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Week in Review

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02/25/2017

For the week 2/20-2/24

[Posted 10:30 PM ET, Friday]

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Edition 933

The Trump Presidency...Week Five

As Charles Krauthammer says, you judge Donald Trump’s presidency “day by day,” while I will always urge everyone to take a deep breath and wait 24 hours.

This was a week in which it was all crystallized.  If you had any doubts before, Steve Bannon really is running the show, as he made a rare public appearance on Thursday, and Trump then parroted him on Friday.

I really hope these reviews of mine quickly get back to normal, and are far shorter, but for now the easiest way for me to write everything up is to take it day by day.  I hope I’m not writing in two months... “The Trump Presidency...Week Thirteen.”

But this coming Tuesday is a key moment, Trump’s speech before Congress, his first opportunity to spell out some details on his domestic proposals, including tax reform, ObamaCare and an infrastructure program.

Wall Street, for one, has been giving the president, and the Republican Congress, the benefit of the doubt.  Now it’s time for Trump and Republican leaders to begin to deliver.  At the least, provide a realistic timetable for hitting some key objectives.  That is what the market is looking for. Wall Street has been priced for perfection and while I said 2017 would be an up year for stocks, from this day forward the risks are to the downside as we’ll see some disappointments on the legislative side. 

But on to another week of “Life on Planet Trump”.

Saturday....

At his campaign rally in Melbourne, Florida, President Trump immediately took his feud with the press to the people, again, vowing to achieve his legislative agenda despite the “lies, misrepresentations and false stories” thrown at him by the media.

“I want to speak to you without the filter of the fake news,” Trump said to huge cheers.  “The dishonest media, which has published one false story after another with no sources, even though they pretend they have them – they make them up in many cases. They just don’t want to report the truth.”

“Many of our greatest presidents fought with the media and called them out,” Trump said, mentioning Thomas Jefferson, Andrew Jackson and Abraham Lincoln.

“When the media lies to people, I will never, ever, let them get away with it.  I will do whatever I can that they don’t get away with it. They have their own agenda and their agenda is not your agenda.

“But despite all their lies, misrepresentations and false stories they could not defeat us in the primaries or general election and we’ll continue to expose them as what they are and most importantly we’ll continue to win, win, win,” said Trump.

“Life is a campaign,” Trump told reporters earlier aboard Air Force One, just before the rally.  “Making our country great again is a campaign. For me, it’s a campaign.”

Trump also suggested Sweden could face the kind of terrorist attacks that have hit France, Belgium and Germany.

“You look what’s happening in Germany, you look at what’s happening last night in Sweden.  Sweden, who would believe this.  Sweden. They took in large numbers. They’re having problems like they never thought possible.”

The statement baffled the country.  Former prime minister Carl Bildt tweeted: “Sweden? Terror attack?  What has he been smoking?”

Trump later tweeted that his statement “was in reference to a story that was broadcast on Fox News concerning immigrants & Sweden.”

There was indeed a clip on Tucker Carlson’s show concerning a documentary about alleged violence committed by refugees in Sweden.

[Trump doubled down with a tweet on Monday, saying: “The FAKE NEWS media is trying to say that large-scale immigration in Sweden is working out just beautifully.  NOT!”]

I know more on this topic than Donald Trump can ever hope to know, having written extensively on it in this space, and, yes, Sweden has a problem, which the government tries to hide.  162,000 migrants, mostly from Syria, Iraq and Afghanistan, went to Sweden in 2015, overwhelming the system and social structure in the country, and the number of asylum applications dropped to 29,000 in 2016 after Sweden wised up and strengthened the border, with asylum seekers facing far longer processing times.

But for the record there have been no France or Belgium-style terror attacks in the country since Sweden’s open-door policy on migration began in 2013, but there were incidents in 2010 and 2015 that were perpetrated by individuals deemed terrorists.

Having said this, about 140 of the 300 Swedes who went to fight for ISIS in Syria and Iraq are reported to have returned, and since these folks are not known to assimilate into Swedish society, this is, and will be, a major problem.

Sunday....

On the talk shows, Fox News anchor Chris Wallace cautioned his colleagues and the network’s viewers that President Trump’s latest attack on the media had gone too far.

“Look, we’re big boys.  We criticize presidents.  They want to criticize us back, that’s fine,” Wallace said on “Fox & Friends.”  “But when he said that the fake news media is not my enemy, it’s the enemy of the American people, I believe that crosses an important line.”

Wallace also reminded his colleagues that when it came to Trump’s reference of Thomas Jefferson, Jefferson had once written the following: “And were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.”

“What Jefferson [was saying],” said Wallace, “is, despite all of our disputes, that to the functioning of a free and fair democracy, you must have an independent press.”

In an interview on NBC’s “Meet the Press,” taped Saturday, Sen. John McCain (R-Ariz.) told host Chuck Todd: “When you look at history, the first thing that dictators do is shut down the press. And I’m not saying that President Trump is trying to be a dictator.  I’m just saying we need to learn the lessons of history.”

“I hate the press. I hate you, especially,” McCain said to Todd, who laughed.  “But the fact is, we need you.  We need a free press. We must have it.  It’s vital.”

But fellow Republican Sen. Rand Paul (Ky.) ripped McCain, arguing the nation is “very lucky” that Trump is president and not McCain.  Paul said McCain’s recent criticisms of Trump are driven by his “personal dispute” with the president over foreign policy.

Paul said, “[McCain] would bankrupt the nation. We’re very lucky John McCain’s not in charge, because I think we’d be in perpetual war.”

Conservative radio host Rush Limbaugh criticized the media.  Appearing on “Fox News Sunday,” Limbaugh said, “The media did not make Donald Trump and they can’t destroy him.”

“They have a formula,” he said, “ they have a blueprint for destroying Republican political officials they don’t like.  It’s not going to work on Trump. He doesn’t fit that mold. They’re trying to every day.  It’s kind of comical to watch.”

Limbaugh added: “Trump has a connection with his voters that most politicians don’t have...and that connection that he has is not anything that anybody else can break. Only he can break it.”

Meanwhile, speaking from the United Arab Emirates on Sunday, Defense Secretary Jim Mattis said he does not see the media as the enemy of the American people, disagreeing with the president.

Monday....

After a weekend of interviews, President Trump picked Lt. Gen. H.R. McMaster as his new national security adviser to replace the fired Michael Flynn, the president calling McMaster “a man of tremendous talent and tremendous experience.”

General McMaster is highly respected as a military strategist and one of the Army’s leading intellectuals, who is not afraid to condemn an administration, having criticized the way President George W. Bush’s team went to war in Iraq.  He also led forces in the Gulf War and the Iraq War.

Meanwhile, there was unrest in a predominantly immigrant suburb of Stockholm, Sweden, after police tried to arrest a suspect on drug charges, which was ironic after Trump’s comments two days earlier about a non-existent incident had so baffled Swedes.

Vehicles were set on fire and shops looted, with a number of injuries. 

Tuesday....

In a visit to the new museum devoted to African-American history in D.C., President Trump spoke out against a series of bomb threats against Jewish community centers across the country after he has come under fire for failing to denounce several waves of anti-Semitic acts since he took office.

“The anti-Semitic threats targeting our Jewish community and community centers are horrible and are painful, and a very sad reminder of the work that still must be done to root out hate and prejudice and evil,” Trump said after his tour.  “Anti-Semitism is horrible, and it’s going to stop and it has to stop.”

But this was too little, too late, and it’s not like he took the opportunity to emphasize he has launched an investigation at the highest levels (though we know there are investigations into each incident).

Following Trump’s remarks, press secretary Sean Spicer was asked by Margaret Brennan of CBS to respond to a strong condemnation of his statement by the Anne Frank Center.

BRENNAN: The Anne Frank Center released a pretty strongly worded [statement], saying that these remarks, while well received, are a “Band-Aid” on the cancer within the Trump administration.  Saying that there is, whether blessed or otherwise, a sense of xenophobia within this administration.

SPICER: “Look.  The president has made clear since the day he was elected – and frankly going back through the campaign – that he is someone who seeks to unite this country. He has brought a diverse group of folks into his administration, both in terms of actual positions and people that he has sought the advice of.  And I think he has been very forceful with this denunciation of people who seek to attack people because of their religion, because of their gender, because of the color of their skin.

“It is something that he’s going to continue to fight and make very, very clear that [it] has no place in this administration.  But I think that it’s ironic that no matter how many times he talks about this that it’s never good enough.”

Last week, Trump was asked on two separate occasions about rising anti-Semitism and he responded by shouting down one reporter and insisting he is “the least anti-Semitic person that you’ve ever seen in your entire life.”  It’s been amazing he can’t just come out and tell the people what specific steps his government is taking.  Go before them and say, “We will do all we can to find and prosecute those committing these acts to the full extent of the law.”  But he has yet to make a statement of that kind.  It’s called leadership, POTUS.

Also Tuesday, memos issued by the Department of Homeland Security spelled out details in execution for the sweeping changes the Trump administration is making in terms of enforcing its immigration policy.

Trump, who campaigned on a promise to crack down on illegal immigration, signed a pair of executive orders earlier that we now know call for 5,000 more Border Patrol agents, 10,000 more immigration enforcement officers, far more detention space and a border wall with Mexico estimated by the administration to cost more than $21 billion.  As to the total cost, which will require funding from Congress, Homeland Security officials don’t know what it will be as yet.

But the policy on deportations has already begun, though in targeting criminals, some undocumented immigrants who would have likely been given a reprieve by the prior administration are being swept up.

“If in the performance of our duty, looking for a criminal alien, we find someone there in the house who is here illegally, we just can’t ignore that,” Thomas Homan, acting director of the Immigration and Customs Enforcement agency, said in an interview with the Wall Street Journal.  “We have to look at the case [on] a case-by-case basis, and find out do we put that person in [deportation] proceedings.”

As reported by the Journal’s Laura Meckler: “The memos still outline priority groups among the estimated 11 million people in the U.S. illegally, starting with serious criminals.  But the priorities are much broader and include people charged with crimes who haven’t been convicted, people guilty only of immigration-related crimes such as using false documents and anybody who an immigration officer believes is a risk to public safety.

“DHS officials said they wouldn’t target otherwise law-abiding undocumented immigrants and said their limited resources would still require a focus on those people who pose a public-safety risk.  They also said rules regarding not picking up people at ‘sensitive locations’ such as churches, remain in effect.  ‘You will not see folks rounded up,’ one official said.

“But officials also said people aren’t exempt from deportation just because they may not fall into a priority group.”

Well, you can see why there is a lot of anxiety in many communities across the country.

Wednesday....

The White House announced it was pushing back the release of a revised executive order on travel and refugees until next week, with no explanation given.

White House policy adviser Stephen Miller said on Fox News Tuesday night, “Fundamentally you’re going to have the same basic policy outcome for the country, with any changes being mostly minor technical differences.”

What I get a kick out of is how when the initial ban was rolled out Jan. 27, with the initial chaos, we were told it had to be brought then to save the homeland, and to prevent thousands of bad hombres from rushing in.

So then a nationwide restraining order was issues by a federal judge in Washington, and later upheld by a three-judge panel of the Ninth Circuit Court of Appeals, and, of course, thousands of bad hombres have had their opportunity to rush in, if we were to believe the White House initially.  I mean it’s comical, yet no one is questioning administration officials on this on the talk shows, for example.

I told you from day one, though, that this wasn’t how the system worked.  Yes, we needed extreme vetting, particularly with certain countries, but in most cases you can’t just simply get a visa because someone kept the door open for a while, referring to the seven specific countries involved in the order.

Meanwhile, Secretary of State Rex Tillerson and Department of Homeland Security Secretary John Kelly went to Mexico Wednesday to meet with officials there for talks on security and immigration.  Before they arrived, Foreign Minister Luis Videgaray said there was no way Mexico would accept the new “unilateral” rules, which among other things seek to deport non-Mexicans to Mexico.

“I want to say clearly and emphatically that the government of Mexico and the Mexican people do not have to accept provisions that one government unilaterally wants to impose on the other,” he told reporters.

Wednesday, White House spokesman Sean Spicer described U.S.-Mexico ties as healthy and robust and said he expected a “great discussion.”  “I think the relationship with Mexico is phenomenal right now,” Spicer told reporters, thereby proving he needs a vacation already.

For his part, Secretary Kelly told reporters the immigration executive order was aimed at catching undocumented immigrants and returning them to their countries of origin.

Separately, the Trump administration lifted federal guidelines that said transgender students should be allowed to use public school bathrooms and locker rooms matching their chosen gender identity, a reversal of an Obama-era directive from last May.  It will now be up to the states and school districts to interpret whether federal sex discrimination law applies to gender identity.

Opponents of the Obama guidance had said it was federal overreach.

And the year-long protest against the Dakota Access oil pipeline in North Dakota ended, stragglers rounded up, as a federal judge rejected a request by two Native American tries for an emergency order blocking the pipeline.

The protest camp was located on federal land near the Standing Rock Sioux Reservation.  As I wrote the other week, citing a Wall Street Journal editorial, if it wasn’t so tragic it would be humorous...that the protesters and their ungodly camp are leaving the land far worse off environmentally than any oil spill (assuming it was then quickly cleaned up). 

There was zero attempt on the part of the protesters to leave the land better than they found it, as many of us would say.

Thursday....

In a meeting with business leaders at the White House, President Trump talked of the new surge in deportations as being a “military operation.” 

“We’re getting really bad dudes out of this country,” Trump said.  “And at a rate nobody has ever seen before. And they’re the bad ones.  And it’s a military operation.”

I imagine he meant it is being run with military precision, at least I hope that this was what he intended, but just in case there was any question, speaking in Mexico City, Homeland Security Secretary John Kelly pledged the military would not be used to expel undocumented immigrants from the U.S.

“Let me be very very clear, there will be no, repeat, no mass deportations,” he said.  “Everything we do in DHS will be done legally and according to human rights and the legal justice system of the United States.”

Kelly added, “There will be no, no use of military force in immigration,” admonishing the media because only “half of you get that right.”

Kelly was probably referring to the draft proposal that had 100,000 National Guard troops being enlisted to apprehend undocumented immigrants, but this was just a proposal that some then stupidly ran with as if it was actual policy.

Mexican Foreign Minister Luis Videgaray said he expressed his “irritation” to President Trump’s envoys, Sec. of State Tillerson and DHS Sec. Kelly about recent U.S. policies towards its southern neighbor.

Videgaray said he told Tillerson he was worried about respect for immigrants’ rights.  Videgaray said rebuilding the relationship would be a long process and would not be easy.

“There’s a concern among Mexicans, there’s irritation [about] what has been perceived as policies that might be harmful for the Mexicans and for the Mexican industry.”

Meanwhile, at the Conservative Political Action Conference, White House chief strategist Stephen K. Bannon and chief of staff Reince Priebus took the stage, with Bannon saying the media is “adamantly opposed to” the president’s agenda.

Bannon, the intellectual force behind Trump’s agenda, said the administration is locked in an unending battle against the media and other globalist forces, while Priebus sought to prove the two were partners, not rivals in fighting on the president’s behalf.

“If you look at these Cabinet nominees, they were selected for a reason, and that is deconstruction,” Bannon said, adding the withdrawal from the Trans-Pacific Partnership was “one of the most pivotal moments in modern American history.”

And after Trump had tweeted that the media was “the enemy of the American people,” Bannon amplified the remark at CPAC: “They’re corporatist, globalist media that are adamantly opposed to an economic nationalist agenda like Donald Trump has.”

Bannon added: “If you look at the opposition party and how they portrayed the campaign and how they portrayed the transition and how they portray the administration, it’s always wrong.”

Bannon then said “all” of Trump’s campaign promises would be implemented in short order.

Separately, in an interview with Reuters, Thursday, Trump said it would be “wonderful” if no nation had nuclear arms, but otherwise the U.S. must be “top of the pack.”

Trump told Reuters that the U.S. had “fallen behind on nuclear weapon capacity.”

A new strategic arms limitation treaty between the U.S. and Russia, known as New Start, requires that by February 5 of next year, both countries must limit their arsenals of strategic nuclear weapons to equal levels for 10 years.

New Start, Trump said, is “a one-sided deal.”

“Just another bad deal that the country made, whether it’s START, whether it’s the Iran deal,” he said.  “We’re going to start making good deals.”

Trump also said in the interview that China was the “grand champion” of currency manipulation, while he is “totally in favor” of the European Union.

Separately, CNN reported that the FBI shot down a recent request from Reince Priebus to publicly blast media reports about the alleged communications between President Trump’s associates and the Russians during the 2016 campaign.

Multiple U.S. officials told CNN that White House staff had been asking the bureau to say the stories were wrong, and that there had been no contacts between the two parties whatsoever – but the FBI refused.

This would be a direct violation of government procedures, which bar White House contact during ongoing investigations.

The story goes back to a Feb. 15 meeting at the White House, the day after reports by the New York Times and CNN that spoke of Trump associates conversing with Russians ahead of the election.

Friday....

In the morning, President Trump gave a speech at CPAC, lashing out at the press from the beginning as he had done Saturday in Florida.

“I want you all to know that we are fighting the fake news.  It’s phony, fake,” Trump said, the crowd reveling in the attack.

“I called the fake news the enemy of the people.  They are the enemy of the people, because they have no sources.  They just make them up when there are none.”

Of course Trump was upset at the CNN story that White House officials tried to knock down media stories on communications with Russia.

Trump said he supports “honest” reporting and the First Amendment.

“I’m not against the media.  I’m not against the press.  I don’t mind bad stories if I deserve them.  I am only against the fake news media or press.  I’m against the people that make up stories and make up sources.”

The rest of the speech we’ve now come to know was boilerplate, including a push for a massive budget request for one of the “greatest military buildups in American history.”

Afterwards, he met again with some corporate honchos back at the White House and signed an executive order concerning an initiative aimed at eliminating unnecessary regulations, an effort I totally support.

Friday afternoon, press secretary Sean Spicer blocked a number of news outlets, including CNN, the New York Times, The Hill, BBC, the Los Angeles Times and the New York Daily News, from a question-and-answer session, an off-camera “gaggle” inside his West Wing office instead of the traditional setup in the press briefing room.

The White House Correspondents’ Association sharply criticized the decision.

This was stupid on the administration’s part.

One more.  Late Friday Mexico’s Foreign Minister Videgaray said his country could respond to any tax the United States unilaterally imposed on imports from its southern neighbor to finance the wall with levies on select goods, aimed at U.S. regions most dependent on exports south of the border.

This needless war of words with Mexico is totally senseless.  But I guess 46% of Americans thought it was a good idea.

Opinion....

Editorial / Washington Post

“President Trump has a good idea of the power the United States wields over Mexico, and the pain it may inflict – the construction of a wall Mexico fiercely opposes; taxes that could be slapped on Mexican imports, wreaking havoc on its economy; deportations of undocumented Mexican immigrants living in the United States, who would be thrust back into a country that would struggle to absorb them.  Mr. Trump might have a fuzzier idea of the pain Mexico, its people furious and its pride wounded by his taunts and contempt, might inflict on the United States.

“Start with those deportations.  At least half of America’s 11 million unauthorized immigrants are Mexican, but many have no documents proving their nationality.  For the Trump administration to deport them, it would need cooperation from Mexico, which cannot be forced to accept deportees without certifying that they are Mexicans.  As former Mexican foreign minister Jorge G. Castaneda has already warned, Mr. Trump can round up hundreds of thousands or millions of migrants, but without Mexico’s cooperation, they could clog U.S. detention centers and immigration courts – at enormous cost and, conceivably, for years.

“Consider, too, the effect on America’s southern border if Mexico were to loosen immigration on its own southern border – the one over which Central American refugees are already streaming north in near-record numbers.  Even with what U.S. officials say are aggressive interdiction efforts by Mexican authorities, the Border Patrol detained more than 220,000 mainly Guatemalans, Hondurans and Salvadorans crossing from Mexico into the United States in the fiscal year ending last fall, exceeding the number of Mexicans apprehended, which has fallen to a 45-year low. If you think the Border Patrol is swamped now, as Homeland Security Secretary John F. Kelly insists, imagine if Mexico, which last year sent home more than 140,000 Central Americans, simply stepped aside....

“Mr. Kelly, who as a Marine led U.S. Southern Command, said in his confirmation hearing that partnerships ‘as far south as Peru’ are more important to U.S. border security than building a wall.  Along with Secretary of State Rex Tillerson, he headed to Mexico on Wednesday, just after the Department of Homeland Security released its new deportation guidelines. If the goal was to widen bilateral cooperation and soothe the harsh feelings Mr. Trump has engendered with our neighbor and ally, the timing was pitiable.”

Editorial / Wall Street Journal

“President Trump campaigned on enforcing immigration law, and Homeland Security Secretary John Kelly plans to deliver.  On Tuesday Mr. Kelly ordered a deportation surge that will cost billions of dollars and expand the size and intrusiveness of government in ways that should make conservatives wince....

“By all means deport gangbangers and miscreants.  But Mr. Kelly’s order is so sweeping that it could capture law-abiding immigrants whose only crime is using false documents to work.  This policy may respond to the politics of the moment, but chasing down maids and meatpackers will not go down as America’s finest hour.

“Under Mr. Kelly’s guidelines, any undocumented immigrant who has committed even a misdemeanor could be ‘subject to immigration arrest, detention and, if found removable by final order, removal from the United States.’  So a restaurant worker with an expired visa or driver without a license who is caught rolling a stop sign could be an expulsion target.

“One question is whether all this effort is needed.  More than 90% of the 65,000 undocumented immigrants removed last year from the U.S. interior were convicted criminals, and about 2,000 were affiliated with gangs.  This suggests that Immigration and Customs Enforcement (ICE) is already targeting and removing as many bad guys as it can locate.

“Mr. Kelly has also ordered a plan to ‘surge the deployment of immigration judges and asylum officers,’ and he’s going to need them... The average wait time for a case is 677 days and can hit five years at some locations.

“More than 500 judges...would need to be hired to eliminate the backlog within a year.  Each full-time position costs about $200,000, so taxpayers could be billed more than a half billion dollars for this surge of government attorneys.  Add all this to the cost of Mr. Trump’s border wall, and the bill rises into the tens of billions....

“Homeland Security officials were at pains this week to say all of this will be done humanely, with a special focus on criminals, and let’s hope so.  Mr. Trump also deserves credit for not repealing President Obama’s order sparing from expulsion some 750,000 ‘dreamers’ who were brought to the U.S. illegally as children.  This is an act of genuine compassion, but Mr. Trump will get little political credit because the news is buried in the larger deportation story.”

Daniel Henninger / Wall Street Journal

“Donald Trump is right that the media is making a mountain out of every Trump molehill. Despite the ‘resistance,’ it also remains true that most Americans want the Trump presidency to succeed.

“These Trump Hopefuls, whose number includes people who didn’t vote for him, want the presidency to succeed because they understand that if it fails, the social and economic condition of their country will be in a bad place.

“Despite this reservoir of goodwill for the Trump presidency, the degree of anxiety about it is palpable. You have to be living in Netflixed isolation not to have had conversations with people wondering what the hell is going on at this White House.

“Beyond the Beltway bubble, I think most people look upon the pitched battle between Mr. Trump and the news media as they would a playground fight between sixth-graders....

“We could spend the next several years arguing whether Mr. Trump or the dishonest mainstream media started this, but a more productive question is, why is the mayhem happening?

“It is happening mainly because the presidential campaign didn’t end last November. The political culture of the 2017 campaign endures inside the White House and among the press and the Trump opposition.

“Presidential campaigns are an essential feature of the American political system... But that glorious tumult is supposed to give way to the more substantial, harder politics of the presidency.

