Week in Review

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Week in Review

02/08/2020

For the week 2/3-2/7

[Posted 10:30 PM ET, Friday]

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Edition 1,086

Ah yes, just another uproarious, tragic, depressing week on planet Earth, boys and girls.  For starters, understand that given the fact this column covers both global financial markets and geopolitics, it’s impossible not to weave the coronavirus story in and out of various sections.  I may be repeating an item or two, but it’s kind of unavoidable.

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First....on the coronavirus epidemic...the number of deaths Friday in China’s central Hubei province rose to 81...699 overall...according to the province’s health commission that has been posting the tally each morning, local time.  There were a further 2,841 cases detected in Hubei, taking the total in the province to 24,953.  Most of the new deaths were in Hubei’s provincial capital of Wuhan, where the virus is believed to have originated.  Wuhan reported 67 new deaths on Friday, up from 64 on Thursday.  A total of 545 people in Wuhan have now died in the outbreak.

[The national death toll stands at 722, with 34,546 cases in the mainland as of late tonight.]

Wuhan ‘had’ a population of 11 million before the crisis, millions fleeing before the place was locked down, which is a major source of the global problem since, but imagine, say, New York City, with 8 million, having a similar issue.  Someday it’s possible.

But for now, airlines, car manufacturers and scores of major companies have shut their operations, extending closures beyond the Lunar New Year holiday.  Hyundai, in also shutting down production in South Korea, was an example of the impact the outbreak is having on the global supply chain, in this case, auto parts.

The factories are supposed to reopen next week.  Will they?  Will there be enough workers to do so?

Thousands of passengers on two cruise ships in Asia were placed in quarantine, helping do a number on that sector of the tourism industry, with 61 infected with the virus on one ship docked in Yokohama, Japan.  Royal Caribbean and Norwegian Cruise Lines are now banning passengers holding passports from China, Hong Kong and Macau, or anyone who has traveled through the three in the past 14 days.

But the paramount issue is what can you believe in terms of the information coming out of the Communist Party?  According to a study by University of Hong Kong scientists published in the journal The Lancet last weekend, as many as 75,815 people in Wuhan may have been infected with the coronavirus, based on the assumption that each infected person could have passed the virus on to 2.68 others.

Yet this is already an old estimate.

White House economic adviser Larry Kudlow said the epidemic would delay a surge in U.S. exports to China expected from the Phase 1 trade deal, while European Central Bank President Christine Lagarde said the virus was adding to economic uncertainty.

“While the threat of a trade war between the United States and China appears to have receded, the coronavirus adds a new layer of uncertainty,” she said in Paris earlier in the week.

But then Kudlow said Chinese President Xi told President Trump in a call today that China would meet its Phase 1 trade deal purchasing targets despite delays linked to the outbreak.

China’s stock market, closed all last week for the Lunar New Year holiday, fell 7.7% on Monday, the first opportunity for investors since the coronavirus story exploded, though it recovered to finish only down 3.4% on the week owing to government intervention.

Editorial / Wall Street Journal

“Last week WHO Director-General Tedros Adhanom Ghebreyesus praised ‘the seriousness with which China is taking this outbreak, especially the commitment from top leadership, and the transparency they have demonstrated.’  Evidence to the contrary continues to grow, undermining the WHO’s credibility.

“China’s bullying ought to be intolerable amid the coronavirus outbreak.  As the single largest contributor to the WHO, the United States should make that clear to Beijing.”

Finally, as I’ve been writing, the Tokyo Olympics will become an issue and this week, the Tokyo Organizing Committee chief executive Toshiro Muto said his group is “seriously concerned” about the spread of coronavirus and the impact it could have on the Games this summer.

“We are extremely worried in the sense that the spread of the infectious virus could pour cold water on momentum for the Games,” said Muto.

But officials are talking about doing all they can “to protect the athletes.”  Trust me, it won’t get to that stage.  The virus either peters out, as is possible (SARS, though, took eight months to do so), by April, or you will have a drumbeat to call off the Games, at least postpone them to another date.  And that would be a huge deal economically for a Japanese economy that continues to struggle mightily.

As for Impeachment....

The Senate voted Wednesday afternoon to acquit President Trump on both articles of impeachment.

The first, alleging abuse of power, was voted down 52-48, while the second article, alleging obstruction of Congress, failed 53-47.

Mitt Romney was the only one of 53 Republicans to buck party lines and vote to convict on article one, while Democratic Sen. Joe Manchin, from the Trump stronghold of West Virginia, stuck to party lines, voting to convict as well.  Ditto Alabama Democratic Sen. Doug Jones, facing a tough re-election battle this fall.

Swing-votes Republican Senators Lamar Alexander (Tenn.) and Lisa Murkowski (Alaska) said they felt Trump committed actions that were “inappropriate,” but that such actions did not rise to warranting removal from office.

So following is a review of where I’ve stood, and stand going forward on this issue.

I was for censure, writing some of the following in this space.

11/23/19

“But I feel like the impeachment hearings, while further dividing the country, were a necessary exercise.  I have held back on telling you my own opinion all this time, but if I had given one back in September, it would have been for censure, which would have still required hearings but not at the level, and intensity, we had.”

12/21/19...after the House approved the impeachment charges Dec. 18

“Back to impeachment...I have zero doubt President Trump sought interference in our election in coercing dirt on a political opponent from a foreign nation. The White House has produced zero documents and witnesses to refute this.  And over and over the president himself has told us he sought this...in public, like Oct. 3rd in the White House driveway.  What more do you need?

“But given the political climate we’re in and the deep divisions, President Trump should have been censured.  It’s doubtful even this would have had significant bipartisan support, but it was the right thing to do.”

At the same time, Democrats were shooting themselves in the foot.  Yes, Rep. Adam Schiff was a fool for his opening parody of the transcript.  It didn’t matter to me, but he should have known President Trump would pick up that ball and run with it straight through to the election.

And when it came to the former vice president....

10/19/19

“As for Biden, he has totally botched the Hunter Biden mess.  All he had to do was admit he understood the perception it was unethical for Hunter to take the positions he did, at least that it looked like a conflict of interest, apologize, and say he should have handled it better.  We know it was not illegal.

“But Biden just sloughs it off, totally.”

Then on Tuesday, House Speaker Nancy Pelosi handed President Trump another gift, stupidly ripping up the State of the Union address.  That was nonsensical.  The president didn’t offer his hand at the start, making him look very small, but she then matched his gesture...and then some, giving Trump and his supporters something that will keep on giving through November as well.

So President Trump had a great week.  Acquittal, solid economic news, the stock market rebounding back to new highs, and he began to exact his revenge, because that is what he does best, to the detriment of the nation.

But just a few final comments on the week, including the whole impeachment quest.

It was appalling there were no witnesses, but the Democrats would be making yet another huge mistake by pursuing investigations at this point, such as subpoenaing John Bolton.

Let Bolton go on his book tour, with all the accompanying television interviews, hopefully starting with “60 Minutes.”  Bolton, and others who come forward in the months up to Election Day, can still tip the scale.  Lord knows, President Trump, who should be romping to re-election, will continue to give that 1 or 2 percent of the electorate that is going to decide it in the battleground states a reason to second-guess their potential vote for him, i.e., suburban women.

At the same time, I can’t help but note the comments of a man I consider to be just about the best political analyst, in the purest sense, on the air today...CNN’s Van Jones.

After the State of the Union Address, which was about the president using the strong economy to go after the black vote, having won just 8% of it in 2016, Jones said Trump was targeting African Americans over Latinos, a calculated risk, the president continuing to belittle the latter, screaming about sanctuary cities, immigrants being rapists and murderers, and touting a wall that blows down in a stiff wind.

As Jones said, the president’s message to blacks is simple: “You might not like my rhetoric, but look at the results.”

You can’t argue with that pitch.  But will the president manage to give away the opening?

Trump World

--In announcing Wednesday that he would vote to convict President Trump on the impeachment article charging abuse of power, breaking with his party to support removing Trump for office and denying the president the ability to campaign on a “totally partisan impeachment,” Sen. Mitt Romney told the New York Times:

“I believe that attempting to corrupt an election to maintain power is about as egregious an assault on the Constitution as can be made.  And for that reason, it is a high crime and misdemeanor, and I have no choice under the oath that I took but to express that conclusion.”

Romney then said on the Senate floor prior to the vote: “What (the president) did was not ‘perfect.’  No, it was a flagrant assault on our electoral rights, our national security and our fundamental values.  Corrupting an election to keep one’s self in office is perhaps the most abusive and destructive violation of one’s oath of office that I can imagine.”

Opinion...all sides....

Erwin Chemerinsky / Los Angeles Times

“The impeachment process in the House and the Senate has come to a totally predictable conclusion and President Trump has not been removed from office.  My great fear is that the wrong lessons will be drawn from this and will have dire consequences for the future:

“Trump did nothing wrong.  Trump continues to claim that his shakedown call with Ukrainian President Volodymyr Zelensky was ‘perfect’ and he sees the Senate’s decision as full exoneration.

“But the president used the powers of his office to his personal political advantage.  As acting White House Chief of Staff Mick Mulvaney said, and as many confirmed, it was a quid pro quo.  It is wrong for presidents to use their powers in this way.  The Senate vote should not be taken as an acquittal, exoneration or as approval of this conduct; it is a partisan choice by the Republican Party to stick with their president.

“A president should not be impeached in the last year of a term.  Trump’s supporters repeatedly criticized the impeachment effort as an attempt to undo the 2016 election and said that it is wrong to impeach a president facing reelection.

“Of course, any impeachment is removing a president who has been elected.  The Framers could have written into the Constitution that a president could be removed from office for ‘treason, bribery, and other high crimes and misdemeanors except in an election year.’  But they did not.

“A president can ignore congressional subpoenas with impunity.  Trump refused to comply in any way with all congressional subpoenas and directed his aides to ignore them. This was the basis for the second article of impeachment.

“Every past president facing an impeachment inquiry – Andrew Johnson, Richard Nixon and Bill Clinton – complied with subpoenas, although they also fought narrower battles over executive privilege.  Supreme Court precedents establish broad authority for Congress to issue subpoenas as part of its checks and balances oversight duty.  In the future, Congress will need to consider using its now-dormant inherent contempt power, which involves Congress directly imposing sanctions on the failure to comply with subpoenas.

“Meeting the ‘high crimes and misdemeanors’ standard requires a criminal act.  This was the central argument made by Trump’s defenders in the Senate. The claim was that absent a crime, a president cannot be removed from office.

“This argument is ahistorical and indefensible as a matter of constitutional law....Andrew Johnson was impeached for an abuse of power that was not a crime.  But most important, there must be a way to remove a president who seriously abuses the power of the office....

“The Senate trial does not need to be a real trial and senators don’t need to be impartial jurors. The Senate refused to call witnesses in Trump’s impeachment, even when there was potentially important new evidence such as national security advisor John Bolton’s book manuscript.  Senators told the world how they would vote before the trial even began, despite their oath to be ‘impartial.’

