Week in Review

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Week in Review

03/20/2021

For the week 3/15-3/19

[Posted 10:00 PM ET, Friday]

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Edition 1,144

Today, President Joe Biden and Vice President Kamala Harris went to Atlanta to offer solace to Asian Americans reeling from a spate of hate crimes, and this week’s attack by a single white gunman that killed eight people in the city and a suburb, most of the victims being Asian American women.

“Hate can have no safe harbor in America,” Biden said, calling on Americans to stand up to bigotry when they see it.  “Our silence is complicity. We cannot be complicit.”

Biden said “it was heart wrenching to listen to” Asian American state legislators and other community leaders discuss living in fear of violence during their meeting before he and Harris delivered remarks at Emory University.

“Racism is real in America,” said Harris.  “And it has always been.  Xenophobia is real in America, and always has been. …Th president and I will not be silent.  We will not stand by. We will always speak out against violence, hate crimes and discrimination, wherever and whenever it occurs.”

Since March 2020, nearly 3,800 incidents have been reported to Stop AAPI Hate, a California-based reporting center for Asian Americans and Pacific Islanders, and its partner advocacy groups, since March 2020.

It’s a shameful time in America.  I’m ashamed.  I’ve thought a lot this week about Pacific Islanders.  I’ve been to Guam six times in my life.  For starters, it’s a great spot to break up a trip to the Far East, especially for someone like me to catch up on work before continuing on.  I always stay a night, or two, at a hotel on the main beach, and you immediately feel relaxed. 

The Chamorros are the native people of the island and you have never met any friendlier folks on the planet.  They are known for that.  Just kind.

Another reason for my trips to Guam is you can’t get to my beloved Yap in Micronesia without flying from Guam.  That’s where I built a church, after being directed to the spot by the Jesuits in New York.  On Yap I made some great friends, like Margaret G., who I miss dearly, and Helen, who I met on my first trip way back in the mid-1990s, and Ulysses, this giant of a gentle man who used to take me out on the boat to reach the island where the church is.  They were always in wonder. Why the heck would I travel all that way to do something for them?  They have nothing.  Once 50 of them put on a feast for me.  It was touching.  But they have no idea what they have done for me.  I’m better for knowing them.

And so I’m hurt by the hate some Americans are showing for AAPI.  There are some days you just get disgusted with your own people.  Today, I wished I was on the beach in Guam, knowing the next day I was taking the island hopper to Yap to see my friends, drink beer and laugh.

Joe Biden’s Agenda, Crisis

--President Biden’s next major economic package is basically dead on arrival, or he’d have to rely on a Democrat-only approach after Senate Minority Leader Mitch McConnell shut the door Tuesday on Republican support for a major infrastructure package that contains tax hikes to pay for it.

West Virginia Democrat Joe Manchin has insisted Democrats at least try to work with Republicans – and Biden continues to hold out hope – but there’s little expectation such a bipartisan path exists for anything close to the scale that the White House wants, and certainly not for the taxes on wealthy individuals and corporations.

Democrats could still try to employ the ‘reconciliation’ maneuver used to pass his $1.9 trillion stimulus package with a simple majority vote, but no one expects this to fly, so you’ll need bipartisan support to get at least some of it.

Among proposals currently planned or under consideration, would be raising the corporate tax rate to 28% from 21%, as well as hiking the income tax rate on individuals earning more than $400,000.

But the overall program has yet to be unveiled.

--President Biden implored lawmakers to enact permanent protections for immigrants without legal status who came to the United States as children, a path that would formalize their footing in a country they have known as home for years.

But while the House approved a ‘Dreamers’ bill, Senate Republicans made it clear that any measure that includes legalization would be difficult absent measures that would bolster border enforcement and tighten U.S. asylum laws. At least 10 Republican senators would be needed to pass such legislation.

“They’ve got a choice to make: Do they want to control the border and set the conditions for an immigration solution, or do they want to just say, ‘I was the opposite of Trump’?” Sen. Lindsey Graham (R-S.C.) said in an interview Thursday.  “Right now, they’re on a glide path not to be able to get anything done on immigration and have a political nightmare on their hands.”

Graham and Sen. Richard Durbin (D-Ill.) have introduced legislation that, like the House approved on a 228-197 vote Thursday, would create a pathway to citizenship for about 2.5 million immigrants who came to the United States as children.

But Graham is also calling for the reinstatement of the so-called “remain in Mexico” policy of the Trump administration that Biden quickly reversed, which requires asylum seekers to wait for their court hearings outside U.S. soil.

Meanwhile, the crisis on the border just gets worse.  Tuesday, President Biden issued a blunt message to migrants thinking about crossing the border: “Don’t come.”

In his ABC News interview with George Stephanopoulos, the question was asked, “do you have to say quite clearly, ‘Don’t come’?”

“Yes, I can say quite clearly: Don’t come over,” Biden replied.  “Don’t leave your town or city or community.”

But then the president basically said, ‘wait until we have a plan in place.’

At least 4,200 migrant children are being held by Border Patrol, with at least 3,000 of them staying in custody longer than the 72-hour limit set by a court order, a U.S. official told the Associated Press.

FEMA announced it would use a Dallas convention center as a temporary shelter for the migrant boys.  It has space for about 2,300 teenagers.

But there are signs tonight the administration is getting tough and stepping up the expulsions of families with children back across the border into Mexico.

Editorial / Wall Street Journal

“The clear signal to migrants, and to the human smugglers who run people across the border, is that now is the time to come to America.  That signal was magnified by the White House message that it wants to legalize the 11 million or so undocumented migrants already in the U.S. with a fast track to citizenship. Message: Get in as fast as you can to qualify.

“Meanwhile, the Biden proposal offers migrants few incentives to wait and enter legally.  In a concession to unions, the bill offers no new pathways for guest workers who could enter legally to work in unfilled jobs.  Without the ability to move back and forth legally, more migrants will enter illegally and take their chances on getting caught.

“President Biden has backed himself into this box canyon by failing to heed political and economic reality.  Americans want to be generous to immigrants, but they also reject the view that the U.S. can finance the healthcare and education of anyone who breaks U.S. law to get here.  That should be clear enough from the immigration reform failures going back to George W. Bush in 2007.

“U.S. immigration politics is stalemated by the extremes of the entry-for-everyone left and the Stephen Miller restrictionist right.  Even modest reforms won’t pass without public confidence that the government isn’t inviting a rush of illegal migration that overwhelms the border and produces a human crisis.  An urgent White House rethink is necessary.”

--The issue of the filibuster in the Senate is becoming an all-consuming one.  The following best encapsulates the problems faced on both sides.  It’s tempting for the Democrats to just blow it up and pass their agenda through the use of tiebreaker Kamala Harris, but they won’t always be in power.

Editorial / Wall Street Journal

“The biggest question in Washington for the next two years isn’t about a single policy or whether President Biden will expose himself to a press conference.  It’s whether Democrats use their narrow Senate majority to kill the legislative filibuster rule requiring 60 votes in order to ram a radical agenda into law with a mere 50 votes plus Vice President Kamala Harris.

“Two Democrats – Kyrsten Sinema of Arizona and Joe Manchin of West Virginia – promised at the start of the year that they wouldn’t vote to do so. But progressive and media pressure is building on the pair to renege on their pledges, as legislation passed by the House piles up at the Senate door. Democratic Senate leaders are vowing that they’ll find a way to evade the filibuster one way or another.

“Republicans can see these signs, and on Tuesday Minority Leader Mitch McConnell made clear what would happen if they do kill the filibuster. It won’t be pretty.

“ ‘Some Democratic Senators seem to imagine this would be a tidy trade-off, if they could just break the rules on a razor-thin majority.  Sure, it might damage the institution, but then nothing would stand between them and their entire agenda, a new era of fast-track policy-making,’ the GOP leader said.

“Don’t count on it, Mr. McConnell continued: ‘So let me say this very clearly for all 99 of my colleagues. Nobody serving in this chamber can even begin, can even begin to imagine what a completely scorched-earth Senate would look like.  None of us have served one minute in the Senate that was completely drained of comity and consent.’

“He then explained what that could mean in practice if Republicans responded by withdrawing the unanimous consent required for the Senate to function: ‘I want our colleagues to imagine a world where every single task, every one of them, requires a physical quorum – which, by the way, the Vice President does not count in determining a quorum.’

“That’s right. A quorum without unanimous consent is 51 Senators, and there are only 50 Democrats.  If Republicans kept their nerve in opposition, Democrats couldn’t confirm nominees or vote on legislation.  The Nancy Pelosi-Joe Biden agenda couldn’t move any more than if there were a filibuster.

“Democrats may think this is a bluff, or that the public would revolt if Republicans ground Senate business to a halt.  But are they willing to make that bet?

“Democrats shouldn’t underestimate how united Senate Republicans would be, and how much GOP grass-roots support they’d have, if Democrats break the filibuster in a 50-50 Senate to federalize 50-state election laws, force mandatory unionization on 26 states with right-to-work laws, add two new states to pack the Senate, or pass the Green New Deal.

