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01/06/2018

For the week 1/1-1/5

[Posted 11:30 PM ET, Friday]

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Edition 978

Trump World...2018, part deux....

If 2017 represented an exhausting news cycle, 2018 sure got off to a similar start.

But first, stocks were shot out of the cannon to open the year, with the S&P 500 and Nasdaq having their best weeks since Dec. 2016 (returns down below).  President Trump’s tax cut legislation is a big help, no doubt, as corporations were scurrying to increase their earnings outlooks for the year, and that’s a good thing.  It is going to be key, though, to listen exactly to what CEOs say with their upcoming earnings statements that will begin coming through next week.  Of more import will really be the accompanying statements to earnings reports following the first quarter, after consumers have had a chance to react more fully to increased paychecks, which is to begin in February.  Will CEOs have the sense that any increase in consumption is long-lasting at that time?

For now, boy, did your editor look bad in Week One of 2018.  Last review, in looking ahead to this year, I wrote:

“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.”

I won’t concede this part, as many would feel the president’s tweet regarding who has a bigger nuclear button, Kim or The Donald, pretty much fits the bill, though I’m predicting “we might avoid a direct confrontation” on the Korean Peninsula.

I’m worried about China and Taiwan, and the administration washing its hands of Syria, “leaving that country to Iran,” with Iran and Syria, together with Hezbollah, pressuring Israel, forcing it to fight back.

And I’m worried about what Trump will do on the trade front.

I’m focused on geopolitics more than ever.  But I also recognize, more than our president, the benefits of synchronized global growth, pounding that drum long before others did (that’s where my focus on Europe paid off...to your benefit).

The point is, while market participants around the world all generally feel pretty good these days, if not euphoric, there are things out there that could change sentiment on a dime. And, importantly, would cause corporate CEOs to rapidly alter their bullish plans, or at least pull back for a while, which would upset the markets. Anything that causes a reversal in the bullish tone for earnings, for example, will send stocks into a little crashette, of which I believe we’ll have two this year.

Yes, I did say the Dow and S&P would fall 5 percent in 2018, and Nasdaq a solid 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.”

And, yes, all three of these soared anew the past four days.  I’m smiling.  This week was like 1999, and we know how that ended.

True, it’s different. The above named companies are real, not dot-com frauds, with great earnings, but I’m reminded of a then well-known PaineWebber strategist, whose name I’ll save from further embarrassment, who I quoted in early 2000. This fellow said “price-earnings multiples didn’t matter,” in discussing some issues with 100 P/Es at the time.  I called him out on it in these pages.  I called for a crash in the Star-Ledger.  That’s what we got. 

But this time is different for another reason.  The world is far more dangerous than in 2000, when we didn’t know what was looming. Today we can see it, yet many choose to look away.

Finally, I thought it was kind of funny that the following was written six days after my last column.  Of course I agreed with the tone.

Karl Rove / Wall Street Journal...Jan. 3rd...

“Two or more areas of new or renewed geopolitical conflict will arise. China will grow more aggressive.  Islamic State will increase large-scale terror attacks.  War with North Korea won’t come, but by year’s end the Hermit Kingdom will have nuclear weapons and long-range missiles capable of reliably delivering them.  A re-elected Mr. Putin will cause more problems for the West, including a major incident in Ukraine.

“More research will emerge on the adverse effects of smartphones and social media on mental health and child development.

“Mr. Trump’s approval rating will end 2018 lower than it is today. Nikki Haley’s star will keep rising.  Jared Kushner will finish the year in worse legal shape.  Key White House aides and at least one cabinet secretary will depart.”

Trumpets....

--Journalist Michael Wolff’s new book, “Fire and Fury: Inside the Trump White House,” roiled Washington and the cable news networks.  I’ve followed Mr. Wolff’s work for years (it was laughable on Thursday when Sarah Sanders said he was an unknown journalist...everyone in D.C. and New York, for starters, knows him) and Wolff can be an entertaining sort, though not someone I’d want to have a beer with, because he can also be rather nasty.  It’s startling he was given extensive access to the West Wing that he then turned into this instant best-seller, reportedly after more than 200 interviews.

Among some of the revelations, you had former chief strategist Steve Bannon believing a June 2016 meeting between Donald Trump Jr. and a group of Russians was “treasonous.”  The Russians had offered Donald Trump Jr. damaging information on Hillary Clinton.

Wolff writes that Bannon told him of the meeting:

The three senior guys in the campaign thought it was a good idea to meet with a foreign government inside Trump Tower in the conference room on the 25th floor – with no lawyers.  They didn’t have any lawyers.  Even if you thought that this was not treasonous, or unpatriotic, or bad s***, and I happen to think it’s all of that, you should have called the FBI immediately.”

Bannon reportedly also said the Justice Department investigation into links between the Trump campaign and Moscow would focus on money laundering, adding: “They’re going to crack Don Junior like an egg on national TV.”

Michael Wolff also reports that on election night, when the results suddenly began tilting in Trump’s favor, “Don Jr. told a friend that his father, or DJT, as he calls him, looked as if he had seen a ghost.  Melania was in tears – and not of joy. There was, in the space of little more than an hour, in Steve Bannon’s not unamused observation, a befuddled Trump morphing into a disbelieving Trump and then into a horrified Trump.  But still to come was the final transformation:  Suddenly, Donald Trump became a man who believed that he deserved to be, and was wholly capable of being, the president of the United States.”

I don’t believe this claim.

But I have to admit I found the following fascinating and, if true, scary...concerning the White House.

Trump, in fact, found the White House to be vexing and even a little scary. He  retreated to his own bedroom – the first time since the Kennedy White House that a presidential couple had maintained separate rooms.  In the first days, he ordered two television screens in addition to the one already there, and a lock on the door, precipitating a brief standoff with the Secret Service, who insisted they have access to the room.”

I can totally see this, and Trump wouldn’t be the first to be wary of the White House, which President Truman called “the great white jail.”

But demanding a lock on the door?  The whole scene fits with other reports of his behavior, which means, we all know, his tweeting.  He’s flipping around in private, looking for the best coverage of...himself.  Heaven forbid if you don’t kiss his ring.

Meanwhile, according to Michael Wolff, Ivanka hopes to be president.  That doesn’t surprise me.  And here I’ll bite my tongue.

There is a description of Trump’s hair....which is frankly gross...and oh, so much more, much of which we already know, like how the president doesn’t read, and just isn’t that bright, and needs policy papers shrunk to 2 or 3 bullet points.

In response Trump’s lawyers wrote to Bannon, saying he violated a non-disclosure agreement and issued a cease-and-desist notice accusing him of defaming the president in speaking to Michael Wolff.

President Trump also personally responded by saying Bannon had “lost his mind” in a statement, and that he and Bannon rarely had one-on-ones and that Bannon had been responsible for the loss of the Republican Senate seat from Alabama.

“Steve Bannon has nothing to do with me or my presidency,” Trump said.  “When he was fired, he not only lost his job, he lost his mind.”

And:

“Steve was rarely in a one-on-one meeting with me and only pretends to have had influence to fool a few people with no access and no clue, whom he helped write phony books,” Trump said.

“Steve pretends to be at war with the media, which he calls the opposition party, yet he spent his time at the White House leaking false information to the media to make himself seem far more important than he was,” the president added.

Trump’s lawyers attempted to block publication of the book, but it was released Friday by Henry Holt & Co. anyway.

John Podhoretz / New York Post

“Remember when Bannon was going to be Trump’s outside enforcer, using the Breitbart web site to get Trumpy Republicans elected and eliminate evil establishmentarians who were improperly uncomfortable with the prospect of having their party tarnished by the Constitution-trashing child molester Roy Moore?

“That was a nice, self-aggrandizing fantasy for him while it lasted.  And now? After the owners of Breitbart realize their own commercial needs are going to be stymied if their audience believes they are being led by someone Trump deems disloyal, Bannon may find himself walking through the IRT subway cars in his two shirts, asking people for donations. He looks the part already.”

Friday, author Michael Wolff said on NBC’s “Today” that he had spoken with President Trump while working on the book, contradicting Trump’s assertion that he had never talked to the writer for this and had authorized “Zero access” to the White House.

Trump had tweeted Thursday evening: “I authorized Zero access to White House (actually turned him down many times) for author of phony book! I never spoke to him for book.”

“Full of lies, misrepresentations and sources that don’t exist. Look at this guy’s past and watch what happens to him and Sloppy Steve!” Trump added.

Wolff added that he had spoken to people who spoke to Trump on a daily, “sometimes minute by minute” basis. Asked to clarify what he meant when he wrote that Trump’s entire circle questioned his fitness for office, Wolff said, “Let me put a marker in the sand here: 100 percent of the people around him... They all say he is like a child. And what they mean by that is he has a need for immediate gratification.  It’s all about him.”

--Trump tweets over the past week:

“The Mercer Family recently dumped the leaker known as Sloppy Steve Bannon. Smart!”

“Well, now that collusion with Russia is proving to be a total hoax and the only collusion is with Hillary Clinton and the FBI/Russia, the Fake News Media (Mainstream) and this phony new book are hitting out at every new front imaginable. They should try wining an election.  Sad!”

“Democrats are doing nothing for DACA – just interested in politics. DACA activists and Hispanics will go hard against Dems, will start ‘falling in love’ with Republicans and their President! We are about RESULTS.”

“Since taking office I have been very strict on Commercial Aviation. Good news – it was just reported that there were Zero deaths in 2017, the best and safest year on record!”

“Crooked Hillary Clinton’s top aid, Huma Abedin, has been accused of disregarding basic security protocols. She put Classified Passwords into the hands of foreign agents. Remember sailors pictures on submarine? Jail! Deep State Justice Dept must finally act? Also on Comey & others.”

“I will be announcing THE MOST DISHONEST & CORRUPT MEDIA AWARDS OF THE YEAR on Monday at 5:00 o’clock. Subjects will cover Dishonesty & Bad Reporting in various categories from the Fake News Media. Stay tuned!”

“I use Social Media not because I like to, but because it is the only way to fight a VERY dishonest and unfair ‘press,’ now often referred to as Fake News Media...Phony and non-existent ‘sources’ are being used more often than ever.  Many stories & reports are pure fiction!”

“If the Dems (Crooked Hillary) got elected, your stocks would be down 50% from values on Election Day. Now they have a great future – and just beginning!”

“As our Country rapidly grows stronger and smarter, I want to wish all of my friends, supporters, enemies, haters, and even the very dishonest Fake News Media, a Happy and Healthy New Year. 2018 will be a great year for America!”

--The U.S. Justice Department has begun an investigation into whether the Clinton Foundation conducted “pay-to-play” politics or other illegal activities during Hillary Clinton’s tenure as secretary of state, as reported by The Hill on Thursday, citing law enforcement officials and a witness.

According to The Hill, FBI agents from Little Rock, Arkansas, where the foundation began, had taken the lead in the investigation and conducted one interview, with further activities expected in coming weeks.

Democrats have accused Republicans of launching an investigation of Clinton as a diversion from Special Counsel Robert Mueller’s probe into possible collusion between President Trump’s campaign and Russia.

According to The Hill, the investigation is examining whether the Clintons promised or performed any policy favors in return for contributions to their charitable efforts.  The FBI may also examine whether the foundation complied with tax laws.

Separately, Republican Senators Charles Grassley of Iowa and Lindsey Graham of South Carolina want the feds to press criminal charges against the former British spy who helped assemble the dossier on alleged collusion between Russia and the Trump campaign, Christopher Steele. Grassley and Graham wrote to the Justice Department saying they believed Steele lied to federal authorities about communicating with reporters as to the dossier’s contents, the New York Times reported today.

So between these two stories, the hyper-partisan fight between the elephants and the donkeys has just been ratcheted up another few notches.  And the mid-terms are now just ten months away.

--The Justice Department rolled back an Obama administration policy to not challenge state  laws that allow people to use pot for medical and recreational uses; a dramatic and unexpected shift in marijuana enforcement policy, seeing as how during the campaign, President Trump said he wouldn’t take such a step, and would “leave it up to the states.”

One Republican Senator, Cory Gardner of Colorado, is livid and has vowed to block future federal judicial nominees that the administration puts forward.

Attorney General Jeff Sessions has long signaled his disagreement with the previous administration’s stance.

The Obama policy, which represented a major breakthrough by advocates for the decriminalization of pot, did not change marijuana’s classification as an illegal drug.  But it discouraged the pursuit of non-violent marijuana users who have no links to criminal gangs or cartel operations.

The announcement came the same week California launched recreational marijuana sales for adults. Every state that’s approved recreational pot use – Alaska, Oregon, Washington, California, Nevada, Colorado, Maine and Massachusetts – has done so through voter approval at the ballot box, showing strong public support. The latest Gallup poll of Americans on the topic last year had 64% believing marijuana should be legalized, an all-time high for the question.

--Editorial / Washington Post

“Seers, pundits, gurus and weather forecasters can agree on one big thing: 2018 is going to be a very eventful year, perhaps the most eventful since, oh, 2017.  Or maybe since 1918, one century ago, when the Western Front finally went quiet, the guns that could fire a shell as heavy as a small car and obliterate human beings 70 miles away stopped firing, and a new world order began. The First World War, which ended in November of that year, caused the disappearance of empires that had run much of the world – Austrian, Russia, German, Ottoman – and was the beginning of a long demise for others, the British and French most of all.

“In the United States, we recoiled from our involvement in the war, though our small, late intervention had probably been the decisive factor, and retreated into not just isolationism but also a nasty sort of xenophobia and racial and ethnic prejudice.  That led to sharp reductions in immigration and to previously unthinkable restrictions on U.S. citizens by vigilante organizations and our federal government (primarily the Justice Department, led by a particularly ruthless attorney general).

“Meanwhile, the country that had seemed to emerge from the Great War as the rising power in the world and had seen itself since the times of George Washington and Abraham Lincoln as a democratic example abandoned major efforts at international involvement and cooperation. As commerce withered in the Great Depression, the country turned to trade protectionism, probably worsening things.  In Europe, many countries came under the sway of ethnic nationalism and totalitarian ideologies, which led to horrendous massacres, exclusions and mass forced migrations, all overseen by authoritarian governments that many U.S. citizens saw as the wave of the future.

“A second world war finally convinced this country’s chiefs of our vital role as leader of free nations, a position the United States maintained with confidence and resolve for over a half-century. Today we seem not so sure.  Nationalism is in vogue with some intellectuals (pseudo and otherwise), fear of the foreign is being cultivated by people in high places, and the United States is abandoning its leading positions in many areas, which newly confident authoritarian regimes are happy to occupy.

“November 1918 was a crucial turning point for the world. November 2018, when Americans elect a new Congress and begin to determine whether this discouraging change in direction will be allowed to continue, could well be another.”

Wall Street

Some important data on the U.S. economy was released this week. The ISM reading on manufacturing for December came in at 59.7 (50 being the dividing line between growth and contraction), a 14-year high. The ISM services reading, however, was 55.9, below expectations of 57.6 but still solid.

November construction spending came in at +0.8%, better than expected, while November factory orders were +1.3%, a little shy of consensus.

And then today we had the December jobs report and it was rather middling at 148,000, below the forecasted 189,000, with revisions to October and November down 9,000.  The three-month average is a more robust 204,000.  Employment gains for 2017 were 2.1 million, the seventh straight year of increases exceeding two million and only the second time on record the economy has produced jobs at that pace for that long (the other period being the 1990s).

Hiring has now risen for 87 straight months, the longest uninterrupted period of job expansion on record.

The unemployment rate remained at 4.1%, the lowest since December 2000, while U6, the underemployment rate, came in at 8.1%.

Importantly, average hourly earnings rose 0.3% last month, but are still up just 2.5% the last 12 months, which remains poor given the strength in the economy.

But to get off on a little tangent here, the unemployment rate for African-Americans fell to 6.8%, the lowest since the Bureau of Labor Statistics began keeping records on this back in 1972!  This is great.

What irks the hell out of me, though, from a purely political junkie standpoint, is how both Presidents Obama and Trump couldn’t / can’t see how a few highly-publicized visits to the inner city would work wonders for their party.

Oh, I know.  Obama and the Democrats didn’t have to do that because they took the black vote for granted, and they have been consistently rewarded.

But Republicans are facing a demographic time bomb and I thought of all people, Donald Trump was a guy who could go into the inner city, gather a group of folks together, and they’d eat it up!  It’s a natural.

Trump should take advantage of the 6.8% number, beyond tweeting about it, or mentioning it in a shout out to reporters or at a campaign rally.  Get into the ghetto and have a talk with the kids....listen to their issues (I know, he doesn’t know how to listen)...and the coverage would be terrific.

Anyway, just one weekend every six months, Mr. President, instead of going to Bedminster or Mar-a-Lago, try it.  It just might spell the difference between success or failure in those same key states you won in 2016.

And that’s a memo....

Back to the soaring stock market, noted investor and hedge fund titan David Tepper of Appaloosa Management told CNBC on Thursday that the bull market still has room to grow.

“Explain to me where this market is rich? It’s not rich with the tax thing that just changed earnings projections. With earnings forecasts going up and interest rates where they are, how is this market expensive?  I don’t see the overvaluation. World growth is higher.  There’s no inflation. The market coming into this year doesn’t look rich, in fact, it looks almost as cheap as coming into last year.”

Tepper said bond prices are the key indicator of whether the stock market can keep going higher.

“The market can’t go down until the bond market gets hit.  It’s amazing where interest rates are.”

I don’t disagree with this.  I’m focused more on European bond markets than our own, frankly, where real carnage awaits investors if the euro economy continues to grow rapidly.

As for Trump and the market, Friday he tweeted:

“Dow goes from 18,589 on November 9, 2016, to 25,075 today, for a new all-time Record.  Jumped 1000 points in last 5 weeks. Record fastest 1000 point move in history. This is all about the Make America Great Again agenda! Jobs, Jobs, Jobs. Six trillion dollars in value created!”

And...

“The Fake News Media barely mentions the fact that the Stock Market just hit another New Record and that business in the U.S. is booming...but the people know! Can you imagine if ‘O’ was president and had these numbers – would be biggest story on earth! Dow now over 25,000.”

Editorial / Wall Street Journal

“The Dow Jones Industrial Average leapt above 25000 for the first time on Thursday, and naturally the White House sent out a press release taking credit.  President Trump’s pro-growth policies are partly responsible for the market’s extraordinary bull run, but he is still making a mistake to hang his economic credentials on stock prices.

“As Mr. Trump likes to say, equity prices have climbed nearly 40% since Election Day in 2016.  Investors have stayed bullish as growth has increased around the world, inflation has remained contained despite accommodating central bank policy, and the Trump deregulatory and tax agenda has taken shape.

“The cut in corporate tax rates will increase earnings, which will flow into equity values in addition to higher wages. The market’s run since the tax bill passed may also reflect that many investors doubted it would pass, or that they doubted the final version would have the pro-growth qualities (it does).  In that sense Dow 25000 is a harbinger of faster growth.

“Yet it still makes no sense for a President, especially one in his first year, to tee up stocks as a measure of economic success. As Wall Street legend Ace Greenberg famously put it amid the 1987 market crash, ‘stocks fluctuate, next question.’ The current lengthy period without a major correction is highly unusual – and it won’t last.  When prices fall after Mr. Trump’s many boasts about their rise, the press corps will ask him to explain the correction at every opportunity. Presidents do not want to become stock-market analysts.

“All the more so because no one knows how the unwinding of the Federal Reserve’s unprecedented balance sheet will affect stock and other asset prices. The Fed’s bond-buying was explicitly intended to buoy asset prices including stocks, and it did.  But will asset prices be under greater pressure as the Fed begins to move in reverse with more dispatch this year? Somehow we don’t see Mr. Trump offering an extended financial analysis of the asset-price impact of quantitative easing.

“Mr. Trump can certainly tout the benefits of faster economic growth. Those will be manifest in ways that affect all Americans – more jobs and job mobility, higher wages – not only those who own stocks or have 401(k)s. Stock prices will take care of themselves.”

As for the Federal Reserve, officials in December debated the impact of looming tax cuts on the economy and whether it would require them to raise short-term interest rates more aggressively than their forecasted three rate hikes for 2018, according to the minutes of the meeting.  The Fed next gathers Jan. 30-31, and no move is expected at that time, especially in light of today’s relatively tepid jobs report and the still-low wage component.

One thing is clear. While the Fed may be currently underestimating the economic benefit of the tax bill, all it really cares about is its own key inflation barometer, the personal consumption expenditures index, and as long as that figure remains below 2% it isn’t going to move more than three times this year, period. Book it.

If inflation is stubbornly weaker, maybe they only move twice.

Ironically, a big upturn in business investment would increase capacity, thus it could hinder inflation. [If demand kept increasing and business didn’t increase capacity, well, that would be inflationary, not to insult anyone’s intelligence.]

