Week in Review

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Week in Review

05/01/2021

For the week 4/26-4/30

[Posted 9:30 PM ET, Friday]

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Edition 1,150

President Biden gave his maiden speech to Congress, unveiling his $1.8 trillion American Families Plan – following his $2.3 trillion American Jobs Plan and his $1.9 trillion American Rescue Plan – for a cool $6 trillion in new federal spending over the next decade, far more than any recent president at a comparable point in their terms.

Biden’s program aims to redistribute trillions of dollars of resources from the highest-earning households and businesses to everyone making less than $400,000 a year.

The president declared “America is ready for a takeoff.”

“America is moving.  Moving forward. And we can’t stop now,” he said. “We’re in competition with China and other countries to win the 21st century.”

But the chances of the American Families and American Jobs Plans being passed in anything close to what has been proposed is zero, and as I’ve said over the past month I’m not going to waste a lot of time on it, though Republicans are eager to support the pure infrastructure portion of the Jobs Plan. And I fully support expanding the resources of the IRS, as spelled out below, as well as eliminating corporate loopholes.

I also believe that in areas such as increased child-care opportunities, family leave and investments in preschool, these only make sense in today’s world and should be considered on a bipartisan basis, though in a fiscally responsible way.  

A new Monmouth University Poll finds that Biden’s infrastructure proposal is broadly popular, registering 68% support and just 29% opposition.  94% of Democrats support it, 69% of independents, but just 32% of Republicans.

In his official Republican response to President Biden’s speech, South Carolina Sen. Tim Scott accused Democrats of dividing the country and suggested they’re wielding race as “a political weapon,” using his time to credit the GOP for leading the country out of its pandemic struggles and toward a hopeful future.

Scott, citing the partisan battle over Biden’s $1.9 trillion Covid-19 relief bill, which Congress approved over unanimous GOP opposition, said: “We need policies and progress that bring us closer together. But three months in, the actions of the president and his party are pulling us further apart.”

But the Senate’s only Black Republican saved some of his sharpest comments for the fraught subject of race.  Scott recounted his rise from a low-income family and “the pain” of repeatedly being pulled over by police while driving but then said, “Hear me clearly: America is not a racist country.”

Scott added, “Race is not a political weapon to settle every issue the way one side wants.”

Both President Biden and Vice President Harris said after that “Americans are not racist,” but there are systemic issues related to our past.

Beyond that I have nothing more to say on the topic.

On vaccines, various polls show that 20% to 25% of Americans are resistant or hesitant when it comes to getting a Covid shot.  A CNN Poll has 26% saying they will not try to get it. 

Then you have the gruesome tragedy continuing to unfold in India, a “tsunami” of disease, setting a new world record for cases virtually every day this week (over 400,000 for the first time today).  Hospitals are turning patients away, having run out of oxygen, no beds, bodies lining up in the halls and streets (and at home), eventually cremated in a Dantesque hell.

As Dr. Amita Gupta, an infectious disease specialist at the Johns Hopkins Bloomberg School of Public Health, put it, “Hospitals full and having no beds – they are absolutely facing that. They’re in a war mentality.”

I have much more below on the topic, but the longer the pandemic rages there, the greater the chance it will develop mutant strains more difficult to treat with existing vaccines.

I would hope after seeing just one report from India that those of you who may still be Covid deniers get it.

Finally, a new CNN/SSRS poll finds that while there is zero evidence of widespread fraud or wrongdoing in the 2020 election (and not even close), many still say that Joe Biden did not legitimately win enough votes to become president.  The poll suggests the share of Americans who believe that falsehood has held roughly steady since just before he took office in January at 30%.  Those doubts are concentrated among Republicans, 70% of whom say they do not think Biden won enough votes to be president.  But the share of Republicans who falsely say there is solid evidence that Biden did not win has dropped from 58% in January to 50% today.

Biden Agenda

--Rich Lowry / New York Post

“Once upon a time, President Joe Biden’s spending proposals would have launched mass demonstrations in opposition.

“Little else would have been talked about in conservative media, and ambitious GOP politicians would have competed with one another to demonstrate the most intense resistance, up to and perhaps including chaining themselves to the U.S. Treasury building in protest.

“In 2009, then-President Barack Obama created a spontaneous, hugely influential conservative grassroots movement on the basis of an $800 billion stimulus bill and a health-care plan estimated to cost less than a trillion.  In 2021, Biden is proposing to spend about $6 trillion in his first three big bills, and he can barely create more interest than the debate on wearing masks outdoors.

“The conventional wisdom was that after the free-spending Trump years, Republicans would snap back to being deficit hawks when out of power. There has been some of that, but the relatively muted reaction to Biden’s almost incomprehensible spending ambitions is testament to the fact that, no, Republicans simply aren’t as interested in fiscal issues anymore.

“The party has changed and would much rather talk about the border than the budget, and cancellations than Congressional Budget Office scores.

“Of course, no Republicans will vote for Biden’s proposals and all will strenuously object, but that his plans won’t engender the fierce reaction they would 10 year years ago is yet another way in which the Overton window has shifted on deficit spending.

“What happened? The short answer is former President Donald Trump.

“He demonstrated in vivid fashion that as the GOP coalition had become older and more working class, it didn’t care as much about spending restraint or entitlement reform as the party’s leaders had presumed.

“Trump taught Republicans how to relax and love expansionary fiscal policy.  By 2019, he was running a nearly $1 trillion deficit at a time of peace and prosperity, and, of course, the pandemic blew the lid off in 2020.

“After that, it’s difficult for the party to come back and sound the klaxons again about the dangers of red ink.

“Besides, the klaxons have issued false alarms before. Republicans realized that past dire warnings of imminent economic harm from deficit spending – rising interest rates, spiking inflation, a debt crisis – haven’t panned out.

“Indeed, this is one reason the center left now believes all such admonitions should be ignored, and there is almost no upper bound on deficit spending.

“Meanwhile, GOP politics have become focused on culture-war issues, another change symbolized by Trump. These issues hit close to the bone in a way that fiscal matters don’t. Conservatives worry about their free-speech rights getting trampled, about schools distorting the minds of their children and about the country’s history getting redefined – and it’s hard to get them to care more about a balance sheet than these other, more definitional questions.

“None of this means that Biden has a free hand. He will presumably be less successful in getting all that he wants with his latest two roughly $2 trillion spending bills. Even in a permissive environment, natural political exhaustion with the high levels of spending will kick in, and it’s always more complicated when tax increases are proposed to pay for at least part of the bill.

“Republicans aren’t going back to their debt-obsession circa 2010, but they should aspire to be, if not the party of green eye shades, the party of fiscal sanity.

“Deficit spending hasn’t led to dire outcomes to this point, although that doesn’t mean it never will.  If interest rates do ever-markedly increase again, the level of debt will strain the economy and force unpalatable choices on policymakers of steep tax increases or spending cuts or both.  The status of the U.S. dollar as the world’s reserve currency could be threatened.

“Why increase these risks if it’s not strictly necessary?

“That question won’t bring people into the streets, yet it’s one that Biden and his supporters can’t persuasively answer.”

David Ignatius / Washington Post

“Joe Biden doesn’t look so sleepy anymore.  He proposed Wednesday night what amounts to a revision of America’s social contract, giving the country something closer to the social safety net that most of the world’s advanced democracies have.

“The cost is enormous: President Biden’s $1.8 trillion American Families Plan would be added to his $2.2 trillion, eight-year infrastructure proposal and his already enacted $1.9 trillion stimulus package.  And let’s be honest: The inflationary danger of shooting this firehose of money into the U.S. economy is obvious, no matter what Federal Reserve Chair Jerome Powell says.

“But it’s the right thing to do.  For a generation, the unfair distribution of rewards in the American economy has been our glaring weakness.  It crushed the middle class and fueled the bizarro billionaire populist crusade of Donald Trump, who nearly wrecked our politics. Changing the formula so that rich people get less and everybody else gets more will be hard, but it’s necessary.

“Here’s a crisp summary of the agenda for change; ‘Capitalism must be modified to do a better job of creating a healthier society, one that is more inclusive and creates more opportunity for more people.’  That didn’t come from Biden, but from Jamie Dimon, the chief executive of JPMorgan Chase, in a 2020 article for Time magazine.

Dimon continued with language that might have been a draft of the president’s speech to Congress.  He called for ‘meaningful changes like rebuilding our education system and providing skills training, affordable health care policies, substantial infrastructure investment, and sensible immigration reform and climate policies.’

“For all the nice words from Dimon and other business leaders, it will be difficult transitioning to an economy in which the returns to labor and capital are more balanced.  As digital technology accelerates business, there are increasing returns to success.  The smartest and most nimble are rewarded, and the gap between business leaders and business laggards widens.  Biden will be swimming against this quickening current with his progressive agenda.

“A few obvious cautions: Biden should be careful in raising taxes and enhancing the safety net, he doesn’t alter the fundamental incentives to work and succeed in a capitalist economy.  As Europe’s social democracies learned in recent decades, fairness and innovation don’t always go together.  Stepping back from the knife edge of ‘winner take all’ capitalism moves a country to a safer but duller place.

“As Biden presses his progressive agenda, with its focus on racial justice, he shouldn’t ignore the needs of the White, working-class voters from ‘flyover’ states who were the backbone of Trump’s success. These Americans feel disposed, too. When they look at the decay of their Rust Belt cities and towns, they resent the blue-state elites who profit from technology and finance….

“America needs investment in capital equipment, the smart machines that will maintain U.S. leadership in computing, communications, artificial intelligence and biotechnology. And it’s heartening that this investment is spreading more into red and purple states, as in Apple’s announcement that it’s building a new campus in North Carolina’s Raleigh-Durham area, and expanding in several U.S. locations, including Austin, Texas’ breakout as an information-technology hub.

“But we need investment in human capital, too, and that’s a centerpiece of Biden’s American Families Plan.  Many studies have cited America’s declining public education systems as one of our biggest competitive weaknesses. Biden’s spending for universal preschool and two years of free community college will start fixing that problem….

“Biden certainly didn’t look like a transformational politician as he stumbled forward during the primaries toward the general election.  But he stumbled all the way to the White House, and now – with a follow-through that’s unusual in the transition from campaigning to governing – is pushing a program that, if successful, could remap U.S. politics.

“Republicans in Washington will try to obstruct Biden every way they can, but he should govern over their heads and speak directly to the angry Black and White Americans who are demanding, in different words, a new formula for sharing our abundance.”

Gerard Baker / Wall Street Journal

“Joe Biden aspires to be the second coming of Franklin Delano Roosevelt, so short of his showing up to work in a wheelchair and sucking on a cigarette holder, the first hundreds days, which he marks this week, will serve as the most symbolic reminder of the president’s sense of historic purpose.

“The ritual observation of the passage of FDR’s calendrical contrivance promises to be even more turgid than usual this year.  President Biden’s first address to a joint session of Congress…will come with special solemnity.  We will be reminded that delivering the nation from the baleful legacy of a one-term Republican in the midst of a national crisis with an urgent flurry of executive and legislative initiatives is what Democrats do.

“We can leave to future historians whether the creation of the White House Gender Policy Council will prove as consequential as that of the Tennessee Valley Authority. To be fair, different times pose different challenges.  Eleanor at least would surely approve.  Perhaps she’s having fireside chats with Dr. Jill the way she used to with Hillary Clinton….

