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01/28/2017

For the week 1/23-1/27

[Posted 11:30 PM ET, Friday]

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Edition 929

*If you print this column out, this one is easily the longest ever...well in excess of 50 pages.

Washington, Inauguration Aftermath and the First Week

Well I’m stressed out.  How about you?  Our new president, Donald J. Trump, not only showed what a narcissist he is, which we already knew, but the thin-skinned leader of the Free World at times was flat-out unhinged.

At the same time, there has never in anyone’s memory been a first week to a presidential term like this one and no one can say President Trump wasn’t a man of action.  One move after another was the fulfillment of a campaign promise.  But that means that at least for now, the country will remain more divided than ever.  If you focus on nothing else in this titanic column, make sure you read Frank Luntz’s comments below.

We’re going to have to learn to separate rhetoric from reality in the Trump White House.  And we’re definitely going to have to learn to follow my adage, ‘wait 24 hours.’  At least I’ll be sticking to it.

I do have to start out with one particular item, Donald Trump’s claim of voter fraud.  What startled me is that no one said what should be obvious to everyone.  This very discussion, thrust forward by our own president, not only undermines our democracy and his very election with the claims he has made, but it is giving the Kremlin exactly what it has been looking to do since the arrival of Vlad the Impaler.  Undermine Western democracy both here and in Europe. 

Here the Kremlin has been making mischief in Europe, especially with the upcoming elections in the Netherlands, France and Germany, and it involved itself heavily in our own this fall, yet President Trump is saying, ‘Yeah, the system is rigged...it is fraudulent.’  This is nuts!

I’ll have far more on this topic next week.  For now a reminder.  This is a running history.  Trump’s Inaugural Address was important, but the timing was such last Friday that I couldn’t include the commentary of others aside from my own.

So herewith, for the record....comment on Donald Trump’s Inaugural Address...after which I’ll cover his first week like no other.

Michael Gerson / Washington Post

“Some of us approach Inauguration Day with a kind of democratic reverence.  Its customs encourage the love of country.  The best inaugural addresses offer historical context, emphasize shared values, encourage engaged citizenship, express goals worthy of a great nation, and at least attempt to wrap it all up in a neat package of rhetorical ambition.

“For Donald Trump, who lives in an eternal now, Inauguration Day was Friday, offering another opportunity to deliver a less raucous version of his stump speech – a chance to slam the establishment and make Peronist promises to reverse globalization.  Apart from a few nice phrases undoubtedly borrowed from other, superior drafts, the ‘American Carnage’ speech was blunt, flat and devoid of craft. Also devoid of generosity, humility and grace.  Making it perfectly credible as the work of Trump’s own hand.

“Trump’s inaugural was instructive in this way: America has chosen a man for whom traditions and norms mean nothing (less than nothing when he finds them constraining).  He used the center stage of American public life to belittle nearly everyone seated around him.  They have ‘reaped the rewards of government,’ prospered at the expense of the people, celebrated while families struggled, and are ‘all talk and no action.’

“These, of course, are the only people who can take action – legislative action – after the Obama-era executive orders get rescinded.  Trump certainly did not appeal to members of Congress for help. So he must be counting on ‘the people’ to intimidate their representatives into supporting the Trump agenda.  I wonder, for example, how Senate Majority Leader Mitch McConnell might respond to this pressure tactic, particularly after being treated to Trump’s rhetorical version of the Red Wedding on the West Front of the Capitol.  (Non- ‘Game of Thrones’ fans will need to look this up.)”  [Ed. I’m a ‘Game of Thrones’ watcher...this is a great analogy.]....

“Trump’s announcement of ‘the hour of action’ has an ominous ring.  He demonstrates no respect for norms of presidential magnanimity and self-restraint.  He has declared that his ‘oath of allegiance’ was taken ‘to all Americans’ rather than to the Constitution....And he has claimed a general mandate to interpret and pursue his vision of the people’s interests.  In the past, we have, I have, been mistaken to discount and downplay the plain meaning of Trump’s words. The oath of office has turned a laughable Putin imitation into a very real concern....

“Trump’s inaugural speech is a funeral oration at the death of Reaganism, and of conservatism more broadly.  In his first inaugural, Ronald Reagan declared government to be ‘the problem.’  When Trump says that government is the problem, he means all government but himself.”

In Moscow, as reported by the Wall Street Journal, “more than 100 Russians from the nationalist-leaning sectors of society gathered in a Soviet-era telegraph office, where they drank champagne and toasted the new U.S. president.”

Editorial / Financial Times

“Opinion polls show that Mr. Trump is more unpopular than any new president in modern history.  On every defining issue of the age – immigration, terror, climate change, inequality – America’s citizens are fiercely at odds with each other.  Mr. Trump has yet to show that, though he may have widened these rifts on the campaign trail, he can narrow them as leader of the nation. This is his great challenge.

“He can start by fulfilling promises. The president has pledged to help America’s ‘forgotten men and women’: those who globalization has left with less. This will take time, but making a good start will do much to mollify Mr. Trump’s critics on the left and will set an example for much of the developed world, struggling with similar problems, to follow.

“It is therefore crucial that he shows he is not satisfied with pleasing the Republican majorities in Congress.  His ascendancy was a rebuke to the philosophies of both parties.  If his economic efforts end at the standard Republican fare of slashing regulations and tax – perhaps flavored with a bit of protectionism – the states of the rust belt, which carried Mr. Trump to victory, will see little of the benefit.

“It was Mr. Trump’s talk of fiscal stimulus and infrastructure spending that sparked the post-election market rally. He repeated the point at the inaugural. In his own words, ‘now arrives the hour of action.’

“Beyond America’s borders, the rules-based system that has long defined global trade and security is under acute pressure, in part because of Mr. Trump’s ascendancy. His speech gave little indication that he has use for the old order: what are its multilateral agreements but an effort to put the good of all ahead of the good of America?  But if Mr. Trump wants to see off the current regime, it is his duty, as the leader of a superpower in an irreversibly interdependent world, to put something equally strong in its place.  National leadership is not real estate.  President Trump must do much more than cut good deals for America.”

Gerald F. Seib / Wall Street Journal

“Donald J. Trump took the oath of office as president at noon Friday, having at last been embraced by the bipartisan Washington establishment gathered around him on the steps of the Capitol.

“Two minutes later, he went on the attack against that same establishment.

“In an inaugural address unlike any in recent memory, he indicted the political system he now leads.  He also signaled that he will be an entirely new kind of president – and the closest thing to a political independent in the White House since Dwight Eisenhower.

“ ‘For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost,’ he declared.  Lest anyone wonder about his view of the politicians gathered around, he declared: ‘The establishment protected itself, but not the citizens of our country.’  That, he said, will change immediately.

“The harsh words seemed directed nearly as much at his own Republican Party, which for the last two years has been in full control of the Capitol before which he stood, as they were at the Democrats in opposition. All of them, he implied, are collectively a big part of the reason American factories have shuttered, manufacturing jobs have been lost and the ‘forgotten men and women of our country’ left adrift by a globalized economy.

“In sum, his remarks resembled more a Trump rally speech than a traditional inaugural address, and they eradicated any thought that President Trump will govern differently than Candidate Trump campaigned.  Much as his rally speeches were directed toward his fervent supporters rather than party regulars, his inaugural speech was directed squarely at the working-class voters in Michigan, Wisconsin and Pennsylvania who propelled him to the Oval Office.

“At the end, in fact, he gave a rally-like fist pump to the crowd spread out on the National Mall before him.  Washington regulars may have been stunned and even appalled, but for his most ardent supporters it likely was pitch perfect.

“Later, in a classic Trump pivot from aggressive public persona to more-gracious private one, he made a point at a celebratory luncheon of warmly praising his election opponent, Hillary Clinton, who went unmentioned in his inaugural address.

“Now that the tone has been set, what happens next is a leap into the unknown.  Not since Mr. Eisenhower – a nonpolitician wooed equally hard by Democrats and Republicans before deciding to run for the GOP – has there been a president with so few attachments to political party or ideology....

“The challenges are considerable, though. The freedom of having only loose ties to a political party is offset by the danger in having few compatriots who feel strong loyalty to him or who believe their political futures are tied tightly to his....

“He also leads a country that is deeply divided, both by partisan rifts and intense feelings toward him personally.  The best sign of that division may lie in the fact that voters’ view of him changed very little after he won the White House.

“In his inaugural address, he nodded to the need to address that problem, pledging to Americans that in his presidency ‘we will rediscover our loyalty to each other.’  He offered no similar pledge of loyalty to the political system in the city he now calls home.”

Editorial / Washington Post

“Some heard in (Trump’s inaugural) an echo of Jacksonian populism. And, to be sure, there is a rich American tradition of attacking establishment fat cats and promising reform. But there’s a world of difference between decrying dysfunction and insinuating disloyalty. Even Andrew Jackson might have blanched at the grandiosity with which Mr. Trump invoked America’s ‘glorious destiny,’ or his repeated promises to abolish the tedium of democratic deliberation – ‘talk’ as Mr. Trump dismissed it – through ‘action.’  Old Hickory’s 1829 first inaugural address humbly included a pledge to ‘keep steadily in view the limitations as well as the extent of the Executive power, trusting thereby to discharge the functions of my office without transcending its authority.’  Mr. Trump, by contrast, spoke in oddly mystical terms of ‘a nation that is only living as long as it is striving.’

“In fact the Constitution – which Mr. Trump never again mentioned after swearing hs oath – was ordained for purposes simultaneously less ethereal and more uplifting, such as to ‘establish justice’ and to ‘secure the blessings of liberty.’  Yet ‘liberty,’ ‘justice’ and even ‘peace,’ language common to past presidents’ inaugural rhetoric, did not make the cut in Mr. Trump’s speech.  Nor did ‘equality,’ though we heard about ‘carnage,’ ‘ripped’ away wealth, ‘stolen’ lives and the ‘destroying’ of jobs.  And we heard Mr. Trump repeatedly offer that Americans would be ‘protected’ against these transgressions and betrayals – ‘I will fight for you,’ he promised.  Simultaneously personalistic, paternalistic and state-aggrandizing, these formulations were hard to square with his claim that, as of noon Friday, ‘the people became the rulers of this nation again.’”

Peggy Noonan / Wall Street Journal

“The speech will electrify President Trump’s followers. They will feel satisfaction that they understood him and knew what they were backing. And it will deepen the Washington establishment’s unease.  Republican leaders had been hoping the address would ameliorate their anxieties about the continued primacy of their traditional policy preferences.  Forget that. This was a declaration that the president is going his own way and they’d best follow.

“Throughout the speech, and much of the day, Mr. Trump looked stern.  At first I thought it was the face he puts on when he’s nervous.  I don’t think so now.

“Anyway, it was a remarkable speech, like none before it, and it marked, I think, yet another break point in the two-party reality that has dominated our politics for many decades.

“And so, now, it begins.  And it simply has to be repeated: We have never had a political moment like this in our lives.  We have never had a president like this, such a norm-breaker, in all the ways we know.  We are in uncharted seas.”

Robert Samuelson / Washington Post

“The question that swirls around Donald Trump’s inaugural address is whether his aggressively pronounced policy of America First will actually result in America Last – not literally last, but declining in power and prestige because the United States no longer views its role in the world as promoting economic and geopolitical stability for our allies.

“Instead, he imagines a world in which the United States takes what it can and worries about others only as an afterthought.  What does he expect other countries to do? The answer is obvious.  They will act more aggressively in their own selfish interests, leading to a further disintegration of post-World War II economic and political alliances.

“It is not that all countries, including the United States, haven’t always acted in their own interests.  But, for decades, they and we have identified self-interest with collective commitments to global commerce and military cooperation.  If the leader of these arrangements – the United States – now forsakes them, other countries will look to make new economic and security arrangements, with China and Russia as leading alternatives.

“This breakdown threatens the greater American prosperity that Trump promises.  A changing world economic order will generate enormous uncertainty, as other countries rush to protect their markets from competitors.  Companies may reduce investment spending, which is already weak. Slower economic growth, or outright recessions, will make it harder for governments and companies to service their high debts.  This would further darken prospects for the global economy....

“It is possible that, in practice, Trump’s policies will be more moderate and more in line with the traditional policies of previous presidents, Democratic and Republican.  Some of his Cabinet selections, in their confirmation hearings, have sounded much more conventional than their boss.

“Still, this illuminates the dilemma Trump has created for himself.  The full implications of what he’s proposed, if implemented, would be disastrous. But if he retreats significantly, he may alienate many of his fervent followers, who will feel rightly that they’ve been betrayed.”

Edward Luce / Financial Times

“In case there were any lingering doubts about the sincerity of Donald Trump’s ‘America First’ campaign, he laid those to rest the moment he swore the oath of office.  His brief inaugural address was perhaps the most xenophobic in U.S. history.

“The 45th president’s one specific foreign policy promise was to eradicate Islamist terrorism ‘from the face of the earth.’  His only other message to the rest of the world was to put it on notice that America would take precedence again after an age in which the U.S. had ‘defended other nations’ borders’ and subsidized their armies.

“That age was over, he said.  ‘I will fight for you with every breath that I have,’ he promised America.  ‘We will follow two simple rules: buy American and hire Americans.’ The rest of the world should be on notice.  Mr. Trump intends to rip up the U.S.-created global order. His address will go down as a turning point in America’s postwar role – and quite possibly its death knell.”

Editorial / Wall Street Journal

“Donald J. Trump took the oath of office Friday promising to be a President, well, like the Donald J. Trump of the last 18 months.  His inaugural address was a full-throated populist manifesto against the political ‘establishment’ that will cheer his voters.  How this will translate into governing isn’t clear, but there’s no doubt Mr. Trump is charging head first into the fray....

“(Trump) pledged to be the agent of change against a ruling class that he said has used the government to help itself.  He assailed politicians ‘who are all talk and no action,’ and in the speech’s best moments he offered an inclusive vision of economic, and even social and cultural, renewal.

“Notably, he included the inner cities, failing schools and post-industrial regions that have been left behind in the current recovery.  He returned to his campaign theme of ‘the forgotten men and women,’ and it is clear from the election result that he has become a tribune for millions who do feel forgotten.

“As he often does, Mr. Trump also made American life today seem much darker than it is, invoking ‘this American carnage’ in one jarring passage.  Subtlety is not the Trump style, and America has problems, but carnage is a word better suited for Aleppo under Russian bombing....

“The risk in Mr. Trump’s rhetoric is that it can lead to a jingoism that produces a revulsion against the world. After eight years of Mr. Obama’s retreat because America isn’t good enough for the world, the world needs more U.S. leadership.  It doesn’t need a conservative brand of isolationism that thinks America is too good for the world.”

As for world leaders, let’s just say as a group they were circumspect, but largely offered standard congratulations.

Saturday, Donald Trump grew increasingly outraged as the punditry dissed his turnout on Friday, with the National Park Service retweeting a photo unfavorably comparing the size of his inauguration crowd with the one that attended Barack Obama’s first inaugural in 2009.  A journalist had also misrepresented that an MLK bust in the Oval Office had been removed when it hadn’t been.

According to the team at the Washington Post, Trump’s aides said he should send out a tweet, “But Trump was adamant, aides said.  Over the objections of his aides and advisers – who urged him to focus on policy and the broader goals of his presidency – the new president issued a decree: He wanted a fiery public response, and he wanted it to come from his press secretary.

“(Sean) Spicer’s resulting statement – delivered in an extended shout and brimming with falsehoods – underscores the extent to which the turbulence and competing factions that were a hallmark of Trump’s campaign have been transported to the White House.”

Trump himself went to the CIA and his performance was embarrassing.

Editorial / Wall Street Journal

“President Trump made a smart move in visiting the CIA on his first full day on the job, but he and his staff are going to have to raise their game if they want to succeed at governing.  This was not a presidential performance.

“The visit made sense to repair any misunderstandings from the campaign and transition when Mr. Trump sometimes seemed to attack the entire intelligence community for the leaks that Russia tried to help his campaign.  Those leaks were almost certainly put out or authorized by the Obama White House or senior intelligence officials appointed by President Obama.  The rank and file didn’t do it.

“ ‘I believe that this group is going to be one of the most important groups in this country towards making us safe, towards making us winners again,’ Mr. Trump told employees assembled in front of the CIA’s Memorial Wall for those who have died in the covert service.  ‘I love you. I respect you.  There’s nobody I respect more.  You’re going to do a fantastic job, and we’re going to start winning again and you’re going to be leading the charge.’  So far so good.

“But Mr. Trump also couldn’t resist turning the event into an extended and self-centered riff about the size of his campaign rallies, the times he’s been on TIME magazine’s cover and how the ‘dishonest’ media misreported his inaugural crowds.  He all but begged for the political approval of the career CIA employees by suggesting most there had voted for him.

“Such defensiveness about his victory and media coverage makes Mr. Trump look small and insecure.  It also undermines his words to the CIA employees by suggesting the visit was really about him, not their vital work.  The White House is still staffing up, but was it too much to ask National Security Adviser Michael Flynn’s staff to write up five or 10 minutes of formal remarks that had something to do with the CIA?

“Mr. Trump may think he’s succeeded by breaking the normal rules of politics and that he can keep doing it.  But he’s now President, and Americans expect a level of seriousness and decorum that is consistent with the responsibility of the office.  He should meet their high expectations, not live down to the media’s.”

Paul Krugman / New York Times

“(Mr. Trump) made big promises during the campaign, so the risk of disillusionment is especially high.

“Will he respond to bad news by accepting responsibility and trying to do better?  Will he renounce his fortune and enter a monastery?  That seems equally likely.

“No, the insecure egomaniac-in-chief will almost surely deny awkward truths, and berate the media for reporting them.  And – this is what worries me – it’s very likely that he’ll try to use his power to shoot the messengers.

“Seriously, how do you think the man who compared the CIA to Nazis will react when the Bureau of Labor Statistics first reports a significant uptick in unemployment or decline in manufacturing jobs?  What’s he going to do when the Centers for Disease Control and the Census Bureau report spiking numbers of uninsured Americans?

“You may have thought that last weekend’s temper tantrum was bad.  But there’s much, much worse to come.”

Saturday also saw the Women’s March on Washington and protests across the nation, as well as overseas.

Editorial / Washington Post

“A demonstration of such scale would have been remarkable on any day.  That it took place the day after President Trump’s inauguration, that the size of the protest dwarfed the size of the celebration, that similar throngs gathered in other cities across the country – all of this underscored how divided the nation still is.  Such division on election night might not have been surprising. That the rift remains as wide, and the feelings as raw, 10 weeks later is a reflection in part on the president himself.  During the transition, he chose not to reassure and heal.  Even as president, he continues to brag about his popularity (the number of TIME magazine covers he has graced) and to give at his domestic ‘enemies.’  The message has been less that of a ‘president for all Americans’ than the us-vs.-them mockery conveyed Saturday morning by Michael Flynn Jr., son of Mr. Trump’s national security adviser, retired Lt. Gen. Michael Flynn.  ‘What MORE do you want?’ he asked of participants in the Women’s March.  ‘Free mani/pedis?’

“Judging by our on-scene reporting, we would tell Mr. Flynn that the goals of the marchers were considerably weightier than that.  The protesters wanted a whole host of things – reproductive rights, equal pay, affordable health care, action on climate change.  Their demands did not always match up, but the marchers had this in common: Whatever they cared about most, they had traveled to the nation’s capital to do something about it....

“The events showed the nation’s division.  But they also showed millions of Americans refusing to give up on their democracy.”

Sunday, Trump tweeted, “Watched protests yesterday but was under the impression that we just had an election!  Why didn’t these people vote?”

“Celebs hurt cause badly,” he said.  [Ed. referring to the likes of Madonna and Ashley Judd.]

Later Sunday morning, Trump sent out a more conciliatory tweet:

“Peaceful protests are a hallmark of our democracy,” he said.  “Even if I don’t always agree, I recognize the rights of people to express their views.”

For the talk shows, Kellyanne Conway was sent out to spar with “Meet the Press” and NBC’s Chuck Todd, wherein Conway used a term that will outlast the Trump presidency, “alternative facts,” in defending Sean Spicer’s comments from the day before, and the press, and a lot of America, was off and running again.

[Kellyanne also said on ABC’s “This Week” that Trump won’t be releasing his taxes.  “We litigated this all through the election.  People didn’t care. They voted for him, and let me make this very clear: most Americans are very focused on what their tax returns will look like while President Trump is in office, not what his look like.”]

Richard Cohen / Washington Post

“Who ordered Spicer to soil his own credibility?  This was essentially the question Chuck Todd kept putting to White House counselor Kellyanne Conway... Conway, who will tell you that a hissing snake is just a harmless hunk of rope, would not say. She kept deflecting the question and, in a tour de force of Orwellian creativity, defended Spicer’s use of ‘alternative facts.’  Todd was laudably persistent, but really we know the answer to his question: Trump is an unhinged narcissist, and Conway is his mirror. Reality must conform to what he wants.

“We now know that Trump’s self-adoration is not a mere personality glitch.  It is instead an engine of intimidation, a furiously dominant aspect of his personality, and when it gets challenged, as it was over the weekend, he responds irrationally....

“No one in his inner circle seems to stand up to Trump.  No one publicly contradicts him....

“Trump is a human dust devil, spinning off analogies and references.  He is Orwellian, Kafkaesque and always chillingly demagogic.”

Back in 2007, when I was in Des Moines for the Iowa State Fair and the early political season for the 2008 campaign, I met pollster/analyst Frank Luntz at the hotel bar and as I’ve written a few times, including then, he is just what he appears to be on television.  Fiercely bright, constantly probing. Some of you will recall I had listened to Joe Biden at the fairgrounds that day, Biden was impressive, and so I told Luntz that and he started firing all these questions at me, “Why did you like him?  What moved you?”  It was funny, a personal performance from the master.

So I’m watching “Face the Nation” on Sunday and Luntz was on a panel, moderated by John Dickerson, and Mr. Luntz was more concerned about the future of  America than I’ve ever seen him.

DICKERSON: Frank, what we’ve seen over the last two days, is that the tableau of America, the cheers for Trump and then the marches against him?  Is that where we are in politics?

LUNTZ: There are three attributes that matter more than anything else in American life: respect, civility and tolerance.  And we’re not seeing much of that from anyone right now. When Donald Trump delivered his speech, he had some very powerful lines and talked about the people getting their government back. And that’s to be applauded.  But there was no respect for the previous president or any of the presidents.  There was no respect for people who were up there on the podium.  And the next day – I got attacked the next day, not even at the rally, by someone who called me a fascist...But we now believe that we can say and do anything to anyone at any time.  We have lost that sense of decency. And, frankly, I don’t know how we’re going to get it back....

We’ve never had as many people who don’t trust the media, don’t trust the politicians, don’t trust economics, don’t trust business.  There’s a reason why two-thirds of young people now believe that socialism is a better solution for American economics than capitalism.

DICKERSON: What about this, Frank?  Here’s a theory...this was a speech to his supporters and he’s locked in tight with them, with the full well knowledge of knowing that Washington’s going to eat away at things, but in this big public moment he wants to show, I am with you... What will be remembered is he stood up there, in that moment, and spoke loud and proud about the things they love about him.

LUNTZ: And he did.  But that’s not how you govern the country.  You’re not president of 46 percent of America. You’re president of 100 percent. And in the green room before we came on, we were talking about our expectations for the future.  I’m clearly the darkest person on this panel because I think we’re going to remember this weekend for a long time to come as not the end, not the campaign being over, but this is the beginning of the most tempestuous, if that’s the right word, in my mind, awful conflict between left and right, between men and women, between young and old.  I think we are breaking apart.  Since 1968 when we lost some incredibly good people in this country, that’s 50 years.  I saw those signs in the parade, and they were so horrific and they are eight, nine, ten year-olds who are being taught to hate the other side.  And that’s the problem, when you teach young people to hate, you can’t get it out of their system.

JEFFREY GOLDBERG: But I think to add to what Frank’s saying, I don’t know if the climate, I don’t know if technology is allowing people to see past their own hatred.

LUNTZ: It’s not.  That’s encouraging it.

DICKERSON: I was also struck, Frank, that the president talked about how America had disappeared over the horizon against other countries.  And there has been a long debate about American exceptionalism and whether presidents are sufficiently exceptional and praising America.  That seems like you wouldn’t put that in the American exceptionalism hymn that we’re disappearing over the horizon.

LUNTZ: No, I really think the country’s in trouble. If we don’t trust the people who give us our news, if we get our news to affirm us rather than to inform us, then we’re not going to collect any information.  If we don’t listen to others and allow our opinions to change over time, then the democracy weakens. And if our electoral process, if we’re telling lies to the people in an effort to get elected, and we don’t hear the accountability, then where are we headed from here both nationally and internationally?  We are losing the respect of the global community. We have lost the respect of Americans here. There’s a sense that our democratic system and the institutions have failed us.  And I see nothing in the last 48 hours to indicate that any of this is going to be addressed in the coming weeks or months.

---

Monday, the first official day of the Trump administration, began with the president signing an executive order to withdraw from the Trans-Pacific Partnership (TPP) trade accord that had been promoted by large companies such as Wal-Mart and Nike, as well as family farmers.

“Great thing for the American worker, what we just did,” Trump said.  Action on renegotiating the NAFTA deal with Mexico and Canada is also in the works.

Trump had campaigned against TPP and other trade deals during the campaign.

As Dan Ikenson of the Cato Institute told Bloomberg News, “Never has the president been the one to initiate protectionism or been so vocal about turning inward.”

Republican Sen. John McCain warned the U.S. was abandoning its U.S. strategic position in Asia, where China is aggressively trying to fill the vacuum.  “Moving forward, it is imperative that America advances a positive trade agenda in the Asia-Pacific that will keep American workers and companies competitive in one of the most economically vibrant and fastest-growing regions in the world.”

The National Cattlemen’s Beef Association, which represents some 230,000 cattle ranchers and feeders, said not having TPP costs the industry $400,000 in sales a day, while NAFTA has driven up U.S. beef exports to Mexico more than seven-fold. Without the two deals, the price of U.S. beef would cost more overseas, a competitive disadvantage.

U.S. agriculture exports have doubled since NAFTA was signed in 1993.

And when it comes to the likes of Nike and Wal-Mart, according to Bloomberg Intelligence, pulling out of TPP eliminates potential savings on import tariffs to the tune of $450 million a year, as posited by a number of trade groups, including Retailers of America.

Nike has said it was planning on using the savings to invest more in the U.S.  Nike currently sources about 40 percent of its shoes from Vietnam, a TPP member nation.

Asian nations expressed concern they would become caught up in superpower politics between the U.S. and China.  Malaysia’s defense minister Hishammuddin Hussein told a security forum in Singapore that he urged the Trump administration not to reduce the U.S. military presence in Asia and the Pacific.  [Sydney Morning Herald]

Editorial / Wall Street Journal

“President Trump fulfilled a campaign promise Monday with an executive order formally withdrawing from the 12-nation Pacific trade pact, and that was the easy part.  Now he’ll have to deal with the fallout, which includes new doubts about U.S. economic commitments and strategic gains for China....

“Mr. Obama (had) stressed the deal’s strategic importance as a counter to Chinese soft power in the Pacific, and he’s right.  But he never made a consistent case for the deal’s economic benefits, and Mr. Trump was able to use TPP as a political whipping boy. The agreement has flaws, with many special carve-outs for this or that country, but on the margin the trade experts at the Cato Institute consider it a net economic plus for the U.S.

“What now?  Mr. Trump isn’t interested in new multilateral pacts, but China is [Ed. more below]....

“The U.S. trade trend has already led to the water-into-wine miracle of Chinese President Xi Jinping preaching the benefits of free trade at the annual global gabfest in Davos last week.  The problem is that China preaches free trade for its exports but too often practices something else at home.

“The Chinese impose multiple regulatory barriers to imports. They subsidize overproduction in commodity goods like steel that hurts foreign producers and workers.  They use political measures to restrict foreign competition so they can build ‘national champions’ in industries like computer chips.  In short, the Chinese continue to practice a mix of free trade and mercantilism, and the Asian trade pact will no doubt seek to continue that pattern.

“TPP would have spread the better Western model of a rules-based trading system.  Mr. Trump and his advisers are targeting China for a U.S. trade-policy renegotiation, albeit with few details about their strategy or their ultimate goal – beyond reducing the U.S. trade deficit in goods with China.

