Week in Review

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Week in Review

08/26/2023

For the week 8/21-8/25

[Posted 5:15 PM ET, Friday]

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Edition 1,271

Let’s start on a positive note…American Noah Lyles just won the men’s 200 meters at the World Track and Field Championships in Budapest, Hungary, Lyles having won the 100m earlier.

19-year-old American Erriyon Knight took the silver.

The Paris Olympics are just around the corner. 

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Former President Donald Trump surrendered at the Fulton County jail in Atlanta, GA, on Thursday and was booked on 13 felony charges for his efforts to reverse his 2020 election loss in the state.  It had to be a bit intimidating.  Not that he came anywhere near the actual jail, but seven inmates have died there this year, the place notorious for filth and violence.  The Department of Justice has been investigating the conditions, including allegations that an “incarcerated person died covered in insects and filth.”

Trump, according to jail records filed after he surrendered, claimed to be 6’3”, 215 pounds, which is 25 pounds lighter and 1-inch taller than when he was booked in Manhattan in April.  Social media had a field day with this.

He also had to take a mugshot, so Trump gave a scowling, ‘threatening’ look (or so he believes), which was then immediately plastered on T-shirts and long sleeve shirts for $34, a $25 coffee mug and $15 beer Koozies.

The tagline under the mug shot on Trump’s first Twitter / ‘X’ post in two years read “ELECTION INTERFERENCE…NEVER SURRENDER.”

So “NEVER SURRENDER!” is on the shirts.

On the tarmac in Atlanta before heading back to Bedminster, Trump said “I have a right to challenge an election.”

Jesse Watters on Fox News, as Trump’s mugshot was being revealed, said it’s so sad that “challenging an election is a crime.”

Rudy Giuliani, after his arrest in Fulton County, said: “If this can happen to me it can happen to you.”

Speak for yourself, Rudy.

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I get into the apparent death of Yevgeny Prigozhin as it happened, chronologically.

It’s also a bit disturbing that Russia is moving troops into Belarus.  How many isn’t known, nor is it known what has happened to the Wagner forces who were there, post-mutiny.  There are reports Belarus may have kicked a lot of them out.

This Week in Ukraine….

--In an extensive piece in the New York Times by four veteran reporters:

“Ukraine’s grinding counteroffensive is struggling to break through entrenched Russian defenses in large part because it has too many troops, including some of its best combat units, in the wrong places, American and Western officials say.

“The main goal of the counteroffensive is to cut off Russian supply lines in southern Ukraine by severing the so-called land bridge between Russia and the occupied Crimean Peninsula.  But instead of focusing on that, Ukrainian commanders have divided troops and firepower roughly equally between the east and the south, the U.S. officials said.

“As a result, more Ukrainian forces are near Bakhmut and other cities in the east than are near Melitopol and Zaporizhzhia in the south, both far more strategically significant fronts, officials say.

“American planners have advised Ukraine to concentrate on the front driving toward Melitopol, Kyiv’s top priority, and on punching through Russian minefields and other defenses, even if the Ukrainians lose more soldiers and equipment in the process….

“In a video teleconference on Aug. 10, Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff; his British counterpart, Adm. Sir Tony Radakin; and Gen. Christopher Cavoli, the top U.S. commander in Europe, urged Ukraine’s most senior military commander, Gen. Valeriy Zaluzhnyi, to focus on one main front. And, according to two officials briefed on the call, General Zaluzhnyi agreed.”

Speaking to reporters on a flight to Rome on Sunday, General Milley said the past two months of the counteroffensive have been “long, bloody and slow.”

“It’s taken longer than Ukraine had planned,” he said.  “But they are making limited progress.”

--Seven people, including a 6-year-old child, were killed, and as many as 140 were wounded after a Russian missile strike on a central square in the historic northern Ukrainian city of Chernihiv on Saturday, Ukrainian officials said.

“A Russian missile hit right in the center of the city, in our Chernihiv.  A square, the polytechnic university, a theatre,” President Volodymyr Zelensky, who was on a visit to Sweden, posted on Telegram. “An ordinary Saturday, which Russia turned into a day of pain and loss,” he added of the strike on Chernihiv, a city of leafy boulevards and centuries-old churches about 90 miles north of Kyiv.

People leaving church after marking a religious holiday and others passing by were among those hurt when the missile hit the theater, where a meeting was taking place.

Law enforcement agencies were looking into how Russians became aware of the event, which involved drone manufacturers.

Zelensky later said in a video address early Sunday: “I am sure our soldiers will respond to Russia for this terrorist attack. Respond tangibly.”

In Russia on Sunday, five people were wounded when a Ukrainian drone hit a train station in the city of Kursk.  Kursk is the capital of the western region of the same name, which borders Ukraine.

--Ukraine destroyed a supersonic Russian jet in a drone strike, according to multiple reports based on social media posts that appeared to show the long-range bomber, the Tupolev Tu-22, on fire.

The burning plane appeared to be located south of St. Petersburg, the BBC reported, using visual clues and historic satellite images of the airbase.

--At least two people were injured on Monday when parts of a Ukrainian drone destroyed by Russian air defenses fell on a house in the Moscow region, the regional governor said.

Nearly 50 plane flights in and out of the capital were disrupted after Russia said it jammed a Ukrainian drone in a district west of the capital and destroyed another one in another district nearby.

--The State Department warned Americans on Monday that they should leave Belarus pronto.  The warning comes days after Lithuania closed two border crossings with Belarus, and it comes amid a “buildup of Russian military forces in Belarus,” according to the U.S. Embassy in Minsk.

“U.S. citizens in Belarus should depart immediately,” and possibly via “the remaining border crossings with Lithuania and Latvia, or by plane,” the State Department said.

--Russian forces are attempting an offensive in the northeast of Ukraine, particularly around approaches to the city of Kupyansk, the Wall Street Journal reported Tuesday.

As I noted last week, Russia’s invasion troops occupied Kupyansk early in the war, but were later pushed back by Ukrainian forces during their counteroffensive around Kharkiv last summer.

Haana Maliar, Ukraine’s deputy defense minister, told the national television broadcaster: “The situation in the Kupiansk direction is difficult. We are confident in our defenders, but it is very difficult for them there.”

--Russia and Ukraine traded drone attacks early Wednesday, officials said, with Kyiv targeting Moscow again and the Kremlin’s forces launching an intense bombardment of grain storage depots in the Odesa region.

“Unfortunately, there are hits on production and transshipment complexes,” Odesa Regional Military Administration Head Oleh Kiper wrote on Telegram.

Russian drones also struck Ukrainian grain facilities at the Danube River port of Izmail early Wednesday.  Deputy Prime Minister Oleksandr Kubrakov said the port’s export capacity had been reduced by 15% and that 13,000 metric tons of grain had been destroyed.

The Danube River has become Ukraine’s main route for exporting grain since the collapse of the grain deal, and Izmail is Ukraine’s main inland port across the Danube from Romania.

Kubrakov said a total of 270,000 tons of grain had now been destroyed in attacks since Russia quit the Black Sea deal.

Last month, Russia crippled significant parts of the port city’s grain facilities, days after Vladimir Putin broke off Russia’s participation in the grain initiative.

Meanwhile, Russian officials claimed to have downed Ukrainian drones in Moscow and the surrounding region early Wednesday, the defense ministry and the mayor said.  No casualties were reported in the attack, which has become almost a daily occurrence in the Russian capital.

--Four educational workers were killed and four others hurt in a Russian attack on a school in the city of Romny in northeastern Ukraine on Wednesday, the interior minister said.  Ihor Klymenko said the bodies of the school director, deputy director, secretary and a librarian had been pulled from the rubble by rescue workers.

“The school building was destroyed, and this is just before the school year, which unfortunately will never start for some,” Ukrainian human rights ombudsman Dmytro Lubinets said on Telegram.

This is so sick.

--Gen. Sergei Surovikin, former commander of Russia’s forces in Ukraine, was removed from his post as chief of the air force, state media reported.  He had ties to Yevgeny Prigozhin, the leader of the Wagner Group.

Surovikin’s last public appearance was on June 24, the second and final day of the mutiny, when he appeared in what looked like a carefully stage-managed video, urging Prigozhin to abandon his march on Moscow.  Surovikin was often publicly praised by Prigozhin in the run-up to the revolt and was being investigated for possible complicity in it and being held under house arrest.

Speaking of Prigozhin, he posted his first video address since leading a short-lived mutiny in late June, appearing in a social media clip which he suggested was shot in Africa.

In the video, posted on Telegram channels affiliated with the Wagner Group on Monday, Prigozhin speaks of making Russia greater on all continents and Africa more free.  It is likely to exacerbate Western fears that Wagner could expand its African operations after a coup in Niger that has taken on anti-Western overtones.

Wagner is already present in Niger’s neighbor Mali.  Additionally, Wagner is also active in Central African Republic and Libya.

--And then, Wednesday afternoon Eastern time, came word that Yevgeny Prigozhin was listed as a passenger on a private jet which crashed north of Moscow, the TASS news agency reported, citing Russia’s aviation authority.

“An investigation has been launched into the Embraer plane crash that occurred tonight in the Tver region.  According to the passenger list, among them is the name and surname of Yevgeny Prigozhin,” the aviation authority, Rosaviatsia, said.    TASS reported that ten people had died in the crash overall.  The jet was reportedly enroute from Moscow to St. Petersburg and was carrying seven passengers and three crew.

