Week in Review

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Week in Review

06/30/2018

For the week 6/25-6/29

[Posted 11:30 PM ET, Friday]

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Edition 1,003

Trump World

This was a big week for President Trump.  He learned he will be able to cement his legacy in nominating a conservative justice for the Supreme Court to replace the retiring Anthony Kennedy, and the High Court had favorable rulings for the president on his travel ban, while handing labor unions a major defeat, as explained below.

But then he does this.

Trump tweet: “Russia continues to say they had nothing to do with Meddling in our Election! Where is the DNC Server, and why didn’t Shady James Comey and the now disgraced FBI agents take and closely examine it? Why isn’t Hillary-Russia being looked at? So many questions, so much corruption!”

Why are you once again sticking up for Russia, Mr. President?  Why do you remain so deferential to Vladimir Putin, while undermining the Western alliance and the European Union?  Why do you say Putin was not in the wrong in taking Crimea? 

Why do you keep saying of the Chinese president, “Xi is a terrific person and great friend of mine...terrific leader.”

Why do you say of Kim Jong Un, “We will have a terrific relationship, I have no doubt.”

Why do you keep favoring strong men over regular democratic leaders?

Do you understand that Vladimir Putin not only poisoned a former agent in Britain recently, and had opposition leader Boris Nemtsov assassinated on a Moscow bridge near the Kremlin a few years ago, let alone taken out numerous reporters who got too close to him and his cronies on various investigations into his immensely corrupt regime, but also that Vladimir Putin, as I wrote in 1999, months before the great William Safire famously did at his perch for the New York Times, killed hundreds of his fellow citizens in the Moscow apartment bombings for which no one was ever convicted?  [Putin and his goons blaming Chechen terrorists, as Putin himself then used the ‘attack’ as a pretext to obliterate Grozny.]

Do you understand, President Trump, that Xi Jinping is the ultimate dictator, the purest example of one-man rule you can find?  Do you understand he has cracked down on all civil liberties, with total censorship?  Do you, Mr. Trump, understand what “Xi Jinping Thought” really means?  Clue: There is no ‘thought’.  It’s no grand theory. It’s simply whatever Xi wants, Xi gets, the other 1.4 billion people be damned.

Do you understand, President Trump, that Kim Jong Un doesn’t just shoot those who cross him, he uses a cannon on them?

Look, I’m on record as saying that President Trump was right to meet with Kim, and I hope things work out well, and I favor him getting together with Xi as often as possible, and it’s OK for our president to meet with Vlad the Impaler...except this is not an ordinary American president we have sitting in the Oval Office. 

I understand a solid base of 40% to 45% of the American voting public likes that Donald Trump is different. The country is doing well economically. Great, I was for corporate tax cuts as long as he was.

But you cannot convince me this presidency is going to end well.  This man who utters about 20 lies a day, some of them outrageous ones, yet a large amount of the public doesn’t seem to care, is leading us down a dark path.

And his vicious rhetoric, such as his talk that our nation is being “infested” with immigrants is sickening.

I’m in favor of strong borders and legal immigration just as much as any conservative, but at the same time I believe in humanity.  I’m not optimistic about the state of the world in the least, but there is a reason why since 9/11 I have ended every column with ‘God bless America.’  Like Ronald Reagan I do believe our country is a shining city on a hill.  For years, my office overlooked the Statue of Liberty when I was at Thomson McKinnon Securities, where I got my start on Wall Street.  [Helluva party in my office for the bicentennial celebration of the Constitution, I can’t help but add.]

I brought up some personal stories last time on possessions that matter to me most to point out that two of the more important people I ever met in all my life were a taxi driver in India and a poor woman on the island of  Yap, examples of the goodness in Man, regardless of one’s standing.

And so it was that after watching an exciting World Cup match on Fox last Saturday afternoon, I kept the network on for a documentary I didn’t know about until that day, which Fox was airing.  “Nossa Chape,” the story of the tragic plane crash in November 2016 that claimed the lives of 71 members of the Chapecoense soccer team, out of western Brazil, who that year had a fairy tale season and qualified for the title game in a prestigious Cup against a team from Colombia.

Truly, this was one of the great sports documentaries I have ever seen. I was glued to it.  It was a story about how the community and team were intertwined, and how the wives of the players who lost their lives tried to move on, with tremendous financial burdens for one.

But it was also the story of the three players who survived, one of whom lost his leg, the other two who then attempted long comebacks.

And it was the story of how team ownership, the board of directors decimated because all but four of them were on the plane as well, tried to cope, finances uncertain, the victims’ families seeking support they deserved. Lawsuits filed.

“Nossa Chape” is a terrific story.  It tells the good...and the bad.

But towards the very end there is a scene that had me tearing up.  A year later, the three survivors, who through a series of events the directors eventually realized were the real leaders of the team, not some coach they had hired from outside who proved to be a disaster, finally met the first responders who climbed into the mountains outside Medellin to search for them.

Understand I’m watching this, last Saturday, in the same week that President Trump talked of immigrants infesting our country...people from South and Central America.  I can’t write what I thought at that very moment, about our leader, watching these beautiful people hug the players they saved.

I can only say this for today.  Don’t fall for the vitriol and hatred that so many these days spew about their fellow man, with total ignorance.

In what some of us would say are the worst countries, like Iran, what do you see in the aftermath of an earthquake?  Government services may fail, but people don’t.  I was talking to my brother later about this and he reminded me, look no further than the White Helmets in Syria...perhaps the heroes of the century, when the final record is put together.

Sorry if I’ve offended some of you.  But if you believe in the Trump agenda, and parts of it I’m onboard with, at the same time you must hold this president accountable. It is our duty as citizens of this great country.  I’m doing my small part.  Use your brain and do yours.  Don’t let him drag us all into the gutter.

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Supreme Court: The battle is on. Supreme Court Justice Anthony Kennedy announced his retirement, effective end of July. The vacancy will set off a titanic battle between conservatives and liberals in the nation’s capital, on the airwaves, and in states represented by key senators whose votes will be needed to confirm his successor.

It also gives President Trump and Senate Republicans an opportunity to create a solidly conservative court that could last decades.

Kennedy, 81, had held the most important seat on the court for more than a decade: the swing vote on issues ranging from abortion and affirmative action to gay rights and capital punishment, often siding with the court’s more liberal justices.

Moderates, both supporters of abortion rights, may now be key to the confirmation of Trump’s pick.

Democrats have a very limited ability to block the president’s nominee, yet they do have some chance in the form of Republican Sens. Susan Collins of Maine and Lisa Murkowski of Alaska.

The Senate majority is narrow, Republicans with just 51 seats, 50 if Sen. John McCain, battling cancer, is not available to vote, as seems likely.  So Trump must nominate someone from his list of 25 names whose views give anti-abortion voters confidence without being so strident as to alienate the moderates.

All are in agreement that the next pick could spell the death knell for Roe v. Wade.  If all Democrats oppose Trump’s nominee, Senate Republicans have little margin for error; in a tie, Vice President Mike Pence – a long-vocal critic of Roe – would cast the deciding vote.

But whether all the Democrats would stick together remains uncertain.  Trump’s first nominee, Neil M. Gorsuch, was confirmed last year by a 54-45 vote. Three Democrats joined all Republicans in support: Sens. Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia. All three face reelection this year.

But the stakes are much higher than with Gorsuch, who was replacing a like-minded conservative, Justice Antonin Scalia. The next nominee replaces the court’s longtime swing vote, Justice Kennedy.

For her part, Sen. Collins suggested the point is moot on whether Roe v. Wade would be a factor in her decision.  “First of all, I view Roe vs. Wade as being settled law. It’s clearly precedent,” she told reporters. “I always look for judges who respect precedent.”

Democrats are feebly claiming that there should be no consideration of a Supreme Court nominee until after the mid-term election, but there is zero reason for the president to wait with the rules in his favor. And Senator Mitch McConnell quickly promised on Wednesday a Senate vote on a new Supreme Court nominee by the fall.

Trump has said he will rely on a list of 25 candidates he has left over from the Gorsuch search, assembled with the help of two conservative organizations.

As to the reports that have Trump already settling on Utah Sen. Mike Lee to replace Kennedy, I would like to see this.  Trump thinks Lee would be easily confirmed by the Senate, though there is concern about keeping the Utah Senate seat in GOP hands.

Lee told Fox News Thursday, “I have a good relationship with the president. He and I don’t see eye-to-eye on every issue,” but “he and I see eye-to-eye on most things when it comes to the Supreme Court.”

Lee, 47, a lawyer who once served as a clerk to Supreme Court Justice Samuel Alito, has said he would accept the nomination and hasn’t ruled out voting for his own confirmation.

George Will / Washington Post

“As the swing vote, Kennedy has frequently infuriated many conservatives.

“But they, or at least those of them who remember ‘Macbeth,’ might now say that nothing in Kennedy’s career became him like the leaving it. This is so because, in his timing, Kennedy has given Republicans a great election-year gift.

“It is difficult to know how reliable such polling is, but for whatever it is worth: A significant number of voters in 2016 said – perhaps they were minting a retrospective rationale for an unpleasant act – that they voted for Donald Trump because they consider the Supreme Court supremely important, and they trusted Trump more than his opponent to fill the empty seat, the one occupied by Antonin Scalia until his death in February 2016....

“The Scalia seat was open because something at issue in 2018 – Republican control of the Senate – enabled Majority Leader Mitch McConnell to prevent consideration of President Barack Obama’s nomination of a replacement, Merrick Garland. It is arguable, indeed plausible, that Trump would not have won if Scalia had not died. And it is likely that Kennedy’s retirement, by focusing attention on the Supreme Court and hence on the Senate, will redound to the benefit of Republicans this autumn.  Religious conservatives will consider this providential and will, for perhaps the first time, thank God for Kennedy.”

--On another topic, the Supreme Court on Wednesday dealt a major blow to organized labor. By a 5-to-4 vote, with the more conservative justices in the majority, the court ruled that government workers who choose not to join unions may not be required to help pay for collective bargaining.

The ruling means that public-sector unions across the nation, already under political pressure, could lose tens of millions of dollars and see their effectiveness diminished.

The court cited the First Amendment, saying that requiring payments to unions that negotiate with the government forces workers to endorse political messages that may be at odds with their beliefs.

But the unions say nonmembers are already entitled to refunds of payments spent on political activities, like advertising to support a political candidate.

But when it comes to collective bargaining, the unions say workers should not be free to reap the benefits without paying a fair share of the costs.

The Supreme Court was poised to rule in favor of conservative groups on this issue in 2016, but Justice Antonin Scalia died and the Court deadlocked 4-4.  The new case, filed in 2015, was waiting in the wings, and then Scalia’s successor, Neil Gorsuch, voted with the majority.

Michael Mulgrew, president of the powerful United Federation of Teachers, slammed the 5-4 decision in Janus v. AFSCME as part of a larger effort to “rig the system” against union members.

“The Janus decision reflects years of scheming by forces desperate to destroy worker’s rights and to undermine public education. These people think that their money, power and privilege give them the right to rig the system in their favor,” said Mulgrew, whose UFT had already prepared plans to slash its $182 million annual budget.

The 187,000-member UFT collects $56 twice monthly from each teacher’s paycheck via automatic payroll deductions.