“Given the revisionist climate we live in, though, Mr. Biden might not want to overdo the historical parallels with a white, male Democrat of the 1930s.  We can only speculate on how FDR might have fared in an unconscious-bias training session led by a modern diversity, equity and inclusion officer, but back in the 1930s the Jim Crow rules enforced by his fellow Democrats meant billy clubs, beatings and lynchings, not a slight reduction in the number of early-voting drop boxes.

“Despite the strenuous efforts to give Mr. Biden an early plinth in the pantheon of great presidents, the American public seems unconvinced.  Polling conducted to mark the 100-day point puts his popular approval somewhere in the low 50s on average.  That is well below all his modern predecessors – except the immediate one.

“This relative long-term underperformance but short-term overperformance might provide a clue to the larger political context of this burgeoning presidency.

“The White House would like you to believe that the progressive lurch it has taken in the first 100 days – contrary to the promises Mr. Biden made during the campaign – is going down well with voters.  Pointing to his 10-point improvement over President Trump, his aides say there’s popular support for the hefty expansion of government they have embarked on. But a more likely explanation is that for a critical mass of Americans in the shrinking center of politics, Mr. Biden’s singular appeal is that he is not Mr. Trump.

“It’s hard to overstate the extent to which the Trump presidency was for nonpartisans simply wearying.  It often felt like being a child of parents going through the collapse of a desperately unhappy marriage: Daddy rage-tweeting about some latest grievance while the media howl back in an angry storm of wild accusations and threats.

“The Biden presidency by contrast is a throwback to an ideal of an earlier age of family tranquility: Old Joe sitting benignly in the La-Z-Boy, listening to Bing Crosby on the record player.  Mother Media dutifully handing him his slippers and a scotch and reassuring him all is well.  The kids quietly doing their homework, and everyone’s in bed by 9.

“This contrast alone – the dialing down of the hysteria we’ve lived with for four years – probably explains the 10-point difference in the Trump and Biden ratings. The cleverest White House move has been the careful rationing of the president’s presence in the lives of ordinary Americans, the rediscovery that scarcity has value.

“What happens when this return to normality simply feels, well, normal again? The Biden people hope that an economy roaring back to life in the early stages of post-pandemic euphoria will maintain their political momentum and Americans will retroactively endorse the progressive course they’re on.

“But there’s an alternative possibility: that the resumption of normal political service reminds at least half the country that an administration that has exceeded even the left of its own party’s expectations may not be what the country needs.”

--David Ignatius / Washington Post…on Biden’s foreign policy

“President Biden’s first 100 days in foreign policy have been more about undoing than doing – fixing the messes he inherited but not yet building a new strategy.  Meanwhile, a restless world is testing Biden, pushing at the margins, and it won’t wait long for answers.

“The best snapshot of Biden’s disorderly world is the global threat assessment presented April 14 by Director of National Intelligence Avril Haines and CIA Director William J. Burns.  It’s a worrying document, summarizing intelligence that China, Russia, Iran and North Korea “have demonstrated the capability and intent to advance their interests at the expense of the United States and its allies.”

“The report is 27 pages of bad news.  Our adversaries perceive a weakened America and are pressing to take advantage.  China sees an ‘epochal geopolitical shift’ away from the United States and is preparing to fight wars in space, at sea and on land. Russia, as usual, is weak in everything except ‘new weapons that present increased threats.’  Iran ‘will take risks that could escalate tensions’ in the Middle East.  North Korea ‘will be a WMD threat for the foreseeable future.’

“Biden’s response has so far mostly been a repair job, understandably so.  He wants to retreat from vulnerable positions such as Afghanistan and strengthen defensible ones such as the security relationships with Japan and India.  He seeks to restore the international partnerships the Trump administration had trashed – from NATO to the Paris climate accord.  Most of all, he wants to rebuild the U.S. economy as a platform for American power.

“Nobody loves a superpower in decline.  Countries around the world are wondering how far they can push Biden’s America.  Chinese diplomats lectured their American counterparts in Anchorage last month.  Russia provocatively moved troops to the Ukraine border.  Saudi Arabia and the United Arab Emirates have secret back-channel contacts with Iran, even as they request more U.S. weapons.

“As Biden enters his second 100 days, he needs a clearer strategy for projecting power. I’m not talking about starting new ‘endless wars,’ but about working better with countries that are willing to fight for themselves.

“Let’s start with Afghanistan, where Biden is moving quickly to withdraw the remaining 2,500 U.S. troops.  I’ve been worried that he will leave behind a country that will implode under a Taliban onslaught, requiring ‘cold hearts and strong stomachs’ as a desperate population pleads for help. But Saad Mohseni, the head of Moby Group, the biggest media company in the country, told me Tuesday that this scenario is unnecessarily bleak. Afghanistan won’t simply collapse back into the dark ages of Taliban rule.

“ ‘The Americans don’t realize they’ve transformed a whole nation,’ Mohseni argues. He rattles off some statistics: The population is now 50 percent urban; 80 percent of the people watch television; 70 percent have a mobile phone; the literacy rate has gone from 10 percent in 2001 to more than 50 percent today.  If Afghanistan gets through the first bloody months after America’s departure, the Taliban will have to make concessions, he contends.  That’s the bet we should make, with money and training and other support.

“Iran is another country probing at the margins. Biden has seemed in his first 100 days to be rushing back into the nuclear deal that President Donald Trump abandoned. Rejoining the agreement makes sense, but it isn’t an Iran policy.  Biden should think bigger – and push back at a bullying regime that’s unpopular at home and feared abroad.

“Why not start in Lebanon, with a hefty investment to rebuild a strong Lebanese Armed Forces that can finally reduce Hezbollah’s power?  Qatar is said to be ready to bail out the Lebanese financial system; a new government, at U.S. insistence, can begin tackling corruption; and an American-financed and -trained Lebanese military can gradually restore sovereignty.

“Finally, there’s the ‘great power competition’ problem of Russia and China.  Okay, so let’s compete….

“America’s high card is technology. We’re still leading that race, but China is gaining. The smartest thing Biden can do is invest in owning the high-tech future. Social spending for an already overheating consumer economy can wait.

“Even after the Trump wrecking ball, America is still the global convener.  That was obvious at last week’s virtual summit on climate change, attended by both Chinese and Russian presidents.  Biden has shown in Afghanistan that he understands the limits of U.S. power. The challenge for the next 100 days – and beyond – is to remind ourselves and the world of this country’s strength and staying power.”

--Biden plans to propose an $80 billion funding boost for the Internal Revenue Service over the next decade, a major expansion of the tax agency that would double its enforcement staffing and give it new tools to combat tax dodging by the wealthiest Americans.

The administration projects that its plan would generate about $700 billion over 10 years in net revenue. The increase, which would yield money that could help fund Biden’s expansion of social-spending programs, would still represent only about 10% of the taxes that are estimated to be owed but go uncollected.

There would also be changes to the information-reporting rules that would give the IRS much more information about business income as it decides who to audit.

As I wrote last week on a related topic, this is a no-brainer.

--The Census Bureau issued its report on the U.S. population on Monday; 331,449,281, a 7.4% increase over the past decade that was the second-slowest ever.  Experts say that paltry pace reflects the combination of an aging population, slowing migration and the scars of the Great Recession, which led many young adults to delay marriage and starting families.

The report also means we have a new allocation of congressional seats and for the first time in 170 years of statehood, California is losing one, a result of slowed migration to the nation’s most populous state.

The census release marks the official beginning of the once-a-decade redistricting battles.

Colorado, Montana and Oregon all added residents and gained seats.  Texas was the biggest winner – the second-most populous state adding two congressional seats, while Florida and North Carolina gained one.  States losing seats included Illinois, Michigan, Pennsylvania and West Virginia.

And then there is New York.  Census said if New York had counted 89 more residents, the state would not have lost a seat but kept it, and Minnesota would have lost one.

The Pandemic

Owing to India, whose death toll is greatly undercounted, the world has been hitting new daily case highs…hardly what you’d expect from a pandemic that a lot of people believe has run its course.

And just go on worldometers.info and pull up the chart for Japan.  Tell me it’s a good idea to hold the Olympics in Tokyo.

Covid-19 death tolls, as of tonight….

World…3,193,179
USA…590,055
Brazil…404,287
Mexico…216,447
India…211,835
UK…127,517
Italy…120,807
Russia…110,128
France…104,514
Germany…83,542
Spain…78,216
Colombia…73,720
Iran…71,758
Poland…67,502
Argentina…63,865
Peru…61,477
South Africa…54,350
Indonesia…45,521
Ukraine…44,085
Turkey…40,131
Czechia…29,267
Romania…28,109
Hungary…27,540
Chile…26,353
Canada…24,219
Belgium…24,185

Source: worldometers.info

U.S. daily death tolls…Sun. 273; Mon. 455; Tues. 885; Wed. 954; Thurs. 870; Fri. 784.

Covid Bytes

--The Centers for Disease Control and Prevention eased its guidelines Tuesday on the wearing of masks outdoors, saying fully vaccinated Americans don’t need to cover their faces anymore unless they are in a big crowd of strangers.

And those who are unvaccinated can go outside without masks in some cases too.

Heck, for all my own talk of masking up, since day one I haven’t worn a mask if I was outdoors exercising.  But I’d have no problem wearing a mask in a grocery or drug store, for example, for years to come if we haven’t totally beaten down the coronavirus and variants are circulating.  What’s the big deal?  An infringement on my rights?  I have a right to wear a mask, if I want to.  [Far more on this topic in ‘random musings.’]

But it is true the CDC has been awful in its differing guidance throughout Covid-19.

--According to a Washington Post/ABC News poll, fewer than 1 in 4 Americans not yet immunized against Covid say they would be willing to get the vaccine made by Johnson & Johnson.

The nationwide survey shows that slightly fewer than half of U.S. adults overall say they consider the J&J vaccine very or somewhat safe after its use was halted this month following reports of rare, severe blood clots.

On the other hand, more than 7 in 10 say they regard the Pfizer and Moderna vaccines to be very or somewhat safe.

Of the 44 percent of adults who remain unvaccinated (at least one dose), a majority say they probably will not get a shot or definitely will not do so.  I know my favorite cousin in western Pennsylvania, a very educated guy, is an adamant Covid denier, anti-vaxxer, and I can only shake my head.

--American tourists who have been fully vaccinated will be able to visit the European Union over the summer, the head of the bloc’s executive body, Ursula von der Leyen, said in an interview with the New York Times on Sunday.  No timeline was offered.

--The U.S. told its citizens to leave India as soon as possible. And now the U.S. will restrict travel from India starting May 4.

India locked down for two months last March as Covid-19 arrived in the country and that action kept infection rates under tight control.  There was a spike in September but the numbers came back down and by February, cases were at an all-time low.  It’s incredible to look at the worldometers.info chart of the country on cases and deaths.

The problem was the country opened up too soon.  People attended cricket matches, weddings and religious festivals.  I was talking to an Indian friend who runs a local liquor store the other day and he said a New Jersey friend’s son went to India to get married.  The kid wanted a very small affair. His fiancée and her family wanted a big deal.  150 attended.  Apparently, at least one of the attendees was infected.  According to my friend, all 150 then came down with Covid.  The groom then came home and infected his father, who as of two weeks ago was in a New Jersey ICU.  Now the facts may be slightly off, but you’ve seen what happened in India when two million, largely maskless folks, hit the Ganges river for a religious festival weeks ago.  That’s nuts!  And this was when less than 5% of the population had been vaccinated.

Prime Minister Narendra Modi didn’t want to jeopardize his popularity by banning the big festival and in the midst of an election season (actual voting taking place in different phases), campaign rallies with thousands continue to be held.

