Week in Review

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Week in Review

06/25/2022

For the week 6/20-6/24

[Posted 8:30 PM ET, Friday]

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Edition 1,210

Even before today’s Supreme Court ruling overturning Roe v. Wade, for so many other reasons we were heading for a “summer of discontent.”  We’ve seen it on the inflation front and record prices at the gas pump, and in falling consumer confidence levels, and major disruptions around the world on the travel front, with an airline industry struggling mightily to deal with often severe labor shortages.

And now the ruling, which I discuss below. 

Treasury Secretary Janet Yellen, on ABC’s “This Week” last Sunday, said that despite rising borrowing costs, high inflation and energy price shocks: “I expect the economy to slow. It’s been growing at a very rapid rate.  It’s natural now that we expect to transition to steady and stable growth, but I don’t think a recession is at all inevitable.”

And so every major administration official that hit the airwaves this week then said the same thing… “recession is not inevitable.”

It was almost laughable.  But this is what you get when your party is going down in flames at the voting booth come November. 

Or maybe not…it’s too early to tell what the impact of the Supreme Court’s ruling will be on our elections.

One thing we do know, based on some of the statements in the Senate when Fed Chair Jerome Powell was being grilled on inflation and the economy, is that Democrats will be blaming Powell when things don’t improve much over the coming months…in fact they could easily get worse.

I quote some noted economists in my ‘Wall Street’ section who both talk of recession hitting in 12-18 months, but the second quarter could very easily be the second straight with negative growth when the numbers come in end of July.  That’s recession!

And with constant recession talk in the air, raw materials are starting to tank, such as in copper and wheat, with oil taking a breather the last two weeks and the price at the pump down to $4.92, nationally, though diesel was unchanged at $5.80, not good for goods and food inflation.

That said, I’ve talked all along about prices “resetting” at much higher levels.  I have to keep repeating that as we roll off some high monthly numbers in the future, of course the rate of inflation will be coming down.  But we’ll be at much higher prices in energy and food and other goods and services. 

One critical sector to watch though is housing, and prices will be coming down in some of the red-hot markets…of this there is no doubt.  Mortgage rates, like gasoline, have taken a breather, but the rate on a 30-year fixed mortgage is still 5.75% to 5.80%, depending on your benchmark, albeit down from an intraweek high of 6.28%.  [The figure quoted most in the national press is Freddie Mac’s weekly figure, released Thursdays, that is 5.81%, but we had much higher figures on a daily basis two weeks ago.]

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A new Pew Research Center Survey of global attitudes has ratings for Russia plummeting after their invasion of Ukraine.  They were already negative before in most of the nations surveyed and in 10 countries, 10% or less of those polled express a favorable opinion of Russia.  Positive views of Vladimir Putin are in single digits in more than half of the nations polled.

Attitudes toward NATO, in contrast, are largely positive, while ratings for the alliance in several nations improved, such as in Germany and the United States.

Overall ratings for the U.S. are largely positive and stable.  A median of 61% across 17 nations (not including the U.S.) express a favorable view of the U.S.  Favorable opinions increased significantly in South Korea, Sweden and Australia, while declining significantly in Greece, Italy and France.

In 2021, more than half in most nations surveyed said democracy in the U.S. used to be a good example for other nations to follow, but that it no longer is.

Large majorities in most countries see America as a reliable partner to their country, and the share of the public holding that view has risen in the past year in most nations.  For instance, 83% of South Koreans consider the U.S. a reliable partner, up from 58% in 2021.

Sweden’s view of the U.S. as a reliable partner has grown from 63% to 84% in the past year.  Canada – 68% to 84%; UK – 72% to 82%.

Ratings for Joe Biden, on the other hand, have fallen significantly in 13 countries, including declines of 20 percentage points or more in Italy, Greece, Spain, Singapore and France; though attitudes towards the president remain mostly positive, with a median of 60%.  Biden gets his highest marks in Poland (82% confidence) and the lowest in Greece (41%).

Biden’s median confidence mark of 60% compares with Emmanuel Macron at 62%, Germany’s Olaf Scholz 59%, Xi Jinping 18%, and Putin 9%.

Negative ratings of Putin are at record highs…U.S. 92%, Canada 89%, UK 90%, France 89%, Italy 86%, Germany 85%.

The one country in the study where Biden receives lower ratings than Trump is Israel. Six-in-ten Israelis see Biden positively, but 71% felt this way about Trump when Pew last surveyed there in 2019.

As for the war in Ukraine, President Zelensky said early in the week “The occupier’s goal is unchanged.  They want to destroy the entire Donbas step-by-step.”  And they are.

Also watch Lithuania, which moved this week to block the transit of some goods from mainland Russia to the exclave of Kaliningrad that I’ve long said is a potential flashpoint.  Moscow is not happy.  Lithuania said it was required to institute the blockade under EU sanctions that took effect on Saturday.

Vitaliy Katsenelson / Barron’s

“After Putin is done Frankensteining the Soviet Union back together with countries that are not part of NATO, he may move on to Baltic countries that are NATO members.  Yes, that is unimaginable.  But so was the invasion of Ukraine and all that’s come after.

“This war is not about Eastern Ukraine or even Ukraine. It is about stopping Hitler in 1939 after he had already invaded Poland but before he marched on the rest of Europe.

“As the exiled dissident Garry Kasparov says, Russia under Putin has turned into a mob state.  Mobsters respect strength and feast on weakness. There is great danger that as the effects of the war on our wallets grow and war coverage recedes, Western resolve in supporting Ukraine doesn’t wane.  Ukrainians are losing their lives on our behalf. If we don’t support them with weapons now, it will be U.S. soldiers fighting the Russian Army in Estonia or Poland in a few years on behalf of NATO….

“Thanks to Putin’s propaganda machine, the majority of Russians believe that Ukraine is on the brink of becoming Nazi Germany.  They point to the swastikas tattooed on Azov fighters who surrendered in Mariupol as proof.  I revile Nazi symbols and beliefs as much as any Jew who had relatives murdered in the Holocaust, but let’s think about it calmly – what is Nazism today?

“It is the most recent, extreme version of nationalism, where one race or country believes it is superior to others and is willing to do any amount of killing to enforce its dominance.

“Russia today is sick with its own sort of Nazism.  Just as Nazis believed they were the superior race, Russia believes it is superior to Ukraine and other nations.  Russia wants to delete the Ukrainian identity, as though the country has no right to exist.  An op-ed in the state-owned Russian Information Agency called for the full suppression of the Ukrainian ethnicity.

“As Russia captures Ukrainian cities, it immediately starts ‘de-nazifying’ and ‘Russifying’ them.  It prevents people from traveling elsewhere in Ukraine and allows them to travel only to Russia (think: the Wall between East and West Germany). It switches the functional currency to the ruble.  It starts rewriting history by canceling the Ukrainian curriculum in schools.  It wants Ukrainians to forget their culture and their language.  Putin wants to force Ukrainians to fall in love with their new Russian nation.

“Ukrainians are not just fighting for their land.  They are fighting for the right to speak their own language, for their culture, for freedom of thought, for the right to be part of the West and maintain its liberal values.

“My advice to President Macron: If you want to save Putin from humiliation, I have heard that Burgundy is nice in August.  Though Russians prefer potato vodka to French wine, they’ll adapt.  You’ll just need to teach Putin two words in French; ‘I surrender.’”

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As the war unfolded this week….

Saturday/Sunday….

Ukrainian President Zelensky said Sunday in his nightly video address, “Obviously, this week we should expect from Russia an intensification of its hostile activities.  We are preparing. We are ready.”

Visiting troops on the front line Saturday, Zelensky said on his official Telegram account upon his return: “Our brave men and women. Each one of them is working flat out. We will definitely hold out!  We will definitely win!”

On his return from a surprise visit to Kyiv, British Prime Minister Boris Johnson said: “The Russians are grinding forward inch by inch and it is vital for us to show what we know to be true which is that Ukraine can win and will win.

“When Ukraine fatigue is setting in, it is very important to show that we are with them for the long haul and we are giving them the strategic resilience that they need,” he said.

Ukraine applied to join the European Union four days after Russian troops poured across its border in February, and the leaders of the 27-nation union will consider the question at a summit on Thursday and Friday, where they are expected to endorse Ukraine’s application despite misgivings from some member states.  The process will take many years to complete.

The EU’s embrace of Ukraine would interfere with one of Vladimir Putin’s stated goals when he invaded the country: to keep Moscow’s southern neighbor outside of the West’s sphere of influence.

Last weekend, however, Putin said Moscow had “nothing against” Ukraine’s EU membership, but the Kremlin then said it was closely following Kyiv’s bid in light of increased defense cooperation among member countries.

--Analysts at the Institute for the Study of War, a Washington-based think tank, wrote in a note that “Russian forces will likely be able to seize Severodonetsk in the coming weeks, but at the cost of concentrating most of their available forces in this small area.”

--NATO Secretary-General Jens Stoltenberg said the Ukraine conflict could last for years and urged Western governments to continue sending state-of-the-art weaponry to Ukrainian troops.

“We must prepare for the fact that it could take years.  We must not let up in supporting Ukraine,” Stoltenberg said.

--The British Ministry of Defense tweeted: “Ukrainian forces have likely suffered desertions in recent weeks, however, Russian morale highly likely remains especially troubled. Cases of whole Russian units refusing orders and armed stand-offs between officers and their troops continue to occur.”

--Monday….

The Kremlin said on Monday that Americans captured in Ukraine were “mercenaries” engaged in illegal activities and should take responsibility for their “crimes,” RIA news agency reported.

Kremlin spokesman Dmitry Peskov was also quoted as saying that the detained men were not covered by the Geneva convention as they were not regular troops.

--A food warehouse in the Black Sea port of Odesa was destroyed in a Russian missile attack but no civilians were killed, the Ukrainian military said.  The Operational Command “South” said Russian forces fired 14 missiles at southern Ukraine during a three-hour barrage “in impotent anger at the successes of our troops.”

Explosions rocked Odesa after the Russian-installed head of the Crimea region said Ukrainian forces had attacked drilling platforms owned by a Crimean oil and gas company in the Black Sea off Ukraine’s southern coast.  Three people were wounded, and a search was under way for seven workers, he said in a Telegram post. 

--President Zelensky, in his video address Monday, predicted Russia would step up attacks ahead of the EU summit on Thursday and Friday.

“We are defending Lysychansk, Severodonetsk, this whole area, the most difficult one.  We have the most difficult fighting there,” he said.  “But we have our strong guys and girls there.”

--Russia demanded that Lithuania immediately lift a ban on the transit of some goods to the Russian exclave of Kaliningrad.

