Stocks and News
Home | Week in Review Process | Terms of Use | About UsContact Us
   Articles Go Fund Me All-Species List Hot Spots Go Fund Me
Week in Review   |  Bar Chat    |  Hot Spots    |   Dr. Bortrum    |   Wall St. History
Week-in-Review
  Search Our Archives: 
 

 

Week in Review

https://www.gofundme.com/s3h2w8

AddThis Feed Button

   

11/17/2018

For the week 11/12-11/16

[Posted 11:30 PM ET, Friday]

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

Edition 1,023

Trump World

The Election still isn’t officially over, but as I go to post, Republicans would appear to be heading towards a 53-47 margin in the Senate, or a pick-up of two seats, while in the House, the Democrats are at 231-198, a pick-up of 36 seats, with six seats still undecided, of which the Dems will pick up another few.

But President Trump tweeted this afternoon:

“People are not being told that the Republican Party is on track to pick up two seats in the U.S. Senate, (an) epic victory: 53 to 47. The Fake News Media only wants to speak of the House, where the Midterm results were better than other sitting Presidents.”

Uh, Mr. President?  You lost the House, bigly.  What don’t you understand?

[I should add the 53-47 Senate margin assumes a Republican victory in the Mississippi runoff, while Rick Scott is going to win in Florida’s hand recount.]

There were a lot of jerks the past week among the candidates, including both Florida Senate candidates, the aforementioned Gov. Scott, and incumbent Sen. Bill Nelson, both fanning the flames of fraud.

Ditto President Trump, who tweeted:

“The Florida Election should be called in favor of Rick Scott and Ron DeSantis in that large numbers of new ballots showed up out of nowhere, and many ballots are missing or forged.  An honest vote count is no longer possible-ballots massively infected. Must go with Election Night!”

And Florida gubernatorial candidate Andrew Gillum was a jerk in how he’s handling incoming Gov. Ron DeSantis’ declared victory; DeSantis not being a jerk in the process.

In Georgia, I don’t like how Stacey Abrams is handling her outcome in not formally conceding defeat; filing a lawsuit against her Republican rival, Brian Kemp, even though she trails 50.3% to 48.8%, 58,000 votes.

I’m not a Kemp fan either, but Abrams is doing her future no good by not bowing out gracefully, and then doing whatever she wants regarding her accusations of voter suppression.

But kudos to Arizona Republican Senate candidate Martha McSally, who was gracious in losing a narrow race to Democrat Kyrsten Sinema.  “I wish her success,” McSally wrote about her opponent.  “I’m grateful to all those who supported me in this journey.  I’m inspired by Arizonans’ spirit and our state’s best days are ahead of us.”

Some preliminary stats on the election, final figures at some point down the road.

The last time turnout for a mid-term topped 50% was 1914, and this year’s turnout was 49.2%, way above 2014’s 37%; the average over the last few decades around 40%.

In some states which heavily utilize voting by mail, namely Washington and Colorado, turnout was 69.4% and 65.5%, respectively.  Minnesota, always a high-participation state, came in at 64.3%.

Texas, boosted by enthusiasm for Democrat Beto O’Rourke, saw its participation rise from 28.3% in 2014 to 46.1%.  Georgia’s, owing to its contentious governor race, saw an increase from 38.6% to 55%.

California’s turnout rose from 30.7% to 47.8%.

Recent presidential elections, by the way, have seen participation of around 60%.

With some states still processing mail-in ballots, Democrats won 51.8% of the overall vote, while Republicans accounted for 46.5%.

According to a Pew Research Center survey, only 35% of Americans said the president was not a factor in their mid-term vote.  For those who had Trump on their minds, 39% said they were casting their ballot against the president, while only 25% were voting to support him.

Only 9% of Americans think that relations between Republicans and Democrats will get better.

So...more Americans are engaged and voting, but the partisan lines are deepening, and they ain’t gettin’ better, sports fans!

Rich Lowry / New York Post

“The midterms suggest that President Trump needs to double down on populism, just not the sort that’s been his signature to this point.

“Trump is both too populist and not populist enough.  His populism is largely, although not entirely, a matter of style – combative, lacerating, emotive, unpredictable and grandiose.

“This sensibility is a central part of Trump’s appeal.  It also puts the accent on his personality, which is a double-edged sword, at best.

“For every Trump voter that it lights up, it reminds a suburban woman why she hates his guts.  The Democratic wave in the suburbs was mostly a function of a deeply felt personal revulsion toward the president.

“If Trump’s populism is always based foremost on Rally Trump and Twitter Trump, i.e., on the behavior pushing the suburbs away from him, there is no way for him to try to tamp down the yawning geographic and demographic vulnerability underlined by the midterms.

“Trump is different from other Republicans on trade and immigration, the issues at the core of his populism, but other than that, he has governed as a fairly typical Republican.  His biggest legislative accomplishment during the first two years of his presidency was a tax cut out of Republican Central Casting. But the tax cut proved an electoral nullity, in large part because it was an answer to a question that voters weren’t asking.

“Trump knew that it didn’t resonate.  He showed an instinctual sense that he needed a genuine middle-class agenda. He talked of a fantastical middle-class tax cut about to be considered. And he insisted that Republicans would do a better job dealing with the problem of pre-existing conditions than Democrats, without offering any supporting policy.

“In the absence of any populist substance, Trump was thrown back on the caravan, and more caravan, and his usual mediagenic provocations. This created his characteristic stew of acrimony and hysterical overreaction by his opponents, which pushed both his supporters and opponents to the polls, and – with the exception of some key red-state Senate races – more of the latter than the former....

“Even if last week’s results weren’t as encouraging to Trump as they appeared at first blush, he is still very much in the game. But unless some exogenous event boosts Trump’s standing, he’s dependent on Democrats once again nominating a candidate unacceptable to the white working class (and not particularly popular in the suburbs, either).”

Wall Street and Trade

Speaking on Wednesday, Federal Reserve Chairman Jerome Powell noted what your editor has long observed (all you have to have done is read my weekly missives on Europe); the global economy has hit a soft patch.

“You’ve seen a bit of a slowdown – not a terrible slowdown,” Powell said.  “It is concerning.”

And as Fed Vice Chairman Richard Clarida said in an interview today with CNBC, the central bank should thus take a “data-dependent” approach to raising interest rates; he, too, citing slowing global growth as a factor in his outlook, while adding interest rates were getting closer to a so-called neutral level, where they neither spur economic growth nor slow it down.

Clarida’s comment came a day after Federal Reserve Bank of Atlanta President Raphael Bostic said the Fed should take a “tentative approach” to raising rates given their proximity to the neutral level.

So you put it all together and the bond market rallied at week’s end, ditto stocks, on the feeling that the Fed may not hike rates after all at its December meeting (18-19), let alone three more times in 2019, and might adopt a cautious, wait-see approach.

In terms of hard data for this week, October retail sales were better than expected, 0.8%, 0.5% ex-autos, industrial production for the month was punk, 0.1%, and the October consumer price index was in line, 0.3%, 2.5% year over year; ex-food and energy, 0.2%, 2.1% yoy.

Add it all up and the Atlanta Fed’s GDPNow barometer for the current quarter is 2.8%, still very solid; just not 4.2% or 3.5%, as in the prior two quarters.

But back to the global story, yes, as I note below, Japan and Germany, to cite two examples, have excuses, perhaps, in the form of natural disasters and new emissions standards on autos, respectively, for their poor third-quarter growth figures.

It’s just that across the globe, economists and business leaders are warning about a common denominator that is hurting growth: trade battles between the U.S. and China and others.  Tariffs aren’t helpful, and there are real concerns trade tensions will worsen, though for now on one major topic, new tariffs on auto imports, the Trump administration is holding off on imposing them.  In this case, Commerce Secretary Wilbur Ross has until February to deliver his findings on the impact of car imports and potential harm to the U.S. economy as well as the global auto industry.  Once the president receives the report, there is then a 90-day review period.

The U.S. imported about $350 billion of cars and car parts last year.

Speaking of Trade...Treasury Secretary Steven Mnuchin resumed discussions with his Chinese counterpart, Vice Premier Liu He, over a deal that would ease tensions between the two, ahead of the G20 summit in Buenos Aires end of the month, but Chinese officials are continuing to resist U.S. demands that China put forward a concrete offer before negotiations can take place. China instead wants to talk first before making a proposal, which is just a way of dragging things out so they can steal more technology, before hard and fast principles are put in place that protect U.S. intellectual property.  Just my informed position.

[China did outline a series of potential concessions later in the week for the first time since the summer but they fall far short of the type of major structural reform President Trump is demanding.  Just standard crapola that they utter all the time about opening up markets, raising equity caps on foreign investment in certain industries, blah blah blah....]

President Trump, in informal remarks at the White House today, however, once again uttered garbage about being optimistic a deal can be cut between the two, and how China wants a deal.

There is no way Chinese President Xi Jinping makes a concrete offer in Buenos Aires that covers the prime issue of IP theft (and the related topic, forced technology transfers in return for market access).  Such a deal would take months and months, if not a year or two, to conclude...just on that single topic.

It is possible, though, the U.S. and China could agree to step up the level of discussions, a limited ceasefire, wherein the U.S. would not increase existing tariffs as planned come January. 

But I need to talk about Trump’s senior trade adviser, Peter Navarro, a man I do not like, who excoriated China and attacked Goldman Sachs and Wall Street as Beijing’s “unpaid foreign agents” at a recent speech.

Less than a mile away, as Navarro spoke, Secretary of State Mike Pompeo and Defense Secretary Jim Mattis were meeting with their Chinese counterparts to try to mend fences with Beijing, while discussing North Korea, Iran and the South China Sea.

Talk about mixed messages.

Navarro, as is well known, is pushing for a hard line on trade talks, which I have no problem with, it’s just the tone was way over the line to the point that Economic Advisor Larry Kudlow, days later, was forced to disavow the remarks in the sternest terms himself, including how Navarro “does not speak for the administration,” though the guy is, err, senior trade adviser.

Navarro said: “If Wall Street is involved and continues to insinuate itself in these negotiations, there will be a stench around any deal that’s consummated because it will have the imprimatur of Goldman Sachs and Wall Street.”  Navarro provided no evidence to back up his claims.

Editorial / Wall Street Journal

“Peter Navarro likes to claim he’s running U.S. trade policy, even if he isn’t, and now he’s acting as if even Donald Trump works for him.  That’s the only way to read the White House trade adviser’s extraordinary public threat against private American citizens on Friday at the Center for Strategic and International Studies.

“ ‘Consider the shuttle diplomacy that is now going on by a self-appointed group of Wall Street bankers and hedge fund managers between the U.S. and China,’ Mr. Navarro said during an event about economic and national security.  ‘As part of a Chinese government influence operation, these globalist billionaires are putting a full court press on the White House in advance of the G20 in Argentina. The mission of these unregistered foreign agents...is to pressure this President into some kind of deal.’

“Whoa there, tough guy.  ‘Foreign agents’?  Does he mean they’re traitors?  And ‘unregistered’?  Is he accusing them of crimes?

“Presumably Mr. Navarro is referring to the likes of Blackstone’s Stephen Schwarzman, former Treasury Secretary Hank Paulson and others who are working in public and behind the scenes to ease tension between the world’s two largest economies. These are private individuals, not deputy flunkies at Commerce, and they have longtime relationships in China. Some also have investments there.

“They have every right to urge their own government and China’s to work out a new modus vivendi on trade.  It’s no secret that Mr. Navarro wants to treat China like the former Soviet Union, but in threatening Americans who disagree with him he’s talking a page straight from the Politburo playbook in Beijing....

“None of this serves the President or U.S. interests. Mr. Trump needs all the allies in business he can get, as last week’s election showed.  Others in the White House might also tell Mr. Trump that the world economy is slowing, thanks in part to the headwinds to growth from trade friction.  If President Trump can’t point to a strong economy over the next two years, he can forget about a second term.  Maybe the question to ask is whether Mr. Navarro is a Democratic Party agent.”

Europe and Asia

Eurostat reported that GDP in the eurozone (EA19) declined to 0.2% in the third quarter, just 1.7% year-on-year, vs. 0.4% rates of growth for both Q1 and Q2, and a 2.7% annualized pace for the fourth quarter of 2017.

Among the individual annualized growth rates at the end of the third quarter:

Germany 1.2% vs. 2.8% Q4; France 1.5% vs. 2.8%; Spain 2.5% vs. 3.1%; Netherlands 2.4% vs. 2.9%; and Italy 0.8% vs. 1.6%.

September industrial production also fell 0.3% for the EA19, up 0.9% year-on-year.

And Eurostat reported that inflation in the EA19 for October was at a 2.2% annual rate, up from 1.4% a year earlier.

European Central Bank President Mario Draghi, speaking in Frankfurt today, stuck with the ECB’s upbeat take on the region’s economic outlook, though he acknowledged that monetary policymakers would need to be on their guard in the coming months in case a raft of bad data proved a harbinger of a prolonged slowdown in the eurozone economy.

Draghi said he still thought that risks to the outlook were “broadly balanced” – meaning the central bank remains on track to withdraw the most important element of its stimulus program, quantitative easing, at the end of the year.

Just a note on Germany, whose GDP for the third quarter fell 0.2% vs. the prior quarter, the first time GDP fell since early 2015, underlying the weakness in the auto industry and new emissions tests that temporarily disrupted car production, which was down 24% in September year-over-year.

Eurobits....

Brexit: The government of British Prime Minister Theresa May unveiled its long-awaited draft withdrawal agreement on Wednesday, which sets out the terms of the UK’s departure from the EU, over 585 pages.

But after initially gaining Cabinet (and earlier EU) approval Wednesday night, May faced fierce opposition across the political spectrum to the draft, which must be approved by Parliament, and the EU, with critics saying it will leave the UK indefinitely tied to the bloc.

Brexit minister Dominic Raab and work and pensions minister Esther McVey quit just over 12 hours after the cabinet had agreed to the terms of the agreement, saying they could not support it.  Two junior ministers and other aides then quit. 

The departures had some lawmakers in London openly questioning Mrs. May’s survival.

Speaking before parliament on Thursday morning, the prime minister said:

“The choice is clear. We can choose to leave with no deal, we can risk no Brexit at all, or we can choose to unite and support the best deal that can be negotiated,” she said.

Mrs. May said Britain will leave the EU on March 29 and will not suspend the process of leaving.

“We will not extend Article 50,” she told parliament, when asked about the clause in the EU’s Lisbon Treaty which allows for countries to leave the bloc.

May also said she shared the concerns of those who believe a Brexit backstop to avoid a border on the island of Ireland impinges on British sovereignty, but it was an improvement on previous proposals.

“The references to the backstop do raise some difficult issues,” the prime minister said.  “I fully accept that across the house, there are concerns in relation to the backstop.”

Prime Minister May, in a news conference yesterday, then responded to questions about her current position of power in Government.

“Am I going to see this through?  Yes,” May said.  “I am going to my job of getting the best deal for Britain and I’m going to my job of getting a deal that is in the national interest.”

“I believe with every fiber of my being that the course I have set out is the right one for our country and all our people,” May added.

May also said there will not be a second referendum.

So Tory backbenchers have said they would call for a vote of confidence in Mrs. May, which requires 48 “letters” to trigger a vote.

Senior Tory MPs are saying they have the magic 48, but this is not fact as yet.

Michael Gove said Friday he “absolutely” has confidence in Theresa May as she pursues her deal.  But he will stay on as environment secretary, not Brexit Secretary as Mrs. May wanted. Gove said he was focused on working in cabinet to get “the right deal in the future.”

It’s understood Gove only wanted to be Brexit Secretary if he could make changes to the agreement, but Mrs. May and EU leaders have said this is not possible.

What is clear is that there will be more fireworks over the weekend, with a Conservative party leadership challenge looming.

Should Mrs. May not survive a potential no confidence vote, that would mean a change of course on Brexit with no real time to come up with a new deal...one that would pass the EU’s muster.

On a radio program Friday morning, Mrs. May took callers’ questions and when asked whether she still had the support of the Democratic Unionists, on whom she relies upon for her Commons majority, she said she was “still working with” Arlene Foster’s party.

As I’ve noted, May needs the DUP’s 10 votes, but there are far more in her coalition in opposition to the draft, with one Tory MP saying it was “mathematically impossible to get this deal through the House of Common” and it was “dead on arrival.”

As for the EU, Michel Barnier, the bloc’s chief Brexit negotiator, told member states that Britain has to face up to the security consequences of Brexit.  Barnier warned that there would be “difficult negotiations” over British demands to maintain access to parts of the EU’s internal security database, according to the Financial Times.

The political declaration on the future relationship is the main remaining focus of the negotiations between Brussels and London ahead of a special EU Brexit summit scheduled for Nov. 25.  An initial seven-page outline of the declaration was published alongside the UK’s 585-page withdrawal agreement.

Although not legally binding, the declaration is intended to serve as the basis for a future free trade agreement, covering everything from financial services and aviation, to data protection, fisheries and security.

The current version of the text leaves open to negotiation the terms of the UK’s cooperation in Europol, the EU’s law enforcement agency.

Access to security databases and Britain’s desire for frictionless trade in goods emerged as two big problems for negotiators on both sides, Barnier apparently told EU ambassadors in Brussels today.

The security system includes the EU’s passenger name recognition database and Barnier dismissed the UK’s demand for access to this. 

The toughest part in the final negotiations, should the parties proceed after March 29, would be each EU government seeking to protect their key economic interests, including access to fishing waters for the likes of France, and demands that the UK cannot undercut EU standards for governments including Denmark and the Netherlands.

Negotiating teams from the EU and the UK are due to thrash out differences over the draft text on Saturday and Sunday, with EU ministers meeting Monday to prepare for the Nov. 25 summit.

Editorial / The Economist

“The game is by no means over.  The deal still has to be agreed by the EU and, harder still, by the British Parliament. Several ministers, including the Brexit secretary, resigned in protest; Theresa May could yet be toppled.  MPs must grapple with multiple loyalties: to their constituents, their parties and their own beliefs, all of which are likely to have shifted since the referendum. Within weeks they will have to make the biggest decision facing Britain, and one of the biggest for Europe, in generations.

“If the country has learned anything since 2016, it is to look before it leaps. Yet, in what well summed up the level of debate on Brexit, hardline Leavers and Remainers alike trashed the deal before they had read a word of it. This makes no sense.  The terms of the divorce will take time for MPs and those they represent to digest – and they may well be amended by European leaders before Parliament has its vote.  Nor is it clear what would happen in the event that the deal were voted down: more negotiating, a second referendum or crashing out without a deal? But as the crunch vote nears, MPs must consider how to approach this fateful question.

“First, forget the past.  The cheating that went on during the campaign, the premature triggering of Article 50 and the thin preparations are maddening.  But they are questions for the inquiry that will surely one day dissect this national fiasco.  The task before Parliament is to decide in a cool-headed way whether adopting the terms on offer is better for the country than rejecting them.

“Those who backed Remain – a group that includes this newspaper, as well as most MPs – will find little in the deal to make them think they were wrong.  Although it legally sets out only a temporary framework, its terms are clearly worse than the status quo.  Yet if they are to respect the referendum, MPs should also judge the deal against what voters were promised. The Leave campaign has no formal manifesto, and most of those behind it have since fled the government. But the animating idea was to ‘take back control.’  In some ways the deal does this, notably in immigration, where Britain would reclaim the right to immigration from Europe.  The price of this is being kicked out of the single market, which would hit the economy. MPs must decide whether the government is right that the public accepts this trade-off.

“In other ways Britain will unequivocally forfeit control.  It will stay aligned with many of the single market’s current and future rules, to keep trade flowing and the Irish border open, something the EU has made a condition of any deal.  Once outside the EU, Britain will have no say in setting these rules. European judges will still arbitrate on such matters, even though Britain will no longer be able to nominate them.  This is not taking back control but giving it up.  Meanwhile, as long as it remains in a customs union Britain will not even get the consolation prize of signing trade deals with other countries, something by which many Brexiteers have come to set enormous (and unwarranted) store.

“The deal also has implications for the integrity of the United Kingdom.  It would keep open the Irish border, but create a deeper regulatory divide between Northern Ireland and mainland Britain.  The sad truth is that most English voters do not care much about Northern Ireland. But MPs, particularly those from what is formally called the Conservative and Unionist Party, should ask themselves whether it is right that an accidental by-product of Brexit should be a step towards Irish unification.

“Hanging over this debate about the pros and cons of the deal is the question of what overturning it would do to the health of Britain’s democracy.  Parliament has the legal right to ignore the referendum. But after a record number of people voted (to ‘take back control’, no less), it could be catastrophic for trust in mainstream parties if it were to do so.

“In truth, the democratic argument is more complicated. The vote to leave was an expression not just of Euroscepticism but of a wider frustration. It exposed divisions by age, region and class that the old left-right party divide had covered up.  Far from bridging those divides, the bitter arguments since the referendum have if anything caused the two sides to move even further apart.  Overturning the vote would risk making them irreconcilable. But adopting a Brexit deal like the one on offer would be unlikely to heal those wounds.  Indeed, to the extent that the referendum was a howl by the left-behind against rule by remote and uncaring elites, this form of Brexit could make those problems worse. Anger at unaccountable rulers would not be assuaged by a deal in which Britain followed orders from people it could not elect. And those keen just to get the whole thing over with might find that Brexit marked only the beginning of national argument about the relationship with the behemoth next door.

“Nor is it clear that the democratic thing to do is to hold people to the result of a two-year-old, narrowly won referendum, when the consequence of the vote has turned out to be quite different from what many voters expected.  Polls suggest that a small majority now prefers Remain to Leave; more might prefer Remain to a compromise like the deal on offer. Almost all MPs want to respect the will of the people. The question is whether the people’s will found its perfect and enduring expression in 2016, or whether it might have changed.

“There is no simple way out of this endgame.  Whether the Brexit deal is accepted or rejected, it will scar Britain for years.”

Sebastian Mallaby / Washington Post

“Now the government has published a draft exit treaty.  It is as long as a Dickens novel and far more confusing.  The most controversial portion concerns the Irish ‘backstop,’ which would kick in at the end of a transition period unless Britain managed to negotiate an unexpectedly deep trade deal with Europe. To avoid a destabilizing hard border between Northern Ireland and the independent Republic of Ireland, the backstop provides that the North would live by Europe’s rules on food products and goods standards, even though the United Kingdom would have lost all influence over those rules’ content.

“Meanwhile, to minimize trade barriers between the North and mainland Britain, the mainland would remain within the EU Customs Union. This would prevent it from negotiating its own separate free-trade deals; so much for the vision of Britain as Singapore. What’s more, Britain would not be allowed to shake off this restraint without the EU’s approval, and the European Court of Justice would adjudicate customs disputes. So much for the Brexiters’ promise of enhanced British sovereignty.

“The political whirlwind has come quickly. The very Brexiters who promised a cakewalk are denouncing the result of their own policy. The latest spate of resignations comes on top of the two senior Brexiters who quit in July. Prime Minister Theresa May deliberately installed committed Euroskeptics as Brexit ministers; both her successive choices have now left in disgust at a diplomatic effort they had theoretically been leading.  As a Brit living in the United States, I used to marvel at Americans who revered their Constitution yet despaired at the political process that it produced.  Now, as a naturalized American living in London, I have watched a political movement passionately advance a radical objective – and then decry the consequences of its own radicalism.

