Stocks and News
Home | Week in Review Process | Terms of Use | About UsContact Us
   Articles Go Fund Me All-Species List Hot Spots Go Fund Me
Week in Review   |  Bar Chat    |  Hot Spots    |   Dr. Bortrum    |   Wall St. History
Week-in-Review
  Search Our Archives: 
 

 

Week in Review

https://www.gofundme.com/s3h2w8

AddThis Feed Button

   

02/06/2021

For the week 2/1-2/5

[Posted 9:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Special thanks to Mark R.

Edition 1,138

Deficit, Schmeficit…what’s a couple $trillion among friends?  I’m not happy, but then I’m the same classic Republican I’ve always been.  A Mitt Romney conservative…fiscal responsibility, standing with our allies, pushing back against the likes of Kim Jong Un and Vladimir Putin, defender of human rights.

But under Donald Trump, we were already headed in the wrong direction even before the pandemic hit.  The deficit was exploding during his four years…it was a $trillion before the first Covid relief program. 

New Treasury Secretary Janet Yellen and Federal Reserve Chairman Jay Powell are right, however, when they say if you’re going to spend big on relief, at least interest rates are at historically low levels and thus the interest expense on the deficit is, cough cough, relatively minimal.

But as we stare down the barrel of a new $1.9 trillion relief package, December’s $900 billion parcel hasn’t even been fully delivered (the postal service really, really sucks these days, I can’t help but interject…12 days…12 freakin’ days for some of my bills to get to their destination the past few weeks when these same deliveries never took more than three days before…but I digress).

I agree with Louisiana Republican Sen. Bill Cassidy, who said the other day that the Biden plan, which the Democrats are now pushing through, has parts of it that look like whoever was in charge just Googled a few terms and, presto, decided $300 billion was the right amount for the Box where Carol Merrill is standing.

But to my fellow Republicans bitching up a storm and blaming our new president for being perhaps a bit disingenuous when it came to ‘unity’, well, blame President Trump for losing Georgia…the two Georgia Senate seats!  That’s all on his legacy.  Win just one of them and we are having an entirely different discussion today.  It’s not real complicated.  Again, the man with the orange hair first lost the House, then the White House, and then the Senate…in that order.  And he lost the popular vote twice.

So we are where we are, and after this week’s episode of “Tales of Marjorie,” who knows where the Republican Party will be come 2022 and the mid-term elections.  As I explain down below, Kevin McCarthy could not have handled the situation in his House caucus any worse this week.

It’s now on President Joe Biden, though.  There is little doubt that with the stimulus, and assuming the vaccine rollout continues to improve, 2021 could see a roaring economy, and Biden’s approval rating would then be as strong, if not better, as it is today in the first Gallup poll, 57%.

But at what price?  When will inflation really begin to make a comeback, which will send the bond market, and equities, in a tailspin as the Federal Reserve is forced to act sooner than they wanted to?

And not for nothing, but President Trump left his successor a mess on the foreign policy front.  Iran and it’s nuclear program is an immediate concern; China is far more powerful than four years ago militarily and Xi Jinping is liking his military fatigues; Lil’ Kim will without a doubt test a ballistic missile of some sort very soon, just to let Biden knows he has to pay attention to him; while Putin, aka “the poisoner,” in Alexei Navalny’s words, is scared his assets could be frozen and he no doubt is wondering who in his inner circle he can trust these days. [Hint: No one.]

And, heck, we lost actor Christopher Plummer today, a man responsible for one of the coolest movie roles in Hollywood history, Captain von Trapp, in perhaps the most beloved picture of all time.

But we do have the Super Bowl, thank God.  I didn’t think it would be possible, going back to August, or even October, but we’re here…and on time.  Good for the NFL…and us. 

Enjoy the game, and let’s hope it’s a good one, given the classic quarterback matchup…Brady vs. Mahomes.

‘Cuz next week, boys and girls, is going to be yet another s---show.  Impeachment II, which in terms of entertainment value (think videos), will be more exciting to watch, and depressing, than Impeachment I.  We’ll be at each other’s throats all over again.

Aren’t the 20s off to a great start?!

---

Well, to button up the action on the budget and Covid relief package front, the House adopted a budget resolution that cleared the Senate early Friday, paving the way for action in the coming weeks on President Biden’s $1.9 trillion stimulus bill with only Democratic votes needed for approval.

The resolution cleared the House on a 219-209 vote, hours after Senate Democrats were forced to play their Harris hole card; the Vice President being the tie-breaking vote in a 50-50 Senate.  The House then had to vote again after the Senate made mostly cosmetic changes during a 15-hour amendment marathon.

President Biden said in remarks at the White House today: “If I have to choose between getting help right now to Americans who are hurting so badly and getting bogged down in a lengthy negotiation – or compromising on a bill that’s up to the crisis – that’s an easy choice.  I’m going to act and I’m going to act fast.”

And, indeed, the House is going to act quickly, it then goes back to the Senate and the stimulus bill should be in place before expanded unemployment benefits expire March 14…or thereabouts.

There are a few issues yet to be wrangled over, like the income level on the $1,400 checks, items in which the White House, if it really wanted to, could at least compromise a little with the other side, but I’m not getting my hopes up.

West Virginia Republican Senator Shelley Moore Capito, one of the ten Republicans who met with the president at the White House to see if there were grounds for cooperation, said today:

“We were ready and willing to work together with Democrats and the White House to get coronavirus under control, kick-start America’s economy, and ensure our kids return back to the education they deserve.

“We offered an alternative to the president that meets our recovery needs while remaining fiscally responsible.  Democrats ignored it, refusing to work across the aisle.”

At least Republicans are going to get a win.  The proposal to raise the federal minimum wage to $15 by 2025 will have to wait.  At least a non-binding amendment in the Senate from Thursday strongly hints that the minimum wage issue will need to be taken up separately at a later date.  Senate Democrats cannot afford to lose a single vote on the stimulus bill and West Virginia’s Joe Manchin has said he opposes the $15 minimum wage provision.

And some House Democrats have expressed unease with taking a purely partisan approach so there will be some changes around the edges.

Biden Bits

--President Biden recommitted the United States to global alliances and a role in the world that projects democratic principles, using his first major foreign policy address to promise that he will counter “advancing authoritarianism” and to announce an end to U.S. support for offensive operations in Yemen that are blamed for thousands of civilian deaths.

Biden also said he would increase the number of refugees admitted to the United States and freeze troop redeployments from Germany, reversing Trump administration policies that Biden sees as out of step with American values (though it is not really clear if any redeployments in Germany have actually been taking place).

“We will repair our alliances and engage with the world once again, not to meet yesterday’s challenges, but today’s and tomorrow’s,” Biden said during an address at the State Department that attempted to turn the page on isolationism and restore diplomacy as the tool of choice.

“America is back. Diplomacy is back,” Biden said, vowing the U.S. will rebound from the attempted insurrection last month “stronger, more determined and better-equipped to unite the world in fighting to defend democracy because we have fought for it ourselves.”

Biden’s speech was short on specifics, painting his traditional policy views with a broad brush, such as in confronting human rights abuses and tyranny in the likes of China, Russia and now Myanmar.  He promised American diplomats demoralized by the Trump years, “I’ll have your back.”

Biden did say with regards to Russia’s Vladimir Putin: “I made it clear to President Putin, in a manner very different from my predecessor, that the days of the United States rolling over in the face of Russia’s aggressive actions, interfering with our elections, cyberattacks, poisoning its citizens, are over,” Biden said.

“We will not hesitate to raise the cost on Russia and defend our vital interests,” he said, while working alongside Russia on some international problems.

Biden said Alexei Navalny should be released from detention immediately.

Calling China “our most serious competitor,” Biden promised a similar approach balancing confrontation and cooperation.

“We’ll confront China’s economic abuses, counter its aggressive, coercive action, to push back on China’s attack on human rights, intellectual property and global governance. But we’re ready to work with Beijing, when it’s in America’s interest to do so.”

--A new Quinnipiac University poll two weeks into the Biden presidency has a majority of Americans, 61-34 percent, saying that they are generally optimistic about the next four years with Biden as president, according to a national poll of 1,075 adults.  However, there were sharp divisions by party identification.

Democrats by 90-7 percent and independents by 62-35 percent say that they are optimistic.  Republicans say by a 65-27 margin that they are pessimistic.

Despite an overall majority being optimistic, 69 percent of Americans say they are either very dissatisfied or somewhat dissatisfied with the way things are going in the nation today.

But nearly 7 in 10 Americans support the Biden administration’s proposed $1.9 trillion stimulus relief bill in response to the pandemic, as 68% say they support it and 24% oppose it.

A majority (56-35 percent) say Biden is doing more to unite the country than to divide it.

--Defense Secretary Lloyd Austin has called on the services to conduct a 60-day stand-down on the issue of extremism in the military, prompted by the Jan. 6 attack on the Capitol and subsequent reports of both active-duty and former service members attending a rally calling to overturn the 2020 election and the riot that ensued.

Austin held a meeting Wednesday of the service secretaries and Joint Chiefs to ask them about their concerns and ideas for improving the situation.

Pentagon spokesman John Kirby told reporters, “Even though the numbers might be small, they may not be as small as we would like them to be, or we believe them to be,” Kirby said of the prevalence of troops with extremists views, ties or activities.  “And that no matter what it is, it is not an insignificant problem.”

Kirby said of Austin’s direction to the service secretaries and Joint Chiefs: “It wasn’t a blithe, ‘Hey, just go talk to your people.’  He was very clear that he wants commands to take the necessary time.  And I didn’t hear him be overly proscriptive about that…to speak with troops about the scope of this problem, and certainly to get a sense from them about what they’re seeing at their level.”

DoD does have a 2012 instruction that prohibits extremist activities, though it doesn’t clearly define extremism itself.  Generally, the services handle these investigations at the unit level – or with the FBI, if it comes to plans for attacks, for instance – and there is no requirement to report those up to service headquarters.

Military Times’ polling has shown that, anecdotally, more than one-third of active-duty troops, and more than half of minority service members, have witnessed signs of white supremacy in their colleagues.  Further, survey respondents ranked white nationalism as a bigger national security threat than terror groups affiliated with Islam.

--The Senate confirmed Alejandro Mayorkas as the next secretary of Homeland Security by a narrow margin, 56-43, as several Republican senators said they disapproved of President Biden’s immigration policy proposals, including one to provide a citizenship path to 11 million immigrants in the country without a permanent legal status.

Former South Bend, Ind., Mayor Pete Buttigieg, by contrast, sailed through 86 to 13 to become the new Transportation secretary.  His confirmation hearing was a relative lovefest.

--Rich Lowry / New York Post

“Joe Biden is off to the most left-wing start of any Democratic president in recent memory.

“Just two weeks later, the dulcet tones of Biden’s inaugural address already seem an artifact of a bygone era.  Republicans will hammer him for the rest of his presidency for failing to deliver on his unifying message, but the fact is that Biden is governing as he promised – further to the left of his own record, further to the left of his ex-boss, former President Barack Obama, and further to the left of any Democrat who made his career prior to the ascendancy of the cultural left.

“It isn’t new for Democratic presidents to want to tax, spend and regulate, even if Biden seeks to do more of all three than his immediate predecessors.  Biden layers on top of this a cultural agenda that represents a new dimension of radicalism that would be alien and baffling to bygone Democrats, who may have wanted to extend the New Deal but never sought to transcend the gender binary.

“Biden is willing, too, to go it alone via rapid-fire unilateral executive actions.

“If Lyndon Johnson gave us the Great Society, he came to office after the assassination of John F. Kennedy seeking to fulfill the legacy of his martyred predecessor, which included passing a tax bill that reduced income-tax rates across the board and slashed corporate taxes.  Once he was elected in his own right in 1964, Johnson embarked on a spate of federal activism that no subsequent Democrat has been able to match, although Johnson largely enacted his priorities the old-fashioned way, by passing bills through Congress. And he operated in a much more culturally conservative country and party….

“Biden is out of the box with a proposed $1.9 trillion relief bill that includes a $15-an-hour minimum wage, not too long ago the pipe dream of his party’s socialist wing, and a massive bailout of states and localities.  Biden campaigned on a $4 trillion tax increase that one sympathetic observer has said would be ‘one of the largest wealth transfers in American history.’  Meanwhile, he is filling positions beneath the Cabinet level with progressives with a mandate to increase regulation across the board.

“The economic agenda is augmented by new progressive causes that were just beginning to get a foothold back in the Clinton and Obama years.  Biden’s obsession with fighting climate change speaks of an overwhelming hostility to fossil fuels as such that is something new….

“There will also be a continual focus on what Biden’s chief-of-staff calls ‘a racial-equity crisis,’ which will be a warrant for a new, more aggressive identity politics.

“The lesson is that the most important thing that any movement can do is influence the direction of a major political party.  If the center of gravity of a party moves, the entire establishment moves with it.  So it is with Biden, who has never been woke or surrounded himself with radicals, yet is attempting to deliver victories to the left-wing of his party almost unimaginable eight or 12 years ago – and do it quickly.

“We can’t really say we weren’t warned, even if Biden did everything he could to obscure the message with his mood music of moderation and unity.”

Trump’s Impeachment, Part Deux

--The Democratic lawmakers who will prosecute former President Trump will say Trump pointed a mob “like a loaded cannon” at the U.S. Capitol before the deadly Jan. 6 rampage.  In a brief filed a week before the trial is set to begin, Tuesday, Feb. 9, nine House lawmakers known as impeachment managers also rejected Republican claims that it would be unconstitutional to try Trump since he became a private citizen after leaving office on Jan. 20.

The Democrats urged the Senate to bar Trump from holding office again.

“President Trump’s conduct offends everything that the Constitution stands for,” the managers wrote in an 80-page brief that noted that Trump had begun voicing his intention to contest an election loss months before the Nov. 3 vote was held.

“He summoned a mob to Washington, exhorted them into a frenzy, and aimed them like a loaded cannon down Pennsylvania Avenue.  As the Capitol was overrun, President Trump was reportedly ‘delighted,’” they said.

One of Trump’s recently hired lawyers, David Schoen, called the impeachment process “completely unconstitutional” in an interview with Fox News on Monday but did not outline the legal strategy.

“I think it’s also the most ill-advised legislative action that I’ve seen in my lifetime,” Schoen said.  “It is tearing the country apart at a time when we don’t need anything like that.”

In their brief, the Democratic impeachment managers said the Senate has jurisdiction to try Trump now because the House impeached him while in office for acts he committed as president.

“There is no ‘January Exception’ to impeachment or any other provision of the Constitution,” the managers said.

Trump’s new defense attorneys then filed a 14-page response to the House article of impeachment, denying Trump incited the crowd at his Jan. 6 rally, and while the defense stopped short of embracing his baseless claims that the election was rigged, they defended his right to argue that massive fraud led to his defeat, a false claim echoed by his supporters as they ransacked the Capitol that day.

Democrats drew a direct line between Trump’s rhetoric and the violence.  But Trump’s defense team argued that free-speech protections allowed him to make such allegations without penalty.

House Democrats on Thursday asked Trump to testify under oath for the trial, saying the former president must explain why he and his lawyers have disputed key factual allegations at the center of the case.  The president, through his attorneys, declined to do so.

Play ball!

The Pandemic….

Great news…the numbers are coming down, from cases and hospitalizations, to deaths.  There is no doubt that increased mask wearing, and the rollout of vaccines, is helping.

But we still have a long ways to go.  This weekend (meaning Sunday and Monday’s numbers, if not Saturday’s), I imagine due to the way the reporting slows down, we’ll have our first daily case figure under 100,000 since November.  But virtually all experts are concerned with a looming spike over the variants.

Covid-19 death tolls, as of tonight….

World…2,308,842
USA…470,705
Brazil…230,127
Mexico…164,290
India…154,956
UK…111,266
Italy…90,618
France…78,603
Russia…75,732
Germany…61,661
Spain…61,386
Iran…58,336
Colombia…55,403
Argentina…48,985
South Africa…45,902
Peru…41,753
Poland…38,712
Indonesia…31,202
Turkey…26,577
Ukraine…23,387
Belgium…21,260
Canada…20,609

Source: worldometers.info

U.S. daily death tolls…Sun. 1,886; Mon. 1,904; Tues. 3,644; Wed. 3,999; Thurs. 3,532; Fri. 3,572.

Covid Bytes

--Johnson & Johnson said on Thursday it has asked U.S. health regulators to authorize its single-dose Covid-19 vaccine for emergency use, and it will apply to European authorities in the coming weeks.  The drugmaker’s application to the Food and Drug Administration follows its Jan. 29 report in which it said the vaccine had a 66% rate of preventing infections in its large global trial.  J&J’s single-shot vaccine could help boost supply and simplify the U.S. immunization campaign, amid concerns of fresh surges due to the more contagious UK variant and the rest.

J&J aims to deliver 1 billion doses in 2021 with production in the United States, Europe, South Africa and India.

Most importantly, the J&J vaccine was 85% effective in stopping severe disease and preventing hospitalization across all geographies and against multiple variants 28 days after immunization.

--AstraZeneca’s Covid-19 vaccine does more than prevent people from falling seriously ill – it appears to reduce transmission of the virus and offers strong protection for three months on just a single dose, researchers said Wednesday in an encouraging turn in the campaign to suppress the outbreak.

The preliminary findings from Oxford University, a co-developer of the vaccine, could vindicate the British government’s controversial strategy of delaying the second shot for up to 12 weeks so that more people can be quickly given a first dose.  Up to now, the recommended time between doses has been four weeks.

Matt Hancock, the British health secretary, hailed the results as “absolutely superb.”

The results of the Oxford study “should give everyone confidence that this jab works not only to keep you safe but to keep you from passing on the virus to others.”

At the same time British authorities say they have discovered a potentially supercharged version of the country’s more-contagious coronavirus variant with a new mutation – one also detected in strains in South Africa and Brazil.  The continued emergence of new variants could make it harder to curb the pandemic and suggests that vaccines will need to regularly update to take account of changes to the virus.

--British researchers are to explore mixing doses of the Pfizer and AstraZeneca Covid vaccines in a world first trial aimed at finding new ways to swiftly reduce coronavirus infections as new mutated variants emerge…namely the so-called British, South African and Brazilian variants, which appear to spread more swiftly than others.

AstraZeneca is separately being trialed in combination with Russia’s Sputnik V.

--Speaking of Sputnik V, Russian scientists say the vaccine appears safe and effective against Covid, according to early results of an advanced study published in the British medical journal Lancet.

Researchers say that, based on their trial, which involved about 20,000 people in Russia last fall, the vaccine is about 91% effective and that the shot also appeared to prevent people from becoming severely ill.

--Novavax reported this week that although its vaccine was nearly 90% effective in clinical trials conducted in Britain, the figure fell to 49% in South Africa – and that nearly all the infections the company analyzed in South Africa involved the B.1.351 variant that emerged there late last year and has spread to the United States and at least 30 other countries.  Johnson & Johnson’s vaccine was 57% effective in South Africa.

--Israel, in the midst of its third major lockdown, nonetheless allowed an estimated 10,000 people, ultra-Orthodox Jews, to gather in Jerusalem Sunday for a funeral procession, in defiance of Israel’s Covid ban on large gatherings.  Police blocked traffic so the procession could continue, but took no action to prevent the illegal assembly.  Few were wearing masks.

While Israel has done a super job of vaccinating its population thus far, it still has one of the world’s highest infection rates and the nation’s coronavirus cases are disproportionately found within the country’s ultra-Orthodox community, which makes up 11% of the population, but 40% of the new cases.

Prime Minister Benjamin Netanyahu doesn’t crack down on them because they are a critical part of his coalition, and there’s another election coming up in March.

--The U.S. Centers for Disease Control and Prevention said it had administered 36,819,212 doses of Covid-19 vaccines in the country as of Friday morning and distributed 58,380,300 doses.  7,503,864 people have received the second dose as of Thursday.  A total of 4,210,027 vaccine doses have been administered in long-term care facilities, the agency said.

--In a Monmouth University Poll, more Americans expressed concern about the impact of Covid-19 now than at any time during the pandemic. 

Half (50%) of the public plans to get the Covid vaccine as soon as they are allowed.  Another 19% say they would prefer to let other people get it first to see how it goes.  However, 24% say it is likely they will never get the vaccine if they can avoid it.

Democrats are most eager to get the vaccine as soon as possible (72% when combined with those who already got the vaccine) – much more so than independents (51%) and Republicans (39%).

Six in ten Americans (60%) say they are very concerned about someone in their family becoming seriously ill from the coronavirus.  This marks the highest level of concern since the pandemic hit the nation.  The percentage who are very concerned registered a low of 37% in early June.

President Biden gets positive reviews for his initial handling of the crisis, with 58% saying he has done a good job and 23% saying he has done a bad job.  As he left office, just 34% thought Donald Trump did a good job and 63% say he did a bad job – his all-time worst rating on the crisis since the pandemic began.

Seven in ten (71%) are confident that Biden can put the country on the road to recovery from the outbreak.

--Dr. Anthony Fauci, as well as the CDC, are basically begging us to “just lay low” rather than gathering for Super Bowl parties on Sunday.

“You don’t want parties with people that you haven’t had much contact with,” Fauci said on NBC’s “Today” show.  “You just don’t know if they’re infected, so as difficult as that is, at least this time around, just lay low and cool it.”

--On the contentious school issue, I totally agree with the opinion of Matt Bai I quoted last week in that if teachers want to be known as “essential employees” then it’s time to get back to work.

Watching teachers this week, they continued to use the excuse, “After I’m in the classroom all day, being exposed, I go back home where my elderly mother lives and I’m endangering her…blah blah blah.”

Sorry, that just doesn’t cut it anymore, after a year of grocery store and drugstore employees going to work, risking exposure, and going home to the exact same situation.

And to the school districts, you’ve had a year now to figure it out.  Just do it.  President Biden must confront the teachers’ unions on this topic, and soon.

--Finally, we note the passing of Britain’s Captain Tom Moore, the World War II veteran who lifted a nation’s spirits by raising millions of pounds for health service workers battling the coronavirus.  Moore died Tuesday aged 100 after he contracted Covid.

Moore struck a chord with locked-down Britain by walking around his garden with the help of a walker to raise 38.9 million pounds ($53 million) for the National Health Service.  His endeavor and wit spread joy amid the grim news of the coronavirus outbreak last spring.

Moore’s message to the world was that the sun would shine again and that the clouds would clear.

British Prime Minister Boris Johnson said: “Captain Tom Moore was a hero in the truest sense of the word. He became not just a national inspiration but a beacon of hope for the world.”

Moore said after completing his sponsored walk: “You’ve all got to remember that we will get through it in the end, it will all be right, it might take time.  At the end of the day we shall all be OK again.”

Wall Street and the Economy

The market rallied sharply this week after the prior week’s hefty losses, buoyed by solid earnings and talk on further stimulus.

But the January jobs report was nothing to write home about. First, December’s job losses were revised to -227,000 from -140,000, while January saw a job gain of just 49,000, with losses in manufacturing and construction, two sectors which have been propping up the economy.  There were further losses at restaurants and bars, while retailers and employers in the transportation industry also laid off workers.  Gains were seen in professional and business services, as well as government payrolls, lifted by gains in state and local government education.

The unemployment rate dropped to 6.3% from December’s 6.7%, but this was because of people misclassifying themselves as being “employed but absent from work.”  Without this misclassification, the jobless rate would have been 6.9%.  U6, the underemployment rate, is 11.1%.

The government also said the economy created 250,000 fewer jobs in the 12 months through March 2020 than previously reported.

Employment is still 9.9 million jobs below its peak in February 2020.  The Congressional Budget Office has estimated employment would not return to its pre-pandemic level before 2024.

The news, the administration is saying today, bolsters the arguments for President Biden’s $1.9 trillion recovery plan, though the nearly $900 billion in additional relief money provided by the government at the end of December will likely help in the months ahead.  In addition, the current pace of Covid-19 infections shows we peaked in early January, a trend that should lead to hiring in the months ahead, should it hold.

Jared Bernstein, a member of the White House Council of Economic Advisers, told CNBC the jobs report ‘just underscores the cost of inaction.  I mean when you’re adding 29,000 jobs a month on average over the past three months, that is a labor market stall.  This underscores the urgency of the American rescue plan.”

