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Week in Review

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09/19/2020

For the week 9/14-9/18

[Posted 10:00 PM ET, Friday]

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

Edition 1,118

Some of us are just waiting for more surprises prior to November 3rd, befitting this historically godawful year, but the news we received tonight wasn’t on my list.

Justice Ruth Bader Ginsburg, a stalwart liberal on the Supreme Court since 1993, died at the age of 87, the Court said, giving Donald Trump a chance to expand the conservative majority with a third appointment.

“Our Nation has lost a jurist of historic stature,” Chief Justice John Roberts said in a statement.  “We at the Supreme Court have lost a cherished colleague.  Today we mourn, but with confidence that future generations will remember Ruth Bader Ginsburg as we knew her – a tireless and resolute champion of justice.”

There is immediate talk in some circles of Trump and Senate Majority Leader Mitch McConnell being able to jam in a replacement by the election, turning a 5-4 conservative majority into 6-3, but no way they get away with it.  I’ll leave it at that, knowing there will be a ton to write on this topic next time, even as McConnell just issued a statement, saying Trump’s nominee to fill the vacancy will receive a vote on the floor of the Senate.

I’m watching President Trump now, addressing a rally in Bemidji, Minnesota, and he literally went on right around when the announcement hit about Justice Ginsburg and it seems certain he doesn’t know the news.  Instead, he’s talked about Minnesota being “overrun and destroyed” if Biden wins, overrun by “Somalis.”  He’s said Comcast, “Concast,” is run by “sick and evil people.  They don’t want what’s best for the American people.”

His usual line that “I’ve now gotten worse press than Lincoln.”

Trump is talking of the greatness of Robert E. Lee.  Kamala Harris is “a maniac.”

Oh, and just as I told you, the Wall is miraculously growing “ten miles a week,” only I said he’d be using the figure 320 miles soon, except tonight it’s up to “330.”

And he’s telling his same, stupid story on what a deal he cut on the Air Force One contract.

At least this is better than his constant undermining of our election process and confidence in our institutions, like in his throwing his CDC director under the bus this week when, under oath, Dr. Robert Redfield gave his honest assessment on when a vaccine would be widely available, while reemphasizing the importance of wearing a mask.  Trump then called him out on both.

A Monmouth University poll released Thursday found that 4 in 10 voters are not confident that the election will be conducted “fairly and accurately.”

Trump’s frequent but unsubstantiated claim that mail-in voting is riddled with fraud and can’t be trusted has fed into voter concerns.

Patrick Murray, director of the Monmouth University Polling Institute, said, “We have voters on both sides who are becoming more inclined to distrust a result they won’t agree with.”

The president just keeps promoting conspiracy theories and chaos.  It’s both sad and sickening. 

As an old friend wrote me this week, “I don’t know how we’re going to ever get out of this polarization.  Social media and the networks won’t let it happen; their business model is division.”

And then there’s the pandemic.  Tonight we hit 50,000 cases again for the first time in two weeks.  We’re supposed to be well under 20,000, prior to flu season and colder weather that will drive us indoors, where it’s easier to catch the virus.  But no.

As the president told Bob Woodward on a March 19 phone call:

“Well, I think Bob really to be honest with you…I wanted to always play it down.  I still like playing it down…because I don’t want to create a panic.”

We learned this week of a new phone call, August 14, that sums it all up, Trump telling Woodward, “Nothing more could have been done.  Nothing more could have been done.”

The same president who told Woodward on Feb. 7, “It goes through air, Bob. …just breathe the air and that’s how it’s passed. …It’s also more deadly than your, you know, your strenuous flus. This is deadly stuff.”

No, a lot more could have been done, Mr. President.

Former director of national intelligence Dan Coats, in a New York Times op-ed:

“We hear often that the November election is the most consequential in our lifetime. But the importance of the election is not just which candidate or which party wins.  Voters also face the question of whether the American democratic experiment, one of the boldest political innovations in human history, will survive.

“Our democracy’s enemies, foreign and domestic, want us to concede in advance that our voting systems are faulty or fraudulent; that sinister conspiracies have distorted the political will of the people; that our discourse has been perverted by the news media and social networks riddled with prejudice, lies and ill will; that judicial institutions, law enforcement and even national security have been twisted, misused and misdirected to create anxiety and conflict, not justice and social peace.

“If those are the results of this tumultuous election year, we are lost, no matter which candidate wins.  No American, and certainly no American leader, should want such an outcome.  Total destruction and sowing salt in the earth of American democracy is a catastrophe well beyond simple defeat and a poison for generations.  An electoral victory on these terms would be no victory at all. The judgment of history, reflecting on the death of enlightened democracy, would be harsh.

“The most urgent task American leaders face is to ensure that the election’s results are accepted as legitimate.  Electoral legitimacy is the essential linchpin of our entire political culture.  We should see the challenge clearly in advance and take immediate action to respond.”

Editorial / Washington Post

“Disturbing evidence keeps piling up that President Trump and his administration are meddling for political purposes in the work of the nation’s leading public health guardians, the Centers for Disease Control and Prevention and the Food and Drug Administration. The integrity of these agencies is vital to fighting the pandemic and to the rollout of a vaccine.  To compromise them helps no one, not even Mr. Trump.

“We first saw this in Mr. Trump’s misguided touting of the antimalarial drug hydroxychloroquine.  In a whistleblower complaint, former director of the Biomedical Advanced Research and Development Authority Rick Bright described how the White House and senior officials at the Department of Health and Human Services pressed to distribute the drug beyond the FDA’s narrow authorization, even though it had no known utility as a coronavirus treatment.

“Then, last month, Mr. Trump pressed for approval of expanded use of blood plasma from recovered patients to treat Covid-19.  The National Institutes of Health had concerns about effectiveness.  On Aug. 19, Mr. Trump phoned Francis Collins, the NIH director, with a blunt message.  ‘Get it done by Friday,’ he said, according to the New York Times.  Mr. Trump announced the FDA’s authorization on Aug. 23, on the eve of the Republican convention, using an exaggerated estimate of its potential usefulness.

“Now comes fresh evidence that the CDC’s scientific reports are being manipulated to meet Mr. Trump’s political imperatives.  Politico reported that communications officials at HHS are reviewing and editing the CDC’s dispatches, the Morbidity and Mortality Weekly Report, written by career scientists. According to Politico, the assistant secretary for public affairs at HHS, Michael Caputo, and Mr. Caputo’s scientific adviser Paul Alexander demanded changes in the reports.  At one point, Mr. Alexander complained in an email that ‘CDC to me appears to be writing hit pieces on the administration.’  The officials were ‘particularly bristling’ about a report that described a coronavirus outbreak in June at a children’s overnight summer camp in Georgia and said children of all ages were susceptible to infection.

“Mr. Caputo heaped scorn on the CDC scientists in a Facebook video, claiming CDC career government scientists were engaging in ‘sedition’ in their handling of the pandemic.  He added, ‘There are scientists who work for this government who do not want America to get well, not until after Joe Biden is president.’  On Wednesday, the agency announced Mr. Caputo is taking a 60-day medical leave from his post, while Mr. Alexander has left HHS entirely.  Meanwhile, Mr. Trump openly rebuked his own CDC director, Robert Redfield, who predicted that a vaccine may be available only next spring or summer, not before the upcoming election, as Mr. Trump insists.

“The bare-knuckle politicization of science puts the nation at risk.  It could lead people to lose faith in these public health agencies cascading into dangerous distrust of a vaccine or drug therapy.  It is hard to see the political profit in that.”

Covid-19 death tolls, as of tonight….

World…956,350
USA…203,171
Brazil…135,857
India…85,625
Mexico…72,803
UK…41,732
Italy…35,668
Peru…31,283
France…31,249
Spain…30,495
Iran…23,952
Colombia…23,850

Source: worldometers.info

U.S. daily death tolls…Sun. 392; Mon. 480; Tues. 1,197; Wed. 1,151; Thurs. 879; Fri. 958.

Week seven of my Wednesday comparison on the case and death tolls of the Euro six (Germany, France, Spain, Italy, UK and Belgium, with a combined population of 336 million) and the U.S. (population 330 million).

The first week, the U.S. had 55,148 cases and 1,319 deaths, while the Euro six had a cumulative 7,281 and 100.

This week, the Euro six was up to 28,930 cases and 324 deaths.  The U.S. was at 40,154 and 1,151.  It is awful that Europe is spiking.  It is a horrible sign for the United States and the rest of the world.  We had new highs in cases in Spain, France, Netherlands, and Ukraine, for starters. This is after their stringent lockdowns suppressed the spread to minimal levels.  But they opened up, not necessarily recklessly, and yet look at the result.

Covid Bytes

--A large, pivotal study of Moderna Inc.’s Covid-19 vaccine could yield a preliminary answer on its efficacy as early as October, CEO Stephane Bancel said Thursday, though it’s more likely to be November.  Timing will depend on rates of infection in the U.S. locations where the trial is being conducted, because the study is comparing whether fewer vaccinated people come down with symptomatic Covid-19 than unvaccinated people.

“Thankfully for the U.S. population it has become better the last few weeks,” Bancel said, referring to a general decline in new cases since August, though I’d add, barely.  “That actually makes it harder for an October readout on efficacy of the vaccine.”

If Moderna’s interim results are positive, the company could seek government authorization for emergency use of the vaccine soon thereafter, Bancel said.

--AstraZeneca, which placed its vaccine trials on hold worldwide on Sept. 6 after a serious side effect was reported in one volunteer in Britain, is facing criticism for its lack of transparency in reporting details of the case.  Johnson & Johnson’s Covid-19 vaccine trial in Spain has seen some volunteers quit after the AstraZeneca news, though J&J says it has enough reserve volunteers for the trial to continue as normal.

--The WHO’s chief scientist Soumya Swaminathan predicted on Tuesday that there will not be enough Covid vaccines for life to return to normal until 2022.

“The way that people are picturing it is that in January you have vaccines for the whole world and things will start going back to normal – it is not how it works,” she said.

“Our best assessment [for vaccine roll-out] is the middle of 2021 because at the beginning of 2021 is when you will start seeing the results of some of these trials.”

--Israel today became the first developed country to impose a second nationwide lockdown, as its government struggles to contain a fresh coronavirus outbreak that has hammered the country and divided the nation.

The lockdown will last at least through early October, aiming to prevent mass gatherings during the Jewish holidays that begin at sundown Friday.  It will extend through Rosh Hashana, Yom Kippur and Sukkot – holidays that typically involve millions of Jewish worshippers attending synagogues and gathering for prayer services.  If deemed effective, Israel will later move to localized lockdowns of Covid hot spots.

--Surging coronavirus figures across Europe should serve as “a wake-up call,” the World Health Organization’s regional director has said.

Hans Kluge said in the past two weeks the number of new cases had doubled in more than half of European member states.  “We have a very serious situation unfolding before us,” he said.

The WHO reported a record one-day increase in global coronavirus cases on Sunday, with the total rising by 307,930 in 24 hours.

--Britain’s health minister said on Friday that the coronavirus was accelerating across the country, with hospital admissions doubling every eight days, but refused to say if another lockdown would be imposed next month.

Health Secretary Matt Hancock said that a lockdown was a last resort, but that the government would do whatever it takes to tackle the virus.

--Editorial / Wall Street Journal…on the surge in Europe.

“One theme is that (Euro) politicians increasingly are alert to the health and economic dangers of mass lockdowns, including mass unemployment, missed education and psychological ills. Another theme is that European leaders are now more inclined to focus on individual responsibility than government action.  ‘There is only so much a government can do,’ Herman Goossens, coordinator of a European Union pandemic advisory panel, told the Journal this week.  He suggests emphasizing steps individuals can take to control the virus’ spread, such as social distancing and mask wearing.

“If that sounds familiar, it’s because that has been Sweden’s approach throughout the pandemic – and Sweden is the conspicuous exception to Europe’s new coronavirus wave. The country eschewed a mandatory lockdown and instead urged prudent individual measures such as working from home when possible and maintaining social distancing.

“While it suffered a higher death toll earlier in the crisis – concentrated, as elsewhere, in nursing homes – a second wave has yet to materialize there.  If this trend continues, it will provide an important point in the debate over what, if anything, the spring’s lockdowns elsewhere accomplished.

“The most notable feature of Europe’s virus response is that policy makers’ judgments are evolving as leaders learn more about the virus and their countries’ ability to manage it.  Americans might well ask when their politicians and media become similarly adaptable in the face of an evolving pandemic.”

The above is full of it in one very important respect.  Americans have proven, about half of us, that they will not follow basic guidelines that could help get us through the winter before a vaccine(s) becomes widely available.  To do so we all have to be on the same page.  The chances of that happening are zero. 

--Canada’s Ontario province is reducing the size of permitted indoor social events from 50 to 10, while the limit for outdoor gatherings would shrink to 25 from 100, owing to “reckless careless people” who are spreading the coronavirus at illegal parties, premier Doug Ford announced on Thursday.

Canada is seeing a distinct spike in cases from the lows of the summer.

--A now-notorious Aug. 7 wedding in the area of Millinocket, Maine, has been linked to seven coronavirus deaths and 176 positive cases, state health officials announced Tuesday.

Six of the seven who died were residents of a rehab & living center in Madison, Maine, with 39 cases linked to the location, though the wedding was held at a church in Millinocket and then a reception at the Big Moose Inn on Millinocket Lake.  83 percent of the roughly 65 guests at the wedding and reception reported experiencing symptoms of Covid afterward.

Trump World

--President Trump claimed in an ABC News town hall that he actually “up-played” the coronavirus if anything, not downplayed it per Woodward’s book, “Rage,” and the audio tapes.

Woodward, appearing at the same time of the ABC town hall on CNN with Anderson Cooper told him: “We are living in an Orwellian world, and this is not just about some political problem or some geopolitical problem.  It’s about the lives of people in this country, and he was told.  He knew.  He told me about it.”

Woodward added: “My job is not to be emotional and I’ve done it for 50 years and I tried to bleach the emotions out of it, but this is a story and unfortunately, it’s not over. We’re right in the middle of the damn pandemic and you talk to the doctors as I have and the experts and if we had received the kind of warning and this kind of ‘this is what you as citizens can do,’ this could be over.”

--Attorney General William Barr on Wednesday said a nationwide coronavirus lockdown would amount to the “greatest intrusion on civil liberties” besides slavery in U.S. history.

Barr made the remarks during a speech at Hillsdale College in celebration of Constitution Day in response to a question about the “constitutional hurdles” of banning church gatherings during the pandemic.

“You know, putting a national lockdown, stay at home orders, is like house arrest.  Other than slavery, which was a different kind of restraint, this is the greatest intrusion on civil liberties in American history,” Barr said.

Barr then slammed governors who have imposed stay-at-home orders even as states like New York and New Jersey used them to cut down on infections.

“Most of the governors do what bureaucrats always do, which is they…defy common sense,” Barr said.  “They treat free citizens as babies that can’t take responsibility for themselves and others.”

--Trump blamed “blue states” for increasing the nation’s death rate from coronavirus, suggesting that if “you take the blue states out” of the equation the United States would be far more competitive with other countries.

Speaking to reporters at the White House, Trump started off arguing that the United States was handling the virus well compared to other nations “despite the fact that the blue states had tremendous death rates.

“If you take the blue states out,” he continued, “we’re at a level that I don’t think anybody in the world would be at.  We’re really at a very low level but some of the states – they were blue states, and blue-state management.”

--As part of Woodward’s book, the author shares an audio from a Jan. 22 conversation he had with President Trump in which Trump boasted about his relationship with Turkish leader Recip Tayyip Erdogan.

“I get along very well with Erdogan,” Trump told Woodward.  “Even though you’re not supposed to, because everyone says ‘What a horrible guy.’ But for me it works out good. I can tell you that the relationships I have, the tougher and meaner they are, the better I get along with them.  You’ll explain that to me some day, OK?  But maybe it’s not a bad thing.  The easy ones are the ones I maybe don’t like as much, or don’t get along with as much.”

Woodward noted the shocking nature of Trump admitting to aligning himself with leaders such as Turkey’s president, while simultaneously having tense relationships with longtime allies.

“He is the face of the United States to the world,” Woodward said on “Today” Monday.  “And he has said – and there it is – ‘Hey, look.  I get along with these bad guys, but not the good guys.’”

--Trump dismissed concerns over climate change on a visit to fire-ravaged California, telling an official there it would “start getting cooler.”

During the visit, Trump repeated his argument that poor forest management was to blame as he met California officials involved in the battle against the wildfires at a stop near Sacramento.

Dismissing one official’s plea to not “ignore the science” on climate change, Trump said: “It’s going to start getting cooler, just you watch… I don’t think science knows actually.”

Earlier that day, Monday, Joe Biden called Trump “a climate arsonist.”

The president has previously criticized California’s forest management, pointing to Finland, where he said they raked and cleared the forests to prevent fires.  Someone remind the president that one-third of Finland is above the Arctic Circle.  Santa Claus trains his reindeer there.

--The president dismissed a former aide to Vice President Mike Pence, Olivia Troye, as someone who was “let go” – denouncing her after she cut an ad saying she supports Democratic presidential candidate Joe Biden.

“I just heard about that, I don’t know her.  She worked for the vice president,” Trump told reporters.

Troye worked as an adviser to the White House coronavirus task force and criticized Trump’s handling of the pandemic in a video for Republican Voters Against Trump.

--Editorial / New York Post

Wear a mask: It’s the most effective single technique right now for limiting Covid-19 spread, pending release of an effective vaccine.

“Please, Mr. President, stop suggesting anything else.

“We want to get back to a more normal life, with indoor restaurant dining and in-person schooling.  The way we get those things is for people to act smart – and that includes wearing masks.

“People are more likely to wear their masks if they get a consistent message to do so from leaders they trust. Which means you need to stop contradicting your own people, such as your CDC chief, Dr. Robert Redfield.

“It’s certainly true, as Politico reports, that Team Trump has worked unprecedented miracles in getting the nation close to a vaccine: If any of several different programs pan out, we’re likely to have one early next year – far sooner than the 12 to 18 months that was the optimistic prediction back in March.

“It’s wrong for Joe Biden to cast doubt on vaccine progress and say he doesn’t trust any vaccine the president promotes.  Democrats are politicizing the pandemic, trying to ride the virus into the White House.

“That’s terrible: This isn’t a blue state-red state issue.

“But that’s true for you, too.  You’re president of every one of these United States, and your sworn duty is to serve the people of every one of them.  Care about all America, and quit dumping on masks.”

--Trump tweets:

“Democrats only want BAILOUT MONEY for Blue States that are doing badly. They don’t care about the people, never did!”

“Twitter makes sure that Trending on Twitter is anything bad, Fake or not, about President Donald Trump.  So obvious what they are doing. Being studied now!”

[Ed. Yeah, just like you are still studying your new healthcare plan, Mr. President…the one we were supposed to have three years ago but “is coming in two weeks.”]

“I am SUBSTANTIALLY LOWERING MEDICARE PREMIUMS.  Have instituted Favored Nations Clause and Rebates on Drug Companies.  Never been done before. Drug companies are hitting me with Fake Ads, just like Sleepy Joe. Be careful! Drug prices will be reduced massively, and soon.

“I am lowering, not raising, Medicare Premiums!”

“Just out: Some people in the Great State of North Carolina have been sent TWO BALLOTS.  RIGGED ELECTION in waiting!”

[Ed. There was a clerical error…only one ballot counts, Mr. President.]

“Unsolicited Ballots are uncontrollable, totally open to ELECTION INTERFERENCE by foreign countries, and will lead to massive chaos and confusion!”

“Because of the news and unprecedented massive amount of unsolicited ballots which will be sent to ‘voters’, or wherever, this year, the Nov 3rd Election result may NEVER BE ACCURATELY DETERMINED, which is what some want. Another election disaster yesterday. Stop Ballot Madness!”

“Bob Woodward’s badly written book is very boring & totally ‘obsolete.’  Didn’t even talk about the recent Middle East deal.  Just another tired, washed up Trump Hater, who can’t stand that I have done so much, so quickly! #MAGA”

Responding to FBI Director Christopher Wray’s congressional testimony where he said in part: “We certainly have seen very active, very active efforts by the Russians to influence our election in 2020…to both sow divisiveness and discord and…to denigrate Vice President Biden,” Trump tweeted:

“But Chris, you don’t see any activity from China, even though it is a FAR greater threat than Russia, Russia, Russia.  They will both, plus others, be able to interfere in our 2020 Election with our totally vulnerable Unsolicited (Counterfeit?) Ballot Scam. Check it out!”

“Great News: BIG TEN FOOTBALL IS BACK.  All teams to participate.  Thank you to the players, coaches, parents, and all school representatives.  Have a FANTASTIC SEASON! It is my great honor to have helped!!!”

Wall Street and the Economy

The Federal Reserve’s Open Market Committee gathered this week and the Fed sees unemployment falling to 7.6 percent by end of this year (from its current 8.4 percent), much better than what they saw months ago, as well as to 5.5 percent by the end of 2021, which would still be above the 3.7% pre-pandemic level.

