Week in Review

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Week in Review

06/12/2021

For the week 6/7-6/11

[Posted 9:00 PM ET, Friday]

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Edition 1,156

Just a brief personal note.  Dr. Bortrum is still with us, but for how long I don’t know.  At times this week has been heartbreaking when I’ve visited him, but he’s receiving the best care possible.

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As we watched the tranquil scene from Cornwall and Falmouth, England, at the G7 summit today, Russian President Vladimir Putin, tuning up for his own summit with President Joe Biden, gave an exclusive interview with Keir Simmons of NBC News in Moscow.

Putin said, “We have a bilateral relationship that has deteriorated to its lowest point in recent years.”  He also praised Donald Trump as a “colorful individual” and said he can work with Biden.  Comparing the two, Putin said:

“Well even now, I believe that former U.S. President Mr. Trump is an extraordinary individual, talented individual, otherwise he would not have become U.S. President,” Putin said.  “He is a colorful individual.  You may like him or not.  And, but he didn’t come from the U.S. establishment, he had not been part of big-time politics before, and some like it, some don’t like it, but that is a fact.”

As for Biden, Putin said he “is radically different from Trump because President Biden is a career man.  He has spent virtually his entire adulthood in politics.”

“That’s a different kind of person, and it is my great hope that yes, there are some advantages, some disadvantages, but there will not be any impulse-based movements, on behalf of the sitting U.S. president.”

Asked point blank by Simmons whether he was a “killer,” as Biden has described him, Putin gave an evasive answer.

“Over my tenure, I’ve gotten used to attacks from all kinds of angles and from all kinds of areas under all kinds of pretext, and reasons and of different caliber and fierceness and none of it surprises me,” Putin said, calling the “killer” label “Hollywood macho.”

Pressed further by Simmons, who mentioned by name some of the Putin opponents who have been killed in recent years, the Russian leader bristled.

“Look, you know, I don’t want to come across as being rude, but this looks like some kind of indigestion except that it’s verbal indigestion.  You’ve mentioned many individuals who indeed suffered and perished at different points in time for various reasons, at the hands of different individuals,” he said.

Ah, the stage is set for Wednesday in Geneva.  The proof will be in Putin’s / Russia’s behavior in the succeeding months. Another big cyberattack or two and the U.S. will have to respond in kind.

Domestically, aside from an issue or two in Washington, this summer we are no doubt going to be consumed with the drought topic.  This week we learned Lake Mead has declined to its lowest level since the reservoir was filled in the 1930s following the construction of the Hoover Dam.

Ian James of the Arizona Republic had some of the following:

“The lake’s rapid decline has been outpacing projections from just a few months ago.  Its surface reached a new low Wednesday night when it dipped past the elevation of 1,071.6 feet, a record set in 2016.  But unlike that year, when inflows helped push lake levels back up, the watershed is now so parched and depleted that Mead is projected to continue dropping next year and into 2023.”

The largest reservoir in the country now stands at just 36% of full capacity.  And this impacts the Colorado River and its tributaries that provide water for cities from Denver to Tucson and about 4.5 million acres of farmland from Wyoming to the U.S.-Mexico border.

‘The watershed has been ravaged by one of the driest 22-year periods in centuries,” James writes.  “Scientists describe the past two decades as a megadrought worsened by climate change and say the Colorado River Basin is undergoing ‘aridification’ that will complicate water management for generations to come.

“In 2000, Lake Mead was nearly full and its surface was lapping at the spillway gates of the Hoover Dam. Since then, the reservoir has fallen nearly 143 feet.  And it’s now at the lowest levels since 1937.”

Seventy-five percent of California is in extreme drought.  And at extreme fire risk.

This one is getting ugly, quick.

Biden Agenda

--A bipartisan group of 10 senators announced Thursday they had reached agreement on the framework of a proposed infrastructure package that could be worth as much as $1.2 trillion.

In a statement, the group of five Republicans and five Democrats described the proposal as “a realistic, compromise framework to modernize our nation’s infrastructure and energy technologies.

“This investment would be fully paid for and not include tax increases,” the statement continued. “We are discussing our approach with our respective colleagues, and the White House, and remain optimistic that this can lay the groundwork to garner broad support from both parties and meet America’s infrastructure needs.”

The new plan calls for $1.2 trillion, spread over eight years, including at least $579 billion in new spending, more than the previous Republican-only effort, but still short of the $1.7 trillion over eight years Biden is seeking.

The negotiation represented the latest attempt to craft a bipartisan agreement after President Biden cut off talks with Senate Republicans led by Sen. Shelley Moore Capito (W. Va.) earlier this week.

If Biden wanted to go forward with the group of 10 proposal, he’d still have to find five other Republicans for passage, let alone every Democrat, and approval in the House would meet stiff resistance from the progressive wing of the Democrats who want Biden to shut off any attempts at bipartisanship and go big.  But this would require full Democratic support in a budget reconciliation process.  The votes simply aren’t there.

At the same time, Democrats see an urgent need to move forward on their efforts to protect voting rights.  They could easily end up with neither.

--President Biden and Boris Johnson signed a new version of the 80-year-old “Atlantic Charter” on Thursday, as the two sought to redefine the Western alliance and accentuate what they said was a growing divide between battered democracies and their autocratic rivals, led by Russia and China.

The new charter was an effort to stake out a grand vision for global relationships, in a new world of emerging threats from cyberattacks, the pandemic, and climate change.  The first charter, drafted by Winston Churchill and Franklin D. Roosevelt, was a declaration of a Western commitment to democracy and territorial integrity just months before the United States entered World War II.

“Today, we build (on the original commitment), with a revitalized Atlantic Charter, updated to reaffirm that promise while speaking directly to the key challenges of this century,” President Biden declared after his private meeting with Johnson.

--The United States’ international image has undergone a dramatic rehabilitation with the election of Joe Biden, recovering from record low assessments of the country’s global standing under Donald Trump, according to a new Pew Research Center survey of people in more than a dozen countries allied with the U.S.

Pew found that some 74 percent of people were confident in Biden’s ability to do “the right thing regarding world affairs,” up from just 17 percent for Trump based on a similar survey of 12 countries towards the end of his tenure.

With his 74 percent approval rating, Biden sits just behind Germany’s Angela Merkel (77 percent) and far ahead of Russia’s Vladimir Putin (23 percent) and Chinese leader Xi Jinping (20 percent).

In France, Germany and Japan, favorable views of the U.S. jumped by more than 30 percentage points.  Italy, the Netherlands, Canada, Sweden, Britain and Spain all saw increases of more than 20 percent.

--The sponsor of the Keystone XL oil pipeline said Wednesday it is pulling the plug on the contentious project after Canadian officials failed to persuade President Biden to reverse his cancellation of its permit on the day he took office.

Calgary-based TC Energy said it would work with government agencies “to ensure a safe termination of and exit from” the partially built line, which was to transport crude from the oil sand fields of western Canada to Steele City, Nebraska.

Construction of the 1,200-mile  pipeline began last year when former President Trump revived the long-delayed project after it had stalled under the Obama administration.

It would have moved up to 830,000 barrels of crude daily, connecting in Nebraska to other pipelines that feed oil refineries on the U.S. Gulf Coast.

Biden canceled it in January over longstanding concerns that burning oil sands crude would make climate change worse.

Officials in Alberta, where the line originated, have been upset with Canadian Prime Minister Justin Trudeau for not lobbying harder to reinstate the pipeline’s permit.

As I wrote at the time of its cancellation, this was a massive mistake on the part of Joe Biden.  The pipeline should have been completed.

--The number of undocumented migrants reaching the U.S.-Mexico border has hit the highest level in more than 20 years in the latest sign of the humanitarian crisis facing the Biden administration.

U.S. Customs and Border Protection said it caught 180,034 migrants, mostly single adults, in May.  The number was up slightly from 178,854 in April and 172,000 in March.

It was the biggest monthly total since April 2000 with increasing numbers coming from outside Central America.

The number of unaccompanied children from Central America dropped to 10,765 in May, compared with 13,940 the previous month, according to CBP figures.

The agency said that of the 180,034 people encountered in May, 112,302 individuals were expelled under a Trump-era policy known as Title 42, which was kept in place by President Biden.

--So very much related to the above, Vice President Kamala Harris took her first foreign trip to Central America and Mexico to address the immigration issue and could not have performed worse.  In interviews her answers to simple questions, such as why she hasn’t been to the U.S.-Mexico border, were snippy and obnoxious.

Asked in an interview with Lester Holt of NBC News whether she had any plans to visit the border, Harris threw up her arms and responded: “At some point.  You know…we are going to the border.  We have been to the border.”

When Holt pointed out that she had not herself visited the region, she said with a laugh: “And I haven’t been to Europe.  I don’t understand the point you’re making.”

The point is, Madam Vice President, you are charged with fixing the border issue and you haven’t been there.

Harris’ aides have been seeking to distance their boss from this toxic political issue. 

Harris tried to be tough, like saying in Guatemala, “Do not come.  Do not come.  The United States will continue to enforce our laws and secure our borders.  If you come to our border, you will be turned back.”

But that ticked off progressives in her party. She’s being set up to fail, re 2024.