“The irony is Mr. Trump would have more negotiating leverage with TPP in his pocket.  If China resisted trade-opening concessions at home and a trade war results, the U.S. could rely on TPP countries for alternative component suppliers and consumer goods.  Now China can use the Asian trade pact as leverage with these U.S. trading partners....

“The larger shock in TPP’s failure is the symbolism of the U.S. withdrawing from global trade leadership.  For nearly 90 years since the Smoot-Hawley Tariff, and especially since the end of World War II, the U.S. has championed a world of freer markets and liberal trade.  No doubt all Americans haven’t benefitted equally, but the free-trade consensus held through the high-growth 1980s and 1990s.  It fell apart in the slow-growth Obama era.

“The question is what will fill the trade vacuum if the U.S. resorts to its own form of mercantilism....

“The economic damage will come in the months ahead if trade becomes a game of beggar-thy-neighbor self-interest in which national success is measured by a simple trade surplus.  Then we’ll look back on TPP’s demise as a watershed to regret.”

Also Monday, Trump quietly backed away from a campaign pledge to end protections for nearly 750,000 immigrants brought to the U.S. illegally as children.  Instead, the administration will focus more on deporting more people who threaten public safety, according to White House press secretary Sean Spicer.

And Trump met with business leaders, as well as organized labor, telling the first group that he will be “cutting taxes massively” and “cutting regulation massively.”

Of the corporate tax rate, currently 35%, “we’re trying to get it down to anywhere from 15 to 20%.”  Regulations, Trump said, could be cut “by 75%,” without explaining how that would work or be measured.

And he warned if corporations moved their workforce out of the U.S., “we are going to be imposing a very major border tax on the products when it comes in,” he said.

Later Monday, in his first official meeting with congressional leaders, Trump griped about his loss of the popular vote, telling lawmakers that he would have won a majority if millions of illegal immigrants had not voted against him. 

The reality of Trump losing the popular vote by three million votes continues to be an obsession of his, as he repeatedly complains adversaries are trying to undermine his legitimacy.

Election officials across the country have said there is virtually zero evidence of widespread voter fraud.

And Monday Trump was still obsessing about the crowd size for his inauguration speech.

But at the same, the president sought to build support for an ambitious legislative agenda; including a repeal and replacement of ObamaCare, a large investment in the nation’s infrastructure, changes to the country’s immigration laws and tax reform.

The positive is that there clearly will be far more interaction with Congress than during President Obama’s two terms, Obama loathing social time with the members.

Sean Spicer said, “The American people are frustrated with the lack of progress here in Washington, and the president wants no delay in addressing our most pressing issues.  He’s taking every opportunity to forge strong bonds with congressional leaders on both sides of the aisle.”

Tuesday, Trump met with auto leaders, telling them to build new plants in the U.S. and bring production back.  He also signed some new orders (technically memorandums since there are conditions to be met, as the president put it), to reverse Obama administration moves that had rejected the Keystone XL and Dakota Access pipelines over environmental concerns.  TransCanada, the operator of the former, later re-submitted its application to the U.S. State Department, seeking approval for the $8bn pipeline that would carry oil from Alberta to refineries in the U.S.

Editorial / Wall Street Journal

“President Trump is making short work of campaign promises, and on Tuesday he signed executive orders reviving the Keystone XL and Dakota Access pipelines. The resurrection is good news for the economy, but one question is whether he’ll sink the projects with his protectionist impulses....

“One danger here is President Trump’s campaign promise to ‘renegotiate some of the terms’ that included bromides about how ‘we’ll build our own pipes, like we used to in the old days.’ He floated royalty payments during the campaign, and a separate order on Tuesday directed the Commerce Department to develop a plan to use U.S. steel and iron in all new pipelines.  TransCanada has said in past months that it’s ‘fully committed’ to Keystone XL, but the company may not be eager for another politician to direct its investment decisions.

“White House Press Secretary Sean Spicer said Mr. Trump is looking to ensure taxpayers the best possible deal. Reminder: Taxpayers pay nothing. The State Department estimated that when Keystone is finished and pumping oil, local governments will collect more than $55 million a year in property taxes. About 70% of the resulting refined products from Keystone would stay in the U.S., which will push down gas prices as another benefit, according to a study from IHS. That already sounds like a good deal....

“Private investment projects like Keystone and Dakota Access are the superior route to creating jobs and boosting incomes, which President Trump has long said is his first priority.  Mr. Trump’s best move would be to ditch his floated Keystone conditions and enjoy taking credit for the resulting economic growth.  He could even attend the next ground-breaking ceremony.”

Meanwhile, in his press conference, Sean Spicer had to defend the president’s voter fraud comments from Monday.  “The president does believe that,” Spicer said.  “(And) he continues to maintain that belief based on studies and evidence that people have presented to him.”

Wednesday, President Trump signed a pair of executive actions to begin ramping up immigration enforcement, including a new border wall with Mexico, vowing construction would begin in months.

As for funding for the border wall, however, that will be a big issue.  Construction estimates come in at anywhere from $8 billion to $20 billion, with no current source of funds.

Appearing at the Department of Homeland Security, Trump issued a series of directives aimed at clamping down on an estimated 11 million immigrants living in the United States illegally.  Among the steps would be the creation of more detention centers, more border control agents, and withholding federal funds for “sanctuary cities,” those such as San Francisco, Los Angeles, New York and Chicago that don’t comply with federal immigration laws, i.e., go after known illegals.

Addressing the DHS, Trump said, “A nation without borders is not a nation. We are going to restore the rule of law in the United States. Beginning today the United States gets control of its borders.”

Having described unauthorized immigrants as criminals during his campaign speeches, Trump told his DHS audience: “We are going to get the bad ones out – the criminals and the drug dealers and gangs and gang members. The day is over when they can stay in our country and wreak havoc.  We are going to get them out, and we are going to get them out fast.”

The president had invited families of people killed by unauthorized immigrants to attend his event at DHS and watch him sign the executive orders.

Editorial / Wall Street Journal

“President Trump’s executive order to build a wall on the Mexican border won’t go down as America’s finest hour.  But at least the policy he’s setting out is more moderate than his campaign rhetoric and makes some concessions to immigration reality.

“Mr. Trump ran and won on mass deportation of illegal immigrants and building a ‘great, great wall,’ and he’s honoring his campaign promises.  Nobody can claim he’s springing what the order calls a ‘secure, contiguous and impassable physical barrier’ on unsuspecting voters. But Mr. Trump also often signaled in 2016 that he would ‘soften’ these positions in office, and in some ways he has....

“The wall...won’t solve the problems Mr. Trump claims it will, to the extent they’re problems.  There are already 652 miles of vehicle and pedestrian fencing along the 1,954-mile U.S.-Mexico border, protecting the most sensitive areas.  Mexico isn’t Gaza and doesn’t require border militarization.

“Despite Mr. Trump’s bombast, Mexican criminals are not pouring over the border.  Border apprehensions were 192,000 last year, but that’s down from 981,000 a decade ago.  Pew estimates that about 11.1 million unauthorized immigrants live in the U.S. (3.5% of the population), and 52% are Mexicans.  That share is falling every year amid rising illegal entries from Asia, Central America and sub-Saharan Africa....

“Mr. Trump also signed an order to ramp up internal immigration enforcement, especially against cities that refuse to help the feds enforce immigration laws....

“The Constitution bars the federal government from commandeering or coercing states or cities, so the practical effect will depend on whether Mr. Trump follows through in denying funds.  This is essentially a political fight, and Mr. Trump’s voters don’t like the spectacle of mayors or police department who refuse to enforce the law.

“One encouraging note is that Mr. Trump seems to have stepped back from his promise to revoke President Obama’s 2012 order that shielded the ‘dreamers’ from deportation. These are young people who were brought to the U.S. as children and can apply for renewable two-year work permits if they’re attending school or have graduated and pass a background check.

“The most fervent restrictionists, in and out of the White House, are unhappy with Mr. Trump’s forbearance. But his restraint is humane and good politics.  The 750,000 young people who have qualified for this reprieve didn’t break the law themselves, and many don’t know the ‘home’ country they would be deported to. The U.S. is their new home.  Nothing would undermine Mr. Trump’s immigration agenda more than stories of dreamers who’ve lived here for years or served in the military being snatched from college campuses and deported to uncertain fates.”

In an interview with ABC News, Trump said the American taxpayer would be reimbursed by the Mexican government for the costs.  More on Mexico’s reaction below.

But Trump also said this to ABC’s David Muir, concerning his speech at CIA headquarters, what Trump described as one of the greatest addresses ever given.

“That speech was a home run,” Trump said.  “See what Fox said. They said it was one of the great speeches. They showed the people applauding and screaming. ...I got a standing ovation.  In fact, they said it was the biggest standing ovation since Peyton Manning had won the Super Bowl, and they said it was equal. I got a standing ovation. It lasted for a long period of time....

“You probably ran it live. I know when I do good speeches.  I know when I do bad speeches. That speech was a total home run.  They loved it. ...People loved it.  They loved it. They gave me a standing ovation for a long period of time.  They never even sat down, most of them, during the speech.  There was love in the room. You and other networks covered it very inaccurately. ...That speech was a good speech. And you and a couple of other networks tried to downplay that speech.  And it was very, very unfortunate that you did.”

Good lord.

Trump also insisted in the interview that he could have “very, very easily” won the popular vote in the election had he simply tried.  He again suggested Hillary Clinton won the popular vote because of widespread voter fraud.

“You have people registered in two states. They’re registered in New York and New Jersey. They vote twice.  There are millions of votes, in my opinion.”

When David Muir noted the reactions of prominent Republicans who do not agree with Trump on this and are alarmed that he is challenging the credibility of the election system:

“Well, let me just tell you, you know what’s important?  Millions of people agree with me when I say that,” Trump said.  “If you would have looked on one of the other networks and all of the people that were calling in, they’re saying, ‘We agree with Mr. Trump. We agree.’  They’re very smart people.”  [David Nakamura / Washington Post]

Trump also said in the interview that his administration would “absolutely do safe zones in Syria” to discourage refugees from seeking safety in other countries, slamming Europe and Germany for accepting millions of immigrants.  “It’s a disaster, what’s happening there,” Trump said.

Back to voter fraud, earlier Wednesday, Trump said in two tweets: “I will be asking for a major investigation into VOTER FRAUD, including those registered to vote in two states, those who are illegal and even, those registered to vote who are dead (and many for a long time).  Depending on results, we will strengthen up voting procedures!”

At their retreat in Philadelphia, Republican lawmakers said they and President Trump need to tighten up their messaging and get on the same page.  As in, cut the crap with crowd sizes and voter fraud, Mr. President.

Senate Republican Conference Chairman John Thune (S.D.), who’s in charge of such stuff, said there’s substantial room for improvement.

“Sometimes we’re not always on the same page, but it’s a work in progress.”

Separately, House Speaker Paul Ryan announced a 200-day action plan, including a repeal of ObamaCare and tax reform, but there is disagreement over whether an infrastructure program will fit in during this timeline.  Trump wants it to, but his preferred $1 trillion investment would swell the deficit.

Philip Stephens / Financial Times

“The alternative facts beloved of Donald Trump’s White House doubtless record that the president’s inaugural address was greeted with unalloyed applause across the world.  The speech was closely watched. The preponderant reaction among America’s friends was disbelieving horror.  In the annals of modern politics, this was indeed ‘huge.’  The soft power accumulated by the U.S. over decades drained to nothing in 17 short minutes.

“Russian president Vladimir Putin backed Mr. Trump.  So did Israel’s Benjamin Netanyahu, who has celebrated the president’s victory by grabbing more Palestinian territory. Hungary’s Viktor Orban promises to be as devoted to Mr. Trump as he has been to Mr. Putin. Mr. Orban craves attention. Reach beyond the self-styled ‘strongmen’ and you will struggle to hear a good word for the new leader of the free world.

“The problem for others – perhaps more so for traditional allies than adversaries – is that Mr. Trump cannot be ignored.  The U.S. is still the world’s sole superpower.  Its role as the linchpin of the geopolitical order cannot be wished away.  Washington is the reference point for everyone else’s foreign policy.

“So the lights have been burning late as policymakers around the world deliberate on how to handle a president with so slight a grip on history or strategic realities.  A first take from friendly foreign ministries is that Mr. Trump’s economic nationalism threatens to fracture the open international trade system. And his eagerness to bully Mexico holds a serious warning for erstwhile friends.

“Indifference towards longstanding security alliances invites others to step into the vacuum – Russia in Eastern Europe and Middle East, China in East Asia.  Once-secure allies now feel vulnerable.  How long before Japan, say, considers its own nuclear deterrent?....

“The broader European hope is that Rex Tillerson at the state department and General James Mattis at defense will act as a restraint on Mr. Trump’s ‘America first’ unilateralism.  But I have struggled to find anyone halfway certain that the president will allow others to set the direction of policy.  The judgment heard more often is that Europe will just have to learn to live with a rogue American president – one, incidentally, who makes it look back with a certain nostalgia to the days of Mr. Bush.

“On the other side of the world, China has been shrewdly cautious.  President Xi Jinping has deftly promoted Beijing as the new guardian of the multilateral trade order...China is keen to avoid direct confrontation but there are red lines – some economic, some territorial – that Mr. Xi will not see crossed without a robust response.

“What unites these various friends and foes – including, I would guess, Mr. Putin – is a view that the U.S. president will prove a force for dangerous instability.  He does not believe in the West, but nor can he be trusted by anyone else.  Yes, the crowds on the Washington Mall may have been on the small side but, yes Mr. Trump, the world was listening.”

Daniel Henninger / Wall Street Journal

“It is time to set aside the numbing and exhausting preoccupation with Donald Trump, celebrity president, and start the hard work of seeing the substantive intent inside the Trump presidency – and deal with it.  There is never going to be a clear lens into America’s 45th presidency. We are all staring into the Trump kaleidoscope.

“The Trump kaleidoscope has at least two reflecting surfaces.  One is Trump Himself, a phenomenon that changes at every turn. The other is the Trump government, which is not going to break free of the American system’s more stable institutional realities and constraints.

“Those who believe Mr. Trump is unqualified or illegitimate will remain obsessively transfixed by Trump Himself, the man who delights in violating norms of politics and taste. The Democrats, or at least those who conduct their politics in the streets, appear fatally drawn to these Trump distractions.

“A shrewder Democrat, say Chuck Schumer, understands that the Trump threat has less to do with Muslim bans, a wall or women but instead with discrete, identifiable policies that may weaken long-established sources of Democratic power and authority....

“Donald J. Trump and the Trump presidency, parallel universes, will always be putting a lot in motion. This week’s output could be the new normal.  There is no other option now than to recalibrate daily between the many, often confusing facets of this presidency, between the ever-present Trump Twitter feed and the daily drudge work of policy debate and implementation....

“(Refinements) from what we all first thought we saw on ObamaCare, Russia, trade policy, entitlements and the rest are also inevitable. There will be Trump wins, draws and losses.

“It almost sounds normal, except that traveling through any of these issues will never be normal with the Trump presidency, for better or worse.

“Better is considered to be Mr. Trump tweeting the auto industry into submission on overseas plants.  Worse could come in foreign affairs if Trump Himself sets off a cascade of less controllable events on the Russian or Chinese peripheries.

“This is going to be messy not because Donald Trump is messy but because our system, even when it’s functioning, was designed to be difficult. For those who want to spend four years quaking before Mr. Trump’s kaleidoscopic tweets, the future is predictable. For everyone else, the more familiar struggles of American governance have just begun.”

Thursday, President Trump and Mexican President Enrique Pena Nieto went at it, with Pena Nieto canceling his planned meeting with Trump scheduled for next week over the disagreement over who would pay for construction of a border wall.

In a tweet, Pena Nieto said his government informed the White House that the meeting was off.  Trump had warned him on Twitter earlier to stay home and skip the meeting unless Mexico is willing to fund the construction.

Trump’s executive order on Wednesday calling for immediate construction of the border barrier was viewed by Mexico as a huge insult because it came the same day that a delegation of top Mexican officials arrived in Washington.

Prior to this, some Mexican politicians said Pena Nieto needed to go to Washington for the sake of diplomacy, but following Trump’s tweets, one noted political analyst, Enrique Krauze, said that Pena Nieto should distance himself from the new U.S. president.

“Trump is a madman who will probably destroy himself,” he tweeted.  “You have to gain time with patience, strength and dignity.”

“The uncertainty is over,” tweeted Javier Lozano, a PAN senator.  “It is confirmed that we will have to deal with an arrogant and ignorant despot in the USA.”

Lozano said of the entire Mexican political class, including those of different political stripes:

“Close ranks in the face of the tyrant and let us move forward united and firm.”  [The Hill]

Later Thursday, aboard Air Force One and on the way back from the Republican retreat in Philadelphia, where the president spoke, White House spokesman Sean Spicer talked of a 20% tax on all imports coming from Mexico to pay for the wall, noting that currently  the U.S. taxes exports and let imports flow freely, “which is ridiculous.”

Spicer said the new tax would generate $10 billion a year and “easily pay for the wall.”

But a few hours later the White House was walking this back as Mexico said it would immediately retaliate in kind if the U.S. did this.  Plus you had the realization that a 20% tariff on imports meant higher prices for American consumers, as well as create profound challenges for industries with supply chains that span the border, which could lead to a collapse of the North American Free Trade Agreement, when I think most rational folks, including in the Trump administration, recognize that, yes, NAFTA has to be renegotiated.  But just that.  Actual negotiations.

The 20%, however, is a key to some Republican proposals to overhaul the tax code; taxing imports from all countries at 20% while American exports would be tax free, or the so-called ‘border adjustment,’ which resembles a value-added tax commonplace elsewhere.

And then you have the currency issue and its impact, but I’m not getting into that topic today.

The disturbing part about Thursday, aside from the Shootout at the OK Corral, was during President Trump’s interview with Fox News’ Sean Hannity, he once again spent way too much time talking about crowd size and popularity and how he was being mistreated by the media and it’s not as if Hannity was egging him on.

Editorial / Wall Street Journal

“Donald Trump’s path to the presidency as an outsider always implied on-the-job-training. This week’s lesson: The world is not a Republican primary.  President Trump’s Twitter broadsides against Mexico have unleashed a political backlash that has now become a diplomatic crisis with a friendly neighbor.

“Mr. Trump fancies himself a negotiating wizard, but in this case he is out-negotiating himself.  The White House announced last weekend that Mr. Trump had asked Mexican President Enrique Pena Nieto to Washington to talk about trade, immigration and the border.  Despite Mr. Trump’s many slights against Mexico during the campaign, Mr. Pena Nieto accepted.

“Mr. Trump proceeded to roll out the red carpet by announcing his plan to build ‘the wall’ on the U.S. southern border that Mexicans of all political stripes consider an insult.  On Wednesday he also rolled out press secretary Sean Spicer to aver that ‘one way or another, as the President has said before, Mexico will pay for it.’

“That cornered the Mexican President, who represents a nation unified by Mr. Trump’s anti-Mexico rhetoric.”

[Ed. Well you saw what happened Thursday.]

“Doesn’t the ‘art of the deal’ include giving your negotiating partner room to compromise?  Mr. Trump made it impossible for Mr. Pena Nieto even to negotiate, all the more so after Mr. Pena Nieto went out of his way in August to invite Mr. Trump for a visit.  That campaign stop helped Mr. Trump show he could stand on stage as an equal with a foreign leader, but Mr. Pena Nieto took a beating at home when Mr. Trump returned to Mexico-bashing....

“With a population of 128 million, Mexico is America’s second-largest export market for goods.  Some six million U.S. jobs depend on trade with Mexico.  But the much larger risk is that Mexicans will sour on progress toward joining their North American neighbors as prosperous free-market democracies.  This is the moment that Mexico’s left – dormant but not dead – has been waiting for as anti-American Andres Manuel Lopez Obrador prepares to run for President again in 2018.

“Mr. Trump is a foreign-affairs neophyte, but he is already learning that nations can’t be bullied like GOP candidates or CEOs. They have their own nationalist political dynamics and when attacked they push back. Mr. Trump said as a candidate that he’d treat America’s friends better than Mr. Obama did, but his first move has been to treat Mexico like Mr. Obama treated Israel.  On present course he may get comparable results, or worse.”

David Ignatius / Washington Post

“President Trump’s slash-and-burn actions in his first week have been dramatic, but dangerously lacking in a consensus of support, even within his own administration. The risks were evident in the collapse of a planned meeting with Mexico’s president and in Trump’s embrace of torture tactics rejected by his secretary of defense and CIA director.

“Trump’s ‘tweet from the hip’ style produced its first real foreign rupture Thursday, when Mexican President Enrique Pena Nieto canceled a planned visit to Washington. That followed Trump’s tweet that he should stay away if he wasn’t ready to pay for the often-proclaimed border wall.

“The Twitter grenade blew up what had been an attempt to finesse the issue with a delayed Mexican financial contribution for the wall, an approach that Trump himself had only hours before supported in an interview with ABC’s David Muir.  Now, Trump has an avoidable Mexico crisis to deal with....

“If the first week of the Trump presidency showed us anything, it’s that he is more determined to overturn the established trade, economic and national-security order than even his critics feared.  So far, there’s more Stephen K. Bannon and less Reince Priebus in this White House.  The costs of Trump’s impulsive, thin-skinned behavior have also become clearer.  He keeps proclaiming how well he’s doing, but his aides have seemingly worked nonstop to put out fires ignited by their boss.

“Whether Trump’s tweeting and his alt-right tilt can be tempered by James Mattis at Defense and Rex Tillerson at State looks more dubious. This will worry foreign leaders who had found the Mattis and Tillerson nominations reassuring, and were prepared to believe that Trump’s bark might be worse than his bite on issues that matter to global allies.

“Trump’s bombastic nature undermines his ability to address the problems he cares most about.  Take Mexico: It doesn’t want a trade war with the United States, and Pena Nieto has been working to resolve border-security and NAFTA-renegotiation issues.  But Trump’s humiliating tweet (prompted, presumably, by his fear of being challenged for willingness to compromise) backed Pena Nieto into a political corner.  The outcome is contrary to both countries’ interests....

“During his first week in office, Trump has been his own loudest cheerleader. He has also been his own worst enemy. As with any other form of self-destructive behavior, it’s time for an intervention by those closest to him.”

Friday, as if on cue, there may indeed have been an intervention because it was a much better day in terms of Trump and the optics...unless you are a refugee hoping to come to the United States from certain countries.

We learned that President Pena Nieto and Trump held a lengthy telephone call to ratchet down the tension, with the two agreeing to work their differences out.  A statement from the White House read: “With respect to payment for the border wall, both presidents recognize their clear and very public differences of positions on this issue but have agreed to work these differences out as part of a comprehensive discussion on all aspects of the bilateral relationship.”  There will be no talk of the wall from these two for at least a few days, it is hoped.

It also helped that Mexico’s richest man, billionaire Carlos Slim, held a rare press conference in Mexico City, telling his countrymen that Mexico should not fear Donald Trump, seeing opportunities for his country in the U.S. president’s economic policies, while praising Mexicans for uniting behind their government in talks with its northern neighbor.

Slim called Trump a negotiator, “not Terminator,” and said his repeated attacks on Mexico had united the country, giving President Pena Nieto “strength” in trade and border security talks.  “This is the most surprising example of national unity that I’ve had the pleasure of seeing in my life,” said Slim, who turns 77 on Saturday.

Trump then had what appears to be a good first meeting with British Prime Minister Theresa May, as Trump performed well at his first press conference with another world leader at his side.  Mrs. May got Trump to nod in the affirmative when she said that the president was 100% behind NATO.  Trump said he believed in torture, but that he was deferring to Gen. James Mattis.  The optics were better and observers marveled at how brief it was compared to the interminable pressers of President Obama.  Trump stayed on script.  No discussions of crowd size.

Ditto at an appearance late in the day at the Pentagon for the swearing-in of Gen. Mattis as secretary of Defense, though it was here that President Trump signed two executive “actions,” one to slam the door on immigration from select countries, the other to begin to rebuild the military.

Regarding the former, there will be fireworks, though once again Donald Trump is following through on a campaign promise.

The executive order temporarily halts the nation’s refugee program and ushers in the most sweeping changes in more than 40 years as to how the United States welcomes the world’s most vulnerable people.

The order blocks all refugees from entering the U.S. for 120 days and suspends the acceptance of refugees from war-torn Syria indefinitely.

“We want to ensure that we are not letting into our country the very threats that our soldiers are fighting overseas,” Trump said at the Pentagon.

Trump is also blocking visa applicants entirely from a list of countries that the administration considers of major concern regarding the threat from terrorism, including Iraq, Iran, Libya, Somalia, Sudan and Yemen, until a new “extreme vetting” procedure for visa applicants can be launched.

It was quite a way to cap the first week.

The U.S. has admitted 80,000 refugees in the last year, but for now those numbers will plummet.  A cap of 50,000 has been set for the fiscal year ending Sept. 30.  Exceptions can be made for “religious minorities” such as Christians fleeing largely Muslim countries.

The order also expands the ability of local jurisdictions to block the settlement of refugees they object to.  This was blocked by the Obama administration.  This provision will be a major lightning rod.

While the order doesn’t specifically ban Muslims, it says the U.S. will focus on blocking people from countries linked to terrorism.

“Make no mistake – this is a Muslim ban,” said Democratic Sen. Kamala Harris of California.

But Republican Rep. Michael McCaul of Texas, who leads the House Homeland Security Committee, said:

“We are a compassionate nation and a country of immigrants.  But as we know, terrorists are dead-set on using our immigration and refugee programs as a Trojan horse to attack us.”

Democratic Senate leader Chuck Schumer of New York said:

“Tears are running down the cheeks of the Statue of Liberty tonight as a grand tradition of America, welcoming immigrants, that has existed since America was founded has been stomped upon.”

One group that is impacted are Iraqis who worked with the U.S. government in Iraq.  Now they fear their chances of finding refuge in the U.S. may vanish.  Tens of thousands risked their lives helping Americans, though the Special Immigrant Visa program set up for them after the 2003 invasion of Iraq, stopped accepting new applicants in 2014.  Many of those affected were interpreters for the U.S. military.  7,000 have resettled in America thus far.  Thousands more hoped to follow.  This move could make it harder to find locals to help our soldiers in the future.

So there are many consequences, but I support a temporary suspension in the process.

Saturday is going to be a busy day for our president, as he has phone calls with President Putin, Chancellor Merkel and French President Hollande.  The call between Trump and Merkel could be more tense than that between Trump and Putin, especially after Friday’s executive action on immigration, Trump having previously slammed Germany’s policies.

As for Putin and talk of lightening the sanctions, Sen. John McCain released a statement Friday, warning Trump.

“President Donald Trump’s call with Vladimir Putin is scheduled to take place amid widespread speculation that the White House is considering lifting sanctions against Russia.  For the sake of America’s national security and that of our allies, I hope President Trump will put an end to this speculation and reject such a reckless course. If he does not, I will work with my colleagues to codify sanctions against Russia into law.

“In just the last three years under Vladimir Putin, Russia has invaded Ukraine, annexed Crimea, threatened NATO allies, and intervened militarily in Syria, leaving a trail of death, destruction, and broken promises in his wake....

“President Trump should remember this when he speaks to Vladimir Putin.  He should remember that the man on the other end of the line is a murderer and a thug who seeks to undermine American national security interests at every turn.  For our commander-in-chief to think otherwise would be naïve and dangerous.”

Charles Krauthammer / Washington Post

“The flurry of bold executive orders and of highly provocative Cabinet nominations (such as a secretary of education who actually believes in school choice) has been encouraging to conservative skeptics of Donald Trump.  But it shouldn’t erase the troubling memory of one major element of Trump’s inaugural address.

“The foreign policy section has received far less attention than so revolutionary a declaration deserved.  It radically redefined the American national interest as understood since World War II.

“Trump outlined a world in which foreign relations are collapsed into a zero-sum game. They gain, we lose. As in: ‘For many decades, we’ve enriched foreign industry at the expense of American industry; subsidized the armies of other countries’ while depleting our own.’

“And most provocatively this: ‘The wealth of our middle class has been ripped from their homes and then redistributed all across the world.’  Bernie Sanders believes that a corrupt establishment has ripped off the middle class to give to the rich. Trump believes those miscreants have given away our patrimony to undeserving, ungrateful foreigners as well.

“JFK’s inaugural pledged to support any friend and oppose any foe to assure the success of liberty. Note that Trump makes no distinction between friend and foe (and no reference to liberty). They’re all out to use, exploit and surpass us.

