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09/05/2020

For the week 8/31-9/4

[Posted 10:30 PM ET, Friday]

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

Edition 1,116

Sixty days to go before the election.  Can we all make it?  I’m not sure I can.

I’m not going to comment much on The Atlantic’s story by one of the real good reporters in the business, Jeffrey Goldberg, that on multiple occasions, President Trump made disparaging remarks about members of the U.S. military who have been captured or killed, including referring to the American war dead at the Aisne-Marne American Cemetery in France in 2018 as “losers” and “suckers.”

As of tonight, the Associated Press and Fox News are among those beginning to confirm some of the remarks attributed to the president, including the cemetery comments.

I prefer to ‘wait 24 hours’ on such matters, but if true this is an important story, though hardly a surprise, coming from a man who this week, in an interview with Fox News’ Laura Ingraham, said of the Jacob Blake shooting, “They [the officers] choke, just like in a golf tournament, they miss a 3-foot putt.”

Ingraham tried to save her leader, quickly interrupting, saying: “You’re not comparing it to golf.  Because of course that’s what the media would say…”

And Trump reiterated: “I’m saying people choke.”

He had the chance to walk it back and left the golf analogy hanging out there.

No one is surprised after four years at anything the president says.  But at what time does it hurt him?  Is it really on Nov. 3rd?

The president does have the economy going for him these days…at least signs of progress in the recovery, and the economic timetable can be a big help.  Yes, third-quarter GDP is announced Oct. 29 and it’s going to be big, anywhere from 20 to 30 percent (the Atlanta Fed’s GDPNow barometer currently at 29.6%).  And he’s going to get a big break in that the October jobs report doesn’t come out until days after the election.  I’ll explain next week why this is good for him, but for now, understand that today’s jobs numbers, while solid, remain highly deceiving, hiding the amazing disconnect between the two Americas…the haves and have nots.

The pandemic devasted huge sectors of our economy, namely retail, restaurants, and leisure…sectors permanently scarred.  By one calculation, leisure and hospitality (which I get into in some detail below) is still down 2.5 million jobs since February.  Others say the figure is much higher.  Professional and business services is still down 1.5 million, retail 655,000.  So, yes, we’re making progress, but it’s hiding some truly depressing stories.

The thing is the disconnect won’t be fully exposed until the fourth quarter.

One other item before I get to today’s main thought.  This afternoon President Trump had a brief presser and he was asked about the poisoning of Alexei Navalny, which I cover below.

True to form, Trump said, “We will look at it very seriously…no one’s been tougher on Russia than I have… It’s interesting everyone is already mentioning Russia…things China is doing are far worse… I get along with everyone… I get along with Putin… I would be very angry if that were the case [that Navalny was poisoned.]”

Of course the Germans already confirmed Navalny was poisoned!  Trump doesn’t need to “look at it further.”  He’ll do all he can to ignore it.

But for now, this was a week filled with talk about how chaotic Election Day may indeed be as Democrats’ mail-in ballots are counted largely after the initial election returns come in that evening, and how Trump could easily be winning, only to have the margin shrink, perhaps over days, and maybe even weeks, while everything is certified.  As noted in the following, this isn’t 2000.  We are a much different nation than twenty years ago.  And it isn’t for the better.

To wit:

Editorial / The Economist

“Labor Day marks the beginning of the home stretch in a presidential election. This one threatens to be ugly.  The president’s supporters are clashing with Black Lives Matter protesters in Portland, Oregon. Donald Trump flew to Kenosha, Wisconsin, for a photo-op in front of burned-out buildings, a week after police shot and paralyzed an unarmed African-American man and one of the president’s supporters shot and killed two demonstrators, possibly in self-defense.  Having adopted a strategy built around profiting from fears about unrest, the president has an interest in stoking it.  Many Americans worry that November could herald not a smooth exercise of democracy but violent discord and a constitutional crisis.

“Is this all hyperbole?  America has had violent, contested elections in the past.  In 1968 one of the candidates, Bobby Kennedy, was assassinated.  In 1912 Teddy Roosevelt was shot in the chest while making a speech in Wisconsin.  (He finished the speech before heading to a hospital, and survived).  Historians are still arguing about who really won the election of 1876.  Yet the country has always managed to gain the consent of the losers in its presidential elections – even in the midst of the Civil War.  That long unbroken streak suggests that doomsayers need to keep things in proportion. However, there is a real risk that things could go wrong in November.

“To ensure the peaceful handover of power, democracies need the losing candidates and most of their followers to admit defeat.  A clear result on polling day helps a lot: the losers may hate it, but they accept it and start preparing for the next election. When the result is unclear, a backup system is needed.  Contested election results are rare in mature Western democracies, but they happen.  In 2006 Silvio Berlusconi narrowly lost an election in Italy and claimed, without evidence, that there had been widespread fraud.  The country’s Supreme Court ruled in favor of his opponent, and Mr. Berlusconi grudgingly surrendered.  In 2000 America’s presidential election was settled in the Supreme Court after contested recounts in Florida.  In both cases, decrees from judges were just about enough to end the squabbling and let the country move on.

“In the case of a landslide win for Mr. Trump or Joe Biden, about half of America will be miserable.  Many Democrats view Mr. Trump as a threat to democracy itself.  If he wins again millions of them will be distraught. Among Republicans, by contrast, Mr. Trump still enjoys an 87% approval rating.  If he loses, many will grouse that the other side cheated. But that need not stop a smooth transfer of power if the margin of victory is big enough. If Mr. Trump were to lose by eight points, as polls currently suggest he will, there will be no way to challenge the result plausibly – though he may try anyway, possibly fomenting further unrest.

“If the election is much closer, things could get even uglier.  America is unusual in the degree of power it gives to Republican and Democratic partisans to administer elections.  Decisions over who is removed from lists of eligible voters when they are updated, the design of ballot papers, where polling stations are situated, whether early voting is allowed and how many people have to witness a postal vote – things which in other mature democracies are in the hands of non-partisan commissions – are all taken by people with a D or an R by their name.  If the election is close then all this will be litigated over, and ultimately end up in courts presided over by judges who have also been appointed by Republican or Democratic governors and presidents.

“As if that were not worrying enough, Covid-19 could add to the legal slugfest….

“If the election is close and there are delays in counting ballots on election night, it could well appear that Mr. Trump is winning in some key states.  He might then claim victory before the results were in, as he did in Florida’s mid-terms.  As more postal votes are counted, the result could then shift in Mr. Biden’s favor.  America would have two candidates claiming victory.  Electoral cases in multiple states might have to be heard in the courts.  Protests would surely erupt, some of them armed.  The president might call out the national guard, as he threatened to do this summer, or send federal agents into Democratic cities to police restive crowds, as happened in Portland.  At this distance, it is easy to forget quite how wrenching a disputed presidential election was in 2000.  And that dispute took place at a time of maximum American self-confidence, before 9/11, before the rise of China, before elections were fought on social media, and when the choice was between two men who would be considered moderate centrists by current standards.

“Now imagine something like the Florida recount taking place in several states, after an epidemic has killed 200,000 Americans, and at a moment when the incumbent is viewed as both illegitimate and odious by a very large number of voters, while on the other side millions are convinced, regardless of any evidence, that their man would have won clearly but for widespread electoral fraud….

“There is so much riding on this election – for America and for the rest of the world – that state officials must do everything they can to make sure it goes as smoothly as possible, remembering that they owe loyalty to the constitution, not their party. Even a landslide election win will be fraught. In the event of a narrow one, America might not be able to generate losers’ consent.  And without that, democracies are in big trouble.”

Covid-19 death tolls, as of tonight….

World…878,710
USA…192,111
Brazil…125,584
India…69,635
Mexico…66,851
UK…41,537
Italy…35,518
France…30,724
Spain…29,418
Peru…29,405
Iran…22,044

Source: worldometers.info

U.S. daily death tolls…Sun. 369; Mon. 512; Tues. 1,164; Wed. 1,090; Thurs. 1,094; Fri. 1,033.

A new long-term forecast from the widely-followed Institute for Health Metrics and Evaluation at the University of Washington’s School of Medicine, Covid-19 deaths could rise to 410,451 by the end of 2020.  In a worst-case scenario, there could be 620,029 fatalities, according to the estimates.

President Trump said this afternoon we are “rounding the corner” on the virus.  This is the same man who in February said, “We have 15 (cases), probably going down to close to zero.”

As alluded to above, we have to suppress the case count down to below 20,000 a day, at the very least.  Today’s was over 52,000, the highest in weeks.

“People in the Northern Hemisphere must be especially vigilant as winter approaches, since the coronavirus, like pneumonia, will be more prevalent in cold climates,” Christopher Murray, IHME’s director, said in the report.

The IHME also points out the decline in mask use from a peak in early August, “including in some states such as Illinois and Iowa with increasing case numbers.”

Meanwhile, in my now regular look at six European nations with a combined population similar to the U.S. (Germany, France, Spain, Italy, UK and Belgium…336.3 million vs. 330 million here) that  we started five weeks ago, selecting Wednesday, where there is no ‘weekend noise’ in reporting the data, back then the U.S. had 55,148 new cases and 1,319 deaths vs. 7,281 and 100 for the euro six.

But Europe is struggling again and this past Wed., those six nations combined had 20,048 new cases and 97 deaths.  The U.S. had 41,211 and 1,090.  Still a big difference, but Europe’s spike should not be giving President Trump any joy, though he treats it as such.  Europe was largely reopening before we were, after shutting down before us.  This is where we are headed…back up…if we aren’t careful.

Today, France hit a new high for cases, as in more than any of its single darkest days in March and April, nearly 9,000.

Covid Bytes

--Cheap, widely available steroid drugs reduced the number of deaths in the sickest patients with Covid, according to a trio of newly published clinical trials.

The World Health Organization, citing evidence from these trials and similar ones, announced Wednesday it strongly recommends doctors use the medications to combat severe or critical forms of disease caused by coronavirus infections.

“Corticosteroids are the only treatment that has been conclusively demonstrated to reduce mortality in patients with Covid-19,” said Jonathan Sterne, an author of the meta-analysis and an expert in medical statistics at Britain’s University of Bristol.

Dexamethasone was the first medication shown to increase the odds of survival in patients with severe Covid-19 when initial outcomes from a British clinical trial, named Recovery, were published in June.

This is very good news.

--But last weekend, Dr. Stephen Hahn, the head of the Food and Drug Administration, told the Financial Times that he is willing to fast-track a Covid-19 vaccine as quickly as possible.  Hahn said his agency was prepared to authorize a vaccine before Phrase Three clinical trials were complete, as long as officials are convinced that the benefits outweigh the risks.

Without providing evidence, a week earlier, President Trump had accused members of a so-called “deep state” working within the FDA of complicating efforts to test Covid-19 vaccines in order to delay results until after the Nov. 3 presidential election.

A day later, the FDA gave “emergency use authorization” of a coronavirus treatment that uses blood plasma from recovered patients.

[Many major hospitals have said they may opt to ignore the EUA in favor of dedicating their assets to a gold-standard clinical trial that would settle the issue of the science behind convalescent plasma once and for all.]

Hahn later said that any decisions on vaccines will not be made because of political pressure.

“This is going to be a science, medicine, data decision. This is not going to be a political decision.”

I doubt that.

--Countries such as Ukraine, Israel and Indonesia this week hit new highs in cases and/or deaths, which should be worrisome to all.  Romania had its highest single death toll and daily cases are at highs.

--India seemingly hits a new high in cases daily, ditto deaths, if you exclude a single day in June that was an anomaly.

--Concern has been rising in Germany that anti-coronavirus restrictions were being hijacked by the far-right and then last Saturday, rightwing radicals waving nationalist flags* broke through police barriers to storm the Reichstag building, the home of the country’s parliament.

*The black-white-red flag of the German Reich, a symbol closely associated with the far-right.

Politicians reacted furiously, with the leader of the governing CDU party, Annegret Kramp-Karrenbauer, saying the public anxiety about the clampdown had been “misused for Nazi propaganda.”  Frank-Walter Steinmeier, the German president, called the Reichstag incident an “intolerable attack on our democracy.”

The movement’s success, which has seen similar demonstrations across Europe, is rooted in its ability to attract people from across the political spectrum.  Protesters include virus-deniers, conspiracy theorists and “anti-vaxxers” who oppose immunizations, but also ordinary people who view the anti-Covid-19 measures as an affront to democracy.

Some say Germany has been a victim of its own success in containing the pandemic. The relatively low number of deaths has stoked suspicions in some sectors of society that the virus is less dangerous than the authorities claim it is, and the anti-corona measures are unnecessary.

But according to the “Politbarometer” poll, 60 percent of Germans approve of the current measures, while 28 percent think they should be toughened up. Only ten percent say they are “exaggerated.”

--Former Italian Prime Minister Silvio Berlusconi tested positive for coronavirus, the staff of the 83-year-old media tycoon said on Wednesday, and then he was hospitalized a day later.  Berlusconi had recently returned from a holiday in Sardinia, which saw a sharp increase in Covid cases in August as tourists from all over the country descended on the Mediterranean island.

--Dwayne “The Rock” Johnson on Wednesday revealed that he and his family recently battled the coronavirus, describing the ordeal as a “kick in the gut” – as he expressed gratitude that they’ve all since come out on the other side.

The actor, 48, said his wife, 35, and their daughters, 4 and 2, were all sick for the last three weeks but are now feeling better.

“This has been one of the most challenging and difficult things we have ever had to endure as a family,” Johnson said in a video.

They contracted the virus following a visit with family friends, who didn’t know they were infected and then passed it on to Johnson and his family.

--Editorial / Washington Post

President Trump’s disastrous response to the coronavirus pandemic is veering toward another wildly irresponsible turn. After first saying the virus would go away, then failing to properly boost the supply chains, then bungling the testing scale-up, then walking away and turning the burdens over to governors, then advocating a reopening in May that triggered a new virus firestorm, Mr. Trump has been asking questions about the strategy of relying on natural ‘herd immunity.’  This is another way of taking a hands-off approach, protecting the most vulnerable while allowing the virus to spread until there is enough natural immunity in the population to block transmission.

“Mr. Trump should ask very hard questions about this.  An analysis by The Post showed that in the United States, with a population of 328 million, reaching a 65 percent threshold for herd immunity could lead to 2.13 million deaths.  This was the pandemic approach in Sweden, and it did not turn out well.

“In response to The Post’s report about these discussions, Mr. Trump’s new pandemic adviser, Scott Atlas, issued a statement through the White House denying that the president has a policy of achieving herd immunity.  However, Dr. Atlas, a neuroradiologist and fellow at the Hoover Institution at Stanford University, has been campaigning for more schools to open in-person classrooms, playing down testing and criticizing lockdowns.

“Dr. Atlas has asserted that young people have little or no risk.  ‘When younger, healthier people get the disease, they don’t have a problem with the disease,’ he said in July.  ‘These people getting the infection is really not a problem, and in fact, as we said months ago, when you isolate everyone, including all the healthy people, you’re prolonging the problem because you’re preventing population immunity.  Low-risk groups getting the infection is not a problem.’

“It is true that children are less likely to get severe cases, and mortality is low, but to dismiss the dangers as ‘not a problem’ is reckless disregard for the adults in a society who are constantly mingling with young people.  Dr. Atlas should take note of outbreaks spreading across U.S. college campuses; separately, the latest data from the American Academy of Pediatrics shows a 17 percent jump in child cases over two weeks in August.  Dr. Atlas has also suggested that asymptomatic people should not be tested. This is another reckless idea; public health experts say that people without symptoms can still transmit the virus and testing should be more widespread, not less….

“The economic and psychic toll is undeniable. But until a vaccine or drug arrives, there is no magic wand to make the virus disappear.  Everyone must understand the virus is relentless, opportunistic and, for 181,000 Americans, so far, a real killer.”

--Editorial / Wall Street Journal

We hate to be the bearer of good news, but here goes: The so-called second virus wave is receding and has been far less deadly than the first in the spring thanks to better therapies and government preparation. Nobody is suggesting we should now let it rip, but the progress should give Americans more confidence that schools and businesses can reopen safely.

“Most states experienced flare-ups of varying degrees this summer as people gathered and traveled more. But outbreaks were worse in the South and West, for reasons that deserve more study but could include high rates of co-morbidities and more multigenerational households. Some U.S. nationals and migrant workers also brought the virus from Mexico.

“But the U.S. seven-day rolling average of new cases has fallen by about 40% from its peak on July 25.  Hospitalizations and deaths in hot spots peaked at about the same time in apparent contradiction to epidemiological models that have predicted two- to three-week lags between cases, hospitalizations and deaths.

“Hospitalizations are down by 62% in Texas, 60% in Florida, 48% in Utah, 45% in California, and 44% in Louisiana from their peaks, which all occurred between July 21 and 24.  Arizona’s hospitalizations…have fallen 78% since topping out July 12.

“Arizona has made so much progress that New York Gov. Andrew Cuomo removed it from his quarantine list last week.  Notably, hospitalizations have been falling at about the same rate in Texas, Florida and Arizona as in the Northeast this spring.  A second shutdown wasn’t needed to crush these outbreaks….

“The best news is that the virus is killing fewer Americans than it did during the spring.  Arizona, Florida and New York City have all recorded about the same number of cases per capita.  New York City’s per capita death rate is about 5.6 times higher than Florida’s and four times higher than Arizona’s….

“Covid cases have been rising in some Midwest states, but the flare-ups so far are well below the spring Northeast debacle or the surge in the South and West.  Flare-ups are inevitable until a vaccine is widely available, especially in places where there have been few cases.  Nobody is suggesting the U.S. has achieved herd immunity and should now declare victory.  Americans will have to behave cautiously for many more months, but it’s still worth taking stock of progress.

“More and faster testing such as the low-cost rapid antigen test by Abbott Laboratories that the Food and Drug Administration approved last week will allow more schools and workplaces to reopen. The policy goal should be to mitigate the virus’ damage while allowing Americans to return to some semblance of normalcy.”

Trump World

--Wednesday in Wilmington, N.C., President Trump urged residents of the state to vote twice in the Nov. 3 election, once by mail and once in person, openly urging an act of voter fraud even as he has decried mail-in ballots.

“Let them send it in and let them go vote,” Trump said in an interview with WECT-TV in Wilmington.  “And if the system is as good as they say it is then obviously they won’t be able to vote” in person.

Voting more than once in an election is illegal and in some states, including North Carolina, it is a felony not only to vote more than once but also to induce another to do so. 

Trump campaign official Tim Murtaugh told NBC News on Wednesday the president was encouraging people to vote early by mail “then show up in person at the polls or the local registrar to verify that their vote has already been counted.”

But the state’s Attorney General Josh Stein, a Democrat, responded on Twitter, writing that Trump had “outrageously encouraged” North Carolinians “to break the law in order to help him sow chaos in our election.”

Stein wrote: “Make sure you vote, but do NOT vote twice!  I will do everything in my power to make sure the will of the people is upheld in November.”

White House spokeswoman Kayleigh McEnany told Fox News on Thursday, “The president is not suggesting anyone do anything unlawful.  What he said very clearly there is make sure your vote is tabulated and if it is not, then vote.”

So Thursday, the president then tweeted:

“Based on the massive number of Unsolicited & Solicited Ballots that will be sent to potential Voters for the upcoming 2020 Election, & in order for you to MAKE SURE YOUR VOTE COUNTS & IS COUNTED, SIGN & MAIL IN your Ballot as EARLY as possible.  On Election Day, or Early Voting…

“…go to your Polling Place to see whether or not your Mail in Vote has been Tabulated (Counted).  If it has you will not be able to Vote & the Mail In System worked properly.  If it has not been Counted, VOTE (which is a citizen’s right to do).  If your Mail In Ballot arrives….

“….after you VOTE, which it should not, that Ballot will not be used or counted in that your vote has already been cast & tabulated.  YOU ARE NOW ASSURED THAT YOUR PRECIOUS VOTE HAS BEEN COUNTED, it hasn’t been ‘lost, or thrown out, or in any way destroyed.’  GOD BLESS AMERICA!!!”

Twitter later placed warnings over the tweets for violating its rules on civic and election integrity.  Facebook also placed a new label on Trump’s post, in which it said “voting by mail has a long history of trustworthiness in the U.S. and the same is predicted this year.”

Rich Lowry / New York Post

“There is a giant scheme afoot to disenfranchise voters in November – and it’s called mail-in balloting. 

“Mail-in voting has, like many things in our politics, taken on the aspect of tribal warfare – if President Trump is vociferously against something, Democrats must be vociferously for it, and vice versa.

“Absentee voting is unquestionably less secure than in-person voting.  But there is no evidence of widespread fraud.  Nor is there evidence that, at least prior to this campaign, mail-in voting has favored Democrats, as the president believes.

“Trump shouldn’t be trying to delegitimize the process, a point that journalists have often made.  Yet there hasn’t been enough focus on the other side of the equation: Does it make sense for Democrats to be fervent boosters of a process that may lead to a historic number of votes cast in a presidential election not counting?

“Stacey Abrams, call your office.

“No matter what anyone says, there is inevitably going to be more mail-in voting in the fall, but in-person voting is superior.

“Consider: Only about one-hundredth of 1 percent of in-person votes are rejected, whereas rejection rates of 1 percent are common with mail-in votes, and some states exceeded that during their primaries this year.

“This should be a five-alarm worry for Democrats.

“According to polling, almost twice as many Biden supporters as Trump supporters say they will vote by mail this year.  According to NPR, studies show ‘that voters of color and young voters are more likely than others to have their ballots not count.’

