Week in Review

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Week in Review

07/10/2021

For the week 7/5-7/9

[Posted 9:30 PM ET, Friday]

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Edition 1,160

The opening ceremonies for the Tokyo Olympics are two weeks from today and this week Japan announced it will bar spectators from all events held in and around Tokyo, as the government imposed a fresh state of emergency to cover the capital during the Games.

Prime Minister Yoshihide Suga announced that Tokyo’s fourth state of emergency would begin July 12 and last until Aug. 22, citing rising infections in the capital and the spread of the highly contagious Delta variant.  He asked bars and restaurants not to serve alcohol during that period – although the city’s streets are likely to remain packed in the daytime, as they have been during previous states of emergency.

Olympic organizers had announced two weeks earlier that some domestic spectators would be able to attend events, capping attendance at 10,000 or 50 percent of a venue’s capacity, but warned at the time this could change if infections rose again…which is what happened.

So Tokyo’s newly rebuilt 68,000-capacity National Stadium will be empty throughout the Games, symbolizing the vast sums of money invested in these Olympics with little reward for the people of Japan or the country’s economy.

The stadium cost around $1.4 billion to rebuild, according to official figures.  The total cost of the Games was officially estimated at $15.4 billion, but government audits suggest it could be twice as high.  All but $6.7 billion is public money, with the International Olympic Committee contributing only about $1.5 billion.

The pace of vaccinations in Japan has at least picked up substantially, with around 20 percent of the country now fully vaccinated.

So Tokyo 2020, as the Games are still being branded, is going to be a made-for-TV affair.

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President Biden gave his most extensive comments yet on the pullout of U.S. troops from Afghanistan and he said, “there’s no mission accomplished,” as he insisted “the mission hasn’t failed – yet.”

“The Taliban is at its strongest militarily since 2001,” Biden said, then added, “The likelihood there’s going to be the Taliban overrunning everything and owning the whole country is highly unlikely.”

I did not agree at all with this decision, going back to President Trump starting the process, and I think it’s going to be a total disaster.  Biden can improve his standing in history, however, if he successfully gets the bulk of the interpreters out as promised.

My point is Donald Trump did Americans a huge disservice in constantly talking about “endless wars” during his four years in office.  What endless wars?

As the Wall Street Journal’s Gerald Seib put it this week, a few days before Biden’s presentation: “The U.S. military hasn’t suffered a fatality in Afghanistan since February 2020 – that is, for 16 months. So the tangible costs of staying in the country, at the reduced troop levels that had become the new normal, would have been relatively low.

“Meantime, the intangible risks of leaving, on humanitarian as well as strategic grounds, are relatively high….

“The departure impulse is bipartisan.  Former President Donald Trump announced while he was still in office that all forces would be gone this year; Mr. Biden is following through.

“This is happening even though the American presence has been reduced to a few thousand troops, largely operating in non-combat situations. They weren’t ‘winning’ the struggle against Taliban extremists, but they were creating some semblance of stability and keeping the Taliban and its version of anti-Western Islamism out of power.

“Juxtaposed against that picture are the very visible risks of departure.  Those risks start with the high likelihood of an eventual collapse of a pro-American government and its Afghan army, and a Taliban takeover.  That could open the door for Afghanistan to again serve as a safe haven and operations center for Islamic extremists, including al-Qaeda and Islamic State, still intent on harming the U.S.”

And it’s sickening that the significant gains made by Afghan women will no doubt be rolled back.

And American bases provided a platform for intelligence gathering, including to keep a watch on Iran.  No longer.

As Seib concludes: “In any case, America is in an America-first mood right now.

“So, having learned the cost of going into Afghanistan, Americans now will learn the cost of leaving.  And there will be one.”

More on the topic below.

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Biden Agenda

--Faced with a steep decline in vaccination rates, President Biden said on Tuesday that his administration would send people door to door, set up clinics at workplaces and urge employers to offer paid time off as part of a renewed push to reach tens of millions of unvaccinated Americans.

But many say the president needs to take the potentially unpopular (and politically explosive) step of encouraging states, employers and colleges and universities to require vaccinations to slow the spread of the coronavirus.

Thus far, however, Biden has doubled down on coaxing people to get vaccinated, the effectiveness of which has reached its limit.

And political strategists on both sides increasingly see the pandemic – the issue that propelled Biden into the White House and has won him high marks from Americans early in his presidency* – is starting to fade as the dominant issue.  Increasingly, talk is turning away from Covid and toward polarizing topics such as crime, immigration and border security, with next year’s midterm elections less than 16 months away.  Biden does not poll well on them either.

*A new Washington Post-ABC News poll shows 62% approve of Biden’s handling of the pandemic, 31% disapprove.

But on immigration, the same Post-ABC News poll shows only 33% of Americans approve of how Biden is handling the border issue, 51% disapprove (16% no opinion).

And on crime, 59% believe it is an “extremely” or “very” serious problem in the U.S.  And only 38% approve of Biden’s handling of this, while 48% disapprove, with 14% having no opinion.

--Today, Biden signed an executive order taking aim at industries where companies dominate the market.  The effort contains 72 initiatives challenging the business practices of America’s enormous technology, healthcare, agricultural and manufacturing firms while also aiming to shake up smaller sectors dominated by only a handful of companies, such as the hearing aid industry.

“The heart of American capitalism is a simple idea: open and fair competition,” Biden said in remarks before signing the order.  “Competition keeps the economy moving and keeps it growing.  Fair competition is why capitalism has been the world’s greatest force for prosperity and growth.”

But the courts have shown skepticism about competition arguments and just the other week, a federal court threw out antitrust cases brought against Facebook by the Federal Trade Commission and state attorneys general.

The order does not itself put policies into effect, rather, it directs federal agencies to begin work on their own rules, which requires a comment period, so nothing imminent.

--Editorial / Washington Post

“ ‘Are they going to act?’ President Biden asked after his meeting with President Vladimir Putin in Geneva about whether the Russian government would finally crack down on ransomware gangs.  His answer to his own question: ‘We’ll find out.’  Now we have.

“A massive attack by hacking group REvil struck up to 1,500 businesses in the United States, Europe and Asia late last week – reportedly the single largest such salvo in history, and only the latest in a series of encroachments by collectives based in or otherwise linked to Russia. Thankfully, the breach of IT software firm Kaseya appears to have caused less damage and disruption to critical industry than the recent compromises this spring of food processor JBS and oil transport network Colonial Pipeline.  But that the incursion occurred at all is a troubling sign that Mr. Putin has not heeded Mr. Biden’s exhortation to stop the cybercriminals who currently operate in his country from wreaking havoc worldwide.

“The White House is sprinting toward a strategy on ransomware, the malicious software that takes a target’s systems and information captive until a sum has been paid – with the captors sometimes also threatening to release any sensitive data unless their demands are met.  Such a strategy is surely necessary: It should include dissuading ransom payments, regulating cryptocurrency exchanges to extend know-your-customer and anti-money laundering requirements, and mandating minimum security standards along with other best practices for beefing up defenses.  But the Kaseya breach is a dispiriting reminder that companies can never perfectly protect themselves.  The firm was aware of the vulnerability that hackers exploited, and working to patch it; the problem was the hackers got there first.

