Week in Review

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Week in Review

05/29/2021

For the week 5/24-5/28

[Posted 9:00 PM ET, Friday]

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Edition 1,154

It didn’t matter that the mother and partner of the late Capitol Police officer Brian Sicknick personally lobbied Republican senators Thursday to support an independent commission to study the Jan. 6 attack on the Capitol.  It didn’t matter that they were escorted to more than a dozen meetings by U.S. Capitol Police officer Harry Dunn and D.C. police officer Michael Fanone.

This afternoon, the Senate voted 54-35 (eleven inexplicably not even showing up to vote; nine Republicans, two Democrats) – short of the 60 votes needed to take up a House-passed bill that would have formed a 10-member commission evenly split between the two parties.

Six Republicans voted with Democrats to move forward – Mitt Romney, Lisa Murkowski, Susan Collins, Ben Sasse, Bill Cassidy and Rob Portman.

The bill had passed the House with the support of 35 Republicans, but GOP senators said they believed the commission would eventually be used against them politically. And Donald Trump, with a firm hold on the party, called it a “Democrat trap.”

It is incredibly depressing that Republicans continue to slough off this direct attack on our democracy, incited by a man who going back to 2019, began laying the predicate…that the only way he could lose the 2020 election was if it was stolen.  That was the mantra of all his campaign appearances for two years.  That’s a fact.

Alaska Sen. Murkowski told reporters before the vote, “Truth is hard stuff, but we’ve got a responsibility to it.  We just can’t pretend that nothing bad happened, or that people just got too excitable.  Something bad happened.  And it’s important to lay that out.”

Murkowsi said of her colleagues opposing the commission, some are concerned that “we don’t want to rock the boat.”

Gerald F. Seib / Wall Street Journal…prior to today’s vote…

“(Here’s) one other consequence if Washington chooses to move down the road without such a commission: The political system will have shown that it remains incapable of reversing the very problems that produced the violence in the first place – severe partisanship, rampant mistrust of the other side, a new willingness to question election results.

“In sum, Washington will have modeled anew the behavior that produced Jan. 6 in the first place, perhaps increasing the chances of more of the same down the road.

“One could make a plausible case that the three most traumatic days in America in the last 60 years were Nov. 22, 1963, the day President John F. Kennedy was shot; Sept. 11, 2001, the day terrorists struck New York and Washington; and Jan. 6, 2021, the day the Capitol was attacked and democracy’s work stopped by an angry mob.

“In the aftermath of the Kennedy assassination and the 9/11 attacks, similar commissions were created to investigate, though they actually pursued slightly different questions.  In the case of the Kennedy assassination, the key question before the Warren Commission was: What happened?  In the 9/11 aftermath, the key question for the panel created then was: how did this happen?

“In the aftermath of Jan. 6, versions of both questions are on the table, and a commission presumably would try to get at both.”

But it’s too late now.  As Seib concludes, a “modicum of trust seems nonexistent.  (So now) the nation will learn the answer to the key question: What happens if we don’t do this?”

Wednesday, in a legal decision concerning a defendant facing charges for the Capitol riot, D.C.  District Court Judge Amy Berman Jackson wrote:

“The steady drumbeat that inspired defendants to take up arms has not faded away; six months later, the canard that the election was stolen is being repeated daily on major news outlets and from the corridors of power in state and federal government, not to mention in the near-daily fulminations of the former President.”

Biden Agenda

--President Biden rolled out a $6 trillion budget for 2022, in what analysts said could be the largest spending spree since World War II, an increase driven by spending envisioned for his infrastructure and families plans.  The figure suggested that the U.S. government will be running deficits of over $1.3 trillion through the next decade.

The deficit would hit $1.8 trillion in 2022 under Biden’s proposed budget, with the deficits dropping slightly in the following years before rising again to nearly $1.6 trillion by 2031.

There are no major new initiatives reflected in the budget numbers. The spending represents the original $2.25 trillion for Biden’s infrastructure-focused American Jobs Plan, the $1.8 trillion American Families Plan and $1.5 trillion in discretionary spending for the Pentagon and domestic agencies.

And while Democrats agree with much of what Biden is proposing, military spending has been an area of contention.  The White House has said it would rise by 1.7% (a slight decrease adjusted for inflation), but some liberal Democrats want to see it cut.  Republicans, on the other hand, won’t stand for just 1.7% when domestic Cabinet agencies would see increases of 16%.

Biden has proposed raising taxes on corporations and earners making more than $400,000 a year to help pay for his spending.  The increased taxes would power huge new social programs like universal pre-K, large subsidies for childcare and guaranteed paid leave.

“The best way to grow our economy is not from the top down, but from the bottom up and the middle out,” Biden said in his written budget message.  “Our prosperity comes from the people who get up every day, work hard, raise their family, pay their taxes, serve their Nation, and volunteer in their communities.”

“Where we choose to invest speaks to what we value as a nation,” Biden said.  “It is a budget that reflects the fact that trickle-down economics has never worked.”

But the GOP opposes all of this.   And some Democrats are balking at the menu of tax increases as well. 

And the fact the administration opted to roll out their plan on the Friday before the Memorial Day weekend indicates the White House isn’t eager to trumpet the impact the proposal will have on an exploding deficit.

--So with most of the above not getting through Congress, there does remain some hope for the infrastructure plan, where the administration has come down to about $1.7 trillion from $2.3 trillion, while Republicans have raised their counter-proposal to $928 billion.

The thing is, Congress is now out on recess for a few weeks, so nothing on any front until it returns.

--Back to defense spending, as Patrick Tucker of Defense One writes, the Congressional Budget Office released a report Monday that estimated the cost of replacing America’s nuclear bombers, missile submarines, and ICBMs was $634 billion, up from $315bn in 2015 and $494bn in 2019.

--So here’s the thing with the first four months of the Biden administration.  The infrastructure plan is hitting roadblocks, a bipartisan effort to investigate the Jan. 6 insurrection at the Capitol fell short, a policing overhaul after the killing of George Floyd, one year ago this week, is up in the air, and the president’s budget has zero chance of adoption in anywhere near its stated form.

Other priorities like addressing gun violence, voting rights and immigration law face long odds in a narrowly split Congress and robust opposition from Republicans.  Much of the Biden agenda would require 60 votes in the Senate and you know the odds on that.

So after getting the $1.9 trillion Covid relief bill passed, it’s basically been nothing, and come the fall, it’s already going to be only about the 2022 mid-term elections.

--Talk about insane.  The Commerce Department floated an idea to ‘double’ tariffs on Canadian lumber shipments from 9 percent to 18.32 percent.  The National Association of Home Builders was among those blasting the idea:

“At a time when soaring lumber prices have added nearly $36,000 to the price of a new home and priced millions of middle-class households out of the housing market, the Biden administration’s preliminary finding yesterday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing.”

This is a tariff that I wrote in the administration’s first week should be eliminated, not doubled!

The Pandemic

President Biden said Wednesday that he has asked the intelligence community to determine the origin of the coronavirus pandemic, a major departure from the previous White House position that the World Health Organization should lead efforts to uncover the contagion’s origin.

In a statement, Biden said he has asked for a report within 90 days and hopes the intelligence community “will collect and analyze information that could bring us closer to a definitive conclusion.”

There are rapidly changing views about the origins of the virus.  In recent weeks, a theory has gained more support that the source of the coronavirus may have emerged from the Wuhan Institute of Virology in China, though this is far from proved.

