Week in Review

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Week in Review

02/11/2017

For the week 2/6-2/10

[Posted 11:00 PM ET, Friday]

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Edition 931

Immigration / The Executive Order / Week  Three....

Yet another chaotic week, starting with last Friday night’s court ruling, then President Trump’s comments to Bill O’Reilly, and on from there.

But as I go to post tonight, the Trump administration is not planning to appeal a temporary hold on the travel ban to the Supreme Court, though it will forge ahead on the lawsuit challenging the executive order as it plays out in Seattle and elsewhere.

Friday, President Trump said “we will continue to go through the court process and ultimately, I have no doubt we will win the (lawsuit brought by Washington and Minnesota).”

In the meantime, Trump said he is considering drafting a new order that will have an easier time clearing legal hurdles.

The president indicated any new action would stick by his core principle that refugees and travelers from countries considered terror threats should be subject to “extreme vetting.”

As for the issue of National Security Adviser Michael Flynn and his contact with the Russian ambassador wherein he discussed the sanctions, and then told the likes of Vice President Mike Pence to deny he had, I’m the wait 24 hours guy.  Nothing more to say on this yet.  Ditto the late story that some of the claims in the 35-page dossier put together by the former MI6 agent have been proven to be true.

As for Trump’s helter-skelter foreign policy thus far, Richard Haass, the chairman of the Council on Foreign Relations, said Trump’s unpredictability has unnerved allies:

“In the short run everyone is trying to get a handle on the new administration. But in the medium and long run, whether governments like or loathe what they’re seeing, I believe what every government will do is essentially rethink its relationship with the United States.”

The other day, German Vice Chancellor Sigmar Gabriel, in Washington for talks with the new secretary of state and Vice President Mike Pence, said that the U.S. under Trump runs the risk of breaking from the American values that have shaped the trans-Atlantic alliance.  “A solid structure of values ties us to the U.S., but one must stick to these values,” said Gabriel, who is also foreign minister.  “There can be no deviation from them, including of course the freedom of religion and how we treat each other in the world.”  [Carol E. Lee / Wall Street Journal]

As I discuss further below, the issue of Trump’s unpredictability has supplied an opening for a new opposition figure in Germany, for one. 

At the same time, hopefully what Texas Republican Sen. John Cornyn said the other day holds true.  “Everybody just needs to relax, and it’s going to be all right.”

So in reviewing the past week, last Friday night, U.S. District Judge James L. Robart entered a temporary but nationwide stop to the administration’s executive order banning and suspending travel from seven predominantly Muslim countries.

Robart, acting after Washington State and Minnesota urged a nationwide hold on the executive order, ruled against government lawyers’ claims that the states did not have the standing to challenge Trump’s order and said they showed their case was likely to succeed.

“The state has met its burden in demonstrating immediate and irreparable injury,” the judge said.  “This TRO (temporary restraining order) is granted on a nationwide basis.”

White House spokesman Sean Spicer issued a statement: “The president’s order is intended to protect the homeland and he has the constitutional authority and responsibility to protect the American people.”

Saturday morning, Trump tweeted: “The opinion of this so-called judge, which essentially takes law-enforcement away from our country, is ridiculous and will be overturned!”

And: “Interesting that certain Middle-Eastern countries agree with the ban. They know if certain people are allowed in it’s death and destruction!”

Saturday, the State Department said: “We have reversed the provisional revocation of visas under” the executive order.  “Those individuals with visas that were not physically canceled may now travel if the visa is otherwise valid.”

Sunday, Vice President Mike Pence, appearing on CBS’ “Face the Nation,” offered a defense of Trump’s “so-called judge” comment.

“Every president has a right to be critical of the other branches of the federal government.

“As you [Ed. CBS moderator John Dickerson] noted, the simple fact is, I think the American people welcome the candor of this president.  And the president and our whole administration frankly are frustrated, because the law could not be more clear here, John, not only his constitutional authority to conduct foreign policy for this country, but clear statutory authority in federal law today gives the president the ability to determine who is given access to this country and who is not.

“And, in this case, the president used a list the Obama administration and the Congress identified of seven countries compromised by terrorism.  It is within his authority to do it. And it is just frustrating to see a federal judge in Washington State conducting American foreign policy or making decisions about our national security.”

Sunday night, 97 tech companies, including Apple, Facebook, Google, Microsoft, Netflix, Twitter, and Uber filed a legal brief opposing the administration’s entry ban.  This was filed with the same U.S. Court of Appeals for the 9th Circuit that was to rule on the White House’s appeal of Robart’s decision.

The legal brief argues that immigration and economic growth are “intimately tied” and that the order would damage the U.S.’s ability to attract the world’s talent.

“Immigrants or their children founded more than 200 of the companies on the Fortune 500 list, including Apple, Kraft, Ford, General Electric, AT&T, Google, McDonald’s, Boeing, and Disney,” it said.

An estimated 37 percent of the workforce in Silicon Valley is foreign-born, according to the think tank Joint Venture.

Monday, Trump, at a stop at Central Command in Tampa, Fla., pledged to rebuild the military, while blaming the press for not reporting all terrorist incidents.

“Radical Islamic terrorists are determined to strike our homeland as they did on 9/11, as they did from Boston to Orlando to San Bernardino, and all across Europe – you have seen what happened in Paris and Nice,” Trump told members of the military.

“It’s gotten to a point where it’s not even being reported, and in many cases, the very, very dishonest press doesn’t want to report it.  They have their reasons and you understand that.”

Spokesman Sean Spicer later explained Trump felt terrorist attacks had been underreported.

Asked for specific instances of such press omissions, Spicer said: “We’ll provide a list later.”

So later the White House released a list of 78 attacks, many of which were heavily covered.

Tuesday, an appeals court met to rule on Judge Robart’s ruling that continued to block Trump’s executive order.  I was one of those following the hearing on television, as the three judge panel grilled both sides, though with August Flentje, representing the Department of Justice, facing harsher questioning than his adversary.  I was underwhelmed by Flentje’s performance, and I’m imagining he simply didn’t have enough time to prepare.

Noah Purcell, the Washington solicitor general representing the states of Washington and Minnesota, also caught some heat, challenged about evidence that the ban discriminates on the basis of religion.  Judge Richard Clifton said he was “not entirely persuaded,” noting the order affected only a small share of the world’s Muslims.

On Wednesday, Trump went after the panel of appeals court judges weighing whether his travel ban should be lifted.  Trump told a gathering of law enforcement officials visiting the White House, “Courts seem to be so political and it would be so great for our justice system if they could read a statement and do what’s right.”

Trump argued the law gives him broad powers to control who enters and leaves the U.S.

“A bad high school student would understand this.  Anybody would understand this,” he said.

Trump of course watched on television the oral arguments in front of the San Francisco-based Ninth Circuit Court of Appeals, and took issue with media coverage of the hearing.

“I listened to a bunch of stuff on television last night that was disgraceful,” he said.  “I think it’s a sad day.  I think our security is at risk today.  And it will be at risk until such time that we are entitled and get what we are entitled to as citizens of this country. We want security.”  [The Hill]

Earlier, Trump tweeted: “If the U.S. does not win this case as it so obviously should, we can never have the security and safety to which we are entitled.  Politics!”

Michael V. Hayden / Washington Post

“President Trump’s executive order on immigration was ill-conceived, poorly implemented and ill-explained.  To be fair, it would have been hard to explain since it was not the product of intelligence and security professionals demanding change, but rather policy, political and ideological personalities close to the president fulfilling a campaign promise to deal with a threat they had overhyped.

“I’ve heard from a lot of intelligence professionals who are going to have to live with the consequences.  They noted that six of the seven countries involved in the ban (Iran being somewhat an exception) are troubled, fragmented states where human sources are essential to defeating threats to the United States.

“Paradoxically, they pointed out how the executive order breached faith with those very sources, many of whom they had promised to always protect with the full might of our government and our people.  Sources who had risked much, if not all, to keep Americans safe.

“I understood their angst.  As CIA director, I reminded them at their case officer graduations that, when they recruited a source, they would likely be the only face of America that the source would see. And that in the act of recruitment they would assume a powerful and permanent moral responsibility for the well-being of the source and his or her loved ones.

“The case officers believed that they were also empowered to offer the full faith and credit of the American nation for that task.  Now, they told me, that promise was eroding.”

Editorial / Wall Street Journal

“The damage from President Trump’s order on immigration and refugees continues to compound, now escalating into a conflict with the judicial branch. There’s enough bad behavior and blame to go around, but Mr. Trump didn’t need to court this altercation.

“On Friday federal Judge James Robart in Seattle issued a nationwide temporary restraining order (TRO) on Mr. Trump’s suspension of U.S. entry for migrants from seven countries associated with terrorism risks.  The Trump Administration is obeying and not enforcing its new immigration policy pending appeal of the TRO, so apparently the onset of fascism that we keep hearing about will be postponed by the Constitution’s normal checks and balances.

“But Mr. Trump is exporting his politics-by-insult to the courts... The more appropriate response to executive defeat in the courts is to say that the Administration is confident it will prevail on appeal, and especially in this case.  Judge Robart’s TRO is remarkably flimsy.

“Judges have the power to impose temporary restraining orders when the plaintiffs can show they are suffering irreparable injury and are likely to win on the merits.  Judges have an obligation to explain why they are availing themselves of this extraordinary remedy and to work through the logic.

“Judge Robart’s seven-page ruling includes no discussion or analysis, with only a cursory assertion of the harms that Washington and other states have conjured to ‘the operations and missions of their public universities and other institutions of higher learning, as well as injury to States’ operations, tax bases and public funds.’....

“Mr. Trump’s rants against the judiciary are offensive to the rule of law, and perhaps also to his own case.  Anyone who defies Mr. Trump these days becomes an overnight progressive folk hero – think Sally Yates – and the judicial liberals of the Ninth Circuit may rally around a bad ruling if they feel they have to defend the judiciary from presidential attack.

“Even if the law is on his side, Mr. Trump and aides Stephen Bannon and Stephen Miller created this mess with an executive order that was conceived in secret, sloppily written and overbroad, and sprung on a confused public.  Breitbartian methods may work online but in the Oval Office they run up against political reality.  When Mr. Trump indulges his worst impulses, he makes enemies out of potential friends and debacles out of should-be victories.”

Thursday, the 9th Circuit flatly rejected the government’s argument that suspension of the executive order should be lifted immediately for national security reasons, asserting their ability to serve as a check on the president’s power.  The vote was 3-0, including one judge appointed by George W. Bush.

So previously barred refugees and citizens from the seven designated countries can continue entering the United States, as we await the next move by the White House.

President Trump reacted angrily on Twitter: “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!”  He later told reporters that the judges had made “a political decision.”

“We have a situation where the security of our country is at stake, and it’s a very, very serious situation, so we look forward, as I just said, to seeing them in court,” he said.

Charles Krauthammer / Washington Post

“Stupid but legal.  Such is the Trump administration’s travel ban for people from seven Muslim countries.  Of course, as with almost everything in American life, what should be a policy or even a moral issue becomes a legal one. The judicial challenge should have been given short shrift, since the presidential grant of authority to exclude the entry of aliens is extremely wide and statutorily clear.  The judge who issued the temporary restraining order never even made a case for its illegality.

“The 9th Circuit Court of Appeals has indeed ruled against the immigration ban, but even if the ban is ultimately vindicated in the courts (as is likely), that doesn’t change the fact that it makes for lousy policy.  It began life as a barstool eruption after the San Bernardino massacre when Donald Trump proposed a total ban on Muslims entering the country ‘until our country’s representatives can figure out what the hell is going on.’