“Defense, in other words, isn’t enough.  Offense is necessary, too.  And the most effective offense could come from Mr. Putin if he had any interest in running a play.  Many cybercriminals located in Russia collaborate directly with the regime and its security services.  Others operate in accordance with what they believe to be official wishes, knowing that’s a near-guarantee against punishment. The Kremlin is very effective in enforcing the law, or its version of the law, when it wants to be: Just ask jailed opposition leader Alexei Navalny. Does anyone really believe this same institution is incapable of doing anything at all about even the most prolific and prominent hackers within its borders?

“Mr. Biden shouldn’t believe it. Mr. Putin won’t act in the absence of credible consequences for inaction, and now it’s on the White House to make clear what those consequences could be….

“The consequences must also include the aggressive disruption of these gangs where they are: in Russia, on its internet, throughout the cyberspace over which it claims sovereignty – and where Mr. Putin would likely prefer U.S. authorities not prowl. The least acceptable answer is to wait longer to ‘find out’ what everyone already knows.”

Today, President Biden called Vladimir Putin and pressed him to take action to disrupt groups conducting ransomware attacks from Russia, according to a White House statement on the call.

Separately, the U.S. and Russia did reach an agreement on keeping a key border crossing between Turkey and rebel-held northwest Syria open for humanitarian aid to get through to Syrian refugees.

The Pandemic

Hospitalizations related to Covid-19 are rising in the U.S. after a long decline, federal data showed, providing evidence of the human toll the Delta variant is taking on unvaccinated Americans.

Just under 2,000 new patients were admitted to hospitals each day over the week ending July 5, a 6.8% increase over admissions during the previous week and an 88% decrease over a seven-day average of 16,492 patients admitted daily in early January, according to data collected by the Centers for Disease Control and Prevention.

New cases are up too, to a seven-day daily average of 13,859 on July 6, about an 11% increase over the previous seven-day average, CDC Director Rochelle Walensky said Thursday at a White House briefing.

Two pictures have emerged, Dr. Walensky said: one where vaccination rates are high, and new cases, hospitalizations and deaths are declining; and another where most people aren’t vaccinated, new cases are rising once again, and hospitals are starting to fill up.

“These numbers and what we are seeing across the country reveal two truths about the current state of the pandemic,” she said.

“We are seeing that communities and counties that have high vaccine coverage and low case rates are getting back to normal,” she said.  Of areas with low vaccination coverage, “We are starting to see some new and concerning trends.”

So, with the above in mind, in my own community of Summit, N.J., I saw recently where 82% of those eligible here were fully vaccinated, a super percentage, and I have no issue not wearing a mask.  But in going to the grocery store yesterday, I was surprised that there seemed to be a tick up in mask wearing, which clearly has to do with the stories surrounding the Delta variant.  If cases start trending higher in my state, I may opt to put a mask back on in certain establishments.

But as for children, a number of studies are showing that they are at extremely slim risk of dying from Covid-19.

Some 99.995% of the 469,982 children in England who were infected during the year examined by researchers survived, one study found.  Other studies came up with similar findings in the U.K., which is as good a test tube as there is.

But as I’ve noted for weeks now, and repeat in my opening, it’s the politics that could get explosive all over again with regards to Delta and rising numbers, weighed against the actual risks, as well as the vaccinated vs. unvaccinated debate.

Which will impact just how open our schools are this fall.  The CDC said today it is relaxing its Covid-19 guidelines.  Vaccinated teachers and students don’t need to wear masks inside school buildings, but children under age 12 aren’t eligible for the shots yet, and not many 12- to 18-year-olds are vaccinated, so there are going to be problems.  How are teachers supposed to keep track of which kids should have masks on?

The CDC’s guidelines on ‘spacing’ are also not exactly clear. 

But the biggest question will be at middle schools where some students are eligible for shots and others aren’t.  Administrators might just choose to keep a masking policy in place for everyone.

Whatever happens, the kids need to be in school, one way or another.

Covid-19 death tolls, as of tonight….

World…4,034,726
USA…622,698
Brazil…531,777
India…407,173
Mexico…234,458
Peru…193,909
Russia…141,501
UK…128,365
Italy…127,756
Colombia…111,731
France…111,302
Argentina…98,148
Germany…91,740
Iran…85,543
Spain…81,003
Poland…75,152
Indonesia…64,631
South Africa…63,873
Ukraine…52,572
Turkey…50,155
Romania…34,197
Chile…33,636
Czechia…30,331
Hungary…30,004
Canada…26,419
Philippines…25,720
Belgium…25,196
Pakistan…22,520
Ecuador…21,803

Source: worldometers.info

U.S. daily death tolls…Sun. 43; Mon. 81; Tues. 222; Wed. 267; Thurs. 261; Fri. 363.

Covid Bytes

--Tuesday, Indonesia recorded 31,189 new cases of Covid-19 and 728 new deaths, both records.  Wednesday, the nation registered 1,040 deaths!  The last two days have been 850 and 870.  This is staggering.  The government has urged its regions to act fast and put in place severe restrictions, including having malls and restaurants close by 5 p.m.  In many cities, stocks of portable oxygen have run dry.

Russia has been reporting record death counts almost daily.  So far just 16% of Russians have been vaccinated.

South Africa is reporting record case figures, with deaths at a level not seen since January.

Infections are surging overall across the African continent, up 20 percent in the week that ended July 4 over the prior week.

Malaysia is spiking to new case and death highs, ditto Bangladesh.

[Bangladesh suffered a different kind of tragedy today, another industrial fire, this one killing over 50 at a juice-making factory.  One of the doors leading from the stairs to the roof was locked.]

--Pfizer is to seek U.S. authorization for a third dose of its Covid-19 vaccine, saying that another shot within 12 months could dramatically boost immunity and maybe help ward off the latest variant.

Research from multiple countries shows the Pfizer shot and other widely used vaccines offer strong protection against the highly contagious Delta variant.  And two does of most vaccines are critical to develop high levels of virus-fighting antibodies against all versions of the coronavirus, not just the Delta variant.

But antibodies naturally wane over time, so studies are also under way to tell if and when boosters might be needed.

Pfizer’s Dr. Mikael Dolsten said Thursday that early data from the company’s booster study suggests people’s antibody levels jump five to 10-fold after a third dose, compared to their second dose months earlier.

In August, Pfizer plans to ask the Food and Drug Administration for emergency authorization of a third dose, he said.

But the FDA and CDC immediately said that Americans who are fully vaccinated do not need a booster shot at this time.  Just another, unnecessary, confusing moment in the pandemic.

--In a study out of Chile, Sinovac Biotech Ltd.’s vaccine was found to be less potent than Pfizer’s shot at stopping Covid-19 in that country, where the two shots were used simultaneously, the first real-world analysis comparing a China-made inoculation against an mRNA shot.

Researchers found CoronaVac was 66% effective in preventing Covid-19 among fully vaccinated adults, versus 93% for the jab made by Pfizer and its partner BioNTech SE.

Preliminary data released in April found CornaVac was 67% effective in preventing symptomatic Covid-19 infections and warded off 80% of fatalities from the disease.

So CoronaVac does perform at a high level, just not as well as Pfizer or Moderna.

Wall Street and the Economy

In the only major economic news of the week, the ISM June service sector reading came in below expectations, but a still robust 60.1 vs. a prior 64.0 (50 the dividing line between growth and contraction).

