Week in Review

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Week in Review

10/09/2021

For the week 10/4-10/8

[Posted 9:00 PM ET]

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Edition 1,173

A Quinnipiac University national poll of adults released Wednesday had more bad news for President Joe Biden and the Democrats, with just 38 percent approving of his job performance, 53 percent disapproving, easily the lowest he’s received since taking office.  Three weeks ago, the Quinnipiac poll had Biden with a 42-50 split.

Independents disapprove of the job Biden is doing by a 60-32 margin.

On specific issues, Americans were asked about his handling of….

--response to the coronavirus: 48 percent approve, 50 percent disapprove;
--the economy: 39 percent approve, 55 percent disapprove;
--job as Commander in Chief of the military: 37 percent approve, 58 percent disapprove;
--foreign policy: 34 percent approve, 58 percent disapprove;
--immigration: 25 percent approve, 67 percent disapprove.

As for his personal traits….

--Only 44 percent say Biden is honest, while 50 percent say no.

More than half of Americans, 55-42 percent, say the Biden administration is not competent in running the government.

To say the least, Joe Biden needs wins, specifically passage of the infrastructure bill, and at least some pieces of the rest of his legislative agenda.

But first, the administration, Congress, and the financial markets had to deal with the debt ceiling and the Senate (with the House expected to follow) kicked the can down the road, as it is wont to do, with Senate Minority Leader Mitch McConnell backing down from his blockade on raising the debt ceiling, offering a temporary reprieve amid mounting political pressure to avoid being blamed for a fiscal calamity.

But the final vote was just 50 to 48, with Democrats unanimously in support and Republicans united in opposition, with the legislation raising the statutory debt limit by $480 billion, an amount the Treasury Department estimates would be enough to allow the government to continue borrowing through at least Dec. 3.

The current debt limit was set at $28.4 trillion on Aug. 1, and the Treasury Department has been using so-called extraordinary measures to delay a breach of the borrowing cap since then.  But Treasury then estimated it would exhaust all such ability to pay the bills on Oct. 18 without an extension.

As in after Thanksgiving, there will just be days to come up with another stopgap measure and this time Republicans are expected to be far less apt to compromise. The same day, Friday, Dec. 3, is also the date government funding is set to lapse if Congress does not approve new spending legislation.

McConnell is still expected to insist that the next increase in December be achieved through the time-consuming “budget reconciliation” process, which would allow for passage without any votes from his party.  Doing so could bolster Republican candidates in the 2022 congressional elections as they try to burnish their credentials as fiscal conservatives – even though most of them previously supported an array of measures passed during Donald Trump’s administration that jacked up the budget deficit.

Democrats have adamantly rejected using the reconciliation process for the debt ceiling, although they have used it to pass some of Biden’s other priorities.

Biden Agenda, cont’d….

--The aforementioned Quinnipiac survey has Americans by a 62-34 margin saying they support a roughly $1 trillion spending bill to improve the nation’s roads, bridges, broadband, and other infrastructure projects.  This compares to 65-28 percent support in August.

And by a 57-40 margin, Americans support a $3.5 trillion spending bill on social programs such as child care, education, family, tax breaks, and expanding Medicare for seniors, compared to 62-32 percent support in August.  Democrats support the bill 92-5 percent, independents are split with 50 percent supporting it and 48 percent opposing it, and Republicans oppose it 68-28 percent.

Speaking of the social-spending bill, congressional Democrats have been discussing how to pare down the original $3.5 trillion price tag, though lawmakers have yet to coalesce around a list of priorities, or even begin negotiations with both moderates and progressives present.  At the same time, the key remains centrist Democratic senators Joe Manchin and Kyrsten Sinema.

Senate Majority Leader Chuck Schumer has said he hopes a deal can be reached by the end of October, though this is doubtful.  Democrats had agreed on a $3.5 trillion outline in the budget resolution passed in August, but Manchin has said he can only support $1.5 trillion in a final bill.  President Biden has floated a $2 trillion figure.

--Moderate House Democrats were furious with Speaker Nancy Pelosi for not honoring her commitment to them that the infrastructure bill would come up for a vote by Sept. 27.  She then allowed the deadline to slip to Thursday (Sept. 30) as progressives dug in their heels and vowed to vote against the legislation if it hit the House floor before the social spending bill.

Rep. Stephanie Murphy (D-Fla.) said in a statement: “This promise was enshrined in a House resolution that every Democrat supported.  This written commitment was the only reason there were enough votes in the House to even start the reconciliation process – that is, to begin the process of writing the Build Back Better Act.”

Murphy concluded by noting that she will support a social spending bill that “is as bold as the votes will bear, that is fiscally disciplined, and that prioritizes measures to combat climate change.  There is no – zero – linkage between these two bills in my mind… No member of Congress, and certainly no member of my own party, has the slightest leverage over my vote.  I will do what I believe is in the best interest of my constituents and my country, and what comports with my conscience.”

Another moderate, Rep. Josh Gottheimer (D-N.J.), said Pelosi had “breached her firm, public commitment to Members of Congress and the American people to hold a vote and to pass the once-in-a-century bipartisan infrastructure bill.”

--A survey from the University of Virginia’s Center for Politics found that more than half of all voters who backed Donald Trump in last year’s presidential election say they “somewhat agree” with the proposition that red states should break away from the U.S., while 41 percent of Biden voters “somewhat agree” with the idea of blue states doing the same thing.

“The divide between Trump and Biden voters is deep, wide, and dangerous,” Center for Politics Director Larry Sabato said in a statement. “The scope is unprecedented, and it will not easily be fixed.”

For example, at least 80 percent of Trump and Biden voters somewhat agree that elected officials from opposing parties represent “a clear and present danger to American democracy” (80 percent of Biden voters, 84 percent of Trump voters).

In addition, at least three-quarters of Trump and Biden voters somewhat agree that Americans who “strongly support” the opposing party are “a clear and present danger to the American way of life” (75 percent of Biden voters, 78 percent of Trump voters).

And more than seven in 10 Biden and Trump voters somewhat agree that “some media sources on the extreme left/right have become so untruthful that they should be censored to stop the spreading of dangerous lies” (78 percent of Biden voters, 73 percent of Trump voters).

At least there was one piece of good news.  Approximately 80 percent of Biden and Trump voters viewed democracy as preferable to other forms of government.

--Scott Jennings / USA TODAY [Jennings a longtime Republican adviser]

“President Joe Biden started a tweet Sunday with: ‘I give you my word as a Biden’

“He was making a lofty promise about his signature legislation: that no one making less than $400,000 a year would see a tax increase.

“I laughed out loud at Biden’s tweet, because A) to what other name would he attach to his word? And B) Biden’s word has never been worth less.

“Furthermore, the promise was laughably false, disproven by the nonpartisan Joint Committee on Taxation, which found taxpayers in every income bracket – yes, every single one – would see a tax increase by 2023.  Read it for yourself.

“And it followed a series of falsehoods told by this president that makes Biden seem like everything he railed against in the 2020 campaign.

“ ‘The words of a president matter,’ Biden used to say.  With a straight face….

“ ‘There is truth and there are lies,’ Biden said in his inaugural address.  ‘Each of us has a duty and responsibility, as citizens, as Americans, and especially as leaders – leaders who have pledged to honor our Constitution and protect our nation – to defend the truth and to defeat the lies.’

“But less than a year in, what’s become clear is that Biden’s ‘word’ means virtually nothing, and that he lies with the same ease as his predecessor….