So here we are, as I wrote weeks and weeks ago.  You have a nation that is a seething breeding ground for variants.

And now India’s neighbors, such as Sri Lanka and Pakistan, are surging.  Understand, Sri Lanka’s gross numbers are small, but the country as of this week had no capacity left in its ICUs.

--Brazil on Thursday became the second country to officially top 400,000 Covid-19 deaths, losing another 100,000 lives in just one month, as some health experts warn there may be gruesome days ahead when the Southern Hemisphere enters winter.  Brazil’s P.1 variant has spread to countries throughout the hemisphere, including Canada, where there has been a spike in cases in the province of British Columbia. 

Uruguay, extolled for limiting the spread of the coronavirus, has suddenly suffered twice the number of deaths in a one-week period ended April 26, than in the whole of 2020.  P.1 is estimated to be responsible for three out of four new infections there.

--Turkey is entering its first full lockdown of the pandemic, to curb a surge in infections and deaths.  The government has done a decent job in holding down deaths and Turkey has a solid healthcare system, but the recent spike has been worrying.

--A fire sparked by an oxygen tank explosion killed at least 82 people and injured 110 at a hospital in Baghdad that had been equipped to house Covid-19 patients, an Interior Ministry spokesman said on Sunday.

--A Spanish man with Covid-19 symptoms who coughed on work colleagues and told them “I’m going to give you all the coronavirus” has been charged with intentionally causing injury after allegedly infecting 22 people.

The man worked at a company on the Mediterranean island of Mallorca.  Days before the outbreak, the man showed Covid symptoms but refused his colleagues’ suggestions to go home and self-isolate, police said in a statement.

A day later he walked around his workplace, lowering his face mask and coughing on them, according to police.

--Germany’s domestic intelligence service said on Wednesday that it would surveil members of the increasingly aggressive coronavirus denier movement because they posed a risk of undermining the state.

The movement – fueled largely by conspiracy theories – has grown from criticizing lockdown measures and hygiene rules to targeting the state itself, its leaders, businesses, the press and globalism.  Demonstrators have increasingly attacked police and defied civil authorities.

In announcing the decision to keep tabs on conspiracy theorists, intelligence officials noted the movement’s close ties to extremists like the Reichsburger, a network of groups that refuse to accept the legitimacy of the modern German state.

Many coronavirus deniers also believe in QAnon, and in Germany, protesters are frequently seen holding signs with anti-Semitic tropes.

--Russia and Chinese media are systematically seeking to sow mistrust in Western Covid-19 vaccines in their latest disinformation campaigns aimed at dividing the West, a European report said on Wednesday.  From December to April, the two countries’ state media outlets pushed fake news online in multiple languages sensationalizing vaccine safety concerns, making unfounded links between jabs and deaths in Europe and promoting Russian and Chinese vaccines as superior, the EU study said.

In a related move, Brazil’s health regulators have rejected the Sputnik V vaccine developed in Russia, citing numerous concerns, including what they called a lack of efficacy data.  The World Health Organization has not scheduled a date to review it either.

--British Prime Minister Boris Johnson denied on Monday saying he would rather bodies piled “high in their thousands” than order a third social and economic lockdown to stem coronavirus infections, as reported in the Daily Mail.

The paper cited unidentified sources as saying that, in October, shortly after agreeing to a second lockdown, Johnson told a meeting in Downing Street: “No more f---ing lockdowns – let the bodies pile high in their thousands.”

--West Virginia Gov. Jim Justice (R) told his staff last week he wanted every idea they had.  Days later, a wild proposition popped into his head: give young people a $100 savings bond if they get vaccinated.

“It would be such a drop in the bucket compared to the ungodly amount of money we’re spending right now” in battling the pandemic, including for testing, protective equipment and economic relief. The total cost: roughly $27.5 million for the bonds.

In the past year alone, Justice said, West Virginia has spent $75 million to test people over and over.

To those who would criticize his plan, Justice said: “If I’m able to pull this off and we are able to shut this down for the small price of $27.5 million…I would tell those critics to kiss my butt.”

Wall Street and the Economy

We had a slew of economic news on the week.  Monday, March durable goods came in at 0.5%, less than forecast though this is a volatile number.  Ex-transportation orders rose 1.6%, up 0.9% on core capital goods.

The February Case-Shiller home price 20-city index rose 1.2% month-on-month, a whopping 11.9% year-on-year, the highest annual rate of price growth since February 2006, at the height of the real estate bubble.

And then we had our first look at first-quarter GDP, up 6.4%, annualized, a tick shy of consensus, and an increase from the fourth quarter’s 4.3% as the rebound continued.  6.4% is, however, lower than some of the frothy numbers we were hearing in January and February, and the final estimate from the Atlanta Fed’s GDPNow barometer was 7.9%.

Jobless claims for the past week were the lowest since the pandemic, 553,000.

Today, a release on March personal income was up a gaudy, and record, 21.1%, after a prior -7.1%, owing to the stimulus checks and other provisions of the $1.9 trillion Covid relief legislation, while consumption rose 4.2% vs. a -1.0% reading in February.  The Fed’s key inflation barometer, the core personal consumption expenditures index, ticked up to a 1.8% pace over the past year.

And we had a spectacular number on Chicago-area manufacturing today for April, 72.1 (50 the dividing line between growth and contraction), the highest since December 1983. Back then Paul McCartney and Michael Jackson topped the Billboard charts with their dreadful “Say Say Say.”

Meanwhile, the Fed’s Open Market Committee held another confab where it left the benchmark short-term rate near zero, where it has been since the pandemic erupted more than a year ago, to help keep loan rates down and encourage borrowing and spending.  The Fed also said it would keep buying $120 billion in bonds each month to try to keep longer-term rates low as well.

Fed Chair Jerome Powell made clear that while the economy is quickly strengthening amid the stimulus and reopening, and inflation is showing signs of picking up, the Fed isn’t even close to beginning a pullback in its ultra-low interest rate policies.

At a news conference, Powell stressed that the Fed would need to see more evidence of sustained and substantial improvements in the job market and the overall economy before it would consider reducing its bond purchases.  In the past, Powell has said that the Fed’s eventual pullback in its economic support would start with a reduction in its bond buying and only after that in a potential rate hike.

“We’re just going to need to see more data,” Powell said.  “It’s not more complicated than that.”

“Since the beginning of the year, indicators of economic activity and employment have strengthened,” Powell said.  “Household spending on goods has risen robustly.”

He also highlighted the striking progress the nation has made against the pandemic, a key point given that the chairman has often said that the economic recovery depends on the virus being brought under control.

“Continued vaccinations,” Powell said, “should allow for a return to more normal economic conditions later this year.”

Rising raw materials and parts prices are, however, an increasing concern for many, as prices for lumber and copper to semiconductors have spiked as demand has outstripped the ability of suppliers and shippers to keep up.

Companies such as Procter & Gamble, 3M and Honeywell are talking of raising prices to offset the cost of more expensive supplies.

Powell, however, continues to downplay inflation concerns, saying the current trends, including supply bottlenecks, will cause only temporary price increases.

“For inflation to move up in a persistent way that moves inflation expectations up,” the chairman said, “that would take some time, and you would think it would be quite likely we would be in very strong labor markets for that to be happening.”

Once expectations for inflation do rise, they can be self-fulfilling.  Workers start demanding higher pay to offset expected price gains, and retailers begin raising prices to offset increased wages and supply costs.  Such a scenario can lead to a wage-price spiral.

The stock market rally paused today in part because Robert Kaplan, president of the Dallas Fed, appeared to break ranks with Chairman Powell in saying that signs of excess risk-taking in the markets show it’s time to start debating a reduction in bond purchase.

Europe and Asia

In the eurozone (EA19), a flash estimate for first-quarter GDP from Eurostat has GDP down 0.6% in the euro area compared with the previous quarter, which follows a decline of 0.7% in the fourth quarter of 2020, after a strong rebound in the third quarter of 2020 (+12.5%).

Year-over year, GDP is -1.8%.

Germany is -3.0% Y/Y; France +1.5%; Italy -1.4%; Spain -4.3%.

A flash estimate on April inflation for the euro area rose to 1.6% annualized, but still just 0.8% ex-food and energy.

The unemployment rate for March in the EA19 was 8.1%, down from 8.2% in February 20221 and up from 7.1% in March 2020.

Germany 4.5%; France 7.9%; Italy 10.1%; Spain 15.3%; Ireland 5.8%; Netherlands 3.5%.  [U.S. 6.0%]

Brexit: Northern Ireland’s First Minister Arlene Foster said she’d step down as first minister and head of the pro-British Democratic Unionist Party. Critics say she failed to oppose the Brexit deal strongly enough, particularly the trade barrier it imposed in the Irish Sea, which they say undermines Northern Ireland’s place in the UK.

It could be a long summer in the North, with potential sectarian strife.

But after four years of political brinkmanship, EU lawmakers backed the post-Brexit trade deal, 660 votes to five, with 32 abstentions, marking the final step in the ratification process.  But European Commission President Ursula von der Leyen warned that the bloc won’t hesitate to act if Britain breaches the terms of the deal, which she said would be instrumental in bolstering the bloc’s single market and avoiding a chaotic rupture.

Fishing again is the key. France said if Britain doesn’t respect its commitments in this sphere, France will block regulations that would allow UK financial firms to do business in the bloc.

Separately, Brexit has triggered a major decline in food trade between Ireland and the UK, according to a report from the Central Statistics Office.

The study found exports of food and drink products to Britain fell by 35 percent from 641 million euros to 418 million in the first two months of 2021 compared with the same period in 2018.  Granted, part of the decline could be due to stockpiling in the lead-up to the UK’s official departure from the EU.

Turning to Asia…We had the official Chinese government PMI readings for April, with the manufacturing figure at 51.1 vs. 51.9 in March, less than expected, as reported by the National Bureau of Statistics.  The non-manufacturing/services reading was 54.9, down from 56.3 in March.

Caixin’s private manufacturing number was 51.9 vs. the prior month’s 50.6, Caixin focusing on small- and medium-sized businesses, the government on large, state-run enterprises.

All of this points to a loss in momentum from the economy’s strong pandemic bounceback.  The softness in the service sector is worrisome in that it underscores concerns that domestic spending, a persistent weak point in the recovery, would hold back China’s economy in the coming months.

The manufacturing data points to the impact of supply bottlenecks and rising costs, which weigh on production as overseas demand lost momentum at the same time.

Some of the companies surveyed by Reuters pointed to problems in sourcing chips, a shortage of containers, and rising freight rates, issues that are still severe in nature.

In Japan, the manufacturing PMI for April was a solid 53.6 vs. 52.7 in March, while industrial production for March was 2.2% month-over-month, 4.0% year-over-year.

March retail sales were up a solid 5.2% Y/Y.  March’s unemployment rate fell to 2.6%.

Street Bytes

--Stocks barely finished mixed on the week with the S&P 500 gaining a point, 0.02%, while the Dow Jones fell 0.5% to 33874 and Nasdaq lost 0.4%.  But both the S&P and Nasdaq hit new highs on Thursday and Monday, respectively.

Earnings from tech biggies Apple, Microsoft, Amazon, Facebook and Google (Alphabet) were outstanding but the market is digesting the strong economy, helped by falling Covid numbers in much of the country, and what that means in terms of inflation and future Fed policy.

--U.S. Treasury Yields

6-mo. 0.02%  2-yr. 0.16%  10-yr. 1.63%  30-yr. 2.30%

Yields on the long end rose a bit this week, given the above and increased inflation fears that would force the Fed’s hand earlier than expected.