Fed leaders are growing more optimistic about the recovery than they were earlier this summer.

“The recovery has progressed more quickly than generally expected,” Fed Chair Jerome Powell said at a news conference.  “Even so, overall activity remains well below its level before the pandemic, and the path ahead remains highly uncertain.”

At the same time, the majority of Fed officials expected the benchmark interest rate would stay at or near zero through 2023.  The Fed also said it would increase holdings of Treasury securities and agency mortgage-backed securities at the current pace, which officials say is helping stave off an even deeper financial crisis.

Policymakers’ estimates for how far GDP would fall this year also improved.  Officials now forecast a decline of 3.7 percent by the end of the year, compared to June expectations for a 6.5 percent drop.

But these numbers do not account for a potential rise in coronavirus cases in the upcoming flu season that could weigh on the broader economy, which is why Powell’s language is peppered with “uncertainty” the last few months.  Congress is also stalled on another massive stimulus bill, which the Fed has argued is needed for the likes of the battered service and leisure sectors of the economy.

At the news conference, Powell said his “sense is that more fiscal support is likely to be needed.”  Congressional relief thus far “has been essential” and Powell warned of the hazards of cutting off aid prematurely, especially to the most vulnerable, including state and local governments facing budgetary crisis and massive layoffs.

“If there’s no additional support…that’s going to show up in economic activity, and in things like evictions and foreclosures and things that will scar and damage the economy,” Powell said.  “That’s a downside risk.”

Powell also noted that for many businesses in need of relief, “getting a loan that may be difficult to repay may not be the answer” and that “in these cases, direct fiscal support may be needed.”

“The overall picture is that the labor market is recovering, but it is a long way, a long way, from maximum employment,” Powell said.  “That’s the bottom line on it.”

Editorial / Wall Street Journal

“The Federal Reserve confirmed again Wednesday that we live in a bizarre monetary world by issuing two paradoxical predictions. The sages of the Open Market Committee (FOMC) said the economy is recovering faster than they had thought, but that interest rates will nonetheless have to stay near zero through 2023.

“In one sense the Fed’s statement puts more specificity on the new inflation-targeting policy that Fed Chair Jerome Powell laid out last month.  We called it, half in jest, ‘low rates forever!’  Wednesday’s statement nailed down that zero-rate forecast through at least 2023, or longer if inflation doesn’t average 2% or higher by then.

“Yet how in the sainted name of Paul Volcker can the Fed predict what interest rates will be at the end of the next Presidency when it misjudged the economy so much over the last three months?  In June the FOMC’s median prediction for GDP this year was minus-6.5%.  Ninety days later it’s only minus-3.7%.  The median jobless rate prediction in June for the end of the year was 9.3%; now it’s 7.6%....

“The Fed has junked the old Phillips Curve connection between inflation and unemployment, which is good. But it doesn’t seem to have a replacement theory of monetary policy beyond saying, ever more explicitly, that it wants inflation to really take off before it will raise rates.  Mr. Powell is now the anti-Volcker, who will do whatever it takes to spur inflation.”

Meanwhile, a few economic data points this week.  August industrial production came in less than expected, 0.4%, while retail sales for the month also fell short, 0.6%, 0.7% ex-transportation, and -0.2% on the ‘control group’ metric.

August housing starts also fell short of what the Street was forecasting, a 1.416 million annualized rate versus a prior revised figure of 1.492m.

But the Atlanta Fed’s GDPNow barometer for the third quarter is at a whopping 32.0%, which the president has been touting for months now, the first official look being reported on Oct. 29.

On trade….

John Cavanagh / USA TODAY [Cavanagh is director of the Institute for Policy Studies]

“As he courts Midwestern voters, President Donald Trump is returning to hard-hit manufacturing regions where he made big, bold promises in his last campaign.  ‘If I’m elected…you won’t lose one plant, I promise you that,’ he told Michigan voters at a rally in October 2016.  In fact, his big stick approach to global trade negotiations would bring jobs back home.  Or so he claimed.

“Four years later, it’s clear that Trump’s trade policies have failed U.S. workers.  Instead of more good jobs, his ever-escalating trade wars have led to higher costs, lost markets, and more plant closures. Economic Policy Institute research shows that nearly 1,800 U.S. factories disappeared between 2016 and 2018.

“In manufacturing-heavy Ohio, Trump’s tit-for-tat tariff battle with China was a major factor in the drop in annual job growth from 36,200 in 2016 to 3,700 in 2019, according to a new report I co-authored.  Average weekly earnings for Ohio manufacturing workers also declined during this period.

“In Michigan, Fiat Chrysler, General Motors, and Ford have all closed plants since Trump’s brash campaign trail commitments. Auto companies as a whole reduced their investment in the state by 29% over the three full years of Trump’s presidency, compared with the previous three years under Obama.

“Where were U.S. manufacturing companies investing?  China. Trump’s war of words with Beijing has done nothing to stop American companies from pouring resources into this fast-growing market.

“In 2019, U.S. firms invested $14 billion in China – more than in 2016, the year Trump was elected. Tesla and General Motors led the pack, with massive investments in electric vehicle production.  These two companies’ decisions to expand in China were motivated in part by Beijing’s consumer subsidies for pollution-reducing technologies.

“But Trump also bears personal responsibility for encouraging offshoring because of the corporate tax cuts he pushed through Congress in 2017.  U.S.-based companies no longer owe Uncle Sam anything on offshore profits up to a certain threshold.  Above that level, they owe a federal tax rate that’s just half of what they’d pay for domestic profits.

“As a result, corporations can save on their IRS bills by shipping jobs overseas.  Big companies like General Motors took their tax break and then shipped thousands of jobs out of Ohio, Michigan and other states.

“What’s Trump saying now, as he once again stumps in these struggling industrial powerhouses?

“Don’t expect any apologies for his broken promises.  Instead, you’ll hear false claims about all the car plants he’s supposedly created in these states.  On Sept. 10 in Freeland, Michigan, he went so far as to claim that he’d ‘brought back our manufacturing jobs’ and added: ‘If Biden wins, China wins.’

“Of course, these are lies. The jobs haven’t come back. But even as he doubles down on his failed trade war with China, Trump continues to reward the corporations that offshored jobs there.”

Finally, economist Robert J. Samuelson has retired from his perch at the Washington Post.  He has always been my favorite in terms of breaking down economics to a level we all could understand.

“I’m around 75,” he wrote in his last column this week.  “If I haven’t yet said what’s on my mind, I never will.”

Samuelson is not optimistic about the future.

“(Modern) democracies have a hard time making sacrifices in the present for gains in the future. We’re already grappling with this problem.  From 2010 to 2030, the elderly’s share of the population (65 and over) is projected to rise from 13 percent to 20 percent.  Spending on Social Security and Medicare will skyrocket, and already is.  Yet we have done little to prevent spending on the elderly from squeezing the rest of the federal budget.  Global warming poses a similar issue: As yet, there is no consensus to spend today in the vague hope that we can curb climate change several decades from now.

“I hope I am wrong about the future.  That’s one excuse for my throwing in the towel now, in the midst of one of the great news stories of our time.  I am a man of the 20th century, but we are now facing the problems of the 21st century, which demand new policies and norms. Goodbye and good luck – you’ll need as much help as you can get.”

Europe and Asia

We’ve had a lull on the economic data front in the EU, with important PMI numbers coming the next two weeks.  We did have a reading from Eurostat on August inflation in the eurozone, down -0.2% annualized, vs. 1.0% a year ago, and down from 0.4% in July.  The decline was due largely to lower energy prices.

Germany -0.1 ann., France 0.2%, Italy -0.5%, Spain -0.6%, and the Netherlands 0.3%.  [0.2% for August in the UK.]

And industrial production in July was up 4.1% in the euro area compared with June, but down 7.7% vs. a year ago.

But the big story remains….

Brexit:  British Prime Minister Boris Johnson is pressing ahead with legislation on trade despite a warning from Brussels that it could wreck their future relationship and an acknowledgement by his government that it violates international law.

The Internal Market Bill is aimed at ensuring Britain’s four nations can trade freely with one another after leaving the European Union, but the government says that requires creating powers to override part of the withdrawal treaty it signed with Brussels.

The government says the powers are a safety net to protect peace in Northern Ireland if negotiations with the EU on how to manage cross-border trade fail.

A key part of the original agreement with Brussels is that Northern Ireland will continue to follow some EU rules even after Brexit happens, which is designed to prevent a hard border.

But Johnson’s new bill would go against the withdrawal agreement – and therefore international law – by allowing UK ministers to “disapply” previously agreed rules relating to Northern Ireland if there is no trade deal with the EU.

The EU wants to make sure the open border with Ireland doesn’t act as a back door into the bloc for goods.  Britain wants to make sure goods flow freely between Northern Ireland and the rest of the United Kingdom.

The bill has to pass the House of Commons, where Johnson’s Conservative Party has an 80-seat majority, and then the House of Lords, the upper chamber, where it does not have a majority. The bill is slated for a vote in the lower house on Sept. 29.  But then it will stall in the House of Lords, which has vowed it will take most of October and November to consider the legislation.

Which means the bill will not be law before the EU’s end of September deadline to withdraw the bill, or Johnson’s Oct. 15 deadline for a deal with the EU.

U.S. special envoy to Northern Ireland, Mick Mulvaney, has warned against creating a “hard border by accident” on the island of Ireland.  Mulvaney’s warning came two days after presidential candidate Joe Biden issued his own warning that Britain must honor the 1998 Good Friday Agreement “that brought peace to Northern Ireland,” and that the U.S. cannot allow the accord to become a casualty of Brexit.  “Any trade deal between the U.S. and UK must be contingent upon respect for the Agreement and preventing the return of a hard border.  Period.”

The UK has said that in talks with the EU, significant gaps remain in key areas, including fisheries and subsidies.

As for the EU side, chief negotiator Michel Barnier told the bloc’s 27 national envoys to Brussels that he still thinks a trade deal with Britain is possible, despite the latest crisis in this four-year saga.  But the next few days are key.  A little progress on the fisheries issue has been made, so we’re told.

The EU’s leaders hold a critical summit Oct. 15-16 and the deal was to have been wrapped up by then, because each member state still then has to approve it before year end.

*Former prime ministers Tony Blair and John Major, who were adversaries in the 1990s as Conservative and Labour party leaders, wrote in a joint letter published by the Sunday Times newspaper that Boris Johnson’s plan to pass legislation that breaks the divorce treaty with the EU was “shocking.”

“How can it be compatible with the codes of conduct that bind ministers, law officers and civil servants deliberately to break treaty obligations?”

Turning to Asia…in China, the economic outlook continued to improve with August retail sales up 0.5% from a year earlier, a strong improvement from July’s 1.1% drop and the first expansion for this metric of the year.

Retail sales have benefited from a lifting of lockdown restrictions across the country.  And now, with no local cases reported in weeks, shopping malls, restaurants and gyms are packed with consumers again.  Movie theaters – the last holdouts – reopened end of July and during the last 10 days of August, official data showed box-office revenue returning to 90% of year-earlier levels.

Rail and air travel is also improving, and August industrial production was up 5.6% from a year earlier, according to the National Bureau of Statistics, beating July’s 4.8%.  January-August fixed-asset investment was down 0.3% from a year earlier, narrowing the Jan.-July decline of 1.6%. 

The urban unemployment rate was down to 5.6%, vs. 5.3% in January.

The Bank of Japan kept monetary policy steady on Thursday and slightly upgraded its view on the economy, suggesting that no immediate expansion of stimulus was needed to combat the coronavirus pandemic.

Markets are focusing on what kind of relationship BOJ Governor Haruhiko Kuroda will have with new Prime Minister Yoshihide Suga in supporting the economy with its dwindling policy tool-kit, a negative short-term benchmark interest rate and a pledge to cap 10-year government bonds yields around zero.

“Japan’s economy remains in a severe state but has started to pick up as business activity gradually resumes,” the BOJ said in a statement.

Since Suga was Shinzo Abe’s right-hand man, there is not likely to be a major change in the relationship between the central bank and the government, Suga saying he would stick with his former boss’ “Abenomics” growth policies while pushing reforms including deregulation, digitalization and smashing of bureaucratic barriers.  Seeming to play down the prospect for an early election, Suga said what Japanese most wanted was to contain the coronavirus outbreak and revive the battered economy.

A lower house election must be held by late October 2021 but there is speculation he might call for a vote sooner to cement his mandate.

Suga has little foreign policy experience and he must also cope with an intensifying U.S.-China confrontation, build ties with the winner of the Nov. 3 election, and try to keep Japan’s own relations with Beijing on track.

Street Bytes

--Stocks fell a third straight day today, taking the averages negative for a third consecutive week amid concerns about the deteriorating relationship between the U.S. and China over social-media apps.  While the Dow Jones just lost a fraction of a point over the week to 27657, the S&P 500 and Nasdaq both fell 0.6%.

Nasdaq is now down 10.5% from its high of just a few weeks ago.

As discussed below, tech stocks were spooked by battle between Washington and Beijing over WeChat and TikTok, with Wedbush Securities analyst Daniel Ives saying in a note to clients today: “The broader worry is that if a deal is not reached over the next 48 hours with approval by the Chinese government around source code access and majority ownership, this shutdown move could be a Fort Sumter moment in the U.S./China cold tech war tensions with retaliation on the horizon,” he said.

--U.S. Treasury Yields

6-mo. 0.11%  2-yr. 0.14%  10-yr. 0.70%  30-yr. 1.45%

With the Fed telling us there will be no change in their stance on rates for years to come, there is little cause for real movement on the yield curve.

--World oil demand will fall more steeply in 2020 than previously forecast due to the pandemic and recover more slowly than expected next year, OPEC said on Monday, potentially making it harder for the group and its allies to support the market.

Demand will tumble by 9.46 million barrels per day this year, OPEC said in a monthly report, more than the 9.06m bpd it called for a month ago.

While some countries have eased lockdowns, allowing demand to recover, a rising number of new cases and higher output have weighed on prices.

“Risks remain elevated and tilted to the downside, particularly related to the development of Covid-19 infection cases as well as possible cures,” OPEC said of the 2021 outlook.  “Increased usage of teleworking and distance conferencing is estimated to limit transportation fuels from fully recovering to 2019 levels.

OPEC also cut its demand forecast for 2021 and sees consumption rising by 6.62m bpd, 370,000 bpd less than expected last month.

To tackle the drop in demand, OPEC and its allies, OPEC+, agreed to a record supply cut of 9.7 million bpd that started on May 1, while the United States and other nations agreed to pump less.

But this week oil got back over $40 ($40.97 on WTI) for the first time in three weeks as U.S. crude inventories fell for the seventh time in eight weeks and reached a five-month low.

--This is how the TikTok story developed this week.  As it went down…for now….

China’s ByteDance would retain a majority ownership stake in its TikTok app unit as part of a proposal being reviewed by national-security regulators, with an eye toward settling the high-profile deal by a deadline Sunday.

The Committee on Foreign Investment in the U.S., known as CFIUS, which includes officials from the Treasury, State, Commerce and other departments, reviewed the deal Tuesday but didn’t comment.

The proposal includes Oracle Corp.’s bid to become TikTok’s U.S. technology partner as part of an effort to address the administration’s national-security concerns surrounding the Chinese-owned video-sharing app.

President Trump said on Tuesday he hoped the administration would make a decision on the deal “pretty soon,” adding he has “high respect” for Oracle Chairman Larry Ellison, because Ellison has held big fundraisers for him, the editor added facetiously.

Then Thursday, Oracle and Walmart were reportedly likely to own a significant combined stake under a new ownership structure that is in the works, the Wall Street Journal first reported.

Walmart CEO Doug McMillon may be granted a board seat, and, in addition, TikTok would file for a U.S. initial public offering in a year.

Together with the stakes held by existing American investors, including Sequoia Capital, General Atlantic and Coatue Management, the U.S. may end up having a more than 50% holding in the new entity, a plan that would also address the security issues raised by the administration.

The administration has contended that the app poses a security threat because the data TikTok collects from U.S. consumers could be shared with the Chinese government.  TikTok has said it would never hand over such data.

Signing off on a deal for TikTok that would allow ByteDance to retain majority ownership would represent a U-turn for Trump and the U.S. government agencies and departments that comprise CFIUS.

So then today, the Commerce Department issued an order prohibiting any service in the U.S. from distributing or updating TikTok or the messaging app WeChat.  Commerce Secretary Wilbur Ross said President Trump took the action “to guarantee our national security and protect Americans from the threats of the Chinese Communist Party.”  Shares in Oracle fell amid the uncertainty.

The ban on WeChat, used by over 1 billion people worldwide, bars the transfer of funds or processing of payments to or from people in the United States through it.  Users could also start to experience a slower service from Sunday night.  The Commerce Department order bars Apple Inc.’s app store, Alphabet Inc.’s Google Play and others from offering the apps on any platform “that can be reached from within the United States,” a senior Commerce official told Reuters.

But the bans are less dramatic than some had originally feared and the order does not ban U.S. companies from doing business on WeChat outside the United States, which is important to companies like Walmart and Starbucks that use WeChat’s embedded ‘mini-app’ programs to facilitate transactions and engage consumers in China.

The Commerce Department will not seek to compel people in the United States to remove the apps or stop using them.  But over time, the lack of updates will degrade the apps usability.

“The expectation is that people will find alternative ways to do these actions,” a senior official said.  “We expect the market to act and there will be more secure apps that will fill in these gaps that Americans can trust and that the United States government won’t have to take similar actions against.”

We’ll now see what the president does on Sunday.  But with everything else going on…including our late-breaking news on Justice Ginsburg, the president can kick the can down the road if he wants.  Or a deal will be reached to put TikTok under the control of U.S. investors.  It’s just that the Chinese government would have to approve.

More next time….

--SoftBank Group Corp. said on Monday it has agreed to sell chip designer Arm to Nvidia Corp. for as much as $40 billion in a deal set to reshape the semiconductor landscape.  The sale will see chip firm Nvidia acquire all of Arm’s shares in return for cash and shares, giving SoftBank and the $100 billion Vision Fund, which has a 25% stake in Arm, a stake in Nvidia of between 7 and 8%.

The sale comes nearly four years after the Japanese conglomerate acquired the British chip technology firm for $32 billion.  The deal will alter the semiconductor landscape by putting a long-neutral technology vendor to Apple Inc. and others under the control of a single player.  Nvidia began as a graphics chip designer and has expanded into products for areas including artificial intelligence and data centers.

The Arm acquisition will put Nvidia into even more intense competition with rivals like Intel and Advanced Micro Devices because Arm has been developing technology to compete with their chips.

Arm licenses its chip designs and technology to companies like Qualcomm, Apple and Samsung, which in turn use the technology in their chips for smartphones and other devices.  For example, Apple’s new Mac computers will use Arm-based chips.

But Arm’s co-founder, Hermann Hauser, told Reuters in an interview that the sale of British-based Arm is a disaster that will destroy its business model.

“It’s a disaster for Cambridge, the UK and Europe,” Hauser said.  “It’s the last European technology company with global relevance and it’s being sold to the Americans.”

Hauser called on the UK government to put three conditions on the deal: a guarantee of jobs in Britain; a promise to preserve Arm’s open business model; and an exception to U.S. security reviews on its client relationships.

--Data-warehouse firm Snowflake saw its initial public offering soar from an IPO price of $120 to $253.50 its first day, Wednesday, hitting a high of $319, in a true sign of irrational exuberance.

Snowflake is backed by Warren Buffett’s Berkshire Hathaway and Salesforce Venture.

Snowflake’s revenue was $242 million for the first six months of 2020, an increase of 132% from the same period last year, while its operating loss for the most recent six months was $174 million, compared with an operating loss of $183 million in the first half of 2019.

Snowflake was founded in 2012 in San Francisco by two former Oracle veterans.

--An intensive investigation by a House committee into the causes of the two Boeing 737 MAX crashes reveals new details documenting what a final report calls “a disturbing pattern of technical miscalculations and troubling management misjudgments made by Boeing,” along with “grossly insufficient oversight by the FAA.”

Rep. Peter DeFazio, (D, Oregon), chair of the House Transportation Committee, signaled in a teleconference briefing that the committee plans to soon propose legislation reforming how the Federal Aviation Administration certifies airplanes as safe to fly.

He called it “mind boggling” that the MAX, which had two crashes that killed 346 people within five months, was originally certified by both Boeing and the FAA as compliant with all safety regulations.

“The problem is it was compliant and not safe. And people died,” DeFazio said.  “Obviously the system is inadequate.”

The report says Boeing engineers at various points during development of the MAX raised questions about all the critical design elements of the flight control software that later led to the crashes – the Maneuvering Characteristics Augmentation System (MCAS).

Internal Boeing memos and emails showed that engineers were asking about the system being triggered by a single sensor, about the potential consequences of a faulty sensor, and the ability of pilots to maintain control, or whether pilots would react in time if MCAS was triggered erroneously.

“Ultimately, all of those safety concerns were either inadequately addressed or simply dismissed by Boeing,” the report states.

Nor did Boeing flag these issues to the FAA.