“Biden only looked honest when posted up against Trump.  He only looked reasonable to Democrats when compared to Bernie Sanders, for that matter.  And we are finding out every day the consequences of judging someone by who they aren’t rather than who they are.

“Remember the stories about his son’s laptop that Biden asserted was Russian disinformation?  Politico, citing a new book, said recently that ‘some of the purported HUNTER BIDEN laptop material is genuine.’

“What about the southern border?  Biden once brushed off our illegal immigration crisis as a seasonal influx, intimating that once the weather turned hot the migrant surge would abate.  Nope.

“Or how about Biden’s claim that proposed voting laws in Georgia and Texas amounted to ‘Jim Crow in the 21st century’?  These mainstream election security efforts are nothing like America’s dark history of voter suppression, and the president knows it.  A large majority of Americans (Black voters included) support voter identification and other measures that make it harder to cheat.

“Biden claimed ‘America is Back’ as a reassurance to allies and a warning to our adversaries.  Then he turned around and greenlighted a long-sought Russian pipeline that infuriated our Ukrainian friends, before angering the French so badly that America’s oldest ally pulled its ambassador from Washington.

“Whether Biden is claiming that trillions of dollars in new spending will cost zero dollars, that he was arrested in South Africa or that ‘no serious economist’ is worried about inflation, he has no problem stretching, bending or outright obliterating the truth.

“When you point this out to Democrats, you get a similar refrain: But Trump lied all the time!

“No doubt.  But is that the standard you want to set for your guy?  That he can lie just slightly less than Trump and be successful in your eyes?....

“An Axios/Ipsos survey released Tuesday reported that ‘45%...say they trust Biden a great deal or a fair amount to provide them with accurate information about the virus and pandemic, while 53% said they have little or no trust in him.’ In January, the scores were reversed, with Biden judged to be honest by a 58% to 42% margin.

“This is what destroys presidencies – when people decide you are a liar, it is hard to regain that trust.  And Biden has lied so frequently and so obviously that he’s in a true political danger zone.”

--The Supreme Court embarked on what is likely to be a highly controversial term this week.  Before it ends next summer, the justices will have weighed in on three major public policy disputes – guns, religious rights and possibly race, if the court takes up a request to once again review affirmative action in university admissions.  And the most divisive issue of them all – abortion.

And Justice Stephen Breyer, 83, nominated by President Bill Clinton, faces increasing pressure to retire while another Democrat is in the White House and the party has a tenuous hold on the Senate.

Wall Street and the Economy

Economically, the world is in a state of chaos.  The supply chain is a mess, labor shortages (largely due to Covid) are widespread, there is a severe lack of workers involved in transport and distribution with huge backlogs of goods at the ports, and few drivers to deliver them once the crates are offloaded, inflation is persisting, energy costs are spiking, profit margins are shrinking, and there is sweeping political discontent.

Otherwise, come on in, the water’s fine…just put your mask on.

Editorial / The Economist

“For a decade after the financial crisis the world economy’s problem was a lack of spending. Worried households paid down their debts, governments imposed austerity and wary firms held back investment, especially in physical capacity, while hiring from a seemingly infinite pool of workers.  Now spending has come roaring back, as governments have stimulated the economy and consumers let rip.  The surge in demand is so powerful that supply is struggling to keep up.  Lorry drivers are getting signing bonuses, an armada of container ships is anchored off California waiting for ports to clear and energy prices are spiraling upwards.  As rising inflation spooks investors, the gluts of the 2010s have given way to a shortage economy.

“The immediate cause is Covid-19.  Some $10.4tr of global stimulus has unleashed a furious but lopsided rebound in which consumers are spending more on goods than normal, stretching global supply chains that have been starved of investment.  Demand for electronic goods has boomed during the pandemic but a shortage of the microchips inside them has struck industrial production in some exporting economies, such as Taiwan. The spread of the Delta variant has shut down clothing factories in parts of Asia. In the rich world migration is down, stimulus has filled bank accounts and not enough workers fancy shifting from out-of-favor jobs like selling sandwiches in cities to in-demand ones such as warehousing.  From Brooklyn to Brisbane, employers are in a mad scramble for extra hands.

“Yet the shortage economy is also the product of two deeper forces. First, decarbonization.  The switch from coal to renewable energy has left Europe, and especially Britain, vulnerable to a natural-gas supply panic that at one point this week had sent spot prices up by over 60%.  A rising carbon price in the European Union’s emissions-trading scheme has made it hard to switch to other dirty forms of energy.  Swathes of China have faced power cuts as some of its provinces scramble to meet strict environmental targets.  High prices for shipping and tech components are now triggering increased capital expenditure to expand capacity.  But when the world is trying to wean itself off dirty forms of energy, the incentive to make long-lived investments in the fossil-fuel industry is weak.

“The second force is protectionism…

“This week Joe Biden’s administration confirmed that it would keep Donald Trump’s tariffs on China, which average 19%, promising only that firms could apply for exemptions (good luck battling the federal bureaucracy).  Around the world, economic nationalism is contributing to the shortage economy. Britain’s lack of lorry drivers has been exacerbated by Brexit.  India has a coal shortage in part because of a misguided attempt to cut imports of fuel….

“All of this might seem eerily reminiscent of the 1970s, when many places faced petrol-pump queues, double-digit price rises and sluggish growth… Today (however) the Federal Reserve is debating how to forecast inflation, (though) there is a consensus that central banks have the power and the duty to keep it in check.

“For now, out-of-control inflation seems unlikely.  Energy prices should ease after the winter.  In the next year the spread of vaccines and new treatments for Covid-19 should reduce disruptions.  Consumers may spend more on services. Fiscal stimulus will wind down in 2022: Mr. Biden is struggling to get his jumbo spending bills through Congress and Britain plans to raise taxes. The risk of a housing bust in China means that demand could even fall, restoring the sluggish conditions of the 2010s.  And an investment boost in some industries will eventually translate into more capacity and higher productivity.

“But make no mistake, the deeper forces behind the shortage economy are not going away and politicians could easily end up with dangerously wrong-headed policies….

“Disruptions often lead people to question economic orthodoxies. The trauma of the 1970s led to a welcome rejection of big government and crude Keynesianism. The risk now is that strains in the economy lead to a repudiation of decarbonization and globalization, with devastating long-term consequences.  That is the real threat posed by the shortage economy.”

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As for the economic data on the week, the ISM services PMI for September was a robust 61.9 (50 the dividing line between growth and contraction), while August factory orders rose a solid 1.2%.

Weekly jobless claims fell to 326,000, down 38,000 from the prior week.

Which brought us to today’s jobs report for September, which was a dud…just 194,000 nonfarm payroll jobs added, the smallest monthly total of the year and far less than the consensus figure of 475,000, with labor supply shortages and Covid-related impacts continuing to exert pressure on the recovery.  It’s also important to note that the surveys compiled for these monthly reports are conducted mid-month, and in early- to mid-September, the Delta variant was raging across the country.  The same dynamic won’t be in play with October’s report nearly as much as cases have come down considerably since then, at least that’s my spin on it.

And at least the jobs gains for July and August were revised upward…July’s already-strong gains up another 38,000 to 1.0913 million, while August’s originally putrid number of 235,000 was revised up to 366,000.

The unemployment rate for September did fall, unexpectedly, to 4.8% from 5.2% prior, due in part to people leaving the labor force, not good, while average hourly earnings were up a strong 0.6%, 4.6% year-over-year as companies use wage increases to combat the persistent labor shortages.  U6, the underemployment rate, declined to 8.5%, a pandemic-era low.

