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07/07/2018

For the week 7/2-7/6

[Posted 11:30 PM ET]

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Edition 1,004

Trump World

It’s another critical, potentially historic, week coming up.  Monday, President Trump has promised us his new Supreme Court pick.  The NATO summit is Wednesday and Thursday.  Friday, Trump goes to Britain for a pseudo-state visit, and then on July 16, it’s Trump and Putin.

All this while the trade war between the United States and China, and between the U.S. and other players, takes hold...to what effect we do not yet know.

What we do know is next week is likely to be a thrill a minute.

Editorial / The Economist

“America did as much as any country to create post-war Europe. In the late 1940s and the 1950s it was midwife to the treaty that became the European Union and to NATO, the military alliance that won the Cold War. The United States acted partly out of charity, but chiefly out of self-interest. Having been dragged into two world wars, it wanted to banish Franco-German rivalry and build a rampart against the Soviet threat. After the Soviet collapse in 1991, the alliance anchored democracy in the newly liberated states of Eastern Europe.

“Today, however, America and Europe are separated by a growing rift. The mood before the NATO summit in Brussels on July 11th and 12th is poisonous. As President Donald Trump accuses the Europeans of bad faith and of failing to pull their weight, they accuse him of crass vandalism.  A second summit, between Vladimir Putin and Mr. Trump in Helsinki on July 16th, could produce the once-unthinkable spectacle of an American president treating his Russian opponent better than he has just treated his allies.

“Even if the two summits pass off without controversy – as they might, given how Mr. Trump delights in confounding his critics – the differing priorities, divergent beliefs and clashing political cultures will remain. The Western alliance is in trouble, and that should worry Europe, America and the world.

“Every alliance has its tensions, but the Western one is strained on a bewildering number of fronts.  Mr. Trump, and his generals, are exasperated by the feeble efforts of many NATO members to honor their promise to raise defense spending towards 2% of GDP by 2024. The American right tends to condemn European support for the Iranian nuclear deal, and what it sees as a bias against Israel. And policymakers from both parties think that, as the world’s attention shifts to Asia, whining, sanctimonious Europeans deserve less of their time.

“As if that were not enough, Mr. Trump fatuously accuses the EU of being ‘set up to take advantage of the United States’ and chastises it for unfair trade.  Meanwhile, Europe is divided. Italy has a new populist coalition that is pro-Putin. So, increasingly,  is Turkey, a member of NATO (but not the EU) which is hostile to the liberal democratic values that bind the alliance.  Worse could be in store.  A Labour government in Britain under Jeremy Corbyn, who has a long history of opposing the use of arms by the West, would treat America with deep suspicion; he could even try to leave NATO.

“This newspaper believes that the Western alliance is worth saving. In a dangerous and increasingly authoritarian world, it can act as a vital source of security and a bastion of democracy. But the alliance does not have a God-given right to survive. It must continually earn its place....

“If NATO and the EU did not already exist, they would not be created.  Since the Soviet collapse, the sense of threat has receded and the barriers to working together have risen. Yet that does not make the transatlantic alliance ‘obsolete,’ as Mr. Trump once claimed. America’s alliances are an asset that are the envy of Russia and China. NATO is an inheritance that is all the more precious for being irreplaceable.

“The need for security remains. Russia is not the Soviet Union but, as a declining power, it feels threatened. It has modernized its forces and is prepared to deploy them. The need to anchor European democracy remains, too.  As authoritarianism creeps up on Poland and Hungary, the EU and NATO can once again help limit its advance. And there is the extra benefit of how Europe helps America project power, by providing bases, troops and, usually, diplomatic support.

“NATO is more fragile than Mr. Trump thinks. At its core is the pledge to treat an attack on one member in the North Atlantic region as an attack on them  all.  His vacillation and his hostility to Europe weakens that promise, if only because it reveals his scorn for the idea that small countries have the same rights as big ones.  Asia is watching, as is Mr. Putin. The more Mr. Trump bullies his allies, the more the world will doubt America’s security guarantees.  Because great powers compete in a grey zone between peace and war, that risks miscalculation.

“Mr. Trump believes he is a master negotiator in pursuit of a stronger America. With Europe, as with so much else, he gravely undervalues what he is giving up.”

As for the meeting with Putin, speaking at the campaign rally in Great Falls, Mont., Trump said  he felt ready.

“They’re going ‘will President Trump be prepared?  You know, President Putin is KGB.’  And this and that,” Trump said of news media reports.  “You know what? Putin’s fine. He’s fine.  We’re all fine. We’re people. Will I be prepared? Totally prepared. I’ve been preparing for this stuff my whole life. They don’t say that.”

I’m prepared for disaster myself.

Robert J. Samuelson / Washington Post

“On this Fourth of July, America has taken a turn for the worse. The great delusion of Donald Trump’s presidency is that we can thrive by embracing nationalism even though major economic and political events are increasingly driven by international forces. Trump is an isolationist in an era of globalism.  It won’t work.

“Keep this in mind on the Fourth. Let us assume – for the sake of argument – that Trump is everything that he isn’t: thoughtful, considerate, open-minded, kind, generous, civil, truthful and respectful of his adversaries. Let us further assume that this imaginary Trump is such a nice guy that his character is widely admired.

“Still, a big problem would remain: his policies.  It’s inaccurate to say that Trump doesn’t have an agenda. In many ways, his agenda resonates with his campaign promises. ‘Make America Great Again’ is a brilliant slogan that captures in nostalgia an urge to resurrect an allegedly more glorious past.

“The trouble is the actual past doesn’t resemble Trump’s rhetorical past, which is widely taken to be America in the late 1950s and early 1960s. The country was much poorer then. Since 1960, the average income (gross domestic product per person) has roughly tripled after adjusting for inflation.  In 2017, that was $59,484.

“Many staples of modern life didn’t exist or were in short supply. Jet travel began in 1958. Color television became widespread only in the 1960s. In 1955, only 2 percent of homes had air conditioning.

“There were more important deficiencies: African Americans throughout the South remained segregated by law and custom; the situation was better in the North, but blacks still faced discrimination. Similarly, most women remained at home; career jobs for them were only slowly expanding.

“One accomplishment that did make America ‘great’ then was its active international engagement, through military alliances and trade policies. These helped Europe and Japan rebuild after World War II and resist communist political pressures. This is precisely the sort of international cooperation – protecting our long-term interests despite some short-term costs – that qualifies as enlightened self-interest.

“It is doubtful that most Americans, when confronted with the tangible conditions of early post-World War II life, would choose to hop on a time-machine and reestablish themselves in this bygone era. Meanwhile, Trump is enthusiastically repudiating – or trying to repudiate – the American-led international cooperation that was a hallmark of the period.

“The underlying lesson was that our power and influence are enhanced when they are exercised in conjunction with countries that, granting differences and disagreements, share our basic values and interests.

“We cannot isolate ourselves from the rest of the world.  To the contrary, power is being drained from nation-states to ‘market forces’ or other global mechanisms that are difficult to control.  This has been going on since at least the mid-19th century and reflects new communication and transportation technologies: the telegraph, the telephone, television, the Internet, automobiles, planes and containerization.

“Obviously, no one is going to uninvent these technologies.  But the globalized world that those technologies have helped foster understandably makes many, possibly most, people uneasy and fearful, because there is a loss of sovereign control over our future....

“To this anxious litany Trump brings a reassuring antidote: more nationalism. It’s a false remedy. Some of Trump’s efforts to control globalization have already backfired. To wit: Harley-Davidson’s decision to move some production to Europe – in response to Europe’s higher tariffs on Harley bikes, which in turn were a reaction to Trump’s higher tariffs on European steel and aluminum exports.

“As before, our global power and influence benefit when we cooperate and respect our allies, not vilify them. Trump cannot deconstruct globalization.  It is too big and well-entrenched. But as noted by Wall Street Journal columnist Greg Ip, Trump can damage it and weaken it by prescribing protectionism. Economic growth would suffer.

“It’s not just Trump. Albeit without his vicious rhetoric, many Democrats share the same nationalism, proof that it represents a potent political symbol. Foreigners are convenient scapegoats. There is also a deeper problem: Economics, which is increasingly global, has outpaced politics, which is mostly local.

“What we had more of in the 1950s is hope and confidence. But they cannot be restored by reverting to a destructive neo-isolationism. It may be popular, but it’s not practical.  As noted, we’ve taken a turn for the worse.”

Trumpets....

--Embattled Environmental Protection Agency administrator Scott Pruitt resigned after months of allegations over legal and ethical violations. Andrew Wheeler, the agency’s deputy and a former lobbyist for the coal industry, will take over as acting administrator on Monday.

Pruitt was hailed among conservatives for his work on deregulation, but his alleged spending abuses, first-class travel, security details and cozy relationships with lobbyists helped to do him in.  Hours before he resigned on Thursday, the New York Times reported on new questions about whether aides to Pruitt had deleted sensitive information about his meetings from his public schedule, potentially in violation of the law.

As administrator, Pruitt began the largest regulatory rollback in the agency’s history, undoing, delaying or blocking several Obama-era environmental rules. And Pruitt helped convince President Trump to withdraw from the Paris climate agreement, which I’ve said was incredibly stupid.

But despite all the allegations and scandals, Trump was reluctant to fire Pruitt because the administrator had done what the president has wanted in terms of cutting regulations.  White House advisers, though, including his chief of staff, John Kelly, finally convinced him it was time for Pruitt to exit.

In a resignation letter released by the EPA,  Pruitt wrote that it had been “a blessing” to serve under Trump and undertake “transformative work” at the EPA.  But he added that “the unrelenting attacks on me personally, my family, are unprecedented and have taken a sizable toll on all of us.”

He signed the letter, “Your Faithful Friend, Scott Pruitt.”

Trump said Thursday on Air Force One that Pruitt came to him and said he didn’t “want to be a distraction.”

Democrats and environmentalists hailed Pruitt’s exit, though Wheeler is expected to continue many of the same policies.

--President Trump’s personal lawyer and fixer Michael Cohen, in an interview with ABC News, appeared to further distance himself from the president.

Cohen said he did not share Trump’s animosity toward Justice Department special prosecutor Robert Mueller and did not dismiss the possibility of cooperating with the investigation into Russian interference in the 2016 election.

“My wife, my daughter and my son have my first loyalty and always will,” Cohen said. “I put family and country first.”

Back in April, following the FBI’s raid on Cohen’s offices and homes, Trump tweeted: “Most people will flip if the government lets them out of trouble, even if it means lying or making up stories. Sorry, I don’t see Michael doing that despite the horrible Witch Hunt and the dishonest media!”

Asked how he might respond if the president or his legal team tries to discredit him, Cohen told ABC:

“I will not be a punching bag as part of anyone’s defense strategy. I am not a villain of this story, and I will not allow others to try to depict me that way.”

--The Trump administration rescinded Obama-era guidelines encouraging the use of race to determine admission to educational institutions, instead favoring a race-neutral policy that critics see as a move against affirmative action.

The government returned to guidelines used during the George W. Bush administration and rejected Obama administration guidelines to schools and colleges that included taking a potential student’s race under consideration as a way to increase diversity.

But the changes do not outlaw affirmative action, which the Supreme Court upheld as recently as 2016.

--Trump tweets: “Congress must pass smart, fast and reasonable immigration Laws now. Law Enforcement at the Border is doing a great job, but the laws they are forced to work with are insane. When people, with or without children, enter our Country, they must be told to leave without our.....

“....Country being forced to endure a long and costly trial. Tell the people ‘OUT,’ and they must leave, just as they would if they were standing on your front lawn. Hiring thousands of ‘judges’ does not work and is not acceptable – only Country in the World that does this!”

“Congress – FIX OUR INSANE IMMIGRATION LAWS NOW!”

“Just out that the Obama Administration granted citizenship, during the terrible Iran Deal negotiation, to 2,500 Iranians – including to government officials. How big (and bad) is that?”

[Ed. this conspiracy theory was totally debunked, but it goes out anyway as being “official” coming the president.]

“Many good conversations with North Korea – it is going well! In the meantime, no Rocket Launches or Nuclear Testing in 8 months. All of Asia is thrilled. Only the Opposition Party, which includes the Fake News, is complaining. If not for me, we would now be at War with North Korea!”

Wall Street...Trade...

On your mark...get set....Boom!!!  The trade war between the U.S. and China is underway as of Friday morning.  The Trump administration followed through with its threat to impose tariffs on $34 billion worth of Chinese products (to be followed with another $16bn...and potentially as much as $450 billion above that), and China immediately put its own similarly sized tariffs ($34bn) on an unspecified group of American goods, previously thought to be pork, soybeans and automobiles, among other goods.

So now we wait to see the impact on global supply chains, on costs for businesses and consumers, and what the effect will be on global financial markets, which have been on edge for months in anticipation of a prolonged trade fight between the U.S., its allies, and China.

China’s Commerce Ministry was blunt in blaming the U.S.

“To put it simply, the U.S. is opening fire on the entire world, including itself,” Trade Ministry spokesperson Gao Feng said in a statement. “China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade.”

Chinese Premier Li Keqiang called on the European Union to expand its cooperation with China to counter the United States; Li having started a six-day visit to Bulgaria and Germany on Thursday.

“The international situation is complicated, with the rise of unilateralism and protectionism,” Li was quoted as telling Jean-Claude Juncker, president of the European Commission.  “As two important forces in the world, China and the EU have to reach consensus, and expand cooperation and mutual interest to deal with the challenges.”

Last month, China and the EU said they would set up a working group to revamp the World Trade Organization (WTO) to counter U.S. unilateralism.

The Federal Reserve, in the minutes of its June meeting released Thursday, said it too was wary “about the possible adverse effects of tariffs and other proposed trade restrictions.”

Particularly, the Fed commented on capital spending, which the central bank said had already “been scaled back or postponed as a result of uncertainty over trade policy.”

The U.S. Chamber of Commerce also slammed the administration, calling Trump’s tariff plan “nothing more than a tax increase on American consumers and businesses.”

The administration said, on the other hand, that China’s countermeasures were on less than half of 1 percent of U.S. exports.

But it’s the unforeseen consequences, including the impact on non-Chinese multinational companies operating in China.

So the Trump administration is waging war and imposing tariffs on foreign steel, aluminum, solar panels, washing machines and other products from the likes of Canada, Mexico, the European Union and Japan.

But it’s China that is the real focus, Trump pressuring the country to curtail what the White House describes as a pattern of bad behavior in its trade practices, while stealing America’s intellectual property.  The tariffs levied by the administration are being used as leverage to force Beijing to make changes, including opening up more markets to U.S. companies and products, while ending the practice of forcing such companies to share their technology with their Chinese rivals.  Or so that’s the plan.

Meanwhile, the European Commission warned in a written submission to the U.S. Department of Commerce, that Trump’s threat to hit car imports with punitive tariffs (20%) risks sparking global retaliation against as much as $300 billion on U.S. products.  In an interview with Fox News on Sunday, Trump said the EU was “as bad” as China when it came to trade behavior, and he dismissed suggestions that his attacks on the EU were counterproductive.

Last weekend, General Motors warned against Trump’s threatened car tariffs, saying it would raise the prices of its vehicles by thousands of dollars, undermine its competitiveness and lead to U.S. job losses.

BMW, which exports 70 percent of its vehicles from its largest plant in South Carolina, also warned of cuts in investment and jobs if the tariffs are imposed.

On another issue, NAFTA, Trump said Sunday he is “not happy” with the revised deal his administration has been hammering out with Canada and Mexico and he doesn’t want to sign any new agreement until after the midterm elections in November.

Canada, on Sunday, imposed tariffs on $12.6 billion of U.S. products.

Meanwhile, there was a lot of economic news to chew on, much of it good.  Construction and factory orders for May were both up 0.4%, and the ISM figures on manufacturing for June, 60.2, and services, 59.1, were both real strong and above expectations (50 being the dividing line between growth and contraction).

And then we had today’s jobs report for June, the economy adding another 213,000, though the unemployment rate rose from 3.8% to 4.0% due to more people entering the job market, which is good.

Figures for April and May were also revised upward by a combined 37,000, so the three-month average is 211,000.

But I did a little work on the numbers this week, as I did last week with GDP, and if you consider President Trump’s first month being December 2016, which is what the administration is using, the 19-month average jobs gain is 192,000.  The average the prior 18 months for President Obama was 206,000.

I mention this because as a guy who for over 19 years has listed nothing but facts in this space, I’m sick of the president spouting off falsehoods, knowing his supporters are just eating it up as gospel.

So when I was watching him make the statement at the Great Falls, Montana, rally last night that “wages are rising for the first time in 18 years,” I wanted to reach through the television screen.

If you freakin’ believe that, just understand that year-over-year, wages have risen over at least the last ten years, which is as far back as I went in checking the monthly numbers.  Fact.  [You had a few months that were negative, but year-over-year, everything is up.]

What have I been writing all this time, every jobs report; wages, going back a few years, were growing at 2% to 2.5% when at this stage of a recovery you should be seeing 3.5%.

Well now wages are coming in at 2.7% (as in this last report), 2.8% in May, but it’s still below where we should be and the Fed is well aware of this.

So those are the facts.  The president has a lot to crow about, but for once in his life, I just wish he would tell the truth.  [Source for both jobs and wages is the Bureau of Labor Statistics]

As for second-quarter GDP projections, the Atlanta Fed’s GDPNow indicator remains the same as last week, 3.8%, but others see it higher. That is a number that Republicans can, will and should parrot into November.  Someone just remind the president that when he talks about an economy growing faster than it ever has, GDP was up 5.2% in the third quarter of 2014.  And he doesn’t want me pulling out some old Reagan growth figures.

Europe and Asia

Lots of economic data for the eurozone (EA19). The unemployment rate in May was 8.4%, unchanged from April and down from 9.2% May 2017.

Germany was 3.4%, France 9.2%, Italy 10.7%, Spain 15.8%, Ireland 5.3% and Greece 20.1% (March).

Youth unemployment rates were still high in Greece, 43.2% (March); Spain, 33.8% (but down from 39.2% year-over-year); Italy, 31.9% (down from 36.5%).

The PMIs for manufacturing and services were also released for the month of June, the EA19 composite at 54.9 vs. 54.1 in May, with manufacturing falling to 54.9 vs. 55.5, and services rising to 55.2 from 53.8.  But you add it all up and the second quarter PMI data was the weakest since Q4 2016.

Germany reported 55.9 on manufacturing last month, an 18-mo. low; 54.5 on services.
France was 52.5 mfg., a 16-mo. low; 55.9 services.
Italy 53.3 mfg., 54.3 services.
Spain 53.4 mfg., 55.4 services.

And the U.K. was 54.4 mfg., 55.1 services, the latter much better than expected.

Chris Williamson / IHS Markit

“Eurozone growth regained momentum in June, rounding off a respectable second quarter performance, for which the survey data point to GDP rising by just over 0.5%. June also saw new orders and employment growth perk up, suggesting rising demand continues to motivate companies to expand capacity.

“Firms’ costs and average selling prices for goods and services are meanwhile rising at rates close to seven-year highs, which will likely feed through to higher consumer price inflation in coming months.

“The upturn in the pace of economic growth and resurgent price pressures adds support to the ECB’s view that stimulus should be tapered later this year, but the details of the survey also justify the central bank’s cautious approach to policy.

“In particular, a weakening in business optimism to the lowest for over one-and-a-half years reflects intensifying nervousness about the outlook for the economy, notably in manufacturing, as trade-war talk escalates. Service sector companies – generally less affected by international trade – are more upbeat about the year ahead, though less so than earlier in the year as domestic political issues once again add to uncertainty about the outlook.”

Eurobits....

