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06/13/2020

For the week 6/8-6/12

[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 1,104

Special thanks to George R. and Bob P. for their ongoing support.

Covid-19 death tolls (as of tonight)

World…427,689
USA…116,825
Brazil…41,901
UK…41,481…really over 50,000, according to experts
Italy…34,223
France…29,374
Spain…27,136
Mexico…16,448…including deaths registered right after this info is posted for the next day

[Worldometers.info]

Covid Bytes

--Thursday saw the, highest number of new cases globally…137,887.  Then tonight, Friday, the figure was 140,917.  That’s more than a bit worrisome.  Europe’s average rate of new infections is way down from its early April peak, but for the rest of the world, Covid-19 remains a huge issue.

The number of new cases in the United States today was 27,221, the highest since May 21!

In the states of California (parts of it), Arizona, Texas, Florida and the Carolinas, there are definitely worrisome signs in case numbers and hospitalizations, and not all of it can be linked simply to better testing, which is why you point to hospitalizations.

Texas, for example, hit a new high in Covid-related hospitalizations this week after becoming one of the first to start reopening from the lockdown.  I heard from a doctor friend in South Carolina this afternoon that they are at 80%+ in capacity there for the first time, and that is highly concerning, as S.C. hit a new high in cases today as well.  The Palmetto state reopened weeks ago.

Much of this was inevitable as we jumpstart our economies but there is still so much we don’t know.  As Dr. Anthony Fauci said the other day during an appearance at a virtual conference, in noting how Covid-19 is much more complex than HIV, a virus he spent his career studying:

“Oh, my goodness.  Where is it going to end?  We’re still at the beginning of really understanding.”

I know many of you saw the pictures of the lungs of the young woman who survived a double-lung transplant after being ravaged by the coronavirus.  It’s horrifying.

Fauci, by the way, blasted the WHO Wednesday, saying an official at the agency was dead wrong when she claimed it was “very rare” for an infected person to transmit the deadly bug to a healthy person.  The official was forced to walk it back.

“In fact,” said Fauci, “the evidence that we have, given the percentage of people, which is about 25, 45 percent of the totality of infected people, likely are without symptoms. And we know from epidemiological studies that they can transmit to someone who is uninfected, even when they’re without symptoms.”

I get into the economic impact of Covid-19 more down below.  For now, we need what we always do…more data.

--The World Health Organization said on Friday that the Americas are bearing the brunt of the global pandemic at present, with four of the 10 worst hit countries in the world.  The disease was described as “highly active” in Central and South America, the WHO’s top emergency expert Mike Ryan said.

Ryan did say that Brazil’s health system was “still coping,” although some intensive care units were at a critical stage and under heavy pressure with more than 90% bed occupancy rates.

And I saw stories today that Brazilians were flocking to shopping malls without masks, urged on by President Jair Bolsonaro (more on him below).

Bolsonaro, by the way, tried to stop publication of Brazil’s Covid data and a Brazilian Supreme Court justice ordered the resumption of publication of same.  This is such a bad guy.

--Mexico’s economy shed over 344,000 jobs in May because of the coronavirus, pushing the number of lost jobs in the last three months above 1 million, though the pace of layoffs is slowing down.  The country is headed towards its worst recession in decades.

Mexico reported a record 4,883 new cases along with a record 708 deaths on Wednesday.

--Residents of Moscow began to resume their normal routines on Tuesday as a lockdown designed to curb the spread was lifted after more than two months, even as the city is reporting over 1,000 new cases daily. Moscow’s nearly 13 million residents are now free to go outside when they want, use public transport and travel across the city in their own vehicles without any restrictions or digital passes.

But critic’s accuse Mayor Sergei Sobyanin of rushing to ease the lockdown in time to allow a Red Square military parade later this month and a July 1 nationwide vote that could extend President Vladimir Putin’s rule until 2036.

--New Zealand appears to have completely eradicated the coronavirus – at least for now – after health officials said Monday the last known infected person had recovered.

The announcement was greeted with joy around the country and means the nation of 5 million people will be among the first to welcome throngs of fans back into sports stadiums, embrace crowded concerts and remove seating restrictions from flights.

It’s been 17 days since the last new case was reported.

But now the country badly needs foreign tourists to jumpstart its economy, and with that will inevitably come issues.  At least the Kiwis are prepared for the challenge.

--As was the case with America’s meat-packing plants, outbreaks of the novel coronavirus are emerging at U.S. fruit and vegetable farms and packing facilities.  While social distancing can be more easily implemented for workers harvesting fruits and vegetables in fields and working outside may reduce some risks for virus spread, plants that package foods such as apples and carrots resemble the elbow-to-elbow conditions that contributed to outbreaks at the meat-packing plants.  By late May, for example, there were more than 600 cases of Covid-19 among agricultural workers in Yakima County, Washington, a majority being in the apple industry.

Monterey County, California, known as “the world’s salad bowl,” reported 247 agricultural workers had tested positive as of June 5.

--My New York/New Jersey area is reopening and our cases and hospitalizations are way down.  We wore masks when we needed to, and most of us still do, especially when in any kind of crowd, and it’s paid off.  As I wrote a few weeks ago, though, because we were all given such conflicting advice early on, we didn’t know it should have been “masks up!” by late March.  For weeks we weren’t wearing them.  Now, every single study has shown their efficacy in reducing the spread.

That said, New Jersey has now officially lost more to the coronavirus than we did in World War II at over 12,500.

Like everywhere else in the country, however, we’re all keeping our fingers crossed that all the mass protests won’t lead to a big spike, both here and across the country.  In another week we’ll have a good idea if it did.

Tackling Systemic Racism in America

Big changes are coming, whether some like it or not.

NASCAR made a big move this week in banning the Confederate flag from its properties, a long-needed, gutsy move. 

“The presence of the confederate flag at NASCAR events runs contrary to our commitment to providing a welcoming and inclusive environment for all fans, our competitors and our industry,” the stock-car racing circuit said in a statement.  “Bringing people together around a love for racing and the community that it creates is what makes our fans and sport special.”

NASCAR’s only African-American driver in NASCAR’s top-flight Cup Series, Bubba Wallace, called on Monday for NASCAR to “get rid of all Confederate flags.” Two days later they complied.  Wallace then went out on Wednesday night and had a terrific race at Martinsville, Va., driving a car featuring the phrase “Black Lives Matter.”

I am a huge fan of Arizona Cardinals star wide receiver Larry Fitzgerald, a future Hall of Famer and University of Pittsburgh grad who I’ve written in my Bar Chat column countless times has a big future in politics, should he opt to go down that road.  He’s a true Renaissance Man, so unlike Donald Trump, a man of great class and knowledge.  He had some of the following thoughts in a New York Times op-ed on Sunday.

“The city of Minneapolis taught me about love.

“I was baptized at New Beginnings Baptist Tabernacle Church, learned to catch a football at Rev. Dr. Martin Luther King Jr. Park, and instilled with values by a loving family and a supportive community.

My mother and father raised us in this beautiful city full of life and diversity.  Minneapolis is home to diverse people from all over the world; Somali and Ethiopian refugees forging new lives, Hmong families building successful businesses, and a thriving arts community that attracts talented performers from around the globe.

“What you’re seeing on the news is not the hometown of my youth….

“For as long as I have known it, Minneapolis has been a city of peace, family and contentment.

“But not right now.

“The events of the last several days have turned Minneapolis, and our nation, upside down.  Injustice, death, destruction, pain, violence, protests, and riots have made it clear – we as a nation are not OK.  We are not healthy. The violent death of George Floyd in police custody is yet another example of a systemic problem we have yet to solve.  A cancer we are failing to cut out.  People and communities are suffering, lives are being lost and futures are being destroyed.

“Growing up, I never personally experienced harassment from the police, but I knew there were issues and I saw situations where people of color were not given the same benefit of the doubt and the same respect that was afforded to others.

“When will this terrible cycle end?  When will love and respect for our fellow man replace hatred and injustice?  When will healing come?

“Sadly, this is not new territory for our America.  The words of Martin Luther King Jr. resonate as clearly today as when he first uttered them in a speech titled ‘The Other America,’ given over 50 years ago.

“So I will continue to condemn riots and continue to say to my brothers and sisters that this is not the way.  And continue to affirm that there is another way.

But at the same time, it is as necessary for me to be as vigorous in condemning the conditions which cause persons to feel that they must engage in riotous activities as it is for me to condemn riots.

I think America must see that riots do not develop out of thin air.  Certain conditions continue to exist in our society which must be condemned as vigorously as we condemn riots.  But in the final analysis, a riot is the language of the unheard.”

“… And so in a real sense our nation’s summers of riots are caused by our nation’s winters of delay. And as long as America postpones justice, we stand in the position of having these recurrences of violence and riots over and over again.”

“We are not listening to one another.  Our winter of delay continues to result in cold hearts and lifeless bodies.  The language of the unheard has broken the silence and our willful deafness has led to death and destruction.  While our nation has struggled under the weight of a biological pandemic we also find our communities ravaged by the insidious disease of injustice.

“People of color across this nation are screaming to be heard….

“When those screams fall on deaf ears the pain of being unheard bears down on your soul….

“The screams of disrespected voices are ringing out in our nation right now.  We must never condone violent riots that take lives and destroy futures but we must also hear the desperate voice of protest that is calling out for justice….

“Systemic injustice births desperation and desperation rarely leads to a healthy outcome.

“But even in the midst of the current tragedy, I’m hopeful.  We have a tremendous opportunity to ensure that all voices are heard….

“There are tens of millions of Americans from every race, religion, background and socioeconomic status that are trying to listen to one another and effectuate change – trying to imagine what it’s like to be George Floyd or Breonna Taylor or Ahmaud Arbery or the people who love them; trying to imagine what it’s like to be a business owner who has lost everything to rioters over the last few days; trying to imagine what it’s like to see through their neighbor’s eyes and live in their skin color.

“We must work together to heal this divide and rebuild our communities by committing to let no voice go unheard.  Our first step must be to listen to one another – to sincerely lean in and hear what the person who is different from us is saying….

“Victims of violence, poverty and injustice, we hear you.

“Communities and lives torn apart by riots, we hear you.

“People of privilege learning a better way, we hear you.

“Mothers and fathers of every race doing the best you can to teach your children to love and not hate, we hear you.

“May God give us all ears to hear so that the cries of the unheard are never again compelled to scream in desperation.”

Finally, former New York Mets outfielder Cleon Jones, who played in the 1960s and ‘70s, was interviewed by the New York Daily News and he talked about growing up in Mobile, Ala., and the racism he faced in the baseball world.

Jones believes people have to reflect on the source of their actions in order to create change.

“Nobody’s born to hate,” Jones said.  “Hate is being passed down from generation to generation.  Until we can break that cycle, we’re going to have situations like we had with George Floyd.”

That’s what worries me most, especially because of the atmosphere in the nation today.  There are good people who understand change has to occur.  There are many others who don’t want to see it, who are now teaching their children that racism is O.K.  We’ll get a good idea of the direction this country is truly headed in at the ballot box come November.

Trump World

--Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff, expressed regret for appearing alongside the president in a church photo op minutes after federal authorities forcibly removed peaceful protesters from the area.

Milley’s admission of regret capped nearly two weeks of outright condemnation of Trump’s leadership amid nationwide protests of racial injustice from some of the nation’s most revered military figures.

And the disagreement continued when Trump sought to shut down efforts by military and congressional leaders to address the legacy of racism by removing the names of Confederate leaders from ten bases.

So there is your broad backdrop for Trump’s visit Saturday to the U.S. Military Academy at West Point, where he will deliver a commencement address to 1,105 graduating cadets.  Neither Milley, nor Defense Secretary Mark Esper, a West Point graduate, is expected to accompany the president.

Milley said in a prerecorded graduation speech to students at the National Defense University that aired Thursday morning that it was important to keep “a keen sense of situational awareness” and that he had failed to do so.

“As many of you saw the results of the photograph of me in Lafayette Square last week, that sparked a national debate about the role of the military in civil society,” Milley said.  “I should not have been there.  My presence in that moment, and in that environment, created the perception of the military involved in domestic politics.”

--David Ignatius / Washington Post…on the looming issue of Election Day

“President Trump, who’s well behind former vice president Joe Biden in most polls, is already setting the table to challenge the result. In a year when mail-in voting will probably be needed as never before because of the health crisis, Trump is claiming such absentee balloting will produce a rigged election.

“Trump last month attacked absentee-balloting plans in Michigan and Nevada as ‘Voter Fraud’ scenarios.  When he later tweeted, ‘There is NO Way (ZERO!) that Mail-In ballots will be anything less than substantially fraudulent,’ Twitter took the unusual step of tagging his message with a warning that pointed users to contrary evidence.

“Trump tried this same delegitimization back in 2016, when most polls predicted he would lose.  He claimed, ‘large scale voter fraud happening,’ and his campaign website pleaded: ‘help me stop Crooked Hillary from rigging this election.’  Even after he won the electoral college, he claimed he had been fraudulently denied a popular-vote win, again without evidence.  As president, he appointed a commission to study the supposed fraud problem, but it disbanded in 2018 after accomplishing nothing.

“ ‘We could very well be headed toward a predictable, disastrous conclusion,’ warns Rep. Adam B. Schiff (D-Calif.), the chairman of the House Intelligence Committee.  ‘If the president’s disparagement of absentee voting leads to one party thinking it’s not legitimate, then the foundation is laid for a sizable refusal to accept the election’s legitimacy.’

“An electoral crisis, added to all our other national problems, seems increasingly likely in November.  We’re on a collision course: The Centers for Disease Control and Prevention in March recommended ‘voting methods that minimize direct contact with other people,’ such as mail-in balloting.  But Trump has derided such measures as unfair.

“How can we protect our democracy from this looming crackup?  Our fate rests with state officials who, in our federalist system, will make and enforce the rules for elections.  Fortunately, like (Andrew) Warner, (the West Virginia secretary of state), they seem to be taking this job seriously and, to an encouraging extent, in a nonpartisan way….

“Here’s the bottom line: Most Americans will have a right to absentee ballots in November, no matter what Trump says.  Counting them will take a week or more – so we’ll have a bitterly divisive post-election period, no matter what.  Let’s be ready for that, vigilant but also patient.

“Forewarned is forearmed.  This will be one of the most important elections in our lifetimes.  State and local officials take the protection of our democratic rights seriously.  And hopefully, they won’t let themselves be intimidated by anyone.”

--President Trump rolled out a plan for combating police brutality Thursday that centered on the idea that cops should use “force with compassion” – an idiotic phrase, especially given the moment and wide-ranging reforms proposed by state and federal lawmakers in the aftermath of the killing of George Floyd.

Offering essentially zero details, Trump said the first part of his agenda is to sign an executive order that will “encourage” police departments across the country to have a standard for using “force with compassion.”  The order, he said, will also see to it that officers are “perfectly trained.”

“That means force, but force with compassion,” said Trump.  “If somebody is really bad, you’re gonna have to do it with real strength, real power.”

The second part of the plan had nothing to do with policing.  Trump said he would seek to provide African-American communities with better access to economic opportunities, school choices and healthcare.

Trump reiterated his belief that “law and order” must be maintained and that situations like Floyd’s were the result of a few “bad apples.”

“You always have a bad apple no matter where you go.  You have bad apples,” he said.  “There are not too many of them.”

There are a lot of them, Mr. President.

Then Trump said, rooting out racism from police departments will be a “quickly” handled task. 

“We’re going to do it very easily,” he said.

Trump did not mention George Floyd by name in his remarks at a roundtable in a megachurch in Dallas. [He did in passing in an interview with Fox News later.]

--Democrats handed Republicans an easy issue for the campaign with talk of “defunding the police,” even if it means to most advocates the reallocation of police budgets to social services including housing and education.  CNN commentator Van Jones made the point that there were many things that police were doing in the course of their day, outside of normal policing and often racking up overtime, and it’s that money, the OT, that could easily be put to better use.  That’s not blowing up the police force.

But the horse is out of the barn…Republicans will have a field day with the topic.

--As I expected, North Carolina (Charlotte) will still be the site of the Republican convention in terms of nominating the party’s candidates for president and vice president, with a limited number of delegates, but the big convention events – namely Trump’s acceptance speech – will be in Jacksonville, Fla., which is now scrambling to overcome concerns about hotel and arena capacity.

The convention will be held Aug. 24-27.

Trump narrowly won Florida and its 29 electoral votes in 2016 by a 49.0-47.8 percent margin.

--As alluded to above, President Trump’s decision to hold his first campaign rally in three months on June 19 in Tulsa, Oklahoma, site of one of the worst massacres of African Americans in U.S. history (May 31-June 1, 1921), is a potentially explosive one.

June 19, or Juneteenth, is also known as Emancipation Day and commemorates the date in 1865 when Maj. Gen. Gordon Granger traveled to Galveston, Texas, to inform residents that President Abraham Lincoln had freed the slaves and that slave owners had to comply with the Emancipation Proclamation.

The Tulsa race massacre, in which an estimated 300 people were killed and scores of businesses and homes were destroyed, came about when a white mob ravaged a thriving African-American business community in the Greenwood District known as the “Black Wall Street.”

Those attending next Friday’s rally will be required to sign a waiver that reads they cannot sue the campaign or the venue if they contract the coronavirus at the event.

--Attorney General William Barr said that the U.S. Secret Service told Donald Trump to go to a secure part of the White House as large protests unfolded outside, contradicting the president’s account of what happened.

“Things were so bad that the Secret Service recommended that the president go down to the bunker,” Barr said Monday evening in an interview on Fox News.

Trump said last week it was a false report that he went to the bunker for his safety.  “I was three for a tiny, little short period of time.  It was much more for an inspection.”

--Trump tweets:

“Our great National Guard Troops who took care of the area around the White House could hardly believe how easy it was. ‘A walk in the park,’ one said. The protesters, agitators, anarchists (ANTIFA), and others, were handled VERY easily by the Guard, D.C. Police, & S.S. GREAT JOB!”

“Seriously flawed presidential candidate, Senator Elizabeth ‘Pocahontas’ Warren, just introduced an Amendment on the renaming of many of our legendary Military Bases from which we trained to WIN two World Wars. Hopefully our great Republican Senators won’t fall for this!”

“THOSE THAT DENY THEIR HISTORY ARE DOOMED TO REPEAT IT!”

“It has been suggested that we should rename as many as 10 of our Legendary Military Bases, such as Fort Bragg in North Carolina, Fort Hood in Texas, Fort Benning in Georgia, etc. These Monumental and very Powerful Bases have become part of a Great American Heritage, and a…

“…history of Winning, Victory, and Freedom.  The United States of America trained and deployed our HEROES on these Hallowed Grounds, and won two World Wars.  Therefore, my Administration will not even consider the renaming of these Magnificent and Fabled Military Installations…

“…Our history as the Greatest Nation in the World will not be tampered with.  Respect our Military!”

“Mattis was our Country’s most overrated General. He talked a lot, but never ‘brought home the bacon.’ He was terrible! Someday I will tell the real story on him and others – both good and bad!”

“Buffalo protester shoved by Police could be an ANTIFA provocateur.  75 year old Martin Gugino was pushed away after appearing to scan police communications in order to black out the equipment. @OANN I watched, he fell harder than was pushed.  Was aiming scanner.  Could be a set up?’