Teamsters President Jim Hoffa, whose union represents 1.4 million workers in the U.S., Canada and Puerto Rico, including more than 200,000 public employees, said the decision hits hard because of growing income inequality.

“The Supreme Court’s ruling is at a time when so many Americans are struggling just to make ends meet,” Hoffa said, adding that the median salary for working people represented by labor unions is $11,000 a year more than non-union people who have no right to negotiate.

Justices scrapped a 41-year-old decision that had allowed states to require that public employees pay some fees to unions that represent them, even if the workers choose not to join.

The plaintiff, Mark Janus, was an employee at the Illinois Department of Healthcare and Family Services.

He asked the court last summer to overrule a decision because he didn’t want fees he had to pay to a union used for political activity he did not support.

Immigration: Trump tweet: “HOUSE REPUBLICANS SHOUD PASS THE STONG BUT FAIR IMMIGRATION BILL, KNOWN AS GOODLATTE II, IN THEIR AFTERNOON VOTE TODAY, EVEN THOUGH THE DEMS WON’T LET IT PASS IN THE SENATE. PASSAGE WILL SHOW THAT WE WANT STRONG BORDERS & SECURITY WHILE THE DEMS WANT OPEN BORDERS = CRIME. WIN!”

The bill went down 121-301, an extraordinary embarrassment to both President Trump and House Republican leaders, who had spent weeks trying to bring together Republican hard-liners and immigration moderates – and ended up alienating both camps.

The defeat also highlighted the continuing inability of both the House and Senate to resolve the fate of the Dreamers, who were brought to the country illegally as children. 

Earlier, the Supreme Court on Tuesday upheld President Trump’s travel ban from five Muslim-majority countries, rejecting arguments that it was prompted by discrimination against Muslims.

Trump quickly praised the ruling: “SUPREME COURT UPHOLDS TRUMP TRAVEL BAN. Wow!,” he tweeted.

The 5-4 decision written by Chief Justice John Roberts found that the president has the authority to set such travel restrictions and dismissed claims of anti-Muslim bias.

The ban “is expressly premised on legitimate purposes: preventing entry of nationals who cannot be adequately vetted and inducing other nations to improve their practices,” Roberts wrote. “The text says nothing about religion.”

But Roberts did not endorse Trump’s comments on immigration during the presidential campaign.

In a dissent, Justice Sonia Sotomayor said judging the case by the facts “a reasonable observer would conclude that the Proclamation was motivated by anti-Muslim animus.”

Trump established the ban in an executive order that limited travel into the United States from Iran, Libya, Syria, Somalia and Yemen.

Editorial / Wall Street Journal

“Donald Trump is so polarizing that a test of his Presidency is whether American institutions can keep their bearings and hold to principle despite the passions of the moment.  Five Supreme Court Justices did the country a service on Tuesday by sticking to the Constitution and rule of law on executive power rather than succumb to the temptation to rebuke an unpopular President’s dubious policy.

“A 5-4 majority upheld Mr. Trump’s third ‘travel ban’ from 2017 that restricted entry to America from eight countries. The ban in our view isn’t necessary, and the Court made no judgment on the policy merits. But Chief Justice John Roberts and four conservative Justices found that the ban falls well within the President’s core national-security powers.  This is less a victory for Mr. Trump than for the ability of future Presidents to defend the country....

“The initial travel ban was an ill-conceived mess, but by the third try the Administration had done its due diligence. The government conducted a painstaking review of countries’ vetting procedures, information-sharing and security risks.  Homeland Security tailored travel restrictions from the eight countries – Chad, Iran, Libya, North Korea, Syria, Venezuela, Yemen and Somalia – based on these considerations....

“No doubt the five Justices will be vilified as abettors of Mr. Trump, but someone had to tell judges on lower courts that they can’t abandon the Constitution to settle political scores.  The majority’s ruling protects the separation of powers that is fundamental to ordered liberty.”

Separately, a U.S. judge has ordered that migrant children and their parents who were separated when they crossed into the U.S. should be reunited within 30 days.

The judge issued the injunction in a case stemming from the administration’s “zero-tolerance” policy.

The policy of breaking up families at the Mexico border is being challenged by 17 states.

More than 2,300 migrant children have been separated from their parents since early May under the administration’s controversial policy, which seeks to criminally prosecute anyone crossing the border illegally.

Last week, President Trump issued an order promising to “keep families together” in migrant detentions. But the lawsuit filed by the ACLU on behalf of a mother who was split from her six-year-old daughter after arriving in the U.S. last year, that a federal judge in San Diego then ruled on, states that the order does not mandate the end of family separation and says nothing about reuniting families who have already been separated.

According to a CBS poll released this week, more Americans than not want illegal alien families either detained or deported all together. But, that same poll shows that 51% of Americans believe that a wall along the United States southern border is a good thing, even if that structure does not span coast-to-coast.  48% say it is a “bad idea.”

Trumpets....

--The Wall Street Journal reported at week’s end that chief of staff John Kelly could be leaving his post at the White House as early as this week, and that the president is consulting with aides on who should replace him. The two contenders are reportedly Mike Pence’s chief of staff, Nick Ayers, and the head of the Office of Management and Budget Mick Mulvaney.

Trump called the Journal report “fake news” on Thursday evening when the story first dribbled out.

Numerous reports have Trump unhappy with Kelly and his rigid structure and that his influence has waned.

--Trump tweets: “We cannot allow all of these people to invade our Country. When somebody comes in, we must immediately, with no Judges or Court Cases, bring them back from where they came. Our system is a mockery to good immigration policy and Law and Order. Most children come without parents...

“...Our Immigration policy, laughed at all over the world, is very unfair to all of those people who have gone through the system legally and are waiting on line for years! Immigration must be based on merit – we need people who will help to Make America Great Again!”

“When is Bob Mueller going to list his Conflicts of Interest? Why has it taken so long? Will they be listed at the top of his $22,000,000 Report...And what about the 13 Angry Democrats, will they list their conflicts with Crooked H? How many people will be sent to jail and...

“...persecuted on old and/or totally unrelated charges (there was no collusion and there was no obstruction of the no collusion)...And what is going on in the FBI & DOJ with Crooked Hillary, the DNC, and all of the lies? A disgraceful situation!”

“Congratulations to Maxine Waters, whose crazy rants have made her, together with Nancy Pelosi, the unhinged FACE of the Democratic Party.  Together, they will Make America Weak Again! But have no fear, America is now stronger than ever before, and I’m not going anywhere!”

“Congresswoman Maxine Waters, an extraordinarily low IQ person, has become, together with Nancy Pelosi, the Face of the Democratic Party. She has just called for harm to supporters, of which there are many, of the Make America Great Again movement.  Be careful what you wish for Max!”

“The Red Hen restaurant should focus more on cleaning its filthy canopies, doors and windows (badly needs a paint job) rather than refusing to serve a fine person like Sarah Huckabee Sanders.  I always had  a rule, if a restaurant is dirty on the outside, it is dirty on the inside!”

Wall Street and Trade

The final reading on first-quarter GDP came in less than expected, 2.0%, and hardly ‘record-breaking’ as President Trump likes to say, but there seems little doubt the second quarter number will be much higher, with the Atlanta Fed’s GDPNow indicator pegging it at 3.8%, though this is a big come-down from last week’s 4.7% estimate.  [The preliminary reading on Q2 GDP from the Bureau of Economic Analysis will be released in about a month.]

For the record...GDP (annualized)

Q1 2017... 1.2%
Q2 2017... 3.1%
Q3 2017... 3.2%
Q4 2017... 2.9%
Q1 2018... 2.0%

For the full year

2010... 2.7% (coming out of the financial crisis)
2011... 1.7%
2012... 1.3%
2013... 2.7%
2014... 2.7%
2015... 2.0%
2016... 1.8%
2017... 2.6%

As for the other economic data for the week, I omitted some housing stats from two weeks ago, last review, so for the record, May housing starts came in better than expected at 1.35 million, while May existing home sales were less than consensus, 5.43m, with the median home price at $264,800, up 4.7% from a year ago and an all-time high.

Then this week, May new home sales were above estimates at 689,000 (ann.), while the S&P CoreLogic Case-Shiller national home price barometer for April was up 6.6% from a year ago, 6.4% on the 20-city index.  Seattle saw the biggest year-over-year gains at 13.1%, while Las Vegas rose 12.7%.

May durable goods (big-ticket items) were down 0.6%, and down 0.3% ex-transportation; not good.

And today we had important data on personal income, 0.4%, as projected, and consumption, 0.2%, less than expected.

The latter contains the important personal consumption expenditures index that the Fed uses as its preferred inflation barometer, and it was up 0.2%, ditto ex-food and energy, and for the past 12 months the PCE was 2.3%, 2.0% on core, which matches the Fed’s target. So now we wait to see if the 2.0% level can be sustained.

The Fed, under chairman Jay Powell, has said it isn’t afraid to let inflation run above target for a while, but if it started to zoom higher, than it’s hiking rates, despite what Trump adviser Larry Kudlow urged the Fed to do today; as in ‘do nothing.’

One more...the Chicago PMI for manufacturing was a far-better-than-expected 64.1 (50 being the dividing line between growth and contraction).

On to Trade:  U.S. ambassador to China Terry Branstad on Friday said the U.S. government is not convinced the Chinese are willing to make enough progress soon enough on trade issues, as the two countries remain locked in spiraling disputes.

Earlier, the Chinese government criticized a move by the U.S. to expand the powers of its foreign investment watchdog, Beijing concerned that the move means the U.S. will use national security concerns unfairly in order to restrict Chinese investments.

The new rules will target Chinese companies investing in technology industries in the U.S., with President Trump supporting new legislation that would expand the powers of the Committee on Foreign Investment in the United States (CFIUS).

CFIUS is an inter-agency body which scrutinizes the national security implications of business deals that would result in foreign ownership of U.S. companies.

It makes recommendations to the president, who can prevent a deal from going through, but in practice a negative CFIUS ruling is enough to kill it.

Trump said in a statement: “I have concluded that such legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity.”

I totally agree with this move, intellectual property remaining a key sticking point in trade tensions between the U.S. and China.

China’s economic plan is heavily weighted to a focus on technological advancement, and heretofore the best way to do this was to buy U.S. companies that already have it.

As I noted the other day, Chinese investment in the U.S. has been plummeting, down more than 90% in 2017.

As for the tariffs, the U.S. will impose 25% levies on $34bn worth of Chinese goods beginning July 6, with at least an additional $16bn to follow (possibly another $200bn on top of that).

China has promised to match in kind.

A full-blown trade war between the United States and China, though, will have a knock-on effect on the likes of allies such as South Korea, Japan and Taiwan, as imported goods account for around half of the total value of Chinese exports to the U.S., meaning the countries that produce the components needed to make the goods  bought by American consumers will suffer.

For example, the iPhone.  Mainland China imports memory chips from South Korea and Taiwan, the displays from Japan and South Korea, and the design from the U.S.; and it assembles these “elements” into iPhones.

As Deutsche Bank estimates, “nearly 37 percent of China’s exports to the U.S. in 2015 consisted of value-added imported from other countries.”

Trump tweet: “Harley-Davidson should stay 100% in America, with the people that got you your success.  I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!”