“What happens next is unknown even to the participants. The Brexit purists are threatening to topple the prime minister. But installing a new leader involves a protracted two-stage process: The parliamentary caucus of the ruling Conservative Party must come up with a short list of two candidates, then rank-and-file Conservatives must vote on them.  Meanwhile, time is running short. Britain will crash out of the EU in March unless it can ratify a divorce treaty before then....

“The parliamentary process has generated a compromise that is pleasing to no one.  If it is implemented, Brexiters will spin a myth that they were betrayed by bureaucrats and Eurocrats and the establishment writ large: Their populism will grow even more poisonous. A second vote would give the Leave camp an opportunity to vote for a cleaner break with the EU, even if it came at the expense of Ireland.  It would also give Remainers a chance to make the argument for solving the whole Brexit problem by staying in the EU. Then the nightmare would be over.”

Macron: President Trump had a highly awkward Armistice Day visit to Paris over the weekend, and then when he got home he mocked and attacked French President Emmanuel Macron over nationalism, plans for a European army and the French leader’s ratings.

After a meeting on Saturday in Paris in which the two leaders appeared to smooth over their differences and agreed that Europe needed to pay more towards its defense costs, Trump was widely criticized for failing to visit the Aisne-Marne American cemetery, which the White House later said was due to poor visibility for his helicopter and Trump not wanting to disrupt the Paris traffic with his motorcade.

The French army appeared to poke fun at Mr. Trump over his decision, tweeting an image of an officer crawling under barbed wire in wet weather with the words: “There’s rain, but it’s no problem.”

Then Sunday, in what appeared to be a direct rebuke, President Macron warned President Trump and other leaders that a dark new tide of nationalism, the label Trump recently embraced for his “America First” movement, ignores the painful lessons of history and threatens a fragile global order.

“Patriotism is the exact opposite of nationalism.  Nationalism is a betrayal of patriotism,” Macron said as Trump sat, unsmiling, with more than 100 other world leaders at a solemn commemoration at the Arc de Triomphe of the moment when World War I officially ended 100 years ago.

“Old demons are coming back to the surface,” Macron declared, citing the dangerous resurgence of the ethnic and religious hatreds that led to that devastating conflict – and the cataclysmic global war that followed three decades later.

But there is another side....

Editorial / New York Post

“French President Emmanuel Macron doubtless felt deep self-satisfaction in delivering a public rebuke to President Trump over the weekend. But his smug lecture on the dangers of nationalism ignored both the lessons of history and of today’s political realities.

“It was also pretty arrogant of Macron to implicitly slam a U.S. president at a commemoration of the 100th anniversary of the end of World War I – a conflict in which France and its allies were saved by American soldiers, thousands of whom lie forever in French soil.  Surely a ‘thanks’ was in order. After all, U.S. troops also liberated France a generation later from the very fascist nationalism that Macron seems to ascribe to Trump, with his warning about ‘old demons coming back to wreak chaos and death.’

“But Trump’s ‘America First’ nationalism is not the same as the force that drove both world wars. It does not seek greatness by conquest, nor does it mean ‘only America.’

“It does, however, expect Europe to share global responsibilities, and recognizes that the United States has not been well-served by multinational groups like the United Nations and the European Union....

“Macron and the fans of his rebuke of Trump also remain in denial on important social issues, including the rise of immigrant-driven anti-Semitism across Europe and particularly France. Nor do dark warnings about nationalism make any less of a disaster German Chancellor Angela Merkel’s 2015 opening of Europe’s doors to unlimited Middle East migrants.

“America’s brand of nationalism is not a ‘betrayal of patriotism,’ as Macron suggests; it’s an affirmation. And it speaks to the American values and commitment that helped France remain a free nation.”

Trump left Paris late Sunday to fly back to Washington, skipping a three-day forum that Macron hosted with German Chancellor Angela Merkel in an effort to galvanize global action on shared challenges, though there had never been plans for Trump to attend this.

Merkel warned against taking peace for granted, saying, “We have to work for it.”  She also made a veiled dig at Trump’s attacks on multilateral organizations, saying that “unwillingness to compromise” can have deadly consequences.

But Macron’s address on Sunday was in effect a rebuttal to Trump’s September address to the UN General Assembly, where he defined globalism as the opposite of patriotism.

As the New York Post editorial alluded to, though, the European Union is dealing with unprecedented strains, from a backlash to the migrant flood, to the financial crisis that worsened inequality in many areas, to the growing number of far-right politicians who have exploited ancient ethnic divisions and fears.

At the same time, the face of Europe, Merkel, just announced this is her last term (if she makes it that long), and Macron is now polling behind the far-right and Marine Le Pen, whom he beat handily in the last election.  [Plus Macron is dealing with a punk economy, and an unemployment rate over five points higher than America’s.]

Trump gave no public response to the speech, but he tweeted Sunday that he had attended a “beautiful ceremony” and thanked Macron.

But if you thought Trump hadn’t paid attention to the ‘in-your-face’ French president, Trump went off on Macron in a series of tweets, Tuesday.

“Just returned from France where much was accomplished in my meetings with World Leaders.  Never easy bringing up the fact that the U.S. must be treated fairly, which it hasn’t, on both Military and Trade. We pay for LARGE portions of other countries military protection....

“...hundreds of billions of dollars, for the great privilege of losing hundreds of billions of dollars with these same countries on trade.  I told them that this situation cannot continue – It is, and always has been, ridiculously unfair to the United States.  Massive amounts....

“....of money spent on protecting other countries, and we get nothing but Trade Deficits and Losses. It is time that these very rich countries either pay the United States for its great military protection, or protect themselves...and Trade must be made FREE and FAIR!”

And....

“Emmanuel Macron suggests building its own army to protect Europe against the U.S., China and Russia. But it was Germany in World Wars One & Two – How did that work out for France?  They were starting to learn German in Paris before the U.S. came along.  Pay NATO or not!”

“The problem is that Emmanuel suffers from a very low Approval Rating in France, 26%, and an unemployment rate of almost 10%. He was just trying to get onto another subject. By the way, there is no country more Nationalist than France, very proud people-and rightfully so!...

“....MAKE FRANCE GREAT AGAIN!”

And....

“On Trade, France makes excellent wine, but so does the U.S.  The problem is that France makes it very hard for the U.S. to sell its wines into France, and charges big Tariffs, whereas the U.S. makes it easy for French wines, and charge very small Tariffs. Not fair, must change!”

Trump, once he realized he was getting beat up on the no-show at the Saturday ceremony honoring war dead, had to respond:

“By the way, when the helicopter couldn’t fly to the first cemetery in France because of almost zero visibility, I suggested driving. Secret Service said NO, too far from airport & big Paris shutdown. Speech next day at American Cemetery in pouring rain!  Little reported-Fake News!”

[I was watching...a bunch of networks reported the Sunday ceremony, live.]

Following Trump’s tweets disparaging Macron, the French president said during a television interview, “The United States is our historic ally, it will continue to be. But to be allied is not to be a vassal.”

A French government spokesman noted that after Trump’s attacks on Tuesday over nationalism, Benjamin Griveaux said, “We were marking the murder of 130 of our people,” referring to the 2015 Paris attacks, Nov. 13.

Italy Budget: The European Commission announced it would move next week to discipline Italy over its 2019 budget, after Rome defied the Commission’s objection to its plan to borrow and spend more next year.  Italy re-submitted its draft budget to the EU on Tuesday, with the same main assumptions Brussels had rejected in October as contravening EU rules.

Now the procedures are such that any penalties, namely fines, are not necessarily implemented right away, but this would be the first time an EU country is disciplined specifically over its debt level (131 percent of GDP).  The EU’s debt target is 60 percent and Italy must commit to cut its debt towards that figure every year, but everyone knows that with the budget Italy is submitting for next year, the debt will rise, not go down. Both the EU and the International Monetary Fund say Italy’s growth assumptions are way too rosy.

The Commission will publish a report on Italy on Wednesday, after which deputy finance ministers and treasurers on a select committee will have two weeks to review it.  The EU would then declare Italy in excessive deficit at a meeting in January and give Rome three to six months to take remedial action.

Turning to Asia, more economic data out of China, this time for the month of October, courtesy of the National Bureau of Statistics...the figures further confirming a slowdown.

Retail sales for the month rose 8.6%, but this was vs. 9.3% in September, year-over-year.  Online sales rose 26.7%, but this is trending lower.

Fixed asset investment was up 5.7% year-to-date, a tick higher.  But industrial production rose 5.9% in the month, yoy, less than expected, and real estate investment increased 9.7%, but this too is trending lower.

Ditto car sales, which were off 12% from a year earlier in October, the fourth straight month of year-over-year sales declines.  [China Association of Automobile Manufacturers]

With October’s performance, auto sales in China are now down 0.1% for the first ten months vs. 2017.

In Japan, GDP for the third quarter was down 1.2% on an annualized basis (preliminary data), owing to natural disasters (earthquake and typhoon) that hit spending and disrupted exports, which were down 1.8% in the quarter vs. Q2.

Trumpets....

--Wednesday, Defense Secretary James Mattis went down to the Texas / Mexico border to address the nearly 6,000 Marines and Army soldiers who are assisting the Border Patrol in Texas, Arizona and California; the units largely just putting up razor wire.

So a soldier in Texas asked the secretary when his unit would be ordered to remove the wire and vehicle barriers they had installed at crossings, and Mattis replied, “Good question.  We’ll let you know.  Right now, the mission is put them in.”

Asked by another soldier to explain the goals of Trump’s election-eve border deployment, Mattis said, “Short term, get the obstacles in.  Longer term...it is somewhat to be determined.”

The troops are slated to stay at border crossing points through early December and potentially longer if the Department of Homeland Security requests an extension.  Happy Thanksgiving to them all, the editor typed sarcastically.

Trump tweeted tonight:

“Isn’t it ironic that large Caravans of people are marching to our border wanting U.S.A. asylum because they are fearful of being in their country – yet they are proudly waving....

“....their country’s flag.  Can this be possible?  Yes, because it is all a Big Con, and the American taxpayer is paying for it!”

To which one could ask an obvious question. What is the fake deployment of U.S. military costing us, Mr. President?

--Trump has been pushing to put a loyal GOP lawmaker in charge of the House Judiciary Committee, which is expected to revive its Russia probe and launch new ones into the administration when the Democrats take control in January.

But while Trump wants Rep. Jim Jordan of Ohio, it’s not up to House Majority Leader (Minority Leader in January), Kevin McCarthy, who Jordan unsuccessfully challenged for the minority leader’s post.  McCarthy doesn’t have the authority to appoint a lawmaker to any ranking member position.

The decision is up to the Republican Steering Committee, whose members don’t like Jordan and could ignore Trump’s wishes.

McCarthy beat off Jordan’s challenge for minority leader by a 159-43 margin.

--President Trump threw his support behind a substantial rewrite of the nation’s prison and sentencing laws on Wednesday, which opened a path to enacting the most significant criminal justice overhaul in a generation.

The bipartisan compromise would invest heavily in anti-recidivism programs and lower some mandatory minimum sentences enacted as part of the get-tough-on-crime policies of the 1980s and 1990s – which have incarcerated African-American offenders at a much higher rate than white offenders; such as the “three strikes” penalty that currently results in life in prison, while shortening mandatory minimum sentences for some nonviolent drug offenses. And it would extend a reduction in the sentencing disparity between crack and powder cocaine that could affect thousands of drug offenders serving lengthy sentences for crack-cocaine offense, vs. the same crimes involving powder cocaine...another disparity hitting black Americans hard, while many white drug dealers get lighter sentences.

--Trump tweets:

On the Mueller probe....

“The inner workings of the Mueller investigation are a total mess. They have found no collusion and have gone absolutely nuts. They are screaming and shouting at people, horribly threatening them to come up with the answers they want. They are a disgrace to our Nation and don’t...

“...care how many lives they ruin. These are Angry People, including the highly conflicted Bob Mueller, who worked for Obama for 8 years. They won’t even look at all of the bad acts and crimes on the other side.  A TOTAL WITCH HUNT LIKE NO OTHER IN AMERICAN HISTORY!”

“Universities will someday study what highly conflicted (and NOT Senate approved) Bob Mueller and his gang of Democrat thugs have done to destroy people. Why is he protecting Crooked Hillary, Comey, McCabe, Lisa Page & her lover, Peter S., and all of his friends on the other side?”

“The only ‘Collusion’ is that of the Democrats with Russia and many others. Why didn’t the FBI take the Server from the DNC? They still don’t have it. Check out how biased Facebook, Google and Twitter are in favor of the Democrats. That’s the real Collusion!”

Potentially related to the Mueller probe, the Justice Department has prepared an indictment against WikiLeaks founder, Julian Assange; the indictment coming to light late Thursday through an unrelated court filing in which prosecutors inadvertently mentioned charges against him.

Assange has been stinking up the Ecuadorean Embassy in London since 2012 (they say his personal hygiene is rather atrocious) and he would have to be arrested and extradited if he were to face charges in federal court...what could be a lengthy process.

WikiLeaks published thousands of emails in 2016 from Democrats during the presidential race that were stolen by Russian intelligence officers; part of Moscow’s campaign of disruption.

But an indictment centering on the publication of information of public interest would create a precedent with profound implications for press freedoms.

Ecuador would love to rid itself of the smelly leaker.

Other topics....

“The White House is running very smoothly and the results for our Nation are obviously very good.  We are the envy of the world. But anytime I even think about making changes, the FAKE NEWS MEDIA goes crazy, always seeking to make us look as bad as possible! Very dishonest!”

--AT&T CEO Randall Stephenson fired back at the White House over its decision to suspend the press credentials of CNN correspondent Jim Acosta, saying officials had ignored established procedures in a way that appeared to violate press-freedom protections.

The administration claimed Acosta “placed his hands” on a White House intern, but it was incidental contact and brief.  [The White House presented a doctored tape making the contact look far worse than it was.]

“If the White House wants to pull someone’s press credentials, there is a process,” Stephenson said at a conference Monday. “That process must be followed, otherwise what is the criteria for pulling somebody’s press credentials?”

Stephenson, who has headed AT&T since 2007, is now a media mogul after AT&T completed its roughly $81 billion acquisition of Time Warner Inc., which includes CNN and other media outlets.

Today, a Washington, D.C. Federal District Court ordered the White House to return Acosta’s press pass.  But Judge Timothy J. Kelly said from the bench: “I want to emphasize the very limited nature of this ruling.  I have not determined that the First Amendment was violated here.”

In reaction to the court ruling, Trump played it down this afternoon, saying it wasn’t “a big deal.”

But, he said, “people have to behave,” adding his staff were “writing up rules and regulations” for the press to abide by, including sticking to the agreed number of questions.

“If they don’t listen to the rules and regulations we’ll end up back in court and will win,” the president said.  “But more importantly, we’ll just leave, and then you won’t be very happy.”

“You can’t take three questions and four questions and just stand up and not sit down,” he added.  “Decorum.  You have to practice decorum.”

On the California wildfires....

“There is no reason for these massive, deadly and costly forest fires in California except that forest management is so poor. Billions of dollars are given each year, with so many lives lost, all because of gross mismanagement of the forests.  Remedy now, or no more Fed payments!”

This was one of the more ill-timed tweets of his presidency. The death toll is now 71, with the number missing up to 1,000.

Street Bytes

--Stocks suffered sizable losses that could have been worse were it not for a rally Thursday and Friday, partly on President Trump’s fake news today that he was optimistic on a China trade deal; Wall Street peopled with idiots who stupidly eat this merde up.

On the week, though, the Dow Jones lost 2.2% to 25413, the S&P 500 declined 1.6%, and Nasdaq fell 2.2%.  Some big tech names, and retailers, didn’t help matters, as spelled out below.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr. 2.80%  10-yr. 3.06%  30-yr. 3.32%

A big rally, particularly in the 2- and 10-year, on the aforementioned seeming caution on the part of Fed officials towards further rate hikes.

--One thing we know about the oil market today is that President Trump’s bite was worse than his bark when it came to sanctions on Iranian crude, given all the significant waivers to the likes of China, Japan, South Korea and India, major importers of Iran’s black gold.

So the world is awash in crude when just six weeks ago, there was supposed to be a potential supply ‘crunch.’  The United States, after all, had initially talked about there being no waivers, and now there is no deadline for ending same.

The price of crude has thus been collapsing, including a record 12-day losing streak that finally ended on Wednesday, oil having traded down to $55 on West Texas Intermediate, down from a recent high of $75 ($86 to $65 on global benchmark Brent), before finishing the week at $56.83, down a sixth consecutive week.

Emblematic of the confusion is the International Energy Agency, which a month ago was calling on producers to ramp up output to help tame prices that have since collapsed, and this week said, OPEC is pumping far more than the market needs for next year.

The Paris-based advisory body defended its decision to push producers to pump more, saying additional supplies should be “welcomed as a form of insurance rather than a threat.”

“Although the oil market appears to be more relaxed than it was a few weeks ago...such is the volatility of events that rising stocks should be welcomed.”

The IEA said Wednesday that demand for OPEC’s crude would be 1.7m barrels a day lower in 2019 than the level they are currently producing.

Saudi Arabia is pushing countries inside and outside the cartel (read Russia) to agree on a production cut when they meet in December.

The IEA said oil demand growth next year would still be “solid,” with global consumption rising by 1.4m barrels a day.

Separately, the Energy Information Administration (EIA), reported crude inventories continued to build for an eighth consecutive week, though down a bit from levels at this time last year.  The EIA reported U.S. production hit a new record, 11.7 million b/d, the highest since the EIA began tracking this in 1983.

Meanwhile, natural-gas prices have been rallying sharply, as some weather forecasts have been changing about the winter and demand for those fueling their homes with nat gas amid perhaps colder than expected temperatures.  We have also seen rising exports, so record-high levels of production haven’t exactly replenished the stores for winter.

Wednesday, the commodity was trading at its highest levels since February 2014, but then fell back sharply Thursday and finished the week at $4.27.  The last several years, production was greater than demand.

The 52-week range on the standard contract is 2.84-4.93.  Longer-term, the outlook for nat gas is still bearish, however.

--California’s largest utility, PG&E, facing liabilities of as much as $17 billion, having been blamed by state investigators for sparking 17 of last year’s blazes in the state (particularly the fires that scorched wine country), is now under the gun again for having faulty equipment that almost undoubtedly contributed to the deadliest blaze in California history, the fire that destroyed the town of Paradise, killing at least 60 there at last count.  [66 statewide, 600 missing.]

15 minutes before a fire was reported among the trees north of Sacramento, a PG&E power line went offline.

It’s true, the exact cause of what caused this fire, that then engulfed Paradise, or any of the fires devastating the state, may not be known for months, or even years, but there are serious questions now just how the company can survive financially.

PG&E said late Tuesday it had exhausted its revolving credit line, and that the liability for Paradise, should it be held responsible, would exceed its insurance coverage.

PG&E was in bankruptcy in 2004, and it probably faces the same, needing help from the state, which would most likely have to step in to protect the utility and its customers, and it will require legislative action from the session beginning in January that would contain new members just elected this month, with incoming governor Gavin Newsom.

PG&E has said current legislation, through a doctrine called “inverse condemnation,” essentially makes utilities the default wildfire insurer of the state, and that they shouldn’t be held for damages tied to their equipment if they follow all safety rules.

The company’s shares collapsed from $48 to $17.75 in just six days, before rallying today to $24.25 on the belief they would avoid bankruptcy.

--Amazon, as expected, selected Long Island City in Queens, NY, and Crystal City in Arlington, VA, just outside of Washington, for two new Eastern hubs; the two new sites eventually housing 50,000 employees, roughly half at each, with Amazon saying the projects would require $5 billion in construction and other investments.

Amazon also said it would develop a smaller site in Nashville that would focus on operations and logistics, as the 14-month competition to lure the tech giant for what everyone thought was to be a single, second headquarters, or HQ2, ended.

The issues are many.  Let’s just say, for starters, a lot of folks in Queens are not happy, fearing many will be displaced through rising rents, as well as significant stresses on an already shaky mass transit and road system.

Others see the positives in development...more restaurants, more commerce, more jobs (on top of the 25K created by Amazon).

The state and local subsidies, however, are massive with no certainty on the return.

In other words...those who lost out on these projects should not necessarily be crying in their milk...or beer, as the case may be.

Editorial / Wall Street Journal

“We rarely agree with socialist Congresswoman-elect Alexandria Ocasio-Cortez, but she’s right to call billions of dollars in taxpayer subsidies for Amazon ‘extremely concerning.’ These handouts to one of the richest companies in the history of the world, with an essentially zero cost of capital, is crony capitalism at its worst.

“Amazon staged a year-long competition to find a second headquarters beyond its Seattle home, and politicians bid for it like millionaires at a Picasso auction.  Except they were bidding with other people’s money.  The two ostensible big winners, announced Tuesday, are Long Island City in the Queens borough of New York City, and Crystal City in Virginia, across the Potomac River from Washington, D.C.

“They stand to split about $5 billion in Amazon investment, with the promise of 25,000 new jobs at an average salary of $150,000 a year. Amazon plans to occupy about four million square feet of office space in each location, with the potential to double that if necessary. The kicker is that Amazon has extracted state and local subsidies of more than $2 billion for the privilege.”

Virginia is doling out $550 million, with another $23 million in infrastructure improvements; New York is starting with subsidies of $1.525 billion, or $48,000 per job, as Amazon put it on its website.

“Apparently bodega owners in Brooklyn are supposed to be happy about subsidizing a third of the salaries of hipster techies.”

And, oh, there are other subsidies, that will total in excess of $500 million, at least, depending on how the IRS designates Amazon’s new compound, such as whether or not it gets the “opportunity zone” provision contained in last year’s Tax Cuts and Jobs Act.

“It’s hard to blame Amazon CEO Jeff Bezos for accepting what politicians give him, though we wonder if he isn’t a tad embarrassed.  The man who was able to buy the Washington Post for the equivalent of pocket money hasn’t made more political friends outside of New York and Virginia with this subsidy sweepstakes.

“The worst actors here are the politicians who pose as job creators but are essentially job buyers. Andrew Cuomo once famously said he’d change his name to Amazon Cuomo if the company located in New York, but he didn’t need to pay such a Queens ransom.  Google and other companies have created thousands of jobs in New York without similar subsidies, and Amazon might well have done the same given the city’s intellectual capital.

“Mr. Cuomo says the state will make money from Amazon despite the subsidies, but that depends on Amazon’s decisions and long-term success....Mr. Cuomo taxes New Yorkers at confiscatory levels, giving himself more money to spend. Then he turns around and takes credit for sparing powerful interests from those taxes.

“In New York, they call this a racket, and with good reason....

“Amazon’s case is aboveboard, but it still amounts to a company with a market capitalization of nearly $800 billion, getting paid to create jobs it would have created somewhere anyway.”

--Shares in Apple sank 5% on Monday, dragging down stocks overall and wiping out more than $40bn in market value, following a profit warning from some of its suppliers, which exacerbated concerns that demand for iPhones is slowing.

One of Apple’s bigger suppliers, Lumentum, which manufacturers facial recognition technology, said one of its major customers had reduced its shipments, Lumentum lowering its sales and profit outlook, its shares falling over 30% as a result.

Another Apple supplier, Japan Display, cut its full-year guidance blaming “volatile customer demand.”

--Walmart Inc. said it is heading into the holiday shopping season with lean inventories in stores and more products online to compete with Amazon.com.  The company reported same-store sales at U.S. stores rose a solid 3.4% in the latest quarter, including a 43% jump in e-commerce sales.  Walmart said same-store sales, ex-volatile gasoline sales, will grow at least 3% for the full fiscal year ending in January.