Trump’s return…and his long shadow…

--Wyoming Republican Rep. Liz Cheney accused former President Trump of having committed the worst violation of a president’s oath of office by inciting the Jan. 6 Capitol insurrection – and taking a jab at House Minority Leader Kevin McCarthy over his subsequent visit to see Trump at Mar-a-Lago.

“I was stunned.  I could not imagine any justification for doing that,” Cheney said of McCarthy’s visit to Trump during an episode of David Axelrod’s “The Axe Files” podcast, which was taped Saturday.  “And I asked him why he had done it, and he said, well, he had just been in the neighborhood, essentially.”

Cheney’s remarks underscored her commitment to decrying Trump’s baseless claims of election fraud and characterization of the riot, despite losing her place in leadership over her stance. Trump then continued to advance falsehoods about the election Saturday night when speaking to the North Carolina Republican Party, crushing the hopes of Republicans who want him to keep a stricter policy focus as Republicans go on offense in 2022.

“As I said, I think what Donald Trump did is the most dangerous thing, the most egregious violation of an oath of office of any president in our history,” Cheney said prior to Trump’s speech.  “And so the idea that a few weeks after he did that, the leader of the Republicans in the House would be at Mar-a-Lago, essentially, you know, pleading with him to somehow come back into the fold, or whatever it was he was doing, to me was inexcusable.”

Cheney also compared Trump’s rhetoric to that of the Chinese Communist Party, arguing that his casting doubt on the federal election system was comparable to efforts by the group to discredit American democracy.

“When you listen to Donald Trump talk now, when you hear the language he’s using now, it is essentially the same things that the Chinese Communist Party, for example, says about the United States and our democracy,” she said.

“When he says that our system doesn’t work…when he suggests that it’s, you know, incapable of conveying the will of the people, you know, that somehow it’s failed – those are the same things that the Chinese government says about us,” Cheney continued.  “And it’s very dangerous and damaging…and it’s not true.”

So with regards to Saturday night’s speech at the North Carolina GOP convention, which I watched in its entirety, Trump said, “That election will go down as the crime of the century, and our country is being destroyed by people who perhaps have no right to destroy it,” uttering a series of false statements about voter fraud in several states, the crowd roaring its approval as he suggested audits in states such as Pennsylvania, Georgia and Arizona could show that he won.

“As we gather tonight, our country is being destroyed before our very own eyes.  Crime is exploding, police departments are being ripped apart and defunded…

“Drugs are pouring in, gas prices are soaring, our industries are being pillaged by foreign cyberattacks.

“That’s a lack of respect for our country and our leaders.”

And while it’s rather clear his mishandling of the coronavirus probably cost him reelection, the crowd reveled in his insults of officials involved in the pandemic and his boasts that he did a great job.

“He’s not a great doctor, but a hell of a promoter.  He likes television more than any politician in this room,” Trump said of frequent target Anthony Fauci.

Trump’s speech otherwise was beyond boring…a rehash of his 2020 stump address, save for saying China should be charged $10 trillion for the pandemic originating in the country, for which he received rousing applause, and he got an ovation when he said that teaching critical race theory, an academic framework centered on the idea that racism is systemic, not just a collection of prejudices, should be banned, both issues not staples of the 2020 campaign.

But when he touted the coronavirus vaccine, telling the crowd it was his administration that was responsible for its quick development, Trump was met with silence, which was rather telling, seeing as, according to the polls, many of his supporters are skeptical of getting vaccinated.

Trump said he got along well with Kim Jong Un, Vlad the Impaler and Xi, but he slammed Germany.

One of my favorite lines was one of his last… “I’m the one trying to save American democracy!”

The convention appearance was also supposed to mark the official launch of daughter-in-law Lara Trump’s North Carolina Senate bid (for the seat to be vacated by retiring Republican Sen. Richard Burr), but then she announced she’s not running, which had President Trump clearly scrambling Saturday, as he then endorsed Rep. Ted Budd instead.

“I am saying no for now, not no forever,” Lara Trump told the audience.

I must say I was surprised that Fox News channel didn’t cover the speech live.  I caught it on C-Span.

--In Georgia last weekend, people attending the party’s state convention booed Republican Gov. Brian Kemp for not doing more to overturn the results of the 2020 election and formally censured Brad Raffensperger, the secretary of state who publicly bucked Trump and vouched for the veracity of Georgia’s election results.

Reuters had an extensive report on the death threats that top election officials, and minor ones, are receiving where results weren’t overturned per President Trump’s wishes.

Linda So / Reuters:

“Late on the night of April 24, the wife of Georgia’s top election official got a chilling text message: ‘You and your family will be killed very slowly.’  A week earlier, Tricia Raffensperger…had received an anonymous text: ‘We plan for the death of you and your family every day.’  That followed an April 5 text warning.  A family member, the texter told her, was ‘going to have a very unfortunate incident.’

“Those messages, which have not been previously reported, illustrate the continuing barrage of threats and intimidation against election officials and their families months after former President Donald Trump’s November election defeat. While reports of threats against Georgia officials emerged in the heated weeks after the voting, Reuters interviews with more than a dozen election workers and top officials, and a review of disturbing texts, voicemails and emails that they and their families received, reveal the previously hidden breadth and severity of the menacing tactics.  Trump’s relentless false claims that the vote was ‘rigged’ against him sparked a campaign to terrorize election officials nationwide, from senior officials such as Raffensperger to the lowest-level local election workers.”

This is beyond sick.

--Former President Trump ordered his top White House attorney to issue a false statement at the height of the Mueller investigation even though he knew the lying could carry criminal consequences for both of them, according to newly unearthed congressional testimony.

Donald McGahn, who served as Trump’s first White House counsel, told members of the House Judiciary Committee in a closed-door hearing last week that the ex-president instructed him to issue a statement in February 2018 denying that he had ever tried to fire Mueller, according to a 241-page transcript of the testimony released Wednesday.

Trump knew that statement “would not have been accurate” since he had ordered McGahn months earlier to orchestrate Mueller’s firing – a demand McGahn refused, he testified.

Trump also knew at the time that McGahn had already told Mueller’s investigators the truth, and that the special counsel would not take kindly to the White House lawyer giving conflicting accounts of a key episode in his probe into whether the former president obstructed justice, according to the testimony.

“(Mueller) had already publicly made clear he was going after various people for that, and that certainly is one that would weigh on anybody’s mind,” McGahn testified, referring to false statement crimes, according to the transcript.

Nonetheless, Trump kept pressuring McGahn, making him feel “trapped,” he testified.

“Frustrated, perturbed, trapped,” he told lawmakers.  “Many emotions… Trapped because the president had the same conversation with me repeatedly, and I thought I conveyed my views and offered my advice, and we were still having the same conversation.”

Asked about the Mueller report’s finding that Mr. McGahn “considered the president’s request to be an inflection point and wanted to hit the brakes,” McGahn said he saw it as “a point of no return,” and could potentially cause events to spin out of control. If (Deputy Attorney General  Rod) Rosenstein “received what he thought was a direction from the counsel to the president to remove a special counsel, he would either have to remove the special counsel or resign,” he told lawmakers, according to the transcript.

He added: “It seemed to me that it’d be easier for me to not make the call and take whatever heat or fallout there would be than to cause, potentially, a chain reaction that I think would not be in the best interest of the president.”

--Rudy Giuliani repeatedly pressured the Ukrainian government to investigate Democrat Joe Biden over a 40-minute phone call in 2019, according to an audio recording obtained by CNN.

During the call with U.S. diplomat Kurt Volker and Andriy Yermak, a senior adviser to Ukraine President Volodymyr Zelensky, Giuliani can be heard urging an investigation of Biden.

Giuliani said a public announcement would “clear the air really well” and allow for a possible meeting between Zelensky and Trump.

“And I think it would make it possible for me to come and make it possible, I think, for me to talk to the President (Trump) to see what I can do about making sure that whatever misunderstandings are put aside,” Giuliani said on the recording.  “I kinda think that this could be a good thing for having a much better relationship.”

Congressional testimony during Trump’s first impeachment detailed how he sought the investigation into the Democratic rival who eventually beat him in the 2020 election.  Trump sought an investigation of Biden and his son, Hunter, by withholding military aid from an ally while Ukraine was under siege from Russia.

“All we need from the President [Zelensky] is to say, ‘I’m gonna put an honest prosecutor in charge, he’s gonna investigate and dig up the evidence that presently exists and is there any other evidence about involvement of the 2016 election,’ and then the Biden thing has to be run out,” Giuliani said.  “Somebody in Ukraine’s gotta take that seriously.”

For his part, President Biden has invited Zelensky to the White House in July.

--And yesterday we had the report from the New York Ties concerning the secret seizure of data from Democratic Reps. Adam Schiff and Eric Swalwell in 2018, when they were both serving on the House Intelligence committee, which Schiff is chairman of.

The Justice Department under President Trump seized data from the two members’ accounts as part of an aggressive crackdown on leaks related to the Russia investigation and other national security matters.

While the Justice Department routinely conducts investigations of leaked information, including classified intelligence, opening such an investigation into members of Congress is extraordinarily rare.  The disclosures reveal one branch of the government using its powers of investigation and prosecution to spy on another.