Editorial / Wall Street Journal

“When it comes to misguided revenge, Sons of Anarchy has nothing on Donald J. Trump.  The President’s own man-of-mayhem trade policies have forced Harley-Davidson to move some of its motorcycle production overseas.  But Mr. Trump responded to this week’s announcement by menacing the company on Twitter Tuesday morning.

“ ‘A Harley-Davidson should never be built in another country – never!’ Mr. Trump raged.  ‘Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end – they surrendered, they quit! The Aura will be gone and they will be taxed like never before!’ In another tweet, the President added, ‘Harley must know they won’t be able to sell back into U.S. without paying a bit tax!’

“Taxes if you do, taxed if you don’t.  In retaliation for Mr. Trump’s steel and aluminum tariffs, the European Union raised tariffs on U.S.-made motorcycles to 31% from 6% last week. The $2,200 price hike would be a deal-breaker for many would-be Harley bikers in Europe and would damage the company’s sales.

“As motorcycle sales in the U.S. continue to decline, Harley knows it needs to reach a global market. So the company was left with two choices: Avoid the tariff by moving operations abroad, or pay the new EU tax, which will cost the company $90 million to $100 million each year. Keep in mind that Harley is already paying $15 million to $20 million more for manufacturing this year because of Mr. Trump’s tariffs on metal....

“Meanwhile, Harley is dealing with union backlash for opening a production plant in Thailand while closing one in Kansas City. Harley made that hard call after Mr. Trump withdrew from the Trans-Pacific Partnership last year, though that agreement would have reduced foreign tariffs on American-made motorcycles. Mr. Trump’s TPP decision made it harder for Harley to compete in the Asian market while still using U.S.-based steelworkers and machinists. Cause, meet effect.

“We remember how Barack Obama railed against Anthem for raising insurance premiums when Democrats were distorting the health-care market. One might expect that Mr. Trump, supposedly savvier about business realities, would understand how corporations have to make tough choices to survive bad policies. Mr. Trump should rage against the man in the mirror who is the reason for Harley’s choices.”

Europe and Asia

At the EU summit in Brussels, European leaders worked through the night, Thursday, on into Friday morning, before reaching a deal on the critical and contentious issue of immigration.  Italy’s new hardline leader threatened to veto a joint statement, but then he said the agreement means Italy is ‘no longer alone’ in tackling the migrant crisis, and, at least for the time being, German Chancellor Angela Merkel, described as “bleary-eyed,” was literally able to save her job.

The German chancellor had been given an ultimatum from her hardline coalition partners in Bavaria’s Christian Social Union (CSU), to find a Europe-wide solution to the migrant issue, calling for borders to be closed to asylum seekers, and the 63-year-old Merkel, who is clearly on her last legs, regardless, emerged after nine hours of “toxic” negotiations to reveal a joint text that included moves to stop migrants registered in Italy and other EU countries from moving on to Germany.

There were also pledges to share out refugees arriving in the bloc, but on a voluntary basis, while creating ‘control centers’ inside the EU to process asylum requests and to strengthen external borders.

Hours later, reports emerged that 100 Europe-bound migrants were feared to have drowned off the Libyan coast.

EU leaders clinched the deal to tackle the crisis though the agreement is filled with vague pledges.

It was Italy’s Prime Minister Giuseppe Conte who had threatened a veto on a joint conclusion for the entire agenda until his demands were finally met.

Italy’s new anti-immigrant government has been turning away a series of rescue boats in recent weeks, sparking a fresh row in the bloc, but in the end, Conte, who described the talks as “virulent,” said Italy was “no longer alone” in shouldering responsibility for asylum seekers.

The crisis is far from over, and the next few months will be telling to see how issues of national borders and the integration of migrants is accomplished.

The 28 leaders agreed to consider setting up “disembarkation platforms” outside the bloc for migrants rescued from international waters, most likely in North Africa, in a bid to discourage migrants from boarding EU-bound smuggler boats.

Under the deal, EU countries can set up migrant processing centers – though only on a voluntary basis – to determine whether they should be returned home as economic migrants or admitted as refugees in willing states.

However, African nations have yet to sign off on such a proposal.  Yes, this whole deal is vague and confusing.

Earlier, Chancellor Merkel warned that “migration could end up determining Europe’s destiny” if the bloc failed to reach an agreement.  But it’s at home where she faces a deadline from her interior minister to seal pacts to curb so-called secondary migration.

Italy’s stance has revived political tensions in the EU, even though some can argue, there is no crisis anymore.  Arrivals have dropped 96 percent since the peak of the migration crisis in 2015, when Germany took in one million asylum seekers.  Fewer than 45,000 migrants have made it to the European Union this year, according to the United Nations.  Back in 2015, thousands were entering daily.

But the political tremors are still being felt across Europe, particularly in east European nations such as Poland and Hungary, Slovenia and Czech Republic, as well as Austria and now Italy.  Poland and Hungary refuse to accept any new arrivals from the likes of Italy and Greece.

And now Austria takes over the EU’s rotating presidency on July 1.  No doubt Chancellor Sebastian Kurz, whose coalition includes the far-right Freedom party, will use the country’s six-month EU leadership to push for a still tougher response on migration.

As for Brexit, it was largely relegated to the sidelines of this summit, though British Prime Minister Theresa May accused the European Union of putting the safety of its 500 million citizens at risk by blocking a broad Brexit deal on security, amid the overall toxic atmosphere surrounding the summit in general.

May told her fellow leaders at their working dinner on Thursday, that Britain wants to play a major role in European security after it leaves the bloc.  “Our ability to do so is being put at risk,” she said.

May cited inflexible EU rules that stop third countries – which is what the U.K. will become – from taking part in the EU’s information-sharing programs. Then she listed the implications of shutting Britain out.

“We would no longer be able to share real time alerts for wanted persons, including serious criminals,” she said.  “Our collective ability to map terrorist networks across Europe and bring those responsible to justice would be reduced. That is not what I want and I do not believe it is what you want either.”

But these comments come as negotiations on a future trade deal haven’t yet gotten underway as May’s Cabinet continues to argue over what kind of customs arrangements it wants with the EU.

And there is no agreement on how to avoid a hard border with Ireland, while EU officials are stepping up their preparations in case negotiations fail to produce a deal.

Leaders such as Ireland’s Leo Varadkar and Jean-Claude Juncker, the European Commission president, voiced their frustration at the U.K.’s slow progress in the negotiations when they arrived at the summit on Thursday, and then today, the EU’s chief negotiator, Michel Barnier, invited UK negotiators back to Brussels on Monday, warning: “The time is very short.”

Barnier said: “We have made progress but huge and serious divergence remains, in particular on Ireland and Northern Ireland.”

He also said he hoped to see “workable and realistic” proposals from the UK on what the future relationship between the UK and EU should look like.

Another issue that must be resolved is the status of Gibraltar, including access to its airport and the exchange of tax information.

Reminder, Brexit is next March. An agreement in principle was to have been reached by now so final wording can be in place by October and an EU summit then that would ratify it.  You need the time between October and next March for all 27 members to then approve Brexit in time for it to go into effect. At that point a transition period goes into place, until December 2020, which gives the governments the chance to work out final procedures, including for trade and the border.  There are serious disagreements still on the future movement of goods and people.

Prime Minister May has promised a white paper, following a crucial Cabinet meeting next week.

There are growing fears in Brussels that Mrs. May will take on the Eurosceptics in her cabinet to push for a softer form of Brexit, only to come up with a compromise that the EU cannot accept.

Britain wants to align with Brussels rules for industrial goods, but it wants the freedom to diverge on services, but Barnier and other EU leaders say this is “cherry-picking,” which Brussels has consistently rejected.

For the EU it’s all about the “four freedoms” and the free movement of goods, services, capital and people.

Gideon Rachman / Financial Times

“An international nationalist movement sounds like a contradiction. Nationalists are concerned above all by the fortunes of their own tribe. International cooperation does not come naturally to them.  And yet, despite this, the world is seeing the emergence of a ‘nationalist international.’  Nationalist political parties are on the rise across the west – and they are taking inspiration from each other and working together.

“Donald Trump is central to this development. The U.S. president is often portrayed as an isolated maverick on the world stage.  But, in fact, he is emerging as the informal leader of an international movement. By shifting American politics in a more nationalist direction, Mr. Trump has changed the tone of politics everywhere.

“The U.S. president already has ideological soulmates in Europe, where the key figures include Viktor Orban, the prime minister of Hungary (who came to power before Mr. Trump), and Matteo Salvini, Italy’s deputy prime minister. Europe’s nationalists include far-right parties that are now in coalition governments, such as Mr. Salvini’s League and Austria’s Freedom Party.  But nationalist themes have also been increasingly adopted by more traditional center-right parties, such as Germany’s CSU, Britain’s Conservatives and Austria’s People’s party.

“The nationalists’ dominant issue is usually immigration – and the need to defend the nation against ‘swarms’ of migrants from outside the west. When it comes to economics, they are often drawn to Trump-style protectionism.

“These nationalists are also hostile to international institutions and treaties, which they regard as the playthings of a rootless, global elite. The Trump administration has withdrawn from international treaties such as the Paris climate accord, and organizations like the UN Human Rights Council. The European nationalists force their ire on the EU and the international rules governing the treatment of refugees.

“Increasingly, they are looking to cooperate. Sebastian Kurz, Austria’s chancellor, has mused about organizing a ‘Berlin-Rome-Vienna’ axis to fight illegal immigration. Richard Grenell, the U.S. ambassador in Germany, has talked about empowering Trump-style ‘conservatives’ across Europe. Steve Bannon, Mr. Trump’s former chief strategist, convened meetings of nationalist parties in Rome during the Italian elections, writing later: ‘It’s hard not to feel we’re on the right side of history.’

“The nationalists are often fans of Vladimir Putin. The Russian president is admired as a tough guy who sticks up for his nation. His violation of international laws in the process is regarded as a plus – not a minus. By contrast, the nationalist detest Angela Merkel, the German chancellor, and Justin Trudeau, the Canadian prime minister, who are seen as preachy internationalists, hopelessly soft-headed on the defining issue of immigration....

“Europe’s nationalists, such as Mr. Salvini, Mr. Orban and Britain’s Nigel Farage, have capitalized on complaints that the EU grabbed too many of the traditional powers of the nation and controls everything from national budget deficits to citizenship rights.

“The central demands of the new nationalists, such as control of immigration or protectionism, have a legitimate place in democratic politics. But the policies adopted by them, once they are in power, have quickly spun off into horrifying directions, such as the detention of migrant children in the U.S. or Mr. Salvini’s demand for a mass expulsion of the Roma population from Italy.

“One key problem is that the nationalist emphasis on the nation-state usually has a strong cultural and racial element. Once you start thinking of outsiders as less worthy than your compatriots – indeed, as people who ‘infest’ your nation (in the words of President Trump) – than it becomes much easier to treat them brutally.

“A second problem is that the new nationalists often ignore the complexity of the modern world.  International rules are not simply the product of the ideological preferences of an unmoored globalist elite. They are the necessary means to regulate the interactions of nations on everything from trade to travel. Abolish all those fussy international laws and you are on the route to anarchy, a trade war – or a real war....

“A world in which nation-states see each other above all as rivals is one that is primed for conflict.”