But the company’s shares, and that of other retailers, declined as investors worried that profits aren’t keeping pace with sales as retailers invest in workers’ wages and lowering prices to compete with Amazon.  Walmart, for one, did see profit margins narrow in the third quarter.

Simeon Gutman, an analyst at Morgan Stanley, said in a note to clients, “Profitless growth is now the best case” for most retailers this year.  [Wall Street Journal]

At Walmart, total quarterly revenue was $124.9 billion, an increase of 1.4% as lower international sales and currency translations slowed the overall gains.

Profit was down 2.2% from the year-earlier quarter at $1.71 billion, or 58 cents a share.

Interestingly, the company said it is gaining market share in groceries, where it remains the country’s largest seller, while with the collapse of Toys “R” Us, it is selling 30% more toys in stores and 40% more toys online this fall versus last year.

--Home Depot reported third-quarter earnings that rose sharply from a year earlier and again raised guidance as it continues to benefit from strong demand in the home-improvement business.

But the company also said it would face tougher comparisons because of last year’s hurricanes, which prompted a surge in sales related to rebuilding in impacted areas.

Same-store sales rose 4.8%, with net sales rising 5.1% to $26.3 billion, while profit rose 32% to $2.87 billion.

HD said the company logged about $282 million in hurricane-related sales in the third quarter last year, compared with $150 million this year.

But while Home Depot guided slightly higher for the full year, analysts pressed the company to discuss whether weaker housing-sector data were reasons to be less optimistic over prospects, and the CFO said the company was confident in its forecasts.

--Nordstrom saw its shares fall heavily (over 13%) after reporting earnings on Thursday, the upscale department store chain posting anemic sales growth of 0.4 percent at its full-price stores while sales at its discount chain, Nordstrom Rack, shot up 5.8 percent in the third quarter.

Nordstrom’s overall comp sales growth of 2.3 percent was shy of Wall Street’s expectations.

The retailer also apologized for overcharging some of the store’s customers who have Nordstrom credit cards, the company spending $72 million to give 4 percent of its customers a refund.  Turns out they were charged a higher interest rate in 2010 than they should have been.

--Macy’s Inc. reported healthy sales growth in its latest quarter and raised its guidance for the year, positioning the retailer for a strong holiday shopping season. Same-store sales grew 3.1% in the three months to Nov. 3, with total sales up 2.3% to $5.4 billion.  Net income was $62m, vs. $30m a year earlier.

CEO Jeff Gennette said its strategic initiatives are starting to pay off, such as its “magnet” stores that have been renovated, adding new lighting and a better assortment of merchandising and technological innovations.  It is also shrinking less-promising locations.

Customers have been giving Macy’s higher ratings vs. a year ago, according to independent research firm Global Data Retail.

But the shares fell, the stock having risen sharply this year, while Walmart’s news didn’t help.

--Cisco Systems saw its shares rise after the market close on Wednesday as the company reported better than expected revenue and earnings for the networking equipment giant.  Net income was $3.5bn, with revenue up 8 percent from a year ago to $13.1bn, with particularly strong growth in Asia-Pacific.  Sales in the application business grew 18 percent year-on-year, while security sales were up 11 percent in the same period.

Chuck Robbins, CEO and chairman, said the opportunity had “never been greater.”  “Our strategy is working and we are well positioned with our growing and differentiated portfolio across multiple domains to bring our customers a more secure, automated and simple IT infrastructure,” he said.

Cisco also forecast revenue growth of between 5 and 7 percent in its second fiscal quarter, in line with current analyst forecasts.

--Goldman Sachs shares hit a 2-year low after a report that Malaysia would seek the full refund of fees charged to 1Malaysia Development Berhad (1MDB).

As I noted last time, Goldman received about $600 million in fees for its work with 1MDB, which included bond offerings that raised $6.5 billion.

Finance Minister Lim Guan Eng said Goldman had “admitted culpability” after former GS banker Tim Leissner entered a guilty plea for his role in the scandal.

--I went off on Facebook two weeks ago based on “Frontline’s” devastating two-part documentary, and the hits, literally, just keep on coming.  This week, the New York Times had an extensive investigation titled “Delay, Deny and Deflect: How Facebook’s Leaders Fought Through Crisis,” and it’s more of the same. That title sums up the company perfectly.

“Sheryl Sandberg was seething.

“Inside Facebook’s Menlo Park, Calif., headquarters, top executives gathered in the glass-walled conference room of its founder, Mark Zuckerberg.  It was September 2017, more than a year after Facebook engineers discovered suspicious Russia-linked activity on its site, an early warning of the Kremlin campaign to disrupt the 2016 American election. Congressional and federal investigators were closing in on evidence that would implicate the company.

“But it wasn’t the looming disaster at Facebook that angered Ms. Sandberg.  It was the social network’s security chief, Alex Stamos, who had informed company board members the day before that Facebook had yet to contain the Russian infestation.  Mr. Stamos’ briefing had prompted a humiliating boardroom interrogation of Ms. Sandberg, Facebook’s chief operating officer, and her billionaire boss. She appeared to regard the admission as a betrayal.

“ ‘You threw us under the bus!’ she yelled at Mr. Stamos, according to people who were present.

“The clash that day would set off a reckoning....

“(And) as evidence accumulated that Facebook’s power could also be exploited to disrupt elections, broadcast viral propaganda and inspire deadly campaigns of hate around the globe, Mr. Zuckerberg and Ms. Sandberg stumbled.  Bent on growth, the pair ignored warning signs and then sought to conceal them from public view. At critical moments over the last three years, they were distracted by personal projects, and passed off security and policy decisions to subordinates, according to current and former executives.

“When Facebook users learned last spring that the company had compromised their privacy in its rush to expand...Facebook sough to deflect blame and mask the extent of the problem....

“While Mr. Zuckerberg has conducted a public apology tour in the last year, Ms. Sandberg has overseen an aggressive lobbying campaign to combat Facebook’s critics, shift public anger toward rival companies and ward off damaging regulation.”

Thursday, Zuckerberg and Sandberg issued statements defending their responses to Russian election meddling and talked of a new plan aimed at stifling misbehavior while maintaining a vibrant hub for online speech.

Zuckerberg said he has acted swiftly to combat the Russian challenge and supports regulation that would encourage companies to reduce the prevalence of “harmful content.”

He announced several self-regulatory measures, including rough plans to create an independent body at the end of 2019 to review appeals from users who contend their content was wrongly banned.  Users would also get a new choice on whether they want to view “borderline content” in their news feeds, he said.

“I’ve increasingly come to believe that Facebook should not make so many important decisions about free expression and safety on our own,” Zuckerberg wrote.

Zuckerberg also claimed both he and Sandberg first learned the company had hired the consulting firm, Definers Public Affairs, which then spread disinformation (such as conspiracies surrounding George Soros) when they read the Times story, Zuckerberg saying the D.C. opposition research firm “is not the kind of thing I want Facebook associated with,” he told reporters on a conference call.

“We certainly stumbled along the way, but to suggest that we weren’t interested in knowing the truth...is simply untrue,” he said.

But the Times maintains Sandberg embarked on old-fashioned lobbying rounds, wheels greased by large campaign contributions to key legislative allies.   Behind the scenes, the Times alleges, the company hired Definers Public Affairs to discredit critics – and shift negative attention to Facebook’s corporate rivals using some of the same propaganda tactics as the misinformation peddlers that Facebook says it’s fighting.

For the first time, Facebook on Thursday revealed data on bullying and harassment content, saying it had identified about 2.1 million such posts on its service between April and September, with about 15 percent found proactively before user complaints.

Facebook’s board in a statement on Thursday credited Zuckerberg and Sandberg for making considerable progress fighting misuse of the social network.

As I’ve said before, based on the fact thousands (conservatively) have died as a result of misuse of their platforms, these two should be indicted. They are truly worthy of maximum contempt.

Separately, the Wall Street Journal reported on employee morale at Facebook courtesy of an internal study there, and just over half of employees said they were optimistic about Facebook’s future, down 32 percentage points from the year earlier, according to a survey of 29,000 employees.  53% said Facebook was making the world better, down 19 points from a year ago.

Lastly, yes, I was right two weeks ago when I talked about “Frontline” far exceeding what “60 Minutes” could do with the story, as you then saw this past Sunday, the topic of social media in general getting just one segment, though Apple’s Tim Cook was at least quoted with his now standard “(Sites like Facebook, which don’t respect our privacy), are being weaponized against us with military efficiency.”

[Separately, fascinating segment on the South African gold mine, wasn’t that?]

--General Electric once had a sterling triple-A bond rating as recently as 2015, but now the same paper is trading in junk territory, as questions about massive losses and its accounting have brought serious questions about the company’s viability to the forefront. 

GE stock was $33 in July 2016, with a 52-week market high of $19.40, and now we’re at $8.00.  Officially, the credit rating has been cut in recent weeks to BBB-plus, three notches above junk, as newly installed CEO Larry Culp sells parts of the company to raise cash and slash debt, including Tuesday’s announcement GE would sell a $3.7 billion stake in Baker Hughes, a GE Co., which led to a small, albeit brief, rally in GE shares, before they fell back.

GE has so much debt, $115 billion, according to the Wall Street Journal, and data from Fitch Ratings, it would become about one-tenth of the $1.2 trillion junk-bond market should its rating slide below investment grade.  And this would have a major impact on fund managers that are holding the stuff...or then would-be buyers.

--Chinese e-commerce giant Alibaba Group Holding Ltd. cashed a record $30.7 billion in sales on Sunday during its 24-hour online retail frenzy Singles’ Day, but the event’s annual growth dropped to its slowest rate, despite the record haul, from 39 percent to 27 percent, at the low end of analysts’ estimates, and the slowest rate in the event’s 10-year history.

Still, $30bn is $30bn.  Nonetheless, competitors like JD.com have come up with their own promotions.

[Singles Day, if you didn’t know, is the antithesis to those involved on Valentine’s Day.  It has become the world’s biggest online sales event and this year’s total was more than Black Friday and Cyber Monday’s totals combined, according to Bloomberg.]

--Bitcoin dropped more than 10% on Wednesday, falling below $6,000 and reaching new lows for the year, currently $5,500 as I go to post.  The cryptocurrency has lost more than 60% of its value this year and trades well below its record high near $20,000, set late last year.

--Juul Labs announced on Tuesday that it would stop selling most of its flavored e-cigarette pods in retail stores and would discontinue its social media promotions.

The San Francisco-based company, which controls 70 percent of the e-cigarette market share in the U.S., is under Food and Drug Administration pressure, the agency moving ahead with a plan to ban sales of flavored e-cigarettes in convenience stores and gas stations.

Kevin Burns, CEO of Juul Labs, said in a statement to reporters: “Our intent was never to have youth use Juul. But intent is not enough. The numbers are what matter and the numbers tell us underage use of e-cigarettes is a problem.”

Critics say Juul no longer needs to use social media to promote its product because it already has a huge market share and now the kids are promoting to other kids.

The F.D.A. admits it was caught off-guard earlier this year by the soaring popularity of vaping among minors.

Well, Thursday, the F.D.A. somewhat reversed itself and said it would allow stores to continue selling the products, but only from closed-off areas that are inaccessible to minors.

At the same time, the agency moved to outlaw two traditional tobacco products that disproportionately harm African Americans: menthol cigarettes and flavored cigars.

The potential ban on menthol cigarettes (the process for such a thing could take at least two years) is big as this brand makes up about 35 percent of cigarette sales in the U.S.

But the plan to sequester flavored e-cigarettes in stores, rather than ban selling them, is a surprise, given what we were led to believe was going to be the F.D.A.’s final decision.

--An Edward Hopper painting sold at auction for $91.9 million, with fees, a high for the artist.  The previous high for a Hopper had been $40.9 million back in 2013 ($43.8 million in today’s dollars).

And the next day, as noted in the New York Times, “A celebrated and enigmatic painting of two men and a turquoise pool by David Hockney sold at Christies for $90.3 million with fees, shattering the auction record for a living artist and cementing a major broadening of tastes at the turbocharged top end of the market.”

Yup, I’d say this is officially a market top...the U.S. economy having also topped, I’m adding (with the second-quarter’s 4.2% GDP).

I mean this Hockney piece (which I had never seen in my life), easily surpassed the previous high for a living artist of $58.4 million, held by Jeff Koons for one of his “Balloon Dog” sculptures.

--Finally, we note the passing of Stan Lee – who as chief writer and editor of Marvel Comics helped create some of the most enduring superheroes of the 20th century, Lee the major force behind the breakout successes of the comic-book industry in the 1960s and early ‘70s, Marvel becoming a global powerhouse.  He was 95.

Stan Lee was a tireless promoter of the brand (and himself) and many believe that due to his leadership, Marvel saw exploding sales and growing legitimacy for the medium.

Lee was a central player in the creation of Spider-Man, the X-Men, the Fantastic Four, Iron Man, the Hulk, Thor and many other superheroes who, as properties of Marvel Comics, now occupy wide swaths of the pop culture landscape in movies and television.

Lee also imbued his characters with human traits, and he once told the Los Angeles Times, “I wanted the reader to feel we were all friends, that we are sharing some private fun that the outside world wasn’t aware of.”

Foreign Affairs

Israel: Defense Minister Avigdor Liberman resigned and said his Yisrael Beytenu party would be leaving the coalition, following a ceasefire with Hamas that he said “cannot be interpreted in any way other than a capitulation to terrorism.”

“This will severely harm our security in the long run.  The response that we gave to the 500 rockets shot from Gaza was not enough, to say the least. The South should come first. Our weakness is being broadcast to other fronts,” he said.

Terrorists should not feel free to riot at the border or incite against Israel, Liberman added.  “Hamas isn’t talking about coexistence and recognition of Israel,” he said.  “They don’t want to reduce unemployment in Gaza.”

Liberman’s announcement came less than 24 hours after the cabinet approved an Egyptian-brokered ceasefire with Hamas in Gaza, though there was dissent.

The record barrage of 500 rockets came in just two days, with the Israeli army responding in kind, but taking care to avoid civilian casualties in Gaza.  Gaza’s Health Ministry on Tuesday said that 14 Palestinians had died, 13 of whom were identified as combatants. [An Israeli commando was killed earlier in a botched secret Gaza operation on Sunday night that killed seven Palestinians, the Israeli forces not expecting to meet a fierce resistance.]

Then the rockets came.  The Israeli military said it replied by attacking 160 Hamas and Islamic Jihad targets in the Strip.  Israel’s Iron Dome missile defense system intercepted more than 100 of the rockets.

[As an aside, I can’t help but add that we now know Iron Dome is far from perfect, yet the Hamas barrage is a good clue that if Hezbollah ever fired 500 or 1,000 of its far-superior rockets, the devastation could be severe.  Let alone 10,000 of them, which it has the capability to do.]

Following Liberman’s resignation, Israeli Prime Minister Benjamin Netanyahu appeared to be left with no choice but to go to an election, as his Finance and Interior ministers both said a day after that it was the preferable outcome.

Saudi Arabia / Turkey: Saudi Arabia’s public prosecutor said on Thursday that he was requesting the death penalty for five people suspected of involvement in the killing of the Saudi dissident Jamal Khashoggi at the country’s consulate in Istanbul.

The prosecutor, speaking to reporters in Riyadh, said the 15-man team sent to confront Khashoggi had orders to return him to the kingdom, but instead made a decision on the spot to kill him after he resisted.

It was the kingdom’s latest version of the Oct. 2 murder of Khashoggi, though the statement sought to reinforce previous Saudi claims that the team in Riyadh had acted without the consent of the kingdom’s top leadership, meaning King Salman and his son Crown Prince Mohammed bin Salman (MBS), which is a total crock...everyone knows that.

Except seemingly the Trump administration.  Many current and former officials from Turkey, the United States and elsewhere have told the international press (New York Times, Wall Street Journal, Washington Post, Times of London...to name a few) that such a complex operation could not have been carried out without the knowledge of MBS.

And yet, even though Turkish officials have supplied all the videos and audio tapes of the hit, and events leading up to it, a Saudi spokesman claimed he could not identify any of the suspects because the investigation is ongoing, yet you have this farcical statement that five will receive the death penalty.

[One of the audiotapes collected by Turkish intelligence apparently has a member of the kill team instructing a superior over the phone to “tell your boss,” believed to be MBS, that the operatives had carried out their mission.]

Reminder...Khashoggi’s body has not been found...or pieces of it.  Turkish officials suspect it was dissolved in acid.  Thursday, the Saudi spokesman repeated his government’s claim it had been given to a Turkish collaborator who then disposed of it.

Thursday, Turkish Foreign Minister Mevlut Cavusoglu told reporters, “I don’t find (the kingdom’s latest comments) satisfying. They say this person was killed because he resisted, whereas this murder was premeditated.”

“Again, they say he was dismembered...but this isn’t a spontaneous thing. The necessary equipment and people were previously brought in to kill and later dismember him.”

President Recep Tayyip Erdogan has said the killing was ordered at the “highest levels” of the Saudi government.

Cavusoglu reiterated Turkey’s call for Riyadh to disclose the location of Khashoggi’s remains.

“Where is the body of the murdered Khashoggi? Where was it thrown, where was it burned?” he said.  Cavusoglu did not mention if Turkey now had evidence it was burned, versus dissolved in acid.

Turkey wants the suspects tried in Turkey, not Saudi Arabia.

But, again, President Donald Trump does not want to hold Crown Prince Mohammed bin Salman responsible for Khashoggi’s death.  Back on Oct. 17, Trump said, “I hope that the king and the crown prince didn’t know about it.”  Trump still hasn’t implicated MBS.

The Treasury Department on Thursday announced sanctions against 17 Saudis, among them MBS’s aide, Saud al-Qahtani, though it isn’t clear if this means the U.S. has concluded that he ordered or approved the killing.  The Treasury Department’s press release just says the 17 men were being sanctioned “for having a role in the killing of Jamal Khashoggi.” But as the Washington Post’s Aaron Blake points out, “Having a role in” doesn’t exactly indicate whether any of them individually plotted or carried out his killing, and Treasury Secretary Steven Mnuchin said, as part of the release, the 17 “targeted and brutally killed” Khashoggi, but the statement doesn’t differentiate between who targeted him and who killed him.

What the statement does is fit the Saudi version of events; as in Qahtani planned a repatriation operation that ended up with Khashoggi’s death, without his approval.

MBS thus remains insulated.

But tonight, the Washington Post is reporting the CIA has concluded that Crown Prince Mohammed bin Salman did order the assassination.  What will the Trump administration do now?

Separately, NBC News is reporting that the administration has been looking into the possibility of extraditing Turkish cleric Fethullah Gulen, who has been in exile in Pennsylvania’s Pocono Mountains for two decades and is accused by the Turkish government of plotting a failed 2016 coup.  The reasoning, per NBC, is that the U.S. government wants to “placate” President Erdogan. But this defies logic.  What does placating Erdogan have to do with a killing committed by the Saudis?

Well, it would be to cover for the kingdom, but the CIA assessment complicates this strategy.

Editorial / Washington Post

“The new account of Jamal Khashoggi’s death offered by Saudi Arabia on Thursday was shocking in its audacity....While reporting that 11 suspects had been indicted and that the death penalty would be sought for five of them, a Riyadh public prosecutor excused not just Crown Prince Mohammed bin Salman – the chief suspect in the murder – but also two of his top aides, who the prosecutor said ordered or advised the capture operation but did not approve Mr. Khashoggi’s killing.

“By offering up this incredible account, the Saudi regime is baldly defying all those, including leading members of Congress, who called for full disclosure and accountability.  Yet the Trump administration appears ready to accept its stonewalling....

“This all-too-transparent tissue of lies only underlines the need for a genuinely independent international investigation led by the United Nations, as Turkey’s foreign minister called for this week....

“Congress should not allow this travesty to continue.  It should suspend all military sales and cooperation with Saudi Arabia until a credible international investigation of the Khashoggi killing is completed. The Saudi cover story is just one more instance of Mohammed bin Salman’s arrogant and reckless behavior. The true murderers of Jamal Khashoggi must be named and punished.”

Yemen: Amid growing international pressure on Saudi Arabia and its allies to make peace in Yemen, the Saudi-led military coalition fighting Iran-backed rebels in Yemen has suspended an assault on the vital port city of Hodeida, which has been under way since June.  Fighting has been subsiding in recent days to give space for aid workers and wounded civilians to evacuate.

After 3 ½ years of fighting, with an estimated 14 million people on the brink of famine, the parties to the conflict must call a cease-fire and enter peace talks.

The coalition aims to unseat the Iranian-backed Houthis from the capital, San’a, and to reinstall the internationally backed government of President Abed Rabbo Mansour Hadi, who was forced to flee after the Houthis stormed San’a in 2014.

The last effort at peace talks, set for September, never started.  Secretary of State Mike Pompeo called for a cease-fire on Oct. 30 and new talks in November.

As for Hodeida itself, where the lion’s share of aid supplies for the entire country flows through, earlier this week the Houthis mined the area around the city to prevent a final assault by the Saudi coalition.  Before the cease-fire, at least 150 people were killed in clashes on Monday.

Syria: The Russian military said today that nearly 270,000 Syrian refugees have returned home to their country in recent months, including 6,000 in the last week alone.

While there is no way to verify this claim, this isn’t exactly a good thing.  Moscow and Damascus are encouraging refuges to return, but Western governments have argued that it’s too early. What the hell are they returning to?  The infrastructure in virtually every major city is a shambles, and there is a very real fear that refugees would be facing persecution upon return to the government-controlled areas in absence of a comprehensive political agreement.

Iran: The regime executed two currency traders for allegedly hoarding gold coins and attempting to manipulate prices at a time when the country’s economy is reeling from re-imposed U.S. sanctions. The two were accused of “spreading corruption on Earth” and making “illegal deals” that destabilized currency markets.

Amnesty International said dozens of other people have been imprisoned on similar charges.

Somalia: There are terror attacks every day in the Middle East but some are so horrific, a telling of the history of the region requires I include it.  Such was the case last weekend in Mogadishu, when Islamic extremists, Shabab, exploded not one, but four car bombs outside a hotel in the capital, killing at least 53, with over a hundred suffering “horrific wounds,” the hospitals having trouble treating everyone.  So sad.  [No doubt the death toll rose far higher...just haven’t seen one.]

Jordan: If you’ve been to the ancient site of Petra (think “Indiana Jones”) as I have, there was flash-flooding there the other day that rose to 13 feet, state TV reported, with 4,000 tourists fleeing.  I didn’t see any casualty figure, but nationwide scores were killed in Jordan in flooding last weekend.

[At Petra, you walk through a very narrow canyon for quite a long spell until you get to the main temple, which is truly spectacular, but if you were caught in the canyon during such an event, it would be bye-bye.]

North Korea: Kim Jong Un has supervised the successful test of a new “high-tech” tactical weapon, state-run media reported on Friday. The KCNA news agency gave no details on the type of weapon, saying only that it had been developed over a long period of time.

The news agency added that Mr. Kim expressed “great satisfaction” over the “state-of-the-art” weapon that “builds impregnable defenses of our country and strengthens the fighting power of our people’s army.”

South Korea says it is attempting to analyze what the weapon may be, but the defense ministry points out Kim and his Orcs never committed to halt weapons development or shut down its missile bases.  They only carried out a fake demolition of a nuclear testing site.

