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For the week 12/25-12/29
[Posted 11:30 PM ET, Friday]
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Looking back at my “Week in Review” from last year at this time, 12/31/16, I said of the then-coming Trump presidency:
So you tell me what is going to happen on the Russia and China fronts the next four years (or 3-6 months)? You tell me what Kim Jong-un is going to do? You tell me when that inevitable WMD terror attack is coming...or that cyberattack that takes out the power grid for a third of the nation?
The thing is, what is really different is the man who takes over on Jan. 20, Donald Trump.
It’s not enough to say, well, I like his prime Cabinet selections in terms of national security, which I do...Tillerson (assuming he doesn’t have a secret pact of some kind with Russia’s Igor Sechin), Mattis, and Kelly.
I loved the Cabinet George W. Bush brought into the White House in Jan. 2001...Cheney, Rumsfeld, Powell and Rice. What a powerful, experienced lineup...and yet they still created a mess...then exacerbated ten-fold by Barack Obama.
We just don’t know what Donald Trump will do? We all should hope that he’s a spectacular president, that four years from now he’s captured 58% of the popular vote in a real landslide, not the fake one he talks about.
That would be a sign that relations with Russia and China are on a stable footing; that there have been no major military conflicts in the South China Sea; the status of Taiwan is unchanged; Russia gets to keep Crimea but gives up on further designs for Eastern Ukraine; Putin doesn’t make a move on the Baltics; Syria is still a hellhole but the conflict is largely confined; Iraq, having finally routed ISIS, with major U.S. help, is stable; Turkey gets along well enough with the European Union and doesn’t open the spigot on the millions of refugees it has taken in following the first wave; the remnants of ISIS launch an occasional terror attack in Europe, but they are no worse than what we’ve already seen and Europe gradually grabs the worst of the group, leaving the dead-enders who don’t have the ability, smarts and financing to use WMDs; Kim Jong-un is killed by one of his generals (who then seeks reconciliation with Seoul and massive aid from the international community in return for giving up the nukes).
Now ask me if I believe any of this (especially my pipedream on North Korea...if Kim is killed by one of his generals, the guy is likely worse, not better, just because there is no way, with the security apparatus there, that one general could put together the leaders of all the major army divisions to participate in a coup like that).
So that was last year.
There was simply no way of even guessing what would happen.
Well now I will more than take a stab at it. I’m going out on a limb bigly.
While President Trump wants us to bask in the light of a 3% economy, 4.1% unemployment and a rising stock market, with the full impact of tax cuts yet to be felt, I’ve been thinking more than ever about the geopolitical front, which the vast majority of Americans never give a thought to.
2018 is going to be awful. Events will rapidly spiral out of control, and this will expose the Trump temperament far more...for the worse, as he recklessly tweets away and greatly exacerbates the crisis of the moment.
China will make a move on Taiwan. [Beijing will also have cause to crackdown further on Hong Kong.]
Russia will indeed stir things up in the Baltics.
Kim Jong Un will keep testing, though we might avoid a direct confrontation, depending on how the Taiwan crisis unfolds, as I see it.
Israel will come under increasing threat due to the Trump administration’s washing its hands of Syria, leaving that country to Iran, Russia having already secured its bases there, with Assad remaining firmly in charge. Iran and Syria, together with Lebanon’s Hizbullah, will encroach on Israel’s buffer zone in the Golan Heights. Israel will fight back. Prime Minister Benjamin Netanyahu will be indicted on multiple counts emanating from the long-running corruption investigation into his actions and that of his wife, further roiling Israel, which Iran, Hizbullah and the Palestinians will attempt to take advantage of.
It will become increasingly clear by the fall that Afghanistan cannot survive, as the pro-West government and U.S./NATO-backed Afghan army crumbles amid a further wave of horrific terror attacks, a la this week’s. ISIS will perpetrate many of them.
Venezuela will finally collapse, with unknown consequences for the region (Hizbullah long having sleeper cells there).
Trump will initiate more than one major protectionism ploy, and to much failure.
As for the U.S. stock market, last year at this time I said the Dow and S&P 500 would rise 10%, Nasdaq 7%. I’m not embarrassed in the least I missed the strength of the rally.
But while virtually everyone and their mother is calling for a repeat story in 2018, owing to the positive benefits of the tax bill, including with corporations and earnings, I say the broad averages finish down when we call it a year next Dec. 31.
The Dow Jones and S&P will fall 5 percent (though with two “crashettes,” brief 10 percent drops in 2-3 days), while Nasdaq will decline 12 percent, owing to investors souring on some of the big names that have powered the index the past year in particular, namely Facebook, Google and Amazon.
Aside from the geopolitical issues that will roil Wall Street, inflation will become an issue for the Federal Reserve, ditto the European Central Bank, and the Fed will be forced to hike the funds rate more than the three times currently forecast.
I’ll add more on the above next time, but for now on to the week’s review....
In an impromptu interview with the New York Times at Trump International Golf Club on Thursday, as reported by Michael Schmidt and Michael Shear, President Trump said he believes Special Counsel Robert Mueller will treat him fairly.
“There’s been no collusion. But I think he’s going to be fair.”
Trump told the paper he didn’t demand an end to the Russia investigations, “but insisted 16 times that there had been ‘no collusion’ discovered by the inquiry.”
Trump cited Fox News contributor Alan Dershowitz to bolster the legality of his claims.
“I watched Alan Dershowitz the other day,” Trump noted. “He said, No. 1, there is no collusion, No. 2, collusion is not a crime, but even if it was a crime, there was no collusion.”
“(The investigation) makes the country look very bad, and it puts the country in a very bad position,” Trump said. “So the sooner it’s worked out, the better it is for the country.”
Asked whether he would order the Justice Department to reopen the investigation into Hillary Clinton’s emails, Trump remained focused on the Russian investigation.
“I have the absolute right to do what I want to do with the Justice Department,” he said, echoing claims by his supporters that as president he has the power to open or end an investigation. “But for purposes of hopefully thinking I’m going to be treated fairly, I’ve stayed uninvolved with this particular matter.”
Trump was also tough on China for secretly shipping oil to North Korea, according to reports, saying for the first time he has “been soft” on Beijing on trade in the hopes that its leaders will pressure North Korea to abandon its nuclear weapons program.
“Oil is going into North Korea. That wasn’t my deal!” he exclaimed, raising the possibility of trade actions against China.
“We have a nuclear menace out there, which is no good for China,” said Trump.
Sec. of State Rex Tillerson / New York Times...who in this instance appeared to be on the same page as the president:
“Over the past year, the United States has faced immense challenges in its dealings with North Korea, China and Russia, and in its efforts to defeat international terrorism. But Americans should be encouraged by the progress the State Department and United States Agency for International Development have made in pushing for global peace and stability.
“When President Trump took office, he identified North Korea as the United States’ greatest security threat. He abandoned the failed policy of strategic patience. In its place we carried out a policy of pressure through diplomatic and economic sanctions. This year, the United Nations Security Council unanimously adopted three of the strongest sanctions resolutions in history, including bans on a wide array of North Korean exports such as coal, iron, seafood and textiles.
“The United States has asked allies and partners to exert unilateral pressure against North Korea in order to force the regime to change its behavior.... Our peaceful pressure campaign has cut off roughly 90 percent of North Korea’s export revenue, much of which is used to fund illegal weapons development.
“We hope that this international isolation will pressure the regime into serious negotiations on the abandonment of its nuclear and ballistic missile programs. A door to dialogue remains open, but we have made it clear that the regime must earn its way back to the negotiating table. Until denuclearization occurs, the pressure will continue.
“A central component of our North Korea strategy is persuading China to exert its decisive economic leverage on Pyongyang. China has applied certain import bans and sanctions, but it could and should do more. We will also continue to pursue American interests in other areas of our relationship, including trade imbalances, intellectual property theft and China’s troubling military activities in the South China Sea and elsewhere. China’s rise as an economic and military power requires Washington and Beijing to consider carefully how to manage our relationship for the next 50 years....
“On Russia, we have no illusions about the regime we are dealing with. The United States today has a poor relationship with a resurgent Russia that has invaded its neighbors Georgia and Ukraine in the last decade and undermined the sovereignty of Western nations by meddling in our election and others’.... Absent a peaceful resolution of the Ukraine situation, which must begin with Russia’s adherence to the Minsk agreements, there cannot be business as usual with Russia.
“While we are on guard against Russian aggression, we recognize the need to work with Russia where mutual interests intersect. Nowhere is that more evident than in Syria. Now that President Vladimir Putin has committed to the United Nations-backed Geneva political process for providing a new future for Syria, we expect Russia to follow through. We are confident that the fulfillment of these talks will produce a Syria that is free of Bashar al-Assad and his family.
“Lastly, the flawed Iran nuclear deal is no longer the focal point of our policy toward Iran. We are now confronting the totality of Iranian threats. Part of this strategy entails rebuilding alliances with our partners in the Middle East, and in November we helped re-establish diplomatic ties between Iraq and Saudi Arabia. We will continue to work with our allies and with Congress to explore options for addressing the nuclear deal’s man flaws, while building a like-minded effort to punish Iran for its violations of ballistic missile commitments and its destabilizing activities in the region.”
From the Los Angeles Times:
“China has now assumed the mantle of fighting climate change, a global crusade that the United States once led. Russia has taken over Syrian peace talks, also once the purview of the American administration, whose officials Moscow recently deigned to invite to negotiations only as observers.
“France and Germany are often now the countries that fellow members of NATO look to, after President Trump wavered on how supportive his administration would be toward the North Atlantic alliance.
“And in the Israeli-Palestinian conflict, the U.S., once the only mediator all sides would accept, has found itself isolated after Trump’s decision to declare that the U.S. recognized Jerusalem as the capital of Israel.
“In his wide-ranging speech on national security last week, Trump highlighted what he called the broadening of U.S. influence throughout the world.
“But one year into his presidency, many international leaders, diplomats and foreign policy experts argue that he has reduced U.S. influence or altered it in ways that are less constructive. On a range of policy issues, Trump has taken positions that disqualified the United States from the debate or rendered it irrelevant, these critics say.
