Week in Review

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Week in Review

06/24/2023

For the week 6/19-6/23

[Posted 5:30 PM ET, Friday]

Edition 1,262

I was out of pocket for half the week, watching baseball and drinking beer in the Midwest, a needed change of pace (actually, I watch a lot of baseball and drink beer wherever I am, but this time it was Nebraska), and I have a little story on the trip down below.

But in catching up, I know I’m among about 50 percent of Americans who just keep shaking their heads over the looming choice for president we have coming up in 2024.

One guy finished a recent speech on gun violence with “God save the queen, man,” and the other guy gave the most appalling interview to Fox News’ Bret Baier that I can’t help but comment on it extensively later on.

One guy I still believe won’t make it through the year, though for now his disgraceful, creepy son was allowed to attend a state dinner for India’s prime minister Thursday night, and the other guy has nothing to say except the 2020 election was stolen. 

Over 158 million Americans voted in 2020, so let’s say that’s 158 million who purport to give a damn about what happens in this country, and we’re going to have a rerun?!   Really?

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Ukraine signaled today that the main push in its counteroffensive against Russian forces was still to come, with some troops not yet deployed and the operation so far intended to “set up the battlefield.”

The gains thus far have been minimal, with every top Ukrainian leader urging patience.

Deputy Defense Minister Hanna Maliar said today the “main events” were “ahead of us.”  “And the main blow is still to come.  Indeed, some of the reserves – these are staged things – will be activated later.”

Read on…all sides presented as usual, including biting criticism of Vladimir Putin and his generals from Yevgeny Prigozhin, who just in the past few hours also accused Russia’s military of launching missile strikes on his training camps and killing “an enormous amount” of troops, pledging to retaliate.

The Defense Ministry in Moscow denied the claim.

But is Prigozhin about to make a move on the Kremlin?

[These are fast moving developments.  Just now, 4:00 PM ET, the FSB (successor to the KGB) opened a criminal case against Prigozhin.]

This Week in Ukraine….

--The New York Times reported over the weekend that Ukraine’s Kakhovka Dam was blown up from within by Russia.  Bottom line: “The dam was built with an enormous concrete block at its base,” and “A small passageway runs through it, reachable from the dam’s machine room,” the Times reported. “It was in this passageway, the evidence suggests, that an explosive charge detonated and destroyed the dam.”

Because “the dam was built during Soviet times, Moscow had every page of the engineering drawings and knew where it was,” according to the Times.  It was Russia also because Russian authorities occupied the dam when it was damaged.  The Associated Press reached a similar conclusion after it’s own work on the topic.

--A large wave of Russian drone and missile strikes targeted Ukraine on Tuesday, including three Iranian-made Shaheds that struck an unspecified “critical infrastructure facility” in the far-western city of Lviv, according to the region’s governor, writing Tuesday on Telegram.  No one was injured in that particular strike.

The drones began approaching Kyiv and other cities around 5 a.m. local time in a barrage of nearly three dozen munitions, 32 of which were allegedly shot down before hitting their targets, according to Ukraine’s military.  “The main direction of attack of Iranian drones is [in the] Kyiv region; more than two dozen Shaheds were destroyed here,” a military spokesman said.

Portions of the capital were left without electricity afterward.  About a half dozen ballistic missiles and S-300 air defense rockets, meanwhile, were used to hit targets in the southern city of Zaporizhzhia; these strikes hitting “telecommunication infrastructure and agriculture and farming properties,” as Reuters reported.

Russia’s Defense Ministry said for its part that Russian forces had hit and destroyed eight ammunition warehouses across Ukraine in the last 24 hours and repelled Ukrainian attacks in three different directions.

Defense Minister Sergei Shoigu said Moscow had information that Ukraine was planning to strike Russian-controlled Crimea with longer-range U.S. and British missiles and warned Russia would retaliate if that happened.

[The Defense Ministry acknowledged there is “intense fighting” in parts of southern Ukraine where Kyiv’s forces are testing Russian defenses.]

“The use of these missiles outside the zone of our special military operation would mean that the United States and Britain would be fully dragged into the conflict and would entail immediate strikes on decision-making centers in Ukraine,” Shoigu told a meeting of military officials.  Shoigu said Ukrainian armed forces had carried out 263 attack on Russian forces’ positions since June 4, referring to what Moscow regards as the start of Ukraine’s counteroffensive.  “Thanks to the smart and selfless actions of our units all of them have been repelled, the enemy has not accomplished its goals,” Shoigu said.

The Kremlin saw scant chance of peace talks with Ukraine due to Kyiv’s stance – which demands a total withdrawal of Russian forces from Ukraine before any peacemaking.

--Ukrainian ground forces are inching their way further into Russian-occupied territory across “at least three sectors of the frontline,” with new gains reported around Bakhmut and the western Donetsk and western Zaporizhzhia oblasts, according to the Institute for the Study of War, writing on Monday evening.

Ukraine claimed as of Tuesday to have recaptured 44 square miles of land from Russian forces, eight villages, a small amount. 

One top defense official warned Russia is working hard to stop Ukraine from clawing back any land during the counteroffensive.  “The enemy will not give up positions easily and we must prepare for the fact that it will be a tough duel,” Deputy Defense Minister Hanna Maliar said Tuesday, writing on Telegram.  Because of this, she cautioned observers, “It is not necessary to measure the result of the work of the defense forces exclusively by settlements and kilometers traveled, because there are much more criteria for the effectiveness of military operations.”

President Zelensky acknowledged battlefield progress has been “slower than desired,” weeks into the counteroffensive.  “Some people believe this is a Hollywood movie and expect results now. It’s not,” he told the BBC.  “What’s at stake is people’s lives.”

Zelensky said the military push was not going easily because 200,000 sq. km (77,220 sq miles) of Ukrainian territory has been mined by Russian forces.

“Whatever some might want, including attempts to pressure us, with all due respect, we will advance on the battlefield the way we deem best,” Zelensky added.

--“We should be prepared that the Russian war of aggression against Ukraine can still last for a long time,” Chancellor Olaf Scholz said Tuesday during a press conference alongside NATO Secretary-General Jens Stoltenberg.  Still, he added, “Germany will continue to support Ukraine for as long as it takes.”

--Ukraine called on Wednesday for Western countries to pledge over $6 billion more to help the country rebuild over the next 12 months, saying Russia’s war meant Kyiv was facing the largest reconstruction project in Europe since World War II.

At a conference in London where Britain, the United States and the European Union pledged billions of dollars in additional help, Ukraine said it needed yet more capital and also commitments to specific projects to not only recover but to develop into a powerful member of the Western world.

Ukrainian Prime Minister Denys Shmyhal put the price tag at more than $6 billion over the next 12 months.

While expressing thanks for the support so far, President Zelensky was blunt – Kyiv also needed concrete commitments to projects that will help Ukraine not only recover but to further modernize.

But a big barrier to investment in Ukraine is the ability to obtain insurance.  Companies need to know whether nations can agree on a way of providing it against war damage and destruction.

Back in March, the World Bank, European Commission and the United Nations estimated that the cost of the war in the first year was $411 billion, and it could easily reach more than $1 trillion.

--Two drones were brought down outside Moscow as they approached the warehouses of a local military unit, a senior Moscow official said Wednesday, in what could be the latest attempt by Ukraine to strike targets inside Russia during the early stages of Kyiv’s counteroffensive.

Russia’s Defense Ministry alleged that it was “an unsuccessful attempt at a terrorist attack” by “the Kyiv regime” on its facilities in the Moscow region.  A third drone was found that had apparently crashed before reaching its intended target.

--Thursday, Ukraine attacked a bridge linking southern Ukraine to the Crimean Peninsula with long-range British missiles, Russian officials said (as Shoigu predicted days earlier).

The two parallel Chonhar bridges were both damaged but no one was hurt, said the Russian-installed governor in occupied Kherson oblast.

