Week in Review

---

Week in Review

01/04/2020

For the week 12/30-1/4

[Posted 9:30 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 1,081

Happy New Year! Bring on 2020....then again....

Thursday night’s attack in Baghdad changed what I was planning on opening with tonight as part of a look at 2020, so I may address some of my ideas next time.  For now, I was struck by something esteemed Middle East expert Aaron David Miller said on CNN early in the week, after the United States launched retaliatory air strikes against an Iranian-backed militia in Iraq.

Talking of Donald Trump, Miller said the president “was a modern-day Gulliver, in a region he doesn’t understand, tied up by smaller nations.”

Never was my adage ‘wait 24 hours’ more important than it is today.  None of us know how Iran is going to react, but we know a reaction, probably broad-based, is coming.

I do feel Iran will go after some soft targets, perhaps in South America (think Argentina and past Iranian actions there), and a western airline could be shot down, but that’s as far as I want to go.

What we do know is that 2020 is already setting up to be hell.  We await Kim Jong Un’s next step, a devastating cyberattack (and/or blinding of one or more of our key satellites) from one of numerous potential players, increasing tensions between the United States and China, regardless of the little trade deal we’re about to sign, mischief from Putin (and deployment of his hypersonic weapon), and a chaotic presidential campaign here that will divide the nation even more than ever.

But for now, let’s start at the beginning and a chronology of the week in Iraq...and Washington.

Last Friday night, more than 30 rockets hit an Iraqi military base near Kirkuk, the 11th attack of its kind in two months, killing an American contractor and injuring four American soldiers.  It was an Iranian-backed group, Kataib Hezbollah, that is nominally part of Iraq’s security forces, that carried it out.

The U.S. responded to the attacks by striking at five Kataib Hezbollah targets, killing a reported 25 militants and injuring scores.

Last June President Trump went against his own advisers when he called off a retaliatory strike on Iran at the last minute after it had shot down a U.S. drone.  Then in September, Trump also declined to act after Iran’s brazen attacks on Saudi oil facilities.

Editorial / Wall Street Journal...Dec. 29

“It’s about time. Finally, after multiple attacks on U.S. bases and allies, President Trump approved a military response against Iranian-allied militias in Iraq and Syria on the weekend.  Mr. Trump has to be prepared to do more if the Iranians decide to escalate.”

Iraqi Prime Minister Adel Abdul Mahdi condemned the U.S. air strikes on bases of the Iranian-backed Iraqi militia.

“The prime minister described the American attack on the Iraqi armed forces as an unacceptable vicious assault that will have dangerous consequences,” his office said.

The U.S. embassy in Baghdad was then the scene of a violent protest, the embassy breached in part, some outlying rooms torched.  Iraqi security forces did zero to stop it.

“Iran will be held fully responsible for lives lost, or damage incurred, at any of our facilities.  They will pay a very BIG PRICE!  This not a Warning, it is a Threat.  Happy New Year!” President Trump tweeted.

100 Marines were sent in to reinforce security at the facility.

Iranian Supreme Leader Ayatollah Ali Khamenei tweeted: “If Iran decides to confront a country, we will do that openly...If anyone threatens our nation’s interests we will fight back...without any hesitation.”

The Iranian-backed demonstrators withdrew from the embassy on Wednesday.

Thursday, U.S. Defense Secretary Mark Esper said there were indications Iran or forces it backs may be planning additional attacks, warning that the “game has changed” and it was possible the United States might have to take preemptive action to protect American lives.

Esper told reporters, “If we get word of attacks or some type of indication, we will take preemptive action...to protect American forces to protect American lives.”

Thursday night, the United States then killed Iranian Major-General Qassem Soleimani, head of the elite Quds Force and architect of Iran’s spreading military influence in the Middle East, in an air strike at Baghdad’s international airport.  The top Iraqi militia commander Abu Mahdi al-Muhandis, an adviser to Soleimani, was also killed in the attack that was authorized by President Trump.

Soleimani’s killing marks a dramatic escalation in the shadow war between Iran and the United States and its allies, principally Israel and Saudi Arabia, which could quickly ratchet up tit-for-tat attacks.

The Pentagon said in a statement:

“At the direction of the President, the U.S. military has taken decisive defensive action to protect U.S. personnel abroad by killing Qassem Soleimani, the head of the Iranian Revolutionary Guard Corps-Quds Force, a U.S.-designated Foreign Terrorist Organization.

“General Soleimani and his Quds Force were responsible for the deaths of hundreds of American and coalition service members and the wounding of thousands more.”

Ayatollah Khamenei warned Friday morning that “harsh retaliation is waiting” for the U.S.  In a statement, Khamenei referred to Soleimani as “the international face of resistance.”

“All enemies should know that the jihad of resistance will continue with a doubled motivation, and a definite victory awaits the fighters in the holy war.”

Iranian Foreign Minister Javad Zarif said the U.S. airstrike was a “foolish escalation” of tensions in the region and warned of consequences.

Zarif tweeted: “The US’ act of international terrorism, targeting & assassinating General Soleimani – THE most effective force fighting Daesh (ISIS), Al Nusrah, Al Qaeda, et al – is extremely dangerous & foolish escalation.”

Lebanon’s Hezbollah leader Sayyed Hassan Nasrallah said his powerful Shiite militia group would continue the path of Soleimani, and that the United States would not be able to achieve its goals with this “big crime” and just punishment was the responsibility of all fighters.

French President Emmanuel Macron said Iran should refrain from any provocation, saying he had held talks with Russian President Vladimir Putin.

Turkey’s foreign ministry said the killing of Soleimani will increase insecurity and instability in the region, and that it was deeply concerned that Iraq will be turned into an area of conflict.

Iraq’s parliament speaker, Mohammed al-Halbousi, condemned the U.S. air strike as a breach of sovereignty.  “Yesterday’s targeting of a military commander in Iraq’s armed forces near Baghdad international airport is a flagrant breach of sovereignty and violation of international agreements,” he said in a statement. “Iraq must avoid becoming a battlefield or a side in any regional or international conflict,” he added.

Soleimani was accused of masterminding sophisticated attacks across the Middle East for over 20 years, attacks that killed hundreds of American troops in Iraq, while Soleimani can claim responsibility for much of the carnage in the Syrian civil war, shoring up support for President Bashar al-Assad when he looked close to defeat early on.

Yaroslav Trofimov / Wall Street Journal

“Tehran’s likely avenues for retaliation would be to attempt to drive the U.S. out of Iraq, including by intensifying attacks on U.S. facilities there and by whipping up a political backlash against the U.S. presence, and to strengthen Hezbollah’s role in Lebanon.

“There are powerful forces, in Lebanon and Iraq, that don’t want their countries to become outright dependencies of non-Arab Iran, and that would try to oppose Tehran’s drive to force a clean break with America.

“Yet, everyone in the Middle East is also aware that President Trump’s overarching and oft-stated objective is to pull back from the region.  The Middle East’s power brokers also know all too well that anyone allying with the U.S. could be betrayed overnight, as it happened to Syrian Kurdish forces just a few months ago.

“Iran, on the other hand, isn’t going anywhere – with or without Gen. Soleimani.”

