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Week in Review

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02/29/2020

For the week 2/24-2/28

[Posted 10:30 PM ET, Friday]

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

Edition 1,089

This was a truly historic week for the world...both global markets and geopolitics. 

For starters, while it is getting lost in the news of the day, as I’ve warned would be the case, the situation in Syria is close to a true catastrophe, as I explain in detail down below.  Syrian regime forces took out 33 Turkish soldiers in an attack, and Turkey has responded in part by opening up its borders, in essence telling 3.6 million Syrian refugees, and another million soon to be entering the country, that they can now go on to Europe.

This is a disaster of immense proportions. 

But I knew this would happen.  For months I’ve told you exactly how it would transpire.

I also told you back in 2012, that President Barack Obama made what will go down in the history of the century as the single greatest mistake, the failure to work with Turkish President Erdogan on a no-fly zone for northern Syria, when the Syrian civil war had recorded ‘just’ 20,000 deaths.

But, recall, it was all about “Bin Laden is dead...GM is alive,” in 2012.  President Obama, who my detractors forget I labeled one of the five worst presidents in American history, along with George W. Bush, was more focused on getting reelected than on doing what was right for the security of the Middle East, Europe and the world.

Because of Obama’s failure to act, ISIS emerged, Russia moved in, another 380,000+ died in the war, millions and millions were displaced, Europe was hit with a wave of migrants that have, and continue to, reshape its politics and future in dire ways, and Syria is nothing but rubble.

And now as President Trump stupidly didn’t keep the tripwire in Syria that was working brilliantly, and never showed he cared about staying engaged diplomatically, another wave of refugees is headed north, many of them terrorists.  Others no doubt carriers of the coronavirus.

It’s sickening.  It didn’t have to be so.

But on to....

Coronavirus Developments....

--Tonight, China reported 427 new confirmed cases, up from 327 a day earlier, with another 47 deaths, 45 of which were in Hubei.  China’s ‘official’ death toll is 2,835, and no one knows what the real number is.

Also tonight, South Korea reported another 594 new cases, bringing their total infections to 2,931, as reported by the Korea Centers for Disease Control and Prevention, who can be trusted.

The surge in infections continues in the likes of Italy, and Iran (though we have zero accurate information here), and now a worrisome spike in the likes of France and Germany, as well as new cases all over the globe.

--In the latest from the World Health Organization today, a spokesman told reporters in Geneva, “The outbreak is getting bigger.  The scenario of the coronavirus reaching multiple countries, if not all countries around the world, is something we have been looking at and warning against for quite a while.”

Then the WHO raised its risk assessment of the outbreak to a “very high” global level from “high” late last month but stopped short of declaring the outbreak a pandemic.

WHO Director General Tedros Adhanom Ghebreyesus said yesterday, “No country should assume it won’t get cases, that would be a fatal mistake, quite literally.”

--Five new countries, all connected to travel from Italy – Nigeria, Estonia, Denmark, Netherlands and Lithuania – reported their first cases today.  Mexico also detected its first cases of infection in two men who had traveled to Italy, making the country the second in Latin America to register the virus after Brazil.

--Bulgaria said it was ready to deploy up to 1,000 troops to the border with Turkey to prevent illegal migrant inflows, as it steps up measures against the coronavirus.  Greece announced it was tightening its border, it being a gateway, along with Bulgaria, for migrants from the Middle East.

--The death toll from passengers on the Diamond Princess cruise liner hit six today.

--Saudi Arabia temporarily barred visitors from entering the country for the Islamic pilgrimage to Mecca, and from visiting the holy mosque in Medina, worshipped as the burial place of the Prophet Muhammad.  Around seven million Muslims make the journey each year.

--Back in the U.S., earlier in the week, Dr. Anthony Fauci, said while the virus was contained in the United States, “If we have a pandemic, then almost certainly we are going to get impacted.”

Tuesday, White House senior economic adviser Larry Kudlow went on CNBC to calm domestic fears of the outbreak.  “We have contained this. I won’t say [it’s] airtight, but it’s pretty close to airtight.”

Minutes earlier, the CDC warned that Americans should prepare for disruptions to everyday life as a result.

Wednesday, Trump tapped Vice President Mike Pence to spearhead American efforts to contain the virus, which he said poses a “very low” risk to Americans.

--Japan’s Prime Minister Shinzo Abe is facing intense heat for stunningly closing schools for a month, parents, teachers, businesses all angry as they attempt to find new ways to live and work.  Many health officials and local authorities said the plan was politically motivated and made little sense.  It’s chaos.  And such a move, on a local scale, could easily happen in the U.S.

In another dramatic move, the northern island of Hokkaido, which has seen the largest number of cases in Japan, late today declared a state of emergency. Its population of about 5 million, which includes Sapporo, were told to refrain from venturing outside their homes over the weekend.

But Abe is also getting criticism for apparently not testing as aggressively as South Korea is, the latter preparing to test more than 200,000 members of a church at the heart of a surge in its outbreak.

As for the Tokyo Olympics, slated to begin July 24, I first started warning about the economic impact on Japan if the Games were canceled Jan. 25, in this space, weeks before others broached the topic.  For now, officials in Tokyo and the International Olympic Committee are saying it’s still a ‘go’.

--Italy’s northern region of Lombardy (Milan) said today it wanted to extend emergency measures adopted to try to contain Europe’s worst outbreak as the number of cases soared.  Officials there said the health system could be thrown into chaos if the contagion spread rapidly.  Lombardy asked the government to keep curbs in place for an additional week, including shutting schools and banning public gatherings.

Italy’s tourism agency said up to 90% of hotel and travel agency bookings had been canceled in Rome and up to 80% in Sicily for March, as school trips and conferences were called off and foreigners decided to stay away.

“Italian tourism never experienced a crisis on this scale in recent history.  This is the darkest moment, not even 9/11 hit our business so hard,” said an official.

Italy’s two largest northern regions, Lombardy and Veneto, the epicenter for the country, account for 30% of the employment and 40% of the exports.  Tourism overall accounts for 13% of its GDP.

Italy’s economy has shown zero growth in 20 years, and it’s now all but assured of its fourth recession since 2008.  Why is this important?  It’s the eighth-largest economy in the world.

--France, with 57 cases as of tonight, recommended that people refrain from shaking hands in order to prevent infection.

--According to a whistleblower complaint, “Officials at the Department of Health and Human Services sent more than a dozen workers to receive the first Americans evacuated from Wuhan, China, the epicenter of the coronavirus outbreak, without proper training for infection control or appropriate protective gear,” as reported by the Washington Post.

The whistleblower, who said the workers did not show symptoms of infection and were not tested for the virus, is seeking federal protection because she alleges she was unfairly and improperly reassigned after raising concerns about the safety of these workers to HHS officials.

--But when it comes to the U.S. today, we’ve learned we don’t have anywhere near enough test kits, so how do we know what the real number of infections is in the country.  California, which is beginning to discover cases, had just 200 kits for diagnostic and surveillance purposes as of this week, though federal officials have promised more will arrive in the coming days.

As for the political debate over the issue, enough.  President Trump needs to stop blaming cable news and the Democrats for the coronavirus hysteria, as his supporters want to call it, and he needs to stop blaming Democrats on a debate stage for the market crash, 1900 Dow points of which occurred before they even took to the stage Tuesday night.

Democrats need to cool their rhetoric as well and work with the administration to make sure authorities have the tools they need to contain the inevitable spread of covid-19.

--Editorial / The Economist

“In public health, honesty is worth a lot more than hope.  It has become clear in the past week that the new viral disease, covid-19, which struck China at the start of December will spread around the world.  Many governments have been signaling that they will stop the disease.  Instead, they need to start preparing people for the onslaught.

“Officials will have to act when they do not have all the facts, because much about the virus is unknown.  A broad guess is that 25%-70% of the population of any infected country may catch the disease.  China’s experience suggests that, of the cases that are detected, roughly 80% will be mild, 15% will need treatment in hospital and 5% will require intensive care.  Experts say that the virus may be five to ten times as lethal as seasonal flu, which, with a fatality rate of 0.1%, kills 60,000 Americans in a bad year.  Across the world, the death toll could be in the millions.

“If the pandemic is like a very severe flu, models point to global economic growth being two percentage points lower over 12 months, at around 1%; if it is worse still, the world economy could shrink.  As that prospect sank in during the week, the S&P 500 fell by 8%.

“Yet all those outcomes depend greatly on what governments choose to do, as China shows.  Hubei province, the origin of the epidemic, has a population of 59m.  It has seen more than 65,000 cases and a fatality rate of 2.9%.  By contrast, the rest of China, which contains 1.3bn people, has suffered fewer than 13,000 cases with a fatality rate of just 0.4%.  Chinese officials at first suppressed news of the disease, a grave error that allowed the virus to take hold.  But even before it had spread much outside Hubei, they imposed the largest and most draconian quarantine in history.  Factories shut, public transport stopped and people were ordered indoors.  This raised awareness and changed behavior.  Without it, China would by now have registered many millions of cases and tens of thousands of deaths.

“The World Health Organization was this week full of praise for China’s approach.  That does not, however, mean it is a model for the rest of the world.  All quarantines carry a cost – not just in lost output, but also in the suffering of those locked away, some of whom forgo medical treatment for other conditions.  It is still too soon to tell whether this price was worth the gains.  As China seeks to revive its economy by relaxing the quarantine, it could well be hit by a second wave of infections.  Given that uncertainty, few democracies would be willing to trample over individuals to the extent China has.  And, as the chaotic epidemic in Iran shows, not all authoritarian governments are capable of it.

“Yet even if many countries could not, or should not, exactly copy China, its experience holds three important lessons – to talk to the public, to slow the transmission of the disease and to prepare health systems for a spike in demand.

“A good example of communication is America’s Centers for Disease Control, which issued a clear, unambiguous warning on February 25th.  A bad one is Iran’s deputy health minister, who succumbed to the virus during a press conference designed to show that the government is on top of the epidemic.*

*The video of this poor guy, wiping away pools of sweat, is pathetic.  We learned he then was diagnosed with it and soon after found out a cabinet member tested positive as well, and she was a few seats away from President Rouhani!

“Even well-meaning attempts to sugarcoat the truth are self-defeating, because they spread mistrust, rumors and, ultimately, fear.  The signal that the disease must be stopped at any cost, or that it is too terrifying to talk about, frustrates efforts to prepare for the virus’ inevitable arrival.  As governments dither, conspiracy theories coming out of Russia are already sowing doubt, perhaps to hinder and discredit the response of democracies....

“This virus has already exposed the strengths and weaknesses of China’s authoritarianism.  It will test all the political systems with which it comes into contact, in both rich and developing countries.   China has bought governments time to prepare for a pandemic. They should use it.”

As for the global financial markets, it was the worst week since the financial crisis of 2008-09, specifically Oct. 2008 when it came to U.S. equity losses, 10%+ on the major indexes as I spell out below, while Europe and Asia suffered similar losses.

Late today, Fed Chairman Jerome Powell issued a brief statement, attempting to reassure the markets:

“The fundamentals of the U.S. economy remain strong.  However, the coronavirus poses evolving risks to economic activity.  The Federal Reserve is closely monitoring developments and their implications for the economic outlook.  We will use our tools and act as appropriate to support the economy.”

One other lead item...by the time I address you next week, we may have a true Democratic frontrunner for the presidential nomination following South Carolina and Super Tuesday.  Or it could be a mess, many of us preferring the latter.

Trump World

--Daniel Henninger / Wall Street Journal

“This is a moment when the public of any affected country – China, Italy, South Korea or the U.S. - expects the people atop its government to provide political leadership.  This being the U.S. in our politically degraded times, we are getting no such thing from Democrats or Republicans.

“One has to wonder: If another 9/11 happened, would Chuck Schumer within an hour accuse Donald Trump of ‘towering and dangerous incompetence,’ as he did Tuesday?  Of course he would.  Just as Mr. Trump amid the crisis would find time, as he did Tuesday, to tweet-smack ‘Cryin’ Chuck Schumer’? ‘He didn’t like my early travel closings.  I was right.  He is incompetent!’

“Virtually within moments of the CDC announcement, Health and Human Services Secretary Alex Azar found himself under assault at a hearing on virus preparation by grandstanding senators from both parties – the GOP’s Richard Shelby and John Kennedy and Democrat Patty Murray.

“By day’s end, the seven cage fighters in the South Carolina Democratic debate were piling on.  Sen. Bernie Sanders ridiculed the ‘great genius’ in the White House and naturally called for expanding the World Health Organization.

“Let us simplify: If anything close to ‘community spread’ occurs in the U.S., two political careers will be at risk – Donald Trump’s and Bernie Sanders’, in the middle of a presidential campaign.

“If the virus expands in the U.S., both the content and the quality of the response will be on President Trump.  As such, the coronavirus could be the issue on which Mr. Trump finally blows himself up with Twitter.

“It will be a situation in which the public is looking to him for leadership.  But on the evidence of the past three years, it will be child’s play for Mr. Schumer, Nancy Pelosi, Mr. Sanders or the media to goad Mr. Trump into a low-grade Twitter spat, which will look as if he thinks the coronavirus is about him, not the American people.

“Mr. Trump’s presentation at Wednesday evening’s press conference on the virus was fairly meandering.  Maybe it was jet lag.  The administration officials who spoke, including coronavirus team leader Vice President Mike Pence, sounded solid.  But if there is a public breaking point to the familiar Trump modus operandi, a coronavirus crisis could surface it.

“A public faced with any chance of restrictions on its personal movement – whether in New York City or Podunk – won’t want happy talk from the president’s aides or tweets from him filled with faux exclamation points.  To simplify further, will Mr. Trump manage the coronavirus in a way that doesn’t sound like a guy on a bar stool?”

Editorial / Washington Post

“Steering the country through a pandemic demands a clear and consistent message from leaders.  President Trump is right to want a calm and serious atmosphere in discussing it.  But he and his administration have delivered mixed messages that only add to public confusion.  They need to get their act together.

“At his White House news conference Wednesday evening, Mr. Trump radiated optimism.  He was careful to add caveats, but his overall message was that everything is going fine.  ‘We’ve had tremendous success, tremendous success beyond what many people would have thought,’ he said.  ‘We’ve done, really, an extraordinary job.’ ‘This is going to end.  Hopefully it’ll be sooner than later.’  ‘The risk to the American people remains very low.’

“By contrast, Nancy Messonnier of the Centers for Disease Control and Prevention told reporters that ‘ultimately, we expect we will see community spread in the United States.  It’s not a question of if this will happen, but when this will happen, and how many people in this country will have severe illnesses.’  She added, ‘Disruptions to everyday life may be severe, but people might want to start thinking about that now.’

“Who’s right?  No one knows how severe the outbreak will become.  But whom to believe?  Mr. Trump declared that a vaccine was being ‘rapidly’ developed.  Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health, cautioned that research and clinical trials will take a year or more and a vaccine won’t be ready for the current outbreak.  Mr. Trump repeatedly returned to his newfound realization that influenza causes thousands of deaths a year, suggesting this new disease will not be as deadly.  But no one knows that yet.  The data from China, still tentative, suggests that covid-19 infection could be fatal to 1 in 7 people over 80 years old. That’s not a typical flu season.  And there are no vaccines yet, unlike those widely in use to protect against the flu.

“ ‘We’re totally prepared,’ Mr. Trump declared, holding up a chart from the Global Health Security Index prepared by the Nuclear Threat Initiative and Johns Hopkins Center for Health Security, with the Economist Intelligence Unit, showing that the United States ranks first in health security.  But this important study also found that national health security ‘is fundamentally weak around the world.  No country is fully prepared for epidemics or pandemics and every country has important gaps to address.’

“Individuals approach a danger such as the coronavirus with both reason and emotion.  Both are understandable and even essential.  But the mission for Mr. Trump and those working for him is to feed the reason, not the dread.  That requires calmness but also candor.”

-- Tuesday, in a press conference from India, President Trump said no country was trying to help him win the November election, after a top intelligence official told lawmakers Russia was interfering in the 2020 presidential vote to help Trump win a second term.

“I want no help from any country and I haven’t been given help from any country,” Trump said.

After the congressional briefing, Trump fired the acting intelligence chief, Joseph Maguire, and replaced him with a political loyalist, Richard Grenell.  Then this afternoon, Trump said he was nominating Rep. John Ratcliffe, who was nominated for the job in July, but was dropped in early August after questions arose about Ratcliffe’s lack of experience and possible exaggerations in his resume.

William H. McRaven, retired Navy admiral, was commander of the U.S. Special Operations Command from 2011 to 2014, overseeing the 2011 Navy SEAL raid that killed Osama bin Laden / Washington Post:

“Edmund Burke, the Irish statesman and philosopher, once said: ‘The only thing necessary for the triumph of evil is for good men to do nothing.’  Over the course of the past three years, I have watched good men and women, friends of mine, come and go in the Trump administration – all trying to do something – all trying to do their best.  Jim Mattis, John Kelly, H.R. McMaster, Sue Gordon, Dan Coats and, now, Joe Maguire, who until this week was the acting director of national intelligence.