“Even in countries that have earned Trump’s praise, such as India, there is concern about Trump’s unpredictability – will he be a reliable partner? – and what many overseas view as his isolationism....
“As the U.S. recedes, other powers including China, Russia and Iran are eagerly stepping into the void.” [Tracy Wilkinson, Alexandra Zavis and Shashank Bengali / L.A. Times]
Meanwhile, the first few weeks Congress is back will be a potential nightmare.
Congress must reach another deal to prevent a government shutdown by Jan. 19, and lawmakers need to resolve the issue of whether to protect young immigrants from losing the protection of an Obama-era program or risk deportation beginning in March. Democratic leader Sen. Chuck Schumer, for one, is under major pressure from many on his left not to keep government funded without a deal for the “Dreamers.”
The next budget package needs to increase the existing caps on spending to prevent further automatic across-the-board cuts, known as sequestration.
And Congress, as well as the White House, have been negotiating behind closed doors for a two-year budget agreement that would cover the rest of fiscal 2018, as well as fiscal 2019 (which begins next September), with the two sides battling over how much to increase both defense and nondefense spending.
The Senate also has to move on an $81 billion disaster aid bill for victims of hurricanes in Texas, Florida, Puerto Rico and the U.S. Virgin Islands that it punted on in December.
And you have a pair of GOP senators, Susan Collins (Maine) and Lamar Alexander (Tenn.) demanding two ObamaCare stabilization programs that they agreed to pass on in December for the purpose of getting the tax bill passed...only now they expect to see action, including on “the Children’s Health Insurance Program reauthorization, funding for Community Health Centers, and other legislation,” the two said in a joint statement.
But House Republicans remain opposed to any measures designed to help stabilize ObamaCare, and insurance markets.
And back to defense spending, despite Trump’s repeated statements that “we’ve been rebuilding our military,” this has been one of his more bald-faced lies. Congress has yet to lift the caps restraining defense spending. This hopefully now happens in January.
Trump in Review....
Daniel Henninger / Wall Street Journal
“There is really only one question anyone asks today: What do you think of it? ‘It,’ of course, being America’s presidency. Needless to say, one presidency wasn’t going to be enough for Donald Trump. In true Trumpian style, the New York developer has produced two presidencies in one year.
“The two Trump presidencies exist as parallel universes. One is inhabited by Trump of Twitter, a character out of Rabelais’s novel ‘The Very Horrific Life of Great Gargantua.’ Much of the American population is appalled by Trump of Twitter, who lives in a dark and deeply personal pool of feuds and fulminations. His first-year approval rating floated below 40%, while voters in Virginia and Alabama rejected his candidates, and him.
“Existing alongside is a universe of solid, tangible economic success. Reporting on the season’s strong holiday retail sales, this newspaper noted that consumer confidence is at a 17-year high, with unemployment at a 17-year low – a time-frame that turns the Obama presidency into a forgotten memory.
“Donald Trump entered office revved up from his victorious campaigns against Hillary Clinton, all Republican comers – and pretty much the whole wide world. It was us versus them, and ‘us’ won.
“On Jan. 20, President Trump delivered an us-versus-them inaugural speech. Later that day he declared war on the White House press.
“No one should ever forget that Mr. Trump has been a career kibitzer, a nonstop source of often annoying opinion about everything. In real life you can say ‘enough already.’ But Twitter allowed the formerly private Trump kibitzing to go mass market. On social media, nobody ever shuts up.
“An atmosphere of eternal Trumpian battle and mayhem dominated the early period of the presidency. Simultaneously, however, Mr. Trump was making stellar, quality appointments to his cabinet and key White House policy roles, but it was hard amid the din to focus on them or their goals....
“Mr. Trump looked less like a president than the ringleader of a traveling carnival.
“It couldn’t go on and it didn’t. In July, Mr. Trump named retired four-star Marine Gen. John Kelly as his chief of staff....
“Mr. Kelly, who has worked in worse conditions, famously imposed discipline on the White House, but military discipline isn’t an end in itself. It exists to attain one total success. The relative calm Mr. Kelly’s discipline brought to the White House has allowed the successes of the parallel Trump presidency to come into focus....
“In the fall, Chief White House economist Kevin Hassett emerged to provide important justifications for the tax bill’s rate reductions. Less publicly, Gary Cohn, the former Goldman Sachs banker who became director of the National Economic Council amid much skepticism, has turned out to be the most ardent Democratic deregulator since Alfred Kahn was advising Jimmy Carter on getting the government out of the airline, shipping and trucking industries....
“The Democrats, who are overinvested in predicting national failure, and the media, overinvested in the Russian collusion story, will try to taunt Mr. Trump into reviving the cage-match atmospherics of the year’s first half.
“It wouldn’t be the dumbest strategy, especially if Mr. Trump starts the year shooting at his own robust economy by starting trade disputes with Mexico, Canada, Japan, South Korea and China. But if Mr. Trump doesn’t rise to the bait, the Democrats’ carping will eventually look petulant and unattractive. Most Americans don’t want their presidency to fail utterly, but that looks increasingly to be what the party’s progressive factions are about.
“For the moment, a correlation appears to exist between success and Donald Trump’s sense of calm. Yes, he still tweets, but with less unnerving animosity (as we go to press). Possibly over time, Mr. Trump will unify his two presidencies into a single venture. At year’s end, this is how a successful government is supposed to look.”
Editorial / Wall Street Journal
“Amid the debate over tweets and tax reform, perhaps the most significant change brought by the first year of the Trump Presidency has been overlooked: reining in and rolling back the regulatory state at a pace faster than even Ronald Reagan. This is a major reason for the acceleration of animal spirits and faster economic growth in the past year.
“A rules rollback is harder than it sounds because the inertial tendency of bureaucracies is to expand, and the modern administrative state has expanded almost inexorably under presidents of both parties. New rules are published in the Federal Register, and Barack Obama presided over six of the seven highest annual page counts ever. In 2016 his regulators left town with a record-breaking binge of 95,894 new pages, according to Wayne Crews, who tracks the administrative state for the Competitive Enterprise Institute....
“By contrast in the first year of the Trump Presidency through Sept. 30, 45,678 pages were added to the Federal Register. Many were required to follow-up on legislation and rules from the Obama era, so the Trump trend is even better....
“Democrats are now dismayed to learn that what can be done with the stroke of a pen can be undone. The Trump Administration has rescinded Education Department guidance on transgender bathrooms, as well as the 2011 ‘Dear Colleague’ guidance that established kangaroo courts on campus to adjudicate sexual assault and harassment. It has negated Labor Department guidance that held businesses legally responsible for their franchisees’ wage-law violations, creating ‘enforcement traps waiting to spring,’ in the words of the Chamber of Commerce....
“Congress has also helped with unprecedented use of the Congressional Review Act (CRA) to nullify 14 Obama-era rules and one Consumer Financial Protection Bureau rule promulgated under Richard Cordray. The CRA had only been used once before, in 2001 to nix a late Bill Clinton rule....
“The size of the economic impact of all this is hard to measure, though the Trump Administration projects the regulatory cost savings for the economy will be $9.8 billion over the next fiscal year....
“But the far larger impact is lifting the pall of government hassle and arbitrary enforcement from business. In the Obama era, CEOs never knew when or how a federal agency might strike for political reasons, no matter the law. Simply lifting that constant fear has had a liberating effect on risk-taking and investment. The deregulation effort ranks with judicial confirmations and tax reform as the main Trump achievements of the year.”
David Ignatius / Washington Post
“Looking for perspective on this past year and the one ahead, I turned to several of the nation’s most experienced former military commanders. One of them put it bluntly: The United States is so divided politically at home that we are becoming vulnerable to our adversaries abroad.
“Our country, these retired military leaders fear, is so polarized right now that it might be difficult to mobilize the nation for war, if that were necessary. The nation survives amid division and dysfunction now, when we’re more or less at peace. But if the United States faced a serious threat abroad, say from a nuclear-armed North Korea, these domestic fissures could be paralyzing.
“The shrinking space for governance worries me at year-end. The problem begins at the top: President Trump is the most unpopular president in modern times. He’s less admired than his predecessor, Barack Obama. He misreads the nation: The more divisive Trump has become – the more he picks at the nation’s scabs – the less the public likes him, according to polls. Yet Trump persists, playing to his base, with harmful consequences for the country.
“Trump brags about how well the stock market is doing. Meanwhile, he attacks the FBI, the NFL and other groups he thinks it will be advantageous to impugn. The nation’s wounds get redder and rawer. But the polls suggest that the public overall isn’t buying it. Trump’s numbers remain low, and Republicans keep losing key races, as in Virginia and Alabama....
“An ominous set of snapshots of the United States came in a study released Tuesday by the Pew Research Center. Pew found that partisan divisions are now much more important than religious or educational ones in driving political views. The gap between Republicans and Democrats on key issues has increased from 15 percentage points in 1994 to 36 points now....
“What worries me most is that, in Trump’s America, people seem increasingly doubtful that these divisions can be healed. A CBS News poll taken in June found that 55 percent of the country thought ‘people of different political views can come together.’ By October, only 47 percent were optimistic, and 51 percent doubted that reconciliation was possible.
“How does Trump’s divided America look to foreign eyes? A Pew study in the spring found that global confidence in the U.S. president had fallen from 64 percent at the end of Obama’s tenure to 22 percent at the start of Trump’s. Those expressing ‘no confidence’ surged from 23 percent to 74 percent....
“Trump is a defiant nationalist, and perhaps he hopes to be a unifier. But as this year ends, the numbers tell us that he has brought a level of division and disarray that should worry even his most passionate supporters.”
With the Tax Cuts and Jobs Act having become law so close to year end, it’s impossible for the IRS to know how it will rule on each provision right away, though it has vowed to in the first few weeks of the year (and it better).
But as people rushed to prepay their 2018 property taxes, hoping to take advantage one last time of a federal deduction that will be scaled back, the IRS said on Wednesday that those prepayments could be deducted only in limited circumstances, a decision that appeared to invalidate many taxpayers’ efforts and raised the prospect that local governments could come under pressure to refund millions of dollars.