[Just a disgraceful statement from the president.  Gugino, at last word, has brain damage of some kind.  New York Gov. Andrew Cuomo tore into Trump.  “There’s no fact to any of it.  He should apologize for that tweet.  How reckless, how mean, how cruel,” Cuomo added. “What did he think, it was staged?  He thought the blood coming out of his head was staged?”]

“Sleepy Joe Biden refuses to leave his basement ‘sanctuary’ and tell his Radical Left BOSSES that they are heading in the wrong direction. Tell them to get out of Seattle now.  Liberal Governor @JayInslee is looking ‘the fool’. LAW & ORDER!”

[The Seattle story will be a non-event within two weeks.  But someday I’ll tell you what I really think of the Pacific Northwest through my travel experiences.]

“NASDAQ HITS ALL-TIME HIGH. Tremendous progress being made, way ahead of schedule. USA!”

[That was Wednesday.  Thursday, Nasdaq fell 6%.]

“Could it be even remotely possible that in Roger Goodell’s rather interesting statement of peace and reconciliation, he was intimating that it would now be O.K. for the players to KNEEL, or not to stand, for the National Anthem, thereby disrespecting our Country & our Flag?”

“Colin Powell was a pathetic interview today on Fake News CNN.  In his time, he was weak & gave away everything to everybody – so bad for the USA. Also got the ‘weapons of mass destruction’ totally wrong, and you know what that mistake cost us?  Sad! Only negative questions asked.”

“Colin Powell, a real stiff who was very responsible for getting us into the disastrous Middle East Wars, just announced he will be voting for another stiff, Sleepy Joe Biden. Didn’t Powell say that Iraq had ‘weapons of mass destruction?’  They didn’t, but off we went to WAR!”

[Powell, on CNN’s “State of the Union,” endorsed Joe Biden because President Trump has “drifted away” from the Constitution, is a chronic liar and is “dangerous to our country.”  Powell added, “He lies.  He lies about things.  And he gets away with it because people will not hold him accountable.”]

Wall Street, the Fed, and the Economy

First, I just want to get some broad-brush, global economic outlooks out there for the record.

The Organization for Economic Cooperation and Development, a group representing developed nations, sees the global economy contracting 6% in 2020, per its latest forecast, IF a second wave can be avoided.  -7.6% if it cannot.  Without a second wave, the rebound in 2021 will be to the tune of 5.2%.  With one, just 2.8%.

The OECD sees the U.S. economy down 7.3% this year, -8.5% with a second wave, with a 4.1% rebound in 2021 if no second wave, only +1.9% with one.

[The World Bank sees the U.S. economy declining 6.1% in 2020; the Congressional Budget Office pegs it at -5.6%.]

So here’s what we know in the United States.  Despite spikes in coronavirus cases and hospitalizations in some parts of the country, and still high daily numbers overall, even if there is a true second wave in the fall, the economy is not going back into shutdown mode a second time.  We all know that.  We didn’t need Treasury Secretary Steven Mnuchin confirming this on Thursday on CNBC to get the picture.  There will be no doubt, however, that if the situation deteriorates to the point where other parts of the country have an experience like New York and New Jersey had in late March and April, individuals will then make a decision on whether to shelter in place themselves, whether or not to fly, eat indoors, go to sporting events.  And state and local governments will need to make decisions on key items like schools.  All of this could obviously impact the economy negatively.

But nationally we aren’t shutting down again in our lifetime.  Period.

Contained in my statement up above, though, is still a tremendous amount of uncertainty, and that is what Fed Chairman Jerome Powell spoke to in his comments following the Fed’s latest Open Market Committee meeting Tuesday and Wednesday.

The Fed said in its policy statement: “The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term.”

The response: the Fed sees the key overnight interest rate, or federal funds rate, remaining near zero through at least 2022.   The decision to leave that rate unchanged on Wednesday was unanimous.  Officials also promised to maintain the Fed’s bond purchases at least at the current pace of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage-backed securities – a sign the central bank is beginning to shape its long-run strategy for economic recovery.

The Fed is now projecting U.S. GDP will fall 6.5% in 2020, and then rise 5% in 2021 and 3.5% in 2022.  The unemployment rate, currently 13.3%, is projected to decline to 9.3% by year end, which to me is optimistic.

But in his comments at his press conference following release of the formal statement, Chairman Powell said:

“The extent of the downturn and the pace of recovery remain extraordinarily uncertain and will depend in large part on our success in containing the virus….

“A full recovery is unlikely to occur until people are confident that it is safe to reengage in a broad range of activities,” he added.  Powell did say he saw a “modest rebound” or stabilization in the retail and motor vehicle sectors.

Powell began his virtual press conference by acknowledging the widespread protests in the aftermath of George Floyd’s killing that have called attention to racial injustices.

“I want to acknowledge the tragic events that have put a spotlight on (issues of racism),” Powell said.  “There is no place at the Federal Reserve for racism, and there should be no place in our society.”

The Fed’s actions thus far are credited with having helped fuel the extraordinary rally in the stock market, but after a small dip in the market Wednesday following Powell’s remarks (though Nasdaq closed over 10000 for the first time), stocks cratered a whopping 6.9% on the Dow, 1861 points, on Thursday as investors focused on the gloomy parts of the Fed Chair’s remarks, as well as the worrisome spikes in coronavirus cases and hospitalizations in parts of the country.

Needless to say, President Trump wasn’t pleased with the market’s actions and tweeted:  

“The Federal Reserve is wrong so often. I see the numbers also, and do MUCH better than they do.  We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021. We will also soon have a Vaccine & Therapeutics/Cure. That’s my opinion. WATCH!”

Well, of course we are going to have a great third quarter, taken alone, and the president will no doubt be touting “the greatest growth ever recorded.”  But this is going to be after a beyond sickening plunge in the second quarter, which the Atlanta Fed’s GDPNow barometer currently pegs at -48.5%.  As I’ve mentioned before, as more data trickles in for May and June, it’s likely this figure will improve but it is still going to be the worst figure in recorded history of the United States.

I also just don’t see a V-shaped recovery, with all the uncertainty that will prevail heading into the fall.

As for this week’s economic data….

May consumer prices came in at -0.1%, ditto ex-food and energy.  Year-over-year, inflation is running at just 0.1%, 1.2% on core.

Producer prices for May rose 0.4%, -0.1% ex-food and energy; -0.8% vs. a year ago, 0.3% on core yoy.

Lastly, the federal budget deficit for May was -$398.8 billion, following a record deficit of $738 billion in April, meaning for the first eight months of fiscal 2020 (which commenced Oct. 1, 2019), the deficit is $1.88 trillion, compared with $738.6 billion at the same point last year.  The Congressional Budget Office estimated in May that pandemic relief efforts will swell the deficit by $2.2 trillion this fiscal year and another $600 billion in fiscal 2021.

Europe and Asia

The eurozone reported GDP in the first quarter was down 3.6% vs. the fourth quarter 2019, and down 3.1% year-over-year. [Eurostat].  The second quarter should be worse, even though the continent is coming out of its severe lockdown.

Eurostat also reported today on industrial production for the euro area in April, down 17.1% compared with March.  This is the largest monthly decline recorded since the start of the series, significantly higher than the 3% to 4% drops seen in late 2008 and early 2009 during the financial crisis.  In April 2020 vs. April 2019, industrial production decreased by 28.0% in the EA19, also the  largest annual fall ever recorded, exceeding the 21.3% plunge in April 2009.

Brexit: The UK economy shrank at the fastest monthly rate on record in April as the lockdown hit demand and activity in all sectors. Output fell by 20.4%, compared with the previous month, according to data from the Office for National Statistics.  This is by far the largest contraction since monthly records began in 1997 and follows a 5.8% contraction in March, the previous record fall.  The ONS said, “In April the economy was around 25% smaller than in February.”

So on the Brexit front, until today, talks with the EU have not been going well and there was little sign member states were ready to soften Michel Barnier’s negotiating mandate.

But Barnier mentioned that on a key issue, that of Northern Ireland, that the special arrangement for the North – under which it will apply EU customs rules so that checks take place in ports and airports there rather than on the land border with the Republic – had been jointly drawn up and agreed with the British government, and that there was room for pragmatism within them.

“Simplified declarations can be used for large economic operators, supermarkets being one of them,” Barnier said, citing one example.

Barnier insisted he was keen to find a compromise.

So then we learned Friday that the British government is to abandon its plan to introduce full border checks with the EU on January 1st as ministers come under mounting pressure from business not to  compound the chaos caused by the pandemic.

In a significant policy U-turn, Michael Gove, the UK cabinet office minister, has accepted that businesses cannot be expected to cope with Covid-19 and simultaneously face the prospect of disruption at the border at the end of the post-Brexit transition period.

Instead of full checks, the British government will now introduce a temporary light-touch regime at UK ports such as Dover for incoming EU goods, even in a “no-deal” scenario.

However, British officials concede that goods flowing to the EU from the UK are likely to face full checks as they enter France.

In February, Gove announced that goods coming from the EU would face the full range of checks.  It will ease some Irish fears about delays in goods coming from continental markets through the UK to the Republic in the event of no trade deal being agreed between the EU and UK.

Apparently the pharmaceutical industry is among those warning the British government that the pandemic would prevent them from rebuilding the six-week medicine stockpile of 2019, raising fears of medicine shortages in the event of no-deal.

In turn, the UK hopes the EU will reciprocate in some fashion on areas from aviation to trucking permits.

Both sides will step up the pace of their negotiations following talks between Prime Minister Boris Johnson and European Commission president Ursula von der Leyen aimed at breaking the deadlock over their future relationship.

But the fishing rights issue remains a big hurdle as well as rules designed at ensuring a level competitive playing field between the two sides, both key to Brussels.

Separately, Britain is catching heat for new rules requiring all people arriving in the UK to self-isolate for 14 days.  Those arriving by plane, ferry or train – including UK nationals – must give an address where they will self-isolate.  Rule breakers will be fined.

Home Secretary Priti Patel has said the laws were designed “to prevent a second wave” of coronavirus.

But the boss of Ryanair, Michael O’Leary, is among those decrying the rules as nothing more than a “political stunt” and are not a quarantine.

O’Leary told the BBC: “You could be in Sainsbury’s, you could be on the beach, you could be on the golf course in the unlikely event the Home Office calls you – all they will have is a mobile number.”

He claimed the Home Office acknowledges the rules were unenforceable.

Some industries have warned they will be severely impacted by them, and O’Leary warned of devastation.

Turning to AsiaChina’s inflation numbers for May were released with its consumer price index rising at an annualized rate of just 2.4%, down from 3.3% in April.  Food inflation was 10.6%, a 9-month low, with pork prices rising 81.7%.  Non-food inflation was only 0.4%.  Producer (factory-gate) prices fell 3.7% in May year-over-year, the steepest decline since March 2016. This is not good.

May exports fell 3.3% year-over-year, vs. a 3.5% rise in April, while imports fell 16.7% yoy vs. a 14.2% decline the month prior.  This latter number is a reflection of insufficient domestic demand; a further sign of how the Chinese economy isn’t rebounding as quickly as officials hoped it would following the nation’s reopening in April.

But as I note below, at least auto sales are rebounding.  Sunday, we receive key data on retail sales.

Japan said its GDP fell 2.2% in the first quarter, which comes on top of Q4 2019’s slide of 7.2%, that was due to the October sales-tax hike and the trade war between the U.S. and China.

So Japan is officially in its first recession in 4 ½ years.  The second quarter will be ugly as well.

[Separately, Tokyo 2020 CEO Toshiro Muto said on Wednesday that the rearranged Olympics will “not be done with grand splendor,” but will be simplified. The Games, originally scheduled to start next month, were postponed for a year due to the pandemic.]

If you are looking for ‘green shoots,’ South Korea reported that exports in the first ten days of June rose 20.2% vs. a year ago.  Semiconductors were up 22.6% and mobile devices 35.8%.  So this is encouraging.

Street Bytes

--The market suffered its worst week since mid-March, with the Dow Jones falling 5.6% to 25605, while the S&P 500 lost 4.8% and Nasdaq 2.3%.

Nasdaq closed above 10000 for the first time on Wed., before cratering Thursday and finishing the week at 9588, but still up 6.9% on the year, largely on the strength of the following.

Wednesday, shares of both Apple and Microsoft crossed the $1.5 trillion level in market cap; the first time any company has ever hit that valuation level, and the longtime rivals crossed the line together.

Amazon.com also hit a record, reaching a market valuation of $1.3 trillion, while Alphabet (Google) topped the $1 trillion level for the first time since February.  It marked the first time since Feb. 21 that all four tech giants had valuations over $1 trillion at the same time.

The four then had a rough go of it Thursday and finished the week with the following market caps.

Apple $1.46 trillion, Microsoft $1.42tn, Amazon 1.26tn, and Alphabet $965bn.

But what is driving the speculative excess in the market, the highest in 20 years according to options trading metrics?  Small investors…totally against history, as in the impact of the retail investor has been small over the years.  But not today.

Robinhood, a trading app popular with millennials, says it’s seen a 30-percent jump in users this year, to 13 million, despite embarrassing outages in the early days of the pandemic, when volumes overwhelmed its serves.

One hedge fund manager told the Wall Street Journal: “I have seen some friends plowing in through Robinhood or similar apps.  No financial background, feeling like geniuses that they are up so much in the last few months.”

Tuesday, there was a 1,250 percent surge in a little-known Chinese online real-estate company with the name FANGDD Network.  Social media said it resembled FANG – code for Facebook, Amazon, Netflix and Google. The stock went from a Monday close of $9.51 to $129.04 before closing at $47.06, all in one day.  It finished Friday at $11.75.  Insane.

Dave Portnoy, the millionaire founder of Barstool Sports, who has taken up day trading, boasted in a video on Monday: “I’m the new breed.  I’m the new generation. There’s nobody who can argue that Warren Buffett is better at the stock market than I am right now.  I’m better than he is. That’s a fact.”

Here’s hoping Portnoy got his clock cleaned Thursday.

--U.S. Treasury Yields

6-mo. 0.18%  2-yr. 0.19%  10-yr. 0.71%  30-yr. 1.46%

A flight to safety led to big declines in the yields on the 10- and 30-year; in the case of the former, down 18 basis points from 0.89%.

--The net worth of U.S. households saw a record decline in the first three months of this year as the pandemic sent shock waves throughout the economy and financial markets.

Household net worth fell 5.6% in the first quarter from the previous three months to a seasonally adjusted $110.79 trillion, the Federal Reserve said Thursday.  That was the largest single-quarter drop in records going back to the early 1950s.

Most of the decline resulted from a $7.8 trillion drop in the value of directly and indirectly held corporate equities.

--Oil’s rally stalled after a deal by OPEC and its allies to extend production cuts was offset by the prospect of increased output from Libya and U.S. shale producers.

West Texas Intermediate, the benchmark for U.S. crude, briefly climbed above $40 a barrel, its highest price since early March.

The new deal, struck Saturday by OPEC+ (I apologize…last time I wrote I thought the meeting was Monday), calls for 23 countries to collectively reduce output by 9.6 million barrels a day until the end of July, amending and extending the historic agreement sealed in April.  But Libya restarted production at its largest oil field (which adds about 300,000 barrels a day), while Mexico refused to continue with output curbs (100,000 barrels).  Plus some American producers are turning the taps back on…though investment in new drilling in the U.S. has dried up, at least for the moment.

Then Thursday, as the overall market tanked, oil did as well, and it ended the week at $36.56.  it didn’t help that the Energy Information Administration said earlier that U.S. crude oil stockpiles surged by 5.7 million barrels last week to a new record high of 538.1 million barrels.

Today, Baker Hughes reported the U.S. oil rig count fell for a 13th straight week to 199, the lowest level since June 2009.

--A reality check was offered in the form of BP’s announcement it was cutting almost 10,000 mostly office-based jobs.  This would represent about 14% of its workforce. 

“We are spending much, much more than we make – I am talking millions of dollars, every day,” BP CEO Bernard Looney said on Monday.

Previously, Chevron Corp. said it plans to reduce its nearly 45,000 workforce by as much as 15%, and Schlumberger Ltd., the world’s largest oil-field-services company by revenue, said it cut 1,500 jobs in North America in the first quarter.  Rival Halliburton Co. slashed about 1,000 jobs at its Houston headquarters.

--Airlines are set to lose $84 billion as the coronavirus pandemic reduces revenue by half to mark the worst year in the sector’s history, the International Air Transport Association (IATA) forecast on Tuesday.  With most of the world’s airliners currently parked, IATA said revenue would likely fall to $419 billion from $838 billion last year.  “Every day of this year will add $230 million to industry losses,” IATA Director General Alexandre de Juniac said. 

IATA forecast a rise in 2021 revenue to $598 billion.  Passenger numbers are seen falling to 2.25 billion this year before rising to 3.38 billion in 2021, still more than 25% below 2019 levels.

Even in markets where Covid-19 infection rates have fallen sharply, airlines still face a patchwork of travel restrictions and wary consumers, such as the 14-day quarantine for arriving passengers introduced by Britain this week.

--Boeing Co. shares skyrocketed to above $230, Monday, on investor optimism on the reopening of the U.S. economy and a revival in air travel.  Then reality hit in the form of continuing news such as that above and that which follows, as well as spikes in the coronavirus in both the U.S. and in other parts of the world that created further uncertainty.  By week’s end, Boeing stock had closed at $189.

Boeing did say it expects to conduct its 737 MAX recertification flight by end of June.

--Alaska Airlines is preparing to shed as many as 3,000 jobs from its 23,000-strong work force as it projects a slow recovery from the rapid decline in air travel.

“Things will likely not go back to pre-Covid levels in the next 12 months,” Alaska Air Group president Ben Minicucci in a video interview.  “We see a smaller company in 2021. We see a smaller industry, in fact.  We think we’ll be smaller by about 3,000 people.”

Minicucci also said the airline is in talks with Boeing over when it may take delivery of its first 737 MAX jets once the grounding is lifted, a development now expected in the fourth quarter.

Alaska has orders for 32 MAX-9s, with options for 37 more.  At the end of March, the plan was to take three of those jets this year, with another seven MAX deliveries pushed out into 2021.  Minicucci said it’s hard to say now if the airline will take any MAXs in 2020.

So this is just one example of the further issues Boeing faces with the MAX and the current industry environment.

Alaska Air, by the way, went from carrying 130,000 passengers a day to a trough of just 5,000.  Traffic is now back up to around 24,000 passengers per day, with revenue down 80% vs. a year ago.

--The TSA checkpoint travel numbers for Thursday, June 11, showed the total number of travelers in the U.S. at 502,209 vs. 2,675,686 for the same day last, 19%, but better than the prior week’s 15%.

--Boeing supplier Spirit AeroSystems Holdings Inc. announced on Wednesday a 21-day layoff for staff doing production and support work for Boeing’s 737 program.  Spirit, which makes the 737 fuselage, said the temporary layoffs and furloughs of roughly 900 workers at its Wichita, Kansas, facility would be effective June 15.