“In another universe, if Trump were urging Democrats to stay away from the polls and instead use a method more likely to get their votes discarded, it would be attacked as a dastardly voter-suppression scheme.”

Mr. Lowry then makes an argument similar to that of The Economist above.

Lowry then concludes:

“In light of all this, it makes sense, first and foremost, to try to make available more options for in-person voting.

“In addition, states should allow the counting of mail-in ballots prior to Election Day to minimize any swing in the count afterwards.  Congress should delay the date that states have to finalize their results, currently Dec. 8.  And election officials and the parties should do everything they can to educate mail-in voters – to do it correctly.

“What should be intolerable is any attempt to change the rules after the fact – although it is entirely conceivable that Democrats will feel compelled after Nov. 3 to argue that the mail-in voting that they have done so much to promote is desperately flawed and deeply unjust.”

-- Today, National Security Adviser Robert O’Brien said that China has the largest program among countries seeking to interfere in the election.

“We know the Chinese have taken the most active role,” O’Brien told reporters. “We’ve made it very clear to the Chinese, to the Russians, to the Iranians and others that haven’t been publicly disclosed that anyone…that attempts to interfere with the American elections will face extraordinary consequences,” he said.

Just what the president wants to hear from his lackey.

--Daniel Henninger / Wall Street Journal

“Let us not overstate the Democratic disadvantage. Donald Trump has (Portland mayor) Ted Wheeler.  But Joe Biden has Donald Trump.

“Rather than let Mr. Biden and the Democrats struggle inside the ideological trap they set for themselves, Mr. Trump is now threatening to do to the protests what he did in the coronavirus’ early days – insist he is the story and overhype anything he does.

“Even as some shift occurs in his direction, the president also seems fascinated in public by the war’s marginal minefields, such as QAnon (‘I understand they like me very much’) or his assertion in a Fox interview that Mr. Biden is controlled ‘by people that are in the dark shadows.’

“Mr. Trump’s instinct for sarcasm-strewn bludgeoning of his opposition may cause gettable voters to conclude the Democrats’ original strategy was right, that this election really is about voting against Donald Trump.

“The electorate still up for grabs has two months to decide which war is more unsettling – the one in the streets or the one inside Mr. Trump himself?”

--Trump tweets:

“The Atlantic Magazine is dying, like most magazines, so they make up a fake story in order to gain some relevance. Story already refuted, but this is what we are up against.  Just like the Fake Dossier.  You fight and fight, and then people realize it was a total fraud!”

“@FoxNews Polls are, as in the past, Fake News. They have been from the beginning, way off in 2016.  Get a new pollster.  I believe we are leading BIG!”

“Do you notice that any time Fake News Suppression Polls are put out, like @FoxNews, the Stock Market goes DOWN. We are going to WIN!”

[Trust me, Mr. President. The stock market didn’t tank Thursday because of some Fox polls.]

“@NYGovCuomo should get his puppet New York prosecutors, who have been illegally after me and my family for years, to investigate his incompetent handling of the China Virus, and all of the deaths caused by this incompetence.  It is at minimum a Nursing Home Scandal – 11,000 DEAD!”

“Sleepy Joe Hiden’ was acknowledged by his own people to have done a terrible job on a much easier situation, H1N1 Swine Flu.  The OBiden Administration failed badly on this, & now he sits back in his basement and criticizes every move we make on the China Virus.  DOING GREAT”

[Ed. Again. 12,500 died during the year-long H1N1 pandemic and it did not impact our lives one bit.]

“Crazy Nancy Pelosi said she was ‘set up’ by the beauty parlor owner when she improperly had the salon opened (and didn’t wear a MASK!).  Does anyone want a Speaker of the House who can be so easily SET UP?”

“Nancy Pelosi says she got ‘set up’ by a Beauty Parlor owner.  Maybe the Beauty Parlor owner should be running the House of Representatives instead of Crazy Nancy?”

[Ed. Pelosi could not have handled this worse.  She had a mask (around her neck).  She should have just apologized for misunderstanding the instructions, and not knowing the rules.]

“I was never a big fan of John McCain, disagree with him on many things including ridiculous endless wars and the lack of success he had in dealing with the VA and our great Vets, but the lowering of our Nations American Flags, and the first class funeral he was given by our…

“…Country, had to be approved by me, as President, & I did so without hesitation or complaint. Quite the contrary, I felt it was well deserved.  I even sent Air Force One to bring his body, in casket, from Arizona to Washington.  It was my honor to do so.  Also, I never called…

“…John a loser and swear on whatever, or whoever, I was asked to swear on, that I never called our great fallen soldiers anything other than HEROES.  This is more made up Fake News given by disgusting & jealous failures in a disgraced attempt to influence the 2020 Election!”

[Ed. At least on the issue of McCain nothing but lies.  Heck, Trump tweeted in 2015 he thought McCain was a “loser.”]

“When a Kennedy loses a Democrat Primary in Massachusetts, by a lot, it just shows how far LEFT that party has gone.  Joe Hiden’ will never be able to hold them back. Life, 2nd A, Energy, Religion, Jobs and the Economy, would be totally obliterated!”

Wall Street and the Economy

Volatility returned in a big way on Wall Street and stocks had their worst week since late June.  I cover some of the gory details on the comeuppance investors in the high flyers suffered down below.

For now, before we get to the jobs data, the ISM manufacturing reading for August came in at 56.0, the best since November 2018 (50 being the dividing line between growth and contraction), though the service sector reading, 56.9, while solid, was down from the prior month’s 58.1.

Construction spending in July was a disappointing 0.1%, while factory orders increased 6.4%.

Initial jobless claims for the week ended Aug. 29 were at 881,000, down from a previously revised 1.011 million, but still well above the previous weekly record of 665,000, pre-pandemic.

So then the August report on nonfarm payrolls was far better than expected, not in the number of jobs created, 1.371 million, which was generally inline with expectations, but in the unemployment rate, 8.4%, vs. 10.2% in July and 11.1% in June.

Job growth is coming down but there are still 11.5 million fewer people in the labor force than prior to the shutdown due to Covid, and the underemployment rate, U6, which includes those with part-time work seeking full-time employment, is 14.6%, though down from 18.0% in June.

Additionally, since I wrote of it a few weeks ago, the unemployment rate for African Americans is 13.0%, while that of Hispanics is 10.5%, the latter a better improvement than for the former since June.

The Federal Reserve’s Open Market Committee next meets Sept. 15-16 and two Fed officials, Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic, downplayed the chances of updated public guidance on the path of interest rates at this confab, suggesting they needed more clarity from the economic data and the outlook first.

“If I had a better idea of where we’re going to be next spring, and things like that, I’d know whether or not we need to ramp up extraordinarily accommodative policies like we did during the last recovery,” Evans said on Thursday.

Bostic offered similar comments during an interview with the Wall Street Journal.  They were the last Fed officials to speak ahead of a blackout on commentary prior to the policy meeting.

[Evans also called on Congress to deliver more fiscal aid, saying that even with an accommodative monetary policy and assuming progress in controlling the coronavirus, U.S. output won’t return to pre-crisis levels until late 2022.  At that point, Evans said unemployment will still be between 5% and 5.5%.]

The Fed’s rate-setting committee has said it won’t raise interest rates from nearly zero until the economy is “on track” to achieving maximum employment and 2% inflation.  But the debate has been over when to provide more clarity on the guidance.

Fed Chair Jerome Powell on Aug. 27 stirred things up when he unveiled a major shift in the central bank’s long-term strategy for setting interest rates.  Under the new framework, officials will allow the inflation rate to rise above their longstanding 2% target following periods of below-target inflation, which means the Fed will keep interest rates near zero for longer.

In an interview today with National Public Radio, Chair Powell said, “Today’s jobs report was a good one.”  But he added, “We think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time.  It will be measured in years.”

It nonetheless now seems like November before we get the real updated guidance that reflects the new strategy and specific thresholds on unemployment and inflation that must be achieved before any rate hikes.

Separately, the federal budget deficit is projected to hit a record $3.3 trillion for fiscal 2020, ending Sept. 30, according to the Congressional Budget Office and a release on Wednesday.

The spike in the deficit this year as huge expenditures were needed to fight the coronavirus and prop up the economy means that federal debt will exceed annual gross domestic product next year – a milestone that would put the U.S. where it was in the aftermath of World War II, when accumulated debt exceeded the size of the economy.

The CBO is projecting that the debt would exceed GDP in 2021 and set a new record high of 107%.

That compares with 79% of GDP at the end of 2019 and 35% back in 2007.

Lastly, on the trade front, the U.S. trade deficit surged in July to $63.6 billion, the highest level in 12 years, as imports jumped by a record amount.

The Commerce Department reported that the July deficit, the gap between what the U.S. buys and what it sells to foreigners, was 18.9% higher than the June deficit of $53.5 billion.

Imports in July surged to $231.7 billion, while exports were also up but by a smaller amount to $168.1 billion.

What’s rather humorous is that we all know that among the things Donald Trump promised as he campaigned in 2016 was to sharply lower the country’s trade deficits, especially with China.

But the deficit with China – the gap between the amount the U.S. buys from China and what it sells – was $31.62 billion in July, just 3.5% lower than $32.8 billion in July 2019, data released by the Census Bureau on Thursday showed.

Europe and Asia

It was PMI week across Europe and Asia and the European composite for August came in at just 51.9 vs. 54.9 in July.  Manufacturing was 51.7 vs. 51.8, services 50.5 vs. 54.7, a big comedown.

Germany: 52.2 manufacturing in August; 52.5 non-mfg. (services) vs. 55.6 in July.
France: 49.8 mfg. vs. 52.4 in July; 51.5 non-mfg. vs. 57.3.
Italy: 53.1 mfg.; 47.1 non-mfg. vs. 51.6.
Spain: 49.9 mfg. vs. 53.5 July; non-mfg. 47.7 vs. 51.9.
Ireland: 52.3 vs. 57.3 mfg; non-mfg. 52.4 vs. 51.9.
Netherlands; 52.3 mfg. in Aug. vs. 47.9 prior.
Greece: 49.4 mfg. vs. 48.6 in July.

UK: 52.2 mfg. in August; non-mfg. 58.8.

Chris Williamson / IHS Markit

Service sector companies across the eurozone saw growth of business activity grind almost to a halt in August, fueling worries that the post-lockdown rebound has started to fade amid ongoing social distancing restrictions linked to Covid-19.

“The near-stalling needs to be viewed in the context of the strong expansion seen in July: business growth had surged to a near two-year high as economies opened up further from the severe Covid-19 lockdowns.  However, the latest reading still sends a disappointing signal that the rebound has lost almost all momentum.

“The deterioration was often linked to worries of resurgent Covid-19 infection rates, notably among consumer-facing companies and especially in Spain and Italy, where virus containment measures remained particularly strict.

“The larger size of the services economy means the subdued picture offsets the more upbeat survey of manufacturers in August, suggesting that the overall pace of economic growth has waned midway through the third quarter.

“Although the relative strength of the PMI data in July and August mean the autumn is likely to still see the economy rebound strongly from the collapse witnessed in the spring, the survey highlights how policymakers will need to remain focused firmly on sustaining the recovery as we head further into the year.”

Eurostat reported that the July unemployment rate came in at 7.9% for the EA19, vs. 7.7% in June, and 7.5% July 2019.  If you’re wondering how the eurozone can have such a low jobless rate, it’s because of all the payment ‘schemes,’ or payroll relief programs.

For example, Spain announced on Thursday that its scheme, currently due to end on Sept. 30, will be extended for “as long as necessary.”  This program pays furloughed workers 70% of their base salary for the first six months, before dropping to 50% for the following months.  My reading of it is that the government will now maintain the 70% level for as long as needed.

July jobless rates across the continent:

Germany is at 4.4%, up from 3.0% a year ago.
France 6.9% vs. 8.5% a year ago (yes, down, from July 2019, but up from June’s 6.6% rate).
Italy 9.7%, unchanged vs. a year ago.
Spain 15.8% vs. 14.3% a year ago.
Ireland 5.0% vs. 4.6% in June, 5.1% a year ago.
Netherlands 4.5% vs. 3.4% a year ago.

The United States for July was 10.2% vs. 3.7% July 2019.

July’s retail trade/sales for the euro area was down by 1.3% over June, up 0.4% vs. a year ago.

--Germany’s government now forecasts GDP to decline -5.7% for 2020, better than first thought but still the biggest decline since World War II (5.7% in 2009).  But the growth forecast for 2021 was lowered to +4.4%, down from a previous estimate of 5.2%.  Exports will decline -12.2% in 2020.

Brexit: The chances of Britain leaving the European Union without a trade deal have risen sharply as negotiations have been threatened by London’s insistence that it have full autonomy over its state aid plans, negotiators and diplomats said.

The UK left the EU on Jan. 31, turning its back after 47 years on the post-World War II project that sought to build the ruined nations of Europe into a global power. The British exit followed more than three years of wrangling over an exit deal since the 2016 referendum that sent shockwaves across financial markets.

But since Brexit, talks on a new trade deal have made little progress. Fears in London, Brussels and other European capitals are mounting that a British exit without a deal could sow further economic chaos amid the pandemic which has hammered Euro economies.

Failure to reach a trade deal could hammer financial markets as nearly a $trillion dollars in trade, from car parts and medicines to lamb and fish would be thrown into turmoil.

I told you since day one the fishing issue was big, but now it seems state aid is the prime stumbling block.

British Prime Minister Boris Johnson’s office said the goal was to reach a deal but that the EU needed to show more realism.

EU officials say: “Sooner or later, the UK should clarify what they want.  It’s not possible to leave the European club and at the same time keep all the benefits,” European Council President Charles Michel told reporters today.

On the state aid issue, Britain does not want to allow Brussels authority over its own rules, stoking one of the bloc’s prime fears: that it shall one day face strong competition from an economy just outside its borders.

Think ‘fair’ competition as opposed to the ongoing battle between Airbus and Boeing and ‘state’ subsidies, to cite an example.

Turning to Asia…China’s PMI data was released.  The government’s official figures, courtesy of the National Bureau of Statistics, showed the manufacturing PMI at 51.0 for August vs. 51.1 in July, while the services reading rose to a solid 55.2 vs. 54.2 the prior month.

The private-sector Caixin manufacturing figure was 53.1 last month vs. 52.8 in July, with non-mfg. at 54.0 vs. 54.1.

Japan’s manufacturing PMI for August was 47.2 vs. 45.2 in July, a 16th straight down month (below 50).

Separately, cap-ex spending was down 11.3% in the second quarter, year-over-year, as noted by the Ministry of Finance, while industrial production in July was up 8.0% over June (the fastest on record) but down -16.1% year-over-year.

Retail sales in July were -3.3% in July over June, -2.8% yoy.

While the preceding has to do with the beginning of the third quarter, a revision on second-quarter GDP is out Sept. 8 and it’s important.

Taiwan reported a 52.2 manufacturing PMI in August vs. 50.6 in July.

South Korea’s mfg. PMI was 48.5 vs. 46.9.

India reported GDP in the second quarter plunged 23.9% year-over-year, according to the Statistics Ministry, the country crushed by the pandemic.

Back to Japan, Chief Cabinet Secretary Yoshihide Suga is now the most preferred candidate among the public to become the next prime minister, following the resignation of Shinzo Abe,  surging in popularity after he entered his party’s leadership race, an Asahi Shimbun survey showed Friday.

Suga, the government’s chief spokesman, has 38% of the public’s support, ahead of 25% for former Defense Minister Shigeru Ishiba (the man I mentioned last week) who had previously led several media polls.

In a June Asahi survey, Ishiba led a pack of seven potential contenders with 31% while Suga had just 3%.

The leadership election is set for Sept. 14 with LDP lawmakers and regional party representatives casting votes. The winner is virtually assured of becoming prime minister of the LDP’s parliamentary majority.

Street Bytes

--Monday started with Apple and Tesla trading at split-adjusted levels, both having huge runups in their share price prior to this moment.

Apple, splitting 4-for-1, opened at $127.50 and ran up to $138, intraday, on Wednesday as the S&P 500 and Nasdaq hit new all-time highs daily.  Then it cratered amid Thursday’s 5% bloodbath in Nasdaq and finished the week at $120.

Tesla, splitting 5-for-1, opened Monday at $444.60, ran up to $502 Wednesday, plunged to $372, and closed the week at $418.  What a ride.  At one point, high to low, Tesla had corrected 26%.

So these two were the big stories on the week as investors finally woke up…valuations were off the charts nuts. Very 1999-2000ish, even if these companies had actual revenues and business models, which wasn’t necessarily the case 20 years ago with many of the Wall Street darlings of that era.

Apple on Thursday actually lost $180 billion in market cap, after peaking at $2.2 trillion, the largest one-day loss in value for any company…ever.  But Apple is still over $2 trillion tonight.

On the week, the Dow Jones lost 1.8% to 28133, while the S&P fell 2.3% and Nasdaq 3.3%.

Also Monday, three new components joined the Dow Jones in conjunction with the stock splits in Apple and Tesla.  Salesforce.com, Amgen and Honeywell went in, replacing Exxon Mobil, Pfizer and Raytheon.

For August, the Dow gained 7.6%, best since 1984, the S&P rose 7%, best since 1986, and Nasdaq soared 9.6%, best since 2000.

Barron’s found that after a big August, with gains of more than 5%, the Dow drops almost 80% of the time in September.  The numbers for the S&P and Nasdaq are about 60% and 55%.

Seasonally speaking, September is the worst month of the year, though following a big August, the drops in September, if any, are historically smaller than the overall average.

--U.S. Treasury Yields

6-mo. 0.11%  2-yr. 0.14%  10-yr. 0.72%  30-yr. 1.47%

Treasuries were virtually unchanged despite the volatility.

--OPEC’s oil output rose about 1 million barrels per day in August, per a Reuters survey, as the group and allies eased record oil supply curbs as the global economy and demand began to recover from the pandemic.  The 13-member cartel pumped 24.27 million bpd on average in August, the survey found, up 950,000 bpd from July’s figure and a further boost from the three-decade low reached in June.

The curbs on supply from OPEC, Russia and allies, known as OPEC+, together with an easing of the lockdowns, helped oil climb from the $teens registered in April into the low $40s (West Texas Intermediate), but prices have stalled out at this level.  And now OPEC+ needs to monitor the market carefully because the world is still far from a full recovery from the coronavirus.

Well by week’s end, oil had fallen from last Friday’s $42.96 on WTI to $39.51, the first weekly close below $40 since June 26.  Iraq appears to not be able to fully implement the additional production cuts it promised after overproducing in recent months.

Sentiment was also undermined by concern over weaker demand from Asia, especially from China, following reports that suggested what the market had anticipated all along – Saudi Arabia will probably cut prices for October shipments.

You also had the growing concerns in Europe that the recovery, at least temporarily, had stalled out amid new surges in Covid cases in key states.

What was disturbing to traders is that crude tanked despite another big drawdown from the U.S., with the Energy Information Agency reporting in its weekly report that crude stockpiles had plummeted by 9.4 million barrels over the week ending Aug. 28.

The U.S. oil rig count rose by one to 181 during the week, versus 683 as of March 13, as reported by Baker Hughes.

--An analysis from the American Hotel and Lodging Association found that America’s hotels are still reeling six months into the pandemic with Labor Day weekend here and no end to the misery in sight.

There are 4.3 million fewer hotel industry jobs since February and 40 percent of its employees are still out of work.

The average occupancy rate in New York City hotels and other urban markets is just 38 percent and 50 percent nationally.

In Gotham, while many Americans have scrapped vacation trips, the Broadway Theater District remains closed until January, indoor dining is still banned, and museums and cultural institutions are just beginning to open up on a restricted basis – all big tourist draws.

Only 33 percent of Americans say they have traveled overnight for leisure or vacation since March, and only 38 percent say they are likely to do so by the end of the year.

Moreover, just 16 percent of Americans plan to travel for Labor Day, 25 percent for Thanksgiving, and 29 percent for Christmas.

And get this…only 14 percent of hotel rooms are booked for this weekend, compared to 41 percent a year ago.

Hotel and Lodging Association CEO Chip Rogers said that without a government relief package, there will be a slew of closures.

“While hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago.  Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently,” Rogers said.

“We are incredibly worried about the fall and what the drop in demand will mean for the industry and the millions of employees we have been unable to bring back.  The job loss will be devastating to our industry, our communities, and the overall American economy.  We need urgent, bipartisan action from Congress now.”

“Our industry is in crisis. Thousands of hotels are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come,” said Rogers.

Think of your own communities.  I’m thinking of two local hotels that are clearly struggling royally…missing out on wedding and banquet business, let alone business meetings/travel.  The restaurants contained therein also have to be near shutting down.  It’s just very sad.

Thursday, Hilton Times Square Hotel (NYC) announced in a regulatory filing it was closing, a move that will affect 200 employees.

Separately, the New York Restaurant Association is forecasting a grim future for eateries, with indoor dining still not being allowed, finding that nearly two-thirds of restaurants in the state probably won’t make it through the year, according to a survey the association conducted of more than 1,000 restaurants.

“It is painfully clear that without financial assistance, the restaurant industry in New York state could collapse,” association President Melissa Fleischut said.

55% said they didn’t think they can even make it until November.

--As previously telegraphed, United Airlines says 16,370 employees will be notified of involuntary furlough as early as October 1.  The cuts include 6,920 flight attendants, 2,850 pilots, 2,060 maintenance workers and 1,400 management and administrative employees.

The only thing that would prevent the involuntary layoffs would be an extension of the payroll support program.

--American Airlines Group said it is slashing its flying capacity by 55% in October as it responds to weakened travel demand.