The main point for now is that filers could only avoid the new $10,000 cap on deductions for state and local taxes by paying property taxes that have been assessed in 2017. Many local governments have not completed assessments for upcoming years.
Meanwhile, the impact on high property tax states is still being tallied. Moody’s Corp. estimates the cap on SALT will lead to home prices in Manhattan falling as much as 9.5%.
While business leaders in New York don’t expect families to just up and leave because of the tax bill, banks and other companies looking to shift jobs to low-cost areas could reconsider Gotham. And younger workers could do the same, choosing rival areas such as Austin, Texas; or Pittsburgh, Pa.
Those New Yorkers with second homes in Florida or other states will be tempted more than before to shift their residences to those low-tax locales.
Selected Trump tweets from the past few days:
“The Tax Cut/Reform Bill, including Massive Alaska Drilling and the Repeal of the highly unpopular Individual Mandate, brought it all together as to what an incredible year we had. Don’t let the Fake News convince you otherwise...and our insider Polls are strong!”
“The Fake News refuses to talk about how Big and how Strong our BASE is. They show Fake Polls just like they report Fake News. Despite only negative reporting, we are doing well – nobody is going to beat us. MAKE AMERICA GREAT AGAIN!”
“The Stock Market is setting record after record and unemployment is at 17 year low. So many things accomplished by the Trump Administration, perhaps more than any other President in first year. Sadly, will never be reported correctly by the Fake News Media!”
“People are proud to be saying Merry Christmas again. I am proud to have led the charge against the assault on our cherished and beautiful phrase. MERRY CHRISTMAS!!!!!”
[Ed. personally, I never stopped saying Merry Christmas, nor did anyone I know.]
“All signs are that business is looking really good for next year, only to be helped further by our Tax Cut Bill. Will be a great year for Companies and JOBS! Stock Market is poised for another year of SUCCESS!”
“WOW. @foxandfriends ‘Dossier is bogus. Clinton Campaign, DNC funded Dossier. FBI CANNOT (after all of this time) VERIFY CLAIMS IN DOSSIER OF RUSSIA/TRUMP COLLUSION. FBI TAINTED.’ And they used this Crooked Hillary pile of garbage as the basis for going after the Trump Campaign!”
“The Democrats have bene told, and fully understand, that there can be no DACA without the desperately needed WALL at the Southern Border and an END to the horrible Chain Migration & ridiculous Lottery System of Immigration etc. We must protect our Country at all cost!”
“Why is the United States Post Office, which is losing many billions of dollars a year, while charging Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!”
--In his interview with the New York Times, President Trump disputed reports that suggested he does not have a detailed understanding of legislation, saying, “I know the details of taxes better than anybody. Better than the greatest C.P.A. I know the details of health care better than most.”
Later, he added that he knows more about “the big bills” debated in the Congress “than any president that’s ever been in office.”
--In his talking points for last Saturday’s show, CNN host Michael Smerconish said President Trump could be the “most consequential president” in modern history, citing the Russia probe and his relationships with Republicans, Democrats and the news media.
“If the pace of change continues for the duration of Trump’s presidency, however long that might be, I think he could become the most consequential president in the modern era.”
Smerconish characterized the distinction as the “most important and significant, having the biggest overall impact.”
But in terms of how little the president has done to change the public’s perception of him during the first year of his presidency:
“Roughly the same number of people support him today as did at the beginning of his administration. The Russia probe has remained constant. The elected Republicans remain skeptical of his leadership but largely compliant. The elected Democrats, they still don’t like him. The war with the media has never subsided and neither have his Twitter fingers,” Smerconish said.
--The Justice Department’s Inspector General Michael Horowitz has been investigating the government’s disputed handling of the Hillary Clinton email inquiry for nearly a year and a report is likely in the next few months, Justice officials have said.
“The inspector general’s investigation is very important,” House Judiciary Committee Chairman Bob Goodlatte, R-Va., told Deputy Attorney General Rod Rosenstein at a Dec. 13 hearing. “It is very encouraging to us that [Horowitz] is doing what I think is good, unbiased work,” the chairman said.
This probe is also a potential landmine for Robert Mueller.
--UN Ambassador Nikki Haley announced Sunday that the United States negotiated a $285 million cut in the United Nations’ ‘bloated’ budget for next year. This came days after she slammed the UN for “singling out” the United States and voting overwhelmingly on a resolution to oppose President Trump’s decision to recognize Jerusalem as the capital of Israel.
The new deal for the 2018-2019 fiscal year is $285 million less than the world body’s $5.4 billion budget for fiscal year 2016-2017.
Meanwhile, Guatemala became the first nation to follow Trump’s lead when it announced Sunday that it would be moving its embassy in Israel from Tel Aviv to Jerusalem.
President Jimmy Morales said he made the decision after discussions with Israeli Prime Minister Benjamin Netanyahu.
--In a Thursday tweet, Trump mocked the science behind climate change, claiming the East Coast could use more global warming. Let’s assume that part was in fun.
But then he wrote, after stating “Perhaps we could use a little bit of that good old Global Warming that our Country, but not other countries, was going to pay TRILIONS OF DOLLARS to protect against. Bundle up!”
Trump was referring to the Paris Accord, but the “TRILLIONS” reference appeared to come from a Heritage Foundation estimate of $2.5 trillion over a 20-year period, except this is a total lie, as I told you at the time, because the freakin’ treaty is non-binding! And my point was it was one of the stupidest moves of all time to back out, and not continue to have a seat at the table, because the United States didn’t have to abide by any perceived targets for reducing emissions! Pure idiocy. We had a chance to game the system and we turned it down, while looking worse than Russia and China in the eyes of many of our allies.
The Dow Jones posted its second-biggest yearly gain of the past decade in 2017, rising 25%. The S&P 500 gained 19% and Nasdaq 28%.
But President Trump won’t be happy that despite all his “record” talk, the S&P finished 4 points off President Obama’s first year in office, 2009, when it was up 23.5% (not including dividends) and was 10 points off 2013 (29.6%). The Dow, on the other hand, was up 18.8% and 26.5% in 2009 and 2013, respectively, so Trump will tout his performance vs. 2009...because that is what he does.
The MSCI AC World ex-USA Index ended 2017 with gains of around 24%, compared with 19% for the S&P, owing to the synchronized growth rate in every developed nation on the planet, benign inflation and still accommodative central banks, with the European Central Bank and Bank of Japan not budging all year off their zero interest rate policies (or negative short-term rates). As examples of the latter, all you need to know is the 10-year yield on the German bund finished the year at 0.42%, while it was 0.04% in Japan.
With rates like these, including the U.S. 10-year at a still historically low 2.41%, stocks continue to look attractive.
So what will change the momentum? Well the bond bubble won’t last forever and the ECB has announced it would begin trimming its bond purchases, while the Federal Reserve has just begun to reduce its balance sheet.
Recently, Peter Boockvar, chief market analyst at the Lindsey Group, said in Barron’s that the estimated shrinkage of the Fed’s balance sheet and the ECB’s tapered buying would mean $1 trillion less will be flowing into capital markets next year.
“I am completely amazed at the nonchalance with monetary policy, and some do not even mention it as a risk factor.”
Yes, it’s possible the impact will be muted, but as always when it comes to the fixed income markets, it’s about speed...about the rate of change. Speed kills.
In terms of the economic news this past week, the Chicago Purchasing Managers Index for December came in at 67.6 (50 being the dividing line between growth and contraction), the highest reading in 6 ½ years, while the production component hit a 34-year high. New orders were only at a 3 ½ year peak, however.
The October reading on the 20-city home price index, as produced by the good folks at S&P/Case Shiller, rose 6.4% year-over-year, 6% over the 2006 peak, with Seattle’s home prices up 13%, Las Vegas 10%, and San Diego 8%.
While such solid gains can lead to a problem with affordability, the price rises are well above wage growth which is a good thing.
And last week Freddie Mac said the rate on a 30-year fixed rate mortgage averaged 3.9%, down from 4.30% a year earlier.
As for holiday retail sales, defined as Nov. 1 to Dec. 24, Mastercard Spending Pulse reported sales rose a strong 4.9% (vs. 3.7% last year), with online up 18.1%. Typically the latter accounts for 10% of U.S. spending. The 4.9% would represent the best year since 2011.
Europe and Asia
There was literally zero economic news of interest for the eurozone this week, as the bureaucrats producing such data took the week off (much as most folks did around the world for that matter).
But the countdown to Europe’s next pivotal election began Friday as Italy’s president dissolved parliament, scheduling the country’s first national vote in five years for March 4.
It was 2013 when the current government, led by the center-left Democratic Party, succeeded the caretaker administration of Mario Monti, a technocrat who stepped in after Silvio Berlusconi, then prime minister, resigned in the midst of Italy’s debt crisis.
While the Democratic Party managed to fulfill its full five-year term, it was under three different prime ministers, including the current one, Paolo Gentiloni, a former foreign minister.
Gentiloni had taken over for 42-year-old Matteo Renzi, who resigned in the wake of a tough defeat in a national referendum on changing the Constitution in ways designed to make Italy’s volatile politics more stable.
But as the Democratic Party has lost support, Italy is now wary of the unpredictable influences of social media and bogus news stories, so this will be a test of how an important European nation can ward off potential outside meddling.
Both the anti-establishment Five Star Movement and the far-right League party have been gaining in opinion polls.
Meanwhile, as for Catalonia, separatist leader Carles Puigdemont called on Spain’s government to allow him to return home in time for the opening session of the Catalan parliament so that he can become the region’s next president; Puigdemont currently in self-imposed exile in Belgium.
The opening session has to take place at the latest on January 23.*
Puigdemont said he was willing to listen to any proposal Prime Minister Mariano Rajoy has for resolving tensions. For his part, Rajoy said he was open to dialogue but implicitly rejected Puigdemont’s demand to meet soon, saying he would only talk with whoever Catalonia’s president is once they have been elected by the new regional parliament.
Ines Arrimadas, whose centrist, anti-independence party scored the most votes on Dec. 21 in the special election, gets first crack at forming a government but Arrimadas does not have enough seats or allies to form one. Negotiations on same begin Jan. 6.
