Week in Review

---

Week in Review

12/16/2023

For the week 12/11-12/15

[Posted 5:00 PM ET, Friday]

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

Special thanks to G.R. for his ongoing support.

Edition 1,287

What a bizarre, and in some ways, troubling week.  The good news was the stock market, as measured by the Dow Jones Industrial Average, hit a new all-time high on bullish talk from Fed Chair Jerome Powell that they were finished hiking interest rates and actual cuts were in the offing.  Other central banks, though, were not as rosy.

There was a ton of movement in European politics, as I discuss below, some good, some bad.

President Biden continued to receive grim news on the polling front, and now he faces an impeachment inquiry…all the more reason over the coming weeks to consider bowing out before primary season so his party can have an actual race to see who takes on Donald Trump.

But the biggest story, along with Israel’s war with Hamas, was Ukraine striking out in both the United States and the European Union when it came to badly needed aid.

Here’s one big fear.  Ukraine needs ongoing air defense systems.  The nightmare is Russia launches a massive drone attack on Kyiv, like 200 drones rather than 20-40, overwhelms air defenses, and then immediately follows up with 20 ballistic missiles.  That could be catastrophic.

Tom Nichols of The Atlantic wrote, in general: “Despite the clear impact of American aid, critics continue to ask: How does it all end?  For Ukraine, the only exit strategy is survival, just as it was for Britain in 1940 or Israel in 1973.  The Ukrainians will keep fighting, because the alternative is the enslavement and butchery of the Ukrainian people, and the end of Ukraine as a nation.  The Russians are the people who need an exit strategy.  But as long as some in the GOP keep giving Putin the hope that he can outlast the West – and as long as Russian parents keep handing Putin their sons to burn on the pyre of his ego and delusions – this war will go on.

“The Kremlin will stay the course.  So should we, for as long as it takes to ensure the survival of Ukraine and the security of Europe, the United States, and the world.”

Well, there is some hope for Ukraine aid as the Senate is making progress on bipartisan talks on border security and providing Kyiv badly needed assistance.  Multiple senators on Thursday said, “We’re making progress and the White House is engaged, which is good.  Everything’s encouraging,” Sen. John Thune, the No. 2 Republican in the Senate, told reporters.

The House has already gone home for the holidays, but it would be significant if on Monday the Senate approves a package, that the House can then tackle immediately in early January.

But then there are the two continuing resolutions that need to be extended, or a final budget for fiscal 2024 approved…those deadlines being January 19 and February 2.

Fun and games after the holidays, boys and girls.

---

Israel and Hamas War…day by day….

--For the record, long after I posted WIR last Friday, the State Department pushed through a sale to Israel of 13,000 rounds of tank ammunition, bypassing a congressional review process that is generally required for arms sales to foreign nations.  The appropriate congressional committees were notified at 11 p.m. that night.

--Over the weekend, UN official Carl Skau said of the crisis in Gaza: “There is a question for how long this can continue, because the humanitarian operation is collapsing.  Half of the population are starving, nine out of 10 are not eating every day.  Obviously, the needs are massive.”

The World Health Organization said on Sunday it will be all but impossible to improve the “catastrophic” health situation in Gaza even as the board passed an emergency WHO motion by consensus to secure more medical access.

WHO Director General Tedros Adhanom Ghebreyesus told the 34-member board in Geneva that medical needs in Gaza had surged and the risk of disease had grown, yet the health system had been reduced to a third of its pre-conflict capacity.

It is estimated that 350,000 people in the Gaza Strip have infections, including 115,000 with severe respiratory infections, while lacking warm clothes, blankets and protection from the rain.

And with little clean water and not enough fuel to boil it, there are real dangers of outbreaks of dysentery, typhoid and cholera.

Meanwhile, Haaretz, an Israeli newspaper, published a study showing the aerial bombing campaign by Israel is the most indiscriminate in terms of civilian casualties in recent years.

“The broad conclusion is that extensive killing of civilians not only contributes nothing to Israel’s security but that it also contains the foundations for further undermining it,” Haaretz concluded.

“The Gazans who will emerge from the ruins of their homes and the loss of their families will seek revenge that no security arrangements will be able to withstand.”

--Jordan’s foreign minister, Ayman Safadi, on Sunday said that Israel was implementing a policy of pushing Palestinians out of Gaza through a war that he said meets the “legal definition of genocide,” allegations that Israel rejected as “outrageous.”

Jordan borders the West Bank and absorbed the bulk of Palestinians after the creation of Israel in 1948.  Safadi also said Israel had created hatred that would haunt the region and define generations to come.

“What we are seeing in Gaza is not just simply the killing of innocent people and the destruction of their livelihoods (by Israel) but a systematic effort to empty Gaza of its people,” Safadi said at a conference in Doha.

“We have not seen the world yet come to the place where it should come…an unequivocal demand for ending this war; a war that is within the realm of legal definition of genocide.”

Israeli government spokesman Eylon Levy said: “These are, of course, outrageous and false accusations.”

“Israel is fighting to defend itself from the monsters who perpetrated the Oct. 7 massacre, and the purpose of our campaign is to bring those monsters to justice and ensure they can never again hurt our people,” he added.

--Prime Minister Netanyahu said on Sunday that dozens of militants have surrendered in recent days as the IDF intensified its military effort to crush Hamas and kill its leadership.

Netanyahu said the world is seeing “the beginning of the end” for Hamas and its leader, Yahya Sinwar.

“They lay down their weapons and surrender themselves to our heroic warriors,” Netanyahu said in a video broadcast.  “It will take more time, the war is in full swing, (but) I say to the Hamas terrorists it is over.  Don’t die for Sinwar.  Surrender – now.”

Hamas issued a statement saying Israel was detaining unarmed civilians and surrounding them with weapons in a “desperate and transparent ploy” to give the appearance that the resolve of the militants was fading.

Netanyahu spoke to Russian President Putin on Sunday and voiced displeasure with “anti-Israel positions” taken by Moscow’s envoys at the United Nations, an Israeli statement said.

Netanyahu also voiced “robust disapproval” of Russia’s “dangerous” cooperation with Iran, the Israeli statement said.

“Vladimir Putin reaffirmed the principal position of rejecting and condemning terrorism in all its forms,” the Kremlin said in a statement.

“At the same time, it is extremely important that countering terrorist threats does not lead to such grave consequences for the civilian population.”

Yes, you read that right…Vlad the Impaler condemns “terrorism in all its forms,” as he was preparing to bomb Kyiv multiple times in the days to follow.

--Violence escalated at Lebanon’s border with Israel on Sunday as Hezbollah launched explosive drones and powerful missiles at Israeli positions and Israeli air strikes rocked several towns and villages in south Lebanon.

Street-to-street combat raged in what Israel described as three Hamas strongholds in the Gaza Strip on Monday, as top Israeli officials warned that increased attacks on northern Israel by Hezbollah, from Lebanon, could prompt a powerful response.

Fighting in “fierce and difficult battles,” the Israeli military said, Israeli leaders hinting at escalating a conflict on the front with Lebanon against Hezbollah.

Increasing Hezbollah strikes on northern Israel “demand of Israel to remove such a threat,” Benny Gantz, a member of the war cabinet and former defense minister, told Secretary of State Antony Blinken in a phone call.

--Hamas said that Israel would not receive its “prisoners alive” unless it agrees to “an exchange and negotiation.”  But Qatar’s prime minister said that the possibility of securing a new ceasefire is diminishing.

--Netanyahu said on Tuesday that Israel enjoys U.S. support for its goals of destroying Hamas and recovering hostages held by the Palestinian militants, but the allies differ about what might follow the Gaza war.

Reiterating his past refusal to countenance a return to Gaza rule of the Western-backed Palestinian Authority under President Mahmoud Abbas, Netanyahu said in a statement that Gaza “will be neither Hamas-stan nor ‘Fatah-stan.’”  Fatah is Abbas’ faction.  “I would like to clarify my position: I will not allow Israel to repeat the mistake of Oslo,” Netanyahu said without clarifying which mistake he was referring to.  The 1993 Oslo Accords established limited Palestinian autonomy in the West Bank and Gaza.

On Tuesday, secretary general of the Executive Committee of the Palestine Liberation Organization Hussein al-Sheik responded to reports that the Israeli premier had compared Oslo to Hamas’ massacre on Oct. 7 by saying both had caused a similar amount of Israeli deaths.

“Benjamin Netanyahu’s statement equating the Oslo Accords with what happened on Oct. 7 confirms his war against all Palestinians,” Al-Sheikh said.  “We say to Netanyahu that Oslo died under the treads of his tanks, sweeping through our cities, villages and camps from Jenin to Rafah.”  [Reuters]

--President Biden said on Tuesday that Israel is losing support over its “indiscriminate” bombing of Gaza and that Netanyahu should change, exposing a new rift in relations.  Biden’s remarks, made to donors to his re-election campaign, were his most critical to date of the Israeli prime minister’s handling of the war.

“Israel’s security can rest on the United States, but right now it has more than the United States. It has the European Union, it has Europe, it has most of the world… But they’re starting to lose that support by indiscriminate bombing that takes place,” Biden said.

Biden alluded to a private conversation in which Netanyahu said: “‘You carpet bombed Germany, you dropped the atom bomb, a lot of civilians died.’”  Biden said he responded: “Yeah, that’s why all these institutions were set up after World War II to see to it that it didn’t happen again…don’t make the same mistakes we made in 9/11. There’s no reason why we had to be in a war in Afghanistan.”

Biden, at the event, also mentioned Israel’s far-right politician Itamar Ben-Gvir, who is Israel’s national security minister, and said “this is the most conservative government in Israel’s history.”

Biden said Netanyahu must “change,” adding that “this government in Israel is making it very difficult.”

He also said that ultimately Israel “can’t say no” to a Palestinian state, which Israeli hardliners oppose.

Netanyahu said the same day, “I will not allow the entry into Gaza of those who educate terrorism, support terrorism and finance terrorism.”

--Meanwhile, the UN General Assembly voted overwhelmingly on Tuesday to demand a humanitarian ceasefire in Gaza in a strong demonstration of global support for ending the Israel-Hamas war.  The vote also shows the growing isolation of the United States and Israel.

The vote in the 193-member body was 153 in favor, 10 against and 23 abstentions.

After the United States vetoed a resolution in the Security Council on Friday demanding a humanitarian ceasefire, Arab and Islamic nations called for an emergency session of the General Assembly to vote on a resolution making the same demand.