The passenger manifest released by authorities showed Prigozhin’s name and that of Wagner’s top commander, Dmitri Utkin.  Grey Zone, a Telegram account associated with the Wagner Group, said that Prigozhin had been killed.

President Zelensky said Ukraine was not involved.  “We had nothing to do with it. Everybody realizes who has something to do with it,” he said on Thursday, per Interfax-Ukraine news agency.

Almost 24 hours after the crash, Vladimir Putin expressed his condolences Thursday to the family of Prigozhin, praising him as a “talented businessman.”  Crash investigators have still to conclusively identity the remains of the 10 people believed to have died and Putin said the examination would take time.

“As for the aviation tragedy, first of all I want to express my most sincere condolences to the families of all the victims.  It’s always a tragedy,” Putin said in televised remarks during a meeting in the Kremlin with the Moscow-installed chief of Donetsk region in eastern Ukraine.

“Indeed, if employees of the Wagner company were there, and the preliminary data indicate they were, I would like to note that these people made a significant contribution to our common cause of combating the neo-Nazi regime in Ukraine, we remember this, we know it and we shall not forget,” he added.

Putin recalled that he had known Prigozhin since the early 1990s.

“He was a talented person, a talented businessman, he worked not only in our country, and achieved results, but also abroad, particularly in Africa.  He was involved there with oil, gas, precious metals and stones.”

But Putin also noted Prigozhin “made some serious mistakes in life.”

President Biden, asked to respond Wednesday to reports of Prigozhin’s death, said, “I am not surprised.  There is not much that happens in Russia that Putin is not behind, but I don’t know enough to know the answer.”

The Kremlin on Friday said that Western suggestions that Prigozhin had been killed on its orders were an “absolute lie,” while declining to definitively confirm his death, citing the need to wait for test results.

Another man believed to be on the plane was Valery Chekalov, head of Wagner’s security service.  “He reportedly headed up Wagner’s sizable contracts in Syria’s oil and phosphate sectors,” Middle East scholar Charles Lister told Defense One.  Chekalov’s apparent “death could feasibly place those contracts in jeopardy,” said Lister.

Citing preliminary intelligence, U.S. and other Western officials said an explosion had brought down the plane, which could have been caused by a bomb or other device planted on the aircraft.

--Also, Wednesday, Zelensky vowed to end Russia’s occupation of Crimea, and deflected criticism of Kyiv’s handling of a grinding counteroffensive.  Russia seized and annexed the Crimea Peninsula in 2014. 

“Crimea will be de-occupied like all other parts of Ukraine that are unfortunately still under the occupier,” Zelensky said in a defiant speech to an international conference on Crimea in Kyiv.  He said Ukrainian troops were advancing in the counteroffensive but set no time frame for retaking Crimea or other occupied territory.

Zelensky outlined the risks that would be involved in moving forces away from the eastern front where, he said, Russia has about 200,000 troops.  “The proposal is this.  Let’s take our forces, the armed forces from there, and transfer them somewhere,” he said, and went on to list towns and cities that could be as a result more vulnerable to Russian attacks.  “I believe that is exactly the kind of hope (the Russians) have.  We will not give up either Kharkiv, nor Donbas, nor Pavlohrad, nor Dnipro,” he said.

--At least 13 people were wounded in Russian attacks on Ukraine on Thursday.  A Russian missile strike wounded 10 people in the central city of Dnipro and three people were hurt in an attack on the southern city of Kherson.

--Friday, Russia said that Ukraine had fired a missile towards Moscow and attacked the Crimean Peninsula with 42 drones, one of the biggest known coordinated Ukrainian air attacks to date on Russian-held territory.

Russia’s defense ministry said it had shot down a modified S-200 missile over the Kaluga region, which borders the Moscow region.

There were no casualties.

On the attack on Crimea, the ministry said nine drones were destroyed by air defense forces while 33 were suppressed by electronic warfare and crashed over Crimea without reaching their targets, it said.

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--The deputy chair of the Russian security council Dmitry Medvedev said Moscow may annex Georgia’s breakaway regions South Ossetia and Abkhazia.

“The idea of joining Russia is still popular in Abkhazia and South Ossetia,” Medvedev wrote in a newspaper article on Wednesday.  “It could quite possibly be implemented if there are good reasons for that,” he said.

Georgia lost control over the regions after the collapse of the Soviet Union.  Moscow recognized their independence in 2008, following Georgia’s attempt to regain control of South Ossetia by force that led to a Russian counterattack.

Georgian officials have repeatedly said they are committed to joining NATO in order to preserve the territorial integrity of the country.

--Russian Foreign Minister Sergei Lavrov said that possession of nuclear weapons protects Russia from security threats and Moscow keeps reminding the West of risks to prevent a conflict of nuclear powers.

“The possession of nuclear arms is today the only possible response to some of significant external threats to security of our country,” Lavrov said in an interview for state-owned media, published last weekend.

--To combat falling morale among some of the citizenry, Ukraine lined up the burnt-out husks of Russian tanks and fighting vehicles along the capital Kyiv’s central drag on Monday as Ukrainians prepare to mark their second wartime Independence Day this week.  The national holiday, which commemorates 32 years of post-Soviet independence from Moscow on Thursday, falls exactly 18 months after Russia launched its full-scale invasion of its southern neighbor.

Said one 74-year-old who was visiting his granddaughter, “It’s important to see such examples of our victories.”  Mykola Kaplun said he was grateful for Western support, but conceded sometimes it feels as if the war has dragged on too long.  “But the feeling that victory will definitely come has not changed,” he said.  [Reuters]

--Ukrainian pilots are training to fly Sweden’s Gripen fighter aircraft, with plans to transfer some of them to Ukraine, President Zelensky said after a visit with Swedish Prime Minister Ulf Kristersson on Saturday.

--China sold Russia a lot more trench-digging excavators in the past year, particularly around August and September of 2022, when Russian forces first started losing occupied territory, the Wall Street Journal reported on Monday.  Overall, Chinese companies “sold Russia nearly twice as many front-end shovel loaders and more than three times as many excavators in the first seven months of 2023 as it did over the same period a year prior.

“That’s not a coincidence,” said Joseph Webster, a senior fellow at the Atlantic Council.  “That’s when Russian forces really started to entrench themselves, when they started retreating.”

The Journal also reported “Russia became the top importer of Chinese vehicles this year. As of June, six of the top 10 car brands in Russia were Chinese, compared with none three years ago.”

And the Journal reported on the opportunism of the UAE.

“UAE imports of Russian crude oil tripled in 2022 to a record 60 million barrels… The UAE (also) imported $4 billion worth of Russian gold between Feb. 24, 2022 and March 3 this year, up from $61 million during 2021.”

But that’s not all: “In the second quarter of 2023, Russians became the third-largest property buyers in Dubai, compared with the ninth biggest in 2021.”

--Russia’s first mission to the moon in nearly 50 years ended in a disaster as its unmanned Luna-25 spacecraft crashed while attempting to land on the unexplored south pole, Russian authorities said Sunday.

Russia was racing with India to become the first nation to land a rover on the area of the moon that scientists believe could hold water and other elements that could support a human settlement in the future.

The Luna-25 probe was launched on a Soyuz rocket on Aug. 11 from the Vostochny Cosmodrome in Russia’s Far East and was supposed to touch down on Aug. 21.

Western experts speculated that the international sanctions on Russia following its invasion of Ukraine might have cut off its space program from access to key technologies.  A successful operation could have shown that the Kremlin still has technological prowess.

Saturday, Russia’s state news agency TASS had reported that the Luna-25 faced an “abnormal situation” during a maneuver to enter a pre-landing orbit and lost contact with its handlers.

“The Luna-25 spacecraft switched to an off-design orbit and ceased to exist as a result of a collision with the surface of the moon,” Russia’s space agency, Roscosmos, told TASS.

The landing of the probe was supposed to happen days before the arrival of India’s own Chandrayaan-3 spacecraft, which was schedule to reach the same area of the moon on Wednesday.

And India nailed it, landing the spacecraft on the moon, becoming only the fourth nation ever to accomplish such a feat.

The mission could cement India’s status as a global superpower in space.  Previously, only the United States, China and the former Soviet Union have completed soft landings on the lunar surface.

Indian Prime Minister Narendra Modi, in South Africa for the BRICS Summit, watched the landing virtually and shared broadcasted remarks on livestream.

“On this joyous occasion…I would like to address all the people of the world,” he said.  “This success belongs to all of humanity, and it will help moon missions by other countries in the future.”

More below.

--Wall Street Journal reporter Evan Gershkovich, arrested in Moscow on espionage charges, had his detention extended to November 30, TASS reported.

Gershkovich arrived at a Moscow court Thursday in a white prison van and was led out handcuffed, wearing jeans, sneakers and a shirt.  Journalists outside the court were not allowed to witness the proceedings.

Gershkovich and the Journal deny the allegations, and the U.S. government declared him to be wrongfully detained.  He is the first American reporter to face espionage charges in Russia since September 1986.