*Late today, Prime Minister Rajoy said a session to swear in lawmakers in Barcelona will take place on Jan. 17 before a vote days later to appoint a new regional president if there is a candidate.
Turning to Asia...there was a slew of data on Japan’s economy. Inflation in November was up 0.9% annualized on core, which in Japan is ex-fresh food, compared with 0.8% in October. Ex-fresh food and energy it was just 0.3%. The Bank of Japan is sticking with its 2% inflation target, so a long ways to go, but some are saying the BOJ could move when the rate gets over just 1%.
The unemployment rate in Japan ticked down to 2.7%, while household consumption came in at 1.7% for November, far better than expected, with retail sales up 1.9% in the month, 2.2% year-over-year. Industrial production rose 0.6% last month.
The Japanese economy grew 2.5% ann. in the third quarter and Prime Minister Shinzo Abe said he wants to see companies raise wages by 3% or more, wage growth being far too sluggish despite all the corporate success with Japan’s export-driven surge. It’s the one thing that would get the Bank of Japan off the dime and its zero interest rate policy (on the 10-year), and negative short-term lending rates that hurt the banking sector.
Some BOJ board members have called for a debate about raising interest rates or lowering purchases of exchange-traded funds in response to the improving outlook, per the release of minutes from last week’s policy meeting.
For China, they’ll be releasing a slew of end of month and yearend data this weekend and in the ensuing week, but last weekend, Yang Weimin, an official from the Communist Party committee overseeing economic policy offered a strong hint concerning future policy when he said annualized growth of 6.3 percent for 2018-2020 would do, vs. the current target of 6.5 percent for the five-year period beginning 2016.
China is seen growing 6.8 percent this year and 6.5 percent in 2018, currently.
But President Xi Jinping has signaled less emphasis on growth recently, pledging to focus on “critical battles” against financial risk, pollution and poverty in the next three years.
--On the holiday-shortened week the Dow Jones fell for the first time in six weeks, -0.1% to 24719, while the S&P 500 declined 0.4% and Nasdaq 0.8%.
--U.S. Treasury Yields
6-mo. 0.61% 2-yr. 1.19% 10-yr. 2.44% 30-yr. 3.07%
6-mo. 1.53% 2-yr. 1.88% 10-yr. 2.41% 30-yr. 2.74%
So after all that, and three rate increases by the Fed, the yield on the 10-year finished lower than a year ago, though the increase in the 2-year is reflective of the moves.
--President Trump’s administration is rescinding proposed rules for hydraulic fracturing and other oil- and gas-drilling practices on government lands, officials announced.
The rules developed under President Obama would have applied mainly in the West, where most federal lands are located. Companies would have had to disclose the chemicals used in fracking, which pumps pressurized water underground to break open hydrocarbon deposits.
The rules to be rescinded today were to have taken effect in 2015 but a federal judge in Wyoming blocked them at the last minute.
The long-awaited change drew praise from industry groups, who claimed the rules would have duplicated state rules, putting unnecessary and expensive burdens on petroleum developers.
--Last week Apple acknowledged for the first time in detail that operating system updates released since “last year” for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge. Some Apple fanatics saw it as part of a long-running conspiracy theory that Apple slows down older phones to get you to buy a new one.
But this week we learned Apple is facing a slew of lawsuits on this topic, with some stating users were kind of coerced to buy a new phone when simply purchasing a new battery would have done the trick.
Now no one is saying Apple will eventually have to pony up, but as Rory Van Loo, a Boston University professor specializing in consumer technology law, told the New York Post:
“It seems clear to me that somebody at Apple made a bad decision by not being more transparent about the update and what was going on with the battery. It’s not yet clear, however, that they made a bad legal decision.”
Van Loo said he thinks Apple’s lack of transparency had more to do with it not wanting the competition to know what it was doing so that they wouldn’t copy it.
“One of Apple’s most valuable assets is its brand,” Van Loo said. “I have a hard time believing that somebody at Apple was so short-sighted as to say ‘okay, let’s slow down people’s old phones to get them to buy new ones.’”
Ergo, the suits are going nowhere....unless there is a nefarious email chain. [Nicolas Vega / New York Post]
And the company did apologize on Thursday, saying it would temporarily lower the price of replacing iPhone batteries, hoping to ease the backlash.
Starting in early January and lasting through December of next year, Apple said, it will charge only $29 to replace the battery of an iPhone 6 or later whose warranty has expired, which is $50 less than the current price of a battery replacement.
Separately, shares in Apple stumbled Tuesday following reports that sales of the new iPhone X could miss expectations in the first quarter.
According to a report in Taiwan’s Economic Daily, Apple is slashing its sales forecast for the iPhone X from 50 million units to 30 million units for the quarter.
Apple didn’t publicly disclose a sales target for the iPhone X, which went on sale in November. At the time some questioned the simultaneous release of the iPhone 8 and 8 Plus that had similar internals with the risk of cannibalization.
It’s going to be interesting to see how it all shakes out, especially say with the March quarter. Recall that CEO Tim Cook in a trip to China earlier this month said he “couldn’t be happier” with demand for the iPhone X there.
Despite this week’s hiccup, Apple shares still finished up the year almost 50%.
--According to KeyBanc Capital Markets analysts, Tesla Inc. is likely to deliver 5,000 Model 3s in the fourth quarter, far below its estimate of 15,000; indicating Tesla may not be out of its “manufacturing hell” for the production of the $35,000 Model 3 sedan. KeyBanc says it talked to sales people in 18 stores in the U.S.
“We talked to stores in California doing as many as a dozen per week with around 10 being the average, and we estimate stores outside of California were doing closer to half a dozen per week.”
Hell, my local Honda salesperson, who has handled my last two cars, sells like six cars a day himself! [He’s terrific...should be running a bunch of tech sales staffs.]
Anyway, Tesla itself back in November said it expected to build 5,000 Model 3s per week late in the first quarter of 2018 from its original target date of December.
And you wonder why I think the new semi-truck won’t be ready until 2030, or 2125.
--Southern California home prices surged 8.6% in November compared with a year earlier, with the six-county region’s median home price hitting $505,000 last month, a nominal record seen in September and, prior to this, the 2007 peak before the crash, as reported by CoreLogic and the Los Angeles Times.
The region’s median home price hasn’t fallen on a year-on-year basis in more than five years.
The median in Orange County is now $700,000, up 6.1% yoy.
The tax law change capping the mortgage interest deduction at $750,000 could present a significant headwind in the future, let alone the $10,000 cap on a combination of state income and property taxes.
--California added 47,400 net new jobs in November and the unemployment rate dropped from 4.9% in October to 4.6%, the lowest level in more than four decades. Educational and health services accounted for 16,700 net new jobs, followed by leisure and hospitality with 15,400.
[The unemployment rate peaked at 12.2% here a number of times in 2010.]
--Goldman Sachs has picked Dublin as a center for administrative staff in its asset management business following Britain’s vote to leave the European Union, a source familiar with the matter first told the Financial Times.
But the number of employees actually involved is miniscule, with Goldman currently having 6,000 in Britain. Goldman previously announced it could move a far more significant number (maybe 1,000) to Frankfurt, pending Brexit and negotiations specific to the financial services industry.
--Copper prices climbed for 16 straight sessions (or 17...not sure due to confusing ‘close’ today), the industrial metal’s longest winning streak ever, the front-month futures price rising to $3.30 a pound on the New York Mercantile Exchange – its highest close since 2014. Strong demand from China, along with a recent report that that nation’s largest producer, Jiangxi Copper Co., was ordered shut due to efforts to reduce pollution, helped lead the latest leg of the rally, with copper finishing the year up a little over 20%.
--“Hamilton” took in $3.8 million at the box office for the week ending Dec. 24, according to the Broadway League, the trade group for the industry; a new all-time weekly sales record for the Great White Way.
Others over the $2 million mark were “The Lion King,” “Springsteen on Broadway,” “Hello, Dolly!” and “Wicked.”
In all, Broadway shows grossed $35.7 million for the week, a 17% increase over the same period a year ago.
--Wal-Mart released its list of the top-selling item from each state during the holiday shopping season and some of this surprises me, some doesn’t...some is flat out bizarre....
Alaska: RV & marine antifreeze
California: Protein powder
Colorado: Peanut M&M’s
Indiana: Instant coffee
Minnesota: Flamin’ Hot Cheetos
Missouri: Life Savers
Montana: Madden NFL video games
New York: Cheerios
Oklahoma: BBQ sauce
South Carolina: Coin banks
Texas: TV wall mounts
Wisconsin: Green Bay Packers bath mat
Wyoming: Flannel shirts
--Bitcoin staggered again this week on word South Korea’s government warned it will crack down on trading.
‘Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in a statement. “We cannot leave the abnormal situation of speculation any longer.”
Last week a Seoul-based exchange suspended trading and filed for bankruptcy after being hit with its second hack attack. As I go to post, bitcoin is at $13,660 (according to Coindesk, the only place I look at for the price...and down $1,000 in the past two hours...which is absurd).
According to CryptoCompare, 80 percent of all transactions in Bitcoin in November were in the Asia-Pacific region.
--In media news...Fox News’ James Rosen, one of the longest-tenured correspondents there, is leaving the company at year end. Fox offered no explanation for his departure, though confirmed he was leaving.
China: In his above-mentioned New York Times interview, President Trump said he had “been soft” on China on trade issues and said he was not happy that China had allowed oil shipments to go into North Korea.
“I have been soft on China because the only thing more important to me than trade is war.”
Earlier on Thursday, Trump tweeted that China had been “caught RED HANDED – very disappointed that China is allowing oil to flow into North Korea. There will never be a friendly solution to the North Korea problem if this continues to happen!” Trump wrote.
In the Times interview Trump said: “When I campaigned, I was very tough on China in terms of trade...we had a trade deficit with China of $350 billion, minimum. That doesn’t include the theft of intellectual property, O.K., which is another $300 billion.