Some prominent researchers have begun arguing that the lab theory should remain on the table until more is known.  A series of reports in the Wall Street Journal, including one that highlighted how several people who work at the Wuhan lab became sick in fall 2019 with Covid-like symptoms, has been part of the reexamination.

As recently as Tuesday, though, the Biden administration had stressed the World Health Organization should be in the lead.   But the WHO has received little cooperation from China with regards to opening up its labs and procedures to investigators.

So Wednesday, Biden suddenly said he was turning to the intelligence community for answers.

The Chinese Embassy in Washington dismissed the inquiry as a “smear campaign and blame shifting” that would hurt efforts to prevent future health crises.

Editorial / Wall Street Journal

“President Biden on Wednesday ordered U.S. intelligence to dig deeper into the origins of Covid-19, a reversal after he reportedly ordered a State Department investigative unit shut down.  Mr. Biden is trying to cover for his embarrassing closure of the investigation because the dam has finally broken on the evidence that the virus may have escaped from the Wuhan Institute of Virology (WIV). The shame is that it took so long because the suspicious facts have been apparent from the start….

“This isn’t merely a score-keeping exercise. The Wuhan origin story is vital to understanding how to prevent the next pandemic; how to better run dangerous labs; and how to defend humanity.  The world still needs an honest and open investigation.”

Covid-19 death tolls, as of tonight….

World…3,536,905
USA…608,961
Brazil…459,171
India…322,384
Mexico…222,657
UK…127,768
Italy…125,919
Russia…120,406
France…109,290
Germany…88,884
Colombia…87,207
Spain…79,905
Iran…79,568
Argentina…76,693
Poland…73,557
Peru…68,816
South Africa…56,293
Ukraine…50,232
Indonesia…50,100
Turkey…47,134
Romania…30,174
Czechia…30,088
Hungary…29,682
Chile…28,928
Canada…25,440
Belgium…24,902
Pakistan…20,607
Philippines…20,566

Source: worldometers.info

U.S. daily death tolls…Sun. 228; Mon. 325; Tues. 669; Wed. 607; Thurs. 630; Fri. 627.

Covid Bytes

--Japan is looking to extend a state of emergency in Tokyo and several other areas by three weeks to June 20, as the pandemic shows no signs of easing, less than two months before the capital hosts the Summer Olympics.

Japan’s influential Asahi Shimbun newspaper, an official partner of the Games, called for them to be cancelled in an editorial on Wednesday, citing risks to public safety and strains on the medical system.

Poll after poll has shown the majority of the public is opposed to holding the Games this summer, concerned about tens of thousands of athletes and officials descending on a country that has mostly remained closed to foreigners since last year and where vaccinations have proceeded at a snail’s pace.

The paper said: “We ask Prime Minister (Yoshihide) Suga to calmly and objectively assess the situation and decide on the cancellation of the event this summer….We are far from a situation in which everybody can be confident they will be ‘safe and secure.’”

The U.S. State Department issued a “Do Not Travel” advisory for Japan on Monday, even as the Biden administration reaffirmed its support for Tokyo’s plan to hold the Olympics.

--Taiwan directly accused China for the first time on Wednesday of blocking a deal with Germany’s BioNTech for Covid-19 vaccines, in an escalating war of words after Beijing offered the shots to the island via a Chinese company.

Taiwan has millions of shots on order, from AstraZeneca and Moderna, but has received only slightly more than 700,000 to date, and has only been able to vaccinate about 1% of its population as Covid cases surge.

With a population of 23 million, Taiwan had bought nearly 30 million shots, President Tsai Ing-wen said this week.

With China claiming Taiwan as its territory, it frequently puts pressure on countries and firms to curtail their dealings with the island.

The worsening Covid outbreak on Taiwan has led to a drop in President Tsai’s approval rating to below 50 percent for the first time in a year.  It was 71.2 percent a year ago when she was inaugurated for a second term.

--Malaysia, hitting new record case highs, is locking down for two weeks.

--England may need to wait before Covid-19 restrictions are fully lifted as a coronavirus variant first found in India spreads, British Prime Minister Boris Johnson said on Thursday, adding it was too soon to say whether restrictions would end on June 21.

Johnson has laid out a roadmap out of lockdown for England, but has warned that the rapidly spreading B.1.617.2 variant poses a risk to that plan.

The numbers of infections with the new variant are far from worrisome, but Health minister Matt Hancock noted that 10% of people hospitalized with it had been double vaccinated – a sign that vaccines work well, but not perfectly.

--India has reported more than 9,000 cases of deadly “black fungus” in a growing epidemic of the disease.  The normally rare infection, called mucormycosis, has a mortality rate of 50%, with some only saved by removing an eye.

In recent months, India saw thousands of cases affecting recovered and recovering Covid-19 patients.

Doctors say there is a link with the steroids used to treat Covid.  Diabetics are at particular risk.  Doctors have also said it seems to strike 12 to 18 days after recovery from the coronavirus.

The coronavirus has also taken a toll on medical workers, killing more than 500 doctors in India since March.

--In the U.S., between Jan. 1 and April 30, a total of 10,262 post-vaccination infections were reported by 46 states and territories.  Those cases represent less than 0.01% of the 107,496,325 people in the U.S. who had been fully vaccinated by April 30, according to the CDC’s Covid Data Tracker.

Moderna announced Tuesday its vaccine is 100% effective in protecting teens as young as 12, clearing the way for its likely approval by federal health authorities.

--New York City public schools won’t offer remote learning this fall, requiring students to return to classrooms in September. About 61% of the students are still taking remote instruction at home, according to the city’s Department of Education.

--Starting today, New Jersey stores, restaurants, gyms and other businesses will be able to operate without the 6-foot social distancing rule, while indoor masks will no longer be required in most circumstances.

Wall Street and the Economy

Federal Reserve Bank of Dallas President Robert Kaplan on Thursday appeared to add a new pillar to the case he is building for reducing the central bank’s support for the economy, saying that the labor market is already tighter than many appreciate.

The factors crimping labor market supply “may not be particularly susceptible to monetary policy.”  Though those factors may fade as the year progresses, labor supply may ultimately increase less than expected, Kaplan and several of his economists wrote in a blog on the Dallas Fed’s website.

“It is our view that this possibility should be kept in mind as policymakers assess the appropriate stance of monetary policy,” they wrote.

Kaplan has been pushing for the Fed to start discussing a reduction in its $120 billion in monthly purchases of Treasuries and mortgage-backed securities sooner than later, citing risks of excesses and imbalances in the financial markets and the possibility that inflation could surge out of control if super-easy policy continues too long.  A tighter-than-appreciated labor market would be another argument for easing up on the monetary gas pedal sooner than later.

The economy still employs 8.5 million fewer people than before the pandemic, but the Dallas Fed expects only about 4.1 million of those will likely return to employment, they wrote.  Many of the others have retired.  Others are caring for family members, or are worried about their health, they said; the extra $300 weekly in unemployment benefits, part of the federal government’s pandemic aid package, may also be playing a role.

Kaplan’s opinion is far from universal.  San Francisco Fed President Mary Daly said that while Fed policymakers are “talking about talking about” reducing their support for the economy, for now policy is in a “very good place.”

“We haven’t seen substantial further progress just yet,” Daly said in an interview on CNBC, referring to the bar the Fed has set before it would begin to taper its asset purchases.  “It’s too early to say the job is done.”

And in terms of inflation, Fed officials such as Lael Brainard, Raphael Bostic and James Bullard said they wouldn’t be surprised to see bottlenecks and supply shortages push prices up in coming months as the pandemic recedes, but that much of those gains should be temporary.