“Rudy Giuliani says he was tasked with cleaning up this idea.  Hence the executive order suspending entry of citizens from seven countries while the vetting process is reviewed and tightened.

“The core idea makes sense.  These are failed, essentially ungovernable states (except for Iran) where reliable data is hard to find.  But the moratorium was unnecessary and damaging.  Its only purpose was to fulfill an ill-considered campaign promise.

“It caused enormous disruption without making us any safer. What was the emergency that compelled us to turn away people already in the air with already approved visas for entry to the United States?

“President Trump said he didn’t want to give any warning.  Otherwise, he tweeted, ‘the ‘bad’ would rush into our country...A lot of bad ‘dudes’ out there!’

“Rush?  Not a single American has ever been killed in a terror attack in this country by a citizen from the notorious seven. The killers have come from countries that are not listed – Egypt, Saudi Arabia, the UAE, Lebanon, Pakistan and Kyrgyzstan (the Tsarnaev brothers).  The notion that we had to act immediately because hordes of jihadists in these seven countries were about to board airplanes to blow up Americans is absurd.

“Vetting standards could easily have been revised and tightened without the moratorium and its attendant disruptions, stupidities, random cruelties and well-deserved bad press....

“If anything, the spectacle served to undermine Trump’s case for extreme vigilance and wariness of foreigners entering the United States.  There is already empirical evidence.  A Nov. 23 Quinnipiac poll found a six-point majority in favor of ‘suspending immigration from ‘terror prone’ regions”; a Feb. 7 poll found a six-point majority against.  The same poll found a whopping 44-point majority opposed to ‘suspending all immigration of Syrian refugees to the U.S. indefinitely.’

“Then there is the opportunity cost of the whole debacle. It risks alienating the leaders of even non-affected Muslim countries – the 57-member Organization of Islamic Cooperation expressed ‘grave concern’ – which may deter us from taking far more real and effective anti-terror measures.  The administration was intent on declaring the Muslim Brotherhood a terrorist organization, a concrete measure that would hamper the operations of a global Islamist force.  In the current atmosphere, however, that declaration is reportedly being delayed and rethought.

“Add to that the costs of the ill-prepared, unvetted, sloppy rollout.  Consider the discordant, hostile message sent to loyal law-abiding Muslim Americans by the initial denial of entry to green-card holders.  And the ripple effect of the initial denial of entry to those Iraqis who risked everything to help us in our war effort.  In future conflicts, this will inevitably weigh upon local Muslims deciding whether to join and help our side.  Actions have consequences.

“In the end, what was meant to be a piece of promise-keeping, tough-on-terror symbolism has become an oxygen-consuming distraction.  This is a young administration with a transforming agenda to enact.  At a time when it should be pushing and promoting deregulation, tax reform and health-care transformation, it has steered itself into a pointless cul-de-sac – where even winning is losing.”

In case the above sounded familiar, I wrote virtually the same thing last week, only I included the use of the term “straw man.”  That’s what the White House laid out.  They blew it.

Russia

The following, part of Bill O’Reilly’s Super Bowl interview with Donald Trump, was a defining moment for the new presidency.

Bill O’Reilly: Do you respect Putin?

Donald Trump: I do respect him.

O’Reilly: Do you? Why?

Trump: Well, I respect a lot of people, but that doesn’t mean I’m going to get along with them.  He is a leader of his country.

I say it’s better to get along with Russia than not.  And if Russia helps us in the fight against ISIS, which is a major fight, and Islamic terrorism all over the world, major fight, that is a good thing.

O’Reilly: Right.

Trump: Will I get along with him?  I have no idea.  It’s possible that I won’t.

O’Reilly: He is a killer, though.  Putin is a killer.

Trump: A lot of killers. We have got a lot of killers.  What, you think our country is so innocent?

I first saw a clip of the interview Saturday and was incredulous.  Yes, I agreed with the Wall Street Journal’s Bret Stephens, who tweeted that day: “President Trump puts the United States on moral par with Putin’s Russia. Never in history has a president slandered his country like this.”

Editorial / Wall Street Journal

“An American President has enormous leeway on foreign policy, and generally that’s better than being micromanaged by Congress.  But there are exceptions, and one of them could be President Trump and Russia.

“Mr. Trump has made eminently clear he wants to forge a new strategic relationship with Vladimir Putin, to the point of sometimes sounding like an apologist.  In a weekend interview with Bill O’Reilly of Fox News, Mr. Trump said he respects the Russian strongman, to which Mr. O’Reilly said, ‘But he’s a killer though.  Putin’s a killer.’

“Mr. Trump responded by equating U.S. government actions with the Kremlin’s, saying that ‘there are a lot of killers. We’ve got a lot of killers. What do you think – our country’s so innocent.  You think our country’s so innocent?’  That’s the sort of false moral equivalence that might embarrass Jane Fonda at a left-wing antiwar rally, and the best you can say for it is that Mr. Trump doesn’t give much thought to most of what he says.

“The more important issue is what kind of deal Mr. Trump wants to cut with Mr. Putin, and on that score the good news is that Republicans in Congress are under no illusions.  Senate Majority Leader Mitch McConnell on Sunday called Mr. Putin ‘a former KGB agent’ and ‘thug.’  House Speaker Paul Ryan told CNN last month that Russia is a ‘global menace’ and that Mr. Putin ‘does not share our interests.  He frustrates our interests.’  GOP Senators Ben Sasse, Marco Rubio, John McCain and Lindsey Graham are also clear-headed about Russia and American interests.

“These voices matter as American officials willing to speak against Russian authoritarianism. But holding prominent positions in Congress, they also matter as a potential check on Mr. Trump’s ability to strike a bad deal with Mr. Putin. Working with Democrats like Senator Ben Cardin, they could make Mr. Trump pay a political price for unilaterally lifting sanctions. This is what Democrats should have done more of with President Obama, and Republicans should do better with Mr. Trump.”

Bret Stephens / Wall Street Journal

“First, the obvious: Had it been Barack Obama, rather than Donald Trump, who suggested a moral equivalency between the United States and Vladimir Putin’s Russia, Republican politicians would not now be rushing through their objections to the comparison in TV interviews while hoping to pivot to tax reform.

“Had it been the president of three weeks ago who had answered Bill O’Reilly’s comment that Mr. Putin ‘is a killer’ by saying, ‘We’ve got a lot of killers,’ and ‘What do you think?  Our country’s so innocent?’ conservative pundits wouldn’t rest with calling the remark ‘inexplicable’ or ‘troubling.’  They would call it moral treason and spend the next four years playing the same clip on repeat, right through the next election.

“In 2009, Mr. Obama gave a series of speeches containing passing expressions of regret for vaguely specified blemishes from the American past.  Examples: ‘The United States is still working through some of our own darker periods in history.’  And ‘we’ve made some mistakes.’  This was the so-called Apology Tour, in which the world ‘apologize’ was never uttered.   Even so, conservatives still fume about it.

“This time, Mr. Trump didn’t apologize for America.  He indicted it.  He did so in language unprecedented for any sitting or former president.  He did it in a manner guaranteed, and perhaps calculated, to vindicate every hard-left slander of ‘Amerika.’  If you are the sort who believes the CIA assassinated JFK, masterminded the crack-cocaine epidemic, and deliberately lied us into the war in Iraq – conspiracy theories on a moral par with how the Putin regime behaves in actual fact – then this president is for you.

“Only he’s worse.

“For the most part, the left’s various indictments of the U.S., whether well- or ill-grounded, have had a moral purpose: to shame Americans into better behavior.  We are reminded of the evils of slavery and Jim Crow in order not to be racist. We dilate on the failure in Vietnam to guard against the arrogance of power. We recall the abuses of McCarthyism in order to underscore the importance of civil liberties.

“Mr. Trump’s purpose, by contrast, isn’t to prevent a recurrence of bad behavior.  It’s to permit it.  In this reading, Mr. Putin’s behavior isn’t so different from ours.  It’s largely the same, except more honest and effective.  The U.S. could surely defeat ISIS – if only it weren’t hampered by the kind of scruples that keep us from carpet bombing Mosul in the way the Russians obliterated Aleppo.  The U.S. could have come out ahead in Iraq – if only we’d behaved like unapologetic conquerors, not do-gooder liberators, and taken their oil.

“This also explains why Mr. Trump doesn’t believe in American exceptionalism, calling the idea ‘insulting [to] the world’ and seeing it as an undue burden on our rights and opportunities as a nation.  Magnanimity, fair dealing, example setting, win-win solutions, a city set upon a hill: All this, in the president’s mind, is a sucker’s game, obscuring the dog-eat-dog realities of life.  Among other distinctions, Mr. Trump may be our first Hobbesian president.

“It would be a mistake to underestimate the political potency of this outlook... If we’re no better than anyone else, why not act like everyone else?  If phrases such as ‘the free world’ or the ‘liberal international order’ are ideological ploys by which the Davos elite swindle the proletarians of Detroit, why sacrifice blood and treasure on their behalf?  Nationalism is usually a form of moral earnestness.  Mr. Trump’s genius has been to transform it into an expression of cynicism.

“That cynicism won’t be easy to defeat.  Right now, a courageous Russian opposition activist named Vladimir Kara-Murza is fighting for his life in a Moscow hospital, having been poisoned for a second time by you-can-easily-guess-who.  Assuming Mr. Trump is even aware of the case, would he be wrong in betting that most Americans are as indifferent to his fate as he is?

“The larger question for conservatives is how Mr. Trump’s dim view of the world will serve them over time.  Honorable Republicans such as Nebraska’s Sen. Ben Sasse have been unequivocal in their outrage, which will surely cost them politically.  Others have hit the mute button, on the theory that it’s foolish to be baited by the president’s every crass utterance. The risk is that silence quickly becomes a form of acquiescence....

“Feb. 6 would have been (Ronald Reagan’s) 106th birthday.  Perhaps because he had been an actor, the 40th president knew that Americans preferred stories in which good guys triumphed over bad ones, not the ones in which they were pretty much all alike. Conservatives should beware the president’s invitation to a political film noir in which the outcome is invariably bleak.”

Editorial / Washington Post

“Of all the strangely accommodating remarks President Trump has made about Russian President Vladimir Putin, none is quite so startling and pernicious as his suggestion that the United States is morally equivalent to a ruthless regime whose critics keep getting murdered.  For all its flaws, the United States is fundamentally different from the Russia of Mr. Putin, whose relentless pursuit of hegemony over his neighbors and the degradation of the West is founded in cynicism.  Every U.S. president prior to Mr. Trump has embraced a contrary vision of American exceptionalism in which the country serves as a beacon of democracy, human rights and the rule of law.  Mr. Trump to casually equate the two is as false as it is shocking....

“To state the obvious, in the United States, critics of the president are not poisoned or gunned down.  By suggesting that U.S. military operations in Iraq – a country the George W. Bush administration invaded to depose a blood-soaked dictator – are equivalent to such crimes, Mr. Trump repudiates the very notion of a foreign policy based on values.  He equates the forces of liberty and thuggery – and thereby validates strongmen everywhere who rule by coercion, suffocate free speech and crush individual dignity.

“The United States is, of course, far from perfect: Its history includes dark chapters both at home and abroad.  But as President Barack Obama observed, American exceptionalism lies in its elevated aspirations, and in the nation’s capacity to reverse its errors through democratic reform.  Rather than embrace that tradition, Mr. Trump’s rhetoric suggests he will mimic Mr. Putin in the naked pursuit of narrow interests and disregard for legality and morality.  It is a doctrine that leaders of both parties, along with ordinary Americans, should repudiate.”

