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08/01/2020

For the week 7/27-7/31

[Posted 10:00 PM ET, Friday]

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*Special thanks to Barb S. and Chris S. for their support. 

Edition 1,111

Congressman John Lewis wrote a final essay titled “Together, You Can Redeem the Soul of Our Nation” that he ordered be published in the New York Times on the morning of his funeral.

Addressing the looming election in November, Lewis wrote:

Ordinary people with extraordinary vision can redeem the soul of America by getting in what I call good trouble, necessary trouble.  Voting and participating in the democratic process are key.  The vote is the most powerful nonviolent change agent you have in a democratic society.  You must use it because it is not guaranteed.  You can lose it.

Trump then tweeted Thursday morning, around the time of the funeral:

“With Universal Mail-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRAUDULENT Election in history.  It will be a great embarrassment to the USA. Delay the Election until people can properly, securely and safely vote???”

The Constitution gives the power to regulate the “time, place and manner” of general elections to Congress, while states control the dates of primary elections.  Nowhere is the president granted such power.

Today the president continued, telling reporters that the election is going to be “rigged” and that “this is going to be the greatest election disaster in history!”

This is disgusting, disgraceful behavior on the part of an American president; a pathetic, small man, surrounded and supported by total sycophants, bent on sowing discord, confusion and chaos.

What is sickening is that a sizable minority will go along with his dangerous game.  It’s the kind of reckless behavior that had me saying a full 1 ½ year ago that the “generals were restless.”  I can only imagine what they are saying to each other in their private conversations today.

Trump’s act cannot continue.  But in sowing doubt in the key institution of our democracy, the electoral process, he is taking us down a road we all know could lead to catastrophe.

The problem is that the opposition is being led by a man, Joe Biden, who is an incredibly weak candidate.  Anything can still happen.

Meanwhile, on the Covid front, the toll mounts, while Trump and some of his acolytes tout a “plateauing” in the numbers…but if so this is at a totally unacceptably high level.  Look at the death tolls below if you haven’t been paying attention this week.

But what really drives me up the wall about our president when it comes to the virus is that he never, ever talks about the long-term side effects, instead misleading the people into thinking that, yes, for the “99% who get the virus, it’s harmless.”

A recent study of 100 recovered Covid-19 patients reveals 78 of them now have lasting cardiovascular damage even though a vast majority of them had mild cases in the first place.

The study, published Monday in JAMA Cardiology, details the results of cardiac MRI exams of the 100.  Twenty-eight of them required oxygen supplementation while fighting the virus, while just two were on ventilators.  But 78 of them still had cardiovascular abnormalities after recovery, with 60 of them showing “ongoing myocardial inflammation,” the study shows.  JAMA researchers concede the findings call for a larger study, but this should scare the hell out of everyone, especially young people.

You don’t want to catch this.  Wise up!  Don’t act like idiots!

Speaking of idiots, many in Congress fall under that category and tonight, nearly 30 million workers are about to lose $600 in enhanced weekly unemployment benefits that have kept much of the economy afloat because top lawmakers and the White House remain at an impasse.  The two sides are far apart on the Covid-19 relief bill, with, among things, Republicans wanting the $600 reduced to $200, while Dems want to maintain the current level.

The White House is saying Democrats, who had a bill of their own signed two months ago, rejected reasonable offers, while House Speaker Nancy Pelosi derided Republicans for trying to advance a short-term fix that would have extended benefits for just a week.

“What are we going to do in a week?” Pelosi asked in her news conference today.

Most states cap weekly unemployment benefits at well below $600, and the enhanced checks have been paying the basic bills of millions.

And now eviction moratoriums have run out in many states.

Pelosi and White House Chief of Staff Mark Meadows are said to be meeting Saturday, possibly joined by Senate Minority Leader Chuck Schumer and Treasury Secretary Steven Mnuchin.

But for many it’s already too late.  I know that the deficits can’t continue to explode forever, but both sides knew this day was coming for months now.  You are going to be hearing one heartbreaking story after another next week unless there is a miracle.

And as if all the above isn’t bad enough, there’s a hurricane headed towards Florida and the East Coast.

Then again it’s 2020…and we have five months to go in this year from hell.

Covid-19 death tolls (as of tonight)

World…682,197
USA…156,747
Brazil…92,568
Mexico…46,688
UK…46,119
India…36,551
Italy…35,141
France…30,265
Spain…28,445

[Source: worldometers.info]

USA daily death tolls…Sun. 451, Mon. 596, Tues. 1,245, Wed. 1,465, Thurs. 1,465 (yes, same), Fri. 1,462.

Look at those numbers…the last three days the highest since May 27 when we had 1,567 deaths.

Covid Bytes

[Just some nuggets of info on the week.]

--Moderna reported Tuesday that its vaccine had induced a strong immune response in a study on monkeys.  The company said the vaccine protected against infection in the lungs and nose and prevented lung disease. Phase 3 human trials have begun.

--Johnson & Johnson kicked off U.S. human safety trials for its Covid vaccine after releasing details of a study in monkeys that showed its best-performing vaccine candidate offered strong protection in a single dose.  When exposed to the virus, six out of six animals who got the vaccine candidate were completely protected from lung disease and five out of six were protected from infection as measured by the presence of virus in nasal swabs, according to a study published in the journal Nature.

“This gives us confidence that we can test a single-shot vaccine in this epidemic and learn whether it has a protective effect in humans,” Dr. Paul Stoffels, J&J’s chief scientific officer, told Reuters in an interview.

The government is backing J&J’s efforts to the tune of $456 million in funding.  They expect to advance to phase 3 trials in September.

--Pfizer on Monday began the last stage, phase 3, trial of an experimental Covid-19 vaccine study that seeks to enroll 30,000 people. Pfizer is developing the vaccine with BioNTech SE.

Pfizer is targeting October to file for regulatory approval for emergency-use authorization.

--Russia announced it would become the first country to produce a vaccine for widespread use, as a Moscow-based research institute plans to register its candidate within the first two weeks of August.

The vaccine, which has gone through two phases of testing, is expected to be registered with the Health Ministry by August 14, said Kirill Dmitriev, head of Russia’s Direct Investment Fund, or RDIF.

Russia is calling this a “Sputnik” moment.  I’ll pass.

--As scientists and pharmaceutical companies work at breakneck speed to develop a vaccine, public health officials and senior U.S. lawmakers are sounding alarms about the Trump administration’s lack of planning for its nationwide distribution.  The federal government traditionally plays a principal role in funding and overseeing the manufacturing and distribution of new vaccines, which often draw on scarce ingredients and need to be made, stored and transported carefully.

Since there won’t be enough vaccines for all 330 million Americans right away, the government has to decide who gets it first (obviously, first responders/healthcare workers, and the elderly should), and in educating our vaccine-wary people.  But just who is in charge of oversight, much less any critical details, is not clear as of today. 

Republican Senator Roy Blunt, who chairs a panel overseeing health program funding, is one of several lawmakers pushing for the CDC, which was first founded in 1946 to counter malaria.

“They are the only federal agency with a proven track record of vaccine distribution and long-standing agreements with health departments across the country.”

--India reported another record level of infections on Friday, 55,078 in the past 24 hours, with 779 deaths.

Australia reported record daily infections on Thursday, with a record 13 deaths and more than 700 new infections, mostly in the second-most populous state of Victoria, where the government ordered all residents to wear face-coverings outside.  The country’s second-largest city, Melbourne, has been in lockdown since July 7.

Even Vietnam has reported a new surge in six cities and provinces in six days, linked to an outbreak in the central city of Danang. Authorities told tens of thousands of people who visited Danang to report to disease control centers.

But we are talking only 42 infections over a multi-day period, yet such severe measures are being taken.  No wonder Vietnam has recorded one single death, reported just today, with 545 cases overall.  The nation’s aggressive contact-tracing has worked.

--Of the 20 countries with the biggest outbreaks, the United States ranks sixth in deaths per capita, at 4.7 per 10,000 people. Only the UK, Spain, Italy, Peru and Chile have a higher per capita rate.

--British Prime Minister Boris Johnson said Covid-19 was now under some measure of control in the UK, but a resurgence of the coronavirus in some European countries made clear that the pandemic was not over.

“This country has had a massive success now in reducing the numbers of those tragic deaths, and we’ve got it at the moment under some measure of control,” he said on Thursday.  “But I have to tell you that we are looking at a resurgence of the virus in some other European countries and you can see what’s been happening in the United States, and so it is absolutely vital as a country that we continue to keep our focus and our discipline, and that we don’t delude ourselves that somehow we are out of the woods or that it’s all over because it isn’t all over.”

--Brazilian President Jair Bolsonaro, following his coronavirus diagnosis and subsequent quarantine, which he previously described as “horrible,” admitted Thursday that he now has “mold” in his lungs.

“I just did a blood test. I was feeling kind of weak yesterday. They found a bit of infection also.  Now I’m on antibiotics,” Bolsonaro said in a livestream video. He did not elaborate on the specifics of his condition.

“After 20 days indoors, I have other problems: I have mold in my lungs,” he added.

Bolsonaro’s wife also tested positive for the virus Thursday – just 24 hours after speaking at a public event with her husband in Brasilia.

--An analysis of a sleep-away camp in Georgia by the Centers for Disease Control and Prevention, details an outbreak last month in which 260 children and staffers – more than three-quarter of the 344 tested – contracted the virus less than a week after spending time together in close quarters.  The children had a median age of 12. The camp had required all 597 campers and staff members to provide documentation that they had tested negative for Covid-19 before coming.  Staff were required to wear masks, but children were not.

Few super-spreading events have been documented among children, adding fuel to the debate over when sending children back to crowded school buildings is worth the risk.

Trump World

--After the president floated the prospect of delaying the November election while claiming widespread mail balloting would be a “catastrophic disaster” leading to fraudulent results, Senate Majority Leader Mitch McConnell quickly and unequivocally rejected the idea.  “Never in the history of the country, through wars, depressions and the Civil War, have we ever not had a federally scheduled election on time,” he said in a television interview. “We’ll find a way to do that again this Nov. 3.”

Steven G. Calabrese, a co-founder of the conservative Federalist Society, wrote in an opinion piece published in the New York Times that the president’s tweet was “fascistic” and “grounds for the president’s immediate impeachment.”

Republican Ari Fleischer, a former press secretary to George W. Bush, said, “Election Day is and will be Nov 3, 2020.  Mr. President – please don’t even pretend to mess with this.  It’s a harmful ideal.”

Added Rep. Liz Cheney (R-Wyo.) on Twitter: “We are not moving the date of the election. The resistance to this idea among Republicans is overwhelming.”  Others, such as Sen. Marco Rubio (R-Fla.) and House Minority Leader Kevin McCarthy (R-Calif.) expressed similar sentiments.

In his eulogy to civil rights icon John Lewis in Atlanta, former president Barack Obama weighed in, saying that “even as we sit here there are those in power who are doing their darndest to discourage people from voting.”  Obama didn’t mention Trump by name.

Rep. James Clyburn (D-S.C.) called Trump’s tweet “despicable,” especially because it came on the day of Lewis’ funeral.

“Americans will rise up & continue John’s fight for unfettered access to the ballot box,” Clyburn tweeted.  “Our voices will not be silenced.”

I do agree with the Wall Street Journal editorial board on this topic, that there are mail-in issues:

“This is not to suggest that the November election will be ‘rigged,’ as Mr. Trump asserts.  If he believes that, he should reconsider his participation and let someone run who isn’t looking for an excuse to blame for defeat.

“But Democrats and their allies are doing a disservice to the integrity of this election by being willfully blind to the challenges posed by the pandemic.  If the presidential result is close in one or more states amid the kind of problems displayed in New York, either candidate surely will sue, making the Florida ‘hanging-chads’ recount in 2000 look like a kindergarten exercise.

“Similar challenges are likely to emerge in Senate, House and state elections.

“Delaying the elections during the pandemic would only put off a potential fiasco.  But with time short, the responsible course is for governors and members of both parties to ensure deadlines for mail-in ballots are early enough so that the counting stops and the results are clear on Election Day.”

--Trump said on Wednesday if U.S. intelligence reports that Russia paid the Taliban to kill American troops in Afghanistan were true, he would be very angry about it.  Before leaving the White House for a trip to Texas, Trump told reporters he would respond appropriately if the reports were proven.  But there was enough evidence for the issue to be included in a widely read CIA report in May, as well as earlier indications Russia has been providing aid to the Taliban…for years.

In an interview with “Axios on HBO,” Trump said he never questioned Vladimir Putin about the intelligence reports, casting doubt on them.  “I have never discussed it with him,” having said earlier he was not briefed on the matter before it emerged in the news media in late June.  He has called the reports a hoax.

Asked why he did not confront Putin on the issue in their phone call last Thursday, Trump told Axios, “That was a phone call to discuss other things, and frankly that’s an issue that many people said was fake news.”

He said he and Putin discussed nuclear nonproliferation on the call.

National security adviser Robert O’Brien has said Trump was not verbally briefed on the Russian bounty intelligence because his CIA briefer concluded the reports were uncorroborated.  White House officials have not denied the information was included in the President’s Daily Brief.

Trump told Axios that if the intelligence “reached my desk, I would have done something about it.”

--Trump again defended the use of hydroxychloroquine to ward off coronavirus, contradicting his own public health officials, at his Tuesday briefing on the Covid-19 situation.

The remarks came after Twitter banned Don Jr. for posting a clip promoting the anti-malaria drug.

There is no evidence the drug can fight the virus, and regulators have warned it may cause heart problems.

Last month, the FDA cautioned against using the drug to treat coronavirus patients, following reports of “serious heart rhythm problems” and other health issues.  The World Health Organization says “there is currently no proof” that it is effective as a treatment or prevents Covid-19.

Trump told reporters Tuesday: “I can only say that from my standpoint, and based on a lot of reading and  a lot of knowledge about it, I think it could have a very positive impact in the early stages.

“I don’t think you lose anything by doing it, other than politically it doesn’t seem too popular.”

He added: “When I recommend something, they like to say ‘don’t use it.’”

The president and Don Jr. were among social media users who shared video late on Monday of a group called America’s Frontline Doctors advocating hydroxychloroquine as a Covid-19 treatment.  But the one doctor leading the presentation, Dr. Stella Immanuel, is a known quack.

Facebook and Twitter removed the content, flagging it as misinformation, but not before 17 million people had seen one of the clips.  Don Jr. was banned from Twitter for 12 hours as a penalty for sharing the clip.  Twitter didn’t remove the tweet by President Trump himself, and does not remove those of other world leaders, citing public interest and newsworthiness.

--Attorney General William Barr clashed with congressional Democrats Tuesday at a House Judiciary Committee hearing, rejecting accusations he is working to politically boost President Trump on a number of fronts, including by deploying federal agents in response to protests and his personal intervention in criminal cases involving the president’s allies.

In his first congressional appearance in more than a year, Barr said the federal response was needed to confront violent demonstrators and fight crime in cities where local officials had done little to keep their streets and federal property safe.

“What unfolds nightly around the courthouse cannot reasonably be called a protest; it is, by any objective measure, an assault on the government of the United States,” Barr said.

Democrats disputed that characterization. State and local leaders in Oregon “have asked that the federal troops leave because the reaction has actually been in reverse proportion,” said Rep. Zoe Lofgren (D., Calif.). “People are showing up because the troops are there, and I’d say most of them are nonviolent….So this brutality has created even more demonstrators.”

On the issue of the forceful removal of protesters near the White House in early June, where officers used smoke bombs and other munitions to clear the area for a photo op for President Trump, the attorney general, who ordered the removal of the protesters, said they had grown unruly and began throwing objects at law enforcement officers.  National Guard Maj. Adam DeMarco testified at a separate House hearing that officers violently cleared the park without provocation.

David Ignatius / Washington Post

“We’ve watched the Portland movie before.  It doesn’t end happily. The idealistic protesters in the streets overplay their hand, tolerate violent provocateurs in their midst and eventually get crushed.  The good guys lose; the bad guys win.

“Over the past decade, I’ve seen this depressing scenario play out around the world, as pro-democracy activists marched courageously but unwisely into confrontations that eventually proved ruinous. Nonviolent protest, as John Lewis taught us, is essential in fighting injustice.  But when protests became destructive abroad, authoritarian leaders seized the pretext and won the day, again and again.

“This movie is the story of the Arab Spring nearly a decade ago, as brave people filled the streets to denounce dictators in Egypt, Libya, Syria, Bahrain and Yemen. Sometimes the dictators were toppled, but the protesters couldn’t consolidate their gains and speak with a clear voice. Ruthless leaders took advantage of the chaos and viciously suppressed dissent.  Many ordinary people, exhausted by violence and disorder, cheered the men with guns.

“If you watched the Arab Spring on the ground, as I did in some of those countries, it carried a harsh lesson: Street protests without a strategy for orderly, nonviolent change are usually doomed to fail.  Anarchic, leaderless movements are lovable, but as the rock-throwers multiply, they bring disaster. The other side has more firepower.

“This movie is the story of the activists in Hong Kong.  Last September, I watched thousands of fearless men and women chanting their slogan: ‘Fight for freedom! Stand with Hong Kong!’ As night approached on Harcourt Road, the front-line protesters with helmets and rocks and petrol bombs emerged to assault government offices. They looked very much like the rock-throwing front-liners you see in Portland.

“Hong Kong felt like a glorious revolution, with cartoon heroes and villains, but it was obvious last year that unless protesters could leverage their gains into a good political settlement, they would eventually lose to the dictators in Beijing.

“The Chinese crackdown, when it came in May, was surprisingly easy and relatively bloodless. Beijing waited until the protesters were fatigued and the enclave’s economy was vulnerable, and then imposed a harsh national security law….

“For President Trump and his campaign, the Portland protests and similar eruptions elsewhere are a dream come true.  This is a president who, quite literally, has nothing to run on – no positive achievements to show.  His only chance is that his adversaries will create opportunities for him.  Let’s be honest: The television footage of police ducking rocks, bottles and other debris plays directly into Trump’s hands.  A country that looks like it’s coming apart – ‘American carnage,’ as Trump cynically called it during his 2017 inaugural speech – is the ruined turf on which he would like to fight for reelection in November.

“Joe Biden’s challenge is to take this battleground away from Trump. He needs to show that as president, he could truly bring America together by uniting our racially and politically diverse nation and restoring law, order and justice – three essential pillars of our democracy.

“Biden shouldn’t wade into the crowds in Portland…. Take the risk of offending an extreme wing of his base to gather broad support from the vast majority of Democrats whose overwhelming priority is to defeat Trump.

“Biden’s job is to show that Trump, the supposed law-and-order candidate, is in fact the voice of illegality and disorder….

“ ‘The president has made clear that he wants conflict between protesters and police as a central theme of his campaign,’ argued Rep. Jerrold Nadler (D., N.Y.) Tuesday in grilling Attorney General William Barr.  Biden’s task is to embody the opposite approach, by demonstrating that he has the guts and moral principles to unify our angry, bruised America.

“Now’s the time to start showing what a good president would do.”

Wednesday, federal agents who have been guarding the U.S. courthouse in Portland reached an agreement with local officials and were to begin withdrawing.  Trump administration officials said some would remain in the building and the entire contingent would stay in the city on standby.  It was a complex agreement, and we’ll see where it goes from here.

--President Trump said on Wednesday he was still considering where to make his speech accepting the Republican presidential nomination, adding he might do it from the White House.

--Robert O’Brien, Trump’s National Security Adviser, contracted coronavirus and is self-isolating at home (or a secure location…not exactly clear, due to his important work).  It wasn’t known when O’Brien was last in physical proximity to Trump, who is tested often.

--Jason L. Riley / Wall Street Journal

“Trump supporters don’t like to hear this, but with just over three months to go before Election Day, their guy is playing catch-up.

“Yes, some pollsters were off four years ago, but that merely confirms that polls (and pundits) are fallible, not that they’re always wrong and should be ignored.  The president often derides polls that show him trailing, but if he didn’t take them seriously he wouldn’t have replaced his campaign manager earlier this month.

“Mr. Trump preferred to run against a Democrat from the progressive wing of the party. But Joe Biden spoiled those plans, and the Covid-19 response stamped out the president’s best argument for re-election: a growing economy with low unemployment and rising wages among broad swaths of workers.  What’s left is a White House in search of a consistent campaign message.

“Mr. Trump’s biggest problem is that Mr. Biden isn’t Hillary Clinton, and it can’t be overstated how much the president benefited four years ago from anti-Clinton sentiment.  Back in 2016, voters who said they didn’t like either candidate went with Mr. Trump over Mrs. Clinton, 47% to 30%, and helped put him over the top in swing states like Michigan, Pennsylvania and Wisconsin. This year, voters with a negative opinion of both Mr. Trump and Mr. Biden say they favor the former vice president by 60% to 10%, according to a Wall Street Journal/NBC News poll released in April.

“Four years ago, Mr. Trump bested Mrs. Clinton among suburbanites, seniors and college-educated white men. Current surveys show him trailing in those categories. To get a sense of how deep Mr. Biden has ventured into the GOP’s demographic strongholds, consider that no Democratic candidate for president has run competitive with voters 65 and older since Al Gore 20 years ago.

“Even among groups Mr. Trump carried in 2016 – evangelicals and white women without a college degree, for example – the lead has shrunk….

“If Democrats are ahead at this juncture, there’s no reason to assume that the lead is insurmountable.  Mrs. Clinton underestimated Mr. Trump, demeaned his supporters, and took her own for granted.  Mr. Biden will try to avoid those mistakes, but we all know that he’s as gaffe-prone as anyone who has run for president.  Two hurdles he has yet to clear are choosing a running mate who won’t fracture the Democratic coalition and putting in a strong debate performance against an incumbent who has regularly challenged his mental sharpness.  Neither one is a given.

“White House officials agree that a new re-election strategy is necessary down the stretch, but moving in a different direction with a notoriously undisciplined candidate and a hostile, pro-Biden media lying in wait is another matter. Reviving the coronavirus briefings with Mr. Trump is an effort to improve his poll numbers and making them shorter and more congenial is a welcome change. Yet this week the president was back to undermining his own health-care experts in late-night tweets, which probably isn’t part of the reboot.

“Similarly, the Trump administration seems intent to push a ‘law and order’ message to voters by cracking down on antipolice mayhem that has become commonplace in several large U.S. cities.  Mr. Trump’s frustration at what he sees playing out on television night after night is understandable. But it isn’t clear that sending federal agents where they aren’t wanted is a smart political move, even if the president has the authority to do it… The unrest has been fueled by a false narrative indulged in the media, but polling shows that the protesters have found sympathy with a majority of Americans, including the white suburbanites Mr. Trump hopes to win over with his crackdowns.

“The reason Mr. Trump was headed for re-election before the pandemic was the economy.  If he wants a second term, he would do better to focus on responsibly reopening businesses, returning kids to school, and assuring voters that the best person to lead the current recovery is the person who oversaw the last one.” 