“I have known Joe for more than 40 years.  There is no better officer, no better man and no greater patriot.  He served for 36 years as a Navy SEAL.  In 2004, he was promoted to the rank of rear admiral and was chosen to command all of Naval Special Warfare, including the SEALs.  Those were dark days for the SEALs.  Our combat losses from wars in Iraq and Afghanistan were the highest in our history, and Joe and his wife, Kathy, attended every SEAL funeral, providing comfort and solace to the families of the fallen.

“But it didn’t stop there.  Not a day went by that the Maguires didn’t reach out to some Gold Star family, some wounded SEAL, some struggling warrior.  Every loss was personal, every family precious. When Joe retired in 2010, he tried the corporate world.  But his passion for the Special Operations soldiers was so deep that he left a lucrative job and took the position as the president of the Special Operations Warrior Foundation, a charity that pays for educating the children of fallen warriors.

“In 2018, Joe was asked to be the director of the National Counterterrorism Center, a job he knew well from his last assignment as a vice admiral.  He accepted, but within months of his arrival came the announcement of Coats’ departure as director of national intelligence.  Maguire didn’t seek to fill the job; he was asked to do it by the president.  At first he declined, suggesting that Sue Gordon, Coats’ deputy, would be better suited for the job.

“But the president chose Maguire.  And, like most of these good men and women, he came in with the intent to do his very best, to follow the rules, to follow the law and to follow what was morally right.  Within a few weeks of taking the assignment, he found himself embroiled in the Ukraine whistleblower case.  Joe told the White House that, if asked, he would testify, and he would tell the truth.  He did.  In short order, he earned the respect of the entire intelligence community.  They knew a good man was at the helm.  A man they could count on, a man who would back them, a man whose integrity was more important than his future employment.

“But, of course, in this administration, good men and women don’t last long.  Joe was dismissed for doing his job: overseeing the dissemination of intelligence to elected officials who needed that information to do their jobs.

“As Americans, we should be frightened – deeply afraid for the future of the nation.  When good men and women can’t speak the truth, when facts are inconvenient, when integrity and character no longer matter, when presidential ego and self-preservation are more important than national security – then there is nothing left to stop the triumph of evil.”

--President Trump went on the attack against two liberal Supreme Court justices, Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor following sharp criticism over his interference in the judiciary in ongoing cases.

Trump tweeted the two should “recuse themselves on all Trump, or Trump related, matters” before the court.

The president’s ire arose from a dissenting opinion issued by Sotomayor in which she criticized the White House for rushing to the Supreme Court for relief when lower courts refused.

“Claiming one emergency after another, the Government has recently sought stays in an unprecedented number of cases, demanding immediate attention and consuming limited Court resources in each,” Sotomayor wrote in the dissent.

“And with each successive application, of course, its cries of urgency ring increasingly hollow.  Indeed, its behavior relating to the public-charge rule in particular shows how much its own definition of irreparable harm has shifted.”

She was also critical of her judicial peers for acquiescing to the administration’s repeated requests.

“It is far from unusual for justices to criticize parties to a case or even to pass judgement on a majority opinion of the court.”

At a press conference in India, Trump again slammed the judge for her written dissent, which he said was “so inappropriate.”

--Trump’s state visit to India, Monday and Tuesday, was everything the president could have hoped for...all the pomp and circumstance, and a crowd of 100,000+ at a rally with his counterpart, Prime Minister Modi.

The president and First Lady then visited the Taj Mahal, for some terrific photos, and the two sides finished work on a $3 billion trade deal that had been in the works for months for items like attack helicopters.

But there was no sweeping trade agreement between the two leaders as major issues remain.

Meanwhile, why was Ivanka there, at taxpayers’ expense?  Well, it’s all about 2024, sports fans.  Mark my words.  Ivanka will be touted by the president, soon after his re-election, as his successor, and she’ll say she has vast foreign policy experience, meeting with world leaders, and....I’ll stop here.

--A U.S. appeals court handed President Trump a major legal victory on Friday by dismissing a Democratic-led congressional panel’s lawsuit seeking to enforce a subpoena for testimony from former White House Counsel Donald McGahn.

The Judiciary Committee had sought testimony from McGahn, who left his post in October 2018, about Trump’s efforts to impede former Special Counsel Robert Mueller’s investigation into Russian election interference in 2016.

--But the White House lost an appeals court ruling today, as one of Trump’s signature immigration policies that has helped to sharply curb a migration surge on the southern border, was blocked.  Some 59,000 people seeking asylum have been sent back to Mexico to await the outcome of their cases in often dangerous border towns.

The ruling means the U.S. can no longer send people back to Mexico under the program, but it’s not clear how it affects people already in it in Mexico.

--Trump tweets:

“CDC and my Administration are doing a GREAT job of handling Coronavirus, including the very early closing of our borders to certain areas of the world.  It was opposed by the Dems, ‘too soon,’ but turned out to be the correct decision.  No matter how well we do, however, the....

“....Democrats talking point is that we are doing badly.  If the virus disappeared tomorrow, they would say we did a really poor, and even incompetent, job.  Not fair, but it is what it is.  So far, by the way, we have not had one death.  Let’s keep it that way!”

“So, the Coronavirus, which started in China and spread to various countries throughout the world, but very slowly in the U.S. because President Trump closed our border, and ended flights, VERY EARLY, is now being blamed, by the Do Nothing Democrats, to be the fault of ‘Trump.’”

“The Do Nothing Democrats were busy wasting time on the Immigration Hoax, & anything else they could to make the Republican Party look bad, while I was busy calling early BORDER & FLIGHT closings, putting us way ahead in our battle with Coronavirus.  Dems called it VERY wrong!”

“Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Coronavirus* look as bad as possible, including panicking markets, if possible.  Likewise their incompetent Do Nothing Democrat comrades are all talk, no action.  USA in great shape! @CDCgov”

*The president misspelled it...I corrected it for him.

“There has rarely been a juror so tainted as the forewoman in the Roger Stone case.  Look at her background.  She never revealed her hatred of ‘Trump’ and Stone.  She was totally biased, as is the judge.  Roger wasn’t even working on my campaign.  Miscarriage of justice.  Sad to watch!”

“Somebody please tell incompetent (thanks for my high poll numbers) & corrupt politician Adam ‘Shifty’ Schiff to stop leaking Classified information or, even worse, made up information, to the Fake News Media.  Someday he will be caught, & that will be a very unpleasant experience!”

“Are any Democrat operatives, the DNC, or Crooked Hillary Clinton, blaming Russia, Russia, Russia for the Bernie Sanders win in Nevada. If so I suggest calling Bob Mueller & the 13 Angry Democrats to do a new Mueller Report, Democrat Edition.  Bob will get to the bottom of it!”

“Word is that Mini Mike Bloomberg performed so poorly in the two debates, that he is thinking about dropping out of the Democrat Primary.  The fact is, he was not true to himself, and the public was able to quickly figure him out.  Not a good experience for Mini Mike!”

“52% in the new Rasmussen Poll.  95% Approval Rating in the Republican Party. Thank you!”

[Ed.  Trump tweeted this this morning.  He misread the numbers.  His approval rating in the Rasmussen survey was 47%, 52% disapproval.  Pathetic.]

“To the people of South Carolina, Tom Steyer is a joke, laughed at by everyone, a total incompetent.  He made money in coal, now he ‘hates’ coal.  Did you see him fawning over Crazy Bernie?  Has no chance, a loser for South Carolina, doesn’t deserve your vote!”

“So @TeamCavuto has very bad ratings on @foxnews with his Fake guests like A.B. Stoddard and others that still haven’t figured it all out.  Will he get the same treatment as his friend Shepherd Smith, who also suffered from the ratings drought?”

Wall Street and Trade

Financial markets around the world collapsed in unison.  The major indices in the U.S. fell 10%+, Tokyo nearly 10%, London 11%, Germany and France 12%.  Bond yields around the world collapsed as well, never a good sign...a flight to safety.

The Dow, S&P 500 and Nasdaq are now all off about 13% from their all-time highs in just days.

Thursday saw the single-worst point drop in the Dow, 1,190 points, in history.

All because there are legitimate fears coronavirus can lead the global economy into recession.  Whether it is short-lived or longer term is indeterminable at this point.

But for this week, the market is reassessing risk and market valuations.

Goldman Sachs issued a report Thursday morning, prior to the market open, that the coronavirus may wipe out corporate growth in 2020, perhaps completely.

Goldman said companies will generate no earnings growth this year, but looking out into 2021, Goldman sees a modest 6% growth rate in S&P 500 earnings.

“Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for U.S. exporters, disruption to the supply chain for many U.S. firms, a slowdown in U.S. economic activity, and elevated business uncertainty,” wrote Goldman strategist David Kostin.

But Kostin adds:

“A more severe pandemic could lead to a more prolonged disruption and a U.S. recession,” Kostin said.  Under a recessionary scenario, Kostin sees S&P earnings dropping 13% this year, which would potentially rebound to 10% growth in 2021.

But in looking at 2021, no one...no one...can tell you what will happen.  What if coronavirus, having slowed this spring, let’s say, comes back in the fall?  How quickly can an effective vaccine be produced, etc.  And you not only have November’s election, but the geopolitical situation could be highly dicey as well.

Separately, in a survey conducted by the American Chamber of Commerce in China, some American companies say they could lose as much as half their annual revenue from China if the epidemic extends through the summer, as businesses struggle to get boots back on the ground.

On the economic data front this week, it’s tough to tell just how important it is since none of it really reflects the current situation and the eventual impact from the coronavirus and the market turmoil.

Tuesday, the S&P/CoreLogic/Case-Shiller 20-city home price index for December was up 2.9% year-over-year for single-family homes.  We then had a bullish January figure on new home sales, 764,000 annualized, far better than expected though no doubt helped by the warmer than normal weather in much of the country.

January durable goods orders fell 0.2%, but rose 1.1% on the key core capital goods metric.

January personal income was up a strong 0.6%, with consumption up 0.2%, a little shy of expectations on the latter.  The core personal consumption expenditures index was 1.6%, year-over-year, this being the Fed’s preferred inflation benchmark, so still shy of the 2% the Fed has long targeted.

This morning we had a better than expected reading on the Chicago PMI for February, the first real look at manufacturing for the month, and the 49.0 (50 being the dividing line between growth and contraction), while not expansionary, was a big improvement over January’s sickly 42.5.

Lastly, we had our second look at fourth-quarter GDP and it remained unchanged at 2.1%

Annualized pace of GDP....

Q4 2019...2.1
Q3 2019...2.1
Q2 2019...2.0
Q1 2019...3.1
Q4 2018...1.1

So we’re stuck at 2%, not the promised 3%.

The Atlanta Fed’s GDPNow barometer for the first quarter, however, is currently 2.6% after today’s data on personal income and consumption, but the data doesn’t reflect the true impact of the outbreak as yet.

Finally, just a note on the trade deal with China.  It seems pretty clear China will be unable to abide by the targets, with increased talk they will declare force majeure, citing a clause that “in the event that a natural disaster or other unforeseeable event outside the control of the parties delays a party from timely complying with its obligations under this agreement,” the two sides would consult with each other.  No doubt that would lead to a lot of tweets from President Trump.  His good friend Xi might be a target of some of them.  [The Trump team will try to get China to delay any such announcement on their part until after the election.]

Europe and Asia

There was no broad economic data this week for the eurozone, but we’ll have a slew of PMI figures and far more next week, in both Europe and Asia, with some of it probably telling, as it will begin to reflect the impact of the outbreak.

Meanwhile we have....

….Brexit: Britain unveiled a tough negotiating mandate for talks with the European Union on Thursday, underlining its desire for future economic and political independence that pits London on a collision course with Brussels.

While a trade agreement between Britain and the EU technically needs to be wrapped up by yearend, British Prime Minister Boris Johnson has set a deadline of June to get what London’s negotiating team called “the broad outline of an agreement” to be finalized by September.  Otherwise, Britain said it would pursue an Australian-style agreement, a looser trading arrangement that runs along baseline World Trade Organization rules.

Britain said it wants “legally binding” obligations on access to the European Union financial market, while a trade deal with the bloc should provide a “predictable, transparent and business-friendly environment” for cross-border financial services activities.

“The agreement should include legally binding obligations on market access and fair competition,” the mandate document reads.

“The agreement should ensure that the UK and EU’s state-owned enterprises operate in a fair and transparent manner and do not discriminate against businesses in the other party when buying and selling on commercial markets,” the document said.

Well, the document goes on in similar, rather strident language, but the bottom line, as I told you a while ago, is that issues like fishing rights and agriculture will be paramount in the negotiations.

The UK negotiating document says, for example: “Fishing opportunities should be negotiated annually based on the best available science for shared stocks.”

Britain said it would no longer accept the existing “relative stability” mechanism for sharing fishing quotas as it was outdated; maintaining that as an independent coastal nation, it will not trade away its fishing rights.

French President Emmanuel Macron last weekend cast doubt over the likelihood of the EU and Britain reaching a post-Brexit trade deal.

“It’s going to be tense because they are very tough...Boris Johnson has a card in his hand and it is fishing and with that he will try to gain access to the market.”

Overall, Johnson told Sky News, “We’re very optimistic. We want a great relationship with our friends.  We buy huge quantities of their stuff, they buy quantities of our stuff. There’s just a big chance there, not just to maintain what we already have but to intensify our economic interpenetration and do more trade together.”

Cabinet office minister Michael Gove told parliament as he unveiled the mandate: “We want the best possible trading relationship with the EU, but in pursuit of a deal we will not trade away our sovereignty.”

But the talks between the two sides begin Monday and there doesn’t even seem to be a consensus on the format as yet.

On Tuesday, the EU said talks on post-Brexit ties would be “very hard” and could fail if London did not secure the new land border with the bloc on the island of Ireland in the way that Brussels said had been agreed to.

Stumbling blocks include what the EU calls its level playing field – shorthand for agreed baseline rules on environmental standards, labor regulations and state aid.

Brussels wants London to commit to those rules in law – but London says that such provisions are not part of other EU trade agreements, and that they do not fit its goal of “taking back control” from Brussels.

Turning to Asia...China reported its official government PMI data for February late tonight and the figures are shocking.  Shocking in that they appear to be brutally honest.

As released by the National Bureau of Statistics, the manufacturing PMI fell to 35.7 from 50.0 in January, the fastest contraction on record.  Analysts were expecting a drop to 46.0.  The service sector reading also shrank at a record pace to 29.6 from 54.1.

The official composite reading, combining both (given the appropriate weighting of each to the overall economy), is 28.9 vs. January’s 53.0.

I have never, ever seen numbers like this.  China is clearly telling us that they are going to be reporting a sickly GDP number for the first quarter, and that’s not good for anyone.

Seriously, I am stupefied.  Again, because for once, officials don’t seem to be playing any games with the numbers.

Next week we should receive the combined Jan./Feb. data on items like retail sales and industrial production that incorporates the impact of the Lunar New Year holiday.

Street Bytes

--The Dow Jones fell 12.4% this week to 25409, down 3,583 points and now well off the all-time high of 29551.  The S&P 500 fell 11.5% and Nasdaq lost 10.5%.  For all three the worst since October 2018.

The three all staged a correction off their highs, defined as 10%, in a record six days.  Thursday’s decline of 4.4% in the S&P was its worst day since Aug. 2011.

I have examples below of the volatility this week, but back on Feb. 19, Tesla shares closed at $917.  Friday, they hit $611 before ending the week at $674.

--U.S. Treasury Yields

6-mo. 1.15%  2-yr. 0.93%  10-yr. 1.16%  30-yr. 1.69%

Yields collapsed when it became clear the coronavirus was spreading rapidly outside China and posed a potential major threat to the U.S.  The yield on the 10-year, which had hit an all-time closing low in July 2016, 1.364%, following the UK’s vote to leave the European Union, fell 31 basis points over the week to 1.16% (after hitting an intraday low of 1.12%).

The 10-year had closed 2019 at 1.92%.

The yield on the 2-year shockingly fell from 1.35% to 0.93% in one week.

The bond market is pricing in at least three rate cuts from the Federal Reserve, which could act this weekend, like Sunday night, or wait until its next Open Market Committee meeting, March 17-18.

Overseas, the yield on the German 10-year, the bund, fell to -0.61%. But the yield on the Greek 10-year rose from 0.93% to 1.26%, as investors lose confidence that, IF there was a recession in Europe, Greece could service its debt.

--Oil hit its lowest level since Dec. 2018, closing the week at $45.32 on West Texas Intermediate, thus wiping out all the gains since the implementation of the joint OPEC-plus (including Russia) production cuts from January 2019, as concerns mounted over global demand amidst the slowdown that is doomed to hit all the major economies.

The cartel is next scheduled to meet March 5.

--Shares in Apple closed at $323 on Feb. 19, and yet Friday morning they were trading at $256, before finishing the week at $275 amidst the incredible volatility. 

But Reuters reported that travel restrictions to China may have come at a particularly bad time because normally, Apple’s engineers jet off to Asia to perfect the production of this fall’s new iPhones, working with partners such as Foxconn to set up new assembly lines and do trial runs.  Foxconn officials have been working remotely from Taipei since the Lunar New Year holiday and have not returned to China on a large scale, while it slowly opens up its production facilities on the mainland.