The capacity cut comes after news this month that the airline will furlough or layoff 19,000 employees in October following expiration of the government’s emergency relief program.

Today, White House economic adviser Larry Kudlow said that he thinks the administration will in a matter of weeks unveil aid for U.S. airlines.

“If they need additional assistance, we stand ready to work with them to hammer out additional packages,” Kudlow said in an interview with Bloomberg.

The main lobby for the airlines, Airlines for America, does not expect air travel to return to pre-pandemic levels until 2024, and is hoping for a second round of government aid to help the industry.

I continue to monitor the TSA Checkpoint numbers from the Department of Homeland Security and with two notable exceptions related to the Labor Day holiday, the percentages of daily travelers vs. the comparable figure for 2019 has been stuck in the 25 to 32 percent range.  The airlines expected a faster recovery by this time.

--Meanwhile, United became the first to drop the highly-unpopular domestic change fees, with Delta Air Lines and American then quickly following suit; all part of a push to woo back travelers.  Low-cost rival Southwest Airlines has never charged a change fee for its tickets.

Delta, United and American were already waiving change fees through the end of the year to give travelers more flexibility in an uncertain environment.  The fees represented around 2% to 3% of their total revenues in 2019. Delta collected $830 million in ticket cancellation and change fees last year, American $819 million and United $625 million, according to the Dept. of Transportation.

--Virgin Atlantic is preparing to cut more than 1,000 jobs after seeing a slower-than-expected recovery in international demand for air travel, Sky News reported. 

The latest round of cuts, if confirmed, would mean that Virgin Atlantic’s workforce has almost halved from about 10,000 people before the pandemic.

The company is 51% owned by Richard Branson’s Virgin Group and 49% by Delta Air Lines.

--Brazilian planemaker Embraer SA said on Thursday it is reducing its workforce by 4.5%, or around 900 jobs, as it restructures its business to deal with the Covid-19 pandemic and cancellation of its partnership with Boeing.  In the first half of this year, commercial jet deliveries plunged 75% compared with the same period a year earlier, Embraer said in a statement, hitting the commercial aviation division particularly hard.

--Ford Motor Co. said it is targeting the elimination of 1,400 U.S. salaried jobs by year end as part of its ongoing, multiyear $11 billion restructuring.  The layoffs will be achieved through voluntary buyouts, the automaker said in an email to employees.

--Amtrak is furloughing more than 2,000 workers as a result of the steep decline in travel demand from the coronavirus.  House Transportation Committee chairman Peter DeFazio said the workers were notified this week they would lose their jobs.  In May, Amtrak said it needed a new $1.475 billion bailout and disclosed plans to cut its workforce by up to 20% in the coming budget year.

Ridership and revenue levels are down 95% year-over-year since the pandemic began, Amtrak has said.  Good lord.

--I missed last Friday that MGM Resorts International had announced it was laying off 18,000 furloughed workers in the U.S. amidst the global travel slowdown, about one-fourth of the company’s pre-pandemic workforce of 68,000 U.S. employees.

CEO Bill Hornbuckle said the company is required by federal law to send layoff notices to furloughed workers (from March) who haven’t been recalled after six months.  But MGM still plans to rehire those workers as business demand returns.

“While the immediate future remains uncertain, I truly believe that the challenges we face today are not permanent,” Hornbuckle wrote.  “The fundamentals of our industry, our company and our communities will not change. Concerts, sports and awe-inspiring entertainment remain on our horizon.”

Workers who return before the end of 2021 will retain seniority and immediately resume benefits, the company said. 

On the Las Vegas Strip, where casinos rely on vacationers and convention attendees from around the world, gambling revenue was down 39% in July from the previous year, bringing in about $330 million compared with nearly $543 million a year earlier.

Nevada’s casinos were allowed to reopen June 4 at 50% occupancy per social-distancing requirements.  Two of MGM’s 13 Strip resorts are still closed.  The Mirage just reopened last week.  MGM Resorts reported a 91% drop in revenue for the three-month period that ended June 30, a similar decrease to other operators on the Strip.

--Tesla announced it plans to sell as much as $5 billion of shares, capitalizing on its high-flying price and on the split that made it more accessible to individual investors.

The electric-car maker will sell the shares “from time to time” through an agreement with several banks, according to a regulatory filing.  The company said it plans to use the proceeds to strengthen its balance sheet and for general corporate purposes.

Tesla is raising money while it expands with new factories going up in Germany and Austin, Texas, following the completion of its plant in Shanghai.

But now Tesla is finally facing real competition from established automakers and startups alike.

--Deal talks for TikTok’s U.S. operations hit a snag over the question of whether the app’s core algorithms can be included as part of a deal, according to the Wall Street Journal.

The algorithms, which determine the videos served to users, ‘the secret sauce,’ were considered part of the deal negotiations up until last Friday, when the Chinese government issued new restrictions on the export of artificial-intelligence technology.

It’s unclear whether the order means the algorithms need Chinese government approval for transfer, and if so, whether Beijing would sign off.

TikTok’s parent company, ByteDance Ltd., has said it would comply with the Chinese order, and is looking for clarity from Beijing on how to proceed.

As in this has slowed chances for a quick deal.

Weeks ago when the TikTok talks first emerged, it was assumed the algorithms would be transferred over to the U.S. buyer over the course of up to an entire year…it’s that kind of process.  You also have no deal, period, without them.

Shares in TikTok’s suitors, Microsoft, Walmart and Oracle, fell on the news.

Separately, White House trade adviser Peter Navarro said in an interview that the administration will crack down on more Chinese apps after TikTok and WeChat.

“It is critical that this country not use apps that are made in China,” he said, “or (apps) that can take our data and go to servers in China,” adding that this data will be used to “surveil, monitor and track” Americans.

--Shares in Zoom Video Communications Inc. soared after the video-chat company that has gained popularity during the pandemic reported another big jump in users and raised its financial forecast.

Shares of the company ended Tuesday up 41% at $457.69, giving the company a market value of about $131 billion, greater than that of IBM.  [But then the shares got swept up in the tech bloodbath, finishing the week at $369, after bottoming at $346 this morning.]

Zoom reported a profit of $185.7 million on sales that had increased about fivefold from the year earlier to $663.5 million.

Zoom said it has more than 370,000 customers with more than 10 employees and that the number of its most lucrative customers doubled compared with the year before.  In order to keep up with the surging demand, the company hired 500 employees in the latest quarter.

Zoom said it will generate at least $2.37 billion in revenue for its current fiscal year, up from an expectation earlier this year that it would record at least $1.78 billion in revenue.

--Facebook and Twitter said that the Russian group that interfered in the 2016 presidential election is at it again, using a network of fake accounts and a website set up to look like a left-wing news stie.

The disinformation campaign by the Kremlin-backed group, known as the Internet Research Agency, is the first public evidence that the agency is trying to repeat its efforts from a year ago and push voters away from Joe Biden, to the benefit of Donald Trump.

Intelligence agencies have been warning of this for months, but now Facebook and Twitter, who were slow to react to wide-ranging disinformation campaigns on their services in 2016, are providing the evidence of the meddling, even as the White House downplays Russian interference.

--Investment-banking and trading revenues hit an eight-year high in the first half of 2020, a surge being driven by two factors: the need for cash from pandemic-hit companies and the Federal Reserve flooding the system with money, propping up market prices and encouraging investors to take on risk.

Revenue in these traditional businesses was up 32% in the first half of the year vs. the same period in 2019.

--Macy’s second-quarter sales were ahead of expectation, but still down big, as it swung to a loss, but the drop wasn’t as steep as predicted as the department store operator began turning its attention to the hopefully lucrative fall and holiday shopping season.

Sales in the quarter slowed to $3.56 billion from $5.55 billion a year earlier, with comparable store sales declining about 35%.  Both still awful figures.  Digital sales for the parent of Bloomingdale’s and Bluemercury climbed 53% over the second quarter of 2019.

“We are encouraged by our second quarter performance; however, we continue to approach the back half of the year conservatively,” said CEO Jeff Gennette.  “Our immediate priority is successfully executing Holiday 2020.  We are also focused on laying the groundwork for 2021 and beyond.”

In an investor presentation, Macy’s said its stores “reopened stronger than anticipated” and its luxury segment outpaced expectations.

Some felt Gennette was a bit disingenuous in his remarks

--Campbell Soup reported strong fiscal fourth-quarter earnings on Thursday, boosted by people make more food at home because of the coronavirus pandemic.

But the shares fell as the company said it is difficult to predict how the Covid-driven market for its products will hold up.

Campbell beat on both earnings and net sales, the latter at $2.1 billion, which was 18% higher than last year’s comp quarter, though this was aided by an extra week which fell in the fourth quarter.

Campbell said its snack division, which includes Pepperidge Farm cookies and Goldfish crackers, saw a 7% jump in sales.  It sees a similar increase in overall net sales in the current quarter but offered no guidance beyond that owing to supply chain uncertainties and shifts in consumer behavior.  As in will at-home consumption continue?

--FedEx plans to hire about 70,000 seasonal workers for the holiday season, a 27% increase from last year’s peak, according to various news reports.

--Amazon.com said it will boost its employment ranks by another 10,000 in Washington state, highlighting the boom in its business during the pandemic.

The company is aiming to add the thousands of jobs over the next few years in Bellevue, a city that stands about 10 miles across Lake Washington from Seattle, where Amazon is headquartered.

It was just in February when Amazon said it would create 15,000 jobs in Bellevue, which it calls a “growing, business-friendly community” that boasts a “fantastic talent pool.”

The company in July said second-quarter net sales surged 40% to $88.9 billion from a year earlier.

--China said on Tuesday it had suspended barley imports from Australia’s largest grain exporter, a ruling that threatens to inflame bilateral tensions.  China’s General Administration of Customs said barley shipments from CBH Grain would be halted after pests were found on multiple occasions, the administration said on its official WeChat account.

While Beijing’s ruling did not essentially affect trade after the imposition of more than an 80% tariff on Australian barley earlier this year, it cast a shadow over Australian exports to China.

CBH – a cooperative of farmers – is Australia’s largest grain exporter, regularly selling millions of tons of wheat, barley and canola to Asia and the Middle East.  China had until recently bought as much as 70% of Australia’s barley exports.  So now with that market closed, Australian farmers will be scrambling to find alternative markets.

Tensions were already high between the two nations after Australia alleged China was meddling in its domestic affairs, and then relations worsened further after Prime Minister Scott Morrison called for an independent inquiry into the origins of Covid-19.  So then China imposed anti-dumping and anti-subsidy duties totaling 80% on Australian barley – stopping a $billion dollar trade.

--Canada’s economy gained a net 245,800 jobs in August, mostly full-time, Statistics Canada said today.  The jobless rate edged down to 10.2%.  The service sector added about 218,000, while manufacturing netted 27,600.

--Colombia’s urban jobless rate* more than doubled to 24.7% in July, from 10.3% in the same month of 2019, to give you yet another example of the global scope of the pandemic. The national unemployment rate climbed to 20.2%, the government’s statistics agency announced on Monday.

More than five months of lockdown to curb the spread of the coronavirus ended on Tuesday.

*More than 70% of the workforce in Colombia is in large cities.

--Brazil reported a strong manufacturing PMI despite its severe Covid issues, 64.7 vs. 58.2 in July, though the reading on services was just 49.5.

--The Trump administration took new steps to curb steel imports from Brazil and Mexico, boosting protections for battered U.S. steelmakers and jobs in the election battleground states of Pennsylvania, Ohio and Michigan.

--Carnival Corp. said it would restart two cruise line brands. Costa Cruises is to restart sailing in Italy on Sept. 6, followed by Germany-based AIDA Cruises, which is scheduled to resume on Nov. 1.  The six initial ships will have limited itineraries.

--E-cigarette giant Juul Labs Inc. could cut more than half its workforce, according to the Wall Street Journal, while it weighs exiting more European and Asian markets – further signs of the once high-flying company’s deteriorating fortunes.

Juul aims to reduce its workforce to about 1,000 employees, down from the current 2,200.

A health crisis surrounding vaping that was later linked to faulty cannabis products sent the already embattled Juul into a tailspin last year.  U.S. regulators blamed an epidemic of teen vaping on the company.

--DraftKings Inc. said on Wednesday that basketball legend Michael Jordan has joined the e-sports and gambling company’s board as a special adviser.  Shares of the company jumped more than 13% on the news, with Jordan agreeing to take an equity interest in the company, while providing strategic and creative inputs on areas such as product development and marketing activities.

Separately, DK signed a multi-year deal with the Chicago Cubs in which the baseball team has made the company its official sports betting and daily fantasy sports partner.  The deal includes a plan to pursue a sportsbook at Wrigley Field, with online access available in the surrounding area.

Sports betting is now legal in Illinois, but a retail sportsbook would need the approval of the City of Chicago.

--Brown-Forman reported better-than-expected fiscal first-quarter results as the maker of Jack Daniel’s Tennessee Whiskey weathers the pandemic.

Net sales in the quarter ended July 31 fell to $753 million from $766 million in the prior-year period, far better than forecast, with earnings also beating the Street.

“Despite being faced with significant ongoing challenges, our business performed well during the quarter though much uncertainty remains in the current environment,” said CEO Lawson Whiting, thus no guidance for fiscal 2021.

Underlying sales in the U.S. rose 9% while international sales gained 12%. Emerging markets fell 3%.

Sales of Jack Daniel’s brands rose 3%, driven by a 37% gain in ready-to-drink and ready-to-pour.

Premium bourbons rose 18%, and tequila brands advanced 16%.

--Prince Harry and wife Meghan have signed an exclusive multiyear production deal with Netflix Inc., a major step in their plan to make a living for themselves outside the royal family.

Under the deal, whose value was not disclosed, the couple will produce films and series ranging from children’s shows to scripted content, Netflix said on Wednesday.

“Our focus will be on creating content that informs but also gives hope,” the couple said in a statement.  “As new parents, making inspirational family programming is also important to us.”

Meghan, a former star of the USA Network series “Suits,” has no plans to return to acting under the deal.

The Netflix deal follows a similar pact in 2018 with former President Barack Obama and wife Michelle.

Harry and Meghan also recently signed with the Harry Walker Agency in New York, which serves as an agent for lectures.  The two are expected to speak together and individually on issues such as racial justice, gender equity, the environment and mental health.

I’ll pass.  Harry lost me when he split from the Royal Family.

--According to Nielsen, the final night of the Republican convention, which featured Trump’s 70-minute long acceptance speech, had an average audience of 23.8 million viewers, putting it slightly behind the TV turnout for his Democratic opponent, Joe Biden, who had 24.6 million viewers the week before.

Trump’s total was also well below the 35 million TV viewers who watched him accept his party’s nomination in 2016.  [John McCain had 38.9 million viewers in 2008, Mitt Romney 30.3m in 2012, and George W. Bush 27.6m in 2004.]

Over four nights, the Republican National Convention averaged 19.4 million viewers – down 21% from 2016 – compared to 21.6 million for the Democratic National Convention, which was down 16% from four years ago.

But the party with the larger audience has only won in November seven times out of 15 races going back to 1960.

Fox News, by the way, accounted for 45 percent of the viewership of the RNC across six major news networks, also according to Nielsen.  In 2016, that figure was about 30 percent.

MSNBC accounted for about 30 percent of the DNC viewership across the six networks – including ABC, NBC, CBS and CNN.

Foreign Affairs

Russia: Officials in Germany said that Kremlin critic Alexei Navalny was poisoned with the Soviet-era nerve agent Novichok. 

Citing new lab test results, German government spokesman Steffen Siebert confirmed that “Alexei Navalny was the victim of an attack with a chemical nerve agent in Russia” – which he called “dismaying.”

“The federal government condemns this attack in the strongest possible terms,” Seibert added.  “We hope for a full recovery of Alexei Navalny.”

Navalny fell ill during a flight to Moscow from Siberia on Aug. 20 and after two days in a hospital in the Siberian city of Omsk, was transferred to a hospital in Berlin.

Novichok is the same nerve agent that targeted former Russian spy Sergei Skripal and his daughter in 2018 in the English city of Salisbury.  Both survived.

Berlin’s Charite hospital said on Twitter Wednesday, “Alexei Navalny’s state of health is still serious.  A long period of illness is to be expected.  Long-term consequences from the severe poisoning cannot be ruled out.”

Wednesday, German Chancellor Angela Merkel then reiterated Navalny had been poisoned with the Novichok nerve agent in an attempt to murder him.

“This is disturbing information about the attempted murder through poisoning against a leading Russian opposition figure,” Merkel told a news conference.

Kremlin spokesman Dmitry Peskov then said Moscow rejected any suggestion that Russia had been behind the attack on Navalny and warned other countries against jumping to hasty conclusions.

“There are no grounds to accuse the Russian state. And we are not inclined to accept any accusations in this respect,” Peskov told reporters.  Peskov said there was therefore no reason to discuss sanctions against Moscow.

Merkel has said Germany would consult its NATO allies about how to respond.  She faced growing pressure on Thursday to reconsider the Nord Stream 2 pipeline, which will take gas from Russia to Germany.  Nord Stream 2 is set to double the capacity of the existing Nord Stream 1 pipeline in carrying gas directly from Russia to Germany.  It is more than 90% finished and due to operate from early 2021.

The White House said the use of Novichok was “completely reprehensible,” with the National Security Council saying on Twitter that Washington would work with allies “to hold those in Russia accountable, wherever the evidence leads, and restrict funds for their malign activities.”

President Trump had not said a word on the case until today, as noted above.

Editorial / Washington Post

“When Russian opposition leader Alexei Navalny suddenly fell ill two weeks ago, Russian authorities dismissed his supporters’ charges of poisoning and resisted allowing his transfer to a German hospital for treatment. Eventually, they relented – and now the government of Chancellor Angela Merkel is reporting “unequivocal evidence” that Mr. Navalny was attacked with a chemical nerve agent.  Once again, the regime of Russian President Vladimir Putin has been caught attempting to murder a leading opponent using a weapon banned by international treaty….

“While (Navalny’s) life is not now in danger, (a statement from the Berlin hospital) said, ‘a more prolonged course of the disease should be expected’ and ‘long-term consequences of severe poisoning are not excluded.’

“That, no doubt, will please Mr. Putin, who had pressing reasons to sideline his longtime nemesis. With his poll ratings sagging, Mr. Putin faces persistent demonstrations in the Siberian city of Khabarovsk*, as well as local elections later this month in which Mr. Navalny had been working to defeat ruling-party candidates.  A popular uprising in neighboring Belarus is setting an example for Russians weary of Mr. Putin’s autocratic rule.

“No doubt a part of the Kremlin’s calculations was the small price paid for previous attacks.  The near-murder of Mr. Skripal in the British city of Salisbury led to the expulsion of Russian diplomats from Western capitals, but no more….

“Whether there are more concerted consequences will depend in part on whether President Trump is willing to work with Germany and other allies.  Following the Skripal poisoning, Mr. Trump only reluctantly agreed to join diplomatic expulsions by Britain and the EU.  He still has not confronted Mr. Putin about intelligence reports that Russia paid bounties to the Afghan Taliban for killing U.S. soldiers. Nor has he objected to ongoing Russian efforts to help his reelection campaign by smearing Democratic nominee Joe Biden.

“It’s little wonder Mr. Putin thinks he can get away with another chemical weapons attack.  To all appearances, he has the president of the United States in his pocket.”

*Thousands of people took to the streets on Saturday in Russia’s far eastern city of Khabarovsk to continue their protests against Putin’s handling of a regional political crisis and the suspected poisoning of Navalny, the official confirmation of the poisoning not having been announced as of that date.

“Putin, have some tea,” protesters chanted.

Editorial / Wall Street Journal

“The U.S. has a few options to support Mr. Navalny.  It could invoke the Chemical and Biological Weapons Control and Warfare Elimination Act or the Magnitsky Act to impose financial sanctions on those responsible.  The U.S. and its allies can also expel Russian diplomats as they did after the Skripal poisoning.

“Then there is the matter of Germany’s cognitive dissonance – and Donald Trump’s. Even as she exposes the assassination attempt on Mr. Navalny, Mrs. Merkel is proceeding with the Nord Stream 2 gas pipeline, which would make Germany more dependent on Russian energy.  And Mr. Trump says he wants to bring Vladimir Putin back into the G-7 club.

“Opponents of the Kremlin have a way of ending up poisoned, including opposition leader Vladimir Kara-Murza and defectors Alexander Perepilichny and Alexander Litvinenko. Russians can’t hold their government accountable for these crimes, but the U.S. and its allies can at least not reward the Kremlin by treating Mr. Putin like a normal leader.”

Lastly, prominent Russian blogger Yegor Zhukov was beaten near his Moscow home late Sunday in another attack on a prominent critic of Vladimir Putin.

Zhukov was beaten in the head and face by two thugs waiting near his apartment who escaped on scooters.

The attack comes amid a crackdown by authorities on activists, bloggers and journalists in recent weeks.

Katie Bo Williams / Defense One

“Moscow has been busy.

“In the last week, the U.S. military has intercepted six Russian jets ‘loitering’ off the coast of Alaska, while over the Black Sea, two Russian planes crossed a B-52 bomber’s nose at less than 100 feet.  In Syria, a Russian vehicle sideswiped a U.S. armored vehicle, injuring seven soldiers amid what one U.S. official called a spike in provocative behavior by Russian forces in the country.

“And on Aug. 20, Russia’s opposition leader, Alexei Navalny, was poisoned using the same nerve agent used to sicken former Russian double agent Sergei Skripal and his daughter in England two years ago – an attack believed by Western intelligence officials to have been carried out by Russian agents.