--Planemaker Bombardier Inc. is to cut up to 600 jobs in its Northern Ireland operations, as part of plans announced last week to slash 2,500 jobs or about 11% of the workforce in its global aviation unit.  The Canadian firm, which produces wings for Airbus’s A220 jet in Belfast, is the largest high-tech manufacturer in Northern Ireland with a workforce of around 3,500.  A huge blow for this small region.

--Macy’s said that 450 department stores that have reopened as of June 1 are performing better than it anticipated.

Macy’s hasn’t completed its first-quarter financial statements yet but it announced it expects sales of $3.02 billion compared to $5.50 billion a year earlier.  The company is nonetheless optimistic it is cleaning up its inventory and is gearing up for the holiday season, which as CEO Jeff Gennette said, “will be crucial.”

But Macy’s did close on approximately $4.5 billion of new financing, some of which will be used to repay outstanding borrowings under an existing $1.5 billion unsecured credit agreement.

--Coresight Research said the U.S. could see 20,000 to 25,000 store closures as a result of the pandemic.  Coresight’s data also indicated that 55 percent to 60 percent of these reside in malls.

Earlier 2020 estimates by Coresight predicted just 15,000 stores would shutter this year.

25,000 closures would shatter the record set in 2019, when more than 9,800 stores closed their doors for good.

--So in keeping with the above, the world’s largest retailer of diamond jewelry says it will not reopen at least 150 of its North America stores that were temporarily shuttered in March due to Covid.

Signet Jewelers, which operates 3,172 stores globally primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria of Jewelry and Piercing Pagoda, also plans to close an additional 150 stores by the end of its fiscal year, which ends in February 2021.

“Landlord discussions, including rent deferrals and abatements, as well as store level analysis, remain ongoing as the Company assesses the future shape of Signet,” the company said in a news release.  “Importantly, while we continue to optimize our store base, physical locations remain a core and valued aspect of the Signet customer experience.”

Yes, as you know, many of Signet’s stores are in malls.  I have a favorite Kay store in a mall near me where I can get watch batteries replaced cheaply vs. the stores in downtown Summit and I love their staff…just cool kids, minorities.  Hope it survived.

--And then you have the nation’s largest mall owner backing out of a $3.6 billion deal to buy a major rival. Simon Property Group announced it would buy Taubman Centers in early February, just weeks before the CDC announced the first known case of coronavirus in the U.S. Clothing stores and malls nationwide were ordered to close the following month.

Simon said that Taubman is uniquely vulnerable as stores reopen because most of its properties are indoor malls that many consumers will avoid.  Simon also said Taubman broke its contract obligations by taking on more debt during the pandemic rather than cutting costs.

Taubman plans to fight Simon, calling its legal claims “invalid and without merit.”

The coronavirus has been devastating to those with a big mall footprint; J.C. Penney, Neiman Marcus and J.Crew having all filed for bankruptcy protection this year.

--Starbucks is closing 400 company-owned locations over the next 18 months, while also speeding up the expansion of “convenience-led formats” such as curbside pickup, drive-thru and mobile-only pickup locations.

“As we navigate through the Covid-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers,” Starbucks CEO Kevin Johnson said in a news release Wednesday.

While Starbucks is closing 400 locations, it still plans to open approximately 300 new stores in its current fiscal year, down from its original goal of 600.

--Dunkin’, a unit of Dunkin’ Brands Group, said on Monday its franchisees are seeking to hire up to 25,000 workers as it prepares for higher demand, with U.S. states reopening after months-long lockdowns to contain the spread of the coronavirus.

Dunkin’, which has about 90 percent of its restaurants open, said new jobs include front-of-counter to managerial roles at restaurants and added that it was committed to diversity and inclusion.

--Best Buy is planning to lift Covid-19-related restrictions at hundreds of stores, allowing customers to “safely and freely shop” at the majority of its stores without an appointment, while bringing back some 9,000 furloughed employees.  Beginning on June 15, more than 800 locations will allow limited numbers of shoppers inside, although it will enforce social distancing rules and keep locations at 25% capacity.

--China’s auto sales were up by double digits in May, as pent-up demand and promotions extended April’s rebound.

Sales totaled 2.19 million, the government-backed China Association of Automobile Manufacturers said Thursday, up 14.5% from a year earlier.  April’s 4.4% year-over-year rise had ended 21 months of sales declines.

Sales for the first five months of the year were down 22.6% from a year ago.

--Britain has now gone two full months without burning coal to generate power.  A decade ago about 40% of the country’s electricity came from coal.

When Britain went into lockdown, electricity demand plummeted and the National Grid responded by taking power plants off the network.  The four remaining coal-fired plants were among the first to be shut down.

--Johnson Matthey, a British chemical firm, said it expects to cut about 2,500 jobs globally.

--Shares in Lululemon Athletica fell 4% after the retailer disclosed lower earnings and profits than expected, choosing not to release figures on sales at stores open at least a year.

Lululemon said it wouldn’t provide comp-store sales results for the quarter, stating that with states closed, “comps are not currently representative of the underlying trends of its business” and that the numbers aren’t “useful to investors in understanding performance.”

The stock had been up, however, 33% before Friday’s action, as investors touted the company’s ability to benefit from the pandemic, with consumers focused on health and wellness (and indulging in yoga pants while working remotely).

The company did say that direct-to-consumer sales climbed 68% year-over-year, and accounted for 54% of revenues, up from just over a quarter of sales in the year-ago period.

As of Wednesday, the company had 295 stores open.

--CrossFit CEO Greg Glassman announced he was stepping down following outrage over his inflammatory statements about the death of George Floyd.

Glassman’s statement came after BuzzFeed News published an article detailing a Zoom call in which Glassman told gym owners and staffers that “We’re not mourning” Floyd’s death.

The call was held on Saturday, hours before Glassman fired off an insensitive tweet about Floyd, sparking a quick backlash, with critics accusing Glassman of racism and saying he made light of Floyd’s police-involved killing.

--Adidas AG said it is increasing the number of black employees and investing $20 million in black communities after some U.S. employees complained the company was profiting off black culture without doing enough to help them.

The sportswear giant said a minimum of 30% of all new positions in the U.S. at Adidas and Reebok will be filled with black and Latino people and that it would finance 50 university scholarships for black students each year over five years.

“The events of the past two weeks have caused all of us to reflect on what we can do to confront the cultural and systemic forces that sustain racism,” said Adidas CEO Kasper Rorsted.

Some black employees have complained that the German company is far from equitable.  Neither its six-person executive team nor its 16-person board of directors includes a black member.

--Since George Floyd’s death on Memorial Day, CNN’s prime-time audience is up 238 percent over last year, according to Nielsen.  Fox News is up 61 percent and MSNBC 40 percent.

Fox News remains the most-watched cable network, but CNN has vaulted past MSNBC.  For last week Fox News averaged 3.86 million viewers, CNN 2.46 million and MSNBC 2.2 million.

ABC’s “World News Tonight” averaged 9.4 million, NBC’s “Nightly News” was second at 8.3 million and the “CBS Evening News” had 5.8 million.

--Last Friday Fox News aired a stunning graphic during “Special Report with Bret Baier” that correlated stock market gains following notable tragic events involving African-Americans.

The bar graph illustrated the percentage change in the S&P 500 one week after the 2014 police shooting of Missouri teen Michael Brown, the 1992 acquittal of cops charged with beating Rodney King, Martin Luther King Jr.’s 1968 assassination and George Floyd’s recent death in police custody.

Viewers were outraged.  Had I seen it I would have been outraged and noted it last WIR. 

A Fox News spokesman said: “The infograph…should have never aired on television without full context.  We apologize for the insensitivity of the image and take this issue seriously.”

Foreign Affairs

China / Taiwan: Taipei test-fired missiles off  its eastern and southern coasts as part of its missile development program designed to bolster its defense against China.  There will be other missile tests in the coming days as tensions mount between the two.

Australian Prime Minister Scott Morrison said that he would not be intimidated or give into coercion when asked on Thursday whether Australia would keep taking hits on exports from major trading partner China.

Diplomatic tensions between China and Australia have worsened after Australia called for an international inquiry into the source and spread of the coronavirus, angering Beijing.  Australia and the European Union have been leading an effort for an independent review and the World Health Assembly voted last month to support such an effort.

China has in recent weeks banned Australian beef imports and imposed tariffs on Australian barley.

North Korea: Kim Jong-un and his aides have made some harsh statements on U.S.-North Korean relations the past week.  Kim has no interest in maintaining a good relationship with Donald Trump, it was reported on the two-year anniversary of the leaders’ first summit.

The regime announced it sees no improvement in relations and says U.S. policies prove Trump’s administration remains a long-term threat to the secretive state and its people.

North Korean Foreign Minister Ri Son Gwon made a statement carried by state news agency KCNA, in which he slams a “hypocritical empty promise” made by Trump at the historic meeting two years ago in Singapore.

Ri said in retrospect the Trump administration appears to have been focusing on only scoring political points while seeking to isolate and suffocate North Korea, as well as threatening it with preemptive nuclear strikes and regime change.

Tuesday, North Korea said it would sever hotlines with South Korea as the first step toward shutting down all contact after days of lashing out at South Korea for not stopping defectors from sending leaflets and other material into the North.  On Wednesday, South Korea said it would take legal action against two organizations that conduct such operations.

Kwon Jong Gun, director-general for U.S. affairs at North Korea’s Foreign Ministry, said, “I am sick of the two-sidedness of the U.S. who is eager to stop inter-Korean relations when it shows sign of progress, but acts up when it seems to sour.  Not only would this be in the interest of the United States, but also be beneficial for a successful presidential election ahead,” Kwon said, telling the U.S. “to keep its mouth shut” unless it wants to go through “something terrible.”

It is unclear what North Korea would do to disrupt the election or cause problems for Trump’s re-election campaign.

But it seems clear to me that North Korea will soon be conducting more missile tests, and possibly a long-range ballistic missile test to once again prove it can hit the U.S.

It also seems clear that despite having said it has no confirmed cases of the coronavirus, experts are highly doubtful.  South Korea’s main intelligence agency said an outbreak there cannot be ruled out.

Israel: The Palestinian Authority said that if Israel annexes part of the West Bank on July 1, the PA will declare a Palestinian state based on the armistice lines from before the 1967 Six Day War and call on the international community to recognize it.

Speaking to members of the foreign press, Prime Minister Mohammad Shtayyeh also said he would expect the international front to impose sanctions on Israel if such a move was made.

“We are facing the moment of truth: nowhere on earth can we live with this annexation,” he threatened.  “If Israel goes to annexation, it is a different day for us…Annexation is an existential  threat to our future.”

Prime Minister Benjamin Netanyahu and Alternate Prime Minister Benny Gantz signed an agreement on April 20 that outlines the first dimension of annexation in the West Bank.  The agreement was based on support by the United States and its “Deal of the Century” peace plan, which President Trump rolled out at the end of January and allows for Israel to annex some 30% of the West Bank.

So look for fireworks in a few weeks.  Annexation would involve larger settlement blocs and/or the Jordan Valley.  Shtayyeh made clear, “All Jewish settlements on Palestinian territory are illegitimate and illegal,” he said.

Syria: President Bashar al Assad issued a decree on Thursday dismissing Prime Minister Imad Khamis from the post he had occupied since 2016, state media said. Assad designated engineer Hussein Arnous as his replacement. No reason for the sudden move was given but the country is in the throes of a deep economic crisis, with the currency plunging to record lows in recent days, aggravating hardships for ordinary Syrians.

Lebanon: Speaking of a plunging currency, protests have been escalating in Lebanon as the pound has tumbled to record lows, having lost 70% of its value since October.  The prime minister called for an emergency cabinet meeting to discuss the economic crisis.

Protests began last October and have grown again after a pause during the coronavirus lockdown.

Many Lebanese citizens who rely on hard currency savings have fallen into poverty, their plight worsened by the pandemic.  The government said tax revenue fell 12.5% in the first quarter, compounding issues.

Iran: An Iranian citizen who provided information to U.S. and Israeli intelligence services on the whereabouts of Iran’s slain top commander Qassem Soleimani will be executed soon, Iran’s judiciary said on Tuesday.

Russia / NATO: According to the Wall Street Journal, by President Trump’s order, the number of American troops in Germany is to be cut to 25,000 from 34,500 in the coming months.  German Foreign Minister Heiko Maas said Germany would take note of the decision, if confirmed.  “We value the cooperation with U.S. armed forces, which has grown over decades,” he told the Bild am Sonntag newspaper.  “They are in the interests of both our countries.”

Asked about German relations with the U.S., he replied: “It’s complicated.”

Allies of German Chancellor Merkel in the German Parliament assailed Trump more forcefully.

“The plans show once again that the Trump administration neglects an elementary leadership task: the involvement of allies in decision-making processes,” said Johann Wadephul, deputy leader of Ms. Merkel’s ruling conservative bloc in Parliament.  “All benefit from the cohesion of the alliance, only Russia and China from discord.”

Some 50,000 U.S. military personnel backed by billions of dollars of U.S. investment would remain across Europe and, as a senior U.S. official said last Friday, the large contingent in Germany is in any case less critical now thanks to increased military spending by other NATO countries.

George F. Will / Washington Post

“There are at least 104,149 U.S. military personnel who will not be leaving Europe. They rest in military graves, testimony to the cultural affinities and strategic vulnerabilities that produced the transatlantic alliance NATO, now 71 years old.

“Intelligent, informed, public-spirited people can support the policy, announced last week, of removing by September about one-third of the 34,500 U.S. troops stationed in Germany.  Forces there will be capped at 25,000.  Some might be moved elsewhere, perhaps to Poland.

“The difficulty of assessing this policy illustrates the toll taken by the inability to trust – it is now unreasonable to trust – the character, judgment and veracity of the president or his employees who interpret him to the public. The default assumption must be that this new policy primarily expresses presidential pique, which is always plentiful.

“Granted, it is reasonable to pressure Germany, which spends 1.38 percent of its gross domestic product on defense, to reach NATO’s target of 2 percent before, as Germany plans, in 2031.  But it also is reasonable to note the following:

“Angela Merkel, who has 30 years of experience in politics, including 15 years as Germany’s chancellor, and who has a doctorate in quantum chemistry, has bad chemistry with the first U.S. president with no prior government experience, civilian or military, and the first to designate himself a genius. Although the redeployment reportedly has been contemplated for a while, the New York Times reports that ‘a person briefed on the planning said that it had not been vetted by the National Security Council’s traditional policy deliberation process.’  It was announced, perhaps impulsively, after Merkel’s refusal to attend the Group of Seven meeting that President Trump wanted held in Washington at the end of this month.  (Trump’s suggestion to permanently enlarge the G-7 by adding Russia was stymied by Britain and Canada, who impertinently reminded him that they have something to say about this.)

“The redeployment gratifies Vladimir Putin, who since Russia’s 2014 annexation of Crimea has been slowly and not very stealthily dismembering Europe’s geographically largest nation: Ukraine.  Putin, the other world figure who is a cauldron of resentments, has a special grievance against NATO for its role in the Soviet Union’s demise, which he considers ‘the greatest geopolitical catastrophe of the century.’ He surely has enjoyed Trump’s denigration of NATO and would relish the alliance’s disintegration.  This could be accomplished by proving that Article 5 of the NATO pact has become a nullity: ‘The Parties agree that an armed attack against one or more of them shall be considered an attack against them all.’  Neither Putin, nor the Baltic states, nor NATO’s members can assume that Article 5 is among the few obligations that Trump takes seriously.

“Germany had not been officially notified of the redeployment when the Wall Street Journal reported it.  Trump probably believes that manners are for weaklings, but they do lubricate life’s frictions….

“Trump is terrified of appearing weak.  Polls indicate an increasing probability that he will slink away a loser.  He makes some national security decisions from petulance.  And he is fascinated with the military as a presidential toy for his amusement, self-expression and political posturing (e.g., the testosterone spill in Lafayette Square).  So, this might be pertinent:

“During the Nixon administration’s final days, when the president was distraught and erratic, Defense Secretary James R. Schlesinger instructed the most senior leaders of the armed services not to obey presidential orders without first consulting him or Secretary of State Henry Kissinger.  One hopes that the Trump administration’s responsible officials, however few they are, remember this episode in the final seven months of a president who is not waving.”

Editorial / Wall Street Journal

“The Chinese threat to democratic values extends far beyond the Pacific, and the U.S. needs allies across the world to resist. That’s one of many reasons President Trump’s partial withdrawal of U.S. troops from Germany would be damaging….

“Deterring Russian aggression is one purpose of the U.S. presence.  But the U.S. can also respond to far-flung threats faster thanks to its German bases.  U.S. Africa Command is based in Stuttgart, while other U.S. facilities support American efforts in the Middle East.  This lets the U.S. project power while maintaining a smaller presence in dangerous regions.

“Withdrawal is a gift to Vladimir Putin, who delights at divisions in NATO and has done nothing to warrant a drawdown of U.S. forces.  The Russian military said (last) Friday it is deploying a brigade with advanced equipment to the country’s west.  It’s a reminder that Russia, despite being an economic backwater, still poses a significant military threat to Europe.”

On a totally different issue, back on May 29, diesel oil started leaking from a storage tank near Norilsk in Russia’s Arctic north; so far at least 21,000 tons contaminating the Ambarnaya river and surrounding subsoil.  It is the worst accident of its kind in modern times in Russia’s Arctic region.

Investigators believe the storage tank sank because of melting permafrost, which weakened its supports.  The Arctic has had weeks of unusually warm weather, probably a symptom of global warming.

The power plant where it happened is run by a subsidiary of Norilsk Nickel, the world’s leading nickel and palladium producer.

So the oil then polluted a large freshwater lake, Lake Pyasino, which serves as the basin for the Pyasina river, which flows to the Kara Sea, part of the Arctic Ocean.

Last I saw, officials said they could prevent the spill from getting into the river.  If it hit the Arctic Ocean, this is an immense environmental catastrophe.

But you also know the huge issues presented by melting permafrost all over.

Mali: Last weekend, France said it had killed the leader of al-Qaeda in north Africa, Abdelmalek Droukdel, in an operation in Mali.  French forces also captured a senior Islamic State group commander in Mali.

So Viva la France!

Brazil: Editorial / Financial Times

Brazil’s last military dictatorship lasted just over two decades and ended in 1985 amid economic chaos and spiraling foreign debt.  It left deep scars from the persecution and killing of hundreds of political opponents, the exile of thousands more and widespread censorship.

“Latin America’s biggest nation has made great strides since.  A new constitution in 1988 laid the foundations for a democratic order.  The military withdrew from politics and won respect as a professional body serving elected presidents and carrying out peacekeeping missions abroad.  Newly powerful civilian institutions – the supreme court, congress and vibrant, independent media – flexed their muscles to such an extent that they forced two presidents from office for misconduct.

“These institutions have now attracted Mr. Bolsonaro’s ire. He is particularly angry about a Supreme Court probe into an alleged fake news operation involving his sons. The president has been incensed by an opposition request for his mobile phone to be searched for evidence in a separate inquiry.  Ominously, one of the generals in his government, Augusto Heleno, warned of ‘unpredictable consequences for national stability’ if the Supreme Court were to uphold the search request.

