Week in Review

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Week in Review

11/06/2021

For the week 11/1-11/5

[Posted 10:30 PM ET]

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Edition 1,177

I held off posting tonight, well over an hour, to watch the Democrats potentially vote on the $1 trillion infrastructure package, in a last-minute surprise maneuver, by attaching a Rule to vote later on the $1.75 trillion social-policy and climate-change legislation, that was initially put on hold until moderates got their ‘score’ (cost estimate) on the legislation from the CBO.

It seemed, though, that progressives were prepared to scuttle the infrastructure package…until this late move by Democratic leadership.

But it’s now 10:30 p.m. and I need to move on…the House is not back in session.

So, from the start, for now…another ‘week to remember’….

Joe Biden won New Jersey by 16 points and Virginia by 10 points just a year ago, yet incumbent Democratic Gov. Phil Murphy won his race for a second term, Tuesday, by only about two points, and Virginia’s Democratic candidate, and former governor, Terry McAuliffe, lost.

In Virginia, Biden had won suburban voters by a 53-45 margin, but Republican Glenn Youngkin took this vote 53-47.

Biden, by proxy, also did worse among independents in the Commonwealth.  He won this group by 18 points in Virginia in 2020, and the same independents then broke 9 points in favor of Youngkin.

Perhaps James Carville, in an interview with PBS’ Judy Woodruff, put it best:

“Don’t just look at Virginia and New Jersey.  Look at Long Island, look at Buffalo, look at Minneapolis, even look at Seattle, Washington.  I mean, this ‘defund the police’ lunacy, this take Abraham Lincoln’s name off of schools. I mean – people see that.”

“Some of these people need to go to a ‘woke’ detox center or something,” Carville told Woodruff.  “They’re expressing a language that people just don’t use, and there’s a backlash and a frustration at that.”

Gov.-elect Youngkin certainly got it.  More than half of Virginia voters (51%) said the Democratic Party was “too liberal” in exit polling.  Youngkin won 87% of the vote among that group.

The president, though, refused to take direct responsibility for the disappointing showings.

“People are upset and uncertain about a lot of things, from Covid to school to jobs to a whole range of things and the cost of a gallon of gasoline,” he said.

“And so if I’m able to pass and sign into law my Build Back Better initiative, I’m in a position where you’re going to see a lot of things ameliorated, quickly and swiftly.”

Biden conceded Democrats should have passed his signature $1.75 trillion package of social and climate programs, as well as the $1 trillion infrastructure bill, that has already cleared the Senate, before Tuesday’s vote, especially at least the latter.

He added: “But I’m not sure I would be able to have changed the number of very conservative folks who turned out in the red districts who were Trump voters.”

Sen. Tim Kaine (D-Va.) was blunt: “I hope my colleagues absorb this notion that, when you’re the majority, to be a Democrat should stand for doer, not delay, dithering, do nothing, division.”

The fact is the president is deeply unpopular and his first ten months have been a disaster.  Biden can indeed somewhat turn things around, perhaps, and the infrastructure bill would help him…as well as helping the country.

But he has to be worried about the backlash among suburban voters.  It’s going to be hard to win them back in the next year.

Joe Biden ran on being a president who would calm things down, return the country to normalcy, and exhibit competence.  His administration hasn’t come close to fulfilling these objectives.

On competency alone, just 37 percent of adults in an NBC News survey gave him high marks for being competent and effective as president, while 50 percent give him low scores for being competent.

In the same NBC News poll, 71% of Americans believe the country is on the wrong track, a staggeringly bad figure, including 70% of independents.

A CNN exit poll of Virginians revealed the economy and jobs to be the number one concern for 33% of them, with education next at 24%.  McAuliffe, and by extension the president, didn’t figure it out.

But it should have been a great week for the president.  Earlier, the Centers for Disease Control and Prevention approved Pfizer Covid-19 vaccinations for children aged 5 to 11, the shot already being administered into tiny arms, and then today, Pfizer announced an oral therapeutic that reduced the risk of hospitalization or death by 89% when taken during the early stages of the disease.

Plus, the president had positive news on the economy Friday, as described further below, and the week actually started with some favorable developments in Rome and Glasgow.

But right now, it’s about his legislative agenda, and even if the House eventually passes the Build Back Better $1.7tr plan, it still faces West Virginia Democratic Sen. Joe Manchin, who has said it will “take time” to negotiate and pass the social safety net bill if it gets to the Senate.

“I’m open to supporting a final bill that helps move our country forward,” Manchin said at one of his press conferences.  “But I’m equally open to voting against a bill that hurts our country.”

As The Economist editorialized this week:

“Beyond next year, the Democrats’ prospects are even bleaker.  Their unpopularity with non-college-educated whites costs them large tracts of the country outside cities and suburbs. To win the electoral college, the House of Representatives and the Senate they need a greater share of the raw vote than any party in history.  Winning under these conditions, while simultaneously repairing national institutions and making progress on America’s problems, from public health to climate to social mobility, is a task for a politician of superhuman talents.

“Mr. Biden is not that guy.  He has dealt admirably with personal misfortune and by most accounts is kind and decent.  However, there is a reason why winning the presidency took him more than 30 years of trying.  Democratic primary voters picked him not for inspiration, but largely as a defensive measure to block the progressives’ champion, Bernie Sanders.

“Mr. Biden campaigned on his competence, centrism, experience in foreign policy and a rejection of nerve-jangling Trumpism.  But the withdrawal from Afghanistan was a debacle, he has governed to the left and the culture wars rage as fiercely as ever.  The fact that no voters seem to have a clue what is in the infrastructure and social-spending bills is partly his fault.  Child poverty has fallen by a quarter, thanks to legislation passed by Congress on his watch. This would be news even to most Democrats.

“The problem is not just Mr. Biden, though.  His party’s left-wing, college-educated activist class consistently assumes that the electorate holds the same attitudes on race and on the role of government as they do.  Virginia is the latest example of this folly….

“Countering the Republican message that he carries out the wishes of the radical left will require Mr. Biden to be much tougher on his party’s fringe.  That may mean doing things they hate.  He could campaign to hire more police officers in cities where the murder rate has spiked, or pick fights with the school board in San Francisco, which thinks that Abraham Lincoln is a symbol of white supremacy….

“In a two-candidate race for the presidency, both nearly always have a real chance of winning. Mr. Biden and his party need to think hard about what they are prepared to do to limit the risk of another four years of Mr. Trump. Because that is where a failed Biden presidency could well lead.”

Biden Agenda…COP26…and the Election

--In a huge loss for the Democrats and a potential harbinger of things to come, like next fall, Republican Glenn Youngkin was elected governor of Virginia, defeating one-time governor Democrat Terry McAuliffe, 50.9%-48.4%, in a dramatic reversal for a state that was solidly Democratic in recent years and a major loss for President Biden and the party establishment.  A red wave washed through the state’s House of Delegates as well, as a 55-45 Democratic majority flipped 51-49 Republican, last I saw.  Biden had carried Virginia by 10 points just last fall.

In the latter stages of the campaign, Youngkin skillfully welcomed Donald Trump’s endorsements, but he never campaigned with the former president.

The governor-elect surged in the late weeks of the race by tapping into a deep well of conservative parental resentment against public school systems.  He promised to ban the teaching of critical race theory, an academic approach to racial history that is not on the Virginia K-12 curriculum, and painted McAuliffe as a champion of big government and teachers unions who wants to keep parents out of the classroom.

For his part McAuliffe ran a horrendous campaign, highlighted by a comment he made during a Sept. 29 debate.

“I don’t think parents should be telling schools what they should teach,” McAuliffe said.

Opinion….

Editorial / Washington Post

“It is difficult to imagine any Virginia Republican running a more adroit campaign than the one that propelled first-time candidate Glenn Youngkin to victory…

“Mr. Youngkin, a former private equity executive, seemed by nature and background to be a moderate.  He embraced wedge conservative issues – including false claims about election  fraud and what gets taught in public schools – deftly enough to motivate GOP base turnout without driving too many suburban swing voters to support his Democratic opponent, former governor Terry McAuliffe who was running to reclaim the job he held until 2018.

“Mr. Youngkin’s victory will be read as evidence that with a nimble enough candidate, at least in an off-year election, the GOP can overcome the burden that former president Donald Trump’s considerable shadow might otherwise represent in a moderate state.

“Having threaded a fine needle so proficiently, Mr. Youngkin has given Virginians cause to hope he will be as nimble in office as he was on the stump.  It’s also reasonable to wish that he plays down the divisive social issues that worked well enough in the campaign, but will do little to make him a good governor.  Certainly, many Virginians who supported him did so despite the campaign’s divisiveness, not because of it, and trusting that his business career will position him to be a skillful steward of the state’s economy.

“Having focused for the campaign’s early months on the canard of election integrity, Mr. Youngkin pivoted this fall by laying out an ambitious economic program.  The cacophony of negative campaigning and culture war wailing tended to drown out his ambitious economic agenda, yet the success of his governorship will be judged more on the latter than the former….

“Mr. Youngkin’s victory owes much to convincing a sufficient number of suburban voters, including in vote-rich Northern Virginia, that he is not the Trump clone that Mr. McAuliffe tried to portray. He did so effectively, and outperformed Mr. Trump substantially in the suburbs.  How Mr. Youngkin will use that mandate will be the test of his governorship.”

John Podhoretz / New York Post

“The Republican victory in Virginia – a state Democrat Joe Biden won last year by 10 points – is such a colossal political story it’s hard to take it all in. The key: Donald Trump was not on the ballot.

“And this key fact works in two directions.

“First, it screws up the Democratic playbook going forward.

“How so? Well, losing Democratic gubernatorial candidate Terry McAuliffe spent his entire campaign working to tie Glenn Youngkin to Trump.

“This was an understandable impulse, since Trump’s dominating presence from 2016 onward did cause a surge in Democratic voting that won the House in 2018 and the presidency in 2020.

“But if you look at the strategy with cold eyes, you have to say that, at best, it’s a bank shot – and you only take a bank shot in pool when you don’t have a better one.

“As a matter of existential fact, Glenn Youngkin is not Donald Trump.  Only Donald Trump is Donald Trump. You could run against Trump when he was the one running, or when your vote could be cast to stymie or thwart his presidential agenda.

“Here, in the first major election of the post-Trump presidency, in a solidly blue state, Democrats were unable to run the anti-Trump playbook again to a satisfactory conclusion.

“Glenn Youngkin kept his distance from Trump and ran on his own messages.  He thus subtly reduced Trump’s shadow, his influence – and his effect on the race.  As a result, with the exception of races in which a 2022 Republican candidate openly embraces or attempts to emulate Trump, that playbook will have to be shredded.

“And the 2022 Republican candidates with a chance to flip House, Senate, and gubernatorial seats from blue to red will now have reason to follow the Youngkin example rather than the Trump example.