Josh Rogin / Washington Post

“As President Trump heads to Europe next month for the NATO summit and then a historic meeting with Russian President Vladimir Putin, his personal attacks on the European Union and other pillars of the Western order are overshadowing his own administration’s attempts to reassure allies that the United States still believes in the transatlantic project it has led since the 1940s.

“During a private meeting at the White House in late April, Trump was discussing trade with French President Emmanuel Macron.  At one point, he asked Macron, ‘Why don’t you leave the E.U.?’ and said that if France exited the union, Trump would offer it a bilateral trade deal with better terms than the E.U. as a whole gets from the United States, according to two European officials. The White House did not dispute the officials’ account, but declined to comment.

“Let’s set aside for a moment the point that Trump’s proposal reveals a basic lack of understanding of Macron’s views and those of the people that elected him. This is an instance of the president of the United States offering an incentive to dismantle an organization of America’s allies, against stated U.S. government policy.

“Trump has been publicly trashing the E.U. and NATO since his campaign, but the pace and viciousness of his attacks have increased. Just this week, at a rally in North Dakota, Trump said: ‘The European Union, of course, was set up to take advantage of the United States, to attack our piggy bank.’ He then complained about a $150 billion trade deficit with the E.U., inflating the figure.

“Other reports note that Trump recently told Group of Seven leaders that ‘NATO is as bad as NAFTA,’ suggested to the Swedish prime minister that America should leave the NATO alliance, and launched gratuitous public attacks on German Chancellor Angela Merkel at her weakest moment.  It’s a deepening trend that leads to an unavoidable conclusion: Trump doesn’t believe in the continued sanctity of the European Union and NATO, as well as the United States’ commitment to both....

“European officials no longer believe Trump’s words can be discounted.  They don’t see the alliance rift as routine or temporary. They don’t believe it’s possible to repair the transatlantic bridge in the middle of a Trump-sized earthquake. European countries have no choice but to hedge and seek alternatives to U.S. leadership.

“ ‘If you look at the world today, you realize the position of the West is going to be contested for the first time in several centuries,’ former British prime minister Tony Blair told me.  ‘And if the West is disunited, it’s going to be much less capable of withstanding that challenge.’...

“Of course, Trump’s opinions closely track those of Putin, including on the status of Crimea, aid to Ukraine and Russia’s interference in the U.S. elections. Overall, Trump’s attack on the E.U. and the U.S.-Europe relationship is a huge strategic windfall for Russia.

“ ‘As long as there is a unified Europe that maintains a liberal international order with basic rules of the road, it is a disaster for a dictator like Putin,’ former vice president Joe Biden told me.  ‘That’s why Putin is doing what he’s doing.’

“The United States and Europe have had disputes before.  It’s possible this one will get resolved eventually. Meanwhile, Trump is doing enormous and unnecessary damage.  His intentional and egregious actions to undermine the E.U., NATO and the United States’ relationship with both can no longer be discounted, rationalized or seen as anything but what they are – a brazen attempt to undo the strategic infrastructure both America and Europe need more than ever.”

---

In a bit of economic news, before the quarter-end crush of data starts next week, a flash estimate on Euro area inflation for June came in at 2.0%, vs. 1.3% a year ago, though the core rate, ex-food and energy, was 1.2%, same as June 2017.  Energy rose 8% year-over-year for the EA19.

Turning to Asia, Australia passed legislation aimed at preventing interference by foreign governments, a move directed at China, which will further stoke tensions between the two.

Mirroring similar rules in the U.S., Australia will require lobbyists for foreign countries to register, and makes them liable for criminal prosecution if they are deemed to be meddling in domestic affairs.

Last year, Prime Minister Malcolm Turnbull referred to “disturbing reports about Chinese influence” as justification for the measures.

China has denied the allegations, but concern over Chinese political donations and relationships between lawmakers and Chinese businesses has intensified in Australia.

Chinese telecom giant Huawei has emerged as a lightning rod for Australian security fears.  The company provides 4G equipment to three of the country’s four major carriers, but was blocked in 2012 from providing broadband equipment.

Street Bytes

--The industrial stocks, as represented by the Dow Jones, fell for a third week in a row, -1.3% to 24271, on continuing trade fears, while Nasdaq, after hitting all-time highs at one point the previous two weeks, fell 2.4% to 7510.  The S&P 500 also lost 1.3%.

[For the quarter, the Dow rose 0.7%, S&P 2.9%, and Nasdaq 6.3%.  The Russell 2000 small-cap index gained a robust 7.4% the past three months.]

But tech stocks were hit this week on reports that the Trump administration might bar technology companies from selling certain high-tech products to China and other countries and limit investment in tech companies by Chinese firms (the CFIUS legislation described above).

Energy stocks, however, saw their shares rise as oil had a big week, up $5.

--U.S. Treasury Yields

6-mo. 2.10%  2-yr. 2.53%  10-yr. 2.86%  30-yr. 2.99%

Spread between the 2- and 10-yr. got down to 30 basis points, narrowest since 2007.  More below.

--The United States said on Tuesday that it will impose sanctions on those importers of Iranian oil by Nov. 4, a move that surprised, and roiled, oil markets and is likely to further alienate allies and adversaries alike.

The markets were used to waivers for American sanctions that had been granted companies in the likes of India and China that import a lot of Iranian oil, as long as they showed steady reductions in the import of same.

But now the State Department said it would discontinue such waivers, and the oil price spiked on the news.

The U.S. is now no longer part of the Iran nuclear deal since President Trump announced in May that he was leaving the accord, but next week the remaining signatories (U.K., France, Britain, Russia and China) are meeting in Vienna and U.S. officials will talk with their European counterparts on the sidelines about further restraining Iran.

But if the United States thinks China, amid a trade war with the Trump administration, is now going to entirely end its imports of Iranian oil, they’re nuts.

And November 4 happens to be two days before the mid-terms.  All kinds of market turmoil could be hitting around then, not good for the White House and Republican hopes, you would think.

European leaders have sought to preserve the nuclear accord since the U.S. pulled out, and they have applied for waivers to the renewed American sanctions against Iran. But few waivers are expected to be granted, and now Tuesday’s announcement causes further strains.

According to the State Department, companies in India and China that continue to buy oil and other products from Iran after Nov. 4 will be barred from selling anything in the United States.

If I were India, I’d tell the U.S., “Hey, we don’t have a problem with Iran, [blank]-off.”

I mean how is this move in any way a positive for the U.S.?  And politically, it is flat-out stupid given the timing.

A week ago, OPEC and 10 producers outside the cartel – including Russia, opted to increase production by just 600,000 barrels a day, far lower than the 1.5 million barrel a day increase sought by Russia.  The group has been holding production back by around 1.8mbd since the start of 2017 in an effort to rein in a supply glut that had weighed on prices since 2014.

The Saudis last weekend said they would be ramping up production by “hundreds of thousands, not tens of thousands, of barrels” – a substantial amount.

--Regulators cleared most of the largest U.S. banks to increase their dividends and share buybacks, but forced two Wall Street titans, Goldman Sachs and Morgan Stanley, to freeze those payments at current levels.  [These two were on the fringe after the first round of stress tests a week earlier.]

34 of the 35 biggest lenders in the U.S. passed the second round of the Federal Reserve’s annual exam, which gauges whether banks are healthy enough to keep lending through an economic meltdown.  The 34 can now buy back shares and pay dividends.

The Fed failed the U.S. unit of Deutsche Bank AG, finding “widespread and critical deficiencies” in its controls and data. DB has been struggling to cut back on its U.S. operations.

Randal Quarles, the Fed’s vice chairman for supervision, said, “The largest banks have strong capital levels, and after making their approved capital distributions, would retain their ability to lend even in a severe recession.”

Goldman and Morgan Stanley fell below the minimum capital levels set by the Fed, but while they were blocked from raising payouts, they were cleared to continue distributing roughly what they have the past year or so.

The report was good news for Wells Fargo, which along with Citigroup, was cleared to pay out more than 100% of expected profits over the coming year. Wells, after nonstop scandals, is doubling its share buyback to $24.5 billion, while increasing its dividend by 10%.

Meanwhile, the financial sector has been swooning, with the S&P Financials Index falling for 13 straight sessions, off about 6 percent over that period. The KBW Bank Index was down the same percentage.

The reason? A flattening yield curve.

Banks have been moving up over the last several years on the belief interest rates would rise, which is a more profitable environment for them.

But now, the difference between, say, the 10-year and 2-year Treasury is narrowing. Banks borrow at the short end and lend at the long end, and the greater the difference between the two, the more profitable lending can be.

Today, though, the spread between the two-year and 10-year Treasury notes is at its narrowest level in more than a decade.

--Walt Disney Co. scored as a coup as the Department of Justice approved its $71.3 billion bid for the entertainment assets of 21st Century Fox on Wednesday, thus throwing a wrench in Comcast’s efforts to make a rival offer for Rupert Murdoch’s entertainment empire.

The government’s approval is on the condition that Disney, which owns ESPN, divest all of Fox’s 22 regional sports networks, which include some valuable assets such as the Yankees’ YES network.

The head of the Justice Department’s antitrust division, Makan Delrahim, said, “Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.”

In December, Disney and Fox agreed on an all-stock deal for $52.4 billion. But two weeks ago, Comcast made an offer of about $65 billion for the Fox assets, which Disney then countered.

Murdoch has twice rebuffed Comcast, citing concerns that the Philadelphia internet service and cable TV giant might fail to win regulatory approval.

Both Disney and Comcast have viewed the Fox businesses, including movie and television studios, cable channels FX and National Geographic, a stake in Hulu and valuable international TV assets in Europe, India and Latin America, as key to expanding globally and competing against the likes of Google and Netflix.

Disney said in a statement: “We are pleased that the DOJ concluded that...the transaction will not harm competition, and that we were able to resolve the limited potential concerns to position us to move forward with this exciting opportunity.”

Reminder, not included in the sale are Fox News, the Fox broadcasting stations and the FS1 sports network.

The regional sports networks are one of Fox’s most valuable businesses and are expected to generate profits of more than $2 billion this year.

At last word, Comcast is scrambling to find outside financing to potentially offer as much as $90 billion, but, again, Disney already has DOJ approval.  It should be, ‘Game over.’

--Elon Musk sent a companywide email to Tesla Inc. employees responding to a Goldman Sachs analyst’s prediction that the carmaker will miss estimates with its crucial Model 3 sedan this quarter.

“They are in for a rude awakening :)” Musk wrote; sharing a link to a CNBC story that reported Goldman expected the company to deliver 22,000 Model 3s in the three months ending in June, short of what is said to be a consensus of 28,000.

As the quarter drew to a close, Tesla is under tremendous pressure to prove that it can achieve and sustain a high production level, with CEO Musk telling investors on June 5 at an annual shareholders meeting that the company was “quite likely” to achieve its target to build 5,000 of the sedans a week by the end of this month.

Tesla’s sole auto assembly plant in Fremont, California, is running around the clock to meet its goal, with the company slated to release second quarter production and delivery figures in early July. 

But you can’t help but wonder, with the rush to produce, how will quality be impacted?

*Friday morning, Reuters reported that three line workers at the Fremont assembly plant told them production was falling short of 5,000, perhaps around the 4,200 level.  One of the problems is the ‘paint’ department, which just can’t keep up.