“Brazilians are now concerned the Mr. Bolsonaro may be attempting to provoke a crisis between the executive, the legislature and the judiciary to justify military intervention.  His falling poll ratings and mounting problems with the coronavirus pandemic…are hurting his chances of re-election.  Hopes of economic reform have evaporated and investors are voting with their feet, with large outflows of capital.

“So far, Brazil’s institutions have withstood the onslaught, with strong public support.  It is unlikely the army would back a military takeover to install Mr. Bolsonaro as an autocrat.  But other countries should take note: the risks to Latin America’s largest democracy are real, and they are growing.”

Random Musings

--Presidential tracking polls….

Gallup: 39% approval of Trump’s job performance, 57% disapproval; 85% of Republicans approve, 39% of independents (May 28-June 4).  Big drop from the last figures for May 1-13; 49/48, 92, 46.  The 85% of Republicans approving is the lowest since Sept. 2018.  But then some of us wondered how the heck back in mid-May, President Trump’s approval rating was 49%.  We have a long, long way to go to November.
Rasmussen: 43% approval of Trump’s performance, 55% disapproval (June 12).  Wow!

--A new CNN poll conducted by SSRS finds President Trump with an approval rating of 38%, down 7 points in the last month, while 57% disapprove.  That’s his worst job approval rating in this survey since January 2019.

Among registered voters, Joe Biden now has a 14-point margin over the president, 55% to 41%.

84% say the peaceful protests are justified in response to police violence against African Americans.

Two-thirds call racism a big problem in America today, up from 49% who said so in a 2015 CNN/Kaiser Family Foundation survey.

63% feel Biden would do a better job on the issue, just 31% choose Trump.  Among black voters, Biden is strongly preferred: 91% say he would do a better job on the issue and just 4% feel Trump would.

--A new Wall Street Journal/NBC News survey gives President Trump a 45% approval rating (53% disapprove), down 1 point from April.  Since the midterm elections, Mr. Trump’s approval rating has never dipped below 43% and has never risen above 47%, according to 18 polls during that time, which is remarkable.  [The Gallup poll had a 10-point swing just this last one.]

When asked whom they would choose “if the presidential election were held today,” voters responded 49% for Biden vs. 42% for Trump, the rest unsure or choosing neither.

The survey also posed the question “When it comes to the country these days, do you generally feel that things in the country are…,” to which 80 percent of respondents chose “out of control” versus 15 percent who chose “under control.”

Among Republicans, 48% said they were more concerned about the protests than the circumstances of Mr. Floyd’s killing, while 81% of Democrats held the opposite opinion.

One more…55% of voters disapproved of Trump’s handling of the virus, up from 52% in April and 51% in March.

--Five states held primary elections Tuesday but problems in Georgia took center stage.

Minnesota Dem. Sen. Amy Klobuchar, who has been pressing legislation designed to make it easier for the states to employ absentee balloting on Nov. 3, said in a statement:

“Today in Georgia, thousands of voters were met with long lines and confusion.  In America, people shouldn’t have to wonder if voting machines will be operational, if their mail-in ballot will arrive in time, or whether they will have to wait hours in line to exercise their right to vote.”

Congress must “make sure states have the resources they need to give Americans options to make their voices heard at the ballot box.”

Georgia voters were faced with fewer polling places due to the coronavirus and a shortage of poll workers, many of whom didn’t know how to operate the new voting machines.

--A case for Joe Biden….

[Literally an hour after I posted last Friday we received word Biden had passed the 1,991 pledged delegate threshold to become his party’s nominee.]

Kathleen Hicks and Michele Flournoy / Defense One

“America is in crisis, and our national security is becoming a casualty. President Donald Trump’s abject failure to lead has left us weaker as a people and as a global power.  The world watches our overdue reckoning with systemic racism and they see a president with an impulse for photo ops and force.  They watch, and see things like an American police officer beat an Australian cameraman after Trump tweets ‘when the looting starts, the shooting starts.’  They watch, and America’s international standing suffers. Allies and partners wonder whether this America will stand with them to meet common threats to free people.  Autocrats wonder if this America will look away when freedom is repressed and U.S. interests are threatened.

“The United States needs a new president, one who seeks to heal our divisions, grow Americans’ prosperity, and strengthen our society.  When we are stronger together at home, we can advance our security interests abroad.

“The next five years will be pivotal for U.S. national security. The coronavirus pandemic lays bare the fragility of our health security.  Climate change threatens generations of Americans. And authoritarian states are developing sophisticated weaponry, flouting other nations’ sovereignty, killing, jailing, and interning their own people, and leveraging modern technology to undermine our democracy.  We must build a new American foreign policy fitted to the global challenges we face.   Three imperatives stand out.

“First, we must secure America’s edge in the global economy by investing more substantially in the drivers of U.S. competitiveness: science and technology, research and development, STEM education, access to higher education, 21st century infrastructure like 5G-capable networks, clean energy, and a robust public health system.  We also need a smart immigration policy.  The United States should once again welcome foreign-born talent that pose no risks to our national security and encourage them to stay and build enterprises here in America.  Yes, we must protect key technologies essential to our security, but we can do so while also maintaining the open economy that drives our prosperity.  This is a moonshot moment and we need the national leadership, call to action, and smart investment plans to inspire and enable America to recover, compete, and win.

“Second, we must repair the damage to our alliances.  From tackling climate change to ensuring the integrity of international borders, our network of alliances magnifies our influence and multiplies the resources at our disposal.  Trump is squandering this unique strategic advantage….

“Third, we need a national security enterprise that is matched to future challenges.  Civilian capabilities form the centerpiece of America’s influence abroad, beginning with an expanded, experienced, and diverse diplomatic corps… Innovation in our military capabilities is also vital.  Chinese and Russian defense investments and activities threaten our ability to secure American interests to a degree unseen in thirty years.  Today, the Defense Department is not keeping pace with these developments, even as the Trump administration has increased defense spending year-over-year.  The United States must out-think and out-innovate its military competitors rather than simply seek to outspend them.

“This agenda requires skilled leadership in the White House.  It requires:

The ability to unify us rather than drive us apart: We agree with former Defense Secretary Jim Mattis. The nation needs a president who can help the country transcend its deep divides and restore rather than destroy the respectful civic discourse on which our democracy depends.

Experience….

Disciplined decision-making….

Commitment to putting the needs of the country before his own….

Respect for the core tenet of a non-partisan military: We need a president who understands that the armed forces take an oath to support and defend the Constitution, not to serve as partisan pawns and political backdrops….

“With years to meet these fitness standards, Donald Trump has failed.  He doesn’t pass muster for company command, let alone for commander in chief.  We will need Vice President Joe Biden to rebuild global trust in the credibility of America’s promises and the strength of our will to uphold them.  He can be the commander in chief the American people need and deserve.  Our national cohesion and security can’t wait another five years.”

--Editorial / USA TODAY

Mitt Romney has been showing the kind of political courage and independent thinking that is rare in an era of hyperpartisanship, particularly within the Republican Party.

“He was the only Republican in either chamber to vote against President Donald Trump on impeachment.  He has joined former Secretary of State Colin Powell in refusing to back Trump’s reelection.  And he appears to be the only GOP member of Congress to take part in one of the many anti-racism protests sweeping the country.

“While we have no special insight into Romney’s motivations, we’d be very surprised if this were some effort to rebrand himself as a moderate.  The Utah senator, and former GOP presidential candidate, is a conservative – opposed to abortion and supportive of free enterprise, robust trade, a strong national defense and social policies that generally reflect traditional values.

“Romney is not a politician departing the Republican Party but one trying to save it  He is saying and doing things that other Republicans would like to join in on, but can’t without risking the wrath of Trump supporters in their next primary election.

“Romney knows that today’s GOP is on an unsustainable path, built on a base shrinking in numbers while increasing in resentment.  The Republican Party has become three things, none of them good:

“A cult of personality in which lifelong public servants are forced to pay obeisance to a lawless, petty and incompetent leader…

“An organization dedicated to the airing of white grievances as it pushes counterproductive and often cruel immigration policies and tacitly supports racist and white supremacist causes…

“An institution perfectly willing to cling to power against popular sentiment through the grotesque gerrymandering of legislative districts and blatant voter suppression laws and policies.

“Needless to say, this is a long way from the ideas espoused by the GOP’s last great president, Ronald Reagan….

“Today, Republicans claim to revere Reagan while disavowing much of what he stood for, including political views grounded in reality and open to productive compromise.

“Except Romney.  He is willing to endure presidential tweetstorms, grassroots tantrums and broadsides from conservative pundits because he sees a party with little to be proud of as it hurtles toward oblivion….

“When the Republican Party is ready to abandon its destructive dalliance with attempted despotism, Romney will have earned a leading voice in rebuilding it.”

Romney marched with protesters at a Black Lives Matter event in Washington on Sunday.

Asked about Romney’s appearance, White House press secretary Kayleigh McEnany offered a nasty criticism.

“Mitt Romney can say three words outside on Pennsylvania Avenue, but I would note this: that President Trump won 8 percent of the black vote.  Mitt Romney won 2 percent of the black vote (in 2012).”

[Exit polling had Romney earning 6 percent in 2012, essentially the same as Trump’s 8 percent, plus Romney was running against a black president.  But both Romney and John McCain in 2008 did worse with black voters than prior Republican candidates.]

--A majority of the Minneapolis City Council over the weekend vowed to abolish the police force, though council members said such reforms would be a long, complex process and provided little detail on the way forward.

New York State lawmakers have passed a series of police reform bills – chief among them, the controversial 50-a repeal and replace bill requiring release of law enforcement disciplinary records subject to freedom of information laws.

A new Washington Post/Schar School poll found that 69% of Americans believe that George Floyd’s death signaled a broader problem with how police operate, up from 43% who said so in the aftermath of the killings that preceded protests in Ferguson, Mo., six years ago.

--In Washington, Congressional Democrats introduced a large police reform bill on Monday, the ‘Justice in Policing Act of 2020,’ which aims to increase transparency and limit abuses after unrest over George Floyd’s death.

House Speaker Nancy Pelosi said she does not support abolishing police, but that she could support “rebalancing some of our funding” so that issues such as mental health would be handled “more directly” rather than by police.

The bill calls for sweeping reforms to law enforcement, including tracking “problematic” officers through a national misconduct registry and limiting the safeguards in place keeping officers from facing legal or civil action in court.

--An investigation by USA TODAY Network found at least 85,000 law enforcement officers across the USA have been investigated or disciplined for misconduct over the past decade.

Reporters from USA TODAY, its affiliated newsroom across the country and the nonprofit Invisible Institute in Chicago spent more than a year creating the biggest collection of police misconduct records, and the records obtained include more than 110,000 internal affairs investigations by hundreds of individual departments and more than 30,000 officers who were decertified by 44 state oversight agencies.

--Army Secretary Ryan McCarthy told Politico on Monday that, after initially opposing the idea, he is now open to discussing renaming Ft. Bragg and nine other installations bearing the names of Confederate war heroes.

Ft. Bragg in North Carolina, is named after Braxton Bragg, who became a major figure in the Confederate army during the Civil War, meaning Ft. Bragg is named for an enemy combatant.

Most of the statues honoring Confederate generals were erected in campaigns to rehabilitate the image of the Confederacy, and as an act of intimidation against African Americans demanding equal treatment.  The memorials tied into the romanticized “Lost Cause” narrative that secession and the Civil War were about states’ rights in the face of “Northern aggression,” and in defense of Southern honor and way of life, which was built on a race-driven system of slavery and a belief in white supremacy.

The generals who took up arms against the United States were committing treason.

Retired Army Gen. David Petraeus wrote for the Atlantic on Monday:

“It would be years before I reflected on the individuals for whom these posts were named.  While on active duty, in fact, I never thought much about these men – about the nature of their service during the Civil War, their postwar activities (which in John Brown Gordon’s case likely included a leadership role in the first Ku Klux Klan), the reasons they were honored, or the timing of the various forts’ dedications.  Nor did I think about the messages those names sent to the many African Americans serving on these installations – messages that should have been noted by all of us.  Like many aspects of the military, the forts themselves were so shrouded in tradition that everything about them seemed rock solid, time tested, immortal.  Their names had taken on new layers of meaning that allowed us to ignore the individuals for whom they were named….

“It also happens that – [Gen. Robert E.] Lee excepted – most of the Confederate generals for whom our bases are named were undistinguished, if not incompetent, battlefield commanders

“For an organization designed to win wars to train for them at installations named for those who led a losing force is sufficiently peculiar, but when we consider the cause for which these officers fought, we begin to penetrate the confusion of Civil War memory.  These bases are, after all, federal installations, home to soldiers who swear an oath to support and defend the Constitution of the United States. The irony of training at bases named for those who took up arms against the United States, and for the right to enslave others, is inescapable to anyone paying attention. Now, belatedly, is the moment for us to pay such attention….

“(America’s) military has often led social change, especially in the area of racial integration.  We do not live in a country to which Braxton Bragg, Henry L. Benning, or Robert E. Lee can serve as an inspiration.  Acknowledging this fact is imperative.  Should it fail to do so, the Army, which prides itself on leading the way in perilous times, will be left to fight a rearguard action against a more inclusive American future, one that fulfills the nation’s founding promise.”

--Gerald F. Seib / Wall Street Journal

“The brutal shocks hitting America this spring have opened up a variety of financial deficits.  Perhaps more important, though, they have revealed a more pervasive underlying condition: a goodwill deficit.

“Put simply, too many Americans have stopped giving the benefit of the doubt to those with whom they disagree.

“For more than three months, America has been reeling from twin shocks: first a pandemic and associated economic slide, followed by the brutal killing of a black man in police custody and the ensuing protests. In an idealized world, these shocks might have pulled the country together in response.

“Instead, the U.S. has experienced angry protests from the right over reopening the economy, followed by angry protests from the left over racial injustice. In what amounts to a symbol of the moment, a high steel fence now has been erected for blocks around the White House, designed to keep away not foreign terrorists but American citizens.

“What has happened?

“That is a complex and emotionally fraught question, but part of the answer lies here: a growing tendency to see those with whom you disagree as not merely wrong, but evil.  There is a diminishing willingness to believe that the person on the other side of the debate – any debate – is well intentioned….

“Such attitudes helped produce the partisan divide that now colors almost every issue. This absence of goodwill didn’t begin amid these crises.  The trend was present and documented before, setting the stage for this spring’s discontents.

“A 2019 survey sponsored by the Brookings Institution, for example, found that 82% of Republicans think the Democratic Party has been taken over by socialists.  On the other hand, 80% of Democrats think the Republican Party has been taken over by racists.

“Similarly, a paper presented last year by political scientists Nathan P. Kalmoe and Lilliana Mason cited a survey showing that nearly 60% of Republicans and more than 60% of Democrats agreed that the opposing party is a serious threat to the U.S. and its people….

“Perhaps most stunning is the partisan divide that has opened up over the simple, seemingly nonpolitical decision to wear a mask in public because of the coronavirus. Those who say they always wear a mask in public settings said they support Joe Biden, the Democrats’ presumptive presidential nominee, over Mr. Trump, 66% to 26%, in this year’s election.  Those who never or rarely wear masks backed Mr. Trump, 83% to 7%.

“ ‘These are really powerful signs that our partisan filter is the way we see everything in this country,’ says Bill McInturff, a Republican pollster who conducts the [Wall Street Journal/NBC News] survey along with Democrat Jeff Horwitt.

“And goodwill has become a casualty of the process.”

--Editorial / Wall Street Journal

“America’s political leaders haven’t distinguished themselves in the aftermath of George Floyd’s death, so allow us to introduce you to Air Force Gen. Charles Q. Brown Jr.  The Senate confirmed Gen. Brown on Tuesday as chief of staff for the Air Force, making him the first African-American to lead a major branch of the military.

“Colin Powell was chairman of the joint chiefs but didn’t run a military service.  Gen. Brown made his way through the ranks the hard way as an F-16 pilot flying some 3,000 hours and holding Air Force commands in Asia and the Middle East.  He recently led the U.S. Pacific Air Forces, which offered him insight into the rise of China’s military.

“But what struck us more than even his distinguished career was the five-minute video Gen. Brown recently made for those under his command.  The statement stands out at this polarized political and cultural moment for its honest and nuanced reflections on the ‘two worlds’ he has inhabited as a black man in a majority white America and as a military officer.

“His patriotism and dedication shine through even as he recounts the difficult moments he’s faced as people made judgments about him based on race.  His thoughtful words offer an example to us all.”

From Gen. Brown’s June 5 video.  [He was confirmed by the Senate June 9.]

“As the commander of Pacific Air Forces, a senior leader in our Air Force, and an African-American, many of you may be wondering what I’m thinking about the current events surrounding the tragic death of George Floyd.  Here’s what I’m thinking about.

“I’m thinking about how full I am with emotion, not just for George Floyd, but the many African-Americans that have suffered the same fate as George Floyd.  I’m thinking about protests in my country – ‘tis of thee, sweet land of liberty – the equality expressed in our Declaration of Independence and the Constitution that I’ve sworn my adult life to support and defend.

“And thinking about a history of racial issues, and my own experiences that didn’t always sing of liberty and equality. I’m thinking about living in two worlds, each with their own perspective and views. I’m thinking about my sister and I being the only African-Americans in our entire elementary school and trying to fit in.  I’m thinking about then going to a high school where roughly half the students were African-American – and trying to fit in….

“I’m thinking about our two sons, and how we had to prepare them to live in two worlds.  I’m thinking about the frank and emotional conversations that my wife and I have had with them just this past week, as we discuss the situations that have led to the protests around our country….

“I’m thinking about how I may have fallen short in my career, and will likely continue falling short living up to all of those expectations.  I’m thinking about how my nomination provides some hope, but also comes with a heavy burden.  I can’t fix centuries of racism in our country, nor can I fix decades of discrimination that may have impacted members of our Air Force.  I’m thinking about how I can make improvements – personally, professionally and institutionally – so that all airmen, both today and tomorrow, appreciate the value of diversity in a conservative environment where they can reach their full potential.

“I’m thinking I don’t have all the answers on how to create such an environment, whether here in Pacaf [Pacific Air Forces] or across our Air Force.  I’m thinking about, without clear-cut answers, I just want to have the wisdom and knowledge to lead during difficult times like these. I want the wisdom and knowledge to lead, participate in and listen to necessary conversations on racism, diversity and inclusion.  I want the wisdom and knowledge to lead those willing to take committed and sustained action to make our Air Force better.”

---

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

We honor our healthcare workers and first responders.

God bless America.

---

Gold: $1737
Oil: $36.56

Returns for the week 6/8-6/12

Dow Jones  -5.6%  [25605]
S&P 500  -4.8%  [3041]
S&P MidCap  -7.9%
Russell  2000  -7.9%
Nasdaq  -2.3%  [9588]

Returns for the period 1/1/20-6/12/20

Dow Jones  -10.3%
S&P 500  -5.9%
S&P MidCap  -14.7%
Russell 2000  -16.8%
Nasdaq  +6.9%

Bulls 56.9
Bears 20.6

Hang in there.  Wash your hands.