“Oaths matter.  Every prior impeachment trial of a president involved witnesses.  The refusal to call them should not be seen as a matter of constitutional principle, but a political choice by Republicans to not risk public disclosure of evidence that would be harmful to their president.

“Whatever the president thinks is in the public interest cannot be an impeachable offense.  This is what lawyer Alan Dershowitz said in Trump’s defense....

“This is akin to Nixon saying that if the president does it, it cannot be illegal. It is a frightening proposition that would allow a president to do virtually anything to help his reelection bid while asserting that his staying in office is in the public interest.  Although Dershowitz later said he did not mean to imply that presidents have unlimited powers, in the future his words will be quoted to support exactly that view.

“The Trump impeachment reflects a country that is deeply polarized and it has exacerbated these divisions.  Democrats overwhelmingly favored impeachment and removal; Republicans with equal fervor opposed it.  The lesson we should draw from it is that this deep partisan divide must be healed or the nation may not survive.

“I fear, however, that the impeachment’s strongest message for future presidents, especially those whose party holds a majority in the Senate, is almost the opposite: They need not fear impeachment and removal, almost no matter what they do.

“A crucial constitutional check on the president has been rendered largely meaningless by the Trump impeachment.  And this should be a frightening lesson for all of us.”

Editorial / Wall Street Journal

“A sorry period in Congressional history ended Wednesday with the Senate acquittal of President Trump on two articles of impeachment passed by a partisan and reckless Democratic House.  Chalk up one more victory for the Framers of the Constitution, who realized the dangers of political factions and created the Senate to check them.

“A sign of our hyperpartisan times is that not a single Senate Democrat broke ranks on either article, not even the ‘obstruction of Congress’ article that sought to eviscerate the separation of powers and two centuries of precedent on executive privilege.  The vote was 53-47. Apparently  the wrath of the anti-Trump resistance, and the risk of a possible primary challenge, was too fearsome to buck.  Or perhaps it was a relatively easy vote since Mr. Trump was in no danger of being evicted from office....

“In the bitter end, what has all of this accomplished?  The House has defined impeachment down to a standard that will now make more impeachments likely.  ‘Abuse of power’ and ‘corrupt motives’ are justifications that partisans in both parties can use.

“Mr. Trump remains in office, but he will now claim vindication and use it as a rallying cry for re-election against what he will call an attempted insider coup.  The partisan furies have intensified, and this election year will be even more bitterly fought.  Mr. Trump’s political standing has even improved during the impeachment struggle, as voters concluded early on that his behavior was wrong and unwise but not impeachable.

“We doubt this is what Nancy Pelosi hoped for, but it is what her partisan impeachment has wrought.  She lost to a better statesman – James Madison.  Now let the voters decide, as Madison and his mates intended.”

Editorial / USA TODAY

“Senate Republicans are no doubt congratulating themselves for staging the first impeachment trial in history with no witnesses and nothing approaching full consideration of the issues at stake.  By bringing the proceedings to their predictable, preordained and premature conclusion on Wednesday, they chose the path of least resistance.

“As President Donald Trump and his enablers run their victory laps, however, the sound you hear is that of the Constitution being trampled.  To say the very least, and the painfully obvious, the acquittals leave a damaging legacy.

“The failure to sanction Trump’s misconduct – using your tax dollars to shake down a foreign government and smear a political rival – means that future presidents will have little to fear from the impeachment process.  The failure to stand up to Trump’s stonewalling of congressional investigators grievously wounds the legislature’s oversight authority.

“Over the past few years, Republicans who once warned that Trump posed grave dangers to both party and country have, one by one, cravenly buckled.  Now, with a truncated trial that they conceived, executed and brought to an early end, they have completed their acts of submission.  All but Romney, the Utah senator and former GOP presidential nominee who courageously voted to convict on abuse of power, are accessories to Trump’s assaults on the rule of law.

“By voting to exclude witnesses, the Senate Republicans created a ‘trial’ that went from opening arguments to closing statements with no testimony in between.  In all likelihood, the evidence they did not want to hear, from former national security adviser John Bolton and others, will drip out in the coming months, prompting people to wonder why the Senate refused to consider it.

“Now that the Senate has rendered its verdict, in nine months the voters will have the opportunity to render theirs.

“Beyond the next election, the Senate’s decision to let Trump off without even requiring him to acknowledge his transgressions, or censuring them, sets a troubling precedent.  As Patrick Philbin, one of Trump’s attorneys, acknowledged in a different context: ‘Whatever is accepted in this case becomes the new normal.’

“What might that new normal look like?

“Some day, perhaps in the not-too-distant future, a Democrat will be elected president.  He or she will look at the lawlessness of Trump and the cowardice of the Senate and conclude that anything goes.

“What’s more, it might be more than a routine Democratic administration that Republicans are confronted with.  To look at the rapidly diversifying electorate and the starkly liberal views of young voters, it’s not impossible to envision an activist, progressive administration that seeks to rule by executive fiat.

“If that’s the case, the Senate’s actions now will look less like political calculation than self-destruction.  The majority will have handed their opponents the weapons to use against them....

“The impact of Wednesday’s votes is likely to reverberate for generations to come.”

Gerald F. Seib / Wall Street Journal

“The impeachment trauma may leave the two most important figures in each party – Republican President Trump and Democratic House Speaker Nancy Pelosi – incapable of working with each other.  He blames her for letting impeachment happen in the first place; as impeachment unfolded, she appears to have become more convinced that he is dishonest and unethical.

“The deep bitterness was on full, nationally televised display Tuesday night, when Mr. Trump refused the traditional handshake with the speaker before he began his State of the Union speech, and Mrs. Pelosi dramatically tore apart the text of the president’s speech as soon as it was over.  The two have never had a good relationship.  Now they essentially can’t stand to be in the same room together.

“This is not normal, yet it may be an impediment to action in Washington, not just for the rest of this year but for a long time to come.

“Baffling and infuriating as it seems to Democrats, the impeachment controversy actually may have nudged upward Mr. Trump’s chances of being re-elected this fall.  The president’s core base of voters is even more energized.  One reader of this column emailed during the impeachment debate to declare that he was prepared to crawl on hands and knees across broken glass to vote for the president’s re-election – and that he has friends who feel even more strongly.

“The venerable Gallup poll this week showed Mr. Trump’s job approval edging up to the highest level of his presidency.  Similarly, Wall Street Journal/NBC News polling shows his approval among the crucial bloc of independent voters has risen.

“In House races, meanwhile, votes cast for impeachment could backfire for some Democrats in Mrs. Pelosi’s caucus as they seek re-election this year.  In particular, the 30 House Democrats seeking re-election in districts Mr. Trump won in 2016 will have some problems back home.

“Yet Republicans have built-in problems of their own, in particular the 26 House Republicans who have chosen to retire rather than seek re-election.  Some of them come from districts where Democrats fired up by impeachment as well as moderate Republicans turned off by Mr. Trump’s behavior could tip those seats to the Democrats this fall.

“Bottom line: Chances are good that Democrats retain control of the House – and Mrs. Pelosi remains Speaker.

“Meanwhile, though, impeachment and broader Trump controversies could make it harder for Republicans to keep control of the Senate.  Three senators – Martha McSally of Arizona, Cory Gardner of Colorado and Susan Collins of Maine – are seeking re-election from swing states where Mr. Trump is relatively unpopular and where their votes against convicting him could energize Democrats and independents to vote against them.

“Some other Republican senators – Thom Tillis of North Carolina and Kelly Loeffler of Georgia – face similar problems, and an open seat in Kansas could be within reach for Democrats.  At the same time, Democratic Sen. Doug Jones of Alabama has the reverse problem as he seeks re-election in a state where the president is popular and his vote against Mr. Trump could hurt him.

“Bottom line: Democrats need to flip three seats to draw the Senate to an even 50-50 split, and four to take outright control, and that is possible.

“Perhaps impeachment’s bitterness will fade, starting with members of the Senate pulling together.  ‘Personal relationships matter a lot more here,’ says Republican Sen. Roy Blunt of Missouri.  Or, perhaps it will help cement the capital’s division for some time to come.”

--On the State of the Union Speech....

Editorial / Los Angeles Times

“Even if Republicans in the House chamber hadn’t begun shouting ‘Four more years,’ it would have been obvious that President Trump’s 2020 State of the Union address was a campaign speech by another name.

“It was also – Democrats take note – an effective one, despite exaggerations and dubious claims that are already being dissected by fact-checkers.

“Granted, Trump’s emphasis on optimism and his talk about ‘building the world’s most prosperous and inclusive society’ was laced with familiar resentment and score-settling.

“ ‘The days of our country being used, taken advantage of, and even scorned by other nations are long behind us,’ he bragged.  Another familiar theme was the claim that he had succeeded where President Obama had failed.  (As always, he exaggerated the extent to which the economic recovery is attributable to his administration.)

“And, yes, there were also appeals to his political base, including an attack on California’s ‘sanctuary’ policies for immigrants and a promise to protect prayer in schools and the right to keep and bear arms.  Trump also boasted about the conservative judges he had appointed, name-checking Brett Kavanaugh and Neil Gorsuch, his appointees to the Supreme Court, who were in the audience.

“But even if a snarl seemed to lurk under the calls for national unity, Trump offered a message designed to appeal to the sort of Democrats who defected to his cause in 2016.  That pitch went beyond the claim that he has presided over a ‘blue collar boom.’

“Trump said that ‘we will always protect your Medicare and your Social Security.’  And he attacked those ‘who want to take away your healthcare, take away your doctor and abolish private insurance entirely.’  He promised: ‘We will never let socialism destroy American healthcare!’

“Never mind the implication that Medicare itself is arguably a socialist healthcare program.  Trump was clearly appealing to voters – including union members – who might be put off by ‘Medicare for All’ as proposed by Sens. Bernie Sanders and Elizabeth Warren.

“Pete Buttigieg, who proposes the less radical ‘Medicare for all who want it,’ can point to Trump’s rant as a reason for Democrats to support him.  But all the Democratic candidates should come away from this speech with a recognition that Trump will be a formidable opponent.”

--Josh Rogin / Washington Post

“If his State of the Union address is any indication, President Trump’s foreign policy in 2020 will be more than ever about politics and less than ever about actual policy.  Most of his major foreign policy efforts have run their course.  But Trump is betting voters in November won’t care about the gap between his rhetoric and the world’s realities.

“Foreign policy wasn’t exactly a major theme of the president’s annual speech to Congress.  The few issues he mentioned were carefully tailored to his reelection campaign.  The problem is, Trump is running on successes that aren’t actually successes and mostly ignoring the failures.  What’s more, he doesn’t seem to have plans for what to do next.

“The clearest example was Trump’s invitation to Juan Guaido, who has been recognized by the United States and more than 50 other governments as the legitimate president of Venezuela.  Trump even hosted him at the White House on Wednesday.

“ ‘We are supporting the hopes of Cubans, Nicaraguans and Venezuelans to restore democracy,’ said Trump, when introducing Guaido to the House chamber on Tuesday.  ‘Please take this message back that all Americans are united with the Venezuelan people in their righteous struggle for freedom.’

