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07/25/2020

For the week 7/20-7/24

[Posted 10:00 PM ET]

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Edition 1,110

After a disastrous performance in an interview with Chris Wallace on Fox News Sunday, filled with lies about everything from the coronavirus to the Democrats’ formal platform, President Trump spent much of the rest of the week backtracking on everything from suddenly deciding wearing a mask was good (as long as it’s not him) to abruptly canceling the Republican National Convention shindig in Jacksonville, shocking the Republican National Committee, which had already spent $millions, among others.

The president also started holding “coronavirus briefings” again, though they were one-man shows, none of his medical experts alongside, explaining that when he last held them they were very successful, with “a lot of people watching” and the “best ratings in the history of cable, in television…”

We were then told, “My administration will stop at nothing to save lives,” while emphasizing the median age of coronavirus victims is 78, and nearly half were in long-term care facilities; the clear implication being “it was their time.”

We were told “America’s youth will act responsibly” in one breath, and that “Things will get worse before they get better” in the next.

Yet “the death rate is looking much better,” saying, incorrectly, that fatalities were down more than 75% since mid-April.

Trump said this week: “I have to protect the American people. There is nothing more important than keeping our people safe.  I care deeply about people around the world…One death is too many, this should have never happened.”

The president hailed his “tremendous moves” shutting down travel from China and the European Union early in the pandemic.

“It’s a nasty horrible disease. It should have never been allowed to escape China.  But it did, and it affected the world, and the world is suffering.”

And, of course, daily we were told, “I have done more in three years than any president in history.”

It was pure helter-skelter.  It was pathetic.

But at least he said in his briefing, Tuesday:

“We are asking everybody that when you are not able to socially distance, wear a mask. Get a mask. Whether you like the mask or not, they have an impact. They will have an effect,” Trump said, reading from prepared remarks.

And he added: “We are imploring young Americans to avoid packed bars and other crowded indoor gatherings. Be safe and be smart.”

Dr. Anthony Fauci told NPR in an interview, “I think we’ve turned the corner on the road of a consistent message.”

Robert Redfield, director of the Centers for Disease Control and Prevention, said he believes the pandemic could be brought under control over the next four to eight weeks if “we could get everybody to wear a mask right now.”  His comments, made Tuesday with the Journal of the American Medical Association, followed an editorial he and others wrote there emphasizing “ample evidence” of asymptomatic spread and highlighting new studies showing how masks help reduce transmission.

But then in appearances outside the White House, Trump didn’t wear a mask.

President Trump’s handling of the coronavirus pandemic has raised doubts about whether he can win in November, amid the surge in cases across the South and West, and he is attempting to deflect blame onto China. 

“Make no mistake. We hold China fully responsible for concealing the virus and unleashing it upon the world. They could have stopped it, they should have stopped it. It would have been very easy to do at the source, when it happened,” the president said the other day.  This was when he added he had no plans to talk to Chinese President Xi Jinping.

Graham Allison, China and weapons expert as well as a professor of government at Harvard University, was among those telling the South China Morning Post the other day that U.S.-China relations are unravelling at an unprecedented speed.

“The remainder of 2020 could pose as severe a test for the U.S. and China as the final five months of 1941 did for the United States and Japan.”

Allison said Japan’s surprise attack on Pearl Harbor on Dec. 7, 1941 – which dragged the U.S. into World War II – had been beyond Washington’s imagination, that “a nation less than one-quarter the size of the U.S. would launch a bolt from the blue against the most powerful nation in the world.”

“But we should remember that when we say something is inconceivable, this is not a claim about what is possible in the world, but rather about what our minds can conceive,” he said.

Much more on the rising Sino-U.S. tensions below.

This coming week is really about the dysfunction in Congress as enhanced unemployment benefit checks that have done a big job in propping up spending expire without congressional action.

Congress returned from recess this week to consider a new relief package, which might have avoided an imminent foreclosure and eviction crisis as moratoriums on mortgage and rent payments run out in many states, but then Republicans under the leadership of Senate Majority Leader Mitch McConnell failed to put anything on the table that would then be the source of negotiations with the Democrats, who passed a House relief package two months ago.

Treasury Secretary Steven Mnuchin did his job, suggesting Congress consider a smaller bill to keep key benefits in place while other details are negotiated, but then both sides dismissed Mnuchin’s plan.

So today, as the enhanced jobless benefits are set to expire, with only next week to wrap up a deal between Senate Republicans and House Democrats before the August recess, McConnell suggested that reaching an agreement could take several weeks, a timeline leaving millions of Americans severely exposed.

This week represented the 18th straight with weekly jobless claims over 1 million and despite all of President Trump’s happy talk on a spectacular third-quarter rebound, the stimulus programs passed in March and April are wearing off and it’s clear layoffs have picked up again.  Small business cannot survive.  Layoffs once thought temporary have become permanent.

But Republican senators are split on the next round of relief, some, like Sen. Ron Johnson (Wis.) not wanting to see another dime spent, while Democrats want to extend the $600 per week enhanced unemployment benefit.

Mnuchin told reporters today, “The president is very focused on getting money quickly to workers right now and the payroll tax (that the White House has abandoned) takes time, so we’ll come back and look at that later.”

The treasury secretary said the decision was made to instead focus on sending another round of stimulus checks to Americans, because that approach would put money in people’s pockets more quickly.

It’s a mess and a lot of it is coming to a head next week, with millions being set adrift. This one is not on the president or Mnuchin, or the Democrats.  It’s on Mitch McConnell.

Covid-19 death tolls (as of tonight)

World…642,617
USA…148,490
Brazil…85,385
UK…45,677
Mexico…42,645
Italy…35,097
India…31,406
France…30,192
Spain…28,432

[Source: worldometers.info]

USA daily death tolls…Sun. 412, Mon. 546, Tues. 1,119, Wed. 1,205, Thurs. 1,150, Fri. 1,141.

Four straight days over 1,000, and the World Health Organization said the last 24 hours saw the highest number of new cases, worldwide, yet…over 284,000.

Covid Bytes

--The race for a vaccine intensified on Monday as three competing laboratories released promising results from early trials in humans.

Two of the vaccine developers – the first, a partnership between Oxford University and the British-Swedish drug maker AstraZeneca; the second, the Chinese company CanSino Biologics – published their early results as peer-reviewed studies in The Lancet, a British medical journal.

A joint venture between the drug giant Pfizer and the German company BioNTech shares results online before peer review, and invited comparisons to the biotech company Moderna, which uses a similar technology.

All the developers that released results Monday said their vaccines had produced strong immune responses with only minor side effects.

--Regional authorities across Spain introduced fresh coronavirus restrictions on Thursday aimed at stamping out a surge in infections that continues to defy efforts at containment and is damaging tourism.  New cases had slowed to a trickle in June, before a nationwide lockdown was lifted, but since then more than 280 clusters have been detected, with wealthy Catalonia the worst affected, leaving hotels largely empty and bars shutting down.  Health ministry data showed 2,615 new cases across Spain on Thursday, compared with a daily average of just 132 cases in June.  In Catalonia (Barcelona), nearly 8,000 cases were diagnosed in the last 14 days.

So now it’s about the borders.  Does France close its own with Spain with the spike? Spanish authorities are pointing out that the majority of the cases in this new surge are asymptomatic and the death rates remain well below that of the peak, partly because new cases are concentrated among younger people.

Today, France advised its citizens not to travel to Catalonia, though the border with Spain remains open, dealing another blow to Spain’s beleaguered tourism sector after Norway announced on Friday that travelers returning from the country would have to undergo a 10-day quarantine.

For its part, France recorded 1,130 new Covid cases in the past 24 hours, in a fresh sign that the rate of infection is accelerating again after the government eased lockdown restrictions.

--The South African Medical Research Council is reporting a “huge discrepancy” between the country’s confirmed Covid-19 deaths and the number of excess deaths from natural causes, while Africa’s top health official says the virus is spreading there “like wildfire.”

The new report, which came out late Wednesday, shows more than 17,000 excess deaths in South Africa from May 6 to July 14 as compared to data from the past two years, while confirmed Covid-19 deaths are 5,940.

“In the past weeks, the numbers have shown a relentless increase – by the second week of July, there were 59% more deaths from natural causes than would have been expected based on historical data,” the report says.

The council’s president, Glenda Gray, said in a statement the excess deaths could be attributed to Covid-19 as well as to other widespread diseases such as HIV and tuberculosis as many health resources are redirected toward the pandemic.

Meanwhile, some South Africans are thought to be avoiding health facilities as fears of the new virus spread and public hospitals are overwhelmed.

“In all countries with Covid-19, we are seeing this,” Health Minister Zweli Mkhize said of the report.

South Africa is “very concerning,” the director of the Africa Centers for Disease Control and Prevention, John Nkengasong, told reporters Thursday.  [Associated Press]

The other day I saw a truly horrifying story from the BBC on the situation in the country and the hospitals trying to deal with the crisis.  Just disgusting in the poorer areas.  You can see why many are opting to die at home.  Testing remains limited by shortages of supplies.

“Community deaths, we just don’t know how countries are capturing that,” Nkengasong said.

--Want some potentially good news?  As a story in the Wall Street Journal pointed out:

“From Argentina to South Africa to New Zealand, countries in the Southern Hemisphere are reporting far lower numbers of influenza and other seasonal respiratory viral infections this year.  In some countries, the flu seems to have all but disappeared, a surprise silver lining that health experts attribute to measures to corral the coronavirus, like mask use and restrictions on air travel.

“The decline could be good news for health officials in the U.S. and Europe worried about a possible second wave of coronavirus infections this fall and winter.  Not only is the coronavirus more likely to spread as people gather indoors during cold weather, but it is also flu season, meaning hospitals could get a double whammy of influenza and Covid-19 patients, both of whom sometimes require intensive-care treatment.”

--Florida teachers sued Monday to block what they call the “reckless and unsafe reopening” of public-school campuses for face-to-face instruction.  The Florida Education Assn. lawsuit argues that reopening this fall would put students and school employees at risk – as well as accelerate the spread of the coronavirus.

“Governor DeSantis needs a reality check, and we are attempting to provide one,” said FEA President Fedrick Ingram.  “The governor needs to accept the reality of the situation here in Florida, where the virus is surging out of control.”

“Everyone wants schools to reopen, but we don’t want to begin in-person teaching, face an explosion of cases and sickness, then be forced to return to distance learning,” Ingram added.

--Dr. Scott Gottlieb / Wall Street Journal

“The Covid epidemic in the South has strained the country’s capacity to keep up with the demand for testing. Six months into the pandemic, we still don’t have enough supplies, equipment or lab services. There’s no national plan for effectively allocating the capacity that does exist or providing a sufficient surge where it’s needed suddenly.

“The system is overwhelmed.  Major commercial labs are reporting turnaround times of around seven days, and patients say it’s often longer. Without a confirmed diagnosis, many infected patients don’t isolate themselves or get treatments.

“The intelligence community has warned for years that pandemic disease was a national-security threat on par with that of terrorism, weapons of mass destruction and cyberattacks.  It’s essential to increase American capacity to detect these events, contain them, and manufacture reliable countermeasures….

“The country is betting on vaccines that look increasingly probable based on clinical data but are unlikely to be available for widespread distribution this year.  Meanwhile, therapeutic antibodies, which are in advanced development by four different manufacturers, could serve as both a treatment and a prophylaxis to prevent infection in those at highest risk.  But there isn’t enough U.S. manufacturing capacity to produce these drugs in the quantities needed to use them as a stopgap if a vaccine is delayed, and it’s probably too late to ramp supply significantly for this year.

“These gaps highlight the need to treat health security with the same gravity as other threats of national importance. We need to invest in a domestic supply chain for diagnostic testing equipment and laboratory services and develop some mothballed capacity to handle a surge in demand….

“Finally, we need incentives to bring manufacturing capacity back to the U.S.  We need the ability to make large quantities of vaccines and biologics domestically. The ability of some nations to respond more effectively than the U.S. has created a public-health, economic and security risk.  A pandemic has long been feared, and the U.S. wasn’t ready when it finally arrived.”

--Henry I. Miller / Wall Street Journal

[Miller is a physician and molecular biologist, a senior fellow at the Pacific Research Institute, and a founding director of the Office of Biotechnology at the FDA]

“It’s good news that the death rate from Covid-19 has trended dramatically downward since April, even as the number of new cases is surging. But it’s far from the whole story.

“Unlike common colds caused by other coronaviruses, Covid-19 is more than a transient, self-limited respiratory infection. There have been numerous reports of nonrespiratory manifestations, including loss of smell or taste, confusion and cognitive impairments, fainting, sudden muscle weakness or paralysis, seizures, ischemic strokes, kidney damage, abnormal blood-coagulation tests, transmission to an unborn child via the placenta, and a severe (though rare) pediatric inflammatory syndrome. Recovery is sometimes incomplete, with some patients experiencing long-term adverse effects that resemble a condition variously known as myalgic encephalomyelitis or chronic fatigue syndrome….

“People with CFS are often incapable of performing ordinary activities and sometimes become completely debilitated, unable to get out of bed.  Manifestations of the syndrome can persist for years….

“We still need to suppress and mitigate Covid-19 aggressively. The fewer new cases, the fewer lingering illnesses there will be, with all their attendant misery and expense.

“Second, the persistence of debilitating symptoms argues strongly against ‘human challenge trials’ of vaccines, in which the infectious virus is intentionally administered to volunteers, some of whom would receive a trial vaccine while others get a placebo. In the absence of very effective drugs to treat Covid-19, such studies would be unethical.”

Remember this last bit. It’s going to be coming into play with some of the Phase III trials we’ll be hearing about on the vaccine front.

--British Prime Minister Boris Johnson said of opponents of vaccination, so called anti-vaxxers:

“There’s all these anti-vaxxers now,” Johnson told medical workers in London.  “They are nuts, they are nuts.”

--Lastly, the tragic story of the thirteen nuns at a Roman Catholic convent in Livonia, Michigan, emerged this week…22% of the residents at the Felician Sisters of North America succumbing to Covid-19.  Seventeen nuns recovered.

According to the Global Sisters Report, an outlet of the National Catholic Reporter publishing company, the 13 deaths, ranging in age from 69 to 99, “may be the worst loss of life to a community of religious women since the 1918 influenza pandemic.”

Trump World

--As noted above, President Trump cancelled the Republican National Convention, blaming the coronavirus “flare-up.”

“It’s not the right time for that,” he said on Thursday, adding that he would still give a convention speech in a different form.

Part of the convention will go ahead in North Carolina, the original site before he shifted the ‘good stuff’ to Jacksonville.  Now Trump will be formally nominated in Charlotte, Aug. 24.

“It’s a different world, and it will be for a little while,” the president said, adding that he “just felt it was wrong” to put potentially tens of thousands of attendees at risk.

“We didn’t want to take any chances,” he said at the briefing.  “We have to be vigilant.  We have to be careful and set an example.”

Well he hardly set an example back in June in Tulsa and Phoenix.

Jacksonville’s sheriff had warned this week his city was not ready for a convention, cases spiking in his city.

But to go back to June 2, when Trump tweeted that he was being denied the ability to hold the convention in Charlotte by Democratic Gov. Roy Cooper, Vice President Pence added in response: “There are states around the country…we think of Texas, we think of Florida, Georgia – the last two states I visited last week that have made tremendous progress on reopening their communities and reopening their economies.”

Ah, not quite, Mr. Vice President.

--President Trump in his Wednesday briefing blamed the dramatic uptick in coronavirus cases on the nationwide protests over police brutality, summer holidays, a “substantial increase in travel” and migrants crossing the U.S.-Mexico border, even though his own advisers have also attributed the surge to some states’ early reopenings.

As Trump spoke Wednesday evening, one of his own top health experts, Dr. Deborah Birx, told Fox News that some states opening too early was a prime factor behind the renewed outbreak.

“This was an event that we think can be traced to Memorial Day and opening up and people traveling again and being on vacations,” the White House coronavirus task force coordinator said.

Trump said his administration “didn’t anticipate” the Covid-19 outbreak across the country’s Sun Belt, including Florida, Texas, Georgia and Arizona, but he failed to acknowledge that those states were among the first to follow his lead to lift restrictions.

--President Trump sent federal troops into Portland, Oregon, after weeks of anti-racism protests, and this week he said he planned to send more law enforcement personnel to other major cities, the mayors of which are not requesting them.  Senior members of previous Republican administrations are now condemning the moves.

Michael Chertoff, the former director of homeland security under George W. Bush, said in an interview that the department appears to be overstepping its mission, and that Trump’s threats to send law enforcement into Democrat-run cities is “very problematic” and “very unsettling.”

“In my view, this is damaging to the department,” Chertoff told the Washington Post.  “It undermines the credibility of the department’s principal mission.”

As the Post’s Greg Sargent notes: “With imagery mounting of militarized law enforcement battling protesters even as Trump threatens to send in more agents while running ads against Joe Biden featuring this exact imagery, Trump’s senior officials must now place a legal and substantive gloss on what’s happening.

“So Chad Wolf, the acting secretary of homeland security, is claiming that the law authorizes federal agents to protect federal property – but also to ‘conduct investigations’ of alleged threats to property and officers to the point of detaining protesters far from federal property,” even as Oregon officials oppose his dispatching of law enforcement into Portland.

When Trump then threatened to send law enforcement into Chicago, Greg Sargent added, “Wolf is claiming that this will be about battling drugs and urban crime. That’s meant to suggest this is not another federal crackdown on protests, as if that validates overruling Chicago officials who oppose this.”

Chertoff said DHS is departing from its mission.

“While it’s appropriate for DHS to protect federal property, that is not an excuse to range more widely in a city and to conduct police operations, particularly if local authorities have not requested federal assistance,” Chertoff told Sargent. “That’s our constitutional system.”

Chertoff suggested that DHS appears to be allowing its mission to shade into “a general roving opportunity to conduct police operations,” rather than keeping it “limited to federal interests,” in defiance of local officials who are being “overruled.”

And the fact that Trump is explicitly singling out cities “run by Democrats” makes his moves even worse, Chertoff suggested.

“Essentially, he’s suggesting this is a political maneuver…suggesting that it’s going to be a tool of political activity is very unsettling.”

“It’s very problematic legally as well as morally,” Chertoff added. 

Tom Ridge, another homeland security secretary under Bush said DHS’s mission is to protect against “global terrorism” and was “not established to be the president’s personal militia.”

“It would be a cold day in hell before I would consent to a unilateral, uninvited intervention into one of my cities,” Ridge told Michael Smerconish.

President Trump tweeted:

“Recently watched failed RINO Tom Ridge, former head of Homeland Security, trying to justify his sudden love of the Radical Left Mayor of Portland, who last night was booed & shouted out of existence by the agitators & anarchists.  Love watching pathetic Never Trumpers squirm!”

Mr. President, Tom Ridge was a Vietnam war hero.  You?  You’re the one squirming today.

Editorial / New York Post

“As President Trump talks of sending in federal law-enforcers to help Chicago, New York and other cities deal with surging crime, we can’t help but think of a line from Mayor Ed Koch after he lost to Mayor David Dinkins: ‘The people have spoken, and they must be punished.’

“Meaning: The public needs to experience the leadership it selects.

“New Yorkers elected Bill de Blasio – twice – and also the hyper-progressive state and city legislators who’ve so worked to provide comfort and aid to local lawbreakers.  Now they’re learning their lesson (we hope).

“That’s how democracy works, and the alternatives are much, much worse.

“Federal authorities have a right and a duty to step in under certain circumstances – notably, as in Portland right now, to protect federal property.

“Indeed, as Andy McCarthy notes, if the feds didn’t have a clear right to enforce federal laws everywhere, there’d be no need to declare a ‘sanctuary city’: Mayors like de Blasio could simply order the feds out.

“But federal help in enforcing local laws is another matter.  As a matter of practicality, it can only work when both sides cooperate, as Long Island authorities are cooperating with the Trump Justice Department to take out the MS-13 monsters.

“It’s another story when local officials lack the will to face down local criminals: The feds can’t give the likes of de Blasio or Chicago’s Lori Lightfoot or Portland’s Ted Wheeler the spine implants they need….

“Four years of David Dinkins led the people of New York to elect Rudy Giuliani, with a mandate to bring crime down.  That produced the most remarkable gains in public order in living memory.

“There’s no guarantee de Blasio’s replacement will be as great an improvement, but it’s up to the people to decide.

“Thanks for thinking of New York, Mr. President, but the city needs to solve its own problems.”

--Amid the growing fear Donald Trump will try to interfere with the Nov. 3 election or refuse to accept its outcome, Democrats are mounting an extensive voter protection effort, hiring directors in 19 key states to lead more comprehensive operations than in past cycles while filing a record number of lawsuits ahead of the election trying to make voting easier.  Thousands of election monitors and lawyers will be mobilized across the country on Election Day.

Republicans say that while they are making routine preparations for recounts and voting irregularities, they are more focused on combating efforts to expand mail-in balloting.

President Trump has cast doubt on the legitimacy of such ballots, which have been used in far greater numbers in primary elections amid the pandemic.

Democrats are bracing for a “nightmare scenario” in which Trump is leading the in-person vote count in battleground states on election night but complains the contest is being stolen from him in ensuing days as mail-in ballots get counted.

--Inexplicably, President Trump sent well wishes to accused child abuser – and close friend of Jeffrey Epstein – Ghislaine Maxwell on Tuesday but said he has not been following her case.

“I wish her well,” Trump said during a news conference otherwise devoted to Covid-19.

In raising the Maxwell case with Trump, a reporter asked: “Do you feel she’s going to turn in powerful men?”