Germany: Chancellor Angela Merkel thought she had fended off a mutiny within her own conservative alliance after returning from the prior week’s marathon EU summit with an agreement on migration.

But then the rebellion escalated two days later, Sunday, further weakening her.  Interior Minister Horst Seehofer, of the Christian Social Union (CSU), threatened to resign over the chancellor’s policy. 

If Seehofer resigned as minister and party leader, but the CSU remained in the governing coalition, Merkel would survive, barely.  But if he took his coalition out of the government, the chancellor loses her majority.

Regardless, Merkel is badly damaged and the question is not whether she’ll serve out her new term, but if she can make it through the year.

Merkel is seen as Europe’s defender of liberal values, best exemplified in her 2015 policy to welcome to Germany nearly a million migrants from the Middle East and Africa, who were not wanted in neighboring countries like Austria and Hungary (the arrivals here, through Greece and the Balkans, often then being transported through Austria to Germany).

But for Merkel, three years later, nationalism and populism have taken hold and she’s a dead woman walking.

As for the CSU, whose base is in Bavaria, it is seeing its support eroded by the far-right Alternative for Germany (AfD) ahead of crucial state elections in October, and Seehofer’s conservatives have had to respond by veering sharply to the right themselves to prevent an AfD upset. Seehofer has also been mulling an alliance with his far-right counterparts in Austria and Italy.

For her part, Merkel wants a European solution to the migration issue, warning that unilateral action by the likes of Austria, Italy, Poland, Czech Republic and Hungary, endangers freedom of movement within the European Union, a central precept of the 28-member bloc.

Austria’s chancellor, Sebastian Kurz, is an example of the current atmosphere.  Kurz said that if Seehofer were to order refugees registered in other European Union countries to be turned back from the German-Austria border, the Austrian government would follow suit. This is the kind of chain reaction Merkel has warned against.

But then Merkel reached a deal, mid-week, to end the row, for now.  Seehofer dropped his threat to resign, while Merkel agreed to tighten controls at the Austrian border to stop people who have applied for asylum in other EU countries from entering Germany. Transit centers will be set up to hold them until they can be sent back.

Merkel described the deal as a good compromise, but then her center-left Social Democrat (SPD) partners in the coalition complained, saying transit centers were not part of the original coalition agreement.

Austria, upon seeing the Merkel agreement that very much involves itself, said it is now preparing to protect its southern borders with Italy and Slovenia.

All of this puts the functioning of Schengen – the EU’s right of passport-free travel across internal borders – at risk.

And there are all kinds of questions on the transit centers and how you identify which migrants have already registered in another EU country...and how do you prevent people smugglers, and criminals. Do they just become prisons?  Does the debate sound familiar?

Meanwhile, a poll from FG Wahlen said 91 percent of Germans favor European solutions on migration, an endorsement of Merkel’s line, with support for the CSU position falling further.

Brexit: Prime Minister Theresa May assembled her Cabinet for a weekend meeting to hammer out a trade relationship agreement that she can present the European Union, the big divorce next March. But there were serious doubts they would emerge with the kind of coherent plan the EU demands.

Businesses have been stepping up their demands that May reach a deal with the bloc that protects its interests. Any bad deal seriously jeopardizes jobs and investment.

So we waited for the decision out of Chequers (the prime minister’s country residence...what is being dubbed the body bag summit) and what any customs proposal contains and whether it will meet EU muster.  All 29 ministers who attend Cabinet were present at the confab, and a clear majority of them voted Remain in the 2016 referendum to exit the EU.

Well, late today the Cabinet reached a “collective” agreement on the basis of the U.K.’s future relationship with the EU.

Ministers signed to a plan to create a free trade area for industrial and agricultural goods with the bloc, based on a “common rule book.”

They also supported a “combined customs territory.”

Immediately, though, analysts said it would “anger many Tory Brexiteers,” as the BBC’s Laura Kuenssberg reported.

Mrs. May opted for a soft Brexit and a closer relationship with the EU than many of her colleagues desired, and now she has to sell it to both her party and EU leaders.

Doubtless there will be far more on this in the coming days and weeks.  The prime minister is hoping to unlock the next phase of talks but if she doesn’t have the support of her party, any agreement reached today is useless.

Mrs. May told the BBC, “This is a proposal that I believe will be good for the U.K. and good for the EU, and I look forward to it being received positively.”

So I’ve looked at the main points of the agreement, and I see EU leaders shredding it, more “cherry picking,” they’ll say, but I need more time to comment further.  The ‘white paper’ comes next week, though for now the deal gives the U.K. the freedom to strike trade deals with other countries while maintaining regulatory, environmental and consumer standards.

A big issue concerns the jurisdiction of the European Court and if there was to be a free trade zone for certain products, then EU law would have to hold sway.

But the document also commits the government to step up preparedness for a no-deal scenario, “given the short period remaining before the necessary conclusion of negotiations.”

Like October, sports fans!  Geezuz, the Brits could not have screwed up this whole deal, including the vote to Leave, more than they have.

Poland: The government carried out a sweeping purge of the Supreme Court on Tuesday, eroding the judiciary’s independence, and thus escalating a conflict with the European Union over the rule of law, while further dividing this nation.

Poland had been seen as a beacon for countries struggling to escape the clutches of the Soviet Union as it embraced Western democracy. But now it is embracing authoritarian methods like Hungary’s as a means to tighten their grip on power. This is not good, people.

For years the right-wing Law and Justice Party has sought to seize control of the court system.  After taking power in 2015, for example, it gave control of the country’s prosecutors to the Ministry of Justice.  In recent days, justices who have been speaking out are being harassed and intimidated by the government. Street protests have been breaking out.

But now the calls for solidarity, “Solidarnosc,” are not being directed against an occupying force, or communist rule, but at a democratically elected government.

Officials say they are merely cleaning up a corrupt system that obstructs the popular will, but critics, both in Poland and abroad, contend they are creating a system where the courts are subservient to the politicians. The ability to change the constitution, for instance, can just be through judicial rulings, should the leaders desire. This is bullshit.

Lech Walesa, who led the Solidarity movement that ended Communist rule in Poland and then served as president from 1990 to 1995, vowed to lead a campaign of civil disobedience if certain judges are removed.  As I go to post, one key one, a female justice, Malgorzata Gersdorf, is refusing to step down.  You go, Girl! 

Turning to Asia, China’s PMI data came out as follows. The official government figure for manufacturing was  51.5 in June vs. 51.9 in May, services 55.0 vs. 54.9.

The Caixin independent reading was 51.0 for manufacturing, 53.9 on services.

In Japan, the June manufacturing PMI was 53.0, with services at 51.4.

South Korea’s June PMI for manufacturing was 49.8. Taiwan’s was 54.5.

Street Bytes

--Stocks rallied this week, breaking a little losing streak and ignoring the trade tensions, choosing to focus on the positives in the economy and the job market.  The Dow Jones rose 0.8% to 24456, with the S&P 500 adding 1.5% and Nasdaq 2.4%.

--U.S. Treasury Yields

6-mo. 2.10%  2-yr. 2.54%  10-yr. 2.82%  30-yr. 2.93%

In the aforementioned minutes of the Fed’s June meeting, one of the statements that got traders’ attention was this:

“Participants generally judged that...it would likely to be appropriate to continue gradually raising the target rate for the federal-funds rate to a setting that was at or somewhat above their estimates of its longer-run level by 2019 or 2020.”

So the Fed is trying to determine what the neutral rate would be – the level that neither spurs nor slows growth, as they now expect the economy to grow faster than is sustainable over the long run. Which means they will then be raising rates above whatever the ‘neutral’ rate is to slow an  economy before it overheats, if their forecast is right.

For now, though, it appears the Fed is still thinking two more rate hikes this year, for a total of four in 2018, which most see today as being in September and December.

One danger is pushing up short rates to a level where the yield is higher than the long end of the curve, an inverted yield curve, that almost always presages recession.

And as you see above, the spread between the 2- and 10-year continues to narrow.

--On the Fourth of July, President Trump tweeted: “The OPEC monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!”

Last Saturday, though, Trump tweeted: “Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference... Prices to (sic) high!  He has agreed!”

Well, on reading this one I almost spit up my Frosted Flakes.  And I have to admit, having never seen dysfunction spelled with a ‘dis’, I looked it up and there is a derivative spelling with ‘dis.’  But I can guarantee not one of you has ever used it.

Trump didn’t specify if the 2m figure was barrels per day. And hours later, the White House walked his tweet back, saying the Saudis will use their spare production capacity “prudently...if and when necessary to ensure market balance and stability.”

Anyway, the president recognizes that oil and prices at the gas pump could be a sleeper issue when voters go to the polls in November, and rising gasoline prices can negate the positive impact of the individual tax cuts and blunt consumer spending.

But for prices to go down significantly from current levels, OPEC, and non-OPEC producers such as Russia, must pump a lot more than the 600,000 barrel a day increase they recently agreed to in Vienna on June 22.

The increase that was to be supplied largely by Saudi Arabia and Russia may not be enough to offset continuing declines in production from the likes of Iran, Libya and Venezuela.

The administration did soften earlier demands that China and India end all imports of oil from Iran, but Trump has sought to line up support against Tehran as it gets set to re-impose sanctions on its energy sector in November.

If the U.S. is successful in cutting Iranian production from its current 2m b/d in exports, that only cuts into any production increases from the likes of the Saudis and Russia.

And fighting in Libya, which has suspended crude loadings at two major oil terminals, threatens that nation’s supply of around 850,000 barrels a day, nearly all of its recent output (an est. 80%).  Before the 2011 uprising, Libya was producing 1.6m b/d.

--U.S. auto sales increased by 1.9% in the first half of the year, with June up about 5%, according to analysts.

General Motors Co., reporting for the first time since it announced it would only report sales on a quarterly basis, rather than monthly, said year-to-date its sales were up 4.2%. Both Toyota and Fiat Chrysler reported gains for the first six months, while Ford and Honda were relatively flat.  Nissan reported a nearly 5% decrease in sales for the first half.

So far it looks like U.S. sales for 2018 will once again top the 17 million level.  Sales peaked in 2015-16 at 17.5m and a record 17.6m, respectively, before dipping slightly to 17.2m last year.

The average new vehicle transaction price is expected to reach $32,221 for the first half, a record, according to J.D. Power.

Meanwhile, Toyota said this week the sticker price on its Camry sedan, built in Kentucky with a base price of about $23,600, could go up in cost by $1,800 if tariffs on auto imports are enacted because it is made with about 30% foreign parts.

But others, such as Nissan, say that consumer confidence outweighs tariff talk and that they look for a strong second half.

Ford is also confident, saying it builds more in the U.S. than the others, which provides it with a level of protection.

But if 25% tariffs do become the norm, sales in the U.S. will decline, no doubt, and perhaps substantially.

Back to June, Ford reported a 1% increase for the month, while Fiat Chrysler’s rose 8%.

Toyota’s increased 3.6%, Honda’s rose 4.8%, and Nissan’s were up 1.2%.

GM, again, reported for the quarter, up 4.6% from April through June.

--Then there is Tesla...the company reporting it met its 5,000 target for the Model 3 in the final week of the second quarter: 5,031, as well as 1,913 Model S sedans and Model X sport-utility vehicles.  The electric-vehicle maker had previously missed the 5,000-a-week target for its first mass-market offering twice, but the announcement that 5,000 had been achieved was met with skepticism and questions on whether CEO Elon Musk could actually execute on the company’s plans.  Musk wrote employees in an email on Sunday, “I think we just became a real car company.”

About a fifth of the 5,000 in the final week rolled off a general assembly line hastily put together under a giant tent outside of the Fremont, Calif., factory.

The company now aims to increase its Model 3 output to 6,000 vehicles a week by late August, now that the 5,000 target has been reached.

Tesla also reaffirmed that it expects to have positive cash flow and post a profit in the third and fourth quarters.

And the company said it has about 420,000 net reservations for the Model 3.

But on the week, the stock fell from $343 at last Friday’s close to $309 today, well off its high of $389.60.

Charley Grant / Wall Street Journal

“Tesla produced about 28,500 Model 3s in the quarter, meaning nearly 18% were produced in the final frenzied week, only slightly lower than the last week of the previous two quarters.

“The average for the quarter was about 2,200 cars per week. That means Tesla built on the gains made in the last week of the first quarter, when it produced 2,020 Model 3s.  But the company said that nearly 40% of the total Model 3s produced in the most recent quarter have not yet been delivered to customers, a larger percentage than in previous quarters.

“Tesla’s sustainable production rate isn’t the only topic investors ought to scrutinize. After all, the point of mass-producing Model 3s is to make a profit. Tesla added a new assembly line and worked around the clock to achieve its production goal, which can’t be good for profit margins. Investors won’t get a clear look at how the production scramble affected finances until Tesla reports financial results later this summer.

“Perhaps most importantly, higher production figures will test how deep the pool of demand for Tesla’s cars really is. The company said Monday it has 420,000 Model 3 reservations. At last week’s production rate, that implies a backlog of about 18 months. But Tesla’s website says a Model 3 reservation placed today will be filled in approximately six to nine months. A  month ago, the website said orders would be filled in up to 12 months....

“It will take much more good news to justify Tesla’s stratospheric valuation.”

--Soybean prices fell to the lowest point in almost a decade on Monday, amid looming Chinese tariffs that threaten to kill off demand from the U.S.’s largest customer.  The market tumbled 15% in June as the crucial cash crop got caught up in the dispute between Washington and Beijing.

As I noted before, U.S. farmers planted more soybean acreage than corn for just the second time ever, the vast majority of the planting taking place before the disputes emerged.  And a reminder...China accounts for around a third of all U.S.-grown crop.

“Researchers at the University of Illinois and Ohio State University estimate that China tariffs of 25% on U.S. soybean imports would cut income for a midsize Illinois grain farm by an average of 87% over four years, prompting a loss of more than $500,000 in the farm’s net worth by 2021.”  [Benjamin Parkin / Wall Street Journal]

--Facebook faces another investigation. The federal probe into the tech giant’s sharing of data with political consultancy Cambridge Analytica has broadened to focus on the actions and statements of Facebook and now involves multiple agencies, including the SEC, according to various reports this week.

The Washington Post reported that representatives for the FBI, SEC and the Federal Trade Commission have joined the Justice Department in its inquiries about the two companies and the sharing of personal information of 71 million Americans.

Facebook discovered in 2015 that Cambridge obtained Facebook data to create voter profiles, yet Facebook didn’t disclose that information until March, when the story began to leak.

The new probes are focusing on why Facebook didn’t reveal back in 2015 to its users or investors, as well as any discrepancies in more recent accounts.

Specifically, CEO Mark Zuckerberg’s testimony before Congress is being scrutinized, Zuckerberg clearly being less than honest, in the opinion of your scribe.

Facebook acknowledged it is “cooperating with officials in the U.S., UK and beyond,” a company spokesman told the Post.

One former director of the FTC’s Bureau of Consumer Protection, David Vladeck, told the paper, “The fact that the Justice Department, the FBI, the SEC and the FTC are sitting down together does raise serious concerns....(and) all sorts of red flags.”

--Macau’s gaming revenues, a key indicator of the health of China’s economy, rose less than expected in June, 12.5% from a year earlier, with casino stocks with major operations there down 20% from their peak earlier in 2018.

Some, however, speculate that gamblers are choosing to wager on the World Cup, rather than card games.

But the decline in China’s stock market to bear-market levels is of more significance in looking at Macau’s take.

--120 companies have gone public on U.S. exchanges thus far in 2018, raising $35.2 billion, the highest volume since 2012 and the fourth-busiest year-to-date on record, according to Dealogic, whose data goes back to 1995.

There is no single catalyst, rather it’s a convergence of favorable business conditions, strong stock markets and investors’ hunger for high-growth companies.

Bankers expect the rapid IPO pace to continue the rest of the year.  And  in 2019, it’s expected that Airbnb Inc., Uber, and WeWork Cos., will go public...at least as of today, though they could all hold off until 2020.

--Meanwhile, Dell Inc. announced a deal that would once again make the PC and data-storage giant a public company.  Dell is acquiring via a share swap the DVMT tracking stock, which tracks its fast-growing VMware Inc. virtualization-software unit.

The expected move helps simplify Dell’s complicated ownership structure. The tracking stock, DVMT being the formal name, was created as a way to help finance Dell’s purchase of storage pioneer EMC in 2016, a deal that was largely in cash, but the remainder was paid via a new security linked to EMC’s interest in the VMware business.

Dell went private in a roughly $25 billion leveraged buyout in 2013 by its founder, Michael Dell, and investment firm Silver Lake.

But after closing on its $67 billion deal for EMC, the largest technology takeover ever, Dell became one of the world’s largest privately controlled tech companies, with over 140,000 people globally and $74 billion in revenue.

Once the largest producer of personal computers, Dell is now better known for corporate products such as storage, servers and security software.  It has also wagered big money on the “Internet of Things,” as it seeks new avenues for growth, with the corporate shift to the cloud.

--Manhattan home sales cratered 17% in the second quarter over a year ago, the third straight quarter of decreases, according to a report from Douglas Elliman Real Estate.

But, as the report notes: “Sales are down from last year, but last year was a banner year.”

That said, the number of sales in the second quarter was the lowest for Q2 in nine years.

--The co-chairman of HNA Group, a conglomerate that operates China’s fourth-largest airline and finance, logistics and other businesses around the world, died in a tragic accident while on a business trip in France.

Wang Jian, a co-founder of the company, fell after climbing on a wall for a photo-op, at a cliffside church in Provence.

HNA, launched in 1993 on the southern island of Hainan, expanded into finance, hotels and other businesses in a multibillion-dollar global acquisition spree, though the company has been selling some assets recently as the Chinese government tightens lending controls and presses companies to rein in debt.

Last year, HNA agreed to acquire a hedge fund operated by Anthony Scaramucci, but it never gained regulatory approval and the two sides called if off in April.

--Ryanair pilots are threatening to go on strike next week, in a row over who gets first call on workplace perks.

Pilots want the length of their time in the job to decide who gets first call on entitlements like annual leave during school holidays, promotions and transfers between bases.

Cabin crew from across Europe are threatening a “summer of industrial action” for “fair” pay and conditions.

According to the International Transport Workers Federation (ITF), “Conditions at Ryanair have been heavily criticized over the last few years, with the range of issues highlighted including poverty pay, draconian disciplinary procedures, unachievable sales targets and staff having to pay for items that most decent employers provide,” it said.

If you’re traveling in Europe this summer, look out.  Ryanair isn’t the only airline that could be hit with major job actions.

--Sears Holdings announced ten more Sears and Kmart stores will be closing in September, bringing the total to 78 that month  - 62 Sears and 16 Kmart locations.  Back in May, Sears had said it identified 100 underperforming stores – meaning they could be on the chopping block.

Sears and Kmart have now closed more than 500 stores over 15 months through the end of its fiscal quarter on May 5.  At the time, it had about 900 left.

--David Einhorn’s main hedge fund at Greenlight Capital fell 7.7 percent in June, bringing the first half loss to almost 19 percent, according to client updates viewed by Bloomberg.  Over the same period of time, the S&P 500 was up 2.6 percent this year on a total return basis.  The HFRX Global Hedge Fund Index, an indicator of industry performance, declined about 1 percent in the period.

Ergo, Einhorn has sucked and his investors are furious.  His outfit has produced lousy results for years now, down 28 percent since the end of 2014, one of the worst showings among his peers. 

At $5.5 billion, Einhorn’s assets were less than half of where they were at their peak, with investors pulling out almost $3 billion in the last two years.

