Week in Review

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Week in Review

06/16/2018

For the week 6/11-6/15

[Posted 11:30 PM ET, Friday]

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Edition 1,001

Ah, the best laid plans of mice and men...this was yet another overwhelming week on the news front for the kid and whatever you do, if you want to save a tree, don’t print this out.  Could be an all-time long one for moi.

I feel compelled to always remind you that this is not just a Week in Review, but an ongoing history, and archive, of our times, so when an issue like the Trump-Kim summit comes up, I have to cover it as extensively as possible, including commentary from as many experts and pundits as I see fit.  So a lot of what follows is just that.  200 years from now, some Harvard professor will appreciate what I’ve done, as I listen to lectures upstairs, given by Charles Krauthammer.

I will get into what I promised you last time, more of a personal take on my life experiences, next review.  A very personal take.  Let’s just say Vlad the Impaler and Xi, President Trump’s “great friend,” will take more than a few hits.  Ditto communism in general, Iran, and other subjects.  I saw a lot of this firsthand as a teenager, and now the last 20 years, and it has shaped my opinions forever.

For now, I do understand Trump World. I do get it. That doesn’t mean I have to like it.

I’m the ‘wait 24 hours’ guy.  That can mean one day, or two years.

To me, for now, it is beyond belief that our president continues to trash our allies, while refusing to speak ill of our main enemies.

I understand diplomacy.  But ‘wait 24 hours’ applies to yours truly as well in my beliefs and postures.

So I hope President Trump is doing the right thing when it comes to abandoning “war games,” and refusing to bring up human rights, and lying to the American public, literally, about 40-50 times a day, as he did in the White House driveway this morning.

Yes, I do understand how well the economy is doing, and as of today, Republicans can safely say there will be no Blue Wave in November. There is a good chance we’re posting 4% GDP growth for the second quarter, and the president and Republicans can stretch that out a long time on the campaign trail, let alone the record employment numbers.

But you also need to ‘wait 24 hours’ to see how Trump’s lack of a trade strategy plays out.  And wait to see how his lack of a grand strategy on anything geopolitical does as well.

What I do know for now is that in the case of North Korea, Kim Jong Un would be a fool to do anything stupid before our mid-term elections. He should just sit back and smile.  He has a man to deal with who is putty in his hands.

As for the Mueller investigation, Trump’s strategy of trashing it nonstop is clearly working with the base. But Mueller is far tougher than the president.  And so we wait.

Far more next time.

Trump World: North Korea...Trade....

Sentosa Island:

Susan Page / USA TODAY

“The handshake was historic. The words? Not so much.

“President Trump on Tuesday touted his unprecedented meeting with North Korean leader Kim Jong Un as a breakthrough that would ease decades of tensions that have made the Korean Peninsula one of the most dangerous places on Earth.

“But the four-point joint statement the two men signed fell short of previous international accords reached with Pyongyang and left big questions unanswered.

“ ‘We’re prepared to start a new history, and we’re ready to write a new chapter,’ a relaxed and triumphant Trump told a news conference after the one-day summit in Singapore. He called the outcome a ‘first, bold step for a brighter future.’

“ ‘The world will see a major change,’ Kim had declared as the two men stood side-by-side in front of a phalanx of U.S. and North Korean flags.

“It was one more sign of how Trump is rewriting long-standing fundamentals of American foreign policy. He described Kim, a despotic adversary, as a ‘talented’ leader who could be trusted. That came just days after he blasted Canadian Prime Minister Justin Trudeau, a democratic ally, as ‘weak’ and ‘dishonest’ after a combative Group of Seven economic summit.

“ ‘They wanted to make a deal, and making a deal is a great thing for the world,’ Trump said of the North Koreans. The president dismissed the idea that the summit itself represented a major concession by the United States that had won little concrete in return.

“For more than an hour at a wide-ranging news conference, Trump basked in what he portrayed as a legacy-making achievement. He fielded questions from reporters from the United States, China, Japan, South Korea and elsewhere, joking with some about favorable or unfavorable stories they had written about him in the past.

“The contrast was head-spinning with a president who less than a year ago was threatening ‘fire and fury like the world has never seen’ against a growing North Korean threat. Now, he offered free advice on the real-estate possibilities in the Hermit Kingdom, still the most isolated country in the world.  ‘They have great beaches,’ he said.  ‘Wouldn’t that make a great condo?’

“While there was skepticism about whether Trump could provide evidence of substantive progress, there was little doubt that Kim got what he wanted: A meeting with a sitting U.S. president, a prize that eluded his father and grandfather. The two men stood as equals on stage, and Trump said he was ‘honored’ to be there. With that picture alone, Kim bolstered the global legitimacy of what had been seen as a pariah state.”

Trump said tough sanctions would remain in place until denuclearization was well underway.  But he also said he would stop the military exercises, “war games,” in his words, adopting the term used by both North Korea and China, though the U.S. has long called them defensive. And then Trump said, as he has for years, that he would like to withdraw U.S. troops from the Korean Peninsula, which gives our allies the heebie-jeebies. 

The thing is, the joint statement had zero details...no deadlines, timetables or verification regimes.  And in terms of denuclearization, nothing about “complete, verifiable and irreversible,” as Trump had declared was the goal prior to the summit. The president said only that the process of denuclearization would begin “very, very quickly.”

We were told nuclear follow-on negotiations with Pyongyang would begin “at the earliest possible date.”

And of course nothing on human rights.

Republican Sen. Bob Corker, chairman of the Foreign Relations Committee: “While I am glad the president and Kim Jong Un were able to meet, it is difficult to determine what of concrete nature has occurred. I look forward to having Secretary Pompeo before our committee soon to share his insights and look forward to carrying out our oversight responsibilities.”

Sen. Lindsey Graham (R-S.C.) said Trump’s cost reasoning for halting the exercises was “ridiculous.”

“It’s not a burden onto the American taxpayer to have a forward deployed force in South Korea,” Graham told CNN.  “It brings stability. It’s a warning to China that you can’t just take over the whole region. So I reject that analysis that it costs too much, but I do accept the proposition, let’s stand down (on military exercises) and see if we can find a better way here.”

Upon returning to Washington on Wednesday, President Trump amped up claims of the summit being highly successful. Tweeting from Air Force One as it was landing, Trump declared:

“Just landed – a long trip, but everybody can now feel much safer than the day I took office. There is no longer a Nuclear Threat from North Korea.  Meeting with Kim Jong Un was an interesting and very positive experience.  North Korea has great potential for the future!”

And....

“Before taking office people were assuming that we were going to War with North Korea. President Obama said that North Korea was our biggest and most dangerous problem. No longer – sleep well tonight!”

Senate Minority Leader Charles Schumer (D-N.Y.) said during remarks on the Senate floor.  “Saying it doesn’t make it so.  North Korea still has nuclear weapons. It still has ICBMs. It still has the United States in danger. Somehow President Trump thinks when he says something it becomes reality, if it were only that easy, only that simple.”

Following the summit, Sec. of State Mike Pompeo, speaking in Seoul, was asked if he would like to accomplish major nuclear disarmament within Trump’s current term, which ends on Jan. 20, 2021.

Pompeo said: “Most definitely. Absolutely. You used the term major, major disarmament, something like that? We’re hopeful that we can achieve that in the two-and-a-half years.”

He said “understandings” had been reached with North Korea that did not appear in the statement. He added: ‘I am confident they understand that there will be in-depth verification.’

Pompeo also said North Korea will not see any economic sanctions lifted until it has demonstrated “complete denuclearization.”  The secretary dismissed a report by North Korean state media that indicated the U.S. would grant concessions to Pyongyang for gradual progress.

And Pompeo insisted the alliance between the U.S., South Korea and Japan remained “ironclad,” despite Trump’s announcement about ending military drills.  South Korea and Japan have always said the drills are necessary to ensure their security.

As for China, after a visit to Beijing, Pompeo said China had committed to maintain United Nations sanctions on North Korea. Pompeo met with China’s President Xi Jinping and other senior officials, but Pompeo’s Chinese counterpart, Wang Yi, didn’t bring up sanctions at the press conference.  Wang also gave a noncommittal response when asked if China would support Pompeo’s plan, outlined in Seoul, to try to achieve “major disarmament” of North Korea’s nuclear weapons within 2 ½ years.

In Washington, U.S. Adm. Harry Harris, who has been nominated to become ambassador to South Korea, said at his Senate confirmation hearing on Thursday that he was concerned about China moving to ease sanction pressure on North Korea.

For their part, North Korea framed the summit as a win, dubbing it as “the meeting of the century” on the front page of its official party newspaper. 

The official Korean Central News Agency (KCNA) said: “Kim Jong Un and Trump had the shared recognition to the effect that it is important to abide by the principle of step-by-step and simultaneous action in achieving peace, stability and denuclearization of the Korean Peninsula.”

But there was nothing more on “denuclearization,” with the statement focusing on stopping hostilities between the two countries.

South Korean President Moon Jae-in heralded the agreement, saying, “It will be recorded as a historic event that has helped break down the last remaining Cold War legacy on Earth.”

But Moon did not address Trump’s decision to cancel joint military exercises.

Japan is working on arranging a meeting between Prime Minister Shinzo Abe and Kim Jong Un, perhaps in August. Aside from the issue of North Korea firing missiles over Japan in the past year, Abe has pledged that the issue of Japanese citizens abducted by North Korea be resolved.

The first poll on American reaction to the summit, courtesy of Reuters/Ipsos, had just over half (51 percent) of all Americans say they approve of how President Trump handled North Korea, but only a quarter think it will lead to the denuclearization of the Korean Peninsula.

40 percent said they did not believe the countries would stick to their commitments, while another 26 percent said they believed the U.S. and North Korea would meet their commitments. 34 percent did not know.

39 percent believe the summit has lowered the threat of nuclear war between the two, while 37 percent said they did not believe it changed anything.

The poll also found that Republicans were twice as likely as Democrats to say that the meeting lowered the threat of nuclear war, and they were three times as likely to say that both sides would follow through on their commitments. Democrats typically give Trump low approval ratings – only 12 percent approve of his overall job performance.  But about 30 percent said they approved of his handling of North Korea.

40 percent say Trump deserves the most credit for the summit, while 11 percent say South Korean President Moon Jae-in deserves primary credit.  Kim was third with 7 percent.

Opinion....all sides....

Robin Wright / New Yorker

“Three days after angering his six closest Western allies, President Trump embraced Asia’s most notorious dictator at a steamy resort in Singapore and heralded a ‘very special bond’ in new relations between the United States and North Korea. Trump and Kim signed a two-page statement – big on ideas but slim on specifics – that committed North Korea to ‘complete denuclearization’ and said that the United States would ‘provide security guarantees’ for a country with which it is still technically at war....

“In Washington, there is broad support for Trump’s diplomacy, especially after a year of threatening rhetoric that seemed to move the U.S. and North Korea ominously close to war... Yet former U.S. negotiators with North Korea and senior military experts who worked on the issue were distinctly unimpressed – even baffled – by the lack of substance at the summit, the first meeting between the leaders of the United States and North Korea....

“The brief statement ‘landed with a thud,’ Abraham Denmark, the director of the Asia Program at the Wilson Center and a former Deputy Assistant  Secretary of Defense for East Asia, told me.  ‘No new commitments from Kim on denuclearization, or even a freeze on North Korea’s nuclear or missile programs. No new assurances from the United States. The statement mostly reiterates what was said at the inter-Korean summit, and sets vague plans for future meetings. We knew there was a long way to go, but this statement makes very little progress.’

“Pyongyang and Beijing are the big winners coming out of the summit, especially because of the limits on U.S. military activities in South Korea.  Trump had also suggested earlier that he might draw down U.S. troops, who have been stationed on the Peninsula for seven decades.  ‘Kim got a huge propaganda win and a metric ton of legitimacy,’ Denmark said.  ‘Expect North Korean media to replay these images for years, showing how the world respects Kim and that North Korea is now recognized as an equal to the United States and the other great powers of the world.  Kim gave up nothing new.’ China...got everything that it wanted, too....