He said it was likely British Storm Shadow missiles that were used in an attack “ordered by London.”

Russia uses the road as a land bridge to Crimea and Melitopol and was one of the targets of the counteroffensive.

Meanwhile, Russian forces continued to target Ukrainian cities including President Zelensky’s home city of Kryvyih Rih and the southern port of Odesa overnight.

Zelensky told Ukrainians on Thursday that intelligence services had received information that Russia was preparing the “scenario of a terrorist attack” on the Zaporizhzhia nuclear plant.  The Kremlin immediately rejected his comments as “another lie.”

Although the plant’s six reactors have all been shut down, the UN’s atomic energy agency warned on Wednesday that the safety and security situation there was “extremely fragile.”

Waters levels in a channel used to cool the reactors have declined since the Kakhovka dam was destroyed and the UN agency said the situation around the plant had become increasingly tense amid the counteroffensive.

--Vladimir Putin said on Wednesday that Russia’s new generation of Sarmat intercontinental ballistic missiles, which are capable of carrying 10 or more nuclear warheads, would soon be deployed for combat duty.

In a speech to new graduates of military academies, Putin stressed the importance of Russia’s “triad” of nuclear forces that can be launched from land, sea or air.  “The most important task here is the development of the nuclear triad, which is a key guarantee of Russia’s military security and global stability,” he said.  “Already about half of the units and formations of the Strategic Missile Forces are equipped with the latest Yars systems, and the troops are being re-equipped with modern missile systems with the Avangard hypersonic warhead.”

--On a related topic, Monday, President Biden said the threat of Vladimir Putin using tactical nuclear weapons is “real,” days after denouncing Russia’s deployment of such weapons in Belarus.

On Saturday, Biden called Putin’s announcement that Russia had deployed its first tactical nukes “absolutely irresponsible.”

“When I was out here about two years ago saying I worried about the Colorado river drying up, everybody looked at me like I was crazy,” Biden told a group of donors in California on Monday.

“They looked at me like when I said I worry about Putin using tactical nuclear weapons.  It’s real,” Biden said.

President Zelensky was asked by the BBC if he was worried by Putin’s tactical nuclear weapon threat.

“Putin has been dangerous for us since 2014 when he occupied the first of our territories,” he said.  “He will talk about the use of nuclear weapons, I don’t think he is ready to do it because he is scared for his life, he loves it a lot.  But there is no way I could say for sure, especially about a person with no ties to reality, who in the 21st Century, launched a full-scale war against their neighbor.”

--Friday, the Ukrainian government said its forces were making advances in the south and that the Russian offensive in the east had been ‘stopped.’

Ukrainian Prime Minister Denys Shmyhal has described his country’s counteroffensive against Russia’s invading troops as a “success.”

In an interview with BBC Radio, Shmyhal said: “The counteroffensive is not only offensive.  It can take time.  It is not an easy walk. In the past two weeks, we have liberated more than 113 square kilometers of our territory [Ed. the same 44 miles discussed earlier in the week].

Deputy Defense Minister Hanna Maliar told Ukrainian television today: “Every day we are advancing, every day.  Yes, it is gradual, but our forces are gaining a foothold on these borders and they are advancing steadily.”

--Also today, the New York Times reported that Ukraine’s NATO-trained brigades have finally entered the fight.  That includes about 36,000 troops using U.S.-provided equipment like Bradley Fighting Vehicles as well as German tanks and more.

“The bulk of the nine Ukrainian brigades has yet to be committed to the fight, but the vanguard of that main assault force is already making its mark,” the Times’ Helene Cooper and Eric Schmitt write.

--The Brits reported today, via Defense One, that as part of Russia’s expanded port infrastructure in occupied Sevastopol, Ukraine, at the southern edge of Ukraine, are “at least four layers of nets and booms across the harbor entrance” and an apparent “doubling of floating mammal pens…which highly likely contain bottle-nosed dolphins.”

The dolphins “are highly likely intended to counter enemy divers,” the UK Ministry of Defense wrote on Twitter, with supporting satellite imagery.  Good lord.

--Lastly, Wagner Group head Yevgeny Prigozhin said in a video Friday that Vladimir Putin’s public reasons for invading Ukraine were based on lies all along – that Ukraine was never going to use NATO to attack Russia, that Putin’s military “is deceiving the public and the president,” and that the goal all along, going back to the initial 2014 invasion of Crimea, “was to divide material assets in Ukraine” among Russia’s oligarchs.

Sounds like the start of Mr. Prigozhin’s presidential campaign, or another shot across the bow in his eventual coup attempt.

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--Wall Street Journal reporter Evan Gershkovich had a new appeal rejected by a Moscow court on Thursday against his pre-trial detention on charges of espionage.  The Journal denies the spying charge, which could lead to a prison sentence of up to 20 years if he is convicted.  His parents, who left the Soviet Union for the United States in 1979, were in court to support their son.  U.S. Ambassador Lynne Tracy was not allowed inside the room.

Gershkovich, who was arrested in March, was appealing against his continued detention in Moscow’s Lefortovo prison ahead of his trial, for which no date has been set.

--Russia’s Supreme Court on Thursday rejected a challenge by the jailed Kremlin critic Alexei Navalny to prison officials’ refusal to give him writing equipment, the Russian independent news site Mediazona reported.  Navalny is serving 11 ½ years on trumped up fraud and other charges that he says were designed to silence him.  He is also on trial for a host of other offenses that could keep him in prison for decades more.

Navalny’s complaint alleged that the authorities had no right to deny him the pen and paper that were provided to all inmates, merely because he was in a punishment cell without a table, or because there was no space in his prison schedule for writing.

“I’m not asking for extra food, I’m not asking for a Christmas tree to be put in my cell…we’re talking about the basic human right to have a pen in the cell and a sheet of paper to write a letter or (complaint) to the court,” Mediazona quoted Navalny as telling the judge.  “In order to have them fetch a can of coffee out of my things and bring it to the cell, I have to write an application.”

Navalny’s complaint had made it through a series of lower courts before being definitively thrown out by the Supreme Court.  [Reuters]

--Opinion….

Ben Hodges, former commander of U.S. Army Europe / Washington Post

Re: the counteroffensive….

“Although Western audiences justifiably want to understand how the fight is going in real time, we should remember the axiom that first reports are never as good or as bad as they sound.  I think the Ukrainians can and will win this fight. But the summer is likely to be long and difficult. We will not be able to judge how successful the counteroffensive has been for quite some time.

“That said, here are some things to keep in mind in these early days.

“First, you will know it when you see it.

“While the counteroffensive has been launched, I do not think the main attack has yet started. The Ukrainian general staff will want to keep the Russians guessing about where it will take place for as long as possible.

“So far, it appears that the Ukrainians are still probing for vulnerabilities they can exploit and reinforcing local tactical successes… We will know the main attack has started when we see large groupings of armored forces – two or three armored brigades attacking in one direction.

“How large is a brigade?  Ukrainian tank battalions usually contain 31 tanks, and armored infantry battalions have a similar number of armored vehicles. Each battalion will also contain additional armor carrying engineers, air defense and logistics.  An armored brigade would have four or five tank and armored infantry battalions. A typical Ukrainian brigade therefore is likely to have at least 250 armored vehicles of different types.

“To date, we have not yet seen these kinds of large armored formations hit the battlefield.

“Second, watch the Russian lines.

“The Russians have built hundreds of miles of trenches (of varying quality), minefields, antitank ditches and ‘dragon’s teeth’ obstacle belts.  These defenses will undoubtedly present challenges to Ukraine’s attack.

“But defenses are only as good as the soldiers occupying those trenches and covering those obstacles.  I’m waiting to see if the Russians fighting from them are more effective in defense than they were on the attack.  The vicious infighting we see between the various Russian military leaders and mercenary bosses highlights the lack of cohesion on the Russian side.