--As a loyal CNBC viewer, I never watch Fox Business Network, so I was surprised to see in Forbes that FBN swept the ratings race in the second quarter, according to data released Tuesday by Nielsen.  Fox Business has now beaten CNBC for seven consecutive quarters, and for the first time, Maria Bartiromo’s Mornings With Maria beat CNBC’s marquee morning show, Squawk Box.

Bartiromo led CNBC 109,000 to 104,000 among total viewers in Q2, as CNBC reached a four-year low in both total day and prime-time ratings.

Business Day, 9:30 a.m. to 5 p.m., Monday thru Friday, saw FBN beat CNBC by 203,000 total viewers to the latter’s 165,000.

But, CNBC remains ahead of Fox Business in the key 25-54 demographic. 

It just hit me I’ve been out of the key demographic for years. Talk about a sign the end is near....

I mean once you’re totally irrelevant to advertisers, what do you do?  It’s kind of like my Mets these days, also irrelevant.

--Meanwhile, speaking of dinosaurs, “Jurassic World: Fallen Kingdom,” took in an additional $60 million last weekend, its second in North American theaters, bringing its domestic total to $264.78 million.  But world-wide, the film has grossed $932.4 million.

Foreign Affairs

Iran: After Trump’s tweet last Saturday on oil, and his threats to further reduce Iranian oil production through the re-imposition of sanctions, Supreme Leader Ayatollah Ali Khamenei accused Washington of trying to turn Iranians against their government.

“They bring to bear economic pressure to separate the nation from the system...but six U.S. presidents before him tried this and had to give up,” Khamenei was quoted as saying on his website, referring to Trump.

Wednesday, President Hassan Rouhani told the UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA), that Iran could reduce its cooperation with the body, after he warned President Trump of “consequences” of fresh sanctions against Iranian oil sales.

“Iran’s nuclear activities have always been for peaceful purposes, but it is Iran that would decide on its level of cooperation with the IAEA,” Iranian state news agency IRNA quoted Rouhani as saying after meeting with IAEA head Yukiya Amano in Vienna.

“The responsibility for the change of Iran’s cooperation level with the IAEA falls on those who have created this new situation,” he added.

Earlier, Rouhani said: “The Americans say they want to reduce Iranian oil exports to zero...It shows they have not thought about its consequences.”

What could Iran do?  An Iranian Revolutionary Guards commander said on Wednesday, “If they want to stop Iranian oil exports, we will not allow any oil shipments to pass through the Strait of Hormuz,” Ismail Kowsari was quoted as saying.

Major-General Qassem Soleimani, commander of the Quds force, in charge of foreign operations for the Revolutionary Guards, said in a letter published on IRNA: “I kiss your (Rouhani’s) hand for expressing such wise and timely comments, and I am at your service to implement any policy that serves the Islamic Republic.”

Meanwhile, while protests continue in Iranian cities and towns over the economy, in a recent piece by Thomas Erdbrink of the New York Times, there was a quote from a spokesman for a moderate political group in the country, Mirzababa Motaharinezhad, representing Mardomsalary.

“A good economic and political process was underway in Iran.  Unfortunately, after Trump pulled out from the (nuke) deal openness ended here and a crackdown on activists resumed.”

Editorial / Wall Street Journal

“Iranians are protesting in the streets again, only a few months after the regime crushed nationwide demonstrations over the country’s sagging economy and widespread corruption. The periodic eruptions are a sign of discontent that may spread as the pressure from renewed U.S. sanctions increases.

“The latest upheavals centered in the southwestern city of Khorramshahr over the weekend, after brown fluid started running out of taps.  Hundreds of residents gathered in a public space reserved for Friday prayers and blamed local officials for the lack of potable water, chanting such anti-government slogans as ‘in the name of religion, they plundered us.’  Protests also broke out in nearby Abadan.

“The weekend demonstrations are part of a larger pattern of discontent with the ruling theocracy in Tehran. In December and January, demonstrations erupted in more than 100 cities and towns over inflation, joblessness and graft. Women staged hijab protests, ripping off their veils. In March farmers from Isfahan province in central Iran protested long droughts. In May truckers went on a nationwide strike to protest stagnant wages and rising costs.

“Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani promised that the 2015 nuclear deal, which funneled tens of billions in hard currency to Iran, would usher in better economic times. Instead, the regime used the money to finance its Quds Force operations and Shiite militias in Syria, Iraq, Yemen and Hezbollah in Lebanon.

“President Trump’s May decision to exit the nuclear deal and reimpose financial sanctions is already increasing pressure on the regime. Protesters swarmed Tehran’s Grand Bazaar last month after the local currency, the rial, slumped to 90,000 to the dollar in the black market. The rial has fallen roughly by half since the end of 2017, as traders and banks anticipate a harder time getting dollars. Economist Steve Hanke estimates annual inflation has spiked to 126%.

“In August the U.S. Treasury plans to reimpose sanctions on gold and other precious metals, U.S. dollar dealing, trade in Iranian sovereign debt, and autos. In November U.S. sanctions will kick in on ports, shipbuilding, petroleum, energy, insurance, and more. A State Department official suggested last month that the U.S. wants to halt all Iranian oil exports, but on Monday policy planning director Brian Hook said it will consider waivers for countries on  a case-by-case basis.

“Mr. Rouhani responded Tuesday by threatening to disrupt oil shipments from neighboring countries in the Middle East, but that would court U.S. intervention to keep oil flowing through the Strait of Hormuz. The U.S. doesn’t want an oil-price spike with a barrel already selling for nearly $75. But the risks are far greater for Iran if it doesn’t change its marauding behavior because its political control at home is far from certain.”

Nawaf E. Obaid / Wall Street Journal...Mr. Obaid a visiting fellow at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government...

“Mass protests are nothing new in Iran. But nearly 40 years into the failed experiment of the Islamic Republic, an end may be near.

“Iran’s economy is in shambles and its public finances are teetering. Given that about 60% of Tehran’s budget comes from petroleum exports, the best way for the U.S. to hasten regime change is to tighten sanctions while closely coordinating with regional allies to increase global oil supplies and lower prices.   The State Department’s recent announcement that countries will face stringent sanctions if they don’t halt Iranian oil imports by Nov. 4 is a crucial first step. Tehran’s mullahs cannot survive a sustained oil price of $60 a barrel with practically no export revenue....

“Three main factors are pushing Iran to the financial breaking point: public-debt obligations on the brink of default, President Hassan Rouhani’s massive subsidies to politically powerful farming communities, and the mounting costs of its attempts to foment chaos throughout the Arab world.

“For the U.S., sustaining a policy of economic pressure will require unprecedented cooperation.  There are three preconditions for success, one of which is already being met.

“First, Saudi Arabia and Russia – the world’s top two oil exporters – have reached an agremenet to increase output....

“Second, as Iran suffers from its lack of indigenous capital and technology to increase sustained oil production and exports, Saudi Arabia and its allies, especially the United Arab Emirates, should join the U.S. in instituting sanctions against the few international oil companies that will still be willing to invest in Iran’s upstream industry.

“Third, because Iran lacks access to foreign financial markets and U.S. banks are banned from doing business there, its remaining hope is European, and to a lesser extent Asian, banks. The Treasury should send a clear message to foreign financial institutions, including those based in Dubai, that they’ll lose access to U.S. capital markets if they float new credit to Tehran in any form after Nov. 4.

“If President Trump, Saudi Arabia’s King Salman and their allies wish to end the widespread terror caused by this so-called Islamic Republic, they should commit to using oil as a nonlethal weapon.”

*A meeting between ministers from Britain, China, France, Germany and Russia, and their Iranian counterpart in Vienna today, the first time since President Trump left the accord in May that the other parties to the agreement got together, did not go well.  Time doesn’t permit me to expound further.

Syria: Dennis Ross / Washington Post...excellent review of the action.

“Doing the same thing over and over again and expecting a different result may not meet the clinical definition of insanity, but it’s still a pretty good standard. It also happens to define both President Barack Obama’s and President Trump’s approaches to working with Russia on the Syrian civil war. Washington and Moscow have repeatedly issued joint statements outlining principles for addressing the conflict and reducing its horrific humanitarian consequences. Yet over and over again, the Russians have betrayed their commitments.

“Consider the record.  In November 2015, Secretary of State John F. Kerry and Russian Foreign Minister Sergei Lavrov reached an agreement on the Vienna principles. They called for a cessation of hostilities; lifting the sieges on all cities; the unimpeded provision of food, medicine and other humanitarian materials; the drafting of a constitution in six months; and a political transition process of 18 months.  In December 2015, these principles were enshrined in UN Security Council Resolution 2254.  Syrian President Bashar al-Assad’s regime blatantly violated all of the terms: It lifted no sieges and did not allow humanitarian relief to pass unimpeded.

“The Russians, too, did nothing.  Although Assad and the Russians did finally implement a cease-fire two months later, it collapsed by April 2016 as the Assad regime resumed its onslaught against civilian targets, with a special emphasis on hospitals. Much as in his use of chemical weapons, Assad hit hospitals to show that he would respect no limits.  Kerry was reduced to condemning Assad’s attacks while plaintively appealing to Moscow to act on the responsibility enshrined in the December 2015 resolution. ‘We all signed the same agreement and we all supported the same UN Security Council Resolution 2254, which calls for a nationwide cessation of hostilities,’ he said, adding that ‘it calls for a nationwide, full delivery of humanitarian assistance within all of Syria.’

“Clear words, but no consequences.  Not surprisingly, Kerry’s calls were in vain. By the fall of 2016 he tried again, reaching an agreement on a joint operations center with the Russians in the hopes of reducing the violence and making a political process possible.  Once again he was frustrated, declaring that he had ‘profound doubt about whether Russia and the Assad regime can or will live up to the obligations that they agreed to in Geneva.’  The Russian response was to launch a scorched-earth attack on Aleppo, which reduced the eastern half of the city – then Syria’s largest – to rubble. That ended Kerry’s efforts.

“Trump has made his own attempts to get somewhere with the Russians.  On the margins of the Group of 20 summit in Germany in July 2017, he and Putin finalized a cease-fire agreement for southwestern Syria. Trump met again with Putin in November at the Asia-Pacific Economic Cooperation Summit in Vietnam, where they issued another joint statement on Syria. It emphasized the ‘importance of de-escalation areas as an interim step to reduce violence in Syria, enforce cease-fire agreements, facilitate unhindered humanitarian access, and set the conditions for the ultimate political solution to the conflict’ on the basis of UN Security Council Resolution 2254.

“So how did the Russians act after that? Along with the Assad regime and the Iranians, they waged military campaigns that decimated and depopulated three of the four de-escalation areas.  The fourth, the one Trump and Putin had agreed to in southwestern Syria, remained quiet – effectively freeing the Assad regime, with its Russian backers, to attack elsewhere.

“Lately Assad and the Russians have turned their attention to southwestern Syria, bombing relentlessly.  On June 21, the State Department issued a blunt statement warning to the Assad regime and the Russian government about ‘serious repercussions of these violations.’  The Russians intensified their bombing, creating a new refugee flow with more than 270,000 people fleeing to the Jordanian and Israeli borders. Did Moscow face any ‘serious repercussions’? No – only Trump’s pursuit of a summit with Putin.”

So what should Trump do when he meets with Putin in Helsinki? Dennis Ross:

“He should make a virtue of necessity and convey the following points: that the United States will maintain our small presence in Syria until the Islamic State is gone; that unless Iran’s continuing entrenchment in Syria is contained, it will trigger a wider war between Israel and the Iranians; and that we will back the Israelis completely, making it in Putin’s interest to stop the expansion of the Iranians and their proxies in Syria and prevent a major regional escalation....

“Trump could also ask Putin to be his channel to the Iranians.  Apart from limiting the potential for miscalculation with Tehran, it could give Putin a stake in coordinating with us on Iran. With the United States having already conceded Syria to Russia, history tells us we are unlikely to achieve more.”

The past few days on the ground, President Assad’s Russian allies unleashed heavy air strikes  and government forces sought to advance on the ground in southwestern Syria, near Jordan, and the UN’s refugee agency urged Jordan to open its borders to Syrians who have fled the fighting, with the number displaced at more than 320,000...60,000 gathered at the border with Jordan, facing potential slaughter.  Just a week ago, I said the number displaced was 40,000.

The Syrian Observatory for Human Rights said there had been 600 air strikes in 15 hours, Wednesday-Thursday.  Barrel bombs are being employed.

The two-week-old attack has taken a chunk of rebel territory northeast of Deraa city, where some rebels surrendered. Hezbollah is helping lead the offensive but keeping a low profile, pro-Damascus sources told Reuters, defying Israel’s demands that Iran-backed forces stay away.

The Observatory said 150 civilians had been killed.

Assad now has his sights on capturing the frontier with the Golan Heights, reestablishing his status as a frontline leader in the conflict with Israel, the Israelis sending reinforcements to Golan.

Meanwhile, as alluded to above, Washington has done nothing as Assad and Russia violate the deal that set up a “de-escalation zone” in the southwest.

For the anti-Assad rebels, losing the region reduces them to an area in the northwest of the country bordering Turkey and a patch of desert in the east where U.S. forces are stationed near the border with Iraq and Jordan.

North Korea: Secretary of State Mike Pompeo is currently in Pyongyang to press North Korean officials on their plans to denuclearize.  Appearing last Sunday on CBS’ “Face the Nation,” National Security Adviser John Bolton said the U.S. has a plan to rid North Korea of its nuclear weapons within a year if the regime abides by the agreement Kim Jong Un signed with President Trump in Singapore.

“I’m sure that the secretary of state will be discussing this with the North Koreans...about, really, how to dismantle all of their WMD and ballistic-missile programs in a year.”

But Bolton wouldn’t discuss a report that said U.S. intelligence is aware Pyongyang is trying to hide its missile numbers, yet he said that if Kim is willing, denuclearization could happen quickly.

Well there isn’t a single expert who believes the process could take place over a year...it’s multiple years, up to ten or more.

And as for the reports, from Jonathan Cheng / Wall Street Journal:

“North Korea is completing a major expansion of a key missile-manufacturing plant, said researchers who have examined new satellite imagery of the site, the latest sign Pyongyang is pushing ahead with weapons programs even as the U.S. pressures it to abandon them.

“The facility makes solid-fuel ballistic missiles – which would be able to strike U.S. military installations in Asia with a nuclear weapon with little warning – as well as re-entry vehicles for warheads that Pyongyang might use on longer-range missiles able to hit the continental U.S.

“New images analyzed by the Middlebury Institute of International Studies at Monterey, Calif., show that North Korea was finishing construction on the exterior of the plant at around the time North Korean leader Kim Jong Un met with U.S. President Donald Trump in Singapore last month. The U.S. is pushing Pyongyang to dismantle its nuclear, chemical, biological and ballistic-missile programs.

“Last week, 38 North, another organization that monitors North Korea, published satellite images of the country’s main nuclear-research center in Yongbyon, showing that Pyongyang was rapidly upgrading its facilities there.

“At the Singapore summit, Mr. Kim pledged to ‘work toward complete denuclearization of the Korean Peninsula,’ without specifying a timeline or committing Mr. Kim to any immediate actions on his weapons programs. However, Mr. Trump told reporters afterward that North Korea would ‘start that process right away.’  A day later he tweeted: ‘There is no longer a Nuclear Threat from North Korea.’”

Editorial / Wall Street Journal

“Part of the problem is that Mr. Trump didn’t get Kim to commit to a timeline for denuclearization, and Mr. Pompeo says the U.S. will not press for one. The President also failed to get the North to commit to giving the U.S. a complete list of its nuclear facilities. The U.S. could then check the list against intelligence to see if the North is being honest.  Kim may now be exploiting these missed opportunities. Kim promised to dismantle a missile-testing facility at Sohae, but there’s no evidence he is doing so.

“Even if there were a timeline for denuclearization, North Korea might not follow it for long. Kim’s father and grandfather reneged on every denuclearization deal they signed.  But at least the U.S. could use missed deadlines to make a case for new sanctions at the United Nations Security Council.

“The Administration’s best chance of convincing Kim to give up his nukes was the ‘maximum pressure’ sanctions campaign. But China loosened its enforcement after the summit, allowing smugglers to move goods across the border, as Mr. Trump has acknowledged.  The North will exploit loopholes in the existing sanctions to earn more hard currency from slave labor.

“The continuing nuclear-fuel production suggests the North will follow its traditional pattern of dragging out open-ended talks for as long as possible and extracting new U.S. concessions at every step along the way.

“The activity at Yongbyon shows that Kim has pocketed the carrot of a presidential summit without taking steps to denuclearize.  If Mr. Trump doesn’t call him on it, Kim will conclude he can keep getting away with it.”

George F. Will / Washington Post

“As the president prepares, if this time he does prepare, for his second summit, note all that went wrong at the first.  If he does as badly in his July 16 meeting with Vladimir Putin in Finland as he did with Kim Jong Un in Singapore, the consequences could be catastrophic.

“An exceptionally knowledgeable student of North Korea, the American Enterprise Institute’s Nicholas Eberstadt, writing in National Review (‘Kim Wins in Singapore’), says the one-day meeting was for the United States ‘a World Series of unforced errors.’ The result was that North Korea ‘walked away with a joint communique that read almost as if it had been drafted by the DPRK (Democratic People’s Republic of Korea) ministry of foreign affairs.’

“Kim, says Eberstadt, is ‘the boss of a state-run crime cartel that a U.N. Commission of Inquiry wants to charge with crimes against humanity.’ Au contraire, said America’s president, who slathered Kim with praise: Kim, with whom Trump has ‘a very special bond,’ is a ‘talented man’ who ‘loves his country,’ which reciprocates with ‘a great fervor.’ Trump called Kim a ‘very worthy negotiator,’ which might actually have made sense if Kim had been forced to negotiate for the concessions that Trump dispensed gratis.

“North Korea, Eberstadt says, is committed to what he calls its ‘racial socialism,’ which motivates Kim’s ‘central and sacred mission, which is ‘nonnegotiable’ – the unconditional reunification of the Korean Peninsula. This presupposes extermination of the South Korean state, which requires the policy Kim announced last New Year’s Day – to ‘mass-produce nuclear warheads and missiles and speed up their deployment.’

“Eberstadt: ‘Such a program would not be necessary for regime legitimation, or for international military extortion, or even to ensure the regime’s survival: All of those objectives could surely be satisfied with a limited nuclear force. Why then threaten the U.S. homeland?’  America is the guarantor of South Korea’s security, and if Washington can be made to blink at a time and place of Pyongyang’s choosing, the U.S.-South Korea alliance will end, as will the U.S. security presence there. Hence the delusional nature of Trump’s belief: One one-day meeting sufficed to cause the North Korean regime to abandon its raison d’etre.

“In addition to the legitimation supplied to Pyongyang by the pageantry of the summit for which Trump obviously hungered, the official record of the Singapore deliberations reveals no U.S. interest in Pyongyang’s atrocious human rights practices (‘unparalleled in the modern world,’ Eberstadt says) that raise doubts about the fervor with which North Koreans appreciate the supreme leader’s love for them.  In return for Trump’s promise to halt military-readiness operations, Kim gave nothing – no inventory of his commitment to ‘denuclearization’ of the Korean Peninsula, an opaque goal that means only that Pyongyang is not clearly committed to anything – beyond a pre-summit promise to decommission a no-longer-useable nuclear test site.  The New Year’s Day  vow has not been disavowed.

“Singapore was, Eberstadt believes, probably the greatest diplomatic coup for North Korea since 1950 and a milestone on ‘the DPRK’s road to establishing itself as a permanent nuclear power.’  And the sanctions that were the Trump administration’s strategy of ‘maximum pressure’ will be difficult to maintain now that a ‘defanged’ – Eberstadt’s description – Trump has declared the nuclear threat banished....