This morning, Secretary of State Mike Pompeo said the strike against Soleimani aimed to disrupt an “imminent attack” that would have endangered Americans in the Middle East, telling both Fox News and CNN that while he couldn’t divulge details of the alleged threat, it was “an intelligence based assessment” that drove the decision to target Soleimani.

The U.S. embassy in Baghdad urged all American citizens to depart Iraq immediately.  Dozens of U.S. citizens working for foreign oil companies in the southern city of Basra were leaving the country.

Ayatollah Khamenei appointed Soleimani’s deputy, Brigadier General Esmail Ghaani, to replace him.

The force’s program “will be unchanged from the time of his predecessor,” Khamenei said in a statement published by state media.

A spokesman for the Iranian Revolutionary Guards Corp. said, “The joy of the Zionists and Americans will in no time turn into mourning.”

President Trump tweeted:

“General Qassem Soleimani has killed or badly wounded thousands of Americans over an extended period of time, and was plotting to kill many more...but got caught!  He was directly and indirectly responsible for the death of millions of people, including the recent large number...

“....of PROTESTERS killed in Iran itself.  While Iran will never be able to properly admit it, Soleimani was both hated and feared within the country.  They are not nearly as saddened as the leaders will let the outside world believe.  He should have been taken out many years ago!”

Then this afternoon, President Trump told reporters at Mar-a-Lago that Soleimani had to be taken out to protect American lives.

“Soleimani was plotting imminent and sinister attacks on American diplomats and military personnel, but we caught him in the act and terminated him.  Under my leadership, America’s policy is unambiguous to terrorists who harm or intend to harm any American.  We will find you.  We will eliminate you.

“We took action last night to stop a war.  We did not take action to start a war.”

Trump said Soleimani had plotted the rocket attack last weekend that killed an American contractor and wounded service members, as well as the attack on the U.S. Embassy in Baghdad that followed.

“What the United States did yesterday should have been done long ago. A lot of lives would have been saved,” he said, adding, “I have deep respect for the Iranian people.  They are a remarkable people.”

Then the president praised the military and threatened Iran that others connected to terror could also be targeted.

“The United States has the best military by far anywhere in the world.  We have the best intelligence in the world.  If Americans anywhere are threatened, we have all of those targets already fully identified, and I am ready and prepared to take whatever action is necessary, and that in particular refers to Iran.”

Kind of funny the president praised the same intelligence he has excoriated in the past.

Tonight, thousands more U.S. troops are being sent to the region.  There are reports of further  air strikes on Kataib Hezbollah, as the group plans protests Saturday in Baghdad.  [There are also conflicting reports as I go to post on just who we hit tonight.]

President Trump had campaigned on a promise to stay out of wars in the Middle East and to bring U.S. troops home.  Iraq’s parliament is slated to vote, perhaps tomorrow, to kick us out.

Trump World

--There are some who are questioning the timing of the killing of Soleimani, given it was on the same day as a new report citing unredacted emails that bolster the case President Trump was directly involved in withholding military aid to Ukraine as he was seeking investigations that could benefit him politically.

The report by Kate Brannen, published by Just Security, referenced an email from Michael Duffey, associate director of national security programs at the Office of Management and Budget, to Elaine McCusker, the acting Pentagon comptroller, on Aug. 30, a little more than a month after Trump pressed Ukrainian President Zelensky for investigations during a phone call.

In the email, which followed a meeting with Trump that included senior administration officials, Duffey told McCusker, “Clear direction from POTUS to hold.”

A redacted version of that email – and several others cited in the report by Brannen, a veteran Pentagon reporter – had previously been made public as the result of Freedom of Information Act litigation.

Senate Minority Leader Charles Schumer said in a statement: “The newly-revealed unredacted emails are a devastating blow to Senator McConnell’s push to have a trial without the documents and witnesses we’ve requested.   These emails further expose the serious concerns raised by Trump administration officials about the propriety and legality of the president’s decision to cut off aid to Ukraine to benefit himself.”

Schumer wants witnesses like Duffey (as well as Mick Mulvaney and John Bolton) to testify in a Senate trial.  McConnell has said the Senate should decide on what if any witnesses to call after hearing opening statements from House impeachment managers and Trump’s lawyers.

We also learned McConnell and Schumer did not communicate over the two-week holiday recess about how to break their impasse on the scope of the impeachment trial.

--Marc A. Thiessen / Washington Post

Last week I posted Mr. Thiessen’s list of the 10 best things President Trump did in 2019.  Here are his 10 worst.

“10. He ridiculously claimed ‘Our country is FULL.’....

“ 9. He used anti-Semitic tropes to attack his enemies....

“ 8. He said the Soviet Union was right to invade Afghanistan and congratulated China on the 70th anniversary of the Communist takeover....

“ 7. He lost a needless government shutdown fight....

“ 6. He used his emergency authority to circumvent Congress on the border wall....

“ 5. He continued to spread the canard that the United States is fighting ‘endless wars.’  Our force levels in Syria, Iraq and Afghanistan are a shadow of their former selves, and U.S. forces are arming and training allies who are doing the fighting for us.  That is the right strategy.  Yet Trump continues to channel his inner Barack Obama and seek complete U.S. withdrawal.

“ 4. He continued to attack dead people....

“ 3. He asked the president of Ukraine to investigate Hunter Biden.  HIs phone call with President Volodymyr Zelensky was not ‘perfect’ as Trump claimed.  After special counsel Robert S. Mueller III found that Trump did not conspire with Russia in 2016, Trump decided to snatch defeat from the jaws of victory by giving Democrats the pretext they had been looking for to impeach him.

“ 2. He invited the Taliban to Camp David....

“ 1. He gave Turkey a green light to invade Syria and attack our Kurdish allies.  The Kurds suffered 11,000 casualties in the fight against the Islamic State since 2014 and gave us the critical intelligence that led us to Islamic State leader Abu Bakr al-Baghdadi's doorstep.  After watching Trump abandon the Kurds to be slaughtered, why would anyone step forward to help the United States in the fight against Islamist radicalism?

“In past years, many entries on my ‘worst’ list were mistakes by style, not substance.  But this year, the number and seriousness of the president’s substantive mistakes grew.  On balance, the good still outweighs the bad in the Trump presidency.  But the bad is getting worse.”

--Trump tweets:

“A lot of very good people were taken down by a small group of Dirty (Filthy) Cops, politicians, government officials, and an investigation that was illegally started & that SPIED on my campaign.  The Witch Hunt is sputtering badly, but still going on (Ukraine Hoax!).  If this....

“....had happened to a Presidential candidate, or President, who was a Democrat, everybody involved would long ago be in jail for treason (and more), and it would be considered the CRIME OF THE CENTURY, far bigger and more sinister than Watergate!”

“Iran never won a war, but never lost a negotiation!”

“President Putin of Russia called to thank me and the U.S. for informing them of a planned terrorist attack in the very beautiful city of Saint Petersburg. They were able to quickly apprehend the suspects, with many lives being saved.  Great & important coordination!”

“California and New York must do something about their TREMENDOUS Homeless problems.  They are setting records!  If their Governors can’t handle the situation, which they should be able to do very easily, they must call and ‘politely’ ask for help.  Would be so easy with competence!”