“I expect Ukraine to seek to exploit this.  A breakthrough along any part of the line could end up being catastrophic for Russian forces as chaos sets in.

“Third, don’t over-interpret Ukrainian losses.

“Breaking through enemy lines is never easy.  Ukraine will suffer setbacks….

“And fourth – perhaps the most vital metric of all – watch how support evolves in Western capitals.

“Ukraine is in an existential fight.  How long it takes and how many lives it costs greatly depends on what additional support the West offers.  Ukraine will need to be resupplied as the war grinds on….”

Ed. Ukraine needs longer range missiles, which would shorten the war.

“President Biden has been hesitant to send the MGM-140 Army Tactical Missile System (ATACMS, pronounce ‘attack ‘ems’) to Ukraine.  [Ed. similar to Britain’s Storm Shadow missiles delivered to Ukraine earlier this year.]  I hope he reconsiders.

“The Biden administration has said it has given Ukraine what it thinks it needs to succeed, suggesting it is up to Ukraine to make maximum use of what it has. This kind of stance can lead to a passive complacency – watching and waiting for battlefield results.

“But what Ukraine needs right now are not spectators.  It needs ATACMS.”

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Wall Street and the Economy

Federal Reserve Chair Jerome Powell gave his semi-annual testimony to Congress this week and said policymakers expect interest rates will need to move higher to reduce U.S. growth to below its long-term trend in order to contain price pressures.  When that happens, however, will depend on the data.

“My colleagues and I understand the hardship that high inflation is causing, and we remain strongly committed to bringing inflation back down to our 2% goal,” Powell said in prepared remarks for the House Financial Services Committee.  “We will continue to make our decisions meeting-by-meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks.”

Powell described an economy that is still strong, with inflation running too high.  He said the Fed is in the unusual situation of “overachieving” on its employment mandate with the jobless rate running near multidecade lows.  That has political implications as Democrats, who applauded the Fed’s pause, are worried higher borrowing costs might push millions of Americans out of work, in time for the 2024 election cycle.  Republicans urged the Fed not to back down on its inflation fight and to be aware of how higher rates are straining the banking system.

The Federal Open Market Committee paused its series of interest-rate hikes last week for the first time in 15 months, leaving the benchmark funds rates in a range of 5.00% to 5.25%.  But Fed officials estimated rates would rise to 5.6% by year end, indicating two more 25-basis point rate hikes in the future.

The next Fed meeting is July 25-26.  We have one of the Fed’s preferred inflation barometers, the personal consumption expenditures index, next Friday.

Separately, Powell said he expects the U.S. dollar to remain the world’s reserve currency as long as democratic institutions and the rule of law remain in place in the U.S.

“The status of the dollar as the world’s reserve currency is a very important thing to us,” Powell said.  “I think the reason we have that status is largely due to our great democratic institutions, the rule of law, and the fact that we have, generally speaking, had strong levels of price stability.  I think the dollar will remain the reserve currency as long as those things are in place.”

The dollar share of official FX reserves fell to a 20-year low of 58% in the fourth quarter of 2022, according to the International Monetary Fund.

Minimal economic data came out this week.  On the housing front, May housing starts came in much stronger than expected at a 1.631 million annualized pace vs. forecasts for 1.40 million and 1.34m prior.

May existing home sales also came in better than expected, 4.30 million, up 0.2% over April’s pace, but down 20.4% year-over-year.  The median price for all housing types fell by 3.1% compared with a year earlier to $396,100.  “Mortgage rates heavily influence the direction of home sales,” said National Association of Realtors Chief Economist Lawrence Yun.  “Relatively steady rates have led to several consecutive months of consistent home sales.”

A figure on May leading economic indicators fell for a 14th straight month, -0.7%, the LEI long signaling a pending recession that forever seems to be around the corner.

Speaking of mortgage rates, Freddie Mac’s 30-year fixed-rate mortgage is at 6.67% this week.  The Atlanta Fed’s GDPNow barometer for second-quarter growth is 1.9%.

Lastly, from Aaron Elstein / Crain’s New York Business:

“Landlords facing persistently vacant office towers are suspending or cutting dividend payouts, praying the economy avoids a recession and pushing for companies to call more workers back to offices.  But stress is building in the sector, and Moody’s is warning in a new note that even without an economic downturn, the coming storm could be formidable.

“ ‘Challenges are crystallizing even as employment growth is strong,’ the ratings agency said in a report issued last week and shared with Crain’s today (Thursday).

“Remote work has changed the office market, a sector with more than $700 billion in outstanding debt, Moody’s said. Vacancy rates, at 17.8% nationally, are 500 basis points higher than in pre-Covid times, and ‘are set to rise.’ The ratings firm observed that office revenues are about 10% below ‘where they should be.’”

Staying on the topic, Bloomberg had the following today regarding the global nature of the looming crisis in commercial real estate:

“The number of transactions is plunging – and when deals do happen, the price declines are stark.  In the U.S., where return-to-office rates have been lower than in Asia and Europe, values for institutional-quality offices are down 27% since March 2022, when interest rates started going up, according to data analytics company Green Street.  Apartment building prices have declined 21%, and malls are off 18%.  Office prices are expected to fall more than 25% in Europe and almost 13% in the Asia-Pacific region before hitting a trough, PGIM Real Estate, a unit of Prudential Financial Inc, forecasts.

“What PGIM analysts have called ‘the great reset’ of values is likely to be agonizingly slow.  It took six years for U.S. office prices to recover after the 2008 financial crisis, even though that episode centered on residential real estate.  ‘This time we think it’ll take 10 years,’ says Richard Barkham, global chief economist for CBRE Group Inc.

“Commercial real estate’s woes will add to the stress on a financial system that’s already reeling from this year’s crisis in regional banks. And as the downturn deepens, it stands to have a transformational impact on some cities as they contend with empty buildings and lower property tax revenue.”

Europe and Asia

We had flash PMI readings in the eurozone for June, courtesy of S&P Global, and they were not good.  The composite was 50.3 (50 the dividing line between growth and contraction), a 5-month low, with manufacturing at 44.6, and services 52.4.

Germany: mfg. 44.2, services 54.1 vs. 57.2 in May
France: mfg. 44.2, services 48.0 (28-mo. low)

UK: mfg. 47.7, services 53.7

Dr. Cyrus de la Rubia, Chief Economist Hamburg Commercial Bank:

“If the ECB (European Central Bank) only had to control goods prices, then Frankfurt would toast the end of inflation, because in June the PMI survey shows that purchasing and selling prices have fallen significantly.  Moreover, given the recession in manufacturing indicated by the PMI, one would start with interest rate cuts.  But this picture is incomplete.  In the more important part of the economy, the private services sector, prices continue to rise, and that’s why the core rate of inflation has been so slow to decline….

“After Eurozone GDP fell for the second time in a row in the first quarter, the probability has increased somewhat that the GDP change will again carry a negative sign in the current quarter, due in part to weak services activity in France.”

Britain: British inflation defied predictions of a slowdown and held at 8.7% in May (core inflation ex-food and energy rose to 7.1% from 6.8%, highest since March 1992), putting yet more pressure on the Bank of England, which then met Thursday and raised borrowing costs for the 13th time in a row by a larger than expected half point.

Economists polled by Reuters expected 8.4%, with October’s 41-year high having been 11.1%.

The numbers are bad for Prime Minister Rishi Sunak, who had pledged to halve the inflation rate before a probable 2024 election – and are adding to the rise in mortgage costs for millions of homeowners, the benchmark mortgage rate over 6%.  Home prices are seen by economists to be falling 10% peak to trough.

Germany: The Ifo Institute estimated the country’s economy will decline 0.4% in 2023 but rise 1.5% in 2024.  The country’s inflation rate is expected to fall to 2.1% in 2024 from 5.8% in 2023.