“Meanwhile, this innocent abroad is strutting toward a meeting with the cold-eyed Russian who is continuing to dismantle one of Europe’s largest nations, Ukraine. He is probably looking ahead to ratcheting up pressure on one of three small nations, Lithuania, Latvia or Estonia, each a member of the NATO alliance that, for the first time in its 69 years, is dealing with a U.S. president who evinces no admiration for what it has accomplished or any understanding of its revived importance as the hard man in Moscow, who can sniff softness, relishes what Singapore revealed.”

Russia: U.K. Home secretary Sajid Javid told parliament on Thursday that Britain is being used as a “dumping ground for poison” by the Russian state, as he demanded to know how two British citizens became critically ill through exposure to the same deadly nerve agent, Novichok, that was used to target former Russian double agent Sergei Skripal and his daughter, Yulia.

Javid said it was time for Russian President Vladimir Putin’s government to explain “exactly what has gone on” after a couple in their 40s, Charlie Rowley and Dawn Sturgess, became seriously ill, about eight miles north of the city of Salisbury where the Skripals were found slumped on a bench.

Prime Minister Theresa May described the development as “deeply disturbing.”

It is believed Rowley and Sturgess handled a “contaminated item” that could have been used to carry the deadly never agent and had not been discarded properly, authorities said.

The U.K.’s chief medical officer said that while the risk to the wider public was low, she warned against picking up any unknown dangerous objects such as needles or syringes.

Russia strenuously denied any involvement, but Mrs. May told Parliament that it was “highly likely” that Moscow was behind the attack.  The prime minister issued an ultimatum to Putin’s government to offer an explanation.

Russia is under the spotlight due to the World Cup, and the upcoming summit with President Trump on July 16.  And of course the NATO summit beforehand.

On Thursday, the European Union announced it had extended its economic sanctions against Russia for another six months, saying Moscow had not fulfilled its obligations in the peace process in eastern Ukraine.

For his part, Trump said he plans to raise the issue of Russia’s “malign activity” in Europe, its efforts to meddle in the 2016 U.S. election, and allegations that Moscow possesses banned missile technology in the one-on-one meeting with Putin.

Mexico: Leftist Andres Manuel Lopez Obrador rode a wave of populist anger fueled by rampant corruption and violence to victory in the country’s presidential election on Sunday, a landslide that upended Mexico’s political establishment and handed him a sweeping mandate to reshape the country.

Known in his country as “AMLO,” the win puts a leftist leader at the helm of Latin America’s second-largest economy for the first time in decades.

With his coalition partners, Lopez Obrador will hold a majority in Congress, potentially giving him more power to enact his policies.

The core promises of AMLO’s campaign – to end corruption, reduce violence and address Mexico’s endemic poverty – were immediately popular with voters, but now the people will want to see results.

AMLO, who doesn’t take office until December, said in his victory speech: “I call on all Mexicans to reconciliation, and to put above their personal interests, however legitimate, the greater interest, the general interest. The state will cease to be a committee at the service of a minority and will represent all Mexicans, rich and poor, those who live in the country and in the city, migrants, believers and nonbelievers, to people of all philosophies and sexual preferences.”

As for U.S.-Mexico relations, President Trump extended an olive branch in a congratulatory tweet on Sunday night:

“Congratulations to Andres Manuel Lopez Obrador on becoming the next President of Mexico.  I look very much forward to working with him.  There is much to be done that will benefit both the United States and Mexico!”

Lopez Obrador embraced a “Mexico first” stance against Trump during the campaign, and went so far as to call him a racist “neo-fascist.” AMLO blasted the proposed border wall and repeatedly promised that if it does get built, Mexico won’t be paying for it.

Random Musings

--Presidential tracking polls...

Gallup: [July 1] 42% job approval for Trump, 53% disapproval
Rasmussen: [July 6] 47% approval, 52% disapproval

--In a Quinnipiac University poll released Monday, 63% of voters agree with the landmark Supreme Court decision on Roe v. Wade, while 31% disagree. 65% of women agree with the decision, 61% of men.

Republicans, though, disagree by a 58-36 margin.

All other listed parties, education, age and racial groups agree with the decision, including 84% of Democrats, 71% of African Americans, and white voters with a college degree 70%.

--Democrats truly are idiots if they think the ‘abolish ICE’ campaign that whipped up their extreme element is a winner come November.  It’s beyond stupid, and establishment Democrats such as Senate Minority Leader Charles Schumer (N.Y.) certainly know that.

Editorial / USA TODAY

“With President Donald Trump and the Republican Party so thoroughly abandoning the political mainstream, Democrats have an opportunity to position themselves as the ascendant party for years to come.

“But that assumes they don’t commit their usual blunders, which they appear to be doing right now on immigration with an ‘Abolish ICE’ campaign. That campaign, pushed by young activists and adopted by several party leaders, is a non-starter.

“While Trump’s immigration policies are hugely unpopular, abolishing the Immigration and Customs Enforcement agency is not a message the mainstream will buy. In fact, it plays right into Trump’s tweeting hands, allowing him to change the subject from the inhumane treatment of immigrants to Democrats’ perceived weakness on border security.

“The campaign is a classic liberal overreach, following the argument that the Democratic Party should push further to the left to counter the rightward turn of Republicans. That ignores political reality. Liberals, while growing, are still a considerably smaller part of the electorate than conservatives.

“In the 2016 election, for instance, 35% of voters identified themselves as conservative while only 26% said they were liberal.  The largest group – 39% called themselves moderates.  Forming a liberal-moderate alliance is a necessity for Democrats.

“To that end, they could advance sensible immigration policies that are more humane than Trump’s, reflect the values of a great nation, and continue the works of former Presidents Ronald Reagan and George W. Bush.

“But such policies should also strive to keep the flow of illegal immigration at manageable levels. This requires border enforcement and an acknowledgement that the law much have meaning.”

--Marc A. Thiessen / Washington Post

“Democrats have a new theory for how they can win back Congress and the White House. Just like ‘soccer moms’ helped put Bill Clinton in the Oval Office in 1996, and ‘NASCAR dads’ helped George W. Bush win in 2004, Donald Trump, the theory goes, was elected because of ‘#NeverHillary’ voters who didn’t particularly like him but despised her.  Axios reports that Democrats are targeting the ‘20% of Trump’s voters [who] told exit pollsters they didn’t like him’ hoping these reluctant Trump voters will help power a ‘blue wave’ in the 2018 midterms and defeat President Trump in 2020.

“One problem with that theory: The left’s nonstop, over-the-top attacks on Trump are not peeling those voters away from him; they are pushing them further into the president’s camp.

“In recent weeks, Trump derangement syndrome on the left has reached critical mass. First, there was Robert De Niro’s ‘f--- Trump’ tirade at the Tony awards, followed by Samantha Bee’s calling Ivanka Trump a ‘feckless c---‘ on her TV show. Then the owners of the Red Hen restaurant threw out White House press secretary Sarah Huckabee Sanders because she works for the president, while chanting protesters heckled Secretary of Homeland Security Kirstjen Nielsen at a Mexican restaurant. Rep. Maxine Waters (D-Calif.) added fuel to the fire by openly calling on mobs of left-wing activists to ‘absolutely harass’ Trump officials. Then, there were the countless Trump opponents in the media, Congress and on Twitter who compared family separations at the southern border with Nazi Germany, and the TIME magazine cover depicting Trump staring down heartlessly at a crying migrant girl and implying she was separated from her mother (until it emerged that she had not in fact been separated from her mother).  And now come the threats to block Trump’s Supreme Court nominee before he has even nominated one.

“How do liberals think that 20 percent of reluctant Trump voters respond to these displays of unbridled contempt? They are outraged not at Trump but at his critics. The unhinged hatred for the president makes these voters almost reflexively defend him.  Don’t take my word for it. The New York Times recently interviewed dozens of tepid Trump voters who explained how the incessant attacks are causing them to rally around the president.  ‘Gina Anders knows the feeling well by now,’ the Times reports.  ‘President Trump says or does something that triggers a spasm of outrage. She doesn’t necessarily agree with how he handled the situation. She gets why people are upset.’ But Anders, who the Times says has ‘not a stitch of ‘Make America Great Again’ gear in her wardrobe, is moved to defend him anyway.’ When she hears the ‘overblown’ attacks on Trump, she says, ‘It makes me angry at them, which causes me to want to defend him to them more.’ Another reluctant Trump voter, Tony Schrantz, agrees. ‘He’s not a perfect guy; he does some stupid stuff,’ he tells the Times.  ‘But when they’re hounding him all the time it just gets old.’

“These are exactly the voters Democrats are hoping to win back.  Instead, they are doing the opposite....

“The left’s miasma of contempt may feel cathartic, but it is the best thing that ever happened to Trump. Indeed, it may very well get him reelected.”

--The controversy over how much Ohio Republican lawmaker, Rep. Jim Jordan, may have known about an Ohio State University former team doctor and alleged sexual abuse on athletes has come to the fore after former Ohio State wrestler Mike DiSabato and four other wrestlers spoke to NBC News and the Wall Street Journal to publicize Dr. Strauss’ conduct.  DiSabato and the others, though, have only recently begun to criticize Jordan, who was an assistant wrestling coach at the school at the time, for ignoring athletes’ concerns despite allegedly knowing that Strauss was molesting student-athletes.

“These are serious allegations and issues. The university has rightfully initiated a full investigation into the matter. The speaker will await the findings of that inquiry,” Doug Andres, a spokesman for House Speaker Paul Ryan (R-Wis.) said in a statement.

President Trump told reporters Thursday he didn’t believe the allegations against Mr. Jordan. “I believe Jim Jordan 100 percent. He’s an outstanding man.”

Chris Davey, a spokesman for the university said in an email Thursday: “We are aware of reports that individuals at the university did not respond appropriately during Richard Strauss’ time at Ohio State from 1978 to 1998. These allegations are troubling and are a critical focus of the independent investigation that remains underway.”

Christine Brennan / USA TODAY

“While it comes as absolutely no surprise that Trump is standing by a political ally, it is reprehensible that he chose to say those words at this time in the midst of another of our nation’s college sex abuse scandals. Obviously, Trump has no idea if Jordan was told about the alleged molestation or not. The only people who know are the student-athletes, perhaps their friends and families, and Jordan and perhaps his friends and family.

“Nonetheless, the president took one look at the most serious of American college sports scandals and turned it into political theater. What a disservice this is to Ohio State’s investigation, and to the five men who had the courage to come forward with their allegations against not only Strauss, but also their former assistant coach who now happens to be one of the most powerful men in the nation.

“Now that you’ve heard from Trump, listen to two of the former wrestlers.

“Shawn Dailey, 43, told NBA News on Thursday that he was groped half a dozen times by Strauss in the mid-1990s.

“ ‘I participated with Jimmy (Jordan) and the other wrestlers in locker room talk about Strauss,’ Dailey said. ‘We all did. It was very common knowledge in the locker room that if you went to Dr. Strauss for anything, you would have to pull your pants down.’

“Dailey, who called Jordan ‘a close friend,’ said he is a Republican and contributed to Jordan’s first political campaign for state representative in 1994.

“ ‘What happened drove me out of the sport,’ Dailey said. ‘So I was surprised to hear Jim say that he knew nothing about it. Jimmy’s a good guy, but to say that he had no knowledge of it. I would say that’s kind of hurtful.’

“And Mark Coleman, another former Ohio State wrestler and a former UFC world champion, told The Wall Street Journal that Jordan was aware of the abuse and did not take action.

“ ‘There’s no way unless he’s got dementia or something that he’s got no recollection of what was going on at Ohio State,’ said Coleman, who said he was Jordan’s roommate on several competition trips.

“Jordan and those who support him in the political realm are already crying conspiracy, that it’s some kind of political plot. A storyline like that plays well with Trump, obviously.

“The stakes could not be higher for Jordan. He must know that everyone at Penn State, USA Gymnastics and Michigan State who failed to act, or looked away, and then lied about it, lost their jobs, their reputations, basically everything.

“That’s what Trump is worried about. But Trump can’t save Jordan.  After Penn State, and after USA Gymnastics and Michigan State, we can be certain of this:

“If Jordan is found to have known about the alleged sexual abuse at Ohio State and done nothing, he will not survive.”

--At the last minute, New Jersey lawmakers put the finishing touches on a $37.4 billion state budget deal last weekend.

The budget won’t raise the sales tax, as new Democratic Gov. Phil Murphy wanted, but will hit wealthy taxpayers with higher taxes on income above $5 million, which is expected to raise about $280 million in new revenue.

And it includes higher corporate taxes and closes loopholes that are expected to generate more than $800 million.

Assembly Minority Leader Jon Bramnick (a great guy who should be governor one day), said that July 1, 2018, “should be declared Phil Murphy tax and spend day” in New Jersey.

None of what the Democrats passed is helpful in terms of keeping the wealthy in my state.  Taxes are outrageously high here, and the likes of $billionaires David Tepper and Leon Cooperman have fled the state in terms of their official residence (for Florida), thus taking gobs of tax revenue with them.

And there is little reason for major corporations to consider moving here, though many of them receive incentives...which isn’t the right way to run government. [See Wisconsin and Foxconn, as Wisconsinites will learn one day.]

But in the past week, in my town of Summit, the Morris Ave., bridge project was finally finished! What should have taken about nine months, max, took nearly three years!!!

Editorial / Wall Street Journal

“(The legislature’s / Governor’s moves) will give New Jersey the fourth highest marginal income tax rate on individuals and the second highest corporate rate after Iowa.  The corporate tax increase will supposedly last two years and then phase out over the next two years, but that’s what politicians always say.

“The two Democrats (Murphy and State Senate leader Steve Sweeney) claim this will do no harm because about 0.04% of New Jersey taxpayers will get smacked. But those taxpayers account for 12.5% of state income-tax revenue and their investment income is highly mobile. The state treasurer said in 2016 that a mere 100 filers pay more than 5.5% of all state receipts. Billionaire David Tepper escaped from New Jersey for Florida in 2015, and other hedge fund managers could follow. Between 2012 and 2016 a net $11.9 billion of income left New Jersey, according to the IRS....

“About two-thirds of New Jersey’s $3.5 billion income outflow last year went to Florida, which doesn’t have an income tax.  Meantime, the state has been bribing corporations with billions in tax credits to stay put. This year the state expects to spend $545 million on corporate welfare, and the cost could double by 2020 – thus consuming the $440 million that the new tax increases are projected to raise.

“While the new taxes will finance more spending, the state still isn’t sufficiently funding pensions.  Pension and health costs are projected to double over five years to $10.7 billion and consume a quarter of the state budget. The fair question is why any rational person or business that can move would stay in New Jersey.”

--A Detroit Free Press / USA TODAY Network investigation found that the SUV revolution is the leading cause of escalating pedestrian deaths nationwide, which are up 46 percent since 2009.

“Almost 6,000 pedestrians died on or along U.S. roads in 2016 alone – nearly as many Americans as have died in combat in Iraq and Afghanistan since 2002. Data analyses by the Free Press/USA TODAY and others show that SUVs are the constant in the increase.”

Federal safety regulators have known this for years, that SUVs, with their higher front-end profile, “are at least twice as likely as cars to kill the walkers, joggers and children they hit, yet have done little to reduce deaths or publicize the danger.”

Among U.S. cities with a population of at least 200,000, Detroit has the highest pedestrian death rate in fatal traffic crashes.  34.5 deaths per 100,000 residents, 2010-2016. Newark, N.J. is second at 29.1.

As SUV sales increase, so will the deaths.  Though some cities have made a difference. For all the criticism some of New York’s measures to reduce pedestrian deaths have received, such as a reduced speed limit and more midblock crosswalks, such deaths were cut in half in just four years.  [Former Mayor Michael Bloomberg started much of it and deserves the major credit, not current Mayor Bill de Blasio.]

--A story in the Wall Street Journal by Melissa Korn notes that “Nearly half of students who graduated from Lehigh University, Princeton University and the University of Southern California this year did so with cum laude, magna cum laude or summa cum laude honors, or their equivalents. At Harvard and Johns Hopkins, more got the designations than didn’t.”

At USC, which requires a GPA of at least 3.5 for the lowest honor, cum laude, 44% now qualify, ditto Lehigh, which requires a 3.4.

Stuart Rojstaczer, a former Duke University professor who has studied grade inflation for years, said, “A 4.0 does signal something significant, that that student is good. A 3.7, however, doesn’t. That’s just a run-of-the-mill student at any of these schools.”

A reminder...your editor graduated from Wake Forest “summa cum lousy, with distinction.”

--That is just a remarkable scene in Thailand as rescuers try to figure out the safest way to free a young soccer team trapped for two weeks in a cave in the northern part of the country. We’ve all seen the same pictures and coverage of the event, and thank god for the Thai navy SEAL divers and others on the international rescue team, but it’s far from mission accomplished, a race against time...the monsoon rains.

Then Friday morning we learned a Thai rescuer died, a former member of the elite SEAL unit who had volunteered as part of the operation.  Samarn Poonan died when his oxygen ran out as he was laying oxygen tanks along a potential exit route.

And now with a return of the rains, and the oxygen issue we just learned about, you can only pray for the children, their coach, and the  rescuers.

--Finally, I noted last week that I had skimmed through President Ronald Reagan’s speech (9/17/1987) in Philadelphia on the bicentennial of the signing of the U.S. Constitution, Sept. 17, 1787.

It’s worth forcing your kids to read this summer instead of having their brains rot in front of a computer.  The following is just the final paragraphs. 

“During the summer of 1787, as the delegates clashed and debated, (George) Washington left the heat of Philadelphia with his trout fishing companion, Gouverneur Morris of Pennsylvania, and made a pilgrimage to Valley Forge. Ten years before, his Continental Army had been camped there through the winter. Food was low, medical supplies nonexistent, his soldiers had to go ‘half in rags in the killing cold, their torn feet leaving bloodstains as they walked shoeless on the icy ground.’ Gouverneur Morris reported that the general was silent throughout the trip. He did not confide his emotions as he surveyed the scene of past hardship.

“One can imagine that his conversation was with someone else – that it took more the form of prayer for this new nation, that such sacrifices be not in vain, that the hope and promise that survived such a terrible winter of suffering not be allowed to wither now that it was summer.  One imagines that he also did what we do today in this gathering and celebration, what will always be America’s foremost duty – to constantly renew that covenant with humanity, with a world yearning to breathe free; to complete the work begun 200 years ago, that grand, noble work that is America’s particular calling – the triumph of human freedom, the triumph of human freedom under God.

“I have, a number of times, said that you may call it mysterious, but I have always believed that this land was put here to be found by a special kind of people. And may I simply say also, a man wrote me a letter, and I would call to your attention what he did to mine. You could go from here to live in another country, France, but you wouldn’t become a Frenchman.  You could go to Japan and live there, but you wouldn’t become a Japanese. But people from every corner of the world can come to this country and become an American.”

So much I want to say concerning today reading this, but I’ll bite my tongue.

---

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

God bless America.

---

Gold $1255
Oil $73.92

Returns for the week 7/2-7/6

Dow Jones  +0.8%  [24456]
S&P 500  +1.5%  [2759]
S&P MidCap  +1.9%
Russell 2000  +3.1%
Nasdaq  +2.4%  [7688]

Returns for the period 1/1/18-7/6/18

Dow Jones -1.1%
S&P 500 +3.2%
S&P MidCap +4.7%
Russell 2000 +10.3%
Nasdaq  +11.4%

Bulls N/A [47.6 / 18.4 split last week]
Bears

Have a great week.

