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Week in Review

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For the week 3/16-3/20

[Posted 11:30 PM ET, Friday]

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Edition 1,092

The mood for yet another amazingly dreadful week was set last Sunday by President Trump, who had a press conference following the Federal Reserve’s move to slash interest rates in an emergency move.

When asked about the coronavirus crisis, the president made comments such as “Relax, we’re doing great, it all will pass.”  “When this goes through they’ll see a pent-up demand like a lot of people haven’t seen before.”


“Stores are stocking up…they say it’s like Xmas.”

I don’t know about you, but I don’t load up on toilet paper, disinfectant and soup during the holiday season.

“A lot of people on Wall Street are very happy,” said the president, referring to the Fed’s move.  The Dow Jones responded with its worst point drop in history.

“It would be great if we could give the news correctly.”

The serious tone the president had set just two days earlier, a week ago Friday, was shattered.  Later in the week he said at another presser, “If we had an honest media in our country we would be in an even greater place.”

“There’s a great spirit in the nation…like we’ve never seen before.” 

Ah, not quite.  There will be a tremendous amount of Americans contemplating suicide in the coming weeks.

Thursday, the president lied about a decades-old malaria drug, chloroquine, in hailing it as a potential treatment.

“Normally, the FDA would take a long time to approve something like that, and it’s – it was approved very, very quickly and it’s now approved by prescription.”

But the FDA had not approved the drug for use against coronavirus, as the agency's chief made clear.  Maybe we find it works on some patients…that would be awesome.  But we need a leader who doesn’t spread false hope.

Trump continued pressing chloroquine (hydroxychloroquine) at another press conference today.

Then when Dr. Fauci was asked about some of the false narratives out there, like more people die in auto accidents than will die from Covid-19, Fauci gave the definitive answer:

“When you have something new emerging, I don’t think with any moral conscience you can say, ‘Lets just let it rip.’”

You can’t.  At this point, it also does no good to look back over the past few months and blast away at China for its deadly and devastating responsibility in how the coronavirus got out of control.  I know as much about China as anyone.  I can play “I told you so” with the best of them, including many a firsthand experience, like my description of the fetid, disgusting, disease-ridden duck ponds I saw in my first trip to Fujian province in 2007, when I told you of how pandemic could start.

I agreed with President Trump in his tough stance on the trade front with China, but I urged the bomb throwers to cool their jets.  No one was personally screwed by the Chinese like I was, despite my having done all my due diligence. 

But I have urged everyone to understand, at least once a month for years now, that you can’t blast them so publicly, as many of our leaders have, without consequences.  It’s been a time for diplomacy, and now both sides are spinning wildly away from each other. 

But I’m not talking about a need for the fake praise of the kind President Trump hands out, the garbage like “I respect China greatly and I respect President Xi.  He’s a great leader and his people love him.”

I get into the growing dangers with China down below, in a few spots.  I also don’t want to mention the obvious on where this is all headed. 

Today, though, we find ourselves in peril on two fronts.  Our healthcare system, our hospitals, were ill-prepared for what is hitting usand the president’s statements early on, such as Feb. 26, that “we have 15 cases…going down to zero,” had half the country actually believing this B.S.

And, second, we face a global depression that is hitting us here in America at lightspeed.  I agree with some of what follows in a critical Wall Street Journal op-ed from today.  But it’s too late.  Just a reminder on a theme of mine all last year.  “The generals aren’t happy.”  We can not let what is now hitting us destroy our nation.

First, the death toll as I go to post globally is over 11,300.  Italy is at 4,000, with a staggering 627 deaths in its most recent 24-hour period.  Spain is now over 1,000 (235 today).  France 450 (78).

The UK is at 177, as British Prime Minister Boris Johnson has been incredibly irresponsible and let things get out of hand.  Only tonight did he close the pubs and restaurants.

Queen Elizabeth addressed her people Thursday.

“At times such as these, I am reminded that our nation’s history has been forged by people and communities coming together to work as one.

“Many of us will need to find new ways of staying in touch with each other and making sure that loved ones are safe.  I am certain we are up to that challenge.  You can be assured that my family and I stand ready to play our part.”  [Well two members are now in Canada.] 

Iran has a reported death toll of over 1,400, but there is little doubt it is far higher.

What should concern the world even more is that it is inevitable the number of cases will begin to explode in many nations that will be overwhelmed worse than we may be.

Philippines, Malaysia, Indonesia, India, Pakistan, the entire African continent and Brazil…all just beginning to surge in infections and death.

And most distressingly, in nations and territories that seemed to have it under control, like Singapore, Taiwan and Hong Kong, there are fresh waves of coronavirus, with cases soaring in Europe and the Middle East and returning travelers bringing it back.

Forget that China is lying about zero new cases in Wuhan city and Hubei province the last two days, they have at least come clean that they are seeing new cases emerge from travelers arriving in the country“imported” cases.  China’s aviation regulator has asked airlines to cut international flights and ordered some Beijing ones to be rerouted.

And consider this.  France is trying to repatriate 130,000 of its nationals stuck overseas.  You know what that means.   A classic case of a negative feedback loop.

How infectious is the Coronavirus?  A good friend of mine who will remain nameless told me of one of his college age daughters, who had four friends come back from Europe (1 from Spain, 2 from Italy and 1 from Denmark) where they had been on Spring semester.  They were screened for Covid-19 upon their return to America.  All four tested positive and they are in quarantine, yet only one had a slight fever. 

My hometown of Summit, New Jersey, received word on its first official case, a 49-year-old male.  Plus we have at least one from a neighboring community in our very good hospital.  Folks in my state also extend their thoughts and prayers to the Fusco family, who at last word had lost four members to the disease, with others in critical condition, after a typical Sunday family dinner.

But now the economy has literally crashed to a halt, our borders with Canada and Mexico closed to non-essential travel.  California, Illinois, Connecticut and New York are on lockdown, New Jersey among those doing the same officially tomorrow.

I’ve said a couple of times since the end of 2019 that 2020 “would be hell.”  I didn’t know exactly how much so.

Somehow, we have to pull together
.  And we need our leaders to give us nothing but the facts.

Editorial / Wall Street Journal 

“You know you have a big economic problem when you roll out your grand solution and markets tank another 6%.  That was the sorry story Wednesday, as the Trump Treasury disclosed its $1 trillion proposal to rescue the pandemic economy, and the panic accelerated. 

“The rout in stocks was the least of it.  Oil fell 17% to about $20 a barrel, which is lower than it’s been since after 9/11.  Financial markets also showed more stress, as asset holders liquidated holdings even in supposedly safe havens like Treasurys and gold.  Money managers are shedding those traditional hedges against risk because they fear even those are too risky to hold.  They’re literally selling those for cash to stick in the vault, if not a mattress. 

“Somehow we doubt this is what President Trump had in mind Tuesday when he said his rescue plan was to ‘go big,’ by which he means spend $1 trillion.  We also doubt it’s what Federal Reserve Chairman Jerome Powell intended when he told House Speaker Nancy Pelosi, according to media leaks, that she also shouldn’t worry about spending $1 trillion.