If delays occur at this stage, going from prototype to full production, that can impact the time Apple needs to finalize orders for chips and other parts, almost all of which are custom-made for the iPhone.

So this is but one example, albeit a large one, of how disruptive the coronavirus can be.

--Microsoft said it does not expect to meet its quarterly revenue forecast for its Windows and personal computing business as a result of the outbreak.

“Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated,” the company said in a statement.

--The International Air Transport Association warned of a deep downturn in earnings among global carriers related to the collapse of travel in Asia because of the virus.

The outbreak could reduce global airline revenue by about $29 billion in 2020, resulting in a small industry contraction compared with 2019, it said.

According to the IATA’s analysis, airlines in the Asia-Pacific region are facing a 13 percent decline in passenger demand for the year.  But this could be highly optimistic and clearly is counting on covid-19 petering out in the coming months.

Air France-KLM estimated a hit to earnings of as much as $216 million between February and April this year.

Monday, United Airlines withdrew its full-year guidance because of uncertainty around the virus outbreak as it canceled further flights to Asia due to withering demand.

--Adidas, the German sportswear giant, said its sales in China dropped by about 85 percent since Chinese New Year on Jan. 25.

--Walt Disney Co. CEO Bob Iger suddenly stepped down, effective immediately, in a surprise announcement Tuesday.  There are no health issues or internal matters, Iger just wanted to step away from the CEO role and focus on the content side of the business as executive chairman, while fulfilling his contract through 2021.

Bob Chapek was named as Iger’s replacement, Chapek most recently chairman of Disney Parks, Experiences and Products.

Iger said it was an “optimal time” for him to step aside following Disney’s acquisition of Fox’s entertainment assets and the launch of Disney Plus streaming service in November.

Iger, 69, became CEO of Disney in 2005, succeeding longtime chief Michael Eisner.  He steered Disney through successful acquisitions of Lucasfilms, Marvel, Pixar and other brands that became big moneymakers for Disney.

But all were in agreement the timing of the announcement was “strange,” as leading analyst Rich Greenfield put it.  “I just can’t comprehend it,” he said.

“It seems strange to spend two years talking about how the focus is winning in streaming and to choose someone who does not have experience in streaming,” Greenfield said.

--Home Depot reported net income of $2.48 billion that was ahead of Wall Street’s expectations in the fourth quarter, while sales of $25.78 billion were in line, though below last year.

Same-store sales for the quarter ended Feb. 2 rose 5.2%, while comp sales in the U.S. rose a strong 5.3%.  In fiscal 2019, same-store sales increased 3.5%.

HD guided higher for full-year 2020, with comp sales growth of 3.5% to 4%.

--Lowe’s Cos. delivered weaker-than-expected sales for its fiscal fourth quarter and offered an annual forecast that was below the Street’s forecasts.  Lowe’s is in the midst of an overhaul as it competes with Home Depot.

Fiscal fourth-quarter net income of $509 million beat the Street on an adjusted basis, but revenue of $16.03 billion was shy.

Overall, sales at stores open at least a year rose 2.5% for the quarter, 2.6% in the U.S., while analysts were expecting 3.2%; far from HD’s 5.3% in the U.S.

Lowe’s then guided below forecasts for full-year earnings.

--Boeing Co. is planning more support to suppliers for its 737 MAX jetliner program to prepare them for restarting production – and to dissuade some from seeking more business from Airbus SE.

Since Boeing suspended MAX production in January after building more than 400 planes it was unable to deliver, the network of more than 600 big suppliers and hundreds of smaller firms has been in limbo over business that in many cases represents about half of their annual sales.  Many of these suppliers had expanded factories and hired more staff to help fill Boeing’s orders for more than 4,500 MAX jets it had planned to build at a rate of 57 a month.  But now analysts believe that even when Boeing restarts production, it will take three years to get to that level.

Boeing has set aside $4 billion for additional expenses this year, for cash advances and other financial support to suppliers. For example, Wichita, Kan.-based Spirit Aerosystems Holdings Inc., one of the biggest MAX suppliers, was building 52 fuselages a month before halting output at the end of 2019, and now Boeing is lending it $225 million this quarter

But many of these same suppliers are now looking to pursue more work from Airbus and military customers.

--Huawei announced it will build its first European manufacturing plant in Europe, as the Chinese telecom giant seeks to ease worldwide concerns stoked by U.S. charges that Beijing could use the equipment for spying.

Huawei will build a mobile base station plant, which will supply the entire European market, not just France’s, chairman Liang Hua said on Thursday.

It isn’t clear if French President Emmanuel Macron gave his blessing on Huawei’s decision as he has led warnings about Chinese encroachment into the European Union’s economy.

--Macy’s posted a better holiday season than anticipated and reported adjusted earnings for the fourth quarter that exceeded expectations, while the department store operator reiterated a full-year forecast that remained short of analyst targets.

Macy’s posted earnings of $2.12 per share Tuesday, lower than $2.73 a year ago but ahead of consensus of $1.96.

Same-store sales fell 0.6%, which was in line, as sales for the quarter were $8.34 billion, vs. a year ago of $8.46bn.

For the full year, the company is projecting revenue of $23.6 billion to $23.9bn.

--J.C. Penney reported adjusted fourth-quarter earnings of $0.13 per share, well above forecast, while revenue fell less than expected to $3.49 billion.  Same-store sales fell 7%.

But comp-store sales for 2020 are still expected to decline 3.5% to 4.5%, and the guidance does not include any impact from the coronavirus epidemic.

--Best Buy Co. Inc. issued a tepid forecast for 2020 on both annual profit and sales as electronics makers curb manufacturing due to the covid-19 epidemic.  The 2020 forecast overshadowed robust online demand for smartphones and tablets during the holiday season that helped the company beat quarterly profit and sales estimates.

For the fourth-quarter revenue rose 2.7% to $15.20 billion, with net profit rising 1.4% to $745 million.  Same-store sales rose 3.2%, better than expected.

“This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in the supply chain,” said Best Buy CEO Corie Barry.

The company expects same-store sales growth of flat to 2% this year compared with expectations of 1.9%.

--Toll Brothers, a builder of luxury homes, reported earnings and revenue that were both below forecasts and the stock tanked around 16%.

--Expedia Group Inc. said it would cut about 3,000 jobs, or 12% of its workforce as part of a plan to streamline its business.  The online travel services company had 25,400 employees globally as of Dec. 31.  The job cuts include 500 people in its headquarters in Seattle.

--Cisco Systems Inc. has started a new round of job cuts as the networking equipment maker faces the prospect of slowing sales growth because of global economic uncertainty.  The company, with 75,000 employees worldwide, declined to say how many people were affected.

Earlier this month, Cisco said it expects revenue to drop between 1.5% and 3.5% in the current quarter, which would come on top of a 3.5% year-over-year drop in revenue for the company’s fiscal second quarter, which ended Jan. 25.

But now it’s about the impact of the coronavirus outbreak on its business.

--Canada’s economy grew at just an annualized rate of 0.3% in the fourth quarter as a result of decreased business investment and weak international trade, Statistics Canada reported today.

--After reporting a 5.4% drop in same-store sales for the first two months of the current quarter, Bed Bath & Beyond Inc. announced it would cut 500 jobs, including management positions.

--Shares in Shake Shack plunged nearly 15% on Tuesday as it reported an unexpected 5.4% drop in traffic at its popular burger-and-fries restaurants, with same-store sales falling 3.6% in its latest quarter.  The New York-based company also said comp sales for the current fiscal year will fall by a low single-digit percentage, after Shake Shack posted a 1.3% increase for the sales metric in fiscal 2019.

“Cannibalization” could be factor as CEO Randy Garruti admitted on a conference call, “We’ve come upon the question in past years of, hey, do these Shacks cannibalize or impact other Shacks. And the answer is sometimes they do.”

Garruti said the company plans to continue adding new restaurants in the U.S. and abroad but the company lowered 2020 growth targets and investors bolted.

But Crain’s New York Business’ Aaron Elstein had an interesting commentary.

“Since Shake Shack’s IPO (2015), the number of Taco Bell locations here (New York) has jumped by 38%, according to a report last year from the Center for an Urban Future. Burger King, Chipotle and Popeye’s each have added more than 20 locations in the past five years, for a total of 288 restaurants.  There are more than 200 McDonald’s, scores of Subways, and on and on.

“All that choice could give you heartburn. It certainly seems to be causing some at Shake Shack, which has two locations a short walk from my Midtown office. There’s also a Five Guys across the street, a Chick fil A just a few blocks away and many other fast-food options.

“Is a Shackburger better than a Big Mac or Whopper? I think so.  Is it better than Five Guys or a fried-chicken sandwich? That’s a harder question. Based on the Shake Shack’s drop in traffic, it looks like people are voting with their feet.”

--Beyond Meat Inc. shares plummeted 15% despite the fact it blew past analyst estimates on revenues.  Fourth-quarter sales of $98.5 million helped push full-year revenue beyond expectations to $297.9 million.  The company forecast 2020 sales of $490 to $510 million.

CEO Ethan Brown said the company is “only scratching the surface” of the U.S. restaurant market, but investors may be impatient for a bigger deal with a major player such as McDonald’s.  Beyond Meat is in about 4% of the 650,000 U.S. restaurants.

The shares closed at $91, down from a July high of $240.

--The new HBO Max streaming service will include a special reunion of the TV show “Friends” and all of the sitcom’s previous episodes when the service launches in May, WarnerMedia said last weekend.

All six of the show’s main stars will be part of the show’s celebration.

HBO Max will be free for HBO subscribers.  For those who don’t have HBO, it will cost $14.99 a month.

“Friends” was on the air for 10 seasons, 1994 through 2004.  Netflix Inc. previously had the rights to stream the show.

The Wall Street Journal reported that the six stars will receive between $2.25 and $2.5 million for the show.

--Recorded-music sales in the U.S. grew 13% last year to $11.1 billion – their highest point in more than a decade – as revenue continued to surge from streaming services such as Spotify and Apple Music.

According to a report from the Recording Industry Association of America, a trade group for record companies, streaming accounted for 80% of overall revenue in 2019, the industry’s fourth consecutive year of growth.

Subscriptions for streaming services topped 60 million in 2019, with revenue up 25% to $6.8bn.

Americans streamed more than 1.5 trillion songs in 2019.

Physical product sales fell less than 1% to $1.15bn as a 19% lift in vinyl – logging the format’s biggest revenue since 1988 – helped offset a 12% decline in revenue from CDs.

--Sign of the Apocalypse: According to a survey of beer drinkers conducted by SW Public Relations, 38 percent insist that they would not, under any circumstances, buy Corona, the beer.  14 percent of respondents who said they regularly consume Corona beer admitted in the survey they would not order the beverage in public.

Foreign Affairs

Syria, Russia, Turkey: Today, NATO envoys were holding emergency talks at the request of Turkey following the killing of 33 Turkish soldiers in northeast Syria in an airstrike by Syrian government forces, the largest death toll for Turkey in a single day since it first intervened in Syria in 2016.  It’s a major escalation of the conflict between Turkish and Russian-backed Syrian forced that has raged since early February, with at least 54 Turkish troops having now been killed in Idlib in that time.

Turkey launched retaliatory strikes on regime positions, killing 16 soldiers, monitors said.

Russia, Syria’s key military ally, said the Turkish troops had been operating alongside jihadist fighters when they were attacked by Syrian forces.  It denied its own air force had been involved in the fighting.

But Russia has been supporting government forces that have been trying to retake Idlib from rebels backed by Turkey.  The airstrike came after the rebels retook a key town.

But almost immediately after the Syrian airstrike, a spokesman for Turkish President Recep Tayyip Erdogan said Turkey was “no longer able to hold refugees” - reiterating a longstanding warning that his country can no longer cope with the arrival of people fleeing the conflict in Idlib.

As I have written for months, Turkey has been hosting 3.6 million Syrians under a 2016 deal with the European Union to step up efforts to halt the flow of refugees to Europe in exchange for billions of euros in aid. Since then Erdogan has repeatedly threatened to “open the gates” in several disputes with European states.

So border and customs officials were told to stand down on Thursday, with another one million refugees, half of which are children, on the Syrian-Turkish border, waiting to be allowed in to avoid the war.

Today, a Greek police official said 300 Syrians, Iranians, Iraqis, Moroccans and Pakistanis were gathering at the border with Greece, which is not an unusual number, but others were massed at beaches facing Greek islands off Turkey’s western coast.

There had already been fierce clashes between Greek officials and the Greek people in areas impacted by the building of new refugee camps, prior to Erdogan’s statement, and the impact of Turkey’s move to open the borders is explosive.

As for NATO, the issue is what to do if Ankara requests their assistance under Article 5 of the treaty – which requires all allies to come to the defense of another member under attack, though debate on this specific topic hasn’t begun as I go to post.

The Syria offensive comes on top of tensions within NATO over Turkey’s purchase of Russian-made S400 missiles, which threaten NATO security and the F-35 stealth fighter jet.

But despite the political-military tensions, Turkey is too important to expel from the 29-member alliance, given its strategic importance, a vital bridge between Europe, the Middle East and Central Asia.  The Bosporus Strait is also the only waterway in and out of the Black Sea, where Russia’s naval fleet is based.

And NATO relies on the Incirlik air base in southeastern Turkey as a staging point for access to the Middle East.

Erdogan has been trying to strike a ceasefire deal with Vladimir Putin.  But they already had one, a 2018 agreement reached in Sochi that called for a demilitarization zone around the Idlib region.  Syria then launched an offensive to take Idlib and flush out the final rebel resistance, many of whom are backed by Turkey.

There is talk of a March 6 summit between the leaders of Turkey, Russia and Iran.  Turkish officials told a Russian delegation in Ankara today that a sustainable ceasefire in Idlib must be established immediately, and that Syrian government forces must withdraw to borders determined in the 2018 Sochi agreement.

Iran: U.S. Secretary of State Mike Pompeo on Tuesday said the United States was “deeply concerned” Iran may have covered up details about the spread of coronavirus, and he called on all nations to “tell the truth” about the epidemic, Pompeo also criticizing Beijing for what he characterized as the censorship of media and medical professionals.

As noted earlier, mistrust of Iran was further heightened on Tuesday, when the deputy health minister and head of Iran’s counter-coronavirus task force, announced he had tested positive, after appearing to be very sick while speaking at a press conference.

There have also been persistent rumors that at least 50 people have died in the Iranian city of Qom from the outbreak, and that was actually from a report on Monday from Iran’s semiofficial ILNA news agency.  The 50 deaths go back to as far as Feb. 13.

Oh, and there was an election last weekend in Iran, which added to the coronavirus tumult, crowds lining up to vote, though turnout was just 43%, down from 62% in the 2016 parliamentary vote, and the lowest in the Islamic Republic’s history.

Needless to say, with 7,000 moderate and reformist candidates having been denied ballot access by the Electoral Commission, conservatives won a landslide, strengthening hard-liners opposed to diplomacy with the West.

Supreme Leader Ali Khamenei on Sunday accused foreign powers of using the virus in their propaganda to discourage Iranians from voting in an attempt to undermine the nation.

Expressing “deep appreciation” for the Iranians who voted, Mr. Khamenei said Iran’s election “negates the enemy’s claim that religion is against democracy and freedom.”

Afghanistan: Having seen a significant reduction in violence in the country during the past six days, Secretary of State Mike Pompeo said on Friday, Washington hopes to sign a U.S.-Taliban deal on an American troop withdrawal tomorrow in Qatar.

But there are zero details on whether Afghanistan remains a democracy and what rights will be afforded women.

Israel: The latest national election is Monday, in what’s bound to be another stalemate between Prime Minister Benjamin Netanyahu and rival Benny Gantz.  But will Avigdor Lieberman finally really play the role of kingmaker?  Stay tuned. 

Egypt: Hosni Mubarak, former president of Egypt, died this week.  He was 91.

In 1981, Mubarak was vice president to Anwar Sadat, when Sadat was gunned down at a military parade.  Mubarak had never sought the top spot, but then lasted 30 years as president, until the 2011 Arab Spring revolution consigned him to history.

His rule was defined by decades of stagnation and oppression, while offering his people a choice: Mubarak or mayhem.

And he did have peace with Israel, no small feat, and for this the United States was grateful and willing to look away when it came to the many downsides of his rule.

China: Chinese President Xi Jinping urged businesses to get back to work, though he said the epidemic was still “severe and complex, and prevention and control work is in the most difficult and critical stage.”

But Xi said that while the outbreak will have a relatively big hit on the economy and society, the government will step up policy support to help achieve economic and social development targets for 2020.

Chen Yulu, a deputy governor at the People’s Bank of China, wrote in an opinion piece in the Financial Times that the “sound” fundamentals of the domestic economy remain unchanged in the medium to long run despite a short-term slowdown due to the epidemic, Chen calling for a “V-shaped” recovery.

Meanwhile, Moscow’s mayor has asked China to respect the measures the city is taking to prevent the spread of the coronavirus after China’s embassy complained about disproportionate and discriminatory action against Chinese nationals.  The embassy this week deplored what it described as the “ubiquitous monitoring” of Chinese on Moscow’s public transport network.