Lithuanian authorities banned the transit of goods which are sanctioned by the European Union across its territory, which includes the only rail route between mainland Russia and Kaliningrad.  Banned goods include coal, metals, construction materials and advanced technology.

--Tuesday….

President Zelensky said the military situation in the eastern region of Luhansk was very difficult as Russia stepped up its effort to evict Ukrainian troops from key areas.

“That is really the toughest spot.  The occupiers are pressing strongly,” Zelensky said in an evening video address.

The governor of the Luhansk region said Russian forces had launched a massive attack and gained some territory on Monday. 

Serhiy Gardai said Russian forces controlled most of Severodonetsk, apart from the Azot chemical plant, where more than 500 civilians, including 38 children, have been sheltering for weeks.  The road connecting Severodonetsk and Lysychansk to the city of Bakhmut was under constant shell fire, he said.

--Dmitry Muratov, the co-winner of the 2021 Nobel Peace Prize and editor of an independent Russian newspaper, auctioned off his Nobel medal for a record $103.5 million to aid children displaced by the war.  His paper, fiercely critical of Vladimir Putin, suspended operations in March after warnings over its coverage of the war.  The buyer of the medal was not known.

--Former Russian President Dmitry Medvedev said on Monday that there was no point having any nuclear arms reduction talks with the United States and that Moscow should wait until the Americans begged for negotiations.

Russia and the United States have negotiated a series of major strategic nuclear arms reduction treaties since Ronald Reagan came to power in 1981.  But with Russia’s invasion of Ukraine, relations between Russia and the West are the worst since 1962 and the Cuban Missile Crisis.  Medvedev, while president from 2008-2012, signed New START in 2010 with Barack Obama, which was extended in February 2021 for five years until 2026.

“Now everything is a dead zone. We don’t have any relations with the United States now.  They are at zero on the Kelvin scale,” Medvedev said on Telegram.  “There is no need to negotiate with them (on nuclear disarmament) yet.  This is bad for Russia,” he said.  Medvedev is currently deputy chairman of the Russian Security Council.  “Let them run or crawl back themselves and ask for it.”

Russia and the United States control about 90% of the world’s nuclear warheads, with around 4,000 each in their stockpiles, according to the Federation of American Scientists.

--Wednesday….

The Novoshakhtinsk oil refinery in Russia’s Rostov region, bordering Ukraine, suspended operations on Wednesday after two unmanned aerial vehicles attacked its facilities “from the Western border,” the refinery said in a statement.  Social media footage showed a drone flying towards the refinery, located just 5 miles from the border with Ukraine, before a large ball of flame and black smoke billowed in the sky, as reported by Reuters.

Russia’s TASS cited a source in the local authorities as saying that one of the drones had crashed into a heat transfer unit at the refinery.

--A spokeswoman for the Russian Foreign Ministry said Wednesday that Moscow’s response to Lithuania’s ban on the transit of goods sanctioned by the EU to the Russian enclave of Kaliningrad will not be exclusively diplomatic but practical in nature.

“One of the main questions has been about whether the response would be exclusively diplomatic.  The answer: no,” said Maria Zakharova.  “The response will not be diplomatic but practical.”  Zakharova would not elaborate on the nature of the practical measures Russia planned to take against Lithuania.

The Kremlin further said Lithuania’s move to block the transit of some goods from mainland Russia was “absolutely unacceptable” and Moscow was working on retaliatory measures.

But, again, no idea on what form the retaliation may take.

--Russian forces pounded Ukraine’s second largest city Kharkiv and surrounding countryside with rockets, killing at least 15 people, in what Kyiv called a bid to force it to pull resources from the main battlefield to protect civilians from attack.

The Russian strikes on Kharkiv were the worst for weeks in the area where normal life had been returning since Ukraine pushed Russian forces back in a major counter-offensive last month.

--Russian forces targeted at least two large North American-owned grain terminals in the Ukrainian port of Mykolaiv on Wednesday, as part of what Kyiv and Western governments say is a campaign to degrade Ukraine’s ability to export food.

Canadian agribusiness Viterra and U.S. grain trader Bunge Ltd. both said they had a grain terminal hit on Wednesday.  Viterra is part-owned by commodities giant Glencore PLC.

Russia also repeatedly hit the bridge that Ukrainian farmers and traders say they use to take grain to the Romanian border and the port of Constanta.  A large sunflower-oil processing plant and other grain terminals have also been hit, and Wednesday’s attack is the second time Bunge has been targeted.

--Thursday….

The European Union leadership approved Ukraine’s candidacy for membership Thursday, starting the embattled nation on a yearslong path toward cementing a closer relationship with the West as it attempts to distance itself from its Russian invaders.

“Historic agreement, historic decision,” European Commission President Charles Michel tweeted after the decision was announced on the first day of an EU leaders’ summit in Belgium.

Ukraine has already implemented about 70% of EU rules, norms and standards, European officials have said.  But they warned that the country still needs political and economic reforms, pointing to corruption. EU candidate status doesn’t guarantee Ukraine membership and does not provide the military security provided by NATO membership.  Still, President Zelensky was elated.

“Sincerely commend EU leaders’ decision at #EUCO to grant a candidate status,” he tweeted.  “It’s a unique and historical moment.”

The EU also granted candidate status to Moldova, a tiny, non-NATO country that borders Ukraine.

--Surging Russian forces overwhelmed two more villages in eastern Ukraine on Thursday and closed in on the city of Lysychansk amid a slow but systematic advancement through the industrial heart of Ukraine.

Lysychansk and small areas of sister city Severodonetsk represent the last hurdle in Russia’s quest to control the Luhansk region.

Oleksiy Arestovych, an adviser to President Zelensky, acknowledged the “threat of a tactical Russian victory (in the region) is there, but they haven’t done it yet.”

Luhansk Gov. Serhiy Haidai told the Associated Press that the Russians were “burning everything out” in their offensive to encircle Ukraine’s fighters.  “The Russians are advancing without trying to spare the ammunition or troops, and they aren’t running out of either,” Haidai said, adding: “They have an edge in heavy artillery and the number of troops.”

President Zelensky accused Moscow of trying to “destroy” the Donbas.

“There were massive air and artillery strikes in Donbas. The occupier’s goal here is unchanged, they want to destroy the Donbas step-by step.”

--The U.S. said it would send $450 million more in military aid to Ukraine, including more medium-range rocket systems, officials said Thursday.

--Friday….

In light of the above on the fighting in Luhansk, Friday, Ukrainian forces began a retreat from Severodonetsk to avoid encirclement.  The administrative center of the region has faced relentless Russian bombardment.  Ukrainian troops fought the Russians in house-to-house battles before retreating to a huge chemical factory on the city’s edge, where they holed up in its sprawling underground structures.

But Russian forces made gains around the city, and Lysychansk, in their bid to encircle Ukrainian troops.

Gov. Haidai said the Ukrainians were given the order to leave to prevent that.

“We will have to pull back our guys,” he said.  “It makes no sense to stay at the destroyed positions, because the number of casualties in poorly fortified areas will grow every day.”

--The UN nuclear watchdog is increasingly concerned about the welfare of Ukrainian staff at the Russian-held Zaporizhzhia nuclear power plant in Ukraine, Europe’s largest, it said on Friday, adding that it must go there as soon as possible.

“The IAEA is aware of recent reports in the media and elsewhere indicating a deteriorating situation for Ukrainian staff at the country’s largest nuclear power plant,” the International Atomic Energy Agency said in a statement.  It added that it was “increasingly concerned about the difficult conditions facing staff.”

Some commentary….

Fareed Zakaria / Washington Post

“In this middle phase that we’re in, the West must help Ukraine strengthen its position. Kyiv needs more weapons and training. While there are real limits to how much the Ukrainians can absorb, Washington (and its allies in Europe and elsewhere) must redouble their efforts. They also need to help Ukraine break the Russian blockade around Odesa.  People have focused on the collapse of the Russian economy, which will probably shrink by about 11 percent this year.  But Ukraine’s economy is likely to contract by a staggering 45 percent in 2022.  Unless the country can export its grain out of its Black Sea ports, it could face economic calamity for years to come.

“Most likely, this middle phase of the war will last for a while.  Neither Russia nor Ukraine has the capacity to win decisively, and neither is likely to surrender easily. In the short term, this favors Russia.  It has taken control of much of Donbas.  And because the West hasn’t completely banned Russia’s energy exports, the Russian government has actually profited during this war.  Bloomberg projects Russia’s oil and gas revenue for this year will be about $285 billion, compared with $236 billion last year.  Meanwhile, it can now thwart Ukraine’s ability to export.  In the longer term, one has to hope that the sanctions will hit Russia harder as the war goes on.  At the same time, Ukraine has massive Western assistance, high morale and a willingness to fight to the end….

“In the final phase of the war, the West – and the United States in particular – become the pivotal players. Right now Russia is battling Ukraine directly.  But if and when the conflict becomes something of a stalemate, the real struggle will be between Russia and the West.  What will Russia give to get a relaxation of sanctions?  What will the West demand to end Russia’s isolation?

“So far, Washington has punted on this, explaining that it is up to the Ukrainians to decide what they want and that Washington will not negotiate over their heads. That’s the right message of public support, but Ukraine and its Western partners need to formulate a set of common war aims, coordinating strategy around them, gaining international support and using all the leverage they have to succeed.  The goal must be an independent Ukraine, in full control of at least as much territory as it had before Feb. 24, and with some security commitments from the West.

“The alternative to some kind of negotiated settlement would be an unending war in Ukraine, which would further devastate that country and its people, more than 5 million of whom have already fled. And the resulting disruption to energy supplies, food and the economy would spiral everywhere, with political turmoil intensifying across the globe.  Surely it is worth searching for an endgame that avoids this bleak future.”

Biden Agenda

--Ever since the draft decision was leaked, we have been waiting for the Supreme Court’s ruling overturning Roe v. Wade and it came today.  Nearly 50 years of constitutional protections for abortion ended in a 5-4 decision, and very shortly, abortions will be banned in roughly half the states.

The decision, deemed unthinkable just a few years ago, was the culmination of decades of efforts by abortion opponents, made possible by an emboldened right side of the court that was fortified by three appointees of former President Trump.

It puts the court at odds with a majority of Americans who favored preserving Roe, according to polling data from the past few years, and further back.

Justice Samuel Alito, in the final opinion, wrote that Roe and Planned Parenthood vs. Casey, the 1992 decision that reaffirmed the right to abortion, were wrong the day they were decided and must be overturned.