“No more, declared Trump: ‘From this day forward, it’s going to be only America First.’

“Imagine how this resonates abroad.  ‘America First’ was the name of the organization led by Charles Lindbergh that bitterly fought FDR before U.S. entry into World War II – right through the Battle of Britain – to keep America neutral between Churchill’s Britain and Hitler’s Reich.  (Then came Pearl Harbor.  Within a week, America First dissolved itself in shame.)....

“Some claim that putting America first is a reassertion of American exceptionalism.  On the contrary, it is the antithesis.  It makes America no different from all the other countries that define themselves by a particularist blood-and-soil nationalism.  What made America exceptional, unique in the world, was defining its own national interest beyond its narrow economic and security needs to encompass the safety and prosperity of a vast array of allies.  A free world marked by open trade and mutual defense was President Truman’s vision, shared by every president since.

“Until now....

“We are embarking upon insularity and smallness. Nor is this just theory. Trump’s long-promised but nonetheless abrupt withdrawal from the Trans-Pacific Partnership is the momentous first fruit of his foreign policy doctrine.  Last year the prime minister of Singapore told John McCain that if we pulled out of the TPP ‘you’ll be finished in Asia.’ He knows the region.

“For 70 years, we sustained an international system of open commerce and democratic alliances that has enabled America and the West to grow and thrive. Global leadership is what made America great.  We abandon it at our peril.”

Next time...Week Two.

Wall Street

The market celebrated hitting Dow 20000 this week for the first time, after being tantalizingly close the past few weeks amid the Trump rally.  It seems the new administration’s aggressive actions in its first days buoyed animal spirits, with the hope a stronger economy will lead to an improved earnings picture.

But the economic data that was released the past few days was decidedly mixed.  The first look at fourth-quarter GDP came in at just 1.9% on an annualized basis, after solid 3.5% growth in the third quarter.

So the last four readings on GDP look like this:

Q4 2016...1.9%
Q3 2016...3.5%
Q2 2016...1.4%
Q1 2016...0.8%

A simple average of 1.9%, but year over year, 1.6%, marking the weakest pace of growth in five years, underscoring the steady but tepid recovery of the Obama administration, and down from 2.6% in 2015, according to the Bureau of Economic Analysis.

Contained within the report was data that the Trump administration could parrot as examples of their aggressive stance on trade, specifically, the U.S. trade deficit.  For example, regarding the $60bn deficit with Mexico, Trump tweeted Friday:

“Mexico has taken advantage of the U.S. for long enough.  Massive trade deficits & little help on the very weak border must change, NOW!”

Patchy export numbers and higher imports subtracted 1.7 percentage points from output in the final three months of the year, though this is a little deceiving.  Soybean sales have been a key; both in the third-quarter surge and the fourth-quarter slump amid depressed exports for the product in Q4 vs. Q3.

The U.S. trade deficit in goods and services rose to $45.2bn in November, as exports fell and imports rose.

On the positive side, consumer spending, two-thirds of the U.S. economy, continued at a solid 2.5% annual clip, while business investment in capital equipment rose 3.1%.

On the inflation front, the GDP report contained the Fed’s preferred price gauge, the personal consumption expenditures index, and this rose an annualized 2.2% in the fourth quarter.  But, excluding volatile food and energy, the core rate rose a modest 1.3%, with the Fed’s goal being 2% on an annualized basis.  For now, the Fed remains focused on the 1.3%, rather than the 2.2%.

In other economic news, the December reading on durable goods was well below expectations, -0.4%, when a gain of 2.7% had been projected (though this reading is highly volatile).  Ex-transportation the figure was +0.5%, but also below forecast.

Then you had December existing home sales, which came in at 5.49 million on an annualized basis, in line, while the figure for all of 2016 was 5.45 million, the highest since 2006, and above 2015’s pace of 5.25 million.

The median home price rose 4.0% in December, year over year, and was up an average 5.2% for all of 2016 to $233,900.

But new home sales for December were well below forecast at 536,000, annualized, and below the 538,000 pace at the end of 2015.

Europe and Asia

First some economic news as Europe and the eurozone continue to show signs of rising growth.  A flash composite reading for the EA19 came in at 54.3 for January (50 being the dividing line between growth and contraction), with the manufacturing component at a solid 55.1 vs. 54.9 in December, and the services component largely unchanged, 53.6 vs. 53.7.  [Markit]

The flash readings break down France and Germany, individually, with Germany’s manufacturing PMI for January at 56.5, a 36-month high, and services 53.2 (down from 54.3 last month). France had a manufacturing reading of 53.4 vs. 53.5 in December, with the services component at 53.9 vs. 52.9.

Chris Williamson, Chief Economist at IHS Markit:

“The eurozone economy has started 2017 on a strong note.  The January flash PMI is signaling respectable quarterly GDP growth of 0.4% with a broad-based expansion across both manufacturing and services.

“Perhaps the most encouraging development is the upturn in hiring, with January seeing the largest monthly rise in employment for nine years amid improved optimism about the year ahead....

“It’s not all good news: with costs rising steeply due to higher commodity prices and the weak euro, while selling price growth remains subdued, margins are being squeezed to the greatest extent for over five years.  However, the recent strengthening of demand is at least starting to help restore some pricing power among suppliers, hinting at an upturn in core inflationary pressures.”

Separately, in Eurostat’s latest look at government debt in the European Union and EA19, debt to GDP in the euro area fell to 90.1% in the third quarter of 2016 from Q3 2015’s rate of 91.5%.

Among the major players....

Germany’s debt to GDP is 69.4%; France 97.5%; Spain 100.3%; Italy 132.7%; Portugal 133.4%; and Greece 176.9%.  [Non-euro U.K. at 88.2%.]

The ratios for Italy, Portugal and Greece are more than worrisome, and in the case of Italy in particular, a reason why I’ve been harping on their bond market being a ticking time bomb.

Somewhat along these lines, Jens Weidmann, the Bundesbank president, has echoed fears from many in his country that the European Central Bank needs to trim its quantitative easing program sooner than its discussed December deadline

Weidmann said: “The economic outlook at the beginning of the year is quite positive and the inflation rate is gradually approaching the ECB’s definition of price stability. If this price development is sustainable, the requirements for the withdrawal from the loose monetary policy are met.”

But ECB President Mario Draghi does not believe inflation is an issue for a long time to come, touting higher energy prices as being the reason for the recent bump, though for its part, the Bundesbank said inflation in Germany was at 2% in January, the ECB’s target.  [It is far less virtually everywhere else in the eurozone.]

Weidmann’s stance is also influenced by the German government’s expectations that GDP will rise to 2.8% in 2017, up from a previous forecast of 2.1%.

As for Brexit....

The U.K.’s highest court dealt a blow to Prime Minister Theresa May on Tuesday by ruling the government must hold a parliamentary vote before  triggering Article 50 to leave the European Union.

But this wasn’t unexpected and really just means Ms. May has to rush a brief bill through both Houses of Parliament to fulfil the court’s requirement for parliamentary approval, so a bill was rushed out days later to “confer power on the Prime Minister to notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.” 

Brexit secretary David Davis said: “I trust that Parliament, which backed the referendum by six to one, will respect the decision taken by the British people and pass the legislation quickly.”

The issue will be that MPs from across the political spectrum will attempt to amend the legislation, with Labour leader Jeremy Corbyn saying he would seek to amend it “to make demands on rights, protections and market access.”

UKIP (anti-EU) leader Paul Nuttall warned MPs and peers not to hamper the passage of the legislation.

“The will of the people will be heard, and woe betide those politicians or parties that attempt to block, delay, or in any other way subvert that will,” he said. 

Significantly in Mrs. May’s favor, the court also ruled the Scottish Parliament and Welsh and Northern Ireland assemblies did not have a say, which of course really torqued off some Scots, as they vow to pursue independence, again, but despite reports it could be imminent, I don’t think so.  Public opinion is still at 55-45 against independence, the margin back with the 2014 referendum.

Scottish First Minister Nicola Sturgeon said the British government’s promises to consult lawmakers in Scotland now were “not worth the paper they are written on” and that it’s “becoming ever clearer” that Scotland must decide whether it should “take our future into our own hands.”

Good luck.  Plus, Spain would oppose Scotland’s acceptance into the EU, anyway, because this would encourage Catalonia to seek to break away and follow suit.

German Finance Minister Wolfgang Schaeuble said last week the German government would try to minimize any damage to both the EU and Britain during the Brexit negotiations as German companies, at least for today, are sanguine on the impact, according to an IW poll on Monday.  A full 90% of the 2,900 companies surveyed expect no damage at all or very little harm from Britain’s exiting the EU.

Back to Theresa May, at an appearance in Philadelphia on Thursday, the day before her meeting with Donald Trump, she told congressional Republicans that the decline of the West was not inevitable but the U.S. and U.K. had to “lead together, again.”

In a pointed reference to China, the prime minister said:

“We – our two countries together – have a joint responsibility to lead,” she said.  “Because when others step up as we step back, it is bad for America, for Britain and the world.”

At the same time she ripped up Tony Blair’s “doctrine of liberal interventionism,” declaring that the days of the U.S. and the U.K. invading countries to engage in nation building were over.  [Blair had said the West should be more willing to replace dictatorships with democracy, a view that formed part of the justification for the wars in Afghanistan, Iraq and Libya.]

But Mrs. May said these were the “failed policies of the past” and declared that the U.S. and U.K. should no longer “intervene in sovereign countries to remake them in our own image.”

Eurobits....

--France’s finance minister Michel Sapin warned that the “window of opportunity” for a deal on the next stages of Greece’s bailout were closing and once again a meeting of finance ministers in Brussels failed to bridge the gap between Greece and the International Monetary Fund.

Sapin’s point is that with all the national elections coming up, beginning with the Netherlands in March, the political space to reach a deal would close.

The IMF has refused to participate in the 86bn euro Greek bailout unless its conditions are met, such as Greece’s commitment to a primary budget surplus (before debt service) that meets its targets, with the IMF wanting Athens to “pre-legislate” certain conditions for 2018 and beyond, which Greece thinks is rather outrageous.  [Kind of like asking the U.S. Congress to commit to certain budget items for fiscal 2019 when they can’t even resolve F2017.]

--Spain is making good progress in bringing down its unemployment rate, from a high of 27% in 2013 to 18.6% in December.  The economy is growing at a 3%+ clip.  But of course it has a long ways to go before it hits the eurozone’s average unemployment rate of 9.8%, let alone Germany’s 4.1%.

--According to Eurostat, the number of tourism nights spent in the European Union is expected to be up 2% in 2016 to 2.8 billion.  Spain has the lead at 454 million nights, +7.8% vs. 2015, followed by France (395m, -4.6%...see terrorism), Italy (395m, +0.5%), Germany (390m, +2.8%) and the U.K. (292m, -4.5%).

In Euro politics....

--Angela Merkel hit back at a surge in “polarization and populism” after the German chancellor was the main target of criticism at a gathering of right-wing European leaders.  Merkel continues to defend her refugee policy as an act of moral and legal obligation by a “state of laws,” Merkel saying Europeans must stand by principles that include offering asylum to those fleeing from war and oppression.

Support for Merkel’s Christian Democratic Union-led bloc fell just one percentage point to 32.5% in a recent INSA poll for Bild newspaper, while backing for the anti-immigrant AfD rose a point to 14.5%.  Merkel’s coalition partner, the Social Democrats, are at 21%.

Surprisingly, a Forsa poll has found that Merkel’s own popularity has risen a little since the Berlin terror attack, as only 28% of German voters see a connection between the refugees and the terrorist threat, with 68% seeing no link.

The feeling of calm is simply because there hasn’t been a follow-on attack.

Separately, the Social Democrats are putting forward European Parliament President Martin Schulz as their challenge to Merkel in the September election, with Sigmar Gabriel, the party leader and current deputy chancellor, standing aside.  Schulz thus also takes Gabriel’s post as SPD chairman.  Gabriel is only 57 and still has a bright future, but it seems he believes that with little chance to beat Merkel, it might be best to hold off for now and wait for a better opportunity.

Gabriel is now going to replace Frank Walter Steinmeier as foreign minister, Steinmeier becoming national president (a figurehead position...the kind I would love...maybe of Bermuda).

--Back to the Netherlands, Prime Minister Mark Rutte is under scrutiny ahead of that country’s big vote after a news program alleged that his justice minister deceived lawmakers about his knowledge of a deal in which the government made a payment to a criminal drug trafficker.  The minister then quit.

Rutte’s Liberals are running neck-and-neck with Geert Wilders’ anti-Islam, anti-EU Freedom Party.  Rutte, trying to show his sensitivity to the migration issue, ran a newspaper advertisement warning immigrants they should “be normal or leave.”

--After the Dutch vote, we have France, the first round in their presidential election being April 23.  And now front-runner Francois Fillon has had to vigorously defend his use of public funds to employ his wife Penelope as his parliamentary aide, denying allegations she had a fake job. Speaking on prime-time television on Thursday, Fillon said his wife would accompany him to events, monitor the news and meet people on his behalf, adding, his wife “has always worked for me, since 1981.”

This could be big, as he’s running as a candidate with high moral standards.

But, French MPs receive a certain amount from the state each month to spend on aides and up to half can be used to employ family members, though you’d expect them to work and from what I’m reading, in various outlets, Mrs. Fillon didn’t do squat.

Just when I thought Fillon was a shoe-in, we have to wait 24 hours, sports fans!

Meanwhile, Sunday is the runoff for France’s ruling Socialist Party to pick their presidential candidate and its between former prime minister Manuel Valls and Benoit Hamon.

But an independent, Emmanuel Macron, who quit President Francois Hollande’s government after launching his own political party in April, is moving up.  The last Ipsos survey in mid-January has Marine Le Pen at 26%, Fillon at 25% and Macron at 21%, with the Socialist candidate, whoever it is, fourth.

It’s been long expected that it would be Le Pen and Fillon in the run-off, with Fillon then kicking Le Pen’s butt, like 65-35, 60-40, as I’ve seen it.  But now Macron, a pro-business progressive, as well as Fillon’s scandal (with Le Pen having her own issues) are mucking things up.

Early next month, Le Pen formally launches her candidacy in Lyon.

But first we wait to see what happens in the Netherlands.

In Asia, it was all about Japan this week.  December exports were up 5.4%, year over year, as a pick-up in global demand and the effects of a weaker yen aided Japan’s critical export sector. 

December exports to the U.S. were up 1.3%, yoy, the first increase in 10 months, led by autos and car parts, while exports to China rose 12.5%.

A flash reading on Japanese manufacturing for January came in at a solid 52.8, the best since March 2014.

A reading on inflation for December showed a nationwide core rate of -0.2%, though this is actually an improvement and everyone is forecasting positive inflation soon.  Tokyo, which reports a month earlier, said the core CPI for January was -0.3% yoy.

But after three straight quarters of economic growth, the government and Bank of Japan are hoping companies begin to hike wages.

Japan is also preparing for all possible contingencies regarding trade talks with the United States, the chief government spokesman said on Friday, after Donald Trump dumped the Trans-Pacific Partnership, with Trump seeking quick progress on a bilateral trade agreement with Japan in its place.

As for China, the Lunar New Year holiday is underway so it will be relatively quiet for a spell here...one hopes.

Street Bytes

--The Dow Jones closed the week at 20093, up 1.3%, with the new record-closing high of 20100 set on Thursday.  The S&P 500 added 1.0% and Nasdaq, in finishing the week at another high, 5660, tacked on 1.9%.

I cover some of the major earnings reports below and while many exceeded expectations, the revenue story remains tepid.

You also have the issue of just how quickly the Trump agenda will get implemented, as alluded to above with Paul Ryan’s 200-day plan.  It’s not going to be as easy as some of the players make it out to be.

--U.S. Treasury Yields

6-mo. 0.62%  2-yr. 1.22%  10-yr. 2.48%  30-yr. 3.06%

Treasuries were virtually unchanged, though there was some intraday volatility. The Federal Reserve meets next week and there is no way they are doing anything, but their accompanying statement should telegraph a move in March, as it’s expected there will not only be more clarity on the timing of the Republicans’ plans by then, but the Fed will also get to see January’s and some of February’s data.

--In its annual look at the global energy outlook published on Wednesday, BP said the world is “facing a long-term oil glut as producers scramble to exploit reserves before demand for fossil fuels goes into decline,” according to the company’s assessment.  [Financial Times]

Essentially, BP is saying there is twice as much recoverable oil than estimated demand between now and 2050.

So companies might scramble to ensure their assets were not left “stranded” with demand shifting from fossil fuels to renewables.

Spencer Dale, BP’s chief economist, said the result of this behavior would likely lead to “quite significant pressure to dampen long-run prices.”

But in the here and now, oil remains firmly above $50 per barrel over optimism OPEC’s supply cuts, with the participation of some non-OPEC producers, will stick.

To that end, Saudi Arabia’s production may have dropped from 10.47 million barrels per day in December to 9.9 million in January, according to Reuters, which would confirm recent statements from Saudi Energy Minister Khalid al-Falih.

But I just have to add some comments from a Wall Street Journal piece last weekend, that U.S. producers will be ramping up spending in a big way, such as RSP Permian Inc., which drills exclusively in West Texas, is boosting its budget by 97% to $600 million. 

Hess, one of the bigger drillers in North Dakota, unveiled a $2.25bn budget for 2017, an 18% increase over last year.

Noble said it would spend up to $2.5bn, a 67% jump over 2016.

The Journal quotes an energy analyst at Raymond James & Associates, Praveen Narra, who offers, “Willingness to spend is certainly there,” but he is projecting an average $70 a barrel price for crude this year.

I would just counter, if the U.S. ramps up production all over again, that will easily replace any cuts elsewhere and the world is still awash in oil.  Ergo, I disagree with the $70 call, unless you tell me production is disrupted in the likes of Iran and Iraq, for what would be troublesome reasons.

--Chevron, the second-largest U.S. oil company, reported earnings well below expectations for the fourth quarter and the shares fell 2% in response.

Revenues for Q4 were also less than expected, up 8% from a year earlier.

CEO John Watson said the company has responded to low oil and gas prices (before the recent rebound) by cutting capital spending and operating costs aggressively.

Results from oil and gas production did rebound due to the higher prices, but the refinery operations saw their profits drop to zero.

Capital and exploration spending dropped to $22.4bn in 2016, from $34bn in 2015.

--Boeing reported higher than expected earnings and revenue for the fourth quarter and guided higher for 2017.  Q4 revenue was $23.3bn, slightly higher than the Street forecast, but it talked of delivering 760-765 commercial aircraft this year, which is a nice jump from last year’s 748, these being rather big-ticket items.  BA’s shares rose sharply.

--Lockheed Martin reported better than expected fourth quarter results, though it issued a downbeat outlook for 2017.  Sales rose 19% from a year ago to $13.8bn, with sales in its aeronautics division, the company’s largest, up 23%, due to higher sales of the controversial F-35 fighter jet.  [Lockheed delivered two more for the quarter than expected, though the total for the year was fewer than forecast.]

Shares in Lockheed slid when the company lowered its guidance for earnings this year, owing to weakness in financial reporting at Sikorsky, the military helicopter maker.

--United Technologies, maker of aerospace and building systems (Otis Elevator), also delivered solid earnings that matched estimates, with sales increasing 3% to $14.7bn.  Otis’ sales were flat in China, a key market for UTX.

Carrier, a unit of United Technologies, was strong-armed by President Trump into abandoning plans to shutter an Indiana plant and move jobs to Mexico.

UTX CEO Greg Hayes, though, praised Trump’s plans on corporate tax reform, including provisions to make it easier to repatriate profits earned overseas, citing his company’s $6bn in cash outside the U.S. that can’t currently be brought back effectively.

--Caterpillar shares slid some as sales declined more than expected during the fourth quarter, down 13% to $9.6bn, with sales down in all regions except Asia Pacific, and across all major business categories.  Adjusted earnings of 83 cents a share, however, eclipsed analysts’ estimates of 66 cents.

The results also show that Caterpillar’s workforce shrank by nearly 10% to 95,400 at the end of 2016, from a year earlier.  But the company also guided lower for this year.

Nonetheless, CAT shares, which fell to a 5 ½-year low at the start of 2016, $56.35, finished the week at $98.95.

--Diversified manufacturer Honeywell International posted fourth-quarter revenue that was roughly flat compared with a year earlier, while analysts were expecting an increase, hurt by weakness in its aerospace and energy businesses; aerospace down 8%, energy down 4.7%.

--Whirlpool Corp. announced it would be cutting about 500 jobs as it restructures its Europe, Middle East and Africa dryer manufacturing operations.  The world’s No. 1 maker of home appliances said production at its Amiens, France, facility would cease in 2018.  The U.K. facility in Yate would focus solely on the U.K. consumer, while non-U.K. consumer needs would be concentrated in Lodz, Poland.

--Alphabet shares fell in after-hours trading on Thursday after the Google parent company revealed earnings that, while strong, fell short of analysts’ expectations.

Alphabet’s sales rose 22% in the fourth quarter to $26.1bn.  Excluding the costs of acquiring traffic, revenues were $21.1bn.

Net profits rose to $5.3bn from $4.9bn in the same period a year earlier.  Profits in the key search division grew nearly 17%, led by mobile search and YouTube.

But the so-called “Other Bets” unit that houses products like the Nest thermostat and its self-driving car project posted an operating loss of $1.1bn.  CFO Ruth Porat, though, said “we’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets.”

--Microsoft reported better-than-expected profits for its fiscal second quarter, with revenues reaching $25.84bn, up 1 percent from the same period a year ago.

Microsoft saw strong growth in its cloud services division, although this was undercut by declining sales in its PC division.  Revenues from Azure, the cloud service, grew 93%.

But what you see in the revenue comparisons between Alphabet and Microsoft is the former has almost caught the latter on a net basis.

--Intel recorded sales and earnings in its fourth quarter that beat estimates, with revenues up 10% to $16.4bn, though net income was flat at $3.6bn. 

Client computing, which includes PC chips, grew 4% in the quarter, as declining volume was offset by growth in prices.

For the coming year, Intel said revenues would be flat, but with growth in earnings.

Intel has been working to reduce its dependence on the PC market and reposition itself into the “internet of things,” including artificial intelligence and autonomous cars, where it is behind graphical-processing chip maker NVIDIA.  [Financial Times]

--Verizon posted earnings that were so-so vs. expectations and the shares fell.  Plus it added fewer net subscribers than forecast.

As for the acquisition of Yahoo, VZ said it “continues to work with (them) to assess the impact of data breaches.”  Yahoo announced the deal would be delayed until the second quarter.

Yahoo also announced in its own earnings report that it saw no drop in usage after disclosures about the two big hacking incidents, which the company was less than forthright on with Verizon. The SEC is investigating if Yahoo disclosed the breaches to investors in a timely manner as well.  [They didn’t.]

That said, revenue at Yahoo was up 15% in the fourth quarter.

Thursday, Verizon said it was exploring a combination with Charter Communications Inc. that would unite two media and telecom giants.  But Charter’s ownership includes cable tycoon John Malone and the Newhouse family, which complicates things.

Verizon has more than 114 million wireless subscribers, while Charter provides television to 17 million customers and broadband connections to 21 million.

--Samsung Electronics Co. shrugged off its issues with the recall of 3 million Galaxy Note 7 smartphones, recording its highest operating profit in more than three years in the fourth quarter, $6.1bn, though revenue was up a fraction of a percent.

Samsung is profiting from strong sales of memory chips and display panels, which contribute 68% of profits.

[Separately, Samsung said it has figured out the issue of the Galaxy Note 7 smartphones. They were catching fire because some batteries were irregularly sized, causing overheating.]

--Electronics maker Foxconn Technology Group is contemplating investing $7 billion in a flat-panel screen factory in the U.S., though CEO Terry Gou, one of the richest men in Asia, said he needed incentives to make it happen.  Gou said the Taiwan-based company that is a major contract player in the region, is targeting Pennsylvania as a likely location.  Getting nearly free power, as well as land, is a key.

The factory would involve Sharp Corp., the Japanese electronics maker and flat-panel supplier that Foxconn recently acquired.

Gou did warn, “The rise of protectionism is unavoidable.”  The company operates factories in China that churn out Apple’s iPhones.

--The automakers that have been groveling at the feet of Donald Trump have huge costs in abandoning plants outside the U.S., such as Ford taking a $200 million charge for shelling a $1.6bn small car facility in Mexico.  For now, though, the CEOs continue to paint a positive picture on the new environment.  But there is little chance they are going to be building new plants anytime soon in the U.S., which are huge commitments; rather they will expand at existing facilities where appropriate.

--McDonald’s debuted all-day breakfast in October 2015 – selling McMuffin sandwiches and the like as part of a plan to turn around sagging sales under then-new CEO Steve Easterbrook.  It worked great...until perhaps now, as same-store sales dipped in the fourth quarter for the first time in a year and a half, though the decline was smaller than expected, 1.3%.

Internationally, McDonald’s fared better, with sales at restaurants open at least 13 months rising 2.7%.

The next few quarters will be interesting to see if the bloom is totally off the rose, though now the company has introduced some new versions of the Big Mac.  I’ve got a hankering for the Giant model.

--Applebee’s Grill & Bar’s owner DineEquity warned that a move to mandate each of the chain’s 2,000 eateries add wood-fired grills to their kitchens to support new menu items, including hand-cut steaks, has backfired in a big way.  Some analysts are expecting same-store sales to decline as customers rebelled against the more expensive meals.

So now Applebee’s is frantically running lower-cost promotions, like chicken-and-shrimp dishes for $9.99.

--Starbucks CEO Howard Schultz, who is leaving that role in April to be executive chairman, admitted that disappointing U.S. sales growth of 3% for the fourth quarter was due in part to “congestion” in the stores that is prompting some people to leave without buying anything.  The popularity of the mobile order-and-pay option, which was supposed to make getting a drink easier, has caused bottlenecks.

While sales were up, due to people tacking on purchases like sandwiches, customer visits were flat, with the company cutting its sales forecast for the year.

Same-store growth rose 6% in China, which I would be concerned about given my gloomy projections for U.S-China relations and the ever-present danger of economic nationalism there.

Schultz has been correctly warning that the retail landscape will undergo a “seismic” shift, not just for bricks-and-mortar retail but also less foot traffic for restaurants, though he doesn’t think this will include Starbucks.  Research firm NPD said it expects total restaurant industry traffic to remain “stalled” this year.

Kevin Johnson takes over from Schulz on April 7, as Schulz begins to gear up for a 2020 presidential run.  [So many of us believe.]

--J&J reported a smaller-than-expected rise in fourth-quarter sales, with slowing demand for its medical devices and a stronger dollar, the latter an old story for multinationals. Overall sales rose just 1.7% to $18.11bn, with sales in its medical device biz up 0.2%.

But then the healthcare company announced it was acquiring Actelion, a Swiss drugmaker, for $30 billion.

--DuPont reported earnings well above expectations, as it cut costs ahead of its planned merger with Dow Chemical, the closing date for which continues to be pushed back due to issues with regulators, who remain concerned with issues of competition for crop protection chemicals and seeds.

--Homebuilder D.R. Horton Inc. reported results that handily beat the Street, posting revenues substantially above estimates.

--American Airlines reported a recovery in revenue in the fourth quarter, with total rev per available seat mile, a key industry metric, rising 1.3% year on year, the first such increase since the fourth quarter of 2014.

Several airlines have reported a “Trump bump” in bookings after the election.  On Tuesday, United Continental Holdings reported better-than-expected net income, helped in part by unexpectedly strong demand in the wake of the vote.

--Alibaba blew through analysts’ estimates in its fiscal third  quarter, with revenue up 54% to $7.7bn, while raising its forecasts for full-year revenue growth.  The company has the largest ecommerce platform in China and it attributed the “blowout quarter” to more users spending more time on its various sites, including 493m mobile monthly active users.  As Deng would have said, ‘pretty, pretty good.’  [Mao would have shot a third of the users.]

--The share of American workers in unions fell to the lowest level on record in 2016.   Only 10.7% of workers were union members, down from 11.1% in 2015, and from more than 20% in the early 1980s.  [Wall Street Journal]

--Mattel Inc. said the holiday season was disappointing, with fourth-quarter sales of $1.83bn vs. $2bn the year before.  CEO Christopher Sinclair, who is being replaced by Google executive Margaret Georgiadis on Feb. 8, cited a “significant U.S. toy category slowdown.”