President Biden, in a meeting with top House Democrats, said the labor report was further proof lawmakers needed to act.

“It’s people’s lives.  Real-life people are hurting and we can fix it,” Biden said.

Separately, we had the ISM readings on manufacturing for January, 58.7, 50 the dividing line between growth and contraction, and the same 58.7 on services.

December construction spending rose 1.0%, while factory orders in the month were up 1.1%.

The initial weekly jobless claims report was at a still sickly 779,000 level, though at least this is down three weeks in a row.

The Atlanta Fed’s very early GDPNow barometer for the first quarter is at 4.6%, which is pretty much Street consensus today.

And, finally, back to the deficit and the net interest expense on same, I have in front of me a ton of spread sheets from the Congressional Budget Office.  Understand that some of us smile when we see the CBO, which does great work, come up with a ten-year projection of the budget.  It’s an impossible task.  For instance, back in 2010, in looking at 2020, it projected the 10-year Treasury would have a yield of 5.5% (actually average 5.5% from 2015-2020). 

Well, we finished last year at 0.91% and, in fact, haven’t finished a year with a yield on the 10-year with as much as a 4-handle (4.00%) since 2007.  So that of course impacts the net interest on the budget deficit.  Back in 2010, the net interest expense for 2020 was projected to be $723 billion, which is the kind of figure in the past I’ve cried ‘wolf’ on.  If you’re paying $723 billion in interest, invariably you have to cut into popular programs elsewhere in the budget, which has been my point since day one of StocksandNews.

But the likes of Yellen and Powell are sanguine today because we’re paying more like $350-$400bn in interest, though this figure is going to rise just because of all the extra Covid-related debt we’re piling on.  Then you imagine if inflation starts to rear its ugly head, above what the Fed, and the bond market, are comfortable with and bam!  Rates start shooting up, ditto the cost of servicing the debt…and serious budget choices on other programs would have to be made (or you raise taxes).  No one is happy then.  I’ll be reinforcing this point much more down the road, I imagine.

Europe and Asia

A flash estimate for fourth quarter GDP in the euro area came in at -0.7%; -5.1% compared with the fourth quarter of 2019.  The Q4 estimate as published by Eurostat, the statistical office of the European Union, follows a strong rebound in the third quarter of 2020, +12.4%, and the sharpest decrease since the time series started in 1995 observed in the second quarter of 2020 (-11.7%).

Q4 2020 compared with Q4 2019:

Germany -3.9%, France -5.0%, Italy -6.6%, and Spain -9.1%.

We had final PMI figures for January in the eurozone, courtesy of IHS Markit, with a composite reading of 47.8 vs. December’s 49.1, manufacturing at 54.8 vs. 55.2 the prior month, and services at 45.4 vs. 46.4.

Germany: 57.1 manufacturing in Jan., services 46.7
France: 51.6 mfg., 47.3 services
Italy: 55.1 mfg., 34-mo. high, services 44.7, up from 39.7
Spain: 49.3 mfg., services 41.7, down from 48.0
Ireland: 51.8 mfg., 36.2 services, tumbling from 50.1
Netherlands: 58.8 mfg.
Greece: 50.0 mfg.

UK: 54.1 mfg., services 39.5 vs. 49.4 in Dec.

Chris Williamson, IHS Markit:

“The eurozone economy endured a predictably tough start to 2021 as ongoing efforts to contain the spread of Covid-19 continued to hit business activity, especially in the service sector.  Manufacturing growth continued to help offset some of the weakness in the service sector, though even here factories saw output growth slow amid subdued demand and supply delays, often linked to the pandemic.

“A contraction of GDP therefore looks likely in the first quarter, though on current trends this should be modest in comparison to the falls seen in the first half of 2020.

“However, with virus containment measures likely to constrain euro area economies in the coming months, and potentially well into the second quarter given the slow vaccine roll-out, the focus will be on the need to sustain supportive fiscal and monetary policymaking for some time to come, notably to prevent further intensifying job losses in the hardest hit sectors, such as hospitality, tourism, travel and retail.

“Rising costs have dealt a further blow to many companies, with input prices rising at the steepest rate for two years to squeeze margins.  However, in many cases this reflects a short-term lack of capacity and shipping delays, which should ease in coming months, helping alleviate these price pressures.”

Separately, the volume of retail trade in the euro area for December was up 2.0% over November; up 0.6% year-over-year. 

And a flash reading on January inflation for the eurozone came in at 0.9% annualized, compared with 1.4% a year ago.  Ex-food and energy the figure is 1.4%.

Lastly, for December 2020, the euro area unemployment rate is 8.3%, which compares to 7.4% a year earlier, pre-pandemic.

Germany 4.6%, France 8.9%, Italy 9.0%, Spain 16.2%, Ireland 7.2%, Netherlands 3.9%.

Brexit: It has not been smooth sailing when it comes to Brexit, and British and European Union negotiators have agreed to resume talks next week on what is called the Northern Ireland protocol after Boris Johnson threatened to invoke Article 16 to override its terms unless his demands are met.

During a meeting Wednesday between all the parties involved, the European Commission official described the difficulties faced by businesses and consumers in Northern Ireland as teething problems and suggested that Britain could make more use of the flexibility built into the protocol.

Under the protocol, all products are normally permitted to be exported from the EU to Northern Ireland (part of the UK) without checks, as NI remains in the single market for goods and continues to operate under EU custom rules…a deal put in place to smooth things out with the Republic of Ireland, sharing a border with the North, which goes back to the ‘Good Friday’ Agreement of 1998, which ended most of the violence of ‘The Troubles’.

The protocol was designed to avoid a return of checkpoints along the Irish Border and minimize potential disruption of cross-border trade.

But as I noted last week, suddenly there was an uproar over vaccine delivery shortfalls, and the EU on Jan. 29 invoked Article 16 of the Northern Ireland protocol which allows the EU or UK to unilaterally suspend aspects of its operations if either side considers that aspect to be causing “economic, societal or environmental difficulties.”

The European Commission then quickly reversed itself as some ugly things were happening in the North and on the border…as in age-old messages were being scrawled on walls, customs agents intimidated and fears of a return to violence between sectarian forces in the North were bubbling up again.

British cabinet office minister Michael Gove told the EC that in briefly activating Article 16, and halting vaccine delivery, it had profoundly undermined the operation of the protocol and cross-community confidence in it.  He called for a grace period exempting supermarkets from some checks, which is due to end on March 31, to be extended until at least Jan. 1, 2023.

And Gove called for similar waivers allowed chilled meat products and parcels to move easily from Great Britain to Northern Ireland.

Like anything involving NI it’s complicated, and made more so by Brexit, and a so-called barrier down the Irish Sea.  More next week after the negotiators get together.

Italy: Former European Central Bank chief Mario Draghi accepted a mandate to try to form a new Italian government as the country seeks to find a way out of its latest political crisis amidst a pandemic.

Draghi, nicknamed “Super Mario” for his role in saving the Euro single currency, will have to quickly galvanize support in parliament for a coalition that could tackle Italy’s battered economy.

President Sergio Mattarella summoned Draghi after ruling coalition partners failed to form a majority following Giuseppe Conte’s resignation as prime minister last week.

In a brief speech after the meeting, Draghi said: “Overcoming the pandemic, completing the vaccination campaign, responding to the needs of citizens and relaunching the country are our challenges.  We have extraordinary resources coming from the EU and we can do a lot for the future of the country.”

Italy is receiving 200bn euro from the EU’s recovery fund – the largest share among member states – and Mattarella ruled out calling early elections, rather he is looking for a “high profile” technical government to steer the country.

But it is unclear that Draghi can win the broad support needed from political forces.  The 5-Star Movement, the biggest party in parliament, said it would not back a technical administration led by Draghi, arguing that a political government was the only solution.  But the next day they softened their opposition.

Matteo Salvini, the leader of the opposition far-right League, and Giorgia Meloni, who heads the smaller far-right Brothers of Italy, both repeated calls for early elections, but said they would meet with Draghi.

Former prime minister and Forza Italia leader Silvio Berlusconi appeared to back the plan for a technocrat, recalling his “longstanding esteem” for Draghi.

The last time a technocrat was appointed in Italy was in 2011, when Mario Monti was entrusted with leading the country out of an acute debt crisis that prompted Berlusconi’s resignation.

We’ll find out this weekend or Monday if Draghi thinks he can form Italy’s 67th government since World War II.

Turning to AsiaChina reported its official PMI data for January (which focuses on big and state-owned firms).  Manufacturing was down to 51.3 from December’s 51.9, while non-manufacturing slid to 52.4 vs. 55.7.

The private Caixin readings, which focus on small- and medium-sized private companies, were 51.5 on manufacturing, and 52.0 services, down sharply from 56.3 in December.

Still growth all around, but slowing due in some part to a few renewed lockdowns in communities impacted by a small spike in new Covid cases.  China’s Lunar New Year holiday period is also in full swing, particularly by next weekend, and with widespread travel there are concerns over increased transmission.

Japan reported a manufacturing PMI in January of 49.8, slight contraction vs. 50.0 in December.  The service sector reading fell to 46.1 from 47.7, not good. 

Household spending in Japan in December fell 0.6% from a year earlier, government data showed today, though this was better than expected.

Meanwhile, Tokyo’s Olympic organizing committee and the government seem hellbent on holding the Games this summer, vaccines for athletes not mandatory.  At least that is the word this week.

The Tokyo Olympics chief, however, former prime minister Yoshiro Mori, 83, apologized for sexist comments about women talking too much, but said he would not resign, as his remarks sparked a storm of criticism on social media and risked tainting public opinion of the Games.

Mori said at an Olympic Committee board of trustees meeting this week: “If we increase the number of female board members, we have to make sure their speaking time is restricted somewhat, they have difficulty finishing, which is annoying.  We have about seven women at the organizing committee but everyone understands their place.”

Doh!

South Korea reported a 53.2 manufacturing PMI in January, while Taiwan at 60.2 had its highest level of activity since April 2010.

Street Bytes

--Stocks staged their best rally since the election, spurred by a certainty of further stimulus and strong earnings, as well as positive news on the vaccine front and declining infections and hospitalizations.  The Dow Jones rose 3.9% to 31148, just shy of its record closing high, while the S&P 500, +4.7%, and Nasdaq, +6.0%, closed at new records.

--U.S. Treasury Yields

6-mo. 0.04%  2-yr. 0.10%  10-yr. 1.17%  30-yr. 1.98%

The 10-year closed at its highest weekly close since last February, prior to the Fed having to move aggressively to combat the impact of the coronavirus.

--Oil prices hit a one-year high at midweek, boosted by an unexpected draw in U.S. crude and gasoline stocks, fueling demand recovery hopes as OPEC+ forecasts the market will be in deficit in 2021.

The American Petroleum Institute reported U.S. crude oil inventories fell by 4.3 million barrels in the week to Jan. 29, compared with analysts’ expectations for a small build.  The Energy Information Agency also reported a small drawdown and West Texas Intermediate closed the week at $56.97, its highest weekly close since 1/17/20.

OPEC and its allies also said that oil stockpiles will finally decline to below a five-year average by June.  OPEC’s production levels, which rose less than expected in January, have been roughly in line with their commitments.

--Exxon Mobil reported a plunge in fourth-quarter revenue and earnings on Tuesday as the energy giant capped off a year that brought the “most challenging” ever market conditions, with plans to cut more expenses while continuing to pay its dividend.

Total revenue and other income dropped to $46.54 billion in the quarter from $67.17 billion a year earlier.  That missed the consensus on Capital IQ for $48.76bn.  Earnings ex-certain items dropped to $0.03 a share from $0.41 previously.

CEO Darren Woods said in a statement:  “While the effects of the pandemic significantly impacted our 2020 results, our previously executed strategic initiatives and reorganizations enabled us to respond decisively to permanently improve our cost structure, drive greater efficiencies across our businesses, and emerge a stronger company.”

Exxon continues to slash expenses, including through job reductions, cutting up to 15% of its workforce and delaying oil and gas projects after accepting oil prices could remain below $60 a barrel for years.

“We remain focused on increasing long-term value for our shareholders by investing in our highest-return assets, preserving the strength of the balance sheet, and paying a reliable dividend,” Woods said.

Cash flow in 2021 is expected to cover capital expenditures as well as dividend payments, although the views are hinged on Brent crude prices of $50 a barrel.  “Should prices fall below $45 per barrel, the company has the ability to further reduce capital investments to cover the dividend and maintain a strong balance sheet,” Exxon said.

Separately, the chief executives of ExxonMobil and Chevron Corp. held preliminary talks in early 2020 to explore combining the two largest U.S. oil producers in what would have been the biggest merger of all time.  The discussions, which are no longer active (but could be resurrected) are indicative of the pressures in the energy sector as the pandemic took hold and prices plunged.

The talks between Darren Woods and Chevron CEO Mike Wirth were serious enough where legal documents on certain aspects of the merger were drafted. 

The two have a combined market value of about $350 billion.  In their talks the two envisioned achieving synergies through massive cost cuts to help weather the downturn.  At the end of 2019, Exxon employed about 75,000 people and Chevron 48,000. 

Following the aborted talks with Exxon, Chevron went on to acquire oil producer Noble Energy in a $5 billion cash-and-stock deal that was completed in October.

Needless to say, a combination of Exxon and Chevron would have faced significant hurdles, including antitrust concerns and objections from corporate rivals.

--BP plunged to a $5.7 billion loss last year, its first in a decade, as the pandemic took a heavy toll on oil demand, and the energy company warned of a tough start to 2021 amid widespread travel restrictions.

But CEO Bernard Looney told Reuters the company’s transition to a greener future remained on track.  It is aiming to ramp up renewable power generation to 50 gigawatts (GW) by 2030 from 3.3 GW currently, while slashing oil output to reduce greenhouse gas emissions.

Capital expenditure is set to rise to $13 billion this year, of which $9 billion will still go to oil and gas, the company disclosed. That compared with a budget of $12 billion in 2020.

Looney does expect oil demand is nevertheless expected to recover in 2021, with global inventories expected to return to their five-year average by the middle of the year.

--Oil giant Royal Dutch Shell on Thursday reported a sharp drop in full-year profit as the pandemic took a heavy toll on the global oil and gas industry.

Shell reported adjusted earnings of $4.85 billion for the full-year 2020. That compared with a profit of $16.5 billion for the full-year 2019, reflecting a drop of 71%.  For the final quarter, Shell reported adjusted earnings of $393 million, missing expectations.

Shell CEO Ben van Beurden described 2020 as an “extraordinary” year.

“We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities.  We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy,” van Beurden said in a statement.

Shell is looking to reassure investors about their future profitability, pointing to an expected upswing in fuel demand in the second half of the year and a mass rollout of Covid vaccines.

However, renewed lockdown measures are leading to concerns over the first half of 2021.

--Jeff Bezos is stepping down as chief executive of Amazon, Bezos becoming executive chairman after leading the company he founded in a Washington state garage more than 26 years ago.

Amazon said on Tuesday that Bezos will be succeeded as CEO by Andy Jassy, Bezos’ closest lieutenant.

Jassy, 53, started with the company as a marketing manager in 1997 – just three years after it was founded by Bezos.  Jassy currently leads the company’s cloud computing offshoot, Amazon Web Services, which he founded in 2003 and became its CEO in 2016.  AWS provides a range of online services for businesses.  The division has grown to a platform used by millions, signing major customers including Verizon, McDonald’s and Honeywell, while competing with Microsoft’s Azure and Alphabet’s Google Cloud.  It brought in $12.7 billion in the most recent quarter, up 28 percent from a year ago.

Jassy graduated from Harvard College and then earned his MBA there.  His ascension won’t take place until the third quarter of 2021, when Bezos, 57, will then become executive chairman.

The company announced Bezos’ changing role as Amazon was reporting that revenue in the fourth quarter soared 44% to $125.56 billion – surpassing $100 billion for the first time in a three-month span – and profit more than doubled to $7.2 billion.

Amazon sales for all of 2020 rose 38% year-over-year to $386.1 billion and are expected to advance again this year.  Amazon said sales for the current quarter should come in at between $100 billion and $106 billion, which would be above current Street forecasts.

The pandemic turned into a sales bonanza for Amazon, and the company struggled early to handle the surging demand, scaling up rapidly, adding more than 500,000 employees, giving it a global workforce of more than 1.3 million, while increasing its fulfillment and logistics square footage by about 50% last year.  It also incurred around $11.5 billion in Covid-related costs and it’s been spending massive sums to expand its transportation network.

Andy Jassy is going to be facing some big issues and challenges, including labor unrest.  The pressure is mounting to unionize its workforce of nearly 1 million warehouse workers.  Employee activists made significant inroads last year as Amazon faced harsh criticism for its warehouse working conditions during the pandemic, leading to improved pay and coronavirus protections.

And the company is facing rising competition from the likes of Walmart, as well as intense competition for Amazon Web Services.

And then you have the regulators, who are looking into claims Amazon unfairly competes with its third-party sellers.

Back to Bezos, he is neck-and-neck with his rival rocket entrepreneur, Elon Musk, both with net worth’s around $190 billion+, depending on the day’s market action.  It’s clear Bezos has stepped back from day-to-day management of Amazon over the past few years as he focuses on some of his other pursuits, like space. 

--Shares in Google parent Alphabet Inc. soared as the company topped quarterly sales expectations for its advertising and Cloud businesses, helped in part by the pandemic, and said it will resume big spending on hiring and facility construction.

Google, which generates more revenue from Internet advertising than any other company, benefited from lockdowns that drove retail and other clients online, helping offset cutbacks by travel and entertainment advertisers.

“Google’s products and supports have been a lifeline for millions of small to medium businesses hit hard by the pandemic,” CEO Sundar Pichai told analysts on a conference call.

Alphabet’s 2020 sales growth of 13% was the slowest increase since 2009 when it posted 8.5% growth.  Still, matched with spending cuts, Alphabet increased its cash hoard by $17 billion in 2020 to $137 billion.

Alphabet did say Google Cloud posted an operating loss of $1.24 billion in the fourth quarter and a $5.6 billion loss for 2020, about 21% steeper than 2019’s annual loss.

Overall, Alphabet’s fourth-quarter profit rose 43% to $15.2 billion.  Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s record $56.9 billion in quarterly sales, which rose 23% vs. a year ago.  Cloud sales, also benefiting from the pandemic, were $3.83 billion, or $13.1 billion for the full year, up 46% from 2019.

--General Motors plans to trim production at several factories this month due to the ongoing shortage of semiconductors, an issue I’ve been noting for weeks now.  GM, and others such as Volkswagen, Ford, and Nissan have been seeking to reduce the impact of the shortage on higher-demand, higher-margin models like large trucks and SUVs.

GM is taking down three North American factories for a week, starting Monday.

Mazda Motor said it expected a production cut of 7,000 vehicles as a result.

The auto industry is now one of the world’s largest purchasers of computer chips, and demand is only increasing as car companies load their latest models with big-screen displays and more sophisticated tech.

--Speaking of Ford Motor Co., it boosted the amount of money it plans to invest on electric and autonomous vehicles to $29 billion, even as it posted a fourth-quarter net loss of $2.8bn, which included several previously disclosed charges related to a recall, recalculation of pensions and the closure of the company’s Brazilian manufacturing operations. 

Ford said it was “doubling down” on connected electric vehicles and said it will invest $22 billion in electrification through 2025.

The No. 2 U.S. automaker also said the global semiconductor chip shortage could lead to a 10% to 20% loss in first-quarter production.  Ford announced Thursday it is cutting shifts at two plants that build its highly profitable flagship F-150 pickup trucks starting next week as a result, raising fears the problem could be worsening.  [It’s becoming a huge problem with Volkswagen in Germany.  And Italian automaker Stellantis is slowing production at its plant in Melfi and putting 7,000 workers on furlough.]

Ford projected operating earnings would climb to $8 billion to $9 billion in 2021, compared with $2.8bn last year.  In Covid-ravaged 2020, Ford’s total revenue fell to $127 billion from $156 billion in 2019.  Ford ended the quarter with $31 billion in cash, compared with $30bn in the prior quarter.

--Pfizer said it expects to generate $15 billion, or about a quarter of its total revenue this year, from sales of its Covid-19 vaccine co-developed with German partner BioNTech SE.  Pfizer aims to make two billion doses in 2021, and CEO Albert Bourla said the company was being conservative in its target. Pfizer also said it expects there could be a long-lasting need for Covid-19 vaccines, to combat new virus variants that emerge and to boost peoples’ waning immune responses.

Overall, the company reported a fourth-quarter profit of $594 million, compared with a year-earlier loss of $337 million, with quarterly revenue of $11.7bn, up vs. $10.5bn a year ago.  The company expects 2021 sales of between $59.4 billion and $61.4bn.

--My neighbor across the street, Bristol-Myers Squibb, lifted its full-year 2021 earnings guidance after the pharm company’s fourth-quarter results topped consensus as its 2019 acquisition of Celgene continued to lift revenue.

Revenue in the December quarter jumped to $11.07 billion from $7.95 billion a year earlier while earnings per share came in at $1.46, up from $1.22.

“In our first full year as a new company we delivered solid operational and financial results, and laid a strong foundation for the future,” said Chief Executive Giovanni Caforio. “The growth opportunities from our in-line and launch portfolios combined with a robust product pipeline and disciplined business development strategy strongly position the company to accelerate the renewal of our portfolio and achieve long-term sustainable growth.”

Celgene became part of BMY in November 2019, bringing products like Revlimid for multiple myeloma and Abraxane for cancer treatments.  Revlimid revenue was up 18% on a pro-forma basis to $3.28bn in the latest quarter, while Abraxane soared 79% on a reported basis to $297 million.

I just have to say that the location literally across the street from me, which has had many different owners over the years…from Ciba-Geigy in my youth, to Schering-Plough (acquired by Merck in 2009), then to Celgene, which started at a separate location in Summit, and then moved into Schering’s space, and now to Bristol-Meyers, is massive and, boy, the new owners are tearing down old buildings and putting up new ones at a feverish pace, and, get this…I’ve been in this area well over 50 years, more or less, and never been on the campus, which is very secure.

But you can drive around most of the perimeter and you get a scope of what’s going on.  It’s encouraging to also see more employees gradually return amid Covid, because the local restaurants within walking distance that were rockin’ and rollin’ with the new expansion have been dying.  The smokers are even returning at the gate.  The people who work the very same hours as their non-smoking brethren, but somehow wrangle about an hour’s worth of free breaks.  At least that’s the way it was in my Wall Street days.

--Merck CEO Ken Frazier will retire in June and be succeeded by Chief Financial Officer Robert Davis, the company said as the pharmaceutical giant reported fourth-quarter earnings that missed expectations.

Frazier has led the Kenilworth, New Jersey-based company since early 2011.  He’ll become executive chairman after he leaves the top post end of June. 

Davis has been CFO since 2014.  He had been president of Baxter International’s medical products business and spent 14 years at Eli Lilly in various finance roles.

Merck also reported fourth-quarter sales rose to $12.51 billion from $11.87bn in the prior-year period, while earnings were $1.32, up from $1.16.

Sales in Merck’s pharmaceutical business rose 8% to $11.37bn, driven by cancer drug Keytruda’s 28% jump to $3.99bn.  Sales of human papillomavirus vaccine Gardasil 9 surged 44% to $998 million.

--United Parcel Service reported fourth-quarter results that surged from a year earlier, coming in better than analysts expected.

Adjusted earnings climbed to $2.66 a share from $2.11 a share previously, well above consensus of $2.14.  Revenue jumped 21% to $24.9 billion in the three months through Dec. 31, ahead of the Street’s view for $22.9bn.

CEO Carol Tome said in a statement Tuesday: “Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPSers for their extraordinary efforts to deliver industry-leading service through the holidays.”

Largely owing to the pandemic, e-commerce sales were up 32% year-on-year to $188.2bn, according to Adobe, and for its part, UPS said U.S. domestic revenue rose 17% to $15.74 billion, with growth driven by small and medium-sized businesses.  Revenue per piece rose 7.8%, led by the company’s ground residential business.  International revenue jumped 27% to $4.77bn.