“Mr. McConnell pointed out the obvious that majorities aren’t permanent and eventually Republicans would be in position to rule the Senate without a filibuster.  Imagine what they might pass?  Mr. McConnell gave a few examples – defunding Planned Parenthood – but for political flavor think GOP Sens. Josh Hawley and Rand Paul unbound.

“These columns have been frustrated by many Democratic filibusters over the years, but the rule exists to protect minority rights and require large majorities for significant reforms.  If Democrats blow it up on the narrowest of majority votes, they will own the unintended consequences.”

--I don’t have to watch Fox News tonight to know that President Biden’s stumbling, multiple times, as he walked up the stairs to Air Force One this afternoon is no doubt being played on loop and feeds into the narrative he isn’t up to the job.  His press conference this coming week is big, let alone long overdue.

Michael Goodwin / New York Post

“It’s early, but not too early to give Politico the scoop of the year award for this: ‘The president so far has surprised some of his former colleagues and allies with a largely gaffe-free White House debut after a lifetime of verbal stumbles.’

“The hoops you have to jump through – and with your eyes closed! – to reach a sweeping conclusion like that is what makes it award winning.  First, you must, at least temporarily, steel your mind to reject any contrary facts, including that President Biden has not held a press conference, meaning the chance for gaffes and inanities are basically zero because he always gets to read from a Teleprompter.

“You also have to overlook the fact that he is only slightly more willing to give interview requests, which also reduces his chance to screw up. Finally, you have to pretend that he didn’t commit the many gaffes he committed when he did venture to talk with the media.

“Other than that, good job.  That’s how you win the big prizes in Washington.

“Only later, in an on-the-other-hand sequence, do the Politico writers admit the contradictions that obliterate their opening.  The most notable is that they point out that after Biden’s lone interview since taking office, with CBS,* the White House ‘had to clarify his comments on whether Trump would receive intelligence briefings, the fate of the $15 minimum wage, and what Iran needed to do in negotiations surrounding the country’s nuclear program.’

*Goodwin wrote this prior to Biden’s interview with ABC News.

“No wonder he’s hiding – three major ‘clarifications’ after one interview is a good reason not to do another.  But hey, no gaffes, no worry.

“The story is in some ways typical of the big picture which shows, now that Donald Trump is gone, the media are free to return to trivial pursuits to protect their chosen president.  For four years, we were assured that journalism was about saving American democracy. Now journalism is about…nothing.

“That might be reasonable if there was nothing to cover. But the willful blindness illustrates how most of the Washington press corp has put aside the brass knuckles it used on Trump and taken out the pom-poms to cheerlead for another Democrat in the White House.

“If they were serious about covering Biden seriously, the media would examine the elephant in the room instead of just mentioning it. Why exactly isn’t the president of the United States available for questions?”

Well, the press will get to fire away at Biden’s first presser this coming Thursday. 

Goodwin:

“Here’s hoping it’s a wide-open affair and not a series of softballs from reporters chosen for their friendliness.

“But beyond the actual questions and his answers, that will be an opportunity to make a fresh assessment of whether there is any reason to be concerned about Biden’s mental acuity. The fact that he’s been largely invisible tells me there is.

“To deny that is to glibly assume that everything is fine with a 78-year-old man who is obviously not as sharp as he was just a few years ago and who is being hidden from the public in ways that are unprecedented, especially at the start of a new administration.

“With its timid acquiescence, the media has participated by treating the president’s absence as no bid deal.  It is a big deal.  A very big deal.”

--Former top economic adviser Gene Sperling was tabbed to oversee implementation of the $1.9 trillion Covid stimulus plan.  Sperling, who advised Biden’s presidential campaign and served under former Democratic Presidents Obama and Clinton, heading the National Economic Council for both, will work with officials across the administration.  It’s critical that funds go out quickly to where they belong.

The Pandemic

The United States has plateaued at 50,000+ cases a day, 63,000/65,000 the last two days, far more than where we need to be.  It’s disturbing that the growing feeling here is that the pandemic is essentially over.  Vaccines are going into arms, states are racing to reopen, and yet there is a ton of the stuff still out there.

Look at Europe.  It’s terrifying.  Germany, France, Italy, Poland, Ukraine, Hungary, Turkey…all spiking anew.

And Brazil’s story gets worse by the week.  More record daily death totals.

Covid-19 death tolls, as of tonight….

World…2,712,642
USA…554,104
Brazil…290,525
Mexico…196,606
India…159,594
UK…126,026
Italy…104,241
Russia…94,267
France…91,679
Germany…75,073
Spain…72,910
Iran…61,649
Colombia…61,771
Argentina…54,476
South Africa…52,035
Peru…49,706
Poland…48,807
Indonesia…39,339
Turkey…29,864
Ukraine…29,515
Czechia…24,331
Belgium…22,624
Canada…22,617
Chile…22,087
Romania…22,020

Source: worldometers.info

U.S. daily death tolls…Sun. 629; Mon. 785; Tues. 1,248; Wed. 1,288; Thurs. 1,705; Fri. 1,268.

Covid Bytes

--The Centers for Disease Control and Prevention relaxed its social distancing guidelines for schools Friday, saying students can now sit 3 feet apart in classrooms.

The revised recommendations represent a turning away from the 6-foot standard that has forced some schools to remove desks, stagger scheduling, and take other steps to keep children away from one another.

Massachusetts has been directing school districts since last year to follow a 3-foot guidance, citing evidence and support from public health experts there that 3 feet – combined with other mitigation measures – is enough to keep students safe.  Mask wearing, however, is still very important in a school setting.

“I want to emphasize that these recommendations are specific to students in classrooms with universal mask-wearing,” said CDC Director Rochelle Walensky. And students should continue to maintain six feet of distance when interacting with teachers and other school staff.

--Britain’s medicines regulator said there had been five cases of a rare type of blood clot in the brain among 11 million given AstraZeneca’s Covid-19 vaccine but said that it found the benefits of the shot far outweigh any possible risks.  Concerns about reports of blood clots have led to some European countries including Germany to pause the rollout of the shot while the cases are investigated.

Britain’s Medicines and Healthcare products Regulatory Agency (MHRA) said that use of the vaccine should continue while five reports were investigated, and one official said that the rollout would likely continue even if a link was proved.

“There is no evidence that blood clots in veins is occurring more than would be expected in the absence of vaccination, for either vaccine,” said June Raine, MHRA Chief Executive, referring to AstraZeneca and Pfizer shots.

The European Medicines Agency is investigating reports of 30 cases of unusual blood disorders out of 5 million people who got the AstraZeneca vaccine in the EU.

Earlier in the week, the AstraZeneca nightmare had worsened, with a number of countries halting shots over safety fears.  At least 10 countries including Italy and Norway reacted after Austria, and later Denmark, raised concerns over the possible side effects from two batches, and temporarily halted their vaccine rollouts.

But today, the World Health Organization’s vaccine safety panel said the data from AstraZeneca’s shot do not point to any overall increase in clotting conditions but it would continue to monitor its effects.

“The AstraZeneca Covid-19 vaccine continues to have a positive benefit-risk profile, with tremendous potential to prevent infections and reduce deaths across the world,” the WHO said in a statement.

And by end of the week, France, Germany, Italy and Spain said they would resume administering the vaccine.

That said, the health scare emerged against a backdrop of further supply woes.

And the spike in cases….

--As an example of the latter, France imposed a month-long lockdown on Paris and parts of the north after a faltering vaccine rollout and spread of highly contagious variants forced President Emmanuel Macron to shift course as the nation experiences a third wave.

Since late January, when he defied the calls of scientists and some in his government to lock the country down, Macron has said he would do whatever it took to keep the economy as open as possible.  But this week he ran out of options just as France and other European countries suspended use of the AstraZeneca vaccine.

The rapid spread of the variant first detected in Britain, now accounting for three quarters of all cases in France, has filled intensive care wards, notably in the Paris region.

Schools are staying open, however.

--The bad press on AstraZeneca does supply anti-vaccine activists with ammunition and that is not good.  And it would be a shame if AstraZeneca’s reputation is unduly tarnished for any future vaccination efforts, let alone the current one.

As the Irish Times’ health editor Paul Cullen put it, after the news in Norway that patients suffered serious blood clotting events after being administered the AstraZeneca vaccine: “Correlation is not causation; just because one event happed after another does not mean the second was caused by the first.”

--Tanzania President John Magufuli died this week.  He was 61.

Magufuli died from heart complications at a hospital in Dar es Salaam, the country’s vice president said in an address on state television.

I bring this up here because he had not been seen in public for more than two weeks, and rumors have been circulating he had Covid-19.

Magufuli was one of Africa’s most prominent coronavirus sceptics, calling for prayers and herbal-infused steam therapy to counter the virus.

The vice president, Samia Suluhu Hassan becomes president and will serve the remainder of Magufuli’s five-year terms which he began last year.

The prime minister had insisted last week that the president was “healthy and working hard.”  He blamed the rumors of the president’s ill-health on “hateful” Tanzanians living abroad.