“The Venezuelan people know perfectly well that the U.S. government’s year-old effort to help Guaido overthrow the sitting Venezuelan president, Nicolas Maduro, has all but failed.  The Trump administration has exhausted the resources it is willing to devote to pressuring Maduro, who currently faces no serious challenge to his power.

“Guaido has become a prop for a failed policy.  But it’s great politics, especially in Florida – where Latino voters lean heavily anti-Maduro – and especially if Trump ends up running against Sen. Bernie Sanders, who opposed the recognition of Guaido and identifies as a democratic socialist.

“Trump’s remarks on the Middle East peace process are another example of pure political spin on a policy that is dead in the water.  He touted son-in-law Jared Kushner’s peace plan, which has been soundly rejected by the Palestinians and many of their biggest Arab supporters, making it a nonstarter.  But the fact that it heavily favors Israel makes it red meat for the donors.  Few believe it is likely to bring any significant progress....

“On China, Trump touted his ‘phase one’ trade deal as a mission accomplished, even though its benefits for trade between the two countries remain unclear at best.  It also offers few remedies to China’s economic aggression. The administration says it is starting negotiations for ‘phase two,’ but no one believes it has a real chance of bearing fruit this year.

“ ‘For decades, China has taken advantage of the United States,’ Trump said on Tuesday.  ‘Now we have changed that, but, at the same time, we have perhaps the best relationship we’ve ever had with China, including with President Xi.’

“Only a few days ago, Secretary of State Mike Pompeo called China the ‘central threat of our times.’  Washington and Beijing are clashing on everything from technology to Hong Kong to the coronavirus outbreak.  Again, Trump’s rhetoric doesn’t match the reality....

“During his 2019 speech, Trump touted his then-upcoming second summit with North Korean leader Kim Jong Un in Hanoi.  This year, he didn’t even bring up North Korea, where his most public foreign policy gambit has completely stalled.

“Nor did he say anything about Syria, other than to celebrate the killing of Islamic State leader Abu Bakr al-Baghdadi.

“To be sure, the Trump administration is trying to make progress on difficult issues, but officials know the president’s political statements cannot be contradicted, even when good policy requires it.  As long as Trump resists changing strategies to respond to new events, he is setting his own team up for failure.

“Trump’s approach makes sense politically, so long as he and his team can keep it up for the rest of the year.  But other countries are not standing still.  As the election nears, Trump will be more risk-averse and less willing to acknowledge the realities around the world.  That’s an opportunity bad actors are sure to exploit.”

--After he was acquitted, President Trump appeared before the annual National Prayer Breakfast, a bipartisan event bringing politicians and religious leaders together to seek common ground through a shared faith, and the president, rather than trying to heal the country, instead turned an annual sermon on American civil religion into another extended campaign advertisement.

Trump entered the room and defiantly waved a copy of USA TODAY with the front-page headline “ACQUITTED.”  House Speaker Nancy Pelosi was seated just a few feet away.  She was there to offer a prayer for the suffering and downtrodden of the world.

After keynote speaker Arthur Brooks of the conservative American Enterprise Institute and a Harvard social scientist spoke of Americans exercising moral courage by loving their enemies, Trump then spoke:

“Arthur, I don’t know if I agree with you.  I don’t know if Arthur is going to like what I’m going to say.”

Trump then demonized his political enemies: “As everyone knows, my family, our great country, and your president have been put through a terrible ordeal by some very dishonest and corrupt people.”

Referring to Mitt Romney’s vote to convict, the president said: “I don’t like people who use their faith as justification for doing what they know is wrong.”

And then, going after Pelosi, who has said on more than one occasion that she prays for the president, Trump said: “Nor do I like people who say ‘I pray for you,’ when they know that that’s not so.”  He added, “So many people have been hurt.  And we can’t let that go on.”

John Fea, professor at Messiah College / USA TODAY

“Trump loves Christianity as long as it props up his corrupt presidency.  He claims to be a defender of religious freedom, but gets angry when people exercise that freedom in a manner that exposes his depravity.

“Except for telling a story about an African American pastor from Louisiana whose faith provided a source of strength after an arson attack that destroyed his church, Trump did little to offer healing to our broken nation. There were no acts of contrition for his role in the impeachment mess.  There was no humility. There was no moral leadership.

“Throughout his presidency, Trump has used Christianity as a political weapon.  On Thursday morning he used the National Prayer Breakfast as his shooting range.

“And his evangelical supporters cheered.”

The president’s “celebration” of his acquittal later in the East Room wasn’t any better.

I got a kick out of one particular line:

“I’ve done wrong things in my life...but not purposely.”

--Marie L. Yovanovitch, former U.S. ambassador to Ukraine / Washington Post

“After nearly 34 years working for the State Department, I said goodbye to a career that I loved.  It is a strange feeling to transition from decades of communicating in the careful words of a diplomat to a person free to speak exclusively for myself.

“What I’d like to share with you is an answer to a question so many have asked me: What do the events of the past year mean for our country’s future?

“It was an honor for me to represent the United States abroad because, like many immigrants, I have a keen understanding of what our country represents.  In a leap of optimism and faith, my parents made their way from the wreckage of post-World War II Europe to America, knowing in their hearts that this country would give me a better life.  They rested their hope, not in the possibility of prosperity, but in a strong democracy: a country with resilient institutions, a government that sought to advance the interests of its people, and a society in which freedom was cherished and dissent protected.  These are treasures that must be carefully guarded by all who call themselves Americans.

“When civil servants in the current administration saw senior officials taking actions they considered deeply wrong in regard to the nation of Ukraine, they refused to take part.  When Congress asked us to testify about those activities, my colleagues and I did not hesitate, even in the face of administration efforts to silence us.

“We did this because it is the American way to speak up about wrongdoing.  I have seen dictatorships around the world, where blind obedience is the norm and truth-tellers are threatened with punishment or death.  We must not allow the United States to become a country where standing up to our government is a dangerous act.  It has been shocking to experience the storm of criticisms, lies and malicious conspiracies that have preceded and followed my public testimony, but I have no regrets.  I did – we did – what our conscience called us to do.  We did what the gift of U.S. citizenship requires us to do.

“Unfortunately, the last year has shown that we need to fight for our democracy.  ‘Freedom is not free’ is a pithy phrase that usually refers to the sacrifices of our military against external threats.  It turns out that same slogan can be applied to challenges which are closer to home.  We need to stand up for our values, defend our institutions, participate in civil society and support a free press.  Every citizen doesn’t need to do everything, but each one of us can do one thing. And very day, I see American citizens around me doing just that: reanimating the Constitution and the values it represents.   We do this even when the odds seem against us, even when wrongdoers seem to be rewarded, because it is the right thing to do.

“I had always thought that our institutions would forever protect us against individual transgressors.  But it turns out that our institutions need us as much as we need them; they need the American people to protect them or they will be hollowed out over time, unable to serve and protect our country....

“(Our) public servants need responsible and ethical political leadership.  This administration, through acts of omission and commission, has undermined our democratic institutions, making the public question the truth and leaving public servants without the support and example of ethical behavior that they need to do their jobs and advance U.S. interests....

“These are turbulent times, perhaps the most challenging that I have witnessed.  But I still intend to find ways to engage on foreign policy issues and to encourage those who want to take part in the important work of the Foreign Service.  Like my parents before me, I remain optimistic about our future. The events of the past year, while deeply disturbing, show that even though our institutions and our fellow citizens are being challenged in ways that few of us ever expected, we will endure, we will persist and we will prevail.”

--The White House today fired Lt. Col. Alexander Vindman, whose testimony in the House impeachment hearings infuriated President Trump and his allies, escorting him out of the White House just days after the Senate trial ended, his lawyer said.

“There is no question in the mind of any American why this man’s job is over, why this country now has one less soldier serving it at the White House,” said David Pressman in a statement.  “Lt. Col. Vindman was asked to leave for telling the truth.  His honor, his commitment to right, frightened the powerful.”

Colonel Vindman’s twin brother, also an Army lieutenant colonel who worked at the White House, was fired as well and escorted out at the same time, according to the New York Times and other publications.

Of course President Trump has every right to dismiss both Vindmans, but it’s disgraceful to escort them out in that fashion.

This story is far from over.  There are some generals who should be furious, for starters.

Both will be reassigned within the Pentagon, but it’s the positions they receive that will be scrutinized.

And, no surprise, Gordon Sondland is on his way home tonight, having been relieved of his duties as U.S. ambassador to the European Union.

--Trump tweets:

“The Democrat Caucus is an unmitigated disaster.  Nothing works, just like they ran the Country.  Remember the 5 Billion Dollar Obamacare Website, that should have cost 2% of that.  The only person that can claim a very big victory in Iowa last night is ‘Trump.’”

“The Democrat Party in Iowa really messed up, but the Republican Party did not.  I had the largest re-election vote in the history of that great state, by far, beating President Obama’s previous record by a lot.  Also, 97% Plus of the vote!  Thank you Iowa!”

“When will the Democrats start blaming RUSSIA, RUSSIA, RUSSIA, instead of their own incompetence for the voting disaster that just happened in the Great State of Iowa?”

“It is not the fault of Iowa, it is the Do Nothing Democrats fault.  As long as I am President, Iowa will stay where it is.  Important tradition!”

“I hope Republicans & the American people realize that the totally partisan Impeachment Hoax is exactly that, a Hoax.  Read the Transcripts, listen to what the President & Foreign Minister of Ukraine said (‘No Pressure’).  Nothing will ever satisfy the Do Nothing, Radical Left Dems!’

“Mini Mike is now negotiating both to get on the Democrat Primary debate stage, and to have the right to stand on boxes, or a lift, during the debates.  This is sometimes done, but really not fair!”

“Many of the ads you are watching were paid for by Mini Mike Bloomberg.  He is going nowhere, just wasting his money, but he is getting the DNC to rig the election against Crazy Bernie, something they wouldn’t do for @CoryBooker and others.  They are doing it to Bernie again, 2016.”

“Mini Mike is part of the Fake News.  They are all working together.  In fact, Bloomberg isn’t covering himself (too boring to do), or other Dems.  Only Trump. That sounds fair!  It’s all the Fake News Media, and that’s why nobody believes in them any more.”

[Yes, Mike Bloomberg’s colossal ad spending is getting under Trump’s skin.]

Tweets from Don Jr.

“Mitt should have already learned this lesson in 2012, but he’s too desperate for affirmation from those who will never actually respect him.  #ExpelMitt”

“Mitt should be expelled from the @SenateGOP conference. #ExpelMitt”

“Mitt Romney is forever bitter that he will never be POTUS. He was too weak to beat the Democrats then so he’s joining them now.

“He’s now officially a member of the resistance & should be expelled from the @GOP”

Wall Street and the Coronavirus

Stocks rocketed to new highs all over again after two dismal weeks in the markets on the first coronavirus stories and the uncertainty over the impact.