Leisure and hospitality again led the job creation, adding 74,000, though this is disappointing.  It should be much higher given the destruction in the sector.

Local government education jobs fell by 144,000, which seemed like an anomaly, and the Labor Department wrote in its report: “Most back-to-school hiring typically occurs in September.  Hiring this September was lower than usual, resulting in a decline after seasonal adjustment.  Recent employment changes are challenging to interpret, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and layoff patterns.”

As for the impact of the weak report on the Federal Reserve’s expected move at its Nov. 2-3 policy meeting to begin tapering its monthly bond buying program, with wages rising solidly, despite the meager payroll gains, I would expect the Fed to begin scaling back as they look to raise interest rates by May or June of next year.

Lastly, not for nothing but the Atlanta Fed’s GDPNow barometer for third-quarter growth is down to just 1.3%!  Granted, the Street’s forecasts for Q3 are all over the board, but the Atlanta Fed number has been dropping like a rock.

Europe and Asia

IHS Markit released the final Eurozone composite PMI for September, 56.2 vs. 59.0 in August. The final service sector reading was 56.4, also vs. 59.0 the prior month.  Shortages of inputs impeded both manufacturing and service sector output, while inflationary trends moved higher.

Country figures for services were also down, but still solid.

Germany 56.2, France 56.2, Italy 55.5, Spain 56.9, Ireland 63.7.

The UK reported 55.4.

Chris Williamson / IHS Markit

“The current economic situation in the eurozone is an unwelcome mix of rising price pressures but slower growth.  Both are linked to supply shortages, especially in manufacturing, which has seen a steeper fall in output growth than services.

“With supply shortages likely to continue to subdue manufacturing well into 2022, the economy has therefore become increasingly dependent on the service sector to sustain a solid recovery path.  However, the service sector is also reporting a marked cooling of demand growth which can be less easily explained by shortages, and is in part linked to customers being deterred by concerns over the persistence of the pandemic and by higher prices, as well as some moderation of spending after the initial reopening of the economy.

“Although for now the overall rate of expansion remains relatively solid by historical standards, the economy enters the final quarter of the year on a slowing growth trajectory.  A drop in business confidence to the lowest since February adds further downside risks to the outlook.”

Separately, Eurostat reported the volume of retail trade in the euro area rose 0.3% in August over July, unchanged year-over-year.

But industrial producer prices rose 1.1% in August over July for the EA19, up a whopping 13.4% Y/Y.

--The European Commission has provided assurances to Ireland that it will stick faithfully to proposed new global corporate tax rules and not seek to secure a higher rate among member states, Finance Minister Paschal Donohue said on Thursday. Ireland dropped its opposition to an overhaul of global corporate tax rules, agreeing to give up its prized 12.5% rate for large multinationals in a major boost to efforts to impose a minimum global rate.  Ireland is keeping its 12.5% rate on small- and medium-sized businesses.

The global deal on corporate tax reform sets a minimum rate of 15 percent for large companies, which is expected to be implemented in 2023.  Ireland will retain its 12.5 percent rate in the interim.

Today, 136 countries signed on to the deal, but many criticize it for having no teeth.  On the other hand, the Paris-based Organization for Economic Cooperation and Development (OECD) said the minimum rate would see countries collect around $150 billion in new revenues annually while taxing rights on more than $125 billion of profit would be shifted to countries where big multinationals earn their income.

Brexit: British Prime Minister Boris Johnson addressed his Conservative party conference on Wednesday, saying he was taking the British economy in a new direction that has long been overdue.  No more uncontrolled immigration.

“The answer is to control immigration, to allow people of talent to come to this country, but not to use immigration as an excuse for failure to invest in people, skills and in the equipment or machinery they need to do their jobs.”

In a series of interviews prior to the conference, Johnson rejected calls from business leaders to relax restrictions on immigration imposed after Brexit in response to severe difficulties caused by labor shortages.

A shortage of lorry drivers has left petrol stations in parts of England empty and farmers on Tuesday (as I wrote last time could be the case) began culling hundreds of healthy pigs because of the unavailability of drivers and slaughterhouse workers.

Picture the farmers, culling healthy animals without selling them for meat, a total waste of food, which a National Farmers Union chief, Tom Bradshaw, said “has never happened before,” in comments to the London Times.

“It’s absolutely needless, and we have been highlighting this issue to government for many months; the largest processors have been pushing on the door to try and get a migratory solution,” said Bradshaw.

Boris Johnson said it was not his job to fix all the problems businesses face, and said he was not worried about rising energy prices and labor shortages.

Editorial / Irish Times

“Central to UK Conservative and Brexiteer criticism of the European Union over the years was the latter’s attempts to raise social standards, wages and conditions. Far better, the British public were told, to let the market dictate such things, to unshackle business from European red tape, to free Britain to thrive.  And, by implication, to pay lower wages.

“Today the Tory Party, the ‘friend of business,’ is singing from a different hymn sheet. British Prime Minister Boris Johnson casts himself as a revolutionary, bolder than all his predecessors.  In a speech notably short of policy, he told the party’s conference in Manchester yesterday he is determined that ‘this reforming government, this can-do government’ will tackle the long-term structural weaknesses in the UK economy, which he blamed on industries such as haulage for not properly investing in better wages or conditions.

“ ‘We are not going to the same old broken model with low wages, low growth, low skills and low productivity, all of it enabled and assisted by uncontrolled immigration,’ he told delegates.  ‘Yes, it will take time, and sometimes it will be difficult, but that is the change that people voted for in 2016.’

“Brexit and its unspoken justification were the subtext – its benefits were just around the corner.  With patience all would be well, despite the unfortunate fallout of labor shortages, higher taxes and benefit cuts.  There would be pain, but as he said on Tuesday: ‘It’s not the job of government to come in and try and fix every problem in business and industry.’

“When it came to the unfinished Brexit business – the implementation of the Northern Ireland protocol – the conference rhetoric was as belligerent as ever.  Chief negotiator David Frost warned of a ‘robust’ response, including the invoking of article 16 to suspend parts of the protocol, if the EU does not show itself sufficiently flexible in the talks expected to resume shortly.  EU officials are understood to be preparing retaliation in the form of tariffs or other barriers to trade flow between the UK and the union should talks fail.

“Frost also launched a new, and very dubious line of attack, complaining that the strong increase in North-South and South-North trade as a result of controls on the Irish Sea was ‘weakening the links’ between the North and Britain.

“Some unionists appear to believe that the well-predicted changes in the patterns of trading on the island post-Brexit will lead to a greater long-term dependency of the Northern economy on the Republic and the EU. That reality, they fear, may feed arguments for unity.

“But Northern Irish business-owners of all persuasions, benefiting as they do from the new cross-Border trade, will not thank Frost or the unionist leaders should they attempt to curtail such trade.”

I said back in June 2016, following the referendum on Brexit, that it was pure idiocy to do what the Brits had done, by an ever-so-slim margin (51.9% Leave the EU, 48.1% Remain).  The nation has paid a heavy price.

The EU’s chief negotiator during the entire process, Michel Barnier, has written a book and made some of the following comments this week on Brexit overall.

“Brexit is lose-lose.  But when you look at the proportion of the trade relations, clearly we export around 8 percent of our goods to the UK.  They export around 47 percent to the EU.  So the proportion of suffering is different, maybe because of that.  We face the same constraints. We have rebuilt controls and non-tariff barriers.  It’s easier to assume and take on board the consequences when you are 26, rather than alone,” Barnier said.

Turning to Asia…China’s private Caixin survey for the service sector in September came in at a vastly improved 53.4 vs. 46.7 in August, as they saw a fall in domestic Covid cases.