Schiff said the seizures suggest “the weaponization of law enforcement by a corrupt president.”

Prosecutors from the DOJ subpoenaed Apple for the data.  Apple informed the committee last month that the records had been shared and that the investigation had been closed, but did not give extensive detail. Also seized were the records of aides, former aides and family members, one of them a minor, according to a committee official.

The Justice Department obtained metadata – probably records of calls, texts and locations – but not other content from the devices, like photos, messages or emails, according to reports.

The Trump administration’s attempt to secretly gain access to the data came as the president was fuming publicly and privately over investigations – in Congress and by then-special counsel Robert Mueller – into his campaign’s ties to Russia.  As the probes swirled around him, he demanded loyalty from a Justice Department he often regarded as his personal law firm.

Schiff and Swalwell were the most prominent Democrats on a committee then led by Republicans.

In a statement, House Speaker Nancy Pelosi said: “The news about the politicization of the Trump Administration Justice Department is harrowing.  These actions appear to be yet another egregious assault on our democracy waged by the former president.”

The news follows revelations that the Justice Department had secretly seized phone records belonging to reporters at the New York Times, the Washington Post and CNN as part of criminal leak investigations.  The DOJ announced last week that it would cease the practice of going after journalists’ sourcing information.

--Editorial / Wall Street Journal

“The liberal establishment willed into being much anti-Trump folk wisdom during the 2020 election campaign. Among the legends were that the U.S. Postal Service was being manipulated to steal votes; that the lab-leak theory of the coronavirus was racist misinformation; and that Donald Trump and Bill Barr gassed peaceful protesters at Lafayette Park to make way for the President’s authoritarian ‘photo-op.’

“The latest of these progressive tribal beliefs to be punctured is the narrative around Lafayette Park.  The Inspector General of the Department of Interior on Wednesday released a report on police actions in the park, which is adjacent to the White House.  It found that the U.S. Park Police on June 1, 2020 ‘cleared the park to allow the contractor to safely install the antiscale fencing in response to destruction of property and injury to officers’ from rioting.

“Since the Jan. 6 pro-Trump assault on the Capitol, the necessity of securing government institutions from political violence has been widely accepted.  But last year Democrats made excuses for riots.  Sen. Elizabeth Warren called for an investigation into Attorney General Bill Barr for the ‘sickening and appalling’ clearing of the park.

“Now one investigation is complete, and it found ‘no evidence that the Attorney General’s visit to Lafayette Park at 6:10 p.m. caused the USPP to alter its plan to clear the park,’ which it had the ‘authority and discretion’ to do after the violence, which injured 49 officers.

“The Department of Justice recently asked a federal judge to dismiss a lawsuit against Mr. Barr relating to the events at Lafayette Square.  Attorney General Merrick Garland told a Senate hearing on Wednesday that ‘the job of the Justice Department in making decisions of law is not to back any Administration’ or impose ‘one rule for Democrats and another for Republicans.’   Hear, hear. The rule of law can be a counterweight to partisan narratives.”

But the report also found that D.C. police officers fired tear gas at protesters as they moved away from the park toward 17th Street, and that Bureau of Prison officials fired pepper spray munitions, both contrary to what Park Police commanders had instructed.

The Interior Department’s inspector general conducted the investigation looking largely at the role of the Park Police but not the Secret Service, which is under the Department of Homeland Security.  The investigators did not interview Secret Service or White House personnel.

The Pandemic

According to a Wall Street Journal analysis of data collected by Johns Hopkins University, it took less than six months for the globe to record more than 1.88 million Covid-19 deaths this year, edging ahead of the 2020 death toll on Thursday.

The numbers underscore how unevenly the pandemic spread around the globe, often hitting poorer nations later, but before they had access to the vaccines benefiting Europe and the U.S.

While the U.S. and the Western nations celebrate low caseloads and declining deaths, parts of Latin America, such as Argentina, are facing their worst moments.

Covid-19 death tolls, as of tonight….

World…3,800,078
USA…614,717
Brazil…484,350
India…367,097
Mexico…229,578
Peru…188,100
UK…127,884
Italy…126,924
Russia…125,674
France…110,344
Colombia…94,615
Germany…90,398
Argentina…84,628
Iran…81,796
Spain…80,501
Poland…74,515
South Africa…57,592
Indonesia…52,566
Ukraine…51,577
Turkey…48,593
Romania…31,681
Chile…30,472
Czechia…30,219
Hungary…29,904
Canada…25,886
Belgium…25,068
Philippines…22,507
Pakistan…21,576
Ecuador…20,997

Source: worldometers.info

U.S. daily death tolls…Sun. 187; Mon. 321; Tues. 401; Wed. 447; Thurs. 424; Fri. 406.

Covid Bytes

--The U.S. government is committed to donating 500 million doses of Pfizer and BioNTech’s Covid-19 vaccine across the world as part of efforts to boost global vaccination rates, as President Biden announced from Britain on Thursday, while the rest of the Group of Seven nations are sharing another 500 million.

“We’re going to help lead the world out of this pandemic working alongside our global partners,” Biden said.  The G-7 also includes Canada, France, Germany, Italy and Japan.

But the 1 billion doses comes over the next year.  Not the next three or so months. 

The administration previously announced plans to share about 80 million doses with other countries by the end of June.  The extra 500 million is on top of that.

--The U.S. appears it will fall short of President Biden’s goal of 70% of Americans being at least partially vaccinated by July 4.  The administration insists that even if the goal isn’t reached, it will have little effect on the overall U.S. recovery, which is already ahead of where Biden said it would be months ago.

About 15 million unvaccinated adults need to receive at least one dose in the next four weeks for Biden to meet his goal, but the pace of new vaccinations in the U.S. has dropped below 400,000 people a day – down from a high of nearly 2 million a day two months ago.

--The U.S. government halted new shipments of the Johnson & Johnson Covid-19 vaccine, one of several steps federal agencies are taking that could help clear a backlog of unused doses before they expire.

The move comes as the U.S. Food and Drug Administration separately extended the shelf life of J&J’s vaccine to 4 ½ months from three months once refrigerated, the drugmaker said Thursday.  The policy change comes as both federal and state health officials are trying to use up J&J doses that have sat on shelves so long they are set to expire.

Just over half of the approximately 21 million J&J doses distributed in the U.S. have been administered, a lower percentage compared with shots from Pfizer Inc. and Moderna Inc., according to the CDC.  J&J has committed to deliver 100 million doses by the end of June, although it has been delayed by manufacturing problems.

Hospital and state officials said they have many J&J doses expiring later this month, partly as an unintended consequence of the U.S.’s decision in April to temporarily suspend administration of J&J doses to assess a rare blood-clot risk.

Then this afternoon, the FDA released 10 million doses of the J&J vaccine that were produced by troubled Emergent BioSolutions Inc.  But at the same time, the FDA said it had determined several other batches aren’t suitable for use, while others are still under review.  The number that could end up beng tossed is anywhere from 60 million to 100 million, depending on the report.

--The highly transmissible Covid-19 variant that first emerged in India is rapidly spreading around the world, health authorities say, intensifying the race to increase global vaccinations.

The B.1.617.2 variant, now dubbed the Delta variant, is in at least 60 countries, including the U.S. and the U.K. and British scientists recently estimated that it might be 40% to 50% more transmissible than the B.1.1.7 variant, or Alpha, which in turn is more transmissible than the original virus and quickly spread across the globe.

In the U.K., the Delta variant is rapidly displacing the Alpha variant, and health officials believe that it is contributing to an uptick in Covid-19 cases and hospitalizations in the country, though it is starting from a low baseline.  Previously, around 98% of cases in the U.K. were due to the Alpha variant, but the Delta variant has started to take over after being introduced into the country in March and now constitutes about 75% of cases, according to the Covid-19 Genomics UK Consortium.

If you look at the U.K. on worldometers.info, you definitely see a pickup in cases after the virus had been crushed with the country’s extensive initial vaccine effort.

--Regarding the Wuhan lab-leak theory, Sen. Lindsey Graham (R-S.C.) is pointing to a message published in the British medical journal The Lancet that dismissed the theory that the virus accidentally leaked out of a virology lab.

“We stand together to strongly condemn conspiracy theories suggesting that Covid-19 does not have a natural origin… Conspiracy theories do nothing but create fear, rumors, and prejudice that jeopardize our global collaboration in the fight against this virus,” read the statement, which was signed by 27 scientists.

“If Trump was right [about the lab-leak theory], it would have changed the outcome of the 2020 election,” Sen. Graham said.

“The media took it and ran, and it changed the course of the election,” Graham told Fox News’ Sean Hannity.  “Why?  Because number one, the scientists are tied to this lab. They were covering their ass.  They put out a letter not based on science, but a political document trying to destroy the credibility of people who suggested it came out of a lab.”

“And if we could have proven that early on in 2020 it was a lab leak coming from China, not occurring naturally, the public would want revenge against China, and who would they turn to, Biden or Trump?”

But you weren’t going to prove the theory early in 2020.  China would not have been forthcoming with key data, just as they haven’t been forthcoming in the 15 months since.