“But ‘big’ is irrelevant or worse if it’s aimed at the wrong solution because you’ve misdiagnosed the problem.  The market has figured out that American commerce is shutting down right before our eyes with no end in sight.  Hotels are at 10% occupancy, airline flights are two-thirds-empty except for college kids on spring break who think they’ll live forever.  U.S. car makers suspended production Wednesday to reduce danger to their workforce and because people don’t buy cars when they’re at home.

“This national economic shutdown is accelerating by the day, and second quarter GDP could fall by 10% or more.  For comparison, the worst single quarter during the financial panic was minus-8.4% at the end of 2008.  Mass layoffs could begin soon in the hardest hit parts of the economy, spreading and growing if there’s no sign of recovery.

“The market has also figured out that Washington is even more panicked than the markets and is throwing money at the wrong problem in the wrong way.  The Fed is deploying its 2008 tools to ease constraints in money markets, and that’s useful for the economy’s financial plumbing and banks.  The commercial paper facility is good for the biggest companies.  But this doesn’t address the dramatic and immediate need for liquidity – financing, i.e., loans – across the breadth of American business to survive this unprecedented economic shutdown.

“President Trump’s Treasury seems to think this can be solved by handing out $500 billion in cash to individual Americans in two installments in April and May. Chuck Schumer and Nancy Pelosi will see and raise.  This won’t stimulate much of anything, but it might even be tolerable at a political price if it helped to sell the proper medicine for the larger economy. 

“Instead, Secretary Steven Mnuchin’s proposal that he sent to Senate Republicans includes $50 billion for the airlines, plus another $150 billion in loans to other affected businesses.  This is too little, too cumbersome, and too political.  Wait until Congress attaches strings to that cash, and wait until the bureaucrats get around to doling it out.  The airlines may get rescued, perhaps with price and route controls attached, but they won’t have many passengers if a million Americans a month lose their jobs. 

“The same goes for another $300 billion for a new small-business loan program to be administered through private lenders, though it isn’t clear what rules would apply or how long this would take to set up.  If it’s anything like the Small Business Administration, prepare for a long wait….

“You don’t calm a panic by floating ill-considered trial balloons or chanting ‘go big’ as an illusion of proper and thoughtful action.  Markets are panicked in part because they sense that our political leaders are more panicked than the public is.

“You calm a panic first by looking like you know what you’re doing.  You explain that this is a liquidity problem caused by an extraordinary precaution against a virus that is closing down businesses.  The government needs to act to prevent the liquidity panic from becoming a solvency rout that becomes a banking crisis.  And it needs to act fast…. 

“This pandemic may be the biggest demand shock to the U.S. economy since World War II.  The only alternative we see to this liquidity solution is if the pandemic eases faster than we think, or policy makers make a different calculation about viral versus economic risks.  If we don’t do the latter, we need to do the former or suffer the economic damage.”

Walter Russell Mead / Wall Street Journal

“As bodies are thrown into mass graves in Iran, as Italian doctors practice triage in overcrowded wards, as borders close across Europe and American cities shut down, it is hard to look past the tumult and distress of each passing day.

“The full political impact of the new coronavirus, a Jet Age pandemic that is spreading through a highly integrated global economy with shattering speed, isn’t yet known, and much depends on how successful efforts to mitigate its damage and find treatments and ultimately a vaccine for it will be.  But on its present trajectory, the pandemic seems likely to test the international political system to an extent that few living people remember.  In an ironic twist, an epidemic that started in China may end by increasing Beijing’s international reach.

“The pandemic has already widened the breach and sharpened the competition between the U.S. and China. While, as Secretary of State Mike Pompeo told me over the weekend, the U.S. has provided medical assistance to China, and while cooperation between medical and technical personnel in the two countries continues, China has used the pandemic to launch a massive propaganda and disinformation campaign – alleging, among other claims, that Americans brought the virus to China.  Despite President Trump’s efforts to keep open lines of communication to President Xi Jinping, relations between the two countries are as difficult as at any time since the Tiananmen Square massacre of 1989….

“So far, with the exception of Iran, the most severe outbreaks outside China have been in wealthy countries with well-developed political and medical systems.  But the greatest impact of the pandemic will likely come in less-developed countries.  On top of an epidemic with which their sometimes underfunded medical systems can’t cope, many countries will face a catastrophic mix of capital flight, falling commodity prices, supply-chain disruptions, slack demand for manufactured goods in a global recession, and the implosion of the tourism industry….

“In the Americas, an epidemic and low oil prices will put enormous pressure on Venezuela.  Mexico, Guatemala, Honduras and El Salvador may send new streams of migrants north as the impact of the epidemic throws those economies into a deep recession.

“The massive epidemic in Iran will almost certainly spill over into war-torn Syria and Iraq, and to a Lebanon struggling to accommodate Syrian refugees amid its worst financial crisis in decades.  Turkey, whose economy was already hurting before the world-wide market meltdown, is currently home to millions of refugees from Syria, Afghanistan and Iraq.  A deep recession in Turkey coupled with an epidemic would test President Recep Tayyip Erdogan’s grip on power even as streams of desperate refugees try to enter from Syria.  With the U.S. looking to reduce its engagement in the region, and Europe focused on its own problems, both Russia and China will be tempted to increase their influence in a strategic part of the world.

“The African outlook is equally grim.  The next months and years could see the most difficult conditions in much of Africa since the colonial era, and it is far from clear that traditional supporters in the West will come to the rescue.

“There are already signs that China hopes to use the crisis to strengthen its global position.Aid donations plus propaganda about the supposed superiority of China’s governance model will find sympathetic ears in many countries, especially if the U.S. and its allies are AWOL.  While the crisis lasts, China will have opportunities to deepen security, economic and political relationships with governments around the world.

“As the recession hits and the pandemic bites, American, Japanese and European leaders must find ways to respond effectively to problems abroad as well as at home.  If the West turns inward until the storm passes, we may not like what we see when the storm clears and we look back out on a changed world.”

Trump World

--New York Times: “The outbreak of the respiratory virus began in China and was quickly spread around the world by air travelers, who ran high fevers.  In the United States, it was first detected in Chicago, and 47 days later, the World Health Organization declared a pandemic. By then it was too late: 110 million Americans were expected to become ill, leading to 7.7 million hospitalized and 586,000 dead.

“That scenario, code-named ‘Crimson Contagion,’ was simulated by the Trump administration’s Department of Health and Human Services in a series of exercises that ran from last January to August.

“The simulation’s sobering results – contained in a draft report dated October 2019 that has not previously been reported – drove home just how underfunded, underprepared and uncoordinated the federal government would be for a life-or-death battle with a virus for which no treatment existed.

“The draft report, marked ‘not to be disclosed,’ laid out in stark detail repeated cases of ‘confusion’ in the exercise.  Federal agencies jockeyed over who was in charge.  State officials and hospitals struggled to figure out what kind of equipment was stockpiled or available. Cities and states went their own ways on school closings…. 

“Three times over the past four years the U.S. government, across two administrations, had grappled in depth with what a pandemic would look like, identifying likely shortcomings and in some cases recommending specific action.”

President Trump has “moved from dismissing the coronavirus as a few cases that would soon be ‘under control’ to his revisionist announcement on Monday that he had known all along that a pandemic was on the way.