Separately, the battery in a Tesla Model S car involved in a fatal crash in Florida last month reignited twice after firefighters extinguished the initial blaze that consumed the vehicle on impact, the National Transportation Safety Board announced in a preliminary report this week.

The agency has been looking at how battery fires in electric vehicles can be particularly challenging to emergency responders because they tend to reignite.

The vehicle in the Florida crash was going at 116 mph in a 30 mph zone, with two of the three passengers dying when the sedan veered off the roadway and hit a concrete wall, bursting into flames.  The NTSB has yet to determine a likely cause of the crash.

--Uber won back its license to operate in London after a judge overturned a ban.

Transport for London had refused to renew Uber’s license in September when it expired, saying the ride-hailing firm was not a “fit and proper” operator.

But following the court order, Uber has been granted a license, though it has been put on probation for 15 months.  Uber has been seeking a five-year license.

--Amazon.com is making another bold move to push further onto the turf of its shipping partners United Parcel Service Inc. and FedEx Corp., enabling small business to carry its overflowing supply of packages through a new initiative in the last-delivery leg to the consumer’s door.

Amazon announced on Thursday that it is inviting entrepreneurs to form small delivery companies employing up to 100 drivers and leasing between about 20 and 40 Amazon-emblazoned vans, which should help the company rapidly build out its own delivery network, in order to handle the surging number of online orders that UPS, FedEx and the U.S. Postal Service can’t.

Amazon is receiving about 40% of all online $s in the U.S. and the number of its deliveries topped more than a billion last year.

The company now expects hundreds of entrepreneurs to sign up for the “last mile” delivery, which would give it a visible presence in bigger metro areas that could help it begin to resemble the big boys.

UPS, FedEx and the USPS have nothing to fear in the short term, with the number of packages Amazon is shipping doubling in five years to 1.2 billion last year, but, over time, yes, Amazon becomes a threat.

Meanwhile, Amazon announced on Thursday that it was acquiring PillPack, an online pharmacy designed for patients who take multiple prescription drugs.  PillPack has a license to operate in 49 states, according to the company’s website.

While Amazon is only paying $1 billion for the company, the deal sparked a sharp selloff in pharmacy stocks, with Walgreens Boots Alliance sliding 10%, despite reporting strong earnings the same day, and CVS Health shares falling 6%.

But, just as in Amazon’s acquisition of Whole Foods Market, the concern over Amazon’s impact, at least for some time to come, may be overblown. Traditional grocery stores are doing just fine after the Whole Foods deal, and health care is a heavily regulated business.

That said, as Charley Grant of the Wall Street Journal wrote, “Amazon’s arrival introduces significant doubt about what the long-term future of the pharmacy business will look like.”

--Farmers planted more acres of soybeans this spring, 89.6m, surpassing the 89.1m of corn, according to the Dept. of Agriculture, marking only the second time in history U.S. fields have been sown with more soybeans than corn, despite the brewing trade war with China that could threaten demand.  [Though demand in China is such that the U.S. product could be shipped to Argentina, and then on to China, according to some reports, in order to circumvent tariffs.]

In recent years, China has purchased almost a third of U.S.-grown soybeans. But as of July 6, it plans to increase the tariffs on the imports from 3% to 28%, plus a 10% value added tax.

By the time China announced the tariff increase in mid-June, 97% of the soybeans had been planted.

--General Electric took another step towards unwinding its industrial conglomerate in announcing it would spin off two of its largest divisions, leaving it with less than half the revenues it had a decade ago.

CEO John Flannery said the company is divesting GE’s healthcare division and stake in Baker Hughes, the oil service company, reversing decades of acquisitions by his two predecessors.

The moves were announced the same day that GE was dropped from the Dow Jones Industrial Average, the company having been the last original member (GE replaced by Walgreen’s).

Flannery said: “Today marks an important milestone in GE’s history. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.”

Since taking control in August, Flannery has devoted his efforts to scaling back GE’s conglomerate structure, which under CEO Jack Welch in the 1980s and 1990s included businesses such as insurance and entertainment.

But now GE will confine its business to three divisions: equipment for the electricity industry, renewable energy, and aero engines and other aircraft parts.

The company is looking to complete the spin-off of the healthcare unit within the next 18 months.

--The Wall Street Journal reported Thursday that Facebook Inc.’s internal probe into potential misuse of its user data “is hitting fundamental roadblocks: The company can’t track where much of the data went after it left the platform or figure out where it is now.”

CEO Mark Zuckerberg pledged in various forums, including Congress, three months ago to investigate all apps that had access to large amounts of Facebook data, and “the company is still combing its system to locate the developers behind those products and find out how they used the information between 2007 and 2015.”

One problem is many of these developers are out of business, so Facebook is trying to piece together where large chunks of data reside. And among those still in business, a lot of the developers haven’t been cooperating. After all, Facebook has zero legal authority to force developers to cooperate. 

Ime Archibong, Facebook’s vice president of product partnerships, said the vast majority – “99.99999999%” – of Facebook developers are good actors and that the firm doesn’t want to unnecessarily alienate them.  What a crock of merde.  [Deepa Seetharaman / WSJ]

--Chipotle Mexican Grill Inc.’s new CEO, Brian Niccol, told investors that he plans to make changes to Chipotle’s menu, and to market those foods more cleverly.

“We will make the brand more culturally relevant,” he said. Chipotle is planning to introduce more snack foods and a “happy hour” promotion between 2 p.m. and 5 p.m., with $2 tacos and the beer and margaritas it sells at most of its restaurants.

The CEO, who received major plaudits from Wall Street when he came on board, sending Chipotle shares up nearly 80% since his appointment, said he is also bringing more discipline and focus to the company by closing up to 65 underperforming stores, while removing layers of management.  The headquarters is also being moved from Denver to Newport Beach, Calif., near his old Taco Bell office.

“The girls...on the beach...are all...within reach...”

Just suggesting a new commercial; guys picking up girls on the beach, and vice versa, and then they all head to Chipotle.

Or maybe not....

--Nike reported solid sales growth in the U.S. of 3% for the three months ended May 31, after three straight quarters of declines. The gains came despite overall weakness in the basketball shoe market and stiffer competition from the likes of Adidas AG.

Nike has been ramping up its own website operation and started selling goods on Amazon.com.

Overall, the company reported profit of $1.1 billion on sales of $9.8 billion for the fourth quarter.  Nike benefited from the corporate tax cut, with its effective rate reduced from 13.7% to 6.4% as a result.

The results were released after the market closed Thursday, so today the shares soared 11% on the North American sales gain. Swooosh!

--Cruise operator Carnival blamed higher fuel prices and strength in the U.S. dollar for cutting its full-year earnings outlook, its shares suffering their biggest one-day drop in more than six years while dragging its peers lower.

Carnival, which operates the Costa and Princess brands, lowered its earnings outlook to a range of $4.15-$4.25 for the year, down from $4.20-$4.40, though the reduction for the current quarter was more pronounced.

Carnival did note that advanced bookings for the next three quarters are in line with the prior year.

--“Jurassic World: Fallen Kingdom” opened to an estimated $150 million in the U.S. and Canada over the weekend.  A great opening, but 28% below the $208.8 million start for the first “Jurassic World,” which relaunched the 25-year-old dinosaur franchise in 2015.

Since debuting two weeks ago in some foreign markets, “Fallen Kingdom” has grossed $561.5 million overseas. Its global total is $711.5 million.

So the second “Jurassic World” will surpass $1 billion world-wide.  But the predecessor did $1.67bn globally.

Foreign Affairs

China: Chinese President Xi Jinping told visiting U.S. Defense Secretary Jim Mattis that China will make no concession on its core interests, despite calling for stronger ties between the countries’ militaries.

“Our attitude is firm and clear in terms of Chinese sovereignty and territorial integrity, that we would not lose a single inch of the lands we inherited from our ancestors, while we would not take a single penny of others’ possessions,” Xi said to Mattis on Wednesday in the Great Hall of the People in Beijing.

Mattis’ visit comes at a time of sharp U.S. criticism of China’s actions in the South China Sea and tensions over Taiwan, amid a trade dispute between the world’s two largest economies.

China continues to militarize outposts in the disputed waters, which the U.S. regards as an attempt to control the world’s busiest trade route.

At the same time, Beijing is angered by U.S. engagement and promises to arm Taiwan, which China continues to threaten it can take by force if necessary.

The National Defense Authorization Act for 2019, recently passed by the U.S. Senate, encourages the U.S. military to participate in exercises with Taiwan’s military, while the Pentagon is considering sending warships through the Taiwan Strait and increasing sales to Taiwan.

Xi, who controls the Chinese military along with everything else in the country, said closer ties between the two sides’ militaries could serve as a stabilizer in bilateral relations, and “should help lower skepticism and prevent misunderstanding, misjudgment or incidents,” Xi said.

Mattis’ trip was the first to China by a U.S. defense chief since 2014.

Separately, after mocking censors working overtime to delete comparisons of President Xi to Winnie the Pooh, comedian John Oliver and now the website of HBO have fallen victim to Beijing’s censorship machine.

Chinese authorities blocked HBO’s site in China, just days after Oliver took Xi to task.

HBO joins a long list of Western media outlets that have had their websites blocked in China, including the New York Times, Facebook and Twitter.

Oliver’s latest segment on China dug into Xi’s distaste at comparisons to the self-described “bear of very little brain” and introduced viewers to repressive changes under way in the world’s most populous country.

North Korea: According to reports, Sec. of State Mike Pompeo is traveling to North Korea next week to discuss the country’s denuclearization plans.  The Financial Times reports that Pompel cancelled a meeting with his Indian counterpart in Washington on July 6 in order to fly to Pyongyang; a visit that will mark the first to North Korea since President Trump and Kim Jong Un met in Singapore, June 12.

On Wednesday, Pompeo told lawmakers he was confident that North Korea understood the scope of the U.S. desire for complete denuclearization, as the two countries continue to negotiate following the Singapore summit.

Separately, analysts from 38 North, a North Korea-focused website published by the Stimson Center in Washington, found that Pyongyang, in recent weeks, appears to have modified the cooling system of its plutonium-production reactor and erected a new building near the cooling tower. 

38 North analyzes satellite pictures, and the latest, captured on June 21, nine days after the Singapore summit, showed no immediate effort to begin denuclearization at North Korea’s key nuclear research site.

Upon his return to Washington from Singapore, June 13, President Trump tweeted: “There is no longer a Nuclear Threat from North Korea.”

But there is some question as to what the new buildings at the research site are, with some saying it appears guest homes have been built, some wondering if this was for future inspectors and foreign visitors as part of a denuclearization process.

But most believe the imagery shows Pyongyang isn’t adhering to its pledge to denuclearize.

38 North analysts said that they expected “business as usual” at the nuclear facility “until specific orders are issued from Pyongyang.”

Russia: The Kremlin and the White House announced Presidents Trump and Putin will meet in Helsinki on July 16, this coming after Trump’s National Security Adviser John Bolton held talks with Russian officials in Moscow to lay the groundwork for the summit.

The meeting will be just days after a NATO summit in Brussels on July 11 and 12, and Trump’s subsequent visit to Britain.