Turning to China, no big economic data but the central bank cut key interest rates on Tuesday for loans issued by the state-controlled banking system, in the clearest sign yet of mounting concern in Beijing that the country’s economy is stalling.  But the interest rate cut was very small and will have little impact on the household sector

Japan had important inflation readings for May, the core rate (as they define it), 3.2% vs. 3.5% in April, the 14th consecutive month above the Bank of Japan’s 2% target.  Ex-food and energy the number was 4.3%, up from 4.1% prior and the highest since June 1981.

A flash PMI reading for June on manufacturing was 48.4 vs. 50.9 in May, while the services figure was 54.2.

Street Bytes

--Stocks finally fell in this holiday-shortened week, spooked by the prospect of further rate hikes after the testimony of Jerome Powell and comments from Fed Governor Mary Daly, with the Dow Jones falling 1.7% to 33727, while the S&P 500’s five-week winning streak was snapped, down 1.4%, and Nasdaq’s eight-week run, longest since 2019, ending, off 1.4% as well.

Stocks in Europe suffered too, the Stoxx Europe 600 index down 2.9% thanks to weak economic data.

--U.S. Treasury Yields

6-mo. 5.29%  2-yr. 4.75%  10-yr. 3.73%  30-yr. 3.81%

Little change in yields on the week.

--FedEx is viewed as a good economic bellwether and the company reported lower fiscal fourth-quarter results after the market closed Tuesday, amid continued demand softness and cost inflation, while the company said its chief financial officer plans to retire at the end of July.

Adjusted per-share earnings fell to $4.94 in the three months ended May 31 from $6.87 a year earlier, but topped expectations of $4.87.  Revenue declined to $21.9 billion from $24.4 billion, trailing the Street’s view of $22.66 billion.  The stock fell about 2% on the news.

Results were hit by weak demand and inflation, partially offset by cost reductions and U.S. domestic package yield improvement, the company said.

FedEx Express’ operating results declined due to lower global volume, though the segment benefited from reduced expenses and higher domestic yields.

Results at ground operations improved due to higher revenue per package and cost-reduction efforts, though volumes declined.  Freight’s operating results fell on the back of decreased shipments and lower weight per shipment.

Separately, FedEx said Michael Lenz will retire as CFO, but serve as a senior adviser to the company until the end of the year.

For fiscal 2024, FedEx is forecasting flat to low-single-digit revenue growth year over year, but also expects “business conditions to remain uncertain.”  The company expects adjusted EPS of $15 to $17 before certain retirement plan adjustments, and between $16.50 and $18.50 after business optimization costs are excluded.

--Ford and its battery manufacturing partner will receive a $9.2 billion loan to build three battery factories in Kentucky and Tennessee, the Department of Energy announced Thursday. The loan is the single biggest financial commitment the Biden administration has made in its effort to build an electric vehicle manufacturing network in the United States.

The loan will go to a joint venture created by Ford and its partner SK On called BlueOval SK, which will supply batteries for electric Ford and Lincoln cars and trucks.  The factories, one in Tennessee and two in Kentucky, will employ 7,500 people and are among the largest such plants being built by auto and battery companies across the country, especially in Southern states.  Production is slated to begin in 2025.

One of the factories will be in Stanton, Tenn., north of Memphis, adjacent to a large manufacturing complex that Ford is building to produce electric pickup trucks.  The other two factories are in Glendale, Ky., south of Louisville, and will employ more people than Kentucky’s coal industry.

--TSA checkpoint numbers vs. 2019

6/22…100 percent of 2019 levels
6/21…96
6/20…97
6/19…101
6/18…97
6/17…102
6/16…101
6/15…100

My flights between Newark and Kansas City this week were packed, and no assholes on board!

--The Federal Trade Commission sued Amazon on Wednesday, alleging that the e-commerce giant has tricked millions of consumers into signing up for its Prime subscription service through deceptive user interface designs.

The complaint filed in the U.S. District Court for the Western District of Washington also takes aim at Amazon for allegedly trying to keep users subscribed who wished to cancel their memberships.

“Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions,” the FTC complaint said.  It added that Amazon deliberately made it much harder to cancel subscriptions than to enroll in Prime, alleging that the company created a ‘labyrinthine’ cancellation process intended to distract or deter consumers from following through on the intent.

The lawsuit marks the FTC’s most significant step yet against business practices the agency says harms consumers by either luring them in or keeping them trapped using psychological gimmicks. It represents the culmination of a months-long investigation into Amazon’s Prime practices that involved testimony from company founder Jeff Bezos and CEO Andy Sassy, along with selfies from Lauren Sanchez.  [OK, this last one isn’t quite accurate.]

--Chemical and manufacturing giant 3M reached a $10.3 billion settlement on Thursday with U.S. cities and towns over their claims that the company contaminated drinking water with so-called forever chemicals used in everything from firefighting foam to nonstick coatings.

Under the sweeping agreement, 3M said it would pay out the money over 13 years to any cities, counties and others across the country to test for and clean up perfluoroalkyl and polyfluoroalkyl substances, known a PFAS, in public water supplies.

3M, which is facing about 4,000 lawsuits by states and municipalities for PFAS contamination, did not admit any liability.

One analysis by research firm Morningstar estimates that 3M’s total liabilities related to PFAS could grow to as much as $30 billion as state, foreign and personal injury claims are factored in.

--JPMorgan Chase reviewed its ties to Jeffrey Epstein in 2019 and found that he had regularly given business advice to onetime JPMorgan executive Jes Staley and invited him to meetings with senior officials in foreign governments.

Epstein also helped Staley with more personal matters, the review found, such as the application process for Staley’s daughter into a Ph.D. program at Columbia University.

The 22-page internal report, reviewed by the Wall Street Journal, was prepared after Epstein was arrested in 2019 on federal sex-trafficking charges.  Epstein died in jail that year before he was tried.  JPM declined to comment beyond its earlier statements that it was a mistake to deal with Epstein and that the bank would have never associated with him if it knew about his alleged sex trafficking.

JPMorgan has been fighting a lawsuit brought by the U.S. Virgin Islands alleging the bank ignored red flags about Epstein’s behavior because he was bringing in wealthy clients for the bank.  The bank this month agreed to pay $290 million to settle a similar lawsuit brought by Epstein’s victims.

The report will be part of the dispute with the Virgin Islands.

JPM has sued Staley claiming he misled the bank. And it said Staley was the executive who was accused of sexual assault by the Epstein accuser who sued the bank.

Staley’s legal team denies the allegations against him.  He has said he regrets his relationship with Epstein.  Staley’s daughter didn’t respond to a request for comment.

--Darden Restaurants on Thursday forecast annual profit largely below Wall Street expectations, as the Olive Garden parent struggled to cope with ballooning commodities costs, sending its shares down 3% in premarket trading.  Inflation has bumped up costs of food items such as beef and dairy, which coupled with a tight labor market has added to operational challenges for restaurant operators.

Orlando, Fla.-based Darden said it expects full-year profit between $8.55 per share and $8.85 per share, where mid-point comes in below analysts’ average estimate of $8.78 per share.  It forecasts same-store sales to grow in the range of 2.5% to 3.5%, compared with 2.7% growth estimates.  Full-service restaurants such as Darden and Texas Roadhouse have also conceded market share to fast food chains as inflation-weary customers curbed spending on dining out and turned to budget-friendly meals.

For the fourth quarter ended May 28, Darden’s quarterly sales came in-line with analysts’ estimates at $2.77 billion. Same-store sales for the fourth quarter at LongHorn Steakhouse grew 7.1%, whereas Olive Garden saw growth of 4.4%.  Ex-items, the company’s profit for the quarter was $2.58 per share, above estimates of $2.54.  “We had a solid quarter to conclude a strong year in which we met or exceeded our financial outlook, despite a tough operating environment,” CEO Rick Cardenas said.