So with the above in mind, the S&P CoreLogic Case-Shiller National Home Price Index for March soared 13.3% in the 20-city index over a year ago, up from a 12% annual rate the prior month.  March marked the highest annual rate of price growth since December 2005.

Also on Tuesday, the Commerce Department said the median price of a new home sold in April was $372,400, up 20.1% from a year earlier, the strongest annual gain since 1988.

The median sales price for an existing home rose 19.1% in April to $341,600, as the National Association of Realtors said last week.

Robust demand, drive by ultra-low mortgage rates, and a shortage of homes for sale have pushed prices rapidly higher in recent months.  Inventory for existing homes was down 28% at the end of March, according to the NAR.

In the Case-Shiller survey, Phoenix had the fastest home-price growth in the country for the 22nd straight month, at 20%, followed by San Diego at 19.1%.

April new-home sales were less than expected, an 863,000 annualized pace, owing in no small part to construction being hampered by tight supplies of lumber and labor.

In other economic data, April durable goods fell 1.3%, but were up 2.3% on the core capital goods metric, a solid number.

And today we had key April data on personal income and consumption.  In March, owing to the massive stimulus and the checks that went out, the figures rose 20.9% and 4.7%, respectively, a record on personal income.  A big decrease was expected in April and it came in -13.1%, though this was a little better than expected, while consumption was in line, up 0.5%.

But on the Fed’s key inflation benchmark, the personal consumption expenditures index, the headline number rose 3.6% year-over-year, the highest reading since 2008.

The core PCE rose 0.7%, and 3.1% Y/Y, but this was basically in line.

It’s important to remember that the year-over-year comparisons are with very depressed pandemic-related (lockdown influenced) figures.  Let’s see where we are on the core PCE come the summer.  Certainly the bond market continues to be sanguine despite the surge in prices, treating it all as ‘transitory,’ a la most members of the Fed.

We had a super-charged Chicago area PMI today, 75.2, the second-highest on record for this data set (50 the dividing line between growth and contraction).

We also had our second look at first-quarter GDP, 6.4%, unchanged.

And the weekly jobless claims figure continued to improve, 406,000, the lowest since last March.

The Atlanta Fed’s GDPNow barometer for growth in the second quarter is at 9.3%.

Meanwhile, top trade negotiators from China and the United States held their first telephone call since Joe Biden entered the White House, and stressed the importance of improving bilateral trade ties.

A brief statement on Thursday by China’s Ministry of Commerce said Vice-Premier Liu He and U.S. Trade Representative Katherine Tai had a “candid and constructive” exchange.

A statement from the USTR’s office said that Tai had discussed the guiding principles of the Biden administration’s worker-centered trade policy and her ongoing review of the U.S.-China trade relationship, while also raising issues of concern.

The two sides’ top negotiators last talked in August.

Regarding the phase one trade deal, which requires Beijing to vastly increase purchases of U.S. agricultural goods, manufactured products, energy and services, Tai said; “Let’s put it in the context of the overall U.S.-China trade, and economic relationship which is very, very challenging.  And requires our attention all across the board.”

According to the latest analysis of the phase one deal by the Peterson Institute for International Economics (PIIE), China is making progress but is still behind in meeting its commitments to purchase U.S. goods.  As of the end of April, China had reached only 73 percent of its year-to-date targets for purchases of all covered products outlined in the deal.

Chinese imports of U.S. agricultural products had reached 87 percent of their YTD targets by the end of last month, while purchases of manufactured products reached 71 percent, according to the PIIE. 

Europe and Asia

Guess what?  Literally nothing of value to report.  But fear not.  There will be a crushing amount of material next time as the May PMI numbers and other data floods in.

Street Bytes

--Stocks rose this week, sloughing off Friday’s big jump in the PCE, and focusing instead on the strong economy and the ongoing reopening in America.  The Dow Jones rose 0.9% to 34529, the S&P 500 gained 1.2% and Nasdaq rose a solid 2.1%.

--U.S. Treasury Yields

6-mo. 0.02%  2-yr. 0.14%  10-yr. 1.59%  30-yr.  2.28%

Look at the 10-year.  Inflation?  Whatever.

That’s the bond market’s attitude these days.  Personally, I want to see a few more months’ worth of numbers.

--The average price for a gallon of gas nationally is around $3.05, the highest since October 2014, according to GasBuddy.

The shutdown of the Colonial Pipeline earlier this month in the wake of a ransomware attack likely “accelerated” the rise in prices at the pump by a few days or weeks.

Lots of Americans are limiting their travel to the States this summer, as opposed to overseas travel, though the latter is beginning to open up, which is impacting demand for gasoline.

--Exxon Mobil Corp. CEO Darren Woods suffered a humiliating setback at the hands of a tiny activist investment firm established less than six months ago.

At least two of the activist’s nominees won seats on Exxon’s board Wednesday, despite Woods’ vocal opposition.

A third seat may yet go to Engine No. 1, when the final results from Exxon’s annual meeting are tallied.  If so, 25% of the board would be under the control of outsiders.

Engine No. 1 has just a 0.02% stake and no history of activism in oil and gas, but it shows that environmental concerns are resonating across the nation’s largest companies.

For Woods, the defeat is the latest in a terrible first five years of his reign.  The shares have cratered, the company posted its first annual loss in decades, and oil production slumped to the lowest since the Mobil Corp. merger in 1999.  At the same time, debt has ballooned as it borrowed to pay for dividends and drilling amid shrinking cash flow.

Exxon had battled the activists and Woods refused to meet with the nominees.

Engine No. 1 had won over large shareholders such as the California State Teachers’ Retirement System, or CalSTRS.

--Amazon.com Inc. said on Wednesday it is buying MGM, the fabled U.S. movie studio home to the James Bond franchise, for $8.45 billion, giving it a huge library of films and TV shows and ramping up competition with streaming rivals led by Netflix and Disney+.  Privately-held MGM, founded in 1924, owns the Epix cable channel and makes popular TV shows, including “Fargo” and “Shark Tank.”

The deal is designed to help Amazon supercharge its Amazon Prime Video service by keeping customers engaged and paying an annual subscription that also guarantees rapid delivery of purchases from its online store.

“The real financial value behind this deal is the treasure trove of (intellectual property) in the deep catalog that we plan to reimagine and develop together with MGM’s talented team.  It’s very exciting and provides so many opportunities for high-quality storytelling,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios.

Just last week, AT&T announced a $43 billion deal to spin out its WarnerMedia business and combine it with Discovery Inc., one of the most ambitious moves yet in the streaming era.

As for the James Bond franchise, that remains in the hands of the Broccoli family, the Bond films’ producers, and it’s doubtful any new installments would be first brought exclusively to Prime viewers rather than the theaters.

--Shares in Boeing rose nearly 4% on Thursday as the planemaker is increasingly upbeat over demand for freighter plane sales in China.  Boeing also benefited from a bullish forecast from European rival Airbus, which outlined an almost two-fold increase in production, citing a strong recovery in aviation from the pandemic.

The head of Airbus urged suppliers to prepare industrially and financially for steep increases in jet output.  “The pent-up demand is very strong,” CEO Guillaume Faury told Reuters.  “That is why we are sharing (production scenarios) with them and we are asking them to be prepared, and they have the means to do that.  There is a lot of liquidity in the market.”

But then Boeing’s shares fell today as it faces renewed scrutiny from the FAA on its handling of quality control lapses with regards to the 787 Dreamliner jet, so Boeing was forced to cease delivery of same.

The latest assessment from the FAA showed defects in parts that will require extensive maintenance and repairs.   It’s not clear how long the postponement might last.