Trump said Wednesday that “getting along with Russia and with China and with everybody is a very good thing.” He said the two would discuss Syria, Ukraine and “many other subjects.”

Editorial / Washington Post

“The reasons for the tension between the United States and Russia are well-established. Russia seized Crimea from Ukraine, instigated a war in eastern Ukraine, intervened to save the dictatorship of Syrian President Bashar al-Assad, interfered in the U.S. presidential election campaign to harm Hillary Clinton and help Donald Trump, poisoned a former intelligence officer on British soil and continues to meddle in the elections of other democracies. Yet on Wednesday in the Kremlin, President Vladimir Putin brushed it all aside and delivered the Russian ‘maskirovka,’ or camouflage, answer that it is all America’s fault.

“Meeting with John Bolton, the president’s national security adviser, Mr. Putin declared that the tensions are ‘in large part the result of an intense domestic political battle inside the U.S.’  Then Mr. Putin’s aide Yuri Ushakov insisted that Russia ‘most certainly did not interfere in the 2016 election’ in the United States. On Thursday morning, Mr. Trump echoed them both on Twitter: ‘Russia continues to say they had nothing to do with Meddling in our Election!’

“Why is Mr. Trump kowtowing again? The U.S. intelligence community has concluded that Russia did attempt to tilt the election using multiple campaigns, including cyberintrusions and insidious social media fakery. Would it be so difficult to challenge Mr. Putin about this offensive behavior? A full accounting has yet to be made of the impact on the election, but Mr. Bolton did not mince words last year when he described Russian interference as ‘a true act of war’ and said, ‘We negotiate with Russia at our peril.’ And now?

“Summits can be productive, even – maybe especially – when nations are at odds.  In theory, a meeting between Mr. Trump and Mr. Putin, now scheduled for next month in Helsinki, could be useful. But a meeting aimed at pleasing Mr. Putin is naïve and foolhardy. A meeting aimed at pleasing Mr. Putin at the expense of traditional, democratic U.S. allies would be dangerous and damaging.”

“Just as Mr. Bolton was flattering Mr. Putin, Russia was engaging in subterfuge on the ground in Syria. The United States, Russia and Jordan last year negotiated cease-fire agreements in southwestern Syria, along the border with Jordan and the Golan Heights. In recent days, the United States has warned Russia and its Syrian allies not to launch an offensive in the area, where the rebel forces hold parts of the city of Daraa and areas along the border. The State Department vowed there would be ‘serious repercussions’ and demanded that Russia restrain its client Syrian forces. Secretary of State Mike Pompeo called the Russian foreign minister, Sergei Lavrov, saying an offensive would be unacceptable. All to no avail; Syria is bombing the area.

“This is what happens when Mr. Trump signals, repeatedly, that he is unwilling or unable to stand up to Russian misbehavior. We are on dangerous ground. Either Mr. Trump has lost touch with essential U.S. interests or there is some other explanation for his kowtowing that is yet unknown.”

Editorial / Wall Street Journal

“The White House has confirmed that Donald Trump will meet with Vladimir Putin at a July 16 summit. Whatever else happens, let’s hope Mr. Trump doesn’t make another agreement like the one his Administration struck with Russia in 2017 for a ‘deconfliction’ zone in southwestern Syria.

“Bashar Assad’s regime is now firing artillery and conducting airstrikes on rebel areas in Daraa and Quneitra provinces near Jordan and Israel with Russian and Iranian help. The Syrian Observatory for Human Rights reports at least 90 people have died and the United Nations estimates about 45,000 civilians have fled.

“The attacks violate a July 2017 agreement among Russia, Jordan and the U.S. to ‘de-escalate’ conflict in the area so the countries could turn their attention to fighting Islamic State. A State Department official said at the time that the U.S. was ‘morally bound where there’s an opportunity to bring about a cease-fire to save people’s lives and to de-escalate the violence.’  Morally bound apparently doesn’t translate well to Russian....

“The Trump Administration has reacted by waving its hands and begging Mr. Putin to stop.... Begging is embarrassing.

“Mr. Assad and his backers figure that Mr. Trump wants to proclaim mission accomplished in Syria and bring U.S. troops home. The White House’s limp reaction to the fighting in southwestern Syria shows they’re probably right. Mr. Putin has been watching all this and wondering if Mr. Trump can be conned as easily and as often as Barack Obama was.”

The U.S. told Free Syrian Army (FSA) rebels they should not expect military support against the offensive in the southwest.  Five hospitals in the area have been targeted by the Assad regime.

Jordan, which already hosts some 650,000 Syrian refugees, has said it will not open the border for new refugees to cross.

On a totally different matter....

Michael Birnbaum / Washington Post

“U.S. commanders are worried that if they had to head off a conflict with Russia, the most powerful military in the world would get stuck in a traffic jam.

“Humvees could snarl behind plodding semis on narrow roads as they made their way east across Europe.  U.S. tanks could crush rusting bridges too weak to hold their weight. Troops could be held up by officious passport-checkers and stubborn railway companies.

“Although many barriers would drop away if there were a declaration of war, the hazy period before a military engagement would present a major problem. NATO has just a skeleton force deployed to its member countries that share a border with Russia.  Backup forces would need to traverse hundreds of miles. And the delays – a mixture of bureaucracy, bad planning and decaying infrastructure – could enable Russia to seize NATO territory in the Baltics while U.S. Army planners were still filling out the 17 forms needed to cross Germany and into Poland.

“During at least one White House exercise that gamed out a European war with Russia, the logistical stumbles contributed to a NATO loss.”

Syria: As alluded to above, President Trump is expected to seek Moscow’s help in scaling back Iran’s military presence in Syria when he meets Vladimir Putin in Helsinki.  But there is no doubt any U.S.-Russian deal will end up strengthening Syrian President Assad, at the expense of the opposition, who the United States has been backing.

Russia and State Department officials agreed on a tentative proposal that would keep Iranian forces at least 27 miles from the border, while in return, the Russians are asking the U.S. to close the military base it has maintained at al-Tarif, which U.S. and other allied forces use to support local Syrian fighters, near the intersection of the Jordanian, Syrian and Iraqi border, U.S. officials told the Wall Street Journal.

But Russia has been violating a ceasefire pact for southwest Syria for days.

David Ignatius / Washington Post

“The catastrophic war in Syria is nearing what could be a diplomatic endgame, as the United States, Russia and Israel shape a deal that would preserve power for Syrian President Bashar al-Assad in exchange for Russian pledges to restrain Iranian influence.

“Checking Iranian power has become the only major Trump administrative goal in Syria, now that the Islamic State is nearly vanquished.  President Trump appears ready to embrace a policy that will validate Assad, an authoritarian leader who has gassed his own people, and abandon a Syrian opposition that was partly trained and supplied by the United States.

“Trump’s Syria policy has bounced back and forth like a ping-pong ball.  The most consistent feature has been his mistrust of Middle East military commitments made by his predecessors George W. Bush and Barack Obama. Step by step, he seems to be undoing them.

“The diplomatic discussions about Syria come as Trump prepares for a July 16 summit with Russian President Vladimir Putin. Foreign diplomats and administration officials are unsure just what will be on the agenda, but the Syria package will probably be in play.

“An intriguing aspect of the possible Syria deal is that it’s driven by close cooperation between Russia and Israel.  The Israeli agenda, like Trump’s, is narrowly focused on blocking Iran – and Israelis seem to have concluded that Putin is a reliable regional partner.

“Israeli, European and U.S. experts outlined some likely elements of the framework.  In exchange for U.S. withdrawal of its demands for a political transition in Syria, Russia will support various measures to contain Iranian power, including:

“ – Iranian-backed forces will stay at least 80 kilometers from the Israeli border on the Golan Heights.

“ – Israel will have tacit Russian permission to attack threatening Iranian targets in Syria, so long as Russian troops aren’t harmed....

“ – Assad’s army, backed by Russian air power, will consolidate control in southwest Syria and retake posts on the Jordanian border.  Jordan favors Assad’s control of the border because it might allow truck traffic to resume, boosting the cash-strapped Jordanian economy. Opposition forces in the southwest apparently will be left to fend for themselves. As thousands of new Syrian refugees flee toward a closed Jordanian border, a new slaughter of trapped civilians is possible.....

“Trump’s willingness to accede to Russian power in Syria – and to give up hard-won U.S. gains – troubles many Pentagon officials, but they seem to be losing the argument.

“As Putin makes his way toward the summit stage, it’s worth pausing a moment to  appreciate how deftly he has played his hand.  Russia is becoming the indispensable regional balancer, playing a role once proudly claimed by the United States. Russia somehow maintains good relations with both Iran and Israel; it has growing ties with Saudi Arabia and the United Arab Emirates; it talks with Syrian Kurds and their bitter rivals in Turkey.

“Putin has a reputation as an ex-KGB thug. But his Syrian strategy evokes the subtler Chinese precept of subduing the enemy without fighting. Putin has taken a decisive position in Syria at minimal cost – with a deferential Trump now seeming ready to confirm his victory.”

Turkey: President Recep Tayyip Erdogan, the man who has dominated Turkish politics since 2002, won last weekend’s presidential election, ushering in dramatic changes to the country’s social and economic landscape, not only securing five more years in office, but Erdogan will now control a powerful system of government that abolishes the role of prime minister and places unprecedented power in his hands.

Under the new powers of the presidency, narrowly approved by referendum last year, Erdogan will have near-absolute power.  He will be able to hire and fire ministers and senior civil servants, issue executive decrees that carry the force of law, and wield greater control of judicial appointments.

Alan Makovsky, a Turkey expert at the Centre for American Progress, a Washington-based think-tank, told the Financial Times: “This is a nightmare result for Turkish democracy. Turkey’s autocratic ruler just got stronger...Turkey could be facing ugly times, and there’s no obvious exit for the next five years.”

Following his win, Erdogan showed little interest in heeling rifts running through Turkish society.

But the results showed his ruling Justice and Development party (AKP) was not as strong as Erdogan had hoped. The AKP won 42.6 percent of the vote, down 7 points from the last general elections in November 2015.

Erdogan was saved by an alliance with the Nationalist Movement party (MHP), an ultranationalist group known for its historic links to rightwing paramilitaries and criminals.

The MHP was the biggest surprise of the vote, wining 11.1 percent, and bringing the combined AKP-MHP total to 53.7 percent.

[In the presidential election, Erdogan won 53%, with Muharrem Ince at more than 30%.]

So now the EU and U.S. wait to see if Erdogan softens his approach towards his critics and attempts to reduce tension in their strained relationships with Ankara.

His biggest immediate challenge is the slumping Turkish economy, with a massive debt reliant on external financing, and a currency, the lira, that has lost more than a fifth of its value this year.

Editorial / New York Post

“In a region where democracy is scarce, it just got scarcer – with Turkish strongman Recep Tayyip Erdogan claiming victory in last weekend’s presidential election and vowing to ‘rapidly’ usher in a new era of presidential authoritarian rule.

“Turks will suffer. Since a 2016 coup attempt, Erdogan has operated under a state of emergency, jailing journalists, political foes and members of the military. One of his foes, Selahattin Demirtas, of the pro-Kurdish People’s Democratic Party, had to campaign while behind bars.

“The new system gives Erdogan even more control of the judiciary and the ability to issue decrees with limited oversight.