“The brief summit – originally scheduled for two days – was rife with lofty language from the President about the North Korean leader, who has executed members of his own family to consolidate power.  ‘Well, he is very talented,’ Trump said.  ‘Anybody that takes over a situation like he did, at twenty-six years of age, and is able to run it, and run it tough.’

“The summit was historic simply because it allowed the socialization of two countries at war, and it ‘didn’t obviously fly off the rails,’ James (Spider) Marks, a retired major general who was a senior intelligence officer on North Korea, told me. But a ‘Presidential pat on the back does not connote trust. It can start trust-building, and we all should hope that that is the intended outcome.’”

David E. Sanger / New York Times

“On paper, there is nothing President Trump extracted from North Korea’s leader, Kim Jong Un, in their summit meeting that Mr. Kim’s father and grandfather had not already given to past American presidents.

“In fact, he got less, at least for now. But as Mr. Trump made clear in a lengthy but vaguely worded reconstruction of their five hours of talks, none of that really matters to him.

“Instead, he is betting everything on the ‘terrific relationship’ and ‘very special bond’ that he said he developed with the 34-year-old dictator, and Mr. Trump’s seeming certainty that they now view the future elimination of North Korea’s arsenal of atomic weapons the same way.  He swatted away suggestions that the phrase ‘complete denuclearization of the Korean Peninsula’ means something different in Pyongyang than it does in Washington.

“Mr. Trump may yet prove that this time is different. This entire venture in the steamy summer in Singapore, the beating capitalist heart of Southeast Asia, is based on his conclusion that past presidents got it backward.

“So he flew halfway around the world to meet the leader of one of the world’s most repressive nations on the theory that if he could win over the country’s leader with a vision of future wealth, North Korea will determine that it no longer needs its nuclear weapons. Or its missiles, its stockpiles of VX and other nerve agents or its biological weapons.

“It is a huge gamble, based on the very Trumpian assumption that the force of his personality, and the deal-making skills in which he has supreme confidence, will make all the difference. Skeptics doubt that anything basic has changed and that a regime that has survived chiefly on its ability to threaten Armageddon will be reluctant to give up everything....

“Still, Mr. Kim was caught by one microphone saying that ‘many people in the world will think this is a scene from science fiction, from fantasy.’

“He was right, and at moments it looked as if it had been drawn from one of the many dark comedies built around the North Korean leader, such as ‘The Interview,’ which imagines a plot to kill him off.  The North responded with a major cyberattack against Sony Pictures.

“There were no commitments in Tuesday’s document about limiting Mr. Kim’s growing cyber army.

“Yet even some of Mr. Trump’s fiercest critics, who say he is dismantling alliances and wrecking America’s reputation for sticking to its agreements, have applauded the effort.

“ ‘We’re in a better place today than we were a year ago,’ Antony (sic) J. Blinken, who was deputy national security adviser and deputy secretary of state under President Barack Obama, said after the meeting ended. It was worth trying the top-down approach to dealing with Mr. Kim, he went on, because the alternative path has failed repeatedly.

“The first test of that theory may come as soon as next week, when Secretary of State Mike Pompeo is supposed to begin translating the vague set of commitments signed on Tuesday into something that resembles a disarmament plan.

“While the White House used to describe those moves as rapid, Mr. Pompeo has privately acknowledged to friends that this will be a long process. He insists, as Mr. Trump did on Tuesday, that the United States will not let up on sanctions against the North until the disarmament process is well underway in order to maintain leverage.

“But the reality is more complicated.

“The United States has little trade with North Korea that it can impose sanctions on. And China and Russia are already letting up the pressure because, in their view, as long as Mr. Kim has Mr. Trump engage in diplomacy, the president cannot threaten fire, fury or a willingness to use what he once called the ‘bigger button’ on his desk.

“ ‘The summit has changed the psychology of the nuclear crisis and thereby pushed off the prospect of preventive U.S. military action,’ said Robert Litwak, a Wilson Center scholar who published a study of negotiating with North Korea. But he warned that Mr. Trump is not walking into the kind of negotiation he thinks he is.

“ ‘The upcoming negotiations will be arms control to constrain the North Korean program, not disarmament to eliminate it,’ Mr. Litwak said.

“The supreme irony, as Mr. Litwak and others noted on Tuesday, is that an effort to constrain the North’s capabilities, rather than eliminate them, has shades of the Iran deal that Mr. Trump just rejected....

“Whatever (Trump) gets, it will be judged by one standard: whether he has ‘solved’ the North Korea problem, as he vowed he would, rather than passing it on to his successor.”

Eli Lake / Bloomberg

“There was a time, only half a year ago, when President Donald Trump seemed clear eyed about North Korea.  He invited a survivor of one of its gulags who had walked thousands of miles to freedom to be an honored guest at this year’s State of the Union. Behind the petty insults he once hurled at Kim Jong Un, Trump also spoke eloquently about the Kim regime’s true, horrific nature.

“Well, it turns out all of that talk of Koreans yearning for freedom was prattle. Trump is in deal-making mode.  So he lavishes his new dictator friend with the kind of puff and hyperbole one expects at an award show.

“This was a theme of the summit in Singapore this week. From the choreographed handshake to show two leaders on equal footing to Trump’s musings about beachfront condos on the North Korean coast, the American president went out of his way to make one of the world’s most grotesque tyrants feel like a statesman.

“Now it should be said that some diplomatic pageantry in the service of a comprehensive, verifiable and irreversible agreement to rid North Korea of its nuclear weapons would be worth it.  But it’s telling that the vague agreement reached at the summit does not include any language on verification, or even a timetable for next steps. For now, Trump is asking the world to take his word on it.

“And while Trump deserves some credit for getting Kim to halt his nuclear and missile tests now for more than seven months, it’s still inexplicable why he would go out of his way to lie about his negotiating partner.  If there really is a deal to be done, then it won’t hinge on Trump’s flattery. It will hinge on Kim’s own calculation that his regime will not survive if he keeps his nuclear weapons.

“Trump can’t help himself though.  With that in mind, two moments of presidential obsequity stand out. The first was his response to a question from ABC’s George Stephanopoulos. Asked what kinds of security guarantees he offered Kim, Trump demurred. He then offered the following tangent: ‘His country does love him. His people, you see the fervor.  They have a great fervor. They’re gonna put it together, and I think they’re going to end up with a very strong country, and a country which has people – that they’re so hard working, so industrious.’

“Then there was Trump’s bizarre suggestion in his press conference that his negotiations with Kim would actually benefit the 100,000 Koreans living in Kim’s prison camps. When asked about whether his sweet words about the dictator counted as a betrayal of those doomed gulag dwellers, Trump was incredulous.

“ ‘No, I think I’ve helped them because I think things will change,’ he said.  ‘There is nothing I can say, all I can do is do what I can do.  We have to stop the nuclearization and that’s a very important thing.

“Trump’s verbiage here is reminiscent of Barack Obama’s 2015 Nowruz message to the Iranian people. Back then Obama said, ‘My message to you, the people of Iran, is that together we have to speak up for the future that we seek.’ Obama knew, when he said this, that the Iranian people had no say in the future of their country’s nuclear program. The only person who did was the supreme leader to whom Obama wrote a series of respectful letters.

“The same dynamic is at play with Trump and North Korea. Trump must know that most North Koreans despise their dictator. He has said as much. In an address to the national assembly in South Korea in November, the president observed: ‘The horror of life in North Korea is so complete that citizens pay bribes to government officials to have themselves exported abroad as slaves.’

“What’s more, Trump is deluding himself if he thinks a nuclear deal with Kim will benefit Koreans rotting in his gulags. The opposite is true. Any agreement will offer Kim’s regime security in exchange for nuclear concessions. A nuclear deal would by definition keep the wardens of those gulags in power.

“In this respect, Trump’s negotiations with North Korea, despite the historic face-to-face meeting, are conventional. It’s the same formula that American presidents have tried since Bill Clinton: your nukes for your regime. The big difference this time is that Trump is offering Kim lavish legitimacy before Kim has even agreed on a timetable to disarm.”

Neil Connor / The Telegraph

“Not so long ago, China was written off as a bystander to landmark events with regards to North Korea.

“Marginalized and some would say irrelevant, Beijing was seen as a witness to an unstoppable rapprochement between North Korea and the United States which reached a dramatic climax in Singapore.

“But Xi Jinping, the Chinese president, didn’t need an invite to this week’s historic summit to ensure his interests were represented and his objections achieved.

“He got everything he would have wanted.

“The end of ‘war games’ and a hint that U.S. troops would be withdrawn from the Korean peninsula would remove two barriers to China’s attempts to project its power across the region.

“Meanwhile, a softening of sanctions will only improve trade with its neighbor.

“China has long called for the end of military drills carried out by the United States and Seoul, as the first part of its ‘dual suspension strategy,’ which Beijing believes will ease tensions on the Korean Peninsula.

“The second part of the strategy – Pyongyang halting its missile tests – had already become a reality in recent weeks as North Korean leader Kim Jong Un seeks to present his country in a less belligerent light.

“Undoubtedly, the end of U.S. military exercises in South Korea is a major concession for Pyongyang. In addition, Mr. Kim does not appear to have given anything in return.

“But the drills are also aimed at China.

“Beijing views them as a significant part of the U.S. strategy to contain it and a constant reminder Washington has a major role in the region.

“The potential withdrawal of more than 28,000 troops from the Korean Peninsula would leave the path clear for China to assert itself as Asia’s dominant superpower.

“So when President Donald Trump said he would end the drills, China’s vision for the future of northeast Asia was beginning to take shape....

“Sensing the momentum was swinging in China’s favor, state media were also positive.  ‘If the U.S. stops joint military exercises with South Korea, it will be a big step forward on the Korean Peninsula,’ the nationalist ‘Global Times’ newspaper said, adding dual suspension becoming a reality would signal ‘a new leaf will be turned over.’

“ ‘With a cooling down of military activities, less U.S. military participation, and possibly an eventual U.S. troop withdrawal, the peninsula will completely walk out of the shadow of the Cold War,’ the newspaper added.”

Michael Rubin / New York Post

“To sell Kim Jong Un a vision for his country of cooperation rather than defiance, President Trump presented him with a slick, Hollywood-produced video.  ‘The doors of opportunity are ready to be opened,’ it declared, showing the barren North Korean coast transform into a new Riviera, with speedboats racing through the waters before luxury high-rises. ‘A new world can begin today, one of friendship, respect and goodwill.’

“It’s typical Trump: Unorthodox and out-of-the-box. For 65 years after the Armistice paused the Korean War, generations of politicians and strategists have coerced and coddled, raged and reacted, with little success to show for their efforts.

“Trump prides himself on breaking the mold. He promised to bring business acumen to government, so why not diplomacy? If real estate made Trump great, and business can make America great again, why can’t development also make North Korea great?

“It’s a compelling vision, but it’s doomed to fail. History isn’t so easily cast aside. North Korea has for generations been the world’s most isolated country.

“In some ways, the impact of that isolation is obvious: While South Koreans physically grew, malnutrition has caused North Koreans to shrink. What once was a common language is evolving into two as separation makes regional dialects more pronounced. But those obvious differences overshadow one more pernicious: ignorance....

“Trump’s video asks of Kim Jong Un, ‘Will this leader choose to advance his country and be part of a new world?’  That’s a noble challenge, but by taking human rights off the table and refusing to demand closure of North Korea’s concentration camps, Trump acknowledges its rejection. Repression’s legacy runs deep and is not easily erased by a luxury hotel, nor will tourists flock to a country where a wrong turn can be a capital crime.”

Michael O’Hanlon / Washington Post

“A consensus seems to be emerging in much of Washington that President Trump gave away too much and got too little in his summit meeting with North Korean leader Kim Jong Un in Singapore this week. Granting the Hermit Kingdom’s brutal dictator a photo op with the leader of the free world, promising to suspend North Korea’s security and virtually ignoring the country’s horrible human rights record – all while getting little out of Kim other than the usual vague, nonbinding promise to denuclearize – might seem a long way from the art of the deal.

