Week in Review

---

Week in Review

09/11/2021

For the week 9/6-9/10

[Posted 9:30 PM ET, Friday]

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

Edition 1,169

I’ve been doing this a long time.  Saturday is the 20th anniversary of 9/11. 

9/11 was a Tuesday and I was on the road that day.  I had a lot of site traffic back then because I was aggressively advertising on radio (nationwide) and in print.  There was thus a lot of pressure on me to post something immediately, but this has always been a ‘week in review,’ not a day in review.  It’s held me in good stead.  So I stuck to that principle and posted that Saturday morning, Sept. 15, at 7:15 a.m. ET.  I had had some time to think.

Following is exactly how I started my column.

---

9/15/01

“For years we have put our faith and trust in the dollar.  We need to put our faith and trust in God.”
--Reverend Franklin Graham

“(On Tuesday), the nation’s decade-long holiday from history came to a shattering end.”
--George Will

On Tuesday morning I turned on the “Today Show” in my hotel room in Sturbridge, Massachusetts to find that the lead story was the return of Michael Jordan.  “This is ‘news’?” I thought.  “Heck, I had reported it the day before in ‘Bar Chat,’ where it belonged.”

I was heading up to Wellesley for a long-planned golf outing with my friend Dave.  As I flipped the radio dial while on the Mass Pike, I settled on a country station.  Within a minute the traffic reporter said to the DJ, “Gee, I see that picture on your screen.  Is that the Trade Center?”  “Something has happened,” replied the DJ.  “It appears a plane hit it.”  My immediate thought was I knew it was a beautiful day in the New York area and that this was no accident.  It was a terrorist attack.

I was soon calling my parents so they could describe what was being shown on television. Both Mom and Dad were obviously shaken.  Then… “Oh no, there has been an explosion at the other tower!”  I hung up with them, sick to the stomach like every American that morning, and proceeded to my friend’s office.  Shortly after my arrival, the first tower collapsed and I knew it was time to go home.  I wasn’t angry, yet…I was scared.

---

The genesis of this Web site, and specifically, this commentary, was that there was a need for people to be able to combine the ‘hard news’ events of the world with the financial markets.  Many of you have been with me from the start, recognizing that while we may not always agree, my job is to stimulate thought, get people thinking about the broader world around them, get people to understand that the price of Cisco might be important to you one day, but a nuclear war between India and Pakistan, or an Iraqi gas attack on Tel Aviv, could spring up the next.  I call them the wild cards.

Some of what follows is self-serving, but no one has combined the study of international affairs with the financial markets like I have. And while I obviously didn’t foresee the tragic events of Tuesday in the manner in which they unfolded, I’m scared because I understand where our new war could take us.  I suspect many of you now share this thought.

Little did I know when I wrote last week’s piece that instead of my normal routine of lighting a candle in St. Patrick’s for myself and my family, “I lit a candle for President Bush and prayed he would be granted some wisdom.”  I was thinking of the economy, but also of the bigger picture.

Little did I know that when I wrote last week, “We need leadership in Washington, Europe, and Japan,” how true that would ring.  President Bush and Prime Minister Blair have already answered the call in grand fashion.

Little did I know that in writing about national missile defense for the umpteenth time, the following was, unfortunately, never more true.

“But to assume that abandoning, or severely limiting NMD, makes the world a safer place is exhibiting a faith in humanity that is far from rational.”

And little did I know that when I blasted some of our young people for their seeming lack of respect for authority, like in the case of our local police, those same kids just a few days later would learn to appreciate what tremendous heroes our police and firefighters are. Not just in New York, but throughout this great land….

WIR, 3/10/01

“After I posted last week’s review, I was watching the news and the footage of the Taliban destroying the 1,500-year-old giant Buddhas in Afghanistan.  I got a sickening feeling in my stomach, like they were destroying my own neighborhood church…Thankfully, most Muslim nations condemned the action.  But it also reaffirms my belief that the future for the Middle East gets bleaker by the day.  And as I’ve written in this space before, what would be truly catastrophic is if the extremists topple the existing regime in Pakistan.  The bomb would then be at their immediate disposal.  In the meantime, the American people need to get prepared for some major action in Afghanistan to wipe Osama bin Laden off the face of the earth.”

So now we have received our wakeup call.  My initial thoughts of fear, more than anger, are based on an understanding of how quickly the whole situation can implode, on a scale that would make even Tuesday’s toll seem small.  Four airplanes caused massive destruction.  One true “weapon of mass destruction” could take out millions….

It was less than one year ago that I wrote of my pilgrimage to Oklahoma City.  Five years ago I went to Normandy, where at the American Cemetery I walked into a chapel and jotted down an inscription I now use every Memorial and Veterans Day…one which also applies to Tuesday’s victims.

“Think not only upon their passing…remember the glory of their spirit.”

But in watching some of the commentators discussing the financial implications of the tragedy, I must say I’ve been disgusted.  Idiots (who will go nameless, for now) are saying things like, “We’re all going to go out and buy a big ticket item to show the terrorists they can’t beat down our spirit,” or, “It’s a long-term buying opportunity.”  This is nuts.  We all want to buy American, we all want to see the economy and the markets rebound, but, now more than ever, as a people we need to face the truth.

This is going to be a long, drawn-out war, with many tragic moments, and our emotions (and the markets’) may swoon with each one.  This week, for example, as 17,000 passengers were diverted to Gander, Newfoundland, I immediately thought of the December 1985 accident there, which claimed 256 of our armed forces. There will be accidents, there will be missions that may not succeed, there will be more terrorist attacks around the world; the point being that no one knows what the future holds….

Random Musings

--No, I’m not going to Taiwan today.  [And it was to be by way of San Francisco, to boot.]  I think I’ll wait a few months before attempting this trip again….

--As I drove back from Wellesley, MA on Tuesday, by way of Albany, NY because I didn’t want to deal with crossing the Hudson River closer to New York City, I was able to follow events on the news stations.  The weather was so beautiful and western Massachusetts is as pretty as any place in the country.  My thoughts were all over the place, but I found comfort in simple things, like coming upon NASCAR driver Matt Kenseth’s crew.  I felt compelled to give the driver a thumb’s up, which he returned.

I teared up for the only time that day (the floodgates opened up Wednesday) when I heard stories of blood donations coming from overseas tourists who happened to be in Manhattan.  I passed by Stockbridge and thought about visiting Norman Rockwell’s “Four Freedoms” painting, but I had been there just a few years ago and desperately wanted to get on the other side of the Hudson.

When I finally made the New York State Thruway, I proceeded to hit a few stops on the way south.  At the Ulster rest area, I just sat in the parking lot for a moment, admiring this tractor trailer from Jacobson Transportation of Des Moines, Iowa.  To me it represented the best of America at that moment.

At mile marker 69, a road sign read, “New York City closed.”  And as I sped down to New Jersey, I passed a little train station, Arden, that has always been a symbol for me of a simpler time.  Back in the summer of ’75, before my senior year in high school, my friends Dave, Tony and I spent a few days on the Appalachian Trail in the area of Arden. The first day we got to Lake Tiorati and there were some older kids sitting around drinking beer.  Now the three of us were goody-two-shoes at that time, but we bummed 2 brews from these guys, and split them 3 ways.  Party down, eh?

My ride then took me to I-287, and down through the western part of New Jersey.  At Kinnelon, I got to the top of the hill and looked east.  There it was, at least 30 miles away, this giant cloud of smoke, but no towers.  It was then the enormity hit home.  The stories you’re seeing on television are true.  For those of us who live in the area, the World Trade Center wasn’t just a place of commerce, it was a beacon for the region and all of America.

---

And so that’s your little time capsule from the archives of StocksandNews.  Starting the next day, I probably went through about 10 boxes of Kleenex in a week.  Our world had changed, forever.

Editorial / The Economist

“Twenty years ago America set out to reshape the world order after the attacks of September 11th.  Today it is easy to conclude that its foreign policy has been abandoned on a runway at Kabul airport.  President Joe Biden says the exit from Afghanistan was about ‘ending an era’ of distant wars, but it has left America’s allies distraught and its enemies gleeful.  Most Americans are tired of it all: roughly two-thirds say the war wasn’t worth it.  Yet the national mood of fatigue and apathy is a poor guide to America’s future role in the world….

“The murder of 3,000 people on American soil provoked a reaction that highlighted America’s ‘unipolar moment.’  For a while, it appeared to have uncontested power.  President George W. Bush declared that the world was either with America or against it.  NATO said the assault on the twin towers was an attack on all its members.  Vladimir Putin pledged Russian military cooperation; Condoleezza Rice, then the national security adviser, called this the real end of the cold war. The ease with which American-led forces routed the Taliban seemed to augur a new kind of light-touch warfare: 63 days after September 11th, Kabul fell.  There have been enduring achievements since then. Counter-terrorism efforts have improved: Osama bin Laden is dead and no remotely comparable attack on America has succeeded.  Lower Manhattan has been rebuilt in style.

“But for the most part the legacy of the response to September 11th has been a bitter one.  The mission to crush al-Qaeda morphed into a desire for regime change and nation-building that delivered unconvincing results in Afghanistan and Iraq, at a huge human and fiscal cost.  Iraq’s weapons of mass destruction were a mirage.  America broke its taboo on torture and lost the moral high ground.  The initial, illusory, sense of clarity about when it should intervene militarily faded into indecision, for example over Syria’s use of chemical weapons in 2013. At home the spirit of unity quickly evaporated and America’s toxic divisions mocked its claim to have a superior form of government.  The mire in the Middle East has been a distraction from the real story of the early 21st century, the rise of China….