“ ‘A single person is becoming the head of the legislature, the executive and the judiciary, and this is a concern for a threat to the survival of the country,’ warned challenger Muharrem Ince of the secular Republican People’s Party.  ‘Turkey has departed from democratic values.’

“At stake are basic freedoms, the country’s secular tradition and its shaky economy.  The damage may also cross Turkey’s border.   Turkey has been cracking down on U.S.-allied Syrian Kurds, cozying up to Russia and acting increasingly hostile toward the U.S.

“With the region reeling from Syria’s civil war, terrorism and Iranian mischief, the notion of an emboldened Erdogan is scary.

“All’s not lost: As the election showed, Turkey’s opposition still lives, with critics, like Ince, fighting to restore democratic rule. Keep your fingers crossed.”

Turnout, by the way, was a staggering 87 percent.

Iran: President Hassan Rouhani promised Iranians the government would be able to handle the economic pressure of new U.S. sanctions, a day after traders massed outside parliament, protesting against a sharp fall in the value of the currency.

Washington is slated to begin reimposing economic penalties on Tehran in the coming months after President Trump quit an agreement between major world powers and Iran in which sanctions were lifted in return for curbs on its nuclear program.

So Iran’s hard currency earnings will be cut due to lower oil exports, and the prospect is triggering a panicked flight from Iran’s rial into dollars.

Rouhani said: “Even in the worst case, I promise that the basic needs of Iranians will be provided. We have enough sugar, wheat, and cooking oil. We have enough foreign currency to inject into the market,” he said in a speech broadcast on state television.

Rouhani said the fresh U.S. sanctions were part of a “psychological, economic and political war,” adding that Washington would pay a high price for its actions.

Mexico: Andres Manuel Lopez Obrador, a two-time presidential runner-up who is targeting government corruption, is the favorite in Sunday’s presidential election.  If victorious, he would be the first left-wing nationalist to lead Mexico in decades.

Polls give Mr. Lopez Obrador an average 22 percentage-point advantage over Ricardo Anaya, the conservative candidate.

Lopez Obrador is seen as an alternative to years of free-market policies that have made Mexico a global competitor but at the same, many families feel left behind.

Random Musings

--Presidential tracking polls...

Gallup (June 24): 41% approval of Trump’s job performance (down from last week’s 45%), 55% disapproval
Rasmussen (June 29): 47% approval, 52% disapproval

--In a Harvard CAPS/Harris poll, former Vice President Joe Biden is the early favorite to represent the Democrats in 2020, the choice of 32%, with Hillary Clinton at 18% and Sen. Bernie Sanders at 16%. Sen. Elizabeth was fourth at 10%.

Biden would be 77 on Election Day in 2020.

--In a huge primary election, New York Democratic Congressman Joe Crowley, thought to be in line to replace Nancy Pelosi as House minority leader, or Speaker should the Dems retake the House, was upset by a Democratic socialist, 28-year-old neophyte Alexandria Ocasio-Cortez, and it wasn’t even close, 57.5% to 42.5% in the Queens district.

President Trump pounced in a tweet: “Wow! Big Trump Hater Congressman Joe Crowley, who many expected was going to take Nancy Pelosi’s place, just LOST his primary election.

“In other words, he’s out! That is a big one that nobody saw happening. Perhaps he should have been nicer, and more respectful, to his President!”

Ocasio-Cortez believes in universal health care, a federal jobs guarantee, and the abolition of ICE.  She was an organizer in Bernie Sanders’ campaign and ran as an antidote to machine politics.

This was as shocking an upset of an incumbent Democrat as any in recent memory. But Ocasio-Cortez is unlikely to be any nicer to Trump than Crowley.

Crowley raised $3.35 million in the race to Ocasio-Cortez’s $300,000.

But he ditched a debate in the district, sending in his place a former City Council member who, like Ocasio-Cortez, is a Hispanic woman.  Even the New York Times criticized the move, editorializing it showed Crowley’s lack of interest.

--We wish Katie Arrington, the Republican candidate for Congress in South Carolina who earlier this month defeated Rep. Mark Sanford in the state’s Republican primary, well after she was seriously injured in a car accident last Friday night. Arrington was traveling with a friend when their vehicle was struck by a car going the wrong way. The driver of the other car was killed.

Ms. Arrington was seriously injured but is going to make a full recovery.

--Amid widespread political polarization, 31 percent of probable U.S. voters surveyed said they think “it’s likely that the United States will experience a second civil war sometime in the next few years.”

Democrats at 37 percent were more fearful of a second civil war than Republicans at 32 percent, according to the poll from Rasmussen.

59 percent of voters were still concerned that opponents of President Donald Trump’s policies would resort to violence.

But during former President Obama’s second year in office, a similar 53 percent thought those who did not support his policies would turn to violence.

--Former New York City mayor Michael Bloomberg is mulling another run for president – but as a Democrat.  Bloomberg, however, would be 78 when he’s competing in the primary process.

Bloomberg had considered making a run in 2016 as an independent, and then endorsed Hillary Clinton, delivering a speech at the Democratic National Convention.

--David Brooks / New York Times

“(Conservatives) have always placed tremendous emphasis on the sacred space where individuals are formed. This space is populated by institutions like the family, religion, the local community, the local culture, the arts, the schools, literature and the manners that govern everyday life.

“Membership in these institutions is not established by rational choice. We are born into them most of the time and are bonded to them by prerational cords of sympathy and affection.  We gratefully inherit these institutions from our ancestors, we steward them and pass them along to our descendants.

“Over the centuries conservatives have resisted anything that threatened this sacred space. First it was the abstract ideology of the French Revolution, the idea that society could be reorganized from the top down. Then it was industrialization. Conservatives like John Ruskin and later T.S. Eliot arose to preserve culture from the soulless pragmatism of the machine age.

“Then it was the state. In their different ways, communists, fascists, social democrats and liberals tried to use the state to perform many functions previously done by the family, local civic organizations and the other players in the sacred space.

“Conservatives fought big government not because they hated the state, per se, but because they loved the sacred space. The last attempts to build a conservatism around the sacred space were George W. Bush’s ‘compassionate conservatism’ and, in Britain, David Cameron’s Big Society conservatism.

“They both fizzled because over the last 30 years the parties of the right drifted from conservatism. The Republican Party became the party of market fundamentalism.

“Market fundamentalism is an inhumane philosophy that makes economic growth society’s prime value and leaves people atomized and unattached. Republican voters eventually rejected fundamentalism and went for the tribalism of Donald Trump because at least he gave them a sense of social belonging. At least he understood that there’s a social order under threat.

“The problem is he doesn’t base his belonging on the bonds of affection conservatives hold dear. He doesn’t respect and obey those institutions, traditions and values that form morally decent individuals.

“His tribalism is the evil twin of community. It is based on hatred, us/them thinking, conspiracy-mongering and distrust. It creates belonging, but on vicious grounds.

“In 2018, the primary threat to the sacred order is no longer the state. It is a radical individualism that leads to vicious tribalism. The threat comes from those two main currents of the national Republican Party. At this essence Trump is an assault on the sacred order that conservatives hold dear – the habits and institutions that cultivate sympathy, honesty, faithfulness and friendship.

“Today you can be a conservative or a Republican, but you can’t be both.

“The new threats to the sacred space demand a fundamental rethinking for conservatives.  You can’t do that rethinking if you are imprisoned in a partisan mind-set or if you dismiss half of Americans because they are on the ‘other team.’”

--Charles Lane / Washington Post        

“You could argue that the Civil War began on May 22, 1856, when Rep. Preston Brooks of South Carolina entered the Senate chamber and beat Sen. Charles Sumner of Massachusetts nearly to death with his cane.

“Brooks’ casus belli was Sumner’s freshly delivered antislavery speech, in which he called Sen. Stephen A. Douglas of Illinois a ‘noise-some, squat, and nameless animal,’ and suggested that Sen. Andrew Butler of South Carolina – Brooks’ cousin – was in love with ‘the harlot, Slavery.’

“You could argue that Sumner was more than justified in using such uncivil language, given the enormity of the evil, slavery, that Douglas was willing to tolerate and Butler actively defended.

“And you could argue that this bloody attack on the senator, if it catalyzed the war, only hastened the inevitable and necessary....

“Our broken polity has not yet produced one such climactic breakdown in civility, but we seem to be on our way there, and because so many people seem to relish that – the slogan ‘F--- civility’ is gaining traction – it’s important to be as clear as possible about both the causes and the potential consequences.

“Civility spread, as a democratic norm, on the basis of consensus. When most people involved in politics share broad goals and a belief in the overall legitimacy of the political process, they are more likely to disagree, when they do, without being disagreeable.

“This is more a matter of incentives than education and training: When democracy is about competing but not warring groups taking turns in power, it’s in our self-interest to be civil because doing so sets a useful precedent – for you.

“When civility prevails among the politically active, it spills over into calm and normality for everyone else; where you shop, or dine, or go to the movies doesn’t have to be a political statement. Commercial establishments are, in that sense, safe spaces. Just ask any citizen of a former communist state in Europe what it was like when every trivial life choice carried political freight.

“The broad political consensus that prevailed in the United States between the end of World War II and the end of the Cold War has broken down, and civility has broken down as well....

“(There’s) plenty of blame to go around. The dominant modus operandi of American politics, across the political spectrum, is to attack various elements of the postwar consensus as attributes not of a stable democracy, but of ‘a rigged system.’ Aspirants for elected office compete to delegitimize not only each other but also American-style democracy itself....

“What we have now is the unprecedented situation of the president of the United States not only attacking the legitimacy of the American political system, not only trashing the very idea of consensus, but also agitating every single question of policy, no matter how sensitive, in the most inflammatory words possible. On basic factual questions, he repeatedly asserts that two plus two equals five, and many seem to believe him....

“Those whom this approach inevitably disempowers and threatens now reach for their own unconventional weapons – ostracism, heckling, mobbing. Rep. Maxine Waters (D-Calif.) has said of Trump’s Cabinet, ‘tell them they’re not welcome anymore, anywhere.’

“You can understand why people act and feel this way without immunizing them against basic questions such as how far, exactly, they propose to go, and what, exactly, they hope to accomplish.

“Michelle Obama once declared, ‘when they go low, we go high.’ That might not work, either, but it does have one clear advantage: It is the only option that could, even at this late date, inspire an upward spiral.”

--The aforementioned Rep. Mark Sanford (S.C.) / Washington Post

“I’m a conservative, and I have overwhelmingly supported the president on the issues he attempted to advance. But because I haven’t been 100 percent supportive, and have spoken out on areas where we disagreed, he injected himself into the race to oppose me as he did. This suggests his concern was over personal loyalty, rather than issue loyalty. That’s a problem in a system built on compliance to laws and the Constitution – not a single man.

“The Republican Party is going through an identity crisis. We need to decide who we are. I believe we are meant to be a party of individual freedom, and I believe in the building blocks of what will get you there – ranging from limited government, taxes and spending to open markets and free trade.

“I have all the merit badges and hard-fought votes to demonstrate my allegiance to those ideals.  But voters in this election did not value this as much as they did fidelity to our president.  In fact, on election night, my opponent proclaimed in her victory speech that ‘we are the party of Donald J. Trump.’