--Trump tweets….

“We are going to WIN the 2020 Election, BIG! #MAGA”

“Must know Election results on the night of the Election, not days, months, or even years later!”

“Glad I was able to get the very dishonest LameStream Media to finally start talking about the RISKS to our Democracy from dangerous Universal Mail-In-Voting (not Absentee Voting, which I totally support!).”

“Mail-In Voting is already proving to be a catastrophic disaster. Even testing areas are way off. The Dems talk of foreign influence in voting, but they know that Mail-In Voting is an easy way for foreign countries to enter the race.  Even beyond that, there’s no accurate count!”

“The Fake News Media is trying to portray the Portland and Seattle ‘protesters’ as wonderful, sweet and innocent people just out for a little stroll. Actually, they are sick and deranged Anarchists & Agitators who our great men & women of Law Enforcement easily control, but who…

“…would destroy our American cities, and worse, if Sleepy Joe Biden, the puppet of the Left, ever won. Markets would crash and cities would burn. Our Country would suffer like never before.  We will beat the Virus, soon, and go on to the Golden Age – better than ever before!”

“Major China Virus flare ups (sic) in many of the countries that the Fake News was touting as doing so well.  Some of these countries are now a disaster. Lamestream Media doesn’t want to report this.  Also, highly inaccurate numbers being reported by many other countries!!! @WSJ”

“Somebody please tell Congressman Clyburn, who doesn’t have a clue, that the chart he put up indicating more CASES for the U.S. than Europe, is because we do MUCH MORE testing than any other country in the World.  If we had no testing, or bad testing, we would show very few CASES…

“…Our massive testing capability, rather than being praised, is used by the Lamestream Media and their partner, the Do Nothing Radical Left Democrats, as a point of scorn. This testing, and what we have so quickly done, is used as a Fake News Weapon. Sad!”

“I was on Air Force One flying to the Great State of Texas, where I just landed.  It is AMAZING in watching Fox News.  How different they are from four years ago. Not even watchable.  They totally forgot who got them where they are!”

[Ed. Fox News veteran Neil Cavuto snapped back.  “First of all, Mr. President, we don’t work for you.  I don’t work for you. My job is to cover you, not fawn over you or rip you, just report on you.  Call balls and strikes on you.  My job, Mr. President, our job here, is to keep the scores, not settle scores.”]

“I am happy to inform all of the people living their Suburban Lifestyle Dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood.”

[Ed. incredibly racist.]

“So disgusting to watch Twitter’s so-called ‘Trending,’ where sooo many trends are about me, and never a good one. They look for anything they can find, make it as bad as possible, and blow it up, trying to make it trend.  Really ridiculous, illegal, and, of course, very unfair!”

“The Trump Campaign has more ENTHUSIASM, according to many, than any campaign in the history of our Great Country – Even more than 2016. Biden has NONE!  The Silent Majority will speak on NOVEMBER THIRD!!! Fake Suppression Polls & Fake News will not save the Radical Left.”

“Because of my strong focus on the China Virus, including scheduled meetings on Vaccines, our economy and much else, I won’t be able to be in New York to throw out the opening pitch for the @Yankees on August 15th.  We will make it later in the season!”

[Ed. Trump was jealous of Anthony Fauci having thrown the ceremonial first pitch at a Nationals game, and then totally made up that the Yankees had invited him.  They hadn’t.]

“LAW & ORDER!”

Wall Street and the Economy

As expected, the U.S. economy contracted at a record rate in the second quarter, as reported by the Commerce Department on Thursday, a seasonally and inflation adjusted 32.9% annual rate, or a 9.5% drop compared with the prior quarter.  They were the steepest declines in more than 70 years of record-keeping.  [For the record, the Atlanta Fed’s GDPNow barometer I like to cite was at -32.1% in its last reading, Wednesday…so pretty good job by them.]

This was the first double-digit decline in annualized GDP since 1958.

The decline in GDP reflected the deep hit to consumer and business spending from the lockdowns, social distancing and other initiatives aimed at containing the virus.

As distressing as the second-quarter GDP figure was, however, of potentially worse portent was this week’s jobless claims number, 1.43 million in the week ended July 25, the second straight week it has risen, after nearly four months of decreases following a late-March peak.  It was also the 19th straight week over 1 million.  And continuing claims increased to 17 million, ending a downward trend that started in mid-May.

So the above is reflective of the delays in reopening (or pullbacks) in states where the virus has been surging.

Editorial / Wall Street Journal

“Democrats and their media allies have trapped themselves in a contradiction.  They are deploring Thursday’s grim second-quarter GDP report even as they demand a repeat of the lockdown that caused the economic catastrophe. What do they expect when government orders Americans to sit in their homes for weeks?

“That’s the main message from the 32.9% decline in GDP, the worst ever recorded.  The damage extended across the private economy – from business investment to manufacturing and housing. But the greatest harm was from the collapse of consumer spending as the shutdown crushed the service economy.

“Consumer spending fell 34.6% and accounted for some 25 percentage points of the GDP decline.  The fall in transportation, recreation, food services and hotels was brutal. But the biggest surprise was the plunge in health-care spending during a health-care crisis.  Health care represents about 12% of the U.S. economy and its collapse subtracted 9.5 percentage points

“How does that happen in a pandemic?  The answer, as our friend Don Luskin points out, is that politicians panicked in March and waited for a surge of Covid-19 patients that the pandemic modelers told them would arrive.  Blessedly, the modelers were wrong, and far fewer hospital and intensive-care beds were needed.  But the economic harm from stopping all elective surgeries and barring visits to doctors was severe and unnecessary.

“It was also a terrible public-health blunder.  That harm will play out for years as Americans discover cancer, heart-disease and other diagnoses that were missed or delayed.

“Notably, Congress’ nearly $3 trillion in appropriations couldn’t stop the economic collapse….

“Personal disposable income increased $1.5 trillion (42.1%) while the savings rate rose to 25.7% from 7.3% in last year’s fourth quarter.  People haven’t been dining out or traveling, so they are stockpiling cash. The more uncertainty caused by threats of second lockdowns, the less likely Americans will be to spend.

“These transfer payments are fiscally unsustainable, and the second quarter offers a window on what an economy run by politicians looks like.  More transfer payments will delay and slow the recovery by causing more workers to stay on the sidelines….

“Hard to believe, but some on the left are stumping for a second nationwide lockdown to control the virus.  Shut the U.S. down again until October when the scourge will be gone for good. Do they want another 33% decline in GDP and 40 million more unemployed?

“Without a vaccine, the virus was always likely to spread through most of the country, as the Centers for Disease Control and Prevention predicted in March.  The lockdown-as-miracle-cure is a fantasy, as the World Health Organization has now acknowledged. The economic and public-health harm is too great and the virus is too easily transmissible.

“The public is smarter than the media and can adjust its behavior when flare-ups occur.  Hospitalizations and cases in hot spots in the South and West are trending down…Deaths have increased, but the rate is far below those on the East Coast in the spring.

“At least the worst economic news is over, or it should be without a second lockdown. Orders for motor vehicles and capital goods are rising, and housing is strong. The service economy will take longer to come back, but it will do so when the public feels confident enough to venture out. What no one needs is another catastrophe like the second-quarter lockdown.”

Meanwhile, the Federal Reserve kept short-term rates pinned at nearly zero this week, as the Open Market Committee agreed to continue to buy about $120 billion in Treasury and mortgage bonds each month to support the economy.

But Chairman Jerome Powell predicted a long road ahead as a recent spike in virus cases saps momentum from the nascent economic recovery.

“The path forward for the economy is extraordinary uncertain and will depend in large part on our success in keeping the virus in check,” Powell said at a news conference following the Fed’s two-day meeting, noting that infections have surged since late June and the “pace of recovery looks like it has slowed.”

As for the labor market, the rebound “is going to take a while” and “we’re going to be there for all of that.”

Powell said both Congress and the central bank would need to do more in the months ahead, noting that thus far, government policy has “kept people in their homes, it’s kept businesses in business.”

In other economic news, June durable goods rose at a rate higher than expected, 7.3%; 3.3% ex-transportation and on core capital goods.

A Chicago purchasing managers survey for manufacturing in the region for July came in at 51.9 (50 the dividing line between growth and contraction), the highest level since May 2019, and versus a putrid 36.6 reading in June.

July personal income fell 1.1%, while consumption rose 5.6%, with June revised upward to 8.5%.  The personal income figure is still distorted by various government transfer payments, while consumption does reflect reopening.

A key Fed inflation barometer, the core-personal consumption expenditures index, rose just 0.9% year on year.

One note on the trade front (and I have a related item in Street Bytes below), but with nearly seven months gone, an ambitious $36.5 billion target for Chinese imports of U.S. farm good this year may not be quite out of reach, but it’s looking like a big stretch.  By the end of May, as reported by Hallie Gu and Karl Plume of Reuters, “imports were running behind 2017 levels – rather than 50% ahead as needed – and while orders for China’s main farm import, soybeans, have started to pick up, scorching levels of buying would be needed to hit the mark.  Add in a rapid deterioration in U.S.-China relations, an upcoming U.S. election, a global pandemic and questions over just how much soybeans China actually needs, and farmers and analysts say it may be a stretch too far.”

I get into soybeans below.  Think Brazil.

In total, China’s American farm purchases amounted to $6 billion through May – the latest data available – up just 9.1% from the same period in 2019 and 31% below 2017’s level.

Europe and Asia

Eurostat released a preliminary estimate on GDP for the eurozone (EA19), down 12.1% for the second quarter over the first, and -15.0% year over year, the sharpest declines since time series started in 1995.  In the first quarter of 2020, GDP had decreased by 3.6% in the EA19 over Q4 2019.  We will receive another estimate in two weeks.

Germany’s GDP fell 10.1% for the quarter, -11.7% vs. a year ago.
France -13.8% Q2, -19.0% vs. Q2 2019
Italy -12.4% Q2, -17.3% vs. Q2 2019
Spain -18.5% Q2, -22.1% vs. Q2 2019

Germany’s figures were the worst on record, as were the others listed.

But as we saw from July’s preliminary PMI data last week, and what we will see with the final data for the month next week, a significant recovery is underway.

Eurostat also reported on the unemployment rate for the euro area for June, 7.8%, up from 7.7% in May 2020.  It was 7.5% a year ago.

Germany 4.2%, France 7.7%, Italy 8.8%, Spain 15.6%, Netherlands 4.3%, Ireland 5.3%.

The above speaks to the various aggressive employment protection “schemes” (as they are called across the pond), programs, compared with the United Sates.

A flash reading on July inflation for the euro area pegs it at an annualized rate of 0.4%, 1.3% ex-food and energy.

Brexit:  Britain and the EU have planned more trade negotiations all the way until Oct. 2, two weeks before an EU leaders summit Oct. 15-16, where it is hoped any agreement could be endorsed, according to a schedule published by British negotiators on Friday.

It’s been more than four years since Britons voted to leave the EU, and after tortuous divorce talks, the two sides are trying to negotiate all aspects of their future ties, from trade to security to transport, from 2021 onwards.

The EU has said negotiators must seal any deal by October to allow for ratification by the bloc’s 27 nations.

If an agreement isn’t reached by Oct. 2, ahead of the summit, then high-level emergency talks would likely be held to get a deal by the end of the year, when Britain’s transition period ends.

But on a totally different topic, the UK government’s decision to impose a 14-day quarantine on everyone arriving from Spain has roiled the country, with Spain’s prime minister, Pedro Sanchez, calling it “unjust,” pleading that tourists in most Spanish regions would be safer from coronavirus than in the UK, as he was hoping Britain would reverse its decision.

You see the GDP figures above.  Spain’s economy is a wreck and desperately needs tourists to return, like now, the critical vacation month for all Europeans, but Spain has had a few hot spots that it claims are well under control.  [Tourism accounts for 12% of Spain’s GDP and nearly 13% of jobs.]

British Prime Minister Boris Johnson, however, said he is not changing the decision, warning that “no travel is risk-free during this pandemic.”

The next day, Germany recommended its citizens avoid Spain’s many resorts.

Don’t look for Spain to be a sympathetic vote when it’s time to rule on any trade deal with the UK.

Turning to Asia…China’s National Bureau of Statistics reported that the manufacturing PMI for July was 51.1 vs. 50.9 in June, while the non-manufacturing/services PMI was 54.2 vs. 54.4, both reflective of the slow, but ongoing recovery in the country.

In Japan, June retail sales were down 1.2% year over year, much better than expected and up 13.1% over May.  May’s decline from a year ago was 12.3%.

June’s preliminary reading on industrial production was -17.7% year over year, vs. May’s -26.3%.  June was up 2.7% over May.

And Japan’s unemployment rate in June was 2.8%.

South Korea had an encouraging reading on June industrial production, up 7.2% month-on-month, reversing a 7.0% decline in May and the fastest growth since February 2009.

Street Bytes

-- Stocks finished mixed on the week, with the Dow Jones falling 0.2% to 26428, while the S&P 500 rose 1.7% and Nasdaq 3.7%, the latter two thanks to the strong performance of the tech titans.  Nasdaq is now back to just 22 points shy of its record high.

--U.S. Treasury Yields

6-mo. 0.09%  2-yr. 0.11%  10-yr. 0.54%  30-yr. 1.20%

The yield on the 10-year is at an all-time record low weekly close, which will be reflected in a further lowering of mortgage rates.

--The Energy Information Administration reported Wednesday that U.S. crude oil inventories fell a whopping 10.6 million barrels last week to 526 million, the largest drawdown since December.

The fall in crude stocks was likely a result of supply cuts by OPEC, previously agreed to in April, finally being realized as imports fell substantially.

But the dour coronavirus news limited what would have normally been a very bullish development.  The dysfunction in Congress in terms of providing relief amid the crisis didn’t help either.  Crude finished today at $40.43, down about a $1 on the week.

--It didn’t help that Exxon Mobil and Chevron posted huge losses before Friday’s opening bell; Exxon with a net loss of $1.08 billion in the June quarter, Chevron $8.27 billion.  Both blamed the losses on plunges in crude prices and demand during the pandemic, and they said billions of dollars in capital spending cuts previously announced are progressing as planned.

For Chevron, the loss was its largest in at least three decades, writing down $5.6 billion, mirroring those of others, including an anticipated $17.5 billion from BP.  The lowering of valuations reflects not just the slump in second-quarter demand but a growing realization that a prolonged economic downturn could depress energy prices for years.

Chevron’s writedowns included its entire investment in crisis-ravaged Venezuela, where it was the last major U.S. oil company still operating. The Trump administration directed the company to wind down its business there, where Chevron had been operating for nearly 100 years.  The loss also included $1 billion to cover severance pay for up to 15% of its 45,000-person workforce as part of an ongoing restructuring of its global operations.

Chevron’s revenues plunged to $13.49 billion from $38.85 billion last year.

For its part, Exxon said it was reviewing operations and promising “significant” cost cuts.  Revenue sank to $32.61 billion from $69.09 billion last year, well-below consensus.

The company said plans to cut its capital investment for this year to $23 billion from $33 billion is “ahead of schedule,” with CEO Darren Woods saying, “The progress we’ve made to date gives us confidence that we will meet or exceed our cost-reduction targets for 2020 and provides a strong foundation for further efficiencies.”

--Royal Dutch Shell avoided its first quarterly loss in recent history, helped by a booming trading business, but announced nearly $17 billion in impairment charges reflecting a pessimistic outlook for oil and gas prices.

Shell had warned last month it was set to slash the value of its oil and gas assets by up to $22 billion as the coronavirus crisis hollowed out energy demand.

The energy giant has cut its dividend for the first time since World War II and cut planned spending by $5 billion this year.

--The leaders of Amazon, Apple, Facebook and Google took a brutal political lashing Wednesday as Democrats and Republicans on the House’s top antitrust subcommittee took turns confronting the executives for wielding their market power to crush competitors and amass data, customers and massive profits.

The House members were armed with millions of documents, hundreds of hours of interviews and even once-private messages of the CEOs. 

Rep. David Cicilline (D-R.I.), chairman of the antitrust panel, said: “Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.”

Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg and Alphabet’s (Google’s) Sundar Pichai took the witness stand to fiercely defend their businesses as rags-to-riches stories, but lawmakers repeatedly presented a different vision, one in which the advancements in communications, consumer electronics and commerce came at the expense of the people who use the tools and the companies seeking to compete against the tech giants.

Rep. Jerrold Nadler (D-N.Y.) in particular took after Zuckerberg using his own past emails, including a 2012 message in which Zuckerberg apparently said he sought to acquire Instagram, which at the time was a rival photo-sharing app, out of fear that it could “meaningfully hurt us.”

“Mergers and acquisitions that buy off potential competitive threats violate the antitrust laws,” Nadler charged.  “In your own words, you purchased Instagram to neutralize a competitive threat.”

“We compete hard.  We compete fairly.  We try to do the best,” Zuckerberg said earlier in the hearing.

So then a day after the four tech titans were interrogated, their combined market value swelled by $250 billion thanks to earnings that shocked even Wall Street.  Combined, the four companies put up sales of $200 billion in the three months ended in June, with Amazon reporting a record quarter.

To wit:

--Apple shares soared to an all-time high in after-hours trading Thursday, crossing the $400 level for the first time, after the company posted second-quarter results that crushed the Street’s estimates, and announced a four-for-one stock split.

Apple reported revenue for its fiscal third quarter ended June 30 of $59.7 billion, up 11% from a year ago and well ahead of consensus.  Profits were $2.58 per share vs. the Street’s forecast of $2.09.

Product revenues were up 9.9%, while services rose 14.8%.  Sales of iPhones were up 1.6%, Macs up 21.6%, iPads up 31%, and wearables 16.7%.

“Apple’s record June quarter was driven by double-digit growth in both Products and Services and growth in each of our geographic segments,” Apple CEO Tim Cook said in a statement.  “In uncertain times, this performance is a testament to the important role our products play in our customers’ lives and to Apple’s relentless innovation.”

The company said it now has over 550 million paid subscriptions across its service businesses, and expects to reach 600 million before the end of the calendar year.

Meanwhile, Apple said its board declared a four-for-one stock split, effective Aug. 31, the fifth in its history, the last being in 2014.

Separately, last week I wrote of a pending investigation into Apple related to its older iPhones and Wednesday we learned Arizona is leading the multi-state inquiry into whether Apple deliberately slowed older phones through power management software.

Apple came under fire in 2017 when Primate Labs, the maker of software for measuring a phone’s processor speeds, revealed that some iPhones became slower as they aged. Apple later acknowledged that it reduced power demands – which can slow the processor – when an aging phone’s battery struggles to supply the peak current the processor demands.  Apple then said without the power adjustments iPhones would have unexpectedly shut down from power spikes.  Outraged iPhone users said this was a bunch of bull, that Apple was slowing older devices to get users to buy new phones.  Apple then publicly apologized and slashed prices on battery replacements.

--Amazon.com Inc. on Thursday posted the biggest profit in its 26-year history as online sales and its lucrative business supporting third-party merchants surged during the pandemic.  While rival brick-and-mortar retailers have had to shut stores during government-imposed lockdowns, Amazon hired 175,000 people in recent months and saw demand for its services soar.  The company said revenue jumped 40% from a year earlier to $88.9 billion.  Amazon had forecast it might lose money in the just-ended second quarter because it expected to spend some $4 billion on protective equipment for staff and other expenses related to Covid-19. It did just that – and still earned $5.2 billion, double its net income from a year prior.

CEO Jeff Bezos, the world’s richest man, said, “This was another highly unusual quarter.”

Amazon Prime Day, the company’s lucrative summer marketing blitz, is now pushed back to the fourth quarter, with Bezos saying the current quarter would see higher costs as the company gears up for the holiday season, even more pronounced now due to higher-than-usual sales.  Still, Amazon anticipates a profit between $2 billion and $5 billion for the quarter.

--Alphabet, parent of Google, reported quarterly sales fell for the first time in its 16 years as a public company, but the decline was less than expected as many advertisers stuck with the most popular online search engine during the pandemic.  The stock was little changed in response, but then collapsed Friday to the tune of 3% on further review of the results.

Advertisers on Google have suffered mass layoffs and other cutbacks during the crisis, and marketing budgets are often the first to get slashed by big clients like travel search engines, airlines and hotels. Google’s ad business has long largely tracked the broader economy and we just saw the worst second quarter in U.S. history.  But Google appeared to weather the slowdown better than before as the internet was seen to be more attractive for advertisers than TV, radio and other avenues.  Alphabet CEO Sundar Pichai said, “This quarter, we saw the early signs of stabilization, as users returned to commercial activity online.  Of course the economic climate remains fragile.”

Alphabet’s overall second-quarter revenue was $38.3 billion, down 2% from the year-ago period.  Analysts were estimating a 4% decline.  But it was the first fall since the company went public in 2004.

About 66% of Alphabet’s revenue came from Google search and YouTube ads, 12% from ads sold on partner properties online, 8% from its cloud business and 14% from its mobile app store and other smaller businesses.

Alphabet’s quarterly profit was $6.96 billion.

Google said on Monday that it would allow employees, who do not need to be in the office, to work from home until the end of June 2021.  The company had said in May it would begin reopening more offices globally as early as June this year, but most Google employees would likely work from home until the end of this year.

--Facebook Inc. posted $18.7 billion in revenue for the second quarter, up 11% from $16.9 billion a year earlier and above analysts’ expectations; strong given the pandemic but a deceleration from the average gain of nearly 25% for the preceding four quarters.

Profit for the second quarter nearly doubled to $5.18 billion, exceeding the Street’s forecasts. Facebook shares surged 8% in response.

Mark Zuckerberg, following his grilling before Congress on Wednesday about whether Facebook and the other three behemoths have accumulated too  much power, used the company’s earnings call to state that Facebook is a vital social good and that overly broad regulatory efforts to hobble it would be counterproductive.

Zuckerberg said efforts to significantly restrict how Facebook collects and deploys data about its users could be harmful, calling the company’s personalized advertising a lifeline for small businesses struggling to survive social-distancing mandates.

Average monthly users of the Facebook platform rose to 2.7 billion in the second quarter, from 2.6 billion in the first.  More than three billion people now use at least one of Facebook’s products on a monthly basis.

--Samsung Electronics Co. Ltd. said it expects a gradual recovery in demand for mobile devices and consumer electronics in the second half of the year, but risks remained due to the coronavirus and growing competition.

Samsung posted a 23% jump in operating profit in the April-June quarter on the back of a 13% surge in DRAM memory chip prices.

The world’s top maker of memory chips and smartphones said chip demand largely came from data centers bulking up to support a work-from-home economy and growth in online learning.

Revenue dropped 6% overall.