Unlike Security Council resolutions, General Assembly resolutions are not legally binding.  But they send a message.

--The IDF announced on Tuesday that 105 soldiers had been killed since the start of the ground operation in the war, 20 of which were killed in accidents, including 13 as a result of friendly fire after being misidentified as being the enemy by IDF soldiers.  Five of the 13 were hit by an airstrike from the Israeli Air Force, four were hit by tank fire and four others by infantry fire.

But the above casualty figures were before Wednesday’s action, when Hamas ambushed Israeli troops in a dense Gaza City neighborhood, killing ten, media reported, as Hamas put up stiff resistance in areas that Israel has isolated and pounded with airstrikes for over nine weeks.

Army Radio said troops who were searching a cluster of buildings lost communication with four soldiers who had come under fire, sparking fears of a possible abduction.  When the other soldiers launched a rescue operation, they were ambushed with heavy gunfire and explosives.

Among the dead were Col. Itzhak Ben Basat, 44, the most senior officer to have been killed in the ground operation, and Lt. Col. Tomer Grinberg, a battalion commander.

--Israel has begun pumping seawater into at least a part of Hamas’ tunnel network under the Gaza Strip, U.S. officials told the Wall Street Journal on Tuesday.  Flooding the tunnels could take weeks, officials estimate.

President Biden expressed his hesitation over the plan when asked about it Tuesday at the White House.  “Assertions [are] being made that [Israeli officials are] quite sure there are no hostages in any of these tunnels,” Biden said.  “But I don’t know that for a fact,” he added.

A second opinion: “The tunnels are military objective liable to attack,” writes Aurel Sari, who teaches Public International Law at the University of Exeter.  Sari wrote at length considering the legal implications of flooding those tunnels, and decided, “Filling them with water would not be an indiscriminate attack,” but “the reverberating effects may be far more significant, in particular if they were to drastically reduce the availability of potable water to the civilian population and lead to high levels of injury and death.”

--Thursday, the head of the UN Palestinian Refugee agency said on Thursday that crowds of hungry people were stopping its aid trucks in Gaza and helping themselves to the food, making it almost impossible to continue delivering aid.

“People are stopping aid in trucks, taking the food and eating it right away.  And this is how desperate and hungry they are,” Philippe Lazzarini, UNRWA commissioner-general, told reporters in Geneva.  This means that hundreds of thousands of people in overcrowded UN shelters in southern Gaza are sometimes deprived of food because it is intercepted before they arrive.

“Hunger has now emerged over the last few weeks and we meet more and more people who haven’t eaten for one, two or three days,” Lazzarini said.  “Because there is more and more of a breakdown of civil order and as long as humanitarian assistance remains a crumble compared to the immensity of the needs, the more this tension will continue, the more the environment is becoming impossible.”

The UN World Food Program says half of Gaza’s population of 2.3 million is starving, and 90% of the people are displaced.

--Israel’s spy chief canceled talks on possible hostage exchanges with Hamas in Qatar, according to Israel’s Channel 13 news, Thursday.

--Nearly half of Israel’s bombs dropped over Gaza were unguided, according to an assessment from the Office of the Director of National Intelligence that was shared with CNN on Wednesday.

--Israel’s military chief said the war in Gaza will “last more than several months” and “will require a long period of time.”  Defense Minister Yoav Gallant said this to visiting White House National Security Adviser Jake Sullivan when the two met Thursday.

The Biden administration wants Israel to find a point to scale back its large-scale ground and air campaign in Gaza and move to more “surgical” military operations targeting Hamas but the U.S. has not demanded a deadline for the shift, according to reports.

Sullivan said he discussed “a shift in emphasis” with members of Netanyahu’s cabinet and other top Israeli officials.  National Security Council spokesman John Kirby said a “possible transitioning from what we would call high-intensity operations, which is what we’re seeing them do now, to lower-intensity operations sometime in the near future.  But I don’t want to put a timestamp on it.”

--The IDF announced this afternoon that Israeli troops mistakenly killed three hostages during combat with Hamas in northern Gaza, initially identifying them “as a threat,” the military said in a statement.  “As a result, the troops fired toward them and they were killed.”  After “a suspicion arose over the identities of the deceased, their bodies were transferred to Israeli territory for examination, after which it was confirmed they were three Israeli hostages.”

---

This Week in Ukraine….

--In his nightly video address to the nation last Friday, President Volodymyr Zelensky urged his troops to press on with fighting as Russia looks to seize more territory in Ukraine’s east and a vote by the U.S. Congress on emergency aid to Kyiv hanged in the balance.

“The task of our state – even now, in winter, no matter how difficult it may be – is to show strength and not let the enemy seize the initiative, not let them fortify,” Zelensky said.

“We continue our active foreign policy work to bring gains for Ukraine in defense, macro-finance, and political and motivational strength,” Zelensky said, adding that he met on Friday with his top commanders for a battleground update.

Senate Republicans continued to block $60 billion of assistance to Ukraine, demanding that the Biden administration tighten the southern U.S. border.

“Anyone defending freedom needs to feel that they are not alone,” Zelensky said.  “The free world must be united.”

Support from the European Union is also looking shaky, though, after Hungary threatened to torpedo this week’s summit in Brussels, where additional funding is slated to be discussed.

Newly committed aid to Kyiv dropped 90%, to the lowest level since Russia launched its full-scale invasion in February 2022, according to data tracked by the Kiel Institute for the World Economy released on Thursday.

Ukrainian first lady Olena Zelenska said in a BBC interview to air on Sunday that Ukrainians are in “mortal danger” if Western countries don’t continue their financial support.  “If the world gets tired, they will simply let us die,” Zelenska said.

--Ukraine on Saturday strongly condemned Russian plans to hold presidential elections next spring on occupied territory, declaring them “null and void” and pledging to prosecute any observers sent to monitor them.  Russia’s upper house set the country’s presidential election for next March, and chairwoman Valentina Matviyenko said residents in four occupied Ukrainian regions would be able to vote for the first time. 

Russia claims to have annexed the Donetsk, Luhansk, Zaporizhzhia and Kherson regions in the east and south of Ukraine during referenda last year dismissed by Kyiv and the West as a sham, but it does not fully control any of them.  And Russia seized Crimea in 2014.

Also Saturday, Ukrainian officials pressed on with a campaign to remove Soviet-era monuments as authorities double down on efforts to erase all traces of Russian rule.

--A declassified U.S. intelligence report shared with Congress assessed that the Ukraine war has cost Russia 315,000 dead and wounded troops, or nearly 90% of the personnel it had when the conflict began.  The report also assessed that Moscow’s losses in personnel and armored vehicles to Ukraine’s military have set back Russia’s overall defense posture.

Russian officials have said Western estimates of Russian death tolls in the war are vastly exaggerated and almost always underestimate Ukrainian losses, which Russian officials say are vast.

The declassified report assessed that Russia began its full-scale invasion of Ukraine in February 2022 with 360,000 personnel.

The losses are the reason Russia has loosened recruitment standards for deployments in Ukraine.

“The scale of losses has forced Russia to take extraordinary measures to sustain its ability to fight.  Russia declared a partial mobilization of 300,000 personnel in late 2022, and has relaxed standards to allow recruitment of convicts and older civilians,” the assessment said, according to a congressional source.

The Russian army began the war with 3,500 tanks, lost 2,200 of them and has had to “backfill” that force with T62 tanks produced in the 1970s, leaving it only 1,300 tanks on the battlefield, the source quoted the report as saying.

Kyiv treats its losses as a state secret and officials say disclosing the figure could harm its war effort.  A New York Times report in August cited U.S. officials as putting the Ukrainian death toll at close to 70,000.

--In a speech Monday night at the National Defense University in Washington, President Zelensky described the situation in stark terms.  He said that Russia was trying to roll back the gains for democracy in Europe won in 1991, when the Soviet Union collapsed.  Russia is a threat, he said, not only to Ukraine, but to freedom “from Warsaw to Chicago.”

“America and all free nations need to be confident in themselves, in their strength, in their leadership, so that dictatorships doubt themselves and their power to undermine freedom,” he said.

“If there’s anyone inspired by unresolved issues on Capitol Hill, it’s just Putin and his sick clique,” Zelensky noted.  “They see the dreams come true when they see the delays and scandals.  They see freedom falling when the support of freedom fighters goes down.  People like Putin shouldn’t even hope to conquer freedom,” he continued.  “And we can show our children and grandchildren what real confidence is, as was shown to us.”

--As senators emerged from their private discussion with Zelensky, Sen. Ron Johnosn (R-Wis.) said that Zelensky had invoked the term “guerrilla warfare,” as in the future direction of the conflict if Ukraine loses U.S. military assistance, Johnson calling that “a lose-lose proposition for everybody.”

“So the sooner this thing ends, the better,” he said, but quickly adding that he remains troubled about “adding fuel to the flame.”

Sen. Sherrod Brown (D-Ohio) told reporters that without U.S. support Ukraine would likely be “overrun” by Russian forces, causing the war to become “a NATO issue.”  Within the alliance there remains considerable concern that, should Kyiv fall, Vladimir Putin would set his sights on other former Soviet states, triggering a world war that inevitably draws in the U.S.

There was little hope an agreement on U.S. assistance could be reached in the next week.  House members were expected to leave this weekend regardless.

House Speaker Mike Johnson said after his meeting with Zelensky that his party’s first condition on any supplemental spending package “is about our own national security.”  He criticized the White House over record numbers of people crossing the border.

Republicans know that support for providing aid to Ukraine has fallen as the war continues, particularly among their party’s supporters.

A recent Pew Research Center survey found that 48 percent of Republicans and Republican-leaning independents believed that the U.S. was giving too much aid to Ukraine.  This was up about four points since the summer.

The failure of Ukraine’s counteroffensive and the grinding of the conflict towards a stalemate has heightened the view among some Republican supporters that U.S. money should go to causes closer to home.

--With Zelensky in the U.S. on Tuesday, in the early hours of Wednesday morning Kyiv time, Russia fired a barrage of hypersonic ballistic missiles at the capital, injuring dozens of people and causing damage and fires from falling debris throughout the city, authorities said.

Loud explosions jolted many residents out of bed around 3 a.m. in central Kyiv, with Ukraine’s air force saying that antiaircraft defenses shot down all 10 ballistic missiles that were launched at Kyiv, an assertion that couldn’t be independently verified.