--Editorial / The Economist

“The disappointing pace of Ukraine’s counteroffensive has been the focus of international headlines for weeks.  For Anastasia Zamula the consequences have been more tangible.  Ms. Zamula is a co-founder of Cvit (Blossom), an all-women volunteer organization that supports Ukrainian units on the front line.  Her crowdfunding appeals have struggled as hopes of a quick breakthrough have dwindled.  Now she says her attention is devoted to counseling exhausted troops whenever she sees them.  ‘The idea of a counteroffensive is bliss when you talk about it from an armchair,’ she say.  ‘It’s much harder when you understand that it means darkness, death and despair.’

“The public mood is somber.  Criticism of Volodymyr Zelensky, the president, has increased, and the reasons for the dissatisfaction are clear.  Having once promised a march to Crimea, occupied and annexed by Russia since 2014, the political leadership in Kyiv now emphasizes more realistic expectations.  ‘We have no right to criticize the military sitting here in Kyiv,’ says Serhit Leshchenko, a spokesman in the presidential office.  He likened frustration with the speed of the counteroffensive to impatient customers waiting for their iced lattes in the capital’s many hipster cafes.  ‘This isn’t a horse you can whip to go faster.  Every meter forward has its price in blood.’

“Ukraine’s leadership is particularly frustrated that Western equipment has not yet arrived in its promised numbers.  It is ‘upsetting…and demotivating,’ Mr. Leschchenko says.  Equivocation among allies about the supply of newer weapons, and the prospect of America re-electing Donald Trump next year, have added to Ukrainian anxieties.  A source in the general staff says that Ukraine has received just 60 Leopard tanks, despite the promise of hundreds.  Demining vehicles are particularly scarce.  ‘We simply don’t have the resources to do the frontal attacks that the West is imploring us to do,’ says the source.

“Lack of air cover is another difficulty.  The source adds that Ukraine’s army was never blind to the challenges of breaching Russian minefields and defense lines without air superiority… For that reason the military leadership delayed the counteroffensive as long as it could. After a disastrous start in early June, when two Western-trained brigades lost an uncomfortable number of men and equipment in minefields, the initial plans were adjusted.  Ukraine has since prioritized preserving its army.  ‘We no longer plan operations that presuppose large losses,’ says the source.  ‘The emphasis is now on degrading the enemy: artillery, drones, electronic warfare and so on.’

“In recent days Ukraine’s armed forces have made important advances in the crucial southern theater, and may have breached enough minefields to reach the first of three lines of Russian fortifications in several locations.  They have also degraded Russia’s operational reserve and logistics. Still, two-and-a-half months in, Ukraine remains a long way off its strategic goal of nearing the Azov sea – and thus cutting Russia’s seized land corridor to Crimea – before the rains of late October, when mud will make for much harder going.

“The grim mood is spilling over into Ukraine’s politics, which have been on hold for much of the war.  Rumors have circulated all summer that Mr. Zelensky’s office may call early parliamentary and presidential elections.  The logic is that it is better for him to seek re-election while still a national hero, rather than after being forced into peace talks that might require an unpopular ceasefire or major territorial concessions.  ‘Any election, if it happens, would be a referendum on Zelensky,’ says Volodymyr Fesenko, a political analyst.  ‘Apart from [commander-in-chief Valery] Zaluzhny, who is busy running the war, he currently has no obvious competitor.  Zelensky’s team understands that could change.

“Conducting an election during a war, with up to 6m Ukrainian citizens living outside the country and hundreds of thousands fighting away from home, would be complex.  And martial law precludes elections, meaning parliament would have to approve a change in electoral rules….

“In the absence of a military breakthrough, peace negotiations with Russia would be an even harder sell… Too much blood has been spilt.  ‘Any peace now is delayed war,’ says the general-staff source.  ‘Why hand the problem to the next generation?’

“Many of Ukraine’s young are, of course, already bearing the burden of a war that has no end in sight.  For young men, in constant danger of being served conscription papers and sent to the front, the pressure is particularly intense.  Those keen to fight volunteered long ago; Ukraine is now recruiting mostly among the unwilling.  ‘It makes the air so thick that you can actually feel it,’ says Ms. Zamula.  Everyone knows that the cost of regained territory is dead soldiers.  ‘Even hoping for success in the counteroffensive has become an act of self-destruction.’”

Editorial / Wall Street Journal

“(President Biden) deserves credit for holding the North Atlantic Treaty Organization together in support of Ukraine, and these columns have supported that effort.  But the President’s failures on Ukraine and Russia are as acute, and the war could still end in a way that leaves Russia occupying much of Ukraine.

“Mr. Biden failed to deter Vladimir Putin’s invasion, no doubt in part owing to the signal sent by the U.S. retreat from Afghanistan.  His Administration thought Kyiv would fall within days.  And Mr. Biden has been slow to deliver the weapons Ukraine needs, even long after it became clear that Kyiv could hold its own and perhaps drive Russia to the Sea of Azov….

“Mr. Biden doesn’t seem to appreciate what a stalemate or worse might cost the U.S. strategically, and himself politically. The Ukrainian spirit of resistance ranks with London in the Blitz, but it needs continuing Western support to keep up the fight.  Mr. Putin’s bet is that he can wait out the West and eventually strike a ‘peace’ accord on his terms.

“At home, Mr. Biden risks playing into the hands of such critics as Donald Trump, who would cut off support for Ukraine.  Most Republicans in Congress have supported aid to Ukraine, and credit in particular goes to Sens. Mitch McConnell and Tom Cotton – despite Mr. Biden’s rhetoric that all Republicans are ‘MAGA.’

“But a failed counteroffensive, and an extended military stalemate that stretches into 2024, risks eroding U.S. public support as GOP voters become more restive amid Mr. Trump’s campaign assault.  Mr. Biden has never given a serious speech making the case for the U.S. security interest in Ukraine and how he hopes the war will end. [Emphasis mine.]*

“Perhaps the President figures ambiguity will give him more flexibility to negotiate a settlement. But if Mr. Biden wants Congress to pass his aid package, he has to make a better case than he has and spend the political capital like the Commander in Chief.”

*I noted this a few weeks ago.  It is unbelievable that Joe Biden’s only Oval Office address of his presidency was on the economy.  It’s not just pathetic, it’s tragic.  Democrats, stand up!  Sen. Amy Klobuchar, Commerce Secretary Gina Raimondo, Gavin Newsom…run for president!

David Ignatius / Washington Post

“Yevgeny Prigozhin appears to be dead.  But his ghost might haunt Russian President Vladimir Putin, who denounced him as a traitor and wanted him gone – yet has failed to extinguish Prigozhin’s critique of the Ukraine war.

“Prigozhin’s apparent death…clears the stage of an impudent rival to Putin. But this news, and speculation that it was an assassination, will add to the sense among some Russians that the country has reverted to instability mixed with the brutal politics of Stalin’s time.

“ ‘Whatever has happened to him, it will be seen by Russian elite as a retaliatory act,’ said Tatiana Stoyanova, a well-connected Russia analyst at the Carnegie Endowment for International Peace.  The Kremlin will encourage this sense that Putin has taken revenge, whatever the facts, she says.

“ ‘Putin is the ultimate apostle of payback,’ CIA Director William J. Burns said last month in an interview.  Russians will assume Putin had a role in the crash….

“If the facts are confirmed, Putin will have consolidated his position in the short run. The man he had accused of ‘armed mutiny’ will be gone. Russian defenses are holding in Ukraine against Kyiv. Putin’s hold on power seems firmer than two months ago, when Prigozhin ordered his Wagner militia to march toward Moscow.

“But Putin’s aura of political mastery has been tarnished, perhaps irreparably.  He has weathered past storms because of his role as arbiter of Russia’s elites and his reputation for decisiveness.  The Prigozhin revolt damaged both; some members of the president’s inner circle are said to share Prigozhin’s critique of Putin’s impulsive invasion of Ukraine, and of his tactics since.  Analysts believe the doubts extend to the Russian security services. Those questions will persist….

“Prigozhin’s message to Russians was that the war wasn’t worth the terrible cost the nation was paying in blood and treasure. He underlined that by questioning the leadership of Putin’s team and, implicitly, of Putin himself. The Ukraine war was based on a lie, Prigozhin said on June 23, the day before his militia’s march on Moscow.  ‘There was nothing extraordinary happening on the eve of February 24,’ the day last year when Russian attacked.  ‘The oligarchic clan that rules Russia needed the war,’ he said.  ‘The mentally ill scumbags decided: ‘It’s okay, we’ll throw in a few thousand more Russian men as cannon fodder. They’ll die under artillery fire, but we’ll get what we want.’

“This visceral critique will outlive Prigozhin, and if Ukraine and its Western allies can continue the fight into next year, it might grow more intense.  Prigozhin is not a martyr so much as a warning.”

Editorial / The Economist

“Mr. Prigozhin’s death could help consolidate Mr. Putin’s power.  But it could also reinforce the myth of the Wagner leader as a truth-telling patriot, and destabilize the pro-war constituency by alienating his followers and champions.  ‘The assassination…will have catastrophic consequences,’ warned Grey Zone, a Wagner-affiliated group on Telegram, a social-media site.  ‘The people who gave the order do not understand the mood in the army and morale at all.’

“As the drama unfolded, Mr. Putin was addressing a gathering in Kursk, hailing the victory of Soviet troops over German invaders 80 years ago.  Russian prosecutors, who promptly shut down an investigation into Mr. Prigozhin’s mutiny after he accepted a deal to go into exile in Belarus, were quick to open an investigation into a violation of ‘air traffic and safety rules.’  The Russian public may learn that it was a pilot’s mistake or a fault in the plane that brought Mr. Prigozhin to his end.  In Russia, nobody expects to be told the truth.”