“If they’re helping me with North Korea, I can look at trade a little bit differently, at least for a period of time. And that’s what I’ve been doing. But when oil is going in, I’m not happy about that.”
China said yesterday there had been no UN sanction-breaking oil sales by Chinese ships to North Korea after a South Korean newspaper said Chinese and North Korean vessels had been illicitly linking up at sea to get oil to North Korea. A U.S. State Department official told Reuters the U.S. was aware of vessels engaged in such activity.
*Tonight, Reuters is reporting “Russian tankers have supplied fuel to North Korea on at least three occasions in recent months by transferring cargoes at sea, according to two senior Western European security sources.
First off, I like to wait 24 hours before citing such a story, but I told weeks ago that Russia was supporting Pyongyang, and breaking the sanctions, just like China was, to curry favor from the regime.
Gideon Rachman / Financial Times
“Donald Trump remains a source of bafflement and confusion to the American establishment. But I felt I understood the U.S. president better, after trips over the course of 2017 to South Africa, Turkey, Brazil and China – where politicians like Mr. Trump are all too familiar. He is the loudmouth leader who is prepared to assault and undermine the institutions of his country – rather than accept checks on his power or challenges to his dignity. He is the demagogue, who is always prepared to appeal to the mob over the heads of the media. He is the swaggering president, who draws obsequious time-servers and venal chancers into his orbit. He is the man of power, all too willing to mingle his business and political interests.
“The ascendance of Mr. Trump – added to the growing power of China – has changed the political atmosphere around the world. There is such a thing as a global mood and the signals coming from Washington and Beijing are disquieting. The Trump administration is sending the message that the U.S. is no longer interested in making the case for democracy and clean government. Meanwhile, Xi Jinping’s China is increasingly confident in arguing for an authoritarian model that tolerates capitalism – but crushes civil society.
“The indirect effects of those signals have stoked a crisis of liberal values that is visible in places as different as South Africa, Turkey and Brazil. These three countries are significant mid-ranking powers and members of the G20 group of leading nations. Each of them, in the recent past, looked like places where liberal and democratic values were advancing steadily. Yet all of them are now struggling to maintain independent institutions that can fight corruption and check the power of political leaders. The roots of their separate crises are local and particular. But liberals in all three places feel that they are now swimming against the global tide....
“For political liberals in China and elsewhere, it is disorienting to no longer be able to look to Washington for encouragement....
“(And) in Hong Kong itself, there are growing fears about the erosion of the ‘one country, two systems’ approach that China has used to run the territory since the end of British rule in 1997. This year saw the imprisonment of Joshua Wong, Nathan Law and Alex Chow, three of the young leaders of Hong Kong’s pro-democracy ‘umbrella movement.’
“The crackdown in Hong Kong reflects the increasing authoritarianism of the government of mainland China. The 19th Communist Party congress in October saw ‘Xi Jinping thought’ incorporated into the official ideology of the party. In China that week, there was a stark contrast between the excitement of nationalists, who felt their country was on the move, and the near despair of liberals who could see their dream of a transition to democracy drifting ever further away.
“For political liberals in China and elsewhere, it is disorienting to no longer be able to look to Washington for encouragement. In the early months of the Trump administration, the Chinese government announced that it was granting several valuable trademarks to the Trump organization. As one head-shaking Chinese academic put it to me: ‘It would appear that we have just bribed the American president.’
“It was a small moment. But it seemed to capture something important and discouraging about 2017.”
Friday, Taiwan President Tsai Ing-wen said China’s military ambitions are becoming more apparent and tensions between Taiwan and the mainland must not be resolved through military force.
Tsai said at a yearend news conference: “China’s military activities don’t only impact the situation in the Taiwan Strait, but also in all of East Asia... This is not a problem being faced alone by Taiwan.”
Taiwan’s defense ministry warned in a white paper issued this week that China’s military threat was growing by the day, with the Chinese air force carrying out 16 rounds of exercises close to Taiwan over the past year or so. Beijing says the drills are routine and that Taiwan had better get used to them.
China has warned Taiwan against “using weapons to refuse reunification” and China’s state media has prominently featured pictures of Chinese jets flying close to the island.
The United States must sell Taiwan more advanced military equipment, as much as this will further torque off Beijing.
Separately, a human-rights activist nicknamed ‘Super Vulgar Butcher’ has been jailed in China for eight years for ‘subversion’ – the harshest sentence given in a crackdown on activists that began in the country in 2015.
“Wu Gan, a 44-year-old administrator at a Beijing law firm, campaigns for victims in criminal cases that are viewed as sensitive by the authorities.
In court, Mr. Wu struck an irreverent tone in his remarks following the sentence, saying he was “grateful to the party for granting me this lofty honor,” according to his lawyer.
Wu raised awareness of cases involving members of the public caught up in legal cases against officials, such as one in 2009, where he supported a pedicurist charged with killing a government official who attempted to molest her.
Luke Patey / New York Times
“The warning bell is ringing on China’s global effort to suppress Western values and undermine the freedoms enjoyed in the world’s democracies.
“Beijing has baited some of America’s leading corporations with offers of access to its giant consumer market. In return, the likes of Apple and LinkedIn have agreed to play by China’s rules and submit to what amounts to censorship.
“On American college campuses, accepting money from the Beijing-backed Confucius Institute has come at the price of academic freedom: There are mounting concerns that the language and cultural centers financed by the institute prohibit discussion on issues that place China in a critical light.
“Elsewhere, Beijing has been accused of pulling the strings of Western democracies. In Australia, Chinese businessmen with ties to the Chinese Communist Party have donated millions of dollars to the country’s two leading political parties in an effort to shape domestic and foreign policy. A rising political star, Sam Dastyari of the opposition Labor Party, announced his resignation from the Senate in the face of allegations that he was peddling Beijing’s positions for financial support.
“But what might first appear to be signs of Beijing’s rising power are proving to be strategic missteps for China. Beijing is overreaching and starting to burn bridges across the West and in the developing world.
“After two decades of expanding engagement and economic ties with Australia, China is now watching as Prime Minister Malcolm Turnbull is overhauling his country’s espionage and foreign interference laws in part to counter Chinese influence. Despite President Trump’s warm reception in Beijing last month during a state visit, the United States government has designated China as a competitor in its new national security strategy and is weighing an expansion of the Foreign Agents and Registration Act to curb propaganda and disinformation from Chinese state media and think tanks.
“Even in the European Union, China’s largest trading partner, Beijing has caused anxieties to spike. Germany’s intelligence agency recently accused China of mining the personal data of German politicians and diplomats. Anders Fogh Rasmussen, the former Danish prime minister and NATO chief, as well as a free-trade-loving Scandinavian, asked the European Union to create measures to investigate and potentially restrict Chinese investments on the Continent.
“This position echoes that of other European leaders who argue Beijing has kept the door closed to foreign investment in too many sectors of its economy exploiting the openness of European markets and snatching up leading European technology companies over the past few years. Demands are growing that Beijing offer equal treatment to European companies in China.”
And it goes on and on....
“In light of this resistance, 2018 may very well see new efforts to tackle the challenge from China. Beijing’s recent intrusions may prompt more security cooperation among the so-called Quad in the Asia-Pacific: the United States, India, Japan and Australia....
“China leaves 2017 with frayed relations across much of the West. If it does not pull back from these intrusions on Western democracies, the overreach will ultimately reduce China’s global power.”
[Luke Patey is a senior researcher at the Danish Institute for International Studies]
Lastly, China makes most of the world’s artificial Christmas trees, but the Communist Party has increasingly banned Christmas-related celebrations, even if there is no real tie to Christians. There have been many reports recently that student / university groups, for one, were warned not to hold them.
North Korea: Pyongyang called the latest UN sanctions against North Korea an act of war and tantamount to a complete economic blockade against the country, the foreign ministry said on Sunday, threatening to punish those who supported the measure after the UN Security Council unanimously imposed new sanctions on the North for its recent intercontinental ballistic missile test.
The UN seeks to ban 90 percent of refined petroleum exports to North Korea by capping them at 500,000 barrels a year, but as noted above, the U.S. believes China is cheating when it comes to carrying out its end of the agreement.
Separately, I have long argued in these pages that the American people are being misled into believing we have the ability to shoot down North Korea’s missiles when we don’t, at least not at a significant percentage.
So I note the following from defense expert Joe Cirincione in an op-ed for Defense News.
“The number one reason we don’t shoot down North Korea’s missiles is that we cannot.
“Officials like to reassure their publics about our defense to these missiles. Japanese Chief Cabinet Secretary Yoshihide Suga told his nation after (a recent) test, ‘We didn’t intercept it because no damage to Japanese territory was expected.’
“That is half true. The missile did not pose a serious theat. It flew over the Japanese island of Hokkaido, landing 3700km (2300 miles) from its launch point near North Korea’s capital of Pyongyang.
“The key word here is ‘over.’ Like way over. Like 770 kilometers (475 miles) over Japan at the apogee of its flight path. Neither Japan nor the United States could have intercepted the missile. None of the theater ballistic missile defense weapons in existence can reach that high. It is hundreds of kilometers too high for the Aegis interceptors deployed on Navy ships off Japan. Even higher for the THAAD systems in South Korea and Guam. Way too high for the Patriot systems in Japan, which engage largely within the atmosphere.
“All of these are basically designed to hit a missile in the post-mid-course or terminal phase, when it is on its way down, coming more or less straight at the defending system. Patriot is meant to protect relatively small areas such as ports or air bases; THAAD defends a larger area; the advanced Aegis system theoretically could defend thousands of square kilometers.
“But could we intercept before the missile climbed that high? There is almost no chance of hitting a North Korean missile on its way up unless an Aegis ship was deployed very close to the launch point, perhaps in North Korean waters. Even then, it would have to chase the missile, a race it is unlikely to win. In the only one or two minutes of warning time any system would have, the probability of a successful engagement drops close to zero....
“What about our long-range defenses, the Ground-Based Midcourse Defense, or GMD, interceptors based in Alaska and California? There the test record is even worse. Even under ideal conditions, where the defenders knew the time, direction and trajectory of the test target and all the details of its shape, temperature, etc., this system has only hit its target half of the time.