Authorities in Moscow have carried out raids on potential carriers of the virus and used facial recognition technology to enforce quarantine measures.  Two Chinese nationals were hospitalized in Russia with the virus, but have since recovered and been discharged.

Separately, Hong Kong publishing tycoon Jimmy Lai, an outspoken critic of Beijing, and two other pro-democracy activists were arrested by police on Friday on charges of illegal assembly, local media reported.  Lai, a self-made millionaire who has been a major financial patron of Hong Kong’s pro-democracy movement, was picked up by police at his house.  This could be a spark for renewed protests, but the coronavirus fears may outweigh the ability for large crowds to gather.

Earlier, a Chinese court sentenced Chinese-born Swedish citizen Gui Minhai to 10 years in jail on Monday for illegally providing intelligence overseas, prompting a protest from Stockholm.  Gui, a bookseller previously based in Hong Kong who sold books critical of China’s political leadership, was detained by mainland police in 2018.  He was seized while with Swedish diplomats on a Beijing-bound train.

China warned Sweden not to meddle in China’s internal affairs.  The decision to sentence Gui could not have been made without President Xi’s approval.  Xi is Trump’s “good friend.”

The guy sold books!  This is what China has become under Xi, and it’s getting worse by the minute.

South Korea: The United States and South Korea postponed joint military drills on Thursday to limit the spread of coronavirus, as a 23-year-old U.S. soldier stationed at a base near the city of Daegu contracted the virus; Daegu the epicenter for covid-19 in Korea.

North Korea:  The silence out of here with regards to the coronavirus has been deafening, though the government reportedly quarantined 380 foreigners in a bid to prevent an outbreak. 

Then suddenly, tonight, state media reported that Kim Jong Un made his first public appearance in 22 days to visit a mausoleum marking the anniversary of the birth of his father and late leader Kim Jong Il.  Kim also oversaw military drills today, we are told.

And in a separate dispatch, KCNA said Kim convened a meeting of the ruling Workers’ Party’s powerful politburo where a stricter enforcement of “top-class anti-epidemic steps” was discussed to prevent the spread of the virus.

“In case the infectious disease spreading beyond control finds its way into our country, it will entail serious consequences,” Kim was quoted as telling the meeting.  He instructed officials to “seal off all the channels and space through which the infectious disease may find its way, and strengthen check-up, test and quarantine,” KCNA added.

India: At least 38 people died and more than 200 were injured over three days of rioting in New Delhi, the death toll slated to rise, in the worst communal violence to hit India’s capital in nearly three decades, triggered by Hindu groups who attacked mostly Muslim protesters demonstrating against Prime Minister Narendra Modi’s new citizenship law, which critics say discriminates against Muslims and is a further attempt to undermine the secular foundations of India’s democracy.

It was total mob violence, groups of Hindus beating unarmed men, including journalists; men with sticks, iron rods and stones wandering the streets; Hindus and Muslims facing off, men questioned as to their religion, some asked to drop their pants, seriously, to prove it (I won’t get into further details).

After President Trump left, Modi tweeted, appealing for peace. The two were in Delhi on Tuesday, seemingly oblivious to the violence taking place miles from them.  Trump had said on Monday that he had spoken with Modi about religious freedoms but wouldn’t be drawn further into the issue.

“They have really worked hard on religious freedom,” Trump added.

Monday, Trump extolled India’s rise as a stable and prosperous democracy as one of the achievements of the century.

“You have done it as a tolerant country. And you have done it as a great, free country,” Trump said.

Many critics say the police in Delhi did little to protect minority Muslims.

Random Musings

--Presidential tracking polls....

Gallup: 49% approve of President Trump’s job performance, 48% disapprove; 93% of Republicans approve, 43% of independents (Feb. 3-16).
Rasmussen: 47% approve, 52% disapprove (Feb. 28).

--Senator Bernie Sanders had a huge win in the Nevada caucuses last Saturday, taking 46.8% of the county delegate vote (24 of the 36 delegates), with Joe Biden at 20.2%, Pete Buttigieg 14.3%, Elizabeth Warren 9.7%, Tom Steyer 4.7% and Amy Klobuchar 4.2%.

But more shockingly, according to exit polls, Sanders took 51% of the Latino vote (Biden 16%), while Biden had 36% of the black vote to Sanders’ 26%.

Sanders also took an eye-popping 60% of the vote among those under 45 years old, according to exit polls.

--Heading into the South Carolina primary on Saturday, a Monmouth University poll released Thursday had 36% for Biden, 16% for Sanders, and 15% for Steyer.  [Warren 8%, Buttigieg 6% and Klobuchar 4%.]  The polling was done after the Nevada caucuses, but prior to Tuesday night’s debate.  Black voters in the Monmouth survey backed Biden (45%) by a wide margin over Steyer (17%) and Sanders (13%).

Mike Bloomberg is not on the ballot in South Carolina, but 1 in 4 likely primary voters say they would be either very (9%) or somewhat (16%) likely to vote for him if he was.

Biden picked up a key endorsement on Wednesday, that of South Carolina Rep. James Clyburn, an influential black congressman and the highest-ranking black lawmaker in Congress.  Black voters make up about 60% of the Democratic electorate in the Palmetto State.

In an NBC News/Marist poll of Democratic primary voters in South Carolina, Biden was at 27% and Sanders 23%, followed by Steyer at 15%, Mayor Pete 9% and Warren 8%.

So quite a difference in the margin between Biden and Sanders in these two surveys.

--According to a Reuters/Ipsos national poll released on Tuesday, among registered Democrats and independents, 26% said they would vote for Sanders, while 15% said they were backing Bloomberg and another 15% supported Biden.  Warren and Buttigieg received 10%.  Klobuchar 4%.  This survey was done after the Vegas debate and Nevada caucuses, but prior to Tuesday’s debate in Charleston.

A CBS News/YouGov national poll of likely Democratic primary voters has Sanders at 28%, Warren 19% and Biden 17%.  Bloomberg stood at 13%, Buttigieg 10% and Klobuchar 5%.  This survey was conducted prior to the Nevada caucuses.

A Fox News national poll had Sanders at 31% among likely primary voters, with Biden at 18%, Bloomberg 16%, Buttigieg 12% and Warren 10% (Klobuchar 5%).

--In a Siena College Research Institute poll of New York Democratic primary voters, 25% backed Sanders and 21% supported Bloomberg.  13% Biden, 11% Warren, and Mayor Pete and Klobuchar each had 9%.

--Tuesday night’s Democratic debate in Charleston, S.C., was an unmitigated disaster, the moderators, Gayle King and Norah O’Donnell, allowing it to get out of control early, the seven candidates jockeying for airtime and screaming and talking over one another.

More than 15 million watched the debate (15.3m) on CBS and BET, according to Nielsen, tied for the third-highest viewership total for a primary debate this election cycle.

The New York Post reported that King and O’Donnell left the debate stage in Charleston on tense terms following the broadcast, according to a source, while another debate source blamed the candidates, not the moderators, for the train wreck. “Tom Perez at the DNC has to rein in the candidates.  It was a disgrace.  It was like ‘Saturday Night Live’ on steroids.”

In the future we should have a permanent moderator, Chris Wallace, and a hologram of Tim Russert.

CBS also caught flack for allowing Bloomberg to run ads during the first and second commercials breaks.

Regarding the candidates on stage, I thought Bloomberg was much better after his disastrous performance in Vegas the week before, but otherwise, it was a pathetic show.

Of course my opinion is different from others.  I’ve been amazed how some have thought a few of Joe Biden’s more recent performances have been solid when I’ve thought he’s been miserable throughout.

But then to be fair, I watched Biden’s CNN townhall meeting Wednesday night and he was strong.

John Podhoretz / New York Post

“If the Democratic confrontation last week in Nevada was ‘The Godfather’ of debates, last night’s South Carolina debate wasn’t ‘The Godfather Part II’ - a worthy follow-up to a great original.

“No, it was ‘Exorcist 2: The Heretic.’  It was ‘Smokey and the Bandit 3: Smokey Is the Bandit.’  It was ‘True Detective Season 2.’

“Who made the South Carolina debate the worst sequel ever?  Here are the nominees:

“Elizabeth Warren, for hijacking the proceedings about five minutes in so she could continue pounding Michael Bloomberg on the very same issue she sought to use to rip his throat out last week.

“Fine, his reportedly ugly comments about women who worked for his company are fair game.

“But then Warren did it again.  And then she interrupted other debaters so she could do it a third time.  And a fourth.

“She was a one-hit wonder giving herself encores with her one hit. This was one case when Warren’s ‘nevertheless, she persisted’ reputation turned around on her.

“Michael Bloomberg, for getting 95 percent of the way to saying he had bought and paid for the 2018 election.  He wanted to score points for helping the Democratic party and bragged he had dropped $100 million to help the Dems take the majority in the House of Representatives.

“ ‘All of the new Democrats that came in put Nancy Pelosi in charge and gave the Congress the ability to control this president, I bough – got them,’ Bloomberg said.

“Yep.  Bloomberg came that close to saying he’d bought the 2018 election for the Democrats.  You want oligarchy?  You got oligarchy.

“Joe Biden, for adding 10 million dead Americans to the nation’s mortuaries.  He wanted to hit Bernie Sanders for voting to give gun manufacturers immunity from tort suits – and said that because of Bernie’s vote, 150 million Americans had been killed by guns.

“That’s about 12 million Americans killed by guns every year.  Ummm...Only 2.8 million people die in America every year – of all causes.  It reminds one that Biden said while campaigning earlier in the day that he was running...for the U.S. Senate.

“Bernie Sanders, who described the elected leader of the Middle East’s only democracy as a ‘reactionary racist’ in the midst of an evening when he said he opposed ‘authoritarians’ but could not bring himself to say he opposed Communists – because, of course, he didn’t and probably doesn’t.*

“When the audience in the room made rude noises after he said Fidel Castro had done good things, he responded in disbelief: ‘Really?  Really?’

“Yes.  Really.

“Norah O’Donnell and Gayle King, whose dreadful handling of the first half-hour on CBS meant that the proceedings turned into an embarrassing free-for-all. Their ineffectuality was matched by their incompetence; O’Donnell actually announced the debate was over and then King said, oh wait, we have another segment coming.

“But they didn’t.  They just had another commercial break they wanted us to stay on for.

“Who wins the Razzie?  You pick.  I can’t.

“There’s nothing to say about Tom Steyer except that he said it’s a misconception his money defines him – when his money is literally the only reason this Montgomery Burns with better hair was even standing on that stage.

“Amy Klobuchar found herself upbraided by Gayle King when she hadn’t offered a bromide quickly enough about what defines her.  ‘I thought I had a minute to answer,’ she protested – and her exasperation at the disrespect she’d been shown was entirely understandable, if a little painful.

“Pete Buttigieg got off the best line when he said Sanders has ‘nostalgia for the revolution politics of the ‘60s.’  He was the only candidate on the stage who had a strategy to try and derail Sanders’ momentum.

“He did what he could.  But everybody else was just so lousy at it.  Or, in the case of Warren, too wrapped up in her misty water-colored memories of her triumph over Bloomberg last week to pay attention to the guy who is actually eating her lunch – the guy who has every reason to think (no matter what happens in South Carolina) that he is heading inexorably for the center stage in Milwaukee.”

Like I said, everyone has a different opinion of winners and losers.  Aaron Blake of the Washington Post had Elizabeth Warren as a winner.  “She built a case for being a general-election candidate against Trump last week by taking the bark off Mike Bloomberg. And she followed it up with a studied and detailed performance on Tuesday.”

Wrong.

*Sanders, in an interview on “60 Minutes” on Sunday, faced criticism from Florida Democrats, and others, after he said the following about Fidel Castro:

“We’re very opposed to the authoritarian nature of Cuba but you know, it’s unfair to simply say everything is bad.  You know?  When Fidel Castro came into office, you know what he did?  He had a massive literacy program.  Is that a bad thing?  Even though Fidel Castro did it?”

Typical of the response from elected Democrats in Florida, Rep. Donna Shalala tweeted: “I’m hoping that in the future, Senator Sanders will take time to speak to some of my constituents before he decides to sing the praises of a murderous tyrant like Fidel Castro.”

--In an interview in the Wall Street Journal by Tunku Varadarajan, Clint Eastwood, 89, waxed nostalgic on a number of topics.

“As for the domestic political scene, Mr. Eastwood seems disheartened.  ‘The politics has gotten so ornery,’ he says, hunching his shoulders in resignation.  He approves of ‘certain things that Trump’s done’ but wishes the president would act ‘in a more genteel way, without tweeting and calling people names.  I would personally like for him to not bring himself to that level.’  As he drives me back to my hotel, he expresses an affinity for another former mayor: ‘The best thing we could do is just get Mike Bloomberg in there.’”

--Harvey Weinstein was convicted Monday on one rape and one criminal sex act count, guilty verdicts that could put him in prison for up to 29 years.

But the verdict wasn’t a total victory for prosecutors.  The seven-man, five-woman jury found Weinstein not guilty of the top charges of predatory sexual assault, which carried a life sentence, and rape in the first degree.

The once-powerful Hollywood mogul was remanded until he is sentenced next month, but then he had a heart issue afterwards and was hospitalized.  Weinstein still faces a second trial in Los Angeles.

--U.S. pedestrian deaths rose in 2019 to their highest level in 30 years, even as the nation’s roadway crash fatalities overall have been falling, according to a report released by the Governors Highway Safety Assocation. 

An estimated 6,590 pedestrians were killed in motor-vehicle crashes last year, a nearly 5% increase from the 6,283 deaths in 2018.

Smartphone-related distraction by drivers and pedestrians is obviously a factor in the increase, as well as inadequate roadway lighting, the large number of SUVs, and alcohol or other drug impairment by both drivers and pedestrians.

Over the last decade, the number of pedestrian fatalities has risen by more than 50%, from 4,109 in 2009, through 2019.  Yet the total number of all other types of crash deaths has edged up 2% in that period, according to the report.

Crash deaths fell an estimated 3.4% in the first half of 2019, after falling 2.4% for all of 2018 from the year before, to 36,650, the National Highway Transportation Safety Administration reported in October.  Cars are much safer these days.

--The Canadian government announced Thursday that it will soon halt providing free security for Harry and Meghan.  The Royal Canadian Mounted Police has been providing protection for the couple since its arrival in January. 

No official date has been set for the security stoppage but the two are slated to step down as senior royals on March 31.

--As part of his Ash Wednesday celebration, Pope Francis issued a plea for Catholics around the world to give up trolling on social media for Lent.  The Pontiff said believers should observe a fast not just of food but of online insults in order for them to get nearer to God in the run-up to Easter.

Lent, he said in remarks observers said were off-the-cuff, “is a time to give up useless words, gossip, rumors, tittle-tattle and speak to the Lord on first-name terms.”

“We live in an atmosphere polluted by verbal violence, too many offensive and harmful words, which are amplified by the internet.  People insult each other as if they were saying ‘Good Day’,” he said.

“Lent is a time to disconnect from cell phones and connect to the Gospel,” the Pontiff added, saying that Catholics should imitate Jesus’ retreat to the desert and seek silence.

--I was reading a review in The Economist of a new book by Edward Achorn, “Every Drop of Blood,” that focuses on Abraham Lincoln’s second inaugural address, March 4, 1865.

Achorn writes, though Lincoln was hardly an orthodox Christian, his second inaugural was “the most overtly religious” of any presidential speech to that date.  Lincoln said America’s “original sin” of slavery required a righteous God to purge both those who wielded the whip and the politicians who permitted it.  Lincoln noted that the northerners and southerners read from the same Bible and prayed to the same God, and both invoked God’s judgment on their adversaries.

Achorn notes the awful presence Lincoln described came from Ezekiel and Jeremiah, not from stories of baby Jesus, meek and mild.  But afterwards came divine healing:

With malice toward none, with charity to all; with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds...to do all which may achieve...a just and lasting peace...

Achorn writes that as they listened, the African-Americans close enough to hear began murmuring, “Bless the Lord,” the chant growing louder until it erupted into shouts and weeping.

But America’s partisan newspapers reviewed the address according to their biases.  Lincoln’s opponents dismissed it as specious and naïve.  His allies seemed confused by the biblicism. But as Achorn writes, ironically, the British press – such as the Times, the Saturday Review and the Spectator – applauded Lincoln’s preference for reconciliation over triumphalism. 

Lincoln was assassinated 41 days later.

---

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

God bless America.

---

Gold $1586...down $60 on the week
Oil $45.32...lowest since 12/18

Returns for the week 2/24-2/28

Dow Jones  -12.4%  [25409]
S&P 500  -11.5%  [2954]
S&P MidCap  -13.0%
Russell 2000  -12.0%
Nasdaq  -10.5%  [8567]

Returns for the period 1/1/20-2/28/20

Dow Jones  -11.0%
S&P 500  -8.6%
S&P MidCap  -12.1%
Russell 2000  -11.5%
Nasdaq  -4.5%

Bulls 49.1
Bears 19.2...data caught up...the split the week before was 54.7 / 18.9; week before that, 52.9 / 19.2.

Have a great week.  Wash your hands.