“Critics’ warnings about not celebrating prematurely or awarding the Nobel Peace Prize just yet are warranted.  But unlike the case with his demeaning treatment of Canadian Prime Minister Justin Trudeau just days before, in this one, there may be a method to Trump’s madness. There is at least reason to hope for a successful arms-control and broader détente process....

“Yes, there was a lot of pomp and circumstance at this summit, and perhaps a bit too much fawning over the North Korean strongman. But if diplomacy is to have a chance, some effort to build camaraderie is sensible – especially after the volleys of insults between Trump and Kim in 2017 seemed to bring the world to the brink of war.  Similarly, every American president of the past quarter of a century has paid more attention to North Korea’s nuclear program than to the country’s abysmal human-rights record. The latter should never be forgotten, but Trump followed the same strategic logic of his three White House predecessors in recognizing the need to emphasize the threat North Korea poses to his own nation and its allies.

“Trump made mistakes, of course. For example, he should not have called the U.S.-South Korean joint military exercises that take place twice a year with well over 20,000 troops ‘provocative.’  But they are indeed large and, yes, they are expensive. They are also replaceable. In the United States, the military rarely conducts such enormous training activities. Even its larger drills, such as those at the Army’s National Training Center and the Marines’ Camp Pendleton in California, or the Navy’s Top Gun School and the Air Force’s Weapons School, generally involve no more than a few thousand personnel. The huge exercises with South Korea produce military benefits, but their larger purpose is to show strength and resolve. The crucial military purposes of the exercises can still be achieved by breaking them into smaller pieces.

“It is true the international sanctions regime of ‘maximum pressure’ against North Korea, imposed in the aftermath of its three intercontinental ballistic-missile tests and one nuclear test in 2017, is already gradually weakening. That is a regrettable, but almost inevitable, casualty of a promising diplomatic process. Trump needs to be attentive to this dynamic and his administration should warn countries such as China against outright defiance of the ban. But none of the sanctions have yet been suspended or lifted, so the concern is sometimes overblown.

“Maintaining a hopeful view of the summit and of what it means for U.S.-North Korean relations will be sustainable only if Pyongyang’s behavior improves meaningfully and permanently. Kim’s moratorium on testing nuclear weapons and long-range missiles is a start, but only a start. North Korea is, even today, surely still enriching uranium, reprocessing plutonium and building bombs, as well as longer-range rockets.

“The onus is therefore now squarely on Secretary of State Mike Pompeo, given his post-summit charge to undertake substantive negotiations. Near-term denuclearization of North Korea according to a Libya, South Africa or Ukraine model is not realistic. But Pompeo does need to make real progress this year in stopping North Korea from increasing its nuclear and longer-range missile arsenals. That will require getting North Korea to submit a database of its nuclear facilities and deploying international inspectors to those sites.  (Searching for undeclared sites will also be necessary.) The inspectors will have to confirm the nuclear facilities have been shut down, ultimately ensuring that centrifuges and other weapons-production systems have been dismantled and shipped out of the country.

“As progress down this path is made, some of the recent UN sanctions that target the North Korean regime’s main trade avenues could be suspended, then lifted, and a peace treaty concluded.  Other sanctions, especially those codified in U.S. law, should be maintained until Pyongyang truly does disarm. That latter goal may take years to achieve.

“Only when we see whether North Korea will go along with this kind of plan and begin its verifiable implementation will we really know how to evaluate what just happened in Singapore.”

Daniel Henninger / Wall Street Journal

“In a press conference after his summit with Kim Jong Un, President Trump said: ‘Honestly, I think he’s going to do these things. I may be wrong. I mean, I may stand before you in six months and say, ‘Hey, I was wrong.’  I don’t know that I’ll ever admit that, but I’ll find some kind of an excuse.’

“Can Donald Trump break every rule in the book and still win?  With the North Korean nuclear threat, we are about to find out.

“Mr. Trump successfully broke the rules of presidential campaigning. His defeat of Hillary Clinton was ‘unthinkable.’  He has turned virtually the entire Washington press corps into a determined opposition and routinely calls on his own attorney general to resign.

“No U.S. president has ever done these things. What has this approach produced?

“Politically, it has provided his supporters the constant reassurance that he will fight for  them in the most public way with anyone.

“Mr. Trump’s most substantive legislative achievement is the 2017 tax cut. If he announced his retirement next week, history would record that his presidency gave the nation one of the most beneficial economies on record.  In the U.S. today, there is work for virtually everyone.

“The tax cut, however, was negotiated with Mitch McConnell, Paul Ryan and Kevin Brady, who should not be mistaken for Xi Jinping, Vladimir Putin and Kim Jong Un.

“This week in Singapore, President Trump greeted Mr. Kim in front of American and North Korean flags arrayed as equals, extended his hand in friendship four times before their private conversation, and when the summit was over said, ‘I do trust him.’

“There are at least three arguments for Mr. Trump’s convivial approach to Kim Jong Un.

“One is that his predecessors’ old-school diplomatic strategies toward North Korea manifestly failed. A second is that unlike Ronald Reagan’s nuclear negotiating partners in the Soviet Union, which was malign but rational, Kim Jong Un’s rule is solitary and whimsically homicidal. In early 2017, Mr. Kim executed five senior North Korean officials with an antiaircraft gun. There is arguably no alternative to Mr. Trump’s fake flattery of a nut case who possesses up to 60 nuclear bombs.

“A last argument for Mr. Trump’s break-all-the-rules approach is that the clock is ticking.  Mike Pompeo said in early 2017, when he was CIA director, that Mr. Kim’s scientists were probably within ‘a handful of months’ of being able to produce a nuclear-armed ballistic missile that could survive re-entry into the Earth’s atmosphere.  The best guess previously was that North Korea was years from this capability.

“There is indeed a case for disruption and breaking the rules of international engagement. But to put it bluntly: When do we start winning?

“Motion isn’t winning. It’s just motion. Mr. Trump’s unconstrained self-confidence is something to behold, such as his tweeting Wednesday, ‘There is no longer a Nuclear Threat from North Korea.’ But self-belief cannot make the decades-old complexities of a North Korea simply go away.

“After the summit, Mr. Trump made a major announcement about pulling back the U.S. troop presence in South Korea. Was there any planning behind that surprise?  It would be nice to believe that Secretary of State Pompeo and national security adviser John Bolton have been working the back channels and that significant breakthroughs will emerge now. There is no evidence of that. Mr. Pompeo on Wednesday described a time-frame for disarmament of 2 ½ years. It sounds as if we are back in the familiar foothills of the North Korean nuclear mountain.

“In 2017, after Mr. Kim exploded the largest of his nuclear bombs so far, the Trump administration obtained UN sanctions that were squeezing North Korea. I think one of the main reasons Mr. Kim agreed to the summit was to get relief from those sanctions. Within hours of the summit, a statement by China made it clear the sanctions regime is going to erode during negotiations. Restoring that leverage will be impossible. It is a big loss.

“The Iran nuclear-deal withdrawal was a good step, but what has become of it? State Department officials are attempting to gain Europe’s support for this decision at the same time that Mr. Trump is fighting the G-7 over trade.

“Mr. Trump’s public trade battle with Canadian Prime Minister Justin Trudeau and the Europeans is entertaining, and this week’s news that the U.S. is about to impose tariffs of tens of billions of dollars on China is provocative. But when should we expect a recognizable economic benefit for the U.S. to appear?

“In dealing with foreign powers – North Korea, Iran, China, Europe, Mexico, Canada, Russia – we have been watching the attention-getting half of Mr. Trump’s improvisational negotiating model. Where’s the rest of it? When do we get the payoff for all this activity?

“It isn’t just our show, either. America’s traditional Asian allies in Japan, India, Taiwan and elsewhere are calculating, with every U.S. statement or presidential tweet, whether to lean toward the U.S., China or even Russia.

“Feeling good again about America matters. But in an unsentimental world, that isn’t the same as winning.”

Victor Cha / New York Times

“There is a phrase in Korean: ‘Begun is half-done.’ It means when tackling a difficult task, half of the battle is getting started.

“Despite the many warts in President Trump’s unconventional diplomacy toward North Korea, we have to give him credit. Only five months ago, based on my conversations with this administration, I thought we were headed down an inexorable path toward a devastating war.

“A military attack would not have ended North Korea’s nuclear weapons program. Instead, it would have resulted in a war – with hundreds of thousands of deaths in Japan and South Korea, including thousands of Americans – that the United States would have won but with horrible costs....

“To be sure, the joint statement that Mr. Trump and Mr. Kim released after their meeting left a lot to be desired. Mr. Kim did not commit to verifiable and irreversible dismantlement of North Korea’s nuclear programs.  Mr. Trump gave props to a dictator who, according to the United Nations, belongs in a docket before the International Criminal Court for crimes against humanity. Mr. Trump surprised his South Korean ally by announcing that he would cancel joint United States-South Korea military exercises that help to keep the peace on the Korean Peninsula. The photo opportunity of a face-to-face meeting with the leader of the free world is the ultimate legitimizer for this nuclear rogue state.

“Yet, in the case of North Korea, there are never good policy options – there are only choices between the bad and the worse.

“Mr. Trump’s diplomacy, however unconventional, has pierced the isolation bubble of the North Korean leadership, which no previous president could do....

“Mr. Trump now needs to get North Korea to provide a full declaration of its nuclear weapons that will be verified by international inspectors. After verification, Mr. Kim must begin a process of dismantling and removing his weapons at a point in the future. The international community, despite its ambivalence to Mr. Trump, will have to support the American president in holding the North to these obligations....

“For the first time since 1953, the door has been opened to peace on the Korean Peninsula. It could close shut again in the near future – if North Korea’s past behavior is any indication. The Singapore summit meeting was a modest start. It’s just the beginning, but, as Koreans say, to have begun is half-done.”

Trade: Last weekend, following the G7 meeting in Quebec, Canadian Prime Minister Justin Trudeau issued a warning to the United States that Canada “will not be pushed around,” with tariffs looming against Canadian products under the guise of “national security.” President Trump saw the statement as a slight after concluding what he considered friendly meetings.

Trump tweet shortly thereafter: “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!”

And: “PM Justin Trudeau of Canada acted so meek and mild during our @g7 meetings, only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around.’  Very dishonest & weak. Our Tariffs are in response to his of 270% on dairy!”

A few days later:

“I think that Justin probably didn’t know that Air Force One has about 20 televisions, and I see the television,” Trump told reporters on Tuesday after concluding his summit with Kim Jong Un. “He’s giving a news conference about how he will not be pushed around by the United States. And I say, ‘push him around? We just shook hands.’  It was very friendly.”

“That’s going to cost a lot of money for the people of Canada,” Trump said.

But this is absurd to the extreme.  Trudeau was just defending Canada, as any Canadian would want him to do, and Trump felt a need to be Trump.

Canada, by most measures, would lose thousands of steel jobs under the current steel and aluminum tariffs, and the tariffs would shave over $6 billion off its GDP.

The whole situation was then compounded by top trade advisor Peter Navarro declaring on a Sunday talk show that there was “a special place in hell” for world leaders who “stab [Trump] in the back on the way out the door.”

Navarro later apologized for his remarks.

“My job was to send a signal of strength,” he said at a Wall Street Journal conference on Tuesday.  “The problem was that in conveying that message I used language that was inappropriate.”

Navarro cited Chinese philosopher Confucius: “If you make a mistake and don’t correct it, that’s a mistake.”

I am not a fan of Navarro, though I don’t disagree with his longtime criticism of China.  I’m just glad he recognized the error of his ways in going after the wrong target.

But it was a bit ironic that Trump’s two designated pit bulls for trashing Trudeau, Navarro and Larry Kudlow, went too far.

Kudlow, also on Sunday, called on Trudeau to apologize to Trump.  Mr. Trudeau “stabbed us in the back,” Kudlow said, which was totally out of character for him, many of us having followed the likable guy for decades.  “It’s a betrayal,” Kudlow added on Jake Tapper’s “State of the Union.”