“Foreign policy is guided by events as much as by strategy: Mr. Bush ran on a platform of compassionate conservatism, not a war on terror.  Mr. Biden must improvise in response to an unruly age.  But he should not imagine that a foreign policy subordinate to fraught domestic politics will revitalize America’s claim to lead the world.”

Biden Agenda

--President Biden on Thursday announced sweeping new federal vaccine requirements affecting as many as 100 million Americans in an all-out effort to increase Covid-19 vaccinations and curb the surging Delta variant that is not just leading to a rising death toll, but jeopardizing the nation’s economic recovery.

The expansive rules mandate that all employers with more than 100 workers require them to be vaccinated or tested for the virus weekly, affecting about 80 million Americans.  And the roughly 17 million workers at health facilities that receive federal Medicare or Medicaid also will have to be fully vaccinated.

Businesses that don’t follow the new rules will be subject to hefty fines.

“This is not about freedom, or personal choice,” Biden said.  “It’s about protecting yourself and those around you – the people you work with, the people you care about, the people you love… We cannot allow these actions to stand in the way of protecting the large majority of Americans who have done their part, who want to get back to life as normal.”

Biden also signed an executive order to require vaccination for employees of the executive branch and contractors who do business with the federal government – with no option to test out.  That covers several million more workers. 

The president laid the blame for the continued health crisis squarely at the feet of the 25% of the public who are unvaccinated and the politicians who he said were “actively working to undermine the fight.”

The mandates will increase the number of those who are vaccinated, but they will inflame the political debate.

Back in July, Biden gave an optimistic speech about how Americans soon would be declaring their “independence” from the virus.  But the Delta variant changed that. 

So it should be no surprise that Republican governors and other lawmakers blasted Biden after he issued his mandates.  Among the comments were those of South Dakota Gov. Kristi Noem, who tweeted: “South Dakota will stand up to defend freedom.  @JoeBiden see you in court.”

“This is not a power that is delegated to the federal government,” Noem told Fox News’ “Hannity” Thursday night.  “This is a power for states to decide.  In South Dakota, we’re going to be free and we’re going to make sure that we don’t overstep our authority. So we will take action.  My legal team is already working, and we will defend and protect our people from this unlawful mandate.”

Georgia Gov. Brian Kemp wrote, “I will pursue every legal option available to the state of Georgia to stop this blatantly unlawful overreach by the Biden administration.”

In Arizona, Gov. Doug Ducey issued a statement decrying what he called Biden’s “dictatorial approach” as “wrong” and “un-American.”

“Covid-19 is a contagious disease, it is still with us and it will be for the foreseeable future,” Ducey wrote.  “President Biden’s solution is hammering down on private businesses and individual freedoms in an unprecedented and dangerous way… How many workers will be displaced?  How many kids kept out of classrooms?  How many businesses fined?”

“These mandates are outrageous,” Ducey concluded. “They will never stand up in court.  We must and will push back.”

Sen. Ben Sasse (R-Neb.) accused Biden of being “so desperate to distract from his shameful, incompetent Afghanistan exit that he is saying crazy things and pushing constitutionally flawed executive orders….

“This isn’t how you beat Covid, but it is how you run a distraction campaign – it’s gross and the American people shouldn’t fall for it.”

According to CDC data, 75.3 percent of U.S. adults have had at least one vaccine shot.  But vaccination rates vary widely among states and the national infection rate is as high as it was in late January when few Americans were vaccinated.

John Podhoretz / New York Post

“Joe Biden’s speech on COVID was bizarrely incoherent.

“He told the American people without qualification that fully vaccinated people are at incredibly low risk: ‘Only 1 out of every 160,000 fully vaccinated Americans was hospitalized for COVID per day.’

“Then he promised to shield them against the evil people who are threatening their very lives: ‘We’re going to protect the vaccinated from unvaccinated coworkers.’

“But Joe, you just said the vaccinated were already protected!

“The danger in what Biden himself called an ‘epidemic of the unvaccinated’ is to the unvaccinated. That is what all the data show.  Ninety-nine percent of the hospitalizations and more than 99 percent of the deaths from the Delta variant are among the unvaccinated.

“More than 200 million Americans have been at least partially vaccinated – 73 percent of the 12-and-over population that is allowed to get the shot.  Sixty-three percent are fully vaccinated; that number will close in on 75 percent by the end of September.

“What’s happening with the Delta variant is terrible, and Biden spent a lot of the speech importuning the unvaccinated to get the shot. They should.  If they don’t, they’re incredibly stupid, and yes, this means you.

“But it’s not a crime to be stupid, or to be a foolish parent.  People do self-destructive things all the time.  Last year, when people did self-destructive things in relation to COVID, it was genuinely threatening to others because there was no vaccine.

“Now there is, and it works, and it saves you.

“Even so, Biden has gone all in on a six-pillar strategy to combat the scourge of the Delta variant, adopting a weirdly pessimistic tone: ‘The path ahead,’ he informed us, ‘is not nearly as bad as last winter.’  This is a sign that the talk was aimed at a very specific population, and it wasn’t the unvaccinated, toward whom he showed very little save contempt.

“No, this speech was a Rube Goldberg message aimed at neurotic vaccinated people. Biden was saying that they shouldn’t worry…but if they’re worried, their worries are justified.

“Oh, and don’t worry, worriers, he was also announcing he’s going to take actions that are likely unconstitutional – using powers the courts have repeatedly said were beyond the scope of presidential authority to compel private businesses to act as he wishes them to act.

“And why?  Well, to ease the very worries he had just tried to convince all of us are actually unnecessary.

“Well, it’s one way to try to change the subject from Afghanistan.”

The mandates on private business are a no-go.  And it would be months before they are enacted due to the legal challenges already in the works.  By then it’s too late.  The Delta variant will have done its thing.

--Editorial / Wall Street Journal

“Congress is back in session, and don’t blink or you may miss the plan to transform America in 17 days.  Never mind Sen. Joe Manchin’s ‘strategic pause.’  Democratic leaders are moving to ram into law their $3.5 trillion plan for cradle-to-grave entitlements with the narrowest of majorities before Americans figure out what they’re doing. As Nancy Pelosi famously said about ObamaCare, Congress will pass the bill so people can find out what’s in it.

“The House Ways and Means and Education and Labor committees introduced the text of their sections of the $3.5 trillion-plus spending bill late Tuesday and Wednesday.  On your mark, set, go for the 100-meter dash.  Within 36 hours, the committees had begun mark-ups.

“Industry lobbyists are feverishly trying to parse the hundreds of pages.  Good luck.  Mrs. Pelosi plans to consummate her crowning career achievement with a House vote by Sept. 27.  There will be little time to debate the details in the halls of Congress or townhalls with constituents.  Democrats in swing districts will be told to get with the program or else.

“It’s worth putting Mrs. Pelosi’s blitzkrieg in historic context. FDR’s New Deal programs were passed incrementally over two presidential terms with overwhelming Democratic majorities.  Democrats created the Great Society over two years with supermajorities.  ObamaCare was hashed out over nine months before Democrats enacted it into law with 56 votes in the Senate.  The 2017 GOP tax reform was debated for months, and its principles for years, before Congress voted.

“Now with merely 50 Democrats in the Senate and a five-member House majority, Democrats are planning to rush through the biggest tax and spending increase in half a century.  We’ll do our best to report and dissect the details in the coming days, but here’s a taste from the text that the two House committees deigned to release….”

Well, I, too, will get into more detail the next two weeks, but we’re talking provisions for universal paid leave, a new employer 401(k) mandate, Medicare would expand to cover dental, vision and hearing benefits…that’s just the beginning.  As Sen. Bernie Sanders knows, some of this will be popular across the country.

But as the Journal concludes:

“The Democratic bill would fundamentally alter the relationship between government and individual Americans.  Entitlements, once created, will be all but impossible to repeal.  Even if they start small, they will inexorably expand….

“Americans should be shouting from the rooftops to stop this steamroller before they wake up to a government that dominates their lives in a country they don’t recognize.”

Well, this is NOT getting through the Senate.  No way…at least not in the form the House, potentially, hands to them.

As Bernie Sanders himself said the other day, “It is not a great secret that you’ve got 200-plus members of the House and there are disagreements there.  We have 50 members in the Senate, there are disagreements there.  What we are trying to do is unprecedented probably in the last 50 or 60 years,” he said.  “This is tough stuff.”

--Patrick Tucker / Defense One

“The ultimate winner of two decades of war in Afghanistan is likely China.  The aircraft and armored vehicles left behind when U.S. forces withdrew will give China – through their eager partners, the Taliban – a broad window into how the U.S. military builds and uses some of its most important tools of war.  Expect the Chinese military to use this windfall to create – and export to client states – a new generation of weapons and tactics tailored to U.S. vulnerabilities, said several experts who spent years building, acquiring, and testing some of the equipment that the Taliban now controls.

