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12/01/2018

For the week 11/26-11/30

[Posted 11:30 PM ET, Friday]

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Edition 1,025

Another crazy week on Planet Earth, at least in the U.S., as Wall Street roared back from its correction mode on the heels of dovish talk from the Federal Reserve and misguided optimism on a possible trade deal inked in Buenos Aires at the G-20 summit tomorrow by Presidents Trump and Xi Jinping.

We also had extensive chatter concerning General Motors’ announcement it was closing plants in North America, much to Donald Trump’s ire.

But speaking of Trump, let’s advance right to.....

....Trump World      

A second guilty plea on Thursday by Michael Cohen, Donald Trump’s personal lawyer, raised new questions about Trump’s dealings with Russia while he was also establishing Republican foreign policy during his run for the presidency.  Trump had repeatedly said he had no ties to Russia.

But the Special Counsel’s Office is investigating Moscow for alleged interference in the 2016 election and possible collusion with Trump’s campaign.  Russia has denied U.S. intelligence conclusions that it meddled and Trump has decried the investigation as a “witch hunt.”

Special counsel Robert Mueller’s team has secured convictions against more than two dozen Russian nationals and entities, as well as a number of Trump’s associates, including former campaign chairman Paul Manafort, who learned he faces sentencing in March.  Mueller this week said Manafort had been lying to federal prosecutors, breaching his plea agreement, according to a court filing Monday.

Mueller said in the filling that after signing a plea agreement: “Manafort committed federal crimes by lying to the Federal Bureau of Investigation and the Special Counsel’s Office on a variety of subject matters.”

President Trump told the New York Post he’s never discussed a pardon for Manafort, but “I wouldn’t take it off the table.”

Trump ripped Mueller’s probe and charged that Manafort and the others were all asked to lie by the special counsel.

“If you told the truth, you go to jail,” Trump said.

Cohen, who had already pleaded guilty to campaign finance violations and other financial crimes in a separate case brought by federal prosecutors in New York, then said he had lied to Congress about a proposed Trump Organization skyscraper in Moscow.

Cohen’s plea agreement with Mueller’s team showed the Trump Organization pursued the scheme into at least June 2016, further than previously disclosed.  By June of that year, Trump was the presumptive Republican nominee, but he was denying any business interests (or loan obligations) in Russia.

Cohen told Mueller he briefed Donald Trump three times on the Moscow Tower project, as well as members of Trump’s family.

Prior to leaving for Buenos Aires on Thursday, Trump called Cohen a “weak person” and a liar, telling reporters in part:

“It doesn’t matter because I was allowed to do whatever I wanted during the campaign.”

Sen. Chris Murphy (D-Conn.) tweeted on Friday: “It’s not some wild coincidence that the Administration’s foreign policy is most inexplicable toward the two countries – Russia and Saudi Arabia – where the Trump family pursues the most business.”

Friday morning from Buenos Aires, Trump tweeted:

“Oh, I get it!  I am a very good developer, happily living my life, when I see our Country going in the wrong direction (to put it mildly). Against all odds, I decide to run for President & continue to run my business – very legal & very cool, talked about it on the campaign trail...

“...Lightly looked at doing a building somewhere in Russia.  Put up zero money, zero guarantees and didn’t do the project. Witch Hunt!”

Cohen, in written testimony to both the House and Senate intelligence committees last year, said the Trump Tower Moscow deal was abandoned in January 2016.

“By the end of January 2016, I determined that the proposal was not feasible for a variety of business reasons and should not be pursued further,” Cohen said then.

The plea deal, though, says that Cohen continued to pursue the project through June 2016, the last known discussion about it being “on or about June 14,” 2016, which is significant because it was the same day the Washington Post broke the story that Russia had hacked the Democratic National Committee.

John Podhoretz / New York Post

“When it comes to Russian collusion, I’ve always been a skeptic....

“Today, I’m not such a skeptic any longer.  Here’s why.

“For starters, we now know, from the plea deal between Trump lawyer Michael Cohen and special counsel Robert Mueller that the Trump organization was actively seeking business opportunities in Moscow even as Trump was securing the GOP nomination.  Given the transactional nature of both Trump and Putin, the idea that quid pro quos might have been discussed is impossible to dismiss.

“Second, we have, in the past few days, learned of the first possible connection between Russian intelligence and actions taken by the president. This is a little hard to unravel. There’s a radio guy named Randy Credico. There’s a conspiracy monger named Jerome Corsi. And there’s Trump political consigliere Roger Stone....

“It seems there was something in the DNC emails that suggested Hillary might have been unwell. Those emails came from Russian intelligence. WikiLeaks boss Julian Assange told Credico about the fact that the emails were going to be released and that Trump should talk about Hillary’s medical condition. And Trump did.

“So: Russian intel gave dirt to Assange, who informed Credico, who in turn gave Corsi a heads-up, who told Stone.  Who told Trump.

“One last point: Trump campaign manager Paul Manafort, who received tens of millions from Ukrainian politicians aligned with Moscow.   Manafort was tried and convicted on charges brought by Mueller, but none of them related to the campaign.

“Mueller may not be done with him, and clearly Manafort isn’t done with Trump, either. So those who are as collusion-skeptical as I was might want to keep your powder dry.”

Editorial / Washington Post

“The question of whether President Trump colluded with Russia to tilt the 2016 election is important. But it’s not the only important question in the Russia investigation, as revelations Thursday from special counsel Robert S. Mueller III make clear. The disclosures suggest that Mr. Trump deceived voters about his business aspirations in Russia even as he asked for their votes during the primaries of 2016. That is not a minor transgression.

“Michael Cohen...admitted in court Thursday that he lied to Congress about Mr. Trump’s effort to develop a marquee building in Moscow.  Mr. Cohen had said previously that the effort ended before the 2016 Iowa caucuses.  In fact, according to the special counsel’s documents, it continued into June 2016, when Mr. Trump was the presumptive GOP president nominee....

“Mr. Cohen told a Manhattan judge Thursday that he lied about the Moscow planning to help Mr. Trump’s political messaging.  The president responded by lashing out at Mr. Cohen and saying that his former lawyer is now lying.  Mr. Trump apparently did not know or did not care that the special counsel had released email evidence bolstering Mr. Cohen’s current position.  Perhaps sensing that no reasonable person would believe him, Mr. Trump simultaneously maintained that it would not have been a problem if he had pursued the Moscow project during the campaign.

“That was not Mr. Trump’s attitude before, when he flatly denied Russia connections during a campaign in which he seemed suspiciously fond of Russian strongman Vladimir Putin.  ‘The Dems said maybe it is Russia dealing with Trump. Crazy!’ Mr. Trump tweeted in July 2016.  ‘For the record, I have ZERO investments in Russia.’  Mr. Trump clearly meant to give the impression that Moscow was irrelevant to his personal interests. After assuring the American people he did not have financial relationships with Russia and subsequently winning the election, Mr. Trump was even more definitive.  ‘I HAVE NOTHING TO DO WITH RUSSIA – NO DEALS, NO LOANS, NO NOTHING!’ he tweeted shortly before his 2017 inauguration.

“In fact, as Post columnist David Ignatius found in an extensive investigation last year, ‘The simple truth is that Trump has been hungry for Russia projects for more than three decades.  He has repeatedly touted plans for a Moscow mega-development and has courted a steady stream of investors from the former Soviet Union for ventures in New York, South Florida and other locations.’

“The collusion question is still outstanding. But there is little room for doubt that Mr. Trump wanted to conceal his business goals in Russia.  His denials, as the public can now see more clearly than ever, are not credible.”

Editorial / Wall Street Journal

“Special counsel Robert Mueller on Thursday gave cable TV countless more hours of programming with a new plea deal with Donald Trump’s former personal attorney, Michael Cohen....

“If you believe the heavy media breathing, Mr. Trump is now, or once again, a goner.  At last here is a clear 2016 link between candidate Trump and Russia. Cohen must know more, and it’s only a matter of time before we learn that Mr. Trump was conspiring with Vladimir Putin in return for who knows what.

“The reality: Who knows?  The Steele dossier was supposed to be the smoking gun, but that turned out to be a fraud. Then the famous 2016 Trump Tower meeting with Russian functionaries was supposed to be proof of collusion, but nothing more has come of that.

“On its face, the Cohen court filing is hardly a crime or impeachable evidence. The filing says Cohen explored a hotel deal in Moscow for about six months in 2016, and that Russians with ties to the Kremlin wanted to get Mr. Trump to visit Russia and meet Mr. Putin.

“But the deal fell through for reasons that aren’t explained, and Mr. Trump never made the trip.  On Thursday President Trump called Cohen a ‘liar,’ which is demonstrably true. Mr. Trump also said there was ‘nothing wrong’ in considering a private business deal when he wasn’t President, which is true in a criminal sense though it was dumb for a presidential candidate.

“As usual, the best posture is to avoid hyperventilating and size up the evidence as it emerges. There is still no public evidence proving a Trump-Russia campaign conspiracy.”

Personally...I agree with the Journal’s last point.  Befitting my “wait 24 hours” dictum, you won’t find an instance in all these columns of your editor saying Donald Trump colluded with the Russians (as much as my critics want to believe I did).

I have done nothing when it comes to the Mueller investigation but lay out the facts as they were presented each week, and included outside opinion. My criticisms of Donald Trump, yes, many-fold, have been on other facets of his presidency. Certainly I have been highly critical of Trump’s interactions with Putin, such as at Helsinki, and wondered what he was hiding, but that wasn’t Mueller specific. Ditto his endless lies.

But if I had to take a stab at it at this point, I’d agree with frequent Trump defender Alan Dershowitz, who said on ABC’s “This Week” with George Stephanopoulos last Sunday:

“I think the (Mueller) report is going to be devastating to the president and I know that the president’s team is already working on a response...

“When I say devastating, I mean it’s going to paint a picture that’s going to be politically very devastating. I still don’t think it’s going to make a criminal case,” he said.

Yes, to overturn the will of the people, the 2016 presidential election, you need to reach a high bar and nothing we were presented this week concerning Cohen’s latest plea deal shows direct illegality.  As many a pundit has said in the aftermath, it’s not illegal to lie to the public as Trump did during the campaign.

Democrats would be fools, though, to overplay their hand at this point.  It would behoove them to just sit back and wait, like the rest of us, to see what else the special counsel has.

What Donald Trump has to know, deep down, however, is that Robert Mueller is made of sterner stuff than he is.

Trumpets....

--The United States, Canada and Mexico signed a North American trade pact on Friday in Buenos Aires, a new NAFTA, officially known as the United States-Mexico-Canada Agreement (USMCA), though I thought it was funny Canadian Prime Minister Justin Trudeau insisted on calling it NAFTA, much to President Trump’s chagrin.  Trudeau also called on Trump “to remove the tariffs on steel and aluminum between our two countries.”

On his last day in office, Mexico’s outgoing President Enrique Pena Nieto was warmer, saying the new deal was forged with the “firm belief that together we are stronger and more competitive.”

But the trade pact still must be approved by legislators from the three countries, and come January, the Democrats have control of the House.  That said, while President Trump has way overhyped this deal, as in there are truly minimal changes to the old trade pact in the grand scheme of things, Democrats should pick other fights and just support it.

--Senate Republicans blocked a vote Wednesday on legislation protecting special counsel Mueller in his probe.  Sen. Mike Lee (R-Utah) objected to a request by Sens. Jeff Flake (R-Ariz.), Cory Booker (D-N.J.) and Chris Coons (D-Del.) for unanimous consent to proceed to a full vote on the bill, citing constitutional issues previously brought up by the late Supreme Court Justice Antonin Scalia.

“As Justice Scalia  explains, we cannot convert an office like this one...without creating a de facto fourth branch of government fundamentally undermining the principles of the separation of powers that is so core to our liberty,” Lee said.

Senate Republican leader Mitch McConnell of Kentucky also dismissed the bill as unnecessary.

“This is a solution in search of a problem,” McConnell said.  “The president is not going to fire Robert Mueller...We have a lot of things to do to try to finish up this year without taking votes on things that are completely irrelevant to outcomes.”

I agree.

--Trump tweets on the Mueller investigation....

“While the disgusting Fake News is doing everything within their power not to report it that way, at least 3 major players are intimating that the Angry Mueller Gang of Dems is viciously telling witnesses to lie about facts & they will get relief.  This is our Joseph McCarthy Era!”

“So much happening with the now discredited Witch Hunt. This total Hoax will be studied for years!”

“Did you ever see an investigation more in search of a crime?  At the same time Mueller and the Angry Democrats aren’t even looking at the atrocious, and perhaps subversive, crimes that were committed by Crooked Hillary Clinton and the Democrats.  A total disgrace!”

“When will this illegal Joseph McCarthy style Witch Hunt, one that has shattered so many innocent lives, ever end-or will it just go on forever?  After wasting more than $40,000,000 (is that possible?), it has proven only one thing-there was NO Collusion with Russia.  So Ridiculous!”

“When Mueller does his final report, will he be covering all of his conflicts of interest in a preamble, will he be recommending action on all of the crimes of man kinds from those ‘on the other side’ (whatever happened to Podesta?), and will he be putting in statements from....

“....hundreds of people closely involved with my campaign who never met, saw or spoke to a Russian during this period? So many campaign workers, people inside from the beginning, ask me why they have not been called (they want to be).  There was NO Collusion & Mueller knows it!”

“The Phony Witch Hunt continues, but Mueller and his gang of Angry Dems are only looking at one side, not the other.  Wait until it comes out how horribly & viciously they are treating people, ruining lives for them refusing to lie.  Mueller is a conflicted prosecutor gone rogue....

“..The Fake News Media builds Bob Mueller up as a Saint, when in actuality he is the exact opposite.  He is doing TREMENDOUS damage to our Criminal Justice System, where he is only looking at one side and not the other.  Heroes will come of this, and it won’t be Mueller and his...

“...terrible Gang of Angry Democrats.  Look at their past, and look where they come from.  The now $30,000,000 Witch Hunt continues and they’ve got nothing but ruined lives. Where is the Server?  Let these terrible people go back to the Clinton Foundation and ‘Justice’ Department!”

The next day it was a “$40,000,000 Witch Hunt”.  It was just one after another on the Mueller probe all week.  The president wants you to read them, which is why in a retelling of the history of the week I have to include a few.

On other topics....

“While CNN doesn’t do great in the United States based on ratings, outside of the U.S. they have very little competition. Throughout the world, CNN has a powerful voice portraying the United States in an unfair....

“....and false way. Something has to be done, including the possibility of the United States starting our own Worldwide Network to show the World the way we really are.  GREAT!”

[See my tidbit on Hungary below.]

--Trump foreign policy....

Walter Russell Mead / Wall Street Journal

“The case against Mr. Trump’s international disruption isn’t as strong as most in the foreign-policy establishment believe. There are certainly dangers in the president’s impulsive approach – some of them grave – but Mr. Trump has one big point in his favor. The liberal-internationalist vision, which holds that the world is a kind of greater European Union, moving inexorably toward its own kind of ‘ever closer union’ via a strengthening network of international institutions, seems to be running out of steam.

“As countries like Turkey, India, China, Brazil and Nigeria develop, they are striving more to strengthen their sovereignty than to pool it. By shifting America’s stance away from the losing defense of legacy liberal internationalism that characterized the John Kerry years, the Trump disruption might, might point the way toward a more sustainable U.S. diplomatic approach.

“But for Mr. Trump to be remembered as something other than a diplomatic wrecking ball, his administration will have to rapidly shift gears. Destruction ceases to be creative when it doesn’t lead to the construction of something better.  After the cautious first stage and the dramatic second stage, a third stage of strategy and leadership must follow.

“In the Middle East, the murder of Jamal Khashoggi and the humanitarian catastrophe in Yemen seem to be forcing the administration to review its strategic options.  Simply outsourcing U.S. regional policy to Riyadh and Jerusalem won’t do.  Washington needs a vision and a policy that both reassures our local allies and disciplines some of their wilder instincts.  Walking away from the Iran deal was easy; implementing a new regional strategy will be hard.  Like his predecessors, Mr. Trump will be judged not by his intentions but by his results.

“The administration’s China policy has also reached an inflection point.  The tariff card has been played. But what is the administration’s vision for the future of an economic relationship that, despite Chinese abuses, has benefited both countries and cannot be ripped apart without profound damage to many U.S. companies and industries?  How will the administration balance its interest in building a strong global alliance to counter China and its efforts to extract more favorable trading terms from partners like Germany and Japan?  Can the Trump administration develop an approach to China that is bipartisan enough to ensure Democrats don’t scrap it all when they return to power?

“Unlike the Soviet Union, China has engaged successfully with the international market system and as a result has many more channels of influence around the world. How will the administration orchestrate a global response?  This is a harder task than the Truman administration faced; is the Trump administration up to the job?

“In Europe, President Trump has been blunt about the many shortcomings he sees in existing U.S. relationships with key allies. He hasn’t, however, put forward a compelling vision of the kind of trans-Atlantic relationship he would like to see instead.

“It is the same on trade. We know Mr. Trump prefers bilateral deals to multilateral ones and he sees reciprocity as the key to fairness. But what would a reformed World Trade Organization look like?  How does Mr. Trump want trade disputes to be handled? Can Mr. Trump subject the international economy to an endless series of trade shocks without undermining the domestic prosperity on which his future and that of his party depend?

“Donald Trump spent much of his pre-political career as a builder and developer.  President Trump has mostly been in the demolition industry where foreign policy is concerned. That will likely change in the next few months as the unrelenting pressure of world events forces the administration to define and communicate its objectives more clearly.  As stage two gives way to stage three, it will become easier to see where this administration wants to take the world – and whether it is having any success.”

--President Trump dismissed a landmark report compiled by 13 federal agencies detailing how damage from global warming is intensifying, saying he is not among the “believers” who see climate change as a pressing problem.

The analysts who put the report together concluded climate change poses a severe threat to the health of Americans, as well as to the country’s infrastructure, economy and natural resources.  The findings, though, are at odds with the administration’s rollback of environmental regulations and absence of any climate action policy.

“One of the problems for a lot of people like myself, we have very high levels of intelligence but we’re not necessarily such believers,” Trump said during an Oval Office interview with the Washington Post.

--President Trump says he’s prepared to declassify documents that would be “devastating” to his opponents if Democrats go after him next year when they control the House.

“If they want to play tough, I will do it,” Trump told the New York Post in an interview Wednesday.  “They will see how devastating those pages are.”

Trump had planned to release documents related to the Russia investigation, but reversed course in September, under pressure from intel chiefs, both here and abroad, that key secrets would be divulged, but now he says he wants to save the documents until they are needed to counterpunch Democrats.

As to probable Democratic investigations into the president’s businesses, tax returns, Russia dealings and more once they take over the House, Trump labeled it “presidential harassment.”

“If they want to go and harass the president and the administration, I think that would (be) the best thing that could happen to me because I’m a counter puncher and I will hit them so hard, they’ve never been hit like that,” Trump said.  “You know what?  I think that will help my campaign. That will be the beginning of my campaign as president.”

Wall Street and the U.S. / China Trade War

In a widely-anticipated speech on Wednesday, Federal Reserve Chair Jerome Powell injected investors with a strong dose of optimism, saying that the central bank’s policy rate is now “just below” estimates of a level that neither brakes nor boosts a healthy economy, i.e., “neutral,” which the market took to mean the Fed’s three-year tightening cycle is drawing to a close and that while there is likely to be a December rate hike at the 12/18-12/19 confab, the fourth of the year, the odds of three more in 2019 as now forecast had significantly diminished.

Powell told the Economic Club of New York audience, “We know that things often turn out to be quite different from even the most careful forecasts.  Our gradual pace of raising interest rates has been an exercise in balancing risks.”  Rates “are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy,” he added.

Powell also said Wednesday that the Fed is paying “very close” attention to economic data even as it expects continued “solid” growth, low unemployment and inflation near its 2 percent target.  The Fed takes equally seriously the risks of hiking too quickly and shortening the economic expansion, and on the other hand of hiking too slowly and prompting higher inflation or financial instability, the Fed chairman said.

But was Powell, under intense pressure from President Trump, intending to send a message or was he simply misinterpreted.

Just last month, Powell said the benchmark fed funds rate was still a “long way” from the neutral level and that the Fed might even tighten beyond it, with stocks swooning on the remarks.

But now we have this dovish shift in language, President Trump the day before telling the Washington Post that he is “not even a little bit happy” with his Fed chief.

It seems Powell was admitting that the Fed may have been too aggressive and was open to slowing the rate of hikes.  There has been evidence of a slowdown overseas, after all.  Other senior Fed officials echoed Powell’s more dovish tone this week as well.

But it’s all going to come down to the data and this week some of it was very strong.

Personal income rose a better-than-expected 0.5% in October, with consumption rising 0.6%.  But the Fed’s preferred inflation barometer, the core personal consumption expenditure index, ex-food and energy, was up only 1.8% in October from a year earlier, below the central bank’s 2.0% target.

A Chicago reading on manufacturing for November came in at a whopping 66.4 (50 being the dividing line between growth and contraction), far higher than forecast.

But figures on housing remained punk, with October new-home sales running at an annualized pace of just 544,000, well below expectations, while the S&P CoreLogic Case-Shiller 20-city home price index for September was up 0.3%, 5.1% year on year, less than forecast and down from the prior month’s 5.5% rise.  Home-price gains have now declined six consecutive months, a further sign rising mortgage rates have helped sap the momentum from the market.