“The permanent campaign has been with us a long time, and Barack Obama was the first president who didn’t disband his campaign operation after winning.  But we’re in a different dimension today.

“Propelled by new media, campaign politics has become a national addiction. It’s similar to the way people drive cars into trees because they can’t stop texting.  No one will let go – not the tweeting president, not the surly press and not the hooked, agog public.

“Still, there’s a political casualty waiting to happen inside the great American thrill ride – the presidency. Trump the president is looking like he’s trapped inside Trump the campaigner....

“Some will say the political world underestimated Donald Trump from day one.  That’s true – but as a candidate. The presidency, by contrast, is one part of a large and complicated political system, complicated because the Founders wanted the process to be difficult and to require getting buy-in from unavoidably divided factions....

“The argument here isn’t that Donald Trump as president has to step up to ‘heal’ a divided nation, not least because our age of limitless sentimentality has turned the phrase ‘heal the nation’ into soap bubbles.  But it’s obvious that the hyper-hot emotions in the country’s political life now are unsettling many normal people who don’t wish Mr. Trump ill.

“There are risks, to the Trump presidency, its goals and the system itself, if the volatile personality-driven politics of the Trump campaign remain the norm for the 45th presidency.

“Yes, we know it’s a populist movement.  Populism, though, is what gets you elected.  The president who tries to govern with populism inside the U.S.’s system of distributed, three-branch authority will fail.

“There are going to be tough votes soon in Congress on the president’s tax bill, ObamaCare reform, a Dodd-Frank revision, the budget, infrastructure and the rest....

“There will be no moral victories for a presidency that cannot produce 50 votes in the Senate.”

Michael Auslin / Wall Street Journal

“Amid the seeming disarray of President Trump’s foreign policy, critics seem unable to make up their minds: Either Mr. Trump is upending America’s traditional postwar priorities, such as by denigrating NATO, or he is easily accommodating conventional wisdom, such as by accepting the ‘One China’ policy. Which is it?

“These critiques miss the logical thread that ties together Mr. Trump’s actions.  Although it is too early to expect the president’s foreign policy to be fully fleshed out, especially after the abrupt resignation of Mike Flynn as national security adviser, the White House appears to be guided by a consistent approach.

“On foreign issues that directly affect domestic concerns, Mr. Trump pursues radical change.  But on matters that are truly foreign, he is willing to adopt a traditional stance. What looks like inconsistency is actually an instinct deeply grounded in his worldview.

“This explains the president’s withdrawal from the Trans-Pacific Partnership and his desire to renegotiate the North American Free Trade Agreement. Some charge that this is a betrayal of America’s decades-long commitment to a liberal global economic system. But Mr. Trump sees it as a domestic priority, a necessary shielding of American workers.  Instead of sweeping, multicountry agreements, he has proposed bilateral trade pacts, beginning with Britain and possibly Japan.

“On pure foreign policy, Mr. Trump has stayed the course for now. After initially questioning the relevance and utility of America’s main postwar alliances, he now seems committed to them. The president and Defense Secretary Jim Mattis have affirmed the mutual-defense agreement with Japan and South Korea.  Mr. Mattis had tough words for NATO allies last week when urging increased military spending, but walking away seems a remote possibility.

“Even more surprising was the recent phone call with Chinese President Xi Jinping. Mr. Trump dropped his criticism of the ‘One China’ policy that has defined relations with Beijing since the 1970s. Mr. Mattis, during a visit to Japan, also calmed fears that the U.S. Navy might physically confront Chinese vessels in the South China Sea.

“The Trump administration has kept Russia at arm’s length, too, despite the president’s continued praise of Vladimir Putin. U.N. Ambassador Nikki Haley has made clear that American sanctions will remain in effect unless Russia withdraws from Ukraine....

“At least so far, Mr. Trump has been remarkably consistent.  Critics from the left and right should accept that the next four years of American foreign policy will be defined by a mix of traditionalism and radicalism.”

The Washington Post noted, however, that as of Monday, when it comes to the State Department, “Of 549 key appointments, the White House has yet to name 515, according to a tracker by The Post and Partnership for Public Service, a nonprofit, nonpartisan organization. Only 14 have been confirmed, and 20 are waiting.  These key positions are among the roughly 1,200 total that require Senate confirmation and about 4,100 overall that the new administration must fill.

“The incoming Trump team wasted no time in forcing Obama appointees overseas to hurry home and vacate their positions by Inauguration Day, but the new administration has moved with far less speed to find replacements.  The only three ambassadors nominated so far are to China, Israel and the United Kingdom.  Not a single assistant secretary of state has been named, much less confirmed.”

Edward Luce / Financial Times

“In his first month Mr. Trump has declared war on the intelligence agencies and the media. It looks like the judicial branch is next on his list of enemies. There is no middle ground in Mr. Trump’s Washington. Either the forces that are against the president will bring him down or he will destroy the system. My bet is on the first.  But I would not stake my life on it.

“Do not be reassured by Mr. Trump’s cabinet.  Many of them are experienced individuals. James Mattis, the secretary of defense, Rex Tillerson, secretary of state, and Steven Mnuchin, the nominee for Treasury secretary, are professionals. We may dispute their priorities but we have no basis to contest their hold on reality.

“Even Kellyanne Conway, and Sean Spicer...would probably look fine if they were working for a different president.  Mr. Trump could populate his administration with America’s most diligent public servants and it would not change the most important thing. They would still be required to execute the orders of a man who divides the world into friends and enemies – and nothing in between.

“Robert Harward, the ex-Navy SEAL who turned down the job to serve as Mr. Trump’s national security adviser, is a harbinger of things to come.  In any normal circumstance, someone of Mr. Harward’s background would have leapt at the honor of such a high position. But Mr. Harward could not stomach the prospect.

“It would have meant serving a president who thinks he knows more than his generals about war, more than his spies do about intelligence and more than his diplomats do about the world.  The only people with whom Mr. Trump agrees are those who agree with him.  It is an open question how long it will take for Mr. Trump’s existing appointees to reach the same conclusion.  There is a thin line between doing your duty and being humiliated....

“Then there is the lying media – or the ‘Lugenpresse’ as Mr. Trump’s alt-right supporters say in echo of the Nazi slur....

“His next logical step is to accuse the media of treason.  In a tweet he later deleted Mr. Trump called the media an “enemy of the American people.”  This cannot end well.  Anonymous death threats have become a normal way of life for many journalists in Washington.  I fear it is only a matter of time before this results in violence.  The same applies to the judiciary.  The judges who shot down Mr. Trump’s ‘Muslim ban’ earlier this month are also receiving death threats.

“Where does this end?  Panglossian types cling to the hope that Mr. Trump will make a course correction.  In this happy development, he would clear the White House of firebrands, such as his close advisers Stephen Bannon and Stephen Miller, and replace them with seasoned operators.

“Such a purge is possible at some point.  It may even be likely....

“But Mr. Trump is not a reformable character. The more besieged he becomes, the more he lashes out.  He is now vowing an investigation into leaks and an implied purge of disloyal officers.

“It is hard to predict how long it would take to resolve the battle between Mr. Trump and the so-called deep state.  It is also hard to say how long a Republican Congress could stand the heat....At some point this will boil down to a choice between Mr. Trump and the U.S. constitution.”

Charles Krauthammer / Washington Post

“At the heart of President Trump’s foreign policy team lies a glaring contradiction. On the one hand, it is composed of men of experience, judgment and traditionalism.  Meaning, they are all very much within the parameters of mainstream American internationalism as practiced since 1945.  Practically every member of the team – the heads of State, Homeland Security, the CIA, and most especially Defense Secretary Jim Mattis and national security adviser H.R. McMaster – could fit in a Cabinet put together by, say, Hillary Clinton.

“The commander in chief, on the other hand, is quite the opposite – inexperienced, untraditional, unbounded.  His pronouncements on everything from the one-China policy to the two-state (Arab-Israeli) solution, from NATO obsolescence to the ravages of free trade, continue to confound and, as we say today, disrupt.

“The obvious question is: Can this arrangement possibly work? The answer thus far, surprisingly, is: perhaps.

“The sample size is tiny but take, for example, the German excursion.  Trump dispatched his grown-ups – Vice President Pence, Defense Secretary Mattis, Secretary of Homeland Security John Kelly and Secretary of State Rex Tillerson – to various international confabs in Germany to reassure allies with the usual pieties about America’s commitment to European security. They did not drop a few hints to Trump’s loud complaints about allied parasitism, in particular shirking their share of the defense burden.

“Within days, Germany announced a 20,000-troop expansion of its military. Smaller European countries are likely to take note of the new setup.  It’s classic good-cop, bad-cop: The secretaries represent foreign policy continuity but their boss preaches America First.  Message: Shape up.

“John Hannah of the Foundation for Defense of Democracies suggests that the push-pull effect might work on foes as well as friends. On Saturday, China announced a cutoff of all coal imports from North Korea for the rest of 2017.  Constituting more than one-third of all North Korean exports, this is a major blow to its economy.

“True, part of the reason could be Chinese ire at the brazen assassination of Kim Jong Un’s half-brother, who had been under Chinese protection.  Nonetheless, the boycott was declared just days after a provocative North Korean missile launch – and shortly into the term of a new American president who has shown that he can be erratic and quite disdainful of Chinese sensibilities....

“Trump’s people have already shown a delicate touch in dealing with his bouts of loopiness.  Trump has gone on for years about how we should have taken Iraq’s oil for ourselves.  Sunday in Baghdad, Mattis wryly backed off, telling his hosts that ‘All of us in American have generally paid for our gas and oil all along, and I am sure we will continue to do so in the future.’

“Yet sometimes an off-center comment can have its uses.  Take Trump’s casual dismissal of a U.S. commitment to a two-state solution in the Middle East. The next day, U.S. policy was brought back in line by his own U.N. ambassador.  But this diversion might prove salutary. It’s a message to the Palestinians that their decades of rejectionism may not continue to pay off with an inexorable march toward statehood – that there may actually be a price to pay for making no concessions and simply waiting for the U.S. to deliver them a Palestinian state.

“To be sure, a two-track, two-policy, two-reality foreign policy is risky, unsettling and has the potential to go totally off the rails... But the experience of the first month suggests that, with prudence and luck, it can yield the occasional benefit – that the combination of radical rhetoric and conventional policy may induce better behavior both in friend and foe.

“Alas, there is also a worst-case scenario. It needs no elaboration.”

Wall Street

The Dow Jones registered its 11th consecutive record on Friday, the longest such streak since 1987, which proved to be a rather dicey year come that October, but bonds rallied both here and abroad and this wasn’t necessarily a positive occurrence.  European investors flew to the safety of German paper amid renewed political uncertainty in the eurozone, covered below, and probably some bond-buying by the European Central Bank, while the yield on the U.S. 10-year fell to its lowest level since late November, breaking out of a tight range, and it really made no sense.

The Federal Reserve released the minutes from its last meeting in January and policymakers said they should be ready to lift short-term interest rates again “fairly soon,” so the next gathering of the Open Market Committee, March 14-15, will likely be a contentious one.

I have been unwavering for months in my belief they will hike then, and not wait until May, and I still believe that despite the late bond rally.  Next week we’ll have another jobs report that, assuming it is strong, should cement the decision to move another 25 basis points, 0.25%. The Fed is way behind the curve and some of the board members know it.  [The Atlanta Fed’s GDPNow indicator currently has first-quarter growth at 2.4%.]

True, the Trump agenda is still uncertain.  The direction of the administration is clear when it comes to tax reform, repealing and replacing ObamaCare, infrastructure spending and deregulation, but details are lacking, including a rather important one...how to pay for it all, including for the “greatest military buildup” in the history of mankind.

That said, as exhibited by President Trump’s latest meetings with business leaders, confidence is high in Corporate America.

Actually, a Harvard-Harris poll provided exclusively to The Hill found that 61% of Americans view the economy as strong, against 39% who say it is weak, a major change in sentiment from the past few years.

Meanwhile, in an interview with CNBC on Thursday, Treasury Secretary Steve Mnuchin said the administration aims to pass “significant” tax reform, including tax cuts for middle-class Americans, by the time of the August recess.

“The No. 1 issue is growth and the most important thing that will impact growth is a tax plan.  We are committed to passing tax reform. It’s going to be very significant.  It’s going to be focused on middle class tax cuts and making the business tax more competitive with the rest of the world.”

As to a proposed border adjustment tax on imports, Mnuchin said, “We are looking at it.  We think there are some very interesting aspects of it.”

Manufacturers support such a tax, but retailers vigorously oppose it, fearing it will raise prices and hammer profits.

And despite President Trump’s claims to the contrary, Mnuchin staged a retreat from the president’s promise to fast track the branding of China as a currency manipulator, which is certainly a more traditional approach on policy.  Mnuchin said there would be no announcement on the issue before a regular Treasury report due in April.

“We have a process within Treasury where we go through and look at currency manipulation across the board, and we’ll go through that process.  We’ll do that as we have in the past and we’re not making any judgments until we continue that process.”

But President Trump could always undo these comments.

Lastly, there was some news on the housing front.  January existing home sales came in at a 5.69 million annualized pace, the strongest since Feb. 2007, with the median home price at $228,900, up 7.1% from a year earlier.

January new home sales were less than expected at 555,000.

Europe and Asia

The flash reading for the eurozone economy in February showed a composite of 56.0 vs. 54.4 in January, 50 being the dividing line between growth and contraction, a 70-month high.  Services came in at 55.6 vs. 53.7, a 69-month high.  Manufacturing was at 55.5 vs. 55.2, a 70-month high, according to Markit.

The flash readings break out Germany and France, individually, and French manufacturing was 52.3 vs. 53.6 last month; services 56.7 vs. 54.1, a 66-month high; with the comp at 56.2 vs. 54.1, a 69-month high.

In Germany, February manufacturing was 57.0 vs. 56.4, a 69-mo. high; services 54.4 vs. 53.4; and the comp 56.1 vs. 54.8, a 34-mo. high.

Chris Williamson, chief economist, Markit:

“The eurozone economy moved up a gear in February. The rise in the flash PMI to its highest since April 2011 means that GDP growth of 0.6% could be seen in the first quarter if this pace of expansion is sustained into March...

“France’s revival represents a much-needed broadening out of the region’s recovery and bodes well for the eurozone’s upturn to become more self-sustaining.

“The ECB will be cheered by the signs of stronger growth and further upturn in price pressures, though will no doubt remain concerned that elections and Brexit could disrupt the business environment this year.  No change in policy therefore looks likely until at least after the German elections in September.”

Germany’s GDP growth was confirmed at 0.4% in Q4 by Destatis, helping overall 2016 output to rise by 1.9% - the best figure in five years.

The U.K. economy grew at a faster clip than previously estimated in the fourth quarter, up 0.7%, or an annualized rate of 2.9%.  But the growth figure for all of 2016 was reduced to 1.8% from 2.0%, as the start of the year was revised downward, as reported by the Office for National Statistics.

But the Q4 growth number is expected to fall as consumers rein in their spending with rising inflation.

Speaking of inflation, Eurostat released the latest figures for the eurozone in January, up 1.8% annualized vs. 1.1% in December.  The January 2016 annualized pace was 0.3%.  Yes, inflation is picking up.

Germany’s annualized inflation rate was 1.9% in January; France 1.6%; Spain 2.9% (vs. -0.4% Jan. 2016); Italy 1.0%; U.K. 1.8%.

It was the first month since February 2013 that there were rising prices across all members of the euro area.

Separately, Germany’s producer price index for last month was 2.4%, 1.8% ex-energy, the quickest pace since March 2012.

And China became Germany’s most important trading partner in 2016, overtaking the United States for the first time, the U.S. falling to third place behind France, according to government statistics released Friday.  German Vice Chancellor Sigmar Gabriel has suggested the European Union should refocus its economic policy toward Asia, should the Trump administration pursue protectionism.  In 2015, the United States became the top trading partner for Germany, overtaking France for the first time since 1961.

But if you look at exports alone, the U.S. remained the biggest client for products “Made in Germany.”  [France second, Britain third.]

Eurobits....

--Regarding Greece’s bailout program, Prime Minister Alexis Tsipras told parliament today that a key review of its progress would be concluded by March 20.

“We will pull the country out of the bailouts...we will pull the country out of supervision, we will pull the country out of the crisis,” he said.

Bailout monitors are due to return to Greece following a meeting of finance ministers and IMF officials in Brussels early in the week, as the Greek government agreed to examine ways in which it can raise its income tax threshold and reduce pension spending – measures pushed by the IMF if the country is to meet its budget targets over the next decade or so.  Greek bonds rallied on the sudden optimistic turn in negotiations.

It didn’t hurt that Greece made a 2bn euro loan repayment to its European creditors this week, in a sign it remains a “reliable” partner.

But it’s still all about a 7bn debt bill looming in July, which Greece can’t make without a further injection of cash.

--On the Brexit front, which is about to heat up further in a big way, Berlin and Rome said they were backing the European Commission’s plan to rule out starting trade talks until Britain gives assurances on a multibillion-euro Brexit bill and citizens’ rights. France is seeking an estimated 60bn euro bill, while Spain is wary of attempts to “punish” the U.K.

European Commission President Jean-Claude Juncker said, “The bill (for the U.K.) will be, to put it somewhat crudely, very steep,” without giving specifics.  He also predicted the negotiations would be “difficult,” which I totally agree with.

The ‘bill,’ by the way, would cover past British spending commitments that will come due down the road on various items, such as economic assistance for Eastern European countries and sharing the pension bill for EU employees.

This is all preliminary, but Berlin’s stance is not a good sign for Britain’s negotiators, who are hoping Germany will take a softer approach. David Davis, Brexit minister, is adamant that trade talks will start in parallel with discussions on the terms of Britain’s withdrawal.

This coming Monday and Wednesday, British legislators will consider changes to the Brexit bill, including giving parliament a binding vote on the final deal.

Separately, U.K. net migration fell by 18% to 273,000, July to September, following the Brexit vote, the lowest level in more than two years, as there was a rise in emigration with Poles and other east Europeans leaving Britain.  [Poland stands to gain an estimated 30,000 service/back-office jobs in the financial sector, according to some experts.]  But there was a record number of arrivals from Romania and Bulgaria.

The French presidential race took another turn this week as centrist Emmanuel Macron gained in the polls after his centrist rival, Francois Bayrou, said he would not run in April’s election and instead urged his supporters to back Macron, in an effort to fend off Marine Le Pen and the National Front.  [Bayrou polled 9% when he ran in 2012 and was around 5% this year.]

French bonds rallied on the news, the bond market having been spooked recently by the potentiality of a win by right-winger, anti-EU Le Pen.  In the latest Opionway survey, Macron was up to 23% (and drawing huge crowds), with Le Pen at 26%.

An Elabe for L’Express magazine survey released Tuesday, before the Bayrou endorsement, had Macron at 17%.  Francois Fillon, the center-right candidate who is embroiled in the fake-pay scandal involving his wife, received 20-21%, with Le Pen at 27-28%.

But an Ifop daily tracking poll on Thursday had Macron at 22.5%, Fillon 20.5% and Le Pen at 26%.  A Harris poll had Le Pen at 26%, Fillon 21% and Macron 20%, while BVA had Macron on 21% and Fillon 19%, though these last two surveys were taken before Bayrou’s announcement.

As with all of these, however, Le Pen is expected to lose badly in a runoff to either Macron or Fillon.  Harris had Le Pen losing 60-40 in a second round to Macron, with Fillon winning 57-43.  The above-mentioned Elabe poll has Fillon winning a runoff with Le Pen 56-44.  The spread is narrowing.

But all the candidates have been making gaffes, or uttering controversial statements.  They have been going overseas, to both build up their foreign policy chops and attempt to capture the votes of French ex-pats.

The other day, Macron, in Algeria, said the country’s 132-year colonization of Algeria had involved “crimes against humanity,” which ticked off veterans of the Algerian war of independence.

As for Le Pen, her chief of staff was put under formal investigation in a probe into the alleged misuse of European Union funds to pay parliamentary assistants.  Le Pen has denied any wrongdoing. The European Parliament insists Le Pen repay money she is accused of wrongly paying the chief of staff and her bodyguard. She then refused to be interviewed by police investigating the case on Friday, saying in a letter she wouldn’t accede to the non-binding summons before the end of the June legislative elections.  Le Pen has not been ordered to answer questions, the prosecutor’s office said.

Also, on a trip to Lebanon on Tuesday, Le Pen refused to wear a headscarf to meet a senior Islamic cleric, thus canceling the meeting, while she pledged to restore ties with Syrian President Bashar al-Assad if elected.  [French law bans headscarves in the public service and for high school students, in the name of church-state separation and equal rights for women.  Le Pen wants to extend the ban to all public places.]

Back to Macron, he pledged this week that if he became president, he would make it very hard on the U.K. in Brexit negotiations, vowing to take a rigid line on access to the EU’s single market; though he said the “special relationship between France and Britain must be preserved,” notably on defense.

Then late Friday, Fillon suffered a big blow as French prosecutors appointed a magistrate to investigate allegations concerning the fake pay issue.  What this means is more resources are being put into the investigation.  The judge can still decide to drop the case, place the suspect under formal investigation, or send it to trial.  But it remained unclear if the probe could be concluded prior to the first round of voting, April 23.  If Fillon was elected president, under French law the investigation would be suspended for the five-year term.

--In the Netherlands, which holds the first key European election March 15, the Dutch populist leader, Geert Wilders, was forced to suspend public appearances because of security concerns after an employee of the government agency responsible for his 24-hour security was arrested for leaking information, such as on Wilders’ travel plans.

Wilders’ Freedom Party, or PVV, is leading in the polls, with the party running on an explicitly Islamophobic ticket, which includes a promise to close all mosques in the Netherlands.

Wilders regularly refers to Moroccan immigrants as “scum,” making him a target of terrorist groups.  Police confirmed this week the arrested suspect was of Moroccan descent but was not one of Wilders’ bodyguards.

Wilders tweeted: “If I can’t blindly trust the service that has to protect me, I can no longer function. This is unacceptable.”

The suspect was accused of leaking information to a Dutch-Moroccan criminal gang, according to a Dutch media outlet, NRC.

Remember, anti-Islam politician Pim Fortuyn was shot dead by a green activist before the 2002 election.

Two years later, Dutch satirist Theo Van Gogh was murdered after he produced a film on the treatment of women in some Islamic societies.

Wilders doesn’t make many public appearances, preferring to communicate via social media and occasional interviews.

According to the latest poll, the PVV is on track to win 28 of 150 seats in parliament, with a slim lead over Prime Minister Mark Rutte’s People’s Party for Freedom and Democracy, which would garner 25 seats.

Wilders would have first crack at then forming a government, but all of the mainstream parties have vowed not to serve in a government with the PVV.  [Duncan Robinson / Financial Times]

--In Germany, the center-left Social Democrats (SPD) are trailing Chancellor Angela Merkel’s conservatives in a poll from Allensbach, with Merkel’s bloc on 33% and the SPD at 30.5%. The anti-immigrant Alternative for Germany (AfD) is at 8.5%, while the far-left Linke and the Greens were both at 8%, and the liberal Free Democrats at 7%.

Turning to Asia, Chinese President Xi Jinping is shaking up his economic team ahead of the twice-a-decade National Party Congress in the fall, where Xi is expected to ask for more than another five years.  By making some of the changes now, he gets to pad party and government organs with loyalists.