The manufacturer of the Embraer Legacy 600 executive jet that went down is furious that their reputation is being sullied with this assassination.  In 20 years, this model had experienced one other accident and it was not mechanical related.

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Wall Street and the Economy

The markets have been eagerly awaiting Federal Reserve Chair Jerome Powell’s annual speech at the Jackson Hole Economic Policy Symposium and today, Powell said the Fed may need to raise interest rates further to ensure inflation is contained.  Nodding to both easing price pressures and the surprisingly strong performance of the U.S. economy, Powell promised the Fed would proceed “carefully” at upcoming meetings.

Fed policymakers would “proceed carefully as we decide whether to tighten further,” but Powell also made clear that the central bank has not yet concluded that its benchmark interest rate is high enough to be sure that inflation returns to the 2% target.

“It is the Fed’s job to bring inflation down to our 2% goal, and we will do so.  We have tightened policy significantly over the past year.  Although inflation has moved down from its peak – a welcome development – it remains too high.  We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

In that context, recent data has raised a new concern, Powell said.  “We are attentive to signs that the economy may not be cooling as expected,” with consumer spending “especially robust” and the housing sector possibly rebounding.

The economy continues to grow above trend, said the Chair, and if that continues “it could put further progress on inflation at risk and could warrant further tightening of monetary policy.”

And: “Restrictive monetary policy will likely play an increasingly important role. Getting inflation sustainably back down to 2% is expected to require a period of below-trend economic growth as well as some softening in labor market conditions,” Powell said.  “Two percent is and will remain our inflation target.”

And just as he did last year, he ended his speech with: “We will keep at it until the job is done.”

So there you have it.  The Fed will be ‘higher for longer,’ there was zero talk of cutting rates, and the Open Market Committee will remain data dependent.

There are three more key data points prior to the next FOMC gathering Sept. 19-20 and two of them come next week. 

Thursday, we have the personal consumption expenditures report for July and then Friday the August jobs report.  Powell particularly emphasized today the importance of getting core PCE down from its current 4.3%.

The only other big number before the FOMC meets is Sept. 13, August consumer prices.

Equities rallied today, slightly, on Powell’s speech, after being up right before (the speech given at 10:05 a.m. ET).  Treasuries were little changed in response.

Prior to Powell’s speech, we had some economic data, with July existing home sales down more than expected, 2.2% month-over-month, to a 4.07 million annualized pace, down 16.6% from a year ago.  But the median price of $406,700 was up 1.9% year-over-year.

July new home sales came in at a better than expected 714,000 pace.

July durable goods fell 5.2%, but were up 0.5% ex-transportation.

The Atlanta Fed’s GDPNow barometer for third-quarter growth ticked up to 5.9%.

Freddie Mac’s 30-year fixed-rate mortgage hit 7.23%, the highest since 2001.

And while gas prices at the pump fell five cents this week to a national average of $3.82, the price of diesel, critical to goods inflation, was up another two cents, 46 cents for the month vs. a 19-cent increase for regular gas.  [Gasoline futures today soared 10 cents.]

Europe and Asia

We had flash PMIs in the eurozone for August, courtesy of S&P Global and Hamburg Commercial Bank.

The flash eurozone composite came in at 47.0 (33-month low).  Manufacturing 43.7; services 48.3…50 the dividing line between growth and contraction.

Germany: Mfg. 39.7 (39-mo. low); services 47.3 (9-mo. low).  Yuck.
France: Mfg. 45.8; services 46.7 (30-mo. low).

UK: Mfg. 43.3 (12-mo. low); services 48.7 vs. 51.5 in July.

Dr. Cyrus de la Rubia, Chief Economist at HBC:

“The service sector of the eurozone is unfortunately showing signs of turning down to match the poor performance of manufacturing. Indeed, service companies reported shrinking activity for the first time since the end of last year, while output in manufacturing dropped again. Considering the PMI figures in our GDP nowcast leads us to the conclusion that the eurozone will shrink by 0.2% in the third quarter….

“The downward pressure on the economy of the eurozone in August stems mainly from the German service sector which switched from growth to contraction at an unusual pace, while the French service sector providers reduced their activity at a similar speed as the month before.  In the manufacturing sector, Germany’s firms are reducing their output at a much faster pace than the French ones.  This will only fuel the discussion of Germany being the sick man of Europe.”

Turning to Asia…nothing on the economic data front of import from China.  But the central bank did lower a key interest rate again, which was met by the markets with a yawn, ditto Friday when authorities said they will further ease mortgage policies to halt a slump in the residential property market.

Japan reported out its flash PMIs for August, with manufacturing at 49.0, and services 54.3; similar to July’s readings.

Taiwan’s exports orders declined for an 11th straight month in July but at the mildest pace since October, indicating the worst of the global slump in consumer demand may be over as the technology industry gears up for its peak season.

Overseas orders shrank 12% in July from a year ago, the Ministry of Economic Affairs said Monday, better than the 15.5% decline economists had expected.

The government lowered its forecast for GDP for 2023 to 1.6%, which would be the slowest pace of growth since 2015.

Street Bytes

--Stocks finished mixed on the week, with the Dow Jones falling 0.4% to 34346.  But the S&P 500 and Nasdaq snapped their 3-week losing streaks, gaining 0.8% and 2.3%, respectively.

Aside from Nvidia’s earnings, covered below, and Chair Powell, some major retailers reported weakness in consumer spending.

Next week…PCE and jobs.

--U.S. Treasury Yields

6-mo. 5.52%  2-yr. 5.07%  10-yr. 4.23%  30-yr. 4.28%

The yield on the 10-year was basically unchanged on the week, but the 2-year yield rose 13 basis points.

--Wednesday witnessed the biggest single earning report of the year, Santa Clara, California-based Nvidia Corp., and the company didn’t disappoint.

The chip designer forecast third-quarter revenue above Wall Street targets, boosted by soaring demand for its chips that power nearly all of the world’s major artificial intelligence apps.  The shares rose over 6% in response, after tripling this year, making the company the first ever trillion-dollar chip business as investors bet Nvidia will be the key beneficiary of the AI boom.

Analysts have estimated that demand for Nvidia’s prized AI chips is exceeding supply by at least 50%, adding that the imbalance will stay in place for the next several quarters.

“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” Nvidia CEO Jensen Huang said in a statement.  From AI startups to major cloud service providers like Microsoft, all are looking to get their hands on more Nvidia chips.  Demand from China is also in overdrive, as companies there are placing rush orders to stockpile chips before any further U.S. export curbs come into action.

The company’s chips are the computational muscle behind lots of popular AI tools, including OpenAI’s ChatGPT and similar language-generation systems made by Google, Microsoft and others.  Nvidia has invested in making chips and software for AI for more than a decade and has no competitors who can yet match it.

“The race is on to adopt generative AI,” Huang said, describing a new computing era where companies are transitioning from general-purpose computing to digital infrastructure geared for AI.

The company forecasts third-quarter revenue of about $16 billion, plus or minus 2%.  Analysts were expecting $12.6 billion.

Adjusted revenue in the second quarter ending July 30 was $13.51 billion, compared to consensus of $11.2 billion.  Revenue at the company’s data center business rose 141% to $10.32 billion, beating the Street’s forecasts of $7.69 billion by more than $2 billion. 

But the shares, which hit $481 on Tuesday and closed Wednesday, prior to the earnings release, at $471, hit a new high of $502 Thursday morning, but closed back at $471, and then finished the week at $460.

--In a long-anticipated moment for the IPO market, Arm Holdings filed paperwork with the SEC late Monday for an initial public offering on the Nasdaq.

Arm will be listed under the ticker ARM, with American depositary shares representing its ordinary stock.

In the filing, ARM said it has revenue of $2.68 billion for the fiscal year ended in March 2023, down slightly from the prior year’s $2.7 billion.  For the same fiscal 2023 period, the company generated net income of $524 million, down from $676 million the prior year.

Softbank acquired Cambridge, England-based Arm for $32 billion in 2016.  In 2020, the company reached an agreement to sell Arm to Nvidia, but that deal was terminated two years after it faced opposition from global regulators and other chip companies.

Arm makes money from licensing its chip architecture and other chip design technologies to semiconductor companies and hardware makers.  The company says its technology powers chips inside nearly every smartphone, which would include Apple iPhone and most Android-based devices.

No word on the timing of the IPO.

--American Airlines’ pilots ratified a new four-year contract that immediately boosts pay by 21%. [The pilots union said 73% of members voted to approve the deal.]

The union representing 15,000 pilots said the new contract, which also boosts 401(k) retirement plan contributions, will raise overall pay by 46% over the next four years, or $9.6 billion, compared with the prior agreement.

American joins United Airlines and Delta in raising pilot pay.  The new contract also includes changes in scheduling and benefits sought by the union as carriers try to overcome challenges of emerging from the pandemic amid surging demand.

Carriers have been under pressure amid employee shortages, including pilots.

--Boeing Co. shares fell over 2% on Thursday after the company announced it had discovered that its largest supplier improperly drilled holes in a component that helps maintain cabin pressure of the 737 MAX jet, threatening to derail delivery targets for its best-selling model.