“President Donald Trump has been silent on the sudden spate of provocations by Russia.  Although a National Security Council spokesman called the poisoning ‘completely reprehensible’ in a Wednesday statement, Trump himself hasn’t spoken publicly on the matter since saying ‘we’re looking at it’ the day after Navalny fell ill.

“Among those criticizing the president’s reticence is his most recent former national security advisor, John Bolton.  ‘It’s confirmed Russian opposition leader Alexei Navalny was poisoned with Novichok – the same family of nerve agent used in the 2018 attack on the Skripals in UK,’ Bolton wrote on Twitter.  ‘We need an urgent statement from Pres. Trump demanding a full explanation from the Russians.’

“Trump’s reluctance to publicly condemn provocations by Moscow has become a point of contention in the run-up to the 2020 election.  Democratic presidential candidate Joe Biden on Monday accused Trump of ‘subservience’ to Russian president Vladimir Putin, specifically criticizing the president for failing to raise the issue of reported Russian bounties on U.S. troops in Afghanistan during multiple phone calls with Putin.

“Secretary of State Mike Pompeo reportedly raised the issue with his counterpart in a call earlier this month, but Trump has said publicly that he has not addressed it with Putin, and has at times dismissed the reports as ‘fake news.’

“ ‘That was a phone call to discuss other things, and frankly, that’s an issue that many people said was fake news,’ Trump said in an interview with ‘Axios on HBO’ in July, referring to a recent call with the Russian leader.  ‘If it reached my desk, I would have done something about it.’

“The dynamic recalls Trump’s reaction to the U.S. intelligence community’s conclusions that Russia interfered in the 2016 U.S. election and is working to sway November’s polling as well. The president has consistently and repeatedly taken Russian leader Vladimir Putin’s side in the matter.

“On Wednesday, U.S. Attorney General William Barr continued the Trump administration’s attempt to deflect attention from Russia, telling CNN’s Wolf Blitzer that U.S. intelligence shows that China has been more aggressive in its election meddling.

“One day later, the Department of Homeland Security issued an intelligence bulletin warning of Russian disinformation on mail-in voting….

“Current and former officials say Trump’s personal sensitivity to any suggestion that Russia may have helped him win his office has complicated efforts to hold Moscow accountable for behavior the U.S. government considers objectionable.

“For days after the ramming incident at Dayrick (Syria, noted above) had become public through social media, the Pentagon was silent on the matter.  Finally – and unusually – it was the National Security Council that confirmed the incident in a statement.  Asked why the statement hadn’t come from the Pentagon or U.S. Central Command, the U.S. official pinned it on a fear of the White House’s reaction if the military were to talk about Russian provocations.

“I think they’re just extremely sensitive – they know the White House is extremely sensitive to any criticism of Russia,’ the official said.  ‘Okay, you talk about it.’”

Today, National Security Adviser Robert O’Brien said the United States had conveyed its concerns to Russia over the incident in Dayrick.  “It’s been communicated at the appropriate level.”

Belarus: President Alexander Lukashenko promoted hardline loyalists to top posts in his security apparatus on Thursday in an effort to strengthen his grip on the former Soviet republic after weeks of mass protests and strikes.

“Belarus finds itself confronting an external aggressor one-to-one,” he told the new security chiefs.  But he has provided no evidence that foreign powers are behind the protests.  The opposition has denied this, and NATO has also denied his allegations that it is massing forces near the Belarusian border.

President Vladimir Putin said last week the Kremlin had set up a reserve police force at Lukashenko’s request but it would be deployed only if necessary.

Human rights experts from the United Nations said this week they had received reports of hundreds of cases of torture, beatings and mistreatment of Belarusian protesters by police.  The government has denied abusing detainees and has said its security forces are acting appropriately.

Two former TV anchors were arrested in the capital Minsk on Wednesday night.

Lithuania, Latvia and Estonia imposed travel bans on Lukashenko and 29 other Belarusian officials on Monday, jumping into action to impose sanctions before the rest of the EU.

China: The Pentagon told Congress Tuesday that China’s stockpile of nuclear weapons numbers in the “low 200s,” providing its most precise estimate to date of Beijing’s nuclear capabilities.

While this number is a fraction of what the United States and Russia have deployed, the Pentagon is projecting that China’s nuclear arsenal will at least double in the next decade as Beijing expands and updates its triad of land-based missiles, missile-carrying submarines and bombers.

“China’s nuclear forces appear to be on a trajectory to exceed the size of a ‘minimum deterrent’ as described in the PLA’s own writings as a small quantity of nuclear weapons to strike enemy urban targets,” said the report, using the acronym for the People’s Liberation Army.

“Over the next decade, China’s nuclear warhead stockpile – currently estimated to be in the low 200s – is projected to at least double in size as China expands and modernizes its nuclear forces,” it added.

The U.S. has 1,750 nuclear warheads currently deployed on its long-range and shorter-range systems, while Russia has 1,572 deployed warheads among its stockpile.

China, as I’ve written for years, has long declined to disclose the size of its program.  [Michael R. Gordon and Nancy A. Youssef / Wall Street Journal]

Taiwan’s Defense Ministry released its annual report on China’s military prowess, delivered to parliament, and it laid out scenarios for Chinese actions, including blockades and seizing offshore islands.

It said China’s military continues to dedicate itself to strengthening live fire drills, building its strength for new types of battle and developing emerging technology and weapons.

“But on the operation of tactics and strategy toward Taiwan, it is still restricted by the natural geographic environment of the Taiwan Strait, and its landing equipment and logistics abilities are insufficient,” it added.

“It still does not have the formal combat capability to fully assault Taiwan.”

Separately, an Australian writer Yang Hengjun, detained by Chinese authorities for 18 months, has told family he has refused to make a false confession, as his case appears to move closer to trial.

Yang’s lawyer was on Thursday allowed access to the Beijing detention facility where the 55-year-old writer is being held, for the first time since he was detained in January 2019, friends said.

Yang was formally charged with suspicion of espionage in March this year.  Australia has strongly objected to the indictment.

“I am innocent and will fight to the end,” Yang said in a message to his family. “I will never confess to something I haven’t done,” as told by a friend to Reuters.

Yang, a prominent Chinese blogger, was intercepted by security officials at Guangzhou airport as he arrived on a visit from New York, where he lived.

On Monday, Australia’s foreign ministry revealed a second Australian journalist, the high-profile Chinese state television host Cheng Lei, had been detained by Chinese authorities.

North Korea:  The UN’s International Atomic Energy Agency wrote in a report released Tuesday that nuclear activities in North Korea remain a cause for “serious concern,” and the rogue state continues to enrich uranium, which could be used in an atomic weapon.

The activities by the country are in “clear violation of relevant UN Security Council resolutions,” the report said.

The report also notes that what was once the heart of the country’s nuclear program, the Yongbyon site, has likely been shut down since 2018 – and that no plutonium has been produced there in the past year.

The agency has not been allowed in the country since the nation expelled it in 2009, but it has been analyzing satellite imagery and using open source information to track North Korea’s nuclear program.

Still, the information it’s able to get about the program is “declining” because the agency’s been locked out of the hermit kingdom.

Lebanon: A French roadmap for Lebanon’s next government calls for the immediate resumption of talks with the International Monetary Fund to fix the shattered economy and swift moves to fight graft and introduce other reforms that have been delayed for years.

French President Emmanuel Macron on a visit to Beirut delivered a stark message to Lebanon’s leaders: deliver on reforms by the end of October or face sanctions.

Macron, whose pressure prompted Lebanon’s bickering leaders to agree on a new prime minister, has spearheaded international efforts to set Lebanon on a new course after decades of corrupt rule led to its deepest crisis since the 1975-1990 civil war.

Lebanon’s banks are paralyzed, its currency has crashed and sectarian tensions are rising.  On top of that you had the huge blast at the port that killed more than 190, injured 6,000, and displaced 300,000.  Damage is now estimated by the World Bank to be up to $4.6 billion.

“The disaster will not only exacerbate the contraction in economic activity, but also worsen poverty rates, which were already at 45 percent of the population just prior to the explosion,” the World Bank said in a statement on Monday.  “Implementation of a credible reform agenda will be key to accessing international development assistance and to unlock external and private sector sources of financing.”

Meanwhile, Mustapha Adib, the former ambassador to Germany, was designated prime minister hours before Macron arrived.  Before taking up the post, he must secure approval for his cabinet, which usually takes month.  Macron set a two-week deadline.  “The challenges are overwhelming and cannot bear delay,” Adib said on Wednesday.

Macron added that international aid would be withheld if Lebanon’s leaders failed to follow its own “road map” to comprehensive reform of the system.

“I will not give a blank check,” he said.  “Today is not about going back to business as usual.”

Macron’s trip on Tuesday reflects Europe’s vested interests in a stable Lebanon, which was a former French colony.

Separately, Lebanon’s army said on Thursday it had found 4.35 tons of ammonium nitrate near the entrance to Beirut port, the site of the blast last month, caused by 2,750 tons of the material stored in unsafe conditions. The public remains anxious that more hazardous materials are being stored badly, putting them at risk.

Earlier, President Michel Aoun ordered repairs to be made to an old refueling infrastructure at Beirut airport and called for an investigation into a report that thousands of liters of fuel had leaked from the system.

Iran: Supreme Leader Ayatollah Ali Khamenei said in a speech on Tuesday that the UAE has betrayed the Islamic world and the Palestinians by reaching a deal toward normalizing ties with Israel.

“Of course, the UAE’s betrayal will not last long, but this stigma will always be remembered.  They allowed the Zionist regime to enter the region and forgot Palestine,” Khamenei said.  “The Emiratis will be disgraced forever…I hope they wake up and compensate for what they did.”

Israel and the UAE expect economic benefits from the deal, the first such accommodation between an Arab country and Israel in more than 20 years, which was forged largely through fear of Iran.  But Palestinian leaders believe it further erodes their struggle for an independent state.

Random Musings

--Presidential tracking polls….

Gallup:  42% approve of President Trump’s job performance, 55% disapprove; 90% of Republicans approve, 39% of independents (July 30-Aug. 12).  We will receive an important (telling) update next week.
Rasmussen: 52% approve, 48% disapprove (Sept. 4). 46/52 the week before; 51/47 the week before that.

--A new USA TODAY/Suffolk University national poll has Joe Biden leading President Trump 50%-43%, down from a 12-point edge Biden held in June.

As noted by USA TODAY’s Susan Page and Sarah Elbeshbishi, “As Labor Day looms, launching the campaign’s final sprint, the survey finds significant skepticism about whether the election itself can be trusted.  If their candidate loses, one in four voters say they aren’t prepared to accept the outcome as fair and accurate – a signal of potential trouble ahead for a nation already engulfed in a deadly pandemic and riven over issues of racial justice.”

As I noted above, this topic is highly depressing.

In all, 28% of Biden’s supporters say they aren’t prepared to accept a Trump victory as fairly won; 19% of Trump’s supporters say they aren’t prepared to accept a Biden victory as legitimate.

An overwhelming 83% of Republicans say they are at least somewhat concerned that mail-in voting will lead to voter fraud; 62% are very concerned.

Only a third of Democrats are concerned about mail-in voting being open to fraud.

Republicans are more than twice as likely as Democrats to say they’ll vote in person and on Election Day, 56% compared with 26%.  Democrats are more than twice as likely as Republicans to plan to vote absentee or by mail, 47% compared with 21%.

--A USC (Southern Cal) Dornsife Daybreak Poll, post conventions, has Joe Biden with an 11-point lead, 52% to 41% as of Monday.  At least in this survey, the violence in places like Portland, Ore., and Kenosha, does not seem to have had any influence.

A CNN Poll of Polls gives Biden a 51-43 advantage nationally.

--But while national polls are one thing, the race is decided in the battleground states and a Fox News survey of three of them showed Joe Biden leading President Trump in all three, among likely voters.

Arizona: Biden 49-40.
North Carolina: Biden 50-46.
Wisconsin: Biden 50-42.

A new Monmouth University poll of registered voters in Pennsylvania had Joe Biden holding a 4-point lead over Trump, 49-45, which is down from a 10-point Biden lead just over six weeks ago, due to declining support for the challenger among men, voters under age 50, and voters in key swing counties.

--According to an ABC News/Ipsos post-convention poll, most Americans (62%) view the incident with Jacob Blake, which left him paralyzed from the waist down, as a sign of broader problems in the treatment of African Americans by police. But that number is not as stark as the 74% who said the same in the wake of the killing of George Floyd.

The downward trend is driven by a decline across ideological and racial groups, but most sharply among Republicans and white Americans. The last time this question was posed was in early June, when 55% of Republicans and 70% of whites said the fatal incident involving Floyd was a sign of a broader problematic pattern.

Now, only 27% of Republicans and 52% of white say the same; big decreases in both.

Only 31% of the country has a favorable view of the president, while Biden’s favorability remains higher than his unfavorability, 46% to 40%.

Vice President Mike Pence is viewed positively by only 31%, while nearly half of Americans (49%) have an unfavorable view of him. 

Biden’s vice presidential nominee, Sen. Kamala Harris, is steadily rising in her favorables, with 43% giving her strong marks in this poll, compared to 35% right before the Democratic convention.  34% have a negative view of Harris.

--Joe Biden accused Donald Trump of being a “weak” and “toxic” leader who has “fomented” violence in the country.  Speaking in Pittsburgh, Biden said the U.S. was facing multiple crises, which “under Donald Trump, keep multiplying.”

In his speech in Pittsburgh on Monday, Mr. Biden said the president “long ago forfeited any moral leadership in this country.”

“He can’t stop the violence – because for years he has fomented it,” he told supporters, adding: “We need justice in America. And we need safety in America.  We are facing multiple crises – crises that, under Donald Trump, keep multiplying.”

“Does anyone believe there will be less violence in America if Donald Trump is re-elected?” he asked.

Biden did say: “Rioting is not protesting.  Looting is not protesting.  Setting fires is not protesting.  It’s lawlessness, plain and simple, and those who do it should be prosecuted.”

Trump, after Biden’s speech, accused the former vice president of “blaming the police” for protests and violence in the country.

“Just watched what Biden had to say,” he wrote on Twitter.  “To me, he’s blaming the Police far more than he’s blaming the Rioters, Anarchists, Agitators, and Looters, which he could never blame or he would lose the Radical Left Bernie [Sanders] support!”

In a tweet earlier on Monday, Trump said “Radical Left Mayors & Governors of Cities where this crazy violence is taking place have lost control of their ‘Movement.’”

Biden ridiculed Mr. Trump for linking him to the violence, asking in his speech on Monday: “Do I look like a radical socialist with a soft spot for rioters?  Really?”

Biden called Trump “an incumbent president who sows chaos rather than provides order” and a “toxic presence on our nation…poisoning our very democracy.”

Editorial / Wall Street Journal

“Later (in Biden’s Pittsburgh speech) he again denounced ‘the right-wing militias and white supremacists and vigilantes with assault weapons – often better armed than the police, often in the middle of the violence – at these protests.’

“Fair enough, but for a man of the left, denouncing right-wing militias is easy.  Surely Mr. Biden knows that the protests and riots since Memorial Day are overwhelmingly led by Black Lives Matter and Antifa.  Mr. Biden didn’t mention those groups in his prepared remarks, and he never used the worlds ‘left-wing’ to describe those who are burning businesses and attacking police precincts.  Mr. Biden conflated the two sides, though leftist militants are dominating urban streets.

“Mr. Biden spent most of his speech attacking Mr. Trump for stoking division, and sometimes the President has.  But the concern many Americans have about Mr. Biden is that he won’t be strong enough to take on the radical left.  On that point his speech wasn’t reassuring.”

--The three presidential debates are set.  Fox News Sunday anchor Chris Wallace will host the first one, Sept. 29.  C-SPAN’s Steve Scully hosts the second, a town-hall style debate, Oct. 15.  And NBC’s Kristen Welker will host the final debate, Oct. 22.

The sole vice-presidential debate will he held on Oct. 7 and moderated by USA TODAY’s Susan Page.

--A Kennedy had won in Massachusetts all 26 times it was on the ballot, until this week, when four-term Congressman Joseph Kennedy III was defeated in his primary battle to become senator by incumbent Sen. Ed Markey.  The margin was substantial, 56-44 percent.

Kennedy was supported by House Speaker Nancy Pelosi (who said she always supports her House members in such a race).

But 74-year-old Markey is a political veteran who co-authored the Green New Deal with Congresswoman Alexandria Ocasio-Cortez, AOC strongly supporting him.

“Our movement is fueled by young people who are not afraid to raise their voices or make enemies,” Markey wrote on Twitter after Tuesday’s primary.  “Tonight’s victory is a tribute to those young people and to their vision.”

I never understood why the 39-year-old Kennedy thought it was time to rush things.  He should have just waited six years for Markey to retire, while building up his gravitas.  He’d still just be 45.  Dumb, dumb, dumb. 

--Gallup has been examining relations between White and Black Americans since 2001 and they have been souring since 2018 to the most negative of any year in Gallup’s tracking.  The majority of U.S. adults say relations between White and Black Americans are very (24%) or somewhat bad (31%), while less than half call them very (7%) or somewhat (37%) good.

From 2001 through 2013, most Americans were upbeat about White-Black relations, with the percentage calling them good to any degree ranging from 63% to 72%.  The sharp decline in positive perceptions to 47% in 2015 followed numerous high-profile incidents in the prior year of unarmed Black citizens being killed by White police officers.

--Michael R. Bloomberg announced on Thursday that his philanthropic foundation would make a $100 million donation to four historically Black medical schools, in an effort to improve the health and wealth of Black communities, with an immediate goal of easing the financial burden on about 800 medical-students, who will each receive grants of up to $100,000.

The donations will be made to Charles R. Drew University of Science and Medicine, in Los Angeles; Howard University College of Medicine, in Washington; Meharry Medical College, in Nashville; and Morehouse School of Medicine, in Atlanta.

There is a broader aim of increasing the number of Black doctors in the United States.

“By increasing the number of Black doctors, we hope the gift will help to save more Black lives and reduce the health problems that limit economic opportunity in Black communities,” Bloomberg told the New York Times.

--Law enforcement agents shot and killed an Antifa supporter on Thursday as they moved to arrest him in the fatal shooting of a right-wing activist who was part of a pro-Trump caravan in Portland, Oregon.  The suspect was shot by officers from a federally led fugitive task force during an encounter in Lacey, Washington, about 120 miles from Portland.  Officers at the scene said Michael Forest Reinoehl, 48, was armed.

--After six awful months, nearly half of New Yorkers say that the Big Apple is heading in the wrong direction, according to a new survey from the Manhattan Institute; 46 percent saying it’s heading the right way, while 42% say it’s off on the wrong track. 

22% surveyed named the city’s economy as their biggest worry, closely followed by 21% who said they were worried most about public safety.

48% of Manhattanites said they’re happy in their current neighborhood when asked where they’d live if they could live anywhere.  Another 14% said they would pick another spot in the city.

But just 23% of respondents in The Bronx said they were happy in their current neighborhood.

Only 45% approve of the job Mayor de Blasio is doing, 46% disapprove.

For those of you not from the region, understand for liberal Gotham, these numbers are terrible for de Blasio.  Gov. Cuomo, by comparison, receives a 73% approval rating from the same respondents.

53% of New Yorkers approve of the Police Department with 40% disapproving.

--Related to the above, the NYPD reported there were 53 murders in August in Gotham, versus 36 the same month in 2019.  Shootings surged 166% with 242 reported last month.

Murders were up 34% for the year, with 291 reported between Jan. 1 and Aug. 31, compared with 217 in the same period last year.

--What an awful accident at sea this week.  A cargo ship, the Gulf Livestock 1, capsized in the East China Sea amid strong winds and heavy seas whipped up by Typhoon Maysak.  A third crewman was found today by the Japanese coastguard, but 40 are missing and presumed dead at this point.

But what is also awful is there were 6,000 cattle on board! 

There are reports from over the past two years that the ship may have had some mechanical defects.

--Finally, a hero from my youth, New York Mets pitcher and Hall of Famer, Tom Seaver, died at the age of 75 after a long illness.  I will have a ton on him in my next Bar Chat column, but he gave us Mets fans (and later Reds and White Sox faithful) so much joy, including one of the best baseball stories of all time, the Miracle Mets of 1969.  Seaver, then just 24, was the undeniable leader, along with legendary manager and fellow Marine, Gil Hodges.  Seaver captured the hearts of New York like few others have.

RIP, Tom Terrific…The Franchise.

---

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

God bless America.

---

Gold: $1940
Oil: $39.51

Returns for the week 8/31-9/4

Dow Jones  -1.8%  [28133]
S&P 500  -2.3%  [3426]
S&P MidCap  -2.5%
Russell 2000  -2.7%
Nasdaq  -3.3%  [11313]

Returns for the period 1/1/20-9/4/20

Dow Jones  -1.4%
S&P 500  +6.1%
S&P MidCap  -8.0%
Russell 2000  -8.0%
Nasdaq  +26.1%

Bulls 61.5
Bears
16.4….prior two weeks the splits were 59.2/16.5, and last week’s 60.0/16.2, which was unavailable at the time I posted.  Reminder, this is a contrarian indicator and the 60 level recorded last week was a true warning sign…at least historically that has been the case.  The current 61.5, which reflects opinions of newsletter types, would have been their opinions largely published by this past Monday.  At least for one week, the indicator worked.

Hang in there.  Mask up…wash your hands.

Happy Labor Day.

Brian Trumbore



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Week in Review

09/05/2020

For the week 8/31-9/4

[Posted 10:30 PM ET, Friday]

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

Edition 1,116

Sixty days to go before the election.  Can we all make it?  I’m not sure I can.