President Trump sent more than 7,700 tweets out in 2019, compared to 3,600 the prior year.

--Thanks to C-Span, I watched Trump’s rally at a gathering of evangelicals tonight and at one point, he began to talk about the tremendous crowds at the past Fourth of July celebration on the Washington Mall, and then began to compare his crowd with that of Martin Luther King Jr. and his March on Washington.  At that I went back to preparing my dinner.

Wall Street and Trade...2019 / 2020

2019 Returns

Dow Jones... +22.3%
S&P 500... +28.9%...best since 2013
Russell 2000... +23.7%
Nasdaq... +35.2%...best since 2013

UK FTSE 100... +12.1%
France CAC 40... +26.4%
Germany DAX... +25.5%
Stoxx Europe 600... +23.2%...best since 2009
Japan Nikkei 225... +18.2%
China Shanghai Comp... +22.3%

Yes, it wasn’t just the United States that had an outstanding year in terms of equity returns, and this despite punk global growth.  Rather monetary policy around the world was more than accommodative when it came to the investment decision of bonds vs. stocks, and despite some rumblings in Europe that zero (and negative) interest rates have done nothing to juice the economy, central banks will continue to be accommodative in 2020.

But for those who say we hit a bottom in terms of the global economy, I’d say we will just largely stagnate this year.  Nothing more than 2%-2.5% GDP growth in the U.S., far less, percentagewise, in Europe and Japan, and in China more of the same, as in the slowest growth there in three decades.

Here in the U.S., there are solid signs the consumer may continue to spend, with full employment and rising wages, but I just don’t see capital spending picking up in any big way, as the geopolitical situation will temper CEO confidence.

As for my predictions, after nailing 2018’s down year better than anyone (fact...I said the Dow and S&P would fall 5 percent, and they were down 5.6% and 6.2%, respectively), I said for 2019, the Dow and S&P would rise 12%, Nasdaq 13%, so I’m not embarrassed by that forecast.

I noted a year ago as well: “Is the U.S.-China trade issue a big risk?  Yes.  But investors, and the public, will at some point be hoodwinked into believing we’ve reached a decent accord with Beijing later in the year and the markets will celebrate, even though the actual agreement will be a bunch of crap...(But) it will be all about market sentiment.”

I stand by that.

So for 2020, I’ll say the S&P 500 and Dow Jones fall 3%, Nasdaq with a 4% gain.  I did talk a year ago about recession in 2020 and on that score I now don’t see one, barring a devastating cyberattack, as noted above, that would totally sap confidence (or an out of control ICBM from Kim and his Orcs).

Speaking of Kim, I wrote a year ago:

“I said ‘we might avoid a direct confrontation’ with Kim, and we did, thus far, but now I believe 2019 will see him fire off a test missile or two.  The Trump Administration is not going to give Kim what he wants, a total relaxation of sanctions, as well as a formal peace agreement, and he’s going to have to show he’s still boss at some point.  Trump’s response will depend on the direction of the Mueller probe (or conclusion) and any reaction in Congress.”

Pretty good on my part.

But back to Wall Street, we had some economic data this week.  The Chicago PMI on manufacturing in the region came in at 48.9 (50 the dividing line between growth and contraction), while today, the national ISM manufacturing reading of 47.2 was not only well below a forecasted 49.0, but also the worst in nearly 11 years.

Separately, construction spending for November was up a better than expected 0.6%, while the S&P CoreLogic October data on the housing market showed prices were up 2.2% year-on-year for the 20-city index.

The Atlanta Fed’s GDPNow barometer for the fourth quarter is 2.3%...unchanged from ten days ago.

On the trade front...President Trump said the phase one accord with China will be signed at the White House on Jan. 15, with Trump saying he would travel to Beijing later to begin work on phase two, though China did not confirm the Jan. 15 date as yet.  So there is little to say outside of what I already have detailed.  Any China hesitation is no doubt over their ability to meet the aggressive purchase targets set by the United States.

But understand, regardless, this is hardly “the big deal” President Trump talked of as late as September, when he rejected talk of a partial agreement...which is now what we are getting.

Europe and Asia

We had the release of the December manufacturing PMIs for the eurozone (EA19) from IHS Markit, 46.3 vs. 46.9 in November, not good.

Germany 43.7, France 50.4, Spain 47.4, Italy 46.2 (80-month low), Netherlands 48.3 (80-mo. low), Ireland 49.5, Greece 53.9. 

The UK came in at 47.5.

Just miserable stuff.

Chris Williamson / IHS Markit

“Eurozone manufacturers reported a dire end to 2019, with output falling at a rate not exceeded since 2012.  The survey is indicative of production falling by 1.5% in the fourth quarter, acting as a severe drag on the wider economy.

“Although firms grew somewhat more optimistic about the year ahead, a return to growth remains a long way off given that new order inflows continued to fall at one of the fastest rates seen over the past seven years.  Firms sought to reduce inventory levels and cut headcounts as a result, focusing on slashing capacity and lowering costs.  Such cost cutting was again also evident in further steep falls in demand for machinery, equipment and production-line inputs.

“Only households provided any source of improved demand in December, underscoring how the consumer sector has helped keep the economy out of recession in recent months.  The ability of the wider economy to avoid sliding into a downturn in the face of such a steep manufacturing contraction remains a key challenge for the eurozone as we head into 2020.”

Brexit: Things will heat back up in the coming weeks, as Prime Minister Boris Johnson and parliament work on final legislation that will allow Britain to formally leave the EU on January 31.

In his New Year message, Johnson said the UK can look forward to a decade of “prosperity and opportunity” as it finally ends the “rancor and uncertainty” of Brexit.

“As we say goodbye to 2019 we can also turn the page on the division, rancor and uncertainty which has dominated public life and held us back for far too long,” Johnson said.

The prime minister said he was determined to be a “prime minister for everyone,” including the millions who backed Remain or did not vote Conservative in the general election.

“If you are one of them, I want to reassure you that I will be a prime minister for everyone, not just those who voted for me.  I know that you love this country no less, simply because you voted for another party or wanted to Remain,” he said.  [I wish President Trump would adopt the tone of this last line.]

“More than that, I want to work with you, as friends and equals, as we build the future this United Kingdom deserves,” he added.  “So let’s together make the 2020s a decade of prosperity and opportunity.”

Hip hip Hooray!  Hip hip Hooray!

Of course there is that little issue of a comprehensive trade deal to be worked out in just eleven months with the EU, or the 2020s will be a decade of despair and turmoil.

France: This coming week could be a key one for President Emmanuel Macron and his flagship pension reforms that he vows “will be carried out,” though he called upon his government to find a speedy compromise with unions as the punishing public sector strikes continued through Christmas and New Year.

“I am aware that changes can often be unsettling.  But worries cannot lead to inaction because there is too much to do,” Macron said in his traditional New Year’s Eve address to the nation.  “I will not give in to pessimism or paralysis.”

Talks are slated for January 7, ahead of a planned day of national protest on the ninth.

It was the second year in a row that Macron had to address a nation roiled in protest against his policies.  Last year it was the yellow vest protests that forced billions of euros in spending concessions from his government.

