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Week in Review

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09/12/2020

For the week 9/7-9/11

[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 1,117

Special thanks this week to Dr. W. for his ongoing support.

Another week in Trump World, less than eight weeks until Election Day, and what we know is that the race is tight between the president and Joe Biden.  It is indeed down to the same battleground states and you know the president is going to be frantically running around holding his airport hangar rallies, as many as he can squeeze in.

But there is clearly no more than about five percent of the electorate up for grabs.  Will the Bob Woodward book, coupled with The Atlantic article by Jeffrey Goldberg, sway even one or two percent of these undecideds?  Maybe, but certainly no more than that.

What seems clearer to me today is the first debate, Sept. 29, could be the entire race.  If Biden holds his own, and given all the ammunition he’s been handed in just the past week between the Goldberg piece and Woodward’s tome, if his staff is worth a damn they’ll prepare him to go on the offensive right at the start (without getting too tongue-tied), he wins a majority of the key six states and probably the election.

I recognize the Trump base isn’t moving.  It’s my job to watch every rally and I saw the comments of the Trump supporters in Michigan when asked why they weren’t wearing masks and I was horrified.  It was pure stuff out of QAnon.  It depresses the hell out of me that so many in this country actually hold some of these beliefs.

I cover the Woodward book down below and it really comes down to the Feb. 7 comment, where the president admitted he knew Covid was “deadly stuff” and that it was “airborne,” and then on March 19, that it’s not just old people catching it, “it’s young people,” but also that he “always plays it down.”

What we know definitively today, because Woodward has the president on tape at key moments, is that Donald Trump has lied to us consistently for months on the dangers of Covid-19.

I won’t talk about body counts in this context, but for all those dealing with kids having to continue with online learning rather than being in a classroom from 8:00-3:00, and for all those restaurant and gym owners who are struggling mightily, or have tragically already shut down, for America’s sports fans who are lucky as hell to at least have sports to watch now but can’t attend games in person, which impacts all the workers at the stadiums, arenas and ballparks, or for college football fans of the Big Ten and Pac-12 who can’t even watch their favorite teams or alma maters play, if you don’t hold President Trump at least partially responsible for your predicament or that of your community (I’m biting my tongue), then good luck.

Donald Trump betrayed the people’s trust and deliberately misled us.

On this anniversary of 9/11, we are hopelessly, nay, bitterly divided as a people, true hatred on both sides, rather than the unity we displayed as a nation 19 years ago, and we are also now destined to be dealing with Covid-19 for months to come, vaccine or no vaccine.  Dr. Anthony Fauci is right when he said today, we won’t be back to normal, defined as last January, until well into next year, if that. 

That’s sad.  It didn’t have to be this way.   

Covid-19 death tolls, as of tonight….

World…919,575
USA…197,421
Brazil…130,474
India…77,506
Mexico…70,183
UK…41,614
Italy…35,597
France…30,893
Peru…30,344
Spain…29,747
Iran…22,913

Source: worldometers.info

U.S. daily death tolls…Sun. 432; Mon. 286; Tues. 498; Wed. 1,208*; Thurs. 1,089; Fri. 1,094.

*Because of the Labor Day holiday, ‘catch-up Tuesday’ became catch-up Wednesday this week.

In my weekly Wednesday comparison of the Euro six (Germany, France, Spain, Italy, UK and Belgium, with a population of 336 million vs. the United States, 330 million), the U.S. had 35,244 cases and 1,208 deaths vs. the Euro six cumulative totals of 23,301 and 90.

Yes, again, cases in Europe continue to spike, with new highs in France and Spain, highly worrisome, but the fatality rates have thus far been minimal in this second wave.

President Trump made a statement Thursday night at his rally in Michigan that was yet another bald-faced lie, saying “Europeans experienced 50% more deaths than the U.S. yesterday,” Wednesday.

The figures were U.S. 1,208, Europe 397 (including 142 in Russia).  Who feeds him this stuff?

Covid Bytes

--AstraZeneca Plc stopped giving shots of its experimental coronavirus vaccine after a person participating in one of the company’s studies got sick, a potential adverse reaction that could delay or derail efforts to speed an immunization against Covid-19, though company officials said the trials could resume as soon as next week once they get a handle on the cause of the illness, was the patient already ill with Covid, etc.

The vaccine, which AstraZeneca is developing with researchers from the University of Oxford, has been viewed as one of the leading candidates.  The partners are aiming to enroll as many as 50,000 participants for late-stage trials that are underway in the U.K., the U.S., Brazil and South Africa, with others planned for Japan and Russia.

--Separately, several drug makers developing Covid vaccines issued a public pledge not to seek government approval until the shots have proven to be safe and effective.

Companies including Pfizer, Johnson & Johnson, and Moderna Inc. committed to making the safety and well-being of vaccinated people the companies’ priority.  The vaccine makers also pledged to adhere to high scientific and ethical standards in the conduct of clinical studies and in the manufacturing processes.

--Infectious-disease experts are warning of a potential cold-weather surge of coronavirus cases – a long-feared “second wave,” possibly at a catastrophic scale.  While this could occur before Election Day, Nov. 3, researchers assume the crest would come weeks later, closer to when fall gives way to winter.

This has been hypothesized since the beginning of the pandemic, but as Eili Klein, an epidemiologist at Johns Hopkins University School of Medicine, told the Washington Post, “My feeling is that there is a wave coming, and it’s not so much whether it’s coming but how big is it going to be.”

Yes, national numbers have been trending downward but the virus has hardly been suppressed to the point where the nation can let down its guard.  And now schools have opened.  On the second day of classes this week, my town of Summit had a middle-school student test positive, and neighboring Chatham had a similar event, forcing that district to go virtual after, like Summit, starting off with a combination of four hours or so of in-person learning and then online for the afternoon.

A model produced by the University of Washington’s Institute for Health Metrics and Evaluation is forecasting a “most likely” daily death toll of 1,907 on Election Day, roughly double the current toll.  Under the latest IHME model, the numbers would continue to rise until early December, peaking at more than 2,800 deaths daily.

By year’s end, 410,000 people in the United States will have died under this model.

“People’s behavior is a dramatic determinant here,” said Christopher Murray, the director of IHME.  “Look at what happened in Florida [after the spike in cases].  People got scared.  They started wearing masks, they stopped going to bars.”

But the converse is also true:  If people stop being vigilant, the virus bounces back, and look at all those not wearing masks at both Trump rallies and the ongoing social justice protests.

--The Israeli government is going to be voting on shutting down the country a second time this Sunday, per the latest reports, which more than takes the shine off Prime Minister Benjamin Netanyahu’s diplomatic successes, covered below.  Israel saw record numbers of cases this week.

--The state of Victoria in Australia on Sunday extended a hard lockdown in its capital Melbourne until September 28th as the infection rate has declined more slowly than hoped.

The lockdown was ordered on August 2nd in response to a second wave of infections that erupted in Melbourne.

Victoria accounts for 75% of the country’s cases, but you can imagine folks in Melbourne are going nuts, businesses destroyed….

--Just like the pandemic helped speed the bankruptcy filings of U.S. retailers such as Lord & Taylor and Neiman Marcus, Japan’s oldest department stores have begun bankruptcy proceedings.  One, the Onuma department store in the northern Japanese city of Yamagata, has been around for “more than three centuries.”

Many of Japan’s leading retailers are known for fancy food halls, luxury items, impeccable service, and rooftop attractions to entertain families.

This year, with consumers wary of shopping and tourism decimated, sales have plunged.  And consumers in Japan, just like everywhere else, are shopping online.

“Closures will weigh on property prices, jobs and many other aspects of an already weakening regional economy,” a government official told Reuters.

--There is little doubt the Sturgis Motorcycle Rally in South Dakota was a superspreader event, though a new study that analyzed cellphone pings for rally attendees and the Covid-19 case numbers in the communities they returned to estimates that more than 265,000 infections confirmed between Aug. 2 and Sept. 2 trace back to the massive gathering of motorcycle enthusiasts.

“We found that for counties that had a lot of people going to Sturgis, after the rally, their case numbers started taking off relative to similar places that did not have a lot of people going to Sturgis,” Andrew Friedson, an economics professor at the University of Colorado Denver and one of the study’s authors, told the New York Daily News Tuesday.

He said the 266,796 cases of Covid-19 linked to Sturgis represent 19% of the 1.4 million new coronavirus cases confirmed in the U.S. during the study time frame.

Now I do not believe this number, but it’s safe to say the impact was significant.

Trump World

--What more we learned from Bob Woodward’s “Rage”:

January 28:  National security adviser Robert O’Brien told the president: “This will be the biggest national security threat you face in your presidency. This is going to be the roughest thing you face.”

Matthew Pottinger, the deputy national security adviser, agreed. He told the president that after reaching contacts in China, it was evident that the world faced a health emergency on par with the flu pandemic of 1918, which killed an estimated 50 million people worldwide.

Ten days later, Trump called Woodward and revealed that he thought the situation was far more dire than what he had been saying publicly.

“You just breathe the air and that’s how it’s passed,” Trump said in a Feb. 7 call.  “And so that’s a very tricky one. That’s a very delicate one.  It’s also more deadly than even your strenuous flu.”

“This is deadly stuff,” the president repeated for emphasis.

At that time the president was telling the nation Covid was nothing more than a seasonal flu, predicting it would soon disappear…when the weather gets warmer, you know….

On March 19, Trump admitted to Woodward that he deliberately minimized the danger.  “I wanted to always play it down,” Trump said.

Trump called Woodward to boast about his “law and order” stance outside St. John’s Episcopal Church two days after he had peaceful protesters forcibly removed for his photo op, June 3.

Woodward had conversations with Trump on “white privilege,” Woodward suggesting the two had a responsibility to better “understand the anger and pain” felt by Black Americans and Trump told him, “You really drank the Kool-Aid, didn’t you? Just listen to you. Wow. No, I don’t feel that at all.”

Trump even tells Woodward: “I have built a nuclear – a weapons system that nobody’s ever had in this country before. We have stuff that you haven’t even seen or heard about. We have stuff that Putin and Xi have never heard about before.  There’s nobody – what we have is incredible.”

The book documents private grumblings, periods of exasperation and wrestling about whether to quit among the so-called adults of the Trump orbit: former Defense Secretary Jim Mattis, former director of national intelligence Daniel Coats and then-Secretary of State Rex Tillerson.

Mattis quietly went to Washington National Cathedral to pray about his concern for the nation’s fate under Trump’s command and, according to Woodward, told Coats, “There may come a time when we have to take collective action” since Trump is “dangerous. He’s unfit.”

In a separate conversation recounted by Woodward, Mattis told Coats, “The president has no moral compass,” to which the director of national intelligence replied: “True.  To him, a lie is not a lie. It’s just what he thinks. He doesn’t know the difference between the truth and a lie.”

Trump told White House trade adviser Peter Navarro at one point, according to Woodward, “(My) fucking generals are a bunch of pussies. They care more about their alliances than they do about trade deals.”

Thursday, at a brief press conference at the White House before he went off to do his Michigan rally that evening, Trump cast his deception as a virtue – instilling calm to protect the people.

“I don’t want to jump up and down and start screaming ‘Death! Death!’ because that’s not what it’s all about. We have to lead a country,” Trump said.  He added, “There has to be calmness.”

But hours earlier on Twitter he was sounding the alarm about a number of other topics.

“If we don’t win, America’s Suburbs will be OVERRUN with Low Income Projects, Anarchists, Agitators, Looters and, of course, ‘Friendly Protesters.’”

And also: “Sending out 80 MILLION BALLOTS to people who aren’t even asking for a Ballot is unfair and a total fraud in the making. Look at what’s going on right now!”

As the Washington Post’s Philip Rucker noted, Trump was jumping up and down on June 22 when he tweeted: “RIGGED 2020 ELECTION…IT WILL BE THE SCANDAL OF OUR TIMES!”

And his countless tweets of “LAW AND ORDER!”

Trump’s campaign is built on panic. 

Trump said at the Thursday presser (all of three questions taken): “I want to show a level of confidence and I want to show strength as a leader and I want to show that our country is going to be fine, one way or the other.”

A day earlier, White House press secretary Kayleigh McEnany bolstered Trump’s defense by telling reporters: “This president does what leaders do – good leaders: It’s stay calm and resolute at a time when you face an insurmountable challenge.”

That’s laughable.

RUN FOR YOUR LIVES…A BLACK FAMILY IS MOVING INTO THE NEIGHBORHOOD!

That’s the sad reality of his coded language, Little Orphan Annie decoder ring not required.

McEnany also had this gem Wednesday: “The president has never lied to the American public on Covid,” and, “the president never downplayed the virus.”

Bob Woodward will be on “60 Minutes” Sunday.

Opinion…both sides

Editorial / Wall Street Journal

“The books professing dark revelations about President Trump appear to be lined up from here to Election Day, like aircraft heading into LaGuardia. This week it’s Bob Woodward’s turn, with the big news reportedly being that Mr. Trump told him in a taped conversation on Feb. 7 that he had played down the coronavirus knowing it was ‘deadly stuff.’

“This is not news. We know Mr. Trump played down the virus threat at the time because he said so publicly many times.  We wrote an editorial about it on March 12, ‘The Virus and Leadership,’ warning Mr. Trump that voters would judge his Presidency largely on how he handled the virus.  Q.E.D. [Ed. “that which was to be demonstrated.”]

“Mr. Trump now says he was trying to keep people from panicking. And given his preoccupation with marketing, we believe him. We also know the President understood the virus was deadly, even if the risks weren’t fully clear, because he barred arrivals from China on Jan. 31 and Europe on March 11.

“His Administration’s Covid-19 record has also been better than he makes it sound – in mobilizing private-public efforts for testing, PPE and vaccines, and preventing a financial meltdown in March. His main failing has been inconstant rhetorical leadership. He has undersold the virus risks and oversold his own achievements when what the public has wanted all along is the candid reality. This is no small failing in a crisis.

“But we know all this because it is on the public record. This may be the most transparent Presidency in history, for better or worse. His faults and mistakes are on constant display, whether in his own voice or leaks to a press that wants him gone.

“Democrats are now citing the Woodward non-reveal as proof that Mr. Trump is responsible for 190,000 deaths, which is contemptible even by today’s political standards. Covid-19 would have challenged any Presidency, as it has Democratic governors.  Mr. Trump has made mistakes, as we have often pointed out. But he also saved lives and livelihoods by urging an earlier end to the lockdowns that have done horrific economic and public health harm.

“By the way, in February prominent Democrats sounded like Mr. Trump.  Nancy Pelosi on Feb. 24: ‘It’s very safe to be in Chinatown and hope that others will come… We want people to be concerned and vigilant.  However, we don’t want them to be afraid… So, again, this fear is – I think – unwarranted in light of the precautions that are being taken here in the United States.’

“New York Gov. Andrew Cuomo on Jan. 30: ‘We have been here before, and I want to remind New Yorkers that it is much more likely that they will be exposed to the influenza virus than to the coronavirus.’ There are more.

“The media campaign to hold Mr. Trump solely responsible for the harm from Covid-19 is rank political opportunism.  Voters should ignore the campaign and judge the whole record.”

Editorial / Washington Post

“When President Trump was told by advisers on Jan. 28 that he was facing the most formidable national security threat of his presidency with the outbreak of a new coronavirus in China, the danger was already evident in Wuhan. The grave warning to Mr. Trump, as described by Post associate editor Bob Woodward in his new book, ‘Rage,’ made a strong impression on him, as he revealed to Mr. Woodward at the time.  What is astounding and indefensible is that in the months that followed, Mr. Trump willfully deceived the nation about the seriousness of the threat.

“Mr. Woodward’s recorded conversations with the president expose a grave dereliction of duty, This was no casual deceit, no singular slip of the tongue, but a purposeful and repeated falsehood, by Mr. Trump’s own admission to Mr. Woodward on March 19.  ‘I wanted to always play it down,’ he said.  ‘I still like playing it down, because I don’t want to create a panic.’  The cost has been about 190,000 dead so far in the United States, and millions sickened, many seriously.

“How, having been advised that the coronavirus pandemic had the potential to rival the great influenza pandemic a century ago, could Mr. Trump have told the nation in good conscience on Feb. 25, ‘I think that’s a problem that’s going to go away’?  Or Feb. 27: ‘It’s going to disappear.  One day, it’s like a miracle, it will disappear.’  In fact, as he told Mr. Woodward on Feb. 7, he knew the virus was transmissible through the air, that it was ‘deadly stuff,’ ‘more deadly than even your strenuous flus.’  But he said to the public June 20, ‘Many call it a virus, which it is.  Many call it a flu, what’s the difference?’  He knew the answer.

“Mr. Trump’s deception paralleled his catastrophic pandemic response. The president who told Mr. Woodward that ‘you just breathe the air and that’s how it’s passed’ was tardy and fumbling in coming up with face masks and other essential personal protective equipment and negligent in galvanizing a federal response.  Then he walked away, turning matters over to the states and irresponsibly demanding a premature opening in the spring.

“Mr. Trump at first praised China’s leader Xi Jinping for his handling of the crisis, then charged that China misled the world about the virus.  There is no question, as we have pointed out, that China’s closed political system attempted to cover up the Wuhan outbreak. But by engaging in a months-long deception of his own, Mr. Trump forfeits the moral standing to call it out.

“His explanation that he hoped to avoid ‘panic’ may reflect Mr. Trump’s fear that the truth would sink the economy and his own political fortunes. It is a sad reality that Mr. Trump often cannot see beyond his own needs.  His response to the pandemic has been more like a circus barker than a president devoted to stewardship of the nation. The American people would have welcomed transparent, honest information about a looming disaster. Instead, they got lies and fantasy.”

--Acting U.S. Homeland Security Secretary Chad Wolf told a former top aide to stop providing assessments of the threat of Russian interference in the Nov. 3 election and to play down U.S. white supremacist activity, according to a whistleblower complaint released on Wednesday. Brian Murphy, a former Homeland Security deputy undersecretary for intelligence, said in the complaint that Wolf told him in mid-May to begin reporting instead on political interference threats posed by China and Iran, and to highlight the involvement of left-wing groups in domestic disorder.  The instruction had come to Wolf from White House national security adviser Robert O’Brien, Murphy cited Wolf as saying.  The White House and Department of Homeland Security each denied the claims.

--Joe Scarborough / Washington Post

“(Trump’s) savage attacks on America’s military leaders and war dead will leave a lasting scar on his Republican Party.  The playboy scion, who avoided military service in Vietnam by claiming bone spurs, told (Bob) Woodward that the decorated military leaders who serve him are ‘pussies’ and ‘suckers.’  It can be no coincidence that the president reportedly also called the 1,800 Marines who died at Belleau Wood ‘suckers’ for giving their lives in war. After those comments were reported by the Atlantic’s Jeffrey Goldberg, Trump predictably made matters worse for himself by mounting a defense that showed just how much he loathed the military and those who serve as its leaders.

“ ‘They want to do nothing but fight wars so that all of those wonderful companies that make the bombs and make the planes and make everything else stay happy,’ Trump blurted out at a news conference.  This commander in chief offering lectures on the excesses of the military-industrial complex is laughable. He has, after all, championed weapons sales like no president before him.  Trump even refused to cancel billions in arms sales to Saudi Arabia after the killing of Post contributing columnist Jamal Khashoggi because he didn’t want to ‘lose an order like that.’  He said doing so would be unfair to Boeing, Lockheed and Raytheon.

“Trump’s Republican Party has been damaged yet again by their leader’s offensive statements.  It has also lost any claim it ever had at being the U.S. military’s bulwark against left-wing attacks.  A recent Military Times poll suggests that most active duty troops agree, with a plurality supporting Democratic nominee Joe Biden’s presidential bid.

“Perhaps Lindsey O. Graham was right when he predicted that Trump would destroy the Republican Party.  The question that remains is why the South Carolina senator and so many of his peers stay silent while the honor of our military leaders is under attack by America’s president.”

--One of President Trump’s traits is to exaggerate numbers, like you’ve undoubtedly noticed his Wall has magically grown with each campaign hangar rally, now 311 miles per Thursday’s appearance in Michigan…so this week I expect it to grow to 320+.

But at his brief presser on Thursday at the White House, Trump started blasting Joe Biden (and President Obama) for their handling of H1N1, and then started talking about deaths by flu each year in this country, and started with “100,000,” and then a moment later said “hundreds of thousands died of the flu last year…right, Scott,” pointing to Dr. Scott Atlas, his new medical guru who was sitting off to the side.

Dr. Atlas responded, “about 35,000 the last few years.”

--In Michael Cohen’s new book, “Disloyal: A Memoir,” the former Trump attorney says the Trump campaign didn’t need to conspire with the Russian election interference effort. All the candidate had to do was sit back and reap the benefits. The fact that the help came from a foreign adversary was of no consequence to him, Cohen says.

“What appeared to be collusion,” Cohen writes, “was really a confluence of shared interests in harming Hillary Clinton in any way possible, up to and including interfering in the American election – a subject that caused Trump precisely zero unease.”

With Putin, it wasn’t just self-interest – Trump genuinely admires the Russian leader, Cohen says.

Trump worships wealth and power, Cohen writes.

“Everyone other than the ruling class on earth was like an ant, to his way of thinking, their lives meaningless and always subject to the whims of the true rulers of the world,” he writes.