South Korean officials also said this was Kim’s first known inspection of a testing site since he was present at the launch of the Hwasong-15 intercontinental missile in November 2017.

This is the first official report of a missile test since last year, even as at June’s Singapore summit, President Trump and Kim agreed the Korean peninsula should denuclearize, though no detailed plan, including a timeline, has ever been released by Pyongyang.

The North Korean report today, however, comes just days after a report based on satellite imagery identified the extent of the North’s complex network of missile bases around the country.

The U.S. State Department lamely put out a spokesman who said the U.S. “remained confident that the promises made by President Trump and Chairman Kim will be fulfilled.”

Meanwhile, the White House maintains a second summit between Trump and Kim will take place early next year.  Vice President Mike Pence said on Thursday that Trump will push for a concrete plan outlining Pyongyang’s moves to end its arms programs.

In an interview with NBC News, though, on the sideline of an Asia-Pacific summit in Singapore, Pence said the United States would not require Pyongyang to provide a complete list of nuclear weapons and locations before the second summit but that the meeting must produce a concrete plan.

“I think it will be absolutely imperative in this next summit that we come away with a plan for identifying all of the weapons in question, identifying all the development sites, allowing for inspections of the sites and the plan for dismantling nuclear weapons,” Pence said.

But then the next day, North Korea made the announcement of the new weapons program.

On Monday, a U.S. think tank said it had identified at least 13 of an estimated 20 active, undeclared missile bases inside North Korea, underscoring the challenge for American negotiators hoping to persuade Kim to give up his weapons programs.

President Trump tweeted: “The story in the New York Times concerning North Korea developing missile bases is inaccurate. We fully know about the sites being discussed, nothing new – and nothing happening out of the normal.  Just more Fake News.  I will be the first to let you know if things go bad!”

Back to Pence, he was asked if China has been doing enough to maintain sanctions pressure on the North and he said Beijing has done more than they had ever done before and Trump was grateful for that. 

No they aren’t...not after Trump declared a trade war with China.

Editorial / Washington Post

“ ‘We’re in no rush,’ President Trump declared last week about efforts to slow or reverse North Korea’s nuclear weapons and ballistic missile programs. Well, North Korea is also in no rush. After Mr. Trump’s showy June summit with North Korean leader Kim Jong Un in Singapore, Pyongyang’s nuclear materials production, missile operating sites and brutal concentration camps are all still grinding along.

“It is true that North Korea has not tested a missile or an atomic bomb lately. But nor has it been idle.  In a report published on Monday, Beyond Parallel, a project of the Center for Strategic and International Studies, documented with satellite imagery 13 North Korean missile operating bases, and perhaps as many as 20, that have been undeclared by the government. The disclosure is another reminder that North Korea has rebuffed the U.S. demand for a complete inventory of its nuclear weapons programs, while insisting the United States make a full declaration of the end of the 1950-1953 Korean War....

“Since the summit, Mr. Trump has swooned in unseemly fashion that ‘we fell in love’ when Mr. Kim wrote to him: ‘No, really – he wrote me beautiful letters, and they’re great letters.’  In fact, while Mr. Kim has focused on a rapprochement with President Moon Jae-in of South Korea, the Trump approach to slowing North Korea’s nuclear weapons systems appears to be at an impasse.  A meeting scheduled for Nov. 8 between North Korean officials and Secretary of State Mike Pompeo fell apart.  Mr. Kim, like his father, is well versed in the tools of deception, delay, threat and extortion.  He is proving it once again, to the detriment of Mr. Trump – and global security....

“A few years ago, the world was shocked to discover North Korea had one, then six, nuclear weapons. The number is now probably in the dozens.  Tens of thousands of people are suffering in brutal prison camps. But who’s in a rush?”

China: Addressing the above-noted ASEAN (Association of Southeast Asian Nations) summit in Singapore, Vice President Pence delivered a warning to Beijing over its rising strength in the Indo-Pacific, saying aggression should not be tolerated and offering reassurances of Washington’s commitment to the region.

“We all agree that empire and aggression has no place in the Indo-Pacific,” Pence said.  “Let me be clear, though: our vision for the Indo-Pacific excludes no nation.  It only requires that nations treat their neighbors with respect, and respect the sovereignty of our nations and international rules and order.”

Pence added the U.S. remained committed to upholding the freedom of seas and skies “where we stand shoulder-to-shoulder with you on freedom of navigation.”

Pence didn’t spell out China by name but it was clear what the intent of the remarks was.

Previously, the vice president said Washington was committed to maintaining openness in the waterway and would not be intimidated by China.

Separately, in a 525-page report by the U.S.-China Economic and Security Review Commission (USCC), which advises Congress, it was spelled out that China’s global rise has “undoubtedly put at risk the national security and economic interests of the United States, its allies, and its partners.”

The USCC called on lawmakers to enact a broad range of measures to better monitor and counter China’s global expansion strategies, trading practices, and influence campaigns abroad.

The commission contends that President Xi is seeking to fundamentally change the global order to facilitate China’s ambitions and warns U.S. policymakers that the country is on track to reverse the strategic philosophy once espoused by the reform-minded leader Deng Xiaoping that China should “hide [its] capabilities, bide [its] time, and never take the lead” in international affairs.

The USCC also issued a specific warning about Chinese dominance of networking-equipment manufacturing and the security of U.S. fifth generation, or 5G, wireless infrastructure. The panel cited Chinese telecom giants Huawei and ZTE in particular.  “In addition, China’s position as the world’s largest manufacturer of internet-connected household devices creates ‘numerous points of vulnerability for intelligence collection, cyberattacks, industrial control, or censorship,’ said the panel.”  [Kate O’Keeffe / Wall Street Journal]

The report’s hawkish tone is finding increasing resonance within mainstream U.S. politics no doubt.

David Ignatius / Washington Post

“While the bombastic U.S.-China ‘trade war’ has been getting the headlines, U.S. intelligence and law enforcement agencies have been waging a quieter battle to combat Chinese theft of trade secrets from American companies – a practice so widespread that even boosters of trade with China regard it as egregious.

“The Trump administration’s much-ballyhooed campaign of tariffs will eventually produce some version of a truce – economists say any other result would amount to a mutual suicide pact. But the battle against Beijing’s economic espionage is still accelerating, and it may prove more important over time in leveling the playing field between the two countries.

“To combat Chinese spying and hacking, U.S. intelligence agencies are increasingly sharing with the Justice Department revelatory information about Chinese operations. That has led to a string of recent indictments and, in one case, the arrest abroad of an alleged Chinese spy and his extradition to the United States to face trial.

“The indictments don’t just charge violations of law; they also expose details of Chinese spycraft.  And there’s a hidden threat: The Chinese must consider whether the United States has blown the covers of not just the people and organizations named in the criminal charges but also others with whom they came in contact.

“This law enforcement approach to counterespionage requires public disclosure of sensitive information, something that intelligence agencies often resist.  But it seems to be an emerging U.S. strategy. The Justice Department has pursued a similar open assault on Russian cyberespionage, with three recent indictments naming a score of Russian operatives and disclosing their hacking techniques, malware tools and planned targets.

“China, like Russia, is displaying an increasingly freewheeling and entrepreneurial approach to espionage. Several indictments unsealed since September reveal how the Ministry of State Security, the Chinese spy service, has operated through its regional bureaus...to obtain precious U.S. technology....

“ ‘The concerted effort to steal, rather than simply purchase, commercially available products should offend every company that invests talent, energy and shareholder money into the development of products,’ said Adam Braverman, the U.S. attorney in San Diego who helped prosecute the cases....

“This month, the Justice Department also unsealed a September indictment that accused a Chinese company and its Taiwan partner, both funded by the Chinese government, of trying to steal eight trade secrets for a memory-chip technology known as DRAM from Micron Technology Inc.... The indictment notes that the Chinese government had identified DRAM as ‘a national economic priority’ that Beijing was determined to obtain....

“What gives these indictments extra bite is that President Xi Jinping had promised back in 2015 that China wouldn’t conduct economic cyberespionage anymore. That pledge followed an indictment the previous year that revealed an elaborate plot by Chinese military hackers to steal U.S. commercial secrets.

“But in the espionage world, promises not to spy are dubious at best.  Over the past three years, the Justice Department has charged former CIA officer Jerry Chun Shing Lee and five other Americans with stealing secrets on behalf of Beijing.

“As a rising power, China is also a rising threat in the intelligence sphere.  The U.S. counterattack, in part, seems to be a public revelation of just how and why Beijing is stealing America’s secrets – overt payback for covert espionage.”

Lastly, regarding Taiwan, local government elections are slated for Nov. 24, but on the ballot is also a referendum over whether the self-ruled island should compete in the next Summer Olympics under the name “Taiwan,” rather than “Chinese Taipei,” a title in use since 1981.

Yes, should the people decide to change to Taiwan, look out.  Beijing will be mighty pissed.

The island has used “Taiwan” or “Formosa” in Olympics back in the 1950s and 60s, and supporters of the measure say it is simply aimed at reverting to a former title.

430,000 signed the petition to hold the referendum – greatly over the 281,000 required.

While support is mostly from the pro-independence camp, politically neutral bigwigs such as Chi Cheng, Taiwan’s first female Olympic medalist, co-led the campaign.

Beijing has warned that it would not allow the name change, and the defense ministry sees the vote as a prelude for the island to declare independence.

Defense Minister Wei Fenghe said at a forum in Beijing last month: “If anyone wants to split Taiwan from China, the Chinese forces would take necessary actions at all cost to retake it.”  [South China Morning Post]

Should the referendum be approved, parliament still has to approve the resulting ‘bill,’ and Taiwan would then have to negotiate with the International Olympic Committee, which most believe would go nowhere.

Random Musings

--Presidential tracking polls....

Gallup: 38% approval of President Trump’s performance, 56% disapproval (Nov. 11); 91% Republicans, 34% Independents.
Rasmussen: 49% approval, 50% disapproval (Nov. 16)

--As noted above, House Majority Leader Kevin McCarthy (R., Calif.) was elected minority leader Wednesday.  And now it’s likely to be Speaker Nancy Pelosi (D., Calif.), Democrats voting in two weeks.

Gerald F. Seib / Wall Street Journal

“Both Democrats and Republicans like to talk about building a ‘big tent’ party with broad appeal across the electorate.

“In 2018, the Democrats actually had one.

“That finding emerges from a deeper analysis of last week’s midterm election results. It has huge implications for the 2020 presidential race – if Democrats can prevent that tent from being torn apart from within over the next two years.

“Most of the attention since last Tuesday’s election has focused, understandably, on the simple numbers of seats won.  Democrats had a strong day, picking up a net of 32 House seats to take control there, with 10 still to be decided; seven governors races, with two to be decided; and more than 330 state legislative seats, a good number but short of the norm in such a midterm.

“They ended up turning more House seats than they did the last time they won back control of the House, in 2006, though they didn’t match the 63 seats Republicans turned in 2010.

“Republicans, of course, countered by keeping and expanding slightly their control of the Senate, which is huge when it comes to exercising power and protecting President Donald Trump and his achievements of the last two years.

“What’s more striking, though, is the breadth of the coalition that drove Democrats.  Crucially, the party avoided being torn between the traditional Democratic moderates and a newly assertive progressive wing.

“Progressives provided a lot of energy, and some of the party’s new stars, but moderates won a lot of races. Third Way, an organization that promotes centrist Democrats, says moderates were responsible for flipping 23 of the Democrats’ new House seats....

“Voters who cast ballots for Democrats cut a wide ideological swath. AP VoteCast, a pre-election and Election Day survey of some 90,000 people who said they voted in the midterms or intended to, found that 51% of Democratic voters identified themselves as liberal, 41% as moderates and 0% as conservative.

“Democrats also won comfortably among independents, the ultimate swing voters who tend to cluster in the ideological middle.  As you’d expect of today’s Democratic Party, its voters were racially diverse: about two-thirds white, a third nonwhite.

“By contrast, Republican voters were more heavily congregated on the right side of the spectrum; 67% identified themselves as conservatives, and just 27% as moderate. And they were predominantly white.

“As that suggests, President Trump has strengthened his grip on his base and his party, but hasn’t expanded them very much.

“The breadth of the Democratic coalition helps explain why Democrats did so much better this year in the Midwest, where President Trump won his most important states in 2016.

“Then, Mr. Trump stunned the Democrats by carrying the industrial states of Pennsylvania, Wisconsin and Michigan. This year, Democrats won 55%, 53% and 52% of the House votes in those three, respectively, and won governor’s races in all three. That suggests Democrats won back some moderate Midwesterners who moved to Mr. Trump in 2016.”

But as Gerald Seib points out, Democrats, to be successful in 2020, need to avoid a civil war between their insurgent progressive wing and the moderates who performed well last week.

“The danger is that by moving hard to the left in 2020, Democrats could lose their grip on those centrist and moderate voters who came their way this year.  Democrats are renting those voters for now; as they learned in 2016, they don’t own them.”

--Back in 2008, California voters authorized $9.95 billion in bonds as seed money for the California High-Speed Rail Authority to build a bullet-train from San Francisco to Los Angeles.

Today, the estimated cost is up to $88 billion, at least four times more than the state and federal funding available to finish it, as an editorial in the San Diego Union-Tribune put it the other day, “The single most likely outcome is a half-finished link in the Central Valley with little utility to anyone.”

--I’ve seen more than a few stories and op-eds of folks abandoning the Catholic Church.  I can’t see doing that myself, I’m just not going to Mass.  But as an interested observer, I can’t say I was pleased with the development this week at the U.S. Conference of Catholic Bishops.

Elizabeth Bruenig / Washington Post

“In ancient Rome, the gates of hell were always open – a wise rendering of the inferno.  ‘The gates of hell are open night and day; smooth the descent, and easy is the way,’ the poet Virgil’s oracle tells his hero Aeneas, ‘but to return, and view the cheerful skies – in this the task and mighty labor lies.’  For most, the effort of escape was too extreme – though an exemplary soul, such as Aeneas, could sometimes make it back to the land of the living if they possessed appropriate courage and willpower.

“How little the Eternal City changes.  Contemporary Rome now finds itself embroiled in a hell much of its own making, and its gates are wide-open – if anyone has the moral fortitude to simply walk out.

“The events at this week’s meeting of the U.S. Conference of Catholic Bishops in Baltimore haven’t given much cause for confidence. The main subject of the convention was set to be the sex abuse crisis, which has roiled the church anew since this summer’s revelations concerning Pennsylvania and disgraced Cardinal Theodore McCarrick. The bishops had planned to vote on ‘concrete measures to respond to the abuse crisis,’ but Cardinal Daniel DiNardo, the conference president, was informed the night before the meeting that the Vatican had decreed there would be no such vote.

“Instead, the Vatican directed American bishops to await the worldwide meeting of church leaders set for February in Rome. Why? Some have speculated it saw ‘canonical problems’ in the text; others have suggested that the proposals themselves were somehow deficient.  If the trouble with the bishops’ resolutions were obvious and objective, they certainly didn’t seem so to several U.S. bishops, who continued agitating for the reforms even after the ruling was handed down.  Maybe they realized that the effect of the sudden intervention was to instantaneously deflate a moment that some lay Catholics had dared look forward to.  ‘Don’t stagnate [the reform process], or slow it down,’ Francesco Cesareo, chairman of the National Review Board monitoring bishops’ progress on the sex abuse crisis, warned, adding that, if the process were to be dragged out and delayed, ‘I fear for the future of our church.’

“Fear is as rational a response as any at this point. While some American bishops seethed over the abrupt defanging of their meeting, others defended the actions of their colleagues over the past decades and bristled at the notion of creating so much as a third-party reporting mechanism for bishops suspected of abuse. Still, at least the Americans were addressing the problem itself, rightly or wrongly.  The Vatican has remained airily removed since the eruption of disturbing revelations over the summer, with Rome’s ambassador to the United States, Archbishop Christophe Pierre, taking time after DiNardo’s announcement to warn bishops against ‘a temptation on the part of some to relinquish responsibility for reform to others from ourselves, as if we were no longer capable of reforming or trusting ourselves.’

“With Rome at odds with U.S. bishops over whether and when to address the crisis concretely, strong trust within the institution was already strained. But what has been inflicted on the trust of ordinary Catholics by this bizarre episode is worse.”

And as Ms. Bruenig summed it up:

“ ‘Long is the way and hard, that out of Hell leads up to light,’ John Milton wrote in ‘Paradise Lost.’  If some of the lay faithful don’t make it through as the scandal grinds on, it will have been their shepherds who abandoned them along the way.”

--The FBI reported hate crimes rose 17% in 2017, with the number of incidents targeting Jews up 37%, to 938.  Anti-Muslim crimes fell by 11% in 2017, to 273.  Hate crimes targeting black people increased by 16% and were the most for any category of race, ethnic group, religion or sexual orientation.

The rise in total hate crimes, to 7,175, is the biggest since 2001, when incidents rose to 9,730.

The FBI defines hate crimes as a “criminal offense against a person or property motivated in whole or in part by an offender’s bias against a race, religion, disability, sexual orientation, ethnicity, gender or gender identity.”

Mars is looking better and better.

--I alluded to potential changes in the weather forecast for this winter in parts of the country.  So Mark R. passed along a piece from Dr. Tony Phillips who wrote six weeks ago, “The sun is entering one of the deepest Solar Minima of the Space Age.”

As in sunspots have been absent for most of 2018 and Earth’s upper atmosphere is responding, says Phillips, editor of spaceweather.com [Which Mark R. follows closely.]

Martin Mlynczak of NASA’s Langley Research Center said, “If current trends continue, it could soon set a Space Age record for cold. We’re not there quite yet, but it could happen in a matter of months.”

You’ve been warned.

I would just make a request of the Weather Gods that I’ll give you a super cold winter, as long as come early April, we’re back to normal and “The Masters...a tradition unlike any other...on CBS.”  [And those fake birds chirping in the background to get us in the spirit.]

--It was amazing in the New York metro area as what was forecast to be a minimal snowstorm turned into far more on Thursday, just as the afternoon commute was about to crank up, and clearly state and local governments simply weren’t prepared.  It ended up being the worst commute this region has experienced in a long time, the Port Authority Bus Terminal shutting down, for example, because of overcrowding, kids stranded in schools because the buses couldn’t move on the roads (or the drivers never made it to the depots).  One woman was killed in neighboring New Providence when her car, stuck on the tracks in the snow and ice, was then struck by a train.

In a lot of cases, the sanitation departments responsible for clearing the roads were prepared to spread some salt, rather than actually have to plow...what a fiasco.  Good thing for some politicians this came after the election.

The two big figures most culpable, New York City Mayor Bill de Blasio, and New Jersey Gov. Phil Murphy, both Democrats, refused to apologize and blamed weather forecasters, who were, to be fair, predicting snow for days, just not the amount we received.

I loved how former New Jersey Gov. Chris Christie, who now has to drive himself rather than be chauffeured around, complained how a normal 25-minute drive took him 5 hours and 40 minutes!  He had a field day going off on Murphy.

Understand that Christie was notorious for telling New Jerseyans, putting us in full panic mode, “Get off the f’n roads, you freakin’ morons!”  Christie was known for putting down so much salt, before the snow even began, that it polluted the waterways.  But when storms hit, people largely heeded his advice and we were snug and safe at home.

Granted, sometimes he had us panicking and the storm didn’t materialize as forecast, but as he’d say after, “What the [blank] do you care?”  Or something to that effect.

--Finally, Paul Dawson and Brian Sheldon are authors of a new book, “Did You Just Eat That?: Two Scientists Explore Double-Dipping, the Five-Second Rule and Other Food Myths in the Lab,” published by W.W. Norton.

Over the weekend they had an essay in the Wall Street Journal, adapted from the book, and among other things note some of the following:

“One in six Americans...comes down with an illness from food-borne microorganisms each year, according to the Centers for Disease Control.

“So how do we avoid the harmful bacteria? There are some basic rules to observe: Wash your hands frequently when touching surfaces and before handling or eating food. Cook food to proper temperatures, and store leftovers properly.”

You know that, but the two authors are scientists who’ve “also spent some years exploding myths.”

To wit: 

On the five-second rule: “Many people believe that a piece of food dropped on the floor is safe to eat if you pick it up quickly enough....

“We tested the five-second rule in our laboratory at Clemson University by dropping bologna and bread on surfaces contaminated with Salmonella.  We recovered between 100,000 and 10,000,000 bacteria after five seconds, depending on the surface, as we reported in 2006 in the Journal of Applied Biology.  Admittedly, waiting 60 seconds is worse – about 10 times worse, in our research – but five seconds is bad enough.

“Ice cubes and lemon juice: Many of us think that the ice in our drinks is safe and that the acid from a lemon slice dropped in a beverage reduces any contaminating microorganisms.  But both can carry potentially harmful pathogens themselves.  A 2007 study...found that 70% of lemon slices from the rims of glasses in restaurants produced microbial growth; 25 different microbial species were found in the samples.

“In our own study published last year in the Journal of Food Research, we found that 60% and 80% of the E. coli bacteria that we introduced onto hands and scoops, respectively, were transferred to a drink via ice cubes. For lemons, an average of 6,000 E. coli were transferred to wet lemons touched by our participants’ hands, and then they multiplied – a six-fold increase over 24 hours at room temperature.

“Restaurant hazards: Food and drink aren’t the only risks to your health when you’re eating out.  A study published in the Journal of Environmental Health in 2013 by U.S. and South Korean researchers found that Salmonella and E. coli can survive for up to 72 hours on laminated plastic menus (on paper menus the strains lasted only six hours).  We checked this ourselves by inoculating plastic menus with a fluorescent E. coli strain and then asking participants to handle the menus for one minute, as if they were ordering food. About 11% of the bacterial cells, or an average of 3 million, were transferred to hands.  Knowing this, you might want to keep a bottle of hand sanitizer ready for the next time you dine out – but then again, see the next point.

“Hand sanitizers...Unfortunately, they are not as effective as a thorough hand-washing regimen....To get U.S. Food & Drug Administration approval for the antimicrobial agents used in hand sanitizers, manufacturers test them against only a select number of bacteria, not including E. coli and Salmonella.”

And then of course you all know that hand dryers are flat-out gross....all they do is blow bacteria around. But this I hadn’t thought about.  “Bioaerosols are generated in restrooms with every flush of the toilet, and then hand dryers circulate the water droplets around the room.”

I’m never using a restroom on the Garden State Parkway or N.J. Turnpike again.

Granted, I haven’t thought about what I’d do instead, without getting arrested.

Maybe buy the authors’ book and keep it in the car, the proper page marked so when the cops question you, you’ve got it handy.

Basically, going back to eating out, you need to bring paper towels, wipes to clean the menus, and only drink bottled beer.  Cans could have rat feces on them.  And no limes or lemons in a bottle of Corona.

One more....if hand dryers are as bad as they are, imagine what the hated leaf blowers do?  #Hantavirus

---

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

God bless America.

---

Gold $1222
Oil $56.83

Returns for the week 11/12-11/16

Dow Jones  -2.2%  [25413]
S&P 500  -1.6%  [2736]
S&P MidCap  -0.9%
Russell 2000  -1.4%
Nasdaq  -2.2%  [7247]

Returns for the period 1/1/18-11/16/18

Dow Jones  +2.8%
S&P 500  +2.3%
S&P MidCap  -1.9%
Russell 2000  -0.5%
Nasdaq  +5.0%

Bulls 42.9
Bears 19.0

Happy Thanksgiving!  When you gather with your families, toast the first responders in California...and our troops around the world. 