I’m not going to comment much on The Atlantic’s story by one of the real good reporters in the business, Jeffrey Goldberg, that on multiple occasions, President Trump made disparaging remarks about members of the U.S. military who have been captured or killed, including referring to the American war dead at the Aisne-Marne American Cemetery in France in 2018 as “losers” and “suckers.”

As of tonight, the Associated Press and Fox News are among those beginning to confirm some of the remarks attributed to the president, including the cemetery comments.

I prefer to ‘wait 24 hours’ on such matters, but if true this is an important story, though hardly a surprise, coming from a man who this week, in an interview with Fox News’ Laura Ingraham, said of the Jacob Blake shooting, “They [the officers] choke, just like in a golf tournament, they miss a 3-foot putt.”

Ingraham tried to save her leader, quickly interrupting, saying: “You’re not comparing it to golf.  Because of course that’s what the media would say…”

And Trump reiterated: “I’m saying people choke.”

He had the chance to walk it back and left the golf analogy hanging out there.

No one is surprised after four years at anything the president says.  But at what time does it hurt him?  Is it really on Nov. 3rd?

The president does have the economy going for him these days…at least signs of progress in the recovery, and the economic timetable can be a big help.  Yes, third-quarter GDP is announced Oct. 29 and it’s going to be big, anywhere from 20 to 30 percent (the Atlanta Fed’s GDPNow barometer currently at 29.6%).  And he’s going to get a big break in that the October jobs report doesn’t come out until days after the election.  I’ll explain next week why this is good for him, but for now, understand that today’s jobs numbers, while solid, remain highly deceiving, hiding the amazing disconnect between the two Americas…the haves and have nots.

The pandemic devasted huge sectors of our economy, namely retail, restaurants, and leisure…sectors permanently scarred.  By one calculation, leisure and hospitality (which I get into in some detail below) is still down 2.5 million jobs since February.  Others say the figure is much higher.  Professional and business services is still down 1.5 million, retail 655,000.  So, yes, we’re making progress, but it’s hiding some truly depressing stories.

The thing is the disconnect won’t be fully exposed until the fourth quarter.

One other item before I get to today’s main thought.  This afternoon President Trump had a brief presser and he was asked about the poisoning of Alexei Navalny, which I cover below.

True to form, Trump said, “We will look at it very seriously…no one’s been tougher on Russia than I have… It’s interesting everyone is already mentioning Russia…things China is doing are far worse… I get along with everyone… I get along with Putin… I would be very angry if that were the case [that Navalny was poisoned.]”

Of course the Germans already confirmed Navalny was poisoned!  Trump doesn’t need to “look at it further.”  He’ll do all he can to ignore it.

But for now, this was a week filled with talk about how chaotic Election Day may indeed be as Democrats’ mail-in ballots are counted largely after the initial election returns come in that evening, and how Trump could easily be winning, only to have the margin shrink, perhaps over days, and maybe even weeks, while everything is certified.  As noted in the following, this isn’t 2000.  We are a much different nation than twenty years ago.  And it isn’t for the better.

To wit:

Editorial / The Economist

“Labor Day marks the beginning of the home stretch in a presidential election. This one threatens to be ugly.  The president’s supporters are clashing with Black Lives Matter protesters in Portland, Oregon. Donald Trump flew to Kenosha, Wisconsin, for a photo-op in front of burned-out buildings, a week after police shot and paralyzed an unarmed African-American man and one of the president’s supporters shot and killed two demonstrators, possibly in self-defense.  Having adopted a strategy built around profiting from fears about unrest, the president has an interest in stoking it.  Many Americans worry that November could herald not a smooth exercise of democracy but violent discord and a constitutional crisis.

“Is this all hyperbole?  America has had violent, contested elections in the past.  In 1968 one of the candidates, Bobby Kennedy, was assassinated.  In 1912 Teddy Roosevelt was shot in the chest while making a speech in Wisconsin.  (He finished the speech before heading to a hospital, and survived).  Historians are still arguing about who really won the election of 1876.  Yet the country has always managed to gain the consent of the losers in its presidential elections – even in the midst of the Civil War.  That long unbroken streak suggests that doomsayers need to keep things in proportion. However, there is a real risk that things could go wrong in November.

“To ensure the peaceful handover of power, democracies need the losing candidates and most of their followers to admit defeat.  A clear result on polling day helps a lot: the losers may hate it, but they accept it and start preparing for the next election. When the result is unclear, a backup system is needed.  Contested election results are rare in mature Western democracies, but they happen.  In 2006 Silvio Berlusconi narrowly lost an election in Italy and claimed, without evidence, that there had been widespread fraud.  The country’s Supreme Court ruled in favor of his opponent, and Mr. Berlusconi grudgingly surrendered.  In 2000 America’s presidential election was settled in the Supreme Court after contested recounts in Florida.  In both cases, decrees from judges were just about enough to end the squabbling and let the country move on.

“In the case of a landslide win for Mr. Trump or Joe Biden, about half of America will be miserable.  Many Democrats view Mr. Trump as a threat to democracy itself.  If he wins again millions of them will be distraught. Among Republicans, by contrast, Mr. Trump still enjoys an 87% approval rating.  If he loses, many will grouse that the other side cheated. But that need not stop a smooth transfer of power if the margin of victory is big enough. If Mr. Trump were to lose by eight points, as polls currently suggest he will, there will be no way to challenge the result plausibly – though he may try anyway, possibly fomenting further unrest.

“If the election is much closer, things could get even uglier.  America is unusual in the degree of power it gives to Republican and Democratic partisans to administer elections.  Decisions over who is removed from lists of eligible voters when they are updated, the design of ballot papers, where polling stations are situated, whether early voting is allowed and how many people have to witness a postal vote – things which in other mature democracies are in the hands of non-partisan commissions – are all taken by people with a D or an R by their name.  If the election is close then all this will be litigated over, and ultimately end up in courts presided over by judges who have also been appointed by Republican or Democratic governors and presidents.

“As if that were not worrying enough, Covid-19 could add to the legal slugfest….

“If the election is close and there are delays in counting ballots on election night, it could well appear that Mr. Trump is winning in some key states.  He might then claim victory before the results were in, as he did in Florida’s mid-terms.  As more postal votes are counted, the result could then shift in Mr. Biden’s favor.  America would have two candidates claiming victory.  Electoral cases in multiple states might have to be heard in the courts.  Protests would surely erupt, some of them armed.  The president might call out the national guard, as he threatened to do this summer, or send federal agents into Democratic cities to police restive crowds, as happened in Portland.  At this distance, it is easy to forget quite how wrenching a disputed presidential election was in 2000.  And that dispute took place at a time of maximum American self-confidence, before 9/11, before the rise of China, before elections were fought on social media, and when the choice was between two men who would be considered moderate centrists by current standards.

“Now imagine something like the Florida recount taking place in several states, after an epidemic has killed 200,000 Americans, and at a moment when the incumbent is viewed as both illegitimate and odious by a very large number of voters, while on the other side millions are convinced, regardless of any evidence, that their man would have won clearly but for widespread electoral fraud….

“There is so much riding on this election – for America and for the rest of the world – that state officials must do everything they can to make sure it goes as smoothly as possible, remembering that they owe loyalty to the constitution, not their party. Even a landslide election win will be fraught. In the event of a narrow one, America might not be able to generate losers’ consent.  And without that, democracies are in big trouble.”

Covid-19 death tolls, as of tonight….

World…878,710
USA…192,111
Brazil…125,584
India…69,635
Mexico…66,851
UK…41,537
Italy…35,518
France…30,724
Spain…29,418
Peru…29,405
Iran…22,044

Source: worldometers.info

U.S. daily death tolls…Sun. 369; Mon. 512; Tues. 1,164; Wed. 1,090; Thurs. 1,094; Fri. 1,033.

A new long-term forecast from the widely-followed Institute for Health Metrics and Evaluation at the University of Washington’s School of Medicine, Covid-19 deaths could rise to 410,451 by the end of 2020.  In a worst-case scenario, there could be 620,029 fatalities, according to the estimates.

President Trump said this afternoon we are “rounding the corner” on the virus.  This is the same man who in February said, “We have 15 (cases), probably going down to close to zero.”

As alluded to above, we have to suppress the case count down to below 20,000 a day, at the very least.  Today’s was over 52,000, the highest in weeks.

“People in the Northern Hemisphere must be especially vigilant as winter approaches, since the coronavirus, like pneumonia, will be more prevalent in cold climates,” Christopher Murray, IHME’s director, said in the report.

The IHME also points out the decline in mask use from a peak in early August, “including in some states such as Illinois and Iowa with increasing case numbers.”

Meanwhile, in my now regular look at six European nations with a combined population similar to the U.S. (Germany, France, Spain, Italy, UK and Belgium…336.3 million vs. 330 million here) that  we started five weeks ago, selecting Wednesday, where there is no ‘weekend noise’ in reporting the data, back then the U.S. had 55,148 new cases and 1,319 deaths vs. 7,281 and 100 for the euro six.

But Europe is struggling again and this past Wed., those six nations combined had 20,048 new cases and 97 deaths.  The U.S. had 41,211 and 1,090.  Still a big difference, but Europe’s spike should not be giving President Trump any joy, though he treats it as such.  Europe was largely reopening before we were, after shutting down before us.  This is where we are headed…back up…if we aren’t careful.

Today, France hit a new high for cases, as in more than any of its single darkest days in March and April, nearly 9,000.

Covid Bytes

--Cheap, widely available steroid drugs reduced the number of deaths in the sickest patients with Covid, according to a trio of newly published clinical trials.

The World Health Organization, citing evidence from these trials and similar ones, announced Wednesday it strongly recommends doctors use the medications to combat severe or critical forms of disease caused by coronavirus infections.

“Corticosteroids are the only treatment that has been conclusively demonstrated to reduce mortality in patients with Covid-19,” said Jonathan Sterne, an author of the meta-analysis and an expert in medical statistics at Britain’s University of Bristol.

Dexamethasone was the first medication shown to increase the odds of survival in patients with severe Covid-19 when initial outcomes from a British clinical trial, named Recovery, were published in June.

This is very good news.

--But last weekend, Dr. Stephen Hahn, the head of the Food and Drug Administration, told the Financial Times that he is willing to fast-track a Covid-19 vaccine as quickly as possible.  Hahn said his agency was prepared to authorize a vaccine before Phrase Three clinical trials were complete, as long as officials are convinced that the benefits outweigh the risks.

Without providing evidence, a week earlier, President Trump had accused members of a so-called “deep state” working within the FDA of complicating efforts to test Covid-19 vaccines in order to delay results until after the Nov. 3 presidential election.

A day later, the FDA gave “emergency use authorization” of a coronavirus treatment that uses blood plasma from recovered patients.

[Many major hospitals have said they may opt to ignore the EUA in favor of dedicating their assets to a gold-standard clinical trial that would settle the issue of the science behind convalescent plasma once and for all.]

Hahn later said that any decisions on vaccines will not be made because of political pressure.

“This is going to be a science, medicine, data decision. This is not going to be a political decision.”

I doubt that.

--Countries such as Ukraine, Israel and Indonesia this week hit new highs in cases and/or deaths, which should be worrisome to all.  Romania had its highest single death toll and daily cases are at highs.

--India seemingly hits a new high in cases daily, ditto deaths, if you exclude a single day in June that was an anomaly.

--Concern has been rising in Germany that anti-coronavirus restrictions were being hijacked by the far-right and then last Saturday, rightwing radicals waving nationalist flags* broke through police barriers to storm the Reichstag building, the home of the country’s parliament.

*The black-white-red flag of the German Reich, a symbol closely associated with the far-right.

Politicians reacted furiously, with the leader of the governing CDU party, Annegret Kramp-Karrenbauer, saying the public anxiety about the clampdown had been “misused for Nazi propaganda.”  Frank-Walter Steinmeier, the German president, called the Reichstag incident an “intolerable attack on our democracy.”

The movement’s success, which has seen similar demonstrations across Europe, is rooted in its ability to attract people from across the political spectrum.  Protesters include virus-deniers, conspiracy theorists and “anti-vaxxers” who oppose immunizations, but also ordinary people who view the anti-Covid-19 measures as an affront to democracy.

Some say Germany has been a victim of its own success in containing the pandemic. The relatively low number of deaths has stoked suspicions in some sectors of society that the virus is less dangerous than the authorities claim it is, and the anti-corona measures are unnecessary.

But according to the “Politbarometer” poll, 60 percent of Germans approve of the current measures, while 28 percent think they should be toughened up. Only ten percent say they are “exaggerated.”

--Former Italian Prime Minister Silvio Berlusconi tested positive for coronavirus, the staff of the 83-year-old media tycoon said on Wednesday, and then he was hospitalized a day later.  Berlusconi had recently returned from a holiday in Sardinia, which saw a sharp increase in Covid cases in August as tourists from all over the country descended on the Mediterranean island.

--Dwayne “The Rock” Johnson on Wednesday revealed that he and his family recently battled the coronavirus, describing the ordeal as a “kick in the gut” – as he expressed gratitude that they’ve all since come out on the other side.

The actor, 48, said his wife, 35, and their daughters, 4 and 2, were all sick for the last three weeks but are now feeling better.

“This has been one of the most challenging and difficult things we have ever had to endure as a family,” Johnson said in a video.

They contracted the virus following a visit with family friends, who didn’t know they were infected and then passed it on to Johnson and his family.

--Editorial / Washington Post

President Trump’s disastrous response to the coronavirus pandemic is veering toward another wildly irresponsible turn. After first saying the virus would go away, then failing to properly boost the supply chains, then bungling the testing scale-up, then walking away and turning the burdens over to governors, then advocating a reopening in May that triggered a new virus firestorm, Mr. Trump has been asking questions about the strategy of relying on natural ‘herd immunity.’  This is another way of taking a hands-off approach, protecting the most vulnerable while allowing the virus to spread until there is enough natural immunity in the population to block transmission.

“Mr. Trump should ask very hard questions about this.  An analysis by The Post showed that in the United States, with a population of 328 million, reaching a 65 percent threshold for herd immunity could lead to 2.13 million deaths.  This was the pandemic approach in Sweden, and it did not turn out well.

“In response to The Post’s report about these discussions, Mr. Trump’s new pandemic adviser, Scott Atlas, issued a statement through the White House denying that the president has a policy of achieving herd immunity.  However, Dr. Atlas, a neuroradiologist and fellow at the Hoover Institution at Stanford University, has been campaigning for more schools to open in-person classrooms, playing down testing and criticizing lockdowns.

“Dr. Atlas has asserted that young people have little or no risk.  ‘When younger, healthier people get the disease, they don’t have a problem with the disease,’ he said in July.  ‘These people getting the infection is really not a problem, and in fact, as we said months ago, when you isolate everyone, including all the healthy people, you’re prolonging the problem because you’re preventing population immunity.  Low-risk groups getting the infection is not a problem.’

“It is true that children are less likely to get severe cases, and mortality is low, but to dismiss the dangers as ‘not a problem’ is reckless disregard for the adults in a society who are constantly mingling with young people.  Dr. Atlas should take note of outbreaks spreading across U.S. college campuses; separately, the latest data from the American Academy of Pediatrics shows a 17 percent jump in child cases over two weeks in August.  Dr. Atlas has also suggested that asymptomatic people should not be tested. This is another reckless idea; public health experts say that people without symptoms can still transmit the virus and testing should be more widespread, not less….

“The economic and psychic toll is undeniable. But until a vaccine or drug arrives, there is no magic wand to make the virus disappear.  Everyone must understand the virus is relentless, opportunistic and, for 181,000 Americans, so far, a real killer.”

--Editorial / Wall Street Journal

We hate to be the bearer of good news, but here goes: The so-called second virus wave is receding and has been far less deadly than the first in the spring thanks to better therapies and government preparation. Nobody is suggesting we should now let it rip, but the progress should give Americans more confidence that schools and businesses can reopen safely.

“Most states experienced flare-ups of varying degrees this summer as people gathered and traveled more. But outbreaks were worse in the South and West, for reasons that deserve more study but could include high rates of co-morbidities and more multigenerational households. Some U.S. nationals and migrant workers also brought the virus from Mexico.

“But the U.S. seven-day rolling average of new cases has fallen by about 40% from its peak on July 25.  Hospitalizations and deaths in hot spots peaked at about the same time in apparent contradiction to epidemiological models that have predicted two- to three-week lags between cases, hospitalizations and deaths.

“Hospitalizations are down by 62% in Texas, 60% in Florida, 48% in Utah, 45% in California, and 44% in Louisiana from their peaks, which all occurred between July 21 and 24.  Arizona’s hospitalizations…have fallen 78% since topping out July 12.

“Arizona has made so much progress that New York Gov. Andrew Cuomo removed it from his quarantine list last week.  Notably, hospitalizations have been falling at about the same rate in Texas, Florida and Arizona as in the Northeast this spring.  A second shutdown wasn’t needed to crush these outbreaks….

“The best news is that the virus is killing fewer Americans than it did during the spring.  Arizona, Florida and New York City have all recorded about the same number of cases per capita.  New York City’s per capita death rate is about 5.6 times higher than Florida’s and four times higher than Arizona’s….

“Covid cases have been rising in some Midwest states, but the flare-ups so far are well below the spring Northeast debacle or the surge in the South and West.  Flare-ups are inevitable until a vaccine is widely available, especially in places where there have been few cases.  Nobody is suggesting the U.S. has achieved herd immunity and should now declare victory.  Americans will have to behave cautiously for many more months, but it’s still worth taking stock of progress.

“More and faster testing such as the low-cost rapid antigen test by Abbott Laboratories that the Food and Drug Administration approved last week will allow more schools and workplaces to reopen. The policy goal should be to mitigate the virus’ damage while allowing Americans to return to some semblance of normalcy.”

Trump World

--Wednesday in Wilmington, N.C., President Trump urged residents of the state to vote twice in the Nov. 3 election, once by mail and once in person, openly urging an act of voter fraud even as he has decried mail-in ballots.

“Let them send it in and let them go vote,” Trump said in an interview with WECT-TV in Wilmington.  “And if the system is as good as they say it is then obviously they won’t be able to vote” in person.

Voting more than once in an election is illegal and in some states, including North Carolina, it is a felony not only to vote more than once but also to induce another to do so. 

Trump campaign official Tim Murtaugh told NBC News on Wednesday the president was encouraging people to vote early by mail “then show up in person at the polls or the local registrar to verify that their vote has already been counted.”

But the state’s Attorney General Josh Stein, a Democrat, responded on Twitter, writing that Trump had “outrageously encouraged” North Carolinians “to break the law in order to help him sow chaos in our election.”

Stein wrote: “Make sure you vote, but do NOT vote twice!  I will do everything in my power to make sure the will of the people is upheld in November.”

White House spokeswoman Kayleigh McEnany told Fox News on Thursday, “The president is not suggesting anyone do anything unlawful.  What he said very clearly there is make sure your vote is tabulated and if it is not, then vote.”

So Thursday, the president then tweeted:

“Based on the massive number of Unsolicited & Solicited Ballots that will be sent to potential Voters for the upcoming 2020 Election, & in order for you to MAKE SURE YOUR VOTE COUNTS & IS COUNTED, SIGN & MAIL IN your Ballot as EARLY as possible.  On Election Day, or Early Voting…

“…go to your Polling Place to see whether or not your Mail in Vote has been Tabulated (Counted).  If it has you will not be able to Vote & the Mail In System worked properly.  If it has not been Counted, VOTE (which is a citizen’s right to do).  If your Mail In Ballot arrives….

“….after you VOTE, which it should not, that Ballot will not be used or counted in that your vote has already been cast & tabulated.  YOU ARE NOW ASSURED THAT YOUR PRECIOUS VOTE HAS BEEN COUNTED, it hasn’t been ‘lost, or thrown out, or in any way destroyed.’  GOD BLESS AMERICA!!!”

Twitter later placed warnings over the tweets for violating its rules on civic and election integrity.  Facebook also placed a new label on Trump’s post, in which it said “voting by mail has a long history of trustworthiness in the U.S. and the same is predicted this year.”

Rich Lowry / New York Post

“There is a giant scheme afoot to disenfranchise voters in November – and it’s called mail-in balloting. 

“Mail-in voting has, like many things in our politics, taken on the aspect of tribal warfare – if President Trump is vociferously against something, Democrats must be vociferously for it, and vice versa.

“Absentee voting is unquestionably less secure than in-person voting.  But there is no evidence of widespread fraud.  Nor is there evidence that, at least prior to this campaign, mail-in voting has favored Democrats, as the president believes.

“Trump shouldn’t be trying to delegitimize the process, a point that journalists have often made.  Yet there hasn’t been enough focus on the other side of the equation: Does it make sense for Democrats to be fervent boosters of a process that may lead to a historic number of votes cast in a presidential election not counting?

“Stacey Abrams, call your office.

“No matter what anyone says, there is inevitably going to be more mail-in voting in the fall, but in-person voting is superior.

“Consider: Only about one-hundredth of 1 percent of in-person votes are rejected, whereas rejection rates of 1 percent are common with mail-in votes, and some states exceeded that during their primaries this year.

“This should be a five-alarm worry for Democrats.

“According to polling, almost twice as many Biden supporters as Trump supporters say they will vote by mail this year.  According to NPR, studies show ‘that voters of color and young voters are more likely than others to have their ballots not count.’

“In another universe, if Trump were urging Democrats to stay away from the polls and instead use a method more likely to get their votes discarded, it would be attacked as a dastardly voter-suppression scheme.”