24 hours later Kudlow suffered a mild heart attack.  He’s expected to make a full recovery.

But even former Conservative prime minister of Canada, Stephen Harper, defended the man who defeated him in 2015, Trudeau.

“I don’t understand the [Trump administration’s] obsession with trade relations over Canada,” Harper told Fox Business Sunday. “Canada is the single biggest purchaser of U.S. goods and services in the world. It seems to me this is the wrong target.”

And Trump continues to grossly exaggerate the deficit with Canada, which is about $18 billion, but actually a surplus if you add in services.  Yet the president recklessly throws out the figure of $100 billion being the deficit with the Great White North, which happens to brew superior beer, I can’t help but add.  [Reader Mark R. keeps writing in on the deals he’s getting at his home in Pennsylvania on Labatt’s Blue.]

So today, the Trump administration announced it was levying tariffs on $50 billion of Chinese goods, while saying it has nearly completed a second list of tariffs on another $100 billion in Chinese products, which China has vowed would trigger an in-kind response from Beijing.

The U.S. list is intended to minimize the impact on U.S. consumers and businesses by selecting goods where there are ample alternative supplies from other countries. But eliminating any impact seems impossible.

Commerce Secretary Wilbur Ross is apparently taking aim at products for which China supplies 33 percent or less of total U.S. imports, making it easier to shift to other countries’ supplies, according to Reuters.  But many believe it will be difficult to find $100 billion with the 33 percent threshold.

On Thursday, China said it preferred dialogue to resolve differences, but said it was ready to respond if Trump moved forward.

In Beijing, meeting with Sec. of State Pompeo, the aforementioned Wang Yi said there were two choices when it came to trade.

“The first choice is cooperation and mutual benefit. The other choice is confrontation and mutual loss.  China chooses the first....We hope the U.S. side can also make the same wise choice. Of course, we have also made preparations to respond to the second kind of choice.”

Well this afternoon China said it would impose 25 percent tariffs on 659 U.S. goods worth $50 billion in response to the U.S. announcement that it is levying tariffs on Chinese imports of equal value. Tariffs on $34 billion of U.S. goods, including agricultural products such as soybeans, will take effect from July 6, the Chinese commerce ministry said. Soybeans are China’s biggest import from the United States by value. Autos will also be impacted, but it’s vague as to the extent.  Aircraft, thus far, are not on the list, with the other $16bn yet to be identified by Beijing.  [This is a fluid situation...I’m a little unclear on this last part myself.]

Related to the above, New York Fed President William Dudley told reporters on his last day on the job today, “I am a little concerned that trade policy could evolve in a way that leads to higher trade barriers, and immigration policy could evolve in a way that leads to much less immigration in the U.S. and therefore less productive capacity for the economy.”

The Fed could also be hiking interest rates into next year because of the low unemployment rate, 3.8 percent.  And it could have to adjust rates further, through 2020, to contend with the government’s “unsustainable deficit,” said Dudley.  [More below]

Separately, Chinese telecommunications giant ZTE resumed trading in its shares in Hong Kong on Wednesday, ending a two-month suspension, after the company agreed to pay up to $1.4 billion in penalties to the U.S. government and overhaul its management.  As expected, the shares fell over 40% the first day.

Lawmakers have been working to attach legislation on ZTE to an upcoming National Defense Authorization Act measure that is expected to pass the Senate.

Trumpets....

--President Trump said today that the jailing of former campaign manager Paul Manafort in advance of his trial was “a tough sentence” and “very unfair.”

Trump shared his thoughts less than two hours after Manafort was ordered to jail in response to allegations of witness tampering while awaiting trial on conspiracy and money-laundering charges.

Federal judge Amy Berman Jackson granted a motion filed by federal prosecutors and blistered Manafort for abusing “the trust placed in you six months ago” when he was released on bail.

The judge scolded Manafort over the feds’ allegations that he used his cell phone to try to persuade witnesses in the case against him to lie.

“This is not middle school. I can’t take away his cellphone,” she said.

“If I tell him not to call 56 witnesses, will he call the 57th?”

Trump tweet: “Wow, what a tough sentence for Paul Manfort, who has represented Ronald Reagan, Bob Dole and many other top political people and campaigns.  Didn’t know Manafort was the head of the Mob. What about Comey and Crooked Hillary and all of the others?  Very unfair!”

Earlier in the day, in his impromptu presser in the White House driveway, Trump sought to distance himself from Manafort.

“Manafort has nothing to do with our campaign,” adding that he felt “a little badly” that prosecutors were targeting the longtime Republican operative for actions taken more than a decade ago.

“You know, Paul Manafort worked for me for a very short period of time... He worked for me for what?  For 49 days or something? A very short period of time.”

In fact it was 144 days as Trump’s campaign chairman, and at a most critical time prior to and at the time of the Republican convention.

--The Justice Department released Thursday a highly anticipated report on the FBI’s handling of the Hillary Clinton email probe and other sensitive issues in the 2016 election. The report contains something for each side in the debate to cherry-pick.

But it also blasts former FBI Director James Comey. His reputation is ruined...up in flames, despite his post-report protestations to the contrary. Everyone in America, from all sides, is tired of this sanctimonious jerk.

At the same time, any rational reading of the report would conclude that the moves of the FBI and Comey helped the Trump campaign by disadvantaging that of Hillary Clinton.

The inspector general found: “While we did not find that these decisions were the result of political bias on Comey’s part, we nevertheless concluded that by departing so clearly and dramatically from FBI and Department norms, the decisions negatively impacted the perception of the FBI and the Department as fair administrators of justice.”

As for Trump and his supporters, he initially cited letters from his attorney and deputy AG faulting Comey’s handling of the investigation into Clinton as the reason for firing him. But the next day, the president acknowledged in his interview with Lester Holt that he would have done it even without the letters and that he was thinking about the Russia investigation at the time.

Recently, Rudy Giuliani has said one reason Trump fired Comey was because the FBI director wouldn’t publicly exonerate the president in the Russia inquiry. But the IG’s report did not examine the origins of the Russia investigation, though it will indeed be used to shape perception.

Clinton supporters will point to the IG saying that Comey mishandled the way he announced her exoneration and displayed a “serious error in judgement” in telling Congress he was reopening the investigation on the eve of the election.

The following sums it all up perfectly....

Editorial / Wall Street Journal

“The long-awaited Inspector General’s report on the FBI’s handling of the Hillary Clinton investigation makes for depressing reading for anyone who cares about American democracy. Self-government depends on public trust in its institutions, especially law enforcement. The IG’s 568-page report makes clear that the FBI under former director James Comey betrayed that public trust in a way not seen since J. Edgar Hoover.

“We use the Hoover analogy advisedly, realizing that the problem in this case was not rampant illegal spying. Though IG Michael Horowitz’s conclusions are measured, his facts are damning. They show that Mr. Comey abused his authority, broke with long-established Justice Department norms, and deceived his superiors and the public.

“While the IG says Mr. Comey’s decisions were not the result of ‘political bias,’ he presided over an investigating team that included agents who clearly were biased against Donald Trump.  The damage to the bureau’s reputation – and to thousands of honest agents – will take years to repair.

“The issue of political bias is almost beside the point. The IG scores Mr. Comey for ‘ad hoc decision making based on his personal views.’ Like Hoover, Mr. Comey believed that he alone could protect the public trust. And like Hoover, this hubris led him to make egregious mistakes of judgment that the IG says ‘negatively impacted the perception of the FBI and the department as fair administrators of justice.’

“The report scores Mr. Comey in particular for his ‘conscious decision not to tell [Justice] Department leadership about his plans to independently announce’ an end to the investigation at his July 5 press conference in which he exonerated but criticized Mrs. Clinton.  And the IG also scores his action 11 days before the 2016 presidential election, on October 28, to send a letter to Congress saying the investigation had been reopened.

“The decision to prosecute belongs to the Attorney General and Justice, not the FBI.  And the FBI does not release derogatory information on someone against whom it is not bringing charges. Regarding the October letter informing Congress that the FBI was renewing the investigation, FBI policy is not to announce investigations.  ‘We found unpersuasive Comey’s explanation,’ deadpans the IG.

“ ‘We found that it was extraordinary and insubordinate for Comey to conceal his intentions from his superiors, the Attorney General and Deputy Attorney General, for the admitted purpose of preventing them from telling him not to make the statement, and to instruct his subordinates in the FBI to do the same,’ says the report.

“ ‘Comey waited until the morning of his press conference to inform [Attorney General Loretta] Lynch and [Deputy Attorney General Sally] Yates of his plans to hold one without them, and did so only after first notifying the press. As a result, Lynch’s office learned about Comey’s plans via press inquiries rather than from Comey. Moreover, when Comey spoke with Lynch he did not tell her what he intended to say in his statement.’

“All of this underscores the case that Deputy Attorney General Rod Rosenstein made when he advised President Trump in May 2017 that he should fire Mr. Comey. The President’s mistake was not firing Mr. Comey immediately upon taking office on Jan. 20, 2017, as some of us advised at the time.

“As for political bias, the IG devotes a chapter to the highly partisan texts exchanged over FBI phones between FBI personnel.  The IG says he found no evidence that political bias affected investigative decisions, but the details will be fodder to those who think otherwise.

“For one thing, the political opinions ran in only one direction – against Mr. Trump. Then there is the case of FBI agent Peter Strzok and his decision to prioritize the Russian investigation over following up on Mrs. Clinton’s emails. The IG concludes that Mr. Strzok’s ‘text messages led us to conclude that we did not have confidence that Strzok’s decision was free from bias.’

“The specific Strzok message the IG cites is one in which he responded to a text from his paramour, Lisa Page, asking for reassurance that Mr. Trump was ‘not ever going to become president, right?’  Mr. Strzok replied, ‘No. No he won’t. We’ll stop it.’

“Senator Ron Johnson’s office reports that his committee had received the first part of this exchange – Ms. Page’s question – from Justice. But somehow Mr. Strzok’s astonishing reply wasn’t included.  If this was deliberate, the official who ordered this exclusion should be publicly identified and fired....

“The unavoidable conclusion is that Mr. Comey’s FBI became a law unto itself, accountable to no one but the former director’s self-righteous conscience. His refusal to follow proper guidelines interfered with a presidential election campaign in a way that has caused millions of Americans in both parties to justifiably cry foul.

“This should never happen in a democracy, and steps must be taken so that it never does again. Mr. Horowitz deserves credit for an investigation that was thorough, informative and unplagued by leaks. But it is not the final word.  Next week he will be testifying before Congress to flesh out and clarify his findings....

“The larger damage here is to trust in institutions that are vital to self-government....

“(New FBI Director Christopher) Wray and Attorney General Jeff Sessions have to understand that radical measures are needed to restore public trust in both the FBI and Justice Department. If they won’t do it, someone else must.”

Today, in the driveway presser, Trump said: “If you read the IG report, I’ve been totally exonerated.” But the report did not examine or make any conclusions about the continuing special counsel investigation into potential Trump campaign ties to Russia.

--The New York attorney general, Barbara Underwood, alleged in a lawsuit filed Thursday that President Trump used his family foundation to further his 2016 campaign, pay legal settlements and promote his businesses. The suit, filed in state Supreme Court in Manhattan, calls the Donald J. Trump Foundation “little more than an empty shell” and accuses it of repeatedly violating laws that govern charities. The suit, which names Mr. Trump, his three older children and the charity itself, seeks to dissolve the foundation.

Trump Organization spokeswoman Amanda Miller called the suit “politics at its very worst.”

On Twitter, Mr. Trump called the suit “ridiculous.” He wrote: “The sleazy New York Democrats, and their now disgraced (and run out of town) A.G. Eric Schneiderman, are doing everything they can to sue me on a foundation that took in $18,800,000 and gave out to charity more money that it took in, $19,200,000. I won’t settle this case!”

Last month, New York lawmakers named Ms. Underwood to replace the disgraced Schneiderman, who resigned amid charges he abused women.

