minister Shinzo Abe.

Elsewhere in the region, South Korea’s manufacturing PMI for last month was 49.4; Taiwan’s was 56.2; and India’s fell sharply from 52.3 to 49.6. 

Street Bytes

--Stocks began 2017 on an up note, with the Dow Jones gaining 1%, though once again falling shy of the 20000 mark, closing at 19963.  The S&P 500, though, finished Friday at a new high of 2276, up 1.7%, while Nasdaq is also at its all-time mark, 5521, having advanced 2.6% in the holiday-shortened week.

--U.S. Treasury Yields

6-mo. 0.61%  2-yr. 1.21%  10-yr. 2.42%  30-yr. 3.01%

Largely unchanged on the week, though the yield on the 10-year was down to 2.34% before Friday’s wage gain component in the jobs report reminded traders that more hikes are on the way.

--President-elect Donald Trump and senior GOP lawmakers vowed to move quickly on a repeal and replacement of ObamaCare, but Republicans haven’t detailed how they plan to replace the law’s coverage program, which they concede will develop over the next several years. 

Some of the Republican ideas: The return of high-risk pools, an end to mandated benefit requirements, tax credits, changes to Medicaid, reliance on health savings accounts, and selling insurance across state lines.

Republicans will also need eight Democrats to enact many parts of any new plan, and there’s no guarantee all 52 Republicans will vote for every aspect themselves.

A poll suggests 52% of Americans are not confident that Trump can deliver on his healthcare promise, while 48% say they are.  [Los Angeles Times]

--U.S. light-vehicle sales hit a second consecutive annual high, with December’s sales pace, one of the strongest monthly performances in the industry’s history, fueled by discounts, according to research firm J.D. Power.

For December, GM’s sales rose 10%, Ford’s just 0.1%, Fiat Chrysler’s 10%, Toyota’s 2.1%, Honda’s 6.4% and Nissan’s 9.7%.

Auto makers sold 1.69 million vehicles last month, 3.1% more than 12 months ago despite one fewer sales day.  The seasonally adjusted sales pace of 18.43 million was the highest since July 2005.  For 2016, a total of 17.55 million vehicles were sold vs. 17.47 million in 2015’s then-record setting year, according to Autodata Corp. 

Roughly 60% of this year’s sales were classified as light trucks.  In 2015, that figure was 56%; the category including pickups, SUVs and crossover wagons.

The bad news is that in pushing to beat 2015’s record pace, the incentives were piled on to lure customers into the showrooms.  Analysts reported they were about 25 percent higher in the fourth quarter of 2016 than in the same period a year earlier, with overall sales flat.

For all of 2016, GM’s sales fell 1.3 percent, to 3.04 million vehicles.  Ford reported sales of 2.61 million in the U.S., essentially flat with ’15.

The third American automaker, Fiat Chrysler, sold 2.24 million last year, a decline of less than 1 percent from the previous year. 

In 2017, the National Automobile Dealers Assn. projects U.S. sales to drop to 17.1 million vehicles as interest rates and vehicle prices rise.  [Wall Street Journal, New York Times, USA TODAY, AP]

--On the Trump front, Ford Motor announced it was scrapping plans to build a $1.6bn plant in Mexico, after coming under criticism by the President-elect for shifting small-car production south of the border.

So instead, the next generation of the Ford Focus compact car will be built at an existing facility in Hermosillo, Mexico, while Ford canceled plans to build a plant in San Luis Potosi, CEO Mark Fields announced.  Ford will now build two products at a factory in Wayne, Michigan, where it assembles the Focus today, protecting about 3,500 jobs. 

Fields told reporters on Tuesday, “One of the factors we’re looking at is the more positive U.S. business environment that we foresee under President-elect Trump and the pro-growth policies that he’s been outlining. This is a vote of confidence around that.” 

--Tesla opened its Gigafactory outside Reno, Nevada.  By 2018, the battery cell manufacturing facility will double the world’s production capacity for lithium-ion batteries and employ 6,500 full-time workers by 2020, according to Tesla’s lastest forecast.  The Gigafactory is one-third complete and is a joint partnership with Panasonic.

But the company fell short of its target to deliver 80,000 cars in 2016, reporting just 76,230 completed in time.

Production at the Gigafactory is critical to Tesla’s goal of producing 500,000 Model 3 sedans by 2018; batteries being the limiting factor for electric cars.

Of course Tesla has seldom hit its production targets, missing its quarterly forecast three times last year, which doesn’t bode well for reaching the goal of 500,000, let alone 1 million in 2020.  Given the sky-high valuation accorded the stock, as Charley Grant of the Wall Street Journal noted: “Tesla certainly can talk the talk, but it looks less and less like it can walk the walk.”

--Separately, Faraday Future unveiled a self-driving electric car this week that it says can accelerate from zero to 60mph in 2.39 seconds, faster than Tesla’s Model S.  But Faraday Future has faced major financial difficulties

And as the car was being shown off at the CES tech show in Las Vegas, the vehicle failed when it came to a self-parking demonstration, the car remaining stationary.

--Mercedes retook the luxury-car crown from BMW for the first time in over a decade, thanks to peppy new models like the GLA compact SUV, while the S-Class was re-established as the benchmark luxury sedan.

BMW AG’s push into electric cars has fallen flat, while the revamped 5-Series sedan still has a conservative design.

Mercedes deliveries jumped 12 percent in the 11 months through November, more than double the pace of growth for BMW’s namesake brand.  Mercedes sold 1.9 million vehicles in the period, about 69,000 ahead of BMW, guaranteeing the crown for the full year.  [Bloomberg]

--Struggling Sears announced it will sell its Craftsman brand to Stanley Black & Decker for more than $900 million, as Sears tries to generate cash after a lengthy string of money-losing years. Due to the payment stream on the deal, including Sears receiving a percentage of new sales of Craftsman products for 15 years, Sears estimates the deal’s value could top $1 billion.

Sears also said on Thursday that it is trying to raise another $1 billion by selling off real estate.  Wednesday, chairman and CEO Eddie Lampert lent Sears up to $500 million to fund operations while it negotiates its asset sales.

Back in May, Sears announced it was trying to wring as much cash as possible out of better known brands, such as Craftsman, Kenmore and DieHard.

But with Craftsman products now becoming available in more outlets, there is less incentive to walk into a Sears store, though sales of the tools will generate money for the company.