“So that’s one major takeaway.  The other – and possibly even more telling – comes when you attempt to answer this question: Why did McAuliffe adopt the bank-shot strategy?  The answer is clear: because the Democratic policy and governing agendas in 2021 are proving toxic.

“The Biden presidency is unpopular – the president has an average approval rating of 43 percent – because people don’t like the results of his governance….

“And that’s where Youngkin’s effectiveness as a candidate came in.  He made it clear he stood in opposition to the self-satisfied status quo of the Democratic Party.  The airy dismissal of parental concerns both on the content of schooling and the handling of schoolchildren during Covid showed McAuliffe to be spectacularly out of touch.

“And don’t think Biden’s ghastly handling of the Afghanistan pullout didn’t play a factor in a state that is home to 127,000 active-duty members of the military (and, in the case of many, their spouses).

“What this means is that Democrats now face a crisis when it comes to what exactly they will run on in 2022 when it comes to a positive message – and how they will cope in a world in which the Trump bank shot is likely to fail, as bank shots usually do.”

Editorial / New York Post

“Issues matter. McAuliffe wanted to make the election all about Donald Trump, even lying that Youngkin and Trump had a campaign rally together (they hadn’t). In New Jersey, Gov. Phil Murphy tried to act like he was running against Trump rather than his real opponent, Jack Ciattarelli. That’s all they have. The Democrats just keep re-litigating Jan. 6 and the former president.

“Voters. Don’t. Care.  They want to make sure inflation is curbed and groceries and gas don’t bankrupt them.  They want to make sure our children are safe and learning. They want common sense as we come out of the pandemic.

“The future matters.  And by that token, Trump’s constant harping about the 2020 election is bunk. Biden won.  The only way GOP candidates save Democrats from their monomania is to buy into Trump’s own re-litigation of the past.

“Youngkin showed how it can be done.  He welcomed Trump’s support but didn’t back the ‘Stop the Steal’ baloney.  Youngkin ran a campaign about Virginia and people’s lives, not Arizona audits. He wanted people to get out and vote. And he made McAuliffe look like the one who was obsessed.

“So congratulations to Glenn Youngkin, not only for winning Virginia but for showing a way forward. We’re not saying every GOP candidate should get a fleece vest – but hey, couldn’t hurt.”

Marc A. Thiessen / Washington Post

“Who says foreign policy doesn’t matter at the polls?

“When we look back at the issues that powered Glenn Youngkin’s upset victory in the Virginia governor’s race, education will be front and center.

“But the turning point was Afghanistan.

“Let’s be clear: Virginia voters did not cast their ballots on Afghanistan.  Exit polls show the top issues on their minds were the economy, education, taxes and the coronavirus pandemic.  Foreign policy did not make the list – which is not surprising in a governor’s race.

“But nearly half of Virginia voters reported that one reason for their vote was to send a message for or against President Biden, and 28 percent said they were casting their ballot to express opposition to the president.  The intensity of Virginians’ disapproval of Biden is stunning: 54 percent said they disapprove of Biden’s performance in office, with 46 percent saying they ‘strongly’ disapprove (only 8 percent ‘somewhat’ disapprove).  In an election decided by just two points, that disapproval proved decisive.

“The collapse in Biden’s approval began with the disastrous withdrawal from Afghanistan.  On Aug. 14 – the day before Kabul fell -  Biden enjoyed a solid 50 percent national approval in the RealClearPolitics average.  A few days earlier, a Hill-HarrisX Poll found Biden’s approval at 55 percent, with strong majorities supporting him on the issues: 55 percent approved of his handling of the economy; 54 percent approved of the job he was doing fighting terrorism; and 58 percent said he was doing a good job running the government.

“But after his Afghanistan debacle, the floor fell out from under the president… A pre-election Quinnipiac poll showed majorities disapproved of his performance not just on foreign policy but also on every single issue tested: the economy, taxes, immigration, his job as commander in chief, even his handling of the pandemic, which had been his strong suit.

“Worst of all, an NBC News/Wall Street Journal poll a week before Election Day found that just 37 percent of Americans believe Biden is competent and effective, while 50 percent say he is not….

“Approval ratings rise and fall, but once voters decide you are incompetent, it’s extremely difficult to reverse that impression.  And Biden’s perception of incompetence began in Afghanistan….

“Glenn Youngkin is the governor-elect of Virginia because of Joe Biden’s incompetence. The 2022 midterms will likely be a referendum on the president’s ineptitude, as well.  And the moment Americans decided that Biden was incompetent was when they watched his calamitous, shameful withdrawal from Afghanistan.”

Daniel Henninger / Wall Street Journal

“That was one sweet night….

“Regular readers of this column will be able to guess why I found Tuesday night sooo sweet.  Let me count the ways.  The Atlanta Braves won the World Series.

“In April Baseball Commissioner Rob Manfred pulled the All-Star Game out of Atlanta, feigning indignation over the Republican Georgia Legislature’s voting-reform law.  That’s the same Commissioner Manfred who forced the Cleveland Indians to drop their mascot, Chief Wahoo, and change the team’s name to the Guardians.  How sweet it was to sit home doing the Tomahawk chop and chant with countless Braves fans.

“And don’t think that Atlanta baseball incident has nothing to do with these elections.  The takeaway from Tuesday’s voting is that the Democratic Party’s progressive are a clear and present danger – to their party and to everyone else.  Because of progressive overreach, incompetence and intolerance, the Republican Party now owns at least three important security issues – economic security, education security and civil security, a k a ‘law and order.’

“Those security fundamentals could be the building blocks of an emerging post-pandemic Republican coalition of suburbs, rural counties and minority voters whose concerns don’t align with the increasingly manifest impracticality of progressive ideas….

“The question of the moment is whether Messrs. Youngkin and Ciattarelli offer a GOP template for the future.  But what about the Democrats’ template – Joe Biden, Bernie Sanders, AOC, unfocused but limitless spending, new taxes and constant cultural disruption?  Right now, that template looks cracked.”

Dan Balz / Washington Post

“Democrats had made substantial inroads in the suburbs during Trump’s presidency, but Youngkin cut into those suburban margins, a success that if repeated around the country next November could have devastating consequences for Biden’s party.  In Loudoun County, for example, Youngkin was running about 10 points behind McAuliffe after Biden won the county by 25 points and Gov. Ralph Northam (D) won it by 20 points in 2017.

“Meanwhile, Youngkin rolled up big margins in some of Virginia’s smallest and reddest counties.  The returns highlighted again how badly Democratic support has cratered in small towns and rural areas of the country. This has major, longer-term consequences for congressional and legislative elections unless Democrats find an effective strategy to reach voters in these areas, which at this point they do not have.”

Rich Lowry / New York Post

“Youngkin’s path to victory was one that Trump himself or any of his epigones would have been incapable of.

“For Trump, being radioactive had its uses – it meant he’d dominate news cycles, which he considered a good in and of itself, and bonded his base even more strongly to him.

“Youngkin thoroughly rejected this model.  His approach from the beginning was to soften his image, assuming that base Republican voters would support him even if he was branded as a nice guy and voters otherwise not willing to listen to a Republican would give him a chance.

“With all the focus on CRT, it’s easy to forget that exit polls showed that the economy was the top issue in the campaign. Youngkin emphasized the cost of living, and according to the Washington Post, won among voters who cared most about the economy, 55 percent to 44 percent.

“It is undoubtedly true that Youngkin wouldn’t have prevailed without hitting education hard, and that CRT is a winning cultural issue for the GOP.  But Youngkin’s position on education was more complicated than sometimes acknowledged.

“What first brought education to prominence was widespread school closures during the pandemic, and a key part of Youngkin’s message was increasing educational standards and paying teachers more – positions with obvious appeal to the center.

“There is no doubt that Trump brought a new cultural combativeness to the GOP, sensed a hunger among the party’s voters for new departures on immigration and trade, and won the presidency in 2016 based on an electoral map few thought possible.

“But Trump has lived off the legend of 2016 – only he knows how to win or fight, and he holds the key to a working-class electoral coalition that no one else understands as instinctively or as well.

“Trump’s image as the wizard of winning was always doubtful.  In 2016, some Republican Senate candidates notably outperformed him in their states.  In 2020, Republican House candidates did the same.

“Trump’s magic was to a large extent based on running against a very unpopular candidate, Hillary Clinton, and in a race where he could lean on the Electoral College.  He never had to aim for 50 percent plus 1, but 46 percent and just the right breaks in the battleground states.  This is not a sustainable or readily replicable model.

“Now, Youngkin, who at the end of the day is a Glenn Youngkin Republican, exceeded Trump’s 2020 margins in the reddest parts of Virginia….

“Worried that he’s not getting enough credit for Virginia, Trump said afterwards that there’s no way Youngkin would have won without MAGA voters.  True enough.  Youngkin needed to get them out and did, without Trump campaigning for him and barely mentioning his name.

“Therein lies a tale.”

--Gary Abernathy / Washington Post

“Shortly after taking office, momentum may have been with (Joe) Biden to go bigger than expected.  But that’s when voters thought his vaunted skills and experience would be in evidence.  Instead, gas prices are skyrocketing, inflation is climbing, the supply chain is in shambles, the southern border is a mess, and Covid-19 remains a threat.  The Afghanistan pullout was disastrous, the fatal drone strike on an innocent Afghan family was appallingly incompetent, and France took the unprecedented step of temporarily recalling its U.S. ambassador over a mishandled submarine deal.

“Additionally, Biden’s personal appearances are unsettling. His recent town hall on CNN included a disturbing moment in which the 78-year-old president stood rigid, fists clenched, as Anderson Cooper posed a question.  His rambling and disjointed statements can’t forever be blamed on a stuttering problem that for decades seemed conquered.

“Next year, voters will offer a midterm report card on Biden and his failing agenda, and there are several indicators justifying Republican optimism.  When the 2024 election rolls around, Biden will be a couple of weeks shy of 82. Does anyone predict a miraculous rejuvenation?  At 78, Trump – likely the GOP nominee barring a drastic change in health or legal developments – might seem like a spring chicken by comparison.

“The partisans will stay true to their respective nominees, but whom will the independents prefer?  Will they return to the guy who thumbed his nose at a democratic election but oversaw a great pre-covid economy, made America more energy independent, passed a criminal justice reform bill that won praise from liberals and brokered new trade deals and Middle East peace agreements?  Or will they stay with someone who unexpectedly turned a capitalist country over to democratic socialists to spend trillions expanding government’s reach, all while displaying an unsettling level of incompetence in day-to-day governing?

“Shockingly, thanks to Biden, Trump remains in the game.”

Mr. Abernathy way overstates the success of the Trump economy.