It was a joyless holiday season.  Sad.

--After sponsoring the U.S. Olympic team since 1984, Anheuser-Busch InBev is ending its partnership with the U.S. Olympic Committee after 16 Olympic games.

Bud wasn’t alone in ending their sponsorships post-Rio.  Others included TD Ameritrade, Citi and Hilton.  Coca-Cola, McDonald’s, P&G and Visa maintain their worldwide sponsorship deals with the USOC.

Anheuser-Busch will continue to have a major presence in events such as the Super Bowl.

When drinking domestic, I opt for the plain taste of Coors Light myself.

--The inauguration of President Trump was watched by 30.6 million television viewers, according to Nielsen, which compared to Barack Obama’s 20.6 million viewers for his second inaugural. But also 37.8m for Obama’s first swearing-in ceremony in 2009; Bill Clinton’s 29.7m in 1993, and the largest TV audience for an inauguration in 1981, Ronald Reagan’s 41.8 million.

Of course the Trump team is talking about the millions who watched on their mobile phones, iPads and such, and they are right, but it’s also hard to quantify.

--The U.S. Drought Monitor said that as of Thursday, over 51% of California remains in “moderate” to “extreme”, compared with more than 95% of the state being listed as being in some form of drought a year ago.

But the drought is over, says moi. As of Thursday, the water content held by the state’s snowpack was 191% of average for the day.

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: So much for a ceasefire.  Syrian Islamist rebel group Ahrar al-Sham said Thursday six other rebel factions had joined its ranks in northwestern Syria in order to fend off a major assault by powerful Jabhat Fateh al-Sham, once allied with al-Qaeda and formerly known as the Nusra Front.  Fateh al-Sham attacked Free Syrian Army (FSA) groups west of Aleppo, accusing them of conspiring against it at peace talks in Kazakhstan this week, Fateh al-Sham not being invited.

Ahrar al-Sham presents itself as a mainstream Sunni Islamist group.  But it is considered a terrorist group by Moscow and did not attend the Russian-backed Astana peace talks.

The FSA groups have received backing from countries opposed to Syrian President Assad such as Gulf Arab states, Turkey and the United States. 

Fateh al-Sham has been targeted by a spate of U.S. airstrikes.  Yes, it’s complex.

Meanwhile, Donald Trump is calling for safe zones, which is beyond idiotic, at least given the current state of affairs.  Longtime readers know I said this war was over in 2012, once the U.S. didn’t work with Turkey on the establishment of safe zones near the Turkish border, years before Russia entered the fray, but Obama was more concerned about the 2012 election in the U.S.  There were about 20,000 dead in the one-year-old civil war at that point.  We had proved in Iraq and the Balkans that no-fly/safe zones could work.  We blew it.  Too late now.

Separately, I have been a big fan of Democratic congresswoman Tulsi Gabbard (Hawaii) for her independent thinking on foreign policy, Gabbard being an Iraq War veteran and a prominent member of both the House Armed Services and Foreign Affairs committees.

But Gabbard is taking bipartisan heat for her secret trip to Syria (accompanied by former Democratic congressman Dennis Kucinich) and her meeting with Syrian President Assad.

“There’s a pretty unanimous feeling of shock and disgust,” a Democratic aide who works on national security issues told The Hill.  “Everybody I’ve talked to on both sides of the aisle, I think people are just stunned.”

Republican Rep. Adam Kinzinger (Ill.), another Iraq War veteran, told The Hill in an email:

“An elected official, a representative of the United States, went on a secret trip to meet with the brutal dictator who had murdered nearly half a million of his own people – it’s reprehensible and cannot be justified.

“The actions of Congresswoman Gabbard have put our nation’s reputation and foreign policy concerns at high risk and I couldn’t be more disgusted.”

Rep. Ed Royce (R-Calif.), chairman of the Foreign Affairs Committee, is seething.

“Assad has exterminated hundreds of thousands of Syrians.  This trip was not authorized by the committee, and it was just wrong,” as noted by a committee spokesman.

But the second-ranking Democrat on the Foreign Affairs panel, Rep. Brad Sherman (Calif.), defended Gabbard.

“Congress has an equal role in the conduct of American foreign policy even if Congress doesn’t negotiate directly on behalf of the United States,” Sherman said.

“Sometimes we have to hear from and meet with leaders that are detestable,” he added.  “I have my disagreements with Tulsi on Syria policy, but knowing Tulsi, I am confident she comported herself admirably on the trip.”

For her part, Gabbard said she had no intention of meeting with Assad on her fact-finding mission, but she grabbed the opportunity when it arose.

“I think we should be ready to meet with anyone if there’s a chance it can help bring about an end to this war, which is causing the Syrian people so much suffering,” she said in a statement.

I think what is upsetting so many is that she gave congressional leadership zero heads up she was going. Gabbard says she kept it secret “for obvious security reasons.”

I saw Gabbard’s first interview on CNN with Jake Tapper when she returned and what is just as controversial is her stance there is no moderate Syrian opposition, and that everyone the Assad regime has been carrying out his campaign of violence on are all terrorists.

In Iraq, the battle for Mosul has reached a critical stage as the Iraqi Army moves on west Mosul, ISIS’ last major stronghold in the country.  It took three months to reconquer east Mosul but deadlier battles are ahead on the city’s west bank, with three quarters of a million civilians living there and at “extreme risk,” the United Nations warned.  It is estimated nearly half of all the casualties thus far in the battle are civilians so the risk today is indeed enormous.  But in eastern Mosul, schools have begun to reopen amid efforts to resume a normal life.

David Gardner / Financial Times

“After six years of war in Syria, Russia and Turkey have brought governments and rebels together in Kazakhstan, face-to-face for the first time, but at opposite sides of the same room glaring at each other.  These talks in Astana are most unlikely to bring peace to Syria – but they will probably cement realignment, leaving the U.S. substantially out of the regional picture from the Levant to Libya.

“True, unlike at previous talks in Geneva, convened by the U.S. and Russia under UN auspices, there are mainstream rebel fighters at the table rather than the five-star hotel rebels who have so signally failed to build a cohesive opposition and alternative government.  Moscow’s ally in Syria, Iran, is minding the government delegation, while Turkey – until now set on toppling the regime of Bashar al-Assad – is supposed to be prompting the rebels.  Everyone notionally agrees Astana is a bridge to resumed UN-run talks in Geneva next month; it could just as easily be a bypass. Either way, this is a diplomatic dance orchestrated in all its essentials by the Kremlin.

“President Donald Trump and his team talk about what they are pleased to call ‘alternative facts.’ The master of the Kremlin he so admires, President Vladimir Putin, is busy with his friends creating alternative facts across the Middle East.

“ ‘Putin intends to start the post-Obama chapter in Syria on his terms, confronting the new American administration with the fait accompli of [Assad] regime victory in Aleppo,’ writes Fabrice Balanche of the Washington Institute for Near East Policy.  ‘On the diplomatic front, the new Turkey-Russia-Iran alliance threatens to marginalize other outside actors.’....

“Now, even though Ankara is purveying ‘alternative facts’ to disguise its shift on Syria, Turkey no longer seeks the removal of Mr. Assad.  ‘The facts on the ground have changed dramatically,’ Mehmet Simsek, Turkey’s deputy prime minister told an audience in Davos last week.  ‘Turkey can no longer insist, you know, on a settlement without Assad,’ he said.  ‘It’s not realistic.’

“Mr. Putin, for whom Syria is arguably about securing Russian superpower parity with the U.S., has just signed long-term leases with the Assad regime for naval and airbases in Syria. Iran and its militia proxies face an unpredictable but hostile Trump administration.  Tehran may be trying to replicate its success with Lebanon’s Hizbullah – the most potent paramilitary organization in the world – with the militia coalitions it has stitched together in both Iraq and Syria.

“President Trump will have to make decisions about these emerging new facts on the ground. He may want to tilt towards Mr. Putin, allying against ISIS and Islamist extremism, and hoping Moscow can restrain Tehran’s muscle-flexing across the region. But that would have collateral costs, not least in Europe and within NATO.”

Iran: Iranian President Hassan Rouhani faces a tough test in May’s upcoming election, with a new opinion poll, conducted in December by the University of Maryland, showiing 69% of Iranians view Rouhani either very favorably or somewhat favorably, which is a decline from 82% in a June poll by the university.  Those who view him very favorably has fallen from 61% in August 2015 to 28% in the new poll.

Rouhani is perceived to have failed to deliver on his campaign promises, with 51% saying the country’s economic conditions were worsening, up from 43% in June.  Almost three-quarters said the nuclear deal hadn’t improved people’s living conditions.

And as I noted a few weeks ago, Rouhani lost a key ally with the passing of former President Rafsanjani.

But, Rouhani still wins handily over two potential conservative candidates, according to the same survey.  [Wall Street Journal]

Turkey: President Recep Tayyip Erdogan’s campaign to secure sweeping executive authority won the approval of parliament, 339-142, last weekend and now Turks will have the final say in a referendum that is likely to be held in April.

Among the proposed changes, the job of prime minister would be abolished and Erdogan would have powers unrivaled since the days of Ataturk.

Erdogan’s supporters say the changes are needed to overcome deepening security and economic challenges, while critics state the obvious...Erdogan would be a dictator, cracking down further on political opponents, journalists, academics and activists.

Erdogan had been prime minister for more than a decade, before he sought to empower the presidency after his election to the position in 2014.

Separately, regarding relations with Greece, Ankara can’t be happy with Greece’s Supreme Court, which ruled against extraditing eight Turkish soldiers whom the Turkish government accuses of being in last July’s attempted coup.  The eight fled to Greece in a helicopter after the coup attempt but say they were not involved.

Turkey had demanded they be returned to stand trial.  The soldiers say their lives would be in dangers.

The court’s decision is final and cannot be appealed against.

Israel: The government has announced plans to build 2,500 more homes in Jewish settlements in the occupied West Bank.  Palestinian officials said the plans undermined peace hopes by building on land they want for a future state.

It is the second such announcement since President Trump took office, as he has indicated he would be more sympathetic to settlement construction than the Obama administration.

About 500,000 Jews live in 140 settlements built since Israel’s 1967 occupation of the West Bank and East Jerusalem.  The settlements are considered illegal under international law, which Israel disputes.

Separately, officials say the Obama administration quietly released $221 million in funds to the Palestinian Authority in its waning hours, which GOP members had been blocking.  The Obama team reportedly notified Congress literally hours before the inauguration.

The funds had been approved by Congress in budgets years 2015 and 2016, but some GOP lawmakers placed holds on it over moves the PA had taken to seek membership in international organizations.

The Trump White House is looking into the move.  Prime Minister Benjamin Netanyahu is going to visit the White House in February.

But Netanyahu was interviewed by Israeli police for a third time on Friday as part of a criminal investigation into abuse of office.  There are two cases.  One involving gifts given to him and his family by businessmen and the other related to conversations he held with an Israeli publisher.  The prime minister has denied any wrongdoing.

If charges are brought, Netanyahu is likely going to have to step down after 11 years in office, spread over four terms.

China: Beijing was not included in the Trans-Pacific Partnership trade pact but it’s unclear just how much China will benefit from U.S. withdrawal from the TPP. China has been promoting its own trade pacts as alternatives such as the Regional Comprehensive Economic Partnership, along with its “One Belt, One Road” initiative.  President Xi Jinping is gearing up to meet regional leaders in Beijing in May to discuss how to implement it all.

But as one analyst, Lin Limin, told the South China Morning Post, countries such as Singapore and Vietnam that intended to join the TPP, always “put their feet in two boats.”

“Even without the TPP, they will always keep a distance from China and will never put all their eggs in one basket.”

Australia, however, said it would push ahead with involvement in the TPP, even without the U.S., saying it was open to China joining the agreement.  Fellow TPP member Chile said it also planned to seek trade deals with China.

Japan said it would continue to try to convince the U.S. to be involved and that it was important to have Washington in the pact.

Meanwhile, Chinese Premier Li Keqiang called for China and Germany to play a leading role to ensure the stability of international markets amid an “uncertain” global political and economic climate. During a call with the German chancellor, Premier Li said “international political and economic scenes are facing several uncertain factors,” Xinhua reported.

On a different note, Monday, White House spokesman Sean Spicer said the U.S. would “make sure we protect our interests” in the South China Sea to prevent China from taking territory in the region.

In response the Chinese foreign ministry said Beijing would “remain firm to defend its rights in the region.” Chinese media said Spicer’s comments would require Washington to “wage war.”

Following his inauguration, Chinese diplomatic observers said China should brace itself for a trade war.  One strategist, Liu Qing, from the China Institute of International Studies, a think tank in Beijing, told the South China Morning Post:

“Trump may take indirect action against China, such as increasing pressure on China’s neighboring countries to affect the regional investment and trade environment and harm Chinese interests,” Liu said.  “This could bring instability to the security of the Asia-Pacific region.”

Liu added, however, that the foundation of Sino-U.S. relations was unlikely to undergo any dramatic shift.  He also said: “From China’s point of view, we shouldn’t scramble to react to every word he says, but rather, take a long vision in the strategic thinking of how to work with the new U.S. president.”

North Korea: Last August, Thae Yong-ho became one of the highest-ranking officials ever to defect and in an interview in Seoul with the BBC’s Stephen Evans, Thae said he believes leader Kim Jong-un would be prepared to attack the U.S. with nuclear weapons, but that the regime will fall one day.

Thae was a diplomat in London when he suddenly vanished and showed up in Seoul.  He won’t say if the secret services of Britain, the U.S. or South Korea helped him and his family get out.

Thae reckons that Kim is so ruthless, that if his very survival were threatened, he would lash out and destroy whatever he could.

South Korea: The outgoing chief judge of South Korea’s Constitutional Court urged the court on Wednesday to conclude the impeachment trial of President Park Geun-hye by March 13, when the retirement of another judge will reduce the nine-judge bench to seven. Chief Judge Park Han-chul, who retires Jan. 31, is concerned the reduction from 9 to 7 on the court would distort the court’s impartiality. Seven is the minimum required by law to rule on an impeachment.  [Reuters]

Russia: President Trump and Russian President Putin are expected to have their first conversation since Trump took office on Saturday, first noted by the Kremlin.  So we’ll see what the readouts are from both sides, in the wake of the Obama administration, which issued sanctions against Russian businesses and individuals for its alleged election-related cyberattacks, backing of separatist forces in Ukraine and illegal annexation of Crimea.

Separately, Russian media has reported that a Russian intelligence officer and a cyber-security investigator were arrested last month on treason charges for allegedly passing information to U.S. intelligence services.

And then there’s Dmitry Kiselyov, the Kremlin’s so-called “chief propagandist,” who said some of the following on his widely watched Sunday news show.

In talking about the inauguration of Donald Trump, his show opened with scenes of the “rioting” in Washington, D.C., but then Kiselyov mainly parroted Trump’s own inauguration speech, focusing on the “carnage” supposedly consuming American streets, while praising the ceremony as the best show Washington has ever staged.

Kiselyov said President Obama had a “stone face” and Michelle Obama “bit her lip the whole time,” adding Michelle “looked like a housemaid without an apron, sitting next to Melania Trump.”

By contrast, Kiselyov insisted the Trumps were perfect, including their ballroom dance later that evening, when they danced to Frank Sinatra’s “My Way” – a very “Trumpovsky” choice, Kiselyov explained, as Trump “really did do it his own way.”

Kiselyov praised Trump for never once uttering the words “democracy” or “NATO.”

Will Donald Trump be a good president?  As the Moscow Times described it:

“He might, Kiselyov told viewers, before the camera dramatically swooped in for a close-up, and the host added, ‘IF HE ISN’T KILLED.’  Despite concerns about assassination plots, Kiselyov said Trump has displayed bravery in the face of danger, even exiting his armored limousine briefly on Friday to walk alongside his wife in the Inauguration Parade.

“ ‘Trump, as we say in Russian, is a muzhik,’ Kiselyov said, telling viewers that America has elected a true man’s man.”

This is the man to follow, Kiselyov, to see just how chummy Putin and Trump become, or the opposite.

Kenya: Islamist Shabaab fighters attacked a Kenyan military base in Somalia in the al-Qaeda linked group’s second attack this week on Friday.   The attack on the Kenyan Defense Forces base was close to the Kenyan-Somalia border and began with suicide truck bombers blasting their way into the camp, followed by militants attacking from different directions, as reported by Agence France Presse.

Shabaab claimed to have overrun the base, killing 57 Kenyan soldiers.

A KDF spokesman denied the claims, saying Kenyan soldiers fought back, killing many of the Islamists.  The truth probably lies somewhere in between as Shabaab frequently exaggerates on its end, and Kenya downplays its losses.

Earlier in the week, 28 people were killed when Shabaab launched an attack on a hotel in Mogadishu.  That death toll is close to accurate.

Somalia is to hold a presidential vote early in February.

Gambia: More than $11 million is missing from the country’s state coffers following the departure of long-time leader Yahya Jammeh, an adviser to President Adama Barrow said early this week.  Luxury cars and other items were reportedly loaded onto a Chadian cargo plane as Jammeh left the country on Saturday.  He had refused to accept election results but finally left after mediation by regional leaders and the threat of military intervention.

President Barrow had remained in neighboring Senegal but went home a few days after Jammeh’s departure.  Jammeh is reported to be in Equatorial Guinea.

Mexico: President Enrique Pena Nieto, part of a statement to his nation on Thursday:

“As the president of Mexico, I fully assume responsibility to defend and to look after the interests of Mexico and the Mexican people.

“It is my duty to confront problems and meet challenges head on.

“On the basis of the final report from the Mexican officials who are currently in Washington, and after consultation with representatives of the Senate and the National Conference of Governors, I will make choices about the next steps to take.

“Mexico offers and demands respect, as the fully sovereign nation that we are.

“Mexico reaffirms its friendship with the American people and our willingness to reach agreements with their government, agreements for the benefit of Mexico and of the Mexican people.”

Random Musings

--FBI Director James B. Comey was asked by President Trump to stay on the job, which will keep Comey at the center of the bureau’s investigation into several Trump associates and their potential ties with the Russian government.

Under federal law, the FBI director is appointed to a 10-year term, designed to overlap more than one administration to give the director independence and insulate the job from politics.  Comey was appointed by President Obama in 2013.  The director can be fired by the president.

The Justice Department’s inspector general is investigating Comey’s handling of the Clinton email case, with the FBI saying it welcomes the probe, believing more information will be made available to the public to help explain Comey’s actions.

--Rich Lowry / New York Post

“The nation’s foremost culture warrior is President Trump.

“He wouldn’t, at first blush, seem well-suited to the part.  Trump once appeared on the cover of Playboy. He has been married three times.  He ran beauty pageants and was a frequent guest on the Howard Stern radio show. His ‘locker-room talk’ captured on the infamous ‘Access Hollywood’ tape didn’t, shall we say, demonstrate a well-honed sense of propriety.

“There is no way Trump could be a credible combatant in the culture war as it existed for the last 40 years.   But he has re-oriented the main lines of battle away from issues related to religion and sexual morality and onto the ground of populism and nationalism.  Trump’s culture war is fundamentally the people versus the elite, national sovereignty versus cosmopolitanism and patriotism versus multiculturalism.

“It’s the difference, in a nutshell, between fighting over gay rights or immigration, over the breakdown in marriage or Black Lives Matter....

“Yet any of his detractors who is warning, out of reflex more than anything else, of an attempt to control women’s bodies or establish a theocracy is badly out of date. Donald Trump has many ambitions, but imposing his morality on anyone clearly isn’t one of them.

“Instead, he wants to topple a corrupt establishment that he believes has put both its selfish interests and a misbegotten, fuzzy-headed altruism above the well-being of the American people.

“This isn’t just a governing program, but a culture crusade that includes a significant regional and class element. It channels the concerns of the Jacksonian America that is Trump’s base and, as Walter Russell Mead writes in an essay in Foreign Affairs, ‘felt itself to be under siege, with its values under attack and its future under threat.’

“The revolt of the Jacksonians as exemplified in Trump’s presidency sets up a cultural conflict as embittered as any we’ve experienced in the post-Roe v. Wade era.

“ ‘If the cosmopolitans see Jacksonians as backward and chauvinistic,’ Mead writes, ‘Jacksonians return the favor by seeing the cosmopolitan elite as near treasonous – people who think it is morally questionable to put their own country, and its citizens, first.’

“This backdrop will add intensity to almost every fight in the Trump years....

“His emphasis on borders, cultural coherence, law and order and national pride will engender a particular fear and loathing. It is an article of faith among the cultural elite that these priorities – despite what they consider the aberration of November’s election – are the relics of a rapidly disappearing America that can’t possibly represent the country’s future. Trump and his supporters beg to differ.

“The culture war is dead; long live the culture war.”

Oh joy.

--White House strategist Stephen Bannon said in an interview with the New York Times that news organizations had been “humiliated” by the election outcome and repeatedly described the media as “the opposition party” of the current administration.

“The media should be embarrassed and humiliated and keep its mouth shut and just listen for a while,” Bannon said.

“I want you to quote this,” he added.  “The media here is the opposition party. They don’t understand this country. They still do not understand why Donald Trump is the president of the Untied States.”

Bannon, long a right-wing bomb-thrower, echoed Trump’s claims he was in “a running war” with the media and called journalists “among the most dishonest people on earth.”

Bannon is responsible for Trump’s nationalist vision. 

“The elite media got it dead wrong, 100 percent dead wrong,” Mr. Bannon told the Times’ Michael M. Grynbaum in a telephone interview, calling it “a humiliating defeat that they will never wash away, that will always be there.”

Bannon initiated the rare conversation in defense of White House press secretary Sean Spicer, whose credibility plummeted last Saturday after Trump pushed him out (with Bannon egging him on as well) to face the press corps over the crowd estimates.

Asked if he was concerned Spicer had lost his credibility with the news media, Bannon ‘chortled.’  “Are you kidding me?” he said. “We think that’s a badge of honor.  ‘Questioning his integrity’ – are you kidding me?   The media has zero integrity, zero intelligence, and no hard work.”

--The battles over the Keystone XL and Dakota Access pipelines are far from over, but now instead of appealing to a friendly Democratic administration, opponents will be taking the battle to the federal courts.

Greenpeace director Annie Leonard said that “instead of pushing bogus claims about the potential of pipelines to create jobs, Trump should focus his efforts on the clean energy sector where America’s future lives.”

--President Trump said on Twitter that he would “send in the Feds” if Chicago can’t fix “the horrible carnage” with violent crime. 

--According to insiders, Caroline Kennedy, home after three years as U.S. ambassador to Japan, is supposedly full of confidence and ready to run for a “New York congressional or Senate seat, with even possibly bigger political objectives down the road,” one confidante told the New York Post.

Another close source revealed, “Caroline is seen in some quarters as the next Hillary Clinton.  She has the Kennedy name but no Clinton baggage.”

Well, if you take this seriously, 2018 is the earliest she could run and she would have to target the seat of New York’s junior Democratic senator, Kirsten Gillibrand, who has her sights on the White House.  Or Caroline could go after Rep. Carolyn Maloney, the liberal Democrat who represents Kennedy’s district.

--New York City Mayor Bill de Blasio revealed at a press conference Wednesday that he has been interviewed by the Manhattan district attorney’s office on whether the mayor broke state election laws trying to help Democrats win the state Senate in 2014.

The mayor said he had not gone before a grand jury, but was interviewed by the prosecutor’s office “a few weeks back.”  “We,” as he put it, meaning the mayor and his attorneys.

And with that he cut off the press conference.

But Friday, we learned federal prosecutor Preet Bharara wants to interview de Blasio and Hizzoner has agreed to do so.

Ergo, ya never know. The door could open for Hillary.

--The Wall Street Journal noted that “this year’s crop of best-picture Oscar nominees appears to be the least commercially successful since the Academy of Motion Picture Arts and Sciences expanded the category to more than five films seven years ago.”

And as Kyle Smith of the New York Post noted:

“Proving yet again that Oscar voters are primarily interested in movies that celebrate the industry all Oscar voters work in, (the Academy) embarrassed itself by giving a record-tying 14 nominations to ‘La La Land,’ a fond but so-so pastiche of great musicals that is now inexplicably keeping company with some of Hollywood’s greatest films.

“ ‘La La Land’ got more nominations than ‘Gone with the Wind,’ ‘Casablanca,’ ‘The Godfather,’ ‘Schindler’s List,’ ‘Return of the King,’ ‘Ben-Hur’...

“Plagued by mediocre songs, a kewpie-doll lead performance by Emma Stone, a flat one by Ryan Gosling and the nonstop sensation that every idea the film has was better executed in the movies it’s imitating, ‘La La Land’ isn’t nearly the best picture of this year, much less one of the all-time greats.

“ ‘La La Land’ got two more nominations than ‘My Fair Lady,’ three more nominations than ‘West Side Story,’ four more nominations than ‘The Sound of Music’....

“If ‘La La Land’ wins Best Picture, it’ll be the fourth time in six years that the academy gave its top honor to a movie about The Magic of the Movies ™.

“I realize Oscar night is all about an industry inviting us to adore it while it adores itself, but let’s cut out the nonsense.  From now on, every winner has to give the same speech: ‘I love me!  I really, really love me!”  It’ll be more honest, and we’ll all get to bed by 10 o’clock.”

--“Saturday Night Live” writer Katie Rich tweeted that 10-year-old Barron Trump “will be this country’s first homeschool shooter.”

Talk about an idiot.  She was apparently fired, though as I write, SNL hasn’t issued an official statement.

--According to the Food Standards Agency, you should avoid burnt toast to reduce your intake of acrylamide, a cancer causing chemical.  Also be careful with chips and potatoes, which should be cooked to a golden yellow color, rather than brown.

Cancer Research UK, however, said that the link shown in mice has not been proven in humans.

But I would say this makes total sense and is nothing new.  We’ve known for years that burning a steak, for example, releases acrylamide (but I like mine burnt anyway). 

The FSA also says potatoes and parsnips should not be kept in the fridge.

As noted in the BBC, “This is because sugar levels rise in the vegetables at low temperatures, potentially increasing the amount of acrylamide produced during cooking.”

So you’ve been warned.

--When I was a kid, I vividly remember Jan. 27, 1967.  I was a news junkie even then, nearing age 9, and I was watching the national news on our black and white TV, and was transfixed by the Apollo 1 disaster that claimed the lives of American astronauts Gus Grissom, Ed White and Roger Chaffee.

As Taylor Dinerman writes in the Wall Street Journal:

“Apollo 1 was supposed to be a test flight in low-Earth orbit. Instead the command module was consumed by fire during a rehearsal. It became the first time NASA had to conduct an investigation of a fatal accident.  It would not be the last....

“NASA identified the causes, among them: ‘a sealed cabin, pressurized with a high-pressure oxygen atmosphere’; extensive ‘combustible material in the cabin’; ‘vulnerable’ wiring and plumbing; and ‘inadequate provisions’ for rescue or escape.  A review board observed that ‘established requirements were not followed with regard to the pre-test constraints list.’

“NASA and its contractors took those lessons to heart and revised the spacecraft design.  Most important, they rededicated themselves to following protocols strictly.  The lessons of Apollo 1 made possible the ultimate success of the Apollo project – putting men on the moon, starting with Apollo 11 in 1969, and saving three astronauts in the 1970 Apollo 13 emergency.

“But NASA’s culture of uncompromising engineering excellence faded after the final Apollo-Soyuz mission in 1975. Lack of presidential leadership, budget cuts and national malaise all contributed to the culture that led to the 1986 Challenger and 2003 Columbia space shuttle disasters....

“The sacrifice of Grissom, White, Chaffee and the other lost sapcefarers reminds us that our human migration off the planet will always require hard work and readiness to take great risks.”

---

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

God bless America.

---

Gold $1193
Oil $53.20

Returns for the week 1/23-1/27

Dow Jones  +1.3%  [20093]
S&P 500  +1.0%  [2294]
S&P MidCap  +1.3%
Russell 2000  +1.4%
Nasdaq  +1.9%  [5660]

Returns for the period 1/1/17-1/27/17

Dow Jones  +1.7%
S&P 500  +2.5%
S&P MidCap  +2.2%
Russell 2000  +1.0%
Nasdaq  +5.2%

Bulls 60.6
Bears 17.3  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore

 



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Week in Review

01/28/2017

For the week 1/23-1/27

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated. Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ  07974.  Special thanks this week to Jerry S. and Scott O.