Also Wednesday, Sears said it would close 150 unprofitable stores, including 108 Kmarts.  During November and December, sales at Sears and Kmart stores open at least a year declined at least 12% from year ago levels.

--Meanwhile, Macy’s and Kohl’s both reported a drop in same-stores sales during the holiday season of 2.1% each, after Macy’s, for one, had expected stronger sales.  It is now planning on closing 68 stores by spring.

Macy’s says the store closings and other moves will eliminate more than 10,000 jobs, with the 68 closures being part of a previously announced 100 closings; the timetable has been accelerated it would seem.  While some employees may be offered positions at nearby stores, Macy’s estimates more than 3,900 will be affected.  Other restructurings will result in 6,200 job losses.

The retailer plans to invest some of its savings, estimated at $550 million annually, in its growing digital business.

Kohl’s said strong sales on Black Friday and during the week before Christmas were offset by softness in early November and December.

Shares in both Macy’s and Kohl’s fell more than 10% on the dire news, which pressured other retailers. Friday, J.C. Penney Co. reported its holiday sales also declined vs. expectations of growth.

--One more regarding the retail sector...Neiman Marcus said today it has pulled its planned initial public offering, having filed for an IPO in August 2015, two years after it was acquired by private-equity firm Ares Management and Canada Pension Plan Investment Board in a $6bn buyout.

The float has repeatedly been pushed back, with Neiman blaming adverse market conditions, which is certainly the case today.

--Apple Inc. said its App Store generated record revenue of more than $20 billion for developers in 2016, roughly maintaining its growth rate even as iPhone sales volumes declined.  Apple takes 30% of App Store sales so the $20bn implies Apple collected about $8.5bn. 

Based on figures supplied by the company last year, growth at the App Store is implied to be around 40%.  With slowing iPhone sales, the growth is coming from a mix of surging app sales in China, new games and rising subscription billings.

On a related issue, Apple CEO Tim Cook and other executives took home lower pay packets in 2016 because of missed revenue and profit targets. Based on a regulatory filing, Apple’s net sales in 2016 were $215.6bn with operating income of $60bn in 2016, below the company’s stated targets.

The filing said: “These two financial measures are used to evaluate executive performance under our annual cash incentive program.”

Cook received $8.7m in total compensation, down from his $10.3m pay in 2015.  He did, however, have over $136m of stock options that vested during 2016, so you know, I’m not shedding any tears for the lad taking a pay cut on his non-stock comp.

--Canada’s jobs report in December was solid, with the economy adding 53,700 jobs, when a loss of 2,500 was expected according to a Bloomberg poll of economists.  In the fourth quarter, employment increased by 108,000, the largest increase since the second quarter of 2010.

--Brazil’s manufacturing PMI was 45.2 in December vs. 46.2 in November as this economy continues to struggle mightily.

--Jon Corzine, former head of MF Global, will pay a $5 million penalty to resolve a lawsuit from the U.S. Commodity Futures Trading Commission over his role in the alleged unlawful use of nearly $1bn in customer funds, with the brokerage firm collapsing in 2011.  Corzine will also be banned from registering with the CFTC or acting as a principal, agent, officer, director or employee of a futures commission operator.

Corzine, through a statement, said in part: “I have accepted responsibility for (MF Global’s) failure, and I deeply regret the impact it had on customers, employees, shareholders and others.  I remain gratified that several years ago all customer money was recovered and returned to MF Global customers.”

--Bitcoin suffered another big day of losses on Friday, falling as low as $873, after hitting $1,000 for the first time since 2013.  Sceptics point to the volatility (including a 50 percent surge in November) as evidence of the currency’s lack of viability.  Earlier Friday, the People’s Bank of China issued a notice on “risks associated with bitcoin.”  The PBOC reminded investors that bitcoin “does not have real meaning as a currency.”

--California’s drought could largely be over after this winter.  Back-to-back storms early this week dropped more than 2 feet of snow in the Sierras, and over the coming days, an “atmospheric river” (“Pineapple Express”) is due to hit the state, with up to 12 inches of rain expected in some areas, and up to 6 feet of snow in the highest elevations. 

The downsides are all the mudslides and avalanches that will ensue and travel will be chaotic.

[The drought is already essentially over in northern California after all the precip of the past few weeks, but the southern half was still suffering...that is until this massive amount of water that will fill the reservoirs now, for starters.]

--Broadways shows set a weekly record by posting a combined $49.7 million in ticket sales for the period ended Jan. 1, according to the Broadway League, a trade group.  “Jersey Boys,” which is ending an 11-year run this month, grossed an all-time high of $1,778,189 for the holiday week.

The $49.7 million figure was 15.4% higher than the previous record-setting week’s total set during the final week of 2015.

--The New York Post’s Chris Perez reported that the Better Business Bureau “has revoked the accreditation of the MyPillow, a popular ‘As Seen On TV’ product, and downgraded its rating to an ‘F’ after receiving a slew of complains about false advertising.

“The consumer watchdog group reported this week that the Minnesota-based company had been taking advantage of customers with their ongoing ‘buy one, get one free’ discount.

“Instead of offering shoppers a pair of standard, Queen-sized MyPillow’s for $49.98 – which is the listed price for just one at checkout – the company is currently offering two of the pillows for $89.97.

“ ‘Continuous BOGO offers, which can then be constructed at an item’s regular, everyday price, violate not only BBB’s code of Advertising – which all BBB Accredited Businesses agree to abide by – but also other state and national organizations’ rules,’ Dana Badgerow, president and CEO of BBB of Minnesota and North Dakota, told NBC affiliate KARE.”

What a bunch of scumbags!  Yeah, you, CEO Mike Lindell.

--Exxon Mobil Corp. has awarded former CEO Rex Tillerson a $180 million retirement package as the company moves to break ties, with Tillerson being Donald Trump’s nominee for secretary of state.  Currently Tillerson holds more than 600,000 vested shares worth about $54 million and the decision will allow him to sell off all of this if he is confirmed.

Tillerson stepped down as Exxon CEO Jan. 1. Before his nomination, he was set to receive more than $180 million in shares that would have vested over a decade.

--We note the passing of F. Ross Johnson, the former RJR Nabisco CEO depicted as the epitome of corporate greed in the bestselling book and movie, “Barbarians at the Gate.”  He was 85.

In 1986, Johnson became CEO of RJR Nabisco, which made both Oreo cookies and Camel cigarettes.