Japan’s service sector PMI for September was 47.8, an improvement from August’s 42.9, but nonetheless still contraction.

Household spending in August was worse than expected, -3.9%, and -3% Y/Y.

Street Bytes

--Stocks registered gains on the week, despite being roiled at times by inflation fears, rising bond yields, and looming earnings reports.  Kicking the can on the debt ceiling to December was the difference between an up or down week in the end.

--U.S. Treasury Yields

6-mo. 0.06%  2-yr. 0.31%  10-yr. 1.61%  30-yr. 2.16%

The yield on the 10-year hit 1.60% for the first time since June.  The high for the year is 1.77% set on March 30.  If we were to run up to 1.70% next week (I’m not saying we will), I can virtually guarantee equities will tank.

Across the pond, yields have also been rising.  The British 10-year at 1.16% has more than doubled since a weekly close of 0.52% on Aug. 20.

--President Biden said he has confidence in Fed Chairman Jerome Powell after Sen. Elizabeth Warren (D-mass.) on Tuesday escalated her criticism.

“Thus far, yes,” Biden said when asked by a reporter on a trip to Michigan if he had confidence in Powell.  “But I’m just catching up to some of these assertions,” he said, referring to senior officials’ trading activities that sparked Warren’s most recent disapproval.

Biden has yet to indicate if he has made a final decision on whether to offer Powell a second term when his current one expires in February.  His economic team supports keeping Powell.  But many progressives want to see someone else in the chair.

--Russian President Vladimir Putin said Moscow was ready to work on stabilizing the global energy market, which caused a reversal in natural gas prices Wednesday.

Putin is looking to take advantage of the growing crisis in Europe caused by a shortage of natural gas, a key source for producing electricity and heating homes on the continent, and the high prices have spilled over to the U.S., with nat gas trading at its highest in over a decade.

Putin said Russia was always a reliable supplier and would fulfill its obligations, saying, “We can reach another record of deliveries of our energy resources to Europe, including gas” this year.

But many experts and officials have said that Russia’s state-owned Gazprom has been slow to increase gas shipments.  Nat gas levels that had risen during the pandemic and the economic slowdown, are now below normal levels heading into winter.

For its part, at a forum in Russia on Thursday, the head of Gazprom Export said soaring gas prices could destabilize the region’s economy and cooperation between producers and consumers could help balance the market.

The company, and the Russian government, also warned that Europe’s preference for more flexible spot market dealings over the kind of long-term supply contracts favored by Gazprom, has left it vulnerable in terms of volumes and prices.

Gazprom’s traditional oil-linked contracts come with a price lag, staying at a higher price for a prolonged period of time after spot oil prices ease but also at a lower price in times of soaring prices.  Gazprom said it was meeting its obligations under long-term contracts, and supplying additional gas where there is the technical means to do so.

Here in the States, the average price of regular unleaded gasoline at the pump rose to an average of $3.20, a level not seen since October 2014, according to AAA.  That’s still well below the record high of $4.11 on July 17, 2008.

OPEC had decided in July to boost crude output by 400,000 barrels each month until at least April 2022, and then on Monday, OPEC+ (including Russia) decided to continue the increase rate established in July rather than further boosting the supply to meet the increased demand, sending the price on West Texas Intermediate to $79.50, which is basically where it finished on the week, the highest since Oct. 2014. 

New data from the Energy Information Administration shows gasoline demand rose 5% from last week, but oil and natural gas production were lower than pre-pandemic levels during the same quarter in 2019.

U.S. oil drilling and output have been ticking higher, though are still far from pre-pandemic levels.  The last time domestic crude prices were so high, there were roughly 1,100 more rigs drilling for oil than the 428 at work last week, according to Baker Hughes Inc.

It was back in 2014 that OPEC and its market allies launched a price war against U.S. shale drillers by turning on the taps and flooding the market with cheap crude.

--Whistle-blower Frances Haugen, a former Facebook employee, testified in a Senate hearing about her experience there and internal research she said showed the company prioritized profit while stoking division. Haugen had appeared on “60 Minutes” Sunday night, saying Facebook routinely made decisions that put business interests ahead of user safety.

“There were conflicts of interest between what was good for the public and what was good for Facebook,” she said.  “Facebook over and over again chose to optimize for its own interests like making more money.”

Haugen’s testimony to the Senate Commerce Subcommittee on Consumer Protection, and accompany statements by senators in the hearing, repeatedly questioned whether Facebook could be trusted.  “Facebook has not earned a right to just have blind trust in them,” said Haugen.

The testimony deepened the sense that Facebook was losing control of its own narrative after the Wall Street Journal reported last month that the company knew its Instagram product harmed teenage girls, but downplayed the risk.

The Journal based its reporting on documents leaked by Haugen, who was a product manager at Facebook who also studied at Harvard business school.

Senator Ed Markey (D-Mass.) said: “Here’s my message for Mark Zuckerberg: Your time of invading our privacy, promoting toxic content and preying on children and teens is over.”

Senators seemed fed up with Facebook, which has long been tagged with fanning political divisions, spreading dangerous misinformation about the pandemic, and aggressively monopolizing the social media marketplace.

Francis Haugen said: “The buck stops with Mark. There is no one currently holding Mark accountable but himself.”

Zuckerberg hit back at the testimony of Haugen, saying her claims the company puts profit over people’s safety are “just not true.”

In a blogpost, the Facebook founder and CEO addressed one of the most damaging statements in Haugen’s opening statement to senators, that Facebook puts “astronomical profits before people.”

“At the heart of these accusations is this idea that we prioritize profit over safety and wellbeing.  That’s just not true,” he said.

He added: “The argument that we deliberately push content that makes people angry for profit is deeply illogical.  We make money from ads, and advertisers consistently tell us they don’t want their ads next to harmful or angry content.”

Referring to evidence presented by Haugen and reporting in the Wall Street Journal, that Facebook failed to act on internal research showing that its Instagram app was damaging teenagers’ mental health, Zuckerberg said:

“Many of the claims don’t make any sense. If we wanted to ignore research, why would we create an industry-leading research program to understand these important issues in the first place?”

Responding to Haugen’s claims that Facebook’s attempts to limit harmful content were constantly hampered by a shortage of staff, he said: “If we didn’t care about fighting harmful content, then why would we employ so many more people dedicated to this than any other company in our space – even ones larger than us?  If we wanted to hide our results, why would we have established an industry-leading standard for transparency and reporting on what we’re doing?”

Zuckerberg said a change to Facebook’s News Feed algorithm in 2018 was implemented because it increased wellbeing. According to Haugen, internal Facebook research showed that the change to News Feed – a customized scroll of content that is a core part of Facebook users’ interaction with the platform – had amplified divisive content.

Zuckerberg said: “This change showed fewer viral videos and more content from friends and family – which we did knowing it would mean people spent less time on Facebook, but that research suggested it was the right thing for people’s wellbeing.  Is that something a company focused on profits over people would do?”

Facebook has delayed the rollout of new products in recent days, people familiar with the matter said.  Executives also have put a hold on some work on new and existing products while a team is involved in conducting “reputational reviews” to examine how Facebook may be criticized and to ensure products don’t adversely impact children.

Meanwhile, Facebook and its Instagram and WhatsApp platforms went offline for nearly six hours Monday.  The company said a cascade of mistakes made during maintenance on the network caused the outage.

The initial problem occurred in a network Facebook calls its “backbone,” which connects its data centers around the world.