Meanwhile, Willie Walsh, director general of the International Air Transport Association, poured cold water on Airbus’ rosy production forecast.

“Let’s wait and see, because obviously there is a huge disconnect between what the manufacturers say they’re going to produce and what the airlines decide to buy,” Walsh told Reuters.  “So, you know that they’re in the business of selling.  I don’t see that there’s going to be the requirement for whatever it is they’re producing,” he added.

--United Airlines foresees an improvement in a key revenue metric in the second quarter on the back of ticketed yields that are gathering pace and topping expectations.

United expects total revenue per available seat mile to be down about 12% for the second quarter, compared with two years ago, an improvement on prior expectations for a decline of about 20%.

“Business demand continues to be significantly depressed, though bookings for business travel are starting to recover,” United said in a statement. 

--TSA checkpoint travel numbers vs. 2019

5/27…75 percent of 2019
5/26…71
5/25…60
5/24…70
5/23…90…post-pandemic high of 1,863,697…percentage an anomaly.
5/22…73
5/21…65
5/20…65

--Luxury homebuilder Toll Brothers Inc. reported home sales revenue rose 21% to a record high $1.84 billion in its fiscal second quarter.  The company expects current quarter deliveries of 2,675 units, while second quarter deliveries stood at 2,271 units.

“Our business continues to operate at a very high level,” Douglas C. Yearley, Jr., Toll Brothers’ chairman and CEO, said in a release.  “With strong demand and constrained industrywide supply, we have continued to raise prices in excess of cost increases.”  The CEO also attributed the company’s second-quarter results to a focus on increasing profit margins and expanded product offerings.

--Dell Technologies Inc. and HP Inc. reported quarterly revenue that beat Wall Street estimates on Thursday, as customers continued to shop for personal computers, even as pandemic-led restrictions eased in many parts of the world.

However, shares of Dell and HP fell after both companies warned the ongoing computer chip shortage could impact their ability to meet demand for laptops this year.

“The component supply situation remains constrained,” Dell Chief Financial Officer Thomas Sweet said in a post earnings call, adding that rising costs to procure these chips would hit its operating income in the current quarter and lead to slightly lower revenue on a sequential basis.

Dell said revenue from its client solutions group, which includes desktops, notebooks and tablets, rose 20% to $13.31 billion in the reported quarter.  HP’s PC-related sales rose 27% in the quarter ended April 30, while notebook sales surged 47% from the same period a year earlier.

--Best Buy Co. raised its annual sales forecast on Thursday, saying the latest round of stimulus checks had kept consumers buying home electronics, while acknowledging that a reopening economy threatens to slow growth later in the year.  The shares rose over 2% in response.

Best Buy was among the biggest retail winners during most of the health crisis as stuck-at-home Americans set up remote workspaces, and invested in home appliances leading to a surge in sales of laptops, washing machines, refrigerators and other electronics.  The arrival of $1,400 stimulus checks in March helped sustain that demand, Best Buy CEO Corie Barry said.

The company forecast second-quarter comparable sales to rise 17%, well above expectations.  For the full year, the company expects comp sales to rise 3% to 6%, compared to a previous  forecast range of a fall of 2% to a rise of 1%, as Best Buy still expects comparable sales in the second half of its fiscal year to fall as consumers switch to spending more on activities such as eating out, traveling and other social events.

Comp sales rose 37.2% in the first quarter ended May 1, beating analysts’ estimates of a 27.2% increase. Sales of appliances jumped 66.6%.  Total revenue rose 35.9% to $11.64 billion, topping expectations of about $10.44 billion.  Ex-items, the company earned $2.23 per share, beating the analysts’ estimates of $1.39.

--Dick’s Sporting Goods on Wednesday reported fiscal Q1 adjusted earnings of $3.79, compared with a net loss of $1.71 per share a year earlier, far exceeding analysts’ expectations.

Revenue for the 13-week period ended May 1 totaled $2.92 billion, more than double the $1.33 billion of a year earlier, also beating the Street.  The shares soared over 15% in response.

Same-store sales increased 115%, compared with a drop of about 30% a year earlier amidst the lockdown.

Looking ahead, the retailer said it now expects full-year fiscal 2021 sales to be in the range of $10.52 billion to $10.81 billion, up from its prior guidance of $9.54 billion to $9.94 billion.  That compares with $9.58 billion reported for full-year fiscal 2020.

The company was coming off a lackluster fiscal fourth quarter with a same-store sales outlook of -2.0% to 2.0%.  And then they do this.

DKS managed to register a 14% increase in eCommerce sales, despite a 110% surge in the year-ago quarter.  Ecommerce now accounts for 20% of total sales.

--Bitcoin rallied from a weekend low of nearly $30,000 (off a high of $64,800 on April 14) as Tuesday, Elon Musk tweeted his support for an apparent effort by bitcoin miners to make their operations more environmentally friendly. The billionaire has roiled the token’s price this month, triggering a selloff by criticizing its energy profile and suspending bitcoin payments to Tesla.  Heightened regulatory rhetoric on cryptocurrencies from China has also pressured the sector.  China’s Financial Stability and Development Committee, chaired by Vice Premier Liu He, singled out bitcoin as the asset it needs to regulate more.

Frankly, this is bulls---.  A single tweet moves the ‘asset’ up or down 10% or more?  As Matt Maley, chief market strategist for Miller Tabak & Co., observed: “If the market continues to see wild swings based on Elon Musk tweets, it’s going to be a big setback for this asset class.  The fact that it sees such wild swings to the tweets from one person takes away the legitimacy of the asset class.”

Pledges to make the industry more green have picked up since Musk’s criticisms.  Several miners joined the Crypto Climate Accord, a private-sector initiative to decarbonize the crypto industry by 2030, which itself is a crock.  It’s going to take years for many of the largest miners to recalibrate where they source their energy.

Bitcoin’s heavy use of power fired by polluting fossil fuels is a longstanding problem.  Miners use hundreds of computers that run around the clock to verify bitcoin transactions in exchange for new coins.

A University of Cambridge index pegs the annual power consumption of bitcoin mining at around 130 terawatt-hours, more than three times higher than at the beginning of 2019.  This is the equivalent of the power consumption of Argentina.

--HSBC Holdings PLC will stop serving mass-market individual customers and smaller businesses in the U.S., exiting the bulk of a retail business that has long struggled to compete with America’s big banks.

The bank said late Wednesday that it will sell 90 of its 148 branches in the U.S. and plans to wind down another 35 to 40. 

HSBC said it will retain around two dozen locations, which will become international wealth centers providing banking and wealth-management services to high-net-worth clients.  The centers would be in cities such as New York, Washington, D.C., San Francisco, Seattle, Los Angeles and Miami.

The London-based lender makes most of its profit in Hong Kong and mainland China, with the lender more than a year into an overhaul to refocus its operations in Asia.

--Shares in discount store operator Dollar Tree Inc. fell 7% after the company issued a disappointing outlook for the full year.

Sales for the quarter ended May 1 totaled $6.48 billion, up from $6.29 billion a year ago, with same-store sales edging up 0.8%.

But the forecast for fiscal 2022 was for earnings of $5.80 to $6.05, below current Street estimates of $6.19.

The company sees higher freight costs in the last three quarters of 2021 due to a disruption in shipping.  At the same time it reiterated plans to open 600 new stores in 2021 (400 Dollar Tree and 200 Family Dollar stores).

--Norwegian Cruise Line said Monday it expects to resume cruising in the U.S. beginning Aug. 7, with Alaska cruises from Seattle, as the industry that was hit hard by the Covid-19 pandemic looks to push ahead with its recovery.