The latest issue for Boeing’s cash-cow jet isn’t a safety threat, the Federal Aviation Administration said Wednesday.  But it’s another complication for Boeing as it speeds the manufacturing pace of the 737 family while dealing with supply-chain strains and the aftermath of a strike at Spirit AeroSystems Holdings Inc., the supplier that builds about 70% of the narrowbody jet frames.

The inspections have uncovered hundreds of misaligned and duplicated holes in some aircraft, according to a report by The Air Current.

The manufacturing glitch will cause some near-term 737 deliver delays, as Boeing conducts inspections and determines how many models were affected and what work they need, according to the company.  Boeing is evaluating whether it will be able to reach its target of delivering 400 to 450 of the 737-family jets this year.

--TSA checkpoint numbers vs. 2019

8/24…97 percent of 2019 levels
8/23…98
8/22…104
8/21…105
8/20…101
8/19…110…low 2019 #, probably weather-related
8/18…102
8/17…102

--Lowe’s Cos. posted a smaller-than-expected drop in quarterly comparable sales and topped estimates for profit on Tuesday, helped by a boost from delayed spring season sales and sustained consumer spending on smaller projects.  While home improvement retailers have seen sales falter in recent months, Americans are still spending on smaller repair and maintenance work and taking up non-discretionary home projects, making up for some of the lost demand.

Shares of the company rose a solid 4% after the company reaffirmed its annual sales and profit forecasts.  The North Carolina-based retailer also saw its margins expand slightly to 33.7% in the second quarter ended Aug. 4.

The company was confident in the mid- to long-term outlook for the home improvement industry, CEO Marvin Ellison said.

Same-store sales at Lowe’s fell 1.6% in the second quarter to $24.96 billion, compared with analysts’ average estimate of a 2.4% drop.

For the full-year, total sales will range between $87 billion and $89bn. Comp sales will drop by 2% to 4% this fiscal year.  Lowe’s expects adjusted earnings will range between $13.20 and $13.60 per share.

--Macy’s kept its annual forecasts unchanged even though its second-quarter sales and profit beat market expectations on Tuesday as the upscale department store chain expects consumer spending to stay under pressure.

The retailer, like Target and Coach parent Tapestry, has seen a drop in demand from middle-income customers as they cut back spending on apparel and handbags amid elevated inflation.

“In light of ongoing macroeconomic pressures and uncertainty on when those will abate, the company continues to take a cautious approach on the consumer,” Macy’s said in a statement.  It reaffirmed its 2023 sales expectations of $22.8 billion to $23.2 billion, and adjusted full-year profit per share between $2.70 and $3.20.

Throughout the second quarter, it has pushed to clear excess inventory after a move to convert its merchandise for the spring and early summer hurt demand, forcing the Bloomingdale’s parent to cut its annual sales and profit forecasts in June.  Gross margins slipped to 38.1% from 38.9% a year ago.

Macy’s posted an adjusted net income of $71 million, or 26 cents per share, besting expectations of 13 cents.

But comparable sales fell 7.3%, worse than Street consensus, and the shares tumbled 14% by the close on Tuesday.

--Dick’s Sporting Goods shares cratered 24% on Tuesday after profit slipped in the second quarter and missed Street forecasts as the retailer cut its full-year profit outlook, citing worries over theft at its stores.

For the period ended July 29, Dick’s earned $244 million, or $2.82 per share.  A year earlier the company earned $319 million, or $3.25 per share.  Analysts had predicted earnings of $3.81 per share, a huge miss.

“Our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers,” President and CEO Laruen Hobart said in a statement.

Retailers have struggled with theft concerns. In May, Target said theft was cutting into its bottom line and that it expected related losses could be $500 million more than last year, when losses from theft were estimated to be anywhere from $700 million to $800 million.  So that means losses could top $1.2 billion this year.

During Target’s second-quarter conference call last week, CEO Brian Cornell told media and analysts that during the first five months of this year, its stores saw a 120% increase in theft incidents involving violence or threats of violence compared to the year-ago period.

Dick’s sales during the quarter climbed to $3.22 billion from $3.11 billion.

Sales at stores open at least a year increased 1.8%, vs. a 5.1% decline in the prior year period.

But Dick’s lowered full-year guidance to an earnings range of $11.33 to $12.13 per share, vs. previous guidance for earnings between $12.90 and $13.80 per share.

--Shares of Foot Locker plummeted over 30% Wednesday after the company lowered its annual forecasts as it reels from weaker consumer demand in the face of still-high inflation.  The athletic-wear retailer also missed expectations for quarterly sales, said it would pause its dividend payouts and flagged softer demand in July, which is typically when back-to-school shopping starts.

“We did see a softening in trends in July and are adjusting our 2023 outlook to allow us to best compete for price-sensitive consumers,” CEO Mary Dillon said.  The shares of the company’s larger rivals Nike, Dick’s Sporting Goods and Under Armour fell between 2% and 4% in response, ditto European peers Adidas and Puma.

Foot Locker, like Dick’s, said its quarter was hit by inventory shrink, or retail theft, and steeper discounts.  Its second-quarter gross margins slumped 460 basis points. 

Sales in the quarter fell 9.9% vs. a year ago to $1.86 billion, less than consensus.  And comp-store sales fell a whopping 9.4%, with the company guiding comp sales for the year to fall 9% to 10%.

It now expects overall sales to fall 8% to 9% this year, compared with its previous forecast for a drop of 6.5% to 8%.  The company trimmed its annual earnings per share forecast to $1.30-$1.50 from $2.00-$2.25, a big adjustment.

--Dollar Tree’s fiscal second-quarter results beat Wall Street’s estimates as the discount retailer experienced strong sales and increased traffic at its stores.

Dollar Tree earned $200.4 million, or 91 cents per share, for the period ended July 29.  A year earlier the company earned $359.9 million, or $1.60 per share.

Revenue totaled $7.33 billion, better than consensus of $7.22bn.

Sales at stores open at least a year rose 7.8% at Dollar Tree locations, up 5.8% at Family Dollar.

DLTR also guided higher for the current quarter on revenue and for the full year.  But the shares fell 12%, as the guidance wasn’t as good as expected and the margins are coming down due to growing ‘shrinkage,’ the company claims.

--T-Mobile said in a regulatory filling Thursday that it plans to cut 5,000 jobs, or 7% of its workforce.  The move comes a few years after then-CEO John Legere told Congress that a merger with rival Sprint would be a major jobs creator.

In 2019, Legere told a House committee scrutinizing the merger, “By 2024 we will have 11,000 more employees.”

Prior to the merger, T-Mobile and Sprint disclosed a combined employee count of around 81,500 employees, T-Mobile ended 2022 with 71,000 employees, according to the company’s annual report.  After the latest cuts, the head count will be closer to 66,000.

Current CEO Mike Sievert told employees in a Thursday email that the cuts will affect corporate and back-office staff, primarily.  Retail and consumer care employees would not be affected.

Sievert cited rising customer acquisition and retention costs.

“Right now, our company is at a pivotal crossroads,” he said.  “What it takes to attract and retain customers is materially more expensive than it was just a few quarters ago.”

--I talk down below about how the weather is impacting trade routes between Turkey and Greece due to wildfires, but there is a far bigger issue developing in Panama and the Panama Canal.  The El Nino climate pattern associated with warmer-than-usual water in the central and eastern tropical Pacific Ocean is contributing to Panama’s drought.

The area around the canal is experiencing one of the two driest years in the country’s 143 years of keeping records, data from the canal authority and the Smithsonian Tropical Research Institute showed.  Rainfall measurements around the area are 30-50 percent below normal.  Understand, Panama is one of the rainiest countries on the planet.

But an early start to Panama’s dry season and hotter-than-average temperatures typical of major El Nino events in the country could increase evaporation from Gatun Lake and result in near-record low water levels by March or April 2024.

So what this means is canal operators have lowered ship weight limits to accommodate lower water depth – posing a problem for big container vessels.  One such large vessel, Ever Max, can carry more than 8,650 40-foot cargo boxes.  But it arrived at the Pacific side of the canal over the limit even though it was only carrying the equivalent of 7,373 containers.

So the vessel had to unload about 700 containers onto trains, and then retrieve them on the Atlantic side and continue on to the U.S. East Coast, according to the Canal Authority.

The number of daily ship crossings is also being cut.  Like check this out.  Each passage requires about 50 million gallons of water (through the lock system), only a portion of which is recycled.

By March, or earlier, this could be a big story in terms of commercial shipping.

--U.S. workers at United Parcel Service ratified a new five-year contract, the Teamsters union said on Tuesday, closing the door on a potential strike that could have severely impacted Christmas deliveries and sent shipping costs soaring.

--A sharp drop in package volume and a move to combine FedEx’s Express and Ground delivery units created a glut of pilots, leaving the company’s most revered class of workers in a state of angst.

The Memphis-based delivery company has an excess of about 700 pilots, according to a letter from the company’s vice president of flight operations.  FedEx has a total of roughly 5,800 pilots after a pandemic-fueled hiring spree.

FedEx union pilots last month voted against a new labor contract, protesting what they describe as insufficient wage increases and operational changes that could lead to declines in work hours.

Under the existing contract, FedEx pilots are paid between $69 and $336 an hour based on factors such as the type of plane they fly and their seniority.  Pilots typically have a minimum guaranteed 68 hours of work a month.