“We therefore hold that the Constitution does not confer a right to abortion.  Roe and Casey must be overruled, and the authority to regulate abortion must be returned to the people and their elected representatives,” Alito wrote.

Authority to regulate abortion rests with the political branches, not the courts, Alito wrote.

Joining Alito were Justices Clarence Thomas, Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett; the latter three Trump appointees.  Thomas first voted to overrule Roe 30 years ago.

Chief Justice John Roberts would have stopped short of ending the abortion right, noting that he would have upheld the Mississippi law at the heart of the case, a ban on abortion after 15 weeks, and said no more.

Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan, the diminished liberal wing of the court, were in dissent.

“With sorrow for this Court, but more, for the many millions of American women who have today lost a fundamental constitutional protection, we dissent,” they wrote.

The ruling will disproportionately affect minority women who already face limited access to health care, and as some social scientists posit, will thus lead to a further rise in the rate of crime over the decades.  That’s just a fact.

Mississippi’s only abortion clinic, which is at the center of the case, continued to see patients Friday, while men outside used a bullhorn to tell people inside the clinic that they would burn in hell.

Mississippi is one of 13 states, mainly in the South and Midwest, that already have laws on the books that ban abortion in the event Roe is overturned.  Another half-dozen states have near-total bans or prohibitions after 6 weeks of pregnancy, before many women know they are pregnant.

In roughly a half-dozen other states, the fight will be over dormant abortion bans that were enacted before Roe was decided in 1973 or new proposals to sharply limit when abortions can be performed, according to the Guttmacher Institute, a research group that supports abortion rights.

The Biden administration and other defenders of abortion rights have warned that a decision overturning Roe also would threaten other high court decisions in favor of gay rights and even potentially, contraception.

The liberal justices made the same point in their joint dissent: “The majority eliminates a 50-year-old constitutional right that safeguards women’s freedom and equal station.  It breaches a core rule-of-law principle, designed to promote constancy in the law.  In doing all of that, it places in jeopardy other rights, from contraception to same-sex intimacy and marriage. And finally, it undermines the Court’s legitimacy.”

Justice Clarence Thomas, the spouse of that election conspiracist, Ginni, wrote a separate opinion in which he explicitly called on his colleagues to put the Supreme Court’s same-sex marriage, gay sex and even contraception cases on the table.

But Alito contended that his analysis addresses abortion only.  “Nothing in this opinion should be understood to cast doubt on precedents that do not concern abortion,” he wrote.

One person who looks like an idiot today is Republican Sen. Susan Collins of Maine, who predicted Gorsuch and Kavanaugh wouldn’t support overturning Roe and Casey, based on private conversations she had with them when they were nominees.

A few quotes from players on both sides of the political aisle:

Senate Republican Leader Mitch McConnell: “This is an historic victory for the Constitution and for the most vulnerable in our society… (The decision) is courageous and correct.”

Former Vice President Mike Pence: “Today, Life Won. By overturning Roe v. Wade, the Supreme Court of the United States has given the American people a new beginning for life, and I commend the justices in the majority for having the courage of their convictions.

“Having been given this second chance for Life, we must not rest and must not relent until the sanctity of life is restored to the center of American law in every state in the land.”

Former President Barack Obama: “Today, the Supreme Court not only reversed nearly 50 years of precedent, it relegated the most intensely personal decision someone can make to the whims of politicians and ideologues – attacking the essential freedoms of millions of Americans.”

Senate Judiciary Committee Chairman Dick Durbin (D): “I will keep fighting to enshrine into law a woman’s right to make her own reproductive choices.  We cannot let our children inherit a nation that is less free and more dangerous than the one their parents grew up in.”

President Joe Biden: “Today the Supreme Court of the United States expressly took away a constitutional right for the American people.  They didn’t limit it, they simply took it away.”

Biden said his administration would defend women who chose to travel to other states who allow abortions.

“Any state or local official, high or low, who tries to interfere with a woman who is exercising her basic right to travel I will do everything in my power to fight that deeply un-American attack.”

“It is a sad day for the court and a sad day for the country… With your vote, you can act.  You can have the final word. This is not over.

“This fall, Roe is on the ballot.”

More next time.

--The Senate voted 65-33 to approve bipartisan gun-safety legislation that is hailed as the biggest breakthrough on the issue in three decades.

The vote came the same day the Supreme Court struck down a New York law that required people to show a special need to carry a handgun in public, ruling for the first time that the Second Amendment protects gun rights outside the home.  [More on this below.]

The dueling actions underscore the deep division that remain in the country on gun policy against the backdrop of recent massacres in Uvalde, Texas, and Buffalo, New York.

Senators, who have long struggled to find common ground on gun safety, restarted stalled negotiations after these two shootings and produced a bill aimed at improving background checks, securing schools and giving states federal funds to combat gun violence.

Under the legislation, every state will have the opportunity for grants to help pay for crisis intervention programs, regardless of whether they set up “red flag” laws that allow judges to remove guns from potentially dangerous owners.

It also provides for improvements to the national background check system, including giving states incentives to upload juvenile records to allow better reviews of gun purchasers aged 18 to 21.

The bill also includes billions of dollars in funding to help secure schools and bolster mental health resources.

Among the 15 Republicans voting for the legislation was Minority Leader Mitch McConnell: 

“This is the sweet spot…making America safer, especially for kids in school, without making our country one bit less free,” McConnell said on the Senate floor.

The House then passed the legislation this afternoon, 234-193, with 14 Republicans.  It goes to the president’s desk for signature.

--President Biden on Wednesday called on Congress to pass a three-month suspension of the federal gasoline tax to help combat record pump prices.  Biden also called on states to temporarily suspend state fuel taxes, which are often higher than federal rates, and he challenged major oil companies to come to a meeting with his energy secretary with ideas on how to bring back idled refining capacity.

“We can bring down the price of gas and give families just a little bit of relief,” said the president.

A suspension of the 18.4 cents a gallon federal gasoline tax and 24.4 cent diesel tax would require congressional approval, making Biden’s support behind the effort largely symbolic, as lawmakers of both parties have expressed resistance to suspending the tax.

If it passed, the president asked Congress to suspend the tax through September, a move that would cost the Highway Trust Fund about $10 billion in foregone revenue.  Some states, such as New York and Connecticut, have already paused state fuel taxes.

U.S. pump prices have hovered around $5 a gallon as soaring demand for motor fuels coincides with the loss of about 1 million barrels per day of processing capacity.  In the last three years many plants were closed when fuel demand cratered at the height of the pandemic.

Meanwhile, Biden escalated a war of words with Chevron CEO Mike Wirth Tuesday after the country’s second-largest oil company rejected the president’s “political rhetoric” about high gas prices.

Wirth wrote to Biden that addressing high gas prices “requires thoughtful action and a willingness to work together, not political rhetoric.”

Biden replied: “He’s mildly sensitive.  I didn’t know they’d get their feelings hurt that quickly… We need more refining capacity. This idea that they don’t have oil to drill and to bring up is simply not true.  We ought to be able to work something out whereby they’re able to increase refining capacity and still not give up on transitioning to renewable energy.”

But the president has done nothing but blame oil companies for contributing to high prices – arguing they aren’t refining enough oil, and slamming companies such as ExxonMobil and Chevron for reaping ‘massive profits’ as global prices rise.

But the profits are far less than during other cycles.

Peter DeFazio, a Democrat and the chair of the House Committee on Transportation and Infrastructure, told reporters a federal gas tax holiday would provide “miniscule relief” while blowing a budget hole in a Highway Trust Fund needed to fix crumbling bridges and build a modern infrastructure system.

CNN anchor John King on Thursday took aim at Biden for his proposal.

“Can you help me here?  That a Democratic president, his party’s in trouble.  He’s in trouble in an election year,” King said.  “He has a major policy announcement, and his own party dumps on it within seconds.”

Wall Street and the Economy

Federal Reserve Chairman Jerome Powell gave his most explicit acknowledgement to date that steep interest-rate hikes could tip the U.S. economy into recession, saying one is possible and calling a soft landing “very challenging.”

“The other risk, though, is that we would not manage to restore price stability and that we would allow this high inflation to get entrenched in the economy,” Powell told the Senate Banking Committee on Wednesday.  “We can’t fail on that task.  We have to get back to 2% inflation.”

Powell said that officials “anticipate that ongoing rate increases will be appropriate,” to cool the hottest price pressures in 40 years.

“Inflation has obviously surprised to the upside over the past year, and further surprises could be in store.  We therefore will need to be nimble in responding to incoming data and the evolving outlook,” said Powell.

After the Federal Open Market Committee hiked its benchmark lending rate 75 basis points – the biggest increase since 1994 – last week to a range of 1.5% to 1.75%, Powell has already said further hikes are coming, a series of them, with the next meeting July 26-27.

“We’re looking for…compelling evidence that inflation is coming down, and we don’t have that,” said Powell.  “There are lots of stories out there about how this should happen, and some people think it’s very clear that it will.  Until we actually do see it happen, we need to keep moving.”

On the economic data front, May existing-home sales came in as expected, 5.41 million annualized, down 3.4% month-to-month, a fourth straight decline, and down 8.6% year-over-year.  The 5.41m is the weakest rate since June 2020.

The median existing-home price rose 14.8% in May from a year earlier to $407,600, a record high, the National Association of Realtors reported.

May new home sales came in far better than forecast, 696,000 ann., though down 5.9% from May 2021.  The median sales price slipped to $449,000 from $454,700 in April, but remained well ahead of the $390,400 level a year ago despite rising inventories.

The Atlanta Fed’s GDPNow barometer for second-quarter growth remains unchanged, 0.0%.

Bill Dudley / Bloomberg News

“If you’re still holding out hope that the Federal Reserve will be able to engineer a soft landing in the U.S. economy, abandon it. A recession is inevitable within the next 12 to 18 months.

“In their latest set of projections, Fed officials laid out a benign scenario, in which the economy keeps growing at a moderate pace and unemployment increases only slightly, even as the central bank raises interest rates significantly to get inflation under control. While the Fed’s forecasts have become more plausible over time, I see several reasons to expect a much harder landing.

“First, persistent prices increases have forced the Fed to shift its focus from supporting economic activity to pushing inflation back down to its 2% objective.  The central bank’s employment mandate is now subservient to its inflation mandate. This can be seen both in Chair Jerome Powell’s performance at last week’s press conference and in the June FOMC statement, which removed language that the labor market would ‘remain strong.’

“Second, the new focus on price stability will be relentless.  Fed officials recognize that failing to bring inflation back down would be disastrous: Inflation expectations would likely become unanchored, necessitating an even bigger recession later.  From a risk-management perspective, better to act now, whatever the cost in terms of jobs and growth.  Powell does not want to repeat the mistakes of the late 1960s and the 1970s.