Brian Trumbore



AddThis Feed Button

-11/17/2018-      
Web Epoch NJ Web Design  |  (c) Copyright 2016 StocksandNews.com, LLC.

Week in Review

11/17/2018

For the week 11/12-11/16

[Posted 11:30 PM ET, Friday]

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

Edition 1,023

Trump World

The Election still isn’t officially over, but as I go to post, Republicans would appear to be heading towards a 53-47 margin in the Senate, or a pick-up of two seats, while in the House, the Democrats are at 231-198, a pick-up of 36 seats, with six seats still undecided, of which the Dems will pick up another few.

But President Trump tweeted this afternoon:

“People are not being told that the Republican Party is on track to pick up two seats in the U.S. Senate, (an) epic victory: 53 to 47. The Fake News Media only wants to speak of the House, where the Midterm results were better than other sitting Presidents.”

Uh, Mr. President?  You lost the House, bigly.  What don’t you understand?

[I should add the 53-47 Senate margin assumes a Republican victory in the Mississippi runoff, while Rick Scott is going to win in Florida’s hand recount.]

There were a lot of jerks the past week among the candidates, including both Florida Senate candidates, the aforementioned Gov. Scott, and incumbent Sen. Bill Nelson, both fanning the flames of fraud.

Ditto President Trump, who tweeted:

“The Florida Election should be called in favor of Rick Scott and Ron DeSantis in that large numbers of new ballots showed up out of nowhere, and many ballots are missing or forged.  An honest vote count is no longer possible-ballots massively infected. Must go with Election Night!”

And Florida gubernatorial candidate Andrew Gillum was a jerk in how he’s handling incoming Gov. Ron DeSantis’ declared victory; DeSantis not being a jerk in the process.

In Georgia, I don’t like how Stacey Abrams is handling her outcome in not formally conceding defeat; filing a lawsuit against her Republican rival, Brian Kemp, even though she trails 50.3% to 48.8%, 58,000 votes.

I’m not a Kemp fan either, but Abrams is doing her future no good by not bowing out gracefully, and then doing whatever she wants regarding her accusations of voter suppression.

But kudos to Arizona Republican Senate candidate Martha McSally, who was gracious in losing a narrow race to Democrat Kyrsten Sinema.  “I wish her success,” McSally wrote about her opponent.  “I’m grateful to all those who supported me in this journey.  I’m inspired by Arizonans’ spirit and our state’s best days are ahead of us.”

Some preliminary stats on the election, final figures at some point down the road.

The last time turnout for a mid-term topped 50% was 1914, and this year’s turnout was 49.2%, way above 2014’s 37%; the average over the last few decades around 40%.

In some states which heavily utilize voting by mail, namely Washington and Colorado, turnout was 69.4% and 65.5%, respectively.  Minnesota, always a high-participation state, came in at 64.3%.

Texas, boosted by enthusiasm for Democrat Beto O’Rourke, saw its participation rise from 28.3% in 2014 to 46.1%.  Georgia’s, owing to its contentious governor race, saw an increase from 38.6% to 55%.

California’s turnout rose from 30.7% to 47.8%.

Recent presidential elections, by the way, have seen participation of around 60%.

With some states still processing mail-in ballots, Democrats won 51.8% of the overall vote, while Republicans accounted for 46.5%.

According to a Pew Research Center survey, only 35% of Americans said the president was not a factor in their mid-term vote.  For those who had Trump on their minds, 39% said they were casting their ballot against the president, while only 25% were voting to support him.

Only 9% of Americans think that relations between Republicans and Democrats will get better.

So...more Americans are engaged and voting, but the partisan lines are deepening, and they ain’t gettin’ better, sports fans!

Rich Lowry / New York Post

“The midterms suggest that President Trump needs to double down on populism, just not the sort that’s been his signature to this point.

“Trump is both too populist and not populist enough.  His populism is largely, although not entirely, a matter of style – combative, lacerating, emotive, unpredictable and grandiose.

“This sensibility is a central part of Trump’s appeal.  It also puts the accent on his personality, which is a double-edged sword, at best.

“For every Trump voter that it lights up, it reminds a suburban woman why she hates his guts.  The Democratic wave in the suburbs was mostly a function of a deeply felt personal revulsion toward the president.

“If Trump’s populism is always based foremost on Rally Trump and Twitter Trump, i.e., on the behavior pushing the suburbs away from him, there is no way for him to try to tamp down the yawning geographic and demographic vulnerability underlined by the midterms.

“Trump is different from other Republicans on trade and immigration, the issues at the core of his populism, but other than that, he has governed as a fairly typical Republican.  His biggest legislative accomplishment during the first two years of his presidency was a tax cut out of Republican Central Casting. But the tax cut proved an electoral nullity, in large part because it was an answer to a question that voters weren’t asking.

“Trump knew that it didn’t resonate.  He showed an instinctual sense that he needed a genuine middle-class agenda. He talked of a fantastical middle-class tax cut about to be considered. And he insisted that Republicans would do a better job dealing with the problem of pre-existing conditions than Democrats, without offering any supporting policy.

“In the absence of any populist substance, Trump was thrown back on the caravan, and more caravan, and his usual mediagenic provocations. This created his characteristic stew of acrimony and hysterical overreaction by his opponents, which pushed both his supporters and opponents to the polls, and – with the exception of some key red-state Senate races – more of the latter than the former....

“Even if last week’s results weren’t as encouraging to Trump as they appeared at first blush, he is still very much in the game. But unless some exogenous event boosts Trump’s standing, he’s dependent on Democrats once again nominating a candidate unacceptable to the white working class (and not particularly popular in the suburbs, either).”

Wall Street and Trade

Speaking on Wednesday, Federal Reserve Chairman Jerome Powell noted what your editor has long observed (all you have to have done is read my weekly missives on Europe); the global economy has hit a soft patch.

“You’ve seen a bit of a slowdown – not a terrible slowdown,” Powell said.  “It is concerning.”

And as Fed Vice Chairman Richard Clarida said in an interview today with CNBC, the central bank should thus take a “data-dependent” approach to raising interest rates; he, too, citing slowing global growth as a factor in his outlook, while adding interest rates were getting closer to a so-called neutral level, where they neither spur economic growth nor slow it down.

Clarida’s comment came a day after Federal Reserve Bank of Atlanta President Raphael Bostic said the Fed should take a “tentative approach” to raising rates given their proximity to the neutral level.

So you put it all together and the bond market rallied at week’s end, ditto stocks, on the feeling that the Fed may not hike rates after all at its December meeting (18-19), let alone three more times in 2019, and might adopt a cautious, wait-see approach.

In terms of hard data for this week, October retail sales were better than expected, 0.8%, 0.5% ex-autos, industrial production for the month was punk, 0.1%, and the October consumer price index was in line, 0.3%, 2.5% year over year; ex-food and energy, 0.2%, 2.1% yoy.

Add it all up and the Atlanta Fed’s GDPNow barometer for the current quarter is 2.8%, still very solid; just not 4.2% or 3.5%, as in the prior two quarters.

But back to the global story, yes, as I note below, Japan and Germany, to cite two examples, have excuses, perhaps, in the form of natural disasters and new emissions standards on autos, respectively, for their poor third-quarter growth figures.

It’s just that across the globe, economists and business leaders are warning about a common denominator that is hurting growth: trade battles between the U.S. and China and others.  Tariffs aren’t helpful, and there are real concerns trade tensions will worsen, though for now on one major topic, new tariffs on auto imports, the Trump administration is holding off on imposing them.  In this case, Commerce Secretary Wilbur Ross has until February to deliver his findings on the impact of car imports and potential harm to the U.S. economy as well as the global auto industry.  Once the president receives the report, there is then a 90-day review period.

The U.S. imported about $350 billion of cars and car parts last year.

Speaking of Trade...Treasury Secretary Steven Mnuchin resumed discussions with his Chinese counterpart, Vice Premier Liu He, over a deal that would ease tensions between the two, ahead of the G20 summit in Buenos Aires end of the month, but Chinese officials are continuing to resist U.S. demands that China put forward a concrete offer before negotiations can take place. China instead wants to talk first before making a proposal, which is just a way of dragging things out so they can steal more technology, before hard and fast principles are put in place that protect U.S. intellectual property.  Just my informed position.

[China did outline a series of potential concessions later in the week for the first time since the summer but they fall far short of the type of major structural reform President Trump is demanding.  Just standard crapola that they utter all the time about opening up markets, raising equity caps on foreign investment in certain industries, blah blah blah....]

President Trump, in informal remarks at the White House today, however, once again uttered garbage about being optimistic a deal can be cut between the two, and how China wants a deal.

There is no way Chinese President Xi Jinping makes a concrete offer in Buenos Aires that covers the prime issue of IP theft (and the related topic, forced technology transfers in return for market access).  Such a deal would take months and months, if not a year or two, to conclude...just on that single topic.

It is possible, though, the U.S. and China could agree to step up the level of discussions, a limited ceasefire, wherein the U.S. would not increase existing tariffs as planned come January. 

But I need to talk about Trump’s senior trade adviser, Peter Navarro, a man I do not like, who excoriated China and attacked Goldman Sachs and Wall Street as Beijing’s “unpaid foreign agents” at a recent speech.

Less than a mile away, as Navarro spoke, Secretary of State Mike Pompeo and Defense Secretary Jim Mattis were meeting with their Chinese counterparts to try to mend fences with Beijing, while discussing North Korea, Iran and the South China Sea.

Talk about mixed messages.

Navarro, as is well known, is pushing for a hard line on trade talks, which I have no problem with, it’s just the tone was way over the line to the point that Economic Advisor Larry Kudlow, days later, was forced to disavow the remarks in the sternest terms himself, including how Navarro “does not speak for the administration,” though the guy is, err, senior trade adviser.

Navarro said: “If Wall Street is involved and continues to insinuate itself in these negotiations, there will be a stench around any deal that’s consummated because it will have the imprimatur of Goldman Sachs and Wall Street.”  Navarro provided no evidence to back up his claims.

Editorial / Wall Street Journal

“Peter Navarro likes to claim he’s running U.S. trade policy, even if he isn’t, and now he’s acting as if even Donald Trump works for him.  That’s the only way to read the White House trade adviser’s extraordinary public threat against private American citizens on Friday at the Center for Strategic and International Studies.

“ ‘Consider the shuttle diplomacy that is now going on by a self-appointed group of Wall Street bankers and hedge fund managers between the U.S. and China,’ Mr. Navarro said during an event about economic and national security.  ‘As part of a Chinese government influence operation, these globalist billionaires are putting a full court press on the White House in advance of the G20 in Argentina. The mission of these unregistered foreign agents...is to pressure this President into some kind of deal.’

“Whoa there, tough guy.  ‘Foreign agents’?  Does he mean they’re traitors?  And ‘unregistered’?  Is he accusing them of crimes?

“Presumably Mr. Navarro is referring to the likes of Blackstone’s Stephen Schwarzman, former Treasury Secretary Hank Paulson and others who are working in public and behind the scenes to ease tension between the world’s two largest economies. These are private individuals, not deputy flunkies at Commerce, and they have longtime relationships in China. Some also have investments there.

“They have every right to urge their own government and China’s to work out a new modus vivendi on trade.  It’s no secret that Mr. Navarro wants to treat China like the former Soviet Union, but in threatening Americans who disagree with him he’s talking a page straight from the Politburo playbook in Beijing....

“None of this serves the President or U.S. interests. Mr. Trump needs all the allies in business he can get, as last week’s election showed.  Others in the White House might also tell Mr. Trump that the world economy is slowing, thanks in part to the headwinds to growth from trade friction.  If President Trump can’t point to a strong economy over the next two years, he can forget about a second term.  Maybe the question to ask is whether Mr. Navarro is a Democratic Party agent.”

Europe and Asia

Eurostat reported that GDP in the eurozone (EA19) declined to 0.2% in the third quarter, just 1.7% year-on-year, vs. 0.4% rates of growth for both Q1 and Q2, and a 2.7% annualized pace for the fourth quarter of 2017.

Among the individual annualized growth rates at the end of the third quarter:

Germany 1.2% vs. 2.8% Q4; France 1.5% vs. 2.8%; Spain 2.5% vs. 3.1%; Netherlands 2.4% vs. 2.9%; and Italy 0.8% vs. 1.6%.

September industrial production also fell 0.3% for the EA19, up 0.9% year-on-year.

And Eurostat reported that inflation in the EA19 for October was at a 2.2% annual rate, up from 1.4% a year earlier.

European Central Bank President Mario Draghi, speaking in Frankfurt today, stuck with the ECB’s upbeat take on the region’s economic outlook, though he acknowledged that monetary policymakers would need to be on their guard in the coming months in case a raft of bad data proved a harbinger of a prolonged slowdown in the eurozone economy.

Draghi said he still thought that risks to the outlook were “broadly balanced” – meaning the central bank remains on track to withdraw the most important element of its stimulus program, quantitative easing, at the end of the year.

Just a note on Germany, whose GDP for the third quarter fell 0.2% vs. the prior quarter, the first time GDP fell since early 2015, underlying the weakness in the auto industry and new emissions tests that temporarily disrupted car production, which was down 24% in September year-over-year.

Eurobits....

Brexit: The government of British Prime Minister Theresa May unveiled its long-awaited draft withdrawal agreement on Wednesday, which sets out the terms of the UK’s departure from the EU, over 585 pages.

But after initially gaining Cabinet (and earlier EU) approval Wednesday night, May faced fierce opposition across the political spectrum to the draft, which must be approved by Parliament, and the EU, with critics saying it will leave the UK indefinitely tied to the bloc.

Brexit minister Dominic Raab and work and pensions minister Esther McVey quit just over 12 hours after the cabinet had agreed to the terms of the agreement, saying they could not support it.  Two junior ministers and other aides then quit. 

The departures had some lawmakers in London openly questioning Mrs. May’s survival.

Speaking before parliament on Thursday morning, the prime minister said:

“The choice is clear. We can choose to leave with no deal, we can risk no Brexit at all, or we can choose to unite and support the best deal that can be negotiated,” she said.

Mrs. May said Britain will leave the EU on March 29 and will not suspend the process of leaving.

“We will not extend Article 50,” she told parliament, when asked about the clause in the EU’s Lisbon Treaty which allows for countries to leave the bloc.

May also said she shared the concerns of those who believe a Brexit backstop to avoid a border on the island of Ireland impinges on British sovereignty, but it was an improvement on previous proposals.

“The references to the backstop do raise some difficult issues,” the prime minister said.  “I fully accept that across the house, there are concerns in relation to the backstop.”

Prime Minister May, in a news conference yesterday, then responded to questions about her current position of power in Government.

“Am I going to see this through?  Yes,” May said.  “I am going to my job of getting the best deal for Britain and I’m going to my job of getting a deal that is in the national interest.”

“I believe with every fiber of my being that the course I have set out is the right one for our country and all our people,” May added.

May also said there will not be a second referendum.

So Tory backbenchers have said they would call for a vote of confidence in Mrs. May, which requires 48 “letters” to trigger a vote.

Senior Tory MPs are saying they have the magic 48, but this is not fact as yet.

Michael Gove said Friday he “absolutely” has confidence in Theresa May as she pursues her deal.  But he will stay on as environment secretary, not Brexit Secretary as Mrs. May wanted. Gove said he was focused on working in cabinet to get “the right deal in the future.”

It’s understood Gove only wanted to be Brexit Secretary if he could make changes to the agreement, but Mrs. May and EU leaders have said this is not possible.

What is clear is that there will be more fireworks over the weekend, with a Conservative party leadership challenge looming.

Should Mrs. May not survive a potential no confidence vote, that would mean a change of course on Brexit with no real time to come up with a new deal...one that would pass the EU’s muster.

On a radio program Friday morning, Mrs. May took callers’ questions and when asked whether she still had the support of the Democratic Unionists, on whom she relies upon for her Commons majority, she said she was “still working with” Arlene Foster’s party.

As I’ve noted, May needs the DUP’s 10 votes, but there are far more in her coalition in opposition to the draft, with one Tory MP saying it was “mathematically impossible to get this deal through the House of Common” and it was “dead on arrival.”

As for the EU, Michel Barnier, the bloc’s chief Brexit negotiator, told member states that Britain has to face up to the security consequences of Brexit.  Barnier warned that there would be “difficult negotiations” over British demands to maintain access to parts of the EU’s internal security database, according to the Financial Times.

The political declaration on the future relationship is the main remaining focus of the negotiations between Brussels and London ahead of a special EU Brexit summit scheduled for Nov. 25.  An initial seven-page outline of the declaration was published alongside the UK’s 585-page withdrawal agreement.

Although not legally binding, the declaration is intended to serve as the basis for a future free trade agreement, covering everything from financial services and aviation, to data protection, fisheries and security.

The current version of the text leaves open to negotiation the terms of the UK’s cooperation in Europol, the EU’s law enforcement agency.

Access to security databases and Britain’s desire for frictionless trade in goods emerged as two big problems for negotiators on both sides, Barnier apparently told EU ambassadors in Brussels today.

The security system includes the EU’s passenger name recognition database and Barnier dismissed the UK’s demand for access to this. 

The toughest part in the final negotiations, should the parties proceed after March 29, would be each EU government seeking to protect their key economic interests, including access to fishing waters for the likes of France, and demands that the UK cannot undercut EU standards for governments including Denmark and the Netherlands.

Negotiating teams from the EU and the UK are due to thrash out differences over the draft text on Saturday and Sunday, with EU ministers meeting Monday to prepare for the Nov. 25 summit.

Editorial / The Economist

“The game is by no means over.  The deal still has to be agreed by the EU and, harder still, by the British Parliament. Several ministers, including the Brexit secretary, resigned in protest; Theresa May could yet be toppled.  MPs must grapple with multiple loyalties: to their constituents, their parties and their own beliefs, all of which are likely to have shifted since the referendum. Within weeks they will have to make the biggest decision facing Britain, and one of the biggest for Europe, in generations.

“If the country has learned anything since 2016, it is to look before it leaps. Yet, in what well summed up the level of debate on Brexit, hardline Leavers and Remainers alike trashed the deal before they had read a word of it. This makes no sense.  The terms of the divorce will take time for MPs and those they represent to digest – and they may well be amended by European leaders before Parliament has its vote.  Nor is it clear what would happen in the event that the deal were voted down: more negotiating, a second referendum or crashing out without a deal? But as the crunch vote nears, MPs must consider how to approach this fateful question.

“First, forget the past.  The cheating that went on during the campaign, the premature triggering of Article 50 and the thin preparations are maddening.  But they are questions for the inquiry that will surely one day dissect this national fiasco.  The task before Parliament is to decide in a cool-headed way whether adopting the terms on offer is better for the country than rejecting them.

“Those who backed Remain – a group that includes this newspaper, as well as most MPs – will find little in the deal to make them think they were wrong.  Although it legally sets out only a temporary framework, its terms are clearly worse than the status quo.  Yet if they are to respect the referendum, MPs should also judge the deal against what voters were promised. The Leave campaign has no formal manifesto, and most of those behind it have since fled the government. But the animating idea was to ‘take back control.’  In some ways the deal does this, notably in immigration, where Britain would reclaim the right to immigration from Europe.  The price of this is being kicked out of the single market, which would hit the economy. MPs must decide whether the government is right that the public accepts this trade-off.

“In other ways Britain will unequivocally forfeit control.  It will stay aligned with many of the single market’s current and future rules, to keep trade flowing and the Irish border open, something the EU has made a condition of any deal.  Once outside the EU, Britain will have no say in setting these rules. European judges will still arbitrate on such matters, even though Britain will no longer be able to nominate them.  This is not taking back control but giving it up.  Meanwhile, as long as it remains in a customs union Britain will not even get the consolation prize of signing trade deals with other countries, something by which many Brexiteers have come to set enormous (and unwarranted) store.

“The deal also has implications for the integrity of the United Kingdom.  It would keep open the Irish border, but create a deeper regulatory divide between Northern Ireland and mainland Britain.  The sad truth is that most English voters do not care much about Northern Ireland. But MPs, particularly those from what is formally called the Conservative and Unionist Party, should ask themselves whether it is right that an accidental by-product of Brexit should be a step towards Irish unification.

“Hanging over this debate about the pros and cons of the deal is the question of what overturning it would do to the health of Britain’s democracy.  Parliament has the legal right to ignore the referendum. But after a record number of people voted (to ‘take back control’, no less), it could be catastrophic for trust in mainstream parties if it were to do so.

“In truth, the democratic argument is more complicated. The vote to leave was an expression not just of Euroscepticism but of a wider frustration. It exposed divisions by age, region and class that the old left-right party divide had covered up.  Far from bridging those divides, the bitter arguments since the referendum have if anything caused the two sides to move even further apart.  Overturning the vote would risk making them irreconcilable. But adopting a Brexit deal like the one on offer would be unlikely to heal those wounds.  Indeed, to the extent that the referendum was a howl by the left-behind against rule by remote and uncaring elites, this form of Brexit could make those problems worse. Anger at unaccountable rulers would not be assuaged by a deal in which Britain followed orders from people it could not elect. And those keen just to get the whole thing over with might find that Brexit marked only the beginning of national argument about the relationship with the behemoth next door.

“Nor is it clear that the democratic thing to do is to hold people to the result of a two-year-old, narrowly won referendum, when the consequence of the vote has turned out to be quite different from what many voters expected.  Polls suggest that a small majority now prefers Remain to Leave; more might prefer Remain to a compromise like the deal on offer. Almost all MPs want to respect the will of the people. The question is whether the people’s will found its perfect and enduring expression in 2016, or whether it might have changed.

“There is no simple way out of this endgame.  Whether the Brexit deal is accepted or rejected, it will scar Britain for years.”

Sebastian Mallaby / Washington Post

“Now the government has published a draft exit treaty.  It is as long as a Dickens novel and far more confusing.  The most controversial portion concerns the Irish ‘backstop,’ which would kick in at the end of a transition period unless Britain managed to negotiate an unexpectedly deep trade deal with Europe. To avoid a destabilizing hard border between Northern Ireland and the independent Republic of Ireland, the backstop provides that the North would live by Europe’s rules on food products and goods standards, even though the United Kingdom would have lost all influence over those rules’ content.

“Meanwhile, to minimize trade barriers between the North and mainland Britain, the mainland would remain within the EU Customs Union. This would prevent it from negotiating its own separate free-trade deals; so much for the vision of Britain as Singapore. What’s more, Britain would not be allowed to shake off this restraint without the EU’s approval, and the European Court of Justice would adjudicate customs disputes. So much for the Brexiters’ promise of enhanced British sovereignty.

“The political whirlwind has come quickly. The very Brexiters who promised a cakewalk are denouncing the result of their own policy. The latest spate of resignations comes on top of the two senior Brexiters who quit in July. Prime Minister Theresa May deliberately installed committed Euroskeptics as Brexit ministers; both her successive choices have now left in disgust at a diplomatic effort they had theoretically been leading.  As a Brit living in the United States, I used to marvel at Americans who revered their Constitution yet despaired at the political process that it produced.  Now, as a naturalized American living in London, I have watched a political movement passionately advance a radical objective – and then decry the consequences of its own radicalism.

“What happens next is unknown even to the participants. The Brexit purists are threatening to topple the prime minister. But installing a new leader involves a protracted two-stage process: The parliamentary caucus of the ruling Conservative Party must come up with a short list of two candidates, then rank-and-file Conservatives must vote on them.  Meanwhile, time is running short. Britain will crash out of the EU in March unless it can ratify a divorce treaty before then....