“To understand how big a potential loss this is for the United States, look beyond the headlines foretelling a Taliban air force.  Look instead to the bespoke and relatively primitive pieces of command, control, and communication equipment sitting around in vehicles the United States left on tarmacs and on airfields.  These purpose-built items aren’t nearly as invincible to penetration as even your own phone.

“ ‘The only reason we aren’t seeing more attacks is because of a veil of secrecy around these systems,’ said Josh Lospinoso, CEO of cybersecurity company Shift5.  ‘Once you pierce that veil of secrecy…it massively accelerates the timeline for being able to build cyber weapons’ to attack them.”

Get angry.

--David Ignatius / Washington Post

“The White House was battered last month by bad luck, bad policy and bad implementation. The surprising thing, given this gut-wrenching reversal for an administration that had been riding high, is the relative lack of internal backbiting.  In other administrations, the leaks by now would have been flowing like a fire hose.

“Biden’s inner team sometimes seems more like a Senate staff than a typical elbows-out administration. Congeniality has its advantages.  But when mistakes happen, as they did in August, problems need to get fixed. Otherwise, the boss – and perhaps dozens of Democratic legislators – will pay the price.”

--Bret Stephens / New York Times

“Joe Biden was supposed to be the man of the hour: a calming presence exuding decency, moderation and trust.  As a candidate, he sold himself as a transitional president, a fatherly figure in the mold of George H.W. Bush who would restore dignity and prudence to the Oval Office after the mendacity and chaos that came before. It’s why I voted for him, as did so many others who once tipped red.

“Instead, Biden has become the emblem of the hour: headstrong but shaky, ambitious but inept. He seems to be the last person in America to realize that, whatever the theoretical merits of the decision to withdraw our remaining troops from Afghanistan, the military and intelligence assumptions on which it was built were deeply flawed, the manner in which it was executed was a national humiliation and a moral betrayal, and the timing was catastrophic.

“We find ourselves commemorating the first great jihadist victory over America, in 2001, right after delivering the second great jihadist victory over America, in 2021. The 9/11 memorial at the World Trade Center – water cascading into one void, and then trickling, out of sight, into another – has never felt more fitting….

“There’s a way back from this cliff’s edge.  It begins with Biden finding a way to acknowledge publicly the gravity of his administration’s blunders.  The most shameful aspect of the Afghanistan withdrawal was the incompetence of the State Department when it came to expediting visas for thousands of people eligible to come to the United States.  Accountability could start with Antony Blinken’s resignation.

“The president might also seize the ‘strategic pause’ Manchin has proposed and push House Democrats to pass the $1 trillion bipartisan infrastructure bill without holding it hostage to the $3.5 trillion reconciliation bill.  Infrastructure is far more popular with middle-of-the-road voters than the Great Society reprise that was never supposed to be a part of the Biden brand.

“My sense is that Biden will do neither.  The last few months have told us something worrying about this president: He’s proud, inflexible, and thinks he’s much smarter than he really is.  That’s bad news for the administration.  It’s worse news for a country that desperately needs to avoid another failed presidency.”

Well, I totally agree with Mr. Stephens and his conclusion.  We’re four-for-four in failed presidents that your editor has covered extensively since the foundation of StocksandNews.

Joe Biden will announce after the 2022 mid-terms that he is not running for reelection.  Look for Vice President Harris to do a lot more overseas travel in an attempt to bolster her bona fides. 

The Pandemic

The longer this goes on, the greater the odds of a new variant emerging that current vaccines can’t beat.  It would appear the Mu variant isn’t it.  But something else inevitably will show up.

Covid-19 death tolls, as of tonight….

World…4,629,724
USA…676,989
Brazil…585,923
India…442,350
Mexico…266,150
Peru…198,621
Russia…191,165
Indonesia…138,431
UK…133,988
Italy…129,828
Colombia…125,529
France…115,442
Iran…113,880
Argentina…113,282
Germany…93,095
Spain…85,290
South Africa…84,608
Poland…75,417
Turkey…59,384
Ukraine…54,251
Chile…37,178
Romania…34,914
Philippines…34,899
Ecuador…32,426
Czechia…30,413
Hungary…30,086
Canada…27,170
Bangladesh…26,832
Pakistan…26,580
Belgium…25,447
Tunisia…24,086
Iraq…21,394

U.S. daily death tolls…Sun. 416; Mon. 236; Tues. 815; Wed. 1,700; Thurs. 1,929; Fri. 1,733.

Covid Bytes

--Pfizer’s vaccine against Covid is expected to be the only one approved for booster shots by this month’s target deadline for rolling out the added jabs, according to Dr. Anthony Fauci.  Moderna should follow shortly thereafter.

There are also growing hopes the Pfizer vaccine will be authorized for children aged 5-11 years old by the end of October.

--The Economist says the official Covid death toll worldwide is not the official figure of over 4.6 million, but anywhere from 9.3 million to 15.2 million.  The Economist is tracking changes in total mortality and “excess deaths.”  This number is the gap between how many people died in a given region during a given time period, regardless of cause, and how many deaths would have been expected if a particular circumstance (such as a natural disaster or disease outbreak) had not occurred.

The biggest increases over the official tally were in Africa, Asia, and India, according to The Economist’s work.

--According to a Washington Post/ABC News poll, nearly half of Americans, 47 percent, rate their risk of getting sick from the coronavirus as moderate or high, up 18 percentage points from late June. This follows a more than tenfold increase in daily infections.

--A Florida judge on Wednesday ruled against Gov. Ron DeSantis’ administration for a second time over school mask mandates, allowing school boards to require that students wear face coverings.

Leon County Circuit Judge John C. Cooper again sided with parents who said an executive order from DeSantis overstepped the state’s authority in restricting school districts from requiring masks.

“We have a variant that’s more infectious and more dangerous to children than the one we had last year,” Cooper said when issuing his ruling.  “We’re in a non-disputed pandemic situation with threats to young children who, at least based on the evidence, have no way to avoid this unless to stay home and isolate themselves.  I think everybody agrees that’s not good for them.”

But then today, Florida’s 1st District Court reinstated a stay on mask mandates in schools, blocking local school requirements for now.  Lawyers for the governor filed the emergency appeal after Judge Cooper’s ruling on Wednesday.

--For the week ending Sept. 2 – more than a fourth of all new Covid cases involved children. Although many infections in children are mild or asymptomatic, some can be severe.  There were 2,400 children hospitalized with Covid in the previous week, the most yet in the outbreak.

--Thirteen school employees have died in the Miami area since mid-August, which may be an undercount, because deaths from Covid-19 among staff are collected only anecdotally.  In Texas, after two middle school teachers died, masks became mandatory at a suburban school district outside Waco.

--West Virginia Republican Governor Jim Justice:

“For god’s sake’s a-livin’, how difficult is this to understand?  Why in the world do we have to come up with these crazy ideas – and they’re crazy ideas – that the vaccine’s got something in it and its tracing people wherever they go.  And the very same people who are saying that are carrying their cell phones around.  I mean come on. Come on.”

--A 12-year-old boy has died in India of Nipah, a rare virus that is far deadlier than Covid-19 – and one that health officials have long feared could start a global pandemic.

Previous outbreaks of Nipah, or NiV, showed an estimated fatality rate of between 40% and 75%, according to the World Health Organization.

“The virus has been shown to spread from person-to-person in these outbreaks, raising concerns about the potential for NiV to cause a global pandemic,” the Centers for Disease Control and Prevention (CDC) said.

--Hundreds of medical facilities in Afghanistan are at risk of imminent closure because the Western donors who finance them are barred from dealing with the new Taliban government, a World Health Organization official said on Monday.  Around 90% of 2,300 health facilities across the country might have to close as soon as this week.  Just an awful development amid the Covid crisis.

Wall Street and the Economy

It was a quiet week on the economic front, befitting the Labor Day holiday.  The equity markets had a tough go of it, however, as it’s increasingly clear the economy is being impacted by the Delta variant and there’s growing uncertainty over future corporate earnings vs. lofty expectations.  The market, after all, finished last week at basically record levels.

Jobless claims for the week hit a new pandemic low, 310,000 for the week ended Sept. 4, from a revised figure of 345,000 the prior week, the Labor Department reported.  So this was good.

But we had another key barometer for inflation, August producer prices, and they soared again to new record highs…up 0.7% and 0.6% ex-food and energy.

Year-over-year, the PPI was up 8.3%, 6.7% on core, which was an increase over 7.8% and 6.2% the month before.

Meanwhile, we have this looming issue of the debt ceiling.  The Treasury Department could run out of room next month to keep paying the government’s bills on time unless Congress steps in to suspend or raise the federal borrowing limit, Secretary Janet Yellen said in a letter to congressional leaders Wednesday.

Time to raise or suspend the limit is running short against a backdrop of deep partisan disagreements over President Biden’s spending plans.

The Treasury has been using cash-conservation measures to keep paying the government’s obligations since Aug. 1, when the borrowing limit was reinstated after a two-year suspension.  Yellen said the Treasury will exhaust these emergency measures sometime in October.

“I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” she said.

Europe and Asia

Eurostat reported on second quarter GDP for the eurozone, up 2.2% over the first quarter, and a whopping 14.3% year-over-year.

Some year-over-year figures:

Germany 9.4%, France 18.7%, Italy 17.3%, Spain 19.8%, Netherlands 9.7%, Ireland 21.1%.