David Satter / Wall Street Journal

“President Trump’s expression of ‘respect’ for Vladimir Putin in an interview that aired over the weekend, and his comparison of extrajudicial killings by the Putin regime to American actions, has ushered in a new era in U.S.-Russian relations.  Never before has an American president implied that political murder is acceptable or that the U.S. is guilty of similar crimes.

“The goal of improved relations with the Russian president, as Mr. Trump explained, is to create the conditions for a U.S.-Russian alliance to fight Islamic State. But the result will be to cripple the Russian opposition, contribute to the propagandizing of the population, and diminish the ability of the U.S. to prevent internal and foreign Russian atrocities.

“In the present atmosphere, Russian activists know they could be killed at any time.  Last week Vladimir Kara-Murza, a political activist and journalist, was hospitalized with symptoms of poisoning....

“On Feb. 27, 2015, Boris Nemtsov, the leader of the Russian opposition, was shot dead as he crossed the Moskvoretsky Bridge in the shadow of the Kremlin.  He was compiling a report on Russian soldiers in eastern Ukraine whose presence was denied by the government....

“The oppositionists also face social isolation.  Alexei Navalny, a prominent blogger, and Mikhail Kasyanov, the former prime minister, have been physically attacked.... Before he was killed, Nemtsov received death threats on social media.  After his murder, images of his body were circulated on websites and social media, and posts denouncing him received hundreds of thousands of ‘likes.’

“In such a hostile environment, U.S. backing is an important source of moral reinforcement for Russia’s political and human-rights activists.  Mr. Trump’s remarks instead provide reinforcement for the Putin regime’s propaganda, which tries to convince Russians that the abuses they experience in their daily lives are typical of all countries....

“Mr. Trump’s statements suggesting that Russia and America are similar in abusing human rights and the U.S. also has ‘killers’ will be quoted by the government, state-run media and other anti-opposition forces for years.

“Mr. Trump also undermines America’s moral authority, making it more difficult for the U.S. to prevent Russian atrocities.  In Syria, Russian forces have deliberately targeted markets, hospitals and homes. The London-based monitoring group Airwars estimates that there were at least 3,786 civilian deaths caused by Russian bombing between Sept. 30, 2015, and Dec. 20, 2016, with the actual numbers likely far higher.  Death on this scale can generate new resistance. But Mr. Trump’s ‘respect’ for Mr. Putin leaves little room for criticism.  If the president is not concerned about political murders, what basis does he have for objecting to the indiscriminate meting out of death from the air?....

“Mr. Trump’s readiness to condone murder in the pursuit of an ill-advised U.S.-Russia partnership suggests that he doesn’t see the distinction between defensive war and the murder of one’s own people to hold on to power.  Cooperation with Russia on these terms could involve the U.S. in crimes that neither the American people nor the world will accept.  Mr. Trump needs to give more thought to his words – while there is still time.”

A view from overseas...Peter Hartcher / Sydney Morning Herald

“Trump’s comment is the remark of someone who sees America as just one country among many, all equally unprincipled.  Countries deal with each other without any sense of right and wrong but solely on  a transactional basis of who can extract what from whom.  It’s about power and advantage.

“This helps to explain a president who doesn’t seem to see any difference between democracies and dictatorships, between allies and enemies.  Last week he told Mexico’s president he might order the invasion of his country, though his staff explained this as humor. At the same time he refused to criticize Moscow’s invasion of Crimea or Ukraine.

“This is consistent with his view of U.S. domestic politics, where he shows no appreciation for democracy as inherently valuable.  He does not respect the separation of powers, calling a federal justice a ‘so-called judge.’  He does not respect freedom of speech, encouraging his supporters to join him in his ‘hate’ for the media; he doesn’t even respect electoral democracy itself, saying he’d only recognize the presidential election result if he won.

“This is far from the Founding Fathers’ America, which was committed to the idea of ‘certain unalienable rights’ for all people, or from Lincoln’s America, ‘a new nation, conceived in liberty,’ which had a mission to ensure ‘government of the people, by the people, for the people, shall not perish from the earth.’....

“Unable to comprehend any qualitative difference between friends and foes, democrats and dictators, exporters and extortionists, Trump stomps and smashes his way through an intricate set of relationships he cannot comprehend.  This also helps explain why Trump might admire a highly effective authoritarian like Putin.  A former speechwriter for George W. Bush, David Frum, argued in The Atlantic that rather than extinguish the media altogether, ‘modern strongmen seek merely to discredit journalism as an institution, by denying that such a thing as independent judgment can exist. All reporting serves an agenda. There is no truth, only competing attempts to grab power.’

“Russian-born journalist Masha Gessen says that Trump and Putin are alike: ‘Lying is the message.’ They lie blatantly, she said, ‘to assert power over truth itself.’....

“A ruthless, amoral world of transactional exploitation and relations based on power alone is also known as the law of the jungle. America, still, has a claim to something better, but Trump seems hellbent on giving it away.”

Joe Scarborough / Washington Post

“President Trump’s recent claim that the United States is morally on par with Russia’s corrupt dystopian regime was so historically ignorant that even Republicans felt compelled to speak out this week.  Perhaps that is because remaining silent in the face of such a morally disorienting claim would make them look like fools.  Vladimir Putin is, after all, the same ruthless autocrat who kills journalists and political rivals who dare to cross him.  He is also the same man who called the Soviet Union’s collapse ‘the greatest geopolitical catastrophe of the century.’

“The evil empire Putin admires speaks volumes about the tyrant our new president defends.  Burning with resentments carried over from a fallen empire, Comrade Putin dreams of rebuilding the U.S.S.R. one invasion at a time. As he wraps himself in that delusion, someone in the West Wing should remind the president just how inhumane life was in the old Soviet Union....

“Russian novelist and historian Aleksandr Solzhenitsyn put the number of Joseph Stalin’s victims at 60 million.  Preeminent European historian Norman Davies estimates that 50 million people were killed between 1924 and 1953 alone.  Other historians are more modest, estimating that the Kremlin was responsible for 20 million to 40 million deaths....

“Since seizing control, Putin has carried forward the worst of the Soviet’s legacy: His political opponents have been poisoned, investigative reporters have been killed and Russia has invaded neighboring countries.  Despite what Trump would have the world believe, the historical record is clear. There is no moral equivalence between the United States and Putin’s Russia.  That much is clear. What is not is why Trump would so gleefully continue to spread this dangerous lie.”

Marc A. Thiessen / Washington Post

“Trump says he wants to get along with Putin. There’s nothing wrong with trying.  But getting along with Putin does not require excusing his campaign of political murder, or suggesting that the U.S. acts similarly.  As William F. Buckley once famously put it, ‘To say that the CIA and the KGB engage in similar practices is the equivalent of saying that the man who pushes an old lady into the path of a hurtling bus is not to be distinguished from the man who pushes an old lady out of the path of a hurtling bus: on the grounds that, after all, in both cases someone is pushing old ladies around.’

“Worse still, Trump’s defense of Putin came just days after he scolded Australian Prime Minister Malcolm Turnbull over an agreement he had reached with President Obama to take in 1,250 refugees held at Australian detention centers from Iran, Somalia and other countries.  Yes, it was poor form for Turnbull and Obama to make this deal after Trump was elected.  Yes, Australia was stupid to press Trump to take in a group of refugees that they themselves refuse to let into their country – many of whom hailed from the very nations for which Trump had just temporarily suspended immigration.  But Australia is also one of our closest allies – a nation that has fought beside us in every war we have fought in the last century from World War I to Iraq and Afghanistan. There was no reason for Trump to tell Turnbull that theirs was ‘the worst call by far’ he has had with any world leader – including, apparently, Vladimir Putin.”

Holman W. Jenkins, Jr. / Wall Street Journal

“We’ll differ slightly from those who think Mr. Trump’s comments to Fox’s Bill O’Reilly, in which he pooh-poohed Mr. Putin’s reputation as an alleged murderer, reflect some consistent and coherent Trumpian worldview.

“The comments were just unwise, spoken by somebody with a thin grasp of his circumstances.  Mr. Trump, clumsily, was actually keeping up a longstanding U.S. policy of covering up for Mr. Putin.

“Yet here’s the ironic result. Mr. Trump has himself become the occasion for sliding sideways into the official public realm the most explosive Putin secret of all.  How many CIA chiefs and top diplomats have passed before Congress since 1999 and yet never were asked about Ryazan?  That’s the Russian city where an alleged Chechen terrorist bombing campaign came to an abrupt end after Mr. Putin’s own security officials were caught planting a bomb in the basement of an apartment block.

“A search of congressional hearing transcripts finds only three mentions of Ryazan over the decades. When I once put the question informally to an ex-top national security official, all I got was a studiously blank stare and a claim not to remember seeing any reports on the subject.

“Then came President Trump. Lo, in a nationally broadcast hearing, Florida Republican Marco Rubio put to Secretary of State nominee Rex Tillerson a direct question on the ‘incredible body of reporting’ suggesting the apartment bombings were carried out by the Putin regime.

“Mr. Tillerson, a private citizen, was exactly the wrong person to ask. But he gamely admitted to being aware of the reports: ‘Those are very, very serious charges to make,’ he said, adding, ‘I understand there is a body of record in the public domain.  I’m sure there’s a body of record in the classified domain.’

“Now confirmed as secretary of state, Mr. Tillerson will be back many times before the Senate, and presumably Mr. Rubio will ask him what he now believes after seeing classified documents.

“This may be a turning point.

“Presidents Clinton, Bush and Obama all wanted things from Mr. Putin and had a firm policy of ignoring Ryazan. They needed to preserve Mr. Putin’s acceptability as somebody Western leaders could meet and deal with.

“Suddenly, a major U.S. political party, the Democrats, has a direct partisan incentive to dispense with the shroud of silence. Nancy Pelosi said on Sunday: ‘I want to know what the Russians have on Donald Trump.’

“She and her colleagues, especially members of the Democratic foreign-policy establishment, will eventually figure out the real question they should be asking is what the CIA has on Mr. Putin that can be used now to tar Mr. Trump.

“The emergence of ugly truths, let’s be clear, would be  a profound inconvenience to Western leaders, who, on balance, have preferred being able to deal with Mr. Putin over having to treat him as untouchable.

“Mr. Trump turns out not to be such a break from his predecessors after all.  He wants to do deals with Mr. Putin too.  But with his untamed, careless mouth, he has contributed to what was probably inevitable anyway. The murders of Alexander Litvinenko, Anna Politkovskaya and Boris Nemtsov, the apartment bombings that killed 293 and injured hundreds more, all this was not going to be swept under the rug forever.  Mr. Putin’s bid for rehabilitation is not going well....

“Read a certain way, Mr. Trump’s comments make him the first U.S. president to admit Mr. Putin’s real nature.  One theory is that Russian power grouplets are committed to Mr. Putin come hell or high water.  This is debatable. If Mr. Putin’s fate is pariah-hood, quite a few powerful Russians may wish not to share it.”

Yes, we have come full circle.  1999 to Igor Sechin and a dark ‘third force,’ as I’ve labeled it.  I wrote about the apartment bombings in 1999.  I have written of powerful people who will one day take out Putin.

Separately, Nebraska Republican Senator Ben Sasse had some of the following to say on ABC’s “This Week” with George Stephanopoulos.