During maintenance of the network, a command was issued to assess how much capacity was available. But the command backfired, disconnecting the network and blocking Facebook’s data centers from communicating, according to the company.  An audit tool designed to catch mistaken commands failed to detect the error.

Facebook then had a second outage today, this one for two hours, and the company blamed another faulty configuration change.

--A Quinnipiac University survey showed Americans by a 71-20 percent margin believe social media platforms like Facebook and Instagram are a bad thing for teenagers.

According to a new poll from The Pearson Institute and the Associated Press-NORC Center for Public Affairs Research, as we saw during the Senate hearing with Ms. Haugen, when discussing the power of a Facebook, it’s a bipartisan issue.  The survey found 79% of Republicans and 73% of Democrats said social media companies have a great deal or quite a bit of responsibility for misinformation.

--Tesla Inc. delivered a record number of vehicles in the third quarter, 241,300, up from 139,593 during the same period last year, exceeding the Street’s expectations.

The result, despite all the global supply chain issues, positions Tesla to easily achieve its full-year goal of increasing deliveries by more than 50% over last year’s total of nearly half a million vehicles.  The company has delivered roughly 627,000 vehicles the first nine months of the year.

Due to the supply chain problems, sales were upended in the third quarter industry-wide, with Toyota outselling General Motors in Q3, a rarity.

The continuing semiconductor shortage is likely to cost the global auto industry $210 billion in lost revenues this year, according to analysts.

Tesla delivered a combined 232,025 Model 3 sedans and Model Y compact sport-utility vehicles in the third quarter, up from 124,318 a year earlier. 

The company handed over 9,275 of its higher-end models: Model S sedans and Model X SUVs, less than last year’s Q3 total of 15,275.

Separately, CEO Elon Musk announced he was moving Tesla’s corporate headquarters to Austin, Texas, where a new factory for the Model Y and forthcoming Cybertruck is nearing completion, relocating from California after making the Golden State its home for 18 years.

Tesla was first based in San Carlos, California and then moved to Palo Alto in 2009, the year before its IPO.

Musk becomes the latest to move his company to Texas, which has lower taxes, a lower cost of living and fewer business regulations, joining the likes of Hewlett Packard, Oracle, Toyota Motor and Schwab.

--General Motors Co. set an ambitious financial target on Wednesday, a rarity for the company, telling investors it aims to more than double revenue by 2030 with an influx of new battery-electric models and auto-related services.

GM took direct aim at Tesla, saying it plans to take the lead in electric-vehicle sales in the U.S., without committing to a timetable.  As part of the push, GM said it would release a new electric SUV priced at about $30,000, undercutting the cheapest version of Tesla’s Model 3 sedan.

GM said it expects revenue to double to $280 billion, from a five-year average of about $140 billion.

The Detroit automaker is looking for investors to value it more like a tech-oriented business than a manufacturer.  The shares have rallied smartly since the pandemic lows of March 2020.

--United Airlines said Thursday it plans to operate more than 3,500 domestic flights in December, its largest domestic schedule since the start of the pandemic, seeking to capitalize on pent-up holiday season demand from travelers who did not see friends and family last year. 

United said holiday travel flight searches on its website were up 16% compared to 2019.

--TSA checkpoint travel numbers vs. 2019…

10/7…79 percent of 2019 level
10/6…71
10/5…68
10/4…77
10/3…83
10/2…80
10/1…80
9/30…79

*8/1 still post-pandemic high of 2,238,462 travelers.

--PepsiCo on Tuesday reported fiscal third-quarter results that topped analyst estimates amid a double-digit revenue gain on the back of a global economic reopening, while the food and beverage giant raised its full-year sales outlook.

Revenue gained nearly 12% annually to $20.19 billion, versus the Street’s view of $19.39 billion.

“We are pleased with our results for the third quarter as we delivered very strong net revenue growth while carefully navigating a dynamic and volatile supply chain and cost environment,” CEO Ramon Laguarta said in a statement.

Sales gained 6% in North American and 14% internationally, with the global snacks and food business delivering 8% organic revenue growth, while PepsiCo’s beverage operations posted a 10% increase.

But supply disruptions and inflationary pressures weighed on the company’s core gross profit and operating income, which rose 9% and 6%, respectively.

The company now projects 8% organic revenue growth for fiscal 2021, better than previous guidance, with full-year adjusted EPS up at least 12%.

Pepsi shares rose 4% after the earnings announcement.

--Work at all of the Kellogg Company’s U.S. cereal plants came to a halt Tuesday as roughly 1,400 workers went on strike, but it wasn’t immediately clear how much the supply of your favorite brands might be disrupted.

The union and the Battle Creek, Michigan-based company have been at an impasse at the bargaining table for more than a year and the dispute involves an assortment of pay and benefit issues such as the loss of premium health care, holiday and vacation pay and reduced retirement benefits.

Kellogg has threatened to move its operations to Mexico.

The company isn’t the only food company to see its workers go on strike.  Similar actions have been taken at Frito-Lay, Nabisco, and Mondelez.

--Bank of America Corp. said Wednesday it has raised its minimum hourly wage to $21 as part of an initiative for a $25 hourly minimum wage by 2025.

--Former President Donald Trump wasn’t included on the annual Forbes 400 ranking of the wealthiest Americans for the first time in 25 years.

Forbes reported Trump’s worth at an estimated $2.5 billion, which is $400 million short of the cutoff to make this year’s list.

Trump’s wealth is down $600 million since the start of the pandemic, according to the outlet, largely the result of a drop in big-city properties, which make up the bulk of Trump’s fortune.

Amazon founder Jeff Bezos was ranked first on the list with an estimated net worth of $201 billion. Tesla and SpaceX’s Elon Musk ranked second with an estimated $190.5 billion. Facebook’s Mark Zuckerberg and Microsoft founder Bill Gates were third and fourth.

--Scandal-hit media firm Ozy Media said it has relaunched just days after it shut itself down.

Boss Carlos Watson told CNBC that the firm was “open for business” again and this was its “Lazarus moment.”

Ozy shut last Friday after reports its co-founder had deceived potential investors during a conference call.  Major advertisers then cut ties and its chairman, Marc Lasry, stepped down.

Watson then told CNBC that the firm had a change of heart: “Over the weekend we spoke to advertising partners, we talked to our readers, our viewers, our investors.  I think Ozy is part of this moment.”

The status of former employees like journalist Katty Kay, who quit the company last week, is unknown.

--In its weekend debut, the latest James Bond flick “No Time to Die,” starring Daniel Craig for a final time, reeled in $119 million from 54 international markets, including the UK, Germany, Spain, Hong Kong and Japan.

That makes the film the first title from Hollywood to crack $100 million without opening in China.  The film debuts in the U.S. today, and opens in China on Oct. 29.

So good news for the industry and theater owners.  The reviews have been good.

--Finally, many of us who follow Wall Street were shocked last weekend to learn of the death of longtime Citigroup chief U.S. equity strategist Tobias Levkovich, who succumbed to injuries sustained in a car accident last month.  He was just 60.

No one seemed to know of the accident, with Levkovich hit by a car while crossing a street on Long Island back on Sept. 1. He was initially in stable condition, police said.  The driver of the car remained at the scene, the incident under investigation.

Levkovich, a managing director at Citigroup, had been chief U.S. equity strategist since 2001.  He was a fixture on CNBC, always good-humored, insightful, and while I never met him, just seemed like a good guy and from all the comments from his colleagues in remembrance, that he was. Our sympathies to his family and friends.