“The parliamentary process has generated a compromise that is pleasing to no one.  If it is implemented, Brexiters will spin a myth that they were betrayed by bureaucrats and Eurocrats and the establishment writ large: Their populism will grow even more poisonous. A second vote would give the Leave camp an opportunity to vote for a cleaner break with the EU, even if it came at the expense of Ireland.  It would also give Remainers a chance to make the argument for solving the whole Brexit problem by staying in the EU. Then the nightmare would be over.”

Macron: President Trump had a highly awkward Armistice Day visit to Paris over the weekend, and then when he got home he mocked and attacked French President Emmanuel Macron over nationalism, plans for a European army and the French leader’s ratings.

After a meeting on Saturday in Paris in which the two leaders appeared to smooth over their differences and agreed that Europe needed to pay more towards its defense costs, Trump was widely criticized for failing to visit the Aisne-Marne American cemetery, which the White House later said was due to poor visibility for his helicopter and Trump not wanting to disrupt the Paris traffic with his motorcade.

The French army appeared to poke fun at Mr. Trump over his decision, tweeting an image of an officer crawling under barbed wire in wet weather with the words: “There’s rain, but it’s no problem.”

Then Sunday, in what appeared to be a direct rebuke, President Macron warned President Trump and other leaders that a dark new tide of nationalism, the label Trump recently embraced for his “America First” movement, ignores the painful lessons of history and threatens a fragile global order.

“Patriotism is the exact opposite of nationalism.  Nationalism is a betrayal of patriotism,” Macron said as Trump sat, unsmiling, with more than 100 other world leaders at a solemn commemoration at the Arc de Triomphe of the moment when World War I officially ended 100 years ago.

“Old demons are coming back to the surface,” Macron declared, citing the dangerous resurgence of the ethnic and religious hatreds that led to that devastating conflict – and the cataclysmic global war that followed three decades later.

But there is another side....

Editorial / New York Post

“French President Emmanuel Macron doubtless felt deep self-satisfaction in delivering a public rebuke to President Trump over the weekend. But his smug lecture on the dangers of nationalism ignored both the lessons of history and of today’s political realities.

“It was also pretty arrogant of Macron to implicitly slam a U.S. president at a commemoration of the 100th anniversary of the end of World War I – a conflict in which France and its allies were saved by American soldiers, thousands of whom lie forever in French soil.  Surely a ‘thanks’ was in order. After all, U.S. troops also liberated France a generation later from the very fascist nationalism that Macron seems to ascribe to Trump, with his warning about ‘old demons coming back to wreak chaos and death.’

“But Trump’s ‘America First’ nationalism is not the same as the force that drove both world wars. It does not seek greatness by conquest, nor does it mean ‘only America.’

“It does, however, expect Europe to share global responsibilities, and recognizes that the United States has not been well-served by multinational groups like the United Nations and the European Union....

“Macron and the fans of his rebuke of Trump also remain in denial on important social issues, including the rise of immigrant-driven anti-Semitism across Europe and particularly France. Nor do dark warnings about nationalism make any less of a disaster German Chancellor Angela Merkel’s 2015 opening of Europe’s doors to unlimited Middle East migrants.

“America’s brand of nationalism is not a ‘betrayal of patriotism,’ as Macron suggests; it’s an affirmation. And it speaks to the American values and commitment that helped France remain a free nation.”

Trump left Paris late Sunday to fly back to Washington, skipping a three-day forum that Macron hosted with German Chancellor Angela Merkel in an effort to galvanize global action on shared challenges, though there had never been plans for Trump to attend this.

Merkel warned against taking peace for granted, saying, “We have to work for it.”  She also made a veiled dig at Trump’s attacks on multilateral organizations, saying that “unwillingness to compromise” can have deadly consequences.

But Macron’s address on Sunday was in effect a rebuttal to Trump’s September address to the UN General Assembly, where he defined globalism as the opposite of patriotism.

As the New York Post editorial alluded to, though, the European Union is dealing with unprecedented strains, from a backlash to the migrant flood, to the financial crisis that worsened inequality in many areas, to the growing number of far-right politicians who have exploited ancient ethnic divisions and fears.

At the same time, the face of Europe, Merkel, just announced this is her last term (if she makes it that long), and Macron is now polling behind the far-right and Marine Le Pen, whom he beat handily in the last election.  [Plus Macron is dealing with a punk economy, and an unemployment rate over five points higher than America’s.]

Trump gave no public response to the speech, but he tweeted Sunday that he had attended a “beautiful ceremony” and thanked Macron.

But if you thought Trump hadn’t paid attention to the ‘in-your-face’ French president, Trump went off on Macron in a series of tweets, Tuesday.

“Just returned from France where much was accomplished in my meetings with World Leaders.  Never easy bringing up the fact that the U.S. must be treated fairly, which it hasn’t, on both Military and Trade. We pay for LARGE portions of other countries military protection....

“...hundreds of billions of dollars, for the great privilege of losing hundreds of billions of dollars with these same countries on trade.  I told them that this situation cannot continue – It is, and always has been, ridiculously unfair to the United States.  Massive amounts....

“....of money spent on protecting other countries, and we get nothing but Trade Deficits and Losses. It is time that these very rich countries either pay the United States for its great military protection, or protect themselves...and Trade must be made FREE and FAIR!”

And....

“Emmanuel Macron suggests building its own army to protect Europe against the U.S., China and Russia. But it was Germany in World Wars One & Two – How did that work out for France?  They were starting to learn German in Paris before the U.S. came along.  Pay NATO or not!”

“The problem is that Emmanuel suffers from a very low Approval Rating in France, 26%, and an unemployment rate of almost 10%. He was just trying to get onto another subject. By the way, there is no country more Nationalist than France, very proud people-and rightfully so!...

“....MAKE FRANCE GREAT AGAIN!”

And....

“On Trade, France makes excellent wine, but so does the U.S.  The problem is that France makes it very hard for the U.S. to sell its wines into France, and charges big Tariffs, whereas the U.S. makes it easy for French wines, and charge very small Tariffs. Not fair, must change!”

Trump, once he realized he was getting beat up on the no-show at the Saturday ceremony honoring war dead, had to respond:

“By the way, when the helicopter couldn’t fly to the first cemetery in France because of almost zero visibility, I suggested driving. Secret Service said NO, too far from airport & big Paris shutdown. Speech next day at American Cemetery in pouring rain!  Little reported-Fake News!”

[I was watching...a bunch of networks reported the Sunday ceremony, live.]

Following Trump’s tweets disparaging Macron, the French president said during a television interview, “The United States is our historic ally, it will continue to be. But to be allied is not to be a vassal.”

A French government spokesman noted that after Trump’s attacks on Tuesday over nationalism, Benjamin Griveaux said, “We were marking the murder of 130 of our people,” referring to the 2015 Paris attacks, Nov. 13.

Italy Budget: The European Commission announced it would move next week to discipline Italy over its 2019 budget, after Rome defied the Commission’s objection to its plan to borrow and spend more next year.  Italy re-submitted its draft budget to the EU on Tuesday, with the same main assumptions Brussels had rejected in October as contravening EU rules.

Now the procedures are such that any penalties, namely fines, are not necessarily implemented right away, but this would be the first time an EU country is disciplined specifically over its debt level (131 percent of GDP).  The EU’s debt target is 60 percent and Italy must commit to cut its debt towards that figure every year, but everyone knows that with the budget Italy is submitting for next year, the debt will rise, not go down. Both the EU and the International Monetary Fund say Italy’s growth assumptions are way too rosy.

The Commission will publish a report on Italy on Wednesday, after which deputy finance ministers and treasurers on a select committee will have two weeks to review it.  The EU would then declare Italy in excessive deficit at a meeting in January and give Rome three to six months to take remedial action.

Turning to Asia, more economic data out of China, this time for the month of October, courtesy of the National Bureau of Statistics...the figures further confirming a slowdown.

Retail sales for the month rose 8.6%, but this was vs. 9.3% in September, year-over-year.  Online sales rose 26.7%, but this is trending lower.

Fixed asset investment was up 5.7% year-to-date, a tick higher.  But industrial production rose 5.9% in the month, yoy, less than expected, and real estate investment increased 9.7%, but this too is trending lower.

Ditto car sales, which were off 12% from a year earlier in October, the fourth straight month of year-over-year sales declines.  [China Association of Automobile Manufacturers]

With October’s performance, auto sales in China are now down 0.1% for the first ten months vs. 2017.

In Japan, GDP for the third quarter was down 1.2% on an annualized basis (preliminary data), owing to natural disasters (earthquake and typhoon) that hit spending and disrupted exports, which were down 1.8% in the quarter vs. Q2.

Trumpets....

--Wednesday, Defense Secretary James Mattis went down to the Texas / Mexico border to address the nearly 6,000 Marines and Army soldiers who are assisting the Border Patrol in Texas, Arizona and California; the units largely just putting up razor wire.

So a soldier in Texas asked the secretary when his unit would be ordered to remove the wire and vehicle barriers they had installed at crossings, and Mattis replied, “Good question.  We’ll let you know.  Right now, the mission is put them in.”

Asked by another soldier to explain the goals of Trump’s election-eve border deployment, Mattis said, “Short term, get the obstacles in.  Longer term...it is somewhat to be determined.”

The troops are slated to stay at border crossing points through early December and potentially longer if the Department of Homeland Security requests an extension.  Happy Thanksgiving to them all, the editor typed sarcastically.

Trump tweeted tonight:

“Isn’t it ironic that large Caravans of people are marching to our border wanting U.S.A. asylum because they are fearful of being in their country – yet they are proudly waving....

“....their country’s flag.  Can this be possible?  Yes, because it is all a Big Con, and the American taxpayer is paying for it!”

To which one could ask an obvious question. What is the fake deployment of U.S. military costing us, Mr. President?

--Trump has been pushing to put a loyal GOP lawmaker in charge of the House Judiciary Committee, which is expected to revive its Russia probe and launch new ones into the administration when the Democrats take control in January.

But while Trump wants Rep. Jim Jordan of Ohio, it’s not up to House Majority Leader (Minority Leader in January), Kevin McCarthy, who Jordan unsuccessfully challenged for the minority leader’s post.  McCarthy doesn’t have the authority to appoint a lawmaker to any ranking member position.

The decision is up to the Republican Steering Committee, whose members don’t like Jordan and could ignore Trump’s wishes.

McCarthy beat off Jordan’s challenge for minority leader by a 159-43 margin.

--President Trump threw his support behind a substantial rewrite of the nation’s prison and sentencing laws on Wednesday, which opened a path to enacting the most significant criminal justice overhaul in a generation.

The bipartisan compromise would invest heavily in anti-recidivism programs and lower some mandatory minimum sentences enacted as part of the get-tough-on-crime policies of the 1980s and 1990s – which have incarcerated African-American offenders at a much higher rate than white offenders; such as the “three strikes” penalty that currently results in life in prison, while shortening mandatory minimum sentences for some nonviolent drug offenses. And it would extend a reduction in the sentencing disparity between crack and powder cocaine that could affect thousands of drug offenders serving lengthy sentences for crack-cocaine offense, vs. the same crimes involving powder cocaine...another disparity hitting black Americans hard, while many white drug dealers get lighter sentences.

--Trump tweets:

On the Mueller probe....

“The inner workings of the Mueller investigation are a total mess. They have found no collusion and have gone absolutely nuts. They are screaming and shouting at people, horribly threatening them to come up with the answers they want. They are a disgrace to our Nation and don’t...

“...care how many lives they ruin. These are Angry People, including the highly conflicted Bob Mueller, who worked for Obama for 8 years. They won’t even look at all of the bad acts and crimes on the other side.  A TOTAL WITCH HUNT LIKE NO OTHER IN AMERICAN HISTORY!”

“Universities will someday study what highly conflicted (and NOT Senate approved) Bob Mueller and his gang of Democrat thugs have done to destroy people. Why is he protecting Crooked Hillary, Comey, McCabe, Lisa Page & her lover, Peter S., and all of his friends on the other side?”

“The only ‘Collusion’ is that of the Democrats with Russia and many others. Why didn’t the FBI take the Server from the DNC? They still don’t have it. Check out how biased Facebook, Google and Twitter are in favor of the Democrats. That’s the real Collusion!”

Potentially related to the Mueller probe, the Justice Department has prepared an indictment against WikiLeaks founder, Julian Assange; the indictment coming to light late Thursday through an unrelated court filing in which prosecutors inadvertently mentioned charges against him.

Assange has been stinking up the Ecuadorean Embassy in London since 2012 (they say his personal hygiene is rather atrocious) and he would have to be arrested and extradited if he were to face charges in federal court...what could be a lengthy process.

WikiLeaks published thousands of emails in 2016 from Democrats during the presidential race that were stolen by Russian intelligence officers; part of Moscow’s campaign of disruption.

But an indictment centering on the publication of information of public interest would create a precedent with profound implications for press freedoms.

Ecuador would love to rid itself of the smelly leaker.

Other topics....

“The White House is running very smoothly and the results for our Nation are obviously very good.  We are the envy of the world. But anytime I even think about making changes, the FAKE NEWS MEDIA goes crazy, always seeking to make us look as bad as possible! Very dishonest!”

--AT&T CEO Randall Stephenson fired back at the White House over its decision to suspend the press credentials of CNN correspondent Jim Acosta, saying officials had ignored established procedures in a way that appeared to violate press-freedom protections.

The administration claimed Acosta “placed his hands” on a White House intern, but it was incidental contact and brief.  [The White House presented a doctored tape making the contact look far worse than it was.]

“If the White House wants to pull someone’s press credentials, there is a process,” Stephenson said at a conference Monday. “That process must be followed, otherwise what is the criteria for pulling somebody’s press credentials?”

Stephenson, who has headed AT&T since 2007, is now a media mogul after AT&T completed its roughly $81 billion acquisition of Time Warner Inc., which includes CNN and other media outlets.

Today, a Washington, D.C. Federal District Court ordered the White House to return Acosta’s press pass.  But Judge Timothy J. Kelly said from the bench: “I want to emphasize the very limited nature of this ruling.  I have not determined that the First Amendment was violated here.”

In reaction to the court ruling, Trump played it down this afternoon, saying it wasn’t “a big deal.”

But, he said, “people have to behave,” adding his staff were “writing up rules and regulations” for the press to abide by, including sticking to the agreed number of questions.

“If they don’t listen to the rules and regulations we’ll end up back in court and will win,” the president said.  “But more importantly, we’ll just leave, and then you won’t be very happy.”

“You can’t take three questions and four questions and just stand up and not sit down,” he added.  “Decorum.  You have to practice decorum.”

On the California wildfires....

“There is no reason for these massive, deadly and costly forest fires in California except that forest management is so poor. Billions of dollars are given each year, with so many lives lost, all because of gross mismanagement of the forests.  Remedy now, or no more Fed payments!”

This was one of the more ill-timed tweets of his presidency. The death toll is now 71, with the number missing up to 1,000.

Street Bytes

--Stocks suffered sizable losses that could have been worse were it not for a rally Thursday and Friday, partly on President Trump’s fake news today that he was optimistic on a China trade deal; Wall Street peopled with idiots who stupidly eat this merde up.

On the week, though, the Dow Jones lost 2.2% to 25413, the S&P 500 declined 1.6%, and Nasdaq fell 2.2%.  Some big tech names, and retailers, didn’t help matters, as spelled out below.

--U.S. Treasury Yields

6-mo. 2.50%  2-yr. 2.80%  10-yr. 3.06%  30-yr. 3.32%

A big rally, particularly in the 2- and 10-year, on the aforementioned seeming caution on the part of Fed officials towards further rate hikes.

--One thing we know about the oil market today is that President Trump’s bite was worse than his bark when it came to sanctions on Iranian crude, given all the significant waivers to the likes of China, Japan, South Korea and India, major importers of Iran’s black gold.

So the world is awash in crude when just six weeks ago, there was supposed to be a potential supply ‘crunch.’  The United States, after all, had initially talked about there being no waivers, and now there is no deadline for ending same.

The price of crude has thus been collapsing, including a record 12-day losing streak that finally ended on Wednesday, oil having traded down to $55 on West Texas Intermediate, down from a recent high of $75 ($86 to $65 on global benchmark Brent), before finishing the week at $56.83, down a sixth consecutive week.

Emblematic of the confusion is the International Energy Agency, which a month ago was calling on producers to ramp up output to help tame prices that have since collapsed, and this week said, OPEC is pumping far more than the market needs for next year.

The Paris-based advisory body defended its decision to push producers to pump more, saying additional supplies should be “welcomed as a form of insurance rather than a threat.”

“Although the oil market appears to be more relaxed than it was a few weeks ago...such is the volatility of events that rising stocks should be welcomed.”

The IEA said Wednesday that demand for OPEC’s crude would be 1.7m barrels a day lower in 2019 than the level they are currently producing.

Saudi Arabia is pushing countries inside and outside the cartel (read Russia) to agree on a production cut when they meet in December.

The IEA said oil demand growth next year would still be “solid,” with global consumption rising by 1.4m barrels a day.

Separately, the Energy Information Administration (EIA), reported crude inventories continued to build for an eighth consecutive week, though down a bit from levels at this time last year.  The EIA reported U.S. production hit a new record, 11.7 million b/d, the highest since the EIA began tracking this in 1983.

Meanwhile, natural-gas prices have been rallying sharply, as some weather forecasts have been changing about the winter and demand for those fueling their homes with nat gas amid perhaps colder than expected temperatures.  We have also seen rising exports, so record-high levels of production haven’t exactly replenished the stores for winter.

Wednesday, the commodity was trading at its highest levels since February 2014, but then fell back sharply Thursday and finished the week at $4.27.  The last several years, production was greater than demand.

The 52-week range on the standard contract is 2.84-4.93.  Longer-term, the outlook for nat gas is still bearish, however.

--California’s largest utility, PG&E, facing liabilities of as much as $17 billion, having been blamed by state investigators for sparking 17 of last year’s blazes in the state (particularly the fires that scorched wine country), is now under the gun again for having faulty equipment that almost undoubtedly contributed to the deadliest blaze in California history, the fire that destroyed the town of Paradise, killing at least 60 there at last count.  [66 statewide, 600 missing.]

15 minutes before a fire was reported among the trees north of Sacramento, a PG&E power line went offline.

It’s true, the exact cause of what caused this fire, that then engulfed Paradise, or any of the fires devastating the state, may not be known for months, or even years, but there are serious questions now just how the company can survive financially.

PG&E said late Tuesday it had exhausted its revolving credit line, and that the liability for Paradise, should it be held responsible, would exceed its insurance coverage.

PG&E was in bankruptcy in 2004, and it probably faces the same, needing help from the state, which would most likely have to step in to protect the utility and its customers, and it will require legislative action from the session beginning in January that would contain new members just elected this month, with incoming governor Gavin Newsom.

PG&E has said current legislation, through a doctrine called “inverse condemnation,” essentially makes utilities the default wildfire insurer of the state, and that they shouldn’t be held for damages tied to their equipment if they follow all safety rules.

The company’s shares collapsed from $48 to $17.75 in just six days, before rallying today to $24.25 on the belief they would avoid bankruptcy.

--Amazon, as expected, selected Long Island City in Queens, NY, and Crystal City in Arlington, VA, just outside of Washington, for two new Eastern hubs; the two new sites eventually housing 50,000 employees, roughly half at each, with Amazon saying the projects would require $5 billion in construction and other investments.

Amazon also said it would develop a smaller site in Nashville that would focus on operations and logistics, as the 14-month competition to lure the tech giant for what everyone thought was to be a single, second headquarters, or HQ2, ended.

The issues are many.  Let’s just say, for starters, a lot of folks in Queens are not happy, fearing many will be displaced through rising rents, as well as significant stresses on an already shaky mass transit and road system.

Others see the positives in development...more restaurants, more commerce, more jobs (on top of the 25K created by Amazon).

The state and local subsidies, however, are massive with no certainty on the return.

In other words...those who lost out on these projects should not necessarily be crying in their milk...or beer, as the case may be.

Editorial / Wall Street Journal

“We rarely agree with socialist Congresswoman-elect Alexandria Ocasio-Cortez, but she’s right to call billions of dollars in taxpayer subsidies for Amazon ‘extremely concerning.’ These handouts to one of the richest companies in the history of the world, with an essentially zero cost of capital, is crony capitalism at its worst.

“Amazon staged a year-long competition to find a second headquarters beyond its Seattle home, and politicians bid for it like millionaires at a Picasso auction.  Except they were bidding with other people’s money.  The two ostensible big winners, announced Tuesday, are Long Island City in the Queens borough of New York City, and Crystal City in Virginia, across the Potomac River from Washington, D.C.

“They stand to split about $5 billion in Amazon investment, with the promise of 25,000 new jobs at an average salary of $150,000 a year. Amazon plans to occupy about four million square feet of office space in each location, with the potential to double that if necessary. The kicker is that Amazon has extracted state and local subsidies of more than $2 billion for the privilege.”

Virginia is doling out $550 million, with another $23 million in infrastructure improvements; New York is starting with subsidies of $1.525 billion, or $48,000 per job, as Amazon put it on its website.

“Apparently bodega owners in Brooklyn are supposed to be happy about subsidizing a third of the salaries of hipster techies.”

And, oh, there are other subsidies, that will total in excess of $500 million, at least, depending on how the IRS designates Amazon’s new compound, such as whether or not it gets the “opportunity zone” provision contained in last year’s Tax Cuts and Jobs Act.

“It’s hard to blame Amazon CEO Jeff Bezos for accepting what politicians give him, though we wonder if he isn’t a tad embarrassed.  The man who was able to buy the Washington Post for the equivalent of pocket money hasn’t made more political friends outside of New York and Virginia with this subsidy sweepstakes.

“The worst actors here are the politicians who pose as job creators but are essentially job buyers. Andrew Cuomo once famously said he’d change his name to Amazon Cuomo if the company located in New York, but he didn’t need to pay such a Queens ransom.  Google and other companies have created thousands of jobs in New York without similar subsidies, and Amazon might well have done the same given the city’s intellectual capital.

“Mr. Cuomo says the state will make money from Amazon despite the subsidies, but that depends on Amazon’s decisions and long-term success....Mr. Cuomo taxes New Yorkers at confiscatory levels, giving himself more money to spend. Then he turns around and takes credit for sparing powerful interests from those taxes.

“In New York, they call this a racket, and with good reason....

“Amazon’s case is aboveboard, but it still amounts to a company with a market capitalization of nearly $800 billion, getting paid to create jobs it would have created somewhere anyway.”

--Shares in Apple sank 5% on Monday, dragging down stocks overall and wiping out more than $40bn in market value, following a profit warning from some of its suppliers, which exacerbated concerns that demand for iPhones is slowing.

One of Apple’s bigger suppliers, Lumentum, which manufacturers facial recognition technology, said one of its major customers had reduced its shipments, Lumentum lowering its sales and profit outlook, its shares falling over 30% as a result.

Another Apple supplier, Japan Display, cut its full-year guidance blaming “volatile customer demand.”

--Walmart Inc. said it is heading into the holiday shopping season with lean inventories in stores and more products online to compete with Amazon.com.  The company reported same-store sales at U.S. stores rose a solid 3.4% in the latest quarter, including a 43% jump in e-commerce sales.  Walmart said same-store sales, ex-volatile gasoline sales, will grow at least 3% for the full fiscal year ending in January.