--Chevron Corp.’s first-quarter profit fell 29% from the same period a year ago as gains from oil and gas prices were undercut by weaker refining margins, production losses and the impact of an asset sale that benefited results last year.  The second-largest U.S. oil producer, reported a profit of $1.72 billion, compared with $2.45 billion a year earlier.  Year-ago results included about $680 million in asset sales and favorable tax items.  Net profit was $1.4 billion, down from $3.6 billion.

CEO Michael Wirth said, “Results were down from a year ago due in part to ongoing downstream margin and volume effects resulting from the pandemic and the impacts of winter storm Uri,” referring to the plunging temperatures that hit Texas and other states in February.  The storm cost $300 million in lost production and repairs, Chevron said.

The company said capital spending for the first quarter was $2.5 billion, down from $4.4 billion in the same period last year.

--The largest U.S. producer, Exxon Mobil, reported better-than-expected first-quarter results on Frida as the oil major benefited from gains in crude prices, while production picked up some.  Adjusted earnings rose to $2.73 billion, or $0.65 a share from $0.53 a year before, when the company recorded a loss of $610 million, while revenue increased to $59.15 billion, compared with $56.16 billion a year earlier.

West Texas Intermediate is up more than 30% so far this year, and finished today at $63.50, after finishing 2020 at $48.42.

The company said the harsh winter weather affected all of its businesses, although a “rapid” recovery minimized the impact.  The weather cut about $600 million off the company’s earnings.

Oil-equivalent production of 3.8 million barrels a day was up 3% from the fourth quarter of 2020 but lower than the 4.05 million-barrel pace of a year ago.  Production in the Permian basin of the southwestern U.S. was up 12% year-on-year.

Shares in Exxon Mobil and Chevron fell 3% and 4%, respectively, in response to their reports.

--BP’s profit soared in the first quarter to $2.6 billion thanks to stronger oil prices and bumper revenue from natural gas trading as the energy company said it intends to resume share buybacks in the third quarter.

BP’s net debt dropped by $5.6 billion to $33.3 billion at the end of March, chiefly due to around $4.8bn worth of disposals and stronger oil prices.

BP’s first-quarter underlying replacement cost profit, the company’s definition of net income, rose to $2.6 billion, far exceeding forecasts of a $1.64 billion profit in a survey of analysts.  That compared with a $790 million a year earlier.

--The Senate voted to restore regulations on methane gas that leaks into the air from U.S. oil and gas production, reversing a Trump-era policy and giving a boost to the Biden administration’s goal of reducing emissions.

In a 52-42 vote Wednesday, the Senate invoked its power under the Congressional Review Act to overturn rules adopted by the Environmental Protection Agency last year on methane-gas emissions, including those easing some monitoring requirements and lowering standards for pollution-control systems to detect methane leaks by facilities that transmit and store natural gas.

Three Republican senators – Susan Collins of Maine, Lindsey Graham of South Carolina and Rob Portman of Ohio – voted with Democrats in favor of the legislation.

Methane is a component of natural gas, which has grown in popularity as a fuel.  It is transported via pipelines, which can leak the gas.  Scientists have determined that methane, while emitted in smaller amounts into the atmosphere than carbon dioxide, is more potent in trapping the Earth’s heat.

The oil-and-gas lobby initially fought methane regulations but has recently eased up on that effort.  Top producers – Royal Dutch Shell, Exxon Mobil, BP – have said they support methane regulations as they face pressure from investors on climate issues.

The American Petroleum Institute, the industry’s top lobbying group, announced on the first full day of the Biden administration that it supported direct regulation of methane.

--A surge in iPhone sales, especially in China, has led to a doubling of profits at Apple since the start of the pandemic.  The results reflected “optimism” about the days ahead, Apple’s boss said.

Apple has seen sales of its phones, apps and other devices rise throughout the past year, as consumers spent more time working, shopping and seeking entertainment online.

Customers continued to upgrade to Apple’s new 5G phones which were rolled out last year, and also bought Mac computers and iPads to tackle working and studying from home, the company said.

Profit was $23.6bn, up from $11.3bn for the same period last year.

“This quarter reflects both the enduring ways our products have helped users meet this moment in their own lives, as well as the optimism consumers seem to feel about better days ahead for all of us,” said CEO Tim Cook.

iPhone sales rose 66% to $47.9 billion on top of a holiday-season quarter when they jumped 17%.  The iPhone 12 is the first model that can connect to 5G wireless networks that promise higher speeds but are still being built out.

Sales of Macs and iPads were $9.1 billion and $7.8 billion, respectively, both beating estimates.

Accessories, which includes products like AirPods headphones and its new AirTag trackers, came in at $7.8bn.

The steadily expanding services division generated revenue of $16.9 billion during the quarter. That division includes the 15% to 30% commission that Apple collects from most paid transactions completed with iPhone apps.

Sales to China nearly doubled, leading to overall revenues for the first three months of this year of $89.6 billion, up more than 50% compared to a year earlier, including $6.5 billion more in iPhone sales than predicted and Mac sales about a third higher than estimates.

Apple raised its dividend to 22 cents per share, as well as announcing a $90 billion share repurchase.  But the shares ended down a bit by week’s end.

--Facebook, which relies on sales of advertising rather than consumer electronics, also saw bumper revenues and profits in the first three months of the year and the shares surged 6%.

The time spent by consumers at home, and the spending power that shifted online, translated into revenues of $26.17bn, up 48% and outpacing analysts’ predictions.  Profit was also higher than expected at $9.5bn, up from $4.9 billion a year earlier.

The average price of ads on Facebook grew 30% from a year earlier.

The company had 2.85 billion monthly users, on average, in March, up 10% from a year ago.  Its family of apps – Facebook, Instagram and WhatsApp – had monthly users of 3.45 billion.  That’s the number of people who logged in to at least one of the apps during the month.

Facebook said in coming months it expected revenue to be stable or grow moderately, and admitted a new feature released this week by Apple – an option for users to prevent apps from collecting user data – could “significantly” hurt its business.  But none of this was a surprise to investors.

--Google’s parent company, Alphabet, said on Tuesday that revenue in its most recent quarter increased sharply from the same period a year ago, boosted by strong demand for online advertising on its search results and YouTube videos and by continued growth at its cloud computing arm.

Alphabet posted revenue of $55.31 billion, up 34 percent from a year earlier, and net profit more than doubled to $17.93 billion in the first quarter.  It was the third straight quarter of record profit for the company.  The results exceeded expectations and the shares rose 4% in response.

Like the other tech companies, Alphabet has thrived in the pandemic, with Google’s advertising business rebounding strongly after an initial pullback in travel-related advertising last spring.  Businesses are spending money with Google to target consumers who are spending more time online.

Advertising revenue rose 32 percent, with Alphabet generating $6 billion in YouTube ads, an increase of 49 percent.

Revenue at the cloud business grew 46 percent, in line with estimates, though Google continues to be a distant third to Amazon and Microsoft in the segment.

Alphabet’s profits were helped by keeping the company’s sales and marketing costs remained flat, and it reduced general spending from a year earlier, even as it continued to increase head count by nearly 17,000 people to roughly 140,000 employees globally.

Finally, the company announced a $50 billion share buyback.

--Microsoft reported that its quarterly sales grew at one of its strongest rates in years, as the company was poised to cross $2 trillion in market value.

Revenue rose to $41.7 billion for the fiscal third quarter, up 19 percent from a year earlier, its biggest quarterly increase since 2018.  Profits jumped 44 percent to $15.5 billion.  The results surpassed Street forecasts.

“Over a year into the pandemic, digital adoption curves aren’t slowing down,” Satya Nadella, Microsoft’s chief executive, said in a statement.  “They’re accelerating.”

Sales of commercial cloud products generated $17.7 billion in revenue, up 33 percent from a year earlier.  Revenue from Azure, Microsoft’s flagship cloud computing product, rose 50 percent, while commercial Office 365 products grew 22 percent as corporate customers embraced running their computing and other tools on the cloud.

Microsoft has closed in on Amazon’s lead in cloud computing, according to data from Synergy Research Group.  Amazon has about a third of the growing market, and Microsoft has surpassed 20 percent market share.

Sales of personal computing products rose to $13 billion in the quarter, up 19 percent, as people bought more computers and opted for new devices with larger screens during the pandemic to learn and work from home. Gaming revenue grew 50 percent, fueled by spending on the new Xbox gaming console, which was launched late last year, as well as on Xbox content and services.

--Amazon’s pandemic boom isn’t showing signs of slowing down.  The company said Thursday that its first-quarter profit more than tripled from a year ago, fueled by the growth of online shopping.  It also posted revenue of more than $100 billion, the second quarter in a row that the company has passed that milestone.

As physical stores temporarily closed, Amazon reaped the rewards, with people stuck at home turning to it to buy groceries, cleaning supplies and more.  And that isn’t dying down.

In Q1 the company reported profit of $8.1 billion, compared to $2.5 billion the year before.  Earnings per share came to $15.79, about $6 more than what Wall Street expected.

Revenue jumped 44% to $108.b billion, becoming one of four American companies that have reported quarterly revenue above $100 billion.  The others are Apple, Exxon Mobil and Walmart.

Amazon said revenue will remain at that level in the second quarter, expecting between $110 billion and $116 billion.  The company plans to hold Prime Day, its popular sales event, during the quarter, details to follow.

Sales at Amazon’s cloud-computing business, which helps power the online operations of Netflix, McDonald’s and other companies, grew 32% in the quarter to $13.5 billion, ahead of estimates.

Amazon announced prior to its earnings report that it was raising wages for its hourly employees after a majority of workers at one of the e-commerce giant’s warehouses voted not to unionize.

The company said that more than 500,000 of its employees would see pay increases of between 50 cents and $3 an hour.  Amazon, which offers a starting wage of $15 an hour and employs roughly 950,000 people in the U.S., said the raises represented an investment of more than $1 billion.

The pay increase covers a variety of workers and schedules, but averaged over the total number of employees Amazon said would be affected, it would amount to about $40 a week per worker.

--Twitter Inc. shares cratered 15% Friday after the company offered tepid revenue guidance for the second quarter, warned of rising costs and expenses and said user growth could slow as the boost seen during the pandemic fizzles. 

The social media company posted revenues and user numbers mostly in line with analyst estimates in stark contrast to the better performing digital ad firms like Facebook and Alphabet.  It said it expected second quarter revenue between $980 million and $1.08 billion, lower than Wall Street estimates of $1.06 billion on average.

Twitter said it wants to reset after years of product stagnation, announcing in February bold goals to expand its user base, speed up new features for users, and double its revenue by 2023.

Ad revenue for the first quarter was $899 million, up 32% from the same period a year ago and slightly beating estimates.

Twitter reported 199 million daily active users, up 20% year-over-year, compared to analysts’ estimates of 200 million.  The company also repeated its warning that growth of its monetizable daily active users could reach “low double digits” in the next quarters, likely hitting a low point in Q2.

--Boeing Co. reported a wider than expected first-quarter loss on Wednesday and took another charge on its program to build two new Air Force One presidential planes after firing a contractor it hired to help perform the work.

The company also did not provide a timetable for fixing the latest problem with its 737 MAX jet, an electrical issue that has forced airlines to park more than 100 of its planes.

The combination of self-inflicted damage and a pandemic that has depressed demand for new planes pushed Boeing to its sixth straight quarterly loss.  However, CEO David Calhoun said the company is at an “inflection point,” with an increase in vaccinations against Covid raising hopes for a rapid recovery in air travel that could translate to aircraft orders.