China’s new home prices rose 0.2% month-on-month in January in 70 major cities, as government curbs continued to take the heat off the market, according to the National Bureau of Statistics. Compared with a year ago, though prices still rose 12.2%. China’s biggest cities, Shenzhen, Shanghai and Beijing saw price increases of 18.2%, 23.8% and 24.7%, respectively, from a year earlier, but Shenzhen’s and Shanghai’s monthly pace slowed.  [Reuters]

In Japan, the flash manufacturing PMI for February was 53.5, a 35-month high, but January exports were disappointing, up just 1.3% year-on-year, well below expectations and off December’s 5.4% pace.  Exports to China rose 3.1% vs. 12% in December, while exports to the U.S. fell 6.6% as the yen strengthened against the dollar.

In Taiwan, exports for January rose 5.2% year-over-year, with this being a leading indicator for demand for Asia’s exports and high-tech gadgets, such as Apple and Chinese smartphones.  Taiwan has a GDP target of 1.9% in 2017.

Street Bytes

--The Dow Jones registered its third straight week of solid gains, up 1.0% to a record 20821.  The S&P 500 gained 0.7% to a record 2367, while Nasdaq stumbled a bit at week’s end, finishing up just 0.1%.

The market is overextended, unless much of the Trump agenda is fulfilled in relatively short order, meaning by Secretary Mnuchin’s August goal.

--U.S. Treasury Yields

6-mo. 0.64%  2-yr. 1.14%  10-yr. 2.31%  30-yr. 2.95%

As noted above the yield on the 10-year broke out of its 8-week trading range of 2.40% to 2.48%.

With bond yields so low, Treasury Secretary Mnuchin floated the idea of a 50- or even 100-year bond to take advantage of the current market.

--The Organization for Economic Cooperation and Development, which monitors the economic output of its 35 members for the developed world, said 2016 growth was 1.7%, a slowdown from the 2.4% rate of growth recorded in 2015 for the club.

Overall, the OECD currently forecasts global economic growth will rise to 3.4% this year from 3.1% in 2016.  It issues a new forecast next month.

OPEC’s Secretary General predicted greater compliance with the supply deal last fall, though producers outside the cartel were falling short initially.  Mohammad Barkindo said: “All countries involved remain resolute in the determination to achieve a higher level of conformity.”

OPEC was conforming to the tune of 90% according to January’s data.

After a spike on the news last fall that OPEC was going to cut production, with some non-OPEC producers such as Russia following suit, oil has traded in a narrow range amid growing signs U.S. production is helping fill the supply void.

Separately, Saudi oil production averaged 10.46 million barrels a day in December, with exports climbing to 7.65mbd, according to data compiled by Bloomberg.

But Russia overtook Saudi Arabia as the world’s largest crude producer in December, pumping 10.49 million barrels a day.

The U.S. was the third-largest producer, at 8.8 million in December, according to the Joint Organizations Data Initiative in Riyadh.  [The JODI had Saudi exports at 8mbd, not the 7.65mbd Bloomberg came up with.]

Iran said on Thursday that an increase in oil prices to more than $55 per barrel was not in the interest of OPEC as it would lead to a rise in output by non-OPEC producers.  Iran’s oil minister, told the Fars news agency, “OPEC is determined to reduce its production to help manage the market.”

According to analysts at ABN Amro Bank NV, crude could plunge towards $30 a barrel if OPEC doesn’t extend its production cuts come July.

In the meantime, U.S. gasoline consumption fell 4.4% in January from a year ago, according to the Oil Price Information Service, which has led to a record amount of surplus gasoline, the U.S. Energy Information Administration reported Wednesday, with storage levels at their highest since the EIA began collecting data in 1990.

--Kraft Heinz pulled its $143 billion takeover offer for Unilever, saying in a joint statement that Kraft had “amicably” abandoned the offer.  But it was Unilever’s initial negative response that had Brazil’s 3G Capital and Warren Buffett walking away because it left a friendly transaction impossible and Buffett has an aversion to hostile deals.  And there were Brexitish concerns, with Anglo-Dutch Unilever being subject to British government approval as it moves to exit the European Union.

The merger would have combined Kraft’s Velveeta with Unilever’s Vaseline, which so grossed out board members on both sides, they chose to go in different directions.

Actually, this wasn’t the real reason, it just wasn’t to be, I guess.  Kraft will definitely be in the market for acquisitions.

--The latest Wall Street Journal/NBC News poll released late Friday has 43% of respondents still believing the Affordable Care Act is a good thing, while 41% said it was bad idea.  In January it was 45% good, 41% bad.  So Republicans are having a tough time convincing the public they can craft a better law.

31% believe a replacement would “make things better,” while 34% say they had little or no confidence it would.

--Macy’s CEO Terry Lundgren was on his final earnings call on Tuesday, as he steps down on March 23, handing the reins to President Jeffrey Gennette.  Lundgren, who will stay on as executive chairman, said 2016 “wasn’t the year we expected or hoped for.  We thought we could do better than that.”

In the fourth quarter ended Jan. 31, Macy’s sales declined 4 percent, to $8.8 billion, with same-store sales down 2.1%, the eighth straight quarterly decline.  The company isn’t looking for any improvement this year, projecting sales will fall between 3.2% and 4.3%.  But earnings did come in better than expected. 

The company closed 66 stores during fiscal 2016 and plans to close another 34, as it received $673 million in cash from real-estate transactions last year and continues to explore all options for its properties.

“The positive this time is that consumers have money to spend,” Lundgren, pointing to robust car sales, but “At some point, everyone will have a new car and there will be dollars that are freed up for other spending.”

Macy’s said 2017 will be a year for testing new concepts, including new merchandise options and enhanced technology.

--But while Macy’s struggles continue, Home Depot continues to kick butt, reporting net earnings of $1.7bn in the three months to the end of January, better than expected, with the company announcing a 29% increase in its quarterly dividend as well as a $15bn share buyback.

Sales were up 5.8% for the quarter, while annual sales rose 6.9% for the year to $94.6bn.  Comp-store sales in the U.S. rose 6.3%.

Commenting on the figures, chairman and CEO Craig Menear said the year had seen a “healthy housing market and strong customer demand.”

The company expects sales to grow a further 4.6% this year.

--And Walmart beat U.S. sales estimates for its fourth quarter, with comparable sales up 1.8%, better than the third-quarter pace of 1.2%.  Ecommerce sales surged 29%, quicker than Q3’s 20.6%.

Earnings beat consensus estimates by a penny at $1.30 a share, while overall revenue rose 1% to $130.9bn, just shy of projections.  Revenue for the year was $485.9 billion, an increase of 0.8%. Excluding the impact of currency, revenue was $496.9bn, an increase of 3.1%.

Walmart continues to invest heavily in ecommerce and in pushing down prices amid stiff competition.  The ecommerce initiative got a jumpstart via its acquisition of Jet.com.

--Kohl’s Corp.’s revenue declined in the final quarter of the year, with same-store sales down 2.2% - the fourth straight quarterly decline, though it matched the Street’s expectations.

In 2017, Kohl’s will focus on becoming a destination for active and wellness as it begins selling Under Armour Inc. products, with UA trying to break out of its sporting goods mold.

For this year, Kohl’s expects sales to be down 1.3% to up 0.7%.

--Nordstrom’s discounted the impact of dropping the Ivanka Trump fashion line with the company reporting better than expected sales and profits for the fourth quarter.

Nordstrom posted $201 million in net earnings vs. $180 during the fourth quarter the prior year, with net sales up 2.4%, to $4.2bn.  But same-store sales fell 0.9%.

The wrath of Donald Trump and his daughter’s line being dropped was, in the words of the retailer’s co-president, “negligible.  It’s not really discernible one way or the other.”

--Friday, J.C. Penney Co. Inc. said it would close about 130-140 stores over the next few months as it reported a bigger-than-expected drop in same-store sales for the holiday quarter.  JCP is also closing two distribution facilities, with the moves impacting up to 6,000 employees.

But the stores being closed represent less than 5% of annual sales, according to CEO Marvin Ellison.

For the quarter, same-store sales fell 0.7%, slightly more than estimates.  The shares dropped nearly 6% in response.

--Tesla Inc. CEO Elon Musk said he still plans to deliver his mass-market Model 3 electric sedan in July and will reach about 5,000 units per week by the end of the year, as per the company’s earnings report.  But there were concerns with the disclosure Tesla’s chief financial official, Jason Wheeler, is leaving after 15 months.

The Model 3 is the linchpin for Tesla’s plans to achieve the profitability that has eluded the company in all but two quarters of its history.

For the fourth-quarter, Tesla reported a loss of $219.4 million, 78 cents a share, better than expectations, on $2.3 billion in revenue, with the results the first for the company since the acquisition of panel installer SolarCity Corp. in late November.

Tesla expects to deliver 50,000 vehicles in the first half of 2017, and then ramp up steeply – with production of 10,000 units a week sometime in 2018.

Musk told analysts Wednesday, “The Model 3 is designed for manufacturing,” and is simpler to build than the Model S and Model X, both of which sell for more than $100,000.  “It’s a very compelling car, and we understand manufacturing a lot better than we did in the past,” he said.

Tesla’s so-called gigafactory is producing lower cost batteries at its giant Reno, Nevada plant, in partnership with Panasonic Corp.

Back to Q4, the company delivered 22,200 cars worldwide, with the total in 2016, 76,233, less than its initial forecast of 90,000.  [The loss for the year was $773 million on $7bn in revenue.]

But, again, it’s all about the Model 3, which had 373,000 pre-orders as of last May, the last time we heard anything about the reservation process.

And, it seems, cash burn, which came up on the earnings call after the release.  Elon Musk said the company was considering a number of options but “it probably makes sense to raise capital to reduce risk.”  It’s estimated Tesla needs $1 billion-$2 billion ahead of the Model 3 launch to minimize the risk of cash running too low.

Tesla shares closed at $273.50 before the earnings report after the market closed on Wednesday, but finished the week at $257.

This is going to continue to be one interesting story going forward.

--HSBC Holdings Plc’s fourth-quarter profit missed expectations as revenue surprisingly fell 3% to $11 billion, less than the $12.4bn analysts expected.  Adjusted earnings were $2.62bn, missing the estimate of $3.78bn, and missing on all key business units, according to an analyst from Sanford C. Bernstein.

CEO Stuart Gulliver said HSBC continues to pare back its sprawling global footprint and reduce expenses.  The bank increased its cost-cutting target by $1 billion to $6bn of savings, which shouldn’t give remaining employees a warm and fuzzy feeling.

--The saga of Wells Fargo and its accounts scandal continues, with four senior managers being fired the other day, including the head of its consumer credit-card business.

Wells has been working since September to combat furor over the opening of 2 million retail bank accounts without customers’ approval, Wells being fined $185 million as a result.  The board and management are conducting reviews on how the fake account practice proliferated.

It was all part of the bank’s cross-selling culture; persuading individual customers to sign up for more Wells Fargo products.

The bank hopes to wrap up its investigation before an annual shareholder meeting in April.  The board is expected to withhold 2016 bonuses from top executives as a way to send a message.

--Anglo-Australian miner BHP Billiton reported a profit of $3.2bn for the six months to Dec. 31, compared with a loss of $5.7bn in the same period a year earlier.  A resurgence in commodity prices certainly helped, as well as a recovery following write-offs from a fatal accident at a joint venture in Brazil.

BHP did warn of a marked rise in geopolitical uncertainty and more seriously protectionism.

“The outlook for the U.S. economy is uncertain.  The policy of the new administration points to a higher inflation environment than previously envisaged,” said the results statement.

--Vale, the world’s largest iron ore producer, also announced a return to profit in 2016, thanks to a rebound in iron prices.  Revenues at the Brazilian group increased 14.7% to $29bn, with net income of $4bn, compared to the previous year’s loss of $12bn.

--HP Inc. reported sales rose for a second straight quarter, as the personal-computer business rebounded.  Revenue was up 4% for the quarter ending Jan. 31 vs. a year earlier, owing to a 16% jump in the sales of notebook PCs, with overall PC shipments growing 6.6% even as global PC shipments were declining 1.5% for all suppliers, according to International Data Corp.

But the printing business is still key, accounting for three-fourths of last year’s profit, and sales in this business were down 3%.

--Meanwhile, the other half of HP, post split, Hewlett Packard Enterprises, saw its shares drop 7% as HPE cut is profit forecast, with the corporate hardware and enterprise software business of Hewlett-Packard Co. facing intense competition in its cloud-related business amid struggles with a strong dollar.

--Activist investor Carl Icahn took a stake in Bristol-Myers Squibb Co., fueling speculation the company could soon be put up for sale.  But the size of Icahn’s stake couldn’t be determined.

--Verizon and Yahoo said Tuesday that the previously announced $4.8bn sale of most of Yahoo to Verizon would be reduced by $350 million in a concession for security lapses that exposed personal information stored in more than 1 billion Yahoo user accounts.

The hacking bombshells Yahoo revealed after the initial offer by Verizon were the two biggest security breaches in internet history.  Yahoo is responsible for 50% of any cash liabilities as a result of any government investigations and lawsuits related to the breaches.

--The New York Times had a report detailing sexism, harassment and debauchery at Uber’s headquarters, with CEO Travis Kalanick announcing an investigation into the workplace culture.

A former employee, in a blog post on Sunday, detailed a litany of sexual harassment and mismanagement that she said she encountered while working there.

The Times interviewed more than 30 current and former Uber workers, and reviewed company emails, chats and meeting logs.  Among the incidents witnessed by sources:

“One Uber manager groped female co-workers’ breasts at a company retreat in Las Vegas.  A director shouted a homophobic slur at a subordinate during a heated confrontation in a meeting.  Another manager threatened to beat an underperforming employee’s head in with a baseball bat.”

--Last week I wrote of the exploding issue of distracted driving and the rising death toll on America’s highways, and this week the CEO of State Farm Automobile Insurance Co., the largest auto insurer by market share, said 36% of the people it surveyed in 2015 admitted to texting while driving, and 29% said they access the internet, compared with 31% and 13%, respectively, in 2009.  Among drivers 18 to 29, 64% said in the 2015 survey that they text while driving, and 54% said they use the internet behind the wheel. 

So you can imagine underwriting results at the major insurance companies have been worsening, and this means higher rates, even for those of us doing the right thing!  So a big [blank] you to everyone who is costing the rest of us major money!  And, boy, I mean that.  The average U.S. car-insurance premium is up 16% from 2011, according to the Insurance Information Institute.

Or as Robert Hartwig, an insurance professor at the University of South Carolina, told the Wall Street Journal, the growing number of wrecks “is swamping the much-heralded beneficial impacts of newer, safe vehicles.” [Leslie Scism and Nicole Friedman / WSJ]

--McDonald’s Corp. is looking to beverages to help perk up business as its all-day breakfast push has seemingly run its course.  So McDonald’s will offer $1 sodas and $2 McCafe specialty drinks across the U.S., turning to higher-margin beverages when cheap grocery prices are encouraging folks to eat at home.  Soft drinks of any size will cost $1.

--According to transportation analytics firm INRIX, Los Angeles had the worst traffic in the world among the 1,064 cities studied, with the average driver in L.A. wasting 104 hours sitting in gridlock during the busiest commuting times last year.  Moscow is second worst.

New York wasn’t far behind these two, costing drivers $2,533 a year in squandered fuel and productivity, which is actually greater than L.A., though New York motorists spent 89 hours on average in gridlock traffic.

--Restaurant Brands International, the fast-food chain controlled by Brazil’s 3G and Warren Buffett, is nearing a deal to acquire Popeyes Louisiana Kitchen, which I’d be very fired up over because RBI owns Burger King and Tim Hortons.  We don’t have a Kentucky Fried Chicken near me, but we do have a BK I frequent and I’m assuming Burger King could incorporate some Popeyes in its operations.

The plain fact is, I am incapable of making good fried chicken myself and I need help!  [For my New Jersey area readers, remember back in our youth...way back... “Don’t cook to-night...call Chicken Delight!”]

--In a poll of Germans for GfK, 46% said they will not visit the U.S. after Donald Trump took office.  36% said they’d continue to travel to America as they differentiate between politics and Americans’ warm-heartedness, with about 17% stating national politics had no impact on their travel plans.

This has an impact on tour operators like TUI AG and Thomas Cook Group.

--Israel’s jobless rate was 4.3% in January, according to the Central Bureau of Statistics.  The economy grew 4% in 2016, but is forecast to slow to 3.2% this year.

--SeaWorld Entertainment reported that both attendance and revenues fell across its 12 parks in 2016.  Fourth-quarter earnings are released next Tuesday.

In all, 22 million people visited SeaWorld parks last year, a drop of 2 percent from 2015.  Year-end revenues are estimated to be $1.34 billion, also down 2 percent from 2015’s $1.37bn.

SeaWorld released these figures ahead of a forthcoming debt refinancing.  The company has aggressively cut costs, including the elimination of 320 jobs.  PETA continues to create problems.  [Lori Weisberg / San Diego Union Tribune]

--Sodastream recalled thousands of its bottles over concerns they could explode when used.  The company said it had discovered a manufacturing defect with one type of bottle that meant it could burst when pressurized.

About 59,000 bottles sold in the U.S. and Canada are affected and it involved blue-tinted one-liter bottles marked dishwasher safe, with a blue plastic cap and bottom, and with an expiration date of “04/2020.”

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey:

Turkish-backed rebels said they seized an ISIS stronghold in northern Syria, al-Bab, which further shrinks the militants’ territory, though it retains Raqqa and much of the neighboring province of Deir Ezzour.

Turkey played a central role in the fight for al-Bab, launching airstrikes on targets in the city, but up to 380 civilians died in the two-week offensive to take the city.  [At least 44 ISIS militants were killed in the fighting.]

However, a car bomb near the city on Friday, today, killed up to 45 civilians and Syrian opposition fighters, proving ISIS still had a significant presence in the area.

A new round of peace talks with the Syrian government is underway in Geneva, though no one is expecting any breakthroughs.  The goal is just to advance to another round later.

ISIS has been steadily losing territory in both Syria and Iraq and now, in Syria, the debate is over which force leads the battle to take Raqqa. Turkey wants a force dominated by Arab rebel fighters since Raqqa is a predominantly Arab city, while the U.S. would like to see the Kurdish-led SDF in the battle.  [The Kurdish YPG militia leads the SDF.]

Separately, Russian President Vladimir Putin said on Thursday that as many as 4,000 Russians are still fighting in Syria on the side of the militants, according to Russian intelligence.

Four Russian military advisers in Syria were killed by a roadside bomb near Homs this week.

And the Israeli Air Force struck a Hizbullah weapons shipment in Syria on Wednesday, allegedly striking targets near Damascus, with Syrian media reporting “loud explosion sounds.”

Lebanese media said the Israeli jets struck from within Lebanon, circling the Beqaa Valley and Baalbek, so as not to be blocked by the Russian defense systems operating in the area.

The IDF (Israel Defense Forces) declined to comment as the army never responds to foreign reports.

The attack comes in a week when Hizbullah leader Hassan Nasrallah made several aggressive statements in an appearance on Iranian television and interviews with Lebanese media, saying “Hizbullah will have no red lines in the next war with Israel,” and that: “Israel should think a million times before it goes to war with Lebanon.”

Lebanese President Michel Aoun defended the weapons Hizbullah has, saying the arms are integral to defending Lebanon against Israel. [Anna Ahronheim / Jerusalem Post]

In Iraq, security forces, with substantial U.S. backing, launched a large-scale offensive to seize the western side of Mosul, making progress by week’s end, including the taking of the international airport.  Up to 450 U.S. Special Forces and advisers are directing airstrikes against ISIS positions and advising Iraqi ground commanders on how best to advance in Mosul. The fighting inside the urban areas should be intense.

Iraqi aircraft also were believed to have carried out their first airstrikes on ISIS inside Syria Friday targeting militants responsible for recent bombings in Baghdad, but ISIS attacked a border guard regiment near Jordan, killing 15.

Secretary of Defense Mattis was in Iraq this week and he plans to unveil a detailed plan to defeat Islamic State by month’s end. He has hinted at granting U.S. officers more leeway in the fight.

[Mattis also said in Baghdad that the United States wasn’t in Iraq to take the oil.]

Iran: President Hassan Rouhani warned Arab countries not to be enticed by Israeli attempts to find allies in the Arab world.

Speaking at a conference in Tehran that was focused on Iranian support for the Palestinians, Rouhani said: ‘The occupying regime, in an attempt to normalize its situation, has for the first time referred to certain Arab countries as its allies against the resistance front, instead of describing them as its enemies.”

Rouhani called on Arab countries to be vigilant in the face of Israeli “plots.” Rouhani lamented Arab countries giving Israel a pass on its treatment of the Palestinians. [Jerusalem Post]

Separately, Supreme Leader Ayatollah Ali Khamenei rejected calls for “national reconciliation,” meaning opposition leaders Mir-Hossein Mousavi and Mehdi Karroubi – leaders of the 2009 Green Movement protests that followed the disputed 2009 election – will remain under house arrest, which means President Rouhani won’t fulfill a key campaign pledge of his before winning office: that they would be released.  [Shashank Bengali / Los Angeles Times]

The Iranian presidential election is in about three months, May 19, and the death of key ally, former President Ali Akbar Hashemi Rafsanjani, continues to hurt Rouhani. 

Recall, I was railing over President Obama’s refusal to utter any words of support for the Green Movement in ’09. 

Israel, part II: Sergeant Elor Azaria, the young Israeli soldier who killed a wounded and incapacitated Palestinian assailant, was sentenced to 18 months’ imprisonment on Tuesday, in a show of leniency that drew condemnation among Palestinians after one of the most divisive trials in Israeli history, with the public literally split 50/50 on Azaria’s guilt or innocence.  In one poll during the trial, nearly half of Israeli Jews said any Palestinian attacker should be killed on the spot, while the Israeli military accused Azaria, then 19, of violating open-fire rules and its ethical code.

A three-judge military court convicted Azaria of manslaughter and he could have received up to 20 years in prison.  Prosecutors had asked for three-to-five years, noting Azaria had shot an assailant who had carried out an attack minutes earlier.

Israeli Defense Minister Avigdor Lieberman, commenting on Facebook after the sentencing, said the “terrorist had come to kill Jews and everyone must take this into account.”

I haven’t seen an official statement from Prime Minister Netanyahu, who was on an official visit to Singapore and Australia.

Russia / NATO: At the Munich Security Conference, U.S. Republican Senator Lindsey Graham promised on Sunday that Congress will press ahead with a bill to sanction Russia for interfering in the U.S. presidential election.

The year 2017, he said, “is going to be a year of kicking Russia in the ass in Congress.  If you’re worried that we’re not going to look long and hard at what Russia did in our election because Trump won and Republicans are in charge, you don’t need to worry about that.  We are.  Because if we don’t, it could be the Chinese or Iranians next, it could be the Republicans next time.”

As to Europe’s big elections this year, Graham said: “To our German friends, you’re next. To our friends in France, they’re coming after you.  To my friend Mr. Lavrov [Russian foreign minister], I hope you finally suffer some consequences for what you and your regime have been doing to democracies.”  [Financial Times]

Secretary of Defense Mattis said in Munich, the transatlantic bond was “as strong as I’ve ever seen it,” and emphasized that America remained “rock solid” in its support of Article 5 – NATO’s core “one for all, all for one” collective defense tenet.

Vice President Mike Pence told the gathering: “Know this: The United States will continue to hold Russia accountable even as we search for new common ground, which as you know, President Trump believes can be found.”

Speaking in his first visit to Brussels on Monday, Pence said Washington was committed to cooperation with the EU and NATO, saying the U.S. and Europe share the “same heritage, values and purpose” to promote freedom, democracy and the rule of law.

“It is the strong commitment of the U.S. to continued cooperation and partnership with the EU,” he said, following a meeting with European Council President Donald Tusk.

Pence added: “Your loss at the hands of barbaric terrorism is felt equally in the households of America. This will require greater coordination and intelligence sharing among EU member states and between the EU and NATO.”