Kyiv Mayor Vitali Klitschko said that 53 people were injured, including six children, and that buildings were damaged throughout districts in the part of the city lying on the eastern bank of the Dnieper River.  Domestic water service was cut off in many parts of Kyiv.

The overnight airstrikes followed a major cyberattack on Tuesday that knocked out Kyivstar, Ukraine’s largest mobile phone and internet service provider, cutting off service to more than 24 million subscribers. In some cities, the hacking attack disabled air alert systems, which alert the public to take cover from incoming missiles and drones.

“Russia has once again confirmed its title as a shameful country that releases rockets at night, hitting residential areas, kindergartens and energy facilities in winter,” President Zelensky wrote Wednesday in a post on Telegram.

Russia had fired missiles at Kyiv on Monday, all shot down, that injured at least four people from falling debris.  That attack involved eight ballistic missiles, the Ukrainian air force said.

--Zelensky, on a trip to Oslo after his failed effort at more aid in Washington, had a better reception, as the five Nordic nations told him during talks that they would support his country “for as long as it takes” in its struggle to drive out Russian forces.

Together, Norway, Sweden, Denmark, Finland, and Iceland have provided aid to Ukraine worth some 11 billion euros ($11.8bn) since Russia invaded in Feb. 2022 and are ready to continue giving extensive military, economic and humanitarian support, the five nations said in a joint statement.

“The Nordic countries will stand with Ukraine for as long as it takes… Russia must end its aggression and withdraw its forces immediately and unconditionally from the territory of Ukraine within its internationally recognized borders,” it said.

--Overnight Thursday, Russia attacked south Ukraine with 42 drones, dozens downed but at least 11 people injured in the Odesa area, according to Ukraine’s air force and local officials.  Ukraine claimed to have downed 41 of the 42 that were deployed from Russian-controlled territory, including the Crimean Peninsula.

Odesa’ s governor said a man died from injuries in an attack the day before.

Then Thursday afternoon, Russian attacked the capital again, after the Ukrainian air force warned of an incoming Russian missile threat.  There were no casualties or damage to critical and civilian infrastructure.  Luckily, no falling debris issues this time from intercepted missiles.

--Also Thursday, President Putin spoke for four hours at a press conference, which used to be an annual event but had not been held since he launched the invasion of Ukraine.

Putin vowed to fight on until Moscow secures the country’s “demilitarization,” “denazification” and neutrality, unless Kyiv accepts a deal that achieves those goals.

Fielding questions from the public, the media and frontline troops, Putin took an uncompromising stance on Ukraine, as he told Russians his initial goals in Ukraine had not changed and that Russian forces had taken the initiative on the battlefield.

“Practically along the entire line of contact, our armed forces are, shall we say, modestly improving their position.  Virtually all are in an active stage of action,” Putin said.

Since the start of the war, Ukraine has stepped up its pursuit of NATO and European Union membership (more on this in a second), steps that it regards as vital for its self-defense and independence from Russia but are opposed by Moscow.

Putin reiterated his view that the Western military alliance’s eastward expansion was the main cause of the war – a view dismissed by the West.

“There will be peace when we achieve our goals… As for demilitarization, if they (the Ukrainians) don’t want to come to an agreement – well, then we are forced to take other measures, including military ones.  “Either we get an agreement, agree on certain parameters (on the size and strength of Ukraine’s military)…or we solve this by force.  This is what we will strive for.”

President Zelensky has said negotiations with Russia are impossible until all Russian soldiers have been expelled from Ukrainian territory.

Putin ruled out a further wave of military mobilization in Russia for now, adding that Moscow had 617,000 Russian troops fighting in Ukraine, a figure far bigger than others I have seen.

“The flow of men ready to defend our homeland…is not decreasing… There is no need for mobilization as of today,” he said.

Putin said this of the West, and the United States: “The unbridled desire to creep towards our borders, taking Ukraine into NATO, all this led to this tragedy… They forced us into these actions.

“When internal changes happen (in the United States), when they start respecting other people… when they start looking for compromise instead of trying to resolve their issues with sanctions and military intervention, then the fundamental conditions will be in place to restore fully fledged relations.”

Putin then compared Russia’s war in Ukraine and Israel’s bombardment of Gaza, saying they were very different.

“Look at the special military operation (in Ukraine) and what is happening in Gaza and feel the difference.  There is nothing like that (what is going on in Gaza),” he said.  “…The Secretary General of the United Nations called today’s Gaza Strip the biggest graveyard of children in the world.  It is an objective assessment.”

Russia says its air strikes do not deliberately target civilians though UN officials say more than 10,000 Ukrainian civilians have been killed and over 18,000 injured since Putin invaded on Feb. 24, 2022.

--Ukraine then seemingly suffered a big defeat on Thursday in Brussels, when Hungarian Prime Minister Viktor Orban, a Putin lackey, insisted that the European Union should not start membership talks with Ukraine, a lone holdout at a critical EU summit.

Orban is also blocking giving 50 billion euros ($54 billion) in financial aid for Kyiv from the EU budget, but signaled he could back long-term aid outside the EU budget, opening a door for some form of deal on that front.  Ukraine badly needs the support.

BUT…the EU was unexpectedly able to open membership talks with Ukraine as Orban agreed to leave the room, i.e., abstain, knowing the other leaders would go ahead and vote.  Orban confirmed that he had abstained from the vote on what he called a “bad decision.”

Such an unusual way to approve a decision – especially such a major one – doesn’t happen in Brussels.

Needless to say, President Zelensky was ecstatic.  “This is a victory for Ukraine.  A victory for all of Europe.  A victory that motivates, inspires, and strengthens,” he said.

European Commission chief Ursula von der Leyen, who has been as big a backer of Ukraine as any EU leader, said it was “a strategic decision and a day that will remain engraved in the history of our Union.”

Orban had very different words to describe the decision.  “Hungary’s stance is clear, Ukraine is not prepared for us to start talks on EU membership,” he said, calling the decision to start talks “irrational” and “inappropriate.”

“But 26 member states were adamant that this decision must be made so Hungary decided that if 26 decide so, they should go on their own path and Hungary does not wish to participate in this bad decision,” he said.

The talks themselves will take years and years.  But this is a huge morale boost for Kyiv, with Western support waning.

“I thank everyone who worked for this to happen and everyone who helped.  I congratulate every Ukrainian on this day… History is made by those who don’t get tired of fighting for freedom,” Zelensky wrote on ‘X’.

Membership talks were also opened with little Moldova.  Pro-Western President Maia Sandu said Moldova would rise to the challenge and was committed to the “hard work” that lay ahead.  “We’re feeling Europe’s warm embrace today.  Thank you for your support and faith in our journey,” Sandu wrote on X.

So then there was the fate of the 50 billion euro aid package, and it wasn’t known whether EU leaders would agree to it this week as they held marathon talks on the issue.

Viktor Orban then blocked it, a crushing defeat for Ukraine, hours after a moment of joy.  Writing on X, Orban said: “We will come back to the issue next year in the #EUCO after proper preparation.”

The government in Budapest won’t support the aid package until the bloc pays out all the funds withheld from Hungary, Orban said Friday.

The European Commission this week agreed to release a third of about 30 billion euro ($33bn) that was frozen due to rule-of-law and graft concerns after Hungary enacted changes related to the judiciary, strengthening the courts’ independence.  When EU leaders meet again early next year to consider that aid package for Ukraine, Hungary will make sure it gets all of its own funds first, Orban said.

Friday, Kremlin spokesman Dmitry Peskov said of Viktor Orban.

“Hungary has its own interests.  And Hungary, unlike many other EU countries, firmly defends its interests, which impresses us.”

Look for Orban to visit Moscow early January…just my guess.

---

--The loss of contact with Russian dissident Alexei Navalny at the prison colony where he is being held likely signals a Kremlin effort to deepen his isolation while President Putin runs for reelection over the next three months, Navalny’s spokeswoman said Tuesday.

Worries emerged Monday after word spread officials at the prison east of Moscow said he was no longer on the inmate roster.  Navalny’s spokeswoman, Kira Yarmysh, said his associates and lawyers have been unable to contact him for a week.  Prison officials said he has been moved from the colony where he has been serving a 19-year term on charges of extremism, but they didn’t say where he went.

Authorities often provide no information about the whereabouts of inmates for weeks until they reach another facility and are given permission to contact relatives or lawyers.

“We now have to look for him in every colony of special regime in Russia,” Yarmysh told the Associated Press. “And there are about 30 of them all over Russia.  So we have no idea in which one we will find him.”

--Iranian Foreign Minister Hossein Amir Abdollahian slammed Ukraine in response to a question, claiming that Ukraine is a potential “black market” for weapons.

The Iranian diplomat was at the Doha Forum speaking about Iran’s policies.  He admitted that Iran “used to provide all kinds of support to Hezbollah, Hamas and Islamic Jihad.”  He then said that these terror groups “if you ask me where they can obtain weapons, then one of the black markets where they can get them is Ukraine.  Very easily, without much effort they can get whatever [they need] in Ukraine.”

Russian state media used the Iranian foreign minister’s comments to push the headline: “Hezbollah, Hamas able to purchase all weapons in Ukraine with ease – top Iranian diplomat.”

--Daniel McLaughlin / Irish Times…on the failure of the counteroffensive….

“With Western help, Ukraine had trained and equipped 12 new brigades comprising about 60,000 soldiers to smash through a Russian occupation force five times larger, with the onus on Kyiv to make best use of its new arms to overcome the disparity in numbers.

“The challenge for the inexperienced force was immense: master a panoply of complex weapons systems, including tanks, artillery, air defense and electronic warfare, and combine them in a large-scale operation against a bigger enemy with abundant ammunition, overwhelming air superiority and deep defensive lines built over more than a year.

“Other factors were also worrying for Kyiv: it had committed some of its most battle-hardened units to Bakhmut, and when it fell they were depleted and simply exhausted; and delays and shortfalls in Western arms supplies were a constant frustration, with Ukraine’s lack of modern air power being the most glaring gap in its armory.

“When the counteroffensive finally began in Zaporizhzhia region on June 7th, the scale of miscalculation by Kyiv and its allies was immediately clear, as Western armored vehicles became trapped in Russia’s minefields and succumbed to its attack helicopters and drones.

“Losses in personnel, armor and morale were so heavy that Ukraine’s top general, Valery Zaluzhnyi, quickly scrapped plans to drive an armored wedge through occupied territory and ordered his troops to navigate minefields on foot in small groups.  The tactic saved lives and equipment but killed the dream of swift gains held by many Ukrainians and western politicians.