Reminder: The Q2 2021 comparison with Q2 2020 is heavily influenced by the severe lockdowns across euroland last year when the continent was in the midst of a severe recession.

What was most important across the euro area this week were the actions of the European Central Bank, which announced it would trim its emergency bond purchases over the coming quarter, taking the first small step towards unwinding the emergency aid that has propped up the eurozone economy during the pandemic.

After the ECB pulled out all the stops last year as Covid-19 ravaged the economy, high vaccination rates across Europe are bolstering recovery prospects and policymakers have been under pressure to acknowledge the worst is over.  The ECB did so by slowing the pace of its Pandemic Emergency Purchase Program (PEPP), which has kept borrowing costs low as governments took on unprecedented amounts of debt to finance the response to the pandemic.

But with rising U.S. infection rates making the Federal Reserve hesitant to wind down its own stimulus, the ECB was keen to stress it wasn’t about to close the money taps.

“The lady isn’t tapering,” ECB President Christine Lagarde told a news conference to explain the decision, using a turn of phrase reminiscent of former British Prime Minister Margaret Thatcher’s famous declaration “the lady’s not for turning.”

“What we have done today…unanimously, is to calibrate the pace of our purchases in order to deliver on our goal of favorable financing conditions.  We have not discussed what comes next,” she said.

Lagarde pushed back a decision on how to wind down the 1.85 trillion euro PEPP to December and stressed that, even if that happens, the ECB will continue keeping credit cheap in its quest to boost inflation to its target.

The ECB upgraded its growth forecast for this year to 5% from a previous 4.6% target and raised inflation expectations.  Inflation is now seen at 2.2% this year, falling to 1.7% next year and 1.5% in 2023 – well below the ECB’s 2% target.

But now we wait to December.

Turning to Asia…we had an important report on China’s trade picture for August and it was much better than expected, with exports up 25.6% year-over-year, according to the General Administration of Customs.  Imports rose 33.1% Y/Y.

Exports to the European Union rose 29.4%, and 15.5% to the U.S.

So better numbers despite renewed Covid restrictions in some regions.  A key factor was the ports were being unclogged from an excessive backlog that was caused by some facilities having to close briefly when infections popped up among workers.

Separately, consumer prices in August rose only 0.8% Y/Y, but producer (factory gate) prices surged 9.5%, a 13-year high.

In Japan, a report on second-quarter GDP came in a little better than estimated, 0.5% quarter-over-quarter, and 1.9% annualized…still putrid vs. the U.S. and Europe.

July household spending fell 0.9% over June, and was up only 0.7% Y/Y.

Street Bytes

--After closing at or near new highs last week, the market took it on the chin this week, with the Dow Jones and S&P 500 falling 2.2% and 1.7%, respectively, while Nasdaq, after hitting another record high on Tuesday, ended down 1.6%.

This morning there was some optimism on the Biden-Xi Jinping phone call (see below), and the potential to ease tensions, but once the producer price data hit, and further signs of global supply chain issues sticking around longer than once expected, stocks sold off anew.

--U.S. Treasury Yields

6-mo. 0.04%  2-yr. 0.21%  10-yr. 1.34%  30-yr. 1.93%

The yield on the 10-year rose a whopping 2 basis points on the ugly producer prices ‘print’ for August.  As former NBA star Derrick Coleman would have said, “Whoopty-damn-do.”

--Some Federal Reserve officials traded stocks and other securities in 2020, a year in which the central bank took emergency steps to prop up financial markets and prevent their collapse – raising questions about whether the Fed’s ethics standards have become too lax.

The trades appeared to be legal and in compliance with Fed rules, but million-dollar stock transactions from Dallas Fed president Robert Kaplan drew particular attention, though none took place when the central bank was most actively backstopping financial markets in late March and April.

It’s just that the mere possibility that Fed officials might be able to financially benefit from information they learn through their positions has prompted criticism of perceived shortcomings in the institution’s ethics rules, which were forged decades ago and are now struggling to keep up with the central bank’s modern-day function.

So yesterday, Kaplan and Eric Rosengren, president of the Federal Reserve Bank of Boston, said they would sell all the individual stocks they own by Sept. 30 and move their financial holdings into passive investments.

--About four-fifths of U.S. oil production in the Gulf of Mexico remains offline, almost two weeks after Hurricane Ida hit Louisiana, as companies struggle to restart offshore platforms.

Ida is turning out to be the most damaging storm for offshore production in more than 15 years (Hurricanes Katrina and Rita in 2005), crippling key infrastructure, which has contributed to keeping about 12% of U.S. oil production idle.  The storm also damaged underwater pipelines that have leaked oil into the Gulf.

The Gulf of Mexico accounts for 16-17% of U.S. oil output, and about 5% of natural gas output.  All the ‘majors’ operated sizable facilities in the area.

Key ports and airports were also knocked offline, delaying the redeployment of staff and equipment.  Companies haven’t been able to find enough offshore staff, as workers tend to their families and homes following the storm.  And some oil and gas processing plants and other key offshore facilities were damaged or remain without electricity.

--To help deal with the global shortage in semiconductors, Intel Corp. plans to build new chip-making facilities in Europe valued at up to $95 billion, responding to a cross-border race to add manufacturing capacity at a time of a global chip-supply crunch.

Intel CEO Pat Gelsinger on Tuesday said the company was planning two chip factories at a new site in Europe (Ireland the prime beneficiary) and could potentially expand it further, with the increases raising the total investment over about a decade to the equivalent of as much as 80 billion euro ($95 billion).  The facilities would cater to meteoric demand for semiconductors as computers, cars and gadgets become more chip-hungry.

Rival Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip maker, this year said it would spend a record $100 billion over the next three years to increase production capacity.  South Korean rival Samsung Electronics Co. last month said it plans to boost investments by one third to more than $205 billion over the next three years, in part to pursue leadership in chip manufacturing.

--Shares in Apple Inc. closed down nearly 3% today after a U.S. federal judge struck down a core part of Apple’s App Store rules on Friday, forcing the company to allow developers to send their users to other payment systems in a win for “Fortnite” creator Epic Games and other app makers.

But the judge did not require Apple to let app makers use their own in-app payment systems, one of Epic’s top requests, and allowed Apple to continue to charge commissions of 15% to 30% for its own in-app payment system.  Epic said it would appeal the ruling, with CEO Tim Sweeney tweeting that the ruling “isn’t a win for developers or for consumers.”

U.S. District Judge Yvonne Gonzalez Rogers described her ruling as requiring a “measured” change to Apple’s rules.  Analysts said the impact may depend heavily on how the iPhone maker chooses to implement the decision.

The ruling vastly expands a concession made to streaming video companies last week allowing them to direct users to outside payment methods.  The decision expands that exemption to all developers, including the game developers who are the biggest cash generators for Apple’s App Store, which itself is the foundation of its $53.8 billion services segment. 

The judge ruled that Apple can no longer bar developers from providing buttons or links in their apps that direct customers to other ways to pay outside of Apple’s own in-app purchase system.  The ruling also said Apple cannot ban developers from communicating with customers via contact information obtained by the developers when customers signed up within the app.

What’s unclear is the bottom-line impact on Apple’s profitability.

--Toyota Motor Corp. said it would spend $9 billion over the next decade to build factories for electric-car batteries as it gears up to sell two million electric cars annually by the end of the decade.

The world’s largest car maker by vehicle sales has been late in joining the global race to produce and sell battery-powered cars.  Toyota previously said it didn’t think they were a good solution to climate- and pollution-related concerns because the batteries were too expensive and took too long to charge.  The company viewed hybrid gas-electric vehicles, which it pioneered, as the better option.

But as countries began implementing stricter emissions regulations and sales of EVs grow, Toyota has been changing its tune.  The company now says it wants about 80% of its cars to include some battery power by 2030.  While most of these would still be hybrids, Toyota intends to sell about two million pure-electric vehicles by then.

--Deliveries of Boeing Co.’s Dreamliner will likely remain halted until at least late October as the plane maker has been unable to persuade air-safety regulators to approve its proposal to inspect the aircraft, people familiar with the matter said.

With almost all deliveries paused for nearly a year, airline and other Boeing customers increasingly are able to use the delay to walk away from deliveries or negotiate for concessions from the aerospace giant.  Deliveries were first halted because the company and the Federal Aviation Administration began taking a deeper look at the plane’s manufacturing defects.  The holdup is choking off an important source of cash for Boeing.

Boeing said it had about 100 Dreamliners in its inventory awaiting delivery at the end of June.  List prices for the aircraft start around $250 million, though customers typically pay about half that with the usual discounts.

--Speaking of delaying or walking away from deliveries, Ryanair has ended talks with Boeing on a major new order for Boeing 737 jets due to a disagreement over pricing, the Irish discount airline giant said on Monday.

Ryanair is already the largest European customer for the 737 MAX, with 210 firm orders of the 197-seat MAX 8-200 model.  It has said it could order up to 250 of the 230-seat MAX 10 for delivery from around 2025.

A large order from Ryanair would provide a huge boost to Boeing, just as the Dreamliner news is providing the opposite.

But last week Ryanair CEO Michael O’Leary said he would be surprised if an agreement with Boeing was reached before next year.  On Monday, he then said talks collapsed without any agreement on pricing, adding, “Boeing (has) a more optimistic outlook on aircraft pricing that we do, and we have a disciplined track record of not paying high prices for aircraft.”