Then in October 1988, Johnson and a group of investors proposed taking the company private, which started a fierce bidding war, with private equity firm Kohlberg Kravis Roberts eventually winning the bidding, paying nearly $25 billion for RJR Nabisco; the largest private equity deal in history at the time, with Johnson walking away with an estimated $50 million as a golden parachute.

--Megyn Kelly left Fox News this week after 12 years to go to NBC News, where she will host a daytime news and discussion program, anchor an in-depth Sunday night news show and take regular part in the network’s political programming and big-event coverage, which no doubt ticks off the likes of Matt Lauer, Samantha Guthrie, Lester Holt and even Brian Williams, who has done well at MSNBC in his return off the suspended list. 

Fox quickly moved to fill Megyn’s slot, announcing just two days later that Tucker Carlson will slide into 9:00 p.m. Eastern, thus fortifying its politically right-leaning commentary programs in prime time, with Carlson between Bill O’Reilly and Sean Hannity.  O’Reilly’s contract is also up this year, though he’s not going anywhere.

Just weeks ago, Carlson took over Fox News’ 7 p.m. hour, where he has scored high ratings.  Martha MacCallum, co-anchor of Fox’s morning news show, is to succeed Carlson at 7 p.m., though this is being billed as a potentially short-term move, with her program titled “The First 100 Days,” for the first 100 days of Trump’s administration.

Also Thursday, we learned Greta Van Susteren, formerly at Fox, is joining MSNBC for a daily 6 p.m. show.  So kind of ironic that Fox’s two best-known female anchors ended up at NBC. 

The New York Post is reporting that Kelly will be groomed to take over for Savannah Guthrie at “Today”. While this wouldn’t be for a few years, persistent rumors of this move will dominate the gossip columns, even if Guthrie just signed a five-year deal with “Today.”

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: There have been all manner of violations of the ceasefire, with Syrian government warplanes bombing a rebel-held Damascus suburb on Thursday.  The suburb, Wadi Barada, is a main source of water to the Syrian capital, and the water supply to some four million residents has been cut off since Dec. 22, according to the United Nations, citing damage to the infrastructure.  [Noam Raydan / Wall Street Journal]

A spokesman for the rebels told the Journal, “The entire cease-fire is on the brink of collapse because of Wadi Barada.”  At least 40 people, including children, have been killed in the air strikes, according to the Syrian Observatory for Human Rights.

The Syrian regime says that an offshoot of al Qaeda-linked Nusra Front (their former name) is mixed in among other rebel factions in Wadi Barada, which residents and the rebels deny.

Turkey warned that planned Syrian peace talks co-sponsored by Russia, were at risk if the Bashar Assad government didn’t halt violations of the ceasefire.  The peace talks are slated to start Jan. 23 in Kazakhstan’s capital of Astana under the auspices of Russia and Turkey, but a dozen Syrian rebel factions suspended talks on negotiations, accusing Assad of multiple violations of the ceasefire.

In Iraq, government forces launched an offensive against ISIS near the Syrian border Thursday, as it tries to squeeze the extremists.  Baghdad has also ramped up the fight on the ISIS stronghold of Mosul, launching a fresh push in the past week.  We’re told significant progress has been made.

Separately, ISIS claimed responsibility for a series of car bombs in Baghdad last weekend and Monday that killed more than 60, combined, while it also attacked an Iraqi police checkpoint near the southern city of Najaf, killing seven policemen

As for Turkey, a gunman later identified as being affiliated with ISIS killed at least 39 New Year’s Eve partiers at the Reina nightclub in Istanbul, ISIS issuing a statement later taking credit, with the gunman still at large as I go to post.  [At least 25 of the people killed were foreigners.]

It has been one terrorist attack after another in Turkey the past few years, along with a bloody, failed coup attempt, and between the ISIS threat and that of Kurdish militants, you can imagine the hit to Turkey’s key tourism industry.

Editorial / Washington Post

“(There) is reason to worry that Iraq and Turkey, the targets of the weekend attacks, are in danger of effectively losing their war with the terrorists. Both dispatched their armies to capture Islamic State territories last year and recorded significant gains.  But both are at risk of political, economic and social breakdown as a result of terrorist counterattacks and of their own counterproductive measures.

“Iraqi counterterrorism units advancing through Mosul, and the U.S. advisers and airpower backing them, deserve credit for tactics aimed at protecting civilians: The humanitarian cost of the 2 ½-month-old battle has been small compared with the assault on Aleppo by Syrian, Russian and Iranian forces.  But the Iraqi troops have taken heavy casualties and, having aimed for victory by the end of 2016, the government of Prime Minister Haider al-Abadi says it may take months more.

“Mr. Abadi’s government, meanwhile, is not delivering on his frequent promises to promote political reconciliation among Iraq’s sectarian factions.  On the contrary, the parliament in Baghdad recently took measures that further alienated the Shiite-led government from Sunni and Kurdish leaders.  The danger is that even after the recapture of Mosul, the country’s sectarian warfare will continue and perhaps even intensify as the factions compete for control over liberated territories.

“Turkey appears at risk of its own meltdown in spite of – and because of – the authoritarianism of President Recep Tayyip Erdogan.  Mr. Erdogan, who avoided action against the Islamic State for several years, dispatched troops to Syria in 2016, but he appears more intent on preventing the consolidation of a Kurdish-controlled region there than on helping to capture Raqqa.  His brutal crackdown on Kurds and other political opponents inside Turkey has polarized the country, driving a wedge between groups that should be united against the terrorists.”

Israel: Since day one of this column I have said that Israeli Prime Minister Benjamin Netanyahu was the “smartest man on the planet, but hopelessly corrupt” and the latter was the focus this week in Israel as police investigators and prosecutors questioned Netanyahu in two long sessions about two different cases, at least one of which involves suspicions of graft – did he and his family receive gifts and other benefits worth hundreds of thousands of shekels from businesspeople.

Haaretz revealed that Hollywood producer Arnon Milchan is allegedly one of the main figures involved in the case, as police have deposed witnesses abroad as well as in Israel.  One significant witness was Jewish American businessman Ron Lauder, a longtime friend of Netanyahu’s, with Lauder’s associates denying reports that he told police he has given gifts to the prime minister and his family.

There is a second, more serious case whose full details haven’t been released to the public, though they were raised by Attorney General Avichal Mendelblit a few months ago.  On Monday, Netanyahu was questioned for the first time over these allegations, with the prime minister cautioning critics afterwards: “don’t celebrate yet.”