Mr. Lowry then makes an argument similar to that of The Economist above.

Lowry then concludes:

“In light of all this, it makes sense, first and foremost, to try to make available more options for in-person voting.

“In addition, states should allow the counting of mail-in ballots prior to Election Day to minimize any swing in the count afterwards.  Congress should delay the date that states have to finalize their results, currently Dec. 8.  And election officials and the parties should do everything they can to educate mail-in voters – to do it correctly.

“What should be intolerable is any attempt to change the rules after the fact – although it is entirely conceivable that Democrats will feel compelled after Nov. 3 to argue that the mail-in voting that they have done so much to promote is desperately flawed and deeply unjust.”

-- Today, National Security Adviser Robert O’Brien said that China has the largest program among countries seeking to interfere in the election.

“We know the Chinese have taken the most active role,” O’Brien told reporters. “We’ve made it very clear to the Chinese, to the Russians, to the Iranians and others that haven’t been publicly disclosed that anyone…that attempts to interfere with the American elections will face extraordinary consequences,” he said.

Just what the president wants to hear from his lackey.

--Daniel Henninger / Wall Street Journal

“Let us not overstate the Democratic disadvantage. Donald Trump has (Portland mayor) Ted Wheeler.  But Joe Biden has Donald Trump.

“Rather than let Mr. Biden and the Democrats struggle inside the ideological trap they set for themselves, Mr. Trump is now threatening to do to the protests what he did in the coronavirus’ early days – insist he is the story and overhype anything he does.

“Even as some shift occurs in his direction, the president also seems fascinated in public by the war’s marginal minefields, such as QAnon (‘I understand they like me very much’) or his assertion in a Fox interview that Mr. Biden is controlled ‘by people that are in the dark shadows.’

“Mr. Trump’s instinct for sarcasm-strewn bludgeoning of his opposition may cause gettable voters to conclude the Democrats’ original strategy was right, that this election really is about voting against Donald Trump.

“The electorate still up for grabs has two months to decide which war is more unsettling – the one in the streets or the one inside Mr. Trump himself?”

--Trump tweets:

“The Atlantic Magazine is dying, like most magazines, so they make up a fake story in order to gain some relevance. Story already refuted, but this is what we are up against.  Just like the Fake Dossier.  You fight and fight, and then people realize it was a total fraud!”

“@FoxNews Polls are, as in the past, Fake News. They have been from the beginning, way off in 2016.  Get a new pollster.  I believe we are leading BIG!”

“Do you notice that any time Fake News Suppression Polls are put out, like @FoxNews, the Stock Market goes DOWN. We are going to WIN!”

[Trust me, Mr. President. The stock market didn’t tank Thursday because of some Fox polls.]

“@NYGovCuomo should get his puppet New York prosecutors, who have been illegally after me and my family for years, to investigate his incompetent handling of the China Virus, and all of the deaths caused by this incompetence.  It is at minimum a Nursing Home Scandal – 11,000 DEAD!”

“Sleepy Joe Hiden’ was acknowledged by his own people to have done a terrible job on a much easier situation, H1N1 Swine Flu.  The OBiden Administration failed badly on this, & now he sits back in his basement and criticizes every move we make on the China Virus.  DOING GREAT”

[Ed. Again. 12,500 died during the year-long H1N1 pandemic and it did not impact our lives one bit.]

“Crazy Nancy Pelosi said she was ‘set up’ by the beauty parlor owner when she improperly had the salon opened (and didn’t wear a MASK!).  Does anyone want a Speaker of the House who can be so easily SET UP?”

“Nancy Pelosi says she got ‘set up’ by a Beauty Parlor owner.  Maybe the Beauty Parlor owner should be running the House of Representatives instead of Crazy Nancy?”

[Ed. Pelosi could not have handled this worse.  She had a mask (around her neck).  She should have just apologized for misunderstanding the instructions, and not knowing the rules.]

“I was never a big fan of John McCain, disagree with him on many things including ridiculous endless wars and the lack of success he had in dealing with the VA and our great Vets, but the lowering of our Nations American Flags, and the first class funeral he was given by our…

“…Country, had to be approved by me, as President, & I did so without hesitation or complaint. Quite the contrary, I felt it was well deserved.  I even sent Air Force One to bring his body, in casket, from Arizona to Washington.  It was my honor to do so.  Also, I never called…

“…John a loser and swear on whatever, or whoever, I was asked to swear on, that I never called our great fallen soldiers anything other than HEROES.  This is more made up Fake News given by disgusting & jealous failures in a disgraced attempt to influence the 2020 Election!”

[Ed. At least on the issue of McCain nothing but lies.  Heck, Trump tweeted in 2015 he thought McCain was a “loser.”]

“When a Kennedy loses a Democrat Primary in Massachusetts, by a lot, it just shows how far LEFT that party has gone.  Joe Hiden’ will never be able to hold them back. Life, 2nd A, Energy, Religion, Jobs and the Economy, would be totally obliterated!”

Wall Street and the Economy

Volatility returned in a big way on Wall Street and stocks had their worst week since late June.  I cover some of the gory details on the comeuppance investors in the high flyers suffered down below.

For now, before we get to the jobs data, the ISM manufacturing reading for August came in at 56.0, the best since November 2018 (50 being the dividing line between growth and contraction), though the service sector reading, 56.9, while solid, was down from the prior month’s 58.1.

Construction spending in July was a disappointing 0.1%, while factory orders increased 6.4%.

Initial jobless claims for the week ended Aug. 29 were at 881,000, down from a previously revised 1.011 million, but still well above the previous weekly record of 665,000, pre-pandemic.

So then the August report on nonfarm payrolls was far better than expected, not in the number of jobs created, 1.371 million, which was generally inline with expectations, but in the unemployment rate, 8.4%, vs. 10.2% in July and 11.1% in June.

Job growth is coming down but there are still 11.5 million fewer people in the labor force than prior to the shutdown due to Covid, and the underemployment rate, U6, which includes those with part-time work seeking full-time employment, is 14.6%, though down from 18.0% in June.

Additionally, since I wrote of it a few weeks ago, the unemployment rate for African Americans is 13.0%, while that of Hispanics is 10.5%, the latter a better improvement than for the former since June.

The Federal Reserve’s Open Market Committee next meets Sept. 15-16 and two Fed officials, Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic, downplayed the chances of updated public guidance on the path of interest rates at this confab, suggesting they needed more clarity from the economic data and the outlook first.

“If I had a better idea of where we’re going to be next spring, and things like that, I’d know whether or not we need to ramp up extraordinarily accommodative policies like we did during the last recovery,” Evans said on Thursday.

Bostic offered similar comments during an interview with the Wall Street Journal.  They were the last Fed officials to speak ahead of a blackout on commentary prior to the policy meeting.

[Evans also called on Congress to deliver more fiscal aid, saying that even with an accommodative monetary policy and assuming progress in controlling the coronavirus, U.S. output won’t return to pre-crisis levels until late 2022.  At that point, Evans said unemployment will still be between 5% and 5.5%.]

The Fed’s rate-setting committee has said it won’t raise interest rates from nearly zero until the economy is “on track” to achieving maximum employment and 2% inflation.  But the debate has been over when to provide more clarity on the guidance.

Fed Chair Jerome Powell on Aug. 27 stirred things up when he unveiled a major shift in the central bank’s long-term strategy for setting interest rates.  Under the new framework, officials will allow the inflation rate to rise above their longstanding 2% target following periods of below-target inflation, which means the Fed will keep interest rates near zero for longer.

In an interview today with National Public Radio, Chair Powell said, “Today’s jobs report was a good one.”  But he added, “We think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time.  It will be measured in years.”

It nonetheless now seems like November before we get the real updated guidance that reflects the new strategy and specific thresholds on unemployment and inflation that must be achieved before any rate hikes.

Separately, the federal budget deficit is projected to hit a record $3.3 trillion for fiscal 2020, ending Sept. 30, according to the Congressional Budget Office and a release on Wednesday.

The spike in the deficit this year as huge expenditures were needed to fight the coronavirus and prop up the economy means that federal debt will exceed annual gross domestic product next year – a milestone that would put the U.S. where it was in the aftermath of World War II, when accumulated debt exceeded the size of the economy.

The CBO is projecting that the debt would exceed GDP in 2021 and set a new record high of 107%.

That compares with 79% of GDP at the end of 2019 and 35% back in 2007.

Lastly, on the trade front, the U.S. trade deficit surged in July to $63.6 billion, the highest level in 12 years, as imports jumped by a record amount.

The Commerce Department reported that the July deficit, the gap between what the U.S. buys and what it sells to foreigners, was 18.9% higher than the June deficit of $53.5 billion.

Imports in July surged to $231.7 billion, while exports were also up but by a smaller amount to $168.1 billion.

What’s rather humorous is that we all know that among the things Donald Trump promised as he campaigned in 2016 was to sharply lower the country’s trade deficits, especially with China.

But the deficit with China – the gap between the amount the U.S. buys from China and what it sells – was $31.62 billion in July, just 3.5% lower than $32.8 billion in July 2019, data released by the Census Bureau on Thursday showed.

Europe and Asia

It was PMI week across Europe and Asia and the European composite for August came in at just 51.9 vs. 54.9 in July.  Manufacturing was 51.7 vs. 51.8, services 50.5 vs. 54.7, a big comedown.

Germany: 52.2 manufacturing in August; 52.5 non-mfg. (services) vs. 55.6 in July.
France: 49.8 mfg. vs. 52.4 in July; 51.5 non-mfg. vs. 57.3.
Italy: 53.1 mfg.; 47.1 non-mfg. vs. 51.6.
Spain: 49.9 mfg. vs. 53.5 July; non-mfg. 47.7 vs. 51.9.
Ireland: 52.3 vs. 57.3 mfg; non-mfg. 52.4 vs. 51.9.
Netherlands; 52.3 mfg. in Aug. vs. 47.9 prior.
Greece: 49.4 mfg. vs. 48.6 in July.

UK: 52.2 mfg. in August; non-mfg. 58.8.

Chris Williamson / IHS Markit

Service sector companies across the eurozone saw growth of business activity grind almost to a halt in August, fueling worries that the post-lockdown rebound has started to fade amid ongoing social distancing restrictions linked to Covid-19.

“The near-stalling needs to be viewed in the context of the strong expansion seen in July: business growth had surged to a near two-year high as economies opened up further from the severe Covid-19 lockdowns.  However, the latest reading still sends a disappointing signal that the rebound has lost almost all momentum.

“The deterioration was often linked to worries of resurgent Covid-19 infection rates, notably among consumer-facing companies and especially in Spain and Italy, where virus containment measures remained particularly strict.

“The larger size of the services economy means the subdued picture offsets the more upbeat survey of manufacturers in August, suggesting that the overall pace of economic growth has waned midway through the third quarter.

“Although the relative strength of the PMI data in July and August mean the autumn is likely to still see the economy rebound strongly from the collapse witnessed in the spring, the survey highlights how policymakers will need to remain focused firmly on sustaining the recovery as we head further into the year.”

Eurostat reported that the July unemployment rate came in at 7.9% for the EA19, vs. 7.7% in June, and 7.5% July 2019.  If you’re wondering how the eurozone can have such a low jobless rate, it’s because of all the payment ‘schemes,’ or payroll relief programs.

For example, Spain announced on Thursday that its scheme, currently due to end on Sept. 30, will be extended for “as long as necessary.”  This program pays furloughed workers 70% of their base salary for the first six months, before dropping to 50% for the following months.  My reading of it is that the government will now maintain the 70% level for as long as needed.

July jobless rates across the continent:

Germany is at 4.4%, up from 3.0% a year ago.
France 6.9% vs. 8.5% a year ago (yes, down, from July 2019, but up from June’s 6.6% rate).
Italy 9.7%, unchanged vs. a year ago.
Spain 15.8% vs. 14.3% a year ago.
Ireland 5.0% vs. 4.6% in June, 5.1% a year ago.
Netherlands 4.5% vs. 3.4% a year ago.

The United States for July was 10.2% vs. 3.7% July 2019.

July’s retail trade/sales for the euro area was down by 1.3% over June, up 0.4% vs. a year ago.

--Germany’s government now forecasts GDP to decline -5.7% for 2020, better than first thought but still the biggest decline since World War II (5.7% in 2009).  But the growth forecast for 2021 was lowered to +4.4%, down from a previous estimate of 5.2%.  Exports will decline -12.2% in 2020.

Brexit: The chances of Britain leaving the European Union without a trade deal have risen sharply as negotiations have been threatened by London’s insistence that it have full autonomy over its state aid plans, negotiators and diplomats said.

The UK left the EU on Jan. 31, turning its back after 47 years on the post-World War II project that sought to build the ruined nations of Europe into a global power. The British exit followed more than three years of wrangling over an exit deal since the 2016 referendum that sent shockwaves across financial markets.

But since Brexit, talks on a new trade deal have made little progress. Fears in London, Brussels and other European capitals are mounting that a British exit without a deal could sow further economic chaos amid the pandemic which has hammered Euro economies.

Failure to reach a trade deal could hammer financial markets as nearly a $trillion dollars in trade, from car parts and medicines to lamb and fish would be thrown into turmoil.

I told you since day one the fishing issue was big, but now it seems state aid is the prime stumbling block.

British Prime Minister Boris Johnson’s office said the goal was to reach a deal but that the EU needed to show more realism.

EU officials say: “Sooner or later, the UK should clarify what they want.  It’s not possible to leave the European club and at the same time keep all the benefits,” European Council President Charles Michel told reporters today.

On the state aid issue, Britain does not want to allow Brussels authority over its own rules, stoking one of the bloc’s prime fears: that it shall one day face strong competition from an economy just outside its borders.

Think ‘fair’ competition as opposed to the ongoing battle between Airbus and Boeing and ‘state’ subsidies, to cite an example.

Turning to Asia…China’s PMI data was released.  The government’s official figures, courtesy of the National Bureau of Statistics, showed the manufacturing PMI at 51.0 for August vs. 51.1 in July, while the services reading rose to a solid 55.2 vs. 54.2 the prior month.

The private-sector Caixin manufacturing figure was 53.1 last month vs. 52.8 in July, with non-mfg. at 54.0 vs. 54.1.

Japan’s manufacturing PMI for August was 47.2 vs. 45.2 in July, a 16th straight down month (below 50).

Separately, cap-ex spending was down 11.3% in the second quarter, year-over-year, as noted by the Ministry of Finance, while industrial production in July was up 8.0% over June (the fastest on record) but down -16.1% year-over-year.

Retail sales in July were -3.3% in July over June, -2.8% yoy.

While the preceding has to do with the beginning of the third quarter, a revision on second-quarter GDP is out Sept. 8 and it’s important.

Taiwan reported a 52.2 manufacturing PMI in August vs. 50.6 in July.

South Korea’s mfg. PMI was 48.5 vs. 46.9.

India reported GDP in the second quarter plunged 23.9% year-over-year, according to the Statistics Ministry, the country crushed by the pandemic.

Back to Japan, Chief Cabinet Secretary Yoshihide Suga is now the most preferred candidate among the public to become the next prime minister, following the resignation of Shinzo Abe,  surging in popularity after he entered his party’s leadership race, an Asahi Shimbun survey showed Friday.

Suga, the government’s chief spokesman, has 38% of the public’s support, ahead of 25% for former Defense Minister Shigeru Ishiba (the man I mentioned last week) who had previously led several media polls.

In a June Asahi survey, Ishiba led a pack of seven potential contenders with 31% while Suga had just 3%.

The leadership election is set for Sept. 14 with LDP lawmakers and regional party representatives casting votes. The winner is virtually assured of becoming prime minister of the LDP’s parliamentary majority.

Street Bytes

--Monday started with Apple and Tesla trading at split-adjusted levels, both having huge runups in their share price prior to this moment.

Apple, splitting 4-for-1, opened at $127.50 and ran up to $138, intraday, on Wednesday as the S&P 500 and Nasdaq hit new all-time highs daily.  Then it cratered amid Thursday’s 5% bloodbath in Nasdaq and finished the week at $120.

Tesla, splitting 5-for-1, opened Monday at $444.60, ran up to $502 Wednesday, plunged to $372, and closed the week at $418.  What a ride.  At one point, high to low, Tesla had corrected 26%.

So these two were the big stories on the week as investors finally woke up…valuations were off the charts nuts. Very 1999-2000ish, even if these companies had actual revenues and business models, which wasn’t necessarily the case 20 years ago with many of the Wall Street darlings of that era.

Apple on Thursday actually lost $180 billion in market cap, after peaking at $2.2 trillion, the largest one-day loss in value for any company…ever.  But Apple is still over $2 trillion tonight.

On the week, the Dow Jones lost 1.8% to 28133, while the S&P fell 2.3% and Nasdaq 3.3%.

Also Monday, three new components joined the Dow Jones in conjunction with the stock splits in Apple and Tesla.  Salesforce.com, Amgen and Honeywell went in, replacing Exxon Mobil, Pfizer and Raytheon.

For August, the Dow gained 7.6%, best since 1984, the S&P rose 7%, best since 1986, and Nasdaq soared 9.6%, best since 2000.

Barron’s found that after a big August, with gains of more than 5%, the Dow drops almost 80% of the time in September.  The numbers for the S&P and Nasdaq are about 60% and 55%.

Seasonally speaking, September is the worst month of the year, though following a big August, the drops in September, if any, are historically smaller than the overall average.

--U.S. Treasury Yields

6-mo. 0.11%  2-yr. 0.14%  10-yr. 0.72%  30-yr. 1.47%

Treasuries were virtually unchanged despite the volatility.

--OPEC’s oil output rose about 1 million barrels per day in August, per a Reuters survey, as the group and allies eased record oil supply curbs as the global economy and demand began to recover from the pandemic.  The 13-member cartel pumped 24.27 million bpd on average in August, the survey found, up 950,000 bpd from July’s figure and a further boost from the three-decade low reached in June.

The curbs on supply from OPEC, Russia and allies, known as OPEC+, together with an easing of the lockdowns, helped oil climb from the $teens registered in April into the low $40s (West Texas Intermediate), but prices have stalled out at this level.  And now OPEC+ needs to monitor the market carefully because the world is still far from a full recovery from the coronavirus.

Well by week’s end, oil had fallen from last Friday’s $42.96 on WTI to $39.51, the first weekly close below $40 since June 26.  Iraq appears to not be able to fully implement the additional production cuts it promised after overproducing in recent months.

Sentiment was also undermined by concern over weaker demand from Asia, especially from China, following reports that suggested what the market had anticipated all along – Saudi Arabia will probably cut prices for October shipments.

You also had the growing concerns in Europe that the recovery, at least temporarily, had stalled out amid new surges in Covid cases in key states.

What was disturbing to traders is that crude tanked despite another big drawdown from the U.S., with the Energy Information Agency reporting in its weekly report that crude stockpiles had plummeted by 9.4 million barrels over the week ending Aug. 28.

The U.S. oil rig count rose by one to 181 during the week, versus 683 as of March 13, as reported by Baker Hughes.

--An analysis from the American Hotel and Lodging Association found that America’s hotels are still reeling six months into the pandemic with Labor Day weekend here and no end to the misery in sight.

There are 4.3 million fewer hotel industry jobs since February and 40 percent of its employees are still out of work.

The average occupancy rate in New York City hotels and other urban markets is just 38 percent and 50 percent nationally.

In Gotham, while many Americans have scrapped vacation trips, the Broadway Theater District remains closed until January, indoor dining is still banned, and museums and cultural institutions are just beginning to open up on a restricted basis – all big tourist draws.

Only 33 percent of Americans say they have traveled overnight for leisure or vacation since March, and only 38 percent say they are likely to do so by the end of the year.

Moreover, just 16 percent of Americans plan to travel for Labor Day, 25 percent for Thanksgiving, and 29 percent for Christmas.

And get this…only 14 percent of hotel rooms are booked for this weekend, compared to 41 percent a year ago.

Hotel and Lodging Association CEO Chip Rogers said that without a government relief package, there will be a slew of closures.

“While hotels have seen an uptick in demand during the summer compared to where we were in April, occupancy rates are nowhere near where they were a year ago.  Thousands of hotels can’t afford to pay their mortgages and are facing the possibility of foreclosure and closing their doors permanently,” Rogers said.

“We are incredibly worried about the fall and what the drop in demand will mean for the industry and the millions of employees we have been unable to bring back.  The job loss will be devastating to our industry, our communities, and the overall American economy.  We need urgent, bipartisan action from Congress now.”

“Our industry is in crisis. Thousands of hotels are in jeopardy of closing forever, and that will have a ripple effect throughout our communities for years to come,” said Rogers.

Think of your own communities.  I’m thinking of two local hotels that are clearly struggling royally…missing out on wedding and banquet business, let alone business meetings/travel.  The restaurants contained therein also have to be near shutting down.  It’s just very sad.

Thursday, Hilton Times Square Hotel (NYC) announced in a regulatory filing it was closing, a move that will affect 200 employees.

Separately, the New York Restaurant Association is forecasting a grim future for eateries, with indoor dining still not being allowed, finding that nearly two-thirds of restaurants in the state probably won’t make it through the year, according to a survey the association conducted of more than 1,000 restaurants.

“It is painfully clear that without financial assistance, the restaurant industry in New York state could collapse,” association President Melissa Fleischut said.

55% said they didn’t think they can even make it until November.

--As previously telegraphed, United Airlines says 16,370 employees will be notified of involuntary furlough as early as October 1.  The cuts include 6,920 flight attendants, 2,850 pilots, 2,060 maintenance workers and 1,400 management and administrative employees.

The only thing that would prevent the involuntary layoffs would be an extension of the payroll support program.