Over the weekend, the Wall Street Journal published an op-ed by two experts, Dr. Steven Quay and Richard Muller, who claimed that a genomic analysis of the virus suggests that it is the result of so-called “gain-of-function” research, in which viruses are made more contagious and transmissible in an effort to prevent pandemics.

President Biden has ordered the intelligence community to review all evidence related to the origins of the Covid-19 pandemic and report back within 90 days, which isn’t enough time.

--A top Japanese virologist and government adviser has warned of the risks of spreading Covid-19 infections during the Tokyo Olympics, the Times of London reported on Tuesday.  Tohoku University professor Hiroshi Oshitani was an architect of Japan’s “Three C’s” approach to the pandemic, which advises avoiding closed spaces, crowds and close contact situations.

“The government organizing committee, including the IOC, keep saying they’re holding a safe Olympics.  But everybody knows there is a risk.  It’s 100 percent impossible to have an Olympics with zero risk…of the spread of infection in Japan and also in other countries after the Olympics,” the Times quoted Oshitani as telling the newspaper. “There are a number of countries that do not have many cases, and a number that don’t have any variants.  We should not make the Olympics (an occasion) to spread the virus to these countries,” he added, noting most countries lack vaccines.

--3M worked with the U.S. Marshals Service in the Eastern District of Kentucky to stop the sale of more than one million suspected fake N95 respirators, as part of the company’s continuing global effort to combat pandemic fraud, counterfeiting and price-gouging.

3M has established hotlines around the world to report suspected fraud and has created online resources to help spot price-gouging, identify authentic 3M respirators and ensure products are from 3M authorized distributors.

Wall Street and the Economy

This week was all about a single data release, the May report on consumer prices, which rose 0.6%, 0.7% ex-food and energy.  For the past 12 months, the CPI rose 5.0% (following a 4.2% rise in April), 3.8% on core.  The jump partly reflected the dropping of last spring’s weak readings from the calculation.  These so-called base effects are expected to level off in June.

It’s also important to note that roughly a third of the May inflation increase was due to soaring used car prices, which are up nearly 30 percent in the past year.  It’s a classic story of supply and demand.  There’s been heavy demand for used cars as people didn’t want to fly or take public transportation.  Meanwhile, there’s little supply largely because rental car companies purchased far fewer cars in 2020, so they aren’t selling many now on the used car market.  The price of gas at the pump is also up sharply as demand rebounds.

Economists expect such eye-popping price hikes to be short-lived as the economy adjusts and the comparisons to a year ago get less dramatic.

But this was the highest inflation level since 2008, during the Great Recession.  Historically, inflation has moved around the most – first moving lower and then spiking – during and just after recessions.

From the Wall Street Journal’s Justin Lahart’s “Heard on the Street” column:

“In the months ahead, the stage seems set for inflation to only heat up further. The economy is growing swiftly – economists polled by IHS Markit now forecast gross domestic product will grow at a 10.1% annual rate in the second quarter followed by 6.9% in the third – while shortages of many items remain unresolved.  Moreover, with many employers struggling to hire workers, wages are picking up, and some businesses are trying to make up for higher labor costs by raising prices.

“But a lot of the factors pushing up prices, while they might last for a while longer, still appear temporary. The chip shortage and other supply-chain bottlenecks seem likely to be resolved over the next year.  The same goes for a lot of issues businesses are having finding employees.  Also, in a year’s time a lot of the demand that built up during the pandemic might be exhausted, and the boost from the substantial amount of money the government pumped into the economy could be fading.  In short, Federal Reserve policy makers have good reason to believe the jump in inflation will probably be temporary.”

Treasury Secretary Janet Yellen said Saturday that inflation could climb as high as 3 percent for the year, “But I personally believe that this represents transitory factors.”

The weekly jobless claims figure hit another pandemic low, 376,000.  The Atlanta Fed’s GDPNow barometer for the second quarter stands at 9.3%.

Meanwhile, the World Bank upgraded its outlook for global growth this year, with the world economy growing 5.6 percent, up from the 4.1 percent it forecast in January. The global economy shrank 3.5 percent in 2020 as the pandemic disrupted trade and forced businesses to close and people to stay home.

The projected expansion would make 2021 the fastest year of growth since 1973’s 6.6 percent.

The bank expects the U.S. economy to expand 6.8 percent in 2021, up from the 3.5 percent it forecast in January. 

China is forecast to grow 8.5 percent in 2021 after expanding just 2.3 percent last year.

The eurozone is forecast to see 4.2 percent growth in 2021, reversing last year’s 6.6 percent fall.  And Japan is expected to post 2.9 percent growth this year after a 4.7 percent decline in 2020.

Lastly, the U.S. budget deficit grew to a record $2.1 trillion during the first eight months of the fiscal year as spending continued to outpace tax receipts, though the latter is rising as the economy recovers.

Federal revenue for the eight-month period ending in May rose 29%, to a record $2.6 trillion, primarily due to higher receipts from individual and corporate income taxes, the Treasury Department said Thursday.

Outlays rose 20%, to a record $4.7 trillion, driven by payments for jobless benefits and Covid-19 relief programs.

For the month of May, the deficit was $132 billion, less than expected.

On the China front…in a rare show of bipartisan solidarity, the Senate came together on Tuesday to pass sweeping legislation designed to strengthen Washington’s hand in its escalating geopolitical and economic competition with China.

By a vote of 68 to 32, the 2,400-page U.S. Innovation and Competition Act of 2021 brought together a coalition of progressives, moderates and conservatives who, despite their intense disagreements on nearly every other consequential policy issue, have become united in their view the Chinese government under the rule of Xi Jinping has become a threat to global stability and American power.

“The world is more competitive now than at any time since the end of the second world war,” Senate Majority Leader Charles Schumer (D-N.Y.) said on the Senate floor moments before the vote.  “If we do nothing, our days as the dominant superpower may be ending.”

“This bill could be the turning point for American leadership in the 21st century, and for that reason, this legislation will go down as one of the most significant bipartisan achievements of the U.S. Senate in recent history.”

The bill, which includes about $250 billion worth of spending, touches on nearly every aspect of the complex and increasingly tense relationship between Washington and Beijing.

It includes billions of dollars to increase American semiconductor manufacturing, a sign of growing urgency in Washington that the U.S. has become dangerously reliant on Chinese supply chains.  It bans American officials from attending the 2022 Beijing Winter Olympics over human rights concerns and declares Beijing’s policies in China’s far-west Xinjiang region a genocide, echoing the position of the State Department and multiple parliaments around the world.

The legislation also includes a range of provisions meant to strengthen U.S. ties with Taiwan and military alliances in the Pacific, including the Quad, an increasingly formalized pact between the U.S., Australia, India and Japan – and still others to crack down on Chinese influence on U.S. campuses, in international organizations and online.

“This is an opportunity to compete with China at the research level,” Senator Roger Wicker (R-Miss.) said before the vote.  “This bill will strengthen our country’s innovation in key technology fields of the future, areas such as artificial intelligence, robotics, quantum computing and communications, and this bill also is a game changer in terms of giving universities all over the United States an opportunity to participate in game-changing research.”

The bill also authorizes new sanctions on Chinese officials for a range of crimes, including cyberattacks, intellectual property theft and, in Xinjiang – where human rights groups cite United Nations reports and witness accounts that as many as 1 million Uighurs and other Muslim minorities are held in ‘re-education camps’ – against perpetrators of ‘systematic rape, coercive abortion, forced sterilization or involuntary contraceptive implantation policies and practices.”

Beijing has repeatedly denied the allegations of human rights abuses in Xinjiang and insists that the camps are vocational training facilities.

The House is working on its own legislation and the two chambers will have to reconcile any differences in their respective bills before sending to President Biden for his signature.

Europe and Asia

The European Central Bank maintained an elevated flow of stimulus as expected on Thursday, fearing that any retreat now would accelerate an already worrisome rise in borrowing costs and choke off the fledgling recovery.

ECB President Christine Lagarde said at a news conference after the policy meeting that “Any kind of transition, exit, whatever you call it, has not been discussed.”

On inflation: “There is also the movement on core inflation, we are clearly seeing an improvement and that dates back to December. The core inflation outlook has been revised, gradually.”

The ECB is happy to see some inflation.

On bottlenecks in the supply chain: “We assume of the bottlenecks that we know of, that some of those bottlenecks will gradually phase out.”

Germany’s central bank updated its economic projections and said the country is poised for a strong upswing in the second half of this year, with activity likely to reach pre-crisis levels as soon as this summer, the Bundesbank said.

The bank’s projections, which are published twice a year, are more optimistic than in December,   They see Europe’s largest economy expanding 3.7 percent this year and 5.2 percent in 2022.

As to inflation, the Bundesbank said current price swings in some areas are being driven by temporary factors, including a return to higher rates of VAT, new carbon emissions certificates, and a steep rise in energy and food costs.

The UK economy gathered momentum in April as shops, hairdressers and restaurants serving outdoors re-opened for business after months of lockdown to fight the coronavirus.

GDP rose 2.3 percent from March, despite unexpected declines in manufacturing and construction, the Office for National Statistics said Friday.  The gain left output just 3.7 percent below its level in February last year before the pandemic struck.  Britain’s rapid vaccination program means the UK is now set for its strongest growth in decades.