“ ‘I think a great strategic mistake has been committed.  And it has been committed for political reasons,’ says Marina Miron, postdoctoral researcher at the war studies department of King’s College London.

“She thinks Kyiv’s allies, particularly the United States, were impatient for results on the battlefield, and wonders how Ukrainian and Western military planners failed to take into account the dense minefields and other defenses constructed by Russia in the southeast.

“ ‘We saw already last year that Western allies wanted to see their money at work,’ Miron says.  “I think the Ukrainian military didn’t want this counteroffensive and pushed it [back] as far as they cold….but it was a big strategic mistake [by the military], regardless of who pushed them, whether it was Zelensky or international pressure, and most likely it was both,’ she adds.

“ ‘I think that for political reasons, Zelensky didn’t want to admit for a long time that the counteroffensive had run out of steam.’….

“The upshot is that Ukraine’s counteroffensive only liberated a handful of near-deserted villages, and [Commander-in-chief of the Armed Forces of Ukraine Valerii] Zaluzhnyi said last month that the war was now in a ‘stalemate’ of ‘positional warfare’ which would ‘benefit Russia, allowing it to rebuild its military power, eventually threatening Ukraine’s armed forces and the state itself.’….

“(Overall), this sobering year has exposed some of Ukraine’s weaknesses: its relative lack of human and industrial resources with which to fight a giant like Russia, and its reliance on economic, diplomatic and military help from Western countries that are struggling to ramp up arms production and are subject to the political winds that always buffet democracies.

“At the same time, Russia is playing to its strengths, shifting much of its huge industrial sector to a war footing and fighting without regard for its human losses, as only a vast authoritarian state without free media, political opposition or democratic elections can.”

---

Wall Street and the Economy

The Federal Reserve’s Open Market Committee gathered Tuesday and Wednesday in Washington, and in a unanimous decision kept interest rates steady.  The Fed said in its statement:

“Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter.  Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low.  Inflation has eased over the past year but remains elevated….

“The Committee will continue to assess additional information and its implications for monetary policy.  In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments… The Committee is strongly committed to returning inflation to its 2 percent objective.”

I highlighted the word “any” because this was a significant addition regarding future policy tightening, suggesting that the chance of further rate increases is now lower.

In his super dovish press conference after, Chair Jerome Powell said the addition of the word “any” was meant to signal the Fed was likely at or near the peak for interest rates.

“We’ll look at the totality of the data,” he said.  “Growth is one thing.  So is inflation. So is the labor market data. So we look, we’d look at the total as we have, and we make decisions about policy changes going forward. …We’re going to look at all those things.”

But while acknowledging that inflation is still too high and the battle against it is not over, Powell said Fed officials don’t want to wait too long before cutting the funds rate.

“We’re aware of the risk that we would hang on for too long” before cutting rates, he said.  “We know that’s a risk, and we’re very focused on not making that mistake.”

You get the picture.  The Fed isn’t waiting until core inflation literally drops to 2%, so with the last core PCE at 3.5%, and core CPI at 4%, think anything under 3% and that’s your signal.

Then again, one or two numbers, or something on the geopolitical front, can change the outlook in a flash.

The market took the news and rallied bigly, Wednesday, the Dow Jones soaring 512 points, 1.4%, to a new record high of 37090.

The FOMC’s updated Summary of Economic Projections showed that members now expect the 2024 median federal funds rate at 4.6%, down from 5.1% projected in September (and current 5.4%), and implying three rate cuts, with some officials projecting five or more.  They lowered their 2025 rate outlook to 3.6% from 3.9%.

Their outlook for inflation, as measured by personal consumption expenditures went down to 2.8% from 3.3% for this year and to 2.4% to 2.5% for 2024. 

Real gross domestic product for next year is just 1.4%, after 2.6% for 2023.

And the unemployment rate is expected to rise slightly to 4.1% for 2024, from its current 3.7%.

The Fed doesn’t meet next until Jan. 30-31, at which point many traders expect Chair Powell & Co. to be more specific on the first rate cut, like March.

But lots of data in between now and then, including another big core PCE reading next Friday.

The Fed pivot, though, had economists rushing to rewrite their 2024 forecasts.  Investors are now pricing in six quarter-point cuts next year, double the three cuts implied by the FOMC.

Goldman Sachs said they now anticipate a faster and steeper set of interest-rate cuts.

“We now forecast three consecutive 25 basis-point cuts in March, May, and June to reset the policy rate” from a level that Fed officials will likely soon see as too high, Goldman’s economics team, led by Jan Hatzius, wrote in a note.

The bank then sees a quarterly pace of rate reductions, culminating in a target range of 3.25% to 3.5%, the current range 5.25% to 5.50%.

On the data front, the November inflation figures were in line with expectations, which helped shape Chair Powell’s positive outlook.

Consumer prices rose 0.1% on the month, 0.3% ex-food and energy; 3.1% year-over-year, 4.0% on core.

Producer prices were unchanged both on headline and core; 0.9% from a year ago, and 2.0% ex-the stuff we use.

All the numbers met consensus.

But core CPI at 4.0% isn’t 3%, let alone 2%.

November retail sales rose 0.3%, when a decline was expected.  And industrial production for the month was up 0.2%, basically in line.

The Atlanta Fed upgraded its GDPNow outlook for the fourth quarter to 2.6% from 1.2%.

Freddie Mac’s 30-year fixed-rate mortgage declined a seventh consecutive week to 6.95%, down from the peak of 7.79%.

Editorial / Wall Street Journal

“We thought Federal Reserve Chairman Jerome Powell would be wary of declaring victory over inflation on Wednesday, but he was wary in formal declaration only.  Everything else about his press conference after the latest (FOMC) meeting suggested that the Chairman’s Paul Volcker era is over.  Easier money is on the way.

“ ‘The committee is proceeding carefully,’ he said.  The Fed still wants to see ‘ongoing progress’ toward the Fed’s 2% inflation target, ‘we still have a ways to go,’ and ‘no one is declaring victory’ over inflation.

“The financial markets didn’t believe a word of it….

“Investors were no doubt looking at the Fed’s famous ‘dot plots,’ which track the estimates of Fed governors and bank presidents about future inflation and interest rates.  The monetary mavens think inflation is conquered, even if Mr. Powell won’t say it….

“Is this pivot warranted?  Mr. Powell is right that he has made anti-inflation progress, but his performance Wednesday will go far to easing the tighter monetary conditions that have produced this progress.  The FOMC didn’t change policy this week, and it can always postpone its rate-cutting for longer.  But it would be a shame to declare victory too soon.”

And whaddya know…but Friday, New York Federal Reserve President John Williams, in an interview with CNBC, pushed back on surging market expectations of interest rate cuts, saying the Fed is still focused on whether it has monetary policy on the right path to continue bringing inflation back to its 2% target.

“We aren’t really talking about rate cuts right now,” Williams said.  “I just think it’s just premature to be even thinking about that” at this point.

Powell had said two days earlier, “the question of when will it become appropriate to begin dialing back the amount of policy restraint in place, that begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today.”

Wiliams cautioned that a move higher in interest rates still can’t be ruled out.  “One thing we’ve learned, even over the pats year, is that the data can move in surprising ways,” he said, adding “we need to be ready to move further if inflation, the progress of inflation were to stall or reverse.”

Is this a sign of dissension within the FOMC?  Frankly, it was a bit bizarre.  Chair Powell couldn’t have been clearer.

Europe and Asia

We had the flash December PMI readings for the eurozone today, earlier than normal due to the holidays, and the composite for the bloc was 47.0 (50 the dividing line between growth and contraction), a 2-month low.  Manufacturing was at 44.1, service sector 48.1. [S&P Global / Hamburg Commercial Bank]

Germany: mfg. 43.4, services 48.4
France: mfg. 40.8 (43-month low!), services 44.3 (37-mo. low)

UK: mfg. 45.9, services 52.7

Just another grim picture for the euro area.

October industrial production for the EA20 came in at 0.7% compared with September, but -6.6% year-over-year.  [Eurostat]

Thursday, the European Central Bank pushed back against bets on imminent cuts to interest rates by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.

Laser-focused on fighting the most severe bout of inflation in a generation, the central bank left its policy rate unchanged and did not even hint at a possible reduction.

ECB President Christine Lagarde highlighted instead that price pressures would remain strong. That was in stark contrast to Jerome Powell’s dovish, pragmatic tone the day before.

“We don’t think that it’s time to lower our guard,” Lagarde told a news conference.  “There is still work to be done…that can very much take the form of holding (rates).”

Lagarde described herself as being “in Covid recovery mode” and spoke more quietly than usual.  She said that policymakers “did not discuss rate cuts at all.”

The ECB expects headline inflation to average 5.4% in 2023, but fall to 2.7% in 2024, which is still short of the ECB’s 2% target.

Britain: The Bank of England also stuck to its guns Thursday and said British interest rates needed to stay high for “an extended period.”  The Monetary Policy Committee voted 6-3 to keep rates at a 15-year high of 5.25% and Governor Andrew Bailey said there was “still some way to go” in the fight against inflation.  The three dissenting votes were in favor of raising borrowing costs and there was no talk of cutting them as the BoE remained concerned that inflation in Britain will prove stickier than in the United States and the eurozone.

“Successive rate rises have helped bring inflation down from over 10% in January to 4.6% in October.  But there is still some ways to go.  We’ll…take the decisions necessary to get inflation all the way back to 2%,” Bailey said in a statement.  He later told broadcasters it was “really too early” to speculate about cutting rates.

Separately, a YouGov poll released Wednesday shows Prime Minister Rishi Sunak at a record low 21% favorable rating, with 70% viewing him unfavorably, so a minus 49, his worst yet and a level that matches his party’s rating for the first time since he became prime minister.  Until now, voters had viewed the premier more favorably than they did his Tory party, which has cycled through five prime ministers since 2016.

Sunak has an impossible task of trying to restore the image of his Conservatives and chisel away at the double-digit lead the opposition Labour Party holds ahead of a general election that Sunak must call prior to the end of January 2025.

Germany: The government solved its budget crisis, after a court ruling left a hole in it.  Chancellor Olaf Scholz and his coalition introduced a new spending plan that included cuts in programs to address climate change, but confirmed its commitment to 8 billion euros ($8.6bn) in direct military aid to Ukraine.

The new budget will comply with the constitutional rules against taking on new debt, the government said.