Las Vegas continued to lead the nation with a 13.5% year-over-year price increase, followed by San Francisco’s 10.0%.  New York City brought up the rear at 2.7%.

Add it all up and the Atlanta Fed’s GDPNow barometer for fourth-quarter growth ticked up to 2.6%.  [Third-quarter growth was unrevised at 3.5% this week, the second look at Q3.]

As for the start of the holiday shopping season, which the National Retail Federation is predicting will be a strong one, with sales up 4.8% compared with last year, foot traffic was a little lighter than last year, according to various surveys, but online sales were up substantially, again, as spelled out further below.

Editorial / Wall Street Journal

“The Federal Reserve’s top two officials rolled out their latest thinking on monetary policy this week, and financial markets cheered as stocks rallied some 2.5% Wednesday.  Investors aren’t always right in their initial impressions of Fed rhetoric. But in this case they seem to have judged correctly that the Fed is reconsidering its plans for higher interest rates, and for the right reasons.

“Jerome Powell, the Fed Chairman, fed the stock rally almost in real time when he said in a New York speech Wednesday that the current fed-funds rate is ‘just below the broad range of estimates of the level that would be neutral for the economy.’....

“More telling was the speech a day earlier by Richard Clarida, the Fed’s Vice Chairman, who offered a detailed explanation for this apparent rethinking.  Mr. Clarida explained that the Fed is close to meeting its twin targets of full employment and 2% inflation.

“But, crucially, he added that even in the current tight labor market ‘there may still be some further room for participation’ by nonworkers to increase....

“This suggests the Powell-Clarida Fed won’t be a slave to Phillips Curve calculations that suggest rates must rise in a ratchet when the jobless rate hits a certain level....

“This being Donald Trump’s Washington, many want to interpret all this as a sign that Mr. Powell is capitulating to the President’s loud criticism of higher rates.  Mr. Trump was especially pointed in an interview with the Washington Post on Tuesday in which he said he’s ‘not even a little bit happy’ with his choice of Mr. Powell as Fed Chairman. As always, everything is personal with Mr. Trump.

“But as the speeches this week make clear, there are good reasons to be cautious about rate increases regardless of Mr. Trump’s hectoring, which is best ignored. Global growth is slowing, bad trade policy is deterring investment, and the Fed is also gradually reducing its bond portfolio with effects on asset prices that no one can predict. Modesty for the Fed is always the best policy, but especially as it unwinds a decade of unprecedented monetary machinations.”

On Trade, President Trump issued conflicting statements all week on the topic of the trade war with China, and his meeting tomorrow with China’s President Xi in Buenos Aires.  The president on Thursday said there was “a long way to go” on tariffs with China and urged companies to build products in the United States to avoid them.

The state-run China Daily newspaper said in an editorial today that Washington must be “fair minded” if it wants to defuse spiraling tensions.

“Beijing wants a deal, just as Washington does. And it is willing to cooperate with Washington in dealing with concerns about trade if they are fair-minded,” the paper said.  “Should there be any other aspirations, such as taking advantage of the trade spat to throttle Chinese growth, then an agreement is unlikely to be reached.”

A deal involving a total scrapping of all tariffs is not expected, although some have not ruled out a “pause” of some kind where any planned tariff increases (such as from 10% to 25% in January on Chinese goods) are put on hold while talks between the two sides continue.

Another potential deal being discussed is a suspension of U.S. tariffs in return for Beijing lifting restrictions on China’s purchases of U.S. farm and energy products.

But the above doesn’t address the overriding issue of intellectual property theft and forced technology transfers, and you aren’t getting any kind of deal on this topic at a G-20 dinner.

As I go to post, much is also being made about the apparent participation of hardline trade hawk Peter Navarro at tomorrow’s soiree, Navarro not originally on the list.

I have largely supported the Trump administration on its China stance.  But my concern is that Americans, and the financial markets, don’t understand that China is determined to have its way.  As I noted last week, their cyber espionage operation is running at a fever pitch.  They are trying to steal as much intellectual property as possible.  They must be stopped.   But they won’t take the pressure well.

Simply put, there isn’t a soul who knows how this will end, long beyond anything the parties come up with tomorrow.

One more.  Last week I also wrote of how China was instructing its remaining independent economic think tanks to tow the party line, or else.

Well, this week one of these remaining firms was forced to cease operations.  As reported in the Financial Times:

“On Monday evening local time the Beijing-based Unirule Institute of Economics announced that ‘in the current institutional environment in China, unless normal protection by the Constitution and laws is confirmed, Unirule...will cease public activities under its name temporarily,” after the business license of its affiliate company was revoked....

“The move by authorities to shutter the group comes amid intensifying censorship of economic news....

“Unirule, founded in 1993 and known as a center of liberal thought, was forced out of its Beijing headquarters in October of last year and temporarily evicted from its new headquarters elsewhere in the capital city in July.

“(Executive director Sheng Hong) has been a staunch critic of economic policy under President Xi Jinping’s tenure and warned in an essay published on the Financial Times’ Chinese language website on October 19 that China was at risk of abandoning Deng Xiaoping’s ‘reform and opening up’ policy of free markets and open trade.”

So regardless of what emerges from the Trump-Xi get together, ‘wait 24 hours’ if you hear anything positive.  Sheng Hong just told you everything you need to know.

Europe and Asia

A few notes on the Euro area (EA19), Eurostat releasing a flash estimate on November inflation, 2.0%, down from 2.2% in October. The core figure, ex-food and energy, was only 1.1%, and has been between 1.1% and 1.3% all year.

Eurostat also released data on October employment for the EA19, 8.1%, unchanged on the month and down from 8.8% in October 2017.  This remains the lowest rate recorded in the euro area since November 2008.

Among the member states, the rate in Germany is 3.3%, France 8.9%, Italy 10.6% (and up from 10.1% in August), Spain 14.8% (down from 16.6% a year earlier), 3.7% in the Netherlands, and 5.3% in Ireland.

These figures compare to 3.7% in the United States.

Brexit: The next 10-12 days are beyond critical.  Last weekend, a last-minute deal to meet Spanish demands for a say on the future of Gibraltar after Britain leaves the European Union salvaged a summit which then proceeded to deliver a Brexit accord to British Prime Minister Theresa May. So after 20 months of tortuous negotiations, an agreement on the UK’s withdrawal received the backing of the EU’s 27 leaders, paving the way for an “orderly withdrawal.”

BUT...now the deal needs to be approved by the UK Parliament, and such approval is far from certain.  In fact, as of now, seemingly impossible.

The critical vote in Parliament has been set for December 11, with debate commencing Tuesday.  Labour, the Lib Dems, the SNP, the DUP and many of Mrs. May’s Conservatives are set to vote against, so the prime minister is appealing to the public to get behind the agreement, arguing it is the best deal she could have struck – and honors the result of the June 2016 referendum.

The EU withdrawal agreement is 585 pages and spells out the terms of the UK’s exit, covering items such as the $50 billion “divorce bill” (to cover commitments Britain has made to the bloc’s budget), citizens’ rights for the roughly 3 million EU citizens living in the UK (the EU reciprocating with respect to an estimated 1.3 million UK citizens in its member states), and the Northern Ireland “backstop” – a way to keep the Irish border open, if trade talks stall.

Actual negotiations on a trade relationship will begin prior to the March 29, 2019 exit date, and there will be a 21-month transition period, which can be extended until December 2022, though it wouldn’t be this far out due to a national election in the UK earlier that year.

Britain and the EU will enter a joint customs area that will relieve the need for customs checks between Northern Ireland and the Republic of Ireland, which would effectively prevent the UK from entering trade deals with non-European economies like the U.S. or China.

The UK can only exit this customs arrangement when the EU agrees that doing so wouldn’t restore a hard border between Northern Ireland and the Republic of Ireland.

There was no formal vote on Sunday, with the EU proceeding by consensus, the European Council saying in a one-page document that it wanted the orderly withdrawal and the “closest possible” relationship in the future.

Before the meeting, European Council president Jean-Claude Juncker said the UK’s departure was a “tragedy” for the EU, adding that there are “no smooth divorces.”

Lithuanian President Dalia Grybauskaite said there were a number of possible outcomes if the UK Parliament rejected the deal, including an extension of the negotiations or another referendum.

But this is the best and only deal Britain is getting, as the EU has made clear, and this is what Parliament doesn’t seem to understand, some members believing they will still be able to amend the accord, and this is going to be part of the coming week’s debate.

Mrs. May could lose the vote, the government would then probably collapse, and then you really have a crisis.  Should Parliament vote it down, she has 21 days to make a statement on how the government is to proceed.

Foreign Secretary Jeremy Hunt said the parliamentary arithmetic was “challenging,” telling the BBC that the UK was getting “between 70% and 80%” of what it wanted, while the agreement “mitigated” most of the negative economic impacts.

IF Parliament approves the deal, however, it then goes back to the European Council, where a majority of countries (20 out of 27 states) will need to vote for it.  It also must be ratified by the European Parliament, in a vote expected to take place in early 2019.

Critics / opponents say the deal cedes too much control to the EU, but the Brits who supported the referendum years ago were naïve to think the EU was just going to roll over.

The bottom line is no one is happy.  Democratic Unionist leader Arlene Foster – who wants to leave the EU – said her party’s parliamentary pact with May’s Conservatives would be reviewed if MPs approved the deal as she believes the agreement as it stands would leave Northern Ireland and the rest of the UK “still within the European structures with no say in its rules.”  [Which is true.]

Former Prime Minister Tony Blair, who wants another referendum, said the deal was a “dodo.”

Should the UK crash out of the EU with no deal and no transition, the Bank of England warns it would lead to the sharpest drop in national income since the second world war.  Home prices, for one, the BoE said on Wednesday, could plummet 30 percent.

Prime Minister May was forced to concede that any form of Brexit would leave Britain worse off initially than if it had remained in the bloc.

This is a freakin’ mess. 

Italy: The European Central Bank expects that Italy will eventually adhere to EU spending rules and reach a deal with the European Commission in their standoff over spending, ECB Vice President Luis de Guindos said yesterday.  “If you start to apply expansionary fiscal policy...markets start to penalize Italian government bonds.  What you gain in terms of fiscal expansion for the real economy, can be lost in terms of funding.”

The government said it is sticking to its main 2019 budget goals but there were signs the deficit target might be lowered in the wake of a spending review to be disclosed soon.

In other words, the Five Star / League coalition appears to be climbing down.

League Leader Matteo Salvini told Italian media: “We use common sense and substance – we’re not getting stuck over 0.1 percent more or less.  If in Brussels they think they can hold the government and 60 million Italians hostage over a decimal place, we are very willing to remove that excuse.”

Luigi Di Maio, leader of the anti-establishment Five Star Movement, said: “The issue is not the conflict with the EU on a deficit of 2.4 percent, what’s important is that not even a single person is kept out of the core measures.”

Di Maio is pushing a citizen’s income to support poorer families and a lower retirement age as part of the budget.  The League is focused on defending the tax cuts it has promised.

The yield on the Italian 10-year fell to 3.21% this week from 3.40% the prior one on the heels of the optimism a compromise can be found between the European Commission and the Italian government.

Hungary: From Patrick Kingsley / New York Times....

“Hundreds of private Hungarian news outlets have been simultaneously donated by their owners to a central holding company run by people close to the far-right prime minister Viktor Orban, cementing Mr. Orban’s grip on the Hungarian news media.

“If approved by the country’s regulatory authorities, which are led by an official appointed by Mr. Orban, the deal will place most leading private Hungarian outlets under the control of a single, state-friendly entity, in a move that is unprecedented within the European Union, according to Freedom House, a global rights watchdog that analyzes press freedom....

“Today, more than 500 Hungarian news outlets take a pro-government stance, compared with just 31 in 2015, according to research by Atlatszo, one of the few Hungarian news websites that remain independently owned.”

Turning to Asia, China’s official manufacturing PMI for November fell to 50.0, dead-on the line between growth and contraction, indicating no change from the previous month; the first time the sector failed to expand since July 2016.  Mid-size and smaller factories were particularly hard-hit, with sub-indices tracking their activity dropping to 49.1 and 49.2, respectively.

The official non-manufacturing PMI dropped half a point to 53.4.

The government has eased some policies to spur growth, but credit growth is still in a downward trend, so the economy is likely to slow further.

In Japan, industrial production for October beat expectations, up 4.2 percent year on year, according to a preliminary reading from the Ministry of Economy, Trade and Industry, following a rough third quarter that was skewed by some natural disasters in September.

Japanese retail sales rose the most in October in 10 months, 3.5% yoy, a fifth straight month of gains, private consumption accounting for 60 percent of the Japanese economy.

A separate reading on employment had the jobless figure at 2.4% for October, up a tick, while the core reading on consumer prices for the month was just 1.0%.

Street Bytes

--Owing to the aforementioned Fed talk, and misplaced optimism over a U.S.-China trade deal, it was quite a week on Wall Street; the Dow Jones advancing 5.2% to finish November in the black, up 1.7%, while the S&P 500, with its 4.9% gain, finished up 1.8% for the month, after being down 2.9% in November as of last Friday.  Nasdaq needed all of its 5.6% gain, the best in years, to squeak out a 0.3% gain for the month.

Shares in Apple, however, lost 18% in November, and as of the market close, Microsoft took over the top spot in market capitalization at $851 billion to Apple’s $847 billion.  What a solid run for Microsoft...nothing spectacular, just executing in every phase of the game.

--U.S. Treasury Yields

6-mo. 2.52%  2-yr. 2.79 %  10-yr. 2.99%  30-yr. 3.29%

With the Fed’s dovish tone this week, the yield on the 10-year fell back below 3.00% for the first time in 12 weeks.

--Monday, General Motors announced it would shutter five North American plants, stop building six low-selling passengers cars in North America and cut up to 15,000 jobs.  GM said it had no plans to shift production of those vehicles to other markets.  Among the models impacted are the Chevy Cruze, the Cadillac CT6 and the Buick LaCrosse.

The plant closures will be in Detroit; Lordstown, Ohio; and Oshawa, Canada, as well as transmission plants near Baltimore and in Warren, Mich.

Many of those who will lose jobs are working on conventional cars with internal combustion engines. CEO Mary Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust.

“We’re right-sizing our capacity for the realities of the marketplace and the transformation that’s occurring,” Barra said.

The moves are expected to save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5bn reduction in capital spending.  Those cuts are in addition to $6.5bn that the company has previously announced would be in effect by the end of this year.

One of the four U.S. plants, Lordstown, is in a state critical to victory in the 2020 presidential campaign.  At a rally there last summer, President Trump told people not to sell their homes because the jobs are “all coming back.”

Rep. Tim Ryan (D-Ohio), whose district includes Lordstown, blamed Trump for the job losses.

The area “has been yearning for the Trump administration to come here, roll up their sleeves and help us fight for this recovery,” Ryan said in a statement Monday.  “What we’ve gotten instead are broken promises and petty tweets.  Corporations like General Motors and the president himself are the only ones benefiting from this economy.”

President Trump said on Wednesday that new auto tariffs were “being studied now,” asserting they could prevent job cuts such as at General Motors.  Trump tweeted that the 25 percent tariff placed on imported pickup trucks and commercial vans from markets outside North America in the 1960s had long boosted U.S. vehicle production.  “If we did that with cars coming in, many more cars would be built here,” Trump said, “and G.M. would not be closing their plants in Ohio, Michigan & Maryland.” 

Trump later tweeted: “Very disappointed with General Motors and their CEO, Mary Barra.  We are now looking at cutting all @GM subsidies, including for electric cars.”

Most believe the president has no power to change existing electric-car subsidies, and it would be up to him to pressure Congress to revise existing tax law, which is a non-starter.

The U.S. currently has a 2.5 percent tariff on imported cars and sport utility vehicles from markets outside North America and South Korea. The new North American trade deal exempts the first 2.6 million SUVs and passenger cars built in Mexico and Canada.  Automakers are now worried the GM moves will prompt Trump to take action faster than expected on new tariffs.

The Trump administration has for months been considering imposing dramatic new tariffs on imported vehicles, with the Commerce Department circulating draft recommendations to the White House on its investigation into whether to impose tariffs of up to 25 percent on imported cars and parts on national security grounds.

“The President has great power on this issue – Because of the G.M. event, it is being studied now!” Trump tweeted.

The prospect of tariffs of 25 percent on imported autos and parts has sent shockwaves through the auto industry, with both U.S. and foreign-brand producers lobbying against it and warning that national security tariffs on EU and Japanese vehicles could dramatically raise the price of many vehicles.

The United States slapped an additional 25 percent tariff on Chinese-made vehicles earlier this year, prompting China to retaliate.  China currently imposes a 40 percent tariff on U.S. vehicles, while the United States has a 27.5 percent tariff on Chinese vehicles.

The European Union currently has a 10 percent tariff on imported vehicles, and President Trump wants them to buy more American-made cars and trucks (ditto Japan).

GM reiterated it was committed to investing in the United States, saying it has invested $22 billion in its U.S. manufacturing operations since 2009, when it underwent a government-led bankruptcy restructuring.  The government has estimated the U.S. Treasury’s bailout fund lost $11.2 billion on GM’s $49.5 billion rescue and restructuring.

As the Wall Street Journal noted:

“The auto industry’s factory utilization – a measure of how much production capacity a plant uses based on a 16-hour workday – has been declining steadily in North America, to 82% so far this year from 93% in 2015, according to research firm LMC Automotive. That underused floor space could become a bigger problem for auto makers if sales drop, analysts said, potentially forcing more layoffs or plant closures.”

Trump tweets on the topic:

“The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country. It is called the ‘chicken tax.’ If we did that with cars coming in, many more cars would be built here....

“....and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue – Because of the G.M. event, it is being studied now!”

“Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland.  Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get!  We are now looking at cutting all @GM subsidies, including...

“...for electric cars. General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off.  I am here to protect America’s Workers!”

“General Motors is very counter to what other auto, and other, companies are doing. Big Steel is opening and renovating plants all over the country.  Auto companies are pouring into the U.S., including BMW, which just announced a major new plant. The U.S.A. is booming!”

Editorial / Wall Street Journal

“President Trump believes he can command markets like King Canute thought he could the tides. But General Motors has again exposed the inability of any politician to arrest the changes in technology and consumer tastes roiling the auto industry.

“GM said Monday it plans to eliminate 15% of its salaried workforce in North America and stop production at five plants that employ 6,700 workers, including one in storied Lordstown, Ohio.  ‘We are taking these actions now while the company and the economy are strong to stay in front of a fast-changing market,’ CEO Mary Barra said.

“The U.S. auto maker plans to redeploy some $4.5 billion in annual savings to more profitable truck, electric-car and autonomous-vehicle manufacturing.  Investors cheered by bidding up GM’s stock, but the President reacted like a spurned suitor.  ‘You know, the United States saved General Motors and for her to take that company out of Ohio is not good,’ he said Monday, adding Tuesday that he might end GM’s subsidies.  GM shares promptly fell 2.6%.

“As a candidate Mr. Trump lambasted Ford for shifting production to Mexico, then took credit when the company announced it would keep its Lincoln MKC in Louisville, Kentucky.  But both decisions were motivated by market changes, and so is GM’s.

“GM is halting production at plants that make sedans including the Chevy Cruze, Impala and Volt hybrid. Americans are buying more trucks and SUVs amid lower gas prices and better fuel efficiency. Small cars make up a third of U.S. vehicle sales compared to half in 2012. About 75% of GM sales last year were trucks and crossovers, up from 60% in 2012.  Its share of the small-car market has also fallen by a third in a decade amid Japanese and Korean competition.

“The main driver of GM’s failure a decade ago was its uncompetitive labor contracts. Rather than reduce costs or idle unproductive plants, GM offered bigger discounts to goose sales. But the market tides still rolled in, and GM executives have learned that staying competitive is necessary to avoid another collapse.

“GM is essentially following Ford and Fiat Chrysler by phasing out small-car production.  Last year GM cut production by a third at Lordstown and nearly half at a plant in Oshawa, Ontario.  Keeping these factories open at lower levels of output would waste human and physical capital that could be deployed to more productive and profitable units....

“Boosting production of higher-margin vehicles is imperative as auto sales flatten after eight years of robust growth and rising interest rates curb demand.  Material costs have also increased due to Mr. Trump’s steel and aluminum tariffs.  GM said in July the tariffs could raise its costs by as much as $700 million this year, which is equal to the pay of about 9,400 employees.

“Mr. Trump and liberals howling about layoffs ignore that GM is steering more investment toward electric and autonomous vehicles.  Electric cars make up only about 1% of U.S. auto sales and often sell at a loss though they could become more popular as batteries improve.

“But China is GM’s largest market, and it sold a third more cars there than in the U.S. last year.  Beijing has set electric-car quotas, and to be competitive GM has little choice but to make cars in China.  All the more so after Beijing raised tariffs on U.S.-made cars to 40% from 15% in retaliation for Mr. Trump’s tariffs.

“GM is also betting that autonomous cars will become the rage as millennials and aging baby boomers give up the wheel....

“Mr. Trump and Democrats seem to believe that with the right mix of tariffs and managed trade they can return to a U.S. economy built on steel and autos....

“But an economy doesn’t run on nostalgia.... Amid a strong economy, most laid-off GM employees should find work.  GM may also decide to retool idled factories to produce trucks as Fiat Chrysler has with a plant in Michigan.