UPS said it was holding off from giving revenue or earnings guidance for 2021 because of economic uncertainty around the pandemic.  The shares rose on the news.

--The U.S. exported $28.75 billion of agricultural goods and related products to China in 2020, data from the Department of Agriculture showed today, missing the $36.5 billion targeted under the Phase 1 trade deal.  2013 saw the all-time high of $29 billion and, to be fair, after a very slow start to 2020, sales picked up briskly in the second half.

Soybean sales reached $14.16bn last year, less than the record $14.88bn in 2012.

President Biden is expected to maintain pressure on China but trade is not expected to be the driving force in his negotiations with Beijing that it was under Donald Trump.

U.S exports of pork and pork products to China surged 75% in 2020 to a record $2.28bn, USDA data showed, this after a disease outbreak in China’s hog herd.  Corn imports reached $1.2bn, just below the record $1.3bn in 2012.

--Chinese e-commerce giant Alibaba Group reported December quarter results that topped estimates as its core commerce business saw customers make more purchases and spend more as the Asian nation’s economy recovered from the pandemic.

“China was the only major economy to achieve positive GDP growth last year,” said CEO Daniel Zhang.  “Thanks to the rapid recovery of China’s economy, Alibaba had another very healthy quarter.”

Zhang said the results were bolstered by “another successful” annual 11.11 Global Shopping Festival on Nov. 11.  At the time, Alibaba said it sold $74.1 billion in general merchandise during the so-called Singles Day promotion, which also included some sales between Nov. 1 and Nov. 3.  A year earlier, Singles Day posted sales of $38.4bn.

In the three months through December, revenue rose 37% to $34.24 billion, with core commerce revenue up 38%.

Mobile monthly active users in China retail sites rose 21 million from the September quarter to 902 million, Alibaba said.

As for Alibaba affiliate Ant Group and its dual listing in Shanghai and Hong Kong, Zhang said the recent significant change in China’s financial technology regulatory environment means Ant’s “business prospects and IPO plans are subject to substantial uncertainties.”

But then Wednesday, Ant announced it had reached an agreement with Chinese regulators on a restructuring plan that will turn it into a financial holding company, making it subject to capital requirements similar to those for banks.

The plan calls for putting all of Ant’s businesses into the holding company, including its technology offerings in areas such as blockchain and food delivery.  As I had reported a week ago, Ant had envisioned putting only financial operations into the new structure.

An official announcement of the overhaul is expected soon.  But this will mark the start of a long process detailing capital requirements and other guidelines.

Alibaba shares rallied on the news, BABA owning about a third of Ant, as it removes some uncertainty. Ant can still explore an IPO, but it would not be any time soon as authorities would have to sign off on a listing.  Regardless, the valuation will be nowhere near what Ant was looking to fetch, $280bn in pre-money valuation before the IPO was halted in November.

--Ryanair Holdings lost more than $380 million in the fourth quarter, against a profit of about $105 million for the same period in 2019.

Revenue for the quarter tumbled 82 percent, while passenger numbers were down 78 percent in the quarter at 8.1 million from 35.9 million.

--American Airlines became the latest to say that some 13,000 employees are at risk of furlough when an aid package for airline workers expires on April 1, blaming slow vaccine rollouts and new international travel restrictions for dampening demand.

“We are nearly five weeks into 2021, and unfortunately, we find ourselves in a situation similar to much of 2020,” CEO Doug Parker and President Robert Isom said in a memo to employees which was part of a regulatory filing.

American furloughed 19,000 workers when a previous round of government payroll support ended on Oct. 1, but recalled them in December after a fresh $15 billion for the industry through March.

Aviation unions are pushing for another $15 billion in payroll assistance to protect jobs through the summer, and today, one key House leader, Peter DeFazio, said it will be part of the Covid relief package.

Large employers such as American, United and Delta are required by law to inform employees whose jobs are at risk, generally within 60 days.  American’s potential furloughs include 1,850 pilots and 4,245 flight attendants.

So let’s look at the latest depressing TSA daily checkpoint numbers….

2/4…36 percent of 2020 levels*
2/3…34
2/2…29
2/1…31
1/31…44
1/30…37
1/29…36
1/28…36
1/27…30

*2020 levels didn’t start sliding until early March, and then crashed mid-month with the national lockdown.

Today, we haven’t seen 1,000,000 passengers since Jan. 4, and the percentage figures are essentially the same as September, which isn’t good.  Last spring, the airlines were projecting a solid 50% by yearend 2020, and they planned accordingly.

--Chipotle Mexican Grill Inc. said costs related to the coronavirus pandemic have dented profit even as online orders boost sales.

Labor has become a growing concern for companies such as food producers.  Many restaurant chains have said they’ve had to raise pay to hire and retain workers in public-facing roles.  The Biden administration is also looking to boost the minimum wage, which would translate into higher wages for many chains.

Chipotle’s same-store sales increase of 5.7% over the prior year was in line with expectations, with the company saying online orders were up 177%.  Delivery now accounts for 25% of its sales.

The company continues to open new restaurants, 61 during the most recent quarter, including 42 of them with digital-order drive-throughs.  The chain said it expects to open about 200 restaurants in its 2021 fiscal year if coronavirus-related delays are minimal.

--Canada lost 212,800 jobs in January, according to Statistics Canada, which says the unemployment rate rose 0.6 percentage points to 9.4 percent last month.  This is the highest rate since last summer, wiping out the gains made in the fall.

The job losses were almost entirely concentrated in Quebec and Ontario, and mostly in the retail sector as Covid-19 lockdowns and restrictions closed many businesses.

--Finnish telecom network equipment maker Nokia warned of challenges to come this year as it tries to catch up with rivals after a strong finish to 2020.  While both Nokia and rival Ericsson have been gaining 5G customers that might otherwise have gone to China’s Huawei, Ericsson has fared better, winning also big 5G contracts in China, where the deployment of the next-generation network is in full swing.

“We have not yet made a breakthrough in 5G (in China) but of course we are not excluding that possibility going forward,” new Chief Executive Pekka Lundmark told Reuters.  “But we want to be prudent so that we do not want to be there at any cost.”

Nokia reported better than expected fourth-quarter revenue and underlying profit on Thursday but forecast 2021 revenue will fall to between $25-$26 billion, from a little over $26bn in 2020.

“We expect 2021 to be challenging, a year of transition, with meaningful headwinds due to market share loss and price erosion in North America,” said Lundmark.

Nokia has vowed to “do whatever it takes” to take the lead in 5G, as it banks on also capturing share from Huawei.  “We believe that we have year-to-date captured about half of the geopolitically influenced opportunities that are there,” Lundmark said.  “Most of these cases have been in Europe.”

Revenue at its mainstay networks business fell 7% to $6.05bn.

Nokia shares have seen wild swings over the last two weeks as the stock has been targeted by the retail trading frenzy, alongside GameStop and other tech companies.

--Does it feel like U.S. Chamber of Commerce CEO Thomas Donohue has been around our entire lifetimes?  It sure does to me.  The 83-year-old is leaving, according to numerous reports tonight.

--News Corp on Thursday reported its most profitable quarter since it spun off its publishing assets into a separate company from its TV assets more than seven years ago – including record earnings at The New York Post.

In the second quarter, News Corp posted net income of $261 million, or 39 cents a share vs. income of $103 million, or 14 cents, in the year-ago period. 

Weakness in the advertising market weighed on revenue, which dipped 3 percent to $2.41 billion, though digital ad growth was up 64 percent year-over-year.

Dow Jones, publisher of the Wall Street Journal, posted its largest profits since News Corp acquired the company in 2007, driven by record digital advertising revenues and continued growth in digital subscriptions, the company said.

--The New York Times set a record for its subscription business in 2020, the company said in an earnings report on Thursday.

After adding 2.3 million digital-only subscriptions in 2020, more than in any previous year, The Times exceeded 7.5 million subscriptions for its digital products and print newspaper.

In the quarter that started in April, when a great number of Americans were into a routine of working remotely, the company added 669,000 digital subscriptions.  It added 627,000 in the fourth quarter, which included Election Day.

In the fourth quarter, digital subscription revenue was $167 million, a 37 percent jump from the final months of 2019.  For the year, it was $598.3 million, a 30 percent rise.

A downside in the quarter, and the year, were ad sales.  Total ad revenue at The Times fell 26 percent in 2020, to $392.4 million, with print ad revenue bearing the brunt of the annual decline, at 39 percent, the company said.

--GameStop shares were all over the place again this week, though were trading below $50 in after-hours trading Thursday, before online brokerage app Robinhood said it has removed temporary trading restrictions on all stocks, including GameStop and AMC Entertainment Holdings Inc.  Earlier, Robinhood’s website had showed that the trading limit on GameStop shares was set at 500, while for AMC the limit was set at 5,500 shares.  Trading restrictions on a few other stocks had been lifted on Wednesday.

So shares in GameStop, which at one point last week in the pre-open market traded at $514, and then cratered throughout this week, are currently at $66.

For its part, Robinhood had issues on a number of securities owing to clearinghouse-mandated deposit requirements and Robinhood was forced to raise capital, which it has.

Treasury Secretary Janet Yellen said on Thursday that before she and financial market regulators took any action, they needed to “understand deeply” what happened in the trading frenzy involving GameStop and other retail stocks in recent days.

“We really need to make sure that our financial markets are functioning properly, efficiently and that investors are protected.”

Yellen said that regulators would “discuss whether or not the recent events warrant further action,” and added: “We need to understand deeply what happened before we go to action but certainly we’re looking carefully at these events.”

Yellen did not specify what potential actions could be taken by regulators to respond to the situation, and no one should expect any significant action soon, and I’m not sure much action is really required.

The action in the likes of GameStop and AMC was not a threat to the entire financial system.

Yes, some amateur investors lost their shirt no doubt this week, but others captured huge gains.  I have a friend who made a killing on Nokia, which was another stock swept up in the mania, and he promptly put his winnings down on a new Mustang EV… “black on black,” as he put it. 

As the Wall Street Journal editorialized:

“A margin call is not a conspiracy.  A clearinghouse is an intermediary between buyers and sellers in a financial market. It ‘clears,’ or finalizes, trades and makes sure the parties fulfill the contract and assets are delivered. It also mitigates risk by requiring that trades be backed by enough capital to reduce the chances that one of the trading parties goes bankrupt. This protects investors as well as brokers.

“Robinhood clears its trades through the well-known Depository Trust & Clearing Corp., which is owned by a consortium of banks, brokers-dealers and other financial firms.  You can fantasize that the DTCC is part of the conspiracy and ganged up on Robinhood at the request of banks to help short-sellers who were being squeezed by the Reddit traders….

“On Monday the Reddit crowds decided to bid up the price of silver, for whatever that exercise is worth.  Such trading raves may continue for some time now that market players have found they can use social media to form an investing mob and catch hedge funds and others napping.

“Short-sellers who were caught on the wrong side of the GameStop price movements have learned a hard lesson about risk in the current market.  So much the better for price discovery and trading discipline. There are no sinners or saints on either side of these transactions. There are consenting adults trading with their own money.

“In this era of limited social trust, financial markets are bound to become targets of populist conspiracy theorists on the right and left.  In the past, conservatives at least tried to understand how financial trading works before joining left-wingers like Rep. Alexandria Ocasio-Cortez and Sen. Elizabeth Warren in forming a hang-‘em-high posse against private markets.  Alas, in this age of conspiracy, knowing less gets you more attention.”

Various congressional representatives, from both sides of the aisle, criticized Robinhood for blocking access to certain highflying stocks a week ago Thursday.  The company said it was forced to act quickly to blunt the impact of market activity, in part because of SEC capital requirements.  Other brokers also changed their requirements for investing in big movers.

Meanwhile, after Citron Research’s Andrew Left argued recently that GameStop would fall to $20 fast, he was pilloried on social media and Left said his family was harassed.  He withdrew from his short position and said he would no longer comment on the stock.

“I had no idea what I’d set off,” he said a week ago.  Citron then said he would no longer publish short-selling research after 20 years of doing so.  “We will focus on giving long side multibagger opportunities for individual investors,” the firm said.

Melvin Capital Management, the hedge fund that has borne the brunt of losses from the soaring stock prices of heavily shorted stocks recently, lost 53% on its investments in January, according to people familiar with the firm.  Whatever.  I’m not shedding any tears for any loser in this episode.

But when it comes to hedge funds, and someone like Andrew Left giving up holding short positions, if hedge funds were to become far more cautious in this realm, that kind of defeats the purpose of hedge funds.  Traditionally, they have promised investors a cushion against market declines by being able to sell short and make money when stocks drop.  Funds are also less likely to use trading strategies such as put options, a kind of derivative that has to be disclosed and that the likes of Melvin used.

Bottom line, if there was any actual fraud in issues like GameStop, the SEC will find it.  But the bigger impact will be on the hedge fund industry overall.

--Finally, as expected, CNN president Jeff Zucker announced he will leave the cable news network at the end of 2021.  Zucker joined CNN in 2013, after being executive producer of NBC’s “Today” show in his 20s, and then as president of NBC Entertainment.

Foreign Affairs

China: Beijing’s most senior foreign policy official Yang Jiechi said the U.S. under Donald Trump had followed “misguided policies,” and called on the new administration to change course – even as comments from President Biden’s advisers echo his predecessor’s tough tone on China.

“For the past few years, the Trump administration adopted misguided policies against China, plunging the relationship into its most difficult period since the establishment of diplomatic ties,” said Yang, a Politburo member regarded as President Xi Jinping’s most trusted foreign policy aide.

The U.S. had an outdated mentality “of zero-sum, major-power rivalry” and needed to change to get the relationship back on track, Yang said.

While Beijing has been keen for a reset in ties, Biden’s team has signaled that China will be a central theme in its foreign policy, with political consensus in Washington remaining against a return to pre-Trump relations.

Secretary of State Antony Blinken said China posed the most significant threat to U.S. interests, and that he endorsed the Trump administration’s tougher approach to China, even if he disagreed with its tactics.

Biden has indicated he is in no hurry to engage with China and would do so once it was in “lockstep” with allies and partners.

Separately, Hong Kong unveiled controversial guidelines for schools in the Chinese-ruled city that include teaching students as young as six about colluding with foreign forces and subversion as part of a new national security curriculum.

Beijing imposed the security law on Hong Kong in June 2020 in response to months of often violent anti-government and anti-China protests in 2019 that put the global financial hub more firmly on an authoritarian path.

The Education bureau’s guidelines, released late on Thursday, show that Beijing’s plans for semi-autonomous Hong Kong go beyond quashing dissent, and aim for a societal overhaul to bring its most restive city more in line with the Communist Party-ruled mainland.

“National security is of great importance. Teachers should not treat it as if it is a controversial issue for discussion as usual,” the guidelines said.  Teachers should “clearly point out that safeguarding national security is the responsibility of all nationals and that as far as national security is concerned, there is no room for debate or compromise.”

Children in primary schools will learn how to sing and respect the national anthem, learn about police and the People’s Liberation Army as protectors of Hong Kong, as well as about the four main offenses in the security law, including terrorism and secessionism.

This is sick.

Russia: Opposition leader Alexei Navalny has been jailed for 3 ½ years in a case that Western states say is politically motivated and the anti-corruption campaigner believes was ordered by the country’s president, Vladimir Putin.

A Moscow court ruled that Mr. Navalny broke the terms of a suspended sentence by failing to report to Russian prison officials late last year, when he was recovering abroad from a near-fatal poisoning in Siberia.

He had already spent 10 months under house arrest so will be required to serve a further two years and eight months behind bars.

Tens of thousands of people across Russia have rallied in support of Navalny, 44, on recent weekends, and thousands were arrested.

“The reason for all this is the hatred and fear of one man, living in a bunker.  Because I mortally offended him simply by surviving when he ordered me to be killed,” Navalny said of Putin in the heavily guarded courtroom.

The judge dismissed Navalny’s insistence that Russian officials knew he was being treated in Berlin after last August’s poisoning with a Novichok nerve agent.

“No matter how much [Putin] pretends to be a great geo-politician, some kind of great world leader, he is angry with me now mainly because he will go down in history as a poisoner,” Navalny told the court.

“This is how it works: jail one to scare millions,” Navalny said.

“But this is not a show of strength…it’s a show of weakness,” he said of his trial.  “It’s impossible to jail millions or hundreds of thousands.  And I really hope that people will realize this more and more.  And when they do – and that moment will come – then this whole thing will collapse. Because you can’t jail an entire country.”

Riot police broke up protests across Russia on Sunday in support of Navalny, detaining more than 5,000 people who had braved the bitter cold and the threat of prosecution to demand he be set free. It was a number similar to the prior weekend, though last weekend, police in Moscow were ready, had closed metro stations, deployed hundreds of riot police, and the crowds still assembled, though not in one unified mass because of the closures.  Instead, Navalny’s allies used social media to repeatedly change the location of their rally, scattering the crowds over different parts of the city.

Editorial / Washington Post

“Having failed to kill Alexei Navalny in a poisoning attack, Russian ruler Vladimir Putin on Tuesday settled for second-best – condemning his nemesis to years in prison.  After a farcical hearing, a Moscow judge ordered Mr. Navalny to begin serving more than 2 ½ years for a six-year-old conviction that was found to be unlawful by the European Court of Human Rights.  But not before Mr. Navalny, who courageously returned to Russia last month knowing he would likely be jailed, delivered his own withering indictment of the ‘small man in a bunker’ who now faces the most serious political challenge in his 20 years of rule….

“Mr. Navalny’s words have the potential to move events in Russia.  Hundreds of thousands of his supporters have turned out in scores of cities across the country the past two weekends to protest his arrest, braving subzero temperatures and the batons of riot police.  According to Mr. Navalny’s organization, some 12,000 were arrested – the largest mass political detentions in Russia since the Stalinist era.  A video Mr. Navalny released last month documenting Mr. Putin’s corruption, including the vast palace he constructed on the Black Sea coast, has been viewed more than 100 million times on YouTube.  His fiery statement in court Tuesday was seen live online by half a million people, according to aides.

“The Putin regime is probably not at risk of collapse.  But its leader clearly fears the possibility of a ‘color revolution’ like those that toppled autocratic and pro-Moscow regimes in Ukraine and Georgia.  ‘This is happening to intimidate large numbers of people,’ Mr. Navalny said.  ‘They’re imprisoning one person to frighten millions.’  Most likely, it won’t work.  Though Mr. Navalny may now be locked away, the protest movement he inspired is likely to continue, driven by the powerful political network he has managed to create.  His aides claim that his emails and videos now routinely reach 10 million to 12 million people; his organization, which has offices in 40 cities, has been funded by small donations from more than 200,000 people.

“Western governments should be doing what they can to help this unprecedented challenge to Mr. Putin’s autocracy survive and grow.  The United States and many European capitals have been rhetorically supportive of Mr. Navalny: Secretary of State Antony Blinken issued another in a series of statements Tuesday calling for his release.  But the Biden administration and European Union should follow up with sanctions against the Russian officials involved in the latest repression – and they should heed the pleas of Mr. Navalny for action to expose and freeze the illicit assets held by Mr. Putin and his cronies outside Russia.  Mr. Putin has dedicated himself to exploiting the weaknesses in democratic systems.  Now is the time to return the favor.”

Editorial / Wall Street Journal

“We would have liked to have been in the room when Vladimir Putin confronted whoever came up with the idea to poison Alexei Navalny last year. The opposition politician nearly died, but the assassination attempt by Russian spooks has made him an even more prominent threat to the Russian dictator’s rule.

“The Kremlin had Mr. Navalny arrested upon his return to Russia in January…and on Tuesday a Russian court sentenced him to three-and-a-half years in prison (reduced by one year for time served). The charges of violating his parole from a previous conviction are a farce.  This is a political arrest and sentence.

“One lesson is that Mr. Putin and his gang must feel threatened.  Protests in support of Mr. Navalny have been growing in major Russian cities.  Mr. Putin has survived protests before, notably in 2012, but his popularity has sagged amid an economy weakened by lower oil prices and Western sanctions….

“But Mr. Putin will only be impressed if the Biden Administration can marshal a unified Western response that includes tougher sanctions, including against Kremlin cronies.

“NATO should also be on guard for an external provocation in case Mr. Putin wants to divert Russian attention from his domestic woes.  He’s done it before, as President Biden well knows.  He was Vice President at the time.”

Friday, Navalny urged his supporters to resist “intimidation” amid the growing crackdown on protesters.  A message, posted on his website, thanked them and insisted they could still “liberate” the country from the “thieves and occupiers” in charge.

Meanwhile, the Russian doctor who was in charge of treating Navalny after he was poisoned by Novichok died suddenly at the age of 55, according to multiple reports.

Sergey Maximishin died of a heart attack after being taken to the hospital where he worked on Wednesday night due to a spike in his blood pressure, Life.ru reported, citing a Russian Health Ministry spokeswoman.

Maximishin was the head of intensive care at his hospital in Omsk.

As for the Biden administration’s decision to extend the New Start treaty five years….

Editorial / Wall Street Journal

“New Start limits the number of deployed strategic nuclear warheads and bombs at 1,550.  It also caps the deployment of intercontinental ballistic missiles, submarine-launched missiles and nuclear-equipped heavy bombers. The deal would have expired Feb. 5, but Mr. Biden took the longest extension possible.

“This squanders useful diplomatic work by the Trump administration. While Washington withdrew from the Intermediate-Range Nuclear Forces (INF) and Open Skies treaties, which Russia was violating, it tried to negotiate a shorter extension to New Start last year.

“Talks began in earnest after Washington demonstrated that it wasn’t afraid of walking away from bad arms-control deals, including the Iran nuclear accord. The U.S. sought improved verification, provisions to address technological developments and a plan for future negotiations to include China. Both sides came close to signing an interim, one-year extension last year before talks were overtaken by the presidential election.

“ ‘The New Start treaty is in the national security interests of the United States,’ White House press secretary Jen Psaki said recently.  ‘This extension makes even more sense when the relationship with Russia is adversarial.’ The opposite is true.  Arms-control works best between trustworthy governments, not with adversaries like Russia willing to cheat.

“Former Trump national security adviser John Bolton recently called for a six-month extension, which would have provided time to address issues like tactical nuclear weapons and hypersonic missiles. Victoria Nuland, Mr. Biden’s nominee for the third-highest State Department post, last year suggested a one- or two-year extension.

“ ‘Washington should not grant Moscow what it wants most,’ she wrote, ‘a free rollover of new START without any negotiations to address Russia’s recent investments in short- and medium-range nuclear weapons systems and new conventional weapons.’  Yet that’s exactly what Mr. Biden has granted.

“This is an echo of the Obama Administration Russia policy of criticizing Mr. Putin while refusing to sell lethal arms to Ukraine.  Mr. Blinken said the U.S. is reviewing how to respond to Mr. Navalny’s arrest and didn’t rule out more sanctions. After its needless unilateral concession on New Start, Mr. Putin won’t be impressed by critical words alone.”

Iran: Iran’s foreign ministry on Saturday rejected any new negotiations or changes to the participants in Tehran’s nuclear deal with world powers, after French President Emmanuel Macron said any new talks should include Saudi Arabia.

“The nuclear accord is a multilateral international agreement ratified by UN Security Council Resolution 2231, which is non-negotiable and parties to it are clear and unchangeable,” Iranian Foreign Ministry spokesman Saeed Khatibzadeh was quoted by state media as saying.

Iran began breaching the deal’s limits on uranium enrichment activity after Washington withdrew from the pact in 2018 under then-President Donald Trump and reimposed economic sanctions on Tehran.

President Biden’s administration has said it will rejoin the deal but only after Tehran resumes full compliance with its terms.  But Saudi Arabia and the United Arab Emirates have said that Gulf Arab states should be involved this time in any talks, which they say should also address Iran’s ballistic missile program and its support for proxies around the Middle East.

Macron said any new talks on the nuclear deal with Iran would be very “strict” and that a very short time remained to prevent Tehran from having a nuclear weapon.

Khatibzadeh said Macron should “show self-restraint.”  “If French officials are worried about their huge arms sales to Persian Gulf Arab states, they better reconsider their policies,” he said. “French arms, along with other Western weapons, not only cause the massacre of thousands of Yemenis, but are also the main cause of regional instability.”