Boeing lost $561 million, $1.53 per share, ex-items, while revenue was $15.22 billion, down 10% from a year earlier and roughly in line with Street forecasts as the company generated cash by delivering more new airliners than it did a year ago; 77 commercial planes, up from 50.

But after the quarter ended, Boeing suffered a new setback with its 737 MAX, grounding dozens of the planes because of issues around electrical grounding of some parts, as described last week.

Calhoun said, “We still believe that (a fix) is in relatively short order, although I will not predict when the FAA is through with its interrogation.”

As for the new Air Force One planes, Boeing took a first-quarter charge of $318 million related to its $3.9 billion contract with the Air Force.  Boeing fired and sued subcontractor GDC Technics, which in turn laid off about 200 workers and filed for bankruptcy protection this week.  GDC, hired for interior work on the planes, filed a countersuit against Boeing.

Boeing has a December 2024 deadline for delivering the aircraft.

--TSA checkpoint travel data vs. 2019

4/29…61 percent vs. 2019 levels
4/28…52
4/27…51
4/26…57
4/25…63
4/24…63
4/23…60
4/22…60
4/21…52

*The post-pandemic passenger high of 1,580,785 travelers is still April 2.

--Tesla posted a Q1 adjusted profit of $0.93 a share, compared with $0.23 a share for the same period in 2020, better than the Street’s forecasts.  Profits came in at $438 million, up from $16m last year, bolstered by sales of Bitcoin and environmental credits.

Revenue for the EV maker shot up 74% to $10.39 billion from last year’s quarter.  Analysts were looking for $10.28 billion.

Tesla said it produced 180,338 vehicles in Q1, up from 102,672 in the 2020 period.  Deliveries rose to 184,877 from 88,496.

Looking ahead, Tesla said that it expects to grow vehicle deliveries by an average of 50% per year over a multi-year period. Deliveries for 2021 are expected to grow by at least 50%.

The company also said it was on track to begin production and deliveries of its Model Y vehicles from its Gigafactory plants in Berlin and Texas in 2021, along with deliveries of Tesla Semis.

CEO Elon Musk said the global shortage of computer chips caused “supply chain challenges,” although that “particular problem” had eased.

He claimed the Model 3 midsize sedan was the “best-selling luxury sedan of any kind in the world” for the quarter.  He also predicted the company’s midsize sport utility Model Y would become the best-selling car or truck of any kind in the coming years.

Meanwhile, Musk is scheduled to host “Saturday Night Live” on May 8, which should garner boffo ratings.  He’s certainly an atypical choice, but we’re all looking for something outrageous, and hopefully funny.  He’s certainly used to being a showman.

--Ford Motor Co. reported an adjusted EPS of $0.89 in Q1, reversing from an adjusted net loss of $0.23 per share a year earlier, and easily surpassing analyst estimates.

Revenue grew 6% to $36.2 billion from a year ago.

For the full-year 2021, the car maker expects adjusted earnings of $5.5 billion to $6.5 billion, including an adverse effect of about $2.5 billion, as it now expects to lose about 1.1 million units of production this year due to the semiconductor shortage.  It said the problem was made worse by a recent supplier fire in Japan, which impacted the flow of semiconductors.

Like many others in the industry, the broader global chip shortage may not be fully resolved until 2022.

Separately, Ford’s manufacturing facility in the northern Mexican city of Hermosillo will pause production from May 3 to May 17 due to supply shortages, including chips.

--United Parcel Service Inc. posted record quarterly profit and revenue on pandemic-fueled demand for doorstep deliveries and air transportation.  Shares soared 12% in response, after operating profit swelled during the first quarter, when severe winter weather briefly disrupted operations.

Total revenue rose 27% to $22.9 billion, handily beating the Street, with earnings at a better-than-expected $2.77 per share.

--General Electric reported mixed results for the first quarter, with revenue sliding from a year earlier to miss analysts’ views as the company’s aviation business struggled, while earnings for the conglomerate unexpectedly advanced.

Adjusted earnings came in at $0.03 vs. $0.02 in the same period of 2020, better than expected by the Street, but revenue, down 12% to $17.12 billion, came in shy of forecasts.

Aviation segment revenue dropped 28% from a year ago to $4.99 billion, as orders fell amid “ongoing pandemic-related challenges,” the company said. Revenue in healthcare fell 9% to $4.31 billion, although the company said the segment rose 7% organically with some medical procedures returning to pre-pandemic levels.

GE’s power segment saw revenue slide 3% to $3.92 billion while orders were down 12% amid declines in the gas power and power portfolio businesses, although gas turbine orders were up by nine year-on-year to 18.  Revenue in renewable energy rose 2% to $3.25 billion as onshore and offshore wind orders increased.

GE reiterated guidance for adjusted EPS of $0.15 to $0.25 for 2021 and industrial revenue growth in the low single-digit range on an organic basis.

--Caterpillar Inc. reported higher quarterly earnings but warned supply-chain bottlenecks, particularly a global shortage of semiconductor chips, could affect its ability to keep up with increasing customer orders.

CFO Andrew Bonfield said while the company was seeing a recovery in most of its markets around the world, the supply situation related to chips remained “dynamic and very fluid” and could impact production later this year.  “We may not be able to satisfy all the end-user demand out there,” he told Reuters.  “And that’s the challenge we are trying to manage.”

The Illinois-based manufacturer of heavy machinery did not provide an earnings forecast for this year.  The company also expects soaring raw material prices, particularly of steel to start pinching it from the quarter through June.  However, it said a run-up in commodity prices was a positive for the company as it was generating demand for its machines from iron-ore miners.

Adjusted profit in the first quarter came in at $2.87 per share, up from $1.65 per share a year earlier.  Equipment sales rose 13% year-on-year in the quarter to $11.2 billion, led by a 72% surge in construction machine sales in Asia.

But CAT shares fell 4% in response to the so-so forecast.

--3M posted first-quarter financials above analysts’ consensus as a broad industrial upturn lifted sales and margins, but the diversified manufacturer said rising costs would pose a bigger earnings headwind than previously expected for the remainder of the year.

The St. Paul, Minnesota-based supplier of adhesives, electronic components, construction components and respirators posted adjusted earnings of $2.77 per share for the quarter ended March 31, up from $2.19 per share a year earlier.

Sales rose 9.6% to $8.85 billion, topping forecasts, including an increase of $190 million in respirator sales year-over-year, amid the pandemic.

Consumer sales rose 9.8% to $1.37 billion, aided by strong home improvement demand as well as office and stationery supplies as people returned to school and workplaces.

Safety and industrial segment sales jumped 14% year-over-year to $3.3 billion on strong demand for respirators but also for abrasives and industrial adhesives. Transportation and electronics sales rose 13% to $2.5 billion with automotive, aerospace and electronics markets driving growth.

For 2021, though, 3M forecast full-year earnings of $9.20 to $9.70 per share on sales growth of 5% to 8%, as “supply chain challenges continue,” the company said in an earnings presentation.

--Rail traffic in the U.S. jumped 30% year-over-year in the seven days that ended on April 24, according to the Association of American Railroads.

All 10 carload commodity groups increased from the same week last year. For example, coal rose 16,126 carloads to 64,252, while motor vehicles and parts rose 9,067 carloads to 11,302.

For the first 16 weeks of the year, U.S. railroads reported volume of 3.62 million carloads, up 1.5% year-over-year.  Intermodal units rose 17%.  Overall, since the start of the year for both the increase is 9.4%.

--UBS Group AG posted a $774 million hit from the implosion of Archegos Capital Management and said it plans to review its risk procedures after it joined Morgan Stanley in surprising investors over the size of the impact from the collapse of the U.S. family office.

The loss helped drive a $554 million drop in revenue at the global markets business, overshadowing what would otherwise have been a surge from equity derivatives and cash equities.  Even with the Archegos hit, UBS reported better-than-expected first quarter profit of $1.82 billion as wealth management income climbed.

Switzerland’s largest bank had remained quiet on the collapse of Bill Hwang’s family office for weeks, even as its biggest rival, Credit Suisse Group AG, unveiled a $5.5 billion hit and Japan’s Nomura Holdings Inc. also warned of steep losses.

--Merck reported lower-than-expected first-quarter earnings on Thursday, as revenue was hurt by decreased sales for several of its pharmaceutical products due to the ongoing pandemic, while the company reiterated its 2021 financial forecast.

The Kenilworth, New Jersey-based drugmaker posted an adjusted profit of $1.40 a share, compared with $1.51 a share for the same period in 2020.  Sales rose to $12.08 billion, up from $12.06 billion for the previous year, the company missing projections on both the top and bottom line.

“While our results this quarter were impacted by the pandemic, the underlying demand for our innovative products remains strong and we remain confident in our future growth prospects,” said Kenneth Frazier, Merck’s chairman and CEO.  “We are also taking the right steps to evolve Merck’s operating model to continue to create value for patients, shareholders and society.”

Merck attributed the revenue shortfall to patients having restricted access to their healthcare providers during the pandemic, with non-Covid-19 vaccines being hard hit.  Sales of Gardasil, its human papillomavirus, plunged 20% to $917 million.

Pharmaceutical sales were $10.7 billion, largely flat year over year, but the company’s top-selling medication, the cancer therapy Keytruda, jumped 16% to $3.9 billion.

Frazier is scheduled to retire as CEO of Merck on June 30.  He will be succeeded by Merck’s president and chief financial officer, Robert Davis.

Merck reiterated its 2021 outlook for adjusted EPS of $6.48 to $6.68, on sales of $51.8 billion to $53.8bn.

--Starbucks Corp. said it expects profit to increase this year as customers come back to its cafes now operating more efficiently than before the pandemic hit.

The coffee giant’s sales plummeted last year as it closed stores first in China than around the world as Covid took hold.  Starbucks has steadily reopened stores since last summer, when health restrictions on business and public gatherings began to ease in parts of the U.S.

Starbucks said Tuesday that global same-store sales in its March-ended quarter increased 11% from the same period last year to $6.7 billion.  International markets accounted for much of the growth, up 35%; same-store sales in the U.S. rose 9%. Analysts had expected global growth of 17%.

--The Centers for Disease Control and Prevention said late Wednesday in a letter to the cruise industry that cruising could restart in mid-summer in American waters.

“We acknowledge that cruising will never be a zero-risk activity and that the goal of the CSO’s (Conditional Sailing Order) phased approach is to resume passenger operations in a way that mitigates the risk of Covid-19 transmission onboard cruise ships and across port communities,” Aimee Treffiletti, head of the Maritime Unit for CDC’s Covid-19 response said in a letter.

Mid-July appears to be the target, depending on cruise lines’ pace and compliance with the CDC’s Framework for the CSO.

--One hoping to take advantage of the above, Royal Caribbean Cruises, reported an adjusted Q1 loss of $4.44 per diluted share, wider than a loss of $1.48 a year earlier. 

Revenue for the quarter was $42 million, down from $2.03 billion a year earlier.

“The company’s operation is still heavily impacted by the consequences of the Covid-19 pandemic. Therefore, the company cannot reasonably estimate its financial or operational results,” it said.

--McDonald’s reported first-quarter revenue that reached pre-pandemic levels as the fast-food giant saw a surge in comparable sales in the U.S., driven by its digital platforms.

Revenue increased 9% to $5.12 billion in the three months through March, better than consensus.  Earnings of $1.92 a share also beat expectations.