And that’s the thing. We don’t know as yet what business will do with their higher after-tax profits...reduce debt, buy back stock, invest in plant and equipment, etc.

Lastly, the latest reading on fourth-quarter GDP from the Atlanta Fed after all this week’s data pegs it at 2.7%.

Europe and Asia

Lots of data for the eurozone this first week back from the holidays.  A flash estimate on euro area (EA19) inflation in December came in at 1.4% annualized vs. 1.5% in November, which helped propel Friday’s rally in equities on the continent, completing the best week for stocks here since last May. With such low inflation, just 1.2% ex-energy, there is little reason for the European Central Bank to change its current policy of zero rates, while it slowly tapers its bond-buying program.

It’s actually a perfect world, strong economic activity and no inflation.

For example, eurozone PMIs for manufacturing and the service sector were released for the month of December and the final manufacturing figure for the EA19 was 60.6 vs. 60.1 in November, an all-time high since the survey, as put out by IHS Markit, was first released in mid-1997. The non-manufacturing number was 56.6 vs. 56.2 the prior month.

Germany came in at an all-time high of 63.3 for manufacturing, 55.8 services.
France 58.8 mfg. (207-month high), 59.1 services.
Italy 57.4, 55.4
Spain 55.8, 54.6

Austria’s manufacturing sector was at an all-time high, 64.3; ditto, Ireland, 59.1. The Netherlands was 62.2, down slightly from November.  Greece hit a 14-month high at 53.1.

Again, all of these numbers well above the 50 dividing line.

Chris Williamson, chief economist / IHS Markit

“The eurozone manufacturing boom gained further momentum in December, rounding off the best year on record and setting the scene for a strong start to 2018.... Forward-looking indicators bode well for the New Year: new orders rose at a near-record pace, while purchasing growth hit a new peak as firms readied themselves for higher production.  Meanwhile, job creation was maintained at November’s record pace.

“Perhaps most encouraging of all is the extent to which the strongest upturn is being recorded for producers of investment goods such as plant and machinery, which highlights the upswing in business investment. Higher investment should help boost productivity and profits, and therefore enhance the sustainability of the upturn.”

As for inflation:

“While not accelerating in December, price pressures are running at the highest for over six years as solidifying demand nurtures improved pricing power.  Based on past experience, the extent to which demand appears to be outstripping supply for many goods and services suggests that inflationary pressures could continue to build in the coming months.  A big question for 2018 will therefore be whether relatively high unemployment and spare capacity in many countries will continue to hold down pay growth and keep a ceiling on consumer price inflation; a reminder that many wounds from the global financial crisis and the region’s sovereign debt crisis are still healing.”

Back to the ECB, its economists are forecasting eurozone final growth of 2.4% in 2017, when a year earlier they were calling for just 1.7%.  2017 is now slated to be the strongest year since 2007.

But political risk remains an issue. To wit....

Brexit: Informal talks will heat up again over the coming weeks, with negotiators from both sides targeting March for more formal preliminary discussions on trade.

But former Labour prime minister Tony Blair said this week that he wants a new Brexit referendum so the British public can “think again” about the U.K.’s future relationship with the bloc, warning that Brexit will destroy Britain’s clout and be regretted for generations.

Blair told the BBC that voters should have a say on the final withdrawal deal once “terms of the alternate relationship” are finalized.

I agree with Blair. Brexit is an incredibly dumb move. But Blair has zero credibility among the British people because of his role in the Iraq war, so his pleadings will go nowhere, including in his own party.

Related to Brexit talks and uncertainty, U.K. car sales suffered their biggest annual slide since the global recession, down 5.6 percent from a year earlier, the steepest drop since 2009, according to the Society for Motor Manufacturers and Traders.  Consumer sentiment just isn’t that strong, especially relative to that in the eurozone.  The SMMT is forecasting a further sales slide this year of 5 to 7 percent.

Germany: In her New Year’s Eve speech, Chancellor Angela Merkel outlined a vision for her fourth term that included an alliance with French President Emmanuel Macron to strengthen Europe’s economic clout and control migration.  With Brexit in mind, Merkel said:

“Twenty-seven countries in Europe must be impelled more strongly than ever to remain a community.  That will be the decisive question of the next few years. Germany and France want to work together to make it succeed.”

But Germany’s national election was back in September and Merkel still hasn’t formed a new government in all this time, the longest post-election deadlock since World War II. Negotiations with her hoped for coalition partner, the Social Democratic Party, begins on Sunday.

A poll for Die Welt newspaper published last Sunday had 46% of Germans wanting Merkel to quit immediately; numbers matching the level of opposition back in 2015 at the height of the immigration crisis.

As for France, President Macron declared in his own New Year’s Eve speech that 2018 would be “a decisive year” and, in echoing Merkel, that cooperation between Germany and France was necessary for Europe to become economically stronger.

“Europe is good for France, and France cannot succeed without a stronger Europe.  Our dialogue with Germany is the necessary condition for Europe to move forward,” he added.

Macron ended his speech to the French people by calling on them to “ask themselves what they can do for the nation” every day – channeling John F. Kennedy’s 1961 inaugural address.

[Last Saturday, Macron also signed into law three bills underpinning his contentious tax reform and other aspects of his election platform, which are designed to spur investment and stimulate the economy, though critics have called it “a gift to the rich.” The budget law of 2018 does away with a wealth tax, among others, with the business tax reduced in coming years.]

Lastly, today Macron told his Turkish counterpart, Recep Tayyip Erdogan, that there is no chance of progress towards Turkey joining the European Union because of differences over human rights since Turkey’s purges following 2016’s failed coup.  Macron said it was time to end the hypocrisy of pretending that there was any prospect of an advance in Turkey’s membership.

But at a joint news conference, Erdogan accused a journalist who was asking about claims Turkey sent arms to Syria of being a member of the Gulenist movement, which Erdogan blames for the failed coup.

Both men hailed cooperation in the fight against ISIS.

Eurobits:

--Tens of thousands of workers in the German metals and engineering industries will stage walkouts at companies across the country next week as part of a campaign for higher wages, powerful union IG Metall said on Friday.  IG Metall is the country’s biggest union and is demanding a 6% wage rise this year for its 3.9 million workers.  Employers have dismissed the wage claim as excessive and so far offered only a 2% increase as well as a 200 euro ($240) one-off payment in the first quarter.

So maybe they compromise at around 3.5% (just a wild guess), while companies give in some on IG Metall’s demands for a shorter work week.  How short? Try 28 hours!

This whole situation bears watching, especially with Merkel not having a formal government as yet.

--Italy is an early sleeper story for 2018 in terms of their snap March national elections.  81-year-old billionaire Silvio Berlusconi could end up being a kingmaker.  His center-right Forza Italia party is only polling 16%, but with the other parties split, Forza seems destined to be a player in any coalition, as long as it doesn’t contain the anti-establishment, anti-eurozone 5 Star Movement that could end up being Italy’s largest single vote getter.

Berlusconi, by the way, has apparently faced 74 trials and 3,667 hearings in his controversial career as prime minister and media mogul, yet he’s had “only one definitive guilty verdict,” as he put it himself in a recent television interview.

--HSBC issued a report stating that Greece might be able to exit its bailout program this year, which the Athens government has been working towards.  Greece regained access to markets last year, and now it should be able to exit its bailout after eight long years.  The yield on the Greek 10-year bond is all the way down to 3.69%.  It was nearly 8.50% in September 2016.

Good for Greece!

Turning to Asia, China’s official government PMI for manufacturing was 51.6 in December vs. 51.8 the prior month, with the services reading at 55.0 vs. 54.8.

The private Caixin readings on manufacturing and the service sector were 51.5 and 53.9, respectively; the non-manufacturing reading of 53.9 being a 3-year high.

Separately, it seems China will be setting its economic growth target at “around 6.5 percent” this year, according to top officials at the Communist Party’s Central Economic Work Conference, which was held last month.  [The talks weren’t public.]

The final wording on growth won’t be released until a meeting of the National People’s Congress in March, but economists surveyed by Bloomberg project 6.5 percent for 2018.

One more...the State Council said on Wednesday it would boost intellectual property rights protection, according to a report on China National Radio.  Premier Li Keqiang said he wants to improve the business environment for companies in China.  If you believe this one, you probably believe the Mets will have a better record than the Yankees in 2018. 

Japan’s manufacturing PMI for December was 54.0 vs. 53.6 in November, the best since Feb. 2014, while the reading on the service sector was 51.1.

Elsewhere in Asia, on the manufacturing PMI front for December, Taiwan came in at a strong 56.6; South Korea slipped to 49.9 (though December exports rose 8.9% year-over-year, 15.8% for all of 2017 to a record $573.9 billion), and India was 54.7 (New Delhi saying it expected economic growth to slow to 6.5 percent in the fiscal year ending in March from 7.1 percent a year earlier).

Street Bytes

--Stocks roared to gains of 2.3% on the Dow Jones to a record 25295, while the S&P 500, +2.6% to a record 2743, and Nasdaq, +3.4% to a new peak of 7136, had, as noted above, their best week in 13 months.

But for the S&P, it was up the first four sessions of the year in a holiday-shortened week for just the third time since 1990.  The other two times, 2006 and 2010, the index jumped at least 12% for the year.

--The Santa Claus Rally is defined as the last week of the year and the first two trading days of January and the S&P was up 1.1% over this span. Statistically this bodes well for the year, but more important is the January barometer, which we’ll address as the month goes on.

--Looking back at 2017, a few items came out since my last column was posted Dec. 29.  Such as 2017 was the calmest year for stocks in more than 50 years (40 years for Treasuries), with only eight days where the S&P 500 moved more than 1% in either direction – the tamest trading year since 1964, according to S&P Dow Jones Indices.  That isn’t good for the brokerage firms and investment banks in terms of their trading desks.  The fourth quarter results aren’t likely to be good in this regard, though the banks have already largely telegraphed this.  [And I suspect they’ll say, ‘2018 is off to a much-better start and we see a better tone for at least the first quarter of this year.’]

--U.S. Treasury Yields

6-mo. 1.58%  2-yr. 1.96%  10-yr. 2.48%  30-yr. 2.81%

Treasuries backed up some with the money flooding into equities. The economic data was actually favorable for fixed income otherwise.

--2017 U.S. auto sales came in at 17.1 to 17.2 million vehicles, according to various experts, including Autodata and Kelly Blue Book, down from 2016’s record high of 17.55 million and ending a winning streak dating back to the financial crisis.

But 17.2m is still very healthy, and with the strength of the U.S. and global economy, there is no reason to fear a big slump in the sector.

Facing a tough comparison to December 2016, Autodata says overall sales were down 5.2% last month.  GM recorded a 1.3% decline for the full year (-3.3% in December), Ford was down 1.1% for 2017 (+0.9% Dec.), Fiat Chrysler fell 8.2% (as it continues to reduce its reliance on fleet sales), and Toyota’s fell 0.6% (-8.3% Dec.).

But Nissan’s and Honda’s rose 1.9% and 0.2%, respectively, for 2017 (though down for the month 9.5% and 7%), while Subaru saw further growth of 5.3%.  Volkswagen Group reported a 5.2% gain for its VW brand in 2017; Audi +7.8%.

Hyundai-Kia’s 2017 sales, however, fell 8.9%.

The average cost of a motor vehicle hit a record high of $36,113 in 2017, largely driven by the continuing growth in pickup sales.  [Fuel efficiency has helped sales of even larger vehicles, let alone relatively low gas prices.]

According to a report in USA TODAY by Nathan Bomey, the following were the five hottest-selling vehicles this year, “based on an (admittedly somewhat subjective) assessment of momentum and sales”:

Audi Q5 (up 16.3% on the year); Buick Envision (assembled in China, Buick’s third-best seller); Ford F-series (accounted for 5% of all new vehicles sold* in the U.S. in 2017); Nissan Rogue (up 22.3% for the year); Toyota RAV4 (automaker’s best-selling U.S. vehicle...has doubled sales in three years).

*Ford said it sold 900,000 of the pickups, a highly profitable vehicle for the automaker.

--Global sales of passenger cars and trucks likely surpassed 90 million for the first time in 2017, according to WardsAuto.com.  To beat a dead horse, synchronized global growth, boys and girls. Western Europe has been in a strong rebound, as noted above, and you’ve had a big recovery in major emerging markets, including Brazil and Russia.  More than a quarter of the cars sold globally last year were to Chinese customers.

China has some of the fastest-growing automakers in the world, such as Chery, Guangzhou, SAIC and Zhejiang Geely Holding Group Co.

--Tesla delivered only 1,550 of its new Model 3 in the final quarter, well below Wall Street’s consensus estimate of 5,000+.  Gee, I’m shocked!  This company is so full of merde. And now, wouldn’t you know, Tesla is pushing back its target for hitting a production rate of 5,000 a week of the new cars to the end of the second quarter, three months later than it had projected.  Just two months ago, it last pushed the 5,000-a-week target back

But Tesla swore Wednesday that it had made “major progress addressing Model 3 production bottlenecks.” The company has blamed the initial problems with the rollout on mastering the complexity of the production line in the Nevada plant where the lithium batteries are packaged into modules, before being assembled into final battery packs.

--The national gas price average of $2.49 to start the year was the most expensive since 2014, when gas prices were more than $3/gallon, per AAA.  Prices in the Northeast, South and the upper Midwest were up on average 13 cents in just one week.  But now that the holidays are over, prices should fall some, and with the wicked weather in much of the country, that will further dampen demand...though more on this in a bit.

--Russia’s’ Gazprom reported gas exports to Europe rose 8.1 percent last year to a record level, despite rising competition from LNG and other sources, the company said Wednesday.

--Meanwhile, Editorial / Wall Street Journal

“The Dakota Access Pipeline marks six months of operations on New Year’s Day, and new data show that North Dakota is already enjoying major benefits from the $3.8 billion project.

“The pipeline has significantly lowered energy transportation costs and encouraged energy companies to move their oil to the Gulf Coast, where it fetches a higher price.  So its little surprise that energy production has surged since the Dakota Access Pipeline opened.

“Between September and October alone, oil production grew by 78,000 barrels a day, the biggest month-over-month increase North Dakota has ever seen. The state peaked at around 1.185 million barrels a day that month – 135,000 barrels more than it produced daily before the pipeline was operational.  Compared with January 2017, North Dakota has an additional 15 drilling rigs currently in operation.

“Increased oil production has resulted in job growth. North Dakota’s unemployment rate was 2.3% in November, and more than 850 existing wells need fracking crews. State revenue rose by about $43.5 million in the first five months the pipeline was operational. And solely because of the Dakota Access Pipeline, the state is on track for $210 million to $250 million in additional tax revenue by the end of this biennial budget period.  ‘That’s exceeded expectations,’ says Tax Commissioner Ryan Rauschenberger.

“The Dakota Access Pipeline has also reduced oil-train traffic within the state. The last time oil production was this high, North Dakota saw as many as 12 trains, or 1,200 cars, pass through daily. Today, only two trains do.  That’s a victory for the environment and public safety, given that oil-spill accidents occur with much greater frequency on railways than in pipelines.

“A year ago, North Dakotans were coping with thousands who flocked to Standing Rock to protest the pipeline, creating a nuisance and costing taxpayers millions for law enforcement and cleanup. The new statistics on the Dakota Access Pipeline’s benefits are recompense for dealing with those unruly out-of-towners.”

This week oil prices closed at a new three-year high, $61.59 a barrel on West Texas Intermediate (that which I quote weekly below).  U.S. crude stockpiles dropped more than expected last week, and the Iran crisis helped the bulls’ case.

But gasoline inventories increased more than forecast, thouogh the extreme cold across the East Coast could interrupt refinery operations and lead to a surge in demand for heating oil.

Separately, on Thursday the Trump administration said it would allow new offshore oil and gas drilling in nearly all United States coastal waters, giving energy companies access to leases off California and along the Eastern Seaboard.

The proposal lifts a ban on such drilling imposed by President Barack Obama near the end of his term and would deal s serious blow to his administration’s environmental legacy.

But the White House, while siding with energy interests over environmentalists, is now at odds with some coastal states that oppose offshore drilling, including Florida, whose Republican governor, Rick Scott, vowed Thursday to protect his state’s coast...Florida, for example, having been hit hard by the Deepwater Horizon rig disaster in 2010.  Scott said: “My top priority is to ensure that Florida’s natural resources are protected.”

Editorial / Wall Street Journal

“The United States sits on more than a decade’s worth of oil and natural gas offshore.  In another reversal of President Obama’s policies, Interior Secretary Ryan Zinke proposed Thursday to open up more than 90% of America’s Outer Continental Shelf for potential energy development.

“The Interior Department’s plan would expand the areas under consideration for offshore drilling in the Gulf of Mexico.  It would also open up the Pacific Coast from Washington to California, the Atlantic Coast from Maine to Florida and the eastern Gulf of Mexico, and nearly all of the waters surrounding Alaska. The proposal will go through two more rounds of public comment, and no doubt some revisions, but when finalized the expanded lease sales could begin as early as 2019.

“The proposal would enhance U.S. energy security while raising billions in federal revenue.  In the past decade, thanks to the fracking revolution, the U.S. has surpassed Saudi Arabia in oil production and Russia in natural gas.  America and its allies are now far less dependent on energy from international disruptors and despots....

“Thanks to drilling mainly in the western Gulf, offshore production accounts for one in six barrels of domestic oil.  But in the wake of the 2010 Deepwater Horizon oil spill, Mr. Obama disallowed energy extraction on 94% of the Outer Continental Shelf....

“To reap the long-term geopolitical benefits of energy resources, the time to expand offshore leases is now. Even after the federal government approves a lease sale, it takes up to seven years for the first oil and gas production to begin.  Meantime, energy companies must find investors, complete environmental assessments, secure permitting and conduct exploratory drilling.

“Accordingly, the Trump Administration has proposed replacing the Obama plan with the largest lease sale in history. That sounds more radical  than it is because of how stringent U.S. restrictions have been.  No other developed nation limits its offshore drilling to the same extent....

“If Mr. Zinke wants to avoid a political backlash, we trust he understands that he can’t afford more Deepwater Horizons. His regulators have to enforce drilling safety and accident-prevention standards. But if he does that, there is no good reason not to exploit America’s offshore resources for the public good.”

--On Tuesday, a technology website The Register said Intel’s chips are vulnerable to hackers, raising concerns about the company’s products and brand.

The Register said a bug lets some software gain access to parts of a computer’s memory that are set aside to protect things like passwords.  Further, all Intel chips from the past 10 years are said to be affected, with patches to Microsoft’s Windows and Apple’s OS X operating systems needing patches, which Intel said they believe they have.

Normally design flaws in microprocessors are easily fixed with patches for the code, but if Intel needed to redesign the chip, the company will have very serious issues.  Everyone agrees it is a PR nightmare.  Rivals such as AMD and Nvidia should benefit.

Intel’s chips have more than 80 percent market share in PCs overall and more than 90 percent in laptops and servers.

Thursday, Apple Inc. said all Mac computers and iOS devices, like iPhones and iPads, are affected by the chip security flaws, but Apple stressed it is not aware of any known exploits impacting users.  The Apple Watch is not affected.

Apple said recent software updates for iPads, iPhones, Mac desktops and laptops mitigate one of the vulnerabilities known as Meltdown.  Apple said its steps haven’t hurt performance, which many argue has been the case with other software fixes.

Friday, Intel attempted to downplay concerns the software updates to address the security vulnerabilities will degrade performance of computers as businesses and consumers scramble to figure out whether installing the patches would slow their machines.

Security experts said it’s government offices and public health institutions that are most at risk of compromise as a result of the chip security vulnerability.

--Department store operator J.C. Penney Co. said same-store sales during the key selling months of November and December rose 3.4percent, driven by strong demand for home and beauty products and jewelry.

Macy’s reported an anemic gain of just 1 percent, while predicting its comparable sales decline for 2018 will be lower than it had previously anticipated, a bit of better news.

Macy’s also announced 11 stores would close early this year, bringing the total to 81 of 100 planned store closures as part of an ongoing turnaround strategy that has seen 124 stores close since 2015.

Meanwhile, Sears Holdings said it expects to close roughly 100 additional stores by spring 2018, 64 Kmart stores and 39 Sears stores between March and April.

Sears closed several hundred stores in 2017 and as of November 30 regulatory filing had 1,100 locations still in existence.

--Global debt rose to a record $233 trillion in the third quarter of 2017, according to an analysis by the Institute of International Finance. 

But the ratio of debt-to-GDP fell for the fourth consecutive quarter, IIF citing, you guessed it, “A combination of factors including synchronized above-potential global growth....”

--Alaska Airlines, JetBlue Airways, American and Southwest announced they would be giving $1,000 bonuses to employees due to the new tax law.

Alaska CEO Brad Tilden said the new law will also let the airline make investments to become bigger and stronger. The law allows companies to immediately deduct capital expenses such as new aircraft.