Poland: Donald Tusk, a leader of a centrist party, returned as Poland’s prime minister for the first time in nearly a decade after a vote in parliament on Monday, paving the way for a new pro-European Union government following eight years of stormy national conservative rule.

Tusk, a former EU leader who served as European Council president from 2014-2019 and has strong connections in Brussels, is expected to improve Warsaw’s standing in the bloc.  He was prime minister from 2007-2014.

Tusk’s ascension to power came nearly two months after an election which was won by a coalition of parties ranging from left-wing to moderate conservative.  The parties ran on separate tickets, but promised to work together under Tusk’s leadership to restore democratic standards and improve ties with allies.

This is a big deal for this nation of 38 million, as record-high turnout voted to replace a government that was clearly eroding democratic values, such as the taxpayer funded media was turned into a party mouthpiece.

The vote in parliament was 248-201 in support of Tusk.

One of his first priorities he said on Tuesday was to demand the full mobilization of the West to help Ukraine, Tusk vowing Poland will be a strong component of NATO.

France: Meanwhile, President Emmanuel Macron’s government is in crisis after opposition parties united to defeat a key immigration bill.  MPs from the far right, far left and moderate parties voted on Monday to reject the draft law.

The left argued its measures were too repressive, while the right said they were not tough enough.  The vote was 270-265.

Macron’s centrist Renaissance party lost its majority in parliament in elections in June 2022, and since then, the government has frequently found itself unable to win votes in parliament.

Turning to Asia…China’s November inflation picture was not good, -0.5% ann. vs. -0.2% prior, signs of a deepening bout of deflation, and down the fastest in 3 years.

Producer, or factory-gate prices in the month declined 3.0% Y/Y, the 14th consecutive month of declines.

Industrial production in November was up 6.6% Y/Y vs. 4.6% prior.

Retail sales for November rose 10.1% Y/Y vs. 7.6% in October.

Fixed asset investment was up just 2.9% year-to-date.

And November’s unemployment rate was unchanged at 5.0%.

So some good news in industrial production and retail sales.

Japan’s flash December PMI readings were 47.7 on manufacturing, a solid 52.0 for services.

November producer prices rose 0.3% Y/Y vs. 0.9% prior.

October industrial production was up 1.1% year-over-year.

Street Bytes

--On the heels of the Fed’s move, Chair Powell’s remarks, and no surprises in the inflation data, stocks surged a seventh consecutive week, the Dow Jones hitting a new all-time high the last three days to today’s close of 37305, up 2.9% on the week.  The S&P 500 rose 2.5%, and Nasdaq 2.8%.

The S&P’s seven-week streak is its longest since Sept. 2017.   

--U.S. Treasury Yields

6-mo. 5.32%  2-yr. 4.45%  10-yr. 3.91%  30-yr. 4.01%

It’s been nuts in the bond pits, with the yield on the 2- and 10-year Treasury collapsing further, especially after Chair Powell’s comments Wednesday.

Since the Oct. 20 weekly close, yields have plunged not just here but across the pond.

While our 2-year has fallen from 5.07% to 4.45%, and the 10-year from 4.91% to today’s 3.91%, we’ve seen the German bund go from 2.89% to 2.01%, the British 10-year from 4.65% to 3.68%, the French 10-year from 3.51% to 2.54%, and the Italian 10-year from 4.92% to 3.72%.

All those movements just since Oct. 20. 

--Oil and gas will be “pillars of global energy for many decades to come,” the closing statement of a meeting of Arab energy ministers said on Tuesday, as the issue of ending the use of fossil fuels sent COP28 into overtime in pursuit of a deal.

Delegates at the UN climate talks in the United Arab Emirates, a member of OPEC, were  divided as some demand a call for a “phase-out” of oil, gas and coal as the biggest cause of global warming.

Arab and other hydrocarbon producers consider attempts at reducing fossil fuels as a blow to their economies.  “I am surprised by this ferocious attack of what is called ‘phasing out’ of oil or reducing dependence on oil as a source of energy with such ferocity that perhaps is matched by the greed of the West in general in seizing control of the economy,” Kuwait’s Oil Minister Saad al Barrak said at the Arab Energy Conference on Tuesday.  He accused the West that he said, as a colonial power had “plundered” the wealth of Asia and Africa, of double standards in its attempt to take the lead “in ensuring the safety of the human environment through climate agreements.”

The closing statement of the Arab Energy Conference in Doha recommend measures to develop fossil fuels, including developing national energy companies and creating mechanisms “to maintain production levels and work to provide additional production capacities.”

On the subject of the climate, it said Arab countries should adopt “balanced development policies, including integrating the environmental dimension into development plans,” adding investments should also be made in renewable energy, hydrogen and nuclear power.

The UAE’s COP28 President Sultan al-Jaber had faced pressure from Saudi Arabia, de facto leader of OPEC, to which the UAE also belongs, to drop any mention of fossil fuels – which he did not do in a draft text.

Then on Wednesday, the climate summit approved a deal that would for the first time push nations to transition away from fossil fuels to avert the worst effects of climate change.

The deal, which needs to be approved by the summit, recognizes “the need for deep, rapid and sustained reductions in greenhouse gas emissions” and calls for parties to contribute to “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.”

The global transition away from fossil fuels was adopted within minutes of the start of the final session of COP28 summit, making it the first time such language has been included in nearly three decades of climate talks.

It also lists seven other steps to help reduce greenhouse gas emissions.  It does not, however, include a commitment to phase out fossil fuels by a set date.

So negotiators struck a compromise.  While past UN climate deals have urged countries to reduce emissions, they have shied away from explicitly mentioning the words “fossil fuels,” even though the burning of oil, gas and coal is the primary cause of global warming.

“Humanity has finally done what is long, long, long overdue,” said Wopke Hoekstra, the European commissioner for climate action.  “Thirty years – 30 years! – we spent to arrive at the beginning of the end of fossil fuels.”

The new deal is not legally binding and can’t, on its own, force any country to act.  But it sends a message to investors and policymakers that the shift away from fossil fuels was unstoppable.  Over the next two years, each nation is supposed to submit a detailed formal plan for how it intends to curb greenhouse gas emissions through 2035.

--In the here and now, global oil demand growth is slowing down sharply as economic activity weakens in key countries, the International Energy Agency said as it slashed estimates for this quarter.

The IEA sliced nearly 400,000 barrels a day from assessments of consumption growth for the final three months of 2023, and continues to expect that growth rates will decelerate dramatically next year.  Meanwhile, soaring production from the U.S., Brazil and Guyana is offsetting production cuts by Saudi Arabia and its OPEC+ allies, it said.

“Evidence of a slowdown in oil demand is mounting,” the Paris-based IEA said in its monthly report on Thursday.  “The increasingly apparent loss of oil demand growth momentum reflects the deterioration in the macroeconomic climate.”

Crude slumped to a five-month low this week on signs of growing oversupply.

The IEA noted the “record-smashing” supply wave from the U.S., which is “squeezing Saudi Arabia and other core Middle Eastern producers out of prime export markets.” 

Europe, Russia and the Middle East drove the agency’s downgrade of fourth-quarter demand estimates.  Europe was “particularly soft amid the continent’s broad manufacturing and industrial slump,” the IEA said.

Global oil demand growth remains on track to increase by a substantial 2.3 million barrels a day this year to average a record 101.7 million a day, bolstered by the remnants of the post-pandemic rebound in consumption.

Yet growth will slow by roughly 50% next year to 1.1 million barrels a day as that rebound peters out, and consumers turn to more efficient or electric vehicles.

--Meanwhile, Occidental Petroleum announced a $10.8 billion agreement to buy West Texas producer CrownRock as the independent oil company seeks to keep pace with rapid consolidation in the industry.

The acquisition would allow Occidental to keep up with competitors who have recently announced major deals.  It closely follows Exxon Mobil’s $60 billion October announcement that it would buy Pioneer Natural Resources and Chevron’s $53 billion deal to purchase Hess that same month.

CrownRock is led by Texas businessman and billionaire Timothy Dunn and backed by the private-equity firm Lime Rock Partners.  The company operates in the Permian basin, the most active oil field.

Timothy Dunn has used his windfall to push an ultraconservative agenda in Texas, including by funding statewide political candidates challenging Republican incumbents.

--TSA checkpoint numbers vs. 2019

12/14…101 percent of 2019 levels
12/13…95
12/12…97
12/11…103
12/10…105
12/9…104
12/8…102
12/7…100

--Tesla is recalling just over two million vehicles in the United States fitted with its Autopilot advanced driver-assistance system to install new safeguards, after a safety regulator said the system was open to “foreseeable misuse.”

The National Highway Traffic Safety Administration (NHTSA) has been investigating the electric automaker for more than two years over whether Tesla vehicles adequately ensure that drivers pay attention when using the driver assistance system.  Tesla said in the recall filing that Autopilot’s software system controls “may not be sufficient to prevent driver misuse” and could increase the risk of a crash.

Tesla’s Autopilot is intended to enable cars to steer, accelerate and brake automatically within their lane, while enhanced Autopilot can assist in changing lanes on highways but does not make them autonomous.

Tesla said it did not agree with NHTSA’s analysis but would deploy an over-the-air software update that will “incorporate additional controls and alerts to those already existing on affected vehicles to further encourage the driver to adhere to their continuous driving responsibility whenever Autosteer is engaged.”

Separately, since 2016, NHTSA has opened more than three dozen Tesla special crash investigations in cases where driver systems such as Autopilot were suspected of being used, with 23 crash deaths reported to date.  NHTSA said there may be an increased risk of a crash in situations when the system is engaged but the driver does not maintain responsibility for vehicle operation and is unprepared to intervene or fails to recognize whether it is canceled or not.  NHTSA’s investigations into Autopilot will remain open as it monitors the efficacy of Tesla’s remedies.

Tesla then announced Wednesday that it will recall 193,000 vehicles in Canada to address concerns about safeguards for Autopilot.

--Slower-than-expected growth in sales of electric vehicles has forced several automakers to scale back once-ambitious production plans.  Add Ford to the list.

In a memo sent to suppliers, the company said it now expected to produce an average of 1,600 electric F-150 Lighting pickup trucks per week in 2024, about half of the level it had previously hoped to achieve.

The reduced target reflects the substantial dimming of expectations for sales of battery-powered cars and trucks that automakers are now coming to grips with.