DeFazio said that in February 2019, after the crash of a Lion Air MAX jet but before the Ethiopian Airlines crash, Ali Bahrami, FAA associate administrator for aviation safety, told him the accident was a “one-off” and that “there’s no problem with that plane.”

Yet DeFazio said that, based on a seven-hour interview with Bahrami by committee investigators last December, it appeared the FAA’s head of safety “really didn’t know much of anything about the MAX or its development.”

--United Airlines pilots union leaders said they have voted to approve a deal with the company that would protect some 2,850 jobs until June 2021, even as the industry battles a sharp downturn from the coronavirus pandemic.  The support of the union leaders virtually assures the full membership will approve the plan.

United has warned that some 16,000 jobs are at risk without an extension of federal aid that expires on Oct. 1, but this deal with the pilots – if approved by all members – would reduce that number.

Congress has been weighing for weeks whether to grant U.S. airlines another $25 billion in payroll assistance that would keep tens of thousands of airline workers on the job for another six months and extend minimum service requirements.  American Airlines said it will cancel just over 700 flights in October to and from 15 smaller airports in October.  Major U.S. airlines that received portions of $25 billion in payroll assistance were required to maintain minimum flights through Sept. 30, but the government could opt to extend those requirements.

--British Airways is having to take every measure possible to make it through the winter as the company said a fear of flying during the pandemic has destroyed any hope of a rapid return to normality.  CEO Alex Cruz told a parliamentary select committee that the airline was running at 25 to 30% of its normal flight schedule, prompting it to cut thousands of jobs.

“This is the worst crisis that British Airways has gone through in its 100 years of history,” he said.  “We’re still fighting for our own survival.”

BA has laid off 13,000 employees and renegotiated the contracts of many of its remaining staff, a move heavily criticized by politicians, but it is burning through $25 million a day.

Cruz cut his own pay by about a third.  He said a return to flying has been hampered by the weekly changes to quarantine rules and the lack of a testing system at airports.

--Spanish airlines expect a tough autumn and winter after a summer that has seen passenger traffic nosedive 80% due to the pandemic, the head of Spain’s airlines industry group said on Tuesday.  The capacity in September and October will likely be 40% of what it was last year.

Spain’s economy, heavily dependent on tourism, contracted 18.5% in the second quarter from the first and the government expects GDP to contract over 10% for the full year.

Today, the government announced partial lockdowns in parts of Madrid as the second wave hits.

--Lufthansa could cut its fleet by 130 planes in response to the coronavirus crisis, a reduction of at least 30 planes more than previously announced.

The number of workers at the German airliner stood at 140,000 before the pandemic hit, but it is expected 28,000 positions will be cut.

Lufthansa received a 9 billion euro ($10.7 billion) government bailout in June, and last month it said it expected capacity to recover to only around 50% of normal at the end of 2020 and to 2/3s of last year’s level in 2021.

--FedEx Corp. reported a bigger-than-expected quarterly profit on Tuesday, after price hikes, lower fuel costs and efficiency gains countered negative impacts associated with a pandemic-fueled surge in e-commerce shipments.  The shares soared 8% in response, before tailing off some.

Average daily package volume for FedEx Ground, which handles e-commerce deliveries for retailers like Walmart, jumped 31% to 11.6 million during the fiscal first quarter ended Aug. 31.  Revenue per package rose 2% to $9.33 during the quarter, which also included one additional business day.

Covid-19 upended operations at FedEx and rival UPS.  Lucrative deliveries to businesses dried up and higher-cost residential deliveries boomed as workers sheltered at home and placed online orders for everything from furniture to snacks and pet food.

FedEx also spent $565 million on fuel across the company during the quarter, 35% less than a year earlier.

Fiscal first quarter adjusted net income jumped 60% to $1.28 billion, while revenue rose 13.5% to $19.3 billion, both exceeding the Street’s estimates.

The company did not provide an earnings forecast for fiscal 2021, citing continued uncertainty.

--Caterpillar said in a regulatory filing Tuesday that its global machine sales were down 20% in the rolling three months to August, compared with a 20% contraction in July and a 23% decline in June.  The shares fell 2% on the news.

--Amazon.com Inc. is hiring 100,000 full and part-time employees across the U.S. and Canada, offering starting wages of at least $15 an hour, the company announced Monday.  This is in addition to the 33,000 corporate and technology employees announced the week before.

Amazon also plans to open 100 new operations buildings in September across fulfillment centers, delivery stations, sorting centers and other sites.

--Walmart said on Thursday it is raising wages for about 165,000 hourly workers as the retailer plans a team-based operating model in its Supercenters.

The company said the new wage ranges for the hourly team-lead roles start at between $18 and $21 an hour and can go up to $30 an hour in the Supercenters. Walmart also said the minimums for hourly workers in the deli and bakery areas are increasing to $15 or higher from $11 an hour and pay for several hourly auto care center roles is also raised for most employees by $1.

--Deutsche Bank AG told U.S. employees they don’t have to return to the office July 2021.  Many employees had asked for a clear policy as they deal with unknowns about school reopenings and the path of the coronavirus.

Americas chief of staff Matthias Krause outlined a plan in a town hall Wednesday, acknowledging New York’s “success in containing Covid” but added that workers “have understandable concerns about public transportation, cleanliness, security and other quality of life issues.”

“Many of you do not wish to return to 60 Wall Street soon,” a memo said, a reference to the bank’s office in downtown Manhattan.

Deutsche Bank’s plans are in contrast to the strategy of JPMorgan Chase, which last week told most senior employees of the sales and trading operation to return to the office by next week.

UBS Group AG told some senior employees in sales and trading that they wouldn’t follow JPM’s lead.

--BlackRock CEO Larry Fink said the asset management giant’s employees may never be 100% back in the office as work from home stretches.

“I don’t believe BlackRock will be ever 100% back in office,” Fink said in remarks at the Morningstar Investment Conference, according to reports.

Fink described the realization that people can work from home as “one of the great humanistic discoveries” after companies were forced to send employees home to battle the spread.

--Citigroup Inc. resumed job cuts this week, affecting less than 1% of the global workforce, the bank said in a statement.  With recent hiring, overall headcount probably won’t show any drops, Citi said.

The reductions come as Citigroup is facing a likely revenue drop and another increase to loan-loss reserves this quarter as the pandemic drags on, as well as years of expenses to improve risk controls.  The Office of the Comptroller of the Currency and the Federal Reserve are weighing public reprimands of the firm because of continued deficiencies in its infrastructure and control functions.

Banks have resumed job cuts in recent weeks after pledging, en masse, to pause such actions earlier this year.

As for Citigroup’s regulatory issues, they clearly accelerated the timing of CEO Michael Corbat’s announcement that he would be stepping down early next year, as he sought fresh leadership ahead of announcing what could be a years-long remediation process to satisfy regulators.

--Raymond James Financial Inc. said on Tuesday it was cutting 500 jobs, or 4% of its workforce, in order to control costs during the pandemic.

CEO Paul Reilly, in an email to employees, said, “This has been a year like no other. A year when we’ve all had to make decisions, decisions where none of the available options are the ones we would usually choose.”

He added that senior executives, including himself, would see pay cuts and that the company did not intend for another round of job cuts.

Raymond James was one of my favorites to work with back in the day.  Good people.

--Nikola Corp. tried to defend itself against last week’s claim the electric-truck maker had deceived investors, accusing a short seller of mischaracterizations and distortions.

Hindenburg Research, the short seller whose report sent Nikola shares tumbling last week, made false and misleading statements that were designed to manipulate the market, Nikola said Monday.

But after a chaotic day of trading Monday, Bloomberg reported securities regulators are examining the merits of the short seller’s claims.

Nikola pushed back on Hindenburg’s allegations that it had overstated the capabilities of some of its earliest test trucks.

--According to a Gallup survey, 55% of people said they owned stocks either directly or through funds – virtually unchanged since 2010. Before the financial crisis, it was consistently 60% or higher.

--China banned pork imports from Germany on Saturday after it confirmed its first case of African swine fever last week, in a move set to hit German producers and push up global prices as China’s meat supplies tighten.  China’s ban on imports from its third largest supplier comes as the world’s top meat buyer deals with an unprecedented pork shortage after its own epidemic of the deadly hog disease.

The ban on Germany, which has supplied about 14% of China’s pork imports so far this year, will push demand for meat from other major suppliers like the United States, Brazil and Spain, boosting global prices.

--Hong Kong’s tourism industry continues to get hammered.  August arrivals were down almost 80 percent from July, with the August arrival figures representing a 99.9 percent year-on-year drop.  You are reading that right.

Provisional figures from the city’s tourism board, released Tuesday, showed that fewer than 4,500 people visited last month, a 78 percent drop from the nearly 20,600 who visited in July.

Officials are pointing solely to the pandemic, but I would add the new national security law that was forced on Hong Kong by Beijing is not helpful either.  I can never go back.

Foreign Affairs

Israel/UAE/Bahrain: President Trump was center stage on Tuesday as the United Arab Emirates and Bahrain signed accords at the White House establishing diplomatic relations with Israel, an achievement the president’s supporters say merits the Nobel Peace Prize and his detractors claim is mostly illusory.

The UAE and Bahrain became just the third and fourth Mideast nations to formally recognize Israel at a White House ceremony that the president sees as vindication of his peacemaking skills after decades of failed efforts by his predecessors in both parties.

The accords can’t be compared to those that brought Israel diplomatic recognition by Egypt and Jordan decades ago, both having warred with Israel on countless occasions, but Tuesday’s agreements signaled the official recognition of the long-standing informal ties between Gulf nations and Israel, and there is no doubt an anti-Iran coalition is starting to form.

I just found it quizzical that President Trump keeps referring to the UAE as a great “warring nation.”

Meanwhile, Palestinian leaders call the accords a “betrayal” of their cause, but they have had little success in rallying traditionally supportive Arab nations to their defense.

In the end I tend to agree with scholar Kenneth Pollack of the American Enterprise Institute.  There’s a mutual recognition of the threat posed by Iran and by U.S. leaders seeking to avoid future military entanglements in the region.

“It’s bringing to an end the great Middle Eastern conflict of the 20th century, but the problem is it may be the harbinger of the great Middle Eastern conflict of the 21st century, which would be the Sunni states and Israel against Iran and its Shia allies.”

Editorial / Wall Street Journal

“How would official Washington respond if a Democratic President brokered a peace deal between Israel and two Arab states? The papers would be stacked with play-by-plays of how the historic breakthrough was achieved and adulatory profiles of the people in the room. The hosannas to the President’s strategic vision would flow from think tanks and academia, if not also from Oslo’s City Hall.

“The reaction Tuesday to the signing of the Abraham Accords between Israel, the United Arab Emirates and Bahrain at the White House was more muted, and maybe that’s for the best.  Some groundwork for the cascading thaw in Arab-Israeli relations was laid by a decade of shifts in the Middle East’s balance of power as Israel grew stronger, the Iran threat persisted, and the U.S. signaled its intention to draw down.

“Yet the Trump Administration deserves credit for taking advantage of these strategic shifts, and for setting aside the failed conventional playbook for how Arab-Israeli comity could be achieved. The Abraham Accords, named for the prophet of Jews, Christians and Muslims alike, are based on mutual interest.  Mr. Trump has been criticized for a transactional view of world affairs, and we sometimes worry about how that will play out, for example, in East Asia.  Yet in the Middle East, hard-headed transactionalism may have been what was needed.

“American negotiators have tried for years to press the Israelis and Palestinians to give up something in a leap of faith and hope that peace will follow.  Each side saw that as a lose-lose proposition. But peace between Arab states and Israel offered a win-win.

“The most obvious benefit, besides strategic cooperation against Iran’s regional mayhem, is economic.  Long-running Arab boycotts against the most dynamic economy in the Middle East have hurt investment and exacerbated the region’s poverty. As the Washington Institute’s Michael Singh notes, there should be opportunities for Gulf capital to flow into Israeli start-up companies – potentially displacing Chinese investment in Israel that has worried the U.S.

“For all the talk of Mr. Trump scorning American allies, the achievement here was possible because he backed allies to the hilt, giving them confidence in U.S. support.  He rejected Barack Obama’s failed courtship of Iran and withdrew from the flawed nuclear deal. He showed the nerve to kill the leader of Iran’s regional aggression, Qasem Soleimani.

“Mr. Trump also moved the U.S. Embassy in Israel to Jerusalem, a gesture that was said to be the death-knell for peace but sent a signal that Israel will not be wished away. No other U.S. President had been willing to take that risk. The Administration also stood by Saudi Arabia in the war in Yemen.  The Saudis haven’t normalized relations, but as the U.A.E. travel embargo ends they are allowing flights to and from the Jewish state to pass through Saudi airspace.

“The Abraham Accords offer little to the Palestinians, beyond an Israeli pledge to suspend annexation of West Bank territories.  Militants on Tuesday launched rockets from the Gaza Strip into southern Israel – a symbol of the rejectionism that has made Arab states tire of the Palestinian cause.

“But Israel’s wider recognition may eventually cause the Palestinians to come to the table in a realistic way. This may seem unlikely now, but Tuesday’s agreement shows that political arrangements that look permanent one day may not be the next.”

Bret Stephens / New York Times

“For years, the Trump administration’s peacemaking efforts in the Middle East have been the object of relentless derision in elite foreign-policy circles, some of it justified. Yet with Friday’s announcement that Bahrain would join the United Arab Emirates as the second Arab state in 30 days to normalize ties with Israel, the administration has done more for regional peace than most of its predecessors, including an Obama administration that tried hard and failed badly.

“There are lessons in this, at least for anyone prepared to consider just how wrong a half-century’s worth of conventional wisdom has been.

“At the heart of that conventional wisdom is the view, succinctly put by UN Secretary General Antonio Guterres in February, that ‘resolving the Israeli-Palestinian conflict remains key to sustainable peace in the Middle East.’  Untie that Gordian knot, so the thinking goes, and the region’s many problems become easier to solve, whether it’s other regional conflicts or the anti-Americanism that feeds international terrorism.

“That thinking was always dubious – what, for instance, did the Iran-Iraq War, in which a million people or more died, have to do with Israelis and Palestinians? – though it had the convenience of giving Arab regimes a good way of deflecting blame for their own bad governance. But since the (misnamed) Arab Spring began nearly a decade ago, the view has become absurd.

“The rise and fall of ISIS, civil war in Syria and anarchy in Libya, Turkey’s aggression against the Kurds, proxy battles and hunger in Yemen, political turmoil and repression in Egypt and Iran, the bankruptcy of the Lebanese state, the plight of Middle Eastern refugees – if any of these catastrophes have something in common, it’s that they have next to nothing to do with the Jewish state or its policies.  One may still hope for a Palestinian state, but it won’t save the region from itself.

“What would?  The best option is an alliance of moderates and modernizers – anyone in power (or seeking power) who wants to move his country in the direction of greater religious and social tolerance, broader (that is, beyond energy) economic development, less preoccupation with ancient disputes, more interest in future opportunities.  Such an alliance is the only hope for a region being sucked into the maw of religious fanaticism, economic stagnation, environmental degradation and perpetual misrule.

“Now this alliance may finally be coming into being.  Unlike Israel’s peace with Egypt and Jordan – both based on strategic necessity and geographic proximity – the peace with the Emirates and Bahrain has no obvious rationale, even if a shared fear of Iran played a role.

“The larger factor is shared aspiration.  Israel is the most advanced country in the region because for seven decades it invested in human, not mineral, potential, and because it didn’t let its wounds (whether with respect to Germany in the 1950s or Egypt in the 1970s) get the better of its judgment.

“The choice for the Arab world is stark.  It can follow a similar path as Israel; be swallowed by Iran, China, Russia, Turkey or some other outsider; or otherwise continue as before until, Libya-like, it implodes.

“As consequential as the peace deals themselves is the Arab League’s refusal to condemn them, eliciting a furious Palestinian reaction.  That’s not surprising: It means the Palestinian grip over the league’s diplomatic agenda may finally be loosening.

“Perhaps it also means that the grievance-driven politics that have dominated the Palestinian issue for decades are finally over, too.  If so, it’s bad news for those Palestinian leaders and activists who think that, with unflagging obstinacy, they can somehow restore the status quo ante 1948, when Israel didn’t exist.

“What’s bad news for some Palestinian leaders may be good news for ordinary Palestinians.  Peace between Israelis and Arabs will not come from the inside out – that is, from a deal between Jerusalem and Ramallah that wins over the rest of the Arab world. Decades of diplomatic failure, culminating in John Kerry’s failed medication efforts in 2014, should put an end to that fantasy.

“Yet it isn’t crazy to think that peace might come from the outside in: from an Arab world that encircles Israel with recognition and partnership rather than enmity, and which thereby shores up Israel’s security while moderating Palestinian behavior.  If that’s right – and if states, like Oman, Morocco, Kuwait, Sudan and especially Saudi Arabia follow suit – then this summer’s peace deals might finally create the conditions of viable Palestinian statehood.

“A final point about these deals: This wasn’t supposed to happen.  Not under the leadership of Israel’s supposedly bellicose Benjamin Netanyahu; certainly not through the diplomatic offices of the usually crazy/amateurish/perverse Trump administration.  Luck and timing played a part, as they always do.

“But it behooves those of us who are so frequently hostile to Netanyahu and Trump to maintain the capacity to be pleasantly surprised – that is, to be honest.  What’s happened between Israel and two former enemies is an honest triumph in a region, and a year, that’s known precious few.”

Herb Keinon / Jerusalem Post

“The Israel-Egypt peace deal signed at the White House on March 26, 1979, spanned dozens of pages and included letters, annexes, detailed maps and agreed minutes.

“So it goes when two sides that fought four bloody wars decide to terminate their state of war and disentangle.  There were no-go zones in the Sinai to delineate, timelines of withdrawal from oil fields to spell out, and an international boundary to set.

“That takes a lot of ink.

“The same is true of the Israel-Jordan peace treaty, signed on October 26, 1994, in the Arava.  That document, which put to end the state of war that existed between two countries that had fought each other three times, included a preamble, 30 articles, five annexes and agreed minutes.

“Contrast that with the relatively brief documents signed Tuesday on the White House lawn.

“There were three documents in all: the Abraham Accords declaration; the Declaration of Peace, Cooperation, and Constructive Diplomatic and Friendly Relations Between the Kingdom of Bahrain and the State of Israel; and the Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel.  The first document was 210 words, the second about 460, and the peace treaty with the UAE spread over nine pages.

“Why so short?  Because unlike the treaties with Egypt and Jordan that had to devolve into minute details about boundaries and timetables, these documents were much more general.

“Much ado was made in the run-up to Tuesday’s signing that no one in Israel – outside of the prime minister, his advisers and officials involved in drawing up the documents – had any idea what was in them.

“That the Prime Minister’s Office was so tight-lipped about the contents of the documents fueled speculation that they contained something explosive.

“They didn’t.

“The Abraham Accords declaration reads like a John Lennon song and declares that the signatories… ‘recognize the importance of maintaining and strengthening peace in the Middle East and around the world based on mutual understanding and coexistence, as well as respect for human dignity and freedom, including religious freedom.’

“This declaration seems like a public service announcement declaring that those who signed it had boarded a ‘peace train,’ in the hopes that this announcement in itself will entice others to do the same.

“The peace treaty with the UAE, however, is written in standard diplomatic style – dry and legalistic, not declaratory…. the Palestinian issue merited no more than 100 words in the Israel-UAE agreement.  The two sides referred to their commitment to ‘continuing their efforts to achieve a just, comprehensive, realistic and enduring solution to the Israeli-Palestinian conflict.’ And to ‘working together to realize a negotiated solution to the Israeli-Palestinian conflict that meets the legitimate needs and aspirations of both peoples, and to advance comprehensive Middle East peace, stability and prosperity.’

“That’s it, and that is about as vague as one could ask for. There is no mention there of a Palestinian state or Jerusalem or possible Israeli annexation.

“But, then again, why should there be?

“This is a treaty between Israel and the UAE, not between Israel and the Palestinians. The rather perfunctory manner in which the Palestinian issue appears here, as it similarly appears in the peace declaration between Israel and Bahrain, leaves the impression that it was raised so that the UAE and Bahrain could say they did not abandon the Palestinian cause.

“That the drafters of the documents decided not to mention any of the contentious issues on the Palestinian track – two states, Jerusalem, refugees, annexation, settlements – underlines the degree to which the UAE, Bahrain and Israel do not want the Palestinian issue to derail their agreements.

“This language makes it clear that the sides are not giving the Palestinians any leverage at all over their relationship.  For if the agreements had said that the hope was for a two-state solution, then if a Palestinian state would not come into being in the foreseeable future, could that be grounds upon which to annul the documents?

“Better not go there at all.  The less detail on this issue for both sides, the better, because that way neither side can say down the road that the other is not living up to the deal.

“If the devil is in the details, then one way to keep the devil at bay is simply not to get into details, and that seems to have been the philosophy that guided the drafters of these accords.  There is nothing in the documents regarding the Palestinians that could be used to break up the new relationships.