At first the Chinese government extended the Lunar New Year holiday for three days to keep people home and halt the spread of the virus.  But this is doing a major job on the Chinese tourism and hospitality industries...hotels and restaurants, concerts, sporting events, movie theater chains have closed, amusement parks...

Supply chains are also being severely disrupted.

But as noted above, investors seem to now believe this is a short-term event and most thought the short-term harm would be limited.  I think, instead, that caution is warranted.

That said, one positive for exporters is China has actively expanded its meat imports to stabilize domestic supply, though it’s not as yet known which countries are profiting in particular.  You would think the U.S. would be.

And China said it would slash tariffs on $75 billion of U.S. imports in half as part of its efforts to implement the trade agreement inked on Jan. 15.

Last Sunday, White House national security adviser Robert O’Brien said on CBS’ “Face the Nation” that Beijing had not yet accepted a U.S. offer of help to contain the epidemic, though O’Brien said “the Chinese have been more transparent certainly than in past crises and we appreciate that.”

Hardly.

Editorial / Wall Street Journal

“Some of President Trump’s advisers may want to wall off the U.S. and China into separate spheres of influence, but the novel coronavirus is showing the futility of economic quarantines.  Like it or not, the Chinese and world economies sniffle and cough together.

“Commodities prices sank on Monday amid news that the coronavirus and resulting economic contagion are spreading.  U.S. crude oil prices have fallen 20% over the last three weeks as Chinese oil demand is expected to fall by two million barrels a day and global economic growth forecasts have plunged.  Copper is down 13%, and iron and steel prices have tumbled....

“Apple, McDonald’s, Levi Strauss and Starbucks have temporarily closed stores.

“U.S. manufacturers such as Ford, Apple and Tesla have temporarily halted production.  One-sixth of Apple sales and nearly half of chip-maker Qualcomm’s revenues come from China. So do 80% of active ingredients used by drug-makers to produce finished medicines.  Because China is the world’s largest manufacturer and an enormous consumer market, the economic freeze will disrupt supply chains and reduce corporate earnings.

“China’s GDP growth was already almost certainly lower than the official figure of 6%, and it is likely to fall by a third or more....Damage to the global economy is harder to forecast.  It may be relatively muted if the virus can be contained quickly and normal business activity resumes.

“But the virus’ rapid spread across China suggests it is more infectious than SARS, which took eight months to contain in 2003.  China is also now far more important to the world economy, accounting for about 15% of global GDP compared to 4% in 2003.

“The virus shock is hitting just when business investment was expected to rebound after a successful Brexit and a truce in Mr. Trump’s trade wars.  Now CEOs will probably wait more months to see how the contagion plays out.  The yield on the 10-year Treasury has fallen by about 30 basis points this past month to 1.53%, causing the yield curve to invert again.  The 2019 U.S. GDP growth rate of 2.3% may be the best we can hope for if the first quarter is weak.

“The Federal Reserve will be watchful, but with rates already low there’s no reason now for panic rate-cutting or new quantitative easing.  U.S. stocks recovered somewhat on Monday as investors bet that the American economy is less vulnerable to external shocks than is most of the world.  Saudi Arabia wants the Organization of the Petroleum Exporting Countries to slash crude production to bolster prices, a useful step that could help U.S. shale producers.

“It’s probably too much to ask Mr. Trump to lift his tariffs on Chinese exports, though it would help.  At the very least he could give Beijing more latitude to meet its promise to buy $200 billion more in U.S. products over the next two years.  The last thing the President should want when campaigning for re-election is an economic pandemic.”

As the Journal also noted in an earlier editorial:

“America has legitimate complaints about the way China does business and trade, especially the theft of intellectual property. But American workers don’t benefit from a poorer China beset by disease.  America benefits when the rest of the world prospers and can buy U.S. goods.”

As for the hard data on the U.S. economy, today we had another strong jobs report, with a much-higher than expected figure of 225,000 for January, with small upward revisions to November and December that result in a 3-month average of 211,000, which is very solid, especially given where we are in the economic cycle.

The unemployment rate ticked up from 3.5% to 3.6%, but this was for all the right reasons, more returning to test the jobs waters.

Average hourly earnings rose to a 3.1% year-over-year pace, better, but still shy of the 3.5% to 4.5% level an economy such as this should be generating.

U6, the underemployment rate, rose to 6.9%, though still near historical lows.

There was other good news, with the ISM manufacturing PMI coming in better than expected at 50.9 (50 being the dividing line between growth and contraction), while the services reading also exceeded expectations at 55.5.

December construction spending was –0.2%, factory orders in the month +1.8%.

Add it all up and the Atlanta Fed’s GDPNow very early barometer of first-quarter growth is now at 2.7%.

***But back to the jobs report, the Labor Department issued its annual revisions to past data and it showed the economy created 514,000 fewer jobs for the period April 2018 through March 2019 than originally estimated; the biggest downgrade to payrolls over a 12-month period since 2009.

The revisions could attract attention amid concerns the Labor Department’s Bureau of Labor Statistics, which compiles the employment data, may not be fully capturing the impact on payrolls of the trade war with China.

Europe and Asia

PMI week in the eurozone (EA19), with the final composite output reading at 51.3 in January vs. 50.9 in December.  [Readings courtesy of IHS Markit]

Manufacturing was 47.9 vs. December’s 46.3; the service sector 52.5 vs. 52.8.

Germany: 45.3 manufacturing; 54.2 services
France: 51.1 mfg; 51.0 services
Italy: 48.9 mfg; 51.4 services
Spain: 48.5 mfg; 52.3 services (weakest in six years)
Ireland: 51.4 mfg; 56.9 services (up from 87-mo. low in October, 50.6)
Netherlands: 49.9 mfg.
Greece: 54.4 mfg.

UK: 50.0 mfg; 53.9 services (big jump over Dec.’s 50.0)

Chris Williamson / IHS Markit

“A further rise in the headline PMI to the highest since last August adds to evidence that the tide may be turning for the eurozone economy. Although growth remains subdued, with the survey signaling a quarterly GDP growth rate of just under 0.2%, manufacturing is showing welcome signs of stabilizing after the heavy downturn seen last year and services growth remains encouragingly resilient, thanks largely to the improving labor market.

“Business confidence about the outlook has also improved markedly since late last year, now running at a 16-month high.

“Fears of a manufacturing downturn spreading to services have therefore eased, in turn helping assuage the risk of recession.  We expect to see growth gaining momentum steadily as 2020 proceeds, as low inflation, a healthy job market and easing financial conditions support consumer spending, while improving global trade helps manufacturers.

“However, the pace of output growth is still subdued, and firms remain concerned by existing headwinds as well as fresh risks.  Although U.S.-China trade war tensions have cooled, U.S. trade rhetoric has now turned to Europe, with the auto sector looking especially vulnerable to tariff threats.  Similarly, while the UK has formally left the EU, trade discussions will no doubt cause an air of uncertainty to hang over the continent. The Wuhan coronavirus meanwhile represents a new potential disruptor to business and trade.  We consequently expect the eurozone to avoid recession in 2020 but to struggle to muster growth of 1.0%.”

Separately, Eurostat reported the volume of retail trade in the euro area in December fell 1.6% over November; though up 1.3% over December 2018.

Germany / France: There was more poor economic news from Europe’s largest economy this week, with German industrial production sliding 3.5% in December, after a report showed factory orders declining at the fastest pace in more than a decade.  That suggests the economy may have contracted in the fourth quarter, with GDP figures due out next week.

In France, industrial output fell 2.8% in December.

Brexit: After exiting the European Union last Friday, the UK enters the transition period, meaning nothing really changes for the rest of the year in terms of its relations with the EU, but trade talks will begin formally in March and then the clock is running once again in earnest.

London and Brussels have to reach a deal on trade and future relations, and so far, British Prime Minister Boris Johnson is striking a much tougher tone than his predecessor, Theresa May.

Johnson says Britain will not adhere to the bloc’s rules and regulations.  And he has said if the EU fails to grant a trade deal allowing for tariff- and quota-free trade in goods, similar to the terms the bloc now has with Canada, Britain will pursue a much looser arrangement, like Australia has.

“There is no need for a free trade agreement to involve accepting EU rules on competition policy, subsidies, social protection, the environment, or anything similar, any more than the EU should be obliged to accept UK rules,” Johnson said.

Johnson suggests the EU offer the free trade deal along the lines of the one it has with Canada, which does not have to follow the bloc’s rules.

“The choice is emphatically not ‘deal or no-deal'.  The question is whether we agree to a trading relationship with the EU comparable to Canada’s, or more like Australia’s.”

The EU-Australia trade runs mostly on World Trade Organization rules, though there are specific rules for certain goods.

Many EU leaders fear Britain is going to try to undercut the EU by failing to agree to what the bloc calls a “level playing field,” which really refers to issues such as environmental standards and labor relations.

Johnson said, “We are not leaving the EU to undermine European standards.  We will not engage in any kind of dumping, whether commercial or social or environmental.”

But Johnson also said in a speech in London: “I am here to warn you today that this beneficial magic is fading. Free trade is being choked, and that is no fault of the people, that is no fault of individual consumers.  I’m afraid it is the politicians who are failing to lead, the mercantilists are everywhere, the protectionists are gaining ground.  From Brussels to China to Washington, tariffs are being waved around like cudgels.  There is ever growing proliferation of non-tariff barriers, and the resulting tensions are letting the air out of the tires of the world economy.”

And Johnson added: “We are ready for the great multi-dimensional game of chess in which we engage in more than one negotiation at once.”

French President Emmanuel Macron warned the other day that although France wanted to forge close ties with Britain after Brexit, it could not expect to be treated the same way as when it was part of the European Union.  “You can’t be in and out,” Macron told the French in a televised address.

“The British people chose to leave the European Union. It won’t have the same obligations, so it will no longer have the same rights.”

I told you the other week that fishing rights are going to be a big deal in trade talks and Macron said specifically he would defend the interests of French fishermen, farmers and workers in the upcoming negotiations on the future relationship between Britain and the EU.  “And in this negotiation, we will remain united, all 27 of us,” Macron said.

Understand Macron is probably the single key figure in the coming eleven months on the EU side, and to a lesser extent, Angela Merkel.  Macron is a fervent European integrationist, who has called Brexit a “shock” and the result of lies and false promises.  In his address to the people, he vowed to strive to make the EU more democratic, powerful and efficient.

Turning to Asia...in China, last week I told you the government released its official PMIs for manufacturing, 50.0, and services, 54.1, in January.  This week we had the private Caixin/Markit data...51.1 mfg., 51.8 for services...both down over December.

Economic growth in China is already at a 30-year low, but now the coronavirus will take it down further.  How much remains to be seen.  Because of the Lunar New Year holiday, and then companies shuttering factories and offices further because of the virus, we may not get a true reflection on the impact until March, which is also when Beijing releases its ‘official’ growth target for the year, though there is already talk of rescheduling the annual parliamentary confab at which such a pronouncement is made.

In Japan, the manufacturing PMI for January was 48.8, the service sector reading 51.0.