--Three lawsuits filed in Ventura County Superior Court allege that Southern California Edison negligently started the state’s largest officially recorded wildfire, the Thomas fire, through SCE’s construction activities that “caused the ignition of dry vegetation at (a) construction site, which set off the massive wildfire” about 6:20 p.m. Dec. 4, one of the suits alleges.  I’m guessing this is true.  One of the other large fires was started by a homeless man’s illegal fire.

--Washington’s state attorney general sued Motel 6 on grounds it is illegally giving information on thousands of guests to immigration enforcement officials who did not have warrants and who scrutinized guests with Latino-sounding names.

Last September, a Phoenix newspaper uncovered evidence that two Arizona locations had been regularly handing over guests’ information to Immigration and Customs Enforcement agents who were on the lookout for immigrants staying in the country illegally.

Motel 6 said then that the information exchange was limited to “the local level without the knowledge of senior management.”

But Washington’s AG said his office had discovered the same “disturbing and unlawful” handovers at several corporate-owned locations in his state.

“It was not isolated to two motels in Phoenix, not by a long shot,” said AG Bob Ferguson of Washington, and that “many thousands” of Washington residents and visitors staying at Motel 6 had been turned over to the federal government “without their knowledge, without their consent.” [Matt Pearce / L.A. Times]

--The United States had another sterling year for airline safety: Zero people died in crashes of commercial jets in 2017, for the eighth year in a row.

Worldwide, there were 10 fatal airliner accidents and 44 fatalities, according to the Aviation Safety Network; down from 16 accidents and 303 fatalities in 2016.  The group says that on average, there is one fatality for every 7 million flights...staggering.

The last U.S. commercial jet accident resulting in passenger fatalities was in 2009, the Colgan Air flight that crashed en route to Buffalo.

As noted above, in truly idiotic fashion, President Trump tweeted: “Since taking office I have been very strict on Commercial Aviation,” claiming credit for another good year.

--Macau gaming receipts rose almost 15 percent in December to $2.8 billion, which was lower-than-expected owing to some bad luck for casinos as high-rollers took home greater-than-expected winnings.  Macau has long catered to this crowd, especially when compared to the typical Las Vegas gambler.

For 2017, gaming revenue rose for the first time in three years after a protracted government campaign against shows of wealth among public officials and slowing economic growth.  Revenues rose 19 percent for the year to $33.13 billion, a little shy of expectations.

--In New Jersey, homeowners are still focused on the new tax bill and how it will impact them, given the $10,000 cap on state and local taxes, along with the mortgage interest deduction being limited to a worth of $750,000, instead of the previously existing $1 million limit.

In the Garden State, according to ATTOM Data Solutions, a real estate analytics firm, 25 percent of single-family homes have property taxes alone topping $10,000.  The average New Jersey homeowner has combined income, sales and property taxes of $21,720.

Mark Zandi of Moody’s Analytics, sees some New Jersey counties witnessing home price declines, as a result, of 10 percent by summer of 2019; the impact of course being much more on higher-priced houses.

--China plans to limit power use by some bitcoin miners.  The People’s Bank of China outlined the plan at a closed-door meeting Wednesday, according to the South China Morning Post.

Chinese officials are concerned that in taking advantage of low electricity prices, the miners are affecting normal electricity use in some cases.  Bitcoin employs energy-intensive computer networks to enable transactions.

Meanwhile, Merrill Lynch has blocked clients and financial advisers who trade on their behalf from buying bitcoin, citing concerns over its investment suitability.   

The ban, as reported by the Wall Street Journal, applies to all accounts and extends an existing policy barring access to newly launched bitcoin futures.  Other firms are doing the same, such as the brokerage arm of UBS Group AG, while the likes of Warren Buffett question whether governments will let it keep growing unabated.

Separately, the Journal reported that one of the biggest names in Silicon Valley, Founders Fund, the venture-capital firm co-founded by Peter Thiel, has amassed hundreds of millions of dollars in bitcoin.  If the story is accurate, Founders, in bets spread out over several of its funds, invested around $15 million to $20 million in the cryptocurrency, beginning mid-2017, which would be worth hundreds of millions today.  [As I go to post, Coindesk has bitcoin at $16,750.]

--Broadway had another record-breaking week, ending last Sunday, according to trade group the Broadway League; a new weekly sales high of $50.3 million, beating the previous record of $49.7 million set about a year ago.

“Hamilton” of course led the pack again with sales of $3,854,874, which is also an all-time weekly high in Broadway history, topping its own mark of $3,797,844 set earlier in December.

Impressively, the off-Broadway production of “Jersey Boys” took in $520,138 for the week, a record for New World Stages, which houses the musical.  That’s cool. 

--The three most popular movies at theaters in the U.S. and Canada in 2017 were each driven by female characters – “Star Wars: The Last Jedi,” “Beauty and the Beast,” and “Wonder Woman.”  The top comedy of the year, “Girls Trip,” was, err, anchored by women.

As for “Star Wars: The Last Jedi,” it took in $52.4 million between last Friday and Sunday to become No. 1 for 2017, with a three-week total of $517 million, plus an additional $523.3 million overseas, and it hadn’t arrived in China as yet.

“Beauty and the Beast” took in $504 million domestically, and $759.5 overseas.

--The NFL finished the regular season with TV ratings that fell nearly 10% over 2016, which saw a decline of 8% over 2015.  So the NFL had to make good on commercials to its advertisers in order to compensate for the audience shortfall.

One network executive, speaking on condition of anonymity, told the Los Angeles Times’ Stephen Battaglio that all carriers of the NFL – NBC, CBS, Fox and ESPN – “made a lot less money than they expected” as a result of the ratings decline.

So President Trump will be tweeting about this for sure.

However, it still needs to be said that NFL games remain among the highest-rated shows on the air: In 2017, accounting for 37 of the 50 most-watched programs of the year, according to Nielsen, with “Sunday Night Football” the most-watched program in prime time, with 18.2 million viewers this past season.

--NBC named Hoda Kotb the new co-anchor of the “Today” show, replacing former co-host Matt Lauer on a permanent basis, after serving on an interim one since he was dismissed.

Kotb, teamed with Savannah Guthrie, thus become the first pair of women to host the show. Kotb will also continue co-hosting the 10 a.m. hour of “Today” with Kathie Lee Gifford.

[The other week I told you how the Guthrie-Kotb duo was cleaning up in the ratings, relatively speaking, since the big scandal.]

Separately, the New York Post reported that Lauer continues to text management of “Today,” offering tips, which aren’t well received.  Now that’s pathetic.

As for Kotb’s pay vs. Lauer’s old deal, the New York Post reports she has a $7 million a year contract, same as Guthrie, which compares with Lauer’s $25 million per.  A show insider said, “Hoda isn’t complaining... She has landed the big job she always dreamed of, and most definitely deserves.  Plus, Matt’s salary reflected the long time he was on the show – 25 years.”

Megyn Kelly reportedly makes $20 million for just hosting the 9:00 a.m. hour.

--Lastly, President Trump has been a boon for the cable networks.  Based on year-end Nielsen ratings for cable news, Fox News finished 2017 as the most-watched cable network in all of TV for a second consecutive year, with an average of 1.5 million viewers, up 8% over 2016.  MSNBC finished third  with 890,000, which was up 48% to a new high, while CNN finished sixth with 783,000, up 4%.

What’s impressive is that all three improved on a 2016 bolstered by the presidential election.  Normally you see a decline in audiences the year after.  Again, it’s all about a polarizing president and his ever-changing narrative.

Most of the cable entertainment networks – such as USA Network, TNT, TBS and AMC – saw their audiences fall compared with the prior year, according to Nielsen.

The resilience of Fox is noticeable with the departures of Bill O’Reilly and Megyn Kelly.   Sean Hannity is now the most-watched of Fox News’ prime-time lineup.  [Stephen Battaglio / L.A. Times]

Foreign Affairs

Iran: Talk about ‘wait 24 hours,’ such was the case here as anti-government protests fizzled by week’s end, and the United States was blasted in the UN Security Council today for calling attention to “an internal matter,” as both Russian and French ambassadors put it.  Across Iran, ollowing Friday prayers, tens of thousands marched in support of the mullahs.  We saw the same thing on Wednesday.  This was not 2009.  Nor were the protests ever an existential threat to the leadership, though corruption, and promises not kept, are real issues.

That said, Iran’s army chief declared on Thursday that police had already quelled the unrest that had killed 21 people (1,000 arrested) but that his troops were ready to intervene as needed.

The protests seemed spontaneous and without a unifying leader, erupting Dec. 28 in Iran’s second city of Mashhad over economic hardships – high youth unemployment and the rising cost of living – along with alleged corruption, while calling on Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani to quit.

Major General Abdolrahim Mousavi was quoted in official media as saying, “Although this blind sedition was so small that a portion of the police force was able to nip it in the bud...you can rest assured that your comrades in the Islamic Republic’s army would be ready to confront the dupes of the Great Satan (United States).”

It was reported that by Thursday, the government lifted restrictions on Instagram, one of the social media tools used to mobilize protesters, though access to a more widely used messaging app, Telegram, remained blocked.

Iran’s interior minister said on Thursday that “at most 42,000 people attended the protests, which is not much,” and I’ll take a stab at it that the figure is fairly accurate.  Revolutionary Guards Major Gen. Mohammad Ali Jafari said units had been deployed to put down protests in three provinces, a sign authorities were taking the protests seriously.  It was the Revolutionary Guards who suppressed an uprising over alleged election fraud in 2009.

Pro-government rallies, which were far better attended than the protests, were described by the official news agencies as “the revolutionary outburst of Iranian people against lawbreakers.”

Ayatollah Khamenei said: “The enemy is always looking for an opportunity and any crevice to infiltrate and strike the Iranian nation.”

UN ambassador Nikki Haley said, “The people of Iran are crying out for freedom. All freedom-loving people must stand with their cause.”

But even Iranian reformists, who backed the 2009 protests, condemned the violence and the support the demonstrations have received from the United States.

Yet authorities now need to address the economic grievances fueling the protests.

“Officials must acknowledge the deplorable situation of the country as the first step to hearing the protesters,” tweeted Mohammad Taghi Karroubi, whose father Mehdi Karroubi has been under house arrest for almost seven years for helping lead the 2009 demonstrations. [Reuters]

And its true many of the protesters are fuming over President Rouhani’s failure to deliver on promises of more jobs and investment as a dividend of the nuclear accord; the money going to finance wars in Syria, Yemen and elsewhere. Both Khamenei and Rouhani had vowed to crackdown on high-level corruption and create economic prosperity for all Iranians.

But the Revolutionary Guards, for example, still control a vast commercial empire.

President Trump, among his tweets of support, declared: “Such respect for the people of Iran as they try to take back their corrupt government.  You will see great support from the United States at the appropriate time!”  I’m guessing it’s too late.

In fact, as I told you when the nuclear accord was signed between the P5+1 and Iran it was already too late, that the door had been opened for the likes of Germany and France to solidify economic ties with Iran while the U.S. sat back.  This is all on President Obama, just as not agreeing to a no-fly zone in Syria in 2012 with Turkey, which resulted in hundreds of thousands of deaths and millions streaming to Europe, is on Obama as well.  Ditto not supporting the Green Revolution here in Iran in 2009.

Today, Europe is locked in.  We can’t look to them for help, while of course Russia and China are just sitting back, enjoying the chaos and seeing the United States, and its president, all torqued off.

Opinion....mostly for the record as the story is likely moving on....

Vice President Mike Pence / Washington Post

“Eight-and-a-half years ago, Americans watched the people of Iran rise up to claim their birthright of freedom.  In the ‘Green Revolution,’ millions of courageous young men and women filled the streets of Tehran and Tabriz, Qazvin and Karaj, and what seemed like every city and village in between. They denounced a fraudulent election, and as the days went on, they began to demand that the unelected ayatollahs end their decades of repression and release their iron-fisted grip on Iran and her people.

“Those brave protesters looked to the leader of the free world for support. But as I saw firsthand as a member of Congress, the president of the United States stayed silent.

“In the wake of the demonstrations and the regime’s brutal attempts to suppress them, President Barack Obama repeatedly failed to express America’s solidarity with the Iranian protesters.  As a member of the House Foreign Affairs Committee, I recognized the lack of action for what it was: an abdication of American leadership.

“The United States has long stood with those who yearn for freedom and a brighter future, and yet the president declined to stand with a proud people who sought to escape from under the heavy weight of a dictatorship, issuing only a delayed response condemning the regime’s violence. At the same time, the United States was failing to confront the leading state sponsor of terrorism – a mistake that endangered the  safety and security of the American people and our allies.

“The last administration’s refusal to act ultimately emboldened Iran’s tyrannical rulers to crack down on the dissent. The Green Revolution was ruthlessly put down, and the deadly silence on the streets of Iran matched the deafening silence from the White House. To this day, many Iranians blamed the United States for abandoning them in their hour of need.

“Today, the Iranian people are once again rising up to demand freedom and opportunity, and under President Trump, the United States is standing with them. This time, we will not be silent.

“Months before the protests started in Iran, the president predicted that the days of the Iranian regime were numbered. Speaking at the United Nations in September, he said, ‘The good people of Iran want change, and, other than the vast military power of the United States, Iran’s people are what their leaders fear the most.’  Much like another president who made similar predictions about the Soviet Union, the president was mocked.

“These words now ring truer than ever. Where his predecessor stayed silent in 2009, Trump swiftly offered the Iranian people America’s unwavering support.  He has also committed to provide assistance in the days ahead.

“More broadly, the president declined to certify the previous administration’s nuclear deal with Iran, which flooded the regime’s coffers with tens of billions of dollars in cash – money that it could use to repress its own people and support terrorism across the wider world. We have already issued new sanctions on Iran’s Islamic Revolutionary Guard Corps, and the president is weighing additional actions to punish the regime for its belligerent behavior and assault on its own citizens.

“The United States has spoken clearly and unequivocally.  Unfortunately, many of our European partners, as well as the United Nations, have thus far failed to forcefully speak out on the growing crisis in Iran.  It’s time for them to stand up. The suppression of the Green Revolution in 2009 shows the disastrous price of silence.  The president and I call on leaders of freedom-loving nations across the world to condemn Iran’s unelected dictators and defend the Iranian people’s unalienable right to chart their own future and determine their own destiny.

“The president has said that ‘oppressive regimes cannot endure forever,’ and our administration will continue to support the protesters in their calls for freedom and demand that Iran’s leaders cease their dangerous and destabilizing actions at home and abroad.

“We stand with the proud people of Iran because it is right, and because the regime in Tehran threatens the peace and security of the world. That is the essence of American leadership, and as the people of Iran now know, the United States is leading on the world stage for freedom once again.”

David Ignatius / Washington Post

“Think of the Iranian uprising as a bottom-up revolt by people who feel they’ve been ignored by a corrupt elite. The issues and the faces in the street are very different from those of the populist movements that swept the United States and Europe in 2016, but you sense a resonance: ‘Make Iran Great Again’ and “Iran First.’

“This revolt probably won’t topple the Islamic Republic, but it certainly has deepened the fault lines. It shows that Iran’s revolutionary adventures in the Middle East carry a cost at home. And it puts a cocky, belligerent regime on its back foot. For unlike the 2009 Green Movement, this isn’t primarily an urban, elite protest, but something potentially broader. A crackdown could backfire.

“ ‘This is a nationwide uprising taking place all over Iran,’ argues Alireza Nader, a senior policy analyst at the Rand Corp. who has been monitoring the protests since they began.  ‘The government has been taken by surprise, and the security forces have been slow to act.’  It’s a revolt of the mostazafin, or dispossessed, Nader says, but also of the urban middle class....

“The White House sensibly plans to work with allies to hold Iran accountable for any violence against its citizens. The senior official said: ‘Iran is now encountering the cost of the choices they’ve made. That’s not going away until they make different choices.’....

“Partly, this is a revolution of rising expectations.  Iranians had hoped that Rouhani and the nuclear deal he championed with the West would bring new investment, jobs and the dynamic, modern life Iranians want. But this hasn’t happened.  Frustrated people get angry, and their rage eventually surges into the streets....

“The world is watching.  That’s the right message for Trump, and every other leader who cares about Iran’s future. Rouhani may sympathize with this revolt – these are the people who voted for him, after all – but Khamenei will want to crush it. The best gift the United States can give the Iranian people is  a digital lifeline, so humanity can witness their brave struggle and encourage them to prevail.”

Editorial / Wall Street Journal

“(Instead of using the nuclear deal) to improve the lives of Iranians, Tehran has used its windfall to back clients making trouble throughout the region.  The mullahs have spent billions propping up Syria’s Bashar Assad with troops, weapons and energy shipments. Iran funds Shiite militias in Iraq, Hezbollah terrorists in Syria and Lebanon, and Houthi fighters in Yemen.

“The protesters in the streets of Tehran, Qom, Shiraz and other cities are explicitly rejecting this adventurism, shouting slogans like ‘Leave Syria, think of us!’  They want a better economy and more opportunities for their children, not campaigns to build a Shiite empire across the Middle East....

“The ire of the protesters is aimed at their own rulers for corruption and wasting what they were told would be the fruits of the nuclear deal.

“Mr. Trump, the supposed foreign-policy bumpkin, understands this better than Mr. Obama and the arms-control sophisticates.  Mr. Obama sought to win over the Tehran regime by avoiding confrontation and letting Iran have its way in Syria and elsewhere. His goal above all else was the nuclear deal.

“Mr. Trump, by contrast, has distinguished between the regime and the Iranian people, much as Ronald Reagan did with the Soviet Union. In speeches over the past year, the President has called out the regime for stirring up foreign trouble and subjugating its people....

“Mr. Trump’s tweets since the protests began may not be Obama-smooth but they have put America on the side of the people, rather than the regime.  This rhetorical support matters to those in the street, and Europeans and Democrats in Congress should join the chorus. The U.S. can also provide technology to help Iranians get around the regime’s internet firewall and censorship. And it can raise the cost of Iran’s interventions around the Middle East.

“Iranians will have to earn their own freedom, but Americans can help by admitting that this isn’t a fight between moderates and ‘hardliners’ or Tehran vs. Trump.  It’s a fight between people who want liberty and their oppressors.”

Mark Dubowitz and Ray Takeyh / Wall Street Journal

“Barack Obama has been rightly castigated for his silence during the Green Revolution.  President Trump is right not to follow his predecessor’s discredited path.  The White House should continue issuing condemnations daily, including through Persian-language media outlets, and follow up with sanctions targeting corruption and human-rights abuses. Congress should rediscover its once-bipartisan determination to hold the regime accountable for its crimes and push America’s European allies to overcome their mercantile greed and support Iranians striving to be free from theocracy.

“The Islamic Republic is a relic of a century that yielded multiple ideological regimes claiming to have mastered the forces of history.  By now most of them are history. Mr. Trump entered office with an understanding of the Islamic Republic’s profound threat to American security.  The most consequential legacy of his presidency may be a Middle East free of its most powerful unsavory regime.”

Sen. Lindsey Graham (R-S.C.) on Sunday said President Trump needs to do more than tweet.

“It’s not enough to watch. President Trump is tweeting very sympathetically to the Iranian people. But you just can’t tweet here. You have to lay out a plan,” Graham said on CBS’ “Face the Nation.”

“The Iranian people are not our enemy,” Graham said.  “The ayatollah is the enemy of the world.”

Graham has encouraged Trump to give a national address to warn Iran that the U.S. will withdraw from the nuclear agreement unless it gets a better deal.

Graham overall warned 2018 could be a year of “extreme danger,” citing growing tensions with North Korea and Iran.

“We’ve got a chance here to deliver some fatal blows to some really bad actors in 2018. But if we blink, God help us all.”

President Trump must decide by mid-January whether to continue waiving U.S. sanctions on Iran’s oil exports under terms of the nuclear deal he opposed.  But if he re-imposes sanctions, he risks worsening the economic pain of Iranians he has vowed to help.

Jafari, the Revolutionary Guards commander, said on Wednesday: “If the Americans’ sympathy with Iranians were real, they would have not imposed cruel sanctions on our nation.”

I don’t agree with this last remark...just telling both sides’ stories for the archives.

Syria: Opposition activists reported heavy clashes between government forces and insurgents east of Damascus, with the British-based Syrian Observatory for Human Rights saying the fighting was concentrated inside a military installation near the suburb of Harasta, where a government force has been trapped.

At least a dozen airstrikes hit Harasta and nearby suburbs, while in the suburbs of Damascus known as eastern Ghouta, which is a living hell after years of war, violence killed 35 civilians, as well as 24 government troops and 29 insurgents, according to the Observatory.

I bring this up because it just needs to be known the killing in Syria continues daily.