But opposition leader Tundu Lissu told the BBC that his sources had told him Magufuli was being treated in hospital for coronavirus in Kenya.

--New York Gov. Andrew Cuomo has been easing more restrictions as infection rates in the state continue to go down and vaccination rates increase.  Some say he’s being too aggressive in order to distract from his sexual harassment issues.

Starting April 1, large outdoor stadiums with 2,500+ capacity can have 20% of fans in the stands, meaning Citi Field can have 8,384 fans for the Mets home opener on April 8 and Yankee Stadium can have 10,850 fans in attendance for the Yankees home opener on April 1.

Proof of a negative test or immunization will be required.  Strict protocols, such as social distancing and mask wearing, will be in place.

New Jersey has also reopened, to 50% of capacity for restaurants, gyms, casinos and more. Our governor, Democrat Phil Murphy, is the only major politician up for election (re-election) this fall so he faces a lot of pressure to open up, even though our Covid #s are heading higher…not down.

--Duke University issued a quarantine order for all of its undergraduates effective last Saturday night due to a coronavirus outbreak caused by students who attended recruitment (rush) parties, the school said.  The school reported more than 180 positive Covid cases among students, while there are an additional 200 students who may have been exposed and have been ordered to quarantine.

--Last Sunday, appearing on the morning news programs, Dr. Anthony Fauci said he hoped Donald Trump will push his supporters to get the Covid vaccine.  And then on Tuesday, in an interview on Fox News Primetime, Trump urged his supporters to be vaccinated, saying it was “safe” and “something that works.”

As we learned a few weeks ago, Trump and his wife, Melania, were vaccinated at the White House in secret in January.

“I would recommend it,” Trump said during the interview.  “I would recommend it to a lot of people that don’t want to get it and a lot of those people voted for me, frankly.”

But various polls show anywhere between 41% and 50% of Republicans say they probably or definitely will not get the shot – compared with 17% of Democrats (Associated Press-NORC Center for Public Affairs Research).

Wall Street and the Economy

The Federal Reserve held its Open Market Committee meeting his week and Chairman Jerome Powell reiterated the central bank’s commitment to supporting financial markets until the economy fully recovers – which investors cheered on Wednesday, following his press conference and the Fed’s bullish outlook, but then on Thursday, the yield on the 10-year Treasury, the key benchmark for lending costs, breached 1.70% for the first time since January 2020, and stocks fell, particularly Nasdaq, down 3% that day.

With borrowing costs going up for businesses and individuals alike, investors tend to sell pricey tch stocks that look less valuable in a rising rate environment and load up on cyclicals that are poised to benefit from the strong economic rebound.  This rotation has been going on for weeks at this point.

The Federal Reserve raised its average growth forecast for 2021 to 6.5% - up from the 4.2% it predicted in December, owing to the vaccination campaign and the $trillions of dollars of fiscal stimulus. And the Fed said the outlook for recovery in the labor market had also brightened.  But the Fed kept interest rates unchanged, with most members of the FOMC expecting to keep borrowing costs near zero until after 2023, according to projections released by the Fed as part of its meeting.

The unemployment rate is seen falling from its current 6.2% to 4.5% by year’s end and to 3.9%, near a healthy level, at the end of 2022.

Chair Powell said the bank wanted to see proof of a more complete recovery before altering its policies, which are focused on stimulating economic activity.

“The state of the economy in two or three years is highly uncertain,” he said, “and I wouldn’t want to focus too much on the exact timing of a potential rate increase that far into the future.”

Powell is focused on the more than 9.5 million that remain out of work (vs. the number employed prior to the pandemic striking) and the parts of the economy most affected by the pandemic – leisure and hospitality – remain weak, he said.  The damage has disproportionately affected minority and low-wage workers, who are often the last to benefit from an economic rebound, he added.

“The recovery has progressed more quickly than generally expected,” Powell said at a press conference after the meeting.  “While we welcome these positive developments, no one should be complacent.”

And: “We will continue to provide the economy the support that it needs for as long as it takes.”

In voting unanimously to maintain overnight interest rates near zero, where they have been set for the past year, the FOMC also said it would continue to purchase at least $120 billion of Treasury bonds and mortgage-backed securities monthly.  Powell said the measures “will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete.”

On inflation, the Fed now seeks a rate “moderately above 2% for some time” to compensate for the past shortfall before it will consider raising rates.  Their median forecast now shows annual inflation accelerating to 2.4% in the fourth quarter of this year, up from their December projection of 1.8%, and remaining at or slightly above 2% through 2023.

Today, Richmond Federal Reserve Bank President Thomas Barkin, in an interview on CNBC, said:

“There’s a lot of momentum in the economy right now.  I think we are going to have a very strong summer, a very strong fall, as pent-up demand comes back in the economy, as vaccines roll out, and I think the economy is going to be strong enough to take somewhat higher rates.”

Barkin reiterated what Powell was saying; that being the Fed won’t be ready to increase  short-term rates until the economy meets clear benchmarks laid out for liftoff: full employment, 2% inflation, and inflation on track to exceed 2% for some time.  Barkin doesn’t see a multi-year surge in inflation.

Meanwhile, the Atlanta Fed’s GDPNow barometer for the first quarter fell to 5.7% after poor data this week on retail sales and housing starts.

February retail sales unexpectedly declined 3.0%, after a 5.3% gain in January, -2.7% ex-autos, due to winter storms and supply-chain disruptions, though a broader economic rebound is poised to accelerate this spring with the easing of Covid restrictions and the massive stimulus relief package.  [Over the last three months, retail sales were up 6% over the comparable period a year earlier.]

Housing starts in the month came in at a 1.421 million annualized pace, far below expectations and after a 1.584m January figure.

The number of Americans applying for first-time unemployment benefits rose this week to 770,000 from 725,000 the prior week, not a good sign…and further proof of Chair Powell’s main concern.

Lastly, if you didn’t hear, the IRS announced Wednesday it is postponing the country’s tax-filing deadline until May 17, as the agency grapples with a mounting backlog of 24 million returns awaiting processing since the 2019 tax year.

The agency is under fire – as lawmakers worry the long-unresolved troubles at the IRS could undercut the Biden administration’s economic recovery plan.  Millions of Americans have not received some stimulus checks under prior aid packages, even as the IRS distributes payments under the new $1.9 trillion package signed into law last month.

The backlog has impacted tax refunds, while at the same time preventing some cash-strapped workers and companies nationwide from taking advantage of some of the stimulus benefits that Congress authorized to blunt the economic impact of the pandemic.

Europe and Asia

Little of import on the eurozone data front, with key preliminary PMI numbers coming out next week, which will give us a sense of the impact of renewed coronavirus restrictions.

Inflation numbers for February were released by Eurostat and came in at 0.9% annualized for the euro area, unchanged from January and compared with 1.2% in February 2020.

Germany 1.6% (ann.), France 0.8%, Italy 1.0%, Spain -0.1% and Ireland -0.4%.

Brexit: A fight over vaccines between the UK and the European Union intensified Wednesday, highlighting fast-deteriorating relations that have already been set back by disputes over Brexit.

The latest blow came when the EU announced it would consider giving member states more power to block Covid-19 vaccine exports, of which the UK has been the largest non-EU recipient.

The UK’s vaccine campaign has delivered at least one shot to almost half the adults in the country, in contrast with the EU’s faltering rollout.

Actions by both the UK and the EU have shaken confidence in a part of the divorce treaty that was aimed at avoiding a border on the island of Ireland after Brexit.  Britain has refused to grant the EU’s envoy in London full diplomatic status, resulting in Britain’s ambassador in Brussels being frozen out of meetings.  And as I noted last week, trade between the UK and the EU has fallen dramatically because of the pandemic and new barriers introduced this year for the first time in almost five decades.

Turning to Asia…China’s National Bureau of Statistics released economic data showing industrial production, consumption, investment and home sales in January and February all jumped by more than 30% from the same period a year ago, when the Chinese economy was largely shut down to contain the fast-spreading coronavirus.

Industrial output in the January-February period (combined due to the Lunar New Year holiday) rose 35.1% from a year earlier, while retail sales expanded 33.8%.

Home sales by volume, an indicator of demand, soared 143.5% in the first two months of 2021 vs. a year ago, and fixed-asset investment increased 35.0% over that period.

But China’s benchmark measure of joblessness, the surveyed urban unemployment rate, ticked higher to 5.5% in February from 5.2% in December.

If you compare some of the data points to comparable periods in 2019, to throw out the impact of the pandemic last year, industrial output for January and February increased by 16.9%, while retail sales were 6.4% higher, the statistics bureau said.

For the full year, Beijing has set a relatively modest growth target of 6% or more.  Many economists say the figure could be closer to 8%.

The Bank of Japan dropped its annual target for stock purchases Friday, a shift for the central bank after years of building a stock portfolio worth hundreds of billions of dollars.