The government also reported lousy readings on household spending for December, down 4.8%, another sign of the struggling consumer following the October sales tax hike, while inflation-adjusted wages for the month fell 0.9%, ditto for all of 2019.  This is hardly what Prime Minister Shinzo Abe sought from ‘Abenomics’.

South Korea’s manufacturing PMI was 49.8 in January, and exports fell for a 14th consecutive month, -6.1% year-over-year.

Taiwan’s manufacturing PMI was 51.8 last month, up from 50.8 in December, but as in all the above, now it’s about the coronavirus.

Street Bytes

--Stocks soared owing to solid earnings, China’s reduction in some of its tariffs, and positive news on the economy, which until today outweighed any concerns over the coronavirus.

The Dow Jones rose 3% to 29102, the S&P 500 surged 3.2%, and Nasdaq soared 4%, it’s best week since December 2018, all having it record highs on Thursday.  [The Dow and S&P had their best weeks since last summer.]

--U.S. Treasury Yields

6-mo. 1.55%  2-yr. 1.40%  10-yr. 1.58%  30-yr. 2.05%

Despite all the good economic news, it’s amazing the 10-year still has a yield of just 1.58%, as in there are zero concerns whatsoever that the Federal Reserve is going to be forced to hike at some point this year, and, in fact, many now expect a rate cut in June. 

--Russia supported a recommendation to deepen OPEC+ global oil supply curbs to compensate for a drop in demand caused by the coronavirus.  An OPEC panel proposed a provisional cut in output of 600,000 barrels per day, and would extend current curbs of 1.7 million bpd.

Oil prices had fallen $10 as measured by West Texas Intermediate since the start of the year as the virus spread.  Today, WTI closed at $50.36, lowest since Jan. 2019.

--The individual stock story of the last few weeks has certainly been Tesla. The company has now reported two straight quarters of profits (though still a loss for all of 2019), with sales and deliveries rising sharply, a new Shanghai factory that was producing vehicles far sooner than expected, and another factory under construction in Germany. 

It was also bullish that a battery joint venture Tesla has with Panasonic in Nevada logged a quarterly profit for the first time at the end of 2019, as higher production offset the cost of raw materials.  Panasonic’s CFO said, “We are catching up as Tesla is quickly expanding production,” referring to battery cell production.  “Higher production volume is helping to push down materials costs and erase losses.”  Musk last April had said that battery production had become a constraint on output of Tesla’s Model 3 sedans.

All is good, say the bulls. Tesla has a lock on the small, but growing, electric vehicle market.

But the company’s sky-high valuation simply isn’t warranted.  And there are still significant safety concerns that pop up more often than not, while Tesla’s quality control is questionable.

So talk about a wild rollercoaster...Tesla closed at $650 on Jan. 31, then $780 on Feb. 3, and $887 on Feb. 4 (hitting $969 intraday), only to plummet to $734 on Wednesday, Feb. 5, before closing the week at $748.

--Shares in Apple Inc. were all over the board this week, as the rapid spread of the coronavirus raised questions about Apple’s dependency on China, both for sales and as a manufacturing hub for most of the iPhones, iPads and Macs sold worldwide.

Apple and Foxconn Technology, the largest manufacturer of Apple devices, said production would resume after a 10-day delay on Feb. 10, but further extensions of the shutdown are probable.  Apple is expected to ship 5% to 10% fewer iPhones than was projected prior to the outbreak, according to analysts, but this number could change significantly.

--Royal Caribbean suspended eight cruises, warning of a $50 million hit to profits amid rising fears over the virus’ impact on the global economy. 

--Hong Kong-based Cathay Pacific is asking all of its 27,000 employees to take three weeks of unpaid leave over the coming months, as it reels from the impact of coronavirus, the CEO saying, “Preserving our cash is now key to protecting our business.”

--Nike has been closing stores in China temporarily, China one of its biggest markets.

--KFC licensee Yum China said it could report an operating loss in the first quarter and take a significant hit to sales and productivity due to the outbreak, after it was forced to shut nearly a third of its stores; a warning echoing thru others of its ilk.

The Lunar New Year holiday should be the busiest of the year in China for companies like Yum, but Yum said same-store sales at restaurants that remained open slumped 40%-50% compared with a year ago.

“This year, the outbreak right before Chinese New Year is causing significant interruption to the business,” CEO Joey Watt said in a call with analysts.

Yum China was spun off from Yum Brands in 2016.  Yum China, also the exclusive licensee of the Pizza Hut and Taco Bell brands in China, has over 9,200 restaurants in more than 1,300 cities.

Despite the short-term issues, it still expects to open 800-850 new stores in the country this year.

For the fourth-quarter, same-store sales grew 2% thanks to strong demand at its KFC restaurants.

--As for Yum Brands (U.S., Europe and everywhere else, ex-China), it reported earnings that easily beat last year but were below expectations, though revenue at $1.69 billion exceeded the Street’s estimates.

The KFC division saw same-store sales rise 3%, compared with a 2% drop in Pizza Hut and a 4% increase for Taco Bell.  Collectively, global comparable sales increased by 2% in the final quarter of 2019.

--Toyota Motor Corp. recorded solid profits in its fiscal third quarter, but cautioned about uncertainty in China due to the Wuhan crisis.

Toyota, still the world’s largest car maker by market capitalization, recorded operating profit of $5.96 billion in the October-December quarter, slightly below the year-earlier figure.

Operating profit in North America quadrupled in the quarter even though sales dipped slightly, reflecting Toyota’s shift to higher-margin trucks and SUVs.  Nearly two-thirds of Toyota’s sales in the U.S. are in that category, specifically the Highlander SUV and Tacoma pickup.

But in terms of the impact of the coronavirus, Toyota said factories in China would remain closed until at least Sunday, with a restart date still uncertain.  You also have the situation where can workers even return to work, especially those who were visiting families during the holiday and now might be stuck in Hubei province.

And then depending on where they are coming from, or where they are headed, local authorities may be demanding they stay home for 14 days before going back to work.

Plus if you are Toyota, you’re worried about parts procurement and the supply chain.

Again, not to beat a dead horse (but of course such a situation requires you do so), while a Toyota can say today that factories outside China, including those in the U.S. and Japan, are operating normally, at what point is this no longer the case because of a shortage of parts from China, such as in my earlier example concerning Hyundai and South Korea.

--Record U.S. sales of Ram trucks and the launch of the new Jeep Gladiator helped fourth-quarter profits at Fiat Chrysler Automobiles grow by more than a third, the U.S.-Italian company reported Thursday. 

Fiat Chrysler, which is in the process of merging with French rival PSA Peugeot, reported net profit in the fourth quarter of $1.74 billion, with the North America division reporting record results, though this was against losses in Asia and declining profits in Europe and the Middle East.

Ram sales in the U.S. soared 18% for all of 2019, led by the Ram Heavy-Duty, Ram 1500 and Ram 1500S. 

The company reaffirmed guidance for a solid 2020.

--Meanwhile, General Motors and Ford Motor Co. provided tepid outlooks that provided little optimism for investors, who are flocking to Tesla as the car company of the future.

Both Detroit giants are suffering from weakening demand and rising labor costs.  GM reported this week that it was hit by the crippling 40-day strike last fall, and that it didn’t expect profits to grow in 2020 due to anticipated shutdowns in the U.S. and China.

Ford reported it barely broke even last year, and released a grim outlook for this year, Ford’s stock falling 9% on Wednesday.

Ford and GM have had a good stretch, nearly a decade of sales growth and strong profits since the financial crisis, but today’s auto story is Tesla.  Plus while Tesla looks to capitalize on its China opportunity, China’s otherwise stalling car market is doing a number on Detroit’s giants.

At the same time, Ford and GM have higher costs owing to new labor agreements signed last fall with the UAW, and the need to spend billions investing in electric and self-driving cars.

One more on GM and China.  The company is backtracking on an aggressive promotion of three-cylinder engines that saw some Buick and Chevrolet models offered only in that option – a move which proved highly unpopular and helped sales slide.

Three-cylinder engines are cleaner and more fuel efficient that their conventional four-cylinder counterparts, and automakers thought promoting them in China, which has stricter fuel economy and emission rules, was the way to go.

But GM went farther than the competition, discontinuing four-cylinder versions for many of its models, while, for instance, Honda, offered its models with an option of three- of four-cylinders.

Many Chinese consumers, however, perceive cars with three-cylinder engines as noisier and prone to vibrating, and for GM, sales plummeted, down 15% in China last year.

As in someone in the C-Suite screwed up, you might say.

--Attorney General William Barr said Thursday that the U.S. should urgently consider whether to enter into partnerships with companies of allied nations to counter the threat posed by China’s dominance of emerging 5G technology, singling out Finland’s Nokia and Sweden’s Ericsson.

The U.S. should be “actively considering” investments into Nokia or Ericsson – even weighing taking a controlling stake – to accelerate development of an alternative to relying on Chinese technology and, specifically, Huawei Technologies Co., Barr said at a conference in Washington.

“It’s all very well to tell our friends and allies that they shouldn’t install Huawei, but whose infrastructure are they going to install?” Barr asked.  “There are only two companies that can compete with Huawei right now: Nokia and Ericsson.”

The UK last month rebuffed the U.S. and said it will use Huawei technology in non-sensitive parts of its new network.

Barr blasted China for relying on a development strategy centered on technological theft from the U.S. and other countries.

But think about what Barr’s comments say about our own progress on this front.  As in the United States is obviously way behind.

--Google-parent Alphabet Inc.’s worst fourth-quarter revenue growth since 2015 sent shares down 5%, overshadowing the disclosure for the first time of YouTube advertising revenue.  Revenue from Google’s cloud service rose 53% to $2.6 billion in the quarter and advertising on YouTube rose 31% to $4.7 billion.  In addition, YouTube generated about $750 million in subscription and other non-advertising revenue, Alphabet CEO Sundar Pichai said.

Overall sales in the fourth quarter were $46.08 billion, up 17%, which was below the Street’s forecasts.  Google ad sales in the holiday shopping quarter were $37.93 billion, up 16.7% from the same period last year, while Google’s “other” revenue bucket including app store purchases and cloud computing deals rose 21.6% to $7.88 billion.

Alphabet’s expenses have ballooned with the hiring of thousands of salespeople, building of new data centers and marketing the Google brand through hardware and other ventures; up 18.5% from a year ago to $36.809 billion.  But that still left profit of $10.67 billion, exceeding estimates.

Google also said it is shutting down all its offices in mainland China, Hong Kong and Taiwan due to the coronavirus.

--Shares of Twitter rose sharply Thursday after the social network reported its largest-ever user growth in a quarter.  The company also pulled in $1 billion in quarterly revenue for the first time, surpassing Wall Street’s expectations amid efforts to make itself more user-friendly, in part by attempting to remove bots and other bad actors.

The number of daily active users increased to 152 million in the quarter, up from 126 million a year earlier.  Analysts had been expecting 147.5 million for this key metric.

Revenue grew 11% in the fourth quarter, beating the Street’s expectations, with ad revenue up 12% to $885 million.

Twitter’s profit per share was below forecasts but that was outweighed by the revenue and daily users ‘beat.’