“What the scenario makes clear, however, is that his own administration has already modeled a similar pandemic and understood its potential trajectory

“But officials have declined to say why the administration was so slow to roll out broad testing or to move faster, as the simulations all indicated it should, to urge social distancing and school closings.

“Asked at his news briefing on Thursday about the government’s preparedness, Mr. Trump responded: ‘Nobody knew there would be a pandemic or epidemic of this proportion.  Nobody has ever seen anything like this before.’

“The work done over the past five years, however, demonstrates that the government had considerable knowledge about the risks of a pandemic and accurately predicted the very types of problems Mr. Trump is now scrambling belatedly to address….

But the planning and thinking happened many layers down in the bureaucracy.  [Emphasis mine.] The knowledge and sense of urgency about the peril appear never to have gotten sufficient attention at the highest level of the executive branch or from Congress, leaving the nation with funding shortfalls, equipment shortages and disorganization within and among various branches and levels of government.

--Editorial / Washington Post

“When the novel coronavirus infection advances through the body in more severe cases, the lungs begin to fill with fluid and breathing becomes difficult.  In a hospital intensive care unit, life-saving ventilators can help a patient survive by pumping oxygen into the impaired lungs.  But what if thousands more people need hospital beds and ventilators than are available? 

“That is the nightmare scenario facing the United States and other nations in the pandemic.  In Italy, doctors are having to make painful choices about which patients get treatment.  President Trump told governors in a conference call on Monday morning, ‘Respirators, ventilators, all of the equipment – try getting it yourselves.  We will be backing you, but try getting it yourselves.  Point of sales, much better, much more direct if you can get it yourself.’

“That was shortsighted.  The federal government ought to be doing everything in its power to make sure the worst-case scenario does not happen.  Tom Inglesby, director of the Johns Hopkins Center for Health Security, has proposed that the United States ‘needs a wartime mobilization’ to boost the supply of ventilators.  We’d settle for even a decent peacetime mobilization.   On Wednesday, Mr. Trump took a welcome step in that direction, invoking the Defense Production Act, which allows him to order companies to shift production toward essential items in a crisis.  We hope he will use it robustly. 

“Whether the worst case will happen is not yet known.  But an epidemiological study published Monday by Imperial College, London, focusing on Britain and the United States, makes the point that all the non-pharmaceutical measures now being proposed – social distancing of the entire population, case isolation, household quarantine if one member is sick and school closures, a so-called suppression strategy – will have to be undertaken to reduce the stress on hospitals.  If a less intense strategy is followed, the study warns, it would result in an ‘8-fold higher peak demand on critical care beds over and above the available surge capacity’ in both Britain and the United States.

“Hospital beds are a major worry. In another study, published in pre-print and not yet peer-reviewed, Eric S. Toner of the Bloomberg School of Public Health at Johns Hopkins and colleagues calculated that, using data from the Wuhan, China, outbreak, the demand for critical-care treatment at the peak of the pandemic might be 259 people per million.  Excluding the Department of Veterans Affairs system, there are 46,500 medical intensive care unit beds in the United States, or 178 per million, with 70 to 80 percent of them already occupied on any given day.  Without any changes, that means that in an average metropolitan area of 1 million, there are only 36 to 53 empty, staffed intensive care beds to meet a need that might be 259.

“To alleviate the shortage, hospitals will have to take drastic rationing action, postpone other treatments and seek additional space.  And even then it is not clear there will be sufficient capacity.  In the case of ventilators, too, there are 62,000 immediately available and 99,000 that could be pulled out in an emergency, according to Forbes.  But that might still not be sufficient, depending on the size of the pandemic.

“By acting now, we may avert a hospital catastrophe.  But that likely will require Mr. Trump to use the legal authority he invoked to add supplies through wartime-style mobilization.
‘Do it yourself’ won’t do.

--Thursday, President Trump touted a malaria treatment that has been tried with some success against the outbreak, but aside from the fact the FDA said it is just in the trial phase, it seems that the supply of the drug, hydroxychloroquine, is in short supply, according to the American Society of Health-System Pharmacists, which is about to add it to its shortages list.

--Rep. Devin Nunes (R-Calif.) appeared on Fox News on Monday night and attempted to walk back previous comments from the day before where he had contradicted public health experts and encouraged Americans to “go to a local restaurant” during the coronavirus crisis.

Sunday, Nunes said, “There’s a lot of concerns with the economy here because people are scared to go out.  But I will just say, one of the things you can do if you’re healthy – you and your family – it’s a great time to just go out, go to a local restaurant.  Likely you can get in easily.”

“Go to your local pub,” he continued.

Nunes’ comments came as Dr. Anthony Fauci appeared on all the Sunday shows, saying people “should prepare to hunker down significantly.”

So Monday, Nunes said that “media freaks don’t have a clue what’s going on out in the real world” regarding the outbreak, while claiming that during his Sunday Fox News appearance, he was encouraging people to do drive-thru or takeout. 

--It’s funny how the likes of Sean Hannity quickly shifted gears last Friday after President Trump declared the virus constitutes a national emergency; this after Hannity and some of his cohorts spent weeks accusing the media of whipping up “mass hysteria” and being “panic pushers.”

“Tonight, we are witnessing what will be a massive paradigm shift in the future of disease control and prevention,” Hannity said. “A bold, new precedent is being set, the world will once again benefit greatly from America’s leadership….The federal government, state governments, private businesses, top hospitals all coming together, under the president’s leadership, to stem the tide of the coronavirus.”

Fox host Tucker Carlson, however, has taken the virus seriously throughout and he reportedly visited with the president in Florida to urge him to take decisive action.

--Trump tweets:

“We are going to WIN, sooner than later!”

“Cuomo wants ‘all states to be treated the same.’  But all states aren’t the same.  Some are being hit hard by the Chinese Virus, some are being hit practically not at all.  New York is a very big ‘hotspot,’ West Virginia has, thus far, zero cases.  Andrew, keep politics out of it….” 

[By week’s end they were getting along.]

“95% Approval Rating in the Republican Party, 53% overall.*  Not bad considering I get nothing but Fake & Corrupt News, day and night.  ‘Russia, Russia, Russia’, then ‘the Ukraine Scam (where’s the Whistleblower?)’, the ‘Impeachment Hoax’, and more, more, more…

“….Also, according to the Daily Caller, leading Sleepy Joe Biden in Florida, 48% to 42%.

*If the president was referring to his favorite Rasmussen Poll, for the second time in two weeks, he missed that the split that day was 46-53, and now 46-52 as listed below, not 53-46.

“The DNC will have gotten their fondest wish and defeated Bernie Sanders, far ahead of schedule.  Now they are doing everything possible to be nice to him in order to keep his supporters.  Bernie has given up, just like he did last time.  He will be dropping out soon! MAGA/KAG”

“I always treated the Chinese Virus very seriously, and have done a very good job from the beginning, including my very early decision to close the ‘borders’ from China – against the wishes of almost all.  Many lives were saved.  The Fake News new narrative is disgraceful & false!”

“Everybody is so well unified and working so hard.  It is a beautiful thing to see. They love our great Country.  We will end up being stronger than ever before!”