GM once expected to produce 400,000 electric vehicles by the middle of 2024, but withdrew that goal in November, and is delaying some new electric models.  Rivian, a younger automaker, has said it aims to make 52,000 electric vehicles by the end of this year, a third of the 150,000 a year it is hoping its Illinois factory will eventually produce.

Similarly, Ford had hoped to have the capacity to make 600,000 battery-powered vehicles a year by the end of next year.  As recently as September, Ford said it aimed to be able to make 150,000 electric F-150s a year – a rate of about 3,000 vehicles a week, and now you see that number is 1,600.  It has also lowered production plans for its electric SUV, the Mustang Mach-E.

Separately, GM said its self-driving car company Cruise laid off nearly a quarter of its workforce, 900 workers, Thursday following a series of safety mishaps and permit suspensions.

The company’s business has struggled since an October incident where a self-driving Cruise collided with a woman and dragged her 20 feet after she had already been hit by another car.

--Oracle late Monday reported fiscal second-quarter revenue that fell short of Wall Street’s expectations even as cloud demand continued to grow.

Revenue advanced 5% year over year to$12.94 billion in the three months ended Nov. 30, but missed consensus of $13.05 billion.  The stock fell a whopping 12% on Tuesday, even as adjusted earnings of $1.34 exceeded the Street’s $1.33 view.

“Demand for our cloud infrastructure and generative (artificial intelligence) services is increasing at an astronomical rate,” CEO Safra Catz said in a statement. “Our cloud businesses are now at nearly a ($20bn) annual revenue run rate, and cloud services demand continues to grow at unprecedented levels.”

And Chairman Larry Ellison said, “Simultaneously we are building dozens of new datacenters in countries all over the world.  Demand is over the moon.”

But is it really?  The company missed on revenues, that’s a big reason why the shares plummeted.

It’s building out all these new centers, but cloud growth is slowing.  The Street is skeptical of the rosy talk from company management.

--Google’s app store practices violate U.S. antitrust law and the search giant has illegally operated a monopoly in Android app distribution, a federal jury said late Monday.

The verdict in a years-long battle between Epic Games – maker of the hit video game “Fortnite” – and the technology giant marks a significant victory for critics of Google’s app store terms and practices.

Epic and Google had sparred for weeks in the federal trial over everything from the fees Google charges for in-app purchases to Google’s contract terms that restrict competing app stores from Android devices.

Google said it would challenge the landmark verdict that could lead to sweeping changes to the company’s app store business.

A separate process in the case is expected to begin in the new year regarding remedies targeting Google’s app store, and could seek to change how Google collects its fees from developers or make it easier for Android devices to host third-party app stores.

--Pfizer on Wednesday forecast 2024 revenue and profit below Wall Street expectations, sending its shares down 8%, even as it raised its cost-cut target by $500 million.  A drop in annual Covid vaccination rates and demand for the treatments in 2023 have dragged sales of Pfizer’s Covid products, Paxlovid and the vaccine it makes with German partner BioNTech.

The products, which had boosted its revenue over the last two years, are now expected to generate $8 billion in total sales in 2024.  Analysts were expecting sales of Comirnaty alone to be more than $8 billion besides more than $5 billion from Paxlovid. The drop in Covid product sales had also forced Pfizer to launch a program to cut jobs and expenses.

The U.S. drugmaker now expects its annual revenue to be in the range of $58.5 billion to $61.5 billion compared with analysts’ average estimate of $63.2 billion. The company also forecast adjusted profit in the range of $2.05 to $2.25 per share, lower than analysts’ expectations of $3.16.

--Hasbro, the toymaker behind popular brands like Peppa Pig, Transformers and Magic: The Gathering, said on Monday that it would eliminate roughly 1,100 jobs, or nearly 17 percent of its work force, as the company continues to grapple with weak sales.

Hasbro’s CEO Chris Cocks said in a memo to staff on Monday that “the market headwinds we anticipated have proven to be stronger and more persistent than planned.”

The layoffs, announced during the critical holiday shopping season, follow a reduction of 800 jobs at the company earlier this year; the toymaker said it expected a majority of the latest cuts to take place over the next six months, with the remainder over the next year.

“We anticipated the first three quarters to be challenging, particularly in toys, where the market is coming off historic, pandemic-driven highs,” Mr. Cocks said in the memo.  “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.”

--An investor group made a $5.8 billion offer to buy Macy’s, in a bid to take the famed department-store chain private after stiff competition from online rivals took a big bite out of its value.

Arkhouse Management, a real-estate focused investing firm, and Brigade Capital management, a global asset manager, on Dec. 1 submitted a proposal to acquire the Macy’s stock they don’t already own for $21 a share.

That represented a roughly 21% premium to where shares closed the day before, $17.39, but a far cry from where Macy’s stock traded in 2015 – as high as $70 a share – before competition from nimbler digital retailers took a toll on the business and that of other erstwhile industry stalwarts.

The group already has a big position in Macy’s through Arkhouse-managed funds.  The board is discussing the offer. 

Macy’s generated about $1.2 billion of profit on $24.4 billion in revenue in the last fiscal year, a slight decrease from 2021.  In 2014, it booked more than $28 billion in sales.

--Rents in Manhattan continued to drop in November, their lowest prices in almost two years even as they remain higher than prepandemic levels.

The median rent in the borough dropped month over month for the third time in a row and fell year over year for the first time in more than two years to reach $4,000, the lowest it has been since May 2022, according to the latest report from Douglas Elliman and Miller Samuel.

New leases increased year over year for the first time in five months, however, rising from $3.070 to $3,368, while the vacancy rate rose to 2.9%, the report says.  [Crain’s New York Business]

--According to an article published in the peer-reviewed journal Cell Reports Sustainability, bitcoin-mining operations are projected to surpass 591 billion gallons of water this year.  For comparison, New York City residents and businesses consumed 403 billion gallons in 2022, according to the U.S. Geological Survey.

Miners use water directly to cool their computer servers and indirectly by running both computers and air conditioning systems powered by gas- and coal-fired power plants that require cooling water.  Some of the cooling water used by power plants evaporates and is no longer available for anything else.

Bitcoin mining requires massive amounts of energy, and with the water angle, you can see how this can create some huge problems, especially in less-developed nations that allow bitcoin mining.

--Choice Hotels is making a hostile bid for Wyndham Hotels & Resorts, appealing directly to shareholders after failing to convince management.  In October, Wyndham’s board unanimously rejected a proposal that would have valued the firm at nearly $8 billion. Wyndham broke off discussions following the proposal after almost six months of negotiations.

The hostile offer is the same as the one that Choice made to the board then - $90 a share for Wyndham holders in a combination of cash and Choice stock.

--China’s primary tourism benchmarks are expected to return to their pre-pandemic levels by the end of this year – a rebound largely driven by domestic demand, as inbound travel has yet to see a similar recovery.

Tourism revenue was forecast to reach $724.8bn in 2023 – 91 percent of the figure from 2019, according to the China Tourism Academy, which is part of the Ministry of Culture and Tourism.

Back in February, the academy’s own forecast projected tourism would recover to 70 to 75 percent of where it had been before the pandemic.

A recovery in the tourism sector is crucial to the overall economy as it accounted for 11% of the country’s GDP in 2019, so it’s a good bellwether for Beijing’s efforts to revitalize the job market and stimulate consumption.

--Lastly, I have had an artificial Christmas tree for at least the last 30 years and I was musing the other day how Mom would take me with her to buy the tree and she would haggle to get the guy down from like $14 to $12.

So I’m reading a piece in the New York Post on Big Apple tree prices, the vendors taking up sidewalk space all over the city this time of year, and the most expensive tree found by the Post was a 13-and-1/2-foot-tall Fraser fir for $1,750!  Granted, it’s from Quebec, and Canadian trees are super expensive this year due to the wild fires in the Great White North reducing supply.

But the seller of this particular tree added that a 10-foot tree that went for $350 last year goes for $550 now.

I think I’ll be staying with my fake tree for the rest of my life.

Foreign Affairs, Part II

China: China hackers are “burrowing” into U.S. infrastructure, unnamed U.S. officials and industry security officials told the Washington Post.  “Hackers affiliated with China’s People’s Liberation Army have burrowed into the computer systems of about two dozen critical entities over the past year, these experts said.”

A water utility in Hawaii, a major West Coast port, and at least one oil and gas pipeline are among the victims.  “The hackers also attempted to break into the operator of Texas’ power grid, which operates independently from electrical systems in the rest of the country,” WaPo reports.

“None of the intrusions affected industrial control systems that operate pumps, pistons or any critical function, or caused a disruption, U.S. officials said.  But they said the attention to Hawaii, which is home to the Pacific Fleet, and to at least one port as well as logistics centers suggests the Chinese military wants the ability to complicate U.S. efforts to ship troops and equipment to the region if a conflict breaks out over Taiwan.”  [Defense One]

Meanwhile, tensions between China and the Philippines continue to rise.  Manila condemned China’s “illegal and aggressive actions” in the South China Sea on Saturday, saying its coast guard had fired water cannon at a Philippine fisheries bureau vessel conducting a regular resupply mission.

The Philippine task force for the South China Sea called for China to stop its “aggressive activities” in the Scarborough Shoal, which is claimed by both countries.  U.S. Ambassador to the Philippines MaryKay Carlson said in a post on X that China’s behavior “violates international law and endangers lives and livelihoods.”

China said it took “control measures” against three Philippine fishing vessels that had intruded into waters near Scarborough Shoal, state media reported.

The incident was ahead of Dec. 10, when the Philippines planned to deploy a Christmas convoy of around 40 Philippine vessels to distribute gifts and other provisions to residents in Thitu island, the Philippines’ largest occupied island in the South China Sea, and to troops garrisoned on an ageing warship in the Second Thomas Shoal.

The Scarborough Shoal is located within the Philippines’ 200-nautical mile exclusive economic zone.  Beijing seized it in 2012 and forced fishermen from the Philippines to travel further for smaller catches.  China claims almost the entire South China Sea, through which $3 trillion of annual shipborne commerce passes, including parts claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei.  The Permanent Court of Arbitration in 2016 said China’s claims had no legal basis.

Well, the mission by volunteers to bring the spirit of Christmas to the fishermen, troops and coastguard crew was forced to turn back on Sunday after organizers said they had been shadowed and intercepted by Chinese Navy vessels, but it later emerged a smaller supply boat had managed to slip past the Chinese!

Christmas presents, donated by the public, were dropped off at Nanshan Island, which is known in the Philippines as Lawak Island, in the Spratly Islands.