“Third, the current economic expansion is uniquely vulnerable to a sudden stop. In the short term, payroll growth, economic reopening and healthy balance sheets (supported by the vast fiscal stimulus of 2020 and 2021) should support demand, which in several sectors exceeds supply.  For example, the two-year cumulative supply shortage in the motor vehicle sector likely amounts to several million units. As a result, it’ll take time and a considerable monetary policy tightening to reduce demand and for that to translate fully into weaker production of goods and services.

“But when that time comes, the production adjustment is likely to be abrupt, due to tight financial conditions, restrictive fiscal policy and tapped-out household savings… As inflation outstrips wage growth, the personal savings rate has plummeted, from 26.6% in March 2021 to 4.4% this April, significantly below its long-run average.  No wonder consumer sentiment has fallen to levels last reached in the aftermath of the 2008 financial crisis, and Google searches for the word ‘recession’ are hitting new records.

“Finally, economic history points to a hard landing. The Fed has never tightened enough to push up the unemployment rate by 0.5 percentage point or more without triggering a recession. According to the Sahm rule, when this trigger is reached the next stop is a deeper slump, in which unemployment increases by at least 2 percentage points.

“Much like Wile E. Coyote heading off a cliff, the U.S. economy has plenty of momentum but rapidly disappearing support.  Falling back to earth will not be a pleasant experience.”

Former Treasury Secretary Larry Summers / “Meet the Press” (June 19)

“If you look at the relative levels of interest rates of different durations, if you look at surveys of consumer expectations, and if you look at the simple fact that what drives inflation is supply and demand, supply doesn’t change that fast. And so mostly what you need to do to reduce inflation is reduce demand.  And that is a very hard process to control. And so it usually leads to a recession.  All of that tells me that, while I wouldn’t presume to be able to judge the timing, the dominant probability would be that by the end of next year we would be seeing a recession in the American economy.”

Europe and Asia

We had flash PMI readings from S&P Global for June in the eurozone, with the composite index at 51.9, a 16-month low (50 the dividing line between growth and contraction), worse than expected.  Manufacturing contracted, 49.3 (24-month low), services 52.8.

Germany: Mfg. 49.0, services 52.4
France: Mfg. 45.7 (25-month low), services 54.4

UK: Mfg. 51.2, services 53.4

Chris Williamson / S&P Global

“Eurozone economic growth is showing signs of faltering as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost-of-living shock and slumping business and consumer confidence.

“Excluding pandemic lockdown months, June’s slowdown was the most abrupt recorded by the survey since the height of the global financial crisis in November 2008.

“The slowdown means the latest data signal a rate of GDP growth of just 0.2% at the end of the second quarter, down sharply from 0.6% at the end of the first quarter, with worse likely to come in the second half of the year.  Inflows of new business have stalled, led by a slump in demand for goods and reduced demand for services from cash-strapped consumers in particular.

“At the same time, business confidence has fallen sharply to a level rarely seen prior to the pandemic, since the region’s economic contraction during 2012, hinting at an imminent downturn unless demand revives.

“Rising levels of unsold stocks meanwhile mean the manufacturing sector will likely seek to reduce capacity in coming months which, alongside the deteriorating picture in the service sector and drop in confidence, will inevitably hit jobs growth.”

The poor PMI data led to a rally in the euro bond market, similar to the U.S., because of the sentiment that perhaps the European Central Bank won’t need to be so aggressive when it begins hiking rates next month.

The yield on the German 10-year fell from last Friday’s 1.65% to 1.43% today, though it remains far higher than that of the Italian 10-year at 3.41%.

Britain: Inflation rose to 9.1% in May, a fresh four-decade high, darkening the country’s economic prospects at a time of mounting worker unrest and growing disaffection with the government.

Tuesday, tens of thousands of workers walked out on the first day of Britain’s biggest rail strike in 30 years, with millions of passengers facing days of chaos as both the unions and government vowed to stick to their guns in a row over pay.  Unions have said the rail strikes, which will take place on various dates, could mark the start of a “summer of discontent” with teachers, medics, waste disposal workers and even barristers heading for industrial action as inflation pushes 10%.

The UK’s rapid inflation and low-growth prospects have converged into what Britons have called the cost-of-living crisis, which has displaced the pandemic, the war in Ukraine and the UK’s divorce from the European Union as the main preoccupation of voters.

And there’s worse to come, as the Bank of England expects the inflation rate to peak at more than 11% after a further jump in home energy prices that is likely to be announced in October.

As for the plight of Prime Minister Boris Johnson, just over two weeks after four in 10 of his Conservative MPs voted to oust him as leader, the Conservatives lost two more seats in special elections dominated by questions about his leadership and ethics on Thursday.

Speaking to reporters in Rwanda on Friday, Johnson insisted he would “keep going” and that the UK’s cost-of-living crisis was a major factor in defeats he described as common for a mid-term government.

But his party is losing faith in a leader whose approach to politics – centered on bullishness and his connection with voters – looks increasingly out of step with the challenges facing Britain.

France: President Emmanuel Macron lost his absolutely majority in the National Assembly last Sunday when extreme left and right-wing parties made unprecedented gains, throwing into question Macron’s ability to enact reforms, such as reforming France’s complex pension system, and to raise the retirement age from 62 to 65.  They are likely doomed.

When all the votes were tallied, Macron’s alliance ended up 44 seats short of an absolute majority in the 577-seat Assembly at 245.  It’s a big fall from the 350 Macron’s group won in 2017.

The Nupes coalition led by extreme left-wing leader Jean-Luc Melenchon ended up with nearly three times the number of seats held by component parties of Nupes in the last assembly, now 131, with Melenchon able to unite the communist, socialist and Green parties.

By Thursday, parties from the left and right brushed off Macron’s appeal for help to overcome a hung parliament, demanding he clarify what compromises he was ready to make to win their backing.

Macron admitted after the vote that the elections had laid bare “deep divisions” across French society.

Ruling out a government of national unity, he called on rival party leaders either to look at possible coalition options with his centrist alliance or to consider lending support for reforms on a bill-by-bill basis.

By the situation doesn’t look good for Macron.  Melenchon has no desire to help out the president, while far-right leader Marine Le Pen, whose National Rally is now the second-biggest single party in parliament at 89 seats, also dismissed Macron’s appeal for unity.

In a nutshell, French politics is in a state of chaos.

Macron could essentially call a snap election if legislative gridlock ensues.

Germany: The people here face certain recession if already faltering Russian gas supplies completely stop, an industry body warned this week, as Sweden joined a growing list of European nations rolling out emergency plans to cope with a deepening energy supply crisis.

Russian gas is still being pumped via Ukraine but at a reduced rate and the Nord Stream 1 pipeline under the Baltic, a vital supply route to Germany, is working at just 40% of capacity, which Moscow says is because Western sanctions are hindering repairs.

The International Energy Agency has warned that Europe must prepare immediately for the complete severance of Russian gas exports this winter, urging governments to take measures to cut demand and keep aging nuclear power plants open.  Germany, though, continues to decommission the last of its plants.

Fatih Birol, the head of the IEA, said Russia’s decision to reduce gas supplies to European countries in the past week may be a precursor to further cuts as Moscow looks to gain “leverage” during its war with Ukraine.

“Europe should be ready in case Russian gas is completely cut off,” Birol told the Financial Times in an interview.

“The nearer we are coming to winter, the more we understand Russia’s intentions,” he said.  “I believe the cuts are geared towards avoiding Europe filling storage, and increasing Russia’s leverage in the winter months.”

The IEA was last year one of the first official bodies to accuse Russia publicly of manipulating gas supplies to Europe in the build-up to the invasion of Ukraine.

Bottom line is countries need to immediately do all they can to ensure storage could be filled ahead of the winter months.

Turning to Asia…nothing of import on the data front from China this week.

Japan reported its flash PMIs for June, 51.0 on manufacturing, 54.2 for services.

A reading on inflation for May had consumer prices up 2.5% year-over-year.  More importantly, Japan’s ‘core’ reading takes out fresh food, but includes energy, and that figure was 2.1%, a second consecutive month above the Bank of Japan’s 2% inflation target which it has been trying to achieve for decades.  So there is growing pressure on the BOJ to change its zero interest rate policy.  [Ex-food and energy, prices were up 0.8%, same as April.]

Street Bytes

--After a brutal three weeks that saw the S&P 500 enter bear market territory, and despite growing recession fears, stocks rallied bigly in this holiday-shortened week as the signs of slowing growth and a recent pullback in commodity prices tempered expectations for the Fed’s rate-hike plans, even though Chair Powell is saying the opposite.

The Dow Jones rose 5.4% to 31500, while the S&P gained 6.4% and Nasdaq 7.5%. Funny how these things work.  Today’s 3.1% gain in the S&P was its best since March 2020.

Lots of important economic news next week.

--U.S. Treasury Yields

6-mo. 2.44%  2-yr. 3.05%  10-yr. 3.13%  30-yr. 3.26%

The 10-year continued to rally with the yield down from a high of 3.49% two weeks ago, which of course is helping mortgage rates.

--Chaos across the airline industry is intensifying with the summer travel season, where weather becomes an ongoing issue (thunderstorms and the like), and more than 5,000 flights were canceled by U.S. carriers over the busy Father’s Day and Juneteenth holiday weekend despite industrywide efforts to tackle the knock-on effects of staff shortages and said weather.

The problems matched those seen over the Memorial Day holiday, with the airlines also citing a dearth of air-traffic controllers.

Delta Air Lines was the worst hit, mirroring its problems over Memorial Day.  United, American and Southwest also all had elevated cancellations and delays, according to FlightAware.

New York City’s three airport – LaGuardia, JFK and Newark Liberty were particularly hard hit, along with Hartsfield-Jackson Atlanta International and Boston Logan International.

Transportation Secretary Pete Buttigieg met virtually with airline executives last week and pressed for assurances that the industry would be ready for the July 4 holiday and the following two months of peak demand. Airline executives have said they expect record travel demand this summer, but the TSA figures I list every week below say otherwise, frankly. I have my doubts given the economic headwinds that will have many changing their plans.

--Global airlines wrapped up an annual summit on Tuesday in Doha, Qatar, pledging to overcome operational problems that have marred the industry’s recovery from the pandemic such as labor shortages in airports.

The International Air Transport Association (IATA) comprising about 300 airlines sought to put into perspective its furor over recent airport and holiday chaos and tempered plans to boost capacity amid staff shortages since air travel collapsed in spring 2020.