Stephanopoulos: (During) the campaign, you were actually quite critical of Mr. Trump.  You said he displays essentially no understanding of our constitutional system of checks and balances with three separate, but co-equal branches of government.

Are we seeing that again with this attack on a so-called federal judge?

Sasse: I’ll be honest.  I don’t understand language like that. We don’t have so-called judges, we don’t have so-called senators, we don’t have so-called presidents, we have people from three different branches of government who take an oath to uphold and defend the constitution.  And it’s important that we do better civics education for our kids.  So, we don’t have any so-called judges, we have real judges.

[On the travel ban....]

Sasse: I applaud what the president is trying to do in focusing attention on the fact that we haven’t taken borders seriously enough, and we haven’t done enough vetting of a lot of folks trying to come to the U.S., especially from nations that have failed states.

If you look at places like Syria and Libya, there hasn’t been enough vetting going on over the course of the last couple of years. And so I applaud the president’s goal.

Now, once we affirm the goal of trying to make sure that you don’t have jihadis infiltrating terrorist flows, we need to make sure we’re doing it in a thoughtful way that’s thinking about the 10 and 15 and 20 years long battle we’re going to have against jihadists.

There are two ways that you can go wrong in our long-term fight against jihadis.

One would be to not acknowledge that terrorism and especially jihadi-motivated terrorism, comes from specific places in the world and is connected to specific ideologies.

But another way to fall off a cliff and harm our long-term interests would be to imply that the U.S. is at war with Islam.  And obviously, this wasn’t a Muslim ban, it was a travel ban.  But it’s been done in a clunk enough way that initial weekend that jihadi recruiters could present it to the people they are trying to recruit as if the U.S. is against all Muslims.  And we know that we’re not at war with all Muslims, we’re at war with a subset of Islam that believes in killing in the name of religion, as jihadis do.

[On Trump’s statement about Putin....]

You know, I’ll be honest.  I don’t know what the president is trying to do with statements like he allegedly has on O’Reilly....

But let’s be clear.  Has the U.S. ever made any mistakes?  Of course.  Is the U.S. at all like Putin’s regime?  Not at all.

Truth affirms freedom of speech.  Putin is no friend of freedom of speech.

Putin is an enemy of freedom of religion. The U.S. celebrates freedom of religion.

Putin is an enemy of the free press. The U.S. celebrates a free press.

Putin is an enemy of political dissent.  The U.S. celebrates political dissent and the right for people to argue free from violence about places or ideas that are in conflict.

There is no moral equivalency between the United States of America, the greatest freedom loving nation in the history of the world and the murderous thugs that are in Putin’s defense of his cronyism....

I don’t understand what the president’s position is on Russia, but I can tell you what my position is on Russia.

Russia is a great danger to a lot of its neighbors and Putin has, as one of his core objectives, fracturing NATO, which is one of the greatest military alliances in the history of the world.

And so Putin is a mess.  He’s committed all sorts of murderous thuggery. And I am opposed to the way Putin conducts himself in world affairs and I hope that the president also wants to show moral leadership about this issue.

Wall Street

Stocks hit new highs, helped in no small part by President Trump’s pronouncement that a tax reform package would be presented in just 2-3 weeks, after both he and Republican leaders made it sound like it was months away, ditto other key parts of the agenda.  It also helped that the president held his first call with China’s President Xi Jinping, with Trump reaffirming the “One China” policy, which he had threatened to use as a bargaining chip.  Simply put, the markets were reassured by the pragmatism displayed by the White House.

That said, GOP leaders are wondering if they bit off more than they can chew with the aggressive agenda they have laid out in terms of repeal and replacing ObamaCare, tax reform, deregulation and a needed infrastructure initiative.  There’s only so much the president can do with the stroke of a pen, and the poisonous atmosphere in Congress is going to make it exceedingly hard on some items for Republicans to hold together, as the deficit hawks will eventually find issues they will insist they have to push back on.

The atmosphere at Republican town hall meetings is also more than a bit disturbing and is something that bears watching, to say the least.  The influence on lawmakers and how they proceed on legislation, for example, could be considerable.  And pray that there aren’t any nut cases among the crowds who take things too far.

Europe and Asia

There was zero in terms of broad, euro area economic news this week, though Italy had some encouraging data on industrial production for December, up 6.6% on an annualized basis.

But the sovereign debt market was rocked earlier in the week on renewed fears of another Greek debt crisis.  Greek officials say they are optimistic they will hammer out a deal at the next meeting of eurozone finance officials next week, but Germany remains against debt relief, at least not until the bailout ends in mid-2018.  Germany wants Greece to reach a primary budget surplus of 3.5% of GDP next year and keep it at that level for 10 years, under which no debt relief would be required.

In the middle is the IMF, which hasn’t been part of the current bailout, but said it would join if Athens was granted relief through lengthening loan maturities and grace periods.  The IMF also believes the budget targets set by Europe are too severe and continue for too long.

Wolfgang Schauble, Germany’s powerful finance minister, made clear full IMF involvement is essential to sustain political support for the bailout at home.

While Greece doesn’t have to make a 7bn euro debt service payment until July, the urgency today is that the issue must be resolved before the round of European elections starts up, at which point the issue would become further politicized.

So amid the uncertainty, the yield on the Greek two-year hit 10% this week, the highest level in eight months, with a one-day jump of 100 basis points, one percent, as the clearest sign of skepticism a deal can be reached with creditors.

But today, Friday, with stories of a potential agreement, yields plummeted, with the 10-year falling from Thursday’s close of 7.60% to 7.14%, and the yield on the two-year plunging to 8.87%.

From what I’m reading Friday night, however, I’m not sure the optimism earlier today is warranted and eurozone officials are acting like talks will drag out beyond Feb. 20, which would not be good.

So the first big election in Europe that could shake the European Union to its core is in the Netherlands, March 15.

Editorial / The Economist

“ ‘There’s something wrong with our country,’ began an open letter to the Dutch people published last month.  It went on to moan about those who ‘abuse our country’s freedom to cause havoc, when they came to our country precisely for that freedom,’ and warned them to ‘act normal or leave.’ The author was not Geert Wilders, leader of the anti-Muslim Freedom Party (PVV), but Mark Rutte, leader of the free-thinking Liberals (VVD) and prime minister of a country that presents itself as one of the most tolerant in the world.  ‘Act normal’ is a common injunction in Dutch; it can mean ‘Don’t be obnoxious’ or ‘Don’t be silly.’  But here it had a dark, exclusionary ring.  Mr. Rutte’s letter marked how much Dutch politics has changed as the country prepares for a national election.  The vote will test the strength of European populism in the era of Brexit and Donald Trump, and will be seen as a portent of the French and German elections later this year.  If Mr. Wilders comes first, says Cas Mudde, an expert on populism at the University of Georgia, ‘The media will represent him and his European collaborators as ‘the choice of the people.’’  That would boost France’s Marine Le Pen, Germany’s Fraulke Petry and others of their ilk.

“The Netherlands has often been a bit of a bellwether for northern Europe...Anti-Muslim populism took off earlier than elsewhere in Europe, and the country elected a center-right government in 2002, again foreshadowing Britain and Germany....

“The polls put Mr. Wilders in the lead by a few percentage points (though PVV usually underperforms on election day).  Yet even if his party becomes the largest, he has almost no chance of leading the country.  Most parties have ruled out joining a coalition with him.”

And there’s talk Wilders doesn’t want to be prime minister because it would hurt his brand.

“Yet keeping the election’s winner out of government would bode ill for democracy, and substantiate Mr. Wilders’ accusations that elites are ignoring the will of the people.  And the ‘Wilders effect’ on other parties is immense.  Few dare mutter a positive word about Europe or refugees.  Parties across the spectrum talk about national identity or ‘progressive patriotism’ (a catchphrase that is as empty as it sounds).

“This is only exacerbating the Netherlands’ problems with integration....

“With so many parties, and 70% of Dutch voters yet to make up their minds, predicting the election’s outcome is foolish.  Easier to forecast is the direction of the country.  Mr. Rutte’s letter praised such Dutch values as gay rights and the freedom to wear short skirts, and did not explicitly criticize Muslims.  But its condemnations of people who decline to shake women’s hands, or who ‘accuse regular Dutch people of being racist,’ made it clear who was allegedly failing to ‘act normal.’”

In the latest developments in the French presidential election, a poll on Friday by Odoxa for France Info radio showed that seven out of 10 French voters want conservative candidate Francois Fillon to step down, as he continued to be hammered by the “fake work” scandal involving his wife and alleged paid work she has done for him over the years, some $900,000 worth.  Among right wing voters, 53% want him replaced, which includes those who say they would vote for far-right National Front (FN) candidate Marine Le Pen.  Excluding FN votes it was 36%.

Fillon apologized this week over the pay to his wife, but has insisted the work she did was genuine and that he did nothing illegal.  He has vowed to continue his campaign.

The polls now show Fillon coming in third behind Le Pen and centrist Emmanuel Macron, but then either Macron or Fillon would handily beat Le Pen in a runoff.  [The polls generally show Le Pen at 25-26%, and Macron and Fillon at 20-21%.]

This week, Le Pen, having formally launched her campaign last weekend, reiterated plans to take France out of the eurozone, speaking of a France that controlled its own borders and identity, hoping to capitalize on some of the same nationalist forces that swept Donald Trump to power.  She also promised to lower the retirement age from 62 to 60, increase benefits for the poorest and lower payroll tax for small companies to increase hiring. And she promised to reject international trade treaties, echoing Trump, by pursuing a policy of “intelligent protectionism” while “re-industrializing France.”

Le Pen is trying to present the election as a choice between those who were pro-globalization and those who were not.  “There is no rightwing and no leftwing anymore,” she said at her campaign kickoff.  “There is only those who support globalization and patriots.”

Should Le Pen suddenly do well in head-to-head runoff polls over the coming weeks, then Euro financial markets, especially the sovereign debt variety, will be roiled more than the mini-earthquake they went through early this week on some of her first pronouncements.  [Euro bonds had largely recovered by Friday.]

For his part, Macron had to deal with the rumor of an extra-marital affair.  He is 39, his wife is more than 20 years older, and he laughed off suggestions he had a relationship with the president of Radio France, who is male. 

[French security officials disrupted a major terrorist plot on Friday, in the nick of time it seems.  Had they not done so, the potential scope of the ensuing attack would no doubt have influenced the election.]

Meanwhile in Germany, suddenly Chancellor Angela Merkel is second in the polls for that nation’s September elections, the first time since 2010 her party, the Christian Democratic Union (CDU) is trailing the center-left Social Democratic Party (SPD), which is Merkel’s coalition partner.

The SPD got a boost when it selected former European Parliament President Martin Schulz as its leader.  As the Wall Street Journal’s editorial board describes him, “Schulz is an orthodox tax-and-spend, pro-European Union social democrat, but he has the advantage of not being tarred by the previous leadership’s 2013 decision to form a grand coalition with Mrs. Merkel.”

Editorial / Wall Street Journal

“Mrs. Merkel needs some serious political competition.  Absent a vibrant center-left, Mrs. Merkel positioned herself as a pragmatic centrist of the European status quo.  Most controversially, the lack of a challenger for centrist votes led Mrs. Merkel to assume she could count on that part of the electorate to support her open-door migration policy despite opposition from her right within the CDU.  This fueled the popularity of the far-right, euroskeptic Alternative for Germany (AfD) party.