--Bitcoin has been surging, crossing $31,400 before falling back a bit to finish the week (Bitcoin never closes) at $30,900 (as of 4:00 p.m. ET).  At $31,000, it’s the highest level since June 2022, up about 90% since the start of the year, but still more than 50% below its all-time high of almost $69,000.

This despite a slew of scandals and challenges for the industry.

But this week it was about BlackRock Inc.’s surprise filing for a U.S. spot Bitcoin exchange-traded fund that’s reignited the fervor, though the product needs approval from regulators, and there’s no guarantee it will be granted.

Should approval be forthcoming, however, then that would be a big deal, mused the eternal Bitcoin skeptic.

--Pixar’s “Elemental,” a $200 million animated rom-com, bombed at the box office its opening weekend, earning an estimated $29.5 million domestically in one of the worst debuts in the studio’s history.

“The Flash,” a Warner Bros. Discovery time-traveling superhero story from the DC multiverse that also cost about $200 million to produce, also fell flat.  It took in $55.1 million in the U.S. and Canada during its three-day debut, according to Comscore.

“The Flash” earned an additional estimated $75 million at the international fox office, bringing its global tally to $130 million over its opening weekend.

“Elemental,” an animated adventure about opposites who attract, added an estimated $15 million at the international box office for a global total of $44.5 million.

The above have time to rebound with moviegoers before some summer blockbusters, like “Indiana Jones and the Dial of Destiny” (June 30) and “Mission Impossible – Dead Reckoning Part One” (July 12).  “Oppenheimer,” the one I want to see, opens July 21.

And then Ridley Scott’s “Napoleon,” Thanksgiving weekend.  Oh baby.

Foreign Affairs, Part II

China: Secretary of State Antony Blinken finally made it to Beijing for two days of talks last Sunday and Monday, the first secretary of state to visit China since 2018.  He had been scheduled to go to Beijing in February, which was scrapped amid the furor over the alleged Chinese spy balloon flying over U.S. territory.

Blinken received a muted reception when he arrived, a lone Foreign Ministry official there to meet him and no red carpet.

As he left less than 48 hours later, Blinken said the trip had achieved its goal because the two sides had restored some senior-level communications. 

But Blinken had hoped to re-establish military-to-military talks between the two nations, only Chinese officials were not interested – citing 2018 U.S. sanctions against its current defense minister, Li Shangfu, for helping China acquire weapons from Russia.

Blinken met President Xi for about 40 minutes on Monday, Xi confirming the meeting at the last minute, and the two agreed to stabilize the intense rivalry between Washington and Beijing so it did not veer into conflict, but the two failed to produce any breakthroughs.  They did agree to continue diplomatic engagement with more visits by U.S. officials in the coming weeks and months.

After meeting with Xi, Blinken acknowledged entrenched differences.  “We have no illusions about the challenges of managing this relationship.  There are many issues on which we profoundly, even vehemently, disagree,” he said.

Xi’s top diplomat, Foreign Minister Qin Gang, wasn’t as careful with his words during talks on Monday, and reportedly demanded U.S. officials stop “hyping the ‘China threat theory’” and “urged the United States not to project on China the template that a strong country must seek hegemony.”

That resuming some conversations counted as success was yet another sign of how sour the relationship has become between the world’s two largest economies.  Threats lurk in every corner that could derail even this modest progress: Taiwan, human rights, the origins of the coronavirus pandemic, semiconductor policy and other issues.

So then at a fundraiser in California, Tuesday, President Biden said Xi was very embarrassed when a suspected Chinese spy balloon was blown off course over U.S. airspace early this year.  Blinken said on Monday the chapter should be closed. 

“The reason why Xi Jinping got very upset in terms of when I shot that balloon down with two box cars full of spy equipment in it was he didn’t know it was there,” Biden said at the fundraiser.  “That’s a great embarrassment for dictators.  When they didn’t know what happened.  That wasn’t supposed to be going where it was. It was blown off course,” he said.

China on Wednesday called comments by Biden describing Xi as a dictator “extremely absurd and irresponsible.”

Foreign Ministry spokesperson Mao Ning said Biden’s comments at the fundraiser “go totally against facts and seriously violate diplomatic protocol, and severely infringe on China’s political dignity.”

“It is a blatant political provocation. China expresses strong dissatisfaction and opposition,” Mao said at a daily briefing.  “The U.S. remarks are extremely absurd and irresponsible.”

Mao reiterated China’s contention that the balloon was intended meteorological research and had been blown off course accidentally.

Editorial / Wall Street Journal

“Set aside the question of why the Commander in Chief aired U.S. intelligence at a fundraiser.  Mr. Biden has long tried to erase what he has called the ‘silly balloon’ from public memory, though the White House had suggested it would tell Americans more about what the U.S. learned from the debris.

“Whether or not Mr. Xi knew about the balloon, his government is responsible for it.  If the blimp wandered off course, why linger over U.S. military bases?  The Communist Party could have apologized but denounced the U.S. for shooting it down.  Mr. Biden admitted Tuesday that the balloon was loaded with spy equipment.

“Mr. Biden is right that Mr. Xi is a dictator, but now the President has created a flap that China will exploit to demand more diplomatic concessions – as a precondition for Mr. Xi to grant Mr. Biden the summit the U.S. President covets.  Foreign leaders used to seek summits with U.S. Presidents.  Now Mr. Biden pines for one.

“This isn’t Mr. Biden’s first China bumble.  He has multiple times said the U.S. military would come to Taiwan’s defense in the event of a Chinese invasion only to be disavowed by the White House staff.  Maybe he needs a teleprompter all day, every day.”

India: President Biden hailed a new era in the U.S.-India relationship, after rolling out the red carpet for Indian Prime Minister Narendra Modi on Thursday, including a state dinner, touting deals on defense and commerce aimed at countering China’s global influence.  The partnership is “stronger, closer and more dynamic than at any time in history,” Biden told reporters at a joint press conference with Modi, and the economic relationship is “booming,” with trade more than doubling over the past decade.

Modi touted “a new chapter” to the countries’ “strategic partnership” after the two leaders emerged from Oval Office talks where the countries’ differences on Russia and human rights were on the table.

Washington wants India to be a strategic counterweight to China, though some wonder just how much India will stand up collectively to Beijing over an issue like Taiwan.  Washington has also been frustrated with India’s close ties to Russia, India buying gobs of Russian oil which pays for the war in Ukraine.

“The challenges and opportunities facing the world in this century require that India and the United States work and lead together, and we are,” Biden said in welcoming Modi to the White House.

But India has not shied away from taking decisions that irk China.  It held a military drill with U.S. forces in an area near the Himalayan border with China.  And Delhi has also continued to actively participate in the Quad – which includes the U.S., Australia and Japan – despite angry reactions from Beijing.

Biden and Modi signed off on a deal to allow General Electric to produce jet engines in India to power Indian military aircraft, while U.S. Navy ships in the region will be able to stop in Indian shipyards for repairs under a maritime agreement, and India will procure U.S.-made armed drones.  Additionally, U.S. chipmaker Micron Technology is going to build a $2.7 billion semiconductor testing and packaging unit in Modi’s home state of Gujarat.  Both the U.S. and India also reached various agreements on space cooperation, including a joint mission to the International Space Station in 2024.

Lastly, at their joint press conference, President Biden said he did not think his comment referring to Chinese President Xi as a dictator had undermined or complicated the U.S. relationship with China, while declining to walk back the sentiment.

“The idea of my choosing and avoiding saying what I think is the facts with regard to the relationship with…China is, is just not something I am going to change very much,” Biden told reporters.  He said he expected to be meeting with Xi in the near term and that “I don’t think (my comments) had any real consequence” after Sec. of State Blinken’s trip.

Israel: An Israeli drone killed three militant gunmen in the West Bank on Wednesday, in a rare strike that came hours after settlers attacked Palestinian towns, torching cars and buildings in retaliation for an attack by Hamas gunmen a day earlier.