Edition 929

*If you print this column out, this one is easily the longest ever...well in excess of 50 pages.

Washington, Inauguration Aftermath and the First Week

Well I’m stressed out.  How about you?  Our new president, Donald J. Trump, not only showed what a narcissist he is, which we already knew, but the thin-skinned leader of the Free World at times was flat-out unhinged.

At the same time, there has never in anyone’s memory been a first week to a presidential term like this one and no one can say President Trump wasn’t a man of action.  One move after another was the fulfillment of a campaign promise.  But that means that at least for now, the country will remain more divided than ever.  If you focus on nothing else in this titanic column, make sure you read Frank Luntz’s comments below.

We’re going to have to learn to separate rhetoric from reality in the Trump White House.  And we’re definitely going to have to learn to follow my adage, ‘wait 24 hours.’  At least I’ll be sticking to it.

I do have to start out with one particular item, Donald Trump’s claim of voter fraud.  What startled me is that no one said what should be obvious to everyone.  This very discussion, thrust forward by our own president, not only undermines our democracy and his very election with the claims he has made, but it is giving the Kremlin exactly what it has been looking to do since the arrival of Vlad the Impaler.  Undermine Western democracy both here and in Europe. 

Here the Kremlin has been making mischief in Europe, especially with the upcoming elections in the Netherlands, France and Germany, and it involved itself heavily in our own this fall, yet President Trump is saying, ‘Yeah, the system is rigged...it is fraudulent.’  This is nuts!

I’ll have far more on this topic next week.  For now a reminder.  This is a running history.  Trump’s Inaugural Address was important, but the timing was such last Friday that I couldn’t include the commentary of others aside from my own.

So herewith, for the record....comment on Donald Trump’s Inaugural Address...after which I’ll cover his first week like no other.

Michael Gerson / Washington Post

“Some of us approach Inauguration Day with a kind of democratic reverence.  Its customs encourage the love of country.  The best inaugural addresses offer historical context, emphasize shared values, encourage engaged citizenship, express goals worthy of a great nation, and at least attempt to wrap it all up in a neat package of rhetorical ambition.

“For Donald Trump, who lives in an eternal now, Inauguration Day was Friday, offering another opportunity to deliver a less raucous version of his stump speech – a chance to slam the establishment and make Peronist promises to reverse globalization.  Apart from a few nice phrases undoubtedly borrowed from other, superior drafts, the ‘American Carnage’ speech was blunt, flat and devoid of craft. Also devoid of generosity, humility and grace.  Making it perfectly credible as the work of Trump’s own hand.

“Trump’s inaugural was instructive in this way: America has chosen a man for whom traditions and norms mean nothing (less than nothing when he finds them constraining).  He used the center stage of American public life to belittle nearly everyone seated around him.  They have ‘reaped the rewards of government,’ prospered at the expense of the people, celebrated while families struggled, and are ‘all talk and no action.’

“These, of course, are the only people who can take action – legislative action – after the Obama-era executive orders get rescinded.  Trump certainly did not appeal to members of Congress for help. So he must be counting on ‘the people’ to intimidate their representatives into supporting the Trump agenda.  I wonder, for example, how Senate Majority Leader Mitch McConnell might respond to this pressure tactic, particularly after being treated to Trump’s rhetorical version of the Red Wedding on the West Front of the Capitol.  (Non- ‘Game of Thrones’ fans will need to look this up.)”  [Ed. I’m a ‘Game of Thrones’ watcher...this is a great analogy.]....

“Trump’s announcement of ‘the hour of action’ has an ominous ring.  He demonstrates no respect for norms of presidential magnanimity and self-restraint.  He has declared that his ‘oath of allegiance’ was taken ‘to all Americans’ rather than to the Constitution....And he has claimed a general mandate to interpret and pursue his vision of the people’s interests.  In the past, we have, I have, been mistaken to discount and downplay the plain meaning of Trump’s words. The oath of office has turned a laughable Putin imitation into a very real concern....

“Trump’s inaugural speech is a funeral oration at the death of Reaganism, and of conservatism more broadly.  In his first inaugural, Ronald Reagan declared government to be ‘the problem.’  When Trump says that government is the problem, he means all government but himself.”

In Moscow, as reported by the Wall Street Journal, “more than 100 Russians from the nationalist-leaning sectors of society gathered in a Soviet-era telegraph office, where they drank champagne and toasted the new U.S. president.”

Editorial / Financial Times

“Opinion polls show that Mr. Trump is more unpopular than any new president in modern history.  On every defining issue of the age – immigration, terror, climate change, inequality – America’s citizens are fiercely at odds with each other.  Mr. Trump has yet to show that, though he may have widened these rifts on the campaign trail, he can narrow them as leader of the nation. This is his great challenge.

“He can start by fulfilling promises. The president has pledged to help America’s ‘forgotten men and women’: those who globalization has left with less. This will take time, but making a good start will do much to mollify Mr. Trump’s critics on the left and will set an example for much of the developed world, struggling with similar problems, to follow.

“It is therefore crucial that he shows he is not satisfied with pleasing the Republican majorities in Congress.  His ascendancy was a rebuke to the philosophies of both parties.  If his economic efforts end at the standard Republican fare of slashing regulations and tax – perhaps flavored with a bit of protectionism – the states of the rust belt, which carried Mr. Trump to victory, will see little of the benefit.

“It was Mr. Trump’s talk of fiscal stimulus and infrastructure spending that sparked the post-election market rally. He repeated the point at the inaugural. In his own words, ‘now arrives the hour of action.’

“Beyond America’s borders, the rules-based system that has long defined global trade and security is under acute pressure, in part because of Mr. Trump’s ascendancy. His speech gave little indication that he has use for the old order: what are its multilateral agreements but an effort to put the good of all ahead of the good of America?  But if Mr. Trump wants to see off the current regime, it is his duty, as the leader of a superpower in an irreversibly interdependent world, to put something equally strong in its place.  National leadership is not real estate.  President Trump must do much more than cut good deals for America.”

Gerald F. Seib / Wall Street Journal

“Donald J. Trump took the oath of office as president at noon Friday, having at last been embraced by the bipartisan Washington establishment gathered around him on the steps of the Capitol.

“Two minutes later, he went on the attack against that same establishment.

“In an inaugural address unlike any in recent memory, he indicted the political system he now leads.  He also signaled that he will be an entirely new kind of president – and the closest thing to a political independent in the White House since Dwight Eisenhower.

“ ‘For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost,’ he declared.  Lest anyone wonder about his view of the politicians gathered around, he declared: ‘The establishment protected itself, but not the citizens of our country.’  That, he said, will change immediately.

“The harsh words seemed directed nearly as much at his own Republican Party, which for the last two years has been in full control of the Capitol before which he stood, as they were at the Democrats in opposition. All of them, he implied, are collectively a big part of the reason American factories have shuttered, manufacturing jobs have been lost and the ‘forgotten men and women of our country’ left adrift by a globalized economy.

“In sum, his remarks resembled more a Trump rally speech than a traditional inaugural address, and they eradicated any thought that President Trump will govern differently than Candidate Trump campaigned.  Much as his rally speeches were directed toward his fervent supporters rather than party regulars, his inaugural speech was directed squarely at the working-class voters in Michigan, Wisconsin and Pennsylvania who propelled him to the Oval Office.

“At the end, in fact, he gave a rally-like fist pump to the crowd spread out on the National Mall before him.  Washington regulars may have been stunned and even appalled, but for his most ardent supporters it likely was pitch perfect.

“Later, in a classic Trump pivot from aggressive public persona to more-gracious private one, he made a point at a celebratory luncheon of warmly praising his election opponent, Hillary Clinton, who went unmentioned in his inaugural address.

“Now that the tone has been set, what happens next is a leap into the unknown.  Not since Mr. Eisenhower – a nonpolitician wooed equally hard by Democrats and Republicans before deciding to run for the GOP – has there been a president with so few attachments to political party or ideology....

“The challenges are considerable, though. The freedom of having only loose ties to a political party is offset by the danger in having few compatriots who feel strong loyalty to him or who believe their political futures are tied tightly to his....

“He also leads a country that is deeply divided, both by partisan rifts and intense feelings toward him personally.  The best sign of that division may lie in the fact that voters’ view of him changed very little after he won the White House.

“In his inaugural address, he nodded to the need to address that problem, pledging to Americans that in his presidency ‘we will rediscover our loyalty to each other.’  He offered no similar pledge of loyalty to the political system in the city he now calls home.”

Editorial / Washington Post

“Some heard in (Trump’s inaugural) an echo of Jacksonian populism. And, to be sure, there is a rich American tradition of attacking establishment fat cats and promising reform. But there’s a world of difference between decrying dysfunction and insinuating disloyalty. Even Andrew Jackson might have blanched at the grandiosity with which Mr. Trump invoked America’s ‘glorious destiny,’ or his repeated promises to abolish the tedium of democratic deliberation – ‘talk’ as Mr. Trump dismissed it – through ‘action.’  Old Hickory’s 1829 first inaugural address humbly included a pledge to ‘keep steadily in view the limitations as well as the extent of the Executive power, trusting thereby to discharge the functions of my office without transcending its authority.’  Mr. Trump, by contrast, spoke in oddly mystical terms of ‘a nation that is only living as long as it is striving.’

“In fact the Constitution – which Mr. Trump never again mentioned after swearing hs oath – was ordained for purposes simultaneously less ethereal and more uplifting, such as to ‘establish justice’ and to ‘secure the blessings of liberty.’  Yet ‘liberty,’ ‘justice’ and even ‘peace,’ language common to past presidents’ inaugural rhetoric, did not make the cut in Mr. Trump’s speech.  Nor did ‘equality,’ though we heard about ‘carnage,’ ‘ripped’ away wealth, ‘stolen’ lives and the ‘destroying’ of jobs.  And we heard Mr. Trump repeatedly offer that Americans would be ‘protected’ against these transgressions and betrayals – ‘I will fight for you,’ he promised.  Simultaneously personalistic, paternalistic and state-aggrandizing, these formulations were hard to square with his claim that, as of noon Friday, ‘the people became the rulers of this nation again.’”

Peggy Noonan / Wall Street Journal

“The speech will electrify President Trump’s followers. They will feel satisfaction that they understood him and knew what they were backing. And it will deepen the Washington establishment’s unease.  Republican leaders had been hoping the address would ameliorate their anxieties about the continued primacy of their traditional policy preferences.  Forget that. This was a declaration that the president is going his own way and they’d best follow.

“Throughout the speech, and much of the day, Mr. Trump looked stern.  At first I thought it was the face he puts on when he’s nervous.  I don’t think so now.

“Anyway, it was a remarkable speech, like none before it, and it marked, I think, yet another break point in the two-party reality that has dominated our politics for many decades.

“And so, now, it begins.  And it simply has to be repeated: We have never had a political moment like this in our lives.  We have never had a president like this, such a norm-breaker, in all the ways we know.  We are in uncharted seas.”

Robert Samuelson / Washington Post

“The question that swirls around Donald Trump’s inaugural address is whether his aggressively pronounced policy of America First will actually result in America Last – not literally last, but declining in power and prestige because the United States no longer views its role in the world as promoting economic and geopolitical stability for our allies.

“Instead, he imagines a world in which the United States takes what it can and worries about others only as an afterthought.  What does he expect other countries to do? The answer is obvious.  They will act more aggressively in their own selfish interests, leading to a further disintegration of post-World War II economic and political alliances.

“It is not that all countries, including the United States, haven’t always acted in their own interests.  But, for decades, they and we have identified self-interest with collective commitments to global commerce and military cooperation.  If the leader of these arrangements – the United States – now forsakes them, other countries will look to make new economic and security arrangements, with China and Russia as leading alternatives.

“This breakdown threatens the greater American prosperity that Trump promises.  A changing world economic order will generate enormous uncertainty, as other countries rush to protect their markets from competitors.  Companies may reduce investment spending, which is already weak. Slower economic growth, or outright recessions, will make it harder for governments and companies to service their high debts.  This would further darken prospects for the global economy....

“It is possible that, in practice, Trump’s policies will be more moderate and more in line with the traditional policies of previous presidents, Democratic and Republican.  Some of his Cabinet selections, in their confirmation hearings, have sounded much more conventional than their boss.

“Still, this illuminates the dilemma Trump has created for himself.  The full implications of what he’s proposed, if implemented, would be disastrous. But if he retreats significantly, he may alienate many of his fervent followers, who will feel rightly that they’ve been betrayed.”

Edward Luce / Financial Times

“In case there were any lingering doubts about the sincerity of Donald Trump’s ‘America First’ campaign, he laid those to rest the moment he swore the oath of office.  His brief inaugural address was perhaps the most xenophobic in U.S. history.

“The 45th president’s one specific foreign policy promise was to eradicate Islamist terrorism ‘from the face of the earth.’  His only other message to the rest of the world was to put it on notice that America would take precedence again after an age in which the U.S. had ‘defended other nations’ borders’ and subsidized their armies.

“That age was over, he said.  ‘I will fight for you with every breath that I have,’ he promised America.  ‘We will follow two simple rules: buy American and hire Americans.’ The rest of the world should be on notice.  Mr. Trump intends to rip up the U.S.-created global order. His address will go down as a turning point in America’s postwar role – and quite possibly its death knell.”

Editorial / Wall Street Journal

“Donald J. Trump took the oath of office Friday promising to be a President, well, like the Donald J. Trump of the last 18 months.  His inaugural address was a full-throated populist manifesto against the political ‘establishment’ that will cheer his voters.  How this will translate into governing isn’t clear, but there’s no doubt Mr. Trump is charging head first into the fray....

“(Trump) pledged to be the agent of change against a ruling class that he said has used the government to help itself.  He assailed politicians ‘who are all talk and no action,’ and in the speech’s best moments he offered an inclusive vision of economic, and even social and cultural, renewal.

“Notably, he included the inner cities, failing schools and post-industrial regions that have been left behind in the current recovery.  He returned to his campaign theme of ‘the forgotten men and women,’ and it is clear from the election result that he has become a tribune for millions who do feel forgotten.

“As he often does, Mr. Trump also made American life today seem much darker than it is, invoking ‘this American carnage’ in one jarring passage.  Subtlety is not the Trump style, and America has problems, but carnage is a word better suited for Aleppo under Russian bombing....

“The risk in Mr. Trump’s rhetoric is that it can lead to a jingoism that produces a revulsion against the world. After eight years of Mr. Obama’s retreat because America isn’t good enough for the world, the world needs more U.S. leadership.  It doesn’t need a conservative brand of isolationism that thinks America is too good for the world.”

As for world leaders, let’s just say as a group they were circumspect, but largely offered standard congratulations.

Saturday, Donald Trump grew increasingly outraged as the punditry dissed his turnout on Friday, with the National Park Service retweeting a photo unfavorably comparing the size of his inauguration crowd with the one that attended Barack Obama’s first inaugural in 2009.  A journalist had also misrepresented that an MLK bust in the Oval Office had been removed when it hadn’t been.

According to the team at the Washington Post, Trump’s aides said he should send out a tweet, “But Trump was adamant, aides said.  Over the objections of his aides and advisers – who urged him to focus on policy and the broader goals of his presidency – the new president issued a decree: He wanted a fiery public response, and he wanted it to come from his press secretary.

“(Sean) Spicer’s resulting statement – delivered in an extended shout and brimming with falsehoods – underscores the extent to which the turbulence and competing factions that were a hallmark of Trump’s campaign have been transported to the White House.”

Trump himself went to the CIA and his performance was embarrassing.

Editorial / Wall Street Journal

“President Trump made a smart move in visiting the CIA on his first full day on the job, but he and his staff are going to have to raise their game if they want to succeed at governing.  This was not a presidential performance.

“The visit made sense to repair any misunderstandings from the campaign and transition when Mr. Trump sometimes seemed to attack the entire intelligence community for the leaks that Russia tried to help his campaign.  Those leaks were almost certainly put out or authorized by the Obama White House or senior intelligence officials appointed by President Obama.  The rank and file didn’t do it.

“ ‘I believe that this group is going to be one of the most important groups in this country towards making us safe, towards making us winners again,’ Mr. Trump told employees assembled in front of the CIA’s Memorial Wall for those who have died in the covert service.  ‘I love you. I respect you.  There’s nobody I respect more.  You’re going to do a fantastic job, and we’re going to start winning again and you’re going to be leading the charge.’  So far so good.

“But Mr. Trump also couldn’t resist turning the event into an extended and self-centered riff about the size of his campaign rallies, the times he’s been on TIME magazine’s cover and how the ‘dishonest’ media misreported his inaugural crowds.  He all but begged for the political approval of the career CIA employees by suggesting most there had voted for him.

“Such defensiveness about his victory and media coverage makes Mr. Trump look small and insecure.  It also undermines his words to the CIA employees by suggesting the visit was really about him, not their vital work.  The White House is still staffing up, but was it too much to ask National Security Adviser Michael Flynn’s staff to write up five or 10 minutes of formal remarks that had something to do with the CIA?

“Mr. Trump may think he’s succeeded by breaking the normal rules of politics and that he can keep doing it.  But he’s now President, and Americans expect a level of seriousness and decorum that is consistent with the responsibility of the office.  He should meet their high expectations, not live down to the media’s.”

Paul Krugman / New York Times

“(Mr. Trump) made big promises during the campaign, so the risk of disillusionment is especially high.

“Will he respond to bad news by accepting responsibility and trying to do better?  Will he renounce his fortune and enter a monastery?  That seems equally likely.

“No, the insecure egomaniac-in-chief will almost surely deny awkward truths, and berate the media for reporting them.  And – this is what worries me – it’s very likely that he’ll try to use his power to shoot the messengers.

“Seriously, how do you think the man who compared the CIA to Nazis will react when the Bureau of Labor Statistics first reports a significant uptick in unemployment or decline in manufacturing jobs?  What’s he going to do when the Centers for Disease Control and the Census Bureau report spiking numbers of uninsured Americans?

“You may have thought that last weekend’s temper tantrum was bad.  But there’s much, much worse to come.”

Saturday also saw the Women’s March on Washington and protests across the nation, as well as overseas.

Editorial / Washington Post

“A demonstration of such scale would have been remarkable on any day.  That it took place the day after President Trump’s inauguration, that the size of the protest dwarfed the size of the celebration, that similar throngs gathered in other cities across the country – all of this underscored how divided the nation still is.  Such division on election night might not have been surprising. That the rift remains as wide, and the feelings as raw, 10 weeks later is a reflection in part on the president himself.  During the transition, he chose not to reassure and heal.  Even as president, he continues to brag about his popularity (the number of TIME magazine covers he has graced) and to give at his domestic ‘enemies.’  The message has been less that of a ‘president for all Americans’ than the us-vs.-them mockery conveyed Saturday morning by Michael Flynn Jr., son of Mr. Trump’s national security adviser, retired Lt. Gen. Michael Flynn.  ‘What MORE do you want?’ he asked of participants in the Women’s March.  ‘Free mani/pedis?’

“Judging by our on-scene reporting, we would tell Mr. Flynn that the goals of the marchers were considerably weightier than that.  The protesters wanted a whole host of things – reproductive rights, equal pay, affordable health care, action on climate change.  Their demands did not always match up, but the marchers had this in common: Whatever they cared about most, they had traveled to the nation’s capital to do something about it....

“The events showed the nation’s division.  But they also showed millions of Americans refusing to give up on their democracy.”

Sunday, Trump tweeted, “Watched protests yesterday but was under the impression that we just had an election!  Why didn’t these people vote?”

“Celebs hurt cause badly,” he said.  [Ed. referring to the likes of Madonna and Ashley Judd.]

Later Sunday morning, Trump sent out a more conciliatory tweet:

“Peaceful protests are a hallmark of our democracy,” he said.  “Even if I don’t always agree, I recognize the rights of people to express their views.”

For the talk shows, Kellyanne Conway was sent out to spar with “Meet the Press” and NBC’s Chuck Todd, wherein Conway used a term that will outlast the Trump presidency, “alternative facts,” in defending Sean Spicer’s comments from the day before, and the press, and a lot of America, was off and running again.

[Kellyanne also said on ABC’s “This Week” that Trump won’t be releasing his taxes.  “We litigated this all through the election.  People didn’t care. They voted for him, and let me make this very clear: most Americans are very focused on what their tax returns will look like while President Trump is in office, not what his look like.”]

Richard Cohen / Washington Post

“Who ordered Spicer to soil his own credibility?  This was essentially the question Chuck Todd kept putting to White House counselor Kellyanne Conway... Conway, who will tell you that a hissing snake is just a harmless hunk of rope, would not say. She kept deflecting the question and, in a tour de force of Orwellian creativity, defended Spicer’s use of ‘alternative facts.’  Todd was laudably persistent, but really we know the answer to his question: Trump is an unhinged narcissist, and Conway is his mirror. Reality must conform to what he wants.

“We now know that Trump’s self-adoration is not a mere personality glitch.  It is instead an engine of intimidation, a furiously dominant aspect of his personality, and when it gets challenged, as it was over the weekend, he responds irrationally....

“No one in his inner circle seems to stand up to Trump.  No one publicly contradicts him....

“Trump is a human dust devil, spinning off analogies and references.  He is Orwellian, Kafkaesque and always chillingly demagogic.”

Back in 2007, when I was in Des Moines for the Iowa State Fair and the early political season for the 2008 campaign, I met pollster/analyst Frank Luntz at the hotel bar and as I’ve written a few times, including then, he is just what he appears to be on television.  Fiercely bright, constantly probing. Some of you will recall I had listened to Joe Biden at the fairgrounds that day, Biden was impressive, and so I told Luntz that and he started firing all these questions at me, “Why did you like him?  What moved you?”  It was funny, a personal performance from the master.

So I’m watching “Face the Nation” on Sunday and Luntz was on a panel, moderated by John Dickerson, and Mr. Luntz was more concerned about the future of  America than I’ve ever seen him.

DICKERSON: Frank, what we’ve seen over the last two days, is that the tableau of America, the cheers for Trump and then the marches against him?  Is that where we are in politics?

LUNTZ: There are three attributes that matter more than anything else in American life: respect, civility and tolerance.  And we’re not seeing much of that from anyone right now. When Donald Trump delivered his speech, he had some very powerful lines and talked about the people getting their government back. And that’s to be applauded.  But there was no respect for the previous president or any of the presidents.  There was no respect for people who were up there on the podium.  And the next day – I got attacked the next day, not even at the rally, by someone who called me a fascist...But we now believe that we can say and do anything to anyone at any time.  We have lost that sense of decency. And, frankly, I don’t know how we’re going to get it back....

We’ve never had as many people who don’t trust the media, don’t trust the politicians, don’t trust economics, don’t trust business.  There’s a reason why two-thirds of young people now believe that socialism is a better solution for American economics than capitalism.

DICKERSON: What about this, Frank?  Here’s a theory...this was a speech to his supporters and he’s locked in tight with them, with the full well knowledge of knowing that Washington’s going to eat away at things, but in this big public moment he wants to show, I am with you... What will be remembered is he stood up there, in that moment, and spoke loud and proud about the things they love about him.

LUNTZ: And he did.  But that’s not how you govern the country.  You’re not president of 46 percent of America. You’re president of 100 percent. And in the green room before we came on, we were talking about our expectations for the future.  I’m clearly the darkest person on this panel because I think we’re going to remember this weekend for a long time to come as not the end, not the campaign being over, but this is the beginning of the most tempestuous, if that’s the right word, in my mind, awful conflict between left and right, between men and women, between young and old.  I think we are breaking apart.  Since 1968 when we lost some incredibly good people in this country, that’s 50 years.  I saw those signs in the parade, and they were so horrific and they are eight, nine, ten year-olds who are being taught to hate the other side.  And that’s the problem, when you teach young people to hate, you can’t get it out of their system.

JEFFREY GOLDBERG: But I think to add to what Frank’s saying, I don’t know if the climate, I don’t know if technology is allowing people to see past their own hatred.

LUNTZ: It’s not.  That’s encouraging it.

DICKERSON: I was also struck, Frank, that the president talked about how America had disappeared over the horizon against other countries.  And there has been a long debate about American exceptionalism and whether presidents are sufficiently exceptional and praising America.  That seems like you wouldn’t put that in the American exceptionalism hymn that we’re disappearing over the horizon.

LUNTZ: No, I really think the country’s in trouble. If we don’t trust the people who give us our news, if we get our news to affirm us rather than to inform us, then we’re not going to collect any information.  If we don’t listen to others and allow our opinions to change over time, then the democracy weakens. And if our electoral process, if we’re telling lies to the people in an effort to get elected, and we don’t hear the accountability, then where are we headed from here both nationally and internationally?  We are losing the respect of the global community. We have lost the respect of Americans here. There’s a sense that our democratic system and the institutions have failed us.  And I see nothing in the last 48 hours to indicate that any of this is going to be addressed in the coming weeks or months.

---

Monday, the first official day of the Trump administration, began with the president signing an executive order to withdraw from the Trans-Pacific Partnership (TPP) trade accord that had been promoted by large companies such as Wal-Mart and Nike, as well as family farmers.

“Great thing for the American worker, what we just did,” Trump said.  Action on renegotiating the NAFTA deal with Mexico and Canada is also in the works.

Trump had campaigned against TPP and other trade deals during the campaign.

As Dan Ikenson of the Cato Institute told Bloomberg News, “Never has the president been the one to initiate protectionism or been so vocal about turning inward.”

Republican Sen. John McCain warned the U.S. was abandoning its U.S. strategic position in Asia, where China is aggressively trying to fill the vacuum.  “Moving forward, it is imperative that America advances a positive trade agenda in the Asia-Pacific that will keep American workers and companies competitive in one of the most economically vibrant and fastest-growing regions in the world.”

The National Cattlemen’s Beef Association, which represents some 230,000 cattle ranchers and feeders, said not having TPP costs the industry $400,000 in sales a day, while NAFTA has driven up U.S. beef exports to Mexico more than seven-fold. Without the two deals, the price of U.S. beef would cost more overseas, a competitive disadvantage.

U.S. agriculture exports have doubled since NAFTA was signed in 1993.

And when it comes to the likes of Nike and Wal-Mart, according to Bloomberg Intelligence, pulling out of TPP eliminates potential savings on import tariffs to the tune of $450 million a year, as posited by a number of trade groups, including Retailers of America.

Nike has said it was planning on using the savings to invest more in the U.S.  Nike currently sources about 40 percent of its shoes from Vietnam, a TPP member nation.

Asian nations expressed concern they would become caught up in superpower politics between the U.S. and China.  Malaysia’s defense minister Hishammuddin Hussein told a security forum in Singapore that he urged the Trump administration not to reduce the U.S. military presence in Asia and the Pacific.  [Sydney Morning Herald]

Editorial / Wall Street Journal

“President Trump fulfilled a campaign promise Monday with an executive order formally withdrawing from the 12-nation Pacific trade pact, and that was the easy part.  Now he’ll have to deal with the fallout, which includes new doubts about U.S. economic commitments and strategic gains for China....

“Mr. Obama (had) stressed the deal’s strategic importance as a counter to Chinese soft power in the Pacific, and he’s right.  But he never made a consistent case for the deal’s economic benefits, and Mr. Trump was able to use TPP as a political whipping boy. The agreement has flaws, with many special carve-outs for this or that country, but on the margin the trade experts at the Cato Institute consider it a net economic plus for the U.S.

“What now?  Mr. Trump isn’t interested in new multilateral pacts, but China is [Ed. more below]....

“The U.S. trade trend has already led to the water-into-wine miracle of Chinese President Xi Jinping preaching the benefits of free trade at the annual global gabfest in Davos last week.  The problem is that China preaches free trade for its exports but too often practices something else at home.

“The Chinese impose multiple regulatory barriers to imports. They subsidize overproduction in commodity goods like steel that hurts foreign producers and workers.  They use political measures to restrict foreign competition so they can build ‘national champions’ in industries like computer chips.  In short, the Chinese continue to practice a mix of free trade and mercantilism, and the Asian trade pact will no doubt seek to continue that pattern.

“TPP would have spread the better Western model of a rules-based trading system.  Mr. Trump and his advisers are targeting China for a U.S. trade-policy renegotiation, albeit with few details about their strategy or their ultimate goal – beyond reducing the U.S. trade deficit in goods with China.