Brian Trumbore



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Week in Review

07/07/2018

For the week 7/2-7/6

[Posted 11:30 PM ET]

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

Edition 1,004

Trump World

It’s another critical, potentially historic, week coming up.  Monday, President Trump has promised us his new Supreme Court pick.  The NATO summit is Wednesday and Thursday.  Friday, Trump goes to Britain for a pseudo-state visit, and then on July 16, it’s Trump and Putin.

All this while the trade war between the United States and China, and between the U.S. and other players, takes hold...to what effect we do not yet know.

What we do know is next week is likely to be a thrill a minute.

Editorial / The Economist

“America did as much as any country to create post-war Europe. In the late 1940s and the 1950s it was midwife to the treaty that became the European Union and to NATO, the military alliance that won the Cold War. The United States acted partly out of charity, but chiefly out of self-interest. Having been dragged into two world wars, it wanted to banish Franco-German rivalry and build a rampart against the Soviet threat. After the Soviet collapse in 1991, the alliance anchored democracy in the newly liberated states of Eastern Europe.

“Today, however, America and Europe are separated by a growing rift. The mood before the NATO summit in Brussels on July 11th and 12th is poisonous. As President Donald Trump accuses the Europeans of bad faith and of failing to pull their weight, they accuse him of crass vandalism.  A second summit, between Vladimir Putin and Mr. Trump in Helsinki on July 16th, could produce the once-unthinkable spectacle of an American president treating his Russian opponent better than he has just treated his allies.

“Even if the two summits pass off without controversy – as they might, given how Mr. Trump delights in confounding his critics – the differing priorities, divergent beliefs and clashing political cultures will remain. The Western alliance is in trouble, and that should worry Europe, America and the world.

“Every alliance has its tensions, but the Western one is strained on a bewildering number of fronts.  Mr. Trump, and his generals, are exasperated by the feeble efforts of many NATO members to honor their promise to raise defense spending towards 2% of GDP by 2024. The American right tends to condemn European support for the Iranian nuclear deal, and what it sees as a bias against Israel. And policymakers from both parties think that, as the world’s attention shifts to Asia, whining, sanctimonious Europeans deserve less of their time.

“As if that were not enough, Mr. Trump fatuously accuses the EU of being ‘set up to take advantage of the United States’ and chastises it for unfair trade.  Meanwhile, Europe is divided. Italy has a new populist coalition that is pro-Putin. So, increasingly,  is Turkey, a member of NATO (but not the EU) which is hostile to the liberal democratic values that bind the alliance.  Worse could be in store.  A Labour government in Britain under Jeremy Corbyn, who has a long history of opposing the use of arms by the West, would treat America with deep suspicion; he could even try to leave NATO.

“This newspaper believes that the Western alliance is worth saving. In a dangerous and increasingly authoritarian world, it can act as a vital source of security and a bastion of democracy. But the alliance does not have a God-given right to survive. It must continually earn its place....

“If NATO and the EU did not already exist, they would not be created.  Since the Soviet collapse, the sense of threat has receded and the barriers to working together have risen. Yet that does not make the transatlantic alliance ‘obsolete,’ as Mr. Trump once claimed. America’s alliances are an asset that are the envy of Russia and China. NATO is an inheritance that is all the more precious for being irreplaceable.

“The need for security remains. Russia is not the Soviet Union but, as a declining power, it feels threatened. It has modernized its forces and is prepared to deploy them. The need to anchor European democracy remains, too.  As authoritarianism creeps up on Poland and Hungary, the EU and NATO can once again help limit its advance. And there is the extra benefit of how Europe helps America project power, by providing bases, troops and, usually, diplomatic support.

“NATO is more fragile than Mr. Trump thinks. At its core is the pledge to treat an attack on one member in the North Atlantic region as an attack on them  all.  His vacillation and his hostility to Europe weakens that promise, if only because it reveals his scorn for the idea that small countries have the same rights as big ones.  Asia is watching, as is Mr. Putin. The more Mr. Trump bullies his allies, the more the world will doubt America’s security guarantees.  Because great powers compete in a grey zone between peace and war, that risks miscalculation.

“Mr. Trump believes he is a master negotiator in pursuit of a stronger America. With Europe, as with so much else, he gravely undervalues what he is giving up.”

As for the meeting with Putin, speaking at the campaign rally in Great Falls, Mont., Trump said  he felt ready.

“They’re going ‘will President Trump be prepared?  You know, President Putin is KGB.’  And this and that,” Trump said of news media reports.  “You know what? Putin’s fine. He’s fine.  We’re all fine. We’re people. Will I be prepared? Totally prepared. I’ve been preparing for this stuff my whole life. They don’t say that.”

I’m prepared for disaster myself.

Robert J. Samuelson / Washington Post

“On this Fourth of July, America has taken a turn for the worse. The great delusion of Donald Trump’s presidency is that we can thrive by embracing nationalism even though major economic and political events are increasingly driven by international forces. Trump is an isolationist in an era of globalism.  It won’t work.

“Keep this in mind on the Fourth. Let us assume – for the sake of argument – that Trump is everything that he isn’t: thoughtful, considerate, open-minded, kind, generous, civil, truthful and respectful of his adversaries. Let us further assume that this imaginary Trump is such a nice guy that his character is widely admired.

“Still, a big problem would remain: his policies.  It’s inaccurate to say that Trump doesn’t have an agenda. In many ways, his agenda resonates with his campaign promises. ‘Make America Great Again’ is a brilliant slogan that captures in nostalgia an urge to resurrect an allegedly more glorious past.

“The trouble is the actual past doesn’t resemble Trump’s rhetorical past, which is widely taken to be America in the late 1950s and early 1960s. The country was much poorer then. Since 1960, the average income (gross domestic product per person) has roughly tripled after adjusting for inflation.  In 2017, that was $59,484.

“Many staples of modern life didn’t exist or were in short supply. Jet travel began in 1958. Color television became widespread only in the 1960s. In 1955, only 2 percent of homes had air conditioning.

“There were more important deficiencies: African Americans throughout the South remained segregated by law and custom; the situation was better in the North, but blacks still faced discrimination. Similarly, most women remained at home; career jobs for them were only slowly expanding.

“One accomplishment that did make America ‘great’ then was its active international engagement, through military alliances and trade policies. These helped Europe and Japan rebuild after World War II and resist communist political pressures. This is precisely the sort of international cooperation – protecting our long-term interests despite some short-term costs – that qualifies as enlightened self-interest.

“It is doubtful that most Americans, when confronted with the tangible conditions of early post-World War II life, would choose to hop on a time-machine and reestablish themselves in this bygone era. Meanwhile, Trump is enthusiastically repudiating – or trying to repudiate – the American-led international cooperation that was a hallmark of the period.

“The underlying lesson was that our power and influence are enhanced when they are exercised in conjunction with countries that, granting differences and disagreements, share our basic values and interests.

“We cannot isolate ourselves from the rest of the world.  To the contrary, power is being drained from nation-states to ‘market forces’ or other global mechanisms that are difficult to control.  This has been going on since at least the mid-19th century and reflects new communication and transportation technologies: the telegraph, the telephone, television, the Internet, automobiles, planes and containerization.

“Obviously, no one is going to uninvent these technologies.  But the globalized world that those technologies have helped foster understandably makes many, possibly most, people uneasy and fearful, because there is a loss of sovereign control over our future....

“To this anxious litany Trump brings a reassuring antidote: more nationalism. It’s a false remedy. Some of Trump’s efforts to control globalization have already backfired. To wit: Harley-Davidson’s decision to move some production to Europe – in response to Europe’s higher tariffs on Harley bikes, which in turn were a reaction to Trump’s higher tariffs on European steel and aluminum exports.

“As before, our global power and influence benefit when we cooperate and respect our allies, not vilify them. Trump cannot deconstruct globalization.  It is too big and well-entrenched. But as noted by Wall Street Journal columnist Greg Ip, Trump can damage it and weaken it by prescribing protectionism. Economic growth would suffer.

“It’s not just Trump. Albeit without his vicious rhetoric, many Democrats share the same nationalism, proof that it represents a potent political symbol. Foreigners are convenient scapegoats. There is also a deeper problem: Economics, which is increasingly global, has outpaced politics, which is mostly local.

“What we had more of in the 1950s is hope and confidence. But they cannot be restored by reverting to a destructive neo-isolationism. It may be popular, but it’s not practical.  As noted, we’ve taken a turn for the worse.”

Trumpets....

--Embattled Environmental Protection Agency administrator Scott Pruitt resigned after months of allegations over legal and ethical violations. Andrew Wheeler, the agency’s deputy and a former lobbyist for the coal industry, will take over as acting administrator on Monday.

Pruitt was hailed among conservatives for his work on deregulation, but his alleged spending abuses, first-class travel, security details and cozy relationships with lobbyists helped to do him in.  Hours before he resigned on Thursday, the New York Times reported on new questions about whether aides to Pruitt had deleted sensitive information about his meetings from his public schedule, potentially in violation of the law.

As administrator, Pruitt began the largest regulatory rollback in the agency’s history, undoing, delaying or blocking several Obama-era environmental rules. And Pruitt helped convince President Trump to withdraw from the Paris climate agreement, which I’ve said was incredibly stupid.

But despite all the allegations and scandals, Trump was reluctant to fire Pruitt because the administrator had done what the president has wanted in terms of cutting regulations.  White House advisers, though, including his chief of staff, John Kelly, finally convinced him it was time for Pruitt to exit.

In a resignation letter released by the EPA,  Pruitt wrote that it had been “a blessing” to serve under Trump and undertake “transformative work” at the EPA.  But he added that “the unrelenting attacks on me personally, my family, are unprecedented and have taken a sizable toll on all of us.”

He signed the letter, “Your Faithful Friend, Scott Pruitt.”

Trump said Thursday on Air Force One that Pruitt came to him and said he didn’t “want to be a distraction.”

Democrats and environmentalists hailed Pruitt’s exit, though Wheeler is expected to continue many of the same policies.

--President Trump’s personal lawyer and fixer Michael Cohen, in an interview with ABC News, appeared to further distance himself from the president.

Cohen said he did not share Trump’s animosity toward Justice Department special prosecutor Robert Mueller and did not dismiss the possibility of cooperating with the investigation into Russian interference in the 2016 election.

“My wife, my daughter and my son have my first loyalty and always will,” Cohen said. “I put family and country first.”

Back in April, following the FBI’s raid on Cohen’s offices and homes, Trump tweeted: “Most people will flip if the government lets them out of trouble, even if it means lying or making up stories. Sorry, I don’t see Michael doing that despite the horrible Witch Hunt and the dishonest media!”

Asked how he might respond if the president or his legal team tries to discredit him, Cohen told ABC:

“I will not be a punching bag as part of anyone’s defense strategy. I am not a villain of this story, and I will not allow others to try to depict me that way.”

--The Trump administration rescinded Obama-era guidelines encouraging the use of race to determine admission to educational institutions, instead favoring a race-neutral policy that critics see as a move against affirmative action.

The government returned to guidelines used during the George W. Bush administration and rejected Obama administration guidelines to schools and colleges that included taking a potential student’s race under consideration as a way to increase diversity.

But the changes do not outlaw affirmative action, which the Supreme Court upheld as recently as 2016.

--Trump tweets: “Congress must pass smart, fast and reasonable immigration Laws now. Law Enforcement at the Border is doing a great job, but the laws they are forced to work with are insane. When people, with or without children, enter our Country, they must be told to leave without our.....

“....Country being forced to endure a long and costly trial. Tell the people ‘OUT,’ and they must leave, just as they would if they were standing on your front lawn. Hiring thousands of ‘judges’ does not work and is not acceptable – only Country in the World that does this!”

“Congress – FIX OUR INSANE IMMIGRATION LAWS NOW!”

“Just out that the Obama Administration granted citizenship, during the terrible Iran Deal negotiation, to 2,500 Iranians – including to government officials. How big (and bad) is that?”

[Ed. this conspiracy theory was totally debunked, but it goes out anyway as being “official” coming the president.]

“Many good conversations with North Korea – it is going well! In the meantime, no Rocket Launches or Nuclear Testing in 8 months. All of Asia is thrilled. Only the Opposition Party, which includes the Fake News, is complaining. If not for me, we would now be at War with North Korea!”

Wall Street...Trade...

On your mark...get set....Boom!!!  The trade war between the U.S. and China is underway as of Friday morning.  The Trump administration followed through with its threat to impose tariffs on $34 billion worth of Chinese products (to be followed with another $16bn...and potentially as much as $450 billion above that), and China immediately put its own similarly sized tariffs ($34bn) on an unspecified group of American goods, previously thought to be pork, soybeans and automobiles, among other goods.

So now we wait to see the impact on global supply chains, on costs for businesses and consumers, and what the effect will be on global financial markets, which have been on edge for months in anticipation of a prolonged trade fight between the U.S., its allies, and China.

China’s Commerce Ministry was blunt in blaming the U.S.

“To put it simply, the U.S. is opening fire on the entire world, including itself,” Trade Ministry spokesperson Gao Feng said in a statement. “China will not bow down in the face of threats and blackmail and will not falter from its determination to defend free trade.”

Chinese Premier Li Keqiang called on the European Union to expand its cooperation with China to counter the United States; Li having started a six-day visit to Bulgaria and Germany on Thursday.

“The international situation is complicated, with the rise of unilateralism and protectionism,” Li was quoted as telling Jean-Claude Juncker, president of the European Commission.  “As two important forces in the world, China and the EU have to reach consensus, and expand cooperation and mutual interest to deal with the challenges.”

Last month, China and the EU said they would set up a working group to revamp the World Trade Organization (WTO) to counter U.S. unilateralism.

The Federal Reserve, in the minutes of its June meeting released Thursday, said it too was wary “about the possible adverse effects of tariffs and other proposed trade restrictions.”

Particularly, the Fed commented on capital spending, which the central bank said had already “been scaled back or postponed as a result of uncertainty over trade policy.”

The U.S. Chamber of Commerce also slammed the administration, calling Trump’s tariff plan “nothing more than a tax increase on American consumers and businesses.”

The administration said, on the other hand, that China’s countermeasures were on less than half of 1 percent of U.S. exports.

But it’s the unforeseen consequences, including the impact on non-Chinese multinational companies operating in China.

So the Trump administration is waging war and imposing tariffs on foreign steel, aluminum, solar panels, washing machines and other products from the likes of Canada, Mexico, the European Union and Japan.

But it’s China that is the real focus, Trump pressuring the country to curtail what the White House describes as a pattern of bad behavior in its trade practices, while stealing America’s intellectual property.  The tariffs levied by the administration are being used as leverage to force Beijing to make changes, including opening up more markets to U.S. companies and products, while ending the practice of forcing such companies to share their technology with their Chinese rivals.  Or so that’s the plan.

Meanwhile, the European Commission warned in a written submission to the U.S. Department of Commerce, that Trump’s threat to hit car imports with punitive tariffs (20%) risks sparking global retaliation against as much as $300 billion on U.S. products.  In an interview with Fox News on Sunday, Trump said the EU was “as bad” as China when it came to trade behavior, and he dismissed suggestions that his attacks on the EU were counterproductive.

Last weekend, General Motors warned against Trump’s threatened car tariffs, saying it would raise the prices of its vehicles by thousands of dollars, undermine its competitiveness and lead to U.S. job losses.

BMW, which exports 70 percent of its vehicles from its largest plant in South Carolina, also warned of cuts in investment and jobs if the tariffs are imposed.

On another issue, NAFTA, Trump said Sunday he is “not happy” with the revised deal his administration has been hammering out with Canada and Mexico and he doesn’t want to sign any new agreement until after the midterm elections in November.

Canada, on Sunday, imposed tariffs on $12.6 billion of U.S. products.

Meanwhile, there was a lot of economic news to chew on, much of it good.  Construction and factory orders for May were both up 0.4%, and the ISM figures on manufacturing for June, 60.2, and services, 59.1, were both real strong and above expectations (50 being the dividing line between growth and contraction).

And then we had today’s jobs report for June, the economy adding another 213,000, though the unemployment rate rose from 3.8% to 4.0% due to more people entering the job market, which is good.

Figures for April and May were also revised upward by a combined 37,000, so the three-month average is 211,000.

But I did a little work on the numbers this week, as I did last week with GDP, and if you consider President Trump’s first month being December 2016, which is what the administration is using, the 19-month average jobs gain is 192,000.  The average the prior 18 months for President Obama was 206,000.

I mention this because as a guy who for over 19 years has listed nothing but facts in this space, I’m sick of the president spouting off falsehoods, knowing his supporters are just eating it up as gospel.

So when I was watching him make the statement at the Great Falls, Montana, rally last night that “wages are rising for the first time in 18 years,” I wanted to reach through the television screen.

If you freakin’ believe that, just understand that year-over-year, wages have risen over at least the last ten years, which is as far back as I went in checking the monthly numbers.  Fact.  [You had a few months that were negative, but year-over-year, everything is up.]

What have I been writing all this time, every jobs report; wages, going back a few years, were growing at 2% to 2.5% when at this stage of a recovery you should be seeing 3.5%.

Well now wages are coming in at 2.7% (as in this last report), 2.8% in May, but it’s still below where we should be and the Fed is well aware of this.

So those are the facts.  The president has a lot to crow about, but for once in his life, I just wish he would tell the truth.  [Source for both jobs and wages is the Bureau of Labor Statistics]

As for second-quarter GDP projections, the Atlanta Fed’s GDPNow indicator remains the same as last week, 3.8%, but others see it higher. That is a number that Republicans can, will and should parrot into November.  Someone just remind the president that when he talks about an economy growing faster than it ever has, GDP was up 5.2% in the third quarter of 2014.  And he doesn’t want me pulling out some old Reagan growth figures.

Europe and Asia

Lots of economic data for the eurozone (EA19). The unemployment rate in May was 8.4%, unchanged from April and down from 9.2% May 2017.

Germany was 3.4%, France 9.2%, Italy 10.7%, Spain 15.8%, Ireland 5.3% and Greece 20.1% (March).

Youth unemployment rates were still high in Greece, 43.2% (March); Spain, 33.8% (but down from 39.2% year-over-year); Italy, 31.9% (down from 36.5%).

The PMIs for manufacturing and services were also released for the month of June, the EA19 composite at 54.9 vs. 54.1 in May, with manufacturing falling to 54.9 vs. 55.5, and services rising to 55.2 from 53.8.  But you add it all up and the second quarter PMI data was the weakest since Q4 2016.

Germany reported 55.9 on manufacturing last month, an 18-mo. low; 54.5 on services.
France was 52.5 mfg., a 16-mo. low; 55.9 services.
Italy 53.3 mfg., 54.3 services.
Spain 53.4 mfg., 55.4 services.

And the U.K. was 54.4 mfg., 55.1 services, the latter much better than expected.

Chris Williamson / IHS Markit

“Eurozone growth regained momentum in June, rounding off a respectable second quarter performance, for which the survey data point to GDP rising by just over 0.5%. June also saw new orders and employment growth perk up, suggesting rising demand continues to motivate companies to expand capacity.

“Firms’ costs and average selling prices for goods and services are meanwhile rising at rates close to seven-year highs, which will likely feed through to higher consumer price inflation in coming months.

“The upturn in the pace of economic growth and resurgent price pressures adds support to the ECB’s view that stimulus should be tapered later this year, but the details of the survey also justify the central bank’s cautious approach to policy.

“In particular, a weakening in business optimism to the lowest for over one-and-a-half years reflects intensifying nervousness about the outlook for the economy, notably in manufacturing, as trade-war talk escalates. Service sector companies – generally less affected by international trade – are more upbeat about the year ahead, though less so than earlier in the year as domestic political issues once again add to uncertainty about the outlook.”