Turning to Asia...China’s official government manufacturing PMI for December came in at 50.2, unchanged, but at least slight expansion, while the services reading was 53.3 vs. 54.4 in November.

The Caixin private sector manufacturing reading was 51.5 vs. 51.8 the prior month.

Meanwhile, China’s central bank said it was cutting the amount of cash that all banks must hold as reserves, releasing about $115 billion in funds to shore up the slowing economy.

South Korea’s manufacturing PMI for December was 50.1 vs. 49.4 in November, while Taiwan’s was 50.8 vs. 49.8, so slight growth in each. [Japan’s has yet to be released.]

Separately, South Korea’s trade ministry reported exports for December fell 5.2% year over year, a 13th consecutive month of declines.  But exports to China were up 3.3%, the first growth in 14 months.  So you look for little clues...about something, anything, mused the editor.

That said, overseas sales of semiconductors, the country’s top-selling item, which accounts for one-fifth of South Korea’s total exports, fell 17.7% year-on-year, but this was the slowest decline in eight months as global prices are stabilizing after a plunge.

Street Bytes

--Stocks finished mixed this holiday shortened week, with the Dow Jones falling 11 points (-0.04%) to 28634, after hitting an all-time high the day before of 28868.  The Dow and the other major indices also had hit new highs Thursday before reacting to the Soleimani air strike.  The S&P lost 0.2%, but Nasdaq gained 0.2% on the week.

Now it’s time for fourth-quarter earnings, though not starting in earnest for another week, but we will get an important employment report next Friday for December as trading desks are fully staffed again following the two-week holiday.

--According to an analysis by Instinet, after rising 25% or more in a year, the S&P 500 has ended the following year higher 67% of the time, an average of 6% since 1920, which is essentially the average forecast from Wall Street’s strategists.

--U.S. Treasury Yields (Jan. 3)

6-mo. 1.54%  2-yr. 1.53%  10-yr. 1.79%  30-yr. 2.25%

12/31/19

6-mo. 1.58%  2-yr. 1.57%  10-yr. 1.92%  30-yr. 2.39%

12/31/18

6-mo. 2.55%  2-yr. 2.49%  10-yr. 2.68%  30-yr. 3.01%

As you can see from the above, we had a big flight to safety on the long end of the curve today.  It was the same situation in Europe, with the yield on the German 10-year, the Bund, going from –0.19% on 12/31 to –0.29% today.

--The national average for gasoline at the pump finished the year at $2.58, 31 cents more expensive than the end of 2018.

For 2019, however, the national average was $2.61, ten cents cheaper than the 2018 average of $2.71.

The least expensive markets are currently Missouri ($2.21), Mississippi ($2.25) and Oklahoma ($2.26).

Hawaii ($3.65) and California ($3.56) remain the most expensive markets in the country.  [AAA]

--According to the Federal Reserve Bank of Atlanta, pay for the bottom 25% of wage earners rose 4.5% in November from a year earlier, while wages for the top 25% of earners rose 2.9%. 

And a slew of states increased their minimum wages on Jan. 1, though how this impacts employment, and profits, remains to be seen.

With a strong labor market, the bargaining power of lower-paid workers is certainly greater.

--Some 540 hedge funds had liquidated by the end of October, according to Hedge Fund Research, furthering the industry’s bloodbath, with more hedge funds shutting down than launching for the fifth year in a row.

The average hedge fund this year is up 8.5%, a marked improvement from the average 6.7% loss they managed in 2018.  Unfortunately, the rebound is still far short of the S&P 500 index gain of nearly 29%.

As Thomas Thornton, president of Greenwich-based research firm Hedge Fund Telemetry, said in a note published Monday, “this business is not dead, it just sucks right now.”

One big winner, vs. the averages, was Point72 Asset Management’s Steve Cohen, the potential new owner of the New York Mets, whose main fund had a return of 13% at the end of November.

Bill Ackman’s Pershing Square Capital soared more than 50 percent for the year, sources said, a major recovery for him, after he was left for dead in the middle of 2018 following a disastrous five-year, major bet against nutrition company Herbalife.

But then you have the case of Louis Bacon, described by Forbes as a “macro-trading legend,” who said in November that his $8.9 billion Moore Capital would be returning investors’ money in 2020.  [New York Post]

--Airbus has become the world’s largest planemaker for the first time since 2011, after delivering a forecast-beating 863 aircraft in 2019, seizing the crown from embattled Boeing.  A reversal in the pecking order between the two giants had been expected after Boeing’s 737 MAX crisis, which drags into 2020.

But the record European data further underscores the tough road ahead for Boeing as it seeks to recoup the top spot down the road.

Airbus exceeded its target of 860 by deploying extra resources until hours before midnight to reach 863.  Deliveries rose 7.9% from 800 aircraft in 2018.  The numbers are from airport and tracking sources and have not been audited as yet.

Airbus’ tally includes around 640 single-aisle aircraft.  Airbus has been hit by delays in fitting the complex new layouts on A321neo jets assembled in Hamburg, Germany, labor shortages an issue in last-minute configurations.

Boeing delivered 345 mainly long-haul jets between January and November, less than half the number of 704 achieved in the same period of 2018, when the MAX was being delivered normally.  For the whole of 2018, Boeing delivered 806 aircraft.

--Ousted Nissan boss Carlos Ghosn fled to his native Lebanon, saying he wouldn’t be “held hostage” by a “rigged” system, raising questions about how one of the world’s most-recognized executives slipped out of Japan months before his trial.

Ghosn’s abrupt departure marks the latest twist in a year-old saga that has shaken the global auto industry, jeopardized the alliance of Nissan Motor Co. Ltd. and top shareholder Renault SA, and cast a harsh light on Japan’s judicial system.  As in we’ve all learned, don’t get arrested there.

Ghosn said in a brief statement on Tuesday: “I am now in Lebanon and will no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied.

“I have not fled justice – I have escaped injustice and political persecution.  I can now finally communicate freely with the media, and look forward to starting next week.”

Tokyo officials have previously said the system is not inhumane and that Ghosn has been treated like any other suspect.

It’s not known for sure how Ghosn, who holds French, Brazilian and Lebanese citizenship, was able to flee Japan on a private jet (two of them), but his flight went through Istanbul, and now Turkish authorities have made a number of arrests in that regard, while Interpol has issued an international arrest warrant.

His lawyers in Japan said they were still in possession of his three passports, but there’s a story Ghosn had a duplicate French passport.

Japan has extradition treaties with only the United States and South Korea, according to the justice ministry, meaning it will be difficult to force Ghosn to return to stand trial.

Ghosn was born in Brazil of Lebanese ancestry, grew up in Beirut and has retained close ties to Lebanon.

Editorial / Wall Street Journal

“Former Nissan CEO Carlos Ghosn has become an international fugitive after fleeing Japan before his expected trial on accusations of financial wrongdoing.  It would have been better had he cleared his name in court, but then it isn’t clear that he could have received a fair trial.