Meanwhile, Defense Secretary Jim Mattis said last weekend that the administration plans to expand the number of U.S. diplomats and contractors in eastern Syria to help stabilize the once Islamic State-controlled part of the country.  Mattis, while giving no details on the numbers involved, said the U.S. was targeting its support for Tabqa and Raqqa; the latter the de facto ISIS capital until it fell last year.

Contractors will be brought in to train civilians on how to clear IEDs, among other things.

But the U.S. presence in Syria is minimal.  It’s all about Iran and its support of Bashar Assad, with Iranian-proxy Hezbollah continuing to support government fighters in their attempt to rout the last insurgents; Russia having already secured its air and naval bases.  The U.S. is basically a non-player here.

Israel: The U.S. has delayed paying about $125 million to the UN agency that serves Palestinian refugees, after President Trump vented his frustration about getting no “respect” or help in the peace process despite American funding.  Secretary of State Rex Tillerson put a hold on the funds, that were to be paid out Jan. 2, until the administration reviews its next steps, according to Bloomberg.

On Jan. 2, Trump tweeted that the U.S. pays the Palestinians “HUNDREDS OF MILLIONS OF DOLLARS a year” and gets “no appreciation or respect.”

The UN Relief and Works Agency, or UNRWA, was established in 1949 to help Palestinian refugees and is not associated with the Palestinian government.  The move on the part of the White House was popular in Israel.  It’s expected, though, that payment will eventually be made and technically it’s not late.

Pakistan: The government lashed out against President Trump after he accused Pakistan’s leaders of “lies & deceit” and suggested the United States would withdraw financial assistance to the nuclear-armed nation it once saw as a key ally against terrorism.

Trump tweeted: “The United States has foolishly given Pakistan more than $33 billion in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools.”

U.S. Ambassador David Hale was summoned to the Foreign Ministry to discuss Trump’s statement.

Trump going back to August has demanded that Pakistan crack down on the safe havens enjoyed by the Taliban fighting in Afghanistan.

Pakistan claims the money it has received was mainly reimbursement for supporting U.S.-led coalition forces that invaded Afghanistan in 2001 to topple the Taliban regime that sheltered al Qaeda.

Afghan officials have cheered Trump’s tough talk on Pakistan, which Kabul accuses of sponsoring terror attacks on Afghan soil.

But Pakistan is going to be key in forging any potential peace deal with the Taliban, which is the goal after all. And licking its chops, waiting to fill the void, is China, which suddenly finds its leverage over Islamabad multiplying as a result of Trump’s mood swings.

Afghanistan: Sergeant First Class Mihail Golin of Fort Lee, New Jersey, was the first U.S. service member killed in the line of duty for 2018 here, killed on New Year’s Day in a firefight where four other troops were wounded. He was assigned to B Company, 2nd Battalion, 10th Special Forces Group out of Fort Carson, Colorado.

North Korea: Pyongyang accepted an offer to attend high-level talks next month, South Korean officials have said.

The meeting next Tuesday will focus on finding a way for North Korean athletes to attend the Winter Olympic Games in South Korea in February, with Kim Jong-un saying this week that sending a delegation to Pyeongchang would be “a good opportunity to show unity of the people.”

The meeting will be on the border at Panmunjom and will represent the first high-level talks both Koreas have held since December 2015.  It isn’t clear who will be attending.

Earlier, the two governments reactivated a hotline between them.

South Korea’s President Moon Jae-in has previously said he sees the Olympics as a “groundbreaking chance” to improve relations.

But Defense Secretary Jim Mattis said on Thursday that the agreement to talk was “the result of international pressure,” though he added it was unclear if this represents “a real olive branch” or a “one-off from [Kim].”

But Japan’s defense minister said his country would remain vigilant as the bottom line is the North will continue with its weapons program.

I do agree with the corresponding move to delay regularly scheduled February military exercises between South Korea and the United States until after the Olympics, which would have only heightened tensions further at a dangerous time.  Presidents Trump and Moon agreed to this in a phone call on Thursday.  Otherwise, Kim has outfoxed Trump.

Editorial / Wall Street Journal

“There’s little benefit in lunging at Donald Trump’s regular Twitter bait, as his opponents prove nearly every day. But you don’t have to be CNN to think that the President should stop popping off about nuclear weapons, whether he’s joking or not.

“ ‘North Korean Leader Kim Jong Un just stated that the ‘Nuclear Button is on his desk at all times,’’ Mr. Trump tweeted Tuesday.  ‘Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!’

“Perhaps Mr. Trump figured this was a clever line about comparative manhood, but it’s an example of why even many of Mr. Trump’s voters wonder if he has any sense of self-restraint. He was trolling a dictator, and boasting about himself in the process, which makes the President look small.  He also distracted from the Iran protests that are vindicating his support for the Iranian people and discrediting his predecessor’s appeasement strategy.

“But more troubling is that Mr. Trump looked to be trifling with the world’s most serious security threat – a nuclear-armed warhead and missile arsenal is so serious a threat that it might require pre-emptive military action. His main advisers, and hundreds of American officials, are working day and night to diminish the threat short of war. If Mr. Trump ever does have to strike the North, he needs the world to believe he is acting as a last resort, not because he thinks he has a bigger Button.

“Comments like these explain the paradox of Mr. Trump’s first year.  He has genuine accomplishments to boast of – including tax reform, judicial nominees who are reshaping the federal courts, and a stop to new regulation.  Yet even with the economy growing faster, and a tight labor market beginning to bid up wages, Mr. Trump’s job approval remains below 40% in the Real Clear Politics average.

“The paradox results from Mr. Trump’s governing behavior. His attacks on all and sundry have polarized the electorate even more than it was on Election Day in 2016. He retains the support of his most fervent base but he has lost support among many who voted against Hillary Clinton more than they did for him.  Those Americans tend to think that a nuclear missile exchange isn’t a laughing matter.

“And please don’t compare this tweet to Ronald Reagan’s 1984 quip about Russia that ‘we begin bombing in five minutes.’ The Gipper said that during a sound check as a joke to radio technicians.  Mr. Trump sent his tweet around the world as a personal boast.

“Voters now tell pollsters they want a Democratic Congress by more than 12 percentage points.  If this holds, Democrats will retake the House and Mr. Trump may be impeached.  Mr. Trump needs to win over more voters if he wants to avoid that fate, and that means acting more like a President.  If he won’t do it for the sake of his office, or for the Americans who took a gamble on him in 2016, he should at least consider his own self-preservation.”

Meanwhile, in his New Year’s address, Kim said North Korea would move to mass produce nuclear weapons in 2018.

“The entire United States is within range of our nuclear weapons, and a nuclear button is always on my desk. This is reality, not a threat,” Kim said during his televised speech.  “This year we should focus on mass producing nuclear warheads and ballistic missiles for operational deployment. These weapons will be used only if our security is threatened.”

On the offer of dialogue from President Moon to President Kim....

Scott Snyder (Council on Foreign Relations) / Defense News:

“Moon wants to host a peaceful 2018 Winter Olympic games, as well as open direct dialogue with his neighbor. But in pursuing those things, Moon cannot succumb to North Korean nuclear blackmail to weaken the South’s military alliance with the United States – in the very same New Year’s speech, Kim claimed to be able to hit the U.S. with a nuclear weapon.  Nor can Moon abandon the U.S.-led international pressure campaign against North Korea’s nuclear and missile development.

“Kim’s dialogue proposal is based on the North’s well-worn ‘By Our Nation Itself’ line – that South Koreans must abandon interference from outside powers, who have benefited from keeping the peninsula weak and divided, and join with North Korean compatriots to achieve independent national unification. This scheme, incidentally, is incompatible with the international pressure campaign the U.S. is relying on to manage the North’s nuclear program – not to mention with the U.S. alliance the South is relying on to protect it.

“And the gambit appeals directly to Moon’s goals, while trying to force a choice: a peaceful Olympics, or South Korea’s alliance with the United States. As part of his dialogue proposal, Kim explicitly criticized the Moon administration for ‘joining the United States in its reckless moves for a North-targeted nuclear war’ and requested the discontinuation of ‘joint nuclear war drills they stage with outside forces.’  But it is Kim himself who wants to hold South Korea’s hosting of the Winter Olympics hostage to his demand for global acknowledgement that the North  has (illegally) become a nuclear weapons state....

“(The) very offer of talks is an unwelcome reminder that despite South Korea’s international success as a top-ranked global economy, the country remains hobbled both by its rough neighborhood and its exasperating northern neighbor.  It exposes Moon’s weaknesses and South Korea’s diplomatic and political constraints, especially as Kim Jong Un tries to generate friction between Presidents Moon and Trump.”

Robert Litwak, a scholar at the Woodrow Wilson Center for International Studies, told the New York Times: “The timing of (Kim’s) overture, combined with his newly declared capability to strike the United States, is shifting the calculus.  Kim sees a rare chance here to take the side of the South Koreans, against President Trump.”

Separately, the aforementioned Sen. Lindsey Graham said that if North Korea participates in the Winter Games, the United States should boycott them.

“Allowing Kim Jong Un...to participate in the Winter Olympics would give legitimacy to the most illegitimate regime on the planet,” Graham tweeted.  “I’m confident South Korea will reject this absurd overture and fully believe that if North Korea goes to the Winter Olympics, we do not.”

Sorry, Senator, you’re going to be wrong, but Japan is one nation that will be disgusted, like Graham. They are losing confidence in Moon to do the right things and stand firm against Kim.

China: From Deng Yuwen / South China Morning Post:

“Does Beijing have a timetable for seizing control of Taiwan? This has been a hot topic for the media and among experts on cross-strait relations.  I believe such a timetable exists. If the timeline was rather vague in the past, it has become clearer now. And the U.S. security strategy that President Donald Trump recently unveiled will hasten the pace of Beijing’s plan to take back the island, probably in 2020.”

You know what I think.  That timetable could be moved up. And indeed, on Monday, the director of China’s Taiwan Affairs Office, Zhang Zhijun, wrote in an article published in Cross-Strait Relations that last year was tough for cross-strait ties.

“[In the past year] the Taipei government refused to endorse the ‘1992 consensus,’ obstructed and limited cross-strait exchanges and indulged the pro-independence forces to further push the de-Sinicisation (sic) process,” Zhang said.

“In the new year, we will not hesitate to oppose any kind of ‘Taiwan independence’ activities...we will never tolerate separatist movements, nor will we sit idly to let them erode the basis for peaceful reunification.’

Random Musings

--Presidential tracking polls....

Gallup:  40% approval for President Trump, 55% disapproval*
Rasmussen:  44% approval, 54% disapproval

*Gallup kind of shocked some folks when it announced it was no longer doing daily approval numbers but rather will publish weekly reports.  The above figures are for 12/30/17.  I’ll see how this shakes out in terms of timing of my column before I decide what I’m going to do.  For now, Rasmussen is still daily.  [Weekly is fine, I just hope it’s Friday’s and not Monday’s that Gallup is reporting, for selfish reasons.]

We should have a slew of new poll data from the networks and major newspapers soon.

--Sen. Orrin G. Hatch (R-Utah) announced Tuesday he would retire rather than seek an eighth term representing the state, opening the door to a return to public office by Mitt Romney. Seeing how contentious it was between Romney and then-candidate Donald Trump in 2016, the prospect of a Sen. Romney is kind of delicious to some of us.

After Trump endorsed Romney’s failed 2012 bid for the presidency against Barack Obama, Trump then called him a “failed presidential candidate” who was “awkward” and “goofy” once Trump launched his own bid.  And then in early March of 2016, as part of a failed attempt to rally Republican support against Trump’s nomination, Romney said:

“Here’s what I know.  Donald Trump is a phony, a fraud.  He’s playing the members of the American public for suckers. He gets a free ride to the White House, and all we get is a lousy hat.”

Hatch, 83, is making good on his long-ago vow to leave office at the conclusion of his current term and he will depart as the longest-serving Republican in the Senate’s history.

“I’ve always been a fighter, but every good fighter knows when to hang up the gloves,” Hatch said in a video announcing his plans.  “And for me, that time is soon approaching.”

Also this week, Minnesota Lt. Gov. Tina Smith was sworn in on Wednesday, replacing Democratic Sen. Al Franken of Minnesota, while Doug Jones of Alabama was also sworn in, after defeating Republican opponent Roy Moore in their December special election.

--Speaking of Roy Moore, a belated “Jerk of the Year” nod to his wife, Kayla, who during the Senate campaign at one point bragged about hiring a Jewish lawyer to counter charges of anti-Semitism, though the lawyer, Richard Jaffe, voted for his longtime pal Doug Jones.

Jaffe told the Washington Examiner, “There could not be a more passionate supporter of Doug than me!” and that he and Jones had been friends for 30 years, and that he had donated to Jones’ campaigns.

Kayla stunned listeners when she mentioned Jaffe while defending her hubby.

“Fake news will tell you that we don’t care for Jews. I tell you all this because I’ve seen it also and I just want to set the record straight while they’re here,” Kayla said at a campaign rally in Midland City, Ala.

“One of our attorneys is a Jew!”

Kayla Moore’s comments followed claims that Moore hated Jewish people because of his allegations that Jewish billionaire George Soros was financing his opponents – and going to hell.

And there is this.  Tina Johnson, one of the women who claimed Moore groped her at his office over two decades ago, came home from work earlier this week to find that her house had burned down – and the blaze is now being investigated as possible arson, Gadsen, Alabama officials said. Firefighters rushed to the rural one-level house after a utility worker called 911 shortly after 8 a.m., but it was too late to save it.

“I am devastated, just devastated,” Johnson told Al.com on Friday morning.  “We have just the clothes on our backs.”

No one was injured as both Johnson and her husband were at work when the fire broke out.

This is sick.

--Chicago ended 2017 with fewer homicides than the year before, but gang violence kept the total number of killings above the 600 mark for only the second time in more than a decade. The Chicago Police Department released statistics Monday that show the number fell from 771 to 650 last year.  [Recall, there were under 300 in New York City, 290 as a preliminary final number in Gotham, the lowest since the 1950s, and far lower than the record 2,245 in 1990.  Los Angeles was also under 300, 271 as of Dec. 16.]

Baltimore set a new per-capita record as a surge of homicides resulted in 343 killings in 2017, bringing the annual rate to its highest ever – roughly 56 killings per 100,000 people.  Understand, Baltimore had 343 killings among 615,000 inhabitants vs. New York’s 290 among 8.5 million.

--I didn’t comment last time on a deadly fire in the Bronx that claimed 12 lives, the worst fire in New York City in 25 years, because I just didn’t think it fit the column. Tragedies are normally just that, tragedies.  Can’t comment on every one of them.

But as the days went by, the story developed that the 25-year-old mother whose toddler started the fire could have done far more to warn her neighbors of the blaze.

The mom dashed out of the apartment with her two young kids, leaving open the door of her burning apartment and sending flames shooting through the building.  She was heard faintly calling out, “fire, fire,” claims Shevon Stewart, 45, whose sister, nieces and cousin were among the 12 killed.

“Her apartment is right behind mine,” Stewart said.  “You don’t call for help? From the moment you see fire, call somebody. And if you don’t have a phone, knock on doors, do something.”

After she escaped the flames, the mother sat down on the curb across the street.  Stewart claimed, “Nobody called us. Nobody tried to find us.” 

Another few days later, it became clear the freakin’ idiot mother, who somehow allowed her child to play with the stove burners, didn’t initially even call 911.

--We note the passing of Brendan Byrne, a two-term New Jersey governor who legalized gambling in the state and served as an elder statesman for decades after. He was 93.

Byrne, a Democrat, was a World War II veteran (flying combat missions across Europe) who led the state through difficult economic times in the 1970s, with long gas lines and a 10% unemployment rate.  He ushered in the development of the Meadowlands Sports Complex and supported the legalization of gambling in Atlantic City in 1974, though he regretted the state didn’t play a more active role in overseeing AC’s development, calling it his “biggest mistake.”

Byrne served from 1974 to 1982 and, with a largely scandal free administration, left office widely admired and is thought of fondly.

--I forgot to give a “Dirtball of the Year” last time.  Myanmar’s Aung San Suu Kyi, former Burmese Nobel Peace Prize winner, as she looked the other way while the Muslim-Rohingya minority became a victim of massive ethnic-cleansing, thousands killed, hundreds of thousands displaced, forced to flee to Bangladesh as their villages were torched.  Suu Kyi proved to be a fraud when it was time to step up.  She’ll be punished in the afterlife. In the here and now, the UN’s human rights chief said she could face genocide charges in the future.

--I was reading a piece in Business Insider on Tony Robbins, the motivational speaker and life coach, and there was this bit on his morning routine, which he “never allows himself to ‘wimp out’ on, or make excuses.”  “Starting the day off by allowing laziness or apathy to take control can really set your day off on the wrong foot,” he says.

“A typical Robbins morning begins around 7 a.m., often following just a few hours of sleep, with a 10-minute breathing exercise designed to prime his mind and body, and to prepare himself for the day ahead.  He then transitions to a state of mindful meditation, in which he mindfully contemplates his goals for the day and allows himself to focus on the things in life that he’s grateful for.

“Once Tony feels mentally ready, he begins a hardcore physical workout with his personal trainer that features high impact intervals of ultra-intensive bursts of maximum exertion – these workouts typically only last around 15 minutes but are designed to keep his heart rate at a very high level, which helps get his body ready for the often long and exhausting day ahead.

“Once his workout is complete, Tony spends a few minutes in a very hot sauna, followed by a quick dip in icy cold water – transitioning between these temperature extremes helps him keep his heart rate up, and it goes a long way towards getting him energized and ready to tackle the coming day.  There’s lots of research available that suggests that exercising in the morning contains a wealth of benefits.”

Hey, I walked at the mall two mornings this week.  Then about nine hours later, I had some beer.

--Along the lines of the above, Zaria Gorvett had a piece on BBC.com on some of the habits and quirks of famous scientists and inventors.

Such as physicist Nikola Tesla, who swore by toe exercises – every night, he’d repeatedly ‘squish’ his toes, 100 times for each foot, according to the author Marc J. Seifer, claiming it helped to stimulate his brain cells.

Or Albert Einstein, who swore by his routine of sleeping for at least 10 hours per day (the average American sleeps 6.8 hours today).

Author John Steinbeck once said: “It is a common experience that a problem difficult at night is resolved in the morning after the committee of sleep has worked on it.”

Einstein, according to legend, also took regular naps, but to be sure he didn’t overdo it, he’d recline in his armchair with a spoon in is hand and a metal plate directly beneath. He’d allow himself to drift off for a second, then – bam! – the spoon would fall from his hand and the sound of it hitting the plate would wake him up.

Einstein’s daily walk was sacred to him as well. While at Princeton, he’d walk the mile and a half from his office to his home and back. Darwin was said to go for three 45-minute walks every day.

Walking isn’t just for exercise, but there are volumes on how walking can boost memory, creativity and problem-solving.  [Walking outside is said to be best.]

--I saw a blurb tonight that Betty White, who is turning 96 on Jan. 17, told Parade that her secret to a long, happy and healthy life is vodka and hot dogs, “probably in that order.”

You know who makes a truly great hot dog? Black Bear, available only thru Shop Rite.  They are best boiled.  Others have told me Black Bear deli meats are also terrific.

Back to Ms. White, she said another key is to “Enjoy life” and “Accentuate the positive, not the negative.”

Seeing as I’m a Mets and Jets fan, this is rather hard to do.

--That was rather remarkable to see measurable snow in parts of Florida for the first time in three decades.  Savannah, Georgia received its first snowfall over one inch in 28 years.  Meanwhile, in the Northeast and Midwest, we are freakin’ tired of sub-freezing weather, on and on and on.....

--But it’s not as bad here as it is tonight up on Mt. Washington in New Hampshire, the highest peak in the Northeastern U.S., which has the highest-recorded wind gust in the world, 231 mph on April 12, 1934, for a wind not associated with a tropical cyclone.  The wind chill tonight is projected to hit -100.  [It’s -85 as I go to post.]

It’s amazing to think there are researchers who live up there.  I’ve only been to the top once, at like age ten, if I recall. 

Mount Washington Observatory staff meteorologist Caleb Meute in his Friday forecast said that at 100 degrees below zero, frostbite sets in on exposed skin in less than one minute. Good lord....

---

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

God bless America.

---

Gold $1320
Oil $61.59

Returns for the week 1/1-1/5

Dow Jones  +2.3%  [25295]
S&P 500  +2.6%  [2743]
S&P MidCap  +1.8%
Russell 2000  +1.6%
Nasdaq  +3.4%  [7136]

Bulls 61.9
Bears
15.2 [Source: Investors Intelligence]

Dr. Bortrum posted a new column.

Have a great week.

Brian Trumbore



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Week in Review

01/06/2018

For the week 1/1-1/5

[Posted 11:30 PM ET, Friday]

Note: StocksandNews has signicant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974. Special thanks to Dr. W. and Mark R.