“The cosmic joke was that Trump convinced a vast swath of working-class white folks in the Midwest that he cared about their well-being. The truth was that he couldn’t care less.”

[I have opted to leave out a disgusting tale Cohen tells concerning his daughter, then 15, who Trump comments on while watching her play tennis…not knowing it is Cohen’s daughter.]

--Trump claimed this week “We were coming together as a nation before the plague…I was starting to get calls from Democrats…”

No you weren’t…and no WE weren’t.

--Trump tweets:

“Bob Woodward had my quotes for many months.  If he thought they were so bad or dangerous, why didn’t he immediately report them in an effort to save lives?  Didn’t he have an obligation to do so?  No, because he knew they were good and proper answers.  Calm, no panic!”

“A vote for Republicans is a vote for safe communities, great jobs, and a limitless future for ALL Americans.  Instead of letting Washington change us, despite all that we have been through, we are changing Washington! #MAGA”

“I have taken the toughest-ever action to stand up to China’s rampant theft of Michigan jobs. Sleepy Joe Biden has vowed to remove those Tariffs and allow China to resume its pillaging.  Joe Biden’s Agenda is Made in China, my agenda is Made in the USA!”

“If Joe Biden is elected, far-left lunatics won’t just be running failed Dem Cities – they will be running the Department of Justice, the Department of Homeland Security, and the U.S. Supreme Court.  No city, town or suburb will be safe.  On November 3rd, your vote will SAVE AMERICA!”

“On November 3rd, Michigan will decide whether we will quickly return to record prosperity – or whether we allow Sleepy Joe Biden to impose a $4 TRILLION DOLLAR TAX HIKE, ban American Energy, confiscate your guns, shutdown the economy, shutdown auto production, delay…

“…the vaccine, destroy the suburbs, erase your borders, and indoctrinate your children with poisonous anti-American lies!”

“When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund.  I will ALWAYS protect Seniors and your Social Security!  Sleepy Joe Biden will do the opposite, he will raise your taxes and DESTROY our Country!”

[Ed. Oh yeah…President Trump is all about ‘calm.’]

“Pelosi and Schumer want Trillions of Dollars of BAILOUT money for Blue States that are doing badly, both economically and in terms of high crime, as a condition to making a deal on stimulus – But the USA is coming back strong!”

“Obama is lucky he ran against @MittRomney, a man with very little talent or political skill, as opposed to someone who knows how to fight and win!”

Wall Street, China and the Economy

Stocks fell for a second week as investors continued to assess sky-high valuations on some market leaders, as well as the state of the economy.  There was little economic news of importance, though the weekly jobless claims figure, 884,000, was exactly the same as the prior revised week, with continuing claims rising, not good on either front. Again, to beat a dead horse, this 884,000 figure is well above the pre-pandemic record of 665,000 set during the Great Recession.

Of more import is the fact the Street is now facing the reality that Congress and the White House are polarized over the next coronavirus aid package, even as both sides are in agreement some targeted aid is necessary to avoid a renewed downturn after what has been a vigorous third quarter.  The Atlanta Fed’s GDPNow barometer is pegging Q3’s seasonally adjusted annual rate of growth at 30.8%. 

But the House and Senate are at loggerheads.  The Republican bill unveiled in the Senate on Tuesday would provide around $300 billion in new aid for schools, businesses, medical supplies and other coronavirus-related costs.  Senate Majority Leader Mitch McConnell said in a speech, “Do you want to do something?  Or do you want to do nothing?”

“They (Democrats) do not want any bipartisan relief whatsoever to reach American families prior to the election” on Nov. 3, McConnell said.

Senate Democratic Leader Chuck Schumer countered: “It is impossible to look at this GOP proposal and not wonder – ‘Do our Republican friends see the damage in America?’”

Schumer listed a series of shortcomings in the Republican bill, including the lack of food and rental assistance, aid to state and local governments whose revenues have fallen during the pandemic and  more money for election security at a time when Americans worry about traveling to voting centers for fear of becoming infected.

The two sides have until the end of the month to reach agreement or nothing will get done the rest of the year as Congress goes home to campaign.

Back to the economic data, we had August readings on inflation, and nothing earth-shattering.

Producer prices rose 0.3%, ditto ex-food and energy.  For the last 12 months, the PPI is down 0.2%, up 0.6% on core.

Consumer prices, both headline and core, were both up 0.4%, up 1.3% vs. a year ago, 1.7% yoy ex-food and energy.

On to growing U.S.-Sino tensions….

President Trump called on U.S. companies to leave China, and for American companies there, the meltdown in relations between the two represents the biggest concern in 2020, but few businesses investing in the country long-term are apt to leave while enjoying healthy profits in an economy that has rebounded strongly from its coronavirus issues last January thru March.

According to an annual business survey out of the American Chamber of Commerce in Shanghai, almost two-thirds of respondents said U.S.-China tensions were their biggest worry – the first time bilateral issues have led the poll, and well ahead of the second biggest concern, domestic competition, at 58 percent.

Yet, 92.1 percent of members said they do not have plans to leave China.  Only 5.1 percent of companies with global revenues over $500 million plan to flee the country, even as the Trump administration pushes to decouple the world’s two largest economies.

President Trump: “Under my administration, we will make America into the manufacturing superpower of the world and we’ll end our reliance on China, once and for all, whether it’s decoupling or putting in massive tariffs like I’ve been doing already.”

Only 4.3 percent of AmCham’s members plan to move parts of their operations back to the United States, the fourth most popular destination for diversifying supply chains, with 70.6 percent of businesses planning no change in production allocation, up 5.1 percent on last year.

Some 22.5 percent of respondents said they were delaying investments due to trade war tariffs, compared to 32.3 percent in 2019, suggesting that American businesses in Shanghai are adapting to a new normal, riding out the volatility to tap the world’s largest consumer market.

57.5 percent are now operating a “China-for-China” strategy, meaning they serve the mainland with their operations there, with facilities elsewhere catering for demand outside China.

But just 25 percent of technology hardware, software and service companies – down from 55 percent in 2019, are in this position, showing that a major decoupling is ongoing in this sector.

Firms in China are finding the toxic U.S.-China relationship is impacting their ability to retain Chinese staff in China, particularly in the education and training sector, as well as warehousing and distribution.

The bottom line, though, is the pay-off is clear: despite the trade war, 78.2 percent of U.S. companies doing business in China saw higher profits last year than 2018, with 32.5 percent seeing greater revenues in 2020 versus 2019, despite the pandemic.

Trump also said, Monday: “When you mention the word ‘decouple,’ it’s an interesting word,” stopping short of explicitly committing to a full termination of economic relations with China.  “We lose billions of dollars and if we didn’t do business with them we wouldn’t lose billions of dollars.  It’s called decoupling, so you’ll start thinking about it.”

Appearing to refer to action items for a potential second term, Trump said his administration would roll out a “made in America” tax break and impose “tariffs” on U.S. companies “that desert America to create jobs in China and other countries.”

Trump also argued Monday that farmers were “very happy” with him, owing to bailouts his administration has distributed to offset sales they lost when China slapped punitive tariffs on U.S. farm products in retaliation for the bilateral trade war that the president started in July 2018.

A recent study by economists at Iowa State University showed that some 44 percent of agricultural producers in Iowa, a farming powerhouse and an important state in the November elections, were left struggling to cover costs last year despite the federal stimulus.

Separately, China’s foreign ministry, when asked about reports that the United States may ban some imports from China’s Xinjiang region over alleged human rights violations, said this is a pretext to oppress Chinese customers and incite instability.  The U.S. has no right or qualifications to intervene, foreign ministry spokesman Zhao Lijian said at a daily news conference in Beijing on Wednesday.

U.S. Customs and Border Protection officials have prepared orders to block imports of cotton and tomato products from Xinjiang over allegations, denied by China, they are produced with forced labor, although a formal announcement has not come out.

David Ignatius / Washington Post

“When John F. Kennedy ran for president in 1960, he claimed there was a dangerous ‘missile gap’ between Russia’s arsenal and that of the United States.  But once he took office in 1961, Kennedy learned that the imbalance was the opposite of what he had argued.  Instead of the 200 or more Soviet intercontinental ballistic missiles that scaremongers had predicted, the Russians had just four.

“Something similar may be happening now with the Trump administration’s claims that China poses a military and economic threat to the United States that’s so severe, Washington should begin ‘decoupling’ its economic relationship with Beijing, especially in high-tech products.

“President Trump amplified the China scare talk in remarks to reporters on Monday.  ‘They’re building up a powerful military, and it’s very lucky that I’ve been building ours up because otherwise we’d be dwarfed right now by China,’ he said.  ‘If Joe Biden becomes president, China will own the United States.’

“Trump called decoupling ‘an interesting word,’ and implied he would pursue it in a second term: ‘Under my administration, we will make America into the manufacturing superpower of the world and we’ll end our reliance on China, once and for all, whether it’s decoupling or putting in massive tariffs.’

“China certainly has made big advances in technology and military weapons over the past decade.  But some leading experts say the claim that China is ahead on key technologies, such as artificial intelligence, is flat wrong. And they warn that policies that seek a radical break between the U.S. and Chinese economies, as Trump implies, could backfire.

“ ‘China is closing the gap in technology but the U.S. can widen its lead if it adopts the right policies,’ argues Jason Matheny, a former director of IARPA, the intelligence community’s in-house think tank.  Matheny is a professor at Georgetown University and contributed to a recent review of technology issues for the Working Group on Science and Technology in U.S.-China Relations, sponsored by the University of California at San Diego and the Asia Society.

“Peter Cowhey, a UCSD dean who chairs this working group, summarized its findings at an online meeting of the UCSD China Forum last week: ‘The U.S. is in much better shape than the pessimists think,’ and it should protect the openness and dynamism that have made the United States the world’s technology superpower.  But at the same time, Cowhey cautioned, Washington should continue to restrict access to certain key technologies, such as the manufacture of semiconductors, where the United States has a decisive competitive advantage.

“Studies from around the world document the U.S. advantage over China in artificial intelligence, perhaps the most important of the emerging technologies.

“A study published in August 2019 by the Center for Data Innovation, a research institute based in Washington and Brussels, found that ‘despite China’s bold AI initiative, the United States still leads in absolute terms.’  The United States scored first in four of the study’s key metrics: talent, research, development and hardware. China led in the other two, adoption of the AI technology and access to data that feeds it….

“A study published in 2018 by Oxford University researcher Jeffrey Ding measured countries’ AI capabilities.  China’s score was about half that of the United States.

“The United States leads the race because it’s the place where the brightest minds want to study, work and live. A report published in June by the Paulson Institute found that the United States ‘has a substantial lead over all other countries in top-tier AI researchers,’ with nearly 60 percent working for American companies and universities.  China is the biggest source of these top-tier engineers, but more than half of them remain in the United States….

“Richard J. Danzig, a former Navy secretary who’s leading a study of U.S.-China technology decoupling for the Johns Hopkins Applied Physics Laboratory, argues in a forthcoming paper with co-author Lorand Laskai that the United States must protect its dominance in making semiconductor chips, but that Beijing has ‘no prospect’ of reaching its goal of 70 percent self-sufficiency by 2025.

“The United States and China have an increasingly competitive relationship, but they need each other, too, like conjoined twins.  Hasty attempts at separation could harm them both.  Open research made U.S. technology great; making it more difficult for the best brains to live and work here would be folly.”

Europe and Asia

Slow week in terms of eurozone economic data after the crush of last week.  The European Central Bank left rates unchanged Thursday, as expected, with the ECB continuing its monthly asset purchase program as long as needed and will end the program shortly before it starts to hike rates, the accompanying statement said.

The ECB staff macroeconomic projections did increase the expected economic growth rate for 2020 to reflect an 8% contraction, narrower than the 8.7% contraction estimate in July.  Expectations for 2021 were lowered to a 5% growth rate from 5.2% previously, with inflation seen rising 0.3% in 2020 and 1% in 2021, the bank said.

Brexit: It has been a chaotic week.  Britain started by setting out new details of its blueprint for life outside the European Union, publishing legislation a government minister acknowledged would break international law in a ‘limited way’ and which could sour trade talks.

After leaving the EU in January, Prime Minister Boris Johnson has pushed on with plans for the end of a status quo period in December, and hoped a bill on Britain’s internal market would set in stone the transfer of powers from Brussels.

But as you’ve seen there has been zero movement for months over the two main issues, fisheries and state aid, and then we got a statement from Johnson’s Northern Ireland minister Brandon Lewis who said that the new bill being proposed would “break international law in a very specific and limited way,” which only made matters worse.

The EU has warned Britain that if it reneges on the divorce deal there would be no agreement.  London has repeatedly said it will respect the withdrawal agreement and Northern Ireland protocol, saying its bill contained only “clarifications.”

The two sides have maintained they only have to October to agree on a free trade deal, which would ease the worries of some companies who fear disruption at the borders and of supply chains at a time when many are struggling with the coronavirus crisis.

In a statement, the government hailed its Internal Market Bill as a way of empowering Britain and ending the reign of “unelected EU bodies.”

“This bill will also give the UK government new spending powers to drive our economic recovery from Covid-19 and support businesses and communities right across the UK,” said Michael Gove, a key cabinet minister.

“No longer will unelected EU bodies be spending our money on our behalf.  These new spending powers will mean that these decisions will now be made in the UK, focus on UK priorities and be accountable to the UK parliament and people of the UK.”

The bill is intended to allow all companies to be able to trade unhindered in Britain’s four nations, to transfer powers to Britain allowing it to replace some of the EU’s spending programs, and set up a new body to monitor internal trade.

On Northern Ireland, Brandon Lewis said in a separate statement that the provisions would ensure businesses based in the British region would have “unfettered access” to the rest of Britain, without paperwork.

It would also ensure that there would be no legal confusion as to the fact that while Northern Ireland would remain subject to the EU’s state aid regime, Britain would not.

Scotland and Wales say the planned bill would undermine the UK by stealing powers from devolved powers from Wales, Scotland and Northern Ireland.

Britain then said it agreed to meet the EU over the implementation of the divorce deal, a UK government spokesperson said, after Brussels called on such a meeting swiftly to clarify “strong concerns” over London’s latest domestic Brexit bill that could undercut the earlier agreement.

For its part the EU has threatened the UK government with legal action if it does not ditch its Internal Market Bill by the end of the month.

Trade talk negotiators on both sides have acknowledged they are still clashing on “significant” issues.

The new legislation will be formally debated by MPs in the House of Commons for the first time on Monday, with focus on the Northern Ireland Protocol – an element of the Brexit withdrawal agreement designed to prevent a hard border returning to the island of Ireland.

The UK said on Thursday nothing could override the free flow of goods between Northern Ireland and the rest of the United Kingdom.

“The Protocol makes clear that Northern Ireland is fully part of the customs territory of the United Kingdom and that there will be unfettered access for goods moving from Northern Ireland to the rest of the United Kingdom.”

The EU’s chief negotiator Michel Barnier said the bloc is stepping up preparations for a no-deal Brexit at the end of this year after he said London disappointed on many fronts.

Speaking after an eighth full round of negotiations on a new partnership with the UK in London, Barnier said the EU has shown flexibility on British demands on fisheries, the bloc’s top court and other areas.

“However, on its side, the UK has not engaged in a reciprocal way on fundamental EU principles and interests,” he said in a statement.  “Significant differences remain in areas of essential interest for the EU.”

Barnier said Britain snubbed the bloc’s calls for level playing field guarantees of fair market competition, as well as on environmental and climate, social and labor standards.

“Nobody should underestimate the practical, economic and social consequences of a ‘no deal’ scenario,” Barnier said.

European diplomats said Britain was playing a game of Brexit “chicken,” threatening to wreck the process and challenging Brussels to change course.  Some fear Johnson views a no-deal exit as a useful distraction from the coronavirus pandemic.

Turning to AsiaChina reported the figures for August exports, up 9.5% year-over-year and the third straight month of increase over 2019.  Key to the export recovery has been China’s outbound shipments of coronavirus-related medical supplies, including face masks, though economists expect the momentum to slow in the coming months as other countries resume production.  Electronic goods have also fared well as much of the developed world shifted to online work at home.

Imports in August, however, fell 2.1% yoy.

August exports to the U.S. were up 20% vs. a year ago, but between Jan. and Aug., exports dropped 3.6% year-over-year, while products to the EU for the eight months rose 2.1%.

Imports from the U.S. fell 2.9% the first eight months, even as China sought to meet its purchasing commitments under the phase one trade deal.

Beijing’s growing trade surplus with Washington – up 27% in August from a year earlier – is bound to grate with President Trump, who has staked his reputation on closing the gap that he claimed was the “greatest theft in history.”

Separately, China’s producer (factory gate) prices fell 2% in August, year-over-year, while consumer prices rose 2.4% yoy.

In Japan, the economy shrank more than expected in the second quarter, a revised -28.1% annualized vs. a preliminary reading of a 27.8% contraction. The main culprit behind the revision was a 4.7% drop in capital expenditure, a sign that the pandemic was hitting broader sectors of the economy.

Separate data showed household spending fell 7.6% in July compared with a year earlier, far more than forecast. Real wages also fell for the fifth straight month in July.

Meanwhile, Japan is pressing ahead with preparations for the Tokyo Olympics next year even though there is no clear sign the coronavirus will be under control by that time, and of course it needs to be under control months and months prior in order to make all the appropriate arrangements.

When asked on Tuesday about the possibility of another postponement or cancellation of the Olympics, Chief Cabinet Secretary Yoshihide Suga said the government was working with related parties to hold the Games next year.

Outgoing Prime Minister Shinzo Abe has said holding the Olympics next summer would mark humanity’s victory over the virus.

Health experts are skeptical.  Even if a vaccine is developed, it would take years to reach some of the world’s less developed countries.

Street Bytes

--Stocks fell hard a second consecutive week, with Nasdaq suffering its worst week since the March crash, -4.1%.  The tech-heavy index had corrected 10% off its recent record high after Tuesday’s big plunge and then finished roughly even the following three days.  The Dow Jones lost 1.7% to 27665, while the S&P 500 fell 2.5%.  Again, it’s about valuations, fears of a potential second wave in the fall that crimps demand all over again, and political uncertainty that has markets jittery.

--U.S. Treasury Yields

6-mo. 0.12%  2-yr. 0.13%  10-yr. 0.67%  30-yr. 1.41%

Treasuries remained in a narrow range, a little flight to safety trade in the long end of the curve with equities struggling again.

--Oil prices slumped to their lowest level in nearly three months Tuesday, closing at $37.39 today, coming under pressure from planned production expansions by OPEC, as well as from a stalling recovery in demand, largely owing to a flare-up of coronavirus cases around the world, such as in India, Great Britain, Spain and parts of the United States.

Record oil imports by China, the return of automobiles to U.S. roads and steep production cuts fueled a rebound after crude prices crashed this spring. But Chinese purchases have slowed since mid-July, the comeback in American gasoline demand has stalled and OPEC is boosting output.

--Meanwhile, Exxon Mobil is facing a $48 billion shortfall through 2021, that may push the energy giant to slash staff size and reduce projects, CNBC first reported Monday.

The company, which borrowed $23 billion in 2020 to pay bills, may see a $1.86 billion loss for the full year, excluding asset sales or write downs.

An Exxon spokesman told CNBC that the company has now undertaken a review to evaluate cost cutting and to “maximize efficiency and capture additional cost savings to put us in the strongest position.”

--A tentative deal between United Airlines and the union representing its pilots would distribute the airline’s flight schedule among a larger number of pilots in an effort to avoid furloughs.  Earlier, United and the union, which represents more than 13,000 pilots, said they had reached an agreement in principle to potentially save jobs.

United has said that some 2,850 pilots were at risk of being furloughed without an extension of government aid.

The TSA daily checkpoint numbers, while improved over the Labor Day holiday, settled back into the 30-35 percent of 2019 numbers after, and we’ll see when that gets into the steady 40 level, let alone 50 percent.

For example, United had forecast a 70% year-over-year decline in third-quarter capacity and a bigger drop in passenger revenue than its previous expectation, but it did say it was adding non-stop flights to Africa, India and Hawaii next year.

United expects passenger revenue to be down approximately 85% in Q3 compared with the year-ago quarter, and it said it will continue to evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand, and expects demand to remain suppressed and plateau at around 50% compared with 2019 levels until a Covid-19 treatment and/or vaccine is widely available.

Delta Air Lines said it has seen a slight increase in travel demand but expects the recovery to be “choppy,” CFO Paul Jacobson said at a conference.

Jacobson said the airline is focusing on reducing expenses, noting that daily cash burn has been reduced by more than 70% to about $27 million as refunds slowed down.

--Ryanair has threatened to pull the plug on flights from Cork and Shannon airports (Ireland) this winter if the Government does not lift flight restrictions.

Ryanair has been furious with the Government and its “mismanagement” of the coronavirus.  Ryanair executive Eddie Wilson said, “forward bookings this winter in Cork and Shannon, and to a lesser extent in Dublin, have suffered irreparable harm.”

The Government is expected to review its travel restrictions on Monday, but Wilson says, “You should be aware that if these quarantine restrictions from EU states are not lifted before the end of September, we will have no alternative but to close our Cork and Shannon bases on a temporary basis for this winter season.

“In those circumstances all pilots and cabin crew will be put on unpaid leave from the end of October.”