--According to a national Marist Poll released on Monday, 44% of Democrats believe their party will have a better chance of winning in 2024 if President Biden is replaced at the top of the ticket.

I told you about a month ago that Biden will announce he is not running in 2024, but not until after the midterm elections. 

--President Biden’s trip to Europe was quickly overshadowed by Tuesday’s domestic elections, but at the high-stakes COP26 global climate summit, the president did achieve a win of sorts in gaining pledges on methane and deforestation, from more than 100 world leaders on the latter, representing over 85 percent of the world’s forests, and some 90 countries on the former, methane, the most critical single element in the fight against climate change.

The Global Methane Pledge aims to limit methane emissions by 30% compared with 2020 levels.  EU Commission chief Ursula von der Leyen told the summit that when it came to COP26’s goal of achieving net zero by 2050 – meaning not adding to the amount of greenhouse gases in the atmosphere, methane was “one of the most effective things we can do to reduce near-term global warming,” calling it “the lowest hanging fruit.”

[Methane is present in cows’ digestive systems and in landfill waste and oil and gas production.  It doesn’t last as long as carbon dioxide in the atmosphere and accounts for only 20 percent of global emissions, but it has 80 times the warming power of carbon dioxide.]

The pledge covers countries which emit nearly half of all methane, and make up 70% of global GDP.

Just last August, the Intergovernmental Panel on Climate Change (IPCC) reported that methane was responsible for a significant proportion of the 1C of warming the world has already experienced.

HOWEVER…major emitters like Russia, China and India are not part of the pledge (Presidents Putin and Xi not in attendance), and all commitments are voluntary – there is no big stick.

[Thawing permafrost in Siberia has been labeled a “methane time bomb.”  Methane is also the chief component of natural gas. In the Permian Basin, it is often produced in such large quantities that pipelines can’t handle the volume, so it spills unburned into the air.  Last year, researchers found that oil and gas activity in the basin was responsible for about 2.7 million metric tons of methane a year, or more than those of all but eight countries in the world.]

As for deforestation, in 2020, the world lost 258,000 square kilometers of forest – an area larger than the United Kingdom, according to WRI’s Global Forest Watch.

--The G20 summit in Rome reached an agreement on taxes, a framework containing two new 15 percent minimum taxes: one on the income American companies earn abroad, and one on the profits that large corporations report to their shareholders.

It also proposed penalties for companies that operate in the United States but keep their headquarters in countries that refuse to join the global deal and put in place a similar minimum tax.

But the proposals have to be approved by each nation’s respective legislatures, including Congress, and chances are zero in Washington given the current makeup of the body.

Wall Street and the Economy

As expected, the Federal Reserve announced this week it was beginning to dial back the extraordinary economic aid it’s provided the economy since the pandemic erupted last year, a response to high inflation that now looks likely to persist for longer than the Fed first thought just a few months ago.

In a statement Wednesday after a meeting of the Federal Open Market Committee, the Fed said it will start reducing its $120 billion in monthly bond purchases in the coming weeks, by $15 billion a month, though it reserved the right to change that pace (i.e., quicken it).  Those purchases were intended to hold down long-term interest rates to encourage borrowing and spending.  With the recovery, that is no longer needed.

The changes reflect a central bank that is rapidly transitioning from an effort to boost the economy and encourage more hiring to one that is increasingly focused on rising inflation.  Prices in September rose at the fastest 12-month increase since 1991.

In a statement after a two-day meeting, the Fed said: “In light of the substantial further progress the economy has made toward the (Fed’s) goals,” the central bank will reduce its bond purchases by a total of $15 billion a month; $10 billion in Treasury bonds, $5 billion in mortgage-backed security purchases.

The bond program has swollen the Fed’s balance sheet by more than $4 trillion.

Under the current timetable, the Fed’s purchases would conclude by next June, and if the tapering is accelerated, that would be a sign to Wall Street that the Fed will be raising interest rates earlier and faster than now anticipated.

In a news conference, Chair Jerome Powell said the supply constraints and related inflation “have been more prevalent and persistent” than anticipated.  “They’re on track to persist well into next year,” he said.

The Fed’s statement said: “Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors.”

It added: “Progress on vaccinations and on an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation.”

For now, Chair Powell is leaning decidedly toward leaving interest rates at zero to further push down unemployment.  “We don’t think it’s a good time to raise interest rates and that’s because we want to see the labor market heal further,” he said.

He added he’s well aware of the risks the inflation spike poses to “people living paycheck to paycheck.”

“We’ll be patient but we won’t hesitate” to lift rates if soaring inflation doesn’t wane.

On the economic data front, the ISM October manufacturing number was a solid 60.8 (50 the dividing line between growth and contraction), with the service sector reading a robust 66.7, far better than expected.

September factory orders were up 0.2%.

The weekly jobless claims number was 269,000, another post-Covid low.

All leading up to today’s jobs report for October and the economy added 531,000 jobs, better than expected, with the unemployment rate falling to 4.6% from the prior month’s 4.8%, but still a ways from the pre-pandemic low of 3.5%.  U6, the underemployment rate, continued to fall, now 8.3%, which remains above the pre-Covid low of 6.8%.

The leisure and hospitality sector added 164,000 jobs last month, reflecting better numbers on the Covid / Delta variant front.

Importantly, September’s jobs number was revised up from a paltry 194,000 to 312,000, while August’s was revised to 483,000 from 366,000.

Average hourly earnings rose 0.4%, in line, and 4.9% year-over-year, up from September’s 4.6% pace.

Befitting the improving Covid picture and improved economic activity in October over the third quarter, the Atlanta Fed’s GDPNow early barometer of fourth-quarter growth is at 8.5%, GDP only 2.0% (ann.) in Q3.

On a different topic, trade, the U.S. and European Union reached an agreement to settle their diplomatic rift over Trump-era steel and aluminum tariffs, as announced at the G20 summit last weekend in Rome.

The Trump administration had placed taxes on EU steel and aluminum in 2018 on the claim that the foreign products introduced by American allies were a threat to U.S. national security. Europeans and other allies were outraged by Trump’s use of a trade-law provision known as Article 232 to justify the tariffs, leading many to impose retaliatory tariffs on U.S.-made motorcycles, bourbon, jeans and other items.

The back-and-forth hurt European producers and raised steel costs for American companies. The tariffs also did not achieve Trump’s stated goals of creating jobs at steel mills. While jobs in the manufacturing of primary metals did rise slightly, mills shed workers during the pandemic, and employment in the sector is roughly half of what it was in 1990.

Editorial / Wall Street Journal

“The weekend deal marks a significant de-escalation in this trade spat….

“(The) Biden Administration isn’t scrapping the Trump tariffs entirely. Section 232 charges will start to bite again when America’s post-pandemic demand expands beyond the tariff-free amount of 4.4 million metric tons of steel (three-quarters of that under the quota and the rest under additional exclusions the U.S. will extend for at least two years)….

“More ominously, the two sides also pledged to discuss ‘future arrangements for trade’ that ‘take account of’ the carbon intensity of steel and aluminum production. China is squarely in the cross-hairs here, as the U.S. and EU target ‘global non-market excess capacity’ and high-emissions production – both of which are frequent complaints about Chinese industry.  The danger is that climate obsessions will become a new excuse for rank protectionism.

“Mr. Biden’s trade policy has been a disappointment, especially given his criticism as a candidate of Mr. Trump’s tariffs.  But at least he’s struck this metals truce with Europe, which he needs in a united front against China on trade. With global supply chains stretched and prices rising rapidly in the U.S. and Europe, this is one trade spat that needed to end.”

Europe and Asia

We had the PMIs for the month of October in the eurozone this week, courtesy of IHS Markit, and the final EA19 manufacturing number was 58.3, services 54.6, both down a bit from September’s readings.  [I’m not listing a composite number because, frankly, it made no sense to me, and I suspect a mistake, or typo.]

The European economy is growing, but slowing rapidly in some spots.

Germany: 57.8 mfg., 52.4 services
France: 53.6, 56.6
Italy: 61.1, 52.4
Spain: 57.4, 56.6
Ireland: 62.1, 63.4
Netherlands: 62.5 mfg.
Greece: 58.9 mfg.
Austria: 60.6 mfg.

UK: 57.8 mfg., 59.1 services

Chris Williamson / IHS Markit

“Eurozone growth has slowed sharply at the start of the fourth quarter, with manufacturing hamstrung by supply constraints and services losing momentum as the rebound from lockdowns fades.

“Despite the slowdown, the rate of expansion remains consistent with quarterly GDP growth of 0.5%, but there’s a worrying lack of clarity on the direction of travel in coming months.

“With supply shortages getting worse rather than better in October, manufacturing growth is likely to remain subdued for some time to come.  That would leave the economy reliant on the service sector to drive growth, and there are already signs that rising virus case numbers are dampening activity in many service sector businesses, notably – but by no means exclusively – in Germany.

“Ongoing supply shortages meanwhile suggest that high price pressures will persist into next year, but as yet there are no signs of persistent strong wage growth, which would be the bigger concern for the longer-term inflation outlook.”

Separately, Eurostat released the euro area unemployment stats for September, the EA19 rate at 7.4%, down from 7.5% in August and from 8.6% in September 2020.

Germany 3.4%, France 7.7%, Italy 9.2%, Spain 14.6%, Netherlands 3.1%, Ireland 6.4%, Greece 13.3%, Austria 5.2%.

Brexit: Britain’s Brexit minister David Frost and France’s Europe minister Clement Beaune will speak by phone next week after a “useful and positive” meeting in Paris failed to resolve their dispute over fishing rights.  Boris Johnson’s official spokesman said the French minister made clear that Paris would not retaliate in the next few days over Britain’s failure to grant licenses to up to 200 fishing boats to operate in British coastal waters.

[France had threatened to stop British fishing boats unloading their catch at French ports and to intensify checks on lorries in response to the rejection of some applications by French boats to continue fishing in waters around Jersey and Guernsey.]

“We are not negotiating on how the licenses are granted,” the spokesman said.

But talks had intensified on the licenses.

And then you still have the Northern Ireland protocol to be negotiated.  Britain has complained that the concessions offered by the EU, which the commission says would eliminate 80 percent of checks on goods moving from Great Britain to Northern Ireland, do not go far enough.  And Lord Frost is demanding that the European Court of Justice (ECJ) should no longer have oversight over the protocol, which the EU will not agree to.

Turning to Asia…China’s official government PMI for manufacturing in October was 49.2 vs. 49.6 in September, another month of contraction for the largely state-run enterprises tracked by the National Bureau of Statistics. The service sector reading was 52.4 vs. the prior month’s 53.2.

Caixin’s private reading on manufacturing was 50.6, up from 50.0 in September, Caixin’s survey focusing more on smaller, export-oriented firms in coastal regions.  Services came in at 53.8 for October, up from 53.4.