Rafaela David, an organizer of the mission, said she was “overjoyed” that the goods had made it.  Solar lamps, medicines and vitamins, toys and traditional Christmas food packages were among the presents handed over.  [The Guardian]

Note to Hollywood: This would be a terrific Christmas movie.  Drama, and a heartwarming ending, featuring some of the best people in the world, Filipinos.

Anthony Bourdain once had a terrific episode from the Philippines and how much they love Christmas.  A scriptwriter could use that for the start, then weave in the Chinese thugs, only to have the thugs lose out to the Good People.

Of course, this would have to be an Indie picture, the big studios too afraid to tackle it so as not to piss off Beijing.

Iran/Yemen: Yemen’s Iranian-backed Houthis said on Tuesday they carried out a military operation against the Norwegian commercial tanker STRINDA in their latest protest against Israel’s bombardment of Gaza.  The group said it hit the tanker with a rocket because it was delivering crude oil to an Israeli terminal and after its crew ignored all warnings, a Houthi military spokesperson said.

However, the tanker’s owner said the vessel was headed to Italy with a cargo of palm oil to be used in biofuels.  It was not planning to stop in Israel,

The STRINDA had loaded vegetable oil and biofuels in Malaysia and was headed for Venice, data from shiptracking firm Kpler (sic) showed, as reported by Reuters.

Last Saturday, the Houthis said they would target all ships heading to Israel, regardless of their nationality, and warned international shipping companies against dealing with Israeli ports.  A spokesman said the group would continue blocking ships heading to Israeli ports until Israel allows the entry of food and medical aid into the Gaza Strip – more than 1,000 miles from the Houthi seat of power in Sanaa.

A U.S. official said the STRINDA was able to move under its own power in the hours after the attack.  The USS Mason rendered assistance, the U.S. military’s Central Command said.  The attack caused a fire and damage but no casualties.

The French Navy said on Sunday that one of its frigates there had shot down two drones launched from Yemen.

Random Musings

--Presidential approval ratings….

Gallup: 37% approve of President Biden’s job performance, 59% disapprove; 27% of independents approve (all-time low) (Nov. 1-21).

Rasmussen: 43% approve; 56% disapprove (Dec. 15).

--A Reuters/Ipsos national poll released Monday found that 61% of self-identified Republicans said they would vote for Donald Trump, with Ron DeSantis and Nikki Haley each backed by 11%.

But the Reuters/Ipsos poll also showed that in a head-to-head matchup, Trump led Joe Biden by only 38% to 36%, with 26% of respondents saying they weren’t sure or might vote for someone else.

Trump’s lead widened to a 5-point margin nationally when Robert F. Kenndy Jr. was included as an option.

Some 16% of respondents picked Kennedy, while Trump had 36% support, compared to 31% for Biden.

--A new Wall Street Journal poll finds Joe Biden’s approval rating at 37%, a low in Journal polling during his presidency, a la Gallup.  His unfavorable reading is 61%, a record high.  “Bidenomics,” the president’s signature economic platform, is viewed favorably by less than 30% of voters and unfavorably by more than half.

Biden lags behind Trump in a hypothetical ballot with only these two, 47% to 43%.  Trump’s lead expands to 6 points, 37% to 31%, when five potential third-party and independent candidates are added to the mix.  They take a combined 17% support, with RFK Jr. drawing the most, 8%.

Interestingly, Nikki Haley tops Biden in a test match-up by 17 points, 51% to 34%, compared with Trump’s four-point lead.

Ron DeSantis only ties Biden at 45% each.

--A new Des Moines Register/NBC News survey of Iowa Republican caucus goers has Donald Trump at 51%, Ron DeSantis 19%, and Nikki Haley 16%.

--New Hampshire Gov. Chris Sununu has been coy about a potential endorsement of one of the Republican presidential candidates not Donald Trump, and he ended up endorsing Haley. The endorsement could give Haley a decent boost, given his popularity in the state, similar to that of Iowa Gov. Kim Reynolds, who endorsed Ron DeSantis, though Gov. Reynolds’ impact on DeSantis’ standing in her state has been minimal thus far.

--A new CNN poll in the battleground states of Michigan and Georgia has Donald Trump ahead of Joe Biden in each, which is highly significant.

In Georgia, registered voters say they prefer Trump (49%) over Biden (44%) in a two-way hypothetical matchup.  In Michigan, Trump leads Biden 50% to 40%, with 10% saying they wouldn’t support either candidate even after being asked which way they lean.

Biden won both states in 2020.

Trump’s margin over Biden is significantly boosted by support from voters who say they did not cast a ballot in 2020, with these voters breaking in Trump’s favor by 26 points in Georgia and 40 points in Michigan.  Those who report having voted in 2020 say they broke for Biden over Trump in that election, but as of now, they tilt in Trump’s favor for 2024 in both states, with Biden holding on to fewer of his 2020 backers than does Trump.

Overall, just 35% in Michigan and 39% in Georgia approve of Biden’s job performance.

Trump’s lead among likely GOP primary voters in each state mirrors his performance in primary polling nationally, with 58% in Michigan and 55% in Georgia.  DeSantis at 15%, Haley at 13% in Michigan, and the two tied at 17% in Georgia.

If you add RFK Jr. and Cornel West to the mix in Georgia, Trump’s lead over Biden grows to 8.  If you add them in in Michigan, Trump’s lead narrows to 8 points.  Kennedy receives 20% in Michigan and 15% in Georgia.

Bottom line, the GOP primary is over, advantage Trump, after Iowa, New Hampshire, Nevada and South Carolina.  Then it’s who does he select as his running mate.

--Trump pulled ahead of Biden in Michigan in a Bloomberg News/Morning Consult poll, 46% to 42%, after they were tied in the same survey done in October and early November.  The former president now leads in the monthly tracking poll of all seven swing states that will decide the 2024 presidential election, according to Bloomberg.

--I have to go back to a Wall Street Journal editorial from Dec. 7, after the last GOP debate, that I didn’t have a chance to note last time.  Specifically, on Trump’s record as president.

“Mr. Trump spent like a Democrat on domestic programs, and there’s little reason to think he would show spending restraint during a second term.

“He showed no resistance to the $2 trillion Covid blowout in March 2020. He tapped Federal Emergency Management Agency (FEMA) funds to extend the enhanced unemployment benefits during the summer of 2020 after they had lapsed.  He even complained that Congress’ $900 billion Covid spending bill in December 2020 was too stingy.

“Mr. Trump also pushed Republicans to increase the bill’s $600 stimulus checks for each adult and child to $2,000, which Democrats then embraced.  Democratic candidates in the two Georgia Senate runoffs campaigned on passing a bigger pandemic spending bill if the party won control of Congress, which they did.  The $6 trillion in Covid relief fueled the runaway inflation.

“Mr. Trump’s successes on judges, tax reform and deregulation were based on conventional conservative ideas that were teed up for him.  Former Reps. Kevin Brady and Paul Ryan and Sen. Pat Toomey midwifed the 2017 tax reform.  Mr. Trump nearly blew up the legislation toward the end when he reportedly dallied with Steve Bannon’s recommendation to raise the top marginal tax rate to 44%.

“The Federalist Society gave Mr. Trump originalist judicial nominees, which Mitch McConnell made sure were confirmed.  Deregulation happened thanks to Mike Pence’s guidance and nominees like Neomi Rao at the White House budget office.  Those people and others like them aren’t coming back for a second Trump term.  Instead the country will get Mr. Bannon and immigration Svengali Stephen Miller.

“Mr. Trump was far less successful on his signature issues of immigration and trade.  As (Chris) Christie pointed out during the debate, his tariffs didn’t change Chinese behavior but did hurt growth and American consumers.  Nor did Mr. Trump solve the immigration issue or build the border wall he promised, as Mr. DeSantis noted.

“Shortly after signing off on a draft bipartisan immigration compromise in Congress that would have increased border security, he went on Fox News and scuttled it.  His positions on issues changed by the hour depending on whom he had last consulted.  His legislative failure on immigration made it possible for Mr. Biden to use executive discretion to open the southern border gates.

“Mr. Trump also didn’t rebuild the military as much as he claims. The Navy had 297 ships at the end of fiscal year 2020, far fewer than his 355-ship goal or even the 308 ships called for by Barack Obama.  His budgets filled some holes in operations and maintenance.  But the military is increasingly stretched and U.S. weapons supply lines are inadequate.

“The former President famously failed to replace ObamaCare as he promised, and he blames the late Sen. John McCain.  But Mr. Trump contributed enormously by making an enemy of McCain, and he never took the time to master the policy or sell it to the public.

“The fundamental problem that Ms. Haley identified is that chaos follows Mr. Trump wherever he goes, like the dust cloud that follows Pig-Pen in the Charlie Brown cartoon.  As Ms. Haley put it, ‘you can’t defeat Democrat chaos with Republican chaos.  And that’s what Donald Trump gives us.’

“We think American institutions are strong enough to contain whatever designs Mr. Trump has to abuse presidential power. The danger for Republican voters to consider is that his chaos theory of governance would result in a second term that failed to deliver on his promises and set up the left for huge gains in 2026 and 2028.”

--Hunter Biden defied an order by House Republicans to testify behind closed doors about his business dealings on Wednesday, ratcheting up tensions with lawmakers who then voted to formalize their impeachment probe of his father.

At a news conference outside the Capitol, Biden blasted the probe as baseless and indicated he would not cooperate with a subpoena by the House Oversight Committee to testify in private.

Republicans said they would take steps to hold him in contempt of Congress, which could potentially result in prison time.

“The president’s son does not get to set the rules,” said Rep. James Comer, the Oversight Committee’s chair.

Hunter said: “For six years, I have been the target of the unrelenting Trump attack machine shouting ‘Where’s Hunter?’ Well, here is my answer, I am here,” he told reporters.

Hunter defended his father, saying, “Let me state as clearly as I can, my father was not financially involved in my business, not as a practicing lawyer, not as a board member of Burisma, not in my partnership with the Chinese private businessman, not in my investments home nor abroad, and certainly not as an artist.”

Hours later, the House voted to formally open an impeachment inquiry into President Biden, pushing forward with a yearlong GOP investigation that has failed to produce evidence of anything approaching high crimes or misdemeanors.  The vote of 221 to 212 was along party lines.

Republicans argue the vote was needed to give them full authority to continue carrying out their investigation amid anticipated legal challenges from the White House. Democrats denounce the inquiry as a fishing expedition.