But if Netanyahu is indicted, while technically that doesn’t mean there would be immediate elections (Likud and the cabinet could rally behind a replacement), the chances are there would be.

According to a Dec. 31 public opinion poll released by Channel 10, if Knesset elections were held now, the opposition Yesh Atid party, headed by Yair Lapid, would be the largest in parliament, with 27 of the Knesset’s 120 seats.

Likud, which has 30 seats today, would shrink to 23, and could shrink further without Netanyahu.  Forming a coalition would be more of a mess than it was to get the current one.

Israel faced another major controversy this week as a young Israeli soldier was convicted of manslaughter for killing a wounded Palestinian in a divisive military trial that immediately led to calls from right-wing politicians, and Netanyahu, for a pardon.

It is a rare case of Israel’s military convicting one of its own troops in a killing, the last instance being in 2003.

Sgt. Elor Azaria was arrested in March after video emerged of him shooting a wounded Palestinian man as he lay bleeding in the street in Hebron.  The Palestinian had stabbed an Israeli soldier moments before and had been shot but not killed by other troops. The mobile phone footage showed Azaria calmly cocking his rifle and firing once into the man’s head.  A panel of military judges rejected defense claims that Azaria thought the wounded man might have a suicide vest on and acted to protect his comrades.

Lastly, Israel sees Hizbullah as a major threat, more so than ever, with an unfathomable number of missiles in their warehouses in Lebanon.  There are so many, the Israeli Defense Forces have stopped trying to count them and now focus on the quality.  A lot of the missiles can hit any point on the map, and while Hizbullah has been bloodied in Syria, it’s the steady inflow of weaponry from Iran that comprises the main threat to Israel today.

China: Heavy, deadly smog continues to blanket a third of China’s cities, including Beijing, with the hazardous air forcing hundreds of flight cancellations and the smog lingering into the weekend in some areas.

The concentration of PM2.5 particles – which pose the greatest health risks as they can become lodged in the lungs – was measured at 475 micrograms per cubic meter near Tiananmen Square on Wednesday, according to the municipal air-monitoring website, while the World Health Organization recommends PM2.5 exposure of no more than 25 micrograms over a 24-hour period, so almost 20 times the accepted level.  [South China Morning Post]

Meanwhile, on Taiwan, President Tsai Ing-wen in her New Year’s press conference, said China is becoming a growing threat to the island and predicted a volatile but pivotal 2017.

“The Beijing leadership has, step by step, backed onto an old track to polarize, pressure and even threaten and intimidate Taiwan,” Tsai said.  “We hope that this is not Beijing’s adoption of a policy and want to remind it that such moves have hurt Taiwanese people’s feelings and affected stability across the Taiwan Strait.”

Tsai has irritated China by refusing to take up Beijing’s offer for talks that the Communist Party hopes could lead to unification of the two sides someday. And Tsai irked Beijing with her phone call to Donald Trump.

“In 2017, our society is going to face some turbulence and face some uncertainties,” she warned. “It’s going to test our whole national security team, as well as the whole government’s ability to handle change.”

North Korea: Last Sunday, leader Kim Jong-un said his nuclear-capable country was close to test-launching an intercontinental ballistic missile (ICBM), raising the prospect of putting parts of the United States in range.

In a 30-minute New Year’s address, Kim said North Korea has become a “nuclear and military power in the East” following its two nuclear tests in 2016 and pledged to boost its nuclear weapons capability for national defense.

Kim also urged the United States to scrap its “hostile policy” toward Pyongyang.

Donald Trump tweeted in response: “It won’t happen.”  South Korea’s Foreign Ministry said Trump’s comment, his first mention of the North Korean nuclear issue since the election, could be interpreted as a “clear warning” to the North.  Trump spokeswoman Kellyanne Conway told ABC’s “Good Morning America” that the president-elect was “putting North Korea on notice through this tweet and through other statements that this won’t happen.”

A State Department spokesman, John Kirby, said on Tuesday, “We do continue to believe that (Kim Jong-un) continues to pursue both nuclear and ballistic missile technologies. We do not believe that at this point in time he has the capability to tip one of these with a nuclear warhead.”

I should hope not. I maintain a position I took about six months ago.  That while Kim is out to create some kind of disturbance around Inauguration Day, I believe he could target a U.S. possession (Guam) directly around Fourth of July, especially assuming testing continues over the coming months.

In an editorial, the Wall Street Journal says if Kim “proceeds with the (missile) test, the U.S. should shoot it down....

“Even the defensive use of force carries risks that Kim would retaliate, but the larger risk is letting a man as reckless as Kim gain the means to hold American cities hostage.  Kim evidently believes that once the North has a credible ability to destroy Seattle or Chicago, the U.S. will have no choice other than to accept it as a normal nuclear state.”

Kim Jong-un’s birthday is January 8th. 

South Korea: President Park Geun-hye refused to testify Tuesday in her impeachment trial that will decide her future, prompting prosecutors to question why she has publicly denied the corruption charges leveled against her, but won’t do so before the court.  The court cannot compel her to appear, but can proceed if she refuses to do so twice.

The Constitutional Court must decide within six months of her Dec. 9 impeachment whether Park should permanently step down or should be reinstated to office.  If the court removes her, an election is held within 60 days.

Russia, part ‘dva’: John Podhoretz / New York Post

“In this time of weird reversals, Democrats and liberals who scoffed at Mitt Romney’s 2012 assertion that Russia was our primary adversary have become so convinced of Vladimir Putin’s perfidy they sound like the Cold Warriors of old.

“Meanwhile, our incoming president continues to extend the benefit of the doubt to Russia when it comes to cyber-mischief, even going so far as to get in a public kerfuffle with America’s intelligence agencies and accuse them of rescheduling a briefing on Russia out of rudeness or lack of preparation....

“(Trump) clearly thinks the intelligence community is participating in an effort to delegitimize his victory.  So he expresses a lack of interest in their briefings and continually reminds the world of the CIA’s mistaken assertion that it was a ‘slam dunk’ Saddam Hussein had WMDs....

“The same media outlets that joined in the laughter at Romney’s anti-Russia talk in 2012 are so eager for news that fits the new narrative line they will not only suspend disbelief but won’t even do any serious spade work or fact-checking before publishing nonsense.

“Last week the Washington Post, on high alert, reported breathlessly that Russia had somehow hacked into Vermont’s power grid. In a matter of days, the Post disavowed the story....