The market was spooked a bit by the weekly jobless claims figure, 373,000, up a tick from the prior week and worse than expected.

The Atlanta Fed’s GDPNow barometer for the second quarter is at 7.9%.

The Federal Reserve released minutes from their June meeting this week and officials continued to call a recent rise in inflation “transitory,” even as it made many of them wary and they debated details as they began to draw up a plan for a gradual move in monetary policy away from their current emergency setting.

The June discussion occurred before the recent rise of the Delta variant, which reinforced that coronavirus outbreaks remain a front-and-center risk to the global economy, and also before a recent jump in oil prices.

The minutes revealed a central bank that is optimistic about growth, but increasingly worried price pressures might last for longer than first thought.  The 18 officials at the meeting, called “participants” in the release, said “economic activity was expanding at a historically rapid pace, led by robust gains in consumer spending,” but noted that inflation had risen faster than they had expected as supply bottlenecks, labor shortages and surging consumer demand converged.

Then, today, the Fed released its semiannual report to Congress on the state of the economy, which will be the subject of hearings in Congress next week, including testimony from Chair Jerome Powell.

The report said that shortages of materials and “difficulties in hiring” are holding back the economic recovery from the pandemic and have driven a “transitory” bout of inflation.

“Progress on vaccinations has led to a reopening of the economy and strong economic growth,” the central bank said.  However, “shortages of material inputs and difficulties in hiring have held down activity in a number of industries.”

So this week, yields on U.S. Treasuries reached fresh multi-month lows on Wednesday, with the 10-year yield down to 1.25% on growing concerns about the economic outlook, given Delta and all, and signs that Congress and the Fed might not provide quite as much stimulus as previously anticipated.  But today it was back up to 1.36%, though way off the March 30 high of 1.77%.

Separately, on China, I discuss some of the government’s moves in relation to publicly traded companies down below, but, more broadly, Josh Rogin of the Washington Post had some of the following in his weekly opinion piece.

“This week, Xi Jinping dealt a humiliating blow to Wall Street, crushing a major Chinese tech firm shortly after U.S. investors had handed it billions.  It’s a watershed moment that has even the most die-hard Wall Street China boosters finally admitting that the game has fundamentally changed.  Investing Americans’ futures in Chinese companies is no longer a risk Wall Street can calculate, much less defend.

“On July 2, just two days after Goldman Sachs, JPMorgan Chase and Morgan Stanley launched an initial public offering for the Chinese ride-hailing app Didi on the New York Stock Exchange, Chinese regulators cracked down on the company hard.  Citing data privacy concerns, the Chinese government ordered the removal of Didi’s app from app stores, pending an opaque national security review process.  As a result, the stock has lost 30 percent of its value since shortly after its IPO, when investors, most of them from the United States, put $4.4 billion into the company.  Shamelessly, the Wall Street firms that set up the Didi IPO collected millions of dollars in fees regardless.

“Some Wall Street pundits – perhaps for the first time – realized they had been acting as useful idiots by encouraging Americans to throw money into the Chinese tech firm. CNBC host Jim Cramer said just last week about Didi, ‘I would try to get as many shares as you can… I doubt they’ll have much trouble with the regulators.’

“This week he’s singing a different tune.  ‘You’re a moron if you buy a Chinese deal after this.  You’re a moron.  I don’t care if it pops,’ Cramer said Tuesday.  ‘Why do you need to put your capital at risk after this?’

“Cramer, the new China skeptic, is now echoing the concerns national security types in Washington have been screaming in Wall Street’s direction for the past several years. Chinese companies raising capital in the United States can’t be audited.  And now that Beijing is determined to increase its control over all Chinese industries, these companies can’t credibly claim to be independent from the Chinese government….

“Until now, many in the financial world wanted to believe the Chinese Communist Party was fundamentally pragmatic. They insisted that Beijing would never risk its economic development by killing its Wall Street cash cow, and that investors could always count on rational decision-making and solid returns.  None of that is defensible anymore.  With the Didi move, Xi has put an end to business as usual.”

Josh Rogin didn’t have to remind me about China.   I learned my own painful lesson years ago.

Europe and Asia

The European Commission revised up on Wednesday its estimates for eurozone growth this year and next but warned against risks posed by new variants of the coronavirus that should be contained to avoid new restrictions.  The European Union executive arm also expected higher inflation this year for the 19-nation currency bloc than it had previously forecast but estimated price growth will slow next year.

The EC predicted the euro region will grow by 4.8% this year, much faster than a previous forecast of 4.3%, largely due to the reopening of the bloc’s national economies in the second quarter, which benefited the services sector and is expected to boost tourism within the EU, the Commission said.

Next year the eurozone is forecast to grow by 4.5%.

Specifically for 2021, the EC sees France expanding by 6.0%, Italy by 5.0% and Germany by 3.6%.  Next year growth will accelerate to 4.6% in Germany and is expected to remain strong at 4.2% in both France and Italy.

Inflation is expected to reach 1.9% this year, slowing to 1.4% in 2022, but this is all dependent on whether supply constraints persist.

We also had the final eurozone PMI figures for June, courtesy of IHS Markit, with the composite at 59.5 vs. May’s 57.1.  The services reading was 58.3 vs. 55.2.

The June non-manufacturing readings:

Germany 57.5, up from 52.8
France 57.8
Italy 56.7
Spain 62.5…highest since 2000
Ireland 63.1

U.K. 62.4

Chris Williamson / IHS Markit

“Europe’s economic recovery stepped up a gear in June, but inflationary pressures have also ratcheted higher.

“Business is booming in the eurozone’s service sector, with output growing at a rate unsurpassed over the past 15 years.  Added to the impressive growth seen in the manufacturing sector, the PMI surveys suggest the region’s economy is firing on all cylinders as it heads into the summer.

“Service sector growth has picked up across the board among the countries surveyed, with hard-hit sectors such as hospitality and tourism now coming back to life to join the recovery as economies and travel are opened up from virus-related restrictions.

“A wave of optimism that the worst of the pandemic is behind us has meanwhile propelled firms’ expectations of growth to the highest for 21 years, boding well for the upturn to gain further strength in coming months.

“Firms are increasingly struggling to meet surging demand, however, in part due to labor supply shortages, meaning greater pricing power and underscoring how the recent rise in inflationary pressures is by no means confined to the manufacturing sector.  Service sector companies are hiking their prices at the steepest pace for over 20 years as costs spike higher, accompanying a similar jump in manufacturing prices to signal a broad-based increase in inflationary pressures.”

Separately, retail trade rose 4.6% in the euro area for May compared with April, according to Eurostat; up 9.0% year-over-year (May 2020 being the height of Europe’s lockdown).

Brexit: Dodging a disaster, Stellantis (Fiat-Chrysler et al) plans to convert its only British car factory to make electric vans, ending months of anguish at an almost 60-year-old plant threatened by the fallout from Brexit.  Last week Nissan said it is working on a new billion-dollar EV and battery hub in northern England.  Prime Minister Boris Johnson said the two announcements are “a huge vote of confidence in our economy…and in our fantastic post-Brexit trading relationships.”

Well, I wouldn’t go that far.