Since 2016, the BOJ had said it would seek to buy about $55 billion in exchange-traded stock funds annually.  In March 2020, when the coronavirus pandemic was developing, it added that it could buy up to twice that amount annually when the market was falling rapidly.

On Friday, it dropped the $55bn target but reiterated it was ready to step in with larger purchases if needed.

The move came after a rapid rise in stock prices over the past year that has brought the Nikkei Stock Average near a 30-year high.  As of March 1, the BOJ’s stockholdings were worth more than $450 billion, making it the single largest holder of shares in the Tokyo market.

Some critics have said the outsize presence of the central bank is interfering with the independence of the stock market and have called on the BOJ to pull back.

Also Friday, the central bank fine-tuned its interest-rate policies, saying it was girding for a lengthy effort to achieve its 2% inflation target.  The BOJ said the 10-year Japanese government bond yield could move more freely around its zero target.  It said it would let the 10-year JGB yield to move in a range between minus 0.25% and plus 0.25%, a little wider than previous verbal guidance.

Separately, Japan’s exports fell 4.5% in February from a year earlier, down for the first time in three months, Ministry of Finance data showed on Wednesday. A decline in U.S.-bound shipments of automobiles was a major reason, exports to the U.S. overall down 14.0%.  Exports to China rose 3.4% from a year ago, led by chip-making equipment.

Imports rose 11.8% in the year to February.

Street Bytes

--Stocks lost some ground late in the week, after the Dow Jones and S&P 500 hit record highs Monday and then Wednesday.  On the week the Dow lost 0.5% to 32627, while the S&P 500 and Nasdaq both fell 0.8%.  Stocks were hurt today, particularly financials, after the Federal Reserve said it would not extend a temporary capital buffer relief put in place to ease a pandemic-driven stress in the funding market.

The Fed had let lenders load up on Treasuries and deposits without setting aside capital to protect against losses and the program will lapse March 31 as originally planned, the Fed said in a statement.

Known as the SLR, for supplementary leverage ratio, the goal was to address the spike in bank reserves triggered by the government’s stimulus programs.  The Fed said it may consider making long-term changes to the SLR down the road as needed.

--U.S. Treasury Yields

6-mo. 0.02%  2-yr. 0.15%  10-yr. 1.72%  30-yr. 2.43%

The yield on the 10-year rose a seventh straight week, hitting 1.75% on Thursday, the highest level since Jan. 2020.

--The International Energy Agency said Wednesday any ideas of a new price supercycle in the oil market are misguided due to plentiful supplies.

Crude has rallied as Saudi Arabia announced plans two weeks ago to keep a tight grip on output.

But the Paris-based IEA said in its monthly report: “Our data and analysis suggest…there is more than enough oil in tanks and under the ground to keep global oil markets adequately supplied.”

As in the 9.3 million barrels-a-day of spare production capacity that OPEC and its allies held back as a result of pandemic cutbacks could be quickly deployed if markets become tight.

“Oil inventories still look ample compared with historical levels,” said the IEA.  “On top of the stock cushion, a hefty amount of spare production capacity has built up as a result of OPEC+ supply curbs.”

OPEC’s 13 member pumped an average of 24.75 million barrels a day in February, the agency estimates.  By the fourth quarter, they’ll need to provide 29.3 million a day in order to keep world markets in balance.

World oil demand proved stronger than expected at the start of the year, “boosted by colder weather and improved industrial activity in the U.S. and elsewhere,” according to the report.

But the longer-term picture isn’t so robust.  The IEA, in a separate report, said world oil demand won’t fully recover to pre-pandemic levels of about 100 million barrels a day until 2023. And this is the key, according to the IEA.  Growth in consumption will lack its previous highs as remote-working becomes entrenched, and as governments shift away from fossil fuels.

Here in the U.S., crude inventories continue to rise, per data from the Energy Information Administration, with stocks of gasoline and diesel increasing against expectations for a decline.  The inventory level exceeded 500 million barrels for the first time this year, with refiners continuing to bring back capacity after the freezing conditions in February.

So the price of crude, as measured by West Texas Intermediate, fell all week, including a massive $4+ on Thursday to $60.47.  Europe and its Covid issues are major factors, including a slowdown in vaccination programs and the prospect of further restrictions to control the virus on the continent.

--The Federal Aviation Administration is laying down the law when it comes to Boeing Co. and its internal authority to inspect and sign off on several newly produced 787 Dreamliners, stripping the company of same.

The FAA said its inspectors, rather than the plane maker’s, would perform routine pre-delivery safety checks of four Dreamliners that Boeing has been unable for months to hand over to its customers while it grapples with various quality issues.

The agency has long allowed Boeing to perform the final safety signoffs on the FAA’s behalf, i.e., issue the airworthiness certificates needed to hand over new jets to the airlines.

After halting deliveries in October, Boeing has built up an inventory of more than 80 newly produced, undelivered Dreamliners, with the company looking to resume deliveries by the end of March.

The wide-body jets are used frequently on international routes and have a strong safety record.

Previously the FAA stripped Boeing of its authority to perform the pre-delivery safety checks on MAX jets in late 2019, after the two fatal crashes that killed 346 people.

--Walt Disney Co. said it would reopen the Disneyland and Disney California Adventure parks on April 30.  The parks have been closed for more than a year due to Covid-19, with thousands of employees furloughed.  Disney said more than 10,000 will be returning to work.  Down in Orlando, Fla., Walt Disney World has been open since last July with some restrictions.

But the closures in California hastened Disney’s transition to streaming, and that sure paid off, with Disney+ hitting the 100 million subscribers mark last week.  Also, CEO Bob Chapek has been closing dozens of Disney stores as part of a transition in the business model.

Chapek said Thursday, “We never envisioned a world where everyone will want to do something in the home.  We have a physical world and a digital world.”

Disney expects an onslaught of demand for its limited tickets for Disneyland, until the state opens up further.  Initially, it can open at 25% capacity, depending on the state’s guidelines over the coming month.

--Speaking of reopening, TSA checkpoint travel numbers vs. 2019…

3/18…61 percent of 2019 levels, with 1,407,000 travelers yesterday, a peak since last March 20.
3/17…52
3/16…44
3/15…50
3/14…59
3/13…46
3/12…54
3/11…59

We’ve suddenly gone from numbers that were stuck in the 30s as late as early February to today’s vastly improved checkpoint figures, which is not necessarily good given where we are in the pandemic. As in this might be too much, too soon, with the CDC still not recommending travel.

But when someone vaccinated in one state learns their grandmother or parents were vaccinated in another state, that’s an excuse to hop on an airliner.

The airlines are increasingly optimistic, after a year that brought passenger traffic down to levels last seen in the mid-1980s.

United and Delta, for example, said they could stop bleeding cash this month, which is amazing because as I’ve been spelling out weekly, January and February were far worse than expected.  It’s like a switch went off and you can certainly thank vaccines for the sudden optimism.

The American Rescue Act that President Biden just signed into law also includes $14 billion to cover salaries and benefits for airline workers in exchange for pledges not to furlough or lay off employees until the fall, bringing the total level of support for airlines to $54 billion.

--Honda Motor Co. said it will temporarily suspend some production next week at all U.S. and Canadian plants citing a number of supply chain issues.  A spokesman for the Japanese automaker said it would halt production for the entire March 22 week at a majority of the plants citing “the impact from Covid-19, congestion at various ports, the microchip shortage and severe winter weather over the past several weeks.”

The company declined to specify the volume of vehicles impacted but said “purchasing and production teams are working to limit the impact of this situation.”

Honda’s issues are being echoed by virtually all automakers these days, including this week by Volkswagen and Toyota, and previously Ford and GM.

--Speaking of VW, the company plans to cut up to 4,000 jobs at its plants in Germany by offering early or partial retirement to older employees in a move that could cost several hundred million euros (estimates go as high as $600 million), the company announced Sunday.

--FedEx Corp. on Thursday said quarterly profit jumped more than expected on higher prices and surging volume from pandemic-fueled e-commerce deliveries during the holiday shipping season.  The shares surged anew, 6% on the news, and have more than doubled in price since a year ago, when the government forced businesses to shutter and issued stay-at-home orders.

Fiscal third quarter adjusted net income came in at $939 million, or $3.47 per share, beating expectations, while revenue grew 23% to $21.5 billion, boosted by a half billion holiday package deliveries and Covid-19 vaccines shipments.

FedEx and rival UPS hiked prices to shelter profits after the pandemic hammered high-margin shipments between businesses and unleashed a flood of deliveries of online orders, including bulky items like exercise bikes and sofas.

Average daily package volume for FedEx Group, which counts Walmart among its top e-commerce shipping partners, jumped 25% to 13.2 million during the quarter.

The company also issued a forecast for full-year adjusted earnings that was better than the Street’s average target. 

--Nike Inc.’s quarterly sales, as opposed to FedEx’s, missed estimates due to shipping issues and a pandemic-related slump at brick-and-mortar stores, and investors were disappointed by the world’s biggest athletic shoemaker’s revenue forecast.  Nike is looking for “low-to-mid-teens” full-year sales growth.  The shares fell 4% in response.