Comparable sales rose 7.5%, beating analysts’ estimates, as the restaurant chain “began to lap the significant impact of Covid-19 on our global results beginning in March 2020,” the company said in a statement.  Still, McDonald’s said customer visits “remained negative for all segments.”

In the U.S., comp sales jumped almost 14%, aided by growth in the size of an average check.  A year ago, U.S. comparable sales rose just 0.1%.

International operated markets comp sales increased 0.6%, turning positive after the prior-year drop of 6.9%, on strength in the UK, Australia and Canada while France and Germany’s sales were “significantly negative.”

--Yum! Brands posted first-quarter earnings above estimates Wednesday as the parent of KFC, Taco Bell and Pizza Hut fast food outlets said it expects to see unit growth at pre-Covid-19 levels “sooner rather than later” with the pandemic waning in the developed world.

Earnings per share was $1.07, ex-items, $0.21 better than consensus.

Revenue for the Louisville-Kentucky-based company rose 18% to $1.49 billion, topping the Street’s forecasts.

Yum added a net of 435 new franchised restaurants, or units, in the first quarter, an increase of 1%, ending the period with more than 50,000 while the company reported 4% net new unit growth in 2019.

First-quarter system sales ex-currency effects rose 11%, as same-store sales increased 9%.

“This was driven by strong sales performance in North America, the UK, Australia and Japan, with some offset from Covid-related restrictions in parts of Asia and Europe,” CEO David Gibbs said.

The KFC and Taco Bell divisions grew same-store sales of 8% and 9%, respectively, while Pizza Hut posted a 12% gain after closing 4% of its outlets over the past year.

KFC delivered system sales growth of 24% in China and 13% in the U.S., where the results were lifted by a new chicken sandwich.

--The pandemic’s boost is fading for Sony, but the company’s longer-term content-focused strategy still looks likely to pay off.

On Wednesday, the Japanese electronics-and-entertainment giant reported a record net profit for the fiscal year ended in March.  The highest-ever earnings from its game division, helped by stay-at-home demand, was the major driver.

Sony has sold 7.8 million of its new PlayStation 5 consoles since its November release, outpacing its predecessor at the same stage.  It could have sold even more if not for supply constraints due to the chip shortage.

But the boost from Covid-19 could soon be over.  Sony issued a cautious outlook, forecasting a decline in operating income this fiscal year.

--Despite a night of historic firsts and a major upset in the best actor category, the 93rd Academy Awards was a ratings bust. ABC’s telecast of the Oscars hit an all-time low with an average of 9.85 million viewers watching on Sunday, a drop of 58% from last year according to Nielsen. The previous low was in 2020 with 23.6 million viewers.

Other awards shows had similar results, with the Golden Globe Awards (6.9 million viewers on NBC) and the Grammy Awards (8.8 million on CBS) also both down more than 50%.

The 9.85 million viewers for the Oscars, while higher than most network prime-time TV shows, pales in comparison to regular-season NFL telecasts, which averaged 15 million viewers this past season.  [Stephen Battaglio / Los Angeles Times]

--New York City will fully reopen on July 1, Mayor Bill de Blasio announced Thursday, no specific details released as yet.  The mayor emphasized that the city is ready for stores, businesses, offices and theaters to reopen at “full strength.”

De Blasio cited the significance rise in vaccinations for Gotham residents.  New York Gov. Andrew Cuomo has also been easing restrictions, citing the drop in cases and hospitalizations.

Foreign Affairs

Iran: The New York Times reported on a leaked audiotape that offered a glimpse into the behind-the-scenes power struggles between Iranian Foreign Minister Mohammad Javad Zarif and the Revolutionary Guards Corps, where Zarif said the Guards overrule many government decisions and ignores advice.

As reported by Farnaz Fassihi, “In one extraordinary moment on the tape that surfaced Sunday, Mr. Zarif departed from the reverential official line on Maj. Gen. Qassim Suleimani, the commander of the Guards’ elite Quds Force, the foreign-facing arm of Iran’s security apparatus, who was killed by the United States in January 2020.

“The general, Mr. Zarif said, undermined him at many steps, working with Russia to sabotage the nuclear deal between Iran and world powers and adopting policies toward Syria’s long war that damaged Iran’s interests.

“ ‘In the Islamic Republic the military field rules,” Mr. Zarif said in a three-hour taped conversation that was part of an oral history project documenting the work of the current administration.  ‘I have sacrificed diplomacy for the military field rather than the field servicing diplomacy.’

“The audio was leaked at a critical moment for Iran, as the country is discussing the framework for a possible return to a nuclear deal with the United States and other Western powers….

“The recording, of a conversation in March between Mr. Zarif and an economist named Saeed Leylaz, an ally, was not meant for publication, as the foreign minister can repeatedly be heard saying in the audio.  A copy was leaked to the London-based Persian news channel Iran International, which first reported on the recording and shared it with The New York Times.

“On it, Mr. Zarif confirms what many have long suspected: that his role as the representative of the Islamic Republic on the world stage is severely constricted.  Decisions, he said, are dictated by the supreme leader or, frequently, the Revolutionary Guards Corps.”

While the motivation for leaking the tape is not known, among Zarif’s observations is that in assassinating Suleimani, the United States delivered a major blow to Iran, more damaging than if it had wiped out an entire city in an attack.

Meanwhile, former Secretary of State John Kerry is taking heat in certain circles over Zarif’s claim that Kerry told him Israel had carried out 200 strikes on Iranian targets in Syria.

“I can tell you that this story and these allegations are unequivocally false. This never happened – either when I was Secretary of State or since,” Kerry tweeted.

The tweet cited a 2018 article from Reutters in which then-intelligence minister Israel Katz said that Israel had carried out over 200 airstrikes against Iranian targets in Syria over the previous two years.

Zarif said that he was often kept in the dark about security matters, and that “to his astonishment,” Kerry told him that Israel had attacked Iranian interests in Syria at least 200 times.

The interviewer, however, asked twice, “You did not know?”, to which Zarif responded “no, no” on both occasions.

Zarif did not clarify when the purported conversation with Kerry took place.  Kerry served as chief negotiator for the 2015 nuclear deal between Iran and world powers and dealt closely with Zarif over the years.

But Israel has publicly acknowledged having launched hundreds of strikes in Syria since the start of the civil war there in 2011.  Heck, I’ve got a lot of it all down here in these pages over the years.  This is hardly a ‘secret.’  And hardly “traitorous” on the part of Kerry, as one New York Post editorial writer opined this week.

Israel: In a senseless, idiotic tragedy, at least 44 people were crushed to death at an overcrowded religious bonfire festival on Friday, in what prime minister Benjamin Netanyahu described as a “heavy disaster.”

The crush occurred as tens of thousands of ultra-Orthodox Jews thronged to the Galilee tomb of second-century sage Rabbi Shim Bar Yochai for annual Lag B’Omer commemorations that include all-night prayer, mystical songs and dance.

Witnesses said people were asphyxiated or trampled in a tightly packed passageway, some going unnoticed until the public address system sounded an appeal to disperse, as crowds packed the Mount Meron slope in defiance of Covid-19 warnings.

Medics said at least 103 had been injured in the stampede.  Casualties included children.

This all comes as Netanyahu is still trying to figure out a way to stay in power even though he doesn’t have the votes in the Knesset. Wednesday, he finally caved in on his more than month-long opposition to appointing Blue and White leader Benny Gantz as Justice Minister in the current transitional government, the prime minister battling against the High Court and Attorney-General Avichai Mandelblit

Earlier, Netanyahu offered to let Gantz, serving as defense minister, be first in a rotation as prime minister.

Netanyahu had initiated last month’s election to avoid implementing his coalition agreement with Gantz, which required him to hand Gantz the premiership in November. But Netanyahu’s bloc failed to obtain a majority in the new Knesset, leaving him searching for options that could enable him at least to rotate as prime minister.

Netanyahu, by making the offer to Gantz, is hoping to gain leverage in negotiations with the anti-Netanyahu bloc that is working on building a coalition.  Gantz is demanding retention of the Defense portfolio.

Yes, it’s confusing.  Just understand every move Netanyahu makes is designed to keep him from being prosecuted in his ongoing corruption trial.

China: The Financial Times reported early in the week that the latest census figures from China were expected to show the nation’s population slipped to less than 1.4 billion.

But authorities said on Thursday that China’s population continued to grow, refuting the FT report that suggested it could fall for the first time in nearly 60 years.

The National Bureau of Statistics said in a short statement that China’s population kept growing in 2020, and detailed data would be released in the upcoming seventh population census results.

A drop in China’s population would be the first since a two-year decline in 1960-61 due to the impact of the Great Famine.  The population fell by around 10 million in 1960 and a further 3.4 million in 1961 before rebounding by 14.4 million in 1962, according to official figures.

Meanwhile, Western countries are becoming concerned about their reliance on China for supplies of rare earth elements and other scarce metals and minerals that are essential for the manufacture of electric car batteries, satellites, weapons, wind turbines and solar panels.

China provides more than 85 percent of the world’s rare earths and is home to about two-thirds of the global supply of scarce metals and minerals like antimony and baryte, according to the Center for Strategic and International Studies (CSIS).

China dominates solar PV manufacturing and is home to more than 90 percent of the world’s wafer manufacturing capacity.    The CSIS said China had most of the world’s capacity for key components used in lithium-ion battery manufacturing and 80 percent of global battery cell manufacturing capacity.

Both Europe and the U.S. are rightfully concerned that any disruption to their supply chains for such products will hurt key industries.  China holds the cards.

Ditto China and its increasingly tense relations with Taiwan, the latter a critical supplier of the semiconductors vital to major sectors of the U.S. and Europe as well.

This week The Economist’s lead editorial called Taiwan “the most dangerous place on Earth,” but the average American has no clue just how dangerous.

“War would be a catastrophe, and not only because of the bloodshed in Taiwan and the risk of escalation between two nuclear powers.  One reason is economic. The island lies at the heart of the semiconductor industry.  TSMC, the world’s most valuable chipmaker, etches 84% of the most advanced chips.  Were production at TSMC to stop, so would the global electronics industry, at incalculable cost. The firm’s technology and know-how are perhaps a decade ahead of its rivals’, and it will take many years of work before either America or China can hope to catch up.”

I’m surprised The Economist piece then didn’t go on to note what I have in the past.  Imagine China simply controlling TSMC and keeping its chips out of the United States’ hands.

Russia: Alexei Navalny appeared in court from prison, head close-shaven and face gaunt, and accused Vladimir Putin of attempting to rule Russia “forever” and caring only about “clinging to power.”

It was the opposition leader’s first public appearance since starting his 2 ½-year jail term, seen as punishment for his fierce criticism of the Kremlin.

Navalny spoke via videolink and his language was as robust as ever.

President Putin was a “king with no clothes,” he said, who was “robbing the people” and depriving Russians of a future.  Russians were being “turned into slaves.”

Navalny was in court for his appeal against a fine for defaming a Soviet World War Two veteran who had appeared in a pro-Kremlin video.  The judge rejected the appeal.

But even as Navalny spoke, another court across Moscow was discussing a petition by the prosecutor to ban all his political organizations as “extremist.”

Anticipating the court’s ruling, Navalny’s right-hand man Leonid Volkov announced that some three dozen “Navalny headquarters” were being disbanded, to protect staff and supporters from prosecution.

The offices were set up in 2017 ahead of Navalny’s attempt to challenge Vladimir Putin for the presidency; he was barred from even joining the race.

On Monday, the Moscow prosecutor suspended all activity by the offices, pending the court decision. 