Pence also said the Trump administration would continue to support efforts in Poland and the Baltic states through NATO to “continue to hold Russia accountable” for “its efforts to redraw national borders by force.”

The Trump government was searching for new “common ground with Russia which president Donald Trump believes can be found,” Pence said.

Mr. Tusk, a former prime minister of Poland, said, “Reports of the death of the West have been greatly exaggerated,” and that the EU was “counting on the U.S.’s wholehearted and unequivocal support for the idea of a united Europe.”  [Financial Times]

Pence did reiterate President Trump’s stance that NATO members had to meet the 2% defense spending target and quickly, saying: “America will do our part. But Europe’s defense requires Europe’s commitment as well as ours.”

Editorial / Wall Street Journal

“Vice President Mike Pence spent the past few days trying to reassure Europeans about America’s commitment to NATO, but in some continental precincts that isn’t enough. Europe’s mandarins are sore that Mr. Pence didn’t embrace the European Union with similar enthusiasm, as if an American Administration is responsible for the EU’s fate....

(European Commission) President Jean-Claude Juncker lectured Monday that the EU is more important to the U.S. economy than ‘some in the U.S. do think.’  He also said: ‘I do think the United States needs a strong, united European Union on all possible issues.’  There was also grumbling that Mr. Pence had underscored his commitment to NATO but hadn’t uttered the words ‘European Union’ at his dinner Sunday with Belgian Prime Minister Charles Michel.

“Come on, guys.  When are you going to take yes for an answer?  NATO is a mutual-defense pact to which the U.S. belongs, and the U.S. accounts for some two-thirds of alliance expenditures.  After Donald Trump’s comments that NATO is ‘obsolete,’ Europeans ought to be pleased that his first major emissaries have embraced the alliance....

“The EU is in trouble because it has failed for at least a decade to deliver growth and jobs. It has failed to police Europe’s burning peripheries, allowing the Continent to be overrun by refugees. It has failed to deter terror attacks or promote greater social cohesion.  Perhaps most troubling is that it has failed to hear the voices of popular protest against these failures.  EU leaders tell their voters to shut up and heed their betters. No wonder Europe’s versions of Donald Trump are on the rise....

“Mr. Trump can be a bully, but in this case he is merely saying that Americans won’t sacrifice to defend Europe if Europeans won’t sacrifice to defend themselves.  Mr. Trump could do much good if sometime soon he gave a speech of his own underscoring the U.S. commitment to defending Europe and common Western values.  But the European Union is going to have to save itself.”

As for Russia, Trump and a potential “deal,” Eliot Cohen of Johns Hopkins University, one of America’s foremost foreign policy experts, said, ceding Eastern Europe to Moscow – something that has been close to heretical in Western diplomacy since Yalta – in exchange for freebies “would be both stupid and immoral and would reverse every fundamental tenet of American foreign policy since World War II.”  [TIME]

No details of a deal are imminent.

In the meantime, as TIME’s Massimo Calabresi and Simon Shuster wrote, “Leaders in Bulgaria and Moldova are listing back toward Moscow.”

And then you have the situation in the tiny Balkan nation of Montenegro, where “more than a dozen Kremlin-linked plotters were allegedly preparing to storm the parliament and assassinate its Prime Minister.  Their goal, according to the government’s investigators, was to stop the country of 620,000 from joining NATO, which would give the U.S.-led alliance control of nearly every northern Mediterranean port from Gibraltar to the Bosporus.  On a tip from an informant, real Montenegrin police rounded up the plotters as polls opened for the vote in October.  Two ringleaders, both suspected agents of the Russian intelligence services, are now back in Russia.” [Calabresi and Shuster]

Senior British and NATO sources said this week that the plot appeared to be genuine and was orchestrated by Russian intelligence officers with backing from Moscow, the Sunday Telegraph reported.

Meanwhile, Vladimir Frolov writes in the Moscow Times that when it comes to a potential deal with the Trump White House, “Russia would be ceded a sphere of influence in Eastern Europe in return for a military alliance against ISIS, more nuclear reductions and efforts to curtail the power of Iran and China.”

But the Kremlin has little to offer on its end.

Frolov: “In other words, the deal would amount to a fire sale of U.S. interests....Russia is too dependent on Iran and its proxies in Syria to engage with the U.S. in ratcheting political and military pressure on Tehran.  It is no longer feasible for Moscow to consider joining forces with the United States to contain China. In fact, increased U.S. pressure on China may prompt Beijing to seek closer security ties with Russia.  Nor is Moscow interested in more nuclear arms control.”

Finally, Vitaly Churkin, Russia’s permanent representative to the United Nations for more than a decade, died suddenly in New York City on Monday, a day shy of his 65th birthday.  He is the fifth Russian diplomat to die in a very short period of time.

North Korea / China: Malaysian police announced Friday that the poison used to kill Kim Jong Nam, the half brother of North Korean leader Kim Jong Un, was VX nerve agent, a substance listed as a chemical weapon.

The police chief said the substance was listed a chemical weapon under the Chemical Weapons Conventions of 1997 and 2005.

Samples were taken from Kim’s skin and eye and was first identified in an analysis by the Center for Chemical Weapons Analysis of the Chemistry Department of Malaysia.

The announcement came a day after North Korea denied any responsibility for Mr. Kim’s death, accusing Malaysian authorities of fabricating evidence of Pyongyang’s involvement under the influence of South Korea.

As for the two women arrested for carrying out the applying of the poison to Kim Jong Nam’s face, relatives insist they were duped into doing so, though Malaysian authorities say otherwise.

Pyongyang issued a veiled, rare attack on China after Beijing halted coal imports from Pyongyang as part of sanctions to rein in its nuclear weapons program.  Coal has accounted for 34% to 40% of North Korean exports in the past several years, and almost all of it was shipped to China, according to South Korean government estimates.  This is a big move...and encouraging.  [China has banned coal imports before, but this came with major loopholes and deliveries continued.  This time seems different.]

A commentary published by the Korean Central News Agency on Thursday did not mention China by name or the coal ban, but referred to a “neighboring country” which often claims to be friendly.

“This country, styling itself a big power, is dancing to the tune of the U.S. while defending its mean behavior with such excuses that it wasn’t meant to have a negative impact on the living standards of people in the DPRK but to check its nuclear program,” the state-run news agency said.

The commentary went on to criticize its neighbor for “unhesitatingly taking inhumane steps such as totally blocking foreign trade related to the improvement of people’s living standards.”

The Global Times, a Chinese Communist Party mouthpiece, editorialized that even though it was not the first time North Korea’s state media had criticized China, the wording was “unprecedentedly vehement” and such language was enough to cause a fallout between Beijing and Pyongyang.

The paper said China should stand firm over U.N. sanctions, but called for Beijing to avoid getting entangled in a war of words with Pyongyang.

The paper also warned North Korea not to become China’s enemy as it was only enforcing sanctions, which was a better option for Pyongyang than China joining the U.S. in confronting the nation.  [South China Morning Post]

Editorial / Wall Street Journal

“Malaysian police are assembling evidence that Pyongyang is responsible for last week’s chilling airport murder of Kim Jong Nam, the estranged older brother of North Korean dictator Kim Jong Un. This is one more reason the U.S. should redesignate North Korea a state sponsor of terror, a status it never should have lost in 2008.

“According to investigators and video from the scene, the attack was carried out by two women, from Indonesia and Vietnam, who had practiced in local shopping malls under the direction of several North Korean men who joined them at the airport and flew out of the country minutes later.  On Wednesday police said a senior diplomat from Pyongyang’s embassy and an employee of its state airline were wanted for questioning.  North Korea has denied involvement, slammed Malaysia’s investigation as a corrupt foreign plot and demanded repatriation of the body....

“Beyond question is that this attack fits a pattern for North Korea, which has long targeted defectors and critics in China and especially in South Korea....

“The United Nations Panel of Experts has repeatedly cited North Korean shipments of illicit arms and munitions to Iran, the world’s leading state sponsor of terror, and of chemical weapons-related materials to Syria, which has used such weapons against civilians and is also a designated terror sponsor.  Pyongyang’s 2014 cyberattack on Sony Pictures may not qualify as terrorism, but its threats against movie theaters might, as would its attempts to hack and damage South Korean nuclear-power plants.

“The U.S. last year placed significant new sanctions on North Korea, so labeling it a terror sponsor would have less practical effect today than years ago.  But it would signal that the new Trump Administration is willing to recognize the North Korean threat as it is, not as some wish it to be.  Especially if followed by long-overdue sanctions on the Chinese firms that sustain the Pyongyang regime, this would put Kim Jong Un and his Chinese patrons on notice.”

President Trump, in his Thursday Reuters interview, said that the North Korea situation, including the recent ballistic missile test, is “a very dangerous situation, and China can end it very quickly in my opinion.”

As for China and its claim to nearly all of the South China Sea and its strategic shipping lanes, according to state media reports, Beijing is drafting a revision to the nation’s maritime “traffic safety” law.  While in Chinese waters, according to the changes, any foreign submarine would be required to stay surfaced and display its national flag.  It would also need to get approval before entering Chinese waters, and report to maritime management authorities.  China would reserve the right to bar or expel foreign ships deemed to threaten “traffic safety and order.”  [Defense One]

Can you say confrontation with the United States?  Potentially of the nuclear variety?  Seriously.

This issue bears close watching, to say the least.  Reuters reported this week that China is also nearly finished building almost two dozen structures on its artificial islands in the South China Sea “that appear designed to house long-range surface-to-air missiles,” two U.S. officials told the news agency.

So much for non-militarization of the area, the world’s busiest shipping lanes.

Meanwhile, Chinese health authorities have issued stern warnings over the H7N9 bird flu outbreak, admitting the situation had already affected half of the country and could lead to more fatalities.  I didn’t realize the virus has killed at least 87 people, as of mid-February, including 79 in January; the highest death toll since the first known human infection in 2013, with most of the cases in the Pearl and Yangtze River delta areas.

In the previous three years, January’s death toll had ranged between 20 and 31.

But the World Health Organization said there were no signs of sustained human-to-human transmission in bird flu cases this year.

Random Musings

--Tomorrow, Saturday, the Democrats will vote on their party’s next chair to head the Democratic National Committee, with Rep. Keith Ellison (Minn.) squaring off against former Labor secretary Tom Perez.  In polling of the 447 voting members conducted by The Hill, Ellison led with 105 supporters to Perez’s 57.  Other candidates have smaller support and 50 were said to be undecided.  You need a majority, so the race could easily extend to multiple rounds.

Ellison has the backing of the Bernie Sanders coalition, including Mass. Sen. Elizabeth Warren and Senate Minority Leader Chuck Schumer.

Perez has the endorsements of former Vice President Joe Biden and former Attorney General Eric Holder (i.e., he has the support of Barack Obama).

The election of Ellison, a progressive leader in the House and the first Muslim elected to Congress with an ‘interesting’ background, would be a gift to Republicans.

Bernie Sanders, following Biden’s endorsement, put out a statement panning Perez and Biden as part of the “failed status quo.”

--In a Pew Research Center poll, Donald Trump’s approval rating was 39% vs. a 56% disapproval mark, while a Fox News poll had Trump at 48% approval, 47% disapproval.

A Gallup presidential tracking poll, with a rolling three-day average, had Trump’s approval up to 43% as of Wednesday, 52% disapproval, vs. a low of 38% approval the prior week.  [It was 45% in this survey when Trump was inaugurated.]

--According to a Harvard-Harris survey commissioned by The Hill, 44% of Americans say the Senate should confirm Neil Gorsuch for the Supreme Court, with 32% saying they’re unsure and 25% believing he should not be confirmed. This bodes well for him.  While Republicans hold just 52 seats and need 60 to break a filibuster unless Senate Majority Leader Mitch McConnell invokes the nuclear option, allowing for a simple majority, it is possible eight Democrats would defect, among the 10 up for reelection in 2018 in states that Trump won.

We know our boy Joe Manchin (West Virginia) will! 

--A survey by the Pew Research Center found that 52% of Republicans and Republican-leaning independents would put their faith in the president if there was a disagreement between Trump and congressional leaders.

The exception: Republicans under the age of 40, who said they are more inclined to trust Congress.

Job approval ratings for GOP leadership were up to 34%, compared to 19% in September 2015.  For Democrats, that approval rating was 37%, up from 34%.

Also, 57% of people have an unfavorable view of Trump, while 41% have a favorable view of the president.

John McCain was viewed favorably by 57% of respondents.

--A new Quinnipiac University poll found that when registered voters were asked who they “trust more to tell you the truth about important issues,” 52% picked the media, 37% President Trump.

But the same survey found that by a 50-45 margin, voters felt the media has treated Trump unfairly.  Yet voters are even more critical of Trump’s treatment of the media, with 61% disapproving and 35% approving.

Independents disapprove of Trump’s treatment of the media by a 59-35 margin.

--For all the Republican congressman who have held testy town halls while back in their districts this week, you had the likes of California representative Darrell Issa, whose district covers coastal San Diego and Orange counties.  Issa opted not to bow to pressure and hold an in-person town hall and it’s a tough decision.  Some say it’s a “lose-lose” proposition for a Republican these days, but if the crowd is particularly vicious and uncivil, I would think the congressman could get a sympathy vote or two by standing his ground.

Carl Luna, a political science professor at San Diego’s Mesa College told the Los Angeles Times: “If people are trying to push you in a direction you don’t want to go, you don’t show up and they attack you,” he said.  “You do show up, and you get beaten up.”

Gary Jacobson, a poli-sci professor at UC San Diego, said even politicians in safe seats may choose to avoid town halls, fearing a tense event like Utah Republican Congressman Jason Chaffetz faced the other week.

“You can imagine some Republicans saying ‘Why bother?’  Those people are not going to vote for me anyway,” he said.

But Jacobson added, representatives brush off protesters and town hall requests “at their peril.”

“They are whistling in the dark if they think this is all ginned up by left-wing organizations, because it does represent that real people are really worried.”

--The Air Force can’t figure out what the heck President Trump was talking about when he said he’s negotiated $1 billion in savings for the program to develop, purchase and operate two new Boeing Co. jets to serve as Air Force One.

“To my knowledge I have not been told that we have that information,” Colonel Pat Ryder, an Air Force spokesman, told reporters Wednesday when asked how Trump had managed to reduce the price for the new presidential plane.  “I refer you to the White House,” Ryder said.

Trump has been boasting that he’s managed to personally cut costs of the F-35 fighter jet built by Lockheed Martin Corp. and Boeing’s Air Force One.

“They were close to signing a $4.2 billion deal to have a new Air Force One,” Trump said at his campaign rally in Florida, Saturday.  “Can you believe this? I said, ‘No way.’ I said, ‘I refuse to fly in a $4.2 billion airplane.  I refuse.”

Trump then said, “We got that price down by over $1 billion, and I probably haven’t spoken, to be honest with you, for more than an hour on the project.”

Ryder said Boeing is now operating under an initial $172 million contract to work on “risk reduction activities” and the service expects to award contracts by June 30 for preliminary aircraft design and for the two unmodified 747-8 aircraft that will be adapted as Air Force One.

In January, Defense Secretary James Mattis ordered a review of how to “substantially reduce the program’s costs.”  [Bloomberg]

--Breitbart editor Milo Yiannopoulos announced his resignation from the far-right news website Tuesday after a 48-hour firestorm over comments that surfaced in which he appeared to condone pedophilia.

“Breitbart News has stood by me when others caved,” said the creep.  “They have allowed me to carry conservative and libertarian ideas to communities that would have otherwise never heard them,” he said in a statement.  About a dozen reporters at Breitbart had threatened to resign if Yiannopoulos wasn’t fired.

His departure came a day after his planned address at CPAC was cancelled, after the president of the group sponsoring the event gave him the boot for allegedly advocating pedophilia.

American Conservative Union president Matt Schlapp said, “Due to the revelation of an offensive video in the past 24 hours condoning pedophilia, [we] have decided to rescind the invitation to Milo Yiannopoulos to speak at the conference.”

Yiannopoulos had responded to the charges on Facebook, but Schlapp, and others, felt it was far from sufficient.

“It is up to him to answer the tough questions and we urge him to immediately further address these disturbing comments,” said Schlapp.

On the video, Yiannopoulos said sex between 13-year-olds and older men can be “life-affirming” in the gay community.

“In the homosexual world...those relationships in which those older men help those young boys discover who they are and given them security and safety and provide them with love and a reliable, sort of rock, where they can’t speak to their parents,” he said.

Milo’s book, “Dangerous,” was also canceled by Simon & Schuster.

Yes, a well-deserved awful stretch for one of the vile people on the planet, though, were it not for the pedophilia remarks, he had a right to speak, and those who launched violent protests at Cal-Berkeley last month were just as much in the wrong.

--The mayor of San Jose was forced to acknowledge that he failed to properly notify residents to evacuate during a flood emergency early Wednesday, with many receiving their first notice when firefighters showed up in boats in their neighborhood.

Water from the swollen Coyote Creek forced 14,000 to leave their homes, with another 22,000 encouraged but not required to evacuate.

The National Weather Service said the water level in the 30-mile long creek reached a 100-year high during the past week’s storm.

--Bill Gates warned that hundreds of millions could be wiped out by viruses that have been genetically engineered by terrorists, with technological and scientific advances allowing terror groups to turn viruses into weapons of mass destruction.

Gates said: “Natural epidemics can be extremely large.  Intentionally caused epidemics, bioterrorism, would be the largest of all.  With nuclear weapons, you’d think you would probably stop after killing 100 million.

“Smallpox won’t stop. Because the population is naïve, and there are no real preparations.  That, if it got out and spread, would be a larger number.”

Gates made his comments at the Munich Security Conference last weekend.  He said developments in genetic engineering were escalating at a “mind-blowing rate.”  That means biological warfare ambitions are now available to smaller terrorist groups with limited resources.

--Norma McCorvey, the woman behind the 1973 Supreme Court ruling Roe v. Wade that legalized abortion, died last Saturday.  She was 69.

McCorvey, who went by the pseudonym Jane Roe, challenged the constitutionality of abortion laws in Texas in 1971. At the time, it was illegal for women to have abortions unless their lives were at risk.

The case made it to the Supreme Court where justices ruled it was legal to have an abortion because of a woman’s right to privacy under the 14th Amendment.

But the ruling was too late for McCorvey, who couldn’t have an abortion and she gave the baby up for adoption.

Later, McCorvey became an anti-abortion activist and filed a motion to have the case overturned.

--We note the passing of Bob Michel, who served as leader of the Republican House minority for 14 years, but was skilled at seeking compromise under the presidencies of Ronald Reagan and George H.W. Bush, which allowed them to pursue their agendas.

Michel was the kind of leader some of us yearn for today.  He retired one term too soon, before the GOP House majority that swept into power in 1994, leaving Newt Gingrich to become House Speaker rather than him.

Bob Michel was 93.  One of the good ones.

--The “Blind Sheikh,” Omar Abdel Rahman, who was found guilty of a 1993 plot to bomb the Holland and Lincoln Tunnels, the George Washington Bridge, the United Nations and the Manhattan headquarters of the FBI, all in one day, died last Saturday. He was 78.

Abdel Rahman became one of the most influential and fearsome theologians for Islamist fundamentalism that swept the Middle East.

Before coming to the United States, he was put on trial in Egypt and in 1980, according to courtroom testimony there, “he gave a blessing to a cell of militant Islamists, emboldening them to assassinate President Anwar el-Sadat during a military parade on Oct. 6, 1981, in Cairo.”  [New York Times]

Twice, though, he was acquitted of instigating Sadat’s death.  In 1990, he fled Egypt for the United States. [No extreme vetting then.]

Rahman lent help in various forms to those who carried out the first World Trade Center bombing in 1993.

Upon his passing, he immediately burned in Hell.

--You ever wonder why we may never see President Trump at Camp David?  As he told a European journalist before he took office: “Camp David is very rustic, it’s nice, you’d like it.  You know how long you’d like it?  For about 30 minutes.”

The Navy-run facility costs taxpayers about $8 million a year to operate and he could just close it; opting for Mar-a-Lago and Trump Tower instead; which are far tougher for the Secret Service to secure and at a far greater annual cost than $8 million!  Sad!

Hopefully Camp David is maintained for future presidents.  President Ronald Reagan went there 150 times, riding his horse and playing host to the likes of Margaret Thatcher.  Dwight D. Eisenhower convalesced there after a heart attack.  [Camp David was renamed after Ike’s father and grandson, according to W. Dale Nelson’s history of the retreat, “The President Is at Camp David.”]

President Jimmy Carter struck a peace accord  at Camp David between Egypt and Israel in 1978.

President George W. Bush used it 149 times, according to CBS news reporter Mark Knoller.  But Barack Obama only used it 39 times.  [Michael Rosenwald / Washington Post]

--We note the passing of Alan Colmes, a long-time radio and television commentator, best known as co-host with conservative Sean Hannity on “Hannity & Colmes” on Fox News.  Colmes was known as the liberal in the “lion’s den” of Fox.  He died of lymphoma at the age of 66.

--The killing of the Indian engineer in an Olathe, Kansas bar on Wednesday by a 51-year-old white man, a clear hate crime, is not only tragic but it is rapidly becoming a huge story in India, as social media there trashes Donald Trump, his immigration policies, and the United States.

I once sold books door-to-door in Olathe, long ago, summer of 1978.  It was a very pleasant community.

But I hope the suspect, Adam Purinton, is put to death as soon as possible.  He allegedly shouted “get out of my country” before shooting the victim and his Indian friend.  Purinton also apparently thought the two were from the Middle East.  Our prayers to the victim’s family and to the two wounded, including a hero, Ian Grillot, who tried to intervene. [The friend has been released from the hospital.]

--Finally, an international team of astronomers has discovered a star named Trappist-1, around which seven Earth-size planets that could potentially harbor life orbit.

Trappist-1 is a dwarf star about 235 trillion miles from Earth, or about 40 light years, which researchers claim is actually quite close, and they feel like they can study the planets in great detail, owing in part to the orientation of their orbits.

One or more of the exoplanets – planets around stars other than the sun – could be at the right temperature to be awash in oceans of water, the astronomers said, based on the distance of the planets from Trappist-1.

Amaury H.M.J. Triaud, an astronomer at the University of Cambridge and a member of the research team, said, “I think that we have made a crucial step toward finding if there is life out there. Here, if life managed to thrive and releases gases similar to that we have on Earth, then we will know.”

The planets were discovered as a result of the light from the dwarf star dimming from time to time, ergo a body is passing in front of the star, blocking part of the light.  [New York Times]

It would be way cool, to state the obvious, if scientists can determine in the next decades if there is indeed life there.  What would it be like?

I like the explanation I read in an extensive report on the intelligence of octopuses (No. 5 on my All-Species List).  The author said for those wondering what alien life could be like, we have an example right in front of us.

You know one of a million things I didn’t know on this general topic?  That dwarf stars live longer than larger ones like the sun.

---

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

God bless America.

---

Gold $1258...highest since early November
Oil $54.02...highest weekly close since July 2015

Returns for the week 2/20-2/24

Dow Jones  +1.0%  [20821*]
S&P 500  +0.7%  [2367*]
S&P MidCap  +0.1%
Russell 2000  -0.4%
Nasdaq  +0.1%  [5845]

Returns for the period 1/1/17-2/24/17

Dow Jones  +5.4%
S&P 500  +5.7%
S&P MidCap  +4.6%
Russell 2000  +2.8%
Nasdaq  +8.6%

Bulls 61.2
Bears 17.5 [Source: Investors Intelligence]

Have a great week. 