“…The USA was never set up for this, just look at the catastrophe of the H1N1 Swine Flu (Biden in charge, 17,000 people lost, very late response time), but it soon will be.  Great decision to close our China, and other, borders early.  Saved many lives!”

“So now it is reported that, after destroying his life & the life of his wonderful family (and many others also), the FBI, working in conjunction with the Justice Department, has ‘lost’ the records of General Michael Flynn.  How convenient. I am strongly considering a Full Pardon!

Wall Street 

The message was clear from Dr. Anthony Fauci on the Sunday news shows. “I would like to see a dramatic diminution of the personal interaction we see in restaurants and in bars.  Whatever it takes to do that, that’s what I’d like to see.”

He also tried to remind people that everybody – including those who may feel they are healthy or not at risk – needs to do their part for the greater good.

“Younger people should be concerned for two reasons: You are not immune or safe from getting seriously ill.  So protect yourself.  But remember: You could also be a vector or a carrier. …That’s why everybody’s got to take this seriously.”

The message was, shutdown.

Editorial / Wall Street Journal, part II

“Financial markets paused their slide Thursday, but no one should think this rolling economic calamity is over.  If this government-ordered shutdown continues for much more than another week or two, the human cost of job losses and bankruptcies will exceed what most Americans imagine. This won’t be popular to read in some quarters, but federal and state officials need to start adjusting their anti-virus strategy now to avoid an economic recession that will dwarf the harm from 2008-2009.

“The vast social-distancing project of the last 10 days or so has been necessary and has done much good.  Warnings about large gatherings of more than 10 people and limiting access to nursing homes will save lives.  The public has received a crucial education in hygiene and disease prevention, and even young people may get the message….

“Yet the costs of this national shutdown are growing by the hour, and we don’t mean federal spending.  We mean a tsunami of economic destruction that will cause tens of millions to lose their jobs as commerce and production simply cease.  Many large companies can withstand a few weeks without revenue but that isn’t true of millions of small and mid-sized firms.

“Even cash-rich businesses operate on a thin margin and can bleed through reserves in a month.  First they will lay off employees and then out of necessity they will shut down.  Another month like this and the layoffs will be measured in millions of people.

“The deadweight loss in production will be profound and take years to rebuild.  In a normal recession the U.S. loses about 5% of national output over the course of a year or so.  In this case we may lose that much, or twice as much, in a month.

“Our friend Ed Hyman, the Wall Street economist, on Thursday adjusted his estimate for the second quarter to an annual rate loss in GDP of minus-20%.  Treasury Secretary Steven Mnuchin’s assertion on Fox Business Thursday that the economy will power through all this is happy talk if this continues for much longer.

“If GDP seems abstract, consider the human cost. Think about the entrepreneur who has invested his life in his Memphis ribs joint only to see his customers vanish in a week.  Or the retail chain of 30 stores that employs hundreds but sees no sales and must shut its doors.

“Or the recent graduate with $20,000 in student-loan debt – taken on with the encouragement of politicians – who finds herself laid off from her first job.  Perhaps she can return home and live with her parents, but what if they’re laid off too?  How do you measure the human cost of these crushed dreams, lives upended, or mental-health damage that result from the orders of federal and state governments?

“Some in the media who don’t understand American business say that China managed a comparable shock to its economy and is now beginning to emerge on the other side.  Why can’t the U.S. do it too?  This ignores that the Chinese state owns an enormous stake in that economy and chose to absorb the losses.  In the U.S. those losses will be borne by private owners and workers who rely on a functioning private economy.  They have no state balance sheet to fall back on.

“The politicians in Washington are telling Americans, as they always do, that they are riding to the rescue by writing checks to individuals and offering loans to business.  But there is no amount of money that can make up for losses of the magnitude we are facing if this extends for several more weeks.  After the first $1 trillion this month, will we have to spend another $1 trillion in April, and another in June?

“By the time Treasury’s small-business lending program runs through the bureaucratic hoops – complete with ordering owners that they can’t lay off anyone as a price for getting the loan – millions of businesses will be bankrupt and tens of millions will be jobless.

“Perhaps we will be lucky, and the human and capitalist genius for innovation will produce a vaccine faster than expected – or at least treatments that reduce Covid-19 symptoms.  But barring that, our leaders and our society will very soon need to shift their virus-fighting strategy to something that is sustainable…. 

“(No) society can safeguard public health for long at the cost of its overall economic health.  Even America’s resources to fight a viral plague aren’t limitless – and they will become more limited by the day as individuals lose jobs, businesses close, and American prosperity gives way to poverty.  America urgently needs a pandemic strategy that is more economically and socially sustainable than the current national lockdown.” 

This week the Federal Reserve went all in with, as the Journal reported, “its 2008 bag of monetary tricks, and financial markets continued their stampede like frightened cattle.

Sunday afternoon, the Fed slashed rates to zero and initiated a new round of bond-buying and lending facilities to stop the liquidity panic from becoming a solvency crash.  The Fed is equipped to lend to not just banks and financial institutions, but also major companies in all key sectors of the economy. 

President Trump then strode before the nation and said the latest cut in interest rates was “good news” and “makes me very happy” as he congratulated the Fed for taking further action aimed at helping shore up the U.S. economy.

The next day the market had its second worst in history from a percentage standpoint and worst point-drop ever in the Dow Jones, nearly 3,000 points.  The rest of the week saw more chaos.

The gains since Donald Trump’s Inauguration have been erased in terms of the Dow, almost so with regards to the S&P 500.  It’s not a time to do anything more than report the facts.  I just can’t help but add it’s probably fortunate the president isn’t able to hold a rally these days.  He’d have to rewrite much of his material.

There was some economic news, but with the world now turned upside down, it’s largely irrelevant because it’s February data, which means many of the surveys were through a period up to, perhaps, mid-month.

But, for the record, retail sales in February were down -0.5%, -0.4% ex-autosbut this is but a glimmer of what is to come.  February industrial production rose 0.6%.

February housing starts came in at a strong 1.599 million annualized level, while February existing home sales, at 5.77m ann., the highest in 13 years, were better than expected, but this is for contracts signed in Dec. and Jan., and then closed in February.

More importantly, the weekly initial jobless claims figure came in at 281,000, up 70,000 from the week before. The figure was for the week ending March 14.  This is the barometer that will be followed most closely going forward.  The figure next week will skyrocket, though there are stories out there that the White House wants states to hold back on the real numbers.

Meanwhile, the Atlanta Fed’s GDPNow for the first quarter is still at 3.1%, but this is before all the March data flows in.  And you’ve seen the forecasts from economists for a negative print for Q1, and then historically bad in the second quarter.

Europe and Asia

There was no important broad-based data from the eurozone this week, but soon we’ll be getting March and first-quarter figures.

Italy’s economy is expected to contract by 3% in the first quarter of this year from the previous three months and shrink a further 5% in the second quarter, according to Milan-based think-tank REF, slashing a previous forecast, made on Feb. 29, which had envisaged a fall in GDP of 1% in Q1 and 3% in Q2.  Since then the government levied even more protective restrictions.