Power shortages and rising costs have weighed on production, and then you have the new coronavirus outbreaks to deal with.

Premier Li Keqiang said this week that China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies.

Japan’s October manufacturing PMI was 53.2, an improvement over September’s 51.5, with services back in expansion mode, 50.7, up from 47.8 the prior month.

September household spending was down 1.9% year-over-year.  The worst of the latest Covid spike was in September and restrictions have been relaxed since, thus the improving services outlook.

South Korea’s manufacturing PMI for October was 50.2 vs. 52.4 in September; Taiwan’s was 55.2 vs. 54.7.  South Korea was hampered by raw material shortages and shipping delays.

Street Bytes

--Except for the Dow Jones on Thursday, all three major averages hit new record highs each day of the week.  Better than expected earnings and a solid jobs report trumped supply chain challenges and inflation concerns.

Stocks have now risen five weeks in a row, with the Dow Jones gaining 1.4% this week to 36327, the S&P 500 2.0% and Nasdaq 3.1%.  Small- and mid-cap stocks fared even better, with the Russell 2000 up 6.1% and the S&P MidCap average up 4.0%.

--U.S. Treasury Yields

6-mo. 0.06%  2-yr. 0.40%  10-yr. 1.45%  30-yr. 1.84%

Yields fell heavily Friday in part because effective pandemic treatments such as Pfizer’s new pill could ease the product shortages and shipping delays recently blamed for driving up inflation.

Additionally, after the Bank of England’s surprise decision to keep interest rates on hold, traders reassessed their expectations that policy makers will be raising borrowing costs to cool inflation.

While the yield on the 10-year Treasury fell to 1.45% from 1.57% last Friday, the German bund fell to -0.28% from -0.11%, and the 10-year Italian bond fell to 0.87% from 1.17% in just one week.

--OPEC+ is heading for a politically consequential showdown with President Biden, as Saudi Arabia and its allies must choose whether to heed American demands for more oil.

The White House is worried inflation caused by high energy prices could derail its economic agenda. Bowing to the pressure and opening the taps would aid Saudi Arabia’s closest ally, but at the expense of the hard-won crude price recovery that has swelled the kingdom’s coffers.

The thing is, the Saudis are furious  Biden has so far refused to speak with Crown Prince Mohammed bin Salman, the country having previously had unfettered access to the White House in past administrations.

Japan and India are among those who support Biden’s arm-twisting, but OPEC+ showed little sign of bending.  Iraq and Kuwait said the cartel should publicly stick to the current plan – reviving just 400,000 barrels a day of idle supply each month and leaving the market in deficit the rest of the year.

And in a brief virtual meeting on Thursday, that’s what OPEC+ did…approve only a 400,000 barrel-a-day output hike for December.

OPEC+ ministers repeatedly blamed their customers’ economic woes on the surging cost of natural gas, over which it has no control.

“Oil is not the problem,” Saudi Energy Minister Prince Abdulaziz bin Salman told reporters.  “The problem is the energy complex is going through havoc and hell.”

Speaking of nat gas, a major Russian pipeline supplying natural gas to Europe remains stuck in reverse after requests to transport gas westwards through it into Germany were abruptly withdrawn, data on the website of its German operator showed.

Russian gas has not flowed to Germany via the pipeline since Saturday.  Instead, supplies are being sent from Germany to Poland in a reversal that sent benchmark European gas futures up almost 18% by mid-week.

The switch comes amidst accusations from some politicians in the region that the Kremlin is not increasing supplies and calming spot prices in order to pressure Germany and the European Union to approve the Nordstream 2 pipeline, which will bring gas from Russia directly to Germany, bypassing Eastern Europe.

Moscow has denied this and has said it is meeting its contractual obligations.

--Separately, Saudi Aramco, the world’s largest oil company, said Sunday that its profits for the third quarter nearly tripled compared with the period a year earlier amidst the recovery in demand and with prices soaring.

Aramco, Saudi Arabia’s national oil company, said net income was $30.4 billion for the July-September period, up from $11.8 billion a year ago when demand for oil collapsed and prices tumbled.

Aramco’s statement didn’t give full financial details, but it is estimated to have received $70 a barrel on average for its oil in the quarter, compared with $43.60 in the same period in 2020.

--Europe’s largest discount airliner, Ryanair, aims to carry 165 million passengers next year as it cashes in on opportunities left by Covid-weakened rivals.

The Irish carrier earned a profit of $260 million in the three months ended Sept. 30, its first surplus since Covid-19 hit air travel in March 2020.

But CEO Michael O’Leary cautioned in a statement that it would lose $115-$230 million in its current fiscal year, ending March 31, as it cuts prices to spur demand.

The 165 million passengers refers to the March 31, 2022 to March 31, 2023 year.

O’Leary said airline failures including Norwegian and Flybe, combined with cuts by rivals such as Easyjet and Jet2, had left the Irish carrier with unchallenged scope to expand.

“The growth opportunity has never been more exciting,” he said.  “Europe is full of opportunity but there doesn’t seem to be much competitor response at all.”

Boeing is due to have delivered 65 of its new 737 MAX 10 jets to Ryanair by June, making it one of the few airlines in Europe that is growing its fleet.

--American Airlines had a terrible weekend, as 2,300 of its flights were canceled from last Friday through Monday.  Staffing shortages have hit American, Southwest and Spirit Airlines in particular as they ramp up flights ahead of the holiday season but face problems finding enough pilots and flight attendants.

“Flight attendant staffing at American is strained and reflects what is happening across the industry as we continue to deal with pandemic-related issues,” flight attendants’ union APFA said.

In the case of American, it was also hit by bad weather around the Dallas-Fort Worth International Airport, the airline’s base of operations, that had displaced staff around the country.

--TSA checkpoint travel numbers vs. 2019….

11/4…77 percent of 2019 level
11/3…71
11/2…74
11/1…83
10/31…75
10/30…83
10/29…85
10/28…94

Aug. 1st is still the highest post-pandemic day with 2,238,462 travelers.

--Marriott International Inc.’s shares rose as the company topped third-quarter earnings and revenue estimates.  Revenue hit a record of $3.95 billion, while the company said Covid-19 will continue to be material to Marriott’s results.

For now the company saw a rebound in leisure travel despite a hit from fresh restrictions in Asia caused by the Delta variant.  Occupancy rates across its hotels in major regions continued to improve from pandemic lows with vaccinations and the reopening of economies encouraging more people to travel.

The owner of brands such as JW Marriott and the Ritz-Carlton said occupancy in its key U.S. & Canada region stood at 63.5% in the third quarter, compared to 37% a year earlier.  Europe occupancy was at 46.7%, up 26.3% from the same period in 2020.

However, lockdowns and tighter social restrictions in Greater China markets saw occupancy fall to 52.7%, compared to 61.4% last year.

But hotel operators are now expected to benefit from a jump in demand as countries either ease or plan to lift Covid-19 travel restrictions for fully vaccinated international visitors.

--Striking workers at Deere & Co. voted down a second tentative agreement, extending the strike by some 10,000 workers into a third week.

The rejected deal offered larger wage increases (10% the first year, 5% in each of the third and fifth years), no new tiers to retirement benefits and a signing bonus of $8,500.  The wage increase affecting 14 of Deere’s facilities was larger than nearly a dozen other collective bargaining agreements the United Auto Workers union has negotiated since 2018.

The vote was 45% yes, 55% no, according to the union.

The rejection of the agreement demonstrates workers’ increased leverage amid a national labor shortage and strong demand for farm equipment.

Deere said the new contract it provided is the company’s best and final offer, and they aren’t returning to the bargaining table.

The world’s largest maker of farm equipment said it remains in contact with the UAW union that represents workers, but that it has nothing else to bargain about.

“The agreement that we provided is frankly our best and final offer,” Marc Howze, chief administrative officer for Deere, said in an interview.  “In order for us to be competitive we have gone as far as we’re gonna go.”

The company’s existing “two-tier” compensation system, in which workers hired since 1997 receive less generous benefits than those who started working there earlier, has been a sticking point for many employees, and would not have been abolished by the tentative agreement.

--Tesla CEO Elon Musk issued a bombshell tweet, as he is wont to do, that read: “I’d like to emphasize that no contract has been signed yet,” casting a deal with Hertz Global Holdings for 100,000 electric vehicles in doubt.

But Hertz stood by its prior pronouncements on the deal, which had propelled Tesla stock to record highs last week.  However, Hertz didn’t say whether there was a signed contract between the two companies or, if not, why not.

Tesla shares fell on the confusion, but then powered higher to more new highs.

--From Jack Ewing and Patricia Cohen / New York Times:

“Turmoil in the auto industry, a powerful engine of the global economy, is threatening growth and sending tremors through companies and communities that depend on carmakers for money and jobs.

“For every car or truck that does not roll off an assembly line in Detroit, Stuttgart of Shanghai, jobs are in jeopardy. They may be miners digging ore for steel in Finland, workers molding tires in Thailand, or Volkswagen employees in Slovakia installing instrument panels in sport utility vehicles. Their livelihoods are at the mercy of supply shortages and shipping chokeholds that are forcing factories to curtail production.

“The auto industry accounts for about 3 percent of global economic output, and in carmaking countries like Germany, Mexico, Japan or South Korea, or states like Michigan, the percentage is much higher.  A slowdown in automaking can leave scars that take years to recover from….

“In Japan, home of Toyota and Nissan, parts shortages caused exports to fall by 46 percent in September compared with a year earlier – a potent demonstration of the car industry’s importance to the economy.”

--Ford Motor’s October sales numbers showed improvement over the prior months, a sign Ford is managing its way through the semiconductor shortage that is roiling production.

On Wednesday, Ford said its U.S. sales were about 176,000 vehicles, up 12% from September’s 157,000.  October sales were down 4% compared with a year ago, when Ford delivered about 183,000 vehicles.

--Toyota Motor Corp. said it expects sales and profit to rebound in the year ending March 2022, with operating profit forecast to rise 12% to the equivalent of $24.5 billion.  It maintained its estimate that revenue would reach about $263 billion, a figure it last hit in the year ended March 2019.

The automaker said globally, production volume had declined, but that it is weathering the shortage of semiconductors better than most of its peers.  In the U.S., its biggest market, Toyota outsold perennial market leader General Motors Co. for the second quarter in a row.

--Barclays Bank said on Monday that its CEO, Jes Staley, would step down immediately following the results of an inquiry by British financial regulators into Staley’s relationship with the disgraced financier Jeffrey Epstein.

The bank said it learned on Friday of the preliminary conclusions of a nearly two-year investigation by Britain’s Financial Conduct Authority and another agency into the two men’s relationship, which dates back to Staley’s tenure as the head of private banking at JPMorgan Chase.  Staley used Epstein to connect with potential clients.