“Mr. Trump thinks his trade machinations can overrule the realities of the marketplace, but he’s as wrong as Barack Obama was about the climate and regulation.  Fine with us if he wants to end subsidies for all car companies.  But if he intervenes to make GM less competitive, Mr. Trump will merely hurt more workers.”

Editorial / Washington Post

“Though his language was the crudest, Mr. Trump was hardly the only politician bashing GM for the layoffs.  Ohio’s two senators, Sherrod Brown (D) and Rob Portman (R), did so, too, as did Canadian Prime Minister Justin Trudeau, whose country will also see a plant close. The American politicians branded GM an ingrate, guilty of repaying the $49.5 billion bailout that rescued the firm in 2009 with ‘corporate greed,’ as Mr. Brown put it.

“The truth of the matter is that General Motors long ago exited bankruptcy and the government sold its last shares almost five years ago. The point of that exercise was to restructure the company, then set it free again to make its own decisions under new management.  Monday’s announcement by chief executive Mary Barra, painful as it was to those affected, is entirely consistent with that government intervention, not a betrayal of it....

“Passenger cars such as the Cruze account for just 30 percent of all new-car sales in the United States; crossovers, SUVs and pickups account for the rest. Ms. Barra’s plan, which the company says will save $6 billion over the next two years, is a rational attempt to meet these new market realities.  If it succeeds, the company will be able to expand and, possibly, create more jobs, and it will be less likely to need another bailout in the future – which is the outcome everyone, from the White House on down, should be rooting for.”

--Ford Motor Co. said on Wednesday it will be reshuffling workers at several of its plants to meet rising demand for pickup trucks and large SUVs, a process that will require finding new positions for 150 workers displaced by the changes but not result in job cuts.  The changes also will not require adding new jobs.  The No. 2 U.S. automaker said it is shifting workers from one Kentucky plant making crossover vehicles to another that makes its best-selling F-Series pickup trucks, plus the Ford Expedition and the Lincoln Navigator, both large SUVs.  Ford is also moving 500 jobs to a Michigan plant making transmissions for popular pickup trucks from one nearby that will reduce production to one shift making Mustangs and the Lincoln Continental.  The moves received the approval of the United Auto Workers union.

--Fiat Chrysler pledged on Thursday to spend more than 5bn euros ($5.7bn) on new models and engines in Italy between 2019-2021 in a bid to fill under-utilized plants, conserve jobs and boost operating margins in Europe.  A total of 13 new models or restylings of existing models will be launched in that period, it said.  The carmaker added a big part of the investments will be focused on the development of electric and hybrid engines.  A new Fiat 500 electric model will be produced at FCA’s plant in Turin.

--The 19-year partnership between Renault SA and Nissan Motor Co. is facing its biggest test to date after its larger-than-life leader, Carlos Ghosn, remains in detention in Tokyo for suspected financial misconduct.  Today, Japanese officials extended Ghosn’s detention another ten days.  Authorities now have to file charges by Dec. 10 or arrest him on suspicion of fresh crimes to keep him in custody.

But at issue is the future of the alliance and the current capital structure, with Renault controlling Nissan through its 43 percent stake, while Nissan holds a non-voting 15 percent stake.  But with Ghosn’s arrest, Nissan wants to reduce what it considers Renault’s outsized control of it.

However, today in Buenos Aires, Japanese Prime Minister Shinzo Abe told French President Emmanuel Macron that “the future of the alliance is up to the private-sector shareholders. The government of Japan does not prejudge the future of the alliance.”

--U.S. exports of petroleum products surged to a new record last week, the U.S. exporting 6.3m barrels per day of refined products, as reported by the Energy Information Administration on Wednesday.  Net of imports, product exports totaled 4.3m b/d, also a record high.

The U.S. was a net importer of petroleum products until 2011.  Growth in domestic oil production from shale, along with investments in refining capacity, have flipped the script, the U.S. now a formidable supplier of liquid fuels to the rest of the world.

U.S. producers are pumping a record 11.7m barrels per day, an increase of more than 2m b/d from last year, the EIA estimates.

U.S. crude oil inventories continued to rise as well, however, to the highest level in a year, and the price of West Texas Intermediate closed the week at just $50.72, which did nonetheless break a seven-week losing streak that resulted in oil having its worst month since Oct. 2008.

--The Marriott International hotel chain said today that the database of its Starwood reservation system had been hacked, with the personal details of 500 million guests going as far back as 2014 being compromised.

The hotel group runs more than 6,700 properties around the world and is the world’s largest hotel chain.  It was informed in September of the breach, and an investigation this month revealed unauthorized access had been made on or before Sept. 10, Marriott said in a statement.

The investigation also found that an “unauthorized party had copied and encrypted information, and took steps toward removing it,” the statement said.

Personal details including names, addresses, dates of birth, passport numbers, email addresses and phone numbers for hundreds of millions of guests may have been accessed.   Some credit-card info may also have been compromised.

Marriott said it has set up a dedicated website and call center to deal with questions guests might have. The company said it was attempting to reach affected customers today.

This isn’t Marriott’s only problem these days.  It has also been dealing with strikes by thousands of workers in nine cities who are protesting over issues including health care coverage, wages and protection from sexual harassment.

--The Frankfurt headquarters of Deutsche Bank have been raided by prosecutors in a money laundering investigation.

Germany’s public prosecutor alleged that two staff members have helped clients launder money from criminal activities. 

The investigation was sparked by revelations in the 2016 “Panama Papers” – a huge trove of information leaked from one of the world’s most secretive companies, a Panamanian law firm called Mossack Fonseca.

Other banks have been fined as a result of information in the Panama Papers.

--Cyber Monday brought in an estimated $7.8bn in sales, up nearly 18 percent on last year, which would make it the biggest online shopping day in the U.S., according to Adobe Analytics.

That’s more than the $6.2bn in online sales for Black Friday, up nearly 24 percent on last year.  But it still pales in comparison to China’s $30.8 billion in spending on Alibaba Singles Day last month.

Shares in Amazon.com jumped 13% this week as the company said Cyber Monday was once again the single-biggest shopping day in its history. Amazon also said the five days from Thanksgiving through Cyber Monday broke records.

--Tiffany & Co. reported quarterly sales that missed estimates as Chinese tourists spent less than expected at the jeweler’s stores in the United States and Hong Kong, the shares falling 12 percent in response.  Investors were also disappointed by the company’s failure to raise its full-year profit outlook ahead of the holiday season.

CEO Alessandro Bogliolo tried to reassure investors that while spending outside of China was down, sales in the country were robust.

The company’s comparable-store sales, excluding the impact of currency changes, rose 3 percent, while analysts on average were expecting a rise of 5.3 percent.  Total revenue rose 3.7 percent to $1.01 billion.

--Dick’s Sporting Goods Inc. continues to suffer from its decision earlier in the year to stop selling guns to people under 21, with sales at existing stores and websites falling 3.9% for the three-month period ended Nov. 3, Dick’s specifically citing weakness in the company’s hunting and electronics departments.  Weak gun sales also hit areas like outdoor equipment with fewer hunters coming to the stores.

In the wake of February’s high school shooting in Florida that killed 17, Dick’s announced it would stop selling assault-style guns and would no longer sell guns and ammunition to people under 21.  Walmart followed suit, but it hasn’t said the decision created a drag on sales.

Gun sales overall have slowed in the Trump presidency, as sales tend to surge under Democratic leadership.

The company reported earnings of $37.8 million, compared with $37 million in the year ago period.

--The New York Times reported that Sheryl Sandberg “asked Facebook’s communications staff to research George Soros’ financial interests in the wake of his high-profile attacks on tech companies, according to three people with knowledge of her request, indicating that Facebook’s second in command was directly involved in the social network’s response to the liberal billionaire.

“Ms. Sandberg, Facebook’s chief operating officer, asked for the information in an email in January to senior communications and policy executives. The email came within days of a blistering speech Mr. Soros delivered that month at the World Economic Forum, attacking Facebook and Google as a ‘menace’ to society and calling for the companies to be regulated.

“Ms. Sandberg, who was at the forum – but was not present for Mr. Soros’ speech, according to a person who attended it – told subordinates to examine why Mr. Soros had criticized the tech companies and whether he stood to gain financially from the attacks. At the time, Facebook was under growing scrutiny for the role its platform had played in disseminating Russian propaganda and fomenting campaigns of hatred in Myanmar and other countries.”

Facebook then commissioned a Republican-linked firm, Definers Public Affairs, which gathered information that was then circulated to reporters about Soros’ funding of several American advocacy groups critical of Facebook.

As the Times reported earlier in the month, this set off a public relations debacle for Sandberg and Facebook, as it was accused of trafficking in anti-Semitic attacks against the billionaire.

One of the issues for Sandberg is in her shifting explanations of her role in Facebook’s decision to hire Definers, having first denied knowing that the company had hired the opposition research firm.

My issue for weeks now has been the fact that the use of Facebook’s platform led to the deaths of thousands in places like Myanmar, Sri Lanka and India, and how Sandberg and Mark Zuckerberg did nothing to prevent it.

--Indonesian investigators have said the Lion Air Boeing 737 jet that plunged into the sea, killing 189 people last month, was not airworthy on a flight the day before it crashed.  They further found that Lion Air must improve its safety culture and better document repair work.

The flight from Bali to Jakarta on Oct. 28 had experienced similar technical issues to the doomed flight the next day from Jakarta to Pangkal Pinang.  The pilot of the Oct. 28 flight chose to press on to Jakarta after shutting down the plane’s anti-stall system, the head of Indonesia’s national transport safety committee said.

But it would seem the pilots of the doomed flight the following day may have struggled with the same anti-stall system.  Data from the black box indicates the pilots fought to save the plane almost from the moment it took off, as the jetliner’s nose was repeatedly forced down, apparently by an automatic system receiving incorrect sensor readings.

Investigators said that Lion Air kept putting the plane back into service despite repeatedly failing to fix a problem with the airspeed indicator in the days leading up to the fatal flight.

Investigators have previously said the doomed aircraft had problems with the airspeed indicator and angle of attack (AOA) sensors, which prompted Boeing to issue a special bulletin telling operators what to do when they face the same situation.

But much remains unknown about the tragic crash because the cockpit voice recorder has yet to be recovered.

Lion Air, despite a shoddy safety record, has grown to capture half the domestic market, and is now Southeast Asia’s biggest airline.

--Bayer AG on Thursday said it would cut 12,000 jobs and sell its animal-health business, Coppertone sunscreens and Dr. Scholl’s foot-care products in an effort to win back investors’ trust, the stock price having been hammered by problems related to its acquisition of Monsanto and the nearly 10,000 lawsuits from users of its weedkillers.

In addition to the issues at Monsanto, though, the chemicals and pharmaceuticals giant is facing challenges in most of its businesses, from falling sales of over-the-counter drugs to a dwindling stable of blockbuster prescription medicines.

--HP Inc. reported strong earnings in the third quarter, amid an upswing in the personal-computer market, with the printer and PC giant, born from the 2015 split of Hewlett-Packard, saying it is confident it will see strong growth in technology spending from corporate clients and consumers in 2019.

Revenue rose 10% to $15.34 billion.  HP’s personal-systems segment, which is the company’s largest single segment and includes the PC business, rose 11%.  The printer segment, which includes the confiscatory supplies business, saw a stronger-than-expected 9% increase in revenue.  [I’m bitter, having had to buy another HP printer this week, all of the models with different ink requirements, and each new printer more cheaply made than the one before...so that it will fall apart quicker, whereupon you have to buy another...and another....]

Industrywide, recent data from research firms International Data Corp. and Gartner Inc. shows a recovery in the PC market this year, driven by Windows 10 hardware upgrades for corporate customers.  Gartner estimates overall IT spending will increase 3.2% in 2019, with further growth on into 2020 owing to the upgrade cycle.

For its part, HP has also been investing heavily in 3-D printing, which it sees as a multitrillion-dollar global market.

The company affirmed its annual profit forecast for the current fiscal year.

--Southern California home sales fell 7.5% in October from a year earlier, according to a report released by CoreLogic.  This represented the third straight month of declines, with the figure for October the lowest for the month since 2011.

Real estate agents in the six-county area say the declines are the result of rising mortgage rates and years of steady price hikes, echoing the national trends.

--My favorite store (or nearly favorite), Dollar Tree, saw its shares rise 6 percent Thursday, even as same-store sales at the Dollar Tree-labeled outlets were less than expected, rising 2.3 percent, and those at the newly-acquired Family Dollar stores fell 0.4 percent.  And DLTR cut its sales outlook, slightly.

But the Street seemed to like that the company said tariffs will have minimal impact on its operations this year, while a possible new round of levies on China would be mitigated.

Personally, being a weekly Dollar Tree shopper, I avoid every Chinese made product, so I was kind of surprised at the positive impact of the statement.  [I can’t help but add, any dog owner who buys dog food or treats made in China, at any store, is nuts.  You are handing your pet a death sentence.]

As CNBC’s Jim Cramer, another Dollar Tree lover, noted yesterday, the other reason why the earnings report was well received is the CEO admitted there was a need to rapidly renovate the Family Dollar stores.

--Canada’s economy grew at a 2% annualized rate in the third quarter, vs. 2.9% in the second, amid a slowdown in business spending...see also ‘world.’

--The Food and Drug Administration has figured out that the E. coli outbreak that shut down the romaine lettuce market last week likely originated in the central coast region in California, where the vast majority of lettuce was grown at the time of the outbreak.

The FDA also outlined a new voluntary labeling regime for romaine lettuce to help consumers better identify whether it is safe to eat.  Romaine lettuce entering the market will now be labeled with a harvest location and date, according to the agency.

The FDA advises, “If [lettuce] does not have this information, you should not eat or use it.”

At least 43 were sickened in this latest outbreak, sixteen needing hospitalization.  22 others fell ill in Canada.  Earlier this year, five died in a separate outbreak tied to romaine lettuce.

--For the seven-day period ending Sunday, Broadway reported combined show attendance of 299,235 and a gross of $43 million, both records for Thanksgiving week; 10% higher than Thanksgiving week last year, which had marked the previous peak for the holiday period, according to the industry’s trade group, the Broadway League.

Foreign Affairs

Russia / Ukraine: Russia seized three small Ukrainian naval vessels on Sunday, capturing 24 sailors, at least three of whom were wounded in a shooting by the Russian side, the action briefly blocking passage through the Kerch Strait.  The vessels had been trying to pass through the Strait on their way to the Sea of Azov.

Russia said the action was over their illegal entry into Russian waters, which Ukraine denies.  Ukraine released video and said the exact location where its ships were fired upon showed that they were in international waters.

The Kerch Strait is flanked by Crimea and the Russian mainland, and Ukrainian vessels have to sail through it to reach Ukrainian ports in the Sea of Azov on the other side of the passage.  Russia insists the boats did not notify traffic authorities of their journey, while Ukraine says Russia was notified in advance.

Sunday’s voyage from the Black Sea port of Odessa was not the first that Ukrainian vessels have sailed from there into the Sea of Azov, designated as shared internal waters by Ukraine and Russia by a 2003 treaty that Putin signed himself.

The 24 sailors were ordered jailed for two months by a court in annexed Crimea pending a possible trial. All of the sailors face jail terms of up to six years if found guilty of what Moscow says was a plot to illegally cross the Russian border.  Friday, the Kremlin announced the three commanders have been transported to a prison in Moscow.

Ukrainian President Petro Poroshenko said he plans to restrict the rights of Russian citizens living in the country under temporary martial law following Russia’s actions.

“No restrictions on the withdrawal of deposits, currency exchange transactions or travel abroad will be imposed on Ukrainian citizens,” Poroshenko said in remarks on his Twitter feed.

“These restrictions will be imposed on Russian citizens, and I think it’s totally justified.”

Poroshenko also accused Putin of wanting to annex all of Ukraine and called for NATO to deploy warships to a sea shared by the two nations.

Poroshenko then said Russian men between 16 and 60 have been barred from traveling to the country; the Ukrainian president saying the restrictions have been initiated to prevent Russians from forming “private armies” fighting on Ukrainian soil. 

President Putin accused Poroshenko of provoking the naval clash to boost his flagging popularity ratings before elections scheduled for next March.

Tensions have been high between Russia and Ukraine since Russia annexed the Crimean Peninsula in 2014. The resulting fighting in Ukraine’s east has killed at least 10,000.

President Trump then canceled his planned meeting with President Putin in Buenos Aires, via Twitter, minutes after telling reporters outside the White House:

“I probably will be meeting with President Putin.  I think it is a very good time to have a meeting.”  He added he was getting a report on Air Force One about the clash with Ukraine “and that will determine what I’m going to do.”

Less than an hour transpired then before Trump tweeted:

“Based on the fact that the ships and sailors have not been returned to Ukraine from Russia, I have decided it would be best for all parties concerned to cancel my previously schedule meeting...

“...in Argentina with President Vladimir Putin. I look forward to a meaningful Summit again as soon as this situation is resolved!”

The Kremlin hadn’t been apprised beforehand and thought the meeting was still on.  Then Friday morning, from Argentina, they said there was still going to be an impromptu meeting at the G-20.

British Prime Minister Theresa May, and other European leaders, said Russia must release the Ukrainian boats and sailors and that the UK would continue to push for “appropriate sanctions.”

Editorial / Wall Street Journal

“Russia’s attack against Ukraine over the weekend marks a notable escalation: Russian forces, under Russian flags, openly assaulted their western neighbor.  President Trump said he was ‘not happy,’ while Secretary of State Mike Pompeo condemned ‘this aggressive Russian action.’  Strong rhetoric helps, but there’s also scope for concrete action – especially if the U.S. and Europe cooperate.

“A start would deny Mr. Putin the international respect he craves, and this week’s G-20 summit in Argentina offers a chance to isolate the Russian leader.  President Trump can call off his meeting with Mr. Putin pending a substantive gesture, such as release of the two dozen Ukrainian sailors Russia kidnapped in its skirmish. Such leverage is more effective than whatever charm Mr. Trump thinks he can deploy against Mr. Putin....

“NATO needn’t directly defend Ukraine, which isn’t an alliance member. But increasing its presence in the Black Sea is worth considering as a show of solidarity. Washington and allies also can heighten the potential costs of future Russian actions around the Sea of Azov by selling Kiev more lethal military assistance, such as antiship missiles.

“Ukraine’s Russia problem is a more urgent version of everyone else’s.  Mr. Putin wants to expand his influence from the Arctic Circle to Africa.  Absent a forceful response to the weekend’s events, more Russian affronts will come soon enough.”

Anne Applebaum / Washington Post

“President Trump’s administration is divided, distracted and preparing to contend with Democrats in the upcoming House majority who will, among other things, investigate his past ties to Russia. The E.U., Canada and even Poland came out with official statements condemning the Russian actions long before anything was heard from the United States. On Monday evening Kiev time, the State Department had still not reacted to the events in the Kerch Strait. U.S. Ambassador to the United Nations Nikki Haley’s denunciation of Russia’s ‘outlaw actions’ came many hours after the other statements.

“Whatever the other motives for this staged attack, this kind of passivity may well be what the Russians are counting on. This is the modus operandi they have followed in the past: Take a few steps forward; wait for a reaction. If there isn’t one, move farther. If there is one, wait for the emotions to die down – and then move farther. This incident may or may not end here, but consider it a warning: If we don’t have a broader strategy for ending this war, that will be the pattern for years to come.”

Saudi Arabia / Yemen: The U.S. Senate advanced a measure to withdraw American support for a Saudi-led coalition fighting in Yemen, a blow to President Trump.  In an initial procedural step, the senators voted 63-37 to take forward the bipartisan motion, many of them unhappy with Trump’s response to the murder of Saudi journalist Jamal Khashoggi.  Secretary of State Mike Pompeo and Defense Secretary Jim Mattis had urged the senators not to back the motion.

There are multiple reports the CIA believes Saudi Crown Prince Mohammed bin Salman ordered Khashoggi’s killing, but President Trump has dismissed it, saying the CIA had not drawn firm conclusions.  Instead, Trump has described Saudi Arabia as a vital ally and resisted calls for sanctions directly against the kingdom’s leadership. 

But senators were ticked off that CIA director Gina Haspel did not attend their closed session hearing on relations with the Saudis on Wednesday.  Haspel has heard what Turkey claims is a recording of Khashoggi’s murder and has studied evidence in the case.  Some are calling Haspel’s absence a “cover-up.”  It clearly is.

Even staunch Trump supporter Sen. Lindsey Graham (S.C.) said, “I am not going to blow past this. Anything that you need me for to get out of town – I ain’t doing it until we hear from the CIA.”

Democratic Sen. Bob Menendez (N.J.) said, “It’s time to send Saudi Arabia a message, both on its violation of human rights and the incredible humanitarian catastrophe it’s creating in Yemen.”

Republican Sen. Bob Corker (Tenn.), who chairs the Senate Foreign Relations Committee, said: “We have a problem here.  We understand that Saudi Arabia is an ally, of sorts, and a semi-important country. We also have a crown prince that’s out of control.”

In a statement, CIA spokesman Timothy Barrett said “the notion that anyone told Director Haspel not to attend today’s briefing is false.”  He added that congressional leaders and members of the Senate Intelligence Committee had been fully briefed, but only one of the 14 Republicans who voted to move ahead with the Yemen resolution was.  Shockingly, Trump, Pompeo and national security adviser John Bolton all have pointedly said they have not listened to the tape, and see no reason to do so.