O’Leary is long known as a ball-buster, but it’s all really about the level of travel in the coming weeks and months and whether he feels more optimistic about a full recovery at some point in 2022.  At least that’s my opinion…having followed this man since day one.

Meanwhile, Airbus has been aggressive in capturing market share, which O’Leary took note of.

--United Airlines said it would give staff who have so far declined to be vaccinated against Covid-19 an extra five weeks to get inoculated as the Sept. 27 deadline approaches for the company’s mandate.

United had been the first U.S. carrier to mandate staff vaccination and on Wednesday said it would put employees exempted on medical or religious grounds on unpaid leave and would look for ways to later reintegrate them through enhanced testing and masking.

Airlines have been tinkering with different approaches to employee vaccination, using incentives such as bonuses and extra time off.

But United had the most stringent policy.  Last month it said it would terminate employees who aren’t vaccinated by the airline’s deadline unless they had an approved religious or medical exemption.  Clearly, though, the policy has been more difficult to implement than planned.

Delta Air Lines stopped short of mandating vaccines, but will require unvaccinated employees to pay an extra $200 a month for health insurance to help cover additional costs, such as hospitalization.

--On a different topic, corporate travel, Delta Air Lines said it returned to about 40% of pre-pandemic levels this summer, and the airline was predicting it could climb to 60% by September.

But now Delta CEO Ed Bastian is saying, “We won’t be at 60%.”

About 60% of the more than 400 business travelers who responded to a survey by Morning Consult for the American Hotel & Lodging Association said they would postpone coming trips.

Some companies, like a Goldman Sachs or JPMorgan Chase, will still encourage travel for face-to-face meetings, but trade shows or large gatherings once again seem to be on the back burner, just when there were signs in June they were coming back.

As for overseas travel, KPMG U.S. CEO and Chair Paul Knopp said, “We’re not traveling internationally, period.  We use Microsoft Teams, where I say I can be on three continents in one day.”

With anecdotes like the above, airlines warned Thursday of another pandemic-driven hit to profits in the months ahead.

--TSA checkpoint travel numbers vs. 2019

NOTE: There are some calendar quirks in these figures.  Labor Day 2019 was Sept. 2.

9/9…69 percent of 2019 level
9/8…72
9/7…86
9/6…88…over 2 million*
9/5…69
9/4…88
9/3…97…over 2 million*
9/2…90

*First days over 2 million since 8/15.  But 8/1 remains top day post-pandemic with 2,238,462 travelers.

--Shares in Kroger fell 7% today after the company logged better-than-expected results for the fiscal second quarter, but the company warned of ongoing supply chain costs that could impact margins and thus spooking investors.

Kroger said people continued to prefer having food at home amid the surge in Covid cases, with business momentum prompting the company to raise its full-year guidance for the second time this year.

Sales rose to $31.68 billion for the three months to Aug. 14, up from $30.49 billion.

“Customers are eating more food at home because it is more affordable, convenient, and healthier than other options,” CEO Rodney McMullen said in a statement. 

Same-store sales, ex-fuel, slipped 0.6% in the quarter compared with expectations for a 2.5% drop, following a nearly 15% gain last year.  Digital sales, however, declined 13%.

Kroger operates 2,750 grocery stores, and 170 jewelry stores under brands including Fred Meyer Jewelers and Littman Jewelers.

--Opening statements kicked off this week in the trial of Elizabeth Holmes, the blood-testing start-up founder who allegedly failed to deliver on promises of running hundreds of tests off just a finger prick of blood.

Holmes, 37, faces criminal charges in federal court here for allegedly defrauding investors and patients by misleading them about the success of her blood-testing company Theranos.  Prosecutors opened by saying that Holmes knowingly made misleading statements about how well Theranos’ portable blood-testing lab worked, and how financially successful the company was.

Holmes started Theranos when she was just 19 years old and a student at Stanford, eventually growing it to 800 employees before media investigations revealed a dysfunctional workplace and erratic technology.

Her defense opened by saying she was acting in good faith.  The defense team will be arguing Holmes was abused and controlled by her former boyfriend Ramesh “Sunny” Balwani, who served as an executive at Theranos starting in 2009.  Balwani has disputed the allegations.

Holmes is charged with 10 counts of wire fraud and two counts of conspiracy to commit wire fraud.  If convicted she faces up to 20 years in prison and up to a $3 million fine.

Among those on the witness list are Rupert Murdoch, former secretary of state Henry Kissinger and former secretary of defense Jim Mattis, the latter two once board members of the company, while Murdoch offered his financial support.

--Chinese regulators have temporarily slowed their approvals of new online games in the country, dealing a fresh blow to video gaming companies like industry giants Tencent Holdings and NetEase, as Beijing steps up measures to tackle gaming addiction among young people.

Wednesday, a meeting was called by regulators, led by the publicity department of the Chinese Communist Party and gaming watchdog the National Press and Publication Administration, to discuss with representatives from Tencent and NetEase how they will implement Beijing’s new restrictions on video gaming for minors.

--As noted the past few weeks, the restaurant industry is suffering due to the Delta variant, with a number of metrics pointing to a slowdown in dining out, after there had been a steady recovery prior to Delta rearing its ugly head.

The last jobs report showed no growth in the leisure sector, but in restaurants and bars, there was a loss of 42,000 jobs in August.

OpenTable, the online reservations company, says that seated dining at U.S. restaurants has been running at about 11 percent below 2019 levels compared with a rate of between 5 percent and six percent in late July, according to a Los Angeles Times report.

“We see a pronounced decline in late July and August,” Debby Soo, CEO of OpenTable told the publication.  “While several factors could be at play here, we believe the primary driver of the downturn is diners’ concerns about the rise in Covid cases.”

According to a survey last month by the National Restaurant Association, 19 percent of adults said they completely stopped going out to restaurants while 60 percent of respondents said they had changed their restaurant use because of the Delta variant and 37 percent said they had ordered delivery or take-out instead of dining at a restaurant.

Demand for restaurants’ outdoor seating remains high, but there is of course renewed concerns for when the weather turns colder.

--Marvel Studios’ “Shang-Chi and the Legend of the Ten Rings” had a record debut that drove the best Labor Day weekend attendance figures at AMC Theatres.

AMC Entertainment Holdings Inc., the parent company of the theater chain, said that more than two million people watched movies at its U.S. theaters Thursday through Sunday, which the company considers the Labor Day weekend, and about 800,000 at its European and Middle East locations.

The weekend’s results mark milestones for the company, after the entertainment sector was slammed by the pandemic and related restrictions.

“This is the very first weekend that our attendance numbers were ahead of those of the same weekend pre-pandemic, since we closed our theatres in March of 2020,” CEO Adam Aron said in a statement.  He also said that admissions revenues broke its 2013 record for Labor Day weekend in the U.S.

AMC’s stock rose 8% on the news.

Walt Disney Co.’s “Shang Chi,” which stars Simu Liu, opened only in theaters to a reported $90 million in the U.S. and Canada, according to industry estimates.

Foreign Affairs

Afghanistan: Ten days after the chaotic evacuation, a jetliner took off from Kabul’s airport on Thursday, the first international passenger flight since American forces ended their 20-year presence in the country.

On board the chartered Qatar Airways Boeing 777 were scores of Americans, Canadians and Britons, and the flight was hailed by some as a sign that the Taliban may be poised to re-engage with the world.

But at the same time the group was intensifying its crackdown on dissent.

After being shut out from the Taliban’s new government, women increased pressure on Afghanistan’s new rulers with a number of protests, at least one of which was broken up by Taliban fighters who whipped some of the demonstrators and arrested local journalists, some of whom were reportedly severely beaten.

But the rallies illustrated the reality that while the Taliban may now stand virtually unchallenged on the battlefield, the group faces a more complicated task in getting fearful Afghans – especially women and those living in cities – to buckle under its rule.  It is evident that the militants are growing less tolerant and more violent in confronting criticism amid calls for wider civil rights.

Speaking of the new all-male government with figures linked to attacks on American forces, the interim cabinet is led by Mullah Mohammad Hassan Akhund, who is on a UN blacklist.  Another figure, Sirajuddin Haqqani, is wanted by the FBI.

In a statement on Tuesday, the U.S. State Department said: “We note the announced list of names consists exclusively of individuals who are members of the Taliban or their close associates and no women.

“We also are concerned by the affiliations and track records of some of the individuals.”

It added that America would “judge the Taliban by its actions, not words.”

“We also reiterate our clear expectation that the Taliban ensure that Afghan soil is not used to threaten any other countries,” it said, adding: “The world is watching closely.”

Earlier, a statement attributed to Taliban Supreme Leader Mawlawi Hibatullah Akhundzada told the government to uphold Sharia law – Islam’s legal system.

The Taliban want “strong and healthy” relations with other countries and would respect international laws and treaties as long as they did not conflict with “Islamic law and the country’s national values,” the statement said.