Trump said he had met Maxwell “numerous times” over the years because he lived in Palm Beach.  But he said he knows nothing about the charges against her, including an allegation that she arranged an assignation between a young girl and Prince Andrew.

“I haven’t been following it too much,” Trump said.  “I just wish her well, frankly.”

As for the British prince, “whatever it is, I don’t know the situation with Prince Andrew,” Trump said.  “I just don’t know.  I’m not aware of it.”

--A federal New York judge ordered Thursday that Michael Cohen, President Trump’s former fixer and personal attorney, must be released from prison because the Department of Justice threw him back behind bars as an act of “retaliation” over his forthcoming tell-all book about the president.

Manhattan Federal Court Judge Alvin Hellerstein fumed at a Justice Department attorney who struggled to explain why Cohen was returned into custody earlier this month after objecting to home confinement conditions that barred him from writing a book about Trump, speaking to journalists or using social media.

“I’ve never seen such a clause. In 21 years of being a judge…I’ve never seen such a clause,” Hellerstein said.  “How can I take any other inference than that it was retaliatory?”

Cohen was released Friday afternoon.

--Trump tweets:

“I spoke to highly respected (Chairman) Senator @JimInhofe, who has informed me that he WILL NOT be changing the names of our great Military Bases and Forts, places from which we won two World Wars (and more!).  Like me, Jim is not a believer in ‘Cancel Culture’.”

“Obama, who wouldn’t even endorse Biden until everyone else was out of the primaries (and even then waited a long time!), is now making a commercial of support.  Remember, I wouldn’t even be here if it weren’t for them. I wouldn’t be President.  They did a terrible job!”

“The Democrats have stated strongly that they won’t approve a Payroll Tax Cut (too bad!). It would be great for workers. The Republicans, therefore, didn’t want to ask for it. Dems, as usual, are hurting the working men and women of our Country!”

[Ed. I said months ago a payroll tax cut was just about the dumbest idea for today.]

“Mail-In Voting, unless changed by the courts, will lead to the most CORRUPT ELECTION in our Nation’s History! #RIGGEDELECTION”

“Strong Stock Market Numbers.  You want to see them dive? Vote for the Radical Left with their BIG Tax Hikes!”

“You will never hear this on the Fake news concerning the China Virus, but by comparison to most other countries, who are suffering greatly, we are doing very well – and we have done things that few other countries could have done!”

[Ed. Indeed we have.  We have died in waves like few others!]

“Looking forward to live sports, but any time I witness a player kneeling during the National Anthem, a sign of great disrespect for our Country and our Flag, the game is over for me!”

[Ed. I will shrug and reach for a beer.]

“We are United in our effort to defeat the Invisible China Virus, and many people say that it is Patriotic to wear a face mask when you can’t socially distance. There is nobody more Patriotic than me, your favorite President!”

“Thank you for the good reviews and comments on my interview with Chris Wallace of @FoxNews. We may have set a record for doing such an interview in the heat.  It was 100 degrees, making things very interesting!”

--Finally, just a few snippets from said interview with Mr. Wallace, host of “Fox News Sunday.”

On his past claims that Covid-19 will simply “disappear,” Trump told Wallace, “I’ll be right eventually.  You know, I said, ‘It’s going to disappear.’  I’ll say it again.”

On the issue of masks, Trump said he didn’t agree with a national mask mandate, saying people should have a “certain freedom.”

The president – as he did before his surprise victory over Hillary Clinton in 2016 – refused to say whether he would challenge the results of the election should he lose to Joe Biden.

Claiming that “mail-in voting is going to rig the election,” Trump repeated his mantra from 2016 that he can’t be sure he will accept the results of the election: “I’m not going to just say yes.  I’m not going to say no, and I didn’t last time either.”

Trump also claimed the coronavirus death rate is going down, despite the fact the rate of deaths is accelerating.

“I think we have one of the lowest mortality rates in the world,” Trump falsely asserted.

“It’s not true, sir,” Wallace countered.  “We had 900 deaths on a single day just this week.”

Trump declined to take responsibility for Covid problems, saying, “Look, I take responsibility, always, for everything because it’s ultimately my job, too.  I have to get everybody in line… Some governors have done well, some governors have done poorly.”

Trump again attributed the rise in cases to increased testing, though the increased rate of infections far outpaces the increased rate of testing.  Wallace explained to Trump that the number of tests has increased by 37 percent but the number of cases has shot up by 194 percent. Trump replied, “Many of those cases are young people that would heal in a day. They have the sniffles and we put it down as a test.  Many of them – don’t forget, I guess it’s like 99.7 percent, people are going to get better and [in] many cases, they’re going to get better very quickly.”

Trump denied his staff organized attacks on Anthony Fauci but said his administration’s top doctor has “made some mistakes” and is “a little bit of an alarmist.”

Trump said he would block changing the names of forts dedicated to Confederate generals such as Braxton Bragg.

“I don’t care what the military says,” Trump said. “I’m supposed to make the decision.”

The president said people who want to fly Confederate battle flags “love their flag,” and “it represents the South; they like the South.”

And Trump said that Fox News – once his favorite network – has “changed a lot” since the days when Roger Ailes ran it, in part because it interviews too many Democrats.

Chris Wallace fact-checked Trump frequently during the interview, including the president’s claim that Biden advocated “defunding” the police.  Biden has said he does not support defunding or abolishing the police but that he favors redirecting some law enforcement funding to other programs.

Wall Street and the Economy

First, on the data front, we had very strong housing numbers for June.  Existing home sales in the month rose 20.7% in the month over May, the largest monthly gain ever,* but were still down 11.3% vs. a year ago.  The median home price rose 3.5% from June of last year to $295,300.

*I was furious with President Trump because in his briefings Wednesday and Thursday, he crowed that home “prices” were up 20.7%, not “sales.”

June new home sales were also up big, 13.8% over May, the biggest monthly increase since 2007.

But as alluded to above, we took a major step back when the weekly initial jobless claim figure came in at 1.416 million, an increase over last week’s revised 1.307 million, the first increase since the peak four months ago, and the 18th straight week over 1 million.  The figure is a reflection of renewed shutdowns or a pause in reopening across the coronavirus hot spots.  In two weeks we will get the July jobs report and it’s not going to be to the president’s liking.

Justin Lahart / Wall Street Journal

“The claims report was just the latest sign that the recovery in jobs from the spring lows has begun to fade. Data from scheduling-software company Homebase, for example, show that gains in the number of hourly employees working at restaurants, retailers and other small businesses stalled out this month. Similarly, data from Kronos, a workforce management software company, shows that growth in work shifts has slowed this month. Experimental weekly data from the Census Bureau shows there has been a marked increase in the number of Americans who say they have experienced lost employment income.

“The claims report is also notable because last week was the so-called reference week for the July employment report, the pay period that the Labor Department bases its closely watched jobs numbers on….

“At the very least, the evidence suggests that any job gains in July will be much more muted than in June, with the potential for the economy to have actually shed jobs.”

Economist Mark Zandi and others are now coming around to this conclusion.

With the stimulus programs beginning to run off, unless Congress acts immediately, bankruptcies in retail, restaurants, bars will begin cascading.  And there’s the issue of mortgage forbearance and rent forgiveness that is running off end of the month in many states.  The stories that are to come will be heartbreaking.

CEOs in America are less optimistic than they were just 4-6 weeks ago, before the renewed surge in Covid-19 numbers across some key states. The recovery is losing momentum. 

From July 5-23, the daily TSA checkpoint travel numbers have stalled at 22% to 28% of 2019 levels, after a steady climb off the April low of 5%.  As I discuss below, the airlines, and the travel and leisure industry in general, are noticeably glum.

We had our shot at a full recovery and we blew it.  As Delta Air Lines CEO Ed Bastian said, “The reality is the politicization of masks and the virus has caused a lot of frustrations… The more stringent and compliant we are, the faster we’ll be through this.  Masks and hygiene and distance are the keys.  You see it around the world. It really is about people taking care of each other.”

But at a key time in our nation’s history, we didn’t and we are paying a severe price.

Europe and Asia

We had the flash PMI readings for July for the eurozone (EA19) and the composite came in at 54.8 vs. 48.5 in June, a 25-month high.  [50 being the dividing line between growth and contraction.  Data courtesy of IHS Markit.]

Manufacturing was 51.1 vs. 47.4, a 19-month high; services 55.1 vs. 48.3, a 25-mo. high.

For Germany, the flash manufacturing reading for this month was 50.0 vs. 45.2, a 19-mo. high; services at 56.7 vs. 47.7, a 30-mo. high.

France reported a flash reading on manufacturing for July of 52.0 vs. 52.3; services 57.8 vs. 50.7.

The UK had a flash manufacturing PMI of 53.6 vs. 50.1; services 56.6 vs. 47.1, a 60-month high!

Yes, Europe benefited from the easing of lockdown measures.  But where now?

Chris Williamson / IHS Markit

“Companies across the euro area reported an encouraging start to the third quarter, with output growing at the fastest rate for just over two years in July as lockdowns continued to ease and economies reopened.  Demand also showed signs of reviving, helping curb the pace of job losses.

“The data add to signs that the economy should see a strong rebound after the unprecedented collapse in the second quarter.

“However, while the survey’s output measures hint at an initial V-shaped recovery, other indicators such as backlogs of work and employment warn of downside risks to the outlook.

“The concern is that the recovery could falter after this initial revival.  Firms continue to reduce headcounts to a worrying degree, with many worried that underlying demand is insufficient to sustain the recent improvement in output. Demand needs to continue to recover in coming months, but the fear is that increased unemployment and damaged balance sheets, plus the need for ongoing social distancing, are likely to hamper the recovery.”

Separately, Eurostat released the government debt to GDP figures for the first quarter.  For the EA19 it rose to 86.3% from 84.1% in the fourth quarter.

Germany 61.3%, France 101.2%, Italy 137.6%, Spain 98.8%, Netherlands 49.5%, and Greece 176.7%.

The UK is at 84.7%.

But the big story on the week was that after four days of acrimonious negotiations in Brussels, European Union leaders agreed on an unprecedented stimulus package worth 750 billion euros ($860 billion) to pull their economies out of the worst recession in memory as well as tighten the financial bonds holding the 27 nations together.

The agreement, reached in the early hours of Tuesday, represented a victory for German Chancellor Angela Merkel and French President Emmanuel Macron, who had drafted an early outline in May. The emergency fund will give out 390 billion euros of grants and 360bn euros of low-interest loans.

Almost a third of the funds are earmarked for fighting climate change and, together with the bloc’s next 1 trillion-euro, seven-year budget, will constitute the biggest green stimulus package in history.

The emergency funds will not only unleash critical financial support for the southern European economies hit hardest by the virus (Italy and Spain), but serve as validation the bloc can work together to help members in need.

“I am very relieved,” Merkel said.  “We have come up with a response to the biggest crisis the EU has faced.”

Italy will be the biggest beneficiary, with the expectation of about 80bn euros in grants and 125bn in loans.

Brexit: The EU’s chief Brexit negotiator, Michel Barnier, said Britain’s refusal to compromise on fisheries and level playing field guarantees of fair competition have made a trade agreement unlikely. Speaking at the end of a round of talks in London, Barnier said that although there was some progress in certain areas there was none on the key issue of a level playing field on state aid.

“By its current refusal to commit to conditions of open and fair competition and to a balanced agreement on fisheries, the UK makes a trade agreement, at this point, unlikely.”

Britain’s chief negotiator David Frost blamed the EU, asserting that its proposals did not respect the red lines Boris Johnson identified in a meeting with the presidents of the EU institutions last month.

“We have always been clear that our principles in these areas are not simple negotiating positions but expressions of the reality that we will be a fully independent country at the end of the transition period,” Frost said.

Frost said the EU had listened to Britain’s concerns about the role of the European Court of Justice in any future agreement and Britain has dropped its demand for a complex suite of separate agreements like those the EU has with Switzerland.

However, the issue of state aid remains a stumbling block, and Mr. Barnier complained on Thursday that Britain had not yet published details of the state aid regime it plans to introduce from January next year.

“We have no visibility on the UK’s intention on its future domestic subsidy control regime.  We respect the UK political debate but the time for answers is quickly running out,” he said.

Turning to Asia…nothing on the data front from China.

In Japan, the flash July PMI figures revealed just modest improvement over June.  The flash composite was 43.9 vs. 40.8 in June, with manufacturing at 41.2 vs. 32.3, and services at 45.2 vs. 45.0.  Still recessionary, and second-quarter GDP is expected to be down about 20%.

Japan’s exports in June suffered a double-digit decline for the fourth month in a row as the pandemic continued to take a heavy toll on demand.  U.S.-bound Japanese shipments nearly halved again due to plunging demand for cars and auto parts, while exports to China remained weak.

The Ministry of Finance data revealed exports plummeted 26.2% in June from a year earlier, a larger decline than expected by economists.  This followed a 28.3% fall in May – the worst downturn since September 2009.

Shipments to the U.S. – Japan’s key market – dived 46.6%, due to a 63.3% decline in shipments of automobiles, 56% drop in airplane engines and a 58.3% fall in car parts.

Exports to China fell 0.2% in June. Shipments to Asia declined 15.3% and to the EU 28.4%.

Reflecting weak demand and declining oil prices (vs. a year ago), imports fell 14.4% in the year to June.

Street Bytes

--With rising tensions between the U.S. and China, and troubles with some tech stocks, like Intel, the Dow Jones and S&P 500 had their first losing week in four, the Dow losing 0.8% to 26469, while the S&P fell 0.3%.  Nasdaq had its second straight losing week, down 1.3%.

Next week, earnings from Amazon, Apple, Alphabet and Facebook.

--U.S. Treasury Yields

6-mo. 0.13%  2-yr. 0.15%  10-yr. 0.58%  30-yr. 1.23%

Lowest weekly close on the 10-year, ever.

The yield on the Italian 10-year, despite the massive debt to GDP ratio, is now 0.99%, owing to approval of the EU rescue package and all the stimulus (bond buying) from the European Central Bank.  The Greek 10-year is at 1.05%!

--Oil closed at $41.34, highest weekly close since early March.  But four straight weeks at $40-$41.

--Chevron Corp. agreed to buy Noble Energy Inc. for about $5 billion in shares as the oil giant looks to beef up amid the wreckage of the worst-ever crude oil price crash.

The takeover is the industry’s first since the coronavirus triggered a severe slump and the largest since Occidental Petroleum outbid Chevron to acquire Anadarko Petroleum Corp. for $37 billion last year.

The deal will grow Chevron’s shale presence in both the Permian Basin, once the main driver of the U.S. shale boom but now experiencing a sharp reduction in drilling, and the Denver-Julesburg Basin in Colorado.  The company’s proved reserves will increase by about 18% over what was reported end of 2019.  The deal also gives Chevron a presence in the eastern Mediterranean by adding a large field off the coast of Israel.

--Oilfield services giant Schlumberger NV, on the other hand, outlined plans for deeper spending cuts after recording a $3.7 billion charge and a second straight quarterly loss; the company announcing it would be reducing its workforce by more than 21,000 employees, or a fifth of its workforce.

--Safe haven gold hit $1,900 today, closing at that level, the first time since 2011, as the worsening U.S.-China row added to fears over the hit to a global economy already reeling from the pandemic.

--The airlines continue to be at the forefront of the Covid-19 story and this week saw earnings reports from most of the biggies.

United Airlines warned on Tuesday that travel demand will remain suppressed until there is a widely accepted treatment or vaccine.  United, which is not blocking middle seats, plans to fly about 35% of its 2019 summer schedule in the third quarter and is forecasting a load factor of around 45% in July.  Its planes flew about one-third full in the second quarter.

CEO Scott Kirby told investors: “The second quarter of 2020 was historic for the airline industry for all the wrong reasons.  At the beginning of April, we saw the sharpest, deepest drop in demand history, far worse than 9/11 or the Great Recession.” 

Kirby added that then “just as optimism about a recovery was beginning to build, we watched demand fade once again as Covid-19 spiked.”

United, which is more exposed than its peers to hard-hit international travel, reported an adjusted net loss of $2.6 billion for the June quarter, as revenue dropped 87% to $1.475 billion.

United had $15.2 billion in liquidity as of July 20 and reiterated its forecast for liquidity to top $18 billion at the end of September as it taps additional capital.  The airline burned through about $40 million per day in the second quarter but sees that slowing to $25 million in the third quarter as it matches its flight schedule to demand.

The setback does not bode well for airline jobs in the fall when the government’s stimulus package expires.  To avoid furloughs, airlines have rolled out a number of packages to encourage employees to leave voluntarily.  Chicago-based United said more than 6,000 employees had opted for such packages, but this is after sending 36,000 notices of potential furloughs come October.  You do the math.

Airlines are not counting on a fresh round of federal aid.  Delta Air Lines and Southwest, which offered cash buyouts, have reported strong employee response for voluntary departments, meaning they could have a less costly workforce on the other side of the crisis since union contracts require airlines to furlough junior workers first.

--Southwest Airlines and American Airlines each slowed their cash burn over the second quarter but warned that demand had stalled as Covid-19 cases spike.

Southwest said it was rethinking the number of flights it had planned to add in August and September.  Analysts have forecast that Southwest would weather the pandemic better than larger U.S. carriers thanks to its domestic focus and lower-cost structure.  LUV said its average core cash burn had nearly halved to $16 million a day from $30 million in April as revenue improved.  But it estimated the burn rate to be $18 million in July, rising to an average of $23 million per day in the third quarter.

American said its second-quarter cash burn rate was about $55 million per day (yikes), lower than its forecast of $70 million, though June was down to $30 million from nearly $100 million in April.

Southwest had $15.5 billion in cash at the end of June and American $10.2 billion. Both, like United, have warned of furloughs in the fall, though Southwest said 16,900 employees had volunteered for extended leaves or early retirements, which it expects to result in more than $400 million in lower costs in the fourth quarter.  Excluding items, Southwest posted a $1.5 billion loss in the quarter, with total operating revenue falling nearly 83% to $1.01 billion.

At American the net loss ex-items was $3.4 billion, while operating revenue plunged 86% to $1.62 billion vs. $11.96bn a year earlier.

American expects a 60% decline in system capacity in Q3 compared with last year.  The airline did say, however, that it “totally” plans to take delivery of Boeing 737 MAX aircraft and is currently discussing the timing of when the jets will arrive into the airline’s fleet.

American said it hopes to finalize financing on 17 MAX aircraft earmarked for delivery this year, and it plans to take its full order of 100 jets over time.

--The number of daily passenger flights in China has rebounded to 80% of pre-coronavirus levels, China’s aviation regulator said on Friday.  On July 23, Chinese airlines operated 13,059 passenger flights.  This is a sign of hope.

--Intel Corp. said on Thursday its new 7-nanometer chip technology was six months behind schedule, sending its shares plummeting 16%. The new delays are a major blow for the Santa Clara, Calif.-based chipmaker, which struggled with years of delays for its current 10-nanometer chips.

Intel’s delays extend the lead in the smaller, faster chip technology held by Taiwan Semiconductor Manufacturing Co. and will likely benefit rivals Advanced Micro Devices and Nvidia Corp., which outsource their manufacturing to TSMC.

Intel CFO George Davis said in an interview that Intel had discovered a “critical defect mode” in part of the 7nm chipmaking process technology and was making adjustments.

Otherwise, Intel updated its full-year 2020 revenue guidance to $75 billion, ahead of current estimates.  For the second quarter ended in June, Intel said overall revenue and adjusted profits were $19.73 billion and $1.23 per share, compared with analysts’ estimates of $18.55bn and $1.11, according to Refinitiv.  Sales for PC chips were $9.5 billion, while revenue for its data center segment was $7.1 billion.

Nvidia, which designs but does not make its own chips, earlier this month overtook Intel as the most valuable U.S. chip supplier, thanks to strong sales to data centers using Nvidia chips for artificial intelligence work.  In the PC market, AMD is rolling out new PC chips that analysts expect to be powered by TSMC’s manufacturing processes.

So Intel is taking fire from all sides.

--Multiple states are investigating Apple Inc. for potentially deceiving consumers, according to a March document obtained by a tech watchdog group.  The Texas attorney general may sue Apple for violating the state’s deceptive trade practices law in connection with the multi-state investigation, according to a document obtained by the Tech Transparency Project. But the document provided few details.

Apple has faced class-action lawsuits from consumers alleging that it deceived them about slowing the performance of iPhones with aging batteries.  Apple is also facing lawsuits alleging that it knew and concealed issues with the keyboards on its MacBook laptops.

Separately, Apple and Nike face growing calls to cut ties with suppliers alleged to be using “forced labor” from China’s Uighur people (most of whom are in Xinjiang province).  Activists have launched a campaign accusing firms of “bolstering and benefiting” from exploitation of the Muslim minority group.

Nike said it was “conducting ongoing due diligence with our suppliers in China to identify and assess potential risks related to employment of Uighur or other ethnic minorities.”

--Microsoft Corp. reported strong sales growth driven by sustained demand for its cloud-computing services as customers shift more work online during the coronavirus pandemic.

The software maker on Wednesday said sales rose 13% to $38 billion in its fiscal fourth quarter, and that it generated a net profit of $11.2 billion, both topping the Street’s expectations.

Sales for Azure, Microsoft’s cloud-computing service, grew by 47% from a year earlier, though this was the first time under 50%, vs. 59% in the prior quarter and 64% in the year earlier period.

Microsoft CEO Satya Nadella said, “The last five months have made it clear that tech intensity is the key to business resilience.  Organizations that build their own digital capability will recover faster and emerge from this crisis stronger.”