For his part, Sec. Mattis said: “We are seldom free to work with unblemished partners.  Long-standing relationships guide but do not blind us. Saudi Arabia, due to geography and the Iranian threat, is fundamental to maintaining regional and Israeli security, and to our interest in Mideast stability.”

The Saudis have been sending signals that they have other options if the U.S. reduces military ties, including with Russia (and MBS and Putin sure looked chummy today in Buenos Aires), but lawmakers have tired of such strategic arguments, arguing President Trump needs to stand up for American ideals – such as condemning the killing of a journalist.

The resolution under consideration is a bipartisan effort by Sens. Bernie Sanders (I-Vt.) and Mike Lee (R-Utah).  It seeks to invoke the War Powers Act to end U.S. military support for the Saudi-led coalition.  If successful, it would be the first time since the act was passed in 1973 that it has been used to end a foreign operation.

Further debate in the Senate is expected next week.

Separately, I was struck by a discussion on Michael Smerconish’s CNN show Saturday and an interview he had with Seth Jones, Director at the Center for Strategic and International Studies.  Smerconish cites a line from a new study put out by the center, “The good news is that there has not been an attack anywhere near the scale of 9/11 in the U.S. since that day, a significant achievement. The bad news is that the ideology that leads someone to fly a plane into a building or drive a car into a crowded sidewalk seems to have metastasized.”

SMERCONISH: I’m trying to reconcile two conflicting stories about the Saudis this week. In one, we have the President’s official statement defending the Saudis despite the murder of journalist Jamal Khashoggi, and despite the fact that 15 of the 19 hijackers on 9/11 came from Saudi Arabia. And in the other, a new report finds that since 9/11, the number of Sunni Islamic militants operating around the world has quadrupled despite nearly two decades of American led efforts to fight Al-Qaeda and the Islamic state.

A reminder, the Saudis are predominantly Sunnis. Most Iranians are Shia. They’re the two sides in the historic Islamic battle over who is the rightful heir to Muhammad that started in the year 632. So it confuses me not just that the President stands with the Saudis, but that he kicked off his official statement by attacking Iran.  He cites its bloody war in Yemen, efforts to destabilize Iraq’s democracy, support for Hezbollah in Lebanon and Assad in Syria and calls Iran the world’s leading sponsor of terror....

Meanwhile, “The Times” reported that 17 years after 9/11, militants have steadily multiplied....

Seth, why is all of our foreign policy animus being directed against the Shia, Iran, when it seems that the Sunnis, many from Saudi Arabia, are the ones who want to export their terror to us?

SETH JONES: Well, Michael, I think it’s a mistake. I mean, I think Iran and the Shia certainly present a threat to the United States, but at this point, Shia groups, even Hezbollah, are not conducting attacks against the U.S. or trying to. They’re predominantly Sunni groups like the Islamic state and Al-Qaeda. So I think we’ve got the wrong enemy here.

SMERCONISH: Who is the enemy?

JONES: Well, I think there are several enemies, but I think when we look at the number of jihadists right now, and where the attacks are taking place, they are in places like Syria and Iraq and Afghanistan and they’re predominantly Sunni jihadist organizations with Al-Qaeda and the Islamic State being the predominant ones and that’s where U.S. focus should be in targeting these groups overseas.

SMERCONISH: Right...but isn’t that which motivates them our continued presence on what they regard as the Arabian Peninsula, their footprint?

JONES: No, I don’t think that’s entirely correct.  I think when we look at what happened on 9/11, the U.S. was not in Afghanistan. The U.S. was not in many areas of the Middle East, yet they attacked us. I think if we look at the U.K. last year, five major attacks in the United Kingdom. The U.K. does not have a meaningful presence overseas. So they’re willing – they’re really willing to attack any outside country – the British, the Americans and others – that are supporting regimes they’re fighting overseas....

(But President Trump and national security adviser John Bolton are) focusing increasingly on Iran.  I would also point out that the most recent national security strategy of the United States says that the Islamic State has been crushed.  I mean, they clearly have not.

So it’s not just the Iran focus. It’s also this argument that’s just simply not true that jihadist groups like the Islamic State and Al-Qaeda have been defeated or crushed, take whatever word the President has used, that’s simply not true.  In fact, we see a quadrupling since 9/11 in numbers overseas, quite the opposite.

[Your editor has complained the past year that President Trump continues to lie to the American people about success against ISIS...Seth Jones is backing me up.  Both ISIS and Al-Qaeda have sanctuaries in Libya, Somalia, Yemen, Iraq, Syria, Afghanistan and Pakistan.]

Iran: France and Germany agreed to take joint responsibility for an EU-Iran trade mechanism to minimize the risk of U.S. punishment on Iran, but few believe it will cover oil sales, heightening fears for the fate of the international nuclear deal with Iran.  The French-German tactic is an attempt to overcome the refusal of individual EU states to host the mechanism to sidestep the risk of being targeted by the revived U.S. sanctions against Iran.

The U.S. has threatened retribution for sanctions-busting, so the trade mechanism is likely to be scaled back to encompass only less sensitive items such as humanitarian and food products.

“The SPV (Special Purpose Vehicle for trade) is important, but what’s more important to the Iranians is oil and ensuring their exports in the long term,” a senior French diplomat told Reuters.  “None of the measures that we’re trying to put in place will perform miracles, but what we’re trying to do is a series of measures to convince the Iranians to keep to their nuclear commitments.”

Syria: Negotiators from Iran, Russia and Turkey met in Kazakhstan Wednesday for talks aimed at preserving a fragile 10-week-old truce in northern Syria.  In addition to cooling the conflict around the northern province of Idlib – Syria’s last major rebel and militant stronghold – discussions were also focused on creating conditions for the return of refugees and internally displaced people.  The United Nations was represented at the talks, but Washington was not.

The Idlib truce deal is in the balance after an alleged chemical attack in the government-held city of Aleppo Saturday, which has triggered retaliatory Russian air raids.

The exact circumstances of the purported attack on three districts of the government-held city are bitterly disputed.

The Syrian government of Bashar Assad has blamed fighters in neighboring Idlib for the attack, which the Syrian Observatory for Human Rights said hospitalized 94 people.

But more than half of the region is controlled by Hay’at Tahrir al-Sham (HTS), a powerful alliance led by the militants of Syria’s former Al-Qaeda affiliate, and they have yet to comment on the attack.

Afghanistan: Taliban insurgents staged a coordinated attack targeting a security firm in the capital of Kabul on Wednesday, killing at least 10, while the U.S. said an airstrike hours earlier in Helmand province that reportedly killed civilians was conducted by American aircraft.

The assault in Kabul came hours after provincial officials said at least 30 civilians were killed along with 16 Taliban fighters during a battle between Afghan government forces and insurgents.  In self-defense, the ground forced called in an airstrike, according to a U.S. military spokesman in Kabul.  It’s possible the civilian casualties were the result of ammunition the Taliban had stockpiled, which then exploded as a result of the strike, but this all just shows you that the chaos, death and misery continue here, all these years later.

The Taliban has been launching near-daily assaults on Afghan military and police forces and government and other installations throughout the country, and while U.S. and NATO troops formally concluded their combat mission in Afghanistan in 2014, it’s a fact U.S. Special Forces have been used increasingly to buck up the Afghan army.

And so on Tuesday, American forces experienced the worst loss of life so far this year when three soldiers were killed in a Taliban attack, a roadside bomb that went off near Ghazni City; the three Special Forces soldiers having been sent three months ago to save the city from falling to the Taliban.

Another U.S. soldier was killed last weekend, an Army Ranger.

Thus far in 2018, 12 American soldiers have died in combat in Afghanistan along with four other coalition soldiers.

China: Taiwanese President Tsai Ing-wen suffered a crushing electoral defeat last week, after both the so-called pro-independence and the U.S. cards failed to turn the tide in local elections.

Tsai’s Democratic Progressive Party (DPP) now only controls six cities and counties to the opposition Kuomintang’s (KMT) 15. 

The DPP lost Kaohsiung, which has long been a stronghold for the pro-independence camp.

So the surprising outcome prompted Tsai to resign as chairwoman of the party.

It seems the people focused more on the economy rather than political issues.  The next presidential election is 2020.  The KMT has a mainland-friendly policy.  Tsai is expected to seek a second term.

The official China Daily said in an editorial that Tsai had ignored Beijing’s “cooperative stance” and forced relations into a deadlock, and that “her separatist stance has lost her the support of the people on the island.”

Separately, two United States Navy ships have sailed through the Taiwan Strait  in the third such operation this year, as the U.S. increases the frequency of transits through the strategic waterway despite opposition from China.

But while such moves ratchet up tensions with the mainland, they are certainly viewed as a sign of support from President Trump amid growing friction between Taipei and Beijing.

The American Pacific Fleet said in a statement: “The ships’ transit through the Taiwan Strait demonstrates the U.S. commitment to a free and open Indo-Pacific.  The U.S. Navy will continue to fly, sail and operate anywhere international law allows.”

A spokesman for China’s defense ministry said: “The Taiwan issue is a matter of China’s sovereignty and territorial integrity. The will and determination of the Chinese military to protect our sovereignty and territorial integrity is unswerving.”

And on a different matter....

Editorial / Washington Post

“After a few decades of engagement and openness with the West, China under President Xi Jinping has shifted to a strategy of defending and promoting its authoritarian regime, including through an influence campaign inside the United States.  It seeks to ‘penetrate and sway’ the Chinese American community, Chinese students in the United States, U.S. civil society organizations, universities, think tanks, media and businesses. That is the conclusion of a new report by an impressive group of U.S. scholars, who warn that China’s political operations in the United States cannot be ignored.

“The report, ‘Chinese Influence & American Interests: Promoting Constructive Vigilance,’ written by a team led by Larry Diamond of the Hoover Institution and Stanford University and Orville Schell of the Asia Society, deliberately refrains from alarmism, and the authors make a determined effort not to stir hysteria that could rebound against Chinese Americans and lead to a new red scare.  They point out that China has not sought to interfere in a national election or to sow confusion or inflame discourse in the ways that Russia has done.

“But these experts, many of whom championed engagement with China in earlier years, portray a looming and malevolent force that is taking advantage of U.S. openness and freedoms to advance the goals of the Chinese Communist Party, which believes in neither.  The fruits of this campaign, which has accelerated since Mr. Xi took power in 2012, are both greater sway in the United States and a cherry-picking of valuable technology.    The report advances the idea that China’s earlier soft power has now been transformed into ‘sharp power’ that can ‘challenge, and sometimes even undermine, core American freedoms, norms, and laws.’

“What’s most striking about the report is the cumulative evidence of this quiet wave. While China’s theft of intellectual property by hacking is well known, the report describes how China has fielded a lesser-noticed, informal network of ‘collectors’ who are ‘operating under the radar’ through a maze of ventures to harvest U.S. technical know-how for China’s economic priorities, including semiconductors, robotics, information technologies, aviation, artificial intelligence and electric vehicles. This is no haphazard system, they report, but is run by a methodical apparatus devoted to collection, distributing stipends, sinecures and cash to those who help. China’s agents often get shopping lists of stuff needed back home.

“This quiet, determined effort has at its core a vast, undeclared army of people who are doing China’s bidding by infiltrating open U.S. institutions to gain influence, steal secrets and exert leverage, the authors note, ruefully pointing out how the playing field is not level. China takes advantage of the open society in the United States but, at the same time, slams shut the doors inside China, making it almost impossible for scholars and journalists to carry out the same kind of activities in the police state that is the People’s Republic.  To remedy this imbalance, they wisely suggest that the United States needs to expose Chinese influence campaigns, as well as enhance defenses against abuses.  It is time for more clear-eyed understanding of what China is up to on these shores.”

Congo: The latest deadly Ebola outbreak is now the second largest in history, behind the devastating West Africa outbreak that killed 11,000 a few years ago, the World Health Organization said Thursday.  Congo’s health ministry announced the number of cases has reached 426, with 198 confirmed deaths.

Congo faces a unique problem in that attacks by rebel groups and open hostility by wary locals has hampered efforts to stem the outbreak.

Random Musings

--Presidential tracking polls....

Gallup: 38% approval of President Trump’s job performance, 60% disapproval (11/25); 86% of Republicans approve, 34% Independents.  Some commentators made a lot of the 60% mark, as the week before the split was 43/53, but two weeks earlier it was 38/56.
Rasmussen: 47% approval, 51% disapproval.

--California Representative Nancy Pelosi handily won the Democratic nomination to be speaker when her party claims the House majority in the new Congress, but with 32 Democrats voting no, she is well short of the 218 votes needed in a full House floor vote on Jan. 3.  Pelosi thus needs to do some arm-twisting.

Pelosi herself brushed aside the concerns of her foes and said she expected her opposition to erode.

Rep. Hakeem Jeffries of New York, 48, was elected Democratic caucus chairman, Jeffries being among the most outspoken in arguing the party must shift to reflect the changing face of the country.  The move is reflective of a new urgency among House Democrats, post-midterm election victories, to infuse a different set of voices into the party leadership.

--Sen. Cindy Hyde-Smith (R) won her runoff in Mississippi Tuesday night against Democrat Mike Espy, 54% to 46%, much tighter than it was first thought it would be, given that Donald Trump took the state by 18 points in 2016.  But despite Hyde-Smith’s comments about being willing to join a supporter on the front row of a public hanging, the 8-point margin still proves how solidly conservative the state is.

--Just-defeated Republican Congresswoman Mia Love (Utah) – who was mocked by President Trump after Election Day for supposedly not showing him sufficient loyalty – fired back at the commander-in-chief Monday.

“The president’s behavior towards me made me wonder: What did he have to gain by saying such a thing about a fellow Republican.

“It was not really about asking him to do more, was it?  Or was it something else?  Well Mr. President, we’ll have to chat about that,” she said during her concession speech after a tight race with Democratic Rep.-elect Ben McAdams.

“However, this gave me a clear vision of his world as it is.  No real relationships, just convenient transactions.  That is an insufficient way to implement sincere service and policy,” she said.

Love, who is African-American, then addressed the problem Republicans have attracting minority voters.

“This election experience and these comments shine a spotlight on the problems Washington politicians have with minorities and black Americans – it’s transactional, it’s not personal,” she said.

“You see, we feel like politicians claim they know what’s best for us from a safe distance, yet they’re never willing to take us home.  Because Republicans never take minority communities into their home and citizens into their homes and into their hearts, they stay with Democrats and bureaucrats in Washington because they do take them home – or at least make them feel like they have a home.”

The day after the midterms, Trump mocked Love and other losing Republicans who didn’t seek his help and endorsement.

“Mia Love gave me no love and she lost. Too bad.  Sorry about that Mia,” Trump said.

Love said in her concession speech that now she is “unleashed, untethered and I am unshackled and I can say exactly what is on my mind.”

McAdams ended with 134,964 votes to Love’s 134,270.

On this very topic of Trump dissing fellow Republicans, which disgusted me....

Daniel Henninger / Wall Street Journal

“A question running alongside Donald Trump’s political career is whether he will ever pay a price for his verbal insults.

“It was widely thought Mr. Trump might have damaged himself fatally when in mid-2015 he said of John McCain’s time as a prisoner of war in Vietnam: ‘He’s not a war hero.  He’s a war hero because he was captured. I like people that weren’t captured.’

“In the event, a determined American electorate had larger fish to fry in November 2016 (such as stopping Hillary Clinton) and put Mr. Trump and his tart tongue into the White House.

“Even now, Mr. Trump’s verbal smackdowns come so fast and furious that it’s hard to keep up.  As far back as I can remember – about a week or so – objects of Mr. Trump’s ire have included the chief justice of the Supreme Court, the special counsel who is investigating him, and the chairman of the Federal Reserve Board. The attacks on ‘fake news’ roll in and out like the weather....

“(But the dissing of fellow Republicans who lost) could cost Mr. Trump in the next two years. The Republicans Mr. Trump hung out to dry in that news conference have friends in Congress and across Washington, and it’s not likely they are going to forget this.  Too bad, Mike (Coffman).  Sorry about that, Mia.

“The imminent threats to Mr. Trump’s presidency are real.  Democratic House committee chairmen intend to investigate him, members of his administration and his family.

“Robert Mueller’s unresolved investigation carries substantial risks for individuals close to Mr. Trump.  The likelihood of an impeachment attempt in the House is high. The media assault will escalate into a nonstop hurricane.

“Every U.S. presidency at some point comes under intense political pressure.  Some break, like Lyndon Johnson or Richard Nixon. But until then, all could count for their survival on the political and personal loyalty of members of their party or the people who worked for them.

“Who with political power that matters will Donald Trump call on when his darkest hour arrives?  Many will lift a finger, but how high?

“Mr. Trump has proven his resiliency.  But that news conference was an odd moment, kicking fallen Republicans while associating himself with the tender mercies of Nancy Pelosi.  Washington, he may find, can quickly become a lonely place.”

A study by CNN of all the congressional House voting in the midterm elections found Democratic candidates amassed 59.5 million votes to 50.5 million for Republicans, a whopping 9 million margin.  That doesn’t bode well for 2020.

--New York Gov. Andrew Cuomo traveled to the White House Wednesday for a meeting with President Trump on the contentious Gateway tunnel project, the $30 billion undertaking that advocates call the nation’s most important infrastructure project.  Gateway would rebuild the Portal Bridge in New Jersey, bore a new train tunnel under the Hudson River and rehabilitate the storm-damaged and oft-clogged conduit connecting New Jersey to Manhattan.  Personally, yes, this is much needed.

But the issue is financing for the project, and President Trump has thus far said he would disregard an Obama-era deal that would have the federal government picking up half the cost.

Cuomo, in their meeting, proposed cutting Amtrak out of efforts to rebuild the rail tunnel and is seeking new estimates as to the cost, currently estimated at $13 billion, the largest piece of the Gateway project.

Trump seemed to agree, but this project needs to get started.

There are many who fear the Hurricane Sandy-damaged train tubes could become unusable before the new structure is complete, which would cause a massive transit nightmare for both Amtrak and NJ Transit, thus threatening a huge percentage of the nation’s gross domestic product.

--An online poll by Quadrant Strategies surveyed 1,500 parents and teens in the New York City metropolitan area, and it found 72% of teens say they regularly see material online their parents would consider inappropriate, 31% say they have messaged a stranger on social media, and 14% say they have sent a sexually explicit photo.

The poll found 70% of parents think they can see what their children are doing online but 57% of teens say they can easily hide what they do there.  Half of teens ages 13 to 18 say they socialize online at least three hours a day.  Half also say they have been bullied online, mostly citing insults.

But I found the following startling.  The survey found that 15% of children ages three to seven are on Facebook, according to their parents. Facebook has a messaging app that children under 13 can use with parental consent that allows them to send texts, messages and videos to a list of contacts.

About 84% of children ages three to seven with “millennial parents,” or those 25 to 37 years old, have their own cellphone or other device with internet access, according to the survey.  [Leslie Brody / Wall Street Journal]

We are so doomed.

--Meanwhile, life expectancy for Americans fell again last year, with the Centers for Disease Control and Prevention releasing a report on Thursday that showed life expectancy fell by one-tenth of a year, to 78.6 years, pushed down by the sharpest annual increase in suicides in nearly a decade and a continued rise in deaths from opioids like fentanyl.

Drug-overdose deaths skyrocketed between 2015 and 2017, particularly for adults between ages 25 and 54.

Deaths from opioids rose 45% in 2017, while the death rate from heroin, which had risen sharly after 2010, was flat.

The U.S. has lost three-tenths of a year in life expectancy since 2014, which as the CDC says is stunning for a developed nation.

And look at how our 78.6 compares to Japan, 84.1, and 83.7 in Switzerland, first and second in the most recent ranking by the Organization for Economic Cooperation and Development. The U.S. ranks 29th.  [Betsy McKay / Wall Street Journal]

--That was a cool moment when the InSight probe landed on Mars the other day and immediately began sending back pictures, though I wish we’d see a Martian in one of ‘em, which would be rather dramatic and might help bring us all together.

The director of California’s Jet Propulsion Laboratory, Mike Watkins, said the success of the landing should remind everyone that “to do science we have to be bold and we have to be explorers.”

---

Pray for the men and women of our armed forces...and all the fallen, especially those we lost in Afghanistan this week.

God bless America.

---

Gold $1227
Oil $50.72

Returns for the week 11/26-11/30

Dow Jones  +5.2%  [25538]
S&P 500  +4.9%  [2760]
S&P MidCap  +3.0%
Russell 2000  +3.0%
Nasdaq  +5.6%  [7330]

Returns for the period 1/1/18-11/30/18

Dow Jones  +3.3%
S&P 500  +3.2%
S&P MidCap  -1.2%
Russell 2000  -0.2%
Nasdaq  +6.2%

Bulls 38.3
Bears 20.6   [Last time I didn’t have the data from Thanksgiving Week...the ratio then was 39.6 / 19.8; two weeks ago, 42.9 / 19.0.  Reminder, this is a contrarian indicator and the 38.3 on the bull front is the lowest since May 2016, which was a good entry point.]

Have a good week.  Happy Hanukkah.

Brian Trumbore

 



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Week in Review

12/01/2018

For the week 11/26-11/30

[Posted 11:30 PM ET, Friday]

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

Edition 1,025

Another crazy week on Planet Earth, at least in the U.S., as Wall Street roared back from its correction mode on the heels of dovish talk from the Federal Reserve and misguided optimism on a possible trade deal inked in Buenos Aires at the G-20 summit tomorrow by Presidents Trump and Xi Jinping.