Editorial / Washington Post

“Taliban leaders have unveiled Afghanistan’s new cabinet, and the Islamic Emirate they have anointed is far from the ‘inclusive’ government that the radical insurgents promised. Rather, it consists almost entirely of hardline ethnic Pashtun men from the Taliban’s long-standing inner circle.  Key figures include prime minister Mohammad Hassan Akhund, a former official of the 1996-2001 Taliban regime who is under sanctions by the United Nations, and interior minister Sirajuddin Haqqani, leader of the violent Haqqani network, who is sought by the FBI for his role in bloody terrorist attacks.  Sidelined completely: the women of Afghanistan, as well as such figures from the deposed U.S.-backed republic as former president Hamid Karzai and former chairman of the High Council for National Reconciliation Abdullah Abdullah.  The Taliban had held showy but, evidently, insubstantial talks with them after taking power.

“In one sense, however, the Taliban has kept its promises: The new powers-that-be in Kabul enjoy not even the pretense of popular election, exactly as a spokesman, Waheedullah Hashimi, foreshadowed in August when he told Reuters: ‘There will be no democratic system at all because it does not have any base in our country.’  The transparency and accountability of the new political process are epitomized by the man widely believed to wield real power in the Taliban, religious leader Haibatullah Akhundzada, who has not been seen in public for years, though a statement was issued in his name to the effect that the new cabinet is an apparently interim ‘acting’ body.  How and when a transition to permanent status would occur were left unclear.

“Such are the political fruits of American withdrawal and Taliban military conquest.  The question for the United States and the rest of the world is how to react to a new and illegitimate but for the moment entrenched dictatorship that has, for all intents and purposes, taken Afghanistan itself hostage and awaits negotiations. The specifics of policy – when and whether to resume humanitarian aid; the timing and extent of sanctions relief, if any – matter greatly. What’s perhaps most important at the outset, though, is to establish a guiding principle.

“We suggest realism…. First, the Taliban 2.0 so far has provided no evidence that it has changed in any fundamental way from the extreme, lawless and tribally based group that ran Afghanistan so disastrously between 1996 and 2001.  And second, such an organization cannot claim to represent the Afghan people and is unlikely to establish a stable political system – let alone a decent one. Courageous demonstrations by women in Herat and Kabul serve as reminders that Afghans did not choose this regime and in many cases find its values abhorrent.

“On that basis, and that basis alone, the United States should pursue its remaining goals in Afghanistan, which must include advocating the human rights of its people.  There has been too much wishful thinking already.”

Editorial / Wall Street Journal

“The Haqqani Network was founded by (Sirajuddin Haqqani’s) father, who had a close relationship with bin Laden.  In 2012 the Obama Administration officially designated the Haqqani Network as a terrorist organization.  The ties between the Haqqani Network and al-Qaeda are long and extensive….

“ ‘The Haqqanis are considered the most lethal and sophisticated insurgent group targeting U.S., Coalition, and Afghan forces in Afghanistan,’ says a description of the U.S. counterterrorism center.  ‘They typically conduct coordinated small-arms assaults coupled with rocket attacks, IEDs, suicide attacks, and attacks using bomb-laden vehicles.’

“Mr. Haqqani will fit comfortably in the new Afghan government led by Taliban supreme leader Haibatullah Akhundzada.  He’s an Islamic fundamentalist who wants to govern the country under strict Shariah law.  The new prime minister is Mullah Hassan Akhund, who was foreign minister in the pre-9/11 Islamic Emirate in Kabul.  Critics who said the Taliban were never serious about negotiating a power-sharing agreement were right.

“These are the men that Secretary of State Antony Blinken and President Joe Biden are counting on to allow the departure of the Americans and Afghan allies who are still trapped in Afghanistan.  They are also supposed to prevent jihadists from again using the country as a sanctuary.

“In the aftermath of 9/11, George W. Bush declared that the U.S. would no longer distinguish between terrorists and the governments that harbor them.  Now, after Mr. Biden’s calamitous withdrawal, the U.S. is in the incredible position of hoping to make a government run by terrorists our partners.”

Iran: The International Atomic Energy Agency on Tuesday criticized Iran for stonewalling an investigation into past activities and jeopardizing important monitoring work, possibly complicating efforts to resume talks on the Iran nuclear deal.

The IAEA said in two reports to member states that there had been no progress on central issues: explaining uranium traces found at several old, undeclared sites and getting urgent access to some monitoring equipment so that the agency can continue to keep track of parts of Iran’s nuclear program.

While the investigation into the uranium traces has been going on for more than a year, diplomats say the IAEA urgently needs access to the equipment to swap out memory cards so there are no gaps in its observation of activities like the production of parts for centrifuges, machines that can enrich uranium.  Without such monitoring and so-called continuity of knowledge, Iran could produce and hide unknown quantities of this equipment that can be used to make weapons or reactor fuel.

For its part, if Iran postpones its return to talks for too long, the U.S. will not agree to return to the 2015 nuclear agreement, U.S. Special Representative to Iran Rob Malley said, as Iranian President Ebrahim Raisi rejected “Western pressure” on Saturday.

“The Iranian government says it still needs time, because it was just put into office and is trying to organize itself, which is understandable,” Malley told Bloomberg on Friday.  “But at the same time, time is passing and…we’ll have to see if Iran is seriously prepared to come back to talks and what nuclear advances it has made in the meantime.”

The U.S. and Iran engaged in indirect negotiations from April-June this year in Vienna, with an eye toward returning to compliance with the Joint Comprehensive Plan of Action, the 2015 nuclear agreement between Iran and world powers (P5+1).

Iran then suspended talks in June, after Raisi was elected president, and has not said if and when it would return.

China: President Biden and Chinese counterpart Xi Jinping spoke by phone on Friday to manage the increasing rivalry between Beijing and Washington, with Xi calling for courage to set ties back on the right track, as their confrontational path would only make the world suffer.

U.S. officials said Biden initiated the 90-minute call, which focused on the way ahead for the troubled relations between the two countries.

According to a Chinese government statement, Xi and Biden had a “candid and in-depth” discussion on a wide range of issues facing their two nations and agreed to step up communications in the wake of their call.

The Chinese government said Taiwan was discussed, and the U.S. had said it was committed to the one-China policy, but the White House statement made no mention of any specific issues covered.

Xi told Biden that China-U.S. relations were facing “serious difficulties” because of U.S. policies towards China.  “The world will benefit if China and the U.S. cooperated. But the world will suffer if China and the U.S. confront each other,” he said, according to the statement.

The Chinese government said the two leaders should deepen communication on major international issues and maintain contact at various levels.  “Both sides will step up working level coordination and dialogue to create conditions for the development of China-U.S. relations.”

Here’s an interesting factoid, Xi hasn’t left China for one year, seven months and 22 days, the longest such stint of any Group of 20 leader.

Xi has done multiple virtual summits, and held calls with about 60 world leaders.

But there are growing worries that Xi’s desire to stay in the country, a byproduct of China’s strategy to completely eliminate cases of Covid-19, could start having diplomatic consequences, particularly if he avoids the G-20 meeting in Rome at the end of October and a UN climate summit right afterward.

Xi no doubt is duly concerned about the upcoming Beijing Winter Olympics, and keeping Covid at bay, which is the only way he has a shot at getting some nations to attend who might not otherwise due to political considerations.

Meanwhile, on Sunday, Taiwan said the Chinese military flew 19 aircraft into its air defense zone and scrambled its air force in response.

North Korea: The nation celebrated the 73rd anniversary of its founding with a night time military parade in the capital, with state media publishing photographs of marching rows of personnel in orange hazmat suits but no ballistic missiles.

Kim Jong Un attended the event as paramilitary and public security forces of the Worker-Peasant Red Guards, the country’s largest civilian defense force, began marching in Pyongyang’s Kim Il Sung square at midnight Wednesday.  Those in the hazmat suits wore medical-grade masks in an apparent symbol of anti-Coronavirus efforts.

Kim did not deliver a speech, unlike last October when he boasted of the country’s nuclear capabilities and showcased unseen intercontinental ballistic missiles during a pre-dawn military parade.

North Korea has not confirmed any Covid-19 cases, but closed borders and imposed strict prevention measures, seeing the pandemic as a matter of national survival.

Most North Korean experts said the parade was strictly designed as a domestic festival aimed at promoting national unity and solidarity of the regime.

The event was kept low-key perhaps because Kim is maneuvering for future talks with the U.S. and South Korea.

Chinese President Xi vowed to further develop ties with North Korea in a message congratulating Kim on the country’s anniversary.

“For the past 73 years since the founding of the DPRK, the Workers’ Party of Korea has led the DPRK people to make unremitting efforts and great achievements in promoting socialist causes,” Xi said, using the official abbreviation for North Korea’s formal name – the Democratic People’s Republic of Korea.

Xi also pledged to further develop the “long-lasting friendship” between China and North Korea, calling it a shared valuable asset, according to Xinhua.

Canada: The snap election that Prime Minister Justin Trudeau called back in August is coming up, Sept. 20, and it could easily backfire. Trudeau, leading a minority government, is hoping to gain a majority in parliament, but he has struggled to justify why he is sending voters to the polls two years ahead of schedule during a fourth wave of Covid-19.

Random Musings

--Presidential approval ratings…

Gallup: No update from Aug. 2-17 survey, that had 49% approving of Biden’s job performance, 48% disapproving.

Rasmussen: 46% of likely voters approve, 52% disapprove; actually a rise from the prior week’s 44-54 split.