“The document with Bahrain ends with a paragraph thanking Trump for, among other things, his ‘pragmatic’ approach to furthering the cause of peace. That the Palestinian issue was barely mentioned demonstrates that pragmatism, because if one wants these agreements to last and bear fruit, it is common sense to leave out as many bones of contention as possible.”

Of course the peace accord between the three was met with pushback from some quarters.

Lebanon’s Iranian-backed Hezbollah said on Saturday it strongly condemned Bahrain’s move to normalize ties with Israel as a “great betrayal” of the Palestinian people.  Hezbollah said the move by the “tyrannical regime in Bahrain” was done at the behest of the United States.

Bahraini opposition groups have said they reject a decision by the government to normalize relations with Israel, with a leading Shiite cleric calling on the region’s people to resist.  Cleric Ayatollah Sheikh Isa Qassim, living in Iran, voiced his disagreement.

“There is a great divergence between the rulers and the ruled in thought, mind, aims and interests. Governments are experiencing a psychological defeat and want to impose it on the people, and the people have to resist this defeat,” Qassim said.

Iran: An explosion two months ago at a key Iranian uranium enrichment facility in Natanz was meant to send a message of determination to stop the Islamic Republic’s nuclear program, the Jerusalem Post reported.  “The purpose of the attack was to send an unambiguous deterrent message that progress toward a nuclear weapon beyond certain redlines would not be tolerated.

“In addition, the Post has confirmed foreign reports that the explosion was caused by physical sabotage as opposed to exclusively cyberwarfare.

“To date, Iran has made multiple announcements but has not accused Israel at an official level, and Jerusalem has never officially taken responsibility, although multiple ministers have dropped hints.

“At the time, a previously unknown group called the Homeland Cheetahs claimed that it was a group of Iranians dissidents that had undertaken the attack.

“However, that group has not been heard from since.  Experts speculated that the group was a cover for the true attacker or at most a mixed operation of Iranian dissidents with a powerful foreign backer like Israel, the United States or Saudi Arabia.

“Apparently, though, one of the goals of the attack was that it be carried out in a public and loud way to send a message to the Iranian leadership, even if only unofficially.”

Well, I wrote last week that Iran is building a new uranium enrichment facility inside a mountain at Natanz.

Afghanistan: Afghan government representatives and Taliban insurgents gathered on Saturday in Doha, Qatar, for historic peace talks aimed at ending two decades of war that has killed tens of thousands of combatants and civilians.  The two sides were urged to reach an immediate ceasefire and forge an agreement that upholds women’s rights.

The head of Afghanistan’s peace council, Abdullah Abdullah, said that even if the two sides could not agree on all points, they should compromise.  “My delegation are in Doha representing a political system that is supported by millions of men and women from a diversity of cultural, social and ethnic backgrounds in our homeland,” he said.  Taliban leader Mullah Baradar Akhund said that Afghanistan should “have an Islamic system in which all tribes and ethnicities of the country find themselves without any discrimination and live their lives in love and brotherhood.”

Secretary of State Mike Pompeo warned that the size and scope of future U.S. financial assistance to the country, which relies heavily on international funding, would depend on their “choices and conduct.”  U.S. Special Envoy Zalmay Khalilzad told reporters that preventing terrorism was the chief condition but that protecting minority and women’s rights would also influence any future decisions on Congress-allocated funding.

Editorial / Washington Post

“The opening of Afghan peace negotiations over the weekend came six months later than planned and was accompanied by continuing violence around the country and low expectations for early progress.  Yet the meeting of a Taliban delegation and one headed by the Afghan government nevertheless is a welcome breakthrough after two decades of war.  It offers hope that a political settlement is possible – provided the United States and other Afghan allies remain stalwart….

“The differences over how Afghanistan should be governed remain stark. But, since it long ago became evident that there was no military solution to the conflict, the beginning of negotiations at least opens a narrow path to peace – something for which the Trump administration and its special envoy, former ambassador Zalmay Khalilzad, deserve credit.  Mr. Khalilzad first negotiated an agreement between the United States and the Taliban, then persuaded the Afghan government to accept its terms – including the painful release of 5,000 Taliban prisoners.

“There are two big reasons for doubt about whether negotiations can progress.  One is the lopsided terms of the U.S.-Taliban deal, and thus of the balance of power between the two Afghan sides. The United States agreed to withdraw all of its troops from the country by next May, tied only to promises by the Taliban not to target U.S. and other international forces and to break ties with al-Qaeda. The insurgents have not fully delivered on either of those commitments, according to international monitors and U.S. military commanders, and they have continued attacks on government forces, killing and wounding more than 10,000 since the accord was signed in February.

“That noncompliance dovetails with the other fundamental problem, which is the evident desire of President Trump to pull U.S. forces out of Afghanistan regardless of the circumstances.  Having drawn down U.S. troop levels from 12,000 to 8,600 in accordance with the deal, Mr. Trump pushed for another withdrawal before the U.S. presidential election; as a result, the troop count will be down to 4,500 by November.  A logical course for the Taliban is to stall on the talks while waiting to see if a reelected Mr. Trump – or former vice president Joe Biden – will complete the pullout unconditionally.

“The chance for an Afghan peace will depend on the willingness of the U.S. president to maintain U.S. forces in place until the Taliban show a genuine will to settle…. The Taliban has incentives to settle including a desire for international recognition and aid for future governments.  If the United States stands firm, then the peace process it has initiated will have a chance to succeed.”

China/Taiwan: China started a military exercise near the Taiwan Strait on Friday, in a new warning to the United States and pro-independence forces in Taiwan to coincide with a visit to the self-ruled island by a senior U.S. diplomat, undersecretary of state Keith Krach.  Krach was to meet with Taiwanese President Tsai Ing-wen today.  He is the most senior state department official to visit the island in 41 years.

A Chinese defense ministry spokesman said in a press conference today that the People’s Liberation Army’s Eastern Theatre Command would begin actual combat exercises near the strait “starting today.”

“This is a legitimate and necessary action taken in response to the current situation across the Taiwan Strait and the safeguarding of national sovereignty and territorial integrity,” he said.

Spokesman Ren Guoqiang said: “The Chinese People’s Liberation Army has firm will, full confidence, and sufficient capabilities to thwart all external interference and separatist acts of ‘Taiwan independence’ and resolutely defend national sovereignty and territorial integrity.”

Separately, last Sunday, China’s Defense Ministry blasted a critical U.S. report on the country’s military ambitions, saying it is the U.S. instead that poses the biggest threat to the international order and world peace.

The statement followed the Sept. 2 release of the annual Defense Department report to Congress on Chinese military developments and goals that it said would have “serious implications for U.S. national interests and the security of the international rules-based order.”

Defense Ministry spokesman Col. Wu Qian called the Pentagon report a “wanton distortion” of China’s aims and the relationship between the People’s Liberation Army and China’s people.

“Many years of evidence shows that it is the U.S. that is the fomenter of regional unrest, the violator of the international order and the destroyer of world peace,” he said.

U.S. actions in Iraq, Syria, Libya and other countries over the last two decades have resulted in the deaths of more than 800,000 people and displacement of millions, Qian said.

“We call on the U.S. to view China’s national defense and military construction objectively and rationally, cease making false statements and related reports, and take concrete actions to safeguard the healthy development of bilateral military relations.”

So today, Taiwan scrambled fighter jets as 18 Chinese aircraft buzzed the island, crossing the sensitive midline of the Taiwan Strait, in response to Keith Krach’s visit.  Taiwan has had to scramble frequently in recent months in response to Chinese intrusions, but the 18 aircraft was the largest number to date.

With each such episode, the risks of an accident increase.

Russia: Alexei Navalny posted a photo of himself from a Berlin hospital on Tuesday, sitting up in bed and surrounded by his family, and said he could now breathe independently after being poisoned in Siberia last month.  Germany said laboratory tests in three countries determined he was poisoned with a Novichok nerve agent.

Navalny said he plans to return to Russia as soon as he has can.  He had been in a medically induced coma at the hospital in Berlin and it was not clear what condition he would be in once he regained consciousness.  But officials say he is mentally sharp and “fully aware of what happened and where he is.”  He remains under heavy guard by German police.

It turns out that Navalny’s supporters rushed to the Siberian hotel where he had been staying immediately after he showed symptoms of poisoning, grabbing anything that could possibly be used as evidence – including a water bottle that tests showed was tainted with the highly toxic nerve agent.

In a video posted on Instagram, members of Navalny’s team swiftly donned rubber gloves and scoured his room at a hotel in Tomsk, Siberia, packing evidence into blue plastic bags.  German investigators and then German military scientists determined that the opposition leader had been poisoned with Novichok in his hotel.  Initially, it was thought he might have been poisoned through a cup of tea he had at the airport in Tomsk.  He then got sick on the flight to Moscow.

British Foreign Secretary Dominic Raab, speaking in Washington alongside Mike Pompeo, said he welcomed Navalny’s recovery but that Russia had a case to answer as the use of a chemical weapon was unacceptable.

Meanwhile, candidates loyal to President Putin swept regional and local elections last weekend, demonstrating the Kremlin’s grip on power despite pockets of support for Navalny’s opposition movement.

Belarus: Belarusian leader Alexander Lukashenko said on Wednesday he had asked Russian President Vladimir Putin to supply Belarus with weapons as he faces mass protests over a disputed election.  Lukashenko didn’t specify what kind of weapons he was requesting.

At least 100,000 protesters took to the streets of Minsk on Sunday in one of the biggest demonstrations against the regime.  Police said they detained over 400 people in Minsk alone, with the atmosphere tense.

Twenty-nine countries including the United States and Germany issued a joint statement on Thursday condemning reported internet shutdowns by the government.  “Shutdowns and blocking or filtering of services unjustifiably limit the rights of peaceful assembly and freedoms of association and expression, especially when they lack procedural fairness and transparency,” said the statement released by the U.S. State Department.

At an urgent meeting of the UN Human Rights Council, Ukraine’s foreign minister warned Russia against taking steps that may undermine Belarus’ sovereignty and destabilize the region, while Britain called for sanctions on those in Belarus responsible for the “fraudulent elections.”

Dmytro Kuleba said: “It is heartbreaking to watch the footage of our close neighbors viciously beaten down and arbitrarily detained on the streets of their native cities.

Ana Marin of the UN warned of “another Iron curtain” descending in Europe.

Greece: Greek authorities were struggling on Wednesday to move thousands of migrants made homeless by a blaze at an overcrowded camp into new tents, while fears grow over a coronavirus outbreak on the island of Lesbos.  More than 12,000 people, mostly refugees from Afghanistan, African countries and Syria, were left without a shelter, proper sanitation or access to food and water by the fire that tore through Moria, Greece’s biggest migrant camp.

Officials set up a new tent camp that can hold 5,000, which is not enough.  Greece has been pleading with the European Union to have member states take some of the refugees. Germany said they would take 1,500. Belgium offered to take 100 to 150.  What a mess, plus you have the Covid angle.

Random Musings

--Presidential polling data….

Gallup: Finally, an update.  42% approve of President Trump’s job performance, 56% disapprove; 92% of Republicans approve, 36% of independents (Aug. 31-Sept. 13).  The splits the last time, for a July 30-Aug. 12 survey period, were 42/55, 90, 39.
Rasmussen: 53% approve, 46% disapprove of Trump’s performance (Sept. 18).

--A Fox News national poll puts Joe Biden ahead 51% to 46%, among both likely and registered voters.  Fox had Biden up 49% to 41% back in July.

--A CBS News/YouGov poll of registered voters in Minnesota had Biden leading Trump 50-41.  In Arizona, Biden is ahead 47-44.

--A Washington Post/ABC News poll had Biden leading 57-41 percent in Minnesota among likely voters, while Biden leads by six points in Wisconsin.  Experts say this doesn’t make too much sense in that the margins in the two states have been similar in recent presidential elections, differing by no more than four points in their vote margin since 2000.  [In 2016, Trump won Wisconsin 47.2-46.5, while Clinton won Minnesota 46.4-44.9.]

Biden holds a 52 to 46 percent lead over Trump among likely voters in Wisconsin, according to the Washington Post/ABC survey.  On an important election issue, 51 percent of Wisconsin voters say they support recent protests against police treatment of Black people, while 44 percent say they oppose them.

--A Monmouth University poll of registered voters in Florida has Joe Biden leading Donald Trump 50 to 45 percent.  Biden leads among Latino voters 58% to 32%, while Hillary Clinton won the state’s Latino vote by 27 points, 62% to 35%.

But an NBC News/Marist survey taken a week earlier had Trump leading Biden among Hispanics, 50 to 46 percent, which set off panic in the Biden campaign.

So either Monmouth or NBC/Marist is very wrong.

Separately, Michael Bloomberg is injecting at least $100 million to help Joe Biden’s campaign in Florida.  “Mike Bloomberg is committed to helping defeat Trump, and that is going to happen in the battleground states,” said Bloomberg adviser Kevin Sheekey.  This helps free up funds for other key states like Pennsylvania.

--A New York Times/Siena College survey of key battleground states has Joe Biden leading the president in Arizona, 49-40, in Maine, 55-38, and in North Carolina, 45-44.

--In three high-profile U.S. Senate races in Maine, South Carolina, and Kentucky, Quinnipiac University polls of likely voters found….

Maine: Democrat Sara Gideon leads Republican Senator Susan Collins by a 54-42 margin.  [A NYTimes/Siena poll has Gideon leading Collins by only 49-44.]

South Carolina: Republican Senator Lindsey Graham is tied with his Democratic challenger Jamie Harrison at 48 percent.

Kentucky: Republican Senate Majority Leader Mitch McConnell is handily ahead of Democrat challenger Amy McGrath 53-41.

--A new Associated Press/NORC Center for Public Affairs Research poll shows roughly 7 in 10 Americans think the nation is on the wrong track, only 27% say we’re on the right track, with just 39% approving of how President Trump is handling the pandemic.

Conversely, 78% say they have some or great confidence in the Centers for Disease Control and Prevention.

Overall, Trump’s approval rating sits at 43%.

--New York City Mayor Bill de Blasio ordered a weeklong furlough for about 500 members of his City Hall staff, including himself, as Gotham deals with a projected $9 billion revenue shortfall through the fiscal year ending in June 2022 because of lockdowns ordered amid the pandemic.  He has said he may lay off 22,000 city employees if the city doesn’t get federal fiscal aid or state authority to borrow $5 billion to pay for operating expenses.

At the same time he is struggling to open New York’s schools to in-person learning, with one delay after another.  Elementary school students will do remote-only learning until Sept. 29, middle and high school stay remote through Oct. 1.

Meanwhile, former Mayor Rudy Giuliani excoriated de Blasio for New York’s crime spike during a news conference from the National Women’s Republican Club on Wednesday, described as a “rambling” presentation.

“It’s about one man, de Blasio.  It’s quite clear the worst mayor in history of New York City is the present mayor, by every statistic,” Giuliani said.  “He’s trying to make us Baltimore, Philadelphia, and with the crime rates, we’re starting to chase Chicago.”

But while there have been 321 murders in New York this year as of Sept. 6, this still compares to 649 in 2001 and 2,262 in 1990 (before Giuliani became mayor, the 649 when he left office).

As in facts matter, especially when you read a certain person’s Twitter feed.  I agree with Jerry Seinfeld…New York will be back, but it will take a few years.  Immigrants will fuel the renewal, just as they did during Giuliani’s two terms, which no one talks about.

--Over in New Jersey….

Editorial / Wall Street Journal

“Connecticut Gov. Ned Lamont’s yacht is coming in.  New York City’s descent into disorder and lockdown are driving off the affluent class.  Now with New Jersey Democrats again raising taxes on millionaires, Connecticut is looking like the least bad state in the region.

“New Jersey Gov. Phil Murphy and State Senate President Steve Sweeney struck a deal on Thursday to raise the state’s top marginal tax rate to 10.75% from 8.97% on income of more than $1 million. Two years ago, Democrats increased the top rate to 10.75% on taxpayers making more than $5 million.  Mr. Sweeney then opposed a lower income threshold because it would drive away millionaires.

“But a ‘pandemic hit, and things have changed,’ Mr. Sweeney said Thursday. They sure have, and New Jersey’s bleeding budget can’t afford to lose any millionaires.  In 2018 New Jersey lost a net $3.2 billion in adjusted gross income to other states, including $2 billion to zero-income tax Florida, according to IRS data.  More will surely follow now.

“The millionaire’s tax is projected to raise $390 million in revenue, which Democrats plan to use to give $500 rebates to families earning less than $150,000 and $75,000 for single parents. Sorry, single and childless millennials.

“Eligible taxpayers will receive the rebates next summer, right before New Jersey’s 2021 gubernatorial and legislative elections. Does Mr. Murphy plan to sign the checks like Donald Trump?

“In an amusing aside, New York Gov. Andrew Cuomo’s budget office on Thursday responded to the New Jersey news by issuing a statement boasting that New York City’s combined top state and city income tax rate of 12.6% will still be higher than New Jersey’s new rate.  Mayor Bill de Blasio wants to raise it even higher.

“Meantime, Mr. Lamont has been working to attract high earners and businesses to Connecticut.  Perhaps he should pay his Democratic neighbors a finder’s fee.”

--In a new Pew Research Center poll of 13 nations (all wealthy democracies), a median of 15 percent of respondents said the United States had handled the pandemic well, while 85 percent said the country had responded poorly.

The data suggests that the international reputation of the United States has dropped to a new low in the face of a disorganized response to the coronavirus.

International affairs analysts say it may be difficult to repair the damage to the United States’ standing overseas.  Among some traditional allies like Germany, views of the United States have declined to the lowest levels since Pew began tracking them nearly two decades ago.

“I still think there is admiration for the United States, but it may be waning very quickly – especially if Trump gets reelected,” said Sudha David-Wilp, a senior transatlantic fellow at the German Marshall Fund in Berlin.

In at least seven nations, including key allies like Britain and Japan, approval ratings for the United States plunged to record lows.  In Germany, just 26 percent of the respondents hold a positive view of the United States – the lowest rating since 2003, the year of the U.S.-led invasion of Iraq.

The decline was most pronounced in South Korea, where 46 percent of respondents gave Trump a positive rating in spring 2019, compared with 17 percent this year.  Only 6 percent said the United States did a good job on the pandemic.

This just needs to be said.  Donald Trump has treated South Korea like dirt.  It should piss off any American who understands the world.  [On the other hand, the South Koreans came out ahead in the trade deal Trump loves to tout.]

--In an incredibly depressing sign of the apocalypse, or something along those lines, nearly 20 percent of Millennials and Gen Z in New York believe the Jews caused the Holocaust, according to a survey commissioned by the Conference on Jewish Material Claims Against Germany; a first ever 50-state survey on knowledge of the Holocaust.

For instance, although there were more than 40,000 camps and ghettos during World War II, 58 percent of respondents in New York cannot name a single one.

Additionally, 60 percent of respondents in New York do not know that six million Jews were killed during the Holocaust.

A total of 34 percent of respondents in New York believe the Holocaust happened but the number of Jews who died has been greatly exaggerated or believe the Holocaust is a myth and did not happen or are unsure.

And get this…28 percent in New York believe it is acceptable to hold neo-Nazi views.

Encouragingly, perhaps, 79 percent say it is important to keep teaching about the Holocaust, in part, so that it does not happen again.

--Two Antarctic glaciers that have long kept scientists awake at night are breaking free from the restraints that have hemmed them in, increasing the threat of large-scale sea-level rise.

The enormous Pine Island and Thwaites glaciers already contribute around 5 percent of global sea-level rise.  The loss of the Thwaites glacier has long been deemed critical as it could trigger the broader collapse of the West Antarctic ice sheet, which contains enough ice to eventually raise seas by about 10 feet.

The new findings were published in the Proceedings of the National Academy of Sciences and come from analysis of satellite images.

--This week there were five tropical storms churning in the Atlantic Ocean for the first time in nearly 50 years (1971), with then-Tropical Storm Sally joined by Paulette, Rene, Teddy and Vicky in the Atlantic.

Sally then became a hurricane and devastated parts of Alabama and the Florida panhandle, making landfall at Gulf Shores, Alabama, next to Orange Beach, both suffering very heavy damage.  It was ten years ago that I ventured down to Orange Beach after the BP oil spill to do my own research, and while the beaches were scarred with the oil, I could see why so many loved to vacation there.  So my heart goes out to the business owners in the region who have to start all over again, let alone to all those calling it home year round.

And now there is more activity in the Gulf.     

---

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

God bless America.

---

Gold $1957
Oil $40.97

Returns for the week 9/14-9/18

Dow Jones  -0.03% [27657]
S&P 500  -0.6%  [3319]
S&P MidCap  +0.6%
Russell 2000  +2.6%
Nasdaq  -0.6%  [10793]

Returns for the period 1/1/20-9/18/20

Dow Jones  -3.1%
S&P 500  +2.8%
S&P MidCap  -9.6%
Russell 2000  -7.9%
Nasdaq   +20.3%

Bulls 54.8
Bears
18.3

Hang in there…mask up, wash your hands.