For the quarter, revenue rose to $10.36 billion from $10.1 billion, but this was well below the Street’s consensus of $11bn.  The company said North America sales fell 11% because container shortages and U.S. port congestion held up inventory more than three weeks.  U.S. container-freight traffic has slowed significantly in recent months due to Covid-19 outbreaks among dockworkers and safety restrictions aimed at stemming the spread of the virus.  At the same time, ports are dealing with a cargo surge due to pandemic-led demand for bulk products.

--Billionaire investor Ray Dalio weighed in on his disdain for holding cash amid rising money printing and inflation, believing bonds are a bad bet as well.

“The economics of investing in bonds (and most financial assets) has become stupid,” he said Monday in a post on LinkedIn.  “Rather than get paid less than inflation why not instead buy stuff – any stuff – that will equal inflation or better?”

With rising amounts of government debt and “classic bubble dynamics” among many different asset classes, Dalio recommends a “well-diversified” portfolio of non-debt and non-dollar assets.

Among some of his thoughts:

“I believe cash is and will continue to be trash (i.e., have returns that are significantly negative relative to inflation) so it pays to a) borrow cash rather than to hold it as an asset and b) buy higher-returning, non-debt investment assets.”

“There’s just so much money injected into the markets and the economy that the markets are like a casino with people playing with funny money.”

“The United States could become perceived as a place that is inhospitable to capitalism and capitalists.”

“Because of limitations of how low interest rates can go, bond prices are close to their upper limits in price, which makes being short them a relatively low-risk bet.”

Can’t disagree with that sentiment.

--New York kept the top spot in the latest Global Financial Centers Index, with London clinging on to second place in the face of competition from Shanghai and other Asian centers.

The index, compiled by the Z/Yen Group, a London-based think tank, and the China Development Institute, looks at 143 yardsticks provided by outside parties such as the World Bank, The Economist Intelligence Unit, the OECD and United Nations.

So New York holds the top spot with 764 points, while London dropped 23 points to 743, just one point ahead of Shanghai.

The next five spots were filled by Asian financial centers, with two European centers making up the rear in the top 10.

--Nokia Corp. plans to cut between 5,000 and 10,000 jobs over the next two years, as the company maneuvers to become more competitive in the 5G equipment markets against rivals Huawei Technologies and Ericsson.

The Finnish company’s workforce is currently about 90,000 worldwide, so a reduction of as much as 11%, the company said Tuesday.  The savings of about $700 million would offset increased investment in research and development, among other areas.

This is part of Nokia’s second major restructuring program in less than a decade. After selling its once-dominant handset business, Nokia acquired French rival Alcatel-Lucent to focus on making cellular antennas, internet routers and other telecommunications equipment.

But it has struggled to integrate Alcatel-Lucent, which, locally, is the mammoth former headquarters of Bell Laboratories, where some of the world’s top research was conducted.  Us locals have always wondered what would happen to the property, especially when you see so few cars in the parking lots (it has enough parking for a major sports stadium), even pre-pandemic.

Part of Nokia’s challenges stem from the company mistiming 5G rollouts around the world.  Wireless carriers started buying 5G equipment earlier than anticipated and Nokia hasn’t yet secured enough cheap, efficient computer chips to go into its cellular equipment, while its rivals had.

Nokia has lost some major contracts to the likes of Samsung Electronics, as well as Ericsson, especially in China, where Ericsson has become the leading foreign supplier.

The deal for Alcatel-Lucent in 2015 also left Nokia with two sets of equipment.

But the U.S. campaign to curb Huawei could provide Nokia with an opportunity.

--So here I was writing about the U.S. agriculture industry and the boom in exports to China, and now there has been a resurgence of African swine fever in the world’s leading hog-producing nation.  China had been forecasting the country would return to pre-disease hog herds this year, but according to Rabobank, the new outbreaks could delay such plans to 2023.

So the new outbreak has pressured U.S. soy prices – particularly for soymeal, commonly used as animal feed, and it threatens strong export demand for U.S. soybeans.

--Chinese President Xi Jinping chaired a meeting of the communist party’s top financial advisory and coordination committee on Monday, warning Beijing will go after so-called “platform” companies that have amassed data and market power, a sign the months-long crackdown on China’s internet sector is continuing.

Regulators are being ordered to step up oversight of internet companies, crack down on monopolies, promote fair competition and prevent the disorderly expansion of capital, according to state broadcaster CCTV.  Internet companies need to enhance data security and financial activities need to come under regulatory supervision, CCTV also reported.

Obviously, none of this is good for the likes of Alibaba and its affiliate Ant Group Co., as well as e-commerce leader JD.com and Tencent Holdings and its banking, insurance and payments services.

--The National Restaurant Association estimates that as of Dec. 1, more than 110,000 eateries and bars – about one of every six in the United States – closed for business during 2020, some temporarily, others forever.  Nearly 2.5 million jobs were lost and as many as 8 million chefs, servers and other restaurant workers were laid off or furloughed at some point during the past year, the NRA estimates.

Under the American Rescue Plan, most restaurants (excluding large chains) are entitled to a grant equal to their 2019 revenues minus what they made in 2020 and the amount of any PPP loan they received.  Some say the new funding could save a third of restaurants from closing.

Funny how not a single Republican in the House or Senate voted for the Rescue Plan, but were quick to praise the restaurant provision.

Live stage venues also got hammered, but they got a hand in the just-passed relief plan, though the Small Business Administration has been slow to dispense the $15 billion that was approved for the program nearly three months ago as part of the Shuttered Venue Operators Grant Program.

--Digital payment giant Stripe’s value soared to $95 billion after it capitalized on a boom in ecommerce with a round of funding, $600 million, that pushed it past Elon Musk’s SpaceX as the most valuable U.S. startup.

Founded in 2010 by Patrick and John Collison when the Irish brothers were barely out of their teens, Stripe is used by more than 50 companies each processing over $1 billion annually to receive payments and bill customers. Its list of customers includes Google, Uber and Amazon, and now even shipping giant Maersk.

The company said it would use the capital to invest in European operations – which cover 31 of the 42 countries where Stripe is active – and expand its global payments and treasury network.  At $95 billion, Stripe is now more valuable than any bank in the euro zone.

Stripe’s CFO said: “The pandemic taught us many things about society, including how much can be achieved, and paid for, online.”

German insurer Allianz’s digital investment unit Allianz X said it saw “astounding growth potential” in Stripe, Allianz among those participating in the latest round of funding.

Stripe also recently announced it was teaming up with banks including Goldman Sachs Group and Citigroup to offer checking accounts and other business-banking services to merchants.

What a story.  I saw where Stripe is hiring another 1,000 in Dublin (its second headquarters, Silicon Valley the main HQ).

--According to Bloomberg’s Billionaires Index, Donald Trump’s net worth dropped by about $700 million to $2.3 billion during his time as president.

The Covid-19 pandemic hit his fortunes hard, with Trump’s office buildings, branded hotels and resorts all losing revenue and falling in value, ditto his golf courses.

And it would seem a Manhattan criminal investigation into his financial affairs and his family business is heating up.

Bloomberg analyzed financial documents and other filings from May 2016 and January 2021 to calculate Trump’s wealth before and after he became president.

Trump’s commercial real estate accounts for about three-quarters of his net worth, and needless to say, office tower valuations have plummeted.  Bloomberg estimates a 26% drop in the value of his main commercial property holdings.

And while golf has benefited from the pandemic, Trump’s courses in Scotland and Ireland have consistently lost money.

--The 2021 Genesis GV80 that Tiger Woods crashed in the Los Angeles area in February, crushing his legs and putting his career in jeopardy, was named a top pick by an independent car safety organization, meaning it scored the highest possible marks on the Insurance Institute for Highway Safety’s grading scale.

--The NFL announced a landmark 11-year broadcast and media distribution agreement on Thursday worth a reported $110 billion, or $10 billion per season.

The deal runs from 2023 through the 2033 season and expands the NFL’s digital and streaming presences.  That includes awarding Thursday Night Football exclusively to Amazon Prime Video.

Foreign Affairs

Afghanistan: President Biden says that it will be “tough” for the U.S. to meet a May 1 deadline to withdraw troops from Afghanistan but that the complete drawdown won’t take much longer.

The deadline to end America’s longest war in less than six weeks was set under an agreement reached by President Trump and the Taliban, without the buy-in of the Afghan government.

Biden, in his interview with ABC’s George Stephanopoulos on Wednesday, said he was consulting with allies on the pace of the drawdown.  Of meeting the May 1 deadline, he said it “could happen, but it is tough.”  If the deadline is extended, he added, it won’t be by “a lot longer.”

The 2,500 remaining American troops in the country is down from 13,000 a year ago.  The Trump deal caught some American allies off guard, as the roughly 7,000 NATO troops in Afghanistan rely on the U.S. for logistics and security support.

Local security forces are unprepared to stand up on their own despite years of training and investment from foreign allies, a government watchdog warned lawmakers on Tuesday.