Meanwhile, Britain will set out its proposals for resolving issues surrounding the implementation of the Northern Ireland protocol within the next two weeks, UK Brexit minister David Frost said the other day.

The North must follow EU customs and food and product safety laws under the protocol, part of the EU-UK Brexit withdrawal agreement that gives the North a special trading status. But Lord Frost said he wanted a permanent solution that would ensure that consumers in the North could continue to access British products without difficulty.

Turning to Asia…China’s private Caixin non-manufacturing reading for June was just 50.3, down from 55.1.  Reduced travel demand, due in part to a small spike in Covid numbers, was cited as a cause.

China’s factory-gate or producer prices rose 8.8% from a year earlier in June after jumping 9.0% in May, the National Bureau of Statistics said. Consumer prices increased 1.1% from a year ago, lower than May’s 1.3%.

Japan’s service sector reading for last month was 48.0. but household spending rose 11.6% in May vs. a year ago, the third month of gains, after a 13.0% rise in April, according to government data.  But spending was down 2.1% over April.

Street Bytes

--Stocks finished a volatile, holiday-shortened week at news highs, again, with the Dow Jones adding 0.2% to 34870, while the S&P 500 and Nasdaq tacked on 0.4% to set new records of their own.

Stocks had tumbled a bit on Thursday after the announcement the Tokyo Olympics would be held without fans due to Covid, adding to fears the global economy may sputter with the spreading Delta variant, but then rebounded strongly today, with the expectation earnings season, which commences next week with the big banks, won’t disappoint.

The S&P hasn’t had a 5% correction based on closing prices since the end of October.  The last time it was this serene was in 2017.

--Investors are pouring money into global equity funds with a fervor never seen before.  About $580bn has been added to the sector in the first half of 2021, putting the category on track for a record inflow, according to data provider EPFR.

Strategists with Bank of America estimate that if the pace of inflows continues at the same clip for the remainder of the year, equity funds will take in more money in 2021 than in the previous 20 years combined.

Equity funds have ploughed those inflows into an ever-rising stock market, with major indices climbing to a series of record highs as the economic recovery from the pandemic gathers steam.

Low bond yields have amplified the appeal of the $117 trillion global stock market.

--U.S. Treasury Yields

6-mo. 0.05%  2-yr. 0.21%  10-yr. 1.36%  30-yr. 1.99%

--OPEC+ ministers called off oil output talks on Monday after clashing last week when the United Arab Emirates rejected a proposed eight-month extension to output curbs, meaning no deal to boost production has been agreed to.  Saudi energy minister Prince Abdulaziz bin Salman had called for “compromise and rationality” to secure a deal after two days of failed discussions last week.  But there was no progress.

OPEC’s Secretary General Mohammad Barkindo said in a statement on Monday the meeting had been cancelled, without a date for the next one being agreed to.

The failure of the talks, which had partly been about an increase in oil output from next month, helped to drive up international crude prices, with some OPEC+ sources saying there would be no oil output increase in August, while others believed there would be a meeting in the coming days and that there would be a boost in production in August.

Oil prices have been at their highest level since 2018 and have already prompted concerns inflation could derail a global recovery from the pandemic.  OPEC+ agreed to record output cuts of almost 10 million barrels per day last year, about 10% of world output, as the pandemic hit.  The curbs have been gradually relaxed and stand at about 5.8 million bpd.

The UAE last Friday accepted a proposal from Saudi Arabia and other OPEC+ members to raise output in stages by about 2 million bpd from August to December but rejected extending remaining cuts to the end of 2022 from a current end data of April without adjusting its current baseline production.  The UAE is upset about the low baseline from which its production cuts are calculated and wants it raised.  Abu Dhabi has invested billions of dollars to increase its production capacity and says its baseline was set too low when OPEC+ originally forged their pact.

--Hackers suspected to be behind a mass extortion attack that affected hundreds of companies worldwide late on Sunday demanded $70 million to restore the data they are holding ransom.

As noted above, the demand was posted on a blog typically used by the REvil cybercrime gang, a Russia-linked group that is counted among the cybercriminal world’s most prolific extortionists.

REvil’s ransomware attack, which the group executed on Friday, was among the most dramatic in a series of increasingly attention-grabbing hacks.

The gang broke into Kaseya, a Miami-based information technology firm, and used their access to breach some of its clients’ clients, setting off a chain reaction that quickly paralyzed the computers of hundreds of firms worldwide.

In at least one case, the disruption spilled out into the public domain when Swedish Coop grocery store chain had to close hundreds of stores on Saturday because its cash registers had been knocked offline as a consequence of the attack.

--As you can see from some of the checkpoint numbers below, airline passengers have been flocking back more quickly than airlines anticipated, though the figures are also a bit more volatile.

Bad weather has caused some of the issues, as is always the case this time of year, but union and industry officials point to staff shortages after too many pilots, mechanics and other workers were let go to cut costs during the pandemic.  A shortage of pilots that existed even before the pandemic, poses long-term challenges.

Southwest and American Airlines, two of the hardest-hit by cancellations and delays last month, took steps to stabilize operations ahead of the July 4 weekend.  Southwest offered flight attendants and ground staff double pay to work extra shifts over the holiday period.  American trimmed back schedules to build in room for recovery from potential hiccups.

Tropical Storm Elsa also forced hundreds of flight cancellations this week.

--TSA checkpoint travel numbers vs. 2019…

7/8…78 percent of 2019 level
7/7…75
7/6…75
7/5…79
7/4…60
7/3…82
7/2…101 …new pandemic high of 2,196,411 travelers
7/1…103

--As alluded to above, China said it would tighten rules for companies listed overseas or seeking to sell shares abroad, moves that could hinder attempts by homegrown firms to raise money in the U.S.

The shift comes as Chinese regulators intensify scrutiny into technology companies, including Didi Global Inc., which listed last week in the U.S.

Wall Street has long been a vehicle for China’s biggest, firms such as Alibaba Group Holding Ltd., to raise money, American investors profiting from their growth.

Now, China’s move toward restricting such listings highlights the diverging visions in Beijing and Washington of the future of technology, data protection and security.  Couple this with widening distrust between the two nations, and both Chinese and American companies are increasingly caught in the middle.

Didi, the ride-hailing giant, had been told by Chinese officials to delay its initial public offering, partly amid concerns that the U.S. government could use audit documents that Didi was required to file as a U.S.-listed company to gain access to data on Chinese citizens.  Didi went ahead with the IPO anyway, which was not a smart move.

Sunday, China’s cyberspace administration ordered smartphone app stores to stop offering Didi’s app after finding that Didi had illegally collected users’ personal data.  Didi responded by saying it had stopped registering new users and would remove its app from app stores.

A notice on Didi’s China app showed it had updated its user information and data privacy policy on June 29, the day before its New York Stock Exchange debut.  Didi didn’t explain why it had updated the policy that particular day.

Editorial / Global Times…a Chinese Communist Party mouthpiece…

“The Cyberspace Administration of China announced on Sunday that it has ordered app stores to remove the country’s most widely used ride-hailing app, Didi Chuxing, due to its serious violations of laws and regulations in the collection and use of personal data.  It also told Didi to rectify its problems.

“The announcement immediately won public support. According to media reports, Didi controls at least 80 percent of China’s ride-hailing market share.  No wonder the public is so concerned about how Didi uses the personal information it has collected over the years.