Brian Trumbore



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Week in Review

09/19/2020

For the week 9/14-9/18

[Posted 10:00 PM ET, Friday]

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

Edition 1,118

Some of us are just waiting for more surprises prior to November 3rd, befitting this historically godawful year, but the news we received tonight wasn’t on my list.

Justice Ruth Bader Ginsburg, a stalwart liberal on the Supreme Court since 1993, died at the age of 87, the Court said, giving Donald Trump a chance to expand the conservative majority with a third appointment.

“Our Nation has lost a jurist of historic stature,” Chief Justice John Roberts said in a statement.  “We at the Supreme Court have lost a cherished colleague.  Today we mourn, but with confidence that future generations will remember Ruth Bader Ginsburg as we knew her – a tireless and resolute champion of justice.”

There is immediate talk in some circles of Trump and Senate Majority Leader Mitch McConnell being able to jam in a replacement by the election, turning a 5-4 conservative majority into 6-3, but no way they get away with it.  I’ll leave it at that, knowing there will be a ton to write on this topic next time, even as McConnell just issued a statement, saying Trump’s nominee to fill the vacancy will receive a vote on the floor of the Senate.

I’m watching President Trump now, addressing a rally in Bemidji, Minnesota, and he literally went on right around when the announcement hit about Justice Ginsburg and it seems certain he doesn’t know the news.  Instead, he’s talked about Minnesota being “overrun and destroyed” if Biden wins, overrun by “Somalis.”  He’s said Comcast, “Concast,” is run by “sick and evil people.  They don’t want what’s best for the American people.”

His usual line that “I’ve now gotten worse press than Lincoln.”

Trump is talking of the greatness of Robert E. Lee.  Kamala Harris is “a maniac.”

Oh, and just as I told you, the Wall is miraculously growing “ten miles a week,” only I said he’d be using the figure 320 miles soon, except tonight it’s up to “330.”

And he’s telling his same, stupid story on what a deal he cut on the Air Force One contract.

At least this is better than his constant undermining of our election process and confidence in our institutions, like in his throwing his CDC director under the bus this week when, under oath, Dr. Robert Redfield gave his honest assessment on when a vaccine would be widely available, while reemphasizing the importance of wearing a mask.  Trump then called him out on both.

A Monmouth University poll released Thursday found that 4 in 10 voters are not confident that the election will be conducted “fairly and accurately.”

Trump’s frequent but unsubstantiated claim that mail-in voting is riddled with fraud and can’t be trusted has fed into voter concerns.

Patrick Murray, director of the Monmouth University Polling Institute, said, “We have voters on both sides who are becoming more inclined to distrust a result they won’t agree with.”

The president just keeps promoting conspiracy theories and chaos.  It’s both sad and sickening. 

As an old friend wrote me this week, “I don’t know how we’re going to ever get out of this polarization.  Social media and the networks won’t let it happen; their business model is division.”

And then there’s the pandemic.  Tonight we hit 50,000 cases again for the first time in two weeks.  We’re supposed to be well under 20,000, prior to flu season and colder weather that will drive us indoors, where it’s easier to catch the virus.  But no.

As the president told Bob Woodward on a March 19 phone call:

“Well, I think Bob really to be honest with you…I wanted to always play it down.  I still like playing it down…because I don’t want to create a panic.”

We learned this week of a new phone call, August 14, that sums it all up, Trump telling Woodward, “Nothing more could have been done.  Nothing more could have been done.”

The same president who told Woodward on Feb. 7, “It goes through air, Bob. …just breathe the air and that’s how it’s passed. …It’s also more deadly than your, you know, your strenuous flus. This is deadly stuff.”

No, a lot more could have been done, Mr. President.

Former director of national intelligence Dan Coats, in a New York Times op-ed:

“We hear often that the November election is the most consequential in our lifetime. But the importance of the election is not just which candidate or which party wins.  Voters also face the question of whether the American democratic experiment, one of the boldest political innovations in human history, will survive.

“Our democracy’s enemies, foreign and domestic, want us to concede in advance that our voting systems are faulty or fraudulent; that sinister conspiracies have distorted the political will of the people; that our discourse has been perverted by the news media and social networks riddled with prejudice, lies and ill will; that judicial institutions, law enforcement and even national security have been twisted, misused and misdirected to create anxiety and conflict, not justice and social peace.

“If those are the results of this tumultuous election year, we are lost, no matter which candidate wins.  No American, and certainly no American leader, should want such an outcome.  Total destruction and sowing salt in the earth of American democracy is a catastrophe well beyond simple defeat and a poison for generations.  An electoral victory on these terms would be no victory at all. The judgment of history, reflecting on the death of enlightened democracy, would be harsh.

“The most urgent task American leaders face is to ensure that the election’s results are accepted as legitimate.  Electoral legitimacy is the essential linchpin of our entire political culture.  We should see the challenge clearly in advance and take immediate action to respond.”

Editorial / Washington Post

“Disturbing evidence keeps piling up that President Trump and his administration are meddling for political purposes in the work of the nation’s leading public health guardians, the Centers for Disease Control and Prevention and the Food and Drug Administration. The integrity of these agencies is vital to fighting the pandemic and to the rollout of a vaccine.  To compromise them helps no one, not even Mr. Trump.

“We first saw this in Mr. Trump’s misguided touting of the antimalarial drug hydroxychloroquine.  In a whistleblower complaint, former director of the Biomedical Advanced Research and Development Authority Rick Bright described how the White House and senior officials at the Department of Health and Human Services pressed to distribute the drug beyond the FDA’s narrow authorization, even though it had no known utility as a coronavirus treatment.

“Then, last month, Mr. Trump pressed for approval of expanded use of blood plasma from recovered patients to treat Covid-19.  The National Institutes of Health had concerns about effectiveness.  On Aug. 19, Mr. Trump phoned Francis Collins, the NIH director, with a blunt message.  ‘Get it done by Friday,’ he said, according to the New York Times.  Mr. Trump announced the FDA’s authorization on Aug. 23, on the eve of the Republican convention, using an exaggerated estimate of its potential usefulness.

“Now comes fresh evidence that the CDC’s scientific reports are being manipulated to meet Mr. Trump’s political imperatives.  Politico reported that communications officials at HHS are reviewing and editing the CDC’s dispatches, the Morbidity and Mortality Weekly Report, written by career scientists. According to Politico, the assistant secretary for public affairs at HHS, Michael Caputo, and Mr. Caputo’s scientific adviser Paul Alexander demanded changes in the reports.  At one point, Mr. Alexander complained in an email that ‘CDC to me appears to be writing hit pieces on the administration.’  The officials were ‘particularly bristling’ about a report that described a coronavirus outbreak in June at a children’s overnight summer camp in Georgia and said children of all ages were susceptible to infection.

“Mr. Caputo heaped scorn on the CDC scientists in a Facebook video, claiming CDC career government scientists were engaging in ‘sedition’ in their handling of the pandemic.  He added, ‘There are scientists who work for this government who do not want America to get well, not until after Joe Biden is president.’  On Wednesday, the agency announced Mr. Caputo is taking a 60-day medical leave from his post, while Mr. Alexander has left HHS entirely.  Meanwhile, Mr. Trump openly rebuked his own CDC director, Robert Redfield, who predicted that a vaccine may be available only next spring or summer, not before the upcoming election, as Mr. Trump insists.

“The bare-knuckle politicization of science puts the nation at risk.  It could lead people to lose faith in these public health agencies cascading into dangerous distrust of a vaccine or drug therapy.  It is hard to see the political profit in that.”

Covid-19 death tolls, as of tonight….

World…956,350
USA…203,171
Brazil…135,857
India…85,625
Mexico…72,803
UK…41,732
Italy…35,668
Peru…31,283
France…31,249
Spain…30,495
Iran…23,952
Colombia…23,850

Source: worldometers.info

U.S. daily death tolls…Sun. 392; Mon. 480; Tues. 1,197; Wed. 1,151; Thurs. 879; Fri. 958.

Week seven of my Wednesday comparison on the case and death tolls of the Euro six (Germany, France, Spain, Italy, UK and Belgium, with a combined population of 336 million) and the U.S. (population 330 million).

The first week, the U.S. had 55,148 cases and 1,319 deaths, while the Euro six had a cumulative 7,281 and 100.

This week, the Euro six was up to 28,930 cases and 324 deaths.  The U.S. was at 40,154 and 1,151.  It is awful that Europe is spiking.  It is a horrible sign for the United States and the rest of the world.  We had new highs in cases in Spain, France, Netherlands, and Ukraine, for starters. This is after their stringent lockdowns suppressed the spread to minimal levels.  But they opened up, not necessarily recklessly, and yet look at the result.

Covid Bytes

--A large, pivotal study of Moderna Inc.’s Covid-19 vaccine could yield a preliminary answer on its efficacy as early as October, CEO Stephane Bancel said Thursday, though it’s more likely to be November.  Timing will depend on rates of infection in the U.S. locations where the trial is being conducted, because the study is comparing whether fewer vaccinated people come down with symptomatic Covid-19 than unvaccinated people.

“Thankfully for the U.S. population it has become better the last few weeks,” Bancel said, referring to a general decline in new cases since August, though I’d add, barely.  “That actually makes it harder for an October readout on efficacy of the vaccine.”

If Moderna’s interim results are positive, the company could seek government authorization for emergency use of the vaccine soon thereafter, Bancel said.

--AstraZeneca, which placed its vaccine trials on hold worldwide on Sept. 6 after a serious side effect was reported in one volunteer in Britain, is facing criticism for its lack of transparency in reporting details of the case.  Johnson & Johnson’s Covid-19 vaccine trial in Spain has seen some volunteers quit after the AstraZeneca news, though J&J says it has enough reserve volunteers for the trial to continue as normal.

--The WHO’s chief scientist Soumya Swaminathan predicted on Tuesday that there will not be enough Covid vaccines for life to return to normal until 2022.

“The way that people are picturing it is that in January you have vaccines for the whole world and things will start going back to normal – it is not how it works,” she said.

“Our best assessment [for vaccine roll-out] is the middle of 2021 because at the beginning of 2021 is when you will start seeing the results of some of these trials.”

--Israel today became the first developed country to impose a second nationwide lockdown, as its government struggles to contain a fresh coronavirus outbreak that has hammered the country and divided the nation.

The lockdown will last at least through early October, aiming to prevent mass gatherings during the Jewish holidays that begin at sundown Friday.  It will extend through Rosh Hashana, Yom Kippur and Sukkot – holidays that typically involve millions of Jewish worshippers attending synagogues and gathering for prayer services.  If deemed effective, Israel will later move to localized lockdowns of Covid hot spots.

--Surging coronavirus figures across Europe should serve as “a wake-up call,” the World Health Organization’s regional director has said.

Hans Kluge said in the past two weeks the number of new cases had doubled in more than half of European member states.  “We have a very serious situation unfolding before us,” he said.

The WHO reported a record one-day increase in global coronavirus cases on Sunday, with the total rising by 307,930 in 24 hours.

--Britain’s health minister said on Friday that the coronavirus was accelerating across the country, with hospital admissions doubling every eight days, but refused to say if another lockdown would be imposed next month.

Health Secretary Matt Hancock said that a lockdown was a last resort, but that the government would do whatever it takes to tackle the virus.

--Editorial / Wall Street Journal…on the surge in Europe.

“One theme is that (Euro) politicians increasingly are alert to the health and economic dangers of mass lockdowns, including mass unemployment, missed education and psychological ills. Another theme is that European leaders are now more inclined to focus on individual responsibility than government action.  ‘There is only so much a government can do,’ Herman Goossens, coordinator of a European Union pandemic advisory panel, told the Journal this week.  He suggests emphasizing steps individuals can take to control the virus’ spread, such as social distancing and mask wearing.

“If that sounds familiar, it’s because that has been Sweden’s approach throughout the pandemic – and Sweden is the conspicuous exception to Europe’s new coronavirus wave. The country eschewed a mandatory lockdown and instead urged prudent individual measures such as working from home when possible and maintaining social distancing.

“While it suffered a higher death toll earlier in the crisis – concentrated, as elsewhere, in nursing homes – a second wave has yet to materialize there.  If this trend continues, it will provide an important point in the debate over what, if anything, the spring’s lockdowns elsewhere accomplished.

“The most notable feature of Europe’s virus response is that policy makers’ judgments are evolving as leaders learn more about the virus and their countries’ ability to manage it.  Americans might well ask when their politicians and media become similarly adaptable in the face of an evolving pandemic.”

The above is full of it in one very important respect.  Americans have proven, about half of us, that they will not follow basic guidelines that could help get us through the winter before a vaccine(s) becomes widely available.  To do so we all have to be on the same page.  The chances of that happening are zero. 

--Canada’s Ontario province is reducing the size of permitted indoor social events from 50 to 10, while the limit for outdoor gatherings would shrink to 25 from 100, owing to “reckless careless people” who are spreading the coronavirus at illegal parties, premier Doug Ford announced on Thursday.

Canada is seeing a distinct spike in cases from the lows of the summer.

--A now-notorious Aug. 7 wedding in the area of Millinocket, Maine, has been linked to seven coronavirus deaths and 176 positive cases, state health officials announced Tuesday.

Six of the seven who died were residents of a rehab & living center in Madison, Maine, with 39 cases linked to the location, though the wedding was held at a church in Millinocket and then a reception at the Big Moose Inn on Millinocket Lake.  83 percent of the roughly 65 guests at the wedding and reception reported experiencing symptoms of Covid afterward.

Trump World

--President Trump claimed in an ABC News town hall that he actually “up-played” the coronavirus if anything, not downplayed it per Woodward’s book, “Rage,” and the audio tapes.

Woodward, appearing at the same time of the ABC town hall on CNN with Anderson Cooper told him: “We are living in an Orwellian world, and this is not just about some political problem or some geopolitical problem.  It’s about the lives of people in this country, and he was told.  He knew.  He told me about it.”

Woodward added: “My job is not to be emotional and I’ve done it for 50 years and I tried to bleach the emotions out of it, but this is a story and unfortunately, it’s not over. We’re right in the middle of the damn pandemic and you talk to the doctors as I have and the experts and if we had received the kind of warning and this kind of ‘this is what you as citizens can do,’ this could be over.”

--Attorney General William Barr on Wednesday said a nationwide coronavirus lockdown would amount to the “greatest intrusion on civil liberties” besides slavery in U.S. history.

Barr made the remarks during a speech at Hillsdale College in celebration of Constitution Day in response to a question about the “constitutional hurdles” of banning church gatherings during the pandemic.

“You know, putting a national lockdown, stay at home orders, is like house arrest.  Other than slavery, which was a different kind of restraint, this is the greatest intrusion on civil liberties in American history,” Barr said.

Barr then slammed governors who have imposed stay-at-home orders even as states like New York and New Jersey used them to cut down on infections.

“Most of the governors do what bureaucrats always do, which is they…defy common sense,” Barr said.  “They treat free citizens as babies that can’t take responsibility for themselves and others.”

--Trump blamed “blue states” for increasing the nation’s death rate from coronavirus, suggesting that if “you take the blue states out” of the equation the United States would be far more competitive with other countries.

Speaking to reporters at the White House, Trump started off arguing that the United States was handling the virus well compared to other nations “despite the fact that the blue states had tremendous death rates.

“If you take the blue states out,” he continued, “we’re at a level that I don’t think anybody in the world would be at.  We’re really at a very low level but some of the states – they were blue states, and blue-state management.”

--As part of Woodward’s book, the author shares an audio from a Jan. 22 conversation he had with President Trump in which Trump boasted about his relationship with Turkish leader Recip Tayyip Erdogan.

“I get along very well with Erdogan,” Trump told Woodward.  “Even though you’re not supposed to, because everyone says ‘What a horrible guy.’ But for me it works out good. I can tell you that the relationships I have, the tougher and meaner they are, the better I get along with them.  You’ll explain that to me some day, OK?  But maybe it’s not a bad thing.  The easy ones are the ones I maybe don’t like as much, or don’t get along with as much.”

Woodward noted the shocking nature of Trump admitting to aligning himself with leaders such as Turkey’s president, while simultaneously having tense relationships with longtime allies.

“He is the face of the United States to the world,” Woodward said on “Today” Monday.  “And he has said – and there it is – ‘Hey, look.  I get along with these bad guys, but not the good guys.’”

--Trump dismissed concerns over climate change on a visit to fire-ravaged California, telling an official there it would “start getting cooler.”

During the visit, Trump repeated his argument that poor forest management was to blame as he met California officials involved in the battle against the wildfires at a stop near Sacramento.

Dismissing one official’s plea to not “ignore the science” on climate change, Trump said: “It’s going to start getting cooler, just you watch… I don’t think science knows actually.”

Earlier that day, Monday, Joe Biden called Trump “a climate arsonist.”

The president has previously criticized California’s forest management, pointing to Finland, where he said they raked and cleared the forests to prevent fires.  Someone remind the president that one-third of Finland is above the Arctic Circle.  Santa Claus trains his reindeer there.

--The president dismissed a former aide to Vice President Mike Pence, Olivia Troye, as someone who was “let go” – denouncing her after she cut an ad saying she supports Democratic presidential candidate Joe Biden.

“I just heard about that, I don’t know her.  She worked for the vice president,” Trump told reporters.

Troye worked as an adviser to the White House coronavirus task force and criticized Trump’s handling of the pandemic in a video for Republican Voters Against Trump.

--Editorial / New York Post

Wear a mask: It’s the most effective single technique right now for limiting Covid-19 spread, pending release of an effective vaccine.

“Please, Mr. President, stop suggesting anything else.

“We want to get back to a more normal life, with indoor restaurant dining and in-person schooling.  The way we get those things is for people to act smart – and that includes wearing masks.

“People are more likely to wear their masks if they get a consistent message to do so from leaders they trust. Which means you need to stop contradicting your own people, such as your CDC chief, Dr. Robert Redfield.

“It’s certainly true, as Politico reports, that Team Trump has worked unprecedented miracles in getting the nation close to a vaccine: If any of several different programs pan out, we’re likely to have one early next year – far sooner than the 12 to 18 months that was the optimistic prediction back in March.

“It’s wrong for Joe Biden to cast doubt on vaccine progress and say he doesn’t trust any vaccine the president promotes.  Democrats are politicizing the pandemic, trying to ride the virus into the White House.

“That’s terrible: This isn’t a blue state-red state issue.

“But that’s true for you, too.  You’re president of every one of these United States, and your sworn duty is to serve the people of every one of them.  Care about all America, and quit dumping on masks.”

--Trump tweets:

“Democrats only want BAILOUT MONEY for Blue States that are doing badly. They don’t care about the people, never did!”

“Twitter makes sure that Trending on Twitter is anything bad, Fake or not, about President Donald Trump.  So obvious what they are doing. Being studied now!”

[Ed. Yeah, just like you are still studying your new healthcare plan, Mr. President…the one we were supposed to have three years ago but “is coming in two weeks.”]

“I am SUBSTANTIALLY LOWERING MEDICARE PREMIUMS.  Have instituted Favored Nations Clause and Rebates on Drug Companies.  Never been done before. Drug companies are hitting me with Fake Ads, just like Sleepy Joe. Be careful! Drug prices will be reduced massively, and soon.

“I am lowering, not raising, Medicare Premiums!”

“Just out: Some people in the Great State of North Carolina have been sent TWO BALLOTS.  RIGGED ELECTION in waiting!”

[Ed. There was a clerical error…only one ballot counts, Mr. President.]

“Unsolicited Ballots are uncontrollable, totally open to ELECTION INTERFERENCE by foreign countries, and will lead to massive chaos and confusion!”

“Because of the news and unprecedented massive amount of unsolicited ballots which will be sent to ‘voters’, or wherever, this year, the Nov 3rd Election result may NEVER BE ACCURATELY DETERMINED, which is what some want. Another election disaster yesterday. Stop Ballot Madness!”

“Bob Woodward’s badly written book is very boring & totally ‘obsolete.’  Didn’t even talk about the recent Middle East deal.  Just another tired, washed up Trump Hater, who can’t stand that I have done so much, so quickly! #MAGA”

Responding to FBI Director Christopher Wray’s congressional testimony where he said in part: “We certainly have seen very active, very active efforts by the Russians to influence our election in 2020…to both sow divisiveness and discord and…to denigrate Vice President Biden,” Trump tweeted:

“But Chris, you don’t see any activity from China, even though it is a FAR greater threat than Russia, Russia, Russia.  They will both, plus others, be able to interfere in our 2020 Election with our totally vulnerable Unsolicited (Counterfeit?) Ballot Scam. Check it out!”

“Great News: BIG TEN FOOTBALL IS BACK.  All teams to participate.  Thank you to the players, coaches, parents, and all school representatives.  Have a FANTASTIC SEASON! It is my great honor to have helped!!!”

Wall Street and the Economy

The Federal Reserve’s Open Market Committee gathered this week and the Fed sees unemployment falling to 7.6 percent by end of this year (from its current 8.4 percent), much better than what they saw months ago, as well as to 5.5 percent by the end of 2021, which would still be above the 3.7% pre-pandemic level.