--The Wall Street Journal is reporting tonight that Microsoft is in talks to acquire the U.S. operations of TikTok, the Chinese-owned video app, as President Trump said today he was considering taking steps that would effectively ban the app from the U.S.

A sale would likely be for tens of billions of dollars.

U.S. officials have expressed concerns that TikTok could pass on the data it collects from Americans streaming videos to China’s authoritarian government.  TikTok has said it would never do so.

About 315 million users downloaded TikTok in the first quarter of the year.

--At least three have been charged in relation to a July 15 Twitter hack that took over the accounts of VIPs including former President Barack Obama and billionaire Bill Gates.  The ringleader was a 17-year-old Floridian, the Florida State Attorney’s Office said on Friday.

--Boeing Co. slashed production on its widebody programs, delayed the arrival of its newest jet, and confirmed the demise of its iconic 747, as it reported a bigger-than-expected quarterly loss on Wednesday amid fallout from the pandemic.

Boeing, which has laid off thousands of workers as it also grapples with the 16-month-old ban on its 737 MAX, delayed its timeline to hit build rates of 31 narrow-bodies monthly to early 2022 from 2021, as demand crumbles.

It now expects to resume 737 MAX deliveries to airline customers before yearend in the U.S., a slip from earlier guidance of September.

The production cuts reflect concern among aviation companies about the pace of the coronavirus recovery.  But global airlines have warned it will take a year longer than expected for air traffic to return to normal, with long-range traffic hit harder than shorter hops.

The 737 MAX grounding has cost Boeing some $20 billion, amid congressional and criminal investigations and lawsuits.

Boeing claims the majority of some 450 MAX aircraft in storage will be delivered during the first year after the company resumes deliveries and that it will gradually increase production to 31 a month by 2022.  Before the pandemic hit, Boeing was planning to ramp production to about 50 a month.

Regarding the 787, Boeing had been producing the Dreamliners at a record monthly rate of 14 and will now reduce that figure to six.

Boeing’s sales tumbled 25% to $11.81 billion, though this was helped by defense sales, flat year over year at about $6.6bn. The company burned through more than $5 billion of cash in the second quarter, bringing the year-to-date burn to more than $10 billion.

The company’s net loss narrowed to $2.40bn in the second quarter, from $2.94bn a year earlier, when the company reported a record loss on charges related to the 737 MAX grounding.

Boeing, in delivering fewer jets in the second quarter, just 20, lost its mantle as the largest U.S. plane maker to General Dynamics Corp., whose Gulfstream arm handed over 32 of its high-end private jets to customers.

--Airbus SE, reeling from the fallout from the collapse in global demand for air travel, said it doesn’t expect to start increasing aircraft production again until around 2022 as the crisis hitting the aviation sector deepens.

The European plane maker, which cut its production rates by a third in April, said Thursday it would again reduce the output of its A350 wide-body from 6 aircraft a month to 5. It also reported a net loss of $2.24 billion in the first half, down from a profit of $1.3bn.

Airbus has about 145 aircraft parked and awaiting delivery. It has delivered 196 as of the end of June, about half the number delivered at the same point last year.

--Meanwhile, the International Air Transport Association said traffic as measured in revenue passenger miles fell almost 87% in June after a 91% contraction in May.  The continued closure of global air travel markets “is a significant drag on recovery” amid continued outbreaks of the disease caused by the new coronavirus.

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak,” said Alexandre de Juniac, the group’s chief executive.  “What improvement we have seen has been domestic flying. International markets remain largely closed.”

Revenue passenger per mile/kilometer, an industry metric used to measure distance traveled by paying customers, won’t return to 2019 levels until 2024, says IATA.  Delta Air Lines said earlier this month that revenue passenger miles sank 94% in the second quarter, while Jet Blue in its quarterly filing Tuesday said that RPMs were also down 94% from a year earlier.

Corporate travel budgets are expected to be “very constrained” with companies coming under pressure from the weak global economy, said IATA, while consumer confidence is weak from uncertainty about jobs and unemployment, meaning that even though there’s demand to visit friends and family, fewer people expect to travel, the industry group said.

“Scientific advances in fighting Covid-19 including development of a successful vaccine, could allow a faster recovery,” IATA added. “However, at present there appears to be more downside risk than upside to the baseline forecast.”

--Revenue at Ryanair plunged 95 percent during the first quarter of the year as it reported a second quarter loss of $200 million compared to a net profit of $270 million during the same period last year.

Ryanair’s fleet was grounded for almost four months as EU governments imposed flight or travel bans and widespread population lockdowns.  Ryanair resumed flights across the majority of its route network on July 1st, and said it expects to operate about 40 percent of its normal July schedule, rising to about 60 percent in August and 70 percent in September.

The airline said it expects full year traffic for 2021 to fall by 60 percent from 149 million to just 60 million, saying 2021 “will be a very challenging year” for the Ryanair group.

“It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn when the annual flu season commences is our biggest fear right now,” it said.

“Hopefully EU governments, by implementing effective track and tracing systems, and EU citizens by complying with recommended face masks, rigorous hand hygiene and other measures, will avoid the need for further lockdowns or restrictions on intra-EU flights.”

--The Dutch arm of Air France-KLM will cut 4,500 to 5,000 positions this year and next. That’s as much as 15% of its staff and will add to the roughly 7,500 reductions planned at Air France over three years.

The reductions are across the board – from pilots to cabin crew and ground staff. KLM said more jobs could go if business doesn’t pick up.

--General Motors reported Wednesday that its net income tumbled on slow sales and thin inventory in the second quarter, especially of its profitable pickups and SUVs following an eight-week factory closure due to the coronavirus.

GM announced a net loss of $806 million, down from a profit of $2.4 billion a year earlier, with net revenue down 53% to $16.8 billion, though GM’s China equity income was $200 million for the quarter.

During a call with the media, GM said the second half of the year will be better and it should allow the automaker to pay off the $16 billion revolving line of credit it took earlier this year to get through the pandemic.

GM burned through $8 billion in cash in the quarter, but has $30.6 billion as of June 30.

The company’s U.S. sales fell 34% to 488,876 vehicles sold, putting GM’s U.S. market share at 16.85%, down just slightly, according to Cox Automotive data.

But GM’s sales in China fell 5.3% in the second quarter, a big improvement from the first quarter when they plunged 43%.

While GM and the others have reopened their assembly lines, in areas still being impacted severely by the coronavirus there is a high rate of absenteeism. 

--Ford Motor’s second-quarter earnings were far better than expected, losing $0.35 a share on $19 billion in sales but the Street was looking for a $1.17 per share loss.  But it’s not like things are great as sales fell from $38.9 billion in the second quarter of 2019.

Ford’s Chinese business lost $100 million in the second quarter – an improvement year over year, while Ford’s European and North America business was hit by the pandemic later than China.  Ford lost $700 million in Europe.

--Advanced Micro Devices Inc. raised its full-year revenue outlook on Tuesday, driven by a surge in chip demand from data-center operators and PC makers scrambling to meet coronavirus-induced remote work needs.  Shares of the chipmaker jumped 9% in response after it also forecast current-quarter sales above Wall Street targets.

Shares in AMD are up about 50% this year, at a time when rival Intel Corp. faces delays in building its newest 7-nanometer chip, while AMD, which relies on outside foundries to make its chips, has started to take market share from Intel with offerings made on Taiwan Semiconductors’ technology.

AMD now expects 2020 revenue to grow by about 32%, driven by strength in PC, gaming and data center products.  In the second quarter, revenue jumped 26% to $1.93 billion.

--Speaking of Intel Corp., which reported on the delay for its new chip last week, the market then taking the company’s shares to the woodshed, this week it announced the departure of its chief engineering officer as the company said it was reorganizing its technology, systems architecture and client group.

Ann Kelleher, a 24-year Intel veteran, will lead development of 7-nanometer and 5-nanometer chip tech processes.

--Meanwhile, shares of Taiwan Semiconductor Manufacturing Co. Ltd. jumped on Monday after Intel signaled it may stop manufacturing its own chip components, after falling far behind schedule developing its newest technology. TSMC is the world’s largest contract chipmaker and rallied 10% to a record high on Intel’s troubles.

For good reason, there are some U.S. politicians and national-security experts who consider the possibility that Intel will no longer make its chips here as potentially dangerous.

TSMC, based in Taiwan, is of course a friendly source, but for how long?  As I’ve noted for years, and again further below, Chinese President Xi Jinping is licking his chops.

--Caterpillar’s sales tumbled 31% in the second quarter as dealers culled construction equipment from showrooms during the pandemic; decreasing machine and engine inventories by about $1.4 billion during the three-month period, compared with an increase of about $500 million a year earlier.

Still, the Deerfield, Illinois, manufacturer topped Wall Street’s expectations, but the shares couldn’t hold on to early gains today.

Revenue fell to $10 billion, from $14.4 billion a year ago, with net income of $458 million.

--General Electric on Wednesday reported an adjusted second-quarter loss of $0.15 per share, worse than expected, as revenue fell to $17.75 billion from $23.41 billion in the prior-year quarter but that beat the Street.

Total orders fell 38% to $13.80bn due to declines in commercial equipment, service and power equipment.

CEO Lawrence Culp said: “Our earnings performance was impacted by the ongoing impact of Covid-19 on our businesses, but industrial free cash flow was better than our expectations and previously communicated range,” adding the company expects to return to positive free cash flow next year.

--The U.S. government and Eastman Kodak reached agreement on a $765 million loan wherein the fallen giant of the photography industry will make ingredients used in generic drugs to help fight the virus as well as other more common drug ingredients.  Kodak’s old facilities are perfect for the mission and the company always had a chemical division.

But the stock, a company that had long reorganized and was seeking a new mission and market niche with the advent of digital photography, closed at $2.10 last Friday on 74,900 shares, and then $2.62 on Monday, but on volume of 1,645,000.  We were told by company officials Wednesday that no one had inside information.

Well the big announcement came Tuesday, and Kodak stock finished the day at $7.94 on 272,359,100 shares!  With further news coming after the close of the market, Wed., the shares opened at $18.43 and actually soared to $60…before closing at $33.

Kodak shares then finished the week at $22.  Yes, some lucky investor(s) made a killing.

We did learn that two news reporters in Rochester tweeted information about a Kodak initiative with the government in response to the pandemic around noon on Monday.  One of the tweets was deleted.  Then the local ABC and CBS affiliates posted stories after Kodak sent an advisory to media outlets about the initiative.  So plenty of questions remain on who knew what, when.

But it’s virtually impossible to get a handle on just how profitable the government venture will be because they will be making products that have been sourced overseas, namely India and China, because they can be made so cheaply.  And Kodak doesn’t have the business yet.

Just a classic bubble story, the kind that emerges at market tops.

--McDonald’s is permanently closing 200 of its 14,000 U.S. locations this year with “low-volume restaurants” in Walmart stores making up over half of the closures.  During its quarterly earnings call, the fast food giant said the closings were in the plans for future years but are being accelerated because of the pandemic.

CEO Chris Kempczinski said regarding the impact of the coronavirus: “Within a matter of weeks, the McDonald’s system made operational modifications across 30,000 restaurants (worldwide), while closing and then reopening another 9,000 restaurants.  We introduced new safety procedures in all our restaurants, modified our menus, and developed new contactless ways to serve our customers.”

96% of the 39,000 restaurants worldwide are open, compared with 75% at the start of the second quarter.

Starting tomorrow, Sat., Aug. 1, McDonald’s will require customers to wear masks or face coverings when entering restaurants nationwide.

Comparable-store sales that were down 39% in April vs. a year ago were down 12% by June.

Restaurants with drive-thru windows are recovering more quickly.

The company said second-quarter net income fell 68% to $484 million, while adjusted earnings fell well short of Wall Street’s expectations.

Same-store sales fell 24% for the entire quarter, down 9% in the U.S.  Last year, they were up 8% in the same period.  Same-store sales fell 41% in international markets.

Overall revenue fell 30% to $3.76 billion.

--Starbucks said revenue plummeted 38% in its fiscal third quarter to $4.2 billion, though this was ahead of the Street’s estimates.  In June the company said it will close up to 400 company-owned locations over the next 18 months.

But it had also announced it was speeding up the expansion of “convenience-led formats” such as curbside pickup, drive-thru and mobile-only pickup locations.

Starbucks CEO Kevin Johnson said during a quarterly earnings call Tuesday that curbside pickup is expected to launch at 700 to 1,000 stores by the end of the quarter.

Officials said they planned to bring back the popular Pumpkin Spice Latte, date to be determined.  And the company said 97% of its company-operated stores around the world are now open, including 99% of stores in China and 96% in the U.S.  But some franchised locations remain closed, especially at airports and on college campuses.

Global same-store sales were down 40% for the April-June period, while Starbucks expects global same-store sales to be down in a range of 12% to 17% in its fiscal fourth quarter and for the full year.  It has seen favorable trends in July.

U.S. comp sales were also down 40%.  International comp store sales were down 37%.

--3M Co. is the lead maker of the most critical face masks in the fight against Covid-19, but this hasn’t protected the company from the brutal economic impact of the pandemic.

The Saint Paul, Minn.-based manufacturer said Tuesday that it suffered a sharp sales drop in its latest quarter while many factories, offices and dentists remained closed, offsetting gains from high demand for N95 masks and home-improvement supplies.

CEO Mike Roman said in an interview, “About 80% of our portfolio was negatively impacted by Covid.”

But 3M saw improvements in the global economy, and it was encouraged by sales in July.

The company said it has doubled production of its N95 masks this year to meet skyrocketing demand from health-care workers.  3M said it produced nearly 800 million respirators and N95s in the first half of this year globally and has distributed about half of them in the U.S.

But face masks make up a small part of 3M’s business, which spans from advanced wound-care products to Scotch tape and industrial sandpaper.  Adjusted sales fell 19% in its transportation and electronics segment, 12% in health care, 6% in safety and industrial and 5% in its consumer segment.

Sales for products that are sold to dentists fell 57%, and were down 25% for office supplies like Post-it Notes.

While adjusted sales overall fell 13% in the U.S., they were down 23% in Canada and 38% in Mexico.

--United Parcel Service Inc. rode a pandemic-fueled surge in e-commerce to higher profits and a 13% jump in revenue in the second quarter.  CEO Carol Tome said on Thursday’s earnings call, “At the beginning of the second quarter, we assumed demand would slow. Instead, we saw just the opposite.”

Average daily shipping volume rose 21% in the quarter, faster than the company has ever recorded, with a 65% increase in shipments to homes.

UPS and rival FedEx are being inundated with millions of extra daily packages after many retail stores were temporarily closed, pushing people to shop online for everything.  But as stores reopen, many shoppers are still reluctant to head to stores as coronavirus cases spike in parts of the U.S.

Both UPS and FedEx see they have the ability to levy new surcharges on large packages and on some of their lower-priced shipping services, and CEO Tome talked of having room to raise shipping rates on large retailers, who she said can pass the increase along to customers by raising prices.

For the period, UPS reported a profit of $1.8 billion, up from $1.7 billion.

--Procter & Gamble Co. posted the strongest annual sales gain since 2006 as the pandemic kept consumers at home and vigilant about cleaning.  Demand in the U.S. for cleaning and paper products continued to surge through the spring and early summer, while the reopening of China, P&G’s second-biggest markets, drove sales there.

P&G said its efforts in recent years to shed weaker brands and streamline are paying off at a time of crisis.

The company said organic sales (ex- impact of currency swings) were up 6% for the fiscal year ended June 30, and 6% as well for the latest quarter.  P&G predicted more modest growth for the current fiscal year, citing high uncertainty around the global economy, and fallout from the coronavirus.

CFO Joe Moeller said, “On the whole, with health, hygiene and cleaning, consumers’ needs have changed forever.  Maybe not to the degree that’s happened recently. But it’s hard to imagine we’ll snap back to the old world.”

Organic sales in China rose 14% in the quarter after its economy reopened, and 8% for the full year.

--MGM Resorts notified their staff that if they weren’t recalled from furlough by Aug. 31, they would subsequently be fired.

Major employers are required under the federal Worker Adjustment and Retraining Notification Act to notify their workers when there are expected to be mass firings.  Wynn Resorts, Tropicana and other casino operators sent out such notifications.

MGM told its employees that it had originally hoped the casino closures would be brief and full operations could be restored.  But the pandemic has progressed, and based on currently available data, it doesn’t look like “it will be safe to restart shows prior to August 31, 2020.”

That means the “large majority” of employees in the entertainment and sports division will be fired on that data.  Health benefits will also be terminated on that date, though employees who are let go will be able to still apply for emergency grants from the casino through Nov. 29, 2020.

--J.C. Penney is looking to sell the business to avoid a brush with liquidation.  During a bankruptcy court hearing Wednesday, the company said the sale should be completed by the fall under an expedited process, as JCP looks to rebuff rumors of a liquidation of the entire chain.

The retailer filed for Chapter 11 in mid-May with 846 stores and 85,000 employees.  J.C. Penney has said it hopes to emerge from bankruptcy with about 600 stores and has begun liquidation sales at around 150 stores.

--Meanwhile, Thanksgiving Day 2020 will look different as the likes of Walmart, Target, Kohl’s, Dick’s Sporting Goods and Best Buy have announced they will be closed that day, a first in about ten years since the trend started to open at least part of it as a way to get a jump on Black Friday.

Target said in a statement: “Let’s face it: Historically, deal hunting and holiday shopping can mean crowded events.”

Target added it will start its holiday sale in October and keep the “lowest prices of the year on items in stores and online” even after the holiday.

--Fewer than one-tenth of Manhattan office workers have returned to the workplace a month after New York gave businesses the green light to return to the buildings they vacated in March, according to the city’s leading landlords, brokerage firms and employers.

The likes of Citigroup and JPMorgan Chase, for example, have allowed only a small number of traders, bankers and other employees to return to the workplace.  Others, like Facebook, have told their workers to stay at home through year end.

You can imagine the ripple effect, however, on the restaurant and retail front in the City…it’s been devastating.  Plus, there is little tourism, especially with quarantine rules, no Broadway, and museums still closed.

Currently, no office could have more than 25% occupancy.

--One of the ripple effects has been on Shake Shack Inc., which posted a bigger-than-expect quarterly loss on Thursday as the burger chain temporarily shut some restaurants and cut working hours due to coronavirus-led lockdowns and civil unrest that gripped several U.S. cities.

Shake Shack has also been hurt by not having drive-thrus, which it has just started building.  McDonald’s said 90% of its quarterly sales were from drive-thrus.

And the chain has been hit hard by its heavy presence in bigger markets such as New York, Chicago and Los Angeles suffering from the return to work trends noted above.

--Former Malaysian Prime Minister Najib Razak was sentenced to 12 years imprisonment and fined nearly $50 million by a Malaysian court that found him guilty of abuse of power in connection with one of the world’s largest financial scandals that resulted in his defeat in the country’s 2018 elections.

The sentence is to run concurrently with shorter prison terms of 10 years for each of the three charges of money laundering and three charges of criminal breach of trust against him, the court said.

Tuesday’s verdict goes back to a string of cases against Najib over allegations he unlawfully received hundreds of millions of dollars from a state investment fund called 1Malaysia Development Bhd., or 1MDB, which I wrote of last time in terms of Goldman Sachs and its agreement to pay the Malaysian government nearly $4 billion for its role in the scandal.

Najib’s lawyer said his client will appeal to a higher court.

--A Mexican central bank official said the economy could contract between 8.5% and 10.5% in 2020 as Latin America’s second-largest economy reels from the pandemic.  Gerardo Esquivel added that it could take until 2022 for economic activity to return to pre-pandemic levels as spending on tourism, transportation, restaurants and fast food have remained far below expected levels through the end of July.

The government then announed GDP contracted 17.3% in the second quarter over the first, and was down 18.9% over the second quarter of 2019, the National Statistics Institute said Thursday.

Industrial production in the April through June period fell 23.6% from the first quarter of the year.

The decline in GDP marked a fifth consecutive quarterly contraction and was the sharpest on record, putting the economy on track for its deepest recession since the Great Depression of the early 1930s.  In the first six months of the year, GDP was down 10.5% from the first half of 2019.

--China’s soybean imports in June from top supplier Brazil soared to a record high, according to customs data released on Sunday, driven by growing demand for soybeans as China’s pig herd recovers after deadly outbreaks of African swine fever.  The world’s top soybean buyer brought in 10.51 million tons of the oilseed from Brazil in June, up 91% from the previous year.

China’s overall soybean imports in June were a record 11.16 million tons as Chinese processors also made the most of lower Brazilian prices as better weather facilitated exports.

China purchased 267,553 tons from the U.S., according to the General Administration of Customs. Down 56.5% from 614,805 tons in the previous year, and down 45.6% from May’s level of 491,697.

So as noted above you can see that China needs to ramp up purchases dramatically to fulfill its pledge under the phase 1 trade deal the two sides signed in January.

--My inground pool manufacturer friend offered up further evidence on the boom in that industry, with B.K. saying the “wave” of seasonal orders has been going on for months and continues to grow in size when it’s normally limited, with no sign it is going to crest anytime soon, orders having quadrupled.  In three weeks, my friend said he went through more steel than he did in perhaps 2 ½ months last year, which was a very good one for the industry.  Needless to say, manufacturers of his ilk are scrambling for raw materials.  A large Midwest dealer my friend knows said he is fully sold out through 2021!

Meanwhile, B.K. says many above ground manufacturers have stopped accepting orders.  Incredible.  Get some rest, friend.  [Pssst, he says he comes home at 11:00 p.m. these days and to relieve stress waters his shrubs.]

--SeaWorld Entertainment said it expects second-quarter revenue of approximately $18 million, a sharp drop from the $406 million revenue a year ago, and just half the Street’s estimate.  The net loss for the quarter is estimated at approximately $105 million, the company formally filing its results in the next ten days or so.

--If you like to drink beer out of a can, you are likely no doubt aware of the aluminum shortage.  The Beer Institute says that aluminum cans have grown far more popular for packaging in recent years, cracking 60% for the first time in the second quarter.  Less than one-third is bottled.  The Can Manufacturers Institute says 35 billion cans are used annually for alcoholic beverages in the U.S. and Canada.

Foreign Affairs

China: In a major move, Hong Kong leader Carrie Lam on Friday postponed a Sept. 6 election for the city’s legislature for a year because of a spike in novel coronavirus cases, dealing a blow to the pro-democracy opposition hoping to make gains in the vote. The opposition had aimed to ride a wave of resentment of a new national security law, that Beijing imposed on the city on June 30, to win a majority in the Legislative Council, where half the seats are directly elected with the other half filled mostly by pro-Beijing appointees.

The postponement comes after 12 pro-democracy candidates were disqualified from running in the poll, for reasons including perceived subversive intentions, opposition to the new security law and campaigning to win a legislation-blocking majority.

Lam, who said the election would be held on Sept. 5 next year, told reporters the decision was the most difficult she had made in seven months and it was aimed at safeguarding people’s health.