Brian Trumbore



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Week in Review

02/29/2020

For the week 2/24-2/28

[Posted 10:30 PM ET, Friday]

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

Edition 1,089

This was a truly historic week for the world...both global markets and geopolitics. 

For starters, while it is getting lost in the news of the day, as I’ve warned would be the case, the situation in Syria is close to a true catastrophe, as I explain in detail down below.  Syrian regime forces took out 33 Turkish soldiers in an attack, and Turkey has responded in part by opening up its borders, in essence telling 3.6 million Syrian refugees, and another million soon to be entering the country, that they can now go on to Europe.

This is a disaster of immense proportions. 

But I knew this would happen.  For months I’ve told you exactly how it would transpire.

I also told you back in 2012, that President Barack Obama made what will go down in the history of the century as the single greatest mistake, the failure to work with Turkish President Erdogan on a no-fly zone for northern Syria, when the Syrian civil war had recorded ‘just’ 20,000 deaths.

But, recall, it was all about “Bin Laden is dead...GM is alive,” in 2012.  President Obama, who my detractors forget I labeled one of the five worst presidents in American history, along with George W. Bush, was more focused on getting reelected than on doing what was right for the security of the Middle East, Europe and the world.

Because of Obama’s failure to act, ISIS emerged, Russia moved in, another 380,000+ died in the war, millions and millions were displaced, Europe was hit with a wave of migrants that have, and continue to, reshape its politics and future in dire ways, and Syria is nothing but rubble.

And now as President Trump stupidly didn’t keep the tripwire in Syria that was working brilliantly, and never showed he cared about staying engaged diplomatically, another wave of refugees is headed north, many of them terrorists.  Others no doubt carriers of the coronavirus.

It’s sickening.  It didn’t have to be so.

But on to....

Coronavirus Developments....

--Tonight, China reported 427 new confirmed cases, up from 327 a day earlier, with another 47 deaths, 45 of which were in Hubei.  China’s ‘official’ death toll is 2,835, and no one knows what the real number is.

Also tonight, South Korea reported another 594 new cases, bringing their total infections to 2,931, as reported by the Korea Centers for Disease Control and Prevention, who can be trusted.

The surge in infections continues in the likes of Italy, and Iran (though we have zero accurate information here), and now a worrisome spike in the likes of France and Germany, as well as new cases all over the globe.

--In the latest from the World Health Organization today, a spokesman told reporters in Geneva, “The outbreak is getting bigger.  The scenario of the coronavirus reaching multiple countries, if not all countries around the world, is something we have been looking at and warning against for quite a while.”

Then the WHO raised its risk assessment of the outbreak to a “very high” global level from “high” late last month but stopped short of declaring the outbreak a pandemic.

WHO Director General Tedros Adhanom Ghebreyesus said yesterday, “No country should assume it won’t get cases, that would be a fatal mistake, quite literally.”

--Five new countries, all connected to travel from Italy – Nigeria, Estonia, Denmark, Netherlands and Lithuania – reported their first cases today.  Mexico also detected its first cases of infection in two men who had traveled to Italy, making the country the second in Latin America to register the virus after Brazil.

--Bulgaria said it was ready to deploy up to 1,000 troops to the border with Turkey to prevent illegal migrant inflows, as it steps up measures against the coronavirus.  Greece announced it was tightening its border, it being a gateway, along with Bulgaria, for migrants from the Middle East.

--The death toll from passengers on the Diamond Princess cruise liner hit six today.

--Saudi Arabia temporarily barred visitors from entering the country for the Islamic pilgrimage to Mecca, and from visiting the holy mosque in Medina, worshipped as the burial place of the Prophet Muhammad.  Around seven million Muslims make the journey each year.

--Back in the U.S., earlier in the week, Dr. Anthony Fauci, said while the virus was contained in the United States, “If we have a pandemic, then almost certainly we are going to get impacted.”

Tuesday, White House senior economic adviser Larry Kudlow went on CNBC to calm domestic fears of the outbreak.  “We have contained this. I won’t say [it’s] airtight, but it’s pretty close to airtight.”

Minutes earlier, the CDC warned that Americans should prepare for disruptions to everyday life as a result.

Wednesday, Trump tapped Vice President Mike Pence to spearhead American efforts to contain the virus, which he said poses a “very low” risk to Americans.

--Japan’s Prime Minister Shinzo Abe is facing intense heat for stunningly closing schools for a month, parents, teachers, businesses all angry as they attempt to find new ways to live and work.  Many health officials and local authorities said the plan was politically motivated and made little sense.  It’s chaos.  And such a move, on a local scale, could easily happen in the U.S.

In another dramatic move, the northern island of Hokkaido, which has seen the largest number of cases in Japan, late today declared a state of emergency. Its population of about 5 million, which includes Sapporo, were told to refrain from venturing outside their homes over the weekend.

But Abe is also getting criticism for apparently not testing as aggressively as South Korea is, the latter preparing to test more than 200,000 members of a church at the heart of a surge in its outbreak.

As for the Tokyo Olympics, slated to begin July 24, I first started warning about the economic impact on Japan if the Games were canceled Jan. 25, in this space, weeks before others broached the topic.  For now, officials in Tokyo and the International Olympic Committee are saying it’s still a ‘go’.

--Italy’s northern region of Lombardy (Milan) said today it wanted to extend emergency measures adopted to try to contain Europe’s worst outbreak as the number of cases soared.  Officials there said the health system could be thrown into chaos if the contagion spread rapidly.  Lombardy asked the government to keep curbs in place for an additional week, including shutting schools and banning public gatherings.

Italy’s tourism agency said up to 90% of hotel and travel agency bookings had been canceled in Rome and up to 80% in Sicily for March, as school trips and conferences were called off and foreigners decided to stay away.

“Italian tourism never experienced a crisis on this scale in recent history.  This is the darkest moment, not even 9/11 hit our business so hard,” said an official.

Italy’s two largest northern regions, Lombardy and Veneto, the epicenter for the country, account for 30% of the employment and 40% of the exports.  Tourism overall accounts for 13% of its GDP.

Italy’s economy has shown zero growth in 20 years, and it’s now all but assured of its fourth recession since 2008.  Why is this important?  It’s the eighth-largest economy in the world.

--France, with 57 cases as of tonight, recommended that people refrain from shaking hands in order to prevent infection.

--According to a whistleblower complaint, “Officials at the Department of Health and Human Services sent more than a dozen workers to receive the first Americans evacuated from Wuhan, China, the epicenter of the coronavirus outbreak, without proper training for infection control or appropriate protective gear,” as reported by the Washington Post.

The whistleblower, who said the workers did not show symptoms of infection and were not tested for the virus, is seeking federal protection because she alleges she was unfairly and improperly reassigned after raising concerns about the safety of these workers to HHS officials.

--But when it comes to the U.S. today, we’ve learned we don’t have anywhere near enough test kits, so how do we know what the real number of infections is in the country.  California, which is beginning to discover cases, had just 200 kits for diagnostic and surveillance purposes as of this week, though federal officials have promised more will arrive in the coming days.

As for the political debate over the issue, enough.  President Trump needs to stop blaming cable news and the Democrats for the coronavirus hysteria, as his supporters want to call it, and he needs to stop blaming Democrats on a debate stage for the market crash, 1900 Dow points of which occurred before they even took to the stage Tuesday night.

Democrats need to cool their rhetoric as well and work with the administration to make sure authorities have the tools they need to contain the inevitable spread of covid-19.

--Editorial / The Economist

“In public health, honesty is worth a lot more than hope.  It has become clear in the past week that the new viral disease, covid-19, which struck China at the start of December will spread around the world.  Many governments have been signaling that they will stop the disease.  Instead, they need to start preparing people for the onslaught.

“Officials will have to act when they do not have all the facts, because much about the virus is unknown.  A broad guess is that 25%-70% of the population of any infected country may catch the disease.  China’s experience suggests that, of the cases that are detected, roughly 80% will be mild, 15% will need treatment in hospital and 5% will require intensive care.  Experts say that the virus may be five to ten times as lethal as seasonal flu, which, with a fatality rate of 0.1%, kills 60,000 Americans in a bad year.  Across the world, the death toll could be in the millions.

“If the pandemic is like a very severe flu, models point to global economic growth being two percentage points lower over 12 months, at around 1%; if it is worse still, the world economy could shrink.  As that prospect sank in during the week, the S&P 500 fell by 8%.

“Yet all those outcomes depend greatly on what governments choose to do, as China shows.  Hubei province, the origin of the epidemic, has a population of 59m.  It has seen more than 65,000 cases and a fatality rate of 2.9%.  By contrast, the rest of China, which contains 1.3bn people, has suffered fewer than 13,000 cases with a fatality rate of just 0.4%.  Chinese officials at first suppressed news of the disease, a grave error that allowed the virus to take hold.  But even before it had spread much outside Hubei, they imposed the largest and most draconian quarantine in history.  Factories shut, public transport stopped and people were ordered indoors.  This raised awareness and changed behavior.  Without it, China would by now have registered many millions of cases and tens of thousands of deaths.

“The World Health Organization was this week full of praise for China’s approach.  That does not, however, mean it is a model for the rest of the world.  All quarantines carry a cost – not just in lost output, but also in the suffering of those locked away, some of whom forgo medical treatment for other conditions.  It is still too soon to tell whether this price was worth the gains.  As China seeks to revive its economy by relaxing the quarantine, it could well be hit by a second wave of infections.  Given that uncertainty, few democracies would be willing to trample over individuals to the extent China has.  And, as the chaotic epidemic in Iran shows, not all authoritarian governments are capable of it.

“Yet even if many countries could not, or should not, exactly copy China, its experience holds three important lessons – to talk to the public, to slow the transmission of the disease and to prepare health systems for a spike in demand.

“A good example of communication is America’s Centers for Disease Control, which issued a clear, unambiguous warning on February 25th.  A bad one is Iran’s deputy health minister, who succumbed to the virus during a press conference designed to show that the government is on top of the epidemic.*

*The video of this poor guy, wiping away pools of sweat, is pathetic.  We learned he then was diagnosed with it and soon after found out a cabinet member tested positive as well, and she was a few seats away from President Rouhani!

“Even well-meaning attempts to sugarcoat the truth are self-defeating, because they spread mistrust, rumors and, ultimately, fear.  The signal that the disease must be stopped at any cost, or that it is too terrifying to talk about, frustrates efforts to prepare for the virus’ inevitable arrival.  As governments dither, conspiracy theories coming out of Russia are already sowing doubt, perhaps to hinder and discredit the response of democracies....

“This virus has already exposed the strengths and weaknesses of China’s authoritarianism.  It will test all the political systems with which it comes into contact, in both rich and developing countries.   China has bought governments time to prepare for a pandemic. They should use it.”

As for the global financial markets, it was the worst week since the financial crisis of 2008-09, specifically Oct. 2008 when it came to U.S. equity losses, 10%+ on the major indexes as I spell out below, while Europe and Asia suffered similar losses.

Late today, Fed Chairman Jerome Powell issued a brief statement, attempting to reassure the markets:

“The fundamentals of the U.S. economy remain strong.  However, the coronavirus poses evolving risks to economic activity.  The Federal Reserve is closely monitoring developments and their implications for the economic outlook.  We will use our tools and act as appropriate to support the economy.”

One other lead item...by the time I address you next week, we may have a true Democratic frontrunner for the presidential nomination following South Carolina and Super Tuesday.  Or it could be a mess, many of us preferring the latter.

Trump World

--Daniel Henninger / Wall Street Journal

“This is a moment when the public of any affected country – China, Italy, South Korea or the U.S. - expects the people atop its government to provide political leadership.  This being the U.S. in our politically degraded times, we are getting no such thing from Democrats or Republicans.

“One has to wonder: If another 9/11 happened, would Chuck Schumer within an hour accuse Donald Trump of ‘towering and dangerous incompetence,’ as he did Tuesday?  Of course he would.  Just as Mr. Trump amid the crisis would find time, as he did Tuesday, to tweet-smack ‘Cryin’ Chuck Schumer’? ‘He didn’t like my early travel closings.  I was right.  He is incompetent!’

“Virtually within moments of the CDC announcement, Health and Human Services Secretary Alex Azar found himself under assault at a hearing on virus preparation by grandstanding senators from both parties – the GOP’s Richard Shelby and John Kennedy and Democrat Patty Murray.

“By day’s end, the seven cage fighters in the South Carolina Democratic debate were piling on.  Sen. Bernie Sanders ridiculed the ‘great genius’ in the White House and naturally called for expanding the World Health Organization.

“Let us simplify: If anything close to ‘community spread’ occurs in the U.S., two political careers will be at risk – Donald Trump’s and Bernie Sanders’, in the middle of a presidential campaign.

“If the virus expands in the U.S., both the content and the quality of the response will be on President Trump.  As such, the coronavirus could be the issue on which Mr. Trump finally blows himself up with Twitter.

“It will be a situation in which the public is looking to him for leadership.  But on the evidence of the past three years, it will be child’s play for Mr. Schumer, Nancy Pelosi, Mr. Sanders or the media to goad Mr. Trump into a low-grade Twitter spat, which will look as if he thinks the coronavirus is about him, not the American people.

“Mr. Trump’s presentation at Wednesday evening’s press conference on the virus was fairly meandering.  Maybe it was jet lag.  The administration officials who spoke, including coronavirus team leader Vice President Mike Pence, sounded solid.  But if there is a public breaking point to the familiar Trump modus operandi, a coronavirus crisis could surface it.

“A public faced with any chance of restrictions on its personal movement – whether in New York City or Podunk – won’t want happy talk from the president’s aides or tweets from him filled with faux exclamation points.  To simplify further, will Mr. Trump manage the coronavirus in a way that doesn’t sound like a guy on a bar stool?”

Editorial / Washington Post

“Steering the country through a pandemic demands a clear and consistent message from leaders.  President Trump is right to want a calm and serious atmosphere in discussing it.  But he and his administration have delivered mixed messages that only add to public confusion.  They need to get their act together.

“At his White House news conference Wednesday evening, Mr. Trump radiated optimism.  He was careful to add caveats, but his overall message was that everything is going fine.  ‘We’ve had tremendous success, tremendous success beyond what many people would have thought,’ he said.  ‘We’ve done, really, an extraordinary job.’ ‘This is going to end.  Hopefully it’ll be sooner than later.’  ‘The risk to the American people remains very low.’

“By contrast, Nancy Messonnier of the Centers for Disease Control and Prevention told reporters that ‘ultimately, we expect we will see community spread in the United States.  It’s not a question of if this will happen, but when this will happen, and how many people in this country will have severe illnesses.’  She added, ‘Disruptions to everyday life may be severe, but people might want to start thinking about that now.’

“Who’s right?  No one knows how severe the outbreak will become.  But whom to believe?  Mr. Trump declared that a vaccine was being ‘rapidly’ developed.  Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health, cautioned that research and clinical trials will take a year or more and a vaccine won’t be ready for the current outbreak.  Mr. Trump repeatedly returned to his newfound realization that influenza causes thousands of deaths a year, suggesting this new disease will not be as deadly.  But no one knows that yet.  The data from China, still tentative, suggests that covid-19 infection could be fatal to 1 in 7 people over 80 years old. That’s not a typical flu season.  And there are no vaccines yet, unlike those widely in use to protect against the flu.

“ ‘We’re totally prepared,’ Mr. Trump declared, holding up a chart from the Global Health Security Index prepared by the Nuclear Threat Initiative and Johns Hopkins Center for Health Security, with the Economist Intelligence Unit, showing that the United States ranks first in health security.  But this important study also found that national health security ‘is fundamentally weak around the world.  No country is fully prepared for epidemics or pandemics and every country has important gaps to address.’

“Individuals approach a danger such as the coronavirus with both reason and emotion.  Both are understandable and even essential.  But the mission for Mr. Trump and those working for him is to feed the reason, not the dread.  That requires calmness but also candor.”

-- Tuesday, in a press conference from India, President Trump said no country was trying to help him win the November election, after a top intelligence official told lawmakers Russia was interfering in the 2020 presidential vote to help Trump win a second term.

“I want no help from any country and I haven’t been given help from any country,” Trump said.

After the congressional briefing, Trump fired the acting intelligence chief, Joseph Maguire, and replaced him with a political loyalist, Richard Grenell.  Then this afternoon, Trump said he was nominating Rep. John Ratcliffe, who was nominated for the job in July, but was dropped in early August after questions arose about Ratcliffe’s lack of experience and possible exaggerations in his resume.

William H. McRaven, retired Navy admiral, was commander of the U.S. Special Operations Command from 2011 to 2014, overseeing the 2011 Navy SEAL raid that killed Osama bin Laden / Washington Post:

“Edmund Burke, the Irish statesman and philosopher, once said: ‘The only thing necessary for the triumph of evil is for good men to do nothing.’  Over the course of the past three years, I have watched good men and women, friends of mine, come and go in the Trump administration – all trying to do something – all trying to do their best.  Jim Mattis, John Kelly, H.R. McMaster, Sue Gordon, Dan Coats and, now, Joe Maguire, who until this week was the acting director of national intelligence.