The pilots are claiming they are flying fewer hours in recent months, and some are concerned about furloughs.  But the company hasn’t furloughed pilots during its 50-year history.

--Goldman Sachs continues to pound the table on its workers coming back to the office, five days a week.  The Wall Street giant says it will crack down on those who aren’t at their desks, Monday through Friday.

Goldman’s Wall Street headquarters was described as “totally dead” on Fridays now that interns have gone and a large number of employees opt to work remotely to get an early start to the weekend.

The investment bank under CEO David Solomon has not performed well and company morale is already in the crapper.

--Chinese tourists are flocking back to Macau’s casinos even as China’s economy is struggling, propelling the city back above Las Vegas as the world’s most lucrative gambling hub.

Some 1.9 million tourists from mainland China visited Macau in July, a number approaching the pre-pandemic level of around two million a month in late 2019.

Macau’s gross gambling revenue in the first half of this year reached nearly $10 billion, compared with Nevada’s $7.5 billion, according to official figures from the two places.

--Roark Capital closed a deal to buy the Subway sandwich-shop chain for about $9.6 billion.

Milford, Conn.-based Subway has been owned by its two founding families for more than three decades.

Subway is the eighth-largest U.S. restaurant chain, with $9.8 billion in domestic sales across 20,810 locations last year.  It has around 37,000 restaurants globally.

Roark, based in Atlanta, is no stranger to restaurant and food investing, with a portfolio including pretzel purveyor Auntie Anne’s, sandwich chains Arby’s (underrated) and Jimmy John’s, as well as ice cream brands Baskin-Robbins and Carvel.

--Last week I mentioned Campbell Soup’s acquisition of Sovos Brands, best known for Rao’s pasta sauce.

Then over the weekend, Ben Cohen of the Wall Street Journal had a piece on the business of Rao’s that was rather fascinating.

Get this:

“After (Sovos) acquired Rao’s Specialty Foods in 2017, they expanded the marketing budget from a few hundred thousand dollars a year to $20 million. They distributed the niche brand that had been confined to the Northeast and West Coast across the country.  They also provided retailers with a powerful financial incentive to stock the product: They say the price of sauces like Prego and Ragu is the same as the profit that stores generate selling a jar of Rao’s.”

So now you’ll look at that $7.98 to $9.98 price for a jar a little differently.

But you can’t charge that price unless it’s truly delicious and “Rao’s deliciousness is undeniable.  Bon Appetit magazine called it ‘the best jarred pasta sauce there ever was.’”

So why does it taste so good?

“First, the tomatoes. Those whole-peeled plum tomatoes from southern Italy are so essential to the success of the entire company that Sovos lists among its business risks the volcanic activity of Mount Vesuvius.”

Tomatoes grown in soil with volcanic ash.  I remember Stanley Tucci in his CNN food program noting this region.  Ditto CNBC’s Jim Cramer recently.

But as for the sauce: “The materially valuable tomatoes are cooked slowly in kettles with olive oil, onions, basil, oregano, garlic, salt, pepper – and that’s it.”

Sovos included a sentence before its initial public offering.  “Our sauces have no tomato blends, no paste, no water, no starch, no fillers and no added sugar.”  As Ben Cohen notes: “Meanwhile, its competitors use tomato purees, canola and soybean oils, dehydrated vegetables and unspecified spices, and the results are as different as the process.”

--Fox News drew a solid audience for the first GOP primary debate, even without Donald Trump on stage.  An average of 12.8 million viewers watched the event, according to Nielsen, the largest cable TV audience for a non-sports program so far this year.

Even with all the cord-cutting that has taken place (Fox News is in 20 million fewer homes than in 2015), the audience was bigger than the 12.5 million for Fox News’ January 2016 primary debate held in Iowa, which Trump skipped as well.

The record was set in 2015, when Trump made his first appearance on the debate stage, which attracted 24 million viewers for Fox News.

Foreign Affairs

China/Taiwan: Taiwan’s election is in January, a choice between democracy and autocracy, Vice President William Lai said in comments broadcast after China carried out extensive military drills around the island in anger at his visit this month to the United States.

Lai, the front-runner in polls, made brief stopovers in the U.S. on his way to and from Paraguay, prompting fury in Beijing, which views him as a dangerous separatist given China’s territorial claims over the island.

Taiwan’s defense ministry said on Sunday morning that in the past 24 hours 25 Chinese air force planes had crossed the Taiwan Strait’s median line, which previously served as an unofficial barrier between the two sides.

Saturday, more than 40 Chinese warplanes flew over Taiwan’s air defense zone, as part of military drills that Taiwan called “irrational and provocative.”

The People’s Liberation Army said the exercises would serve as a “stern warning to the collusion of ‘Taiwan independence’ separatists with foreign elements and their provocations.”

China said Lai was a “troublemaker” and that it would take “resolute measures” to “safeguard national sovereignty and territorial integrity.”

Lai said it was not up to China to decide who won the election.  “It’s not who China likes today, and then they can assume the post.  This goes against the spirit of Taiwan’s democracy, and represents huge damage to Taiwan’s democratic system,” he said.  There is no cause for China to “make a fuss about nothing” when it comes to foreign travel by Taiwanese leaders, Lai said.  “My position is that Taiwan is not a part of the People’s Republic of China.  We are willing to link up with the international community and talk to China under the guarantee of security.”

Lai added: “This election is not a choice between peace and war.  We can’t order off a menu, choosing peace and then there’s peace, choosing war and then there’s war.  That’s not the case. What it is is that we have the right to choose whether we want democracy or autocracy.  This is the real choice we have to make in this election.”

China has demanded that Taiwan’s government accept both sides of the Taiwan Strait are part of “one China,” which it has refused to do.

China’s Eastern Theater Command, on its official WeChat account, posted a short video clip late Saturday of a map of Taiwan superimposed with three slogans: “Relying on the U.S. is an evil road,” “Seeking independence is a dead end” and “Reunification is the right road.”

The U.S. urged China on Saturday to stop pressuring Taiwan.  “We urge Beijing to cease its military, diplomatic, and economic pressure against Taiwan and instead engage in meaningful dialogue with Taiwan,” a State Department spokesperson said in a statement.

Today, Friday, Taiwan reported renewed Chinese military activity around the island, including 13 aircraft and five ships carrying out combat readiness patrols.

Japan’s defense ministry said it scrambled fighter jets to monitor Chinese air force bombers and drones flying near the country’s southwestern Okinawa island and Taiwan.

Josh Rogin / Washington Post

“The Chinese government is already heavily interfering in Lai’s election, as it has been doing in every Taiwanese election for years through economic pressure, military intimidation, political corruption, disinformation and other methods.  Beijing professes to want to solve the Taiwan issue through negotiation and dialogue, but has never once agreed to meet with (current President) Tsai (Ing-wen) during her nearly eight years as president.  Beijing claims this is because Tsai won’t confirm what’s known as ‘the 1992 consensus,’ which essentially asserts that Taiwan is part of China.

“For Beijing, the problem is not really what Lai says or promises to do as president.  The election of a third consecutive DPP administration would confirm that Beijing’s attempts to bring Taiwan under its closer control through coercion and intimidation are failing, former assistant defense secretary for Indo-Pacific security affairs Randy Schriver told me.

“ ‘It’s part of a trend where Beijing’s constituency in Taiwan for any kind of reunification as ‘One China’ is gone – and they helped destroy it,’ he said.

“The narrative about Lai being dangerously pro-independence is also obsolete because, Lai explained, the Taiwanese independence movement has evolved over decades.  Taiwan’s de facto independence is something younger Taiwanese were born into and see no need to jettison.

“Despite its lack of diplomatic recognition, Taiwan is a democratic country with its own identity, politics and culture.  It was never ruled by the Chinese Communist Party and never wants to be.  These are facts that will endure whether Lai wins or not – and that is what truly worries Beijing.”

Separately, the BRICS group of nations (Brazil, Russia, India, China and South Africa) are expanding, inviting six countries – Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the United Arab Emirates – to join, in a move aimed at increasing the clout of a bloc that has pledged to champion the “Global South.”

President Xi called it an historic expansion that “serves the common interests of emerging markets and developing countries.”  Xi also said that the BRICS countries “are all countries with great influence and shoulder important responsibilities for world peace and development.”

Lastly, the following is from a report by Liyan Qi of the Wall Street Journal:

“A Chinese state media report this week cited a sharp drop in the country’s fertility rate, offering a rare glimpse into China’s deepening demographic plight and highlighting the country’s increasing lack of transparency on data.

“China’s total fertility rate – a snapshot of the average number of babies a woman would have over her lifetime – fell to 1.09 last year from 1.30 in 2020, according to a study by a unit of the National Health Commission cited this week by National Business Daily, a media outlet managed by the municipal government of Chengdu, the capital of Sichuan province.

“At 1.09, China’s rate would be below the 1.26 of Japan, a country long known for its aging society – throwing one of Beijing’s long-term challenges into sharp relief even as the country struggles with an economic slowdown right now.”

The National Bureau of Statistics stopped releasing annual data on total fertility rate in 2017, thus the importance of this particular study.  Reminder, a 2.1 ratio is needed to help keep the population stable.

Last week, the NBS said it would stop publishing the youth unemployment rate, an explosive topic.

North Korea: Pyongyang’s second attempt to place a spy satellite in orbit failed on Thursday after the rocket booster experienced a problem during its third stage, state media reported, as space authorities vowed to try again in October.