“We have 3 million voters going out in one day across Hong Kong, such flow of people would cause high risk of infection,” Lam said.

The poll would have been the first official vote since Beijing imposed the security law to tackle what China broadly defines as secession, subversion, terrorism and collusion with foreign forces, with punishment of up to life in prison.

Among the 12 opposition candidates seeking to run in the election was Joshua Wong, who rose to fame leading protests in Hong Kong as a teenager in 2012 and 2014.  “Barring me from running…would not stop our cause for democracy,” said Wong, 23.

Wong, who China calls a “black hand” of foreign forces, said his disqualification was “invalid and ridiculous” and the new law a “legal weapon used against dissidents.”

Hong Kong’s last British governor, Chris Patten, called it an “outrageous political purge” to disqualify the candidates.

Yes, Hong Kong has been reporting triple-digits in infections recently, but this is hardly like many other cities around the world, especially in the United States.  Singapore, with similar case levels, held a general election in July.

Separately, Hong Kong police arrested four people aged 16-21 for suspected offenses under the new national security law, the first such detentions outside of street protests since the legislation took effect a month ago.  Police said the three men and a woman, all students, were suspected of being involved in an online group that pledged to use every means to fight for an independent Hong Kong.  Human Rights Watch condemned the arrests.

“The gross misuse of this draconian law makes clear that the aim is to silence dissent, not protect national security,” said Sophie Richardson, China director at Human Rights Watch.

Meanwhile, there are growing fears President Xi Jinping, seeking to cement his place alongside Mao and Deng Xiaoping, is set on conquering Taiwan.  Joseph Wu, the foreign minister for the island, said on July 22 that China “may look for excuses to start a war or conflict” after it suddenly stepped up incursions into Taiwan’s air defense identification zone, raising the risk of a collision that could escalate.  “What China is doing now is continuing to ramp up preparedness to solve the Taiwan issue,” Wu said.  “We are very concerned that China will target Taiwan now that the Hong Kong security law’s been passed.”

It was in a speech last year that Xi Jinping said: “China must and will be united, which is an inevitable requirement for the historical rejuvenation of the Chinese nation in the new era.”

Opinion from both sides….

Editorial / Washington Post

“The United states should be leading democratic nations in resisting China’s tightening totalitarianism and escalating belligerence.  Instead, President Trump is pursuing a reckless, incoherent and unilateral offensive against Beijing that appears designed to boost his reelection campaign, not manage the complicated challenge posed by the regime of Xi Jinping.

“The State Department’s abrupt order shutting down the Chinese Consulate in Houston…is a case study in Mr. Trump’s counterproductivity.  It will inevitably lead to the permanent closure of a comparable U.S. mission in China – [Ed. which ended up being Chengdu].  That will reduce channels of communication and diminish U.S. understanding of China’s domestic situation, while doing next to nothing to address the offensive activities of the Xi regime, from its crackdown in Hong Kong to its attempts to spy on Americans and steal U.S. technology.

“U.S. officials are describing the Houston consulate as a nest of espionage activities, though they have offered no evidence to back that up.  Secretary of State Mike Pompeo portrayed the closure as sending a message: ‘We are setting out clear expectations for how the Chinese Communist Party is going to behave, and when they don’t, we’re going to take actions that protect the American people, protect our security, our national security, and also protect our economy and jobs.’

“That’s good campaign rhetoric – but closing consulates won’t accomplish those aims.  Most Chinese hacking and spying is directed from China, not Houston.  Many of the other measures Mr. Trump has taken, from imposing tariffs on U.S.-China trade to restricting student visas, have damaged the U.S. economy and cost jobs without changing Chinese behavior.

“Mr. Trump’s crusade – including racist references to the ‘Chinese virus’ and ‘kung flu’ – would be more plausible if it did not represent an abrupt, election-season U-turn.  Until March, Mr. Trump was publicly praising Mr. Xi as a great leader, including in his response to the coronavirus.  In private, Mr. Trump reportedly begged the Chinese ruler for help with his reelection campaign while approving of Mr. Xi’s crackdowns in Hong Kong and on the Uighurs of Xinjiang province.  In the trade deal he struck with Mr. Xi in January, Mr. Trump gave up demands for meaningful reforms in China’s trade practices in pursuit of pre-election soybean purchases from Midwestern farmers.

“The president has since come to see greater electoral benefit in blaming Beijing for the spread of Covid-19 while portraying opponent Joe Biden as a Chinese puppet.  Some of the resulting flurry of measures are worthy, if long overdue: Under heavy pressure from Congress, the administration finally imposed sanctions on officials and companies involved in the Xinjiang and Hong Kong crackdowns.

“Yet this in no way represents a cogent strategy for countering Mr. Xi’s ambition to spread China’s model of dictatorship around the world and forcibly silence critics at home and abroad.  That would require coordination with U.S. allies – such as Germany, South Korea and Japan, which Mr. Trump instead threatens with trade wars or the withdrawal of U.S. troops.  It would mean reviving the Trans-Pacific Partnership on trade. And it would require leaving open channels for diplomacy with Beijing to address issues such as North Korea’s growing nuclear arsenal and global warming.  Closing consulates will achieve none of that.”

Editorial / Wall Street Journal

“The Trump Administration’s closure of China’s consulate in Houston, and China’s retaliatory closure of the American consulate in Chengdu, is the latest in the din of diplomatic discord that now defines the world’s most important bilateral relationship.  On Thursday (July 23) Secretary of State Mike Pompeo made explicit what has been clear to anyone observing developments from Hong Kong to Huawei: America’s decades-long gamble on greater China openness has hit a wall.

“Governments often operate secretively out of foreign consulates, but the U.S. says China regularly crosses the line from diplomacy to intelligence operations and espionage.  The U.S. announced visa-fraud charges Thursday against four researchers who allegedly lied about their ties to the People’s Liberation Army.  One had been in contact with the Chinese consulate in New York and another sought refuge in the Chinese consulate in San Francisco.

“The details of activities in the Houston consulate are murky, but U.S. officials say it played a significant role in orchestrating research theft in the Southeast.  An indictment this week accused hackers in China of targeting U.S. coronavirus vaccine research.  Houston is a hub of medical research, and last year its MD Anderson center expelled three researchers for not disclosing research ties to the Chinese government.  Notably, the Houston consul general was previously stationed in Australia, one of the first Western nations to sound the alarm about China’s foreign-influence operations….

“One danger is that Beijing writes off the new U.S. posture as an election-year gambit by President Trump.

“That would be a mistake.  Despite harsh criticisms of U.S. actions against Iran, for example, Democrats have been encouraging or silent as the Administration pushes back against Beijing.  The new posture reflects an emerging consensus from blue-collar voters to business and security elites that China has gotten away with too much for too long.  A Biden Administration would inherit the tense situation in the Western Pacific and a large portfolio of counterintelligence and criminal investigations targeting China’s influence in the U.S.

“China-watchers debate whether Beijing has grown more belligerent since the coronavirus because it feels strong or because President Xi Jinping is vulnerable.  Either way, his recent actions have rallied more countries to the U.S. position on China’s threat to world order.  And the U.S. needs allies in confronting China.

“The West can’t control China’s behavior, but it can impose costs for abuses.  That’s what the Administration is trying to do with actions like the Houston consulate closure and its rejection of Beijing’s South China Sea claims last week.  The U.S. should also fund efforts to help get around the internet firewall that blocks Chinese citizens from the outside world and sustains Communist rule.

“The risks of confrontation are considerable.  No one should want diplomatic and economic tensions to become a military showdown.  Yet Beijing has grown convinced that it won’t face consequences for abuses.  Now that’s changing, and the hope is that a tougher policy convinces others in Beijing that Mr. Xi’s approach is too costly to continue.”

North Korea: Incredibly, leader Kim Jong Un declared an emergency and a lockdown in a border town after a person suspected of being infected with the coronavirus returned from South Korea after illegally crossing the border, state media said on Sunday.  If confirmed, we are told this would be the first case officially acknowledged by North Korean authorities.

One wonders why Kim disappeared for weeks on end earlier this year amid rumors he was sheltering from Covid-19.

Russia: As noted recently, the U.S. military plans to move nearly 12,000 troops from Germany, relocate its major European headquarters to Belgium and send F-16 fighters to Italy to implement President Trump’s decision to shrink the U.S. military footprint in the NATO ally, Defense Secretary Esper said on Wednesday.

Trump had said last month the move was intended to punish Germany, which he has asserted is not meeting its financial commitments.

Esper, however, sought to cast the shift, which will cost $billions and could take years to achieve, as a way to update its efforts to deter Russian aggression.  Esper tried to convince us that the moves will “strengthen” NATO and will “enhance the deterrence of Russia.”

After Esper’s comments, President Trump later told reporters that the plan could change should Germany pay more of its gross domestic product toward defense, the two percent level you always hear about.

So it’s not about strengthening NATO.  But then we knew this when Trump first announced the move.  Trump said; “We don’t want to be the suckers anymore. The United States has been taken advantage of for 25 years, both on trade and on the military. We’re protecting Germany, so we’re reducing the force because they’re not paying their bills.  It’s very simple. They’re delinquent.  So we’re reducing the force.  Now if they start paying their bills…I would think about it.”

Nothing about Russia in that statement.  It’s a gift to the Kremlin.

This while U.S. officials said Tuesday that Russian intelligence services are using a trio of English-language websites to spread disinformation about the Covid-19 pandemic, seeking to exploit the crisis that America is struggling to contain ahead of the November elections.

Officials who spoke to the Associated Press on the condition of anonymity said they were free to discuss the previously classified information to sound the alarm about the particular websites and to expose what they say is a clear link between the sites and Russian intelligence.

Meanwhile, President Putin said on Sunday the Russian Navy would be armed with hypersonic nuclear strike weapons and underwater nuclear drones, which the defense ministry said were in their final phase of testing.

Putin, who says he doesn’t want an arms race, has often spoken of a new generation of Russian nuclear weapons that he says are unequalled and can hit almost anywhere in the world.  But some Western experts question just how advanced the program is.

Last year Putin threatened to deploy hypersonic missiles on ships and submarines that could lurk outside U.S. territorial waters if the United States moved to deploy intermediate-range nuclear weapons in Europe.  Washington has not done so as yet, but Moscow is worried it might.

Separately, Belarusian opposition candidate Svetlana Tikhanouskaya on Thursday denied allegations that she or her jailed husband had ties to an alleged plot by Russian mercenaries to destabilize Belarus ahead of a presidential election.

Authorities launched a criminal case against her husband on suspicion of inciting riots and state-run media suggested he was part of a plot to sow instability.

The 37-year-old is leading the strongest challenge in years to President Alexander Lukashenko, who has ruled with little opposition for 26 years.  Tikhanouskaya said she feared that attempts to tie her family to alleged foreign plotters could lead to bloodshed ahead of the election on Aug.9.

This is a very confusing, bizarre situation.  Russia has demanded an explanation from Belarus after Minsk arrested the alleged mercenaries and said they were suspected of plotting “acts of terrorism.”

Belarusian state television broadcast footage on Wednesday of more than 30 suspected Russian private mercenaries, with talk the group numbered 200.

Finally, back to Vladimir Putin, he is facing serious protests in the Russian far east, as tens of thousands have been marching in Khabarovski, seven time zones away, over the detention of a popular regional governor, Sergei Furgal, who was arrested on murder charges he denies.  His supporters say the move was politically motivated and are calling on Putin to resign.

Iran: Supreme Leader Ayatollah Ali Khamenei, in a live speech on state TV today, ruled out negotiations with the United States over Tehran’s ballistic missile and nuclear programs, calling on Iranians to resist U.S. bullying.

“America’s brutal sanctions on Iran are aimed at collapsing our economy… Their aim is to limit our influence in the region and to halt our missile and nuclear capabilities,” Khamenei said.  “Relying on national capabilities and cutting our dependence on oil exports will help us to resist America’s pressure.”

Turkey: Turkey and Greece exchanged harsh words on Saturday over the conversion of Istanbul’s Hagia Sophia into a mosque, a day after Islamic prayers were held at the ancient site for the first time in nine decades.

Greek criticism of the move to convert the site from a museum has been scathing, underlining tense ties between the two neighbors.  Church bells tolled in mourning across Greece on Friday as Turkish President Erdogan joined prayers at the building.

“Greece showed once again its enmity towards Islam and Turkey with the excuse of reacting to Hagia Sophia Mosque being opened to prayers,” Turkish Foreign Ministry spokesman Hami Aksoy said in a statement on Saturday.

The Greek Foreign Ministry responded with its own statement, saying “the international community of the 21st century is stunned to observe the religious and nationalist fanatic ramblings of today’s Turkey.”

Random Musings

--Presidential tracking polls….

Gallup: 41% approve of President Trump’s job performance, 56% disapprove; 91% of Republicans approve, 34% of independents (Jul 1-23).  The splits for the last survey (June 8-30), were 38/57, 91, 33.
Rasmussen: 50% approve, 48% disapprove (July 31…had been 42/55 back on June 29).

--According to new CNN polls of battleground states Arizona, Florida and Michigan, former Vice President Joe Biden was leading in all three.

In Florida, Biden leads 51% to 46%, in Arizona it’s 49% to 45%, while in Michigan, Biden leads among registered voters 52% to 40%, matching the national average for the presidential race per the most recent CNN Poll of Polls.

Trump carried all three states in 2016.

In Florida, other recent polls give Biden similar support, with Quinnipiac pegging it at the same 51%, 48% in a CBS News survey, and 49% in a Fox News poll.  Trump’s figures for the three, in order, were 38%, 42% and 40% in the Fox survey.

In the CNN poll, 60% disapprove of the president’s performance on the coronavirus, 59% in Michigan, and 57% in Florida.

But in Arizona and Florida, 52% rate Trump positively when it comes to the economy.

Interestingly, in the CNN poll, Michigan’s Democratic Gov. Gretchen Whitmer earns a 69% approval rating for her handling of the coronavirus, while 66% say Arizona Republican Gov. Doug Ducey is falling short, ditto Florida Republican Gov. Ron DeSantis (63%).

--A new NBC News/Marist poll of North Carolina registered voters has Biden at 51% to Trump’s 44% in a state Trump won by 3.6 points in 2016.

Democratic Senate candidate Cal Cunningham leads incumbent Sen. Thom Tillis by 9 points, 50-41.

And Democratic Gov. Roy Cooper leads his Republican challenger, Lt. Gov. Dan Forest, 58 to 38 percent.

President Trump’s job approval rating in the state has dropped to 41%, with 55% disapproving.  Back in March the split was 45-48.

--Gerard Baker / Wall Street Journal

“As was perhaps predictable in a presidential contest between two men on the ripe side of 70, we’re into the ‘my memory is better than yours’ phase of the election campaign.

“Neurologists are divided on the real value of cognitive testing, but in any case we should be less interested in whether someone can recite with precision a string of random words than in whether he can demonstrate practical recall of recent important events in his life.

“A better test for Joe Biden right now than ‘Person. Woman. Man. Camera. TV’ might be ‘Obama. Vice president. Russia. Trump. Investigation.’

“It’s well past time Mr. Biden was asked some hard questions about what he knew about the campaign by the administration he worked in to paint Mr. Trump as an asset of Russian intelligence.

“When he digitally tiptoes out from his Delaware fastness, the former vice president is typically tossed some gentle softballs from friends at MSNBC, CNN or some other group of Democratic Party activists.

“Even these can take a curious course.  Last week, in a free-associative online session with representatives of the Service Employees International Union, Mr. Biden warned that the president was inciting hatred of Koreans by attacking China for covering up Covid-19.  ‘People don’t make a distinction – as you well know – from a South Korean and someone from Beijing,’ he told a panel that included a couple of puzzled Asian-Americans.  They nodded sympathetically, like concerned relatives at the bedside of an elderly family member ranting about the nurse who has taken away his record player.

“Mr. Biden can speak knowledgeably on the topic of Asian stereotypes.  In 2006, when he was cognitively sharper, he offered this socioeconomic gem: ‘You cannot go to a 7-Eleven or a Dunkin’ Donuts unless you have a slight Indian accent.  I’m not joking.’

“Mr. Biden is lucky he doesn’t receive tough questions – about the Russia-collusion story, for instance.  Having spent three years talking about little else, the media has now pushed the story down the memory hole, since it was widely discredited and failed to generate its intended outcome, the removal of the president.

“Inconveniently for the former vice president, awkward reminders keep popping back up unexpectedly, like the verbal eructations that punctuate Mr. Biden’s remarks….

“All this comes on top of what Michael Horowitz, the Justice Department inspector general, discovered late last year: FBI officials doctored information to get judges to approve Foreign Intelligence Surveillance Act warrants and ignored or played down evidence that undermined their investigation. All the while, officials leaked damaging and selective information to friendly media to convince the country they were on to something.

“We know Mr. Biden was kept abreast of aspects of the investigation…. We know that his boss wanted to be told everything the FBI investigators were doing.  We know that Susan Rice, Mr. Obama’s national security adviser and a leading contender for Mr. Biden’s vice presidential pick, was also closely involved in reviewing aspects of the FBI’s activities….

“There are many…questions to be asked of a presidential candidate about what he can recall of such a critical period in recent history.

“Mr. Biden’s widening memory lapses were once thought by advisers to be a critical electoral liability.  But if he can get from here to Nov. 3 assisted by a complaisant press corps disinclined to help him recall those last months of the Obama administration, the failing memory may turn out to be his greatest asset.”

--One of the more unlikable members of Congress I can ever remember, Rep. Louie Gohmert (R-TX), who has steadfastly refused to wear a mask during the crisis, said on Wednesday he had tested positive for Covid-19, leading to at least three of his colleagues self-quarantining after being close to him in recent days.

Gohmert said in an interview later Wednesday, “I can’t help but wonder if by keeping a mask on and keeping it in place, I might have put some germs – some virus – onto the mask and breathed it in.” 

Gohmert, who has frequently been without a mask while in proximity to others on Capitol Hill and told CNN last month that he wasn’t wearing a mask because he is tested often but would wear one if he tested positive, was due to accompany the president on Air Force One for Trump’s trip to Texas.

Gohmert said he would self-quarantine for 10 days.

House Speaker Nancy Pelosi then said on learning of Rep. Gohmert’s positive test, every member and staff would be required to wear masks in the House.  Members will be allowed to remove their masks when addressing the chamber, Pelosi said on the House floor.

“The chair expects all members and staff to adhere to this requirement as a sign of respect for the health, safety and well-being of others present in the chamber and surrounding areas.”

Pelosi warned that she had the authority to ask the House sergeant at arms to remove a member from the floor for violating decorum, and “the chair views the failure to wear a mask as a serious breach of decorum.”

--We note the passing of former presidential candidate Herman Cain, who died after a battle with Covid-19 on Thursday. He was 74.

Cain had been hospitalized with coronavirus, according to a statement posted July 2 on his official Twitter account.  It’s not clear where or when he was infected, but it was well-known he attended President Trump’s rally in Tulsa just weeks earlier, June 20, and he wasn’t wearing a mask, nor were those seated around him.

President Trump tweeted:

“My friend Herman Cain, a Powerful Voice of Freedom and all that is good, passed away this morning.  Herman had an incredible career and was adored by everyone that ever met him, especially me. He was a very special man, an American Patriot, and great friend.  I just got off…

“…the phone with his amazing wife Gloria, daughter, Melanie, and son Vincent to express my deepest condolences to the entire family.  @FLOTUS Melania and I loved Herman Cain, a great man. Herman, Rest In Peace!”

Cain was a true rags-to-riches story, a former pizza chain CEO, National Restaurant Association head, and candidate for the Republican nomination in 2012, who before the primaries commenced, was actually in the lead.  His campaign was derailed by some sexual harassment allegations, which he denied, and then Cain went on to become a leading supporter of President Trump.

He seemed like a good man, and I haven’t heard or read anything to the contrary.  It’s sad his last days were filled with such suffering.

--NASA launched its most ambitious robotic rover to Mars on Thursday, opening the next phase of exploration on the Red Planet.

The $2.7 billion mission, Perseverance, will seek signs of ancient life on Mars that can be packaged and, for the first time, returned to Earth.  It will test ways to extract oxygen from the Martian air for future colonists and try out an experimental helicopter drone that could become the first craft to fly on another planet.

A United Launch Alliance Atlas V rocket boosted the spacecraft from the Cape Canaveral Air Force Station on a 300-million-mile voyage between the planets.  If all goes as planned, the spacecraft will land on Feb. 18 at a 28-mile-wide basin called Jezero Crater.

China and the United Arab Emirates independently launched maiden voyages to Mars earlier this month.  Europe and Russia are set to follow with a joint Mars mission in 2022.

--The case of the mystery seeds showing up in U.S. mailboxes from shippers in China and other countries has gone global. Canada, the U.K. and Australia are all investigating the matter.

The U.S. Department of Agriculture said consumers in at least 22 states had received the unsolicited seeds, with various agencies including the FBI and the Department of Homeland Security investigating them as well.

You are not to plant them, the USDA being concerned they are potentially invasive species, though as of late Wednesday, there was no indication any of the seeds carry pests or diseases, according to the agency.

--According to a joint study by the Pew Charitable Trust and sustainability consulting firm Systemiq Ltd., the annual flow of plastic into the world’s oceans is set to surge and businesses’ efforts to reduce plastic waste will do little to stop it.  We’re talking the inflow could triple from 2016 to 2040, the study found.

Companies and governments have pledged to cut plastic, but those commitments would only achieve a 7% annual reduction in plastic leaking into the ocean by 2040, so still more than a twofold increase in volume.

China and Indonesia are likely the top sources of plastic reaching the oceans, accounting for more than a third of the plastic bottles, bags and “other” washing out to sea, according to a 2015 study from the University of Georgia.

Over the past two years China has been making strides to improve waste management, including banning the import of plastic and other waste from developed countries like the U.S., which for decades have shipped much of their trash overseas.

---

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

God bless America.

---

Gold $1994…up $52 today…more next week.
Oil $40.43

Returns for the week 7/27-7/31

Dow Jones  -0.2%  [26428]
S&P 500  +1.7%  [3271]
S&P MidCap  +0.8% 
Russell 2000  +0.9%
Nasdaq  +3.7%  [10745…just shy of new record]

Returns for the period 1/1/20-7/31/20

Dow Jones  -7.4%
S&P 500  +1.3%
S&P MidCap  -9.7%
Russell 2000  -11.3%
Nasdaq  +19.8%

Bulls 56.7
Bears
17.3…(last week’s #s…update not provided)

Hang in there…Mask up.  Wash your hands.

Brian Trumbore



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Week in Review

08/01/2020

For the week 7/27-7/31

[Posted 10:00 PM ET, Friday]

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

*Special thanks to Barb S. and Chris S. for their support. 