“You might even call Mr. Ghosn’s decision to escape to Lebanon – presumably by private plane with still unknown assistance – a case of rough justice.  He was feted for years in Japan for saving Nissan from bankruptcy, but to his shock he was arrested in November 2018 as he embarked from a private plane in Tokyo on what he thought was a business trip.  The Japanese press had been alerted to the airport arrest.

“The 65-year-old was held for weeks, initially without charge, and subject to interrogation without an attorney present or access to his business records.  Prosecutors have tried to coerce a confession, but Mr. Ghosn has maintained his innocence.  He was finally granted bail after months in jail, but the court has allowed only limited contact with his wife and son.  A trial was expected in 2020, though more than 99% of defendants in Japan are convicted.

“The charges boil down to compensation that Mr. Ghosn supposedly didn’t properly disclose, or wasn’t entitled to, as well as payments to outside consultants.  But Mr. Ghosn says there was never a contract that required disclosure, his compensation was appropriate and approved by the company, and the payments to outsiders were for services that benefited the auto maker.

“The evidence remains murky and is complicated by a power struggle at the top of Nissan....

“All of this has exposed Japan’s non-transparent corporate governance and lack of legal due process.  Disputes over compensation and corporate control should have been handled in the boardroom.  Yet somehow – and this is the biggest mystery – they became a criminal matter.  The suspicion hangs over the case that one or more individuals set out to use opaque governance rules to oust a foreigner from a position of Japanese corporate power.

“One irony is that the truth may now be easier to discover outside of a courtroom....

“Mr. Ghosn will pay a price for having violated his promise to remain in Japan, not least the $13.8 million he paid in bail.  Lebanon, where he grew up and is popular, has no extradition treaty with Japan and has said he entered the country legally.  But his foreign travel will be limited lest he risk arrest in a country that honors a Japanese indictment.

“The Ghosn saga has been a fiasco from its dubious start.  The best way justice could be served now would be for the truth about the accusations to emerge; for Mr. Ghosn to get his reputation back if the evidence is as weak as it seems; and for Japan to reform its justice system and corporate governance so they are more appropriate for a modern free-market economy.”

--Huawei Technologies on Tuesday said its full-year revenue would likely jump 18% in 2019 to $121.72 billion, lower than its earlier projections, as a U.S. trade blacklisting curbed growth and disrupted its ability to source key parts.

The world’s biggest maker of telecom network equipment and the No. 2 manufacturer of smartphones, was all but banned by the United States in May from doing business with U.S. companies, with the government alleging Huawei poses a national security threat because its equipment could be used by the Chinese government to spy on users.  Huawei has repeatedly denied its products are a security threat.

Huawei’s rotating Chairman Eric Xu said in a New Year’s message to employees and customers: “The external environment is becoming more complicated than ever, and downward pressure on the global economy has intensified.  In the long term, the U.S. government will continue to suppress the development of leading technology – a challenging environment for Huawei to survive and thrive.”

Xu also said that Huawei shipped 240 million smartphones this year, a 20% increase from 2018.

The newest Mate 30 smartphone first went on sale in September but it cannot access a licensed version of Google’s Android operating system because of the trade curbs.

But Huawei is developing its own mobile operating system known as Harmony, although analysts are skeptical that the system is a viable alternative.

--Tesla started delivering Model 3 electric cars built at its Shanghai factory in just under a year since it began work on the $2 billion plant, setting a record for global automakers in China, Tesla saying it would be ramping up deliveries next month.

Monday, 15 Tesla employees received cars they had purchased, the China-made Model 3 sedans priced at $50,000 before subsidies.

By comparison, its imported Model 3 vehicles are substantially higher, while the standard range plus model costs under $40,000 in the United States.

Separately, I saw a blurb on the wires that Tesla Model 3 registrations in the Netherlands climbed to 12,062 in December from 3,980 in November.  I sure as heck see more and more on my streets here.

Well, I wrote the above on Thursday and then today, Tesla reported it delivered a total of 367,500 vehicles in 2019, meeting the company’s delivery guidance for the year, pushing the share price to a new record high of $442, after hitting $454 earlier today.

Tesla’s annual total was 50 percent higher than 2018, and given a boost thanks to record production of 105,000 vehicles and record deliveries of 112,000 in the final three months of the year. [87,000 were the mass-market Model 3.]

Elon Musk had previously set a delivery goal of between 360,000 and 400,000 cars in 2019, after delivering just over 245,000 vehicles last year.

--Federal officials plan to approve a massive solar farm with energy storage in the desert outside Las Vegas, a $1 billion project that will provide electricity to Nevada residents served by Warren Buffett’s NV Energy.

The facility would span 7,100 acres and generate more power than the current largest solar farm operating in the U.S., a plant in Southern California.

The so-called Gemini project will be on federal lands, and thus requires sign-off from the Interior Department.

President Trump has called solar power “very, very expensive” despite the fact it is now the cheapest electricity source across much of the United States, but his appointees at the Interior Department have helped push forward large renewable energy projects nonetheless.

--The Trump administration banned most flavored e-cigarette pods – closed cartridges that contain vaping liquids and are hugely popular among young people – while sparing the kind of products typically sold by vape shops, according to a senior administration official.

The ban applies to sweet- and fruit-flavored pods but not to menthol- and tobacco-flavored ones.

The action is a step back from the comprehensive flavor ban that President Trump announced in September to combat what has been described as an epidemic of underage vaping.  Back then, Trump said the Food and Drug Administration would bar the sale of all flavored e-cigarettes, except for tobacco flavors.  The prohibition would applies to pod-based systems popularized by Juul Labs and others.

--Amazon is said to have threatened employees with termination for publicly talking about the company’s role in the climate crisis, according to activist group Amazon Employees for Climate Justice.

According to media reports, several members of the group have been questioned by Amazon’s legal and HR representatives regarding their public comments that push the company to combat climate change.

Amazon’s updated external communications policy requires employees to seek permission from the company before talking in a public forum.

--The death of former NBA commissioner David Stern, 77, is a business story.  During his tenure, 1984-2014, in growing the NBA into one of the most popular leagues in the world, television revenue increased from $10 million per year to approximately $900 million per.

The 2010 All-Star Game drew more than 108,000 fans to Dallas Cowboys Stadium, a record to watch a basketball game, while the NBA, under Stern’s watch, and now Commissioner Adam Silver’s, is televised in more than 200 countries and territories and in more than 40 languages.

--Ratings for the National Football League rose 5% in 2019, according to Nielsen data, making it the most-watched season since 2016.  This is the second straight season of viewership growth for the NFL, after it lost a chunk of viewers in 2017.

--Walt Disney Co. ended the year as the film industry’s unprecedented leader with a slate loaded with nostalgia-inducing blockbusters, but rivals failed to sell the tickets needed to make 2019 the historic year it was expected to be. 

A handful of expensive flops fizzled at theaters in the U.S. and Canada, including “Terminator: Dark Fate” and “Gemini Man,” both distributed by Viacom Inc.’s Paramount Pictures; Sony Corp.’s “Men in Black: International;” and “Dark Phoenix,” an X-men movie from Twentieth Century Fox, which Disney acquired this year.