Eurobits....

Germany: Chancellor Angela Merkel thought she had fended off a mutiny within her own conservative alliance after returning from the prior week’s marathon EU summit with an agreement on migration.

But then the rebellion escalated two days later, Sunday, further weakening her.  Interior Minister Horst Seehofer, of the Christian Social Union (CSU), threatened to resign over the chancellor’s policy. 

If Seehofer resigned as minister and party leader, but the CSU remained in the governing coalition, Merkel would survive, barely.  But if he took his coalition out of the government, the chancellor loses her majority.

Regardless, Merkel is badly damaged and the question is not whether she’ll serve out her new term, but if she can make it through the year.

Merkel is seen as Europe’s defender of liberal values, best exemplified in her 2015 policy to welcome to Germany nearly a million migrants from the Middle East and Africa, who were not wanted in neighboring countries like Austria and Hungary (the arrivals here, through Greece and the Balkans, often then being transported through Austria to Germany).

But for Merkel, three years later, nationalism and populism have taken hold and she’s a dead woman walking.

As for the CSU, whose base is in Bavaria, it is seeing its support eroded by the far-right Alternative for Germany (AfD) ahead of crucial state elections in October, and Seehofer’s conservatives have had to respond by veering sharply to the right themselves to prevent an AfD upset. Seehofer has also been mulling an alliance with his far-right counterparts in Austria and Italy.

For her part, Merkel wants a European solution to the migration issue, warning that unilateral action by the likes of Austria, Italy, Poland, Czech Republic and Hungary, endangers freedom of movement within the European Union, a central precept of the 28-member bloc.

Austria’s chancellor, Sebastian Kurz, is an example of the current atmosphere.  Kurz said that if Seehofer were to order refugees registered in other European Union countries to be turned back from the German-Austria border, the Austrian government would follow suit. This is the kind of chain reaction Merkel has warned against.

But then Merkel reached a deal, mid-week, to end the row, for now.  Seehofer dropped his threat to resign, while Merkel agreed to tighten controls at the Austrian border to stop people who have applied for asylum in other EU countries from entering Germany. Transit centers will be set up to hold them until they can be sent back.

Merkel described the deal as a good compromise, but then her center-left Social Democrat (SPD) partners in the coalition complained, saying transit centers were not part of the original coalition agreement.

Austria, upon seeing the Merkel agreement that very much involves itself, said it is now preparing to protect its southern borders with Italy and Slovenia.

All of this puts the functioning of Schengen – the EU’s right of passport-free travel across internal borders – at risk.

And there are all kinds of questions on the transit centers and how you identify which migrants have already registered in another EU country...and how do you prevent people smugglers, and criminals. Do they just become prisons?  Does the debate sound familiar?

Meanwhile, a poll from FG Wahlen said 91 percent of Germans favor European solutions on migration, an endorsement of Merkel’s line, with support for the CSU position falling further.

Brexit: Prime Minister Theresa May assembled her Cabinet for a weekend meeting to hammer out a trade relationship agreement that she can present the European Union, the big divorce next March. But there were serious doubts they would emerge with the kind of coherent plan the EU demands.

Businesses have been stepping up their demands that May reach a deal with the bloc that protects its interests. Any bad deal seriously jeopardizes jobs and investment.

So we waited for the decision out of Chequers (the prime minister’s country residence...what is being dubbed the body bag summit) and what any customs proposal contains and whether it will meet EU muster.  All 29 ministers who attend Cabinet were present at the confab, and a clear majority of them voted Remain in the 2016 referendum to exit the EU.

Well, late today the Cabinet reached a “collective” agreement on the basis of the U.K.’s future relationship with the EU.

Ministers signed to a plan to create a free trade area for industrial and agricultural goods with the bloc, based on a “common rule book.”

They also supported a “combined customs territory.”

Immediately, though, analysts said it would “anger many Tory Brexiteers,” as the BBC’s Laura Kuenssberg reported.

Mrs. May opted for a soft Brexit and a closer relationship with the EU than many of her colleagues desired, and now she has to sell it to both her party and EU leaders.

Doubtless there will be far more on this in the coming days and weeks.  The prime minister is hoping to unlock the next phase of talks but if she doesn’t have the support of her party, any agreement reached today is useless.

Mrs. May told the BBC, “This is a proposal that I believe will be good for the U.K. and good for the EU, and I look forward to it being received positively.”

So I’ve looked at the main points of the agreement, and I see EU leaders shredding it, more “cherry picking,” they’ll say, but I need more time to comment further.  The ‘white paper’ comes next week, though for now the deal gives the U.K. the freedom to strike trade deals with other countries while maintaining regulatory, environmental and consumer standards.

A big issue concerns the jurisdiction of the European Court and if there was to be a free trade zone for certain products, then EU law would have to hold sway.

But the document also commits the government to step up preparedness for a no-deal scenario, “given the short period remaining before the necessary conclusion of negotiations.”

Like October, sports fans!  Geezuz, the Brits could not have screwed up this whole deal, including the vote to Leave, more than they have.

Poland: The government carried out a sweeping purge of the Supreme Court on Tuesday, eroding the judiciary’s independence, and thus escalating a conflict with the European Union over the rule of law, while further dividing this nation.

Poland had been seen as a beacon for countries struggling to escape the clutches of the Soviet Union as it embraced Western democracy. But now it is embracing authoritarian methods like Hungary’s as a means to tighten their grip on power. This is not good, people.

For years the right-wing Law and Justice Party has sought to seize control of the court system.  After taking power in 2015, for example, it gave control of the country’s prosecutors to the Ministry of Justice.  In recent days, justices who have been speaking out are being harassed and intimidated by the government. Street protests have been breaking out.

But now the calls for solidarity, “Solidarnosc,” are not being directed against an occupying force, or communist rule, but at a democratically elected government.

Officials say they are merely cleaning up a corrupt system that obstructs the popular will, but critics, both in Poland and abroad, contend they are creating a system where the courts are subservient to the politicians. The ability to change the constitution, for instance, can just be through judicial rulings, should the leaders desire. This is bullshit.

Lech Walesa, who led the Solidarity movement that ended Communist rule in Poland and then served as president from 1990 to 1995, vowed to lead a campaign of civil disobedience if certain judges are removed.  As I go to post, one key one, a female justice, Malgorzata Gersdorf, is refusing to step down.  You go, Girl! 

Turning to Asia, China’s PMI data came out as follows. The official government figure for manufacturing was  51.5 in June vs. 51.9 in May, services 55.0 vs. 54.9.

The Caixin independent reading was 51.0 for manufacturing, 53.9 on services.

In Japan, the June manufacturing PMI was 53.0, with services at 51.4.

South Korea’s June PMI for manufacturing was 49.8. Taiwan’s was 54.5.

Street Bytes

--Stocks rallied this week, breaking a little losing streak and ignoring the trade tensions, choosing to focus on the positives in the economy and the job market.  The Dow Jones rose 0.8% to 24456, with the S&P 500 adding 1.5% and Nasdaq 2.4%.

--U.S. Treasury Yields

6-mo. 2.10%  2-yr. 2.54%  10-yr. 2.82%  30-yr. 2.93%

In the aforementioned minutes of the Fed’s June meeting, one of the statements that got traders’ attention was this:

“Participants generally judged that...it would likely to be appropriate to continue gradually raising the target rate for the federal-funds rate to a setting that was at or somewhat above their estimates of its longer-run level by 2019 or 2020.”

So the Fed is trying to determine what the neutral rate would be – the level that neither spurs nor slows growth, as they now expect the economy to grow faster than is sustainable over the long run. Which means they will then be raising rates above whatever the ‘neutral’ rate is to slow an  economy before it overheats, if their forecast is right.

For now, though, it appears the Fed is still thinking two more rate hikes this year, for a total of four in 2018, which most see today as being in September and December.

One danger is pushing up short rates to a level where the yield is higher than the long end of the curve, an inverted yield curve, that almost always presages recession.

And as you see above, the spread between the 2- and 10-year continues to narrow.

--On the Fourth of July, President Trump tweeted: “The OPEC monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!”

Last Saturday, though, Trump tweeted: “Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference... Prices to (sic) high!  He has agreed!”

Well, on reading this one I almost spit up my Frosted Flakes.  And I have to admit, having never seen dysfunction spelled with a ‘dis’, I looked it up and there is a derivative spelling with ‘dis.’  But I can guarantee not one of you has ever used it.

Trump didn’t specify if the 2m figure was barrels per day. And hours later, the White House walked his tweet back, saying the Saudis will use their spare production capacity “prudently...if and when necessary to ensure market balance and stability.”

Anyway, the president recognizes that oil and prices at the gas pump could be a sleeper issue when voters go to the polls in November, and rising gasoline prices can negate the positive impact of the individual tax cuts and blunt consumer spending.

But for prices to go down significantly from current levels, OPEC, and non-OPEC producers such as Russia, must pump a lot more than the 600,000 barrel a day increase they recently agreed to in Vienna on June 22.

The increase that was to be supplied largely by Saudi Arabia and Russia may not be enough to offset continuing declines in production from the likes of Iran, Libya and Venezuela.

The administration did soften earlier demands that China and India end all imports of oil from Iran, but Trump has sought to line up support against Tehran as it gets set to re-impose sanctions on its energy sector in November.

If the U.S. is successful in cutting Iranian production from its current 2m b/d in exports, that only cuts into any production increases from the likes of the Saudis and Russia.

And fighting in Libya, which has suspended crude loadings at two major oil terminals, threatens that nation’s supply of around 850,000 barrels a day, nearly all of its recent output (an est. 80%).  Before the 2011 uprising, Libya was producing 1.6m b/d.

--U.S. auto sales increased by 1.9% in the first half of the year, with June up about 5%, according to analysts.

General Motors Co., reporting for the first time since it announced it would only report sales on a quarterly basis, rather than monthly, said year-to-date its sales were up 4.2%. Both Toyota and Fiat Chrysler reported gains for the first six months, while Ford and Honda were relatively flat.  Nissan reported a nearly 5% decrease in sales for the first half.

So far it looks like U.S. sales for 2018 will once again top the 17 million level.  Sales peaked in 2015-16 at 17.5m and a record 17.6m, respectively, before dipping slightly to 17.2m last year.

The average new vehicle transaction price is expected to reach $32,221 for the first half, a record, according to J.D. Power.

Meanwhile, Toyota said this week the sticker price on its Camry sedan, built in Kentucky with a base price of about $23,600, could go up in cost by $1,800 if tariffs on auto imports are enacted because it is made with about 30% foreign parts.

But others, such as Nissan, say that consumer confidence outweighs tariff talk and that they look for a strong second half.

Ford is also confident, saying it builds more in the U.S. than the others, which provides it with a level of protection.

But if 25% tariffs do become the norm, sales in the U.S. will decline, no doubt, and perhaps substantially.

Back to June, Ford reported a 1% increase for the month, while Fiat Chrysler’s rose 8%.

Toyota’s increased 3.6%, Honda’s rose 4.8%, and Nissan’s were up 1.2%.

GM, again, reported for the quarter, up 4.6% from April through June.

--Then there is Tesla...the company reporting it met its 5,000 target for the Model 3 in the final week of the second quarter: 5,031, as well as 1,913 Model S sedans and Model X sport-utility vehicles.  The electric-vehicle maker had previously missed the 5,000-a-week target for its first mass-market offering twice, but the announcement that 5,000 had been achieved was met with skepticism and questions on whether CEO Elon Musk could actually execute on the company’s plans.  Musk wrote employees in an email on Sunday, “I think we just became a real car company.”

About a fifth of the 5,000 in the final week rolled off a general assembly line hastily put together under a giant tent outside of the Fremont, Calif., factory.

The company now aims to increase its Model 3 output to 6,000 vehicles a week by late August, now that the 5,000 target has been reached.

Tesla also reaffirmed that it expects to have positive cash flow and post a profit in the third and fourth quarters.

And the company said it has about 420,000 net reservations for the Model 3.

But on the week, the stock fell from $343 at last Friday’s close to $309 today, well off its high of $389.60.

Charley Grant / Wall Street Journal

“Tesla produced about 28,500 Model 3s in the quarter, meaning nearly 18% were produced in the final frenzied week, only slightly lower than the last week of the previous two quarters.

“The average for the quarter was about 2,200 cars per week. That means Tesla built on the gains made in the last week of the first quarter, when it produced 2,020 Model 3s.  But the company said that nearly 40% of the total Model 3s produced in the most recent quarter have not yet been delivered to customers, a larger percentage than in previous quarters.

“Tesla’s sustainable production rate isn’t the only topic investors ought to scrutinize. After all, the point of mass-producing Model 3s is to make a profit. Tesla added a new assembly line and worked around the clock to achieve its production goal, which can’t be good for profit margins. Investors won’t get a clear look at how the production scramble affected finances until Tesla reports financial results later this summer.

“Perhaps most importantly, higher production figures will test how deep the pool of demand for Tesla’s cars really is. The company said Monday it has 420,000 Model 3 reservations. At last week’s production rate, that implies a backlog of about 18 months. But Tesla’s website says a Model 3 reservation placed today will be filled in approximately six to nine months. A  month ago, the website said orders would be filled in up to 12 months....

“It will take much more good news to justify Tesla’s stratospheric valuation.”

--Soybean prices fell to the lowest point in almost a decade on Monday, amid looming Chinese tariffs that threaten to kill off demand from the U.S.’s largest customer.  The market tumbled 15% in June as the crucial cash crop got caught up in the dispute between Washington and Beijing.

As I noted before, U.S. farmers planted more soybean acreage than corn for just the second time ever, the vast majority of the planting taking place before the disputes emerged.  And a reminder...China accounts for around a third of all U.S.-grown crop.

“Researchers at the University of Illinois and Ohio State University estimate that China tariffs of 25% on U.S. soybean imports would cut income for a midsize Illinois grain farm by an average of 87% over four years, prompting a loss of more than $500,000 in the farm’s net worth by 2021.”  [Benjamin Parkin / Wall Street Journal]

--Facebook faces another investigation. The federal probe into the tech giant’s sharing of data with political consultancy Cambridge Analytica has broadened to focus on the actions and statements of Facebook and now involves multiple agencies, including the SEC, according to various reports this week.

The Washington Post reported that representatives for the FBI, SEC and the Federal Trade Commission have joined the Justice Department in its inquiries about the two companies and the sharing of personal information of 71 million Americans.

Facebook discovered in 2015 that Cambridge obtained Facebook data to create voter profiles, yet Facebook didn’t disclose that information until March, when the story began to leak.

The new probes are focusing on why Facebook didn’t reveal back in 2015 to its users or investors, as well as any discrepancies in more recent accounts.

Specifically, CEO Mark Zuckerberg’s testimony before Congress is being scrutinized, Zuckerberg clearly being less than honest, in the opinion of your scribe.

Facebook acknowledged it is “cooperating with officials in the U.S., UK and beyond,” a company spokesman told the Post.

One former director of the FTC’s Bureau of Consumer Protection, David Vladeck, told the paper, “The fact that the Justice Department, the FBI, the SEC and the FTC are sitting down together does raise serious concerns....(and) all sorts of red flags.”

--Macau’s gaming revenues, a key indicator of the health of China’s economy, rose less than expected in June, 12.5% from a year earlier, with casino stocks with major operations there down 20% from their peak earlier in 2018.

Some, however, speculate that gamblers are choosing to wager on the World Cup, rather than card games.

But the decline in China’s stock market to bear-market levels is of more significance in looking at Macau’s take.

--120 companies have gone public on U.S. exchanges thus far in 2018, raising $35.2 billion, the highest volume since 2012 and the fourth-busiest year-to-date on record, according to Dealogic, whose data goes back to 1995.

There is no single catalyst, rather it’s a convergence of favorable business conditions, strong stock markets and investors’ hunger for high-growth companies.

Bankers expect the rapid IPO pace to continue the rest of the year.  And  in 2019, it’s expected that Airbnb Inc., Uber, and WeWork Cos., will go public...at least as of today, though they could all hold off until 2020.

--Meanwhile, Dell Inc. announced a deal that would once again make the PC and data-storage giant a public company.  Dell is acquiring via a share swap the DVMT tracking stock, which tracks its fast-growing VMware Inc. virtualization-software unit.

The expected move helps simplify Dell’s complicated ownership structure. The tracking stock, DVMT being the formal name, was created as a way to help finance Dell’s purchase of storage pioneer EMC in 2016, a deal that was largely in cash, but the remainder was paid via a new security linked to EMC’s interest in the VMware business.

Dell went private in a roughly $25 billion leveraged buyout in 2013 by its founder, Michael Dell, and investment firm Silver Lake.

But after closing on its $67 billion deal for EMC, the largest technology takeover ever, Dell became one of the world’s largest privately controlled tech companies, with over 140,000 people globally and $74 billion in revenue.

Once the largest producer of personal computers, Dell is now better known for corporate products such as storage, servers and security software.  It has also wagered big money on the “Internet of Things,” as it seeks new avenues for growth, with the corporate shift to the cloud.

--Manhattan home sales cratered 17% in the second quarter over a year ago, the third straight quarter of decreases, according to a report from Douglas Elliman Real Estate.

But, as the report notes: “Sales are down from last year, but last year was a banner year.”

That said, the number of sales in the second quarter was the lowest for Q2 in nine years.

--The co-chairman of HNA Group, a conglomerate that operates China’s fourth-largest airline and finance, logistics and other businesses around the world, died in a tragic accident while on a business trip in France.

Wang Jian, a co-founder of the company, fell after climbing on a wall for a photo-op, at a cliffside church in Provence.

HNA, launched in 1993 on the southern island of Hainan, expanded into finance, hotels and other businesses in a multibillion-dollar global acquisition spree, though the company has been selling some assets recently as the Chinese government tightens lending controls and presses companies to rein in debt.

Last year, HNA agreed to acquire a hedge fund operated by Anthony Scaramucci, but it never gained regulatory approval and the two sides called if off in April.

--Ryanair pilots are threatening to go on strike next week, in a row over who gets first call on workplace perks.

Pilots want the length of their time in the job to decide who gets first call on entitlements like annual leave during school holidays, promotions and transfers between bases.

Cabin crew from across Europe are threatening a “summer of industrial action” for “fair” pay and conditions.

According to the International Transport Workers Federation (ITF), “Conditions at Ryanair have been heavily criticized over the last few years, with the range of issues highlighted including poverty pay, draconian disciplinary procedures, unachievable sales targets and staff having to pay for items that most decent employers provide,” it said.

If you’re traveling in Europe this summer, look out.  Ryanair isn’t the only airline that could be hit with major job actions.

--Sears Holdings announced ten more Sears and Kmart stores will be closing in September, bringing the total to 78 that month  - 62 Sears and 16 Kmart locations.  Back in May, Sears had said it identified 100 underperforming stores – meaning they could be on the chopping block.

Sears and Kmart have now closed more than 500 stores over 15 months through the end of its fiscal quarter on May 5.  At the time, it had about 900 left.

--David Einhorn’s main hedge fund at Greenlight Capital fell 7.7 percent in June, bringing the first half loss to almost 19 percent, according to client updates viewed by Bloomberg.  Over the same period of time, the S&P 500 was up 2.6 percent this year on a total return basis.  The HFRX Global Hedge Fund Index, an indicator of industry performance, declined about 1 percent in the period.

Ergo, Einhorn has sucked and his investors are furious.  His outfit has produced lousy results for years now, down 28 percent since the end of 2014, one of the worst showings among his peers. 

At $5.5 billion, Einhorn’s assets were less than half of where they were at their peak, with investors pulling out almost $3 billion in the last two years.