Brian Trumbore



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Week in Review

06/13/2020

For the week 6/8-6/12

[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 1,104

Special thanks to George R. and Bob P. for their ongoing support.

Covid-19 death tolls (as of tonight)

World…427,689
USA…116,825
Brazil…41,901
UK…41,481…really over 50,000, according to experts
Italy…34,223
France…29,374
Spain…27,136
Mexico…16,448…including deaths registered right after this info is posted for the next day

[Worldometers.info]

Covid Bytes

--Thursday saw the, highest number of new cases globally…137,887.  Then tonight, Friday, the figure was 140,917.  That’s more than a bit worrisome.  Europe’s average rate of new infections is way down from its early April peak, but for the rest of the world, Covid-19 remains a huge issue.

The number of new cases in the United States today was 27,221, the highest since May 21!

In the states of California (parts of it), Arizona, Texas, Florida and the Carolinas, there are definitely worrisome signs in case numbers and hospitalizations, and not all of it can be linked simply to better testing, which is why you point to hospitalizations.

Texas, for example, hit a new high in Covid-related hospitalizations this week after becoming one of the first to start reopening from the lockdown.  I heard from a doctor friend in South Carolina this afternoon that they are at 80%+ in capacity there for the first time, and that is highly concerning, as S.C. hit a new high in cases today as well.  The Palmetto state reopened weeks ago.

Much of this was inevitable as we jumpstart our economies but there is still so much we don’t know.  As Dr. Anthony Fauci said the other day during an appearance at a virtual conference, in noting how Covid-19 is much more complex than HIV, a virus he spent his career studying:

“Oh, my goodness.  Where is it going to end?  We’re still at the beginning of really understanding.”

I know many of you saw the pictures of the lungs of the young woman who survived a double-lung transplant after being ravaged by the coronavirus.  It’s horrifying.

Fauci, by the way, blasted the WHO Wednesday, saying an official at the agency was dead wrong when she claimed it was “very rare” for an infected person to transmit the deadly bug to a healthy person.  The official was forced to walk it back.

“In fact,” said Fauci, “the evidence that we have, given the percentage of people, which is about 25, 45 percent of the totality of infected people, likely are without symptoms. And we know from epidemiological studies that they can transmit to someone who is uninfected, even when they’re without symptoms.”

I get into the economic impact of Covid-19 more down below.  For now, we need what we always do…more data.

--The World Health Organization said on Friday that the Americas are bearing the brunt of the global pandemic at present, with four of the 10 worst hit countries in the world.  The disease was described as “highly active” in Central and South America, the WHO’s top emergency expert Mike Ryan said.

Ryan did say that Brazil’s health system was “still coping,” although some intensive care units were at a critical stage and under heavy pressure with more than 90% bed occupancy rates.

And I saw stories today that Brazilians were flocking to shopping malls without masks, urged on by President Jair Bolsonaro (more on him below).

Bolsonaro, by the way, tried to stop publication of Brazil’s Covid data and a Brazilian Supreme Court justice ordered the resumption of publication of same.  This is such a bad guy.

--Mexico’s economy shed over 344,000 jobs in May because of the coronavirus, pushing the number of lost jobs in the last three months above 1 million, though the pace of layoffs is slowing down.  The country is headed towards its worst recession in decades.

Mexico reported a record 4,883 new cases along with a record 708 deaths on Wednesday.

--Residents of Moscow began to resume their normal routines on Tuesday as a lockdown designed to curb the spread was lifted after more than two months, even as the city is reporting over 1,000 new cases daily. Moscow’s nearly 13 million residents are now free to go outside when they want, use public transport and travel across the city in their own vehicles without any restrictions or digital passes.

But critic’s accuse Mayor Sergei Sobyanin of rushing to ease the lockdown in time to allow a Red Square military parade later this month and a July 1 nationwide vote that could extend President Vladimir Putin’s rule until 2036.

--New Zealand appears to have completely eradicated the coronavirus – at least for now – after health officials said Monday the last known infected person had recovered.

The announcement was greeted with joy around the country and means the nation of 5 million people will be among the first to welcome throngs of fans back into sports stadiums, embrace crowded concerts and remove seating restrictions from flights.

It’s been 17 days since the last new case was reported.

But now the country badly needs foreign tourists to jumpstart its economy, and with that will inevitably come issues.  At least the Kiwis are prepared for the challenge.

--As was the case with America’s meat-packing plants, outbreaks of the novel coronavirus are emerging at U.S. fruit and vegetable farms and packing facilities.  While social distancing can be more easily implemented for workers harvesting fruits and vegetables in fields and working outside may reduce some risks for virus spread, plants that package foods such as apples and carrots resemble the elbow-to-elbow conditions that contributed to outbreaks at the meat-packing plants.  By late May, for example, there were more than 600 cases of Covid-19 among agricultural workers in Yakima County, Washington, a majority being in the apple industry.

Monterey County, California, known as “the world’s salad bowl,” reported 247 agricultural workers had tested positive as of June 5.

--My New York/New Jersey area is reopening and our cases and hospitalizations are way down.  We wore masks when we needed to, and most of us still do, especially when in any kind of crowd, and it’s paid off.  As I wrote a few weeks ago, though, because we were all given such conflicting advice early on, we didn’t know it should have been “masks up!” by late March.  For weeks we weren’t wearing them.  Now, every single study has shown their efficacy in reducing the spread.

That said, New Jersey has now officially lost more to the coronavirus than we did in World War II at over 12,500.

Like everywhere else in the country, however, we’re all keeping our fingers crossed that all the mass protests won’t lead to a big spike, both here and across the country.  In another week we’ll have a good idea if it did.

Tackling Systemic Racism in America

Big changes are coming, whether some like it or not.

NASCAR made a big move this week in banning the Confederate flag from its properties, a long-needed, gutsy move. 

“The presence of the confederate flag at NASCAR events runs contrary to our commitment to providing a welcoming and inclusive environment for all fans, our competitors and our industry,” the stock-car racing circuit said in a statement.  “Bringing people together around a love for racing and the community that it creates is what makes our fans and sport special.”

NASCAR’s only African-American driver in NASCAR’s top-flight Cup Series, Bubba Wallace, called on Monday for NASCAR to “get rid of all Confederate flags.” Two days later they complied.  Wallace then went out on Wednesday night and had a terrific race at Martinsville, Va., driving a car featuring the phrase “Black Lives Matter.”

I am a huge fan of Arizona Cardinals star wide receiver Larry Fitzgerald, a future Hall of Famer and University of Pittsburgh grad who I’ve written in my Bar Chat column countless times has a big future in politics, should he opt to go down that road.  He’s a true Renaissance Man, so unlike Donald Trump, a man of great class and knowledge.  He had some of the following thoughts in a New York Times op-ed on Sunday.

“The city of Minneapolis taught me about love.

“I was baptized at New Beginnings Baptist Tabernacle Church, learned to catch a football at Rev. Dr. Martin Luther King Jr. Park, and instilled with values by a loving family and a supportive community.

My mother and father raised us in this beautiful city full of life and diversity.  Minneapolis is home to diverse people from all over the world; Somali and Ethiopian refugees forging new lives, Hmong families building successful businesses, and a thriving arts community that attracts talented performers from around the globe.

“What you’re seeing on the news is not the hometown of my youth….

“For as long as I have known it, Minneapolis has been a city of peace, family and contentment.

“But not right now.

“The events of the last several days have turned Minneapolis, and our nation, upside down.  Injustice, death, destruction, pain, violence, protests, and riots have made it clear – we as a nation are not OK.  We are not healthy. The violent death of George Floyd in police custody is yet another example of a systemic problem we have yet to solve.  A cancer we are failing to cut out.  People and communities are suffering, lives are being lost and futures are being destroyed.

“Growing up, I never personally experienced harassment from the police, but I knew there were issues and I saw situations where people of color were not given the same benefit of the doubt and the same respect that was afforded to others.

“When will this terrible cycle end?  When will love and respect for our fellow man replace hatred and injustice?  When will healing come?

“Sadly, this is not new territory for our America.  The words of Martin Luther King Jr. resonate as clearly today as when he first uttered them in a speech titled ‘The Other America,’ given over 50 years ago.

“So I will continue to condemn riots and continue to say to my brothers and sisters that this is not the way.  And continue to affirm that there is another way.

But at the same time, it is as necessary for me to be as vigorous in condemning the conditions which cause persons to feel that they must engage in riotous activities as it is for me to condemn riots.

I think America must see that riots do not develop out of thin air.  Certain conditions continue to exist in our society which must be condemned as vigorously as we condemn riots.  But in the final analysis, a riot is the language of the unheard.”

“… And so in a real sense our nation’s summers of riots are caused by our nation’s winters of delay. And as long as America postpones justice, we stand in the position of having these recurrences of violence and riots over and over again.”

“We are not listening to one another.  Our winter of delay continues to result in cold hearts and lifeless bodies.  The language of the unheard has broken the silence and our willful deafness has led to death and destruction.  While our nation has struggled under the weight of a biological pandemic we also find our communities ravaged by the insidious disease of injustice.

“People of color across this nation are screaming to be heard….

“When those screams fall on deaf ears the pain of being unheard bears down on your soul….

“The screams of disrespected voices are ringing out in our nation right now.  We must never condone violent riots that take lives and destroy futures but we must also hear the desperate voice of protest that is calling out for justice….

“Systemic injustice births desperation and desperation rarely leads to a healthy outcome.

“But even in the midst of the current tragedy, I’m hopeful.  We have a tremendous opportunity to ensure that all voices are heard….

“There are tens of millions of Americans from every race, religion, background and socioeconomic status that are trying to listen to one another and effectuate change – trying to imagine what it’s like to be George Floyd or Breonna Taylor or Ahmaud Arbery or the people who love them; trying to imagine what it’s like to be a business owner who has lost everything to rioters over the last few days; trying to imagine what it’s like to see through their neighbor’s eyes and live in their skin color.

“We must work together to heal this divide and rebuild our communities by committing to let no voice go unheard.  Our first step must be to listen to one another – to sincerely lean in and hear what the person who is different from us is saying….

“Victims of violence, poverty and injustice, we hear you.

“Communities and lives torn apart by riots, we hear you.

“People of privilege learning a better way, we hear you.

“Mothers and fathers of every race doing the best you can to teach your children to love and not hate, we hear you.

“May God give us all ears to hear so that the cries of the unheard are never again compelled to scream in desperation.”

Finally, former New York Mets outfielder Cleon Jones, who played in the 1960s and ‘70s, was interviewed by the New York Daily News and he talked about growing up in Mobile, Ala., and the racism he faced in the baseball world.

Jones believes people have to reflect on the source of their actions in order to create change.

“Nobody’s born to hate,” Jones said.  “Hate is being passed down from generation to generation.  Until we can break that cycle, we’re going to have situations like we had with George Floyd.”

That’s what worries me most, especially because of the atmosphere in the nation today.  There are good people who understand change has to occur.  There are many others who don’t want to see it, who are now teaching their children that racism is O.K.  We’ll get a good idea of the direction this country is truly headed in at the ballot box come November.

Trump World

--Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff, expressed regret for appearing alongside the president in a church photo op minutes after federal authorities forcibly removed peaceful protesters from the area.

Milley’s admission of regret capped nearly two weeks of outright condemnation of Trump’s leadership amid nationwide protests of racial injustice from some of the nation’s most revered military figures.

And the disagreement continued when Trump sought to shut down efforts by military and congressional leaders to address the legacy of racism by removing the names of Confederate leaders from ten bases.

So there is your broad backdrop for Trump’s visit Saturday to the U.S. Military Academy at West Point, where he will deliver a commencement address to 1,105 graduating cadets.  Neither Milley, nor Defense Secretary Mark Esper, a West Point graduate, is expected to accompany the president.

Milley said in a prerecorded graduation speech to students at the National Defense University that aired Thursday morning that it was important to keep “a keen sense of situational awareness” and that he had failed to do so.

“As many of you saw the results of the photograph of me in Lafayette Square last week, that sparked a national debate about the role of the military in civil society,” Milley said.  “I should not have been there.  My presence in that moment, and in that environment, created the perception of the military involved in domestic politics.”

--David Ignatius / Washington Post…on the looming issue of Election Day

“President Trump, who’s well behind former vice president Joe Biden in most polls, is already setting the table to challenge the result. In a year when mail-in voting will probably be needed as never before because of the health crisis, Trump is claiming such absentee balloting will produce a rigged election.

“Trump last month attacked absentee-balloting plans in Michigan and Nevada as ‘Voter Fraud’ scenarios.  When he later tweeted, ‘There is NO Way (ZERO!) that Mail-In ballots will be anything less than substantially fraudulent,’ Twitter took the unusual step of tagging his message with a warning that pointed users to contrary evidence.

“Trump tried this same delegitimization back in 2016, when most polls predicted he would lose.  He claimed, ‘large scale voter fraud happening,’ and his campaign website pleaded: ‘help me stop Crooked Hillary from rigging this election.’  Even after he won the electoral college, he claimed he had been fraudulently denied a popular-vote win, again without evidence.  As president, he appointed a commission to study the supposed fraud problem, but it disbanded in 2018 after accomplishing nothing.

“ ‘We could very well be headed toward a predictable, disastrous conclusion,’ warns Rep. Adam B. Schiff (D-Calif.), the chairman of the House Intelligence Committee.  ‘If the president’s disparagement of absentee voting leads to one party thinking it’s not legitimate, then the foundation is laid for a sizable refusal to accept the election’s legitimacy.’

“An electoral crisis, added to all our other national problems, seems increasingly likely in November.  We’re on a collision course: The Centers for Disease Control and Prevention in March recommended ‘voting methods that minimize direct contact with other people,’ such as mail-in balloting.  But Trump has derided such measures as unfair.

“How can we protect our democracy from this looming crackup?  Our fate rests with state officials who, in our federalist system, will make and enforce the rules for elections.  Fortunately, like (Andrew) Warner, (the West Virginia secretary of state), they seem to be taking this job seriously and, to an encouraging extent, in a nonpartisan way….

“Here’s the bottom line: Most Americans will have a right to absentee ballots in November, no matter what Trump says.  Counting them will take a week or more – so we’ll have a bitterly divisive post-election period, no matter what.  Let’s be ready for that, vigilant but also patient.

“Forewarned is forearmed.  This will be one of the most important elections in our lifetimes.  State and local officials take the protection of our democratic rights seriously.  And hopefully, they won’t let themselves be intimidated by anyone.”

--President Trump rolled out a plan for combating police brutality Thursday that centered on the idea that cops should use “force with compassion” – an idiotic phrase, especially given the moment and wide-ranging reforms proposed by state and federal lawmakers in the aftermath of the killing of George Floyd.

Offering essentially zero details, Trump said the first part of his agenda is to sign an executive order that will “encourage” police departments across the country to have a standard for using “force with compassion.”  The order, he said, will also see to it that officers are “perfectly trained.”

“That means force, but force with compassion,” said Trump.  “If somebody is really bad, you’re gonna have to do it with real strength, real power.”

The second part of the plan had nothing to do with policing.  Trump said he would seek to provide African-American communities with better access to economic opportunities, school choices and healthcare.

Trump reiterated his belief that “law and order” must be maintained and that situations like Floyd’s were the result of a few “bad apples.”

“You always have a bad apple no matter where you go.  You have bad apples,” he said.  “There are not too many of them.”

There are a lot of them, Mr. President.

Then Trump said, rooting out racism from police departments will be a “quickly” handled task. 

“We’re going to do it very easily,” he said.

Trump did not mention George Floyd by name in his remarks at a roundtable in a megachurch in Dallas. [He did in passing in an interview with Fox News later.]

--Democrats handed Republicans an easy issue for the campaign with talk of “defunding the police,” even if it means to most advocates the reallocation of police budgets to social services including housing and education.  CNN commentator Van Jones made the point that there were many things that police were doing in the course of their day, outside of normal policing and often racking up overtime, and it’s that money, the OT, that could easily be put to better use.  That’s not blowing up the police force.

But the horse is out of the barn…Republicans will have a field day with the topic.

--As I expected, North Carolina (Charlotte) will still be the site of the Republican convention in terms of nominating the party’s candidates for president and vice president, with a limited number of delegates, but the big convention events – namely Trump’s acceptance speech – will be in Jacksonville, Fla., which is now scrambling to overcome concerns about hotel and arena capacity.

The convention will be held Aug. 24-27.

Trump narrowly won Florida and its 29 electoral votes in 2016 by a 49.0-47.8 percent margin.

--As alluded to above, President Trump’s decision to hold his first campaign rally in three months on June 19 in Tulsa, Oklahoma, site of one of the worst massacres of African Americans in U.S. history (May 31-June 1, 1921), is a potentially explosive one.

June 19, or Juneteenth, is also known as Emancipation Day and commemorates the date in 1865 when Maj. Gen. Gordon Granger traveled to Galveston, Texas, to inform residents that President Abraham Lincoln had freed the slaves and that slave owners had to comply with the Emancipation Proclamation.

The Tulsa race massacre, in which an estimated 300 people were killed and scores of businesses and homes were destroyed, came about when a white mob ravaged a thriving African-American business community in the Greenwood District known as the “Black Wall Street.”

Those attending next Friday’s rally will be required to sign a waiver that reads they cannot sue the campaign or the venue if they contract the coronavirus at the event.

--Attorney General William Barr said that the U.S. Secret Service told Donald Trump to go to a secure part of the White House as large protests unfolded outside, contradicting the president’s account of what happened.

“Things were so bad that the Secret Service recommended that the president go down to the bunker,” Barr said Monday evening in an interview on Fox News.

Trump said last week it was a false report that he went to the bunker for his safety.  “I was three for a tiny, little short period of time.  It was much more for an inspection.”

--Trump tweets:

“Our great National Guard Troops who took care of the area around the White House could hardly believe how easy it was. ‘A walk in the park,’ one said. The protesters, agitators, anarchists (ANTIFA), and others, were handled VERY easily by the Guard, D.C. Police, & S.S. GREAT JOB!”

“Seriously flawed presidential candidate, Senator Elizabeth ‘Pocahontas’ Warren, just introduced an Amendment on the renaming of many of our legendary Military Bases from which we trained to WIN two World Wars. Hopefully our great Republican Senators won’t fall for this!”

“THOSE THAT DENY THEIR HISTORY ARE DOOMED TO REPEAT IT!”

“It has been suggested that we should rename as many as 10 of our Legendary Military Bases, such as Fort Bragg in North Carolina, Fort Hood in Texas, Fort Benning in Georgia, etc. These Monumental and very Powerful Bases have become part of a Great American Heritage, and a…

“…history of Winning, Victory, and Freedom.  The United States of America trained and deployed our HEROES on these Hallowed Grounds, and won two World Wars.  Therefore, my Administration will not even consider the renaming of these Magnificent and Fabled Military Installations…

“…Our history as the Greatest Nation in the World will not be tampered with.  Respect our Military!”

“Mattis was our Country’s most overrated General. He talked a lot, but never ‘brought home the bacon.’ He was terrible! Someday I will tell the real story on him and others – both good and bad!”

“Buffalo protester shoved by Police could be an ANTIFA provocateur.  75 year old Martin Gugino was pushed away after appearing to scan police communications in order to black out the equipment. @OANN I watched, he fell harder than was pushed.  Was aiming scanner.  Could be a set up?’