So while this dialogue was taking place, Iran was continuing to breach the nuclear deal and on Tuesday, the International Atomic Energy Agency said Iran had started enriching uranium with a second of three cascades of new centrifuges, a further violation.  Under the accord it was only allowed to enrich at one site, Natanz, and with older centrifuges. Iran’s ambassador to the IAEA said on Twitter that Tehran had started installing another line of centrifuges at Fordow, and has begun enriching uranium to the 20% purity it last achieved before the 2015 deal. 

The same day, Israel’s energy minister said it would now take Iran about six months to produce enough fissile material for one nuclear weapon.  The nuclear accord sets a limit of 3.67% enrichment purity, suitable for producing civilian nuclear energy.

Meanwhile, Iran’s long-range ballistic missile program continues, testing a new rocket on Monday with improved technology that could be used in its missile program, Tehran’s latest attempt to raise the stakes for the Biden administration ahead of potential negotiations over a new deal.

Myanmar: The military seized power in a coup after detaining civilian leader Aung San Suu Kyi, the former Nobel Peace Prize winner, and other senior members of her governing party.

All authority has been given to the top army commander and a one-year state of emergency has been declared, a statement on military television said, the army shutting down virtually all outside lines of communication and the internet.

The coup followed a landslide election win by Suu Kyi’s National League for Democracy (NLD).

In a letter written in preparation for her impending detention, she said the military’s actions put the country back under dictatorship.

In the early hours of Monday the military said it was handing power to commander-in-chief Min Aung Hlaing because of “election fraud.”

Myanmar, also known as Burma, was ruled by the armed forces until 2011, when democratic reforms spearheaded by Aung San Suu Kyi ended military rule, Suu Kyi coming to power after a 2015 election that turned her into an international icon.

But Suu Kyi, after this heroic move, then cut a deal with the devil, for which she has received widespread criticism in the West among those who used to see her as a hero.  For starters, hundreds of thousands of Rohingya fled army operations into refuge from Myanmar’s western Rakhine state in 2017, but she had remained popular at home.

But then political tensions soared and rumors of a coup were rampant, because as part of her election landslide, she sought changes to the constitution that would limit the generals’ power. 

The constitution granted 25% of seats in parliament for the military and control of three key ministries in Suu Kyi’s administration.

Police filed several charges against Suu Kyi, accusing her of breaching import and export laws, and possession of unlawful communications devices.  [Literally, walkie-talkies.]

As far as I’m aware, Suu Kyi and the deposed president, Win Myint, haven’t been heard from.  Min Aung Hlaing installed an 11-member junta.

If you forget where Myanmar is and why we should care, aside from the tragic Rohingya story, in which Bangladesh has not performed well either (many Rohingya fleeing there), aside from Bangladesh, Myanmar borders China.  As in China could de facto take it over in the blink of an eye, and thus have access to the Andaman Sea, which leads into the Strait of Malacca, where your editor has been, because I wanted to see firsthand what this critical spit of water was in terms of international cargo traffic, to the likes of South Korea, Japan and the United States, among others.  So use your imagination.

Random Musings

--Presidential approval ratings….

Rasmussen: 49% approve of President Biden’s job performance, 48% disapprove (Friday).
Gallup (initial survey): 57% approve of Biden’s performance, 37% disapprove (Jan. 21-Feb. 2). Donald Trump’s initial split was 45-45.

--In the above noted Quinnipiac University poll, President Biden receives a job approval rating of 49%, 36% disapprove.

Democrats in Congress: 44% approve, 46% disapprove.

Republicans in Congress: 26% approve, 64% disapprove.

Asked about several issue and whether they are a crisis, a problem but not a crisis, or not a problem at all:

Coronavirus pandemic: 68 percent say crisis, 25 percent problem but not a crisis, 6 percent not a problem at all.

The state of the nation’s economy: 45 percent say crisis, 46 percent problem but not a crisis, 7 percent not a problem at all.

Climate change: 43 percent say crisis, 33 percent problem but not a crisis, 21 percent not a problem at all.

People believing in Conspiracy Theories: 34 percent say crisis, 41 percent problem but not a crisis, 21 percent not a problem at all.

On Immigration: By an 83-12 margin, Americans support Biden’s proposal to create a pathway to citizenship for undocumented immigrants who were brought to the U.S. as children.

--The State of the Republican Party:

For starters, Kevin McCarthy is not playing his cards right, nor is the GOP.  McCarthy should be well-positioned to become Speaker after the midterm elections in 2022, Republicans being only a handful of seats away from retaking the House, but he totally botched the Marjorie Taylor Greene and Liz Cheney fractures within the House GOP.

Reminder…Greene has used her Facebook and Twitter accounts to call for the executions of House Speaker Nancy Pelosi, former President Barack Obama and other prominent Democrats she claimed were part of the “deep state.”

It was also discovered that Greene, prior to her November election to a first term, harassed survivors of a 2018 school shooting in Florida and falsely claimed they faked the massacre as part of a Democratic plot to implement stricter gun laws.  Greene has also pushed baseless claims about 9/11 being an “inside job” and peddled anti-Semitic theories about wealthy Jews using “space lasers” to set forest fires in California.

Many of Greene’s claims are inspired by the QAnon theory, which she has a history of promoting.  She was endorsed by former President Trump and has refused to apologize for her wild conspiracy mongering, until, possibly, now.  She also defeated in her primary race a brain surgeon, John Cowan…a man I saw interviewed on Michael Smerconish’s CNN show last Saturday who was a very impressive, obviously intelligent man.  But Georgia voters have their own rights and elected Greene.

So in terms of the House GOP, on one side are the Trump loyalists – two-thirds of whom voted to reject state electoral votes and endorse Trump’s Big Lie on voter fraud – while a significant minority are eager to move the party away from Trump and toward a more policy-driven foundation.

Senate Minority Leader Mitch McConnell correctly dismissed Greene’s statements as “loony lies” that have “nothing to do with the challenges facing American families or the robust debates on substance that can strengthen our party.”

“Somebody who’s suggested that perhaps no airplane hit the Pentagon on 9/11, that horrifying school shootings were pre-staged, and that the Clintons crashed JFK Jr.’s airplane is not living in reality,” McConnell said. 

Sen. John Thune (S.C.), the No. 2 GOP leader, correctly said House Republicans faced a simple choice: “Do they want to be the party of limited government…or do they want to be the party of conspiracy theories and QAnon?”

And Sen. Mitt Romney (R-Utah) was correct in saying: “Our big tent is not large enough to both accommodate conservatives and kooks.”

But Wednesday, a key House panel, the Rules Committee, advanced a resolution to remove Rep. Greene from her posts on the chamber’s education and budget committees and also ban her from getting any other appointments.

The vote – which fell entirely along party lines – sent the resolution to the full House, where it was to gain final approval on Thursday.

So then with Wednesday night’s moves by McCarthy, to allow Greene to retain both of her committee posts, having accepted her supposed apology, and then with House members taking a secret vote to support Liz Cheney as No. 3 in the House membership, a vote that went 145-61 in favor of Cheney, only it was “secret,” no record whatsoever kept of who voted what.

For her part, Cheney didn’t apologize for her Jan. 13 vote to impeach Trump, saying it was an act of conscience that she stands by.  She did argue, however, that she is a team player and should continue in her leadership role.  Representatives Jim Jordan (Ohio) and Louis Gohmert (Texas), two of the more obnoxious figures in Congress, if not the top two, argued against Cheney, insisting that an elected leader of the party should not have voted to impeach a Republican president.

Leader McCarthy defended Cheney, calling for unity in the party.

But McCarthy, by not handling the issue on his own with Greene, and by not being the leader he is supposed to be, exposed his members to a full vote on the House floor as to their stance on Greene, which gives Republican opponents in 2022 a major weapon to use against them!

Republicans, with rational leadership, could have regained some support in the suburbs in ’22, but not now.

Back to the House Rules Committee, Oklahoma Rep. Tom Cole, the panel’s top Republican, called Greene’s promotion of various crackpot conspiracy theories “deeply offensive,” “vile” and “repugnant,” but argued against the resolution on process ground.

“This hearing is premature,” Cole said, reasoning that the matter should first have been taken up by the House Ethics Committee to avoid setting a new precedent for reprimanding members.

But House Rules Chairman Jim McGovern (D-Mass.) said if the resolution sets a new precedent for removing members, he’s okay with that.

“If the precedent’s going to be that if somebody advocates for putting a bullet in the head of a member…if that is going to be the new determination as to what it takes to throw people off of committees, I’m fine with that,” he said.  “If this is not the bottom, I don’t know what the hell is.”

Robert Doar, president of the American Enterprise Institute, a conservative think tank with close ties to Republican policymakers, said it was incumbent on the GOP to accept Trump critics like Cheney into the fold and root out extremists or watch the party’s electoral coalition continue to unravel.

“The risk is that they’ll drive reasonable people who would likely be supportive of right-of-center policies away because they don’t want to be a part of a party that has those elements in it,” he said.  “What will happen is that the substance that you really care about – a certain kind of tax policy, a certain kind of budgetary policy, an approach on issues concerning cancel culture and identity politics – will lose.”

Editorial / Wall Street Journal…Tuesday

“Minorities in the House of Representatives are rarely relevant, but the current GOP minority is only a few seats from taking back control. That makes its deliberations Wednesday over two of its Members an important message about the party’s potential return to power.

“A few dozen backbenchers want to depose Wyoming Rep. Liz Cheney from the House leadership for voting to impeach Donald Trump.  Other Members are concerned about the high public profile of Marjorie Taylor Greene, a freshman Member from Georgia with kooky views.  If the House GOP punishes Ms. Cheney while saying nothing about Ms. Greene, it will deserve a longer time in the wilderness.

“Ms. Cheney’s impeachment decision was a vote of conscience, as GOP leaders said at the time.  She joined nine others in voting to impeach Mr. Trump after an assault on the Capitol that followed weeks of false election claims from the White House.  Some Republicans say Ms. Cheney has special obligations to reflect the GOP conference as a leader, but GOP leaders didn’t whip the vote and Minority Leader Kevin McCarthy was offering little guidance.

“Ms. Cheney should get credit for daring to stand alone despite the political risks.  The Trumpians are vowing to defeat her in a primary in 2022, and Rep. Matt Gaetz, a Trump acolyte, flew to a rally in Cheyenne last week to stir up opposition.  Donald Trump Jr. called into the rally to promote a primary challenge to her in 2022.

“If bowing before all things Trump is the litmus test for being a loyal Republican, the party should get used to continued losses in the suburbs.  Mr. McCarthy should be defending his colleague’s vote as a matter of principle, even if he disagreed with it, rather than living in fear of the wrath of Mar-a-Lago….

“As for Ms. Greene…(she) somehow won a crowded primary, then a runoff, in her heavily GOP district.  But it’s not clear how tuned-in many Georgians were to her wilder views.  John Cowan, the Republican she beat, recently said voters wanted a flamethrower.  Now, he added, ‘A lot of people call me and say, ‘Wow, we didn’t know she was really going to be this way!’’ Mr. Cowan could have used more help from the rest of the party.

“But Ms. Greene won, and she deserves to be judged on how she handles herself in office.  Democrats also have their share of cranks in the ranks.  ‘Israel has hypnotized the world, may Allah awaken the people and help them see the evil doings of Israel,’ Democratic Rep. Ilhan Omar once wrote.  After being elected, she explained her view of why Congress backs Israel: ‘It’s all about the Benjamins baby.’

California Rep. Maxine Waters urged people to harass Trump Administration officials at restaurants or gas stations, and she now runs the Financial Services Committee.  The point is that ousting a Member of Congress has usually been left to the voters, with the exception of criminal behavior.

“The House GOP could deny Ms. Greene committee assignments, as it did with former Iowa Rep. Steve King in 2019.  But Mr. King had spent years in Congress making noxious racially tinged statements. Iowa voters defeated him in a primary.  Ms. Greene has been in the House for only a month.  Mr. McCarthy’s best option for now might be to warn her about future comments and behavior, and if she crosses a line he can then strip her of committee slots.  Voters in her district will get another chance in 2022, and Georgia Republicans could also reconfigure her district based on the 2020 Census.

***

“Congress has had many oddballs over the decades, but in our social-media age the opposition will try to turn the words of even a single Member against the whole party. That’s the GOP’s Marjorie Taylor Greene problem.  Congress today also has many Members like Mr. Gaetz, who view the House as a platform for their personal political brand rather than a place to legislate.

“The main goal of the House minority is to become the majority, and in 2022 Republicans should have an excellent chance. But they’ll squander it if they purge serious Members like Liz Cheney and let themselves be defined by conspiracy theorists and Parkland truthers.”

So, Thursday night the Democratic-led House voted mostly along party lines to remove Rep. Greene from her two committees, the vote 230-199 with 11 Republicans joining every Democrat in stripping her from the Education & Labor Committee and the Budget Committee.

Leader Kevin McCarthy in the charged debate leading up to the vote: “This resolution sets a dangerous new standard that will only deepen division within this House. For all their talk about norms and institutions, it’s the Democrats who’ve acted to undermine the People’s House at every turn.”

For her part, Greene took to the floor earlier Thursday to disavow some of her previous incendiary posts on social media in a last-ditch effort to avoid punishment.

Though she expressed some regret, she never apologized.

“During my campaign, I never said any of these things,” she said.  “Since I have been elected for Congress.  These were words of the past and these things do not represent me, they do not represent my district, and they do not represent my values.”

The 11 Republicans joining all Democrats in voting to remove Greene:

Brian Fitzpatrick (Pa.), Carlos Gimenez (Fla.), Mario Diaz Balart (Fla.), Chris Jacobs (N.Y.), John Katko (N.Y.), Young Kim (Calif.), Adam Kinzinger (Ill.), Nicole Malliotakis (N.Y.), Maria Salazar (Fla.), Chris Smith (N,.J.), Fred Upton (Mich.)

Editorial / Washington Post

“The House voted Thursday to expel Rep. Marjorie Taylor Greene from the Budget Committee and the Education and Labor Committee.  Republicans said the vote set a bad precedent. But blame for this episode lies first with Ms. Greene herself, with her extensive history of offensive conspiracy theorizing, and second with the rest of the House Republican caucus, which failed to do anything about the dangerous crackpot in its midst….

“(Greene) assures us further that she reached some kind of a turning point in 2018, perhaps after she speculated that the California wildfires of that year may have been caused by a Jewish-conspiracy space laser.  If so, she kept her recovery well-hidden.  It was already 2019 when she claimed that a body double had replaced Supreme Court Justice Ruth Bader Ginsburg. It was during her 2020 campaign that she said, ‘The only way you get your freedoms back is if it’s earned with the price of blood.’

“Enough was known about Ms. Greene before committee assignments were handed out that Republican leaders should have prevented her from taking roles on such high-profile panels. Her posting on the education committee was particularly galling, giver her previous statements questioning the reality of school shootings and accosting their victims.  As revelation after revelation about her offensive past emerged, Republicans should have reconsidered.  Instead, they declined on Wednesday to take a stand against kookiness, forcing Thursday’s vote.

“Republicans’ failure to police their own put Democrats in a tough position.  The notion of allowing Ms. Greene to remain on plum committees is abhorrent. But using a vote of the full House to strip a member of the minority party of her committee assignments sets a precedent that may well be misused down the road.

“That a corrosive influence such as Ms. Greene enjoys good standing among her House Republican colleagues offers one more sign that the House GOP is morally adrift.  Thursday’s vote should never have had to happen.  Republicans should have had more self-respect than to support her last year, to welcome her with full honors and to allow the situation to escalate as it did.”

I couldn’t agree more…and as I said earlier, Kevin McCarthy foolishly allowed this to get to the point where he put his members on record…and by 2022, this certainly won’t help them in their attempt to retake the House.

--Rep. Adam Kinzinger on Sunday offered a glimpse of what it’s like being one of the 10 House Republicans who voted to impeach former President Donald Trump: Friends and family turned against him, and he was told he’s “possessed by the devil.”

“Look it’s really difficult.  I mean, all of a sudden imagine everybody that supported you, or so it seems that way, your friends, your family, has turned against you.  They think you’re selling out,” the Illinois congressman said on NBC’s “Meet the Press.”

“I’ve gotten a letter, a certified letter, twice from the same people, disowning me and claiming I’m possessed by the devil.”

Kinzinger added: “If you look at Matt Gaetz going to Wyoming because, what, a tough woman has an independent view and he doesn’t want to have to go out and explain why he didn’t vote for impeachment, that’s totally GOP cancel culture,” he said.  “What we’re standing for, and I think what, frankly, a significant part of the base wants, is to say, ‘Look, we can have diversity of opinion.’”

Kinzinger then released a video, touting a GOP voter base that wants to give up the division and conspiracy theories that he says have come to define the party.

“The biggest danger right now is that we’ve become a party that dabbles – not just dabbles – we traffic in conspiracies and we traffic in lies,” Kinzinger said.

“Republicans must say enough is enough.  It’s time to unplug the outrage machine, reject the politics of personality, and cast aside the conspiracy theories and rage.  It’s time to turn back from the edge of darkness and return to the ideals that have long been our guiding light,” he said in the video.  “It’s now or never.  The choice is ours.  I’ve made mine, and I hope every Republican, and every American who shares our values, will choose to join me.  Let’s take back our party.”

He says he’s trying to steer the party of Ronald Reagan back toward hope, optimism and truth.  Kinzinger said he is clear-eyed on the challenges he’s likely to confront among Republicans still faithful to Trump.

“Would we lose the Proud Boys? Maybe.  I’m fine with that,” he said.  “But we’d be bringing in…that Republican who maybe voted Biden and then Republican down-ballot because they couldn’t stand Donald Trump but they gave the Republican Party one last shot.”

--Nebraska Republican Sen. Ben Sasse, in an amazing five-minute video after local news reports revealed the state party was considering a censure motion for the senator’s rebuke of Trump following the Capitol insurrection, denounced the party’s State Central Committee.

Politics isn’t about the weird worship of one dude,” Sasse said.  “The party can purge Trump skeptics.  But I’d like to convince you that not only is that civic cancer for the nation, it’s just terrible for our party.”

In his video statement, Sasse cast himself as a loyal conservative and differentiated between his constituents and members of the central committee.  He said very few Nebraska voters “are as angry about life as some of the people on this committee.”

“Political addicts don’t represent most Nebraska conservatives,” Sasse said.

The senator, noting (rightly) that he is one of the most conservative members of the Senate, said his party was dissatisfied with his “not bending the knee” to Trump.

Sasse also used the video to reiterate his disdain for Trump’s behavior between Election Day and his departure from office, when Trump continuously spread false claims that the election was stolen from him. Sasse said the Capitol riot “happened because the president lied to you” and because Trump “riled a mob that attacked the Capitol – many chanting ‘hang Pence.’”

“If that president were a Democrat, we both know how you’d respond,” Sasse said.  “But, because he had Republican behind his name, you’re defending him.”

--Gov. Gavin Newsom’s job approval rating among California voters has plummeted, driven largely by dissatisfaction over the state’s response to the Covid-19 pandemic and adding fuel to a Republican-led recall campaign, according to a new poll by the UC Berkeley Institute of Governmental Studies.

More than a third of the state’s registered voters said they would vote to oust Newsom from office if the recall qualifies for the ballot, though 45% said they would oppose such a move, the survey found.

The poll also found that just 31% of those surveyed thought that Newsom and other state government leaders have done an excellent or good job handling the pandemic, while 23% said they have done a fair job and 43% called it a poor job.

--Sarah Ellison and Jeremy Barr of the Washington Post had a good report on the crisis facing Fox News, as best exhibited by the behavior of Sean Hannity, who “seems to have been working through a process, live and on camera….

“For a few weeks, it manifested as the denial shared by his fellow believers in the ex-president’s unsupported claims of election fraud. After the inauguration of the new president, Hannity pivoted to the next stage – anger – as he lashed out at ‘the weak, the frail, the cognitively struggling Biden.’  More recently, he has displayed something closer to depression, as he engages his viewers in a session of public mourning.

“ ‘My heart’s troubled,’ he told his on-air colleague Laura Ingraham.  ‘It’s aching for my country right now.’

“Hanity’s process is a window into the current tumult inside Fox News, as the former president’s former favorite network tries to find its place in a post-Trump reality… But never before had a network been so closely affiliated with a commander in chief.”

I think pollster Frank Luntz put it best: “Fox has succeeded for years in straddling the line between a quality news organization and the opinion side. But Trump won’t let that happen anymore, and neither will his supporters.  They want their ‘news’ to affirm them rather than inform them.”

Separately, Smartmatic, the voting software company that former President Trump’s lawyers falsely accused of manipulating vote counts in the 2020 election, has filed a $2.7-billion defamation lawsuit against Fox News and three of its on-air hosts – Maria Bartiromo, Lou Dobbs and Jeanine Pirro – who presented the disinformation on their programs.

The suit, filed Thursday in New York State Supreme Court, also names Trump’s lawyers Rudy Giuliani and Sidney Powell, who were frequent guests on Fox News programs in the weeks after the November election, which the former president insisted was rigged against him.

And then tonight, Fox abruptly canceled “Lou Dobbs Tonight,” its highest-rated show.

--The Screen and Actors Guild, SAG-AFTRA, delivered a one-liner Thursday when Donald Trump resigned from the actors union ahead of a disciplinary hearing over his role in the Jan. 6 Capitol riot.

“Thank you,” the guild’s leadership said in a terse, two-word response.

Trump had sent a petulant letter “revoking” his union membership.

“I write to you today regarding the so-called Disciplinary Committee hearing aimed at revoking my union membership.  Who cares!” Trump wrote.

“While I’m not familiar with your work, I’m very proud of my work on movies such as Home Alone 2, Zoolander and Wall Street,” he continued, naming a few more credits including his “Apprentice” reality show.

“This letter is to inform you of my immediate resignation from SAG-AFTRA.  You have done nothing for me,” he wrote.

--Uh oh…this isn’t good.

Mark Johnson / Milwaukee Journal Sentinel

“A new and always fatal disease that has been killing chimpanzees at a sanctuary in Sierra Leone for years has been reported for the first time by an international team of scientists led by researchers at the University of Wisconsin-Madison.

“The disease, reported Wednesday in the journal Nature Communications, is caused by a newly discovered species of bacterium and comes as the world wrestles with a devastating pandemic caused by another novel foe, the new coronavirus.

“Although the chimpanzee illness has yet to be found in a human being, the two species share about 99% of their hereditary material, or DNA.

“ ‘There are very few pathogens that infect chimpanzees without infecting humans and very few pathogens that infect humans without infecting chimpanzees,’ said Tony Goldberg, one of the authors of the paper and a University of Wisconsin-Madison professor of epidemiology."

Lethal diseases, including Ebola and HIV, have jumped from great apes to humans.  Other diseases, such as influenza and polio, have passed the other way…humans to apes.

Ebola had about a 50% fatality rate.

Goldberg added: “The staff at Tacugama (Sanctuary in Freetown, Sierra Leone) are super worried. It looks like something we need to be concerned about.”

Yet another reason to sleep with one eye open.

--So we had a big snowstorm in my area this week. It started Sunday afternoon and literally went through Tuesday morning, and then we even had some more, related to the same storm, Wednesday.

New Jersey’s all-time record for a single storm was set all the way back in 1899, Cape May, 34 inches.

Unofficially that was surpassed by the community of Mount Arlington, not too far away, with 35.5 inches, though it takes awhile for the weather folks to make this official.  But the people of Mount Arlington are psyched they could forever be in the record books.

Personally, the storm was another reminder why many of us can’t wait for spring…and golf.

---

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

We pray for the healthcare workers and first responders.

God bless America.

---

Gold $1811
Oil $56.97

Returns for the week 2/1-2/5

Dow Jones  +3.9%  [31148]
S&P 500  +4.7%  [3886]
S&P MidCap  +5.8%
Russell 2000  +7.7%
Nasdaq  +6.0%  [13856]

Returns for the period 1/1/21-2/5/21

Dow Jones  +1.8%
S&P 500  +3.5%
S&P MidCap  +7.4%
Russell 2000  +13.1%
Nasdaq  +7.5%

Bulls  57.8
Bears 16.7 [Prior week’s split, which was delayed, 61.2 / 16.5]

Hang in there.  Mask up…wash your hands.