CEO Jack Dorsey, however, had trouble deflecting questions on his future travel plans, after he revealed he plans to spend 3 to 6 months a year in Africa, saying he’s going to let staff work from anywhere as they branch out from San Francisco.

--Saturday, the Federal Aviation Administration released a statement saying Boeing recently informed the agency “about concerns associated with the location of wiring in certain areas of the (737) MAX.”  Since then, according to the statement, “the FAA has closely monitored the company’s analysis and how the issue might affect the ongoing certification efforts.”

Earlier, the New York Times first reported that potentially hazardous wiring inside the MAX was the latest flashpoint between U.S. and European regulators and a further complication in the grounded fleet’s return to service.

Technical experts at the European Union Aviation Safety Agency want certain electrical wires relocated to reduce what they say are dangers from potential short circuits, which in a worst-case could disrupt flight-control systems, according to the experts.

It just never ends for Boeing.

--Elliott Management Corp. has built up a more than $2.5 billion stake in Japan’s SoftBank Group and is pushing the sprawling tech giant to make changes that would boost its share price, as first reported by the Wall Street Journal.

Founded by billionaire Paul Singer, New York-based Elliott is known as a leading activist investor, seeking to influence company management.

SoftBank, founded by Masayoshi Son, is one of the world’s most influential technology players and is the largest shareholder in Chinese internet giant Alibaba.

But Son’s investing style has been questioned after the implosion of office-sharing company WeWork’s public offering last year, which forced SoftBank to write down the value of its Vision Fund’s stake by a cumulative $8.2 billion.

--Macy’s on Tuesday laid out a radical $1.5 billion cost-cutting plan to revive its fortunes, calling for the closing of another 125 stores, axing 2,000 corporate jobs and shutting its joint headquarters in Cincinnati to consolidate operations in New York, including its tech operation, which will be in New York and Atlanta.  The latter move will result in over 800 layoffs in San Francisco, where tech is headquartered now, according to the San Francisco Chronicle, citing a required state labor filing.

Macy's, which operates about 680 department stores under the Macy’s and Bloomingdale’s brands, said the sites to be closed accounted for a combined $1.4 billion in annual sales.  The company said it was targeting the “least productive” stores.

CEO Jeff Gennette said he was laying out a plan to “set the foundation for sustainable, profitable growth.”  Gennette is seeking to invest in its better sites, including upgrading and refurbishing another 100 stores this year; having refreshed about 150 thus far.

Macy’s is also looking to expand its private label offerings, as well as introducing a smaller store format known as Market.

--Uber shares rose 6% after the ride-sharing company said it would achieve profitability on an adjusted basis in the fourth quarter of 2020, a year earlier than previously predicted, as CEO Dara Khosrowshahi said the company would cut costs, aim to generate more repeat-customer business and try to increase use of premium ride services.

Total revenue in the fourth quarter rose 37% to $4.07 billion, though the net loss widened to $1.1 billion.

The ride-hailing business would already be profitable, but the company is burning through cash on its other initiatives.  The company said its monthly active users rose to 111 million globally.

--Credit Suisse CEO Tidjane Thiam resigned amid a power struggle which followed a spying scandal at the bank.

He is stepping down after five years at the Swiss institution just months after it emerged that two former employees had been placed under surveillance.

Thiam said he did not know the spying was taking place.  The scandal came to light in September when a probe found the bank’s former chief operating officer had hired private detectives to track its former head of wealth management.  Credit Suisse later admitted its former human resources head had also been tailed, prompting an investigation by the Swiss financial watchdog.

--Disney reported mixed quarterly results, with profits declining while revenue rose.  Costs associated with building out its Disney Plus streaming service filled the gap.

But investors were most interested in only one number: Disney Plus subscribers, with the company saying there were 28.6 million as of Monday, which is rather stunning given its been available less than three months.  CEO Robert Iger said the response to it “exceeded even our greatest expectations.”

Average monthly revenue per paid subscriber in the quarter was $5.56.

As for the coronavirus outbreak in China, however, Shanghai Disney Resort and Hong Kong Disneyland have been closed for more than a week and the losses from the closures, the duration of which is unknown, could drag down current quarter income by $135 million in Shanghai and $145 million in Hong Kong if the parks were closed “for two months.”

For the most recent quarter, Disney’s theme park division had operating income of $2.3 billion, a 9 percent increase from the same period a year earlier.

Attendance at Disney’s domestic parks increased by 2 percent in the quarter.

Walt Disney Studios delivered a $948 million operating profit, an increase of 100 percent from a year earlier.  “Frozen II” took in $1.4 billion, “Star Wars: The Rise of Skywalker,” has taken in $1.1 billion.

But in the Media Networks division, while the addition of recently purchased National Geographic and FX networks helped the bottom line, ESPN continues to struggle with lower advertising revenue as a result of lower viewership.

--Fox Corp. said it took in about $600 million in advertising revenue for its coverage of Super Bowl LIV and pregame and postgame activities.  According to Nielsen, Sunday’s game averaged 99.9 million viewers, slightly above last year’s contest on CBS, but short of the record 114.4 million viewers of NBC’s 2015 telecast.  An additional three million watched online and on Fox’ Spanish-language sports channel.

Fox overall reported revenue for its fiscal second quarter, ending Dec. 31, rose 5% from a year earlier to $3.78 billion, helped by higher affiliate fees.

--New York Times Co. reported another strong quarter of digital-subscription growth, but suffered continuing declines in advertising revenue, which the company said would continue for now.

The publisher reported net income of $68.2 million, up 24% from the same period a year earlier.

Revenue rose 1.1% to $508.4 million, with a 4.5% increase in subscription revenue and a 30% rise in other revenue, mostly coming from the Times’ new television program, “The Weekly,” and licensing revenue from Facebook News.

Digital-subscription growth continued with 342,000 additional customers in the quarter, the Times ending the quarter with 4.4 million paid digital subscribers, including 966,000 for the cooking and crossword apps.  Including print subscribers, the Times had 5.3 million paying customers at the end of the quarter.

Advertising revenue, however, fell 11% to $171.3 million; down 11% each for both digital and print.

--If you get HBO, a programming tip from your editor.  The new series (that started last Monday) on McDonald’s Monopoly game from the late 1990s/early 2000s, is fascinating.  A documentary on a trial and fraud case involving dozens of defendants accused of snookering the nation’s biggest hamburger chain out of $24 million.

--Finally, Bernie Ebbers died, age 78, a month after his early release from prison.  Ebbers was the former chief of WorldCom who was convicted in one of the largest corporate accounting scandals in U.S. history.

Ebbers was convicted in New York in 2005 on securities fraud and other charges and received a 25-year sentence.

Meanwhile, Bernie Madoff, on his last legs, so they say, wants to be released early so he can die at home.  Let him rot in the prison hospital, or as my brother said, let the Wilpons of the New York Mets take care of him (a little inside humor for us Mets fans, the Wilpons having been taken to the cleaners by their ‘friend’ Bernie, much to the long-term detriment of our beloved franchise).

Foreign Affairs

Syria: The war has restarted in a big way, even if in just a small section of the country.  We are at a very important point in the crisis in Idlib province; which is on the verge of the long-feared humanitarian catastrophe that would spread into Turkey and then into Europe with a new wave of refugees.  Turkey is already hosting 3.6 million refugees from Syria and another million are on the move, according to Turkish officials.

Syrian government forces have been on the move in northwestern Idlib, a renewed push by President Bashar al-Assad to recapture the last rebel stronghold.  Shelling by Syrian government forces had killed eight Turkish military personnel on Monday, prompting Turkish forces to strike back, “neutralizing” 76 Syrian government soldiers, according to Turkey’s defense minister.  Turkey’s President Tayyip Erdogan threatened on Wednesday to drive back Syrian troops in Idlib unless they withdraw by the end of the month to stem an assault which he said had displaced nearly 1 million people.

Russia said on Thursday that some of its troops had been killed in militant attacks in Idlib – its first confirmation of casualties in the current round of fighting.

Attacks on Russian military positions and on Syrian government forces were continuing from a Turkish-controlled zone in the region, the Kremlin said.

“There has recently been a dangerous increase in tension and a surge of violence in Idlib,” it said.  “Russian and Turkish military experts were tragically killed,” the Foreign Ministry said, without giving a number.

Kremlin spokesman Dmitry Peskov said there were no plans for Presidents Putin and Erdogan to meet to reduce tensions.

The ministry said more than 1,000 militant attacks had taken place in the last two weeks of January and that hundreds of Syrian troops and civilians outside the Syrian de-escalation zone were killed and wounded.

“In the Turkish zone of responsibility, aggressive activity by these terrorist groups is continuing and these aggressive actions are directed against the Syrian republic’s armed forces and Russian military sites in Syria,” Peskov said.

But the U.S. said it was seeing not just Russians but Iranians and Hezbollah actively involved in supporting the Syrian offensive.  Special Representative for Syria James Jeffrey said there have been more incidents of Russia violating the terms of the mutual deconfliction agreement, in what appeared to be an attempt to challenge the U.S. presence in the region.

Meanwhile, a passenger plane carrying 172 passengers from Tehran to Damascus made an emergency landing at the Russian-controlled Hmeimim Air Base in Syria on Thursday after coming under fire from Syrian air defenses, Russia said on Friday.

The Syrian forces were responding to Israeli strikes on targets in Syria, Russia’s defense ministry said.

The Syrian defense ministry said it had intercepted Israeli missiles over Damascus that were fired at military targets in southern Syria.  Israel declined to comment.

The Airbus A320 had been coming in to land at Damascus International Airport when it was forced to divert to the nearest alternative airfield, the Hmeimim Air Base near Latakia in northwest Syria, which is operated by the Russian military.

Editorial / Washington Post

“The carnage in Syria’s northwestern Idlib province has resumed, and the pattern is familiar.  Rupturing the latest cease-fire, which they observed for only two days, Syrian, Russian and Iranian forces are bombing and shelling civilian targets, driving more than 150,000 people from their homes in January alone, according to the International Red Cross.

“So far, the forces have captured two towns on a strategic road linking Damascus with the northern city of Aleppo. What’s still unclear is whether they intend to overrun the rest of the province, which is one of the last areas under Syrian rebel control.  If they do, the State Department says they could drive 3 million refugees across the border into Turkey, including thousands of militants from a group linked to al-Qaeda.

“Apart from the extremists, the only substantial opposition to the offensive is coming from Turkey, which has deployed its own troops in Idlib and is backing some Syrian fighters.  That led to a clash between Turkish and Syrian government forces this week, with fatalities on both sides.  Tensions, meanwhile, are rising between Turkey and Russia, imperiling what has been a growing entente between Turkish President Recep Tayyip Erdogan and Russian ruler Vladimir Putin.

“Washington might take some perverse satisfaction in the predicament of Mr. Erdogan, who has badly strained relations by buying Russian weapons and displacing U.S. and Kurdish forces from another strip of northern Syria. The Turkish ruler now finds himself facing the same Russian perfidy that for years confounded the Obama administration:  Moscow promises to restrain President Bashar al-Assad's regime, then goes right on enabling its offensives by deliberately bombing hospitals, schools and food markets.