Microsoft’s personal computing business – which includes licensing revenue from PC sales, the Xbox gaming platform and Surface laptops – saw sales advance 14% to $12.91 billion.

The shares fell because Microsoft’s profit margin wasn’t as good as analysts expected.

[Microsoft’s LinkedIn unit will cut about 960 jobs, or around 6% of its workforce as the professional networking site grapples with falling demand for its recruitment services due to the pandemic.  LinkdIn’s revenue nonetheless rose 10% in the quarter.]

--IBM beat estimates for second-quarter profit on Monday and signaled that demand in its cloud computing business would get a boost as large corporations accelerate their digital shift due to the outbreak.

IBM has jettisoned some of its legacy business to focus on higher-margin cloud computing.  “The trend we see in the market is clear.  Clients want to modernize apps, move more workloads to the cloud and automate IT tasks,” IBM’s new boss Arvind Krishna said on an earnings call with analysts.

Revenue from the cloud business, previously headed by Krishna, rose 30% to $6.3 billion in the second quarter.  Krishna took over as CEO from Ginni Rometty in April.  Sales in the business services unit was impacted by delayed spending on discretionary projects due to Covid-19, down  7% to $3.9 billion.

IBM’s total revenue fell 5.4% to $18.12 billion, but came in above analysts’ estimates.

--Tesla overcame a seven-week pandemic-related shutdown at its Fremont, California plant to post a surprising $104 million net profit for the second quarter.

It was the company’s fourth-straight positive quarter, qualifying it to be included in the S&P 500 index, decision to come later.

Excluding one-time items such as $347 million in stock-based compensation, Tesla made $2.18 per share, beating Wall Street estimates of a break-even quarter, with revenue down 4.9% from a year ago to $6.04 billion, which still whipped forecasts for $5.15bn.  The surprising profit was vs. a $408 million loss a year ago.

The company did issue a note of caution in its investor letter.  “It remains difficult to predict whether there will be further operational interruptions or how global consumer sentiment will evolve in the second half of 2020.”

Tesla said it was well-positioned for a strong second half, while announcing it had picked a site for its second U.S. assembly plant in the Austin, Texas, area, five minutes from Austin International Airport and 15 minutes from downtown Austin, according to CEO Elon Musk.  This will be its largest facility employing at least 5,000 workers.

The new factory will build Tesla’s upcoming Cybertruck pickup and will be the second U.S. manufacturing site for the Model Y small SUV, largely for distribution to the East Coast.

The company said it has enough money to fund new products and to build new factories in the U.S. and Germany, as well as cover other expenses.  It is also going to begin delivering its electric semi next year.  The company ended the June quarter with about $9.1 billion in cash, though it has $8.5 billion in debt.

CEO Musk had pledged to build more than 500,000 vehicles this year but the Fremont factory shutdown has made that goal more difficult.  Still, the company has a target of delivering more than half-million vehicles this year, and it’s expanding Fremont’s capability.

The company said it delivered 90,650 vehicles from April through June as it rolled out the new Model Y SUV in the U.S. and China.  That’s a slight increase over the first quarter’s 88,400, though a 4.8% drop from the second quarter of 2019, when Tesla delivered 95,200 vehicles.

Musk has been taking a victory lap less than two years after his controversial tweet about taking Tesla private at $420 a share – a pot joke that scored him a $20 million fine and had him booted as chairman of Tesla’s board.  The stock is up over 300 percent since the pandemic hit in early March.  As a result, Musk has leaped into the top-10 list of the world’s richest people, with his $72 billion fortune currently placing him at No. 8, according to Forbes.

But the shares cratered at week’s end.  Noted Bernstein analyst Toni Sacconaghi in a Wednesday research report called Tesla’s earnings report and outlook “Good but not great,” adding Tesla’s “valuation implies nearly world domination.”

--Twitter Inc. on Thursday reported its highest-ever yearly growth of daily users who can view ads, beating analysts’ estimates on usage and sending its shares up 4%.  Twitter’s average monetizable daily active users increased 34% year over year to 186 million, in a rise it said was primarily driven by external factors such as shelter-in-place requirements and increased conversation around the coronavirus.

But ad sales, which make up 82% of Twitter’s revenue, sank 23% to $562 million, a drop the company attributed to brand spending pauses tied to the pandemic and civil unrest.

CEO Jack Dorsey opened a conference call with analysts by apologizing for the hack that compromised the accounts of high-profile users last week, saying “we feel terrible.”  Dorsey said Twitter had taken steps to improve its security and “resiliency against targeted social engineering attempts.”

--Earlier in the week, Twitter announced sweeping measures aimed at cracking down on the QAnon conspiracy theory, including banning thousands of accounts.

QAnon is a sprawling conspiracy theory whose followers support President Trump.  Twitter said it hoped the action would help to prevent “offline harm.”

The suspensions are expected to impact about 150,000 accounts worldwide.  More than 7,000 accounts have been removed in recent weeks for violations, Twitter said.

Followers of QAnon believe “deep-state” traitors are plotting against Donald Trump. The conspiracy theory has jumped from fringe social media to mainstream attention.

The FBI last year issued a warning about “conspiracy theory-driven domestic extremists” and designated QAnon a potential domestic extremist threat.

Lauren Boebert, a fan of the movement, won the Republican primary for Colorado’s 3rd District earlier this month and is expected to win in November. I am biting my tongue on this whole topic, knowing some people in my area who support the movement as well.

--As alluded to above, the U.S. has agreed to pay Pfizer Inc. and BioNTech SE nearly $2 billion to secure 100 million doses of their experimental Covid-19 vaccine to provide to Americans free of charge.

Under the $1.95 billion agreement, the U.S. Dept. of Health and Human Services and the Defense Department will receive 100 million doses of the vaccine should it be cleared by regulators, and can also acquire an additional 500 million does.  The vaccine, which has shown promising preliminary results in small groups of patients, is set to enter late-stage testing this month.

--Casino magnate Sheldon Adelson’s Las Vegas Sands Corp. reported a 97% decline in revenues as the global pandemic hit the gambling hubs of Las Vegas and Macau, and executives expressed little optimism about a return to business as usual.

On Wednesday, Sands posted $98 million in net revenue for the three months ended June 30, down from $3.3 billion a year earlier.  The company had a net loss of $985 million for the quarter, compared with net income of $1.11 billion a year earlier.

Nevada allowed casinos to reopen June 4, but then Covid-19 cases have been on the rise in the state and Las Vegas Sands executives are pessimistic over the outlook for Vegas, at least in the near future, with the restrictions in place, such as a 50% occupancy limit.

Chief Operating Officer Robert Goldstein said, “In all of the years I’ve been here in Las Vegas, I’ve never felt more gloomy than I do today about what’s happening in Las Vegas short term.  Hope long term we will see a better day.”

--Coca-Cola said earnings and revenue sank in the second quarter, which it expects to be the period of 2020 that’s the “most severely impacted” by Covid-19, while trends in its away-from-home segment improved in line with lockdowns being eased.

Revenue fell 28% to $7.2 billion as products outside the home faced pressure, the Atlanta-based company said.  Revenue fell around the world, with North America down 16%; Europe, Middle East and Africa falling by 37%; and Asia-Pacific revenue sank 23%.

The pandemic prompted restaurants around the world to close their dining rooms so it’s not hard to see how Coca-Cola has suffered.

--Chipotle Mexican Grill said online sales more than tripled after the coronavirus pandemic hit, rewarding the company’s recent investments in its digital operations.  The company reported a same-store sales decline of 9.8% in its second quarter, less than expected, with CMG turning a profit of $8.2 million vs. $91 million in last year’s period.

Online sales surged, accounting for 60.7% of revenue in the latest quarter, up from 26% of revenue in its quarter ending in March, when the pandemic had closed dining rooms and driven more customers to order online.

As I noted last week, Chipotle is building more stores with drive-through lanes for digital orders.

--Tractor Supply, a rural lifestyle retailer that has become a darling of the Street for its strong performance amid the pandemic, reported fiscal second-quarter earnings of $2.90, up from $1.80 a year earlier, higher than expected.

Sales increased 35% to $3.18 billion in the three months ended June 27, with comparable store sales increasing about 31%.

The company said in a statement that results were positively impacted by the pandemic, which has customers more focused on the care of their homes, land and animals.

--The operator of Ann Taylor and Lane Bryant filed for Chapter 11 protection Thursday.  Ascena Retail Group Inc., which operates nearly 3,000 stores mostly at malls, had been dragged down by debt and weak sales for years.

The company said it reached an agreement with its creditors to reduce its debt by $1 billion.

--The Southern California housing market is showing signs of heating up after a coronavirus-induced slump.  Sales remain below year-earlier levels but are up sharply from spring.

Despite the fact Covid-19 cases are surging in the state, for now, would-be buyers who still have the financial wherewithal seem eager to get their hands on mortgages with historically low rates.

Sales across the six-county Southern California region jumped 43.5% from May, the largest increase ever from May to June in a data set that dates from 1988.

But sales were still at a record low for a June and down 15.2% from a year earlier, according to data firm DQNews.  [Sales had declined 45% year over year in May and fell 31.5% in April.]

In Los Angeles County, sales rose 40.8% from May and fell 24.3% from a year earlier.  The median price rose 4% from a year ago to $643,000.

In Orange County, sales rose 49% from May and fell 22.1% from a year earlier.  The median price rose 4.1% vs. year ago to $765,000.

--Malaysia on Friday said investment bank Goldman Sachs has agreed to a $3.9 billion settlement with the government over the multi-billion dollar 1MDB scandal.  The deal includes a $2.5 billion cash payout by Goldman and a guarantee by the bank to return at least $1.4 billion in assets linked to 1MDB bonds, Malaysia’s finance ministry said in a statement.

Malaysian prosecutors first filed charge in December 2018 against three Goldman Sachs units for misleading investors over bond sales totaling $6.5 billion that the bank helped raise for sovereign wealth fund 1MDB (1Malaysia Development Bhd). Goldman has consistently denied wrongdoing, saying that certain members of the former Malaysian government and 1MDB lied to it about how proceeds from the bond sales would be used.  The units of Goldman have pleaded not guilty to the charges.  The U.S. Department of Justice has said around $4.5 billion was misappropriated from 1MDB.

--I forgot to note BlackRock Inc.’s quarterly earnings from last Friday and just want to get down for the record that the world’s largest asset manager took in a record quarterly $57 billion in its bond ETFs in the second quarter, with BlackRock now having $7.3 trillion under management.

The investment firm posted a second-quarter profit of $1.2 billion, up from the year-prior period of $1 billion, with revenue rising 4% to $3.6 billion.

--Bridgewater Associates, the world’s largest hedge-fund firm headed by founder Ray Dalio, has laid off several dozen employees across the company this month, a rarity.  The layoffs affected Bridgewater’s research department and client-services team. 

In a statement, Bridgewater said that, given the changing world, “team members will be working more from home so we won’t need the same number of support people, new technologies are changing what type of people we need and how we serve our clients, and we also want to become more efficient.”

The pandemic has led companies of all stripes to conclude they can do the same with less.

--Irish retail banks are likely to cut up to 30 percent of jobs – the equivalent of 7,650 positions – in the next five years as the Covid crisis shifted transactions to online and lenders seek to rein in costs in an era of ultra-low interest rates, according to Deloitte Ireland.  You can probably make the same statement worldwide.

“Profitability will remain the key challenge for banks. The lower-for-even-longer interest rates and evaporation of traditional fee income streams will depress returns, and aggressive cost control may be the only real lever for banks to improve their profitability in the short to medium term,” said David Dalton, head of financial services at Deloitte Ireland.  [Irish Times]

--Bayer AG lost an appeal in the first case to go to trial linking its Roundup weedkiller to cancer, though the California court greatly reduced the amount of damages awarded to $20.4 million, vs. an initial $289.2 million award, which was followed by an even larger $2 billion award in a second trial.

Recently, Bayer said it would pay up to $10.9 billion to settle tens of thousands of Roundup lawsuits, but that it was still pursuing appeals in the three cases that have gone to trial.

--I’ve been writing of the problems facing New York’s Metropolitan Transportation Authority and the “fiscal tsunami” it faces, and this week its leaders said only a Washington bailout can fill a $16 billion budget gap over the next four years.

The authority has requested $3.9 billion in federal funding to maintain operations through the end of the year and “prevent system-wide calamity.”

--Hershey Co. said it expects subdued Halloween celebrations will result in slower demand for a holiday that normally generates a tenth of its sales.  But CEO Michele Buck said consumer behavior is hard to predict during the pandemic and “Consumers will find creative and safe ways to trick-or-treat.”  Stay away from my place, urchins! mused the editor.

Hershey does have to figure it out because otherwise it could be left with a ton of inventory it would have to pull back or try to sell at a discount.

Foreign Affairs

China: Wednesday, the United States told China to close its consulate in Houston by the end of the week in a dramatic worsening of ties between the world’s two biggest economies, with Beijing immediately warning of retaliation.  That turned out to be an order today to close the U.S. consulate in the southwestern city of Chengdu.

China’s foreign ministry called the move an “unprecedented escalation.”

The State Department said the move was made “to protect American intellectual property and Americans’ private information.”

Speaking on a visit to Denmark, Secretary of State Mike Pompeo repeated accusations about Chinese theft of U.S. and European intellectual property, which he said were costing “hundreds of thousands of jobs.”

Pompeo referred to a U.S. Justice Department indictment on Tuesday of two Chinese nationals over what it called a decade-long cyber espionage campaign that targeted defense contractors, Covid researchers and hundreds of other victims worldwide.

“President Trump has said enough – we are not going to allow this to continue to happen,” Pompeo told a news conference.

The New York Times quoted the top U.S. diplomat for East Asia, David Stilwell, as saying that the Houston consulate had been at the “epicenter” of the Chinese army’s efforts to advance its warfare advantages by sending students to U.S. universities.  “We took a practical step to prevent them from doing that,” Stilwell told the times. Stilwell said China’s consul general in Houston and two other diplomats had been caught recently engaging in questionable activity past the security check area at Houston airport while awaiting takeoff of a charter flight to China that Beijing had arranged due to air travel restrictions during the coronavirus pandemic.  He said the diplomats were escorting travelers to the gate area and Air China had paperwork with false birth dates for the diplomats.

Late on Tuesday, firefighters in Houston went to the consulate after smoke was seen and video emerged showing documents being burned in the courtyard.

Sen. Marco Rubio (R-Fla.), acting chairman of the Senate Intelligence Committee, told Fox News the Houston consulate was “kind of the central node of a massive spy operation, commercial espionage, defense espionage.”

“They use businessmen as fronts in many cases to try to influence members of Congress and other political leaders at the state and local level.  So it’s long overdue that it be closed.”

The Chinese Ministry of Foreign Affairs said in a statement Friday that the Chengdu consulate’s closure was a “legitimate and necessary response to the unjustified act by the U.S.”

Beijing’s decision will not only oust American diplomats from the capital of Sichuan province – a region with a population rivaling Germany – it will close a key listening post for developments in neighboring Tibet.   The move will probably have a bigger impact than shutting the U.S. consulate in Wuhan, but less than closing U.S. missions in the key financial centers of Hong Kong or Shanghai.

“It’s not possible to carry out an entirely equivalent action, but choosing Chengdu shows China wants to reduce the harm made to bilateral relations,” said Wang Yiwei, a former Chinese diplomat and director of China’s Institute of International Affairs at Renmin University in Beijing.

But Thursday, in a blistering speech at the Richard Nixon Presidential Library and Museum, Sec. of State Pompeo accused Xi Jinping and the Chinese leadership of attempting to “tyrannize inside and outside China forever” in pursuit of global hegemony.  “Securing our freedoms from the Chinese Communist Party is the mission of our time,” Pompeo said.

Pompeo cast competition with China as an existential struggle between right and wrong.

“If we bend the knee now, our children’s children may be at the mercy of the Chinese Communist Party, whose actions are the primary challenge today in the free world,” the secretary said.  “The free world must triumph over this new tyranny.”

While Pompeo didn’t call for regime change, he came close, saying the U.S. must “engage and empower the Chinese people.”

Taking a more pessimistic twist on Ronald Reagan’s adage of “trust but verify” in relations with the Soviet Union, Pompeo said the U.S. needs to “distrust and verify” agreements with Beijing.  Pompeo also claimed that Communists “almost always lie,” which drew scrutiny from China experts who said it was needlessly antagonistic.

The location of the speech at the Nixon Library was not by accident, as the administration believes efforts at engagement by Nixon and his successors failed.

“If the free world doesn’t change Communist China, Communist China will change us,” Pompeo said. “There can’t be a return to past practices because they’re comfortable or because they’re convenient.”

Pompeo also noted: “President Nixon once said he feared he had created a ‘Frankenstein’ by opening the world to the CCP. And here we are.”

“The truth is that our policies, and those of other free nations, resurrected China’s failing economy, only to see Beijing bite the international hands that were feeding it,” Pompeo said.  “We, the freedom-loving nations of the world must induce China to change…in more creative and assertive ways, because Beijing’s actions threaten our people and our prosperity.” 

In a sign that relations could deteriorate further, Foreign Ministry spokesman Wang Wenbin answered a question about the future of the U.S.-China trade deal by saying the American side should think “carefully” about where the relationship was heading. President Trump said Thursday that his “phase one” deal means “much less” to him in the wake of the pandemic.

Separately, China threatened on Thursday to withdraw its recognition of British National Overseas passports held by residents of Hong Kong, in retaliation for the former colonial ruler’s policy of easing their path to citizenship.

Starting from January 2021, those in Hong Kong with such status would be able to apply for special visas to live in Britain that could eventually confer citizenship, interior minister Priti Patel said this week.

However, China opposes such a policy as interfering in domestic affairs, a spokesman for its foreign ministry said, calling the move a flagrant violation of Britain’s promises, international law and principles of international relations.  “As the English side is the first to violate the promise, China will consider not recognizing BNO passports as a valid travel document, and reserves the right to take further measures,” the spokesman told a news briefing.

China has never recognized BNO passports as a valid document for mainland entry by residents of Hong Kong, which returned to Chinese rule in 1997.  Instead, it required them to use travel permits issued by China. Britain’s decision, which could allow three million Hong Kong residents to settle in Britain, came after Beijing imposed its new national security law that effectively ends democracy as Hong Kong has known it for decades and goes against the freedoms promised to the territory in 1997 with the handover from Britain to China, which really goes back to the terms of the treaty agreed to by the two sides in 1984.

China, in accusing Britain of interfering in Hong Kong and Chinese affairs, said, “The Chinese side urges the British side to recognize the reality that Hong Kong has returned to China, to look at the Hong Kong national security law objectively and immediately correct its mistakes,” China’s embassy in London said in a statement.

In another move China’s Communist Party expelled an outspoken and prominent property tycoon who denounced Xi Jinping, paving the way for his criminal prosecution and escalating the CCP’s efforts to quash dissent among the elite.

The party announced the expulsion of Ren Zhiqiang and said it had seized his assets for “serious violations of discipline and law” that included the possession of golf club memberships.  Officials also took aim at Ren’s family, accusing him of “colluding with his children to accumulate wealth without restraint.”

The move no doubt sends a chill over China’s entrepreneurs and business leaders.  No one is above the CCP’s demands for unflinching political loyalty.

Lastly, China successfully launched an unmanned probe to Mars on Thursday in its first independent mission to another planet, in a display of its technological prowess and ambition to join an elite club of space-faring nations.

In 2020, Mars is at its closest to Earth, at a distance of about 34 million miles, in a window of about a month that opens once every 26 months. The probe is expected to reach Mars in February where it will attempt to land and deploy a rover to explore the planet for 90 days.

Editorial / Wall Street Journal

“A couple of months ago we heard that President Trump was pushing the Pentagon to withdraw U.S. troops from Afghanistan, Germany and South Korea. We started calling around and were told to focus on Afghanistan, as the other two deployments were safe in an election year.

“Bad call.  Mr. Trump has since ordered the withdrawal of 9,500 of the 34,500 U.S. troops stations in Germany, and now we read in the Journal that he may do the same with U.S. forces in Seoul.  You never know with Mr. Trump how much of this leak is negotiating bluster, but it’s the President’s worst national-security idea since he floated a Taliban visit to Camp David last year.

“The U.S. has some 28,500 troops on the Korean peninsula. The main strategic purpose is defending against North Korea, but the deployments also protect America’s security interests and reassure the region that the U.S. is committed to defending America’s friends against a threatening China.

“As he likes to do, Mr. Trump has been seeking more money from South Korea to pay for the U.S. mission, though Seoul contributed some $926 million in 2019. South Korean President Moon Jae-in has balked at the U.S. demands, which are for $1 billion or more a year, and we’re told the talks are deadlocked.

“Mr. Trump is considering his options, including some reduction of force.  But even a partial U.S. retreat from the East Asian flashpoint would echo around the world as a sign of American weakness.  It also wouldn’t save money since the Pentagon would have to pay the troops even if they come home, and it would cost far more to have to send those forces back to the region in a crisis.

“Above all, a U.S. retreat would be a gift to the hawks in China who want to push the U.S. out of the region. Withdrawal would confirm their view that the U.S. is in decline and can no longer be trusted, and it would shock our allies in Japan and Taiwan.

“Senator Ben Sasse, the Nebraska Republican, didn’t hold back Friday in criticizing the potential withdrawal: ‘This kind of strategic incompetence is Jimmy Carter-level weak. Why is this so hard?  We don’t have missile systems in South Korea as a welfare program; we have troops and munitions there to protect Americans.  Our aim is to give the Chinese communist leadership and the nuclear nut tyrannizing his North Korean subjects something to think about before they mess with us.’