[Just a disgraceful statement from the president.  Gugino, at last word, has brain damage of some kind.  New York Gov. Andrew Cuomo tore into Trump.  “There’s no fact to any of it.  He should apologize for that tweet.  How reckless, how mean, how cruel,” Cuomo added. “What did he think, it was staged?  He thought the blood coming out of his head was staged?”]

“Sleepy Joe Biden refuses to leave his basement ‘sanctuary’ and tell his Radical Left BOSSES that they are heading in the wrong direction. Tell them to get out of Seattle now.  Liberal Governor @JayInslee is looking ‘the fool’. LAW & ORDER!”

[The Seattle story will be a non-event within two weeks.  But someday I’ll tell you what I really think of the Pacific Northwest through my travel experiences.]

“NASDAQ HITS ALL-TIME HIGH. Tremendous progress being made, way ahead of schedule. USA!”

[That was Wednesday.  Thursday, Nasdaq fell 6%.]

“Could it be even remotely possible that in Roger Goodell’s rather interesting statement of peace and reconciliation, he was intimating that it would now be O.K. for the players to KNEEL, or not to stand, for the National Anthem, thereby disrespecting our Country & our Flag?”

“Colin Powell was a pathetic interview today on Fake News CNN.  In his time, he was weak & gave away everything to everybody – so bad for the USA. Also got the ‘weapons of mass destruction’ totally wrong, and you know what that mistake cost us?  Sad! Only negative questions asked.”

“Colin Powell, a real stiff who was very responsible for getting us into the disastrous Middle East Wars, just announced he will be voting for another stiff, Sleepy Joe Biden. Didn’t Powell say that Iraq had ‘weapons of mass destruction?’  They didn’t, but off we went to WAR!”

[Powell, on CNN’s “State of the Union,” endorsed Joe Biden because President Trump has “drifted away” from the Constitution, is a chronic liar and is “dangerous to our country.”  Powell added, “He lies.  He lies about things.  And he gets away with it because people will not hold him accountable.”]

Wall Street, the Fed, and the Economy

First, I just want to get some broad-brush, global economic outlooks out there for the record.

The Organization for Economic Cooperation and Development, a group representing developed nations, sees the global economy contracting 6% in 2020, per its latest forecast, IF a second wave can be avoided.  -7.6% if it cannot.  Without a second wave, the rebound in 2021 will be to the tune of 5.2%.  With one, just 2.8%.

The OECD sees the U.S. economy down 7.3% this year, -8.5% with a second wave, with a 4.1% rebound in 2021 if no second wave, only +1.9% with one.

[The World Bank sees the U.S. economy declining 6.1% in 2020; the Congressional Budget Office pegs it at -5.6%.]

So here’s what we know in the United States.  Despite spikes in coronavirus cases and hospitalizations in some parts of the country, and still high daily numbers overall, even if there is a true second wave in the fall, the economy is not going back into shutdown mode a second time.  We all know that.  We didn’t need Treasury Secretary Steven Mnuchin confirming this on Thursday on CNBC to get the picture.  There will be no doubt, however, that if the situation deteriorates to the point where other parts of the country have an experience like New York and New Jersey had in late March and April, individuals will then make a decision on whether to shelter in place themselves, whether or not to fly, eat indoors, go to sporting events.  And state and local governments will need to make decisions on key items like schools.  All of this could obviously impact the economy negatively.

But nationally we aren’t shutting down again in our lifetime.  Period.

Contained in my statement up above, though, is still a tremendous amount of uncertainty, and that is what Fed Chairman Jerome Powell spoke to in his comments following the Fed’s latest Open Market Committee meeting Tuesday and Wednesday.

The Fed said in its policy statement: “The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term.”

The response: the Fed sees the key overnight interest rate, or federal funds rate, remaining near zero through at least 2022.   The decision to leave that rate unchanged on Wednesday was unanimous.  Officials also promised to maintain the Fed’s bond purchases at least at the current pace of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage-backed securities – a sign the central bank is beginning to shape its long-run strategy for economic recovery.

The Fed is now projecting U.S. GDP will fall 6.5% in 2020, and then rise 5% in 2021 and 3.5% in 2022.  The unemployment rate, currently 13.3%, is projected to decline to 9.3% by year end, which to me is optimistic.

But in his comments at his press conference following release of the formal statement, Chairman Powell said:

“The extent of the downturn and the pace of recovery remain extraordinarily uncertain and will depend in large part on our success in containing the virus….

“A full recovery is unlikely to occur until people are confident that it is safe to reengage in a broad range of activities,” he added.  Powell did say he saw a “modest rebound” or stabilization in the retail and motor vehicle sectors.

Powell began his virtual press conference by acknowledging the widespread protests in the aftermath of George Floyd’s killing that have called attention to racial injustices.

“I want to acknowledge the tragic events that have put a spotlight on (issues of racism),” Powell said.  “There is no place at the Federal Reserve for racism, and there should be no place in our society.”

The Fed’s actions thus far are credited with having helped fuel the extraordinary rally in the stock market, but after a small dip in the market Wednesday following Powell’s remarks (though Nasdaq closed over 10000 for the first time), stocks cratered a whopping 6.9% on the Dow, 1861 points, on Thursday as investors focused on the gloomy parts of the Fed Chair’s remarks, as well as the worrisome spikes in coronavirus cases and hospitalizations in parts of the country.

Needless to say, President Trump wasn’t pleased with the market’s actions and tweeted:  

“The Federal Reserve is wrong so often. I see the numbers also, and do MUCH better than they do.  We will have a very good Third Quarter, a great Fourth Quarter, and one of our best ever years in 2021. We will also soon have a Vaccine & Therapeutics/Cure. That’s my opinion. WATCH!”

Well, of course we are going to have a great third quarter, taken alone, and the president will no doubt be touting “the greatest growth ever recorded.”  But this is going to be after a beyond sickening plunge in the second quarter, which the Atlanta Fed’s GDPNow barometer currently pegs at -48.5%.  As I’ve mentioned before, as more data trickles in for May and June, it’s likely this figure will improve but it is still going to be the worst figure in recorded history of the United States.

I also just don’t see a V-shaped recovery, with all the uncertainty that will prevail heading into the fall.

As for this week’s economic data….

May consumer prices came in at -0.1%, ditto ex-food and energy.  Year-over-year, inflation is running at just 0.1%, 1.2% on core.

Producer prices for May rose 0.4%, -0.1% ex-food and energy; -0.8% vs. a year ago, 0.3% on core yoy.

Lastly, the federal budget deficit for May was -$398.8 billion, following a record deficit of $738 billion in April, meaning for the first eight months of fiscal 2020 (which commenced Oct. 1, 2019), the deficit is $1.88 trillion, compared with $738.6 billion at the same point last year.  The Congressional Budget Office estimated in May that pandemic relief efforts will swell the deficit by $2.2 trillion this fiscal year and another $600 billion in fiscal 2021.

Europe and Asia

The eurozone reported GDP in the first quarter was down 3.6% vs. the fourth quarter 2019, and down 3.1% year-over-year. [Eurostat].  The second quarter should be worse, even though the continent is coming out of its severe lockdown.

Eurostat also reported today on industrial production for the euro area in April, down 17.1% compared with March.  This is the largest monthly decline recorded since the start of the series, significantly higher than the 3% to 4% drops seen in late 2008 and early 2009 during the financial crisis.  In April 2020 vs. April 2019, industrial production decreased by 28.0% in the EA19, also the  largest annual fall ever recorded, exceeding the 21.3% plunge in April 2009.

Brexit: The UK economy shrank at the fastest monthly rate on record in April as the lockdown hit demand and activity in all sectors. Output fell by 20.4%, compared with the previous month, according to data from the Office for National Statistics.  This is by far the largest contraction since monthly records began in 1997 and follows a 5.8% contraction in March, the previous record fall.  The ONS said, “In April the economy was around 25% smaller than in February.”

So on the Brexit front, until today, talks with the EU have not been going well and there was little sign member states were ready to soften Michel Barnier’s negotiating mandate.

But Barnier mentioned that on a key issue, that of Northern Ireland, that the special arrangement for the North – under which it will apply EU customs rules so that checks take place in ports and airports there rather than on the land border with the Republic – had been jointly drawn up and agreed with the British government, and that there was room for pragmatism within them.

“Simplified declarations can be used for large economic operators, supermarkets being one of them,” Barnier said, citing one example.

Barnier insisted he was keen to find a compromise.

So then we learned Friday that the British government is to abandon its plan to introduce full border checks with the EU on January 1st as ministers come under mounting pressure from business not to  compound the chaos caused by the pandemic.

In a significant policy U-turn, Michael Gove, the UK cabinet office minister, has accepted that businesses cannot be expected to cope with Covid-19 and simultaneously face the prospect of disruption at the border at the end of the post-Brexit transition period.

Instead of full checks, the British government will now introduce a temporary light-touch regime at UK ports such as Dover for incoming EU goods, even in a “no-deal” scenario.

However, British officials concede that goods flowing to the EU from the UK are likely to face full checks as they enter France.

In February, Gove announced that goods coming from the EU would face the full range of checks.  It will ease some Irish fears about delays in goods coming from continental markets through the UK to the Republic in the event of no trade deal being agreed between the EU and UK.

Apparently the pharmaceutical industry is among those warning the British government that the pandemic would prevent them from rebuilding the six-week medicine stockpile of 2019, raising fears of medicine shortages in the event of no-deal.

In turn, the UK hopes the EU will reciprocate in some fashion on areas from aviation to trucking permits.

Both sides will step up the pace of their negotiations following talks between Prime Minister Boris Johnson and European Commission president Ursula von der Leyen aimed at breaking the deadlock over their future relationship.

But the fishing rights issue remains a big hurdle as well as rules designed at ensuring a level competitive playing field between the two sides, both key to Brussels.

Separately, Britain is catching heat for new rules requiring all people arriving in the UK to self-isolate for 14 days.  Those arriving by plane, ferry or train – including UK nationals – must give an address where they will self-isolate.  Rule breakers will be fined.

Home Secretary Priti Patel has said the laws were designed “to prevent a second wave” of coronavirus.

But the boss of Ryanair, Michael O’Leary, is among those decrying the rules as nothing more than a “political stunt” and are not a quarantine.

O’Leary told the BBC: “You could be in Sainsbury’s, you could be on the beach, you could be on the golf course in the unlikely event the Home Office calls you – all they will have is a mobile number.”

He claimed the Home Office acknowledges the rules were unenforceable.

Some industries have warned they will be severely impacted by them, and O’Leary warned of devastation.

Turning to AsiaChina’s inflation numbers for May were released with its consumer price index rising at an annualized rate of just 2.4%, down from 3.3% in April.  Food inflation was 10.6%, a 9-month low, with pork prices rising 81.7%.  Non-food inflation was only 0.4%.  Producer (factory-gate) prices fell 3.7% in May year-over-year, the steepest decline since March 2016. This is not good.

May exports fell 3.3% year-over-year, vs. a 3.5% rise in April, while imports fell 16.7% yoy vs. a 14.2% decline the month prior.  This latter number is a reflection of insufficient domestic demand; a further sign of how the Chinese economy isn’t rebounding as quickly as officials hoped it would following the nation’s reopening in April.

But as I note below, at least auto sales are rebounding.  Sunday, we receive key data on retail sales.

Japan said its GDP fell 2.2% in the first quarter, which comes on top of Q4 2019’s slide of 7.2%, that was due to the October sales-tax hike and the trade war between the U.S. and China.

So Japan is officially in its first recession in 4 ½ years.  The second quarter will be ugly as well.

[Separately, Tokyo 2020 CEO Toshiro Muto said on Wednesday that the rearranged Olympics will “not be done with grand splendor,” but will be simplified. The Games, originally scheduled to start next month, were postponed for a year due to the pandemic.]

If you are looking for ‘green shoots,’ South Korea reported that exports in the first ten days of June rose 20.2% vs. a year ago.  Semiconductors were up 22.6% and mobile devices 35.8%.  So this is encouraging.

Street Bytes

--The market suffered its worst week since mid-March, with the Dow Jones falling 5.6% to 25605, while the S&P 500 lost 4.8% and Nasdaq 2.3%.

Nasdaq closed above 10000 for the first time on Wed., before cratering Thursday and finishing the week at 9588, but still up 6.9% on the year, largely on the strength of the following.

Wednesday, shares of both Apple and Microsoft crossed the $1.5 trillion level in market cap; the first time any company has ever hit that valuation level, and the longtime rivals crossed the line together.

Amazon.com also hit a record, reaching a market valuation of $1.3 trillion, while Alphabet (Google) topped the $1 trillion level for the first time since February.  It marked the first time since Feb. 21 that all four tech giants had valuations over $1 trillion at the same time.

The four then had a rough go of it Thursday and finished the week with the following market caps.

Apple $1.46 trillion, Microsoft $1.42tn, Amazon 1.26tn, and Alphabet $965bn.

But what is driving the speculative excess in the market, the highest in 20 years according to options trading metrics?  Small investors…totally against history, as in the impact of the retail investor has been small over the years.  But not today.

Robinhood, a trading app popular with millennials, says it’s seen a 30-percent jump in users this year, to 13 million, despite embarrassing outages in the early days of the pandemic, when volumes overwhelmed its serves.

One hedge fund manager told the Wall Street Journal: “I have seen some friends plowing in through Robinhood or similar apps.  No financial background, feeling like geniuses that they are up so much in the last few months.”

Tuesday, there was a 1,250 percent surge in a little-known Chinese online real-estate company with the name FANGDD Network.  Social media said it resembled FANG – code for Facebook, Amazon, Netflix and Google. The stock went from a Monday close of $9.51 to $129.04 before closing at $47.06, all in one day.  It finished Friday at $11.75.  Insane.

Dave Portnoy, the millionaire founder of Barstool Sports, who has taken up day trading, boasted in a video on Monday: “I’m the new breed.  I’m the new generation. There’s nobody who can argue that Warren Buffett is better at the stock market than I am right now.  I’m better than he is. That’s a fact.”

Here’s hoping Portnoy got his clock cleaned Thursday.

--U.S. Treasury Yields

6-mo. 0.18%  2-yr. 0.19%  10-yr. 0.71%  30-yr. 1.46%

A flight to safety led to big declines in the yields on the 10- and 30-year; in the case of the former, down 18 basis points from 0.89%.

--The net worth of U.S. households saw a record decline in the first three months of this year as the pandemic sent shock waves throughout the economy and financial markets.

Household net worth fell 5.6% in the first quarter from the previous three months to a seasonally adjusted $110.79 trillion, the Federal Reserve said Thursday.  That was the largest single-quarter drop in records going back to the early 1950s.

Most of the decline resulted from a $7.8 trillion drop in the value of directly and indirectly held corporate equities.

--Oil’s rally stalled after a deal by OPEC and its allies to extend production cuts was offset by the prospect of increased output from Libya and U.S. shale producers.

West Texas Intermediate, the benchmark for U.S. crude, briefly climbed above $40 a barrel, its highest price since early March.

The new deal, struck Saturday by OPEC+ (I apologize…last time I wrote I thought the meeting was Monday), calls for 23 countries to collectively reduce output by 9.6 million barrels a day until the end of July, amending and extending the historic agreement sealed in April.  But Libya restarted production at its largest oil field (which adds about 300,000 barrels a day), while Mexico refused to continue with output curbs (100,000 barrels).  Plus some American producers are turning the taps back on…though investment in new drilling in the U.S. has dried up, at least for the moment.

Then Thursday, as the overall market tanked, oil did as well, and it ended the week at $36.56.  it didn’t help that the Energy Information Administration said earlier that U.S. crude oil stockpiles surged by 5.7 million barrels last week to a new record high of 538.1 million barrels.

Today, Baker Hughes reported the U.S. oil rig count fell for a 13th straight week to 199, the lowest level since June 2009.

--A reality check was offered in the form of BP’s announcement it was cutting almost 10,000 mostly office-based jobs.  This would represent about 14% of its workforce. 

“We are spending much, much more than we make – I am talking millions of dollars, every day,” BP CEO Bernard Looney said on Monday.

Previously, Chevron Corp. said it plans to reduce its nearly 45,000 workforce by as much as 15%, and Schlumberger Ltd., the world’s largest oil-field-services company by revenue, said it cut 1,500 jobs in North America in the first quarter.  Rival Halliburton Co. slashed about 1,000 jobs at its Houston headquarters.

--Airlines are set to lose $84 billion as the coronavirus pandemic reduces revenue by half to mark the worst year in the sector’s history, the International Air Transport Association (IATA) forecast on Tuesday.  With most of the world’s airliners currently parked, IATA said revenue would likely fall to $419 billion from $838 billion last year.  “Every day of this year will add $230 million to industry losses,” IATA Director General Alexandre de Juniac said. 

IATA forecast a rise in 2021 revenue to $598 billion.  Passenger numbers are seen falling to 2.25 billion this year before rising to 3.38 billion in 2021, still more than 25% below 2019 levels.

Even in markets where Covid-19 infection rates have fallen sharply, airlines still face a patchwork of travel restrictions and wary consumers, such as the 14-day quarantine for arriving passengers introduced by Britain this week.

--Boeing Co. shares skyrocketed to above $230, Monday, on investor optimism on the reopening of the U.S. economy and a revival in air travel.  Then reality hit in the form of continuing news such as that above and that which follows, as well as spikes in the coronavirus in both the U.S. and in other parts of the world that created further uncertainty.  By week’s end, Boeing stock had closed at $189.

Boeing did say it expects to conduct its 737 MAX recertification flight by end of June.

--Alaska Airlines is preparing to shed as many as 3,000 jobs from its 23,000-strong work force as it projects a slow recovery from the rapid decline in air travel.

“Things will likely not go back to pre-Covid levels in the next 12 months,” Alaska Air Group president Ben Minicucci in a video interview.  “We see a smaller company in 2021. We see a smaller industry, in fact.  We think we’ll be smaller by about 3,000 people.”

Minicucci also said the airline is in talks with Boeing over when it may take delivery of its first 737 MAX jets once the grounding is lifted, a development now expected in the fourth quarter.

Alaska has orders for 32 MAX-9s, with options for 37 more.  At the end of March, the plan was to take three of those jets this year, with another seven MAX deliveries pushed out into 2021.  Minicucci said it’s hard to say now if the airline will take any MAXs in 2020.

So this is just one example of the further issues Boeing faces with the MAX and the current industry environment.

Alaska Air, by the way, went from carrying 130,000 passengers a day to a trough of just 5,000.  Traffic is now back up to around 24,000 passengers per day, with revenue down 80% vs. a year ago.

--The TSA checkpoint travel numbers for Thursday, June 11, showed the total number of travelers in the U.S. at 502,209 vs. 2,675,686 for the same day last, 19%, but better than the prior week’s 15%.

--Boeing supplier Spirit AeroSystems Holdings Inc. announced on Wednesday a 21-day layoff for staff doing production and support work for Boeing’s 737 program.  Spirit, which makes the 737 fuselage, said the temporary layoffs and furloughs of roughly 900 workers at its Wichita, Kansas, facility would be effective June 15.