Staley intends to contest the investigation’s findings, which concluded that it did not find evidence that Staley “saw, or was aware of, any of Mr. Epstein’s alleged crimes” and that it was “disappointed” with the outcome.

But no details about what the inquiry found were provided.

Staley previously said that he had been “transparent and open” with Barclays about his ties to Epstein.

Frankly, from what I’ve read, I’m rather confused as to why Staley had to step down, and it makes sense he is fighting the finding’s, whatever they may be.

--DuPont de Nemours reported adjusted Q3 earnings of $1.15 per share, vs. $0.61 a year ago.  Sales rose to $4.27 billion from $3.63 billion a year earlier, above expectations.

But the company guided a little lower than previously reported for the full year 2021.

DuPont then announced it would acquire engineering materials producer Rogers Corp. in a $5.2 billion cash transaction that’s expected to improve the chemicals company’s position in advanced materials.  Rogers’ shareholders were receiving $277 per share, reflecting a 33% premium over the company’s stock price a day earlier.

DuPont said the deal should improve its standing in advanced materials used in electric vehicles, advanced driver assistance systems, 5G telecommunications and clean energy. Rogers is expected to generate revenue of approximately $950 million in 2021, according to DuPont.

--Qualcomm, the biggest supplier of chips for mobile phones, reported fiscal fourth-quarter adjusted earnings of $2.55 per share, compared with $1.45 a year earlier.

Revenue for the quarter ended Sept. 26 was $9.32 billion, up from $6.50bn a year ago, better than analysts’ forecasts.  The company is pegging revenue in the current quarter of $10 billion to $10.8 billion, also above expectations.

Qualcomm’s optimistic forecast came even as smartphone makers such as Apple Inc. have been struggling with supply chain issues and reporting uneven results.

--Pfizer is hiking sales expectations for its Covid-19 vaccine again, and its early look at 2022 also falls well above Wall Street forecasts.

The drugmaker said Tuesday that it now expects to book about $36 billion in revenue from Comirnaty this year, which is about 7% higher than what Pfizer forecast in July and more than twice what the company expected at the start of the year, shortly after distribution of the two-shot vaccine began.

Next year, Pfizer says global vaccine sales could total around $29 billion or more, and there’s room for growth.  The company expects to recognize revenue for 1.7 billion doses in 2022, but it could produce 4 billion.

In the U.S., around 248 million doses of Comirnaty (developed with Germany’s BioNTech) have been administered, according to the Centers for Disease Control and Prevention.  That compares to 159 million and 15 million doses of vaccines from rivals Moderna and Johnson & Johnson, respectively.

Pfizer books the vast majority of revenue from Comirnaty and splits profit, as well as the cost to make and distribute the vaccine, with BioNTech.  In the third quarter, Pfizer recorded about $13 billion in sales from the shots, even though revenue slipped in the U.S.

And now the CDC has approved Pfizer’s vaccine for children ages 5 to 11.

Overall, Pfizer earned $8.15 billion in the third quarter, with the company’s revenue more than doubling to $24.09 billion compared to last year’s quarter, earnings and revenue above the Street’s forecasts.

Pfizer shares jumped nearly 5% on the news.

And then 11% on Friday after news on its antiviral drug was released.  CEO Albert Bourla called it a “real game-changer in the global efforts to halt the devastation of this pandemic.”  [More below.]

--But while Pfizer shares were rising smartly, shares in Moderna cratered to the tune of 15% on Thursday after the drugmaker scaled back expectations for the number of Covid-19 vaccine deliveries it expects to make this year and the revenue it will record from them.

The drugmaker said Thursday that longer delivery lead times for exports and a temporary impact from expanding its fill-finish capacity may shift some deliveries to early 2022.  The company now expects full-year, 2021 product sales of between $15 billion and $18 billion, down from a prediction of $20 billion in sales that it made in August.

Moderna’s Covid vaccine is the only product the company has on the market.  It brought in $4.81 billion in sales during the third quarter, up from $4.2 billion the previous quarter.

Deliveries were pegged between 700 million and 800 million doses for the year, compared with its previous projections of 800m to 1 billion doses in 2021.

But then shares in Moderna fell another 15% today after Pfizer’s news on its antiviral drug, amid speculation that the pill and a rival treatment from Merck, announced weeks before, may curb demand for Covid-19 vaccinations.

--Zillow Group said it would shut down its homebuying and selling business, citing the company’s inability to accurately predict future home prices.

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” CEO Rich Barton said Tuesday.

“We have been willing to take a really big swing on this, but not a bet the company swing,” the CEO said on an investor call following the announcement in the company’s third-quarter earnings.

Barton also said labor and supply shortages backed up the company’s home-processing pipeline.  “We’ve been able to convert only about 10% of the serious sellers who ask for a Zillow Offer, and we have tended to disappoint the roughly 90% who didn’t sell to us,” Barton said.

Zillow still has thousands of homes in its inventory.  The company said in its shareholder letter released Tuesday that it purchased 9,680 homes in the latest quarter and sold 3,032 homes.  It ended the quarter with 9,790 homes in its inventory and an additional 8,172 homes under contract.  That’s a significant increase from the 3,142 homes Zillow had in its inventory at the end of the second quarter.

Zillow plans to shut down the program over several quarters, noting that the company will process, prepare, and sell homes the way it has historically.  The company expects to sell most of its homes by the end of the second quarter of 2022.

The program’s end will result in a 25% reduction in its workforce over the next several quarters, Zillow said.  The company employs around 8,000 people.

Zillow shares lost 33% of their value in two days on the news and are down about 45% from their June high.

Here’s the thing.  Most shareholders had no idea Zillow had a home-flipping business.

--Uber Technologies Inc. on Thursday reported its first profitable quarter on an adjusted basis since it launched more than a decade ago with its two most important segments, ride-hailing and restaurant delivery, both turning the corner.

Company executives allayed investor concerns about a shortage of drivers, telling analysts that spending on incentives to entice drivers back on the road after the pandemic was largely behind the company.

But a massive drop in the value of its stake in Chinese ride-hailing company Didi drove a $2.4 billion net loss in the third quarter, and the Street viewed Uber’s fourth-quarter outlook as disappointing.

--Peloton Interactive Inc. shares cratered over 30% on Friday after the fitness company cut its annual forecast by as much as $1 billion and lowered its projections for subscribers and profit margins, underscoring its struggles to adjust to a post-pandemic economy.

Best known for its exercise bikes and remote classes, Peloton now expects sales of $4.4 billion to $4.8 billion in fiscal 2022, which ends next June.  Less than three months ago, it had been predicting revenue of $5.4 billion.  On an earnings call with analysts, Peloton said it underestimated the impact of economic reopenings.

Supply-chain constraints, as well as the soaring costs of commodities and freight, also are weighing on Peloton.

--Kellogg increased its organic sales (ex-acquisitions) outlook and affirmed its earnings guidance for the full year after results in the third quarter topped Wall Street estimates on a positive price mix across regions despite supply chain disruptions.

The food manufacturer expects sales growth of 2% to 3%, up from a prior estimate of zero to 1%.  Sales in the quarter ended Oct. 2 climbed to $3.62 billion from $3.43 billion.

The company’s sales in North America were unchanged at $2.06 billion as a positive price mix was offset by lower volumes due to supply disruptions.

Europe sales grew 14%, led by the UK and Russia.  Latin America sales increased 6.7%, and Asia, Pacific, the Middle East and Africa sales climbed 17%.

--The New York Times Company said on Wednesday that it added 455,000 new digital subscriptions in the third quarter, a gain that keeps the publisher on pace to reach its stated goal of 10 million subscriptions by 2025.

Of the new digital subscriptions, 320,000 signed up for the Times’ journalism.  The rest for Games, Cooking and Wirecutter, the product review site that started offering subscriptions in September.

Of the Times’ nearly 8.4 million total subscriptions, 7.6 million are now digital.  The number of print subscriptions fell to 795,000 in the July-through-September quarter, from 831,000 in the same three-month period last year, a decline in keeping with trends affecting the news industry as a whole. 

Roughly 12 percent of the subscriptions are international.

The company reported adjusted operating profit of $65.1 million, a 15 percent increase over the same quarter a year ago, on $509.1 million of revenue, a 19.3 percent rise.

--Fox Corp., parent of Fox News and the Fox broadcast network, reported higher revenue in the latest quarter, as more original entertainment programming, live sports and growth at its streaming platforms boosted advertising sales.

Revenue rose 12% to $3.05 billion for the quarter ended Sept. 30, above expectations.

Fox attracted more advertisers for the live fall sports season, CEO Lachlan Murdoch said, with advertising revenues increasing 17% over last year.

Fox’s cable programming unit, which includes Fox Business Network and Fox Sports 1 channel as well as Fox News, pulled in $1.42 billion in revenue, up nearly 7% from last year.  Fox also got a boost from pay-per-view boxing.

On Wednesday, Fox secured a rights deal with the Union of European Football Associations, or UEFA, to bring more than 1,500 soccer matches to Fox Sports.  Fox also has the rights to some of the biggest soccer tournaments including the FIFA World Cup and Women’s World Cup.

Revenue from Fox’s TV stations was $1.58 billion, up from $1.35 billion a year ago.  The company also benefited from a full college football slate, the MLB All-Star game and more scripted entertainment programming at its Fox Network.

--In one of its first major antitrust lawsuits, the Biden administration on Tuesday sued to stop Penguin Random House, the largest publisher in the United States, from acquiring its rival Simon & Schuster, a broader view of checking corporate acquisitions than what has prevailed in Washington for decades.

Penguin Random House operates more than 300 imprints worldwide and has 15,000 new releases a year, far more than the other four major U.S. publishers.  With the acquisition of Simon & Schuster, Penguin Random House stood to become substantially larger.

Rather than concerns solely over harm to consumers, the Department of Justice said the acquisition could be detrimental to producers – in this case, authors – in what is called a monopsony, as opposed to a monopoly.

Penguin Random House said it planned to vigorously fight the challenge.

--Macau casinos had their worst month of the year as the world’s largest gambling hub reported a 40% fall in gaming revenue for October, after a pandemic-induced travel halt and as uncertainties swirled over tighter government oversight of the industry.

Gross gaming revenue declined to $545 million, the lowest monthly number this year, according to the Gaming Inspection and Coordination Bureau.

Revenue was down 83% from the pre-pandemic level in 2019.

Macau recorded just 8,159 visitor arrivals during Golden Week, down 95% year-on-year, according to government data.  A Covid resurgence in mainland China has now led the enclave to require quarantine for visitors traveling from 20 regions in nine mainland provinces.

Hong Kong, the second largest contributor of visitors, announced it will resume a quarantine exemption for arrivals from Macau from Nov. 2.  Macau maintains its quarantine requirement for people traveling from Hong Kong, making the future impact on tourism to the gaming hub unclear.