Brian Trumbore



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Week in Review

02/25/2017

For the week 2/20-2/24

[Posted 10:30 PM ET, Friday]

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

Edition 933

The Trump Presidency...Week Five

As Charles Krauthammer says, you judge Donald Trump’s presidency “day by day,” while I will always urge everyone to take a deep breath and wait 24 hours.

This was a week in which it was all crystallized.  If you had any doubts before, Steve Bannon really is running the show, as he made a rare public appearance on Thursday, and Trump then parroted him on Friday.

I really hope these reviews of mine quickly get back to normal, and are far shorter, but for now the easiest way for me to write everything up is to take it day by day.  I hope I’m not writing in two months... “The Trump Presidency...Week Thirteen.”

But this coming Tuesday is a key moment, Trump’s speech before Congress, his first opportunity to spell out some details on his domestic proposals, including tax reform, ObamaCare and an infrastructure program.

Wall Street, for one, has been giving the president, and the Republican Congress, the benefit of the doubt.  Now it’s time for Trump and Republican leaders to begin to deliver.  At the least, provide a realistic timetable for hitting some key objectives.  That is what the market is looking for. Wall Street has been priced for perfection and while I said 2017 would be an up year for stocks, from this day forward the risks are to the downside as we’ll see some disappointments on the legislative side. 

But on to another week of “Life on Planet Trump”.

Saturday....

At his campaign rally in Melbourne, Florida, President Trump immediately took his feud with the press to the people, again, vowing to achieve his legislative agenda despite the “lies, misrepresentations and false stories” thrown at him by the media.

“I want to speak to you without the filter of the fake news,” Trump said to huge cheers.  “The dishonest media, which has published one false story after another with no sources, even though they pretend they have them – they make them up in many cases. They just don’t want to report the truth.”

“Many of our greatest presidents fought with the media and called them out,” Trump said, mentioning Thomas Jefferson, Andrew Jackson and Abraham Lincoln.

“When the media lies to people, I will never, ever, let them get away with it.  I will do whatever I can that they don’t get away with it. They have their own agenda and their agenda is not your agenda.

“But despite all their lies, misrepresentations and false stories they could not defeat us in the primaries or general election and we’ll continue to expose them as what they are and most importantly we’ll continue to win, win, win,” said Trump.

“Life is a campaign,” Trump told reporters earlier aboard Air Force One, just before the rally.  “Making our country great again is a campaign. For me, it’s a campaign.”

Trump also suggested Sweden could face the kind of terrorist attacks that have hit France, Belgium and Germany.

“You look what’s happening in Germany, you look at what’s happening last night in Sweden.  Sweden, who would believe this.  Sweden. They took in large numbers. They’re having problems like they never thought possible.”

The statement baffled the country.  Former prime minister Carl Bildt tweeted: “Sweden? Terror attack?  What has he been smoking?”

Trump later tweeted that his statement “was in reference to a story that was broadcast on Fox News concerning immigrants & Sweden.”

There was indeed a clip on Tucker Carlson’s show concerning a documentary about alleged violence committed by refugees in Sweden.

[Trump doubled down with a tweet on Monday, saying: “The FAKE NEWS media is trying to say that large-scale immigration in Sweden is working out just beautifully.  NOT!”]

I know more on this topic than Donald Trump can ever hope to know, having written extensively on it in this space, and, yes, Sweden has a problem, which the government tries to hide.  162,000 migrants, mostly from Syria, Iraq and Afghanistan, went to Sweden in 2015, overwhelming the system and social structure in the country, and the number of asylum applications dropped to 29,000 in 2016 after Sweden wised up and strengthened the border, with asylum seekers facing far longer processing times.

But for the record there have been no France or Belgium-style terror attacks in the country since Sweden’s open-door policy on migration began in 2013, but there were incidents in 2010 and 2015 that were perpetrated by individuals deemed terrorists.

Having said this, about 140 of the 300 Swedes who went to fight for ISIS in Syria and Iraq are reported to have returned, and since these folks are not known to assimilate into Swedish society, this is, and will be, a major problem.

Sunday....

On the talk shows, Fox News anchor Chris Wallace cautioned his colleagues and the network’s viewers that President Trump’s latest attack on the media had gone too far.

“Look, we’re big boys.  We criticize presidents.  They want to criticize us back, that’s fine,” Wallace said on “Fox & Friends.”  “But when he said that the fake news media is not my enemy, it’s the enemy of the American people, I believe that crosses an important line.”

Wallace also reminded his colleagues that when it came to Trump’s reference of Thomas Jefferson, Jefferson had once written the following: “And were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.”

“What Jefferson [was saying],” said Wallace, “is, despite all of our disputes, that to the functioning of a free and fair democracy, you must have an independent press.”

In an interview on NBC’s “Meet the Press,” taped Saturday, Sen. John McCain (R-Ariz.) told host Chuck Todd: “When you look at history, the first thing that dictators do is shut down the press. And I’m not saying that President Trump is trying to be a dictator.  I’m just saying we need to learn the lessons of history.”

“I hate the press. I hate you, especially,” McCain said to Todd, who laughed.  “But the fact is, we need you.  We need a free press. We must have it.  It’s vital.”

But fellow Republican Sen. Rand Paul (Ky.) ripped McCain, arguing the nation is “very lucky” that Trump is president and not McCain.  Paul said McCain’s recent criticisms of Trump are driven by his “personal dispute” with the president over foreign policy.

Paul said, “[McCain] would bankrupt the nation. We’re very lucky John McCain’s not in charge, because I think we’d be in perpetual war.”

Conservative radio host Rush Limbaugh criticized the media.  Appearing on “Fox News Sunday,” Limbaugh said, “The media did not make Donald Trump and they can’t destroy him.”

“They have a formula,” he said, “ they have a blueprint for destroying Republican political officials they don’t like.  It’s not going to work on Trump. He doesn’t fit that mold. They’re trying to every day.  It’s kind of comical to watch.”

Limbaugh added: “Trump has a connection with his voters that most politicians don’t have...and that connection that he has is not anything that anybody else can break. Only he can break it.”

Meanwhile, speaking from the United Arab Emirates on Sunday, Defense Secretary Jim Mattis said he does not see the media as the enemy of the American people, disagreeing with the president.

Monday....

After a weekend of interviews, President Trump picked Lt. Gen. H.R. McMaster as his new national security adviser to replace the fired Michael Flynn, the president calling McMaster “a man of tremendous talent and tremendous experience.”

General McMaster is highly respected as a military strategist and one of the Army’s leading intellectuals, who is not afraid to condemn an administration, having criticized the way President George W. Bush’s team went to war in Iraq.  He also led forces in the Gulf War and the Iraq War.

Meanwhile, there was unrest in a predominantly immigrant suburb of Stockholm, Sweden, after police tried to arrest a suspect on drug charges, which was ironic after Trump’s comments two days earlier about a non-existent incident had so baffled Swedes.

Vehicles were set on fire and shops looted, with a number of injuries. 

Tuesday....

In a visit to the new museum devoted to African-American history in D.C., President Trump spoke out against a series of bomb threats against Jewish community centers across the country after he has come under fire for failing to denounce several waves of anti-Semitic acts since he took office.

“The anti-Semitic threats targeting our Jewish community and community centers are horrible and are painful, and a very sad reminder of the work that still must be done to root out hate and prejudice and evil,” Trump said after his tour.  “Anti-Semitism is horrible, and it’s going to stop and it has to stop.”

But this was too little, too late, and it’s not like he took the opportunity to emphasize he has launched an investigation at the highest levels (though we know there are investigations into each incident).

Following Trump’s remarks, press secretary Sean Spicer was asked by Margaret Brennan of CBS to respond to a strong condemnation of his statement by the Anne Frank Center.

BRENNAN: The Anne Frank Center released a pretty strongly worded [statement], saying that these remarks, while well received, are a “Band-Aid” on the cancer within the Trump administration.  Saying that there is, whether blessed or otherwise, a sense of xenophobia within this administration.

SPICER: “Look.  The president has made clear since the day he was elected – and frankly going back through the campaign – that he is someone who seeks to unite this country. He has brought a diverse group of folks into his administration, both in terms of actual positions and people that he has sought the advice of.  And I think he has been very forceful with this denunciation of people who seek to attack people because of their religion, because of their gender, because of the color of their skin.

“It is something that he’s going to continue to fight and make very, very clear that [it] has no place in this administration.  But I think that it’s ironic that no matter how many times he talks about this that it’s never good enough.”

Last week, Trump was asked on two separate occasions about rising anti-Semitism and he responded by shouting down one reporter and insisting he is “the least anti-Semitic person that you’ve ever seen in your entire life.”  It’s been amazing he can’t just come out and tell the people what specific steps his government is taking.  Go before them and say, “We will do all we can to find and prosecute those committing these acts to the full extent of the law.”  But he has yet to make a statement of that kind.  It’s called leadership, POTUS.

Also Tuesday, memos issued by the Department of Homeland Security spelled out details in execution for the sweeping changes the Trump administration is making in terms of enforcing its immigration policy.

Trump, who campaigned on a promise to crack down on illegal immigration, signed a pair of executive orders earlier that we now know call for 5,000 more Border Patrol agents, 10,000 more immigration enforcement officers, far more detention space and a border wall with Mexico estimated by the administration to cost more than $21 billion.  As to the total cost, which will require funding from Congress, Homeland Security officials don’t know what it will be as yet.

But the policy on deportations has already begun, though in targeting criminals, some undocumented immigrants who would have likely been given a reprieve by the prior administration are being swept up.

“If in the performance of our duty, looking for a criminal alien, we find someone there in the house who is here illegally, we just can’t ignore that,” Thomas Homan, acting director of the Immigration and Customs Enforcement agency, said in an interview with the Wall Street Journal.  “We have to look at the case [on] a case-by-case basis, and find out do we put that person in [deportation] proceedings.”

As reported by the Journal’s Laura Meckler: “The memos still outline priority groups among the estimated 11 million people in the U.S. illegally, starting with serious criminals.  But the priorities are much broader and include people charged with crimes who haven’t been convicted, people guilty only of immigration-related crimes such as using false documents and anybody who an immigration officer believes is a risk to public safety.

“DHS officials said they wouldn’t target otherwise law-abiding undocumented immigrants and said their limited resources would still require a focus on those people who pose a public-safety risk.  They also said rules regarding not picking up people at ‘sensitive locations’ such as churches, remain in effect.  ‘You will not see folks rounded up,’ one official said.

“But officials also said people aren’t exempt from deportation just because they may not fall into a priority group.”

Well, you can see why there is a lot of anxiety in many communities across the country.

Wednesday....

The White House announced it was pushing back the release of a revised executive order on travel and refugees until next week, with no explanation given.

White House policy adviser Stephen Miller said on Fox News Tuesday night, “Fundamentally you’re going to have the same basic policy outcome for the country, with any changes being mostly minor technical differences.”

What I get a kick out of is how when the initial ban was rolled out Jan. 27, with the initial chaos, we were told it had to be brought then to save the homeland, and to prevent thousands of bad hombres from rushing in.

So then a nationwide restraining order was issues by a federal judge in Washington, and later upheld by a three-judge panel of the Ninth Circuit Court of Appeals, and, of course, thousands of bad hombres have had their opportunity to rush in, if we were to believe the White House initially.  I mean it’s comical, yet no one is questioning administration officials on this on the talk shows, for example.

I told you from day one, though, that this wasn’t how the system worked.  Yes, we needed extreme vetting, particularly with certain countries, but in most cases you can’t just simply get a visa because someone kept the door open for a while, referring to the seven specific countries involved in the order.

Meanwhile, Secretary of State Rex Tillerson and Department of Homeland Security Secretary John Kelly went to Mexico Wednesday to meet with officials there for talks on security and immigration.  Before they arrived, Foreign Minister Luis Videgaray said there was no way Mexico would accept the new “unilateral” rules, which among other things seek to deport non-Mexicans to Mexico.

“I want to say clearly and emphatically that the government of Mexico and the Mexican people do not have to accept provisions that one government unilaterally wants to impose on the other,” he told reporters.

Wednesday, White House spokesman Sean Spicer described U.S.-Mexico ties as healthy and robust and said he expected a “great discussion.”  “I think the relationship with Mexico is phenomenal right now,” Spicer told reporters, thereby proving he needs a vacation already.

For his part, Secretary Kelly told reporters the immigration executive order was aimed at catching undocumented immigrants and returning them to their countries of origin.

Separately, the Trump administration lifted federal guidelines that said transgender students should be allowed to use public school bathrooms and locker rooms matching their chosen gender identity, a reversal of an Obama-era directive from last May.  It will now be up to the states and school districts to interpret whether federal sex discrimination law applies to gender identity.

Opponents of the Obama guidance had said it was federal overreach.

And the year-long protest against the Dakota Access oil pipeline in North Dakota ended, stragglers rounded up, as a federal judge rejected a request by two Native American tries for an emergency order blocking the pipeline.

The protest camp was located on federal land near the Standing Rock Sioux Reservation.  As I wrote the other week, citing a Wall Street Journal editorial, if it wasn’t so tragic it would be humorous...that the protesters and their ungodly camp are leaving the land far worse off environmentally than any oil spill (assuming it was then quickly cleaned up). 

There was zero attempt on the part of the protesters to leave the land better than they found it, as many of us would say.

Thursday....

In a meeting with business leaders at the White House, President Trump talked of the new surge in deportations as being a “military operation.” 

“We’re getting really bad dudes out of this country,” Trump said.  “And at a rate nobody has ever seen before. And they’re the bad ones.  And it’s a military operation.”

I imagine he meant it is being run with military precision, at least I hope that this was what he intended, but just in case there was any question, speaking in Mexico City, Homeland Security Secretary John Kelly pledged the military would not be used to expel undocumented immigrants from the U.S.

“Let me be very very clear, there will be no, repeat, no mass deportations,” he said.  “Everything we do in DHS will be done legally and according to human rights and the legal justice system of the United States.”

Kelly added, “There will be no, no use of military force in immigration,” admonishing the media because only “half of you get that right.”

Kelly was probably referring to the draft proposal that had 100,000 National Guard troops being enlisted to apprehend undocumented immigrants, but this was just a proposal that some then stupidly ran with as if it was actual policy.

Mexican Foreign Minister Luis Videgaray said he expressed his “irritation” to President Trump’s envoys, Sec. of State Tillerson and DHS Sec. Kelly about recent U.S. policies towards its southern neighbor.

Videgaray said he told Tillerson he was worried about respect for immigrants’ rights.  Videgaray said rebuilding the relationship would be a long process and would not be easy.

“There’s a concern among Mexicans, there’s irritation [about] what has been perceived as policies that might be harmful for the Mexicans and for the Mexican industry.”

Meanwhile, at the Conservative Political Action Conference, White House chief strategist Stephen K. Bannon and chief of staff Reince Priebus took the stage, with Bannon saying the media is “adamantly opposed to” the president’s agenda.

Bannon, the intellectual force behind Trump’s agenda, said the administration is locked in an unending battle against the media and other globalist forces, while Priebus sought to prove the two were partners, not rivals in fighting on the president’s behalf.

“If you look at these Cabinet nominees, they were selected for a reason, and that is deconstruction,” Bannon said, adding the withdrawal from the Trans-Pacific Partnership was “one of the most pivotal moments in modern American history.”

And after Trump had tweeted that the media was “the enemy of the American people,” Bannon amplified the remark at CPAC: “They’re corporatist, globalist media that are adamantly opposed to an economic nationalist agenda like Donald Trump has.”

Bannon added: “If you look at the opposition party and how they portrayed the campaign and how they portrayed the transition and how they portray the administration, it’s always wrong.”

Bannon then said “all” of Trump’s campaign promises would be implemented in short order.

Separately, in an interview with Reuters, Thursday, Trump said it would be “wonderful” if no nation had nuclear arms, but otherwise the U.S. must be “top of the pack.”

Trump told Reuters that the U.S. had “fallen behind on nuclear weapon capacity.”

A new strategic arms limitation treaty between the U.S. and Russia, known as New Start, requires that by February 5 of next year, both countries must limit their arsenals of strategic nuclear weapons to equal levels for 10 years.

New Start, Trump said, is “a one-sided deal.”

“Just another bad deal that the country made, whether it’s START, whether it’s the Iran deal,” he said.  “We’re going to start making good deals.”

Trump also said in the interview that China was the “grand champion” of currency manipulation, while he is “totally in favor” of the European Union.

Separately, CNN reported that the FBI shot down a recent request from Reince Priebus to publicly blast media reports about the alleged communications between President Trump’s associates and the Russians during the 2016 campaign.

Multiple U.S. officials told CNN that White House staff had been asking the bureau to say the stories were wrong, and that there had been no contacts between the two parties whatsoever – but the FBI refused.

This would be a direct violation of government procedures, which bar White House contact during ongoing investigations.

The story goes back to a Feb. 15 meeting at the White House, the day after reports by the New York Times and CNN that spoke of Trump associates conversing with Russians ahead of the election.

Friday....

In the morning, President Trump gave a speech at CPAC, lashing out at the press from the beginning as he had done Saturday in Florida.

“I want you all to know that we are fighting the fake news.  It’s phony, fake,” Trump said, the crowd reveling in the attack.

“I called the fake news the enemy of the people.  They are the enemy of the people, because they have no sources.  They just make them up when there are none.”

Of course Trump was upset at the CNN story that White House officials tried to knock down media stories on communications with Russia.

Trump said he supports “honest” reporting and the First Amendment.

“I’m not against the media.  I’m not against the press.  I don’t mind bad stories if I deserve them.  I am only against the fake news media or press.  I’m against the people that make up stories and make up sources.”

The rest of the speech we’ve now come to know was boilerplate, including a push for a massive budget request for one of the “greatest military buildups in American history.”

Afterwards, he met again with some corporate honchos back at the White House and signed an executive order concerning an initiative aimed at eliminating unnecessary regulations, an effort I totally support.

Friday afternoon, press secretary Sean Spicer blocked a number of news outlets, including CNN, the New York Times, The Hill, BBC, the Los Angeles Times and the New York Daily News, from a question-and-answer session, an off-camera “gaggle” inside his West Wing office instead of the traditional setup in the press briefing room.

The White House Correspondents’ Association sharply criticized the decision.

This was stupid on the administration’s part.

One more.  Late Friday Mexico’s Foreign Minister Videgaray said his country could respond to any tax the United States unilaterally imposed on imports from its southern neighbor to finance the wall with levies on select goods, aimed at U.S. regions most dependent on exports south of the border.

This needless war of words with Mexico is totally senseless.  But I guess 46% of Americans thought it was a good idea.

Opinion....

Editorial / Washington Post

“President Trump has a good idea of the power the United States wields over Mexico, and the pain it may inflict – the construction of a wall Mexico fiercely opposes; taxes that could be slapped on Mexican imports, wreaking havoc on its economy; deportations of undocumented Mexican immigrants living in the United States, who would be thrust back into a country that would struggle to absorb them.  Mr. Trump might have a fuzzier idea of the pain Mexico, its people furious and its pride wounded by his taunts and contempt, might inflict on the United States.

“Start with those deportations.  At least half of America’s 11 million unauthorized immigrants are Mexican, but many have no documents proving their nationality.  For the Trump administration to deport them, it would need cooperation from Mexico, which cannot be forced to accept deportees without certifying that they are Mexicans.  As former Mexican foreign minister Jorge G. Castaneda has already warned, Mr. Trump can round up hundreds of thousands or millions of migrants, but without Mexico’s cooperation, they could clog U.S. detention centers and immigration courts – at enormous cost and, conceivably, for years.

“Consider, too, the effect on America’s southern border if Mexico were to loosen immigration on its own southern border – the one over which Central American refugees are already streaming north in near-record numbers.  Even with what U.S. officials say are aggressive interdiction efforts by Mexican authorities, the Border Patrol detained more than 220,000 mainly Guatemalans, Hondurans and Salvadorans crossing from Mexico into the United States in the fiscal year ending last fall, exceeding the number of Mexicans apprehended, which has fallen to a 45-year low. If you think the Border Patrol is swamped now, as Homeland Security Secretary John F. Kelly insists, imagine if Mexico, which last year sent home more than 140,000 Central Americans, simply stepped aside....

“Mr. Kelly, who as a Marine led U.S. Southern Command, said in his confirmation hearing that partnerships ‘as far south as Peru’ are more important to U.S. border security than building a wall.  Along with Secretary of State Rex Tillerson, he headed to Mexico on Wednesday, just after the Department of Homeland Security released its new deportation guidelines. If the goal was to widen bilateral cooperation and soothe the harsh feelings Mr. Trump has engendered with our neighbor and ally, the timing was pitiable.”

Editorial / Wall Street Journal

“President Trump campaigned on enforcing immigration law, and Homeland Security Secretary John Kelly plans to deliver.  On Tuesday Mr. Kelly ordered a deportation surge that will cost billions of dollars and expand the size and intrusiveness of government in ways that should make conservatives wince....

“By all means deport gangbangers and miscreants.  But Mr. Kelly’s order is so sweeping that it could capture law-abiding immigrants whose only crime is using false documents to work.  This policy may respond to the politics of the moment, but chasing down maids and meatpackers will not go down as America’s finest hour.

“Under Mr. Kelly’s guidelines, any undocumented immigrant who has committed even a misdemeanor could be ‘subject to immigration arrest, detention and, if found removable by final order, removal from the United States.’  So a restaurant worker with an expired visa or driver without a license who is caught rolling a stop sign could be an expulsion target.

“One question is whether all this effort is needed.  More than 90% of the 65,000 undocumented immigrants removed last year from the U.S. interior were convicted criminals, and about 2,000 were affiliated with gangs.  This suggests that Immigration and Customs Enforcement (ICE) is already targeting and removing as many bad guys as it can locate.

“Mr. Kelly has also ordered a plan to ‘surge the deployment of immigration judges and asylum officers,’ and he’s going to need them... The average wait time for a case is 677 days and can hit five years at some locations.

“More than 500 judges...would need to be hired to eliminate the backlog within a year.  Each full-time position costs about $200,000, so taxpayers could be billed more than a half billion dollars for this surge of government attorneys.  Add all this to the cost of Mr. Trump’s border wall, and the bill rises into the tens of billions....

“Homeland Security officials were at pains this week to say all of this will be done humanely, with a special focus on criminals, and let’s hope so.  Mr. Trump also deserves credit for not repealing President Obama’s order sparing from expulsion some 750,000 ‘dreamers’ who were brought to the U.S. illegally as children.  This is an act of genuine compassion, but Mr. Trump will get little political credit because the news is buried in the larger deportation story.”

Daniel Henninger / Wall Street Journal

“Donald Trump is right that the media is making a mountain out of every Trump molehill. Despite the ‘resistance,’ it also remains true that most Americans want the Trump presidency to succeed.

“These Trump Hopefuls, whose number includes people who didn’t vote for him, want the presidency to succeed because they understand that if it fails, the social and economic condition of their country will be in a bad place.

“Despite this reservoir of goodwill for the Trump presidency, the degree of anxiety about it is palpable. You have to be living in Netflixed isolation not to have had conversations with people wondering what the hell is going on at this White House.

“Beyond the Beltway bubble, I think most people look upon the pitched battle between Mr. Trump and the news media as they would a playground fight between sixth-graders....

“We could spend the next several years arguing whether Mr. Trump or the dishonest mainstream media started this, but a more productive question is, why is the mayhem happening?

“It is happening mainly because the presidential campaign didn’t end last November. The political culture of the 2017 campaign endures inside the White House and among the press and the Trump opposition.

“Presidential campaigns are an essential feature of the American political system... But that glorious tumult is supposed to give way to the more substantial, harder politics of the presidency.