“I have known Joe for more than 40 years.  There is no better officer, no better man and no greater patriot.  He served for 36 years as a Navy SEAL.  In 2004, he was promoted to the rank of rear admiral and was chosen to command all of Naval Special Warfare, including the SEALs.  Those were dark days for the SEALs.  Our combat losses from wars in Iraq and Afghanistan were the highest in our history, and Joe and his wife, Kathy, attended every SEAL funeral, providing comfort and solace to the families of the fallen.

“But it didn’t stop there.  Not a day went by that the Maguires didn’t reach out to some Gold Star family, some wounded SEAL, some struggling warrior.  Every loss was personal, every family precious. When Joe retired in 2010, he tried the corporate world.  But his passion for the Special Operations soldiers was so deep that he left a lucrative job and took the position as the president of the Special Operations Warrior Foundation, a charity that pays for educating the children of fallen warriors.

“In 2018, Joe was asked to be the director of the National Counterterrorism Center, a job he knew well from his last assignment as a vice admiral.  He accepted, but within months of his arrival came the announcement of Coats’ departure as director of national intelligence.  Maguire didn’t seek to fill the job; he was asked to do it by the president.  At first he declined, suggesting that Sue Gordon, Coats’ deputy, would be better suited for the job.

“But the president chose Maguire.  And, like most of these good men and women, he came in with the intent to do his very best, to follow the rules, to follow the law and to follow what was morally right.  Within a few weeks of taking the assignment, he found himself embroiled in the Ukraine whistleblower case.  Joe told the White House that, if asked, he would testify, and he would tell the truth.  He did.  In short order, he earned the respect of the entire intelligence community.  They knew a good man was at the helm.  A man they could count on, a man who would back them, a man whose integrity was more important than his future employment.

“But, of course, in this administration, good men and women don’t last long.  Joe was dismissed for doing his job: overseeing the dissemination of intelligence to elected officials who needed that information to do their jobs.

“As Americans, we should be frightened – deeply afraid for the future of the nation.  When good men and women can’t speak the truth, when facts are inconvenient, when integrity and character no longer matter, when presidential ego and self-preservation are more important than national security – then there is nothing left to stop the triumph of evil.”

--President Trump went on the attack against two liberal Supreme Court justices, Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor following sharp criticism over his interference in the judiciary in ongoing cases.

Trump tweeted the two should “recuse themselves on all Trump, or Trump related, matters” before the court.

The president’s ire arose from a dissenting opinion issued by Sotomayor in which she criticized the White House for rushing to the Supreme Court for relief when lower courts refused.

“Claiming one emergency after another, the Government has recently sought stays in an unprecedented number of cases, demanding immediate attention and consuming limited Court resources in each,” Sotomayor wrote in the dissent.

“And with each successive application, of course, its cries of urgency ring increasingly hollow.  Indeed, its behavior relating to the public-charge rule in particular shows how much its own definition of irreparable harm has shifted.”

She was also critical of her judicial peers for acquiescing to the administration’s repeated requests.

“It is far from unusual for justices to criticize parties to a case or even to pass judgement on a majority opinion of the court.”

At a press conference in India, Trump again slammed the judge for her written dissent, which he said was “so inappropriate.”

--Trump’s state visit to India, Monday and Tuesday, was everything the president could have hoped for...all the pomp and circumstance, and a crowd of 100,000+ at a rally with his counterpart, Prime Minister Modi.

The president and First Lady then visited the Taj Mahal, for some terrific photos, and the two sides finished work on a $3 billion trade deal that had been in the works for months for items like attack helicopters.

But there was no sweeping trade agreement between the two leaders as major issues remain.

Meanwhile, why was Ivanka there, at taxpayers’ expense?  Well, it’s all about 2024, sports fans.  Mark my words.  Ivanka will be touted by the president, soon after his re-election, as his successor, and she’ll say she has vast foreign policy experience, meeting with world leaders, and....I’ll stop here.

--A U.S. appeals court handed President Trump a major legal victory on Friday by dismissing a Democratic-led congressional panel’s lawsuit seeking to enforce a subpoena for testimony from former White House Counsel Donald McGahn.

The Judiciary Committee had sought testimony from McGahn, who left his post in October 2018, about Trump’s efforts to impede former Special Counsel Robert Mueller’s investigation into Russian election interference in 2016.

--But the White House lost an appeals court ruling today, as one of Trump’s signature immigration policies that has helped to sharply curb a migration surge on the southern border, was blocked.  Some 59,000 people seeking asylum have been sent back to Mexico to await the outcome of their cases in often dangerous border towns.

The ruling means the U.S. can no longer send people back to Mexico under the program, but it’s not clear how it affects people already in it in Mexico.

--Trump tweets:

“CDC and my Administration are doing a GREAT job of handling Coronavirus, including the very early closing of our borders to certain areas of the world.  It was opposed by the Dems, ‘too soon,’ but turned out to be the correct decision.  No matter how well we do, however, the....

“....Democrats talking point is that we are doing badly.  If the virus disappeared tomorrow, they would say we did a really poor, and even incompetent, job.  Not fair, but it is what it is.  So far, by the way, we have not had one death.  Let’s keep it that way!”

“So, the Coronavirus, which started in China and spread to various countries throughout the world, but very slowly in the U.S. because President Trump closed our border, and ended flights, VERY EARLY, is now being blamed, by the Do Nothing Democrats, to be the fault of ‘Trump.’”

“The Do Nothing Democrats were busy wasting time on the Immigration Hoax, & anything else they could to make the Republican Party look bad, while I was busy calling early BORDER & FLIGHT closings, putting us way ahead in our battle with Coronavirus.  Dems called it VERY wrong!”

“Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Coronavirus* look as bad as possible, including panicking markets, if possible.  Likewise their incompetent Do Nothing Democrat comrades are all talk, no action.  USA in great shape! @CDCgov”

*The president misspelled it...I corrected it for him.

“There has rarely been a juror so tainted as the forewoman in the Roger Stone case.  Look at her background.  She never revealed her hatred of ‘Trump’ and Stone.  She was totally biased, as is the judge.  Roger wasn’t even working on my campaign.  Miscarriage of justice.  Sad to watch!”

“Somebody please tell incompetent (thanks for my high poll numbers) & corrupt politician Adam ‘Shifty’ Schiff to stop leaking Classified information or, even worse, made up information, to the Fake News Media.  Someday he will be caught, & that will be a very unpleasant experience!”

“Are any Democrat operatives, the DNC, or Crooked Hillary Clinton, blaming Russia, Russia, Russia for the Bernie Sanders win in Nevada. If so I suggest calling Bob Mueller & the 13 Angry Democrats to do a new Mueller Report, Democrat Edition.  Bob will get to the bottom of it!”

“Word is that Mini Mike Bloomberg performed so poorly in the two debates, that he is thinking about dropping out of the Democrat Primary.  The fact is, he was not true to himself, and the public was able to quickly figure him out.  Not a good experience for Mini Mike!”

“52% in the new Rasmussen Poll.  95% Approval Rating in the Republican Party. Thank you!”

[Ed.  Trump tweeted this this morning.  He misread the numbers.  His approval rating in the Rasmussen survey was 47%, 52% disapproval.  Pathetic.]

“To the people of South Carolina, Tom Steyer is a joke, laughed at by everyone, a total incompetent.  He made money in coal, now he ‘hates’ coal.  Did you see him fawning over Crazy Bernie?  Has no chance, a loser for South Carolina, doesn’t deserve your vote!”

“So @TeamCavuto has very bad ratings on @foxnews with his Fake guests like A.B. Stoddard and others that still haven’t figured it all out.  Will he get the same treatment as his friend Shepherd Smith, who also suffered from the ratings drought?”

Wall Street and Trade

Financial markets around the world collapsed in unison.  The major indices in the U.S. fell 10%+, Tokyo nearly 10%, London 11%, Germany and France 12%.  Bond yields around the world collapsed as well, never a good sign...a flight to safety.

The Dow, S&P 500 and Nasdaq are now all off about 13% from their all-time highs in just days.

Thursday saw the single-worst point drop in the Dow, 1,190 points, in history.

All because there are legitimate fears coronavirus can lead the global economy into recession.  Whether it is short-lived or longer term is indeterminable at this point.

But for this week, the market is reassessing risk and market valuations.

Goldman Sachs issued a report Thursday morning, prior to the market open, that the coronavirus may wipe out corporate growth in 2020, perhaps completely.

Goldman said companies will generate no earnings growth this year, but looking out into 2021, Goldman sees a modest 6% growth rate in S&P 500 earnings.

“Our reduced profit forecasts reflect the severe decline in Chinese economic activity in 1Q, lower end-demand for U.S. exporters, disruption to the supply chain for many U.S. firms, a slowdown in U.S. economic activity, and elevated business uncertainty,” wrote Goldman strategist David Kostin.

But Kostin adds:

“A more severe pandemic could lead to a more prolonged disruption and a U.S. recession,” Kostin said.  Under a recessionary scenario, Kostin sees S&P earnings dropping 13% this year, which would potentially rebound to 10% growth in 2021.

But in looking at 2021, no one...no one...can tell you what will happen.  What if coronavirus, having slowed this spring, let’s say, comes back in the fall?  How quickly can an effective vaccine be produced, etc.  And you not only have November’s election, but the geopolitical situation could be highly dicey as well.

Separately, in a survey conducted by the American Chamber of Commerce in China, some American companies say they could lose as much as half their annual revenue from China if the epidemic extends through the summer, as businesses struggle to get boots back on the ground.

On the economic data front this week, it’s tough to tell just how important it is since none of it really reflects the current situation and the eventual impact from the coronavirus and the market turmoil.

Tuesday, the S&P/CoreLogic/Case-Shiller 20-city home price index for December was up 2.9% year-over-year for single-family homes.  We then had a bullish January figure on new home sales, 764,000 annualized, far better than expected though no doubt helped by the warmer than normal weather in much of the country.

January durable goods orders fell 0.2%, but rose 1.1% on the key core capital goods metric.

January personal income was up a strong 0.6%, with consumption up 0.2%, a little shy of expectations on the latter.  The core personal consumption expenditures index was 1.6%, year-over-year, this being the Fed’s preferred inflation benchmark, so still shy of the 2% the Fed has long targeted.

This morning we had a better than expected reading on the Chicago PMI for February, the first real look at manufacturing for the month, and the 49.0 (50 being the dividing line between growth and contraction), while not expansionary, was a big improvement over January’s sickly 42.5.

Lastly, we had our second look at fourth-quarter GDP and it remained unchanged at 2.1%

Annualized pace of GDP....

Q4 2019...2.1
Q3 2019...2.1
Q2 2019...2.0
Q1 2019...3.1
Q4 2018...1.1

So we’re stuck at 2%, not the promised 3%.

The Atlanta Fed’s GDPNow barometer for the first quarter, however, is currently 2.6% after today’s data on personal income and consumption, but the data doesn’t reflect the true impact of the outbreak as yet.

Finally, just a note on the trade deal with China.  It seems pretty clear China will be unable to abide by the targets, with increased talk they will declare force majeure, citing a clause that “in the event that a natural disaster or other unforeseeable event outside the control of the parties delays a party from timely complying with its obligations under this agreement,” the two sides would consult with each other.  No doubt that would lead to a lot of tweets from President Trump.  His good friend Xi might be a target of some of them.  [The Trump team will try to get China to delay any such announcement on their part until after the election.]

Europe and Asia

There was no broad economic data this week for the eurozone, but we’ll have a slew of PMI figures and far more next week, in both Europe and Asia, with some of it probably telling, as it will begin to reflect the impact of the outbreak.

Meanwhile we have....

….Brexit: Britain unveiled a tough negotiating mandate for talks with the European Union on Thursday, underlining its desire for future economic and political independence that pits London on a collision course with Brussels.

While a trade agreement between Britain and the EU technically needs to be wrapped up by yearend, British Prime Minister Boris Johnson has set a deadline of June to get what London’s negotiating team called “the broad outline of an agreement” to be finalized by September.  Otherwise, Britain said it would pursue an Australian-style agreement, a looser trading arrangement that runs along baseline World Trade Organization rules.

Britain said it wants “legally binding” obligations on access to the European Union financial market, while a trade deal with the bloc should provide a “predictable, transparent and business-friendly environment” for cross-border financial services activities.

“The agreement should include legally binding obligations on market access and fair competition,” the mandate document reads.

“The agreement should ensure that the UK and EU’s state-owned enterprises operate in a fair and transparent manner and do not discriminate against businesses in the other party when buying and selling on commercial markets,” the document said.

Well, the document goes on in similar, rather strident language, but the bottom line, as I told you a while ago, is that issues like fishing rights and agriculture will be paramount in the negotiations.

The UK negotiating document says, for example: “Fishing opportunities should be negotiated annually based on the best available science for shared stocks.”

Britain said it would no longer accept the existing “relative stability” mechanism for sharing fishing quotas as it was outdated; maintaining that as an independent coastal nation, it will not trade away its fishing rights.

French President Emmanuel Macron last weekend cast doubt over the likelihood of the EU and Britain reaching a post-Brexit trade deal.

“It’s going to be tense because they are very tough...Boris Johnson has a card in his hand and it is fishing and with that he will try to gain access to the market.”

Overall, Johnson told Sky News, “We’re very optimistic. We want a great relationship with our friends.  We buy huge quantities of their stuff, they buy quantities of our stuff. There’s just a big chance there, not just to maintain what we already have but to intensify our economic interpenetration and do more trade together.”

Cabinet office minister Michael Gove told parliament as he unveiled the mandate: “We want the best possible trading relationship with the EU, but in pursuit of a deal we will not trade away our sovereignty.”

But the talks between the two sides begin Monday and there doesn’t even seem to be a consensus on the format as yet.

On Tuesday, the EU said talks on post-Brexit ties would be “very hard” and could fail if London did not secure the new land border with the bloc on the island of Ireland in the way that Brussels said had been agreed to.

Stumbling blocks include what the EU calls its level playing field – shorthand for agreed baseline rules on environmental standards, labor regulations and state aid.

Brussels wants London to commit to those rules in law – but London says that such provisions are not part of other EU trade agreements, and that they do not fit its goal of “taking back control” from Brussels.

Turning to Asia...China reported its official government PMI data for February late tonight and the figures are shocking.  Shocking in that they appear to be brutally honest.

As released by the National Bureau of Statistics, the manufacturing PMI fell to 35.7 from 50.0 in January, the fastest contraction on record.  Analysts were expecting a drop to 46.0.  The service sector reading also shrank at a record pace to 29.6 from 54.1.

The official composite reading, combining both (given the appropriate weighting of each to the overall economy), is 28.9 vs. January’s 53.0.

I have never, ever seen numbers like this.  China is clearly telling us that they are going to be reporting a sickly GDP number for the first quarter, and that’s not good for anyone.

Seriously, I am stupefied.  Again, because for once, officials don’t seem to be playing any games with the numbers.

Next week we should receive the combined Jan./Feb. data on items like retail sales and industrial production that incorporates the impact of the Lunar New Year holiday.

Street Bytes

--The Dow Jones fell 12.4% this week to 25409, down 3,583 points and now well off the all-time high of 29551.  The S&P 500 fell 11.5% and Nasdaq lost 10.5%.  For all three the worst since October 2018.

The three all staged a correction off their highs, defined as 10%, in a record six days.  Thursday’s decline of 4.4% in the S&P was its worst day since Aug. 2011.

I have examples below of the volatility this week, but back on Feb. 19, Tesla shares closed at $917.  Friday, they hit $611 before ending the week at $674.

--U.S. Treasury Yields

6-mo. 1.15%  2-yr. 0.93%  10-yr. 1.16%  30-yr. 1.69%

Yields collapsed when it became clear the coronavirus was spreading rapidly outside China and posed a potential major threat to the U.S.  The yield on the 10-year, which had hit an all-time closing low in July 2016, 1.364%, following the UK’s vote to leave the European Union, fell 31 basis points over the week to 1.16% (after hitting an intraday low of 1.12%).

The 10-year had closed 2019 at 1.92%.

The yield on the 2-year shockingly fell from 1.35% to 0.93% in one week.

The bond market is pricing in at least three rate cuts from the Federal Reserve, which could act this weekend, like Sunday night, or wait until its next Open Market Committee meeting, March 17-18.

Overseas, the yield on the German 10-year, the bund, fell to -0.61%. But the yield on the Greek 10-year rose from 0.93% to 1.26%, as investors lose confidence that, IF there was a recession in Europe, Greece could service its debt.

--Oil hit its lowest level since Dec. 2018, closing the week at $45.32 on West Texas Intermediate, thus wiping out all the gains since the implementation of the joint OPEC-plus (including Russia) production cuts from January 2019, as concerns mounted over global demand amidst the slowdown that is doomed to hit all the major economies.

The cartel is next scheduled to meet March 5.

--Shares in Apple closed at $323 on Feb. 19, and yet Friday morning they were trading at $256, before finishing the week at $275 amidst the incredible volatility. 

But Reuters reported that travel restrictions to China may have come at a particularly bad time because normally, Apple’s engineers jet off to Asia to perfect the production of this fall’s new iPhones, working with partners such as Foxconn to set up new assembly lines and do trial runs.  Foxconn officials have been working remotely from Taipei since the Lunar New Year holiday and have not returned to China on a large scale, while it slowly opens up its production facilities on the mainland.