Personally, over the years I have taken the high-speed ferry from Hong Kong to Macau three times.  I can’t imagine having to quarantine.  These ferries are usually packed, so I can picture the ripple effect on the tourism industry and the overall economy.

--Speaking of China, Yahoo on Tuesday said it has pulled its services from the mainland, citing an “increasingly challenging business and legal environment.”

Chinese authorities maintain a firm grip on the internet domestically, and require companies operating in China to censor content and keywords deemed politically sensitive or inappropriate.

“In recognition of the increasingly challenging business and legal environment in China, Yahoo’s suite of services will no longer be accessible from mainland China as of November 1,” the statement read.

It said it “remains committed to the rights of our users and a free and open internet.”

The company’s withdrawal coincided with the implementation of China’s Personal Information Protection Law, which limits what information companies can gather and sets standards for how it must be stored.

Chinese laws also stipulate that companies operating in the country must hand over data if requested by authorities, making it difficult for Western firms to operate in China as they may also face pressure back home over giving in to China’s demands.

A week earlier, Microsoft-owned LinkedIn pulled out of the Chinese market; the last major American social media site operating there officially.

The Pandemic

As noted above, Pfizer’s vaccine was cleared by the CDC for use in children aged 5 to 11.  The government has already purchased 115 million pediatric doses of the shots, or enough to vaccinate every U.S. child, Pfizer Chairman and CEO Albert Bourla told analysts on Tuesday.

Dr. Rochelle Walensky, director of the CDC, said: “Together, with science leading the charge, we have taken another important step forward in our nation’s fight against the virus that causes Covid-19.

“We know millions of parents are eager to get their children vaccinated and with this decision, we now have recommended that about 28 million children receive a Covid-19 vaccine.”

Since the pandemic began early last year, 8,300 children in the 5-11 age group had been hospitalized, and 94 died, according to the latest data.

And then we had the news on Pfizer’s antiviral pill today, ritonavir (also called Paxlovid), which a large-scale study showed can reduce the risk of hospitalization or death from Covid by 89% when taken during the early stages (first three days) of the disease.  Participants in the study were located all over the globe, with 45% in the U.S.

The product is administered orally rather than intravenously, like remdesivir.

Pfizer plans to submit the data to the FDA as soon as possible for an emergency use authorization.

Amidst the good news on vaccines and therapeutics, the Biden administration released requirements that employers with 100 or more employees will have to ensure by Jan. 4 that their workers are vaccinated or tested weekly for Covid-19 or face penalties of up to or around $13,600 per violation.  Employers aren’t required under the new policy to provide or pay for tests, with potential exceptions if collective bargaining agreements compel them to do so.

The administration said the requirements don’t apply to employees who don’t report to a workplace where other individuals are present, employees who only work from home, or employees who work exclusively outdoors.

Needless to say, this has created a new political firestorm.

But Dr. Scott Gottlieb, a Pfizer board member, said the combination of Pfizer’s therapeutic and the new federal workplace safety standards that take effect in January, could lead to the end of the pandemic that month.

“By Jan. 4, this pandemic may well be over,” he told CNBC, “at least as it relates to the United States after we get through this Delta wave of infection.  And we’ll be in a more endemic phase of this virus.”

Covid-19 death tolls, as of tonight….

World…5,053,399
USA…774,673
Brazil…609,112
India…460,268
Mexico…289,131
Russia…244,447
Peru…200,350
Indonesia…143,519
UK…141,588
Italy…132,334
Colombia…127,456
Iran…127,053
France…117,875
Argentina…116,083
Germany…96,941
South Africa…89,295
Spain…87,504
Poland…77,547
Turkey…71,724
Ukraine…70,842
Romania…50,087
Philippines…44,085
Chile…37,814
Ecuador…32,983
Hungary…31,184
Czechia…30,938
Malaysia…29,155
Canada…29,132
Pakistan…28,507
Bangladesh…27,887
Belgium…26,105
Tunisia…25,261
Bulgaria…24,940
Iraq…23,297
Vietnam…22,412

[Source: worldometers.info]

U.S. daily death tolls…Sun. 412; Mon. 550; Tues. 1,059; Wed. 1,436; Thurs. 1,303; Fri. 1,345.

Covid Bytes

--Tragically, Russia confirmed new daily highs in infections and deaths this week, with 1,195 of the latter on Wednesday, 1,192 on Thursday.

Moscow’s shops, schools and restaurants are shuttered until Nov. 7 in a bid to stop a surge in coronavirus infections and deaths that came after vaccination efforts stalled.

But Moscow will not extend its non-working period past Nov. 7, Mayor Sergei Sobyanin said.

Russian authorities said Monday that doctors were under “extraordinary” strain due to surging Covid cases.

[It’s the exact same situation in Ukraine, still…new case and death tolls virtually daily.]

--At the same time, the World Health Organization warned that a surge of coronavirus cases in Europe and Central Asia has pushed the region back as the epicenter of the pandemic.

There are now 78 million cases in the European region, which is more than infections reported in Southeast Asia, the Eastern Mediterranean, the Western Pacific and Africa combined, according to the WHO.  Last week, Europe and Central Asia accounted for almost half of the world’s reported deaths from Covid-19.

The outbreak has been accelerating in Europe over the last four weeks as colder temperatures lead to more socializing indoors, while many countries have eased restrictions.  The WHO has repeatedly said that the pandemic is not yet over, and that governments should keep public-health measures such as mask-wearing along with vaccinations.

“According to one reliable projection, if we stay on this trajectory, we could see another half a million Covid-19 deaths in Europe and Central Asia by Feb. 1 next year,” Hans Kluge, the WHO’s regional director for Europe, said at a media briefing on Thursday.

Cases in Germany, shockingly, are hitting new highs.

--Meanwhile, Chinese authorities are ring-fencing Beijing against growing Covid-19 outbreaks now permeating more than half the nation’s provinces, seeking to protect the capital as it gears up to host top political leaders next week and the Winter Olympics in less than 100 days.

The country’s state-owned rail operator said on Wednesday they suspended ticket sales for trains departing from 123 stations in 23 locations that reported coronavirus infections.

The escalating restrictions come after the number of infections in the capital rose persistently over the past few days and are now nearing 40.  The outbreak is powered by the Delta variant.

The latest resurgence in Beijing comes days ahead of a major summit for the ruling Communist Party, which will lay the groundwork for extending President Xi Jinping’s term as leader next year.

Separately, more than 30,000 visitors to the Shanghai Disneyland theme park were kept within the park’s gate on Sunday and forced to undergo Covid-19 testing after a customer tested positive for the virus, a move that underscores China’s eradication efforts.  The park was then shutdown for two days, an illustration of how Disney and other Western firms have no control in China of their own operations.

Foreign Affairs

Iran: Talks with world powers aimed at reinstating the 2015 nuclear deal will resume on Nov. 29, Iran’s top nuclear negotiator said on Wednesday, as Western concerns over Tehran’s nuclear advances grow.  The talks have been on hold since the election of Iran’s hardline President Ebrahim Raisi in June.  He will no doubt take a hardline approach when talks resume in Vienna.

Separately, Vietnam has been in talks with Iranian authorities over the seizure of a Vietnamese oil tanker off the Iranian coast, the Ministry of Foreign Affairs said on Thursday.

Afghanistan: An independent Pentagon review has concluded that the U.S. drone strike that killed innocent Kabul civilians and children in the final days of the Afghanistan war was not caused by misconduct or negligence, and it doesn’t recommend any disciplinary action, officials said during a Wednesday press conference.

The review concluded there were breakdowns in communication and in the process of identifying and confirming the target of the bombing, but the mistaken strike happened despite prudent measures to prevent civilian deaths.

This is an independent review, however, and not the final word.  Air Force Lt. Gen. Sami Said (sic) said the drone strike must be considered in the context of the moment, as U.S. forces under stress were being flooded by information about threats to troops and civilians at the Kabul airport, just days after a suicide bombing.

But we had another ISIS attack this week, this one on a military hospital in Kabul, that killed at least 25 people.  The sophisticated attack included armed gunmen and at least one suicide bomber, which targeted a large facility in one of Kabul’s more affluent neighborhoods, where both wounded soldiers who fought for the former government and Taliban fighters were being treated.

In another attack, three gunmen who claimed to be members of the Taliban shot dead three people attending a wedding in Afghanistan – because music was being played at the reception, but a Taliban government spokesman said two of the three attackers had been arrested after the Friday incident, while denying they were acting on behalf of the Islamist movement.

What is clear, however, is that the Taliban is having a big problem controlling ISIS, which threatens the Taliban’s control of the country.

Editorial / Wall Street Journal

“Two months from his disastrous withdrawal, President Biden wants Americans to forget about Afghanistan and the Americans left behind.  Too bad Islamic terrorists haven’t lost interest in the U.S.

“Colin Kahl, undersecretary of defense for policy, spun the bleak situation as well as he could Tuesday during Senate testimony. But there’s no denying that it won’t be long before al-Qaeda and Islamic State are using their havens in Afghanistan to threaten the West.

“ ‘We could see ISIS-K generate that capability in somewhere between six or 12 months,’ Mr. Kahl said, citing intelligence community assessments. He added that it would take al-Qaeda ‘a year or two to reconstitute that capability.  We have to remain vigilant against that possibility.’

“There are some 2,000 ISIS militants based largely out of eastern Afghanistan, according to the United Nations sanctions monitors.  They frequently clash with the Taliban, which has tens of thousands of fighters.  But this month a Taliban spokesman ruled out cooperating with the U.S. to control ISIS, as the Biden Administration had hoped….

“Meanwhile, U.S. citizens remain trapped inside Afghanistan, a fact Mr. Biden also doesn’t want to talk about. Mr. Kahl said State is in touch with ‘196 American citizens ready to depart, and arrangements are being made via air or ground.  Another 243 have been contacted, but are not ready to depart.’

“Why aren’t they on their way out already?  And why isn’t the U.S. pressuring the Taliban to let these Americans leave? And what about the Afghans who worked with the U.S. as interpreters and other jobs?

“ ‘President Biden is responsible for this slow-motion hostage crisis and his indifference to the life-or-death situation these Americans face is morally indefensible,’ said Nebraska Sen. Ben Sasse on Tuesday.  ‘Americans have been trapped behind Taliban lines for nearly two months, but nobody in the Biden Administration is owning the problem.’

“Mr. Sasse is right, and the danger is that ISIS or al-Qaeda or the Taliban will kill these Americans while they’re waiting to get out. The U.S. press corps may have lost interest in Afghanistan, but the risk to American lives is real now and will grow as the country again becomes a jihadist sanctuary.”