Edition 1,111

Congressman John Lewis wrote a final essay titled “Together, You Can Redeem the Soul of Our Nation” that he ordered be published in the New York Times on the morning of his funeral.

Addressing the looming election in November, Lewis wrote:

Ordinary people with extraordinary vision can redeem the soul of America by getting in what I call good trouble, necessary trouble.  Voting and participating in the democratic process are key.  The vote is the most powerful nonviolent change agent you have in a democratic society.  You must use it because it is not guaranteed.  You can lose it.

Trump then tweeted Thursday morning, around the time of the funeral:

“With Universal Mail-In Voting (not Absentee Voting, which is good), 2020 will be the most INACCURATE & FRAUDULENT Election in history.  It will be a great embarrassment to the USA. Delay the Election until people can properly, securely and safely vote???”

The Constitution gives the power to regulate the “time, place and manner” of general elections to Congress, while states control the dates of primary elections.  Nowhere is the president granted such power.

Today the president continued, telling reporters that the election is going to be “rigged” and that “this is going to be the greatest election disaster in history!”

This is disgusting, disgraceful behavior on the part of an American president; a pathetic, small man, surrounded and supported by total sycophants, bent on sowing discord, confusion and chaos.

What is sickening is that a sizable minority will go along with his dangerous game.  It’s the kind of reckless behavior that had me saying a full 1 ½ year ago that the “generals were restless.”  I can only imagine what they are saying to each other in their private conversations today.

Trump’s act cannot continue.  But in sowing doubt in the key institution of our democracy, the electoral process, he is taking us down a road we all know could lead to catastrophe.

The problem is that the opposition is being led by a man, Joe Biden, who is an incredibly weak candidate.  Anything can still happen.

Meanwhile, on the Covid front, the toll mounts, while Trump and some of his acolytes tout a “plateauing” in the numbers…but if so this is at a totally unacceptably high level.  Look at the death tolls below if you haven’t been paying attention this week.

But what really drives me up the wall about our president when it comes to the virus is that he never, ever talks about the long-term side effects, instead misleading the people into thinking that, yes, for the “99% who get the virus, it’s harmless.”

A recent study of 100 recovered Covid-19 patients reveals 78 of them now have lasting cardiovascular damage even though a vast majority of them had mild cases in the first place.

The study, published Monday in JAMA Cardiology, details the results of cardiac MRI exams of the 100.  Twenty-eight of them required oxygen supplementation while fighting the virus, while just two were on ventilators.  But 78 of them still had cardiovascular abnormalities after recovery, with 60 of them showing “ongoing myocardial inflammation,” the study shows.  JAMA researchers concede the findings call for a larger study, but this should scare the hell out of everyone, especially young people.

You don’t want to catch this.  Wise up!  Don’t act like idiots!

Speaking of idiots, many in Congress fall under that category and tonight, nearly 30 million workers are about to lose $600 in enhanced weekly unemployment benefits that have kept much of the economy afloat because top lawmakers and the White House remain at an impasse.  The two sides are far apart on the Covid-19 relief bill, with, among things, Republicans wanting the $600 reduced to $200, while Dems want to maintain the current level.

The White House is saying Democrats, who had a bill of their own signed two months ago, rejected reasonable offers, while House Speaker Nancy Pelosi derided Republicans for trying to advance a short-term fix that would have extended benefits for just a week.

“What are we going to do in a week?” Pelosi asked in her news conference today.

Most states cap weekly unemployment benefits at well below $600, and the enhanced checks have been paying the basic bills of millions.

And now eviction moratoriums have run out in many states.

Pelosi and White House Chief of Staff Mark Meadows are said to be meeting Saturday, possibly joined by Senate Minority Leader Chuck Schumer and Treasury Secretary Steven Mnuchin.

But for many it’s already too late.  I know that the deficits can’t continue to explode forever, but both sides knew this day was coming for months now.  You are going to be hearing one heartbreaking story after another next week unless there is a miracle.

And as if all the above isn’t bad enough, there’s a hurricane headed towards Florida and the East Coast.

Then again it’s 2020…and we have five months to go in this year from hell.

Covid-19 death tolls (as of tonight)

World…682,197
USA…156,747
Brazil…92,568
Mexico…46,688
UK…46,119
India…36,551
Italy…35,141
France…30,265
Spain…28,445

[Source: worldometers.info]

USA daily death tolls…Sun. 451, Mon. 596, Tues. 1,245, Wed. 1,465, Thurs. 1,465 (yes, same), Fri. 1,462.

Look at those numbers…the last three days the highest since May 27 when we had 1,567 deaths.

Covid Bytes

[Just some nuggets of info on the week.]

--Moderna reported Tuesday that its vaccine had induced a strong immune response in a study on monkeys.  The company said the vaccine protected against infection in the lungs and nose and prevented lung disease. Phase 3 human trials have begun.

--Johnson & Johnson kicked off U.S. human safety trials for its Covid vaccine after releasing details of a study in monkeys that showed its best-performing vaccine candidate offered strong protection in a single dose.  When exposed to the virus, six out of six animals who got the vaccine candidate were completely protected from lung disease and five out of six were protected from infection as measured by the presence of virus in nasal swabs, according to a study published in the journal Nature.

“This gives us confidence that we can test a single-shot vaccine in this epidemic and learn whether it has a protective effect in humans,” Dr. Paul Stoffels, J&J’s chief scientific officer, told Reuters in an interview.

The government is backing J&J’s efforts to the tune of $456 million in funding.  They expect to advance to phase 3 trials in September.

--Pfizer on Monday began the last stage, phase 3, trial of an experimental Covid-19 vaccine study that seeks to enroll 30,000 people. Pfizer is developing the vaccine with BioNTech SE.

Pfizer is targeting October to file for regulatory approval for emergency-use authorization.

--Russia announced it would become the first country to produce a vaccine for widespread use, as a Moscow-based research institute plans to register its candidate within the first two weeks of August.

The vaccine, which has gone through two phases of testing, is expected to be registered with the Health Ministry by August 14, said Kirill Dmitriev, head of Russia’s Direct Investment Fund, or RDIF.

Russia is calling this a “Sputnik” moment.  I’ll pass.

--As scientists and pharmaceutical companies work at breakneck speed to develop a vaccine, public health officials and senior U.S. lawmakers are sounding alarms about the Trump administration’s lack of planning for its nationwide distribution.  The federal government traditionally plays a principal role in funding and overseeing the manufacturing and distribution of new vaccines, which often draw on scarce ingredients and need to be made, stored and transported carefully.

Since there won’t be enough vaccines for all 330 million Americans right away, the government has to decide who gets it first (obviously, first responders/healthcare workers, and the elderly should), and in educating our vaccine-wary people.  But just who is in charge of oversight, much less any critical details, is not clear as of today. 

Republican Senator Roy Blunt, who chairs a panel overseeing health program funding, is one of several lawmakers pushing for the CDC, which was first founded in 1946 to counter malaria.

“They are the only federal agency with a proven track record of vaccine distribution and long-standing agreements with health departments across the country.”

--India reported another record level of infections on Friday, 55,078 in the past 24 hours, with 779 deaths.

Australia reported record daily infections on Thursday, with a record 13 deaths and more than 700 new infections, mostly in the second-most populous state of Victoria, where the government ordered all residents to wear face-coverings outside.  The country’s second-largest city, Melbourne, has been in lockdown since July 7.

Even Vietnam has reported a new surge in six cities and provinces in six days, linked to an outbreak in the central city of Danang. Authorities told tens of thousands of people who visited Danang to report to disease control centers.

But we are talking only 42 infections over a multi-day period, yet such severe measures are being taken.  No wonder Vietnam has recorded one single death, reported just today, with 545 cases overall.  The nation’s aggressive contact-tracing has worked.

--Of the 20 countries with the biggest outbreaks, the United States ranks sixth in deaths per capita, at 4.7 per 10,000 people. Only the UK, Spain, Italy, Peru and Chile have a higher per capita rate.

--British Prime Minister Boris Johnson said Covid-19 was now under some measure of control in the UK, but a resurgence of the coronavirus in some European countries made clear that the pandemic was not over.

“This country has had a massive success now in reducing the numbers of those tragic deaths, and we’ve got it at the moment under some measure of control,” he said on Thursday.  “But I have to tell you that we are looking at a resurgence of the virus in some other European countries and you can see what’s been happening in the United States, and so it is absolutely vital as a country that we continue to keep our focus and our discipline, and that we don’t delude ourselves that somehow we are out of the woods or that it’s all over because it isn’t all over.”

--Brazilian President Jair Bolsonaro, following his coronavirus diagnosis and subsequent quarantine, which he previously described as “horrible,” admitted Thursday that he now has “mold” in his lungs.

“I just did a blood test. I was feeling kind of weak yesterday. They found a bit of infection also.  Now I’m on antibiotics,” Bolsonaro said in a livestream video. He did not elaborate on the specifics of his condition.

“After 20 days indoors, I have other problems: I have mold in my lungs,” he added.

Bolsonaro’s wife also tested positive for the virus Thursday – just 24 hours after speaking at a public event with her husband in Brasilia.

--An analysis of a sleep-away camp in Georgia by the Centers for Disease Control and Prevention, details an outbreak last month in which 260 children and staffers – more than three-quarter of the 344 tested – contracted the virus less than a week after spending time together in close quarters.  The children had a median age of 12. The camp had required all 597 campers and staff members to provide documentation that they had tested negative for Covid-19 before coming.  Staff were required to wear masks, but children were not.

Few super-spreading events have been documented among children, adding fuel to the debate over when sending children back to crowded school buildings is worth the risk.

Trump World

--After the president floated the prospect of delaying the November election while claiming widespread mail balloting would be a “catastrophic disaster” leading to fraudulent results, Senate Majority Leader Mitch McConnell quickly and unequivocally rejected the idea.  “Never in the history of the country, through wars, depressions and the Civil War, have we ever not had a federally scheduled election on time,” he said in a television interview. “We’ll find a way to do that again this Nov. 3.”

Steven G. Calabrese, a co-founder of the conservative Federalist Society, wrote in an opinion piece published in the New York Times that the president’s tweet was “fascistic” and “grounds for the president’s immediate impeachment.”

Republican Ari Fleischer, a former press secretary to George W. Bush, said, “Election Day is and will be Nov 3, 2020.  Mr. President – please don’t even pretend to mess with this.  It’s a harmful ideal.”

Added Rep. Liz Cheney (R-Wyo.) on Twitter: “We are not moving the date of the election. The resistance to this idea among Republicans is overwhelming.”  Others, such as Sen. Marco Rubio (R-Fla.) and House Minority Leader Kevin McCarthy (R-Calif.) expressed similar sentiments.

In his eulogy to civil rights icon John Lewis in Atlanta, former president Barack Obama weighed in, saying that “even as we sit here there are those in power who are doing their darndest to discourage people from voting.”  Obama didn’t mention Trump by name.

Rep. James Clyburn (D-S.C.) called Trump’s tweet “despicable,” especially because it came on the day of Lewis’ funeral.

“Americans will rise up & continue John’s fight for unfettered access to the ballot box,” Clyburn tweeted.  “Our voices will not be silenced.”

I do agree with the Wall Street Journal editorial board on this topic, that there are mail-in issues:

“This is not to suggest that the November election will be ‘rigged,’ as Mr. Trump asserts.  If he believes that, he should reconsider his participation and let someone run who isn’t looking for an excuse to blame for defeat.

“But Democrats and their allies are doing a disservice to the integrity of this election by being willfully blind to the challenges posed by the pandemic.  If the presidential result is close in one or more states amid the kind of problems displayed in New York, either candidate surely will sue, making the Florida ‘hanging-chads’ recount in 2000 look like a kindergarten exercise.

“Similar challenges are likely to emerge in Senate, House and state elections.

“Delaying the elections during the pandemic would only put off a potential fiasco.  But with time short, the responsible course is for governors and members of both parties to ensure deadlines for mail-in ballots are early enough so that the counting stops and the results are clear on Election Day.”

--Trump said on Wednesday if U.S. intelligence reports that Russia paid the Taliban to kill American troops in Afghanistan were true, he would be very angry about it.  Before leaving the White House for a trip to Texas, Trump told reporters he would respond appropriately if the reports were proven.  But there was enough evidence for the issue to be included in a widely read CIA report in May, as well as earlier indications Russia has been providing aid to the Taliban…for years.

In an interview with “Axios on HBO,” Trump said he never questioned Vladimir Putin about the intelligence reports, casting doubt on them.  “I have never discussed it with him,” having said earlier he was not briefed on the matter before it emerged in the news media in late June.  He has called the reports a hoax.

Asked why he did not confront Putin on the issue in their phone call last Thursday, Trump told Axios, “That was a phone call to discuss other things, and frankly that’s an issue that many people said was fake news.”

He said he and Putin discussed nuclear nonproliferation on the call.

National security adviser Robert O’Brien has said Trump was not verbally briefed on the Russian bounty intelligence because his CIA briefer concluded the reports were uncorroborated.  White House officials have not denied the information was included in the President’s Daily Brief.

Trump told Axios that if the intelligence “reached my desk, I would have done something about it.”

--Trump again defended the use of hydroxychloroquine to ward off coronavirus, contradicting his own public health officials, at his Tuesday briefing on the Covid-19 situation.

The remarks came after Twitter banned Don Jr. for posting a clip promoting the anti-malaria drug.

There is no evidence the drug can fight the virus, and regulators have warned it may cause heart problems.

Last month, the FDA cautioned against using the drug to treat coronavirus patients, following reports of “serious heart rhythm problems” and other health issues.  The World Health Organization says “there is currently no proof” that it is effective as a treatment or prevents Covid-19.

Trump told reporters Tuesday: “I can only say that from my standpoint, and based on a lot of reading and  a lot of knowledge about it, I think it could have a very positive impact in the early stages.

“I don’t think you lose anything by doing it, other than politically it doesn’t seem too popular.”

He added: “When I recommend something, they like to say ‘don’t use it.’”

The president and Don Jr. were among social media users who shared video late on Monday of a group called America’s Frontline Doctors advocating hydroxychloroquine as a Covid-19 treatment.  But the one doctor leading the presentation, Dr. Stella Immanuel, is a known quack.

Facebook and Twitter removed the content, flagging it as misinformation, but not before 17 million people had seen one of the clips.  Don Jr. was banned from Twitter for 12 hours as a penalty for sharing the clip.  Twitter didn’t remove the tweet by President Trump himself, and does not remove those of other world leaders, citing public interest and newsworthiness.

--Attorney General William Barr clashed with congressional Democrats Tuesday at a House Judiciary Committee hearing, rejecting accusations he is working to politically boost President Trump on a number of fronts, including by deploying federal agents in response to protests and his personal intervention in criminal cases involving the president’s allies.

In his first congressional appearance in more than a year, Barr said the federal response was needed to confront violent demonstrators and fight crime in cities where local officials had done little to keep their streets and federal property safe.

“What unfolds nightly around the courthouse cannot reasonably be called a protest; it is, by any objective measure, an assault on the government of the United States,” Barr said.

Democrats disputed that characterization. State and local leaders in Oregon “have asked that the federal troops leave because the reaction has actually been in reverse proportion,” said Rep. Zoe Lofgren (D., Calif.). “People are showing up because the troops are there, and I’d say most of them are nonviolent….So this brutality has created even more demonstrators.”

On the issue of the forceful removal of protesters near the White House in early June, where officers used smoke bombs and other munitions to clear the area for a photo op for President Trump, the attorney general, who ordered the removal of the protesters, said they had grown unruly and began throwing objects at law enforcement officers.  National Guard Maj. Adam DeMarco testified at a separate House hearing that officers violently cleared the park without provocation.

David Ignatius / Washington Post

“We’ve watched the Portland movie before.  It doesn’t end happily. The idealistic protesters in the streets overplay their hand, tolerate violent provocateurs in their midst and eventually get crushed.  The good guys lose; the bad guys win.

“Over the past decade, I’ve seen this depressing scenario play out around the world, as pro-democracy activists marched courageously but unwisely into confrontations that eventually proved ruinous. Nonviolent protest, as John Lewis taught us, is essential in fighting injustice.  But when protests became destructive abroad, authoritarian leaders seized the pretext and won the day, again and again.

“This movie is the story of the Arab Spring nearly a decade ago, as brave people filled the streets to denounce dictators in Egypt, Libya, Syria, Bahrain and Yemen. Sometimes the dictators were toppled, but the protesters couldn’t consolidate their gains and speak with a clear voice. Ruthless leaders took advantage of the chaos and viciously suppressed dissent.  Many ordinary people, exhausted by violence and disorder, cheered the men with guns.

“If you watched the Arab Spring on the ground, as I did in some of those countries, it carried a harsh lesson: Street protests without a strategy for orderly, nonviolent change are usually doomed to fail.  Anarchic, leaderless movements are lovable, but as the rock-throwers multiply, they bring disaster. The other side has more firepower.

“This movie is the story of the activists in Hong Kong.  Last September, I watched thousands of fearless men and women chanting their slogan: ‘Fight for freedom! Stand with Hong Kong!’ As night approached on Harcourt Road, the front-line protesters with helmets and rocks and petrol bombs emerged to assault government offices. They looked very much like the rock-throwing front-liners you see in Portland.

“Hong Kong felt like a glorious revolution, with cartoon heroes and villains, but it was obvious last year that unless protesters could leverage their gains into a good political settlement, they would eventually lose to the dictators in Beijing.

“The Chinese crackdown, when it came in May, was surprisingly easy and relatively bloodless. Beijing waited until the protesters were fatigued and the enclave’s economy was vulnerable, and then imposed a harsh national security law….

“For President Trump and his campaign, the Portland protests and similar eruptions elsewhere are a dream come true.  This is a president who, quite literally, has nothing to run on – no positive achievements to show.  His only chance is that his adversaries will create opportunities for him.  Let’s be honest: The television footage of police ducking rocks, bottles and other debris plays directly into Trump’s hands.  A country that looks like it’s coming apart – ‘American carnage,’ as Trump cynically called it during his 2017 inaugural speech – is the ruined turf on which he would like to fight for reelection in November.

“Joe Biden’s challenge is to take this battleground away from Trump. He needs to show that as president, he could truly bring America together by uniting our racially and politically diverse nation and restoring law, order and justice – three essential pillars of our democracy.

“Biden shouldn’t wade into the crowds in Portland…. Take the risk of offending an extreme wing of his base to gather broad support from the vast majority of Democrats whose overwhelming priority is to defeat Trump.

“Biden’s job is to show that Trump, the supposed law-and-order candidate, is in fact the voice of illegality and disorder….

“ ‘The president has made clear that he wants conflict between protesters and police as a central theme of his campaign,’ argued Rep. Jerrold Nadler (D., N.Y.) Tuesday in grilling Attorney General William Barr.  Biden’s task is to embody the opposite approach, by demonstrating that he has the guts and moral principles to unify our angry, bruised America.

“Now’s the time to start showing what a good president would do.”

Wednesday, federal agents who have been guarding the U.S. courthouse in Portland reached an agreement with local officials and were to begin withdrawing.  Trump administration officials said some would remain in the building and the entire contingent would stay in the city on standby.  It was a complex agreement, and we’ll see where it goes from here.

--President Trump said on Wednesday he was still considering where to make his speech accepting the Republican presidential nomination, adding he might do it from the White House.

--Robert O’Brien, Trump’s National Security Adviser, contracted coronavirus and is self-isolating at home (or a secure location…not exactly clear, due to his important work).  It wasn’t known when O’Brien was last in physical proximity to Trump, who is tested often.

--Jason L. Riley / Wall Street Journal

“Trump supporters don’t like to hear this, but with just over three months to go before Election Day, their guy is playing catch-up.

“Yes, some pollsters were off four years ago, but that merely confirms that polls (and pundits) are fallible, not that they’re always wrong and should be ignored.  The president often derides polls that show him trailing, but if he didn’t take them seriously he wouldn’t have replaced his campaign manager earlier this month.

“Mr. Trump preferred to run against a Democrat from the progressive wing of the party. But Joe Biden spoiled those plans, and the Covid-19 response stamped out the president’s best argument for re-election: a growing economy with low unemployment and rising wages among broad swaths of workers.  What’s left is a White House in search of a consistent campaign message.

“Mr. Trump’s biggest problem is that Mr. Biden isn’t Hillary Clinton, and it can’t be overstated how much the president benefited four years ago from anti-Clinton sentiment.  Back in 2016, voters who said they didn’t like either candidate went with Mr. Trump over Mrs. Clinton, 47% to 30%, and helped put him over the top in swing states like Michigan, Pennsylvania and Wisconsin. This year, voters with a negative opinion of both Mr. Trump and Mr. Biden say they favor the former vice president by 60% to 10%, according to a Wall Street Journal/NBC News poll released in April.

“Four years ago, Mr. Trump bested Mrs. Clinton among suburbanites, seniors and college-educated white men. Current surveys show him trailing in those categories. To get a sense of how deep Mr. Biden has ventured into the GOP’s demographic strongholds, consider that no Democratic candidate for president has run competitive with voters 65 and older since Al Gore 20 years ago.

“Even among groups Mr. Trump carried in 2016 – evangelicals and white women without a college degree, for example – the lead has shrunk….

“If Democrats are ahead at this juncture, there’s no reason to assume that the lead is insurmountable.  Mrs. Clinton underestimated Mr. Trump, demeaned his supporters, and took her own for granted.  Mr. Biden will try to avoid those mistakes, but we all know that he’s as gaffe-prone as anyone who has run for president.  Two hurdles he has yet to clear are choosing a running mate who won’t fracture the Democratic coalition and putting in a strong debate performance against an incumbent who has regularly challenged his mental sharpness.  Neither one is a given.

“White House officials agree that a new re-election strategy is necessary down the stretch, but moving in a different direction with a notoriously undisciplined candidate and a hostile, pro-Biden media lying in wait is another matter. Reviving the coronavirus briefings with Mr. Trump is an effort to improve his poll numbers and making them shorter and more congenial is a welcome change. Yet this week the president was back to undermining his own health-care experts in late-night tweets, which probably isn’t part of the reboot.

“Similarly, the Trump administration seems intent to push a ‘law and order’ message to voters by cracking down on antipolice mayhem that has become commonplace in several large U.S. cities.  Mr. Trump’s frustration at what he sees playing out on television night after night is understandable. But it isn’t clear that sending federal agents where they aren’t wanted is a smart political move, even if the president has the authority to do it… The unrest has been fueled by a false narrative indulged in the media, but polling shows that the protesters have found sympathy with a majority of Americans, including the white suburbanites Mr. Trump hopes to win over with his crackdowns.

“The reason Mr. Trump was headed for re-election before the pandemic was the economy.  If he wants a second term, he would do better to focus on responsibly reopening businesses, returning kids to school, and assuring voters that the best person to lead the current recovery is the person who oversaw the last one.” 