--American Airlines Group said it is slashing its flying capacity by 55% in October as it responds to weakened travel demand.

The capacity cut comes after news this month that the airline will furlough or layoff 19,000 employees in October following expiration of the government’s emergency relief program.

Today, White House economic adviser Larry Kudlow said that he thinks the administration will in a matter of weeks unveil aid for U.S. airlines.

“If they need additional assistance, we stand ready to work with them to hammer out additional packages,” Kudlow said in an interview with Bloomberg.

The main lobby for the airlines, Airlines for America, does not expect air travel to return to pre-pandemic levels until 2024, and is hoping for a second round of government aid to help the industry.

I continue to monitor the TSA Checkpoint numbers from the Department of Homeland Security and with two notable exceptions related to the Labor Day holiday, the percentages of daily travelers vs. the comparable figure for 2019 has been stuck in the 25 to 32 percent range.  The airlines expected a faster recovery by this time.

--Meanwhile, United became the first to drop the highly-unpopular domestic change fees, with Delta Air Lines and American then quickly following suit; all part of a push to woo back travelers.  Low-cost rival Southwest Airlines has never charged a change fee for its tickets.

Delta, United and American were already waiving change fees through the end of the year to give travelers more flexibility in an uncertain environment.  The fees represented around 2% to 3% of their total revenues in 2019. Delta collected $830 million in ticket cancellation and change fees last year, American $819 million and United $625 million, according to the Dept. of Transportation.

--Virgin Atlantic is preparing to cut more than 1,000 jobs after seeing a slower-than-expected recovery in international demand for air travel, Sky News reported. 

The latest round of cuts, if confirmed, would mean that Virgin Atlantic’s workforce has almost halved from about 10,000 people before the pandemic.

The company is 51% owned by Richard Branson’s Virgin Group and 49% by Delta Air Lines.

--Brazilian planemaker Embraer SA said on Thursday it is reducing its workforce by 4.5%, or around 900 jobs, as it restructures its business to deal with the Covid-19 pandemic and cancellation of its partnership with Boeing.  In the first half of this year, commercial jet deliveries plunged 75% compared with the same period a year earlier, Embraer said in a statement, hitting the commercial aviation division particularly hard.

--Ford Motor Co. said it is targeting the elimination of 1,400 U.S. salaried jobs by year end as part of its ongoing, multiyear $11 billion restructuring.  The layoffs will be achieved through voluntary buyouts, the automaker said in an email to employees.

--Amtrak is furloughing more than 2,000 workers as a result of the steep decline in travel demand from the coronavirus.  House Transportation Committee chairman Peter DeFazio said the workers were notified this week they would lose their jobs.  In May, Amtrak said it needed a new $1.475 billion bailout and disclosed plans to cut its workforce by up to 20% in the coming budget year.

Ridership and revenue levels are down 95% year-over-year since the pandemic began, Amtrak has said.  Good lord.

--I missed last Friday that MGM Resorts International had announced it was laying off 18,000 furloughed workers in the U.S. amidst the global travel slowdown, about one-fourth of the company’s pre-pandemic workforce of 68,000 U.S. employees.

CEO Bill Hornbuckle said the company is required by federal law to send layoff notices to furloughed workers (from March) who haven’t been recalled after six months.  But MGM still plans to rehire those workers as business demand returns.

“While the immediate future remains uncertain, I truly believe that the challenges we face today are not permanent,” Hornbuckle wrote.  “The fundamentals of our industry, our company and our communities will not change. Concerts, sports and awe-inspiring entertainment remain on our horizon.”

Workers who return before the end of 2021 will retain seniority and immediately resume benefits, the company said. 

On the Las Vegas Strip, where casinos rely on vacationers and convention attendees from around the world, gambling revenue was down 39% in July from the previous year, bringing in about $330 million compared with nearly $543 million a year earlier.

Nevada’s casinos were allowed to reopen June 4 at 50% occupancy per social-distancing requirements.  Two of MGM’s 13 Strip resorts are still closed.  The Mirage just reopened last week.  MGM Resorts reported a 91% drop in revenue for the three-month period that ended June 30, a similar decrease to other operators on the Strip.

--Tesla announced it plans to sell as much as $5 billion of shares, capitalizing on its high-flying price and on the split that made it more accessible to individual investors.

The electric-car maker will sell the shares “from time to time” through an agreement with several banks, according to a regulatory filing.  The company said it plans to use the proceeds to strengthen its balance sheet and for general corporate purposes.

Tesla is raising money while it expands with new factories going up in Germany and Austin, Texas, following the completion of its plant in Shanghai.

But now Tesla is finally facing real competition from established automakers and startups alike.

--Deal talks for TikTok’s U.S. operations hit a snag over the question of whether the app’s core algorithms can be included as part of a deal, according to the Wall Street Journal.

The algorithms, which determine the videos served to users, ‘the secret sauce,’ were considered part of the deal negotiations up until last Friday, when the Chinese government issued new restrictions on the export of artificial-intelligence technology.

It’s unclear whether the order means the algorithms need Chinese government approval for transfer, and if so, whether Beijing would sign off.

TikTok’s parent company, ByteDance Ltd., has said it would comply with the Chinese order, and is looking for clarity from Beijing on how to proceed.

As in this has slowed chances for a quick deal.

Weeks ago when the TikTok talks first emerged, it was assumed the algorithms would be transferred over to the U.S. buyer over the course of up to an entire year…it’s that kind of process.  You also have no deal, period, without them.

Shares in TikTok’s suitors, Microsoft, Walmart and Oracle, fell on the news.

Separately, White House trade adviser Peter Navarro said in an interview that the administration will crack down on more Chinese apps after TikTok and WeChat.

“It is critical that this country not use apps that are made in China,” he said, “or (apps) that can take our data and go to servers in China,” adding that this data will be used to “surveil, monitor and track” Americans.

--Shares in Zoom Video Communications Inc. soared after the video-chat company that has gained popularity during the pandemic reported another big jump in users and raised its financial forecast.

Shares of the company ended Tuesday up 41% at $457.69, giving the company a market value of about $131 billion, greater than that of IBM.  [But then the shares got swept up in the tech bloodbath, finishing the week at $369, after bottoming at $346 this morning.]

Zoom reported a profit of $185.7 million on sales that had increased about fivefold from the year earlier to $663.5 million.

Zoom said it has more than 370,000 customers with more than 10 employees and that the number of its most lucrative customers doubled compared with the year before.  In order to keep up with the surging demand, the company hired 500 employees in the latest quarter.

Zoom said it will generate at least $2.37 billion in revenue for its current fiscal year, up from an expectation earlier this year that it would record at least $1.78 billion in revenue.

--Facebook and Twitter said that the Russian group that interfered in the 2016 presidential election is at it again, using a network of fake accounts and a website set up to look like a left-wing news stie.

The disinformation campaign by the Kremlin-backed group, known as the Internet Research Agency, is the first public evidence that the agency is trying to repeat its efforts from a year ago and push voters away from Joe Biden, to the benefit of Donald Trump.

Intelligence agencies have been warning of this for months, but now Facebook and Twitter, who were slow to react to wide-ranging disinformation campaigns on their services in 2016, are providing the evidence of the meddling, even as the White House downplays Russian interference.

--Investment-banking and trading revenues hit an eight-year high in the first half of 2020, a surge being driven by two factors: the need for cash from pandemic-hit companies and the Federal Reserve flooding the system with money, propping up market prices and encouraging investors to take on risk.

Revenue in these traditional businesses was up 32% in the first half of the year vs. the same period in 2019.

--Macy’s second-quarter sales were ahead of expectation, but still down big, as it swung to a loss, but the drop wasn’t as steep as predicted as the department store operator began turning its attention to the hopefully lucrative fall and holiday shopping season.

Sales in the quarter slowed to $3.56 billion from $5.55 billion a year earlier, with comparable store sales declining about 35%.  Both still awful figures.  Digital sales for the parent of Bloomingdale’s and Bluemercury climbed 53% over the second quarter of 2019.

“We are encouraged by our second quarter performance; however, we continue to approach the back half of the year conservatively,” said CEO Jeff Gennette.  “Our immediate priority is successfully executing Holiday 2020.  We are also focused on laying the groundwork for 2021 and beyond.”

In an investor presentation, Macy’s said its stores “reopened stronger than anticipated” and its luxury segment outpaced expectations.

Some felt Gennette was a bit disingenuous in his remarks

--Campbell Soup reported strong fiscal fourth-quarter earnings on Thursday, boosted by people make more food at home because of the coronavirus pandemic.

But the shares fell as the company said it is difficult to predict how the Covid-driven market for its products will hold up.

Campbell beat on both earnings and net sales, the latter at $2.1 billion, which was 18% higher than last year’s comp quarter, though this was aided by an extra week which fell in the fourth quarter.

Campbell said its snack division, which includes Pepperidge Farm cookies and Goldfish crackers, saw a 7% jump in sales.  It sees a similar increase in overall net sales in the current quarter but offered no guidance beyond that owing to supply chain uncertainties and shifts in consumer behavior.  As in will at-home consumption continue?

--FedEx plans to hire about 70,000 seasonal workers for the holiday season, a 27% increase from last year’s peak, according to various news reports.

--Amazon.com said it will boost its employment ranks by another 10,000 in Washington state, highlighting the boom in its business during the pandemic.

The company is aiming to add the thousands of jobs over the next few years in Bellevue, a city that stands about 10 miles across Lake Washington from Seattle, where Amazon is headquartered.

It was just in February when Amazon said it would create 15,000 jobs in Bellevue, which it calls a “growing, business-friendly community” that boasts a “fantastic talent pool.”

The company in July said second-quarter net sales surged 40% to $88.9 billion from a year earlier.

--China said on Tuesday it had suspended barley imports from Australia’s largest grain exporter, a ruling that threatens to inflame bilateral tensions.  China’s General Administration of Customs said barley shipments from CBH Grain would be halted after pests were found on multiple occasions, the administration said on its official WeChat account.

While Beijing’s ruling did not essentially affect trade after the imposition of more than an 80% tariff on Australian barley earlier this year, it cast a shadow over Australian exports to China.

CBH – a cooperative of farmers – is Australia’s largest grain exporter, regularly selling millions of tons of wheat, barley and canola to Asia and the Middle East.  China had until recently bought as much as 70% of Australia’s barley exports.  So now with that market closed, Australian farmers will be scrambling to find alternative markets.

Tensions were already high between the two nations after Australia alleged China was meddling in its domestic affairs, and then relations worsened further after Prime Minister Scott Morrison called for an independent inquiry into the origins of Covid-19.  So then China imposed anti-dumping and anti-subsidy duties totaling 80% on Australian barley – stopping a $billion dollar trade.

--Canada’s economy gained a net 245,800 jobs in August, mostly full-time, Statistics Canada said today.  The jobless rate edged down to 10.2%.  The service sector added about 218,000, while manufacturing netted 27,600.

--Colombia’s urban jobless rate* more than doubled to 24.7% in July, from 10.3% in the same month of 2019, to give you yet another example of the global scope of the pandemic. The national unemployment rate climbed to 20.2%, the government’s statistics agency announced on Monday.

More than five months of lockdown to curb the spread of the coronavirus ended on Tuesday.

*More than 70% of the workforce in Colombia is in large cities.

--Brazil reported a strong manufacturing PMI despite its severe Covid issues, 64.7 vs. 58.2 in July, though the reading on services was just 49.5.

--The Trump administration took new steps to curb steel imports from Brazil and Mexico, boosting protections for battered U.S. steelmakers and jobs in the election battleground states of Pennsylvania, Ohio and Michigan.

--Carnival Corp. said it would restart two cruise line brands. Costa Cruises is to restart sailing in Italy on Sept. 6, followed by Germany-based AIDA Cruises, which is scheduled to resume on Nov. 1.  The six initial ships will have limited itineraries.

--E-cigarette giant Juul Labs Inc. could cut more than half its workforce, according to the Wall Street Journal, while it weighs exiting more European and Asian markets – further signs of the once high-flying company’s deteriorating fortunes.

Juul aims to reduce its workforce to about 1,000 employees, down from the current 2,200.

A health crisis surrounding vaping that was later linked to faulty cannabis products sent the already embattled Juul into a tailspin last year.  U.S. regulators blamed an epidemic of teen vaping on the company.

--DraftKings Inc. said on Wednesday that basketball legend Michael Jordan has joined the e-sports and gambling company’s board as a special adviser.  Shares of the company jumped more than 13% on the news, with Jordan agreeing to take an equity interest in the company, while providing strategic and creative inputs on areas such as product development and marketing activities.

Separately, DK signed a multi-year deal with the Chicago Cubs in which the baseball team has made the company its official sports betting and daily fantasy sports partner.  The deal includes a plan to pursue a sportsbook at Wrigley Field, with online access available in the surrounding area.

Sports betting is now legal in Illinois, but a retail sportsbook would need the approval of the City of Chicago.

--Brown-Forman reported better-than-expected fiscal first-quarter results as the maker of Jack Daniel’s Tennessee Whiskey weathers the pandemic.

Net sales in the quarter ended July 31 fell to $753 million from $766 million in the prior-year period, far better than forecast, with earnings also beating the Street.

“Despite being faced with significant ongoing challenges, our business performed well during the quarter though much uncertainty remains in the current environment,” said CEO Lawson Whiting, thus no guidance for fiscal 2021.

Underlying sales in the U.S. rose 9% while international sales gained 12%. Emerging markets fell 3%.

Sales of Jack Daniel’s brands rose 3%, driven by a 37% gain in ready-to-drink and ready-to-pour.

Premium bourbons rose 18%, and tequila brands advanced 16%.

--Prince Harry and wife Meghan have signed an exclusive multiyear production deal with Netflix Inc., a major step in their plan to make a living for themselves outside the royal family.

Under the deal, whose value was not disclosed, the couple will produce films and series ranging from children’s shows to scripted content, Netflix said on Wednesday.

“Our focus will be on creating content that informs but also gives hope,” the couple said in a statement.  “As new parents, making inspirational family programming is also important to us.”

Meghan, a former star of the USA Network series “Suits,” has no plans to return to acting under the deal.

The Netflix deal follows a similar pact in 2018 with former President Barack Obama and wife Michelle.

Harry and Meghan also recently signed with the Harry Walker Agency in New York, which serves as an agent for lectures.  The two are expected to speak together and individually on issues such as racial justice, gender equity, the environment and mental health.

I’ll pass.  Harry lost me when he split from the Royal Family.

--According to Nielsen, the final night of the Republican convention, which featured Trump’s 70-minute long acceptance speech, had an average audience of 23.8 million viewers, putting it slightly behind the TV turnout for his Democratic opponent, Joe Biden, who had 24.6 million viewers the week before.

Trump’s total was also well below the 35 million TV viewers who watched him accept his party’s nomination in 2016.  [John McCain had 38.9 million viewers in 2008, Mitt Romney 30.3m in 2012, and George W. Bush 27.6m in 2004.]

Over four nights, the Republican National Convention averaged 19.4 million viewers – down 21% from 2016 – compared to 21.6 million for the Democratic National Convention, which was down 16% from four years ago.

But the party with the larger audience has only won in November seven times out of 15 races going back to 1960.

Fox News, by the way, accounted for 45 percent of the viewership of the RNC across six major news networks, also according to Nielsen.  In 2016, that figure was about 30 percent.

MSNBC accounted for about 30 percent of the DNC viewership across the six networks – including ABC, NBC, CBS and CNN.

Foreign Affairs

Russia: Officials in Germany said that Kremlin critic Alexei Navalny was poisoned with the Soviet-era nerve agent Novichok. 

Citing new lab test results, German government spokesman Steffen Siebert confirmed that “Alexei Navalny was the victim of an attack with a chemical nerve agent in Russia” – which he called “dismaying.”

“The federal government condemns this attack in the strongest possible terms,” Seibert added.  “We hope for a full recovery of Alexei Navalny.”

Navalny fell ill during a flight to Moscow from Siberia on Aug. 20 and after two days in a hospital in the Siberian city of Omsk, was transferred to a hospital in Berlin.

Novichok is the same nerve agent that targeted former Russian spy Sergei Skripal and his daughter in 2018 in the English city of Salisbury.  Both survived.

Berlin’s Charite hospital said on Twitter Wednesday, “Alexei Navalny’s state of health is still serious.  A long period of illness is to be expected.  Long-term consequences from the severe poisoning cannot be ruled out.”

Wednesday, German Chancellor Angela Merkel then reiterated Navalny had been poisoned with the Novichok nerve agent in an attempt to murder him.

“This is disturbing information about the attempted murder through poisoning against a leading Russian opposition figure,” Merkel told a news conference.

Kremlin spokesman Dmitry Peskov then said Moscow rejected any suggestion that Russia had been behind the attack on Navalny and warned other countries against jumping to hasty conclusions.

“There are no grounds to accuse the Russian state. And we are not inclined to accept any accusations in this respect,” Peskov told reporters.  Peskov said there was therefore no reason to discuss sanctions against Moscow.

Merkel has said Germany would consult its NATO allies about how to respond.  She faced growing pressure on Thursday to reconsider the Nord Stream 2 pipeline, which will take gas from Russia to Germany.  Nord Stream 2 is set to double the capacity of the existing Nord Stream 1 pipeline in carrying gas directly from Russia to Germany.  It is more than 90% finished and due to operate from early 2021.

The White House said the use of Novichok was “completely reprehensible,” with the National Security Council saying on Twitter that Washington would work with allies “to hold those in Russia accountable, wherever the evidence leads, and restrict funds for their malign activities.”

President Trump had not said a word on the case until today, as noted above.

Editorial / Washington Post

“When Russian opposition leader Alexei Navalny suddenly fell ill two weeks ago, Russian authorities dismissed his supporters’ charges of poisoning and resisted allowing his transfer to a German hospital for treatment. Eventually, they relented – and now the government of Chancellor Angela Merkel is reporting “unequivocal evidence” that Mr. Navalny was attacked with a chemical nerve agent.  Once again, the regime of Russian President Vladimir Putin has been caught attempting to murder a leading opponent using a weapon banned by international treaty….

“While (Navalny’s) life is not now in danger, (a statement from the Berlin hospital) said, ‘a more prolonged course of the disease should be expected’ and ‘long-term consequences of severe poisoning are not excluded.’

“That, no doubt, will please Mr. Putin, who had pressing reasons to sideline his longtime nemesis. With his poll ratings sagging, Mr. Putin faces persistent demonstrations in the Siberian city of Khabarovsk*, as well as local elections later this month in which Mr. Navalny had been working to defeat ruling-party candidates.  A popular uprising in neighboring Belarus is setting an example for Russians weary of Mr. Putin’s autocratic rule.

“No doubt a part of the Kremlin’s calculations was the small price paid for previous attacks.  The near-murder of Mr. Skripal in the British city of Salisbury led to the expulsion of Russian diplomats from Western capitals, but no more….

“Whether there are more concerted consequences will depend in part on whether President Trump is willing to work with Germany and other allies.  Following the Skripal poisoning, Mr. Trump only reluctantly agreed to join diplomatic expulsions by Britain and the EU.  He still has not confronted Mr. Putin about intelligence reports that Russia paid bounties to the Afghan Taliban for killing U.S. soldiers. Nor has he objected to ongoing Russian efforts to help his reelection campaign by smearing Democratic nominee Joe Biden.

“It’s little wonder Mr. Putin thinks he can get away with another chemical weapons attack.  To all appearances, he has the president of the United States in his pocket.”

*Thousands of people took to the streets on Saturday in Russia’s far eastern city of Khabarovsk to continue their protests against Putin’s handling of a regional political crisis and the suspected poisoning of Navalny, the official confirmation of the poisoning not having been announced as of that date.

“Putin, have some tea,” protesters chanted.

Editorial / Wall Street Journal

“The U.S. has a few options to support Mr. Navalny.  It could invoke the Chemical and Biological Weapons Control and Warfare Elimination Act or the Magnitsky Act to impose financial sanctions on those responsible.  The U.S. and its allies can also expel Russian diplomats as they did after the Skripal poisoning.

“Then there is the matter of Germany’s cognitive dissonance – and Donald Trump’s. Even as she exposes the assassination attempt on Mr. Navalny, Mrs. Merkel is proceeding with the Nord Stream 2 gas pipeline, which would make Germany more dependent on Russian energy.  And Mr. Trump says he wants to bring Vladimir Putin back into the G-7 club.

“Opponents of the Kremlin have a way of ending up poisoned, including opposition leader Vladimir Kara-Murza and defectors Alexander Perepilichny and Alexander Litvinenko. Russians can’t hold their government accountable for these crimes, but the U.S. and its allies can at least not reward the Kremlin by treating Mr. Putin like a normal leader.”

Lastly, prominent Russian blogger Yegor Zhukov was beaten near his Moscow home late Sunday in another attack on a prominent critic of Vladimir Putin.

Zhukov was beaten in the head and face by two thugs waiting near his apartment who escaped on scooters.

The attack comes amid a crackdown by authorities on activists, bloggers and journalists in recent weeks.

Katie Bo Williams / Defense One

“Moscow has been busy.

“In the last week, the U.S. military has intercepted six Russian jets ‘loitering’ off the coast of Alaska, while over the Black Sea, two Russian planes crossed a B-52 bomber’s nose at less than 100 feet.  In Syria, a Russian vehicle sideswiped a U.S. armored vehicle, injuring seven soldiers amid what one U.S. official called a spike in provocative behavior by Russian forces in the country.

“And on Aug. 20, Russia’s opposition leader, Alexei Navalny, was poisoned using the same nerve agent used to sicken former Russian double agent Sergei Skripal and his daughter in England two years ago – an attack believed by Western intelligence officials to have been carried out by Russian agents.