Fed leaders are growing more optimistic about the recovery than they were earlier this summer.

“The recovery has progressed more quickly than generally expected,” Fed Chair Jerome Powell said at a news conference.  “Even so, overall activity remains well below its level before the pandemic, and the path ahead remains highly uncertain.”

At the same time, the majority of Fed officials expected the benchmark interest rate would stay at or near zero through 2023.  The Fed also said it would increase holdings of Treasury securities and agency mortgage-backed securities at the current pace, which officials say is helping stave off an even deeper financial crisis.

Policymakers’ estimates for how far GDP would fall this year also improved.  Officials now forecast a decline of 3.7 percent by the end of the year, compared to June expectations for a 6.5 percent drop.

But these numbers do not account for a potential rise in coronavirus cases in the upcoming flu season that could weigh on the broader economy, which is why Powell’s language is peppered with “uncertainty” the last few months.  Congress is also stalled on another massive stimulus bill, which the Fed has argued is needed for the likes of the battered service and leisure sectors of the economy.

At the news conference, Powell said his “sense is that more fiscal support is likely to be needed.”  Congressional relief thus far “has been essential” and Powell warned of the hazards of cutting off aid prematurely, especially to the most vulnerable, including state and local governments facing budgetary crisis and massive layoffs.

“If there’s no additional support…that’s going to show up in economic activity, and in things like evictions and foreclosures and things that will scar and damage the economy,” Powell said.  “That’s a downside risk.”

Powell also noted that for many businesses in need of relief, “getting a loan that may be difficult to repay may not be the answer” and that “in these cases, direct fiscal support may be needed.”

“The overall picture is that the labor market is recovering, but it is a long way, a long way, from maximum employment,” Powell said.  “That’s the bottom line on it.”

Editorial / Wall Street Journal

“The Federal Reserve confirmed again Wednesday that we live in a bizarre monetary world by issuing two paradoxical predictions. The sages of the Open Market Committee (FOMC) said the economy is recovering faster than they had thought, but that interest rates will nonetheless have to stay near zero through 2023.

“In one sense the Fed’s statement puts more specificity on the new inflation-targeting policy that Fed Chair Jerome Powell laid out last month.  We called it, half in jest, ‘low rates forever!’  Wednesday’s statement nailed down that zero-rate forecast through at least 2023, or longer if inflation doesn’t average 2% or higher by then.

“Yet how in the sainted name of Paul Volcker can the Fed predict what interest rates will be at the end of the next Presidency when it misjudged the economy so much over the last three months?  In June the FOMC’s median prediction for GDP this year was minus-6.5%.  Ninety days later it’s only minus-3.7%.  The median jobless rate prediction in June for the end of the year was 9.3%; now it’s 7.6%....

“The Fed has junked the old Phillips Curve connection between inflation and unemployment, which is good. But it doesn’t seem to have a replacement theory of monetary policy beyond saying, ever more explicitly, that it wants inflation to really take off before it will raise rates.  Mr. Powell is now the anti-Volcker, who will do whatever it takes to spur inflation.”

Meanwhile, a few economic data points this week.  August industrial production came in less than expected, 0.4%, while retail sales for the month also fell short, 0.6%, 0.7% ex-transportation, and -0.2% on the ‘control group’ metric.

August housing starts also fell short of what the Street was forecasting, a 1.416 million annualized rate versus a prior revised figure of 1.492m.

But the Atlanta Fed’s GDPNow barometer for the third quarter is at a whopping 32.0%, which the president has been touting for months now, the first official look being reported on Oct. 29.

On trade….

John Cavanagh / USA TODAY [Cavanagh is director of the Institute for Policy Studies]

“As he courts Midwestern voters, President Donald Trump is returning to hard-hit manufacturing regions where he made big, bold promises in his last campaign.  ‘If I’m elected…you won’t lose one plant, I promise you that,’ he told Michigan voters at a rally in October 2016.  In fact, his big stick approach to global trade negotiations would bring jobs back home.  Or so he claimed.

“Four years later, it’s clear that Trump’s trade policies have failed U.S. workers.  Instead of more good jobs, his ever-escalating trade wars have led to higher costs, lost markets, and more plant closures. Economic Policy Institute research shows that nearly 1,800 U.S. factories disappeared between 2016 and 2018.

“In manufacturing-heavy Ohio, Trump’s tit-for-tat tariff battle with China was a major factor in the drop in annual job growth from 36,200 in 2016 to 3,700 in 2019, according to a new report I co-authored.  Average weekly earnings for Ohio manufacturing workers also declined during this period.

“In Michigan, Fiat Chrysler, General Motors, and Ford have all closed plants since Trump’s brash campaign trail commitments. Auto companies as a whole reduced their investment in the state by 29% over the three full years of Trump’s presidency, compared with the previous three years under Obama.

“Where were U.S. manufacturing companies investing?  China. Trump’s war of words with Beijing has done nothing to stop American companies from pouring resources into this fast-growing market.

“In 2019, U.S. firms invested $14 billion in China – more than in 2016, the year Trump was elected. Tesla and General Motors led the pack, with massive investments in electric vehicle production.  These two companies’ decisions to expand in China were motivated in part by Beijing’s consumer subsidies for pollution-reducing technologies.

“But Trump also bears personal responsibility for encouraging offshoring because of the corporate tax cuts he pushed through Congress in 2017.  U.S.-based companies no longer owe Uncle Sam anything on offshore profits up to a certain threshold.  Above that level, they owe a federal tax rate that’s just half of what they’d pay for domestic profits.

“As a result, corporations can save on their IRS bills by shipping jobs overseas.  Big companies like General Motors took their tax break and then shipped thousands of jobs out of Ohio, Michigan and other states.

“What’s Trump saying now, as he once again stumps in these struggling industrial powerhouses?

“Don’t expect any apologies for his broken promises.  Instead, you’ll hear false claims about all the car plants he’s supposedly created in these states.  On Sept. 10 in Freeland, Michigan, he went so far as to claim that he’d ‘brought back our manufacturing jobs’ and added: ‘If Biden wins, China wins.’

“Of course, these are lies. The jobs haven’t come back. But even as he doubles down on his failed trade war with China, Trump continues to reward the corporations that offshored jobs there.”

Finally, economist Robert J. Samuelson has retired from his perch at the Washington Post.  He has always been my favorite in terms of breaking down economics to a level we all could understand.

“I’m around 75,” he wrote in his last column this week.  “If I haven’t yet said what’s on my mind, I never will.”

Samuelson is not optimistic about the future.

“(Modern) democracies have a hard time making sacrifices in the present for gains in the future. We’re already grappling with this problem.  From 2010 to 2030, the elderly’s share of the population (65 and over) is projected to rise from 13 percent to 20 percent.  Spending on Social Security and Medicare will skyrocket, and already is.  Yet we have done little to prevent spending on the elderly from squeezing the rest of the federal budget.  Global warming poses a similar issue: As yet, there is no consensus to spend today in the vague hope that we can curb climate change several decades from now.

“I hope I am wrong about the future.  That’s one excuse for my throwing in the towel now, in the midst of one of the great news stories of our time.  I am a man of the 20th century, but we are now facing the problems of the 21st century, which demand new policies and norms. Goodbye and good luck – you’ll need as much help as you can get.”

Europe and Asia

We’ve had a lull on the economic data front in the EU, with important PMI numbers coming the next two weeks.  We did have a reading from Eurostat on August inflation in the eurozone, down -0.2% annualized, vs. 1.0% a year ago, and down from 0.4% in July.  The decline was due largely to lower energy prices.

Germany -0.1 ann., France 0.2%, Italy -0.5%, Spain -0.6%, and the Netherlands 0.3%.  [0.2% for August in the UK.]

And industrial production in July was up 4.1% in the euro area compared with June, but down 7.7% vs. a year ago.

But the big story remains….

Brexit:  British Prime Minister Boris Johnson is pressing ahead with legislation on trade despite a warning from Brussels that it could wreck their future relationship and an acknowledgement by his government that it violates international law.

The Internal Market Bill is aimed at ensuring Britain’s four nations can trade freely with one another after leaving the European Union, but the government says that requires creating powers to override part of the withdrawal treaty it signed with Brussels.

The government says the powers are a safety net to protect peace in Northern Ireland if negotiations with the EU on how to manage cross-border trade fail.

A key part of the original agreement with Brussels is that Northern Ireland will continue to follow some EU rules even after Brexit happens, which is designed to prevent a hard border.

But Johnson’s new bill would go against the withdrawal agreement – and therefore international law – by allowing UK ministers to “disapply” previously agreed rules relating to Northern Ireland if there is no trade deal with the EU.

The EU wants to make sure the open border with Ireland doesn’t act as a back door into the bloc for goods.  Britain wants to make sure goods flow freely between Northern Ireland and the rest of the United Kingdom.

The bill has to pass the House of Commons, where Johnson’s Conservative Party has an 80-seat majority, and then the House of Lords, the upper chamber, where it does not have a majority. The bill is slated for a vote in the lower house on Sept. 29.  But then it will stall in the House of Lords, which has vowed it will take most of October and November to consider the legislation.

Which means the bill will not be law before the EU’s end of September deadline to withdraw the bill, or Johnson’s Oct. 15 deadline for a deal with the EU.

U.S. special envoy to Northern Ireland, Mick Mulvaney, has warned against creating a “hard border by accident” on the island of Ireland.  Mulvaney’s warning came two days after presidential candidate Joe Biden issued his own warning that Britain must honor the 1998 Good Friday Agreement “that brought peace to Northern Ireland,” and that the U.S. cannot allow the accord to become a casualty of Brexit.  “Any trade deal between the U.S. and UK must be contingent upon respect for the Agreement and preventing the return of a hard border.  Period.”

The UK has said that in talks with the EU, significant gaps remain in key areas, including fisheries and subsidies.

As for the EU side, chief negotiator Michel Barnier told the bloc’s 27 national envoys to Brussels that he still thinks a trade deal with Britain is possible, despite the latest crisis in this four-year saga.  But the next few days are key.  A little progress on the fisheries issue has been made, so we’re told.

The EU’s leaders hold a critical summit Oct. 15-16 and the deal was to have been wrapped up by then, because each member state still then has to approve it before year end.

*Former prime ministers Tony Blair and John Major, who were adversaries in the 1990s as Conservative and Labour party leaders, wrote in a joint letter published by the Sunday Times newspaper that Boris Johnson’s plan to pass legislation that breaks the divorce treaty with the EU was “shocking.”

“How can it be compatible with the codes of conduct that bind ministers, law officers and civil servants deliberately to break treaty obligations?”

Turning to Asia…in China, the economic outlook continued to improve with August retail sales up 0.5% from a year earlier, a strong improvement from July’s 1.1% drop and the first expansion for this metric of the year.

Retail sales have benefited from a lifting of lockdown restrictions across the country.  And now, with no local cases reported in weeks, shopping malls, restaurants and gyms are packed with consumers again.  Movie theaters – the last holdouts – reopened end of July and during the last 10 days of August, official data showed box-office revenue returning to 90% of year-earlier levels.

Rail and air travel is also improving, and August industrial production was up 5.6% from a year earlier, according to the National Bureau of Statistics, beating July’s 4.8%.  January-August fixed-asset investment was down 0.3% from a year earlier, narrowing the Jan.-July decline of 1.6%. 

The urban unemployment rate was down to 5.6%, vs. 5.3% in January.

The Bank of Japan kept monetary policy steady on Thursday and slightly upgraded its view on the economy, suggesting that no immediate expansion of stimulus was needed to combat the coronavirus pandemic.

Markets are focusing on what kind of relationship BOJ Governor Haruhiko Kuroda will have with new Prime Minister Yoshihide Suga in supporting the economy with its dwindling policy tool-kit, a negative short-term benchmark interest rate and a pledge to cap 10-year government bonds yields around zero.

“Japan’s economy remains in a severe state but has started to pick up as business activity gradually resumes,” the BOJ said in a statement.

Since Suga was Shinzo Abe’s right-hand man, there is not likely to be a major change in the relationship between the central bank and the government, Suga saying he would stick with his former boss’ “Abenomics” growth policies while pushing reforms including deregulation, digitalization and smashing of bureaucratic barriers.  Seeming to play down the prospect for an early election, Suga said what Japanese most wanted was to contain the coronavirus outbreak and revive the battered economy.

A lower house election must be held by late October 2021 but there is speculation he might call for a vote sooner to cement his mandate.

Suga has little foreign policy experience and he must also cope with an intensifying U.S.-China confrontation, build ties with the winner of the Nov. 3 election, and try to keep Japan’s own relations with Beijing on track.

Street Bytes

--Stocks fell a third straight day today, taking the averages negative for a third consecutive week amid concerns about the deteriorating relationship between the U.S. and China over social-media apps.  While the Dow Jones just lost a fraction of a point over the week to 27657, the S&P 500 and Nasdaq both fell 0.6%.

Nasdaq is now down 10.5% from its high of just a few weeks ago.

As discussed below, tech stocks were spooked by battle between Washington and Beijing over WeChat and TikTok, with Wedbush Securities analyst Daniel Ives saying in a note to clients today: “The broader worry is that if a deal is not reached over the next 48 hours with approval by the Chinese government around source code access and majority ownership, this shutdown move could be a Fort Sumter moment in the U.S./China cold tech war tensions with retaliation on the horizon,” he said.

--U.S. Treasury Yields

6-mo. 0.11%  2-yr. 0.14%  10-yr. 0.70%  30-yr. 1.45%

With the Fed telling us there will be no change in their stance on rates for years to come, there is little cause for real movement on the yield curve.

--World oil demand will fall more steeply in 2020 than previously forecast due to the pandemic and recover more slowly than expected next year, OPEC said on Monday, potentially making it harder for the group and its allies to support the market.

Demand will tumble by 9.46 million barrels per day this year, OPEC said in a monthly report, more than the 9.06m bpd it called for a month ago.

While some countries have eased lockdowns, allowing demand to recover, a rising number of new cases and higher output have weighed on prices.

“Risks remain elevated and tilted to the downside, particularly related to the development of Covid-19 infection cases as well as possible cures,” OPEC said of the 2021 outlook.  “Increased usage of teleworking and distance conferencing is estimated to limit transportation fuels from fully recovering to 2019 levels.

OPEC also cut its demand forecast for 2021 and sees consumption rising by 6.62m bpd, 370,000 bpd less than expected last month.

To tackle the drop in demand, OPEC and its allies, OPEC+, agreed to a record supply cut of 9.7 million bpd that started on May 1, while the United States and other nations agreed to pump less.

But this week oil got back over $40 ($40.97 on WTI) for the first time in three weeks as U.S. crude inventories fell for the seventh time in eight weeks and reached a five-month low.

--This is how the TikTok story developed this week.  As it went down…for now….

China’s ByteDance would retain a majority ownership stake in its TikTok app unit as part of a proposal being reviewed by national-security regulators, with an eye toward settling the high-profile deal by a deadline Sunday.

The Committee on Foreign Investment in the U.S., known as CFIUS, which includes officials from the Treasury, State, Commerce and other departments, reviewed the deal Tuesday but didn’t comment.

The proposal includes Oracle Corp.’s bid to become TikTok’s U.S. technology partner as part of an effort to address the administration’s national-security concerns surrounding the Chinese-owned video-sharing app.

President Trump said on Tuesday he hoped the administration would make a decision on the deal “pretty soon,” adding he has “high respect” for Oracle Chairman Larry Ellison, because Ellison has held big fundraisers for him, the editor added facetiously.

Then Thursday, Oracle and Walmart were reportedly likely to own a significant combined stake under a new ownership structure that is in the works, the Wall Street Journal first reported.

Walmart CEO Doug McMillon may be granted a board seat, and, in addition, TikTok would file for a U.S. initial public offering in a year.

Together with the stakes held by existing American investors, including Sequoia Capital, General Atlantic and Coatue Management, the U.S. may end up having a more than 50% holding in the new entity, a plan that would also address the security issues raised by the administration.

The administration has contended that the app poses a security threat because the data TikTok collects from U.S. consumers could be shared with the Chinese government.  TikTok has said it would never hand over such data.

Signing off on a deal for TikTok that would allow ByteDance to retain majority ownership would represent a U-turn for Trump and the U.S. government agencies and departments that comprise CFIUS.

So then today, the Commerce Department issued an order prohibiting any service in the U.S. from distributing or updating TikTok or the messaging app WeChat.  Commerce Secretary Wilbur Ross said President Trump took the action “to guarantee our national security and protect Americans from the threats of the Chinese Communist Party.”  Shares in Oracle fell amid the uncertainty.

The ban on WeChat, used by over 1 billion people worldwide, bars the transfer of funds or processing of payments to or from people in the United States through it.  Users could also start to experience a slower service from Sunday night.  The Commerce Department order bars Apple Inc.’s app store, Alphabet Inc.’s Google Play and others from offering the apps on any platform “that can be reached from within the United States,” a senior Commerce official told Reuters.

But the bans are less dramatic than some had originally feared and the order does not ban U.S. companies from doing business on WeChat outside the United States, which is important to companies like Walmart and Starbucks that use WeChat’s embedded ‘mini-app’ programs to facilitate transactions and engage consumers in China.

The Commerce Department will not seek to compel people in the United States to remove the apps or stop using them.  But over time, the lack of updates will degrade the apps usability.

“The expectation is that people will find alternative ways to do these actions,” a senior official said.  “We expect the market to act and there will be more secure apps that will fill in these gaps that Americans can trust and that the United States government won’t have to take similar actions against.”

We’ll now see what the president does on Sunday.  But with everything else going on…including our late-breaking news on Justice Ginsburg, the president can kick the can down the road if he wants.  Or a deal will be reached to put TikTok under the control of U.S. investors.  It’s just that the Chinese government would have to approve.

More next time….

--SoftBank Group Corp. said on Monday it has agreed to sell chip designer Arm to Nvidia Corp. for as much as $40 billion in a deal set to reshape the semiconductor landscape.  The sale will see chip firm Nvidia acquire all of Arm’s shares in return for cash and shares, giving SoftBank and the $100 billion Vision Fund, which has a 25% stake in Arm, a stake in Nvidia of between 7 and 8%.

The sale comes nearly four years after the Japanese conglomerate acquired the British chip technology firm for $32 billion.  The deal will alter the semiconductor landscape by putting a long-neutral technology vendor to Apple Inc. and others under the control of a single player.  Nvidia began as a graphics chip designer and has expanded into products for areas including artificial intelligence and data centers.

The Arm acquisition will put Nvidia into even more intense competition with rivals like Intel and Advanced Micro Devices because Arm has been developing technology to compete with their chips.

Arm licenses its chip designs and technology to companies like Qualcomm, Apple and Samsung, which in turn use the technology in their chips for smartphones and other devices.  For example, Apple’s new Mac computers will use Arm-based chips.

But Arm’s co-founder, Hermann Hauser, told Reuters in an interview that the sale of British-based Arm is a disaster that will destroy its business model.

“It’s a disaster for Cambridge, the UK and Europe,” Hauser said.  “It’s the last European technology company with global relevance and it’s being sold to the Americans.”

Hauser called on the UK government to put three conditions on the deal: a guarantee of jobs in Britain; a promise to preserve Arm’s open business model; and an exception to U.S. security reviews on its client relationships.

--Data-warehouse firm Snowflake saw its initial public offering soar from an IPO price of $120 to $253.50 its first day, Wednesday, hitting a high of $319, in a true sign of irrational exuberance.

Snowflake is backed by Warren Buffett’s Berkshire Hathaway and Salesforce Venture.

Snowflake’s revenue was $242 million for the first six months of 2020, an increase of 132% from the same period last year, while its operating loss for the most recent six months was $174 million, compared with an operating loss of $183 million in the first half of 2019.

Snowflake was founded in 2012 in San Francisco by two former Oracle veterans.

--An intensive investigation by a House committee into the causes of the two Boeing 737 MAX crashes reveals new details documenting what a final report calls “a disturbing pattern of technical miscalculations and troubling management misjudgments made by Boeing,” along with “grossly insufficient oversight by the FAA.”

Rep. Peter DeFazio, (D, Oregon), chair of the House Transportation Committee, signaled in a teleconference briefing that the committee plans to soon propose legislation reforming how the Federal Aviation Administration certifies airplanes as safe to fly.

He called it “mind boggling” that the MAX, which had two crashes that killed 346 people within five months, was originally certified by both Boeing and the FAA as compliant with all safety regulations.

“The problem is it was compliant and not safe. And people died,” DeFazio said.  “Obviously the system is inadequate.”

The report says Boeing engineers at various points during development of the MAX raised questions about all the critical design elements of the flight control software that later led to the crashes – the Maneuvering Characteristics Augmentation System (MCAS).

Internal Boeing memos and emails showed that engineers were asking about the system being triggered by a single sensor, about the potential consequences of a faulty sensor, and the ability of pilots to maintain control, or whether pilots would react in time if MCAS was triggered erroneously.

“Ultimately, all of those safety concerns were either inadequately addressed or simply dismissed by Boeing,” the report states.

Nor did Boeing flag these issues to the FAA.