We also had extensive chatter concerning General Motors’ announcement it was closing plants in North America, much to Donald Trump’s ire.

But speaking of Trump, let’s advance right to.....

....Trump World      

A second guilty plea on Thursday by Michael Cohen, Donald Trump’s personal lawyer, raised new questions about Trump’s dealings with Russia while he was also establishing Republican foreign policy during his run for the presidency.  Trump had repeatedly said he had no ties to Russia.

But the Special Counsel’s Office is investigating Moscow for alleged interference in the 2016 election and possible collusion with Trump’s campaign.  Russia has denied U.S. intelligence conclusions that it meddled and Trump has decried the investigation as a “witch hunt.”

Special counsel Robert Mueller’s team has secured convictions against more than two dozen Russian nationals and entities, as well as a number of Trump’s associates, including former campaign chairman Paul Manafort, who learned he faces sentencing in March.  Mueller this week said Manafort had been lying to federal prosecutors, breaching his plea agreement, according to a court filing Monday.

Mueller said in the filling that after signing a plea agreement: “Manafort committed federal crimes by lying to the Federal Bureau of Investigation and the Special Counsel’s Office on a variety of subject matters.”

President Trump told the New York Post he’s never discussed a pardon for Manafort, but “I wouldn’t take it off the table.”

Trump ripped Mueller’s probe and charged that Manafort and the others were all asked to lie by the special counsel.

“If you told the truth, you go to jail,” Trump said.

Cohen, who had already pleaded guilty to campaign finance violations and other financial crimes in a separate case brought by federal prosecutors in New York, then said he had lied to Congress about a proposed Trump Organization skyscraper in Moscow.

Cohen’s plea agreement with Mueller’s team showed the Trump Organization pursued the scheme into at least June 2016, further than previously disclosed.  By June of that year, Trump was the presumptive Republican nominee, but he was denying any business interests (or loan obligations) in Russia.

Cohen told Mueller he briefed Donald Trump three times on the Moscow Tower project, as well as members of Trump’s family.

Prior to leaving for Buenos Aires on Thursday, Trump called Cohen a “weak person” and a liar, telling reporters in part:

“It doesn’t matter because I was allowed to do whatever I wanted during the campaign.”

Sen. Chris Murphy (D-Conn.) tweeted on Friday: “It’s not some wild coincidence that the Administration’s foreign policy is most inexplicable toward the two countries – Russia and Saudi Arabia – where the Trump family pursues the most business.”

Friday morning from Buenos Aires, Trump tweeted:

“Oh, I get it!  I am a very good developer, happily living my life, when I see our Country going in the wrong direction (to put it mildly). Against all odds, I decide to run for President & continue to run my business – very legal & very cool, talked about it on the campaign trail...

“...Lightly looked at doing a building somewhere in Russia.  Put up zero money, zero guarantees and didn’t do the project. Witch Hunt!”

Cohen, in written testimony to both the House and Senate intelligence committees last year, said the Trump Tower Moscow deal was abandoned in January 2016.

“By the end of January 2016, I determined that the proposal was not feasible for a variety of business reasons and should not be pursued further,” Cohen said then.

The plea deal, though, says that Cohen continued to pursue the project through June 2016, the last known discussion about it being “on or about June 14,” 2016, which is significant because it was the same day the Washington Post broke the story that Russia had hacked the Democratic National Committee.

John Podhoretz / New York Post

“When it comes to Russian collusion, I’ve always been a skeptic....

“Today, I’m not such a skeptic any longer.  Here’s why.

“For starters, we now know, from the plea deal between Trump lawyer Michael Cohen and special counsel Robert Mueller that the Trump organization was actively seeking business opportunities in Moscow even as Trump was securing the GOP nomination.  Given the transactional nature of both Trump and Putin, the idea that quid pro quos might have been discussed is impossible to dismiss.

“Second, we have, in the past few days, learned of the first possible connection between Russian intelligence and actions taken by the president. This is a little hard to unravel. There’s a radio guy named Randy Credico. There’s a conspiracy monger named Jerome Corsi. And there’s Trump political consigliere Roger Stone....

“It seems there was something in the DNC emails that suggested Hillary might have been unwell. Those emails came from Russian intelligence. WikiLeaks boss Julian Assange told Credico about the fact that the emails were going to be released and that Trump should talk about Hillary’s medical condition. And Trump did.

“So: Russian intel gave dirt to Assange, who informed Credico, who in turn gave Corsi a heads-up, who told Stone.  Who told Trump.

“One last point: Trump campaign manager Paul Manafort, who received tens of millions from Ukrainian politicians aligned with Moscow.   Manafort was tried and convicted on charges brought by Mueller, but none of them related to the campaign.

“Mueller may not be done with him, and clearly Manafort isn’t done with Trump, either. So those who are as collusion-skeptical as I was might want to keep your powder dry.”

Editorial / Washington Post

“The question of whether President Trump colluded with Russia to tilt the 2016 election is important. But it’s not the only important question in the Russia investigation, as revelations Thursday from special counsel Robert S. Mueller III make clear. The disclosures suggest that Mr. Trump deceived voters about his business aspirations in Russia even as he asked for their votes during the primaries of 2016. That is not a minor transgression.

“Michael Cohen...admitted in court Thursday that he lied to Congress about Mr. Trump’s effort to develop a marquee building in Moscow.  Mr. Cohen had said previously that the effort ended before the 2016 Iowa caucuses.  In fact, according to the special counsel’s documents, it continued into June 2016, when Mr. Trump was the presumptive GOP president nominee....

“Mr. Cohen told a Manhattan judge Thursday that he lied about the Moscow planning to help Mr. Trump’s political messaging.  The president responded by lashing out at Mr. Cohen and saying that his former lawyer is now lying.  Mr. Trump apparently did not know or did not care that the special counsel had released email evidence bolstering Mr. Cohen’s current position.  Perhaps sensing that no reasonable person would believe him, Mr. Trump simultaneously maintained that it would not have been a problem if he had pursued the Moscow project during the campaign.

“That was not Mr. Trump’s attitude before, when he flatly denied Russia connections during a campaign in which he seemed suspiciously fond of Russian strongman Vladimir Putin.  ‘The Dems said maybe it is Russia dealing with Trump. Crazy!’ Mr. Trump tweeted in July 2016.  ‘For the record, I have ZERO investments in Russia.’  Mr. Trump clearly meant to give the impression that Moscow was irrelevant to his personal interests. After assuring the American people he did not have financial relationships with Russia and subsequently winning the election, Mr. Trump was even more definitive.  ‘I HAVE NOTHING TO DO WITH RUSSIA – NO DEALS, NO LOANS, NO NOTHING!’ he tweeted shortly before his 2017 inauguration.

“In fact, as Post columnist David Ignatius found in an extensive investigation last year, ‘The simple truth is that Trump has been hungry for Russia projects for more than three decades.  He has repeatedly touted plans for a Moscow mega-development and has courted a steady stream of investors from the former Soviet Union for ventures in New York, South Florida and other locations.’

“The collusion question is still outstanding. But there is little room for doubt that Mr. Trump wanted to conceal his business goals in Russia.  His denials, as the public can now see more clearly than ever, are not credible.”

Editorial / Wall Street Journal

“Special counsel Robert Mueller on Thursday gave cable TV countless more hours of programming with a new plea deal with Donald Trump’s former personal attorney, Michael Cohen....

“If you believe the heavy media breathing, Mr. Trump is now, or once again, a goner.  At last here is a clear 2016 link between candidate Trump and Russia. Cohen must know more, and it’s only a matter of time before we learn that Mr. Trump was conspiring with Vladimir Putin in return for who knows what.

“The reality: Who knows?  The Steele dossier was supposed to be the smoking gun, but that turned out to be a fraud. Then the famous 2016 Trump Tower meeting with Russian functionaries was supposed to be proof of collusion, but nothing more has come of that.

“On its face, the Cohen court filing is hardly a crime or impeachable evidence. The filing says Cohen explored a hotel deal in Moscow for about six months in 2016, and that Russians with ties to the Kremlin wanted to get Mr. Trump to visit Russia and meet Mr. Putin.

“But the deal fell through for reasons that aren’t explained, and Mr. Trump never made the trip.  On Thursday President Trump called Cohen a ‘liar,’ which is demonstrably true. Mr. Trump also said there was ‘nothing wrong’ in considering a private business deal when he wasn’t President, which is true in a criminal sense though it was dumb for a presidential candidate.

“As usual, the best posture is to avoid hyperventilating and size up the evidence as it emerges. There is still no public evidence proving a Trump-Russia campaign conspiracy.”

Personally...I agree with the Journal’s last point.  Befitting my “wait 24 hours” dictum, you won’t find an instance in all these columns of your editor saying Donald Trump colluded with the Russians (as much as my critics want to believe I did).

I have done nothing when it comes to the Mueller investigation but lay out the facts as they were presented each week, and included outside opinion. My criticisms of Donald Trump, yes, many-fold, have been on other facets of his presidency. Certainly I have been highly critical of Trump’s interactions with Putin, such as at Helsinki, and wondered what he was hiding, but that wasn’t Mueller specific. Ditto his endless lies.

But if I had to take a stab at it at this point, I’d agree with frequent Trump defender Alan Dershowitz, who said on ABC’s “This Week” with George Stephanopoulos last Sunday:

“I think the (Mueller) report is going to be devastating to the president and I know that the president’s team is already working on a response...

“When I say devastating, I mean it’s going to paint a picture that’s going to be politically very devastating. I still don’t think it’s going to make a criminal case,” he said.

Yes, to overturn the will of the people, the 2016 presidential election, you need to reach a high bar and nothing we were presented this week concerning Cohen’s latest plea deal shows direct illegality.  As many a pundit has said in the aftermath, it’s not illegal to lie to the public as Trump did during the campaign.

Democrats would be fools, though, to overplay their hand at this point.  It would behoove them to just sit back and wait, like the rest of us, to see what else the special counsel has.

What Donald Trump has to know, deep down, however, is that Robert Mueller is made of sterner stuff than he is.

Trumpets....

--The United States, Canada and Mexico signed a North American trade pact on Friday in Buenos Aires, a new NAFTA, officially known as the United States-Mexico-Canada Agreement (USMCA), though I thought it was funny Canadian Prime Minister Justin Trudeau insisted on calling it NAFTA, much to President Trump’s chagrin.  Trudeau also called on Trump “to remove the tariffs on steel and aluminum between our two countries.”

On his last day in office, Mexico’s outgoing President Enrique Pena Nieto was warmer, saying the new deal was forged with the “firm belief that together we are stronger and more competitive.”

But the trade pact still must be approved by legislators from the three countries, and come January, the Democrats have control of the House.  That said, while President Trump has way overhyped this deal, as in there are truly minimal changes to the old trade pact in the grand scheme of things, Democrats should pick other fights and just support it.

--Senate Republicans blocked a vote Wednesday on legislation protecting special counsel Mueller in his probe.  Sen. Mike Lee (R-Utah) objected to a request by Sens. Jeff Flake (R-Ariz.), Cory Booker (D-N.J.) and Chris Coons (D-Del.) for unanimous consent to proceed to a full vote on the bill, citing constitutional issues previously brought up by the late Supreme Court Justice Antonin Scalia.

“As Justice Scalia  explains, we cannot convert an office like this one...without creating a de facto fourth branch of government fundamentally undermining the principles of the separation of powers that is so core to our liberty,” Lee said.

Senate Republican leader Mitch McConnell of Kentucky also dismissed the bill as unnecessary.

“This is a solution in search of a problem,” McConnell said.  “The president is not going to fire Robert Mueller...We have a lot of things to do to try to finish up this year without taking votes on things that are completely irrelevant to outcomes.”

I agree.

--Trump tweets on the Mueller investigation....

“While the disgusting Fake News is doing everything within their power not to report it that way, at least 3 major players are intimating that the Angry Mueller Gang of Dems is viciously telling witnesses to lie about facts & they will get relief.  This is our Joseph McCarthy Era!”

“So much happening with the now discredited Witch Hunt. This total Hoax will be studied for years!”

“Did you ever see an investigation more in search of a crime?  At the same time Mueller and the Angry Democrats aren’t even looking at the atrocious, and perhaps subversive, crimes that were committed by Crooked Hillary Clinton and the Democrats.  A total disgrace!”

“When will this illegal Joseph McCarthy style Witch Hunt, one that has shattered so many innocent lives, ever end-or will it just go on forever?  After wasting more than $40,000,000 (is that possible?), it has proven only one thing-there was NO Collusion with Russia.  So Ridiculous!”

“When Mueller does his final report, will he be covering all of his conflicts of interest in a preamble, will he be recommending action on all of the crimes of man kinds from those ‘on the other side’ (whatever happened to Podesta?), and will he be putting in statements from....

“....hundreds of people closely involved with my campaign who never met, saw or spoke to a Russian during this period? So many campaign workers, people inside from the beginning, ask me why they have not been called (they want to be).  There was NO Collusion & Mueller knows it!”

“The Phony Witch Hunt continues, but Mueller and his gang of Angry Dems are only looking at one side, not the other.  Wait until it comes out how horribly & viciously they are treating people, ruining lives for them refusing to lie.  Mueller is a conflicted prosecutor gone rogue....

“..The Fake News Media builds Bob Mueller up as a Saint, when in actuality he is the exact opposite.  He is doing TREMENDOUS damage to our Criminal Justice System, where he is only looking at one side and not the other.  Heroes will come of this, and it won’t be Mueller and his...

“...terrible Gang of Angry Democrats.  Look at their past, and look where they come from.  The now $30,000,000 Witch Hunt continues and they’ve got nothing but ruined lives. Where is the Server?  Let these terrible people go back to the Clinton Foundation and ‘Justice’ Department!”

The next day it was a “$40,000,000 Witch Hunt”.  It was just one after another on the Mueller probe all week.  The president wants you to read them, which is why in a retelling of the history of the week I have to include a few.

On other topics....

“While CNN doesn’t do great in the United States based on ratings, outside of the U.S. they have very little competition. Throughout the world, CNN has a powerful voice portraying the United States in an unfair....

“....and false way. Something has to be done, including the possibility of the United States starting our own Worldwide Network to show the World the way we really are.  GREAT!”

[See my tidbit on Hungary below.]

--Trump foreign policy....

Walter Russell Mead / Wall Street Journal

“The case against Mr. Trump’s international disruption isn’t as strong as most in the foreign-policy establishment believe. There are certainly dangers in the president’s impulsive approach – some of them grave – but Mr. Trump has one big point in his favor. The liberal-internationalist vision, which holds that the world is a kind of greater European Union, moving inexorably toward its own kind of ‘ever closer union’ via a strengthening network of international institutions, seems to be running out of steam.

“As countries like Turkey, India, China, Brazil and Nigeria develop, they are striving more to strengthen their sovereignty than to pool it. By shifting America’s stance away from the losing defense of legacy liberal internationalism that characterized the John Kerry years, the Trump disruption might, might point the way toward a more sustainable U.S. diplomatic approach.

“But for Mr. Trump to be remembered as something other than a diplomatic wrecking ball, his administration will have to rapidly shift gears. Destruction ceases to be creative when it doesn’t lead to the construction of something better.  After the cautious first stage and the dramatic second stage, a third stage of strategy and leadership must follow.

“In the Middle East, the murder of Jamal Khashoggi and the humanitarian catastrophe in Yemen seem to be forcing the administration to review its strategic options.  Simply outsourcing U.S. regional policy to Riyadh and Jerusalem won’t do.  Washington needs a vision and a policy that both reassures our local allies and disciplines some of their wilder instincts.  Walking away from the Iran deal was easy; implementing a new regional strategy will be hard.  Like his predecessors, Mr. Trump will be judged not by his intentions but by his results.

“The administration’s China policy has also reached an inflection point.  The tariff card has been played. But what is the administration’s vision for the future of an economic relationship that, despite Chinese abuses, has benefited both countries and cannot be ripped apart without profound damage to many U.S. companies and industries?  How will the administration balance its interest in building a strong global alliance to counter China and its efforts to extract more favorable trading terms from partners like Germany and Japan?  Can the Trump administration develop an approach to China that is bipartisan enough to ensure Democrats don’t scrap it all when they return to power?

“Unlike the Soviet Union, China has engaged successfully with the international market system and as a result has many more channels of influence around the world. How will the administration orchestrate a global response?  This is a harder task than the Truman administration faced; is the Trump administration up to the job?

“In Europe, President Trump has been blunt about the many shortcomings he sees in existing U.S. relationships with key allies. He hasn’t, however, put forward a compelling vision of the kind of trans-Atlantic relationship he would like to see instead.

“It is the same on trade. We know Mr. Trump prefers bilateral deals to multilateral ones and he sees reciprocity as the key to fairness. But what would a reformed World Trade Organization look like?  How does Mr. Trump want trade disputes to be handled? Can Mr. Trump subject the international economy to an endless series of trade shocks without undermining the domestic prosperity on which his future and that of his party depend?

“Donald Trump spent much of his pre-political career as a builder and developer.  President Trump has mostly been in the demolition industry where foreign policy is concerned. That will likely change in the next few months as the unrelenting pressure of world events forces the administration to define and communicate its objectives more clearly.  As stage two gives way to stage three, it will become easier to see where this administration wants to take the world – and whether it is having any success.”

--President Trump dismissed a landmark report compiled by 13 federal agencies detailing how damage from global warming is intensifying, saying he is not among the “believers” who see climate change as a pressing problem.

The analysts who put the report together concluded climate change poses a severe threat to the health of Americans, as well as to the country’s infrastructure, economy and natural resources.  The findings, though, are at odds with the administration’s rollback of environmental regulations and absence of any climate action policy.

“One of the problems for a lot of people like myself, we have very high levels of intelligence but we’re not necessarily such believers,” Trump said during an Oval Office interview with the Washington Post.

--President Trump says he’s prepared to declassify documents that would be “devastating” to his opponents if Democrats go after him next year when they control the House.

“If they want to play tough, I will do it,” Trump told the New York Post in an interview Wednesday.  “They will see how devastating those pages are.”

Trump had planned to release documents related to the Russia investigation, but reversed course in September, under pressure from intel chiefs, both here and abroad, that key secrets would be divulged, but now he says he wants to save the documents until they are needed to counterpunch Democrats.

As to probable Democratic investigations into the president’s businesses, tax returns, Russia dealings and more once they take over the House, Trump labeled it “presidential harassment.”

“If they want to go and harass the president and the administration, I think that would (be) the best thing that could happen to me because I’m a counter puncher and I will hit them so hard, they’ve never been hit like that,” Trump said.  “You know what?  I think that will help my campaign. That will be the beginning of my campaign as president.”

Wall Street and the U.S. / China Trade War

In a widely-anticipated speech on Wednesday, Federal Reserve Chair Jerome Powell injected investors with a strong dose of optimism, saying that the central bank’s policy rate is now “just below” estimates of a level that neither brakes nor boosts a healthy economy, i.e., “neutral,” which the market took to mean the Fed’s three-year tightening cycle is drawing to a close and that while there is likely to be a December rate hike at the 12/18-12/19 confab, the fourth of the year, the odds of three more in 2019 as now forecast had significantly diminished.

Powell told the Economic Club of New York audience, “We know that things often turn out to be quite different from even the most careful forecasts.  Our gradual pace of raising interest rates has been an exercise in balancing risks.”  Rates “are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy,” he added.

Powell also said Wednesday that the Fed is paying “very close” attention to economic data even as it expects continued “solid” growth, low unemployment and inflation near its 2 percent target.  The Fed takes equally seriously the risks of hiking too quickly and shortening the economic expansion, and on the other hand of hiking too slowly and prompting higher inflation or financial instability, the Fed chairman said.

But was Powell, under intense pressure from President Trump, intending to send a message or was he simply misinterpreted.

Just last month, Powell said the benchmark fed funds rate was still a “long way” from the neutral level and that the Fed might even tighten beyond it, with stocks swooning on the remarks.

But now we have this dovish shift in language, President Trump the day before telling the Washington Post that he is “not even a little bit happy” with his Fed chief.

It seems Powell was admitting that the Fed may have been too aggressive and was open to slowing the rate of hikes.  There has been evidence of a slowdown overseas, after all.  Other senior Fed officials echoed Powell’s more dovish tone this week as well.

But it’s all going to come down to the data and this week some of it was very strong.

Personal income rose a better-than-expected 0.5% in October, with consumption rising 0.6%.  But the Fed’s preferred inflation barometer, the core personal consumption expenditure index, ex-food and energy, was up only 1.8% in October from a year earlier, below the central bank’s 2.0% target.

A Chicago reading on manufacturing for November came in at a whopping 66.4 (50 being the dividing line between growth and contraction), far higher than forecast.

But figures on housing remained punk, with October new-home sales running at an annualized pace of just 544,000, well below expectations, while the S&P CoreLogic Case-Shiller 20-city home price index for September was up 0.3%, 5.1% year on year, less than forecast and down from the prior month’s 5.5% rise.  Home-price gains have now declined six consecutive months, a further sign rising mortgage rates have helped sap the momentum from the market.

Las Vegas continued to lead the nation with a 13.5% year-over-year price increase, followed by San Francisco’s 10.0%.  New York City brought up the rear at 2.7%.