This is a relatively small case, as the attorney general’s office is only asking for $2.8 million in restitution. It also asks that Mr. Trump be banned from serving on the board of any charity in New York for 10 years, and that three of his children – Don Jr., Ivanka and Eric – be banned from serving on boards for one year each.  But....

“As our investigation reveals, the Trump Foundation was little more than a checkbook for payments from Mr. Trump or his businesses to nonprofits, regardless of their purpose or legality,” Ms. Underwood said in a statement.  “This is not how private foundations should function and my office intends to hold the Foundation and its directors accountable for its misuse of charitable assets.”

The investigation found, for example, that in the days immediately before the Feb. 1, 2016, Iowa caucus, the foundation made at least five $100,000 grants to groups in Iowa.

The lawsuit also found numerous cases of self-dealing transactions that were illegal because they benefited Trump or his businesses and weren’t made for charitable purposes, including a $158,000 payment to settle legal claims against the Trump National Golf Club and a $100,000 payment to settle legal claims against the Mar-a-Lago resort (the flagpole case, some of you might recall).

For the record, the Washington Post first reported on this story months ago. It’s only now the state of New York felt compelled to act.

--President Trump’s personal attorney, Michael Cohen, is under intensifying scrutiny from federal prosecutors in Manhattan who are examining his business practices, as well as special counsel Robert Mueller’s continuing probe.

Andrii Artemenko, a former member of the Ukrainian parliament, said in an interview with the Washington Post that many of the questions he faced during several hours of testimony the other day were focused on his interactions with Cohen.  “I realized that Michael Cohen is a target” of Mueller, Artemenko told the Post.

The dual investigations can’t help but fuel anxiety inside the White House, given Cohen’s extensive knowledge of the president’s personal dealings and the Trump family business.

Cohen supposedly is frustrated by the lack of outreach by the president these days, and he’s now seeking new legal representation as his bills soar.

The New York investigation centers around possible bank fraud, wire fraud and campaign finance violations, whereas the Mueller probe is focusing on Cohen’s role in at least two episodes involving Russian interests, including negotiations in 2016 to build a tower in Moscow.

--The White House was forced to walk back comments President Trump made in his driveway presser on the topic of immigration and upcoming legislation that is slated to be voted on next week in the House.  The administration had to admit Trump supports a bill that closely tracks his priorities on border security and limiting legal immigration, after he made comments on TV rejecting the GOP bill.

A White House official told various news outlets that Trump “supports both the moderate and the more conservative House immigration bill.”  Trump bungled an answer to a question on the topic in his “Fox and Friends” interview that kicked things off Friday morning.

The moderate version would guarantee funding of a physical wall, end the Diversity Visa Program, and end the system of family-based immigration that distributes visas to the spouses, children and siblings of U.S. citizens, while at the same time offering a path to citizenship for roughly 1.8 million “dreamers” who came illegally to the U.S. as children.

--I thought one of the more outrageous comments by the president today in the driveway was his statement that he had given Kim Jong Un “a very direct number” and instructed him to “call me if he has any difficulties.” I hope he wasn’t referring to his cellphone, which we’ve learned is unsecured because he wants it out of the control of Chief of Staff John Kelly.  I mean can you imagine every North Korean member of Kim’s cyber army tapping the phone.  As it is, it seems Trump gave Kim more than just the White House switchboard.

As for Trump’s comment: “(Kim) speaks and his people sit up at attention. I want my people to do the same,” I’m giving the president a pass.

--Financial disclosure forms released Monday show that Ivanka Trump and Jared Kushner brought in at least $82 million in outside income while serving as senior White House advisors during 2017.  Of course this can create massive conflicts of interests.  And someone tell Jared’s father, Charles Kushner, ex-con, to shut up.  I’m too busy to do it myself.

--The New York Post reported that Rudy Giuliani had an affair with a married New Hampshire hospital administrator before he and wife, Judith Nathan, separated.

The former U.S. attorney, who has been the face of Trump’s legal team, first made a public appearance with his married lover on March 29 while touring the hospital she runs – an event that was captured by local news cameras.  Giuliani, 74, and Maria Rosa Ryan, 53, then shacked up at a resort, and court records show Nathan then pulled the plug on her 15-year marriage.

Giuliani has been married three times. Yeah, it matters.

But wait...there’s more!

Giuliani revealed Thursday he’s been dating a political operative from Louisiana, Jennifer LeBlanc.  Rudy said, regarding Dr. Ryan, there was “nothing going on but friendship.”

Judith Nathan said this week that Giuliani was indeed having an affair before they were separated.  “My husband’s denial of the affair with the married Mrs. Ryan is as false as his claim that we were separated when he took up with her,” she said in a statement.

Wall Street

The Federal Reserve raised its benchmark interest rate for the second time this year and signaled it may step up the pace of rate increases to include another two the rest of 2018, because of solid economic growth and rising inflation.

The central bank hiked its key short-term funds rate to a still historically low range of 1.75% to 2%; a move reflecting the economy’s resilience, the job market’s strength and inflation that’s finally essentially at the Fed’s 2% target level.

The action means consumers and businesses will face higher loan rates over time.

It is the seventh rate increase since the Fed began tightening credit in 2015, and it followed an increase in March.

In its accompanying statement, the Fed’s  Open Market Committee noted that economic activity has been rising “at a solid rate,” a change from their May statement, when they called the rate “moderate.” They removed a line stating that “market-based measures of inflation compensation remain low” and several sentences that expressed caution over the Fed’s future rate moves, including that “the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.”

And while the Fed previously telegraphed three rate hikes this year, it now expects a fourth before year-end. Most forecasts call for a hike in September, and now probably another in December; with signs of continued strength in the growth outlook. The Atlanta Fed’s GDPNow barometer for the second quarter, for instance, is still at a robust 4.8% at week’s end.

Officials now expect the economy to grow 2.8% this year, with the unemployment rate dipping to 3.6% from its current 3.8%.

The Fed also raised its inflation forecast for the year to 2.1% from 1.9%.

Fed chairman Jerome Powell, who is receiving rave reviews (personally, I love the guy) for his plainspoken, easy to understand commentary, is not, as yet, concerned with the growing trade tensions in terms of the power to torpedo growth overall.  But the Fed is maintaining a wait-and-see attitude.

The one perplexing topic is wages, which despite the roaring economy are still growing at below par for such an expansion, roughly 2.5%, which is largely being erased by growing consumer prices.  Wages should be running at a 3.5% to 4.0% clip.

Lastly, there was some important economic data, with consumer prices for May coming in as expected, 0.2%, ditto ex-food and energy, and up 2.8% and 2.2%, respectively, year-over-year.

The PPI for the last month, however, was a little hot, 0.5% and 3.1% over 2017, and 0.3% on core, 2.4% yoy.

So the Fed had some further ammunition for its inflation call.

Then we had May retail sales, up a strong 0.8%, and 0.9% ex-autos.  May industrial production, however, was down 0.1%, below expectations.

Europe and Asia         

While the U.S. Federal Reserve was issuing its latest missive and adding a probable fourth interest rate hike this year, the European Central Bank, the next day, was closing a chapter on its controversial policy of government bond purchases, though extending the life of another: negative interest rates.

The central bank laid out plans to wind down its giant bond-buying operation by the end of this year, but said it would likely wait “at least through the summer of 2019” before raising its deposit rate, now at minus 0.4%.

But many are immediately questioning the ECB’s moves as it is clear the eurozone economy is slowing, and this is before the threats from a potential trade war and political turmoil in Italy.

The ECB’s main goal, it seems, is to stifle any sharp appreciation of the euro, which would hurt the critical export component of the EU economy, though in ending the stimulus policy, it could be leading to further deceleration in the economic numbers.

But in saying interest rates won’t rise before September 2019, at least for a week, the euro fell sharply against the dollar, while yields on eurozone government bonds fell hard, like from 0.49% on Tuesday for the German 10-year bund to 0.40% Friday, and 3.11% on the Italian 10-year a week ago, to 2.59% today. 

But in the case of Italy, there is zero cause for optimism, at least in terms of the financial picture there.

ECB President Mario Draghi said at a press conference that the decisions the governing council reached were justified by pointing to still solid underlying growth and a recent rebound in inflation and wages. A final reading on eurozone inflation for May was 1.9%, same as the flash report, which was an increase from April’s 1.3%.

ECB policy makers “concluded that progress toward a sustained adjustment in inflation has been substantial so far,” Draghi said.  But he was cautious on the outlook for the economy, stressing that the bank didn’t want to “underplay the existing risks” and that the ECB’s policies could change if the outlook darkens.

The bank lowered its growth forecast for 2018 to 2.1%, from 2.4%, but raised its inflation projections for this year and next, to 1.7% - not far from the ECB’s target of just below 2%.

In terms of the bond-buying program (quantitative easing), the ECB is reducing its bond purchases, currently 30bn euro a month, through September, to 15bn euro, October through December, at which point the purchases will end.

Critics of the bond-buying and zero interest rate policies say it has allowed “zombie” firms to stay afloat, despite an otherwise healthy economy, and some countries, such as Greece and Italy, still have large amounts of nonperforming loans on their books.

But others argue, correctly, that the QE worked to reduce the value of the euro against other currencies, which spurred exports, and that was a big help in reducing unemployment in the eurozone to 8.5%, lowest in a decade.

Brexit: The key European Union summit is just around the corner, June 28-29, and Britain is supposed to be submitting a final plan for exiting the EU at that time, at least a lion’s share of it, because, while I hate to keep beating a dead horse, facts are facts...deadlines are deadlines...and the real drop-dead date on a plan that has all the ‘i’s dotted and ‘t’s crossed is October.

British Prime Minister Theresa May is up against the wall, dealing with a split Tory party, with pro-European lawmakers calling for new talks to reach a compromise on her Brexit law, in an effort to avoid a potentially damaging showdown next week.

Former minister Stephen Hammond on Friday accused some in May’s team of hijacking a deal that she’d struck with his pro-EU colleagues on how to give Parliament a so-called meaningful vote – which would allow lawmakers to direct the final stage of negotiations as a chaotic no-deal scenario looks imminent.  The rebels rejected May’s final wording and now want to resume talks prior to the critical Parliament gathering next week, which was to give approval for the prime minister’s final pitch the following week to the EU.

So four months before the drop-dead date, May’s ruling Conservatives are still stuck negotiating with itself.  There is a small faction that insist on staying close to the bloc and want Parliament to have the power to tell the government what to do if a no-deal becomes a possibility (which would be a killer for business in the UK).

But the government maintains that would tie its hands for final negotiations with Brussels. Then you have those among the Tories who want to distance themselves even more from the bloc, and don’t want to compromise in the least with their dissenting colleagues.

Imagine the pressure on May, who could lose her job at any minute, let alone the sustainability of the minority government, and the U.K.’s future relationship with its largest trading partner, all on the line.

So this issue has been massively confusing.  It hasn’t been easy for me to try to simplify it all these months.  But after next week, it will become much clearer, and then we wait to see what the EU says at the summit.  If the go ahead is given then, it will be a sprint to October, with the Irish border remaining probably the main hurdle.

Editorial / Wall Street Journal

“Commentators frequently call political fiascoes ‘circuses,’ but rarely does a political class oblige by providing three rings of entertainment at once. Such is the British government’s attempt to leave the European Union.

“In the first ring, Prime Minister Theresa May survived a challenge to her government on Tuesday, as the House of Commons batted down amendments to Brexit legislation proposed by Remainers in the House of Lords. But the votes were nail-biters in a way such legislation usually isn’t.

“This suggests the issues – parliamentary oversight of a final Brexit deal with Brussels, and what trade deal London should work toward – won’t go away. Mrs. May’s restive Tories were pacified with a promise they’ll be able to vote on a final Brexit. They also were corralled with a reminder that a legislative defeat would topple her government, but one day they may view that as a promise instead of a threat and replace her.

“Meanwhile, in the second circus ring, negotiations with Brussels are going badly. Mrs. May is seeking a ‘backstop’ deal to manage trade across Northern Ireland’s border if the two sides can’t agree on the future relationship between Britain and the EU as a whole. This matters because the Good Friday Accords of 1997 hinged on frictionless travel and trade between Ireland and Northern Ireland, and imposing a hard border for customs reasons might inflame sectarian passions. Brussels and Dublin want to insure this won’t happen if they can’t strike a final agreement with London in time.