But the company’s shares, and that of other retailers, declined as investors worried that profits aren’t keeping pace with sales as retailers invest in workers’ wages and lowering prices to compete with Amazon.  Walmart, for one, did see profit margins narrow in the third quarter.

Simeon Gutman, an analyst at Morgan Stanley, said in a note to clients, “Profitless growth is now the best case” for most retailers this year.  [Wall Street Journal]

At Walmart, total quarterly revenue was $124.9 billion, an increase of 1.4% as lower international sales and currency translations slowed the overall gains.

Profit was down 2.2% from the year-earlier quarter at $1.71 billion, or 58 cents a share.

Interestingly, the company said it is gaining market share in groceries, where it remains the country’s largest seller, while with the collapse of Toys “R” Us, it is selling 30% more toys in stores and 40% more toys online this fall versus last year.

--Home Depot reported third-quarter earnings that rose sharply from a year earlier and again raised guidance as it continues to benefit from strong demand in the home-improvement business.

But the company also said it would face tougher comparisons because of last year’s hurricanes, which prompted a surge in sales related to rebuilding in impacted areas.

Same-store sales rose 4.8%, with net sales rising 5.1% to $26.3 billion, while profit rose 32% to $2.87 billion.

HD said the company logged about $282 million in hurricane-related sales in the third quarter last year, compared with $150 million this year.

But while Home Depot guided slightly higher for the full year, analysts pressed the company to discuss whether weaker housing-sector data were reasons to be less optimistic over prospects, and the CFO said the company was confident in its forecasts.

--Nordstrom saw its shares fall heavily (over 13%) after reporting earnings on Thursday, the upscale department store chain posting anemic sales growth of 0.4 percent at its full-price stores while sales at its discount chain, Nordstrom Rack, shot up 5.8 percent in the third quarter.

Nordstrom’s overall comp sales growth of 2.3 percent was shy of Wall Street’s expectations.

The retailer also apologized for overcharging some of the store’s customers who have Nordstrom credit cards, the company spending $72 million to give 4 percent of its customers a refund.  Turns out they were charged a higher interest rate in 2010 than they should have been.

--Macy’s Inc. reported healthy sales growth in its latest quarter and raised its guidance for the year, positioning the retailer for a strong holiday shopping season. Same-store sales grew 3.1% in the three months to Nov. 3, with total sales up 2.3% to $5.4 billion.  Net income was $62m, vs. $30m a year earlier.

CEO Jeff Gennette said its strategic initiatives are starting to pay off, such as its “magnet” stores that have been renovated, adding new lighting and a better assortment of merchandising and technological innovations.  It is also shrinking less-promising locations.

Customers have been giving Macy’s higher ratings vs. a year ago, according to independent research firm Global Data Retail.

But the shares fell, the stock having risen sharply this year, while Walmart’s news didn’t help.

--Cisco Systems saw its shares rise after the market close on Wednesday as the company reported better than expected revenue and earnings for the networking equipment giant.  Net income was $3.5bn, with revenue up 8 percent from a year ago to $13.1bn, with particularly strong growth in Asia-Pacific.  Sales in the application business grew 18 percent year-on-year, while security sales were up 11 percent in the same period.

Chuck Robbins, CEO and chairman, said the opportunity had “never been greater.”  “Our strategy is working and we are well positioned with our growing and differentiated portfolio across multiple domains to bring our customers a more secure, automated and simple IT infrastructure,” he said.

Cisco also forecast revenue growth of between 5 and 7 percent in its second fiscal quarter, in line with current analyst forecasts.

--Goldman Sachs shares hit a 2-year low after a report that Malaysia would seek the full refund of fees charged to 1Malaysia Development Berhad (1MDB).

As I noted last time, Goldman received about $600 million in fees for its work with 1MDB, which included bond offerings that raised $6.5 billion.

Finance Minister Lim Guan Eng said Goldman had “admitted culpability” after former GS banker Tim Leissner entered a guilty plea for his role in the scandal.

--I went off on Facebook two weeks ago based on “Frontline’s” devastating two-part documentary, and the hits, literally, just keep on coming.  This week, the New York Times had an extensive investigation titled “Delay, Deny and Deflect: How Facebook’s Leaders Fought Through Crisis,” and it’s more of the same. That title sums up the company perfectly.

“Sheryl Sandberg was seething.

“Inside Facebook’s Menlo Park, Calif., headquarters, top executives gathered in the glass-walled conference room of its founder, Mark Zuckerberg.  It was September 2017, more than a year after Facebook engineers discovered suspicious Russia-linked activity on its site, an early warning of the Kremlin campaign to disrupt the 2016 American election. Congressional and federal investigators were closing in on evidence that would implicate the company.

“But it wasn’t the looming disaster at Facebook that angered Ms. Sandberg.  It was the social network’s security chief, Alex Stamos, who had informed company board members the day before that Facebook had yet to contain the Russian infestation.  Mr. Stamos’ briefing had prompted a humiliating boardroom interrogation of Ms. Sandberg, Facebook’s chief operating officer, and her billionaire boss. She appeared to regard the admission as a betrayal.

“ ‘You threw us under the bus!’ she yelled at Mr. Stamos, according to people who were present.

“The clash that day would set off a reckoning....

“(And) as evidence accumulated that Facebook’s power could also be exploited to disrupt elections, broadcast viral propaganda and inspire deadly campaigns of hate around the globe, Mr. Zuckerberg and Ms. Sandberg stumbled.  Bent on growth, the pair ignored warning signs and then sought to conceal them from public view. At critical moments over the last three years, they were distracted by personal projects, and passed off security and policy decisions to subordinates, according to current and former executives.

“When Facebook users learned last spring that the company had compromised their privacy in its rush to expand...Facebook sough to deflect blame and mask the extent of the problem....

“While Mr. Zuckerberg has conducted a public apology tour in the last year, Ms. Sandberg has overseen an aggressive lobbying campaign to combat Facebook’s critics, shift public anger toward rival companies and ward off damaging regulation.”

Thursday, Zuckerberg and Sandberg issued statements defending their responses to Russian election meddling and talked of a new plan aimed at stifling misbehavior while maintaining a vibrant hub for online speech.

Zuckerberg said he has acted swiftly to combat the Russian challenge and supports regulation that would encourage companies to reduce the prevalence of “harmful content.”

He announced several self-regulatory measures, including rough plans to create an independent body at the end of 2019 to review appeals from users who contend their content was wrongly banned.  Users would also get a new choice on whether they want to view “borderline content” in their news feeds, he said.

“I’ve increasingly come to believe that Facebook should not make so many important decisions about free expression and safety on our own,” Zuckerberg wrote.

Zuckerberg also claimed both he and Sandberg first learned the company had hired the consulting firm, Definers Public Affairs, which then spread disinformation (such as conspiracies surrounding George Soros) when they read the Times story, Zuckerberg saying the D.C. opposition research firm “is not the kind of thing I want Facebook associated with,” he told reporters on a conference call.

“We certainly stumbled along the way, but to suggest that we weren’t interested in knowing the truth...is simply untrue,” he said.

But the Times maintains Sandberg embarked on old-fashioned lobbying rounds, wheels greased by large campaign contributions to key legislative allies.   Behind the scenes, the Times alleges, the company hired Definers Public Affairs to discredit critics – and shift negative attention to Facebook’s corporate rivals using some of the same propaganda tactics as the misinformation peddlers that Facebook says it’s fighting.

For the first time, Facebook on Thursday revealed data on bullying and harassment content, saying it had identified about 2.1 million such posts on its service between April and September, with about 15 percent found proactively before user complaints.

Facebook’s board in a statement on Thursday credited Zuckerberg and Sandberg for making considerable progress fighting misuse of the social network.

As I’ve said before, based on the fact thousands (conservatively) have died as a result of misuse of their platforms, these two should be indicted. They are truly worthy of maximum contempt.

Separately, the Wall Street Journal reported on employee morale at Facebook courtesy of an internal study there, and just over half of employees said they were optimistic about Facebook’s future, down 32 percentage points from the year earlier, according to a survey of 29,000 employees.  53% said Facebook was making the world better, down 19 points from a year ago.

Lastly, yes, I was right two weeks ago when I talked about “Frontline” far exceeding what “60 Minutes” could do with the story, as you then saw this past Sunday, the topic of social media in general getting just one segment, though Apple’s Tim Cook was at least quoted with his now standard “(Sites like Facebook, which don’t respect our privacy), are being weaponized against us with military efficiency.”

[Separately, fascinating segment on the South African gold mine, wasn’t that?]

--General Electric once had a sterling triple-A bond rating as recently as 2015, but now the same paper is trading in junk territory, as questions about massive losses and its accounting have brought serious questions about the company’s viability to the forefront. 

GE stock was $33 in July 2016, with a 52-week market high of $19.40, and now we’re at $8.00.  Officially, the credit rating has been cut in recent weeks to BBB-plus, three notches above junk, as newly installed CEO Larry Culp sells parts of the company to raise cash and slash debt, including Tuesday’s announcement GE would sell a $3.7 billion stake in Baker Hughes, a GE Co., which led to a small, albeit brief, rally in GE shares, before they fell back.

GE has so much debt, $115 billion, according to the Wall Street Journal, and data from Fitch Ratings, it would become about one-tenth of the $1.2 trillion junk-bond market should its rating slide below investment grade.  And this would have a major impact on fund managers that are holding the stuff...or then would-be buyers.

--Chinese e-commerce giant Alibaba Group Holding Ltd. cashed a record $30.7 billion in sales on Sunday during its 24-hour online retail frenzy Singles’ Day, but the event’s annual growth dropped to its slowest rate, despite the record haul, from 39 percent to 27 percent, at the low end of analysts’ estimates, and the slowest rate in the event’s 10-year history.

Still, $30bn is $30bn.  Nonetheless, competitors like JD.com have come up with their own promotions.

[Singles Day, if you didn’t know, is the antithesis to those involved on Valentine’s Day.  It has become the world’s biggest online sales event and this year’s total was more than Black Friday and Cyber Monday’s totals combined, according to Bloomberg.]

--Bitcoin dropped more than 10% on Wednesday, falling below $6,000 and reaching new lows for the year, currently $5,500 as I go to post.  The cryptocurrency has lost more than 60% of its value this year and trades well below its record high near $20,000, set late last year.

--Juul Labs announced on Tuesday that it would stop selling most of its flavored e-cigarette pods in retail stores and would discontinue its social media promotions.

The San Francisco-based company, which controls 70 percent of the e-cigarette market share in the U.S., is under Food and Drug Administration pressure, the agency moving ahead with a plan to ban sales of flavored e-cigarettes in convenience stores and gas stations.

Kevin Burns, CEO of Juul Labs, said in a statement to reporters: “Our intent was never to have youth use Juul. But intent is not enough. The numbers are what matter and the numbers tell us underage use of e-cigarettes is a problem.”

Critics say Juul no longer needs to use social media to promote its product because it already has a huge market share and now the kids are promoting to other kids.

The F.D.A. admits it was caught off-guard earlier this year by the soaring popularity of vaping among minors.

Well, Thursday, the F.D.A. somewhat reversed itself and said it would allow stores to continue selling the products, but only from closed-off areas that are inaccessible to minors.

At the same time, the agency moved to outlaw two traditional tobacco products that disproportionately harm African Americans: menthol cigarettes and flavored cigars.

The potential ban on menthol cigarettes (the process for such a thing could take at least two years) is big as this brand makes up about 35 percent of cigarette sales in the U.S.

But the plan to sequester flavored e-cigarettes in stores, rather than ban selling them, is a surprise, given what we were led to believe was going to be the F.D.A.’s final decision.

--An Edward Hopper painting sold at auction for $91.9 million, with fees, a high for the artist.  The previous high for a Hopper had been $40.9 million back in 2013 ($43.8 million in today’s dollars).

And the next day, as noted in the New York Times, “A celebrated and enigmatic painting of two men and a turquoise pool by David Hockney sold at Christies for $90.3 million with fees, shattering the auction record for a living artist and cementing a major broadening of tastes at the turbocharged top end of the market.”

Yup, I’d say this is officially a market top...the U.S. economy having also topped, I’m adding (with the second-quarter’s 4.2% GDP).

I mean this Hockney piece (which I had never seen in my life), easily surpassed the previous high for a living artist of $58.4 million, held by Jeff Koons for one of his “Balloon Dog” sculptures.

--Finally, we note the passing of Stan Lee – who as chief writer and editor of Marvel Comics helped create some of the most enduring superheroes of the 20th century, Lee the major force behind the breakout successes of the comic-book industry in the 1960s and early ‘70s, Marvel becoming a global powerhouse.  He was 95.

Stan Lee was a tireless promoter of the brand (and himself) and many believe that due to his leadership, Marvel saw exploding sales and growing legitimacy for the medium.

Lee was a central player in the creation of Spider-Man, the X-Men, the Fantastic Four, Iron Man, the Hulk, Thor and many other superheroes who, as properties of Marvel Comics, now occupy wide swaths of the pop culture landscape in movies and television.

Lee also imbued his characters with human traits, and he once told the Los Angeles Times, “I wanted the reader to feel we were all friends, that we are sharing some private fun that the outside world wasn’t aware of.”

Foreign Affairs

Israel: Defense Minister Avigdor Liberman resigned and said his Yisrael Beytenu party would be leaving the coalition, following a ceasefire with Hamas that he said “cannot be interpreted in any way other than a capitulation to terrorism.”

“This will severely harm our security in the long run.  The response that we gave to the 500 rockets shot from Gaza was not enough, to say the least. The South should come first. Our weakness is being broadcast to other fronts,” he said.

Terrorists should not feel free to riot at the border or incite against Israel, Liberman added.  “Hamas isn’t talking about coexistence and recognition of Israel,” he said.  “They don’t want to reduce unemployment in Gaza.”

Liberman’s announcement came less than 24 hours after the cabinet approved an Egyptian-brokered ceasefire with Hamas in Gaza, though there was dissent.

The record barrage of 500 rockets came in just two days, with the Israeli army responding in kind, but taking care to avoid civilian casualties in Gaza.  Gaza’s Health Ministry on Tuesday said that 14 Palestinians had died, 13 of whom were identified as combatants. [An Israeli commando was killed earlier in a botched secret Gaza operation on Sunday night that killed seven Palestinians, the Israeli forces not expecting to meet a fierce resistance.]

Then the rockets came.  The Israeli military said it replied by attacking 160 Hamas and Islamic Jihad targets in the Strip.  Israel’s Iron Dome missile defense system intercepted more than 100 of the rockets.

[As an aside, I can’t help but add that we now know Iron Dome is far from perfect, yet the Hamas barrage is a good clue that if Hezbollah ever fired 500 or 1,000 of its far-superior rockets, the devastation could be severe.  Let alone 10,000 of them, which it has the capability to do.]

Following Liberman’s resignation, Israeli Prime Minister Benjamin Netanyahu appeared to be left with no choice but to go to an election, as his Finance and Interior ministers both said a day after that it was the preferable outcome.

Saudi Arabia / Turkey: Saudi Arabia’s public prosecutor said on Thursday that he was requesting the death penalty for five people suspected of involvement in the killing of the Saudi dissident Jamal Khashoggi at the country’s consulate in Istanbul.

The prosecutor, speaking to reporters in Riyadh, said the 15-man team sent to confront Khashoggi had orders to return him to the kingdom, but instead made a decision on the spot to kill him after he resisted.

It was the kingdom’s latest version of the Oct. 2 murder of Khashoggi, though the statement sought to reinforce previous Saudi claims that the team in Riyadh had acted without the consent of the kingdom’s top leadership, meaning King Salman and his son Crown Prince Mohammed bin Salman (MBS), which is a total crock...everyone knows that.

Except seemingly the Trump administration.  Many current and former officials from Turkey, the United States and elsewhere have told the international press (New York Times, Wall Street Journal, Washington Post, Times of London...to name a few) that such a complex operation could not have been carried out without the knowledge of MBS.

And yet, even though Turkish officials have supplied all the videos and audio tapes of the hit, and events leading up to it, a Saudi spokesman claimed he could not identify any of the suspects because the investigation is ongoing, yet you have this farcical statement that five will receive the death penalty.

[One of the audiotapes collected by Turkish intelligence apparently has a member of the kill team instructing a superior over the phone to “tell your boss,” believed to be MBS, that the operatives had carried out their mission.]

Reminder...Khashoggi’s body has not been found...or pieces of it.  Turkish officials suspect it was dissolved in acid.  Thursday, the Saudi spokesman repeated his government’s claim it had been given to a Turkish collaborator who then disposed of it.

Thursday, Turkish Foreign Minister Mevlut Cavusoglu told reporters, “I don’t find (the kingdom’s latest comments) satisfying. They say this person was killed because he resisted, whereas this murder was premeditated.”

“Again, they say he was dismembered...but this isn’t a spontaneous thing. The necessary equipment and people were previously brought in to kill and later dismember him.”

President Recep Tayyip Erdogan has said the killing was ordered at the “highest levels” of the Saudi government.

Cavusoglu reiterated Turkey’s call for Riyadh to disclose the location of Khashoggi’s remains.

“Where is the body of the murdered Khashoggi? Where was it thrown, where was it burned?” he said.  Cavusoglu did not mention if Turkey now had evidence it was burned, versus dissolved in acid.

Turkey wants the suspects tried in Turkey, not Saudi Arabia.

But, again, President Donald Trump does not want to hold Crown Prince Mohammed bin Salman responsible for Khashoggi’s death.  Back on Oct. 17, Trump said, “I hope that the king and the crown prince didn’t know about it.”  Trump still hasn’t implicated MBS.

The Treasury Department on Thursday announced sanctions against 17 Saudis, among them MBS’s aide, Saud al-Qahtani, though it isn’t clear if this means the U.S. has concluded that he ordered or approved the killing.  The Treasury Department’s press release just says the 17 men were being sanctioned “for having a role in the killing of Jamal Khashoggi.” But as the Washington Post’s Aaron Blake points out, “Having a role in” doesn’t exactly indicate whether any of them individually plotted or carried out his killing, and Treasury Secretary Steven Mnuchin said, as part of the release, the 17 “targeted and brutally killed” Khashoggi, but the statement doesn’t differentiate between who targeted him and who killed him.

What the statement does is fit the Saudi version of events; as in Qahtani planned a repatriation operation that ended up with Khashoggi’s death, without his approval.

MBS thus remains insulated.

But tonight, the Washington Post is reporting the CIA has concluded that Crown Prince Mohammed bin Salman did order the assassination.  What will the Trump administration do now?

Separately, NBC News is reporting that the administration has been looking into the possibility of extraditing Turkish cleric Fethullah Gulen, who has been in exile in Pennsylvania’s Pocono Mountains for two decades and is accused by the Turkish government of plotting a failed 2016 coup.  The reasoning, per NBC, is that the U.S. government wants to “placate” President Erdogan. But this defies logic.  What does placating Erdogan have to do with a killing committed by the Saudis?

Well, it would be to cover for the kingdom, but the CIA assessment complicates this strategy.

Editorial / Washington Post

“The new account of Jamal Khashoggi’s death offered by Saudi Arabia on Thursday was shocking in its audacity....While reporting that 11 suspects had been indicted and that the death penalty would be sought for five of them, a Riyadh public prosecutor excused not just Crown Prince Mohammed bin Salman – the chief suspect in the murder – but also two of his top aides, who the prosecutor said ordered or advised the capture operation but did not approve Mr. Khashoggi’s killing.

“By offering up this incredible account, the Saudi regime is baldly defying all those, including leading members of Congress, who called for full disclosure and accountability.  Yet the Trump administration appears ready to accept its stonewalling....

“This all-too-transparent tissue of lies only underlines the need for a genuinely independent international investigation led by the United Nations, as Turkey’s foreign minister called for this week....

“Congress should not allow this travesty to continue.  It should suspend all military sales and cooperation with Saudi Arabia until a credible international investigation of the Khashoggi killing is completed. The Saudi cover story is just one more instance of Mohammed bin Salman’s arrogant and reckless behavior. The true murderers of Jamal Khashoggi must be named and punished.”

Yemen: Amid growing international pressure on Saudi Arabia and its allies to make peace in Yemen, the Saudi-led military coalition fighting Iran-backed rebels in Yemen has suspended an assault on the vital port city of Hodeida, which has been under way since June.  Fighting has been subsiding in recent days to give space for aid workers and wounded civilians to evacuate.

After 3 ½ years of fighting, with an estimated 14 million people on the brink of famine, the parties to the conflict must call a cease-fire and enter peace talks.

The coalition aims to unseat the Iranian-backed Houthis from the capital, San’a, and to reinstall the internationally backed government of President Abed Rabbo Mansour Hadi, who was forced to flee after the Houthis stormed San’a in 2014.

The last effort at peace talks, set for September, never started.  Secretary of State Mike Pompeo called for a cease-fire on Oct. 30 and new talks in November.

As for Hodeida itself, where the lion’s share of aid supplies for the entire country flows through, earlier this week the Houthis mined the area around the city to prevent a final assault by the Saudi coalition.  Before the cease-fire, at least 150 people were killed in clashes on Monday.

Syria: The Russian military said today that nearly 270,000 Syrian refugees have returned home to their country in recent months, including 6,000 in the last week alone.

While there is no way to verify this claim, this isn’t exactly a good thing.  Moscow and Damascus are encouraging refuges to return, but Western governments have argued that it’s too early. What the hell are they returning to?  The infrastructure in virtually every major city is a shambles, and there is a very real fear that refugees would be facing persecution upon return to the government-controlled areas in absence of a comprehensive political agreement.

Iran: The regime executed two currency traders for allegedly hoarding gold coins and attempting to manipulate prices at a time when the country’s economy is reeling from re-imposed U.S. sanctions. The two were accused of “spreading corruption on Earth” and making “illegal deals” that destabilized currency markets.

Amnesty International said dozens of other people have been imprisoned on similar charges.

Somalia: There are terror attacks every day in the Middle East but some are so horrific, a telling of the history of the region requires I include it.  Such was the case last weekend in Mogadishu, when Islamic extremists, Shabab, exploded not one, but four car bombs outside a hotel in the capital, killing at least 53, with over a hundred suffering “horrific wounds,” the hospitals having trouble treating everyone.  So sad.  [No doubt the death toll rose far higher...just haven’t seen one.]

Jordan: If you’ve been to the ancient site of Petra (think “Indiana Jones”) as I have, there was flash-flooding there the other day that rose to 13 feet, state TV reported, with 4,000 tourists fleeing.  I didn’t see any casualty figure, but nationwide scores were killed in Jordan in flooding last weekend.

[At Petra, you walk through a very narrow canyon for quite a long spell until you get to the main temple, which is truly spectacular, but if you were caught in the canyon during such an event, it would be bye-bye.]

North Korea: Kim Jong Un has supervised the successful test of a new “high-tech” tactical weapon, state-run media reported on Friday. The KCNA news agency gave no details on the type of weapon, saying only that it had been developed over a long period of time.

The news agency added that Mr. Kim expressed “great satisfaction” over the “state-of-the-art” weapon that “builds impregnable defenses of our country and strengthens the fighting power of our people’s army.”

South Korea says it is attempting to analyze what the weapon may be, but the defense ministry points out Kim and his Orcs never committed to halt weapons development or shut down its missile bases.  They only carried out a fake demolition of a nuclear testing site.

South Korean officials also said this was Kim’s first known inspection of a testing site since he was present at the launch of the Hwasong-15 intercontinental missile in November 2017.