“Now voters inclined to vote for a social democrat appear to be returning home to Mr. Schulz because he really is one.  Polls show the CDU and its Bavarian sister party, the CSU, together virtually tied with the SPD at around 30% support.  This is forcing Mrs. Merkel back toward the right.  Witness the tougher new policy to deport some migrants – and to step up security surveillance while migrants are  in Germany – she unveiled Thursday.  This is a sign she’s no longer taking for granted the support of the CDU faithful.”

Merkel’s plans to deport more migrants are much tougher than proposals she presented in the wake of the Berlin Christmas market terrorist attack that was allegedly carried out by a failed Tunisian asylum seeker.

The government is also seeking to curb migrant inflows by getting out the word that it is no longer a soft touch.  Many migrants are seeing their applications turned down, but then the problem is they aren’t deported right away (let alone detained) and they just wander wherever they please, as was the case with the Tunisian.

As for Martin Schulz, he is playing up what he sees as a malign force: Donald Trump.

Mr. Trump’s “attacks on Europe are also attacks on Germany,” Schulz said at a rally last week.  “In a time when the world is drifting apart, in a time of Trumpism, we need values-based cooperation of the democracies in Europe now more than ever.”

Schulz’s policies are very similar to Merkel’s.  The difference is he’s going after Trump and she has been cautious thus far.

More than 75% of Germans disapprove of Trump today, according to an INSA/Bild poll, while a survey by Infratest Dimap found the share of Germans who consider the U.S. to be a trustworthy partner has fallen to 22% from 59%.  [Wall Street Journal]

Then there’s Brexit.  I’ve said since the referendum this will not be an easy process and that markets have been far too optimistic on what is to come in terms of the negotiations.

So I got a kick out of a piece by Bloomberg’s Simon Kennedy today:

“A week after the British prime minister [Theresa May] formalized her strategy, Brussels-based diplomats say the risk is growing that talks deteriorate early on, increasing the chance that Britain leaves the bloc in 2019 without an exit package, let alone the sweeping trade accord it’s seeking.

“EU officials have been irked by May’s push to curb immigration while maintaining trade ties, as well as her warnings that failure to get what she wants could prompt her to slash taxes or withdraw security provisions.

“Likely early flashpoints include haggling over how much the U.K. owes the EU and whether the divorce and the future can be discussed at the same time.  Any clash could mean May has to rein in her ambitions to avoid a disorderly split.”

Prime Minister May did win a second vote in the House of Commons, leaving the House of Lords to approve of the plan to move forward with Brexit, though opposition Labour Party leader Jeremy Corbyn has said he’ll propose eight amendments, including the right for lawmakers to vote on May’s final deal.

The bill can’t become law until both houses of Parliament approve, so if the Lords amend it, it must return to the Commons.  However, none of the proposed amendments succeeded in the Commons and the Lords, after all, are unelected, so for them to trash the bill would raise questions about their legitimacy.

But May did offer the concession to lawmakers that Parliament would get an early vote on a final pact, which means MPs either accept her government’s deal-making or quit the EU with no deal at all.  Brexit Minister David Jones has warned Mrs. May would never return to the negotiating table to ask EU leaders for a better pact.

But Labour Party member Keir Starmer told the BBC on Wednesday, the government is bluffing.

“The idea the prime minister would seriously say in 2019: ‘Well, rather than go back and see if I can improve and satisfy parliament I will simply crash out’ that would be a reckless act.”

Reckless indeed.  Like I said, going back to last June, this will be a freakin’ mess.  Mrs. May will be triggering Article 50 to begin the process by March 31.

Eurobits....

--German Finance Minister Wolfgang Schauble was sharply critical of the European Central Bank’s easy money policies that are slated to continue the rest of 2017.  Schauble in the past blamed ECB President Mario Draghi for the success of the far-right AfD party in Germany, and now with Angela Merkel struggling, Schauble is concerned the AfD* will continue to gain support from voters worried about the low interest on their savings.

*The AfD’s poll #s are actually slipping a bit.

--U.K. car sales rose 2.9% in January to the highest level since 2005, but officials continue to warn of a slowdown in consumer spending as confidence wanes amid both the Brexit negotiations and rising inflation.

A survey of Britain’s largest companies suggested the Brexit vote is having a negative impact on business, with 58% saying their firms had suffered since last June’s vote.  A third thought the referendum had not made any difference, and 11% felt it had been positive.

Two-thirds of the CEOs and directors thought their business would be worse off after the U.K. left the EU. [Ipsos Mori]

Turning to Asia, just a few notes....

China’s foreign exchange reserves fell below $3 trillion for the first time in nearly six years last month as the central bank used more of its war chest on propping up the currency, while Beijing imposed new capital controls in an effort to control outflows.  Included in the capital controls is a regulatory clampdown on foreign acquisitions with European and U.S. companies.  30 deals worth nearly $75bn were canceled in 2016 as a result.

China’s January export figure was much better than expected, up 7.9% year over year in $dollar terms, as reported by the government.  This was after a 6.1% contraction in December.  Imports also beat estimates, up 16.7% yoy.

And the private Caixin reading on services for January came in at a solid 53.1 vs. 53.4 in December, 50 being the dividing line between growth and contraction.

In Japan, machine tool orders rose a solid 6.7% in December over November, a sign of strength, with year over year growth also 6.7%, both better than expected.

Street Bytes

--All three major indexes closed at record highs Friday, with the Dow Jones now at 20269, up 1.0% on the week.  The S&P 500 tacked on 0.8% to 2316, and Nasdaq rose 1.2% to a record 5734.

--U.S. Treasury Yields

6-mo. 0.64%  2-yr. 1.19%  10-yr. 2.41%  30-yr. 3.01%

The 10-year finished with a yield of between 2.40% and 2.48% for a seventh week in a row, after breaking down to 2.34% on Thursday.

Key inflation data coming out next week, as well as figures on retail sales.

--The number of Americans filing for first-time jobless benefits fell last week to just above the lowest level since 1973, 234,000, a further sign of tightening in the labor market (and you’d think higher wages to come). 

--The International Energy Agency said on Friday that global oil output plunged in January as OPEC and non-OPEC producers curbed supply to accelerate market rebalancing after one of the largest oil gluts in decades,

Oil supplies fell about 1.5 million barrels per day, including 1 million bpd for OPEC, or initial compliance of 90 percent with a six-month output-cut deal reached back in December as OPEC attempts to boost prices.

The IEA said Saudi Arabia appears to be cutting by more than required, and if the January level of compliance were maintained, combined with strong demand, the record inventory levels should ease substantially over the next six months.

The IEA has raised its demand growth forecast for 2017 to 1.4m bpd.  2016 saw growth of 1.6 million.

But the fly in the ointment is production from non-OPEC producers like the U.S. and Canada. After falling by 800,000 barrels per day last year, growth from these two, plus the likes of Brazil, could amount to as much as 750,000 bpd.

Ergo, wait and see.

--Oil giant BP saw profits double in the fourth quarter, but it did take another charge of $799m for the Deepwater Horizon disaster, bringing total charges to $62.6bn.

CEO Bob Dudley said, “2016 was the year we made significant strides” for future growth, adding: “We start this year with considerable momentum...We have laid the foundation for BP to be back to growth.”

Full-year capital expenditures are now expected to be at the higher end of BP’s previous guidance of $16-$17bn, a sign that the company feels that crude oil prices are starting to stabilize.

--In a meeting with airline executives at the White House, President Trump described the current air-traffic control system as being “totally out of whack.”  In the meeting where he mentioned he was announcing tax reform measures in the next three weeks, Trump vowed to reduce government regulations and place a pilot at the head of the Federal Aviation Administration, the industry’s safety regulator and air-traffic control provider.

Southwest CEO Gary Kelly estimated that delays, air congestion, and excess fuel use cost the industry $25 billion last year.  The U.S. is still using World War II-era ground-based radar to guide air traffic, rather than GPS satellite-delivered navigational tools, which everyone in the airline industry says leads to longer trip times.

As the Wall Street Journal pointed out, a 236-mile flight from Las Vegas to Los Angeles took 59 minutes in 1990, but today takes 70 minutes.

--General Motors reported record profits in its core North American market last year, but about 20% of its highly profitable light trucks are built in Mexico and the company has no plans to shift production from there, which could be a problem given the Trump administration’s proposed crackdown on imports.  GM is moving more production to Mexico for the assembly of certain SUVs.

GM sells more cars overseas than at home, with China the No. 1 market, far surpassing U.S. deliveries, with much of its parts production outside the U.S. as well.

So with record profits come record bonuses for GM’s 52,000 UAW members, who are receiving an average of $12,000 from profit sharing for 2016, which is based not just on money earned in the U.S., but all of North America.  [The workers receive $1,000 for every $1bn in annual pre-tax North American profit, and GM turned a $12bn profit in same in 2016, up from $11bn in 2015.]

If there was a 20% border tax, as is being discussed, that could equate to $3 billion in annual penalties for GM.

[Ford, on the other hand, relies on Mexico for the production of small cars that are less profitable.]

GM’s overall net income was $9.43 billion because of one-time charges.  But the automaker beat analyst expectations with profit of $6.12 per share for the year, $1.28 for the fourth quarter.

Global revenue topped $166.38 billion last year, compared with $152.36bn in 2015.

--Walt Disney reported sales unexpectedly fell to $14.8bn in the fourth quarter, 3% lower than the same period a year earlier, with a drop in advertising at cable network ESPN and a 7% fall in revenues at its movie business.  Revenue from Disney’s parks and resorts unit, the company’s second-largest business, rose 6.4% to $4.56bn.

CEO Bob Iger also weighed in on trade issues between the U.S. and China, China being increasingly important for Disney’s movie and merchandise sales, with Disneyland Shanghai one of its “biggest success stories in 2016.”

“An all-out trade war with China would be damaging to Disney’s business and to business in general.”  As to the executive order signed by Trump barring migrants and refugees from seven Muslim countries, Iger told CNBC, “We cannot shut our borders to immigrants.”

Disneyland Shanghai, by the way, has received 7 million visitors since opening last June, with tickets selling out during the Lunar New Year holiday period.  I can’t think of a worse nightmare than being with the hordes at that time. 

Meanwhile, Iger, whose contract ends in June 2018, said he is open to extending his term.  Shares in Disney were basically unchanged on all the news.

--Shares in Twitter plunged 12% on Thursday (and another 5% Friday) after the company reported its slowest quarterly revenue growth since going public, Twitter continuing to face intense competition from Snapchat and Facebook’s Instagram.  Revenue rose just 1% to $717.2 million, missing the average analyst estimate of $740 million.

Twitter said its user base rose 4% to 319 million average monthly active users, basically inline, while the company’s adjusted profit beat expectations.

It’s the revenue growth that was the killer, though, and the takeover buzz from last year, with the likes of Salesforce.com and Disney, has fizzled.

Yes, Donald Trump has driven some of the user growth but it hasn’t been enough.

--Meanwhile, Twitter competitor Snap, owner of the Snapchat app, said it expects to spend $1 billion over the next five years using Amazon.com cloud services, in addition to a $2bn contract it already has with Google. 

The announcement was part of an amendment to a filing related to its looming IPO, in which the company is looking to raise at least $3bn.  [At a valuation close to $25bn.]

--Tesla is shutting down its Fremont, Calif., factory for a week in February as it retools for its highly-anticipated Model 3, which Tesla announced Thursday should begin production later this year as planned, with the goal still 500,000 vehicles in 2018.

Tesla already has 373,000 pre-orders for the Model 3, with customers having put down $1,000 each, though this figure hasn’t been updated since last year (some may have dropped out, others placed new orders).