Enjoy the Super Bowl.

Brian Trumbore

 

 



AddThis Feed Button

-02/06/2021-      
Web Epoch NJ Web Design  |  (c) Copyright 2016 StocksandNews.com, LLC.

Week in Review

02/06/2021

For the week 2/1-2/5

[Posted 9:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Special thanks to Mark R.

Edition 1,138

Deficit, Schmeficit…what’s a couple $trillion among friends?  I’m not happy, but then I’m the same classic Republican I’ve always been.  A Mitt Romney conservative…fiscal responsibility, standing with our allies, pushing back against the likes of Kim Jong Un and Vladimir Putin, defender of human rights.

But under Donald Trump, we were already headed in the wrong direction even before the pandemic hit.  The deficit was exploding during his four years…it was a $trillion before the first Covid relief program. 

New Treasury Secretary Janet Yellen and Federal Reserve Chairman Jay Powell are right, however, when they say if you’re going to spend big on relief, at least interest rates are at historically low levels and thus the interest expense on the deficit is, cough cough, relatively minimal.

But as we stare down the barrel of a new $1.9 trillion relief package, December’s $900 billion parcel hasn’t even been fully delivered (the postal service really, really sucks these days, I can’t help but interject…12 days…12 freakin’ days for some of my bills to get to their destination the past few weeks when these same deliveries never took more than three days before…but I digress).

I agree with Louisiana Republican Sen. Bill Cassidy, who said the other day that the Biden plan, which the Democrats are now pushing through, has parts of it that look like whoever was in charge just Googled a few terms and, presto, decided $300 billion was the right amount for the Box where Carol Merrill is standing.

But to my fellow Republicans bitching up a storm and blaming our new president for being perhaps a bit disingenuous when it came to ‘unity’, well, blame President Trump for losing Georgia…the two Georgia Senate seats!  That’s all on his legacy.  Win just one of them and we are having an entirely different discussion today.  It’s not real complicated.  Again, the man with the orange hair first lost the House, then the White House, and then the Senate…in that order.  And he lost the popular vote twice.

So we are where we are, and after this week’s episode of “Tales of Marjorie,” who knows where the Republican Party will be come 2022 and the mid-term elections.  As I explain down below, Kevin McCarthy could not have handled the situation in his House caucus any worse this week.

It’s now on President Joe Biden, though.  There is little doubt that with the stimulus, and assuming the vaccine rollout continues to improve, 2021 could see a roaring economy, and Biden’s approval rating would then be as strong, if not better, as it is today in the first Gallup poll, 57%.

But at what price?  When will inflation really begin to make a comeback, which will send the bond market, and equities, in a tailspin as the Federal Reserve is forced to act sooner than they wanted to?

And not for nothing, but President Trump left his successor a mess on the foreign policy front.  Iran and it’s nuclear program is an immediate concern; China is far more powerful than four years ago militarily and Xi Jinping is liking his military fatigues; Lil’ Kim will without a doubt test a ballistic missile of some sort very soon, just to let Biden knows he has to pay attention to him; while Putin, aka “the poisoner,” in Alexei Navalny’s words, is scared his assets could be frozen and he no doubt is wondering who in his inner circle he can trust these days. [Hint: No one.]

And, heck, we lost actor Christopher Plummer today, a man responsible for one of the coolest movie roles in Hollywood history, Captain von Trapp, in perhaps the most beloved picture of all time.

But we do have the Super Bowl, thank God.  I didn’t think it would be possible, going back to August, or even October, but we’re here…and on time.  Good for the NFL…and us. 

Enjoy the game, and let’s hope it’s a good one, given the classic quarterback matchup…Brady vs. Mahomes.

‘Cuz next week, boys and girls, is going to be yet another s---show.  Impeachment II, which in terms of entertainment value (think videos), will be more exciting to watch, and depressing, than Impeachment I.  We’ll be at each other’s throats all over again.

Aren’t the 20s off to a great start?!

---

Well, to button up the action on the budget and Covid relief package front, the House adopted a budget resolution that cleared the Senate early Friday, paving the way for action in the coming weeks on President Biden’s $1.9 trillion stimulus bill with only Democratic votes needed for approval.

The resolution cleared the House on a 219-209 vote, hours after Senate Democrats were forced to play their Harris hole card; the Vice President being the tie-breaking vote in a 50-50 Senate.  The House then had to vote again after the Senate made mostly cosmetic changes during a 15-hour amendment marathon.

President Biden said in remarks at the White House today: “If I have to choose between getting help right now to Americans who are hurting so badly and getting bogged down in a lengthy negotiation – or compromising on a bill that’s up to the crisis – that’s an easy choice.  I’m going to act and I’m going to act fast.”

And, indeed, the House is going to act quickly, it then goes back to the Senate and the stimulus bill should be in place before expanded unemployment benefits expire March 14…or thereabouts.

There are a few issues yet to be wrangled over, like the income level on the $1,400 checks, items in which the White House, if it really wanted to, could at least compromise a little with the other side, but I’m not getting my hopes up.

West Virginia Republican Senator Shelley Moore Capito, one of the ten Republicans who met with the president at the White House to see if there were grounds for cooperation, said today:

“We were ready and willing to work together with Democrats and the White House to get coronavirus under control, kick-start America’s economy, and ensure our kids return back to the education they deserve.

“We offered an alternative to the president that meets our recovery needs while remaining fiscally responsible.  Democrats ignored it, refusing to work across the aisle.”

At least Republicans are going to get a win.  The proposal to raise the federal minimum wage to $15 by 2025 will have to wait.  At least a non-binding amendment in the Senate from Thursday strongly hints that the minimum wage issue will need to be taken up separately at a later date.  Senate Democrats cannot afford to lose a single vote on the stimulus bill and West Virginia’s Joe Manchin has said he opposes the $15 minimum wage provision.

And some House Democrats have expressed unease with taking a purely partisan approach so there will be some changes around the edges.

Biden Bits

--President Biden recommitted the United States to global alliances and a role in the world that projects democratic principles, using his first major foreign policy address to promise that he will counter “advancing authoritarianism” and to announce an end to U.S. support for offensive operations in Yemen that are blamed for thousands of civilian deaths.

Biden also said he would increase the number of refugees admitted to the United States and freeze troop redeployments from Germany, reversing Trump administration policies that Biden sees as out of step with American values (though it is not really clear if any redeployments in Germany have actually been taking place).

“We will repair our alliances and engage with the world once again, not to meet yesterday’s challenges, but today’s and tomorrow’s,” Biden said during an address at the State Department that attempted to turn the page on isolationism and restore diplomacy as the tool of choice.

“America is back. Diplomacy is back,” Biden said, vowing the U.S. will rebound from the attempted insurrection last month “stronger, more determined and better-equipped to unite the world in fighting to defend democracy because we have fought for it ourselves.”

Biden’s speech was short on specifics, painting his traditional policy views with a broad brush, such as in confronting human rights abuses and tyranny in the likes of China, Russia and now Myanmar.  He promised American diplomats demoralized by the Trump years, “I’ll have your back.”

Biden did say with regards to Russia’s Vladimir Putin: “I made it clear to President Putin, in a manner very different from my predecessor, that the days of the United States rolling over in the face of Russia’s aggressive actions, interfering with our elections, cyberattacks, poisoning its citizens, are over,” Biden said.

“We will not hesitate to raise the cost on Russia and defend our vital interests,” he said, while working alongside Russia on some international problems.

Biden said Alexei Navalny should be released from detention immediately.

Calling China “our most serious competitor,” Biden promised a similar approach balancing confrontation and cooperation.

“We’ll confront China’s economic abuses, counter its aggressive, coercive action, to push back on China’s attack on human rights, intellectual property and global governance. But we’re ready to work with Beijing, when it’s in America’s interest to do so.”

--A new Quinnipiac University poll two weeks into the Biden presidency has a majority of Americans, 61-34 percent, saying that they are generally optimistic about the next four years with Biden as president, according to a national poll of 1,075 adults.  However, there were sharp divisions by party identification.

Democrats by 90-7 percent and independents by 62-35 percent say that they are optimistic.  Republicans say by a 65-27 margin that they are pessimistic.

Despite an overall majority being optimistic, 69 percent of Americans say they are either very dissatisfied or somewhat dissatisfied with the way things are going in the nation today.

But nearly 7 in 10 Americans support the Biden administration’s proposed $1.9 trillion stimulus relief bill in response to the pandemic, as 68% say they support it and 24% oppose it.

A majority (56-35 percent) say Biden is doing more to unite the country than to divide it.

--Defense Secretary Lloyd Austin has called on the services to conduct a 60-day stand-down on the issue of extremism in the military, prompted by the Jan. 6 attack on the Capitol and subsequent reports of both active-duty and former service members attending a rally calling to overturn the 2020 election and the riot that ensued.

Austin held a meeting Wednesday of the service secretaries and Joint Chiefs to ask them about their concerns and ideas for improving the situation.

Pentagon spokesman John Kirby told reporters, “Even though the numbers might be small, they may not be as small as we would like them to be, or we believe them to be,” Kirby said of the prevalence of troops with extremists views, ties or activities.  “And that no matter what it is, it is not an insignificant problem.”

Kirby said of Austin’s direction to the service secretaries and Joint Chiefs: “It wasn’t a blithe, ‘Hey, just go talk to your people.’  He was very clear that he wants commands to take the necessary time.  And I didn’t hear him be overly proscriptive about that…to speak with troops about the scope of this problem, and certainly to get a sense from them about what they’re seeing at their level.”

DoD does have a 2012 instruction that prohibits extremist activities, though it doesn’t clearly define extremism itself.  Generally, the services handle these investigations at the unit level – or with the FBI, if it comes to plans for attacks, for instance – and there is no requirement to report those up to service headquarters.

Military Times’ polling has shown that, anecdotally, more than one-third of active-duty troops, and more than half of minority service members, have witnessed signs of white supremacy in their colleagues.  Further, survey respondents ranked white nationalism as a bigger national security threat than terror groups affiliated with Islam.

--The Senate confirmed Alejandro Mayorkas as the next secretary of Homeland Security by a narrow margin, 56-43, as several Republican senators said they disapproved of President Biden’s immigration policy proposals, including one to provide a citizenship path to 11 million immigrants in the country without a permanent legal status.

Former South Bend, Ind., Mayor Pete Buttigieg, by contrast, sailed through 86 to 13 to become the new Transportation secretary.  His confirmation hearing was a relative lovefest.

--Rich Lowry / New York Post

“Joe Biden is off to the most left-wing start of any Democratic president in recent memory.

“Just two weeks later, the dulcet tones of Biden’s inaugural address already seem an artifact of a bygone era.  Republicans will hammer him for the rest of his presidency for failing to deliver on his unifying message, but the fact is that Biden is governing as he promised – further to the left of his own record, further to the left of his ex-boss, former President Barack Obama, and further to the left of any Democrat who made his career prior to the ascendancy of the cultural left.

“It isn’t new for Democratic presidents to want to tax, spend and regulate, even if Biden seeks to do more of all three than his immediate predecessors.  Biden layers on top of this a cultural agenda that represents a new dimension of radicalism that would be alien and baffling to bygone Democrats, who may have wanted to extend the New Deal but never sought to transcend the gender binary.

“Biden is willing, too, to go it alone via rapid-fire unilateral executive actions.

“If Lyndon Johnson gave us the Great Society, he came to office after the assassination of John F. Kennedy seeking to fulfill the legacy of his martyred predecessor, which included passing a tax bill that reduced income-tax rates across the board and slashed corporate taxes.  Once he was elected in his own right in 1964, Johnson embarked on a spate of federal activism that no subsequent Democrat has been able to match, although Johnson largely enacted his priorities the old-fashioned way, by passing bills through Congress. And he operated in a much more culturally conservative country and party….

“Biden is out of the box with a proposed $1.9 trillion relief bill that includes a $15-an-hour minimum wage, not too long ago the pipe dream of his party’s socialist wing, and a massive bailout of states and localities.  Biden campaigned on a $4 trillion tax increase that one sympathetic observer has said would be ‘one of the largest wealth transfers in American history.’  Meanwhile, he is filling positions beneath the Cabinet level with progressives with a mandate to increase regulation across the board.

“The economic agenda is augmented by new progressive causes that were just beginning to get a foothold back in the Clinton and Obama years.  Biden’s obsession with fighting climate change speaks of an overwhelming hostility to fossil fuels as such that is something new….

“There will also be a continual focus on what Biden’s chief-of-staff calls ‘a racial-equity crisis,’ which will be a warrant for a new, more aggressive identity politics.

“The lesson is that the most important thing that any movement can do is influence the direction of a major political party.  If the center of gravity of a party moves, the entire establishment moves with it.  So it is with Biden, who has never been woke or surrounded himself with radicals, yet is attempting to deliver victories to the left-wing of his party almost unimaginable eight or 12 years ago – and do it quickly.

“We can’t really say we weren’t warned, even if Biden did everything he could to obscure the message with his mood music of moderation and unity.”

Trump’s Impeachment, Part Deux

--The Democratic lawmakers who will prosecute former President Trump will say Trump pointed a mob “like a loaded cannon” at the U.S. Capitol before the deadly Jan. 6 rampage.  In a brief filed a week before the trial is set to begin, Tuesday, Feb. 9, nine House lawmakers known as impeachment managers also rejected Republican claims that it would be unconstitutional to try Trump since he became a private citizen after leaving office on Jan. 20.

The Democrats urged the Senate to bar Trump from holding office again.

“President Trump’s conduct offends everything that the Constitution stands for,” the managers wrote in an 80-page brief that noted that Trump had begun voicing his intention to contest an election loss months before the Nov. 3 vote was held.

“He summoned a mob to Washington, exhorted them into a frenzy, and aimed them like a loaded cannon down Pennsylvania Avenue.  As the Capitol was overrun, President Trump was reportedly ‘delighted,’” they said.

One of Trump’s recently hired lawyers, David Schoen, called the impeachment process “completely unconstitutional” in an interview with Fox News on Monday but did not outline the legal strategy.

“I think it’s also the most ill-advised legislative action that I’ve seen in my lifetime,” Schoen said.  “It is tearing the country apart at a time when we don’t need anything like that.”

In their brief, the Democratic impeachment managers said the Senate has jurisdiction to try Trump now because the House impeached him while in office for acts he committed as president.

“There is no ‘January Exception’ to impeachment or any other provision of the Constitution,” the managers said.

Trump’s new defense attorneys then filed a 14-page response to the House article of impeachment, denying Trump incited the crowd at his Jan. 6 rally, and while the defense stopped short of embracing his baseless claims that the election was rigged, they defended his right to argue that massive fraud led to his defeat, a false claim echoed by his supporters as they ransacked the Capitol that day.

Democrats drew a direct line between Trump’s rhetoric and the violence.  But Trump’s defense team argued that free-speech protections allowed him to make such allegations without penalty.

House Democrats on Thursday asked Trump to testify under oath for the trial, saying the former president must explain why he and his lawyers have disputed key factual allegations at the center of the case.  The president, through his attorneys, declined to do so.

Play ball!

The Pandemic….

Great news…the numbers are coming down, from cases and hospitalizations, to deaths.  There is no doubt that increased mask wearing, and the rollout of vaccines, is helping.

But we still have a long ways to go.  This weekend (meaning Sunday and Monday’s numbers, if not Saturday’s), I imagine due to the way the reporting slows down, we’ll have our first daily case figure under 100,000 since November.  But virtually all experts are concerned with a looming spike over the variants.

Covid-19 death tolls, as of tonight….

World…2,308,842
USA…470,705
Brazil…230,127
Mexico…164,290
India…154,956
UK…111,266
Italy…90,618
France…78,603
Russia…75,732
Germany…61,661
Spain…61,386
Iran…58,336
Colombia…55,403
Argentina…48,985
South Africa…45,902
Peru…41,753
Poland…38,712
Indonesia…31,202
Turkey…26,577
Ukraine…23,387
Belgium…21,260
Canada…20,609

Source: worldometers.info

U.S. daily death tolls…Sun. 1,886; Mon. 1,904; Tues. 3,644; Wed. 3,999; Thurs. 3,532; Fri. 3,572.

Covid Bytes

--Johnson & Johnson said on Thursday it has asked U.S. health regulators to authorize its single-dose Covid-19 vaccine for emergency use, and it will apply to European authorities in the coming weeks.  The drugmaker’s application to the Food and Drug Administration follows its Jan. 29 report in which it said the vaccine had a 66% rate of preventing infections in its large global trial.  J&J’s single-shot vaccine could help boost supply and simplify the U.S. immunization campaign, amid concerns of fresh surges due to the more contagious UK variant and the rest.

J&J aims to deliver 1 billion doses in 2021 with production in the United States, Europe, South Africa and India.

Most importantly, the J&J vaccine was 85% effective in stopping severe disease and preventing hospitalization across all geographies and against multiple variants 28 days after immunization.

--AstraZeneca’s Covid-19 vaccine does more than prevent people from falling seriously ill – it appears to reduce transmission of the virus and offers strong protection for three months on just a single dose, researchers said Wednesday in an encouraging turn in the campaign to suppress the outbreak.

The preliminary findings from Oxford University, a co-developer of the vaccine, could vindicate the British government’s controversial strategy of delaying the second shot for up to 12 weeks so that more people can be quickly given a first dose.  Up to now, the recommended time between doses has been four weeks.

Matt Hancock, the British health secretary, hailed the results as “absolutely superb.”

The results of the Oxford study “should give everyone confidence that this jab works not only to keep you safe but to keep you from passing on the virus to others.”

At the same time British authorities say they have discovered a potentially supercharged version of the country’s more-contagious coronavirus variant with a new mutation – one also detected in strains in South Africa and Brazil.  The continued emergence of new variants could make it harder to curb the pandemic and suggests that vaccines will need to regularly update to take account of changes to the virus.

--British researchers are to explore mixing doses of the Pfizer and AstraZeneca Covid vaccines in a world first trial aimed at finding new ways to swiftly reduce coronavirus infections as new mutated variants emerge…namely the so-called British, South African and Brazilian variants, which appear to spread more swiftly than others.

AstraZeneca is separately being trialed in combination with Russia’s Sputnik V.

--Speaking of Sputnik V, Russian scientists say the vaccine appears safe and effective against Covid, according to early results of an advanced study published in the British medical journal Lancet.

Researchers say that, based on their trial, which involved about 20,000 people in Russia last fall, the vaccine is about 91% effective and that the shot also appeared to prevent people from becoming severely ill.

--Novavax reported this week that although its vaccine was nearly 90% effective in clinical trials conducted in Britain, the figure fell to 49% in South Africa – and that nearly all the infections the company analyzed in South Africa involved the B.1.351 variant that emerged there late last year and has spread to the United States and at least 30 other countries.  Johnson & Johnson’s vaccine was 57% effective in South Africa.

--Israel, in the midst of its third major lockdown, nonetheless allowed an estimated 10,000 people, ultra-Orthodox Jews, to gather in Jerusalem Sunday for a funeral procession, in defiance of Israel’s Covid ban on large gatherings.  Police blocked traffic so the procession could continue, but took no action to prevent the illegal assembly.  Few were wearing masks.

While Israel has done a super job of vaccinating its population thus far, it still has one of the world’s highest infection rates and the nation’s coronavirus cases are disproportionately found within the country’s ultra-Orthodox community, which makes up 11% of the population, but 40% of the new cases.

Prime Minister Benjamin Netanyahu doesn’t crack down on them because they are a critical part of his coalition, and there’s another election coming up in March.

--The U.S. Centers for Disease Control and Prevention said it had administered 36,819,212 doses of Covid-19 vaccines in the country as of Friday morning and distributed 58,380,300 doses.  7,503,864 people have received the second dose as of Thursday.  A total of 4,210,027 vaccine doses have been administered in long-term care facilities, the agency said.

--In a Monmouth University Poll, more Americans expressed concern about the impact of Covid-19 now than at any time during the pandemic. 

Half (50%) of the public plans to get the Covid vaccine as soon as they are allowed.  Another 19% say they would prefer to let other people get it first to see how it goes.  However, 24% say it is likely they will never get the vaccine if they can avoid it.

Democrats are most eager to get the vaccine as soon as possible (72% when combined with those who already got the vaccine) – much more so than independents (51%) and Republicans (39%).

Six in ten Americans (60%) say they are very concerned about someone in their family becoming seriously ill from the coronavirus.  This marks the highest level of concern since the pandemic hit the nation.  The percentage who are very concerned registered a low of 37% in early June.

President Biden gets positive reviews for his initial handling of the crisis, with 58% saying he has done a good job and 23% saying he has done a bad job.  As he left office, just 34% thought Donald Trump did a good job and 63% say he did a bad job – his all-time worst rating on the crisis since the pandemic began.

Seven in ten (71%) are confident that Biden can put the country on the road to recovery from the outbreak.

--Dr. Anthony Fauci, as well as the CDC, are basically begging us to “just lay low” rather than gathering for Super Bowl parties on Sunday.

“You don’t want parties with people that you haven’t had much contact with,” Fauci said on NBC’s “Today” show.  “You just don’t know if they’re infected, so as difficult as that is, at least this time around, just lay low and cool it.”

--On the contentious school issue, I totally agree with the opinion of Matt Bai I quoted last week in that if teachers want to be known as “essential employees” then it’s time to get back to work.

Watching teachers this week, they continued to use the excuse, “After I’m in the classroom all day, being exposed, I go back home where my elderly mother lives and I’m endangering her…blah blah blah.”

Sorry, that just doesn’t cut it anymore, after a year of grocery store and drugstore employees going to work, risking exposure, and going home to the exact same situation.

And to the school districts, you’ve had a year now to figure it out.  Just do it.  President Biden must confront the teachers’ unions on this topic, and soon.

--Finally, we note the passing of Britain’s Captain Tom Moore, the World War II veteran who lifted a nation’s spirits by raising millions of pounds for health service workers battling the coronavirus.  Moore died Tuesday aged 100 after he contracted Covid.

Moore struck a chord with locked-down Britain by walking around his garden with the help of a walker to raise 38.9 million pounds ($53 million) for the National Health Service.  His endeavor and wit spread joy amid the grim news of the coronavirus outbreak last spring.

Moore’s message to the world was that the sun would shine again and that the clouds would clear.

British Prime Minister Boris Johnson said: “Captain Tom Moore was a hero in the truest sense of the word. He became not just a national inspiration but a beacon of hope for the world.”

Moore said after completing his sponsored walk: “You’ve all got to remember that we will get through it in the end, it will all be right, it might take time.  At the end of the day we shall all be OK again.”

Wall Street and the Economy

The market rallied sharply this week after the prior week’s hefty losses, buoyed by solid earnings and talk on further stimulus.

But the January jobs report was nothing to write home about. First, December’s job losses were revised to -227,000 from -140,000, while January saw a job gain of just 49,000, with losses in manufacturing and construction, two sectors which have been propping up the economy.  There were further losses at restaurants and bars, while retailers and employers in the transportation industry also laid off workers.  Gains were seen in professional and business services, as well as government payrolls, lifted by gains in state and local government education.

The unemployment rate dropped to 6.3% from December’s 6.7%, but this was because of people misclassifying themselves as being “employed but absent from work.”  Without this misclassification, the jobless rate would have been 6.9%.  U6, the underemployment rate, is 11.1%.

The government also said the economy created 250,000 fewer jobs in the 12 months through March 2020 than previously reported.

Employment is still 9.9 million jobs below its peak in February 2020.  The Congressional Budget Office has estimated employment would not return to its pre-pandemic level before 2024.

The news, the administration is saying today, bolsters the arguments for President Biden’s $1.9 trillion recovery plan, though the nearly $900 billion in additional relief money provided by the government at the end of December will likely help in the months ahead.  In addition, the current pace of Covid-19 infections shows we peaked in early January, a trend that should lead to hiring in the months ahead, should it hold.

Jared Bernstein, a member of the White House Council of Economic Advisers, told CNBC the jobs report ‘just underscores the cost of inaction.  I mean when you’re adding 29,000 jobs a month on average over the past three months, that is a labor market stall.  This underscores the urgency of the American rescue plan.”

President Biden, in a meeting with top House Democrats, said the labor report was further proof lawmakers needed to act.