“The larger point is that two years after the referendum and with Brexit Day looming next March, Brexiters are struggling to devise legal and politically viable trading plans. That’s exposing them to bruising criticism from Remainers and denting public confidence in Brexit. A plurality in one recent poll thought Brexit would be bad for the economy, and a plurality in another now oppose leaving the EU.

“Which brings us to ring three: A trove of emails reported by the London Times over the weekend suggest the Kremlin supported a major funder of the Leave campaign....(though) there’s no evidence that Russian influence swayed the referendum.  But reports that (businessman Arron) Banks wasn’t forthcoming about his Russian contacts could further erode support for Brexit.

“The central problem is that the politicians who campaigned most fiercely for Brexit aren’t showing the policy and political chops to make it work....

“Instead, the Tories have Mrs. May’s squishy interventionism, which only looks good compared to the socialism of Jeremy Corbyn’s Labour party, and isn’t convincing as a justification for tearing up trading relations with the European Union.  No wonder a consensus seems to be emerging among voters and many politicians that Britain should seek some form of customs union or other partnership with the EU after Brexit....

“Brexiters will squawk about a betrayal, but their political failure is not uniting to make the case for something better.”

Italy: The new government has been shaking things up, and it wasted no time in enforcing a hardline on immigration in turning back a ship, whose origination was in Libya, that was carrying 629 migrants that Spain then accepted.  Italy summoned France’s envoy and angrily rejected French criticism of its policy, escalating a diplomatic standoff between the neighboring euro powers. French President Emmanuel Macron said Rome had acted with “cynicism and irresponsibility” by closing its port to migrants.

“We have nothing to learn about generosity, voluntarism, welcoming, and solidarity from anyone,” Italy’s interior minister, Matteo Salvini, told the Senate. Salvini, who is also deputy premier and the leader of the anti-immigrant League party, called on France to apologize and said he was not prepared to take criticism from a country which regularly stopped migrants on their shared border.

The case of the ship with the 629 migrants touched on one of the main faultlines in European politics – how to share the responsibility of handling migrants trying to get into the bloc from war zones and poor countries, largely across Africa and the Middle East. Salvini’s League scored its best-ever result in March’s national elections, partly on pledges to deport hundreds of thousands of migrants and halt the flow of newcomers. Italy is currently sheltering some 170,000 asylum seekers, as well as an estimated half-million unregistered migrants.

Separately, Italy announced it would not ratify the EU’s free trade agreement with Canada, its new agriculture minister making the call, ratcheting up an international trade spat and potentially scuppering the EU’s biggest accord in years. The Comprehensive Economic and Trade Agreement (CETA) is the first major trade deal the European Union has signed since it began implementing its South Korea agreement in 2011. All 28 EU member states must approve the agreement for it to take full effect.  Minister Gian Marco Centinaio said the Italian government would ask the parliament not to ratify the treaty since it does not ensure sufficient protection for the country’s specialty foods.

Of the 28 European Union countries, Italy has the most food products with the PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) labels, including Parmigiano cheese and prosciutto.  But Canada has recognized only 40 PDO and PGI labels out of a total of 292 for the food-obsessed country.

Some farm associations in European states have also expressed concerns about the threat of rapidly rising pork and beef imports from Canada.

Last weekend, in another pronouncement, Italy’s new economy minister, Giovanni Tria, looked to reassure nervous financial markets saying  the coalition wanted to boost growth through investment and structural reforms, not through deficit spending. But he said he wouldn’t present new economic forecasts and government goals until September, because, you know, Europe takes off the month of August.  [That’s me, not Mr. Tria.]

Greece / Macedonia: After 27 years of talks, and protests, Greece reached a deal on the name of its northern neighbor, which called itself Macedonia at the breakup of the former Yugoslavia.

The two settled on the name Republic of North Macedonia.  Greece had objected to the name Macedonia, fearing territorial claims on its eponymous northern region.

It had vetoed the neighbor’s bid to join NATO and the European Union.

The new name will need to be approved by the Macedonian people and Greek parliament.

Turning to Asia....

China said fixed asset investment for the January to May period was up 6.1 percent from the same period a year earlier, the slowest pace since at least February 1996.  This has always been a key metric, as it’s about projects like roads, railways, airports and telecommunications. So a sign growth is slowing in the Land of the Strongman.

Producer prices for May rose 4.1% vs. 3.4% in April, according to the National Bureau of Statistics, while consumer prices last month rose 1.8%, unchanged over the prior one.  [1.9% ex-food and energy.]

In Japan, machine orders rebounded in April, up 10.1% over March, which is a potential sign of a recovery in capital spending.

Separately, the Bank of Japan today announced it was leaving its ultra-easy monetary policy in place.

Street Bytes

--Stocks were mixed, with the Dow Jones down 0.9% to 25090, while the S&P 500 was unchanged and Nasdaq up 1.3%, the tech-heavy barometer hitting another all-time closing high on Thursday of 7761.

The industrials continue to suffer from uncertainty over looming trade issues.

--U.S. Treasury Yields

6-mo. 2.06%  2-yr. 2.55%  10-yr. 2.92%  30-yr. 3.05%

Fourth consecutive week the 10-yr. closed with a yield between 2.90% and 2.95%.

--The International Energy Agency said in its latest monthly oil market report that the collapse in Venezuela’s oil production and the loss of Iranian barrels after the reimposition of U.S. sanctions could take 1.5m barrels off the markets by the end of 2019 from these counties alone.

The anticipated fall thus leaves the oil market “vulnerable” to a further escalation in prices, particularly if OPEC peers continue to pump at current levels.

Energy ministers from OPEC and Russia meet in Vienna next week to debate increasing production after coming under pressure from big consumer countries.

U.S. officials have been quietly speaking to producers, believed to include Saudi Arabia, about raising output to prevent any further price spike that results from a loss in Iranian barrels.

Global oil supply rose 276,000 b/d in May, to 98.7mb/d, as non-OPEC output – led by the U.S. – rose further.

Separately, Iraq’s oil minister urged global producers to resist calls to raise output, saying increasing supply could trigger a fall in prices and the “collapse” of the deal to curb production.  Currently, Iraq is around its agreed upon limit of 4.325 million barrels per day.

--A federal judge blessed AT&T Inc.’s $85.4 billion takeover of Time Warner, with Judge Richard Leon soundly rejecting the Justice Department’s arguments to stop the blockbuster deal.  Leon said the DOJ had failed to show how the merger would harm consumers and that the two companies should be allowed to proceed, without any conditions or divestitures.

The deal will integrate complementary companies that don’t compete head-to-head.  This is not a classic case of two direct rivals attempting to merge, which could impact pricing and service.  Instead, this was a vertical merger.  AT&T and Time Warner’s CNN, HBO and TBS content.  With Time Warner, AT&T will control direcTV, the country’s largest pay-TV distributor, the second-largest cellular network and Time Warner’s popular programming.

Judge Leon said the DOJ shouldn’t bother asking for an emergency court order staying the merger during appellate litigation.

Well, AT&T moved quickly to close the acquisition of Time Warner late Thursday.  John Stankey, 55, a 32-year veteran of AT&T and its predecessors, will be the new boss at Time Warner.  Current CEO Jeffrey Bewkes will serve as a senior advisor to Stankey and AT&T during the transition.

--21st Century Fox stock soared Wednesday, climbing 7% to an all-time high, as Wall Street roots for a bidding war over key Fox assets, and then Comcast Corp. offered to buy Rupert Murdoch’s company for $65 billion. Fox’s assets include FX, National Geographic, regional sports networks and Fox’s movie and television studios, setting off a bidding war with Disney, with Comcast’s offer 20% more for essentially the same assets, Disney having made a lower, prior offer.

Neither bid includes Fox News, Fox Sports 1 (FS1), or the Fox broadcast network, which will be spun off into a separate company. But the deal does include Fox’s 39 percent ownership stake in the European pay TV operator Sky, with Comcast already making an offer to buy the other 61 percent of Sky in a separate deal.  The deal also includes two dozen regional sports networks, such as the Yankees’ YES channel, that some see as a real key in the deal.  [For their part, the Yankees may try to regain control of YES.]

Comcast had tried to buy the Fox assets in December, but Murdoch spurned the bid due to fears Comcast would not be able to get regulatory approval.

But then with the AT&T ruling Tuesday, it was game back on for Comcast.  Now we wait to see if Disney offers a new bid. Comcast’s Brian Roberts vs. Disney’s Robert Iger.

Fox has set a July 10 meeting for shareholders to vote on the sale to Disney, but the meeting could be postponed.

The fight for Fox is part of the scramble for telecom and cable companies to compete against the likes of Netflix, Amazon and YouTube.  The AT&T / Time Warner deal is a classic example of this need to merge content with distribution and technology.

[Netflix recently surpassed Disney to become the most valuable media company at $158 billion.]

Editorial / Wall Street Journal

“Well, that was a rout.  Federal Judge Richard Leon on Tuesday gave the Justice Department a much-needed kick in the shins by greenlighting AT&T’s merger with Time Warner without conditions. President Trump’s antitrust chief Makan Delrahim should reflect long and hard on how the government so misjudged the law and the media marketplace.

“The Justice Department last November sued to block the $85 billion deal on the dubious theory that the combined company would hinder competition by forcing competitors to pay hundreds of millions of dollars more per year for Time Warner’s ‘indispensable’ programming. If rivals refused, AT&T could supposedly withhold its content and grab rivals’ customers.

“The theory ignores the ‘tectonic changes’ in the media and broadband markets, as Judge Leon explained in his 172-page analysis.  ‘Generic statements that vertical integration ‘can’ lead to ‘an unfair advantage over its rivals’ do not come close to answering the question before the Court,’ he added.

“Lo, video subscriptions are declining while TV ad revenues have plateaued. Consumers are ‘cutting the cord’ from cable and buying cheaper alternatives over the web.  Facebook and Google’s digital ad platforms have surpassed TV advertising in revenue. Google’s YouTube boasts 1.8 billion registered monthly viewers, which is 72 times as many as AT&T’s TV subscribers....

“To significantly increase market share, AT&T would have to withhold content from most competitors, which would reduce Time Warner’s $31 billion in annual advertising and subscription revenue. This would be self-defeating.  A major goal of the merger is to monetize customer data as YouTube and Facebook do.

“Judge Leon also pointed out that Comcast’s acquisition of NBCUniversal in 2011 did not cause content prices to increase.  And Justice couldn’t explain why or how conditions imposed on that merger failed to prevent anti-competitive conduct.  Thus, the government ‘failed to meet its burden to show that the proposed merger is likely to substantially lessen competition,’ Judge Leon concluded....

“Mr. Delrahim should avoid another humiliation by conceding defeat and walking away.”

--Tesla announced it was cutting thousands of jobs, 9% of its workforce, though “almost entirely” salaried employees, not production-line workers, according to an internal email posted by CEO Elon Musk.  This is a big move, aimed at improving its finances amid a period of torrential losses as it accelerates production of its newest electric vehicle.

As of Dec. 31, Tesla had 37,543 full-time employees, so 9% would equal nearly 3,400.

Musk is facing pressure to ramp up output of the new Model 3 electric sedan and show bottom-line profitability.

Musk said the cuts would not affect the ability to speed up production.

“Tesla has grown and evolved rapidly over the last several years, which has resulted in some duplication of roles and some job functions that, while they made sense in the past, are difficult to justify today,” he told workers.

--Separately, Elon Musk’s Boring Co. is the winner in a bid to build a multibillion-dollar high-speed express train to Chicago’s O’Hare International Airport, a huge win that gives the young company a big boost in its legitimacy as it tries to get projects underway in Los Angeles and Washington, D.C.

Considering Boring was launched just 18 months ago, Musk should be proud of this one, especially as its working with unproven futuristic ideas, and it lacks construction experience.