Henry Olsen / Washington Post 

The coronavirus pandemic may claim an unexpected victim: a united euro zone. And if it does, Italy will have done much of the work.

“The country has essentially shuttered its economy to fight its enormous health crisis Effectively, millions of Italians are out of work….

“But Italy’s economy is already weak, and has been for decades.  Its gross domestic product has barely grown over the past 20 years.  Its unemployment rate, at 9.8 percent, is one of the highest in Europe. Worse still, Italy is one of the most heavily indebted nations in the world.  Government debt stood at 138 percent of GDP before this crisis hit…With this existing weakness as a backdrop, Italy will find it difficult to muster the fiscal response it would need to contain new economic distress – something its lockdown is sure to cause.

“Italy’s economic crisis will ultimately put serious pressure on the euro….If Italy’s economic hit weakens its banks sufficiently, the European Central Bank could be forced to step in with a large bailout.  The terms it imposed on Greece, another deeply indebted European Union country, after it slunk into default, indicate that Italians would likely face years of depression and stagnation should a bailout be necessary.

“That’s not something they are likely to stand for.  Italy’s current government is extremely weak, a coalition between the populist Five Star Movement and the center-left Democratic Party that has trailed the opposition in the polls by substantial margins for over a year. That opposition coalition is dominated by the extreme populist League party and its bombastic leader Matteo Salvini.

Salvini has long raged against the EU. While he has recently called for the very measures the Italian government is now undertaking, he has also called for a massive fiscal stimulus to offset the economic pain.  It’s not inconceivable that the current government, unable to deliver such a stimulus and unwilling to flout the powers that be in the EU, falls and thus brings Salvini to power.  And a Salvini-led government would be a nightmare for the EU establishment….

“If Italy leaves the euro, then it’s likely only a matter of time before the euro zone itself either contracts to only stronger, northern countries or breaks up all together.

The European Central Bank acted this week to attempt to blunt scenarios such as that of Mr. Olsen, unveiling a new $818.7 billion bond-buying program aimed at shielding the eurozone economy. 

The move followed days of mixed messages from the ECB, as borrowing costs for Southern European countries jumped, reflecting concerns the region’s governments, such as Italy, will struggle to meet their obligations as spending demands increase.

Separately, the Bank of England cut interest rates to near zero, its second emergency rate cut in just over a week, and, it too, promised to buy vast amounts of bonds.

Turning to Asia, lots of dreadful data from China this week.  The National Bureau of Statistics released reports for the combined months of January and February, as they always do, to take into effect the impact of the Lunar New Year holiday, where most workers are out for a few weeks and many businesses close.

So for the two months, industrial production fell 13.5% year-over-year, the sharpest decline in 30 years.  Fixed asset investment (big projects) plunged 24.5% yoy.  Retail sales not only plummeted 20.5% yoybut a minimal rise had been expected. 

New home prices in the 70-city index were unchanged in February over January for the first non-increase since April 2015.  Property investment (mostly residential) fell 16.3% over the two months.

The jobless rate in February was 6.2% vs. 5.2% in December. 

China’s economy, however, is beginning to show signs of normalization, according to the International Monetary Fund and anecdotal information, such as stores being reopened.  But, again, infections could rise again as national and international travel resumes.  Outbreaks in other countries and financial market volatility could also make consumers and firms wary of Chinese goods.

The IMF said: What started as a series of sudden stops in economic activity, quickly cascaded through the economy and morphed into a full-blown shock simultaneously impeding supply and demand.

But the government did eventually mitigate the impact of the disease.

The full-year GDP forecast for 2020 prior to the pandemic was below last year’s 6.1%, but now who knows.  Most seem to be talking -9% for the first quarter (annualized).

Street Bytes

It was the worst week on Wall Street since 2008, with the Dow Jones crashing 17.3% to 19173.   The S&P 500 fell 15% and Nasdaq 12.6%.

Aside from Monday’s 12.9% disaster, the Dow also had single-day losses of 6.3% (Wed.) and 4.6% (Friday).

From the all-time record highs set just last month, the Dow has plunged -35%, the S&P -32% and Nasdaq -30%.

It was another poor week overseas as well.

Monday, the New York Stock Exchange will temporarily close its iconic trading floor and move to all-electronic trading as a precautionary step, after two people who work at the exchange tested positive for coronavirus.  

The two individuals were denied entry to the NYSE building this week after they failed to pass mandatory screening procedures.

--U.S. Treasury Yields

6-mo. -0.02%  2-yr. 0.32%  10-yr. 0.87%  30-yr. 1.47%

More chaos in the bond pits.  And much more next week on the actions of the Federal Reserve and whether it helped cool things down.

--Crude prices plunged Wednesday to an 18-year low, nearing $20 on West Texas Intermediate, as governments worldwide accelerated lockdowns.  Global oil demand by the end of March could fall as much as 8 million to 9 million barrels per day, Goldman Sachs estimated.   At the same time, U.S. crude stocks rose 2 million barrels in their eighth straight weekly build.

Saudi Arabia, after deciding earlier this month to dramatically increase supply since it and Russia could not agree to cut output in anticipation of weaker demand, is ignoring entreaties thus far to act to balance the market.  The Saudis have reiterated their plans to maintain production at more than 12 million barrels per day, which would be a record.

North American shale producers have cut planned expenditures between 25% and 55% on averagewith Goldman Sachs estimating U.S. production could fall by as much as 1.3 million barrels per day over five quarters after the second quarter of 2020.

Shale drilling had driven U.S. production to an all-time record of nearly 13 million bpd, making the nation the world’s largest producer.

Thursday, the price of oil surged 23%, $4.71 on WTI to $25.08, but then Friday it collapsed all over again to $19.84…down from $41.59 in just two weeks, from $53.33 in four.

The job losses are amounting quickly, including a 3,500-person furlough at oilfield firm Halliburton announced this week.  The destruction is going to be sickening.

--U.S. airlines are seeking over $50 billion in financial assistance from the government, more than three times the size of the industry’s bailout after the Sept. 11 attacks.  “We’re going to back the airlines 100%,” President Trump said Monday.  “We have to back the airlines.  It’s not their fault.”

Another $8 billion in grants and guarantees has been requested for cargo carriers.

And, as I noted last week, U.S. airports are seeking $10 billion in assistance to counter forecast full-year losses already approaching $9 billion.

The airlines have been stunned by the rapid plunge in their bookings as the coronavirus pandemic has spread around the world.

United Airlines announced a 60% schedule reduction in April, including a 42% cut across the U.S. and Canada, and an 85% decrease in international flights.

Across the Atlantic, Pacific and Latin America, United will operate under 45 daily flights in April.

United is estimating its revenue would be down $1.5 billion in March from a year ago.

--Delta Air Lines says revenue for the month of March is now expected to decline by almost $2 billion over last year, according to an SEC filing.  The airline projected April revenue will fall even more.  All Delta officers took a 50% pay cut through June 30.

Delta’s systemwide capacity will be reduced at least 70 percent.  The airline announced late today second-quarter revenue will fall by $10 billion, an 80% reduction compared with a year earlier.

--Southwest Airlines said late today it was canceling 1,000 flights daily out of 4,000 starting March 22 until April 14 due to the drop in demand.  It will also suspend all international flights from March 22 due to travel restrictions.