Add it all up and the Atlanta Fed’s GDPNow barometer for fourth-quarter growth ticked up to 2.6%.  [Third-quarter growth was unrevised at 3.5% this week, the second look at Q3.]

As for the start of the holiday shopping season, which the National Retail Federation is predicting will be a strong one, with sales up 4.8% compared with last year, foot traffic was a little lighter than last year, according to various surveys, but online sales were up substantially, again, as spelled out further below.

Editorial / Wall Street Journal

“The Federal Reserve’s top two officials rolled out their latest thinking on monetary policy this week, and financial markets cheered as stocks rallied some 2.5% Wednesday.  Investors aren’t always right in their initial impressions of Fed rhetoric. But in this case they seem to have judged correctly that the Fed is reconsidering its plans for higher interest rates, and for the right reasons.

“Jerome Powell, the Fed Chairman, fed the stock rally almost in real time when he said in a New York speech Wednesday that the current fed-funds rate is ‘just below the broad range of estimates of the level that would be neutral for the economy.’....

“More telling was the speech a day earlier by Richard Clarida, the Fed’s Vice Chairman, who offered a detailed explanation for this apparent rethinking.  Mr. Clarida explained that the Fed is close to meeting its twin targets of full employment and 2% inflation.

“But, crucially, he added that even in the current tight labor market ‘there may still be some further room for participation’ by nonworkers to increase....

“This suggests the Powell-Clarida Fed won’t be a slave to Phillips Curve calculations that suggest rates must rise in a ratchet when the jobless rate hits a certain level....

“This being Donald Trump’s Washington, many want to interpret all this as a sign that Mr. Powell is capitulating to the President’s loud criticism of higher rates.  Mr. Trump was especially pointed in an interview with the Washington Post on Tuesday in which he said he’s ‘not even a little bit happy’ with his choice of Mr. Powell as Fed Chairman. As always, everything is personal with Mr. Trump.

“But as the speeches this week make clear, there are good reasons to be cautious about rate increases regardless of Mr. Trump’s hectoring, which is best ignored. Global growth is slowing, bad trade policy is deterring investment, and the Fed is also gradually reducing its bond portfolio with effects on asset prices that no one can predict. Modesty for the Fed is always the best policy, but especially as it unwinds a decade of unprecedented monetary machinations.”

On Trade, President Trump issued conflicting statements all week on the topic of the trade war with China, and his meeting tomorrow with China’s President Xi in Buenos Aires.  The president on Thursday said there was “a long way to go” on tariffs with China and urged companies to build products in the United States to avoid them.

The state-run China Daily newspaper said in an editorial today that Washington must be “fair minded” if it wants to defuse spiraling tensions.

“Beijing wants a deal, just as Washington does. And it is willing to cooperate with Washington in dealing with concerns about trade if they are fair-minded,” the paper said.  “Should there be any other aspirations, such as taking advantage of the trade spat to throttle Chinese growth, then an agreement is unlikely to be reached.”

A deal involving a total scrapping of all tariffs is not expected, although some have not ruled out a “pause” of some kind where any planned tariff increases (such as from 10% to 25% in January on Chinese goods) are put on hold while talks between the two sides continue.

Another potential deal being discussed is a suspension of U.S. tariffs in return for Beijing lifting restrictions on China’s purchases of U.S. farm and energy products.

But the above doesn’t address the overriding issue of intellectual property theft and forced technology transfers, and you aren’t getting any kind of deal on this topic at a G-20 dinner.

As I go to post, much is also being made about the apparent participation of hardline trade hawk Peter Navarro at tomorrow’s soiree, Navarro not originally on the list.

I have largely supported the Trump administration on its China stance.  But my concern is that Americans, and the financial markets, don’t understand that China is determined to have its way.  As I noted last week, their cyber espionage operation is running at a fever pitch.  They are trying to steal as much intellectual property as possible.  They must be stopped.   But they won’t take the pressure well.

Simply put, there isn’t a soul who knows how this will end, long beyond anything the parties come up with tomorrow.

One more.  Last week I also wrote of how China was instructing its remaining independent economic think tanks to tow the party line, or else.

Well, this week one of these remaining firms was forced to cease operations.  As reported in the Financial Times:

“On Monday evening local time the Beijing-based Unirule Institute of Economics announced that ‘in the current institutional environment in China, unless normal protection by the Constitution and laws is confirmed, Unirule...will cease public activities under its name temporarily,” after the business license of its affiliate company was revoked....

“The move by authorities to shutter the group comes amid intensifying censorship of economic news....

“Unirule, founded in 1993 and known as a center of liberal thought, was forced out of its Beijing headquarters in October of last year and temporarily evicted from its new headquarters elsewhere in the capital city in July.

“(Executive director Sheng Hong) has been a staunch critic of economic policy under President Xi Jinping’s tenure and warned in an essay published on the Financial Times’ Chinese language website on October 19 that China was at risk of abandoning Deng Xiaoping’s ‘reform and opening up’ policy of free markets and open trade.”

So regardless of what emerges from the Trump-Xi get together, ‘wait 24 hours’ if you hear anything positive.  Sheng Hong just told you everything you need to know.

Europe and Asia

A few notes on the Euro area (EA19), Eurostat releasing a flash estimate on November inflation, 2.0%, down from 2.2% in October. The core figure, ex-food and energy, was only 1.1%, and has been between 1.1% and 1.3% all year.

Eurostat also released data on October employment for the EA19, 8.1%, unchanged on the month and down from 8.8% in October 2017.  This remains the lowest rate recorded in the euro area since November 2008.

Among the member states, the rate in Germany is 3.3%, France 8.9%, Italy 10.6% (and up from 10.1% in August), Spain 14.8% (down from 16.6% a year earlier), 3.7% in the Netherlands, and 5.3% in Ireland.

These figures compare to 3.7% in the United States.

Brexit: The next 10-12 days are beyond critical.  Last weekend, a last-minute deal to meet Spanish demands for a say on the future of Gibraltar after Britain leaves the European Union salvaged a summit which then proceeded to deliver a Brexit accord to British Prime Minister Theresa May. So after 20 months of tortuous negotiations, an agreement on the UK’s withdrawal received the backing of the EU’s 27 leaders, paving the way for an “orderly withdrawal.”

BUT...now the deal needs to be approved by the UK Parliament, and such approval is far from certain.  In fact, as of now, seemingly impossible.

The critical vote in Parliament has been set for December 11, with debate commencing Tuesday.  Labour, the Lib Dems, the SNP, the DUP and many of Mrs. May’s Conservatives are set to vote against, so the prime minister is appealing to the public to get behind the agreement, arguing it is the best deal she could have struck – and honors the result of the June 2016 referendum.

The EU withdrawal agreement is 585 pages and spells out the terms of the UK’s exit, covering items such as the $50 billion “divorce bill” (to cover commitments Britain has made to the bloc’s budget), citizens’ rights for the roughly 3 million EU citizens living in the UK (the EU reciprocating with respect to an estimated 1.3 million UK citizens in its member states), and the Northern Ireland “backstop” – a way to keep the Irish border open, if trade talks stall.

Actual negotiations on a trade relationship will begin prior to the March 29, 2019 exit date, and there will be a 21-month transition period, which can be extended until December 2022, though it wouldn’t be this far out due to a national election in the UK earlier that year.

Britain and the EU will enter a joint customs area that will relieve the need for customs checks between Northern Ireland and the Republic of Ireland, which would effectively prevent the UK from entering trade deals with non-European economies like the U.S. or China.

The UK can only exit this customs arrangement when the EU agrees that doing so wouldn’t restore a hard border between Northern Ireland and the Republic of Ireland.

There was no formal vote on Sunday, with the EU proceeding by consensus, the European Council saying in a one-page document that it wanted the orderly withdrawal and the “closest possible” relationship in the future.

Before the meeting, European Council president Jean-Claude Juncker said the UK’s departure was a “tragedy” for the EU, adding that there are “no smooth divorces.”

Lithuanian President Dalia Grybauskaite said there were a number of possible outcomes if the UK Parliament rejected the deal, including an extension of the negotiations or another referendum.

But this is the best and only deal Britain is getting, as the EU has made clear, and this is what Parliament doesn’t seem to understand, some members believing they will still be able to amend the accord, and this is going to be part of the coming week’s debate.

Mrs. May could lose the vote, the government would then probably collapse, and then you really have a crisis.  Should Parliament vote it down, she has 21 days to make a statement on how the government is to proceed.

Foreign Secretary Jeremy Hunt said the parliamentary arithmetic was “challenging,” telling the BBC that the UK was getting “between 70% and 80%” of what it wanted, while the agreement “mitigated” most of the negative economic impacts.

IF Parliament approves the deal, however, it then goes back to the European Council, where a majority of countries (20 out of 27 states) will need to vote for it.  It also must be ratified by the European Parliament, in a vote expected to take place in early 2019.

Critics / opponents say the deal cedes too much control to the EU, but the Brits who supported the referendum years ago were naïve to think the EU was just going to roll over.

The bottom line is no one is happy.  Democratic Unionist leader Arlene Foster – who wants to leave the EU – said her party’s parliamentary pact with May’s Conservatives would be reviewed if MPs approved the deal as she believes the agreement as it stands would leave Northern Ireland and the rest of the UK “still within the European structures with no say in its rules.”  [Which is true.]

Former Prime Minister Tony Blair, who wants another referendum, said the deal was a “dodo.”

Should the UK crash out of the EU with no deal and no transition, the Bank of England warns it would lead to the sharpest drop in national income since the second world war.  Home prices, for one, the BoE said on Wednesday, could plummet 30 percent.

Prime Minister May was forced to concede that any form of Brexit would leave Britain worse off initially than if it had remained in the bloc.

This is a freakin’ mess. 

Italy: The European Central Bank expects that Italy will eventually adhere to EU spending rules and reach a deal with the European Commission in their standoff over spending, ECB Vice President Luis de Guindos said yesterday.  “If you start to apply expansionary fiscal policy...markets start to penalize Italian government bonds.  What you gain in terms of fiscal expansion for the real economy, can be lost in terms of funding.”

The government said it is sticking to its main 2019 budget goals but there were signs the deficit target might be lowered in the wake of a spending review to be disclosed soon.

In other words, the Five Star / League coalition appears to be climbing down.

League Leader Matteo Salvini told Italian media: “We use common sense and substance – we’re not getting stuck over 0.1 percent more or less.  If in Brussels they think they can hold the government and 60 million Italians hostage over a decimal place, we are very willing to remove that excuse.”

Luigi Di Maio, leader of the anti-establishment Five Star Movement, said: “The issue is not the conflict with the EU on a deficit of 2.4 percent, what’s important is that not even a single person is kept out of the core measures.”

Di Maio is pushing a citizen’s income to support poorer families and a lower retirement age as part of the budget.  The League is focused on defending the tax cuts it has promised.

The yield on the Italian 10-year fell to 3.21% this week from 3.40% the prior one on the heels of the optimism a compromise can be found between the European Commission and the Italian government.

Hungary: From Patrick Kingsley / New York Times....

“Hundreds of private Hungarian news outlets have been simultaneously donated by their owners to a central holding company run by people close to the far-right prime minister Viktor Orban, cementing Mr. Orban’s grip on the Hungarian news media.

“If approved by the country’s regulatory authorities, which are led by an official appointed by Mr. Orban, the deal will place most leading private Hungarian outlets under the control of a single, state-friendly entity, in a move that is unprecedented within the European Union, according to Freedom House, a global rights watchdog that analyzes press freedom....

“Today, more than 500 Hungarian news outlets take a pro-government stance, compared with just 31 in 2015, according to research by Atlatszo, one of the few Hungarian news websites that remain independently owned.”

Turning to Asia, China’s official manufacturing PMI for November fell to 50.0, dead-on the line between growth and contraction, indicating no change from the previous month; the first time the sector failed to expand since July 2016.  Mid-size and smaller factories were particularly hard-hit, with sub-indices tracking their activity dropping to 49.1 and 49.2, respectively.

The official non-manufacturing PMI dropped half a point to 53.4.

The government has eased some policies to spur growth, but credit growth is still in a downward trend, so the economy is likely to slow further.

In Japan, industrial production for October beat expectations, up 4.2 percent year on year, according to a preliminary reading from the Ministry of Economy, Trade and Industry, following a rough third quarter that was skewed by some natural disasters in September.

Japanese retail sales rose the most in October in 10 months, 3.5% yoy, a fifth straight month of gains, private consumption accounting for 60 percent of the Japanese economy.

A separate reading on employment had the jobless figure at 2.4% for October, up a tick, while the core reading on consumer prices for the month was just 1.0%.

Street Bytes

--Owing to the aforementioned Fed talk, and misplaced optimism over a U.S.-China trade deal, it was quite a week on Wall Street; the Dow Jones advancing 5.2% to finish November in the black, up 1.7%, while the S&P 500, with its 4.9% gain, finished up 1.8% for the month, after being down 2.9% in November as of last Friday.  Nasdaq needed all of its 5.6% gain, the best in years, to squeak out a 0.3% gain for the month.

Shares in Apple, however, lost 18% in November, and as of the market close, Microsoft took over the top spot in market capitalization at $851 billion to Apple’s $847 billion.  What a solid run for Microsoft...nothing spectacular, just executing in every phase of the game.

--U.S. Treasury Yields

6-mo. 2.52%  2-yr. 2.79 %  10-yr. 2.99%  30-yr. 3.29%

With the Fed’s dovish tone this week, the yield on the 10-year fell back below 3.00% for the first time in 12 weeks.

--Monday, General Motors announced it would shutter five North American plants, stop building six low-selling passengers cars in North America and cut up to 15,000 jobs.  GM said it had no plans to shift production of those vehicles to other markets.  Among the models impacted are the Chevy Cruze, the Cadillac CT6 and the Buick LaCrosse.

The plant closures will be in Detroit; Lordstown, Ohio; and Oshawa, Canada, as well as transmission plants near Baltimore and in Warren, Mich.

Many of those who will lose jobs are working on conventional cars with internal combustion engines. CEO Mary Barra said the industry is changing rapidly and moving toward electric propulsion, autonomous vehicles and ride-sharing, and GM must adjust.

“We’re right-sizing our capacity for the realities of the marketplace and the transformation that’s occurring,” Barra said.

The moves are expected to save $6 billion in cash by the end of next year, including $4.5 billion in recurring annual cost reductions and a $1.5bn reduction in capital spending.  Those cuts are in addition to $6.5bn that the company has previously announced would be in effect by the end of this year.

One of the four U.S. plants, Lordstown, is in a state critical to victory in the 2020 presidential campaign.  At a rally there last summer, President Trump told people not to sell their homes because the jobs are “all coming back.”

Rep. Tim Ryan (D-Ohio), whose district includes Lordstown, blamed Trump for the job losses.

The area “has been yearning for the Trump administration to come here, roll up their sleeves and help us fight for this recovery,” Ryan said in a statement Monday.  “What we’ve gotten instead are broken promises and petty tweets.  Corporations like General Motors and the president himself are the only ones benefiting from this economy.”

President Trump said on Wednesday that new auto tariffs were “being studied now,” asserting they could prevent job cuts such as at General Motors.  Trump tweeted that the 25 percent tariff placed on imported pickup trucks and commercial vans from markets outside North America in the 1960s had long boosted U.S. vehicle production.  “If we did that with cars coming in, many more cars would be built here,” Trump said, “and G.M. would not be closing their plants in Ohio, Michigan & Maryland.” 

Trump later tweeted: “Very disappointed with General Motors and their CEO, Mary Barra.  We are now looking at cutting all @GM subsidies, including for electric cars.”

Most believe the president has no power to change existing electric-car subsidies, and it would be up to him to pressure Congress to revise existing tax law, which is a non-starter.

The U.S. currently has a 2.5 percent tariff on imported cars and sport utility vehicles from markets outside North America and South Korea. The new North American trade deal exempts the first 2.6 million SUVs and passenger cars built in Mexico and Canada.  Automakers are now worried the GM moves will prompt Trump to take action faster than expected on new tariffs.

The Trump administration has for months been considering imposing dramatic new tariffs on imported vehicles, with the Commerce Department circulating draft recommendations to the White House on its investigation into whether to impose tariffs of up to 25 percent on imported cars and parts on national security grounds.

“The President has great power on this issue – Because of the G.M. event, it is being studied now!” Trump tweeted.

The prospect of tariffs of 25 percent on imported autos and parts has sent shockwaves through the auto industry, with both U.S. and foreign-brand producers lobbying against it and warning that national security tariffs on EU and Japanese vehicles could dramatically raise the price of many vehicles.

The United States slapped an additional 25 percent tariff on Chinese-made vehicles earlier this year, prompting China to retaliate.  China currently imposes a 40 percent tariff on U.S. vehicles, while the United States has a 27.5 percent tariff on Chinese vehicles.

The European Union currently has a 10 percent tariff on imported vehicles, and President Trump wants them to buy more American-made cars and trucks (ditto Japan).

GM reiterated it was committed to investing in the United States, saying it has invested $22 billion in its U.S. manufacturing operations since 2009, when it underwent a government-led bankruptcy restructuring.  The government has estimated the U.S. Treasury’s bailout fund lost $11.2 billion on GM’s $49.5 billion rescue and restructuring.

As the Wall Street Journal noted:

“The auto industry’s factory utilization – a measure of how much production capacity a plant uses based on a 16-hour workday – has been declining steadily in North America, to 82% so far this year from 93% in 2015, according to research firm LMC Automotive. That underused floor space could become a bigger problem for auto makers if sales drop, analysts said, potentially forcing more layoffs or plant closures.”

Trump tweets on the topic:

“The reason that the small truck business in the U.S. is such a go to favorite is that, for many years, Tariffs of 25% have been put on small trucks coming into our country. It is called the ‘chicken tax.’ If we did that with cars coming in, many more cars would be built here....

“....and G.M. would not be closing their plants in Ohio, Michigan & Maryland. Get smart Congress. Also, the countries that send us cars have taken advantage of the U.S. for decades. The President has great power on this issue – Because of the G.M. event, it is being studied now!”

“Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland.  Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get!  We are now looking at cutting all @GM subsidies, including...

“...for electric cars. General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off.  I am here to protect America’s Workers!”

“General Motors is very counter to what other auto, and other, companies are doing. Big Steel is opening and renovating plants all over the country.  Auto companies are pouring into the U.S., including BMW, which just announced a major new plant. The U.S.A. is booming!”

Editorial / Wall Street Journal

“President Trump believes he can command markets like King Canute thought he could the tides. But General Motors has again exposed the inability of any politician to arrest the changes in technology and consumer tastes roiling the auto industry.

“GM said Monday it plans to eliminate 15% of its salaried workforce in North America and stop production at five plants that employ 6,700 workers, including one in storied Lordstown, Ohio.  ‘We are taking these actions now while the company and the economy are strong to stay in front of a fast-changing market,’ CEO Mary Barra said.

“The U.S. auto maker plans to redeploy some $4.5 billion in annual savings to more profitable truck, electric-car and autonomous-vehicle manufacturing.  Investors cheered by bidding up GM’s stock, but the President reacted like a spurned suitor.  ‘You know, the United States saved General Motors and for her to take that company out of Ohio is not good,’ he said Monday, adding Tuesday that he might end GM’s subsidies.  GM shares promptly fell 2.6%.

“As a candidate Mr. Trump lambasted Ford for shifting production to Mexico, then took credit when the company announced it would keep its Lincoln MKC in Louisville, Kentucky.  But both decisions were motivated by market changes, and so is GM’s.

“GM is halting production at plants that make sedans including the Chevy Cruze, Impala and Volt hybrid. Americans are buying more trucks and SUVs amid lower gas prices and better fuel efficiency. Small cars make up a third of U.S. vehicle sales compared to half in 2012. About 75% of GM sales last year were trucks and crossovers, up from 60% in 2012.  Its share of the small-car market has also fallen by a third in a decade amid Japanese and Korean competition.

“The main driver of GM’s failure a decade ago was its uncompetitive labor contracts. Rather than reduce costs or idle unproductive plants, GM offered bigger discounts to goose sales. But the market tides still rolled in, and GM executives have learned that staying competitive is necessary to avoid another collapse.

“GM is essentially following Ford and Fiat Chrysler by phasing out small-car production.  Last year GM cut production by a third at Lordstown and nearly half at a plant in Oshawa, Ontario.  Keeping these factories open at lower levels of output would waste human and physical capital that could be deployed to more productive and profitable units....

“Boosting production of higher-margin vehicles is imperative as auto sales flatten after eight years of robust growth and rising interest rates curb demand.  Material costs have also increased due to Mr. Trump’s steel and aluminum tariffs.  GM said in July the tariffs could raise its costs by as much as $700 million this year, which is equal to the pay of about 9,400 employees.

“Mr. Trump and liberals howling about layoffs ignore that GM is steering more investment toward electric and autonomous vehicles.  Electric cars make up only about 1% of U.S. auto sales and often sell at a loss though they could become more popular as batteries improve.

“But China is GM’s largest market, and it sold a third more cars there than in the U.S. last year.  Beijing has set electric-car quotas, and to be competitive GM has little choice but to make cars in China.  All the more so after Beijing raised tariffs on U.S.-made cars to 40% from 15% in retaliation for Mr. Trump’s tariffs.

“GM is also betting that autonomous cars will become the rage as millennials and aging baby boomers give up the wheel....

“Mr. Trump and Democrats seem to believe that with the right mix of tariffs and managed trade they can return to a U.S. economy built on steel and autos....