The starting price for the mid-market car is $35,000 before government incentives, and it’s critical to Tesla becoming profitable.

But to ramp up from 76,000 Model S and Model X luxury vehicles to 500,000 by next year is a rather daunting mission and Tesla never hits their targets.  Plus the company has labor issues, with some workers out to unionize.

--President Trump attacked Nordstrom Inc. for dropping his daughter Ivanka’s clothing line, raising concerns about the use of his White House platform for his family’s business.

Nordstrom said its move was based on the sales performance of the Ivanka Trump products, while White House spokesman Sean Spicer characterized the company’s action as a “direct attack” on the president’s policies.

“My daughter Ivanka has been treated so unfairly by @Nordstrom.  She is a great person – always pushing me to do the right thing! Terrible!” Trump tweeted.

Spicer also painted Nordstrom’s move as an attack on the president’s daughter.  “For someone to take out their concern with his policies on a family member of his is just not acceptable.  And the president has every right as a father to stand up to them.”

It’s tough to know if Nordstrom was being political or not, but there is an ongoing campaign called #GrabYourWallet, which encourages shoppers to boycott products with ties to President Trump, his family and his donors.

What was funny was that initially the shares dropped, only to rally sharply and end up about 5% by week’s end off the lows.

I’ll say this was a turning point in terms of Trump’s impact on companies who incur his wrath. 

But then you had Kellyanne Conway hawking Ivanka’s clothing line on Fox News Thursday morning from the White House briefing room, totally against ethics rules. 

“Go buy Ivanka’s stuff...I’m going to get some myself today....I’m going to give a free commercial here: Go buy it today, everybody.”

While this is far from a felony, House Oversight Committee Chairman Jason Chaffetz (Rep.) was pissed and issued a bipartisan letter to the White House, calling Conway’s comments “unacceptable” and “clearly over the line.”  But it is up to the White House to discipline Conway and no one looks for The Donald to do anything of the sort.

--Yum China – which operates fast-food franchises including KFC and Pizza Hut in China – reported same-store sales were flat over the fourth quarter, though earnings beat expectations.

But as a barometer of sentiment and changing tastes in China, KFC saw a 1% increase, which was offset by a 3% decline in comp-store sales at Pizza Hut.

Meanwhile, Yum Brands Inc., which spun off Yum China last year, reported rising revenue and same-store sales in Q4, with comp sales at KFC rising 3%, ditto Taco Bell, while Pizza Hut’s fell 2%.  The KFC and Taco Bell performances are pretty good, given the difficulties in the industry.

--Editorial / Wall Street Journal

“The U.S. Army Corps of Engineers finally granted an easement Tuesday that will allow the Dakota Access Pipeline to cross under the Missouri River north of the Standing Rock Sioux Reservation in North Dakota.  The approval means that construction of the final 1.5 miles of the more than 1,700-mile pipeline can proceed.  More important, the approval means that the era of arbitrary political interference with private infrastructure projects is over.

“The pipeline’s last sliver had been held up for months by protesters who claim to oppose disturbing the area’s pristine natural resources.  In reality, they oppose extracting any fossil fuels from the ground, and the Obama Administration indulged them in its final days.

“Other evidence of less-than-pristine motives comes from the garbage dump the protesters left behind.  A North Dakota Fox affiliate reported this week on the clean-up efforts for the makeshift encampments: Thousands of protesters produced enough garbage to fill an estimated 250 trucks with trash.  The detritus – tarps, tents – has frozen into ‘massive chunks of junk,’ said the report, and much of it is buried under snow.

“The Army Corps closed the area and said in a press release that grass has been destroyed or removed from some 50 acres.  The mess has to be cleared out before a spring flood sends toxic sludge into the nearby Cannonball River and Lake Oahe, the same lake the protesters said would be polluted by the pipeline.  Moral grandstanding can be a dirty business, but shouldn’t the protesters pay to clean up their own mess?”

--Tiffany & Co. abruptly replaced CEO Frederic Cumenal, who had been running the company since April 2015, after another poor quarter, with sales declines in Europe and the Americas over the holiday season.  Stepped-up security at its flagship store next to Trump Tower continues to hurt traffic.

Lady Gaga did a Super Bowl ad for the company, Tiffany’s first such effort.

--Dunkin’ Brands Group Inc. reported fourth-quarter net income of $56.1 million, after reporting a loss in the same period a year earlier, with adjusted earnings of 64 cents per share beating the Street.

The owner of Dunkin’ Donuts and Baskin-Robbin chains had revenue of $215.7 million in the period, also slightly above expectations and the shares rallied on the solid report.

On a personal note, I would like to thank the Dunkin’ crew in my building for getting to work on time in Thursday morning’s snowstorm.

--Hewlett-Packard announced it was laying off 500 employees at a factory in Leixlip, Co. Kildare, Ireland on Wednesday.  The factory makes ink jet cartridges and printers.  I only bring this up because it’s just a classic case of changing technology, and the impact a closed plant will have on the surrounding community.  HP does, however, maintain that 2,100 other employees in the general area connected to other facets of the company will be safe.

--Ratings for the Super Bowl were slightly below last year, a 48.8 rating and a 72 share on Sunday vs. 49 and 73 for SB 50, according to Nielsen.  Pretty good game, I think you’d agree.

--Bob Costas is stepping down as host of NBC’s Olympics coverage after 24 years.  He’ll be replaced in Pyeongchang next year by Mike Tirico.  Costas turns 65 in March.  I like them both.

--Greg Trotter / Los Angeles Times

“In a time of deep political divisions, this much appears unassailable: Americans are hitting the hard stuff with gusto these days, increasingly American whiskey but also – in the spirit of inclusiveness – cognac, tequila and vodka.

“For the seventh straight year, the spirits industry swiped market share from beer, according to economic data released Tuesday by the Distilled Spirits Council of the United States.  Overall, spirits suppliers’ sales to wholesalers grew to $25.2 billion last year, up 4.5% from the year before, and sales volume increased about 2.4% to 220 million cases.

“Based on revenue, spirits had 35.9% of the U.S. alcoholic-beverage market last year while beer had 47% and wine had 17.1%.  In 2000, spirits had 28.7% of the market, beer had 55.5%, and wine had 15.7%.”

Tequila sales volume increased 7% in 2016 over 2015.

Moi?  Sticking with domestic, sports fans, with volume up 45% here at global headquarters.

Foreign Affairs

Iran: Monday, Iran said a recent ballistic missile trial launch was not meant to send a message to President Trump and to test him, since Iranian officials already “know him quite well.”

The test prompted Washington to levy new sanctions, as Trump tweeted Iran was “playing with fire.”  Foreign Ministry spokesman Bahram Qassemi said, “Our missile tests are in line with our national interests, and conducted on the basis of a schedule,” he explained.  Iran continues to maintain its missiles are conventional weapons, not capable of carrying nuclear warheads, which is B.S.

Last weekend Defense Secretary James Mattis said he was not considering strengthening U.S. forces in the Middle East to address Iran’s’ “misbehavior.”  Also last weekend, Iran reversed a decision to ban a U.S. wrestling team from a competition in the country after retaliating for Trump’s executive order banning visas for Iranians.

Monday, Russia said it does not agree with a claim by the U.S. that Iran supports terrorism, after in his Bill O’Reilly interview Trump said Iran is “the number one terrorist state.”  Saturday, Secretary Mattis called Iran the world’s “biggest state sponsor of terrorism.”

Russian Deputy Foreign Minister Sergei Ryabkov also denied a Wall Street Journal story that the Trump administration is trying to drive a wedge between Russia and Iran.

Meanwhile, Supreme Leader Ayatollah Ali Khamenei made his first public speech since Trump’s inauguration.

He dismissed the U.S. decision to put Iran “on notice” over the missile test and called on Iranians to take part in demonstrations marking the anniversary of the 1979 Islamic revolution.

“We are thankful to [Trump] for making our life easy as he showed the real face of America,” Khamenei said.

“He says, ‘You should be afraid of me.’  No!  The Iranian people will respond to his words on February 10* and will show their stance against such threats.”

White House spokesman Sean Spicer reiterated his boss’ stance.  “I think the Ayatollah is going to realize there’s a new president in office.  This president’s not going to sit by and let Iran flout its violations, (and) he will continue to take action as he sees fit.

“The president has also made clear time and time again that he’s not going to project what those actions will be, and he’s not going to take anything off the table.”

*Friday, millions turned out in Tehran and around the country to celebrate the anniversary of the Islamic Revolution, with President Hassan Rouhani saying the rallies were “a response” to anti-Iran remarks coming out of the White House.

Separately, Israeli Prime Minister Benjamin Netanyahu is meeting with Trump in Washington on Feb. 15 and Iran will be at the top of the agenda, though there is no sign that the White House is thinking of scrapping the nuclear accord, as Trump had said during the campaign.  Defense Secretary Mattis doesn’t want this, for starters, but Netanyahu and Trump will no doubt reach agreement on a tougher U.S. policy towards Tehran through measures designed to tighten enforcement and pressure Iran into renegotiating key provisions; such as removing “sunset” terms that allow some curbs on Iranian nuclear activity to start expiring in 10-15 years.

However, you have to get the other members of the P5+1 on board.

Editorial / Wall Street Journal

“The world has been wondering if the Trump Administration will withdraw from President Obama’s nuclear agreement with Iran, and the answer appears to be no.  That makes sense given the break it would cause with U.S. allies and the opening for Iran to make more mischief.  But it does look as if President Trump may be willing to do what President Obama refused to do, which is to rigorously enforce the agreement and push back against Iran’s aggression in the Middle East....

“Iran’s missile launch is a deliberate effort to test the seriousness of the new U.S. administration.  Iran may now decide to test the White House again on how far it is willing to go to enforce the meaning of ‘on notice.’  The more unequivocal the Administration’s response, the sooner Tehran will get the message that, this time, it faces a U.S. government that means what it says.”

John Bolton / Wall Street Journal

“The loopholes are larger than the activity supposedly barred. Iran simply denies that its missiles are ‘designed’ for nuclear payloads – because, after all, it does not have a nuclear-weapons program. This is a palpable lie, but both the JCPOA [Joint Comprehensive Plan of Action...the main nuclear deal] and a unanimous Security Council accepted it.  Resolution 2231 includes a paragraph: ‘Welcoming Iran’s reaffirmation in the JCPOA that it will under no circumstances ever seek, develop or acquire any nuclear weapons.’  The ayatollahs have been doing precisely that ever since the 1979 revolution.

“Finally, Resolution 2231 itself also merely ‘calls upon’ Iran to comply with Annex B’s ballistic-missile limits, even as the same sentence says that all states ‘shall comply’ with other provisions. When the Security Council wants to ‘prohibit’ or ‘demand’ or even ‘decide,’ it knows how to say so. It did not here.

“The upshot is very simple: Iran can’t violate the ballistic-missile language because it has reaffirmed that it doesn’t have a nuclear-weapons program.  Really, what could go wrong?

“These are weasel words of the highest order, coupled with flat-out misrepresentation by Iran and willful blindness by the United States.  The Jell-O will not stick to the wall.  The deal cannot be ‘strictly enforced.’  And this is only one example of the slippery language found throughout the deal.

“Pentagon sources have said that the missile Iran recently tested failed while re-entering the Earth’s atmosphere. This is telling.  If the missile program were, as Iran claims, only for launching weather and communications satellites, there would be no need to test re-entry vehicles.  The goal would be to put satellites in orbit and keep them there.  But nuclear warheads obviously have to re-enter the atmosphere to reach their targets.  The recent tests provide even more evidence of what Iran’s ballistic-missile program has always been about, namely supplying delivery vehicles for nuclear weapons.