Edition 978

Trump World...2018, part deux....

If 2017 represented an exhausting news cycle, 2018 sure got off to a similar start.

But first, stocks were shot out of the cannon to open the year, with the S&P 500 and Nasdaq having their best weeks since Dec. 2016 (returns down below).  President Trump’s tax cut legislation is a big help, no doubt, as corporations were scurrying to increase their earnings outlooks for the year, and that’s a good thing.  It is going to be key, though, to listen exactly to what CEOs say with their upcoming earnings statements that will begin coming through next week.  Of more import will really be the accompanying statements to earnings reports following the first quarter, after consumers have had a chance to react more fully to increased paychecks, which is to begin in February.  Will CEOs have the sense that any increase in consumption is long-lasting at that time?

For now, boy, did your editor look bad in Week One of 2018.  Last review, in looking ahead to this year, I wrote:

“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.”

I won’t concede this part, as many would feel the president’s tweet regarding who has a bigger nuclear button, Kim or The Donald, pretty much fits the bill, though I’m predicting “we might avoid a direct confrontation” on the Korean Peninsula.

I’m worried about China and Taiwan, and the administration washing its hands of Syria, “leaving that country to Iran,” with Iran and Syria, together with Hezbollah, pressuring Israel, forcing it to fight back.

And I’m worried about what Trump will do on the trade front.

I’m focused on geopolitics more than ever.  But I also recognize, more than our president, the benefits of synchronized global growth, pounding that drum long before others did (that’s where my focus on Europe paid off...to your benefit).

The point is, while market participants around the world all generally feel pretty good these days, if not euphoric, there are things out there that could change sentiment on a dime. And, importantly, would cause corporate CEOs to rapidly alter their bullish plans, or at least pull back for a while, which would upset the markets. Anything that causes a reversal in the bullish tone for earnings, for example, will send stocks into a little crashette, of which I believe we’ll have two this year.

Yes, I did say the Dow and S&P would fall 5 percent in 2018, and Nasdaq a solid 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.”

And, yes, all three of these soared anew the past four days.  I’m smiling.  This week was like 1999, and we know how that ended.

True, it’s different. The above named companies are real, not dot-com frauds, with great earnings, but I’m reminded of a then well-known PaineWebber strategist, whose name I’ll save from further embarrassment, who I quoted in early 2000. This fellow said “price-earnings multiples didn’t matter,” in discussing some issues with 100 P/Es at the time.  I called him out on it in these pages.  I called for a crash in the Star-Ledger.  That’s what we got. 

But this time is different for another reason.  The world is far more dangerous than in 2000, when we didn’t know what was looming. Today we can see it, yet many choose to look away.

Finally, I thought it was kind of funny that the following was written six days after my last column.  Of course I agreed with the tone.

Karl Rove / Wall Street Journal...Jan. 3rd...

“Two or more areas of new or renewed geopolitical conflict will arise. China will grow more aggressive.  Islamic State will increase large-scale terror attacks.  War with North Korea won’t come, but by year’s end the Hermit Kingdom will have nuclear weapons and long-range missiles capable of reliably delivering them.  A re-elected Mr. Putin will cause more problems for the West, including a major incident in Ukraine.

“More research will emerge on the adverse effects of smartphones and social media on mental health and child development.

“Mr. Trump’s approval rating will end 2018 lower than it is today. Nikki Haley’s star will keep rising.  Jared Kushner will finish the year in worse legal shape.  Key White House aides and at least one cabinet secretary will depart.”

Trumpets....

--Journalist Michael Wolff’s new book, “Fire and Fury: Inside the Trump White House,” roiled Washington and the cable news networks.  I’ve followed Mr. Wolff’s work for years (it was laughable on Thursday when Sarah Sanders said he was an unknown journalist...everyone in D.C. and New York, for starters, knows him) and Wolff can be an entertaining sort, though not someone I’d want to have a beer with, because he can also be rather nasty.  It’s startling he was given extensive access to the West Wing that he then turned into this instant best-seller, reportedly after more than 200 interviews.

Among some of the revelations, you had former chief strategist Steve Bannon believing a June 2016 meeting between Donald Trump Jr. and a group of Russians was “treasonous.”  The Russians had offered Donald Trump Jr. damaging information on Hillary Clinton.

Wolff writes that Bannon told him of the meeting:

The three senior guys in the campaign thought it was a good idea to meet with a foreign government inside Trump Tower in the conference room on the 25th floor – with no lawyers.  They didn’t have any lawyers.  Even if you thought that this was not treasonous, or unpatriotic, or bad s***, and I happen to think it’s all of that, you should have called the FBI immediately.”

Bannon reportedly also said the Justice Department investigation into links between the Trump campaign and Moscow would focus on money laundering, adding: “They’re going to crack Don Junior like an egg on national TV.”

Michael Wolff also reports that on election night, when the results suddenly began tilting in Trump’s favor, “Don Jr. told a friend that his father, or DJT, as he calls him, looked as if he had seen a ghost.  Melania was in tears – and not of joy. There was, in the space of little more than an hour, in Steve Bannon’s not unamused observation, a befuddled Trump morphing into a disbelieving Trump and then into a horrified Trump.  But still to come was the final transformation:  Suddenly, Donald Trump became a man who believed that he deserved to be, and was wholly capable of being, the president of the United States.”

I don’t believe this claim.

But I have to admit I found the following fascinating and, if true, scary...concerning the White House.

Trump, in fact, found the White House to be vexing and even a little scary. He  retreated to his own bedroom – the first time since the Kennedy White House that a presidential couple had maintained separate rooms.  In the first days, he ordered two television screens in addition to the one already there, and a lock on the door, precipitating a brief standoff with the Secret Service, who insisted they have access to the room.”

I can totally see this, and Trump wouldn’t be the first to be wary of the White House, which President Truman called “the great white jail.”

But demanding a lock on the door?  The whole scene fits with other reports of his behavior, which means, we all know, his tweeting.  He’s flipping around in private, looking for the best coverage of...himself.  Heaven forbid if you don’t kiss his ring.

Meanwhile, according to Michael Wolff, Ivanka hopes to be president.  That doesn’t surprise me.  And here I’ll bite my tongue.

There is a description of Trump’s hair....which is frankly gross...and oh, so much more, much of which we already know, like how the president doesn’t read, and just isn’t that bright, and needs policy papers shrunk to 2 or 3 bullet points.

In response Trump’s lawyers wrote to Bannon, saying he violated a non-disclosure agreement and issued a cease-and-desist notice accusing him of defaming the president in speaking to Michael Wolff.

President Trump also personally responded by saying Bannon had “lost his mind” in a statement, and that he and Bannon rarely had one-on-ones and that Bannon had been responsible for the loss of the Republican Senate seat from Alabama.

“Steve Bannon has nothing to do with me or my presidency,” Trump said.  “When he was fired, he not only lost his job, he lost his mind.”

And:

“Steve was rarely in a one-on-one meeting with me and only pretends to have had influence to fool a few people with no access and no clue, whom he helped write phony books,” Trump said.

“Steve pretends to be at war with the media, which he calls the opposition party, yet he spent his time at the White House leaking false information to the media to make himself seem far more important than he was,” the president added.

Trump’s lawyers attempted to block publication of the book, but it was released Friday by Henry Holt & Co. anyway.

John Podhoretz / New York Post

“Remember when Bannon was going to be Trump’s outside enforcer, using the Breitbart web site to get Trumpy Republicans elected and eliminate evil establishmentarians who were improperly uncomfortable with the prospect of having their party tarnished by the Constitution-trashing child molester Roy Moore?

“That was a nice, self-aggrandizing fantasy for him while it lasted.  And now? After the owners of Breitbart realize their own commercial needs are going to be stymied if their audience believes they are being led by someone Trump deems disloyal, Bannon may find himself walking through the IRT subway cars in his two shirts, asking people for donations. He looks the part already.”

Friday, author Michael Wolff said on NBC’s “Today” that he had spoken with President Trump while working on the book, contradicting Trump’s assertion that he had never talked to the writer for this and had authorized “Zero access” to the White House.

Trump had tweeted Thursday evening: “I authorized Zero access to White House (actually turned him down many times) for author of phony book! I never spoke to him for book.”

“Full of lies, misrepresentations and sources that don’t exist. Look at this guy’s past and watch what happens to him and Sloppy Steve!” Trump added.

Wolff added that he had spoken to people who spoke to Trump on a daily, “sometimes minute by minute” basis. Asked to clarify what he meant when he wrote that Trump’s entire circle questioned his fitness for office, Wolff said, “Let me put a marker in the sand here: 100 percent of the people around him... They all say he is like a child. And what they mean by that is he has a need for immediate gratification.  It’s all about him.”

--Trump tweets over the past week:

“The Mercer Family recently dumped the leaker known as Sloppy Steve Bannon. Smart!”

“Well, now that collusion with Russia is proving to be a total hoax and the only collusion is with Hillary Clinton and the FBI/Russia, the Fake News Media (Mainstream) and this phony new book are hitting out at every new front imaginable. They should try wining an election.  Sad!”

“Democrats are doing nothing for DACA – just interested in politics. DACA activists and Hispanics will go hard against Dems, will start ‘falling in love’ with Republicans and their President! We are about RESULTS.”

“Since taking office I have been very strict on Commercial Aviation. Good news – it was just reported that there were Zero deaths in 2017, the best and safest year on record!”

“Crooked Hillary Clinton’s top aid, Huma Abedin, has been accused of disregarding basic security protocols. She put Classified Passwords into the hands of foreign agents. Remember sailors pictures on submarine? Jail! Deep State Justice Dept must finally act? Also on Comey & others.”

“I will be announcing THE MOST DISHONEST & CORRUPT MEDIA AWARDS OF THE YEAR on Monday at 5:00 o’clock. Subjects will cover Dishonesty & Bad Reporting in various categories from the Fake News Media. Stay tuned!”

“I use Social Media not because I like to, but because it is the only way to fight a VERY dishonest and unfair ‘press,’ now often referred to as Fake News Media...Phony and non-existent ‘sources’ are being used more often than ever.  Many stories & reports are pure fiction!”

“If the Dems (Crooked Hillary) got elected, your stocks would be down 50% from values on Election Day. Now they have a great future – and just beginning!”

“As our Country rapidly grows stronger and smarter, I want to wish all of my friends, supporters, enemies, haters, and even the very dishonest Fake News Media, a Happy and Healthy New Year. 2018 will be a great year for America!”

--The U.S. Justice Department has begun an investigation into whether the Clinton Foundation conducted “pay-to-play” politics or other illegal activities during Hillary Clinton’s tenure as secretary of state, as reported by The Hill on Thursday, citing law enforcement officials and a witness.

According to The Hill, FBI agents from Little Rock, Arkansas, where the foundation began, had taken the lead in the investigation and conducted one interview, with further activities expected in coming weeks.

Democrats have accused Republicans of launching an investigation of Clinton as a diversion from Special Counsel Robert Mueller’s probe into possible collusion between President Trump’s campaign and Russia.

According to The Hill, the investigation is examining whether the Clintons promised or performed any policy favors in return for contributions to their charitable efforts.  The FBI may also examine whether the foundation complied with tax laws.

Separately, Republican Senators Charles Grassley of Iowa and Lindsey Graham of South Carolina want the feds to press criminal charges against the former British spy who helped assemble the dossier on alleged collusion between Russia and the Trump campaign, Christopher Steele. Grassley and Graham wrote to the Justice Department saying they believed Steele lied to federal authorities about communicating with reporters as to the dossier’s contents, the New York Times reported today.

So between these two stories, the hyper-partisan fight between the elephants and the donkeys has just been ratcheted up another few notches.  And the mid-terms are now just ten months away.

--The Justice Department rolled back an Obama administration policy to not challenge state  laws that allow people to use pot for medical and recreational uses; a dramatic and unexpected shift in marijuana enforcement policy, seeing as how during the campaign, President Trump said he wouldn’t take such a step, and would “leave it up to the states.”

One Republican Senator, Cory Gardner of Colorado, is livid and has vowed to block future federal judicial nominees that the administration puts forward.

Attorney General Jeff Sessions has long signaled his disagreement with the previous administration’s stance.

The Obama policy, which represented a major breakthrough by advocates for the decriminalization of pot, did not change marijuana’s classification as an illegal drug.  But it discouraged the pursuit of non-violent marijuana users who have no links to criminal gangs or cartel operations.

The announcement came the same week California launched recreational marijuana sales for adults. Every state that’s approved recreational pot use – Alaska, Oregon, Washington, California, Nevada, Colorado, Maine and Massachusetts – has done so through voter approval at the ballot box, showing strong public support. The latest Gallup poll of Americans on the topic last year had 64% believing marijuana should be legalized, an all-time high for the question.

--Editorial / Washington Post

“Seers, pundits, gurus and weather forecasters can agree on one big thing: 2018 is going to be a very eventful year, perhaps the most eventful since, oh, 2017.  Or maybe since 1918, one century ago, when the Western Front finally went quiet, the guns that could fire a shell as heavy as a small car and obliterate human beings 70 miles away stopped firing, and a new world order began. The First World War, which ended in November of that year, caused the disappearance of empires that had run much of the world – Austrian, Russia, German, Ottoman – and was the beginning of a long demise for others, the British and French most of all.

“In the United States, we recoiled from our involvement in the war, though our small, late intervention had probably been the decisive factor, and retreated into not just isolationism but also a nasty sort of xenophobia and racial and ethnic prejudice.  That led to sharp reductions in immigration and to previously unthinkable restrictions on U.S. citizens by vigilante organizations and our federal government (primarily the Justice Department, led by a particularly ruthless attorney general).

“Meanwhile, the country that had seemed to emerge from the Great War as the rising power in the world and had seen itself since the times of George Washington and Abraham Lincoln as a democratic example abandoned major efforts at international involvement and cooperation. As commerce withered in the Great Depression, the country turned to trade protectionism, probably worsening things.  In Europe, many countries came under the sway of ethnic nationalism and totalitarian ideologies, which led to horrendous massacres, exclusions and mass forced migrations, all overseen by authoritarian governments that many U.S. citizens saw as the wave of the future.

“A second world war finally convinced this country’s chiefs of our vital role as leader of free nations, a position the United States maintained with confidence and resolve for over a half-century. Today we seem not so sure.  Nationalism is in vogue with some intellectuals (pseudo and otherwise), fear of the foreign is being cultivated by people in high places, and the United States is abandoning its leading positions in many areas, which newly confident authoritarian regimes are happy to occupy.

“November 1918 was a crucial turning point for the world. November 2018, when Americans elect a new Congress and begin to determine whether this discouraging change in direction will be allowed to continue, could well be another.”

Wall Street

Some important data on the U.S. economy was released this week. The ISM reading on manufacturing for December came in at 59.7 (50 being the dividing line between growth and contraction), a 14-year high. The ISM services reading, however, was 55.9, below expectations of 57.6 but still solid.

November construction spending came in at +0.8%, better than expected, while November factory orders were +1.3%, a little shy of consensus.

And then today we had the December jobs report and it was rather middling at 148,000, below the forecasted 189,000, with revisions to October and November down 9,000.  The three-month average is a more robust 204,000.  Employment gains for 2017 were 2.1 million, the seventh straight year of increases exceeding two million and only the second time on record the economy has produced jobs at that pace for that long (the other period being the 1990s).

Hiring has now risen for 87 straight months, the longest uninterrupted period of job expansion on record.

The unemployment rate remained at 4.1%, the lowest since December 2000, while U6, the underemployment rate, came in at 8.1%.

Importantly, average hourly earnings rose 0.3% last month, but are still up just 2.5% the last 12 months, which remains poor given the strength in the economy.

But to get off on a little tangent here, the unemployment rate for African-Americans fell to 6.8%, the lowest since the Bureau of Labor Statistics began keeping records on this back in 1972!  This is great.

What irks the hell out of me, though, from a purely political junkie standpoint, is how both Presidents Obama and Trump couldn’t / can’t see how a few highly-publicized visits to the inner city would work wonders for their party.

Oh, I know.  Obama and the Democrats didn’t have to do that because they took the black vote for granted, and they have been consistently rewarded.

But Republicans are facing a demographic time bomb and I thought of all people, Donald Trump was a guy who could go into the inner city, gather a group of folks together, and they’d eat it up!  It’s a natural.

Trump should take advantage of the 6.8% number, beyond tweeting about it, or mentioning it in a shout out to reporters or at a campaign rally.  Get into the ghetto and have a talk with the kids....listen to their issues (I know, he doesn’t know how to listen)...and the coverage would be terrific.

Anyway, just one weekend every six months, Mr. President, instead of going to Bedminster or Mar-a-Lago, try it.  It just might spell the difference between success or failure in those same key states you won in 2016.

And that’s a memo....

Back to the soaring stock market, noted investor and hedge fund titan David Tepper of Appaloosa Management told CNBC on Thursday that the bull market still has room to grow.

“Explain to me where this market is rich? It’s not rich with the tax thing that just changed earnings projections. With earnings forecasts going up and interest rates where they are, how is this market expensive?  I don’t see the overvaluation. World growth is higher.  There’s no inflation. The market coming into this year doesn’t look rich, in fact, it looks almost as cheap as coming into last year.”

Tepper said bond prices are the key indicator of whether the stock market can keep going higher.

“The market can’t go down until the bond market gets hit.  It’s amazing where interest rates are.”

I don’t disagree with this.  I’m focused more on European bond markets than our own, frankly, where real carnage awaits investors if the euro economy continues to grow rapidly.

As for Trump and the market, Friday he tweeted:

“Dow goes from 18,589 on November 9, 2016, to 25,075 today, for a new all-time Record.  Jumped 1000 points in last 5 weeks. Record fastest 1000 point move in history. This is all about the Make America Great Again agenda! Jobs, Jobs, Jobs. Six trillion dollars in value created!”

And...

“The Fake News Media barely mentions the fact that the Stock Market just hit another New Record and that business in the U.S. is booming...but the people know! Can you imagine if ‘O’ was president and had these numbers – would be biggest story on earth! Dow now over 25,000.”

Editorial / Wall Street Journal

“The Dow Jones Industrial Average leapt above 25000 for the first time on Thursday, and naturally the White House sent out a press release taking credit.  President Trump’s pro-growth policies are partly responsible for the market’s extraordinary bull run, but he is still making a mistake to hang his economic credentials on stock prices.

“As Mr. Trump likes to say, equity prices have climbed nearly 40% since Election Day in 2016.  Investors have stayed bullish as growth has increased around the world, inflation has remained contained despite accommodating central bank policy, and the Trump deregulatory and tax agenda has taken shape.

“The cut in corporate tax rates will increase earnings, which will flow into equity values in addition to higher wages. The market’s run since the tax bill passed may also reflect that many investors doubted it would pass, or that they doubted the final version would have the pro-growth qualities (it does).  In that sense Dow 25000 is a harbinger of faster growth.

“Yet it still makes no sense for a President, especially one in his first year, to tee up stocks as a measure of economic success. As Wall Street legend Ace Greenberg famously put it amid the 1987 market crash, ‘stocks fluctuate, next question.’ The current lengthy period without a major correction is highly unusual – and it won’t last.  When prices fall after Mr. Trump’s many boasts about their rise, the press corps will ask him to explain the correction at every opportunity. Presidents do not want to become stock-market analysts.

“All the more so because no one knows how the unwinding of the Federal Reserve’s unprecedented balance sheet will affect stock and other asset prices. The Fed’s bond-buying was explicitly intended to buoy asset prices including stocks, and it did.  But will asset prices be under greater pressure as the Fed begins to move in reverse with more dispatch this year? Somehow we don’t see Mr. Trump offering an extended financial analysis of the asset-price impact of quantitative easing.

“Mr. Trump can certainly tout the benefits of faster economic growth. Those will be manifest in ways that affect all Americans – more jobs and job mobility, higher wages – not only those who own stocks or have 401(k)s. Stock prices will take care of themselves.”

As for the Federal Reserve, officials in December debated the impact of looming tax cuts on the economy and whether it would require them to raise short-term interest rates more aggressively than their forecasted three rate hikes for 2018, according to the minutes of the meeting.  The Fed next gathers Jan. 30-31, and no move is expected at that time, especially in light of today’s relatively tepid jobs report and the still-low wage component.

One thing is clear. While the Fed may be currently underestimating the economic benefit of the tax bill, all it really cares about is its own key inflation barometer, the personal consumption expenditures index, and as long as that figure remains below 2% it isn’t going to move more than three times this year, period. Book it.

If inflation is stubbornly weaker, maybe they only move twice.

Ironically, a big upturn in business investment would increase capacity, thus it could hinder inflation. [If demand kept increasing and business didn’t increase capacity, well, that would be inflationary, not to insult anyone’s intelligence.]