“It’s people’s lives.  Real-life people are hurting and we can fix it,” Biden said.

Separately, we had the ISM readings on manufacturing for January, 58.7, 50 the dividing line between growth and contraction, and the same 58.7 on services.

December construction spending rose 1.0%, while factory orders in the month were up 1.1%.

The initial weekly jobless claims report was at a still sickly 779,000 level, though at least this is down three weeks in a row.

The Atlanta Fed’s very early GDPNow barometer for the first quarter is at 4.6%, which is pretty much Street consensus today.

And, finally, back to the deficit and the net interest expense on same, I have in front of me a ton of spread sheets from the Congressional Budget Office.  Understand that some of us smile when we see the CBO, which does great work, come up with a ten-year projection of the budget.  It’s an impossible task.  For instance, back in 2010, in looking at 2020, it projected the 10-year Treasury would have a yield of 5.5% (actually average 5.5% from 2015-2020). 

Well, we finished last year at 0.91% and, in fact, haven’t finished a year with a yield on the 10-year with as much as a 4-handle (4.00%) since 2007.  So that of course impacts the net interest on the budget deficit.  Back in 2010, the net interest expense for 2020 was projected to be $723 billion, which is the kind of figure in the past I’ve cried ‘wolf’ on.  If you’re paying $723 billion in interest, invariably you have to cut into popular programs elsewhere in the budget, which has been my point since day one of StocksandNews.

But the likes of Yellen and Powell are sanguine today because we’re paying more like $350-$400bn in interest, though this figure is going to rise just because of all the extra Covid-related debt we’re piling on.  Then you imagine if inflation starts to rear its ugly head, above what the Fed, and the bond market, are comfortable with and bam!  Rates start shooting up, ditto the cost of servicing the debt…and serious budget choices on other programs would have to be made (or you raise taxes).  No one is happy then.  I’ll be reinforcing this point much more down the road, I imagine.

Europe and Asia

A flash estimate for fourth quarter GDP in the euro area came in at -0.7%; -5.1% compared with the fourth quarter of 2019.  The Q4 estimate as published by Eurostat, the statistical office of the European Union, follows a strong rebound in the third quarter of 2020, +12.4%, and the sharpest decrease since the time series started in 1995 observed in the second quarter of 2020 (-11.7%).

Q4 2020 compared with Q4 2019:

Germany -3.9%, France -5.0%, Italy -6.6%, and Spain -9.1%.

We had final PMI figures for January in the eurozone, courtesy of IHS Markit, with a composite reading of 47.8 vs. December’s 49.1, manufacturing at 54.8 vs. 55.2 the prior month, and services at 45.4 vs. 46.4.

Germany: 57.1 manufacturing in Jan., services 46.7
France: 51.6 mfg., 47.3 services
Italy: 55.1 mfg., 34-mo. high, services 44.7, up from 39.7
Spain: 49.3 mfg., services 41.7, down from 48.0
Ireland: 51.8 mfg., 36.2 services, tumbling from 50.1
Netherlands: 58.8 mfg.
Greece: 50.0 mfg.

UK: 54.1 mfg., services 39.5 vs. 49.4 in Dec.

Chris Williamson, IHS Markit:

“The eurozone economy endured a predictably tough start to 2021 as ongoing efforts to contain the spread of Covid-19 continued to hit business activity, especially in the service sector.  Manufacturing growth continued to help offset some of the weakness in the service sector, though even here factories saw output growth slow amid subdued demand and supply delays, often linked to the pandemic.

“A contraction of GDP therefore looks likely in the first quarter, though on current trends this should be modest in comparison to the falls seen in the first half of 2020.

“However, with virus containment measures likely to constrain euro area economies in the coming months, and potentially well into the second quarter given the slow vaccine roll-out, the focus will be on the need to sustain supportive fiscal and monetary policymaking for some time to come, notably to prevent further intensifying job losses in the hardest hit sectors, such as hospitality, tourism, travel and retail.

“Rising costs have dealt a further blow to many companies, with input prices rising at the steepest rate for two years to squeeze margins.  However, in many cases this reflects a short-term lack of capacity and shipping delays, which should ease in coming months, helping alleviate these price pressures.”

Separately, the volume of retail trade in the euro area for December was up 2.0% over November; up 0.6% year-over-year. 

And a flash reading on January inflation for the eurozone came in at 0.9% annualized, compared with 1.4% a year ago.  Ex-food and energy the figure is 1.4%.

Lastly, for December 2020, the euro area unemployment rate is 8.3%, which compares to 7.4% a year earlier, pre-pandemic.

Germany 4.6%, France 8.9%, Italy 9.0%, Spain 16.2%, Ireland 7.2%, Netherlands 3.9%.

Brexit: It has not been smooth sailing when it comes to Brexit, and British and European Union negotiators have agreed to resume talks next week on what is called the Northern Ireland protocol after Boris Johnson threatened to invoke Article 16 to override its terms unless his demands are met.

During a meeting Wednesday between all the parties involved, the European Commission official described the difficulties faced by businesses and consumers in Northern Ireland as teething problems and suggested that Britain could make more use of the flexibility built into the protocol.

Under the protocol, all products are normally permitted to be exported from the EU to Northern Ireland (part of the UK) without checks, as NI remains in the single market for goods and continues to operate under EU custom rules…a deal put in place to smooth things out with the Republic of Ireland, sharing a border with the North, which goes back to the ‘Good Friday’ Agreement of 1998, which ended most of the violence of ‘The Troubles’.

The protocol was designed to avoid a return of checkpoints along the Irish Border and minimize potential disruption of cross-border trade.

But as I noted last week, suddenly there was an uproar over vaccine delivery shortfalls, and the EU on Jan. 29 invoked Article 16 of the Northern Ireland protocol which allows the EU or UK to unilaterally suspend aspects of its operations if either side considers that aspect to be causing “economic, societal or environmental difficulties.”

The European Commission then quickly reversed itself as some ugly things were happening in the North and on the border…as in age-old messages were being scrawled on walls, customs agents intimidated and fears of a return to violence between sectarian forces in the North were bubbling up again.

British cabinet office minister Michael Gove told the EC that in briefly activating Article 16, and halting vaccine delivery, it had profoundly undermined the operation of the protocol and cross-community confidence in it.  He called for a grace period exempting supermarkets from some checks, which is due to end on March 31, to be extended until at least Jan. 1, 2023.

And Gove called for similar waivers allowed chilled meat products and parcels to move easily from Great Britain to Northern Ireland.

Like anything involving NI it’s complicated, and made more so by Brexit, and a so-called barrier down the Irish Sea.  More next week after the negotiators get together.

Italy: Former European Central Bank chief Mario Draghi accepted a mandate to try to form a new Italian government as the country seeks to find a way out of its latest political crisis amidst a pandemic.

Draghi, nicknamed “Super Mario” for his role in saving the Euro single currency, will have to quickly galvanize support in parliament for a coalition that could tackle Italy’s battered economy.

President Sergio Mattarella summoned Draghi after ruling coalition partners failed to form a majority following Giuseppe Conte’s resignation as prime minister last week.

In a brief speech after the meeting, Draghi said: “Overcoming the pandemic, completing the vaccination campaign, responding to the needs of citizens and relaunching the country are our challenges.  We have extraordinary resources coming from the EU and we can do a lot for the future of the country.”

Italy is receiving 200bn euro from the EU’s recovery fund – the largest share among member states – and Mattarella ruled out calling early elections, rather he is looking for a “high profile” technical government to steer the country.

But it is unclear that Draghi can win the broad support needed from political forces.  The 5-Star Movement, the biggest party in parliament, said it would not back a technical administration led by Draghi, arguing that a political government was the only solution.  But the next day they softened their opposition.

Matteo Salvini, the leader of the opposition far-right League, and Giorgia Meloni, who heads the smaller far-right Brothers of Italy, both repeated calls for early elections, but said they would meet with Draghi.

Former prime minister and Forza Italia leader Silvio Berlusconi appeared to back the plan for a technocrat, recalling his “longstanding esteem” for Draghi.

The last time a technocrat was appointed in Italy was in 2011, when Mario Monti was entrusted with leading the country out of an acute debt crisis that prompted Berlusconi’s resignation.

We’ll find out this weekend or Monday if Draghi thinks he can form Italy’s 67th government since World War II.

Turning to AsiaChina reported its official PMI data for January (which focuses on big and state-owned firms).  Manufacturing was down to 51.3 from December’s 51.9, while non-manufacturing slid to 52.4 vs. 55.7.

The private Caixin readings, which focus on small- and medium-sized private companies, were 51.5 on manufacturing, and 52.0 services, down sharply from 56.3 in December.

Still growth all around, but slowing due in some part to a few renewed lockdowns in communities impacted by a small spike in new Covid cases.  China’s Lunar New Year holiday period is also in full swing, particularly by next weekend, and with widespread travel there are concerns over increased transmission.

Japan reported a manufacturing PMI in January of 49.8, slight contraction vs. 50.0 in December.  The service sector reading fell to 46.1 from 47.7, not good. 

Household spending in Japan in December fell 0.6% from a year earlier, government data showed today, though this was better than expected.

Meanwhile, Tokyo’s Olympic organizing committee and the government seem hellbent on holding the Games this summer, vaccines for athletes not mandatory.  At least that is the word this week.

The Tokyo Olympics chief, however, former prime minister Yoshiro Mori, 83, apologized for sexist comments about women talking too much, but said he would not resign, as his remarks sparked a storm of criticism on social media and risked tainting public opinion of the Games.

Mori said at an Olympic Committee board of trustees meeting this week: “If we increase the number of female board members, we have to make sure their speaking time is restricted somewhat, they have difficulty finishing, which is annoying.  We have about seven women at the organizing committee but everyone understands their place.”

Doh!

South Korea reported a 53.2 manufacturing PMI in January, while Taiwan at 60.2 had its highest level of activity since April 2010.

Street Bytes

--Stocks staged their best rally since the election, spurred by a certainty of further stimulus and strong earnings, as well as positive news on the vaccine front and declining infections and hospitalizations.  The Dow Jones rose 3.9% to 31148, just shy of its record closing high, while the S&P 500, +4.7%, and Nasdaq, +6.0%, closed at new records.

--U.S. Treasury Yields

6-mo. 0.04%  2-yr. 0.10%  10-yr. 1.17%  30-yr. 1.98%

The 10-year closed at its highest weekly close since last February, prior to the Fed having to move aggressively to combat the impact of the coronavirus.

--Oil prices hit a one-year high at midweek, boosted by an unexpected draw in U.S. crude and gasoline stocks, fueling demand recovery hopes as OPEC+ forecasts the market will be in deficit in 2021.

The American Petroleum Institute reported U.S. crude oil inventories fell by 4.3 million barrels in the week to Jan. 29, compared with analysts’ expectations for a small build.  The Energy Information Agency also reported a small drawdown and West Texas Intermediate closed the week at $56.97, its highest weekly close since 1/17/20.

OPEC and its allies also said that oil stockpiles will finally decline to below a five-year average by June.  OPEC’s production levels, which rose less than expected in January, have been roughly in line with their commitments.

--Exxon Mobil reported a plunge in fourth-quarter revenue and earnings on Tuesday as the energy giant capped off a year that brought the “most challenging” ever market conditions, with plans to cut more expenses while continuing to pay its dividend.

Total revenue and other income dropped to $46.54 billion in the quarter from $67.17 billion a year earlier.  That missed the consensus on Capital IQ for $48.76bn.  Earnings ex-certain items dropped to $0.03 a share from $0.41 previously.

CEO Darren Woods said in a statement:  “While the effects of the pandemic significantly impacted our 2020 results, our previously executed strategic initiatives and reorganizations enabled us to respond decisively to permanently improve our cost structure, drive greater efficiencies across our businesses, and emerge a stronger company.”

Exxon continues to slash expenses, including through job reductions, cutting up to 15% of its workforce and delaying oil and gas projects after accepting oil prices could remain below $60 a barrel for years.

“We remain focused on increasing long-term value for our shareholders by investing in our highest-return assets, preserving the strength of the balance sheet, and paying a reliable dividend,” Woods said.

Cash flow in 2021 is expected to cover capital expenditures as well as dividend payments, although the views are hinged on Brent crude prices of $50 a barrel.  “Should prices fall below $45 per barrel, the company has the ability to further reduce capital investments to cover the dividend and maintain a strong balance sheet,” Exxon said.

Separately, the chief executives of ExxonMobil and Chevron Corp. held preliminary talks in early 2020 to explore combining the two largest U.S. oil producers in what would have been the biggest merger of all time.  The discussions, which are no longer active (but could be resurrected) are indicative of the pressures in the energy sector as the pandemic took hold and prices plunged.

The talks between Darren Woods and Chevron CEO Mike Wirth were serious enough where legal documents on certain aspects of the merger were drafted. 

The two have a combined market value of about $350 billion.  In their talks the two envisioned achieving synergies through massive cost cuts to help weather the downturn.  At the end of 2019, Exxon employed about 75,000 people and Chevron 48,000. 

Following the aborted talks with Exxon, Chevron went on to acquire oil producer Noble Energy in a $5 billion cash-and-stock deal that was completed in October.

Needless to say, a combination of Exxon and Chevron would have faced significant hurdles, including antitrust concerns and objections from corporate rivals.

--BP plunged to a $5.7 billion loss last year, its first in a decade, as the pandemic took a heavy toll on oil demand, and the energy company warned of a tough start to 2021 amid widespread travel restrictions.

But CEO Bernard Looney told Reuters the company’s transition to a greener future remained on track.  It is aiming to ramp up renewable power generation to 50 gigawatts (GW) by 2030 from 3.3 GW currently, while slashing oil output to reduce greenhouse gas emissions.

Capital expenditure is set to rise to $13 billion this year, of which $9 billion will still go to oil and gas, the company disclosed. That compared with a budget of $12 billion in 2020.

Looney does expect oil demand is nevertheless expected to recover in 2021, with global inventories expected to return to their five-year average by the middle of the year.

--Oil giant Royal Dutch Shell on Thursday reported a sharp drop in full-year profit as the pandemic took a heavy toll on the global oil and gas industry.

Shell reported adjusted earnings of $4.85 billion for the full-year 2020. That compared with a profit of $16.5 billion for the full-year 2019, reflecting a drop of 71%.  For the final quarter, Shell reported adjusted earnings of $393 million, missing expectations.

Shell CEO Ben van Beurden described 2020 as an “extraordinary” year.

“We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities.  We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy,” van Beurden said in a statement.

Shell is looking to reassure investors about their future profitability, pointing to an expected upswing in fuel demand in the second half of the year and a mass rollout of Covid vaccines.

However, renewed lockdown measures are leading to concerns over the first half of 2021.

--Jeff Bezos is stepping down as chief executive of Amazon, Bezos becoming executive chairman after leading the company he founded in a Washington state garage more than 26 years ago.

Amazon said on Tuesday that Bezos will be succeeded as CEO by Andy Jassy, Bezos’ closest lieutenant.

Jassy, 53, started with the company as a marketing manager in 1997 – just three years after it was founded by Bezos.  Jassy currently leads the company’s cloud computing offshoot, Amazon Web Services, which he founded in 2003 and became its CEO in 2016.  AWS provides a range of online services for businesses.  The division has grown to a platform used by millions, signing major customers including Verizon, McDonald’s and Honeywell, while competing with Microsoft’s Azure and Alphabet’s Google Cloud.  It brought in $12.7 billion in the most recent quarter, up 28 percent from a year ago.

Jassy graduated from Harvard College and then earned his MBA there.  His ascension won’t take place until the third quarter of 2021, when Bezos, 57, will then become executive chairman.

The company announced Bezos’ changing role as Amazon was reporting that revenue in the fourth quarter soared 44% to $125.56 billion – surpassing $100 billion for the first time in a three-month span – and profit more than doubled to $7.2 billion.

Amazon sales for all of 2020 rose 38% year-over-year to $386.1 billion and are expected to advance again this year.  Amazon said sales for the current quarter should come in at between $100 billion and $106 billion, which would be above current Street forecasts.

The pandemic turned into a sales bonanza for Amazon, and the company struggled early to handle the surging demand, scaling up rapidly, adding more than 500,000 employees, giving it a global workforce of more than 1.3 million, while increasing its fulfillment and logistics square footage by about 50% last year.  It also incurred around $11.5 billion in Covid-related costs and it’s been spending massive sums to expand its transportation network.

Andy Jassy is going to be facing some big issues and challenges, including labor unrest.  The pressure is mounting to unionize its workforce of nearly 1 million warehouse workers.  Employee activists made significant inroads last year as Amazon faced harsh criticism for its warehouse working conditions during the pandemic, leading to improved pay and coronavirus protections.

And the company is facing rising competition from the likes of Walmart, as well as intense competition for Amazon Web Services.

And then you have the regulators, who are looking into claims Amazon unfairly competes with its third-party sellers.

Back to Bezos, he is neck-and-neck with his rival rocket entrepreneur, Elon Musk, both with net worth’s around $190 billion+, depending on the day’s market action.  It’s clear Bezos has stepped back from day-to-day management of Amazon over the past few years as he focuses on some of his other pursuits, like space. 

--Shares in Google parent Alphabet Inc. soared as the company topped quarterly sales expectations for its advertising and Cloud businesses, helped in part by the pandemic, and said it will resume big spending on hiring and facility construction.

Google, which generates more revenue from Internet advertising than any other company, benefited from lockdowns that drove retail and other clients online, helping offset cutbacks by travel and entertainment advertisers.

“Google’s products and supports have been a lifeline for millions of small to medium businesses hit hard by the pandemic,” CEO Sundar Pichai told analysts on a conference call.

Alphabet’s 2020 sales growth of 13% was the slowest increase since 2009 when it posted 8.5% growth.  Still, matched with spending cuts, Alphabet increased its cash hoard by $17 billion in 2020 to $137 billion.

Alphabet did say Google Cloud posted an operating loss of $1.24 billion in the fourth quarter and a $5.6 billion loss for 2020, about 21% steeper than 2019’s annual loss.

Overall, Alphabet’s fourth-quarter profit rose 43% to $15.2 billion.  Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s record $56.9 billion in quarterly sales, which rose 23% vs. a year ago.  Cloud sales, also benefiting from the pandemic, were $3.83 billion, or $13.1 billion for the full year, up 46% from 2019.

--General Motors plans to trim production at several factories this month due to the ongoing shortage of semiconductors, an issue I’ve been noting for weeks now.  GM, and others such as Volkswagen, Ford, and Nissan have been seeking to reduce the impact of the shortage on higher-demand, higher-margin models like large trucks and SUVs.

GM is taking down three North American factories for a week, starting Monday.

Mazda Motor said it expected a production cut of 7,000 vehicles as a result.

The auto industry is now one of the world’s largest purchasers of computer chips, and demand is only increasing as car companies load their latest models with big-screen displays and more sophisticated tech.

--Speaking of Ford Motor Co., it boosted the amount of money it plans to invest on electric and autonomous vehicles to $29 billion, even as it posted a fourth-quarter net loss of $2.8bn, which included several previously disclosed charges related to a recall, recalculation of pensions and the closure of the company’s Brazilian manufacturing operations. 

Ford said it was “doubling down” on connected electric vehicles and said it will invest $22 billion in electrification through 2025.

The No. 2 U.S. automaker also said the global semiconductor chip shortage could lead to a 10% to 20% loss in first-quarter production.  Ford announced Thursday it is cutting shifts at two plants that build its highly profitable flagship F-150 pickup trucks starting next week as a result, raising fears the problem could be worsening.  [It’s becoming a huge problem with Volkswagen in Germany.  And Italian automaker Stellantis is slowing production at its plant in Melfi and putting 7,000 workers on furlough.]

Ford projected operating earnings would climb to $8 billion to $9 billion in 2021, compared with $2.8bn last year.  In Covid-ravaged 2020, Ford’s total revenue fell to $127 billion from $156 billion in 2019.  Ford ended the quarter with $31 billion in cash, compared with $30bn in the prior quarter.

--Pfizer said it expects to generate $15 billion, or about a quarter of its total revenue this year, from sales of its Covid-19 vaccine co-developed with German partner BioNTech SE.  Pfizer aims to make two billion doses in 2021, and CEO Albert Bourla said the company was being conservative in its target. Pfizer also said it expects there could be a long-lasting need for Covid-19 vaccines, to combat new virus variants that emerge and to boost peoples’ waning immune responses.

Overall, the company reported a fourth-quarter profit of $594 million, compared with a year-earlier loss of $337 million, with quarterly revenue of $11.7bn, up vs. $10.5bn a year ago.  The company expects 2021 sales of between $59.4 billion and $61.4bn.

--My neighbor across the street, Bristol-Myers Squibb, lifted its full-year 2021 earnings guidance after the pharm company’s fourth-quarter results topped consensus as its 2019 acquisition of Celgene continued to lift revenue.

Revenue in the December quarter jumped to $11.07 billion from $7.95 billion a year earlier while earnings per share came in at $1.46, up from $1.22.

“In our first full year as a new company we delivered solid operational and financial results, and laid a strong foundation for the future,” said Chief Executive Giovanni Caforio. “The growth opportunities from our in-line and launch portfolios combined with a robust product pipeline and disciplined business development strategy strongly position the company to accelerate the renewal of our portfolio and achieve long-term sustainable growth.”

Celgene became part of BMY in November 2019, bringing products like Revlimid for multiple myeloma and Abraxane for cancer treatments.  Revlimid revenue was up 18% on a pro-forma basis to $3.28bn in the latest quarter, while Abraxane soared 79% on a reported basis to $297 million.

I just have to say that the location literally across the street from me, which has had many different owners over the years…from Ciba-Geigy in my youth, to Schering-Plough (acquired by Merck in 2009), then to Celgene, which started at a separate location in Summit, and then moved into Schering’s space, and now to Bristol-Meyers, is massive and, boy, the new owners are tearing down old buildings and putting up new ones at a feverish pace, and, get this…I’ve been in this area well over 50 years, more or less, and never been on the campus, which is very secure.

But you can drive around most of the perimeter and you get a scope of what’s going on.  It’s encouraging to also see more employees gradually return amid Covid, because the local restaurants within walking distance that were rockin’ and rollin’ with the new expansion have been dying.  The smokers are even returning at the gate.  The people who work the very same hours as their non-smoking brethren, but somehow wrangle about an hour’s worth of free breaks.  At least that’s the way it was in my Wall Street days.

--Merck CEO Ken Frazier will retire in June and be succeeded by Chief Financial Officer Robert Davis, the company said as the pharmaceutical giant reported fourth-quarter earnings that missed expectations.

Frazier has led the Kenilworth, New Jersey-based company since early 2011.  He’ll become executive chairman after he leaves the top post end of June. 

Davis has been CFO since 2014.  He had been president of Baxter International’s medical products business and spent 14 years at Eli Lilly in various finance roles.

Merck also reported fourth-quarter sales rose to $12.51 billion from $11.87bn in the prior-year period, while earnings were $1.32, up from $1.16.

Sales in Merck’s pharmaceutical business rose 8% to $11.37bn, driven by cancer drug Keytruda’s 28% jump to $3.99bn.  Sales of human papillomavirus vaccine Gardasil 9 surged 44% to $998 million.

--United Parcel Service reported fourth-quarter results that surged from a year earlier, coming in better than analysts expected.

Adjusted earnings climbed to $2.66 a share from $2.11 a share previously, well above consensus of $2.14.  Revenue jumped 21% to $24.9 billion in the three months through Dec. 31, ahead of the Street’s view for $22.9bn.

CEO Carol Tome said in a statement Tuesday: “Our financial performance in the fourth quarter exceeded our expectations, and I thank all UPSers for their extraordinary efforts to deliver industry-leading service through the holidays.”

Largely owing to the pandemic, e-commerce sales were up 32% year-on-year to $188.2bn, according to Adobe, and for its part, UPS said U.S. domestic revenue rose 17% to $15.74 billion, with growth driven by small and medium-sized businesses.  Revenue per piece rose 7.8%, led by the company’s ground residential business.  International revenue jumped 27% to $4.77bn.

UPS said it was holding off from giving revenue or earnings guidance for 2021 because of economic uncertainty around the pandemic.  The shares rose on the news.