“Time always works on the side of nuclear proliferators, and the Iran deal is providing the ayatollahs with protective camouflage.  Every day Washington lets pass without ripping the deal up is a day of danger for America and its friends.  We proceed slowly at our peril.”

But, Ambassador Bolton, you can’t rip it up without the other signatories, as I’ve said since it was first signed...period.

Iraq/Syria/ISIS/Russia/Turkey: Well, rumors of Syrian President Bashar al-Assad’s demise from a health issue (let alone assassination) were unfounded as Yahoo News’ Michael Isikoff scored an interview with the dictator in Damascus, wherein Assad rejected the creation of safe zones for refugees and displaced people in Syria, an idea floated by President Trump.

Assad signaled he would welcome cooperation with Washington in the fight against Islamic State, however, as long as the United States took a ‘clear political position’ on Syria’s sovereignty and unity.  Assad has cautiously welcomed the new U.S. administration’s focus on fighting the jihadists, in which Trump has held out the possibility of cooperation with Damascus’ ally Russia.

Regarding safe zones, Assad said: “It’s not a realistic idea at all.  This is where you can have natural safe zones, which is our country. They don’t need safe zones at all...It’s much more viable, much more practical and less costly to have stability than to create safe zones.”

Assad said safe zones would be at risk of attack from armed groups.  The U.N. also rejects safe zones, saying conditions are not suitable.

Assad also dismissed a report by Amnesty International that said up to 13,000 prisoners had been executed at a military jail in Damascus since 2011, calling it a product of a “fake news era”, charging A.I. had fabricated evidence to discredit his regime.

Amnesty said in its report that authorities executed prisoners in the middle of the night in groups of up to 50, Amnesty saying it had interviewed dozens of former detainees, prison guards, judges and lawyers.

Separately, at Syrian peace talks last month, rebel leaders said they had secured an agreement with Russia that 13,000 female prisoners would be released by the Assad regime as part of the cease-fire agreement and none have been released to date.  [Wall Street Journal]

Back to Assad, he condemned the United States for its own human rights abuses.  “The United States is in no position to talk about human rights,” he said.  Assad also dismissed photos showing rows of emaciated, brutally beaten bodies of detainees – many believed to be political protesters – at his military prisons.

Meanwhile, the top U.S. commander in Iraq, Lieutenant Gen. Stephen Townsend, was quoted by the Associated Press as saying U.S.-backed forces will recapture Islamic State’s two major strongholds – Raqqa in Syria and Mosul in Iraq – within the next six months.  Some thought this would have already been accomplished.

Tidbits....

--Russian airstrikes accidentally killed three Turkish soldiers during an operation against ISIS in northern Syria.  Vladimir Putin called Turkish counterpart Tayyip Erdogan to express his condolences for the accidental killing.

--The RBC news agency estimates the Russian military has spent $168 million deploying its lone aircraft carrier, the Admiral Kuznetsov, to the Mediterranean in support of operations in Syria.  The deployment was to have ended on Thursday, after which the ship will return to Russia’s Northern Fleet headquarters.  The Kuznetsov lost two aircraft to technical failures, a MiG-29 and an Su-33.  [Matthew Bodner / Moscow Times]

--U.S. forces announced that in recent air strikes, they had killed 11 members of al-Qaeda in Syria, including a former ally of Osama Bin Laden.

--In Turkey, police last Sunday detained over 400 suspected members of ISIS in nationwide raids in response to the New Year’s attack on the Reina nightclub that killed 39.  The government also announced at least 48 Turkish soldiers have been killed since Turkey’s incursion into Syria to fight Islamic State.

Afghanistan: Bad week here.  Six Afghan Red Cross workers were killed in a suspected ISIS attack in the north, the workers shot dead, with two others unaccounted for and presumed abducted by the group.  Islamic State has been active since 2015 in the country.  The Red Cross, which has been in Afghanistan for 30 years, said it will now assess its operations here.  The staff was transporting supplies to areas affected by recent deadly snowstorms that claimed over 100 lives in avalanches.

Earlier, a suicide bomber targeted the Supreme Court building in the capital of Kabul, killing at least 19, with the explosion hitting near a side door used for court employees.  The attacker was on foot and detonated his suicide vest as employees and others were leaving for the day.  No one claimed responsibility, but this was probably the work of the Taliban, which has targeted the court in the past.

So with it being very clear that Afghanistan is far from stable, U.S. Gen. John Nicholson, the top commander in the theater, told Congress this week that Afghanistan is in a “stalemate” that will require several thousand more Western troops to break. 

Defense Secretary Mattis is expected to make the request to NATO defense ministers when they meet next week in Brussels.  President Trump has said he would listen to his generals.

In a blistering statement, Sen. John McCain, chairman of the Armed Services Committee, said the Obama administration had obsessed about troop numbers instead of needs.

“Unfortunately, in recent years, we’ve tied the hands of our military in Afghanistan, and instead of trying to win, we settled for just trying not to lose.  Meanwhile, the risk to American and Afghan forces has only grown worse as the terrorist threat has intensified.  The Taliban has grown more lethal, expanded its territorial control, and inflicted heavy casualties on Afghan forces.”  [Kevin Baron / Defense One]

Gen. Nicholson also said Russia’s goal in Afghanistan is to undermine the U.S. and NATO as it looks to “legitimize and support” the Taliban.  [Reuters]

President Trump needs to keep this in mind when dealing with Vlad the Impaler.

Israel: In a worrisome development, ISIS reportedly fired seven rockets toward Israel from Egypt’s Sinai on Wednesday night.  The barrage was on Eilat, Israel’s southernmost city.  Three of the seven were intercepted by the Iron Dome missile defense system, according to the IDF Southern Command.

China: [The following is chronological]

After essentially zero communication since the November election, President Trump sent a letter to Chinese President Xi Jinping, thanking Xi for congratulating him on his inauguration last month and said he looked forward to “constructive” relations, but Trump and Xi have not spoken.  Since the election, Trump has challenged Beijing on sensitive issues such as Taiwan and the South China Sea.  China responded cautiously, expressing “serious concern” about Trump’s position on the “One China” policy.

The New York Times ran a story Thursday that China was stung by Trump’s phone call with the president of Taiwan and that it was not felt President Xi would reach out to Trump until he publicly commits to recognizing a single Chinese government in Beijing.

But then late Thursday evening, with Japanese Prime Minister Shinzo Abe about to start an extravagant three-day visit to Washington, including golf with Trump in Florida, and having met with Secretary of State Rex Tillerson earlier in the day, Trump called Xi and agreed to honor the One China policy, reassuring Beijing.

The White House described the call as being “extremely cordial.”  The two leaders had invited each other to visit and looked forward to further talks.

A statement from Beijing said China appreciated Mr. Trump’s acknowledgement of the One China policy.

Just a reminder...under the One China policy, which goes back to 1978-79, the U.S. recognizes and has formal ties with China rather than the island of Taiwan, which China sees as a breakaway province to be reunified with the mainland one day.

Trump, after his call with Taiwan’s president in December, said: “I don’t know why we have to be bound by a One China policy unless we make a deal with China having to do with other things, including trade.”

I blasted the move back then.  What the president did Thursday is certainly preferable.

But Taiwan needs to know the United States will continue to support it militarily, and Beijing must learn to live with this.

And you still have the highly contentious issue of the islands in the South and East China Seas.

Earlier, the Asia Maritime Transparency Initiative at the Center for Strategic and International Studies in Washington said on Wednesday that China now occupies 20 outposts in the South China Sea around the disputed Paracel Islands and there has been an extensive military buildup on eight islands.  The group said “Three of these now have protected harbors capable of hosting large numbers of naval and civilian vessels.”  [South China Morning Post]

China has repeatedly promised not to militarize its man-made islands.

Last weekend, on a trip to South Korea and Japan, Defense Secretary Mattis stressed there was no need for “dramatic military moves” in the South China Sea to pressure Beijing to stop construction there.  Mattis said in Tokyo that the U.S. should pursue diplomatic efforts first and foremost.

At the same time, Mattis added, “I made clear that our longstanding policy on the Senkaku Islands (in the East China Sea) stands.  The U.S. will continue to recognize Japanese administration of the islands and as such Article 5 of the U.S.-Japan Security Treaty applies.”  This is a policy dating back to 1972, but the pledge is always in doubt from Tokyo’s perspective.

As for North Korea, senior Japanese officials have said one of their biggest fears is that President Trump would act unilaterally against Pyongyang, leaving Japan and South Korea to face retaliation.

Russia, part dva: The nation’s main opposition leader, Alexei Navalny, was found guilty of embezzlement and handed a five-year suspended sentence.  He is barred for running for president next year against President Putin.

Navalny vows to appeal and still take part in the race.  The conviction came in a retrial after the European Court of Human Rights ruled the first trial to be unfair.

Navalny said after the sentence was read:  “What we are seeing now is a sort of telegram sent from the Kremlin, saying that they believe that I, my team, and the people whose views I voice, are too dangerous to allow us to take part in the election campaign.  We don’t recognize this ruling.  I have every right to take part in the election according to the constitution and I will do so.”

Navalny, 40, has been active in Russian politics since 2008 when he started his blog about alleged corruption at some of Russia’s biggest state-owned corporations and described Putin’s United Russia as “the party of crooks and thieves.”

In 2013, he ran for mayor of Moscow and received about 25% of the vote.

In the first trial in 2013, Navalny was found guilty of heading a group that embezzled timber worth $500,000 from the Kirovles state timber company.  He was given a five-year suspended sentence, with opposition supporters clashing with police in Moscow and elsewhere afterwards.

But the judgment was overruled by the Russian Supreme Court last year following the European Court of Human Rights’ ruling Navalny didn’t receive a fair trial.

Navalny said on Wednesday that the verdicts in the two trials were identical.  [Reuters, BBC]

Editorial / Wall Street Journal

“Mr. Navalny’s reconviction follows news last week that Vladimir Kara-Murza, a pro-democracy activist and contributor to these pages, had become ill with poisoning symptoms similar to those he suffered in 2015.  Mr. Kara-Murza has now fallen into a coma.

“The fashion among some Western politicians, from Donald Trump to Francois Fillon and Marine Le Pen in France, is to say they want to engage Mr. Putin the way Ronald Reagan did the Soviet Union.  One difference is that the Gipper would not have hesitated to speak up for Messrs. Navalny and Kara-Murza.”

Separately, according to another lead to the press from the White House staff, we learned that President Trump railed at Vladimir Putin in their recent phone call, denouncing the 2010 New START nuclear arms limitation pact as a ‘bad deal.’  According to Reuters: “When Putin raised the possibility of extending the 2010 treaty...Trump paused to ask his aides what the treaty was.”  He then reprised campaign rhetoric about how one-sided the treaty is, claiming that it gave Russia a strategic nuclear advantage.

New START, approved ty a vote of 71-26 in the Senate, is a modest arms reduction treaty that trims U.S. and Russian “operationally deployed strategic weapons” to 1,550 on each side and extends crucial inspection and verification procedures.  It expires in 2021.