IATA says the sharper than expected recovery of air travel caught airports and many planners by surprise.  But IATA Director General Willie Walsh said the labor shortages can be managed and had not affected the entire industry.

“There are certain airlines and airports.  It’s not widespread across the world.  It’s not every airport.  It’s not every day of the week.  It’s not every day of the year,” Walsh said. “I think that some of the airlines have decided to adjust capacity going forward to reflect the fact that they may not be able to recruit people as fast.”

Lufthansa CEO Carsten Spohr said the problem in Europe was exacerbated by restrictive immigration policies.  “This is in my view just the beginning of a structural problem we have in Europe when it comes to blue-collar labor due to the demographic developments,” he said.  “That’s something politics has to look at because again it is not an aviation problem, it is not restaurant or hospitality or hotel problem, this is the beginning of shifts of the labor market we better gear ourselves for.”

Boy, this conversation is getting pretty deep.

So these 300 airlines get together and the industry expects to narrow losses this year but has raised its forecasts owing to the brisk recovery while voicing concerns about rising inflation and Ukraine.

What we see in the U.S. is airlines having to adjust capacity plans due to staff shortages, including at the airports, but Walsh says it’s mostly a Europe issue.  I think it’s a Europe and North American issue, for starters.

Walsh also pledged that the aviation industry would stick to a commitment to achieve net zero emissions by 2050 despite debate over the speed of development of alternative fuels.

Of course I will have been dead 20 years and you young’uns are on your own.

--KLM, the Dutch arm of Air France-KLM, will be the most affected by a cap placed on the number of passengers allowed at Amsterdam’s Schipol Airport this summer.  KLM will absorb about half of the reductions, according to news agency ANP.

The airport, which has seen major chaos the past 4-6 weeks, announced the measures, which amount to a 16% cut in the schedules airlines had planned, on Thursday, citing shortages of security workers.  KLM has said it will hold Schipol financially responsible for the costs of the reduced schedule.

--British Airways staff at London’s Heathrow voted on Thursday in favor of a strike for better pay, threatening disruption at Britain’s busiest airport, probably during the peak summer holiday period.

Workers must give two weeks’ notice to BA before carrying out any strike.  The staff is demanding a 10% pay cut imposed during the pandemic be rolled back.

--Today, some cabin crew at Ryanair went on strike in Belgium, Spain and Portugal in a dispute over pay and working conditions, with the budget airline canceling dozens of flights, though reportedly over a hundred in Belgium affecting 21,000 passengers.

But there were even bigger issues with Lufthansa AG, which canceled 2,200 flights after a wave of coronavirus infections worsened staffing shortages.  The airline scrapped both German domestic and European routes for July and August, which follows 900 cancellations announced earlier this month.

Germany and other European countries have been confronted by a new outbreak of Covid-19 that, while less deadly than previous waves, it leading to growing absences from workplaces, worsening the already acute labor shortages at airlines.

--United Airlines announced Thursday it will temporarily cut about 50 daily departures from its Newark hub, 12% of its daily schedule there, starting July 1 to address congestion and as concerns mount over the summer travel season.

An employee email sent out by United chief operations officer Jon Roitman said the cuts “should help minimize excessive delays and improve on-time performance,” and were being adopted even though the company had “the planes, pilots, crews and supporting staffing necessary to fly our current Newark schedule.”

Separately, UAL’s pilot union on Friday approved a tentative deal that would give pilots a 14% pay raise in the next 18 months when calculated from the beginning of the year.  The union represents about 14,000 pilots.

--JetBlue Airways Corp. is continuing its quest to buy Spirit Airlines Inc., increasing its offer to $33.50 in cash per Spirit share. Previously it offered $31.50.

Spirit is weighing whether to go ahead with a planned acquisition by Frontier Group Holdings Inc. or to accept JetBlue’s offer.

Spirit’s board said it expects to complete discussions with both carriers ahead of the shareholder meeting scheduled for June 30.

I continue to maintain this is nuts.  A JetBlue-Spirit combination will NOT get approval from regulators, but a Frontier-Spirit combo could.

--TSA checkpoint travel numbers vs. 2019

6/23…90 percent of 2019 levels
6/22…84
6/21…86
6/20…89
6/19…88
6/18…91
6/17…88
6/16…87

--JPMorgan Chase confirmed Wednesday it’s laying off home lending employees and reassigning some to other positions amid the slowdown.  The move would affect a total of more than 1,000 workers in the U.S., Bloomberg first reported.

JPMorgan isn’t the only firm affected by rapidly shrinking home buying demand.  Last week, online real estate brokers Compass and Redfin both announced plans to cut hundreds of employees amid the cooling housing market.

Wells Fargo is another big mortgage lender that has been laying off and reassigning employees in its home-lending division.

Higher borrowing costs continue to push many home buyers to the sidelines, cooling off the red-hot housing market.

--Toyota Motor Corp. said Wednesday that it slashed its July global production plan by 50,000 vehicles due to semiconductor shortages and plant suspensions caused by Covid-19 curbs. 

The carmaker said it expects to produce 800,000 units in July, but its forecast for the fiscal year remains unchanged at approximately 9.7 million units.

Toyota noted that it extended suspensions of operations in four lines at two plants in Japan due to continued Covid outbreaks. This, and a persistent parts shortage, may lower future production plans, the company said.

--Tesla CEO Elon Musk said Tuesday that a recession in the U.S. looks likely.

“A recession is inevitable at some point, as to whether there is a recession in the near term, that is more likely than not,” Musk said in an interview with Bloomberg News.

--The Wall Street Journal reported Wednesday that the Food and Drug Administration is preparing to remove Juul e-cigarettes from the U.S. market, which the FDA then did Thursday.  Banning Juul in the U.S., where it was on track to make 94% of its revenue this year, would put the business in serious jeopardy.

At its peak in 2019, Juul generated annual sales of $2 billion, before controversy hit the business and by 2021, sales had dropped to $1.3 billion.  Juul has pulled out of more than a dozen countries and stopped selling fruit- and candy-flavored e-cigarettes in the U.S. after young people flocked to these products.

Wednesday, shares of Altria, maker of Marlboro cigarettes, dropped 9%, $7 billion in market cap, as the cigarette giant has a 35% stake in Juul.  Altria paid $12.8 billion for Juul and had lowered the book value on the investment to $1.7 billion before the news.

The share-price reaction reflects concerns that Altria, which makes 90% of its revenue from combustible cigarettes, is now back to square one with its smoke-free strategy.

--The price of Bitcoin plunged on Saturday to as low as $17,599, marking a record-breaking 12th consecutive daily decline, before stabilizing some back to the $20,500 range, where it sat a week ago.

Crypto broker Voyager Digital Ltd. said it may issue a notice of default to Three Arrows Capital Ltd. if the crypto hedge fund fails to make a loan repayment by June 27.

Voyager Digital said it lent 15,250 bitcoin and $350 million in USD Coin to Three Arrows Capital.  The company initially asked for a repayment of $25 million USD Coin by June 24 and then asked for the entire balance to be paid by June 27, the loans amounting to $666 million based on bitcoin’s current price.  Neither of the loans has been repaid.

Just another example of the chaos inside the crypto market, with Celsius Network LLC, one of the largest crypto lenders, having first sent the market into a tailspin when it froze customer accounts on June 13.  Celsius hasn’t let users withdraw funds for more than a week due to “extreme market conditions.”  Others have also suspended redemptions and withdrawals.

--Shares in FedEx Corp. rose 7% after the company reported fiscal fourth-quarter earnings that matched Wall Street’s expectations and offered guidance that topped analysts’ projections for the coming year.

“Our continued emphasis on revenue quality drove significant improvement in our fourth quarter results,” said CFO Michael Lenz in the company’s news release.  “We expect further momentum in fiscal 2023 and beyond as we execute on our initiatives to drive increased profitability and returns.”

Revenue grew to $24.4 billion from $22.6 billion a year earlier, boosted in part by fuel surcharges.  FedEx issued a full-year forecast for earnings per share of $22.50 to $24.50 excluding items, with the Street at about $22.80.

“We expect margin expansion at all of our transportation segments on an adjusted basis as we execute on key priorities, including enhanced revenue quality beyond inflation, technology-driven operational efficiency improvements and increasing utilization of our assets,” COO Michael Lenz said on a conference call with analysts.

FedEx is seeing “the lower customer demand trends we experienced in the fourth quarter continue into June and expect first quarter volumes will continue to be pressured,” Lenz said.

--Netflix announced another round of job cuts, 300 positions, or roughly 4% of its workforce, mostly in the U.S., after axing 150 people in May.

The moves come after the company reported its first subscriber loss in more than a decade in April.

--Kohl’s shares took a late-day hit Wednesday on reports that suitor Franchise Group may lower its bid for the department store by as much as $10 a share.  If so, it would underscore how quickly sentiment has soured in the retail sector.

Earlier this month, Kohl’s entered into exclusive talks with Franchise Group, owner of other retail properties such as Vitamin Shoppe; at the time for $60-per-share, which was down from a bid first linked to the company in mid-April at $69.

But then May brought a series of downbeat earnings reports from players across the industry, including Kohl’s itself, and now we have recession fears.  Kohl’s shares closed the week at $39.

--Kellogg said Tuesday it was splitting into three independent companies by spinning off its North American cereal and plant-based foods businesses, becoming the latest U.S. firm to break itself up.

Shares of the company, which began life in 1894 when W.K. Kellogg created Corn Flakes and became known around the world for breakfast cereals, jumped 7% on the news but then fell back.

In recent years, Kellogg has focused on building its snacking portfolio, which includes its international cereals and noodles, and North American frozen breakfast business.  The division brought in $11.4 billion in net sales in 2021, accounting for 80% of its total sales.

Kellogg said its other two divisions – U.S., Canadian, and Caribbean cereal and plant-based businesses – collectively represented about 20% of its net sales in 2021.  The company said the names of the three companies would be determined later.

The snack division includes brands such as Pringles, Cheez-It, and Pop-Tarts, while the company’s North American cereal business accounted for about $2.4 billion of its net sales in 2021 and includes popular American breakfast cereal brands such as Kellogg’s, Frosted Flakes and Froot Loops.

--The hedge fund Citadel and the trading firm Citadel Securities, both run by the billionaire Ken Griffin, are moving their offices to Miami.  Griffin has talked about such a move for years, but the final decision follows elevated tensions between Griffin and Gov. J.B. Pritzker of Illinois, a Democrat, over taxes and the city’s crime rate.