“Instead of bolstering the case against Russian misconduct, stories like these weaken it by causing any rational consumer of news to view subsequent reports on the subject with skepticism and distrust.”

Josh Rogin / Washington Post

“For many Americans, President Obama’s announcement of sanctions against Russia last week brought home a shocking realization that Russia is using hybrid warfare in an aggressive attempt to disrupt and undermine our democracy.

“But for many Europeans, this is old news.  As Obama was educating the American people about the threat, three senior senators were getting a lesson from leaders of three NATO countries that have been barraged with Russian meddling. Having fought alone for years, Estonia, Latvia and Lithuania are begging the United States to join the battle...

“In the Baltic states, cyberhacking is only one of many tactics that Russia uses for malign influence.  Moscow has corrupted the media space by blasting Russian-language propaganda at the region’s millions of Russian-speaking citizens.  Years before the 2016 U.S. presidential campaign, in 2007, a massive Russian cyberassault on Estonia simultaneously targeted the presidency, Parliament, most government ministries, banks and media organizations.  The tiny Baltic state reacted by becoming an international leader in cyberdefense.

“Across Europe, Russia has supported far-right politicians and political parties, including in Germany and France, which have major elections coming soon.  Pro-Russian leaders with either explicit or indirect Russian government support have taken over the governments of Armenia, Georgia, Hungary and Moldova....

“ ‘Russia is trying to break the backs of democracies all over the world,’ (Republican Sen. Lindsey) Graham told reporters in Latvia, where he promised that more sanctions would get bipartisan support.  ‘You can expect some economic pain. It will be true in America.  But freedom is worth suffering pain.  It is now time for Russia to understand, enough is enough.’”

Who might be the next target for the Kremlin?  German Chancellor Angela Merkel, with the country holding general elections next autumn.  Merkel has been a thorn in Putin’s side, following the Crimea annexation.  As reported by Jochen Bittner in the New York Times:

“After all, last year the same hackers who broke into the Democratic Party’s computers, known online as Fancy Bear or Sofacy Group, attacked the German Parliament’s network; they are also accused of stealing documents from individual members of Parliament.  Every revelation about how Russia interfered in the American elections gives Germany a foretaste of what is already looking to be the nastiest, toughest, most exhausting election campaign in modern German history.”

Holman W. Jenkins, Jr. / Wall Street Journal

“Here’s one more way U.S. intelligence on Russia may not be up to snuff.  Many would like President Obama to repay Russian hacking by releasing secret details of Vladimir Putin’s stolen wealth, estimated at up to $160 billion.  They may be disappointed to learn the data doesn’t exist.

“The idea of weakening Mr. Putin by laying out his secrets is a good one.  We proposed it here three years ago.  But even then, when the U.S. Treasury announced sanctions on Mr. Putin’s ‘personal bank’ after his Crimea grab, it was quoting the 10-year-old allegation of one of Mr. Putin’s domestic opponents.  Treasury revealed nothing you couldn’t find from Google. A second problem may be that Mr. Putin actually owns title to nothing. At least in the latter stages of Russia’s kleptocracy, he merely points to things and people give them to him....

“The extreme murkiness of who owns what, and for how long, under Putin sufferance is illustrated by the financial coup with which he ended 2016.

“To relieve a strained Russian budget and show the country’s appeal to Western investors, his underlings arranged a partial privatization of state-owned oil giant Rosneft.  Yet the Italian bank supposedly financing the purchase admitted it was still mulling whether to participate. The key Western participant, Anglo-Swiss mining giant Glencore, was revealed in the Russian press to be off the hook for most of the cash for its $5 billion stake: ‘Russian banks provided it an exemption from this obligation.’

“So where the money came from and who might end up owning many of the shares is about as clear as mud.

“Still, critics are not wrong to suspect Mr. Putin is sensitive to corruption allegations. Nobody predicted the Arab Spring, the Ukrainian revolution, the fall of Gaddafi, etc.  Mr. Putin cannot be certain when a public eruption might sweep him from his throne....

“(Western governments) have kept silent even on the polonium murder in London of dissident Alexander Litvinenko, an act of international nuclear terrorism. Why?  Because they are unwilling to press hard on the Putin regime, fearing either blowback or his replacement by the devil they don’t know....

“The best and likeliest outcome if Mr. Trump is successful is that Mr. Putin will stop being an international problem in the run-up to his own re-election in 2018 and a year or so thereafter.  Mr. Trump will be freer to concentrate on domestic reform and reacting to whatever emergencies the European Union inevitably throws up in the new year.

“This holiday will be temporary. Mr. Putin, who has no realistic hope for a peaceful retirement, and whose society and economy are rotting out from under him, is almost certain to be a bane for the world and Russia in the coming decade.”

Brazil: The news here just continues to get worse.  56 inmates were killed in a prison riot between drug gangs at a maximum-security prison, which you might be thinking, ‘Well, what’s so bad about that?’ except that 126 violent convicts escaped in the chaos.

You also need to know that the violence was so horrific many of the dead were decapitated or cut into quarters by fellow inmates and thrown over prison walls, as reported by the Los Angeles Times.

But then on Friday, at a separate prison, the powerful drug gang that was targeted in the above attack sought revenge and, as reported by Reuters, members of the First Capital Command (PCC) gang killed 33 inmates, “decapitating and cutting out the hearts of most of them.”

Well, it’s been a lovely week in Brazil.  You can have this place.

[Separately, across the Pacific, nearly 160 inmates escaped from a prison holding suspected Muslim rebels in the Philippines this week, too.]

Finland: My new Finn friend, M.N., who is now in Chicago but maintains extensive contacts, sent me an update the other day on the situation in his country, which I wrote of after the killing of two female reporters and a female politician; that he believes is an immigration issue, native Finns increasingly ticked off at the benefits accorded immigrants while regular Finns struggle.  M.N. said there will be no official update on the crime and the only thing one would find in the press eventually is a little mention of the sentence.  The authorities, he said, are afraid to talk about how the immigrants have been destroying the country.  The police are hiring 50 more officers to be trained to detect “hate talk” in all media, and that what I wrote of would be considered such talk there.  Devices are even inserted in all cars not just to collect a “road tax,” but also so that authorities know where you are at all times. 