“As for the domestic U.S. politics, a withdrawal certainly doesn’t fit an election strategy of running against Joe Biden as a naif who’d be eaten alive by Chinese President Xi Jinping.  Mr. Biden would quickly get to Mr. Trump’s right on China and foreign policy, and he’d be able to quote Republicans in the Senate like Mr. Sasse who agree with him.

“Mr. Trump’s cavalier treatment of allies, and the threat he may walk away from long-time alliances, is one risk of a second term.  Apart from North Korea’s young dictator, Kim Jong Un, a U.S. retreat in Korea would most please Mr. Xi.”

Iran: Editorial / Washington Post

“The Trump administration’s ‘maximum pressure’ campaign against Iran has manifestly failed to achieve either its stated or unstated aims: It has not forced Iran to renegotiate the nuclear accord from which President Trump unwisely withdrew; nor has it ended Iranian aggression in the Middle East or caused the regime of Ali Khamenei to collapse.  Now it may result in a powerful new blow to U.S. interests, in the form of an Iranian partnership with China that could rescue Iran’s economy while giving Beijing a powerful new place in the region.

“An agreement approved by Iranian President Hassan Rouhani last month could lead to billions of dollars in Chinese investments in Iran, in exchange for a steady and discounted stream of Iranian oil, according to the New York Times. The deal also envisages security cooperation, including joint military exercises and the sharing of weapons development and intelligence, according to an 18-page draft the Times obtained.

“It’s not certain the pact will go forward: It has yet to be publicly unveiled and must be approved by the Iranian parliament, where it could encounter nationalist resistance.  But if it does, it will not only rupture the wall of sanctions that the Trump administration has constructed in an attempt to strangle the Iranian economy; it will also mark a significant escalation of China’s challenge to U.S. global influence.

“As with the mounting U.S. conflict with Iran, that was not inevitable. The regime of Xi Jinping supported the pressure campaign against Iran conducted by the Obama administration as well as the nuclear accord it led to, which was meant to restrain Iran’s uranium enrichment and other nuclear development for a decade or more.  Even after Mr. Trump withdrew from the deal in 2018, Beijing at first generally adhered to the new U.S. sanctions, reducing oil purchases and other trade.

“Yet Mr. Trump’s confrontational approach to China in recent months, including his refusal to continue work on a comprehensive trade deal, has given Mr. Xi little incentive to cooperate with Washington’s geopolitical priorities.  On the contrary, the Chinese leadership likely perceives a moment of critical U.S. weakness as Mr. Trump flounders amid a health and economic crisis and is moving to take advantage. It is expanding its presence in the South China Sea; it is crushing Hong Kong’s autonomy. Allying itself with the foremost U.S. adversary in the Middle East opens yet another front.”

Israel: Public anger has been growing against Prime Minister Benjamin Netanyahu over his handling of the coronavirus crisis and alleged corruption.  In Jerusalem last weekend, hundreds gathered outside the prime minister’s residence and then marched through the streets, calling for his resignation.  In Tel Aviv, thousands rallied, demanding better state aid to businesses hurt by coronavirus restrictions and to people who have lost jobs.

Unemployment presently stands at 21%.  A poll by the nonpartisan Israel Democracy Institute found only 29.5% of the public trust Netanyahu’s handling of the crisis.

Libya: Egypt’s parliament gave President Abdel-Fattah al-Sisi the green light for possible military intervention in Libya by approving the deployment of armed forces abroad to fight “terrorist groups” and “militias.”

A sharp military escalation in Libya, where fighters led by eastern commander Khalifa Haftar have been battling the forces of the internationally recognized government, could risk igniting a direct conflict among the foreign powers that have poured in weapons and fighters in violation of an arms embargo.

Sisi warned last week that Egypt would not stand idle if there was a threat to national security in Egypt and its western neighbor, Libya.

Reminder, Egypt is alongside UAE and Russia in backing Haftar. Turkey backs the recognized government in Tripoli.

Turkey: President Tayyip Erdogan joined thousands of worshippers at Hagia Sophia on Friday for the first prayers there since he declared the monument, revered by Christians and Muslims for almost 1,500 years, a mosque once again.  It had been a museum since 1934 and the days of the founder of modern Turkey, my man Kemal Ataturk.  Years ago I went to visit Ataturk’s grand tomb in Ankara. I wonder what will happen to it?

Russia: The U.S. and UK have accused Russia of testing a weapon-like projectile in space that could be used to target satellites in orbit.

The State Department described the recent use of “what would appear to be actual in-orbit anti-satellite weaponry” as concerning.

Russia’s defense ministry earlier said it was using new technology to perform checks on Russian space equipment.

U.S. Assistant Secretary of State for International Security and Non-proliferation, Christopher Ford, accused Moscow of hypocrisy after it said it wanted arms control to be extended to space.

“Moscow aims to restrict the capabilities of the United States while clearly having no intention of halting its own counter-space program,” he said.

Gen. Jay Raymond, who heads U.S. Space Command, said there was evidence Russia “conducted a test of a space-based anti-satellite weapon.”

Random Musings

--Presidential tracking polls….

Gallup: 38% approve of President Trump’s job performance, 57% disapprove; 91% of Republicans approve, 33% of independents (June 8-30).
Rasmussen: 49% approve of Trump’s job performance, 49% disapprove (July 24…an improvement over last week’s 45-53 split.)

--In a new ABC News/Washington Post national poll, Joe Biden leads President Trump 55 percent to 40 percent among registered voters.  That compares with a 10-point Biden lead in May and a two-point edge in March.  Among those who say they are certain to vote, however, Biden’s lead is 11 points.

Trump’s job approval rating stands at 39 percent, 57 percent disapproving.  In the late-March poll when Biden led Trump by only two points, essentially tied, Trump’s approval rating stood at 48 percent and 46 percent negative.

So it’s all about his handling of the coronavirus. Currently, 38 percent approve and 60 percent disapprove.

50 percent still approve of Trump’s handling of the economy, 47 percent disapproving.  In late March the split was 57-38 on this topic.

But 61 percent say the president has done more to divide the country than unite it, and 76 percent say that when Trump talks about people with whom he disagrees, he crosses the line in terms of what’s acceptable.

--A Fox News survey of registered voters around the country found Biden with an 8-point lead, 49-41 percent.  In this poll the margin has narrowed since June, when Biden led 50-38.

Trump is ahead by 5 points among men, while Biden is up 19 among women.  Biden leads among Blacks (+64), Hispanics (+30), millennials (+22), suburban voters (+11) and independents (+11).

Whites with a college degree (+3) and without a degree go for Trump (+9).  Trump is also the choice among White evangelical Christians (+43), rural voters (+9) and seniors (+1).  Curiously, last month seniors went for Biden by 10.

Voters believe Trump lacks the key traits for the Oval Office: less than half think he has the mental soundness (43 percent), intelligence (42 percent), and judgment (40 percent) to serve effectively as president.  For reference, 36 percent felt he had the necessary judgment in October 2016, less than a month before his victory.  [Biden’s three numbers, in order, are 47, 51 and 52 percent.  So both under 50 percent on the issue of mental soundness.]

29 percent rank coronavirus as the No. 1 problem facing the country, topping the 15 percent who cite the economy and 10 percent who say race relations.

43 percent approve of Trump’s handling of the pandemic, 56 percent disapprove.  [74 percent approve of the job Dr. Fauci is doing.]

Trump’s ratings on the economy split 47-47.  That’s down from a high of 56 percent approval in January.  By a 44-43 margin, voters say Biden will do a better job on the economy.

Only 15 percent said they favored reopening the schools “as usual” and another 21 percent supported a return to classrooms accompanied with social distancing measures.  More than half of voters thought remote learning, which Trump opposes, will have to be at least part of the new school year – with 31 percent supporting a combination of in-person and remote classes and 25 percent calling for fully remote classes.

Trump’s overall job approval rating in the Fox survey shows 45 percent approve and 54 percent disapprove, basically unchanged from last month.

Eighty-one percent of voters report wearing a mask all or most of the time when in public, up from 72 percent in May.  90 percent of Democrats and 71 percent of Republicans wear a mask.

--A Reuters/Ipsos poll of registered voters released Wednesday, like Fox, also had Biden with an 8-point lead, 46 percent to 38 percent, with a whopping 16 percent either undecided, planning to support a third-party candidate or may not vote.

But, importantly, a Reuters/Ipsos 2016 poll of those who said they were undecided that summer had support evenly split between Trump and Hillary Clinton.  Then on Election Day, Trump won a majority of voters who said they decided in the final week.

Today, however, the poll found that 61 percent of undecided or third-party registered voters said they would support Biden if they had to choose, while 39 percent would vote for Trump.

70 percent of undecided or third-party voters say they disapprove of Trump’s performance in office and the same number think the country is headed in the wrong direction.

--A Quinnipiac University poll of registered voters in Florida showed Biden with a 51-38 lead over President Trump. In an April 22nd poll, Biden led only 46-42 percent.  Only 40 percent of Floridians approve of Trump’s job performance, 58 percent disapprove.

The survey was released Thursday and by a 62-34 margin, voters said it would be unsafe to hold the Republican national convention in Jacksonville.  Then the president made his announcement canceling it.

--A separate Fox News poll of battleground states has Joe Biden leading Donald Trump in Michigan, Minnesota and Pennsylvania.

Biden leads 49-40 in Michigan; 51-38 in Minnesota; and 50-39 in Pennsylvania.

--Biden outlined a sweeping plan on Tuesday aimed at breathing life into the coronavirus-battered economy by investing $775 billion in caregiving, programs for children, the elderly and the disabled.

Biden said his proposal would create 5 million jobs and would provide all 3- and 4-year-old children access to free preschool.  He also promised to make it easier for aging relatives and loved ones with disabilities to receive home or community-based care.

“We’re trapped in a caregiving crisis within an economic crisis within a healthcare crisis,” Biden told educators at a campaign event in New Castle, Delaware.

I watched Biden’s presentation and it was as well-reasoned a program as I’ve heard in a long time, and a program every single American can relate to.  He says he would pay for it by rolling back tax breaks for real estate investors and tightening enforcement of the existing tax code.

But after Biden spoke he again failed to take questions.  He has to.

Separately, Biden said Trump was the country’s “first” racist president.  During a virtual town hall on Wednesday, when a questioner complained of racism surrounding the outbreak and mentioned the president referring to it as the “China virus,” Biden responded by blasting Trump and “his spread of racism.”

“The way he deals with people based on the color of their skin, their national origin, where they’re from, is absolutely sickening,” Biden said.  “No sitting president has ever done this.  Never, never, never.  No Republican president has done this.  No Democratic president.  We’ve had racists, and they’ve existed. They’ve tried to get elected president.  He’s the first one that has.”

Biden also suggested that Trump is using race “as a wedge” to distract from his mishandling of the pandemic.

--Gerald F. Seib / Wall Street Journal

Is there a hidden Trump vote? The good news for President Trump is this: There just might be.

“The bad news for the president: The universe of potential hidden supporters is heavily populated with the kinds of people who happen to be more comfortable with Joe Biden than they were with Hillary Clinton four years ago.

“The question of whether there is a submerged Trump vote is rising in importance as virtually every poll, nationwide and in swing states, shows Mr. Trump losing to Mr. Biden.  Nationally, the Biden lead is so large that the emergence of pockets of secret supporters alone probably wouldn’t be enough to fully turn around the numbers.

“But in some swing states, the race is close enough that the appearance of silent Trump supporters could make a decisive difference. These would be people who fly below the political radar screen, because they haven’t voted in the past, or don’t tend to respond to pollsters, or don’t advertise their Trump support.

“Given its current predicament, the Trump campaign has to hope it can find such a rich vein of unmined gold – and indeed, that is exactly what the Trump team insists it will do, precisely as it did in 2016.

“Though a record 137 million Americans voted in 2016, about 39% of eligible Americans didn’t vote, meaning there are tens of millions of nonvoters available, if they can be registered and turned out. This universe of hidden voters certainly includes a lot of potential Trump supporters.

“Dave Wasserman, an analyst at the nonpartisan Cook Political Report, has produced a detailed analysis of those who didn’t vote in 2016.  His research found that in some of the key swing states of 2016 – Michigan, Pennsylvania and Wisconsin – eligible white voters without college degrees made up a majority of the nonvoting population: 64% in Pennsylvania and Wisconsin, and 60% in Michigan.

“Such working-class white voters have been Mr. Trump’s strongest demographic group. Exit polls in 2016 showed that two-thirds of them went for him over Mrs. Clinton, a Democrat.

“Today, the Trump campaign assumes that these potential voters are particularly troubled by the current racially tinged unrest. That’s one reason you hear Mr. Trump offer bleak descriptions of lawless cities and suburbs that he says only he can bring under control – and why a new Trump ad declares that ‘you won’t be safe in Joe Biden’s America.’….

“There is another bit of evidence suggesting a hidden Trump vote.  In a recent survey, the Monmouth University poll found that a majority of voters in Pennsylvania – 57% - believe there are secret Trump backers in their communities who don’t tell anyone about their support.

“Still, there is nothing certain about this trove of potential Trump voters. Even if they exist, they fly below the radar for a reason: They don’t tend to participate in the political process and getting them to do so is no easy trick.

“Beyond that, working-class whites are far more comfortable with Mr. Biden than they were with Mrs. Clinton.  Mr. Biden projects more as working-class Joe from Scranton, a beer-and-shot kind of guy with a long history of police-union support, than as a representative of the urban, liberal Democratic elites that many blue-collar voters distrust and disdain.  It’s no coincidence that Mr. Biden came out early against the movement to defund police departments….

“(But) Mr. Biden still has problems with these voters; the most recent Wall Street Journal/NBC News poll shows white voters with less than a college education tend to be unenthused about him, and they still break more for Mr. Trump.  But their support for Mr. Biden in the matchup against Mr. Trump is higher than it was for Mrs. Clinton.

“That’s one reason Mr. Trump is eager to portray Mr. Biden less as some kind of left-wing radical himself, but rather as so old and weak he’ll be led around by his party’s progressives.  ‘It won’t be him,’ Mr. Trump said in an interview on ‘Fox News Sunday.’  ‘It will be the radical left.’

“There are other shortcomings in the theory of a decisive hidden Trump vote.  One is that there also were significant numbers of Democratic-friendly, nonwhite voters who didn’t show up in 2016; in the key state of Arizona, they outnumber the working-class whites who didn’t vote.  Such voters also could be activated.

“Bottom line: In a year of intense political interest, Americans who don’t normally vote probably will show up.  But their precise impact remains an open question.”

--Rich Lowry / New York Post

“The Biden team certainly isn’t going to rewrite any campaign playbooks or dazzle anyone with its brilliance, but it has avoided serious mistakes and demonstrated an understanding of the basic political terrain and its candidate’s strengths.

“It hasn’t asked Biden to do anything out of his comfort zone or beyond his capabilities and has been content for President Trump to dominate all the attention, so long as Trump is not advancing his own cause, and often setting it back, with all the airtime and headlines.

“Above all, the campaign has avoided the most politically perilous ideological excesses throughout.  This has required some discipline, given how influential woke Twitter is on the left.

“Biden’s theory of the Democratic Party, even if it seemed doubtful at the outset, proved correct – that the center of gravity of the party was still with, as he put it, Obama-Biden Democrats rather than with the avowed socialists and social-justice warriors….

“It might seem obvious that endorsing ‘Medicare for All,’ which involves yanking away the private health insurance of more than 100 million Americans, is foolish and politically indefensible, but several candidates in the Democratic race did it anyway.

“He’s steered clear of other pitfalls since locking up the nomination. He’s said he wouldn’t ban fracking. He didn’t endorse defunding the police.  He defended the statues of America’s founders.

“He’s indisputably slid left.  This has been his M.O. his entire career – to stay smack in the middle of whatever the consensus position of the Democratic Party is at any given time.  He’s running on the leftmost platform of any Democratic nominee in a couple of generations but has tried to soften the edges as much as possible.

“As a general matter, nothing he’s said has made much of an impression one way or the other.  His campaign knows that it benefits if the election is a referendum on Trump – and is acting accordingly.

“On the other hand, Trump should know that it hurts him if the election is a referendum on him – yet persists in making it one anyway.  Why should Biden try to take the mic from Trump if the president is using it to feud with Bubba Wallace and Anthony Fauci?

“Not only do these diversions do nothing to dent Biden, they serve to validate the former vice president’s case that the country needs a return to normalcy.

“Still, nothing is decided in July.  Events took a hand earlier this year in turning a political tailwind for Trump into a stiff headwind. Something unforeseeable could change the dynamic yet again, and better economic conditions could improve the overall atmosphere.

“Biden’s record and agenda give Trump targets to shoot at, and he should obviously take every opportunity to make the election, to the extent he can, about the radicalism of the Democratic Party.

“Finally, there’s the fact that Biden is an unsteady performer at best….

“So Trump can’t be counted out.  But the Biden campaign is canny enough that it isn’t going to make it easy for him.”

--Shootings in New York City have increased by 66.8% from the start of the year through July 17, according to figures by the New York Police Department.  The number of shooting victims has grown by 77.5%.

In a television appearance on Monday, NYPD Commissioner Dermot Shea said that morale is at a low point after weeks of large-scale protests over the killing of George Floyd.  The demonstrations have called for changes to policing and defunding of the NYPD and other police departments.

In response to the protests, Mayor Bill de Blasio signed a new law that criminalizes police use of chokeholds.  Commissioner Shea has said the law discourages officers from policing.

Earlier, Shea unleashed his anger at city leaders during a meeting with police brass, calling them “cowards” who “don’t have a goddamn clue what they’re talking about” with new NYPD reforms, as a video obtained by the New York Daily News revealed.

“I don’t know if there’s ever been a period like this where so many systems of government are literally cowards and won’t stand up for what’s right,” Shea said while standing at a podium.  “They’re failing at every possible measure to be leaders and throw it on the back of the police department.  They curse them with one hand and blame them with the other.  How dare they.”

Councilman Rory Lancman (D-Queens), who drafted the chokehold bill, fought back, saying Shea should look in the mirror before calling anyone out.

“It’s frightening that Commissioner Shea is part of the lunatic fringe who thinks it’s acceptable to choke or stand on a suspect, and it’s dangerous that the mayor still has his back,” Lancman said in a statement.  He has demanded Mayor de Blasio fire Shea over the skyrocketing shootings.  But de Blasio continues to support his police commissioner.

--Some thoughts on the passing of Congressman John Lewis, a pioneer of the civil rights movement and long-time member of the House of Representatives.  Lewis, a true American hero, died Friday at the age of 80.

On the front lines of the bloody campaign to end Jim Crow laws, with blows to his body and a fractured skull to prove it, Lewis, a sharecroppers son was the last surviving speaker at the historic March on Washington for Jobs and Freedom in 1963.

Rep. James E. Clyburn (S.C.): “When I told my father that I had decided against following him into the ministry, he responded that, ‘the world would rather see a sermon than hear one.’  John was both a minister and a living example, who demonstrated what it means to follow the moral compass directed by one’s faith.

“My favorite Old Testament scripture is Micah 6:8, ‘do justly be merciful and walk humbly.’ It must have been John’s as well.”

Former President Barack Obama: “He loved this country so much that he risked his life and his blood so that it might live up to its promise. And through the decades, he not only gave all of himself to the cause of freedom and justice, but inspired generations that followed to try to live up to his example.”

House Speaker Nancy Pelosi: “John Lewis was a titan of the civil rights movement whose goodness, faith and bravery transformed our nation, from the determination with which he met discrimination at lunch counters and on Freedom Rides, to the courage he showed as a young man facing down violence and death on the Edmund Pettus Bridge, to the moral leadership he brought to the Congress for more than 30 years.”

Republican Majority Leader Mitch McConnell: “The Senate and the nation mourn the loss of Congressman John Lewis, a pioneering civil rights leader who put his life on the line to fight racism, promote equal rights, and bring our nation into greater alignment with its founding principles.”

Former President George W. Bush: “Laura and I join our fellow Americans in mourning the loss of Congressman John Lewis. As a young man marching for equality in Selma, Alabama, John answered brutal violence with courageous hope.  And throughout his career as a civil rights leader and public servant, he worked to make our country a more perfect union.  America can best honor John’s memory by continuing his journey toward liberty and justice for all.”

--Finally, Siberia is routinely hitting north of 90 degrees, the World Economic Forum reported, and is likely the cause of manmade climate change.

Heatwaves above the Arctic Circle are not uncommon, but researchers warn the region is warming at twice the rate as the rest of Earth.

“We are missing more than 2.5 million square kilometers of Arctic sea by mid-July,” tweeted London-based meteorologist and weather analyst Scott Duncan of EDF Energy on Wednesday.  “That is over 467 million football fields.”

Duncan added that the minimum temperature in some of Arctic Siberia will not fall below 68 degrees for at least several days.

The mercury hit 95 in the northern Siberian locale of Kujga on Tuesday, according to NASA.

---

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

God bless America.

---

Gold: $1900…new closing record.
Oil: $41.34

Returns for the week 7/20-7/24

Dow Jones  -0.8%  [26469]
S&P 500  -0.3%  [3215]
S&P MidCap  +0.7%
Russell 2000  -0.4%
Nasdaq  -1.3%  [10363]

Returns for the period 1/1/20-7/24/20

Dow Jones  -7.3%
S&P 500  -0.5%
S&P MidCap  -10.3%
Russell 2000  -12.0%
Nasdaq  +15.5%

Bulls 56.7
Bears 17.3

Hang in there…Mask up.  Wash your hands.