“ ‘The success rate of the GMD systems in flight intercept tests has been dismal,’ says former director of operational testing for the Pentagon, Philip Coyle. Our chances of intercepting a threat missile, even under ideal conditions, are basically ‘at least as good as a coin toss,’ says the former head of the Missile Defense Agency, retired Lt. Gen. Trey Obering.
“Yet, reporters routinely use words like ‘shield’ and ‘dome’ to describe our supposed capability, giving us a false sense of security. Officials make the matters worse with exaggerated, if carefully constructed, claims. ‘The United States military can defend against a limited North Korean attack on Seoul, Japan and the United States,’ said Chairman of the Joint Chiefs, General Joseph Dunford at the annual Aspen Security Forum in July.
“Is this true? It depends what you mean by the word ‘limited.’
“If North Korea cooperated and shot their new intercontinental ballistic missile, the Hwasong-14, at the United States with adequate warning so that we could prepare, and if the warhead looked pretty much like we expect it to look, and if they only shot one, and if they did not try to spoof the defense with decoys that looked like the warhead, or block the defense with low-power jammers, or hide the warhead in a cloud of chaff, or blind the defense by attacking the vulnerable radars, then, maybe this is true. The United States might have a 50-50 chance of hitting such a missile. If we had time to fire four or five interceptors, then the odds could go up.
“But North Korea is unlikely to cooperate. It will do everything possible to suppress the defenses. The 1999 National Intelligence Estimate of the Ballistic Threat to the United States noted that any country capable of testing a long-range ballistic missile would ‘rely initially on readily available technology – including separating RVs (reentry vehicles], spin-stabilized RVs, RV reorientation, radar absorbing material, booster fragmentation, low-power jammers, chaff, and simple (balloon) decoys – to develop penetration aids and countermeasures.’
“Our anti-missile systems have never been realistically tested against any of these simple countermeasures. This is one reason that the Pentagon’s current director of operational testing is much more cautious in his assessments than missile defense program officials. ‘GMD has demonstrated a limited capability to defend the U.S. Homeland from small numbers of simple intermediate-range or intercontinental ballistic missile threats launched from North Korea or Iran,’ he reports. Moreover, it is impossible, he says, to ‘quantitatively assess GMD performance due to lack of ground tests’ and ‘the reliability and availability of the operational GBI’s [Ground-Based Interceptors] is low, and the MDA continues to discover new failure modes during testing.’
“Yet, we have spent $40 billion on the GMD system and over $320 billion on scores of missile defense systems over the past few decades. You have to wonder exactly what these tests are for: give the troops the protection they need or give the contractors the next program payment?”
With the above in mind, it’s interesting the Pentagon and the administration called for building two $1 billion radar installations and adding 20 rocket interceptors to the 44 already deployed in underground silos at Ft. Greely in Alaska and at Vandenberg Air Force Base in California.
The Pentagon is also taking steps to launch new satellites to help each interceptor’s “kill vehicle” find, crash into and destroy incoming ballistic missiles high above the atmosphere.
The expected cost is $10.2 billion over five years, on top of more than $40 billion already spent on the system, as reported by David Williams of the Los Angeles Times.
But government reports and the views of experts such as Joe Cirincione are that the enhancements won’t work. Far more flight tests would need to be conducted. We have no time for that.
Russia: Michael R. Gordon and Julian E. Barnes / Wall Street Journal
“The U.S. and Russia aired disagreements this week over key world conflict zones, framing differences that spell increasing uncertainties for the start of 2018 in Europe, Asia and the Middle East.
“U.S. Secretary of State Rex Tillerson, in a call to Russian counterpart Sergei Lavrov, urged Russia to moderate its stance toward Ukraine, the State Department said Wednesday, while Mr. Lavrov exhorted the U.S. to back away from confrontation with North Korea.
“Tensions surrounding both Ukraine and North Korea, however, have only escalated over recent days, a development that comes as U.S. allies debate whether to push for expanded diplomatic contacts with Moscow or keep expert-level discussions frozen over complaints of Russian interference in Ukraine.”
Fighting has been intensifying in Ukraine recently, as Moscow backed away from a ceasefire in the east. At the same time, President Trump finally agreed to send Ukraine defensive lethal weapons that have the ability to destroy armored vehicles used by Russian-backed separatists. [The Pentagon and State Department had recommended Trump take this step at the beginning of the year.]
And while Russia has urged the Trump administration to work together on forging a diplomatic solution for North Korea, Lavrov said “Washington’s aggressive rhetoric about Pyongyang” and “war preparations” were escalating tensions in the region.
On a totally different topic, as the Washington Post’s Michael Birnbaum reported, “Russian submarines have dramatically stepped up activity around undersea data cables in the North Atlantic, part of a more aggressive naval posture that has driven NATO to revive a Cold War-era command, according to senior military officials.
“The apparent Russian focus on the cables, which provide Internet and other communications connections to North America and Europe, could give the Kremlin the power to sever or tap into vital data lines, the officials said. Russian submarine activity has increased to levels unseen since the Cold War, they said, sparking hunts in recent months for the elusive watercraft....
“The privately owned lines, laid along some of the same corridors as the first transatlantic telegraph wire in 1858, carry nearly all of the communications on the Internet, facilitating trillions of dollars of daily trade. If severed, they could snarl the Web. If tapped, they could give Russia a valuable picture of the tide of the world’s Internet traffic.”
Meanwhile, while hundreds of Russian celebrities, sportspeople and politicians nominated President Vladimir Putin for reelection on Tuesday, hours earlier the Kremlin said it wanted opposition leader Alexei Navalny investigated for calling for a boycott of the coming March election.
Navalny called for the boycott after Russia’s central election commission ruled he was not eligible to run for president due to a suspended prison sentence hanging over him. [I told you way back the Kremlin would never let him run.]
Navalny says he’s being excluded on false grounds because the Kremlin is running scared, while adding he will use his campaign headquarters across the country to call into question the legitimacy of the vote. Kremlin spokesman Dmitry Peskov said, “The fact that one of the would-be candidates is not taking part has no bearing on the election’s legitimacy.” Hours later, Putin was feted by about 700 supporters who pledged to back him – above the 500 minimum required to initiate a presidential bid.
Editorial / Washington Post
“Mr. Putin could easily beat Mr. Navalny in the presidential election, bolstering both his international and domestic credibility.
“He nevertheless prefers to stage a Potemkin vote in which his only challengers will be two perennial candidates, one Communist and one ultra-nationalist, and Ksenia Sobchak, a 36-year-old celebrity who has called the election ‘a high-budget show.’”
Turnout is undoubtedly going to be low.
Editorial / Wall Street Journal
“Welcome to democracy, Putin-style. In today’s Russia, an opposition candidate [Navalny] is convicted on trumped up charges that are designed to scare him off from politics and his anticorruption campaigns. He decides to run anyway, and then is declared ineligible by virtue of the conviction. Which leaves the Kremlin in the position of threatening Mr. Navalny with more jail time for boycotting an election the Kremlin has prevented him from entering.
“Mr. Navalny is a brave man who knows what he is doing and what he’s risking. But Mr. Putin’s moves against Mr. Navalny and his associates aren’t those of a strong and confident man. To the contrary, they are the actions of someone letting his fears get the best of him.”
One last item...President Putin said on Monday that Russian authorities should monitor the activity of “some companies” on social media during next year’s presidential election and assess the extent of their involvement in domestic policies.
My, that’s rather rich, isn’t it, sports fans?
Russia has already designated the likes of Radio Free Europe/Radio Liberty and Voice of America, both U.S.-backed organizations, as “foreign agents.”
Syria: Fewer than 1,000 ISIS fighters remain in Iraq and Syria, according to the U.S.-led international coalition, which compares with 3,000 only three weeks ago. This is good, but far from the end of the movement (see Afghanistan below).
Wednesday, Turkish President Erdogan denounced President Assad as a terrorist mass murderer with no place in Syria’s postwar future, even as Assad seems more confident than ever he will survive and remain Syria’s leader.
Erdogan’s statement was a surprise as in recent months he had signaled a willingness to accept Assad’s political longevity.
Erdogan appeared to be reminding Russia that it cannot dictate Syria’s future alone, especially on issues sensitive to Turkey such as the fate of Syria’s Kurdish groups, which Ankara views as enemies.
Editorial / Wall Street Journal
The upper house of the Russian Parliament this week approved a 49-year extension on its naval base in the Syrian port of Tartus, another sign of Vladimir Putin’s strategic gains from his intervention in Syria’s civil war. As the last Islamic State strongholds are defeated in Syria, the big question is whether the U.S. will cede the advantage to Russia and Iran and their client Bashar Assad.
“The State Department confirmed recently that Islamic State has lost 95% of the territory it once controlled in Iraq and Syria, and the flow of foreign fighters into Syria is slowing. That’s the good news.
“The bad news is that Mr. Assad remains in power, despite nearly seven years of civil war and two U.S. Presidents and successive Secretaries of State who have called for his ouster. The Syrian dictator’s predations have killed more than 400,000 civilians and displaced millions, and he’s still torturing, starving and murdering his enemies. The regime has spent most of this month shelling Eastern Ghouta, a rebel-held Damascus suburb, despite a proclaimed Russia-brokered cease-fire.
“The Trump Administration hasn’t challenged Assad or Russian and Iranian-backed forces directly in offensive operations. Instead, the U.S. has tried to re-establish limited deterrence to prevent those forces from pushing into areas controlled by the Syrian Democratic Forces (SDF) that oppose Assad. President Trump blew up a Syrian airfield after a chemical weapons attack in April, and the U.S. military has downed a Syrian aircraft that made incursions into SDF areas. That’s fine as far as it goes but it won’t change the balance of power in Syria.
“Mr. Trump committed in October to roll back Iran’s influence in the Middle East, calling Tehran a ‘fanatical regime.’ What he does in Syria will show if those words were meaningful, or rhetoric to mask a continuing U.S. retreat from the Middle East as tensions rise between Iran and the Sunni Gulf states.