And that’s the thing. We don’t know as yet what business will do with their higher after-tax profits...reduce debt, buy back stock, invest in plant and equipment, etc.

Lastly, the latest reading on fourth-quarter GDP from the Atlanta Fed after all this week’s data pegs it at 2.7%.

Europe and Asia

Lots of data for the eurozone this first week back from the holidays.  A flash estimate on euro area (EA19) inflation in December came in at 1.4% annualized vs. 1.5% in November, which helped propel Friday’s rally in equities on the continent, completing the best week for stocks here since last May. With such low inflation, just 1.2% ex-energy, there is little reason for the European Central Bank to change its current policy of zero rates, while it slowly tapers its bond-buying program.

It’s actually a perfect world, strong economic activity and no inflation.

For example, eurozone PMIs for manufacturing and the service sector were released for the month of December and the final manufacturing figure for the EA19 was 60.6 vs. 60.1 in November, an all-time high since the survey, as put out by IHS Markit, was first released in mid-1997. The non-manufacturing number was 56.6 vs. 56.2 the prior month.

Germany came in at an all-time high of 63.3 for manufacturing, 55.8 services.
France 58.8 mfg. (207-month high), 59.1 services.
Italy 57.4, 55.4
Spain 55.8, 54.6

Austria’s manufacturing sector was at an all-time high, 64.3; ditto, Ireland, 59.1. The Netherlands was 62.2, down slightly from November.  Greece hit a 14-month high at 53.1.

Again, all of these numbers well above the 50 dividing line.

Chris Williamson, chief economist / IHS Markit

“The eurozone manufacturing boom gained further momentum in December, rounding off the best year on record and setting the scene for a strong start to 2018.... Forward-looking indicators bode well for the New Year: new orders rose at a near-record pace, while purchasing growth hit a new peak as firms readied themselves for higher production.  Meanwhile, job creation was maintained at November’s record pace.

“Perhaps most encouraging of all is the extent to which the strongest upturn is being recorded for producers of investment goods such as plant and machinery, which highlights the upswing in business investment. Higher investment should help boost productivity and profits, and therefore enhance the sustainability of the upturn.”

As for inflation:

“While not accelerating in December, price pressures are running at the highest for over six years as solidifying demand nurtures improved pricing power.  Based on past experience, the extent to which demand appears to be outstripping supply for many goods and services suggests that inflationary pressures could continue to build in the coming months.  A big question for 2018 will therefore be whether relatively high unemployment and spare capacity in many countries will continue to hold down pay growth and keep a ceiling on consumer price inflation; a reminder that many wounds from the global financial crisis and the region’s sovereign debt crisis are still healing.”

Back to the ECB, its economists are forecasting eurozone final growth of 2.4% in 2017, when a year earlier they were calling for just 1.7%.  2017 is now slated to be the strongest year since 2007.

But political risk remains an issue. To wit....

Brexit: Informal talks will heat up again over the coming weeks, with negotiators from both sides targeting March for more formal preliminary discussions on trade.

But former Labour prime minister Tony Blair said this week that he wants a new Brexit referendum so the British public can “think again” about the U.K.’s future relationship with the bloc, warning that Brexit will destroy Britain’s clout and be regretted for generations.

Blair told the BBC that voters should have a say on the final withdrawal deal once “terms of the alternate relationship” are finalized.

I agree with Blair. Brexit is an incredibly dumb move. But Blair has zero credibility among the British people because of his role in the Iraq war, so his pleadings will go nowhere, including in his own party.

Related to Brexit talks and uncertainty, U.K. car sales suffered their biggest annual slide since the global recession, down 5.6 percent from a year earlier, the steepest drop since 2009, according to the Society for Motor Manufacturers and Traders.  Consumer sentiment just isn’t that strong, especially relative to that in the eurozone.  The SMMT is forecasting a further sales slide this year of 5 to 7 percent.

Germany: In her New Year’s Eve speech, Chancellor Angela Merkel outlined a vision for her fourth term that included an alliance with French President Emmanuel Macron to strengthen Europe’s economic clout and control migration.  With Brexit in mind, Merkel said:

“Twenty-seven countries in Europe must be impelled more strongly than ever to remain a community.  That will be the decisive question of the next few years. Germany and France want to work together to make it succeed.”

But Germany’s national election was back in September and Merkel still hasn’t formed a new government in all this time, the longest post-election deadlock since World War II. Negotiations with her hoped for coalition partner, the Social Democratic Party, begins on Sunday.

A poll for Die Welt newspaper published last Sunday had 46% of Germans wanting Merkel to quit immediately; numbers matching the level of opposition back in 2015 at the height of the immigration crisis.

As for France, President Macron declared in his own New Year’s Eve speech that 2018 would be “a decisive year” and, in echoing Merkel, that cooperation between Germany and France was necessary for Europe to become economically stronger.

“Europe is good for France, and France cannot succeed without a stronger Europe.  Our dialogue with Germany is the necessary condition for Europe to move forward,” he added.

Macron ended his speech to the French people by calling on them to “ask themselves what they can do for the nation” every day – channeling John F. Kennedy’s 1961 inaugural address.

[Last Saturday, Macron also signed into law three bills underpinning his contentious tax reform and other aspects of his election platform, which are designed to spur investment and stimulate the economy, though critics have called it “a gift to the rich.” The budget law of 2018 does away with a wealth tax, among others, with the business tax reduced in coming years.]

Lastly, today Macron told his Turkish counterpart, Recep Tayyip Erdogan, that there is no chance of progress towards Turkey joining the European Union because of differences over human rights since Turkey’s purges following 2016’s failed coup.  Macron said it was time to end the hypocrisy of pretending that there was any prospect of an advance in Turkey’s membership.

But at a joint news conference, Erdogan accused a journalist who was asking about claims Turkey sent arms to Syria of being a member of the Gulenist movement, which Erdogan blames for the failed coup.

Both men hailed cooperation in the fight against ISIS.

Eurobits:

--Tens of thousands of workers in the German metals and engineering industries will stage walkouts at companies across the country next week as part of a campaign for higher wages, powerful union IG Metall said on Friday.  IG Metall is the country’s biggest union and is demanding a 6% wage rise this year for its 3.9 million workers.  Employers have dismissed the wage claim as excessive and so far offered only a 2% increase as well as a 200 euro ($240) one-off payment in the first quarter.

So maybe they compromise at around 3.5% (just a wild guess), while companies give in some on IG Metall’s demands for a shorter work week.  How short? Try 28 hours!

This whole situation bears watching, especially with Merkel not having a formal government as yet.

--Italy is an early sleeper story for 2018 in terms of their snap March national elections.  81-year-old billionaire Silvio Berlusconi could end up being a kingmaker.  His center-right Forza Italia party is only polling 16%, but with the other parties split, Forza seems destined to be a player in any coalition, as long as it doesn’t contain the anti-establishment, anti-eurozone 5 Star Movement that could end up being Italy’s largest single vote getter.

Berlusconi, by the way, has apparently faced 74 trials and 3,667 hearings in his controversial career as prime minister and media mogul, yet he’s had “only one definitive guilty verdict,” as he put it himself in a recent television interview.

--HSBC issued a report stating that Greece might be able to exit its bailout program this year, which the Athens government has been working towards.  Greece regained access to markets last year, and now it should be able to exit its bailout after eight long years.  The yield on the Greek 10-year bond is all the way down to 3.69%.  It was nearly 8.50% in September 2016.

Good for Greece!

Turning to Asia, China’s official government PMI for manufacturing was 51.6 in December vs. 51.8 the prior month, with the services reading at 55.0 vs. 54.8.

The private Caixin readings on manufacturing and the service sector were 51.5 and 53.9, respectively; the non-manufacturing reading of 53.9 being a 3-year high.

Separately, it seems China will be setting its economic growth target at “around 6.5 percent” this year, according to top officials at the Communist Party’s Central Economic Work Conference, which was held last month.  [The talks weren’t public.]

The final wording on growth won’t be released until a meeting of the National People’s Congress in March, but economists surveyed by Bloomberg project 6.5 percent for 2018.

One more...the State Council said on Wednesday it would boost intellectual property rights protection, according to a report on China National Radio.  Premier Li Keqiang said he wants to improve the business environment for companies in China.  If you believe this one, you probably believe the Mets will have a better record than the Yankees in 2018. 

Japan’s manufacturing PMI for December was 54.0 vs. 53.6 in November, the best since Feb. 2014, while the reading on the service sector was 51.1.

Elsewhere in Asia, on the manufacturing PMI front for December, Taiwan came in at a strong 56.6; South Korea slipped to 49.9 (though December exports rose 8.9% year-over-year, 15.8% for all of 2017 to a record $573.9 billion), and India was 54.7 (New Delhi saying it expected economic growth to slow to 6.5 percent in the fiscal year ending in March from 7.1 percent a year earlier).

Street Bytes

--Stocks roared to gains of 2.3% on the Dow Jones to a record 25295, while the S&P 500, +2.6% to a record 2743, and Nasdaq, +3.4% to a new peak of 7136, had, as noted above, their best week in 13 months.

But for the S&P, it was up the first four sessions of the year in a holiday-shortened week for just the third time since 1990.  The other two times, 2006 and 2010, the index jumped at least 12% for the year.

--The Santa Claus Rally is defined as the last week of the year and the first two trading days of January and the S&P was up 1.1% over this span. Statistically this bodes well for the year, but more important is the January barometer, which we’ll address as the month goes on.

--Looking back at 2017, a few items came out since my last column was posted Dec. 29.  Such as 2017 was the calmest year for stocks in more than 50 years (40 years for Treasuries), with only eight days where the S&P 500 moved more than 1% in either direction – the tamest trading year since 1964, according to S&P Dow Jones Indices.  That isn’t good for the brokerage firms and investment banks in terms of their trading desks.  The fourth quarter results aren’t likely to be good in this regard, though the banks have already largely telegraphed this.  [And I suspect they’ll say, ‘2018 is off to a much-better start and we see a better tone for at least the first quarter of this year.’]

--U.S. Treasury Yields

6-mo. 1.58%  2-yr. 1.96%  10-yr. 2.48%  30-yr. 2.81%

Treasuries backed up some with the money flooding into equities. The economic data was actually favorable for fixed income otherwise.

--2017 U.S. auto sales came in at 17.1 to 17.2 million vehicles, according to various experts, including Autodata and Kelly Blue Book, down from 2016’s record high of 17.55 million and ending a winning streak dating back to the financial crisis.

But 17.2m is still very healthy, and with the strength of the U.S. and global economy, there is no reason to fear a big slump in the sector.

Facing a tough comparison to December 2016, Autodata says overall sales were down 5.2% last month.  GM recorded a 1.3% decline for the full year (-3.3% in December), Ford was down 1.1% for 2017 (+0.9% Dec.), Fiat Chrysler fell 8.2% (as it continues to reduce its reliance on fleet sales), and Toyota’s fell 0.6% (-8.3% Dec.).

But Nissan’s and Honda’s rose 1.9% and 0.2%, respectively, for 2017 (though down for the month 9.5% and 7%), while Subaru saw further growth of 5.3%.  Volkswagen Group reported a 5.2% gain for its VW brand in 2017; Audi +7.8%.

Hyundai-Kia’s 2017 sales, however, fell 8.9%.

The average cost of a motor vehicle hit a record high of $36,113 in 2017, largely driven by the continuing growth in pickup sales.  [Fuel efficiency has helped sales of even larger vehicles, let alone relatively low gas prices.]

According to a report in USA TODAY by Nathan Bomey, the following were the five hottest-selling vehicles this year, “based on an (admittedly somewhat subjective) assessment of momentum and sales”:

Audi Q5 (up 16.3% on the year); Buick Envision (assembled in China, Buick’s third-best seller); Ford F-series (accounted for 5% of all new vehicles sold* in the U.S. in 2017); Nissan Rogue (up 22.3% for the year); Toyota RAV4 (automaker’s best-selling U.S. vehicle...has doubled sales in three years).

*Ford said it sold 900,000 of the pickups, a highly profitable vehicle for the automaker.

--Global sales of passenger cars and trucks likely surpassed 90 million for the first time in 2017, according to WardsAuto.com.  To beat a dead horse, synchronized global growth, boys and girls. Western Europe has been in a strong rebound, as noted above, and you’ve had a big recovery in major emerging markets, including Brazil and Russia.  More than a quarter of the cars sold globally last year were to Chinese customers.

China has some of the fastest-growing automakers in the world, such as Chery, Guangzhou, SAIC and Zhejiang Geely Holding Group Co.

--Tesla delivered only 1,550 of its new Model 3 in the final quarter, well below Wall Street’s consensus estimate of 5,000+.  Gee, I’m shocked!  This company is so full of merde. And now, wouldn’t you know, Tesla is pushing back its target for hitting a production rate of 5,000 a week of the new cars to the end of the second quarter, three months later than it had projected.  Just two months ago, it last pushed the 5,000-a-week target back

But Tesla swore Wednesday that it had made “major progress addressing Model 3 production bottlenecks.” The company has blamed the initial problems with the rollout on mastering the complexity of the production line in the Nevada plant where the lithium batteries are packaged into modules, before being assembled into final battery packs.

--The national gas price average of $2.49 to start the year was the most expensive since 2014, when gas prices were more than $3/gallon, per AAA.  Prices in the Northeast, South and the upper Midwest were up on average 13 cents in just one week.  But now that the holidays are over, prices should fall some, and with the wicked weather in much of the country, that will further dampen demand...though more on this in a bit.

--Russia’s’ Gazprom reported gas exports to Europe rose 8.1 percent last year to a record level, despite rising competition from LNG and other sources, the company said Wednesday.

--Meanwhile, Editorial / Wall Street Journal

“The Dakota Access Pipeline marks six months of operations on New Year’s Day, and new data show that North Dakota is already enjoying major benefits from the $3.8 billion project.

“The pipeline has significantly lowered energy transportation costs and encouraged energy companies to move their oil to the Gulf Coast, where it fetches a higher price.  So its little surprise that energy production has surged since the Dakota Access Pipeline opened.

“Between September and October alone, oil production grew by 78,000 barrels a day, the biggest month-over-month increase North Dakota has ever seen. The state peaked at around 1.185 million barrels a day that month – 135,000 barrels more than it produced daily before the pipeline was operational.  Compared with January 2017, North Dakota has an additional 15 drilling rigs currently in operation.

“Increased oil production has resulted in job growth. North Dakota’s unemployment rate was 2.3% in November, and more than 850 existing wells need fracking crews. State revenue rose by about $43.5 million in the first five months the pipeline was operational. And solely because of the Dakota Access Pipeline, the state is on track for $210 million to $250 million in additional tax revenue by the end of this biennial budget period.  ‘That’s exceeded expectations,’ says Tax Commissioner Ryan Rauschenberger.

“The Dakota Access Pipeline has also reduced oil-train traffic within the state. The last time oil production was this high, North Dakota saw as many as 12 trains, or 1,200 cars, pass through daily. Today, only two trains do.  That’s a victory for the environment and public safety, given that oil-spill accidents occur with much greater frequency on railways than in pipelines.

“A year ago, North Dakotans were coping with thousands who flocked to Standing Rock to protest the pipeline, creating a nuisance and costing taxpayers millions for law enforcement and cleanup. The new statistics on the Dakota Access Pipeline’s benefits are recompense for dealing with those unruly out-of-towners.”

This week oil prices closed at a new three-year high, $61.59 a barrel on West Texas Intermediate (that which I quote weekly below).  U.S. crude stockpiles dropped more than expected last week, and the Iran crisis helped the bulls’ case.

But gasoline inventories increased more than forecast, thouogh the extreme cold across the East Coast could interrupt refinery operations and lead to a surge in demand for heating oil.

Separately, on Thursday the Trump administration said it would allow new offshore oil and gas drilling in nearly all United States coastal waters, giving energy companies access to leases off California and along the Eastern Seaboard.

The proposal lifts a ban on such drilling imposed by President Barack Obama near the end of his term and would deal s serious blow to his administration’s environmental legacy.

But the White House, while siding with energy interests over environmentalists, is now at odds with some coastal states that oppose offshore drilling, including Florida, whose Republican governor, Rick Scott, vowed Thursday to protect his state’s coast...Florida, for example, having been hit hard by the Deepwater Horizon rig disaster in 2010.  Scott said: “My top priority is to ensure that Florida’s natural resources are protected.”

Editorial / Wall Street Journal

“The United States sits on more than a decade’s worth of oil and natural gas offshore.  In another reversal of President Obama’s policies, Interior Secretary Ryan Zinke proposed Thursday to open up more than 90% of America’s Outer Continental Shelf for potential energy development.

“The Interior Department’s plan would expand the areas under consideration for offshore drilling in the Gulf of Mexico.  It would also open up the Pacific Coast from Washington to California, the Atlantic Coast from Maine to Florida and the eastern Gulf of Mexico, and nearly all of the waters surrounding Alaska. The proposal will go through two more rounds of public comment, and no doubt some revisions, but when finalized the expanded lease sales could begin as early as 2019.

“The proposal would enhance U.S. energy security while raising billions in federal revenue.  In the past decade, thanks to the fracking revolution, the U.S. has surpassed Saudi Arabia in oil production and Russia in natural gas.  America and its allies are now far less dependent on energy from international disruptors and despots....

“Thanks to drilling mainly in the western Gulf, offshore production accounts for one in six barrels of domestic oil.  But in the wake of the 2010 Deepwater Horizon oil spill, Mr. Obama disallowed energy extraction on 94% of the Outer Continental Shelf....

“To reap the long-term geopolitical benefits of energy resources, the time to expand offshore leases is now. Even after the federal government approves a lease sale, it takes up to seven years for the first oil and gas production to begin.  Meantime, energy companies must find investors, complete environmental assessments, secure permitting and conduct exploratory drilling.

“Accordingly, the Trump Administration has proposed replacing the Obama plan with the largest lease sale in history. That sounds more radical  than it is because of how stringent U.S. restrictions have been.  No other developed nation limits its offshore drilling to the same extent....

“If Mr. Zinke wants to avoid a political backlash, we trust he understands that he can’t afford more Deepwater Horizons. His regulators have to enforce drilling safety and accident-prevention standards. But if he does that, there is no good reason not to exploit America’s offshore resources for the public good.”

--On Tuesday, a technology website The Register said Intel’s chips are vulnerable to hackers, raising concerns about the company’s products and brand.

The Register said a bug lets some software gain access to parts of a computer’s memory that are set aside to protect things like passwords.  Further, all Intel chips from the past 10 years are said to be affected, with patches to Microsoft’s Windows and Apple’s OS X operating systems needing patches, which Intel said they believe they have.

Normally design flaws in microprocessors are easily fixed with patches for the code, but if Intel needed to redesign the chip, the company will have very serious issues.  Everyone agrees it is a PR nightmare.  Rivals such as AMD and Nvidia should benefit.

Intel’s chips have more than 80 percent market share in PCs overall and more than 90 percent in laptops and servers.

Thursday, Apple Inc. said all Mac computers and iOS devices, like iPhones and iPads, are affected by the chip security flaws, but Apple stressed it is not aware of any known exploits impacting users.  The Apple Watch is not affected.

Apple said recent software updates for iPads, iPhones, Mac desktops and laptops mitigate one of the vulnerabilities known as Meltdown.  Apple said its steps haven’t hurt performance, which many argue has been the case with other software fixes.

Friday, Intel attempted to downplay concerns the software updates to address the security vulnerabilities will degrade performance of computers as businesses and consumers scramble to figure out whether installing the patches would slow their machines.

Security experts said it’s government offices and public health institutions that are most at risk of compromise as a result of the chip security vulnerability.

--Department store operator J.C. Penney Co. said same-store sales during the key selling months of November and December rose 3.4percent, driven by strong demand for home and beauty products and jewelry.

Macy’s reported an anemic gain of just 1 percent, while predicting its comparable sales decline for 2018 will be lower than it had previously anticipated, a bit of better news.

Macy’s also announced 11 stores would close early this year, bringing the total to 81 of 100 planned store closures as part of an ongoing turnaround strategy that has seen 124 stores close since 2015.

Meanwhile, Sears Holdings said it expects to close roughly 100 additional stores by spring 2018, 64 Kmart stores and 39 Sears stores between March and April.

Sears closed several hundred stores in 2017 and as of November 30 regulatory filing had 1,100 locations still in existence.

--Global debt rose to a record $233 trillion in the third quarter of 2017, according to an analysis by the Institute of International Finance. 

But the ratio of debt-to-GDP fell for the fourth consecutive quarter, IIF citing, you guessed it, “A combination of factors including synchronized above-potential global growth....”

--Alaska Airlines, JetBlue Airways, American and Southwest announced they would be giving $1,000 bonuses to employees due to the new tax law.

Alaska CEO Brad Tilden said the new law will also let the airline make investments to become bigger and stronger. The law allows companies to immediately deduct capital expenses such as new aircraft.