“The United States nevertheless cannot afford a disaster in Idlib. A new flood of refugees into Turkey could easily lead to another destabilizing exodus to Europe.  International terrorists now bottled up in the province, including from the Islamic State, could disperse, too.  That’s not to speak of the horrific humanitarian crisis the new offensive may trigger.

“So the Trump administration has been trying to support the Turks – though so far only with rhetoric.  Secretary of State Mike Pompeo issued a statement on Jan. 27 condemning the ‘unjustifiable attacks against the people of northwest Syria’ and declaring that the ‘United States is prepared to take the strongest diplomatic and economic actions against the Assad regime and any state or individual that aids its brutal agenda.’  In a briefing for reporters Wednesday, the State Department’s special envoy for Syria, James F. Jeffrey, placed blame for the new offensive squarely on Moscow.

“That would seem to suggest that new U.S. sanctions against Russia are in order.  Yet Mr. Jeffrey indicated otherwise, saying, ‘We tend to focus the pressure primarily in Syria on the Syrian government.’  That will accomplish little: The Syrian economy is already in ruins.  If the Trump administration actually wants to stem the latest bloodbath, it will need to focus its pressure not on Damascus but on Moscow.”

Iran / Iraq: Iranian President Hassan Rouhani said his country was ready to cooperate with the European Union to resolve issues related to the 2015 multilateral nuclear deal.

“The Islamic Republic of Iran is still ready for interaction and cooperation with the European Union for resolving issues and whenever the opposite side completely upholds their commitments, Iran will return to its commitments.”

In Iraq, President Barham Salih appointed Mohammed Tawfiq Allawi as prime minister, after squabbling parties had failed to name a candidate in the two months since Adel Abdul-Mahdi was ousted by mass protests.  Allawi, who will run Iraq until early elections can be held, must form a government within a month, which seems unlikely.

Protesters were not appeased by the Allawi appointment.

Israel / Palestine: Violence has been surging following the release of the U.S. peace plan for the region, with Palestinians killed in clashes with Israeli security forces in the West Bank this week, and an Israeli soldier seriously wounded in a car ramming attack in Jerusalem.  Israeli forces also admitted they shot and killed a Palestinian Authority police officer by mistake.

Last weekend, the Palestinian Authority cut all ties with the United States and Israel, including those relating to security, after rejecting the Trump peace plan.

Palestinian President Mahmoud Abbas said, “I will not have it recorded in my history that I sold Jerusalem.”

Foreign ministers from Egypt, Saudi Arabia, Jordan, as well as Iraq and Lebanon, among others, said at an Arab League summit that there could be no peace without recognizing Palestinian rights to establish a state within the pre-1967 territories.

Yemen: The United States killed al Qaeda in Arabian Peninsula (AQAP) leader Qassim al-Raymi in a counterterrorism operation in Yemen.  President Trump said in a statement that “His death further degrades AQAP and the global al-Qaeda movement, and it brings us closer to eliminating the threats these groups pose to our national security.”  It is not known when Raymi was killed.

China: President Xi Jinping assured President Trump on Friday that China was doing all it can to contain the coronavirus that is causing alarm over much of the world.  Xi said China was gradually achieving results and was confident it could defeat the epidemic with no long-term consequences for economic development, Xi told Trump in a phone call, according to state television.

China had earlier accused the U.S. of scaremongering, saying Washington was whipping up panic, even as China’s central bank was vowing to step up support for the economy to cushion the blow of the outbreak.

Analysts believe first-quarter growth in the world’s second-biggest economy could slow by 2 percentage points or more, from 6%, in the last quarter, but could rebound sharply if the outbreak peaked soon.

Xi declared a “people’s war” on the virus, saying China had responded with all its strength and “the most thorough and strict prevention and control measures,” state media said.

The rallying cry came amid an outpouring of grief and anger on social media over the death of ophthalmologist Li Wenliang.

Li, 34, was one of eight people reprimanded by police in Wuhan, the epicenter of the contagion, last month for spreading “illegal and false” information about the virus.

His social media messages warning of a new “SARS-like” coronavirus triggered the wrath of police.

China was accused of trying to cover up SARS in 2002-03.  800 died worldwide back then.

Li was forced to sign a letter on Jan. 3 saying he had “severely disrupted social order” and was threatened with charges.

So Thursday, word spread Li had died of the virus.  At first, however, officials tried to deny he was dead.  Social media went ballistic.

Finally, the Communist Party’s People’s Daily said on Twitter: “We deeply mourn the death of Wuhan doctor Li Wenliang... After all-effort rescue, Li passes away on 2:58 a.m.”

Social media users described Li as a hero, accusing authorities of incompetence in the early stages of the outbreak.

Thursday, the death toll from the outbreak had reached 636 in mainland China, up by 73 from the previous day, according to the country’s National Health Commission.  The toll in Hubei province – epicenter of the outbreak – was 69, including 64 in the provincial capital Wuhan.  Across mainland China, there were 3,143 new confirmed infections on Thursday, bringing the total thus far to 31,161.

[As noted above, the figures have since risen to 722 dead, nationwide, with 34.546 cases in the mainland.]

The World Health Organization (WHO) said on Friday that the world is facing a chronic shortage of gowns, masks, gloves and other protective equipment in the fight against the spreading virus.  The UN agency has been sending such supplies to every region, but WHO chief Tedros Adhanom warned of bottlenecks in the pandemic supply chain.

Meanwhile, Taiwan and China are embroiled in a new spat over the fate of Taiwanese stranded in Wuhan, after Taiwan said one of its citizens sent back on the first flight was infected with the disease.  Only one flight from China, which claims Taiwan as its own territory, has so far evacuated 247 of the estimated 500 Taiwanese caught up in China’s preventative lockdown of Wuhan.

Beijing has permitted countries from the U.S. to Japan to send several flights to Wuhan to collect their nationals, but Taiwan and China have been unable to agree on further flights to take out the Taiwanese, at least as I go to post.

Taiwan is furious it also remains excluded from the World Health Organization, with China saying Taiwan is part of China and has been provided with timely information on the virus.  Taiwan says this is a lie.

Then you have the lies of a different nature.  Italy’s air traffic from and to China will remain closed, Italy’s health ministry said on Friday, after China’s foreign ministry had said Italy was willing to resume some flights.  [Italy confirmed its third coronavirus case Thursday, an Italian national who tested positive after returning from Wuhan.]

Thursday, China’s ambassador to London blasted the government for over-reacting to the outbreak, after Britain told its nationals to leave China.

Canada told its citizens who did not need to be in China to leave while they still can.

Russia said last Sunday it would halt passenger trains to China until further notice.

I could go on and on....

Editorial / Global Times...a Communist Party mouthpiece....

“In order to fight the novel coronavirus, Chinese society has been more mobilized than it was during the SARS period.  It has become an unprecedented public health war.  An increasing number of southern cities heavily plagued by the epidemic are on lockdown or in a similar state.  Citizens there are required to stay at home and only one family member is allowed to go out to buy necessities every other day or longer.  All people there have paid the price.

“However, most people are responding to the call of the country and local governments.  Although they have some complaints, this hasn’t prevented them from being united and the fight against the novel coronavirus has generally been carried out in an orderly way.  The temporary lockdown doesn’t mean the cities are paralyzed, but a part of the highly organized anti-epidemic campaign.

“But we have found some problems in the ongoing battle.  One of them is that many places have reported cases in which people deliberately concealed their travel history to Wuhan city or Hubei Province and infected many locals.  The non-cooperative acts of a few have caused great harm.

“While people across the country are jointly fighting the epidemic, such actions should be strongly condemned.  Criticism of such behavior should be intensified so that those who are still doing the same or intend to do so would be deterred....

“At this point, if anyone deliberately conceals his or her dangerous trips and contacts with people, willfully interacts with others and causes severe consequences of infection, the behavior can be considered a crime....

“Everyone is faced with tests in this people’s war.  Let us all keep pace with the national mobilization rather than hinder the battle against the virus.  We will eventually be awarded for jointly fighting the epidemic.”

#Mao

North Korea: Kim Jong Un remains strangely silent, though he did offer his “condolences” to President Xi over the coronavirus outbreak.  Just imagine if it spreads to the Hermit Kingdom.  It would be a total disaster.

Turkey: Speaking of disasters, as rescuers searched for survivors of a deadly avalanche in eastern Turkey on Tuesday, a second avalanche swept down the same slope on Wednesday, killing at least 39, injuring over 50.

Over 200 people were searching for victims in the first avalanche when the second one hit.  The victims included soldiers, village guards, firefighters and civilians who had joined the rescue efforts.

Some of those found alive were under as much as 16 feet of snow.  The death toll will be rising as officials have no idea how many were actually involved in the first rescue operation.

Random Musings

--Presidential tracking polls....

Gallup: 49% approve of President Trump’s job performance (highest ever), 50% disapprove; 94% of Republicans (highest ever), 42% of independents (tied for highest ever) (Jan. 16-29).
Rasmussen: 49% approve, 49% disapprove (Feb. 7)

A new Wall Street Journal/NBC News poll had Trump with a 46% job approval rating, with 51% disapproving.

--As if you thought Monday night in Iowa wasn’t bad enough, with the vote count taking us into Thursday morning because of technical problems with a new mobile app, Democratic National Committee Chairman Tom Perez called for a recanvass of the caucuses, a recount,

“Enough is enough.  In light of the problems that have emerged in the implementation of the delegate selection plan and in order to assure public confidence in the results. I am calling on the Iowa Democratic Party to immediately begin a recanvass,” Perez said in a tweet.

After Monday night’s delay in counting and delivering results due to the glitchy app, precinct leaders then attempted to call in the results to party headquarters, only to have the phone lines overloaded.

So the Iowa Democratic Party (IDP) then had to manually examine the worksheets from each of the 1700 caucuses.

The results that had been released prior to Perez’ statement showed Bernie Sanders with 26.1% of state delegate equivalents, trailing Pete Buttigieg, who had 26.2%.  That was with what we were told was 97% of precincts counted.  Then at 100% it was still Buttigieg 26.2%, Bernie 26.1%.

Warren 18%, Biden 15.8%, Klobuchar 12.3%. 

However, most news organizations as of this afternoon said there were still mistakes in the count, but as of now, the candidates want to move on. 

Aside from the problems with the app, the IDP said it had received an “unusually high volume of inbound calls” to its caucus hotline on Monday night from “callers who would hang up immediately after being connected,” supporters of President Trump who called to express their displeasure with the Democratic Party, and Iowans looking to confirm details. Party staff worked to flag and block repeat callers who appeared to be attempting to jam the lines and interfere with the reporting of caucus results, and the call volume was ‘highly irregular’ compared to previous caucuses, the official said.

As for Biden, the result was highly-disappointing as he headed to New Hampshire, admitting it was a “gut punch.... The whole process was a gut punch.”