“But an economy doesn’t run on nostalgia.... Amid a strong economy, most laid-off GM employees should find work.  GM may also decide to retool idled factories to produce trucks as Fiat Chrysler has with a plant in Michigan.

“Mr. Trump thinks his trade machinations can overrule the realities of the marketplace, but he’s as wrong as Barack Obama was about the climate and regulation.  Fine with us if he wants to end subsidies for all car companies.  But if he intervenes to make GM less competitive, Mr. Trump will merely hurt more workers.”

Editorial / Washington Post

“Though his language was the crudest, Mr. Trump was hardly the only politician bashing GM for the layoffs.  Ohio’s two senators, Sherrod Brown (D) and Rob Portman (R), did so, too, as did Canadian Prime Minister Justin Trudeau, whose country will also see a plant close. The American politicians branded GM an ingrate, guilty of repaying the $49.5 billion bailout that rescued the firm in 2009 with ‘corporate greed,’ as Mr. Brown put it.

“The truth of the matter is that General Motors long ago exited bankruptcy and the government sold its last shares almost five years ago. The point of that exercise was to restructure the company, then set it free again to make its own decisions under new management.  Monday’s announcement by chief executive Mary Barra, painful as it was to those affected, is entirely consistent with that government intervention, not a betrayal of it....

“Passenger cars such as the Cruze account for just 30 percent of all new-car sales in the United States; crossovers, SUVs and pickups account for the rest. Ms. Barra’s plan, which the company says will save $6 billion over the next two years, is a rational attempt to meet these new market realities.  If it succeeds, the company will be able to expand and, possibly, create more jobs, and it will be less likely to need another bailout in the future – which is the outcome everyone, from the White House on down, should be rooting for.”

--Ford Motor Co. said on Wednesday it will be reshuffling workers at several of its plants to meet rising demand for pickup trucks and large SUVs, a process that will require finding new positions for 150 workers displaced by the changes but not result in job cuts.  The changes also will not require adding new jobs.  The No. 2 U.S. automaker said it is shifting workers from one Kentucky plant making crossover vehicles to another that makes its best-selling F-Series pickup trucks, plus the Ford Expedition and the Lincoln Navigator, both large SUVs.  Ford is also moving 500 jobs to a Michigan plant making transmissions for popular pickup trucks from one nearby that will reduce production to one shift making Mustangs and the Lincoln Continental.  The moves received the approval of the United Auto Workers union.

--Fiat Chrysler pledged on Thursday to spend more than 5bn euros ($5.7bn) on new models and engines in Italy between 2019-2021 in a bid to fill under-utilized plants, conserve jobs and boost operating margins in Europe.  A total of 13 new models or restylings of existing models will be launched in that period, it said.  The carmaker added a big part of the investments will be focused on the development of electric and hybrid engines.  A new Fiat 500 electric model will be produced at FCA’s plant in Turin.

--The 19-year partnership between Renault SA and Nissan Motor Co. is facing its biggest test to date after its larger-than-life leader, Carlos Ghosn, remains in detention in Tokyo for suspected financial misconduct.  Today, Japanese officials extended Ghosn’s detention another ten days.  Authorities now have to file charges by Dec. 10 or arrest him on suspicion of fresh crimes to keep him in custody.

But at issue is the future of the alliance and the current capital structure, with Renault controlling Nissan through its 43 percent stake, while Nissan holds a non-voting 15 percent stake.  But with Ghosn’s arrest, Nissan wants to reduce what it considers Renault’s outsized control of it.

However, today in Buenos Aires, Japanese Prime Minister Shinzo Abe told French President Emmanuel Macron that “the future of the alliance is up to the private-sector shareholders. The government of Japan does not prejudge the future of the alliance.”

--U.S. exports of petroleum products surged to a new record last week, the U.S. exporting 6.3m barrels per day of refined products, as reported by the Energy Information Administration on Wednesday.  Net of imports, product exports totaled 4.3m b/d, also a record high.

The U.S. was a net importer of petroleum products until 2011.  Growth in domestic oil production from shale, along with investments in refining capacity, have flipped the script, the U.S. now a formidable supplier of liquid fuels to the rest of the world.

U.S. producers are pumping a record 11.7m barrels per day, an increase of more than 2m b/d from last year, the EIA estimates.

U.S. crude oil inventories continued to rise as well, however, to the highest level in a year, and the price of West Texas Intermediate closed the week at just $50.72, which did nonetheless break a seven-week losing streak that resulted in oil having its worst month since Oct. 2008.

--The Marriott International hotel chain said today that the database of its Starwood reservation system had been hacked, with the personal details of 500 million guests going as far back as 2014 being compromised.

The hotel group runs more than 6,700 properties around the world and is the world’s largest hotel chain.  It was informed in September of the breach, and an investigation this month revealed unauthorized access had been made on or before Sept. 10, Marriott said in a statement.

The investigation also found that an “unauthorized party had copied and encrypted information, and took steps toward removing it,” the statement said.

Personal details including names, addresses, dates of birth, passport numbers, email addresses and phone numbers for hundreds of millions of guests may have been accessed.   Some credit-card info may also have been compromised.

Marriott said it has set up a dedicated website and call center to deal with questions guests might have. The company said it was attempting to reach affected customers today.

This isn’t Marriott’s only problem these days.  It has also been dealing with strikes by thousands of workers in nine cities who are protesting over issues including health care coverage, wages and protection from sexual harassment.

--The Frankfurt headquarters of Deutsche Bank have been raided by prosecutors in a money laundering investigation.

Germany’s public prosecutor alleged that two staff members have helped clients launder money from criminal activities. 

The investigation was sparked by revelations in the 2016 “Panama Papers” – a huge trove of information leaked from one of the world’s most secretive companies, a Panamanian law firm called Mossack Fonseca.

Other banks have been fined as a result of information in the Panama Papers.

--Cyber Monday brought in an estimated $7.8bn in sales, up nearly 18 percent on last year, which would make it the biggest online shopping day in the U.S., according to Adobe Analytics.

That’s more than the $6.2bn in online sales for Black Friday, up nearly 24 percent on last year.  But it still pales in comparison to China’s $30.8 billion in spending on Alibaba Singles Day last month.

Shares in Amazon.com jumped 13% this week as the company said Cyber Monday was once again the single-biggest shopping day in its history. Amazon also said the five days from Thanksgiving through Cyber Monday broke records.

--Tiffany & Co. reported quarterly sales that missed estimates as Chinese tourists spent less than expected at the jeweler’s stores in the United States and Hong Kong, the shares falling 12 percent in response.  Investors were also disappointed by the company’s failure to raise its full-year profit outlook ahead of the holiday season.

CEO Alessandro Bogliolo tried to reassure investors that while spending outside of China was down, sales in the country were robust.

The company’s comparable-store sales, excluding the impact of currency changes, rose 3 percent, while analysts on average were expecting a rise of 5.3 percent.  Total revenue rose 3.7 percent to $1.01 billion.

--Dick’s Sporting Goods Inc. continues to suffer from its decision earlier in the year to stop selling guns to people under 21, with sales at existing stores and websites falling 3.9% for the three-month period ended Nov. 3, Dick’s specifically citing weakness in the company’s hunting and electronics departments.  Weak gun sales also hit areas like outdoor equipment with fewer hunters coming to the stores.

In the wake of February’s high school shooting in Florida that killed 17, Dick’s announced it would stop selling assault-style guns and would no longer sell guns and ammunition to people under 21.  Walmart followed suit, but it hasn’t said the decision created a drag on sales.

Gun sales overall have slowed in the Trump presidency, as sales tend to surge under Democratic leadership.

The company reported earnings of $37.8 million, compared with $37 million in the year ago period.

--The New York Times reported that Sheryl Sandberg “asked Facebook’s communications staff to research George Soros’ financial interests in the wake of his high-profile attacks on tech companies, according to three people with knowledge of her request, indicating that Facebook’s second in command was directly involved in the social network’s response to the liberal billionaire.

“Ms. Sandberg, Facebook’s chief operating officer, asked for the information in an email in January to senior communications and policy executives. The email came within days of a blistering speech Mr. Soros delivered that month at the World Economic Forum, attacking Facebook and Google as a ‘menace’ to society and calling for the companies to be regulated.

“Ms. Sandberg, who was at the forum – but was not present for Mr. Soros’ speech, according to a person who attended it – told subordinates to examine why Mr. Soros had criticized the tech companies and whether he stood to gain financially from the attacks. At the time, Facebook was under growing scrutiny for the role its platform had played in disseminating Russian propaganda and fomenting campaigns of hatred in Myanmar and other countries.”

Facebook then commissioned a Republican-linked firm, Definers Public Affairs, which gathered information that was then circulated to reporters about Soros’ funding of several American advocacy groups critical of Facebook.

As the Times reported earlier in the month, this set off a public relations debacle for Sandberg and Facebook, as it was accused of trafficking in anti-Semitic attacks against the billionaire.

One of the issues for Sandberg is in her shifting explanations of her role in Facebook’s decision to hire Definers, having first denied knowing that the company had hired the opposition research firm.

My issue for weeks now has been the fact that the use of Facebook’s platform led to the deaths of thousands in places like Myanmar, Sri Lanka and India, and how Sandberg and Mark Zuckerberg did nothing to prevent it.

--Indonesian investigators have said the Lion Air Boeing 737 jet that plunged into the sea, killing 189 people last month, was not airworthy on a flight the day before it crashed.  They further found that Lion Air must improve its safety culture and better document repair work.

The flight from Bali to Jakarta on Oct. 28 had experienced similar technical issues to the doomed flight the next day from Jakarta to Pangkal Pinang.  The pilot of the Oct. 28 flight chose to press on to Jakarta after shutting down the plane’s anti-stall system, the head of Indonesia’s national transport safety committee said.

But it would seem the pilots of the doomed flight the following day may have struggled with the same anti-stall system.  Data from the black box indicates the pilots fought to save the plane almost from the moment it took off, as the jetliner’s nose was repeatedly forced down, apparently by an automatic system receiving incorrect sensor readings.

Investigators said that Lion Air kept putting the plane back into service despite repeatedly failing to fix a problem with the airspeed indicator in the days leading up to the fatal flight.

Investigators have previously said the doomed aircraft had problems with the airspeed indicator and angle of attack (AOA) sensors, which prompted Boeing to issue a special bulletin telling operators what to do when they face the same situation.

But much remains unknown about the tragic crash because the cockpit voice recorder has yet to be recovered.

Lion Air, despite a shoddy safety record, has grown to capture half the domestic market, and is now Southeast Asia’s biggest airline.

--Bayer AG on Thursday said it would cut 12,000 jobs and sell its animal-health business, Coppertone sunscreens and Dr. Scholl’s foot-care products in an effort to win back investors’ trust, the stock price having been hammered by problems related to its acquisition of Monsanto and the nearly 10,000 lawsuits from users of its weedkillers.

In addition to the issues at Monsanto, though, the chemicals and pharmaceuticals giant is facing challenges in most of its businesses, from falling sales of over-the-counter drugs to a dwindling stable of blockbuster prescription medicines.

--HP Inc. reported strong earnings in the third quarter, amid an upswing in the personal-computer market, with the printer and PC giant, born from the 2015 split of Hewlett-Packard, saying it is confident it will see strong growth in technology spending from corporate clients and consumers in 2019.

Revenue rose 10% to $15.34 billion.  HP’s personal-systems segment, which is the company’s largest single segment and includes the PC business, rose 11%.  The printer segment, which includes the confiscatory supplies business, saw a stronger-than-expected 9% increase in revenue.  [I’m bitter, having had to buy another HP printer this week, all of the models with different ink requirements, and each new printer more cheaply made than the one before...so that it will fall apart quicker, whereupon you have to buy another...and another....]

Industrywide, recent data from research firms International Data Corp. and Gartner Inc. shows a recovery in the PC market this year, driven by Windows 10 hardware upgrades for corporate customers.  Gartner estimates overall IT spending will increase 3.2% in 2019, with further growth on into 2020 owing to the upgrade cycle.

For its part, HP has also been investing heavily in 3-D printing, which it sees as a multitrillion-dollar global market.

The company affirmed its annual profit forecast for the current fiscal year.

--Southern California home sales fell 7.5% in October from a year earlier, according to a report released by CoreLogic.  This represented the third straight month of declines, with the figure for October the lowest for the month since 2011.

Real estate agents in the six-county area say the declines are the result of rising mortgage rates and years of steady price hikes, echoing the national trends.

--My favorite store (or nearly favorite), Dollar Tree, saw its shares rise 6 percent Thursday, even as same-store sales at the Dollar Tree-labeled outlets were less than expected, rising 2.3 percent, and those at the newly-acquired Family Dollar stores fell 0.4 percent.  And DLTR cut its sales outlook, slightly.

But the Street seemed to like that the company said tariffs will have minimal impact on its operations this year, while a possible new round of levies on China would be mitigated.

Personally, being a weekly Dollar Tree shopper, I avoid every Chinese made product, so I was kind of surprised at the positive impact of the statement.  [I can’t help but add, any dog owner who buys dog food or treats made in China, at any store, is nuts.  You are handing your pet a death sentence.]

As CNBC’s Jim Cramer, another Dollar Tree lover, noted yesterday, the other reason why the earnings report was well received is the CEO admitted there was a need to rapidly renovate the Family Dollar stores.

--Canada’s economy grew at a 2% annualized rate in the third quarter, vs. 2.9% in the second, amid a slowdown in business spending...see also ‘world.’

--The Food and Drug Administration has figured out that the E. coli outbreak that shut down the romaine lettuce market last week likely originated in the central coast region in California, where the vast majority of lettuce was grown at the time of the outbreak.

The FDA also outlined a new voluntary labeling regime for romaine lettuce to help consumers better identify whether it is safe to eat.  Romaine lettuce entering the market will now be labeled with a harvest location and date, according to the agency.

The FDA advises, “If [lettuce] does not have this information, you should not eat or use it.”

At least 43 were sickened in this latest outbreak, sixteen needing hospitalization.  22 others fell ill in Canada.  Earlier this year, five died in a separate outbreak tied to romaine lettuce.

--For the seven-day period ending Sunday, Broadway reported combined show attendance of 299,235 and a gross of $43 million, both records for Thanksgiving week; 10% higher than Thanksgiving week last year, which had marked the previous peak for the holiday period, according to the industry’s trade group, the Broadway League.

Foreign Affairs

Russia / Ukraine: Russia seized three small Ukrainian naval vessels on Sunday, capturing 24 sailors, at least three of whom were wounded in a shooting by the Russian side, the action briefly blocking passage through the Kerch Strait.  The vessels had been trying to pass through the Strait on their way to the Sea of Azov.

Russia said the action was over their illegal entry into Russian waters, which Ukraine denies.  Ukraine released video and said the exact location where its ships were fired upon showed that they were in international waters.

The Kerch Strait is flanked by Crimea and the Russian mainland, and Ukrainian vessels have to sail through it to reach Ukrainian ports in the Sea of Azov on the other side of the passage.  Russia insists the boats did not notify traffic authorities of their journey, while Ukraine says Russia was notified in advance.

Sunday’s voyage from the Black Sea port of Odessa was not the first that Ukrainian vessels have sailed from there into the Sea of Azov, designated as shared internal waters by Ukraine and Russia by a 2003 treaty that Putin signed himself.

The 24 sailors were ordered jailed for two months by a court in annexed Crimea pending a possible trial. All of the sailors face jail terms of up to six years if found guilty of what Moscow says was a plot to illegally cross the Russian border.  Friday, the Kremlin announced the three commanders have been transported to a prison in Moscow.

Ukrainian President Petro Poroshenko said he plans to restrict the rights of Russian citizens living in the country under temporary martial law following Russia’s actions.

“No restrictions on the withdrawal of deposits, currency exchange transactions or travel abroad will be imposed on Ukrainian citizens,” Poroshenko said in remarks on his Twitter feed.

“These restrictions will be imposed on Russian citizens, and I think it’s totally justified.”

Poroshenko also accused Putin of wanting to annex all of Ukraine and called for NATO to deploy warships to a sea shared by the two nations.

Poroshenko then said Russian men between 16 and 60 have been barred from traveling to the country; the Ukrainian president saying the restrictions have been initiated to prevent Russians from forming “private armies” fighting on Ukrainian soil. 

President Putin accused Poroshenko of provoking the naval clash to boost his flagging popularity ratings before elections scheduled for next March.

Tensions have been high between Russia and Ukraine since Russia annexed the Crimean Peninsula in 2014. The resulting fighting in Ukraine’s east has killed at least 10,000.

President Trump then canceled his planned meeting with President Putin in Buenos Aires, via Twitter, minutes after telling reporters outside the White House:

“I probably will be meeting with President Putin.  I think it is a very good time to have a meeting.”  He added he was getting a report on Air Force One about the clash with Ukraine “and that will determine what I’m going to do.”

Less than an hour transpired then before Trump tweeted:

“Based on the fact that the ships and sailors have not been returned to Ukraine from Russia, I have decided it would be best for all parties concerned to cancel my previously schedule meeting...

“...in Argentina with President Vladimir Putin. I look forward to a meaningful Summit again as soon as this situation is resolved!”

The Kremlin hadn’t been apprised beforehand and thought the meeting was still on.  Then Friday morning, from Argentina, they said there was still going to be an impromptu meeting at the G-20.

British Prime Minister Theresa May, and other European leaders, said Russia must release the Ukrainian boats and sailors and that the UK would continue to push for “appropriate sanctions.”

Editorial / Wall Street Journal

“Russia’s attack against Ukraine over the weekend marks a notable escalation: Russian forces, under Russian flags, openly assaulted their western neighbor.  President Trump said he was ‘not happy,’ while Secretary of State Mike Pompeo condemned ‘this aggressive Russian action.’  Strong rhetoric helps, but there’s also scope for concrete action – especially if the U.S. and Europe cooperate.

“A start would deny Mr. Putin the international respect he craves, and this week’s G-20 summit in Argentina offers a chance to isolate the Russian leader.  President Trump can call off his meeting with Mr. Putin pending a substantive gesture, such as release of the two dozen Ukrainian sailors Russia kidnapped in its skirmish. Such leverage is more effective than whatever charm Mr. Trump thinks he can deploy against Mr. Putin....

“NATO needn’t directly defend Ukraine, which isn’t an alliance member. But increasing its presence in the Black Sea is worth considering as a show of solidarity. Washington and allies also can heighten the potential costs of future Russian actions around the Sea of Azov by selling Kiev more lethal military assistance, such as antiship missiles.

“Ukraine’s Russia problem is a more urgent version of everyone else’s.  Mr. Putin wants to expand his influence from the Arctic Circle to Africa.  Absent a forceful response to the weekend’s events, more Russian affronts will come soon enough.”

Anne Applebaum / Washington Post

“President Trump’s administration is divided, distracted and preparing to contend with Democrats in the upcoming House majority who will, among other things, investigate his past ties to Russia. The E.U., Canada and even Poland came out with official statements condemning the Russian actions long before anything was heard from the United States. On Monday evening Kiev time, the State Department had still not reacted to the events in the Kerch Strait. U.S. Ambassador to the United Nations Nikki Haley’s denunciation of Russia’s ‘outlaw actions’ came many hours after the other statements.

“Whatever the other motives for this staged attack, this kind of passivity may well be what the Russians are counting on. This is the modus operandi they have followed in the past: Take a few steps forward; wait for a reaction. If there isn’t one, move farther. If there is one, wait for the emotions to die down – and then move farther. This incident may or may not end here, but consider it a warning: If we don’t have a broader strategy for ending this war, that will be the pattern for years to come.”

Saudi Arabia / Yemen: The U.S. Senate advanced a measure to withdraw American support for a Saudi-led coalition fighting in Yemen, a blow to President Trump.  In an initial procedural step, the senators voted 63-37 to take forward the bipartisan motion, many of them unhappy with Trump’s response to the murder of Saudi journalist Jamal Khashoggi.  Secretary of State Mike Pompeo and Defense Secretary Jim Mattis had urged the senators not to back the motion.

There are multiple reports the CIA believes Saudi Crown Prince Mohammed bin Salman ordered Khashoggi’s killing, but President Trump has dismissed it, saying the CIA had not drawn firm conclusions.  Instead, Trump has described Saudi Arabia as a vital ally and resisted calls for sanctions directly against the kingdom’s leadership. 

But senators were ticked off that CIA director Gina Haspel did not attend their closed session hearing on relations with the Saudis on Wednesday.  Haspel has heard what Turkey claims is a recording of Khashoggi’s murder and has studied evidence in the case.  Some are calling Haspel’s absence a “cover-up.”  It clearly is.

Even staunch Trump supporter Sen. Lindsey Graham (S.C.) said, “I am not going to blow past this. Anything that you need me for to get out of town – I ain’t doing it until we hear from the CIA.”

Democratic Sen. Bob Menendez (N.J.) said, “It’s time to send Saudi Arabia a message, both on its violation of human rights and the incredible humanitarian catastrophe it’s creating in Yemen.”

Republican Sen. Bob Corker (Tenn.), who chairs the Senate Foreign Relations Committee, said: “We have a problem here.  We understand that Saudi Arabia is an ally, of sorts, and a semi-important country. We also have a crown prince that’s out of control.”