“The irony is Mr. Trump would have more negotiating leverage with TPP in his pocket.  If China resisted trade-opening concessions at home and a trade war results, the U.S. could rely on TPP countries for alternative component suppliers and consumer goods.  Now China can use the Asian trade pact as leverage with these U.S. trading partners....

“The larger shock in TPP’s failure is the symbolism of the U.S. withdrawing from global trade leadership.  For nearly 90 years since the Smoot-Hawley Tariff, and especially since the end of World War II, the U.S. has championed a world of freer markets and liberal trade.  No doubt all Americans haven’t benefitted equally, but the free-trade consensus held through the high-growth 1980s and 1990s.  It fell apart in the slow-growth Obama era.

“The question is what will fill the trade vacuum if the U.S. resorts to its own form of mercantilism....

“The economic damage will come in the months ahead if trade becomes a game of beggar-thy-neighbor self-interest in which national success is measured by a simple trade surplus.  Then we’ll look back on TPP’s demise as a watershed to regret.”

Also Monday, Trump quietly backed away from a campaign pledge to end protections for nearly 750,000 immigrants brought to the U.S. illegally as children.  Instead, the administration will focus more on deporting more people who threaten public safety, according to White House press secretary Sean Spicer.

And Trump met with business leaders, as well as organized labor, telling the first group that he will be “cutting taxes massively” and “cutting regulation massively.”

Of the corporate tax rate, currently 35%, “we’re trying to get it down to anywhere from 15 to 20%.”  Regulations, Trump said, could be cut “by 75%,” without explaining how that would work or be measured.

And he warned if corporations moved their workforce out of the U.S., “we are going to be imposing a very major border tax on the products when it comes in,” he said.

Later Monday, in his first official meeting with congressional leaders, Trump griped about his loss of the popular vote, telling lawmakers that he would have won a majority if millions of illegal immigrants had not voted against him. 

The reality of Trump losing the popular vote by three million votes continues to be an obsession of his, as he repeatedly complains adversaries are trying to undermine his legitimacy.

Election officials across the country have said there is virtually zero evidence of widespread voter fraud.

And Monday Trump was still obsessing about the crowd size for his inauguration speech.

But at the same, the president sought to build support for an ambitious legislative agenda; including a repeal and replacement of ObamaCare, a large investment in the nation’s infrastructure, changes to the country’s immigration laws and tax reform.

The positive is that there clearly will be far more interaction with Congress than during President Obama’s two terms, Obama loathing social time with the members.

Sean Spicer said, “The American people are frustrated with the lack of progress here in Washington, and the president wants no delay in addressing our most pressing issues.  He’s taking every opportunity to forge strong bonds with congressional leaders on both sides of the aisle.”

Tuesday, Trump met with auto leaders, telling them to build new plants in the U.S. and bring production back.  He also signed some new orders (technically memorandums since there are conditions to be met, as the president put it), to reverse Obama administration moves that had rejected the Keystone XL and Dakota Access pipelines over environmental concerns.  TransCanada, the operator of the former, later re-submitted its application to the U.S. State Department, seeking approval for the $8bn pipeline that would carry oil from Alberta to refineries in the U.S.

Editorial / Wall Street Journal

“President Trump is making short work of campaign promises, and on Tuesday he signed executive orders reviving the Keystone XL and Dakota Access pipelines. The resurrection is good news for the economy, but one question is whether he’ll sink the projects with his protectionist impulses....

“One danger here is President Trump’s campaign promise to ‘renegotiate some of the terms’ that included bromides about how ‘we’ll build our own pipes, like we used to in the old days.’ He floated royalty payments during the campaign, and a separate order on Tuesday directed the Commerce Department to develop a plan to use U.S. steel and iron in all new pipelines.  TransCanada has said in past months that it’s ‘fully committed’ to Keystone XL, but the company may not be eager for another politician to direct its investment decisions.

“White House Press Secretary Sean Spicer said Mr. Trump is looking to ensure taxpayers the best possible deal. Reminder: Taxpayers pay nothing. The State Department estimated that when Keystone is finished and pumping oil, local governments will collect more than $55 million a year in property taxes. About 70% of the resulting refined products from Keystone would stay in the U.S., which will push down gas prices as another benefit, according to a study from IHS. That already sounds like a good deal....

“Private investment projects like Keystone and Dakota Access are the superior route to creating jobs and boosting incomes, which President Trump has long said is his first priority.  Mr. Trump’s best move would be to ditch his floated Keystone conditions and enjoy taking credit for the resulting economic growth.  He could even attend the next ground-breaking ceremony.”

Meanwhile, in his press conference, Sean Spicer had to defend the president’s voter fraud comments from Monday.  “The president does believe that,” Spicer said.  “(And) he continues to maintain that belief based on studies and evidence that people have presented to him.”

Wednesday, President Trump signed a pair of executive actions to begin ramping up immigration enforcement, including a new border wall with Mexico, vowing construction would begin in months.

As for funding for the border wall, however, that will be a big issue.  Construction estimates come in at anywhere from $8 billion to $20 billion, with no current source of funds.

Appearing at the Department of Homeland Security, Trump issued a series of directives aimed at clamping down on an estimated 11 million immigrants living in the United States illegally.  Among the steps would be the creation of more detention centers, more border control agents, and withholding federal funds for “sanctuary cities,” those such as San Francisco, Los Angeles, New York and Chicago that don’t comply with federal immigration laws, i.e., go after known illegals.

Addressing the DHS, Trump said, “A nation without borders is not a nation. We are going to restore the rule of law in the United States. Beginning today the United States gets control of its borders.”

Having described unauthorized immigrants as criminals during his campaign speeches, Trump told his DHS audience: “We are going to get the bad ones out – the criminals and the drug dealers and gangs and gang members. The day is over when they can stay in our country and wreak havoc.  We are going to get them out, and we are going to get them out fast.”

The president had invited families of people killed by unauthorized immigrants to attend his event at DHS and watch him sign the executive orders.

Editorial / Wall Street Journal

“President Trump’s executive order to build a wall on the Mexican border won’t go down as America’s finest hour.  But at least the policy he’s setting out is more moderate than his campaign rhetoric and makes some concessions to immigration reality.

“Mr. Trump ran and won on mass deportation of illegal immigrants and building a ‘great, great wall,’ and he’s honoring his campaign promises.  Nobody can claim he’s springing what the order calls a ‘secure, contiguous and impassable physical barrier’ on unsuspecting voters. But Mr. Trump also often signaled in 2016 that he would ‘soften’ these positions in office, and in some ways he has....

“The wall...won’t solve the problems Mr. Trump claims it will, to the extent they’re problems.  There are already 652 miles of vehicle and pedestrian fencing along the 1,954-mile U.S.-Mexico border, protecting the most sensitive areas.  Mexico isn’t Gaza and doesn’t require border militarization.

“Despite Mr. Trump’s bombast, Mexican criminals are not pouring over the border.  Border apprehensions were 192,000 last year, but that’s down from 981,000 a decade ago.  Pew estimates that about 11.1 million unauthorized immigrants live in the U.S. (3.5% of the population), and 52% are Mexicans.  That share is falling every year amid rising illegal entries from Asia, Central America and sub-Saharan Africa....

“Mr. Trump also signed an order to ramp up internal immigration enforcement, especially against cities that refuse to help the feds enforce immigration laws....

“The Constitution bars the federal government from commandeering or coercing states or cities, so the practical effect will depend on whether Mr. Trump follows through in denying funds.  This is essentially a political fight, and Mr. Trump’s voters don’t like the spectacle of mayors or police department who refuse to enforce the law.

“One encouraging note is that Mr. Trump seems to have stepped back from his promise to revoke President Obama’s 2012 order that shielded the ‘dreamers’ from deportation. These are young people who were brought to the U.S. as children and can apply for renewable two-year work permits if they’re attending school or have graduated and pass a background check.

“The most fervent restrictionists, in and out of the White House, are unhappy with Mr. Trump’s forbearance. But his restraint is humane and good politics.  The 750,000 young people who have qualified for this reprieve didn’t break the law themselves, and many don’t know the ‘home’ country they would be deported to. The U.S. is their new home.  Nothing would undermine Mr. Trump’s immigration agenda more than stories of dreamers who’ve lived here for years or served in the military being snatched from college campuses and deported to uncertain fates.”

In an interview with ABC News, Trump said the American taxpayer would be reimbursed by the Mexican government for the costs.  More on Mexico’s reaction below.

But Trump also said this to ABC’s David Muir, concerning his speech at CIA headquarters, what Trump described as one of the greatest addresses ever given.

“That speech was a home run,” Trump said.  “See what Fox said. They said it was one of the great speeches. They showed the people applauding and screaming. ...I got a standing ovation.  In fact, they said it was the biggest standing ovation since Peyton Manning had won the Super Bowl, and they said it was equal. I got a standing ovation. It lasted for a long period of time....

“You probably ran it live. I know when I do good speeches.  I know when I do bad speeches. That speech was a total home run.  They loved it. ...People loved it.  They loved it. They gave me a standing ovation for a long period of time.  They never even sat down, most of them, during the speech.  There was love in the room. You and other networks covered it very inaccurately. ...That speech was a good speech. And you and a couple of other networks tried to downplay that speech.  And it was very, very unfortunate that you did.”

Good lord.

Trump also insisted in the interview that he could have “very, very easily” won the popular vote in the election had he simply tried.  He again suggested Hillary Clinton won the popular vote because of widespread voter fraud.

“You have people registered in two states. They’re registered in New York and New Jersey. They vote twice.  There are millions of votes, in my opinion.”

When David Muir noted the reactions of prominent Republicans who do not agree with Trump on this and are alarmed that he is challenging the credibility of the election system:

“Well, let me just tell you, you know what’s important?  Millions of people agree with me when I say that,” Trump said.  “If you would have looked on one of the other networks and all of the people that were calling in, they’re saying, ‘We agree with Mr. Trump. We agree.’  They’re very smart people.”  [David Nakamura / Washington Post]

Trump also said in the interview that his administration would “absolutely do safe zones in Syria” to discourage refugees from seeking safety in other countries, slamming Europe and Germany for accepting millions of immigrants.  “It’s a disaster, what’s happening there,” Trump said.

Back to voter fraud, earlier Wednesday, Trump said in two tweets: “I will be asking for a major investigation into VOTER FRAUD, including those registered to vote in two states, those who are illegal and even, those registered to vote who are dead (and many for a long time).  Depending on results, we will strengthen up voting procedures!”

At their retreat in Philadelphia, Republican lawmakers said they and President Trump need to tighten up their messaging and get on the same page.  As in, cut the crap with crowd sizes and voter fraud, Mr. President.

Senate Republican Conference Chairman John Thune (S.D.), who’s in charge of such stuff, said there’s substantial room for improvement.

“Sometimes we’re not always on the same page, but it’s a work in progress.”

Separately, House Speaker Paul Ryan announced a 200-day action plan, including a repeal of ObamaCare and tax reform, but there is disagreement over whether an infrastructure program will fit in during this timeline.  Trump wants it to, but his preferred $1 trillion investment would swell the deficit.

Philip Stephens / Financial Times

“The alternative facts beloved of Donald Trump’s White House doubtless record that the president’s inaugural address was greeted with unalloyed applause across the world.  The speech was closely watched. The preponderant reaction among America’s friends was disbelieving horror.  In the annals of modern politics, this was indeed ‘huge.’  The soft power accumulated by the U.S. over decades drained to nothing in 17 short minutes.

“Russian president Vladimir Putin backed Mr. Trump.  So did Israel’s Benjamin Netanyahu, who has celebrated the president’s victory by grabbing more Palestinian territory. Hungary’s Viktor Orban promises to be as devoted to Mr. Trump as he has been to Mr. Putin. Mr. Orban craves attention. Reach beyond the self-styled ‘strongmen’ and you will struggle to hear a good word for the new leader of the free world.

“The problem for others – perhaps more so for traditional allies than adversaries – is that Mr. Trump cannot be ignored.  The U.S. is still the world’s sole superpower.  Its role as the linchpin of the geopolitical order cannot be wished away.  Washington is the reference point for everyone else’s foreign policy.

“So the lights have been burning late as policymakers around the world deliberate on how to handle a president with so slight a grip on history or strategic realities.  A first take from friendly foreign ministries is that Mr. Trump’s economic nationalism threatens to fracture the open international trade system. And his eagerness to bully Mexico holds a serious warning for erstwhile friends.

“Indifference towards longstanding security alliances invites others to step into the vacuum – Russia in Eastern Europe and Middle East, China in East Asia.  Once-secure allies now feel vulnerable.  How long before Japan, say, considers its own nuclear deterrent?....

“The broader European hope is that Rex Tillerson at the state department and General James Mattis at defense will act as a restraint on Mr. Trump’s ‘America first’ unilateralism.  But I have struggled to find anyone halfway certain that the president will allow others to set the direction of policy.  The judgment heard more often is that Europe will just have to learn to live with a rogue American president – one, incidentally, who makes it look back with a certain nostalgia to the days of Mr. Bush.

“On the other side of the world, China has been shrewdly cautious.  President Xi Jinping has deftly promoted Beijing as the new guardian of the multilateral trade order...China is keen to avoid direct confrontation but there are red lines – some economic, some territorial – that Mr. Xi will not see crossed without a robust response.

“What unites these various friends and foes – including, I would guess, Mr. Putin – is a view that the U.S. president will prove a force for dangerous instability.  He does not believe in the West, but nor can he be trusted by anyone else.  Yes, the crowds on the Washington Mall may have been on the small side but, yes Mr. Trump, the world was listening.”

Daniel Henninger / Wall Street Journal

“It is time to set aside the numbing and exhausting preoccupation with Donald Trump, celebrity president, and start the hard work of seeing the substantive intent inside the Trump presidency – and deal with it.  There is never going to be a clear lens into America’s 45th presidency. We are all staring into the Trump kaleidoscope.

“The Trump kaleidoscope has at least two reflecting surfaces.  One is Trump Himself, a phenomenon that changes at every turn. The other is the Trump government, which is not going to break free of the American system’s more stable institutional realities and constraints.

“Those who believe Mr. Trump is unqualified or illegitimate will remain obsessively transfixed by Trump Himself, the man who delights in violating norms of politics and taste. The Democrats, or at least those who conduct their politics in the streets, appear fatally drawn to these Trump distractions.

“A shrewder Democrat, say Chuck Schumer, understands that the Trump threat has less to do with Muslim bans, a wall or women but instead with discrete, identifiable policies that may weaken long-established sources of Democratic power and authority....

“Donald J. Trump and the Trump presidency, parallel universes, will always be putting a lot in motion. This week’s output could be the new normal.  There is no other option now than to recalibrate daily between the many, often confusing facets of this presidency, between the ever-present Trump Twitter feed and the daily drudge work of policy debate and implementation....

“(Refinements) from what we all first thought we saw on ObamaCare, Russia, trade policy, entitlements and the rest are also inevitable. There will be Trump wins, draws and losses.

“It almost sounds normal, except that traveling through any of these issues will never be normal with the Trump presidency, for better or worse.

“Better is considered to be Mr. Trump tweeting the auto industry into submission on overseas plants.  Worse could come in foreign affairs if Trump Himself sets off a cascade of less controllable events on the Russian or Chinese peripheries.

“This is going to be messy not because Donald Trump is messy but because our system, even when it’s functioning, was designed to be difficult. For those who want to spend four years quaking before Mr. Trump’s kaleidoscopic tweets, the future is predictable. For everyone else, the more familiar struggles of American governance have just begun.”

Thursday, President Trump and Mexican President Enrique Pena Nieto went at it, with Pena Nieto canceling his planned meeting with Trump scheduled for next week over the disagreement over who would pay for construction of a border wall.

In a tweet, Pena Nieto said his government informed the White House that the meeting was off.  Trump had warned him on Twitter earlier to stay home and skip the meeting unless Mexico is willing to fund the construction.

Trump’s executive order on Wednesday calling for immediate construction of the border barrier was viewed by Mexico as a huge insult because it came the same day that a delegation of top Mexican officials arrived in Washington.

Prior to this, some Mexican politicians said Pena Nieto needed to go to Washington for the sake of diplomacy, but following Trump’s tweets, one noted political analyst, Enrique Krauze, said that Pena Nieto should distance himself from the new U.S. president.

“Trump is a madman who will probably destroy himself,” he tweeted.  “You have to gain time with patience, strength and dignity.”

“The uncertainty is over,” tweeted Javier Lozano, a PAN senator.  “It is confirmed that we will have to deal with an arrogant and ignorant despot in the USA.”

Lozano said of the entire Mexican political class, including those of different political stripes:

“Close ranks in the face of the tyrant and let us move forward united and firm.”  [The Hill]

Later Thursday, aboard Air Force One and on the way back from the Republican retreat in Philadelphia, where the president spoke, White House spokesman Sean Spicer talked of a 20% tax on all imports coming from Mexico to pay for the wall, noting that currently  the U.S. taxes exports and let imports flow freely, “which is ridiculous.”

Spicer said the new tax would generate $10 billion a year and “easily pay for the wall.”

But a few hours later the White House was walking this back as Mexico said it would immediately retaliate in kind if the U.S. did this.  Plus you had the realization that a 20% tariff on imports meant higher prices for American consumers, as well as create profound challenges for industries with supply chains that span the border, which could lead to a collapse of the North American Free Trade Agreement, when I think most rational folks, including in the Trump administration, recognize that, yes, NAFTA has to be renegotiated.  But just that.  Actual negotiations.

The 20%, however, is a key to some Republican proposals to overhaul the tax code; taxing imports from all countries at 20% while American exports would be tax free, or the so-called ‘border adjustment,’ which resembles a value-added tax commonplace elsewhere.

And then you have the currency issue and its impact, but I’m not getting into that topic today.

The disturbing part about Thursday, aside from the Shootout at the OK Corral, was during President Trump’s interview with Fox News’ Sean Hannity, he once again spent way too much time talking about crowd size and popularity and how he was being mistreated by the media and it’s not as if Hannity was egging him on.

Editorial / Wall Street Journal

“Donald Trump’s path to the presidency as an outsider always implied on-the-job-training. This week’s lesson: The world is not a Republican primary.  President Trump’s Twitter broadsides against Mexico have unleashed a political backlash that has now become a diplomatic crisis with a friendly neighbor.

“Mr. Trump fancies himself a negotiating wizard, but in this case he is out-negotiating himself.  The White House announced last weekend that Mr. Trump had asked Mexican President Enrique Pena Nieto to Washington to talk about trade, immigration and the border.  Despite Mr. Trump’s many slights against Mexico during the campaign, Mr. Pena Nieto accepted.

“Mr. Trump proceeded to roll out the red carpet by announcing his plan to build ‘the wall’ on the U.S. southern border that Mexicans of all political stripes consider an insult.  On Wednesday he also rolled out press secretary Sean Spicer to aver that ‘one way or another, as the President has said before, Mexico will pay for it.’

“That cornered the Mexican President, who represents a nation unified by Mr. Trump’s anti-Mexico rhetoric.”

[Ed. Well you saw what happened Thursday.]

“Doesn’t the ‘art of the deal’ include giving your negotiating partner room to compromise?  Mr. Trump made it impossible for Mr. Pena Nieto even to negotiate, all the more so after Mr. Pena Nieto went out of his way in August to invite Mr. Trump for a visit.  That campaign stop helped Mr. Trump show he could stand on stage as an equal with a foreign leader, but Mr. Pena Nieto took a beating at home when Mr. Trump returned to Mexico-bashing....

“With a population of 128 million, Mexico is America’s second-largest export market for goods.  Some six million U.S. jobs depend on trade with Mexico.  But the much larger risk is that Mexicans will sour on progress toward joining their North American neighbors as prosperous free-market democracies.  This is the moment that Mexico’s left – dormant but not dead – has been waiting for as anti-American Andres Manuel Lopez Obrador prepares to run for President again in 2018.

“Mr. Trump is a foreign-affairs neophyte, but he is already learning that nations can’t be bullied like GOP candidates or CEOs. They have their own nationalist political dynamics and when attacked they push back. Mr. Trump said as a candidate that he’d treat America’s friends better than Mr. Obama did, but his first move has been to treat Mexico like Mr. Obama treated Israel.  On present course he may get comparable results, or worse.”

David Ignatius / Washington Post

“President Trump’s slash-and-burn actions in his first week have been dramatic, but dangerously lacking in a consensus of support, even within his own administration. The risks were evident in the collapse of a planned meeting with Mexico’s president and in Trump’s embrace of torture tactics rejected by his secretary of defense and CIA director.

“Trump’s ‘tweet from the hip’ style produced its first real foreign rupture Thursday, when Mexican President Enrique Pena Nieto canceled a planned visit to Washington. That followed Trump’s tweet that he should stay away if he wasn’t ready to pay for the often-proclaimed border wall.

“The Twitter grenade blew up what had been an attempt to finesse the issue with a delayed Mexican financial contribution for the wall, an approach that Trump himself had only hours before supported in an interview with ABC’s David Muir.  Now, Trump has an avoidable Mexico crisis to deal with....

“If the first week of the Trump presidency showed us anything, it’s that he is more determined to overturn the established trade, economic and national-security order than even his critics feared.  So far, there’s more Stephen K. Bannon and less Reince Priebus in this White House.  The costs of Trump’s impulsive, thin-skinned behavior have also become clearer.  He keeps proclaiming how well he’s doing, but his aides have seemingly worked nonstop to put out fires ignited by their boss.

“Whether Trump’s tweeting and his alt-right tilt can be tempered by James Mattis at Defense and Rex Tillerson at State looks more dubious. This will worry foreign leaders who had found the Mattis and Tillerson nominations reassuring, and were prepared to believe that Trump’s bark might be worse than his bite on issues that matter to global allies.

“Trump’s bombastic nature undermines his ability to address the problems he cares most about.  Take Mexico: It doesn’t want a trade war with the United States, and Pena Nieto has been working to resolve border-security and NAFTA-renegotiation issues.  But Trump’s humiliating tweet (prompted, presumably, by his fear of being challenged for willingness to compromise) backed Pena Nieto into a political corner.  The outcome is contrary to both countries’ interests....

“During his first week in office, Trump has been his own loudest cheerleader. He has also been his own worst enemy. As with any other form of self-destructive behavior, it’s time for an intervention by those closest to him.”

Friday, as if on cue, there may indeed have been an intervention because it was a much better day in terms of Trump and the optics...unless you are a refugee hoping to come to the United States from certain countries.

We learned that President Pena Nieto and Trump held a lengthy telephone call to ratchet down the tension, with the two agreeing to work their differences out.  A statement from the White House read: “With respect to payment for the border wall, both presidents recognize their clear and very public differences of positions on this issue but have agreed to work these differences out as part of a comprehensive discussion on all aspects of the bilateral relationship.”  There will be no talk of the wall from these two for at least a few days, it is hoped.

It also helped that Mexico’s richest man, billionaire Carlos Slim, held a rare press conference in Mexico City, telling his countrymen that Mexico should not fear Donald Trump, seeing opportunities for his country in the U.S. president’s economic policies, while praising Mexicans for uniting behind their government in talks with its northern neighbor.

Slim called Trump a negotiator, “not Terminator,” and said his repeated attacks on Mexico had united the country, giving President Pena Nieto “strength” in trade and border security talks.  “This is the most surprising example of national unity that I’ve had the pleasure of seeing in my life,” said Slim, who turns 77 on Saturday.

Trump then had what appears to be a good first meeting with British Prime Minister Theresa May, as Trump performed well at his first press conference with another world leader at his side.  Mrs. May got Trump to nod in the affirmative when she said that the president was 100% behind NATO.  Trump said he believed in torture, but that he was deferring to Gen. James Mattis.  The optics were better and observers marveled at how brief it was compared to the interminable pressers of President Obama.  Trump stayed on script.  No discussions of crowd size.

Ditto at an appearance late in the day at the Pentagon for the swearing-in of Gen. Mattis as secretary of Defense, though it was here that President Trump signed two executive “actions,” one to slam the door on immigration from select countries, the other to begin to rebuild the military.

Regarding the former, there will be fireworks, though once again Donald Trump is following through on a campaign promise.

The executive order temporarily halts the nation’s refugee program and ushers in the most sweeping changes in more than 40 years as to how the United States welcomes the world’s most vulnerable people.

The order blocks all refugees from entering the U.S. for 120 days and suspends the acceptance of refugees from war-torn Syria indefinitely.

“We want to ensure that we are not letting into our country the very threats that our soldiers are fighting overseas,” Trump said at the Pentagon.

Trump is also blocking visa applicants entirely from a list of countries that the administration considers of major concern regarding the threat from terrorism, including Iraq, Iran, Libya, Somalia, Sudan and Yemen, until a new “extreme vetting” procedure for visa applicants can be launched.

It was quite a way to cap the first week.

The U.S. has admitted 80,000 refugees in the last year, but for now those numbers will plummet.  A cap of 50,000 has been set for the fiscal year ending Sept. 30.  Exceptions can be made for “religious minorities” such as Christians fleeing largely Muslim countries.

The order also expands the ability of local jurisdictions to block the settlement of refugees they object to.  This was blocked by the Obama administration.  This provision will be a major lightning rod.

While the order doesn’t specifically ban Muslims, it says the U.S. will focus on blocking people from countries linked to terrorism.

“Make no mistake – this is a Muslim ban,” said Democratic Sen. Kamala Harris of California.

But Republican Rep. Michael McCaul of Texas, who leads the House Homeland Security Committee, said:

“We are a compassionate nation and a country of immigrants.  But as we know, terrorists are dead-set on using our immigration and refugee programs as a Trojan horse to attack us.”

Democratic Senate leader Chuck Schumer of New York said:

“Tears are running down the cheeks of the Statue of Liberty tonight as a grand tradition of America, welcoming immigrants, that has existed since America was founded has been stomped upon.”

One group that is impacted are Iraqis who worked with the U.S. government in Iraq.  Now they fear their chances of finding refuge in the U.S. may vanish.  Tens of thousands risked their lives helping Americans, though the Special Immigrant Visa program set up for them after the 2003 invasion of Iraq, stopped accepting new applicants in 2014.  Many of those affected were interpreters for the U.S. military.  7,000 have resettled in America thus far.  Thousands more hoped to follow.  This move could make it harder to find locals to help our soldiers in the future.

So there are many consequences, but I support a temporary suspension in the process.

Saturday is going to be a busy day for our president, as he has phone calls with President Putin, Chancellor Merkel and French President Hollande.  The call between Trump and Merkel could be more tense than that between Trump and Putin, especially after Friday’s executive action on immigration, Trump having previously slammed Germany’s policies.

As for Putin and talk of lightening the sanctions, Sen. John McCain released a statement Friday, warning Trump.

“President Donald Trump’s call with Vladimir Putin is scheduled to take place amid widespread speculation that the White House is considering lifting sanctions against Russia.  For the sake of America’s national security and that of our allies, I hope President Trump will put an end to this speculation and reject such a reckless course. If he does not, I will work with my colleagues to codify sanctions against Russia into law.

“In just the last three years under Vladimir Putin, Russia has invaded Ukraine, annexed Crimea, threatened NATO allies, and intervened militarily in Syria, leaving a trail of death, destruction, and broken promises in his wake....

“President Trump should remember this when he speaks to Vladimir Putin.  He should remember that the man on the other end of the line is a murderer and a thug who seeks to undermine American national security interests at every turn.  For our commander-in-chief to think otherwise would be naïve and dangerous.”

Charles Krauthammer / Washington Post

“The flurry of bold executive orders and of highly provocative Cabinet nominations (such as a secretary of education who actually believes in school choice) has been encouraging to conservative skeptics of Donald Trump.  But it shouldn’t erase the troubling memory of one major element of Trump’s inaugural address.

“The foreign policy section has received far less attention than so revolutionary a declaration deserved.  It radically redefined the American national interest as understood since World War II.

“Trump outlined a world in which foreign relations are collapsed into a zero-sum game. They gain, we lose. As in: ‘For many decades, we’ve enriched foreign industry at the expense of American industry; subsidized the armies of other countries’ while depleting our own.’

“And most provocatively this: ‘The wealth of our middle class has been ripped from their homes and then redistributed all across the world.’  Bernie Sanders believes that a corrupt establishment has ripped off the middle class to give to the rich. Trump believes those miscreants have given away our patrimony to undeserving, ungrateful foreigners as well.

“JFK’s inaugural pledged to support any friend and oppose any foe to assure the success of liberty. Note that Trump makes no distinction between friend and foe (and no reference to liberty). They’re all out to use, exploit and surpass us.