M.N. says all politicians profit from the “immigration business,” collecting millions on the legal assistance, translations and social assistance paid by regular Finns through their taxes.  “Most often these businesses are run by their spouses or foundations where they are board members.  I laugh when there are reports on Finland being one of the least corrupted nations in the world.”

Thank you, M.N.  After your description, it seems Finland is ripe for Russian mischief, too, if the corruption is at levels you describe.  It would only take a little hacking to uncover it, no?  Then it’s an easy game of propaganda and blackmail.

Random Musings

--The Wall Street Journal first reported that President-elect Donald Trump wants to pare back the Central Intelligence Agency and other facets of the intelligence apparatus, believing the Office of the Director of National Intelligence has become bloated and politicized, according to the Journal.  On Thursday, Trump was said to have selected former Indiana Sen. Dan Coats to be the director of the Office of National Intelligence Agency, which oversees all 16 agencies that make up the intelligence community.

--Sweden said it would not decide for several weeks whether to drop or proceed with an investigation into allegations of rape against WikiLeaks founder Julian Assange.  Prosecutors interviewed him in November at the Ecuadorian embassy in London, where he has been holed up since 2012 to avoid extradition over allegations that he committed rape in 2010, which Assange denies.

--President-elect Donald Trump blasted Republicans for their move to gut an independent congressional ethics office, saying they should focus instead on domestic policy priorities such as health care and a tax overhaul.

Trump called the Office of Congressional Ethics “unfair,” in his series of tweets, but said focusing on it was misplaced at this time, referencing #DTS, an apparent allusion to his promise to “drain the swamp” in Washington.

So this was a break with Republicans, who overrode their own leadership on Monday in the vote to curtail the power of the ethics office, which was set up in 2008 as a result of scandals that impacted three members.

Part of the issue, and uproar after, was the fact this move was made late Monday, on the eve of the formal beginning of the new legislative session.

So with the ensuing uproar, House Republicans reversed course Tuesday, Trump’s comment certainly helping, while Speaker Paul Ryan and top Republicans warned their colleagues not to pursue the proposal to weaken the independent ethics office.

But there was a legitimate reason to look at the ethics office in the first place.

Editorial / Wall Street Journal

“(The) GOP is right that the investigative body has the power to destroy reputations without due process.

“By the way, Paul Ryan was re-elected Speaker Tuesday with one GOP defection, while Minority Leader Nancy Pelosi lost four Democrats.  But that news was dwarfed as the House considered rules for the new Congress, and Judiciary Chairman Bob Goodlatte offered an amendment to restructure the Office of Congressional Ethics.

“The office is composed of political grandees, often former Members, and it has not prosecutorial power. But it conducts investigations into Members or staffers and makes recommendations to the House Ethics Committee.  The proposal limited what information can be released to the public and barred the committee from having a press secretary. Also banned: Anonymous tips.

“Mr. Ryan and other House leaders opposed the rule as badly timed. But the rank and file adopted the idea Monday night anyway, only to dump it on Tuesday after denunciations from the Democratic-media complex.  The left rounded up callers to deluge Republican switchboards for ‘gutting’ the outfit. Donald Trump couldn’t resist piling on with a pair of tweets: ‘With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it may be, their number one act and priority.’

“The reality is that the office is at best redundant and perhaps worse.  Democrats created the office in 2008 to deflect attention from a crush of corruption scandals, including against at least three Members. The left is pitching the place as an essential institution of self-government, but the Senate manages to function without a similar office.

“As it is, the ethics office is a roving investigator that can publish reports with details that may not be accurate and can damage a reputation with little or no proof of guilt.  Evidence of wrongdoing in travel, campaign finances and other matters can be handled by the House Ethics Committee, and if necessary law-enforcement agencies. Both are politically accountable, unlike the independent office.

“Anonymous complaints are especially insidious, as subjects of an investigation may not know who is accusing them – and the accuser may never have to press his case.  Nixing the communications director is also worthy: A press secretary is nothing but a designated leaker. The office is a great tool for government ‘watchdog’ groups that are progressives posing as transparency enthusiasts, which renders the proceedings even less fair....

“Progressives are elated that their Trump ‘resistance’ project notched a victory and will continue the fact-free outrage campaigns.  If you think the political pressure is intense on ethics rules, wait until the left completes its nationwide talent search for the person most harmed by the GOP’s health-care proposals.  Mr. Trump will also figure he can rout any opposition with a tweet, not that he’s known for restraint.”

--Republicans currently enjoy a 241-194 advantage over Democrats in the House, though the margin will narrow in the coming weeks as the Senate takes up nominations of several House members to the Trump administration, including Mike Pompeo (R-Kan.) to serve as CIA director and Rep. Tom Price (R-Ga.) for health and human services secretary.  Should they be confirmed, their seats would be filled through special elections to be held later this year.  In all, four Republicans fit the bill, while Democrat Rep. Xavier Becerra (Calif.) also expected to depart the House soon to become his state’s attorney general.

--New York Democratic Gov. Andrew Cuomo has been all over the place the past few months, especially in and around Gotham, as there is little doubt he is gearing up for a run for president in 2020 (assuming he can escape the ethics probes that have been circling around him the past few years).  He needs a clean sheet, as they say in Premier League football, where it’s only his associates, and not he himself, who continue to be targeted.  But at some point by 2018, he needs the public to believe he won’t ever be indicted, that the probes are over, and he can thus move on.

In the meantime he was all over the opening of New York’s Second Avenue Subway this week after decades and decades, and $10s of billions in expense, no doubt as an example of an infrastructure program he’ll claim in 2019-20 to have directed.

Also this week he appeared with Sen. Bernie Sanders at a community college in Queens to trumpet a tuition free plan for in-state students whose families earn $125,000 or less.  Some 940,000 New York households with college-age children would qualify for the additional assistance.

New York is one of 10 states considering tuition-free programs at community colleges, and 150 state and local programs of one kind or another already target the same thing, but Cuomo claims his would be the most aggressive and unique because of the high income cap.

--As I imagine virtually every American who can read knows by now, Chicago ended up with 762 homicides in 2016, the most in two decades and more than New York City (335) and Los Angeles (294) combined.

The nation’s third-largest city also saw 1,100 more shooting incidents than in 2015, according to the Chicago Police Department. The spike in homicides from 485 in ’15 was the largest percentage increase in 60 years.

Rich Lowry / New York Post

“The city of Chicago is conducting a long, bloody experiment in what happens to a gang-ridden municipality in the absence of effective policing.