But what will the project look like?  Musk tweeted about his ideas for Chicago last year: “Electric pods for sure.  Rails maybe, maybe not.”

There is no government funding of the project, so Boring would have to finance the entire construction cost itself.

But many are skeptical this project will get off the ground...at least not for years. That said, Boring winning the bid means it will deal exclusively with the city of Chicago over the details, which aims to connect Chicago with O’Hare, about 15 miles and a $40 taxi ride away.

Chicago has set a goal of connecting downtown with the airport in 20 minutes or less, with service every 15 minutes for the majority of the day.  And it requested that fares be below the current rates for taxis and ride-share trips.

Currently, a ride to the airport on a Chicago Transit Authority train, taking about 40 minutes, is $5.

--Apple has long positioned the iPhone as a secure device that only its owner can open, but then law enforcement officials who want to get information off them.

In a big case in 2016, the FBI had to pay a third party to get into the phone of a mass killer because it was locked, after Apple refused to open it up.

But now Apple is closing the technological loophole that let authorities hack into iPhones, angering police and other officials and reigniting a debate over whether the government has a right to get into the personal devices.

Apple said it was planning an iPhone software update that would effectively disable the phone’s charging and data port an hour after the phone is locked.  In order to get data to or from the iPhone using the port, a person would first need to enter the phone’s password, which will hinder law enforcement officials, who are furious.

In an email, an Apple spokesman, Fred Sainz, said the company is constantly strengthening security protections and fixes any vulnerability it finds in its phones, partly because criminals could also exploit the same flaws that law enforcement agencies use.  “We have the greatest respect for law enforcement, and we don’t design our security improvements to frustrate their efforts to do their jobs,” he said.  [Jack Nicas / New York Times]

--Rolls-Royce said it planned to slash 4,600 jobs over the next two years as part of a sweeping organizational restructuring designed to “deliver improved returns, higher margins, and increased cash flow.”  The majority of the cuts will be in the U.K., where the company makes cars and aircraft engines.

--Theranos Inc. founder Elizabeth Holmes and the embattled blood-testing company’s former president were indicted on charges that they engaged in schemes to defraud investors, doctors and patients, the U.S. Justice Department announced today.

The company said Holmes was stepping down.  Ramesh “Sunny” Balwani had left earlier.

Each faces two counts of conspiracy to commit wire fraud and nine counts of wire fraud.  Give them both the chair.  It would set a great example...and would be in keeping with my policy of executing white collar criminals.

--My neighbors across the street, biotech giant Celgene, have seen their shares fall over 20% this year, while its market value is roughly half its peak last fall. I’ve noted how the company has been expanding by leaps and bounds, and amazingly filling two large campuses here in Summit, New Jersey, but the rapid growth bit it in the ass, and Celgene had to admit the other day it bungled an attempt to win regulatory approval for an important new drug.

Earlier this year, investors were stunned when the FDA refused to review an application for a multiple sclerosis pill called Ozanimod, after regulators concluded Celgene hadn’t done enough to understand how the medicine really worked.

Shareholders fear the Ozanimod delay and other strategic missteps will make it harder for the company to cope with the loss of drugs coming off patent protection, particularly its top medicine.

The president of hematology and oncology at Celgene, Nadim Ahmed, blamed the decision to press ahead on an application with colleagues at a subsidiary in California called Receptos, which Celgene had acquired for $7.2 billion in 2015.

Ahmed said: “I think that 99 percent of folk at Celgene wouldn’t have submitted, but we had Receptos out on the West coast and, for whatever reason, the decision was made to submit.

“We learned a lesson of humility and that when you do an acquisition it’s better to be more integrated rather than be completely away from the mothership.” [Financial Times]

Celgene’s Revlimid, a cancer medicine that generated $8.2bn in sales last year, accounts for 63 percent of overall revenue, but it’s expected to face competition from cheaper generic versions within the next few years and it seems clear Celgene has been caught with its pants down, and two massive locations.

But the company is vowing to be “very aggressive” in its pursuit of more deals.

For now, the number of smokers outside the gates of HQ appears to be steady.

Former CEO Bob Hugin is running as the Republican candidate for Dem. Sen. Robert Menendez’s seat.

--Bitcoin prices are down more than 50% this year, with fears over an exchange hack in South Korea, as well as a clampdown on trading platforms in China.  But it’s just the general scrutiny around the world that has added to issues like thefts, market manipulation and money laundering.

--McDonald’s Corp. detailed changes to its organizational structure in the U.S., with USA President Chris Kempczinski seeking to reassure U.S. employees and franchisees that they will get more support from the company even with some positions being eliminated, though the company still hasn’t said how many jobs will be lost in the restructuring.

--Yes, as many suspected, IHOP’s temporary name change to IHOb was all about burgers, as we learned Monday. Yes, it’s a total gimmick, but what the hell.  I don’t see how you can criticize the move, though at the same time I haven’t been to an IHOP in decades and maybe, just maybe, now I’d check it out.

Darren Rebelez, president of IHOP, told CNN: “We are definitely going to be IHOP. But we want to convey that we are taking our burgers as seriously as our pancakes.”

IHOP is owned by Dine Brands Global, which also owns Applebee’s, with both table-service restaurant chains struggling against quick-service, order-at-the-counter operations that offer lower prices.

--NBC is now thinking of moving the struggling “Megyn Kelly Today” show to an hour later, and bringing Kathie Lee Gifford and Hoda Kotb’s popular hour of “Today” forward by an hour to replace it.

Kelly’s ratings continue to suck, and that drags down Gifford and Kotb’s 10 a.m. hour because viewers who turn off Kelly’s show never return.

Meanwhile, the 7-to-9 a.m. slot – anchored by Kotb and Savannah Guthrie – has been doing well since Matt Lauer was fired in November.

Kelly’s supporters say her numbers are ticking up. Dr. Bortrum said he’s been watching for the first time.

Foreign Affairs

China: China’s navy carried out drills in the South China Sea to simulate fending off an aerial attack, state media said on Friday, as China and the United States trade barbs over who is responsible for heightened tensions in the region.

During a visit to Beijing on Thursday, Sec. of State Mike Pompeo expressed concern over China’s efforts to militarize the seas.

Pentagon officials have long complained that China has not been candid enough about its rapid military guild-up and its use of South China Sea islands to gather intelligence.  Taiwan, Vietnam, Malaysia, Brunei and the Philippines all have competing claims in the waterways.

Meanwhile, you know those missiles I wrote of last week that mysteriously disappeared from one of the disputed islands?  Satellite images this week showed they had been redeployed, so the guess it was probably just a maintenance issue makes sense.

North Korea: Iran warned Kim Jong Un on Tuesday against trusting President Trump, saying he could cancel their denuclearization agreement within hours. Tehran cited its own experience in offering the advice to Kim a month after Washington withdrew from a similar deal with Iran.

Yemen: Pro-government forces, backed by a Saudi-led coalition (mainly Saudi Arabia and the United Arab Emirates), began an assault on the Red Sea city of Hudaydah, which is the main entry point for aid to the war-torn country.  The target is the Houthi rebels backed by Iran, with the war raging in the country for three years.

The New York Times reported that the United States rejected a request from the UAE to provide intelligence, reconnaissance aircraft and Navy minesweepers because of growing congressional opposition to the offensive.  France apparently agreed to provide the minesweepers.

Yemen’s government on Friday said its forces, backed by the coalition, are not attacking the port of Hudaydah.  “We are not planning to destroy the infrastructure,” said the foreign minister.

The pro-government forces did advance on the airport with the support of coalition airstrikes on positions held by the rebel Houthi movement.

The UN Security Council called for the key port to be kept open, the council expressing “deep concerns about the risks to the humanitarian situation.”

Britain and Sweden have been urging the council to call for an immediate freeze to military action, as well as a negotiated withdrawal of the Shiite rebels.

The assault represents the first time the Saudi-led coalition has tried to capture such a well-defended major city in Yemen. Saudi Arabia has accused the rebels of using Hudaydah to smuggle in Iranian weapons, which Iran and the rebels deny.

An estimated 600,000 people live in the area and the regional head of the Red Cross has said the attack is “likely to exacerbate an already catastrophic humanitarian crisis.” The UN’s co-coordinator for Humanitarian Affairs said as many as 250,000 people may lose everything – even their lives.”

About 10,000 people have been killed in the fighting in Yemen since March 2015, according to the UN.

As of today, it is not clear what kind of progress is really being made by the Saudi coalition, let alone the scope of casualties.

Meanwhile, as the assault on Hudaydah commenced in full force, Saudi Crown Prince Mohammed bin Salman was attending the opening match of the World Cup in Moscow, sitting in a luxury box with Russian President Vladimir Putin, the Saudi national squad getting trounced by the Russians, 5-0.  Great optics for the folks back home, eh?

Syria / Iraq: ISIS proved it is still a force to be reckoned with, seizing parts of a key town on the Syrian-Iraqi border last weekend in a massive operation that took many by surprise.  ISIS used at least 10 suicide bombers in its offensive on Albukamal, according to the Syrian Observatory for Human Rights, with at least 25 government and allied fighters killed in the operation, one of the militants’ largest this year. At least 18 militants, including the suicide attackers, were also killed.

Separately, Syrian President Bashar Assad denied Moscow is running the show in his country, saying in an interview released Sunday that his government operates independently of its Russian and Iranian allies.

In an interview in Damascus with the Daily Mail, Assad slammed the United States and British military actions in Syria as “colonial” while praising Russia.

“We’ve had good relations with Russia for more than six decades now, nearly seven decades. They never, during our relations, try to dictate, even if there are differences.”  In the end, though, Assad said, “the only decision about what’s going on in Syria and what’s going to happen, it’s a Syrian decision.”

Assad also denies there are Iranian troops on the ground....which is a laughable assertion.

The UN regional humanitarian coordinator for Syria said 920,000 were newly displaced in the country during the first four months of 2018, the highest level in the seven-year conflict.

The total number displaced in Syria is now 6.2 million, while another 5.6 million are refugees in neighboring countries, according to UN figures.

Most of the 920,000 were a result of the escalation in fighting in the former rebel bastion of Eastern Ghouta and within the northwestern province of Idlib, which is almost entirely controlled by various jihadist and hardline rebels.

Estimates on the number killed in the war now number between 350,000 and 500,000.

Meanwhile, in Iraq, a fire engulfed a depot on Sunday where ballots from Iraq’s national election were being stored ahead of a full manual account, the latest setback for a process that had already been mired in accusations of fraud and other violations. The Iraqi Interior Ministry said it was deliberately set.

The destruction of the ballots further risks the legitimacy of last month’s election.  Electronic voting machines and some ballot boxes were destroyed, but this was just one of four storage facilities for ballots.  And not all of the ballots stored in the warehouse that was engulfed were destroyed. Some brave workers were seen carrying out boxes during the fire (I’m assuming these are “good guys.”)

The vote was won by populist Shiite preacher Moqtada Sadr’s electoral alliance with communists, but it will take months to put a ruling coalition together.

Iran: President Hassan Rohani on Sunday criticized U.S. “unilateralism” in withdrawing from the Iran nuclear deal and said he appreciated efforts by China and Russia to maintain the agreement.

“The U.S. efforts to impose its policies on others are expanding as a threat to all,” Rohani told a regional Summit in Shanghai, led by China and Russia, which was taking place at the same time as the G-7.

Chinese President Xi Jinping, speaking after Rohani, expressed “regret” that Washington had withdrawn from the nuclear deal.

“China is willing to work with Russia and other countries to preserve the JCPOA (Joint Comprehensive Plan of Action),” Xi said.

Following the Shanghai Cooperation Organization summit, the China Daily newspaper said it was a good example for multilateral cooperation, offering a “new vision” for a more just and equitable world.

“Against the backdrop of rising unilateralism and anti-globalization, the SCO’s opposition to trade protectionism in any form is especially encouraging,” the English-language daily noted in an editorial.

In a separate piece, the newspaper made the case for a united front against Trump after the G7 debacle.

“The G7 summit has served as another reminder that it is the Trump administration that is challenging the international rules-based order,” it said.