In July, Ryanair said it was cutting 1,000 flights serving the Irish market, citing the Government’s 14-day quarantine rules.

The Irish tourism industry has been decimated, with hoteliers warning almost three-quarters of tourism-related jobs are at risk.  The Irish Hotels Federation said that 100,000 of some 270,000 tourism jobs in the State at the start of the year had been wiped out by the pandemic, with a further 100,000 at “imminent risk in the coming weeks” amid a slump in autumn and winter bookings across hotels and guesthouses. 

July and August saw average national room occupancy at 49 percent, compared with 90 percent for the same months last year, it said.

At the same time, for months, there has been a running debate on reopening pubs, which as anyone who has been to Ireland knows are frankly the worst settings for avoiding Covid.  But the industry is on its last legs, so the Government is opening them up, at great risk.

--Shares in Boeing had a tough go of it in the holiday-shortened week as new manufacturing issues were discovered with its 787 Dreamliner, with inspections affecting the timing of deliveries at least in the near-term.

Boeing secured its first 737 MAX order in 2020, but recorded more cancellations as customers continued to ditch orders for the grounded jets, Boeing saying it lost another 17 orders in August; bringing the total number of canceled orders, including conversions, to 445 for the year.

Separately, Boeing is submitting to an independent ethics probe of its behavior in bidding to supply lunar landing vehicles, Reuters reported Wednesday.

A criminal investigation is underway on whether NASA’s former human exploration chief, Doug Loverro, acted unethically while guiding Boeing executive Jim Chilton through the bidding process.

--Marriott announced it is laying off 673 workers from its Bethesda, Maryland, headquarters due to the slump in travel amid the pandemic.

For the week ending Aug. 29, U.S. weekly hotel occupancy was down 28% from the same period in 2019, according to data firm STR.

Marriott employs about 4,000 workers at its North Bethesda headquarters.

In March, Marriott International said it was furloughing tens of thousands of employees due to a tidal wave of cancellations.

Marriott is the largest hotel chain in the world with 1.38 million rooms worldwide. The company’s brands include its namesake hotel chain, Westin, Sheraton, Courtyard by Marriott, Residence Inn by Marriott, The Ritz-Carlton and Renaissance Hotels.

--Shares in Tesla had their worst day ever on Tuesday, down 21% after the company was passed over for addition to the S&P 500 index. The stock, which hit an intra-day record high of $502 on Sept. 1, closed at $330 a week later, and finished  the week at $373, with violent swings up and down amid a battle between the bulls and bears on the company and its valuation.

--General Motors announced a partnership with Nikola, the alternative-fuel trucking pioneer, with shares in Nikola rising 40% in response.

Under the terms of the agreement, GM will engineer and build Nikola’s pickup truck named Badger, with GM taking an 11% stake in Nikola and having the right to nominate one person to the board of directors,   The 11%, or roughly $2 billion, equity stake will be due from “in-kind” contributions, which means, not cash.  The Badger is expected to enter production by year-end 2022.

GM stock rose 8% in response.  Nikola’s stock move gives the startup a market capitalization of about $19 billion.  Nikola expects to save $4 billion in manufacturing costs and $1 billion in engineering costs.

“This strategic partnership with Nikola, an industry-leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems,” said GM CEO Mary Barra in a company release.  “We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability.”

But then on Thursday, Nikola shares fell 11% as short-seller firm Hindenburg Research accused  the company of being an “intricate fraud built on dozens of lies.”

Hindenburg said it gathered evidence including phone calls, messages and emails that show dozens of “false statements” made by NKLA founder Trevor Milton.

Regarding the deal with GM, Hindenburg said, “Nikola seems to be bringing nothing to the partnership but concept designs, their brand name and up to $700 million they will be paying GM for costs related to production.”  Today the stock plunged further, another 14%, as the fraud allegations gained steam.

--China’s car sales grew at their fastest rate in more than two years in August, driven by heavy discounts and new-model debuts, adding momentum to a second-half recovery after the deep slump of the first half amid the pandemic.

Retail passenger-car sales in the country increased by 8.9% last month from a year earlier to 1.7 million vehicles, the China Passenger Car Association said Tuesday, marking the strongest rate of growth since May 2018.

It was also the second straight month in which sales outpaced those of the same month last year.

--Good news…container imports are flowing back into the U.S. after a six-month hiatus, with U.S. retailers knocked back by pandemic-driven lockdowns now stocking up before the holiday season.

The demand is filling up container ships across the Pacific and operators are restoring cargo-vessel sailing that were cut by as much as a third at the height of the pandemic.

The Port of Los Angeles said August “will more than likely be” the best August in the history of the port, according to executive director of the port, Gene Seroka, the largest U.S. gateway for seaborne container imports, said this week.  And September is looking strong too.

“Capacity from Asia to the U.S. West Coast is 25% higher than it was in May and around 7% on year,” said Jonathan Roach, a shipping analyst at London-based Braemar ACM Shipbroking.

With the rebound in demand, freight rates are heading up as well.

--Walt Disney Co.’s release of “Mulan,” which is set in China and meant to appeal to audiences there, has provoked a backlash on social media over its star’s support of Hong Kong police and for being partly filmed in the Xinjiang region.  Hong Kong democracy activist Joshua Wong and internet users in Taiwan and Thailand are among those who promoted hashtags #BoycottMulan and #BanMulan on Twitter, following this month’s launch of the film on Disney’s streaming platform.  It will also be shown in cinemas in China – an increasingly important market for Hollywood studios – from Sept. 11.

Disney’s 2019 mega-hit “Avengers: Endgame” took in $629.1 million in China, roughly 23% of its $2.8 billion worldwide total.  A 2019 remake of “The Lion King” sold $120 million worth of tickets in China, or about 7% of its global receipts.

Disney’s shares rose, however, as investors shrugged off the backlash on hopes that subscribers to the company’s streaming video service in the U.S. and other markets paid $30 over the weekend to watch the film as part of a test release amid the coronavirus pandemic.

Criticism of the live-action remake of a 1998 animated version began last year when Mulan’s star, mainland Chinese-born actress Liu Yifei, expressed support on social media for police in Hong Kong, which was roiled at the time by anti-government protests.

Wong, the Hong Kong activist, accused Disney of “kowtowing” to China, citing Liu and another actor’s support for police in the territory and the movie’s credits mentioning state organizations in Xinjiang.

Disney has not released any data on the number of streams for Mulan as yet.

--Northrop Grumman Corp. received a long-anticipated Air Force contract valued at $13.3 billion to proceed into full development of the United States’ next intercontinental ballistic missile, the land-based segment of the nation’s nuclear triad, the Air Force announced Tuesday.

It’s the first installment in what’s estimated to be at least an $85 billion program to develop and build a replacement for the aging Minuteman III ICBM.  Work will be performed in Roy, Utah, and other locations nationwide and is expected to be completed February 2029.

The entire effort to modernize the delivery systems for nuclear weapons via land-based systems, submarines and strategic bombers is expected to cost as much as $1.2 trillion through 2046, the Congressional Budget Office estimated in 2018.

--Citigroup said Thursday that CEO Michael Corbat was retiring and stepping down from the board in February.  The board then named Jane Fraser, currently the company’s president and CEO of global consumer banking, as Corbat’s successor at CEO. Fraser has been at Citi for 16 years and has been in her current roles since 2019.

Fraser will be the first woman to lead one of Wall Street’s big six banks, a significant event.

In a memo to employees, Thursday, both Mr. Corbat and Ms. Fraser cited the need for Citigroup to invest even more heavily in its global infrastructure for risk and controls.  Mr. Corbat said putting those plans in the hands of his successor was one reason it was time for a new leader.

Citigroup, the third-largest U.S. lender, has struggled for years to convince the Street that management’s vision of a global bank with a hodgepodge of profitable, if unrelated, businesses will work. Citi has major technology issues that have also plagued it for years and have represented a sticking point for regulators.

--Oracle offered guidance for its fiscal second quarter that projects year-on-year growth after beating expectations in the first three months of results that prompted price-target upgrades from Wall Street on Friday.  The stock hit a new high of $61.86 in response, but then slid to $56.85 at the close.

In the three months ending Aug. 31, total revenue grew 2% to $9.37 billion, with CEO Safra Katz saying, “This quarter was all about solid execution on the sales side and disciplined management of our operations as operating income grew 8%, our best result in 3 years.”

Cloud services and license support revenue rose 2% to $6.95 billion, while cloud license and on-premise license rose 9% to $886 million.

An RBC research note stated that the “near-term shift to the cloud apps creates headwinds to margin expansion.”

--Lululemon Athletica saw its shares fall about 10% as it forecast adjusted third-quarter profit would fall 15%-20% due to higher marketing expenses.

Lululemon said it earned 74 cents a share on revenue that rose 3% year over year in its fiscal second-quarter to $902.9 million, better than expected on both metrics.

However, revenue at company-operated stores fell 51% to $287.2 million, though direct-to-consumer revenue jumped 157% to $554.3 million, representing 61.4% of total revenue.

Lululemon and others have struggled to make up for store closures with online sales, so the increase is an encouraging sign.

--Peloton Interactive Inc. beat analysts’ estimates for quarterly revenue on Thursday as the exercise bike maker benefited from a surge in subscribers and demand for its fitness products during the pandemic.  The shares surged 13% in response, but then finished today down 4%.

Stay-at-home stocks have benefited from increased demand and sales of Peloton’s electric bikes and other fitness equipment more than tripled this year to $485.9 million in the quarter. Subscriptions rose 113% to 1.09 million.  The company forecast revenue for fiscal year 2021 between $3.5 billion and $3.65 billion, with analysts expecting $2.72bn, according to Refinitiv data.

--LVMH Moet Hennessy said it will not be able to close its $16.2 billion takeover of jewelry Tiffany due to complications arising from the transaction.

The French luxury goods giant cited both a request from the French Foreign Affairs Ministry to delay the transaction due to threats of U.S. tariffs on French products and Tiffany’s request to extend the deadline to Dec. 31 from Nov. 24.

In a separate release, Tiffany said it has initiated a lawsuit against LVMH in the state of Delaware to force the French conglomerate “to abide by its contractual obligation” and close the transaction on agreed terms.

Tiffany said that LVMH breached its obligations by failing to file for antitrust approval in at least three of the required jurisdictions.

“We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders,” said Tiffany chairman Roger Farah.  “Tiffany is confident it has complied with all of its obligations under the merger agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH.”

Tiffany shares fell 9% on the news, but cut the losses some by week’s end.

LVMH has been looking to get out of the deal ever since the pandemic hit.  Thursday, the company said Tiffany’s first-half results and its outlook for 2020 “are very disappointing, and significantly inferior to those of comparable brands of the LVMH Group during this period.”

The company added, “LVMH will be therefore led to challenge the handling of the crisis by Tiffany’s management and its Board of Directors.”

LVMH said the management of Tiffany during the crisis meant the company had suffered a material adverse event, which under the merger agreement would allow LVMH to walk away from the deal.

This fight has just begun.

--J.C. Penney Co. Inc. reached a tentative deal with landlords and lenders valued at $1.75 billion to rescue the beleaguered department store chain from bankruptcy proceedings, averting a liquidation that would have threatened roughly 70,000 jobs and represented one of the most significant business collapses following the pandemic.

Mall owners Simon Property Groups Inc. and Brookfield Property Partner LP have teamed up to acquire JCP’s retail operations and are putting the final touches on an agreement, according to a company attorney.

Approval from a bankruptcy judge is expected in early October, in time for the holiday season.  A restructured J.C. Penney is expected to operate about 650 stores.

--More than 300 storefronts along Broadway in Manhattan are vacant, a 78% increase from three years ago, according to a survey from the Manhattan Borough President Gale Brewer’s office, as the pandemic has done a number on brick-and-mortar businesses.

“The rent is so high, particularly on Broadway in Manhattan, that it’s hard for the small shops to make a go of it,” Ms. Brewer said.  “At this point, with the gates down and sometimes plywood on the storefront, you don’t know whether it’s going to be rented.”

Separately, New York’s secretive and venerable private clubs have been laying off employees, as old-school benefits and rituals become impracticable during the pandemic.

The University Club, for example, is laying off 243 workers, while the Harvard Club is axing 299, both having to notify the Department of Labor.

Many of the club members simply aren’t working in the City anymore.  [Gwen Everitt / Crain’s New York Business]

--But JPMorgan Chase & Co. executives told senior employees of the bank’s giant sales and trading operation that they and their teams must return to the office by Sept. 21.  Employees with child-care issues and medical conditions that make them more vulnerable to coronavirus complications can continue working from home.

Amazon.com said last month that it would expand its physical offices in New York and other cities, signaling its belief in the long-term viability of office work.

President Trump tweeted:

“Congratulations to JPMorgan Chase for ordering everyone BACK TO OFFICE on September 21st.  Will always be better than working from home!”

--South Africa’s economy shrank by an annualized 51% in the second quarter, its worst quarterly decline in at least a century and one of the steepest contractions recorded by any major economy during the pandemic.  Compared with the second quarter last year, South Africa’s GDP plummeted by 17.6%, the statistics agency said.

Africa’s most developed economy imposed a strict lockdown in late March, closing most businesses and banning the sale of alcohol and cigarettes along with other items not considered essential.  [Glad I don’t live in South Africa, re the former item…but I digress…]

The restrictions managed to slow the spread of the coronavirus in South Africa, but infections increased after large parts of the economy were allowed to reopen in July.

--The number of high school students using e-cigarettes has dropped significantly over the past year, after several years of soaring growth, according to a study administered by the Centers for Disease Control and Prevention.

The 2020 National Youth Tobacco Survey revealed that among high school students, 19.6 percent reported using an e-cigarette at least once in the prior 30 days, down sharply from 27.5 percent in 2019.  That translates to a decline in regular users to 3 million, from 4.1 million a year earlier.

The sharp decline reflects a drumbeat of efforts from public health experts to illuminate the risks of e-cigarettes.   At least 68 people died and 2,807 had been hospitalized as of February of this year from lung-related disease linked to vaping, according to the CDC.

While the Trump administration instituted a ban on flavored e-cigarettes, a loophole still allows the sale of flavored disposable e-cigarettes.

Sales of flavored products have now soared, among regular users.

Foreign Affairs

Russia/Belarus: Russian opposition politician Alexei Navalny has made further progress in his recovery after what Germany said was poisoning with a Soviet-style Novichok nerve agent, and is able to speak again, Der Spiegel magazine reported.

The magazine also reported that Navalny’s protection has been stepped up in the expectation he would be receiving more visitors as his condition improved.

Secretary of State Mike Pompeo said on Wednesday there was a “substantial chance’ his poisoning was ordered by senior Russian officials, but President Trump has said little.

German politicians are pressuring Chancellor Angela Merkel to reconsider Germany’s Nord Stream 2 pipeline project with Russia following the poisoning of Navalny.  Defense Minister Annegret Kramp-Karrenbauer said the question of sanctions on the pipeline, which will bring gas from Russia to Germany, rested on Moscow’s cooperation in clearing up what exactly happened to Navalny.

In Belarus, Nobel prize-winning author Svetlana Alexievich accused the authorities of terrorizing their own people on Wednesday as another opposition politician was detained by masked men in plain clothes.  Maxim Znak was the latest figure to be seized in a systematic campaign by the government of President Alexander Lukashenko to round up leaders of a month-long mass protest movement.

“What is happening is terror against the people,” said Alexievich, who summoned supporters to her home.  “We have to unite and not give up our intentions.  There is a danger we will lose the country,” she said.

The interior ministry said 121 more protesters had been arrested on Tuesday.  New protests broke out in Minsk on Wednesday evening and several people were arrested by masked security forces, local media footage showed.

Lukashenko, who retains the backing of Russian President Vladimir Putin, is supposedly going to Moscow on Monday for talks.

Exiled opposition leader Sviatlana Tsikhanouskaya said during a visit to Poland on Wednesday that the opposition could ask foreign countries to play a mediation role if Belarus is not able to resolve its own internal conflict.  She also said the demonstrations must remain peaceful.

Lukashenko said something curious, admitting he may have stayed in power as president a little too long, but that he was the only person capable of protecting the country for now, Russian news agencies reported him as saying on Tuesday.  “Yes, maybe I overstayed a bit,” the TASS news agency cited Lukashenko as saying in an interview.

China/Hong Kong/Taiwan: Hong Kong police arrested hundreds of people including key activists as protest again flared up on the city’s streets Sunday after weeks of relative calm since the implementation of a national security law.

A total of 270 people were arrested for illegal assembly.

Prominent pro-democracy activists with the League of Social Democrats, Figo Chan, Raphael Wong and Leung Kwok-hung, were arrested, according to a Facebook post by the group.

The trio “were accused by the police of leading more than 30 people to gather, were escorted into a police car and taken back to the police station for arrest,” according to a post.

In a statement, the government on Sunday condemned the protests, calling them “unlawful” and “selfish” as they threaten public health, adding that independence slogans may be in violation of the security law.

Taiwan denounced China on Thursday over large-scale air and naval drills off its southwestern coast, calling them a serious provocation and a threat to international air traffic.  It urged Beijing to rein in its armed forces.

China, which claims democratic Taiwan as its own, has once again stepped up military exercises near the island, in what Taipei views as intimidation to force it to accept Chinese rule.

Yeh Kuo-hui, from Taiwan’s defense ministry, told a news conference that China’s intentions could not be predicted.  “We must make all preparations for war readiness.”

The drills have been taking place in Taiwan’s air defense identification zone.

Taiwan has been carrying out live-fire weapons tests off its southeast and eastern coast.  President Tsai Ing-wen has warned of a rising risk of accidental conflict, saying communication must be maintained to cut the risk of miscalculation.

George F. Will / Washington Post

“The Biden administration’s first grave test approaches, not silently on little cat’s feet but in the noisy stomping of totalitarians’ boots.  In 2021, Taiwan might provide the most perilous U.S. moment since the Cuban missile crisis of 1962.

“The U.S. policy of ‘strategic ambiguity’ regarding Taiwan has become untenable, as has Joe Biden’s 2001 stance.  President George W. Bush, asked that year whether the country has an obligation to defend Taiwan against an attack by China, said; ‘Yes, we do, and the Chinese must understand that.’  Bush was asked, ‘With the full force of the American military?’  He answered: ‘Whatever it took.’  Bush’s national security adviser, Condoleezza Rice, said ‘the Taiwan Relations Act makes very clear that the U.S. has an obligation that Taiwan’s peaceful way of life is not upset by force.’

“Biden responded: ‘No. Not exactly.’  In a Post op-ed, Biden reaffirmed the U.S. commitment to preserving Taiwan’s ‘autonomy’ under the 1979 Taiwan Relations Act, and to providing Taiwan with ‘defense articles and defense services’ necessary for ‘sufficient self-defense capability.’  But he said the United States ‘has not been obligated to defend Taiwan since we abrogated the 1954 Mutual Defense Treaty,’ in 1980.

“The act, Biden said, makes it U.S. policy that ‘any attempt to determine the future of Taiwan by other than peaceful means would…be ‘of grave concern.’’  But Biden stressed ‘a huge difference between reserving the right to use force and obligating ourselves, a priori, to come to the defense of Taiwan.’  He said that neither Taiwan nor Beijing should have ‘the ability automatically to draw us into a war across the Taiwan Strait.’

“But even 19 years ago, it was essentially unthinkable that Taiwan would ‘draw us into’ a war by attacking the mainland.  Today, time is Taiwan’s friend.  A 2001 poll measured Taiwanese vs. Chinese identity among Taiwan’s residents. It found that 10.6 percent identified as Chinese, 41.6 percent as Taiwanese, 43.1 percent as both.  Today, 66 percent identity as just Taiwanese, 28 percent as both, and just 4 percent as Chinese.  Although a majority of Taiwanese favor independence someday, today’s threat to the status quo comes from Beijing.

“The ‘one China policy’ – the diplomatic fiction that the Republic of China (Taiwan) and the People’s Republic of China are parts of the same entity – has been made a mockery in Hong Kong.  In 2001, China was just beginning the military buildup produced by a 900 percent spending increase between 1990 and 2017….

“Today, Hong Kong’s liberty is a guttering candle because Chinese dictator Xi Jinping meant what he said in 2017: ‘The wheels of history roll on, the tides of the times are vast and mighty.’ Tides with wheels?  Never mind.  Xi said: ‘History looks kindly on those with resolve, with drive and ambition, and with plenty of guts; it won’t wait for the hesitant.’  From the bloodshed on the China-India border to the lawless aggressiveness in the South China Sea to the coarse bullying by China’s ‘Wolf Warrior’ diplomats, especially in Europe, China is demonstrating the arrogance that begets recklessness.

“Furthermore, a regime’s internal dynamics often presage external behavior, so it is ominous, the New York Times reports, that Xi’s regime is directing the security agencies to ‘drive the blade in’ and ‘scrape poison off the bone’ as they ‘resolutely put absolute loyalty, absolute purity and absolute dependability into action’ to make everyone ‘obey Xi in everything.’

“Xi has suffocated Hong Kong because he could, and because free people on China’s periphery threaten the mainland with a destabilizing political virus.  Regarding Taiwan’s 24 million free people, he said last year: ‘We make no promise to renounce the use of force and reserve the option of taking all necessary means.’