“One early sign will be what the White House decides to do with the SDF-controlled regions, which are now protected by U.S. and allied air power, similar to how the George H.W. Bush and Clinton Administrations protected the Kurds of northern Iraq in the 1990s. Our sources say there are safe zones that could be maintained long enough to rebuild civil institutions and to train a force strong enough to challenge Assad-held areas. That may take years, but it’s worth the effort to prevent Tehran from achieving its goal of a land bridge from Tehran through Iraq and Syria to the Mediterranean.
“Another marker will be how the Trump team handles the issue of the Syrian Kurds, known as the YPG. The group has links with the Kurdistan Worker’s Party, or PKK, which is a U.S.-designated terror group. The White House armed YPG fighters in May to help with the siege of Raqqa and announced in November that this aid would soon cease. If the White House doesn’t handle diplomacy with the Syrian Kurds carefully, they could cut a deal with Assad for some form of regional autonomy, which might provoke the Turks, who want to prevent a Kurdish state, into an intervention in northern Syria.
“Russia and Iran are trying to project an image that they’ve already won the civil war and lure the White House into a peace deal on their terms. That’s why Mr. Putin hosted a summit in Sochi last month with Iranian President Hassan Rouhani and Turkish President Recep Tayyip Erdogan.
“The Russian has scheduled another peace summit for late January with the same countries, but the Syrian opposition to Assad is refusing to attend. Secretary of State Rex Tillerson told a Washington audience last month that the Administration is ‘working together with Russia on how to prevent the civil war from re-erupting.’
“But the civil war has never gone away. Assad’s forces are also having trouble holding territory they win militarily. He recently pulled a unit out of an area near Mayadeen and sent those troops to Idlib and Hama. Islamic State units quickly returned to local villages. The U.S. does not want an Islamic State 2.0 to form in Syria as the only Sunni alternative to Assad’s Alawite minority.
“A key U.S. goal in Syria should be to deny Assad, Russia and Iran the strategic victory of controlling all of Syria. Only when Russia and Iran conclude that they can’t win militarily, or that the price of winning is too high, will they negotiate a genuine peace deal that allows for self-governing ethnic enclaves in Syria. The means to that end is supporting Syrian and Kurdish forces that oppose Assad and Islamic radicals. The alternative is a U.S. retreat that would allow an Islamic State comeback and perhaps a larger war in the Middle East.”
Afghanistan: Suicide bombers stormed a Shia cultural center and news agency in central Kabul on Thursday, killing at least 41 and wounding scores, many of them students attending a conference. Islamic State said in an online statement that it was responsible, the latest in a series of attacks targeting Shiites in Kabul, ISIS saying the center received support from Iran.
Israel: Reuel Marc-Gerecht / Wall Street Journal
“The biggest problem the Palestinians have is that the Israelis don’t trust them, and the Israelis cannot be ignored, sidestepped, bullied, bombed or boycotted out of eastern Jerusalem and the West Bank. Fatah, the lead organization of the Palestine Liberation Organization and the muscle behind the Palestinian Authority, has often acted publicly as if the Israelis weren’t the foreigners who truly mattered, appealing to Europeans, Russians and Americans to intercede on its behalf. Americans and Europeans have consistently encouraged this reflex by stressing their own role in resolving the conflict, usually by suggesting that they would cajole or push Israelis toward Palestinian positions.
“For the Israelis, this has seemed a surreal stage play. The Fatah leadership is well aware that only the Israeli security services have kept the West Bank from going the way of the Gaza Strip, where Fatah’s vastly better-armed forces were easily overwhelmed by Hamas in 2007. Fatah’s secular police state – and that is what the Palestinian Authority is – has proved, so far, no match for Hamas.
“Western diplomacy has failed abysmally to recognize the profound split between Palestinian fundamentalists and secularists and played wistfully to the hope that a deeply corrupt Fatah oligarchy could conclude a permanent peace accord with Israel. This delusion’s concomitant bet: Such a deal would terminally weaken Hamas, since the secularists would have finally brought home the mutton.
“The most important point, however, is always ignored. Competent, transparent, nonviolent Palestinian governance is the only chance Palestinian society has of escaping the fundamentalist critique that has undermined oligarchs across the Arab world. Fearful of playing the imperialists and keenly aware of the efficiency of having a police state as a partner, Americans, Europeans and Israelis have failed to use the leverage of financial aid to set standards for Palestinian governance on the West Bank and in Gaza.
“Palestinian Muslims are no different than other Muslim Arabs. Religious militancy has grown astronomically over the past 40 years as the ruling secular elites have calcified into corrupt, hypocritical, heavy-handed autocracies. Westerners have not dealt with this well, since it defies the top-down approach inherent in diplomacy – and also because fundamentalists terrify them. Yet the past ought to tell Americans and Europeans that a two-state solution to the Israel-Palestinian clash isn’t going to happen before Palestinians reconcile in a functioning democracy that doesn’t scare their Jewish neighbors. The overwhelming burden here is upon the Palestinians.
“The most valuable American contribution to the peace process, so far only episodically delivered, is to remind the Palestinians that they first have to get their own house in order and the Israelis have viewed the Palestinians – and Arab Muslims in general – as the ineducable ‘other,’ who is best left to his own rules so long as Israelis aren’t killed. Any Israeli effort to control Palestinian-on-Palestinian abuse will surely be met with a hailstorm of censure from the West. But the Israelis ought to take a longer view. Barrier or no barrier, they are going to live with the Palestinians forever. Israel should certainly want to correct its enormous mistake of allowing Yasser Arafat, the father of Palestinian nationalism, to import his thugocracy into the West Bank and Gaza.
“Most Arabs have adjusted, however reluctantly, to the permanence of Zion. They did so four decades ago when Egypt, slowly collapsing under its own military dictatorship, checked out of the war. Americans, Europeans and Israelis – not ‘the Arabs’ - are primarily responsible for elongating the big Palestinian delusions about the ‘right of return’ and a sovereign East Jerusalem. It’s way past time they stopped. Mr. Trump’s decision, whatever the motivation, is a step forward.”
Iran: The country saw the largest anti-government demonstrations today since the nationwide pro-reform unrest in 2009, as thousands turned out in several cities to protest rising prices and alleged corruption, as well as the country’s costly involvement in regional conflicts such as those in Syria and Iraq.
Saudi Arabia: Editorial / Washington Post
“Saudi Arabia’s Crown Prince Mohammed bin Salman wants to shake up the hidebound kingdom. He has already announced that women will be permitted to drive, launched an anti-corruption campaign, allowed movie theaters to open next year, imposed budget austerity and revealed expansive ambitions to diversify the economy away from its dependence on oil. All this seems responsive to a restive younger generation. But the crown prince has occluded his vision with a taste for grandeur.
“He reportedly bought a luxury chateau for more than $300 million in Louveciennes, France, near Versailles, and he acquired a 440-foot yacht from a Russian tycoon in 2015 for about $550 million. Those prices are eye-watering, but the Saudi government says the crown prince did not provide $450.3 million for the most expensive art purchase in history, a Leonardo da Vinci painting recently sold at auction.
“Certainly, the anti-corruption campaign, in which 159 of the kingdom’s richest businessmen, princes and officials were rounded up and detained at a five-star Ritz-Carlton Hotel last month, had more than a whiff of a power grab. The corruption problem is real, and so is the impatience of the younger generation. But don’t look for trials for those detained in their cushy suites. Instead, the crown prince is attempting to coerce the wealthy into signing over tens of billions of dollars in assets to avoid prosecution and win their freedom. This is a crude method of an autocratic regime, not a modern rule-of-law state. Why did the crown prince, railing against self-enrichment by his peers and colleagues, decide to plunk down more than half a billion dollars for the mega-yacht and the villa in France, which sits on a 57-acre landscaped park?... the symbolism is awful and suggests the crown prince has one vision for his people and another for himself.
“If he is truly interested in demonstrating enlightened and modern leadership, he should unlock the prison doors behind which he and his predecessors have unjustly jailed people of creativity, especially writers critical of the regime and intolerant religious hard-liners. Recently, he oversaw a crackdown that swept up influential clerics, activists, journalists and writers on vague charges of endangering national security. Allowing these voices to thrive and exist in the open would be a real contribution to the kind of society he says he wants.”
--Presidential tracking polls....
Gallup: 38% job approval rating for President Trump, 57% disapproval.
Rasmussen: 45% approval, 53% disapproval.
--Democrat Doug Jones was officially declared the winner of Alabama’s special senate election on Thursday as officials certified the results. Jones defeated Republican Roy Moore earlier this month by about 22,000 votes, 1.5 percentage points.
Jones, though, has still refused to concede, filing a last-ditch lawsuit hours before the certification, that a judge rejected, and another one after claiming voter fraud. What a freakin’ jerk.
So Jones, who will be sworn in on Jan. 3, narrows the GOP’s advantage in the Senate to 51-49.
--Appearing on ABC’s “This Week,” Rep. Charlie Dent (R-Pa.) said the GOP should “be prepared for the worst” in the 2018 midterms, pointing to President Trump’s low approval ratings, even in solid red states like Alabama.
Dent, who announced earlier in the year he would not seek reelection, has been a critic of his party under Trump, having ripped candidate Roy Moore.
Dent did say that Trump could help in “some very ruby-red Republican districts,” but in marginal swing districts in the Northeast “I suspect a lot of candidates probably would rather that he not visit,” Dent said.
--The other day, former Republican governor of New Jersey, Christine Todd Whitman, said some of the following in an op-ed for the Star-Ledger.
“Today, freedom of the press is constantly challenged by claims of ‘fake news’ and editorial comment on the front pages, as well as the denigration of any media outlet that chooses to disagree and question those making policy. Calling those who disagree ‘the enemy of the people,’ and calling for an examination of their licenses to operate, is more in tune with a dictatorship than a democracy. Our forefathers understood the importance of the press. Thomas Jefferson once said, ‘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.’ As citizens, we should be very worried if the only news we receive has been preselected and we are not allowed to have access to a variety of sources for our information – this suggests an imminent Orwellian dystopia....