Caterpillar recently said it was moving its office from Illinois to Texas, and Boeing has said it is moving from Illinois to Virginia.  Kellogg, on the other hand, said it was moving its corporate HQ to Chicago from Battle Creek, Mich.

Ken Griffin has donated more than $600 million to educational, cultural, medical and civic organizations in Chicago alone.  He is a major supporter of Florida Gov. Ron DeSantis (see below).

--If you are wondering where your tax refund is, it now being over two months since April 15, the IRS has a backlog of unprocessed paper tax returns of 21.3 million as of end of May, up 1.3 million from a year earlier.  Agency officials have said they aimed to return the backlog to a “healthy” level in the next six months.

--Walmart Inc. became the latest retailer to say it is no longer carrying MyPillow Inc. products in stores.  MyPillow’s CEO, Mike Lindell, faces litigation over his unproven claims of fraud in the 2020 election.

MyPillow products will remain available online at WMT.

Dominion Voting Systems sued Lindell and MyPillow for more than $1.3 billion in damages last year. The suit asserts Lindell made false accusations that Dominion had rigged the 2020 election for Joe Biden.  Lindell countersued.  A judge in May dismissed the countersuit.

Personally, you can get a good pillow for $10 at Bed Bath & Beyond.  Don’t forget to use your 20% coupon!

--An anonymous donor paid a record $19 million to eat lunch with Warren Buffett, in the 21st and final time that the 91-year-old auctioned a private lunch to benefit a San Francisco charity, Glide, that helps the poor, homeless or those battling substance abuse.

--New York Broadway show goers will not have to wear a mask for the month of July, the industry announced Tuesday. 

“We’re thrilled to welcome even more of our passionate fans back to Broadway in the exciting 22-23 season that has just begun,” said Charlotte St. Martin, the group’s president.

The experiment is just for July to see how it goes.

--“Lightyear,” the first Pixar movie to be released in theaters in more than two years, sold an estimated $51 million in tickets at 4,255 locations in the United States and Canada in its first three days in release, according to Comscore, which was disappointing versus prerelease analyst expectations and was not enough to eclipse “Jurassic World Dominion” as the No. 1 draw.

Overseas, “Lightyear” collected an additional $34.6 million.  Disney said, “In nearly all international markets, ‘Lightyear’ is opening ahead of upcoming school holidays and so long-term play is key.”

The movie was banned in 14 small box office markets in the Middle East and Southeast Asia because it briefly depicts a same-sex relationship.  The Chinese authorities have yet to say whether they will clear “Lightyear” for release.

The $200 million movie revisits Pixar’s hugely successful “Toy Story” franchise.

“Jurassic World Dominion” took in about $58.7 million in North America for a two-week domestic total of about $250 million.  “Top Gun: Maverick” remained a healthy third, collecting roughly $44 million and lifting its four-week domestic total to $466 million.

The Pandemic

--Pfizer’s CEO Albert Bourla said Covid-19 vaccines that specifically target the Omicron and other variants are under development, adding that the company will be able to quickly adapt shots as the novel coronavirus mutates.  While the ultimate approval decisions rest with U.S. regulators, “we are ready for that,” Bourla said in an interview.

--Moderna announced Wednesday that its Covid vaccine booster designed to target Omicron variant also generates strong immune response against fast-spreading Omicron subvariants BA.4 and BA.5.  The company plans to submit regulatory applications in coming weeks for use in the fall.

--The South Korean government believes North Korea’s Kim Jong Un will soon declare his country has beaten the virus, which will be linked, of course, to Kim’s strong and clever leadership.

According to North Korea’s official tally, less than 100 have died, while 18% of the nation of 26 million reportedly have had symptoms that outsiders suspect was from Covid, though which the North just calls a virus.

Of course no one knows what the real numbers are in a country with a horrendous health care system and little or no access to vaccines.

Covid-19 death tolls, as of early tonight….

World…6,349,126
USA…1,040,515
Brazil…670,282
India…524,954
Russia…380,776
Mexico…325,511
Peru…213,425
UK…179,927
Italy…168,018
Indonesia…156,711
France…149,317

Canada…41,865

U.S. daily death tolls…Mon. 81; Tues. 223; Wed. 423; Thurs. 298; Fri. 223.

Foreign Affairs

China / Taiwan: Taipei has had to scramble jets at least twice this week.  Thursday Taiwan warned away 22 Chinese aircraft in its air defense identification zone, after having done so on Tuesday, when 29 Chinese aircraft entered the ADIZ. The largest such incursion remains Jan. 23, involving 39 aircraft, most of the aircraft in all such operations being fighters and bombers.

It’s a bit disturbing that there were two such large-scale moves by Beijing in three days.

China’s military said last month it had conducted an exercise around Taiwan as a “solemn warning” against what it called the island’s “collusion” with the United States.  That came after President Biden angered China by appearing to signal a change in a U.S. policy of “strategic ambiguity” on Taiwan by saying the United States would get involved militarily if China were to attack the island.  China has stepped up pressure on Taiwan to accept its sovereignty claims.

Incursions in the ADIZ are not necessarily invasions of Taiwan’s air space, the ADIZ a broader area Taiwan monitors and patrols to give it more time to respond to any threats.

The government in Taipei has said it wants peace but will defend itself if attacked. This week, Foreign Minister Joseph Wu said, after Tuesday’s move by China, that the threat is “more serious than ever.”

“But there’s no way #Taiwan will cave in & surrender its sovereignty & democracy to the big bully.  Not a chance!” Wu tweeted.

Separately, in a phone call with Vladimir Putin, Chinese President Xi Jinping repeated his country’s support for pragmatic cooperation.

“China is willing to continue to support the Russian side on issues related to core interests and major concerns such as sovereignty and security, to work closely on strategic cooperation between the two countries,” he said.

Iran: European Union foreign policy chief Josep Borrell traveled to Iran today to try to urge Tehran to seal an agreement to revive the nuclear deal with world powers signed in 2015 that the United States withdrew from but is now seeking to save.   Borrell was to meet with Iran’s foreign minister.

But it’s the same old, same old.  Tehran insists on sanctions relief, not directly mentioning the nuclear deal.  “Bilateral relations, regional and international issues, as well as the latest status of sanctions lifting will be discussed during the visit, which is part of the ongoing consultations between Iran and the European Union,” a foreign ministry spokesperson said.

A deal appeared imminent in March, but talks were thrown into disarray in part by a dispute over whether the United States should remove Iran’s elite Revolutionary Guards from its Foreign Terrorist Organization list.

The United States doesn’t have a Plan B when talks formally break down and a military strike on Iran’s facilities could backfire badly.

The thing is, Iran already has enough enriched uranium for a bomb.  The question is how quickly can it be weaponized.  Some say soon, others say years for this final step.

Israel: We are heading to our fifth election in 3 ½ years here, after Prime Minister Naftali Bennett and Alternate Prime Minister Yair Lapid gave up Monday on their efforts to stabilize the coalition.

In a joint statement, Bennett and Lapid said that they will bring a bill to dissolve the Knesset next week, which means an election will likely be held in October. The duo’s goal apparently is to initiate an election on their own terms and not be forced out by opposition leader Benjamin Netanyahu.

Lapid becomes caretaker prime minister until the election and until the new government comes into power, which as we’ve found in the past can take a while.  He is set to greet President Joe Biden when he comes to Israel next month.

Justice Minister Gideon Sa’ar blamed the downfall of the government on “irresponsible behavior by Knesset members in the coalition.”  He said the goal of the next election would be to prevent Netanyahu from returning to power and “mortgaging the country to his own personal interest.”

The collapse of Israel’s ruling coalition gives Netanyahu his fifth chance in three years to form a government, no doubt his last shot.

Netanyahu, now 73, remains in a strong position as Israel’s politics continue a rightward shift and his allied parties grow, analysts said.  After a year as opposition leader, Israelis have seen what a government looks like without him at the top for the first time in over a decade, and polls show they don’t like what they saw.

Netanyahu’s corruption trial is also going in his favor as prosecutors struggle to prove the most severe allegations against him.

Afghanistan: The death toll from a devastating earthquake in the eastern part of the country hit at least 1,150 on Friday, with hundreds, probably thousands, more wounded, many critically, with virtually zero medical care available.

The epicenter was in the mountainous area near the country’s border with Pakistan – about 27 miles from the city of Khost.

These poor people.  The country of 38 million was already in the midst of a spiraling economic crisis that had plunged millions into deep poverty, with over a million children at risk of severe malnutrition, and now this.

The magnitude 6 quake struck Wednesday night as people were sleeping, leaving thousands who survived without shelter.  State media reported close to 3,000 homes were destroyed or badly damaged.

Aid organizations like the local Red Crescent and World Food Program are doing what they can to set up tents and sleeping mats, but the area is very hard to reach.

The Taliban government is worthless in such an emergency situation and it is pleading for international aid.

As if the above wasn’t bad enough, the UN humanitarian office said preparations were underway to avoid a cholera outbreak, saying that half a million cases of acute diarrhea had already been reported.

Colombia: Former rebel Gustavo Petro narrowly won a runoff election over a political outsider millionaire Sunday, ushering in a new era of politics for Colombia by becoming the country’s first leftist president.

Petro, a senator, had 50.47% of the votes, while real estate magnate Rodolfo Hernandez had 47.27%, with almost all ballots counted, according to results released by election authorities.  This was Petro’s third attempt to win the presidency.

His victory underlined a drastic change in presidential politics for a country that has long marginalized the left for its perceived association with the armed conflict.

Outgoing conservative President Ivan Duque congratulated Petro shortly after results were announced, and Hernandez quickly conceded defeat.

“I accept the result, as it should be, if we want our institutions to be firm,” Hernandez said in a video on social media.  “I sincerely hope that this decision is beneficial for everyone.”

That’s refreshing, given our own recent experience.

Random Musings

--Presidential approval ratings….

Gallup: New #s…41% approve of President Biden’s job performance, 57% disapprove; 36% of independents approve (Jun 1-20).

The approval rating has been between 40 and 42 percent in this survey since January.

Rasmussen: 40% approve of Biden’s performance, 58% disapprove (June 24).

--Katie Britt handily won the Republican Senate nomination in Alabama, defeating six-term Rep. Mo Brooks in a primary runoff, 63-37 percent, after former President Trump took the unusual step of switching his endorsement.

Trump initially backed Brooks, who had fully embraced Trump’s election lies, but then pulled his support as Brooks’ campaign languished in the polls.  Britt is an aide to retiring Sen. Richard Shelby.

--Florida Gov. Ron DeSantis is reportedly not seeking former President Trump’s endorsement for his reelection bid this fall as the pair jockey for position in the 2024 Republican White House sweepstakes.