The settlers had rampaged through Palestinian towns in the West Bank in retaliation for the killing of four Israelis by Hamas gunmen who opened fire on a roadside restaurant near the settlement of Eli, where Israel said it planned to add 1,000 new homes.

And so it goes…on and on and on…

As of Wednesday, thus far in 2023, 174 Palestinians, most of them militants but several of them civilians, have been killed by Israeli forces.  At the same time, 27 Israelis and one foreigner have been killed in attacks by Palestinians in the West Bank, around Jerusalem and in some Israeli cities.

Random Musings

--Presidential approval ratings….

Gallup: 39% approve of Biden’s job performance, 57% disapprove; 33% of independents approve (May 1-24).  Should get an update next week.

Rasmussen: 45% approve, 53% disapprove (June 23).

--In a CNN poll conducted by SSRS, former President Donald Trump’s support softened a bit following his indictment and arrest on federal charges.

Most Americans approve of Trump’s indictment stemming from his alleged mishandling of classified documents after leaving office, even as 71% say politics played a role in that charging decision.

Still, there’s little sign that Republican-aligned voters who aren’t backing Trump are consolidating behind any one of his rivals.  Nor are they unified around wanting Trump out of the race entirely, or in feeling that his primary opponents ought to call him out for his alleged actions in this case.

Overall, 47% of Republicans and Republican-leaning registered voters say Trump is their first choice for the party’s nomination for president, down from 53% in a May CNN poll. Support for Florida Gov. Ron DeSantis held steady at 26%, with former vice president Mike Pence at 9%.  Nikki Haley stood at 5%, Sen. Tim Scott 4%, and Chris Christie 3%.

In addition to the decline in support for Trump’s candidacy, his favorability rating among Republican-aligned voters has dipped, from 77% in May to 67% now, while the share who say they would not support him for the nomination under any circumstances has climbed, from 16% in May to 23% now.  At the same time, there has been a similar increase in the share saying they would not back DeSantis under any circumstances (up 6 points to 21%).

The poll was completed entirely after Trump’s arraignment in federal court last week.

--Donald Trump gave an interview to Fox News’ Bret Baier the other day, a most contentious affair, as Trump denied allegations of mishandling classified materials, promoted lies about the outcome of the 2020 presidential election, and discussed his 2024 presidential bid.

After Baier pressed Trump on why he did not return the boxes of classified documents to the National Archives and Records Administration earlier, Trump said the boxes were packed with personal items and that he was “very busy.”

“I had boxes,” Trump said.  “I wanted to go through the boxes and get all of my personal things out. I don’t want to hand that over to NARA yet.”

“And I was very busy,” Trump added, “as you’ve sort of seen.”  [Busy playing golf.]

Back then Trump was doing nothing but golfing, just my observation.

The boxes, the incorrigible 9-year-old said, were packed with magazines, old newspapers, clothing, and personal items. 

When Baier asked Trump what his message would be to win back a hypothetical independent female voter who did not support Trump in 2020 and now disapproves of President Biden, Trump ignored the question.

“First of all, I won in 2020 by a lot,” Trump said.  “Let’s get that straight.”

Trump then got in a testy back and forth exchange with Baier, who told the former president “You lost the 2020 election.”

Trump said former Attorney General Bill Barr is “a coward,” after Barr said the evidence in the indictment related to Trump’s alleged mishandling of classified documents is “damning.”

Trump said that, if elected in 2024, one change he would make from his first term is to surround himself with “really great strong people,” and named Barr and John Bolton, his national security adviser.

“You know, actually Bolton was good because everybody, every time I negotiated, people said, ‘Oh, they’ve got this maniac here, he’s going to go to war with us,’’ Trump said.  ‘And they’d concede every point. I mean, it was actually pretty good in a certain way.’

Trump said that if he was president, China “would never be talking about even the concept of going into Taiwan.”

But then Trump didn’t say whether he supports independence for Taiwan, claiming it would make discussions with Chinese President Xi more difficult.

“I have a very good relationship with President Xi,” Trump said.  “After Covid came in I sort of didn’t want the relationship and I sort of ended the relationship, after having made one of the greatest trade deals ever made.”

Aside from the above making zero sense, China hasn’t come close to living up to its side of the agreement.

Trump also said in his interview that China “wouldn’t have ever had a spy balloon if I was president.”

Trump also claimed that if he was still president, Vladimir Putin would not have invaded Ukraine.

“I thought he might do it,” Trump said.  “I talked to him, I said, ‘If you do it, there’s going to be hell to pay. It’s going to be a catastrophe, don’t do it.’”

I’d say there is a 95% chance that Trump never told Putin this.  Make that 99%.  Trump previously claimed he would end the war in Ukraine within 24 hours if he is elected president.  Of course he has to unpack his boxes first.

Anyway, the interview was an unmitigated disaster, but congrats to Bret Baier for revealing the true Donald yet again.

Karl Rove / Wall Street Journal

“What Donald Trump said this week could come to haunt him.

“He got into trouble during an interview with the well-prepared, fair and focused Fox News anchor Bret Baier.  Mr. Baier asked Mr. Trump why after leaving office he’d kept ‘very sensitive national security defense documents like the war plans for a strike on Iran.’

“Rather than say the obvious, wise thing – he shouldn’t speak about an ongoing legal case in which he’s involved – Mr. Trump talked freely and in ways sure to create additional political difficulties for him.

“Mr. Trump said he had ‘every right’ to take classified documents.  He didn’t.  He said ‘everything was declassified.’  His lawyers haven’t made that claim.  He insisted he acted ‘like every other president’ in leaving office with boxes upon boxes of papers. No other president did what he did.

“In the tall tale spun by Mr. Trump, this was all an innocent accident on his part.  The papers he took were ‘interspersed with all sorts of things – golf shirts, clothing, pants, shoes.’  Digging through all that would have taken a lot of time, so he grabbed everything as he exited.  He didn’t return what the indictment alleges were highly sensitive documents – including ones dealing with war plans – because he’d been ‘very busy’ and didn’t have time to ‘go through the boxes and get all my personal things.’  As if a heavily scheduled retirement is a legitimate reason to ignore months of requests from the National Archives, a subpoena, a visit from the director of the Federal Bureau of Investigation’s counterterrorism unit and a grand jury indictment….

“Mr. Trump ranged from unpersuasive to incoherent. His comments certainly didn’t help him with the independent voters who’ll decide the 2024 contest. Already, a June 17 CNN/SSRS poll found that by 67% to 33%, independents support indicting Mr. Trump on his handling of the documents. By the same margin, independents said he ‘put national security at risk’ by taking the papers.

“Mr. Trump doesn’t seem to have a plan to attract these or other key voters.  Mr. Baier asked Mr. Trump how he’d win back suburban women whose defection contributed to the GOP’s loss in 2020.  Mr. Trump denied the premise: ‘I won in 2020 by a lot.  OK?  Let’s get that straight.’….

“When the Fox anchor countered that in more than 50 lawsuits Team Trump didn’t prove any widespread fraud, the former president said he was ‘trying to get recounts, real recounts’ – as if the recounts and audits in Georgia, Arizona, Michigan and Wisconsin didn’t happen.  Wisconsin has ‘practically admitted it was rigged,’ Mr. Trump declared, though that’s not true, either.  The former president wasn’t deterred even when Mr. Baier bluntly told him, ‘You lost the 2020 election.’….

“If Mr. Trump keeps this up, many right-leaning voters may conclude that though they liked what he did as president, he has too much baggage.”

--The federal judge presiding over the prosecution of Donald Trump in the classified documents case set an aggressive schedule on Tuesday, ordering a trial to begin as soon as Aug. 14.

The judge, Aileen M. Cannon, won’t likely get her wish as the timeline will be delayed by extensive pretrial litigation – including over how to handle classified material.  Judge Cannon is likely trying to avoid the appearance of dragging her feet or slow-walking the proceeding.