If delays occur at this stage, going from prototype to full production, that can impact the time Apple needs to finalize orders for chips and other parts, almost all of which are custom-made for the iPhone.

So this is but one example, albeit a large one, of how disruptive the coronavirus can be.

--Microsoft said it does not expect to meet its quarterly revenue forecast for its Windows and personal computing business as a result of the outbreak.

“Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated,” the company said in a statement.

--The International Air Transport Association warned of a deep downturn in earnings among global carriers related to the collapse of travel in Asia because of the virus.

The outbreak could reduce global airline revenue by about $29 billion in 2020, resulting in a small industry contraction compared with 2019, it said.

According to the IATA’s analysis, airlines in the Asia-Pacific region are facing a 13 percent decline in passenger demand for the year.  But this could be highly optimistic and clearly is counting on covid-19 petering out in the coming months.

Air France-KLM estimated a hit to earnings of as much as $216 million between February and April this year.

Monday, United Airlines withdrew its full-year guidance because of uncertainty around the virus outbreak as it canceled further flights to Asia due to withering demand.

--Adidas, the German sportswear giant, said its sales in China dropped by about 85 percent since Chinese New Year on Jan. 25.

--Walt Disney Co. CEO Bob Iger suddenly stepped down, effective immediately, in a surprise announcement Tuesday.  There are no health issues or internal matters, Iger just wanted to step away from the CEO role and focus on the content side of the business as executive chairman, while fulfilling his contract through 2021.

Bob Chapek was named as Iger’s replacement, Chapek most recently chairman of Disney Parks, Experiences and Products.

Iger said it was an “optimal time” for him to step aside following Disney’s acquisition of Fox’s entertainment assets and the launch of Disney Plus streaming service in November.

Iger, 69, became CEO of Disney in 2005, succeeding longtime chief Michael Eisner.  He steered Disney through successful acquisitions of Lucasfilms, Marvel, Pixar and other brands that became big moneymakers for Disney.

But all were in agreement the timing of the announcement was “strange,” as leading analyst Rich Greenfield put it.  “I just can’t comprehend it,” he said.

“It seems strange to spend two years talking about how the focus is winning in streaming and to choose someone who does not have experience in streaming,” Greenfield said.

--Home Depot reported net income of $2.48 billion that was ahead of Wall Street’s expectations in the fourth quarter, while sales of $25.78 billion were in line, though below last year.

Same-store sales for the quarter ended Feb. 2 rose 5.2%, while comp sales in the U.S. rose a strong 5.3%.  In fiscal 2019, same-store sales increased 3.5%.

HD guided higher for full-year 2020, with comp sales growth of 3.5% to 4%.

--Lowe’s Cos. delivered weaker-than-expected sales for its fiscal fourth quarter and offered an annual forecast that was below the Street’s forecasts.  Lowe’s is in the midst of an overhaul as it competes with Home Depot.

Fiscal fourth-quarter net income of $509 million beat the Street on an adjusted basis, but revenue of $16.03 billion was shy.

Overall, sales at stores open at least a year rose 2.5% for the quarter, 2.6% in the U.S., while analysts were expecting 3.2%; far from HD’s 5.3% in the U.S.

Lowe’s then guided below forecasts for full-year earnings.

--Boeing Co. is planning more support to suppliers for its 737 MAX jetliner program to prepare them for restarting production – and to dissuade some from seeking more business from Airbus SE.

Since Boeing suspended MAX production in January after building more than 400 planes it was unable to deliver, the network of more than 600 big suppliers and hundreds of smaller firms has been in limbo over business that in many cases represents about half of their annual sales.  Many of these suppliers had expanded factories and hired more staff to help fill Boeing’s orders for more than 4,500 MAX jets it had planned to build at a rate of 57 a month.  But now analysts believe that even when Boeing restarts production, it will take three years to get to that level.

Boeing has set aside $4 billion for additional expenses this year, for cash advances and other financial support to suppliers. For example, Wichita, Kan.-based Spirit Aerosystems Holdings Inc., one of the biggest MAX suppliers, was building 52 fuselages a month before halting output at the end of 2019, and now Boeing is lending it $225 million this quarter

But many of these same suppliers are now looking to pursue more work from Airbus and military customers.

--Huawei announced it will build its first European manufacturing plant in Europe, as the Chinese telecom giant seeks to ease worldwide concerns stoked by U.S. charges that Beijing could use the equipment for spying.

Huawei will build a mobile base station plant, which will supply the entire European market, not just France’s, chairman Liang Hua said on Thursday.

It isn’t clear if French President Emmanuel Macron gave his blessing on Huawei’s decision as he has led warnings about Chinese encroachment into the European Union’s economy.

--Macy’s posted a better holiday season than anticipated and reported adjusted earnings for the fourth quarter that exceeded expectations, while the department store operator reiterated a full-year forecast that remained short of analyst targets.

Macy’s posted earnings of $2.12 per share Tuesday, lower than $2.73 a year ago but ahead of consensus of $1.96.

Same-store sales fell 0.6%, which was in line, as sales for the quarter were $8.34 billion, vs. a year ago of $8.46bn.

For the full year, the company is projecting revenue of $23.6 billion to $23.9bn.

--J.C. Penney reported adjusted fourth-quarter earnings of $0.13 per share, well above forecast, while revenue fell less than expected to $3.49 billion.  Same-store sales fell 7%.

But comp-store sales for 2020 are still expected to decline 3.5% to 4.5%, and the guidance does not include any impact from the coronavirus epidemic.

--Best Buy Co. Inc. issued a tepid forecast for 2020 on both annual profit and sales as electronics makers curb manufacturing due to the covid-19 epidemic.  The 2020 forecast overshadowed robust online demand for smartphones and tablets during the holiday season that helped the company beat quarterly profit and sales estimates.

For the fourth-quarter revenue rose 2.7% to $15.20 billion, with net profit rising 1.4% to $745 million.  Same-store sales rose 3.2%, better than expected.

“This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in the supply chain,” said Best Buy CEO Corie Barry.

The company expects same-store sales growth of flat to 2% this year compared with expectations of 1.9%.

--Toll Brothers, a builder of luxury homes, reported earnings and revenue that were both below forecasts and the stock tanked around 16%.

--Expedia Group Inc. said it would cut about 3,000 jobs, or 12% of its workforce as part of a plan to streamline its business.  The online travel services company had 25,400 employees globally as of Dec. 31.  The job cuts include 500 people in its headquarters in Seattle.

--Cisco Systems Inc. has started a new round of job cuts as the networking equipment maker faces the prospect of slowing sales growth because of global economic uncertainty.  The company, with 75,000 employees worldwide, declined to say how many people were affected.

Earlier this month, Cisco said it expects revenue to drop between 1.5% and 3.5% in the current quarter, which would come on top of a 3.5% year-over-year drop in revenue for the company’s fiscal second quarter, which ended Jan. 25.

But now it’s about the impact of the coronavirus outbreak on its business.

--Canada’s economy grew at just an annualized rate of 0.3% in the fourth quarter as a result of decreased business investment and weak international trade, Statistics Canada reported today.

--After reporting a 5.4% drop in same-store sales for the first two months of the current quarter, Bed Bath & Beyond Inc. announced it would cut 500 jobs, including management positions.

--Shares in Shake Shack plunged nearly 15% on Tuesday as it reported an unexpected 5.4% drop in traffic at its popular burger-and-fries restaurants, with same-store sales falling 3.6% in its latest quarter.  The New York-based company also said comp sales for the current fiscal year will fall by a low single-digit percentage, after Shake Shack posted a 1.3% increase for the sales metric in fiscal 2019.

“Cannibalization” could be factor as CEO Randy Garruti admitted on a conference call, “We’ve come upon the question in past years of, hey, do these Shacks cannibalize or impact other Shacks. And the answer is sometimes they do.”

Garruti said the company plans to continue adding new restaurants in the U.S. and abroad but the company lowered 2020 growth targets and investors bolted.

But Crain’s New York Business’ Aaron Elstein had an interesting commentary.

“Since Shake Shack’s IPO (2015), the number of Taco Bell locations here (New York) has jumped by 38%, according to a report last year from the Center for an Urban Future. Burger King, Chipotle and Popeye’s each have added more than 20 locations in the past five years, for a total of 288 restaurants.  There are more than 200 McDonald’s, scores of Subways, and on and on.

“All that choice could give you heartburn. It certainly seems to be causing some at Shake Shack, which has two locations a short walk from my Midtown office. There’s also a Five Guys across the street, a Chick fil A just a few blocks away and many other fast-food options.

“Is a Shackburger better than a Big Mac or Whopper? I think so.  Is it better than Five Guys or a fried-chicken sandwich? That’s a harder question. Based on the Shake Shack’s drop in traffic, it looks like people are voting with their feet.”

--Beyond Meat Inc. shares plummeted 15% despite the fact it blew past analyst estimates on revenues.  Fourth-quarter sales of $98.5 million helped push full-year revenue beyond expectations to $297.9 million.  The company forecast 2020 sales of $490 to $510 million.

CEO Ethan Brown said the company is “only scratching the surface” of the U.S. restaurant market, but investors may be impatient for a bigger deal with a major player such as McDonald’s.  Beyond Meat is in about 4% of the 650,000 U.S. restaurants.

The shares closed at $91, down from a July high of $240.

--The new HBO Max streaming service will include a special reunion of the TV show “Friends” and all of the sitcom’s previous episodes when the service launches in May, WarnerMedia said last weekend.

All six of the show’s main stars will be part of the show’s celebration.

HBO Max will be free for HBO subscribers.  For those who don’t have HBO, it will cost $14.99 a month.

“Friends” was on the air for 10 seasons, 1994 through 2004.  Netflix Inc. previously had the rights to stream the show.

The Wall Street Journal reported that the six stars will receive between $2.25 and $2.5 million for the show.

--Recorded-music sales in the U.S. grew 13% last year to $11.1 billion – their highest point in more than a decade – as revenue continued to surge from streaming services such as Spotify and Apple Music.

According to a report from the Recording Industry Association of America, a trade group for record companies, streaming accounted for 80% of overall revenue in 2019, the industry’s fourth consecutive year of growth.

Subscriptions for streaming services topped 60 million in 2019, with revenue up 25% to $6.8bn.

Americans streamed more than 1.5 trillion songs in 2019.

Physical product sales fell less than 1% to $1.15bn as a 19% lift in vinyl – logging the format’s biggest revenue since 1988 – helped offset a 12% decline in revenue from CDs.

--Sign of the Apocalypse: According to a survey of beer drinkers conducted by SW Public Relations, 38 percent insist that they would not, under any circumstances, buy Corona, the beer.  14 percent of respondents who said they regularly consume Corona beer admitted in the survey they would not order the beverage in public.

Foreign Affairs

Syria, Russia, Turkey: Today, NATO envoys were holding emergency talks at the request of Turkey following the killing of 33 Turkish soldiers in northeast Syria in an airstrike by Syrian government forces, the largest death toll for Turkey in a single day since it first intervened in Syria in 2016.  It’s a major escalation of the conflict between Turkish and Russian-backed Syrian forced that has raged since early February, with at least 54 Turkish troops having now been killed in Idlib in that time.

Turkey launched retaliatory strikes on regime positions, killing 16 soldiers, monitors said.

Russia, Syria’s key military ally, said the Turkish troops had been operating alongside jihadist fighters when they were attacked by Syrian forces.  It denied its own air force had been involved in the fighting.

But Russia has been supporting government forces that have been trying to retake Idlib from rebels backed by Turkey.  The airstrike came after the rebels retook a key town.

But almost immediately after the Syrian airstrike, a spokesman for Turkish President Recep Tayyip Erdogan said Turkey was “no longer able to hold refugees” - reiterating a longstanding warning that his country can no longer cope with the arrival of people fleeing the conflict in Idlib.

As I have written for months, Turkey has been hosting 3.6 million Syrians under a 2016 deal with the European Union to step up efforts to halt the flow of refugees to Europe in exchange for billions of euros in aid. Since then Erdogan has repeatedly threatened to “open the gates” in several disputes with European states.

So border and customs officials were told to stand down on Thursday, with another one million refugees, half of which are children, on the Syrian-Turkish border, waiting to be allowed in to avoid the war.

Today, a Greek police official said 300 Syrians, Iranians, Iraqis, Moroccans and Pakistanis were gathering at the border with Greece, which is not an unusual number, but others were massed at beaches facing Greek islands off Turkey’s western coast.

There had already been fierce clashes between Greek officials and the Greek people in areas impacted by the building of new refugee camps, prior to Erdogan’s statement, and the impact of Turkey’s move to open the borders is explosive.

As for NATO, the issue is what to do if Ankara requests their assistance under Article 5 of the treaty – which requires all allies to come to the defense of another member under attack, though debate on this specific topic hasn’t begun as I go to post.

The Syria offensive comes on top of tensions within NATO over Turkey’s purchase of Russian-made S400 missiles, which threaten NATO security and the F-35 stealth fighter jet.

But despite the political-military tensions, Turkey is too important to expel from the 29-member alliance, given its strategic importance, a vital bridge between Europe, the Middle East and Central Asia.  The Bosporus Strait is also the only waterway in and out of the Black Sea, where Russia’s naval fleet is based.

And NATO relies on the Incirlik air base in southeastern Turkey as a staging point for access to the Middle East.

Erdogan has been trying to strike a ceasefire deal with Vladimir Putin.  But they already had one, a 2018 agreement reached in Sochi that called for a demilitarization zone around the Idlib region.  Syria then launched an offensive to take Idlib and flush out the final rebel resistance, many of whom are backed by Turkey.

There is talk of a March 6 summit between the leaders of Turkey, Russia and Iran.  Turkish officials told a Russian delegation in Ankara today that a sustainable ceasefire in Idlib must be established immediately, and that Syrian government forces must withdraw to borders determined in the 2018 Sochi agreement.

Iran: U.S. Secretary of State Mike Pompeo on Tuesday said the United States was “deeply concerned” Iran may have covered up details about the spread of coronavirus, and he called on all nations to “tell the truth” about the epidemic, Pompeo also criticizing Beijing for what he characterized as the censorship of media and medical professionals.

As noted earlier, mistrust of Iran was further heightened on Tuesday, when the deputy health minister and head of Iran’s counter-coronavirus task force, announced he had tested positive, after appearing to be very sick while speaking at a press conference.

There have also been persistent rumors that at least 50 people have died in the Iranian city of Qom from the outbreak, and that was actually from a report on Monday from Iran’s semiofficial ILNA news agency.  The 50 deaths go back to as far as Feb. 13.

Oh, and there was an election last weekend in Iran, which added to the coronavirus tumult, crowds lining up to vote, though turnout was just 43%, down from 62% in the 2016 parliamentary vote, and the lowest in the Islamic Republic’s history.

Needless to say, with 7,000 moderate and reformist candidates having been denied ballot access by the Electoral Commission, conservatives won a landslide, strengthening hard-liners opposed to diplomacy with the West.

Supreme Leader Ali Khamenei on Sunday accused foreign powers of using the virus in their propaganda to discourage Iranians from voting in an attempt to undermine the nation.

Expressing “deep appreciation” for the Iranians who voted, Mr. Khamenei said Iran’s election “negates the enemy’s claim that religion is against democracy and freedom.”

Afghanistan: Having seen a significant reduction in violence in the country during the past six days, Secretary of State Mike Pompeo said on Friday, Washington hopes to sign a U.S.-Taliban deal on an American troop withdrawal tomorrow in Qatar.

But there are zero details on whether Afghanistan remains a democracy and what rights will be afforded women.

Israel: The latest national election is Monday, in what’s bound to be another stalemate between Prime Minister Benjamin Netanyahu and rival Benny Gantz.  But will Avigdor Lieberman finally really play the role of kingmaker?  Stay tuned. 

Egypt: Hosni Mubarak, former president of Egypt, died this week.  He was 91.

In 1981, Mubarak was vice president to Anwar Sadat, when Sadat was gunned down at a military parade.  Mubarak had never sought the top spot, but then lasted 30 years as president, until the 2011 Arab Spring revolution consigned him to history.

His rule was defined by decades of stagnation and oppression, while offering his people a choice: Mubarak or mayhem.

And he did have peace with Israel, no small feat, and for this the United States was grateful and willing to look away when it came to the many downsides of his rule.

China: Chinese President Xi Jinping urged businesses to get back to work, though he said the epidemic was still “severe and complex, and prevention and control work is in the most difficult and critical stage.”

But Xi said that while the outbreak will have a relatively big hit on the economy and society, the government will step up policy support to help achieve economic and social development targets for 2020.

Chen Yulu, a deputy governor at the People’s Bank of China, wrote in an opinion piece in the Financial Times that the “sound” fundamentals of the domestic economy remain unchanged in the medium to long run despite a short-term slowdown due to the epidemic, Chen calling for a “V-shaped” recovery.

Meanwhile, Moscow’s mayor has asked China to respect the measures the city is taking to prevent the spread of the coronavirus after China’s embassy complained about disproportionate and discriminatory action against Chinese nationals.  The embassy this week deplored what it described as the “ubiquitous monitoring” of Chinese on Moscow’s public transport network.