China/Taiwan: I got a kick out of an annual report to Congress on China’s military from the  Pentagon this week that sharply increased its estimate of China’s projected nuclear weapons arsenal over the coming years, saying Beijing could have 700 warheads by 2027 and possibly 1,000 by 2030.  While the numbers would still be significantly smaller than the current U.S. nuclear stockpile, they represent a significant change in the U.S. projection from just last year, when the Pentagon warned the Chinese arsenal would top 400 by the end of the decade.

I told you years ago that it was a farce when the Pentagon would release a nuke estimate for China because we had no freakin’ idea!  [Back then it was ‘200’.] At least in the case of Russia and the United States, because of arms control agreements there is some transparency.  There never has been with China.  It’s all underground!  But the satellites are picking up new missile silo sites these days, many of which are fake in an attempt to deceive the U.S.

Washington has repeatedly called on China to join it and Russia in a new arms control treaty, and in the report the Pentagon reiterated concern about increasing pressure on Taiwan, and China’s chemical and biological programs and technological advancements.

But the report put particular emphasis on China’s growing nuclear arsenal.

The United States has a stockpile of 3,750 nuclear warheads, of which 1,389 were deployed as of Sept. 1.

Meanwhile, China will make people who support Taiwan independence criminally liable for life, a spokeswomen for China’s Taiwan Affairs Office said on Friday.  This is the first time that China has spelt out concretely punishment for people deemed to be pro-Taiwan independence, as tensions rise between the two.  The office named Taiwan’s premier, parliament speaker and foreign minister as people who are “stubbornly pro-Taiwan independence,” and made public for the first time it has drawn up a list of people who fall into this category.

China will enforce punishment on the people on the list, by not letting them enter the mainland and China’s Special Administrative Regions of Hong Kong and Macau.

Taiwan’s President Tsai Ing-wen wasn’t named.

David Ignatius / Washington Post

“In dealing with Taiwan, ambiguity has always been the diplomat’s friend. It has allowed Washington and Beijing to say they both favor ‘one China’ in principle – and for Taipei to pursue its own democratic path and self-defense strategy without a formal declaration of independence.

“For the moment, Beijing and Washington still pledge allegiance to the pleasant fiction of the 1972 Shanghai Communique that the United States can recognize a unitary China even as it supports an increasingly independent-minded Taiwan.  Neither seems ready yet to break that foundation stone of their relationship. But as positions harden on Taiwan, a collision with reality is ahead.

“President Biden doesn’t do ambiguity well, so he just blurted out last month what everyone (including China) assumes about Taiwan. When asked by CNN’s Anderson Cooper whether he would defend the island if it were attacked by China, Biden answered: ‘Yes, we have a commitment.’  That sounded like a change in Washington’s formal policy of ‘strategic ambiguity,’ and global media scrambled to report breaking news.

“White House officials quickly cautioned reporters that it was a verbal slip rather than a deliberate escalation.  White House press secretary Jen Psaki affirmed the next day, ‘There is no change in our policy.’ The Chinese, after momentary indigestion, decided to accept that Biden had just made a gaffe.  That’s the blessing and curse in being perceived as an old duffer; people don’t take Biden’s words all that seriously….

“The problem with Taiwan is that the real world keeps intervening in this tacit agreement to suspend disbelief. Take the question of America’s military presence in Taiwan. The Chinese have known that the United States sends troops to train the Taiwanese military. But as long as the United States and Taiwan didn’t tout that fact, the Chinese could save face.

“The fig leaf is gone.  A U.S. Army video surfaced last year showing Special Operations forces training in Taiwan.  Last month, the Wall Street Journal reported that two dozen Special Operations forces and a number of Marines were training the Taiwanese military.  Taiwan’s President Tsai Ing-wen then made it official in an interview with CNN last month: ‘We have a wide range of cooperation with the U.S. aimed at increasing our defense capability.’

“Has the United States crossed a Chinese ‘red line’ with this military presence?  You might have thought so.  Last year an annual Pentagon report on China listed ‘foreign forces stationed on Taiwan’ as one of seven issues on which China had said it might use military force against the island.  But Newsweek noted that in this year’s version of the report, released Wednesday, the ‘foreign forces’ pretext was dropped.

“Military planners can’t afford ambiguity.  So China’s war plans for Taiwan assume that the U.S. military will become involved, according to a leading China analyst who requested anonymity.  He said China’s goal is to seize Taiwan in five days, before the United States is able to land forces.

“America won’t deter such an attack with the aircraft carriers we once sailed boldly into the Taiwan Strait.  Today, those behemoths are prey to Chinese precision-guided missiles.  Instead, the counterweights against China are three largely invisible factors: America’s alliances with powerful Pacific neighbors such as Japan and Australia; its unmatched dominance of undersea warfare; and its ability to help Taiwan fight an asymmetric war that would be very costly for China….

“For now, this is a war that nobody wants.  It would puncture Beijing’s economy and derail Xi’s march toward what he calls his ‘China dream.’ For Taiwan, the wreckage would be worse; Tasi frankly says that she wants no more than ‘maintaining the status quo.’ The United States doesn’t want a war that past Pentagon war games have predicted it would lose.

“The Taiwan straddle continues, because for now it serves everyone’s interest. But the ambiguity won’t last forever. When Xi says he is determined to achieve reunification, you have to assume he means it.”

[We also learned this week that Taiwan has sent troops to Guam for training and joint exercises, the defense ministry confirmed.]

On a different topic, China has had more space launches in the first 10 months of 2021 than in any previous whole year and is narrowly ahead of the United States in the intensifying space race.

There were 40 launches, with two failures, from Chinese rocket launch pads by the end of October – already more than 2020’s 39, the country’s previous high for a year, with at least seven more planned before the end of December. In the same 10 months, the United States had 39 launches, of which 36 were successful.

This year’s notable Chinese missions have included the core module of the Tiangong space station and two crewed missions shuttling three astronauts each to the station.

Lastly, the captain and two other leaders of the USS Connecticut were relieved for “loss of confidence” after the submarine hit an underwater mountain in the South China Sea, the Navy announced Thursday.

A command investigation into the Oct. 2 incident found that the Seawolf-class nuclear attack submarine grounded on an uncharted seamount while operating in international waters, U.S. 7th Fleet said Monday.

7th Fleet commander Vice Adm. Karl Thomas found “determined sound judgement, prudent decision-making and adherence to required procedures in navigation planning, watch team execution and risk management could have prevented the incident,” the statement said.

Ethiopia/Eritrea: The UN human rights chief said Wednesday that Ethiopia’s yearlong war has been marked by “extreme brutality” as a joint investigation with the Ethiopian Human Rights Commission into alleged atrocities faulted all sides for committing abuses, and “the big numbers of violations” are linked to Ethiopian forces and those from neighboring Eritrea.

It’s been one year since Africa’s second most populous country entered a state of emergency with rival Tigray forces threatening the capital.

Thousands have been killed since the government of Nobel Peace Prize-winning Prime Minister Abiy Ahmed allowed soldiers from Eritrea to invade Tigray and join Ethiopian forces in fighting the Tigray forces who long dominated the national government before Abiy took office. Ethnic Tigrayans across the country have since reported being targeted with arbitrary detentions, while civilians in Tigray have described gang rapes, famine and mass expulsions.

Sudan: UN human rights officials have called on military leaders to step back following last week’s coup, with High Commissioner for Human Rights Michelle Bachelet describing the Oct. 25 military takeover as “deeply disturbing,” while calling for an end to the deadly use of force that has claimed at least 13 lives thus far.

Japan: Prime Minister Fumio Kishida, invigorated by a surprisingly strong election victory, signaled on Monday he would pursue defense policies aimed at deterring China, address climate change and accelerate recovery from the pandemic.

Kishida’s conservative Liberal Democratic Party (LDP) defied predictions and held onto its single party majority in a Sunday election, solidifying his position as head of the fractious party and giving him a freer hand in parliament.

Kishida has only been in power one month, which made the election results a little more surprising.  On defense, he said Japan needed to consider the capability to strike enemy bases as an option to counter growing defense technology in other nations.

Random Musings

--Presidential approval ratings….

Gallup: 42% approve of President Biden’s job performance, 52% disapprove, 34% of independents approve (Oct. 1-19).

Rasmussen: 43% approve, 55% disapprove (Nov. 5).

In a new national NBC News poll, 42% of adults say they approve of Biden’s overall job as president – a decline of 7 points since August, with much of the attrition coming from key parts of the Democratic base.

That’s compared to 54 percent who say they disapprove of the president’s job, which is up 6 points since August.  [Among registered voters, Biden’s job rating stands at 45% who approve, 52% who disapprove.]

The above noted Marist national poll has Biden with a 44% approval rating, 49% disapproving.

--I have been writing for months that here in New Jersey, Republican gubernatorial candidate Jack Ciattarelli, was running a good campaign (after a shaky start), and that the race was much closer than the polls.  I wrote last week that Ciattarelli would lose by six points, which would have been a great showing in a state that Joe Biden won by 16 a year ago.  [For the record, a poll the day before the election from Rutgers-Eagleton had Murphy by eight points.]

The tally stands at 50.8-48.5, Murphy, though scores of absentee ballots have yet to be counted.

--I said Eric Adams would win New York City’s mayoral election by 35 points and he prevailed by 37+, 66.5-28.8 percent.  I’ve been writing of Adams a long time in this space.  In fact, way back on April 3, 2010 I wrote this:

“I’ve always found New York Dem. State Sen. Eric Adams to be a fascinating individual. Oh, he’s more than a bit radical, but the former NYPD captain and co-founder of 100 Blacks in Law Enforcement is entertaining and could one day be a force to reckon with in a congressional race.  He’s Al Sharpton without the baggage.

“So Adams is the latest black politician to attempt to get black youth to pull up their pants. This has literally been going on for 20 years, but it’s always good to see someone respected in the community like Adams, or Bill Cosby, shine a light on the issue.

“Adams is putting up billboards: ‘Stop the Sag!’ and ‘We are better than this!’

“ ‘Children will be children.  But as adults, we need to be on record and tell them they’re doing something wrong,’ he says.”

Oh well, re Bill Cosby, I can’t nail ‘em all.  But he was right on this particular topic.

So Tuesday night, Adams celebrated at an exclusive Manhattan nightclub, where he told a crowd of well-heeled donors and celebrities that he’s going to “hit reset” on the de Blasio administration’s “dysfunctional” relationship with business leaders and the police.

Addressing the business leaders in attendance, Adams said: “Can I say to you that this is going to become one of the most business-friendly cities?” his audience cheering and applauding.  “You cross the damn Washington Bridge, and it says, ‘Welcome to the Empire State’ – not ‘welcome to the state that destroys empires.’  This is a place you build empires.”

Predecessor Bill de Blasio had nothing but contempt, it seemed, for the private sector.