DeFazio said that in February 2019, after the crash of a Lion Air MAX jet but before the Ethiopian Airlines crash, Ali Bahrami, FAA associate administrator for aviation safety, told him the accident was a “one-off” and that “there’s no problem with that plane.”

Yet DeFazio said that, based on a seven-hour interview with Bahrami by committee investigators last December, it appeared the FAA’s head of safety “really didn’t know much of anything about the MAX or its development.”

--United Airlines pilots union leaders said they have voted to approve a deal with the company that would protect some 2,850 jobs until June 2021, even as the industry battles a sharp downturn from the coronavirus pandemic.  The support of the union leaders virtually assures the full membership will approve the plan.

United has warned that some 16,000 jobs are at risk without an extension of federal aid that expires on Oct. 1, but this deal with the pilots – if approved by all members – would reduce that number.

Congress has been weighing for weeks whether to grant U.S. airlines another $25 billion in payroll assistance that would keep tens of thousands of airline workers on the job for another six months and extend minimum service requirements.  American Airlines said it will cancel just over 700 flights in October to and from 15 smaller airports in October.  Major U.S. airlines that received portions of $25 billion in payroll assistance were required to maintain minimum flights through Sept. 30, but the government could opt to extend those requirements.

--British Airways is having to take every measure possible to make it through the winter as the company said a fear of flying during the pandemic has destroyed any hope of a rapid return to normality.  CEO Alex Cruz told a parliamentary select committee that the airline was running at 25 to 30% of its normal flight schedule, prompting it to cut thousands of jobs.

“This is the worst crisis that British Airways has gone through in its 100 years of history,” he said.  “We’re still fighting for our own survival.”

BA has laid off 13,000 employees and renegotiated the contracts of many of its remaining staff, a move heavily criticized by politicians, but it is burning through $25 million a day.

Cruz cut his own pay by about a third.  He said a return to flying has been hampered by the weekly changes to quarantine rules and the lack of a testing system at airports.

--Spanish airlines expect a tough autumn and winter after a summer that has seen passenger traffic nosedive 80% due to the pandemic, the head of Spain’s airlines industry group said on Tuesday.  The capacity in September and October will likely be 40% of what it was last year.

Spain’s economy, heavily dependent on tourism, contracted 18.5% in the second quarter from the first and the government expects GDP to contract over 10% for the full year.

Today, the government announced partial lockdowns in parts of Madrid as the second wave hits.

--Lufthansa could cut its fleet by 130 planes in response to the coronavirus crisis, a reduction of at least 30 planes more than previously announced.

The number of workers at the German airliner stood at 140,000 before the pandemic hit, but it is expected 28,000 positions will be cut.

Lufthansa received a 9 billion euro ($10.7 billion) government bailout in June, and last month it said it expected capacity to recover to only around 50% of normal at the end of 2020 and to 2/3s of last year’s level in 2021.

--FedEx Corp. reported a bigger-than-expected quarterly profit on Tuesday, after price hikes, lower fuel costs and efficiency gains countered negative impacts associated with a pandemic-fueled surge in e-commerce shipments.  The shares soared 8% in response, before tailing off some.

Average daily package volume for FedEx Ground, which handles e-commerce deliveries for retailers like Walmart, jumped 31% to 11.6 million during the fiscal first quarter ended Aug. 31.  Revenue per package rose 2% to $9.33 during the quarter, which also included one additional business day.

Covid-19 upended operations at FedEx and rival UPS.  Lucrative deliveries to businesses dried up and higher-cost residential deliveries boomed as workers sheltered at home and placed online orders for everything from furniture to snacks and pet food.

FedEx also spent $565 million on fuel across the company during the quarter, 35% less than a year earlier.

Fiscal first quarter adjusted net income jumped 60% to $1.28 billion, while revenue rose 13.5% to $19.3 billion, both exceeding the Street’s estimates.

The company did not provide an earnings forecast for fiscal 2021, citing continued uncertainty.

--Caterpillar said in a regulatory filing Tuesday that its global machine sales were down 20% in the rolling three months to August, compared with a 20% contraction in July and a 23% decline in June.  The shares fell 2% on the news.

--Amazon.com Inc. is hiring 100,000 full and part-time employees across the U.S. and Canada, offering starting wages of at least $15 an hour, the company announced Monday.  This is in addition to the 33,000 corporate and technology employees announced the week before.

Amazon also plans to open 100 new operations buildings in September across fulfillment centers, delivery stations, sorting centers and other sites.

--Walmart said on Thursday it is raising wages for about 165,000 hourly workers as the retailer plans a team-based operating model in its Supercenters.

The company said the new wage ranges for the hourly team-lead roles start at between $18 and $21 an hour and can go up to $30 an hour in the Supercenters. Walmart also said the minimums for hourly workers in the deli and bakery areas are increasing to $15 or higher from $11 an hour and pay for several hourly auto care center roles is also raised for most employees by $1.

--Deutsche Bank AG told U.S. employees they don’t have to return to the office July 2021.  Many employees had asked for a clear policy as they deal with unknowns about school reopenings and the path of the coronavirus.

Americas chief of staff Matthias Krause outlined a plan in a town hall Wednesday, acknowledging New York’s “success in containing Covid” but added that workers “have understandable concerns about public transportation, cleanliness, security and other quality of life issues.”

“Many of you do not wish to return to 60 Wall Street soon,” a memo said, a reference to the bank’s office in downtown Manhattan.

Deutsche Bank’s plans are in contrast to the strategy of JPMorgan Chase, which last week told most senior employees of the sales and trading operation to return to the office by next week.

UBS Group AG told some senior employees in sales and trading that they wouldn’t follow JPM’s lead.

--BlackRock CEO Larry Fink said the asset management giant’s employees may never be 100% back in the office as work from home stretches.

“I don’t believe BlackRock will be ever 100% back in office,” Fink said in remarks at the Morningstar Investment Conference, according to reports.

Fink described the realization that people can work from home as “one of the great humanistic discoveries” after companies were forced to send employees home to battle the spread.

--Citigroup Inc. resumed job cuts this week, affecting less than 1% of the global workforce, the bank said in a statement.  With recent hiring, overall headcount probably won’t show any drops, Citi said.

The reductions come as Citigroup is facing a likely revenue drop and another increase to loan-loss reserves this quarter as the pandemic drags on, as well as years of expenses to improve risk controls.  The Office of the Comptroller of the Currency and the Federal Reserve are weighing public reprimands of the firm because of continued deficiencies in its infrastructure and control functions.

Banks have resumed job cuts in recent weeks after pledging, en masse, to pause such actions earlier this year.

As for Citigroup’s regulatory issues, they clearly accelerated the timing of CEO Michael Corbat’s announcement that he would be stepping down early next year, as he sought fresh leadership ahead of announcing what could be a years-long remediation process to satisfy regulators.

--Raymond James Financial Inc. said on Tuesday it was cutting 500 jobs, or 4% of its workforce, in order to control costs during the pandemic.

CEO Paul Reilly, in an email to employees, said, “This has been a year like no other. A year when we’ve all had to make decisions, decisions where none of the available options are the ones we would usually choose.”

He added that senior executives, including himself, would see pay cuts and that the company did not intend for another round of job cuts.

Raymond James was one of my favorites to work with back in the day.  Good people.

--Nikola Corp. tried to defend itself against last week’s claim the electric-truck maker had deceived investors, accusing a short seller of mischaracterizations and distortions.

Hindenburg Research, the short seller whose report sent Nikola shares tumbling last week, made false and misleading statements that were designed to manipulate the market, Nikola said Monday.

But after a chaotic day of trading Monday, Bloomberg reported securities regulators are examining the merits of the short seller’s claims.

Nikola pushed back on Hindenburg’s allegations that it had overstated the capabilities of some of its earliest test trucks.

--According to a Gallup survey, 55% of people said they owned stocks either directly or through funds – virtually unchanged since 2010. Before the financial crisis, it was consistently 60% or higher.

--China banned pork imports from Germany on Saturday after it confirmed its first case of African swine fever last week, in a move set to hit German producers and push up global prices as China’s meat supplies tighten.  China’s ban on imports from its third largest supplier comes as the world’s top meat buyer deals with an unprecedented pork shortage after its own epidemic of the deadly hog disease.

The ban on Germany, which has supplied about 14% of China’s pork imports so far this year, will push demand for meat from other major suppliers like the United States, Brazil and Spain, boosting global prices.

--Hong Kong’s tourism industry continues to get hammered.  August arrivals were down almost 80 percent from July, with the August arrival figures representing a 99.9 percent year-on-year drop.  You are reading that right.

Provisional figures from the city’s tourism board, released Tuesday, showed that fewer than 4,500 people visited last month, a 78 percent drop from the nearly 20,600 who visited in July.

Officials are pointing solely to the pandemic, but I would add the new national security law that was forced on Hong Kong by Beijing is not helpful either.  I can never go back.

Foreign Affairs

Israel/UAE/Bahrain: President Trump was center stage on Tuesday as the United Arab Emirates and Bahrain signed accords at the White House establishing diplomatic relations with Israel, an achievement the president’s supporters say merits the Nobel Peace Prize and his detractors claim is mostly illusory.

The UAE and Bahrain became just the third and fourth Mideast nations to formally recognize Israel at a White House ceremony that the president sees as vindication of his peacemaking skills after decades of failed efforts by his predecessors in both parties.

The accords can’t be compared to those that brought Israel diplomatic recognition by Egypt and Jordan decades ago, both having warred with Israel on countless occasions, but Tuesday’s agreements signaled the official recognition of the long-standing informal ties between Gulf nations and Israel, and there is no doubt an anti-Iran coalition is starting to form.

I just found it quizzical that President Trump keeps referring to the UAE as a great “warring nation.”

Meanwhile, Palestinian leaders call the accords a “betrayal” of their cause, but they have had little success in rallying traditionally supportive Arab nations to their defense.

In the end I tend to agree with scholar Kenneth Pollack of the American Enterprise Institute.  There’s a mutual recognition of the threat posed by Iran and by U.S. leaders seeking to avoid future military entanglements in the region.

“It’s bringing to an end the great Middle Eastern conflict of the 20th century, but the problem is it may be the harbinger of the great Middle Eastern conflict of the 21st century, which would be the Sunni states and Israel against Iran and its Shia allies.”

Editorial / Wall Street Journal

“How would official Washington respond if a Democratic President brokered a peace deal between Israel and two Arab states? The papers would be stacked with play-by-plays of how the historic breakthrough was achieved and adulatory profiles of the people in the room. The hosannas to the President’s strategic vision would flow from think tanks and academia, if not also from Oslo’s City Hall.

“The reaction Tuesday to the signing of the Abraham Accords between Israel, the United Arab Emirates and Bahrain at the White House was more muted, and maybe that’s for the best.  Some groundwork for the cascading thaw in Arab-Israeli relations was laid by a decade of shifts in the Middle East’s balance of power as Israel grew stronger, the Iran threat persisted, and the U.S. signaled its intention to draw down.

“Yet the Trump Administration deserves credit for taking advantage of these strategic shifts, and for setting aside the failed conventional playbook for how Arab-Israeli comity could be achieved. The Abraham Accords, named for the prophet of Jews, Christians and Muslims alike, are based on mutual interest.  Mr. Trump has been criticized for a transactional view of world affairs, and we sometimes worry about how that will play out, for example, in East Asia.  Yet in the Middle East, hard-headed transactionalism may have been what was needed.

“American negotiators have tried for years to press the Israelis and Palestinians to give up something in a leap of faith and hope that peace will follow.  Each side saw that as a lose-lose proposition. But peace between Arab states and Israel offered a win-win.

“The most obvious benefit, besides strategic cooperation against Iran’s regional mayhem, is economic.  Long-running Arab boycotts against the most dynamic economy in the Middle East have hurt investment and exacerbated the region’s poverty. As the Washington Institute’s Michael Singh notes, there should be opportunities for Gulf capital to flow into Israeli start-up companies – potentially displacing Chinese investment in Israel that has worried the U.S.

“For all the talk of Mr. Trump scorning American allies, the achievement here was possible because he backed allies to the hilt, giving them confidence in U.S. support.  He rejected Barack Obama’s failed courtship of Iran and withdrew from the flawed nuclear deal. He showed the nerve to kill the leader of Iran’s regional aggression, Qasem Soleimani.

“Mr. Trump also moved the U.S. Embassy in Israel to Jerusalem, a gesture that was said to be the death-knell for peace but sent a signal that Israel will not be wished away. No other U.S. President had been willing to take that risk. The Administration also stood by Saudi Arabia in the war in Yemen.  The Saudis haven’t normalized relations, but as the U.A.E. travel embargo ends they are allowing flights to and from the Jewish state to pass through Saudi airspace.

“The Abraham Accords offer little to the Palestinians, beyond an Israeli pledge to suspend annexation of West Bank territories.  Militants on Tuesday launched rockets from the Gaza Strip into southern Israel – a symbol of the rejectionism that has made Arab states tire of the Palestinian cause.

“But Israel’s wider recognition may eventually cause the Palestinians to come to the table in a realistic way. This may seem unlikely now, but Tuesday’s agreement shows that political arrangements that look permanent one day may not be the next.”

Bret Stephens / New York Times

“For years, the Trump administration’s peacemaking efforts in the Middle East have been the object of relentless derision in elite foreign-policy circles, some of it justified. Yet with Friday’s announcement that Bahrain would join the United Arab Emirates as the second Arab state in 30 days to normalize ties with Israel, the administration has done more for regional peace than most of its predecessors, including an Obama administration that tried hard and failed badly.

“There are lessons in this, at least for anyone prepared to consider just how wrong a half-century’s worth of conventional wisdom has been.

“At the heart of that conventional wisdom is the view, succinctly put by UN Secretary General Antonio Guterres in February, that ‘resolving the Israeli-Palestinian conflict remains key to sustainable peace in the Middle East.’  Untie that Gordian knot, so the thinking goes, and the region’s many problems become easier to solve, whether it’s other regional conflicts or the anti-Americanism that feeds international terrorism.

“That thinking was always dubious – what, for instance, did the Iran-Iraq War, in which a million people or more died, have to do with Israelis and Palestinians? – though it had the convenience of giving Arab regimes a good way of deflecting blame for their own bad governance. But since the (misnamed) Arab Spring began nearly a decade ago, the view has become absurd.

“The rise and fall of ISIS, civil war in Syria and anarchy in Libya, Turkey’s aggression against the Kurds, proxy battles and hunger in Yemen, political turmoil and repression in Egypt and Iran, the bankruptcy of the Lebanese state, the plight of Middle Eastern refugees – if any of these catastrophes have something in common, it’s that they have next to nothing to do with the Jewish state or its policies.  One may still hope for a Palestinian state, but it won’t save the region from itself.

“What would?  The best option is an alliance of moderates and modernizers – anyone in power (or seeking power) who wants to move his country in the direction of greater religious and social tolerance, broader (that is, beyond energy) economic development, less preoccupation with ancient disputes, more interest in future opportunities.  Such an alliance is the only hope for a region being sucked into the maw of religious fanaticism, economic stagnation, environmental degradation and perpetual misrule.

“Now this alliance may finally be coming into being.  Unlike Israel’s peace with Egypt and Jordan – both based on strategic necessity and geographic proximity – the peace with the Emirates and Bahrain has no obvious rationale, even if a shared fear of Iran played a role.

“The larger factor is shared aspiration.  Israel is the most advanced country in the region because for seven decades it invested in human, not mineral, potential, and because it didn’t let its wounds (whether with respect to Germany in the 1950s or Egypt in the 1970s) get the better of its judgment.

“The choice for the Arab world is stark.  It can follow a similar path as Israel; be swallowed by Iran, China, Russia, Turkey or some other outsider; or otherwise continue as before until, Libya-like, it implodes.

“As consequential as the peace deals themselves is the Arab League’s refusal to condemn them, eliciting a furious Palestinian reaction.  That’s not surprising: It means the Palestinian grip over the league’s diplomatic agenda may finally be loosening.

“Perhaps it also means that the grievance-driven politics that have dominated the Palestinian issue for decades are finally over, too.  If so, it’s bad news for those Palestinian leaders and activists who think that, with unflagging obstinacy, they can somehow restore the status quo ante 1948, when Israel didn’t exist.

“What’s bad news for some Palestinian leaders may be good news for ordinary Palestinians.  Peace between Israelis and Arabs will not come from the inside out – that is, from a deal between Jerusalem and Ramallah that wins over the rest of the Arab world. Decades of diplomatic failure, culminating in John Kerry’s failed medication efforts in 2014, should put an end to that fantasy.

“Yet it isn’t crazy to think that peace might come from the outside in: from an Arab world that encircles Israel with recognition and partnership rather than enmity, and which thereby shores up Israel’s security while moderating Palestinian behavior.  If that’s right – and if states, like Oman, Morocco, Kuwait, Sudan and especially Saudi Arabia follow suit – then this summer’s peace deals might finally create the conditions of viable Palestinian statehood.

“A final point about these deals: This wasn’t supposed to happen.  Not under the leadership of Israel’s supposedly bellicose Benjamin Netanyahu; certainly not through the diplomatic offices of the usually crazy/amateurish/perverse Trump administration.  Luck and timing played a part, as they always do.

“But it behooves those of us who are so frequently hostile to Netanyahu and Trump to maintain the capacity to be pleasantly surprised – that is, to be honest.  What’s happened between Israel and two former enemies is an honest triumph in a region, and a year, that’s known precious few.”

Herb Keinon / Jerusalem Post

“The Israel-Egypt peace deal signed at the White House on March 26, 1979, spanned dozens of pages and included letters, annexes, detailed maps and agreed minutes.

“So it goes when two sides that fought four bloody wars decide to terminate their state of war and disentangle.  There were no-go zones in the Sinai to delineate, timelines of withdrawal from oil fields to spell out, and an international boundary to set.

“That takes a lot of ink.

“The same is true of the Israel-Jordan peace treaty, signed on October 26, 1994, in the Arava.  That document, which put to end the state of war that existed between two countries that had fought each other three times, included a preamble, 30 articles, five annexes and agreed minutes.

“Contrast that with the relatively brief documents signed Tuesday on the White House lawn.

“There were three documents in all: the Abraham Accords declaration; the Declaration of Peace, Cooperation, and Constructive Diplomatic and Friendly Relations Between the Kingdom of Bahrain and the State of Israel; and the Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel.  The first document was 210 words, the second about 460, and the peace treaty with the UAE spread over nine pages.

“Why so short?  Because unlike the treaties with Egypt and Jordan that had to devolve into minute details about boundaries and timetables, these documents were much more general.

“Much ado was made in the run-up to Tuesday’s signing that no one in Israel – outside of the prime minister, his advisers and officials involved in drawing up the documents – had any idea what was in them.

“That the Prime Minister’s Office was so tight-lipped about the contents of the documents fueled speculation that they contained something explosive.

“They didn’t.

“The Abraham Accords declaration reads like a John Lennon song and declares that the signatories… ‘recognize the importance of maintaining and strengthening peace in the Middle East and around the world based on mutual understanding and coexistence, as well as respect for human dignity and freedom, including religious freedom.’

“This declaration seems like a public service announcement declaring that those who signed it had boarded a ‘peace train,’ in the hopes that this announcement in itself will entice others to do the same.

“The peace treaty with the UAE, however, is written in standard diplomatic style – dry and legalistic, not declaratory…. the Palestinian issue merited no more than 100 words in the Israel-UAE agreement.  The two sides referred to their commitment to ‘continuing their efforts to achieve a just, comprehensive, realistic and enduring solution to the Israeli-Palestinian conflict.’ And to ‘working together to realize a negotiated solution to the Israeli-Palestinian conflict that meets the legitimate needs and aspirations of both peoples, and to advance comprehensive Middle East peace, stability and prosperity.’

“That’s it, and that is about as vague as one could ask for. There is no mention there of a Palestinian state or Jerusalem or possible Israeli annexation.

“But, then again, why should there be?

“This is a treaty between Israel and the UAE, not between Israel and the Palestinians. The rather perfunctory manner in which the Palestinian issue appears here, as it similarly appears in the peace declaration between Israel and Bahrain, leaves the impression that it was raised so that the UAE and Bahrain could say they did not abandon the Palestinian cause.

“That the drafters of the documents decided not to mention any of the contentious issues on the Palestinian track – two states, Jerusalem, refugees, annexation, settlements – underlines the degree to which the UAE, Bahrain and Israel do not want the Palestinian issue to derail their agreements.

“This language makes it clear that the sides are not giving the Palestinians any leverage at all over their relationship.  For if the agreements had said that the hope was for a two-state solution, then if a Palestinian state would not come into being in the foreseeable future, could that be grounds upon which to annul the documents?

“Better not go there at all.  The less detail on this issue for both sides, the better, because that way neither side can say down the road that the other is not living up to the deal.

“If the devil is in the details, then one way to keep the devil at bay is simply not to get into details, and that seems to have been the philosophy that guided the drafters of these accords.  There is nothing in the documents regarding the Palestinians that could be used to break up the new relationships.