But, “The New START Treaty has the unanimous support of America’s military leadership – to include the chairman of the Joint Chiefs of Staff, all of the service chiefs, and the commander of the U.S. Strategic Command, the organization responsible for our strategic nuclear deterrent,” said then-Secretary of Defense Robert Gates in 2010.  “This treaty deserves [to be ratified by the U.S. Senate] on account of the dangerous weapons it reduces, the critical defense capabilities it preserves, the strategic stability it maintains, and, above all, the security it provides to the American people.”  [Joe Cirincione / Defense One]

Friday, the Kremlin said the prospects of extending New START will “depend on the position of our American partners” and require negotiations.

As for Ukraine, Trump and Ukrainian President Petro Poroshenko talked the other day, with Poroshenko calling for more dialogue and economic ties with the U.S., the White House describing the conversation as a “very good call.”  Trump reportedly said: “We will work with Ukraine, Russia and all other parties involved to help them restore peace along the border.”

The call came after more than a week of intense fighting between government troops and pro-Russian separatists near the border with Russia resulted in at least 35 deaths (civilians and military).

A notorious commander of the Russian-backed rebels, Mikhail Tolstykh, “Givi,” was killed mysteriously in an explosion in his office early Wednesday, far from the front lines. A rebel news agency called it a “terrorist” act.

Strangely, at least six rebel leaders have been killed in ambushes and bombings inside rebel territory since hostilities began in 2014.  Four days earlier, another leader was blown up by a car bomb.

Brazil: As I keep repeating, talk about a mess.  The whole country is a hellhole.  This week, more than 100 people were killed* as the result of a strike by police in the state of Espirito Santo, with schools and businesses closed, transportation shut down.  The Army has been mobilized to try and restore order, but residents have been tweeting they are hostages in their own homes.  When stores open, they are wiped out of their stocks as residents act like a natural disaster is approaching.  The murder rate is six times the state’s average during the same time of year, and with more than 200 cars stolen, that is ten times the daily average.  The police union says they haven’t received a raise in four years, so with inflation, you get the hardship.  [Paulo Whitaker / Reuters]

*This data was as of Thursday.  Friday, the death toll rose to 120+ with the government threatening to arrest the striking police.  It’s violent anarchy.

Random Musings

--Wednesday, Connecticut Democratic Senator Richard Blumenthal told reporters that Supreme Court nominee Neil Gorsuch told him he found it “disheartening” and “demoralizing” when the president slammed federal judges over a court order that blocked his immigration ban.   A spokesman for Gorsuch confirmed Blumenthal’s account of their conversation.

Trump and Spicer said Gorsuch was mischaracterized.

--Sen. Jeff Sessions was confirmed as attorney general on Wednesday, 52-47, with Joe Manchin (D-W. Va.) joining the Republicans.  A few Democrats after, like New Jersey’s Robert Menendez, went over after to shake Sessions’ hand, but otherwise the Dems were classless.

The fight over Sessions escalated when Sen. Elizabeth Warren (D-Mass.) read a letter that Coretta Scott King had written in 1986, accusing Sessions, a U.S. attorney at the time, of using the power of his office to prevent blacks from voting.

Senate majority Leader Mitch McConnell objected to Warren’s speech, saying she had impugned another member of the Senate, and in a 49-43 vote, the Senate agreed, shutting her off...at least on the Senate floor.

McConnell said: “We all know our colleague from Alabama.  He’s honest.  He’s fair. He’s been a friend to many of us, on both sides of the aisle.”

I said since day one that I liked Sessions and that he was getting a raw deal.  I certainly stand by that.

[Alabama Attorney General Luther Strange (Rep.) was appointed by Gov. Robert Bentley (Rep.) to take over Sessions’ seat.  An election will be held in 2018, though it’s not known if it will be Election Day or earlier in the year.]

--Betsy DeVoss squeaked through as secretary of Education, 51-50, with Vice President Pence having to cast the deciding vote, the first time in U.S. history the vice president had to break a tie when it came to a cabinet nominee. Two Republican senators broke ranks, necessitating that Pence become the decider.

--The Senate voted early Friday morning to confirm Tom Price, the conservative Georgia congressman to be secretary of the Department of Health and Human Services.  Befitting the polarized Senate, this vote was 52-47, with Price not drawing a single vote from Senate Democrats.

--A Department of Homeland Security internal report seen by Reuters puts the cost of a series of fences and walls along the U.S.-Mexico border at as much as $21.6 billion, and would take more than three years to construct.  With 654 miles of the border already fortified, the new construction would cover 1,250 miles of the 2,000 total.

--Homeland Security Secretary John Kelly told a House committee that the administration should have done a better job of informing Congress before implementing the travel ban.

“The thinking was to get it out quick so potentially people coming here to harm us would not take advantage” of a delay, Kelly told the House Homeland Security Committee on Tuesday.

Kelly defended the order itself, saying it wasn’t a ban on Muslims but a “temporary pause” on immigrants and visitors from countries about whose residents the U.S. can’t access solid information.  He sought to take responsibility for the chaotic rollout, saying it’s “all on me.”

Well, he’s just being a good soldier.  Countless reports say Kelly had little input in the executive order and rollout.

Kelly also suggested the fence/wall won’t be nearly as long as the 2,000-mile border, and may not be much longer than the over 650 miles of fencing in existence.  As to the cost, Kelly said he would take his cues from border patrol agents on the ground.

--Thomas L. Friedman / New York Times

“Every day, the president’s behavior becomes more worrying.  One day he demeans a federal judge who challenges him; the next day, without evidence, he accuses the media of hiding illegal voting or acts of terrorism.  His lack of respect for institutions and truth pours out so fast, you start to forget how crazy this behavior is for any adult, let alone a president, and just how ugly things will get when we have a real crisis.  And crises are baked into this story because of the incoherence of President Trump’s worldview.

“How so?  The world today is more interdependent than ever.  The globalization of markets, the spread of cellphones, the accelerations in technology and biology, the new mass movements of migrants and the disruptions in the climate are all intertwined and impacting one another.  As a result, we need a president who can connect all of these dots and navigate a path that gets the most out of them and cushions the worst.

“But Trump is a dot exploiter, not connector. He made a series of reckless, unconnected promises, not much longer than tweets, to get elected, and now he’s just checking off each one, without thinking through the linkages among them or anticipating second-order effects.

“It is a great way to make America weak – and overstretched – again.”

--Chief White House Strategist Stephen Bannon saw his profile elevated this week, between a lengthy TIME magazine cover story, and his portrayal as the Grim Reaper on “Saturday Night Live.”

What has been kind of shocking about these first few weeks is just how many leaks there have been from the White House to the ‘hated’ press and President Trump isn’t happy about it, let alone having people like Bannon receive such a high profile.  Monday morning, Trump tweeted: “I call my own shots, largely based on an accumulation of data, and everyone knows it.”

This came about an hour after a spot on MSNBC’s “Morning Joe” played the SNL skit, showed the TIME cover and posed the question whether Bannon was “calling all the shots.”

The day before, former secretary of state Madeleine Albright told CNN she assumed Bannon was “the person that’s pulling the strings.”

One White House source told The Hill, “I assume President Trump was not pleased with the TIME cover, because that is reserved for Donald Trump.”

The same source conceded, though, that you can’t blame Bannon for being on the cover, and it’s not as if he agreed to be interviewed for it.

--CNN reported that President Trump is not happy with Sean Spicer’s performance and blames chief of staff Reince Priebus for pushing Spicer for the job, a source telling the network, Trump “regrets it every day and blames Priebus.”

According to CNN, Trump wanted Kellyanne Conway to assume the role of press secretary, but she turned it down.

--Trump met Tuesday with a group from the National Sheriff Association, a group that consists of more than 3,000 sheriffs from around the country, and before the group he repeated a falsehood about the murder rate in the country.

“It’s the highest it’s been in 47 years,” Trump told them.  Blaming the media for not publicizing this, he added, “But the murder rate is the highest it’s been in, I guess, 45 to 47 years.”

According to the FBI, though, the murder rate is practically at the lowest level in 47 years.

Beginning in 1957, when the rate was 4.0 murders per 100,000 residents, the rate rose to a high of 10.2 in 1980.  It then steadily dropped to 4.4 in 2014, before ticking up to 4.9 in 2015, or less than half the rate of 1980.

The violent crime rate has also plummeted...from 758 per 100,000 residents in 1991 to 373 per 100,000 in 2015.

2016 stats aren’t available yet.

Yes, in some cities the murder rate is up, but you get the picture.

--A Pew Research Center study finds that of the estimated 11.1 million immigrants in the country illegally, 1.2 million are in the greater New York area, 1 million in Los Angeles and Orange counties, and Houston is third at 575,000.  Up to 8 million could be considered priorities for deportation under President Trump’s proposed crackdown.  [Los Angeles Times]

--Trump tweeted this week: “Any negative polls are fake news, just like the CNN, ABC, NBC polls in the election.  Sorry, people want border security and extreme vetting.”

Frankly, I want my New York Mets to have a healthy starting pitching staff this season.

--In another one of his incredibly asinine tweets, Trump blasted Sen. John McCain, again, after the senator questioned the success of the Yemen raid that resulted in the loss of a Navy SEAL.

“Sen. McCain should not be talking about the success or failure of a mission to the media.  Only emboldens the enemy!  He’s been losing so long he doesn’t know how to win anymore, just look at the mess our country is in – bogged down in conflict all over the place.  Our hero Ryan died on a  winning mission (according to General Mattis), not a ‘failure.’  Time for the U.S. to get smart and start winning again!”

--In an interview with The Andrew Marr Show for the BBC, Matthew McConaughey said it’s time to “embrace” Trump’s election and work with him. When asked if Hollywood should ease up on attacking Trump, McConaughey said: “They don’t have a choice now.”

He added: “He’s our president. And it’s very dynamic and divisive of an inauguration and time as we’ve had.  At the same time, it’s time for us to embrace and shake hands with this fact and be constructive with him over the next four years.

“Even those who most strongly may disagree with his principles or things he’s said or done – which is another thing – we’ll see what he does compare to what he has said.  No matter how much you disagreed with the way, it’s time to think how constructive you can be.  Because he’s our president for the next four years, at least.”  [BBC]

--The White House Correspondents Dinner is April 29, and with the feud between the president and the media, well, who knows what will happen.  But I can’t imagine Trump will attend.

Then again, if his poll numbers were up around April 15....

--Talk about a nightmare, ripped from the gossip pages.  Sandra Lee, the celebrity TV chef, was down in Houston for the Super Bowl as a member of the Host Committee, but she didn’t sleep a wink for three nights. Why?

Her room at the Four Seasons was next to that of rapper Lil Wayne.  As the New York Post put it, Lee “endured three nights of parties, pot smoke and music blaring from the rapper’s room.  The hotel was full, so she couldn’t move rooms.”

Finally, Lee ended up in the elevator with Lil Wayne, who said – mixing her up with the baked-goods company – “Hey Sara Lee!  You going to cook for us?”  Sandra answered, “Can’t make anything for the munchies today – gotta catch a flight.”

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

God bless America.

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Gold $1234
Oil $53.85...nine straight weeks at $52/$53

Returns for the week 2/6-2/10

Dow Jones  +1.0%  [20269]
S&P 500  +0.8%  [2316]
S&P MidCap  +0.8%
Russell 2000  +0.8%
Nasdaq  +1.2%  [5734]

Returns for the period 1/1/17-2/10/17

Dow Jones  +2.6%
S&P 500  +3.5%
S&P MidCap  +3.6%
Russell 2000  +2.3%
Nasdaq  +6.5%

Bulls 62.7
Bears  16.7

Have a great week.

Brian Trumbore

*We are undergoing a server change probably Monday.  These are never totally smooth, so there may be a brief interruption in accessing the site as part of the process.

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