DeSantis has decided not to ask for Trump’s blessing, in part because he is in a commanding position against his Democratic opponents, according to Politico, quoting insiders.

But the governor also wants to avoid owing any political chits to Trump as the two Florida residents size up their options ahead of the 2024 race.

Piers Morgan / New York Post…on Donald Trump and DeSantis…

“The once omnipotent GOP beast bestriding the American political world like a paw-crunching King Kong is now seeing his stranglehold over the party ebb away faster than the infamous gorilla tumbled to his demise from the Empire State Building after being shot by U.S. Navy Jets.

“And the same foe is proving to be the deadly weapon again now, in the form of Florida Gov. Ron DeSantis, a U.S. Navy war hero who advised SEAL Team commanders in Iraq, and who still serves with the U.S. Navy Reserve.

“If you were scripting a perfect Republican presidential candidate, the list of preferred requirements would read something like DeSantis’ resume.

“He’s a man from humble beginnings, raised in Dunedin, Florida by working-class parents…

“He graduated with honors from both Yale and Harvard Law School.

“He was captain of Yale’s baseball team. … ‘He’s a great captain,’ teammate Kyle Cousin said of DeSantis at the time.  ‘He helps everybody out.  He is a true leader on and off the field.’….

“The two men [Trump and DeSantis] have publicly supported each other for years, but I confidently predict this mutual admiration society is about to hit the buffers big time.

“For if there’s one thing Trump can’t stomach more than people who don’t buy into his ‘rigged election’ bullshit, it’s people who might threaten his chances of returning to the White House in 2024.

“And Ron DeSantis, 43, is that person.

“He isn’t just 35 years younger than Trump, he’s more eloquent, focused and organized, going about his business with military-style planning….

“[DeSantis is] just younger, fresher, and more exciting than the aging, raging gorilla who’s become a whiny, Democracy-defying bore.

“DeSantis may be Trumpian when it comes to policy, agreeing with him on most issues, which will please the MAGA crowd, but he comes without all the January 6 baggage (he hasn’t said the 2020 election was stolen) and wildly erratic and polarizing personality.

“As liberal Bill Maher put it: ‘You know what Ron DeSantis won’t be doing?  He won’t be poop-tweeting every day. It won’t be, like, having feuds with Bette Midler on Twitter.  He’s not an insane person.’

“He’s not….

“But don’t take my word for his credentials, take Trump’s.

“In 2017, when he was President and DeSantis was running for Governor, he tweeted: ‘Ron DeSantis is a brilliant young leader, Yale and then Harvard Law, who would make a GREAT Governor of Florida.  He loves our Country and is a true FIGHTER!’

“He is, as Trump’s about to find out.

“The game’s up for The Donald, who opened his political career STRONG but who’s now ‘died.’

“It’s time Republicans put their faith in The Ronald.”

--A new ABC News/Ipsos poll finds that after the first full week of hearings for the House select committee’s investigation into the Jan. 6 attack on the U.S. Capitol, nearly 6 in 10 Americans (58%) believe former President Trump should be charged with a crime for his role in the incident.

Six in 10 also believe the committee is conducting a fair and impartial investigation.

But a new Quinnipiac University Poll found 46% saying Trump committed a crime and 47% saying he did not.

--So in the second week of hearings, Arizona House Speaker Russell “Rusty” Bowers (R) provided some of the most compelling testimony on Tuesday – and of any hearing thus far.  And in doing so, Bowers added to the growing evidence that Trump’s team was told its plot to overturn the election was illegal.

Bowers said Trump lawyer Rudy Giuliani asked him to look into potentially removing Joe Biden’s electors in Bowers’ state, at which point he bucked.

“He pressed that point, and I said, ‘Look, you are asking me to do something that is counter to my oath, when I swore to the Constitution to uphold it. And I also swore to the Constitution and the laws of the state of Arizona. And this is totally foreign as an idea or a theory to me. And I would never do anything of such magnitude without deep consultation with qualified attorneys,’” Bowers said.  “And I said, ‘I’ve got some good attorneys, and I’m going to give you their names.  But you’re asking me to do something against my oath and I will not break my oath.’”

Bowers also recalled Giuliani acknowledging at one point that he didn’t yet have the evidence to back up the action he was asking for.

“My recollection [is] he said, ‘We’ve got lots of theories; we just don’t have the evidence,’” Bowers said.  “And I don’t know if that was a gaffe or maybe he didn’t think through what he said.  But both myself and others in my group – the three in my group and my counsel – both remembered that specifically.”

Bowers said Trump lawyer John Eastman also inquired about decertifying the electors – supposedly so the courts could decide – at which point Bowers offered a similar response about the lack of evidence to back that up, even if he could do it.

“And I said, ‘You’re asking me to do something that’s never been done in history – the history of the United States. And I’m not going to put my state through that without sufficient proof?  And that’s going to be good enough with me? …No, Sir.”

Rusty Bowers…Profile in Courage.

Thursday, the hearings focused on Trump’s efforts to pressure the Justice Department to help overturn the election.

Richard Donoghue, a senior Justice Department official, said Trump pressured officials to declare there was voter fraud in the election.  “Just say it was corrupt and leave the rest to me and the Republican congressmen,” Trump said.  Donoghue said he found none of Trump’s fraud allegations credible.

Donoghue, when he was acting deputy attorney general, told Trump that the Justice Department would see “hundreds and hundreds” of mass resignations among the agency’s rank and file if Trump fired top leadership to appoint an election denier as attorney general.

“Within 24, 48, 72 hours, you could have hundreds and hundreds of resignations in the leadership of your entire Justice Department because of your actions. What’s that going to say about you?’,” Donoghue said he told the president in testimony to the Jan. 6 committee.

“Jeff Clark will be left leading a graveyard,” Donoghue warned, Clark being Trump’s handpicked candidate to replace acting attorney general Jeffrey Rosen.

Clark’s superiors at the DOJ believed he was grossly unqualified to become attorney general. When Clark tried to convince Trump in a Jan. 3 meeting at the Oval Office that he was experienced because of his work on environmental law, Donoghue said, “You’re an environmental lawyer. How about you go back to your office, and we’ll call you when there’s an oil spill?”

Then-acting AG Rosen testified that Trump either called or met with him “every day” between Dec. 23, 2020, and Jan. 3, 2021 to discuss his voter fraud claims.

It was Rep. Scott Perry (R-Pa.) who brought Clark to a December 2020 meeting with Trump.

We also learned that multiple Republican members of Congress asked White House officials if President Trump would preemptively pardon them for their activities in the lead-up to Jan. 6 before he left office, according to testimony provided by Trump White House aides.

The members included Matt Gaetz (Fla.), Mo Brooks (Ala.), Andy Biggs (Ariz.), Louie Gohmert (Tex.) and Perry.

The allegations came from Cassidy Hutchinson, an aide to Trump chief of staff Mark Meadows, and John McEntee, a close aide to Trump.  There was some question whether Rep. Marjorie Taylor Greene (R-Ga.) had asked for one. She denies doing so. 

--Tom Nichols / The Atlantic

“I am appalled, as so many Americans are, that Donald Trump and his team assaulted our elections, but today I’m thinking about how the assault on election officials across the nation is an even deeper wound that will take years to heal.

“I hadn’t planned on writing about the Jan. 6 investigation… But that was before I watched the testimony of Rusty Bowers, Brad Raffensperger, Gabriel Sterling, Shaye Moss, and Ruby Freeman.

“Their stories of being targeted with threats, harassment, and vile accusations are a reminder of how much Trump and his team of malignant election fabulists have taken from the civic life of the United States.  I’ve spent most of my career studying authoritarian governments, and I’ve spent a lot of time in some repressive places, from Greece under a military junta as a boy to the Soviet Union as an adult.  I always felt, on returning to the United States, that I had returned to a fortress of democratic stability and civic cooperation.

“I no longer feel that way.

“American elections have never been perfect.  Any member of a visible minority knows this; anyone who’s seen a political machine in action knows it too.  (I worked in politics in Massachusetts.  Gerrymandering is literally named for one of our governors.)  But American elections are fair and free, even if it is fashionable among cynics at home and observers abroad to dismiss such sentiments.

“Our elections work because they are run by ordinary citizens at the state and local level who either were elected or volunteered to help administer the vote as a matter of civic duty.  This is a wondrous thing: community volunteers overseeing the vote and counting the results.  I love voting in person for just this reason; having seen people in other nations too terrified even to talk about politics, it always filled me with quiet joy to have my fellow townspeople hand me a ballot and protect my privacy while I voted.

“Trump and his people, however, have made it clear that democracy is a meaningless word.  They want what they want and they will hurt anyone who gets in their way.  Their goal is to make public service a hazardous undertaking, to create an environment in which people working on their elections – their fellow American citizens – fear for their lives if they don’t cough up the results they want.

“These unhinged bullies are telling other Americans that it is not safe to defy them at the ballot box, whether you’re a top elected official or a rank-and-file volunteer – or even if you’re the vice president of the United States, as Mike Pence learned while hiding from the mob on January 6….

“In the coming elections, Trump and a claque of liars and opportunists will continue their efforts to hollow out American democracy.

“Will the voters stop them?”

--Editorial / Wall Street Journal

“Republicans should be able to retake the Senate in November, but they may blow their chance by nominating candidates whom too many voters find offensive. A leading example is Missouri Republican Senate candidate Eric Greitens, who is running a TV ad that shows remarkably bad judgment, even for him.

“The online ad has Mr. Greitens toting a shotgun and declaring that he’s hunting for ‘RINO,’ short for a Republican In Name Only, who the ad says ‘feeds on corruption and is marked by the stripes of cowardice.’  Armed men in military gear break into a home in the ad, followed by Mr. Greitens, who exhorts; ‘Join the MAGA crew.  Get a RINO hunting permit.  There’s no bagging limit, no tagging limit, and it doesn’t expire until we save our country.’

“Plenty of politicians appear with guns in ads as a show of support for the Second Amendment.  But the Greitens ad is a call to target those with differing political beliefs, potentially with violence.  Mr. Greitens is angling for a Donald Trump endorsement before the Aug. 2 primary, but this is desperate stuff.

“In response to criticism, Mr. Greitens claims any ‘normal person’ would understand the ad is ‘clearly a metaphor.’ But it is nonetheless a reckless message at a time when some on the right and left seem to think violence is justified to achieve their goals.

“Mr. Greitens was once a rising GOP star, but he resigned as Missouri Governor in 2018 after an affair with a hairdresser led to claims of blackmail, a Missouri House investigation, a criminal charge (later dropped), and threats of impeachment.  Mr. Greitens’ former wife has accused him in court documents of physical abuse toward her and one of their sons.