Brian Trumbore



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Week in Review

07/25/2020

For the week 7/20-7/24

[Posted 10:00 PM ET]

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 1,110

After a disastrous performance in an interview with Chris Wallace on Fox News Sunday, filled with lies about everything from the coronavirus to the Democrats’ formal platform, President Trump spent much of the rest of the week backtracking on everything from suddenly deciding wearing a mask was good (as long as it’s not him) to abruptly canceling the Republican National Convention shindig in Jacksonville, shocking the Republican National Committee, which had already spent $millions, among others.

The president also started holding “coronavirus briefings” again, though they were one-man shows, none of his medical experts alongside, explaining that when he last held them they were very successful, with “a lot of people watching” and the “best ratings in the history of cable, in television…”

We were then told, “My administration will stop at nothing to save lives,” while emphasizing the median age of coronavirus victims is 78, and nearly half were in long-term care facilities; the clear implication being “it was their time.”

We were told “America’s youth will act responsibly” in one breath, and that “Things will get worse before they get better” in the next.

Yet “the death rate is looking much better,” saying, incorrectly, that fatalities were down more than 75% since mid-April.

Trump said this week: “I have to protect the American people. There is nothing more important than keeping our people safe.  I care deeply about people around the world…One death is too many, this should have never happened.”

The president hailed his “tremendous moves” shutting down travel from China and the European Union early in the pandemic.

“It’s a nasty horrible disease. It should have never been allowed to escape China.  But it did, and it affected the world, and the world is suffering.”

And, of course, daily we were told, “I have done more in three years than any president in history.”

It was pure helter-skelter.  It was pathetic.

But at least he said in his briefing, Tuesday:

“We are asking everybody that when you are not able to socially distance, wear a mask. Get a mask. Whether you like the mask or not, they have an impact. They will have an effect,” Trump said, reading from prepared remarks.

And he added: “We are imploring young Americans to avoid packed bars and other crowded indoor gatherings. Be safe and be smart.”

Dr. Anthony Fauci told NPR in an interview, “I think we’ve turned the corner on the road of a consistent message.”

Robert Redfield, director of the Centers for Disease Control and Prevention, said he believes the pandemic could be brought under control over the next four to eight weeks if “we could get everybody to wear a mask right now.”  His comments, made Tuesday with the Journal of the American Medical Association, followed an editorial he and others wrote there emphasizing “ample evidence” of asymptomatic spread and highlighting new studies showing how masks help reduce transmission.

But then in appearances outside the White House, Trump didn’t wear a mask.

President Trump’s handling of the coronavirus pandemic has raised doubts about whether he can win in November, amid the surge in cases across the South and West, and he is attempting to deflect blame onto China. 

“Make no mistake. We hold China fully responsible for concealing the virus and unleashing it upon the world. They could have stopped it, they should have stopped it. It would have been very easy to do at the source, when it happened,” the president said the other day.  This was when he added he had no plans to talk to Chinese President Xi Jinping.

Graham Allison, China and weapons expert as well as a professor of government at Harvard University, was among those telling the South China Morning Post the other day that U.S.-China relations are unravelling at an unprecedented speed.

“The remainder of 2020 could pose as severe a test for the U.S. and China as the final five months of 1941 did for the United States and Japan.”

Allison said Japan’s surprise attack on Pearl Harbor on Dec. 7, 1941 – which dragged the U.S. into World War II – had been beyond Washington’s imagination, that “a nation less than one-quarter the size of the U.S. would launch a bolt from the blue against the most powerful nation in the world.”

“But we should remember that when we say something is inconceivable, this is not a claim about what is possible in the world, but rather about what our minds can conceive,” he said.

Much more on the rising Sino-U.S. tensions below.

This coming week is really about the dysfunction in Congress as enhanced unemployment benefit checks that have done a big job in propping up spending expire without congressional action.

Congress returned from recess this week to consider a new relief package, which might have avoided an imminent foreclosure and eviction crisis as moratoriums on mortgage and rent payments run out in many states, but then Republicans under the leadership of Senate Majority Leader Mitch McConnell failed to put anything on the table that would then be the source of negotiations with the Democrats, who passed a House relief package two months ago.

Treasury Secretary Steven Mnuchin did his job, suggesting Congress consider a smaller bill to keep key benefits in place while other details are negotiated, but then both sides dismissed Mnuchin’s plan.

So today, as the enhanced jobless benefits are set to expire, with only next week to wrap up a deal between Senate Republicans and House Democrats before the August recess, McConnell suggested that reaching an agreement could take several weeks, a timeline leaving millions of Americans severely exposed.

This week represented the 18th straight with weekly jobless claims over 1 million and despite all of President Trump’s happy talk on a spectacular third-quarter rebound, the stimulus programs passed in March and April are wearing off and it’s clear layoffs have picked up again.  Small business cannot survive.  Layoffs once thought temporary have become permanent.

But Republican senators are split on the next round of relief, some, like Sen. Ron Johnson (Wis.) not wanting to see another dime spent, while Democrats want to extend the $600 per week enhanced unemployment benefit.

Mnuchin told reporters today, “The president is very focused on getting money quickly to workers right now and the payroll tax (that the White House has abandoned) takes time, so we’ll come back and look at that later.”

The treasury secretary said the decision was made to instead focus on sending another round of stimulus checks to Americans, because that approach would put money in people’s pockets more quickly.

It’s a mess and a lot of it is coming to a head next week, with millions being set adrift. This one is not on the president or Mnuchin, or the Democrats.  It’s on Mitch McConnell.

Covid-19 death tolls (as of tonight)

World…642,617
USA…148,490
Brazil…85,385
UK…45,677
Mexico…42,645
Italy…35,097
India…31,406
France…30,192
Spain…28,432

[Source: worldometers.info]

USA daily death tolls…Sun. 412, Mon. 546, Tues. 1,119, Wed. 1,205, Thurs. 1,150, Fri. 1,141.

Four straight days over 1,000, and the World Health Organization said the last 24 hours saw the highest number of new cases, worldwide, yet…over 284,000.

Covid Bytes

--The race for a vaccine intensified on Monday as three competing laboratories released promising results from early trials in humans.

Two of the vaccine developers – the first, a partnership between Oxford University and the British-Swedish drug maker AstraZeneca; the second, the Chinese company CanSino Biologics – published their early results as peer-reviewed studies in The Lancet, a British medical journal.

A joint venture between the drug giant Pfizer and the German company BioNTech shares results online before peer review, and invited comparisons to the biotech company Moderna, which uses a similar technology.

All the developers that released results Monday said their vaccines had produced strong immune responses with only minor side effects.

--Regional authorities across Spain introduced fresh coronavirus restrictions on Thursday aimed at stamping out a surge in infections that continues to defy efforts at containment and is damaging tourism.  New cases had slowed to a trickle in June, before a nationwide lockdown was lifted, but since then more than 280 clusters have been detected, with wealthy Catalonia the worst affected, leaving hotels largely empty and bars shutting down.  Health ministry data showed 2,615 new cases across Spain on Thursday, compared with a daily average of just 132 cases in June.  In Catalonia (Barcelona), nearly 8,000 cases were diagnosed in the last 14 days.

So now it’s about the borders.  Does France close its own with Spain with the spike? Spanish authorities are pointing out that the majority of the cases in this new surge are asymptomatic and the death rates remain well below that of the peak, partly because new cases are concentrated among younger people.

Today, France advised its citizens not to travel to Catalonia, though the border with Spain remains open, dealing another blow to Spain’s beleaguered tourism sector after Norway announced on Friday that travelers returning from the country would have to undergo a 10-day quarantine.

For its part, France recorded 1,130 new Covid cases in the past 24 hours, in a fresh sign that the rate of infection is accelerating again after the government eased lockdown restrictions.

--The South African Medical Research Council is reporting a “huge discrepancy” between the country’s confirmed Covid-19 deaths and the number of excess deaths from natural causes, while Africa’s top health official says the virus is spreading there “like wildfire.”

The new report, which came out late Wednesday, shows more than 17,000 excess deaths in South Africa from May 6 to July 14 as compared to data from the past two years, while confirmed Covid-19 deaths are 5,940.

“In the past weeks, the numbers have shown a relentless increase – by the second week of July, there were 59% more deaths from natural causes than would have been expected based on historical data,” the report says.

The council’s president, Glenda Gray, said in a statement the excess deaths could be attributed to Covid-19 as well as to other widespread diseases such as HIV and tuberculosis as many health resources are redirected toward the pandemic.

Meanwhile, some South Africans are thought to be avoiding health facilities as fears of the new virus spread and public hospitals are overwhelmed.

“In all countries with Covid-19, we are seeing this,” Health Minister Zweli Mkhize said of the report.

South Africa is “very concerning,” the director of the Africa Centers for Disease Control and Prevention, John Nkengasong, told reporters Thursday.  [Associated Press]

The other day I saw a truly horrifying story from the BBC on the situation in the country and the hospitals trying to deal with the crisis.  Just disgusting in the poorer areas.  You can see why many are opting to die at home.  Testing remains limited by shortages of supplies.

“Community deaths, we just don’t know how countries are capturing that,” Nkengasong said.

--Want some potentially good news?  As a story in the Wall Street Journal pointed out:

“From Argentina to South Africa to New Zealand, countries in the Southern Hemisphere are reporting far lower numbers of influenza and other seasonal respiratory viral infections this year.  In some countries, the flu seems to have all but disappeared, a surprise silver lining that health experts attribute to measures to corral the coronavirus, like mask use and restrictions on air travel.

“The decline could be good news for health officials in the U.S. and Europe worried about a possible second wave of coronavirus infections this fall and winter.  Not only is the coronavirus more likely to spread as people gather indoors during cold weather, but it is also flu season, meaning hospitals could get a double whammy of influenza and Covid-19 patients, both of whom sometimes require intensive-care treatment.”

--Florida teachers sued Monday to block what they call the “reckless and unsafe reopening” of public-school campuses for face-to-face instruction.  The Florida Education Assn. lawsuit argues that reopening this fall would put students and school employees at risk – as well as accelerate the spread of the coronavirus.

“Governor DeSantis needs a reality check, and we are attempting to provide one,” said FEA President Fedrick Ingram.  “The governor needs to accept the reality of the situation here in Florida, where the virus is surging out of control.”

“Everyone wants schools to reopen, but we don’t want to begin in-person teaching, face an explosion of cases and sickness, then be forced to return to distance learning,” Ingram added.

--Dr. Scott Gottlieb / Wall Street Journal

“The Covid epidemic in the South has strained the country’s capacity to keep up with the demand for testing. Six months into the pandemic, we still don’t have enough supplies, equipment or lab services. There’s no national plan for effectively allocating the capacity that does exist or providing a sufficient surge where it’s needed suddenly.

“The system is overwhelmed.  Major commercial labs are reporting turnaround times of around seven days, and patients say it’s often longer. Without a confirmed diagnosis, many infected patients don’t isolate themselves or get treatments.

“The intelligence community has warned for years that pandemic disease was a national-security threat on par with that of terrorism, weapons of mass destruction and cyberattacks.  It’s essential to increase American capacity to detect these events, contain them, and manufacture reliable countermeasures….

“The country is betting on vaccines that look increasingly probable based on clinical data but are unlikely to be available for widespread distribution this year.  Meanwhile, therapeutic antibodies, which are in advanced development by four different manufacturers, could serve as both a treatment and a prophylaxis to prevent infection in those at highest risk.  But there isn’t enough U.S. manufacturing capacity to produce these drugs in the quantities needed to use them as a stopgap if a vaccine is delayed, and it’s probably too late to ramp supply significantly for this year.

“These gaps highlight the need to treat health security with the same gravity as other threats of national importance. We need to invest in a domestic supply chain for diagnostic testing equipment and laboratory services and develop some mothballed capacity to handle a surge in demand….

“Finally, we need incentives to bring manufacturing capacity back to the U.S.  We need the ability to make large quantities of vaccines and biologics domestically. The ability of some nations to respond more effectively than the U.S. has created a public-health, economic and security risk.  A pandemic has long been feared, and the U.S. wasn’t ready when it finally arrived.”

--Henry I. Miller / Wall Street Journal

[Miller is a physician and molecular biologist, a senior fellow at the Pacific Research Institute, and a founding director of the Office of Biotechnology at the FDA]

“It’s good news that the death rate from Covid-19 has trended dramatically downward since April, even as the number of new cases is surging. But it’s far from the whole story.

“Unlike common colds caused by other coronaviruses, Covid-19 is more than a transient, self-limited respiratory infection. There have been numerous reports of nonrespiratory manifestations, including loss of smell or taste, confusion and cognitive impairments, fainting, sudden muscle weakness or paralysis, seizures, ischemic strokes, kidney damage, abnormal blood-coagulation tests, transmission to an unborn child via the placenta, and a severe (though rare) pediatric inflammatory syndrome. Recovery is sometimes incomplete, with some patients experiencing long-term adverse effects that resemble a condition variously known as myalgic encephalomyelitis or chronic fatigue syndrome….

“People with CFS are often incapable of performing ordinary activities and sometimes become completely debilitated, unable to get out of bed.  Manifestations of the syndrome can persist for years….

“We still need to suppress and mitigate Covid-19 aggressively. The fewer new cases, the fewer lingering illnesses there will be, with all their attendant misery and expense.

“Second, the persistence of debilitating symptoms argues strongly against ‘human challenge trials’ of vaccines, in which the infectious virus is intentionally administered to volunteers, some of whom would receive a trial vaccine while others get a placebo. In the absence of very effective drugs to treat Covid-19, such studies would be unethical.”

Remember this last bit. It’s going to be coming into play with some of the Phase III trials we’ll be hearing about on the vaccine front.

--British Prime Minister Boris Johnson said of opponents of vaccination, so called anti-vaxxers:

“There’s all these anti-vaxxers now,” Johnson told medical workers in London.  “They are nuts, they are nuts.”

--Lastly, the tragic story of the thirteen nuns at a Roman Catholic convent in Livonia, Michigan, emerged this week…22% of the residents at the Felician Sisters of North America succumbing to Covid-19.  Seventeen nuns recovered.

According to the Global Sisters Report, an outlet of the National Catholic Reporter publishing company, the 13 deaths, ranging in age from 69 to 99, “may be the worst loss of life to a community of religious women since the 1918 influenza pandemic.”

Trump World

--As noted above, President Trump cancelled the Republican National Convention, blaming the coronavirus “flare-up.”

“It’s not the right time for that,” he said on Thursday, adding that he would still give a convention speech in a different form.

Part of the convention will go ahead in North Carolina, the original site before he shifted the ‘good stuff’ to Jacksonville.  Now Trump will be formally nominated in Charlotte, Aug. 24.

“It’s a different world, and it will be for a little while,” the president said, adding that he “just felt it was wrong” to put potentially tens of thousands of attendees at risk.

“We didn’t want to take any chances,” he said at the briefing.  “We have to be vigilant.  We have to be careful and set an example.”

Well he hardly set an example back in June in Tulsa and Phoenix.

Jacksonville’s sheriff had warned this week his city was not ready for a convention, cases spiking in his city.

But to go back to June 2, when Trump tweeted that he was being denied the ability to hold the convention in Charlotte by Democratic Gov. Roy Cooper, Vice President Pence added in response: “There are states around the country…we think of Texas, we think of Florida, Georgia – the last two states I visited last week that have made tremendous progress on reopening their communities and reopening their economies.”

Ah, not quite, Mr. Vice President.

--President Trump in his Wednesday briefing blamed the dramatic uptick in coronavirus cases on the nationwide protests over police brutality, summer holidays, a “substantial increase in travel” and migrants crossing the U.S.-Mexico border, even though his own advisers have also attributed the surge to some states’ early reopenings.

As Trump spoke Wednesday evening, one of his own top health experts, Dr. Deborah Birx, told Fox News that some states opening too early was a prime factor behind the renewed outbreak.

“This was an event that we think can be traced to Memorial Day and opening up and people traveling again and being on vacations,” the White House coronavirus task force coordinator said.

Trump said his administration “didn’t anticipate” the Covid-19 outbreak across the country’s Sun Belt, including Florida, Texas, Georgia and Arizona, but he failed to acknowledge that those states were among the first to follow his lead to lift restrictions.

--President Trump sent federal troops into Portland, Oregon, after weeks of anti-racism protests, and this week he said he planned to send more law enforcement personnel to other major cities, the mayors of which are not requesting them.  Senior members of previous Republican administrations are now condemning the moves.

Michael Chertoff, the former director of homeland security under George W. Bush, said in an interview that the department appears to be overstepping its mission, and that Trump’s threats to send law enforcement into Democrat-run cities is “very problematic” and “very unsettling.”

“In my view, this is damaging to the department,” Chertoff told the Washington Post.  “It undermines the credibility of the department’s principal mission.”

As the Post’s Greg Sargent notes: “With imagery mounting of militarized law enforcement battling protesters even as Trump threatens to send in more agents while running ads against Joe Biden featuring this exact imagery, Trump’s senior officials must now place a legal and substantive gloss on what’s happening.

“So Chad Wolf, the acting secretary of homeland security, is claiming that the law authorizes federal agents to protect federal property – but also to ‘conduct investigations’ of alleged threats to property and officers to the point of detaining protesters far from federal property,” even as Oregon officials oppose his dispatching of law enforcement into Portland.

When Trump then threatened to send law enforcement into Chicago, Greg Sargent added, “Wolf is claiming that this will be about battling drugs and urban crime. That’s meant to suggest this is not another federal crackdown on protests, as if that validates overruling Chicago officials who oppose this.”

Chertoff said DHS is departing from its mission.

“While it’s appropriate for DHS to protect federal property, that is not an excuse to range more widely in a city and to conduct police operations, particularly if local authorities have not requested federal assistance,” Chertoff told Sargent. “That’s our constitutional system.”

Chertoff suggested that DHS appears to be allowing its mission to shade into “a general roving opportunity to conduct police operations,” rather than keeping it “limited to federal interests,” in defiance of local officials who are being “overruled.”

And the fact that Trump is explicitly singling out cities “run by Democrats” makes his moves even worse, Chertoff suggested.

“Essentially, he’s suggesting this is a political maneuver…suggesting that it’s going to be a tool of political activity is very unsettling.”

“It’s very problematic legally as well as morally,” Chertoff added. 

Tom Ridge, another homeland security secretary under Bush said DHS’s mission is to protect against “global terrorism” and was “not established to be the president’s personal militia.”

“It would be a cold day in hell before I would consent to a unilateral, uninvited intervention into one of my cities,” Ridge told Michael Smerconish.

President Trump tweeted:

“Recently watched failed RINO Tom Ridge, former head of Homeland Security, trying to justify his sudden love of the Radical Left Mayor of Portland, who last night was booed & shouted out of existence by the agitators & anarchists.  Love watching pathetic Never Trumpers squirm!”

Mr. President, Tom Ridge was a Vietnam war hero.  You?  You’re the one squirming today.

Editorial / New York Post

“As President Trump talks of sending in federal law-enforcers to help Chicago, New York and other cities deal with surging crime, we can’t help but think of a line from Mayor Ed Koch after he lost to Mayor David Dinkins: ‘The people have spoken, and they must be punished.’

“Meaning: The public needs to experience the leadership it selects.

“New Yorkers elected Bill de Blasio – twice – and also the hyper-progressive state and city legislators who’ve so worked to provide comfort and aid to local lawbreakers.  Now they’re learning their lesson (we hope).

“That’s how democracy works, and the alternatives are much, much worse.

“Federal authorities have a right and a duty to step in under certain circumstances – notably, as in Portland right now, to protect federal property.

“Indeed, as Andy McCarthy notes, if the feds didn’t have a clear right to enforce federal laws everywhere, there’d be no need to declare a ‘sanctuary city’: Mayors like de Blasio could simply order the feds out.

“But federal help in enforcing local laws is another matter.  As a matter of practicality, it can only work when both sides cooperate, as Long Island authorities are cooperating with the Trump Justice Department to take out the MS-13 monsters.

“It’s another story when local officials lack the will to face down local criminals: The feds can’t give the likes of de Blasio or Chicago’s Lori Lightfoot or Portland’s Ted Wheeler the spine implants they need….

“Four years of David Dinkins led the people of New York to elect Rudy Giuliani, with a mandate to bring crime down.  That produced the most remarkable gains in public order in living memory.

“There’s no guarantee de Blasio’s replacement will be as great an improvement, but it’s up to the people to decide.

“Thanks for thinking of New York, Mr. President, but the city needs to solve its own problems.”

--Amid the growing fear Donald Trump will try to interfere with the Nov. 3 election or refuse to accept its outcome, Democrats are mounting an extensive voter protection effort, hiring directors in 19 key states to lead more comprehensive operations than in past cycles while filing a record number of lawsuits ahead of the election trying to make voting easier.  Thousands of election monitors and lawyers will be mobilized across the country on Election Day.

Republicans say that while they are making routine preparations for recounts and voting irregularities, they are more focused on combating efforts to expand mail-in balloting.

President Trump has cast doubt on the legitimacy of such ballots, which have been used in far greater numbers in primary elections amid the pandemic.

Democrats are bracing for a “nightmare scenario” in which Trump is leading the in-person vote count in battleground states on election night but complains the contest is being stolen from him in ensuing days as mail-in ballots get counted.

--Inexplicably, President Trump sent well wishes to accused child abuser – and close friend of Jeffrey Epstein – Ghislaine Maxwell on Tuesday but said he has not been following her case.

“I wish her well,” Trump said during a news conference otherwise devoted to Covid-19.

In raising the Maxwell case with Trump, a reporter asked: “Do you feel she’s going to turn in powerful men?”