“I could not disagree more strongly. I believe that both parties belong to the regular working people who have labored to advance their ideals. Given the state of our politics, we need to question who we are and what we stand for as never before.

“Finally, I am struck by how little we now care for truth. The president’s attacks on me were certainly not true, and my opponent took license with the truth in ways I have never seen in an opponent, but does this pattern deserve alarm? I believe so. Trust is foundational to a reason-based republic. It’s why I feel the need to speak up for my values, as I did before the election – though there proved to be an electoral consequence.

“I respect the fact I could be seen as an odd person to offer a sermon on the notion of truth – given the fact I was living a lie in 2009. But this is precisely the point. It was discovered, and there were tremendous personal and professional consequences for me in the wake of that discovery. That’s the way it’s supposed to work.

“We have become so desensitized to the president’s tortured relationship with the truth that we don’t challenge the inaccurate things he and others say. There should be a consequence to making things up. But inexplicably, as a society, we have somehow fallen into a collective amnesia in thinking that it doesn’t matter when the highest officeholder in the land doesn’t tell the truth.

“These themes played a part in my first electoral loss, but I believe their implications are far more significant. This is something I’ll be contemplating over the weeks and months ahead, and I hope other Americans will, too.”

--George Will / Washington Post

“Amid the carnage of Republican misrule in Washington, there is this glimmer of good news: The family-shredding policy along the southern border, the most telegenic recent example of misrule, clarified something.  Occurring less than 140 days before elections that can reshape Congress, the policy has given independents and temperate Republicans – these are probably expanding and contracting cohorts, respectively – fresh if redundant evidence for the principle by which they should vote.

“The principle: The congressional Republican caucuses must be substantially reduced. So substantially that their remnants, reduced to minorities, will be stripped of the Constitution’s Article I powers that they have been too invertebrate to use against the current wielder of Article II powers. They will then have leisure time to wonder why they worked so hard to achieve membership in a legislature whose unexercised muscles have atrophied because of people like them.

“Consider the melancholy example of House Speaker Paul D. Ryan (Wis.), who wagered his dignity on the patently false proposition that it is possible to have sustained transactions with today’s president, this Vesuvius of mendacities, without being degraded.  In Robert Bolt’s play “A Man for All Seasons,” Thomas More, having angered Henry VIII, is on trial for his life. When Richard Rich, whom More had once mentored, commits perjury against More in exchange for the office of attorney general for Wales, More says: ‘Why, Richard, it profits a man nothing to give his soul for the whole world...But for Wales!’ Ryan traded his political soul for...a tax cut. He who formerly spoke truths about the accelerating crisis of the entitlement system lost everything in the service of a president pledged to preserve the unsustainable status quo.

“Ryan and many other Republicans have become the president’s poodles, not because James Madison’s system has failed but because today’s abject careerists have failed to be worthy of it. As explained in Federalist 51: ‘Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place.’ Congressional Republicans (congressional Democrats are equally supine toward Democratic presidents) have no higher ambition than to placate this president. By leaving dormant the powers inherent in their institution, they vitiate the Constitution’s vital principle: the separation of powers.

“Recently Sen. Bob Corker, the Tennessee Republican who is retiring, became an exception that illuminates the depressing rule. He proposed a measure by which Congress could retrieve a small portion of the policymaking power that it has, over many decades and under both parties, improvidently delegated to presidents. Congress has done this out of sloth and timidity – to duck hard work and risky choices.  Corker’s measure would have required Congress to vote to approve any trade restrictions imposed in the name of ‘national security.’  All Senate Republicans worthy of the conservative label that all Senate Republicans flaunt would privately admit that this is conducive to sound governance and true to the Constitution’s structure. But the Senate would not vote on it – would not allow it to become just the second amendment voted on this year. 

“This is because the amendment would have peeved the easily peeved president. The Republican-controlled Congress, which waited for Trump to undo by unilateral decree the border folly they could have prevented by actually legislating, is an advertisement for the unimportance of Republican control.

“The Trump whisperer regarding immigration is Stephen Miller, 32, whose ascent to eminence began when he became the Savonarola of Santa Monica High School. Corey Lewandowski, a Trump campaign official who fell from the king’s grace but is crawling back (he works for Vice President Pence’s political action committee), recently responded on Fox News to the story of a 10-year-old girl with Down syndrome taken from her parents at the border. Lewandowski replied: ‘Wah, wah.’  Meaningless noise in this administration’s appropriate libretto because, just as a magnet attracts iron fillings, Trump attracts, and is attracted to, louts.

“In today’s GOP, which is the president’s plaything, he IS the mainstream.  So, to vote against his party’s cowering congressional caucuses is to affirm the nation’s honor while quarantining him.  A Democratic-controlled Congress would be a basket of deplorables, but there would be enough Republicans to gum up the Senate’s machinery, keeping the institution as peripheral as it has been under their control and asphyxiating mischief from a Democratic House. And to those who say, ‘But the judges, the judges!’ the answer is: Article III institutions are not more important than those of Articles I and II combined.”

--As noted in a piece in the Wall Street Journal by Jo Craven McGinty, according to figures published by the Centers for Disease Control and Prevention, around 30,000 cases of Lyme disease are documented each year, but the agency says, the real number is more like 300,000.

“We know Lyme disease is underreported,” said Kiersten Kugeler, an epidemiologist with the CDC.  “It is the most common vector-borne disease by far.”

There are several reasons for the undercount, including a new rule requiring most states to produce lab evidence of the disease that may reduce participation.

How screwed up are the numbers? North Carolina reported 32 Lyme cases to the CDC in 2016 but in the same year made 88,539 health-care claims for a Lyme diagnosis.  That doesn’t mean the 88,000 actually had the disease, but it’s the number of encounters those with a Lyme diagnosis had with a health-care system.

The bottom line is Lyme disease is costly, with researchers from Johns Hopkins estimating it costs the U.S. health-care system between $712 million and $1.3 billion a year.

Remember when you’re outside to always be aware of the tick danger.  Every golfer is certainly aware of it. Anyone going on a picnic should be as well.

According to a researcher in New York, in heavily infested regions, 20% to 40% of nymphs – newly hatched ticks about the size of a poppy seed – carry the bacteria that causes Lyme.

--There was a piece in USA TODAY on Thursday, via the Milwaukee Journal Sentinel, on a topic I’ve covered a couple of times, traveling to Mexico, as in years ago I said ‘don’t do it.’  The Sentinel reports that since July 2017, the paper has heard from more than 170 travelers describing injuries, illnesses and deaths after drinking alcohol at resorts and in tourist towns in Mexico.

Many tourists have reported blacking out after just one or two drinks and then regaining consciousness to find out they’ve been robbed, assaulted, hospitalized and taken to jail.

At first, resort and Mexican authorities, in many instances, were uncooperative, and TripAdvisor was deleting dozens of posts describing incidents at Mexican resorts, before the U.S. Federal Trade Commission investigated TripAdvisor’s business practices and they mended their ways.

And now the Mexican government has been reasonably active, including the takedown of two black market tequila distilleries, confiscating 20,000 gallons of illegal tequila.

“Tests found more than 235 gallons of that supply contained dangerous levels of methanol. Methanol, sometimes called wood alcohol, is commonly used in windshield washer fluid and as a solvent and is extremely toxic even in small quantities.”

--A man with a vendetta against an Annapolis, Md., newspaper, the Capital Gazette, fired a shotgun through the newsroom’s glass doors and at its employees, killing five and injuring two others Thursday afternoon in a targeted shooting, according to police.

The attack appears to be the deadliest involving journalists in the United States in decades.

The suspect, Jarrod Ramos, 38, lost a defamation case against the paper in 2015 over a 2011 column he contended defamed him. The column provided an account of Ramos’ guilty plea to criminal harassment of a woman over social media.

So tragic.  So senseless.  But I’m biting my tongue in terms of commenting further.

--Finally, one more on the passing of the great columnist/political commentator Charles Krauthammer.

Editorial / Wall Street Journal

“Allow us to add a few words about the way (Charles) thought and argued as a journalist because our republic could use more like him.

“Krauthammer arrived at journalism after stops in psychiatric medicine and political speech writing.  Once he arrived at journalism, writing for the Washington Post, he was home. We emphasize his journalistic roots because his writing and later his commentary for Fox News embody the best traditions of a free press. He understood that his journalistic platforms were both an opportunity and an obligation.

“They gave him the opportunity to witness and influence the great events of his day, such as the Reagan challenge to Soviet Communism, the Iraq war during the Bush Presidency, the election of the first black U.S. President, and the tumultuous emergence of Donald Trump’s brand of populism.

“Today, everyone who has an opinion about anything can share it with the world on social media. Charles Krauthammer never forgot that he owed his readers and audience something more than on-the-fly opinion. When his admirers say he was learned, they mean that Krauthammer had deep respect for the importance of knowledge and facts. Any Krauthammer commentary was grounded in facts – whether they lessons of history, as in the Middle East, or the dynamic facts of a legislative struggle on Capitol Hill.

“A typical Krauthammer column or TV appearance was a reflection of judgment on fact-based reality. Which is to say, Charles Krauthammer was old school.

“What does that mean? It means that Krauthammer didn’t do snark and he didn’t sneer at opponents. He often looked impatient when others did. His humor was sly and never mean-spirited. He didn’t build his opinions out of emotional resentments. He wasn’t  tribal. He refused to be any politician’s cheerleader. He was his own man.

“His readers and viewers liked that. No, they loved it. They loved him for being a trustworthy voice.  He had credibility, and once he had it, he made sure he never lost it.

“Krauthammer did not shrink from promoting his convictions with clarity and firmness, especially in foreign affairs. He spoke often about the notion of American exceptionalism, which he called ‘a venerable idea.’ His belief that America could be a force for good in the world was idealistic and practical.  In a 2010 speech for the Fund for American Studies, he argued that World War II left a vacuum, ‘which we had to fill to maintain liberty for ourselves and for the world.’

“Good and honorable journalism has lost one of its great practitioners.”

I hope in reading the above, you recognized in the case of this column, the only running history of our times in the world, that I do not like “on-the-fly opinion” either, and it’s why I live by the adage ‘wait 24 hours.’ 

And I too “have a deep respect for the importance of knowledge and facts.”  I have little tolerance for those who don’t understand that.

For a final time, RIP, Charles Krauthammer. 

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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 $1254...lowest weekly close since Dec. ‘17
Oil $74.25...highest close since Nov. ’14!

Returns for the week 6/25-6/29

Dow Jones  -1.3%  [24271]
S&P 500  -1.3%  [2718]
S&P MidCap  -1.9%
Russell 2000  -2.5%
Nasdaq  -2.4%  [7510]

Returns for the period 1/1/18-6/29/18

Dow Jones  -1.8%
S&P 500  +1.7%
S&P MidCap  +2.7%
Russell 2000  +7.0%
Nasdaq  +8.8%

Bulls  47.6
Bears 18.4

Dr. Bortrum posted a new column!

Have a good week. Happy Birthday, America!

*I just glanced at President Ronald Reagan’s remarks at the bicentennial celebration for the signing of the Constitution, Sept. 17, 1987.  They are worth looking up for the Fourth of July.

No doubt I’ll have some of it in my next column.

Brian Trumbore

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