A new Washington Post/ABC News poll has Biden’s approval rating falling from 50% in June to 44% today, dragged down by 2-to-1 disapproval for his handling of Afghanistan following the chaotic withdrawal. Biden’s ratings for handling the economy have also declined, from 52% positive in April to 45% in the latest survey.

And a new CNN/SSRS poll, taken over an extended period of time, Aug. 3-Sept. 7, had better news for the president, with his approval rating at 52%, 48% disapproving, though I would submit this is already ‘dated.’

What isn’t dated, and most worrisome for Biden and the Democrats is that only 46% of independents approve of the president’s job performance, while 54% disapprove.  Not good.

[Vice President Kamala Harris also has a 52-48 approval split, but the disapproval figure is up ten points since April.]

The CNN poll additionally finds that 69% of Americans say things in the country today are going badly, below the pandemic-era high of 77% reached in January just before Biden took office, but well above the 60% who felt that way in a March CNN poll.

And 62% say that economic conditions in the U.S. are poor, up from 45% in April and nearly as high as the pandemic-era peak of 65% reached in May 2020.

--The massive statue of Robert E. Lee was appropriately removed in Richmond, Va., Wednesday.  Look, I have Civil War prints in my living room, and before I moved, and I had a ton of wall space on four levels, about half of everything on those walls was Civil War related, save for my awesome framed comic strips (like framed copies of the last “Calvin & Hobbes” and original “Bloom County,” plus a ton of Charles Schulz’s best).

Anyway, I’ve toured many a battlefield, including pilgrimages to the likes of Shiloh and multiple trips to Appomattox.  [In fact I have a print of the surrender…with General George Armstrong Custer in the background…only historians later realized he was not there…which I learned in a second trip when a painting of the surrender between Grant and Lee didn’t have Custer in it.  “ ‘Sup with that?” I asked the tour guide.  Turns out new research changed the narrative.]

Which brings me to Donald Trump’s attempt to once again stay relevant with his base…another example of revisionist history, as opposed to the above where the facts are corrected.

Upon removal of Lee’s statute, Trump issued a statement containing some of the following.

First, he once again warned “(our) culture is being destroyed and our history and heritage, both good and bad, are being extinguished by the Radical Left.”

Then he segued into a history lesson.

“Robert E. Lee is considered by many Generals to be the greatest strategist of them all,” Trump said.  “President Lincoln wanted him to command the North, in which case the war would have been over in one day.  Robert E. Lee instead chose the other side because of his great love of Virginia, and except for Gettysburg, would have won the war.

“He should be remembered as perhaps the greatest unifying force after the war was over, ardent in his resolve to bring the North and South together through many means of reconciliation and imploring his soldiers to do their duty in becoming good citizens of this Country.”

Trump closed by pivoting to the disastrous evacuation of U.S. forces from Afghanistan, writing: “If only we had Robert E. Lee to command our troops in Afghanistan, that disaster would have ended in a complete and total victory many years ago.  What an embarrassment we are suffering because we don’t have the genius of a Robert E. Lee!”

Oh brother. 

Gen. Lee hurled Gen. George Pickett’s division right in front of General George Meade’s headquarters.  There’s a story that Dwight Eisenhower, who admired Lee’s generalship, took Field Marshall Montgomery to visit the Gettysburg battlefield. They looked at the site of Pickett’s charge and were baffled.  Eisenhower said, “The man [Lee] must have got so mad that he wanted to hit that guy [Meade] with a brick.”

It has been estimated that 10,500 Confederates made the charge and 5,674 – roughly 54 percent – fell dead or wounded.  Yes, a few hundred did break the Union line but only briefly.

Altogether at Gettysburg as many as 28,000 Confederates were killed, wounded, captured, or missing: more than a third of Lee’s whole army.  Meade, however, was traumatized by his own losses – about 23,000 – and he failed to pursue Lee on his withdrawal south, and trap him up against a flooded Potomac.  Meade could have wiped Lee out.  President Lincoln, for good reason, was furious.  The war, and increasing butchery, continued.

--Thursday, speaking at the Ronald Reagan Presidential Library, former New Jersey Governor Chris Christie, without ever mentioning Donald Trump by name, gave a stinging critique of the Republican Party, saying it must focus on the truth and not conspiracy theories and false claims that the 2020 election was stolen.

“Pretending we won when we lost is a waste of time, and energy and credibility,” Christie said.

The man who ran unsuccessfully against Trump in 2016 and has said he hasn’t ruled out running again in 2024 even if the former president enters the race, said Republicans must “stop wallowing in the past” and “free ourselves from the quicksand of endless grievances.”

Citing the struggle against the far-right John Birch Society by Reagan and the conservative editor and author William F. Buckley in the 1960s, Christie said the GOP must discredit extremists and conspiracy theories to offer credible alternatives to Democrats and win midterm elections in 2022 and the White House in 2024.

“We need to renounce the conspiracy theorists and the truth deniers – the ones who know better, and the ones who are just plain nuts,” Christie said, singling out supporters of QAnon.

The former governor also decried what he described as the politics of getting support by saying “a bunch of things that aren’t true” and “bending to the will of any one person rather than advocating ideas for the good of all people” – a veiled reference to Trump.

“No man, no woman, no matter what office they’ve held or wealth they’ve acquired, are worthy of blind faith or obedience,” Christie said.

It’s way too early in talking of 2024, but Christie will be a player.

--Congratulations to Texas Gov. Greg Abbott, who goes in my December file for yearend hardware with one of the dumbest statements I’ve ever heard, that he intends to “eliminate rape” in his state, amid criticism that a new law banning abortions at six weeks does not include an exception for victims of rape and incest.

Asked on Tuesday why the state would force a victim of rape or incest to carry a pregnancy to term, Abbott said:

“Rape is a crime, and Texas will work tirelessly to make sure we eliminate all rapists from the streets of Texas by aggressively going out and arresting them and prosecuting them and getting them off the streets. So goal No. 1 in the state of Texas is to eliminate rape so that no woman, no person, will be a victim of rape,” he said.

Abbott added state-supported organizations would “provide support for those who are victims of rape,” which means his future efforts to “eliminate rape” failed and that the victim still must have the baby.  Or as former U.S. Housing and Urban Development Secretary Julian Castro tweeted, Abbott is “lying.”

“Many women don’t even know they’re pregnant by the 6-week mark when abortion is outlawed in this bill,” he wrote.  “Rape and incest victims would be forced to carry a pregnancy to term at that point – or face civil lawsuits for getting an abortion.”

So according to the state’s Department of Public Safety, in 2019, 14,656 rapes were reported in Texas.  About 2,200 were arrested for the crime that same year.

Separately, the Justice Department on Thursday sued Texas over the state law that bans most abortions, arguing that it was enacted “in open defiance of the Constitution.”

The lawsuit, filed in federal court in Texas, asks a federal judge to declare that the law is invalid, “to enjoin its enforcement, and to protect the rights that Texas has violated.”

The Justice Department argues the law unlawfully infringes on the constitutional rights of women and violates the Supremacy Clause of the Constitution, which says federal law supersedes state law.  Federal officials are also concerned other states could enact similar laws that would “deprive their citizens of their constitutional rights,” Attorney General Merrick Garland said.

The Texas law, known as SB8, prohibits abortions once medical professionals can detect cardiac activity – usually around six weeks, before some women know they’re pregnant.  Courts have blocked other states from imposing similar restrictions, but Texas’ law differs significantly because it leaves enforcement to private citizens through civil lawsuits instead of criminal prosecutors.

--Editorial / Winston-Salem Journal…call it Cawthorn, Part II

“Rep. Madison Cawthorn, R-N.C.-11, took center stage last week – and made our state look bad.

“This is not the kind of national attention we appreciate.

“Cawthorn is a freshman legislator whose inexperience shows.  He’s revealed a penchant for getting historical facts wrong, despite presenting himself as a history buff.  He’s claimed honors he never received and accomplishments he never achieved.  Over 160 students who attended a Christian college with him signed a letter last October claiming that he was a little too handsy with women (not necessarily a problem for Trump fans).  During the flooding that crippled Haywood County a couple of weeks ago, rather than gather resources to help, he was busy tweeting about finishing ‘the wall.’ Shades of Cancun.

“But what drew attention last week was a speech he gave at a Macon County GOP gathering, where he repeated that the 2020 election was rigged and said, ‘If our election systems continue to be rigged, continue to be stolen, it’s going to lead to one place and that’s bloodshed.’

“He added: ‘As much as I am willing to defend our liberty at all costs, there’s nothing that I would dread doing more than having to pick up arms against a fellow American.’

“When asked when he was going to ‘call us to Washington again’ – what? – he said, ‘That – we are actively working on that one.’

“He said a lot more, but this is enough crazy for one editorial.

“It’s also enough, we hope, for the FBI and DOJ to sit up and pay attention….

“But when asked about his statements, a Cawthorn spokesperson said that he was ‘CLEARLY advocating for violence not to occur over election integrity questions.’

“To which we say, come on.  You don’t use that kind of language about something you don’t intend to do.  It’s highly irresponsible and dangerous.

“Cawthorn’s bluster might still be dismissed if it were occurring in a vacuum. But following the Jan. 6 insurrection, we’ve got to take invocations to violence seriously.  Especially since they’re showing up in other places….