“To Xi, Taiwan’s autonomy means that the communist conquest of China in 1949 remains incomplete.  Completing it would secure his place in Chinese history.  If he considers attacking Taiwan, or even just one of its nearby islands, will he know President Biden’s intentions?  Ambiguity is useful in diplomacy, until it becomes dangerous.”

Lastly, with problems at the India-Chinese border, India announced it had become the fourth country to successfully flight test hypersonic technology, joining an elite club alongside the U.S., Russia and China with the ability to develop missiles that can travel several times faster than the speed of sound.

The Indian defense ministry said its test of a demonstration vehicle on Monday was conducted from an island off Odisha, an eastern coastal state in India.  In a statement, the ministry said its hypersonic cruise vehicle with an indigenously developed scramjet engine had reached an altitude of 98,000 feet and traveled at six times the speed of sound.

Lovely.

North Korea: Kim Jong Un on Saturday toured areas hit by a typhoon, replaced a local provincial party committee chairman and ordered Pyongyang officials to lead a recovery effort, state media reported on Sunday.  The Korean Central News Agency admitted to more than 1,000 homes being destroyed along the coastline.

North Korea’s ruling party has called for punishment of officials whose failure to follow orders results in “dozens of casualties’ during typhoons.

Probably not a good thing for the local officials’ resumes.

One upcoming date to watch for a potential missile test or two is Oct. 10, which will mark the 75th anniversary of the Workers’ Party founding, one of the regime’s most important events in years.

“North Korea does have a lot of problems,” said Go Myong-hyun, a research fellow at the Asan Institute, a Seoul-based think tank.  “But that does not mean North Korea will suspend development or work on its nuclear weapons.”

Meanwhile, the Bob Woodward book revealed some of the letters President Trump received from Kim Jong Un.  Trump told Woodward he evaluates Kim and his nuclear arsenal like a real estate target: “It’s really like, you know, somebody that’s in love with a house and they just can’t sell it.”

Kim welcomed Trump’s overtures with over-the-top prose in letters.  Kim wrote that he wanted “another historic meeting between myself and Your Excellency reminiscent of a scene from a fantasy film.”  And he said his meetings with Trump were a “precious memory” that underscored how the “deep and special friendship between us will work as a magical force.”

In another letter, Kim wrote to Trump, “I feel pleased to have formed good ties with such a powerful and preeminent statesman as Your Excellency.”  And in yet another, Kim reflected on “that moment of history when I firmly held Your Excellency’s hand at the beautiful and sacred location as the whole world watched with great interest and hope to relive the honor of that day.”

I feel dirty.

Trump was taken with Kim’s flattery, Woodward writes, telling the author pridefully that Kim had addressed him as “Excellency.”  Trump remarked that he was awestruck meeting Kim for the first time in 2018 in Singapore, thinking to himself, “Holy shit,” and finding Kim to be “far beyond smart.”  Trump also boasted to Woodward that Kim “tells me everything,” including a graphic account of Kim having his uncle killed.

Trump did not share his letters to Kim – “those are so top secret,” the president said.

Trump reflected on his relationships with authoritarian leaders generally, including Turkish President Erdogan.  “It’s funny, the relationships I have, the tougher and meaner they are, the better I get along with them,” he told Woodward.  “You know?  Explain that to me someday, okay?”

Oh brother.

Iran: The country has begun to build a hall in “the heart of the mountains” near its Natanz nuclear site for making advanced centrifuges, Iran’s nuclear chief said on Tuesday, aiming to replace a production hall at the facility hit by fire in July.  Iran said at the time that the fire was the result of sabotage and had caused significant damage that could slow the development of advanced uranium enrichment centrifuges.

“Due to the sabotage, it was decided to build a more modern, larger and more comprehensive hall in all dimensions in the heart of the mountain near Natanz.  Of course, the work has begun,” said Ali Akbar Salehi, according to state TV.

Natanz is the centerpiece of Iran’s enrichment program.  Tehran maintains it’s for peaceful purposes.  Western intelligence agencies and the UN’s nuclear watchdog believe Iran had a coordinated, clandestine nuclear arms program that it halted in 2003.

Iraq: The Trump administration said it is cutting the number of U.S. troops in Iraq to about 3,000 this month, a reduction from 5,200 there now.

The move is part of President Trump’s effort to reduce the American military footprint in both Iraq and Afghanistan prior to the election.  The top U.S. commander in the Middle East, Gen. Frank McKenzie, said improvements in Iraq’s security forces allowed the U.S. to downsize.

The United States has been working with Iraqi Security to battle ISIS, and a report from the UN Security Council, the eleventh on the threat still posed by Islamic State in Iraq and the Levant (ISIL, or Da’esh), notes the threat remains.

From the Security Council report:

“Against the background of the coronavirus disease pandemic, the report highlights a surge in ISIL activity in Iraq and the Syrian Arab Republic and among some of its regional affiliates.  ISIL has not been able to reconstitute its external operations capability, and the measures of Member States aimed at reducing the spread of the virus appear to have temporarily reduced the risk of terrorist attacks in many States outside conflict zones.  However, the pandemic’s impact on ISIL propaganda, recruitment and fundraising activities remains unclear.  Socioeconomic fallout from the crisis could exacerbate conditions conducive to terrorism and increase the medium- to long-term threat, within and outside conflict zones….

“More than 10,000 ISIL fighters are estimated to remain active in Iraq and the Syrian Arab Republic. These fighters, organized in small cells, are freely moving across the border between the two countries and some have managed to find safe haven in the Hamrin Mountains of north-eastern Iraq.”

ISIS remains a threat.  The United States, and Europe, can never let their guard down.

Afghanistan: At least 10 people were killed in a bomb attack in the capital Kabul that targeted First Vice President Amrullah Saleh.  Saleh, a former Afghan intelligence services head, escaped with slight burns on his face and hand, he said.

The blast came as Afghan officials and the Taliban are prepared to begin their first formal talks in Doha, Qatar.

Saleh is known as a vocal opponent of the Taliban, and he has survived several previous assassination attempts, including one last year that killed 20 people at his office.

The Taliban said it was not involved in the blast, but that seems hard to believe.

Saleh vowed to continue his work.  Sounds like a tough SOB.  Good luck.

Turkey/Greece: Two fires on consecutive days totally destroyed Greece’s largest migrant camp, the overcrowded Moria facility on the island of Lesbos.

It was unclear how the fires began, with some blaming the migrants and others blaming Greek locals, but Moria was home to nearly 13,000 people, more than four times the number it can officially hold.  According to InfoMigrants, about 70% of people in the camp are from Afghanistan but migrants from more than 70 different countries live there.

Meanwhile, military tensions are increasing between Greece and Turkey over energy resources in the eastern Mediterranean.  Greece wants to spend part of its multi-billion euro cash reserves on its defense sector.

A Greek government official told Reuters last week that Greece is in talks with France and other countries over the acquisition of fighter jets.

Last month, Ankara sent an exploration vessel into disputed waters, accompanied by warships, days after Greece signed a maritime deal with Egypt.  Ankara has since been extending the vessel’s work in the wider region, issuing advisories which Athens calls illegal.

Turkish President Recep Tayyip Erdogan last weekend warned Greece to enter talks over the disputed territory or face the consequences.

“They’re either going to understand the language of politics and diplomacy, or in the field with painful experiences,” Erdogan said on Saturday.

“They are going to understand that Turkey has the political, economic and military power to tear up the immoral maps and documents imposed,” Erdogan added.

Turkish media reported that tanks were being moved toward the Greek border from Syria.

Israel/UAE: The two countries will be in Washington, D.C., next Tuesday for a signing ceremony for their peace agreement.

Prime Minister Benjamin Netanyahu said he is “proud to be going to Washington next week at U.S. President Donald Trump’s invitation, to participate in the historic ceremony in the White House, celebrating establishing a peace treaty between Israel and the United Arab Emirates.”

Separately, Saudi Arabia’s ruler King Salman bin Abdulaziz told President Trump there would be normalization with Israel without Palestinian statehood, the kingdom’s state news agency reported on Monday.

But while Saudi Arabia does not recognize Israel, it did allow Israeli airliners to use its airspace for a first time to allow flights between UAE and Israel, an important move symbolically.

And then this afternoon, President Trump announced that Bahrain had joined the UAE in striking an agreement to normalize relations with Israel, another move aimed at easing tensions in the Middle East.

Bahrain thus becomes the fourth Arab country to reach such an agreement with Israel since exchanging embassies with Egypt and Jordan decades ago.

The king of Bahrain reiterated the necessity of reaching a fair and lasting peace between the Israelis and Palestinians, based on a two state solution.

A spokesman for Iran’s parliament speaker tweeted that the agreement between Israel and Bahrain is a great betrayal to the Islamic cause and Palestinians.

“The imprudent leaders in UAE, #Bahrain must not pave the way for the Zionist schemes.  They should learn lessons from history.  Tomorrow is late!  The U.S. lifeline has worn out for years.”

The Turkish Foreign Ministry on Saturday strongly condemned the decision by Bahrain, adding it will deal a fresh blow to efforts to defend the Palestinian cause.

“It will further encourage Israel to continue illegitimate practices towards Palestine and its efforts to make the occupation of Palestinian lands permanent,” the ministry statement said.

Lebanon: Residents of Beirut were shaken again when a large fire broke out Thursday at the main port, sending up a huge plume of smoke near the site of the massive explosion that devastated a large swath of the country’s capital and killed nearly 200 people.  The cause couldn’t immediately be determined, but it served as a grim reminder of the security lapses that led to the Aug. 4 blast, which injured more than 6,000 and left thousands of homes in ruins.

Meanwhile, the United States imposed sanctions on members of Hezbollah and other allied political parties by blacklisting two former government ministers, saying they had aided Hezbollah, which Washington brands a terrorist group.

Hezbollah, a member of the government, condemned the move.

Lebanon’s President Michel Aoun requested the country’s caretaker foreign minister make contact with the U.S. “in order to understand the circumstances” behind the decision.  The move comes at a sensitive time, as a new government is being formed under a tight deadline in a bid to extricate Lebanon from a deep economic crisis. 

Prime Minister-designate Mustapha Adib, named after the last government was forced out following the Aug. 4 blast, is seeking to form a cabinet by early next week, under pressure from France which is leading an international push for deep reforms to unlock pledges of aid.

Random Musings

--Presidential tracking polls….

Gallup: Still no update from July 30-Aug. 12 report.
Rasmussen: 48% approve, 51% disapprove of the president’s performance (Sept. 11).

--A CBS News/YouGov national poll has Joe Biden with a 10-point lead over President Trump, 52% to 42%, according to the Sept. 2-4 survey.

Some 87% of likely Biden voters said their support was “very strong,” compared with 82% in early August. For Trump, 84% said their support was “very strong,” up from 82%.  This suggests the number of persuadable voters has diminished to just a few.

In Wisconsin, Biden held a 6 percentage-point lead over Trump, 50% to 44%.  The Democrat has a 9-point lead in the state among white women, far wider than the 2-point margin Hillary Clinton had in the state in 2016 among that segment of voters.

--A survey of likely voters in Texas by The Dallas Morning News and the University of Texas at Tyler has Trump leading Biden by two, 48 to 46 percent.  That marks a seven-point swing from a July poll that found Biden up 46 to 41.

If you break it down to registered voters, Biden is on top, 44 to 43.

Trump carried Texas by nine in 2016, 52.2-43.2.

--An NBC News/Marist poll has Donald Trump and Joe Biden deadlocked in the battleground of Florida, both gaining 48 percent of likely voters (48-47 Trump among a broader universe of registered voters), with the president ahead among Latinos in the state, and Biden doing better with seniors than Hillary Clinton did four years ago.

Biden leads among Black likely voters, 83-11, women, 57-40, and independents, 51-40.

Trump leads among men, 58-38, white voters, 56-41, and whites without college degrees, 63-35.

But in a significant break from four years ago, Trump holds a narrow edge over Biden among likely Latino voters, 50-46 percent.

In the 2016 race, exit polls showed Clinton bested Trump among Florida Latinos, 62-35; so a hugely worrisome trend for the Biden campaign.

Trump won Florida in 2016, 49.0-47.8.

Another NBC/Marist poll has Biden with a 9-point margin among likely voters in Pennsylvania, 53-44 percent.

Biden is leading among suburban likely voters in the state by nearly 20 points, 58 to 39 percent.  Trump won suburban voters by about 8 points, exit polls showed in 2016.  Trump won Pennsylvania 48.2-47.5.

--A CNBC/Change Research poll showed Joe Biden’s edge over Donald Trump in Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin is unchanged from two weeks ago, before the Republican National Convention.

Across the six, Biden leads 49% to 45%, compared with 49% to 46% two weeks ago.

Arizona: Biden 49-45
Florida: Biden 49-46
Michigan: Biden 49-43
North Carolina: Biden 49-47
Pennsylvania: Biden 50-46
Wisconsin: Biden 50-44

The poll, taken Friday through Sunday, surveyed 4,143 likely voters across the six states.

A majority, 51% said Trump is mentally unfit to be president, while 49% answered that he is fit to hold the job.  But by a 52-48 margin, voters responded that Biden is mentally unfit to be president.

--A Monmouth University Poll revealed 37% said President Trump has done a good job of handling the coronavirus outbreak, while 56% say he has done a bad job, the survey taken before the Woodward book revelations.  Prior readings in this poll had Trump’s positive rating on the pandemic at between 40% and 42%.

77% of Republicans give the president a good rating on his handling of the coronavirus, 34% of independents do and just 5% of Democrats agree.

The president’s overall job approval rating is holding steady at 41% approve and 53% disapprove, among registered voters.

--Big employers including Gap Inc., Old Navy, Target Corp. and Warby Parker are telling employees they can take paid time off to volunteer as election workers this fall as they aim to help solve a national poll-worker shortage and offer workers a way to find a sense of purpose.

Various organizations such as Power the Polls and Civic Alliance are working through their corporate partnerships and have signed up hundreds of thousands of poll workers and other volunteers.

It is estimated that 460,000 poll workers will be needed this year because the coronavirus pandemic could keep home many older Americans, who often serve as poll workers.  Nearly 60% of poll workers were over the age of 60 in the 2018 general election, with nearly 30% over 70, according to a Pew Research Center report.

--There was an interesting story in the Wall Street Journal by Gordon Lubold on how the Republic of Palau in the South Pacific has asked the Pentagon to build ports, bases and airfields on the island nation, offering a boost to U.S. military expansion plans in Asia, as Washington aims to counter Beijing.

China has moved to lay claim to islands in the South China Sea, while threatening Taiwan, and the U.S. is on the hunt to build or reinforce partnerships with other countries to help counter China’s illegal claims, and send a signal that the U.S. is committed to the region.

Last year, Palau’s president, along with his counterparts from Micronesia and the Marshall Islands, met at the White House last year in a show of unity, looking for U.S. support while offering their lands for bases.

But Palau has been aggressive in broadening its cooperation and allowing U.S. access for exercises and training.  They also want Americans to come often.

So years ago, on my first trip to Yap in Micronesia, I boarded a Continental Micronesia plane in Guam for the hour flight to Yap.  This was just a day trip. Arrived at about 7:30, flew back at 5:00.

When I boarded my return flight to Guam that evening, I was greeted by the same captain and crew.  Hey, I had you this morning, I said. ‘It’s the milk run,’ he replied.

The milk run is Guam to Yap to Palau to Manila…and then back.  The pilots, I learned, like it because the airstrips on Yap and Palau were more challenging than standard fare, and Yap’s is indeed very short.

Years after, I then took the milk run to Manila, on my way to Hong Kong, and the approach to Palau is so beautiful.  If you are a diver, for example, it’s paradise and they are desperate for tourism.  It’s just so far away

Anyway, that’s my rambling way of saying I hope the U.S. and Palau strengthen their relationship.  I’ve been afraid China was making inroads on Yap, which wouldn’t be good.

--150 New York City business leaders wrote a letter to Mayor Bill de Blasio that garnered quite a bit of attention.

“Dear Mayor de Blasio:

“As employers who are committed to New York City and its re-emergence from the devastating health and economic impact of the Covid-19 pandemic, we are confident that New York can and shall remain a thriving global center of commerce, innovation and opportunity.

“Despite New York’s success in containing the coronavirus, unprecedented numbers of New Yorkers are unemployed, facing homelessness, or otherwise at risk. There is widespread anxiety over public safety, cleanliness and other quality of life issues that are contributing to deteriorating conditions in commercial districts and neighborhoods across the five boroughs.

“We need to send a strong, consistent message that our employees, customers, clients and visitors will be coming back to a safe and healthy work environment. People will be slow to return unless their concerns about security and livability of our communities are addressed quickly and with respect and fairness for our city’s diverse populations.

“We urge you to take immediate action to restore essential services as a necessary precursor for solving the city’s longer term, economic challenges.  Consistent with analysis and recommendations laid out in A Call for Action and Collaboration, a report on the impact of Covid-19 published by the Partnership for New York City in July, we are prepared to help advise and support such an effort.

“We look forward to your response and to partnering with you and others who share a commitment to a vibrant recovery and a great future for our city.”

--Wildlife populations have fallen by more than two-thirds in less than 50 years, according to a major report by the conservation group WWF.  The report says this “catastrophic decline” shows no sign of slowing and it warns that nature is being destroyed by humans at a rate never seen before.

Tanya Steele, chief executive at WWF, said wildlife is “in freefall” as we burn forests, over-fish our seas and destroy wild areas.

“We are wrecking our world – the one place we call home – risking our health, security and survival here on Earth. Now nature is sending us a desperate SOS and time is running out.”

The report looked at thousands of different wildlife species monitored by conservation scientists in habitats across the world.

They recorded an average 68% fall in more than 20,000 populations of mammals, birds, amphibians, reptiles and fish since 1970.

Dr. Andrew Terry, director of conservation at the Zoological Society of London, which provides the data, said, the decline was clear evidence of the damage human activity is doing to the natural world.

“If nothing changes, populations will undoubtedly continue to fall, driving wildlife to extinction and threatening the integrity of the ecosystems on which we depend,” he added.

The British TV presenter and naturalist Sir David Attenborough said the Anthropocene, the geological age during which human activity has come to the fore, could be the moment we achieve a balance with the natural world and become stewards of our planet.

“Doing so will require systemic shifts in how we produce food, create energy, manage our oceans and use materials,” he said.

“But above all it will require a change in perspective.  A change from viewing nature as something that’s optional or ‘nice to have’ to the single greatest ally we have in restoring balance to our world.”

--Meanwhile, the World Meteorological Organization and other global science groups released a new science update Wednesday, through the UN, that notes the warming world is getting closer to passing a temperature limit set by global leaders five years ago and may exceed it in the next decade or so.

In the next five years, the planet has nearly a 1-in-4 chance of experiencing a year that’s hot enough to put the global temperature at 2.7 degrees Fahrenheit, or 1.5 degrees Celsius, above pre-industrial times.

The 1.5 degrees Celsius is the more stringent of two limits set in 2015 by world leaders in the Paris climate change agreement.  A 2018 UN science report said a world hotter than that would still survive, but the chances of dangerous problems increase tremendously.

Separately, concentrations of greenhouse gases in the Earth’s atmosphere hit a record high this year, per a report from the UN and the World Meteorological Organization.  Petteri Taalas, head of the WMO, said, “We have continued seeing records in atmospheric concentration of carbon dioxide.”

While daily emissions fell in April by 17% relative to the previous year, those were still on a par with 2006, underlining how much emissions have grown in recent years.  And by early June, as factories and offices reopened, emissions were back up to within 5% of 2019 levels.  Even if 2020 emissions are lower than last year’s output by up to 7% as expected, what is released will still contribute to the long-term accumulation since the industrial era.

UN Secretary-General Antonio Guterres, launching the report, said, “The consequences of our failure to come to grips with the climate emergency are everywhere.  Whether we are tackling a pandemic or the climate crisis, it is clear that we need science, solidarity and decisive solutions.”

The report showed atmospheric concentration of CO2 hit 414.38 parts per million in July, compared with 411.74 ppm a year earlier.  Scientists say they consider 350 ppm, breached in 1988, a safe limit.

--The total number of acres burned by wildfires in California this year, 3 million+, is already well more than in any total year previously recorded, going back to 1932 when records began.

---

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

Congratulations to Master Sergeant Major Thomas P. Payne for being awarded the Medal of Honor today for his incredible bravery in helping his team rescue 75 ISIS hostages in Iraq.

God bless America.

---

Gold $1948
Oil $37.39

Returns for the week 9/7-9/11

Dow Jones  -1.7%  [27665]
S&P 500  -2.5%  [3340]
S&P MidCap  -2.3%
Russell 2000  -2.5%
Nasdaq  -4.1%  [10853]

Returns for the period 1/1/20-9/11/20

Dow Jones  -3.1%
S&P 500  +3.4%
S&P MidCap  -10.1%
Russell 2000  -10.3%
Nasdaq  +21.0%

Bulls  59.0
Bears  16.2

Hang in there…Mask up, wash your hands.

We pray for those struggling to deal with the historic fires in America’s West.

And never forget 9/11.

Brian Trumbore

 

 



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Week in Review

09/12/2020

For the week 9/7-9/11

[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 1,117

Special thanks this week to Dr. W. for his ongoing support.