Disney had seven of the top 10 movies world-wide in 2019. But the disappointments helped drag the 2019 domestic box office down about 4% from 2018, according to Comscore, which expects a full-year total of about $11.4 billion.  Last year, ticket sales rose to a record $11.9 billion.

Disney became the first studio in modern times to command one-third of Hollywood’s box-office take, with a 33.1% share of the domestic market through Dec. 29.  Six of its films passed the $1 billion mark on a global basis, including “Toy Story 4,” “Frozen 2” and “Captain Marvel,” another first for the studio.

Disney’s “Star Wars” sequel “The Rise of Skywalker,” is also poised to exceed the $1 billion mark after a late-2019 release.  The company’s “Avengers: Endgame,” released in April, surpassed 2009’s “Avatar” as the highest-grossing movie to date, with $2.8bn.

--On Broadway, for the seven-day period ending last Sunday, shows grossed $55.8 million, according to the Broadway League, the trade group that tracks the industry.  That was a 3.5% decline from the $57.8 million holiday week in 2018, which still stands as the highest-grossing week in Broadway history.

Cumulative grosses are off 6.3% thus far for the 2019-20 season.

But among the major successes recently have been the musicals “Moulin Rouge!”, “Beetlejuice” and “Ain’t Too Proud.”

The revival of “West Side Story,” which started running in previews in December, is playing to capacity crowds.

Meanwhile, “Hamilton” is still the perennial Broadway favorite and the biggest winner at the box office, grossing $3.6 million over the past week and commanding a top ticket price of $996!!!  Good lord.

Foreign Affairs

Iran / Iraq: ...prior to last night’s takeout of Soleimani...but following the violence at the U.S. embassy in Baghdad.

The Economist

“The riot was another escalation in a crisis between America, Iran and Iraq.  On December 27th more than 30 rockets hit an Iraqi military base near Kirkuk. That attack, the 11th of its kind in two months, killed an American contractor and wounded four American soldiers.  The American response, two days later, was a series of air strikes on five bases run by Kataib Hizbullah*.  At least 25 of its members were killed.

[*The Economist spells Hezbollah, ‘Hizbullah,’ which is how I used to spell it....and it is the correct spelling, but I long ago gave up.]

“This was an ‘unacceptable vicious assault,’ fumed Adel Abdul-Mahdi, Iraq’s outgoing prime minister.  He was referring not to the initial rocket attack but to the retaliatory air strikes that followed.  Those strikes had violated Iraqi sovereignty and ‘would force Iraq to review its relations and its security, political and legal framework’ with America, said the government.

“Mr. Abdul-Mahdi had a point.  America killed Iraqi nationals on Iraqi soil, in an attack carried out without the blessing of the Iraqi government.  But America was not the only actor to make a mockery of Iraqi sovereignty.  Though Kataib Hizbullah is backed by Iran, it is nominally under the control of Iraq’s government, like other paramilitary groups created to fight the jihadists of Islamic State.  If it fired rockets at an Iraqi military base, one branch of the Iraqi state bombed another.  At the American embassy days later, at least one photograph showed a uniformed member of the Iraqi security forces helping rioters smash windows.

“American officials are seething at the Iraqi government’s willingness to rebuke them while giving a free hand to Iranian-backed groups.  Iraq failed in its ‘responsibility to protect us as their invited guests,’ complained a State Department official.  In December American officials accused Iran of stashing short-range missiles in the country, and there are suspicions that Iraq may have been the launching point for a drone and missile attack on Saudi oil facilities in September.  The raid on Kataib Hizbullah is a major blow in that contest.  ‘We haven’t killed this many tier-one Iranian proxies in one go, ever,’ says Michael Knights (sic) of the Washington Institute for Near East Policy, a think tank.

“But this is at best a tactical achievement.  America is 19 months into Donald Trump’s ‘maximum pressure’ campaign against Iran, which began with his decision to withdraw from a deal that curbed Iran’s nuclear program in return for economic relief.  His sanctions have cut Iran off from the world economy.  Oil exports crashed from around 2.5m barrels a day in 2017 to less than half a million now....

“But economic pain has not compelled Iran to negotiate a new agreement, let alone moderate its regional policies....

“Far from panicked, though, Iran’s aggression looks calculated.  Since October it has faced a wave of popular anger across the region.  Protesters in Iraq want an end to Iran’s meddling.  Those in Lebanon have turned some of their ire on Hizbullah, a Shia militia and political party that is separate from Kataib Hizbullah but similarly backed by Iran.  Meanwhile, Iran itself was convulsed by unrest in late November after the government raised fuel prices.

“So the American strike was a welcome distraction.  On December 30th a coalition of pro-Iran parties in Iraq demanded the expulsion of all 6,000 American troops.... The Pentagon, understandably, is worried about protecting troops and contractors in Iraq.  But the Trump administration seems to have thought little about the political consequences – in part, because there is almost no one in Baghdad to consider them.  The embassy there, which once housed 2,000 diplomats, now has just ten political officers and six working on military affairs.  The secretary of state, Mike Pompeo, wants to cut those numbers further.

“Iran would be happy to see America go, but Iraq has plenty to lose.  Its army remains weak, demoralized and corrupt.  Shia militias and Kurdish peshmerga are motivated and capable but have their own agenda.  What is left relies on close cooperation with American special forces and spies.  Since 2014 America has spent $5.8bn on military aid for Iraq....

“Meanwhile, militia leaders eventually told their men to withdraw from the embassy, out of ‘respect for the Iraqi government.’  But they had made their point.  Sixteen years after America invaded Iraq with the hope of installing a friendly government, it can barely keep its own embassy safe.”

---

In light of the action to take out Soleimani, Democratic presidential hopefuls weighed in, with Joe Biden calling the attack “a hugely escalatory move” in the region.

In a statement, Biden conceded the leader of Iran’s Quds Force deserved to face justice, but warned, “President Trump just tossed a stick of dynamite into a tinderbox.”

“He deserved to be brought to justice for his crimes against American troops and thousands of innocents throughout the region.  He supported terror and sowed chaos,” Biden said of Soleimani.

But, Biden added, “None of that negates the fact that this is a hugely escalatory move in an already dangerous region.  We could be on the brink of a major conflict across the Middle East.”

Massachusetts Sen. Elizabeth Warren said in a statement: “Soleimani was a murderer, responsible for the deaths of thousands, including hundreds of Americans.  But this reckless move escalates the situation with Iran and increases the likelihood of more deaths and new Middle East conflict.  Our priority must be to avoid another costly war.”

Vermont Sen. Bernie Sanders wrote on Twitter: “Trump’s dangerous escalation brings us closer to another disastrous war in the Middle East that could cost countless lives and trillions more dollars.  Trump promised to end endless wars, but this action puts us on the path to another one.”

Nebraska Republican Sen. Ben Sasse tweeted: “Gen. Soleimani has killed hundreds and hundreds of Americans, and was actively plotting more.  This commander-in-chief...has an obligation to defend America by killing this bastard.”

Sen. Jim Risch (R., Idaho), who chairs the Senate Foreign Relations Committee, congratulated President Trump on his “decisive action,” and “successful outcome.”

“As I have previously warned the Iranian government, they should not mistake our reasonable restraint in response to their previous attacks as weakness.  The U.S. will always vigorously defend our interests and allies in the face of terrorist conduct and provocations.”