Exports of iron and steel boosted the latest data, delivering a 2 percent gain in merchandise exports to the EU in the month. Imports from the bloc added 3.2 percent. Goods coming from non-EU countries, excluding precious metals, were the highest since records began in January 1997.

Prime Minister Boris Johnson is expected to delay the final stage of lockdown easing that had been planned for June 21st due to the spread of the Delta Covid variant first identified in India.

Brexit: In their first in-person meeting in Cornwall ahead of the G7 summit, Boris Johnson and Joe Biden reaffirmed their commitment to the Belfast Agreement after they avoided a public confrontation over the Northern Ireland protocol.

Johnson said the U.S. president did not express concern over Britain’s unilateral actions over the protocol and his failure to negotiate agreed solutions to its difficulties with the European Union.

“There’s complete harmony on the need to keep going, find solutions, and make sure we uphold the Belfast/Good Friday Agreement.  And I think what’s interesting is Northern Ireland is a fantastic place and it’s got amazing potential.  It is a great, great part of the UK,” he said.

“America, the United States, Washington, the UK, plus the European Union have one thing we absolutely all want to do and that is to uphold the Belfast/Good Friday Agreement, and make sure we keep the balance of the peace process going.  That is absolutely common ground.”

Despite Thursday’s show of harmony, there is growing alarm in Irish Government circles that a further deterioration in relations between the EU and the UK over the Northern Ireland protocol is inevitable, with potentially destabilizing effects on the North.  EU leaders are ready to threaten Boris Johnson with a trade war tomorrow at the G7, demanding Britain honor the terms of the Brexit deal in relation to Northern Ireland.

Turning to Asia…China reported an ugly producer price figure for May, up a whopping 9% year-over-year.

Japan’s economy fell 3.9% annualized in the first quarter, better than expected, on smaller cuts to plant and equipment spending, but the pandemic still dealt a huge blow to overall demand.  The economy had grown 11.7% in Q4.

Some analysts expect Japan’s economy to post another contraction in the current quarter – pushing it back into a technical recession – as an extension of coronavirus emergency curbs for Tokyo and other major areas hurts domestic demand.

Finally, on the global minimum corporate tax issue, Treasury Secretary Janet Yellen’s deal with the G7 to impose one and allow more countries to tax big multinational firms, is already facing stiff Republican opposition and raises questions about the U.S. ability to implement a broader global agreement.

“It’s wrong for the United States,” Republican Senator John Barrasso said of the tax deal struck on Saturday by finance ministers from the G7.  “I think it’s going to be anti-competitive, anti-U.S., harmful for us as we try to continue to grow the economy and certainly at a time when we’re coming out of a pandemic,” Barrasso, who chairs the Senate Republican Conference, told reporters.

In the landmark agreement, G7 finance ministers agreed to pursue a global minimum tax rate of at least 15% and to allow market countries to tax up to 20% of the excess profits – above a 10% margin – of around 100 large, high-profit companies.  Yellen said the “significant, unprecedented commitment” would end what she called a race to the bottom on global taxation.  In exchange, G7 countries agreed to end digital services taxes, but the timing for that is dependent on the new rules being implemented.

Republican Sen. Pat Toomey said the deal would drain tax revenues away from the U.S. Treasury to other countries, adding that he hoped some Democrats would be unwilling “to subject the American economy to this kind of misery.”

The rest of the G7 will wait to see what the U.S. Congress does before taking it to their own parliaments.

But one thing seems certain.  Global corporate tax rates are heading upward.

Street Bytes

--Stocks finished mixed in a quiet week, with the Dow Jones falling 0.8% to 34479, while the S&P 500 hit a record high today, up 0.4% to 4247.  Nasdaq rose for a fourth week, up 1.9% and is now just a day’s rally away from a new record of its own.

Next week we have a Fed gathering where the market will be looking for clues as to when tapering of the bond purchase program will begin.

Overseas, the STOXX Europe 600 (like the S&P 500 a leading benchmark) hit an all-time high today as well.

--U.S. Treasury Yields

6-mo. 0.04%  2-yr. 0.15%  10-yr. 1.45%  30-yr. 2.14%

So much for the inflation news.  The yield on the 10-year fell to its lowest level since February.  Its 32 basis points from its 1.77% March 30 high.

Euro bonds also rallied on the tame news out of the ECB, with the yield on the 10-year German Bund back to -0.27%.  The yield on the Italian 10-year is 0.74% despite its humongous debt-to-GDP ratio.

--Oil demand is expected to exceed pre-coronavirus levels by the end of 2022, the International Energy Agency said on Friday, with the body calling on world producers to “open the taps.”

Consumption declined by a record 8.6m barrels a day last year as the coronavirus raged around the world.  It is expected to rebound by 5.4m b/d this year as vaccines are rolled out and countries open up again.

In 2022, the IEA expects a further 3.1m b/d increase, to average 99.5m b/d with an increase at the end of the year that will surpass the level of demand before the coronavirus crisis took hold.

The IEA hastened to add that slow vaccine distribution could “jeopardize” any rebound.  And a “wild card” for the IEA is a potential increase in Iranian oil supply should the producer agree on a deal that would result in the U.S. lifting sanctions.

But for now, oil marches higher, finishing the week at $70.78 on West Texas Intermediate, highest since May 2018.

--Federal authorities have recovered more than two million dollars in cryptocurrency paid in ransom to foreign hackers whose attack last month led to the shutdown of a major pipeline that provides nearly half the East Coast’s fuel.

The seizure of funds paid by Colonial Pipeline to a Russian hacker ring, DarkSide, marks the first recovery by a new ransomware Justice Department task force.

“Today we turned the tables on DarkSide,” Deputy Attorney General Lisa Monaco said, announcing the recovery Monday afternoon.  “The Department of Justice has found and recaptured the majority of the ransom” in the wake of last month’s attack.

Authorities seized 63.7 bitcoin of the ransom of 75 bitcoin, the value being much higher when the ransom was paid on May 8 than where bitcoin is priced today.

Meanwhile, JBS USA Holdings Inc., the world’s largest meat processing company by sales, announced it paid an $11 million ransom to cybercriminals who last week temporarily knocked out plants that process roughly one-fifth of the nation’s supply.

--United Airlines Holdings Inc. is in advanced talks for a large narrow-body aircraft order that would include at least 100 Boeing Co. 737 MAX jets as part of a broader fleet revamp, according to the Wall Street Journal.

United sees an opportunity to upgrade its fleet and is studying several new, fuel-efficient models at a time when the likes of Boeing and Airbus SE are anxious for deals and demand for leisure travel is surging in the U.S.

To attract orders for the MAX, Boeing has been offering some customers deep discounts, reduced upfront payments and other inducements not normally available in normal times.

A United spokeswoman said, “We do not currently have a deal in place with Boeing or Airbus to purchase new aircraft and do not comment on speculative aircraft orders.  But, she added, the carrier has turned its attention “away from managing the crisis of the pandemic and toward planning for our bright future.”

A deal would expand on an order for 25 MAX single-aisle jets that United announced in March.  It could also help United retire its oldest single-aisle Boeing 757s, many of which date from the mid-1990s and burn more fuel than the newer generation jets.

Other large customers like Southwest Airlines, Ryanair and Alaska Airlines have been stocking up on MAX jets, as Boeing looks to clear hundreds of undelivered 737s and 787s from its inventory.

Southwest said this week it struck a deal to take 34 more of Boeing’s smallest 737 next year, in addition to the 100 MAX jets it ordered in March.  The all-737 operator now expects to spend about $1.5 billion on aircraft next year, about $800 million more than previously planned, the carrier said in a filing.

And Southwest also announced it has extended its bookable flight schedule through Jan. 5, 2022, while resuming nonstop service to international destinations such as Nassau, Bahamas; Grand Cayman, Cayman Islands; and Cancun, Mexico, from Ft. Lauderdale.

--TSA checkpoint travel numbers vs. 2019

6/10…74 percent of 2019
6/9…66
6/8…64
6/7…69
6/6…74…pandemic high of 1,984,658 travelers
6/5…76
6/4…71
6/3…69

--According to a controversial report from the investigative journalism organization ProPublica, Amazon founder Jeff Bezos paid no income tax in 2007 and 2011.  Tesla founder Elon Musk’s income tax bill was zero in 2018.  And Warren Buffett had a “true tax rate” of 0.10% from 2014-2018.

Overall, the richest 25 Americans pay less in tax – an average of 15.8% of adjusted gross income – than many ordinary workers do, once you include taxes for Social Security and Medicare, ProPublica found.  The findings thus fuel a national debate over the vast and widening inequality between the very wealthiest Americans and everyone else.

An anonymous source delivered to ProPublica reams of Internal Revenue Service data on the country’s wealthiest people, including Buffett, Bill Gates, Rupert Murdoch and Mark Zuckerberg.  ProPublica compared the tax data it received with information available from other sources.  It reported that “in every instance we were able to check – involving tax filings by more than 50 separate people – the details provided to ProPublica matched the information from other sources.”

Using perfectly legal tax strategies, many of the uber-rich are able to shrink their federal tax bills to nothing or close to it.

Buffett has in the past called for tougher restrictions on the wealthy to prevent them avoiding paying taxes.