“The permanent campaign has been with us a long time, and Barack Obama was the first president who didn’t disband his campaign operation after winning.  But we’re in a different dimension today.

“Propelled by new media, campaign politics has become a national addiction. It’s similar to the way people drive cars into trees because they can’t stop texting.  No one will let go – not the tweeting president, not the surly press and not the hooked, agog public.

“Still, there’s a political casualty waiting to happen inside the great American thrill ride – the presidency. Trump the president is looking like he’s trapped inside Trump the campaigner....

“Some will say the political world underestimated Donald Trump from day one.  That’s true – but as a candidate. The presidency, by contrast, is one part of a large and complicated political system, complicated because the Founders wanted the process to be difficult and to require getting buy-in from unavoidably divided factions....

“The argument here isn’t that Donald Trump as president has to step up to ‘heal’ a divided nation, not least because our age of limitless sentimentality has turned the phrase ‘heal the nation’ into soap bubbles.  But it’s obvious that the hyper-hot emotions in the country’s political life now are unsettling many normal people who don’t wish Mr. Trump ill.

“There are risks, to the Trump presidency, its goals and the system itself, if the volatile personality-driven politics of the Trump campaign remain the norm for the 45th presidency.

“Yes, we know it’s a populist movement.  Populism, though, is what gets you elected.  The president who tries to govern with populism inside the U.S.’s system of distributed, three-branch authority will fail.

“There are going to be tough votes soon in Congress on the president’s tax bill, ObamaCare reform, a Dodd-Frank revision, the budget, infrastructure and the rest....

“There will be no moral victories for a presidency that cannot produce 50 votes in the Senate.”

Michael Auslin / Wall Street Journal

“Amid the seeming disarray of President Trump’s foreign policy, critics seem unable to make up their minds: Either Mr. Trump is upending America’s traditional postwar priorities, such as by denigrating NATO, or he is easily accommodating conventional wisdom, such as by accepting the ‘One China’ policy. Which is it?

“These critiques miss the logical thread that ties together Mr. Trump’s actions.  Although it is too early to expect the president’s foreign policy to be fully fleshed out, especially after the abrupt resignation of Mike Flynn as national security adviser, the White House appears to be guided by a consistent approach.

“On foreign issues that directly affect domestic concerns, Mr. Trump pursues radical change.  But on matters that are truly foreign, he is willing to adopt a traditional stance. What looks like inconsistency is actually an instinct deeply grounded in his worldview.

“This explains the president’s withdrawal from the Trans-Pacific Partnership and his desire to renegotiate the North American Free Trade Agreement. Some charge that this is a betrayal of America’s decades-long commitment to a liberal global economic system. But Mr. Trump sees it as a domestic priority, a necessary shielding of American workers.  Instead of sweeping, multicountry agreements, he has proposed bilateral trade pacts, beginning with Britain and possibly Japan.

“On pure foreign policy, Mr. Trump has stayed the course for now. After initially questioning the relevance and utility of America’s main postwar alliances, he now seems committed to them. The president and Defense Secretary Jim Mattis have affirmed the mutual-defense agreement with Japan and South Korea.  Mr. Mattis had tough words for NATO allies last week when urging increased military spending, but walking away seems a remote possibility.

“Even more surprising was the recent phone call with Chinese President Xi Jinping. Mr. Trump dropped his criticism of the ‘One China’ policy that has defined relations with Beijing since the 1970s. Mr. Mattis, during a visit to Japan, also calmed fears that the U.S. Navy might physically confront Chinese vessels in the South China Sea.

“The Trump administration has kept Russia at arm’s length, too, despite the president’s continued praise of Vladimir Putin. U.N. Ambassador Nikki Haley has made clear that American sanctions will remain in effect unless Russia withdraws from Ukraine....

“At least so far, Mr. Trump has been remarkably consistent.  Critics from the left and right should accept that the next four years of American foreign policy will be defined by a mix of traditionalism and radicalism.”

The Washington Post noted, however, that as of Monday, when it comes to the State Department, “Of 549 key appointments, the White House has yet to name 515, according to a tracker by The Post and Partnership for Public Service, a nonprofit, nonpartisan organization. Only 14 have been confirmed, and 20 are waiting.  These key positions are among the roughly 1,200 total that require Senate confirmation and about 4,100 overall that the new administration must fill.

“The incoming Trump team wasted no time in forcing Obama appointees overseas to hurry home and vacate their positions by Inauguration Day, but the new administration has moved with far less speed to find replacements.  The only three ambassadors nominated so far are to China, Israel and the United Kingdom.  Not a single assistant secretary of state has been named, much less confirmed.”

Edward Luce / Financial Times

“In his first month Mr. Trump has declared war on the intelligence agencies and the media. It looks like the judicial branch is next on his list of enemies. There is no middle ground in Mr. Trump’s Washington. Either the forces that are against the president will bring him down or he will destroy the system. My bet is on the first.  But I would not stake my life on it.

“Do not be reassured by Mr. Trump’s cabinet.  Many of them are experienced individuals. James Mattis, the secretary of defense, Rex Tillerson, secretary of state, and Steven Mnuchin, the nominee for Treasury secretary, are professionals. We may dispute their priorities but we have no basis to contest their hold on reality.

“Even Kellyanne Conway, and Sean Spicer...would probably look fine if they were working for a different president.  Mr. Trump could populate his administration with America’s most diligent public servants and it would not change the most important thing. They would still be required to execute the orders of a man who divides the world into friends and enemies – and nothing in between.

“Robert Harward, the ex-Navy SEAL who turned down the job to serve as Mr. Trump’s national security adviser, is a harbinger of things to come.  In any normal circumstance, someone of Mr. Harward’s background would have leapt at the honor of such a high position. But Mr. Harward could not stomach the prospect.

“It would have meant serving a president who thinks he knows more than his generals about war, more than his spies do about intelligence and more than his diplomats do about the world.  The only people with whom Mr. Trump agrees are those who agree with him.  It is an open question how long it will take for Mr. Trump’s existing appointees to reach the same conclusion.  There is a thin line between doing your duty and being humiliated....

“Then there is the lying media – or the ‘Lugenpresse’ as Mr. Trump’s alt-right supporters say in echo of the Nazi slur....

“His next logical step is to accuse the media of treason.  In a tweet he later deleted Mr. Trump called the media an “enemy of the American people.”  This cannot end well.  Anonymous death threats have become a normal way of life for many journalists in Washington.  I fear it is only a matter of time before this results in violence.  The same applies to the judiciary.  The judges who shot down Mr. Trump’s ‘Muslim ban’ earlier this month are also receiving death threats.

“Where does this end?  Panglossian types cling to the hope that Mr. Trump will make a course correction.  In this happy development, he would clear the White House of firebrands, such as his close advisers Stephen Bannon and Stephen Miller, and replace them with seasoned operators.

“Such a purge is possible at some point.  It may even be likely....

“But Mr. Trump is not a reformable character. The more besieged he becomes, the more he lashes out.  He is now vowing an investigation into leaks and an implied purge of disloyal officers.

“It is hard to predict how long it would take to resolve the battle between Mr. Trump and the so-called deep state.  It is also hard to say how long a Republican Congress could stand the heat....At some point this will boil down to a choice between Mr. Trump and the U.S. constitution.”

Charles Krauthammer / Washington Post

“At the heart of President Trump’s foreign policy team lies a glaring contradiction. On the one hand, it is composed of men of experience, judgment and traditionalism.  Meaning, they are all very much within the parameters of mainstream American internationalism as practiced since 1945.  Practically every member of the team – the heads of State, Homeland Security, the CIA, and most especially Defense Secretary Jim Mattis and national security adviser H.R. McMaster – could fit in a Cabinet put together by, say, Hillary Clinton.

“The commander in chief, on the other hand, is quite the opposite – inexperienced, untraditional, unbounded.  His pronouncements on everything from the one-China policy to the two-state (Arab-Israeli) solution, from NATO obsolescence to the ravages of free trade, continue to confound and, as we say today, disrupt.

“The obvious question is: Can this arrangement possibly work? The answer thus far, surprisingly, is: perhaps.

“The sample size is tiny but take, for example, the German excursion.  Trump dispatched his grown-ups – Vice President Pence, Defense Secretary Mattis, Secretary of Homeland Security John Kelly and Secretary of State Rex Tillerson – to various international confabs in Germany to reassure allies with the usual pieties about America’s commitment to European security. They did not drop a few hints to Trump’s loud complaints about allied parasitism, in particular shirking their share of the defense burden.

“Within days, Germany announced a 20,000-troop expansion of its military. Smaller European countries are likely to take note of the new setup.  It’s classic good-cop, bad-cop: The secretaries represent foreign policy continuity but their boss preaches America First.  Message: Shape up.

“John Hannah of the Foundation for Defense of Democracies suggests that the push-pull effect might work on foes as well as friends. On Saturday, China announced a cutoff of all coal imports from North Korea for the rest of 2017.  Constituting more than one-third of all North Korean exports, this is a major blow to its economy.

“True, part of the reason could be Chinese ire at the brazen assassination of Kim Jong Un’s half-brother, who had been under Chinese protection.  Nonetheless, the boycott was declared just days after a provocative North Korean missile launch – and shortly into the term of a new American president who has shown that he can be erratic and quite disdainful of Chinese sensibilities....

“Trump’s people have already shown a delicate touch in dealing with his bouts of loopiness.  Trump has gone on for years about how we should have taken Iraq’s oil for ourselves.  Sunday in Baghdad, Mattis wryly backed off, telling his hosts that ‘All of us in American have generally paid for our gas and oil all along, and I am sure we will continue to do so in the future.’

“Yet sometimes an off-center comment can have its uses.  Take Trump’s casual dismissal of a U.S. commitment to a two-state solution in the Middle East. The next day, U.S. policy was brought back in line by his own U.N. ambassador.  But this diversion might prove salutary. It’s a message to the Palestinians that their decades of rejectionism may not continue to pay off with an inexorable march toward statehood – that there may actually be a price to pay for making no concessions and simply waiting for the U.S. to deliver them a Palestinian state.

“To be sure, a two-track, two-policy, two-reality foreign policy is risky, unsettling and has the potential to go totally off the rails... But the experience of the first month suggests that, with prudence and luck, it can yield the occasional benefit – that the combination of radical rhetoric and conventional policy may induce better behavior both in friend and foe.

“Alas, there is also a worst-case scenario. It needs no elaboration.”

Wall Street

The Dow Jones registered its 11th consecutive record on Friday, the longest such streak since 1987, which proved to be a rather dicey year come that October, but bonds rallied both here and abroad and this wasn’t necessarily a positive occurrence.  European investors flew to the safety of German paper amid renewed political uncertainty in the eurozone, covered below, and probably some bond-buying by the European Central Bank, while the yield on the U.S. 10-year fell to its lowest level since late November, breaking out of a tight range, and it really made no sense.

The Federal Reserve released the minutes from its last meeting in January and policymakers said they should be ready to lift short-term interest rates again “fairly soon,” so the next gathering of the Open Market Committee, March 14-15, will likely be a contentious one.

I have been unwavering for months in my belief they will hike then, and not wait until May, and I still believe that despite the late bond rally.  Next week we’ll have another jobs report that, assuming it is strong, should cement the decision to move another 25 basis points, 0.25%. The Fed is way behind the curve and some of the board members know it.  [The Atlanta Fed’s GDPNow indicator currently has first-quarter growth at 2.4%.]

True, the Trump agenda is still uncertain.  The direction of the administration is clear when it comes to tax reform, repealing and replacing ObamaCare, infrastructure spending and deregulation, but details are lacking, including a rather important one...how to pay for it all, including for the “greatest military buildup” in the history of mankind.

That said, as exhibited by President Trump’s latest meetings with business leaders, confidence is high in Corporate America.

Actually, a Harvard-Harris poll provided exclusively to The Hill found that 61% of Americans view the economy as strong, against 39% who say it is weak, a major change in sentiment from the past few years.

Meanwhile, in an interview with CNBC on Thursday, Treasury Secretary Steve Mnuchin said the administration aims to pass “significant” tax reform, including tax cuts for middle-class Americans, by the time of the August recess.

“The No. 1 issue is growth and the most important thing that will impact growth is a tax plan.  We are committed to passing tax reform. It’s going to be very significant.  It’s going to be focused on middle class tax cuts and making the business tax more competitive with the rest of the world.”

As to a proposed border adjustment tax on imports, Mnuchin said, “We are looking at it.  We think there are some very interesting aspects of it.”

Manufacturers support such a tax, but retailers vigorously oppose it, fearing it will raise prices and hammer profits.

And despite President Trump’s claims to the contrary, Mnuchin staged a retreat from the president’s promise to fast track the branding of China as a currency manipulator, which is certainly a more traditional approach on policy.  Mnuchin said there would be no announcement on the issue before a regular Treasury report due in April.

“We have a process within Treasury where we go through and look at currency manipulation across the board, and we’ll go through that process.  We’ll do that as we have in the past and we’re not making any judgments until we continue that process.”

But President Trump could always undo these comments.

Lastly, there was some news on the housing front.  January existing home sales came in at a 5.69 million annualized pace, the strongest since Feb. 2007, with the median home price at $228,900, up 7.1% from a year earlier.

January new home sales were less than expected at 555,000.

Europe and Asia

The flash reading for the eurozone economy in February showed a composite of 56.0 vs. 54.4 in January, 50 being the dividing line between growth and contraction, a 70-month high.  Services came in at 55.6 vs. 53.7, a 69-month high.  Manufacturing was at 55.5 vs. 55.2, a 70-month high, according to Markit.

The flash readings break out Germany and France, individually, and French manufacturing was 52.3 vs. 53.6 last month; services 56.7 vs. 54.1, a 66-month high; with the comp at 56.2 vs. 54.1, a 69-month high.

In Germany, February manufacturing was 57.0 vs. 56.4, a 69-mo. high; services 54.4 vs. 53.4; and the comp 56.1 vs. 54.8, a 34-mo. high.

Chris Williamson, chief economist, Markit:

“The eurozone economy moved up a gear in February. The rise in the flash PMI to its highest since April 2011 means that GDP growth of 0.6% could be seen in the first quarter if this pace of expansion is sustained into March...

“France’s revival represents a much-needed broadening out of the region’s recovery and bodes well for the eurozone’s upturn to become more self-sustaining.

“The ECB will be cheered by the signs of stronger growth and further upturn in price pressures, though will no doubt remain concerned that elections and Brexit could disrupt the business environment this year.  No change in policy therefore looks likely until at least after the German elections in September.”

Germany’s GDP growth was confirmed at 0.4% in Q4 by Destatis, helping overall 2016 output to rise by 1.9% - the best figure in five years.

The U.K. economy grew at a faster clip than previously estimated in the fourth quarter, up 0.7%, or an annualized rate of 2.9%.  But the growth figure for all of 2016 was reduced to 1.8% from 2.0%, as the start of the year was revised downward, as reported by the Office for National Statistics.

But the Q4 growth number is expected to fall as consumers rein in their spending with rising inflation.

Speaking of inflation, Eurostat released the latest figures for the eurozone in January, up 1.8% annualized vs. 1.1% in December.  The January 2016 annualized pace was 0.3%.  Yes, inflation is picking up.

Germany’s annualized inflation rate was 1.9% in January; France 1.6%; Spain 2.9% (vs. -0.4% Jan. 2016); Italy 1.0%; U.K. 1.8%.

It was the first month since February 2013 that there were rising prices across all members of the euro area.

Separately, Germany’s producer price index for last month was 2.4%, 1.8% ex-energy, the quickest pace since March 2012.

And China became Germany’s most important trading partner in 2016, overtaking the United States for the first time, the U.S. falling to third place behind France, according to government statistics released Friday.  German Vice Chancellor Sigmar Gabriel has suggested the European Union should refocus its economic policy toward Asia, should the Trump administration pursue protectionism.  In 2015, the United States became the top trading partner for Germany, overtaking France for the first time since 1961.

But if you look at exports alone, the U.S. remained the biggest client for products “Made in Germany.”  [France second, Britain third.]

Eurobits....

--Regarding Greece’s bailout program, Prime Minister Alexis Tsipras told parliament today that a key review of its progress would be concluded by March 20.

“We will pull the country out of the bailouts...we will pull the country out of supervision, we will pull the country out of the crisis,” he said.

Bailout monitors are due to return to Greece following a meeting of finance ministers and IMF officials in Brussels early in the week, as the Greek government agreed to examine ways in which it can raise its income tax threshold and reduce pension spending – measures pushed by the IMF if the country is to meet its budget targets over the next decade or so.  Greek bonds rallied on the sudden optimistic turn in negotiations.

It didn’t hurt that Greece made a 2bn euro loan repayment to its European creditors this week, in a sign it remains a “reliable” partner.

But it’s still all about a 7bn debt bill looming in July, which Greece can’t make without a further injection of cash.

--On the Brexit front, which is about to heat up further in a big way, Berlin and Rome said they were backing the European Commission’s plan to rule out starting trade talks until Britain gives assurances on a multibillion-euro Brexit bill and citizens’ rights. France is seeking an estimated 60bn euro bill, while Spain is wary of attempts to “punish” the U.K.

European Commission President Jean-Claude Juncker said, “The bill (for the U.K.) will be, to put it somewhat crudely, very steep,” without giving specifics.  He also predicted the negotiations would be “difficult,” which I totally agree with.

The ‘bill,’ by the way, would cover past British spending commitments that will come due down the road on various items, such as economic assistance for Eastern European countries and sharing the pension bill for EU employees.

This is all preliminary, but Berlin’s stance is not a good sign for Britain’s negotiators, who are hoping Germany will take a softer approach. David Davis, Brexit minister, is adamant that trade talks will start in parallel with discussions on the terms of Britain’s withdrawal.

This coming Monday and Wednesday, British legislators will consider changes to the Brexit bill, including giving parliament a binding vote on the final deal.

Separately, U.K. net migration fell by 18% to 273,000, July to September, following the Brexit vote, the lowest level in more than two years, as there was a rise in emigration with Poles and other east Europeans leaving Britain.  [Poland stands to gain an estimated 30,000 service/back-office jobs in the financial sector, according to some experts.]  But there was a record number of arrivals from Romania and Bulgaria.

The French presidential race took another turn this week as centrist Emmanuel Macron gained in the polls after his centrist rival, Francois Bayrou, said he would not run in April’s election and instead urged his supporters to back Macron, in an effort to fend off Marine Le Pen and the National Front.  [Bayrou polled 9% when he ran in 2012 and was around 5% this year.]

French bonds rallied on the news, the bond market having been spooked recently by the potentiality of a win by right-winger, anti-EU Le Pen.  In the latest Opionway survey, Macron was up to 23% (and drawing huge crowds), with Le Pen at 26%.

An Elabe for L’Express magazine survey released Tuesday, before the Bayrou endorsement, had Macron at 17%.  Francois Fillon, the center-right candidate who is embroiled in the fake-pay scandal involving his wife, received 20-21%, with Le Pen at 27-28%.

But an Ifop daily tracking poll on Thursday had Macron at 22.5%, Fillon 20.5% and Le Pen at 26%.  A Harris poll had Le Pen at 26%, Fillon 21% and Macron 20%, while BVA had Macron on 21% and Fillon 19%, though these last two surveys were taken before Bayrou’s announcement.

As with all of these, however, Le Pen is expected to lose badly in a runoff to either Macron or Fillon.  Harris had Le Pen losing 60-40 in a second round to Macron, with Fillon winning 57-43.  The above-mentioned Elabe poll has Fillon winning a runoff with Le Pen 56-44.  The spread is narrowing.

But all the candidates have been making gaffes, or uttering controversial statements.  They have been going overseas, to both build up their foreign policy chops and attempt to capture the votes of French ex-pats.

The other day, Macron, in Algeria, said the country’s 132-year colonization of Algeria had involved “crimes against humanity,” which ticked off veterans of the Algerian war of independence.

As for Le Pen, her chief of staff was put under formal investigation in a probe into the alleged misuse of European Union funds to pay parliamentary assistants.  Le Pen has denied any wrongdoing. The European Parliament insists Le Pen repay money she is accused of wrongly paying the chief of staff and her bodyguard. She then refused to be interviewed by police investigating the case on Friday, saying in a letter she wouldn’t accede to the non-binding summons before the end of the June legislative elections.  Le Pen has not been ordered to answer questions, the prosecutor’s office said.

Also, on a trip to Lebanon on Tuesday, Le Pen refused to wear a headscarf to meet a senior Islamic cleric, thus canceling the meeting, while she pledged to restore ties with Syrian President Bashar al-Assad if elected.  [French law bans headscarves in the public service and for high school students, in the name of church-state separation and equal rights for women.  Le Pen wants to extend the ban to all public places.]

Back to Macron, he pledged this week that if he became president, he would make it very hard on the U.K. in Brexit negotiations, vowing to take a rigid line on access to the EU’s single market; though he said the “special relationship between France and Britain must be preserved,” notably on defense.

Then late Friday, Fillon suffered a big blow as French prosecutors appointed a magistrate to investigate allegations concerning the fake pay issue.  What this means is more resources are being put into the investigation.  The judge can still decide to drop the case, place the suspect under formal investigation, or send it to trial.  But it remained unclear if the probe could be concluded prior to the first round of voting, April 23.  If Fillon was elected president, under French law the investigation would be suspended for the five-year term.

--In the Netherlands, which holds the first key European election March 15, the Dutch populist leader, Geert Wilders, was forced to suspend public appearances because of security concerns after an employee of the government agency responsible for his 24-hour security was arrested for leaking information, such as on Wilders’ travel plans.

Wilders’ Freedom Party, or PVV, is leading in the polls, with the party running on an explicitly Islamophobic ticket, which includes a promise to close all mosques in the Netherlands.

Wilders regularly refers to Moroccan immigrants as “scum,” making him a target of terrorist groups.  Police confirmed this week the arrested suspect was of Moroccan descent but was not one of Wilders’ bodyguards.

Wilders tweeted: “If I can’t blindly trust the service that has to protect me, I can no longer function. This is unacceptable.”

The suspect was accused of leaking information to a Dutch-Moroccan criminal gang, according to a Dutch media outlet, NRC.

Remember, anti-Islam politician Pim Fortuyn was shot dead by a green activist before the 2002 election.

Two years later, Dutch satirist Theo Van Gogh was murdered after he produced a film on the treatment of women in some Islamic societies.

Wilders doesn’t make many public appearances, preferring to communicate via social media and occasional interviews.

According to the latest poll, the PVV is on track to win 28 of 150 seats in parliament, with a slim lead over Prime Minister Mark Rutte’s People’s Party for Freedom and Democracy, which would garner 25 seats.

Wilders would have first crack at then forming a government, but all of the mainstream parties have vowed not to serve in a government with the PVV.  [Duncan Robinson / Financial Times]

--In Germany, the center-left Social Democrats (SPD) are trailing Chancellor Angela Merkel’s conservatives in a poll from Allensbach, with Merkel’s bloc on 33% and the SPD at 30.5%. The anti-immigrant Alternative for Germany (AfD) is at 8.5%, while the far-left Linke and the Greens were both at 8%, and the liberal Free Democrats at 7%.

Turning to Asia, Chinese President Xi Jinping is shaking up his economic team ahead of the twice-a-decade National Party Congress in the fall, where Xi is expected to ask for more than another five years.  By making some of the changes now, he gets to pad party and government organs with loyalists.