--Trump tweets….

“We are going to WIN the 2020 Election, BIG! #MAGA”

“Must know Election results on the night of the Election, not days, months, or even years later!”

“Glad I was able to get the very dishonest LameStream Media to finally start talking about the RISKS to our Democracy from dangerous Universal Mail-In-Voting (not Absentee Voting, which I totally support!).”

“Mail-In Voting is already proving to be a catastrophic disaster. Even testing areas are way off. The Dems talk of foreign influence in voting, but they know that Mail-In Voting is an easy way for foreign countries to enter the race.  Even beyond that, there’s no accurate count!”

“The Fake News Media is trying to portray the Portland and Seattle ‘protesters’ as wonderful, sweet and innocent people just out for a little stroll. Actually, they are sick and deranged Anarchists & Agitators who our great men & women of Law Enforcement easily control, but who…

“…would destroy our American cities, and worse, if Sleepy Joe Biden, the puppet of the Left, ever won. Markets would crash and cities would burn. Our Country would suffer like never before.  We will beat the Virus, soon, and go on to the Golden Age – better than ever before!”

“Major China Virus flare ups (sic) in many of the countries that the Fake News was touting as doing so well.  Some of these countries are now a disaster. Lamestream Media doesn’t want to report this.  Also, highly inaccurate numbers being reported by many other countries!!! @WSJ”

“Somebody please tell Congressman Clyburn, who doesn’t have a clue, that the chart he put up indicating more CASES for the U.S. than Europe, is because we do MUCH MORE testing than any other country in the World.  If we had no testing, or bad testing, we would show very few CASES…

“…Our massive testing capability, rather than being praised, is used by the Lamestream Media and their partner, the Do Nothing Radical Left Democrats, as a point of scorn. This testing, and what we have so quickly done, is used as a Fake News Weapon. Sad!”

“I was on Air Force One flying to the Great State of Texas, where I just landed.  It is AMAZING in watching Fox News.  How different they are from four years ago. Not even watchable.  They totally forgot who got them where they are!”

[Ed. Fox News veteran Neil Cavuto snapped back.  “First of all, Mr. President, we don’t work for you.  I don’t work for you. My job is to cover you, not fawn over you or rip you, just report on you.  Call balls and strikes on you.  My job, Mr. President, our job here, is to keep the scores, not settle scores.”]

“I am happy to inform all of the people living their Suburban Lifestyle Dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood.”

[Ed. incredibly racist.]

“So disgusting to watch Twitter’s so-called ‘Trending,’ where sooo many trends are about me, and never a good one. They look for anything they can find, make it as bad as possible, and blow it up, trying to make it trend.  Really ridiculous, illegal, and, of course, very unfair!”

“The Trump Campaign has more ENTHUSIASM, according to many, than any campaign in the history of our Great Country – Even more than 2016. Biden has NONE!  The Silent Majority will speak on NOVEMBER THIRD!!! Fake Suppression Polls & Fake News will not save the Radical Left.”

“Because of my strong focus on the China Virus, including scheduled meetings on Vaccines, our economy and much else, I won’t be able to be in New York to throw out the opening pitch for the @Yankees on August 15th.  We will make it later in the season!”

[Ed. Trump was jealous of Anthony Fauci having thrown the ceremonial first pitch at a Nationals game, and then totally made up that the Yankees had invited him.  They hadn’t.]

“LAW & ORDER!”

Wall Street and the Economy

As expected, the U.S. economy contracted at a record rate in the second quarter, as reported by the Commerce Department on Thursday, a seasonally and inflation adjusted 32.9% annual rate, or a 9.5% drop compared with the prior quarter.  They were the steepest declines in more than 70 years of record-keeping.  [For the record, the Atlanta Fed’s GDPNow barometer I like to cite was at -32.1% in its last reading, Wednesday…so pretty good job by them.]

This was the first double-digit decline in annualized GDP since 1958.

The decline in GDP reflected the deep hit to consumer and business spending from the lockdowns, social distancing and other initiatives aimed at containing the virus.

As distressing as the second-quarter GDP figure was, however, of potentially worse portent was this week’s jobless claims number, 1.43 million in the week ended July 25, the second straight week it has risen, after nearly four months of decreases following a late-March peak.  It was also the 19th straight week over 1 million.  And continuing claims increased to 17 million, ending a downward trend that started in mid-May.

So the above is reflective of the delays in reopening (or pullbacks) in states where the virus has been surging.

Editorial / Wall Street Journal

“Democrats and their media allies have trapped themselves in a contradiction.  They are deploring Thursday’s grim second-quarter GDP report even as they demand a repeat of the lockdown that caused the economic catastrophe. What do they expect when government orders Americans to sit in their homes for weeks?

“That’s the main message from the 32.9% decline in GDP, the worst ever recorded.  The damage extended across the private economy – from business investment to manufacturing and housing. But the greatest harm was from the collapse of consumer spending as the shutdown crushed the service economy.

“Consumer spending fell 34.6% and accounted for some 25 percentage points of the GDP decline.  The fall in transportation, recreation, food services and hotels was brutal. But the biggest surprise was the plunge in health-care spending during a health-care crisis.  Health care represents about 12% of the U.S. economy and its collapse subtracted 9.5 percentage points

“How does that happen in a pandemic?  The answer, as our friend Don Luskin points out, is that politicians panicked in March and waited for a surge of Covid-19 patients that the pandemic modelers told them would arrive.  Blessedly, the modelers were wrong, and far fewer hospital and intensive-care beds were needed.  But the economic harm from stopping all elective surgeries and barring visits to doctors was severe and unnecessary.

“It was also a terrible public-health blunder.  That harm will play out for years as Americans discover cancer, heart-disease and other diagnoses that were missed or delayed.

“Notably, Congress’ nearly $3 trillion in appropriations couldn’t stop the economic collapse….

“Personal disposable income increased $1.5 trillion (42.1%) while the savings rate rose to 25.7% from 7.3% in last year’s fourth quarter.  People haven’t been dining out or traveling, so they are stockpiling cash. The more uncertainty caused by threats of second lockdowns, the less likely Americans will be to spend.

“These transfer payments are fiscally unsustainable, and the second quarter offers a window on what an economy run by politicians looks like.  More transfer payments will delay and slow the recovery by causing more workers to stay on the sidelines….

“Hard to believe, but some on the left are stumping for a second nationwide lockdown to control the virus.  Shut the U.S. down again until October when the scourge will be gone for good. Do they want another 33% decline in GDP and 40 million more unemployed?

“Without a vaccine, the virus was always likely to spread through most of the country, as the Centers for Disease Control and Prevention predicted in March.  The lockdown-as-miracle-cure is a fantasy, as the World Health Organization has now acknowledged. The economic and public-health harm is too great and the virus is too easily transmissible.

“The public is smarter than the media and can adjust its behavior when flare-ups occur.  Hospitalizations and cases in hot spots in the South and West are trending down…Deaths have increased, but the rate is far below those on the East Coast in the spring.

“At least the worst economic news is over, or it should be without a second lockdown. Orders for motor vehicles and capital goods are rising, and housing is strong. The service economy will take longer to come back, but it will do so when the public feels confident enough to venture out. What no one needs is another catastrophe like the second-quarter lockdown.”

Meanwhile, the Federal Reserve kept short-term rates pinned at nearly zero this week, as the Open Market Committee agreed to continue to buy about $120 billion in Treasury and mortgage bonds each month to support the economy.

But Chairman Jerome Powell predicted a long road ahead as a recent spike in virus cases saps momentum from the nascent economic recovery.

“The path forward for the economy is extraordinary uncertain and will depend in large part on our success in keeping the virus in check,” Powell said at a news conference following the Fed’s two-day meeting, noting that infections have surged since late June and the “pace of recovery looks like it has slowed.”

As for the labor market, the rebound “is going to take a while” and “we’re going to be there for all of that.”

Powell said both Congress and the central bank would need to do more in the months ahead, noting that thus far, government policy has “kept people in their homes, it’s kept businesses in business.”

In other economic news, June durable goods rose at a rate higher than expected, 7.3%; 3.3% ex-transportation and on core capital goods.

A Chicago purchasing managers survey for manufacturing in the region for July came in at 51.9 (50 the dividing line between growth and contraction), the highest level since May 2019, and versus a putrid 36.6 reading in June.

July personal income fell 1.1%, while consumption rose 5.6%, with June revised upward to 8.5%.  The personal income figure is still distorted by various government transfer payments, while consumption does reflect reopening.

A key Fed inflation barometer, the core-personal consumption expenditures index, rose just 0.9% year on year.

One note on the trade front (and I have a related item in Street Bytes below), but with nearly seven months gone, an ambitious $36.5 billion target for Chinese imports of U.S. farm good this year may not be quite out of reach, but it’s looking like a big stretch.  By the end of May, as reported by Hallie Gu and Karl Plume of Reuters, “imports were running behind 2017 levels – rather than 50% ahead as needed – and while orders for China’s main farm import, soybeans, have started to pick up, scorching levels of buying would be needed to hit the mark.  Add in a rapid deterioration in U.S.-China relations, an upcoming U.S. election, a global pandemic and questions over just how much soybeans China actually needs, and farmers and analysts say it may be a stretch too far.”

I get into soybeans below.  Think Brazil.

In total, China’s American farm purchases amounted to $6 billion through May – the latest data available – up just 9.1% from the same period in 2019 and 31% below 2017’s level.

Europe and Asia

Eurostat released a preliminary estimate on GDP for the eurozone (EA19), down 12.1% for the second quarter over the first, and -15.0% year over year, the sharpest declines since time series started in 1995.  In the first quarter of 2020, GDP had decreased by 3.6% in the EA19 over Q4 2019.  We will receive another estimate in two weeks.

Germany’s GDP fell 10.1% for the quarter, -11.7% vs. a year ago.
France -13.8% Q2, -19.0% vs. Q2 2019
Italy -12.4% Q2, -17.3% vs. Q2 2019
Spain -18.5% Q2, -22.1% vs. Q2 2019

Germany’s figures were the worst on record, as were the others listed.

But as we saw from July’s preliminary PMI data last week, and what we will see with the final data for the month next week, a significant recovery is underway.

Eurostat also reported on the unemployment rate for the euro area for June, 7.8%, up from 7.7% in May 2020.  It was 7.5% a year ago.

Germany 4.2%, France 7.7%, Italy 8.8%, Spain 15.6%, Netherlands 4.3%, Ireland 5.3%.

The above speaks to the various aggressive employment protection “schemes” (as they are called across the pond), programs, compared with the United Sates.

A flash reading on July inflation for the euro area pegs it at an annualized rate of 0.4%, 1.3% ex-food and energy.

Brexit:  Britain and the EU have planned more trade negotiations all the way until Oct. 2, two weeks before an EU leaders summit Oct. 15-16, where it is hoped any agreement could be endorsed, according to a schedule published by British negotiators on Friday.

It’s been more than four years since Britons voted to leave the EU, and after tortuous divorce talks, the two sides are trying to negotiate all aspects of their future ties, from trade to security to transport, from 2021 onwards.

The EU has said negotiators must seal any deal by October to allow for ratification by the bloc’s 27 nations.

If an agreement isn’t reached by Oct. 2, ahead of the summit, then high-level emergency talks would likely be held to get a deal by the end of the year, when Britain’s transition period ends.

But on a totally different topic, the UK government’s decision to impose a 14-day quarantine on everyone arriving from Spain has roiled the country, with Spain’s prime minister, Pedro Sanchez, calling it “unjust,” pleading that tourists in most Spanish regions would be safer from coronavirus than in the UK, as he was hoping Britain would reverse its decision.

You see the GDP figures above.  Spain’s economy is a wreck and desperately needs tourists to return, like now, the critical vacation month for all Europeans, but Spain has had a few hot spots that it claims are well under control.  [Tourism accounts for 12% of Spain’s GDP and nearly 13% of jobs.]

British Prime Minister Boris Johnson, however, said he is not changing the decision, warning that “no travel is risk-free during this pandemic.”

The next day, Germany recommended its citizens avoid Spain’s many resorts.

Don’t look for Spain to be a sympathetic vote when it’s time to rule on any trade deal with the UK.

Turning to Asia…China’s National Bureau of Statistics reported that the manufacturing PMI for July was 51.1 vs. 50.9 in June, while the non-manufacturing/services PMI was 54.2 vs. 54.4, both reflective of the slow, but ongoing recovery in the country.

In Japan, June retail sales were down 1.2% year over year, much better than expected and up 13.1% over May.  May’s decline from a year ago was 12.3%.

June’s preliminary reading on industrial production was -17.7% year over year, vs. May’s -26.3%.  June was up 2.7% over May.

And Japan’s unemployment rate in June was 2.8%.

South Korea had an encouraging reading on June industrial production, up 7.2% month-on-month, reversing a 7.0% decline in May and the fastest growth since February 2009.

Street Bytes

-- Stocks finished mixed on the week, with the Dow Jones falling 0.2% to 26428, while the S&P 500 rose 1.7% and Nasdaq 3.7%, the latter two thanks to the strong performance of the tech titans.  Nasdaq is now back to just 22 points shy of its record high.

--U.S. Treasury Yields

6-mo. 0.09%  2-yr. 0.11%  10-yr. 0.54%  30-yr. 1.20%

The yield on the 10-year is at an all-time record low weekly close, which will be reflected in a further lowering of mortgage rates.

--The Energy Information Administration reported Wednesday that U.S. crude oil inventories fell a whopping 10.6 million barrels last week to 526 million, the largest drawdown since December.

The fall in crude stocks was likely a result of supply cuts by OPEC, previously agreed to in April, finally being realized as imports fell substantially.

But the dour coronavirus news limited what would have normally been a very bullish development.  The dysfunction in Congress in terms of providing relief amid the crisis didn’t help either.  Crude finished today at $40.43, down about a $1 on the week.

--It didn’t help that Exxon Mobil and Chevron posted huge losses before Friday’s opening bell; Exxon with a net loss of $1.08 billion in the June quarter, Chevron $8.27 billion.  Both blamed the losses on plunges in crude prices and demand during the pandemic, and they said billions of dollars in capital spending cuts previously announced are progressing as planned.

For Chevron, the loss was its largest in at least three decades, writing down $5.6 billion, mirroring those of others, including an anticipated $17.5 billion from BP.  The lowering of valuations reflects not just the slump in second-quarter demand but a growing realization that a prolonged economic downturn could depress energy prices for years.

Chevron’s writedowns included its entire investment in crisis-ravaged Venezuela, where it was the last major U.S. oil company still operating. The Trump administration directed the company to wind down its business there, where Chevron had been operating for nearly 100 years.  The loss also included $1 billion to cover severance pay for up to 15% of its 45,000-person workforce as part of an ongoing restructuring of its global operations.

Chevron’s revenues plunged to $13.49 billion from $38.85 billion last year.

For its part, Exxon said it was reviewing operations and promising “significant” cost cuts.  Revenue sank to $32.61 billion from $69.09 billion last year, well-below consensus.

The company said plans to cut its capital investment for this year to $23 billion from $33 billion is “ahead of schedule,” with CEO Darren Woods saying, “The progress we’ve made to date gives us confidence that we will meet or exceed our cost-reduction targets for 2020 and provides a strong foundation for further efficiencies.”

--Royal Dutch Shell avoided its first quarterly loss in recent history, helped by a booming trading business, but announced nearly $17 billion in impairment charges reflecting a pessimistic outlook for oil and gas prices.

Shell had warned last month it was set to slash the value of its oil and gas assets by up to $22 billion as the coronavirus crisis hollowed out energy demand.

The energy giant has cut its dividend for the first time since World War II and cut planned spending by $5 billion this year.

--The leaders of Amazon, Apple, Facebook and Google took a brutal political lashing Wednesday as Democrats and Republicans on the House’s top antitrust subcommittee took turns confronting the executives for wielding their market power to crush competitors and amass data, customers and massive profits.

The House members were armed with millions of documents, hundreds of hours of interviews and even once-private messages of the CEOs. 

Rep. David Cicilline (D-R.I.), chairman of the antitrust panel, said: “Our founders would not bow before a king. Nor should we bow before the emperors of the online economy.”

Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg and Alphabet’s (Google’s) Sundar Pichai took the witness stand to fiercely defend their businesses as rags-to-riches stories, but lawmakers repeatedly presented a different vision, one in which the advancements in communications, consumer electronics and commerce came at the expense of the people who use the tools and the companies seeking to compete against the tech giants.

Rep. Jerrold Nadler (D-N.Y.) in particular took after Zuckerberg using his own past emails, including a 2012 message in which Zuckerberg apparently said he sought to acquire Instagram, which at the time was a rival photo-sharing app, out of fear that it could “meaningfully hurt us.”

“Mergers and acquisitions that buy off potential competitive threats violate the antitrust laws,” Nadler charged.  “In your own words, you purchased Instagram to neutralize a competitive threat.”

“We compete hard.  We compete fairly.  We try to do the best,” Zuckerberg said earlier in the hearing.

So then a day after the four tech titans were interrogated, their combined market value swelled by $250 billion thanks to earnings that shocked even Wall Street.  Combined, the four companies put up sales of $200 billion in the three months ended in June, with Amazon reporting a record quarter.

To wit:

--Apple shares soared to an all-time high in after-hours trading Thursday, crossing the $400 level for the first time, after the company posted second-quarter results that crushed the Street’s estimates, and announced a four-for-one stock split.

Apple reported revenue for its fiscal third quarter ended June 30 of $59.7 billion, up 11% from a year ago and well ahead of consensus.  Profits were $2.58 per share vs. the Street’s forecast of $2.09.

Product revenues were up 9.9%, while services rose 14.8%.  Sales of iPhones were up 1.6%, Macs up 21.6%, iPads up 31%, and wearables 16.7%.

“Apple’s record June quarter was driven by double-digit growth in both Products and Services and growth in each of our geographic segments,” Apple CEO Tim Cook said in a statement.  “In uncertain times, this performance is a testament to the important role our products play in our customers’ lives and to Apple’s relentless innovation.”

The company said it now has over 550 million paid subscriptions across its service businesses, and expects to reach 600 million before the end of the calendar year.

Meanwhile, Apple said its board declared a four-for-one stock split, effective Aug. 31, the fifth in its history, the last being in 2014.

Separately, last week I wrote of a pending investigation into Apple related to its older iPhones and Wednesday we learned Arizona is leading the multi-state inquiry into whether Apple deliberately slowed older phones through power management software.

Apple came under fire in 2017 when Primate Labs, the maker of software for measuring a phone’s processor speeds, revealed that some iPhones became slower as they aged. Apple later acknowledged that it reduced power demands – which can slow the processor – when an aging phone’s battery struggles to supply the peak current the processor demands.  Apple then said without the power adjustments iPhones would have unexpectedly shut down from power spikes.  Outraged iPhone users said this was a bunch of bull, that Apple was slowing older devices to get users to buy new phones.  Apple then publicly apologized and slashed prices on battery replacements.

--Amazon.com Inc. on Thursday posted the biggest profit in its 26-year history as online sales and its lucrative business supporting third-party merchants surged during the pandemic.  While rival brick-and-mortar retailers have had to shut stores during government-imposed lockdowns, Amazon hired 175,000 people in recent months and saw demand for its services soar.  The company said revenue jumped 40% from a year earlier to $88.9 billion.  Amazon had forecast it might lose money in the just-ended second quarter because it expected to spend some $4 billion on protective equipment for staff and other expenses related to Covid-19. It did just that – and still earned $5.2 billion, double its net income from a year prior.

CEO Jeff Bezos, the world’s richest man, said, “This was another highly unusual quarter.”

Amazon Prime Day, the company’s lucrative summer marketing blitz, is now pushed back to the fourth quarter, with Bezos saying the current quarter would see higher costs as the company gears up for the holiday season, even more pronounced now due to higher-than-usual sales.  Still, Amazon anticipates a profit between $2 billion and $5 billion for the quarter.

--Alphabet, parent of Google, reported quarterly sales fell for the first time in its 16 years as a public company, but the decline was less than expected as many advertisers stuck with the most popular online search engine during the pandemic.  The stock was little changed in response, but then collapsed Friday to the tune of 3% on further review of the results.

Advertisers on Google have suffered mass layoffs and other cutbacks during the crisis, and marketing budgets are often the first to get slashed by big clients like travel search engines, airlines and hotels. Google’s ad business has long largely tracked the broader economy and we just saw the worst second quarter in U.S. history.  But Google appeared to weather the slowdown better than before as the internet was seen to be more attractive for advertisers than TV, radio and other avenues.  Alphabet CEO Sundar Pichai said, “This quarter, we saw the early signs of stabilization, as users returned to commercial activity online.  Of course the economic climate remains fragile.”

Alphabet’s overall second-quarter revenue was $38.3 billion, down 2% from the year-ago period.  Analysts were estimating a 4% decline.  But it was the first fall since the company went public in 2004.

About 66% of Alphabet’s revenue came from Google search and YouTube ads, 12% from ads sold on partner properties online, 8% from its cloud business and 14% from its mobile app store and other smaller businesses.

Alphabet’s quarterly profit was $6.96 billion.

Google said on Monday that it would allow employees, who do not need to be in the office, to work from home until the end of June 2021.  The company had said in May it would begin reopening more offices globally as early as June this year, but most Google employees would likely work from home until the end of this year.

--Facebook Inc. posted $18.7 billion in revenue for the second quarter, up 11% from $16.9 billion a year earlier and above analysts’ expectations; strong given the pandemic but a deceleration from the average gain of nearly 25% for the preceding four quarters.

Profit for the second quarter nearly doubled to $5.18 billion, exceeding the Street’s forecasts. Facebook shares surged 8% in response.

Mark Zuckerberg, following his grilling before Congress on Wednesday about whether Facebook and the other three behemoths have accumulated too  much power, used the company’s earnings call to state that Facebook is a vital social good and that overly broad regulatory efforts to hobble it would be counterproductive.

Zuckerberg said efforts to significantly restrict how Facebook collects and deploys data about its users could be harmful, calling the company’s personalized advertising a lifeline for small businesses struggling to survive social-distancing mandates.

Average monthly users of the Facebook platform rose to 2.7 billion in the second quarter, from 2.6 billion in the first.  More than three billion people now use at least one of Facebook’s products on a monthly basis.

--Samsung Electronics Co. Ltd. said it expects a gradual recovery in demand for mobile devices and consumer electronics in the second half of the year, but risks remained due to the coronavirus and growing competition.

Samsung posted a 23% jump in operating profit in the April-June quarter on the back of a 13% surge in DRAM memory chip prices.

The world’s top maker of memory chips and smartphones said chip demand largely came from data centers bulking up to support a work-from-home economy and growth in online learning.

Revenue dropped 6% overall.