“For years we listened to conservatives complain about ‘unelected judges’ and ‘unelected bureaucrats.’  Now, the ‘elected’ part doesn’t seem to matter.  We’re just a few right-wing podcasts and a week away from Republicans declaring that every sitting Democrat is illegitimate.

“Think we’re kidding?

“In the same speech in which Cawthorn claimed that Trump won, he said that Dan Forest defeated Gov. Roy Cooper in 2020.

“This, despite election results that showed Cooper, a popular incumbent, in a state with a majority of registered Democrats, with a 250,000-vote margin of victory.

“Maybe Cawthorn should tell us which Democrat(s) did win legitimately.

“We know the rebuttals: Yes, both Hillary Clinton and Georgia’s Stacey Abrams expressed sour grapes over the elections they lost. But neither encouraged mobs to overthrow the results.  Abrams just went out and registered hundreds of thousands of new voters.

“And, yes, Black Lives Matter and antifa, shorthand for anti-fascists, have been involved in incidents of violence – though BLM violence, especially, has been greatly exaggerated for propaganda purposes.

“All political violence is deplorable.  But neither BLM nor antifa has tried to violently overthrow an election or urged their followers to prepare to do so.

“For that, you apparently need a steady diet of conservative misinformation and a Big Lie.

“We know there are multitudes of more sober Republicans who regret to see this trend in their own party. We’d like to think they’ll speak up, letting it be known that these loose cannons don’t represent them – and that ‘mob rule’ doesn’t mean the voters whose candidate won the election, but those who would take the law into their own hands to overturn the election.  And that no disappointing election outcome justifies violence, no matter how ‘patriotic’ the perpetrator.

“We’re waiting…”

Don’t hold your breath.

--Editorial / Washington Post

“House Minority Leader Kevin McCarthy (R-Calif.) on Tuesday warned telecommunications and social media companies not to cooperate with the House select committee investigating the Jan. 6 Capitol invasion.  He claimed that they might break federal law if they comply with committee requests; he threatened that the companies might lose their ability to operate in the United States; and he vowed that a future ‘Republican majority will not forget’ what they do.

“What a pitiful path Mr. McCarthy has traveled, from initially placing at least some blame for Jan. 6 on former president Donald Trump to actively undermining congressional inquiries into the riot.  His descent reflects the GOP’s broader trend toward embracing Jan. 6 trutherism: minimizing, forgiving or even valorizing a deadly attack on the nation’s seat of government.  In an accelerating misinformation campaign, congressional Republicans have claimed that fake Trump protesters did the rioting, that the mob was not armed, that insurrectionists behaved like normal tourists, that those who were arrested are ‘political prisoners’ and that House Speaker Nancy Pelosi (D-Calif.) was really responsible.  Republicans have punished and sidelined the few who have refused to play along, such as Rep. Liz Cheney (R-Wyo.).  ‘I feel like I went to hell and back to protect them and the people in this room, but too many are now telling me that hell doesn’t exist or that hell actually wasn’t that bad,’ D.C. police officer Michael Fanone testified in the select committee’s first hearing.

“Mr. McCarthy’s Tuesday statement came after the committee asked 35 telecommunications and social media companies to preserve records – ‘metadata, subscriber information, technical usage information, and content of communications for the listed individuals.’  CNN reports that some lawmakers and members of Mr. Trump’s circle are on the list.  The committee has not yet asked the companies to turn over any records, just to hold on to them….

“The committee has subpoena power, but that would be useless if companies destroyed records prematurely.  The time-limited investigation – as soon as Republicans control the House, they will end it – would also be much easier if the companies cooperated voluntarily, rather than inviting lengthy court proceedings as the committee sought to enforce its subpoenas.

“This would be reasonable: The Jan. 6 probe is not only a legitimate congressional investigation, it is among the most urgent in recent times.  Though Mr. McCarthy’s office did not clarify to us what law he thinks the companies would violate if they turned over communications information, he seems to be referring to the Electronic Communications Privacy Act.  But that statue appears to limit only disclosure to executive agencies, not to Congress, for many of the types of information the committee has asked the companies to preserve.

“Mr. McCarthy should be defending Congress’ prerogative to investigate, not trying to curb it with threats and bullying.  His fevered reaction can only prompt questions about what he and members of the House GOP caucus seek to hide.”

There are growing concerns among law enforcement officials and the Department of Homeland Security over the upcoming Sept. 18 protest/rally at the Capitol, “Justice for J6,” organized by far-right groups which aims to support insurrectionists charged in the Jan. 6 riot.

--Meanwhile, according to an Emerson College survey released last weekend, 47 percent of voters would favor Donald Trump in a hypothetical re-run of lats year’s election.  Just 46 percent of those polled backed Biden, with 6 percent saying they would seek out another candidate. 

This doesn’t surprise me in the least.  Biden’s low poll ratings are well-deserved. 

--On to something less provocative.  We note the passing of legendary weatherman Willard Scott, a true original and sunny presence on television for decades.  Scott died Saturday at 87.

Scott was best known for his role on NBC’s “Today Show.”  He was the main weatherman for the morning program until 1996, when he went into semiretirement and was succeeded by Al Roker.

Scott began appearing as a weatherman on WRC-TV in Washington in 1970, and got the call to “Today” in 1980.

In 1983, a viewer asked Scott to wish her mother a happy 100th birthday.  That led to Scott making regular shoutouts to celebrating centenarians, and that was important.  Just something nice every morning. 

Nothing wrong with ‘nice,’ in a world filled with hate and intolerance. 

--Boy this must have been a bit unsettling…

“Alarms were triggered on board the International Space Station after the crew reported smoke and the smell of burning plastic.”

It turns out the incident happened in the Russian-built module which provides living quarters, according to Russian media.

The ageing space station has suffered a number of failures over the years, owing to outdated hardware and failing systems.

These include air leaks, misfiring engines (which happened very recently) and cracks.

So the burning plastic smell was due to the recharging of the station’s batteries, Russia’s space agency reported, but everything was fine.

Count me out if they are looking for volunteers to go up the next few years, before they call it a day on this “giant accident waiting to happen.”

I’ll take my chances going to Mars, and just hang out there for a while. 

--Daniel Henninger / Wall Street Journal

“After terrorists took control of four airliners on Sept. 11, 2001 – destroying the World Trade Center’s twin towers, flying into the Pentagon and crashing into a Pennsylvania field – it became commonplace to say, ‘9/11 changed everything.’

“It was difficult not to believe this was true. The shock of that day was deep.  Nothing like this – nearly 3,000 Americans murdered in a few hours – had happened on U.S. soil despite two world wars. America was immune from militarized invasions.  Now we weren’t.

"9/11 began at 8:45 a.m. when an airliner hit the north tower.  Before the second one fell, it was on TV screens everywhere. The unfathomable horror, and its political implications – America would counterattack – was watched by the whole world in real time.  Nothing like this had ever happened….

“For the longest time, it felt a if the attack was all one could think about.  This column, conceived earlier in the year as “Wonder Land,” was scheduled to appear that October.  It was clear the next morning it had to start Friday, and for months it seemed as if the only thing I and others wrote about was this event, by now reduced to ‘9/11.’

“The early days of intense national solidary, such as the no-apologies display of American flags, were striking in part because all that year Republicans and Democrats were at each other’s throats over the contested 2000 election between George W. Bush and Al Gore Jr.  In December, the U.S. Supreme Court decided who won Florida because the political system could not.

“Bush v. Gore is the event that put in motion the great and inexorable pushing apart of American political life.  9/11 couldn’t stop this tectonic shift.

“President Bush had almost universal support for his bombings of al-Qaeda’s training camps in Taliban-run Afghanistan.  It didn’t last.  In a Sept. 20 address to Congress, Mr. Bush announced a ‘war on terror,’ and in time with the implementation of those policies – military tribunals for terrorist prisoners, the detention facility at Guantanamo – the 9/11 consensus began to break, despite continuing acts of Islamic terror on the U.S. mainland. The war on terror did in fact stop many attacks and plots.

“Notwithstanding his broad initial support, President Bush was loathed the next seven years by Democrats, the media and a mocking entertainment complex….

“But there was one positive consequence.  Every single day, even in winter, people came to stand outside the fence and stare into the hole. They came from the U.S. and around the world.  There wasn’t anything touristy about their presence.  It seemed more like the act of a doubting Thomas, wanting personal proof of the unimaginable. When News Corp. moved our offices to midtown, I was glad to go.  I’d seen enough of the hole.

“Today if you go back there, it’s a handsome park, with a 9/11 Memorial whose walls are etched with names – like those on the Vietnam Veterans Memorial in Washington or the carved names on monuments all over the U.S. to those who died in other wars.  One stands and remembers.  Somehow, it always feels like they’ve made another beginning possible.”

---

Gold $1789
Oil   $69.60

Returns for the week 9/6-9/10

Dow Jones   -2.2%  [34607]
S&P 500  -1.7%  [4458]
S&P MidCap  -2.7%
Russell 2000  -2.8%
Nasdaq  -1.6%  [15115]

Returns for the period 1/1/21-9/10/21

Dow Jones  +13.1%
S&P 500  +18.7%
S&P MidCap  +16.5%
Russell 2000  +12.8%
Nasdaq  +17.3%

Bulls 52.6
Bears 21.2…prior week, 52.1 / 21.3 split

Hang in there.  We must never forget 9/11.

Brian Trumbore

---