Sen. Marco Rubio (R., Fla.) tweeted that Iran and its proxy groups had received clear warnings.

“They chose to ignore these warnings because they believed @POTUS was constrained from acting by our domestic political divisions.  They badly miscalculated.”

Mr. Rubio said he doesn’t want war with Iran, “But when an adversary decides to use force to attack our Armed Forces @potus has an affirmative duty to defend the U.S. against & if possible prevent such attacks.”

Syria: President Trump and his Turkish counterpart Tayyip Erdogan agreed on the need to de-escalate tensions in Idlib in order to protect civilians, the White House said on Thursday, a day after eight people were killed in a Syrian missile strike in the province. 

President Erdogan said that up to 250,000 migrants were fleeing toward Turkey from Idlib after weeks of renewed bombardment by Russian and Syrian government forces.  [The UN put the tally at 284,000 people having fled in recent weeks.]

Turkey already hosts some 3.7 million Syrian refugees, the largest refugee population in the world, and Erdogan said it was taking steps with some difficulty to prevent another wave from crossing its border.

Israel: Prime Minister Benjamin Netanyahu said on Wednesday he would seek parliamentary immunity from prosecution in the three graft cases he faces, a move that could delay criminal proceedings against him for months. Netanyahu was indicted in November on charges of bribery, fraud and breach of trust over allegations he granted state favors worth hundreds of millions of dollars to Israeli media barons in returns for gifts and favorable coverage.   He denies any wrongdoing, saying he is the victim of a witch hunt by the media and left to oust a popular right-wing leader.

A trial cannot get underway once an immunity request is made.  Israel has another election on March 2.

North Korea: Leader Kim Jong Un said this week that there were no longer grounds for Pyongyang to be bound by a self-declared moratorium on intercontinental ballistic missiles and nuclear bomb testing and that a “new strategic weapon” would be introduced in the near future.

President Trump has repeatedly pointed to the moratorium, in place since 2017, as a sign that his policy of engagement with North Korea was working.

Kim has complained the United States had continued joint military drills with South Korea, adopting cutting-edge weapons and imposed sanctions while making “gangster-like demands.”

But Kim had also warned Washington of a possible “Christmas gift” after he gave the United States until the end of the year to propose new concessions in talks over his country’s nuclear arsenal, and this week he left the door open for dialogue.

North Korea experts said that Kim’s remarks, made during an hours-long speech as part of a rare four-day meeting of the ruling Workers’ Party policy-making committee – were likely directed at his party, military and government officials, preparing the people for another period of economic hardship as it prepares for a long stalemate with the U.S.  Kim admitted sanctions have hit the economy and were unlikely to be lifted soon, warning that North Koreans will have to “tighten our belts.”

Secretary of State Mike Pompeo said on Tuesday he hoped North Korea would “choose peace and prosperity over conflict and war” after Kim’s remarks.  President Trump said he got along with Kim and “we have to do what we have to do.”

“But he did sign a contract...talking about denuclearization. ...That was done in Singapore, and I think he’s a man of his word, so we’re going to find out,” Trump told reporters New Year’s Eve.

China / Hong Kong / Taiwan: A year ago, Chinese President Xi Jinping convened a meeting of top officials from around the country and warned them of a long list of risks that might jeopardize the rule of the Communist Party.  Xi warned about foreign relations, ideology, the economy, technology...saying 2019 would be full of “black swans,” or surprising events, and “grey rhinos” - highly probable yet neglected threats.

And that’s how 2019 unfolded, particularly in Hong Kong, as millions took to the streets over a myriad of grievances with Hong Kong’s government, proposed legislation (the extradition bill), and the police force.

And there was the global reaction to China’s internment and extensive surveillance of mostly Muslim ethnic minority groups in Xinjiang.  And slowing economic growth, slowest pace in three decades, let alone the trade war with the U.S. and an African swine fever epidemic that swept the country’s pig herd, causing immense disruption.  With Lunar New Year festivities coming in late January, the price and availability of pork has become one of several perceived political risks that has Beijing increasing scrutiny of local officials.  The Chinese government has put forward a flurry of policies to slow the trend, from importing record amounts to restoring hog production.

Looking ahead, no one sees tensions between the U.S. and China lessening much, despite the signing (eventually) of a phase one trade deal.

And as for Hong Kong, the pro-democracy protests will continue, and it remains a matter of ‘when,’ not ‘if,’ in terms of President Xi unleashing his security forces.  But it is an exceedingly difficult decision for Xi, knowing a crackdown would further tarnish his reputation.

As part of his New Year’s message Tuesday, Xi said he “sincerely” hopes for the best for Hong Kong and its people, adding the situation there has “been everybody’s concern over the past few months.”

“Without a harmonious and stable environment, how can there be a home where people can live and work happily?”

With an election looming, Taiwan’s top military official was among eight people killed when a military helicopter made an emergency landing in mountainous terrain.  General Shen Yi-ming and 12 others were on the Black Hawk helicopter when it was forced to land in poor weather near the capital, Taipei.  The general was flying to an army base in the northeast of Taiwan.  Several other top military officials were also on the helicopter.

This was a big blow to the country, and Taiwanese President Tsai Ing-wen temporarily canceled campaigning ahead of the January 11 vote.

Somalia: At least 90 were killed when a bomb-laden vehicle exploded at a bustling checkpoint in the Somali capital of Mogadishu on Saturday.  While I have yet to see anyone claim responsibility, al-Qaeda-linked Islamist group al Shabaab regularly carries out such attacks in an attempt to undermine the government, which is backed by the UN and African Union troops.

Random Musings

--Presidential tracking polls....

Gallup: 45% approval of President Trump, 51% disapproval; 89% of Republicans approve, 42% of independents (Dec. 2-15).
Rasmussen: 50% approve, 50% disapprove (Jan. 3).

--The Iowa caucuses are just a month away, Feb. 3.  That’s going to be a fun night for political junkies.  New Hampshire is then Feb. 11.  After those two, the field should be winnowed down considerably to no more than 9 or 10.

We will have a slew of new polls to chew on next week.

--On the fundraising front, Democratic candidate Pete Buttigieg was the first to announce he raised $24.7 million in the fourth quarter, well ahead of the $19.1 million he collected in the third quarter.

But Bernie Sanders raised $34.5 million in the last quarter of 2019.  President Trump, however, hauled in $46 million.

Joe Biden came in at $22.7 million, his biggest quarter thus far, Elizabeth Warren $21.2 million (below the prior quarter), Andrew Yang raised $16.5 million, which is rather impressive, Amy Klobuchar $11.7 million and Cory Booker $6.6 million.

Sanders’ total campaign fundraising for the year was $96 million, making him the leading fundraiser so far among the 14 Democrats vying to face Trump.

But the president starts 2020 with $102.7 million in cash on hand.

Pssst...Julian Castro dropped out of the race Thursday.  That leaves Cory Booker as the only candidate left who is black or Latino.

--Chief Justice John Roberts expressed concern on Tuesday about disinformation amplified by the internet and social media as he focused his year-end report on the weakening state of civics education in the United States.