Adams also blasted the dysfunctional use of tax dollars under de Blasio.

“We expect an inferior product every day.  How the hell are you going to spend $38 billion on the Department of Education, and 65% of Black and Brown children never reach proficiency at all?  Talk about wasting our tax dollars,” he said.  “Year after year after year, we take $98.7 billion and give us an inferior product, and we’re supposed to act like everything’s alright.  Damn it, it’s not alright.  It’s not alright.”

--Back to Glenn Youngkin.  He is a former Co-Chief Executive Officer of The Carlyle Group, the buyout firm that once employed former President George H.W. Bush and has in recent years worked to shed its reputation as a Beltway operator.

But Youngkin’s election puts Carlyle back on the Washington map.  The D.C.-based private equity firm first cultivated its image as a Washington heavy hitter during the 1990s and early 2000s.  In addition to Bush, it hired ex-Treasury Secretary and Secretary of State James Baker and former Defense Secretary Frank Carlucci.

Throughout the 1990s, Carlyle funds, which now have around $280 billion in assets under management, bought defense firms such as United Defense and Vought Aircraft.  Those investments came under scrutiny after the 9/11 attacks. The Bin Laden family, who had money with Carlyle, liquidated their stake following criticism that they would benefit from U.S. spending on wars, according to a story back then in the New York Times.

The firm’s famous hires retired and it worked to keep a lower profile.  Co-founder David Rubenstein, who purchased the last privately-owned copy of the Magna Carta in 2007, told Forbes in 2012 that “we depoliticized the image,” though he is still a well-known figure in D.C.  [Rubenstein contributed $7.5 million towards the restoration of the Washington Monument after it was damaged in a rare earthquake, and later $10 million towards improvements on the Jefferson Memorial, among his other philanthropic efforts.]

For his part, Youngkin’s win puts a renewed target on Carlyle.  He lost a power struggle to lead the firm, and then announced his gubernatorial run as the Republican candidate in January.  Then he wins a state Biden had won by 10 points.

Recall that when Senator Mitt Romney ran for president in 2012, his past work at rival asset manager Bain cost him votes, as he was accused of slashing jobs and chasing profits at the expense of average Americans.  Bain and private equity became household words.

And that playbook could be used against Youngkin, with Carlyle having some iffy investments, such as in China’s ByteDance, owner of TikTok.

It’s funny how some are already talking of Youngkin as a presidential candidate in 2024.  If so, the name Carlyle will be front and center.

--Donald Trump was quick to take credit for Youngkin’s win.

“I would like to thank my BASE for coming out in force and voting for Glenn Youngkin.  Without you, he would not have been close to winning. The MAGA movement is bigger and stronger than ever before.  Glenn will be a great governor.  Thank you to the people of the Commonwealth of Virginia and most particularly, to our incredible MAGA voters!” 

Trump encouraged Virginia voters to support Youngkin on the eve of the election, but he said nothing about Ciattarelli, who once described Trump as an embarrassment who was unfit to serve as president.

--Democrat Michelle Wu became the first woman and first person of color elected as mayor of Boston. Wu is Taiwanese American and was the first Asian American city councilor in the city.

--Voters in Minneapolis rejected a referendum (ballot question) to replace the police department with a new Department of Public Safety that would have focused on mental health, civilian well-being and social services.

The proposed amendment came after high-profile killings of Black men by law enforcement, including the conviction of former Minneapolis police officer Derek Chauvin, who was sentenced to more than 20 years in prison for killing George Floyd.

Under the proposed change, which fiercely divided the community, power over the police department would have been split between the mayor and city council.  It also would have removed the requirement that the city have a minimum level of funding and staffing for the force.

But critics said defunding the department would not address the rising crime in the city and the question was shot down 56.9% to 43.1%.

--In one of the most stunning political upsets in New Jersey history, longtime state Senate President Stephen Sweeney was defeated in his latest re-election bid by a little-known Republican, Edward Durr, who staged a largely grassroots campaign, supposedly spending just $153 on the race.

Sweeney is the second-most powerful elected state official after Gov. Murphy, but lost to Durr, a commercial truck driver.

Sweeney had been senate president since 2010, and had served the south Jersey district since 2002.

Durr says he was motivated to run after he was denied a concealed carry permit, despite having a clean record.  He was asked by Fox News what he was going to do on Day 1 and Durr said he didn’t know.

“I don’t know what I don’t know, but I will learn what I need to know, and I’m going to guarantee one thing.  I will be the voice and people will hear me because if there is one thing people will learn about me, I got a big mouth and I don’t shut up when I want to be heard.  I’m going to be heard.”

Well, as you can imagine it only took a few hours before it was discovered that Durr’s social media posts have been rather incendiary…xenophobic and anti-Muslim, for starters.  One Twitter post from Sept. 2019 labeled Islam “a false religion” and its prophet, Muhammad, a “pedophile.”

A pair of tweets from Durr’s account called Sen. Robert Menendez of New Jersey a “pedophile” in 2018 and 2018.  And multiple posts from his Facebook account downplayed the Jan. 6 attack on the Capitol – one calling it “not an insurrection…(but) an unauthorized entry by undocumented federal employers!”

In September, a post from Durr’s Facebook account compared Covid-19 mandates to Jews being exterminated in the Holocaust.

So we’ll see just how big a mouth Mr. Durr has.  This afternoon, he apologized and deleted his social media accounts.

--Asked Monday night who made him “buck” President Donald Trump’s wishes and certify the results of the 2020 presidential election, former vice president Mike Pence told a group of young conservatives that he looked to the teachings of James Madison and the Bible to help him defy Trump hours after the deadly pro-Trump riot at the U.S. Capitol on Jan. 6.

Speaking at a Young America’s Foundation event at the University of Iowa, Pence was asked by an audience member identified only as Jared whether “someone in the White House convinced you that it would destroy your hopes of becoming president” if he followed Trump’s pressure not to certify the election results in Arizona and other states.

“My question is what is the name of the person who told you to buck President Trump’s plan and certify the votes?” the audience member asked.

Pence, who hid from the marauding mob as some chanted “Hang Mike Pence,” responded, “James Madison” – the fourth president of the United States, who is known as the “father of the Constitution.”

Pence emphasized that he stands by his January decision, saying, “The only role of the federal government is to open and count the electoral votes that were sent by the states.”

“I understand the disappointment in the election.  You might remember I was on the ballot,” he said of the 500 or so people in attendance.  “But you’ve got to be willing to do your duty.  And the time may come that some of you are in that position, or one like it.  And I just have a feeling, based on the shining faces I’m seeing around here, you’re going to be men and women who do your duty in that time as well.”

Pence’s comments came days after it was reported by the Washington Post that Trump attorney John Eastman kept pressing the vice president to act even after Trump’s supporters had tramped through the Capitol – an attack a Pence aide, Greg Jacob, had described as a “siege” in their email exchange.

“The ‘siege’ is because YOU and your boss did not do what was necessary to allow this to be aired in a public way so that the American people can see for themselves what happened,” Eastman wrote to Jacob, referring to Trump’s false claims of voter fraud.

Trump has been seeking to withhold almost 800 pages of documents from the House select committee investigating the Jan. 6 insurrection.  The former president is attempting to exert executive privilege, but he’s not president.

Under the most drastic of the options outlined in Eastman’s memos, Pence would have rejected electoral votes for Biden from states where Republicans were claiming fraud, making Trump the winner – a proposal that Eastman has more recently tried to disown as a “crazy” suggestion he did not endorse.

--In an interview with USA TODAY for his new book, “Integrity Counts,” Georgia Secretary of State Brad Raffensperger criticized attempts to forge “new revisionist history” about the Jan. 6 insurrection.  People are trying to cast it as a largely peaceful protest rather than what it was, he said: A violent attempt to re-install Trump in the White House.

“What really bothers me the most is that people are now trying to minimize what happened on January 6,” he said.  “I find that really, highly objectionable… People need to know people did that.”

Disagree, he said, but do it “respectfully.”

“That’s what we’re called to be,” Raffensperger said, not like the kinds of people who triggered the attack on the U.S. Capitol: ‘It’s not to call people all sorts of names and threaten them with violence. That’s what the mob does.”

Raffensperger has defended most of Georgia’s controversial new election law, which he insists expands voter’s access overall.  But he has remained critical of election changes in Georgia, and across the country, that have shifted some election administration aspects to highly partisan bodies.

Previously the Georgia secretary of state served as chair of the State Election Board, but the new law demotes the office to a nonvoting member of the panel. The new chair will be elected by the legislature.

At least seven other battleground states have made similar changes, which critics warn politicize the election administrative process.

Ahead of the 2022 midterms there also has been a rise of Republican secretaries of state candidates in crucial battleground states who are wedded to Trump’s false claims about last year’s election.

Raffensperber said any sitting secretary of state who thinks they can violate the law on behalf of their preferred candidate will be “hauled before the Justice Department.”

The secretary of state is running for reelection.

--An analyst who was a primary source for the 2016 Steele dossier of allegations against Donald Trump was arrested on charges that he repeatedly lied to the FBI about where and how he got his information, officials said Thursday.

Igor Danchenko’s role in providing information to British ex-spy Christopher Steele, who compiled the accusations about Trump in a series of reports, has long been a subject of scrutiny from internal Justice Department investigators and special counsel John Durham, according to those familiar with the investigations.

A 2019 report by the Justice Department inspector general found major problems with the accuracy of Danchenko’s information, but the 39-page indictment unveiled Thursday paints a more detailed picture of claims that were allegedly built on exaggerations, rumors and outright lies.  The indictment is likely to buttress Republican charges that Democrats and FBI agents intentionally or accidentally turned cheap partisan smears into a high-stakes national security investigation of a sitting president.

--The National Highway Traffic Safety Administration reported that U.S. traffic deaths in the first six months of 2021 hit 20,160, the highest first-half total since 2006, the government reported Thursday, a sign of reckless driving during the coronavirus pandemic.

The estimated number was 18.4% higher than the first half of last year.

--Good news for Californians and their drought.  The storm that pounded Mammoth Lakes last week left the High Sierra under a blanket of snow and Mammoth Mountain opened for skiing today, two weeks ahead of schedule.

---

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

God bless America.

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Gold $1820
Oil $81.17

Returns for the week 11/1-11/5

Dow Jones  +1.4%  [36327]
S&P 500  +2.0%    [4697]
S&P MidCap  +4.0%
Russell 2000  +6.1%
Nasdaq  +3.1%  [15971]

Returns for the period 1/1/21-11/5/21

Dow Jones  +18.7%
S&P 500  +25.1%
S&P MidCap  +26.0%
Russell 2000  +23.4%
Nasdaq  +23.9%

Bulls 54.0
Bears 24.1…prior split was 48.9 / 23.8

Hang in there.

Brian Trumbore

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