Trump said he had met Maxwell “numerous times” over the years because he lived in Palm Beach.  But he said he knows nothing about the charges against her, including an allegation that she arranged an assignation between a young girl and Prince Andrew.

“I haven’t been following it too much,” Trump said.  “I just wish her well, frankly.”

As for the British prince, “whatever it is, I don’t know the situation with Prince Andrew,” Trump said.  “I just don’t know.  I’m not aware of it.”

--A federal New York judge ordered Thursday that Michael Cohen, President Trump’s former fixer and personal attorney, must be released from prison because the Department of Justice threw him back behind bars as an act of “retaliation” over his forthcoming tell-all book about the president.

Manhattan Federal Court Judge Alvin Hellerstein fumed at a Justice Department attorney who struggled to explain why Cohen was returned into custody earlier this month after objecting to home confinement conditions that barred him from writing a book about Trump, speaking to journalists or using social media.

“I’ve never seen such a clause. In 21 years of being a judge…I’ve never seen such a clause,” Hellerstein said.  “How can I take any other inference than that it was retaliatory?”

Cohen was released Friday afternoon.

--Trump tweets:

“I spoke to highly respected (Chairman) Senator @JimInhofe, who has informed me that he WILL NOT be changing the names of our great Military Bases and Forts, places from which we won two World Wars (and more!).  Like me, Jim is not a believer in ‘Cancel Culture’.”

“Obama, who wouldn’t even endorse Biden until everyone else was out of the primaries (and even then waited a long time!), is now making a commercial of support.  Remember, I wouldn’t even be here if it weren’t for them. I wouldn’t be President.  They did a terrible job!”

“The Democrats have stated strongly that they won’t approve a Payroll Tax Cut (too bad!). It would be great for workers. The Republicans, therefore, didn’t want to ask for it. Dems, as usual, are hurting the working men and women of our Country!”

[Ed. I said months ago a payroll tax cut was just about the dumbest idea for today.]

“Mail-In Voting, unless changed by the courts, will lead to the most CORRUPT ELECTION in our Nation’s History! #RIGGEDELECTION”

“Strong Stock Market Numbers.  You want to see them dive? Vote for the Radical Left with their BIG Tax Hikes!”

“You will never hear this on the Fake news concerning the China Virus, but by comparison to most other countries, who are suffering greatly, we are doing very well – and we have done things that few other countries could have done!”

[Ed. Indeed we have.  We have died in waves like few others!]

“Looking forward to live sports, but any time I witness a player kneeling during the National Anthem, a sign of great disrespect for our Country and our Flag, the game is over for me!”

[Ed. I will shrug and reach for a beer.]

“We are United in our effort to defeat the Invisible China Virus, and many people say that it is Patriotic to wear a face mask when you can’t socially distance. There is nobody more Patriotic than me, your favorite President!”

“Thank you for the good reviews and comments on my interview with Chris Wallace of @FoxNews. We may have set a record for doing such an interview in the heat.  It was 100 degrees, making things very interesting!”

--Finally, just a few snippets from said interview with Mr. Wallace, host of “Fox News Sunday.”

On his past claims that Covid-19 will simply “disappear,” Trump told Wallace, “I’ll be right eventually.  You know, I said, ‘It’s going to disappear.’  I’ll say it again.”

On the issue of masks, Trump said he didn’t agree with a national mask mandate, saying people should have a “certain freedom.”

The president – as he did before his surprise victory over Hillary Clinton in 2016 – refused to say whether he would challenge the results of the election should he lose to Joe Biden.

Claiming that “mail-in voting is going to rig the election,” Trump repeated his mantra from 2016 that he can’t be sure he will accept the results of the election: “I’m not going to just say yes.  I’m not going to say no, and I didn’t last time either.”

Trump also claimed the coronavirus death rate is going down, despite the fact the rate of deaths is accelerating.

“I think we have one of the lowest mortality rates in the world,” Trump falsely asserted.

“It’s not true, sir,” Wallace countered.  “We had 900 deaths on a single day just this week.”

Trump declined to take responsibility for Covid problems, saying, “Look, I take responsibility, always, for everything because it’s ultimately my job, too.  I have to get everybody in line… Some governors have done well, some governors have done poorly.”

Trump again attributed the rise in cases to increased testing, though the increased rate of infections far outpaces the increased rate of testing.  Wallace explained to Trump that the number of tests has increased by 37 percent but the number of cases has shot up by 194 percent. Trump replied, “Many of those cases are young people that would heal in a day. They have the sniffles and we put it down as a test.  Many of them – don’t forget, I guess it’s like 99.7 percent, people are going to get better and [in] many cases, they’re going to get better very quickly.”

Trump denied his staff organized attacks on Anthony Fauci but said his administration’s top doctor has “made some mistakes” and is “a little bit of an alarmist.”

Trump said he would block changing the names of forts dedicated to Confederate generals such as Braxton Bragg.

“I don’t care what the military says,” Trump said. “I’m supposed to make the decision.”

The president said people who want to fly Confederate battle flags “love their flag,” and “it represents the South; they like the South.”

And Trump said that Fox News – once his favorite network – has “changed a lot” since the days when Roger Ailes ran it, in part because it interviews too many Democrats.

Chris Wallace fact-checked Trump frequently during the interview, including the president’s claim that Biden advocated “defunding” the police.  Biden has said he does not support defunding or abolishing the police but that he favors redirecting some law enforcement funding to other programs.

Wall Street and the Economy

First, on the data front, we had very strong housing numbers for June.  Existing home sales in the month rose 20.7% in the month over May, the largest monthly gain ever,* but were still down 11.3% vs. a year ago.  The median home price rose 3.5% from June of last year to $295,300.

*I was furious with President Trump because in his briefings Wednesday and Thursday, he crowed that home “prices” were up 20.7%, not “sales.”

June new home sales were also up big, 13.8% over May, the biggest monthly increase since 2007.

But as alluded to above, we took a major step back when the weekly initial jobless claim figure came in at 1.416 million, an increase over last week’s revised 1.307 million, the first increase since the peak four months ago, and the 18th straight week over 1 million.  The figure is a reflection of renewed shutdowns or a pause in reopening across the coronavirus hot spots.  In two weeks we will get the July jobs report and it’s not going to be to the president’s liking.

Justin Lahart / Wall Street Journal

“The claims report was just the latest sign that the recovery in jobs from the spring lows has begun to fade. Data from scheduling-software company Homebase, for example, show that gains in the number of hourly employees working at restaurants, retailers and other small businesses stalled out this month. Similarly, data from Kronos, a workforce management software company, shows that growth in work shifts has slowed this month. Experimental weekly data from the Census Bureau shows there has been a marked increase in the number of Americans who say they have experienced lost employment income.

“The claims report is also notable because last week was the so-called reference week for the July employment report, the pay period that the Labor Department bases its closely watched jobs numbers on….

“At the very least, the evidence suggests that any job gains in July will be much more muted than in June, with the potential for the economy to have actually shed jobs.”

Economist Mark Zandi and others are now coming around to this conclusion.

With the stimulus programs beginning to run off, unless Congress acts immediately, bankruptcies in retail, restaurants, bars will begin cascading.  And there’s the issue of mortgage forbearance and rent forgiveness that is running off end of the month in many states.  The stories that are to come will be heartbreaking.

CEOs in America are less optimistic than they were just 4-6 weeks ago, before the renewed surge in Covid-19 numbers across some key states. The recovery is losing momentum. 

From July 5-23, the daily TSA checkpoint travel numbers have stalled at 22% to 28% of 2019 levels, after a steady climb off the April low of 5%.  As I discuss below, the airlines, and the travel and leisure industry in general, are noticeably glum.

We had our shot at a full recovery and we blew it.  As Delta Air Lines CEO Ed Bastian said, “The reality is the politicization of masks and the virus has caused a lot of frustrations… The more stringent and compliant we are, the faster we’ll be through this.  Masks and hygiene and distance are the keys.  You see it around the world. It really is about people taking care of each other.”

But at a key time in our nation’s history, we didn’t and we are paying a severe price.

Europe and Asia

We had the flash PMI readings for July for the eurozone (EA19) and the composite came in at 54.8 vs. 48.5 in June, a 25-month high.  [50 being the dividing line between growth and contraction.  Data courtesy of IHS Markit.]

Manufacturing was 51.1 vs. 47.4, a 19-month high; services 55.1 vs. 48.3, a 25-mo. high.

For Germany, the flash manufacturing reading for this month was 50.0 vs. 45.2, a 19-mo. high; services at 56.7 vs. 47.7, a 30-mo. high.

France reported a flash reading on manufacturing for July of 52.0 vs. 52.3; services 57.8 vs. 50.7.

The UK had a flash manufacturing PMI of 53.6 vs. 50.1; services 56.6 vs. 47.1, a 60-month high!

Yes, Europe benefited from the easing of lockdown measures.  But where now?

Chris Williamson / IHS Markit

“Companies across the euro area reported an encouraging start to the third quarter, with output growing at the fastest rate for just over two years in July as lockdowns continued to ease and economies reopened.  Demand also showed signs of reviving, helping curb the pace of job losses.

“The data add to signs that the economy should see a strong rebound after the unprecedented collapse in the second quarter.

“However, while the survey’s output measures hint at an initial V-shaped recovery, other indicators such as backlogs of work and employment warn of downside risks to the outlook.

“The concern is that the recovery could falter after this initial revival.  Firms continue to reduce headcounts to a worrying degree, with many worried that underlying demand is insufficient to sustain the recent improvement in output. Demand needs to continue to recover in coming months, but the fear is that increased unemployment and damaged balance sheets, plus the need for ongoing social distancing, are likely to hamper the recovery.”

Separately, Eurostat released the government debt to GDP figures for the first quarter.  For the EA19 it rose to 86.3% from 84.1% in the fourth quarter.

Germany 61.3%, France 101.2%, Italy 137.6%, Spain 98.8%, Netherlands 49.5%, and Greece 176.7%.

The UK is at 84.7%.

But the big story on the week was that after four days of acrimonious negotiations in Brussels, European Union leaders agreed on an unprecedented stimulus package worth 750 billion euros ($860 billion) to pull their economies out of the worst recession in memory as well as tighten the financial bonds holding the 27 nations together.

The agreement, reached in the early hours of Tuesday, represented a victory for German Chancellor Angela Merkel and French President Emmanuel Macron, who had drafted an early outline in May. The emergency fund will give out 390 billion euros of grants and 360bn euros of low-interest loans.

Almost a third of the funds are earmarked for fighting climate change and, together with the bloc’s next 1 trillion-euro, seven-year budget, will constitute the biggest green stimulus package in history.

The emergency funds will not only unleash critical financial support for the southern European economies hit hardest by the virus (Italy and Spain), but serve as validation the bloc can work together to help members in need.

“I am very relieved,” Merkel said.  “We have come up with a response to the biggest crisis the EU has faced.”

Italy will be the biggest beneficiary, with the expectation of about 80bn euros in grants and 125bn in loans.

Brexit: The EU’s chief Brexit negotiator, Michel Barnier, said Britain’s refusal to compromise on fisheries and level playing field guarantees of fair competition have made a trade agreement unlikely. Speaking at the end of a round of talks in London, Barnier said that although there was some progress in certain areas there was none on the key issue of a level playing field on state aid.

“By its current refusal to commit to conditions of open and fair competition and to a balanced agreement on fisheries, the UK makes a trade agreement, at this point, unlikely.”

Britain’s chief negotiator David Frost blamed the EU, asserting that its proposals did not respect the red lines Boris Johnson identified in a meeting with the presidents of the EU institutions last month.

“We have always been clear that our principles in these areas are not simple negotiating positions but expressions of the reality that we will be a fully independent country at the end of the transition period,” Frost said.

Frost said the EU had listened to Britain’s concerns about the role of the European Court of Justice in any future agreement and Britain has dropped its demand for a complex suite of separate agreements like those the EU has with Switzerland.

However, the issue of state aid remains a stumbling block, and Mr. Barnier complained on Thursday that Britain had not yet published details of the state aid regime it plans to introduce from January next year.

“We have no visibility on the UK’s intention on its future domestic subsidy control regime.  We respect the UK political debate but the time for answers is quickly running out,” he said.

Turning to Asia…nothing on the data front from China.

In Japan, the flash July PMI figures revealed just modest improvement over June.  The flash composite was 43.9 vs. 40.8 in June, with manufacturing at 41.2 vs. 32.3, and services at 45.2 vs. 45.0.  Still recessionary, and second-quarter GDP is expected to be down about 20%.

Japan’s exports in June suffered a double-digit decline for the fourth month in a row as the pandemic continued to take a heavy toll on demand.  U.S.-bound Japanese shipments nearly halved again due to plunging demand for cars and auto parts, while exports to China remained weak.

The Ministry of Finance data revealed exports plummeted 26.2% in June from a year earlier, a larger decline than expected by economists.  This followed a 28.3% fall in May – the worst downturn since September 2009.

Shipments to the U.S. – Japan’s key market – dived 46.6%, due to a 63.3% decline in shipments of automobiles, 56% drop in airplane engines and a 58.3% fall in car parts.

Exports to China fell 0.2% in June. Shipments to Asia declined 15.3% and to the EU 28.4%.

Reflecting weak demand and declining oil prices (vs. a year ago), imports fell 14.4% in the year to June.

Street Bytes

--With rising tensions between the U.S. and China, and troubles with some tech stocks, like Intel, the Dow Jones and S&P 500 had their first losing week in four, the Dow losing 0.8% to 26469, while the S&P fell 0.3%.  Nasdaq had its second straight losing week, down 1.3%.

Next week, earnings from Amazon, Apple, Alphabet and Facebook.

--U.S. Treasury Yields

6-mo. 0.13%  2-yr. 0.15%  10-yr. 0.58%  30-yr. 1.23%

Lowest weekly close on the 10-year, ever.

The yield on the Italian 10-year, despite the massive debt to GDP ratio, is now 0.99%, owing to approval of the EU rescue package and all the stimulus (bond buying) from the European Central Bank.  The Greek 10-year is at 1.05%!

--Oil closed at $41.34, highest weekly close since early March.  But four straight weeks at $40-$41.

--Chevron Corp. agreed to buy Noble Energy Inc. for about $5 billion in shares as the oil giant looks to beef up amid the wreckage of the worst-ever crude oil price crash.

The takeover is the industry’s first since the coronavirus triggered a severe slump and the largest since Occidental Petroleum outbid Chevron to acquire Anadarko Petroleum Corp. for $37 billion last year.

The deal will grow Chevron’s shale presence in both the Permian Basin, once the main driver of the U.S. shale boom but now experiencing a sharp reduction in drilling, and the Denver-Julesburg Basin in Colorado.  The company’s proved reserves will increase by about 18% over what was reported end of 2019.  The deal also gives Chevron a presence in the eastern Mediterranean by adding a large field off the coast of Israel.

--Oilfield services giant Schlumberger NV, on the other hand, outlined plans for deeper spending cuts after recording a $3.7 billion charge and a second straight quarterly loss; the company announcing it would be reducing its workforce by more than 21,000 employees, or a fifth of its workforce.

--Safe haven gold hit $1,900 today, closing at that level, the first time since 2011, as the worsening U.S.-China row added to fears over the hit to a global economy already reeling from the pandemic.

--The airlines continue to be at the forefront of the Covid-19 story and this week saw earnings reports from most of the biggies.

United Airlines warned on Tuesday that travel demand will remain suppressed until there is a widely accepted treatment or vaccine.  United, which is not blocking middle seats, plans to fly about 35% of its 2019 summer schedule in the third quarter and is forecasting a load factor of around 45% in July.  Its planes flew about one-third full in the second quarter.

CEO Scott Kirby told investors: “The second quarter of 2020 was historic for the airline industry for all the wrong reasons.  At the beginning of April, we saw the sharpest, deepest drop in demand history, far worse than 9/11 or the Great Recession.” 

Kirby added that then “just as optimism about a recovery was beginning to build, we watched demand fade once again as Covid-19 spiked.”

United, which is more exposed than its peers to hard-hit international travel, reported an adjusted net loss of $2.6 billion for the June quarter, as revenue dropped 87% to $1.475 billion.

United had $15.2 billion in liquidity as of July 20 and reiterated its forecast for liquidity to top $18 billion at the end of September as it taps additional capital.  The airline burned through about $40 million per day in the second quarter but sees that slowing to $25 million in the third quarter as it matches its flight schedule to demand.

The setback does not bode well for airline jobs in the fall when the government’s stimulus package expires.  To avoid furloughs, airlines have rolled out a number of packages to encourage employees to leave voluntarily.  Chicago-based United said more than 6,000 employees had opted for such packages, but this is after sending 36,000 notices of potential furloughs come October.  You do the math.

Airlines are not counting on a fresh round of federal aid.  Delta Air Lines and Southwest, which offered cash buyouts, have reported strong employee response for voluntary departments, meaning they could have a less costly workforce on the other side of the crisis since union contracts require airlines to furlough junior workers first.

--Southwest Airlines and American Airlines each slowed their cash burn over the second quarter but warned that demand had stalled as Covid-19 cases spike.

Southwest said it was rethinking the number of flights it had planned to add in August and September.  Analysts have forecast that Southwest would weather the pandemic better than larger U.S. carriers thanks to its domestic focus and lower-cost structure.  LUV said its average core cash burn had nearly halved to $16 million a day from $30 million in April as revenue improved.  But it estimated the burn rate to be $18 million in July, rising to an average of $23 million per day in the third quarter.

American said its second-quarter cash burn rate was about $55 million per day (yikes), lower than its forecast of $70 million, though June was down to $30 million from nearly $100 million in April.

Southwest had $15.5 billion in cash at the end of June and American $10.2 billion. Both, like United, have warned of furloughs in the fall, though Southwest said 16,900 employees had volunteered for extended leaves or early retirements, which it expects to result in more than $400 million in lower costs in the fourth quarter.  Excluding items, Southwest posted a $1.5 billion loss in the quarter, with total operating revenue falling nearly 83% to $1.01 billion.

At American the net loss ex-items was $3.4 billion, while operating revenue plunged 86% to $1.62 billion vs. $11.96bn a year earlier.

American expects a 60% decline in system capacity in Q3 compared with last year.  The airline did say, however, that it “totally” plans to take delivery of Boeing 737 MAX aircraft and is currently discussing the timing of when the jets will arrive into the airline’s fleet.

American said it hopes to finalize financing on 17 MAX aircraft earmarked for delivery this year, and it plans to take its full order of 100 jets over time.

--The number of daily passenger flights in China has rebounded to 80% of pre-coronavirus levels, China’s aviation regulator said on Friday.  On July 23, Chinese airlines operated 13,059 passenger flights.  This is a sign of hope.

--Intel Corp. said on Thursday its new 7-nanometer chip technology was six months behind schedule, sending its shares plummeting 16%. The new delays are a major blow for the Santa Clara, Calif.-based chipmaker, which struggled with years of delays for its current 10-nanometer chips.

Intel’s delays extend the lead in the smaller, faster chip technology held by Taiwan Semiconductor Manufacturing Co. and will likely benefit rivals Advanced Micro Devices and Nvidia Corp., which outsource their manufacturing to TSMC.

Intel CFO George Davis said in an interview that Intel had discovered a “critical defect mode” in part of the 7nm chipmaking process technology and was making adjustments.

Otherwise, Intel updated its full-year 2020 revenue guidance to $75 billion, ahead of current estimates.  For the second quarter ended in June, Intel said overall revenue and adjusted profits were $19.73 billion and $1.23 per share, compared with analysts’ estimates of $18.55bn and $1.11, according to Refinitiv.  Sales for PC chips were $9.5 billion, while revenue for its data center segment was $7.1 billion.

Nvidia, which designs but does not make its own chips, earlier this month overtook Intel as the most valuable U.S. chip supplier, thanks to strong sales to data centers using Nvidia chips for artificial intelligence work.  In the PC market, AMD is rolling out new PC chips that analysts expect to be powered by TSMC’s manufacturing processes.

So Intel is taking fire from all sides.

--Multiple states are investigating Apple Inc. for potentially deceiving consumers, according to a March document obtained by a tech watchdog group.  The Texas attorney general may sue Apple for violating the state’s deceptive trade practices law in connection with the multi-state investigation, according to a document obtained by the Tech Transparency Project. But the document provided few details.

Apple has faced class-action lawsuits from consumers alleging that it deceived them about slowing the performance of iPhones with aging batteries.  Apple is also facing lawsuits alleging that it knew and concealed issues with the keyboards on its MacBook laptops.

Separately, Apple and Nike face growing calls to cut ties with suppliers alleged to be using “forced labor” from China’s Uighur people (most of whom are in Xinjiang province).  Activists have launched a campaign accusing firms of “bolstering and benefiting” from exploitation of the Muslim minority group.

Nike said it was “conducting ongoing due diligence with our suppliers in China to identify and assess potential risks related to employment of Uighur or other ethnic minorities.”

--Microsoft Corp. reported strong sales growth driven by sustained demand for its cloud-computing services as customers shift more work online during the coronavirus pandemic.

The software maker on Wednesday said sales rose 13% to $38 billion in its fiscal fourth quarter, and that it generated a net profit of $11.2 billion, both topping the Street’s expectations.

Sales for Azure, Microsoft’s cloud-computing service, grew by 47% from a year earlier, though this was the first time under 50%, vs. 59% in the prior quarter and 64% in the year earlier period.

Microsoft CEO Satya Nadella said, “The last five months have made it clear that tech intensity is the key to business resilience.  Organizations that build their own digital capability will recover faster and emerge from this crisis stronger.”