The Pandemic

Pfizer and BioNTech announced Thursday that they have requested emergency use authorization from the Food and Drug Administration for their Covid-19 vaccine for children between the ages of 5 and 11, which would protect more than 28 million people in the U.S.

“With new cases in children in the U.S. continuing to be at a high level, this submission is an important step in our ongoing effort against Covid-19,” Pfizer said in a statement.

“We’re committed to working with the FDA with the ultimate goal of helping protect children against this serious public health threat.”

An FDA advisory panel is to meet on Pfizer’s application Oct. 26.

Meanwhile, yes, cases are coming down in the U.S., but are still averaging 100,000 a day.  And deaths remain disturbingly high.

And, globally, while the numbers have improved in Asia, critical to the supply chain issue, they are still too high in the likes of Thailand and Malaysia.

And check out Russia, Ukraine and Romania.  Russia, as has long been known, has vastly underreported, and manipulated, its death toll.  It got to the point where it was almost laughable, as the daily figure was stuck between 750 and 770 for weeks, and months, on end.

But then in the past ten days, Russia started reporting record daily deaths, with cases spiking, while Ukraine and Romania have flat-out gruesome looking charts.

Russian officials say there are no plans to impose a lockdown and while mask-wearing regulations are in place, they are loosely enforced.

Covid-19 death tolls, as of tonight….

World…4,856,174
USA…732,351
Brazil…600,493
India…450,408
Mexico…281,121
Russia…214,485
Peru…199,581
Indonesia…142,560
UK…137,541
Italy…131,228
Colombia…126,552
Iran…122,197
France…117,029
Argentina…115,444
Germany…94,585
South Africa…88,236
Spain…86,778
Poland…75,834
Turkey…65,778
Ukraine…58,081
Philippines…39,232
Romania…38,927
Chile…37,542
Ecuador…32,836
Czechia…30,496
Hungary…30,275
Canada…28,170
Pakistan…28,058
Bangladesh…27,654
Malaysia…27,113
Belgium…25,665
Tunisia…24,987
Iraq…22,509
Bulgaria…21,505
Vietnam…20,337

[Source: worldometers.info]

U.S. daily death tolls…Sun. 259; Mon. 677; Tues. 1,811; Wed. 2,103; Thurs. 1,709; Fri. 1,811.

Covid Bytes

--According to a new Quinnipiac University poll, 74 percent of Americans say they either have received a Covid-19 vaccine or plan to, while 20 percent say they don’t plan to receive a shot.  This is largely unchanged from a September survey.

A majority of Americans say 52-44 percent that once students of all ages are eligible for a Covid-19 vaccine, they should not be required to receive a shot.

Nearly 8 in 10 (77 percent) think a return to in-person work at this time is a good thing, while 15 percent think it’s a bad thing.

--Johnson & Johnson asked the FDA to grant emergency use authorization for a booster dose of its one-shot vaccine.  The FDA’s advisory committee is scheduled to meet Oct. 14 and 15 to discuss whether to authorize both J&J’s and Moderna’s booster shots, after previously authorizing Pfizer-BioNTech’s booster for those receiving its two-shot regimen.

--Sweden and Denmark said on Wednesday they will pause the use of Moderna’s Covid-19 vaccine for younger age groups after reports of possible rare side effects, such as myocarditis.  The Swedish health agency said it would pause using the shot for people born in 1991 and later as data pointed to an increase of myocarditis and pericarditis among youths and young adults that had been vaccinated.  Those conditions involve an inflammation of the heart muscle.

“The connection is especially clear when it comes to Moderna’s vaccine Spikevax, especially after the second dose,” the health agency said in a statement, adding the risk of being affected was very small.

Denmark said that, while it was already using the Pfizer/BioNTech vaccine as the main option for people aged 12-17 years, it had decided to pause giving the Moderna vaccine to people below 18 according to a “precautionary principle.”

“In the preliminary data…there is a suspicion of an increased risk of heart inflammation, when vaccinated with Moderna,” the Danish Health Authority said in a statement.

Speaking of heart issues and Covid, heart damage extends well beyond the disease’s initial stages, according to a study that found even people who were never sick enough to need hospitalization are in danger of developing heart failure and deadly blood clots a year later.

Heart disease and stroke are already the leading causes of death worldwide. The increased likelihood of lethal heart complications in Covid survivors – who number in the hundreds of millions globally – will add to its devastation, according to the study, which is under consideration for publication by the journal Nature.

“The aftereffects of Covid-19 are substantial,” said Ziyad Al-Aly, director of the clinical epidemiology center at the Veterans Affairs St. Louis Health Care System in Missouri, who led the research.  “Governments and health systems must wake up to the reality that Covid will cast a tall shadow in the form of long Covid, and has devastating consequences.  I am concerned that we are not taking this seriously enough.”

--On a different topic, the World Health Organization on Wednesday endorsed a new weapon in the war on malaria, among the oldest known and deadliest of infectious diseases: the first vaccine shown to help prevent the disease.  By one estimate, it will save tens of thousands of children each year.

Malaria kills about half a million people each year, nearly all of them in sub-Saharan Africa – including 260,000 children under 5.  The new vaccine, made by GlaxoSmithKline, rouses a child’s immune system to thwart the deadliest of five malaria pathogens (Plasmodium falciparum) and the most prevalent in Africa.

The malaria parasite is carried by mosquitoes and is particularly insidious because it can strike the same person over and over.  In sub-Saharan Africa, children have on average six malaria episodes a year.

Foreign Affairs

Iran: Tehran has rejected direct talks with the U.S.  Indirect talks on reviving a 2015 nuclear accord stopped in June. Iran has been unable to obtain tens of billions of dollars of its assets in foreign banks because of U.S. sanctions on its banking and energy sectors.

Iran’s foreign minister said last weekend that U.S. officials tried to discuss restarting nuclear talks last month, but he insisted Washington must first release $10 billion of Tehran’s frozen funds as a sign of good will.

Meanwhile, Tehran’s nuclear program is advancing and Israel is going to have to act, soon.

Afghanistan: According to the aforementioned Quinnipiac University poll, roughly 3 in 10 Americans (28 percent) think the U.S. did the right thing by withdrawing all troops from Afghanistan, while 50 percent think the U.S. should have withdrawn some troops from Afghanistan but not all troops, and 15 percent think the U.S. should not have withdrawn any troops from Afghanistan.

As for the Taliban government, it is clear they are headed back to their old ways.

But today, a powerful suicide bombing in a mosque in northern Afghanistan (Kunduz province) during Friday prayers killed at least 50 and wounded dozens more.  All of the victims were members of the Shiite Hazara minority.  ISIS-K was suspected of carrying out the attack.

China/Taiwan:  Taiwan does not seek military confrontation, but will do whatever it takes to defend its freedom, President Tsai Ing-wen said on Friday, amid soaring tensions. Taiwan, claimed by China as its own territory, reported close to 150 Chinese air force aircraft flew into its air defense zone over a four-day period beginning last Friday (a record 56 on Monday alone).

Taiwan has complained for more than year of such activities, which it views as “grey zone warfare,” designed to wear out Taiwan’s armed forces and test their ability to respond.

“Taiwan does not seek military confrontation,” Tsai told a security forum in Taipei.  “It hopes for a peaceful, stable, predictable and mutually-beneficial coexistence with its neighbors.  But Taiwan will also do whatever it takes to defend its freedom and democratic way of life.”

Prosperity in the Indo-Pacific needs a peaceful, stable and transparent environment and there are many opportunities in the region, she added.  “But this also brings new tensions and systemic contradictions that could have a devastating effect on international security and the global economy if they are not handled carefully.” 