--Planemaker Bombardier Inc. is to cut up to 600 jobs in its Northern Ireland operations, as part of plans announced last week to slash 2,500 jobs or about 11% of the workforce in its global aviation unit.  The Canadian firm, which produces wings for Airbus’s A220 jet in Belfast, is the largest high-tech manufacturer in Northern Ireland with a workforce of around 3,500.  A huge blow for this small region.

--Macy’s said that 450 department stores that have reopened as of June 1 are performing better than it anticipated.

Macy’s hasn’t completed its first-quarter financial statements yet but it announced it expects sales of $3.02 billion compared to $5.50 billion a year earlier.  The company is nonetheless optimistic it is cleaning up its inventory and is gearing up for the holiday season, which as CEO Jeff Gennette said, “will be crucial.”

But Macy’s did close on approximately $4.5 billion of new financing, some of which will be used to repay outstanding borrowings under an existing $1.5 billion unsecured credit agreement.

--Coresight Research said the U.S. could see 20,000 to 25,000 store closures as a result of the pandemic.  Coresight’s data also indicated that 55 percent to 60 percent of these reside in malls.

Earlier 2020 estimates by Coresight predicted just 15,000 stores would shutter this year.

25,000 closures would shatter the record set in 2019, when more than 9,800 stores closed their doors for good.

--So in keeping with the above, the world’s largest retailer of diamond jewelry says it will not reopen at least 150 of its North America stores that were temporarily shuttered in March due to Covid.

Signet Jewelers, which operates 3,172 stores globally primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria of Jewelry and Piercing Pagoda, also plans to close an additional 150 stores by the end of its fiscal year, which ends in February 2021.

“Landlord discussions, including rent deferrals and abatements, as well as store level analysis, remain ongoing as the Company assesses the future shape of Signet,” the company said in a news release.  “Importantly, while we continue to optimize our store base, physical locations remain a core and valued aspect of the Signet customer experience.”

Yes, as you know, many of Signet’s stores are in malls.  I have a favorite Kay store in a mall near me where I can get watch batteries replaced cheaply vs. the stores in downtown Summit and I love their staff…just cool kids, minorities.  Hope it survived.

--And then you have the nation’s largest mall owner backing out of a $3.6 billion deal to buy a major rival. Simon Property Group announced it would buy Taubman Centers in early February, just weeks before the CDC announced the first known case of coronavirus in the U.S. Clothing stores and malls nationwide were ordered to close the following month.

Simon said that Taubman is uniquely vulnerable as stores reopen because most of its properties are indoor malls that many consumers will avoid.  Simon also said Taubman broke its contract obligations by taking on more debt during the pandemic rather than cutting costs.

Taubman plans to fight Simon, calling its legal claims “invalid and without merit.”

The coronavirus has been devastating to those with a big mall footprint; J.C. Penney, Neiman Marcus and J.Crew having all filed for bankruptcy protection this year.

--Starbucks is closing 400 company-owned locations over the next 18 months, while also speeding up the expansion of “convenience-led formats” such as curbside pickup, drive-thru and mobile-only pickup locations.

“As we navigate through the Covid-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers,” Starbucks CEO Kevin Johnson said in a news release Wednesday.

While Starbucks is closing 400 locations, it still plans to open approximately 300 new stores in its current fiscal year, down from its original goal of 600.

--Dunkin’, a unit of Dunkin’ Brands Group, said on Monday its franchisees are seeking to hire up to 25,000 workers as it prepares for higher demand, with U.S. states reopening after months-long lockdowns to contain the spread of the coronavirus.

Dunkin’, which has about 90 percent of its restaurants open, said new jobs include front-of-counter to managerial roles at restaurants and added that it was committed to diversity and inclusion.

--Best Buy is planning to lift Covid-19-related restrictions at hundreds of stores, allowing customers to “safely and freely shop” at the majority of its stores without an appointment, while bringing back some 9,000 furloughed employees.  Beginning on June 15, more than 800 locations will allow limited numbers of shoppers inside, although it will enforce social distancing rules and keep locations at 25% capacity.

--China’s auto sales were up by double digits in May, as pent-up demand and promotions extended April’s rebound.

Sales totaled 2.19 million, the government-backed China Association of Automobile Manufacturers said Thursday, up 14.5% from a year earlier.  April’s 4.4% year-over-year rise had ended 21 months of sales declines.

Sales for the first five months of the year were down 22.6% from a year ago.

--Britain has now gone two full months without burning coal to generate power.  A decade ago about 40% of the country’s electricity came from coal.

When Britain went into lockdown, electricity demand plummeted and the National Grid responded by taking power plants off the network.  The four remaining coal-fired plants were among the first to be shut down.

--Johnson Matthey, a British chemical firm, said it expects to cut about 2,500 jobs globally.

--Shares in Lululemon Athletica fell 4% after the retailer disclosed lower earnings and profits than expected, choosing not to release figures on sales at stores open at least a year.

Lululemon said it wouldn’t provide comp-store sales results for the quarter, stating that with states closed, “comps are not currently representative of the underlying trends of its business” and that the numbers aren’t “useful to investors in understanding performance.”

The stock had been up, however, 33% before Friday’s action, as investors touted the company’s ability to benefit from the pandemic, with consumers focused on health and wellness (and indulging in yoga pants while working remotely).

The company did say that direct-to-consumer sales climbed 68% year-over-year, and accounted for 54% of revenues, up from just over a quarter of sales in the year-ago period.

As of Wednesday, the company had 295 stores open.

--CrossFit CEO Greg Glassman announced he was stepping down following outrage over his inflammatory statements about the death of George Floyd.

Glassman’s statement came after BuzzFeed News published an article detailing a Zoom call in which Glassman told gym owners and staffers that “We’re not mourning” Floyd’s death.

The call was held on Saturday, hours before Glassman fired off an insensitive tweet about Floyd, sparking a quick backlash, with critics accusing Glassman of racism and saying he made light of Floyd’s police-involved killing.

--Adidas AG said it is increasing the number of black employees and investing $20 million in black communities after some U.S. employees complained the company was profiting off black culture without doing enough to help them.

The sportswear giant said a minimum of 30% of all new positions in the U.S. at Adidas and Reebok will be filled with black and Latino people and that it would finance 50 university scholarships for black students each year over five years.

“The events of the past two weeks have caused all of us to reflect on what we can do to confront the cultural and systemic forces that sustain racism,” said Adidas CEO Kasper Rorsted.

Some black employees have complained that the German company is far from equitable.  Neither its six-person executive team nor its 16-person board of directors includes a black member.

--Since George Floyd’s death on Memorial Day, CNN’s prime-time audience is up 238 percent over last year, according to Nielsen.  Fox News is up 61 percent and MSNBC 40 percent.

Fox News remains the most-watched cable network, but CNN has vaulted past MSNBC.  For last week Fox News averaged 3.86 million viewers, CNN 2.46 million and MSNBC 2.2 million.

ABC’s “World News Tonight” averaged 9.4 million, NBC’s “Nightly News” was second at 8.3 million and the “CBS Evening News” had 5.8 million.

--Last Friday Fox News aired a stunning graphic during “Special Report with Bret Baier” that correlated stock market gains following notable tragic events involving African-Americans.

The bar graph illustrated the percentage change in the S&P 500 one week after the 2014 police shooting of Missouri teen Michael Brown, the 1992 acquittal of cops charged with beating Rodney King, Martin Luther King Jr.’s 1968 assassination and George Floyd’s recent death in police custody.

Viewers were outraged.  Had I seen it I would have been outraged and noted it last WIR. 

A Fox News spokesman said: “The infograph…should have never aired on television without full context.  We apologize for the insensitivity of the image and take this issue seriously.”

Foreign Affairs

China / Taiwan: Taipei test-fired missiles off  its eastern and southern coasts as part of its missile development program designed to bolster its defense against China.  There will be other missile tests in the coming days as tensions mount between the two.

Australian Prime Minister Scott Morrison said that he would not be intimidated or give into coercion when asked on Thursday whether Australia would keep taking hits on exports from major trading partner China.

Diplomatic tensions between China and Australia have worsened after Australia called for an international inquiry into the source and spread of the coronavirus, angering Beijing.  Australia and the European Union have been leading an effort for an independent review and the World Health Assembly voted last month to support such an effort.

China has in recent weeks banned Australian beef imports and imposed tariffs on Australian barley.

North Korea: Kim Jong-un and his aides have made some harsh statements on U.S.-North Korean relations the past week.  Kim has no interest in maintaining a good relationship with Donald Trump, it was reported on the two-year anniversary of the leaders’ first summit.

The regime announced it sees no improvement in relations and says U.S. policies prove Trump’s administration remains a long-term threat to the secretive state and its people.

North Korean Foreign Minister Ri Son Gwon made a statement carried by state news agency KCNA, in which he slams a “hypocritical empty promise” made by Trump at the historic meeting two years ago in Singapore.

Ri said in retrospect the Trump administration appears to have been focusing on only scoring political points while seeking to isolate and suffocate North Korea, as well as threatening it with preemptive nuclear strikes and regime change.

Tuesday, North Korea said it would sever hotlines with South Korea as the first step toward shutting down all contact after days of lashing out at South Korea for not stopping defectors from sending leaflets and other material into the North.  On Wednesday, South Korea said it would take legal action against two organizations that conduct such operations.

Kwon Jong Gun, director-general for U.S. affairs at North Korea’s Foreign Ministry, said, “I am sick of the two-sidedness of the U.S. who is eager to stop inter-Korean relations when it shows sign of progress, but acts up when it seems to sour.  Not only would this be in the interest of the United States, but also be beneficial for a successful presidential election ahead,” Kwon said, telling the U.S. “to keep its mouth shut” unless it wants to go through “something terrible.”

It is unclear what North Korea would do to disrupt the election or cause problems for Trump’s re-election campaign.

But it seems clear to me that North Korea will soon be conducting more missile tests, and possibly a long-range ballistic missile test to once again prove it can hit the U.S.

It also seems clear that despite having said it has no confirmed cases of the coronavirus, experts are highly doubtful.  South Korea’s main intelligence agency said an outbreak there cannot be ruled out.

Israel: The Palestinian Authority said that if Israel annexes part of the West Bank on July 1, the PA will declare a Palestinian state based on the armistice lines from before the 1967 Six Day War and call on the international community to recognize it.

Speaking to members of the foreign press, Prime Minister Mohammad Shtayyeh also said he would expect the international front to impose sanctions on Israel if such a move was made.

“We are facing the moment of truth: nowhere on earth can we live with this annexation,” he threatened.  “If Israel goes to annexation, it is a different day for us…Annexation is an existential  threat to our future.”

Prime Minister Benjamin Netanyahu and Alternate Prime Minister Benny Gantz signed an agreement on April 20 that outlines the first dimension of annexation in the West Bank.  The agreement was based on support by the United States and its “Deal of the Century” peace plan, which President Trump rolled out at the end of January and allows for Israel to annex some 30% of the West Bank.

So look for fireworks in a few weeks.  Annexation would involve larger settlement blocs and/or the Jordan Valley.  Shtayyeh made clear, “All Jewish settlements on Palestinian territory are illegitimate and illegal,” he said.

Syria: President Bashar al Assad issued a decree on Thursday dismissing Prime Minister Imad Khamis from the post he had occupied since 2016, state media said. Assad designated engineer Hussein Arnous as his replacement. No reason for the sudden move was given but the country is in the throes of a deep economic crisis, with the currency plunging to record lows in recent days, aggravating hardships for ordinary Syrians.

Lebanon: Speaking of a plunging currency, protests have been escalating in Lebanon as the pound has tumbled to record lows, having lost 70% of its value since October.  The prime minister called for an emergency cabinet meeting to discuss the economic crisis.

Protests began last October and have grown again after a pause during the coronavirus lockdown.

Many Lebanese citizens who rely on hard currency savings have fallen into poverty, their plight worsened by the pandemic.  The government said tax revenue fell 12.5% in the first quarter, compounding issues.

Iran: An Iranian citizen who provided information to U.S. and Israeli intelligence services on the whereabouts of Iran’s slain top commander Qassem Soleimani will be executed soon, Iran’s judiciary said on Tuesday.

Russia / NATO: According to the Wall Street Journal, by President Trump’s order, the number of American troops in Germany is to be cut to 25,000 from 34,500 in the coming months.  German Foreign Minister Heiko Maas said Germany would take note of the decision, if confirmed.  “We value the cooperation with U.S. armed forces, which has grown over decades,” he told the Bild am Sonntag newspaper.  “They are in the interests of both our countries.”

Asked about German relations with the U.S., he replied: “It’s complicated.”

Allies of German Chancellor Merkel in the German Parliament assailed Trump more forcefully.

“The plans show once again that the Trump administration neglects an elementary leadership task: the involvement of allies in decision-making processes,” said Johann Wadephul, deputy leader of Ms. Merkel’s ruling conservative bloc in Parliament.  “All benefit from the cohesion of the alliance, only Russia and China from discord.”

Some 50,000 U.S. military personnel backed by billions of dollars of U.S. investment would remain across Europe and, as a senior U.S. official said last Friday, the large contingent in Germany is in any case less critical now thanks to increased military spending by other NATO countries.

George F. Will / Washington Post

“There are at least 104,149 U.S. military personnel who will not be leaving Europe. They rest in military graves, testimony to the cultural affinities and strategic vulnerabilities that produced the transatlantic alliance NATO, now 71 years old.

“Intelligent, informed, public-spirited people can support the policy, announced last week, of removing by September about one-third of the 34,500 U.S. troops stationed in Germany.  Forces there will be capped at 25,000.  Some might be moved elsewhere, perhaps to Poland.

“The difficulty of assessing this policy illustrates the toll taken by the inability to trust – it is now unreasonable to trust – the character, judgment and veracity of the president or his employees who interpret him to the public. The default assumption must be that this new policy primarily expresses presidential pique, which is always plentiful.

“Granted, it is reasonable to pressure Germany, which spends 1.38 percent of its gross domestic product on defense, to reach NATO’s target of 2 percent before, as Germany plans, in 2031.  But it also is reasonable to note the following:

“Angela Merkel, who has 30 years of experience in politics, including 15 years as Germany’s chancellor, and who has a doctorate in quantum chemistry, has bad chemistry with the first U.S. president with no prior government experience, civilian or military, and the first to designate himself a genius. Although the redeployment reportedly has been contemplated for a while, the New York Times reports that ‘a person briefed on the planning said that it had not been vetted by the National Security Council’s traditional policy deliberation process.’  It was announced, perhaps impulsively, after Merkel’s refusal to attend the Group of Seven meeting that President Trump wanted held in Washington at the end of this month.  (Trump’s suggestion to permanently enlarge the G-7 by adding Russia was stymied by Britain and Canada, who impertinently reminded him that they have something to say about this.)

“The redeployment gratifies Vladimir Putin, who since Russia’s 2014 annexation of Crimea has been slowly and not very stealthily dismembering Europe’s geographically largest nation: Ukraine.  Putin, the other world figure who is a cauldron of resentments, has a special grievance against NATO for its role in the Soviet Union’s demise, which he considers ‘the greatest geopolitical catastrophe of the century.’ He surely has enjoyed Trump’s denigration of NATO and would relish the alliance’s disintegration.  This could be accomplished by proving that Article 5 of the NATO pact has become a nullity: ‘The Parties agree that an armed attack against one or more of them shall be considered an attack against them all.’  Neither Putin, nor the Baltic states, nor NATO’s members can assume that Article 5 is among the few obligations that Trump takes seriously.

“Germany had not been officially notified of the redeployment when the Wall Street Journal reported it.  Trump probably believes that manners are for weaklings, but they do lubricate life’s frictions….

“Trump is terrified of appearing weak.  Polls indicate an increasing probability that he will slink away a loser.  He makes some national security decisions from petulance.  And he is fascinated with the military as a presidential toy for his amusement, self-expression and political posturing (e.g., the testosterone spill in Lafayette Square).  So, this might be pertinent:

“During the Nixon administration’s final days, when the president was distraught and erratic, Defense Secretary James R. Schlesinger instructed the most senior leaders of the armed services not to obey presidential orders without first consulting him or Secretary of State Henry Kissinger.  One hopes that the Trump administration’s responsible officials, however few they are, remember this episode in the final seven months of a president who is not waving.”

Editorial / Wall Street Journal

“The Chinese threat to democratic values extends far beyond the Pacific, and the U.S. needs allies across the world to resist. That’s one of many reasons President Trump’s partial withdrawal of U.S. troops from Germany would be damaging….

“Deterring Russian aggression is one purpose of the U.S. presence.  But the U.S. can also respond to far-flung threats faster thanks to its German bases.  U.S. Africa Command is based in Stuttgart, while other U.S. facilities support American efforts in the Middle East.  This lets the U.S. project power while maintaining a smaller presence in dangerous regions.

“Withdrawal is a gift to Vladimir Putin, who delights at divisions in NATO and has done nothing to warrant a drawdown of U.S. forces.  The Russian military said (last) Friday it is deploying a brigade with advanced equipment to the country’s west.  It’s a reminder that Russia, despite being an economic backwater, still poses a significant military threat to Europe.”

On a totally different issue, back on May 29, diesel oil started leaking from a storage tank near Norilsk in Russia’s Arctic north; so far at least 21,000 tons contaminating the Ambarnaya river and surrounding subsoil.  It is the worst accident of its kind in modern times in Russia’s Arctic region.

Investigators believe the storage tank sank because of melting permafrost, which weakened its supports.  The Arctic has had weeks of unusually warm weather, probably a symptom of global warming.

The power plant where it happened is run by a subsidiary of Norilsk Nickel, the world’s leading nickel and palladium producer.

So the oil then polluted a large freshwater lake, Lake Pyasino, which serves as the basin for the Pyasina river, which flows to the Kara Sea, part of the Arctic Ocean.

Last I saw, officials said they could prevent the spill from getting into the river.  If it hit the Arctic Ocean, this is an immense environmental catastrophe.

But you also know the huge issues presented by melting permafrost all over.

Mali: Last weekend, France said it had killed the leader of al-Qaeda in north Africa, Abdelmalek Droukdel, in an operation in Mali.  French forces also captured a senior Islamic State group commander in Mali.

So Viva la France!

Brazil: Editorial / Financial Times

Brazil’s last military dictatorship lasted just over two decades and ended in 1985 amid economic chaos and spiraling foreign debt.  It left deep scars from the persecution and killing of hundreds of political opponents, the exile of thousands more and widespread censorship.

“Latin America’s biggest nation has made great strides since.  A new constitution in 1988 laid the foundations for a democratic order.  The military withdrew from politics and won respect as a professional body serving elected presidents and carrying out peacekeeping missions abroad.  Newly powerful civilian institutions – the supreme court, congress and vibrant, independent media – flexed their muscles to such an extent that they forced two presidents from office for misconduct.

“These institutions have now attracted Mr. Bolsonaro’s ire. He is particularly angry about a Supreme Court probe into an alleged fake news operation involving his sons. The president has been incensed by an opposition request for his mobile phone to be searched for evidence in a separate inquiry.  Ominously, one of the generals in his government, Augusto Heleno, warned of ‘unpredictable consequences for national stability’ if the Supreme Court were to uphold the search request.