--American Airlines’ $29 billion in debt and massive share buybacks are coming under increased scrutiny as the aviation industry looks for government aid.

American spent about $12.4 billion on stock repurchases since 2014. Southwest has spent $10.7 billion buying back stock. 

According to a Bloomberg News analysis, American, United, Delta and Southwest, have spent 96% of free cash flows to repurchase stock during the past decade.

You can be sure, share repurchases and banning same, as tech billionaire Mark Cuban has recommended, will be front and center in the postmortems and follow-on legislation.

--British Airways planes are being rapidly parked.  There are more than 280 planes in BA’s fleet and the airline’s owner, IAG, has said it plans to cut capacity by 75% in April and May, meaning hundreds of planes on the ground.

--Norwegian Air is receiving a bailout from the government, but some say it won’t be enough.

--SAS temporarily halted most of its flights on Monday until conditions for commercial aviation improve, it said, as demand for flights has “more or less disappeared.”  90% of the workforce of up to 10,000 was being temporarily laid off.

--Boeing Co. on Tuesday called for a $60 billion lifeline for the struggling U.S. aerospace manufacturing industry, which faces huge losses from the coronavirus pandemic. Boeing noted that typically 70% of its revenue flows to its 17,000 suppliers and has told lawmakers that without significant assistance the entire U.S. aviation manufacturing sector could collapse.

“This will be one of the most important ways for airlines, airports, suppliers and manufacturers to bridge to recovery.  Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain,” Boeing spokesman Gordon Johndroe said.

President Trump said Tuesday, “We have to protect Boeing… We’ll be helping Boeing.” As Boeing’s share price has collapsed, the company confirmed it had secured the rest of a $13.8 billion line of credit it had secured last month.

Boeing’s total debt nearly doubled to $27.3 billion in 2019, as it compensated airlines and grappled with additional production costs for the 737 MAX even as the grounding prevented it from delivering the aircraft to buyers.

[Rival Airbus reportedly has about $17.6 billion in cash, and needs some $6 billion a month, according to Moody’s, to stay afloat.]

Separately, the deal market is in turmoil, to say the least, one example being Boeing’s proposed purchase of Brazilian aircraft manufacturer Embraer, which faced intense scrutiny in Brazil to begin with, and still lacks European Union regulatory approval, let alone Boeing’s now precarious financial situation.

Boeing CEO Dave Calhoun said in January the company was still committed to pursuing the deal, but then the world changed, and critics in Congress will question how potential U.S. taxpayer funds would be deployed.  It’s tough to hold your hand out, while spending $4.2 billion to complete the deal.

One more…Thursday, Nikki Haley, former South Carolina governor and U.S. ambassador to the United Nations, resigned from the board of Boeing because of her opposition to the company’s move to seek financial support from the federal government.

Knowing Haley still harbors presidential ambitions, no way she wanted this on her resume, but it’s an incredibly weak move, with the company in crisis, and I lost major respect for her.

--According to analytics firm STR, which looks at over 68,000 registered hotel chains, groups and individual properties, revenue per available room (RevPAR) – a key metric for the industry – in Hong Kong fell 85.9% in February from a year earlier and 82.2% in mainland China.  In the United States, since this was only February, San Francisco revenue fell 12%, while New York dropped a mere 0.2%.  Then came the crash.  New York City’s occupancy rate fell to 72.1% for the week ending March 7, a 13.1% decline from the same week a year ago.  Who knows what the figures are now as many hotels are shuttered.  New York City comptroller Scott Stringer* says hotel vacancy rates could soar to 80%, vs. the average occupancy rate of 86.2% in 2019, according to STR. 

All the major hotel chains, such as Hyatt, Marriott and IHG, aside from withdrawing earnings guidance, have offered waivers on cancellations and changes in bookings for travelers in several countries and also shut hotels.

Marriot International was the first to announce Tuesday it was furloughing tens of thousands of employees.

Walt Disney World in Florida closed, joining other Disney properties around the world.  In a regulatory filing, Disney said: “We expect the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on our financial and operational results, will be dictated by the length of time that such disruptions continue

“There are certain limitations of our ability to mitigate the adverse financial impact of these items, including the fixed costs of our theme park business.

The company said it planned to offer debt to be used for general corporate purposes.

*Separately, Comptroller Stringer said a conservative estimate of how coronavirus will crush New York’s economy is at least $3.2 billion in revenues over the next six months.  I’m sure that will rise much further.

--Department stores were shutting down all week, with most indoor malls closing.  All the U.S. locations of Macy’s, Bloomingdale’s and Nordstrom have closed and the companies have said they will provide benefits and compensation to affected workers.  Most expect to be shut for at least two weeks.  But the websites are open.

The thing is department stores have invested $billions in their New York flagships.  Saks Fifth Avenue, for instance, is finishing up a $250 million renewal of its store.

And the likes of Apple, NikeLululemon and Abercrombie & Fitch closed their U.S. shops.

Apple said it was closing all its retail stores, except those in Greater China.  Apple reopened all 42 of its branded stores there last Friday as the number of new cases fell in the country.

I’ve been mall-walking four mornings a week since December and Lululemon was among the few stores that had workers preparing for the day at 7:30 because business has been strong.

[In the real estate sector, the shares of Simon Property Group, a major operator of retail properties, including malls and premium outlets, fell 46% this week after the company closed all its properties until March 29, for starters.]

Kohl’s, which tends to have stand-alone locations, said Thursday that due to the outbreak it will temporarily close all of its stores through at least April 1, with store associates receiving two calendar weeks of pay.

Bed Bath & Beyond said after the markets closed Thursday that it would temporarily close over half of its stores within the U.S. and Canada, “to help reduce the spread of the novel coronavirus.”

But even before all the closures, consumer behavior was changing rapidly, with foot traffic to retailers decreasing 31% in the week through March 13, the sixth straight week that store visits had fallen, according to location-data provider Prodco Analytics.

--Meanwhile, plans to hire an additional 100,000 employees in the U.S. as millions of people turn to online deliveries at an unprecedented pace and Americans continue to reorient their lives to limit the spread of the new coronavirus.   The company also announced it was raising pay for all employees in fulfillment centers in April.

Amazon employed nearly 800,000 full and part-time employees as of Dec. 31.

But then Amazon said late Thursday it was temporarily halting its Prime Pantry delivery service in the U.S. to restock groceries as business has surged with the panic over the outbreak.  It said it is not accepting new orders, nor did it say when it would reopen.

--Walmart said it would hire more than 150,000 hourly workers in the United States, citing a jump in shoppers.  The company also said it plans to pay a special cash bonus of $300 to full-time hourly workers and $150 to part-time associates.

The 150,000 new workers will work in Walmart’s stores, clubs, distribution and fulfillment centers, adding that they would be temporary at first but many would convert to permanent roles over time.

--Dollar Tree announced today it was hiring 25,000 full- and part-time associates at both Dollar Tree and Family Dollar stores and distribution centers across the U.S.

--Casinos across Las Vegas shut down Wednesday.  Said one employee of Treasure Island, “I’ve never seen how a casino shuts down in my 35 years working on the strip.  Only when they open up.”