Another week in Trump World, less than eight weeks until Election Day, and what we know is that the race is tight between the president and Joe Biden.  It is indeed down to the same battleground states and you know the president is going to be frantically running around holding his airport hangar rallies, as many as he can squeeze in.

But there is clearly no more than about five percent of the electorate up for grabs.  Will the Bob Woodward book, coupled with The Atlantic article by Jeffrey Goldberg, sway even one or two percent of these undecideds?  Maybe, but certainly no more than that.

What seems clearer to me today is the first debate, Sept. 29, could be the entire race.  If Biden holds his own, and given all the ammunition he’s been handed in just the past week between the Goldberg piece and Woodward’s tome, if his staff is worth a damn they’ll prepare him to go on the offensive right at the start (without getting too tongue-tied), he wins a majority of the key six states and probably the election.

I recognize the Trump base isn’t moving.  It’s my job to watch every rally and I saw the comments of the Trump supporters in Michigan when asked why they weren’t wearing masks and I was horrified.  It was pure stuff out of QAnon.  It depresses the hell out of me that so many in this country actually hold some of these beliefs.

I cover the Woodward book down below and it really comes down to the Feb. 7 comment, where the president admitted he knew Covid was “deadly stuff” and that it was “airborne,” and then on March 19, that it’s not just old people catching it, “it’s young people,” but also that he “always plays it down.”

What we know definitively today, because Woodward has the president on tape at key moments, is that Donald Trump has lied to us consistently for months on the dangers of Covid-19.

I won’t talk about body counts in this context, but for all those dealing with kids having to continue with online learning rather than being in a classroom from 8:00-3:00, and for all those restaurant and gym owners who are struggling mightily, or have tragically already shut down, for America’s sports fans who are lucky as hell to at least have sports to watch now but can’t attend games in person, which impacts all the workers at the stadiums, arenas and ballparks, or for college football fans of the Big Ten and Pac-12 who can’t even watch their favorite teams or alma maters play, if you don’t hold President Trump at least partially responsible for your predicament or that of your community (I’m biting my tongue), then good luck.

Donald Trump betrayed the people’s trust and deliberately misled us.

On this anniversary of 9/11, we are hopelessly, nay, bitterly divided as a people, true hatred on both sides, rather than the unity we displayed as a nation 19 years ago, and we are also now destined to be dealing with Covid-19 for months to come, vaccine or no vaccine.  Dr. Anthony Fauci is right when he said today, we won’t be back to normal, defined as last January, until well into next year, if that. 

That’s sad.  It didn’t have to be this way.   

Covid-19 death tolls, as of tonight….

World…919,575
USA…197,421
Brazil…130,474
India…77,506
Mexico…70,183
UK…41,614
Italy…35,597
France…30,893
Peru…30,344
Spain…29,747
Iran…22,913

Source: worldometers.info

U.S. daily death tolls…Sun. 432; Mon. 286; Tues. 498; Wed. 1,208*; Thurs. 1,089; Fri. 1,094.

*Because of the Labor Day holiday, ‘catch-up Tuesday’ became catch-up Wednesday this week.

In my weekly Wednesday comparison of the Euro six (Germany, France, Spain, Italy, UK and Belgium, with a population of 336 million vs. the United States, 330 million), the U.S. had 35,244 cases and 1,208 deaths vs. the Euro six cumulative totals of 23,301 and 90.

Yes, again, cases in Europe continue to spike, with new highs in France and Spain, highly worrisome, but the fatality rates have thus far been minimal in this second wave.

President Trump made a statement Thursday night at his rally in Michigan that was yet another bald-faced lie, saying “Europeans experienced 50% more deaths than the U.S. yesterday,” Wednesday.

The figures were U.S. 1,208, Europe 397 (including 142 in Russia).  Who feeds him this stuff?

Covid Bytes

--AstraZeneca Plc stopped giving shots of its experimental coronavirus vaccine after a person participating in one of the company’s studies got sick, a potential adverse reaction that could delay or derail efforts to speed an immunization against Covid-19, though company officials said the trials could resume as soon as next week once they get a handle on the cause of the illness, was the patient already ill with Covid, etc.

The vaccine, which AstraZeneca is developing with researchers from the University of Oxford, has been viewed as one of the leading candidates.  The partners are aiming to enroll as many as 50,000 participants for late-stage trials that are underway in the U.K., the U.S., Brazil and South Africa, with others planned for Japan and Russia.

--Separately, several drug makers developing Covid vaccines issued a public pledge not to seek government approval until the shots have proven to be safe and effective.

Companies including Pfizer, Johnson & Johnson, and Moderna Inc. committed to making the safety and well-being of vaccinated people the companies’ priority.  The vaccine makers also pledged to adhere to high scientific and ethical standards in the conduct of clinical studies and in the manufacturing processes.

--Infectious-disease experts are warning of a potential cold-weather surge of coronavirus cases – a long-feared “second wave,” possibly at a catastrophic scale.  While this could occur before Election Day, Nov. 3, researchers assume the crest would come weeks later, closer to when fall gives way to winter.

This has been hypothesized since the beginning of the pandemic, but as Eili Klein, an epidemiologist at Johns Hopkins University School of Medicine, told the Washington Post, “My feeling is that there is a wave coming, and it’s not so much whether it’s coming but how big is it going to be.”

Yes, national numbers have been trending downward but the virus has hardly been suppressed to the point where the nation can let down its guard.  And now schools have opened.  On the second day of classes this week, my town of Summit had a middle-school student test positive, and neighboring Chatham had a similar event, forcing that district to go virtual after, like Summit, starting off with a combination of four hours or so of in-person learning and then online for the afternoon.

A model produced by the University of Washington’s Institute for Health Metrics and Evaluation is forecasting a “most likely” daily death toll of 1,907 on Election Day, roughly double the current toll.  Under the latest IHME model, the numbers would continue to rise until early December, peaking at more than 2,800 deaths daily.

By year’s end, 410,000 people in the United States will have died under this model.

“People’s behavior is a dramatic determinant here,” said Christopher Murray, the director of IHME.  “Look at what happened in Florida [after the spike in cases].  People got scared.  They started wearing masks, they stopped going to bars.”

But the converse is also true:  If people stop being vigilant, the virus bounces back, and look at all those not wearing masks at both Trump rallies and the ongoing social justice protests.

--The Israeli government is going to be voting on shutting down the country a second time this Sunday, per the latest reports, which more than takes the shine off Prime Minister Benjamin Netanyahu’s diplomatic successes, covered below.  Israel saw record numbers of cases this week.

--The state of Victoria in Australia on Sunday extended a hard lockdown in its capital Melbourne until September 28th as the infection rate has declined more slowly than hoped.

The lockdown was ordered on August 2nd in response to a second wave of infections that erupted in Melbourne.

Victoria accounts for 75% of the country’s cases, but you can imagine folks in Melbourne are going nuts, businesses destroyed….

--Just like the pandemic helped speed the bankruptcy filings of U.S. retailers such as Lord & Taylor and Neiman Marcus, Japan’s oldest department stores have begun bankruptcy proceedings.  One, the Onuma department store in the northern Japanese city of Yamagata, has been around for “more than three centuries.”

Many of Japan’s leading retailers are known for fancy food halls, luxury items, impeccable service, and rooftop attractions to entertain families.

This year, with consumers wary of shopping and tourism decimated, sales have plunged.  And consumers in Japan, just like everywhere else, are shopping online.

“Closures will weigh on property prices, jobs and many other aspects of an already weakening regional economy,” a government official told Reuters.

--There is little doubt the Sturgis Motorcycle Rally in South Dakota was a superspreader event, though a new study that analyzed cellphone pings for rally attendees and the Covid-19 case numbers in the communities they returned to estimates that more than 265,000 infections confirmed between Aug. 2 and Sept. 2 trace back to the massive gathering of motorcycle enthusiasts.

“We found that for counties that had a lot of people going to Sturgis, after the rally, their case numbers started taking off relative to similar places that did not have a lot of people going to Sturgis,” Andrew Friedson, an economics professor at the University of Colorado Denver and one of the study’s authors, told the New York Daily News Tuesday.

He said the 266,796 cases of Covid-19 linked to Sturgis represent 19% of the 1.4 million new coronavirus cases confirmed in the U.S. during the study time frame.

Now I do not believe this number, but it’s safe to say the impact was significant.

Trump World

--What more we learned from Bob Woodward’s “Rage”:

January 28:  National security adviser Robert O’Brien told the president: “This will be the biggest national security threat you face in your presidency. This is going to be the roughest thing you face.”

Matthew Pottinger, the deputy national security adviser, agreed. He told the president that after reaching contacts in China, it was evident that the world faced a health emergency on par with the flu pandemic of 1918, which killed an estimated 50 million people worldwide.

Ten days later, Trump called Woodward and revealed that he thought the situation was far more dire than what he had been saying publicly.

“You just breathe the air and that’s how it’s passed,” Trump said in a Feb. 7 call.  “And so that’s a very tricky one. That’s a very delicate one.  It’s also more deadly than even your strenuous flu.”

“This is deadly stuff,” the president repeated for emphasis.

At that time the president was telling the nation Covid was nothing more than a seasonal flu, predicting it would soon disappear…when the weather gets warmer, you know….

On March 19, Trump admitted to Woodward that he deliberately minimized the danger.  “I wanted to always play it down,” Trump said.

Trump called Woodward to boast about his “law and order” stance outside St. John’s Episcopal Church two days after he had peaceful protesters forcibly removed for his photo op, June 3.

Woodward had conversations with Trump on “white privilege,” Woodward suggesting the two had a responsibility to better “understand the anger and pain” felt by Black Americans and Trump told him, “You really drank the Kool-Aid, didn’t you? Just listen to you. Wow. No, I don’t feel that at all.”

Trump even tells Woodward: “I have built a nuclear – a weapons system that nobody’s ever had in this country before. We have stuff that you haven’t even seen or heard about. We have stuff that Putin and Xi have never heard about before.  There’s nobody – what we have is incredible.”

The book documents private grumblings, periods of exasperation and wrestling about whether to quit among the so-called adults of the Trump orbit: former Defense Secretary Jim Mattis, former director of national intelligence Daniel Coats and then-Secretary of State Rex Tillerson.

Mattis quietly went to Washington National Cathedral to pray about his concern for the nation’s fate under Trump’s command and, according to Woodward, told Coats, “There may come a time when we have to take collective action” since Trump is “dangerous. He’s unfit.”

In a separate conversation recounted by Woodward, Mattis told Coats, “The president has no moral compass,” to which the director of national intelligence replied: “True.  To him, a lie is not a lie. It’s just what he thinks. He doesn’t know the difference between the truth and a lie.”

Trump told White House trade adviser Peter Navarro at one point, according to Woodward, “(My) fucking generals are a bunch of pussies. They care more about their alliances than they do about trade deals.”

Thursday, at a brief press conference at the White House before he went off to do his Michigan rally that evening, Trump cast his deception as a virtue – instilling calm to protect the people.

“I don’t want to jump up and down and start screaming ‘Death! Death!’ because that’s not what it’s all about. We have to lead a country,” Trump said.  He added, “There has to be calmness.”

But hours earlier on Twitter he was sounding the alarm about a number of other topics.

“If we don’t win, America’s Suburbs will be OVERRUN with Low Income Projects, Anarchists, Agitators, Looters and, of course, ‘Friendly Protesters.’”

And also: “Sending out 80 MILLION BALLOTS to people who aren’t even asking for a Ballot is unfair and a total fraud in the making. Look at what’s going on right now!”

As the Washington Post’s Philip Rucker noted, Trump was jumping up and down on June 22 when he tweeted: “RIGGED 2020 ELECTION…IT WILL BE THE SCANDAL OF OUR TIMES!”

And his countless tweets of “LAW AND ORDER!”

Trump’s campaign is built on panic. 

Trump said at the Thursday presser (all of three questions taken): “I want to show a level of confidence and I want to show strength as a leader and I want to show that our country is going to be fine, one way or the other.”

A day earlier, White House press secretary Kayleigh McEnany bolstered Trump’s defense by telling reporters: “This president does what leaders do – good leaders: It’s stay calm and resolute at a time when you face an insurmountable challenge.”

That’s laughable.

RUN FOR YOUR LIVES…A BLACK FAMILY IS MOVING INTO THE NEIGHBORHOOD!

That’s the sad reality of his coded language, Little Orphan Annie decoder ring not required.

McEnany also had this gem Wednesday: “The president has never lied to the American public on Covid,” and, “the president never downplayed the virus.”

Bob Woodward will be on “60 Minutes” Sunday.

Opinion…both sides

Editorial / Wall Street Journal

“The books professing dark revelations about President Trump appear to be lined up from here to Election Day, like aircraft heading into LaGuardia. This week it’s Bob Woodward’s turn, with the big news reportedly being that Mr. Trump told him in a taped conversation on Feb. 7 that he had played down the coronavirus knowing it was ‘deadly stuff.’

“This is not news. We know Mr. Trump played down the virus threat at the time because he said so publicly many times.  We wrote an editorial about it on March 12, ‘The Virus and Leadership,’ warning Mr. Trump that voters would judge his Presidency largely on how he handled the virus.  Q.E.D. [Ed. “that which was to be demonstrated.”]

“Mr. Trump now says he was trying to keep people from panicking. And given his preoccupation with marketing, we believe him. We also know the President understood the virus was deadly, even if the risks weren’t fully clear, because he barred arrivals from China on Jan. 31 and Europe on March 11.

“His Administration’s Covid-19 record has also been better than he makes it sound – in mobilizing private-public efforts for testing, PPE and vaccines, and preventing a financial meltdown in March. His main failing has been inconstant rhetorical leadership. He has undersold the virus risks and oversold his own achievements when what the public has wanted all along is the candid reality. This is no small failing in a crisis.

“But we know all this because it is on the public record. This may be the most transparent Presidency in history, for better or worse. His faults and mistakes are on constant display, whether in his own voice or leaks to a press that wants him gone.

“Democrats are now citing the Woodward non-reveal as proof that Mr. Trump is responsible for 190,000 deaths, which is contemptible even by today’s political standards. Covid-19 would have challenged any Presidency, as it has Democratic governors.  Mr. Trump has made mistakes, as we have often pointed out. But he also saved lives and livelihoods by urging an earlier end to the lockdowns that have done horrific economic and public health harm.

“By the way, in February prominent Democrats sounded like Mr. Trump.  Nancy Pelosi on Feb. 24: ‘It’s very safe to be in Chinatown and hope that others will come… We want people to be concerned and vigilant.  However, we don’t want them to be afraid… So, again, this fear is – I think – unwarranted in light of the precautions that are being taken here in the United States.’

“New York Gov. Andrew Cuomo on Jan. 30: ‘We have been here before, and I want to remind New Yorkers that it is much more likely that they will be exposed to the influenza virus than to the coronavirus.’ There are more.

“The media campaign to hold Mr. Trump solely responsible for the harm from Covid-19 is rank political opportunism.  Voters should ignore the campaign and judge the whole record.”

Editorial / Washington Post

“When President Trump was told by advisers on Jan. 28 that he was facing the most formidable national security threat of his presidency with the outbreak of a new coronavirus in China, the danger was already evident in Wuhan. The grave warning to Mr. Trump, as described by Post associate editor Bob Woodward in his new book, ‘Rage,’ made a strong impression on him, as he revealed to Mr. Woodward at the time.  What is astounding and indefensible is that in the months that followed, Mr. Trump willfully deceived the nation about the seriousness of the threat.

“Mr. Woodward’s recorded conversations with the president expose a grave dereliction of duty, This was no casual deceit, no singular slip of the tongue, but a purposeful and repeated falsehood, by Mr. Trump’s own admission to Mr. Woodward on March 19.  ‘I wanted to always play it down,’ he said.  ‘I still like playing it down, because I don’t want to create a panic.’  The cost has been about 190,000 dead so far in the United States, and millions sickened, many seriously.

“How, having been advised that the coronavirus pandemic had the potential to rival the great influenza pandemic a century ago, could Mr. Trump have told the nation in good conscience on Feb. 25, ‘I think that’s a problem that’s going to go away’?  Or Feb. 27: ‘It’s going to disappear.  One day, it’s like a miracle, it will disappear.’  In fact, as he told Mr. Woodward on Feb. 7, he knew the virus was transmissible through the air, that it was ‘deadly stuff,’ ‘more deadly than even your strenuous flus.’  But he said to the public June 20, ‘Many call it a virus, which it is.  Many call it a flu, what’s the difference?’  He knew the answer.

“Mr. Trump’s deception paralleled his catastrophic pandemic response. The president who told Mr. Woodward that ‘you just breathe the air and that’s how it’s passed’ was tardy and fumbling in coming up with face masks and other essential personal protective equipment and negligent in galvanizing a federal response.  Then he walked away, turning matters over to the states and irresponsibly demanding a premature opening in the spring.

“Mr. Trump at first praised China’s leader Xi Jinping for his handling of the crisis, then charged that China misled the world about the virus.  There is no question, as we have pointed out, that China’s closed political system attempted to cover up the Wuhan outbreak. But by engaging in a months-long deception of his own, Mr. Trump forfeits the moral standing to call it out.

“His explanation that he hoped to avoid ‘panic’ may reflect Mr. Trump’s fear that the truth would sink the economy and his own political fortunes. It is a sad reality that Mr. Trump often cannot see beyond his own needs.  His response to the pandemic has been more like a circus barker than a president devoted to stewardship of the nation. The American people would have welcomed transparent, honest information about a looming disaster. Instead, they got lies and fantasy.”

--Acting U.S. Homeland Security Secretary Chad Wolf told a former top aide to stop providing assessments of the threat of Russian interference in the Nov. 3 election and to play down U.S. white supremacist activity, according to a whistleblower complaint released on Wednesday. Brian Murphy, a former Homeland Security deputy undersecretary for intelligence, said in the complaint that Wolf told him in mid-May to begin reporting instead on political interference threats posed by China and Iran, and to highlight the involvement of left-wing groups in domestic disorder.  The instruction had come to Wolf from White House national security adviser Robert O’Brien, Murphy cited Wolf as saying.  The White House and Department of Homeland Security each denied the claims.

--Joe Scarborough / Washington Post

“(Trump’s) savage attacks on America’s military leaders and war dead will leave a lasting scar on his Republican Party.  The playboy scion, who avoided military service in Vietnam by claiming bone spurs, told (Bob) Woodward that the decorated military leaders who serve him are ‘pussies’ and ‘suckers.’  It can be no coincidence that the president reportedly also called the 1,800 Marines who died at Belleau Wood ‘suckers’ for giving their lives in war. After those comments were reported by the Atlantic’s Jeffrey Goldberg, Trump predictably made matters worse for himself by mounting a defense that showed just how much he loathed the military and those who serve as its leaders.

“ ‘They want to do nothing but fight wars so that all of those wonderful companies that make the bombs and make the planes and make everything else stay happy,’ Trump blurted out at a news conference.  This commander in chief offering lectures on the excesses of the military-industrial complex is laughable. He has, after all, championed weapons sales like no president before him.  Trump even refused to cancel billions in arms sales to Saudi Arabia after the killing of Post contributing columnist Jamal Khashoggi because he didn’t want to ‘lose an order like that.’  He said doing so would be unfair to Boeing, Lockheed and Raytheon.

“Trump’s Republican Party has been damaged yet again by their leader’s offensive statements.  It has also lost any claim it ever had at being the U.S. military’s bulwark against left-wing attacks.  A recent Military Times poll suggests that most active duty troops agree, with a plurality supporting Democratic nominee Joe Biden’s presidential bid.

“Perhaps Lindsey O. Graham was right when he predicted that Trump would destroy the Republican Party.  The question that remains is why the South Carolina senator and so many of his peers stay silent while the honor of our military leaders is under attack by America’s president.”

--One of President Trump’s traits is to exaggerate numbers, like you’ve undoubtedly noticed his Wall has magically grown with each campaign hangar rally, now 311 miles per Thursday’s appearance in Michigan…so this week I expect it to grow to 320+.

But at his brief presser on Thursday at the White House, Trump started blasting Joe Biden (and President Obama) for their handling of H1N1, and then started talking about deaths by flu each year in this country, and started with “100,000,” and then a moment later said “hundreds of thousands died of the flu last year…right, Scott,” pointing to Dr. Scott Atlas, his new medical guru who was sitting off to the side.

Dr. Atlas responded, “about 35,000 the last few years.”

--In Michael Cohen’s new book, “Disloyal: A Memoir,” the former Trump attorney says the Trump campaign didn’t need to conspire with the Russian election interference effort. All the candidate had to do was sit back and reap the benefits. The fact that the help came from a foreign adversary was of no consequence to him, Cohen says.

“What appeared to be collusion,” Cohen writes, “was really a confluence of shared interests in harming Hillary Clinton in any way possible, up to and including interfering in the American election – a subject that caused Trump precisely zero unease.”

With Putin, it wasn’t just self-interest – Trump genuinely admires the Russian leader, Cohen says.

Trump worships wealth and power, Cohen writes.

“Everyone other than the ruling class on earth was like an ant, to his way of thinking, their lives meaningless and always subject to the whims of the true rulers of the world,” he writes.

“The cosmic joke was that Trump convinced a vast swath of working-class white folks in the Midwest that he cared about their well-being. The truth was that he couldn’t care less.”