“The internet era has provided people with all kinds of convenience.  However, personal information security has become fragile.  Whenever a person uses a service, personal data of what they did will be collected and stored. We often face situations that force us to allow our personal information to be used. And we have no choice to refuse.

“The reality is, our personal data, some of which is very private, is incorporated into databases of big companies – and we don’t know whether these companies will jeopardize our security.

“Didi Chuxing is a high-tech internet company and it has played an active role in popularizing the ride-hailing service in China. But at the same time, it controls the most detailed personal travel information among all the big internet companies operating in China….

“When it comes to collecting information, it is hoped that internet giants stick to the principle of minimization rather than capturing everything they can.  Many people suspect that certain internet companies have taken too much personal information.  Commercial use of personal information is a light violation of rights.  If certain information is leaked, it may bring unexpected trouble and impact on some people.

“People do not know how Didi has seriously violated laws and regulations by collecting information. The Chinese government felt it necessary to step in to protect personal information. This boosts public confidence.

“More importantly, the government will not allow internet giants to become rules-makers of data collection and usage.  The standards must be in the hands of the government to ensure that giant companies are restrained when they collect personal data and stick to the principle of minimization.  No internet giant is allowed to become a super data base that has more personal data about the Chinese people than the country does, not to mention using the data at its own will.

“For companies like Didi which have gotten listed in the U.S. market and whose largest and second-largest shareholders are foreign companies, China should more strictly supervise their information security to protect both personal data security and national security. Supervision does not mean restricting development.  Only when risks are excluded, users can feel at ease.  This makes future market space much larger.”

The above is rather rich.

--Facebook, Twitter and Alphabet Inc.’s Google have privately warned the Hong Kong government that they could stop offering their services in the city if authorities proceed with planned changes to data-protection laws that could make them liable for the malicious sharing of individuals’ information online.

A letter sent by an industry group that includes the internet firms said companies are concerned that the planned rules to address doxing could put their staff at risk of criminal investigations or prosecutions related to what the firms’ users post online.  Doxing refers to the practice of putting people’s personal information online so they can be harassed by others.

Hong Kong’s Constitutional and Mainland Affairs Bureau in May proposed amendments to the city’s data-protection laws that it said were needed to combat doxing, a practice that was prevalent during 2019 protests in the city.  The proposals call for punishments of up to 1 million Hong Kong dollars, about $130,000, and up to five years’ imprisonment.

The Wall Street Journal first reviewed a reported June 25 letter from the Singapore-based Asia Internet Coalition.

Tensions have emerged between some of the U.S.’s most powerful firms and Hong Kong authorities as Beijing exerts increasing control over the city and clamps down on political dissent.

--Speaking of Facebook, Twitter et al, former president Trump sued them this week.  In an op-ed for the Wall Street Journal, Trump said in part:

“One of the gravest threats to our democracy today is a powerful group of Big Tech corporations that have teamed up with government to censor the free speech of the American people.  This is not only wrong – it is unconstitutional. To restore free speech for myself and for every American, I am suing Big Tech to stop it.

“Social media has become as central to free speech as town meeting halls, newspapers and television networks were in prior generations. The internet is the new public square.  In recent years, however, Big Tech platforms have become increasingly brazen and shameless in censoring and discriminating against ideas, information and people on social media – banning users, deplatforming organizations, and aggressively blocking the free flow of information on which our democracy depends.

“No longer are Big Tech giants simply removing specific threats of violence.  They are manipulating and controlling the political debate itself.  Consider content that was censored in the past year. Big Tech companies banned users from their platforms for publishing evidence that showed the coronavirus emerged from a Chinese lab, which even the corporate media now admits may be true.  In the middle of a pandemic, Big Tech censored physicians from discussing potential treatments such as hydroxychloroquine, which studies have now shown does work to relieve symptoms of Covid-19.  In the weeks before a presidential election, the platforms banned the New York Post – America’s oldest newspaper – for publishing a story critical of Joe Biden’s family, a story the Biden campaign did not even dispute.

“Perhaps most egregious, in the weeks after the election, Big Tech blocked the social-media accounts of the sitting president.  If they can do it to me, they can do it to you – and believe me, they are….

“Through these lawsuits, I intend to restore free speech for all Americans – Democrats, Republicans and independents.  I will never stop fighting to defend the constitutional rights and sacred liberties of the American people.”

--China’s car sales snapped an 11-month streak of year-over-year growth as demand bolstered by a strong economic recovery collided with a global semiconductor shortage.

Sales of passenger cars in June were down 5.1% from a year earlier to 1.58 million vehicles, the China Passenger Car Association said Thursday.  April-June sales were up 2.3% from the same period last year, when the market began to recover from a nationwide pandemic lockdown.

Much of the decline could be attributed to supply constraints that have emerged in recent months, the association said.  The historic chip shortage has crimped production for auto makers around the world, the CPCA said.

Japanese car makers were among the hardest-hit by the chip shortage last month.  Nissan Motor Co.’s China sales were down 16% in June from a year earlier, while Honda Motor Co.’s were off 17%.  Honda cited component shortages.

Ford said Friday it sold more than 306,700 vehicles in greater China in the first half of 2021, up 24% from the same period a year ago.

Sales of Lincoln brand luxury vehicles rose 111.4%, while sales of Ford brand passenger vehicle sales increased 6%.

The global chip shortage, though, dented sales in Q2 with sales down 3.6% from a year ago, Ford said.

--The Pentagon scuttled its massive cloud-computing contract on Tuesday, opting to restart a process Microsoft won twice rather than be drawn any further into a years-long legal drama with Amazon that had no end in sight.

In canceling and replacing the 10-year, $10 billion contract, the Defense Department will move away from the winner-take-all guidelines that drew protests from such rivals as Oracle and IBM as early as 2018, before the bids were due.  A new contract will be started from scratch, on which both Microsoft and Amazon can bid.

The reversal ends a legal battle over the 2019 contract, with allegations of interference by President Trump.  Amazon alleged that he improperly influenced the outcome to retaliate against founder Jeff Bezos, who also owns the Washington Post.

The move is a significant setback for the Pentagon.  While leading the world in weapons development, surveillance technology and the like, it has lagged the private sector in the computing realm.  Such as missing out on innovations in cloud computing.

“The troops expect to have information at their fingertips, and that information comes through the cloud, so they are missing out on what everyday Americans have access to,” said Arnold Punaro, a retired Marine Corps general and Democratic Senate staffer who now works as an industry consultant.  “We’ve been waiting around because of this bureaucratic procurement process, which in my view was flawed from the outset.”

Then- Secretary of Defense Jim Mattis billed the Joint Enterprise Defense Infrastructure (JEDI) as a way to simplify the Pentagon’s numerous stove-piped information systems and help the U.S. win an artificial-intelligence arms race with China.  So they insisted on giving the contract to just one company.

At the time the awarding of the contract to Microsoft was a surprise, given Amazon’s technological dominance in cloud computing.

--The Biden administration will push regulators to confront consolidation and perceived anticompetitive pricing in the ocean shipping and railroad industries as part of a broad effort to blunt the power of big business to dominate industries, according to the Wall Street Journal.