The cruise, on the company’s Norwegian Bliss, is subject to a conditional sailing certificate from the Centers for Disease Control and Prevention, which the company expects to obtain shortly.

The CDC halted cruise ship sailings in March 2020 as the pandemic spread on several vessels before introducing a framework for conditional sailing orders in October that set out requirements for companies to be able to resume trips.

In early May, Norwegian reported an adjusted loss of $2.03 per share in the first quarter, compared with a loss of $0.99 a year ago. Revenue dropped to $3.1 million from $1.25 billion.

--Royal Caribbean Group said on Wednesday that it has received approval to resume sailings from the U.S. after more than a year of suspended operations.

On June 26, the cruise company will mark a return with “Celebrity Cruises’ Celebrity Edge” departing from Port Everglades in Fort Lauderdale.

The company said that all sailings will depart with vaccinated crew and that everyone over the age of 16 must present proof of vaccination against Covid-19.  The company added that as of August 1, 2021, “all guest ages 12 and older must present proof of vaccination.”

--Peloton manufactures the bulk of its bikes and treadmills in Asia, but it is set to create 2,174 jobs as part of a $400 million investment in Wood County, Ohio (near Toledo).

Peloton CEO and co-founder John Foley said in a statement: “We are thrilled to bring a good portion of our manufacturing to United States soil and proud that it will be in the great state of Ohio.  While we will continue to invest in our Asian manufacturing footprint as well as our existing facilities in the U.S. via our Precor sites, the new Peloton Output Park gives us a massive strategic lever to make sure we have capacity, quality, and economies of scale in our bike and tread product lines, to support our continued growth for years and years to come.”

The factory will use renewable energy to power its operations…hundreds of Peloton riders lined up on the factory floor, peddling at rates befitting the existing demand.

OK, this last part might not be accurate.

--Brazil’s unemployment rate rose to a historic high of 14.7% in the quarter to March, with indicators pointing to a broad deterioration in labor market conditions.    The official unemployment rate rose from 13.9% in the three months through December, and was exactly in line with the median forecast in a Reuters poll of economists.

The figures capture the early part of the deadly second wave of the pandemic in Brazil that prompted new lockdown measures in many cities and has since propelled the death toll sharply higher.

--Sir Richard Branson’s Virgin Galactic space plane has conducted the first of three key test flights that should enable it to enter commercial service.

The Unity vehicle, with two pilots, powered to a height of 55 miles, and then glided back down to Earth.

Sir Richard has some 600 paying customers – including movie and music stars – waiting to take the same ride.

But they’ll only get their chance once Unity is fully licensed, which is expected to happen by year’s end.

The licensing process is the responsibility of the Federal Aviation Administration, who will receive the operational and performance data from Saturday’s sortie above the New Mexico desert.

Foreign Affairs

Israel and the Palestinians: One week and the ceasefire is holding.  U.S. Secretary of State Antony Blinken pledged on a mission to the region that Washington would rally support to rebuild Gaza as part of efforts to bolster the ceasefire between Hamas and Israel.

But Blinken made clear that the United States intended to ensure that Hamas, which it regards as a terrorist organization, did not benefit from the humanitarian aid – a difficult task in an enclave over which it has a strong grip.

Israeli Prime Minister Benjamin Netanyahu threatened a “very powerful response” if Hamas renewed cross-border rocket strikes.

Blinken said: “We know that to prevent a return to violence we have to use the space created to address a larger set of underlying issues and challenges. And that begins with tackling the grave humanitarian situation in Gaza and starting to rebuild.”

Israeli authorities finally allowed fuel, medicine and food earmarked for Gaza’s private sector to enter the territory for the first time since the hostilities began on May 10.

At least 253 people were killed in Gaza and more than 1,900 wounded during the 11 days of fighting that saw hundreds of Israeli air strikes.  The death toll in Israel was put at 13.

James Freeman / Wall Street Journal…on the rise in anti-Semitism…

“There hasn’t been much to applaud in the first four months of the Biden presidency. But today gives reason to entertain the hope that the Democratic Party’s tolerance for street violence is approaching its limit.  The good news arrives in a tweet from President Joe Biden posted (Monday) morning:

The recent attacks on the Jewish community are despicable, and they must stop.  I condemn this hateful behavior at home and abroad – it’s up to all of us to give hate no safe harbor.

“The Biden message is refreshingly unequivocal – it is offered without any excusing the perpetrators of violence with gobbledygook about their passionate beliefs.  The timing could not be better. Shane Harris and Brittany Shammas reported last night for the Washington Post:

A series of attacks on Jews in the United States in recent days, linked to the conflict between Israel and Hamas, has increased pressure on law enforcement officials, lawmakers and the Biden administration to take more steps to quell antisemitic violence.

Since May 10, at least 26 instances of antisemitism have been reported across the United States, from Los Angeles to New York, according to the Anti-Defamation League and news reports. The cases range from protest signs calling Zionists ‘Nazis’ to several physical attacks.  There have also been at least four reported instances of vandalism at synagogues and Jewish community centers.

“Mr. Biden should encourage his Democratic colleagues running America’s biggest cities to be completely intolerant of such crimes, regardless of the victims or perpetrators – and to let police police.”

Iran: Tehran agreed on Monday to a one-month extension of an agreement with international inspectors that would allow them to continue monitoring the country’s nuclear program, avoiding a major setback in the continuing negotiations with Iran.

Under the agreement with the International Atomic Energy Agency, Iran will extend access to monitoring cameras at its nuclear facilities until June 24.

The extension prevents a new crisis that could derail talks among world powers, including the United States, aimed at bringing Washington back to the 2015 nuclear deal that President Trump withdrew from three years ago.

IAEA director general Rafael Mariano Grossi said the new agreement will allow for continued visibility into the nuclear program, but, “I want to stress this is not ideal.  This is like an emergency device that we came up with in order for us to continue having these monitoring activities.”

He added, it was better than the alternative of severe restrictions on inspectors that would leave the atomic agency “flying completely blind” and unable to assess whether Iran might be sprinting toward nuclear weapons capability.

A fourth round of talks concluded in Vienna last week.  Their goal is to persuade Iran to scale back its nuclear program in compliance with the deal and for the United States to lift sanctions that are strangling Iran’s oil exports and economy.

Secretary of State Blinken said that the talks had made progress but suggested that Tehran was delaying further progress.

“Iran, I think, knows what it needs to do to come back into compliance on the nuclear side. And what we haven’t yet seen is whether Iran is ready and willing to make a decision to do what it has to do,” he said. 

Iran now has a stockpile of 2.5 kilograms of uranium enriched to 60 percent purity, 90 kilograms of enriched uranium at 20 percent and 5,000 kilograms of enriched uranium at 5 percent, according to the head of the country’s Atomic Energy Organization.

Uranium enriched to 60 percent is a short step from bomb fuel, which is considered 90 percent or higher.

The nuclear deal with the P5+1 capped Iran’s enrichment and stockpiling of nuclear material at 2.2 kilograms of uranium enriched to a level of just 3.7 percent.

Editorial / Wall Street Journal

“Arms-control agreements are only as good as the verification allowed.  If international inspectors don’t have instant and comprehensive access to declared or undeclared nuclear sites, there’s no way to know whether they are complying – or if a deal even covered all of Iran’s nuclear activity.  If the Biden negotiators can’t address Iran’s undeclared nuclear sites, and the IAEA doesn’t make progress either, there’s little point in returning to the Obama deal.