[I have opted to leave out a disgusting tale Cohen tells concerning his daughter, then 15, who Trump comments on while watching her play tennis…not knowing it is Cohen’s daughter.]

--Trump claimed this week “We were coming together as a nation before the plague…I was starting to get calls from Democrats…”

No you weren’t…and no WE weren’t.

--Trump tweets:

“Bob Woodward had my quotes for many months.  If he thought they were so bad or dangerous, why didn’t he immediately report them in an effort to save lives?  Didn’t he have an obligation to do so?  No, because he knew they were good and proper answers.  Calm, no panic!”

“A vote for Republicans is a vote for safe communities, great jobs, and a limitless future for ALL Americans.  Instead of letting Washington change us, despite all that we have been through, we are changing Washington! #MAGA”

“I have taken the toughest-ever action to stand up to China’s rampant theft of Michigan jobs. Sleepy Joe Biden has vowed to remove those Tariffs and allow China to resume its pillaging.  Joe Biden’s Agenda is Made in China, my agenda is Made in the USA!”

“If Joe Biden is elected, far-left lunatics won’t just be running failed Dem Cities – they will be running the Department of Justice, the Department of Homeland Security, and the U.S. Supreme Court.  No city, town or suburb will be safe.  On November 3rd, your vote will SAVE AMERICA!”

“On November 3rd, Michigan will decide whether we will quickly return to record prosperity – or whether we allow Sleepy Joe Biden to impose a $4 TRILLION DOLLAR TAX HIKE, ban American Energy, confiscate your guns, shutdown the economy, shutdown auto production, delay…

“…the vaccine, destroy the suburbs, erase your borders, and indoctrinate your children with poisonous anti-American lies!”

“When we win I, as your President, will totally forgive ALL deferred payroll taxes with money from the General Fund.  I will ALWAYS protect Seniors and your Social Security!  Sleepy Joe Biden will do the opposite, he will raise your taxes and DESTROY our Country!”

[Ed. Oh yeah…President Trump is all about ‘calm.’]

“Pelosi and Schumer want Trillions of Dollars of BAILOUT money for Blue States that are doing badly, both economically and in terms of high crime, as a condition to making a deal on stimulus – But the USA is coming back strong!”

“Obama is lucky he ran against @MittRomney, a man with very little talent or political skill, as opposed to someone who knows how to fight and win!”

Wall Street, China and the Economy

Stocks fell for a second week as investors continued to assess sky-high valuations on some market leaders, as well as the state of the economy.  There was little economic news of importance, though the weekly jobless claims figure, 884,000, was exactly the same as the prior revised week, with continuing claims rising, not good on either front. Again, to beat a dead horse, this 884,000 figure is well above the pre-pandemic record of 665,000 set during the Great Recession.

Of more import is the fact the Street is now facing the reality that Congress and the White House are polarized over the next coronavirus aid package, even as both sides are in agreement some targeted aid is necessary to avoid a renewed downturn after what has been a vigorous third quarter.  The Atlanta Fed’s GDPNow barometer is pegging Q3’s seasonally adjusted annual rate of growth at 30.8%. 

But the House and Senate are at loggerheads.  The Republican bill unveiled in the Senate on Tuesday would provide around $300 billion in new aid for schools, businesses, medical supplies and other coronavirus-related costs.  Senate Majority Leader Mitch McConnell said in a speech, “Do you want to do something?  Or do you want to do nothing?”

“They (Democrats) do not want any bipartisan relief whatsoever to reach American families prior to the election” on Nov. 3, McConnell said.

Senate Democratic Leader Chuck Schumer countered: “It is impossible to look at this GOP proposal and not wonder – ‘Do our Republican friends see the damage in America?’”

Schumer listed a series of shortcomings in the Republican bill, including the lack of food and rental assistance, aid to state and local governments whose revenues have fallen during the pandemic and  more money for election security at a time when Americans worry about traveling to voting centers for fear of becoming infected.

The two sides have until the end of the month to reach agreement or nothing will get done the rest of the year as Congress goes home to campaign.

Back to the economic data, we had August readings on inflation, and nothing earth-shattering.

Producer prices rose 0.3%, ditto ex-food and energy.  For the last 12 months, the PPI is down 0.2%, up 0.6% on core.

Consumer prices, both headline and core, were both up 0.4%, up 1.3% vs. a year ago, 1.7% yoy ex-food and energy.

On to growing U.S.-Sino tensions….

President Trump called on U.S. companies to leave China, and for American companies there, the meltdown in relations between the two represents the biggest concern in 2020, but few businesses investing in the country long-term are apt to leave while enjoying healthy profits in an economy that has rebounded strongly from its coronavirus issues last January thru March.

According to an annual business survey out of the American Chamber of Commerce in Shanghai, almost two-thirds of respondents said U.S.-China tensions were their biggest worry – the first time bilateral issues have led the poll, and well ahead of the second biggest concern, domestic competition, at 58 percent.

Yet, 92.1 percent of members said they do not have plans to leave China.  Only 5.1 percent of companies with global revenues over $500 million plan to flee the country, even as the Trump administration pushes to decouple the world’s two largest economies.

President Trump: “Under my administration, we will make America into the manufacturing superpower of the world and we’ll end our reliance on China, once and for all, whether it’s decoupling or putting in massive tariffs like I’ve been doing already.”

Only 4.3 percent of AmCham’s members plan to move parts of their operations back to the United States, the fourth most popular destination for diversifying supply chains, with 70.6 percent of businesses planning no change in production allocation, up 5.1 percent on last year.

Some 22.5 percent of respondents said they were delaying investments due to trade war tariffs, compared to 32.3 percent in 2019, suggesting that American businesses in Shanghai are adapting to a new normal, riding out the volatility to tap the world’s largest consumer market.

57.5 percent are now operating a “China-for-China” strategy, meaning they serve the mainland with their operations there, with facilities elsewhere catering for demand outside China.

But just 25 percent of technology hardware, software and service companies – down from 55 percent in 2019, are in this position, showing that a major decoupling is ongoing in this sector.

Firms in China are finding the toxic U.S.-China relationship is impacting their ability to retain Chinese staff in China, particularly in the education and training sector, as well as warehousing and distribution.

The bottom line, though, is the pay-off is clear: despite the trade war, 78.2 percent of U.S. companies doing business in China saw higher profits last year than 2018, with 32.5 percent seeing greater revenues in 2020 versus 2019, despite the pandemic.

Trump also said, Monday: “When you mention the word ‘decouple,’ it’s an interesting word,” stopping short of explicitly committing to a full termination of economic relations with China.  “We lose billions of dollars and if we didn’t do business with them we wouldn’t lose billions of dollars.  It’s called decoupling, so you’ll start thinking about it.”

Appearing to refer to action items for a potential second term, Trump said his administration would roll out a “made in America” tax break and impose “tariffs” on U.S. companies “that desert America to create jobs in China and other countries.”

Trump also argued Monday that farmers were “very happy” with him, owing to bailouts his administration has distributed to offset sales they lost when China slapped punitive tariffs on U.S. farm products in retaliation for the bilateral trade war that the president started in July 2018.

A recent study by economists at Iowa State University showed that some 44 percent of agricultural producers in Iowa, a farming powerhouse and an important state in the November elections, were left struggling to cover costs last year despite the federal stimulus.

Separately, China’s foreign ministry, when asked about reports that the United States may ban some imports from China’s Xinjiang region over alleged human rights violations, said this is a pretext to oppress Chinese customers and incite instability.  The U.S. has no right or qualifications to intervene, foreign ministry spokesman Zhao Lijian said at a daily news conference in Beijing on Wednesday.

U.S. Customs and Border Protection officials have prepared orders to block imports of cotton and tomato products from Xinjiang over allegations, denied by China, they are produced with forced labor, although a formal announcement has not come out.

David Ignatius / Washington Post

“When John F. Kennedy ran for president in 1960, he claimed there was a dangerous ‘missile gap’ between Russia’s arsenal and that of the United States.  But once he took office in 1961, Kennedy learned that the imbalance was the opposite of what he had argued.  Instead of the 200 or more Soviet intercontinental ballistic missiles that scaremongers had predicted, the Russians had just four.

“Something similar may be happening now with the Trump administration’s claims that China poses a military and economic threat to the United States that’s so severe, Washington should begin ‘decoupling’ its economic relationship with Beijing, especially in high-tech products.

“President Trump amplified the China scare talk in remarks to reporters on Monday.  ‘They’re building up a powerful military, and it’s very lucky that I’ve been building ours up because otherwise we’d be dwarfed right now by China,’ he said.  ‘If Joe Biden becomes president, China will own the United States.’

“Trump called decoupling ‘an interesting word,’ and implied he would pursue it in a second term: ‘Under my administration, we will make America into the manufacturing superpower of the world and we’ll end our reliance on China, once and for all, whether it’s decoupling or putting in massive tariffs.’

“China certainly has made big advances in technology and military weapons over the past decade.  But some leading experts say the claim that China is ahead on key technologies, such as artificial intelligence, is flat wrong. And they warn that policies that seek a radical break between the U.S. and Chinese economies, as Trump implies, could backfire.

“ ‘China is closing the gap in technology but the U.S. can widen its lead if it adopts the right policies,’ argues Jason Matheny, a former director of IARPA, the intelligence community’s in-house think tank.  Matheny is a professor at Georgetown University and contributed to a recent review of technology issues for the Working Group on Science and Technology in U.S.-China Relations, sponsored by the University of California at San Diego and the Asia Society.

“Peter Cowhey, a UCSD dean who chairs this working group, summarized its findings at an online meeting of the UCSD China Forum last week: ‘The U.S. is in much better shape than the pessimists think,’ and it should protect the openness and dynamism that have made the United States the world’s technology superpower.  But at the same time, Cowhey cautioned, Washington should continue to restrict access to certain key technologies, such as the manufacture of semiconductors, where the United States has a decisive competitive advantage.

“Studies from around the world document the U.S. advantage over China in artificial intelligence, perhaps the most important of the emerging technologies.

“A study published in August 2019 by the Center for Data Innovation, a research institute based in Washington and Brussels, found that ‘despite China’s bold AI initiative, the United States still leads in absolute terms.’  The United States scored first in four of the study’s key metrics: talent, research, development and hardware. China led in the other two, adoption of the AI technology and access to data that feeds it….

“A study published in 2018 by Oxford University researcher Jeffrey Ding measured countries’ AI capabilities.  China’s score was about half that of the United States.

“The United States leads the race because it’s the place where the brightest minds want to study, work and live. A report published in June by the Paulson Institute found that the United States ‘has a substantial lead over all other countries in top-tier AI researchers,’ with nearly 60 percent working for American companies and universities.  China is the biggest source of these top-tier engineers, but more than half of them remain in the United States….

“Richard J. Danzig, a former Navy secretary who’s leading a study of U.S.-China technology decoupling for the Johns Hopkins Applied Physics Laboratory, argues in a forthcoming paper with co-author Lorand Laskai that the United States must protect its dominance in making semiconductor chips, but that Beijing has ‘no prospect’ of reaching its goal of 70 percent self-sufficiency by 2025.

“The United States and China have an increasingly competitive relationship, but they need each other, too, like conjoined twins.  Hasty attempts at separation could harm them both.  Open research made U.S. technology great; making it more difficult for the best brains to live and work here would be folly.”

Europe and Asia

Slow week in terms of eurozone economic data after the crush of last week.  The European Central Bank left rates unchanged Thursday, as expected, with the ECB continuing its monthly asset purchase program as long as needed and will end the program shortly before it starts to hike rates, the accompanying statement said.

The ECB staff macroeconomic projections did increase the expected economic growth rate for 2020 to reflect an 8% contraction, narrower than the 8.7% contraction estimate in July.  Expectations for 2021 were lowered to a 5% growth rate from 5.2% previously, with inflation seen rising 0.3% in 2020 and 1% in 2021, the bank said.

Brexit: It has been a chaotic week.  Britain started by setting out new details of its blueprint for life outside the European Union, publishing legislation a government minister acknowledged would break international law in a ‘limited way’ and which could sour trade talks.

After leaving the EU in January, Prime Minister Boris Johnson has pushed on with plans for the end of a status quo period in December, and hoped a bill on Britain’s internal market would set in stone the transfer of powers from Brussels.

But as you’ve seen there has been zero movement for months over the two main issues, fisheries and state aid, and then we got a statement from Johnson’s Northern Ireland minister Brandon Lewis who said that the new bill being proposed would “break international law in a very specific and limited way,” which only made matters worse.

The EU has warned Britain that if it reneges on the divorce deal there would be no agreement.  London has repeatedly said it will respect the withdrawal agreement and Northern Ireland protocol, saying its bill contained only “clarifications.”

The two sides have maintained they only have to October to agree on a free trade deal, which would ease the worries of some companies who fear disruption at the borders and of supply chains at a time when many are struggling with the coronavirus crisis.

In a statement, the government hailed its Internal Market Bill as a way of empowering Britain and ending the reign of “unelected EU bodies.”

“This bill will also give the UK government new spending powers to drive our economic recovery from Covid-19 and support businesses and communities right across the UK,” said Michael Gove, a key cabinet minister.

“No longer will unelected EU bodies be spending our money on our behalf.  These new spending powers will mean that these decisions will now be made in the UK, focus on UK priorities and be accountable to the UK parliament and people of the UK.”

The bill is intended to allow all companies to be able to trade unhindered in Britain’s four nations, to transfer powers to Britain allowing it to replace some of the EU’s spending programs, and set up a new body to monitor internal trade.

On Northern Ireland, Brandon Lewis said in a separate statement that the provisions would ensure businesses based in the British region would have “unfettered access” to the rest of Britain, without paperwork.

It would also ensure that there would be no legal confusion as to the fact that while Northern Ireland would remain subject to the EU’s state aid regime, Britain would not.

Scotland and Wales say the planned bill would undermine the UK by stealing powers from devolved powers from Wales, Scotland and Northern Ireland.

Britain then said it agreed to meet the EU over the implementation of the divorce deal, a UK government spokesperson said, after Brussels called on such a meeting swiftly to clarify “strong concerns” over London’s latest domestic Brexit bill that could undercut the earlier agreement.

For its part the EU has threatened the UK government with legal action if it does not ditch its Internal Market Bill by the end of the month.

Trade talk negotiators on both sides have acknowledged they are still clashing on “significant” issues.

The new legislation will be formally debated by MPs in the House of Commons for the first time on Monday, with focus on the Northern Ireland Protocol – an element of the Brexit withdrawal agreement designed to prevent a hard border returning to the island of Ireland.

The UK said on Thursday nothing could override the free flow of goods between Northern Ireland and the rest of the United Kingdom.

“The Protocol makes clear that Northern Ireland is fully part of the customs territory of the United Kingdom and that there will be unfettered access for goods moving from Northern Ireland to the rest of the United Kingdom.”

The EU’s chief negotiator Michel Barnier said the bloc is stepping up preparations for a no-deal Brexit at the end of this year after he said London disappointed on many fronts.

Speaking after an eighth full round of negotiations on a new partnership with the UK in London, Barnier said the EU has shown flexibility on British demands on fisheries, the bloc’s top court and other areas.

“However, on its side, the UK has not engaged in a reciprocal way on fundamental EU principles and interests,” he said in a statement.  “Significant differences remain in areas of essential interest for the EU.”

Barnier said Britain snubbed the bloc’s calls for level playing field guarantees of fair market competition, as well as on environmental and climate, social and labor standards.

“Nobody should underestimate the practical, economic and social consequences of a ‘no deal’ scenario,” Barnier said.

European diplomats said Britain was playing a game of Brexit “chicken,” threatening to wreck the process and challenging Brussels to change course.  Some fear Johnson views a no-deal exit as a useful distraction from the coronavirus pandemic.

Turning to AsiaChina reported the figures for August exports, up 9.5% year-over-year and the third straight month of increase over 2019.  Key to the export recovery has been China’s outbound shipments of coronavirus-related medical supplies, including face masks, though economists expect the momentum to slow in the coming months as other countries resume production.  Electronic goods have also fared well as much of the developed world shifted to online work at home.

Imports in August, however, fell 2.1% yoy.

August exports to the U.S. were up 20% vs. a year ago, but between Jan. and Aug., exports dropped 3.6% year-over-year, while products to the EU for the eight months rose 2.1%.

Imports from the U.S. fell 2.9% the first eight months, even as China sought to meet its purchasing commitments under the phase one trade deal.

Beijing’s growing trade surplus with Washington – up 27% in August from a year earlier – is bound to grate with President Trump, who has staked his reputation on closing the gap that he claimed was the “greatest theft in history.”

Separately, China’s producer (factory gate) prices fell 2% in August, year-over-year, while consumer prices rose 2.4% yoy.

In Japan, the economy shrank more than expected in the second quarter, a revised -28.1% annualized vs. a preliminary reading of a 27.8% contraction. The main culprit behind the revision was a 4.7% drop in capital expenditure, a sign that the pandemic was hitting broader sectors of the economy.

Separate data showed household spending fell 7.6% in July compared with a year earlier, far more than forecast. Real wages also fell for the fifth straight month in July.

Meanwhile, Japan is pressing ahead with preparations for the Tokyo Olympics next year even though there is no clear sign the coronavirus will be under control by that time, and of course it needs to be under control months and months prior in order to make all the appropriate arrangements.

When asked on Tuesday about the possibility of another postponement or cancellation of the Olympics, Chief Cabinet Secretary Yoshihide Suga said the government was working with related parties to hold the Games next year.

Outgoing Prime Minister Shinzo Abe has said holding the Olympics next summer would mark humanity’s victory over the virus.

Health experts are skeptical.  Even if a vaccine is developed, it would take years to reach some of the world’s less developed countries.

Street Bytes

--Stocks fell hard a second consecutive week, with Nasdaq suffering its worst week since the March crash, -4.1%.  The tech-heavy index had corrected 10% off its recent record high after Tuesday’s big plunge and then finished roughly even the following three days.  The Dow Jones lost 1.7% to 27665, while the S&P 500 fell 2.5%.  Again, it’s about valuations, fears of a potential second wave in the fall that crimps demand all over again, and political uncertainty that has markets jittery.

--U.S. Treasury Yields

6-mo. 0.12%  2-yr. 0.13%  10-yr. 0.67%  30-yr. 1.41%

Treasuries remained in a narrow range, a little flight to safety trade in the long end of the curve with equities struggling again.

--Oil prices slumped to their lowest level in nearly three months Tuesday, closing at $37.39 today, coming under pressure from planned production expansions by OPEC, as well as from a stalling recovery in demand, largely owing to a flare-up of coronavirus cases around the world, such as in India, Great Britain, Spain and parts of the United States.

Record oil imports by China, the return of automobiles to U.S. roads and steep production cuts fueled a rebound after crude prices crashed this spring. But Chinese purchases have slowed since mid-July, the comeback in American gasoline demand has stalled and OPEC is boosting output.

--Meanwhile, Exxon Mobil is facing a $48 billion shortfall through 2021, that may push the energy giant to slash staff size and reduce projects, CNBC first reported Monday.

The company, which borrowed $23 billion in 2020 to pay bills, may see a $1.86 billion loss for the full year, excluding asset sales or write downs.

An Exxon spokesman told CNBC that the company has now undertaken a review to evaluate cost cutting and to “maximize efficiency and capture additional cost savings to put us in the strongest position.”

--A tentative deal between United Airlines and the union representing its pilots would distribute the airline’s flight schedule among a larger number of pilots in an effort to avoid furloughs.  Earlier, United and the union, which represents more than 13,000 pilots, said they had reached an agreement in principle to potentially save jobs.

United has said that some 2,850 pilots were at risk of being furloughed without an extension of government aid.

The TSA daily checkpoint numbers, while improved over the Labor Day holiday, settled back into the 30-35 percent of 2019 numbers after, and we’ll see when that gets into the steady 40 level, let alone 50 percent.

For example, United had forecast a 70% year-over-year decline in third-quarter capacity and a bigger drop in passenger revenue than its previous expectation, but it did say it was adding non-stop flights to Africa, India and Hawaii next year.

United expects passenger revenue to be down approximately 85% in Q3 compared with the year-ago quarter, and it said it will continue to evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand, and expects demand to remain suppressed and plateau at around 50% compared with 2019 levels until a Covid-19 treatment and/or vaccine is widely available.

Delta Air Lines said it has seen a slight increase in travel demand but expects the recovery to be “choppy,” CFO Paul Jacobson said at a conference.

Jacobson said the airline is focusing on reducing expenses, noting that daily cash burn has been reduced by more than 70% to about $27 million as refunds slowed down.

--Ryanair has threatened to pull the plug on flights from Cork and Shannon airports (Ireland) this winter if the Government does not lift flight restrictions.

Ryanair has been furious with the Government and its “mismanagement” of the coronavirus.  Ryanair executive Eddie Wilson said, “forward bookings this winter in Cork and Shannon, and to a lesser extent in Dublin, have suffered irreparable harm.”

The Government is expected to review its travel restrictions on Monday, but Wilson says, “You should be aware that if these quarantine restrictions from EU states are not lifted before the end of September, we will have no alternative but to close our Cork and Shannon bases on a temporary basis for this winter season.

“In those circumstances all pilots and cabin crew will be put on unpaid leave from the end of October.”

In July, Ryanair said it was cutting 1,000 flights serving the Irish market, citing the Government’s 14-day quarantine rules.