Microsoft’s personal computing business – which includes licensing revenue from PC sales, the Xbox gaming platform and Surface laptops – saw sales advance 14% to $12.91 billion.

The shares fell because Microsoft’s profit margin wasn’t as good as analysts expected.

[Microsoft’s LinkedIn unit will cut about 960 jobs, or around 6% of its workforce as the professional networking site grapples with falling demand for its recruitment services due to the pandemic.  LinkdIn’s revenue nonetheless rose 10% in the quarter.]

--IBM beat estimates for second-quarter profit on Monday and signaled that demand in its cloud computing business would get a boost as large corporations accelerate their digital shift due to the outbreak.

IBM has jettisoned some of its legacy business to focus on higher-margin cloud computing.  “The trend we see in the market is clear.  Clients want to modernize apps, move more workloads to the cloud and automate IT tasks,” IBM’s new boss Arvind Krishna said on an earnings call with analysts.

Revenue from the cloud business, previously headed by Krishna, rose 30% to $6.3 billion in the second quarter.  Krishna took over as CEO from Ginni Rometty in April.  Sales in the business services unit was impacted by delayed spending on discretionary projects due to Covid-19, down  7% to $3.9 billion.

IBM’s total revenue fell 5.4% to $18.12 billion, but came in above analysts’ estimates.

--Tesla overcame a seven-week pandemic-related shutdown at its Fremont, California plant to post a surprising $104 million net profit for the second quarter.

It was the company’s fourth-straight positive quarter, qualifying it to be included in the S&P 500 index, decision to come later.

Excluding one-time items such as $347 million in stock-based compensation, Tesla made $2.18 per share, beating Wall Street estimates of a break-even quarter, with revenue down 4.9% from a year ago to $6.04 billion, which still whipped forecasts for $5.15bn.  The surprising profit was vs. a $408 million loss a year ago.

The company did issue a note of caution in its investor letter.  “It remains difficult to predict whether there will be further operational interruptions or how global consumer sentiment will evolve in the second half of 2020.”

Tesla said it was well-positioned for a strong second half, while announcing it had picked a site for its second U.S. assembly plant in the Austin, Texas, area, five minutes from Austin International Airport and 15 minutes from downtown Austin, according to CEO Elon Musk.  This will be its largest facility employing at least 5,000 workers.

The new factory will build Tesla’s upcoming Cybertruck pickup and will be the second U.S. manufacturing site for the Model Y small SUV, largely for distribution to the East Coast.

The company said it has enough money to fund new products and to build new factories in the U.S. and Germany, as well as cover other expenses.  It is also going to begin delivering its electric semi next year.  The company ended the June quarter with about $9.1 billion in cash, though it has $8.5 billion in debt.

CEO Musk had pledged to build more than 500,000 vehicles this year but the Fremont factory shutdown has made that goal more difficult.  Still, the company has a target of delivering more than half-million vehicles this year, and it’s expanding Fremont’s capability.

The company said it delivered 90,650 vehicles from April through June as it rolled out the new Model Y SUV in the U.S. and China.  That’s a slight increase over the first quarter’s 88,400, though a 4.8% drop from the second quarter of 2019, when Tesla delivered 95,200 vehicles.

Musk has been taking a victory lap less than two years after his controversial tweet about taking Tesla private at $420 a share – a pot joke that scored him a $20 million fine and had him booted as chairman of Tesla’s board.  The stock is up over 300 percent since the pandemic hit in early March.  As a result, Musk has leaped into the top-10 list of the world’s richest people, with his $72 billion fortune currently placing him at No. 8, according to Forbes.

But the shares cratered at week’s end.  Noted Bernstein analyst Toni Sacconaghi in a Wednesday research report called Tesla’s earnings report and outlook “Good but not great,” adding Tesla’s “valuation implies nearly world domination.”

--Twitter Inc. on Thursday reported its highest-ever yearly growth of daily users who can view ads, beating analysts’ estimates on usage and sending its shares up 4%.  Twitter’s average monetizable daily active users increased 34% year over year to 186 million, in a rise it said was primarily driven by external factors such as shelter-in-place requirements and increased conversation around the coronavirus.

But ad sales, which make up 82% of Twitter’s revenue, sank 23% to $562 million, a drop the company attributed to brand spending pauses tied to the pandemic and civil unrest.

CEO Jack Dorsey opened a conference call with analysts by apologizing for the hack that compromised the accounts of high-profile users last week, saying “we feel terrible.”  Dorsey said Twitter had taken steps to improve its security and “resiliency against targeted social engineering attempts.”

--Earlier in the week, Twitter announced sweeping measures aimed at cracking down on the QAnon conspiracy theory, including banning thousands of accounts.

QAnon is a sprawling conspiracy theory whose followers support President Trump.  Twitter said it hoped the action would help to prevent “offline harm.”

The suspensions are expected to impact about 150,000 accounts worldwide.  More than 7,000 accounts have been removed in recent weeks for violations, Twitter said.

Followers of QAnon believe “deep-state” traitors are plotting against Donald Trump. The conspiracy theory has jumped from fringe social media to mainstream attention.

The FBI last year issued a warning about “conspiracy theory-driven domestic extremists” and designated QAnon a potential domestic extremist threat.

Lauren Boebert, a fan of the movement, won the Republican primary for Colorado’s 3rd District earlier this month and is expected to win in November. I am biting my tongue on this whole topic, knowing some people in my area who support the movement as well.

--As alluded to above, the U.S. has agreed to pay Pfizer Inc. and BioNTech SE nearly $2 billion to secure 100 million doses of their experimental Covid-19 vaccine to provide to Americans free of charge.

Under the $1.95 billion agreement, the U.S. Dept. of Health and Human Services and the Defense Department will receive 100 million doses of the vaccine should it be cleared by regulators, and can also acquire an additional 500 million does.  The vaccine, which has shown promising preliminary results in small groups of patients, is set to enter late-stage testing this month.

--Casino magnate Sheldon Adelson’s Las Vegas Sands Corp. reported a 97% decline in revenues as the global pandemic hit the gambling hubs of Las Vegas and Macau, and executives expressed little optimism about a return to business as usual.

On Wednesday, Sands posted $98 million in net revenue for the three months ended June 30, down from $3.3 billion a year earlier.  The company had a net loss of $985 million for the quarter, compared with net income of $1.11 billion a year earlier.

Nevada allowed casinos to reopen June 4, but then Covid-19 cases have been on the rise in the state and Las Vegas Sands executives are pessimistic over the outlook for Vegas, at least in the near future, with the restrictions in place, such as a 50% occupancy limit.

Chief Operating Officer Robert Goldstein said, “In all of the years I’ve been here in Las Vegas, I’ve never felt more gloomy than I do today about what’s happening in Las Vegas short term.  Hope long term we will see a better day.”

--Coca-Cola said earnings and revenue sank in the second quarter, which it expects to be the period of 2020 that’s the “most severely impacted” by Covid-19, while trends in its away-from-home segment improved in line with lockdowns being eased.

Revenue fell 28% to $7.2 billion as products outside the home faced pressure, the Atlanta-based company said.  Revenue fell around the world, with North America down 16%; Europe, Middle East and Africa falling by 37%; and Asia-Pacific revenue sank 23%.

The pandemic prompted restaurants around the world to close their dining rooms so it’s not hard to see how Coca-Cola has suffered.

--Chipotle Mexican Grill said online sales more than tripled after the coronavirus pandemic hit, rewarding the company’s recent investments in its digital operations.  The company reported a same-store sales decline of 9.8% in its second quarter, less than expected, with CMG turning a profit of $8.2 million vs. $91 million in last year’s period.

Online sales surged, accounting for 60.7% of revenue in the latest quarter, up from 26% of revenue in its quarter ending in March, when the pandemic had closed dining rooms and driven more customers to order online.

As I noted last week, Chipotle is building more stores with drive-through lanes for digital orders.

--Tractor Supply, a rural lifestyle retailer that has become a darling of the Street for its strong performance amid the pandemic, reported fiscal second-quarter earnings of $2.90, up from $1.80 a year earlier, higher than expected.

Sales increased 35% to $3.18 billion in the three months ended June 27, with comparable store sales increasing about 31%.

The company said in a statement that results were positively impacted by the pandemic, which has customers more focused on the care of their homes, land and animals.

--The operator of Ann Taylor and Lane Bryant filed for Chapter 11 protection Thursday.  Ascena Retail Group Inc., which operates nearly 3,000 stores mostly at malls, had been dragged down by debt and weak sales for years.

The company said it reached an agreement with its creditors to reduce its debt by $1 billion.

--The Southern California housing market is showing signs of heating up after a coronavirus-induced slump.  Sales remain below year-earlier levels but are up sharply from spring.

Despite the fact Covid-19 cases are surging in the state, for now, would-be buyers who still have the financial wherewithal seem eager to get their hands on mortgages with historically low rates.

Sales across the six-county Southern California region jumped 43.5% from May, the largest increase ever from May to June in a data set that dates from 1988.

But sales were still at a record low for a June and down 15.2% from a year earlier, according to data firm DQNews.  [Sales had declined 45% year over year in May and fell 31.5% in April.]

In Los Angeles County, sales rose 40.8% from May and fell 24.3% from a year earlier.  The median price rose 4% from a year ago to $643,000.

In Orange County, sales rose 49% from May and fell 22.1% from a year earlier.  The median price rose 4.1% vs. year ago to $765,000.

--Malaysia on Friday said investment bank Goldman Sachs has agreed to a $3.9 billion settlement with the government over the multi-billion dollar 1MDB scandal.  The deal includes a $2.5 billion cash payout by Goldman and a guarantee by the bank to return at least $1.4 billion in assets linked to 1MDB bonds, Malaysia’s finance ministry said in a statement.

Malaysian prosecutors first filed charge in December 2018 against three Goldman Sachs units for misleading investors over bond sales totaling $6.5 billion that the bank helped raise for sovereign wealth fund 1MDB (1Malaysia Development Bhd). Goldman has consistently denied wrongdoing, saying that certain members of the former Malaysian government and 1MDB lied to it about how proceeds from the bond sales would be used.  The units of Goldman have pleaded not guilty to the charges.  The U.S. Department of Justice has said around $4.5 billion was misappropriated from 1MDB.

--I forgot to note BlackRock Inc.’s quarterly earnings from last Friday and just want to get down for the record that the world’s largest asset manager took in a record quarterly $57 billion in its bond ETFs in the second quarter, with BlackRock now having $7.3 trillion under management.

The investment firm posted a second-quarter profit of $1.2 billion, up from the year-prior period of $1 billion, with revenue rising 4% to $3.6 billion.

--Bridgewater Associates, the world’s largest hedge-fund firm headed by founder Ray Dalio, has laid off several dozen employees across the company this month, a rarity.  The layoffs affected Bridgewater’s research department and client-services team. 

In a statement, Bridgewater said that, given the changing world, “team members will be working more from home so we won’t need the same number of support people, new technologies are changing what type of people we need and how we serve our clients, and we also want to become more efficient.”

The pandemic has led companies of all stripes to conclude they can do the same with less.

--Irish retail banks are likely to cut up to 30 percent of jobs – the equivalent of 7,650 positions – in the next five years as the Covid crisis shifted transactions to online and lenders seek to rein in costs in an era of ultra-low interest rates, according to Deloitte Ireland.  You can probably make the same statement worldwide.

“Profitability will remain the key challenge for banks. The lower-for-even-longer interest rates and evaporation of traditional fee income streams will depress returns, and aggressive cost control may be the only real lever for banks to improve their profitability in the short to medium term,” said David Dalton, head of financial services at Deloitte Ireland.  [Irish Times]

--Bayer AG lost an appeal in the first case to go to trial linking its Roundup weedkiller to cancer, though the California court greatly reduced the amount of damages awarded to $20.4 million, vs. an initial $289.2 million award, which was followed by an even larger $2 billion award in a second trial.

Recently, Bayer said it would pay up to $10.9 billion to settle tens of thousands of Roundup lawsuits, but that it was still pursuing appeals in the three cases that have gone to trial.

--I’ve been writing of the problems facing New York’s Metropolitan Transportation Authority and the “fiscal tsunami” it faces, and this week its leaders said only a Washington bailout can fill a $16 billion budget gap over the next four years.

The authority has requested $3.9 billion in federal funding to maintain operations through the end of the year and “prevent system-wide calamity.”

--Hershey Co. said it expects subdued Halloween celebrations will result in slower demand for a holiday that normally generates a tenth of its sales.  But CEO Michele Buck said consumer behavior is hard to predict during the pandemic and “Consumers will find creative and safe ways to trick-or-treat.”  Stay away from my place, urchins! mused the editor.

Hershey does have to figure it out because otherwise it could be left with a ton of inventory it would have to pull back or try to sell at a discount.

Foreign Affairs

China: Wednesday, the United States told China to close its consulate in Houston by the end of the week in a dramatic worsening of ties between the world’s two biggest economies, with Beijing immediately warning of retaliation.  That turned out to be an order today to close the U.S. consulate in the southwestern city of Chengdu.

China’s foreign ministry called the move an “unprecedented escalation.”

The State Department said the move was made “to protect American intellectual property and Americans’ private information.”

Speaking on a visit to Denmark, Secretary of State Mike Pompeo repeated accusations about Chinese theft of U.S. and European intellectual property, which he said were costing “hundreds of thousands of jobs.”

Pompeo referred to a U.S. Justice Department indictment on Tuesday of two Chinese nationals over what it called a decade-long cyber espionage campaign that targeted defense contractors, Covid researchers and hundreds of other victims worldwide.

“President Trump has said enough – we are not going to allow this to continue to happen,” Pompeo told a news conference.

The New York Times quoted the top U.S. diplomat for East Asia, David Stilwell, as saying that the Houston consulate had been at the “epicenter” of the Chinese army’s efforts to advance its warfare advantages by sending students to U.S. universities.  “We took a practical step to prevent them from doing that,” Stilwell told the times. Stilwell said China’s consul general in Houston and two other diplomats had been caught recently engaging in questionable activity past the security check area at Houston airport while awaiting takeoff of a charter flight to China that Beijing had arranged due to air travel restrictions during the coronavirus pandemic.  He said the diplomats were escorting travelers to the gate area and Air China had paperwork with false birth dates for the diplomats.

Late on Tuesday, firefighters in Houston went to the consulate after smoke was seen and video emerged showing documents being burned in the courtyard.

Sen. Marco Rubio (R-Fla.), acting chairman of the Senate Intelligence Committee, told Fox News the Houston consulate was “kind of the central node of a massive spy operation, commercial espionage, defense espionage.”

“They use businessmen as fronts in many cases to try to influence members of Congress and other political leaders at the state and local level.  So it’s long overdue that it be closed.”

The Chinese Ministry of Foreign Affairs said in a statement Friday that the Chengdu consulate’s closure was a “legitimate and necessary response to the unjustified act by the U.S.”

Beijing’s decision will not only oust American diplomats from the capital of Sichuan province – a region with a population rivaling Germany – it will close a key listening post for developments in neighboring Tibet.   The move will probably have a bigger impact than shutting the U.S. consulate in Wuhan, but less than closing U.S. missions in the key financial centers of Hong Kong or Shanghai.

“It’s not possible to carry out an entirely equivalent action, but choosing Chengdu shows China wants to reduce the harm made to bilateral relations,” said Wang Yiwei, a former Chinese diplomat and director of China’s Institute of International Affairs at Renmin University in Beijing.

But Thursday, in a blistering speech at the Richard Nixon Presidential Library and Museum, Sec. of State Pompeo accused Xi Jinping and the Chinese leadership of attempting to “tyrannize inside and outside China forever” in pursuit of global hegemony.  “Securing our freedoms from the Chinese Communist Party is the mission of our time,” Pompeo said.

Pompeo cast competition with China as an existential struggle between right and wrong.

“If we bend the knee now, our children’s children may be at the mercy of the Chinese Communist Party, whose actions are the primary challenge today in the free world,” the secretary said.  “The free world must triumph over this new tyranny.”

While Pompeo didn’t call for regime change, he came close, saying the U.S. must “engage and empower the Chinese people.”

Taking a more pessimistic twist on Ronald Reagan’s adage of “trust but verify” in relations with the Soviet Union, Pompeo said the U.S. needs to “distrust and verify” agreements with Beijing.  Pompeo also claimed that Communists “almost always lie,” which drew scrutiny from China experts who said it was needlessly antagonistic.

The location of the speech at the Nixon Library was not by accident, as the administration believes efforts at engagement by Nixon and his successors failed.

“If the free world doesn’t change Communist China, Communist China will change us,” Pompeo said. “There can’t be a return to past practices because they’re comfortable or because they’re convenient.”

Pompeo also noted: “President Nixon once said he feared he had created a ‘Frankenstein’ by opening the world to the CCP. And here we are.”

“The truth is that our policies, and those of other free nations, resurrected China’s failing economy, only to see Beijing bite the international hands that were feeding it,” Pompeo said.  “We, the freedom-loving nations of the world must induce China to change…in more creative and assertive ways, because Beijing’s actions threaten our people and our prosperity.” 

In a sign that relations could deteriorate further, Foreign Ministry spokesman Wang Wenbin answered a question about the future of the U.S.-China trade deal by saying the American side should think “carefully” about where the relationship was heading. President Trump said Thursday that his “phase one” deal means “much less” to him in the wake of the pandemic.

Separately, China threatened on Thursday to withdraw its recognition of British National Overseas passports held by residents of Hong Kong, in retaliation for the former colonial ruler’s policy of easing their path to citizenship.

Starting from January 2021, those in Hong Kong with such status would be able to apply for special visas to live in Britain that could eventually confer citizenship, interior minister Priti Patel said this week.

However, China opposes such a policy as interfering in domestic affairs, a spokesman for its foreign ministry said, calling the move a flagrant violation of Britain’s promises, international law and principles of international relations.  “As the English side is the first to violate the promise, China will consider not recognizing BNO passports as a valid travel document, and reserves the right to take further measures,” the spokesman told a news briefing.

China has never recognized BNO passports as a valid document for mainland entry by residents of Hong Kong, which returned to Chinese rule in 1997.  Instead, it required them to use travel permits issued by China. Britain’s decision, which could allow three million Hong Kong residents to settle in Britain, came after Beijing imposed its new national security law that effectively ends democracy as Hong Kong has known it for decades and goes against the freedoms promised to the territory in 1997 with the handover from Britain to China, which really goes back to the terms of the treaty agreed to by the two sides in 1984.

China, in accusing Britain of interfering in Hong Kong and Chinese affairs, said, “The Chinese side urges the British side to recognize the reality that Hong Kong has returned to China, to look at the Hong Kong national security law objectively and immediately correct its mistakes,” China’s embassy in London said in a statement.

In another move China’s Communist Party expelled an outspoken and prominent property tycoon who denounced Xi Jinping, paving the way for his criminal prosecution and escalating the CCP’s efforts to quash dissent among the elite.

The party announced the expulsion of Ren Zhiqiang and said it had seized his assets for “serious violations of discipline and law” that included the possession of golf club memberships.  Officials also took aim at Ren’s family, accusing him of “colluding with his children to accumulate wealth without restraint.”

The move no doubt sends a chill over China’s entrepreneurs and business leaders.  No one is above the CCP’s demands for unflinching political loyalty.

Lastly, China successfully launched an unmanned probe to Mars on Thursday in its first independent mission to another planet, in a display of its technological prowess and ambition to join an elite club of space-faring nations.

In 2020, Mars is at its closest to Earth, at a distance of about 34 million miles, in a window of about a month that opens once every 26 months. The probe is expected to reach Mars in February where it will attempt to land and deploy a rover to explore the planet for 90 days.

Editorial / Wall Street Journal

“A couple of months ago we heard that President Trump was pushing the Pentagon to withdraw U.S. troops from Afghanistan, Germany and South Korea. We started calling around and were told to focus on Afghanistan, as the other two deployments were safe in an election year.

“Bad call.  Mr. Trump has since ordered the withdrawal of 9,500 of the 34,500 U.S. troops stations in Germany, and now we read in the Journal that he may do the same with U.S. forces in Seoul.  You never know with Mr. Trump how much of this leak is negotiating bluster, but it’s the President’s worst national-security idea since he floated a Taliban visit to Camp David last year.

“The U.S. has some 28,500 troops on the Korean peninsula. The main strategic purpose is defending against North Korea, but the deployments also protect America’s security interests and reassure the region that the U.S. is committed to defending America’s friends against a threatening China.

“As he likes to do, Mr. Trump has been seeking more money from South Korea to pay for the U.S. mission, though Seoul contributed some $926 million in 2019. South Korean President Moon Jae-in has balked at the U.S. demands, which are for $1 billion or more a year, and we’re told the talks are deadlocked.

“Mr. Trump is considering his options, including some reduction of force.  But even a partial U.S. retreat from the East Asian flashpoint would echo around the world as a sign of American weakness.  It also wouldn’t save money since the Pentagon would have to pay the troops even if they come home, and it would cost far more to have to send those forces back to the region in a crisis.

“Above all, a U.S. retreat would be a gift to the hawks in China who want to push the U.S. out of the region. Withdrawal would confirm their view that the U.S. is in decline and can no longer be trusted, and it would shock our allies in Japan and Taiwan.

“Senator Ben Sasse, the Nebraska Republican, didn’t hold back Friday in criticizing the potential withdrawal: ‘This kind of strategic incompetence is Jimmy Carter-level weak. Why is this so hard?  We don’t have missile systems in South Korea as a welfare program; we have troops and munitions there to protect Americans.  Our aim is to give the Chinese communist leadership and the nuclear nut tyrannizing his North Korean subjects something to think about before they mess with us.’