“In our age, when social media can instantly spread rumor and false information on a grand scale, the public’s need to understand our government, and the protections it provides, is ever more vital,” Roberts said in his annual report on behalf of the federal judiciary.

The chief justice warned that Americans “have come to take democracy for granted, and civic education has fallen by the wayside.”

Roberts’ comments come as legislators and officials have raised concerns about the persistence of foreign propaganda and false news aimed at sowing discord in the U.S. political system in the lead-up to the 2020 election.

Roberts said in his report that an independent judiciary was a “key source of national unity and stability” and called on his judicial colleagues to promote public confidence and trust by reflecting on their duty to judge without fear or favor.  He has previously lamented the perception in an increasingly polarized society that lower courts and the Supreme Court are becoming politicized, and that judges are guided primarily by their partisan affiliations.

Roberts, named to the court in 2005 by President George W. Bush, is poised to preside over Trump’s looming U.S. Senate impeachment trial, a highly visible but largely ceremonial role.

By the end of June, the Supreme Court is expected to decide several major cases involving a number of hot-button issues including abortion rights, Trump’s move to kill a program that protects young immigrants, dubbed “Dreamers,” and Trump’s bid to keep details of his finances secret.

--David Willman and Melody Petersen / Los Angeles Times

“Scientific experts warned Congress more than a decade ago that just four teaspoons of radioactive cesium-137 – if spread by a terrorist’s ‘dirty bomb’ - could contaminate up to 10 square miles of Manhattan.

“The material is commonly found across the United States.  Hospitals, blood banks and medical research centers use it in devices called irradiators, which sterilize blood and tissue.  Hundreds of devices are licensed for use, including at least 50 in Southern California.

“Each typically contains about twice as much radioactive material as the scientific panel warned could disrupt much of the nation’s largest city.

“The panel’s warning in 2008 came with blunt recommendations: The government should stop licensing new cesium-based blood irradiators, and existing ones should be withdrawn from use.  Safer devices that use X-ray technology worked just as well, the panel found.

“But after protests from hospitals, the U.S. Nuclear Regulatory Commission declined to crack down.  Instead, the number of licensed irradiators used for blood – and the risk they pose – has grown, a Los Angeles Times investigation shows.

“Recent emergencies highlight the danger.

“Pennsylvania authorities in 2015 intervened after an improperly secured irradiator was found inside a downtown Philadelphia office building near the planned motorcade route for a visit by Pope Francis.

“In May of this year, the accidental release of a small amount of cesium from an irradiator in Seattle contaminated 13 people and caused a seven-story medical research building to be shuttered indefinitely.

“The cesium used for irradiators is a dry, talc-like material derived from atomic fuel left over from nuclear power production.

“The material is particularly feared by experts on radiological threats because its fine particles disperse easily and can migrate through air ducts and bind tightly to porous surfaces, including concrete.  The potential is long-lasting: Cesium can keep emitting radiation for nearly 300 years.”

Several developed countries have converted away from cesium, but the Nuclear Regulatory Commission, by contrast, has continued to license new irradiators.

“A dirty bomb packed with cesium would not kill a large number of people.  Instead, it would be a weapon of ‘mass disruption’ - leaving areas uninhabitable for months or even decades and increasing long-term cancer risks for people who come in contact with it, atomic experts say.”

--Retired Navy SEAL Eddie Gallagher, who was convicted of posing for a photo with the corpse of a young ISIS terrorist, has been hawking his line of clothing and endorsing nutritional supplements since President Trump helped clear him, according to the New York Times.

Gallagher is taking advantage of his social media followers, and peddling T-shirts that read “stay salty” and hooded sweatshirts featuring pockets designed to hold beer bottles.  He also promotes veteran-owned coffee beans and muscle-building supplements as he makes appearances at conservative gatherings and touts the Trump administration.

Paul Rieckhoff, founder of Iraq and Afghanistan Veterans of America, told The Times:

“He’s handsome, he’s heroic, he’s got a beautiful wife.  He’s a Rambo version of the same story Trump has been telling over and over: The deep state is trying to screw you, the media is bad, and the rich people don’t understand you.  But I’ll stick up for you.”

--Distracted driving was the leading cause of fatal crashes in New Jersey in 2018, more than speeding and driving while intoxicated.

A State Police fatal crash analysis found 146 crashes were because of driver inattention, 143 were caused by driver intoxication and 53 because of unsafe speed in 2018.  It’s the eighth straight year that the analysis found distracted driving was the leading cause of fatal crashes in my state.

The only good news is that the number of fatalities from distracted driving is down from 196 crashes in 2017.

--Northern India was hit by a record cold wave, with New Delhi experiencing its coldest day in 119 years on Monday, the maximum temperature dipping below 49 degrees F., about 20 degrees below the average for December.

Moscow had its warmest December since 1886.  Artificial snow was dumped in the city center for New Year festivities.

Yes, a far cry from “General Winter” - the famous subzero temperatures that did in Napoleon and Hitler.

Russian climatologist Vladimir Semyonov said “such winters are a direct consequence of global warming – they will happen more frequently.”

Speaking to RIA Novosti news agency, he said: “For the past 30 years the average winter temperatures in the Moscow region have risen by four degrees.  That really is a lot.”

Yes, four degrees C. is huge!

But then we have this ongoing catastrophe in Australia with the excessive heat, zero rain, and cataclysmic bushfires.  What a horrifying scene as thousands of tourists and residents in a seaside town hunkered down in public buildings or waded into water at the seafront on Tuesday as wailing emergency sirens warned of a looming, fierce firefront.   The coastal town of Mallacoota was ringed by wildfires and the main road in and out of town cut off.

A big problem is the embers blowing all over the place, starting endless spot fires.  The Australian army has been called in to help fight the blazes, but it’s too overwhelming.

The smoke is also so think that parts of New Zealand, nearly 1,200 miles away, are enveloped in a sickening orange haze.

And then in Indonesia, over 40 have died in the worst flooding in years in the capital Jakarta and its suburbs after torrential rain brought attention to a stark reality...one of the world’s fastest-sinking megacities, some 30 million, is particularly vulnerable.  Around 40% of the city has sunk below sea level, according to World Bank estimates, in large part because residents rely on pumping underground water for daily use, causing the land above it to subside.  So floodwater doesn’t drain into the sea as it naturally would.

Jakarta has drainage canals, and the city employs dozens of pumps to channel the excess water into them, but the canals overflowed Wednesday, leaving nowhere to pump the water.

---

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

God bless America.  Help keep us safe.

---

Gold: $1552 (12/31 $1523)
Oil: $63.00 (12/31 $61.06)

Returns for the week 12/30-1/3

Dow Jones  -0.04%  [28634]
S&P 500  -0.2%  [3234]
S&P MidCap  -0.4%
Russell 2000  -0.5%
Nasdaq  +0.2%  [9020]

Returns for 2019

Dow Jones  +22.3%
S&P 500  +28.9%
S&P MidCap  +24.1%
Russell 2000  +23.7%
Nasdaq  +35.2%

Bulls 58.9
Bears 17.7...prior two readings both 57.7 / 17.3

Have a great week.

Brian Trumbore

---