The Irish tourism industry has been decimated, with hoteliers warning almost three-quarters of tourism-related jobs are at risk.  The Irish Hotels Federation said that 100,000 of some 270,000 tourism jobs in the State at the start of the year had been wiped out by the pandemic, with a further 100,000 at “imminent risk in the coming weeks” amid a slump in autumn and winter bookings across hotels and guesthouses. 

July and August saw average national room occupancy at 49 percent, compared with 90 percent for the same months last year, it said.

At the same time, for months, there has been a running debate on reopening pubs, which as anyone who has been to Ireland knows are frankly the worst settings for avoiding Covid.  But the industry is on its last legs, so the Government is opening them up, at great risk.

--Shares in Boeing had a tough go of it in the holiday-shortened week as new manufacturing issues were discovered with its 787 Dreamliner, with inspections affecting the timing of deliveries at least in the near-term.

Boeing secured its first 737 MAX order in 2020, but recorded more cancellations as customers continued to ditch orders for the grounded jets, Boeing saying it lost another 17 orders in August; bringing the total number of canceled orders, including conversions, to 445 for the year.

Separately, Boeing is submitting to an independent ethics probe of its behavior in bidding to supply lunar landing vehicles, Reuters reported Wednesday.

A criminal investigation is underway on whether NASA’s former human exploration chief, Doug Loverro, acted unethically while guiding Boeing executive Jim Chilton through the bidding process.

--Marriott announced it is laying off 673 workers from its Bethesda, Maryland, headquarters due to the slump in travel amid the pandemic.

For the week ending Aug. 29, U.S. weekly hotel occupancy was down 28% from the same period in 2019, according to data firm STR.

Marriott employs about 4,000 workers at its North Bethesda headquarters.

In March, Marriott International said it was furloughing tens of thousands of employees due to a tidal wave of cancellations.

Marriott is the largest hotel chain in the world with 1.38 million rooms worldwide. The company’s brands include its namesake hotel chain, Westin, Sheraton, Courtyard by Marriott, Residence Inn by Marriott, The Ritz-Carlton and Renaissance Hotels.

--Shares in Tesla had their worst day ever on Tuesday, down 21% after the company was passed over for addition to the S&P 500 index. The stock, which hit an intra-day record high of $502 on Sept. 1, closed at $330 a week later, and finished  the week at $373, with violent swings up and down amid a battle between the bulls and bears on the company and its valuation.

--General Motors announced a partnership with Nikola, the alternative-fuel trucking pioneer, with shares in Nikola rising 40% in response.

Under the terms of the agreement, GM will engineer and build Nikola’s pickup truck named Badger, with GM taking an 11% stake in Nikola and having the right to nominate one person to the board of directors,   The 11%, or roughly $2 billion, equity stake will be due from “in-kind” contributions, which means, not cash.  The Badger is expected to enter production by year-end 2022.

GM stock rose 8% in response.  Nikola’s stock move gives the startup a market capitalization of about $19 billion.  Nikola expects to save $4 billion in manufacturing costs and $1 billion in engineering costs.

“This strategic partnership with Nikola, an industry-leading disrupter, continues the broader deployment of General Motors’ all-new Ultium battery and Hydrotec fuel cell systems,” said GM CEO Mary Barra in a company release.  “We are growing our presence in multiple high-volume EV segments while building scale to lower battery and fuel cell costs and increase profitability.”

But then on Thursday, Nikola shares fell 11% as short-seller firm Hindenburg Research accused  the company of being an “intricate fraud built on dozens of lies.”

Hindenburg said it gathered evidence including phone calls, messages and emails that show dozens of “false statements” made by NKLA founder Trevor Milton.

Regarding the deal with GM, Hindenburg said, “Nikola seems to be bringing nothing to the partnership but concept designs, their brand name and up to $700 million they will be paying GM for costs related to production.”  Today the stock plunged further, another 14%, as the fraud allegations gained steam.

--China’s car sales grew at their fastest rate in more than two years in August, driven by heavy discounts and new-model debuts, adding momentum to a second-half recovery after the deep slump of the first half amid the pandemic.

Retail passenger-car sales in the country increased by 8.9% last month from a year earlier to 1.7 million vehicles, the China Passenger Car Association said Tuesday, marking the strongest rate of growth since May 2018.

It was also the second straight month in which sales outpaced those of the same month last year.

--Good news…container imports are flowing back into the U.S. after a six-month hiatus, with U.S. retailers knocked back by pandemic-driven lockdowns now stocking up before the holiday season.

The demand is filling up container ships across the Pacific and operators are restoring cargo-vessel sailing that were cut by as much as a third at the height of the pandemic.

The Port of Los Angeles said August “will more than likely be” the best August in the history of the port, according to executive director of the port, Gene Seroka, the largest U.S. gateway for seaborne container imports, said this week.  And September is looking strong too.

“Capacity from Asia to the U.S. West Coast is 25% higher than it was in May and around 7% on year,” said Jonathan Roach, a shipping analyst at London-based Braemar ACM Shipbroking.

With the rebound in demand, freight rates are heading up as well.

--Walt Disney Co.’s release of “Mulan,” which is set in China and meant to appeal to audiences there, has provoked a backlash on social media over its star’s support of Hong Kong police and for being partly filmed in the Xinjiang region.  Hong Kong democracy activist Joshua Wong and internet users in Taiwan and Thailand are among those who promoted hashtags #BoycottMulan and #BanMulan on Twitter, following this month’s launch of the film on Disney’s streaming platform.  It will also be shown in cinemas in China – an increasingly important market for Hollywood studios – from Sept. 11.

Disney’s 2019 mega-hit “Avengers: Endgame” took in $629.1 million in China, roughly 23% of its $2.8 billion worldwide total.  A 2019 remake of “The Lion King” sold $120 million worth of tickets in China, or about 7% of its global receipts.

Disney’s shares rose, however, as investors shrugged off the backlash on hopes that subscribers to the company’s streaming video service in the U.S. and other markets paid $30 over the weekend to watch the film as part of a test release amid the coronavirus pandemic.

Criticism of the live-action remake of a 1998 animated version began last year when Mulan’s star, mainland Chinese-born actress Liu Yifei, expressed support on social media for police in Hong Kong, which was roiled at the time by anti-government protests.

Wong, the Hong Kong activist, accused Disney of “kowtowing” to China, citing Liu and another actor’s support for police in the territory and the movie’s credits mentioning state organizations in Xinjiang.

Disney has not released any data on the number of streams for Mulan as yet.

--Northrop Grumman Corp. received a long-anticipated Air Force contract valued at $13.3 billion to proceed into full development of the United States’ next intercontinental ballistic missile, the land-based segment of the nation’s nuclear triad, the Air Force announced Tuesday.

It’s the first installment in what’s estimated to be at least an $85 billion program to develop and build a replacement for the aging Minuteman III ICBM.  Work will be performed in Roy, Utah, and other locations nationwide and is expected to be completed February 2029.

The entire effort to modernize the delivery systems for nuclear weapons via land-based systems, submarines and strategic bombers is expected to cost as much as $1.2 trillion through 2046, the Congressional Budget Office estimated in 2018.

--Citigroup said Thursday that CEO Michael Corbat was retiring and stepping down from the board in February.  The board then named Jane Fraser, currently the company’s president and CEO of global consumer banking, as Corbat’s successor at CEO. Fraser has been at Citi for 16 years and has been in her current roles since 2019.

Fraser will be the first woman to lead one of Wall Street’s big six banks, a significant event.

In a memo to employees, Thursday, both Mr. Corbat and Ms. Fraser cited the need for Citigroup to invest even more heavily in its global infrastructure for risk and controls.  Mr. Corbat said putting those plans in the hands of his successor was one reason it was time for a new leader.

Citigroup, the third-largest U.S. lender, has struggled for years to convince the Street that management’s vision of a global bank with a hodgepodge of profitable, if unrelated, businesses will work. Citi has major technology issues that have also plagued it for years and have represented a sticking point for regulators.

--Oracle offered guidance for its fiscal second quarter that projects year-on-year growth after beating expectations in the first three months of results that prompted price-target upgrades from Wall Street on Friday.  The stock hit a new high of $61.86 in response, but then slid to $56.85 at the close.

In the three months ending Aug. 31, total revenue grew 2% to $9.37 billion, with CEO Safra Katz saying, “This quarter was all about solid execution on the sales side and disciplined management of our operations as operating income grew 8%, our best result in 3 years.”

Cloud services and license support revenue rose 2% to $6.95 billion, while cloud license and on-premise license rose 9% to $886 million.

An RBC research note stated that the “near-term shift to the cloud apps creates headwinds to margin expansion.”

--Lululemon Athletica saw its shares fall about 10% as it forecast adjusted third-quarter profit would fall 15%-20% due to higher marketing expenses.

Lululemon said it earned 74 cents a share on revenue that rose 3% year over year in its fiscal second-quarter to $902.9 million, better than expected on both metrics.

However, revenue at company-operated stores fell 51% to $287.2 million, though direct-to-consumer revenue jumped 157% to $554.3 million, representing 61.4% of total revenue.

Lululemon and others have struggled to make up for store closures with online sales, so the increase is an encouraging sign.

--Peloton Interactive Inc. beat analysts’ estimates for quarterly revenue on Thursday as the exercise bike maker benefited from a surge in subscribers and demand for its fitness products during the pandemic.  The shares surged 13% in response, but then finished today down 4%.

Stay-at-home stocks have benefited from increased demand and sales of Peloton’s electric bikes and other fitness equipment more than tripled this year to $485.9 million in the quarter. Subscriptions rose 113% to 1.09 million.  The company forecast revenue for fiscal year 2021 between $3.5 billion and $3.65 billion, with analysts expecting $2.72bn, according to Refinitiv data.

--LVMH Moet Hennessy said it will not be able to close its $16.2 billion takeover of jewelry Tiffany due to complications arising from the transaction.

The French luxury goods giant cited both a request from the French Foreign Affairs Ministry to delay the transaction due to threats of U.S. tariffs on French products and Tiffany’s request to extend the deadline to Dec. 31 from Nov. 24.

In a separate release, Tiffany said it has initiated a lawsuit against LVMH in the state of Delaware to force the French conglomerate “to abide by its contractual obligation” and close the transaction on agreed terms.

Tiffany said that LVMH breached its obligations by failing to file for antitrust approval in at least three of the required jurisdictions.

“We regret having to take this action but LVMH has left us no choice but to commence litigation to protect our company and our shareholders,” said Tiffany chairman Roger Farah.  “Tiffany is confident it has complied with all of its obligations under the merger agreement and is committed to completing the transaction on the terms agreed to last year. Tiffany expects the same of LVMH.”

Tiffany shares fell 9% on the news, but cut the losses some by week’s end.

LVMH has been looking to get out of the deal ever since the pandemic hit.  Thursday, the company said Tiffany’s first-half results and its outlook for 2020 “are very disappointing, and significantly inferior to those of comparable brands of the LVMH Group during this period.”

The company added, “LVMH will be therefore led to challenge the handling of the crisis by Tiffany’s management and its Board of Directors.”

LVMH said the management of Tiffany during the crisis meant the company had suffered a material adverse event, which under the merger agreement would allow LVMH to walk away from the deal.

This fight has just begun.

--J.C. Penney Co. Inc. reached a tentative deal with landlords and lenders valued at $1.75 billion to rescue the beleaguered department store chain from bankruptcy proceedings, averting a liquidation that would have threatened roughly 70,000 jobs and represented one of the most significant business collapses following the pandemic.

Mall owners Simon Property Groups Inc. and Brookfield Property Partner LP have teamed up to acquire JCP’s retail operations and are putting the final touches on an agreement, according to a company attorney.

Approval from a bankruptcy judge is expected in early October, in time for the holiday season.  A restructured J.C. Penney is expected to operate about 650 stores.

--More than 300 storefronts along Broadway in Manhattan are vacant, a 78% increase from three years ago, according to a survey from the Manhattan Borough President Gale Brewer’s office, as the pandemic has done a number on brick-and-mortar businesses.

“The rent is so high, particularly on Broadway in Manhattan, that it’s hard for the small shops to make a go of it,” Ms. Brewer said.  “At this point, with the gates down and sometimes plywood on the storefront, you don’t know whether it’s going to be rented.”

Separately, New York’s secretive and venerable private clubs have been laying off employees, as old-school benefits and rituals become impracticable during the pandemic.

The University Club, for example, is laying off 243 workers, while the Harvard Club is axing 299, both having to notify the Department of Labor.

Many of the club members simply aren’t working in the City anymore.  [Gwen Everitt / Crain’s New York Business]

--But JPMorgan Chase & Co. executives told senior employees of the bank’s giant sales and trading operation that they and their teams must return to the office by Sept. 21.  Employees with child-care issues and medical conditions that make them more vulnerable to coronavirus complications can continue working from home.

Amazon.com said last month that it would expand its physical offices in New York and other cities, signaling its belief in the long-term viability of office work.

President Trump tweeted:

“Congratulations to JPMorgan Chase for ordering everyone BACK TO OFFICE on September 21st.  Will always be better than working from home!”

--South Africa’s economy shrank by an annualized 51% in the second quarter, its worst quarterly decline in at least a century and one of the steepest contractions recorded by any major economy during the pandemic.  Compared with the second quarter last year, South Africa’s GDP plummeted by 17.6%, the statistics agency said.

Africa’s most developed economy imposed a strict lockdown in late March, closing most businesses and banning the sale of alcohol and cigarettes along with other items not considered essential.  [Glad I don’t live in South Africa, re the former item…but I digress…]

The restrictions managed to slow the spread of the coronavirus in South Africa, but infections increased after large parts of the economy were allowed to reopen in July.

--The number of high school students using e-cigarettes has dropped significantly over the past year, after several years of soaring growth, according to a study administered by the Centers for Disease Control and Prevention.

The 2020 National Youth Tobacco Survey revealed that among high school students, 19.6 percent reported using an e-cigarette at least once in the prior 30 days, down sharply from 27.5 percent in 2019.  That translates to a decline in regular users to 3 million, from 4.1 million a year earlier.

The sharp decline reflects a drumbeat of efforts from public health experts to illuminate the risks of e-cigarettes.   At least 68 people died and 2,807 had been hospitalized as of February of this year from lung-related disease linked to vaping, according to the CDC.

While the Trump administration instituted a ban on flavored e-cigarettes, a loophole still allows the sale of flavored disposable e-cigarettes.

Sales of flavored products have now soared, among regular users.

Foreign Affairs

Russia/Belarus: Russian opposition politician Alexei Navalny has made further progress in his recovery after what Germany said was poisoning with a Soviet-style Novichok nerve agent, and is able to speak again, Der Spiegel magazine reported.

The magazine also reported that Navalny’s protection has been stepped up in the expectation he would be receiving more visitors as his condition improved.

Secretary of State Mike Pompeo said on Wednesday there was a “substantial chance’ his poisoning was ordered by senior Russian officials, but President Trump has said little.

German politicians are pressuring Chancellor Angela Merkel to reconsider Germany’s Nord Stream 2 pipeline project with Russia following the poisoning of Navalny.  Defense Minister Annegret Kramp-Karrenbauer said the question of sanctions on the pipeline, which will bring gas from Russia to Germany, rested on Moscow’s cooperation in clearing up what exactly happened to Navalny.

In Belarus, Nobel prize-winning author Svetlana Alexievich accused the authorities of terrorizing their own people on Wednesday as another opposition politician was detained by masked men in plain clothes.  Maxim Znak was the latest figure to be seized in a systematic campaign by the government of President Alexander Lukashenko to round up leaders of a month-long mass protest movement.

“What is happening is terror against the people,” said Alexievich, who summoned supporters to her home.  “We have to unite and not give up our intentions.  There is a danger we will lose the country,” she said.

The interior ministry said 121 more protesters had been arrested on Tuesday.  New protests broke out in Minsk on Wednesday evening and several people were arrested by masked security forces, local media footage showed.

Lukashenko, who retains the backing of Russian President Vladimir Putin, is supposedly going to Moscow on Monday for talks.

Exiled opposition leader Sviatlana Tsikhanouskaya said during a visit to Poland on Wednesday that the opposition could ask foreign countries to play a mediation role if Belarus is not able to resolve its own internal conflict.  She also said the demonstrations must remain peaceful.

Lukashenko said something curious, admitting he may have stayed in power as president a little too long, but that he was the only person capable of protecting the country for now, Russian news agencies reported him as saying on Tuesday.  “Yes, maybe I overstayed a bit,” the TASS news agency cited Lukashenko as saying in an interview.

China/Hong Kong/Taiwan: Hong Kong police arrested hundreds of people including key activists as protest again flared up on the city’s streets Sunday after weeks of relative calm since the implementation of a national security law.

A total of 270 people were arrested for illegal assembly.

Prominent pro-democracy activists with the League of Social Democrats, Figo Chan, Raphael Wong and Leung Kwok-hung, were arrested, according to a Facebook post by the group.

The trio “were accused by the police of leading more than 30 people to gather, were escorted into a police car and taken back to the police station for arrest,” according to a post.

In a statement, the government on Sunday condemned the protests, calling them “unlawful” and “selfish” as they threaten public health, adding that independence slogans may be in violation of the security law.

Taiwan denounced China on Thursday over large-scale air and naval drills off its southwestern coast, calling them a serious provocation and a threat to international air traffic.  It urged Beijing to rein in its armed forces.

China, which claims democratic Taiwan as its own, has once again stepped up military exercises near the island, in what Taipei views as intimidation to force it to accept Chinese rule.

Yeh Kuo-hui, from Taiwan’s defense ministry, told a news conference that China’s intentions could not be predicted.  “We must make all preparations for war readiness.”

The drills have been taking place in Taiwan’s air defense identification zone.

Taiwan has been carrying out live-fire weapons tests off its southeast and eastern coast.  President Tsai Ing-wen has warned of a rising risk of accidental conflict, saying communication must be maintained to cut the risk of miscalculation.

George F. Will / Washington Post

“The Biden administration’s first grave test approaches, not silently on little cat’s feet but in the noisy stomping of totalitarians’ boots.  In 2021, Taiwan might provide the most perilous U.S. moment since the Cuban missile crisis of 1962.

“The U.S. policy of ‘strategic ambiguity’ regarding Taiwan has become untenable, as has Joe Biden’s 2001 stance.  President George W. Bush, asked that year whether the country has an obligation to defend Taiwan against an attack by China, said; ‘Yes, we do, and the Chinese must understand that.’  Bush was asked, ‘With the full force of the American military?’  He answered: ‘Whatever it took.’  Bush’s national security adviser, Condoleezza Rice, said ‘the Taiwan Relations Act makes very clear that the U.S. has an obligation that Taiwan’s peaceful way of life is not upset by force.’

“Biden responded: ‘No. Not exactly.’  In a Post op-ed, Biden reaffirmed the U.S. commitment to preserving Taiwan’s ‘autonomy’ under the 1979 Taiwan Relations Act, and to providing Taiwan with ‘defense articles and defense services’ necessary for ‘sufficient self-defense capability.’  But he said the United States ‘has not been obligated to defend Taiwan since we abrogated the 1954 Mutual Defense Treaty,’ in 1980.

“The act, Biden said, makes it U.S. policy that ‘any attempt to determine the future of Taiwan by other than peaceful means would…be ‘of grave concern.’’  But Biden stressed ‘a huge difference between reserving the right to use force and obligating ourselves, a priori, to come to the defense of Taiwan.’  He said that neither Taiwan nor Beijing should have ‘the ability automatically to draw us into a war across the Taiwan Strait.’

“But even 19 years ago, it was essentially unthinkable that Taiwan would ‘draw us into’ a war by attacking the mainland.  Today, time is Taiwan’s friend.  A 2001 poll measured Taiwanese vs. Chinese identity among Taiwan’s residents. It found that 10.6 percent identified as Chinese, 41.6 percent as Taiwanese, 43.1 percent as both.  Today, 66 percent identity as just Taiwanese, 28 percent as both, and just 4 percent as Chinese.  Although a majority of Taiwanese favor independence someday, today’s threat to the status quo comes from Beijing.

“The ‘one China policy’ – the diplomatic fiction that the Republic of China (Taiwan) and the People’s Republic of China are parts of the same entity – has been made a mockery in Hong Kong.  In 2001, China was just beginning the military buildup produced by a 900 percent spending increase between 1990 and 2017….

“Today, Hong Kong’s liberty is a guttering candle because Chinese dictator Xi Jinping meant what he said in 2017: ‘The wheels of history roll on, the tides of the times are vast and mighty.’ Tides with wheels?  Never mind.  Xi said: ‘History looks kindly on those with resolve, with drive and ambition, and with plenty of guts; it won’t wait for the hesitant.’  From the bloodshed on the China-India border to the lawless aggressiveness in the South China Sea to the coarse bullying by China’s ‘Wolf Warrior’ diplomats, especially in Europe, China is demonstrating the arrogance that begets recklessness.

“Furthermore, a regime’s internal dynamics often presage external behavior, so it is ominous, the New York Times reports, that Xi’s regime is directing the security agencies to ‘drive the blade in’ and ‘scrape poison off the bone’ as they ‘resolutely put absolute loyalty, absolute purity and absolute dependability into action’ to make everyone ‘obey Xi in everything.’