“A related illusion is that once the 2015 deal is revived, the U.S. and Iran can seek a phase-two deal that addresses Iran’s missile program and regional imperialism. But what leverage would the U.S. have to win Iranian concessions after it gives up the Trump sanctions?

“The Administration seems eager to accept even a flawed deal as a way to liberate the U.S. from its entanglements in the Middle East.  But this will empower Iran and its proxies and make it more likely America is dragged back in – albeit in a weaker strategic position.”

Lebanon: A UN tribunal set up to prosecute those behind the 2005 assassination of Lebanese Prime Minister Rafik Hariri has run out of funding amid Lebanon’s economic and political crisis, threatening plans for future trials.  Closing the tribunal would dash the hopes of families of victims in the Hariri murder and other attacks, but also those demanding that a UN tribunal bring to justice those responsible for the Beirut port blast last August that killed 200 and injured 6,500.

Last year the UN Special Tribunal for Lebanon, located outside of The Hague, convicted former Hezbollah member Salim Jamil Ayyash for the bombing that killed Hariri and 21 others.  Ayyash was sentenced in absentia to five life terms in prison, while three alleged accomplices were acquitted due to insufficient evidence.

The court’s financial trouble comes as Lebanon faces its worst turmoil since Hariri’s assassination, with the country deeply polarized between supporters of Iranian-backed militant group Hezbollah and its allies and supporters of Hariri’s son, prime minister designate Saad al-Hariri.

Saad Hariri has been at loggerheads for months with President Michel Aoun, an ally of Hezbollah, over cabinet positions.  The country’s economic meltdown has pushed much of the population into poverty and poses the biggest threat to stability since the 1975-1990 civil war.

China: The U.S. is entering a period of intense competition with China as the government running the world’s second-biggest economy becomes ever more tightly controlled by President Xi Jinping, the White House’s top official for Asia said.

“The period that was broadly described as engagement has come to an end,” Kurt Campbell, the U.S. coordinator for Indo-Pacific affairs on the National Security Council, said Wednesday at an event hosted by Stanford University.  U.S. policy toward China will now operate under a “new set of strategic parameters,” Campbell said, adding that “the dominant paradigm is going to be competition.”

Chinese policies under Xi are in large part responsible for the shift in U.S. policy, Campbell said, citing military clashes on China’s border with India, an “economic campaign” against Australia and the rise of “wolf warrior” diplomacy.  Beijing’s behavior was emblematic of a shift toward “harsh power, or hard power,” which “signals that China is determined to play a more assertive role,” he said.

In Hong Kong, pro-democracy media mogul Jimmy Lai has been sentenced to 14 months in prison for participating in an unauthorized assembly in 2019.  Lai, 73, is currently already serving time for participating in other demonstrations that year, and will now serve a total of 20 months in jail.

The verdict comes as mainland China continues cracking down on Hong Kong’s rights and freedoms.

Meanwhile, Taiwan has a massive water issue, as in no typhoon made landfall last year, the first time since 1964.  As of this week, the water levels at two main reservoirs that supply some major cities were hovering between 1 percent and 2 percent of normal capacity.

Tropical cyclones are a prime source of precipitation for the island’s reservoirs.  Some scientist say the recent lack of typhoons is part of a decades-long pattern linked to global warming, in which the intensity of storms hitting Taiwan has increased but their annual frequency has decreased.

Ordinary rainfall has also been drastically lower than normal this year.

Russia: Hackers linked to Russia’s main intelligence agency surreptitiously seized an email system used by the State Department’s international aid agency to burrow into the computer networks of human rights groups and other organizations of the sort that have been critical of President Vladimir Putin, Microsoft Corp. disclosed on Thursday.

Discovery of the breach comes just three weeks before President Biden is scheduled to meet with Putin in Geneva, and at a moment of increased tension between the two nations, including a series of increasingly sophisticated cyberattacks originating in Russia.

Michael O’Hanlon / USA TODAY

“Four months into its term in office, the president needs a clearer sense of strategy before meeting with Vladimir Putin in Geneva on June 16 – because face-to-face meetings with the Russian leader are no guarantee of progress on any issue. The problem greatly predates the Trump administration.  Just ask George W. Bush, who thought he had gained a positive window into Putin’s ‘soul’ when hosting him in Texas in 2001; within a few years, Putin was cracking down on political opponents at home and invading the small nearby country of Georgia. Or ask Barack Obama, who met several times with Russian leaders as he sought to ‘reset’ relations back in 2009-2010, only to watch the relationship fall apart spectacularly by 2014.

“Biden has just lifted sanctions against companies involved in the Nord Stream 2 pipeline that will, if completed, carry natural gas from Russia to Germany under the sea. But by trying to help Angela Merkel of Germany with this decision, the Biden team has also just offered Vladimir Putin something for nothing. Biden is not wrong to seek a better relationship with Russia, even with Putin ensconced in the Kremlin.  Yet any new initiative towards Moscow must place demands on Russia as well.  The importance of being tough with Russia even as we seek a more stable and less dangerous relationship is underscored by the recent abomination of Belarus effectively hijacking a flight bound for Lithuania to arrest one of its own dissidents.  If Putin and co. did not have a direct hand in the operation, they still likely inspired it with their similar tactics over the years against domestic critics like the poisoned, then imprisoned lawyer and activist, Alexei Navalny.

“The good news is that western policy towards Russia begins with some strong fundamentals already in place.  NATO has strengthened military defenses in Poland as well as the Baltic states in recent years.  The U.S. and EU have continued their sanctions against Russia due to its ongoing aggression and threats against Ukraine, and its human rights abuses against its own people.

“But beyond that, we are a bit stuck – and the problem goes back four American presidents by now. Since the spring of 2008, the United States and the rest of NATO have promised publicly to bring Ukraine, as well as the smaller and even more remote country of Georgia, into the North Atlantic Treaty Organization. But there is no positive movement on this agenda.  In fact, by promising eventual membership yet with no timetable and no interim security guarantees to those nations, we have managed to paint a giant bullseye on the backs of Ukrainian and Georgian friends.  If most westerners have forgotten our promises to Kiev and Tbilisi, Vladimir Putin surely has not – and he will do what he must to keep those countries unstable enough that they will not qualify for membership.  If Biden stays on policy autopilot, or just offers tactical adjustments like the Nord Stream 2 concession, we will remain mired in this destructive cycle.”

Belarus: In an amazingly brazen, and shocking, act, Belarusian authorities scrambled a fighter jet and flagged what turned out to be a false bomb alert to force a Ryanair plane to land in Minsk  on Sunday and then detained a dissident journalist, Roman Protasevich, who was on board.

After the plane was diverted, Protasevich turned to fellow passengers “and said he was facing the death penalty,” one passenger told Agence France-Presse in Vilnius.

Protasevich was on a wanted list after last year’s mass street protests following an election in which Belarusian President Alexander Lukashenko had claimed a landslide victory.

The flight originated in Athens, bound for Vilnius, Lithuania, with 126 passengers on board, as well as a crew of six.  121 eventually arrived in Vilnius, after being on the ground about seven hours, meaning aside from the journalist (and his girlfriend, also detained), there were Belarusian agents on board who remained in Minsk; meaning the operation had effectively been coordinated with spies operating on the ground in Greece.

After relaying the bomb threat, air-traffic controllers recommended the plane turn around and land at Minsk National Airport.

European Union and U.S. leaders were swift to condemn the action.  On Monday, they agreed to impose a new round of sanctions on Belarus and ban its airlines from entering the bloc’s airspace and airports.