Some of us are just waiting for one side to make a mistake.  It only takes one rogue fighter pilot to send the region spinning into disaster. Taiwan’s defense minister said this week that the situation was “the most serious” in more than 40 years since he joined the military, adding there was a risk of a “misfire” across the sensitive Taiwan Strait.

As for the Taiwanese people as a whole, they remain confident there will be no war. A recent survey by think tank Intelligentsia Taipei found 50.2 percent of respondents in Taipei said they did not think that war was likely.

Sixty percent said they did not think there would be a war within 10 years, against 18 percent who said there would.

Last spring, in another opinion poll by the Taiwan International Strategic Study Society, 63 percent of respondents did not think Beijing would attack Taiwan within six years, as opposed to 29 percent who though it would.

Meanwhile, China’s top diplomat, Yang Jiechi, told U.S. national security adviser Jake Sullivan in a meeting on Wednesday in Zurich, Switzerland that confrontation between China and the United States would cause serious damage to both countries and the world, China’s official Xinhua news agency said. Xinhua cited Yang as saying that China and the U.S. agreed to take action to properly manage differences and avoid conflict.  The talks ended without the confrontational tone that marred their previous meeting in March, in Anchorage, Alaska, with Beijing this time saying the discussion was “conducive to enhancing mutual understanding.”

The U.S. asked for a face-to-face meeting between Presidents Xi and Biden, but a virtual meeting before the end of the year was agreed to.

Xi has not left Chinese territory for face-to-face meetings with world leaders in nearly two years and will not be at the Group of 20 summit in Rome this month, which he usually attends.

North Korea: In a small reconciliation step, North Korea restored dormant communication hotlines with South Korea in an apparent push to win outside concessions with a mix of conciliatory gestures and missile tests.

The hotlines are phone and fax channels that the Koreas use to set up meetings, arrange border crossings and avoid accidental clashes.  They’ve been largely stalled for more than a year as the North cut them off in protest of South Korean civilian leafleting campaigns.

Japan: Just two days after being voted into and launching his new government, Japan’s new Prime Minister Fumio Kishida found himself with an approval rating at 45%, according to the daily Asahi.  The more conservative-learning Yomiuri said 56% supported his government. 

In all the polls, support for Kishida’s government was lower than that of his predecessor Yoshihide Suga’s administration when it came into power last year.  But then Suga’s poll numbers plummeted.

Kishida said he would dissolve the lower house of parliament on Oct. 14, with a general election scheduled for Oct. 31, with the handling of the pandemic and economic recovery set to become key issues.

President Biden congratulated Kishida on his election in parliament and hailed the alliance of the two countries as a “cornerstone of peace, security and prosperity” in the Indo-Pacific region and the world.

France: A major report released Tuesday said French Catholic clerics had abused more than 200,000 minors over the past 70 years, a systemic trauma that the inquiry’s leader described as deep and “cruel.”

The findings add to the picture of country-by-country trauma within a religion that has tended to find abuse on a stunning scale anywhere it has looked.

The Vatican said in a statement that Pope Francis had been informed of the report during a recent visit by French bishops.  “His thoughts turn first to the victims, with immense sorrow for their injuries and gratitude for their courage to speak out,” the statement said, adding that Francis hopes the French church can follow a path of “redemption” after becoming aware of this “appalling reality.”

About 60 percent of French adults identify as Catholics, according to a Pew Research Center survey conducted from 2015 to 2017. But due to France’s strict limits on collecting ethnic or religious data, the number of practicing Catholics remains difficult to ascertain.

Germany: A three-way German government led by the Social Democrats (SPD) should be ready to take office by the end of the year, according to party leaders.  The SPD following last week’s national election, is looking to form a coalition with the Greens and the business-friendly Free Democrats, which would command a parliamentary majority.

Brazil: For weeks there have been massive protests against the leadership of President Jair Bolsonaro, one year ahead of the country’s elections. Bolsonaro has been plunging in the polls as a result of his handling of the pandemic, with 600,000 dead.

A poll by the Atlas Institute suggested that 61% of Brazilians described his government’s performance as bad or very bad, up from 23% when he first took office in January 2019.

For his part, Bolsonaro is borrowing from the Trump playbook and already talking about a rigged election system.

Philippines: President Rodrigo Duterte says he is backing out of an announced plan to run for vice president in next year’s elections and will retire from politics after his term ends.

Philippine presidents are limited by the constitution to a single six-year term and opponents had said they would question the legality of Duterte’s announced vice presidential run before the Supreme Court.

Boxer Manny Pacquiao, who recently announced his retirement from the sport, is running for president.

The Pandora Papers:  In a leak of millions of documents called the Pandora Papers, the hidden financial affairs of 35 current and former world leaders, and more than 330 public officials in more than 90 countries and territories, was revealed.

The documents – which come from 14 offshore services firms from around the world – expose offshore dealings by the King of Jordan, the president of Kenya and the prime minister of the Czech Republic, as well as former British prime minister Tony Blair.

Among the hidden assets revealed in the documents are:

A $22 million chateau in the French Riviera – replete with a cinema and two swimming pools – purchased through offshore companies by the Czech Republic’s populist prime minister, a billionaire who has railed against the corruption of economic and political elites.

Three beachfront mansions in Malibu, California, purchased through three offshore companies for $68 million by the King of Jordan in the years after Jordanians filled the streets during Arab Spring to protest joblessness and corruption.

The records were obtained by the Washington-based International Consortium of Investigative Journalists and shared with 150 news organizations worldwide.

The report this week hit with a splash, but it’s not worth a lot of ink in this space.  No one is surprised by any of this, the fact that $trillions is held “offshore.”  And it is not illegal in most countries to do business in offshore jurisdictions, though the complexity and secrecy of many jurisdictions means it is possible to avoid scrutiny by regulators.  The system is sustained by multinational banks, law firms and accounting practices headquartered in the U.S. and Europe.

But a key was a Panamanian law firm, Aleman, Cordero, Galindo & Lee (Alcogal), which is led by a former Panamanian ambassador to the U.S.

The investigation also highlights how Baker McKenzie, the largest law firm in the U.S., and other law firms helped create the modern offshore system.  The firm and its global affiliates have used their lobbying and legislation-drafting know-how to shape financial laws around the world.

A spokesperson for Baker McKenzie said the firm seeks to provide the best legal and tax advice to its clients and strives “to ensure that our clients adhere to both the law and best practice.”

Bottom line, its possible some current politicos, such as Czech Republic’s Andrej Babis and Kenya’s Uhuru Kenyatta could take a fall over the Pandora Papers, especially since they talked of transparency in government, and yet hid sizable assets from the public, but otherwise, little will come of all of this, though in the case of Babis, Czechs are going to the polls today and tomorrow and while his party is expected to win…he may have difficulty forming a coalition.

Random Musings

--Presidential approval ratings….

Gallup: Awaiting update…For Sept. 1-17, 43% approved of President Biden’s job performance, 53% disapproved; only 37% of independents approved.

Rasmussen: 43% approve of Biden’s performance, 56% disapprove (Oct. 8).

--In the Quinnipiac University poll, 30 percent approve of the Democrats’ job performance in Congress, while 63 percent disapprove.  Republicans have just a 28 percent approval rating, while 63 percent disapprove.

Speaker Nancy Pelosi has a 33 percent approval rating, Senate Majority Leader Chuck Schumer, 32 percent approval, House Minority Leader Kevin McCarthy is at 27 percent, and Senate Minority Leader Mitch McConnell only has a 23 percent approval rating.