--Three lawsuits filed in Ventura County Superior Court allege that Southern California Edison negligently started the state’s largest officially recorded wildfire, the Thomas fire, through SCE’s construction activities that “caused the ignition of dry vegetation at (a) construction site, which set off the massive wildfire” about 6:20 p.m. Dec. 4, one of the suits alleges.  I’m guessing this is true.  One of the other large fires was started by a homeless man’s illegal fire.

--Washington’s state attorney general sued Motel 6 on grounds it is illegally giving information on thousands of guests to immigration enforcement officials who did not have warrants and who scrutinized guests with Latino-sounding names.

Last September, a Phoenix newspaper uncovered evidence that two Arizona locations had been regularly handing over guests’ information to Immigration and Customs Enforcement agents who were on the lookout for immigrants staying in the country illegally.

Motel 6 said then that the information exchange was limited to “the local level without the knowledge of senior management.”

But Washington’s AG said his office had discovered the same “disturbing and unlawful” handovers at several corporate-owned locations in his state.

“It was not isolated to two motels in Phoenix, not by a long shot,” said AG Bob Ferguson of Washington, and that “many thousands” of Washington residents and visitors staying at Motel 6 had been turned over to the federal government “without their knowledge, without their consent.” [Matt Pearce / L.A. Times]

--The United States had another sterling year for airline safety: Zero people died in crashes of commercial jets in 2017, for the eighth year in a row.

Worldwide, there were 10 fatal airliner accidents and 44 fatalities, according to the Aviation Safety Network; down from 16 accidents and 303 fatalities in 2016.  The group says that on average, there is one fatality for every 7 million flights...staggering.

The last U.S. commercial jet accident resulting in passenger fatalities was in 2009, the Colgan Air flight that crashed en route to Buffalo.

As noted above, in truly idiotic fashion, President Trump tweeted: “Since taking office I have been very strict on Commercial Aviation,” claiming credit for another good year.

--Macau gaming receipts rose almost 15 percent in December to $2.8 billion, which was lower-than-expected owing to some bad luck for casinos as high-rollers took home greater-than-expected winnings.  Macau has long catered to this crowd, especially when compared to the typical Las Vegas gambler.

For 2017, gaming revenue rose for the first time in three years after a protracted government campaign against shows of wealth among public officials and slowing economic growth.  Revenues rose 19 percent for the year to $33.13 billion, a little shy of expectations.

--In New Jersey, homeowners are still focused on the new tax bill and how it will impact them, given the $10,000 cap on state and local taxes, along with the mortgage interest deduction being limited to a worth of $750,000, instead of the previously existing $1 million limit.

In the Garden State, according to ATTOM Data Solutions, a real estate analytics firm, 25 percent of single-family homes have property taxes alone topping $10,000.  The average New Jersey homeowner has combined income, sales and property taxes of $21,720.

Mark Zandi of Moody’s Analytics, sees some New Jersey counties witnessing home price declines, as a result, of 10 percent by summer of 2019; the impact of course being much more on higher-priced houses.

--China plans to limit power use by some bitcoin miners.  The People’s Bank of China outlined the plan at a closed-door meeting Wednesday, according to the South China Morning Post.

Chinese officials are concerned that in taking advantage of low electricity prices, the miners are affecting normal electricity use in some cases.  Bitcoin employs energy-intensive computer networks to enable transactions.

Meanwhile, Merrill Lynch has blocked clients and financial advisers who trade on their behalf from buying bitcoin, citing concerns over its investment suitability.   

The ban, as reported by the Wall Street Journal, applies to all accounts and extends an existing policy barring access to newly launched bitcoin futures.  Other firms are doing the same, such as the brokerage arm of UBS Group AG, while the likes of Warren Buffett question whether governments will let it keep growing unabated.

Separately, the Journal reported that one of the biggest names in Silicon Valley, Founders Fund, the venture-capital firm co-founded by Peter Thiel, has amassed hundreds of millions of dollars in bitcoin.  If the story is accurate, Founders, in bets spread out over several of its funds, invested around $15 million to $20 million in the cryptocurrency, beginning mid-2017, which would be worth hundreds of millions today.  [As I go to post, Coindesk has bitcoin at $16,750.]

--Broadway had another record-breaking week, ending last Sunday, according to trade group the Broadway League; a new weekly sales high of $50.3 million, beating the previous record of $49.7 million set about a year ago.

“Hamilton” of course led the pack again with sales of $3,854,874, which is also an all-time weekly high in Broadway history, topping its own mark of $3,797,844 set earlier in December.

Impressively, the off-Broadway production of “Jersey Boys” took in $520,138 for the week, a record for New World Stages, which houses the musical.  That’s cool. 

--The three most popular movies at theaters in the U.S. and Canada in 2017 were each driven by female characters – “Star Wars: The Last Jedi,” “Beauty and the Beast,” and “Wonder Woman.”  The top comedy of the year, “Girls Trip,” was, err, anchored by women.

As for “Star Wars: The Last Jedi,” it took in $52.4 million between last Friday and Sunday to become No. 1 for 2017, with a three-week total of $517 million, plus an additional $523.3 million overseas, and it hadn’t arrived in China as yet.

“Beauty and the Beast” took in $504 million domestically, and $759.5 overseas.

--The NFL finished the regular season with TV ratings that fell nearly 10% over 2016, which saw a decline of 8% over 2015.  So the NFL had to make good on commercials to its advertisers in order to compensate for the audience shortfall.

One network executive, speaking on condition of anonymity, told the Los Angeles Times’ Stephen Battaglio that all carriers of the NFL – NBC, CBS, Fox and ESPN – “made a lot less money than they expected” as a result of the ratings decline.

So President Trump will be tweeting about this for sure.

However, it still needs to be said that NFL games remain among the highest-rated shows on the air: In 2017, accounting for 37 of the 50 most-watched programs of the year, according to Nielsen, with “Sunday Night Football” the most-watched program in prime time, with 18.2 million viewers this past season.

--NBC named Hoda Kotb the new co-anchor of the “Today” show, replacing former co-host Matt Lauer on a permanent basis, after serving on an interim one since he was dismissed.

Kotb, teamed with Savannah Guthrie, thus become the first pair of women to host the show. Kotb will also continue co-hosting the 10 a.m. hour of “Today” with Kathie Lee Gifford.

[The other week I told you how the Guthrie-Kotb duo was cleaning up in the ratings, relatively speaking, since the big scandal.]

Separately, the New York Post reported that Lauer continues to text management of “Today,” offering tips, which aren’t well received.  Now that’s pathetic.

As for Kotb’s pay vs. Lauer’s old deal, the New York Post reports she has a $7 million a year contract, same as Guthrie, which compares with Lauer’s $25 million per.  A show insider said, “Hoda isn’t complaining... She has landed the big job she always dreamed of, and most definitely deserves.  Plus, Matt’s salary reflected the long time he was on the show – 25 years.”

Megyn Kelly reportedly makes $20 million for just hosting the 9:00 a.m. hour.

--Lastly, President Trump has been a boon for the cable networks.  Based on year-end Nielsen ratings for cable news, Fox News finished 2017 as the most-watched cable network in all of TV for a second consecutive year, with an average of 1.5 million viewers, up 8% over 2016.  MSNBC finished third  with 890,000, which was up 48% to a new high, while CNN finished sixth with 783,000, up 4%.

What’s impressive is that all three improved on a 2016 bolstered by the presidential election.  Normally you see a decline in audiences the year after.  Again, it’s all about a polarizing president and his ever-changing narrative.

Most of the cable entertainment networks – such as USA Network, TNT, TBS and AMC – saw their audiences fall compared with the prior year, according to Nielsen.

The resilience of Fox is noticeable with the departures of Bill O’Reilly and Megyn Kelly.   Sean Hannity is now the most-watched of Fox News’ prime-time lineup.  [Stephen Battaglio / L.A. Times]

Foreign Affairs

Iran: Talk about ‘wait 24 hours,’ such was the case here as anti-government protests fizzled by week’s end, and the United States was blasted in the UN Security Council today for calling attention to “an internal matter,” as both Russian and French ambassadors put it.  Across Iran, ollowing Friday prayers, tens of thousands marched in support of the mullahs.  We saw the same thing on Wednesday.  This was not 2009.  Nor were the protests ever an existential threat to the leadership, though corruption, and promises not kept, are real issues.

That said, Iran’s army chief declared on Thursday that police had already quelled the unrest that had killed 21 people (1,000 arrested) but that his troops were ready to intervene as needed.

The protests seemed spontaneous and without a unifying leader, erupting Dec. 28 in Iran’s second city of Mashhad over economic hardships – high youth unemployment and the rising cost of living – along with alleged corruption, while calling on Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani to quit.

Major General Abdolrahim Mousavi was quoted in official media as saying, “Although this blind sedition was so small that a portion of the police force was able to nip it in the bud...you can rest assured that your comrades in the Islamic Republic’s army would be ready to confront the dupes of the Great Satan (United States).”

It was reported that by Thursday, the government lifted restrictions on Instagram, one of the social media tools used to mobilize protesters, though access to a more widely used messaging app, Telegram, remained blocked.

Iran’s interior minister said on Thursday that “at most 42,000 people attended the protests, which is not much,” and I’ll take a stab at it that the figure is fairly accurate.  Revolutionary Guards Major Gen. Mohammad Ali Jafari said units had been deployed to put down protests in three provinces, a sign authorities were taking the protests seriously.  It was the Revolutionary Guards who suppressed an uprising over alleged election fraud in 2009.

Pro-government rallies, which were far better attended than the protests, were described by the official news agencies as “the revolutionary outburst of Iranian people against lawbreakers.”

Ayatollah Khamenei said: “The enemy is always looking for an opportunity and any crevice to infiltrate and strike the Iranian nation.”

UN ambassador Nikki Haley said, “The people of Iran are crying out for freedom. All freedom-loving people must stand with their cause.”

But even Iranian reformists, who backed the 2009 protests, condemned the violence and the support the demonstrations have received from the United States.

Yet authorities now need to address the economic grievances fueling the protests.

“Officials must acknowledge the deplorable situation of the country as the first step to hearing the protesters,” tweeted Mohammad Taghi Karroubi, whose father Mehdi Karroubi has been under house arrest for almost seven years for helping lead the 2009 demonstrations. [Reuters]

And its true many of the protesters are fuming over President Rouhani’s failure to deliver on promises of more jobs and investment as a dividend of the nuclear accord; the money going to finance wars in Syria, Yemen and elsewhere. Both Khamenei and Rouhani had vowed to crackdown on high-level corruption and create economic prosperity for all Iranians.

But the Revolutionary Guards, for example, still control a vast commercial empire.

President Trump, among his tweets of support, declared: “Such respect for the people of Iran as they try to take back their corrupt government.  You will see great support from the United States at the appropriate time!”  I’m guessing it’s too late.

In fact, as I told you when the nuclear accord was signed between the P5+1 and Iran it was already too late, that the door had been opened for the likes of Germany and France to solidify economic ties with Iran while the U.S. sat back.  This is all on President Obama, just as not agreeing to a no-fly zone in Syria in 2012 with Turkey, which resulted in hundreds of thousands of deaths and millions streaming to Europe, is on Obama as well.  Ditto not supporting the Green Revolution here in Iran in 2009.

Today, Europe is locked in.  We can’t look to them for help, while of course Russia and China are just sitting back, enjoying the chaos and seeing the United States, and its president, all torqued off.

Opinion....mostly for the record as the story is likely moving on....

Vice President Mike Pence / Washington Post

“Eight-and-a-half years ago, Americans watched the people of Iran rise up to claim their birthright of freedom.  In the ‘Green Revolution,’ millions of courageous young men and women filled the streets of Tehran and Tabriz, Qazvin and Karaj, and what seemed like every city and village in between. They denounced a fraudulent election, and as the days went on, they began to demand that the unelected ayatollahs end their decades of repression and release their iron-fisted grip on Iran and her people.

“Those brave protesters looked to the leader of the free world for support. But as I saw firsthand as a member of Congress, the president of the United States stayed silent.

“In the wake of the demonstrations and the regime’s brutal attempts to suppress them, President Barack Obama repeatedly failed to express America’s solidarity with the Iranian protesters.  As a member of the House Foreign Affairs Committee, I recognized the lack of action for what it was: an abdication of American leadership.

“The United States has long stood with those who yearn for freedom and a brighter future, and yet the president declined to stand with a proud people who sought to escape from under the heavy weight of a dictatorship, issuing only a delayed response condemning the regime’s violence. At the same time, the United States was failing to confront the leading state sponsor of terrorism – a mistake that endangered the  safety and security of the American people and our allies.

“The last administration’s refusal to act ultimately emboldened Iran’s tyrannical rulers to crack down on the dissent. The Green Revolution was ruthlessly put down, and the deadly silence on the streets of Iran matched the deafening silence from the White House. To this day, many Iranians blamed the United States for abandoning them in their hour of need.

“Today, the Iranian people are once again rising up to demand freedom and opportunity, and under President Trump, the United States is standing with them. This time, we will not be silent.

“Months before the protests started in Iran, the president predicted that the days of the Iranian regime were numbered. Speaking at the United Nations in September, he said, ‘The good people of Iran want change, and, other than the vast military power of the United States, Iran’s people are what their leaders fear the most.’  Much like another president who made similar predictions about the Soviet Union, the president was mocked.

“These words now ring truer than ever. Where his predecessor stayed silent in 2009, Trump swiftly offered the Iranian people America’s unwavering support.  He has also committed to provide assistance in the days ahead.

“More broadly, the president declined to certify the previous administration’s nuclear deal with Iran, which flooded the regime’s coffers with tens of billions of dollars in cash – money that it could use to repress its own people and support terrorism across the wider world. We have already issued new sanctions on Iran’s Islamic Revolutionary Guard Corps, and the president is weighing additional actions to punish the regime for its belligerent behavior and assault on its own citizens.

“The United States has spoken clearly and unequivocally.  Unfortunately, many of our European partners, as well as the United Nations, have thus far failed to forcefully speak out on the growing crisis in Iran.  It’s time for them to stand up. The suppression of the Green Revolution in 2009 shows the disastrous price of silence.  The president and I call on leaders of freedom-loving nations across the world to condemn Iran’s unelected dictators and defend the Iranian people’s unalienable right to chart their own future and determine their own destiny.

“The president has said that ‘oppressive regimes cannot endure forever,’ and our administration will continue to support the protesters in their calls for freedom and demand that Iran’s leaders cease their dangerous and destabilizing actions at home and abroad.

“We stand with the proud people of Iran because it is right, and because the regime in Tehran threatens the peace and security of the world. That is the essence of American leadership, and as the people of Iran now know, the United States is leading on the world stage for freedom once again.”

David Ignatius / Washington Post

“Think of the Iranian uprising as a bottom-up revolt by people who feel they’ve been ignored by a corrupt elite. The issues and the faces in the street are very different from those of the populist movements that swept the United States and Europe in 2016, but you sense a resonance: ‘Make Iran Great Again’ and “Iran First.’

“This revolt probably won’t topple the Islamic Republic, but it certainly has deepened the fault lines. It shows that Iran’s revolutionary adventures in the Middle East carry a cost at home. And it puts a cocky, belligerent regime on its back foot. For unlike the 2009 Green Movement, this isn’t primarily an urban, elite protest, but something potentially broader. A crackdown could backfire.

“ ‘This is a nationwide uprising taking place all over Iran,’ argues Alireza Nader, a senior policy analyst at the Rand Corp. who has been monitoring the protests since they began.  ‘The government has been taken by surprise, and the security forces have been slow to act.’  It’s a revolt of the mostazafin, or dispossessed, Nader says, but also of the urban middle class....

“The White House sensibly plans to work with allies to hold Iran accountable for any violence against its citizens. The senior official said: ‘Iran is now encountering the cost of the choices they’ve made. That’s not going away until they make different choices.’....

“Partly, this is a revolution of rising expectations.  Iranians had hoped that Rouhani and the nuclear deal he championed with the West would bring new investment, jobs and the dynamic, modern life Iranians want. But this hasn’t happened.  Frustrated people get angry, and their rage eventually surges into the streets....

“The world is watching.  That’s the right message for Trump, and every other leader who cares about Iran’s future. Rouhani may sympathize with this revolt – these are the people who voted for him, after all – but Khamenei will want to crush it. The best gift the United States can give the Iranian people is  a digital lifeline, so humanity can witness their brave struggle and encourage them to prevail.”

Editorial / Wall Street Journal

“(Instead of using the nuclear deal) to improve the lives of Iranians, Tehran has used its windfall to back clients making trouble throughout the region.  The mullahs have spent billions propping up Syria’s Bashar Assad with troops, weapons and energy shipments. Iran funds Shiite militias in Iraq, Hezbollah terrorists in Syria and Lebanon, and Houthi fighters in Yemen.

“The protesters in the streets of Tehran, Qom, Shiraz and other cities are explicitly rejecting this adventurism, shouting slogans like ‘Leave Syria, think of us!’  They want a better economy and more opportunities for their children, not campaigns to build a Shiite empire across the Middle East....

“The ire of the protesters is aimed at their own rulers for corruption and wasting what they were told would be the fruits of the nuclear deal.

“Mr. Trump, the supposed foreign-policy bumpkin, understands this better than Mr. Obama and the arms-control sophisticates.  Mr. Obama sought to win over the Tehran regime by avoiding confrontation and letting Iran have its way in Syria and elsewhere. His goal above all else was the nuclear deal.

“Mr. Trump, by contrast, has distinguished between the regime and the Iranian people, much as Ronald Reagan did with the Soviet Union. In speeches over the past year, the President has called out the regime for stirring up foreign trouble and subjugating its people....

“Mr. Trump’s tweets since the protests began may not be Obama-smooth but they have put America on the side of the people, rather than the regime.  This rhetorical support matters to those in the street, and Europeans and Democrats in Congress should join the chorus. The U.S. can also provide technology to help Iranians get around the regime’s internet firewall and censorship. And it can raise the cost of Iran’s interventions around the Middle East.

“Iranians will have to earn their own freedom, but Americans can help by admitting that this isn’t a fight between moderates and ‘hardliners’ or Tehran vs. Trump.  It’s a fight between people who want liberty and their oppressors.”

Mark Dubowitz and Ray Takeyh / Wall Street Journal

“Barack Obama has been rightly castigated for his silence during the Green Revolution.  President Trump is right not to follow his predecessor’s discredited path.  The White House should continue issuing condemnations daily, including through Persian-language media outlets, and follow up with sanctions targeting corruption and human-rights abuses. Congress should rediscover its once-bipartisan determination to hold the regime accountable for its crimes and push America’s European allies to overcome their mercantile greed and support Iranians striving to be free from theocracy.

“The Islamic Republic is a relic of a century that yielded multiple ideological regimes claiming to have mastered the forces of history.  By now most of them are history. Mr. Trump entered office with an understanding of the Islamic Republic’s profound threat to American security.  The most consequential legacy of his presidency may be a Middle East free of its most powerful unsavory regime.”

Sen. Lindsey Graham (R-S.C.) on Sunday said President Trump needs to do more than tweet.

“It’s not enough to watch. President Trump is tweeting very sympathetically to the Iranian people. But you just can’t tweet here. You have to lay out a plan,” Graham said on CBS’ “Face the Nation.”

“The Iranian people are not our enemy,” Graham said.  “The ayatollah is the enemy of the world.”

Graham has encouraged Trump to give a national address to warn Iran that the U.S. will withdraw from the nuclear agreement unless it gets a better deal.

Graham overall warned 2018 could be a year of “extreme danger,” citing growing tensions with North Korea and Iran.

“We’ve got a chance here to deliver some fatal blows to some really bad actors in 2018. But if we blink, God help us all.”

President Trump must decide by mid-January whether to continue waiving U.S. sanctions on Iran’s oil exports under terms of the nuclear deal he opposed.  But if he re-imposes sanctions, he risks worsening the economic pain of Iranians he has vowed to help.

Jafari, the Revolutionary Guards commander, said on Wednesday: “If the Americans’ sympathy with Iranians were real, they would have not imposed cruel sanctions on our nation.”

I don’t agree with this last remark...just telling both sides’ stories for the archives.

Syria: Opposition activists reported heavy clashes between government forces and insurgents east of Damascus, with the British-based Syrian Observatory for Human Rights saying the fighting was concentrated inside a military installation near the suburb of Harasta, where a government force has been trapped.

At least a dozen airstrikes hit Harasta and nearby suburbs, while in the suburbs of Damascus known as eastern Ghouta, which is a living hell after years of war, violence killed 35 civilians, as well as 24 government troops and 29 insurgents, according to the Observatory.

I bring this up because it just needs to be known the killing in Syria continues daily.