“Xi has suffocated Hong Kong because he could, and because free people on China’s periphery threaten the mainland with a destabilizing political virus.  Regarding Taiwan’s 24 million free people, he said last year: ‘We make no promise to renounce the use of force and reserve the option of taking all necessary means.’

“To Xi, Taiwan’s autonomy means that the communist conquest of China in 1949 remains incomplete.  Completing it would secure his place in Chinese history.  If he considers attacking Taiwan, or even just one of its nearby islands, will he know President Biden’s intentions?  Ambiguity is useful in diplomacy, until it becomes dangerous.”

Lastly, with problems at the India-Chinese border, India announced it had become the fourth country to successfully flight test hypersonic technology, joining an elite club alongside the U.S., Russia and China with the ability to develop missiles that can travel several times faster than the speed of sound.

The Indian defense ministry said its test of a demonstration vehicle on Monday was conducted from an island off Odisha, an eastern coastal state in India.  In a statement, the ministry said its hypersonic cruise vehicle with an indigenously developed scramjet engine had reached an altitude of 98,000 feet and traveled at six times the speed of sound.

Lovely.

North Korea: Kim Jong Un on Saturday toured areas hit by a typhoon, replaced a local provincial party committee chairman and ordered Pyongyang officials to lead a recovery effort, state media reported on Sunday.  The Korean Central News Agency admitted to more than 1,000 homes being destroyed along the coastline.

North Korea’s ruling party has called for punishment of officials whose failure to follow orders results in “dozens of casualties’ during typhoons.

Probably not a good thing for the local officials’ resumes.

One upcoming date to watch for a potential missile test or two is Oct. 10, which will mark the 75th anniversary of the Workers’ Party founding, one of the regime’s most important events in years.

“North Korea does have a lot of problems,” said Go Myong-hyun, a research fellow at the Asan Institute, a Seoul-based think tank.  “But that does not mean North Korea will suspend development or work on its nuclear weapons.”

Meanwhile, the Bob Woodward book revealed some of the letters President Trump received from Kim Jong Un.  Trump told Woodward he evaluates Kim and his nuclear arsenal like a real estate target: “It’s really like, you know, somebody that’s in love with a house and they just can’t sell it.”

Kim welcomed Trump’s overtures with over-the-top prose in letters.  Kim wrote that he wanted “another historic meeting between myself and Your Excellency reminiscent of a scene from a fantasy film.”  And he said his meetings with Trump were a “precious memory” that underscored how the “deep and special friendship between us will work as a magical force.”

In another letter, Kim wrote to Trump, “I feel pleased to have formed good ties with such a powerful and preeminent statesman as Your Excellency.”  And in yet another, Kim reflected on “that moment of history when I firmly held Your Excellency’s hand at the beautiful and sacred location as the whole world watched with great interest and hope to relive the honor of that day.”

I feel dirty.

Trump was taken with Kim’s flattery, Woodward writes, telling the author pridefully that Kim had addressed him as “Excellency.”  Trump remarked that he was awestruck meeting Kim for the first time in 2018 in Singapore, thinking to himself, “Holy shit,” and finding Kim to be “far beyond smart.”  Trump also boasted to Woodward that Kim “tells me everything,” including a graphic account of Kim having his uncle killed.

Trump did not share his letters to Kim – “those are so top secret,” the president said.

Trump reflected on his relationships with authoritarian leaders generally, including Turkish President Erdogan.  “It’s funny, the relationships I have, the tougher and meaner they are, the better I get along with them,” he told Woodward.  “You know?  Explain that to me someday, okay?”

Oh brother.

Iran: The country has begun to build a hall in “the heart of the mountains” near its Natanz nuclear site for making advanced centrifuges, Iran’s nuclear chief said on Tuesday, aiming to replace a production hall at the facility hit by fire in July.  Iran said at the time that the fire was the result of sabotage and had caused significant damage that could slow the development of advanced uranium enrichment centrifuges.

“Due to the sabotage, it was decided to build a more modern, larger and more comprehensive hall in all dimensions in the heart of the mountain near Natanz.  Of course, the work has begun,” said Ali Akbar Salehi, according to state TV.

Natanz is the centerpiece of Iran’s enrichment program.  Tehran maintains it’s for peaceful purposes.  Western intelligence agencies and the UN’s nuclear watchdog believe Iran had a coordinated, clandestine nuclear arms program that it halted in 2003.

Iraq: The Trump administration said it is cutting the number of U.S. troops in Iraq to about 3,000 this month, a reduction from 5,200 there now.

The move is part of President Trump’s effort to reduce the American military footprint in both Iraq and Afghanistan prior to the election.  The top U.S. commander in the Middle East, Gen. Frank McKenzie, said improvements in Iraq’s security forces allowed the U.S. to downsize.

The United States has been working with Iraqi Security to battle ISIS, and a report from the UN Security Council, the eleventh on the threat still posed by Islamic State in Iraq and the Levant (ISIL, or Da’esh), notes the threat remains.

From the Security Council report:

“Against the background of the coronavirus disease pandemic, the report highlights a surge in ISIL activity in Iraq and the Syrian Arab Republic and among some of its regional affiliates.  ISIL has not been able to reconstitute its external operations capability, and the measures of Member States aimed at reducing the spread of the virus appear to have temporarily reduced the risk of terrorist attacks in many States outside conflict zones.  However, the pandemic’s impact on ISIL propaganda, recruitment and fundraising activities remains unclear.  Socioeconomic fallout from the crisis could exacerbate conditions conducive to terrorism and increase the medium- to long-term threat, within and outside conflict zones….

“More than 10,000 ISIL fighters are estimated to remain active in Iraq and the Syrian Arab Republic. These fighters, organized in small cells, are freely moving across the border between the two countries and some have managed to find safe haven in the Hamrin Mountains of north-eastern Iraq.”

ISIS remains a threat.  The United States, and Europe, can never let their guard down.

Afghanistan: At least 10 people were killed in a bomb attack in the capital Kabul that targeted First Vice President Amrullah Saleh.  Saleh, a former Afghan intelligence services head, escaped with slight burns on his face and hand, he said.

The blast came as Afghan officials and the Taliban are prepared to begin their first formal talks in Doha, Qatar.

Saleh is known as a vocal opponent of the Taliban, and he has survived several previous assassination attempts, including one last year that killed 20 people at his office.

The Taliban said it was not involved in the blast, but that seems hard to believe.

Saleh vowed to continue his work.  Sounds like a tough SOB.  Good luck.

Turkey/Greece: Two fires on consecutive days totally destroyed Greece’s largest migrant camp, the overcrowded Moria facility on the island of Lesbos.

It was unclear how the fires began, with some blaming the migrants and others blaming Greek locals, but Moria was home to nearly 13,000 people, more than four times the number it can officially hold.  According to InfoMigrants, about 70% of people in the camp are from Afghanistan but migrants from more than 70 different countries live there.

Meanwhile, military tensions are increasing between Greece and Turkey over energy resources in the eastern Mediterranean.  Greece wants to spend part of its multi-billion euro cash reserves on its defense sector.

A Greek government official told Reuters last week that Greece is in talks with France and other countries over the acquisition of fighter jets.

Last month, Ankara sent an exploration vessel into disputed waters, accompanied by warships, days after Greece signed a maritime deal with Egypt.  Ankara has since been extending the vessel’s work in the wider region, issuing advisories which Athens calls illegal.

Turkish President Recep Tayyip Erdogan last weekend warned Greece to enter talks over the disputed territory or face the consequences.

“They’re either going to understand the language of politics and diplomacy, or in the field with painful experiences,” Erdogan said on Saturday.

“They are going to understand that Turkey has the political, economic and military power to tear up the immoral maps and documents imposed,” Erdogan added.

Turkish media reported that tanks were being moved toward the Greek border from Syria.

Israel/UAE: The two countries will be in Washington, D.C., next Tuesday for a signing ceremony for their peace agreement.

Prime Minister Benjamin Netanyahu said he is “proud to be going to Washington next week at U.S. President Donald Trump’s invitation, to participate in the historic ceremony in the White House, celebrating establishing a peace treaty between Israel and the United Arab Emirates.”

Separately, Saudi Arabia’s ruler King Salman bin Abdulaziz told President Trump there would be normalization with Israel without Palestinian statehood, the kingdom’s state news agency reported on Monday.

But while Saudi Arabia does not recognize Israel, it did allow Israeli airliners to use its airspace for a first time to allow flights between UAE and Israel, an important move symbolically.

And then this afternoon, President Trump announced that Bahrain had joined the UAE in striking an agreement to normalize relations with Israel, another move aimed at easing tensions in the Middle East.

Bahrain thus becomes the fourth Arab country to reach such an agreement with Israel since exchanging embassies with Egypt and Jordan decades ago.

The king of Bahrain reiterated the necessity of reaching a fair and lasting peace between the Israelis and Palestinians, based on a two state solution.

A spokesman for Iran’s parliament speaker tweeted that the agreement between Israel and Bahrain is a great betrayal to the Islamic cause and Palestinians.

“The imprudent leaders in UAE, #Bahrain must not pave the way for the Zionist schemes.  They should learn lessons from history.  Tomorrow is late!  The U.S. lifeline has worn out for years.”

The Turkish Foreign Ministry on Saturday strongly condemned the decision by Bahrain, adding it will deal a fresh blow to efforts to defend the Palestinian cause.

“It will further encourage Israel to continue illegitimate practices towards Palestine and its efforts to make the occupation of Palestinian lands permanent,” the ministry statement said.

Lebanon: Residents of Beirut were shaken again when a large fire broke out Thursday at the main port, sending up a huge plume of smoke near the site of the massive explosion that devastated a large swath of the country’s capital and killed nearly 200 people.  The cause couldn’t immediately be determined, but it served as a grim reminder of the security lapses that led to the Aug. 4 blast, which injured more than 6,000 and left thousands of homes in ruins.

Meanwhile, the United States imposed sanctions on members of Hezbollah and other allied political parties by blacklisting two former government ministers, saying they had aided Hezbollah, which Washington brands a terrorist group.

Hezbollah, a member of the government, condemned the move.

Lebanon’s President Michel Aoun requested the country’s caretaker foreign minister make contact with the U.S. “in order to understand the circumstances” behind the decision.  The move comes at a sensitive time, as a new government is being formed under a tight deadline in a bid to extricate Lebanon from a deep economic crisis. 

Prime Minister-designate Mustapha Adib, named after the last government was forced out following the Aug. 4 blast, is seeking to form a cabinet by early next week, under pressure from France which is leading an international push for deep reforms to unlock pledges of aid.

Random Musings

--Presidential tracking polls….

Gallup: Still no update from July 30-Aug. 12 report.
Rasmussen: 48% approve, 51% disapprove of the president’s performance (Sept. 11).

--A CBS News/YouGov national poll has Joe Biden with a 10-point lead over President Trump, 52% to 42%, according to the Sept. 2-4 survey.

Some 87% of likely Biden voters said their support was “very strong,” compared with 82% in early August. For Trump, 84% said their support was “very strong,” up from 82%.  This suggests the number of persuadable voters has diminished to just a few.

In Wisconsin, Biden held a 6 percentage-point lead over Trump, 50% to 44%.  The Democrat has a 9-point lead in the state among white women, far wider than the 2-point margin Hillary Clinton had in the state in 2016 among that segment of voters.

--A survey of likely voters in Texas by The Dallas Morning News and the University of Texas at Tyler has Trump leading Biden by two, 48 to 46 percent.  That marks a seven-point swing from a July poll that found Biden up 46 to 41.

If you break it down to registered voters, Biden is on top, 44 to 43.

Trump carried Texas by nine in 2016, 52.2-43.2.

--An NBC News/Marist poll has Donald Trump and Joe Biden deadlocked in the battleground of Florida, both gaining 48 percent of likely voters (48-47 Trump among a broader universe of registered voters), with the president ahead among Latinos in the state, and Biden doing better with seniors than Hillary Clinton did four years ago.

Biden leads among Black likely voters, 83-11, women, 57-40, and independents, 51-40.

Trump leads among men, 58-38, white voters, 56-41, and whites without college degrees, 63-35.

But in a significant break from four years ago, Trump holds a narrow edge over Biden among likely Latino voters, 50-46 percent.

In the 2016 race, exit polls showed Clinton bested Trump among Florida Latinos, 62-35; so a hugely worrisome trend for the Biden campaign.

Trump won Florida in 2016, 49.0-47.8.

Another NBC/Marist poll has Biden with a 9-point margin among likely voters in Pennsylvania, 53-44 percent.

Biden is leading among suburban likely voters in the state by nearly 20 points, 58 to 39 percent.  Trump won suburban voters by about 8 points, exit polls showed in 2016.  Trump won Pennsylvania 48.2-47.5.

--A CNBC/Change Research poll showed Joe Biden’s edge over Donald Trump in Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin is unchanged from two weeks ago, before the Republican National Convention.

Across the six, Biden leads 49% to 45%, compared with 49% to 46% two weeks ago.

Arizona: Biden 49-45
Florida: Biden 49-46
Michigan: Biden 49-43
North Carolina: Biden 49-47
Pennsylvania: Biden 50-46
Wisconsin: Biden 50-44

The poll, taken Friday through Sunday, surveyed 4,143 likely voters across the six states.

A majority, 51% said Trump is mentally unfit to be president, while 49% answered that he is fit to hold the job.  But by a 52-48 margin, voters responded that Biden is mentally unfit to be president.

--A Monmouth University Poll revealed 37% said President Trump has done a good job of handling the coronavirus outbreak, while 56% say he has done a bad job, the survey taken before the Woodward book revelations.  Prior readings in this poll had Trump’s positive rating on the pandemic at between 40% and 42%.

77% of Republicans give the president a good rating on his handling of the coronavirus, 34% of independents do and just 5% of Democrats agree.

The president’s overall job approval rating is holding steady at 41% approve and 53% disapprove, among registered voters.

--Big employers including Gap Inc., Old Navy, Target Corp. and Warby Parker are telling employees they can take paid time off to volunteer as election workers this fall as they aim to help solve a national poll-worker shortage and offer workers a way to find a sense of purpose.

Various organizations such as Power the Polls and Civic Alliance are working through their corporate partnerships and have signed up hundreds of thousands of poll workers and other volunteers.

It is estimated that 460,000 poll workers will be needed this year because the coronavirus pandemic could keep home many older Americans, who often serve as poll workers.  Nearly 60% of poll workers were over the age of 60 in the 2018 general election, with nearly 30% over 70, according to a Pew Research Center report.

--There was an interesting story in the Wall Street Journal by Gordon Lubold on how the Republic of Palau in the South Pacific has asked the Pentagon to build ports, bases and airfields on the island nation, offering a boost to U.S. military expansion plans in Asia, as Washington aims to counter Beijing.

China has moved to lay claim to islands in the South China Sea, while threatening Taiwan, and the U.S. is on the hunt to build or reinforce partnerships with other countries to help counter China’s illegal claims, and send a signal that the U.S. is committed to the region.

Last year, Palau’s president, along with his counterparts from Micronesia and the Marshall Islands, met at the White House last year in a show of unity, looking for U.S. support while offering their lands for bases.

But Palau has been aggressive in broadening its cooperation and allowing U.S. access for exercises and training.  They also want Americans to come often.

So years ago, on my first trip to Yap in Micronesia, I boarded a Continental Micronesia plane in Guam for the hour flight to Yap.  This was just a day trip. Arrived at about 7:30, flew back at 5:00.

When I boarded my return flight to Guam that evening, I was greeted by the same captain and crew.  Hey, I had you this morning, I said. ‘It’s the milk run,’ he replied.

The milk run is Guam to Yap to Palau to Manila…and then back.  The pilots, I learned, like it because the airstrips on Yap and Palau were more challenging than standard fare, and Yap’s is indeed very short.

Years after, I then took the milk run to Manila, on my way to Hong Kong, and the approach to Palau is so beautiful.  If you are a diver, for example, it’s paradise and they are desperate for tourism.  It’s just so far away

Anyway, that’s my rambling way of saying I hope the U.S. and Palau strengthen their relationship.  I’ve been afraid China was making inroads on Yap, which wouldn’t be good.

--150 New York City business leaders wrote a letter to Mayor Bill de Blasio that garnered quite a bit of attention.

“Dear Mayor de Blasio:

“As employers who are committed to New York City and its re-emergence from the devastating health and economic impact of the Covid-19 pandemic, we are confident that New York can and shall remain a thriving global center of commerce, innovation and opportunity.

“Despite New York’s success in containing the coronavirus, unprecedented numbers of New Yorkers are unemployed, facing homelessness, or otherwise at risk. There is widespread anxiety over public safety, cleanliness and other quality of life issues that are contributing to deteriorating conditions in commercial districts and neighborhoods across the five boroughs.

“We need to send a strong, consistent message that our employees, customers, clients and visitors will be coming back to a safe and healthy work environment. People will be slow to return unless their concerns about security and livability of our communities are addressed quickly and with respect and fairness for our city’s diverse populations.

“We urge you to take immediate action to restore essential services as a necessary precursor for solving the city’s longer term, economic challenges.  Consistent with analysis and recommendations laid out in A Call for Action and Collaboration, a report on the impact of Covid-19 published by the Partnership for New York City in July, we are prepared to help advise and support such an effort.

“We look forward to your response and to partnering with you and others who share a commitment to a vibrant recovery and a great future for our city.”

--Wildlife populations have fallen by more than two-thirds in less than 50 years, according to a major report by the conservation group WWF.  The report says this “catastrophic decline” shows no sign of slowing and it warns that nature is being destroyed by humans at a rate never seen before.

Tanya Steele, chief executive at WWF, said wildlife is “in freefall” as we burn forests, over-fish our seas and destroy wild areas.

“We are wrecking our world – the one place we call home – risking our health, security and survival here on Earth. Now nature is sending us a desperate SOS and time is running out.”

The report looked at thousands of different wildlife species monitored by conservation scientists in habitats across the world.

They recorded an average 68% fall in more than 20,000 populations of mammals, birds, amphibians, reptiles and fish since 1970.

Dr. Andrew Terry, director of conservation at the Zoological Society of London, which provides the data, said, the decline was clear evidence of the damage human activity is doing to the natural world.

“If nothing changes, populations will undoubtedly continue to fall, driving wildlife to extinction and threatening the integrity of the ecosystems on which we depend,” he added.

The British TV presenter and naturalist Sir David Attenborough said the Anthropocene, the geological age during which human activity has come to the fore, could be the moment we achieve a balance with the natural world and become stewards of our planet.

“Doing so will require systemic shifts in how we produce food, create energy, manage our oceans and use materials,” he said.

“But above all it will require a change in perspective.  A change from viewing nature as something that’s optional or ‘nice to have’ to the single greatest ally we have in restoring balance to our world.”

--Meanwhile, the World Meteorological Organization and other global science groups released a new science update Wednesday, through the UN, that notes the warming world is getting closer to passing a temperature limit set by global leaders five years ago and may exceed it in the next decade or so.

In the next five years, the planet has nearly a 1-in-4 chance of experiencing a year that’s hot enough to put the global temperature at 2.7 degrees Fahrenheit, or 1.5 degrees Celsius, above pre-industrial times.

The 1.5 degrees Celsius is the more stringent of two limits set in 2015 by world leaders in the Paris climate change agreement.  A 2018 UN science report said a world hotter than that would still survive, but the chances of dangerous problems increase tremendously.

Separately, concentrations of greenhouse gases in the Earth’s atmosphere hit a record high this year, per a report from the UN and the World Meteorological Organization.  Petteri Taalas, head of the WMO, said, “We have continued seeing records in atmospheric concentration of carbon dioxide.”

While daily emissions fell in April by 17% relative to the previous year, those were still on a par with 2006, underlining how much emissions have grown in recent years.  And by early June, as factories and offices reopened, emissions were back up to within 5% of 2019 levels.  Even if 2020 emissions are lower than last year’s output by up to 7% as expected, what is released will still contribute to the long-term accumulation since the industrial era.

UN Secretary-General Antonio Guterres, launching the report, said, “The consequences of our failure to come to grips with the climate emergency are everywhere.  Whether we are tackling a pandemic or the climate crisis, it is clear that we need science, solidarity and decisive solutions.”

The report showed atmospheric concentration of CO2 hit 414.38 parts per million in July, compared with 411.74 ppm a year earlier.  Scientists say they consider 350 ppm, breached in 1988, a safe limit.

--The total number of acres burned by wildfires in California this year, 3 million+, is already well more than in any total year previously recorded, going back to 1932 when records began.

---

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

Congratulations to Master Sergeant Major Thomas P. Payne for being awarded the Medal of Honor today for his incredible bravery in helping his team rescue 75 ISIS hostages in Iraq.

God bless America.

---

Gold $1948
Oil $37.39

Returns for the week 9/7-9/11

Dow Jones  -1.7%  [27665]
S&P 500  -2.5%  [3340]
S&P MidCap  -2.3%
Russell 2000  -2.5%
Nasdaq  -4.1%  [10853]

Returns for the period 1/1/20-9/11/20

Dow Jones  -3.1%
S&P 500  +3.4%
S&P MidCap  -10.1%
Russell 2000  -10.3%
Nasdaq  +21.0%

Bulls  59.0
Bears  16.2

Hang in there…Mask up, wash your hands.

We pray for those struggling to deal with the historic fires in America’s West.

And never forget 9/11.

Brian Trumbore