--The Wall Street Journal is reporting tonight that Microsoft is in talks to acquire the U.S. operations of TikTok, the Chinese-owned video app, as President Trump said today he was considering taking steps that would effectively ban the app from the U.S.

A sale would likely be for tens of billions of dollars.

U.S. officials have expressed concerns that TikTok could pass on the data it collects from Americans streaming videos to China’s authoritarian government.  TikTok has said it would never do so.

About 315 million users downloaded TikTok in the first quarter of the year.

--At least three have been charged in relation to a July 15 Twitter hack that took over the accounts of VIPs including former President Barack Obama and billionaire Bill Gates.  The ringleader was a 17-year-old Floridian, the Florida State Attorney’s Office said on Friday.

--Boeing Co. slashed production on its widebody programs, delayed the arrival of its newest jet, and confirmed the demise of its iconic 747, as it reported a bigger-than-expected quarterly loss on Wednesday amid fallout from the pandemic.

Boeing, which has laid off thousands of workers as it also grapples with the 16-month-old ban on its 737 MAX, delayed its timeline to hit build rates of 31 narrow-bodies monthly to early 2022 from 2021, as demand crumbles.

It now expects to resume 737 MAX deliveries to airline customers before yearend in the U.S., a slip from earlier guidance of September.

The production cuts reflect concern among aviation companies about the pace of the coronavirus recovery.  But global airlines have warned it will take a year longer than expected for air traffic to return to normal, with long-range traffic hit harder than shorter hops.

The 737 MAX grounding has cost Boeing some $20 billion, amid congressional and criminal investigations and lawsuits.

Boeing claims the majority of some 450 MAX aircraft in storage will be delivered during the first year after the company resumes deliveries and that it will gradually increase production to 31 a month by 2022.  Before the pandemic hit, Boeing was planning to ramp production to about 50 a month.

Regarding the 787, Boeing had been producing the Dreamliners at a record monthly rate of 14 and will now reduce that figure to six.

Boeing’s sales tumbled 25% to $11.81 billion, though this was helped by defense sales, flat year over year at about $6.6bn. The company burned through more than $5 billion of cash in the second quarter, bringing the year-to-date burn to more than $10 billion.

The company’s net loss narrowed to $2.40bn in the second quarter, from $2.94bn a year earlier, when the company reported a record loss on charges related to the 737 MAX grounding.

Boeing, in delivering fewer jets in the second quarter, just 20, lost its mantle as the largest U.S. plane maker to General Dynamics Corp., whose Gulfstream arm handed over 32 of its high-end private jets to customers.

--Airbus SE, reeling from the fallout from the collapse in global demand for air travel, said it doesn’t expect to start increasing aircraft production again until around 2022 as the crisis hitting the aviation sector deepens.

The European plane maker, which cut its production rates by a third in April, said Thursday it would again reduce the output of its A350 wide-body from 6 aircraft a month to 5. It also reported a net loss of $2.24 billion in the first half, down from a profit of $1.3bn.

Airbus has about 145 aircraft parked and awaiting delivery. It has delivered 196 as of the end of June, about half the number delivered at the same point last year.

--Meanwhile, the International Air Transport Association said traffic as measured in revenue passenger miles fell almost 87% in June after a 91% contraction in May.  The continued closure of global air travel markets “is a significant drag on recovery” amid continued outbreaks of the disease caused by the new coronavirus.

“Passenger traffic hit bottom in April, but the strength of the upturn has been very weak,” said Alexandre de Juniac, the group’s chief executive.  “What improvement we have seen has been domestic flying. International markets remain largely closed.”

Revenue passenger per mile/kilometer, an industry metric used to measure distance traveled by paying customers, won’t return to 2019 levels until 2024, says IATA.  Delta Air Lines said earlier this month that revenue passenger miles sank 94% in the second quarter, while Jet Blue in its quarterly filing Tuesday said that RPMs were also down 94% from a year earlier.

Corporate travel budgets are expected to be “very constrained” with companies coming under pressure from the weak global economy, said IATA, while consumer confidence is weak from uncertainty about jobs and unemployment, meaning that even though there’s demand to visit friends and family, fewer people expect to travel, the industry group said.

“Scientific advances in fighting Covid-19 including development of a successful vaccine, could allow a faster recovery,” IATA added. “However, at present there appears to be more downside risk than upside to the baseline forecast.”

--Revenue at Ryanair plunged 95 percent during the first quarter of the year as it reported a second quarter loss of $200 million compared to a net profit of $270 million during the same period last year.

Ryanair’s fleet was grounded for almost four months as EU governments imposed flight or travel bans and widespread population lockdowns.  Ryanair resumed flights across the majority of its route network on July 1st, and said it expects to operate about 40 percent of its normal July schedule, rising to about 60 percent in August and 70 percent in September.

The airline said it expects full year traffic for 2021 to fall by 60 percent from 149 million to just 60 million, saying 2021 “will be a very challenging year” for the Ryanair group.

“It is impossible to predict how long the Covid-19 pandemic will persist, and a second wave of Covid-19 cases across Europe in late autumn when the annual flu season commences is our biggest fear right now,” it said.

“Hopefully EU governments, by implementing effective track and tracing systems, and EU citizens by complying with recommended face masks, rigorous hand hygiene and other measures, will avoid the need for further lockdowns or restrictions on intra-EU flights.”

--The Dutch arm of Air France-KLM will cut 4,500 to 5,000 positions this year and next. That’s as much as 15% of its staff and will add to the roughly 7,500 reductions planned at Air France over three years.

The reductions are across the board – from pilots to cabin crew and ground staff. KLM said more jobs could go if business doesn’t pick up.

--General Motors reported Wednesday that its net income tumbled on slow sales and thin inventory in the second quarter, especially of its profitable pickups and SUVs following an eight-week factory closure due to the coronavirus.

GM announced a net loss of $806 million, down from a profit of $2.4 billion a year earlier, with net revenue down 53% to $16.8 billion, though GM’s China equity income was $200 million for the quarter.

During a call with the media, GM said the second half of the year will be better and it should allow the automaker to pay off the $16 billion revolving line of credit it took earlier this year to get through the pandemic.

GM burned through $8 billion in cash in the quarter, but has $30.6 billion as of June 30.

The company’s U.S. sales fell 34% to 488,876 vehicles sold, putting GM’s U.S. market share at 16.85%, down just slightly, according to Cox Automotive data.

But GM’s sales in China fell 5.3% in the second quarter, a big improvement from the first quarter when they plunged 43%.

While GM and the others have reopened their assembly lines, in areas still being impacted severely by the coronavirus there is a high rate of absenteeism. 

--Ford Motor’s second-quarter earnings were far better than expected, losing $0.35 a share on $19 billion in sales but the Street was looking for a $1.17 per share loss.  But it’s not like things are great as sales fell from $38.9 billion in the second quarter of 2019.

Ford’s Chinese business lost $100 million in the second quarter – an improvement year over year, while Ford’s European and North America business was hit by the pandemic later than China.  Ford lost $700 million in Europe.

--Advanced Micro Devices Inc. raised its full-year revenue outlook on Tuesday, driven by a surge in chip demand from data-center operators and PC makers scrambling to meet coronavirus-induced remote work needs.  Shares of the chipmaker jumped 9% in response after it also forecast current-quarter sales above Wall Street targets.

Shares in AMD are up about 50% this year, at a time when rival Intel Corp. faces delays in building its newest 7-nanometer chip, while AMD, which relies on outside foundries to make its chips, has started to take market share from Intel with offerings made on Taiwan Semiconductors’ technology.

AMD now expects 2020 revenue to grow by about 32%, driven by strength in PC, gaming and data center products.  In the second quarter, revenue jumped 26% to $1.93 billion.

--Speaking of Intel Corp., which reported on the delay for its new chip last week, the market then taking the company’s shares to the woodshed, this week it announced the departure of its chief engineering officer as the company said it was reorganizing its technology, systems architecture and client group.

Ann Kelleher, a 24-year Intel veteran, will lead development of 7-nanometer and 5-nanometer chip tech processes.

--Meanwhile, shares of Taiwan Semiconductor Manufacturing Co. Ltd. jumped on Monday after Intel signaled it may stop manufacturing its own chip components, after falling far behind schedule developing its newest technology. TSMC is the world’s largest contract chipmaker and rallied 10% to a record high on Intel’s troubles.

For good reason, there are some U.S. politicians and national-security experts who consider the possibility that Intel will no longer make its chips here as potentially dangerous.

TSMC, based in Taiwan, is of course a friendly source, but for how long?  As I’ve noted for years, and again further below, Chinese President Xi Jinping is licking his chops.

--Caterpillar’s sales tumbled 31% in the second quarter as dealers culled construction equipment from showrooms during the pandemic; decreasing machine and engine inventories by about $1.4 billion during the three-month period, compared with an increase of about $500 million a year earlier.

Still, the Deerfield, Illinois, manufacturer topped Wall Street’s expectations, but the shares couldn’t hold on to early gains today.

Revenue fell to $10 billion, from $14.4 billion a year ago, with net income of $458 million.

--General Electric on Wednesday reported an adjusted second-quarter loss of $0.15 per share, worse than expected, as revenue fell to $17.75 billion from $23.41 billion in the prior-year quarter but that beat the Street.

Total orders fell 38% to $13.80bn due to declines in commercial equipment, service and power equipment.

CEO Lawrence Culp said: “Our earnings performance was impacted by the ongoing impact of Covid-19 on our businesses, but industrial free cash flow was better than our expectations and previously communicated range,” adding the company expects to return to positive free cash flow next year.

--The U.S. government and Eastman Kodak reached agreement on a $765 million loan wherein the fallen giant of the photography industry will make ingredients used in generic drugs to help fight the virus as well as other more common drug ingredients.  Kodak’s old facilities are perfect for the mission and the company always had a chemical division.

But the stock, a company that had long reorganized and was seeking a new mission and market niche with the advent of digital photography, closed at $2.10 last Friday on 74,900 shares, and then $2.62 on Monday, but on volume of 1,645,000.  We were told by company officials Wednesday that no one had inside information.

Well the big announcement came Tuesday, and Kodak stock finished the day at $7.94 on 272,359,100 shares!  With further news coming after the close of the market, Wed., the shares opened at $18.43 and actually soared to $60…before closing at $33.

Kodak shares then finished the week at $22.  Yes, some lucky investor(s) made a killing.

We did learn that two news reporters in Rochester tweeted information about a Kodak initiative with the government in response to the pandemic around noon on Monday.  One of the tweets was deleted.  Then the local ABC and CBS affiliates posted stories after Kodak sent an advisory to media outlets about the initiative.  So plenty of questions remain on who knew what, when.

But it’s virtually impossible to get a handle on just how profitable the government venture will be because they will be making products that have been sourced overseas, namely India and China, because they can be made so cheaply.  And Kodak doesn’t have the business yet.

Just a classic bubble story, the kind that emerges at market tops.

--McDonald’s is permanently closing 200 of its 14,000 U.S. locations this year with “low-volume restaurants” in Walmart stores making up over half of the closures.  During its quarterly earnings call, the fast food giant said the closings were in the plans for future years but are being accelerated because of the pandemic.

CEO Chris Kempczinski said regarding the impact of the coronavirus: “Within a matter of weeks, the McDonald’s system made operational modifications across 30,000 restaurants (worldwide), while closing and then reopening another 9,000 restaurants.  We introduced new safety procedures in all our restaurants, modified our menus, and developed new contactless ways to serve our customers.”

96% of the 39,000 restaurants worldwide are open, compared with 75% at the start of the second quarter.

Starting tomorrow, Sat., Aug. 1, McDonald’s will require customers to wear masks or face coverings when entering restaurants nationwide.

Comparable-store sales that were down 39% in April vs. a year ago were down 12% by June.

Restaurants with drive-thru windows are recovering more quickly.

The company said second-quarter net income fell 68% to $484 million, while adjusted earnings fell well short of Wall Street’s expectations.

Same-store sales fell 24% for the entire quarter, down 9% in the U.S.  Last year, they were up 8% in the same period.  Same-store sales fell 41% in international markets.

Overall revenue fell 30% to $3.76 billion.

--Starbucks said revenue plummeted 38% in its fiscal third quarter to $4.2 billion, though this was ahead of the Street’s estimates.  In June the company said it will close up to 400 company-owned locations over the next 18 months.

But it had also announced it was speeding up the expansion of “convenience-led formats” such as curbside pickup, drive-thru and mobile-only pickup locations.

Starbucks CEO Kevin Johnson said during a quarterly earnings call Tuesday that curbside pickup is expected to launch at 700 to 1,000 stores by the end of the quarter.

Officials said they planned to bring back the popular Pumpkin Spice Latte, date to be determined.  And the company said 97% of its company-operated stores around the world are now open, including 99% of stores in China and 96% in the U.S.  But some franchised locations remain closed, especially at airports and on college campuses.

Global same-store sales were down 40% for the April-June period, while Starbucks expects global same-store sales to be down in a range of 12% to 17% in its fiscal fourth quarter and for the full year.  It has seen favorable trends in July.

U.S. comp sales were also down 40%.  International comp store sales were down 37%.

--3M Co. is the lead maker of the most critical face masks in the fight against Covid-19, but this hasn’t protected the company from the brutal economic impact of the pandemic.

The Saint Paul, Minn.-based manufacturer said Tuesday that it suffered a sharp sales drop in its latest quarter while many factories, offices and dentists remained closed, offsetting gains from high demand for N95 masks and home-improvement supplies.

CEO Mike Roman said in an interview, “About 80% of our portfolio was negatively impacted by Covid.”

But 3M saw improvements in the global economy, and it was encouraged by sales in July.

The company said it has doubled production of its N95 masks this year to meet skyrocketing demand from health-care workers.  3M said it produced nearly 800 million respirators and N95s in the first half of this year globally and has distributed about half of them in the U.S.

But face masks make up a small part of 3M’s business, which spans from advanced wound-care products to Scotch tape and industrial sandpaper.  Adjusted sales fell 19% in its transportation and electronics segment, 12% in health care, 6% in safety and industrial and 5% in its consumer segment.

Sales for products that are sold to dentists fell 57%, and were down 25% for office supplies like Post-it Notes.

While adjusted sales overall fell 13% in the U.S., they were down 23% in Canada and 38% in Mexico.

--United Parcel Service Inc. rode a pandemic-fueled surge in e-commerce to higher profits and a 13% jump in revenue in the second quarter.  CEO Carol Tome said on Thursday’s earnings call, “At the beginning of the second quarter, we assumed demand would slow. Instead, we saw just the opposite.”

Average daily shipping volume rose 21% in the quarter, faster than the company has ever recorded, with a 65% increase in shipments to homes.

UPS and rival FedEx are being inundated with millions of extra daily packages after many retail stores were temporarily closed, pushing people to shop online for everything.  But as stores reopen, many shoppers are still reluctant to head to stores as coronavirus cases spike in parts of the U.S.

Both UPS and FedEx see they have the ability to levy new surcharges on large packages and on some of their lower-priced shipping services, and CEO Tome talked of having room to raise shipping rates on large retailers, who she said can pass the increase along to customers by raising prices.

For the period, UPS reported a profit of $1.8 billion, up from $1.7 billion.

--Procter & Gamble Co. posted the strongest annual sales gain since 2006 as the pandemic kept consumers at home and vigilant about cleaning.  Demand in the U.S. for cleaning and paper products continued to surge through the spring and early summer, while the reopening of China, P&G’s second-biggest markets, drove sales there.

P&G said its efforts in recent years to shed weaker brands and streamline are paying off at a time of crisis.

The company said organic sales (ex- impact of currency swings) were up 6% for the fiscal year ended June 30, and 6% as well for the latest quarter.  P&G predicted more modest growth for the current fiscal year, citing high uncertainty around the global economy, and fallout from the coronavirus.

CFO Joe Moeller said, “On the whole, with health, hygiene and cleaning, consumers’ needs have changed forever.  Maybe not to the degree that’s happened recently. But it’s hard to imagine we’ll snap back to the old world.”

Organic sales in China rose 14% in the quarter after its economy reopened, and 8% for the full year.

--MGM Resorts notified their staff that if they weren’t recalled from furlough by Aug. 31, they would subsequently be fired.

Major employers are required under the federal Worker Adjustment and Retraining Notification Act to notify their workers when there are expected to be mass firings.  Wynn Resorts, Tropicana and other casino operators sent out such notifications.

MGM told its employees that it had originally hoped the casino closures would be brief and full operations could be restored.  But the pandemic has progressed, and based on currently available data, it doesn’t look like “it will be safe to restart shows prior to August 31, 2020.”

That means the “large majority” of employees in the entertainment and sports division will be fired on that data.  Health benefits will also be terminated on that date, though employees who are let go will be able to still apply for emergency grants from the casino through Nov. 29, 2020.

--J.C. Penney is looking to sell the business to avoid a brush with liquidation.  During a bankruptcy court hearing Wednesday, the company said the sale should be completed by the fall under an expedited process, as JCP looks to rebuff rumors of a liquidation of the entire chain.

The retailer filed for Chapter 11 in mid-May with 846 stores and 85,000 employees.  J.C. Penney has said it hopes to emerge from bankruptcy with about 600 stores and has begun liquidation sales at around 150 stores.

--Meanwhile, Thanksgiving Day 2020 will look different as the likes of Walmart, Target, Kohl’s, Dick’s Sporting Goods and Best Buy have announced they will be closed that day, a first in about ten years since the trend started to open at least part of it as a way to get a jump on Black Friday.

Target said in a statement: “Let’s face it: Historically, deal hunting and holiday shopping can mean crowded events.”

Target added it will start its holiday sale in October and keep the “lowest prices of the year on items in stores and online” even after the holiday.

--Fewer than one-tenth of Manhattan office workers have returned to the workplace a month after New York gave businesses the green light to return to the buildings they vacated in March, according to the city’s leading landlords, brokerage firms and employers.

The likes of Citigroup and JPMorgan Chase, for example, have allowed only a small number of traders, bankers and other employees to return to the workplace.  Others, like Facebook, have told their workers to stay at home through year end.

You can imagine the ripple effect, however, on the restaurant and retail front in the City…it’s been devastating.  Plus, there is little tourism, especially with quarantine rules, no Broadway, and museums still closed.

Currently, no office could have more than 25% occupancy.

--One of the ripple effects has been on Shake Shack Inc., which posted a bigger-than-expect quarterly loss on Thursday as the burger chain temporarily shut some restaurants and cut working hours due to coronavirus-led lockdowns and civil unrest that gripped several U.S. cities.

Shake Shack has also been hurt by not having drive-thrus, which it has just started building.  McDonald’s said 90% of its quarterly sales were from drive-thrus.

And the chain has been hit hard by its heavy presence in bigger markets such as New York, Chicago and Los Angeles suffering from the return to work trends noted above.

--Former Malaysian Prime Minister Najib Razak was sentenced to 12 years imprisonment and fined nearly $50 million by a Malaysian court that found him guilty of abuse of power in connection with one of the world’s largest financial scandals that resulted in his defeat in the country’s 2018 elections.

The sentence is to run concurrently with shorter prison terms of 10 years for each of the three charges of money laundering and three charges of criminal breach of trust against him, the court said.

Tuesday’s verdict goes back to a string of cases against Najib over allegations he unlawfully received hundreds of millions of dollars from a state investment fund called 1Malaysia Development Bhd., or 1MDB, which I wrote of last time in terms of Goldman Sachs and its agreement to pay the Malaysian government nearly $4 billion for its role in the scandal.

Najib’s lawyer said his client will appeal to a higher court.

--A Mexican central bank official said the economy could contract between 8.5% and 10.5% in 2020 as Latin America’s second-largest economy reels from the pandemic.  Gerardo Esquivel added that it could take until 2022 for economic activity to return to pre-pandemic levels as spending on tourism, transportation, restaurants and fast food have remained far below expected levels through the end of July.

The government then announed GDP contracted 17.3% in the second quarter over the first, and was down 18.9% over the second quarter of 2019, the National Statistics Institute said Thursday.

Industrial production in the April through June period fell 23.6% from the first quarter of the year.

The decline in GDP marked a fifth consecutive quarterly contraction and was the sharpest on record, putting the economy on track for its deepest recession since the Great Depression of the early 1930s.  In the first six months of the year, GDP was down 10.5% from the first half of 2019.

--China’s soybean imports in June from top supplier Brazil soared to a record high, according to customs data released on Sunday, driven by growing demand for soybeans as China’s pig herd recovers after deadly outbreaks of African swine fever.  The world’s top soybean buyer brought in 10.51 million tons of the oilseed from Brazil in June, up 91% from the previous year.

China’s overall soybean imports in June were a record 11.16 million tons as Chinese processors also made the most of lower Brazilian prices as better weather facilitated exports.

China purchased 267,553 tons from the U.S., according to the General Administration of Customs. Down 56.5% from 614,805 tons in the previous year, and down 45.6% from May’s level of 491,697.

So as noted above you can see that China needs to ramp up purchases dramatically to fulfill its pledge under the phase 1 trade deal the two sides signed in January.

--My inground pool manufacturer friend offered up further evidence on the boom in that industry, with B.K. saying the “wave” of seasonal orders has been going on for months and continues to grow in size when it’s normally limited, with no sign it is going to crest anytime soon, orders having quadrupled.  In three weeks, my friend said he went through more steel than he did in perhaps 2 ½ months last year, which was a very good one for the industry.  Needless to say, manufacturers of his ilk are scrambling for raw materials.  A large Midwest dealer my friend knows said he is fully sold out through 2021!

Meanwhile, B.K. says many above ground manufacturers have stopped accepting orders.  Incredible.  Get some rest, friend.  [Pssst, he says he comes home at 11:00 p.m. these days and to relieve stress waters his shrubs.]

--SeaWorld Entertainment said it expects second-quarter revenue of approximately $18 million, a sharp drop from the $406 million revenue a year ago, and just half the Street’s estimate.  The net loss for the quarter is estimated at approximately $105 million, the company formally filing its results in the next ten days or so.

--If you like to drink beer out of a can, you are likely no doubt aware of the aluminum shortage.  The Beer Institute says that aluminum cans have grown far more popular for packaging in recent years, cracking 60% for the first time in the second quarter.  Less than one-third is bottled.  The Can Manufacturers Institute says 35 billion cans are used annually for alcoholic beverages in the U.S. and Canada.

Foreign Affairs

China: In a major move, Hong Kong leader Carrie Lam on Friday postponed a Sept. 6 election for the city’s legislature for a year because of a spike in novel coronavirus cases, dealing a blow to the pro-democracy opposition hoping to make gains in the vote. The opposition had aimed to ride a wave of resentment of a new national security law, that Beijing imposed on the city on June 30, to win a majority in the Legislative Council, where half the seats are directly elected with the other half filled mostly by pro-Beijing appointees.