“No more, declared Trump: ‘From this day forward, it’s going to be only America First.’

“Imagine how this resonates abroad.  ‘America First’ was the name of the organization led by Charles Lindbergh that bitterly fought FDR before U.S. entry into World War II – right through the Battle of Britain – to keep America neutral between Churchill’s Britain and Hitler’s Reich.  (Then came Pearl Harbor.  Within a week, America First dissolved itself in shame.)....

“Some claim that putting America first is a reassertion of American exceptionalism.  On the contrary, it is the antithesis.  It makes America no different from all the other countries that define themselves by a particularist blood-and-soil nationalism.  What made America exceptional, unique in the world, was defining its own national interest beyond its narrow economic and security needs to encompass the safety and prosperity of a vast array of allies.  A free world marked by open trade and mutual defense was President Truman’s vision, shared by every president since.

“Until now....

“We are embarking upon insularity and smallness. Nor is this just theory. Trump’s long-promised but nonetheless abrupt withdrawal from the Trans-Pacific Partnership is the momentous first fruit of his foreign policy doctrine.  Last year the prime minister of Singapore told John McCain that if we pulled out of the TPP ‘you’ll be finished in Asia.’ He knows the region.

“For 70 years, we sustained an international system of open commerce and democratic alliances that has enabled America and the West to grow and thrive. Global leadership is what made America great.  We abandon it at our peril.”

Next time...Week Two.

Wall Street

The market celebrated hitting Dow 20000 this week for the first time, after being tantalizingly close the past few weeks amid the Trump rally.  It seems the new administration’s aggressive actions in its first days buoyed animal spirits, with the hope a stronger economy will lead to an improved earnings picture.

But the economic data that was released the past few days was decidedly mixed.  The first look at fourth-quarter GDP came in at just 1.9% on an annualized basis, after solid 3.5% growth in the third quarter.

So the last four readings on GDP look like this:

Q4 2016...1.9%
Q3 2016...3.5%
Q2 2016...1.4%
Q1 2016...0.8%

A simple average of 1.9%, but year over year, 1.6%, marking the weakest pace of growth in five years, underscoring the steady but tepid recovery of the Obama administration, and down from 2.6% in 2015, according to the Bureau of Economic Analysis.

Contained within the report was data that the Trump administration could parrot as examples of their aggressive stance on trade, specifically, the U.S. trade deficit.  For example, regarding the $60bn deficit with Mexico, Trump tweeted Friday:

“Mexico has taken advantage of the U.S. for long enough.  Massive trade deficits & little help on the very weak border must change, NOW!”

Patchy export numbers and higher imports subtracted 1.7 percentage points from output in the final three months of the year, though this is a little deceiving.  Soybean sales have been a key; both in the third-quarter surge and the fourth-quarter slump amid depressed exports for the product in Q4 vs. Q3.

The U.S. trade deficit in goods and services rose to $45.2bn in November, as exports fell and imports rose.

On the positive side, consumer spending, two-thirds of the U.S. economy, continued at a solid 2.5% annual clip, while business investment in capital equipment rose 3.1%.

On the inflation front, the GDP report contained the Fed’s preferred price gauge, the personal consumption expenditures index, and this rose an annualized 2.2% in the fourth quarter.  But, excluding volatile food and energy, the core rate rose a modest 1.3%, with the Fed’s goal being 2% on an annualized basis.  For now, the Fed remains focused on the 1.3%, rather than the 2.2%.

In other economic news, the December reading on durable goods was well below expectations, -0.4%, when a gain of 2.7% had been projected (though this reading is highly volatile).  Ex-transportation the figure was +0.5%, but also below forecast.

Then you had December existing home sales, which came in at 5.49 million on an annualized basis, in line, while the figure for all of 2016 was 5.45 million, the highest since 2006, and above 2015’s pace of 5.25 million.

The median home price rose 4.0% in December, year over year, and was up an average 5.2% for all of 2016 to $233,900.

But new home sales for December were well below forecast at 536,000, annualized, and below the 538,000 pace at the end of 2015.

Europe and Asia

First some economic news as Europe and the eurozone continue to show signs of rising growth.  A flash composite reading for the EA19 came in at 54.3 for January (50 being the dividing line between growth and contraction), with the manufacturing component at a solid 55.1 vs. 54.9 in December, and the services component largely unchanged, 53.6 vs. 53.7.  [Markit]

The flash readings break down France and Germany, individually, with Germany’s manufacturing PMI for January at 56.5, a 36-month high, and services 53.2 (down from 54.3 last month). France had a manufacturing reading of 53.4 vs. 53.5 in December, with the services component at 53.9 vs. 52.9.

Chris Williamson, Chief Economist at IHS Markit:

“The eurozone economy has started 2017 on a strong note.  The January flash PMI is signaling respectable quarterly GDP growth of 0.4% with a broad-based expansion across both manufacturing and services.

“Perhaps the most encouraging development is the upturn in hiring, with January seeing the largest monthly rise in employment for nine years amid improved optimism about the year ahead....

“It’s not all good news: with costs rising steeply due to higher commodity prices and the weak euro, while selling price growth remains subdued, margins are being squeezed to the greatest extent for over five years.  However, the recent strengthening of demand is at least starting to help restore some pricing power among suppliers, hinting at an upturn in core inflationary pressures.”

Separately, in Eurostat’s latest look at government debt in the European Union and EA19, debt to GDP in the euro area fell to 90.1% in the third quarter of 2016 from Q3 2015’s rate of 91.5%.

Among the major players....

Germany’s debt to GDP is 69.4%; France 97.5%; Spain 100.3%; Italy 132.7%; Portugal 133.4%; and Greece 176.9%.  [Non-euro U.K. at 88.2%.]

The ratios for Italy, Portugal and Greece are more than worrisome, and in the case of Italy in particular, a reason why I’ve been harping on their bond market being a ticking time bomb.

Somewhat along these lines, Jens Weidmann, the Bundesbank president, has echoed fears from many in his country that the European Central Bank needs to trim its quantitative easing program sooner than its discussed December deadline

Weidmann said: “The economic outlook at the beginning of the year is quite positive and the inflation rate is gradually approaching the ECB’s definition of price stability. If this price development is sustainable, the requirements for the withdrawal from the loose monetary policy are met.”

But ECB President Mario Draghi does not believe inflation is an issue for a long time to come, touting higher energy prices as being the reason for the recent bump, though for its part, the Bundesbank said inflation in Germany was at 2% in January, the ECB’s target.  [It is far less virtually everywhere else in the eurozone.]

Weidmann’s stance is also influenced by the German government’s expectations that GDP will rise to 2.8% in 2017, up from a previous forecast of 2.1%.

As for Brexit....

The U.K.’s highest court dealt a blow to Prime Minister Theresa May on Tuesday by ruling the government must hold a parliamentary vote before  triggering Article 50 to leave the European Union.

But this wasn’t unexpected and really just means Ms. May has to rush a brief bill through both Houses of Parliament to fulfil the court’s requirement for parliamentary approval, so a bill was rushed out days later to “confer power on the Prime Minister to notify, under Article 50(2) of the Treaty on European Union, the United Kingdom’s intention to withdraw from the EU.” 

Brexit secretary David Davis said: “I trust that Parliament, which backed the referendum by six to one, will respect the decision taken by the British people and pass the legislation quickly.”

The issue will be that MPs from across the political spectrum will attempt to amend the legislation, with Labour leader Jeremy Corbyn saying he would seek to amend it “to make demands on rights, protections and market access.”

UKIP (anti-EU) leader Paul Nuttall warned MPs and peers not to hamper the passage of the legislation.

“The will of the people will be heard, and woe betide those politicians or parties that attempt to block, delay, or in any other way subvert that will,” he said. 

Significantly in Mrs. May’s favor, the court also ruled the Scottish Parliament and Welsh and Northern Ireland assemblies did not have a say, which of course really torqued off some Scots, as they vow to pursue independence, again, but despite reports it could be imminent, I don’t think so.  Public opinion is still at 55-45 against independence, the margin back with the 2014 referendum.

Scottish First Minister Nicola Sturgeon said the British government’s promises to consult lawmakers in Scotland now were “not worth the paper they are written on” and that it’s “becoming ever clearer” that Scotland must decide whether it should “take our future into our own hands.”

Good luck.  Plus, Spain would oppose Scotland’s acceptance into the EU, anyway, because this would encourage Catalonia to seek to break away and follow suit.

German Finance Minister Wolfgang Schaeuble said last week the German government would try to minimize any damage to both the EU and Britain during the Brexit negotiations as German companies, at least for today, are sanguine on the impact, according to an IW poll on Monday.  A full 90% of the 2,900 companies surveyed expect no damage at all or very little harm from Britain’s exiting the EU.

Back to Theresa May, at an appearance in Philadelphia on Thursday, the day before her meeting with Donald Trump, she told congressional Republicans that the decline of the West was not inevitable but the U.S. and U.K. had to “lead together, again.”

In a pointed reference to China, the prime minister said:

“We – our two countries together – have a joint responsibility to lead,” she said.  “Because when others step up as we step back, it is bad for America, for Britain and the world.”

At the same time she ripped up Tony Blair’s “doctrine of liberal interventionism,” declaring that the days of the U.S. and the U.K. invading countries to engage in nation building were over.  [Blair had said the West should be more willing to replace dictatorships with democracy, a view that formed part of the justification for the wars in Afghanistan, Iraq and Libya.]

But Mrs. May said these were the “failed policies of the past” and declared that the U.S. and U.K. should no longer “intervene in sovereign countries to remake them in our own image.”

Eurobits....

--France’s finance minister Michel Sapin warned that the “window of opportunity” for a deal on the next stages of Greece’s bailout were closing and once again a meeting of finance ministers in Brussels failed to bridge the gap between Greece and the International Monetary Fund.

Sapin’s point is that with all the national elections coming up, beginning with the Netherlands in March, the political space to reach a deal would close.

The IMF has refused to participate in the 86bn euro Greek bailout unless its conditions are met, such as Greece’s commitment to a primary budget surplus (before debt service) that meets its targets, with the IMF wanting Athens to “pre-legislate” certain conditions for 2018 and beyond, which Greece thinks is rather outrageous.  [Kind of like asking the U.S. Congress to commit to certain budget items for fiscal 2019 when they can’t even resolve F2017.]

--Spain is making good progress in bringing down its unemployment rate, from a high of 27% in 2013 to 18.6% in December.  The economy is growing at a 3%+ clip.  But of course it has a long ways to go before it hits the eurozone’s average unemployment rate of 9.8%, let alone Germany’s 4.1%.

--According to Eurostat, the number of tourism nights spent in the European Union is expected to be up 2% in 2016 to 2.8 billion.  Spain has the lead at 454 million nights, +7.8% vs. 2015, followed by France (395m, -4.6%...see terrorism), Italy (395m, +0.5%), Germany (390m, +2.8%) and the U.K. (292m, -4.5%).

In Euro politics....

--Angela Merkel hit back at a surge in “polarization and populism” after the German chancellor was the main target of criticism at a gathering of right-wing European leaders.  Merkel continues to defend her refugee policy as an act of moral and legal obligation by a “state of laws,” Merkel saying Europeans must stand by principles that include offering asylum to those fleeing from war and oppression.

Support for Merkel’s Christian Democratic Union-led bloc fell just one percentage point to 32.5% in a recent INSA poll for Bild newspaper, while backing for the anti-immigrant AfD rose a point to 14.5%.  Merkel’s coalition partner, the Social Democrats, are at 21%.

Surprisingly, a Forsa poll has found that Merkel’s own popularity has risen a little since the Berlin terror attack, as only 28% of German voters see a connection between the refugees and the terrorist threat, with 68% seeing no link.

The feeling of calm is simply because there hasn’t been a follow-on attack.

Separately, the Social Democrats are putting forward European Parliament President Martin Schulz as their challenge to Merkel in the September election, with Sigmar Gabriel, the party leader and current deputy chancellor, standing aside.  Schulz thus also takes Gabriel’s post as SPD chairman.  Gabriel is only 57 and still has a bright future, but it seems he believes that with little chance to beat Merkel, it might be best to hold off for now and wait for a better opportunity.

Gabriel is now going to replace Frank Walter Steinmeier as foreign minister, Steinmeier becoming national president (a figurehead position...the kind I would love...maybe of Bermuda).

--Back to the Netherlands, Prime Minister Mark Rutte is under scrutiny ahead of that country’s big vote after a news program alleged that his justice minister deceived lawmakers about his knowledge of a deal in which the government made a payment to a criminal drug trafficker.  The minister then quit.

Rutte’s Liberals are running neck-and-neck with Geert Wilders’ anti-Islam, anti-EU Freedom Party.  Rutte, trying to show his sensitivity to the migration issue, ran a newspaper advertisement warning immigrants they should “be normal or leave.”

--After the Dutch vote, we have France, the first round in their presidential election being April 23.  And now front-runner Francois Fillon has had to vigorously defend his use of public funds to employ his wife Penelope as his parliamentary aide, denying allegations she had a fake job. Speaking on prime-time television on Thursday, Fillon said his wife would accompany him to events, monitor the news and meet people on his behalf, adding, his wife “has always worked for me, since 1981.”

This could be big, as he’s running as a candidate with high moral standards.

But, French MPs receive a certain amount from the state each month to spend on aides and up to half can be used to employ family members, though you’d expect them to work and from what I’m reading, in various outlets, Mrs. Fillon didn’t do squat.

Just when I thought Fillon was a shoe-in, we have to wait 24 hours, sports fans!

Meanwhile, Sunday is the runoff for France’s ruling Socialist Party to pick their presidential candidate and its between former prime minister Manuel Valls and Benoit Hamon.

But an independent, Emmanuel Macron, who quit President Francois Hollande’s government after launching his own political party in April, is moving up.  The last Ipsos survey in mid-January has Marine Le Pen at 26%, Fillon at 25% and Macron at 21%, with the Socialist candidate, whoever it is, fourth.

It’s been long expected that it would be Le Pen and Fillon in the run-off, with Fillon then kicking Le Pen’s butt, like 65-35, 60-40, as I’ve seen it.  But now Macron, a pro-business progressive, as well as Fillon’s scandal (with Le Pen having her own issues) are mucking things up.

Early next month, Le Pen formally launches her candidacy in Lyon.

But first we wait to see what happens in the Netherlands.

In Asia, it was all about Japan this week.  December exports were up 5.4%, year over year, as a pick-up in global demand and the effects of a weaker yen aided Japan’s critical export sector. 

December exports to the U.S. were up 1.3%, yoy, the first increase in 10 months, led by autos and car parts, while exports to China rose 12.5%.

A flash reading on Japanese manufacturing for January came in at a solid 52.8, the best since March 2014.

A reading on inflation for December showed a nationwide core rate of -0.2%, though this is actually an improvement and everyone is forecasting positive inflation soon.  Tokyo, which reports a month earlier, said the core CPI for January was -0.3% yoy.

But after three straight quarters of economic growth, the government and Bank of Japan are hoping companies begin to hike wages.

Japan is also preparing for all possible contingencies regarding trade talks with the United States, the chief government spokesman said on Friday, after Donald Trump dumped the Trans-Pacific Partnership, with Trump seeking quick progress on a bilateral trade agreement with Japan in its place.

As for China, the Lunar New Year holiday is underway so it will be relatively quiet for a spell here...one hopes.

Street Bytes

--The Dow Jones closed the week at 20093, up 1.3%, with the new record-closing high of 20100 set on Thursday.  The S&P 500 added 1.0% and Nasdaq, in finishing the week at another high, 5660, tacked on 1.9%.

I cover some of the major earnings reports below and while many exceeded expectations, the revenue story remains tepid.

You also have the issue of just how quickly the Trump agenda will get implemented, as alluded to above with Paul Ryan’s 200-day plan.  It’s not going to be as easy as some of the players make it out to be.

--U.S. Treasury Yields

6-mo. 0.62%  2-yr. 1.22%  10-yr. 2.48%  30-yr. 3.06%

Treasuries were virtually unchanged, though there was some intraday volatility. The Federal Reserve meets next week and there is no way they are doing anything, but their accompanying statement should telegraph a move in March, as it’s expected there will not only be more clarity on the timing of the Republicans’ plans by then, but the Fed will also get to see January’s and some of February’s data.

--In its annual look at the global energy outlook published on Wednesday, BP said the world is “facing a long-term oil glut as producers scramble to exploit reserves before demand for fossil fuels goes into decline,” according to the company’s assessment.  [Financial Times]

Essentially, BP is saying there is twice as much recoverable oil than estimated demand between now and 2050.

So companies might scramble to ensure their assets were not left “stranded” with demand shifting from fossil fuels to renewables.

Spencer Dale, BP’s chief economist, said the result of this behavior would likely lead to “quite significant pressure to dampen long-run prices.”

But in the here and now, oil remains firmly above $50 per barrel over optimism OPEC’s supply cuts, with the participation of some non-OPEC producers, will stick.

To that end, Saudi Arabia’s production may have dropped from 10.47 million barrels per day in December to 9.9 million in January, according to Reuters, which would confirm recent statements from Saudi Energy Minister Khalid al-Falih.

But I just have to add some comments from a Wall Street Journal piece last weekend, that U.S. producers will be ramping up spending in a big way, such as RSP Permian Inc., which drills exclusively in West Texas, is boosting its budget by 97% to $600 million. 

Hess, one of the bigger drillers in North Dakota, unveiled a $2.25bn budget for 2017, an 18% increase over last year.

Noble said it would spend up to $2.5bn, a 67% jump over 2016.

The Journal quotes an energy analyst at Raymond James & Associates, Praveen Narra, who offers, “Willingness to spend is certainly there,” but he is projecting an average $70 a barrel price for crude this year.

I would just counter, if the U.S. ramps up production all over again, that will easily replace any cuts elsewhere and the world is still awash in oil.  Ergo, I disagree with the $70 call, unless you tell me production is disrupted in the likes of Iran and Iraq, for what would be troublesome reasons.

--Chevron, the second-largest U.S. oil company, reported earnings well below expectations for the fourth quarter and the shares fell 2% in response.

Revenues for Q4 were also less than expected, up 8% from a year earlier.

CEO John Watson said the company has responded to low oil and gas prices (before the recent rebound) by cutting capital spending and operating costs aggressively.

Results from oil and gas production did rebound due to the higher prices, but the refinery operations saw their profits drop to zero.

Capital and exploration spending dropped to $22.4bn in 2016, from $34bn in 2015.

--Boeing reported higher than expected earnings and revenue for the fourth quarter and guided higher for 2017.  Q4 revenue was $23.3bn, slightly higher than the Street forecast, but it talked of delivering 760-765 commercial aircraft this year, which is a nice jump from last year’s 748, these being rather big-ticket items.  BA’s shares rose sharply.

--Lockheed Martin reported better than expected fourth quarter results, though it issued a downbeat outlook for 2017.  Sales rose 19% from a year ago to $13.8bn, with sales in its aeronautics division, the company’s largest, up 23%, due to higher sales of the controversial F-35 fighter jet.  [Lockheed delivered two more for the quarter than expected, though the total for the year was fewer than forecast.]

Shares in Lockheed slid when the company lowered its guidance for earnings this year, owing to weakness in financial reporting at Sikorsky, the military helicopter maker.

--United Technologies, maker of aerospace and building systems (Otis Elevator), also delivered solid earnings that matched estimates, with sales increasing 3% to $14.7bn.  Otis’ sales were flat in China, a key market for UTX.

Carrier, a unit of United Technologies, was strong-armed by President Trump into abandoning plans to shutter an Indiana plant and move jobs to Mexico.

UTX CEO Greg Hayes, though, praised Trump’s plans on corporate tax reform, including provisions to make it easier to repatriate profits earned overseas, citing his company’s $6bn in cash outside the U.S. that can’t currently be brought back effectively.

--Caterpillar shares slid some as sales declined more than expected during the fourth quarter, down 13% to $9.6bn, with sales down in all regions except Asia Pacific, and across all major business categories.  Adjusted earnings of 83 cents a share, however, eclipsed analysts’ estimates of 66 cents.

The results also show that Caterpillar’s workforce shrank by nearly 10% to 95,400 at the end of 2016, from a year earlier.  But the company also guided lower for this year.

Nonetheless, CAT shares, which fell to a 5 ½-year low at the start of 2016, $56.35, finished the week at $98.95.

--Diversified manufacturer Honeywell International posted fourth-quarter revenue that was roughly flat compared with a year earlier, while analysts were expecting an increase, hurt by weakness in its aerospace and energy businesses; aerospace down 8%, energy down 4.7%.

--Whirlpool Corp. announced it would be cutting about 500 jobs as it restructures its Europe, Middle East and Africa dryer manufacturing operations.  The world’s No. 1 maker of home appliances said production at its Amiens, France, facility would cease in 2018.  The U.K. facility in Yate would focus solely on the U.K. consumer, while non-U.K. consumer needs would be concentrated in Lodz, Poland.

--Alphabet shares fell in after-hours trading on Thursday after the Google parent company revealed earnings that, while strong, fell short of analysts’ expectations.

Alphabet’s sales rose 22% in the fourth quarter to $26.1bn.  Excluding the costs of acquiring traffic, revenues were $21.1bn.

Net profits rose to $5.3bn from $4.9bn in the same period a year earlier.  Profits in the key search division grew nearly 17%, led by mobile search and YouTube.

But the so-called “Other Bets” unit that houses products like the Nest thermostat and its self-driving car project posted an operating loss of $1.1bn.  CFO Ruth Porat, though, said “we’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets.”

--Microsoft reported better-than-expected profits for its fiscal second quarter, with revenues reaching $25.84bn, up 1 percent from the same period a year ago.

Microsoft saw strong growth in its cloud services division, although this was undercut by declining sales in its PC division.  Revenues from Azure, the cloud service, grew 93%.

But what you see in the revenue comparisons between Alphabet and Microsoft is the former has almost caught the latter on a net basis.

--Intel recorded sales and earnings in its fourth quarter that beat estimates, with revenues up 10% to $16.4bn, though net income was flat at $3.6bn. 

Client computing, which includes PC chips, grew 4% in the quarter, as declining volume was offset by growth in prices.

For the coming year, Intel said revenues would be flat, but with growth in earnings.

Intel has been working to reduce its dependence on the PC market and reposition itself into the “internet of things,” including artificial intelligence and autonomous cars, where it is behind graphical-processing chip maker NVIDIA.  [Financial Times]

--Verizon posted earnings that were so-so vs. expectations and the shares fell.  Plus it added fewer net subscribers than forecast.

As for the acquisition of Yahoo, VZ said it “continues to work with (them) to assess the impact of data breaches.”  Yahoo announced the deal would be delayed until the second quarter.

Yahoo also announced in its own earnings report that it saw no drop in usage after disclosures about the two big hacking incidents, which the company was less than forthright on with Verizon. The SEC is investigating if Yahoo disclosed the breaches to investors in a timely manner as well.  [They didn’t.]

That said, revenue at Yahoo was up 15% in the fourth quarter.

Thursday, Verizon said it was exploring a combination with Charter Communications Inc. that would unite two media and telecom giants.  But Charter’s ownership includes cable tycoon John Malone and the Newhouse family, which complicates things.

Verizon has more than 114 million wireless subscribers, while Charter provides television to 17 million customers and broadband connections to 21 million.

--Samsung Electronics Co. shrugged off its issues with the recall of 3 million Galaxy Note 7 smartphones, recording its highest operating profit in more than three years in the fourth quarter, $6.1bn, though revenue was up a fraction of a percent.

Samsung is profiting from strong sales of memory chips and display panels, which contribute 68% of profits.

[Separately, Samsung said it has figured out the issue of the Galaxy Note 7 smartphones. They were catching fire because some batteries were irregularly sized, causing overheating.]

--Electronics maker Foxconn Technology Group is contemplating investing $7 billion in a flat-panel screen factory in the U.S., though CEO Terry Gou, one of the richest men in Asia, said he needed incentives to make it happen.  Gou said the Taiwan-based company that is a major contract player in the region, is targeting Pennsylvania as a likely location.  Getting nearly free power, as well as land, is a key.

The factory would involve Sharp Corp., the Japanese electronics maker and flat-panel supplier that Foxconn recently acquired.

Gou did warn, “The rise of protectionism is unavoidable.”  The company operates factories in China that churn out Apple’s iPhones.

--The automakers that have been groveling at the feet of Donald Trump have huge costs in abandoning plants outside the U.S., such as Ford taking a $200 million charge for shelling a $1.6bn small car facility in Mexico.  For now, though, the CEOs continue to paint a positive picture on the new environment.  But there is little chance they are going to be building new plants anytime soon in the U.S., which are huge commitments; rather they will expand at existing facilities where appropriate.

--McDonald’s debuted all-day breakfast in October 2015 – selling McMuffin sandwiches and the like as part of a plan to turn around sagging sales under then-new CEO Steve Easterbrook.  It worked great...until perhaps now, as same-store sales dipped in the fourth quarter for the first time in a year and a half, though the decline was smaller than expected, 1.3%.

Internationally, McDonald’s fared better, with sales at restaurants open at least 13 months rising 2.7%.

The next few quarters will be interesting to see if the bloom is totally off the rose, though now the company has introduced some new versions of the Big Mac.  I’ve got a hankering for the Giant model.

--Applebee’s Grill & Bar’s owner DineEquity warned that a move to mandate each of the chain’s 2,000 eateries add wood-fired grills to their kitchens to support new menu items, including hand-cut steaks, has backfired in a big way.  Some analysts are expecting same-store sales to decline as customers rebelled against the more expensive meals.

So now Applebee’s is frantically running lower-cost promotions, like chicken-and-shrimp dishes for $9.99.

--Starbucks CEO Howard Schultz, who is leaving that role in April to be executive chairman, admitted that disappointing U.S. sales growth of 3% for the fourth quarter was due in part to “congestion” in the stores that is prompting some people to leave without buying anything.  The popularity of the mobile order-and-pay option, which was supposed to make getting a drink easier, has caused bottlenecks.

While sales were up, due to people tacking on purchases like sandwiches, customer visits were flat, with the company cutting its sales forecast for the year.

Same-store growth rose 6% in China, which I would be concerned about given my gloomy projections for U.S-China relations and the ever-present danger of economic nationalism there.

Schultz has been correctly warning that the retail landscape will undergo a “seismic” shift, not just for bricks-and-mortar retail but also less foot traffic for restaurants, though he doesn’t think this will include Starbucks.  Research firm NPD said it expects total restaurant industry traffic to remain “stalled” this year.

Kevin Johnson takes over from Schulz on April 7, as Schulz begins to gear up for a 2020 presidential run.  [So many of us believe.]

--J&J reported a smaller-than-expected rise in fourth-quarter sales, with slowing demand for its medical devices and a stronger dollar, the latter an old story for multinationals. Overall sales rose just 1.7% to $18.11bn, with sales in its medical device biz up 0.2%.

But then the healthcare company announced it was acquiring Actelion, a Swiss drugmaker, for $30 billion.

--DuPont reported earnings well above expectations, as it cut costs ahead of its planned merger with Dow Chemical, the closing date for which continues to be pushed back due to issues with regulators, who remain concerned with issues of competition for crop protection chemicals and seeds.

--Homebuilder D.R. Horton Inc. reported results that handily beat the Street, posting revenues substantially above estimates.

--American Airlines reported a recovery in revenue in the fourth quarter, with total rev per available seat mile, a key industry metric, rising 1.3% year on year, the first such increase since the fourth quarter of 2014.

Several airlines have reported a “Trump bump” in bookings after the election.  On Tuesday, United Continental Holdings reported better-than-expected net income, helped in part by unexpectedly strong demand in the wake of the vote.

--Alibaba blew through analysts’ estimates in its fiscal third  quarter, with revenue up 54% to $7.7bn, while raising its forecasts for full-year revenue growth.  The company has the largest ecommerce platform in China and it attributed the “blowout quarter” to more users spending more time on its various sites, including 493m mobile monthly active users.  As Deng would have said, ‘pretty, pretty good.’  [Mao would have shot a third of the users.]

--The share of American workers in unions fell to the lowest level on record in 2016.   Only 10.7% of workers were union members, down from 11.1% in 2015, and from more than 20% in the early 1980s.  [Wall Street Journal]

--Mattel Inc. said the holiday season was disappointing, with fourth-quarter sales of $1.83bn vs. $2bn the year before.  CEO Christopher Sinclair, who is being replaced by Google executive Margaret Georgiadis on Feb. 8, cited a “significant U.S. toy category slowdown.”