--As a loyal CNBC viewer, I never watch Fox Business Network, so I was surprised to see in Forbes that FBN swept the ratings race in the second quarter, according to data released Tuesday by Nielsen.  Fox Business has now beaten CNBC for seven consecutive quarters, and for the first time, Maria Bartiromo’s Mornings With Maria beat CNBC’s marquee morning show, Squawk Box.

Bartiromo led CNBC 109,000 to 104,000 among total viewers in Q2, as CNBC reached a four-year low in both total day and prime-time ratings.

Business Day, 9:30 a.m. to 5 p.m., Monday thru Friday, saw FBN beat CNBC by 203,000 total viewers to the latter’s 165,000.

But, CNBC remains ahead of Fox Business in the key 25-54 demographic. 

It just hit me I’ve been out of the key demographic for years. Talk about a sign the end is near....

I mean once you’re totally irrelevant to advertisers, what do you do?  It’s kind of like my Mets these days, also irrelevant.

--Meanwhile, speaking of dinosaurs, “Jurassic World: Fallen Kingdom,” took in an additional $60 million last weekend, its second in North American theaters, bringing its domestic total to $264.78 million.  But world-wide, the film has grossed $932.4 million.

Foreign Affairs

Iran: After Trump’s tweet last Saturday on oil, and his threats to further reduce Iranian oil production through the re-imposition of sanctions, Supreme Leader Ayatollah Ali Khamenei accused Washington of trying to turn Iranians against their government.

“They bring to bear economic pressure to separate the nation from the system...but six U.S. presidents before him tried this and had to give up,” Khamenei was quoted as saying on his website, referring to Trump.

Wednesday, President Hassan Rouhani told the UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA), that Iran could reduce its cooperation with the body, after he warned President Trump of “consequences” of fresh sanctions against Iranian oil sales.

“Iran’s nuclear activities have always been for peaceful purposes, but it is Iran that would decide on its level of cooperation with the IAEA,” Iranian state news agency IRNA quoted Rouhani as saying after meeting with IAEA head Yukiya Amano in Vienna.

“The responsibility for the change of Iran’s cooperation level with the IAEA falls on those who have created this new situation,” he added.

Earlier, Rouhani said: “The Americans say they want to reduce Iranian oil exports to zero...It shows they have not thought about its consequences.”

What could Iran do?  An Iranian Revolutionary Guards commander said on Wednesday, “If they want to stop Iranian oil exports, we will not allow any oil shipments to pass through the Strait of Hormuz,” Ismail Kowsari was quoted as saying.

Major-General Qassem Soleimani, commander of the Quds force, in charge of foreign operations for the Revolutionary Guards, said in a letter published on IRNA: “I kiss your (Rouhani’s) hand for expressing such wise and timely comments, and I am at your service to implement any policy that serves the Islamic Republic.”

Meanwhile, while protests continue in Iranian cities and towns over the economy, in a recent piece by Thomas Erdbrink of the New York Times, there was a quote from a spokesman for a moderate political group in the country, Mirzababa Motaharinezhad, representing Mardomsalary.

“A good economic and political process was underway in Iran.  Unfortunately, after Trump pulled out from the (nuke) deal openness ended here and a crackdown on activists resumed.”

Editorial / Wall Street Journal

“Iranians are protesting in the streets again, only a few months after the regime crushed nationwide demonstrations over the country’s sagging economy and widespread corruption. The periodic eruptions are a sign of discontent that may spread as the pressure from renewed U.S. sanctions increases.

“The latest upheavals centered in the southwestern city of Khorramshahr over the weekend, after brown fluid started running out of taps.  Hundreds of residents gathered in a public space reserved for Friday prayers and blamed local officials for the lack of potable water, chanting such anti-government slogans as ‘in the name of religion, they plundered us.’  Protests also broke out in nearby Abadan.

“The weekend demonstrations are part of a larger pattern of discontent with the ruling theocracy in Tehran. In December and January, demonstrations erupted in more than 100 cities and towns over inflation, joblessness and graft. Women staged hijab protests, ripping off their veils. In March farmers from Isfahan province in central Iran protested long droughts. In May truckers went on a nationwide strike to protest stagnant wages and rising costs.

“Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani promised that the 2015 nuclear deal, which funneled tens of billions in hard currency to Iran, would usher in better economic times. Instead, the regime used the money to finance its Quds Force operations and Shiite militias in Syria, Iraq, Yemen and Hezbollah in Lebanon.

“President Trump’s May decision to exit the nuclear deal and reimpose financial sanctions is already increasing pressure on the regime. Protesters swarmed Tehran’s Grand Bazaar last month after the local currency, the rial, slumped to 90,000 to the dollar in the black market. The rial has fallen roughly by half since the end of 2017, as traders and banks anticipate a harder time getting dollars. Economist Steve Hanke estimates annual inflation has spiked to 126%.

“In August the U.S. Treasury plans to reimpose sanctions on gold and other precious metals, U.S. dollar dealing, trade in Iranian sovereign debt, and autos. In November U.S. sanctions will kick in on ports, shipbuilding, petroleum, energy, insurance, and more. A State Department official suggested last month that the U.S. wants to halt all Iranian oil exports, but on Monday policy planning director Brian Hook said it will consider waivers for countries on  a case-by-case basis.

“Mr. Rouhani responded Tuesday by threatening to disrupt oil shipments from neighboring countries in the Middle East, but that would court U.S. intervention to keep oil flowing through the Strait of Hormuz. The U.S. doesn’t want an oil-price spike with a barrel already selling for nearly $75. But the risks are far greater for Iran if it doesn’t change its marauding behavior because its political control at home is far from certain.”

Nawaf E. Obaid / Wall Street Journal...Mr. Obaid a visiting fellow at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government...

“Mass protests are nothing new in Iran. But nearly 40 years into the failed experiment of the Islamic Republic, an end may be near.

“Iran’s economy is in shambles and its public finances are teetering. Given that about 60% of Tehran’s budget comes from petroleum exports, the best way for the U.S. to hasten regime change is to tighten sanctions while closely coordinating with regional allies to increase global oil supplies and lower prices.   The State Department’s recent announcement that countries will face stringent sanctions if they don’t halt Iranian oil imports by Nov. 4 is a crucial first step. Tehran’s mullahs cannot survive a sustained oil price of $60 a barrel with practically no export revenue....

“Three main factors are pushing Iran to the financial breaking point: public-debt obligations on the brink of default, President Hassan Rouhani’s massive subsidies to politically powerful farming communities, and the mounting costs of its attempts to foment chaos throughout the Arab world.

“For the U.S., sustaining a policy of economic pressure will require unprecedented cooperation.  There are three preconditions for success, one of which is already being met.

“First, Saudi Arabia and Russia – the world’s top two oil exporters – have reached an agremenet to increase output....

“Second, as Iran suffers from its lack of indigenous capital and technology to increase sustained oil production and exports, Saudi Arabia and its allies, especially the United Arab Emirates, should join the U.S. in instituting sanctions against the few international oil companies that will still be willing to invest in Iran’s upstream industry.

“Third, because Iran lacks access to foreign financial markets and U.S. banks are banned from doing business there, its remaining hope is European, and to a lesser extent Asian, banks. The Treasury should send a clear message to foreign financial institutions, including those based in Dubai, that they’ll lose access to U.S. capital markets if they float new credit to Tehran in any form after Nov. 4.

“If President Trump, Saudi Arabia’s King Salman and their allies wish to end the widespread terror caused by this so-called Islamic Republic, they should commit to using oil as a nonlethal weapon.”

*A meeting between ministers from Britain, China, France, Germany and Russia, and their Iranian counterpart in Vienna today, the first time since President Trump left the accord in May that the other parties to the agreement got together, did not go well.  Time doesn’t permit me to expound further.

Syria: Dennis Ross / Washington Post...excellent review of the action.

“Doing the same thing over and over again and expecting a different result may not meet the clinical definition of insanity, but it’s still a pretty good standard. It also happens to define both President Barack Obama’s and President Trump’s approaches to working with Russia on the Syrian civil war. Washington and Moscow have repeatedly issued joint statements outlining principles for addressing the conflict and reducing its horrific humanitarian consequences. Yet over and over again, the Russians have betrayed their commitments.

“Consider the record.  In November 2015, Secretary of State John F. Kerry and Russian Foreign Minister Sergei Lavrov reached an agreement on the Vienna principles. They called for a cessation of hostilities; lifting the sieges on all cities; the unimpeded provision of food, medicine and other humanitarian materials; the drafting of a constitution in six months; and a political transition process of 18 months.  In December 2015, these principles were enshrined in UN Security Council Resolution 2254.  Syrian President Bashar al-Assad’s regime blatantly violated all of the terms: It lifted no sieges and did not allow humanitarian relief to pass unimpeded.

“The Russians, too, did nothing.  Although Assad and the Russians did finally implement a cease-fire two months later, it collapsed by April 2016 as the Assad regime resumed its onslaught against civilian targets, with a special emphasis on hospitals. Much as in his use of chemical weapons, Assad hit hospitals to show that he would respect no limits.  Kerry was reduced to condemning Assad’s attacks while plaintively appealing to Moscow to act on the responsibility enshrined in the December 2015 resolution. ‘We all signed the same agreement and we all supported the same UN Security Council Resolution 2254, which calls for a nationwide cessation of hostilities,’ he said, adding that ‘it calls for a nationwide, full delivery of humanitarian assistance within all of Syria.’

“Clear words, but no consequences.  Not surprisingly, Kerry’s calls were in vain. By the fall of 2016 he tried again, reaching an agreement on a joint operations center with the Russians in the hopes of reducing the violence and making a political process possible.  Once again he was frustrated, declaring that he had ‘profound doubt about whether Russia and the Assad regime can or will live up to the obligations that they agreed to in Geneva.’  The Russian response was to launch a scorched-earth attack on Aleppo, which reduced the eastern half of the city – then Syria’s largest – to rubble. That ended Kerry’s efforts.

“Trump has made his own attempts to get somewhere with the Russians.  On the margins of the Group of 20 summit in Germany in July 2017, he and Putin finalized a cease-fire agreement for southwestern Syria. Trump met again with Putin in November at the Asia-Pacific Economic Cooperation Summit in Vietnam, where they issued another joint statement on Syria. It emphasized the ‘importance of de-escalation areas as an interim step to reduce violence in Syria, enforce cease-fire agreements, facilitate unhindered humanitarian access, and set the conditions for the ultimate political solution to the conflict’ on the basis of UN Security Council Resolution 2254.

“So how did the Russians act after that? Along with the Assad regime and the Iranians, they waged military campaigns that decimated and depopulated three of the four de-escalation areas.  The fourth, the one Trump and Putin had agreed to in southwestern Syria, remained quiet – effectively freeing the Assad regime, with its Russian backers, to attack elsewhere.

“Lately Assad and the Russians have turned their attention to southwestern Syria, bombing relentlessly.  On June 21, the State Department issued a blunt statement warning to the Assad regime and the Russian government about ‘serious repercussions of these violations.’  The Russians intensified their bombing, creating a new refugee flow with more than 270,000 people fleeing to the Jordanian and Israeli borders. Did Moscow face any ‘serious repercussions’? No – only Trump’s pursuit of a summit with Putin.”

So what should Trump do when he meets with Putin in Helsinki? Dennis Ross:

“He should make a virtue of necessity and convey the following points: that the United States will maintain our small presence in Syria until the Islamic State is gone; that unless Iran’s continuing entrenchment in Syria is contained, it will trigger a wider war between Israel and the Iranians; and that we will back the Israelis completely, making it in Putin’s interest to stop the expansion of the Iranians and their proxies in Syria and prevent a major regional escalation....

“Trump could also ask Putin to be his channel to the Iranians.  Apart from limiting the potential for miscalculation with Tehran, it could give Putin a stake in coordinating with us on Iran. With the United States having already conceded Syria to Russia, history tells us we are unlikely to achieve more.”

The past few days on the ground, President Assad’s Russian allies unleashed heavy air strikes  and government forces sought to advance on the ground in southwestern Syria, near Jordan, and the UN’s refugee agency urged Jordan to open its borders to Syrians who have fled the fighting, with the number displaced at more than 320,000...60,000 gathered at the border with Jordan, facing potential slaughter.  Just a week ago, I said the number displaced was 40,000.

The Syrian Observatory for Human Rights said there had been 600 air strikes in 15 hours, Wednesday-Thursday.  Barrel bombs are being employed.

The two-week-old attack has taken a chunk of rebel territory northeast of Deraa city, where some rebels surrendered. Hezbollah is helping lead the offensive but keeping a low profile, pro-Damascus sources told Reuters, defying Israel’s demands that Iran-backed forces stay away.

The Observatory said 150 civilians had been killed.

Assad now has his sights on capturing the frontier with the Golan Heights, reestablishing his status as a frontline leader in the conflict with Israel, the Israelis sending reinforcements to Golan.

Meanwhile, as alluded to above, Washington has done nothing as Assad and Russia violate the deal that set up a “de-escalation zone” in the southwest.

For the anti-Assad rebels, losing the region reduces them to an area in the northwest of the country bordering Turkey and a patch of desert in the east where U.S. forces are stationed near the border with Iraq and Jordan.

North Korea: Secretary of State Mike Pompeo is currently in Pyongyang to press North Korean officials on their plans to denuclearize.  Appearing last Sunday on CBS’ “Face the Nation,” National Security Adviser John Bolton said the U.S. has a plan to rid North Korea of its nuclear weapons within a year if the regime abides by the agreement Kim Jong Un signed with President Trump in Singapore.

“I’m sure that the secretary of state will be discussing this with the North Koreans...about, really, how to dismantle all of their WMD and ballistic-missile programs in a year.”

But Bolton wouldn’t discuss a report that said U.S. intelligence is aware Pyongyang is trying to hide its missile numbers, yet he said that if Kim is willing, denuclearization could happen quickly.

Well there isn’t a single expert who believes the process could take place over a year...it’s multiple years, up to ten or more.

And as for the reports, from Jonathan Cheng / Wall Street Journal:

“North Korea is completing a major expansion of a key missile-manufacturing plant, said researchers who have examined new satellite imagery of the site, the latest sign Pyongyang is pushing ahead with weapons programs even as the U.S. pressures it to abandon them.

“The facility makes solid-fuel ballistic missiles – which would be able to strike U.S. military installations in Asia with a nuclear weapon with little warning – as well as re-entry vehicles for warheads that Pyongyang might use on longer-range missiles able to hit the continental U.S.

“New images analyzed by the Middlebury Institute of International Studies at Monterey, Calif., show that North Korea was finishing construction on the exterior of the plant at around the time North Korean leader Kim Jong Un met with U.S. President Donald Trump in Singapore last month. The U.S. is pushing Pyongyang to dismantle its nuclear, chemical, biological and ballistic-missile programs.

“Last week, 38 North, another organization that monitors North Korea, published satellite images of the country’s main nuclear-research center in Yongbyon, showing that Pyongyang was rapidly upgrading its facilities there.

“At the Singapore summit, Mr. Kim pledged to ‘work toward complete denuclearization of the Korean Peninsula,’ without specifying a timeline or committing Mr. Kim to any immediate actions on his weapons programs. However, Mr. Trump told reporters afterward that North Korea would ‘start that process right away.’  A day later he tweeted: ‘There is no longer a Nuclear Threat from North Korea.’”

Editorial / Wall Street Journal

“Part of the problem is that Mr. Trump didn’t get Kim to commit to a timeline for denuclearization, and Mr. Pompeo says the U.S. will not press for one. The President also failed to get the North to commit to giving the U.S. a complete list of its nuclear facilities. The U.S. could then check the list against intelligence to see if the North is being honest.  Kim may now be exploiting these missed opportunities. Kim promised to dismantle a missile-testing facility at Sohae, but there’s no evidence he is doing so.

“Even if there were a timeline for denuclearization, North Korea might not follow it for long. Kim’s father and grandfather reneged on every denuclearization deal they signed.  But at least the U.S. could use missed deadlines to make a case for new sanctions at the United Nations Security Council.

“The Administration’s best chance of convincing Kim to give up his nukes was the ‘maximum pressure’ sanctions campaign. But China loosened its enforcement after the summit, allowing smugglers to move goods across the border, as Mr. Trump has acknowledged.  The North will exploit loopholes in the existing sanctions to earn more hard currency from slave labor.

“The continuing nuclear-fuel production suggests the North will follow its traditional pattern of dragging out open-ended talks for as long as possible and extracting new U.S. concessions at every step along the way.

“The activity at Yongbyon shows that Kim has pocketed the carrot of a presidential summit without taking steps to denuclearize.  If Mr. Trump doesn’t call him on it, Kim will conclude he can keep getting away with it.”

George F. Will / Washington Post

“As the president prepares, if this time he does prepare, for his second summit, note all that went wrong at the first.  If he does as badly in his July 16 meeting with Vladimir Putin in Finland as he did with Kim Jong Un in Singapore, the consequences could be catastrophic.

“An exceptionally knowledgeable student of North Korea, the American Enterprise Institute’s Nicholas Eberstadt, writing in National Review (‘Kim Wins in Singapore’), says the one-day meeting was for the United States ‘a World Series of unforced errors.’ The result was that North Korea ‘walked away with a joint communique that read almost as if it had been drafted by the DPRK (Democratic People’s Republic of Korea) ministry of foreign affairs.’

“Kim, says Eberstadt, is ‘the boss of a state-run crime cartel that a U.N. Commission of Inquiry wants to charge with crimes against humanity.’ Au contraire, said America’s president, who slathered Kim with praise: Kim, with whom Trump has ‘a very special bond,’ is a ‘talented man’ who ‘loves his country,’ which reciprocates with ‘a great fervor.’ Trump called Kim a ‘very worthy negotiator,’ which might actually have made sense if Kim had been forced to negotiate for the concessions that Trump dispensed gratis.

“North Korea, Eberstadt says, is committed to what he calls its ‘racial socialism,’ which motivates Kim’s ‘central and sacred mission, which is ‘nonnegotiable’ – the unconditional reunification of the Korean Peninsula. This presupposes extermination of the South Korean state, which requires the policy Kim announced last New Year’s Day – to ‘mass-produce nuclear warheads and missiles and speed up their deployment.’

“Eberstadt: ‘Such a program would not be necessary for regime legitimation, or for international military extortion, or even to ensure the regime’s survival: All of those objectives could surely be satisfied with a limited nuclear force. Why then threaten the U.S. homeland?’  America is the guarantor of South Korea’s security, and if Washington can be made to blink at a time and place of Pyongyang’s choosing, the U.S.-South Korea alliance will end, as will the U.S. security presence there. Hence the delusional nature of Trump’s belief: One one-day meeting sufficed to cause the North Korean regime to abandon its raison d’etre.

“In addition to the legitimation supplied to Pyongyang by the pageantry of the summit for which Trump obviously hungered, the official record of the Singapore deliberations reveals no U.S. interest in Pyongyang’s atrocious human rights practices (‘unparalleled in the modern world,’ Eberstadt says) that raise doubts about the fervor with which North Koreans appreciate the supreme leader’s love for them.  In return for Trump’s promise to halt military-readiness operations, Kim gave nothing – no inventory of his commitment to ‘denuclearization’ of the Korean Peninsula, an opaque goal that means only that Pyongyang is not clearly committed to anything – beyond a pre-summit promise to decommission a no-longer-useable nuclear test site.  The New Year’s Day  vow has not been disavowed.

“Singapore was, Eberstadt believes, probably the greatest diplomatic coup for North Korea since 1950 and a milestone on ‘the DPRK’s road to establishing itself as a permanent nuclear power.’  And the sanctions that were the Trump administration’s strategy of ‘maximum pressure’ will be difficult to maintain now that a ‘defanged’ – Eberstadt’s description – Trump has declared the nuclear threat banished....