Representative Tom Cole, Republican of Oklahoma and the chairman of the Rules Committee, portrayed the vote as a largely procedural step to shore up the House’s investigatory powers.

“Today’s resolution simply formulizes (the ongoing inquiry), and grants the House full authority to enforce its subpoenas that have been denied as recently as today.”

Rep. Jim McGovern, Democrat of Massachusetts, said this was nothing but rank politics.

“We are here for one reason and one reason alone: Donald Trump demanded that Republicans impeach, so they are going to impeach.”

Speaker Mike Johnson said lawmakers were particularly focused on investigating four areas: the millions of dollars Hunter Biden and James Biden, the president’s brother, received from overseas business deals; false or misleading statements the elder Mr. Biden made about his son’s work; incidents in which the elder Mr. Biden met with or spoke with his son’s business partners; and about $240,000 the elder Biden received from his family members as reimbursements for loans.”

--The Senate authorized $844.3 billion for the Department of Defense and $32.4 billion for national security programs within the Department of Energy, part of a total $886 billion defense spending plan Wednesday, supported by the president. 

The National Defense Authorization Act (NDAA) provides funding each year for Pentagon priorities such as training and equipment.  The Senate passed it 87-13.

The House then on Thursday overwhelmingly passed it as well, 310-118, clearing the measure for President Biden to sign after pushing past a revolt from the far right over the exclusion of restrictions they had sought to abortion access, transgender care, and racial diversity and inclusion policies at the Pentagon.

Among the provisions is new funding for naval vessels, combat aircraft, armored vehicles, weapon systems and munitions, $300 million in security assistance for Ukraine (separate from the $60 billion sought as discussed above), and a 5.2 percent pay raise for military servicemembers and the Defense Department civilian workforce.

This was extremely important to get this done.  Senate Majority Leader Chuck Schumer said on the Senate floor: “Passing the NDAA enables us to hold the line against Russia, stand firm against the Chinese Communist Party and ensure America’s defense remains state of the art at all times.”

However…recall that the entire U.S. government is being funded by a continuing resolution – which bars the military from starting new programs.  As noted in my opening, Congress still needs to act on passing a full budget in the first weeks it is back from break.

--Special counsel Jack Smith on Monday asked the Supreme Court to quickly consider former president Trump’s claims that he is immune from prosecution for alleged election obstruction in 2020 – an aggressive move aimed at keeping Trump’s D.C. criminal trial on track for next March, one day before the Super Tuesday primary, though I just said above the GOP race could in essence be over by then.

But then on Wednesday, a federal judge put on hold all of the proceedings in Trump’s trial on charges of plotting to overturn the election as his lawyers asked an appeals court to move slowly in considering his claim that he is immune from prosecution.

Judge Tanya S. Chutkan, the trial judge overseeing the election case, handed Trump a victory by suspending all “further proceedings that would move this case towards trial” until the appeal of the immunity issue is resolved.

Trump’s lawyers had challenged Chutkan’s rejection of the former president’s immunity claim, because these were actions he took while he was in office.

It’s very possible, however, both the U.S Court of Appeals and the Supreme Court will respond quickly.

All along, Trump and his lawyers have been trying to delay the trial on election interference charges for as long as possible.

If Trump is able to postpone the trial until after next year’s election and ultimately wins, he will then have the power to simply have any charges dropped.  And holding a trial after the race would deprive voters from hearing the evidence gathered.

Special Counsel Smith and his team say they are seeking to protect the enormous public interest in seeing the case resolved before next November.

--A jury awarded $148 million in damages late this afternoon to two former Georgia election workers who sued Rudy Giuliani for defamation over lies he spread about them in 2020 that ruined their lives with racist threats and harassment.

“Shaye” Moss and her mother, Ruby Freeman, may not see much of the $148 million, but hopefully they will sleep just a little better.  It was beyond disgusting and despicable what Giuliani continued to say about these Black women even this freakin’ week!

--The Supreme Court will decide this term whether to limit access to a key abortion drug, returning the polarizing issue to the high court for the first time since the conservative majority overturned Roe v. Wade last year, and placing it right at the forefront of the 2024 presidential campaign, as any ruling would likely be at the end of June.

The Biden administration and the manufacturer of mifepristone have asked the justices to overturn a lower-court ruling that would make it more difficult to obtain the medication, which is part of a two-drug regimen used in more than half of all abortions in the United States.  Oral arguments will likely be scheduled for the spring.

The justices announced Wednesday that they will review a decision from the conservative U.S. Court of Appeals for the 5th circuit that said the Food and Drug Administration did not follow proper procedures when it began loosening regulations for obtaining mifepristone, which was first approved more than 20 years ago.

The changes made over the last few years included allowing the drug to be taken later in pregnancy, mailed directly to patients and prescribed by a medical professional other than a doctor.

Such medications to terminate pregnancy have increased importance as more than a dozen states severely limited or banned abortions following the Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization.

The broader issue of abortion remains divisive, such as in the case of a pregnant woman in Texas who this week lost her legal battle for permission to end her pregnancy, after she had left the state to obtain an abortion, doctors asserting the fetus wasn’t viable and the mother’s health and/or her ability to have children in the future was at risk.

--Claudine Gay is staying on as president of Harvard, the school’s governing board announced on Tuesday, despite the uproar over her evasive answers at a congressional hearing about campus antisemitism.

The members of the board, the Harvard Corporation, deliberated into the night on Monday before finally deciding not to remove Dr. Gay, the university’s first Black president, from her post.

In a statement, the board acknowledged Dr. Gay had made mistakes, including in her initial reaction to Hamas’ Oct. 7 attack on Israel.  “So many people have suffered tremendous damage and pain because of Hamas’ brutal terrorist attack, and the University’s initial statement should have been an immediate, direct, and unequivocal condemnation,” the statement said.

Now Dr. Gay has to regain the confidence of the Harvard community.

About 700 members of Harvard’s faculty, and hundreds more alumni, came to her defense in several open letters, after donors, alumni and students ratcheted up a pressure campaign to oust her in lieu of the Dec. 5 appearance before Congress.

Earlier, University of Pennsylvania President Liz Magill resigned amid intense criticism from donors, alumni and others after testimony she gave at the congressional hearing, where she declined to state plainly that a call for genocide against Jews would violate the university’s code of conduct.

--Finally, George F. Will / Washington Post

“In German-occupied Poland on a November day in 1942, a Jewish woman carrying a baby realizes an SS man is following her down the street.  She catches the eye of a woman walking toward her.  Peter Englund tells what a witness saw:

“ ‘Some sort of wordless communication takes place – maybe no more than an almost invisible gesture or a glance or an eye movement – and the approaching woman spreads her arms a little and, without any sign of hesitation, the Jewish woman passes the baby across while hiding the movement with her body to prevent the SS man from seeing.’

“The Jewish woman, who knows her life is about to end, saves her baby.  A block later, she is arrested, destined for annihilation.

“This is from Englund’s ‘November 1942: An Intimate History of the Turning Point of World War II.’  He has deftly stitched a tapestry of vignettes from letters, diaries and memoirs of people tossed like fallen leaves by a global typhoon.  It is a book suited to 2023, the year of the West’s awakening from the grand illusion that large-scale, high-intensity warfare ignited by barbarians is a thing of the past.

“From Stalingrad to El Alamein to Guadalcanal (where U.S. troops could smell the new leather of nearby Japanese soldiers’ gear), large events of November 1942 changed the course of the war as individuals endured its particularities.  In besieged Leningrad, whose population that November was about 800,000, down from 3.3 million in just over a year, ‘Some people murdered for food – to steal ration cards or, in the worst cases, to eat their victims,’ Englund writes.  In China, people are ‘collecting and sieving the droppings of wild geese in order to pick out undigested grain which they will then eat.’….

“In Poland, in the Treblinka extermination camp, where 14,000 Jews could be murdered in a day, there were 15 to 20 suicides a day.  Englund:

“ ‘Committing suicide may be seen as a form of resistance – initially, many people were too crushed and too powerless even to take their own lives… The prisoners began to help one another hang themselves from the roof beam in the darkened barrack hut… That is the first stage of…becoming a collective.’

“And of collective resistance.  The doomed but life-affirming Treblinka uprising came in August 1943.  This was less than five years before the creation of the necessary response to Treblinka: Israel.  Today, the desire of Hamas to complete the Holocaust is applauded by moral cretins in academic cocoons (some Princetonians chanted ‘Globalize the intifada’), too uneducated to understand the grotesque pedigree of their enthusiasm….

“Today, academic ethicists at a safe distance are instructing Israel to be ‘proportionate’ in its response to what was done on Oct. 7.  Perhaps the students and faculty exhilarated by Hamas need to see pictures of what was done.  So, give every U.S. college and university the 46-minute video that Israel compiled from Hamas cameras and other sources, showing the sadists inflicting their carnage.  Challenge the schools to screen it.  This would be disturbingly educational, but the schools, many of them uneasy about such things, should do it anyway.”

In 1999, at the start of StockandNews, I took a personal pilgrimage to Treblinka, which I’ve described a number of times over the years, the looks of the old women at the doors of their homes on the narrow road into where the memorial is (back then literally driving over the train track that took the Jews in to be exterminated).  These women, some no doubt witnesses to history 55 years earlier, were not happy my driver and I were there.

Back then it was full train cars going into the woods, empty cars coming out.

I get it.  And it’s so depressing that this generation of young people is likely never to learn the real truth until it’s too late.

---

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

Pray for Ukraine, Israel and the innocent in Gaza.

God bless America.

---

Gold $2032
Oil $71.61…broke a seven-week losing streak, barely.

Regular Gas: $3.08; Diesel: $4.04 [$3.19 / $4.83 yr. ago]

Returns for the week 12/11-12/15

Dow Jones  +2.9%  [37305]
S&P 500  +2.5%  [4719]
S&P MidCap  +4.3%
Russell 2000  +5.5%
Nasdaq  +2.8%  [14813]

Returns for the period 1/1/23-12/15/23

Dow Jones  +12.5%
S&P 500  +22.9%
S&P MidCap  +13.0%
Russell 2000  +12.7%
Nasdaq  +41.5%

Bulls 55.6
Bears 19.4…reminder, this is a contrarian indicator and a bear reading under ‘20’ is normally a danger signal.  Ditto a Bull reading at 60.

Hang in there.

Brian Trumbore

---