--The U.S. exported $28.75 billion of agricultural goods and related products to China in 2020, data from the Department of Agriculture showed today, missing the $36.5 billion targeted under the Phase 1 trade deal.  2013 saw the all-time high of $29 billion and, to be fair, after a very slow start to 2020, sales picked up briskly in the second half.

Soybean sales reached $14.16bn last year, less than the record $14.88bn in 2012.

President Biden is expected to maintain pressure on China but trade is not expected to be the driving force in his negotiations with Beijing that it was under Donald Trump.

U.S exports of pork and pork products to China surged 75% in 2020 to a record $2.28bn, USDA data showed, this after a disease outbreak in China’s hog herd.  Corn imports reached $1.2bn, just below the record $1.3bn in 2012.

--Chinese e-commerce giant Alibaba Group reported December quarter results that topped estimates as its core commerce business saw customers make more purchases and spend more as the Asian nation’s economy recovered from the pandemic.

“China was the only major economy to achieve positive GDP growth last year,” said CEO Daniel Zhang.  “Thanks to the rapid recovery of China’s economy, Alibaba had another very healthy quarter.”

Zhang said the results were bolstered by “another successful” annual 11.11 Global Shopping Festival on Nov. 11.  At the time, Alibaba said it sold $74.1 billion in general merchandise during the so-called Singles Day promotion, which also included some sales between Nov. 1 and Nov. 3.  A year earlier, Singles Day posted sales of $38.4bn.

In the three months through December, revenue rose 37% to $34.24 billion, with core commerce revenue up 38%.

Mobile monthly active users in China retail sites rose 21 million from the September quarter to 902 million, Alibaba said.

As for Alibaba affiliate Ant Group and its dual listing in Shanghai and Hong Kong, Zhang said the recent significant change in China’s financial technology regulatory environment means Ant’s “business prospects and IPO plans are subject to substantial uncertainties.”

But then Wednesday, Ant announced it had reached an agreement with Chinese regulators on a restructuring plan that will turn it into a financial holding company, making it subject to capital requirements similar to those for banks.

The plan calls for putting all of Ant’s businesses into the holding company, including its technology offerings in areas such as blockchain and food delivery.  As I had reported a week ago, Ant had envisioned putting only financial operations into the new structure.

An official announcement of the overhaul is expected soon.  But this will mark the start of a long process detailing capital requirements and other guidelines.

Alibaba shares rallied on the news, BABA owning about a third of Ant, as it removes some uncertainty. Ant can still explore an IPO, but it would not be any time soon as authorities would have to sign off on a listing.  Regardless, the valuation will be nowhere near what Ant was looking to fetch, $280bn in pre-money valuation before the IPO was halted in November.

--Ryanair Holdings lost more than $380 million in the fourth quarter, against a profit of about $105 million for the same period in 2019.

Revenue for the quarter tumbled 82 percent, while passenger numbers were down 78 percent in the quarter at 8.1 million from 35.9 million.

--American Airlines became the latest to say that some 13,000 employees are at risk of furlough when an aid package for airline workers expires on April 1, blaming slow vaccine rollouts and new international travel restrictions for dampening demand.

“We are nearly five weeks into 2021, and unfortunately, we find ourselves in a situation similar to much of 2020,” CEO Doug Parker and President Robert Isom said in a memo to employees which was part of a regulatory filing.

American furloughed 19,000 workers when a previous round of government payroll support ended on Oct. 1, but recalled them in December after a fresh $15 billion for the industry through March.

Aviation unions are pushing for another $15 billion in payroll assistance to protect jobs through the summer, and today, one key House leader, Peter DeFazio, said it will be part of the Covid relief package.

Large employers such as American, United and Delta are required by law to inform employees whose jobs are at risk, generally within 60 days.  American’s potential furloughs include 1,850 pilots and 4,245 flight attendants.

So let’s look at the latest depressing TSA daily checkpoint numbers….

2/4…36 percent of 2020 levels*
2/3…34
2/2…29
2/1…31
1/31…44
1/30…37
1/29…36
1/28…36
1/27…30

*2020 levels didn’t start sliding until early March, and then crashed mid-month with the national lockdown.

Today, we haven’t seen 1,000,000 passengers since Jan. 4, and the percentage figures are essentially the same as September, which isn’t good.  Last spring, the airlines were projecting a solid 50% by yearend 2020, and they planned accordingly.

--Chipotle Mexican Grill Inc. said costs related to the coronavirus pandemic have dented profit even as online orders boost sales.

Labor has become a growing concern for companies such as food producers.  Many restaurant chains have said they’ve had to raise pay to hire and retain workers in public-facing roles.  The Biden administration is also looking to boost the minimum wage, which would translate into higher wages for many chains.

Chipotle’s same-store sales increase of 5.7% over the prior year was in line with expectations, with the company saying online orders were up 177%.  Delivery now accounts for 25% of its sales.

The company continues to open new restaurants, 61 during the most recent quarter, including 42 of them with digital-order drive-throughs.  The chain said it expects to open about 200 restaurants in its 2021 fiscal year if coronavirus-related delays are minimal.

--Canada lost 212,800 jobs in January, according to Statistics Canada, which says the unemployment rate rose 0.6 percentage points to 9.4 percent last month.  This is the highest rate since last summer, wiping out the gains made in the fall.

The job losses were almost entirely concentrated in Quebec and Ontario, and mostly in the retail sector as Covid-19 lockdowns and restrictions closed many businesses.

--Finnish telecom network equipment maker Nokia warned of challenges to come this year as it tries to catch up with rivals after a strong finish to 2020.  While both Nokia and rival Ericsson have been gaining 5G customers that might otherwise have gone to China’s Huawei, Ericsson has fared better, winning also big 5G contracts in China, where the deployment of the next-generation network is in full swing.

“We have not yet made a breakthrough in 5G (in China) but of course we are not excluding that possibility going forward,” new Chief Executive Pekka Lundmark told Reuters.  “But we want to be prudent so that we do not want to be there at any cost.”

Nokia reported better than expected fourth-quarter revenue and underlying profit on Thursday but forecast 2021 revenue will fall to between $25-$26 billion, from a little over $26bn in 2020.

“We expect 2021 to be challenging, a year of transition, with meaningful headwinds due to market share loss and price erosion in North America,” said Lundmark.

Nokia has vowed to “do whatever it takes” to take the lead in 5G, as it banks on also capturing share from Huawei.  “We believe that we have year-to-date captured about half of the geopolitically influenced opportunities that are there,” Lundmark said.  “Most of these cases have been in Europe.”

Revenue at its mainstay networks business fell 7% to $6.05bn.

Nokia shares have seen wild swings over the last two weeks as the stock has been targeted by the retail trading frenzy, alongside GameStop and other tech companies.

--Does it feel like U.S. Chamber of Commerce CEO Thomas Donohue has been around our entire lifetimes?  It sure does to me.  The 83-year-old is leaving, according to numerous reports tonight.

--News Corp on Thursday reported its most profitable quarter since it spun off its publishing assets into a separate company from its TV assets more than seven years ago – including record earnings at The New York Post.

In the second quarter, News Corp posted net income of $261 million, or 39 cents a share vs. income of $103 million, or 14 cents, in the year-ago period. 

Weakness in the advertising market weighed on revenue, which dipped 3 percent to $2.41 billion, though digital ad growth was up 64 percent year-over-year.

Dow Jones, publisher of the Wall Street Journal, posted its largest profits since News Corp acquired the company in 2007, driven by record digital advertising revenues and continued growth in digital subscriptions, the company said.

--The New York Times set a record for its subscription business in 2020, the company said in an earnings report on Thursday.

After adding 2.3 million digital-only subscriptions in 2020, more than in any previous year, The Times exceeded 7.5 million subscriptions for its digital products and print newspaper.

In the quarter that started in April, when a great number of Americans were into a routine of working remotely, the company added 669,000 digital subscriptions.  It added 627,000 in the fourth quarter, which included Election Day.

In the fourth quarter, digital subscription revenue was $167 million, a 37 percent jump from the final months of 2019.  For the year, it was $598.3 million, a 30 percent rise.

A downside in the quarter, and the year, were ad sales.  Total ad revenue at The Times fell 26 percent in 2020, to $392.4 million, with print ad revenue bearing the brunt of the annual decline, at 39 percent, the company said.

--GameStop shares were all over the place again this week, though were trading below $50 in after-hours trading Thursday, before online brokerage app Robinhood said it has removed temporary trading restrictions on all stocks, including GameStop and AMC Entertainment Holdings Inc.  Earlier, Robinhood’s website had showed that the trading limit on GameStop shares was set at 500, while for AMC the limit was set at 5,500 shares.  Trading restrictions on a few other stocks had been lifted on Wednesday.

So shares in GameStop, which at one point last week in the pre-open market traded at $514, and then cratered throughout this week, are currently at $66.

For its part, Robinhood had issues on a number of securities owing to clearinghouse-mandated deposit requirements and Robinhood was forced to raise capital, which it has.

Treasury Secretary Janet Yellen said on Thursday that before she and financial market regulators took any action, they needed to “understand deeply” what happened in the trading frenzy involving GameStop and other retail stocks in recent days.

“We really need to make sure that our financial markets are functioning properly, efficiently and that investors are protected.”

Yellen said that regulators would “discuss whether or not the recent events warrant further action,” and added: “We need to understand deeply what happened before we go to action but certainly we’re looking carefully at these events.”

Yellen did not specify what potential actions could be taken by regulators to respond to the situation, and no one should expect any significant action soon, and I’m not sure much action is really required.

The action in the likes of GameStop and AMC was not a threat to the entire financial system.

Yes, some amateur investors lost their shirt no doubt this week, but others captured huge gains.  I have a friend who made a killing on Nokia, which was another stock swept up in the mania, and he promptly put his winnings down on a new Mustang EV… “black on black,” as he put it. 

As the Wall Street Journal editorialized:

“A margin call is not a conspiracy.  A clearinghouse is an intermediary between buyers and sellers in a financial market. It ‘clears,’ or finalizes, trades and makes sure the parties fulfill the contract and assets are delivered. It also mitigates risk by requiring that trades be backed by enough capital to reduce the chances that one of the trading parties goes bankrupt. This protects investors as well as brokers.

“Robinhood clears its trades through the well-known Depository Trust & Clearing Corp., which is owned by a consortium of banks, brokers-dealers and other financial firms.  You can fantasize that the DTCC is part of the conspiracy and ganged up on Robinhood at the request of banks to help short-sellers who were being squeezed by the Reddit traders….

“On Monday the Reddit crowds decided to bid up the price of silver, for whatever that exercise is worth.  Such trading raves may continue for some time now that market players have found they can use social media to form an investing mob and catch hedge funds and others napping.

“Short-sellers who were caught on the wrong side of the GameStop price movements have learned a hard lesson about risk in the current market.  So much the better for price discovery and trading discipline. There are no sinners or saints on either side of these transactions. There are consenting adults trading with their own money.

“In this era of limited social trust, financial markets are bound to become targets of populist conspiracy theorists on the right and left.  In the past, conservatives at least tried to understand how financial trading works before joining left-wingers like Rep. Alexandria Ocasio-Cortez and Sen. Elizabeth Warren in forming a hang-‘em-high posse against private markets.  Alas, in this age of conspiracy, knowing less gets you more attention.”

Various congressional representatives, from both sides of the aisle, criticized Robinhood for blocking access to certain highflying stocks a week ago Thursday.  The company said it was forced to act quickly to blunt the impact of market activity, in part because of SEC capital requirements.  Other brokers also changed their requirements for investing in big movers.

Meanwhile, after Citron Research’s Andrew Left argued recently that GameStop would fall to $20 fast, he was pilloried on social media and Left said his family was harassed.  He withdrew from his short position and said he would no longer comment on the stock.

“I had no idea what I’d set off,” he said a week ago.  Citron then said he would no longer publish short-selling research after 20 years of doing so.  “We will focus on giving long side multibagger opportunities for individual investors,” the firm said.

Melvin Capital Management, the hedge fund that has borne the brunt of losses from the soaring stock prices of heavily shorted stocks recently, lost 53% on its investments in January, according to people familiar with the firm.  Whatever.  I’m not shedding any tears for any loser in this episode.

But when it comes to hedge funds, and someone like Andrew Left giving up holding short positions, if hedge funds were to become far more cautious in this realm, that kind of defeats the purpose of hedge funds.  Traditionally, they have promised investors a cushion against market declines by being able to sell short and make money when stocks drop.  Funds are also less likely to use trading strategies such as put options, a kind of derivative that has to be disclosed and that the likes of Melvin used.

Bottom line, if there was any actual fraud in issues like GameStop, the SEC will find it.  But the bigger impact will be on the hedge fund industry overall.

--Finally, as expected, CNN president Jeff Zucker announced he will leave the cable news network at the end of 2021.  Zucker joined CNN in 2013, after being executive producer of NBC’s “Today” show in his 20s, and then as president of NBC Entertainment.

Foreign Affairs

China: Beijing’s most senior foreign policy official Yang Jiechi said the U.S. under Donald Trump had followed “misguided policies,” and called on the new administration to change course – even as comments from President Biden’s advisers echo his predecessor’s tough tone on China.

“For the past few years, the Trump administration adopted misguided policies against China, plunging the relationship into its most difficult period since the establishment of diplomatic ties,” said Yang, a Politburo member regarded as President Xi Jinping’s most trusted foreign policy aide.

The U.S. had an outdated mentality “of zero-sum, major-power rivalry” and needed to change to get the relationship back on track, Yang said.

While Beijing has been keen for a reset in ties, Biden’s team has signaled that China will be a central theme in its foreign policy, with political consensus in Washington remaining against a return to pre-Trump relations.

Secretary of State Antony Blinken said China posed the most significant threat to U.S. interests, and that he endorsed the Trump administration’s tougher approach to China, even if he disagreed with its tactics.

Biden has indicated he is in no hurry to engage with China and would do so once it was in “lockstep” with allies and partners.

Separately, Hong Kong unveiled controversial guidelines for schools in the Chinese-ruled city that include teaching students as young as six about colluding with foreign forces and subversion as part of a new national security curriculum.

Beijing imposed the security law on Hong Kong in June 2020 in response to months of often violent anti-government and anti-China protests in 2019 that put the global financial hub more firmly on an authoritarian path.

The Education bureau’s guidelines, released late on Thursday, show that Beijing’s plans for semi-autonomous Hong Kong go beyond quashing dissent, and aim for a societal overhaul to bring its most restive city more in line with the Communist Party-ruled mainland.

“National security is of great importance. Teachers should not treat it as if it is a controversial issue for discussion as usual,” the guidelines said.  Teachers should “clearly point out that safeguarding national security is the responsibility of all nationals and that as far as national security is concerned, there is no room for debate or compromise.”

Children in primary schools will learn how to sing and respect the national anthem, learn about police and the People’s Liberation Army as protectors of Hong Kong, as well as about the four main offenses in the security law, including terrorism and secessionism.

This is sick.

Russia: Opposition leader Alexei Navalny has been jailed for 3 ½ years in a case that Western states say is politically motivated and the anti-corruption campaigner believes was ordered by the country’s president, Vladimir Putin.

A Moscow court ruled that Mr. Navalny broke the terms of a suspended sentence by failing to report to Russian prison officials late last year, when he was recovering abroad from a near-fatal poisoning in Siberia.

He had already spent 10 months under house arrest so will be required to serve a further two years and eight months behind bars.

Tens of thousands of people across Russia have rallied in support of Navalny, 44, on recent weekends, and thousands were arrested.

“The reason for all this is the hatred and fear of one man, living in a bunker.  Because I mortally offended him simply by surviving when he ordered me to be killed,” Navalny said of Putin in the heavily guarded courtroom.

The judge dismissed Navalny’s insistence that Russian officials knew he was being treated in Berlin after last August’s poisoning with a Novichok nerve agent.

“No matter how much [Putin] pretends to be a great geo-politician, some kind of great world leader, he is angry with me now mainly because he will go down in history as a poisoner,” Navalny told the court.

“This is how it works: jail one to scare millions,” Navalny said.

“But this is not a show of strength…it’s a show of weakness,” he said of his trial.  “It’s impossible to jail millions or hundreds of thousands.  And I really hope that people will realize this more and more.  And when they do – and that moment will come – then this whole thing will collapse. Because you can’t jail an entire country.”

Riot police broke up protests across Russia on Sunday in support of Navalny, detaining more than 5,000 people who had braved the bitter cold and the threat of prosecution to demand he be set free. It was a number similar to the prior weekend, though last weekend, police in Moscow were ready, had closed metro stations, deployed hundreds of riot police, and the crowds still assembled, though not in one unified mass because of the closures.  Instead, Navalny’s allies used social media to repeatedly change the location of their rally, scattering the crowds over different parts of the city.

Editorial / Washington Post

“Having failed to kill Alexei Navalny in a poisoning attack, Russian ruler Vladimir Putin on Tuesday settled for second-best – condemning his nemesis to years in prison.  After a farcical hearing, a Moscow judge ordered Mr. Navalny to begin serving more than 2 ½ years for a six-year-old conviction that was found to be unlawful by the European Court of Human Rights.  But not before Mr. Navalny, who courageously returned to Russia last month knowing he would likely be jailed, delivered his own withering indictment of the ‘small man in a bunker’ who now faces the most serious political challenge in his 20 years of rule….

“Mr. Navalny’s words have the potential to move events in Russia.  Hundreds of thousands of his supporters have turned out in scores of cities across the country the past two weekends to protest his arrest, braving subzero temperatures and the batons of riot police.  According to Mr. Navalny’s organization, some 12,000 were arrested – the largest mass political detentions in Russia since the Stalinist era.  A video Mr. Navalny released last month documenting Mr. Putin’s corruption, including the vast palace he constructed on the Black Sea coast, has been viewed more than 100 million times on YouTube.  His fiery statement in court Tuesday was seen live online by half a million people, according to aides.

“The Putin regime is probably not at risk of collapse.  But its leader clearly fears the possibility of a ‘color revolution’ like those that toppled autocratic and pro-Moscow regimes in Ukraine and Georgia.  ‘This is happening to intimidate large numbers of people,’ Mr. Navalny said.  ‘They’re imprisoning one person to frighten millions.’  Most likely, it won’t work.  Though Mr. Navalny may now be locked away, the protest movement he inspired is likely to continue, driven by the powerful political network he has managed to create.  His aides claim that his emails and videos now routinely reach 10 million to 12 million people; his organization, which has offices in 40 cities, has been funded by small donations from more than 200,000 people.

“Western governments should be doing what they can to help this unprecedented challenge to Mr. Putin’s autocracy survive and grow.  The United States and many European capitals have been rhetorically supportive of Mr. Navalny: Secretary of State Antony Blinken issued another in a series of statements Tuesday calling for his release.  But the Biden administration and European Union should follow up with sanctions against the Russian officials involved in the latest repression – and they should heed the pleas of Mr. Navalny for action to expose and freeze the illicit assets held by Mr. Putin and his cronies outside Russia.  Mr. Putin has dedicated himself to exploiting the weaknesses in democratic systems.  Now is the time to return the favor.”

Editorial / Wall Street Journal

“We would have liked to have been in the room when Vladimir Putin confronted whoever came up with the idea to poison Alexei Navalny last year. The opposition politician nearly died, but the assassination attempt by Russian spooks has made him an even more prominent threat to the Russian dictator’s rule.

“The Kremlin had Mr. Navalny arrested upon his return to Russia in January…and on Tuesday a Russian court sentenced him to three-and-a-half years in prison (reduced by one year for time served). The charges of violating his parole from a previous conviction are a farce.  This is a political arrest and sentence.

“One lesson is that Mr. Putin and his gang must feel threatened.  Protests in support of Mr. Navalny have been growing in major Russian cities.  Mr. Putin has survived protests before, notably in 2012, but his popularity has sagged amid an economy weakened by lower oil prices and Western sanctions….

“But Mr. Putin will only be impressed if the Biden Administration can marshal a unified Western response that includes tougher sanctions, including against Kremlin cronies.

“NATO should also be on guard for an external provocation in case Mr. Putin wants to divert Russian attention from his domestic woes.  He’s done it before, as President Biden well knows.  He was Vice President at the time.”

Friday, Navalny urged his supporters to resist “intimidation” amid the growing crackdown on protesters.  A message, posted on his website, thanked them and insisted they could still “liberate” the country from the “thieves and occupiers” in charge.

Meanwhile, the Russian doctor who was in charge of treating Navalny after he was poisoned by Novichok died suddenly at the age of 55, according to multiple reports.

Sergey Maximishin died of a heart attack after being taken to the hospital where he worked on Wednesday night due to a spike in his blood pressure, Life.ru reported, citing a Russian Health Ministry spokeswoman.

Maximishin was the head of intensive care at his hospital in Omsk.

As for the Biden administration’s decision to extend the New Start treaty five years….

Editorial / Wall Street Journal

“New Start limits the number of deployed strategic nuclear warheads and bombs at 1,550.  It also caps the deployment of intercontinental ballistic missiles, submarine-launched missiles and nuclear-equipped heavy bombers. The deal would have expired Feb. 5, but Mr. Biden took the longest extension possible.

“This squanders useful diplomatic work by the Trump administration. While Washington withdrew from the Intermediate-Range Nuclear Forces (INF) and Open Skies treaties, which Russia was violating, it tried to negotiate a shorter extension to New Start last year.

“Talks began in earnest after Washington demonstrated that it wasn’t afraid of walking away from bad arms-control deals, including the Iran nuclear accord. The U.S. sought improved verification, provisions to address technological developments and a plan for future negotiations to include China. Both sides came close to signing an interim, one-year extension last year before talks were overtaken by the presidential election.

“ ‘The New Start treaty is in the national security interests of the United States,’ White House press secretary Jen Psaki said recently.  ‘This extension makes even more sense when the relationship with Russia is adversarial.’ The opposite is true.  Arms-control works best between trustworthy governments, not with adversaries like Russia willing to cheat.

“Former Trump national security adviser John Bolton recently called for a six-month extension, which would have provided time to address issues like tactical nuclear weapons and hypersonic missiles. Victoria Nuland, Mr. Biden’s nominee for the third-highest State Department post, last year suggested a one- or two-year extension.

“ ‘Washington should not grant Moscow what it wants most,’ she wrote, ‘a free rollover of new START without any negotiations to address Russia’s recent investments in short- and medium-range nuclear weapons systems and new conventional weapons.’  Yet that’s exactly what Mr. Biden has granted.

“This is an echo of the Obama Administration Russia policy of criticizing Mr. Putin while refusing to sell lethal arms to Ukraine.  Mr. Blinken said the U.S. is reviewing how to respond to Mr. Navalny’s arrest and didn’t rule out more sanctions. After its needless unilateral concession on New Start, Mr. Putin won’t be impressed by critical words alone.”

Iran: Iran’s foreign ministry on Saturday rejected any new negotiations or changes to the participants in Tehran’s nuclear deal with world powers, after French President Emmanuel Macron said any new talks should include Saudi Arabia.

“The nuclear accord is a multilateral international agreement ratified by UN Security Council Resolution 2231, which is non-negotiable and parties to it are clear and unchangeable,” Iranian Foreign Ministry spokesman Saeed Khatibzadeh was quoted by state media as saying.

Iran began breaching the deal’s limits on uranium enrichment activity after Washington withdrew from the pact in 2018 under then-President Donald Trump and reimposed economic sanctions on Tehran.

President Biden’s administration has said it will rejoin the deal but only after Tehran resumes full compliance with its terms.  But Saudi Arabia and the United Arab Emirates have said that Gulf Arab states should be involved this time in any talks, which they say should also address Iran’s ballistic missile program and its support for proxies around the Middle East.

Macron said any new talks on the nuclear deal with Iran would be very “strict” and that a very short time remained to prevent Tehran from having a nuclear weapon.

Khatibzadeh said Macron should “show self-restraint.”  “If French officials are worried about their huge arms sales to Persian Gulf Arab states, they better reconsider their policies,” he said. “French arms, along with other Western weapons, not only cause the massacre of thousands of Yemenis, but are also the main cause of regional instability.”