Cannon is the judge who disrupted the documents investigation last year with several rulings favorable to the former president before a conservative appeals court overturned her, saying that she never had legitimate legal authority to intervene.

--The Justice Department has reached an agreement with Hunter Biden on his tax issues, and a separate gun charge, according to a court filing on Tuesday, moving to close a long-running and politically explosive investigation into the finances, drug use and international business dealings of President Biden’s godawful son.

The following breaks down the elements without histrionics.

Editorial / Wall Street Journal

“President Biden’s son Hunter agreed Tuesday to plead guilty to two misdemeanor tax charges that will likely keep him out of prison. The lenient treatment is firing up Republican claims of two-tiered justice, especially because there are no answers about the Biden family’s foreign influence peddling.

“U.S. Attorney David Weiss [Ed. A Trump appointee] began investigating Hunter in 2018, and former Attorney General Bill Barr said Tuesday these charges could have been brought within months of his own confirmation in early 2019.

“The tax charges stem from Hunter’s ‘willful failure’ to pay more than $200,000 in taxes in 2017 and 2018 on income of more than $3 million from his foreign business deals. The press is reporting that prosecutors will recommend probation instead of jail time.

“The gun plea says Hunter lied on the federal background-check form by denying he was an unlawful user of a controlled substance when buying a gun.  Hunter had admitted he was a cocaine addict at the time. He’ll be allowed to enter a pretrial diversion agreement in which he promises to stay drug free for two years and never again own a firearm. The gun charge will then be dropped.

“One question is why Hunter faced only ‘willful’ misdemeanor tax charges rather than a felony count of ‘tax evasion’ – given April news reports that Mr. Weiss’s office felt it had enough evidence for the latter.  It’s true DOJ has rarely pursued ‘lie and buy’ gun cases – a longtime complaint of progressive gun-control groups.  But DOJ has elevated its focus in recent years, and other attorneys have bragged about their aggressive pursuit of such cases.

“There’s also the testimony by Internal Revenue Service agent Gary Shapley, a 14-year-veteran who oversees a team specializing in international tax crimes. The whistleblower says his team was assigned to the Hunter case in early 2020, and he ‘immediately saw deviations form the normal process.’

“He says ‘multiple steps’ were ‘just completely not done’ and that ‘each and every time’ decisions ‘seemed to always benefit the subject.’  Mr. Shapley says when he pushed back, his team was excluded – and later removed – from the probe.

“In any case, is that all there is? What about the Biden family’s income windfall from Hunter’s foreign business deals?

“House and Senate Republicans have documented dozens of suspicious financial transactions related to Hunter’s overseas business while his father was Vice President.  The evidence includes a web of shell companies that appear to have funneled large sums of cash to Hunter and other Biden family members.

“Congressional investigators have also revealed the existence of an FBI document in which a confidential FBI source says a Ukrainian oligarch claimed to have made bribery payments to Hunter and Joe Biden.  Mr. Barr says that FBI document was sent to Mr. Weiss’s office.  The bribery claim remains hearsay, but Hunter’s financial dealings with shady foreign actors – some connected to the Chinese Communist Party – contain enough smoke to warrant a thorough probe.

“DOJ said in a press release Tuesday that the ‘investigation is ongoing.’  But Hunter’s attorney said ‘it is my understanding that the five-year investigation into Hunter is resolved.’ Which is it?  Mr. Weiss ought to clarify matters and cooperate with Congress to put any suspicion of favorable treatment to rest.”

Tuesday, a White House spokesman, Ian Sams, said in a statement: “The president and first lady love their son and support him as he continues to rebuild his life.  We will have no further comment.”

But later at an appearance in California, President Biden said he is “proud” of his son.

You can love him as a child, but proud?  Hunter Biden is a dirtball and total scumbag.  An absolutely loathsome figure.

Hunter also had good lawyers.

Well, Thursday, the House Ways and Means Committee took testimony from a pair of IRS whistleblowers.

Editorial / Wall Street Journal:

“We’ve heard enough whistleblower tales over the years to be skeptical about claims that can be exploited by partisans, which is one reason we’ve been cautious about reporting the second-hand accounts about the IRS investigators from House Republicans.  [Ed. ditto moi.]  We wanted to see specific claims from specific individuals, and on Thursday we did….

“The details are shocking if true because they charge political interference and favorable prosecutorial and favorable prosecutorial treatment in the IRS probe of Hunter Biden….

“(Agent) Gary Shapley claims his IRS unit recommended more serious felony charges (than those brought this week) based partly on what he described as a scheme to hide payments from Burisma, the Ukrainian energy company that hired Hunter as a consultant and board member.  Mr. Shapley claims U.S. Attorney David Weiss was blocked from pursuing those charges, which the Justice Department denies.

“Mr. Shapley also recounts that his team obtained a July 30, 2017, WhatsApp message from Hunter Biden to Henry Zhao, a Chinese businessman. The testimony says Hunter wrote:

“ ‘I am sitting here with my father and we would like to understand why the commitment made has not been fulfilled.  Tell the director that I would like to resolve this now before it gets out of hand, and now means tonight.  And, Z, if I get a call or text from anyone involved in this other than you, Zhang, or the chairman, I will make certain that between the man sitting next to me and every person he knows and my ability to forever hold a grudge that you will regret not following my direction.  I am sitting here waiting for the call with my father.’

“If this is true, then Hunter was threatening a foreign business partner with retribution from Joe Biden, who was then the former American Vice President and potential future presidential candidate.  There’s much more in the hundreds of pages of testimony.

“It’s important to stress that these are allegations. But the press won’t help public understanding by ignoring them. The testimony is already rocketing around the internet, and Democrats counting on Mr. Biden in 2024 would be wise to pay attention.”

Donald Trump said on Truth Social, “a mere traffic ticket,” adding, “Our system is BROKEN!”

A system that out of 330 million Americans produces a race between Joe Biden and Donald Trump, a second time, is indeed SEVERELY BROKEN!!!

And, to just pull out another response from Republicans (though Trump is a fake Republican), we have Rep. Marjorie Taylor Greene (Ga.) who tweeted:

“Hunter Biden pleading guilty to a gun charge and misdemeanor tax charges with no jail time is a stunt to make him look like he is just cooperating with the DOJ.  Oh but hey, look at Jack Smith trying to throw President Trump in jail for 100 years for illegally possessing documents he’s allowed to posses (sic) under the Presidential Records Act.”

MTG also called fellow Republican Rep. Lauren Boebert “a little bitch” on the House floor, as those two escalate their feud.  Now discuss amongst yourselves.

--Driving from Omaha to Kansas City I listened to the Buck Sexton, Clay Travis radio show and I have to admit, I hadn’t really thought about the fact that President Biden’s risky strategy of making South Carolina the first primary for Democrats ahead of Iowa and New Hampshire, doesn’t necessarily mean those two won’t still hold their contests earlier anyway, which might mean Biden wouldn’t be on the ballots there.  Which opens the door bigtime for Robert F. Kennedy Jr.

I’ve ignored RFK Jr. thus far I admit because I have trouble taking him seriously.  I know, he’s getting good reviews from conservatives, actually, because of his anti-vaccine stance and his going after the government’s handling of Covid.

But what if Iowa and New Hampshire, because of their own state laws, which would precede anything the Democratic National Committee desires, hold their caucuses/primary first and RFK Jr. wins them?  That would be a seismic development and no doubt would have Gavin Newsom immediately entering the fray.  [That’s my opinion, Newsom entering then, not that of anyone else I’ve seen.]  After all, Bobby Kennedy didn’t enter the 1968 race until after the first few primaries that year and the chaos in the Democratic Party

--Daniel Rodriguez, the man who attacked then-Washington, DC, police officer Michael Fanone with an electroshock weapon in the neck during the Capitol riot on Jan. 6, 2021, was sentenced Wednesday to 12 and a half years in prison.