Navalny, visibly gaunt, used his platform to launch a broadside against Putin and his government, calling the judge and prosecutors “traitors.”

Navalny spoke with his wife, who was physically present in court, telling her details about his weight and what he last ate.

He said he was taken to a bathhouse so that he could look “decent” for his hearing.

“I looked at myself.  I’m just an awful skeleton.”  He said he ate “four tablespoons of porridge a day, today five, tomorrow I will eat six.”

In his final statement before the judge, Navalny launched a tirade against Putin.

“I would like to say that your king is naked, and more than one little boy is shouting about it – it is now millions of people who are already shouting about it.  It is quite obvious. Twenty years of incompetent rule have come to this: there is a crown sliding from his ears,” Navalny said of Putin, referring also to the mass anti-government protests in Russia following the activist’s imprisonment and during his hunger strike. 

“Your naked king wants to rule until the end, he doesn’t care about the country, he has clung to power and wants to rule indefinitely,” he said.

Then Navalny turned to the prosecutors in the courtroom.

“You are all traitors.  You and the naked king are implementing a plan to seize Russia, and the  Russians should be turned into slaves. Their wealth will be taken away from them, they will be deprived of any prospects, you have implemented that plan.”

But, again, the Kremlin is shutting down Navalny’s network.  The resistance will be pushed underground.  Many of Navalny’s associates have been jailed or forced into exile.

The independent news media has also come under increased pressure, with one of the most popular Russian-language news websites, Meduza, fighting for its survival after being declared a “foreign agent” by the Russian government last week.

Turkey / Armenia: As expected, President Joe Biden declared on Saturday that massacres of Armenians in the Ottoman Empire constituted genocide, a declaration Turkey called “simply outrageous” and saying it will respond over the coming months.

Biden broke with decades of carefully calibrated White House comments over the 1915 killings, which delighted Armenia and its diaspora but further strained ties between Washington and Ankara, both members of NATO.

“There will be a reaction of different forms and kinds and degrees in the coming days and months,” Ibrahim Kalin, President Tayyip Erdogan’s spokesman and adviser told news media.  Kalin did not specify whether Ankara would restrict U.S. access to the Incirlik air base in southern Turkey, which has been used to support the international coalition fighting Islamic State in Syria and Iraq, among measures it may take.

Turkey accepts that many Armenians living in the Ottoman Empire were killed in clashes with Ottoman forces in World War One, but denies the killings were systematically orchestrated and constitute genocide.

Relations between Turkey and the U.S. were already strained after Washington imposed sanctions on Turkey over its purchase of Russian air defenses, while Ankara has been angered that the United States has armed Kurdish YPG fighters in Syria and not extradited a U.S.-based cleric Turkey accuses of orchestrating a 2016 coup attempt.  Navigating those disputes will now be even harder.

Lawmakers in Turkey could hit back rhetorically against Biden by classifying the treatment of Native Americans by European settlers as genocide.  But this would hardly be controversial in the U.S. 

Biden called Erdogan on Friday to warn him he was making the statement and Erdogan told Biden it would be a “colossal mistake” to go ahead with it.

Indonesia: What a sad, sad tale; that of the missing Indonesian submarine that on Sunday was found sunk 850 meters below sea level and cracked into at least three parts, army and navy officials said on Sunday.  Rescuers found new objects, including a life vest, they believe belong to the crew of 53 of the 44-year-old KRI Nanggala-402, which lost contact the previous Wednesday as it prepared to conduct a torpedo drill.

Random Musings

--Presidential approval ratings

A new NBC News poll has slightly more than half of Americans saying they approve of President Biden’s job performance, 53%, while 39% disapprove.  90% of Democrats approve, 61% of independents but just 9% of Republicans…essentially a total reverse of Donald Trump’s ratings, with the exception that more independents approve of Biden than did Trump…and that’s a key to 2022.  Trump left office with only 30% approval from independents, and 34% prior to Jan. 6, per the Gallup survey.

Just my own work…but if Biden and Democrats are to keep the House in 2022, I’ll say his approval rating among independents needs to be no worse than 50%.

And let’s face it, Biden’s initial approval ratings are pretty crappy vs. historical precedents, save for Donald Trump’s which sucked throughout his four years. 

Also in this survey, 80% still think the country is mostly divided, despite Biden’s promise to be a more unifying president.

69% do approve of Biden’s handling of the pandemic, while on the economy 52% approve.

Biden’s lowest scores come on dealing with China (35%), handling the gun issue (34%) and dealing with border security and immigration (33%).

But by a 55-34 margin, respondents believe that Biden has returned the country to a more typical way that past presidents have governed the country.

As one North Carolina man who voted for Biden put it: “The best thing about Joe Biden is I don’t have to think about Joe Biden.”

Finally, 36% of Americans say the country is headed in the right direction, which is low, but it’s up from 21% who said so in January.

56% believe the nation is on the wrong track, which continues a streak (going back to George W. Bush’s second term as president) of at least a majority of Americans holding this view in the poll.

A Washington Post/ABC News poll has Biden with a 52% approval rating, 42% disapprove.

64% give him positive ratings for his handling of the coronavirus.  52% approve of his handling of the economy.  But 53% disapprove of the way he has dealt with the immigration crisis.

Similar to the NBC News survey, 90% of Democrats approve of Biden’s performance compared with 13% of Republicans.  Among independents in this one, however, Biden’s approval rating is 47%, nine points better than Trump’s 38% four years ago.  Interesting the disparity here between the two surveys.

Rasmussen: 47% approve of Biden’s performance, 51% disapprove (Apr. 30).  [52-46 last week.]

--House Minority Leader Kevin McCarthy (R-Calif.) continued to defend former President Trump’s response to the Jan. 6 insurrection, claiming in an interview with Fox News’ Chris Wallace that Trump was unaware the Capitol was being stormed until McCarthy called and urged him to tell his supporters to stop.

“I was the first person to contact him when the riot was going on.  He didn’t see it, but he ended the call…telling me he’ll put something out to make sure to stop this.  And that’s what he did.  He put a video out later.”

Beyond pathetic.  Plus the statement contradicted McCarthy’s initial response to Trump’s role in the attack and a fellow GOP lawmaker’s recollection of what had been a tense call between McCarthy and Trump.  In addition, one Trump adviser told the Washington Post that the then-president had been watching live television coverage of the riot, as multiple people were trying to reach him begging for help.

Recall, as Rep. Jaime Herrera Beutler (R-Wash.) said McCarthy had relayed details of his call with Trump. Trump had “initially repeated the falsehood that it was antifa that had breached the Capitol,” Herrera Beutler said, indicating that Trump would have already been aware of the siege when McCarthy spoke to him.

And recall, according to Herrera Beutler, after McCarthy told Trump it was his supporters storming the Capitol, Trump responded: “Well, Kevin, I guess these people are more upset about the election than you are.”

Chris Wallace asked McCarthy whether Trump had said that and McCarthy refused to answer directly.

“Listen, my conversations with the president are my conversations with the president,” McCarthy told Wallace.  “I engaged in the idea of making sure we could stop what was going on inside the Capitol at that moment in time.  The president said he would help.”

I’m too tired to throw up.

--California Gov. Gavin Newsom (Dem.) will face a recall vote as state officials announced on Monday that a Republican-led drive to remove him from office had collected enough voter signatures to qualify for a ballot.  The recall drive was propelled by voter frustration over California’s response to the pandemic.

Recall backers submitted more than 1,495,709 verified voter signatures – equal to 12% of all ballots cast in the last gubernatorial election – meeting the minimum threshold to force a special recall election.  Barring intervention by the courts, Newsom will thus face a statewide vote of confidence by year’s end, but exactly when is unknown.  If not November, possibly October. 

The cost of conducting a recall is estimated at $400 million and recent opinion polls showed that only 40% of California voters support removing Newsom.

--James Carville commented on the current state of the Democratic Party in an interview with Vox’s Sean Illing and he went off on the PC culture of “wokeness” coursing through his party.

“Wokeness is a problem and everyone knows it. It’s hard to talk to anybody today – and I talk to lots of people in the Democratic Party – who doesn’t say this. But they don’t want to say it out loud.”

Asked by Illing why not, Carville responded: “Because they’ll get clobbered or canceled.”

Chris Cillizza / Washington Post…on Carville’s thoughts…

“All of this has happened as the base of the Democratic Party has grown more liberal on virtually every issue, while the base of the Republican Party has grown even more conservative.

“That latter trend is why Trump has now taken to blasting the enforcement of fair elections as ‘WOKE CANCEL CULTURE.’ He’s using the term as a sort of umbrella description of anything he doesn’t like, which, of course, is not the same as ‘wokeness’ or ‘cancel culture.’

“But don’t let Trump’s ridiculousness distract you.  Carville is tapping into a very real sentiment in the electorate, and one that goes well beyond just Republican base voters.

“With the Democratic House and Senate majorities very much up for grabs next November, look for Republican candidates and leaders to try to make the midterm elections a referendum on ‘wokeness.’”

--A longtime New York Post reporter said she has resigned after being “ordered” to write a false story that claimed undocumented minors were being welcomed to the United States with copies of a children’s book written by Vice President Harris.

“The Kamala Harris story – an incorrect story I was ordered to write and which I failed to push back hard enough against – was my breaking point,” Laura Italiano tweeted Tuesday afternoon, several hours after her viral article about the books had been deleted from the Post’s website and replaced with corrected versions.

Italiano has written for the Post since the 1990s.

The Post had published the story on its front page Saturday, and the conservative mediascape was in an uproar over the supposed distribution of Harris’ 2019 book, “Superheroes Are Everywhere,” at migrant shelters.  A slew of prominent Republicans expressed outrage over the possibility that taxpayers were funding the program.

And then on Tuesday, in a one-sentence note at the bottom of the original online article, the Post acknowledged that almost none of it was true.

“Editor’s note: The original version of this article said migrant kids were getting Harris’ book in a welcome kit, but has been updated to note that only one known copy of the book was given to a child,” it read in full.

It’s not even clear a single child actually received a copy of the book, which was photographed by Reuters on a vacant bed at a shelter in Long Beach, Calif., last week. It was one of many items, including toys and clothing, donated by residents in a citywide drive, Long Beach officials said.  No government funds were used to purchase the items.

Italiano had originally reported on Friday that “unaccompanied migrant kids brought from the U.S.-Mexico border to a new shelter in Long Beach, Calif.,” would be given a copy of the book “in their welcome kits.”  Her story attributed this claim to the Reuters photo, and the Post spun it into an all-caps pun for the front page of its print edition: “KAM ON IN.”

A follow-up story by a different New York Post reporter on Monday reported that “thousands” of copies were being given to the children, and that White House press secretary Jen Psaki had “no answers” when asked whether Harris was profiting from the purported giveaways.

The Washington Post’s Fact Checker debunked the stories early Tuesday morning, and several hours later the stories disappeared from the New York Post’s website without explanation.

A Fox News story published online over the weekend was corrected Tuesday to note that only one donated book was known to exist.  But then it alleged that “the inclusion of the book raises questions over who is providing funding for the welcome packs.”  On Monday, the network also walked back a false report that President Biden intended to restrict consumption of red meat.

As you can imagine, conservative lawmakers had a field day in the four days the children’s book story remained online and uncorrected.  Republican National Committee chair Ronna McDaniel tweeted: “After learning officials are handing out Kamala Harris’ book to migrants in facilities at the border, it’s worth asking…Was Harris paid for these books?  Is she profiting from Biden’s border crisis?”