‘Achieving our counterterrorism reconstruction objectives depends on a strong, stable, democratic and self-reliant Afghanistan.  Unfortunately, Afghanistan is far from that reality,” said John Sopko, Special Inspector General for Afghanistan Reconstruction.

“Afghan security forces are nowhere near achieving self-sufficiency, as they cannot maintain their equipment, manage their supply chains or train new soldiers, pilots and policemen.”

Editorial / Wall Street Journal

“The Biden Administration is scrambling to find a responsible way out of Afghanistan by the May 1 deadline for the withdrawal of U.S. troops set by Donald Trump.  Problem is, a prudent withdrawal on such a tight timeline is impossible.

“ ‘The United States has not ruled out any option,’ Secretary of State Antony Blinken wrote in a recent letter to Afghan President Ashraf Ghani.  ‘I am making this clear to you so that you understand the urgency of my tone.’ The U.S. is pushing aggressively for Taliban and Kabul officials to reach a political settlement.

“The contents of Mr. Blinken’s letter, along with a more detailed peace plan, don’t give much reason for optimism.  Washington has proposed an interim government in which the Taliban shares power with Kabul. Eventually, the country would transition to a democratic government with the current constitution as an ‘initial template.’

“Sounds nice, but the Taliban goal is an Islamic Emirate of Afghanistan.  The group said in 2016 that it ‘has not readily embraced this death and destruction for the sake of some silly ministerial posts.’….

“Mr. Blinken called for ‘a 90-day Reduction-in-Violence’ to forestall the Taliban’s spring offensive.  The group, last year responsible for around twice as many civilian casualties as Afghan national forces were, has rejected such pleas before.  Why would they now, especially with the U.S. eagerly eyeing the door?

“The U.S. is hoping to lasso China, India, Iran, Pakistan, and Russia to help negotiate and enforce a peace deal.  Is that the same Pakistan that has been the Taliban’s primary benefactor for years?  The same Iran that has cooperated with the Taliban despite political and religious differences?  The same Russia that has provided the Taliban with diplomatic support and perhaps more?

“President Biden will need a Plan B if this diplomatic push fails. His campaign website isn’t a bad place to start: ‘Biden will bring the vast majority of our troops home from Afghanistan and narrowly focus our mission on Al-Qaeda and ISIS.’ The alternative is a full withdrawal that would free up the Taliban to conquer more of the country, and perhaps the collapse of the government and a humanitarian disaster….

“Remaining in Afghanistan doesn’t require a massive commitment… The bipartisan Afghanistan Study Group suggests 4,500 Americans are enough ‘for training, advising and assisting Afghan defense forces; supporting allied forces; conducting counterterrorism operations; and securing our embassy.’

“This is the best advice we’ve seen.  There is no easy exit from Afghanistan, but the worst would be a rushed retreat by May 1 that would serve only the Taliban and its jihadist allies.”

Thursday, the United States was joined by Russia, China and Pakistan in calling on Afghanistan’s warring sides to reach an immediate ceasefire and for the Taliban not to declare offensives in the spring and summer.

“At this turning point, our four countries call on the sides to hold talks and reach a peace agreement that will end more than four decades of war in Afghanistan,” a joint statement said after talks in Qatar.

But the plan would involve an interim government, as noted above, and Afghan President Ghani opposes such a plan, as odes the Taliban.

Lebanon: Hezbollah chief Sayyed Hassan Nasrallah said on Thursday he would support a new Lebanese cabinet if one is announced on Monday, but said that a government formed solely of specialists would not last.  President Michel Aoun is scheduled to meet with Prime Minister-designate Saad al-Hariri next week.  The two politicians have been wrangling for months as the country sinks deeper into financial crisis.  Aoun is an ally of Iran-backed Hezbollah.

Lebanon’s economic meltdown is posing the biggest threat to its stability since the 1975-1990 civil war.  Politicians since late 2019 have failed to agree to a rescue plan to unlock foreign cash which Lebanon desperately needs.   Hariri said this week that a  new cabinet would re-engage the IMF, which is the only solution to Lebanon’s woes.

But Nasrallah said Lebanon would not be able to withstand any edicts by the IMF for aid, such as the lifting of subsidies.

Meanwhile, Israeli Maj.-Gen. Uri Gordin warned on Monday that in any future war with Hezbollah, “Israel will be hit by 2,000 missiles a day.”

“They know they cannot defeat us on the battlefield so they try to move the war to a second front and that is our homes and in our cities,” the IDF general said.

Israel believes that Hezbollah has an arsenal of approximately 150,000 rockets and missiles, some of which have the ability to strike anywhere inside the country.

Israel’s latest election is Tuesday and the final polls suggested continued political deadlock, as neither the anti- or pro-Netanyahu blocs are expected to receive 61 seats in order to form a government.

According to Channel 11’s poll, the anti-Netanyahu bloc would have 56 seats, while the pro-Netanyahu bloc would receive 51 seats.

Iran: A foreign ministry spokesman said on Monday that the United States should lift sanctions and give guarantees that mistakes made by the administration of former President Trump will never be repeated.

“The U.S. should lift sanctions on Iran and also should give guarantees that Trump’s mistakes will not happen again, then we can talk within the framework of JCPOA,” the spokesman told a weekly news conference.

President Joe Biden has offered to join European countries to revive Iran’s 2015 nuclear deal with six powers, known as the Joint Comprehensive Plan of Action. Trump abandoned it in 2018 and reimposed sanctions. But Tehran says Washington must first lift the sanctions and rejoin the pact.

China: The United States and China leveled sharp rebukes of each others’ policies in the first high-level, in-person talks of the Biden administration on Thursday, with deeply strained relations of the two global rivals on rare public display during the meeting’s opening session in Alaska.

The U.S. is looking for China to change its behavior if it wants to reset crumbling relations, but Beijing has said Washington is full of illusions if it thinks it will compromise.

U.S. Secretary of State Antony Blinken and national security adviser Jake Sullivan opened their meeting with China’s top diplomat Yang Jiechi and State Councilor Wang Yi in Anchorage, fresh off Blinken’s visits to allies Japan and South Korea.

“We will…discuss our deep concerns with actions by China, including in Xinjiang, Hong Kong, Taiwan, cyber attacks on the United States, economic coercion of our allies,” Blinken said in unusually blunt public remarks at the top of the first meeting.  “Each of these actions threaten the rules-based order that maintains global stability,” he said.

Yang responded with a 15-minute speech in Chinese while the U.S. side awaited translation, lashing out about what he said was the United States’ struggling democracy and poor treatment of minorities.  “The United States uses its military force and financial hegemony to carry out long arm jurisdiction and suppress other countries,” Yang said.  “It abuses so-called notions of national security to obstruct normal trade exchanges, and incite some countries to attack China,” he added.

Yang said human rights in the U.S. were at a low point, with black Americans being “slaughtered.”

Taken aback by Yang’s remarks, Blinken held journalists in the room so he could respond.  Sullivan said the United States did not seek conflict with China but would stand up for principles and friends.

It seemed the two sides would agree on very little at the talks, though we were told discussions behind closed doors were more diplomatic.

Washington has said it is willing to work with China when it is in the interests of the United States and has cited the fight against climate change and the coronavirus pandemic as examples.  On Thursday, Blinken said Washington hoped to see China use its influence with North Korea to persuade it to give up its nuclear weapons.

China has indicated it is set to begin trials of two Canadians detained in December 2018 on spying charges soon after Canadian police detained Meng Wanzhou, the chief financial officer of telecom equipment company Huawei Technologies on a U.S. warrant.  China said the timing of the trials had nothing to do with the Anchorage talks.

Beijing has called for a reset to ties, now at their lowest in decades.  The largest group representing exiled Uighurs has written to Blinken urging him to demand that Beijing close its internment camps in the Xinjiang region, where UN experts say that more than 1 million members of the ethnic group and other Muslim minorities have been held.

Yang said Xinjiang, Hong Kong and Taiwan were all inseparable parts of Chinese territory and China firmly opposed U.S. interference in its internal affairs.  The United States should handle its own affairs and China its own, he said.  “The way we see the relationship with the United States is as President Xi Jinping has said, that is we hope to see no confrontation, no conflict, mutual respect and win-win cooperation with the United States.”

Today, after day two of the discussions, national security adviser Jake Sullivan told reporters, “We expected to have tough and direct talks on a wide array of issues and that’s exactly what we had.”

“We were also able to have a very candid conversation over these many hours on an expansive agenda,” Secretary Blinken said.  “On Iran, on North Korea, on Afghanistan, on climate, our interests intersect.”

China’s Yang Jiechi said the two days had been candid, constructive and beneficial, while adding: “But of course, there are still differences,” China’s CGTN television network reported.  Yang said “the two sides should follow the policy of ‘no conflict’ to guide our path towards a healthy and stable trajectory moving forward.”

The network said on Twitter that Wang Yi made clear to the U.S. side that sovereignty was a matter of principle and it should not underestimate China’s determination to defend it.