“Considering that the Trump administration has also instigated trade disputes with other countries such as China, the global backlash against Trump’s unilateralist tendencies is gaining momentum. The international community should rally and reject the self-oriented closed-door policies of the U.S.”

Russia: The top U.S. counterintelligence official is advising Americans traveling to Russia for the World Cup that they should not take electronic devices because they are likely to be hacked by criminals or the Russian government.

William Evanina said: “If you’re planning on taking a mobile phone, laptop, PDA, or other electronic device with you – make no mistake – any data on those devices (especially your personally identifiable information) may be accessed by the Russian government or cyber criminals.

Separately, the foreign ministers of Russia, Ukraine, Germany and France met in Berlin on Monday to discuss the implementation of a fragile ceasefire for Ukraine and the deployment of a UN peacekeeping mission in the country’s conflict zone.  But at the end, according to the German foreign minister, Heiko Maas, the sides were still “very much apart.”

More than 10,000 have been killed in Eastern Ukraine.  A ceasefire agreed to in Feb. 2015 in Minsk has failed to end the violence, with fighters on both sides violating the peace plan on a nearly daily basis.

On a related note, British Prime Minister Theresa May said Russia would not be invited back to join the Group of Seven nations until it stops interfering in the affairs of other countries, rebuffing calls from President Trump for Moscow to return to the group.

May told lawmakers in Britain’s parliament, “There was a good reason why the G8 became the G7,” saying the exclusion was a result of its “illegal annexation of Crimea.”

Random Musings

--Presidential tracking polls:

Gallup: 42% approve of Trump’s job performance, 54% disapprove (6/10)
Rasmussen: 47% approval, 51% disapproval

--President Trump scored some primary wins on Tuesday in Virginia and South Carolina.  Rep. Mark Sanford was a victim, losing his first political race ever to a candidate backed by Trump at the last minute, like in a tweet three hours before the polls closed. Sanford, who is highly-conservative in his voting pattern, has been critical of the president and we’ve learned that’s a no-no.

And in Virginia, a far-right candidate, Corey Stewart, won the Republican senate nomination after waging an incendiary campaign and portraying himself as a disciple of Trump, though Stewart doesn’t stand a chance against incumbent Dem. Sen. Tim Kaine.

I can’t disagree with this take from the New York Times’ Jonathan Martin and Michael Tackett:

“The president’s transformation of the G.O.P. – its policies, its tone, even the fate of its candidates – has never been so evident. A party that once championed free trade has now largely turned to protectionism under Mr. Trump. Sermons about inclusivity have been replaced with demagogic attacks on immigrants and black athletes. A trust-but-verify approach to foreign policy has given way to a seat-of-the-pants style in which rogue regimes like North Korea are elevated and democratic allies like Canada are belittled.

“Mr. Trump’s harsh attacks, including describing the news media as ‘the country’s biggest enemy’ Tuesday, draw muted responses or silence from most Republicans these days.  The party’s lawmakers have seen what he can do to their campaigns, having witnessed how Senators Jeff Flake of Arizona and Bob Corker of Tennessee saw their standing with conservative voters plummet after they tangled with him. Neither is seeking re-election.”

--The Supreme Court on Monday upheld Ohio election rules that allow the cancellation of voter registration for citizens who haven’t voted in two years and don’t confirm their eligibility.

Voting-rights challengers said the state’s approach was among the strictest in the nation.

Federal law prohibits states from disqualifying people because they don’t vote, but it also pushes states to maintain accurate registration lists by removing individuals who have died, moved away or lost their eligibility to vote at their registered addresses.

The Court voted 5-4 along ideological lines.

Voter turnout tends to be lower in minority communities, who usually favor Democrats, so the controversy is that state regulations could allow for the purge process to focus on recent voting frequency.

At issue in Ohio was one of the methods used to identify and purge from its voter rolls people who are no longer eligible because of a change in residence.

Citizens who don’t cast a ballot for two years receive a state notice asking them to verify their eligibility. If they don’t respond, and also fail to vote in the next four years, Ohio cancels their registration.  Seems like a fair process to me.

--An accelerating thaw of Antarctica has pushed up world sea levels by almost a centimeter since the early 1990s in a risk for coasts from Pacific islands to Florida, an international team of scientists said on Thursday.

Antarctica has enough ice to raise seas by 58 meters (190 feet) if it ever all melted, dwarfing frozen stores in places from Greenland to the Himalayas and making its future the biggest uncertainty in understanding global warming and ocean levels.

The team of 84 scientists, who put together what they called the most complete overview of Antarctic ice to date, said the continent lost almost three trillion tons of ice between 1992 and 2017.  The findings were in the journal Nature.

--Former baseball commissioner Fay Vincent / Wall Street Journal

“Charles Krauthammer is one of my heroes. For years my wife and I watched Fox News’ ‘Special Report With Bret Baier,’ where Charles softly delivered his insights on politics with impressive and often sardonic wit and intelligence.  We grew to rely on his electronic companionship and his political navigational skills. He knew where true north pointed; and although he could bite, he seldom barked.

“Now he has announced he has a few weeks to live. Our pain is sharp.

“Charles is a serious baseball fan. His final declaration that ‘my fight is over’ recalled for me the moving exit speech by Lou Gehrig, who – on July 4, 1939, dying of his eponymous disease – called himself ‘the luckiest man on the face of the earth.’ It is important to play the game well, but is also important how one leaves the arena.

“For most of his life, Charles was a quiet daily witness that the Fates can be cruel.  He surely endured untold suffering, and this latest medical report seems like piling on, to use a football term. He surely had a full dose of suffering when he broke his neck diving into a gym pool during his first year at Harvard Medical School. Despite that injury, which paralyzed his legs totally and his arms partly, he finished his medical training on time with the class of 1975. He became a psychiatrist and turned to journalism when editors noticed his talent for writing. His weekly column in the Washington Post became a Beltway staple....

“Past great political pundits – Walter Lippmann, H.L. Mencken, Arthur Krock – were not the presence that Charles Krauthammer became with his daily Fox News appearances. He is the finest of our current political translators and commentators, well-suited for our age because of his contrast with it. The prevalence of bloviating, uncivilized screamers makes Charles’ self-effacing reserve especially refreshing.  Slyly irreverent yet respectful and civil, he has a classic education and is literate when those attributes are being devalued. He is an inspiration: We wish we knew what Charles knows.

“In his famous prayer, Cardinal John Henry Newman asked God to grant him each night ‘a safe lodging, and a holy rest and peace at the last.’  It is that ‘peace at the last’ we wish for our friend Charles Krauthammer. We saw him fight so well, and now he tells us his fight is over. May peace come to this fine man, who led his life in such a noble manner, and set such a shining example.”

Editorial / Washington Post

“We know we speak for many of you when we say that nothing and no one can replace (Charles Krauthammer). Charles wrote for the right reasons. Lord knows – and presidents, from right to left, can attest – he didn’t seek invitations to the White House dinners or other badges of approval from the powerful. He sought, rather, to provoke us to think, to enlarge our understanding, at times to make us laugh.

“Like few others, he succeeded, week after week, Friday after Friday, year after year. His unsparing judgments were cheered by some readers while angering others. But few could disagree that he wrote a column of breathtaking range and intelligence and integrity.

“In the introduction to his best-selling 2013 book, ‘Things That Matter,’ Charles mused about what humans should send into space as evidence, to any other species that might be out there, of our existence. He noted that what we had chosen to send were words from a UN secretary general, Kurt Waldheim – who later was discovered to have played a part in Hitler’s armed forces.  ‘A minor one, mind you,’ Charles wrote.  ‘Just a small willing cog in the machine. Makes you wish that we’d immediately sent out a Voyager 3 beeping frantically: Please disregard all previous messages.’”

Kathleen Parker / Washington Post

“When I think of Charles, several fond memories come to mind. First, he is a consummate gentleman.  He is warm, affectionate and funny. Once, when we were both at the White House toward the end of the George W. Bush administration, he said to me, ‘We better enjoy this, because I have a feeling it’ll be the last time we’ll see the inside of this place.’ Barack Obama had just been elected.

“As it turned out, we did see each other inside the White House again not long after when Obama invited us, among others, to an off-the-record meeting.  I remember nothing about it other than Charles’ wry smile, the one that often found his face and allowed him to say everything without uttering a word.

“Another time we were both invited to the White House, I was stalled at the security gate, unable to convince the guards that I should be allowed to pass. As I was about to leave in frustration, Charles pulled up in his van, winked at me and said to the guard, who obviously knew Charles well: ‘She’s with me.’  Calling out to me, he said, ‘C’mon, I’ll give you a ride.’

“I was as tickled as any girl’s ever been when the coolest guy in the class shows her the slightest attention.  This is how I’ll always remember you, Charles, if you’re reading this – as the smartest, handsomest, most dignified gentleman and scholar ever to wield a pen in the pursuit of truth and right ideas.

“It is incomprehensible that you are soon to leave us, but I’m not at all surprised that God would need a good shrink.”

--Tim Carman / Washington Post...on the death of Anthony Bourdain.

“Tony lived 61 years, and I have to think the invisible armor around him largely did its job. It protected  him from a public always demanding more.  But, today, I realize that armor failed to protect Tony from the cruelest force: the enemy within. It makes me unbelievably upset to write these words. I guess I was fooled, too: I thought he was invincible.”

Daniel Patterson, chef and writer / New York Times

“For so many cooks grinding it out day after day, we looked up to Mr. Bourdain as the one who succeeded against the odds, which makes his suicide even more devastating. As a friend asked me this morning, ‘If he can’t make it, with everything he’s accomplished, what chance do we have?’

“He was a celebrity who seemed like one of us, which is increasingly rare in our era of plasticized heroes. His popularity was always rooted in his relatability, his humanness and imperfections. Mr. Bourdain celebrated life for what it is, a wondrous but difficult and often lonely journey: ‘As you move through this life and this world you change things slightly, you leave marks behind, however small. And in return, life – and travel – leaves marks on you. Most of the time, those marks – on your body or on your heart – are beautiful. Often, though, they hurt.’”

--With the big summit this week, I just have to note that I was drinking boatloads of beer on Sentosa Island back in 2004, part of a long trip to Hong Kong and Shanghai. Sentosa was not as built up as it is today, but I have fond memories of sitting at a bar on the beach, watching the massive container ships in the Strait of Malacca.  There is a cable car that takes you over the giant port to the island and it gives you a tremendous perspective on the importance of the location and the amount of commerce flowing through there.

I loved Singapore.  Trump should have taken Kim to the zoo, which is perhaps the world’s best.  And there is a separate “Night Zoo” that is way cool.  The food in the city is also fantastic, your editor settling on a Turkish establishment a few of the nights that was out of this world.

I thought the people were fantastic...the women gorgeous.

And I love order!  No spitting is good, sports fans!

--Finally, speaking of sports, don’t be afraid to follow the World Cup.  I caught some of today’s Portugal-Spain match, which might easily be the best of the entire tournament... Ronaldo with a hat trick, including a phenomenal game-tying goal at about the 88’ mark.

As my friend Ken P. said, “It doesn’t matter the U.S. isn’t in it.  We sucked.” And indeed we did in those horrendous qualifying match performances.

Personally, I’m on the Iceland Train, which might derail against Argentina Sat. morning, Eastern time.

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

God bless America.

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Gold $1282...lowest since Dec.
Oil $64.38

Returns for the week 6/11–6/15

Dow Jones  -0.9%  [25090]
S&P 500  +0.02%  [2779]
S&P MidCap  -0.4%
Russell 2000  +0.7%
Nasdaq  +1.3%  [7746]

Returns for the period 1/1/18–6/15/18

Dow Jones  +1.5%
S&P 500  +4.0%
S&P MidCap  +4.8%
Russell 2000  +9.7%
Nasdaq  +12.2%

Bulls 55.5
Bears 17.8* [Investors Intelligence]

*Ratio week before was 52.9 / 17.7

Have a good week.  Happy Father’s Day!

Brian Trumbore

 

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