But the real issue is, who released the information?  The IRS is investigating, as taxpayer information is confidential, and there are potential criminal penalties for IRS employees or others who pass this on.  Commissioner Charles Rettig told lawmakers that there were internal and external investigations beginning, with potential prosecutions to follow.

“I share the concerns of every American for the sensitive and private nature and confidential nature of the information the IRS receives,” he said during a Senate Finance Committee hearing that had been scheduled before the information was released.  “Trust and confidence in the Internal Revenue Service is sort of the bedrock of asking people and requiring people to provide financial information.”

ProPublica said it didn’t know the identity of its source and described the information it received as IRS data on thousands of people covering more than 15 years.  It isn’t certain that the information came directly from within the IRS or whether the agency was hacked in some way.

--Global shipyards that were retrenching and consolidating in a faltering maritime market barely more than a year ago are now flush with new orders, boosted by efforts by shipping lines to add capacity to meet resurgent consumer demand in Western economies.

Orders for new container ships in the first five months of this year were nearly double the orders for all of both 2019 and 2020, according to London-based maritime data provider VesselsValue Ltd., with the biggest gains going to shipyards in South Korea and China.

Some shipyards are trying to renegotiate existing orders as the price of steel plates used to build vessels has doubled since the end of 2020, according to people involved in those deals.

The resurgence in ordering is being driven mainly by container ships as Western retailers such as Walmart and Amazon.com scramble to restock after a year of supply-chain disruptions from the pandemic.

At the same time as I’ve written recently, congestion at major ports in North America, Europe and Asia, has left cargo space hard to find and sent freight rates soaring, great for operators like A.P. Moller-Maersk A/S.

And when they make money, the owners invest in new ships.

--Electric-truck startup Lordstown Motors Corp. disclosed it doesn’t have sufficient cash to start full commercial production and has doubts about whether it can continue as a going concern through the end of the year.

The disclosure in a filing marks the latest trouble for Lordstown, one of several electric-vehicle and battery startups that went public last year through reverse mergers with special-purpose acquisition companies, or SPACs.

--Tesla is pulling the plug on its most expensive version of its flagship sedan, the Model S Plaid Plus, CEO Elon Musk announced on Twitter.

The company had previously announced plans to sell the premium car – which was advertised as being able to go more than 520 miles on a fully charged battery – for almost $150,000, $30,000 more than the standard “Plaid” version.

Tesla still plans a “Plaid” version of the Model S, which is advertised as being able to go 390 miles per charge.

“Plaid+ is canceled.  No need, as Plaid is just so good,” Musk tweeted Sunday.  “0 to 60mph in under 2 secs.  Quickest production car ever made of any kind.  Has to be felt to be believed.”

--The U.S. Food and Drug Administration on Monday approved Biogen’s experimental therapy for Alzheimer’s disease.  The drug, aducanumab, which will be marketed under the brand name Aduhelm, was approved for use in the United States.  The decision makes Biogen the first company to bring a new Alzheimer’s drug to market since 2003.

The FDA approved Aduhelm under what it calls the “Accelerated Approval” pathway, which allows it to clear drugs that are likely to result in a benefit for patients, but where there still remains some uncertainty.  As part of the approval, the agency asked Biogen to conduct a larger clinical trial to show that the drug’s goal – removing a sticky plaque that builds up inside the brain of Alzheimer’s patients – results in benefits to patients.

The drug aims to slow cognitive decline in people with early symptoms of the disease.  But there are some who say it has limited value.  And there are unanswered questions about how doctors determine if a patient is eligible for the drug and whether patients will need to get expensive PET scans to detect amyloid beta plaque deposits in their brain.

--Google agreed to pay roughly $270 million in fines and change some of its business practices as part of a settlement, announced on Monday with French antitrust regulators who had accused the company of abusing its dominance of the online advertising market.

French competition regulators said Google used its position as the world’s largest internet advertising company to hurt news publishers and other sellers of internet ads.

As part of the settlement, the French authorities said, Google agreed to end the practice of giving its services preferential treatment and to change its advertising system so that it would work more easily with other services.

--Campbell Soup faced headwinds in the fiscal third quarter ranging from rising inflation to margin pressure, weighing on the food processing company’s quarterly results that failed to meet Wall Street’s expectations and the shares fell over 6% on the news, which includes a diminished full year outlook.

Campbell reported adjusted earnings of $0.57 per share for the quarter ended May 2, down from $0.83 per share a year earlier, missing estimates.  Net sales totaled $1.98 billion, below $2.24 billion reported a year ago when people stored items like soups and snacks amid strict Covid-19 restrictions. The Street’s view was for $2.01 billon.

“While we recognized the third quarter would be a challenging net sales comparison to the demand surge at the onset of the Covid-19 pandemic a year ago, we faced additional headwinds,” CEO Mark Clouse said.  “Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs, and some executional pressures.”

Campbell Soup’s meals and beverages segment reported a 14% decline in sales while snacks was down 8%.

The company cut its full-year guidance to factor in the sale of Plum Organics, an organic baby food and kids snacks brand, and expectations for continued margin pressure in the fiscal fourth quarter and more pronounced inflation before pricing changes take hold early in fiscal 2022.

As I noted with their last report, I have enough food from my buying in the first half of last year to feed an army and have been dropping off boxes of it at my church.  The problem is, anytime I see a 3-for-$5 sale on Campbell’s Chunky Soup I go for it.

--Chipotle raised menu prices 3.5 to 4 percent to help offset an increase in employee wages, the company said Tuesday.   Chipotle announced in May it was hiring 20,000 employees and raising its average hourly wage to $15 by the end of June.  Starting pay will range from $11 to $18 an hour.

“We really prefer not to take pricing, but it made sense in this scenario to invest in our employees and get these restaurants staffed and make sure that we had the pipeline of people to support our growth,” CE Brian Niccol said at a conference.  “We’ve taken some pricing to cover some of that investment.”

McDonald’s said in May it was raising wages by an average of 10% at its company-owned locations.

--Starbucks Corp. is running short in some stores on basics including cups and coffee syrups, baristas reported, as the chain moves to full operations in the wake of the pandemic.

Starbucks employees have said they are resorting to serving drinks in different cup sizes when the proper ones aren’t available.

“Due to current supply shortages, some of your favorites may be temporarily out of stock,” Starbucks wrote to its app users earlier this week.  “We’re sorry for the inconvenience.”

Starbucks has recovered much of the U.S. sales that evaporated earlier in the pandemic, and is now restoring limited seating to more domestic cafes.

--Shares of Clover Health jumped 18% Wednesday to $28.85 per share, and then crashed to $16.80 by the end of the day, as it became the latest Reddit darling, with individual traders on online discussion forums pumping the stock a day after it soared 86%.  The stock closed last week at $9.00.  It ended this week at $14.70.

--While many New Yorkers are still working from home, a recent survey by a big business group found that Manhattan offices could soon see workers flowing back into office buildings at a faster pace.

In their latest survey, the Partnership for New York City found that 62% of Manhattan office workers were expected to return to the workplace by the end of September, a significant bump from the groups’ March survey in which 45% of employees were expected back in the office by the same time.  However, only 12% had returned by the end of last month, an uptick of two percentage points from the March survey.

Seventy-one percent of employers said they expect to adopt a hybrid model, with 63% having said that employees would be required to be in the office at least three days a week.

The survey found that 62% of employers had resumed business travel in some capacity, up form 25% in March, with a third of employers expecting business travel to resume in the second half of the year.

--Jeff Bezos will be flying to space on the first crewed flight of the New Shepard, the rocket ship made by his space company, Blue Origin.  The flight is scheduled for July 20, just 15 days after he is set to resign as CEO of Amazon.

Blue Origin said Bezos’ younger brother, Mark Bezos, will also join the flight, along with the winner of a month-long auction, where the bidding exceeded $2.8 million, last I saw.

“Ever since I was five years old, I’ve dreamed of traveling to space,” Bezos, 57, said in an Instagram post.  “On July 20th, I will take that journey with my brother.  The greatest adventure, with my best friend.”

Bezos will thus beat rival Elon Musk, though British billionaire Richard Branson is threatening to beat Bezos into space with his space company, Virgin Galactic, which is planning on conducting flights to suborbital space for ultra-wealthy thrill seekers and competing directly with Blue Origin.

Blue Origin’s crewed flight will see the company’s six-seater capsule and 59-foot rocket tear toward the edge of space on an 11-minute flight that’ll reach more than 60 miles above Earth.

Bezos is remaining involved in Amazon, though he will transition to the executive chairman role.  He will be succeeded as CEO by Andy Jassy, the head of Amazon Web Services.

Foreign Affairs

Israel: Knesset speaker Yariv Levin announced on Tuesday that the new unity government led by Naftali Bennett and Yair Lapid would be brought to a vote of confidence and be sworn in during a special session of the Knesset on Sunday.  The final card for the coalition was a key right-wing lawmaker (Nir Orbach*) rebuffing Benjamin Netanyahu for the new leadership.

*Orbach is receiving a security detail amid a wave of threats, as a result of his change of allegiance.

The coalition consists of eight parties, including Bennett, who heads the right-wing Yamina party, and Lapid, who heads the centrist Yesh Atid party.  Among the other six parties is an independent Arab faction.