It was a joyless holiday season.  Sad.

--After sponsoring the U.S. Olympic team since 1984, Anheuser-Busch InBev is ending its partnership with the U.S. Olympic Committee after 16 Olympic games.

Bud wasn’t alone in ending their sponsorships post-Rio.  Others included TD Ameritrade, Citi and Hilton.  Coca-Cola, McDonald’s, P&G and Visa maintain their worldwide sponsorship deals with the USOC.

Anheuser-Busch will continue to have a major presence in events such as the Super Bowl.

When drinking domestic, I opt for the plain taste of Coors Light myself.

--The inauguration of President Trump was watched by 30.6 million television viewers, according to Nielsen, which compared to Barack Obama’s 20.6 million viewers for his second inaugural. But also 37.8m for Obama’s first swearing-in ceremony in 2009; Bill Clinton’s 29.7m in 1993, and the largest TV audience for an inauguration in 1981, Ronald Reagan’s 41.8 million.

Of course the Trump team is talking about the millions who watched on their mobile phones, iPads and such, and they are right, but it’s also hard to quantify.

--The U.S. Drought Monitor said that as of Thursday, over 51% of California remains in “moderate” to “extreme”, compared with more than 95% of the state being listed as being in some form of drought a year ago.

But the drought is over, says moi. As of Thursday, the water content held by the state’s snowpack was 191% of average for the day.

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey: So much for a ceasefire.  Syrian Islamist rebel group Ahrar al-Sham said Thursday six other rebel factions had joined its ranks in northwestern Syria in order to fend off a major assault by powerful Jabhat Fateh al-Sham, once allied with al-Qaeda and formerly known as the Nusra Front.  Fateh al-Sham attacked Free Syrian Army (FSA) groups west of Aleppo, accusing them of conspiring against it at peace talks in Kazakhstan this week, Fateh al-Sham not being invited.

Ahrar al-Sham presents itself as a mainstream Sunni Islamist group.  But it is considered a terrorist group by Moscow and did not attend the Russian-backed Astana peace talks.

The FSA groups have received backing from countries opposed to Syrian President Assad such as Gulf Arab states, Turkey and the United States. 

Fateh al-Sham has been targeted by a spate of U.S. airstrikes.  Yes, it’s complex.

Meanwhile, Donald Trump is calling for safe zones, which is beyond idiotic, at least given the current state of affairs.  Longtime readers know I said this war was over in 2012, once the U.S. didn’t work with Turkey on the establishment of safe zones near the Turkish border, years before Russia entered the fray, but Obama was more concerned about the 2012 election in the U.S.  There were about 20,000 dead in the one-year-old civil war at that point.  We had proved in Iraq and the Balkans that no-fly/safe zones could work.  We blew it.  Too late now.

Separately, I have been a big fan of Democratic congresswoman Tulsi Gabbard (Hawaii) for her independent thinking on foreign policy, Gabbard being an Iraq War veteran and a prominent member of both the House Armed Services and Foreign Affairs committees.

But Gabbard is taking bipartisan heat for her secret trip to Syria (accompanied by former Democratic congressman Dennis Kucinich) and her meeting with Syrian President Assad.

“There’s a pretty unanimous feeling of shock and disgust,” a Democratic aide who works on national security issues told The Hill.  “Everybody I’ve talked to on both sides of the aisle, I think people are just stunned.”

Republican Rep. Adam Kinzinger (Ill.), another Iraq War veteran, told The Hill in an email:

“An elected official, a representative of the United States, went on a secret trip to meet with the brutal dictator who had murdered nearly half a million of his own people – it’s reprehensible and cannot be justified.

“The actions of Congresswoman Gabbard have put our nation’s reputation and foreign policy concerns at high risk and I couldn’t be more disgusted.”

Rep. Ed Royce (R-Calif.), chairman of the Foreign Affairs Committee, is seething.

“Assad has exterminated hundreds of thousands of Syrians.  This trip was not authorized by the committee, and it was just wrong,” as noted by a committee spokesman.

But the second-ranking Democrat on the Foreign Affairs panel, Rep. Brad Sherman (Calif.), defended Gabbard.

“Congress has an equal role in the conduct of American foreign policy even if Congress doesn’t negotiate directly on behalf of the United States,” Sherman said.

“Sometimes we have to hear from and meet with leaders that are detestable,” he added.  “I have my disagreements with Tulsi on Syria policy, but knowing Tulsi, I am confident she comported herself admirably on the trip.”

For her part, Gabbard said she had no intention of meeting with Assad on her fact-finding mission, but she grabbed the opportunity when it arose.

“I think we should be ready to meet with anyone if there’s a chance it can help bring about an end to this war, which is causing the Syrian people so much suffering,” she said in a statement.

I think what is upsetting so many is that she gave congressional leadership zero heads up she was going. Gabbard says she kept it secret “for obvious security reasons.”

I saw Gabbard’s first interview on CNN with Jake Tapper when she returned and what is just as controversial is her stance there is no moderate Syrian opposition, and that everyone the Assad regime has been carrying out his campaign of violence on are all terrorists.

In Iraq, the battle for Mosul has reached a critical stage as the Iraqi Army moves on west Mosul, ISIS’ last major stronghold in the country.  It took three months to reconquer east Mosul but deadlier battles are ahead on the city’s west bank, with three quarters of a million civilians living there and at “extreme risk,” the United Nations warned.  It is estimated nearly half of all the casualties thus far in the battle are civilians so the risk today is indeed enormous.  But in eastern Mosul, schools have begun to reopen amid efforts to resume a normal life.

David Gardner / Financial Times

“After six years of war in Syria, Russia and Turkey have brought governments and rebels together in Kazakhstan, face-to-face for the first time, but at opposite sides of the same room glaring at each other.  These talks in Astana are most unlikely to bring peace to Syria – but they will probably cement realignment, leaving the U.S. substantially out of the regional picture from the Levant to Libya.

“True, unlike at previous talks in Geneva, convened by the U.S. and Russia under UN auspices, there are mainstream rebel fighters at the table rather than the five-star hotel rebels who have so signally failed to build a cohesive opposition and alternative government.  Moscow’s ally in Syria, Iran, is minding the government delegation, while Turkey – until now set on toppling the regime of Bashar al-Assad – is supposed to be prompting the rebels.  Everyone notionally agrees Astana is a bridge to resumed UN-run talks in Geneva next month; it could just as easily be a bypass. Either way, this is a diplomatic dance orchestrated in all its essentials by the Kremlin.

“President Donald Trump and his team talk about what they are pleased to call ‘alternative facts.’ The master of the Kremlin he so admires, President Vladimir Putin, is busy with his friends creating alternative facts across the Middle East.

“ ‘Putin intends to start the post-Obama chapter in Syria on his terms, confronting the new American administration with the fait accompli of [Assad] regime victory in Aleppo,’ writes Fabrice Balanche of the Washington Institute for Near East Policy.  ‘On the diplomatic front, the new Turkey-Russia-Iran alliance threatens to marginalize other outside actors.’....

“Now, even though Ankara is purveying ‘alternative facts’ to disguise its shift on Syria, Turkey no longer seeks the removal of Mr. Assad.  ‘The facts on the ground have changed dramatically,’ Mehmet Simsek, Turkey’s deputy prime minister told an audience in Davos last week.  ‘Turkey can no longer insist, you know, on a settlement without Assad,’ he said.  ‘It’s not realistic.’

“Mr. Putin, for whom Syria is arguably about securing Russian superpower parity with the U.S., has just signed long-term leases with the Assad regime for naval and airbases in Syria. Iran and its militia proxies face an unpredictable but hostile Trump administration.  Tehran may be trying to replicate its success with Lebanon’s Hizbullah – the most potent paramilitary organization in the world – with the militia coalitions it has stitched together in both Iraq and Syria.

“President Trump will have to make decisions about these emerging new facts on the ground. He may want to tilt towards Mr. Putin, allying against ISIS and Islamist extremism, and hoping Moscow can restrain Tehran’s muscle-flexing across the region. But that would have collateral costs, not least in Europe and within NATO.”

Iran: Iranian President Hassan Rouhani faces a tough test in May’s upcoming election, with a new opinion poll, conducted in December by the University of Maryland, showiing 69% of Iranians view Rouhani either very favorably or somewhat favorably, which is a decline from 82% in a June poll by the university.  Those who view him very favorably has fallen from 61% in August 2015 to 28% in the new poll.

Rouhani is perceived to have failed to deliver on his campaign promises, with 51% saying the country’s economic conditions were worsening, up from 43% in June.  Almost three-quarters said the nuclear deal hadn’t improved people’s living conditions.

And as I noted a few weeks ago, Rouhani lost a key ally with the passing of former President Rafsanjani.

But, Rouhani still wins handily over two potential conservative candidates, according to the same survey.  [Wall Street Journal]

Turkey: President Recep Tayyip Erdogan’s campaign to secure sweeping executive authority won the approval of parliament, 339-142, last weekend and now Turks will have the final say in a referendum that is likely to be held in April.

Among the proposed changes, the job of prime minister would be abolished and Erdogan would have powers unrivaled since the days of Ataturk.

Erdogan’s supporters say the changes are needed to overcome deepening security and economic challenges, while critics state the obvious...Erdogan would be a dictator, cracking down further on political opponents, journalists, academics and activists.

Erdogan had been prime minister for more than a decade, before he sought to empower the presidency after his election to the position in 2014.

Separately, regarding relations with Greece, Ankara can’t be happy with Greece’s Supreme Court, which ruled against extraditing eight Turkish soldiers whom the Turkish government accuses of being in last July’s attempted coup.  The eight fled to Greece in a helicopter after the coup attempt but say they were not involved.

Turkey had demanded they be returned to stand trial.  The soldiers say their lives would be in dangers.

The court’s decision is final and cannot be appealed against.

Israel: The government has announced plans to build 2,500 more homes in Jewish settlements in the occupied West Bank.  Palestinian officials said the plans undermined peace hopes by building on land they want for a future state.

It is the second such announcement since President Trump took office, as he has indicated he would be more sympathetic to settlement construction than the Obama administration.

About 500,000 Jews live in 140 settlements built since Israel’s 1967 occupation of the West Bank and East Jerusalem.  The settlements are considered illegal under international law, which Israel disputes.

Separately, officials say the Obama administration quietly released $221 million in funds to the Palestinian Authority in its waning hours, which GOP members had been blocking.  The Obama team reportedly notified Congress literally hours before the inauguration.

The funds had been approved by Congress in budgets years 2015 and 2016, but some GOP lawmakers placed holds on it over moves the PA had taken to seek membership in international organizations.

The Trump White House is looking into the move.  Prime Minister Benjamin Netanyahu is going to visit the White House in February.

But Netanyahu was interviewed by Israeli police for a third time on Friday as part of a criminal investigation into abuse of office.  There are two cases.  One involving gifts given to him and his family by businessmen and the other related to conversations he held with an Israeli publisher.  The prime minister has denied any wrongdoing.

If charges are brought, Netanyahu is likely going to have to step down after 11 years in office, spread over four terms.

China: Beijing was not included in the Trans-Pacific Partnership trade pact but it’s unclear just how much China will benefit from U.S. withdrawal from the TPP. China has been promoting its own trade pacts as alternatives such as the Regional Comprehensive Economic Partnership, along with its “One Belt, One Road” initiative.  President Xi Jinping is gearing up to meet regional leaders in Beijing in May to discuss how to implement it all.

But as one analyst, Lin Limin, told the South China Morning Post, countries such as Singapore and Vietnam that intended to join the TPP, always “put their feet in two boats.”

“Even without the TPP, they will always keep a distance from China and will never put all their eggs in one basket.”

Australia, however, said it would push ahead with involvement in the TPP, even without the U.S., saying it was open to China joining the agreement.  Fellow TPP member Chile said it also planned to seek trade deals with China.

Japan said it would continue to try to convince the U.S. to be involved and that it was important to have Washington in the pact.

Meanwhile, Chinese Premier Li Keqiang called for China and Germany to play a leading role to ensure the stability of international markets amid an “uncertain” global political and economic climate. During a call with the German chancellor, Premier Li said “international political and economic scenes are facing several uncertain factors,” Xinhua reported.

On a different note, Monday, White House spokesman Sean Spicer said the U.S. would “make sure we protect our interests” in the South China Sea to prevent China from taking territory in the region.

In response the Chinese foreign ministry said Beijing would “remain firm to defend its rights in the region.” Chinese media said Spicer’s comments would require Washington to “wage war.”

Following his inauguration, Chinese diplomatic observers said China should brace itself for a trade war.  One strategist, Liu Qing, from the China Institute of International Studies, a think tank in Beijing, told the South China Morning Post:

“Trump may take indirect action against China, such as increasing pressure on China’s neighboring countries to affect the regional investment and trade environment and harm Chinese interests,” Liu said.  “This could bring instability to the security of the Asia-Pacific region.”

Liu added, however, that the foundation of Sino-U.S. relations was unlikely to undergo any dramatic shift.  He also said: “From China’s point of view, we shouldn’t scramble to react to every word he says, but rather, take a long vision in the strategic thinking of how to work with the new U.S. president.”

North Korea: Last August, Thae Yong-ho became one of the highest-ranking officials ever to defect and in an interview in Seoul with the BBC’s Stephen Evans, Thae said he believes leader Kim Jong-un would be prepared to attack the U.S. with nuclear weapons, but that the regime will fall one day.

Thae was a diplomat in London when he suddenly vanished and showed up in Seoul.  He won’t say if the secret services of Britain, the U.S. or South Korea helped him and his family get out.

Thae reckons that Kim is so ruthless, that if his very survival were threatened, he would lash out and destroy whatever he could.

South Korea: The outgoing chief judge of South Korea’s Constitutional Court urged the court on Wednesday to conclude the impeachment trial of President Park Geun-hye by March 13, when the retirement of another judge will reduce the nine-judge bench to seven. Chief Judge Park Han-chul, who retires Jan. 31, is concerned the reduction from 9 to 7 on the court would distort the court’s impartiality. Seven is the minimum required by law to rule on an impeachment.  [Reuters]

Russia: President Trump and Russian President Putin are expected to have their first conversation since Trump took office on Saturday, first noted by the Kremlin.  So we’ll see what the readouts are from both sides, in the wake of the Obama administration, which issued sanctions against Russian businesses and individuals for its alleged election-related cyberattacks, backing of separatist forces in Ukraine and illegal annexation of Crimea.

Separately, Russian media has reported that a Russian intelligence officer and a cyber-security investigator were arrested last month on treason charges for allegedly passing information to U.S. intelligence services.

And then there’s Dmitry Kiselyov, the Kremlin’s so-called “chief propagandist,” who said some of the following on his widely watched Sunday news show.

In talking about the inauguration of Donald Trump, his show opened with scenes of the “rioting” in Washington, D.C., but then Kiselyov mainly parroted Trump’s own inauguration speech, focusing on the “carnage” supposedly consuming American streets, while praising the ceremony as the best show Washington has ever staged.

Kiselyov said President Obama had a “stone face” and Michelle Obama “bit her lip the whole time,” adding Michelle “looked like a housemaid without an apron, sitting next to Melania Trump.”

By contrast, Kiselyov insisted the Trumps were perfect, including their ballroom dance later that evening, when they danced to Frank Sinatra’s “My Way” – a very “Trumpovsky” choice, Kiselyov explained, as Trump “really did do it his own way.”

Kiselyov praised Trump for never once uttering the words “democracy” or “NATO.”

Will Donald Trump be a good president?  As the Moscow Times described it:

“He might, Kiselyov told viewers, before the camera dramatically swooped in for a close-up, and the host added, ‘IF HE ISN’T KILLED.’  Despite concerns about assassination plots, Kiselyov said Trump has displayed bravery in the face of danger, even exiting his armored limousine briefly on Friday to walk alongside his wife in the Inauguration Parade.

“ ‘Trump, as we say in Russian, is a muzhik,’ Kiselyov said, telling viewers that America has elected a true man’s man.”

This is the man to follow, Kiselyov, to see just how chummy Putin and Trump become, or the opposite.

Kenya: Islamist Shabaab fighters attacked a Kenyan military base in Somalia in the al-Qaeda linked group’s second attack this week on Friday.   The attack on the Kenyan Defense Forces base was close to the Kenyan-Somalia border and began with suicide truck bombers blasting their way into the camp, followed by militants attacking from different directions, as reported by Agence France Presse.

Shabaab claimed to have overrun the base, killing 57 Kenyan soldiers.

A KDF spokesman denied the claims, saying Kenyan soldiers fought back, killing many of the Islamists.  The truth probably lies somewhere in between as Shabaab frequently exaggerates on its end, and Kenya downplays its losses.

Earlier in the week, 28 people were killed when Shabaab launched an attack on a hotel in Mogadishu.  That death toll is close to accurate.

Somalia is to hold a presidential vote early in February.

Gambia: More than $11 million is missing from the country’s state coffers following the departure of long-time leader Yahya Jammeh, an adviser to President Adama Barrow said early this week.  Luxury cars and other items were reportedly loaded onto a Chadian cargo plane as Jammeh left the country on Saturday.  He had refused to accept election results but finally left after mediation by regional leaders and the threat of military intervention.

President Barrow had remained in neighboring Senegal but went home a few days after Jammeh’s departure.  Jammeh is reported to be in Equatorial Guinea.

Mexico: President Enrique Pena Nieto, part of a statement to his nation on Thursday:

“As the president of Mexico, I fully assume responsibility to defend and to look after the interests of Mexico and the Mexican people.

“It is my duty to confront problems and meet challenges head on.

“On the basis of the final report from the Mexican officials who are currently in Washington, and after consultation with representatives of the Senate and the National Conference of Governors, I will make choices about the next steps to take.

“Mexico offers and demands respect, as the fully sovereign nation that we are.

“Mexico reaffirms its friendship with the American people and our willingness to reach agreements with their government, agreements for the benefit of Mexico and of the Mexican people.”

Random Musings

--FBI Director James B. Comey was asked by President Trump to stay on the job, which will keep Comey at the center of the bureau’s investigation into several Trump associates and their potential ties with the Russian government.

Under federal law, the FBI director is appointed to a 10-year term, designed to overlap more than one administration to give the director independence and insulate the job from politics.  Comey was appointed by President Obama in 2013.  The director can be fired by the president.

The Justice Department’s inspector general is investigating Comey’s handling of the Clinton email case, with the FBI saying it welcomes the probe, believing more information will be made available to the public to help explain Comey’s actions.

--Rich Lowry / New York Post

“The nation’s foremost culture warrior is President Trump.

“He wouldn’t, at first blush, seem well-suited to the part.  Trump once appeared on the cover of Playboy. He has been married three times.  He ran beauty pageants and was a frequent guest on the Howard Stern radio show. His ‘locker-room talk’ captured on the infamous ‘Access Hollywood’ tape didn’t, shall we say, demonstrate a well-honed sense of propriety.

“There is no way Trump could be a credible combatant in the culture war as it existed for the last 40 years.   But he has re-oriented the main lines of battle away from issues related to religion and sexual morality and onto the ground of populism and nationalism.  Trump’s culture war is fundamentally the people versus the elite, national sovereignty versus cosmopolitanism and patriotism versus multiculturalism.

“It’s the difference, in a nutshell, between fighting over gay rights or immigration, over the breakdown in marriage or Black Lives Matter....

“Yet any of his detractors who is warning, out of reflex more than anything else, of an attempt to control women’s bodies or establish a theocracy is badly out of date. Donald Trump has many ambitions, but imposing his morality on anyone clearly isn’t one of them.

“Instead, he wants to topple a corrupt establishment that he believes has put both its selfish interests and a misbegotten, fuzzy-headed altruism above the well-being of the American people.

“This isn’t just a governing program, but a culture crusade that includes a significant regional and class element. It channels the concerns of the Jacksonian America that is Trump’s base and, as Walter Russell Mead writes in an essay in Foreign Affairs, ‘felt itself to be under siege, with its values under attack and its future under threat.’

“The revolt of the Jacksonians as exemplified in Trump’s presidency sets up a cultural conflict as embittered as any we’ve experienced in the post-Roe v. Wade era.

“ ‘If the cosmopolitans see Jacksonians as backward and chauvinistic,’ Mead writes, ‘Jacksonians return the favor by seeing the cosmopolitan elite as near treasonous – people who think it is morally questionable to put their own country, and its citizens, first.’

“This backdrop will add intensity to almost every fight in the Trump years....

“His emphasis on borders, cultural coherence, law and order and national pride will engender a particular fear and loathing. It is an article of faith among the cultural elite that these priorities – despite what they consider the aberration of November’s election – are the relics of a rapidly disappearing America that can’t possibly represent the country’s future. Trump and his supporters beg to differ.

“The culture war is dead; long live the culture war.”

Oh joy.

--White House strategist Stephen Bannon said in an interview with the New York Times that news organizations had been “humiliated” by the election outcome and repeatedly described the media as “the opposition party” of the current administration.

“The media should be embarrassed and humiliated and keep its mouth shut and just listen for a while,” Bannon said.

“I want you to quote this,” he added.  “The media here is the opposition party. They don’t understand this country. They still do not understand why Donald Trump is the president of the Untied States.”

Bannon, long a right-wing bomb-thrower, echoed Trump’s claims he was in “a running war” with the media and called journalists “among the most dishonest people on earth.”

Bannon is responsible for Trump’s nationalist vision. 

“The elite media got it dead wrong, 100 percent dead wrong,” Mr. Bannon told the Times’ Michael M. Grynbaum in a telephone interview, calling it “a humiliating defeat that they will never wash away, that will always be there.”

Bannon initiated the rare conversation in defense of White House press secretary Sean Spicer, whose credibility plummeted last Saturday after Trump pushed him out (with Bannon egging him on as well) to face the press corps over the crowd estimates.

Asked if he was concerned Spicer had lost his credibility with the news media, Bannon ‘chortled.’  “Are you kidding me?” he said. “We think that’s a badge of honor.  ‘Questioning his integrity’ – are you kidding me?   The media has zero integrity, zero intelligence, and no hard work.”

--The battles over the Keystone XL and Dakota Access pipelines are far from over, but now instead of appealing to a friendly Democratic administration, opponents will be taking the battle to the federal courts.

Greenpeace director Annie Leonard said that “instead of pushing bogus claims about the potential of pipelines to create jobs, Trump should focus his efforts on the clean energy sector where America’s future lives.”

--President Trump said on Twitter that he would “send in the Feds” if Chicago can’t fix “the horrible carnage” with violent crime. 

--According to insiders, Caroline Kennedy, home after three years as U.S. ambassador to Japan, is supposedly full of confidence and ready to run for a “New York congressional or Senate seat, with even possibly bigger political objectives down the road,” one confidante told the New York Post.

Another close source revealed, “Caroline is seen in some quarters as the next Hillary Clinton.  She has the Kennedy name but no Clinton baggage.”

Well, if you take this seriously, 2018 is the earliest she could run and she would have to target the seat of New York’s junior Democratic senator, Kirsten Gillibrand, who has her sights on the White House.  Or Caroline could go after Rep. Carolyn Maloney, the liberal Democrat who represents Kennedy’s district.

--New York City Mayor Bill de Blasio revealed at a press conference Wednesday that he has been interviewed by the Manhattan district attorney’s office on whether the mayor broke state election laws trying to help Democrats win the state Senate in 2014.

The mayor said he had not gone before a grand jury, but was interviewed by the prosecutor’s office “a few weeks back.”  “We,” as he put it, meaning the mayor and his attorneys.

And with that he cut off the press conference.

But Friday, we learned federal prosecutor Preet Bharara wants to interview de Blasio and Hizzoner has agreed to do so.

Ergo, ya never know. The door could open for Hillary.

--The Wall Street Journal noted that “this year’s crop of best-picture Oscar nominees appears to be the least commercially successful since the Academy of Motion Picture Arts and Sciences expanded the category to more than five films seven years ago.”

And as Kyle Smith of the New York Post noted:

“Proving yet again that Oscar voters are primarily interested in movies that celebrate the industry all Oscar voters work in, (the Academy) embarrassed itself by giving a record-tying 14 nominations to ‘La La Land,’ a fond but so-so pastiche of great musicals that is now inexplicably keeping company with some of Hollywood’s greatest films.

“ ‘La La Land’ got more nominations than ‘Gone with the Wind,’ ‘Casablanca,’ ‘The Godfather,’ ‘Schindler’s List,’ ‘Return of the King,’ ‘Ben-Hur’...

“Plagued by mediocre songs, a kewpie-doll lead performance by Emma Stone, a flat one by Ryan Gosling and the nonstop sensation that every idea the film has was better executed in the movies it’s imitating, ‘La La Land’ isn’t nearly the best picture of this year, much less one of the all-time greats.

“ ‘La La Land’ got two more nominations than ‘My Fair Lady,’ three more nominations than ‘West Side Story,’ four more nominations than ‘The Sound of Music’....

“If ‘La La Land’ wins Best Picture, it’ll be the fourth time in six years that the academy gave its top honor to a movie about The Magic of the Movies ™.

“I realize Oscar night is all about an industry inviting us to adore it while it adores itself, but let’s cut out the nonsense.  From now on, every winner has to give the same speech: ‘I love me!  I really, really love me!”  It’ll be more honest, and we’ll all get to bed by 10 o’clock.”

--“Saturday Night Live” writer Katie Rich tweeted that 10-year-old Barron Trump “will be this country’s first homeschool shooter.”

Talk about an idiot.  She was apparently fired, though as I write, SNL hasn’t issued an official statement.

--According to the Food Standards Agency, you should avoid burnt toast to reduce your intake of acrylamide, a cancer causing chemical.  Also be careful with chips and potatoes, which should be cooked to a golden yellow color, rather than brown.

Cancer Research UK, however, said that the link shown in mice has not been proven in humans.

But I would say this makes total sense and is nothing new.  We’ve known for years that burning a steak, for example, releases acrylamide (but I like mine burnt anyway). 

The FSA also says potatoes and parsnips should not be kept in the fridge.

As noted in the BBC, “This is because sugar levels rise in the vegetables at low temperatures, potentially increasing the amount of acrylamide produced during cooking.”

So you’ve been warned.

--When I was a kid, I vividly remember Jan. 27, 1967.  I was a news junkie even then, nearing age 9, and I was watching the national news on our black and white TV, and was transfixed by the Apollo 1 disaster that claimed the lives of American astronauts Gus Grissom, Ed White and Roger Chaffee.

As Taylor Dinerman writes in the Wall Street Journal:

“Apollo 1 was supposed to be a test flight in low-Earth orbit. Instead the command module was consumed by fire during a rehearsal. It became the first time NASA had to conduct an investigation of a fatal accident.  It would not be the last....

“NASA identified the causes, among them: ‘a sealed cabin, pressurized with a high-pressure oxygen atmosphere’; extensive ‘combustible material in the cabin’; ‘vulnerable’ wiring and plumbing; and ‘inadequate provisions’ for rescue or escape.  A review board observed that ‘established requirements were not followed with regard to the pre-test constraints list.’

“NASA and its contractors took those lessons to heart and revised the spacecraft design.  Most important, they rededicated themselves to following protocols strictly.  The lessons of Apollo 1 made possible the ultimate success of the Apollo project – putting men on the moon, starting with Apollo 11 in 1969, and saving three astronauts in the 1970 Apollo 13 emergency.

“But NASA’s culture of uncompromising engineering excellence faded after the final Apollo-Soyuz mission in 1975. Lack of presidential leadership, budget cuts and national malaise all contributed to the culture that led to the 1986 Challenger and 2003 Columbia space shuttle disasters....

“The sacrifice of Grissom, White, Chaffee and the other lost sapcefarers reminds us that our human migration off the planet will always require hard work and readiness to take great risks.”

---

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

God bless America.

---

Gold $1193
Oil $53.20

Returns for the week 1/23-1/27

Dow Jones  +1.3%  [20093]
S&P 500  +1.0%  [2294]
S&P MidCap  +1.3%
Russell 2000  +1.4%
Nasdaq  +1.9%  [5660]

Returns for the period 1/1/17-1/27/17

Dow Jones  +1.7%
S&P 500  +2.5%
S&P MidCap  +2.2%
Russell 2000  +1.0%
Nasdaq  +5.2%

Bulls 60.6
Bears 17.3  [Source: Investors Intelligence]

Have a great week.

Brian Trumbore