This is the first official report of a missile test since last year, even as at June’s Singapore summit, President Trump and Kim agreed the Korean peninsula should denuclearize, though no detailed plan, including a timeline, has ever been released by Pyongyang.

The North Korean report today, however, comes just days after a report based on satellite imagery identified the extent of the North’s complex network of missile bases around the country.

The U.S. State Department lamely put out a spokesman who said the U.S. “remained confident that the promises made by President Trump and Chairman Kim will be fulfilled.”

Meanwhile, the White House maintains a second summit between Trump and Kim will take place early next year.  Vice President Mike Pence said on Thursday that Trump will push for a concrete plan outlining Pyongyang’s moves to end its arms programs.

In an interview with NBC News, though, on the sideline of an Asia-Pacific summit in Singapore, Pence said the United States would not require Pyongyang to provide a complete list of nuclear weapons and locations before the second summit but that the meeting must produce a concrete plan.

“I think it will be absolutely imperative in this next summit that we come away with a plan for identifying all of the weapons in question, identifying all the development sites, allowing for inspections of the sites and the plan for dismantling nuclear weapons,” Pence said.

But then the next day, North Korea made the announcement of the new weapons program.

On Monday, a U.S. think tank said it had identified at least 13 of an estimated 20 active, undeclared missile bases inside North Korea, underscoring the challenge for American negotiators hoping to persuade Kim to give up his weapons programs.

President Trump tweeted: “The story in the New York Times concerning North Korea developing missile bases is inaccurate. We fully know about the sites being discussed, nothing new – and nothing happening out of the normal.  Just more Fake News.  I will be the first to let you know if things go bad!”

Back to Pence, he was asked if China has been doing enough to maintain sanctions pressure on the North and he said Beijing has done more than they had ever done before and Trump was grateful for that. 

No they aren’t...not after Trump declared a trade war with China.

Editorial / Washington Post

“ ‘We’re in no rush,’ President Trump declared last week about efforts to slow or reverse North Korea’s nuclear weapons and ballistic missile programs. Well, North Korea is also in no rush. After Mr. Trump’s showy June summit with North Korean leader Kim Jong Un in Singapore, Pyongyang’s nuclear materials production, missile operating sites and brutal concentration camps are all still grinding along.

“It is true that North Korea has not tested a missile or an atomic bomb lately. But nor has it been idle.  In a report published on Monday, Beyond Parallel, a project of the Center for Strategic and International Studies, documented with satellite imagery 13 North Korean missile operating bases, and perhaps as many as 20, that have been undeclared by the government. The disclosure is another reminder that North Korea has rebuffed the U.S. demand for a complete inventory of its nuclear weapons programs, while insisting the United States make a full declaration of the end of the 1950-1953 Korean War....

“Since the summit, Mr. Trump has swooned in unseemly fashion that ‘we fell in love’ when Mr. Kim wrote to him: ‘No, really – he wrote me beautiful letters, and they’re great letters.’  In fact, while Mr. Kim has focused on a rapprochement with President Moon Jae-in of South Korea, the Trump approach to slowing North Korea’s nuclear weapons systems appears to be at an impasse.  A meeting scheduled for Nov. 8 between North Korean officials and Secretary of State Mike Pompeo fell apart.  Mr. Kim, like his father, is well versed in the tools of deception, delay, threat and extortion.  He is proving it once again, to the detriment of Mr. Trump – and global security....

“A few years ago, the world was shocked to discover North Korea had one, then six, nuclear weapons. The number is now probably in the dozens.  Tens of thousands of people are suffering in brutal prison camps. But who’s in a rush?”

China: Addressing the above-noted ASEAN (Association of Southeast Asian Nations) summit in Singapore, Vice President Pence delivered a warning to Beijing over its rising strength in the Indo-Pacific, saying aggression should not be tolerated and offering reassurances of Washington’s commitment to the region.

“We all agree that empire and aggression has no place in the Indo-Pacific,” Pence said.  “Let me be clear, though: our vision for the Indo-Pacific excludes no nation.  It only requires that nations treat their neighbors with respect, and respect the sovereignty of our nations and international rules and order.”

Pence added the U.S. remained committed to upholding the freedom of seas and skies “where we stand shoulder-to-shoulder with you on freedom of navigation.”

Pence didn’t spell out China by name but it was clear what the intent of the remarks was.

Previously, the vice president said Washington was committed to maintaining openness in the waterway and would not be intimidated by China.

Separately, in a 525-page report by the U.S.-China Economic and Security Review Commission (USCC), which advises Congress, it was spelled out that China’s global rise has “undoubtedly put at risk the national security and economic interests of the United States, its allies, and its partners.”

The USCC called on lawmakers to enact a broad range of measures to better monitor and counter China’s global expansion strategies, trading practices, and influence campaigns abroad.

The commission contends that President Xi is seeking to fundamentally change the global order to facilitate China’s ambitions and warns U.S. policymakers that the country is on track to reverse the strategic philosophy once espoused by the reform-minded leader Deng Xiaoping that China should “hide [its] capabilities, bide [its] time, and never take the lead” in international affairs.

The USCC also issued a specific warning about Chinese dominance of networking-equipment manufacturing and the security of U.S. fifth generation, or 5G, wireless infrastructure. The panel cited Chinese telecom giants Huawei and ZTE in particular.  “In addition, China’s position as the world’s largest manufacturer of internet-connected household devices creates ‘numerous points of vulnerability for intelligence collection, cyberattacks, industrial control, or censorship,’ said the panel.”  [Kate O’Keeffe / Wall Street Journal]

The report’s hawkish tone is finding increasing resonance within mainstream U.S. politics no doubt.

David Ignatius / Washington Post

“While the bombastic U.S.-China ‘trade war’ has been getting the headlines, U.S. intelligence and law enforcement agencies have been waging a quieter battle to combat Chinese theft of trade secrets from American companies – a practice so widespread that even boosters of trade with China regard it as egregious.

“The Trump administration’s much-ballyhooed campaign of tariffs will eventually produce some version of a truce – economists say any other result would amount to a mutual suicide pact. But the battle against Beijing’s economic espionage is still accelerating, and it may prove more important over time in leveling the playing field between the two countries.

“To combat Chinese spying and hacking, U.S. intelligence agencies are increasingly sharing with the Justice Department revelatory information about Chinese operations. That has led to a string of recent indictments and, in one case, the arrest abroad of an alleged Chinese spy and his extradition to the United States to face trial.

“The indictments don’t just charge violations of law; they also expose details of Chinese spycraft.  And there’s a hidden threat: The Chinese must consider whether the United States has blown the covers of not just the people and organizations named in the criminal charges but also others with whom they came in contact.

“This law enforcement approach to counterespionage requires public disclosure of sensitive information, something that intelligence agencies often resist.  But it seems to be an emerging U.S. strategy. The Justice Department has pursued a similar open assault on Russian cyberespionage, with three recent indictments naming a score of Russian operatives and disclosing their hacking techniques, malware tools and planned targets.

“China, like Russia, is displaying an increasingly freewheeling and entrepreneurial approach to espionage. Several indictments unsealed since September reveal how the Ministry of State Security, the Chinese spy service, has operated through its regional bureaus...to obtain precious U.S. technology....

“ ‘The concerted effort to steal, rather than simply purchase, commercially available products should offend every company that invests talent, energy and shareholder money into the development of products,’ said Adam Braverman, the U.S. attorney in San Diego who helped prosecute the cases....

“This month, the Justice Department also unsealed a September indictment that accused a Chinese company and its Taiwan partner, both funded by the Chinese government, of trying to steal eight trade secrets for a memory-chip technology known as DRAM from Micron Technology Inc.... The indictment notes that the Chinese government had identified DRAM as ‘a national economic priority’ that Beijing was determined to obtain....

“What gives these indictments extra bite is that President Xi Jinping had promised back in 2015 that China wouldn’t conduct economic cyberespionage anymore. That pledge followed an indictment the previous year that revealed an elaborate plot by Chinese military hackers to steal U.S. commercial secrets.

“But in the espionage world, promises not to spy are dubious at best.  Over the past three years, the Justice Department has charged former CIA officer Jerry Chun Shing Lee and five other Americans with stealing secrets on behalf of Beijing.

“As a rising power, China is also a rising threat in the intelligence sphere.  The U.S. counterattack, in part, seems to be a public revelation of just how and why Beijing is stealing America’s secrets – overt payback for covert espionage.”

Lastly, regarding Taiwan, local government elections are slated for Nov. 24, but on the ballot is also a referendum over whether the self-ruled island should compete in the next Summer Olympics under the name “Taiwan,” rather than “Chinese Taipei,” a title in use since 1981.

Yes, should the people decide to change to Taiwan, look out.  Beijing will be mighty pissed.

The island has used “Taiwan” or “Formosa” in Olympics back in the 1950s and 60s, and supporters of the measure say it is simply aimed at reverting to a former title.

430,000 signed the petition to hold the referendum – greatly over the 281,000 required.

While support is mostly from the pro-independence camp, politically neutral bigwigs such as Chi Cheng, Taiwan’s first female Olympic medalist, co-led the campaign.

Beijing has warned that it would not allow the name change, and the defense ministry sees the vote as a prelude for the island to declare independence.

Defense Minister Wei Fenghe said at a forum in Beijing last month: “If anyone wants to split Taiwan from China, the Chinese forces would take necessary actions at all cost to retake it.”  [South China Morning Post]

Should the referendum be approved, parliament still has to approve the resulting ‘bill,’ and Taiwan would then have to negotiate with the International Olympic Committee, which most believe would go nowhere.

Random Musings

--Presidential tracking polls....

Gallup: 38% approval of President Trump’s performance, 56% disapproval (Nov. 11); 91% Republicans, 34% Independents.
Rasmussen: 49% approval, 50% disapproval (Nov. 16)

--As noted above, House Majority Leader Kevin McCarthy (R., Calif.) was elected minority leader Wednesday.  And now it’s likely to be Speaker Nancy Pelosi (D., Calif.), Democrats voting in two weeks.

Gerald F. Seib / Wall Street Journal

“Both Democrats and Republicans like to talk about building a ‘big tent’ party with broad appeal across the electorate.

“In 2018, the Democrats actually had one.

“That finding emerges from a deeper analysis of last week’s midterm election results. It has huge implications for the 2020 presidential race – if Democrats can prevent that tent from being torn apart from within over the next two years.

“Most of the attention since last Tuesday’s election has focused, understandably, on the simple numbers of seats won.  Democrats had a strong day, picking up a net of 32 House seats to take control there, with 10 still to be decided; seven governors races, with two to be decided; and more than 330 state legislative seats, a good number but short of the norm in such a midterm.

“They ended up turning more House seats than they did the last time they won back control of the House, in 2006, though they didn’t match the 63 seats Republicans turned in 2010.

“Republicans, of course, countered by keeping and expanding slightly their control of the Senate, which is huge when it comes to exercising power and protecting President Donald Trump and his achievements of the last two years.

“What’s more striking, though, is the breadth of the coalition that drove Democrats.  Crucially, the party avoided being torn between the traditional Democratic moderates and a newly assertive progressive wing.

“Progressives provided a lot of energy, and some of the party’s new stars, but moderates won a lot of races. Third Way, an organization that promotes centrist Democrats, says moderates were responsible for flipping 23 of the Democrats’ new House seats....

“Voters who cast ballots for Democrats cut a wide ideological swath. AP VoteCast, a pre-election and Election Day survey of some 90,000 people who said they voted in the midterms or intended to, found that 51% of Democratic voters identified themselves as liberal, 41% as moderates and 0% as conservative.

“Democrats also won comfortably among independents, the ultimate swing voters who tend to cluster in the ideological middle.  As you’d expect of today’s Democratic Party, its voters were racially diverse: about two-thirds white, a third nonwhite.

“By contrast, Republican voters were more heavily congregated on the right side of the spectrum; 67% identified themselves as conservatives, and just 27% as moderate. And they were predominantly white.

“As that suggests, President Trump has strengthened his grip on his base and his party, but hasn’t expanded them very much.

“The breadth of the Democratic coalition helps explain why Democrats did so much better this year in the Midwest, where President Trump won his most important states in 2016.

“Then, Mr. Trump stunned the Democrats by carrying the industrial states of Pennsylvania, Wisconsin and Michigan. This year, Democrats won 55%, 53% and 52% of the House votes in those three, respectively, and won governor’s races in all three. That suggests Democrats won back some moderate Midwesterners who moved to Mr. Trump in 2016.”

But as Gerald Seib points out, Democrats, to be successful in 2020, need to avoid a civil war between their insurgent progressive wing and the moderates who performed well last week.

“The danger is that by moving hard to the left in 2020, Democrats could lose their grip on those centrist and moderate voters who came their way this year.  Democrats are renting those voters for now; as they learned in 2016, they don’t own them.”

--Back in 2008, California voters authorized $9.95 billion in bonds as seed money for the California High-Speed Rail Authority to build a bullet-train from San Francisco to Los Angeles.

Today, the estimated cost is up to $88 billion, at least four times more than the state and federal funding available to finish it, as an editorial in the San Diego Union-Tribune put it the other day, “The single most likely outcome is a half-finished link in the Central Valley with little utility to anyone.”

--I’ve seen more than a few stories and op-eds of folks abandoning the Catholic Church.  I can’t see doing that myself, I’m just not going to Mass.  But as an interested observer, I can’t say I was pleased with the development this week at the U.S. Conference of Catholic Bishops.

Elizabeth Bruenig / Washington Post

“In ancient Rome, the gates of hell were always open – a wise rendering of the inferno.  ‘The gates of hell are open night and day; smooth the descent, and easy is the way,’ the poet Virgil’s oracle tells his hero Aeneas, ‘but to return, and view the cheerful skies – in this the task and mighty labor lies.’  For most, the effort of escape was too extreme – though an exemplary soul, such as Aeneas, could sometimes make it back to the land of the living if they possessed appropriate courage and willpower.

“How little the Eternal City changes.  Contemporary Rome now finds itself embroiled in a hell much of its own making, and its gates are wide-open – if anyone has the moral fortitude to simply walk out.

“The events at this week’s meeting of the U.S. Conference of Catholic Bishops in Baltimore haven’t given much cause for confidence. The main subject of the convention was set to be the sex abuse crisis, which has roiled the church anew since this summer’s revelations concerning Pennsylvania and disgraced Cardinal Theodore McCarrick. The bishops had planned to vote on ‘concrete measures to respond to the abuse crisis,’ but Cardinal Daniel DiNardo, the conference president, was informed the night before the meeting that the Vatican had decreed there would be no such vote.

“Instead, the Vatican directed American bishops to await the worldwide meeting of church leaders set for February in Rome. Why? Some have speculated it saw ‘canonical problems’ in the text; others have suggested that the proposals themselves were somehow deficient.  If the trouble with the bishops’ resolutions were obvious and objective, they certainly didn’t seem so to several U.S. bishops, who continued agitating for the reforms even after the ruling was handed down.  Maybe they realized that the effect of the sudden intervention was to instantaneously deflate a moment that some lay Catholics had dared look forward to.  ‘Don’t stagnate [the reform process], or slow it down,’ Francesco Cesareo, chairman of the National Review Board monitoring bishops’ progress on the sex abuse crisis, warned, adding that, if the process were to be dragged out and delayed, ‘I fear for the future of our church.’

“Fear is as rational a response as any at this point. While some American bishops seethed over the abrupt defanging of their meeting, others defended the actions of their colleagues over the past decades and bristled at the notion of creating so much as a third-party reporting mechanism for bishops suspected of abuse. Still, at least the Americans were addressing the problem itself, rightly or wrongly.  The Vatican has remained airily removed since the eruption of disturbing revelations over the summer, with Rome’s ambassador to the United States, Archbishop Christophe Pierre, taking time after DiNardo’s announcement to warn bishops against ‘a temptation on the part of some to relinquish responsibility for reform to others from ourselves, as if we were no longer capable of reforming or trusting ourselves.’

“With Rome at odds with U.S. bishops over whether and when to address the crisis concretely, strong trust within the institution was already strained. But what has been inflicted on the trust of ordinary Catholics by this bizarre episode is worse.”

And as Ms. Bruenig summed it up:

“ ‘Long is the way and hard, that out of Hell leads up to light,’ John Milton wrote in ‘Paradise Lost.’  If some of the lay faithful don’t make it through as the scandal grinds on, it will have been their shepherds who abandoned them along the way.”

--The FBI reported hate crimes rose 17% in 2017, with the number of incidents targeting Jews up 37%, to 938.  Anti-Muslim crimes fell by 11% in 2017, to 273.  Hate crimes targeting black people increased by 16% and were the most for any category of race, ethnic group, religion or sexual orientation.

The rise in total hate crimes, to 7,175, is the biggest since 2001, when incidents rose to 9,730.

The FBI defines hate crimes as a “criminal offense against a person or property motivated in whole or in part by an offender’s bias against a race, religion, disability, sexual orientation, ethnicity, gender or gender identity.”

Mars is looking better and better.

--I alluded to potential changes in the weather forecast for this winter in parts of the country.  So Mark R. passed along a piece from Dr. Tony Phillips who wrote six weeks ago, “The sun is entering one of the deepest Solar Minima of the Space Age.”

As in sunspots have been absent for most of 2018 and Earth’s upper atmosphere is responding, says Phillips, editor of spaceweather.com [Which Mark R. follows closely.]

Martin Mlynczak of NASA’s Langley Research Center said, “If current trends continue, it could soon set a Space Age record for cold. We’re not there quite yet, but it could happen in a matter of months.”

You’ve been warned.

I would just make a request of the Weather Gods that I’ll give you a super cold winter, as long as come early April, we’re back to normal and “The Masters...a tradition unlike any other...on CBS.”  [And those fake birds chirping in the background to get us in the spirit.]

--It was amazing in the New York metro area as what was forecast to be a minimal snowstorm turned into far more on Thursday, just as the afternoon commute was about to crank up, and clearly state and local governments simply weren’t prepared.  It ended up being the worst commute this region has experienced in a long time, the Port Authority Bus Terminal shutting down, for example, because of overcrowding, kids stranded in schools because the buses couldn’t move on the roads (or the drivers never made it to the depots).  One woman was killed in neighboring New Providence when her car, stuck on the tracks in the snow and ice, was then struck by a train.

In a lot of cases, the sanitation departments responsible for clearing the roads were prepared to spread some salt, rather than actually have to plow...what a fiasco.  Good thing for some politicians this came after the election.

The two big figures most culpable, New York City Mayor Bill de Blasio, and New Jersey Gov. Phil Murphy, both Democrats, refused to apologize and blamed weather forecasters, who were, to be fair, predicting snow for days, just not the amount we received.

I loved how former New Jersey Gov. Chris Christie, who now has to drive himself rather than be chauffeured around, complained how a normal 25-minute drive took him 5 hours and 40 minutes!  He had a field day going off on Murphy.

Understand that Christie was notorious for telling New Jerseyans, putting us in full panic mode, “Get off the f’n roads, you freakin’ morons!”  Christie was known for putting down so much salt, before the snow even began, that it polluted the waterways.  But when storms hit, people largely heeded his advice and we were snug and safe at home.

Granted, sometimes he had us panicking and the storm didn’t materialize as forecast, but as he’d say after, “What the [blank] do you care?”  Or something to that effect.

--Finally, Paul Dawson and Brian Sheldon are authors of a new book, “Did You Just Eat That?: Two Scientists Explore Double-Dipping, the Five-Second Rule and Other Food Myths in the Lab,” published by W.W. Norton.

Over the weekend they had an essay in the Wall Street Journal, adapted from the book, and among other things note some of the following:

“One in six Americans...comes down with an illness from food-borne microorganisms each year, according to the Centers for Disease Control.

“So how do we avoid the harmful bacteria? There are some basic rules to observe: Wash your hands frequently when touching surfaces and before handling or eating food. Cook food to proper temperatures, and store leftovers properly.”

You know that, but the two authors are scientists who’ve “also spent some years exploding myths.”

To wit: 

On the five-second rule: “Many people believe that a piece of food dropped on the floor is safe to eat if you pick it up quickly enough....

“We tested the five-second rule in our laboratory at Clemson University by dropping bologna and bread on surfaces contaminated with Salmonella.  We recovered between 100,000 and 10,000,000 bacteria after five seconds, depending on the surface, as we reported in 2006 in the Journal of Applied Biology.  Admittedly, waiting 60 seconds is worse – about 10 times worse, in our research – but five seconds is bad enough.

“Ice cubes and lemon juice: Many of us think that the ice in our drinks is safe and that the acid from a lemon slice dropped in a beverage reduces any contaminating microorganisms.  But both can carry potentially harmful pathogens themselves.  A 2007 study...found that 70% of lemon slices from the rims of glasses in restaurants produced microbial growth; 25 different microbial species were found in the samples.

“In our own study published last year in the Journal of Food Research, we found that 60% and 80% of the E. coli bacteria that we introduced onto hands and scoops, respectively, were transferred to a drink via ice cubes. For lemons, an average of 6,000 E. coli were transferred to wet lemons touched by our participants’ hands, and then they multiplied – a six-fold increase over 24 hours at room temperature.

“Restaurant hazards: Food and drink aren’t the only risks to your health when you’re eating out.  A study published in the Journal of Environmental Health in 2013 by U.S. and South Korean researchers found that Salmonella and E. coli can survive for up to 72 hours on laminated plastic menus (on paper menus the strains lasted only six hours).  We checked this ourselves by inoculating plastic menus with a fluorescent E. coli strain and then asking participants to handle the menus for one minute, as if they were ordering food. About 11% of the bacterial cells, or an average of 3 million, were transferred to hands.  Knowing this, you might want to keep a bottle of hand sanitizer ready for the next time you dine out – but then again, see the next point.

“Hand sanitizers...Unfortunately, they are not as effective as a thorough hand-washing regimen....To get U.S. Food & Drug Administration approval for the antimicrobial agents used in hand sanitizers, manufacturers test them against only a select number of bacteria, not including E. coli and Salmonella.”

And then of course you all know that hand dryers are flat-out gross....all they do is blow bacteria around. But this I hadn’t thought about.  “Bioaerosols are generated in restrooms with every flush of the toilet, and then hand dryers circulate the water droplets around the room.”

I’m never using a restroom on the Garden State Parkway or N.J. Turnpike again.

Granted, I haven’t thought about what I’d do instead, without getting arrested.

Maybe buy the authors’ book and keep it in the car, the proper page marked so when the cops question you, you’ve got it handy.

Basically, going back to eating out, you need to bring paper towels, wipes to clean the menus, and only drink bottled beer.  Cans could have rat feces on them.  And no limes or lemons in a bottle of Corona.

One more....if hand dryers are as bad as they are, imagine what the hated leaf blowers do?  #Hantavirus

---

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

God bless America.

---

Gold $1222
Oil $56.83

Returns for the week 11/12-11/16

Dow Jones  -2.2%  [25413]
S&P 500  -1.6%  [2736]
S&P MidCap  -0.9%
Russell 2000  -1.4%
Nasdaq  -2.2%  [7247]

Returns for the period 1/1/18-11/16/18

Dow Jones  +2.8%
S&P 500  +2.3%
S&P MidCap  -1.9%
Russell 2000  -0.5%
Nasdaq  +5.0%

Bulls 42.9
Bears 19.0

Happy Thanksgiving!  When you gather with your families, toast the first responders in California...and our troops around the world. 

Brian Trumbore