Earlier this week in Seoul, Sec. Blinken said of China and North Korea:

“Virtually all of North Korea’s economic relationships, its trade…go through China so it has tremendous influence, and I think it has a shared interest in making sure that we do something about North Korea’s nuclear program and about the increasingly dangerous ballistic missile program.”

Blinken also criticized North Korea for massive human rights abuses and said both “pressure and diplomatic options” were being considered in dealing with Pyongyang, marking a departure from the less confrontational tone taken by President Donald Trump’s administration.

So speaking of North Korea:  A top North Korean diplomat confirmed that the United States had recently tried to initiate contact, but blasted the attempts as a “cheap trick” that would never be answered until Washington drops hostile policies.  The statement by Choe Son Hui, first vice minister of foreign affairs for North Korea is the first detailed rebuttal of tentative approaches by the Biden administration.  The attempts at contact were made by sending e-mails and telephone messages via various routes, including by a third country, she said in a statement carried by state news agency KCNA.

Choe said North Korea had already made clear it would not talk while the United States maintains hostile policies such as military drills and sanctions, and that the attempts at contact were a “cheap trick” for gaining time and building up public opinion.  “What has been heard from the U.S. since the emergence of the new regime is only lunatic theory of ‘threat from North Korea’ and groundless rhetoric about ‘complete denuclearization,’ she said.

Speaking in Seoul, Blinken accused North Korea of committing “systemic and widespread abuses” against its own people and said the United States and its allies were committed to the denuclearization of North Korea.

Meanwhile, Kim Jong-un’s influential sister, Kim Yo-jong, warned the U.S. not to “cause a stink,” as President Biden prepares to lay out his Korean policy.

In remarks on state media, she criticized the U.S. and South Korea for conducting joint military exercises.  Her comments came a day before Secretary Blinken and Defense Secretary Lloyd Austin were to appear in Seoul.

Kim Yo-jong was quoted in the official Rodong Sinmun newspaper as saying: “A word of advice to the new administration of the United States that is struggling to spread the smell of gunpowder on our land from across the ocean.

“If it wants to sleep in peace for [the] coming four years, it had better refrain from causing a stink at its first step.”

Russia: President Vladimir Putin said on Thursday he and President Joe Biden should hold talks in coming days that would be broadcast live, after Biden said he thought the Russian leader was a killer and bilateral ties sank to a new post-Cold War low.

Putin, speaking on television earlier on Thursday, scathingly responded to Biden’s remarks with the comment that it takes one to know one.  In an ABC News interview broadcast on Wednesday that prompted Russia to recall its Washington ambassador for consultation, Biden said “I do” when asked if he believed Putin was a killer. 

Putin said he had last spoken to Biden by phone at the U.S. president’s request and that he now proposed they had another conversation, on Friday or Monday, to be held by video-link and broadcast live.

“I want to offer President Biden to continue our discussion but on the condition that we do it live, online, without any delays but in an open, direct discussion,” Putin said, asked in a television interview about Biden’s comments.

In his comments, Biden also described Putin as having no soul, and said he would pay a price for alleged Russian meddling in the November 2020 U.S. presidential election, something the Kremlin denies.

Russia is preparing to be hit by a new round of U.S. sanctions in the coming days over that alleged meddling as well as over an alleged hack.

Suggesting Biden was hypocritical in his remarks, Putin said that every state had to contend with “bloody events” and added Biden was accusing the Russian leader of something he was guilty of himself.

“I remember in my childhood, when we argued in the courtyard with each other we used to say: it takes one to know one. And that’s not a coincidence, not just a children’s saying or joke. The psychological meaning here is very deep,” Putin said.  “We always see our own traits in other people and think they are like how we really are.  And as a result we assess (a person’s) activities and give assessments,” he said.

While Biden was quick to extend a key nuclear arms pact with Russia after he took office in January, the administration has said it will take a tougher line with Moscow than Trump did during his term in office, and engage only when there is a tangible benefit for the United States.

Separately, Russia and Iran sought to influence the outcome of last November’s presidential election, but a report released Tuesday from the Office of the Director of National Intelligence found no evidence that any foreign actor changed votes or otherwise disrupted the voting process, affirming the integrity of the contest won by President Biden.

The report amounts to the most detailed description of the broad array of foreign threats to the 2020 election and, in the end, officials said: “We have no indications that any foreign actor attempted to interfere in the 2020 U.S. elections by altering any technical aspect of the voting process, including voter registration, ballot casting, vote tabulation, or reporting results.”

The issue took on added scrutiny when Donald Trump, whose 2016 election effort benefited from hacking by Russian intelligence officers and a covert social media campaign, seized on an intelligence community assessment from last August that said China preferred a Biden presidency to Trump’s re-election.

Tuesday’s report, however, says China ultimately did not interfere on either side and “considered but did not deploy” influence operations aimed at affecting the outcome.  Officials determined that Beijing valued a stable relationship with the U.S. and did not consider either election outcome as advantageous enough for it to risk getting caught.

The report did add that Vladimir Putin either oversaw or at least approved of the election meddling to benefit Trump.  More on this topic below.

Lastly, Russian opposition leader Alexei Navalny was able to post a message on his Instagram page reassuring his supporters he was OK, referring to his new confines as “our friendly concentration camp.”  He had indeed been transferred to Penal Colony No. 2 in the Vladimir Region east of Moscow.  It is here he is likely to spend the next two years.

Navalny passed the message along to his lawyers, who were able to visit him Monday for the first time.

Myanmar: The military junta has levied more bribery charges on ousted leader Aung San Suu Kyi, who faces a long prison sentence if convicted.  Her lawyer dismissed the initial accusation last week as a joke.  He didn’t comment on the additional charges.

Last weekend, at least 39 anti-coup protesters were killed in various cities.  As of mid-week the death toll from the protests was approaching 150, with well over 2,000 detained, 300 released.  And I just saw at least another nine were killed today.

Germany: Chancellor Angela Merkel’s Christian Democratic Union (CDU) suffered record defeats in twin regional votes on Sunday, with the left-leaning Social Democrats (SPD) the biggest beneficiary.  The SPD believes September’s federal election could allow them to form a government without the conservatives, who will no longer be led by the retiring Merkel.

Merkel and her Bavarian sister party (CSU) has ruled at the federal level for almost eight years in a “grand coalition” with the SPD – an alliance of post-war Germany’s historically dominant parties that the SPD has seen as a necessary evil in which it comes off second-best.

So now the SPD is looking to ally with the business-friendly liberal Free Democrats (FDP).

In a national survey by the pollster Forsa published on March 10, the conservative bloc had 33% support, the left-leaning environmentalist Greens 18%, the SPD 16%, the far-right AfD 10% and both the FDP and the far-left Linke 8%.

Yup, a fractured electoral landscape, where the CDU/CSU could end up in a coalition with the Greens.

Random Musings

--Presidential approval ratings….

Gallup (new): 54% approve of President Biden’s job performance, 42% disapprove (Mar. 1-15); down from an initial 57-37 spread, Jan. 21-Feb. 2.  50% of independents approve, down from an initial 61%.

Rasmussen: 52% approve of Biden’s job performance, 47% disagree (Mar. 19).

--Five Republican Senators have announced they would not be running for re-election in 2022, and Iowa Republican Sen. Chuck Grassley hasn’t made up his mind about whether he’ll run for an eighth…8th…term in 2022.  The dude is 87!  Give it up, Chuck.

And it seems that’s the attitude of Iowans in a new Des Moines Register poll, with 55% wanting Grassley to end his political career next year as compared to just 28% who said they would like to see him run for another term.

More than 1 in 3 self-identified Republicans (35%) say they think the time has come for him to retire.

Grassley has said he would wait until the fall to decide.  Yes, it’s true Grassley gives Republicans their best chance to hold the seat, as he remains very popular.

--U.S. Postal Service investigators found no evidence to support a Pennsylvania postal worker’s claim that his supervisors had tampered with mail-in ballots, according to an inspector general’s report – allegations cited by top Republicans to press baseless claims of fraud in the president election.

Richard Hopkins, a mail carrier in Erie, alleged in November that he overheard the local postmaster discussing plans to backdate ballots received after the Nov. 3 vote and pass them off to election officials as legitimate.  Working with Project Veritas, a nonprofit entity that seeks to expose what it says is bias in the mainstream news media, Hopkins publicly released a sworn affidavit recounting those allegations.

Sen. Lindsey Graham (R-S.C.) cited Hopkins’ claim in a letter to the Justice Department calling for a federal investigation into election results in Pennsylvania.

Then-Attorney General William Barr subsequently authorized federal prosecutors to open investigations into credible allegations of voting irregularities and fraud before results were certified.

Hopkins then recanted, and the new investigation confirmed this.  In an interview with federal agents, Hopkins “revised his initial claims, eventually stating that he had not heard a conversation about ballots at all – rather he saw the Postmaster and Supervisor having a discussion and assumed it was about fraudulent ballot backdating,” the report says.