Bennett will become prime minister first for two years, followed by Lapid.

Netanyahu is not going quietly into the night.  He says he is the victim of a “deep state” conspiracy.  He speaks in apocalyptic terms when talking about the country without his leadership.

“They are uprooting the good and replacing it with the bad and dangerous,” Netanyahu told the conservative Channel 20 TV station this week.  “I fear for the destiny of the nation.”

Such language has made for tense days as the prime minister and his loyalists make a final desperate push to prevent a new government from taking office.  We’re also getting to see what he’ll be like as opposition leader.

Netanyahu has been belittling his rivals, painting opponents as weak, self-hating “leftists,” and Arab politicians as a potential fifth column of terrorist sympathizers.  He routinely presents himself in grandiose terms as the only person capable of leading the country through its never-ending security challenges.

Netanyahu’s past tactics are coming back to haunt him.  The new Biden administration has been cool to the Israeli leader, while Netanyahu’s close relationship with Donald Trump has alienated large segments of the Democratic Party.

At home, his magic has dissipated – in large part due to his trial on corruption charges.  In four consecutive elections since 2019, the once-invincible Netanyahu was unable to secure a parliamentary majority.  Facing the unappealing possibility of a fifth consecutive election, eight parties managed to assemble a majority.

Netanyahu has adopted the language of his friend and benefactor Trump.

“We are witnesses to the greatest election fraud in the history of the country,” Netanyahu claimed at a Likud meeting this week.  He has long described the corruption trial as a “witch hunt” fueled by “fake news,” and that he is hounded by the “deep state.”

Separately, the outgoing chief of Israel’s Mossad intelligence service, Yossi Cohen, offered the closest acknowledgment yet his country was behind recent attacks targeting Iran’s nuclear program and a military scientist.  It was also a clear warning to other scientists in Iran’s nuclear program that they too could become targets for assassination even as diplomats in Vienna try to negotiate terms to try to salvage the atomic accord with world powers.

“If the scientist is willing to change careers and will not hurt us anymore, than yes, sometimes we offer them a way out,” said Cohen.

Among the major attacks to target Iran, none have struck deeper than two explosions over the last year at its Natanz nuclear facility.

In July 2020, a mysterious explosion tore apart Natanz’s advanced centrifuge assembly, which Iran later blamed on Israel. The in April of this year, another blast tore apart one of its underground uranium enrichment halls.

Iran: The Biden administration lifted sanctions on three former Iranian officials and several energy companies amid stalled nuclear negotiations, signaling Washington’s willingness to further ease economic pressure on Iran if the country changes course.

“These actions demonstrate our commitment to lifting sanctions in the event of a change in status or behavior by sanctioned persons,” Secretary of State Antony Blinken said in a statement accompanying the notice of the action.

The moves came as U.S., Iranian, European and Chinese negotiators in Vienna are preparing to start a sixth round of talks this weekend to restore the 2015 nuclear deal with Iran, the U.S. and five other world powers (P5+1…five permanent members of the UN Security Council and Germany).

U.S. and European officials have said significant differences remain between Washington and Tehran over how to restore the nuclear accord, including the extent of any potential sanctions’ relief.  Iran’s June 18 presidential election is a complicating factor in the talks.

The International Atomic Energy Agency said reviving the nuclear deal will become more difficult later this month, after Iran’s election and when a temporary monitoring pact expires on June 24.

“It’s becoming increasingly difficult,” IAEA Director General Rafael Mariano Grossi said Monday.  “What’s going on is serious. We have to be aware of this.  We cannot limit and continue to curtail the ability of inspectors to inspect and at the same time pretend there is trust.”

Separately, Russia is preparing to supply Iran with an advanced satellite system that will give Tehran an unprecedented ability to track potential military targets across the Middle East and beyond, current and former U.S. and Middle Eastern officials briefed on details of the arrangement told the Washington Post.

The plan would deliver to the Iranians a Russian-made Kanopus-V satellite equipped with a high-resolution camera that would greatly enhance Iran’s spying capabilities, allowing continuous monitoring of facilities ranging from Persian Gul oil refineries and Israeli military bases to Iraqi barracks that house U.S. troops, the officials said. The launch could happen within months, they said.

Add this to a long list of contentious issues that have strained relations between Moscow and Washington, including most notably recent Russian hacking operations and efforts to interfere with U.S. elections.  Opponents of the U.S. reentering the nuclear accord with Iran are also likely to seize on the disclosure to argue against any engagement with Tehran that doesn’t address its military ambitions in the region.

[Putin, in Friday’s NBC News interview, denied the satellite system story, dismissing it as “nonsense.”]

As for the election itself, the seven-man race is between hardline and somewhat less hardline candidates, and two low-profile moderates, all hand-selected by the election watchdog, the Guardian Council.

Afghanistan: At least 10 people were killed and 16 others injured in an armed attack on staff members of a British-American charity in Afghanistan that has been clearing land mines in the country for decades, officials said on Wednesday.  The interior ministry blamed the Taliban for the attack, which targeted the Halo Trust.  All the victims were Afghan citizens.

The charity began working in Afghanistan in 1988 (months before the Soviet army pulled out of the country in 1989).  Its field teams clear land mines, dispose of unexploded ordnance found in bombs and bullets, and build facilities to store guns and other weapons safely.

China: I didn’t have a chance to note an op-ed by Fareed Zakaria in the Washington Post last time, which read in part:

“China’s current foreign policy is far removed from its patient, long-term and moderate approach during the Deng Xiaoping era and after.  Back then, the central objective was to ensure that the country’s meteoric economic rise did not trigger resentment and counterbalancing from other nations.  President Hu Jintao’s adviser Zheng Bijian coined the term ‘peaceful rise’ to describe China’s aspirations and strategy.  Now Chinese diplomats embrace conflict and hurl insults in what is known as ‘wolf warrior’ diplomacy.

“What is striking about China’s strategy is that it has produced a series of ‘own goals’ – leading countries to adopt the very policies Beijing has long tried to stop.  There have also been serious consequences for its global image, greatly diminishing its soft power.  Negative views toward China among Americans soared from 47 percent in 2017 to a staggering 73 percent in 2020.  If you think that’s a U.S. phenomenon, here are the numbers for some other countries: 40 percent to 73 percent in Canada, 37 percent to 74 percent in the United Kingdom, 32 percent to 81 percent in Australia, 61 percent to 75 percent in South Korea and 49 percent to 85 percent in Sweden.  If there is a single theme in international life these days, it is rising public hostility toward China.

“President Xi Jinping has transformed China’s approach, domestically and abroad.  He has consolidated power for the party and himself.  He has reasserted party control over economic policy, in recent months putting curbs on the most innovative parts of the Chinese economy (the technology sector) while lavishing benefits on its most unproductive one (the old state-owned enterprises).  And he has pursued a combative, unpredictable and often emotional foreign policy.

“In doing all this, he is dismantling China’s hard-earned reputation as a smart, stable and productive player on the world stage.  It all brings to mind another period of centralized politics and aggressive foreign policy – the Mao era. That did not end so well for China.”

Russia: A court in Moscow has banned political organizations linked to the jailed Kremlin critic, Alexei Navalny, classifying them as “extremist.”

Activists will risk prison sentences if they continue their work and anyone who publicly supports Mr. Navalny’s political network can now be barred from running for public office.

Writing on social media, Navalny promised he would “not retreat.”  However, he said his supporters would now have to change how they work.

The move by the court was clearly orchestrated by the Kremlin as parliamentary elections are due to take place in September and opinion polls show the ruling party losing support.  Some of Navalny’s supporters have been planning to run in the elections.

Following Wednesday’s ruling, a court statement said Navalny’s regional network offices and his Anti-Corruption Foundation (FBK) had been banned with immediate effect.

“It was found that these organizations not only disseminated information that incited hatred and enmity against government officials, but also committed extremist actions,” prosecutors’ spokesman Alexei Zhafyarov said outside the court.

--Meanwhile, as a prelude to Vladimir Putin’s summit with Joe Biden, Putin accused the U.S. of double standards for its treatment of the Capitol rioters.

He said it was wrong for the U.S. to criticize crackdowns on anti-government protests overseas, while prosecuting Americans with “political demands.”  Putin also set expectations low for the meeting in Geneva, saying he expected no breakthroughs.

And he denied suggestions that recent cyber-attacks on U.S. companies had originated in Russia, and rejected claims that Moscow had meddled in American elections.

Putin reserved some of his most stinging criticism for U.S. condemnation of a crackdown on anti-government protesters by Moscow’s regional ally, Belarus.  He hit back by suggesting the U.S. Capitol rioters were being treated unfairly.

“They weren’t just a crowd of robbers and rioters,” Putin said of the Trump supporters who stormed Congress on Jan. 6 and temporarily suspended a session to certify Joe Biden as the winner of November’s election.  “Those people had come with political demands.”

Mexico: Women were poised to win a record number of state governors’ offices in Mexican mid-term elections last weekend, capturing territory long dominated by men and giving them a bigger political platform to reach the presidency one day.