“The document with Bahrain ends with a paragraph thanking Trump for, among other things, his ‘pragmatic’ approach to furthering the cause of peace. That the Palestinian issue was barely mentioned demonstrates that pragmatism, because if one wants these agreements to last and bear fruit, it is common sense to leave out as many bones of contention as possible.”

Of course the peace accord between the three was met with pushback from some quarters.

Lebanon’s Iranian-backed Hezbollah said on Saturday it strongly condemned Bahrain’s move to normalize ties with Israel as a “great betrayal” of the Palestinian people.  Hezbollah said the move by the “tyrannical regime in Bahrain” was done at the behest of the United States.

Bahraini opposition groups have said they reject a decision by the government to normalize relations with Israel, with a leading Shiite cleric calling on the region’s people to resist.  Cleric Ayatollah Sheikh Isa Qassim, living in Iran, voiced his disagreement.

“There is a great divergence between the rulers and the ruled in thought, mind, aims and interests. Governments are experiencing a psychological defeat and want to impose it on the people, and the people have to resist this defeat,” Qassim said.

Iran: An explosion two months ago at a key Iranian uranium enrichment facility in Natanz was meant to send a message of determination to stop the Islamic Republic’s nuclear program, the Jerusalem Post reported.  “The purpose of the attack was to send an unambiguous deterrent message that progress toward a nuclear weapon beyond certain redlines would not be tolerated.

“In addition, the Post has confirmed foreign reports that the explosion was caused by physical sabotage as opposed to exclusively cyberwarfare.

“To date, Iran has made multiple announcements but has not accused Israel at an official level, and Jerusalem has never officially taken responsibility, although multiple ministers have dropped hints.

“At the time, a previously unknown group called the Homeland Cheetahs claimed that it was a group of Iranians dissidents that had undertaken the attack.

“However, that group has not been heard from since.  Experts speculated that the group was a cover for the true attacker or at most a mixed operation of Iranian dissidents with a powerful foreign backer like Israel, the United States or Saudi Arabia.

“Apparently, though, one of the goals of the attack was that it be carried out in a public and loud way to send a message to the Iranian leadership, even if only unofficially.”

Well, I wrote last week that Iran is building a new uranium enrichment facility inside a mountain at Natanz.

Afghanistan: Afghan government representatives and Taliban insurgents gathered on Saturday in Doha, Qatar, for historic peace talks aimed at ending two decades of war that has killed tens of thousands of combatants and civilians.  The two sides were urged to reach an immediate ceasefire and forge an agreement that upholds women’s rights.

The head of Afghanistan’s peace council, Abdullah Abdullah, said that even if the two sides could not agree on all points, they should compromise.  “My delegation are in Doha representing a political system that is supported by millions of men and women from a diversity of cultural, social and ethnic backgrounds in our homeland,” he said.  Taliban leader Mullah Baradar Akhund said that Afghanistan should “have an Islamic system in which all tribes and ethnicities of the country find themselves without any discrimination and live their lives in love and brotherhood.”

Secretary of State Mike Pompeo warned that the size and scope of future U.S. financial assistance to the country, which relies heavily on international funding, would depend on their “choices and conduct.”  U.S. Special Envoy Zalmay Khalilzad told reporters that preventing terrorism was the chief condition but that protecting minority and women’s rights would also influence any future decisions on Congress-allocated funding.

Editorial / Washington Post

“The opening of Afghan peace negotiations over the weekend came six months later than planned and was accompanied by continuing violence around the country and low expectations for early progress.  Yet the meeting of a Taliban delegation and one headed by the Afghan government nevertheless is a welcome breakthrough after two decades of war.  It offers hope that a political settlement is possible – provided the United States and other Afghan allies remain stalwart….

“The differences over how Afghanistan should be governed remain stark. But, since it long ago became evident that there was no military solution to the conflict, the beginning of negotiations at least opens a narrow path to peace – something for which the Trump administration and its special envoy, former ambassador Zalmay Khalilzad, deserve credit.  Mr. Khalilzad first negotiated an agreement between the United States and the Taliban, then persuaded the Afghan government to accept its terms – including the painful release of 5,000 Taliban prisoners.

“There are two big reasons for doubt about whether negotiations can progress.  One is the lopsided terms of the U.S.-Taliban deal, and thus of the balance of power between the two Afghan sides. The United States agreed to withdraw all of its troops from the country by next May, tied only to promises by the Taliban not to target U.S. and other international forces and to break ties with al-Qaeda. The insurgents have not fully delivered on either of those commitments, according to international monitors and U.S. military commanders, and they have continued attacks on government forces, killing and wounding more than 10,000 since the accord was signed in February.

“That noncompliance dovetails with the other fundamental problem, which is the evident desire of President Trump to pull U.S. forces out of Afghanistan regardless of the circumstances.  Having drawn down U.S. troop levels from 12,000 to 8,600 in accordance with the deal, Mr. Trump pushed for another withdrawal before the U.S. presidential election; as a result, the troop count will be down to 4,500 by November.  A logical course for the Taliban is to stall on the talks while waiting to see if a reelected Mr. Trump – or former vice president Joe Biden – will complete the pullout unconditionally.

“The chance for an Afghan peace will depend on the willingness of the U.S. president to maintain U.S. forces in place until the Taliban show a genuine will to settle…. The Taliban has incentives to settle including a desire for international recognition and aid for future governments.  If the United States stands firm, then the peace process it has initiated will have a chance to succeed.”

China/Taiwan: China started a military exercise near the Taiwan Strait on Friday, in a new warning to the United States and pro-independence forces in Taiwan to coincide with a visit to the self-ruled island by a senior U.S. diplomat, undersecretary of state Keith Krach.  Krach was to meet with Taiwanese President Tsai Ing-wen today.  He is the most senior state department official to visit the island in 41 years.

A Chinese defense ministry spokesman said in a press conference today that the People’s Liberation Army’s Eastern Theatre Command would begin actual combat exercises near the strait “starting today.”

“This is a legitimate and necessary action taken in response to the current situation across the Taiwan Strait and the safeguarding of national sovereignty and territorial integrity,” he said.

Spokesman Ren Guoqiang said: “The Chinese People’s Liberation Army has firm will, full confidence, and sufficient capabilities to thwart all external interference and separatist acts of ‘Taiwan independence’ and resolutely defend national sovereignty and territorial integrity.”

Separately, last Sunday, China’s Defense Ministry blasted a critical U.S. report on the country’s military ambitions, saying it is the U.S. instead that poses the biggest threat to the international order and world peace.

The statement followed the Sept. 2 release of the annual Defense Department report to Congress on Chinese military developments and goals that it said would have “serious implications for U.S. national interests and the security of the international rules-based order.”

Defense Ministry spokesman Col. Wu Qian called the Pentagon report a “wanton distortion” of China’s aims and the relationship between the People’s Liberation Army and China’s people.

“Many years of evidence shows that it is the U.S. that is the fomenter of regional unrest, the violator of the international order and the destroyer of world peace,” he said.

U.S. actions in Iraq, Syria, Libya and other countries over the last two decades have resulted in the deaths of more than 800,000 people and displacement of millions, Qian said.

“We call on the U.S. to view China’s national defense and military construction objectively and rationally, cease making false statements and related reports, and take concrete actions to safeguard the healthy development of bilateral military relations.”

So today, Taiwan scrambled fighter jets as 18 Chinese aircraft buzzed the island, crossing the sensitive midline of the Taiwan Strait, in response to Keith Krach’s visit.  Taiwan has had to scramble frequently in recent months in response to Chinese intrusions, but the 18 aircraft was the largest number to date.

With each such episode, the risks of an accident increase.

Russia: Alexei Navalny posted a photo of himself from a Berlin hospital on Tuesday, sitting up in bed and surrounded by his family, and said he could now breathe independently after being poisoned in Siberia last month.  Germany said laboratory tests in three countries determined he was poisoned with a Novichok nerve agent.

Navalny said he plans to return to Russia as soon as he has can.  He had been in a medically induced coma at the hospital in Berlin and it was not clear what condition he would be in once he regained consciousness.  But officials say he is mentally sharp and “fully aware of what happened and where he is.”  He remains under heavy guard by German police.

It turns out that Navalny’s supporters rushed to the Siberian hotel where he had been staying immediately after he showed symptoms of poisoning, grabbing anything that could possibly be used as evidence – including a water bottle that tests showed was tainted with the highly toxic nerve agent.

In a video posted on Instagram, members of Navalny’s team swiftly donned rubber gloves and scoured his room at a hotel in Tomsk, Siberia, packing evidence into blue plastic bags.  German investigators and then German military scientists determined that the opposition leader had been poisoned with Novichok in his hotel.  Initially, it was thought he might have been poisoned through a cup of tea he had at the airport in Tomsk.  He then got sick on the flight to Moscow.

British Foreign Secretary Dominic Raab, speaking in Washington alongside Mike Pompeo, said he welcomed Navalny’s recovery but that Russia had a case to answer as the use of a chemical weapon was unacceptable.

Meanwhile, candidates loyal to President Putin swept regional and local elections last weekend, demonstrating the Kremlin’s grip on power despite pockets of support for Navalny’s opposition movement.

Belarus: Belarusian leader Alexander Lukashenko said on Wednesday he had asked Russian President Vladimir Putin to supply Belarus with weapons as he faces mass protests over a disputed election.  Lukashenko didn’t specify what kind of weapons he was requesting.

At least 100,000 protesters took to the streets of Minsk on Sunday in one of the biggest demonstrations against the regime.  Police said they detained over 400 people in Minsk alone, with the atmosphere tense.

Twenty-nine countries including the United States and Germany issued a joint statement on Thursday condemning reported internet shutdowns by the government.  “Shutdowns and blocking or filtering of services unjustifiably limit the rights of peaceful assembly and freedoms of association and expression, especially when they lack procedural fairness and transparency,” said the statement released by the U.S. State Department.

At an urgent meeting of the UN Human Rights Council, Ukraine’s foreign minister warned Russia against taking steps that may undermine Belarus’ sovereignty and destabilize the region, while Britain called for sanctions on those in Belarus responsible for the “fraudulent elections.”

Dmytro Kuleba said: “It is heartbreaking to watch the footage of our close neighbors viciously beaten down and arbitrarily detained on the streets of their native cities.

Ana Marin of the UN warned of “another Iron curtain” descending in Europe.

Greece: Greek authorities were struggling on Wednesday to move thousands of migrants made homeless by a blaze at an overcrowded camp into new tents, while fears grow over a coronavirus outbreak on the island of Lesbos.  More than 12,000 people, mostly refugees from Afghanistan, African countries and Syria, were left without a shelter, proper sanitation or access to food and water by the fire that tore through Moria, Greece’s biggest migrant camp.

Officials set up a new tent camp that can hold 5,000, which is not enough.  Greece has been pleading with the European Union to have member states take some of the refugees. Germany said they would take 1,500. Belgium offered to take 100 to 150.  What a mess, plus you have the Covid angle.

Random Musings

--Presidential polling data….

Gallup: Finally, an update.  42% approve of President Trump’s job performance, 56% disapprove; 92% of Republicans approve, 36% of independents (Aug. 31-Sept. 13).  The splits the last time, for a July 30-Aug. 12 survey period, were 42/55, 90, 39.
Rasmussen: 53% approve, 46% disapprove of Trump’s performance (Sept. 18).

--A Fox News national poll puts Joe Biden ahead 51% to 46%, among both likely and registered voters.  Fox had Biden up 49% to 41% back in July.

--A CBS News/YouGov poll of registered voters in Minnesota had Biden leading Trump 50-41.  In Arizona, Biden is ahead 47-44.

--A Washington Post/ABC News poll had Biden leading 57-41 percent in Minnesota among likely voters, while Biden leads by six points in Wisconsin.  Experts say this doesn’t make too much sense in that the margins in the two states have been similar in recent presidential elections, differing by no more than four points in their vote margin since 2000.  [In 2016, Trump won Wisconsin 47.2-46.5, while Clinton won Minnesota 46.4-44.9.]

Biden holds a 52 to 46 percent lead over Trump among likely voters in Wisconsin, according to the Washington Post/ABC survey.  On an important election issue, 51 percent of Wisconsin voters say they support recent protests against police treatment of Black people, while 44 percent say they oppose them.

--A Monmouth University poll of registered voters in Florida has Joe Biden leading Donald Trump 50 to 45 percent.  Biden leads among Latino voters 58% to 32%, while Hillary Clinton won the state’s Latino vote by 27 points, 62% to 35%.

But an NBC News/Marist survey taken a week earlier had Trump leading Biden among Hispanics, 50 to 46 percent, which set off panic in the Biden campaign.

So either Monmouth or NBC/Marist is very wrong.

Separately, Michael Bloomberg is injecting at least $100 million to help Joe Biden’s campaign in Florida.  “Mike Bloomberg is committed to helping defeat Trump, and that is going to happen in the battleground states,” said Bloomberg adviser Kevin Sheekey.  This helps free up funds for other key states like Pennsylvania.

--A New York Times/Siena College survey of key battleground states has Joe Biden leading the president in Arizona, 49-40, in Maine, 55-38, and in North Carolina, 45-44.

--In three high-profile U.S. Senate races in Maine, South Carolina, and Kentucky, Quinnipiac University polls of likely voters found….

Maine: Democrat Sara Gideon leads Republican Senator Susan Collins by a 54-42 margin.  [A NYTimes/Siena poll has Gideon leading Collins by only 49-44.]

South Carolina: Republican Senator Lindsey Graham is tied with his Democratic challenger Jamie Harrison at 48 percent.

Kentucky: Republican Senate Majority Leader Mitch McConnell is handily ahead of Democrat challenger Amy McGrath 53-41.

--A new Associated Press/NORC Center for Public Affairs Research poll shows roughly 7 in 10 Americans think the nation is on the wrong track, only 27% say we’re on the right track, with just 39% approving of how President Trump is handling the pandemic.

Conversely, 78% say they have some or great confidence in the Centers for Disease Control and Prevention.

Overall, Trump’s approval rating sits at 43%.

--New York City Mayor Bill de Blasio ordered a weeklong furlough for about 500 members of his City Hall staff, including himself, as Gotham deals with a projected $9 billion revenue shortfall through the fiscal year ending in June 2022 because of lockdowns ordered amid the pandemic.  He has said he may lay off 22,000 city employees if the city doesn’t get federal fiscal aid or state authority to borrow $5 billion to pay for operating expenses.

At the same time he is struggling to open New York’s schools to in-person learning, with one delay after another.  Elementary school students will do remote-only learning until Sept. 29, middle and high school stay remote through Oct. 1.

Meanwhile, former Mayor Rudy Giuliani excoriated de Blasio for New York’s crime spike during a news conference from the National Women’s Republican Club on Wednesday, described as a “rambling” presentation.

“It’s about one man, de Blasio.  It’s quite clear the worst mayor in history of New York City is the present mayor, by every statistic,” Giuliani said.  “He’s trying to make us Baltimore, Philadelphia, and with the crime rates, we’re starting to chase Chicago.”

But while there have been 321 murders in New York this year as of Sept. 6, this still compares to 649 in 2001 and 2,262 in 1990 (before Giuliani became mayor, the 649 when he left office).

As in facts matter, especially when you read a certain person’s Twitter feed.  I agree with Jerry Seinfeld…New York will be back, but it will take a few years.  Immigrants will fuel the renewal, just as they did during Giuliani’s two terms, which no one talks about.

--Over in New Jersey….

Editorial / Wall Street Journal

“Connecticut Gov. Ned Lamont’s yacht is coming in.  New York City’s descent into disorder and lockdown are driving off the affluent class.  Now with New Jersey Democrats again raising taxes on millionaires, Connecticut is looking like the least bad state in the region.

“New Jersey Gov. Phil Murphy and State Senate President Steve Sweeney struck a deal on Thursday to raise the state’s top marginal tax rate to 10.75% from 8.97% on income of more than $1 million. Two years ago, Democrats increased the top rate to 10.75% on taxpayers making more than $5 million.  Mr. Sweeney then opposed a lower income threshold because it would drive away millionaires.

“But a ‘pandemic hit, and things have changed,’ Mr. Sweeney said Thursday. They sure have, and New Jersey’s bleeding budget can’t afford to lose any millionaires.  In 2018 New Jersey lost a net $3.2 billion in adjusted gross income to other states, including $2 billion to zero-income tax Florida, according to IRS data.  More will surely follow now.

“The millionaire’s tax is projected to raise $390 million in revenue, which Democrats plan to use to give $500 rebates to families earning less than $150,000 and $75,000 for single parents. Sorry, single and childless millennials.

“Eligible taxpayers will receive the rebates next summer, right before New Jersey’s 2021 gubernatorial and legislative elections. Does Mr. Murphy plan to sign the checks like Donald Trump?

“In an amusing aside, New York Gov. Andrew Cuomo’s budget office on Thursday responded to the New Jersey news by issuing a statement boasting that New York City’s combined top state and city income tax rate of 12.6% will still be higher than New Jersey’s new rate.  Mayor Bill de Blasio wants to raise it even higher.

“Meantime, Mr. Lamont has been working to attract high earners and businesses to Connecticut.  Perhaps he should pay his Democratic neighbors a finder’s fee.”

--In a new Pew Research Center poll of 13 nations (all wealthy democracies), a median of 15 percent of respondents said the United States had handled the pandemic well, while 85 percent said the country had responded poorly.

The data suggests that the international reputation of the United States has dropped to a new low in the face of a disorganized response to the coronavirus.

International affairs analysts say it may be difficult to repair the damage to the United States’ standing overseas.  Among some traditional allies like Germany, views of the United States have declined to the lowest levels since Pew began tracking them nearly two decades ago.

“I still think there is admiration for the United States, but it may be waning very quickly – especially if Trump gets reelected,” said Sudha David-Wilp, a senior transatlantic fellow at the German Marshall Fund in Berlin.

In at least seven nations, including key allies like Britain and Japan, approval ratings for the United States plunged to record lows.  In Germany, just 26 percent of the respondents hold a positive view of the United States – the lowest rating since 2003, the year of the U.S.-led invasion of Iraq.

The decline was most pronounced in South Korea, where 46 percent of respondents gave Trump a positive rating in spring 2019, compared with 17 percent this year.  Only 6 percent said the United States did a good job on the pandemic.

This just needs to be said.  Donald Trump has treated South Korea like dirt.  It should piss off any American who understands the world.  [On the other hand, the South Koreans came out ahead in the trade deal Trump loves to tout.]

--In an incredibly depressing sign of the apocalypse, or something along those lines, nearly 20 percent of Millennials and Gen Z in New York believe the Jews caused the Holocaust, according to a survey commissioned by the Conference on Jewish Material Claims Against Germany; a first ever 50-state survey on knowledge of the Holocaust.

For instance, although there were more than 40,000 camps and ghettos during World War II, 58 percent of respondents in New York cannot name a single one.

Additionally, 60 percent of respondents in New York do not know that six million Jews were killed during the Holocaust.

A total of 34 percent of respondents in New York believe the Holocaust happened but the number of Jews who died has been greatly exaggerated or believe the Holocaust is a myth and did not happen or are unsure.

And get this…28 percent in New York believe it is acceptable to hold neo-Nazi views.

Encouragingly, perhaps, 79 percent say it is important to keep teaching about the Holocaust, in part, so that it does not happen again.

--Two Antarctic glaciers that have long kept scientists awake at night are breaking free from the restraints that have hemmed them in, increasing the threat of large-scale sea-level rise.

The enormous Pine Island and Thwaites glaciers already contribute around 5 percent of global sea-level rise.  The loss of the Thwaites glacier has long been deemed critical as it could trigger the broader collapse of the West Antarctic ice sheet, which contains enough ice to eventually raise seas by about 10 feet.

The new findings were published in the Proceedings of the National Academy of Sciences and come from analysis of satellite images.

--This week there were five tropical storms churning in the Atlantic Ocean for the first time in nearly 50 years (1971), with then-Tropical Storm Sally joined by Paulette, Rene, Teddy and Vicky in the Atlantic.

Sally then became a hurricane and devastated parts of Alabama and the Florida panhandle, making landfall at Gulf Shores, Alabama, next to Orange Beach, both suffering very heavy damage.  It was ten years ago that I ventured down to Orange Beach after the BP oil spill to do my own research, and while the beaches were scarred with the oil, I could see why so many loved to vacation there.  So my heart goes out to the business owners in the region who have to start all over again, let alone to all those calling it home year round.

And now there is more activity in the Gulf.     

---

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

God bless America.

---

Gold $1957
Oil $40.97

Returns for the week 9/14-9/18

Dow Jones  -0.03% [27657]
S&P 500  -0.6%  [3319]
S&P MidCap  +0.6%
Russell 2000  +2.6%
Nasdaq  -0.6%  [10793]

Returns for the period 1/1/20-9/18/20

Dow Jones  -3.1%
S&P 500  +2.8%
S&P MidCap  -9.6%
Russell 2000  -7.9%
Nasdaq   +20.3%

Bulls 54.8
Bears
18.3

Hang in there…mask up, wash your hands.

Brian Trumbore