Meanwhile, Defense Secretary Jim Mattis said last weekend that the administration plans to expand the number of U.S. diplomats and contractors in eastern Syria to help stabilize the once Islamic State-controlled part of the country.  Mattis, while giving no details on the numbers involved, said the U.S. was targeting its support for Tabqa and Raqqa; the latter the de facto ISIS capital until it fell last year.

Contractors will be brought in to train civilians on how to clear IEDs, among other things.

But the U.S. presence in Syria is minimal.  It’s all about Iran and its support of Bashar Assad, with Iranian-proxy Hezbollah continuing to support government fighters in their attempt to rout the last insurgents; Russia having already secured its air and naval bases.  The U.S. is basically a non-player here.

Israel: The U.S. has delayed paying about $125 million to the UN agency that serves Palestinian refugees, after President Trump vented his frustration about getting no “respect” or help in the peace process despite American funding.  Secretary of State Rex Tillerson put a hold on the funds, that were to be paid out Jan. 2, until the administration reviews its next steps, according to Bloomberg.

On Jan. 2, Trump tweeted that the U.S. pays the Palestinians “HUNDREDS OF MILLIONS OF DOLLARS a year” and gets “no appreciation or respect.”

The UN Relief and Works Agency, or UNRWA, was established in 1949 to help Palestinian refugees and is not associated with the Palestinian government.  The move on the part of the White House was popular in Israel.  It’s expected, though, that payment will eventually be made and technically it’s not late.

Pakistan: The government lashed out against President Trump after he accused Pakistan’s leaders of “lies & deceit” and suggested the United States would withdraw financial assistance to the nuclear-armed nation it once saw as a key ally against terrorism.

Trump tweeted: “The United States has foolishly given Pakistan more than $33 billion in aid over the last 15 years, and they have given us nothing but lies & deceit, thinking of our leaders as fools.”

U.S. Ambassador David Hale was summoned to the Foreign Ministry to discuss Trump’s statement.

Trump going back to August has demanded that Pakistan crack down on the safe havens enjoyed by the Taliban fighting in Afghanistan.

Pakistan claims the money it has received was mainly reimbursement for supporting U.S.-led coalition forces that invaded Afghanistan in 2001 to topple the Taliban regime that sheltered al Qaeda.

Afghan officials have cheered Trump’s tough talk on Pakistan, which Kabul accuses of sponsoring terror attacks on Afghan soil.

But Pakistan is going to be key in forging any potential peace deal with the Taliban, which is the goal after all. And licking its chops, waiting to fill the void, is China, which suddenly finds its leverage over Islamabad multiplying as a result of Trump’s mood swings.

Afghanistan: Sergeant First Class Mihail Golin of Fort Lee, New Jersey, was the first U.S. service member killed in the line of duty for 2018 here, killed on New Year’s Day in a firefight where four other troops were wounded. He was assigned to B Company, 2nd Battalion, 10th Special Forces Group out of Fort Carson, Colorado.

North Korea: Pyongyang accepted an offer to attend high-level talks next month, South Korean officials have said.

The meeting next Tuesday will focus on finding a way for North Korean athletes to attend the Winter Olympic Games in South Korea in February, with Kim Jong-un saying this week that sending a delegation to Pyeongchang would be “a good opportunity to show unity of the people.”

The meeting will be on the border at Panmunjom and will represent the first high-level talks both Koreas have held since December 2015.  It isn’t clear who will be attending.

Earlier, the two governments reactivated a hotline between them.

South Korea’s President Moon Jae-in has previously said he sees the Olympics as a “groundbreaking chance” to improve relations.

But Defense Secretary Jim Mattis said on Thursday that the agreement to talk was “the result of international pressure,” though he added it was unclear if this represents “a real olive branch” or a “one-off from [Kim].”

But Japan’s defense minister said his country would remain vigilant as the bottom line is the North will continue with its weapons program.

I do agree with the corresponding move to delay regularly scheduled February military exercises between South Korea and the United States until after the Olympics, which would have only heightened tensions further at a dangerous time.  Presidents Trump and Moon agreed to this in a phone call on Thursday.  Otherwise, Kim has outfoxed Trump.

Editorial / Wall Street Journal

“There’s little benefit in lunging at Donald Trump’s regular Twitter bait, as his opponents prove nearly every day. But you don’t have to be CNN to think that the President should stop popping off about nuclear weapons, whether he’s joking or not.

“ ‘North Korean Leader Kim Jong Un just stated that the ‘Nuclear Button is on his desk at all times,’’ Mr. Trump tweeted Tuesday.  ‘Will someone from his depleted and food starved regime please inform him that I too have a Nuclear Button, but it is a much bigger & more powerful one than his, and my Button works!’

“Perhaps Mr. Trump figured this was a clever line about comparative manhood, but it’s an example of why even many of Mr. Trump’s voters wonder if he has any sense of self-restraint. He was trolling a dictator, and boasting about himself in the process, which makes the President look small.  He also distracted from the Iran protests that are vindicating his support for the Iranian people and discrediting his predecessor’s appeasement strategy.

“But more troubling is that Mr. Trump looked to be trifling with the world’s most serious security threat – a nuclear-armed warhead and missile arsenal is so serious a threat that it might require pre-emptive military action. His main advisers, and hundreds of American officials, are working day and night to diminish the threat short of war. If Mr. Trump ever does have to strike the North, he needs the world to believe he is acting as a last resort, not because he thinks he has a bigger Button.

“Comments like these explain the paradox of Mr. Trump’s first year.  He has genuine accomplishments to boast of – including tax reform, judicial nominees who are reshaping the federal courts, and a stop to new regulation.  Yet even with the economy growing faster, and a tight labor market beginning to bid up wages, Mr. Trump’s job approval remains below 40% in the Real Clear Politics average.

“The paradox results from Mr. Trump’s governing behavior. His attacks on all and sundry have polarized the electorate even more than it was on Election Day in 2016. He retains the support of his most fervent base but he has lost support among many who voted against Hillary Clinton more than they did for him.  Those Americans tend to think that a nuclear missile exchange isn’t a laughing matter.

“And please don’t compare this tweet to Ronald Reagan’s 1984 quip about Russia that ‘we begin bombing in five minutes.’ The Gipper said that during a sound check as a joke to radio technicians.  Mr. Trump sent his tweet around the world as a personal boast.

“Voters now tell pollsters they want a Democratic Congress by more than 12 percentage points.  If this holds, Democrats will retake the House and Mr. Trump may be impeached.  Mr. Trump needs to win over more voters if he wants to avoid that fate, and that means acting more like a President.  If he won’t do it for the sake of his office, or for the Americans who took a gamble on him in 2016, he should at least consider his own self-preservation.”

Meanwhile, in his New Year’s address, Kim said North Korea would move to mass produce nuclear weapons in 2018.

“The entire United States is within range of our nuclear weapons, and a nuclear button is always on my desk. This is reality, not a threat,” Kim said during his televised speech.  “This year we should focus on mass producing nuclear warheads and ballistic missiles for operational deployment. These weapons will be used only if our security is threatened.”

On the offer of dialogue from President Moon to President Kim....

Scott Snyder (Council on Foreign Relations) / Defense News:

“Moon wants to host a peaceful 2018 Winter Olympic games, as well as open direct dialogue with his neighbor. But in pursuing those things, Moon cannot succumb to North Korean nuclear blackmail to weaken the South’s military alliance with the United States – in the very same New Year’s speech, Kim claimed to be able to hit the U.S. with a nuclear weapon.  Nor can Moon abandon the U.S.-led international pressure campaign against North Korea’s nuclear and missile development.

“Kim’s dialogue proposal is based on the North’s well-worn ‘By Our Nation Itself’ line – that South Koreans must abandon interference from outside powers, who have benefited from keeping the peninsula weak and divided, and join with North Korean compatriots to achieve independent national unification. This scheme, incidentally, is incompatible with the international pressure campaign the U.S. is relying on to manage the North’s nuclear program – not to mention with the U.S. alliance the South is relying on to protect it.

“And the gambit appeals directly to Moon’s goals, while trying to force a choice: a peaceful Olympics, or South Korea’s alliance with the United States. As part of his dialogue proposal, Kim explicitly criticized the Moon administration for ‘joining the United States in its reckless moves for a North-targeted nuclear war’ and requested the discontinuation of ‘joint nuclear war drills they stage with outside forces.’  But it is Kim himself who wants to hold South Korea’s hosting of the Winter Olympics hostage to his demand for global acknowledgement that the North  has (illegally) become a nuclear weapons state....

“(The) very offer of talks is an unwelcome reminder that despite South Korea’s international success as a top-ranked global economy, the country remains hobbled both by its rough neighborhood and its exasperating northern neighbor.  It exposes Moon’s weaknesses and South Korea’s diplomatic and political constraints, especially as Kim Jong Un tries to generate friction between Presidents Moon and Trump.”

Robert Litwak, a scholar at the Woodrow Wilson Center for International Studies, told the New York Times: “The timing of (Kim’s) overture, combined with his newly declared capability to strike the United States, is shifting the calculus.  Kim sees a rare chance here to take the side of the South Koreans, against President Trump.”

Separately, the aforementioned Sen. Lindsey Graham said that if North Korea participates in the Winter Games, the United States should boycott them.

“Allowing Kim Jong Un...to participate in the Winter Olympics would give legitimacy to the most illegitimate regime on the planet,” Graham tweeted.  “I’m confident South Korea will reject this absurd overture and fully believe that if North Korea goes to the Winter Olympics, we do not.”

Sorry, Senator, you’re going to be wrong, but Japan is one nation that will be disgusted, like Graham. They are losing confidence in Moon to do the right things and stand firm against Kim.

China: From Deng Yuwen / South China Morning Post:

“Does Beijing have a timetable for seizing control of Taiwan? This has been a hot topic for the media and among experts on cross-strait relations.  I believe such a timetable exists. If the timeline was rather vague in the past, it has become clearer now. And the U.S. security strategy that President Donald Trump recently unveiled will hasten the pace of Beijing’s plan to take back the island, probably in 2020.”

You know what I think.  That timetable could be moved up. And indeed, on Monday, the director of China’s Taiwan Affairs Office, Zhang Zhijun, wrote in an article published in Cross-Strait Relations that last year was tough for cross-strait ties.

“[In the past year] the Taipei government refused to endorse the ‘1992 consensus,’ obstructed and limited cross-strait exchanges and indulged the pro-independence forces to further push the de-Sinicisation (sic) process,” Zhang said.

“In the new year, we will not hesitate to oppose any kind of ‘Taiwan independence’ activities...we will never tolerate separatist movements, nor will we sit idly to let them erode the basis for peaceful reunification.’

Random Musings

--Presidential tracking polls....

Gallup:  40% approval for President Trump, 55% disapproval*
Rasmussen:  44% approval, 54% disapproval

*Gallup kind of shocked some folks when it announced it was no longer doing daily approval numbers but rather will publish weekly reports.  The above figures are for 12/30/17.  I’ll see how this shakes out in terms of timing of my column before I decide what I’m going to do.  For now, Rasmussen is still daily.  [Weekly is fine, I just hope it’s Friday’s and not Monday’s that Gallup is reporting, for selfish reasons.]

We should have a slew of new poll data from the networks and major newspapers soon.

--Sen. Orrin G. Hatch (R-Utah) announced Tuesday he would retire rather than seek an eighth term representing the state, opening the door to a return to public office by Mitt Romney. Seeing how contentious it was between Romney and then-candidate Donald Trump in 2016, the prospect of a Sen. Romney is kind of delicious to some of us.

After Trump endorsed Romney’s failed 2012 bid for the presidency against Barack Obama, Trump then called him a “failed presidential candidate” who was “awkward” and “goofy” once Trump launched his own bid.  And then in early March of 2016, as part of a failed attempt to rally Republican support against Trump’s nomination, Romney said:

“Here’s what I know.  Donald Trump is a phony, a fraud.  He’s playing the members of the American public for suckers. He gets a free ride to the White House, and all we get is a lousy hat.”

Hatch, 83, is making good on his long-ago vow to leave office at the conclusion of his current term and he will depart as the longest-serving Republican in the Senate’s history.

“I’ve always been a fighter, but every good fighter knows when to hang up the gloves,” Hatch said in a video announcing his plans.  “And for me, that time is soon approaching.”

Also this week, Minnesota Lt. Gov. Tina Smith was sworn in on Wednesday, replacing Democratic Sen. Al Franken of Minnesota, while Doug Jones of Alabama was also sworn in, after defeating Republican opponent Roy Moore in their December special election.

--Speaking of Roy Moore, a belated “Jerk of the Year” nod to his wife, Kayla, who during the Senate campaign at one point bragged about hiring a Jewish lawyer to counter charges of anti-Semitism, though the lawyer, Richard Jaffe, voted for his longtime pal Doug Jones.

Jaffe told the Washington Examiner, “There could not be a more passionate supporter of Doug than me!” and that he and Jones had been friends for 30 years, and that he had donated to Jones’ campaigns.

Kayla stunned listeners when she mentioned Jaffe while defending her hubby.

“Fake news will tell you that we don’t care for Jews. I tell you all this because I’ve seen it also and I just want to set the record straight while they’re here,” Kayla said at a campaign rally in Midland City, Ala.

“One of our attorneys is a Jew!”

Kayla Moore’s comments followed claims that Moore hated Jewish people because of his allegations that Jewish billionaire George Soros was financing his opponents – and going to hell.

And there is this.  Tina Johnson, one of the women who claimed Moore groped her at his office over two decades ago, came home from work earlier this week to find that her house had burned down – and the blaze is now being investigated as possible arson, Gadsen, Alabama officials said. Firefighters rushed to the rural one-level house after a utility worker called 911 shortly after 8 a.m., but it was too late to save it.

“I am devastated, just devastated,” Johnson told Al.com on Friday morning.  “We have just the clothes on our backs.”

No one was injured as both Johnson and her husband were at work when the fire broke out.

This is sick.

--Chicago ended 2017 with fewer homicides than the year before, but gang violence kept the total number of killings above the 600 mark for only the second time in more than a decade. The Chicago Police Department released statistics Monday that show the number fell from 771 to 650 last year.  [Recall, there were under 300 in New York City, 290 as a preliminary final number in Gotham, the lowest since the 1950s, and far lower than the record 2,245 in 1990.  Los Angeles was also under 300, 271 as of Dec. 16.]

Baltimore set a new per-capita record as a surge of homicides resulted in 343 killings in 2017, bringing the annual rate to its highest ever – roughly 56 killings per 100,000 people.  Understand, Baltimore had 343 killings among 615,000 inhabitants vs. New York’s 290 among 8.5 million.

--I didn’t comment last time on a deadly fire in the Bronx that claimed 12 lives, the worst fire in New York City in 25 years, because I just didn’t think it fit the column. Tragedies are normally just that, tragedies.  Can’t comment on every one of them.

But as the days went by, the story developed that the 25-year-old mother whose toddler started the fire could have done far more to warn her neighbors of the blaze.

The mom dashed out of the apartment with her two young kids, leaving open the door of her burning apartment and sending flames shooting through the building.  She was heard faintly calling out, “fire, fire,” claims Shevon Stewart, 45, whose sister, nieces and cousin were among the 12 killed.

“Her apartment is right behind mine,” Stewart said.  “You don’t call for help? From the moment you see fire, call somebody. And if you don’t have a phone, knock on doors, do something.”

After she escaped the flames, the mother sat down on the curb across the street.  Stewart claimed, “Nobody called us. Nobody tried to find us.” 

Another few days later, it became clear the freakin’ idiot mother, who somehow allowed her child to play with the stove burners, didn’t initially even call 911.

--We note the passing of Brendan Byrne, a two-term New Jersey governor who legalized gambling in the state and served as an elder statesman for decades after. He was 93.

Byrne, a Democrat, was a World War II veteran (flying combat missions across Europe) who led the state through difficult economic times in the 1970s, with long gas lines and a 10% unemployment rate.  He ushered in the development of the Meadowlands Sports Complex and supported the legalization of gambling in Atlantic City in 1974, though he regretted the state didn’t play a more active role in overseeing AC’s development, calling it his “biggest mistake.”

Byrne served from 1974 to 1982 and, with a largely scandal free administration, left office widely admired and is thought of fondly.

--I forgot to give a “Dirtball of the Year” last time.  Myanmar’s Aung San Suu Kyi, former Burmese Nobel Peace Prize winner, as she looked the other way while the Muslim-Rohingya minority became a victim of massive ethnic-cleansing, thousands killed, hundreds of thousands displaced, forced to flee to Bangladesh as their villages were torched.  Suu Kyi proved to be a fraud when it was time to step up.  She’ll be punished in the afterlife. In the here and now, the UN’s human rights chief said she could face genocide charges in the future.

--I was reading a piece in Business Insider on Tony Robbins, the motivational speaker and life coach, and there was this bit on his morning routine, which he “never allows himself to ‘wimp out’ on, or make excuses.”  “Starting the day off by allowing laziness or apathy to take control can really set your day off on the wrong foot,” he says.

“A typical Robbins morning begins around 7 a.m., often following just a few hours of sleep, with a 10-minute breathing exercise designed to prime his mind and body, and to prepare himself for the day ahead.  He then transitions to a state of mindful meditation, in which he mindfully contemplates his goals for the day and allows himself to focus on the things in life that he’s grateful for.

“Once Tony feels mentally ready, he begins a hardcore physical workout with his personal trainer that features high impact intervals of ultra-intensive bursts of maximum exertion – these workouts typically only last around 15 minutes but are designed to keep his heart rate at a very high level, which helps get his body ready for the often long and exhausting day ahead.

“Once his workout is complete, Tony spends a few minutes in a very hot sauna, followed by a quick dip in icy cold water – transitioning between these temperature extremes helps him keep his heart rate up, and it goes a long way towards getting him energized and ready to tackle the coming day.  There’s lots of research available that suggests that exercising in the morning contains a wealth of benefits.”

Hey, I walked at the mall two mornings this week.  Then about nine hours later, I had some beer.

--Along the lines of the above, Zaria Gorvett had a piece on BBC.com on some of the habits and quirks of famous scientists and inventors.

Such as physicist Nikola Tesla, who swore by toe exercises – every night, he’d repeatedly ‘squish’ his toes, 100 times for each foot, according to the author Marc J. Seifer, claiming it helped to stimulate his brain cells.

Or Albert Einstein, who swore by his routine of sleeping for at least 10 hours per day (the average American sleeps 6.8 hours today).

Author John Steinbeck once said: “It is a common experience that a problem difficult at night is resolved in the morning after the committee of sleep has worked on it.”

Einstein, according to legend, also took regular naps, but to be sure he didn’t overdo it, he’d recline in his armchair with a spoon in is hand and a metal plate directly beneath. He’d allow himself to drift off for a second, then – bam! – the spoon would fall from his hand and the sound of it hitting the plate would wake him up.

Einstein’s daily walk was sacred to him as well. While at Princeton, he’d walk the mile and a half from his office to his home and back. Darwin was said to go for three 45-minute walks every day.

Walking isn’t just for exercise, but there are volumes on how walking can boost memory, creativity and problem-solving.  [Walking outside is said to be best.]

--I saw a blurb tonight that Betty White, who is turning 96 on Jan. 17, told Parade that her secret to a long, happy and healthy life is vodka and hot dogs, “probably in that order.”

You know who makes a truly great hot dog? Black Bear, available only thru Shop Rite.  They are best boiled.  Others have told me Black Bear deli meats are also terrific.

Back to Ms. White, she said another key is to “Enjoy life” and “Accentuate the positive, not the negative.”

Seeing as I’m a Mets and Jets fan, this is rather hard to do.

--That was rather remarkable to see measurable snow in parts of Florida for the first time in three decades.  Savannah, Georgia received its first snowfall over one inch in 28 years.  Meanwhile, in the Northeast and Midwest, we are freakin’ tired of sub-freezing weather, on and on and on.....

--But it’s not as bad here as it is tonight up on Mt. Washington in New Hampshire, the highest peak in the Northeastern U.S., which has the highest-recorded wind gust in the world, 231 mph on April 12, 1934, for a wind not associated with a tropical cyclone.  The wind chill tonight is projected to hit -100.  [It’s -85 as I go to post.]

It’s amazing to think there are researchers who live up there.  I’ve only been to the top once, at like age ten, if I recall. 

Mount Washington Observatory staff meteorologist Caleb Meute in his Friday forecast said that at 100 degrees below zero, frostbite sets in on exposed skin in less than one minute. Good lord....

---

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

God bless America.

---

Gold $1320
Oil $61.59

Returns for the week 1/1-1/5

Dow Jones  +2.3%  [25295]
S&P 500  +2.6%  [2743]
S&P MidCap  +1.8%
Russell 2000  +1.6%
Nasdaq  +3.4%  [7136]

Bulls 61.9
Bears
15.2 [Source: Investors Intelligence]

Dr. Bortrum posted a new column.

Have a great week.

Brian Trumbore