It was the Washington Post that reported the other day that the RNC used more than $400,000 in donated funds last year to buy copies of books written by Republican authors, which may have generated royalty payments.

--S.E. Cupp / New York Daily News

“I can say this because I know: There’s some seriously dangerous, high-level trolling going on in right-wing media.

“Having come from this space – I used to be a Fox News regular, a guest on outlets like Newsmax, an employee at The Blaze, a columnist at The Daily Caller, Townhall, and others – I know a thing or two about how it works.

“For many, there is of course a genuine interest in bolstering and defending conservative ideas, promoted by people who genuinely believe them.  I was one of those.

“Then there are folks who willingly spread racism, xenophobia and bigotry because they either believe in it, or believe their consumers want to hear it.

“Finally, there’s a good-sized cadre of outrage-peddlers who follow the money, the center of power and attention, and who say things they know to be untrue just to get people fired up, angry and afraid.

“That kind of gaslighting and irresponsibility in right-wing media has become an increasing mainstay at places like Fox, where former President Donald Trump turned it into a ratings bonanza, and personalities like Lou Dobbs and Laura Ingraham made it a fixture.  Telling viewers Covid was a hoax, or promoting the Big Lie – things they knew to be false – was a way to keep viewers hooked on the outrage dopamine.

“On Monday night, Fox host Tucker Carlson participated in the worst kind of outrage-peddling – the kind that is completely dishonest, intentionally incendiary, and designed to turn Americans against each other just so he can get attention.

“In a segment on mask-wearing, he called on his millions of loyal viewers to call the police on parents whose children wear masks, saying, ‘As for forcing children to wear masks outside, that should be illegal. Your response when you see children wearing masks as they play should be no different from your response to seeing someone beat a kid in Walmart. Call the police immediately, contact child protective services. Keep calling until someone arrives.’

“He went on to equate it with actual child abuse, telling his viewers that they’re ‘morally obligated to attempt to prevent it.’

“It’s hard for me to imagine a universe in which Carlson, a father of four and person I know, actually believes parents of mask-wearing children should be incarcerated, and their children taken away from them.  Nor one in which he believes that could legally happen. This isn’t a genuine policy suggestion.

“The more likely scenario is that, like much of what Carlson says on Fox, this is itself a hoax, a trick played on his own viewers to see how gullible they are, and a ploy to see how outraged he can make the rest of us.  Like I said, high-level trolling – just because he can.

“Lest you doubt this interpretation, I remind you that Fox’s own lawyers have argued this – that Carlson says things that are intentionally false, and you, the viewer, should be able to tell that from the ‘general tenor’ of the show.

“As the U.S. District Judge May Kay Vyskocil wrote in an opinion dismissing a lawsuit against Carlson and Fox, ‘Fox persuasively argues, that given Mr. Carlson’s reputation, any reasonable viewer ‘arrive[s] with an appropriate amount of skepticism’ about the statements he makes.’

“It’s a good warning, and one that should perhaps accompany every Carlson broadcast.”

--Federal investigators on Wednesday searched the New York City apartment of Rudolph Giuliani, the city’s former mayor and later President Donald Trump’s personal lawyer, pursuant to a search warrant, Giuliani’s lawyer, Bob Costello, said on Wednesday.  The agents seized electronic devices, escalating a criminal investigation into Giuliani.

Federal prosecutors in Manhattan have been investigating Giuliani’s business dealings in Ukraine.  Two former associates, Lev Parnas and Igor Fruman, have been charged with campaign finance violations and other crimes.  Parnas’ and Fruman’s work included efforts to help Giuliani dig up damaging information before the 2020 election about Joe Biden and his son, Hunter, and what prosecutors called an effort to remove then-U.S. Ambassador to Ukraine Marie Yovanovitch.

Giuliani appeared on Fox News Thursday, telling Tucker Carlson: “The prosecutors in the Justice Department spied on me. These are tactics only known in a dictatorship – where you seize a lawyer’s records in the middle of his presentation.”

“I think they should be investigated for blatantly violating my Constitutional rights, the president’s Constitutional rights in the middle of the impeachment defense. They invaded – without telling me – my iCloud. They took documents that are privileged, and then, they unilaterally decided what they could read and not read,” said Giuliani.

Former Trump fixer Michael Cohen ripped Giuliani as a greedy “idiot” who deserves to get raked over the coals by federal prosecutors for doing Trump’s dirty work and trying to profit off it.

Cohen said he personally warned Giuliani that he would eventually end up on the short end of the stick because Trump “doesn’t care about anyone or anything.”

“He’s been involved in some very, very shady stuff and now it’s all gonna come out,” Cohen said on CNN.  Cohen also predicted that the former mayor will eventually flip on his ex-boss and cooperate with the feds.

“Do I think Rudy will give up Donald in a heartbeat? Absolutely,” said Cohen.

Meanwhile, the Washington Post reported Thursday that the FBI warned Giuliani in late 2019 that he was the target of a Russian influence operation aimed at circulating falsehoods intended to damage President Biden politically ahead of last year’s election.

The warning was part of an extensive effort to alert members of Congress and at least one conservative media outlet, One America News, that they faced a risk of being used to further Russia’s attempt to influence the election’s outcome.

Despite the alert, Giuliani went forward in December 2019 with a planned trip to Kyiv, where he met with a Ukrainian lawmaker whom the U.S. government later labeled “an active Russian agent” and sanctioned on grounds he was running an “influence campaign” against Biden.

The FBI last summer also gave what is known as a defensive briefing to Sen. Ron Johnson (R-Wis.), who ahead of the election used his perch as chairman of the Senate Homeland Security and Governmental Affairs Committee to investigate Biden’s dealings with Ukraine, including those of his son, Hunter.

Johnson, in a statement to the Washington Post, said in part, “I can confirm I received such a briefing in August of 2020.  I asked the briefers what specific evidence they had regarding this warning, and they could not provide me anything other than the generalized warning.  Without specific information, I felt the briefing was completely useless and unnecessary (since I was fully aware of the dangers of Russian disinformation).”

--The aforementioned Donald Trump on Tuesday responded to Rep. Liz Cheney telling the New York Post that she’s not ruling out a presidential bid.

Trump called the Wyoming Republican a “warmongering fool” and said that she would “embarrass her family” with a 2024 run.

“Liz Cheney is polling sooo low in Wyoming, and has sooo little support, even from the Wyoming Republican Party, that she is looking for a way out of her Congressional race,” Trump said in a statement.

“Based on all polling, there is no way she can win. She’ll either be yet another lobbyist or maybe embarrass her family by running for President, in order to save face.”

Trump added: “This warmongering fool wants to stay in the Middle East and Afghanistan for another 19 years, but doesn’t consider the big picture – Russia and China!”

That’s a laughable statement, Mr. President.

Trump said last week that he is “beyond seriously” considering another White House bid in 2024.  Speaking on Sean Hannity’s Fox News program, Trump said, “So I say this, I am looking at it very seriously, beyond seriously.”

Meanwhile, he is preparing to ‘summer’ in New Jersey at the nearby Trump National Golf Club Bedminster, though plans haven’t been finalized last I saw.  This means occasionally I will catch glimpses of aerial activity associated with his stay from my perch here at StocksandNews, where I see flights going into and out of nearby Morristown Airport.

The locals, at least many of them, will be furious because it crowds the roads anytime Trump is in town.  Merchants, though, are happy.

Trump National had been slated to host the PGA Championship in 2022, something that had been planned before Trump won the 2016 election, but PGA of America’s board decided to cancel after the violence in the Capitol.

--According to a CNN Poll conducted by SSRA, more than three-quarters of Americans say they are satisfied with the guilty verdict in the trial of former police officer Derek Chauvin for the murder of George Floyd.  Just 16% are dissatisfied with the outcome.

But expectations for changes to the way Black people and other racial and ethnic minorities are treated in American society following the verdict are mixed (53% say they are likely, 43% unlikely), and most (55%) say their view of the nation’s criminal justice system is unchanged by the verdict.  And the survey finds sharp divisions by party in views on the verdict and policing.

The widest gap in satisfaction with the verdict comes along partisan lines. While 97% of Democrats and 77% of Independents express satisfaction with the outcome, just 53% of Republicans feel the same way.  Divides by race, age or gender are less stark.  Black adults are broadly satisfied with the outcome (95%), but broad majorities of Latinos (78%) and Whites (74%) are as well.  Women (81%) express more satisfaction than men (73%), and there are no significant differences by age.

According to the poll, most Americans, 53%, say that policing in America today needs major changes or a complete overhaul.  Only 14% say policing works pretty well as it is and 32% say it needs minor changes.  Among Black Americans, 82% say policing needs major changes or a complete overhaul, compared with 47% among White Americans.  The gap is also largely by party: Among Democrats, 79% think it needs major changes or a total overhaul, but that drops to just 23% among Republicans.

--Astronaut Michael Collins, who was part of the Apollo 11 crew, died after a battle with cancer. He was 90.

The Italy-born astronaut was the command module pilot for the historic 1969 lunar mission. He circled the moon aboard Apollo 11 as fellow astronauts Neil Armstrong and Buzz Aldrin landed and walked on its surface.

“Today the nation lost a true pioneer and lifelong advocate for exploration in astronaut Michal Collins,” acting NASA Administrator Steve Jurczyk said in a statement.

“As pilot of the Apollo 11 command module – some called him ‘the loneliest man in history’ – while his colleagues walked on the Moon for the first time, he helped our nation to achieve a defining milestone,” he wrote.

Collins recreated his thoughts for his 1974 memoir, “Carrying the Fire.”

“I am alone now, truly alone, and absolutely isolated from any known life,” he wrote. “If a count were taken, the score would be three billion plus two over on the other side of the moon, and one plus God only knows what on this side,” he added.  “I like the feeling.  Outside my window I can see stars – and that is all. Where I know the moon to be, there is simply a black void.”

Collins recalled later that he had carried a packet around his neck containing 18 contingency plans for rescuing his crewmates if the lunar module, after blasting off the moon, failed to dock with Columbia for the trip back to Earth.

As he wrote of the moment in his memoir: “My secret terror for the last six months has been leaving them on the moon and returning to Earth alone; now I am within minutes of finding out the truth of the matter. If they fail to rise from the surface, or crash back into it, I am not going to commit suicide; I am coming home, forthwith, but I will be a marked man for life and I know it.”

When the Apollo 11 crew members splashed down in the Pacific Ocean, they were American heroes.

In a statement on Twitter, Buzz Aldrin, the last surviving member of that crew, wrote, “Dear Mike, Wherever you have been or will be, you will always have the Fire to Carry us deftly to new heights and to the future.”

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

We thank our healthcare workers and first responders.

God bless America.

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Gold $1768
Oil $63.49

Returns for the week 4/26-4/30

Dow Jones  -0.5%  [33874]
S&P 500  +0.02%  [4181]
S&P MidCap  -0.8%
Russell 2000  -0.2%
Nasdaq  -0.4%  [13962]

Returns for the period 1/1/21-4/30/21

Dow Jones  +10.7%
S&P 500  +11.3%
S&P MidCap  +18.1%
Russell 2000  +14.8%
Nasdaq  +8.3%

Bulls 59.2
Bears 16.5…prior week 63.7 / 16.7

Hang in there. Continue to where a mask where appropriate...wash your hands.

*Dr. Bortrum is in the beginning of a long recovery and your prayers are appreciated.  His mind is pretty sharp, but he will be in rehab for a lengthy period and then we hope we can bring him home.  The old guy needs to write his final column.

Brian Trumbore

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