In a statement, CIA spokesman Timothy Barrett said “the notion that anyone told Director Haspel not to attend today’s briefing is false.”  He added that congressional leaders and members of the Senate Intelligence Committee had been fully briefed, but only one of the 14 Republicans who voted to move ahead with the Yemen resolution was.  Shockingly, Trump, Pompeo and national security adviser John Bolton all have pointedly said they have not listened to the tape, and see no reason to do so.

For his part, Sec. Mattis said: “We are seldom free to work with unblemished partners.  Long-standing relationships guide but do not blind us. Saudi Arabia, due to geography and the Iranian threat, is fundamental to maintaining regional and Israeli security, and to our interest in Mideast stability.”

The Saudis have been sending signals that they have other options if the U.S. reduces military ties, including with Russia (and MBS and Putin sure looked chummy today in Buenos Aires), but lawmakers have tired of such strategic arguments, arguing President Trump needs to stand up for American ideals – such as condemning the killing of a journalist.

The resolution under consideration is a bipartisan effort by Sens. Bernie Sanders (I-Vt.) and Mike Lee (R-Utah).  It seeks to invoke the War Powers Act to end U.S. military support for the Saudi-led coalition.  If successful, it would be the first time since the act was passed in 1973 that it has been used to end a foreign operation.

Further debate in the Senate is expected next week.

Separately, I was struck by a discussion on Michael Smerconish’s CNN show Saturday and an interview he had with Seth Jones, Director at the Center for Strategic and International Studies.  Smerconish cites a line from a new study put out by the center, “The good news is that there has not been an attack anywhere near the scale of 9/11 in the U.S. since that day, a significant achievement. The bad news is that the ideology that leads someone to fly a plane into a building or drive a car into a crowded sidewalk seems to have metastasized.”

SMERCONISH: I’m trying to reconcile two conflicting stories about the Saudis this week. In one, we have the President’s official statement defending the Saudis despite the murder of journalist Jamal Khashoggi, and despite the fact that 15 of the 19 hijackers on 9/11 came from Saudi Arabia. And in the other, a new report finds that since 9/11, the number of Sunni Islamic militants operating around the world has quadrupled despite nearly two decades of American led efforts to fight Al-Qaeda and the Islamic state.

A reminder, the Saudis are predominantly Sunnis. Most Iranians are Shia. They’re the two sides in the historic Islamic battle over who is the rightful heir to Muhammad that started in the year 632. So it confuses me not just that the President stands with the Saudis, but that he kicked off his official statement by attacking Iran.  He cites its bloody war in Yemen, efforts to destabilize Iraq’s democracy, support for Hezbollah in Lebanon and Assad in Syria and calls Iran the world’s leading sponsor of terror....

Meanwhile, “The Times” reported that 17 years after 9/11, militants have steadily multiplied....

Seth, why is all of our foreign policy animus being directed against the Shia, Iran, when it seems that the Sunnis, many from Saudi Arabia, are the ones who want to export their terror to us?

SETH JONES: Well, Michael, I think it’s a mistake. I mean, I think Iran and the Shia certainly present a threat to the United States, but at this point, Shia groups, even Hezbollah, are not conducting attacks against the U.S. or trying to. They’re predominantly Sunni groups like the Islamic state and Al-Qaeda. So I think we’ve got the wrong enemy here.

SMERCONISH: Who is the enemy?

JONES: Well, I think there are several enemies, but I think when we look at the number of jihadists right now, and where the attacks are taking place, they are in places like Syria and Iraq and Afghanistan and they’re predominantly Sunni jihadist organizations with Al-Qaeda and the Islamic State being the predominant ones and that’s where U.S. focus should be in targeting these groups overseas.

SMERCONISH: Right...but isn’t that which motivates them our continued presence on what they regard as the Arabian Peninsula, their footprint?

JONES: No, I don’t think that’s entirely correct.  I think when we look at what happened on 9/11, the U.S. was not in Afghanistan. The U.S. was not in many areas of the Middle East, yet they attacked us. I think if we look at the U.K. last year, five major attacks in the United Kingdom. The U.K. does not have a meaningful presence overseas. So they’re willing – they’re really willing to attack any outside country – the British, the Americans and others – that are supporting regimes they’re fighting overseas....

(But President Trump and national security adviser John Bolton are) focusing increasingly on Iran.  I would also point out that the most recent national security strategy of the United States says that the Islamic State has been crushed.  I mean, they clearly have not.

So it’s not just the Iran focus. It’s also this argument that’s just simply not true that jihadist groups like the Islamic State and Al-Qaeda have been defeated or crushed, take whatever word the President has used, that’s simply not true.  In fact, we see a quadrupling since 9/11 in numbers overseas, quite the opposite.

[Your editor has complained the past year that President Trump continues to lie to the American people about success against ISIS...Seth Jones is backing me up.  Both ISIS and Al-Qaeda have sanctuaries in Libya, Somalia, Yemen, Iraq, Syria, Afghanistan and Pakistan.]

Iran: France and Germany agreed to take joint responsibility for an EU-Iran trade mechanism to minimize the risk of U.S. punishment on Iran, but few believe it will cover oil sales, heightening fears for the fate of the international nuclear deal with Iran.  The French-German tactic is an attempt to overcome the refusal of individual EU states to host the mechanism to sidestep the risk of being targeted by the revived U.S. sanctions against Iran.

The U.S. has threatened retribution for sanctions-busting, so the trade mechanism is likely to be scaled back to encompass only less sensitive items such as humanitarian and food products.

“The SPV (Special Purpose Vehicle for trade) is important, but what’s more important to the Iranians is oil and ensuring their exports in the long term,” a senior French diplomat told Reuters.  “None of the measures that we’re trying to put in place will perform miracles, but what we’re trying to do is a series of measures to convince the Iranians to keep to their nuclear commitments.”

Syria: Negotiators from Iran, Russia and Turkey met in Kazakhstan Wednesday for talks aimed at preserving a fragile 10-week-old truce in northern Syria.  In addition to cooling the conflict around the northern province of Idlib – Syria’s last major rebel and militant stronghold – discussions were also focused on creating conditions for the return of refugees and internally displaced people.  The United Nations was represented at the talks, but Washington was not.

The Idlib truce deal is in the balance after an alleged chemical attack in the government-held city of Aleppo Saturday, which has triggered retaliatory Russian air raids.

The exact circumstances of the purported attack on three districts of the government-held city are bitterly disputed.

The Syrian government of Bashar Assad has blamed fighters in neighboring Idlib for the attack, which the Syrian Observatory for Human Rights said hospitalized 94 people.

But more than half of the region is controlled by Hay’at Tahrir al-Sham (HTS), a powerful alliance led by the militants of Syria’s former Al-Qaeda affiliate, and they have yet to comment on the attack.

Afghanistan: Taliban insurgents staged a coordinated attack targeting a security firm in the capital of Kabul on Wednesday, killing at least 10, while the U.S. said an airstrike hours earlier in Helmand province that reportedly killed civilians was conducted by American aircraft.

The assault in Kabul came hours after provincial officials said at least 30 civilians were killed along with 16 Taliban fighters during a battle between Afghan government forces and insurgents.  In self-defense, the ground forced called in an airstrike, according to a U.S. military spokesman in Kabul.  It’s possible the civilian casualties were the result of ammunition the Taliban had stockpiled, which then exploded as a result of the strike, but this all just shows you that the chaos, death and misery continue here, all these years later.

The Taliban has been launching near-daily assaults on Afghan military and police forces and government and other installations throughout the country, and while U.S. and NATO troops formally concluded their combat mission in Afghanistan in 2014, it’s a fact U.S. Special Forces have been used increasingly to buck up the Afghan army.

And so on Tuesday, American forces experienced the worst loss of life so far this year when three soldiers were killed in a Taliban attack, a roadside bomb that went off near Ghazni City; the three Special Forces soldiers having been sent three months ago to save the city from falling to the Taliban.

Another U.S. soldier was killed last weekend, an Army Ranger.

Thus far in 2018, 12 American soldiers have died in combat in Afghanistan along with four other coalition soldiers.

China: Taiwanese President Tsai Ing-wen suffered a crushing electoral defeat last week, after both the so-called pro-independence and the U.S. cards failed to turn the tide in local elections.

Tsai’s Democratic Progressive Party (DPP) now only controls six cities and counties to the opposition Kuomintang’s (KMT) 15. 

The DPP lost Kaohsiung, which has long been a stronghold for the pro-independence camp.

So the surprising outcome prompted Tsai to resign as chairwoman of the party.

It seems the people focused more on the economy rather than political issues.  The next presidential election is 2020.  The KMT has a mainland-friendly policy.  Tsai is expected to seek a second term.

The official China Daily said in an editorial that Tsai had ignored Beijing’s “cooperative stance” and forced relations into a deadlock, and that “her separatist stance has lost her the support of the people on the island.”

Separately, two United States Navy ships have sailed through the Taiwan Strait  in the third such operation this year, as the U.S. increases the frequency of transits through the strategic waterway despite opposition from China.

But while such moves ratchet up tensions with the mainland, they are certainly viewed as a sign of support from President Trump amid growing friction between Taipei and Beijing.

The American Pacific Fleet said in a statement: “The ships’ transit through the Taiwan Strait demonstrates the U.S. commitment to a free and open Indo-Pacific.  The U.S. Navy will continue to fly, sail and operate anywhere international law allows.”

A spokesman for China’s defense ministry said: “The Taiwan issue is a matter of China’s sovereignty and territorial integrity. The will and determination of the Chinese military to protect our sovereignty and territorial integrity is unswerving.”

And on a different matter....

Editorial / Washington Post

“After a few decades of engagement and openness with the West, China under President Xi Jinping has shifted to a strategy of defending and promoting its authoritarian regime, including through an influence campaign inside the United States.  It seeks to ‘penetrate and sway’ the Chinese American community, Chinese students in the United States, U.S. civil society organizations, universities, think tanks, media and businesses. That is the conclusion of a new report by an impressive group of U.S. scholars, who warn that China’s political operations in the United States cannot be ignored.

“The report, ‘Chinese Influence & American Interests: Promoting Constructive Vigilance,’ written by a team led by Larry Diamond of the Hoover Institution and Stanford University and Orville Schell of the Asia Society, deliberately refrains from alarmism, and the authors make a determined effort not to stir hysteria that could rebound against Chinese Americans and lead to a new red scare.  They point out that China has not sought to interfere in a national election or to sow confusion or inflame discourse in the ways that Russia has done.

“But these experts, many of whom championed engagement with China in earlier years, portray a looming and malevolent force that is taking advantage of U.S. openness and freedoms to advance the goals of the Chinese Communist Party, which believes in neither.  The fruits of this campaign, which has accelerated since Mr. Xi took power in 2012, are both greater sway in the United States and a cherry-picking of valuable technology.    The report advances the idea that China’s earlier soft power has now been transformed into ‘sharp power’ that can ‘challenge, and sometimes even undermine, core American freedoms, norms, and laws.’

“What’s most striking about the report is the cumulative evidence of this quiet wave. While China’s theft of intellectual property by hacking is well known, the report describes how China has fielded a lesser-noticed, informal network of ‘collectors’ who are ‘operating under the radar’ through a maze of ventures to harvest U.S. technical know-how for China’s economic priorities, including semiconductors, robotics, information technologies, aviation, artificial intelligence and electric vehicles. This is no haphazard system, they report, but is run by a methodical apparatus devoted to collection, distributing stipends, sinecures and cash to those who help. China’s agents often get shopping lists of stuff needed back home.

“This quiet, determined effort has at its core a vast, undeclared army of people who are doing China’s bidding by infiltrating open U.S. institutions to gain influence, steal secrets and exert leverage, the authors note, ruefully pointing out how the playing field is not level. China takes advantage of the open society in the United States but, at the same time, slams shut the doors inside China, making it almost impossible for scholars and journalists to carry out the same kind of activities in the police state that is the People’s Republic.  To remedy this imbalance, they wisely suggest that the United States needs to expose Chinese influence campaigns, as well as enhance defenses against abuses.  It is time for more clear-eyed understanding of what China is up to on these shores.”

Congo: The latest deadly Ebola outbreak is now the second largest in history, behind the devastating West Africa outbreak that killed 11,000 a few years ago, the World Health Organization said Thursday.  Congo’s health ministry announced the number of cases has reached 426, with 198 confirmed deaths.

Congo faces a unique problem in that attacks by rebel groups and open hostility by wary locals has hampered efforts to stem the outbreak.

Random Musings

--Presidential tracking polls....

Gallup: 38% approval of President Trump’s job performance, 60% disapproval (11/25); 86% of Republicans approve, 34% Independents.  Some commentators made a lot of the 60% mark, as the week before the split was 43/53, but two weeks earlier it was 38/56.
Rasmussen: 47% approval, 51% disapproval.

--California Representative Nancy Pelosi handily won the Democratic nomination to be speaker when her party claims the House majority in the new Congress, but with 32 Democrats voting no, she is well short of the 218 votes needed in a full House floor vote on Jan. 3.  Pelosi thus needs to do some arm-twisting.

Pelosi herself brushed aside the concerns of her foes and said she expected her opposition to erode.

Rep. Hakeem Jeffries of New York, 48, was elected Democratic caucus chairman, Jeffries being among the most outspoken in arguing the party must shift to reflect the changing face of the country.  The move is reflective of a new urgency among House Democrats, post-midterm election victories, to infuse a different set of voices into the party leadership.

--Sen. Cindy Hyde-Smith (R) won her runoff in Mississippi Tuesday night against Democrat Mike Espy, 54% to 46%, much tighter than it was first thought it would be, given that Donald Trump took the state by 18 points in 2016.  But despite Hyde-Smith’s comments about being willing to join a supporter on the front row of a public hanging, the 8-point margin still proves how solidly conservative the state is.

--Just-defeated Republican Congresswoman Mia Love (Utah) – who was mocked by President Trump after Election Day for supposedly not showing him sufficient loyalty – fired back at the commander-in-chief Monday.

“The president’s behavior towards me made me wonder: What did he have to gain by saying such a thing about a fellow Republican.

“It was not really about asking him to do more, was it?  Or was it something else?  Well Mr. President, we’ll have to chat about that,” she said during her concession speech after a tight race with Democratic Rep.-elect Ben McAdams.

“However, this gave me a clear vision of his world as it is.  No real relationships, just convenient transactions.  That is an insufficient way to implement sincere service and policy,” she said.

Love, who is African-American, then addressed the problem Republicans have attracting minority voters.

“This election experience and these comments shine a spotlight on the problems Washington politicians have with minorities and black Americans – it’s transactional, it’s not personal,” she said.

“You see, we feel like politicians claim they know what’s best for us from a safe distance, yet they’re never willing to take us home.  Because Republicans never take minority communities into their home and citizens into their homes and into their hearts, they stay with Democrats and bureaucrats in Washington because they do take them home – or at least make them feel like they have a home.”

The day after the midterms, Trump mocked Love and other losing Republicans who didn’t seek his help and endorsement.

“Mia Love gave me no love and she lost. Too bad.  Sorry about that Mia,” Trump said.

Love said in her concession speech that now she is “unleashed, untethered and I am unshackled and I can say exactly what is on my mind.”

McAdams ended with 134,964 votes to Love’s 134,270.

On this very topic of Trump dissing fellow Republicans, which disgusted me....

Daniel Henninger / Wall Street Journal

“A question running alongside Donald Trump’s political career is whether he will ever pay a price for his verbal insults.

“It was widely thought Mr. Trump might have damaged himself fatally when in mid-2015 he said of John McCain’s time as a prisoner of war in Vietnam: ‘He’s not a war hero.  He’s a war hero because he was captured. I like people that weren’t captured.’

“In the event, a determined American electorate had larger fish to fry in November 2016 (such as stopping Hillary Clinton) and put Mr. Trump and his tart tongue into the White House.

“Even now, Mr. Trump’s verbal smackdowns come so fast and furious that it’s hard to keep up.  As far back as I can remember – about a week or so – objects of Mr. Trump’s ire have included the chief justice of the Supreme Court, the special counsel who is investigating him, and the chairman of the Federal Reserve Board. The attacks on ‘fake news’ roll in and out like the weather....

“(But the dissing of fellow Republicans who lost) could cost Mr. Trump in the next two years. The Republicans Mr. Trump hung out to dry in that news conference have friends in Congress and across Washington, and it’s not likely they are going to forget this.  Too bad, Mike (Coffman).  Sorry about that, Mia.

“The imminent threats to Mr. Trump’s presidency are real.  Democratic House committee chairmen intend to investigate him, members of his administration and his family.

“Robert Mueller’s unresolved investigation carries substantial risks for individuals close to Mr. Trump.  The likelihood of an impeachment attempt in the House is high. The media assault will escalate into a nonstop hurricane.

“Every U.S. presidency at some point comes under intense political pressure.  Some break, like Lyndon Johnson or Richard Nixon. But until then, all could count for their survival on the political and personal loyalty of members of their party or the people who worked for them.

“Who with political power that matters will Donald Trump call on when his darkest hour arrives?  Many will lift a finger, but how high?

“Mr. Trump has proven his resiliency.  But that news conference was an odd moment, kicking fallen Republicans while associating himself with the tender mercies of Nancy Pelosi.  Washington, he may find, can quickly become a lonely place.”

A study by CNN of all the congressional House voting in the midterm elections found Democratic candidates amassed 59.5 million votes to 50.5 million for Republicans, a whopping 9 million margin.  That doesn’t bode well for 2020.

--New York Gov. Andrew Cuomo traveled to the White House Wednesday for a meeting with President Trump on the contentious Gateway tunnel project, the $30 billion undertaking that advocates call the nation’s most important infrastructure project.  Gateway would rebuild the Portal Bridge in New Jersey, bore a new train tunnel under the Hudson River and rehabilitate the storm-damaged and oft-clogged conduit connecting New Jersey to Manhattan.  Personally, yes, this is much needed.

But the issue is financing for the project, and President Trump has thus far said he would disregard an Obama-era deal that would have the federal government picking up half the cost.

Cuomo, in their meeting, proposed cutting Amtrak out of efforts to rebuild the rail tunnel and is seeking new estimates as to the cost, currently estimated at $13 billion, the largest piece of the Gateway project.

Trump seemed to agree, but this project needs to get started.

There are many who fear the Hurricane Sandy-damaged train tubes could become unusable before the new structure is complete, which would cause a massive transit nightmare for both Amtrak and NJ Transit, thus threatening a huge percentage of the nation’s gross domestic product.

--An online poll by Quadrant Strategies surveyed 1,500 parents and teens in the New York City metropolitan area, and it found 72% of teens say they regularly see material online their parents would consider inappropriate, 31% say they have messaged a stranger on social media, and 14% say they have sent a sexually explicit photo.

The poll found 70% of parents think they can see what their children are doing online but 57% of teens say they can easily hide what they do there.  Half of teens ages 13 to 18 say they socialize online at least three hours a day.  Half also say they have been bullied online, mostly citing insults.

But I found the following startling.  The survey found that 15% of children ages three to seven are on Facebook, according to their parents. Facebook has a messaging app that children under 13 can use with parental consent that allows them to send texts, messages and videos to a list of contacts.

About 84% of children ages three to seven with “millennial parents,” or those 25 to 37 years old, have their own cellphone or other device with internet access, according to the survey.  [Leslie Brody / Wall Street Journal]

We are so doomed.

--Meanwhile, life expectancy for Americans fell again last year, with the Centers for Disease Control and Prevention releasing a report on Thursday that showed life expectancy fell by one-tenth of a year, to 78.6 years, pushed down by the sharpest annual increase in suicides in nearly a decade and a continued rise in deaths from opioids like fentanyl.

Drug-overdose deaths skyrocketed between 2015 and 2017, particularly for adults between ages 25 and 54.

Deaths from opioids rose 45% in 2017, while the death rate from heroin, which had risen sharly after 2010, was flat.

The U.S. has lost three-tenths of a year in life expectancy since 2014, which as the CDC says is stunning for a developed nation.

And look at how our 78.6 compares to Japan, 84.1, and 83.7 in Switzerland, first and second in the most recent ranking by the Organization for Economic Cooperation and Development. The U.S. ranks 29th.  [Betsy McKay / Wall Street Journal]

--That was a cool moment when the InSight probe landed on Mars the other day and immediately began sending back pictures, though I wish we’d see a Martian in one of ‘em, which would be rather dramatic and might help bring us all together.

The director of California’s Jet Propulsion Laboratory, Mike Watkins, said the success of the landing should remind everyone that “to do science we have to be bold and we have to be explorers.”

---

Pray for the men and women of our armed forces...and all the fallen, especially those we lost in Afghanistan this week.

God bless America.

---

Gold $1227
Oil $50.72

Returns for the week 11/26-11/30

Dow Jones  +5.2%  [25538]
S&P 500  +4.9%  [2760]
S&P MidCap  +3.0%
Russell 2000  +3.0%
Nasdaq  +5.6%  [7330]

Returns for the period 1/1/18-11/30/18

Dow Jones  +3.3%
S&P 500  +3.2%
S&P MidCap  -1.2%
Russell 2000  -0.2%
Nasdaq  +6.2%

Bulls 38.3
Bears 20.6   [Last time I didn’t have the data from Thanksgiving Week...the ratio then was 39.6 / 19.8; two weeks ago, 42.9 / 19.0.  Reminder, this is a contrarian indicator and the 38.3 on the bull front is the lowest since May 2016, which was a good entry point.]

Have a good week.  Happy Hanukkah.

Brian Trumbore