President Andres Manuel Lopez Obrador’s National Regeneration Movement (MORENA), which dominated the state votes, nonetheless saw its hold on the lower house of Congress weakened.  The latest census showed there are roughly 3 million more women than men among Mexico’s population of 126 million.

Some of the northern border states such as Baja California and Chihuahua will be governed by women if results are confirmed.

But this election cycle was dominated by sickening violence, with 96 politicians and officials killed.

Myanmar: Authorities have opened new corruption cases against deposed leader Aung San Suu Kyi accusing her of abusing her authority and accepting bribes, state media reported on Thursday, allegations her chief lawyer said were “absurd.”

The cases are the latest of a series brought against the elected leader Suu Kyi, whose overthrow in a Feb. 1 coup has plunged Myanmar into chaos.  Anti-junta militias reportedly killed 37 soldiers in an attack Thursday on a border area.

Fighting in northeast and northwest Myanmar has forced more than 100,000 people to flee, according to the United Nations.

Random Musings

--Presidential approval ratings….

Gallup: 54% approve of Biden’s job performance, 40% disapprove.  54% of independents approve (May 3-18…new poll due out next week, I imagine).

Rasmussen: No change…49% approve, 49% disapprove.

--The New York mayoralty race is heating up and Thursday’s Democratic debate looked like it wasn’t going to feature the frontrunner.

Brooklyn Borough President Eric Adams said he was skipping it, saying he would instead attend a vigil for 10-year-old Justin Wallace, who was killed in a Queens shooting over the weekend, but then he showed up on the debate stage.

Questions have swirled over Adams’ residency.  He owns an apartment in Fort Lee, New Jersey with his partner, but lists his address as a brownstone he also owns in Bedford-Stuyvesant.

However, Adams invited reporters into his Brooklyn apartment on Wednesday afternoon to prove he does, in fact, live there.

Adams had been blasted by his rivals, such as Andrew Yang and Kathryn Garcia, for dodging tough questions about potentially embarrassing disclosures.  They called for him to release his E-Z Pass records, and that Adams did Thursday as well, though the questions remained.

--We had a primary Tuesday here in New Jersey to select a Republican to run against incumbent Democratic Gov. Phil Murphy, and its former state Assemblyman Jack Ciattarelli who will take him on.

I voted for him, a more traditional Republican, who easily defeated two candidates who ran as fervent Trump supporters, Phil Rizzo and Hirsh Singh, who ended up splitting the Trump vote, so to speak…Rizzo at 26%, Singh at 22%, to Ciattarelli’s near 50%.

But Ciattarelli is trailing Murphy by 26 points, according to a Rutgers-Eagleton poll published this week, with 52% of New Jersey voters not knowing who Ciattarelli is.

I’ve met him.  Funny guy.  He has my vote in November, but Murphy will cruise, especially with the timing of the state’s reopening.

Having said that, Murphy’s job approval rating has been falling, from 77% in May 2020, at the height of our Covid crisis, to 55% today, though he was at 52% in April 2019.

--A federal judge last Friday overturned California’s three-decade-old ban on assault weapons, ruling that it violates the constitutional right to bear arms.

U.S. District Judge Roger Benitez of San Diego ruled that the state’s definition of illegal military-style rifles unlawfully deprives law-abiding Californians of weapons commonly allowed in most other states and by the U.S. Supreme Court.

“Under no level of heightened scrutiny can the law survive,” Benitez said.  He issued a permanent injunction against enforcement of the law but stayed it for 30 days to give state Atty. Gen. Rob Bonta time to appeal.

Bonta promised an appeal in a statement Friday night, calling the ruling “fundamentally flawed” and noting that the judge’s decision to delay implementation means that the state’s existing laws “remain in full force and effect.”

Gov. Gavin Newsom condemned the decision, calling it “a direct threat to public safety and the lives of innocent Californians, period.”

In his 94-page ruling, the judge spoke favorably of modern weapons and said they were overwhelmingly used for legal reasons.

“Like the Swiss Army knife, the popular AR-15 rifle is a perfect combination of home defense weapon and homeland defense equipment. Good for both home and battle,” the judge said.

That comparison “completely undermines the credibility of this decision and is a slap in the face to the families who’ve lost loved ones to this weapon,” Newsom said in a statement. 

--Peggy Noonan / Wall Street Journal

“Here is an attempt to get at some of what’s behind conspiracism, the rising belief in a promotion of political conspiracy theories.  In recent years those theories have been heavily associated with QAnon; that a cabal of child sexual abusers running a world-wide trafficking ring has been a major force in opposing Donald Trump; that ‘the storm,’ the day the cabal is exposed and jailed, is coming.  In the past year, it includes the charge the presidential election was stolen through state-by-state fraud.  In the past week there is increasing talk of the coming ‘reinstatement,’ in which proof of election fraud is revealed through state audits, previously reported results are overturned, and Donald Trump is inaugurated again.

“Belief in these things is growing.  An online poll this week from Ipsos reported 15% of Americans agree that the government, media and financial worlds are controlled by Satan-worshiping pedophiles.  Not 15% of Republicans or conservatives, but of Americans.  That’s a lot. Twenty percent believe in ‘the storm.’ Axios last weekend quoted Russell Moore, the evangelical theologian, saying he talks every day to pastors of virtually every denomination ‘who are exhausted by these theories blowing through their churches.’….

“Church affiliation and practice have been falling for decades, but people always have a spiritual hole inside, and if God can’t fill it, Q will do.  The unrealized and unhappy are always in search of a cause to distract themselves from the problems of their lives.  And we like to be divided, too.  We like to be in a fight – ‘Albion’s Seed’ – and on a side….

“Conspiracism is of course fueled and powered by the great engine of this still-new thing in human history, the internet.  We are so used to saying, ‘The internet changed everything’ that we have forgotten it changed everything.  American politics has always been full of spleen and madness, and the pamphlets and newspapers of George Washington’s era were full of conspiracy.  (John Adams was a secret monarchist, Washington a doddering egomaniac with ‘a sick mind.’)  But the pamphlets could go only so far and reach so many.  In a nation of farmers only so many people had time to incorporate wild talk into their worldview.

“The internet is a great thing with great virtues, but it is helping break up America. This is a problem that can’t be solved, only managed.  Good people should be thinking about how to do that.

“Conspiracism isn’t going away. It will only grow and become damaging in ways we aren’t quite imagining.”

--Editorial / Washington Post

“Melting land-based ice, huge quantities of which comprise the ice sheets on Antarctica and Greenland, threatens to raise global sea levels over time, as water stockpiled on land flows into the sea. Recent research suggests this process is happening at an alarming rate and may threaten human society sooner than previously thought.  By contrast, sea-based ice, like that which covers Arctic areas such as the North Pole, already contributes to the volume of the oceans, because it floats in the water like ice cubes in a cup. But the thinning of sea ice in coastal Arctic regions is an ominous sign for other reasons.

“ ‘The thickness of sea ice is a sensitive indicator of the health of the Arctic,’ said Robbie Mallett, one of the University College London researchers behind the new study.  ‘It is important as thicker ice acts as an insulating blanket, stopping the ocean from warming up the atmosphere in winter, and protecting the ocean from the sunshine in summer.’  That second point is key: Thick sea ice reflects sunlight away from the planet and allows less solar radiation to reach the water underneath; losing lots of it means more heat gets trapped there.  This is just one of many climate ‘feedbacks’ in which warming induces effects that result in faster warming.

“It turns out that warming can also scramble scientists’ efforts to measure how the planet is changing.  Scientists’ previous estimates of Arctic sea ice relied on satellite measurements combined with estimates of how much snow accumulated on top of the ice.  The more weight on top of the ice, the more ice sinks below the surface.  But the snow estimates are two decades old, and global warming has changed the picture over that period.  ‘Because sea ice has begun forming later and later in the year, the snow on top has less time to accumulate,’ Mr. Mallett explained.  ‘Our calculations account for this declining snow depth for the first time, and suggest the sea ice is thinning faster than we thought.’

“The British team’s new calculations indicate that Arctic ice is thinning 70 to 100 percent faster – that is, at roughly double the rate – than previously thought.  This finding is just another in a long string of warnings from scientists that many of global warming’s predicted effects may be occurring faster or in a more severe manner than anticipated.

“Climate doubters often point to experts’ uncertainty about how bad climate change and its consequences could be, arguing that inaction might not be as irresponsible as scientists claim.  But uncertainty works in both directions; global warming could be tamer than predicted – or far worse.  Too many recent measurements have suggested that the consequences might land on the ‘far worse’ side of the spectrum.  The uncertainty should not comfort people – it should spur everyone to action.”

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

Thank you to the first responders and healthcare workers.

God bless America.

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Gold $1879
Oil $70.78

Returns for the week 6/7-6/11

Dow Jones  -0.8%  [34479]
S&P 500  +0.4%  [4247]
S&P MidCap  +0.9%
Russell 2000  +2.2%
Nasdaq  +1.9%  [14069]

Returns for the period 1/1/21-6/11/21

Dow Jones  +12.7%
S&P 500  +13.1%
S&P MidCap  +19.3%
Russell 2000  +18.3%
Nasdaq  +9.2%

Bulls  54.5
Bears  16.2

Hang in there.  Get vaccinated.

Brian Trumbore

 

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