“As for the domestic U.S. politics, a withdrawal certainly doesn’t fit an election strategy of running against Joe Biden as a naif who’d be eaten alive by Chinese President Xi Jinping.  Mr. Biden would quickly get to Mr. Trump’s right on China and foreign policy, and he’d be able to quote Republicans in the Senate like Mr. Sasse who agree with him.

“Mr. Trump’s cavalier treatment of allies, and the threat he may walk away from long-time alliances, is one risk of a second term.  Apart from North Korea’s young dictator, Kim Jong Un, a U.S. retreat in Korea would most please Mr. Xi.”

Iran: Editorial / Washington Post

“The Trump administration’s ‘maximum pressure’ campaign against Iran has manifestly failed to achieve either its stated or unstated aims: It has not forced Iran to renegotiate the nuclear accord from which President Trump unwisely withdrew; nor has it ended Iranian aggression in the Middle East or caused the regime of Ali Khamenei to collapse.  Now it may result in a powerful new blow to U.S. interests, in the form of an Iranian partnership with China that could rescue Iran’s economy while giving Beijing a powerful new place in the region.

“An agreement approved by Iranian President Hassan Rouhani last month could lead to billions of dollars in Chinese investments in Iran, in exchange for a steady and discounted stream of Iranian oil, according to the New York Times. The deal also envisages security cooperation, including joint military exercises and the sharing of weapons development and intelligence, according to an 18-page draft the Times obtained.

“It’s not certain the pact will go forward: It has yet to be publicly unveiled and must be approved by the Iranian parliament, where it could encounter nationalist resistance.  But if it does, it will not only rupture the wall of sanctions that the Trump administration has constructed in an attempt to strangle the Iranian economy; it will also mark a significant escalation of China’s challenge to U.S. global influence.

“As with the mounting U.S. conflict with Iran, that was not inevitable. The regime of Xi Jinping supported the pressure campaign against Iran conducted by the Obama administration as well as the nuclear accord it led to, which was meant to restrain Iran’s uranium enrichment and other nuclear development for a decade or more.  Even after Mr. Trump withdrew from the deal in 2018, Beijing at first generally adhered to the new U.S. sanctions, reducing oil purchases and other trade.

“Yet Mr. Trump’s confrontational approach to China in recent months, including his refusal to continue work on a comprehensive trade deal, has given Mr. Xi little incentive to cooperate with Washington’s geopolitical priorities.  On the contrary, the Chinese leadership likely perceives a moment of critical U.S. weakness as Mr. Trump flounders amid a health and economic crisis and is moving to take advantage. It is expanding its presence in the South China Sea; it is crushing Hong Kong’s autonomy. Allying itself with the foremost U.S. adversary in the Middle East opens yet another front.”

Israel: Public anger has been growing against Prime Minister Benjamin Netanyahu over his handling of the coronavirus crisis and alleged corruption.  In Jerusalem last weekend, hundreds gathered outside the prime minister’s residence and then marched through the streets, calling for his resignation.  In Tel Aviv, thousands rallied, demanding better state aid to businesses hurt by coronavirus restrictions and to people who have lost jobs.

Unemployment presently stands at 21%.  A poll by the nonpartisan Israel Democracy Institute found only 29.5% of the public trust Netanyahu’s handling of the crisis.

Libya: Egypt’s parliament gave President Abdel-Fattah al-Sisi the green light for possible military intervention in Libya by approving the deployment of armed forces abroad to fight “terrorist groups” and “militias.”

A sharp military escalation in Libya, where fighters led by eastern commander Khalifa Haftar have been battling the forces of the internationally recognized government, could risk igniting a direct conflict among the foreign powers that have poured in weapons and fighters in violation of an arms embargo.

Sisi warned last week that Egypt would not stand idle if there was a threat to national security in Egypt and its western neighbor, Libya.

Reminder, Egypt is alongside UAE and Russia in backing Haftar. Turkey backs the recognized government in Tripoli.

Turkey: President Tayyip Erdogan joined thousands of worshippers at Hagia Sophia on Friday for the first prayers there since he declared the monument, revered by Christians and Muslims for almost 1,500 years, a mosque once again.  It had been a museum since 1934 and the days of the founder of modern Turkey, my man Kemal Ataturk.  Years ago I went to visit Ataturk’s grand tomb in Ankara. I wonder what will happen to it?

Russia: The U.S. and UK have accused Russia of testing a weapon-like projectile in space that could be used to target satellites in orbit.

The State Department described the recent use of “what would appear to be actual in-orbit anti-satellite weaponry” as concerning.

Russia’s defense ministry earlier said it was using new technology to perform checks on Russian space equipment.

U.S. Assistant Secretary of State for International Security and Non-proliferation, Christopher Ford, accused Moscow of hypocrisy after it said it wanted arms control to be extended to space.

“Moscow aims to restrict the capabilities of the United States while clearly having no intention of halting its own counter-space program,” he said.

Gen. Jay Raymond, who heads U.S. Space Command, said there was evidence Russia “conducted a test of a space-based anti-satellite weapon.”

Random Musings

--Presidential tracking polls….

Gallup: 38% approve of President Trump’s job performance, 57% disapprove; 91% of Republicans approve, 33% of independents (June 8-30).
Rasmussen: 49% approve of Trump’s job performance, 49% disapprove (July 24…an improvement over last week’s 45-53 split.)

--In a new ABC News/Washington Post national poll, Joe Biden leads President Trump 55 percent to 40 percent among registered voters.  That compares with a 10-point Biden lead in May and a two-point edge in March.  Among those who say they are certain to vote, however, Biden’s lead is 11 points.

Trump’s job approval rating stands at 39 percent, 57 percent disapproving.  In the late-March poll when Biden led Trump by only two points, essentially tied, Trump’s approval rating stood at 48 percent and 46 percent negative.

So it’s all about his handling of the coronavirus. Currently, 38 percent approve and 60 percent disapprove.

50 percent still approve of Trump’s handling of the economy, 47 percent disapproving.  In late March the split was 57-38 on this topic.

But 61 percent say the president has done more to divide the country than unite it, and 76 percent say that when Trump talks about people with whom he disagrees, he crosses the line in terms of what’s acceptable.

--A Fox News survey of registered voters around the country found Biden with an 8-point lead, 49-41 percent.  In this poll the margin has narrowed since June, when Biden led 50-38.

Trump is ahead by 5 points among men, while Biden is up 19 among women.  Biden leads among Blacks (+64), Hispanics (+30), millennials (+22), suburban voters (+11) and independents (+11).

Whites with a college degree (+3) and without a degree go for Trump (+9).  Trump is also the choice among White evangelical Christians (+43), rural voters (+9) and seniors (+1).  Curiously, last month seniors went for Biden by 10.

Voters believe Trump lacks the key traits for the Oval Office: less than half think he has the mental soundness (43 percent), intelligence (42 percent), and judgment (40 percent) to serve effectively as president.  For reference, 36 percent felt he had the necessary judgment in October 2016, less than a month before his victory.  [Biden’s three numbers, in order, are 47, 51 and 52 percent.  So both under 50 percent on the issue of mental soundness.]

29 percent rank coronavirus as the No. 1 problem facing the country, topping the 15 percent who cite the economy and 10 percent who say race relations.

43 percent approve of Trump’s handling of the pandemic, 56 percent disapprove.  [74 percent approve of the job Dr. Fauci is doing.]

Trump’s ratings on the economy split 47-47.  That’s down from a high of 56 percent approval in January.  By a 44-43 margin, voters say Biden will do a better job on the economy.

Only 15 percent said they favored reopening the schools “as usual” and another 21 percent supported a return to classrooms accompanied with social distancing measures.  More than half of voters thought remote learning, which Trump opposes, will have to be at least part of the new school year – with 31 percent supporting a combination of in-person and remote classes and 25 percent calling for fully remote classes.

Trump’s overall job approval rating in the Fox survey shows 45 percent approve and 54 percent disapprove, basically unchanged from last month.

Eighty-one percent of voters report wearing a mask all or most of the time when in public, up from 72 percent in May.  90 percent of Democrats and 71 percent of Republicans wear a mask.

--A Reuters/Ipsos poll of registered voters released Wednesday, like Fox, also had Biden with an 8-point lead, 46 percent to 38 percent, with a whopping 16 percent either undecided, planning to support a third-party candidate or may not vote.

But, importantly, a Reuters/Ipsos 2016 poll of those who said they were undecided that summer had support evenly split between Trump and Hillary Clinton.  Then on Election Day, Trump won a majority of voters who said they decided in the final week.

Today, however, the poll found that 61 percent of undecided or third-party registered voters said they would support Biden if they had to choose, while 39 percent would vote for Trump.

70 percent of undecided or third-party voters say they disapprove of Trump’s performance in office and the same number think the country is headed in the wrong direction.

--A Quinnipiac University poll of registered voters in Florida showed Biden with a 51-38 lead over President Trump. In an April 22nd poll, Biden led only 46-42 percent.  Only 40 percent of Floridians approve of Trump’s job performance, 58 percent disapprove.

The survey was released Thursday and by a 62-34 margin, voters said it would be unsafe to hold the Republican national convention in Jacksonville.  Then the president made his announcement canceling it.

--A separate Fox News poll of battleground states has Joe Biden leading Donald Trump in Michigan, Minnesota and Pennsylvania.

Biden leads 49-40 in Michigan; 51-38 in Minnesota; and 50-39 in Pennsylvania.

--Biden outlined a sweeping plan on Tuesday aimed at breathing life into the coronavirus-battered economy by investing $775 billion in caregiving, programs for children, the elderly and the disabled.

Biden said his proposal would create 5 million jobs and would provide all 3- and 4-year-old children access to free preschool.  He also promised to make it easier for aging relatives and loved ones with disabilities to receive home or community-based care.

“We’re trapped in a caregiving crisis within an economic crisis within a healthcare crisis,” Biden told educators at a campaign event in New Castle, Delaware.

I watched Biden’s presentation and it was as well-reasoned a program as I’ve heard in a long time, and a program every single American can relate to.  He says he would pay for it by rolling back tax breaks for real estate investors and tightening enforcement of the existing tax code.

But after Biden spoke he again failed to take questions.  He has to.

Separately, Biden said Trump was the country’s “first” racist president.  During a virtual town hall on Wednesday, when a questioner complained of racism surrounding the outbreak and mentioned the president referring to it as the “China virus,” Biden responded by blasting Trump and “his spread of racism.”

“The way he deals with people based on the color of their skin, their national origin, where they’re from, is absolutely sickening,” Biden said.  “No sitting president has ever done this.  Never, never, never.  No Republican president has done this.  No Democratic president.  We’ve had racists, and they’ve existed. They’ve tried to get elected president.  He’s the first one that has.”

Biden also suggested that Trump is using race “as a wedge” to distract from his mishandling of the pandemic.

--Gerald F. Seib / Wall Street Journal

Is there a hidden Trump vote? The good news for President Trump is this: There just might be.

“The bad news for the president: The universe of potential hidden supporters is heavily populated with the kinds of people who happen to be more comfortable with Joe Biden than they were with Hillary Clinton four years ago.

“The question of whether there is a submerged Trump vote is rising in importance as virtually every poll, nationwide and in swing states, shows Mr. Trump losing to Mr. Biden.  Nationally, the Biden lead is so large that the emergence of pockets of secret supporters alone probably wouldn’t be enough to fully turn around the numbers.

“But in some swing states, the race is close enough that the appearance of silent Trump supporters could make a decisive difference. These would be people who fly below the political radar screen, because they haven’t voted in the past, or don’t tend to respond to pollsters, or don’t advertise their Trump support.

“Given its current predicament, the Trump campaign has to hope it can find such a rich vein of unmined gold – and indeed, that is exactly what the Trump team insists it will do, precisely as it did in 2016.

“Though a record 137 million Americans voted in 2016, about 39% of eligible Americans didn’t vote, meaning there are tens of millions of nonvoters available, if they can be registered and turned out. This universe of hidden voters certainly includes a lot of potential Trump supporters.

“Dave Wasserman, an analyst at the nonpartisan Cook Political Report, has produced a detailed analysis of those who didn’t vote in 2016.  His research found that in some of the key swing states of 2016 – Michigan, Pennsylvania and Wisconsin – eligible white voters without college degrees made up a majority of the nonvoting population: 64% in Pennsylvania and Wisconsin, and 60% in Michigan.

“Such working-class white voters have been Mr. Trump’s strongest demographic group. Exit polls in 2016 showed that two-thirds of them went for him over Mrs. Clinton, a Democrat.

“Today, the Trump campaign assumes that these potential voters are particularly troubled by the current racially tinged unrest. That’s one reason you hear Mr. Trump offer bleak descriptions of lawless cities and suburbs that he says only he can bring under control – and why a new Trump ad declares that ‘you won’t be safe in Joe Biden’s America.’….

“There is another bit of evidence suggesting a hidden Trump vote.  In a recent survey, the Monmouth University poll found that a majority of voters in Pennsylvania – 57% - believe there are secret Trump backers in their communities who don’t tell anyone about their support.

“Still, there is nothing certain about this trove of potential Trump voters. Even if they exist, they fly below the radar for a reason: They don’t tend to participate in the political process and getting them to do so is no easy trick.

“Beyond that, working-class whites are far more comfortable with Mr. Biden than they were with Mrs. Clinton.  Mr. Biden projects more as working-class Joe from Scranton, a beer-and-shot kind of guy with a long history of police-union support, than as a representative of the urban, liberal Democratic elites that many blue-collar voters distrust and disdain.  It’s no coincidence that Mr. Biden came out early against the movement to defund police departments….

“(But) Mr. Biden still has problems with these voters; the most recent Wall Street Journal/NBC News poll shows white voters with less than a college education tend to be unenthused about him, and they still break more for Mr. Trump.  But their support for Mr. Biden in the matchup against Mr. Trump is higher than it was for Mrs. Clinton.

“That’s one reason Mr. Trump is eager to portray Mr. Biden less as some kind of left-wing radical himself, but rather as so old and weak he’ll be led around by his party’s progressives.  ‘It won’t be him,’ Mr. Trump said in an interview on ‘Fox News Sunday.’  ‘It will be the radical left.’

“There are other shortcomings in the theory of a decisive hidden Trump vote.  One is that there also were significant numbers of Democratic-friendly, nonwhite voters who didn’t show up in 2016; in the key state of Arizona, they outnumber the working-class whites who didn’t vote.  Such voters also could be activated.

“Bottom line: In a year of intense political interest, Americans who don’t normally vote probably will show up.  But their precise impact remains an open question.”

--Rich Lowry / New York Post

“The Biden team certainly isn’t going to rewrite any campaign playbooks or dazzle anyone with its brilliance, but it has avoided serious mistakes and demonstrated an understanding of the basic political terrain and its candidate’s strengths.

“It hasn’t asked Biden to do anything out of his comfort zone or beyond his capabilities and has been content for President Trump to dominate all the attention, so long as Trump is not advancing his own cause, and often setting it back, with all the airtime and headlines.

“Above all, the campaign has avoided the most politically perilous ideological excesses throughout.  This has required some discipline, given how influential woke Twitter is on the left.

“Biden’s theory of the Democratic Party, even if it seemed doubtful at the outset, proved correct – that the center of gravity of the party was still with, as he put it, Obama-Biden Democrats rather than with the avowed socialists and social-justice warriors….

“It might seem obvious that endorsing ‘Medicare for All,’ which involves yanking away the private health insurance of more than 100 million Americans, is foolish and politically indefensible, but several candidates in the Democratic race did it anyway.

“He’s steered clear of other pitfalls since locking up the nomination. He’s said he wouldn’t ban fracking. He didn’t endorse defunding the police.  He defended the statues of America’s founders.

“He’s indisputably slid left.  This has been his M.O. his entire career – to stay smack in the middle of whatever the consensus position of the Democratic Party is at any given time.  He’s running on the leftmost platform of any Democratic nominee in a couple of generations but has tried to soften the edges as much as possible.

“As a general matter, nothing he’s said has made much of an impression one way or the other.  His campaign knows that it benefits if the election is a referendum on Trump – and is acting accordingly.

“On the other hand, Trump should know that it hurts him if the election is a referendum on him – yet persists in making it one anyway.  Why should Biden try to take the mic from Trump if the president is using it to feud with Bubba Wallace and Anthony Fauci?

“Not only do these diversions do nothing to dent Biden, they serve to validate the former vice president’s case that the country needs a return to normalcy.

“Still, nothing is decided in July.  Events took a hand earlier this year in turning a political tailwind for Trump into a stiff headwind. Something unforeseeable could change the dynamic yet again, and better economic conditions could improve the overall atmosphere.

“Biden’s record and agenda give Trump targets to shoot at, and he should obviously take every opportunity to make the election, to the extent he can, about the radicalism of the Democratic Party.

“Finally, there’s the fact that Biden is an unsteady performer at best….

“So Trump can’t be counted out.  But the Biden campaign is canny enough that it isn’t going to make it easy for him.”

--Shootings in New York City have increased by 66.8% from the start of the year through July 17, according to figures by the New York Police Department.  The number of shooting victims has grown by 77.5%.

In a television appearance on Monday, NYPD Commissioner Dermot Shea said that morale is at a low point after weeks of large-scale protests over the killing of George Floyd.  The demonstrations have called for changes to policing and defunding of the NYPD and other police departments.

In response to the protests, Mayor Bill de Blasio signed a new law that criminalizes police use of chokeholds.  Commissioner Shea has said the law discourages officers from policing.

Earlier, Shea unleashed his anger at city leaders during a meeting with police brass, calling them “cowards” who “don’t have a goddamn clue what they’re talking about” with new NYPD reforms, as a video obtained by the New York Daily News revealed.

“I don’t know if there’s ever been a period like this where so many systems of government are literally cowards and won’t stand up for what’s right,” Shea said while standing at a podium.  “They’re failing at every possible measure to be leaders and throw it on the back of the police department.  They curse them with one hand and blame them with the other.  How dare they.”

Councilman Rory Lancman (D-Queens), who drafted the chokehold bill, fought back, saying Shea should look in the mirror before calling anyone out.

“It’s frightening that Commissioner Shea is part of the lunatic fringe who thinks it’s acceptable to choke or stand on a suspect, and it’s dangerous that the mayor still has his back,” Lancman said in a statement.  He has demanded Mayor de Blasio fire Shea over the skyrocketing shootings.  But de Blasio continues to support his police commissioner.

--Some thoughts on the passing of Congressman John Lewis, a pioneer of the civil rights movement and long-time member of the House of Representatives.  Lewis, a true American hero, died Friday at the age of 80.

On the front lines of the bloody campaign to end Jim Crow laws, with blows to his body and a fractured skull to prove it, Lewis, a sharecroppers son was the last surviving speaker at the historic March on Washington for Jobs and Freedom in 1963.

Rep. James E. Clyburn (S.C.): “When I told my father that I had decided against following him into the ministry, he responded that, ‘the world would rather see a sermon than hear one.’  John was both a minister and a living example, who demonstrated what it means to follow the moral compass directed by one’s faith.

“My favorite Old Testament scripture is Micah 6:8, ‘do justly be merciful and walk humbly.’ It must have been John’s as well.”

Former President Barack Obama: “He loved this country so much that he risked his life and his blood so that it might live up to its promise. And through the decades, he not only gave all of himself to the cause of freedom and justice, but inspired generations that followed to try to live up to his example.”

House Speaker Nancy Pelosi: “John Lewis was a titan of the civil rights movement whose goodness, faith and bravery transformed our nation, from the determination with which he met discrimination at lunch counters and on Freedom Rides, to the courage he showed as a young man facing down violence and death on the Edmund Pettus Bridge, to the moral leadership he brought to the Congress for more than 30 years.”

Republican Majority Leader Mitch McConnell: “The Senate and the nation mourn the loss of Congressman John Lewis, a pioneering civil rights leader who put his life on the line to fight racism, promote equal rights, and bring our nation into greater alignment with its founding principles.”

Former President George W. Bush: “Laura and I join our fellow Americans in mourning the loss of Congressman John Lewis. As a young man marching for equality in Selma, Alabama, John answered brutal violence with courageous hope.  And throughout his career as a civil rights leader and public servant, he worked to make our country a more perfect union.  America can best honor John’s memory by continuing his journey toward liberty and justice for all.”

--Finally, Siberia is routinely hitting north of 90 degrees, the World Economic Forum reported, and is likely the cause of manmade climate change.

Heatwaves above the Arctic Circle are not uncommon, but researchers warn the region is warming at twice the rate as the rest of Earth.

“We are missing more than 2.5 million square kilometers of Arctic sea by mid-July,” tweeted London-based meteorologist and weather analyst Scott Duncan of EDF Energy on Wednesday.  “That is over 467 million football fields.”

Duncan added that the minimum temperature in some of Arctic Siberia will not fall below 68 degrees for at least several days.

The mercury hit 95 in the northern Siberian locale of Kujga on Tuesday, according to NASA.

---

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

God bless America.

---

Gold: $1900…new closing record.
Oil: $41.34

Returns for the week 7/20-7/24

Dow Jones  -0.8%  [26469]
S&P 500  -0.3%  [3215]
S&P MidCap  +0.7%
Russell 2000  -0.4%
Nasdaq  -1.3%  [10363]

Returns for the period 1/1/20-7/24/20

Dow Jones  -7.3%
S&P 500  -0.5%
S&P MidCap  -10.3%
Russell 2000  -12.0%
Nasdaq  +15.5%

Bulls 56.7
Bears 17.3

Hang in there…Mask up.  Wash your hands.

Brian Trumbore