Americans were asked, if the election were held today, would they rather see the Republican Party or the Democratic Party win control of the House.  Forty-six percent say they would rather see the Republicans take control, while 43 percent say the Democrats, with 11 percent having no opinion.

--A Senate report unveiled damning details as to how former President Trump relentlessly tried to bully the Justice Department into helping him overturn the results of the 2020 election, a push that culminated with the storming of the Capitol on Jan. 6.

The report from the Senate Judiciary Committee depicts an angry Trump threatening to replace his hand-picked acting Attorney General Jeffrey Rosen with a loyalist who was ready to denounce the vote that President Biden won as “corrupt.”

“One thing we know is you, Rosen, aren’t going to do anything to overturn the election,” Trump berated the nation’s top law enforcement office, the report said.

Trump hoped to replace Rosen with acting Assistant Attorney General Jeffrey Clark, a MAGA loyalist who wrote a memo suggesting the Justice Department should declare the election “corrupt” and launch a probe into supposed voter fraud.

Top White House lawyer Pat Cipollone threatened to quit, calling the proposed shake-up a “murder-suicide pact.”

Trump only backed off his scheme when Rosen and other top prosecutors threatened to resign en masse in protest.

Sen. Richard Durbin (D-Ill.), the chairman of the committee that compiled the report, called the revelations frightening new evidence of just how close Trump came to mounting a de facto coup and retaining power.

“Thanks to a number of upstanding Americans in the Department of Justice, Donald Trump was unable to bend the department to his will,” Durbin said.  “But it was not due to a lack of effort.”

The report said Trump personally tried no fewer than nine times to get the Justice Department to launch bogus probes into supposed fraud, even though former Attorney General Bill Barr already said there was  no credible evidence to back up the false claims.

White House Chief of Staff Mark Meadows also improperly sought to pressure prosecutors to launch investigations into certified vote counts in swing states that Biden won, the report said.

--Former Vice President Mike Pence dismissed on Monday the media’s continued focus on the Jan. 6 riot.  He told Fox News host Sean Hannity that the coverage was designed to “demean” former President Trump’s supporters.

“I know the media wants to distract from the Biden administration’s failed agenda by focusing on one day in January,” he said.  “They want to use that one day to try and demean the character and intentions of 74 million Americans who believed we could be strong again and prosperous again and supported our administration in 2016 and 2020.”

Of course, Mr. Trump had falsely claimed that Pence could stop the certification, while some of Trump’s supporters who breached the Capitol could be heard chanting, “Hang Mike Pence!”  The vice president was safely evacuated by the Secret Service before returning hours later to complete the certification of Biden’s win.

“Jan. 6 was a tragic day in the history of our Capitol building,” Pence told Hannity. “But thanks to the efforts of Capitol Hill police, federal officials, the Capitol was secured, we finished our work.  And the president and I sat down a few days later and talked through all of it.”

Despite Trump’s public criticism of Pence’s role in the certification, the vice president said the two parted ways “amicably” and “have talked a number of times since we both left office.”

“You can’t spend almost five years in a political foxhole with somebody without developing a strong relationship,” he said.

So pathetic, but at least in the critical moment in history, Pence stood up to the pressure and anger heaped on him by Trump for not buying into the rigged election lie.

But now it’s just “one day in January.”  The threat of the insurrection was overblown.

--Former Trump press secretary Stephanie Grisham, making the rounds hawking her tell-all book, warns that if he runs and wins in 2024, “He’ll be able to do whatever he wants,” Grisham said.  “And we all know there is going to be retribution, there is going to be revenge. I guarantee there will be draconian policies, and they’re not going to care because they don’t have to run for reelection again.”

--A massive oil spill off the Orange County coast of California fouled beaches and ecologically sensitive wetlands in what officials called an environmental catastrophe that has renewed calls to ban offshore drilling.

The spill, first reported last Saturday, but detected the night before, originated from a pipeline running from the Port of Long Beach to an offshore oil platform known as Elly.  The failure caused 144,000 gallons of oil to gush into the Catalina Channel.

California Gov. Gavin Newsom (Dem.) said during a news conference that it’s “time once and for all to disabuse ourselves that [oil drilling] has to be part of our future…at the end of the day, this is about the stale air of normalcy versus the fresh air of progress.”

The U.S. Coast Guard inspected a container ship in Oakland focusing on the possibility that the ship’s anchor struck the pipeline, as reported by the Los Angeles Times.  The ship was in the area of the pipeline before the spill was discovered, and later headed north.

The probe into whether an anchor ruptured the pipeline was in its early stages and there is no word on which ship had been inspected. A final determination of the spill’s cause may take months, but the probe of the ship underscores that investigators continue to zero in on a ship anchor as a possible cause.

Amplify Energy, which owns the pipeline and connected rigs, said on Tuesday that oil appeared to have leaked through a 13-inch gash in the pipe, which was “pulled like a bowstring” about 105 feet from where it should have been.”

As bad as this spill is, thankfully it is nowhere near the scale of some of the worst in U.S. history.

The famous 1969 Santa Barbara spill, which had a major impact on the nascent environmental movement, spilled 4.2 million gallons vs. this week’s spill of 144,000.

1989’s Exxon Valdez disaster released 11 million gallons.

And the Deepwater Horizon disaster in the Gulf of Mexico, 2010, was an unfathomable 133,980,000 gallons, much of which sunk to the bottom, a major reason why it continues to have such a long-reaching, long-lasting impact.

Again, I’m not minimizing what just occurred off Orange County’s waters, but this will be largely cleaned up, and/or much of the oil will disperse, with little long-term environmental impact, that’s my guess.

The political impact is an entirely different matter.

--We had two deserving recipients of this year’s Nobel Peace Prize…Philippine journalist Maria Ressa, who co-founded a news website that has focused “critical attention on the Duterte regime’s controversial, murderous anti-drug campaign,” in the words of the Nobel committee, and Dmitry Muratov of Russia.  Muratov was one of the founders of the independent Russian newspaper Novaya Gazeta, which the committee said “is the most independent newspaper in Russia today, with a fundamentally critical attitude towards power.”

--It was a record cold winter in Antarctica, between April and September, with the average temperature at the Amundsen-Scott South Pole Station a frigid minus-78 degrees (minus-61 Celsius), the coldest on record for that base, dating back to 1957.  That would kind of heavily limit your outdoor activities, I imagine.

And the record cold continued in October, with Russia’s Vostok Station sinking to minus-110.9 degrees (minus-79.4 Celsius) on Thursday.

Scientists credited a very strong polar vortex surrounding Antarctica for the intensity of the cold.

So to get away from the rest of the planet’s heat, having notched its fourth-hottest June through August on record, according to the National Oceanic and Atmospheric Administration, head south, way south, young man.  [Jason Samenow and Kasha Patel / Washington Post]

---

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

God bless America.

---

Gold $1757
Oil $79.59

Returns for the week 10/4-10/8

Dow Jones  +1.2%  [34746]
S&P 500  +0.8%  [4391]
S&P MidCap  +0.3%
Russell 2000  -0.4%
Nasdaq  +0.1%  [14579]

Returns for the period 1/1/21-10/8/21

Dow Jones  +13.5%
S&P 500  +16.9%
S&P MidCap  +16.6%
Russell 2000  +13.1%
Nasdaq  +13.1%

Bulls 40.4…lowest percentage since the week ended April 17, 2020, which was a good time to buy, though the percentage of bulls bottomed at 30.1, March 27, 2020, an even better time.
Bears 22.5

Hang in there.

Brian Trumbore

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