Its first try in May also ended in failure when the new Chollima-1 rocket crashed into the sea.  North Korea has vowed to carry on with a plan to place a fleet of satellites to monitor moves by U.S. and South Korean troops.

Japan: Tokyo started releasing treated radioactive water from the wrecked Fukushima nuclear power plant into the Pacific Ocean on Thursday, a polarizing move that prompted China to announce an immediate blanket ban on all aquatic products from Japan.

China is “highly concerned about the risk of radioactive contamination brought by…Japan’s food and agricultural products,” the customs bureau said in a statement.

The Japanese government signed off on the plan two years ago and it was given a green light by the UN nuclear watchdog last month.  The discharge is a key step in decommissioning the Fukushima Daiichi plant after it was destroyed by a tsunami in 2011.

China reiterated its firm opposition to the plan and said the Japanese had not proved that the water discharged would be safe.  “The Japanese side should not cause secondary harm to the local people and even the people of the world out of its own selfish interests,” its foreign ministry said in a statement.  Tokyo has in turn criticized China for spreading “scientifically unfounded claims.” It maintains the water release is safe, noting that the International Atomic Energy Agency has alco concluded that the impact it would have on people and the environment was ‘negligible.’

Japan wants China to immediately lift its ban on aquatic products and seeks a discussion on the impact of the water release based on science, Prime Minister Fumio Kishida told reporters.

Japan exported about $600 million worth of aquatic products to China in 2022, making it the biggest market for Japanese exports, with Hong Kong second. Sales to China and Hong Kong accounted for 42% of all Japanese aquatic exports in 2022, according to government data.

South Korea has also placed import bans on Fukushima fisheries and food products that will stay in place until public concerns are eased.  But the government has endorsed the water release plan, for which it has faced fierce criticism.

The release is estimated to take about 30 years…1.3 million tons, after it has been filtered and diluted.

Syria: Russian fighter jets are making dangerous head-on passes of U.S. jets in the skies over Syria, “including several high-speed, opposite-direction, close-aboard passes intended to force a reaction from our aircraft,” Col. Mike Andrews of the U.S. Air Force Central Command told Defense One on Monday.

Russian state media are accusing U.S. aircraft of doing the same thing.  On Aug. 19, TASS said U.S. F-35s had flown dangerously close to Russian jets. Andrews denied that such an event occurred.  “There has not been one incident where U.S. aircraft approached Russian aircraft and engaged in escalatory, dangerous, or unsafe behavior,” he said.

Whether it’s in the airspace near Taiwan, or here, or in the waters off Scandinavia and the Baltics, or off Alaska, a mistake, or purposeful action, will occur and how we react could be market moving.

Saudi Arabia:  According to Human Rights Watch, Saudi guards killed hundreds of Ethiopian migrants trying to cross the border from Yemen.  The NGO says that border guards used explosive weapons against migrants in a “systematic pattern of attack.”  Saudi Arabia has denied the accusations of widespread border violence.  The latest attacks allegedly took place between March 2022 and June 2023.

In all my years of following Human Rights Watch, I have never known them to make up reports.

Niger: The junta signed an order that would allow Burkina Faso and Mali, its neighbors, to intervene militarily in “the event of aggression.”  ECOWAS, the regional bloc, has said it would consider sending in troops if diplomatic efforts to restore democracy fail.  Burkina Faso and Mali suffered coups in 2022 and 2021, respectively.

Random Musings

--Presidential approval ratings….

Gallup: 40% approve of President Biden’s job performance, 55% disapprove; 38% of independents approve (July 3-27).

Rasmussen: 46% approve, 51% disapprove (Aug. 25).

--A CBS News/YouGov national poll of likely GOP primary voters has Donald Trump at 62%, Ron DeSantis 16%, Vivek Ramaswamy 7%, Mike Pence 5%, Tim Scott 3%, Nikki Haley and Chris Christie 2% each.

--An NBC News/Des Moines Register/Mediacom poll of Iowa Republicans has Trump with 42%, DeSantis 19%, Scott 9%, Pence and Haley 6%, Christie 5%, Ramaswamy 4%.

A poll of likely New Hampshire Republican primary voters conducted by research firm Echelon Insights in conjunction with the Republican Main Street Partnership, had Chris Christie gaining,14%, moving into second place behind Donald Trump, who leads with 34%.  Ron DeSantis was fourth, behind Vivek Ramaswamy, who picked up 11%.

All of the above polls were taken prior to Wednesday’s debate.

--Donald Trump on Sunday confirmed he would skip the Republican primary debates, citing his large lead in opinion polls as evidence that he was already well-known and liked by voters ahead of the 2024 election.

“The public knows who I am & what a successful Presidency I had,” Trump said on Truth Social.  “I will therefore not be doing the debates.”

Trump taped an interview with former Fox News host Tucker Carlson that was expected to be posted online.

Editorial / Wall Street Journal

“Donald Trump’s decision to skip Wednesday’s presidential debate shows that he wants to avoid having to tussle with competitors who might criticize him.  The more interesting question is how Republican voters will respond to the former President’s evident presumption that he owns their allegiance.

“Instead of debating, Mr. Trump says he will commune somewhere with Tucker Carlson. The former Fox News host will be on hand less as an interviewer than to endorse the former president’s claims that Vladimir Putin’s invasion of Ukraine is America’s fault and that the Jan. 6, 2021, Capitol riot was merely a case of exuberant supporters getting slightly carried away.

“Mr. Trump clearly thinks he has the nomination all but wrapped up, and judging by the current polls he has reason to think so. But what a message he is sending about the loyalty he thinks GOP voters owe him.

“It would mean the Grand Old Party is going to nominate, for the third time, a man who has been indicted four times on 91 felony counts. We don’t mean despite being indicted. We mean because he’s been indicted.

“In order to spite the Democrats for their partisan prosecutions, GOP voters would be doing exactly what Democrats and the press corps want them to do.  Democrats want Republicans to nominate the man who has shown over the last three national elections that he is the greatest voter turnout machine for the Democratic Party since Franklin Delano Roosevelt.

“Republican voters often say they like that Mr. Trump is a fighter, but for whom is he fighting?  Them, or himself? He would carry into the general election more baggage than the British royals. Yet Mr. Trump expects GOP voters to nominate him without so much as a primary debate, much less a real nominating contest.

“There are still five months before the Iowa caucuses and New Hampshire primary, and perhaps Mr. Trump’s presumption is mistaken.  But political parties have made repeated nominations in the past in thrall to one man and suffered repeated losses for it.  Democrats did it three times with William Jennings Bryan in 1896, 1900 and 1908, and Republicans are tempting the same fate.”

--So we had the debate, and it was entertaining, though a bit chaotic at times as Bret Baier and Martha MacCallum weren’t the greatest moderators in maintaining control.

That said, it’s always amusing how everyone has a different opinion after on who won and lost.

I thought Nikki Haley was a huge winner, especially in offering sharp criticism of both Donald Trump and the Republican Party.

“Republicans did this to you too,” she said when describing the massive U.S. budget deficit.  “They need to stop the spending, stop the borrowing.”

Haley spoke specifically of the $8 trillion in debt added during the Trump presidency.  She also said of Trump that he was the “most disliked politician in America” – and warned the GOP will suffer because of it in the general election.

And Haley scrapped with Ramaswamy on continuing U.S. aid to Ukraine, which she supports. And she clashed with Mike Pence on abortion, calling his demands for a national abortion ban unrealistic and politically damaging.

No doubt…Haley gained support Wednesday night.

On the other hand, her South Carolina compatriot, Sen. Tim Scott, didn’t help himself with a lackluster performance.  And his call to fire 87,000 IRS agents and hire more agents for the border is rather idiotic.  Oh yeah, let’s get rid of the IRS.  Incredibly nonsensical.

Mike Pence helped himself a lot, I believe, as he was strong and aggressive.

Ron DeSantis did not help himself.  I thought he looked like a puppet. 

As for Vivek Ramaswamy, I’m sorry, but this guy has always made my skin crawl.  It goes back years ago to his many appearances on CNBC, and I’ve noted that I am always deeply suspicious of fast talkers, going back to my extensive personal experience on Wall Street.  He’s a used-car salesman.

More importantly, I obviously vehemently disagree with his stance on Ukraine, and his claim of a new “Reagan Revolution” is absurd, given his calls for cutting off aid to Ukraine, which is not exactly what the Gipper would have wanted.

The Wall Street Journal said this of Vivek: “He can sling appealing phrases… But he can also sound like a young man in too much of a hurry, and his rapid-fire one-liners and insults (‘I’m the only person on the stage who isn’t bought and paid for’) give him the air of a supercilious grad student.’”

In a separate editorial, the Journal ripped Ramaswamy’s wrongheaded foreign policy to shreds, including on Taiwan, concluding:

“Former United Nations Ambassador Nikki Haley and former Vice President Mike Pence exposed Mr. Ramaswamy’s faulty worldview in the debate, and they’re right.  Mr. Ramaswamy is a reminder that a GOP politician who can’t see the stakes in Ukraine won’t stand up to a larger test from Beijing.

“Mr. Ramaswamy debuted in our editorial pages, and the presidential contest, as a bold challenger of progressive policies. His venture into foreign policy may be bold but it’s also glib and reckless.  It will not help him get to the White House.”