President Biden said in a statement, Monday, the “removal and arrest of Roman Protasevich…are a direct affront to international norms,” adding that the U.S. condemned the act “in the strongest possible terms.”

Separately, White House National Security Adviser Jake Sullivan spoke Monday with the exiled Belarus opposition leader Sviatlana Tsikhanouskaya.

“Mr. Sullivan made clear that the United States, in coordination with the EU and other allies and partners, will hold the Lukashenko regime to account,” an NSC spokeswoman said.

British Foreign Secretary Dominic Raab said Lukashenko must be held to account, calling the incident “state piracy.”

A joint statement from the U.S. and various European countries read in part: “This act of state terror and kidnapping is a threat to all those who travel to Europe and beyond.  It cannot be allowed to stand.”

Protasevich appeared in a staged “confession” video in which he supposedly admits to organizing protests.  He is no doubt being tortured.

European officials have called a bomb threat improbable.  Belarus has said it acted according to international protocols after receiving correspondence from Hamas that a bomb aboard was set to detonate over Vilnius. The thing is, when the plane diverted to Minsk, the plane was closer to Vilnius.

President Lukashenko accused the West of launching a hybrid war against his country and unfairly demonizing him for diverting the flight, a move he insisted was legal and justified.

The Belarusian leader said his country had averted a tragedy and saved lives by heeding reports that there were explosives on board the plane and he charged that Western leaders had crossed red lines in their attacks on the former Soviet state.

“We responded adequately to the information received,” Lukashenko said in a speech to parliament on Wednesday, his first comments since the Sunday incident, with some of his remarks contradicting information Belarusian authorities released earlier in the week.  “How would the United States react in such a situation in view of their sad experience?”

Random Musings

--Presidential approval ratings….

Rasmussen:  53% approve of President Biden’s job performance, 45% disapprove (May 28).

Gallup: 54% approval, 40% disapproval (May 3-18), 54% independents

--In a Reuters/Ipsos poll of 2,007 Americans, including 909 Democrats and 754 Republicans, conducted online, 25% of those surveyed, including 53% of Republicans, say Donald Trump is still the “true president,” a finding in line with polls showing that a significant portion of the USA does not accept the legitimacy of the presidential election.

According to the survey, 32% of Americans agree with the statement that the U.S. Capitol riot Jan. 6 “was led by violent left-wing protestors trying to make Trump look bad,” including 55% of Republicans, 24% of independents and 16% of Democrats.

Oh brother.

Fifty-eight percent of those polled agree Trump was at least partly responsible for the violence.  65% of GOP members disagree.

Fifty-five percent of Americans say they believe the election was entirely “legitimate and accurate”; 86% of Democrats go along with this, versus 53% of independents and 25% of Republicans.

Thirty percent of those surveyed agree the 2020 election “was stolen from Donald Trump.”

--In response to a report that Manhattan District Attorney Cy Vance has convened a grand jury to examine potential criminal charges related to the activities of the Trump Organization, former President Trump issued a familiar statement, reading in part:

“This is a continuation of the greatest Witch Hunt in American history.  It began the day I came down the escalator in Trump Tower, and it’s never stopped. They wasted two years and $48 million in taxpayer dollars on Mueller and Russia Russia Russia, Impeachment Hoax #1, Impeachment Hoax #2, and it continues to this day, with illegally leaked confidential information.”

The Washington Post reported Tuesday that the grand jury will sit three days per week for the next six months and will hear evidence related to several long-term matters.  It also indicates Vance’s investigation of the former president and his business has reached an advanced stage after more than two years.  It suggests, too, that Vance believes he has found evidence of a crime – if not by Trump then by someone potentially close to him or by his company.

Among the many issues the investigators are scrutinizing is whether the value of specific properties in the Trump Organization’s real estate portfolio were manipulated in a way that defrauded banks and insurance companies, and if any tax benefits were obtained illegally through unscrupulous asset valuation.

--Rep. Adam Kinzinger (R-Ill.) said Tuesday that Rep. Marjorie Taylor Greene (R-Ga.) should be removed from the House Republican conference over remarks comparing coronavirus-related restrictions to anti-Jewish laws in Nazi Germany.

“You can’t stop somebody from calling themselves a Republican or declaring themselves a Republican,” Kinzinger said, according to The Hill.

“But what we can do as a party is take a stand and say, ‘You don’t belong in our conference.’ That what I think we should do.

“I think we should kick her out of the conference, prevent her from coming to conference meetings, benefiting from conference materials, and I’m not sure if that’ll happen, but it’s just going to continue this kind of stuff,” he added.  “It’s just mind-numbing.”

Greene drew outrage last week after criticizing House rules requiring that members wear masks in the chamber except when speaking during debate.

“You know, we can look back at a time in history when people were told to wear a gold star, and they were definitely treated like second-class citizens, so much so that they were put in trains and taken to gas chambers in Nazi Germany,” Greene told Christian Broadcasting Network’s David Brody, Brody nodding in approval.  “And this is exactly the type of abuse that Nancy Pelosi is talking about.”

Earlier Tuesday, Greene tweeted out an article about a Tennessee grocery store adding a “vaccination logo” to employees’ name badges.

“Vaccinated employees get a vaccination logo just like the Nazi’s [sic] forced Jewish people to wear a gold star,” she wrote.  “Vaccine passports & mask mandates create discrimination against unvaxxed people who trust their immune systems to a virus that is 99 percent survivable.”

Greene’s comments were condemned by House Minority Leader Kevin McCarthy, Minority Whip Steve Scalise and Conference Chair Elise Stefanik, as well as Senate Minority Leader Mitch McConnell. 

“Marjorie is wrong, and her intentional decision to compare the horrors of the Holocaust with wearing masks is appalling,” McCarthy said, before suggesting that the other party was primarily responsible for a rising tide of antisemitism: “At a time when the Jewish people face increased violence and threats, anti-Semitism is on the rise in the Democrat Party and is completely ignored by Speaker Nancy Pelosi.  Americans must stand together to defeat anti-Semitism and any attempt to diminish the history of the Holocaust.”

McCarthy said nothing about a potential punishment for Greene.

House GOP rules require a two-thirds vote to expel a member from the conference, meaning it would take 142 votes to remove her.

Jeff Miller, a prominent GOP lobbyist and a member of the U.S. Holocaust Memorial Museum Council, tweeted:

“WTF is wrong with you?  I think you need to pay a visit to the U.S. Holocaust Museum. I’d be happy to arrange. Then maybe going forward you wouldn’t make anymore disgusting, ignorant and offensive tweets.”

Rep. Liz Cheney (R-Wyo.) lambasted Greene’s comparison as “evil lunacy” in a tweet.

Greene should be censured, though the House is now in recess until June 14.

Speaking of Cheney, Wyoming state Sen. Anthony Bouchard, a Republican who has announced his intention to challenge Cheney for her House seat, acknowledged Thursday that he had impregnated a 14-year-old and had a relationship with her when he was 18, comparing the teen intimacy to Shakespeare’s tragedy “Romeo and Juliet.”

“So, bottom line, it’s a story when I was young, two teenagers, girl gets pregnant.  You’ve heard those stories before,” he said in a Facebook Live video.  “She was a little younger than me, so it’s like the Romeo and Juliet story.”

--Florida Republican Rep. Matt Goetz has been touring with Marjorie Taylor Greene, and the other day he texted the New York Post that he is considering a run for president in 2024, despite being a subject of a Justice Department investigation into whether he had sex with a 17-year-old girl and transported her across state lines in violation of sex trafficking laws.