--GOP Sen. Ron Johnson of Wisconsin, speaking on a talk radio show, drew fire Saturday for saying that Trump-supporting Capitol Hill rioters don’t scare him – but Black Lives Matter protesters do.

“I never felt threatened [during the Jan. 6 incursion], because I didn’t,” Johnson said.  “I knew those were people that love this country, that truly respect law enforcement.”

But, he said, “had the tables been turned and…those were tens of thousands of Black Lives Mater and Antifa protesters, I might have been a little concerned.”

And he’s a senator.

--Max Boot / Washington Post

“When I was growing up in the 1980s, the Republican Party stood for freedom – freedom from big government at home and from communist tyranny abroad. It was why I, as a young refugee from the Soviet Union, became a Republican in the first place.

“I am, therefore, agonized and appalled to see the GOP rapidly metamorphosing into an authoritarian party that has more in common with the Law and Justice party in Poland or the Fidesz Party in Hungary than with mainstream center-right parties such as the Christian Democrats in Germany. The transformation has been in the works at least since Donald Trump’s election in 2016, but it has accelerated alarmingly in the past year.

“A newly declassified report from the director of national intelligence confirms that the Trump White House, the Republican party and their propaganda organs colluded with, or at least worked on parallel lines with, a Russian campaign to defeat now-President Biden. The report notes that Moscow ‘sought to amplify mistrust in the electoral process by denigrating mail-in ballots, highlighting alleged irregularities, and accusing the Democratic Party of voter fraud.’  Russian agents also ‘spread unsubstantiated or misleading claims about President Biden and his family’s alleged wrongdoing related to Ukraine.’

“Sound familiar?  It should, because those are precisely the same narratives that were being pushed by Trump and his supporters at places such as Fox News and One America News. That’s no coincidence.  The report notes that Russian intelligence sought to ‘launder’ its propaganda ‘through U.S. media organizations, US officials, and prominent US individuals, some of whom were close to former President Trump and his administration.’ The report cites Ukrainian politician Andriy Derkach as one of the ‘Russian proxies’ active in this disinformation campaign; he provided information to, among others, Trump’s lawyer Rudolph W. Giuliani.

“This was the second election in a row where Trump and his supporters were serenely untroubled by the help he received from a hostile authoritarian regime.  The Russian effort to influence our election didn’t succeed this time, but even after Trump lost, he kept pushing the Big Lie that he had actually won and continued to demand that either the courts or Republican lawmakers overturn the results.  On Tuesday night, Trump was still at it, lamenting on Fox News that ‘our Supreme Court and our courts didn’t have the courage to overturn elections.’

“That is the kind of blatantly anti-democratic rhetoric that incited the insurrection on Jan. 6.  Yet even after a Trump mob stormed the Capitol, 147 Republicans in both houses voted to toss our electoral votes.  In other words, nearly 60 percent of Republicans were willing to subvert democracy to win power. By contrast, only 17 Republicans – a mere 6.5 percent of the total – voted to impeach Trump for inciting an insurrection.”

Mr. Boot goes on to talk about all the election legislation being proposed in over 40 states that would limit mail, early in-person and Election Day voting with various restraints, and the counter to it in the Democratic-controlled House, H.R. 1, which received nary a Republican vote.

“The only way this bill, or any version thereof, can pass the Senate is if the Democrats eliminate or amend the filibuster rule that demands 60 votes to pass most legislation. Unfortunately, there aren’t 10 Republicans in the Senate who can be counted upon to support voting rights. It is hard to imagine a more damning indictment of the party once led by freedom fighters such as Abraham Lincoln, Theodore Roosevelt, Dwight D. Eisenhower, Ronald Reagan and George H.W. Bush.”

--A white man, Robert Aaron Long, supposed self-described sex addict, was charged with killing eight people – including six Asian women – at Atlanta area spas on Tuesday, and it’s not known as yet whether the individual will be charged with a hate crime as he told police initially after his actions weren’t racially motivated.

But it was last week I wrote of the statistics concerning the spike in hate crimes against Asian Americans and its sickening what is going on in the country, regardless of whether the Atlanta tragedy can be related to the overall crisis.

Thursday, from the New York Daily News:

“An unhinged man cursed and spat at a woman walking her dog in lower Manhattan – the latest in a growing trend of anti-Asian hate crimes to hit the city, officials said Thursday.

“The 33-year-old victim was walking her dog along Spring St. near Elizabeth St. when the stranger spat at her about 8 p.m. Wednesday, cops said.

“ ‘You f---ing c---k,’ the man screamed, using a derogatory term for Asian people.  ‘You stupid c---k b---h!  Go back to your country.’

“The woman wasn’t hit by the suspect’s spit, officials said.”

This is what is so disturbing….

“As of Sunday, cops [Ed. again, New York City] have investigated 10 anti-Asian hate crimes so far this year fueled by racism and ignorance over the Covid pandemic, officials said.  By this time last year, before the pandemic started, no hate crimes against Asians had been reported, officials said.”

And I’m supposed to give Donald Trump a pass?!

--U.S. spy agencies warned on Wednesday of an ongoing threat that racially motivated violent extremists, such as white supremacists, will carry out mass-casualty attacks on civilians while militia groups target police and government personnel and buildings.  Agencies contributing to the assessment by the Office of the Director of National Intelligence included the FBI, the Department of Homeland Security and the National Counterterrorism Center.

The assessment said extremists who promote white racial superiority have potentially frequent communications with extremists abroad who hold similar ideological beliefs and each seeks to influence the other.

The agencies said that recent political and social developments – such as claims by Republican former President Donald Trump and his supporters about fraud in November’s election, restrictions related to Covid-19, fallout from the Jan. 6 Capitol riot, and conspiracy theories – “will almost certainly spur” some domestic extremists “to try to engage in violence this year.”

--President Biden, in an interview with ABC News’ George Stephanopoulos, said New York Gov. Andrew Cuomo should resign if an investigation confirms the allegations of inappropriate behavior made against him by multiple women.

Biden added that he thought Cuomo will “probably end up being prosecuted” if the investigation confirms the claims.

Cuomo has said that people should withhold judgment until Attorney General Letitia James’ investigation is concluded.

And a new Siena College Research Institute poll has 50% of New Yorkers saying Cuomo should not resign, while 35% say he should.  57% of New York voters said they were satisfied with how the governor has handled the allegations.

AG James’ investigation has been heating up as she has interviewed three witnesses, extensively, by week’s end.

As a presidential candidate, Biden denied an allegation by former Senate staffer Tara Reade that he assaulted her when she worked in his office in 1993.

--New York City has a huge mayoral race this year, as Democrats line up to have the opportunity to displace term-limited Mayor Bill de Blasio (no viable Republican candidate this time around).  Investment banker Ray McGuire finished first in a Crain’s New York Business poll of readers likely to vote in the upcoming Democratic primary, handily beating entrepreneur Andrew Yang and Brooklyn Borough President Eric Adams, who have far greater name recognition.

Crain’s readers gave McGuire 27% of the vote as their first choice.  Yang was next at 17%. It’s a big field.

--According to the Army Combat Readiness Center, which has been looking into a series of fatal UH-60 Black Hawk helicopter crashes (five, claiming the lives of 16 service members in total) over the past year-and-a-half, investigators have not found any material problems or common piloting errors linking them.  So far, nothing hints at a material issue with the airframe.  And nothing that warrants the grounding of the Black Hawk fleet.

According to the Army’s safety director, Brig. Gen. Andrew Hilmes, “Each of (the) mishaps occurred under unique circumstances and we are looking at different causal factors in each.”

Over the past four decades, about 86 percent of Army aviation mishaps have been attributed to human error, which can encompass a wide range of issues, from overreaction during an emergency to complacency on routine flights.

In one case, an Idaho Guard Black Hawk that went down near Boise, deteriorating weather was a significant factor.  But the primary cause was the crew’s inability to complete an emergency shift to instrument flight before impact. 

As per an article by Kyle Rempfer in Army Times, “although coronavirus restrictions limited some training last year, the force still hit 90 percent of the flying hours that were cataloged in 2019.”

--According to research done by a veterans’ group in Tampa, Fla., research funded by the Irish government, of the 3,507 Medals of Honor awarded by the United States, some 2,018 have gone to Irish-Americans. I hasten to add, the congressional Medal of Honor Society said it had no way to confirm this, but an interesting bit for St. Patrick’s Day.  [Military Times]

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

We thank our first responders and healthcare workers.

God bless America.

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Gold $1744
Oil $61.44…down $4 on the week

Returns for the week 3/15-3/19

Dow Jones  -0.5%  [32627]
S&P 500  -0.8%  [3913]
S&P MidCap  -1.2%
Russell 2000  -2.8%
Nasdaq  -0.8%  [13215]

Returns for the period 1/1/21-3/19/21

Dow Jones  +6.6%
S&P 500  +4.2%
S&P MidCap  +13.3%
Russell 2000  +15.8%
Nasdaq  +2.5%

Bulls 55.9
Bears 19.6

Hang in there…mask up where appropriate, wash your hands.

Brian Trumbore

 

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