Including the shutdown across the state, Nevada put the brakes on 5,400 table games and 163,000 slot machineswith over 350,000 jobs in the entire leisure sector at risk, one-quarter of all jobs in the state.

--Royal Caribbean Cruises Ltd suspended the voyages of its fleet globally from midnight Saturday.  The cruise operator said it will conclude all current sailings as scheduled and expects to return to service on April 11.  President Trump had said last Friday that major cruise lines would suspend operations for 30 days at his request.

--Ford Motor Comoved to hoard cash on its balance sheet, drawing down $15.4 billion from two credit lines and suspending its dividend, in a move to bolster reserves to ride out the damage.  Ford, like every other company in America, abandoned its 2020 financial forecast.

CEO Jim Hackett said Ford was putting in place safeguards to protect its business.

“While we obviously didn’t foresee the coronavirus pandemic, we have maintained a strong balance sheet and ample liquidity so that we could weather economic uncertainty and continue to invest in our future.”

Ford, GM and Fiat Chrysler announced Wednesday they were shutting down their North American plants to prevent the spread of the disease among their factory workers.

--But Tesla’s Fremont electric vehicle assembly plant, which employs about 10,000 workers, had remained open despite the “shelter in place” lockdown issued by six Bay Area counties on Monday.

Alameda County declared Tesla an “essential business” that is allowed to remain in operation, according to a county spokesman.

What’s essential about automobile manufacturing in the midst of a viral pandemic?  “That’s a good question,” said spokesman Ray Kelly.

Many of the workers at the plant were of course concerned about getting Covid-19 and then spreading it at home.

Solate Wednesday night, Tesla first said it was reducing the number of workers at the Fremont plantCEO Elon Musk asking only “essential employees” to report.

And then Thursday afternoon, Tesla said it was temporarily suspending production from the end of this coming Monday.  The company said it had ample cash and credit lines “to successfully navigate an extended period of uncertainty.” 

But Musk has minimized what he called the “panic” surrounding the disease.

“My frank opinion is that the harm from the coronavirus panic far exceeds that of the virus itself,” he wrote.  He said that Covid-19 cases “will not exceed 0.1% of the population.”

--In an example of the growing carnage in the casual-dining sector, Darden Restaurants, the owner of Olive Garden and other chains, said same-store sales across its restaurants plunged 21% for the week ending March 15, but in parts of the country that have banned in-person dining, sales fell 60%.  And it’s only going to get increasingly worse. 

Darden, with 1,800 restaurants across the country, is stopping new construction and reducing capital spending to the bare bones necessities.

--Facebook said it was giving out a $1,000 bonus to each of the company’s employees as part of an effort to help them deal with the pandemic.

--FedEx Corp. suspended its 2020 profit outlook on Tuesday, citing the “significant impact” of the coronavirus, and said it would cut costs due to the uncertainty, FedEx among the few major companies announcing earnings this week.

Revenue rose about 3% to $17.5 billion for the period ending Feb. 29, but this is all in the past.

--Tiffany & Co. on Friday reported fiscal fourth-quarter earnings of $201.2 million, with adjusted EPS beating the Street.  Revenue was $1.36 billion, which was in line.  The shares have held up well given the devastation in the luxury goods sector worldwide.

--So we’re all watching a ton of television.  In South Korea, as cases spiked, television viewership shot up 17 percent, according to Nielsen.

In the Seattle area, total television use increased 22 percent on March 11 from the week before.

But as the New York Times reported, “the benefit of having a bigger-than-usual audience may be short-lived as the outbreak threatens to undercut the very structure of their business,” as cord cutting accelerates, viewers breaking away from cable to reduce expenses.

Just look at sports programming, the dependable asset for the broadcasters. As in there is none. No, I’m not about to watch old NCCA title games or golf tournaments.  Last weekend instead I listened to a lot of music, with the television on in the background, muted.

Executives at NBCUniversal are particularly on edge because of the status of the Tokyo Olympics, still undecided, with no decision needing to be made for probably another month, the Games slated to begin July 24.  More than $1.25 billion in advertising commitments are on the line for the network and its parent company, Comcast.

The late-night talk shows went dark, though Stephen Colbert brilliantly opened his shows Monday through Wednesday with monologues from his home, which were terrific, having stayed up each night for them.  But otherwise, the shows are off through at least March 30.  “Saturday Night Live” suspended production indefinitely with six episodes to go in the current season.

--In another example of job destruction, Cirque du Soleil Entertainment Group announced company-wide temporary layoffs due to the pandemic and the forced closure of all its shows worldwide.  95% of the total workforce of nearly 4,700 employees are jobless for now.

--Bill Gateswho co-founded Microsoft and led the company as it became a tech juggernaut, announced he was stepping down from the company’s board to spend more time on his philanthropic work.

Gates, the second-wealthiest person in the world behind Amazon founder Jeff Bezos, co-founded Microsoft with his high school friend Paul Allen, who died in October 2018.

Gates began moving away from Microsoft in 2000, when he gave up the CEO post to Steve Ballmer. He stepped down as Microsoft’s chairman in 2014.

Gates also stepped away from his other board position at Berkshire Hathaway.

--The financial hit to New York with the cancellation of the St. Patrick’s Day parade for the first time ever was another big blow.  Less than a week earlier, the city was still planning on holding it, so the pubs ordered accordingly.  As in tons of corned beef, which then went unused with the pubs closed.  Owners either gave it away, many to their employees who were being laid off, or froze it.

--The domestic box office posted its worst weekend in nearly two decades amid calls to practice social distancing to slow the coronavirus pandemic, though the public has yet to abandon going to the movies altogether.

Grosses in the U.S. and Canada totaled just $55.3 millionaccording to ComScore, the worst since Sept. 15, 2000.  The weekend following the terrorist attacks of Sept. 11, 2001, represented a modest improvement on that low-water mark.

--Among the casualties of coronavirus is Playboy magazine, which announced Wednesday it would no longer publish a printed edition.

“Last week, as the disruption of the coronavirus pandemic to content production and the supply chain became clearer and clearer, we were forced to accelerate a conversation we’ve been having internally,” CEO Ben Kohn said.

The magazine founded by Hugh Hefner 66 years ago had gone to a quarterly without ads in early 2019 and the spring 2020 edition now hitting newsstands will be its last before it goes all digital next year.

At its height, Playboy sold over 7 million copies on newsstands.

Foreign Affairs

Iran, Iraq: The U.S. army is pulling out of al-Qaim and two other key military bases in Iraq in the coming weeks.  The decision to leave three of its eight bases in Iraq is a sign the U.S. is looking to dramatically reduce its footprint in the country.  The moves come amid heightened tensions with the Iraqi government and Iran.

Editorial / Washington Post

“In the shadow of the mounting covid-19 pandemic, the Trump administration has been drawn into another cycle of escalating hostilities with Iranian-backed militias in Iraq.  Twice since March 11, volleys of rockets launched by Tehran’s proxies have struck the sprawling Camp Taji base north of Baghdad, killing two Americans and seriously wounding at least two others.  A retaliatory U.S. strike hit five sites described as weapons depots for the Kataib Hezbollah militia, leaving a number of militiamen and several Iraqi government soldiers dead.  Both sides are threatening further action.