The administration, in a sweeping executive order, will ask the Federal Maritime Commission and the Surface Transportation Board to combat what it calls a pattern of consolidation and aggressive pricing that has made it onerously expensive for American companies to transport goods to market.

The administration says the relatively small number of major players in the ocean-shipping trade and in the U.S. freight rail business has enabled companies to charge unreasonable fees.

For example, consolidation has given railroads monopoly power over sections of the country where theirs are the only freight tracks, a source told the Journal.

--Samsung Electronics Co. said on Wednesday its second-quarter operating profit likely jumped 53%, beating analysts’ estimates, as strong chip prices and demand lifted earnings.

The world’s largest memory chip and smartphone maker said profit for the quarter ended June 30 was likely $11 billion.  Revenue rose an estimated 19% from the same period a year earlier to about $55 billion, the company said in its preliminary earnings release.

Prices of DRAM chips, widely used in servers, mobile phones and other computing devices, jumped 27% compared with the March quarter, while those of NAND flash chips that serve the data storage market rose 8.6%.

Samsung’s smartphone shipments fell to about 59 million in April-June from about 76 million in the first quarter, according to Shinyoung Investment & Securities, as sales of its flagship model launched in the first quarter slowed.

New Covid-19 outbreaks in regions such as India and Vietnam, as well as constrained supply of mobile processor chips, also hurt smartphone shipments, according to analysts.

--At least three Tesla drivers have died since 2016 in crashes in which Autopilot was engaged and failed to detect obstacles in the road, as reported by the New York Times.  In two instances, the system did not break for tractor-trailers crossing highways.  In the third, it failed to recognize a concrete barrier.  In June the federal traffic safety agency released a list showing that at least 10 people have been killed eight accidents involving Autopilot since 2016.

Autopilot is not an autonomous driving system.  Rather, it is a suite of software, cameras and sensors intended to assist drivers and prevent accidents by taking over many aspects of driving a car – even the changing of lanes.  Tesla executives have claimed that handing off these functions to computers will make driving safer because human drivers are prone to mistakes and distractions, and cause most of the roughly 40,000 traffic fatalities that occur each year in the United States.

--Movies from Comcast Corp.’s Universal Pictures will go to its sister streaming service Peacock after their theatrical and home video releases, ending a longtime pact with HBO, as the company looks to compete with media industry rivals in online video.

Universal said on Tuesday it signed a multiyear deal to distribute films to Peacock “no later than” four months after they’re released in theaters, starting in 2022.  That’s much shorter than the typical six- to nine-month gap between a movie’s debut in multiplexes and when it hits pay TV networks.

--Jeff Bezos stepped away as CEO of Amazon the other day, though he will still be very much involved, one suspects, as executive chairman.

What we do know is he amassed a $199 billion fortune and he’s heading to space shortly.

He has also pledged $10 billion to climate-focused initiatives through the Bezos Earth Fund and gave $2 billion to increase access to education and address homelessness through the Bezos Day One Fund.  But Bezos’ ex-wife, MacKenzie Scott, has overshadowed his charitable efforts with her own.

Foreign Affairs

Iran:  The Biden administration is grappling with the possibility the 2015 nuclear accord with Iran the president promised to revive may soon be beyond saving.  Tehran is reducing the ‘breakout time’ needed to build a bomb.

Hopes for a quick re-entry to the accord that Donald Trump abandoned have faded after six rounds of negotiations in Vienna with the signatories to the deal, with no sign of a seventh.  Iran has been making technological advances and with the election of a new hardline president, Ebrahim Raisi, there are doubts about whether the 2015 agreement would be enough to constrain Iran’s nuclear ambitions.

To wit, on Tuesday, the International Atomic Energy Agency reported that Iran has taken steps to make metal fuel plates with uranium it has enriched to 20% purity. That’s banned by the accord with world powers and marks a significant step toward production of a nuclear bomb.

The Biden administration has been seeking to rejoin the accord and then reach what it calls a “longer and stronger” deal addressing issues such as extending restrictions on Iran’s nuclear program, some of which are set to expire as soon as 2025.  The U.S. also would seek to open negotiations to limit Iran’s ballistic missile program and its support for groups the U.S. considers terrorists. 

But Raisi has made clear that his government, which takes power in August, wants no part of such discussions.

Reentering the JCPOA (Joint Comprehensive Plan of Action) would bring clear benefits for Iran and a relaxation of sanctions that have punished the economy.

But Iran has survived thus far.

And now the question is, if the purpose of the 2015 agreement was to constrain Iran’s program to the point where “breakout” would mean the country would need a year to produce a nuke, now that Iran has greatly reduced the breakout time, is it worth trying to get back into the deal?

State Department spokesman Ned Price said the “breakout” time has shrunk to “perhaps a few months.”

“We are conscious that as time proceeds Iran’s nuclear advances will have a bearing on the view of returning to the JCPOA,” Price told reporters Tuesday.  “One of the chief advantages of the JCPOA was the elongation of the breakout time. If those advantages start to disappear, we’ll have to reassess where we are in this process.”

Afghanistan, part II: As noted above, President Biden strongly defended his decision to pull U.S. troops out of Afghanistan, saying the Afghan people must decide their own future and that he would not consign another generation of Americans to the 20-year war.  Speaking in the White House East Room, Biden said the Afghan military has the ability to repel the Taliban, denying reports that U.S. intelligence had forecast a collapse of the U.S.-backed government in Kabul in six months amid warnings of a civil war.  Biden set a target date of Aug. 31 for the final withdrawal of U.S. forces, minus about 650 troops to provide security for the U.S. embassy in Kabul, while saying thousands of Afghan interpreters will be moved to safety.

A long-time skeptic of the 20-year military presence in Afghanistan, Biden said the United States had long ago achieved its original rationale for invading the country in 2001: to root out al-Qaeda militants and prevent another attack on American soil like the one launched on Sept. 11, 2001.

But while the architect of 9/11, Osama bin Laden, was killed in 2011, Biden was careful Thursday not to declare victory, saying “there’s no mission accomplished.”

“We achieved those objectives, that’s why we went.  We did not go to Afghanistan to nation build. And it’s the right and the responsibility of the Afghan people alone to decide their future and how they want to run their country,” he said.

According to an Ipsos poll from April, a majority of Americans support Biden’s decision to move troops out of Afghanistan, but only 28% of adults agreed that the U.S. accomplished its goals in the country, and 43% said the U.S. withdrawal now helps al-Qaeda.

Addressing critics of his decision directly, Biden asked; “How many thousands more Americans, daughters and sons, were you willing to risk?  How long would you have them stay?”

The president then answered his own question: “I will not send another generation of Americans to war in Afghanistan with no reasonable expectation of achieving a different outcome,” he said.

Biden said the Afghan government should seek a deal with the Taliban to allow them to coexist peacefully.

“The likelihood there’s going to be one unified government in Afghanistan controlling the whole country is highly unlikely,” he said.

As for the thousands of interpreters and plans to move them out of the country in August, the Pentagon has said it is looking at a range of options.

The United States abandoned Bagram air base last weekend, and not exactly in the most professional manner, when you look at some of the reporting out of the region, such as by NBC’s Richard Engel.  Looters made off with much of the supplies meant for Afghan troops.

And in the last week, the Taliban have overrun areas bordering five countries – Iran, Tajikistan, Turkmenistan, China and Pakistan. 