“Meanwhile, this innocent abroad is strutting toward a meeting with the cold-eyed Russian who is continuing to dismantle one of Europe’s largest nations, Ukraine. He is probably looking ahead to ratcheting up pressure on one of three small nations, Lithuania, Latvia or Estonia, each a member of the NATO alliance that, for the first time in its 69 years, is dealing with a U.S. president who evinces no admiration for what it has accomplished or any understanding of its revived importance as the hard man in Moscow, who can sniff softness, relishes what Singapore revealed.”

Russia: U.K. Home secretary Sajid Javid told parliament on Thursday that Britain is being used as a “dumping ground for poison” by the Russian state, as he demanded to know how two British citizens became critically ill through exposure to the same deadly nerve agent, Novichok, that was used to target former Russian double agent Sergei Skripal and his daughter, Yulia.

Javid said it was time for Russian President Vladimir Putin’s government to explain “exactly what has gone on” after a couple in their 40s, Charlie Rowley and Dawn Sturgess, became seriously ill, about eight miles north of the city of Salisbury where the Skripals were found slumped on a bench.

Prime Minister Theresa May described the development as “deeply disturbing.”

It is believed Rowley and Sturgess handled a “contaminated item” that could have been used to carry the deadly never agent and had not been discarded properly, authorities said.

The U.K.’s chief medical officer said that while the risk to the wider public was low, she warned against picking up any unknown dangerous objects such as needles or syringes.

Russia strenuously denied any involvement, but Mrs. May told Parliament that it was “highly likely” that Moscow was behind the attack.  The prime minister issued an ultimatum to Putin’s government to offer an explanation.

Russia is under the spotlight due to the World Cup, and the upcoming summit with President Trump on July 16.  And of course the NATO summit beforehand.

On Thursday, the European Union announced it had extended its economic sanctions against Russia for another six months, saying Moscow had not fulfilled its obligations in the peace process in eastern Ukraine.

For his part, Trump said he plans to raise the issue of Russia’s “malign activity” in Europe, its efforts to meddle in the 2016 U.S. election, and allegations that Moscow possesses banned missile technology in the one-on-one meeting with Putin.

Mexico: Leftist Andres Manuel Lopez Obrador rode a wave of populist anger fueled by rampant corruption and violence to victory in the country’s presidential election on Sunday, a landslide that upended Mexico’s political establishment and handed him a sweeping mandate to reshape the country.

Known in his country as “AMLO,” the win puts a leftist leader at the helm of Latin America’s second-largest economy for the first time in decades.

With his coalition partners, Lopez Obrador will hold a majority in Congress, potentially giving him more power to enact his policies.

The core promises of AMLO’s campaign – to end corruption, reduce violence and address Mexico’s endemic poverty – were immediately popular with voters, but now the people will want to see results.

AMLO, who doesn’t take office until December, said in his victory speech: “I call on all Mexicans to reconciliation, and to put above their personal interests, however legitimate, the greater interest, the general interest. The state will cease to be a committee at the service of a minority and will represent all Mexicans, rich and poor, those who live in the country and in the city, migrants, believers and nonbelievers, to people of all philosophies and sexual preferences.”

As for U.S.-Mexico relations, President Trump extended an olive branch in a congratulatory tweet on Sunday night:

“Congratulations to Andres Manuel Lopez Obrador on becoming the next President of Mexico.  I look very much forward to working with him.  There is much to be done that will benefit both the United States and Mexico!”

Lopez Obrador embraced a “Mexico first” stance against Trump during the campaign, and went so far as to call him a racist “neo-fascist.” AMLO blasted the proposed border wall and repeatedly promised that if it does get built, Mexico won’t be paying for it.

Random Musings

--Presidential tracking polls...

Gallup: [July 1] 42% job approval for Trump, 53% disapproval
Rasmussen: [July 6] 47% approval, 52% disapproval

--In a Quinnipiac University poll released Monday, 63% of voters agree with the landmark Supreme Court decision on Roe v. Wade, while 31% disagree. 65% of women agree with the decision, 61% of men.

Republicans, though, disagree by a 58-36 margin.

All other listed parties, education, age and racial groups agree with the decision, including 84% of Democrats, 71% of African Americans, and white voters with a college degree 70%.

--Democrats truly are idiots if they think the ‘abolish ICE’ campaign that whipped up their extreme element is a winner come November.  It’s beyond stupid, and establishment Democrats such as Senate Minority Leader Charles Schumer (N.Y.) certainly know that.

Editorial / USA TODAY

“With President Donald Trump and the Republican Party so thoroughly abandoning the political mainstream, Democrats have an opportunity to position themselves as the ascendant party for years to come.

“But that assumes they don’t commit their usual blunders, which they appear to be doing right now on immigration with an ‘Abolish ICE’ campaign. That campaign, pushed by young activists and adopted by several party leaders, is a non-starter.

“While Trump’s immigration policies are hugely unpopular, abolishing the Immigration and Customs Enforcement agency is not a message the mainstream will buy. In fact, it plays right into Trump’s tweeting hands, allowing him to change the subject from the inhumane treatment of immigrants to Democrats’ perceived weakness on border security.

“The campaign is a classic liberal overreach, following the argument that the Democratic Party should push further to the left to counter the rightward turn of Republicans. That ignores political reality. Liberals, while growing, are still a considerably smaller part of the electorate than conservatives.

“In the 2016 election, for instance, 35% of voters identified themselves as conservative while only 26% said they were liberal.  The largest group – 39% called themselves moderates.  Forming a liberal-moderate alliance is a necessity for Democrats.

“To that end, they could advance sensible immigration policies that are more humane than Trump’s, reflect the values of a great nation, and continue the works of former Presidents Ronald Reagan and George W. Bush.

“But such policies should also strive to keep the flow of illegal immigration at manageable levels. This requires border enforcement and an acknowledgement that the law much have meaning.”

--Marc A. Thiessen / Washington Post

“Democrats have a new theory for how they can win back Congress and the White House. Just like ‘soccer moms’ helped put Bill Clinton in the Oval Office in 1996, and ‘NASCAR dads’ helped George W. Bush win in 2004, Donald Trump, the theory goes, was elected because of ‘#NeverHillary’ voters who didn’t particularly like him but despised her.  Axios reports that Democrats are targeting the ‘20% of Trump’s voters [who] told exit pollsters they didn’t like him’ hoping these reluctant Trump voters will help power a ‘blue wave’ in the 2018 midterms and defeat President Trump in 2020.

“One problem with that theory: The left’s nonstop, over-the-top attacks on Trump are not peeling those voters away from him; they are pushing them further into the president’s camp.

“In recent weeks, Trump derangement syndrome on the left has reached critical mass. First, there was Robert De Niro’s ‘f--- Trump’ tirade at the Tony awards, followed by Samantha Bee’s calling Ivanka Trump a ‘feckless c---‘ on her TV show. Then the owners of the Red Hen restaurant threw out White House press secretary Sarah Huckabee Sanders because she works for the president, while chanting protesters heckled Secretary of Homeland Security Kirstjen Nielsen at a Mexican restaurant. Rep. Maxine Waters (D-Calif.) added fuel to the fire by openly calling on mobs of left-wing activists to ‘absolutely harass’ Trump officials. Then, there were the countless Trump opponents in the media, Congress and on Twitter who compared family separations at the southern border with Nazi Germany, and the TIME magazine cover depicting Trump staring down heartlessly at a crying migrant girl and implying she was separated from her mother (until it emerged that she had not in fact been separated from her mother).  And now come the threats to block Trump’s Supreme Court nominee before he has even nominated one.

“How do liberals think that 20 percent of reluctant Trump voters respond to these displays of unbridled contempt? They are outraged not at Trump but at his critics. The unhinged hatred for the president makes these voters almost reflexively defend him.  Don’t take my word for it. The New York Times recently interviewed dozens of tepid Trump voters who explained how the incessant attacks are causing them to rally around the president.  ‘Gina Anders knows the feeling well by now,’ the Times reports.  ‘President Trump says or does something that triggers a spasm of outrage. She doesn’t necessarily agree with how he handled the situation. She gets why people are upset.’ But Anders, who the Times says has ‘not a stitch of ‘Make America Great Again’ gear in her wardrobe, is moved to defend him anyway.’ When she hears the ‘overblown’ attacks on Trump, she says, ‘It makes me angry at them, which causes me to want to defend him to them more.’ Another reluctant Trump voter, Tony Schrantz, agrees. ‘He’s not a perfect guy; he does some stupid stuff,’ he tells the Times.  ‘But when they’re hounding him all the time it just gets old.’

“These are exactly the voters Democrats are hoping to win back.  Instead, they are doing the opposite....

“The left’s miasma of contempt may feel cathartic, but it is the best thing that ever happened to Trump. Indeed, it may very well get him reelected.”

--The controversy over how much Ohio Republican lawmaker, Rep. Jim Jordan, may have known about an Ohio State University former team doctor and alleged sexual abuse on athletes has come to the fore after former Ohio State wrestler Mike DiSabato and four other wrestlers spoke to NBC News and the Wall Street Journal to publicize Dr. Strauss’ conduct.  DiSabato and the others, though, have only recently begun to criticize Jordan, who was an assistant wrestling coach at the school at the time, for ignoring athletes’ concerns despite allegedly knowing that Strauss was molesting student-athletes.

“These are serious allegations and issues. The university has rightfully initiated a full investigation into the matter. The speaker will await the findings of that inquiry,” Doug Andres, a spokesman for House Speaker Paul Ryan (R-Wis.) said in a statement.

President Trump told reporters Thursday he didn’t believe the allegations against Mr. Jordan. “I believe Jim Jordan 100 percent. He’s an outstanding man.”

Chris Davey, a spokesman for the university said in an email Thursday: “We are aware of reports that individuals at the university did not respond appropriately during Richard Strauss’ time at Ohio State from 1978 to 1998. These allegations are troubling and are a critical focus of the independent investigation that remains underway.”

Christine Brennan / USA TODAY

“While it comes as absolutely no surprise that Trump is standing by a political ally, it is reprehensible that he chose to say those words at this time in the midst of another of our nation’s college sex abuse scandals. Obviously, Trump has no idea if Jordan was told about the alleged molestation or not. The only people who know are the student-athletes, perhaps their friends and families, and Jordan and perhaps his friends and family.

“Nonetheless, the president took one look at the most serious of American college sports scandals and turned it into political theater. What a disservice this is to Ohio State’s investigation, and to the five men who had the courage to come forward with their allegations against not only Strauss, but also their former assistant coach who now happens to be one of the most powerful men in the nation.

“Now that you’ve heard from Trump, listen to two of the former wrestlers.

“Shawn Dailey, 43, told NBA News on Thursday that he was groped half a dozen times by Strauss in the mid-1990s.

“ ‘I participated with Jimmy (Jordan) and the other wrestlers in locker room talk about Strauss,’ Dailey said. ‘We all did. It was very common knowledge in the locker room that if you went to Dr. Strauss for anything, you would have to pull your pants down.’

“Dailey, who called Jordan ‘a close friend,’ said he is a Republican and contributed to Jordan’s first political campaign for state representative in 1994.

“ ‘What happened drove me out of the sport,’ Dailey said. ‘So I was surprised to hear Jim say that he knew nothing about it. Jimmy’s a good guy, but to say that he had no knowledge of it. I would say that’s kind of hurtful.’

“And Mark Coleman, another former Ohio State wrestler and a former UFC world champion, told The Wall Street Journal that Jordan was aware of the abuse and did not take action.

“ ‘There’s no way unless he’s got dementia or something that he’s got no recollection of what was going on at Ohio State,’ said Coleman, who said he was Jordan’s roommate on several competition trips.

“Jordan and those who support him in the political realm are already crying conspiracy, that it’s some kind of political plot. A storyline like that plays well with Trump, obviously.

“The stakes could not be higher for Jordan. He must know that everyone at Penn State, USA Gymnastics and Michigan State who failed to act, or looked away, and then lied about it, lost their jobs, their reputations, basically everything.

“That’s what Trump is worried about. But Trump can’t save Jordan.  After Penn State, and after USA Gymnastics and Michigan State, we can be certain of this:

“If Jordan is found to have known about the alleged sexual abuse at Ohio State and done nothing, he will not survive.”

--At the last minute, New Jersey lawmakers put the finishing touches on a $37.4 billion state budget deal last weekend.

The budget won’t raise the sales tax, as new Democratic Gov. Phil Murphy wanted, but will hit wealthy taxpayers with higher taxes on income above $5 million, which is expected to raise about $280 million in new revenue.

And it includes higher corporate taxes and closes loopholes that are expected to generate more than $800 million.

Assembly Minority Leader Jon Bramnick (a great guy who should be governor one day), said that July 1, 2018, “should be declared Phil Murphy tax and spend day” in New Jersey.

None of what the Democrats passed is helpful in terms of keeping the wealthy in my state.  Taxes are outrageously high here, and the likes of $billionaires David Tepper and Leon Cooperman have fled the state in terms of their official residence (for Florida), thus taking gobs of tax revenue with them.

And there is little reason for major corporations to consider moving here, though many of them receive incentives...which isn’t the right way to run government. [See Wisconsin and Foxconn, as Wisconsinites will learn one day.]

But in the past week, in my town of Summit, the Morris Ave., bridge project was finally finished! What should have taken about nine months, max, took nearly three years!!!

Editorial / Wall Street Journal

“(The legislature’s / Governor’s moves) will give New Jersey the fourth highest marginal income tax rate on individuals and the second highest corporate rate after Iowa.  The corporate tax increase will supposedly last two years and then phase out over the next two years, but that’s what politicians always say.

“The two Democrats (Murphy and State Senate leader Steve Sweeney) claim this will do no harm because about 0.04% of New Jersey taxpayers will get smacked. But those taxpayers account for 12.5% of state income-tax revenue and their investment income is highly mobile. The state treasurer said in 2016 that a mere 100 filers pay more than 5.5% of all state receipts. Billionaire David Tepper escaped from New Jersey for Florida in 2015, and other hedge fund managers could follow. Between 2012 and 2016 a net $11.9 billion of income left New Jersey, according to the IRS....

“About two-thirds of New Jersey’s $3.5 billion income outflow last year went to Florida, which doesn’t have an income tax.  Meantime, the state has been bribing corporations with billions in tax credits to stay put. This year the state expects to spend $545 million on corporate welfare, and the cost could double by 2020 – thus consuming the $440 million that the new tax increases are projected to raise.

“While the new taxes will finance more spending, the state still isn’t sufficiently funding pensions.  Pension and health costs are projected to double over five years to $10.7 billion and consume a quarter of the state budget. The fair question is why any rational person or business that can move would stay in New Jersey.”

--A Detroit Free Press / USA TODAY Network investigation found that the SUV revolution is the leading cause of escalating pedestrian deaths nationwide, which are up 46 percent since 2009.

“Almost 6,000 pedestrians died on or along U.S. roads in 2016 alone – nearly as many Americans as have died in combat in Iraq and Afghanistan since 2002. Data analyses by the Free Press/USA TODAY and others show that SUVs are the constant in the increase.”

Federal safety regulators have known this for years, that SUVs, with their higher front-end profile, “are at least twice as likely as cars to kill the walkers, joggers and children they hit, yet have done little to reduce deaths or publicize the danger.”

Among U.S. cities with a population of at least 200,000, Detroit has the highest pedestrian death rate in fatal traffic crashes.  34.5 deaths per 100,000 residents, 2010-2016. Newark, N.J. is second at 29.1.

As SUV sales increase, so will the deaths.  Though some cities have made a difference. For all the criticism some of New York’s measures to reduce pedestrian deaths have received, such as a reduced speed limit and more midblock crosswalks, such deaths were cut in half in just four years.  [Former Mayor Michael Bloomberg started much of it and deserves the major credit, not current Mayor Bill de Blasio.]

--A story in the Wall Street Journal by Melissa Korn notes that “Nearly half of students who graduated from Lehigh University, Princeton University and the University of Southern California this year did so with cum laude, magna cum laude or summa cum laude honors, or their equivalents. At Harvard and Johns Hopkins, more got the designations than didn’t.”

At USC, which requires a GPA of at least 3.5 for the lowest honor, cum laude, 44% now qualify, ditto Lehigh, which requires a 3.4.

Stuart Rojstaczer, a former Duke University professor who has studied grade inflation for years, said, “A 4.0 does signal something significant, that that student is good. A 3.7, however, doesn’t. That’s just a run-of-the-mill student at any of these schools.”

A reminder...your editor graduated from Wake Forest “summa cum lousy, with distinction.”

--That is just a remarkable scene in Thailand as rescuers try to figure out the safest way to free a young soccer team trapped for two weeks in a cave in the northern part of the country. We’ve all seen the same pictures and coverage of the event, and thank god for the Thai navy SEAL divers and others on the international rescue team, but it’s far from mission accomplished, a race against time...the monsoon rains.

Then Friday morning we learned a Thai rescuer died, a former member of the elite SEAL unit who had volunteered as part of the operation.  Samarn Poonan died when his oxygen ran out as he was laying oxygen tanks along a potential exit route.

And now with a return of the rains, and the oxygen issue we just learned about, you can only pray for the children, their coach, and the  rescuers.

--Finally, I noted last week that I had skimmed through President Ronald Reagan’s speech (9/17/1987) in Philadelphia on the bicentennial of the signing of the U.S. Constitution, Sept. 17, 1787.

It’s worth forcing your kids to read this summer instead of having their brains rot in front of a computer.  The following is just the final paragraphs. 

“During the summer of 1787, as the delegates clashed and debated, (George) Washington left the heat of Philadelphia with his trout fishing companion, Gouverneur Morris of Pennsylvania, and made a pilgrimage to Valley Forge. Ten years before, his Continental Army had been camped there through the winter. Food was low, medical supplies nonexistent, his soldiers had to go ‘half in rags in the killing cold, their torn feet leaving bloodstains as they walked shoeless on the icy ground.’ Gouverneur Morris reported that the general was silent throughout the trip. He did not confide his emotions as he surveyed the scene of past hardship.

“One can imagine that his conversation was with someone else – that it took more the form of prayer for this new nation, that such sacrifices be not in vain, that the hope and promise that survived such a terrible winter of suffering not be allowed to wither now that it was summer.  One imagines that he also did what we do today in this gathering and celebration, what will always be America’s foremost duty – to constantly renew that covenant with humanity, with a world yearning to breathe free; to complete the work begun 200 years ago, that grand, noble work that is America’s particular calling – the triumph of human freedom, the triumph of human freedom under God.

“I have, a number of times, said that you may call it mysterious, but I have always believed that this land was put here to be found by a special kind of people. And may I simply say also, a man wrote me a letter, and I would call to your attention what he did to mine. You could go from here to live in another country, France, but you wouldn’t become a Frenchman.  You could go to Japan and live there, but you wouldn’t become a Japanese. But people from every corner of the world can come to this country and become an American.”

So much I want to say concerning today reading this, but I’ll bite my tongue.

---

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

God bless America.

---

Gold $1255
Oil $73.92

Returns for the week 7/2-7/6

Dow Jones  +0.8%  [24456]
S&P 500  +1.5%  [2759]
S&P MidCap  +1.9%
Russell 2000  +3.1%
Nasdaq  +2.4%  [7688]

Returns for the period 1/1/18-7/6/18

Dow Jones -1.1%
S&P 500 +3.2%
S&P MidCap +4.7%
Russell 2000 +10.3%
Nasdaq  +11.4%

Bulls N/A [47.6 / 18.4 split last week]
Bears

Have a great week.

Brian Trumbore