“The renewed hostilities suggest that Iran and its Iraqi proxies were undeterred by the killing of senior Iranian strategist Maj. Gen. Qasem Soleimani and a senior Iraqi militia commander in a U.S. drone strike in early January.  They raise anew two critical dangers for the Trump administration: that Iran will succeed in pushing U.S. forces out of Iraq, or that it will draw the United States into a larger military conflict.

“Those might seem like extraordinary ambitions for the regime of Supreme Leader Ayatollah Ali Khamenei at a time when it is grappling with one of the world’s most severe outbreaks of coronavirus, on top of a severe economic contraction and mounting domestic unrest.  But the ruling ayatollah may see conflict with the United States as the best way out of his internal challenges; after all, the death of Soleimani produced a rare outpouring of nationalist sentiment….

“President Trump may well be tempted to withdraw the 5,000 U.S. troops deployed to fight the Islamic State in Iraq… While this may be prudent in view of the mounting risk of rocket attacks, a full U.S. pullout would hand Iran a major strategic victory.  Having made containment of Tehran’s regional ambitions a pillar of his foreign policy, Mr. Trump would have ensured Iranian dominance in Iraq as well as Syria and Lebanon….

“In all, Mr. Trump faces a perilous Middle Eastern morass that is mostly of his own making.  His reckless decision to scrap the nuclear deal with Iran and renew economic warfare on its regime has led directly to an unnecessary crisis he must now manage amid the covid-19 pandemic.”

Syria, Russia, Turkey: There has been little news the past week, which ordinarily would be a good thing, but part of it is the news agencies are stretched a little thin, I imagine.  Russia and Turkey were forced to cut short their first joint patrol along the M4 highway linking Syria’s east and west due to rebel provocations, but the latest ceasefire is largely holding.

Israel: There were nearly 700 confirmed coronavirus cases in Israel as of Thursday afternoon and Prime Minister Benjamin Netanyahu tightened a national stay-at-home policy, saying police would now enforce restrictions aimed at halting the spread.  Israelis would still be allowed to shop for food and medicine.  Israel has already banned the entry of foreigners into the country.  [There are 47 reported cases among Palestinians in the occupied West Bank.]

Netanyahu pointed a finger at Israel’s ultra-Orthodox Jewish community and Arab minority, as civil rights activists petitioned for a freeze in cellphone monitoring of potential virus carriers put into place this week under emergency regulations.

The thing is, Netanyahu’s rival, Benny Gantz, was tabbed this week by Israel’s president to try to form a new government.  There has been talk of establishing a unity government, but no signs of progress as yet.

Gantz and his backers have more seats, 61, than Netanyahu’s bloc of 58, in the 120-member Knessetwith Netanyahu proposing a national unity administration with Netanyahu serving as premier for two years and then Gantz serving the next two.

Gantz has always talked of a united government, he just wants Netanyahu out of the picture for good.  He has less than four weeks to get the job done, though this process could be extended two more weeks.

China: A Chinese report into the coronavirus death of a young doctor reprimanded by police for “spreading rumors” when he tried to raise the alarm about the disease drew quick criticism online after it merely suggested the reprimand be withdrawn.  The investigative team also denounced the “anti-establishment” labels of “hero” and “awakener” that some had given to Dr. Li Wenliang, who became one of the crisis’ most visible figures in the early days of the outbreak when he tried to sound the alarm in the central city of Wuhan.  News of his death at 34 in early February triggered an outpouring of outrage and sadness in China.

The report, issued by China’s top anti-corruption agency, simply recommended that Wuhan authorities need to find the police who had reprimanded Li and hold them accountable.  That was it.

So no surprise that China announced on Tuesday that it would expel American journalists working for the New York Times, the Wall Street Journal and the Washington Post.  It also demanded that those outlets, as well as the Voice of America and Time magazine, provide the Chinese government with detailed information about their operations.

The move, made by China’s Ministry of Foreign Affairs, came weeks after the Trump administration limited to 100 the number of Chinese citizens who can work in the United States for five state-run Chinese news organizations that are widely considered propaganda outlets.

The journalists working for the three news organizations, whose press credentials are due to expire this year, were told to hand back those credentials within ten days.

The Ministry of Foreign Affairs said the decisions “are entirely necessary and reciprocal countermeasures that China is compelled to take in response to the unreasonable oppression the Chinese media organizations experience in the U.S.

The statement also accused the U.S. of “exclusively targeting Chinese media organizations,” adding that it was “driven by a Cold War mentality.”

It’s been foreign news organizations, such as the above three, who aggressively reported on the coronavirus epidemic, including in its earliest days, when it was just in Hubei province and the Chinese government was minimizing the severity.  The same news organizations have also been reporting on other issues such as the mass internment of Muslims in the Xinjiang region.

Orville Schell, a longtime expert on China who is now at the Asia Society, told the New York Times: “There’s been nothing on such a grand scale.”

“Throwing out the big papers is one notch below closing down an embassy,” he added.  “It’s a devastatingly dangerous spiral that we’re falling into here.  The already compromised musculature between the two countries is being rent apart.”

More from Walter Russell Mead / Wall Street Journal

“In the past, the Communists contented themselves with preventing people in China from reading what the free press has to say. That is no longer enough. Today, they’re laboring to construct a new Iron Curtain to keep the world from learning what is happening within Chinese borders.

“The saddest aspect of my work as Global View columnist has been documenting the steady decline in the relationship between the U.S. and the People’s Republic of China.  In the past 20 years I have traveled widely across China, participated in seminars and colloquies with Chinese scholars, lectured in Chinese universities, and taught Chinese students on campuses around the world.  China’s rich culture, the brilliance of its thinkers, and the eager curiosity of its students are among the greatest treasures of the human race.  Nothing could improve the world more than a strong U.S.-China partnership.  Nothing is more dangerous for both countries and the world at large than a long and bitter rivalry….

“A relationship’s collapse is rarely the fault of only one partner, and Washington could have managed its China portfolio better over the past decade.  But the heart of the problem is the Chinese Communist Party’s refusal to grow with the times and accept a wider, more humane, and in the end more sustainable vision of its relationship to Chinese society. The party’s compulsion to enforce a backward-looking conformity on a vibrant, educated population pushes it down a path of increasing repression and centralization of power, undermining Beijing’s governance at home and frustrating its drive for respect and acceptance abroad.

“In a system where the party’s wisdom and omnicompetence must always be acknowledged, a culture of sterility and conformism inevitably degrades decision making and, as the world saw in Wuhan, leads to grave errors.  The culture of denial grows denser, as does the party’s fear of independent voices and accurate information.  Such a state, however imposing and powerful it appears, is a prisoner of its fears.  A stronger, more confident government wouldn’t fear criticism from foreign journalists or foreign intellectuals.  China’s Communists are very afraid.

“There is another factor that weakened U.S.-Sino relations.  The financial crisis of 2008-09 led many in China to believe that their system was superior to the apparently exhausted American model, and the course of both the Obama and Trump presidencies has confirmed that analysis.  Blinded in part by their ow