Rodriguez, 40, had pleaded guilty to four counts in February, including conspiracy, assault with a dangerous weapon and obstruction of an official proceeding.

As Rodriguez exited the courtroom Wednesday, he defiantly shouted that ‘Trump won!’ repeating the same lie that ultimately culminated in the Capitol attack.

During Wednesday’s sentencing, Judge Amy Berman Jackson called Rodriguez’s attack on Fanone a “horrific assault,” noting that while Rodriguez was trying to stop the peaceful transfer of power, Fanone “was protecting the very foundation of democracy.”

“He was protecting America,” she said.

Fanone, who addressed the court Wednesday, said he didn’t “give a shit” about Rodriguez. “He ceased to exist a long time ago.”

--The Wall Street Journal reviewed data from around the nation on the number of homeless people counted on streets and in shelters around the U.S. and the figure has broadly risen this year.

The Journal reviewed data from 150 entities that count homeless people in areas ranging from cities to entire states.  More than 100 places reported increases in early 2023 counts compared with 2022, and collectively, their numbers indicate the U.S. might see a sharper climb than in recent years.  Most major urban areas reporting data so far have seen increases, including Chicago, Miami, Boston and Phoenix.

“The increases underscore what advocates for the homeless say is pressure from high housing costs and the end of temporary pandemic-era protections, such as eviction moratoriums.”

Makes sense, and very sad.

--According to a report released Wednesday by the National Assessment of Educational Progress, the gold-standard federal exam, math and reading scores of 13-year-olds in the U.S. hit the lowest level in decades.

The last time math performance was this low for 13-year-olds was in 1990.  In reading, 2004.

Performance has fallen significantly since the 2019-2020 school year, when Covid hit, but the downward trend began years before the health crisis.

The federal standardized test, known as NAEP, was given last fall and focused on basic skills.

Achievement declined across lines of race, class and geography.  But in math, especially, vulnerable children – including Black, Native American and low-income students – experienced bigger drops. 

The 13-year-olds who took this version of the NAEP exam last fall were 10-year-olds – and in fourth or fifth grade – when the pandemic hit.  They then had remote learning for the most part at a time that is crucial for mastering foundational skills, including multiplication, division, and basic reading skills, including comprehension. [Dana Goldstein / New York Times]

--A fire at a New York City e-bike shop quickly spread to upper-floor apartments and killed four people early Tuesday in the latest deadly blaze linked to exploding lithium-ion batteries in Gotham.

The shop was cited last summer for safety violations related to the storage and charging of batteries, officials said.

A pile of burned bikes, scooters and other debris lay on the sidewalk outside the shop, HQ E-Bike Repair, which was on the ground floor of a six-story building in Manhattan’s Chinatown neighborhood.

So far this year, there have been more than 100 fires and 13 deaths linked to battery explosions in the city, the fire commissioner said.

It’s scary as hell if you are a New York apartment dweller, not knowing who in your building is charging their batteries inside.  These fires just explode and are extremely difficult for fire departments to put out.

So why would you want a car powered by said battery?  You’ve seen the stories on the intensity of ‘Car X’ fires.  Just being ornery, but our late Dr. Bortrum wrote of everything you need to know on the development of lithium-ion batteries, being in the forefront of such work himself, and like being one step shy of getting the Nobel Prize.  [Just plug John Goodenough into my search engine and read the first piece that comes up from 10/25/19.]

--A week ago, Thursday, I flew out to Omaha, via Kansas City, to meet up with a college buddy from Wake Forest who was driving out from Virginia to check out the action in the College World Series, Wake having qualified for the first time since 1955.

At K.C., I hopped in my rental car for the 2 1/2-hour drive to Omaha, and then west to Wahoo, NE, where we stayed to save major $s, and on a busy highway outside Omaha, I was in the middle of three lanes.

A truck in front of me suddenly swerved left, revealing a truck tire, partially shredded right in my path that in that split second, I could do nothing but run over (and then the car behind me did), but thankfully there was no vehicle on my immediate right or left and out of nowhere there was an exit ahead.

The car was barely drivable, and I was sure I had broken an axle, with one or two flats, but I was able to coast down the hill to the bottom of the exit and there, as if God planted it, was an auto dealership that I was able to park in front of.

Shaken up (to say the least), I went into the Edwards Auto Group (17950 Burt St., Omaha), the sales staff saw the look of horror on my face, I asked if I could see someone in the service dept., and even though they were busy, they agreed to look at my car right away.

Thirty minutes later, “Mr. Trumbore, everything is fine.  Your wheels swallowed up the shredded tire, thus the reason you couldn’t drive properly, but the pieces were spit out.”

I couldn’t believe it.  [The front bumper and sides had black marks all over, which I spent over an hour one morning scrubbing out best I could…it was a rental, after all.]  And then my service tech, Adian (sic), said, “No charge.”

Well, I gave Adian a nice tip.

I just had to tell that little story not only because of how ‘bad’ it all could have gone down for yours truly, but just how good the people are in Nebraska.

At the World Series, I met an old-timer who had no school affiliation to the teams playing but like a lot of locals he attends a few of the games each year (the CWS always held in Omaha), and he was saying how he was from New Jersey, but had lived in Nebraska most of his life, where he had a career in law enforcement, and he says to me, “You know, I think in 40 years I’ve met just 2 or 3 people, max, I didn’t like.”

I’ve been to Nebraska many times, Scottsbluff a favorite spot, and that’s been my experience as well.  Thank you, good folks of the Cornhusker State!

[And always leave a little extra room when following a tractor trailer on the highway.  I was too close.]

--Finally, the news cycle was dominated this week by the missing OceanGate Expeditions’ lost submersible, ‘Titan,’ with five passengers (crew) on board.  The vessel lost contact on Sunday morning with its support ship about an hour and 45 minutes into what should have been a two-hour descent.

It turns out as a rescue operation was being assembled, the U.S. Navy had already detected an implosion on Sunday at the site where the vessel lost communications.

The information, which was not definitive, was immediately shared with the U.S. Coast Guard, and a decision was made to continue the mission as a search and rescue to “make every effort to save the lives on board,” according to a senior Navy official.

The Coast Guard announced Thursday that the five crew members of the Titan died from a “catastrophic implosion” of their vessel after examining debris found underwater by a remotely operated vehicle. The debris was found 1,600 feet from the bow of the Titanic.

“We immediately notified the families,” Rear Admiral John Mauger said at a briefing in Boston.  “On behalf of the U.S. Coast Guard and the entire unified command, I offer my deepest condolences.”

Our thoughts and prayers for the families, and a note of appreciation for the amazing efforts of the U.S. Coast Guard and their Canadian counterparts.

But Titan was one of 10 such submersibles designed for such a deep dive, worldwide, and the only one of the 10 not certified.  Director/explorer James Cameron was right.  It was a mission “born of hubris,” with a predictable ending.  [I’m also the only kid on my block who in the early days of StocksandNews, like 2000, traveled to Texas to visit a carbon fiber plant, Zoltek, when I was exploring it as an investment.  Nothing wrong with the material, unless you are subjecting it to immense pressure, two miles down under water, over and over again!]

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

Pray for Ukraine.

God bless America.

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Gold $1929
Oil $69.31

Regular Gas: $3.58; Diesel: $3.89 [$4.94 / $5.80 yr. ago]

*June 19, 2022, was the high for diesel at $5.81, and it greatly impacted the inflation rate.

Returns for the week 6/19-6/23

Dow Jones  -1.7%  [33727]
S&P 500  -1.4%  [4348]
S&P MidCap  -2.5%
Russell 2000  -2.9%
Nasdaq  -1.4%  [13492]

Returns for the period 1/1/23-6/23/23

Dow Jones  +1.8%
S&P 500  +13.3%
S&P MidCap  +3.5%
Russell 2000  +3.4%
Nasdaq   +28.9%

Bulls 54.3
Bears 20.0

Hang in there.

Brian Trumbore

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