“Mr. Greitens denies this – and child-custody fights aren’t pretty.  But Democrats won’t hesitate to use all of this in the fall campaign. They’re praying he’s the GOP nominee because they know he would be their best chance to gain a Senate seat and keep Chuck Schumer as Majority Leader.”

Editorial / Washington Post

“Over the past two weeks, the Jan. 6 committee has replayed the scenes of violence when a mob of Trump supporters attacked the U.S. Capitol last year in a bid to overturn Joe Biden’s election as president.  One would think that the reminders of the horror of that day – how close our elected leaders came to bodily danger – would be taken to heart, particularly by anyone seeking a seat in that chamber.  Instead, a leading contender for the Republican Senate nomination in Missouri has taken a page from the Donald Trump playbook of incitement, doubling down on political violence as a means to an end.

“ ‘I’m Eric Greitens, Navy SEAL, and today we’re going RINO hunting,’ the former Missouri governor vying for the Senate says, gun in hand, in an ad released Monday.  There is, as The Post’s Philip bump wrote, ‘nothing subtle’ about the ad. It hits you over the head….

“Not 24 hours before the ad was released, Illinois Republican Rep. Adam Kinzinger talked about a threat mailed to his home promising to execute him, his wife and their 5-month-old son.  ‘We’ve never seen or had anything like that,’ he told ABC News’ ‘This Week.’  Mr. Kinzinger, an outspoken critic of Mr. Trump who voted to impeach him and now sits on the committee investigating the Capitol attack, has become a target of Trump supporters, labeled as one of the RINOs Mr. Greitens would make fair game.  That Mr. Kinzinger recognized his dim prospects in a GOP primary and is not seeking reelection but Mr. Greitens, forced out as governor after he was credibly accused of tying up and forcing a woman to perform oral sex on him, actually has a chance to become his party’s Senate nominee speaks volumes about today’s Republican Party and how very low it has sunk.  (Mr. Greitens has denied the accusations of abuse.)

“Party leaders have refused to confront and condemn fanatical MAGA supporters, instead enabling and emboldening them.  Little wonder, then, that the use of violent, disturbing rhetoric is on the unimpeded rise in Republican circles.  Witness how Rep. Dan Crenshaw (R-Tex.) was accosted – berated as ‘Eyepatch McCain’* – at the Texas Republican Party convention for his support of Ukraine. Sen. John Cornyn (R-Tex.) was booed and given a rebuke for having the temerity to negotiate with Democrats about gun safety.

“ ‘There is violence in the future, I’m going to tell you,’ Mr. Kinzinger told ABC.  ‘And until we get a grip on telling people the truth, we can’t expect any differently.’ That sober warning came as the Texas GOP made a part of its official party platform the lie that Mr. Biden was not legitimately elected.  It is long past time for senior Republican leaders to start telling the truth about Mr. Trump and make clear that they do not condone the violence so grotesquely promoted by Mr. Greitens.”

*It was disgraceful how Crenshaw and his staff were confronted by a number of far-right activists, including members of the Proud Boys, at the Republican Party of Texas Convention in Houston.  Crenshaw, a Navy SEAL, lost an eye fighting in Afghanistan.  As they were shouting insults to him as he and his staffers were walking through the lobby last Saturday, others soon joined in to shout “You’re a traitor” and “You sold us out.”

The “Eyepatch McCain” insult was started by Fox News’ Tucker Carlson, that amazing POS who equated Crenshaw’s support of sending military aid to Ukraine to the policies of the late Republican Sen. John McCain.

--Uvalde, Texas, police chief Pedro “Pete” Arredondo was put on leave Wednesday after being accused of botching the response to the fatal shooting of 19 school children and two teachers.

Defending his actions, the 50-year-old has said he did not think he was the official in charge at the time.

Public anger has been rising as more details of the May 24 attack emerge, and state lawmakers are investigating why police waited for more than an hour outside the Robb Elementary School classroom in which the assailant had barricaded himself before a team made entry.

Arredondo has not spoken in a public capacity since last month’s shooting. 

In an interview with the Texas Tribune earlier this month, however, he said he “took on the role of a front-line responder” during the attack and assumed another official had taken control of the broader response.

Arredondo said officers on the scene could not find a key to unlock the door to the classroom until 77 minutes after the attack started.

But Col. Steve McCraw, director of the Texas Department of Public Safety, testified at a state Senate hearing on the police handling of the tragedy.

Eight minutes after the shooter entered the building, an officer reported that police had a ‘hooligan’ crowbar that they could use to break down the classroom door, McCraw said.  Nineteen minutes after the gunman entered, the first ballistic shield was brought into the building by police, the witness testified.

McCraw told the Senate committee that Arredondo decided to put the lives of officers ahead of the lives of children.

“It has been reported that he didn’t have a radio with him. That’s true.  He did not,” McCraw said of Arredondo.

McCraw also said the classroom door could not be locked from the inside.

--The Supreme Court ruled on Thursday that New York’s century-old concealed carry handgun law violated the Second Amendment, a finding long feared by local officials who viewed the law as a linchpin in efforts to curb the proliferation of pistols on New York City streets.

The 6 to 3 decision, which is the court’s most significant gun-rights ruling in more than a decade, voided the state’s Sullivan Act, a regulation that limited concealed carry handgun licenses to New Yorkers with specific defense needs.

New York City Mayor Eric Adams said repeatedly in recent weeks the looming Supreme Court decision was keeping him up at night.

“Can you imagine being on the 4 train with someone having a 9-millimeter, exposed?” the mayor said at a news conference earlier this month.  “This is not the Wild Wild West.”

Editorial / New York Daily News

“Using a garbled reading of history as a crutch, the U.S. Supreme Court’s supposed textualist conservatives have just managed to codify a cartoon cutout version of the Second Amendment, obliterating New York State’s concealed carry firearm permitting system.  We will mince no words: This will cost the lives of civilians and police officers, as almost anyone in New York City will now be free to carry a gun.  At a time when the proliferation of weapons is already killing record numbers of Americans, the nearly absolutist right of self-defense the majority canonizes will become a right to societal suicide.

“It’s just 27 simple words written in 1789: ‘A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.’  Justice Clarence Thomas, writing for the six-member majority, brazenly ignores that first clause and renders the second in the most expansive terms imaginable.

“With all the incisiveness of a junior high school student, he states: ‘We know of no other constitutional right that an individual may exercise only after demonstrating to government officers some special need.’  By this principle, there’s just about no weapon that can be restricted in hardly any place, so long as a man with his finger on the trigger can credibly assert the need to protect himself.  Indeed, with ever more Americans carrying ever more guns, the psychological need to carry ever more powerful weapons only escalates.

“Most appallingly, though the challenge was to a New York law, the majority doesn’t give two shakes about the implications of its absolutism for the nation’s most populous city, which happens to be battling an upsurge in shootings due in large part to the easy availability of weapons. The word ‘subway’ doesn’t appear once in Thomas’ 63 pages.

“It is left for an exasperated Justice Stephen Breyer, in a dissent, to ask: ‘What about subways, nightclubs, movie theaters, and sports stadiums?  The Court does not say.’  Nor, he points out, does the majority stoop to grapple with the nature or severity of gun violence in America – gun violence that, no coincidence, is far, far less severe in states like New York, which have more restrictive permitting systems.  New York’s gun death rate is 5.3 per 100,000 people.  Mississippi’s, Louisiana’s and Wyoming’s are all north of 25 per 100,000.

“Conservatives typically revere states’ rights.  Here, they obliterate them. Conservatives typically decry those who speak of a ‘living Constitution.’  Here, they choose one that licenses dying.

“At least the majority affirms the theoretical right for localities to forbid public carriage in ‘sensitive places’ – until the next legal challenge, anyway. New York must immediately so designate subways, buses, places of worship, Times Square, Union Square, Central Park, and all other places where large numbers of people gather.

“But it’s one thing to put up ‘no guns’ signs around sensitive places and quite another for the Police Department to actually enforce such restrictions when even ensuring compliance with a mask mandate has been burdensome, and the difference between legal and illegal carry has suddenly grown blurry.  God help us.

“Gov. Hochul must immediately recall the Legislature to salvage what remains of New York’s gun safety regime.  And Mayor Adams must huddle with his NYPD commissioner to develop a battle plan. The Supreme Court would render our city a free-fire zone. We must fight back.”

--Drought is a big issue worldwide, not just in the United States.  Thursday, Italian authorities noted drought conditions were spreading rapidly through the country, with rivers and reservoirs drying up and the forecast for higher temperatures making things worse.  Several Italian regions have already declared a state of emergency, while farming associations say agricultural output is set to plunge this year in key growing areas.

Italy’s longest river, the Po, which crosses the major northern regions and accounts for around a third of the country’s agricultural production, is experiencing its worst drought for 70 years.

A project funded by the European Space Agency said on Thursday that weeks of hot weather had raised the surface temperature of the Mediterranean by about 4C (7 degrees F.) above the 1985-2005 average.

Temperatures in Italy next week are expected to be 10C-12C above normal, with peaks of up to 44C expected on the islands of Sardinia and Sicily.  44C is 111F.

--Visitors began to return to a changed landscape in Yellowstone National Park on Wednesday as it partially reopened following the devastating record floods that reshaped the park’s rivers and canyons, wiped out numerous roads and left some areas famous for their wildlife viewing inaccessible, possibly for months to come.

Three of Yellowstone’s five entrances were opened, and at least some of the premier attractions such as Old Faithful will again be viewable.

But the wildlife-rich northern half of the park will be shuttered until at least early July, and key routes into the park remain severed near the Montana tourist towns of Gardiner, Red Lodge and Cooke City.

---

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

Pray for Ukraine.

God bless America.

---

Gold $1827
Oil $107.58

Returns for the week 6/20-6/24

Dow Jones  +5.4%  [31500]
S&P 500  +6.4%  [3911]
S&P MidCap  +5.1%
Russell 2000  +6.0%
Nasdaq  +7.5%  [11607]

Returns for the period 1/1/22-6/24/22

Dow Jones  -13.3%
S&P 500  -17.9%
S&P MidCap  -17.9%
Russell 2000  -21.4%
Nasdaq  -25.8%

Bulls 26.5…lowest since March 2009, as best as I can ascertain, which was the week of the market low.  [Reminder, I have Bull/Bear readings going back to 1990, so just glanced through all of them.  Handwritten, mind you.]
Bears 44.1

Hang in there.

Brian Trumbore

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