So while this dialogue was taking place, Iran was continuing to breach the nuclear deal and on Tuesday, the International Atomic Energy Agency said Iran had started enriching uranium with a second of three cascades of new centrifuges, a further violation.  Under the accord it was only allowed to enrich at one site, Natanz, and with older centrifuges. Iran’s ambassador to the IAEA said on Twitter that Tehran had started installing another line of centrifuges at Fordow, and has begun enriching uranium to the 20% purity it last achieved before the 2015 deal. 

The same day, Israel’s energy minister said it would now take Iran about six months to produce enough fissile material for one nuclear weapon.  The nuclear accord sets a limit of 3.67% enrichment purity, suitable for producing civilian nuclear energy.

Meanwhile, Iran’s long-range ballistic missile program continues, testing a new rocket on Monday with improved technology that could be used in its missile program, Tehran’s latest attempt to raise the stakes for the Biden administration ahead of potential negotiations over a new deal.

Myanmar: The military seized power in a coup after detaining civilian leader Aung San Suu Kyi, the former Nobel Peace Prize winner, and other senior members of her governing party.

All authority has been given to the top army commander and a one-year state of emergency has been declared, a statement on military television said, the army shutting down virtually all outside lines of communication and the internet.

The coup followed a landslide election win by Suu Kyi’s National League for Democracy (NLD).

In a letter written in preparation for her impending detention, she said the military’s actions put the country back under dictatorship.

In the early hours of Monday the military said it was handing power to commander-in-chief Min Aung Hlaing because of “election fraud.”

Myanmar, also known as Burma, was ruled by the armed forces until 2011, when democratic reforms spearheaded by Aung San Suu Kyi ended military rule, Suu Kyi coming to power after a 2015 election that turned her into an international icon.

But Suu Kyi, after this heroic move, then cut a deal with the devil, for which she has received widespread criticism in the West among those who used to see her as a hero.  For starters, hundreds of thousands of Rohingya fled army operations into refuge from Myanmar’s western Rakhine state in 2017, but she had remained popular at home.

But then political tensions soared and rumors of a coup were rampant, because as part of her election landslide, she sought changes to the constitution that would limit the generals’ power. 

The constitution granted 25% of seats in parliament for the military and control of three key ministries in Suu Kyi’s administration.

Police filed several charges against Suu Kyi, accusing her of breaching import and export laws, and possession of unlawful communications devices.  [Literally, walkie-talkies.]

As far as I’m aware, Suu Kyi and the deposed president, Win Myint, haven’t been heard from.  Min Aung Hlaing installed an 11-member junta.

If you forget where Myanmar is and why we should care, aside from the tragic Rohingya story, in which Bangladesh has not performed well either (many Rohingya fleeing there), aside from Bangladesh, Myanmar borders China.  As in China could de facto take it over in the blink of an eye, and thus have access to the Andaman Sea, which leads into the Strait of Malacca, where your editor has been, because I wanted to see firsthand what this critical spit of water was in terms of international cargo traffic, to the likes of South Korea, Japan and the United States, among others.  So use your imagination.

Random Musings

--Presidential approval ratings….

Rasmussen: 49% approve of President Biden’s job performance, 48% disapprove (Friday).
Gallup (initial survey): 57% approve of Biden’s performance, 37% disapprove (Jan. 21-Feb. 2). Donald Trump’s initial split was 45-45.

--In the above noted Quinnipiac University poll, President Biden receives a job approval rating of 49%, 36% disapprove.

Democrats in Congress: 44% approve, 46% disapprove.

Republicans in Congress: 26% approve, 64% disapprove.

Asked about several issue and whether they are a crisis, a problem but not a crisis, or not a problem at all:

Coronavirus pandemic: 68 percent say crisis, 25 percent problem but not a crisis, 6 percent not a problem at all.

The state of the nation’s economy: 45 percent say crisis, 46 percent problem but not a crisis, 7 percent not a problem at all.

Climate change: 43 percent say crisis, 33 percent problem but not a crisis, 21 percent not a problem at all.

People believing in Conspiracy Theories: 34 percent say crisis, 41 percent problem but not a crisis, 21 percent not a problem at all.

On Immigration: By an 83-12 margin, Americans support Biden’s proposal to create a pathway to citizenship for undocumented immigrants who were brought to the U.S. as children.

--The State of the Republican Party:

For starters, Kevin McCarthy is not playing his cards right, nor is the GOP.  McCarthy should be well-positioned to become Speaker after the midterm elections in 2022, Republicans being only a handful of seats away from retaking the House, but he totally botched the Marjorie Taylor Greene and Liz Cheney fractures within the House GOP.

Reminder…Greene has used her Facebook and Twitter accounts to call for the executions of House Speaker Nancy Pelosi, former President Barack Obama and other prominent Democrats she claimed were part of the “deep state.”

It was also discovered that Greene, prior to her November election to a first term, harassed survivors of a 2018 school shooting in Florida and falsely claimed they faked the massacre as part of a Democratic plot to implement stricter gun laws.  Greene has also pushed baseless claims about 9/11 being an “inside job” and peddled anti-Semitic theories about wealthy Jews using “space lasers” to set forest fires in California.

Many of Greene’s claims are inspired by the QAnon theory, which she has a history of promoting.  She was endorsed by former President Trump and has refused to apologize for her wild conspiracy mongering, until, possibly, now.  She also defeated in her primary race a brain surgeon, John Cowan…a man I saw interviewed on Michael Smerconish’s CNN show last Saturday who was a very impressive, obviously intelligent man.  But Georgia voters have their own rights and elected Greene.

So in terms of the House GOP, on one side are the Trump loyalists – two-thirds of whom voted to reject state electoral votes and endorse Trump’s Big Lie on voter fraud – while a significant minority are eager to move the party away from Trump and toward a more policy-driven foundation.

Senate Minority Leader Mitch McConnell correctly dismissed Greene’s statements as “loony lies” that have “nothing to do with the challenges facing American families or the robust debates on substance that can strengthen our party.”

“Somebody who’s suggested that perhaps no airplane hit the Pentagon on 9/11, that horrifying school shootings were pre-staged, and that the Clintons crashed JFK Jr.’s airplane is not living in reality,” McConnell said. 

Sen. John Thune (S.C.), the No. 2 GOP leader, correctly said House Republicans faced a simple choice: “Do they want to be the party of limited government…or do they want to be the party of conspiracy theories and QAnon?”

And Sen. Mitt Romney (R-Utah) was correct in saying: “Our big tent is not large enough to both accommodate conservatives and kooks.”

But Wednesday, a key House panel, the Rules Committee, advanced a resolution to remove Rep. Greene from her posts on the chamber’s education and budget committees and also ban her from getting any other appointments.

The vote – which fell entirely along party lines – sent the resolution to the full House, where it was to gain final approval on Thursday.

So then with Wednesday night’s moves by McCarthy, to allow Greene to retain both of her committee posts, having accepted her supposed apology, and then with House members taking a secret vote to support Liz Cheney as No. 3 in the House membership, a vote that went 145-61 in favor of Cheney, only it was “secret,” no record whatsoever kept of who voted what.

For her part, Cheney didn’t apologize for her Jan. 13 vote to impeach Trump, saying it was an act of conscience that she stands by.  She did argue, however, that she is a team player and should continue in her leadership role.  Representatives Jim Jordan (Ohio) and Louis Gohmert (Texas), two of the more obnoxious figures in Congress, if not the top two, argued against Cheney, insisting that an elected leader of the party should not have voted to impeach a Republican president.

Leader McCarthy defended Cheney, calling for unity in the party.

But McCarthy, by not handling the issue on his own with Greene, and by not being the leader he is supposed to be, exposed his members to a full vote on the House floor as to their stance on Greene, which gives Republican opponents in 2022 a major weapon to use against them!

Republicans, with rational leadership, could have regained some support in the suburbs in ’22, but not now.

Back to the House Rules Committee, Oklahoma Rep. Tom Cole, the panel’s top Republican, called Greene’s promotion of various crackpot conspiracy theories “deeply offensive,” “vile” and “repugnant,” but argued against the resolution on process ground.

“This hearing is premature,” Cole said, reasoning that the matter should first have been taken up by the House Ethics Committee to avoid setting a new precedent for reprimanding members.

But House Rules Chairman Jim McGovern (D-Mass.) said if the resolution sets a new precedent for removing members, he’s okay with that.

“If the precedent’s going to be that if somebody advocates for putting a bullet in the head of a member…if that is going to be the new determination as to what it takes to throw people off of committees, I’m fine with that,” he said.  “If this is not the bottom, I don’t know what the hell is.”

Robert Doar, president of the American Enterprise Institute, a conservative think tank with close ties to Republican policymakers, said it was incumbent on the GOP to accept Trump critics like Cheney into the fold and root out extremists or watch the party’s electoral coalition continue to unravel.

“The risk is that they’ll drive reasonable people who would likely be supportive of right-of-center policies away because they don’t want to be a part of a party that has those elements in it,” he said.  “What will happen is that the substance that you really care about – a certain kind of tax policy, a certain kind of budgetary policy, an approach on issues concerning cancel culture and identity politics – will lose.”

Editorial / Wall Street Journal…Tuesday

“Minorities in the House of Representatives are rarely relevant, but the current GOP minority is only a few seats from taking back control. That makes its deliberations Wednesday over two of its Members an important message about the party’s potential return to power.

“A few dozen backbenchers want to depose Wyoming Rep. Liz Cheney from the House leadership for voting to impeach Donald Trump.  Other Members are concerned about the high public profile of Marjorie Taylor Greene, a freshman Member from Georgia with kooky views.  If the House GOP punishes Ms. Cheney while saying nothing about Ms. Greene, it will deserve a longer time in the wilderness.

“Ms. Cheney’s impeachment decision was a vote of conscience, as GOP leaders said at the time.  She joined nine others in voting to impeach Mr. Trump after an assault on the Capitol that followed weeks of false election claims from the White House.  Some Republicans say Ms. Cheney has special obligations to reflect the GOP conference as a leader, but GOP leaders didn’t whip the vote and Minority Leader Kevin McCarthy was offering little guidance.

“Ms. Cheney should get credit for daring to stand alone despite the political risks.  The Trumpians are vowing to defeat her in a primary in 2022, and Rep. Matt Gaetz, a Trump acolyte, flew to a rally in Cheyenne last week to stir up opposition.  Donald Trump Jr. called into the rally to promote a primary challenge to her in 2022.

“If bowing before all things Trump is the litmus test for being a loyal Republican, the party should get used to continued losses in the suburbs.  Mr. McCarthy should be defending his colleague’s vote as a matter of principle, even if he disagreed with it, rather than living in fear of the wrath of Mar-a-Lago….

“As for Ms. Greene…(she) somehow won a crowded primary, then a runoff, in her heavily GOP district.  But it’s not clear how tuned-in many Georgians were to her wilder views.  John Cowan, the Republican she beat, recently said voters wanted a flamethrower.  Now, he added, ‘A lot of people call me and say, ‘Wow, we didn’t know she was really going to be this way!’’ Mr. Cowan could have used more help from the rest of the party.

“But Ms. Greene won, and she deserves to be judged on how she handles herself in office.  Democrats also have their share of cranks in the ranks.  ‘Israel has hypnotized the world, may Allah awaken the people and help them see the evil doings of Israel,’ Democratic Rep. Ilhan Omar once wrote.  After being elected, she explained her view of why Congress backs Israel: ‘It’s all about the Benjamins baby.’

California Rep. Maxine Waters urged people to harass Trump Administration officials at restaurants or gas stations, and she now runs the Financial Services Committee.  The point is that ousting a Member of Congress has usually been left to the voters, with the exception of criminal behavior.

“The House GOP could deny Ms. Greene committee assignments, as it did with former Iowa Rep. Steve King in 2019.  But Mr. King had spent years in Congress making noxious racially tinged statements. Iowa voters defeated him in a primary.  Ms. Greene has been in the House for only a month.  Mr. McCarthy’s best option for now might be to warn her about future comments and behavior, and if she crosses a line he can then strip her of committee slots.  Voters in her district will get another chance in 2022, and Georgia Republicans could also reconfigure her district based on the 2020 Census.

***

“Congress has had many oddballs over the decades, but in our social-media age the opposition will try to turn the words of even a single Member against the whole party. That’s the GOP’s Marjorie Taylor Greene problem.  Congress today also has many Members like Mr. Gaetz, who view the House as a platform for their personal political brand rather than a place to legislate.

“The main goal of the House minority is to become the majority, and in 2022 Republicans should have an excellent chance. But they’ll squander it if they purge serious Members like Liz Cheney and let themselves be defined by conspiracy theorists and Parkland truthers.”

So, Thursday night the Democratic-led House voted mostly along party lines to remove Rep. Greene from her two committees, the vote 230-199 with 11 Republicans joining every Democrat in stripping her from the Education & Labor Committee and the Budget Committee.

Leader Kevin McCarthy in the charged debate leading up to the vote: “This resolution sets a dangerous new standard that will only deepen division within this House. For all their talk about norms and institutions, it’s the Democrats who’ve acted to undermine the People’s House at every turn.”

For her part, Greene took to the floor earlier Thursday to disavow some of her previous incendiary posts on social media in a last-ditch effort to avoid punishment.

Though she expressed some regret, she never apologized.

“During my campaign, I never said any of these things,” she said.  “Since I have been elected for Congress.  These were words of the past and these things do not represent me, they do not represent my district, and they do not represent my values.”

The 11 Republicans joining all Democrats in voting to remove Greene:

Brian Fitzpatrick (Pa.), Carlos Gimenez (Fla.), Mario Diaz Balart (Fla.), Chris Jacobs (N.Y.), John Katko (N.Y.), Young Kim (Calif.), Adam Kinzinger (Ill.), Nicole Malliotakis (N.Y.), Maria Salazar (Fla.), Chris Smith (N,.J.), Fred Upton (Mich.)

Editorial / Washington Post

“The House voted Thursday to expel Rep. Marjorie Taylor Greene from the Budget Committee and the Education and Labor Committee.  Republicans said the vote set a bad precedent. But blame for this episode lies first with Ms. Greene herself, with her extensive history of offensive conspiracy theorizing, and second with the rest of the House Republican caucus, which failed to do anything about the dangerous crackpot in its midst….

“(Greene) assures us further that she reached some kind of a turning point in 2018, perhaps after she speculated that the California wildfires of that year may have been caused by a Jewish-conspiracy space laser.  If so, she kept her recovery well-hidden.  It was already 2019 when she claimed that a body double had replaced Supreme Court Justice Ruth Bader Ginsburg. It was during her 2020 campaign that she said, ‘The only way you get your freedoms back is if it’s earned with the price of blood.’

“Enough was known about Ms. Greene before committee assignments were handed out that Republican leaders should have prevented her from taking roles on such high-profile panels. Her posting on the education committee was particularly galling, giver her previous statements questioning the reality of school shootings and accosting their victims.  As revelation after revelation about her offensive past emerged, Republicans should have reconsidered.  Instead, they declined on Wednesday to take a stand against kookiness, forcing Thursday’s vote.

“Republicans’ failure to police their own put Democrats in a tough position.  The notion of allowing Ms. Greene to remain on plum committees is abhorrent. But using a vote of the full House to strip a member of the minority party of her committee assignments sets a precedent that may well be misused down the road.

“That a corrosive influence such as Ms. Greene enjoys good standing among her House Republican colleagues offers one more sign that the House GOP is morally adrift.  Thursday’s vote should never have had to happen.  Republicans should have had more self-respect than to support her last year, to welcome her with full honors and to allow the situation to escalate as it did.”

I couldn’t agree more…and as I said earlier, Kevin McCarthy foolishly allowed this to get to the point where he put his members on record…and by 2022, this certainly won’t help them in their attempt to retake the House.

--Rep. Adam Kinzinger on Sunday offered a glimpse of what it’s like being one of the 10 House Republicans who voted to impeach former President Donald Trump: Friends and family turned against him, and he was told he’s “possessed by the devil.”

“Look it’s really difficult.  I mean, all of a sudden imagine everybody that supported you, or so it seems that way, your friends, your family, has turned against you.  They think you’re selling out,” the Illinois congressman said on NBC’s “Meet the Press.”

“I’ve gotten a letter, a certified letter, twice from the same people, disowning me and claiming I’m possessed by the devil.”

Kinzinger added: “If you look at Matt Gaetz going to Wyoming because, what, a tough woman has an independent view and he doesn’t want to have to go out and explain why he didn’t vote for impeachment, that’s totally GOP cancel culture,” he said.  “What we’re standing for, and I think what, frankly, a significant part of the base wants, is to say, ‘Look, we can have diversity of opinion.’”

Kinzinger then released a video, touting a GOP voter base that wants to give up the division and conspiracy theories that he says have come to define the party.

“The biggest danger right now is that we’ve become a party that dabbles – not just dabbles – we traffic in conspiracies and we traffic in lies,” Kinzinger said.

“Republicans must say enough is enough.  It’s time to unplug the outrage machine, reject the politics of personality, and cast aside the conspiracy theories and rage.  It’s time to turn back from the edge of darkness and return to the ideals that have long been our guiding light,” he said in the video.  “It’s now or never.  The choice is ours.  I’ve made mine, and I hope every Republican, and every American who shares our values, will choose to join me.  Let’s take back our party.”

He says he’s trying to steer the party of Ronald Reagan back toward hope, optimism and truth.  Kinzinger said he is clear-eyed on the challenges he’s likely to confront among Republicans still faithful to Trump.

“Would we lose the Proud Boys? Maybe.  I’m fine with that,” he said.  “But we’d be bringing in…that Republican who maybe voted Biden and then Republican down-ballot because they couldn’t stand Donald Trump but they gave the Republican Party one last shot.”

--Nebraska Republican Sen. Ben Sasse, in an amazing five-minute video after local news reports revealed the state party was considering a censure motion for the senator’s rebuke of Trump following the Capitol insurrection, denounced the party’s State Central Committee.

Politics isn’t about the weird worship of one dude,” Sasse said.  “The party can purge Trump skeptics.  But I’d like to convince you that not only is that civic cancer for the nation, it’s just terrible for our party.”

In his video statement, Sasse cast himself as a loyal conservative and differentiated between his constituents and members of the central committee.  He said very few Nebraska voters “are as angry about life as some of the people on this committee.”

“Political addicts don’t represent most Nebraska conservatives,” Sasse said.

The senator, noting (rightly) that he is one of the most conservative members of the Senate, said his party was dissatisfied with his “not bending the knee” to Trump.

Sasse also used the video to reiterate his disdain for Trump’s behavior between Election Day and his departure from office, when Trump continuously spread false claims that the election was stolen from him. Sasse said the Capitol riot “happened because the president lied to you” and because Trump “riled a mob that attacked the Capitol – many chanting ‘hang Pence.’”

“If that president were a Democrat, we both know how you’d respond,” Sasse said.  “But, because he had Republican behind his name, you’re defending him.”

--Gov. Gavin Newsom’s job approval rating among California voters has plummeted, driven largely by dissatisfaction over the state’s response to the Covid-19 pandemic and adding fuel to a Republican-led recall campaign, according to a new poll by the UC Berkeley Institute of Governmental Studies.

More than a third of the state’s registered voters said they would vote to oust Newsom from office if the recall qualifies for the ballot, though 45% said they would oppose such a move, the survey found.

The poll also found that just 31% of those surveyed thought that Newsom and other state government leaders have done an excellent or good job handling the pandemic, while 23% said they have done a fair job and 43% called it a poor job.

--Sarah Ellison and Jeremy Barr of the Washington Post had a good report on the crisis facing Fox News, as best exhibited by the behavior of Sean Hannity, who “seems to have been working through a process, live and on camera….

“For a few weeks, it manifested as the denial shared by his fellow believers in the ex-president’s unsupported claims of election fraud. After the inauguration of the new president, Hannity pivoted to the next stage – anger – as he lashed out at ‘the weak, the frail, the cognitively struggling Biden.’  More recently, he has displayed something closer to depression, as he engages his viewers in a session of public mourning.

“ ‘My heart’s troubled,’ he told his on-air colleague Laura Ingraham.  ‘It’s aching for my country right now.’

“Hanity’s process is a window into the current tumult inside Fox News, as the former president’s former favorite network tries to find its place in a post-Trump reality… But never before had a network been so closely affiliated with a commander in chief.”

I think pollster Frank Luntz put it best: “Fox has succeeded for years in straddling the line between a quality news organization and the opinion side. But Trump won’t let that happen anymore, and neither will his supporters.  They want their ‘news’ to affirm them rather than inform them.”

Separately, Smartmatic, the voting software company that former President Trump’s lawyers falsely accused of manipulating vote counts in the 2020 election, has filed a $2.7-billion defamation lawsuit against Fox News and three of its on-air hosts – Maria Bartiromo, Lou Dobbs and Jeanine Pirro – who presented the disinformation on their programs.

The suit, filed Thursday in New York State Supreme Court, also names Trump’s lawyers Rudy Giuliani and Sidney Powell, who were frequent guests on Fox News programs in the weeks after the November election, which the former president insisted was rigged against him.

And then tonight, Fox abruptly canceled “Lou Dobbs Tonight,” its highest-rated show.

--The Screen and Actors Guild, SAG-AFTRA, delivered a one-liner Thursday when Donald Trump resigned from the actors union ahead of a disciplinary hearing over his role in the Jan. 6 Capitol riot.

“Thank you,” the guild’s leadership said in a terse, two-word response.

Trump had sent a petulant letter “revoking” his union membership.

“I write to you today regarding the so-called Disciplinary Committee hearing aimed at revoking my union membership.  Who cares!” Trump wrote.

“While I’m not familiar with your work, I’m very proud of my work on movies such as Home Alone 2, Zoolander and Wall Street,” he continued, naming a few more credits including his “Apprentice” reality show.

“This letter is to inform you of my immediate resignation from SAG-AFTRA.  You have done nothing for me,” he wrote.

--Uh oh…this isn’t good.

Mark Johnson / Milwaukee Journal Sentinel

“A new and always fatal disease that has been killing chimpanzees at a sanctuary in Sierra Leone for years has been reported for the first time by an international team of scientists led by researchers at the University of Wisconsin-Madison.

“The disease, reported Wednesday in the journal Nature Communications, is caused by a newly discovered species of bacterium and comes as the world wrestles with a devastating pandemic caused by another novel foe, the new coronavirus.

“Although the chimpanzee illness has yet to be found in a human being, the two species share about 99% of their hereditary material, or DNA.

“ ‘There are very few pathogens that infect chimpanzees without infecting humans and very few pathogens that infect humans without infecting chimpanzees,’ said Tony Goldberg, one of the authors of the paper and a University of Wisconsin-Madison professor of epidemiology."

Lethal diseases, including Ebola and HIV, have jumped from great apes to humans.  Other diseases, such as influenza and polio, have passed the other way…humans to apes.

Ebola had about a 50% fatality rate.

Goldberg added: “The staff at Tacugama (Sanctuary in Freetown, Sierra Leone) are super worried. It looks like something we need to be concerned about.”

Yet another reason to sleep with one eye open.

--So we had a big snowstorm in my area this week. It started Sunday afternoon and literally went through Tuesday morning, and then we even had some more, related to the same storm, Wednesday.

New Jersey’s all-time record for a single storm was set all the way back in 1899, Cape May, 34 inches.

Unofficially that was surpassed by the community of Mount Arlington, not too far away, with 35.5 inches, though it takes awhile for the weather folks to make this official.  But the people of Mount Arlington are psyched they could forever be in the record books.

Personally, the storm was another reminder why many of us can’t wait for spring…and golf.

---

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

We pray for the healthcare workers and first responders.

God bless America.

---

Gold $1811
Oil $56.97

Returns for the week 2/1-2/5

Dow Jones  +3.9%  [31148]
S&P 500  +4.7%  [3886]
S&P MidCap  +5.8%
Russell 2000  +7.7%
Nasdaq  +6.0%  [13856]

Returns for the period 1/1/21-2/5/21

Dow Jones  +1.8%
S&P 500  +3.5%
S&P MidCap  +7.4%
Russell 2000  +13.1%
Nasdaq  +7.5%

Bulls  57.8
Bears 16.7 [Prior week’s split, which was delayed, 61.2 / 16.5]

Hang in there.  Mask up…wash your hands.

Enjoy the Super Bowl.

Brian Trumbore