“It is keeping the morgue depressingly busy...

“While everyone on the left pays obeisance to the slogan ‘Black Lives Matter,’ Chicago mayor Rahm Emanuel runs a jurisdiction where black lives have been getting cheaper almost by the day, especially in the poorest areas.

“The lion’s share of Chicago’s spike of violence has occurred in five of the city’s 22 police districts. Eighty percent of the victims were rated by the Police Department as likely to be involved in gun violence, which means that the city is adept at identifying people as potential victims – just not at keeping them from getting shot....

“The equation that accounts for the rising body count is simple: As the Chicago police have become less aggressive, the gangs have become more aggressive and more people have been killed.  Chicago demonstrates that in swatches of inner-city America you can have a chastened, passive police department or a modicum of public order – but not both....

“Fearful of becoming the next ‘viral video,’ harassed and mocked when out doing their job in tough neighborhoods, beleaguered by paperwork, the police have suffered a crisis in morale and clearly pulled back.

“Documents obtained by ’60 Minutes’ show an 80 percent drop in stops from almost 50,000 in August 2015 to under 9,000 a year later, and arrests dropping from roughly 10,000 to 7,000.

“This reduced police presence on the streets has been a boon only to anti-police ideologues (the ACLU welcomes it) and the city’s myriad gangs.  Chicago police superintendent Eddie Johnson says that the surge in violence has been driven by ‘emboldened offenders who acted without a fear of penalty from the criminal-justice system.’

“There is much about Chicago that can’t be readily fixed, but it is fully within the city’s power to make its criminal offenders feel less emboldened. Chicago simply needs to stop, arrest and jail more dangerous people.

“The only alternative is the continuation of the city’s current experiment in chaos, which is making the city unlivable for the people unfortunate enough to inhabit its most violent precincts.”

[New York City’s total of 335 homicides is bested only by the 333 recorded in 2014.   The city’s peak was a staggering 2,245 in 1989 during the crack epidemic.  Another tally is 2,262 in 1990, but I seem to remember the official high being 2,245.  It’s possible, though, they have gone back and reclassified some homicides.]

Editorial / Wall Street Journal

“President Obama plans a farewell speech next week in Chicago, and perhaps he’ll notice that while he’s been in Washington his hometown has become the nation’s murder capital and largest gang war zone.  Worth reflecting on is the city’s upswell in violence last year that followed political protests against law enforcement and a pullback in policing....

“(The) demonization of cops has contributed to Chicago’s surge of violence, with the principal victims being young minorities, many of them innocent bystanders. Perhaps the President could include an elegy for these black lives in his farewell.”

--Ah yes, my adage “wait 24 hours.”  As I went to post last Friday, I was aware of a story about possible Russian hacking of a Vermont utility computer, but opted not to comment and, as it turns out, we learned a few days later the story was benign.

An employee at Burlington Electric Department was checking his Yahoo email account Friday and triggered an alert indicating his laptop had connected to an IP address associated with the hack on the Democratic National Committee, but officials later said this particular address is found all over the place and not unique to Burlington Electric, suggesting the company wasn’t being targeted. The laptop also wasn’t connected to its grid systems.  But the Washington Post initially did really poor work on the story, reporting incorrectly the country’s electric grid had been penetrated.

--George F. Will / Washington Post

“Any summation of Barack Obama’s impact on domestic policy and politics should begin with this: In 2008, he assured supporters, ‘We are the ones we’ve been waiting for. We are the change that we seek.’

“Soon he will be replaced by someone who says, ‘I alone can fix it.’ So, Americans have paid Obama the compliment of choosing continuity, if only in presidential narcissism.

“The nation has now had, for only the second time, three consecutive two-term presidencies.  (The other was ‘the Virginia dynasty’ of Thomas Jefferson, James Madison and James Monroe.)  The first trio culminated in an ‘era of good feelings.’  (Monroe was reelected unopposed.)  The second not so much.

“Obama, who called health insurance reform the ‘defining struggle of this generation,’ was semi-right, in two senses.  Because ObamaCare demonstrates the perils of trying to micromanage 18 percent of the economy (America’s health-care sector is larger than all but four national economies), it might be the last gasp of New Deal/Great Society-style government hubris.

“On Jan. 16, 2008, Obama told the Reno-Gazette-Journal, ‘I want to make government cool again.’  His paragraph in our national epic did not do that.  On the other hand, Obama might have catalyzed a conviction already forming in the American mind, but in any case he leaves a nation that now believes public policy should enable everyone to have access to insurance.

“Obama has been among the most loquacious of our presidents, but can you call to mind from his Niagara of rhetoric a memorable sentence or even phrase?  If power is the ability to achieve intended effects, his rhetoric has been powerless to produce anything but an empty, inconsequential reputation for speaking well.

“He assured congressional Democrats that they could safely vote for ObamaCare because ‘you’ve got me.’  He would demonstrate his magic when campaigning for it and for them.  Seven years after he said this, it remains unpopular, and they are fewer than they were.  There are 11 fewer senators and 62 fewer representatives from the Democratic Party than on Jan. 20, 2009.

“Three presidents – George Washington, Ulysses Grant and Dwight Eisenhower – were world figures before becoming president and are remembered primarily for what they did before. Eisenhower rebuffed his aides’ requests that he make more use of a new medium for marketing himself: ‘I can think of nothing more boring, for the American public, than to have to sit in their living rooms for a whole half-hour looking at my face on their television screens.’  Eisenhower left office very popular.

“A former colleague of Obama’s on the faculty of the University of Chicago Law School described him as someone who never learned anything from anyone with whom he disagreed.  He also never learned anything from anyone about constitutional etiquette....

“He combined progressivism’s oldest tradition and central tenet – hostility to the separation of powers – with a breezy indifference to the take care clause (the president ‘shall take care that the laws be faithfully executed’) and to the first sentence of the Constitution’s first article (‘All legislative powers herein granted shall be vested in a Congress’)....

“Obama’s adventures in green energy produced the $535 million bankruptcy of Solyndra and 60 percent fewer electric cars on the road in 2015 than he had predicted.  Gulliver on his travels met someone like Obama:

“ ‘He has been eight years upon a project for extracting sunbeams out of cucumbers, which were to be put in phials hermetically sealed, and let out to warm the air in raw inclement summers.  He told me, he did not doubt, that, in eight years more, he should be able to supply the governor’s gardens with sunshine, at a reasonable rate: but he complained that his stock was low, and entreated me to give him something as an encouragement to ingenuity, especially since this had been a very dear season for cucumbers.’