China’s new home prices rose 0.2% month-on-month in January in 70 major cities, as government curbs continued to take the heat off the market, according to the National Bureau of Statistics. Compared with a year ago, though prices still rose 12.2%. China’s biggest cities, Shenzhen, Shanghai and Beijing saw price increases of 18.2%, 23.8% and 24.7%, respectively, from a year earlier, but Shenzhen’s and Shanghai’s monthly pace slowed.  [Reuters]

In Japan, the flash manufacturing PMI for February was 53.5, a 35-month high, but January exports were disappointing, up just 1.3% year-on-year, well below expectations and off December’s 5.4% pace.  Exports to China rose 3.1% vs. 12% in December, while exports to the U.S. fell 6.6% as the yen strengthened against the dollar.

In Taiwan, exports for January rose 5.2% year-over-year, with this being a leading indicator for demand for Asia’s exports and high-tech gadgets, such as Apple and Chinese smartphones.  Taiwan has a GDP target of 1.9% in 2017.

Street Bytes

--The Dow Jones registered its third straight week of solid gains, up 1.0% to a record 20821.  The S&P 500 gained 0.7% to a record 2367, while Nasdaq stumbled a bit at week’s end, finishing up just 0.1%.

The market is overextended, unless much of the Trump agenda is fulfilled in relatively short order, meaning by Secretary Mnuchin’s August goal.

--U.S. Treasury Yields

6-mo. 0.64%  2-yr. 1.14%  10-yr. 2.31%  30-yr. 2.95%

As noted above the yield on the 10-year broke out of its 8-week trading range of 2.40% to 2.48%.

With bond yields so low, Treasury Secretary Mnuchin floated the idea of a 50- or even 100-year bond to take advantage of the current market.

--The Organization for Economic Cooperation and Development, which monitors the economic output of its 35 members for the developed world, said 2016 growth was 1.7%, a slowdown from the 2.4% rate of growth recorded in 2015 for the club.

Overall, the OECD currently forecasts global economic growth will rise to 3.4% this year from 3.1% in 2016.  It issues a new forecast next month.

OPEC’s Secretary General predicted greater compliance with the supply deal last fall, though producers outside the cartel were falling short initially.  Mohammad Barkindo said: “All countries involved remain resolute in the determination to achieve a higher level of conformity.”

OPEC was conforming to the tune of 90% according to January’s data.

After a spike on the news last fall that OPEC was going to cut production, with some non-OPEC producers such as Russia following suit, oil has traded in a narrow range amid growing signs U.S. production is helping fill the supply void.

Separately, Saudi oil production averaged 10.46 million barrels a day in December, with exports climbing to 7.65mbd, according to data compiled by Bloomberg.

But Russia overtook Saudi Arabia as the world’s largest crude producer in December, pumping 10.49 million barrels a day.

The U.S. was the third-largest producer, at 8.8 million in December, according to the Joint Organizations Data Initiative in Riyadh.  [The JODI had Saudi exports at 8mbd, not the 7.65mbd Bloomberg came up with.]

Iran said on Thursday that an increase in oil prices to more than $55 per barrel was not in the interest of OPEC as it would lead to a rise in output by non-OPEC producers.  Iran’s oil minister, told the Fars news agency, “OPEC is determined to reduce its production to help manage the market.”

According to analysts at ABN Amro Bank NV, crude could plunge towards $30 a barrel if OPEC doesn’t extend its production cuts come July.

In the meantime, U.S. gasoline consumption fell 4.4% in January from a year ago, according to the Oil Price Information Service, which has led to a record amount of surplus gasoline, the U.S. Energy Information Administration reported Wednesday, with storage levels at their highest since the EIA began collecting data in 1990.

--Kraft Heinz pulled its $143 billion takeover offer for Unilever, saying in a joint statement that Kraft had “amicably” abandoned the offer.  But it was Unilever’s initial negative response that had Brazil’s 3G Capital and Warren Buffett walking away because it left a friendly transaction impossible and Buffett has an aversion to hostile deals.  And there were Brexitish concerns, with Anglo-Dutch Unilever being subject to British government approval as it moves to exit the European Union.

The merger would have combined Kraft’s Velveeta with Unilever’s Vaseline, which so grossed out board members on both sides, they chose to go in different directions.

Actually, this wasn’t the real reason, it just wasn’t to be, I guess.  Kraft will definitely be in the market for acquisitions.

--The latest Wall Street Journal/NBC News poll released late Friday has 43% of respondents still believing the Affordable Care Act is a good thing, while 41% said it was bad idea.  In January it was 45% good, 41% bad.  So Republicans are having a tough time convincing the public they can craft a better law.

31% believe a replacement would “make things better,” while 34% say they had little or no confidence it would.

--Macy’s CEO Terry Lundgren was on his final earnings call on Tuesday, as he steps down on March 23, handing the reins to President Jeffrey Gennette.  Lundgren, who will stay on as executive chairman, said 2016 “wasn’t the year we expected or hoped for.  We thought we could do better than that.”

In the fourth quarter ended Jan. 31, Macy’s sales declined 4 percent, to $8.8 billion, with same-store sales down 2.1%, the eighth straight quarterly decline.  The company isn’t looking for any improvement this year, projecting sales will fall between 3.2% and 4.3%.  But earnings did come in better than expected. 

The company closed 66 stores during fiscal 2016 and plans to close another 34, as it received $673 million in cash from real-estate transactions last year and continues to explore all options for its properties.

“The positive this time is that consumers have money to spend,” Lundgren, pointing to robust car sales, but “At some point, everyone will have a new car and there will be dollars that are freed up for other spending.”

Macy’s said 2017 will be a year for testing new concepts, including new merchandise options and enhanced technology.

--But while Macy’s struggles continue, Home Depot continues to kick butt, reporting net earnings of $1.7bn in the three months to the end of January, better than expected, with the company announcing a 29% increase in its quarterly dividend as well as a $15bn share buyback.

Sales were up 5.8% for the quarter, while annual sales rose 6.9% for the year to $94.6bn.  Comp-store sales in the U.S. rose 6.3%.

Commenting on the figures, chairman and CEO Craig Menear said the year had seen a “healthy housing market and strong customer demand.”

The company expects sales to grow a further 4.6% this year.

--And Walmart beat U.S. sales estimates for its fourth quarter, with comparable sales up 1.8%, better than the third-quarter pace of 1.2%.  Ecommerce sales surged 29%, quicker than Q3’s 20.6%.

Earnings beat consensus estimates by a penny at $1.30 a share, while overall revenue rose 1% to $130.9bn, just shy of projections.  Revenue for the year was $485.9 billion, an increase of 0.8%. Excluding the impact of currency, revenue was $496.9bn, an increase of 3.1%.

Walmart continues to invest heavily in ecommerce and in pushing down prices amid stiff competition.  The ecommerce initiative got a jumpstart via its acquisition of Jet.com.

--Kohl’s Corp.’s revenue declined in the final quarter of the year, with same-store sales down 2.2% - the fourth straight quarterly decline, though it matched the Street’s expectations.

In 2017, Kohl’s will focus on becoming a destination for active and wellness as it begins selling Under Armour Inc. products, with UA trying to break out of its sporting goods mold.

For this year, Kohl’s expects sales to be down 1.3% to up 0.7%.

--Nordstrom’s discounted the impact of dropping the Ivanka Trump fashion line with the company reporting better than expected sales and profits for the fourth quarter.

Nordstrom posted $201 million in net earnings vs. $180 during the fourth quarter the prior year, with net sales up 2.4%, to $4.2bn.  But same-store sales fell 0.9%.

The wrath of Donald Trump and his daughter’s line being dropped was, in the words of the retailer’s co-president, “negligible.  It’s not really discernible one way or the other.”

--Friday, J.C. Penney Co. Inc. said it would close about 130-140 stores over the next few months as it reported a bigger-than-expected drop in same-store sales for the holiday quarter.  JCP is also closing two distribution facilities, with the moves impacting up to 6,000 employees.

But the stores being closed represent less than 5% of annual sales, according to CEO Marvin Ellison.

For the quarter, same-store sales fell 0.7%, slightly more than estimates.  The shares dropped nearly 6% in response.

--Tesla Inc. CEO Elon Musk said he still plans to deliver his mass-market Model 3 electric sedan in July and will reach about 5,000 units per week by the end of the year, as per the company’s earnings report.  But there were concerns with the disclosure Tesla’s chief financial official, Jason Wheeler, is leaving after 15 months.

The Model 3 is the linchpin for Tesla’s plans to achieve the profitability that has eluded the company in all but two quarters of its history.

For the fourth-quarter, Tesla reported a loss of $219.4 million, 78 cents a share, better than expectations, on $2.3 billion in revenue, with the results the first for the company since the acquisition of panel installer SolarCity Corp. in late November.

Tesla expects to deliver 50,000 vehicles in the first half of 2017, and then ramp up steeply – with production of 10,000 units a week sometime in 2018.

Musk told analysts Wednesday, “The Model 3 is designed for manufacturing,” and is simpler to build than the Model S and Model X, both of which sell for more than $100,000.  “It’s a very compelling car, and we understand manufacturing a lot better than we did in the past,” he said.

Tesla’s so-called gigafactory is producing lower cost batteries at its giant Reno, Nevada plant, in partnership with Panasonic Corp.

Back to Q4, the company delivered 22,200 cars worldwide, with the total in 2016, 76,233, less than its initial forecast of 90,000.  [The loss for the year was $773 million on $7bn in revenue.]

But, again, it’s all about the Model 3, which had 373,000 pre-orders as of last May, the last time we heard anything about the reservation process.

And, it seems, cash burn, which came up on the earnings call after the release.  Elon Musk said the company was considering a number of options but “it probably makes sense to raise capital to reduce risk.”  It’s estimated Tesla needs $1 billion-$2 billion ahead of the Model 3 launch to minimize the risk of cash running too low.

Tesla shares closed at $273.50 before the earnings report after the market closed on Wednesday, but finished the week at $257.

This is going to continue to be one interesting story going forward.

--HSBC Holdings Plc’s fourth-quarter profit missed expectations as revenue surprisingly fell 3% to $11 billion, less than the $12.4bn analysts expected.  Adjusted earnings were $2.62bn, missing the estimate of $3.78bn, and missing on all key business units, according to an analyst from Sanford C. Bernstein.

CEO Stuart Gulliver said HSBC continues to pare back its sprawling global footprint and reduce expenses.  The bank increased its cost-cutting target by $1 billion to $6bn of savings, which shouldn’t give remaining employees a warm and fuzzy feeling.

--The saga of Wells Fargo and its accounts scandal continues, with four senior managers being fired the other day, including the head of its consumer credit-card business.

Wells has been working since September to combat furor over the opening of 2 million retail bank accounts without customers’ approval, Wells being fined $185 million as a result.  The board and management are conducting reviews on how the fake account practice proliferated.

It was all part of the bank’s cross-selling culture; persuading individual customers to sign up for more Wells Fargo products.

The bank hopes to wrap up its investigation before an annual shareholder meeting in April.  The board is expected to withhold 2016 bonuses from top executives as a way to send a message.

--Anglo-Australian miner BHP Billiton reported a profit of $3.2bn for the six months to Dec. 31, compared with a loss of $5.7bn in the same period a year earlier.  A resurgence in commodity prices certainly helped, as well as a recovery following write-offs from a fatal accident at a joint venture in Brazil.

BHP did warn of a marked rise in geopolitical uncertainty and more seriously protectionism.

“The outlook for the U.S. economy is uncertain.  The policy of the new administration points to a higher inflation environment than previously envisaged,” said the results statement.

--Vale, the world’s largest iron ore producer, also announced a return to profit in 2016, thanks to a rebound in iron prices.  Revenues at the Brazilian group increased 14.7% to $29bn, with net income of $4bn, compared to the previous year’s loss of $12bn.

--HP Inc. reported sales rose for a second straight quarter, as the personal-computer business rebounded.  Revenue was up 4% for the quarter ending Jan. 31 vs. a year earlier, owing to a 16% jump in the sales of notebook PCs, with overall PC shipments growing 6.6% even as global PC shipments were declining 1.5% for all suppliers, according to International Data Corp.

But the printing business is still key, accounting for three-fourths of last year’s profit, and sales in this business were down 3%.

--Meanwhile, the other half of HP, post split, Hewlett Packard Enterprises, saw its shares drop 7% as HPE cut is profit forecast, with the corporate hardware and enterprise software business of Hewlett-Packard Co. facing intense competition in its cloud-related business amid struggles with a strong dollar.

--Activist investor Carl Icahn took a stake in Bristol-Myers Squibb Co., fueling speculation the company could soon be put up for sale.  But the size of Icahn’s stake couldn’t be determined.

--Verizon and Yahoo said Tuesday that the previously announced $4.8bn sale of most of Yahoo to Verizon would be reduced by $350 million in a concession for security lapses that exposed personal information stored in more than 1 billion Yahoo user accounts.

The hacking bombshells Yahoo revealed after the initial offer by Verizon were the two biggest security breaches in internet history.  Yahoo is responsible for 50% of any cash liabilities as a result of any government investigations and lawsuits related to the breaches.

--The New York Times had a report detailing sexism, harassment and debauchery at Uber’s headquarters, with CEO Travis Kalanick announcing an investigation into the workplace culture.

A former employee, in a blog post on Sunday, detailed a litany of sexual harassment and mismanagement that she said she encountered while working there.

The Times interviewed more than 30 current and former Uber workers, and reviewed company emails, chats and meeting logs.  Among the incidents witnessed by sources:

“One Uber manager groped female co-workers’ breasts at a company retreat in Las Vegas.  A director shouted a homophobic slur at a subordinate during a heated confrontation in a meeting.  Another manager threatened to beat an underperforming employee’s head in with a baseball bat.”

--Last week I wrote of the exploding issue of distracted driving and the rising death toll on America’s highways, and this week the CEO of State Farm Automobile Insurance Co., the largest auto insurer by market share, said 36% of the people it surveyed in 2015 admitted to texting while driving, and 29% said they access the internet, compared with 31% and 13%, respectively, in 2009.  Among drivers 18 to 29, 64% said in the 2015 survey that they text while driving, and 54% said they use the internet behind the wheel. 

So you can imagine underwriting results at the major insurance companies have been worsening, and this means higher rates, even for those of us doing the right thing!  So a big [blank] you to everyone who is costing the rest of us major money!  And, boy, I mean that.  The average U.S. car-insurance premium is up 16% from 2011, according to the Insurance Information Institute.

Or as Robert Hartwig, an insurance professor at the University of South Carolina, told the Wall Street Journal, the growing number of wrecks “is swamping the much-heralded beneficial impacts of newer, safe vehicles.” [Leslie Scism and Nicole Friedman / WSJ]

--McDonald’s Corp. is looking to beverages to help perk up business as its all-day breakfast push has seemingly run its course.  So McDonald’s will offer $1 sodas and $2 McCafe specialty drinks across the U.S., turning to higher-margin beverages when cheap grocery prices are encouraging folks to eat at home.  Soft drinks of any size will cost $1.

--According to transportation analytics firm INRIX, Los Angeles had the worst traffic in the world among the 1,064 cities studied, with the average driver in L.A. wasting 104 hours sitting in gridlock during the busiest commuting times last year.  Moscow is second worst.

New York wasn’t far behind these two, costing drivers $2,533 a year in squandered fuel and productivity, which is actually greater than L.A., though New York motorists spent 89 hours on average in gridlock traffic.

--Restaurant Brands International, the fast-food chain controlled by Brazil’s 3G and Warren Buffett, is nearing a deal to acquire Popeyes Louisiana Kitchen, which I’d be very fired up over because RBI owns Burger King and Tim Hortons.  We don’t have a Kentucky Fried Chicken near me, but we do have a BK I frequent and I’m assuming Burger King could incorporate some Popeyes in its operations.

The plain fact is, I am incapable of making good fried chicken myself and I need help!  [For my New Jersey area readers, remember back in our youth...way back... “Don’t cook to-night...call Chicken Delight!”]

--In a poll of Germans for GfK, 46% said they will not visit the U.S. after Donald Trump took office.  36% said they’d continue to travel to America as they differentiate between politics and Americans’ warm-heartedness, with about 17% stating national politics had no impact on their travel plans.

This has an impact on tour operators like TUI AG and Thomas Cook Group.

--Israel’s jobless rate was 4.3% in January, according to the Central Bureau of Statistics.  The economy grew 4% in 2016, but is forecast to slow to 3.2% this year.

--SeaWorld Entertainment reported that both attendance and revenues fell across its 12 parks in 2016.  Fourth-quarter earnings are released next Tuesday.

In all, 22 million people visited SeaWorld parks last year, a drop of 2 percent from 2015.  Year-end revenues are estimated to be $1.34 billion, also down 2 percent from 2015’s $1.37bn.

SeaWorld released these figures ahead of a forthcoming debt refinancing.  The company has aggressively cut costs, including the elimination of 320 jobs.  PETA continues to create problems.  [Lori Weisberg / San Diego Union Tribune]

--Sodastream recalled thousands of its bottles over concerns they could explode when used.  The company said it had discovered a manufacturing defect with one type of bottle that meant it could burst when pressurized.

About 59,000 bottles sold in the U.S. and Canada are affected and it involved blue-tinted one-liter bottles marked dishwasher safe, with a blue plastic cap and bottom, and with an expiration date of “04/2020.”

Foreign Affairs

Iraq/Syria/ISIS/Russia/Turkey:

Turkish-backed rebels said they seized an ISIS stronghold in northern Syria, al-Bab, which further shrinks the militants’ territory, though it retains Raqqa and much of the neighboring province of Deir Ezzour.

Turkey played a central role in the fight for al-Bab, launching airstrikes on targets in the city, but up to 380 civilians died in the two-week offensive to take the city.  [At least 44 ISIS militants were killed in the fighting.]

However, a car bomb near the city on Friday, today, killed up to 45 civilians and Syrian opposition fighters, proving ISIS still had a significant presence in the area.

A new round of peace talks with the Syrian government is underway in Geneva, though no one is expecting any breakthroughs.  The goal is just to advance to another round later.

ISIS has been steadily losing territory in both Syria and Iraq and now, in Syria, the debate is over which force leads the battle to take Raqqa. Turkey wants a force dominated by Arab rebel fighters since Raqqa is a predominantly Arab city, while the U.S. would like to see the Kurdish-led SDF in the battle.  [The Kurdish YPG militia leads the SDF.]

Separately, Russian President Vladimir Putin said on Thursday that as many as 4,000 Russians are still fighting in Syria on the side of the militants, according to Russian intelligence.

Four Russian military advisers in Syria were killed by a roadside bomb near Homs this week.

And the Israeli Air Force struck a Hizbullah weapons shipment in Syria on Wednesday, allegedly striking targets near Damascus, with Syrian media reporting “loud explosion sounds.”

Lebanese media said the Israeli jets struck from within Lebanon, circling the Beqaa Valley and Baalbek, so as not to be blocked by the Russian defense systems operating in the area.

The IDF (Israel Defense Forces) declined to comment as the army never responds to foreign reports.

The attack comes in a week when Hizbullah leader Hassan Nasrallah made several aggressive statements in an appearance on Iranian television and interviews with Lebanese media, saying “Hizbullah will have no red lines in the next war with Israel,” and that: “Israel should think a million times before it goes to war with Lebanon.”

Lebanese President Michel Aoun defended the weapons Hizbullah has, saying the arms are integral to defending Lebanon against Israel. [Anna Ahronheim / Jerusalem Post]

In Iraq, security forces, with substantial U.S. backing, launched a large-scale offensive to seize the western side of Mosul, making progress by week’s end, including the taking of the international airport.  Up to 450 U.S. Special Forces and advisers are directing airstrikes against ISIS positions and advising Iraqi ground commanders on how best to advance in Mosul. The fighting inside the urban areas should be intense.

Iraqi aircraft also were believed to have carried out their first airstrikes on ISIS inside Syria Friday targeting militants responsible for recent bombings in Baghdad, but ISIS attacked a border guard regiment near Jordan, killing 15.

Secretary of Defense Mattis was in Iraq this week and he plans to unveil a detailed plan to defeat Islamic State by month’s end. He has hinted at granting U.S. officers more leeway in the fight.

[Mattis also said in Baghdad that the United States wasn’t in Iraq to take the oil.]

Iran: President Hassan Rouhani warned Arab countries not to be enticed by Israeli attempts to find allies in the Arab world.

Speaking at a conference in Tehran that was focused on Iranian support for the Palestinians, Rouhani said: ‘The occupying regime, in an attempt to normalize its situation, has for the first time referred to certain Arab countries as its allies against the resistance front, instead of describing them as its enemies.”

Rouhani called on Arab countries to be vigilant in the face of Israeli “plots.” Rouhani lamented Arab countries giving Israel a pass on its treatment of the Palestinians. [Jerusalem Post]

Separately, Supreme Leader Ayatollah Ali Khamenei rejected calls for “national reconciliation,” meaning opposition leaders Mir-Hossein Mousavi and Mehdi Karroubi – leaders of the 2009 Green Movement protests that followed the disputed 2009 election – will remain under house arrest, which means President Rouhani won’t fulfill a key campaign pledge of his before winning office: that they would be released.  [Shashank Bengali / Los Angeles Times]

The Iranian presidential election is in about three months, May 19, and the death of key ally, former President Ali Akbar Hashemi Rafsanjani, continues to hurt Rouhani. 

Recall, I was railing over President Obama’s refusal to utter any words of support for the Green Movement in ’09. 

Israel, part II: Sergeant Elor Azaria, the young Israeli soldier who killed a wounded and incapacitated Palestinian assailant, was sentenced to 18 months’ imprisonment on Tuesday, in a show of leniency that drew condemnation among Palestinians after one of the most divisive trials in Israeli history, with the public literally split 50/50 on Azaria’s guilt or innocence.  In one poll during the trial, nearly half of Israeli Jews said any Palestinian attacker should be killed on the spot, while the Israeli military accused Azaria, then 19, of violating open-fire rules and its ethical code.

A three-judge military court convicted Azaria of manslaughter and he could have received up to 20 years in prison.  Prosecutors had asked for three-to-five years, noting Azaria had shot an assailant who had carried out an attack minutes earlier.

Israeli Defense Minister Avigdor Lieberman, commenting on Facebook after the sentencing, said the “terrorist had come to kill Jews and everyone must take this into account.”

I haven’t seen an official statement from Prime Minister Netanyahu, who was on an official visit to Singapore and Australia.

Russia / NATO: At the Munich Security Conference, U.S. Republican Senator Lindsey Graham promised on Sunday that Congress will press ahead with a bill to sanction Russia for interfering in the U.S. presidential election.

The year 2017, he said, “is going to be a year of kicking Russia in the ass in Congress.  If you’re worried that we’re not going to look long and hard at what Russia did in our election because Trump won and Republicans are in charge, you don’t need to worry about that.  We are.  Because if we don’t, it could be the Chinese or Iranians next, it could be the Republicans next time.”

As to Europe’s big elections this year, Graham said: “To our German friends, you’re next. To our friends in France, they’re coming after you.  To my friend Mr. Lavrov [Russian foreign minister], I hope you finally suffer some consequences for what you and your regime have been doing to democracies.”  [Financial Times]

Secretary of Defense Mattis said in Munich, the transatlantic bond was “as strong as I’ve ever seen it,” and emphasized that America remained “rock solid” in its support of Article 5 – NATO’s core “one for all, all for one” collective defense tenet.

Vice President Mike Pence told the gathering: “Know this: The United States will continue to hold Russia accountable even as we search for new common ground, which as you know, President Trump believes can be found.”

Speaking in his first visit to Brussels on Monday, Pence said Washington was committed to cooperation with the EU and NATO, saying the U.S. and Europe share the “same heritage, values and purpose” to promote freedom, democracy and the rule of law.

“It is the strong commitment of the U.S. to continued cooperation and partnership with the EU,” he said, following a meeting with European Council President Donald Tusk.