“President Donald Trump has been silent on the sudden spate of provocations by Russia.  Although a National Security Council spokesman called the poisoning ‘completely reprehensible’ in a Wednesday statement, Trump himself hasn’t spoken publicly on the matter since saying ‘we’re looking at it’ the day after Navalny fell ill.

“Among those criticizing the president’s reticence is his most recent former national security advisor, John Bolton.  ‘It’s confirmed Russian opposition leader Alexei Navalny was poisoned with Novichok – the same family of nerve agent used in the 2018 attack on the Skripals in UK,’ Bolton wrote on Twitter.  ‘We need an urgent statement from Pres. Trump demanding a full explanation from the Russians.’

“Trump’s reluctance to publicly condemn provocations by Moscow has become a point of contention in the run-up to the 2020 election.  Democratic presidential candidate Joe Biden on Monday accused Trump of ‘subservience’ to Russian president Vladimir Putin, specifically criticizing the president for failing to raise the issue of reported Russian bounties on U.S. troops in Afghanistan during multiple phone calls with Putin.

“Secretary of State Mike Pompeo reportedly raised the issue with his counterpart in a call earlier this month, but Trump has said publicly that he has not addressed it with Putin, and has at times dismissed the reports as ‘fake news.’

“ ‘That was a phone call to discuss other things, and frankly, that’s an issue that many people said was fake news,’ Trump said in an interview with ‘Axios on HBO’ in July, referring to a recent call with the Russian leader.  ‘If it reached my desk, I would have done something about it.’

“The dynamic recalls Trump’s reaction to the U.S. intelligence community’s conclusions that Russia interfered in the 2016 U.S. election and is working to sway November’s polling as well. The president has consistently and repeatedly taken Russian leader Vladimir Putin’s side in the matter.

“On Wednesday, U.S. Attorney General William Barr continued the Trump administration’s attempt to deflect attention from Russia, telling CNN’s Wolf Blitzer that U.S. intelligence shows that China has been more aggressive in its election meddling.

“One day later, the Department of Homeland Security issued an intelligence bulletin warning of Russian disinformation on mail-in voting….

“Current and former officials say Trump’s personal sensitivity to any suggestion that Russia may have helped him win his office has complicated efforts to hold Moscow accountable for behavior the U.S. government considers objectionable.

“For days after the ramming incident at Dayrick (Syria, noted above) had become public through social media, the Pentagon was silent on the matter.  Finally – and unusually – it was the National Security Council that confirmed the incident in a statement.  Asked why the statement hadn’t come from the Pentagon or U.S. Central Command, the U.S. official pinned it on a fear of the White House’s reaction if the military were to talk about Russian provocations.

“I think they’re just extremely sensitive – they know the White House is extremely sensitive to any criticism of Russia,’ the official said.  ‘Okay, you talk about it.’”

Today, National Security Adviser Robert O’Brien said the United States had conveyed its concerns to Russia over the incident in Dayrick.  “It’s been communicated at the appropriate level.”

Belarus: President Alexander Lukashenko promoted hardline loyalists to top posts in his security apparatus on Thursday in an effort to strengthen his grip on the former Soviet republic after weeks of mass protests and strikes.

“Belarus finds itself confronting an external aggressor one-to-one,” he told the new security chiefs.  But he has provided no evidence that foreign powers are behind the protests.  The opposition has denied this, and NATO has also denied his allegations that it is massing forces near the Belarusian border.

President Vladimir Putin said last week the Kremlin had set up a reserve police force at Lukashenko’s request but it would be deployed only if necessary.

Human rights experts from the United Nations said this week they had received reports of hundreds of cases of torture, beatings and mistreatment of Belarusian protesters by police.  The government has denied abusing detainees and has said its security forces are acting appropriately.

Two former TV anchors were arrested in the capital Minsk on Wednesday night.

Lithuania, Latvia and Estonia imposed travel bans on Lukashenko and 29 other Belarusian officials on Monday, jumping into action to impose sanctions before the rest of the EU.

China: The Pentagon told Congress Tuesday that China’s stockpile of nuclear weapons numbers in the “low 200s,” providing its most precise estimate to date of Beijing’s nuclear capabilities.

While this number is a fraction of what the United States and Russia have deployed, the Pentagon is projecting that China’s nuclear arsenal will at least double in the next decade as Beijing expands and updates its triad of land-based missiles, missile-carrying submarines and bombers.

“China’s nuclear forces appear to be on a trajectory to exceed the size of a ‘minimum deterrent’ as described in the PLA’s own writings as a small quantity of nuclear weapons to strike enemy urban targets,” said the report, using the acronym for the People’s Liberation Army.

“Over the next decade, China’s nuclear warhead stockpile – currently estimated to be in the low 200s – is projected to at least double in size as China expands and modernizes its nuclear forces,” it added.

The U.S. has 1,750 nuclear warheads currently deployed on its long-range and shorter-range systems, while Russia has 1,572 deployed warheads among its stockpile.

China, as I’ve written for years, has long declined to disclose the size of its program.  [Michael R. Gordon and Nancy A. Youssef / Wall Street Journal]

Taiwan’s Defense Ministry released its annual report on China’s military prowess, delivered to parliament, and it laid out scenarios for Chinese actions, including blockades and seizing offshore islands.

It said China’s military continues to dedicate itself to strengthening live fire drills, building its strength for new types of battle and developing emerging technology and weapons.

“But on the operation of tactics and strategy toward Taiwan, it is still restricted by the natural geographic environment of the Taiwan Strait, and its landing equipment and logistics abilities are insufficient,” it added.

“It still does not have the formal combat capability to fully assault Taiwan.”

Separately, an Australian writer Yang Hengjun, detained by Chinese authorities for 18 months, has told family he has refused to make a false confession, as his case appears to move closer to trial.

Yang’s lawyer was on Thursday allowed access to the Beijing detention facility where the 55-year-old writer is being held, for the first time since he was detained in January 2019, friends said.

Yang was formally charged with suspicion of espionage in March this year.  Australia has strongly objected to the indictment.

“I am innocent and will fight to the end,” Yang said in a message to his family. “I will never confess to something I haven’t done,” as told by a friend to Reuters.

Yang, a prominent Chinese blogger, was intercepted by security officials at Guangzhou airport as he arrived on a visit from New York, where he lived.

On Monday, Australia’s foreign ministry revealed a second Australian journalist, the high-profile Chinese state television host Cheng Lei, had been detained by Chinese authorities.

North Korea:  The UN’s International Atomic Energy Agency wrote in a report released Tuesday that nuclear activities in North Korea remain a cause for “serious concern,” and the rogue state continues to enrich uranium, which could be used in an atomic weapon.

The activities by the country are in “clear violation of relevant UN Security Council resolutions,” the report said.

The report also notes that what was once the heart of the country’s nuclear program, the Yongbyon site, has likely been shut down since 2018 – and that no plutonium has been produced there in the past year.

The agency has not been allowed in the country since the nation expelled it in 2009, but it has been analyzing satellite imagery and using open source information to track North Korea’s nuclear program.

Still, the information it’s able to get about the program is “declining” because the agency’s been locked out of the hermit kingdom.

Lebanon: A French roadmap for Lebanon’s next government calls for the immediate resumption of talks with the International Monetary Fund to fix the shattered economy and swift moves to fight graft and introduce other reforms that have been delayed for years.

French President Emmanuel Macron on a visit to Beirut delivered a stark message to Lebanon’s leaders: deliver on reforms by the end of October or face sanctions.

Macron, whose pressure prompted Lebanon’s bickering leaders to agree on a new prime minister, has spearheaded international efforts to set Lebanon on a new course after decades of corrupt rule led to its deepest crisis since the 1975-1990 civil war.

Lebanon’s banks are paralyzed, its currency has crashed and sectarian tensions are rising.  On top of that you had the huge blast at the port that killed more than 190, injured 6,000, and displaced 300,000.  Damage is now estimated by the World Bank to be up to $4.6 billion.

“The disaster will not only exacerbate the contraction in economic activity, but also worsen poverty rates, which were already at 45 percent of the population just prior to the explosion,” the World Bank said in a statement on Monday.  “Implementation of a credible reform agenda will be key to accessing international development assistance and to unlock external and private sector sources of financing.”

Meanwhile, Mustapha Adib, the former ambassador to Germany, was designated prime minister hours before Macron arrived.  Before taking up the post, he must secure approval for his cabinet, which usually takes month.  Macron set a two-week deadline.  “The challenges are overwhelming and cannot bear delay,” Adib said on Wednesday.

Macron added that international aid would be withheld if Lebanon’s leaders failed to follow its own “road map” to comprehensive reform of the system.

“I will not give a blank check,” he said.  “Today is not about going back to business as usual.”

Macron’s trip on Tuesday reflects Europe’s vested interests in a stable Lebanon, which was a former French colony.

Separately, Lebanon’s army said on Thursday it had found 4.35 tons of ammonium nitrate near the entrance to Beirut port, the site of the blast last month, caused by 2,750 tons of the material stored in unsafe conditions. The public remains anxious that more hazardous materials are being stored badly, putting them at risk.

Earlier, President Michel Aoun ordered repairs to be made to an old refueling infrastructure at Beirut airport and called for an investigation into a report that thousands of liters of fuel had leaked from the system.

Iran: Supreme Leader Ayatollah Ali Khamenei said in a speech on Tuesday that the UAE has betrayed the Islamic world and the Palestinians by reaching a deal toward normalizing ties with Israel.

“Of course, the UAE’s betrayal will not last long, but this stigma will always be remembered.  They allowed the Zionist regime to enter the region and forgot Palestine,” Khamenei said.  “The Emiratis will be disgraced forever…I hope they wake up and compensate for what they did.”

Israel and the UAE expect economic benefits from the deal, the first such accommodation between an Arab country and Israel in more than 20 years, which was forged largely through fear of Iran.  But Palestinian leaders believe it further erodes their struggle for an independent state.

Random Musings

--Presidential tracking polls….

Gallup:  42% approve of President Trump’s job performance, 55% disapprove; 90% of Republicans approve, 39% of independents (July 30-Aug. 12).  We will receive an important (telling) update next week.
Rasmussen: 52% approve, 48% disapprove (Sept. 4). 46/52 the week before; 51/47 the week before that.

--A new USA TODAY/Suffolk University national poll has Joe Biden leading President Trump 50%-43%, down from a 12-point edge Biden held in June.

As noted by USA TODAY’s Susan Page and Sarah Elbeshbishi, “As Labor Day looms, launching the campaign’s final sprint, the survey finds significant skepticism about whether the election itself can be trusted.  If their candidate loses, one in four voters say they aren’t prepared to accept the outcome as fair and accurate – a signal of potential trouble ahead for a nation already engulfed in a deadly pandemic and riven over issues of racial justice.”

As I noted above, this topic is highly depressing.

In all, 28% of Biden’s supporters say they aren’t prepared to accept a Trump victory as fairly won; 19% of Trump’s supporters say they aren’t prepared to accept a Biden victory as legitimate.

An overwhelming 83% of Republicans say they are at least somewhat concerned that mail-in voting will lead to voter fraud; 62% are very concerned.

Only a third of Democrats are concerned about mail-in voting being open to fraud.

Republicans are more than twice as likely as Democrats to say they’ll vote in person and on Election Day, 56% compared with 26%.  Democrats are more than twice as likely as Republicans to plan to vote absentee or by mail, 47% compared with 21%.

--A USC (Southern Cal) Dornsife Daybreak Poll, post conventions, has Joe Biden with an 11-point lead, 52% to 41% as of Monday.  At least in this survey, the violence in places like Portland, Ore., and Kenosha, does not seem to have had any influence.

A CNN Poll of Polls gives Biden a 51-43 advantage nationally.

--But while national polls are one thing, the race is decided in the battleground states and a Fox News survey of three of them showed Joe Biden leading President Trump in all three, among likely voters.

Arizona: Biden 49-40.
North Carolina: Biden 50-46.
Wisconsin: Biden 50-42.

A new Monmouth University poll of registered voters in Pennsylvania had Joe Biden holding a 4-point lead over Trump, 49-45, which is down from a 10-point Biden lead just over six weeks ago, due to declining support for the challenger among men, voters under age 50, and voters in key swing counties.

--According to an ABC News/Ipsos post-convention poll, most Americans (62%) view the incident with Jacob Blake, which left him paralyzed from the waist down, as a sign of broader problems in the treatment of African Americans by police. But that number is not as stark as the 74% who said the same in the wake of the killing of George Floyd.

The downward trend is driven by a decline across ideological and racial groups, but most sharply among Republicans and white Americans. The last time this question was posed was in early June, when 55% of Republicans and 70% of whites said the fatal incident involving Floyd was a sign of a broader problematic pattern.

Now, only 27% of Republicans and 52% of white say the same; big decreases in both.

Only 31% of the country has a favorable view of the president, while Biden’s favorability remains higher than his unfavorability, 46% to 40%.

Vice President Mike Pence is viewed positively by only 31%, while nearly half of Americans (49%) have an unfavorable view of him. 

Biden’s vice presidential nominee, Sen. Kamala Harris, is steadily rising in her favorables, with 43% giving her strong marks in this poll, compared to 35% right before the Democratic convention.  34% have a negative view of Harris.

--Joe Biden accused Donald Trump of being a “weak” and “toxic” leader who has “fomented” violence in the country.  Speaking in Pittsburgh, Biden said the U.S. was facing multiple crises, which “under Donald Trump, keep multiplying.”

In his speech in Pittsburgh on Monday, Mr. Biden said the president “long ago forfeited any moral leadership in this country.”

“He can’t stop the violence – because for years he has fomented it,” he told supporters, adding: “We need justice in America. And we need safety in America.  We are facing multiple crises – crises that, under Donald Trump, keep multiplying.”

“Does anyone believe there will be less violence in America if Donald Trump is re-elected?” he asked.

Biden did say: “Rioting is not protesting.  Looting is not protesting.  Setting fires is not protesting.  It’s lawlessness, plain and simple, and those who do it should be prosecuted.”

Trump, after Biden’s speech, accused the former vice president of “blaming the police” for protests and violence in the country.

“Just watched what Biden had to say,” he wrote on Twitter.  “To me, he’s blaming the Police far more than he’s blaming the Rioters, Anarchists, Agitators, and Looters, which he could never blame or he would lose the Radical Left Bernie [Sanders] support!”

In a tweet earlier on Monday, Trump said “Radical Left Mayors & Governors of Cities where this crazy violence is taking place have lost control of their ‘Movement.’”

Biden ridiculed Mr. Trump for linking him to the violence, asking in his speech on Monday: “Do I look like a radical socialist with a soft spot for rioters?  Really?”

Biden called Trump “an incumbent president who sows chaos rather than provides order” and a “toxic presence on our nation…poisoning our very democracy.”

Editorial / Wall Street Journal

“Later (in Biden’s Pittsburgh speech) he again denounced ‘the right-wing militias and white supremacists and vigilantes with assault weapons – often better armed than the police, often in the middle of the violence – at these protests.’

“Fair enough, but for a man of the left, denouncing right-wing militias is easy.  Surely Mr. Biden knows that the protests and riots since Memorial Day are overwhelmingly led by Black Lives Matter and Antifa.  Mr. Biden didn’t mention those groups in his prepared remarks, and he never used the worlds ‘left-wing’ to describe those who are burning businesses and attacking police precincts.  Mr. Biden conflated the two sides, though leftist militants are dominating urban streets.

“Mr. Biden spent most of his speech attacking Mr. Trump for stoking division, and sometimes the President has.  But the concern many Americans have about Mr. Biden is that he won’t be strong enough to take on the radical left.  On that point his speech wasn’t reassuring.”

--The three presidential debates are set.  Fox News Sunday anchor Chris Wallace will host the first one, Sept. 29.  C-SPAN’s Steve Scully hosts the second, a town-hall style debate, Oct. 15.  And NBC’s Kristen Welker will host the final debate, Oct. 22.

The sole vice-presidential debate will he held on Oct. 7 and moderated by USA TODAY’s Susan Page.

--A Kennedy had won in Massachusetts all 26 times it was on the ballot, until this week, when four-term Congressman Joseph Kennedy III was defeated in his primary battle to become senator by incumbent Sen. Ed Markey.  The margin was substantial, 56-44 percent.

Kennedy was supported by House Speaker Nancy Pelosi (who said she always supports her House members in such a race).

But 74-year-old Markey is a political veteran who co-authored the Green New Deal with Congresswoman Alexandria Ocasio-Cortez, AOC strongly supporting him.

“Our movement is fueled by young people who are not afraid to raise their voices or make enemies,” Markey wrote on Twitter after Tuesday’s primary.  “Tonight’s victory is a tribute to those young people and to their vision.”

I never understood why the 39-year-old Kennedy thought it was time to rush things.  He should have just waited six years for Markey to retire, while building up his gravitas.  He’d still just be 45.  Dumb, dumb, dumb. 

--Gallup has been examining relations between White and Black Americans since 2001 and they have been souring since 2018 to the most negative of any year in Gallup’s tracking.  The majority of U.S. adults say relations between White and Black Americans are very (24%) or somewhat bad (31%), while less than half call them very (7%) or somewhat (37%) good.

From 2001 through 2013, most Americans were upbeat about White-Black relations, with the percentage calling them good to any degree ranging from 63% to 72%.  The sharp decline in positive perceptions to 47% in 2015 followed numerous high-profile incidents in the prior year of unarmed Black citizens being killed by White police officers.

--Michael R. Bloomberg announced on Thursday that his philanthropic foundation would make a $100 million donation to four historically Black medical schools, in an effort to improve the health and wealth of Black communities, with an immediate goal of easing the financial burden on about 800 medical-students, who will each receive grants of up to $100,000.

The donations will be made to Charles R. Drew University of Science and Medicine, in Los Angeles; Howard University College of Medicine, in Washington; Meharry Medical College, in Nashville; and Morehouse School of Medicine, in Atlanta.

There is a broader aim of increasing the number of Black doctors in the United States.

“By increasing the number of Black doctors, we hope the gift will help to save more Black lives and reduce the health problems that limit economic opportunity in Black communities,” Bloomberg told the New York Times.

--Law enforcement agents shot and killed an Antifa supporter on Thursday as they moved to arrest him in the fatal shooting of a right-wing activist who was part of a pro-Trump caravan in Portland, Oregon.  The suspect was shot by officers from a federally led fugitive task force during an encounter in Lacey, Washington, about 120 miles from Portland.  Officers at the scene said Michael Forest Reinoehl, 48, was armed.

--After six awful months, nearly half of New Yorkers say that the Big Apple is heading in the wrong direction, according to a new survey from the Manhattan Institute; 46 percent saying it’s heading the right way, while 42% say it’s off on the wrong track. 

22% surveyed named the city’s economy as their biggest worry, closely followed by 21% who said they were worried most about public safety.

48% of Manhattanites said they’re happy in their current neighborhood when asked where they’d live if they could live anywhere.  Another 14% said they would pick another spot in the city.

But just 23% of respondents in The Bronx said they were happy in their current neighborhood.

Only 45% approve of the job Mayor de Blasio is doing, 46% disapprove.

For those of you not from the region, understand for liberal Gotham, these numbers are terrible for de Blasio.  Gov. Cuomo, by comparison, receives a 73% approval rating from the same respondents.

53% of New Yorkers approve of the Police Department with 40% disapproving.

--Related to the above, the NYPD reported there were 53 murders in August in Gotham, versus 36 the same month in 2019.  Shootings surged 166% with 242 reported last month.

Murders were up 34% for the year, with 291 reported between Jan. 1 and Aug. 31, compared with 217 in the same period last year.

--What an awful accident at sea this week.  A cargo ship, the Gulf Livestock 1, capsized in the East China Sea amid strong winds and heavy seas whipped up by Typhoon Maysak.  A third crewman was found today by the Japanese coastguard, but 40 are missing and presumed dead at this point.

But what is also awful is there were 6,000 cattle on board! 

There are reports from over the past two years that the ship may have had some mechanical defects.

--Finally, a hero from my youth, New York Mets pitcher and Hall of Famer, Tom Seaver, died at the age of 75 after a long illness.  I will have a ton on him in my next Bar Chat column, but he gave us Mets fans (and later Reds and White Sox faithful) so much joy, including one of the best baseball stories of all time, the Miracle Mets of 1969.  Seaver, then just 24, was the undeniable leader, along with legendary manager and fellow Marine, Gil Hodges.  Seaver captured the hearts of New York like few others have.

RIP, Tom Terrific…The Franchise.

---

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

God bless America.

---

Gold: $1940
Oil: $39.51

Returns for the week 8/31-9/4

Dow Jones  -1.8%  [28133]
S&P 500  -2.3%  [3426]
S&P MidCap  -2.5%
Russell 2000  -2.7%
Nasdaq  -3.3%  [11313]

Returns for the period 1/1/20-9/4/20

Dow Jones  -1.4%
S&P 500  +6.1%
S&P MidCap  -8.0%
Russell 2000  -8.0%
Nasdaq  +26.1%

Bulls 61.5
Bears
16.4….prior two weeks the splits were 59.2/16.5, and last week’s 60.0/16.2, which was unavailable at the time I posted.  Reminder, this is a contrarian indicator and the 60 level recorded last week was a true warning sign…at least historically that has been the case.  The current 61.5, which reflects opinions of newsletter types, would have been their opinions largely published by this past Monday.  At least for one week, the indicator worked.

Hang in there.  Mask up…wash your hands.

Happy Labor Day.

Brian Trumbore