“Brazilians are now concerned the Mr. Bolsonaro may be attempting to provoke a crisis between the executive, the legislature and the judiciary to justify military intervention.  His falling poll ratings and mounting problems with the coronavirus pandemic…are hurting his chances of re-election.  Hopes of economic reform have evaporated and investors are voting with their feet, with large outflows of capital.

“So far, Brazil’s institutions have withstood the onslaught, with strong public support.  It is unlikely the army would back a military takeover to install Mr. Bolsonaro as an autocrat.  But other countries should take note: the risks to Latin America’s largest democracy are real, and they are growing.”

Random Musings

--Presidential tracking polls….

Gallup: 39% approval of Trump’s job performance, 57% disapproval; 85% of Republicans approve, 39% of independents (May 28-June 4).  Big drop from the last figures for May 1-13; 49/48, 92, 46.  The 85% of Republicans approving is the lowest since Sept. 2018.  But then some of us wondered how the heck back in mid-May, President Trump’s approval rating was 49%.  We have a long, long way to go to November.
Rasmussen: 43% approval of Trump’s performance, 55% disapproval (June 12).  Wow!

--A new CNN poll conducted by SSRS finds President Trump with an approval rating of 38%, down 7 points in the last month, while 57% disapprove.  That’s his worst job approval rating in this survey since January 2019.

Among registered voters, Joe Biden now has a 14-point margin over the president, 55% to 41%.

84% say the peaceful protests are justified in response to police violence against African Americans.

Two-thirds call racism a big problem in America today, up from 49% who said so in a 2015 CNN/Kaiser Family Foundation survey.

63% feel Biden would do a better job on the issue, just 31% choose Trump.  Among black voters, Biden is strongly preferred: 91% say he would do a better job on the issue and just 4% feel Trump would.

--A new Wall Street Journal/NBC News survey gives President Trump a 45% approval rating (53% disapprove), down 1 point from April.  Since the midterm elections, Mr. Trump’s approval rating has never dipped below 43% and has never risen above 47%, according to 18 polls during that time, which is remarkable.  [The Gallup poll had a 10-point swing just this last one.]

When asked whom they would choose “if the presidential election were held today,” voters responded 49% for Biden vs. 42% for Trump, the rest unsure or choosing neither.

The survey also posed the question “When it comes to the country these days, do you generally feel that things in the country are…,” to which 80 percent of respondents chose “out of control” versus 15 percent who chose “under control.”

Among Republicans, 48% said they were more concerned about the protests than the circumstances of Mr. Floyd’s killing, while 81% of Democrats held the opposite opinion.

One more…55% of voters disapproved of Trump’s handling of the virus, up from 52% in April and 51% in March.

--Five states held primary elections Tuesday but problems in Georgia took center stage.

Minnesota Dem. Sen. Amy Klobuchar, who has been pressing legislation designed to make it easier for the states to employ absentee balloting on Nov. 3, said in a statement:

“Today in Georgia, thousands of voters were met with long lines and confusion.  In America, people shouldn’t have to wonder if voting machines will be operational, if their mail-in ballot will arrive in time, or whether they will have to wait hours in line to exercise their right to vote.”

Congress must “make sure states have the resources they need to give Americans options to make their voices heard at the ballot box.”

Georgia voters were faced with fewer polling places due to the coronavirus and a shortage of poll workers, many of whom didn’t know how to operate the new voting machines.

--A case for Joe Biden….

[Literally an hour after I posted last Friday we received word Biden had passed the 1,991 pledged delegate threshold to become his party’s nominee.]

Kathleen Hicks and Michele Flournoy / Defense One

“America is in crisis, and our national security is becoming a casualty. President Donald Trump’s abject failure to lead has left us weaker as a people and as a global power.  The world watches our overdue reckoning with systemic racism and they see a president with an impulse for photo ops and force.  They watch, and see things like an American police officer beat an Australian cameraman after Trump tweets ‘when the looting starts, the shooting starts.’  They watch, and America’s international standing suffers. Allies and partners wonder whether this America will stand with them to meet common threats to free people.  Autocrats wonder if this America will look away when freedom is repressed and U.S. interests are threatened.

“The United States needs a new president, one who seeks to heal our divisions, grow Americans’ prosperity, and strengthen our society.  When we are stronger together at home, we can advance our security interests abroad.

“The next five years will be pivotal for U.S. national security. The coronavirus pandemic lays bare the fragility of our health security.  Climate change threatens generations of Americans. And authoritarian states are developing sophisticated weaponry, flouting other nations’ sovereignty, killing, jailing, and interning their own people, and leveraging modern technology to undermine our democracy.  We must build a new American foreign policy fitted to the global challenges we face.   Three imperatives stand out.

“First, we must secure America’s edge in the global economy by investing more substantially in the drivers of U.S. competitiveness: science and technology, research and development, STEM education, access to higher education, 21st century infrastructure like 5G-capable networks, clean energy, and a robust public health system.  We also need a smart immigration policy.  The United States should once again welcome foreign-born talent that pose no risks to our national security and encourage them to stay and build enterprises here in America.  Yes, we must protect key technologies essential to our security, but we can do so while also maintaining the open economy that drives our prosperity.  This is a moonshot moment and we need the national leadership, call to action, and smart investment plans to inspire and enable America to recover, compete, and win.

“Second, we must repair the damage to our alliances.  From tackling climate change to ensuring the integrity of international borders, our network of alliances magnifies our influence and multiplies the resources at our disposal.  Trump is squandering this unique strategic advantage….

“Third, we need a national security enterprise that is matched to future challenges.  Civilian capabilities form the centerpiece of America’s influence abroad, beginning with an expanded, experienced, and diverse diplomatic corps… Innovation in our military capabilities is also vital.  Chinese and Russian defense investments and activities threaten our ability to secure American interests to a degree unseen in thirty years.  Today, the Defense Department is not keeping pace with these developments, even as the Trump administration has increased defense spending year-over-year.  The United States must out-think and out-innovate its military competitors rather than simply seek to outspend them.

“This agenda requires skilled leadership in the White House.  It requires:

The ability to unify us rather than drive us apart: We agree with former Defense Secretary Jim Mattis. The nation needs a president who can help the country transcend its deep divides and restore rather than destroy the respectful civic discourse on which our democracy depends.

Experience….

Disciplined decision-making….

Commitment to putting the needs of the country before his own….

Respect for the core tenet of a non-partisan military: We need a president who understands that the armed forces take an oath to support and defend the Constitution, not to serve as partisan pawns and political backdrops….

“With years to meet these fitness standards, Donald Trump has failed.  He doesn’t pass muster for company command, let alone for commander in chief.  We will need Vice President Joe Biden to rebuild global trust in the credibility of America’s promises and the strength of our will to uphold them.  He can be the commander in chief the American people need and deserve.  Our national cohesion and security can’t wait another five years.”

--Editorial / USA TODAY

Mitt Romney has been showing the kind of political courage and independent thinking that is rare in an era of hyperpartisanship, particularly within the Republican Party.

“He was the only Republican in either chamber to vote against President Donald Trump on impeachment.  He has joined former Secretary of State Colin Powell in refusing to back Trump’s reelection.  And he appears to be the only GOP member of Congress to take part in one of the many anti-racism protests sweeping the country.

“While we have no special insight into Romney’s motivations, we’d be very surprised if this were some effort to rebrand himself as a moderate.  The Utah senator, and former GOP presidential candidate, is a conservative – opposed to abortion and supportive of free enterprise, robust trade, a strong national defense and social policies that generally reflect traditional values.

“Romney is not a politician departing the Republican Party but one trying to save it  He is saying and doing things that other Republicans would like to join in on, but can’t without risking the wrath of Trump supporters in their next primary election.

“Romney knows that today’s GOP is on an unsustainable path, built on a base shrinking in numbers while increasing in resentment.  The Republican Party has become three things, none of them good:

“A cult of personality in which lifelong public servants are forced to pay obeisance to a lawless, petty and incompetent leader…

“An organization dedicated to the airing of white grievances as it pushes counterproductive and often cruel immigration policies and tacitly supports racist and white supremacist causes…

“An institution perfectly willing to cling to power against popular sentiment through the grotesque gerrymandering of legislative districts and blatant voter suppression laws and policies.

“Needless to say, this is a long way from the ideas espoused by the GOP’s last great president, Ronald Reagan….

“Today, Republicans claim to revere Reagan while disavowing much of what he stood for, including political views grounded in reality and open to productive compromise.

“Except Romney.  He is willing to endure presidential tweetstorms, grassroots tantrums and broadsides from conservative pundits because he sees a party with little to be proud of as it hurtles toward oblivion….

“When the Republican Party is ready to abandon its destructive dalliance with attempted despotism, Romney will have earned a leading voice in rebuilding it.”

Romney marched with protesters at a Black Lives Matter event in Washington on Sunday.

Asked about Romney’s appearance, White House press secretary Kayleigh McEnany offered a nasty criticism.

“Mitt Romney can say three words outside on Pennsylvania Avenue, but I would note this: that President Trump won 8 percent of the black vote.  Mitt Romney won 2 percent of the black vote (in 2012).”

[Exit polling had Romney earning 6 percent in 2012, essentially the same as Trump’s 8 percent, plus Romney was running against a black president.  But both Romney and John McCain in 2008 did worse with black voters than prior Republican candidates.]

--A majority of the Minneapolis City Council over the weekend vowed to abolish the police force, though council members said such reforms would be a long, complex process and provided little detail on the way forward.

New York State lawmakers have passed a series of police reform bills – chief among them, the controversial 50-a repeal and replace bill requiring release of law enforcement disciplinary records subject to freedom of information laws.

A new Washington Post/Schar School poll found that 69% of Americans believe that George Floyd’s death signaled a broader problem with how police operate, up from 43% who said so in the aftermath of the killings that preceded protests in Ferguson, Mo., six years ago.

--In Washington, Congressional Democrats introduced a large police reform bill on Monday, the ‘Justice in Policing Act of 2020,’ which aims to increase transparency and limit abuses after unrest over George Floyd’s death.

House Speaker Nancy Pelosi said she does not support abolishing police, but that she could support “rebalancing some of our funding” so that issues such as mental health would be handled “more directly” rather than by police.

The bill calls for sweeping reforms to law enforcement, including tracking “problematic” officers through a national misconduct registry and limiting the safeguards in place keeping officers from facing legal or civil action in court.

--An investigation by USA TODAY Network found at least 85,000 law enforcement officers across the USA have been investigated or disciplined for misconduct over the past decade.

Reporters from USA TODAY, its affiliated newsroom across the country and the nonprofit Invisible Institute in Chicago spent more than a year creating the biggest collection of police misconduct records, and the records obtained include more than 110,000 internal affairs investigations by hundreds of individual departments and more than 30,000 officers who were decertified by 44 state oversight agencies.

--Army Secretary Ryan McCarthy told Politico on Monday that, after initially opposing the idea, he is now open to discussing renaming Ft. Bragg and nine other installations bearing the names of Confederate war heroes.

Ft. Bragg in North Carolina, is named after Braxton Bragg, who became a major figure in the Confederate army during the Civil War, meaning Ft. Bragg is named for an enemy combatant.

Most of the statues honoring Confederate generals were erected in campaigns to rehabilitate the image of the Confederacy, and as an act of intimidation against African Americans demanding equal treatment.  The memorials tied into the romanticized “Lost Cause” narrative that secession and the Civil War were about states’ rights in the face of “Northern aggression,” and in defense of Southern honor and way of life, which was built on a race-driven system of slavery and a belief in white supremacy.

The generals who took up arms against the United States were committing treason.

Retired Army Gen. David Petraeus wrote for the Atlantic on Monday:

“It would be years before I reflected on the individuals for whom these posts were named.  While on active duty, in fact, I never thought much about these men – about the nature of their service during the Civil War, their postwar activities (which in John Brown Gordon’s case likely included a leadership role in the first Ku Klux Klan), the reasons they were honored, or the timing of the various forts’ dedications.  Nor did I think about the messages those names sent to the many African Americans serving on these installations – messages that should have been noted by all of us.  Like many aspects of the military, the forts themselves were so shrouded in tradition that everything about them seemed rock solid, time tested, immortal.  Their names had taken on new layers of meaning that allowed us to ignore the individuals for whom they were named….

“It also happens that – [Gen. Robert E.] Lee excepted – most of the Confederate generals for whom our bases are named were undistinguished, if not incompetent, battlefield commanders

“For an organization designed to win wars to train for them at installations named for those who led a losing force is sufficiently peculiar, but when we consider the cause for which these officers fought, we begin to penetrate the confusion of Civil War memory.  These bases are, after all, federal installations, home to soldiers who swear an oath to support and defend the Constitution of the United States. The irony of training at bases named for those who took up arms against the United States, and for the right to enslave others, is inescapable to anyone paying attention. Now, belatedly, is the moment for us to pay such attention….

“(America’s) military has often led social change, especially in the area of racial integration.  We do not live in a country to which Braxton Bragg, Henry L. Benning, or Robert E. Lee can serve as an inspiration.  Acknowledging this fact is imperative.  Should it fail to do so, the Army, which prides itself on leading the way in perilous times, will be left to fight a rearguard action against a more inclusive American future, one that fulfills the nation’s founding promise.”

--Gerald F. Seib / Wall Street Journal

“The brutal shocks hitting America this spring have opened up a variety of financial deficits.  Perhaps more important, though, they have revealed a more pervasive underlying condition: a goodwill deficit.

“Put simply, too many Americans have stopped giving the benefit of the doubt to those with whom they disagree.

“For more than three months, America has been reeling from twin shocks: first a pandemic and associated economic slide, followed by the brutal killing of a black man in police custody and the ensuing protests. In an idealized world, these shocks might have pulled the country together in response.

“Instead, the U.S. has experienced angry protests from the right over reopening the economy, followed by angry protests from the left over racial injustice. In what amounts to a symbol of the moment, a high steel fence now has been erected for blocks around the White House, designed to keep away not foreign terrorists but American citizens.

“What has happened?

“That is a complex and emotionally fraught question, but part of the answer lies here: a growing tendency to see those with whom you disagree as not merely wrong, but evil.  There is a diminishing willingness to believe that the person on the other side of the debate – any debate – is well intentioned….

“Such attitudes helped produce the partisan divide that now colors almost every issue. This absence of goodwill didn’t begin amid these crises.  The trend was present and documented before, setting the stage for this spring’s discontents.

“A 2019 survey sponsored by the Brookings Institution, for example, found that 82% of Republicans think the Democratic Party has been taken over by socialists.  On the other hand, 80% of Democrats think the Republican Party has been taken over by racists.

“Similarly, a paper presented last year by political scientists Nathan P. Kalmoe and Lilliana Mason cited a survey showing that nearly 60% of Republicans and more than 60% of Democrats agreed that the opposing party is a serious threat to the U.S. and its people….

“Perhaps most stunning is the partisan divide that has opened up over the simple, seemingly nonpolitical decision to wear a mask in public because of the coronavirus. Those who say they always wear a mask in public settings said they support Joe Biden, the Democrats’ presumptive presidential nominee, over Mr. Trump, 66% to 26%, in this year’s election.  Those who never or rarely wear masks backed Mr. Trump, 83% to 7%.

“ ‘These are really powerful signs that our partisan filter is the way we see everything in this country,’ says Bill McInturff, a Republican pollster who conducts the [Wall Street Journal/NBC News] survey along with Democrat Jeff Horwitt.

“And goodwill has become a casualty of the process.”

--Editorial / Wall Street Journal

“America’s political leaders haven’t distinguished themselves in the aftermath of George Floyd’s death, so allow us to introduce you to Air Force Gen. Charles Q. Brown Jr.  The Senate confirmed Gen. Brown on Tuesday as chief of staff for the Air Force, making him the first African-American to lead a major branch of the military.

“Colin Powell was chairman of the joint chiefs but didn’t run a military service.  Gen. Brown made his way through the ranks the hard way as an F-16 pilot flying some 3,000 hours and holding Air Force commands in Asia and the Middle East.  He recently led the U.S. Pacific Air Forces, which offered him insight into the rise of China’s military.

“But what struck us more than even his distinguished career was the five-minute video Gen. Brown recently made for those under his command.  The statement stands out at this polarized political and cultural moment for its honest and nuanced reflections on the ‘two worlds’ he has inhabited as a black man in a majority white America and as a military officer.

“His patriotism and dedication shine through even as he recounts the difficult moments he’s faced as people made judgments about him based on race.  His thoughtful words offer an example to us all.”

From Gen. Brown’s June 5 video.  [He was confirmed by the Senate June 9.]

“As the commander of Pacific Air Forces, a senior leader in our Air Force, and an African-American, many of you may be wondering what I’m thinking about the current events surrounding the tragic death of George Floyd.  Here’s what I’m thinking about.

“I’m thinking about how full I am with emotion, not just for George Floyd, but the many African-Americans that have suffered the same fate as George Floyd.  I’m thinking about protests in my country – ‘tis of thee, sweet land of liberty – the equality expressed in our Declaration of Independence and the Constitution that I’ve sworn my adult life to support and defend.

“And thinking about a history of racial issues, and my own experiences that didn’t always sing of liberty and equality. I’m thinking about living in two worlds, each with their own perspective and views. I’m thinking about my sister and I being the only African-Americans in our entire elementary school and trying to fit in.  I’m thinking about then going to a high school where roughly half the students were African-American – and trying to fit in….

“I’m thinking about our two sons, and how we had to prepare them to live in two worlds.  I’m thinking about the frank and emotional conversations that my wife and I have had with them just this past week, as we discuss the situations that have led to the protests around our country….

“I’m thinking about how I may have fallen short in my career, and will likely continue falling short living up to all of those expectations.  I’m thinking about how my nomination provides some hope, but also comes with a heavy burden.  I can’t fix centuries of racism in our country, nor can I fix decades of discrimination that may have impacted members of our Air Force.  I’m thinking about how I can make improvements – personally, professionally and institutionally – so that all airmen, both today and tomorrow, appreciate the value of diversity in a conservative environment where they can reach their full potential.

“I’m thinking I don’t have all the answers on how to create such an environment, whether here in Pacaf [Pacific Air Forces] or across our Air Force.  I’m thinking about, without clear-cut answers, I just want to have the wisdom and knowledge to lead during difficult times like these. I want the wisdom and knowledge to lead, participate in and listen to necessary conversations on racism, diversity and inclusion.  I want the wisdom and knowledge to lead those willing to take committed and sustained action to make our Air Force better.”

---

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

We honor our healthcare workers and first responders.

God bless America.

---

Gold: $1737
Oil: $36.56

Returns for the week 6/8-6/12

Dow Jones  -5.6%  [25605]
S&P 500  -4.8%  [3041]
S&P MidCap  -7.9%
Russell  2000  -7.9%
Nasdaq  -2.3%  [9588]

Returns for the period 1/1/20-6/12/20

Dow Jones  -10.3%
S&P 500  -5.9%
S&P MidCap  -14.7%
Russell 2000  -16.8%
Nasdaq  +6.9%

Bulls 56.9
Bears 20.6

Hang in there.  Wash your hands.

Brian Trumbore