“I support Donald Trump for president.  I’ve directly encouraged him to run and he gives me every indication he will,” Gaetz told the paper.  “If Trump doesn’t run, I’m sure I could defeat whatever remains of Joe Biden by 2024.”

--The critical New York City mayoral Democratic primary is coming up, June 22, and Brooklyn Borough President Eric Adams once again bests Andrew Yang in the crowded field, while former city Sanitation Commissioner Kathryn Garcia has surged into third, according to a Fontas/Core Decision Analytics survey.

Adams received 18 percent, followed by Yang at 13 and Garcia with 11.

26 percent of the 800 likely Democratic voters interviewed were still undecided.

But in a PIX 11/Emerson College poll released Tuesday, Garcia actually leads Adams by a point, 21-20, Yang at 16 percent.

--In a Siena College Research Institute poll, 49% of New York voters said Gov. Andrew Cuomo shouldn’t resign, down slightly from 51% in April.

But 37% said they were prepared to re-elect him, up from 33% in April.

--We note the passing of John W. Warner, a five-term U.S. senator from Virginia who helped plan the nation’s 1976 bicentennial celebrations, played a central role in military affairs and gained respect from both sides of the political aisle for his consensus building and independence.  He was 94.

Warner became the Republican whom many Virginia independents and Democrats respected and voted for as he was willing to buck the more conservative elements of his party.

As a former secretary of the Navy and, in later years, one of only a handful of World War II veterans in the Senate, Warner held considerable authority in military matters.  And, through his six-year marriage to Elizabeth Taylor, he gained a certain aura in the political world.

As chairman of the Armed Services Committee, Warner provided critical support for President George W. bush’s handling of the war in Iraq, beginning in 2003, though he would later break with the Bush administration’s proposed “surge” of additional troops for Iraq.  His stance strengthened Democratic efforts to curtail spending on the war.

Along with Sens. John McCain and Lindsey Graham, Warner also co-sponsored legislation that banned the torture of suspected terrorists.

Editorial / Washington Post

“It’s difficult now to remember there was a time when John W. Warner was widely dismissed as an empty suit, notable more for his wealthy wives, square jaw and sartorial elegance than for any claim to gravitas in national affairs.  That image of suave playboy and lord of a massive horse-country estate made a nice hook for some early profile writers, but it wasn’t long into his 30-year tenure representing Virginia in the U.S. Senate that the reassessments began.  Fusing a tendency for grandiloquence with real gravitas and unquestioned integrity, Mr. Warner became a force on military affairs, a standard-bearer for Senate traditions and a Washington personage not beholden to tribal alliance.

“He was, to be sure, a rock-ribbed Republican.  Yet the Warner brand of Republicanism – suspicious of populism, repelled by extremists, prizing principle over partisanship – is all but unrecognizable today.  After a five-term career in the Senate marked by frequent breaks with GOP orthodoxy, it was hardly a shock when, shunning Donald Trump in both his presidential campaigns, he endorsed Democratic presidential candidates Hillary Clinton in 2016 and Joe Biden last year….

“It wasn’t just that he looked the part of a senator; he fully inhabited the role.  No one doubted his rectitude or his willingness to break with his party.  He did so repeatedly, embracing abortion rights and gun control (including a federal ban on assault weapons) and rejecting the legal basis for impeaching President Bill Clinton… In 1994, when Mr. Warner spurned the GOP’s nominee for Virginia’s other Senate seat, Oliver North, and endorsed an independent, it helped split the Republican vote and sealed the race for the Democratic candidate, former governor Charles Robb.  Many Republicans were furious; Mr. Warner had the stature to ignore them.

“That stature was hard won and well deserved.  Today, in an era of lockstep party loyalty, Mr. Warner may look like a throwback.  In fact, he was the embodiment of patriotic public service.”

--A federal judge on Monday formally dismissed the fraud case against Stephen Bannon, the conservative provocateur and former adviser to President Trump, ending months of litigation over how the court system should handle his pardon while related criminal cases remain unresolved.

U.S. District Judge Analisa Torres, citing examples of other cases being dismissed following a presidential reprieve, granted Bannon’s application – saying in a seven-page ruling that Trump’s pardon was valid and that “dismissal of the Indictment is the proper course.”

Bannon was charged last year alongside three others in what prosecutors described as a massive fundraising scam targeting the donors of a private campaign to build a wall along the U.S.-Mexico border.  Bannon was accused of pocketing more than $1 million from his involvement with “We Build the Wall” while representing to the organization’s backers that all of the money was being used for construction.

Trump pardoned Bannon as one of his last acts as president in January.

--Jacqueline Feldscher of Defense One had a story on an important issue, the tracking of space debris.

This was normally the purview of the Pentagon, which had the duty of warning the world’s space operators of impending collisions.  But the Commerce Department was ordered to start keeping tabs on satellites and orbital debris.  However the handoff has stalled, even as orbits fill up and the danger grows.  “Now as the pace of space launches accelerates, the likelihood of collisions is high and rising – and so, some industry officials say, is the chance that America’s longstanding leadership in international space policy may slip away.”

Both the European Union and China have launched their own efforts to track objects in space.

Space Command is currently in charge, collecting data on orbiting objects and alerting companies and other governments when an accident is possible.  “That means if a Chinese satellite is on a collision course with a piece of space debris, it’s the military that makes the call to alert foreign officials to the problem.”

But the mission is growing exponentially as companies like SpaceX and OneWeb launch mega constellations with thousands of satellites.  Get this.

“As space gets more congested, the number of times another satellite or piece of debris flies within one kilometer of a satellite has doubled from 2,000 per month in 2017 to 4,000 per month today.”

That requires more personnel to analyze the mountains of data and alert satellite owners about any trouble, and satellite operators, who are having to move their satellites more frequently to avoid collisions.

Here’s the thing.  One collision “could make entire areas of space unusable if they created a cloud of dangerous debris.”

Yes, the transition from Space Command to the Office of Space Commerce needs to be completed, quickly.

--This was a sad tale.

“More than half a million bees died in Massachusetts after they were left on a hot UPS truck for weeks, according to CBS Boston.

“A million bees were meant to be shipped to beekeepers in New England, but were held up in the town of Shrewsbury, nearly 50 miles west of Boston, due to faulty packaging, according to UPS.  A beekeeper had been called in by UPS on Wednesday because they had been getting loose, but more than half of the bees had already died.  Whatever bees survived were located and released by the beekeeper UPS brought in.”  [USA TODAY]

Honeybees pollinate about one third of food that we eat. A 2019 report by the U.S. Department of Agriculture’s National Agricultural Statistics Service found the population dropped to 2.88 million honeybee colonies, down 12% from the record high 3.28 million colonies in 2012.

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Pray for the men and women of our armed forces…and all the fallen.  Not just on Memorial Day, but every day.

We thank our healthcare workers and first responders.

God bless America.

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Gold $1906…highest weekly close since Nov. 2020
Oil $66.65…highest weekly close since Oct. 2018

Returns for the week 5/24-5/28

Dow Jones  +0.9%  [34529]
S&P 500  +1.2%  [4204]
S&P MidCap  +1.4%
Russell 2000  +2.4%
Nasdaq  +2.1%  [13748]

Returns for the period 1/1/21-5/28/21

Dow Jones  +12.8%
S&P 500  +11.9%
S&P MidCap  +18.2%
Russell 2000  +14.9%
Nasdaq  +6.7%

Bulls 54.5
Bears 17.2

Enjoy the weekend and a return to normalcy.  Dr. Bortrum is still kicking.

Brian Trumbore

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