Authorities in Moscow have carried out raids on potential carriers of the virus and used facial recognition technology to enforce quarantine measures.  Two Chinese nationals were hospitalized in Russia with the virus, but have since recovered and been discharged.

Separately, Hong Kong publishing tycoon Jimmy Lai, an outspoken critic of Beijing, and two other pro-democracy activists were arrested by police on Friday on charges of illegal assembly, local media reported.  Lai, a self-made millionaire who has been a major financial patron of Hong Kong’s pro-democracy movement, was picked up by police at his house.  This could be a spark for renewed protests, but the coronavirus fears may outweigh the ability for large crowds to gather.

Earlier, a Chinese court sentenced Chinese-born Swedish citizen Gui Minhai to 10 years in jail on Monday for illegally providing intelligence overseas, prompting a protest from Stockholm.  Gui, a bookseller previously based in Hong Kong who sold books critical of China’s political leadership, was detained by mainland police in 2018.  He was seized while with Swedish diplomats on a Beijing-bound train.

China warned Sweden not to meddle in China’s internal affairs.  The decision to sentence Gui could not have been made without President Xi’s approval.  Xi is Trump’s “good friend.”

The guy sold books!  This is what China has become under Xi, and it’s getting worse by the minute.

South Korea: The United States and South Korea postponed joint military drills on Thursday to limit the spread of coronavirus, as a 23-year-old U.S. soldier stationed at a base near the city of Daegu contracted the virus; Daegu the epicenter for covid-19 in Korea.

North Korea:  The silence out of here with regards to the coronavirus has been deafening, though the government reportedly quarantined 380 foreigners in a bid to prevent an outbreak. 

Then suddenly, tonight, state media reported that Kim Jong Un made his first public appearance in 22 days to visit a mausoleum marking the anniversary of the birth of his father and late leader Kim Jong Il.  Kim also oversaw military drills today, we are told.

And in a separate dispatch, KCNA said Kim convened a meeting of the ruling Workers’ Party’s powerful politburo where a stricter enforcement of “top-class anti-epidemic steps” was discussed to prevent the spread of the virus.

“In case the infectious disease spreading beyond control finds its way into our country, it will entail serious consequences,” Kim was quoted as telling the meeting.  He instructed officials to “seal off all the channels and space through which the infectious disease may find its way, and strengthen check-up, test and quarantine,” KCNA added.

India: At least 38 people died and more than 200 were injured over three days of rioting in New Delhi, the death toll slated to rise, in the worst communal violence to hit India’s capital in nearly three decades, triggered by Hindu groups who attacked mostly Muslim protesters demonstrating against Prime Minister Narendra Modi’s new citizenship law, which critics say discriminates against Muslims and is a further attempt to undermine the secular foundations of India’s democracy.

It was total mob violence, groups of Hindus beating unarmed men, including journalists; men with sticks, iron rods and stones wandering the streets; Hindus and Muslims facing off, men questioned as to their religion, some asked to drop their pants, seriously, to prove it (I won’t get into further details).

After President Trump left, Modi tweeted, appealing for peace. The two were in Delhi on Tuesday, seemingly oblivious to the violence taking place miles from them.  Trump had said on Monday that he had spoken with Modi about religious freedoms but wouldn’t be drawn further into the issue.

“They have really worked hard on religious freedom,” Trump added.

Monday, Trump extolled India’s rise as a stable and prosperous democracy as one of the achievements of the century.

“You have done it as a tolerant country. And you have done it as a great, free country,” Trump said.

Many critics say the police in Delhi did little to protect minority Muslims.

Random Musings

--Presidential tracking polls....

Gallup: 49% approve of President Trump’s job performance, 48% disapprove; 93% of Republicans approve, 43% of independents (Feb. 3-16).
Rasmussen: 47% approve, 52% disapprove (Feb. 28).

--Senator Bernie Sanders had a huge win in the Nevada caucuses last Saturday, taking 46.8% of the county delegate vote (24 of the 36 delegates), with Joe Biden at 20.2%, Pete Buttigieg 14.3%, Elizabeth Warren 9.7%, Tom Steyer 4.7% and Amy Klobuchar 4.2%.

But more shockingly, according to exit polls, Sanders took 51% of the Latino vote (Biden 16%), while Biden had 36% of the black vote to Sanders’ 26%.

Sanders also took an eye-popping 60% of the vote among those under 45 years old, according to exit polls.

--Heading into the South Carolina primary on Saturday, a Monmouth University poll released Thursday had 36% for Biden, 16% for Sanders, and 15% for Steyer.  [Warren 8%, Buttigieg 6% and Klobuchar 4%.]  The polling was done after the Nevada caucuses, but prior to Tuesday night’s debate.  Black voters in the Monmouth survey backed Biden (45%) by a wide margin over Steyer (17%) and Sanders (13%).

Mike Bloomberg is not on the ballot in South Carolina, but 1 in 4 likely primary voters say they would be either very (9%) or somewhat (16%) likely to vote for him if he was.

Biden picked up a key endorsement on Wednesday, that of South Carolina Rep. James Clyburn, an influential black congressman and the highest-ranking black lawmaker in Congress.  Black voters make up about 60% of the Democratic electorate in the Palmetto State.

In an NBC News/Marist poll of Democratic primary voters in South Carolina, Biden was at 27% and Sanders 23%, followed by Steyer at 15%, Mayor Pete 9% and Warren 8%.

So quite a difference in the margin between Biden and Sanders in these two surveys.

--According to a Reuters/Ipsos national poll released on Tuesday, among registered Democrats and independents, 26% said they would vote for Sanders, while 15% said they were backing Bloomberg and another 15% supported Biden.  Warren and Buttigieg received 10%.  Klobuchar 4%.  This survey was done after the Vegas debate and Nevada caucuses, but prior to Tuesday’s debate in Charleston.

A CBS News/YouGov national poll of likely Democratic primary voters has Sanders at 28%, Warren 19% and Biden 17%.  Bloomberg stood at 13%, Buttigieg 10% and Klobuchar 5%.  This survey was conducted prior to the Nevada caucuses.

A Fox News national poll had Sanders at 31% among likely primary voters, with Biden at 18%, Bloomberg 16%, Buttigieg 12% and Warren 10% (Klobuchar 5%).

--In a Siena College Research Institute poll of New York Democratic primary voters, 25% backed Sanders and 21% supported Bloomberg.  13% Biden, 11% Warren, and Mayor Pete and Klobuchar each had 9%.

--Tuesday night’s Democratic debate in Charleston, S.C., was an unmitigated disaster, the moderators, Gayle King and Norah O’Donnell, allowing it to get out of control early, the seven candidates jockeying for airtime and screaming and talking over one another.

More than 15 million watched the debate (15.3m) on CBS and BET, according to Nielsen, tied for the third-highest viewership total for a primary debate this election cycle.

The New York Post reported that King and O’Donnell left the debate stage in Charleston on tense terms following the broadcast, according to a source, while another debate source blamed the candidates, not the moderators, for the train wreck. “Tom Perez at the DNC has to rein in the candidates.  It was a disgrace.  It was like ‘Saturday Night Live’ on steroids.”

In the future we should have a permanent moderator, Chris Wallace, and a hologram of Tim Russert.

CBS also caught flack for allowing Bloomberg to run ads during the first and second commercials breaks.

Regarding the candidates on stage, I thought Bloomberg was much better after his disastrous performance in Vegas the week before, but otherwise, it was a pathetic show.

Of course my opinion is different from others.  I’ve been amazed how some have thought a few of Joe Biden’s more recent performances have been solid when I’ve thought he’s been miserable throughout.

But then to be fair, I watched Biden’s CNN townhall meeting Wednesday night and he was strong.

John Podhoretz / New York Post

“If the Democratic confrontation last week in Nevada was ‘The Godfather’ of debates, last night’s South Carolina debate wasn’t ‘The Godfather Part II’ - a worthy follow-up to a great original.

“No, it was ‘Exorcist 2: The Heretic.’  It was ‘Smokey and the Bandit 3: Smokey Is the Bandit.’  It was ‘True Detective Season 2.’

“Who made the South Carolina debate the worst sequel ever?  Here are the nominees:

“Elizabeth Warren, for hijacking the proceedings about five minutes in so she could continue pounding Michael Bloomberg on the very same issue she sought to use to rip his throat out last week.

“Fine, his reportedly ugly comments about women who worked for his company are fair game.

“But then Warren did it again.  And then she interrupted other debaters so she could do it a third time.  And a fourth.

“She was a one-hit wonder giving herself encores with her one hit. This was one case when Warren’s ‘nevertheless, she persisted’ reputation turned around on her.

“Michael Bloomberg, for getting 95 percent of the way to saying he had bought and paid for the 2018 election.  He wanted to score points for helping the Democratic party and bragged he had dropped $100 million to help the Dems take the majority in the House of Representatives.

“ ‘All of the new Democrats that came in put Nancy Pelosi in charge and gave the Congress the ability to control this president, I bough – got them,’ Bloomberg said.

“Yep.  Bloomberg came that close to saying he’d bought the 2018 election for the Democrats.  You want oligarchy?  You got oligarchy.

“Joe Biden, for adding 10 million dead Americans to the nation’s mortuaries.  He wanted to hit Bernie Sanders for voting to give gun manufacturers immunity from tort suits – and said that because of Bernie’s vote, 150 million Americans had been killed by guns.

“That’s about 12 million Americans killed by guns every year.  Ummm...Only 2.8 million people die in America every year – of all causes.  It reminds one that Biden said while campaigning earlier in the day that he was running...for the U.S. Senate.

“Bernie Sanders, who described the elected leader of the Middle East’s only democracy as a ‘reactionary racist’ in the midst of an evening when he said he opposed ‘authoritarians’ but could not bring himself to say he opposed Communists – because, of course, he didn’t and probably doesn’t.*

“When the audience in the room made rude noises after he said Fidel Castro had done good things, he responded in disbelief: ‘Really?  Really?’

“Yes.  Really.

“Norah O’Donnell and Gayle King, whose dreadful handling of the first half-hour on CBS meant that the proceedings turned into an embarrassing free-for-all. Their ineffectuality was matched by their incompetence; O’Donnell actually announced the debate was over and then King said, oh wait, we have another segment coming.

“But they didn’t.  They just had another commercial break they wanted us to stay on for.

“Who wins the Razzie?  You pick.  I can’t.

“There’s nothing to say about Tom Steyer except that he said it’s a misconception his money defines him – when his money is literally the only reason this Montgomery Burns with better hair was even standing on that stage.

“Amy Klobuchar found herself upbraided by Gayle King when she hadn’t offered a bromide quickly enough about what defines her.  ‘I thought I had a minute to answer,’ she protested – and her exasperation at the disrespect she’d been shown was entirely understandable, if a little painful.

“Pete Buttigieg got off the best line when he said Sanders has ‘nostalgia for the revolution politics of the ‘60s.’  He was the only candidate on the stage who had a strategy to try and derail Sanders’ momentum.

“He did what he could.  But everybody else was just so lousy at it.  Or, in the case of Warren, too wrapped up in her misty water-colored memories of her triumph over Bloomberg last week to pay attention to the guy who is actually eating her lunch – the guy who has every reason to think (no matter what happens in South Carolina) that he is heading inexorably for the center stage in Milwaukee.”

Like I said, everyone has a different opinion of winners and losers.  Aaron Blake of the Washington Post had Elizabeth Warren as a winner.  “She built a case for being a general-election candidate against Trump last week by taking the bark off Mike Bloomberg. And she followed it up with a studied and detailed performance on Tuesday.”

Wrong.

*Sanders, in an interview on “60 Minutes” on Sunday, faced criticism from Florida Democrats, and others, after he said the following about Fidel Castro:

“We’re very opposed to the authoritarian nature of Cuba but you know, it’s unfair to simply say everything is bad.  You know?  When Fidel Castro came into office, you know what he did?  He had a massive literacy program.  Is that a bad thing?  Even though Fidel Castro did it?”

Typical of the response from elected Democrats in Florida, Rep. Donna Shalala tweeted: “I’m hoping that in the future, Senator Sanders will take time to speak to some of my constituents before he decides to sing the praises of a murderous tyrant like Fidel Castro.”

--In an interview in the Wall Street Journal by Tunku Varadarajan, Clint Eastwood, 89, waxed nostalgic on a number of topics.

“As for the domestic political scene, Mr. Eastwood seems disheartened.  ‘The politics has gotten so ornery,’ he says, hunching his shoulders in resignation.  He approves of ‘certain things that Trump’s done’ but wishes the president would act ‘in a more genteel way, without tweeting and calling people names.  I would personally like for him to not bring himself to that level.’  As he drives me back to my hotel, he expresses an affinity for another former mayor: ‘The best thing we could do is just get Mike Bloomberg in there.’”

--Harvey Weinstein was convicted Monday on one rape and one criminal sex act count, guilty verdicts that could put him in prison for up to 29 years.

But the verdict wasn’t a total victory for prosecutors.  The seven-man, five-woman jury found Weinstein not guilty of the top charges of predatory sexual assault, which carried a life sentence, and rape in the first degree.

The once-powerful Hollywood mogul was remanded until he is sentenced next month, but then he had a heart issue afterwards and was hospitalized.  Weinstein still faces a second trial in Los Angeles.

--U.S. pedestrian deaths rose in 2019 to their highest level in 30 years, even as the nation’s roadway crash fatalities overall have been falling, according to a report released by the Governors Highway Safety Assocation. 

An estimated 6,590 pedestrians were killed in motor-vehicle crashes last year, a nearly 5% increase from the 6,283 deaths in 2018.

Smartphone-related distraction by drivers and pedestrians is obviously a factor in the increase, as well as inadequate roadway lighting, the large number of SUVs, and alcohol or other drug impairment by both drivers and pedestrians.

Over the last decade, the number of pedestrian fatalities has risen by more than 50%, from 4,109 in 2009, through 2019.  Yet the total number of all other types of crash deaths has edged up 2% in that period, according to the report.

Crash deaths fell an estimated 3.4% in the first half of 2019, after falling 2.4% for all of 2018 from the year before, to 36,650, the National Highway Transportation Safety Administration reported in October.  Cars are much safer these days.

--The Canadian government announced Thursday that it will soon halt providing free security for Harry and Meghan.  The Royal Canadian Mounted Police has been providing protection for the couple since its arrival in January. 

No official date has been set for the security stoppage but the two are slated to step down as senior royals on March 31.

--As part of his Ash Wednesday celebration, Pope Francis issued a plea for Catholics around the world to give up trolling on social media for Lent.  The Pontiff said believers should observe a fast not just of food but of online insults in order for them to get nearer to God in the run-up to Easter.

Lent, he said in remarks observers said were off-the-cuff, “is a time to give up useless words, gossip, rumors, tittle-tattle and speak to the Lord on first-name terms.”

“We live in an atmosphere polluted by verbal violence, too many offensive and harmful words, which are amplified by the internet.  People insult each other as if they were saying ‘Good Day’,” he said.

“Lent is a time to disconnect from cell phones and connect to the Gospel,” the Pontiff added, saying that Catholics should imitate Jesus’ retreat to the desert and seek silence.

--I was reading a review in The Economist of a new book by Edward Achorn, “Every Drop of Blood,” that focuses on Abraham Lincoln’s second inaugural address, March 4, 1865.

Achorn writes, though Lincoln was hardly an orthodox Christian, his second inaugural was “the most overtly religious” of any presidential speech to that date.  Lincoln said America’s “original sin” of slavery required a righteous God to purge both those who wielded the whip and the politicians who permitted it.  Lincoln noted that the northerners and southerners read from the same Bible and prayed to the same God, and both invoked God’s judgment on their adversaries.

Achorn notes the awful presence Lincoln described came from Ezekiel and Jeremiah, not from stories of baby Jesus, meek and mild.  But afterwards came divine healing:

With malice toward none, with charity to all; with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds...to do all which may achieve...a just and lasting peace...

Achorn writes that as they listened, the African-Americans close enough to hear began murmuring, “Bless the Lord,” the chant growing louder until it erupted into shouts and weeping.

But America’s partisan newspapers reviewed the address according to their biases.  Lincoln’s opponents dismissed it as specious and naïve.  His allies seemed confused by the biblicism. But as Achorn writes, ironically, the British press – such as the Times, the Saturday Review and the Spectator – applauded Lincoln’s preference for reconciliation over triumphalism. 

Lincoln was assassinated 41 days later.

---

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

God bless America.

---

Gold $1586...down $60 on the week
Oil $45.32...lowest since 12/18

Returns for the week 2/24-2/28

Dow Jones  -12.4%  [25409]
S&P 500  -11.5%  [2954]
S&P MidCap  -13.0%
Russell 2000  -12.0%
Nasdaq  -10.5%  [8567]

Returns for the period 1/1/20-2/28/20

Dow Jones  -11.0%
S&P 500  -8.6%
S&P MidCap  -12.1%
Russell 2000  -11.5%
Nasdaq  -4.5%

Bulls 49.1
Bears 19.2...data caught up...the split the week before was 54.7 / 18.9; week before that, 52.9 / 19.2.

Have a great week.  Wash your hands.

Brian Trumbore