“In 2007, Obama said, ‘Let us transform this nation.’   Judging by the nature of his successor, Obama somewhat succeeded.”

--Johnny Oleksinski / New York Post

“Two Hollywood icons died this week, a mother and daughter, only one day apart.  But Carrie Fisher and Debbie Reynolds’ untimely ends have already been pushed aside by – what else? – tweets.

“Death itself is no longer the most dramatic event there is.

“Last Tuesday, Steve Martin, an actual friend of Fisher’s, took to Twitter to pay tribute to the ‘Star Wars’ icon.

“ ‘When I was a young man,’ he wrote, ‘Carrie Fisher was the most beautiful creature I had ever seen. She turned out to be witty and bright as well.’

“New York magazine flogged Martin, implying he was as piggish as Jabba the Hutt.  How dare he objectify Fisher?  Anonymous tweeters piled on , and within hours Martin deleted his innocent tweet.

“When it was announced on Christmas Day that singer George Michael had died at age 53, actress Sarah Michelle Gellar leapt to Twitter to respond...to the wrong person’s passing.

“ ‘Do you really want to hurt me?’ she tweeted.  ‘I guess you do 2016 - #ripboygeorge I was truly one of your biggest fans.’

“Such is the pressure to hop on Twitter the moment a celebrity dies: You might get your ‘80s British icons mixed up.

“This onslaught of feuds and memes and mini-obits is all part of our crippling addiction to mournography – the near-pornographic levels of grief we exhibit for the loss of total strangers and the race to be the best at it.

“Today, people are glued to every celebrity death, reveling in virtual snuff films while having nonstop paroxysms of surface-level sadness. We’ve convinced ourselves that this fixation is loving – generous even – when it’s actually as selfish as a man-spreader on the subway.

“Grieving on social media is one of the most shameful acts of acceptable narcissism today. See how upset I am?  See how big a fan I was?  See the run-in I had with her in line at Starbucks?  It’s a cockfight at a funeral, a talent show at a wake.  Mourning, once complex and personal, has been reduced to a few hasty clicks and GIFs....

“When (Carrie) Fisher suffered her heart attack on a flight to Los Angeles on Dec. 23, one fellow passenger immediately took to Twitter.

“Discarding common decency like a crumpled receipt, a passenger seated behind Fisher, YouTube star Anna Akana, took to the social-media platform to break the news to her 132,000 followers.

“ ‘Don’t know how else to process this but Carrie Fisher stopped breathing on the flight home.  Hope she’s gonna be OK,’ tweeted Akana, ending her message with a tacky frown emoji....

“Not everyone thought Akana was committing a public service.

“ ‘Have some respect, don’t be tweeting about things like this!’ wrote one user.

“Akana would not be shamed.  ‘We talked it over and ultimately hoped it would help get the news to her family since people report on tweets,’ she wrote.

“How thoughtful.

“Her tweet was, in all likelihood, the way Fisher’s family discovered that their mother, daughter and sister might be brain-dead.  And yet, it was Akana – a promoter of ‘rape prevention leggings’ – who needed to ‘process’ the situation.”

--As reported by the Associated Press: “A Mexican man accused of raping a 13-year-old on a Greyhound bus that traveled through Kansas had been deported 10 times and voluntarily removed from the U.S. another nine times since 2003...

“Three U.S. Republican senators – including Kansas’ Jerry Moran and Pat Roberts – demanded this month that the Department of Homeland Security provide immigration records for 38-year-old Tomas Martinez-Maldonado....

“U.S. Sen. Charles Grassley, from Iowa and chairman of the judiciary committee, co-signed a Dec. 9 letter with Moran and Roberts to Homeland Security Secretary Jeh Johnson, calling it ‘an extremely disturbing case’ and questioning how Martinez-Maldonado was able to re-enter and remain in the country.”

--From Rebecca Everett / NJ.com: “Police are investigating the alleged beating of a 19-year-old New Jersey man whose family claims he was targeted because of his U.S. Army service.

“Lori F. [I’m withholding her name and that of her son] told Fox29 that her son, Austin F., was attacked while walking with her after the Mummers parade (in Philadelphia) on New Year’s Day by a group of young men who made comments to him about his army jacket.

“He is now being treated for a broken jaw and other injuries at Jefferson University Hospital, police confirmed.  His mother told the station that his jaw will have to be wired shut for eight week....

“Austin F., a recent Hammonton (N.J.) High School graduate, was home for the holidays from Fort Benning in Georgia and was preparing to deploy to the Middle East, his mother told Fox29....

“Witnesses told police that a group of 11 or 12 men started making comments to the victim about the army and, after what Gripp called an ‘exchange of words,’ the men started beating the victim in the face and body....

“(Gripp) said he has not heard of any other recent reports of soldiers or veterans being targeted in Philadelphia.”

--After I wrote about 64 U.S. policemen being killed in the line of duty in 2016, sadly, one more was added to the list, a Pennsylvania state trooper, Landon Weaver, who was fatally shot after responding to an abuse violation Friday night (Dec. 30).

--607 people died on New Jersey’s roads last year, 45 more than 2015, and, of course, distracted driving is an increasing problem, “the largest change in behavior over the last 10 years,” as a spokeswoman for the AAA said.

--According to new guidelines from the National Institutes of Health, most babies should start eating peanut-containing foods well before their first birthday, a shift in dietary advice, based on landmark research that found early exposure dramatically lowers a baby’s chances of becoming allergic.

But that’s all I’m saying on the topic, not even playing a fake doctor on the Web.  Ask your pediatrician for guidance.

---

Pray for the men and women of our armed forces...and all the fallen.  And our thoughts and prayers go out to the victims in Ft. Lauderdale...this is a 'wait 24 hours' moment as well.

God bless America.

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Gold $1172
Oil $53.70

Returns for the week 1/2-1/6

Dow Jones  +1.0%  [19963]
S&P 500  +1.7%  [2276]
S&P MidCap  +1.3%
Russell 2000  +0.8%
Nasdaq  +2.6%  [5521]

Bulls  60.2
Bears  18.4  [Source: Investors Intelligence...now it gets interesting, if you follow this contrarian indicator.  60 is a definite ‘buyer beware’ sign....]

Have a great week.

Dr. Bortrum posted a new column.

Brian Trumbore