Lastly, Chris Christie had his moments, but he needs Donald Trump on the stage.

Asa Hutchinson showed he is more than competent, and he’d be a solid president.  But I’m hoping he is the future Attorney General.  You can trust this man and his experience would be invaluable in a Republican administration.

Doug Burgum performed poorly, but I’m sure his injury from the day before while playing basketball didn’t help.

--Meanwhile, Donald Trump was interviewed by Tucker Carlson, a taped interview released just before the Fox News debate.

Trump called the four criminal indictments he’s facing “trivia, nonsense, bullshit.”  He continued his attempts to cast as political persecution the indictment he faces in Fulton County, Ga., over efforts to keep him in power despite his 2020 election loss. Though subject to a bond condition that restricts him from threatening those involved in the case, Trump kept up his criticism of District Attorney Fani Willis.

On the more than 90 federal and state felony charges he faces in connection with the four indictments, two of which are related to efforts to overturn the 2020 election in his favor, Trump said, “It’s horrible when you look at what they’re doing.”

--According to ABC News, former White House chief of staff Mark Meadows has told special counsel Jack Smith’s investigators that he could not recall Donald Trump ever ordering, or even discussing, declassifying broad sets of classified materials before leaving the White House, nor was he aware of any “standing order” from Trump authorizing the declassification of materials taken out of the Oval Office. 

The testimony would contradict Trump’s primary public defense in the classified documents case, in which Trump has insisted that he declassified all the materials before he left office.

Following the FBI’s search of Mar-a-Lago in August 2022, Trump’s team issued a statement to one media outlet claiming that, while still in office, Trump had issued “a standing order that documents removed from the Oval Office and taken to the residence were deemed to be declassified the moment he removed them.”  On social media, Trump himself insisted that the documents at Mar-a-Lago were “all declassified.”

There were also questions from the special counsel’s office on edits Meadows made to the original draft of his book, “The Chief’s Chief,” and the issue of the four-page report typed up by Joint Chief of Staff Mark Milley, which is the subject of a key audio recording uncovered by the special counsel’s investigators.

--President Biden was greeted with middle fingers, chants of protests and derisive signs Monday as he arrived in Maui to tour wildfire damage after repeatedly declining to comment last week on the tragedy that killed at least 115 people, and, depressingly, the number unaccounted for rose to as many as 1,100.  But then it was reduced to 388 late Thursday.

As Biden drove toward downtown Lahaina, Biden passed signs that said, “NO COMMENT,” “ACTION SPEAKS LOUDER THAN WORDs,” and “FJB.”

Editorial / New York Post

“Last week, when President Biden announced his trip to Maui, The Post asked: How much do you want to bet he will act inappropriately to family members and try to make it all about himself?

“If there was anyone dumb enough to take that bet, time to pay up.

“Even by Joe’s low standards, this trip was a debacle.  Our tone-dear commander in chief takes off from the Lake Tahoe home of a Democratic donor, does a fly-by of the island, then turns around to go back on vacation.  Mission accomplished!

“While on the ground, Biden points at some burned out buildings, stiffly shakes hands with some first responders, and puts on a facial expression that’s meant to convey ‘serious’ when it more resembles rigor mortis.

“The Biden team set up a presidential lectern in the middle of the rubble, which is bad enough, but they also brought along a tiny little table to set his water on.  Gotta make sure Joe Antoinette Biden doesn’t get thirsty. Guess we should be grateful they didn’t bring a teleprompter, which is why he stared at this speech the entire time.

“Then Biden decided the best way to show Hawaii that he cares is to lie. Again.  He recounted the harrowing moment firefighters had to ‘run into the flames’ of his home to save his wife, Jill.

“This.  Never.  Happened.  For years, Biden has turned a minor kitchen blaze into the Great Chicago Fire, even after the Delaware department he praises says it was ‘insignificant.’

“The press tries to gaslight us by saying that Biden recounting this fire, or insisting his son Beau died in Iraq when he really died of cancer, resonates with victims.  ‘Biden…has long been seen as uniquely adept at leading with empathy amid tragedies like this one,’ the Washington Post claimed this week.

“But this isn’t empathy.  This is ego.  And it’s insulting.

“A myth has constructed around Joe Biden.  He’s the great negotiator.  He’s the empathizer-in-chief.  He’s Mr. Even-Keeled.  None of these things are true. They probably never were true.  We can see it with our own eyes.”

Meanwhile, shares in Hawaiian Electric fell 19% today one day after the utility was sued by Maui County, which accused the utility of negligently failing to shut off power despite exceptionally high winds and dry conditions, saying that the destruction could have been avoided if the company had taken essential actions.  Witness accounts and video indicated that sparks from power lines ignited fires as utility poles snapped in the winds.

Maui County is far from blameless itself.

--The weather….

In Greece, wildfires killed at least 20, including 18 who were probably migrants.  Searing temperatures fueled the fires and prompted health warnings across Europe on Wednesday.

On the Turkish side, authorities temporarily closed the Dardanelles Strait to shipping, creating a queue of 100 cargo ships, to allow helicopters and planes to scoop up water to douse a forest fire in the area that has raged for two days.

The strait, linking the Aegean Sea and the Black Sea, is a major shipping route for commodities such as oil and grains.

The French national weather service, Meteo-France, reported the country’s highest average temperature for the late summer period after Aug. 15 since records began in 1947.  It said some areas of southern France would experience temperatures of 42 Celsius (108F).  Grape pickers were told to work in the morning to avoid the extreme heat.

Spain is enduring its fourth heatwave of the summer.  Rome, Italy was 99, 99, 101F, Saturday thru Monday, when the average is 87.

They were holding the World Track and Field Championships in Budapest, Hungary, this week and last Sunday and Monday, the air temp hit 94 and 96, when the average is 79.

Temperatures in the Middle East this week surged past 122 degrees in some parts.  Iran ordered a two-day shutdown of schools, banks and public institutions, which helped relieve the burden on the nation’s faltering power grid.

Authorities in Iraq did much of the same in the country’s sizzling southern regions, while Jordan, where such shutdowns are rare, decreed work stoppages during peak heat hours.

Egyptians have been suffering through rolling blackouts, as the government told public employees to work from home one day a week until September.

In the States, Wichita, Kansas had air temps of 110 and 109, Saturday and Sunday, when the average is 90.

St. Louis had a heat index of 114 on Wednesday.

In Tropical Storm Hillary, San Diego received 10 Xs its average summer rainfall in one day.

Palm Springs had a year’s worth of rain in 24 hours.

Lastly, a catastrophic die-off of emperor penguin chicks has been observed in the Antarctic, with up to 10,000 young birds estimated to have been killed.

The sea-ice underneath the chicks melted and broke apart before they could develop the waterproof feathers needed to swim in the ocean.

The birds most likely drowned or froze to death.

The event, in late 2022, occurred in the west of the continent and was recorded by satellites.

Dr. Peter Fretwell, from the British Antarctic Survey, said the wipeout was a harbinger of things to come.

More than 90% of emperor penguin colonies are predicted to be all but extinct by the end of the century, as the continent’s seasonal sea-ice withers in an ever-warming world.

“Emperors depend on sea-ice for their breeding cycle; it’s the stable platform they use to bring up their young.  But if that ice is not as extensive as it should be or breaks up faster these birds are in trouble,” Fretwell told BBC News.

--Congratulations to the Pakistani military (I never thought I’d write this) for carrying out a spectacular rescue of eight people who were stuck in a cable car dangling 900 feet above the ground.

In a slow and dangerous operation, with high winds, a military helicopter rescued one child, while teams on the ground recovered the rest of the group after dark.

They were helped to safety along a zip line, with a huge crowd on top of the hillside celebrating their rescue.

The group were on their way to school when one of the car’s cables snapped.

Six children, aged between 10 and 16, were trapped, along with two adults.

--Finally, back to the Chandrayaan-3 spacecraft, India’s lunar lander consists of three parts: a lander, rover and propulsion module, which provided the spacecraft all the thrust required to traverse the 238,855-mile void between the moon and Earth.

The lander, called Vikram, completed the precision maneuvers required to make a soft touchdown on the lunar surface after it was ejected from the propulsion module.  Tucked inside is Pragyan, a small, six-wheeled rover (weighing 57.3 pounds) that will deploy from the lander by rolling down a ramp.  The rover is packed with scientific instruments to capture data to help researchers analyze the lunar surface and deliver fresh insights into its composition.

And so on Thursday, the rover exited the spacecraft and began exploring the surface of the lunar south pole and conducting experiments, and was braced for new challenges, the space agency chief said.

Go Little Pragyan, Go!

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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 $1941
Oil $80.05

Regular Gas: $3.82; Diesel: $4.36 [$3.87 / $4.98 yr. ago]

Returns for the week 8/21-8/25

Dow Jones  -0.4%  [34346]
S&P 500  +0.8%  [4405]
S&P MidCap  +0.01%
Russell 2000  -0.3%
Nasdaq  +2.3%  [13590]

Returns for the period 1/1/23-8/25/23

Dow Jones  +3.6%
S&P 500  +14.7%
S&P MidCap  +6.1%
Russell 2000  +5.2%
Nasdaq  +29.8%

Bulls 44.3
Bears 18.6…the prior split was 47.1 / 20.0…two weeks ago 52.2 / 19.4…for those of you keeping score at home.

Hang in there.

Brian Trumbore

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