The postponement comes after 12 pro-democracy candidates were disqualified from running in the poll, for reasons including perceived subversive intentions, opposition to the new security law and campaigning to win a legislation-blocking majority.

Lam, who said the election would be held on Sept. 5 next year, told reporters the decision was the most difficult she had made in seven months and it was aimed at safeguarding people’s health.

“We have 3 million voters going out in one day across Hong Kong, such flow of people would cause high risk of infection,” Lam said.

The poll would have been the first official vote since Beijing imposed the security law to tackle what China broadly defines as secession, subversion, terrorism and collusion with foreign forces, with punishment of up to life in prison.

Among the 12 opposition candidates seeking to run in the election was Joshua Wong, who rose to fame leading protests in Hong Kong as a teenager in 2012 and 2014.  “Barring me from running…would not stop our cause for democracy,” said Wong, 23.

Wong, who China calls a “black hand” of foreign forces, said his disqualification was “invalid and ridiculous” and the new law a “legal weapon used against dissidents.”

Hong Kong’s last British governor, Chris Patten, called it an “outrageous political purge” to disqualify the candidates.

Yes, Hong Kong has been reporting triple-digits in infections recently, but this is hardly like many other cities around the world, especially in the United States.  Singapore, with similar case levels, held a general election in July.

Separately, Hong Kong police arrested four people aged 16-21 for suspected offenses under the new national security law, the first such detentions outside of street protests since the legislation took effect a month ago.  Police said the three men and a woman, all students, were suspected of being involved in an online group that pledged to use every means to fight for an independent Hong Kong.  Human Rights Watch condemned the arrests.

“The gross misuse of this draconian law makes clear that the aim is to silence dissent, not protect national security,” said Sophie Richardson, China director at Human Rights Watch.

Meanwhile, there are growing fears President Xi Jinping, seeking to cement his place alongside Mao and Deng Xiaoping, is set on conquering Taiwan.  Joseph Wu, the foreign minister for the island, said on July 22 that China “may look for excuses to start a war or conflict” after it suddenly stepped up incursions into Taiwan’s air defense identification zone, raising the risk of a collision that could escalate.  “What China is doing now is continuing to ramp up preparedness to solve the Taiwan issue,” Wu said.  “We are very concerned that China will target Taiwan now that the Hong Kong security law’s been passed.”

It was in a speech last year that Xi Jinping said: “China must and will be united, which is an inevitable requirement for the historical rejuvenation of the Chinese nation in the new era.”

Opinion from both sides….

Editorial / Washington Post

“The United states should be leading democratic nations in resisting China’s tightening totalitarianism and escalating belligerence.  Instead, President Trump is pursuing a reckless, incoherent and unilateral offensive against Beijing that appears designed to boost his reelection campaign, not manage the complicated challenge posed by the regime of Xi Jinping.

“The State Department’s abrupt order shutting down the Chinese Consulate in Houston…is a case study in Mr. Trump’s counterproductivity.  It will inevitably lead to the permanent closure of a comparable U.S. mission in China – [Ed. which ended up being Chengdu].  That will reduce channels of communication and diminish U.S. understanding of China’s domestic situation, while doing next to nothing to address the offensive activities of the Xi regime, from its crackdown in Hong Kong to its attempts to spy on Americans and steal U.S. technology.

“U.S. officials are describing the Houston consulate as a nest of espionage activities, though they have offered no evidence to back that up.  Secretary of State Mike Pompeo portrayed the closure as sending a message: ‘We are setting out clear expectations for how the Chinese Communist Party is going to behave, and when they don’t, we’re going to take actions that protect the American people, protect our security, our national security, and also protect our economy and jobs.’

“That’s good campaign rhetoric – but closing consulates won’t accomplish those aims.  Most Chinese hacking and spying is directed from China, not Houston.  Many of the other measures Mr. Trump has taken, from imposing tariffs on U.S.-China trade to restricting student visas, have damaged the U.S. economy and cost jobs without changing Chinese behavior.

“Mr. Trump’s crusade – including racist references to the ‘Chinese virus’ and ‘kung flu’ – would be more plausible if it did not represent an abrupt, election-season U-turn.  Until March, Mr. Trump was publicly praising Mr. Xi as a great leader, including in his response to the coronavirus.  In private, Mr. Trump reportedly begged the Chinese ruler for help with his reelection campaign while approving of Mr. Xi’s crackdowns in Hong Kong and on the Uighurs of Xinjiang province.  In the trade deal he struck with Mr. Xi in January, Mr. Trump gave up demands for meaningful reforms in China’s trade practices in pursuit of pre-election soybean purchases from Midwestern farmers.

“The president has since come to see greater electoral benefit in blaming Beijing for the spread of Covid-19 while portraying opponent Joe Biden as a Chinese puppet.  Some of the resulting flurry of measures are worthy, if long overdue: Under heavy pressure from Congress, the administration finally imposed sanctions on officials and companies involved in the Xinjiang and Hong Kong crackdowns.

“Yet this in no way represents a cogent strategy for countering Mr. Xi’s ambition to spread China’s model of dictatorship around the world and forcibly silence critics at home and abroad.  That would require coordination with U.S. allies – such as Germany, South Korea and Japan, which Mr. Trump instead threatens with trade wars or the withdrawal of U.S. troops.  It would mean reviving the Trans-Pacific Partnership on trade. And it would require leaving open channels for diplomacy with Beijing to address issues such as North Korea’s growing nuclear arsenal and global warming.  Closing consulates will achieve none of that.”

Editorial / Wall Street Journal

“The Trump Administration’s closure of China’s consulate in Houston, and China’s retaliatory closure of the American consulate in Chengdu, is the latest in the din of diplomatic discord that now defines the world’s most important bilateral relationship.  On Thursday (July 23) Secretary of State Mike Pompeo made explicit what has been clear to anyone observing developments from Hong Kong to Huawei: America’s decades-long gamble on greater China openness has hit a wall.

“Governments often operate secretively out of foreign consulates, but the U.S. says China regularly crosses the line from diplomacy to intelligence operations and espionage.  The U.S. announced visa-fraud charges Thursday against four researchers who allegedly lied about their ties to the People’s Liberation Army.  One had been in contact with the Chinese consulate in New York and another sought refuge in the Chinese consulate in San Francisco.

“The details of activities in the Houston consulate are murky, but U.S. officials say it played a significant role in orchestrating research theft in the Southeast.  An indictment this week accused hackers in China of targeting U.S. coronavirus vaccine research.  Houston is a hub of medical research, and last year its MD Anderson center expelled three researchers for not disclosing research ties to the Chinese government.  Notably, the Houston consul general was previously stationed in Australia, one of the first Western nations to sound the alarm about China’s foreign-influence operations….

“One danger is that Beijing writes off the new U.S. posture as an election-year gambit by President Trump.

“That would be a mistake.  Despite harsh criticisms of U.S. actions against Iran, for example, Democrats have been encouraging or silent as the Administration pushes back against Beijing.  The new posture reflects an emerging consensus from blue-collar voters to business and security elites that China has gotten away with too much for too long.  A Biden Administration would inherit the tense situation in the Western Pacific and a large portfolio of counterintelligence and criminal investigations targeting China’s influence in the U.S.

“China-watchers debate whether Beijing has grown more belligerent since the coronavirus because it feels strong or because President Xi Jinping is vulnerable.  Either way, his recent actions have rallied more countries to the U.S. position on China’s threat to world order.  And the U.S. needs allies in confronting China.

“The West can’t control China’s behavior, but it can impose costs for abuses.  That’s what the Administration is trying to do with actions like the Houston consulate closure and its rejection of Beijing’s South China Sea claims last week.  The U.S. should also fund efforts to help get around the internet firewall that blocks Chinese citizens from the outside world and sustains Communist rule.

“The risks of confrontation are considerable.  No one should want diplomatic and economic tensions to become a military showdown.  Yet Beijing has grown convinced that it won’t face consequences for abuses.  Now that’s changing, and the hope is that a tougher policy convinces others in Beijing that Mr. Xi’s approach is too costly to continue.”

North Korea: Incredibly, leader Kim Jong Un declared an emergency and a lockdown in a border town after a person suspected of being infected with the coronavirus returned from South Korea after illegally crossing the border, state media said on Sunday.  If confirmed, we are told this would be the first case officially acknowledged by North Korean authorities.

One wonders why Kim disappeared for weeks on end earlier this year amid rumors he was sheltering from Covid-19.

Russia: As noted recently, the U.S. military plans to move nearly 12,000 troops from Germany, relocate its major European headquarters to Belgium and send F-16 fighters to Italy to implement President Trump’s decision to shrink the U.S. military footprint in the NATO ally, Defense Secretary Esper said on Wednesday.

Trump had said last month the move was intended to punish Germany, which he has asserted is not meeting its financial commitments.

Esper, however, sought to cast the shift, which will cost $billions and could take years to achieve, as a way to update its efforts to deter Russian aggression.  Esper tried to convince us that the moves will “strengthen” NATO and will “enhance the deterrence of Russia.”

After Esper’s comments, President Trump later told reporters that the plan could change should Germany pay more of its gross domestic product toward defense, the two percent level you always hear about.

So it’s not about strengthening NATO.  But then we knew this when Trump first announced the move.  Trump said; “We don’t want to be the suckers anymore. The United States has been taken advantage of for 25 years, both on trade and on the military. We’re protecting Germany, so we’re reducing the force because they’re not paying their bills.  It’s very simple. They’re delinquent.  So we’re reducing the force.  Now if they start paying their bills…I would think about it.”

Nothing about Russia in that statement.  It’s a gift to the Kremlin.

This while U.S. officials said Tuesday that Russian intelligence services are using a trio of English-language websites to spread disinformation about the Covid-19 pandemic, seeking to exploit the crisis that America is struggling to contain ahead of the November elections.

Officials who spoke to the Associated Press on the condition of anonymity said they were free to discuss the previously classified information to sound the alarm about the particular websites and to expose what they say is a clear link between the sites and Russian intelligence.

Meanwhile, President Putin said on Sunday the Russian Navy would be armed with hypersonic nuclear strike weapons and underwater nuclear drones, which the defense ministry said were in their final phase of testing.

Putin, who says he doesn’t want an arms race, has often spoken of a new generation of Russian nuclear weapons that he says are unequalled and can hit almost anywhere in the world.  But some Western experts question just how advanced the program is.

Last year Putin threatened to deploy hypersonic missiles on ships and submarines that could lurk outside U.S. territorial waters if the United States moved to deploy intermediate-range nuclear weapons in Europe.  Washington has not done so as yet, but Moscow is worried it might.

Separately, Belarusian opposition candidate Svetlana Tikhanouskaya on Thursday denied allegations that she or her jailed husband had ties to an alleged plot by Russian mercenaries to destabilize Belarus ahead of a presidential election.

Authorities launched a criminal case against her husband on suspicion of inciting riots and state-run media suggested he was part of a plot to sow instability.

The 37-year-old is leading the strongest challenge in years to President Alexander Lukashenko, who has ruled with little opposition for 26 years.  Tikhanouskaya said she feared that attempts to tie her family to alleged foreign plotters could lead to bloodshed ahead of the election on Aug.9.

This is a very confusing, bizarre situation.  Russia has demanded an explanation from Belarus after Minsk arrested the alleged mercenaries and said they were suspected of plotting “acts of terrorism.”

Belarusian state television broadcast footage on Wednesday of more than 30 suspected Russian private mercenaries, with talk the group numbered 200.

Finally, back to Vladimir Putin, he is facing serious protests in the Russian far east, as tens of thousands have been marching in Khabarovski, seven time zones away, over the detention of a popular regional governor, Sergei Furgal, who was arrested on murder charges he denies.  His supporters say the move was politically motivated and are calling on Putin to resign.

Iran: Supreme Leader Ayatollah Ali Khamenei, in a live speech on state TV today, ruled out negotiations with the United States over Tehran’s ballistic missile and nuclear programs, calling on Iranians to resist U.S. bullying.

“America’s brutal sanctions on Iran are aimed at collapsing our economy… Their aim is to limit our influence in the region and to halt our missile and nuclear capabilities,” Khamenei said.  “Relying on national capabilities and cutting our dependence on oil exports will help us to resist America’s pressure.”

Turkey: Turkey and Greece exchanged harsh words on Saturday over the conversion of Istanbul’s Hagia Sophia into a mosque, a day after Islamic prayers were held at the ancient site for the first time in nine decades.

Greek criticism of the move to convert the site from a museum has been scathing, underlining tense ties between the two neighbors.  Church bells tolled in mourning across Greece on Friday as Turkish President Erdogan joined prayers at the building.

“Greece showed once again its enmity towards Islam and Turkey with the excuse of reacting to Hagia Sophia Mosque being opened to prayers,” Turkish Foreign Ministry spokesman Hami Aksoy said in a statement on Saturday.

The Greek Foreign Ministry responded with its own statement, saying “the international community of the 21st century is stunned to observe the religious and nationalist fanatic ramblings of today’s Turkey.”

Random Musings

--Presidential tracking polls….

Gallup: 41% approve of President Trump’s job performance, 56% disapprove; 91% of Republicans approve, 34% of independents (Jul 1-23).  The splits for the last survey (June 8-30), were 38/57, 91, 33.
Rasmussen: 50% approve, 48% disapprove (July 31…had been 42/55 back on June 29).

--According to new CNN polls of battleground states Arizona, Florida and Michigan, former Vice President Joe Biden was leading in all three.

In Florida, Biden leads 51% to 46%, in Arizona it’s 49% to 45%, while in Michigan, Biden leads among registered voters 52% to 40%, matching the national average for the presidential race per the most recent CNN Poll of Polls.

Trump carried all three states in 2016.

In Florida, other recent polls give Biden similar support, with Quinnipiac pegging it at the same 51%, 48% in a CBS News survey, and 49% in a Fox News poll.  Trump’s figures for the three, in order, were 38%, 42% and 40% in the Fox survey.

In the CNN poll, 60% disapprove of the president’s performance on the coronavirus, 59% in Michigan, and 57% in Florida.

But in Arizona and Florida, 52% rate Trump positively when it comes to the economy.

Interestingly, in the CNN poll, Michigan’s Democratic Gov. Gretchen Whitmer earns a 69% approval rating for her handling of the coronavirus, while 66% say Arizona Republican Gov. Doug Ducey is falling short, ditto Florida Republican Gov. Ron DeSantis (63%).

--A new NBC News/Marist poll of North Carolina registered voters has Biden at 51% to Trump’s 44% in a state Trump won by 3.6 points in 2016.

Democratic Senate candidate Cal Cunningham leads incumbent Sen. Thom Tillis by 9 points, 50-41.

And Democratic Gov. Roy Cooper leads his Republican challenger, Lt. Gov. Dan Forest, 58 to 38 percent.

President Trump’s job approval rating in the state has dropped to 41%, with 55% disapproving.  Back in March the split was 45-48.

--Gerard Baker / Wall Street Journal

“As was perhaps predictable in a presidential contest between two men on the ripe side of 70, we’re into the ‘my memory is better than yours’ phase of the election campaign.

“Neurologists are divided on the real value of cognitive testing, but in any case we should be less interested in whether someone can recite with precision a string of random words than in whether he can demonstrate practical recall of recent important events in his life.

“A better test for Joe Biden right now than ‘Person. Woman. Man. Camera. TV’ might be ‘Obama. Vice president. Russia. Trump. Investigation.’

“It’s well past time Mr. Biden was asked some hard questions about what he knew about the campaign by the administration he worked in to paint Mr. Trump as an asset of Russian intelligence.

“When he digitally tiptoes out from his Delaware fastness, the former vice president is typically tossed some gentle softballs from friends at MSNBC, CNN or some other group of Democratic Party activists.

“Even these can take a curious course.  Last week, in a free-associative online session with representatives of the Service Employees International Union, Mr. Biden warned that the president was inciting hatred of Koreans by attacking China for covering up Covid-19.  ‘People don’t make a distinction – as you well know – from a South Korean and someone from Beijing,’ he told a panel that included a couple of puzzled Asian-Americans.  They nodded sympathetically, like concerned relatives at the bedside of an elderly family member ranting about the nurse who has taken away his record player.

“Mr. Biden can speak knowledgeably on the topic of Asian stereotypes.  In 2006, when he was cognitively sharper, he offered this socioeconomic gem: ‘You cannot go to a 7-Eleven or a Dunkin’ Donuts unless you have a slight Indian accent.  I’m not joking.’

“Mr. Biden is lucky he doesn’t receive tough questions – about the Russia-collusion story, for instance.  Having spent three years talking about little else, the media has now pushed the story down the memory hole, since it was widely discredited and failed to generate its intended outcome, the removal of the president.

“Inconveniently for the former vice president, awkward reminders keep popping back up unexpectedly, like the verbal eructations that punctuate Mr. Biden’s remarks….

“All this comes on top of what Michael Horowitz, the Justice Department inspector general, discovered late last year: FBI officials doctored information to get judges to approve Foreign Intelligence Surveillance Act warrants and ignored or played down evidence that undermined their investigation. All the while, officials leaked damaging and selective information to friendly media to convince the country they were on to something.

“We know Mr. Biden was kept abreast of aspects of the investigation…. We know that his boss wanted to be told everything the FBI investigators were doing.  We know that Susan Rice, Mr. Obama’s national security adviser and a leading contender for Mr. Biden’s vice presidential pick, was also closely involved in reviewing aspects of the FBI’s activities….

“There are many…questions to be asked of a presidential candidate about what he can recall of such a critical period in recent history.

“Mr. Biden’s widening memory lapses were once thought by advisers to be a critical electoral liability.  But if he can get from here to Nov. 3 assisted by a complaisant press corps disinclined to help him recall those last months of the Obama administration, the failing memory may turn out to be his greatest asset.”

--One of the more unlikable members of Congress I can ever remember, Rep. Louie Gohmert (R-TX), who has steadfastly refused to wear a mask during the crisis, said on Wednesday he had tested positive for Covid-19, leading to at least three of his colleagues self-quarantining after being close to him in recent days.

Gohmert said in an interview later Wednesday, “I can’t help but wonder if by keeping a mask on and keeping it in place, I might have put some germs – some virus – onto the mask and breathed it in.” 

Gohmert, who has frequently been without a mask while in proximity to others on Capitol Hill and told CNN last month that he wasn’t wearing a mask because he is tested often but would wear one if he tested positive, was due to accompany the president on Air Force One for Trump’s trip to Texas.

Gohmert said he would self-quarantine for 10 days.

House Speaker Nancy Pelosi then said on learning of Rep. Gohmert’s positive test, every member and staff would be required to wear masks in the House.  Members will be allowed to remove their masks when addressing the chamber, Pelosi said on the House floor.

“The chair expects all members and staff to adhere to this requirement as a sign of respect for the health, safety and well-being of others present in the chamber and surrounding areas.”

Pelosi warned that she had the authority to ask the House sergeant at arms to remove a member from the floor for violating decorum, and “the chair views the failure to wear a mask as a serious breach of decorum.”

--We note the passing of former presidential candidate Herman Cain, who died after a battle with Covid-19 on Thursday. He was 74.

Cain had been hospitalized with coronavirus, according to a statement posted July 2 on his official Twitter account.  It’s not clear where or when he was infected, but it was well-known he attended President Trump’s rally in Tulsa just weeks earlier, June 20, and he wasn’t wearing a mask, nor were those seated around him.

President Trump tweeted:

“My friend Herman Cain, a Powerful Voice of Freedom and all that is good, passed away this morning.  Herman had an incredible career and was adored by everyone that ever met him, especially me. He was a very special man, an American Patriot, and great friend.  I just got off…

“…the phone with his amazing wife Gloria, daughter, Melanie, and son Vincent to express my deepest condolences to the entire family.  @FLOTUS Melania and I loved Herman Cain, a great man. Herman, Rest In Peace!”

Cain was a true rags-to-riches story, a former pizza chain CEO, National Restaurant Association head, and candidate for the Republican nomination in 2012, who before the primaries commenced, was actually in the lead.  His campaign was derailed by some sexual harassment allegations, which he denied, and then Cain went on to become a leading supporter of President Trump.

He seemed like a good man, and I haven’t heard or read anything to the contrary.  It’s sad his last days were filled with such suffering.

--NASA launched its most ambitious robotic rover to Mars on Thursday, opening the next phase of exploration on the Red Planet.

The $2.7 billion mission, Perseverance, will seek signs of ancient life on Mars that can be packaged and, for the first time, returned to Earth.  It will test ways to extract oxygen from the Martian air for future colonists and try out an experimental helicopter drone that could become the first craft to fly on another planet.

A United Launch Alliance Atlas V rocket boosted the spacecraft from the Cape Canaveral Air Force Station on a 300-million-mile voyage between the planets.  If all goes as planned, the spacecraft will land on Feb. 18 at a 28-mile-wide basin called Jezero Crater.

China and the United Arab Emirates independently launched maiden voyages to Mars earlier this month.  Europe and Russia are set to follow with a joint Mars mission in 2022.

--The case of the mystery seeds showing up in U.S. mailboxes from shippers in China and other countries has gone global. Canada, the U.K. and Australia are all investigating the matter.

The U.S. Department of Agriculture said consumers in at least 22 states had received the unsolicited seeds, with various agencies including the FBI and the Department of Homeland Security investigating them as well.

You are not to plant them, the USDA being concerned they are potentially invasive species, though as of late Wednesday, there was no indication any of the seeds carry pests or diseases, according to the agency.

--According to a joint study by the Pew Charitable Trust and sustainability consulting firm Systemiq Ltd., the annual flow of plastic into the world’s oceans is set to surge and businesses’ efforts to reduce plastic waste will do little to stop it.  We’re talking the inflow could triple from 2016 to 2040, the study found.

Companies and governments have pledged to cut plastic, but those commitments would only achieve a 7% annual reduction in plastic leaking into the ocean by 2040, so still more than a twofold increase in volume.

China and Indonesia are likely the top sources of plastic reaching the oceans, accounting for more than a third of the plastic bottles, bags and “other” washing out to sea, according to a 2015 study from the University of Georgia.

Over the past two years China has been making strides to improve waste management, including banning the import of plastic and other waste from developed countries like the U.S., which for decades have shipped much of their trash overseas.

---

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

God bless America.

---

Gold $1994…up $52 today…more next week.
Oil $40.43

Returns for the week 7/27-7/31

Dow Jones  -0.2%  [26428]
S&P 500  +1.7%  [3271]
S&P MidCap  +0.8% 
Russell 2000  +0.9%
Nasdaq  +3.7%  [10745…just shy of new record]

Returns for the period 1/1/20-7/31/20

Dow Jones  -7.4%
S&P 500  +1.3%
S&P MidCap  -9.7%
Russell 2000  -11.3%
Nasdaq  +19.8%

Bulls 56.7
Bears
17.3…(last week’s #s…update not provided)

Hang in there…Mask up.  Wash your hands.

Brian Trumbore