“This isn’t the first time in my life that I’ve been knocked down,” Biden added.

But Biden is now directly going after Sanders and Buttigieg, saying of the former that every Democrat running for the House of Representatives or Senate this year would have to carry the label “socialist” if Sanders became the Democratic nominee, while Biden accuses Buttigieg of being insufficiently supportive of the achievements of the Obama administration and cast doubt on his experience.  “It’s a risk...for this party to nominate someone who’s never held an office higher than mayor of a town of 100,000 people in Indiana.”

Lastly, for the record, two of the three Iowa polls I mentioned last time had Joe Biden winning, all three way underestimating Buttigieg’s support.

Over the weekend, after I posted, an Emerson College poll had Sanders at 28%, Biden 21% and Buttigieg 15%.  Just funny stuff.  But at least this one had Klobuchar at 11%.

John Podhoretz / New York Post

“The Iowa caucuses reveal not only a Democratic Party deliriously incompetent at handling a vote tally – this from the folks who have been screaming about vote fraud and irregularities for years – but at war with itself in a way that could lead to political disorder that will make the counting disaster look like a garden party.

“What little we can glean from entrance polls reveals the way in which the schematics of the intra-Democratic conflict in 2020 are very stark.

“It’s Joe Biden with big numbers with people 65 and older – and nobody else.  It’s Bernie Sanders with huge numbers among people 18-29 – and mediocre numbers with everybody else....

“Slicing the Iowa pie even more thinly, Biden likely lost a significant number of younger moderate voters to 37-year-old Pete Buttigieg – another suggestion that Biden’s candidacy is, in a state like Iowa, almost exclusively a Geritol candidacy.

“This happened in a state that is 92 percent white.  New Hampshire, which follows, is 93 percent white.  Polling suggests Sanders will win there in a walk, as he did in 2016 – and that his victory there could mean a downward slide for Biden.

“But what happens when the nominating process begins reflecting another schematic reality – the entry of African-American voters in sizable numbers?  Before any voting, Biden was running away with them.   In January, a Washington Post-Ipsos poll had Biden at 48 percent nationally and Sanders at 20.

“But it’s only in the fourth state to vote, South Carolina, that African Americans will be the decisive players....

“So if you combine Biden’s strength with the elderly and his strength among African Americans, Sanders’ base of young voters starts to look a little shaky. The problem is Biden has to remain viable through a month in which he might start appearing hapless and, well, excessively old....

“And then, hovering in the background, is the Billionaire Mothership.  If Biden melts down, Bernie isn’t exactly going to glide effortlessly to the nomination the way Donald Trump did as the populist insurgent darling.

“He (and whoever else is still in the race) will then have to contend with the limitless resources of his worst nightmare – a free-spending billionaire whose money he has yet been unable to expropriate.

“What we know is that Mike Bloomberg has been dropping his infinite dollars in the places where people are going to be voting a month from now – just as voters in the largest states begin to hit the ballot boxes having heard almost no ads and seen relatively few Facebook posts from anyone but the former mayor.

“All of this is a recipe for chaos – even more so because the Democratic Party’s apportionment of delegates is by voting percentage within each state rather than the Republican party’s winner-take-all system.

“Hello, brokered convention!”

--In a surprise move, the congresswoman for the district that starts a block from me, on the other side of the mighty Passaic River, Democratic Rep. Mikie Sherrill, threw her support to Mike Bloomberg, after her first choice, Sen. Cory Booker, dropped out.

“I served in the Navy with members of our military community dedicated to making our country safer and stronger, and it’s clear we need the same level of commitment from our political leaders.  Mike Bloomberg embodies the integrity we need from leadership and I am proud to give my support to him.”

Today in Virginia, a key Super Tuesday state, former U.S. Secretary of the Navy Richard V. Spencer endorsed Mayor Bloomberg, making him the first former Trump administration official to back a Democratic candidate in the 2020 election.

“Restoring America’s standing in the world and repairing relationships with our allies will be a top priority in Mike’s administration.   And he knows our nation owes a debt of gratitude to our veterans and military families,” Spencer said in a statement prior to his formal endorsement at a campaign event.

Last year, Spencer was fired because of conflicts with the Trump administration over his handling of the case of Navy SEAL Edward Gallagher.

--Mike Bloomberg / Op-Ed, New York Times

“Every Democrat running for president agrees that income inequality is one of the great problems of our time.  And we all agree that the wealthy should pay more in taxes.

“But only one of us has actually raised taxes on the wealthy by persuading a Republican legislature to vote for them: Me.

“When I was elected mayor of New York City, seven weeks after the terrorist attacks of Sept. 11, we faced a budget crisis and a recession.  I had a choice: slash budgets and conduct mass layoffs, which would especially hurt the young, the elderly and low-income communities – or raise taxes.

“So I took the politically difficult step of proposing tax increases, including one on those making more than $500,000 a year (about $700,000 in today’s dollars).  I persuaded a Republican-led State Senate and a Democratic-led State Assembly to pass the bill, and a Republican governor to sign it. The extra revenue – roughly $400 million per year – allowed us to invest in our future and create jobs and opportunity in the neighborhoods where they were needed most.

“That is what leadership is all about: bringing people in both parties together to get results.  Over my 12 years as mayor, I also helped persuade Republicans in Albany to pass marriage equality, increase funding for public schools and enact juvenile justice reforms that helped lower the number of teenagers in confinement.

“I’m committed to helping Democrats win control of Congress this year, regardless of the fate of my own campaign. And if, for whatever reasons, our party falls short of controlling both chambers of Congress, the next Democratic president will have to reach across the aisle to end the Republican obstructionism that has gripped Washington for so long.  That’s not something that most of my fellow Democratic candidates talk much about.”

Regarding his tax plan to increase taxes on the wealthy....

“Some who are wealthy will call me a traitor to my class.  But that’s what they called Franklin and Theodore Roosevelt.  Like them, I’ll wear the label as a badge of honor – and I’ll use the new tax revenue, an estimated $5 trillion over 10 years, to invest in America in ways that reduce inequality, strengthen the middle class and restore faith in the promise of the American dream.”

--In a WBZ-TV/Boston Globe/Suffolk University tracking poll of New Hampshire Democratic primary voters, Bernie Sanders picks up 24.8%, Pete Buttigieg 18.6%, Joe Biden 12% and Elizabeth Warren 11%...Amy Klobuchar about 6%.

A Monmouth University poll of registered New Hampshire Democrats and unaffiliated voters who are likely to participate in next week’s primary had 24% going for Sanders, 20% for Buttigieg, 17% for Biden, 13% for Warren and 9% for Klobuchar.

[I am half-watching tonight’s debate in New Hampshire, needing to focus on this column.]

--Michael Goodwin / New York Post

“Here’s a question for Speaker Nancy Pelosi:  Have you heard of Albert Einstein’s definition of insanity? The one where he says it’s ‘doing the same thing over and over again and expecting different results?’

“To judge by your conduct, I’m guessing you haven’t. Either that or you think Einstein was an idiot, too.

“Then again, maybe you’re a secret Republican agent trying to re-elect President Trump.  Is that why you keep making the same mistake over and over again?

“You’ve been screwing up for three years, starting with the juvenile resistance where you refused even to negotiate over big national interests such as border control. Then, just when it seemed you couldn’t sink any lower than that cheap, partisan impeachment you engineered, you hit a new low during the State of the union.

“Your mumbling and sneering smiles throughout President Trump’s powerful address were bad enough, but your decision to tear into shreds your copy of his speech and drop it like a dead fish was shameful beyond measure.

“Coming immediately after he finished, and while he was still on the podium, you had to know the television cameras would catch you.  No doubt that was your goal – to display your disgust to the nation and the world.  Viva la resistance!

“Message received, and here’s back at you: You disgraced your office and all of congress....

“The president is on a winning streak, and he had every right to brag about his record in his third State of the Union address. The country has noticed, as he is reaching his highest approval ratings in the polls since he took office.

“Truth be told, he couldn’t do it without Pelosi’s help.  She has overplayed her hand time and again, and her insistence that Trump is an illegitimate president has presented Americans with a stark either-or-choice.  They wisely rejected impeachment as too radical, which is something she initially said herself before succumbing to the mob mentality.

“And she’s just led her party into another embarrassing dead end.  Combined with Trump’s strong record, the chaos in the Dems’ Iowa caucus, the lackluster field of presidential candidates and the failed impeachment, the president is off to a roaring start for the campaign.

“We can add Pelosi’s televised tantrum to the growing list of his achievements.”

--Rush Limbaugh announced he has advanced lung cancer.

“I wish I didn’t have to tell you this, and I thought about not trying to tell anybody, I thought about trying to do this without anybody knowing, because I don’t like making things about me.

“(But) there are going to be days that I’m not going to be able to be here.  Because I will be undergoing treatment,” said the avid cigar-smoker.

Limbaugh, 69, said he went to the doctor after experiencing shortness of breath and was eventually diagnosed.

He has previously scoffed at the dangers of “firsthand smoke,” saying in 2015 that “it takes 50 years to kill people, if it does.”

He has also ridiculed the mounds of research tying secondhand smoke to cancer and death, calling the assertion “a myth.”

Rush is a smart guy.  But on the above he was an idiot.

--A federal judge Friday sentenced former PIMCO CEO Douglas Hodge to nine months in prison for paying $850,000 over more than a decade to get four of his children admitted to elite private universities, specifically USC and Georgetown.  Hodge, who I didn’t know personally when I was working there, long ago, became the 14th parent sentenced in the blockbuster college admissions scandal, receiving the severest penalty yet, including having to pay a $750,000 fine, as well as perform 500 hours of community service. 

Perhaps we could work something out with China whereupon he could scrub toilets in Wuhan to satisfy this last bit.

U.S. District Judge Nathaniel Gorton said, “Mr. Hodge, your conduct in this whole sordid case is appalling and mind-boggling at the same time.  There is no term in the English language to describe your conduct better than the Yiddish term chutzpah.”

--A record high temperature has been logged on the continent of Antarctica.  The reading, taken Thursday by an Argentine research base, was 18.3C (64.9F), 0.8C hotter than the previous peak set in March 2015.

Temperatures on the Antarctic continent have risen by almost 3C over the past 50 years, the UN World Meteorological Organization said.  About 87% of the glaciers along its west coast have “retreated” in that time, with an “accelerated retreat” in the past 12 years, the WMO added.  [BBC News]

Well, as the great George Strait once sang, “I got some ocean front property in Arizona.”

---

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

God bless America.

---

Gold: $1593
Oil: $51.63

Returns for the week 2/3-2/7

Dow Jones  +3.0%  [29102]
S&P 500  +3.2%  [3327]
S&P MidCap  +2.1%
Russell 2000  +2.7%
Nasdaq  +4.0%  [9520]

Returns for the period 1/1/20-2/7/20

Dow Jones  +2.0%
S&P 500  +3.0%
S&P MidCap  -0.7%
Russell 2000  -0.7%
Nasdaq  +6.1%

Bulls 47.6
Bears 19.1

Have a great week.

Brian Trumbore

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