“It (also) seems that people can no longer disagree in a civilized way. Those who disagree with us become our enemy, not just a friend or relative who holds a different opinion. Respect for the individual and the concept that ‘all men are created equal’ is being undermined by the denigration of people of different religions, the belittling of those with disabilities, the demonizing of whole categories of people because of a shared national origin. Nearly all of our ancestors came to America from somewhere else. It is our diversity and our commitment to our nation’s ideals that gives us our depth and strength.
“Freedom of the press, freedom of speech, and the rights of the individual all form the basic pillars of our democracy. Today they are threatened. We are losing our respect as a world leader, sidelining ourselves from many of the critical discussions taking place around the world. Our influence on the world stage is undermined every time we stop acting like the country we are: ‘the shining city on the hill’ of which Ronald Reagan spoke so eloquently....
“In a democracy, we are the only ones who can make a difference – with the rights we cherish so comes responsibility. We need to stand up, demand to be heard, and tell our leaders to put partisanship aside. We have a responsibility to require our leaders to act in the best interests of the nation before we permanently damage the way of life we treasure, the democracy we hold dear, and the privilege it is to be an American.”
--Democratic Rep. Sheila Jackson Lee was at it again, accused of using her position to get into a first-class airline seat, as another woman, a Washington, DC, schoolteacher who had booked the seat well in advance, was bumped from it.
So the teacher, 63-year-old Jean Marie Simon, then called out Jackson Lee on social media – and the congresswoman lashed back, playing the race card when criticized, which was par for the course for her.
“Since this was not any fault of mine, the way the individual continued to act appeared to be, upon reflection, because I was an African American woman, seemingly an easy target along with the African American flight attendant who was very, very nice,” she tweeted.
“But in the spirit of this season and out of the sincerity of my heart, if it is perceived that I had anything to do with this, I am kind enough to simply say sorry. But as an African American, I know there are too many examples like this all over the nation.”
According to the Houston Chronicle, the congresswoman was voted “Biggest Windbag” on Capitol Hill from 1998 through 2006.
In 1998, she blew up over not being able to get seafood on a Continental flight.
“Don’t you know who I am? I’m Congresswoman Sheila Jackson Lee! Where is my seafood meal? I know it was ordered!” she yelled.
David Martosko, U.S. political editor for the Daily Mail, said on Twitter he had personally witnessed Jackson Lee melting down on another flight.
“I saw Sheila Jackson Lee on a domestic flight two years ago. While I was walking back to coach, she was throwing a hissy fit in First Class over why the steward had to gate-check her carry-on. (It was too big to fit in the overhead.) She threw a tantrum worthy of a 3-year-old,” he wrote.
--Back in 1990, at the height of the crack epidemic, New York City had 2,245 murders, but as of Wednesday that toll was 286 – the lowest since reliable records have been kept.
The previous low for homicides was 333 in 2014, and overall crime – including the major felony categories of murder and manslaughter, rape, assault, robbery, burglary, grand larceny, and car thefts – will have declined for 27 straight years. [From 527,000 in 1990 to 94,800 as of Sunday.]
There was an increase in reports of rape at yearend, which coincided with the accusations against men like Harvey Weinstein, which in turn gave rise to the #MeToo movement encouraging victims to come forward.
--From Melissa Klein / New York Post:
“One of New York City’s highest paid surgeons – who made $7.3 million last year – was a virtual ghost in the operating room, leaving more than 1,000 patients in the hands of unsupervised residents for delicate prostate procedures and other surgeries, according to two new lawsuits.
“Dr. David Samadi would claim to be performing the surgeries but was actually in another operating room at Lenox Hill Hospital, according to the lawsuits filed last Friday in Manhattan Supreme Court.
“Samadi, the head of urology at Lenox Hill, went so far as to put the patients under general anesthesia rather than a milder sedative so they would be knocked out and not realize he wasn’t in the OR, the suits charge.”
The U.S. Attorney’s office in Manhattan has been probing Samadi’s billing practices, according to an email sent by prosecutors to the Boston Globe. And the state Department of Health is also investigating the doctor, according to the Globe.
Overlapping surgeries are permitted under Medicare rules, but not when the “critical parts” of two operations happen at the same time.
Samadi’s contract includes incentive clauses related to the number of operations he performs, according to the lawsuits.
Klein: “Samadi would sometimes leave a robotic surgery momentarily – and leave instruments inside a patient – to do a mandated pre-surgical overview of a procedure in another room, the court papers say.”
--The temperature at International Falls, Minnesota – the self-proclaimed “Nation’s Icebox” – plunged to a record low for Dec. 27, 37 degrees below zero, air temp, breaking the old record of 32 below set in 1924. [The record low for any day there is -55 set in Jan. 1909.]
And as you all know (but which I had to get down for the archives), Erie, Penn., had a record 65 inches of snow over 72 hours (60” in 48), with some New York communities near Lake Ontario’s eastern end seeing around 5 feet of snow as well.
To put the 60 inches over two days for Erie into perspective, the previous two-day record for Pennsylvania was ‘only’ 44 inches for Morgantown, March 20-21, 1958. [A little place in Berks County that as of the last census had 826 residents...and not to be confused with Morgantown, West Virginia...a distinction I had to look up just to be sure there was a Morgantown, PA....as I ramble on....]
--The British government is in a tizzy over word that Prince Harry and fiancée Meghan Markle are inviting Barack and Michelle Obama to their May wedding, which no one would give a damn about except for a certain current occupant of the White House.
As the Sun newspaper reported in the U.K., “Harry has made it clear he wants the Obamas at the wedding, so it’s causing a lot of nervousness, the Sun citing a senior government official. “Trump could react very badly if the Obamas get to a royal wedding before he has had a chance to meet the Queen.”
Trump and British Prime Minister Theresa May have had a rocky first year in their relationship, as her invite to Trump to come to England for a state visit was met with protests and petitions against it. But she could have a final say on whether Trump is in attendance for the May 19 nuptials.
The Obamas were not invited to Prince William and Kate Middleton’s wedding in 2011.
--Finally, with many of you on the road this holiday season, following is a nightmare in this regard, via Yonden Lhatoo, chief news editor at the South China Morning Post (Hong Kong).
“I had a sinking feeling about my journey to Hong Kong on flight AI-310 when I reached the boarding gate at New Delhi’s Indira Gandhi International Airport to be informed there would be a one-hour delay.
“At the boarding gate across from us on Thursday night, another Air India flight, to Mumbai, was caught up in some kind of drama, with ground staff screaming their lungs out at each other and into their walkie-talkies over some crisis I couldn’t quite figure out, preoccupied as I was with the prospect of a tedious wait ahead of my least favorite pastime – flying economy class.
“My own gate was soon the epicenter of another loud drama as one angry passenger after another launched into yelling contests with Air India counter staff over the inconvenience caused by our delay, which ended up lasting nearly two hours.”
So Mr. Lhatoo’s scheduled Boeing 787 Dreamliner flight developed technical problems and the aircraft was swapped out for another aircraft, which “meant many passengers lost their window-aisle/emergency exit seat bookings and there was much commotion on board, compounded by ground staff running up and down the aisles looking for ‘missing’ travelers.
“I ended up in 22D, a middle-row aisle seat, and stashed my carry-on luggage – a small, nylon, zip suitcase – in the locker directly above my head.
“Along with some clothes and books, I had in it a leather bag with my laptop, iPad, and some U.S., Indian and Hong Kong currency. I was carrying about US$3,000 in 100-dollar bills.
“My suitcase had no lock, but it was so tightly packed and heavy that I remember thinking it would take considerable effort and skill to remove it or prise the leather out from above my head without my knowledge.
“The journey lasted less than five hours, and I drifted in and out of sleep through most of it. I could sense the occasional passenger brushing past me for a toilet trip, and cabin crew going about their business up and down the aisle while most of us dozed off.
“When we landed in Hong Kong on Friday morning, a very quick inspection of my carry-on baggage suggested everything was in order and I left the aircraft.
“It was only in the evening, while unpacking at home, that I suddenly discovered all the US$100 bills were gone; they had been replaced with US$1 notes – 21 in total. Nice exchange rate.
“The sneaky switcheroo had worked exactly as intended. Nothing else had been stolen and that was the genius of the con – I would have easily spotted a missing laptop or credit cards.
“Whoever took the money would have had to remove the bag, take it away to carry out the elaborate swap and bring it back – it could not have been done above my head without waking me up.
“The only time the suitcase was out of my sight otherwise was for a couple of minutes when it went through the X-ray during the security check earlier. That’s also the first time someone would have seen there was money in it.
“I’ve heard of organized gangs being responsible for mid-air thefts, even involving a nexus of X-ray checkers and cabin crew, but have never been a victim myself until now. I’m not saying that’s what happened here because, frankly, I have no clue. I’m just stunned by the sheer audacity and duplicity of it all.”
If you are carrying a lot of cash in this fashion, check your bag after you get through the X-ray line, and, upon arriving, before you disembark the plane. At least you can raise some hell, even if it goes nowhere, should something be amiss.
Pray for the men and women of our armed forces...and all the fallen.
God Bless America.
Gold $1305...best year since 2010
Oil $60.10...first weekly close above $60 since 5/29/15
Returns for the week 12/25-12/29
Dow Jones -0.1% 
S&P 500 -0.4% 
S&P MidCap -0.2%
Russell 2000 -0.5%
Nasdaq -0.8% 
Returns for 2017*
Dow Jones +25.1%
S&P 500 +19.4%
S&P MidCap +14.4%
Russell 2000 +13.1%
*I’ll be posting my exclusive year in review in numbers on my “Wall Street History” link by Sunday p.m.
Bulls N/A...last week’s split was 64.1 / 15.1, if you missed my update...awaiting new figures* [Update 1/3...figures weren't released Christmas week it turns out.]
*For ages I shelled out big money for real time numbers. I can no longer afford to do so. I can receive it elsewhere with a delay. Understand I shell out $thousands on subscriptions of all kinds each year.
Hope you had a good Christmas.
Dr. Bortrum celebrated a big birthday this week...90!
HAPPY NEW YEAR!!! Go Deacs! ....Wake Forest being 55-52 winners today in the Belk Bowl against Texas A&M.