There were reports more than 1,000 Afghan security personnel fled across the border into Tajikistan, an example of the rapidly deteriorating situation.

The commander of U.S. troops in Afghanistan, General Austin Miller, warned last week that the country may be headed toward a civil war.  But Biden said Afghan troops far outnumber the Taliban, 300,000 to 75,000, and that a Taliban takeover can be stopped.  “It’s not inevitable,” he said.  And he added, there was no comparison with the hasty American withdrawal from Saigon in the 1970s.

“There’s going to be no circumstance where you’re going to see people being lifted off the roof of an embassy (of the) United States from Afghanistan. It is not at all comparable.”

Rep. Michael McCaul (Texas), ranking Republican on the House Foreign Affairs Committee, said Biden had “only offered more empty promises and no detailed plan of action… The time for platitudes and casting blame is over.  The American people deserve answers and concrete solutions, not false hope.”

The U.S. intelligence community believes the Afghan military is weak and that the Kabul government’s chances of survival are not good.  But President Biden denied the U.S. intel community forecast a collapse of the Kabul government in six months.

Sen. Lindsey Graham (R-S.C.) said, “President Biden does not understand conditions are developing in Afghanistan for a reemergence of al-Qaeda and ISIS which will directly threaten the American homeland and our allies.  Get ready for major upheaval as this decision by President Biden is a disaster in the making.”

Sen. Jeanne Shaheen (D-N.H.) called on the administration to put in place a clear plan to advance the rights of women in the country and protect translators and other allies of the U.S. in Afghanistan.

What we do know is that Joe Biden will ‘own’ whatever transpires from here on.

China:  It seems clear what U.S. policy towards Taiwan is, after comments by White House Indo-Pacific coordinator Kurt Campbell on Tuesday.  ‘We’ll help you defend yourself, but overall, you’re on your own and you better not declare ‘independence.’’

Campbell’s remarks, at an event hosted by the Asia Society, were intended to send a signal both to Beijing and Taipei that the Biden administration did not wish to cross a major red line, analysts conclude.

Beijing, which claims Taiwan as part of its own territory, has repeatedly warned that a declaration of independence would lead to war.

Campbell said the U.S. supports a strong unofficial relationship, but not independence, which comes after last week’s comments by President Xi Jinping, at his speech marking the Communist Party’s centenary, that any attempts to block the “complete reunification” of Taiwan and the mainland would be crushed.

Analysts said recent developments – including growing hints that Japan and other U.S. allies would support Taiwan, Washington’s growing closeness to Taipei and Xi’s threats – had all helped fuel tensions in the region.

On Monday, Japan’s Deputy Prime Minister Taro Aso said a Chinese attack on Taiwan could be seen as an existential threat, which would allow Japan to join the U.S. in defending the island, a claim he later walked back after it triggered a furious response from Beijing.

In response, Pentagon press secretary John Kirby said U.S.-Taiwan policy remained unchanged as Washington – which switched diplomatic recognition to Beijing from Taipei in 1979 – would continue to “observe the one-China policy.”

As for Hong Kong, President Xi has made clear that while Beijing would respect Hong Kong’s semi-autonomous status, the central government enjoyed full authority over its affairs.

Which means it is not even semi-autonomous.

Haiti: What a bizarre week here.  As many as 26 suspects in the assassination of Haiti’s president, Jovenel Moise, at his home before dawn Wednesday, have been rounded up, which at least two believed to hold dual U.S.-Haitian citizenship while Colombia’s government says at least six are former members of its army.  The majority of those rounded up were from Colombia.  It’s in dispute how many suspects were also killed in an operation by Haitian security forces. The motivation of the killers remains unclear.

Some of the suspects had tried to break into the Taiwanese embassy.

So now there are two competing prime ministers who claim the right to run the country.

Haiti’s interim prime minister, Claude Joseph, says he has taken command of the police and the army, declaring a “state of siege” that puts the country under martial law.  But many legislators don’t believe he has the authority to impose it, which was challenged by a rival.

President Moise just two days before his death had appointed a new prime minister, Ariel Henry, a neurosurgeon who was supposed to take up the role this week.

For good reason, the citizens have no idea what is happening.  U.S. officials quickly sided with the interim prime minister, Joseph, even though he was supposed to be replaced this week, since he was the “incumbent” at the time of the assassination.  But the State Department said it had also been in touch with Henry.

Random Musings

--Presidential approval ratings….

The above-mentioned new Washington Post-ABC News poll had President Biden’s job approval at 50%, 42% disapproval, essentially unchanged from April’s survey.  Among independents, 45% approve, 43% disapprove, not particularly good for the president.

Gallup: 56% approve of Biden’s performance, 42% disapprove; 55% of independents approve (June 1-18…new survey due out soon).

Rasmussen: 49% approve, 49% disapprove (July 9).

--Eric Adams declared victory in New York City’s Democratic mayoral race Tuesday after holding on to a thin lead in a pivotal ballot update, putting him on track to become just the second Black mayor in Big Apple history after running a centrist campaign focused on fighting crime and appealing to blue-collar voters.

Adams, Brooklyn’s current borough president and a retired NYPD captain, led former sanitation commissioner Kathryn Garcia by just 8,426 ballots – or 1% of the total (50.5% to 49.5%) – after more than 120,000 absentee votes were added to the Board of Elections’ unofficial tally of ranked-choice results.

Garcia and third-place finisher Maya Wiley both conceded shortly after.

“The results are clear: an historic, diverse, five-borough coalition led by working-class New Yorkers has led us to victory in the Democratic primary for mayor of New York City,” Adams said in a statement.  “Now we must focus on winning in November so that we can deliver on the promise of this great city for those who are struggling, who are underserved, and who are committed to a safe, fair, affordable future for all New Yorkers.”

Adams will now face long-shot Republican mayoral candidate Curtis Sliwa in the November general election.  Adams will win in a landslide in deep-blue New York.

--Separately, New York Gov. Andrew Cuomo declared a new state of emergency around gun violence and committed almost $139 million to reverse the trend of rising shootings and murders across the state.

The emergency disaster declaration, which the governor said was the first by a state to address gun violence, would allow New York officials to quickly coordinate resources and provide funding for community-led efforts to prevent and respond to shootings.

The governor called gun violence a civil rights injustice that overwhelmingly affects poor, black and Latino communities, whose youth are three to 10 times as likely as whites to be victims of gun violence, he said.  But the governor said the issue is urgent for all New Yorkers because the state cannot rebound from the pandemic without addressing it.

“It is a matter of saving lives, and New York’s future depends on it,” Cuomo said at a news conference at John Jay College of Criminal Justice in Manhattan.  “People are not coming back to this city, they’re not coming back to any city, until they know they are safe.”

While gun violence is usually the province of local police and elected officials, Cuomo said the state had to step in to address violence that is now taking a greater toll than the Coronavirus.

In New York City, the police recorded more than 1,500 shootings in 2020, almost twice as many as 2019, and the violence so far this year is at its highest level since the early 2000s.

--A new book by Wall Street Journal reporter Michael Bender, “Frankly, We Did Win This Election,” alleges that former president Trump frustrated four-star general and then-White House chief of staff John Kelly by praising Adolf Hitler.