Pence added: “Your loss at the hands of barbaric terrorism is felt equally in the households of America. This will require greater coordination and intelligence sharing among EU member states and between the EU and NATO.”

Pence also said the Trump administration would continue to support efforts in Poland and the Baltic states through NATO to “continue to hold Russia accountable” for “its efforts to redraw national borders by force.”

The Trump government was searching for new “common ground with Russia which president Donald Trump believes can be found,” Pence said.

Mr. Tusk, a former prime minister of Poland, said, “Reports of the death of the West have been greatly exaggerated,” and that the EU was “counting on the U.S.’s wholehearted and unequivocal support for the idea of a united Europe.”  [Financial Times]

Pence did reiterate President Trump’s stance that NATO members had to meet the 2% defense spending target and quickly, saying: “America will do our part. But Europe’s defense requires Europe’s commitment as well as ours.”

Editorial / Wall Street Journal

“Vice President Mike Pence spent the past few days trying to reassure Europeans about America’s commitment to NATO, but in some continental precincts that isn’t enough. Europe’s mandarins are sore that Mr. Pence didn’t embrace the European Union with similar enthusiasm, as if an American Administration is responsible for the EU’s fate....

(European Commission) President Jean-Claude Juncker lectured Monday that the EU is more important to the U.S. economy than ‘some in the U.S. do think.’  He also said: ‘I do think the United States needs a strong, united European Union on all possible issues.’  There was also grumbling that Mr. Pence had underscored his commitment to NATO but hadn’t uttered the words ‘European Union’ at his dinner Sunday with Belgian Prime Minister Charles Michel.

“Come on, guys.  When are you going to take yes for an answer?  NATO is a mutual-defense pact to which the U.S. belongs, and the U.S. accounts for some two-thirds of alliance expenditures.  After Donald Trump’s comments that NATO is ‘obsolete,’ Europeans ought to be pleased that his first major emissaries have embraced the alliance....

“The EU is in trouble because it has failed for at least a decade to deliver growth and jobs. It has failed to police Europe’s burning peripheries, allowing the Continent to be overrun by refugees. It has failed to deter terror attacks or promote greater social cohesion.  Perhaps most troubling is that it has failed to hear the voices of popular protest against these failures.  EU leaders tell their voters to shut up and heed their betters. No wonder Europe’s versions of Donald Trump are on the rise....

“Mr. Trump can be a bully, but in this case he is merely saying that Americans won’t sacrifice to defend Europe if Europeans won’t sacrifice to defend themselves.  Mr. Trump could do much good if sometime soon he gave a speech of his own underscoring the U.S. commitment to defending Europe and common Western values.  But the European Union is going to have to save itself.”

As for Russia, Trump and a potential “deal,” Eliot Cohen of Johns Hopkins University, one of America’s foremost foreign policy experts, said, ceding Eastern Europe to Moscow – something that has been close to heretical in Western diplomacy since Yalta – in exchange for freebies “would be both stupid and immoral and would reverse every fundamental tenet of American foreign policy since World War II.”  [TIME]

No details of a deal are imminent.

In the meantime, as TIME’s Massimo Calabresi and Simon Shuster wrote, “Leaders in Bulgaria and Moldova are listing back toward Moscow.”

And then you have the situation in the tiny Balkan nation of Montenegro, where “more than a dozen Kremlin-linked plotters were allegedly preparing to storm the parliament and assassinate its Prime Minister.  Their goal, according to the government’s investigators, was to stop the country of 620,000 from joining NATO, which would give the U.S.-led alliance control of nearly every northern Mediterranean port from Gibraltar to the Bosporus.  On a tip from an informant, real Montenegrin police rounded up the plotters as polls opened for the vote in October.  Two ringleaders, both suspected agents of the Russian intelligence services, are now back in Russia.” [Calabresi and Shuster]

Senior British and NATO sources said this week that the plot appeared to be genuine and was orchestrated by Russian intelligence officers with backing from Moscow, the Sunday Telegraph reported.

Meanwhile, Vladimir Frolov writes in the Moscow Times that when it comes to a potential deal with the Trump White House, “Russia would be ceded a sphere of influence in Eastern Europe in return for a military alliance against ISIS, more nuclear reductions and efforts to curtail the power of Iran and China.”

But the Kremlin has little to offer on its end.

Frolov: “In other words, the deal would amount to a fire sale of U.S. interests....Russia is too dependent on Iran and its proxies in Syria to engage with the U.S. in ratcheting political and military pressure on Tehran.  It is no longer feasible for Moscow to consider joining forces with the United States to contain China. In fact, increased U.S. pressure on China may prompt Beijing to seek closer security ties with Russia.  Nor is Moscow interested in more nuclear arms control.”

Finally, Vitaly Churkin, Russia’s permanent representative to the United Nations for more than a decade, died suddenly in New York City on Monday, a day shy of his 65th birthday.  He is the fifth Russian diplomat to die in a very short period of time.

North Korea / China: Malaysian police announced Friday that the poison used to kill Kim Jong Nam, the half brother of North Korean leader Kim Jong Un, was VX nerve agent, a substance listed as a chemical weapon.

The police chief said the substance was listed a chemical weapon under the Chemical Weapons Conventions of 1997 and 2005.

Samples were taken from Kim’s skin and eye and was first identified in an analysis by the Center for Chemical Weapons Analysis of the Chemistry Department of Malaysia.

The announcement came a day after North Korea denied any responsibility for Mr. Kim’s death, accusing Malaysian authorities of fabricating evidence of Pyongyang’s involvement under the influence of South Korea.

As for the two women arrested for carrying out the applying of the poison to Kim Jong Nam’s face, relatives insist they were duped into doing so, though Malaysian authorities say otherwise.

Pyongyang issued a veiled, rare attack on China after Beijing halted coal imports from Pyongyang as part of sanctions to rein in its nuclear weapons program.  Coal has accounted for 34% to 40% of North Korean exports in the past several years, and almost all of it was shipped to China, according to South Korean government estimates.  This is a big move...and encouraging.  [China has banned coal imports before, but this came with major loopholes and deliveries continued.  This time seems different.]

A commentary published by the Korean Central News Agency on Thursday did not mention China by name or the coal ban, but referred to a “neighboring country” which often claims to be friendly.

“This country, styling itself a big power, is dancing to the tune of the U.S. while defending its mean behavior with such excuses that it wasn’t meant to have a negative impact on the living standards of people in the DPRK but to check its nuclear program,” the state-run news agency said.

The commentary went on to criticize its neighbor for “unhesitatingly taking inhumane steps such as totally blocking foreign trade related to the improvement of people’s living standards.”

The Global Times, a Chinese Communist Party mouthpiece, editorialized that even though it was not the first time North Korea’s state media had criticized China, the wording was “unprecedentedly vehement” and such language was enough to cause a fallout between Beijing and Pyongyang.

The paper said China should stand firm over U.N. sanctions, but called for Beijing to avoid getting entangled in a war of words with Pyongyang.

The paper also warned North Korea not to become China’s enemy as it was only enforcing sanctions, which was a better option for Pyongyang than China joining the U.S. in confronting the nation.  [South China Morning Post]

Editorial / Wall Street Journal

“Malaysian police are assembling evidence that Pyongyang is responsible for last week’s chilling airport murder of Kim Jong Nam, the estranged older brother of North Korean dictator Kim Jong Un. This is one more reason the U.S. should redesignate North Korea a state sponsor of terror, a status it never should have lost in 2008.

“According to investigators and video from the scene, the attack was carried out by two women, from Indonesia and Vietnam, who had practiced in local shopping malls under the direction of several North Korean men who joined them at the airport and flew out of the country minutes later.  On Wednesday police said a senior diplomat from Pyongyang’s embassy and an employee of its state airline were wanted for questioning.  North Korea has denied involvement, slammed Malaysia’s investigation as a corrupt foreign plot and demanded repatriation of the body....

“Beyond question is that this attack fits a pattern for North Korea, which has long targeted defectors and critics in China and especially in South Korea....

“The United Nations Panel of Experts has repeatedly cited North Korean shipments of illicit arms and munitions to Iran, the world’s leading state sponsor of terror, and of chemical weapons-related materials to Syria, which has used such weapons against civilians and is also a designated terror sponsor.  Pyongyang’s 2014 cyberattack on Sony Pictures may not qualify as terrorism, but its threats against movie theaters might, as would its attempts to hack and damage South Korean nuclear-power plants.

“The U.S. last year placed significant new sanctions on North Korea, so labeling it a terror sponsor would have less practical effect today than years ago.  But it would signal that the new Trump Administration is willing to recognize the North Korean threat as it is, not as some wish it to be.  Especially if followed by long-overdue sanctions on the Chinese firms that sustain the Pyongyang regime, this would put Kim Jong Un and his Chinese patrons on notice.”

President Trump, in his Thursday Reuters interview, said that the North Korea situation, including the recent ballistic missile test, is “a very dangerous situation, and China can end it very quickly in my opinion.”

As for China and its claim to nearly all of the South China Sea and its strategic shipping lanes, according to state media reports, Beijing is drafting a revision to the nation’s maritime “traffic safety” law.  While in Chinese waters, according to the changes, any foreign submarine would be required to stay surfaced and display its national flag.  It would also need to get approval before entering Chinese waters, and report to maritime management authorities.  China would reserve the right to bar or expel foreign ships deemed to threaten “traffic safety and order.”  [Defense One]

Can you say confrontation with the United States?  Potentially of the nuclear variety?  Seriously.

This issue bears close watching, to say the least.  Reuters reported this week that China is also nearly finished building almost two dozen structures on its artificial islands in the South China Sea “that appear designed to house long-range surface-to-air missiles,” two U.S. officials told the news agency.

So much for non-militarization of the area, the world’s busiest shipping lanes.

Meanwhile, Chinese health authorities have issued stern warnings over the H7N9 bird flu outbreak, admitting the situation had already affected half of the country and could lead to more fatalities.  I didn’t realize the virus has killed at least 87 people, as of mid-February, including 79 in January; the highest death toll since the first known human infection in 2013, with most of the cases in the Pearl and Yangtze River delta areas.

In the previous three years, January’s death toll had ranged between 20 and 31.

But the World Health Organization said there were no signs of sustained human-to-human transmission in bird flu cases this year.

Random Musings

--Tomorrow, Saturday, the Democrats will vote on their party’s next chair to head the Democratic National Committee, with Rep. Keith Ellison (Minn.) squaring off against former Labor secretary Tom Perez.  In polling of the 447 voting members conducted by The Hill, Ellison led with 105 supporters to Perez’s 57.  Other candidates have smaller support and 50 were said to be undecided.  You need a majority, so the race could easily extend to multiple rounds.

Ellison has the backing of the Bernie Sanders coalition, including Mass. Sen. Elizabeth Warren and Senate Minority Leader Chuck Schumer.

Perez has the endorsements of former Vice President Joe Biden and former Attorney General Eric Holder (i.e., he has the support of Barack Obama).

The election of Ellison, a progressive leader in the House and the first Muslim elected to Congress with an ‘interesting’ background, would be a gift to Republicans.

Bernie Sanders, following Biden’s endorsement, put out a statement panning Perez and Biden as part of the “failed status quo.”

--In a Pew Research Center poll, Donald Trump’s approval rating was 39% vs. a 56% disapproval mark, while a Fox News poll had Trump at 48% approval, 47% disapproval.

A Gallup presidential tracking poll, with a rolling three-day average, had Trump’s approval up to 43% as of Wednesday, 52% disapproval, vs. a low of 38% approval the prior week.  [It was 45% in this survey when Trump was inaugurated.]

--According to a Harvard-Harris survey commissioned by The Hill, 44% of Americans say the Senate should confirm Neil Gorsuch for the Supreme Court, with 32% saying they’re unsure and 25% believing he should not be confirmed. This bodes well for him.  While Republicans hold just 52 seats and need 60 to break a filibuster unless Senate Majority Leader Mitch McConnell invokes the nuclear option, allowing for a simple majority, it is possible eight Democrats would defect, among the 10 up for reelection in 2018 in states that Trump won.

We know our boy Joe Manchin (West Virginia) will! 

--A survey by the Pew Research Center found that 52% of Republicans and Republican-leaning independents would put their faith in the president if there was a disagreement between Trump and congressional leaders.

The exception: Republicans under the age of 40, who said they are more inclined to trust Congress.

Job approval ratings for GOP leadership were up to 34%, compared to 19% in September 2015.  For Democrats, that approval rating was 37%, up from 34%.

Also, 57% of people have an unfavorable view of Trump, while 41% have a favorable view of the president.

John McCain was viewed favorably by 57% of respondents.

--A new Quinnipiac University poll found that when registered voters were asked who they “trust more to tell you the truth about important issues,” 52% picked the media, 37% President Trump.

But the same survey found that by a 50-45 margin, voters felt the media has treated Trump unfairly.  Yet voters are even more critical of Trump’s treatment of the media, with 61% disapproving and 35% approving.

Independents disapprove of Trump’s treatment of the media by a 59-35 margin.

--For all the Republican congressman who have held testy town halls while back in their districts this week, you had the likes of California representative Darrell Issa, whose district covers coastal San Diego and Orange counties.  Issa opted not to bow to pressure and hold an in-person town hall and it’s a tough decision.  Some say it’s a “lose-lose” proposition for a Republican these days, but if the crowd is particularly vicious and uncivil, I would think the congressman could get a sympathy vote or two by standing his ground.

Carl Luna, a political science professor at San Diego’s Mesa College told the Los Angeles Times: “If people are trying to push you in a direction you don’t want to go, you don’t show up and they attack you,” he said.  “You do show up, and you get beaten up.”

Gary Jacobson, a poli-sci professor at UC San Diego, said even politicians in safe seats may choose to avoid town halls, fearing a tense event like Utah Republican Congressman Jason Chaffetz faced the other week.

“You can imagine some Republicans saying ‘Why bother?’  Those people are not going to vote for me anyway,” he said.

But Jacobson added, representatives brush off protesters and town hall requests “at their peril.”

“They are whistling in the dark if they think this is all ginned up by left-wing organizations, because it does represent that real people are really worried.”

--The Air Force can’t figure out what the heck President Trump was talking about when he said he’s negotiated $1 billion in savings for the program to develop, purchase and operate two new Boeing Co. jets to serve as Air Force One.

“To my knowledge I have not been told that we have that information,” Colonel Pat Ryder, an Air Force spokesman, told reporters Wednesday when asked how Trump had managed to reduce the price for the new presidential plane.  “I refer you to the White House,” Ryder said.

Trump has been boasting that he’s managed to personally cut costs of the F-35 fighter jet built by Lockheed Martin Corp. and Boeing’s Air Force One.

“They were close to signing a $4.2 billion deal to have a new Air Force One,” Trump said at his campaign rally in Florida, Saturday.  “Can you believe this? I said, ‘No way.’ I said, ‘I refuse to fly in a $4.2 billion airplane.  I refuse.”

Trump then said, “We got that price down by over $1 billion, and I probably haven’t spoken, to be honest with you, for more than an hour on the project.”

Ryder said Boeing is now operating under an initial $172 million contract to work on “risk reduction activities” and the service expects to award contracts by June 30 for preliminary aircraft design and for the two unmodified 747-8 aircraft that will be adapted as Air Force One.

In January, Defense Secretary James Mattis ordered a review of how to “substantially reduce the program’s costs.”  [Bloomberg]

--Breitbart editor Milo Yiannopoulos announced his resignation from the far-right news website Tuesday after a 48-hour firestorm over comments that surfaced in which he appeared to condone pedophilia.

“Breitbart News has stood by me when others caved,” said the creep.  “They have allowed me to carry conservative and libertarian ideas to communities that would have otherwise never heard them,” he said in a statement.  About a dozen reporters at Breitbart had threatened to resign if Yiannopoulos wasn’t fired.

His departure came a day after his planned address at CPAC was cancelled, after the president of the group sponsoring the event gave him the boot for allegedly advocating pedophilia.

American Conservative Union president Matt Schlapp said, “Due to the revelation of an offensive video in the past 24 hours condoning pedophilia, [we] have decided to rescind the invitation to Milo Yiannopoulos to speak at the conference.”

Yiannopoulos had responded to the charges on Facebook, but Schlapp, and others, felt it was far from sufficient.

“It is up to him to answer the tough questions and we urge him to immediately further address these disturbing comments,” said Schlapp.

On the video, Yiannopoulos said sex between 13-year-olds and older men can be “life-affirming” in the gay community.

“In the homosexual world...those relationships in which those older men help those young boys discover who they are and given them security and safety and provide them with love and a reliable, sort of rock, where they can’t speak to their parents,” he said.

Milo’s book, “Dangerous,” was also canceled by Simon & Schuster.

Yes, a well-deserved awful stretch for one of the vile people on the planet, though, were it not for the pedophilia remarks, he had a right to speak, and those who launched violent protests at Cal-Berkeley last month were just as much in the wrong.

--The mayor of San Jose was forced to acknowledge that he failed to properly notify residents to evacuate during a flood emergency early Wednesday, with many receiving their first notice when firefighters showed up in boats in their neighborhood.

Water from the swollen Coyote Creek forced 14,000 to leave their homes, with another 22,000 encouraged but not required to evacuate.

The National Weather Service said the water level in the 30-mile long creek reached a 100-year high during the past week’s storm.

--Bill Gates warned that hundreds of millions could be wiped out by viruses that have been genetically engineered by terrorists, with technological and scientific advances allowing terror groups to turn viruses into weapons of mass destruction.

Gates said: “Natural epidemics can be extremely large.  Intentionally caused epidemics, bioterrorism, would be the largest of all.  With nuclear weapons, you’d think you would probably stop after killing 100 million.

“Smallpox won’t stop. Because the population is naïve, and there are no real preparations.  That, if it got out and spread, would be a larger number.”

Gates made his comments at the Munich Security Conference last weekend.  He said developments in genetic engineering were escalating at a “mind-blowing rate.”  That means biological warfare ambitions are now available to smaller terrorist groups with limited resources.

--Norma McCorvey, the woman behind the 1973 Supreme Court ruling Roe v. Wade that legalized abortion, died last Saturday.  She was 69.

McCorvey, who went by the pseudonym Jane Roe, challenged the constitutionality of abortion laws in Texas in 1971. At the time, it was illegal for women to have abortions unless their lives were at risk.

The case made it to the Supreme Court where justices ruled it was legal to have an abortion because of a woman’s right to privacy under the 14th Amendment.

But the ruling was too late for McCorvey, who couldn’t have an abortion and she gave the baby up for adoption.

Later, McCorvey became an anti-abortion activist and filed a motion to have the case overturned.

--We note the passing of Bob Michel, who served as leader of the Republican House minority for 14 years, but was skilled at seeking compromise under the presidencies of Ronald Reagan and George H.W. Bush, which allowed them to pursue their agendas.

Michel was the kind of leader some of us yearn for today.  He retired one term too soon, before the GOP House majority that swept into power in 1994, leaving Newt Gingrich to become House Speaker rather than him.

Bob Michel was 93.  One of the good ones.

--The “Blind Sheikh,” Omar Abdel Rahman, who was found guilty of a 1993 plot to bomb the Holland and Lincoln Tunnels, the George Washington Bridge, the United Nations and the Manhattan headquarters of the FBI, all in one day, died last Saturday. He was 78.

Abdel Rahman became one of the most influential and fearsome theologians for Islamist fundamentalism that swept the Middle East.

Before coming to the United States, he was put on trial in Egypt and in 1980, according to courtroom testimony there, “he gave a blessing to a cell of militant Islamists, emboldening them to assassinate President Anwar el-Sadat during a military parade on Oct. 6, 1981, in Cairo.”  [New York Times]

Twice, though, he was acquitted of instigating Sadat’s death.  In 1990, he fled Egypt for the United States. [No extreme vetting then.]

Rahman lent help in various forms to those who carried out the first World Trade Center bombing in 1993.

Upon his passing, he immediately burned in Hell.

--You ever wonder why we may never see President Trump at Camp David?  As he told a European journalist before he took office: “Camp David is very rustic, it’s nice, you’d like it.  You know how long you’d like it?  For about 30 minutes.”

The Navy-run facility costs taxpayers about $8 million a year to operate and he could just close it; opting for Mar-a-Lago and Trump Tower instead; which are far tougher for the Secret Service to secure and at a far greater annual cost than $8 million!  Sad!

Hopefully Camp David is maintained for future presidents.  President Ronald Reagan went there 150 times, riding his horse and playing host to the likes of Margaret Thatcher.  Dwight D. Eisenhower convalesced there after a heart attack.  [Camp David was renamed after Ike’s father and grandson, according to W. Dale Nelson’s history of the retreat, “The President Is at Camp David.”]

President Jimmy Carter struck a peace accord  at Camp David between Egypt and Israel in 1978.

President George W. Bush used it 149 times, according to CBS news reporter Mark Knoller.  But Barack Obama only used it 39 times.  [Michael Rosenwald / Washington Post]

--We note the passing of Alan Colmes, a long-time radio and television commentator, best known as co-host with conservative Sean Hannity on “Hannity & Colmes” on Fox News.  Colmes was known as the liberal in the “lion’s den” of Fox.  He died of lymphoma at the age of 66.

--The killing of the Indian engineer in an Olathe, Kansas bar on Wednesday by a 51-year-old white man, a clear hate crime, is not only tragic but it is rapidly becoming a huge story in India, as social media there trashes Donald Trump, his immigration policies, and the United States.

I once sold books door-to-door in Olathe, long ago, summer of 1978.  It was a very pleasant community.

But I hope the suspect, Adam Purinton, is put to death as soon as possible.  He allegedly shouted “get out of my country” before shooting the victim and his Indian friend.  Purinton also apparently thought the two were from the Middle East.  Our prayers to the victim’s family and to the two wounded, including a hero, Ian Grillot, who tried to intervene. [The friend has been released from the hospital.]

--Finally, an international team of astronomers has discovered a star named Trappist-1, around which seven Earth-size planets that could potentially harbor life orbit.

Trappist-1 is a dwarf star about 235 trillion miles from Earth, or about 40 light years, which researchers claim is actually quite close, and they feel like they can study the planets in great detail, owing in part to the orientation of their orbits.

One or more of the exoplanets – planets around stars other than the sun – could be at the right temperature to be awash in oceans of water, the astronomers said, based on the distance of the planets from Trappist-1.

Amaury H.M.J. Triaud, an astronomer at the University of Cambridge and a member of the research team, said, “I think that we have made a crucial step toward finding if there is life out there. Here, if life managed to thrive and releases gases similar to that we have on Earth, then we will know.”

The planets were discovered as a result of the light from the dwarf star dimming from time to time, ergo a body is passing in front of the star, blocking part of the light.  [New York Times]

It would be way cool, to state the obvious, if scientists can determine in the next decades if there is indeed life there.  What would it be like?

I like the explanation I read in an extensive report on the intelligence of octopuses (No. 5 on my All-Species List).  The author said for those wondering what alien life could be like, we have an example right in front of us.

You know one of a million things I didn’t know on this general topic?  That dwarf stars live longer than larger ones like the sun.

---

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

God bless America.

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Gold $1258...highest since early November
Oil $54.02...highest weekly close since July 2015

Returns for the week 2/20-2/24

Dow Jones  +1.0%  [20821*]
S&P 500  +0.7%  [2367*]
S&P MidCap  +0.1%
Russell 2000  -0.4%
Nasdaq  +0.1%  [5845]

Returns for the period 1/1/17-2/24/17

Dow Jones  +5.4%
S&P 500  +5.7%
S&P MidCap  +4.6%
Russell 2000  +2.8%
Nasdaq  +8.6%

Bulls 61.2
Bears 17.5 [Source: Investors Intelligence]

Have a great week. 

Brian Trumbore