The Guardian, which obtained an early copy of the book, writes that during a 2018 trip to Europe, Trump told Kelly, “Well, Hitler did a lot of good things.”

A “stunned” Kelly reportedly pushed back by offering Trump an abbreviated history lesson and assuring him that despite whatever short term economic growth Germany may have seen under the rule of its far-right, anti-immigrant, nationalist leader, the country would have been better off without all of the death Hitler left in his wake.

“You cannot ever say anything supportive of Adolf Hitler,” Kelly allegedly said.  “You just can’t.”

According to Bender’s book, Trump was “undeterred” by Kelly’s position. A Trump spokesperson calls the allegation “totally false.”

--Last Saturday at a rally in Sarasota, Fla., Donald Trump lashed out at Manhattan prosecutors for indicting his organization and its chief financial officer, Allen Weisselberg, for tax fraud, calling it “prosecutorial misconduct” in his most extensive comments on the charges since they were unsealed.

But as he criticized the investigation, he stupidly appeared to acknowledge the very tax schemes while questioning whether the alleged violations were in fact crimes.

“They go after good, hard-working people for not paying taxes on a company car,” he said.  “You didn’t pay tax on the car or a company apartment.  You used an apartment because you need an apartment because you have to travel too far where your house is.  You didn’t pay tax. Or education for your grandchildren. I don’t even know. Do you have to? Does anybody know the answer to that stuff?”

Weisselberg, according to the Manhattan DA’s office, evaded taxes on $1.7 million in fringe benefits, which included the Trump Organization paying his rent, leasing him cars and other gifts.

Trump said prosecutors were politically motivated and the investigation came at the expense of focusing on violent crimes.

“For murder and for selling massive amounts of the worst drugs in the world that kill people left and right, that’s okay,” he said.  “Think of it, think of how unfair it is.  Never before has New York City and their prosecutors or perhaps any prosecutors criminally charged a company or a person for fringe benefits.  Fringe benefits.  Murders, okay.  Human trafficking, no problem – but fringe benefits, you can’t do that.”

“Every abuse and attack they throw my way, it’s only because I have been fighting for you against the corrupt establishment,” he said.  “That’s all it is.”

Prosecutors argued that the business practices were not “standard practice.”

Florida Gov. Ron DeSantis, who by one poll is garnering more support than Trump for the Republican presidential nomination in 2024, had urged Trump not to hold the rally in Sarasota as the state dealt with the collapse of the condo tower in Surfside, Florida.

A spokeswoman for Trump, Liz Harrington, said the rally was “three-and-a-half hours away, approximately the same distance from Boston to New York, and will not impact any of the recovery efforts.”

You may be surprised to hear me say this, but I think DeSantis is playing his cards right thus far and I would like nothing more than to have him push Trump aside…body check him into the boards, befitting Tampa Bay’s second consecutive Stanley Cup title this week.

--The White House is defending the indefensible…that being Hunter Biden and an art show at a New York gallery this fall that is expected to see his works fetch $75,000 to $500,000.  Press Secretary Jen Psaki said “reasonable safeguards” had been applied. 

As part of the arrangement, the buyers are supposed to remain anonymous to Hunter Biden – who is a self-taught artist – in order to prevent influence-peddlers seeking to curry favor with the president.

But Walter Schaub, who served as ethics chief under President Obama, rejected the White House’s claim that the arrangement would ensure transparency.

Schaub, an outspoken critic of former President Trump, wrote on Twitter: “So instead of disclosing who is paying outrageous sums for Hunter Biden’s artwork so that we could monitor whether the purchasers are gaining access to government, the [White House] tried to make sure we will never know who they are.

“That’s very disappointing.”

--Pope Francis underwent colon surgery in Rome on Sunday, and he remains hospitalized, last I saw.  Since becoming pope in 2013, it is the first time the 84-year-old has been admitted to a hospital, and it comes at a time of tension in the church, with the Vatican this week indicting officials on charges of financial crimes, American bishops last month essentially disregarding Rome’s appeal to hold off on a politically fraught document about the Eucharist, and many in the church confused by Francis’ new warm words to L.G.B.T.Q. Catholics even as his church continues to hold a hard line.

I was surprised to read that unlike his predecessors, he has never left the Vatican for the cooler papal residence in Castel Gandolfo, near Rome, during the summer.  He just tends to ease up on his schedule in July.

The pontiff has been slowed by sciatica, a condition that causes leg and back pain, which forced him to miss New Year’s Eve and Day services because of a flare-up.

Francis plans on visiting Slovakia in September.

As for the indictments on charges of financial crimes, a prominent Italian cardinal was among 10 people sent to trial in the Vatican, including for embezzlement, money laundering, fraud, extortion and abuse of office.

Cardinal Angelo Becciu, formerly a senior official in the Vatican administration, as well as two top officials at the Vatican’s Financial Intelligence Unit will go on trial on July 27 over a multi-million-euro scandal involving the Vatican’s purchase of a building in one of London’s upscale districts.

Becciu, 73, becomes the most senior Vatican official to be charged with financial crimes.

--The searing heat that scorched western Canada and the U.S. at the end of June was “virtually impossible” without climate change, say scientists.

An international team of 27 climate researchers who are part of the World Weather Attribution network analyzed the data.

In their study, the team of researchers say that the deadly heatwave was a one-in-a-1,000-year event.  But we can expect extreme events such as this to become more common.

Scientists worry that global heating is now driving up temperatures faster than models predict.

Climate researchers have grown used to heatwaves breaking records all over the world in recent years. However, beating the previous national high temperature mark by 10% in one go, as happened in Canada last week, is virtually unprecedented.

The heatwave in Oregon was blamed for over 100 deaths in the state, many of them in the county that includes Portland.  Many homes and apartments don’t have air conditioning because it is seldom needed, but the temperature hit 116 degrees in Portland, breaking its all-time temperature record for three straight days.

--Related to the above, California Gov. Gavin Newsom is asking Californians to voluntarily cut back on water consumption by 15% compared with last year as drought conditions worsen and temperatures continue to rise across the western United States.

The governor on Thursday also expanded his regional drought state of emergency to apply to 50 California counties, or roughly 42% of the state’s population.

With the recall election two months away, Newsom has refrained from issuing a state of emergency for all of California or mandating water restrictions as drought covers the state.

But assuming he wins the recall, as looks likely, Newsom will have to act more harshly, and swiftly.

--Finally, congratulations to Zaila Avant-garde for becoming the first African American winner of the Scripps National Spelling Bee. Talk about a role model. 

Zaila, 14, is already a basketball prodigy, holding three Guinness records for dribbling, bouncing and juggling basketballs, and she has yet to enter ninth grade.

---

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

We thank our first responders and healthcare workers.

God bless America.

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Gold $1808
Oil $74.63

Returns for the week 7/5-7/9

Dow Jones  +0.2%  [34870]
S&P 500  +0.4%  [4369]
S&P Midcap  -0.1%
Russell 2000  -1.1%
Nasdaq  +0.4%  [14701]

Returns for the period 1/1/21-7/9/21

Dow Jones  +13.9%
S&P 500  +16.3%
S&P Midcap  +17.3%
Russell 2000  +15.5%
Nasdaq  +14.1%

Bulls 60.8
Bears 15.5

Have a good week.

Brian Trumbore

 

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